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, 1996
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 28, 1997
Capital Stock, $.15 par value $1,635,094,000
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date.
Outstanding at
Class February 28, 1997
Capital Stock, $.15 par value 34,242,802 shares
DOCUMENTS INCORPORATED BY REFERENCE
Part III: The Registrant's Proxy Statement for its Annual Meeting
of Stockholders to be held on May 8, 1997
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INDEX
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PART I
Items 1 and 2. Business and Properties.
The Company
Contributions of Principal Products
Petroleum Operations
General
Sales
Oil and Gas Properties
Oil and Gas Reserves
Exploration Activities
Development Activities
Drilling Activities at December 31, 1996
Oil and Gas Wells
Crude and Condensate, Plant Products and Natural Gas
Production and Prices Realized
Regulation
Federal Energy Regulatory Commission
Environmental Matters
Item 3. Legal Proceedings.
Item 4. Submission of Matters to a Vote of Security
Holders.
Executive Officers of the Registrant
PART II
Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters.
Item 6. Selected Financial Data.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Item 8. Financial Statements and Supplementary Data.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
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PART III
Item 10. Directors and Executive Officers of the Registrant.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
Item 13. Certain Relationships and Related Transactions.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.
(a)(1) Financial Statements and Supplementary Data
(a)(2) Financial Statement Schedules
(a)(3) Index to Exhibits
(b) Reports on Form 8-K
Signatures
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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
Statements, other than historical facts, contained in this Annual
Report on Form 10-K, including statements of estimated oil and gas
production and reserves, drilling plans, future cash flows,
anticipated capital expenditures and Management's strategies, plans
and objectives, are "forward looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Although the Company believes that its forward looking statements
are based on reasonable assumptions, it cautions that such
statements are subject to a wide range of risks and uncertainties
incident to the exploration for, acquisition, development and
marketing of oil and gas, and it can give no assurance that its
estimates and expectations will be realized. Important factors
that could cause actual results to differ materially from the
forward looking statements include, but are not limited to, changes
in production volumes, worldwide demand, and commodity prices for
petroleum natural resources; the timing and extent of the Company's
success in discovering, acquiring, developing and producing oil and
gas reserves; risks incident to the drilling and operation of oil
and gas wells; future production and development costs; the effect
of existing and future laws, governmental regulations and the
political and economic climate of the United States and foreign
countries in which the Company operates; the effect of hedging
activities; and conditions in the capital markets. Other risk
factors are discussed elsewhere in this Form 10-K, including those
risk factors described under the headings "General", "Sales" and
"Environmental Matters."
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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. At December
31, 1996, LL&E had 581 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 15
of "Notes to Consolidated Financial Statements" for additional
information on LL&E's operations.
<TABLE>
<CAPTION>
Years ended December 31,
(Millions of dollars) 19961 1995 1994
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<S> <C> <C> <C>
Crude and condensate $ 292.3 272.8 235.8
Natural gas 283.7 172.5 169.9
Refined products2 263.5 355.2 361.4
Other petroleum products 21.0 19.4 15.4
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Total $ 860.5 819.9 782.5
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1 Includes refined products revenues for seven months. On July 31, 1996, the Company
completed the sale of its crude oil refinery and terminal near Mobile, Alabama. See Note
3 of "Notes to Consolidated Financial Statements."
2 After elimination of intercompany transfers to the Company's refinery. In 1996, 1995 and
1994, such transfers were valued at $16.9 million, $28 million and $24.8 million,
respectively.
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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, 1996 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, Tunisia and
Venezuela.
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 1996, working interest
revenues accounted for 89% 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.
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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 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 natural gas
processing, are generally available through multiple sources and
acquired through specialized independent contractors. The gas
processing operations' principal raw material is natural gas.
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 1996, 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. Prior to the
sale of its refinery in July, LL&E charged transfers of proprietary
production to its refinery at appropriate market prices. The 1996
sales period experienced dramatic price fluctuations with crude oil
prices ranging between $17.45 per barrel and $26.57 per barrel.
Overall, crude oil prices averaged $22 per barrel at Cushing,
Oklahoma for West Texas Intermediate. This price was approximately
$3.60 per barrel above the price averaged in 1995.
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 1% 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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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, 1996, LL&E had working interests in
approximately 580 thousand gross (262 thousand net) productive
acres and approximately 5.9 million gross (2.7 million net)
undeveloped acres. The total unamortized cost to LL&E of such
undeveloped acreage at December 31, 1996 was $47 million. Through
its affiliate, CLAM Petroleum Company, LL&E had working interests
in approximately 42 thousand gross (6 thousand net) productive
acres and approximately 577 thousand gross (133 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, 1996, LL&E owned approximately 594 thousand
acres in fee lands in south Louisiana of which approximately 112
thousand acres were leased to various other companies for oil and
gas exploration, development and production and an additional 81
thousand acres were subject to geophysical option agreements. Of
those leased to others, approximately 89 thousand acres are
productive and yield a weighted average royalty to LL&E of 25%. In
addition, LL&E holds State of Louisiana leases covering
approximately 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.
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Of the approximately 401 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 $157 million in
1996: $21 million was spent on seismic data, over $21 million was
expended for unproved leases in the United States, and $115 million
was expended for participation in 36 wells. Of this total, 18
wells were successful completions: 8 oil and 10 gas.
South Louisiana/Gulf Coast
During 1996, the Company acquired substantial 3-D seismic data
over its fee land and leasehold acreage in south Louisiana. Over
900 square miles of data were added to the Company's existing
inventory of 1,000 square miles. At year-end 1996, the Company
owned about 20% of all 3-D seismic acquired by the industry in
south Louisiana. One of the areas in which the Company is actively
acquiring data is the "Transition Zone." The Transition Zone
encompasses five miles on each side of the Louisiana coast line and
extends from the Texas border to Terrebonne Bay. This area has
historically had poor quality seismic data coverage and limited
drilling activity. The Company intends to acquire 500 square miles
of data over this area, of which 300 is already completed and under
evaluation. The Transition Zone is targeted for at least one
exploratory well during 1997.
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During 1996, the Company successfully employed 3-D seismic
technology to generate new exploratory prospects in the area as
well as identify development opportunities in mature producing
fields. At the Leleux Field in Vermilion Parish, the L.C. Landry
No. 1 was successfully drilled and tested 13.5 million cubic feet
of gas per day and 110 barrels of condensate per day. The
Company's working interest in this discovery is 45%. The moderate
potential, lower risk drilling program continued to produce solid
results. For example, the West Paradis LL&E Fee #1 well, which is
located on the Company's fee lands, was drilled to 12,567 feet and
tested four million cubic feet of gas and 74 barrels of condensate
per day. This prospect was generated from the 92 square-mile 1994
Des Allemands 3-D seismic survey. As a result of this success, the
Company will drill at least one additional well adjacent to this
discovery. Additional prospects generated from this survey are
currently under evaluation for future drilling. The Company's
working interest in these prospects is 33%; its net revenue
interest is 43% as a result of its fee land ownership.
One of the Company's largest 3-D seismic surveys in the state,
the 380 square-mile Terrebonne Bay survey, is nearing completion.
This survey covers the Company's fee lands at Caillou Island Field,
the second largest field ever discovered in the state of Louisiana,
as well as a number of adjacent producing fields and leases. This
survey has generated a number of attractive prospects. Three such
prospects were successfully drilled in late 1996 which in total
tested a net 800 barrels of oil per day and 9.4 million cubic feet
of gas per day. Since the beginning of 1997, two additional
successful wells have been drilled which tested a net total of 1.7
million cubic feet of gas per day and 345 barrels of oil per day.
At least two additional wells are currently scheduled for drilling
in 1997. The Company is a 50% working interest owner in all of
these wells. At the same time, Texaco is pursuing an aggressive
drilling program at Caillou Island over the Company's fee lands and
state leases that were previously leased to Texaco. The first of
six wells planned for 1997 was recently successfully completed.
The Company benefits from a 12 1/2% to 25% royalty interest on
these properties with no associated drilling or development costs.
Exploitation of the Bastian Bay Field in Plaquemines Parish
continued in 1996. Production volumes grew 66% as a result of
workovers and recompletions of additional pay sands that were
encountered during the successful 1995 3-D drilling program. Four
exploratory wells are planned for this field in 1997.
Several new 3-D surveys are currently planned for 1997 which
will add at least 500 additional square miles of data. By year-end
1997, the Company expects to have covered 90% of its fee lands with
3-D data. At present, the Company has 35 different 3-D surveys in
varying stages of acquisition, processing, or interpretation. The
Company's growing inventory of 3-D seismic data has yielded 20-25
drilling locations for 1997. Of these, approximately one quarter
would be considered high potential opportunities. This sizeable
database is expected to produce a constant flow of new exploratory
prospects over the next several years. <PAGE>
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Gulf of Mexico
The Company continues to be active in the Gulf of Mexico.
During 1996, a discovery was drilled at Green Canyon 45/89, an
infield wildcat program was expanded, two new production platforms
were installed and substantial new exploratory acreage was added to
inventory in both the offshore shelf and deep water areas.
The discovery at Green Canyon 45/89 was in an area known as
the Flex Trend. Referred to as the Cinnamon Prospect, the well is
located in 690 feet of water. The well encountered high quality
reservoirs and pay between 9,500 and 10,255 feet. A delineation
well is planned for the first quarter of 1997 which will further
evaluate this discovery and test an additional prospect at a deeper
horizon. Development plans will be finalized following drilling of
this well.
One component of the Company's overall Gulf of Mexico strategy
is to fully exploit areas around existing fields using 3-D seismic
technology. The Company expanded its infield wildcat exploitation
program on several properties in the Gulf during 1996. This
strategy yields beneficial results because the cost to drill these
lower risk wells from existing platforms is attractive, and
existing infrastructure can be used to immediately produce the
hydrocarbons discovered. In late 1995, the Company recognized that
the South Timbalier 148 Field had significant upside potential
after acquiring 3-D seismic data over the area that identified
several amplitude related targets. The Company acquired an
additional 15% working interest in the block prior to drilling the
first new well, the A-7, which was completed in 1996 and is
producing in excess of 25 MMCFD and 1,600 BCPD. A second
exploratory well was recently successfully completed and the third
well is currently drilling. Prior to the drilling of these wells,
the platform was producing approximately seven million cubic feet
of gas per day and 80 barrels of condensate per day. Since the
initiation of this new drilling program, production levels have
increased greatly and further significant growth in production is
likely with additional drilling planned for later this year. The
Company's working interest in this block is 40.4% Elsewhere in the
Gulf, eight additional successful exploitation wells added new
reserves in other fields.
Three subsalt wells were drilled in the Gulf with
disappointing results. While the Company still believes in the
long-term viability of the subsalt play, additional drilling will
not be aggressively pursued at this time. The Company continues to
own a significant number of offshore blocks with salt-related
features, many of which are held by production.
The Company was a very active participant in both 1996 federal
offshore lease sales. The Company acquired a total of 20 blocks in
the shallow water on the shelf to add to its existing inventory of
low to moderate risk and potential prospects in the Gulf. The
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Company also acquired interests in 12 blocks in water depths
ranging between 2,000 and 8,000 feet. In the March 1997 lease
sale, the Company has further expanded its deep water holdings with
apparent winning bids on 42 additional blocks. The Company
believes the deep water of the Gulf will provide significant upside
reserve exposure but with less drilling risk than in the subsalt
play. The deep water blocks expose the Company to high-potential
prospects and complement the lower risk, low- to medium-potential
opportunities being pursued on the shelf. The Company has formed
a joint venture team for deep water exploration with partners who
have extensive deep water drilling experience in the Gulf and
internationally. In 1997, seismic data will be acquired over a
portion of the deep water blocks and initial drilling is planned
for 1998. As of year-end 1996, the Company owned a total of 172
offshore leases covering 154,100 net developed and 195,600
undeveloped acres. The Company's participation in the recent 1997
lease sale has added an additional 114,000 net acres if the bids
are approved by the Minerals Management Service.
Drilling plans for the Gulf of Mexico for 1997 include 20-25
wells of which 85% will be exploratory opportunities and 20% of
these are expected to be higher potential, higher risk prospects.
Rocky Mountains
Using the expertise developed in the Madden Field, the Company
has recently entered into an exploration license agreement on the
Wind River Indian Reservation. The agreement covers approximately
500,000 gross acres in this area and is situated 20 miles west of
the Madden Field. The license agreement covers a highly
prospective, under explored area of the Wind River Basin which is
on trend with recent discoveries at Cave Gulch and also has
exploration potential in similar horizons, though at shallower
depths, as at the Madden Field. The Company will begin shooting
3-D and 2-D seismic over this area during 1997 and anticipates
drilling the first well in 1998. The Company owns a 40% working
interest in this area.
Algeria
The Company owns a 65% working interest in Blocks 405 and 215
and is the operator. Block 405, located in the eastern sector of
Algeria, comprises nearly 713,000 acres. Block 215, located 65
miles west of Block 405 and 71 miles south of the giant Hassi
Messaoud Field, comprises 840,000 acres. During 1996, the Company
drilled three successful exploratory wells on Block 405. The MLN-
1, completed in July, encountered 85 feet of net oil pay and flowed
15,850 barrels of oil per day and 61 million cubic feet of gas per
day. The MLN-2 delineation well to this accumulation was success-
fully completed in December. The well tested 3,400 barrels of oil
per day and achieved its objective of defining the western limits
of the field. A third well, the MLN-3, was spudded early in 1997
to delineate the eastern limits of the field, with results expected
in late spring. A fourth well is planned for later this year.
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Results from these wells will be used to finalize the plan of
development for this new field. Sonatrach, the national oil and
gas enterprise of Algeria, has the option to participate in the
development and production of commercial discoveries. The Company
is entitled to recover exploration costs out of production during
the exploitation phase.
During the third quarter, the Company drilled the MLNE-1 well
in the northeast sector of the block about 16 miles northeast of
the MLN Field to determine if recent discoveries on adjacent blocks
extended onto Block 405. The well encountered 167 feet of
hydrocarbon column and flowed 750 barrels of oil per day and 225
thousand cubic feet of gas per day, thus indicating that a portion
of the adjacent fields crossed onto Block 405. The Company
recently signed a unitization agreement outlining participation in
the development of this field, now referred to as the Quoubba
Field. As the next step, the Company will drill the MLNE-2, a
water injection well, during the second quarter of 1997. A plan of
development for the Quoubba Field is scheduled to be submitted to
the Algerian government prior to mid-1997.
Several additional exploratory prospects have been identified
for drilling on Block 405. At least one of these could be drilled
later this year. The Company's first exploratory well at Block
215, the ONE-1, is planned for the second quarter of 1997. The
Company will also complete acquisition of at least 530 miles of
seismic on Block 405.
Venezuela
In July 1996, the Company signed a concession agreement for
exploration rights in eastern Venezuela on the Delta Centro Block.
Under the terms of its work commitment, the Company will acquire
and process 3-D and 2-D seismic data over the area and drill three
exploratory wells over a five-year primary term with the option to
extend the exploratory period for an additional four years. This
highly prospective block, which has had nominal seismic coverage
and has not been drilled, consists of 526,000 acres in the Orinoco
River Delta. The area is on geologic trend with several recent oil
discoveries on blocks adjacent to Delta Centro. The Company's many
years of experience operating in the marshlands of south Louisiana
have already proven valuable in initiating exploration activity
over the area. The Company has recently begun acquisition of 350
square miles of 3-D seismic data over the southwestern portion of
the block and plans to acquire an additional 100 miles of 2-D data
elsewhere on the license. The first exploratory well should begin
drilling by early 1998. The Company owns a 35% working interest in
the block and is the operator.
Tunisia
Additional seismic data has been acquired over a prospective
portion of the Company's one million acre Ramla Block in the Gulf
of Gabes, offshore Tunisia. Encouraged that an initial well
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drilled on the block in 1995 confirmed the existence of an active
hydrocarbon system in the area, at least one exploratory well is
scheduled to be drilled in the area this year. The Company owns a
50% working interest in the block.
Other Areas
The Company's net production from the KAKAP Field, offshore
Indonesia, averaged 2,300 barrels of oil per day in 1996 and
additional development drilling is planned in 1997. A 3-D seismic
survey conducted over the area has yielded four additional
exploratory prospects that will also be drilled during 1997. Costs
to develop and produce additional reserves should be minimized by
utilizing the existing infrastructure in the complex.
An exploration well, the Susana #1, will be drilled in
Colombia on the Bambuco Association Contract in the second quarter
of 1997. The Company will operate the well and owns a 50% working
interest. The Company is currently seeking additional prospective
acreage in Colombia for future exploratory drilling.
In Papua New Guinea, the Company farmed out its interest in
Block PPL 155. The Company will not incur any additional seismic
costs or the costs of drilling the first well but will retain a 13%
working interest in the concession.
During the years 1994 through 1996, 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
1996 1995 1994 1996 1995 1994 1996 1995 1994
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LL&E and Subsidiaries:
Domestic:
Gulf of Mexico .6 - - 3.0 2.2 3.3 1.7 2.8 1.8
Louisiana 1.7 .9 1.2 1.7 3.3 1.7 4.3 .7 2.9
North Sea:
United Kingdom - - .1 - - - .1 - -
Other foreign:
Algeria 2.0 - - - - - - - -
Australia - - - - - - .3 - .3
Canada - .3 .5 - 1.3 5.3 - - 2.9
Colombia - - - - - - - - 1.0
Indonesia - .3 - - - - - - -
Tunisia - - - - - - - .5 -
Yemen - - - - - - .2 - .3
_______________________________________________________________________________________
Total 4.3 1.5 1.8 4.7 6.8 10.3 6.6 4.0 9.2
_______________________________________________________________________________________
CLAM (50%)
Netherlands-North Sea - - - - - - - .2 .2
_______________________________________________________________________________________
/TABLE
<PAGE>
<PAGE>
Royalty Interest
During 1996, 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 -
Louisiana 2 8 3
Netherlands - North Sea - - 1
_______________________________________________________________________________________
Total 2 9 4
_______________________________________________________________________________________
</TABLE>
DEVELOPMENT ACTIVITIES
Working Interest
Development of the Company's oil and gas properties in 1996
resulted in the expenditure of $72 million for participation in 29
wells and the installation of platforms and facilities in the
United States and overseas. Successful development drilling
resulted in 21 oil wells and 8 gas wells. In addition, almost $5
million was spent in the acquisition of additional working
interests in proved properties in the United States.
Gulf of Mexico
Two offshore production platforms were installed during 1996.
The South Pass 34/47 platform was installed in May of 1996 and
placed on production with peak field rates of 48 million cubic feet
of gas per day and 150 barrels of condensate per day. The Company
owns a 45% working interest in this field. The South Timbalier 229
platform was also set and production from this platform commenced
in July with rates of 40 million cubic feet of gas per day and
1,600 barrels of condensate per day. The Company has a 100%
interest in this field.
Rocky Mountains
In Wyoming, the Big Horn 4-36, the third deep well to the
Madison Formation below 24,000 feet, has recently completed
drilling. Two wells to this formation are currently producing a
total of over 50 million cubic feet of gas per day into the Lost
Cabin Gas Plant. After the removal of hydrogen sulfide and carbon
dioxide, residual gas sales average nearly 35 million cubic feet of
gas per day. Successful completion and testing of the Big Horn
4-36 will add significant proved reserves and lead to expansion of
the gas plant. The Company owns a 38% working interest in this
well.
<PAGE>
<PAGE>
In the shallower horizons of the Madden Field where production
does not require gas plant processing, the Company has implemented
a new initiative which utilizes 3-D seismic and shear wave
technology to identify higher productivity locations for infill
drilling. The Company has successfully drilled two such wells and
an additional six wells are planned for drilling this year.
Jay Field
At the Jay Field in Florida, the Company has played a key role
in maintaining strong production rates, reducing operating costs
and adding recoverable reserves. The Company increased its
ownership in this large, long-lived field during 1996 and currently
owns a 48.5% working interest.
North Sea
At T-Block in the North Sea, production was initiated from the
Thelma Fields in late 1996. The first three of five development
wells have been placed on production. Thelma production currently
totals 15,000 barrels of oil per day and is expected to rise to
25,000 barrels of oil per day after the remaining wells are placed
on production later this year. Production from Thelma will
mitigate the impact of natural declines from the existing T-Block
fields, Tiffany and Toni. The Company owns a 11.26% working
interest in the T-Block fields.
At the Brae complex, where the Company owns an average 6%
working interest, the Plan of Development for the West Brae Field
was approved by the U.K. government. This sixth Brae field
development will consist of subsea completions tied-back to the
South Brae platform. Three horizontal production wells and one
water injection well are planned to be drilled. Initial production
is expected in late 1997 and is expected to grow to 25,000 barrels
of oil per day in 1998. Additional volumes from West Brae will
mitigate the impact of natural declines at the existing Brae
fields.
In the Dutch sector of the North Sea, the Company participates
in natural gas exploration and production through its 50%-owned
affiliate, CLAM Petroleum Company. Due to a successful year of
drilling, CLAM added almost 38 billion cubic feet of reserves.
Production from CLAM rose 6% over last year's volumes. Further
development drilling is expected during 1997.
Other Areas
The Company's net production from the Casanare Association
Contract Area in Colombia averaged 1,300 barrels of oil per day in
1996. Continued development drilling is planned for the area in
1997.
<PAGE>
<PAGE>
During the years 1994 through 1996, 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
1996 1995 1994 1996 1995 1994 1996 1995 1994
_______________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LL&E and Subsidiaries:
Domestic:
Gulf of Mexico - .6 .8 2.5 1.5 2.3 - - -
Louisiana - - - .5 .9 - - - -
Wyoming .2 .2 - - - .7 - - -
North Sea:
Netherlands - .6 - - - .1 - - -
United Kingdom .6 .6 .2 - - - - - .1
Other foreign:
Colombia .4 .1 - - - .1 - - -
Indonesia 1.2 1.1 - - - - - - -
_______________________________________________________________________________________
Total 2.4 3.2 1.0 3.0 2.4 3.2 - - .1
_______________________________________________________________________________________
CLAM (50%)
Netherlands-North Sea - - - .2 .2 .1 - - -
_______________________________________________________________________________________
</TABLE>
Royalty Interest
During 1996, the following development wells were drilled by
others on LL&E's fee and leasehold acreage.
<TABLE>
<CAPTION>
Gross wells
Oil Gas Dry
_______________________________________________________________________________________
<S> <C> <C> <C>
Domestic:
Gulf of Mexico - 1 -
Louisiana 2 - -
_______________________________________________________________________________________
Total 2 1 -
_______________________________________________________________________________________
</TABLE>
<PAGE>
DRILLING ACTIVITIES AT DECEMBER 31, 1996
Working Interest
The table below sets forth the working interest wells in the
process of drilling at December 31, 1996 by LL&E and by CLAM.
<TABLE>
<CAPTION>
Wells drilling
Gross Net
_______________________________________________________________________________________
<S> <C> <C>
LL&E and Subsidiaries:
Domestic 19 7.0
North Sea 4 .4
Other foreign 2 .8
_______________________________________________________________________________________
Total 25 8.2
_______________________________________________________________________________________
CLAM (50%) Netherlands-North Sea 1 .1
_______________________________________________________________________________________
</TABLE>
Royalty Interest
Four domestic wells were being drilled by others at
December 31, 1996 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, 1996.
<TABLE>
<CAPTION>
Oil wells Gas wells
Gross Net Gross Net
_______________________________________________________________________________________
<S> <C> <C> <C> <C>
LL&E and Subsidiaries:
Domestic 1,377 132.2 300 104.0
North Sea 69 8.0 - -
Other foreign 55 8.0 - -
_______________________________________________________________________________________
Total 1,501 148.2 300 104.0
_______________________________________________________________________________________
CLAM (50%) Netherlands-North Sea - - 57 3.7
_______________________________________________________________________________________
</TABLE>
Oil wells include 28 dual completions and gas wells include 28
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, 1996.
<TABLE>
<CAPTION>
Gross wells
Oil Gas
_______________________________________________________________________________________
<S> <C> <C>
Domestic 564 277
_______________________________________________________________________________________
</TABLE>
Oil wells include 21 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
1994 through 1996 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>
1996 1995 1994
_______________________________________________________________________________________
<S> <C> <C> <C>
LL&E and Subsidiaries:
Domestic $3.64 3.95 3.97
North Sea 4.53 4.65 5.89
Other foreign 4.09 3.51 5.59
_______________________________________________________________________________________
CLAM
Netherlands-North Sea $4.50 4.39 2.36
_______________________________________________________________________________________
</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>
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 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 14 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 (62)
Chairman of the Board, President
and Chief Executive Officer since
November 1996. Chairman of the
Board and Chief Executive Officer
since September 1995. Chairman of
the Board, President and Chief
Executive Officer from 1989 to
1995.
Louis A. Raspino, Jr. (44)
Senior Vice President-Chief
Financial Officer since September
1995. Treasurer from 1992 to 1995.
John A. Williams (52) Senior Vice President-Exploration
and Production since September
1995. Vice President from 1988
to 1995.
Suzanne V. Baer (49) Vice President and Treasurer
since September 1995. Director-
Investor and Shareholder Relations
from 1988 to 1995.
Jerry D. Carlisle (51) Vice President and Controller
since 1984.
Robert J. Chebul (49) Vice President-Algeria since
January 1997. Vice President-New
Orleans Division from 1992 to
1997. Vice President-Oklahoma City
Division from 1991 to 1992.
William N. Hahne (45) Vice President-Worldwide Asset
Management since November 1996.
Vice President-Houston Division
from 1994 to 1996. General
Manager-Production from 1993 to
1994. Vice President to NERCO Oil
& Gas, Inc. from 1991 to 1993.
C. Scott Kirk (47)
Vice President-Production
Marketing since September 1995.
General Manager-Natural Gas
Marketing from 1989 to 1995.
John O. Lyles (51)
Vice President-Strategic Planning
since September 1995. Vice
President-Operational Support Team
from 1992 to 1995. Vice President
and Treasurer from 1984 to 1992.
<PAGE>
<PAGE>
Kevin J. McMichael (41)
Vice President-Domestic
Exploration since November 1996.
Held various managerial positions
in domestic exploration from 1988
to 1996.
James E. Orth (44)
Vice President-Acquisitions since
January 1997. Vice President-
Production from 1995 to 1996.
General Manager-Denver District
from 1991 to 1995.
Frederick J. Plaeger, II (43)
Vice President, General Counsel
and Corporate Secretary since
September 1995. General Counsel
and Corporate Secretary from 1992
to 1995.
James N. Wood, Jr. (48)
Vice President-Administration
since November 1996. General
Manager-Information Technology
from 1992 to 1996.
C. A. Zackary (52)
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:
Financial Statements:
Report of Management
Independent Auditors' Report
Consolidated Balance Sheets
Consolidated Statements of Earnings (Loss)
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Unaudited Supplemental Data:
Management's Discussion and Analysis
Data on Oil and Gas Activities
Oil and Gas Operating Data
Oil and Gas Properties
Wells Drilled
Selected Financial Data
Quarterly Data
Market Price and Dividend Data
The following financial statements of 50% or less owned persons
required by Regulation S-X, Rule 3-09, are included herein:
MaraLou Netherlands Partnership and its wholly owned
consolidated subsidiary, CLAM Petroleum Company:
Independent Auditors' Report
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Partners' Capital
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
<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 present-
ation 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, 1996 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, President 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, 1996 and 1995, 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, 1996.
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, 1996 and 1995, and the results of
their operations and their cash flows for each of the years in the
three-year period ended December 31, 1996, in conformity with
generally accepted accounting principles.
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 7, 1997<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
CONSOLIDATED BALANCE SHEETS The Louisiana Land and Exploration
Company and Subsidiaries
December 31, 1996 and 1995
(Millions of dollars)
ASSETS 1996 1995
_________________________________________________________________________________________
<S> <C> <C>
CURRENT ASSETS:
Cash, including cash equivalents (1996-$1.2; 1995-$1.0) $ 9.0 10.3
Accounts and notes receivable 150.7 143.8
Refinery inventories - 38.7
Prepaid expenses 10.7 12.9
Deferred income taxes .7 .9
_________________________________________________________________________________________
Total current assets 171.1 206.6
_________________________________________________________________________________________
Investments in affiliates 8.1 19.9
Net property, plant and equipment, at cost, under the
successful efforts method of accounting for oil
and gas properties 1,159.7 1,207.6
Other assets 25.9 33.6
_________________________________________________________________________________________
$ 1,364.8 1,467.7
_________________________________________________________________________________________
LIABILITIES AND STOCKHOLDERS' EQUITY
_________________________________________________________________________________________
CURRENT LIABILITIES:
Accounts payable and accrued expenses 138.9 199.8
Income taxes payable 9.4 .8
_________________________________________________________________________________________
Total current liabilities 148.3 200.6
_________________________________________________________________________________________
Deferred income taxes 78.4 49.6
Long-term debt 505.7 691.6
Other liabilities 157.8 155.2
STOCKHOLDERS' EQUITY:
Capital stock of $.15 par value. Authorized-100,000,000
shares; issued and outstanding: 1996-34,231,404 shares;
1995-33,490,180 shares 5.1 5.0
Additional paid-in capital 44.6 14.8
Retained earnings 424.9 352.8
_________________________________________________________________________________________
474.6 372.6
Loans to ESOP - (1.9)
_________________________________________________________________________________________
TOTAL STOCKHOLDERS' EQUITY 474.6 370.7
_________________________________________________________________________________________
$ 1,364.8 1,467.7
_________________________________________________________________________________________
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) The Louisiana Land and Exploration
Company and Subsidiaries
Years ended December 31, 1996, 1995 and 1994
(Millions, except per share data)
<CAPTION>
1996 1995 1994
_________________________________________________________________________________________
<S> <C> <C> <C>
REVENUES:
Oil and gas $ 597.0 464.7 421.2
Refined products 263.5 355.2 361.3
Gain on sales of petroleum assets 2.0 2.3 6.8
_________________________________________________________________________________________
862.5 822.2 789.3
_________________________________________________________________________________________
COSTS AND EXPENSES:
Lease operating and facility expenses 116.2 116.5 116.1
Refinery cost of sales and operating expenses 254.4 347.9 354.5
Dry holes and exploratory charges 106.1 68.3 69.7
Depletion, depreciation and amortization 178.0 161.8 202.2
Taxes, other than on earnings 23.6 23.6 25.4
Write-down of petroleum assets - - 319.0
General and administrative expenses 40.2 45.0 44.6
_________________________________________________________________________________________
718.5 763.1 1,131.5
_________________________________________________________________________________________
144.0 59.1 (342.2)
OTHER INCOME (EXPENSE):
Interest and debt expenses (34.5) (38.6) (25.6)
Reversal of litigation accrual - - 10.0
Other income (expense), net 10.2 8.3 12.2
_________________________________________________________________________________________
Earnings (loss) before income taxes 119.7 28.8 (345.6)
Income tax expense (benefit) 39.5 10.0 (118.7)
_________________________________________________________________________________________
NET EARNINGS (LOSS) $ 80.2 18.8 (226.9)
_________________________________________________________________________________________
EARNINGS (LOSS) PER SHARE $ 2.35 0.56 (6.80)
_________________________________________________________________________________________
AVERAGE SHARES 34.2 33.5 33.4
_________________________________________________________________________________________
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY The Louisiana Land and Exploration
Company and Subsidiaries
Years ended December 31, 1996, 1995 and 1994
(Millions of dollars, except per share data)
<CAPTION>
Capital Stock Additional
Shares Par paid-in Retained Loans to
Outstanding Value capital earnings ESOP Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Balance at 12/31/93 as
reported 38,004,537 $ 5.7 $ 82.9 $ 684.4 $ (8.8) $ 599.8
Reclass of treasury
stock (4,831,574) (0.7) (81.5) (82.2) - -
_________________________________________________________________________________________
Balance at December 31,
1993 33,172,963 5.0 1.4 602.2 (8.8) 599.8
Net loss - - - (226.9) - (226.9)
Cash dividends ($1.00
per share) - - - (33.3) - (33.3)
Repayment of loans to
ESOP - - - - 3.6 3.6
Other 206,845 - 9.2 - - 9.2
_________________________________________________________________________________________
Balance at December 31,
1994 33,379,808 5.0 10.6 342.0 (5.2) 352.4
Net earnings - - - 18.8 - 18.8
Cash dividends ($0.24
per share) - - - (8.0) - (8.0)
Repayment of loans to
ESOP - - - - 3.3 3.3
Other 110,372 - 4.2 - - 4.2
_________________________________________________________________________________________
Balance at December 31,
1995 33,490,180 5.0 14.8 352.8 (1.9) 370.7
Net earnings - - - 80.2 - 80.2
Cash dividends ($0.24
per share) - - - (8.1) - (8.1)
Repayment of loans to
ESOP - - - - 1.9 1.9
Other 741,224 .1 29.8 - - 29.9
_________________________________________________________________________________________
Balance at December 31,
1996 34,231,404 $ 5.1 $ 44.6 $ 424.9 $ - $ 474.6
_________________________________________________________________________________________
NOTE: Maryland law provides that repurchased stock of a corporation constitutes authorized
but unissued stock rather than treasury stock. Accordingly, effective January 1,
1994, the par value of treasury stock ($.7 million) has been reclassed as a
reduction of capital stock issued. The cost of treasury stock in excess of par
value has been charged to additional paid-in capital ($81.5 million), to the extent
available, and the balance ($82.2 million) has been charged to retained earnings.
All capital stock transactions subsequent to January 1, 1994 are reflected as either
issuances or retirements of capital stock. This change in the law had no effect on
total stockholders' equity.
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, 1996, 1995 and 1994
(Millions of dollars)
<CAPTION>
1996 1995 1994
_________________________________________________________________________________________
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 80.2 18.8 (226.9)
Adjustments to reconcile to cash flows from
operations:
Write-down of petroleum assets - - 319.0
Gain on sales of petroleum assets (2.0) (2.3) (6.8)
Depletion, depreciation and amortization 178.0 161.8 202.2
Deferred income taxes 29.0 11.3 (111.2)
Dry holes and impairment charges 69.5 41.2 36.4
Other 12.6 6.3 2.2
_________________________________________________________________________________________
367.3 237.1 214.9
Changes in operating assets and liabilities,
net of dispositions:
Net increase in receivables (42.5) (19.7) (9.0)
Net increase in refinery inventories (4.1) (6.9) (5.0)
Net (increase) decrease in prepaid items .2 (4.0) 3.8
Net increase in payables 3.3 11.8 .7
Other (5.8) 2.2 6.7
_________________________________________________________________________________________
Net cash flows from operating activities 318.4 220.5 212.1
_________________________________________________________________________________________
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (224.1) (191.0) (236.8)
Proceeds from asset sales 71.6 21.3 15.6
Other (10.4) (4.3) (16.3)
_________________________________________________________________________________________
Net cash flows from investing activities (162.9) (174.0) (237.5)
_________________________________________________________________________________________
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term debt - 28.0 239.7
Repayments of long-term debt (185.9) (75.9) (234.7)
Dividends (8.1) (8.0) (33.3)
Advances against cash surrender value 20.0 9.0 34.4
Repayment of loans to ESOP 1.9 3.3 3.6
Other 15.3 (5.1) (5.1)
_________________________________________________________________________________________
Net cash flows from financing activities (156.8) (48.7) 4.6
_________________________________________________________________________________________
Decrease in cash and cash equivalents $ (1.3) (2.2) (20.8)
_________________________________________________________________________________________
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<PAGE>
_________________________________________________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Louisiana Land
and Exploration
Company and
Subsidiaries
December 31, 1996, 1995 and 1994
_________________________________________________________________
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
on exploratory projects 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.
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.
Financial Instruments and Hedging Activities
The Company's anticipated hydrocarbon transactions are periodically
hedged against market risks through the use of various derivative
financial instruments. To qualify as a hedge, these instruments
must correlate to anticipated future production such that the
Company's exposure to the effects of commodity price changes is
reduced. 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 on existing debt
obligations 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. The Company initially recognizes
deferred tax assets and liabilities for (i) differences between the
financial statement carrying amounts and tax bases of assets and
liabilities that will result in future deductible or taxable
amounts and (ii) for operating loss carryforwards. A valuation
allowance is established to reduce the deferred tax asset if it is
more likely than not that the related tax benefits will not be
realized.
Stock-based Compensation
The Company uses the intrinsic value based method of accounting for
stock-based compensation as prescribed by the Accounting Principles
Board's Opinion No. 25, "Accounting for Stock Issued to Employees."
<PAGE>
<PAGE>
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.
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. Asset Dispositions
On July 31, 1996, the Company completed the sale of its crude oil
refinery and terminal near Mobile, Alabama, including crude oil and
refined product inventories, for approximately $70 million
resulting in a gain of approximately $2 million. The net book
value of refinery property, plant and equipment at that date
totaled approximately $33 million. The following table sets forth
the refinery operating profit (loss) for the periods indicated.
<TABLE>
<CAPTION>
Seven months Years ended
ended July 31, December 31,
(Millions of dollars) 1996 1995 1994
________________________________________________________________________________________
<S> <C> <C> <C>
Revenues:
Refined products* $ 280.4 383.2 386.1
Other .3 .3 2.1
________________________________________________________________________________________
280.7 383.5 388.2
________________________________________________________________________________________
Costs and expenses:
Cost of sales* 244.7 337.8 340.1
Operating expenses 26.6 38.1 39.2
Depreciation 1.1 1.8 3.3
Taxes, other than income .9 3.2 3.5
Write-down of refinery assets - - 39.0
________________________________________________________________________________________
273.3 380.9 425.1
________________________________________________________________________________________
$ 7.4 2.6 (36.9)
________________________________________________________________________________________
* Before elimination of intercompany
transfers $ 16.9 28.0 24.8
________________________________________________________________________________________
</TABLE>
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).
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.
<PAGE>
<PAGE>
5. Nonrecurring Credit
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. Investments in Affiliates
<TABLE>
<CAPTION>
Investment
% (Millions of dollars)
Investee Industry Location Owned 1996 1995
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
MaraLou (CLAM
Petroleum Oil &
Company) Gas North Sea 50% $ 4.0 14.7
Other Various U.S. Various 4.1 5.2
_________________________________________________________________________________________
$ 8.1 19.9
_________________________________________________________________________________________
</TABLE>
The Company's equity in earnings of affiliates, which is included
in "Other income (expense), net" in the accompanying Consolidated
Statements of Earnings (Loss), amounted to $9.3 million, $5.8
million and $4.2 million in 1996, 1995 and 1994, respectively.
Cash dividends received from MaraLou/CLAM in 1996, 1995 and 1994
totaled $20 million, $10 million and $6 million, respectively.
The consolidated financial position of MaraLou and its wholly owned
subsidiary, CLAM, as of December 31, 1996 and 1995 and the results
of their operations for each of the years in the three-year period
ended December 31, 1996 are summarized below.
<TABLE>
<CAPTION>
(Millions of dollars) 1996 1995
_________________________________________________________________________________________
<S> <C> <C>
Current assets $ 35.4 28.6
_________________________________________________________________________________________
Noncurrent assets 140.3 167.5
_________________________________________________________________________________________
Current liabilities 24.6 18.4
_________________________________________________________________________________________
Noncurrent liabilities 143.3 148.3
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
(Millions of dollars) 1996 1995 1994
_________________________________________________________________________________________
<S> <C> <C> <C>
Gross revenues $ 97.0 85.8 68.7
_________________________________________________________________________________________
Operating profit 49.7 31.1 36.2
_________________________________________________________________________________________
Net earnings 18.5 11.6 8.2
_________________________________________________________________________________________
</TABLE>
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.
7. Property, Plant and Equipment
<TABLE>
<CAPTION>
(Millions of dollars) 1996 1995
_________________________________________________________________________________________
<S> <C> <C>
Petroleum properties:
Proved $2,781.8 2,693.3
Unproved 136.6 82.7
Refining and marketing 113.3 278.2
_________________________________________________________________________________________
3,031.7 3,054.2
Other properties 68.9 66.7
_________________________________________________________________________________________
3,100.6 3,120.9
Less accumulated depletion, depreciation and amortization 1,940.9 1,913.3
_________________________________________________________________________________________
$1,159.7 1,207.6
_________________________________________________________________________________________
</TABLE>
8. Financial Instruments and Hedging Activities
The Company uses derivative financial instruments to manage well-
defined interest rate and commodity price risks and does not use
them for speculative purposes.
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 $412 million
and $423 million at December 31, 1996 and 1995, 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, 1996 and 1995, resulting in an unrealized loss of $12 million
and an unrealized loss of $23 million for the respective periods.
The Company's commodity price hedging program is 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
<PAGE>
<PAGE>
the Company to participate in market price increases above a set
level over the floor price and outside of specific ranges. At
December 31, 1996, approximately 93 trillion BTU of domestic
natural gas production for 1997 were covered by a series of
transactions designed to set an average floor price of $1.84 per
million BTU with the Company's nonparticipation in market price
increases above the floor price limited to $0.18 per million BTU.
For 1998, approximately 50 trillion BTU of domestic natural gas
were similarly hedged at an average floor price of $1.76 per
million BTU with the Company's nonparticipation in market price
increases above the floor price limited to $0.20 per million BTU.
While these transactions have nominal carrying values, their fair
value, represented by the estimated amount that would be required
to terminate the contracts, were a net benefit of $3.2 million for
the 1997 hedges and a net benefit of $2.7 million for the 1998
hedges. (The Company estimates that its domestic natural gas
production averages approximately 1.07 million BTU for each
thousand cubic feet.) In addition, approximately 1.8 million
barrels of the Company's worldwide crude oil production for 1997
were similarly hedged at an average floor price of $20.01 per
barrel with the Company's nonparticipation in market price
increases above the floor price limited to $2.32 per barrel. These
transactions also have nominal carrying values, but their fair
value at December 31, 1996 amounted to a net cost of $0.3 million.
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 or 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.
9. Long-term Debt
<TABLE>
<CAPTION>
(Millions of dollars) 1996 1995
_________________________________________________________________________________________
<S> <C> <C>
Revolving Credit Facility $ - 92.0
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 104.8 198.6
Other issues .9 1.0
_________________________________________________________________________________________
Total long-term debt $505.7 691.6
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
Debt maturities for the years 1997 through 2000 are less than $.1
million each year with maturities of $104.9 million in the year
2001.
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. In June 1996, the Company amended the reducing
revolving loan to reduce the banks' commitments to $350 million,
extend the maturity one year to June 30, 2001, reduce interest
rates and fees and improve other terms and conditions favorable to
the Company. Borrowings under the facilities in 1996 and 1995 were
at average interest rates of 6.2% and 6.5%, respectively. Fees
ranging from .10% to .25% based upon debt ratings are charged on
the facility.
In June 1992, the Company registered under the Securities and
Exchange Commission's shelf registration rules $300 million of
senior unsecured debt securities to be issued from time to time on
terms to be then determined. In June 1992, the Company sold $100
million of 8-1/4% Notes due 2002. In April 1993, the Company
completed its second $100 million public offering of debt
securities under the existing shelf registration filed in 1992 with
the issuance of 7-5/8% Debentures due 2013. In November 1993, the
Company registered up to $500 million of senior unsecured debt
securities under the Securities and Exchange Commission's shelf
registration rules, which included the $100 million available under
the shelf registration filed in 1992. In December 1993, the
Company completed a $200 million public offering with the issuance
of 7.65% Debentures due 2023. In November, 1996, the Company
registered up to $500 million of securities under the Securities
and Exchange Commission's shelf registration rules, which included
the $300 million available under the shelf registration filed in
1993.
During 1996, the average monthly balance of commercial paper notes
outstanding was $189 million; the maximum amount outstanding during
that period was $296 million. Commercial paper borrowings during
1996 and 1995 were at average interest rates of 5.5% and 6.1%,
respectively. The commercial paper program is supported by the
unused portion of the aforementioned revolving credit facility.
<PAGE>
<PAGE>
10. Interest and Debt Expenses
For the years ended December 31, 1996, 1995 and 1994, interest
costs incurred, which were essentially the same as interest
payments, were $45.6 million, $54.3 million and $47.9 million,
respectively, of which $11.1 million, $15.7 million and $22.3
million, respectively, were capitalized as part of the cost of
property, plant and equipment.
11. Income Taxes
The components of earnings (loss) before income taxes were taxed
under the following jurisdictions:
<TABLE>
<CAPTION>
(Millions of dollars) 1996 1995 1994
_________________________________________________________________________________________
<S> <C> <C> <C>
Domestic $ 93.1 (16.7) (322.0)
Foreign 26.6 45.5 (23.6)
_________________________________________________________________________________________
$ 119.7 28.8 (345.6)
_________________________________________________________________________________________
</TABLE>
Components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
(Millions of dollars) 1996 1995 1994
_________________________________________________________________________________________
<S> <C> <C> <C>
Current tax expense (benefit):
Federal $ 5.2 1.1 (3.5)
State 5.0 .2 (.7)
Foreign (4.0) (2.6) (3.3)
_________________________________________________________________________________________
6.2 (1.3) (7.5)
_________________________________________________________________________________________
Deferred tax expense (benefit):
Federal 28.6 10.2 (109.2)
Foreign 4.7 1.1 (2.0)
_________________________________________________________________________________________
33.3 11.3 (111.2)
_________________________________________________________________________________________
$ 39.5 10.0 (118.7)
_________________________________________________________________________________________
</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) 1996 1995 1994
_________________________________________________________________________________________
<S> <C> <C> <C>
Computed "expected" tax expense (benefit) $ 41.9 10.1 (121.0)
Increases (reductions) in taxes resulting from:
Equity in earnings of foreign affiliates (6.3) (4.3) 4.5
Foreign income taxes, net of Federal income tax
benefit .1 4.5 (2.0)
Employee benefit plans (1.8) (1.8) (1.1)
Percentage depletion (.2) (.2) (.2)
Other 5.8 1.7 1.1
_________________________________________________________________________________________
$ 39.5 10.0 (118.7)
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
Total income tax expense (benefit) was allocated as follows:
<TABLE>
<CAPTION>
(Millions of dollars) 1996 1995 1994
_________________________________________________________________________________________
<S> <C> <C> <C>
Income (loss) before extraordinary item and
changes in accounting principles $ 39.5 10.0 (118.7)
Stockholders' equity for compensation expense for
tax purposes in excess of amount recognized for
financial reporting purposes (4.4) (.2) (1.0)
_________________________________________________________________________________________
$ 35.1 9.8 (119.7)
_________________________________________________________________________________________
</TABLE>
The significant components of income tax expense (benefit) attri-
butable to income from continuing operations are as follows:
<TABLE>
<CAPTION>
(Millions of dollars) 1996 1995 1994
_________________________________________________________________________________________
<S> <C> <C> <C>
Current tax expense (benefit) $ 6.2 (1.3) (7.5)
Deferred tax expense (benefit) (exclusive of
the effects of other components listed below) 33.3 11.3 (2.5)
Deferred tax benefits related to write-down of
petroleum assets - - (108.7)
_________________________________________________________________________________________
$ 39.5 10.0 (118.7)
_________________________________________________________________________________________
</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) 1996 1995 1994
_________________________________________________________________________________________
<S> <C> <C> <C>
Deferred tax assets:
Deferred foreign tax credits $ 60.6 42.5 32.3
Foreign tax credit carryforwards 4.1 6.5 11.7
Federal net operating loss carryforwards 13.5 44.0 36.4
Alternative minimum tax credit carryforwards 8.2 2.1 1.9
Employee benefits 16.9 16.0 19.0
Other 11.6 10.9 10.3
_________________________________________________________________________________________
Total gross deferred tax assets 114.9 122.0 111.6
Less valuation allowance (34.3) (31.9) (28.3)
_________________________________________________________________________________________
Net deferred tax assets 80.6 90.1 83.3
_________________________________________________________________________________________
(continued)
<PAGE>
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
(Millions of dollars) 1996 1995 1994
_________________________________________________________________________________________
<S> <C> <C> <C>
Deferred tax liabilities:
Property, plant and equipment, principally due
to differences in depreciation and capitalized
interest (141.3) (114.4) (90.7)
Other (17.0) (24.4) (30.0)
_________________________________________________________________________________________
Total gross deferred tax liabilities (158.3) (138.8) (120.7)
_________________________________________________________________________________________
$ (77.7) (48.7) (37.4)
_________________________________________________________________________________________
</TABLE>
The net changes in the valuation allowance for the years ended
December 31, 1996, 1995 and 1994 were increases of $2.4 million,
$3.6 million and $10.5 million, respectively. These changes were
made to provide for uncertainties surrounding the realization of
certain foreign tax credits and 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, 1996, 1995 and 1994, the Company's
net cash payments (refunds) of income taxes totaled $4.4 million,
$.7 million and $(1.1) million, respectively.
At December 31, 1996, the Company has foreign tax credit
carryforwards for Federal income tax purposes of $4.1 million which
are available through 1998 to offset future Federal income taxes,
if any. The Company has Federal net operating loss carryforwards
totaling $38.7 million which are available to offset future Federal
taxable income through 2012. The Company also has alternative
minimum tax credit carryforwards of $8.2 million which are
available to reduce Federal regular income taxes, if any, over an
indefinite period.
12. 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. Funding
requirements for the years ended December 31, 1996 and 1995
amounted to $5.1 million and $5.6 million, respectively.
<PAGE>
<PAGE>
As a result of the sale of the Company's refinery, the eligible
employees there retired resulting in a distribution from plan
assets amounting to $6.4 million and the deferral of an actuarial
gain of $1.0 million. The settlement of the obligations resulted
in the recognition of the previously unrecognized losses/assets
resulting in a net loss of $1.6 million which was included in the
calculation of the gain on the sale of the refinery.
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) 1996 1995
_________________________________________________________________________________________
<S> <C> <C>
Accumulated benefit obligation, including vested benefits
of $22.3 and $24.3 $ 22.8 24.9
_________________________________________________________________________________________
Projected benefit obligation (32.3) (37.2)
Plan assets at fair market value 25.1 23.8
_________________________________________________________________________________________
Plan assets under projected benefit obligation (7.2) (13.4)
Additional minimum liability - (1.1)
Unrecognized net loss from past experience different
from that assumed and effects of changes in assumptions 7.7 13.4
Unrecognized net asset being recognized over 15 years (.4) (.8)
_________________________________________________________________________________________
Prepaid (accrued) pension cost $ .1 (1.9)
_________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
(Millions of dollars) 1996 1995 1994
_________________________________________________________________________________________
<S> <C> <C> <C>
Service cost $ 3.6 2.5 3.4
Interest cost 2.3 2.0 2.0
Actual (gain) loss on plan assets (4.3) (5.0) .4
Net amortization and deferral 2.7 3.7 (1.1)
_________________________________________________________________________________________
Net pension expense $ 4.3 3.2 4.7
_________________________________________________________________________________________
Discount rate 7-1/2% 7-1/4% 8%
_________________________________________________________________________________________
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. As
a result of the aforementioned refinery sale, the curtailment of
the benefits of eligible employees resulted in an actuarial gain of
$1.4 million which was applied against the previously unrecognized
net loss.
<PAGE>
<PAGE>
The postretirement benefit plans are unfunded and the Company funds
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>
<CAPTION>
(Millions of dollars) 1996 1995
_________________________________________________________________________________________
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ (22.2) (21.8)
Employees eligible to retire (3.8) (3.4)
Other employees (5.1) (5.6)
_________________________________________________________________________________________
(31.1) (30.8)
Unrecognized net loss 2.3 3.1
_________________________________________________________________________________________
Accrued postretirement benefit cost $ (28.8) (27.7)
_________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
(Millions of dollars) 1996 1995 1994
_________________________________________________________________________________________
<S> <C> <C> <C>
Service cost $ 1.3 1.1 1.3
Interest cost 2.3 2.2 2.1
_________________________________________________________________________________________
Net postretirement benefit cost $ 3.6 3.3 3.4
_________________________________________________________________________________________
</TABLE>
Assumptions utilized to measure the accumulated postretirement
obligation at December 31, 1996 and 1995 were: discount rates of
7-1/2% and 7-1/4%, respectively; health care cost trend rates of:
1996 - 8% declining to 4% in the year 2002; 1995 - 9% 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, 1996
and 1995 of $2.7 million and $2.7 million, respectively; the
aggregate of service cost and interest cost for the years ended
December 31, 1996 and 1995 would have increased by $.5 million and
$.5 million, respectively.
13. Capital Stock, Options and Rights
Under the 1988 Long Term Stock Incentive Plan (the Employee 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. Under the 1990 and 1995
Stock Option Plans for Non-Employee Directors (the Non-Employee
Plans), the Company may grant stock options to non-employee
directors for up to 247,500 shares of the Company's capital stock.
As prescribed by the plans, the stock options are exercisable at
the market price of the Company's capital stock on the date of
grant and vest 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.
<PAGE>
<PAGE>
A summary of the status of stock options granted under the Employee
Plan and the Non-Employee Plans is presented below for the periods
indicated.
<TABLE>
<CAPTION>
1996 1995 1994
Number Weighted Number Weighted Number Weighted
of average of average of average
shares price shares price shares price
__________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of year 1,921,567 $ 36.18 1,545,517 $ 36.17 1,493,892 $ 35.46
Granted 305,300 45.05 467,700 35.65 272,600 36.55
Exercised (819,406) 36.08 (79,750) 32.69 (204,375) 31.04
Cancelled (24,900) 39.36 (11,900) 38.84 (16,600) 41.06
__________________________________________________________________________________________
Outstanding at end of
year 1,382,561 $ 38.12 1,921,567 $ 36.18 1,545,517 $ 36.17
__________________________________________________________________________________________
Exercisable at end of
year 875,186 $ 36.25 1,362,317 $ 36.32 1,152,967 $ 35.12
__________________________________________________________________________________________
Available for future
grants 284,379 - 587,686 - 919,372 -
__________________________________________________________________________________________
</TABLE>
A summary of information about stock options outstanding at
December 31, 1996 is presented below:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
Range of Remaining Weighted Weighted
exercise contrac- average average
prices Shares tual life price Shares price
__________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
$29 - 38 764,661 6.2 years $ 33.63 559,986 $ 32.88
$39 - 47 518,400 6.7 years $ 42.14 315,200 $ 42.39
$48 - 53 99,500 9.4 years $ 51.86 - -
__________________________________________________________________________________________
</TABLE>
The restricted stock and performance shares awarded under the
Employee 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 1996, 1995 and
1994, awards were granted for 10,700 shares, 11,000 shares and
9,000 shares, respectively. During those same years, 16,414
shares, 16,088 shares and 12,081 shares, respectively, were re-
<PAGE>
<PAGE>
leased to grantees. In order for unrestricted performance shares
to be released to the grantee, the Company must attain certain
performance goals by the end of a three-year performance cycle
which begins with the year of the award. Awards granted in 1996,
1995 and 1994 amounted to 19,000 shares, 29,700 shares and 19,500
shares, respectively. During those same years, performance shares
released to grantees amounted to 11,273 shares, 16,228 shares and
10,496 shares, respectively. The weighted average grant date fair
value of restricted stock and performance share awards in 1996,
1995 and 1994, based on the market value of the Company's capital
stock on the date of the awards, were $42.47, $35.56 and $37.32,
respectively.
The Company accounts for its stock-based compensation plans under
the principles prescribed by the Accounting Principles Board's
Opinion No. 25, "Accounting for Stock Issued to Employees" (Opinion
No. 25). Accordingly, stock options awarded under the Employee
Plan and the Non-Employee Plans are considered to be "non-
compensatory" and do not result in the recognition of compensation
expense. However, the restricted stock and performance shares
awarded under the Employee Plan are considered to be "compensatory"
and the Company recognized compensation expense in 1996, 1995 and
1994 of $1.3 million, $1.2 million and $1 million, respectively.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation," (SFAS No. 123), which encouraged the
use of a fair value based method of accounting for compensation
expense associated with stock option and similar plans. However,
SFAS No. 123 permits the continued use of the intrinsic value based
method prescribed by Opinion No. 25 but requires additional
disclosures, including pro forma calculations of net earnings and
earnings per share as if the fair value method of accounting
prescribed by SFAS No. 123 had been applied in 1996 and 1995. The
pro forma data presented below is not representative of the effects
on reported amounts for future years because SFAS No. 123 does not
apply to awards prior to 1995 and additional awards are expected in
the future.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
As Reported Pro Forma
1996 1995 1996 1995
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
Net earnings $ 80.2 18.8 78.2 17.7
_________________________________________________________________________________________
Earnings per share $ 2.35 0.56 2.29 0.53
_________________________________________________________________________________________
Average shares outstanding 34.2 33.5 34.2 33.5
_________________________________________________________________________________________
Average fair value of grants
during the year $ 14.00 10.37
_________________________________________________________________________________________
Black-Scholes option pricing
model assumptions:
Risk-free interest rate 5.9-6.1% 5.6-5.9%
Expected life (years) 3 - 4 3 - 4
Volatility 22.2% 22.3%
Dividend yield .52% .64%
_________________________________________________________________________________________
</TABLE>
In 1986, the Company's Board of Directors declared a dividend to
shareholders consisting of one Capital Stock Purchase Right on each
outstanding share of capital stock which was intended to cause
substantial ownership dilution to a person or group attempting to
acquire the Company without approval of the Company's Board of
Directors. A right would also be issued with each share of capital
stock that became outstanding prior to the time the rights become
exercisable or expired. Prior to the expiration of the rights in
June 1996, the Company's Board of Directors extended the term of
the rights to June 2006 and approved amendments to and restated the
rights.
Under the amendments, 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, each right becomes exercisable ten days
thereafter and entitles its holder to purchase one share of capital
stock for $175. If the Company is acquired in a business
combination transaction, each right not owned by the 20% holder
entitles its holder to purchase for $175 common shares of the
acquiring company having a market value of $350. Alternatively, if
a 20% holder were to acquire the Company through a reverse merger
in which the Company and its capital stock survive or were to
engage in certain "self-dealing" transactions, each right not owned
by the acquiring person would entitle its holder to purchase for
$175 capital stock of the Company having a market value of $350.
Each right can be redeemed by the Company for $.01, subject to the
occurrence of certain events and other restrictions. The rights
should not interfere with a business combination transaction that
has been approved by the Board of Directors.
<PAGE>
<PAGE>
14. 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>
15. Petroleum Segment Information*
<CAPTION>
(Millions of dollars) 1996 1995 1994
_________________________________________________________________________________________
<S> <C> <C> <C>
Sales to unaffiliated customers:
Domestic $ 697.3 662.0 678.1
North Sea 141.6 133.9 92.9
Other foreign 23.6 26.3 18.3
_________________________________________________________________________________________
Total revenues $ 862.5 822.2 789.3
_________________________________________________________________________________________
Earnings (loss) before income taxes:
Operating profit (loss):
Domestic 160.0 95.5 (262.3)
North Sea 47.6 33.8 5.5
Other foreign (13.5) (15.9) (30.7)
_________________________________________________________________________________________
194.1 113.4 (287.5)
Other income (expense), net (74.4) (84.6) (58.1)
_________________________________________________________________________________________
Earnings (loss) before income taxes $ 119.7 28.8 (345.6)
_________________________________________________________________________________________
Identifiable industry assets:
Domestic 756.0 824.0 793.9
North Sea 468.3 495.6 518.8
Other foreign 85.7 78.5 92.6
_________________________________________________________________________________________
1,310.0 1,398.1 1,405.3
Other assets 56.1 69.6 72.8
_________________________________________________________________________________________
Total assets $1,366.1 1,467.7 1,478.1
_________________________________________________________________________________________
Depletion, depreciation and amortization:
Petroleum 171.6 156.1 196.7
Other 6.4 5.7 5.5
_________________________________________________________________________________________
$ 178.0 161.8 202.2
_________________________________________________________________________________________
Capital expenditures:
Exploration:
Domestic 114.8 51.8 55.3
North Sea 1.4 .4 1.6
Other foreign 20.2 14.1 16.5
_________________________________________________________________________________________
136.4 66.3 73.4
_________________________________________________________________________________________
Development:
Domestic 53.8 69.5 75.4
North Sea 14.2 16.9 18.2
Other foreign 9.0 11.2 16.0
_________________________________________________________________________________________
77.0 97.6 109.6
_________________________________________________________________________________________
Refining and marketing 2.5 3.5 31.1
_________________________________________________________________________________________
215.9 167.4 214.1
Capitalized interest 11.1 15.7 22.3
Other 2.9 4.2 3.8
_________________________________________________________________________________________
$ 229.9 187.3 240.2
_________________________________________________________________________________________
* Includes nonrecurring charges/credits as follows:
1996 - see Note 3.
1995 - see Note 3.
1994 - see Notes 2, 3 and 5.
/TABLE
<PAGE>
<PAGE>
_________________________________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS
_________________________________________________________________
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
Statements, other than historical facts, contained in this
Annual Report on Form 10-K, including statements of estimated oil
and gas production and reserves, drilling plans, future cash flows,
anticipated capital expenditures and Management's strategies, plans
and objectives, are "forward looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Although the Company believes that its forward looking statements
are based on reasonable assumptions, it cautions that such
statements are subject to a wide range of risks and uncertainties
incident to the exploration for, acquisition, development and
marketing of oil and gas, and it can give no assurance that its
estimates and expectations will be realized. Important factors
that could cause actual results to differ materially from the
forward looking statements include, but are not limited to, changes
in production volumes, worldwide demand, and commodity prices for
petroleum natural resources; the timing and extent of the Company's
success in discovering, acquiring, developing and producing oil and
gas reserves; risks incident to the drilling and operation of oil
and gas wells; future production and development costs; the effect
of existing and future laws, governmental regulations and the
political and economic climate of the United States and foreign
countries in which the Company operates; the effect of hedging
activities; and conditions in the capital markets. Other risk
factors are discussed elsewhere in this Form 10-K, including those
risk factors described under the headings "General", "Sales" and
"Environmental Matters."
REVIEW OF OPERATIONS (1996 vs 1995)
The Company reported net earnings of $80.2 million in 1996, a
significant improvement over net earnings of $18.8 million reported
in 1995. This increase in net earnings was primarily attributable
to higher oil and gas revenues, improved refining operating profits
for the seven months prior to its sale and continued cost controls.
Oil and Gas Operations
Revenues from oil and gas operations were up $132 million from
1995. Natural gas revenues were up $111 million due to increased
domestic and North Sea deliveries ($30 million) and the effect of
higher prices ($81 million). Liquids revenues were up over $19
million due to higher crude oil prices ($36 million) which was
partially offset by the impact of lower volumes ($17 million). <PAGE>
<PAGE>
Natural gas deliveries were up 47 million cubic feet per day
(MMCFD) in 1996. Domestic deliveries contributed almost 42 MMCFD
due to new wells onstream in south Louisiana and the Gulf of Mexico
and increased production from the Madden Field in Wyoming. North
Sea volumes were also up 4 MMCFD as a result of increased
deliveries through the SAGE Pipeline System. All of these
increases were net of natural declines at mature producing
properties.
Crude oil production declined almost 3,000 barrels per day
(BPD) in 1996 due primarily to natural declines at mature producing
properties. Domestic production was up almost 400 BPD as volumes
from new wells coming onstream more than offset the effects of
natural declines. However, North Sea volumes fell almost 2,000 BPD
due to natural declines at older fields combined with a late-summer
shutdown of the Tiffany and Toni fields at T-Block during the tie-
in of the Thelma Field. Volumes from other foreign operations
declined almost 1,400 BPD primarily as the result of natural
declines at the KAKAP Concession, offshore Indonesia.
Lease operating and facilities expenses were unchanged for the
second year in a row as cost-control efforts resulted in reduced
operating costs on new and existing properties which more than
offset higher workover, maintenance and facilities expenses.
Higher depletion, depreciation and amortization in 1996 was mainly
due to new wells coming onstream. Dry holes and exploratory
charges increased significantly due primarily to the Company's
expanded exploration program in 1996. The Company's cost-control
efforts in 1996 are also reflected in the decline in general,
administrative and other expenses. Lower interest and debt
expenses in 1996 reflect the sizable reduction in long-term debt,
although partially offset by the decline in interest capitalizable
to qualifying projects.
Refining Operations
Prior to the sale in July, the refinery generated pretax
profits of $7.4 million as compared to the $2.6 million generated
for all of 1995. The seven-month sales period of 1996 was very
favorable as daily sales volumes averaged over 10,000 barrels
higher and at 10% higher profit margins than that realized in 1995.
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.
<PAGE>
<PAGE>
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
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
<PAGE>
<PAGE>
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).
LIQUIDITY AND CAPITAL RESOURCES
In 1996, the Company generated approximately $318 million in
cash from operations which, along with proceeds from asset sales
($72 million), advances against cash surrender values of life
insurance policies ($20 million) and available cash, was utilized
for capital projects ($224 million), repayment of long-term debt
($186 million) and dividends ($8 million).
As discussed in Note 3, in July the Company completed the sale
of its crude oil refinery, including crude oil and refined product
inventories, for approximately $70 million resulting in a gain of
approximately $2 million.
The Company expects that its 1997 capital and exploration
program, presently estimated at approximately $240 million, will be
financed substantially by internally generated funds. The
Company's expenditures are continually reviewed, and revised as
necessary, based on perceived current and long-term economic
conditions.
As discussed in Note 9, in June the Company amended its
reducing revolving loan with a group of banks to reduce the banks'
commitments to $350 million, extend the maturity one year to June
30, 2001 and improve other terms and conditions favorable to the
Company. In addition, in November the Company registered up to
$500 million of securities under the Securities and Exchange
Commission's shelf registration rules. <PAGE>
<PAGE>
As explained in Note 14, 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 8, the Company uses derivative financial
instruments to manage commodity price risks but does not use them
for speculative purposes. In 1995, the Company implemented a risk
management program to reduce exposure to commodity price volatility
below strategic price levels desired for the Company to
aggressively pursue its capital and exploration programs. In
contrast to a common industry risk management practice of reducing
commodity price volatility through the use of fixed price forward
sales contracts, the Company's risk management strategy has been to
establish floor prices and allow the Company to fully participate
in commodity prices above a modest non-participation range. As a
result, the Company participated in the highest natural gas prices
since the inception of trading of natural gas futures on the New
York Mercantile Exchange and the highest crude oil prices since the
Persian Gulf War. Although revenues would have been higher in 1996
(natural gas-$15.7 million or $0.12 per MCF and crude oil-$14.5
million or $0.99 per barrel) without the non-participation range,
the Company believes the alternative would have involved the use of
fixed price forward sales contracts. The use of such contracts
could, and likely would, have resulted in locking-in prices lower
than actual realized prices, and, thus, would have negatively
affected revenues by more than the aforementioned amounts. In
1995, the Company's risk management strategy resulted in higher
natural gas revenues ($5.1 million or $0.04 per MCF).
CAPITAL STOCK, DIVIDENDS AND OTHER MARKET DATA
The Company's capital stock is listed and traded on the New
York Stock Exchange, the London Stock Exchange and the Swiss Stock
Exchanges (Basle, Geneva and Zurich). As of February 28, 1997,
there were 6,099 holders of record. The quarterly market prices
for the past two years and the cash dividends paid in each period
are presented herein under the heading "Market Price and Dividend
Data."
As discussed in Note 13, 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.
<PAGE>
<PAGE>
As discussed in Note 13, the Company has reserved 1,666,940
shares of its capital stock for future grants and exercises of
stock options.
In February 1997, the Company's Board of Directors authorized
the repurchase of up to two million shares of the Company's capital
stock.
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, 1996.
<TABLE>
<CAPTION>
Liquids (Millions of barrels)
North Other
Domestic Sea CLAM Foreign Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
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
Revisions of previous estimates 11.1 (.1) - (.3) 10.7
Purchase of reserves in place 2.0 - - - 2.0
Extensions, discoveries and
other additions 6.2 2.2 - .1 8.5
Production (8.6) (5.9) - (1.3) (15.8)
_________________________________________________________________________________________
Proved reserves at December 31, 1996 71.4 24.2 .3 6.3 102.2
_________________________________________________________________________________________
Proved-developed reserves at December 31,
1994 48.1 32.7 .2 4.4 85.4
_________________________________________________________________________________________
1995 56.7 23.7 .2 6.4 87.0
_________________________________________________________________________________________
1996 67.8 20.0 .2 5.2 93.2
_________________________________________________________________________________________
/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, 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
Revisions of previous estimates 43.1 24.5 4.0 - 71.6
Purchase of reserves in place 5.7 - - - 5.7
Extensions, discoveries and
other additions 58.0 .3 33.7 - 92.0
Production (103.1) (11.4) (16.8) - (131.3)
Sales of reserves in place (.2) - - - (.2)
_________________________________________________________________________________________
Proved reserves at December 31, 1996 693.1 178.0 145.3 .5 1,016.9
_________________________________________________________________________________________
Proved-developed reserves at December 31,
1994 493.5 146.4 116.1 10.1 766.1
_________________________________________________________________________________________
1995 520.7 159.7 111.1 .5 792.0
_________________________________________________________________________________________
1996 557.0 174.3 90.2 .5 822.0
_________________________________________________________________________________________
</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>
1994 670.3 670.3
_________________________________________________________________________________________
1995 974.7 974.7
_________________________________________________________________________________________
1996 1,094.0 1,094.0
_________________________________________________________________________________________
</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, 1996:
<CAPTION>
North Other
(Millions of dollars) Domestic Sea Foreign Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
Future cash inflows $4,272.8 1,113.3 124.0 5,510.1
Future production and development costs (1,360.3) (240.2) (49.8) (1,650.3)
Future income tax expenses (853.9) (302.4) (16.1) (1,172.4)
_________________________________________________________________________________________
Future net cash flows 2,058.6 570.7 58.1 2,687.4
10% annual discount for estimated timing
of cash flows (789.1) (198.1) (13.4) (1,000.6)
_________________________________________________________________________________________
Standardized measure of discounted future
net cash flows $1,269.5 372.6 44.7 1,686.8
_________________________________________________________________________________________
CLAM $ - 23.4 - 23.4
_________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SOURCES OF CHANGE DURING 1996:
(Millions of dollars)
_________________________________________________________________________________________
<S> <C>
Sales and transfers, net of production costs $(457.6)
Net change in prices and production costs 655.0
Extensions, discoveries and improved recovery,
less related costs 203.9
Net change in future development costs (18.7)
Previously estimated development costs
incurred during the year 72.4
Revisions of previous reserve estimates 157.9
Purchase of reserves in place 29.0
Sales of reserves in place (.5)
Accretion of discount 153.0
Net change in income taxes (319.3)
Other 32.0
_________________________________________________________________________________________
Net change $ 507.1
_________________________________________________________________________________________
</TABLE>
<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>
_________________________________________________________________________________________
RESULTS OF OPERATIONS FOR OIL AND GAS ACTIVITIES
<CAPTION>
Years ended December 31:
North Other
19961 (Millions of dollars) Domestic Sea Foreign Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
Revenues $ 433.82 141.6 23.6 599.0
Production costs (90.9) (38.8) (5.7) (135.4)
Exploration expenses (91.9) (1.3) (12.9) (106.1)
DD&A (98.1) (53.9) (18.5) (170.5)
_________________________________________________________________________________________
152.9 47.6 (13.5) 187.0
Income tax (expense) benefit (65.4) (13.1) 4.7 (73.8)
_________________________________________________________________________________________
Earnings (loss)3 $ 87.5 34.5 (8.8) 113.2
_________________________________________________________________________________________
CLAM4 $ - 8.6 - 8.6
_________________________________________________________________________________________
19951(Millions of dollars)
_________________________________________________________________________________________
Revenues 306.82 133.9 26.3 467.0
Production costs (84.6) (39.9) (8.8) (133.3)
Exploration expenses (45.9) (2.6) (19.8) (68.3)
DD&A (83.1) (57.6) (13.6) (154.3)
_________________________________________________________________________________________
93.2 33.8 (15.9) 111.1
Income tax (expense) benefit (34.3) (15.9) 7.2 (43.0)
_________________________________________________________________________________________
Earnings (loss)3 $ 58.9 17.9 (8.7) 68.1
_________________________________________________________________________________________
CLAM4 $ - 5.4 - 5.4
_________________________________________________________________________________________
19941 (Millions of dollars)
_________________________________________________________________________________________
Revenues 316.82 92.9 18.3 428.0
Production costs (87.1) (36.9) (9.4) (133.4)
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)
_________________________________________________________________________________________
(223.3) 5.5 (30.7) (248.5)
Income tax (expense) benefit 77.8 (9.0) 13.6 82.4
_________________________________________________________________________________________
Earnings (loss)3 $(145.5) (3.5) (17.1) (166.1)
_________________________________________________________________________________________
CLAM4 $ - 3.9 - 3.9
_________________________________________________________________________________________
1 Includes nonrecurring charges/credits as explained in "Notes to Consolidated Financial
Statements" as follows:
1996 - see Note 3.
1995 - see Note 3.
1994 - see Notes 2 and 3.
2 Includes intercompany transfers to the Company's refinery of $16.9, $28.0 and $24.8 in
1996, 1995 and 1994, 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 6 of "Notes to Consolidated Financial Statements."
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
COSTS INCURRED IN OIL AND GAS ACTIVITIES
<CAPTION>
Years ended December 31:
North Other
1996 (Millions of dollars) Domestic Sea Foreign Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
Property acquisition:
Proved $ 4.6 - - 4.6
Unproved 21.2 - - 21.2
Exploration 109.7 1.7 26.9 138.3
Development 48.4 15.0 9.0 72.4
_________________________________________________________________________________________
183.9 16.7 35.9 236.5
Capitalized interest 2.0 8.4 .7 11.1
_________________________________________________________________________________________
$ 185.9 25.1 36.6 247.6
_________________________________________________________________________________________
CLAM $ - (2.1) - (2.1)
_________________________________________________________________________________________
1995 (Millions of dollars)
_________________________________________________________________________________________
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
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
OIL AND GAS OPERATING DATA1
<CAPTION>
Years ended December 31:
1996 1995 1994 19932 1992
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
CRUDE AND CONDENSATE3
Production (barrels per day):
Domestic:
Working interest 16,720 16,808 18,833 17,586 15,308
Royalty interest 4,398 3,945 3,678 4,161 4,070
_________________________________________________________________________________________
21,118 20,753 22,511 21,747 19,378
North Sea (working interest) 15,296 17,250 14,769 6,529 6,258
Other foreign (working interest) 3,561 4,936 3,496 6,509 5,674
_________________________________________________________________________________________
39,975 42,939 40,776 34,785 31,310
_________________________________________________________________________________________
Average price received (per barrel):
Domestic $ 20.54 18.11 16.26 17.33 19.85
North Sea 19.77 17.29 16.01 16.20 19.11
Other foreign 18.09 15.12 12.63 14.40 14.98
Consolidated 20.03 17.44 15.86 16.57 18.82
_________________________________________________________________________________________
NATURAL GAS
Production (thousands of cubic feet
per day):
Domestic:
Working interest 250,857 209,876 203,700 155,917 119,050
Royalty interest 30,799 30,052 24,957 23,861 21,146
_________________________________________________________________________________________
281,656 239,928 228,657 179,778 140,196
North Sea (working interest) 31,063 26,864 5,302 156 236
Other foreign (working interest) - 1,379 3,018 5,316 4,871
CLAM Petroleum Company 45,967 43,550 40,003 34,608 40,485
_________________________________________________________________________________________
358,686 311,721 276,980 219,858 185,788
_________________________________________________________________________________________
Average price received (per MCF):
Domestic $ 2.50 1.73 1.95 2.19 1.75
North Sea 2.29 2.09 2.20 1.51 1.92
Other foreign - 0.68 1.63 1.27 0.84
CLAM Petroleum Company 2.81 2.59 2.27 2.35 2.73
Consolidated 2.52 1.88 2.00 2.19 1.94
_________________________________________________________________________________________
PLANT PRODUCTS
Production (barrels per day):
Domestic (working interest) 2,301 2,936 2,475 2,377 2,294
North Sea (working interest) 887 1,015 552 352 461
Other foreign (working interest) - 19 6 29 39
_________________________________________________________________________________________
3,188 3,970 3,033 2,758 2,794
_________________________________________________________________________________________
Average price received (per barrel):
Domestic $ 13.61 11.20 10.06 11.26 13.07
North Sea 17.02 13.49 11.28 12.62 14.47
Other foreign - 10.67 7.84 11.97 12.68
Consolidated 14.55 11.78 10.28 11.44 13.29
_________________________________________________________________________________________
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>
_________________________________________________________________________________________
OIL AND GAS PROPERTIES
<CAPTION>
December 31, 1996
Productive acreage Undeveloped acreage
(Thousands of acres) Gross Net Gross Net
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
LEASEHOLDS AND OPTIONS
Domestic:
Offshore Gulf of Mexico 313.3 154.1 368.6 195.6
Louisiana 126.5 78.2 74.7 34.6
Alabama/Florida 10.7 9.1 - -
Colorado/Utah .8 - 95.9 48.0
Wyoming 39.8 11.4 183.1 104.4
Other 43.0 4.0 66.9 10.3
_________________________________________________________________________________________
534.1 256.8 789.2 392.9
_________________________________________________________________________________________
North Sea:
Netherlands 2.7 1.0 103.3 36.0
United Kingdom 19.8 1.3 130.2 10.9
_________________________________________________________________________________________
22.5 2.3 233.5 46.9
_________________________________________________________________________________________
Other foreign:
Algeria - - 1,552.9 1,009.4
Australia - - 139.1 46.3
Colombia 12.6 1.7 950.6 398.1
Indonesia 10.7 1.6 485.0 72.7
Papua New Guinea - - 168.4 73.8
Tunisia - - 1,021.0 510.5
Venezuela - - 525.1 183.7
_________________________________________________________________________________________
23.3 3.3 4,842.1 2,294.5
_________________________________________________________________________________________
FEE LANDS 90.0 90.0 504.0 504.0
_________________________________________________________________________________________
CLAM PETROLEUM COMPANY (50%)
Netherlands-North Sea 42.0 5.7 577.0 133.0
_________________________________________________________________________________________
711.9 358.1 6,945.8 3,371.3
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_______________________________________________________________________________________
WELLS DRILLED
<CAPTION>
Years ended December 31:
1996 1995 1994 1993 1992
_______________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
GROSS WELLS DRILLED (by location)
Working interest
Domestic:
Offshore Gulf of Mexico 21 15 20 23 5
Louisiana 17 13 14 10 17
Wyoming 1 1 4 6 2
Other - - - - 1
_______________________________________________________________________________________
39 29 38 39 25
_______________________________________________________________________________________
North Sea:
Netherlands 4 7 3 4 5
United Kingdom 10 8 6 5 8
_______________________________________________________________________________________
14 15 9 9 13
_______________________________________________________________________________________
Other foreign:
Algeria 3 - - - -
Australia 1 - 1 2 -
Canada - 5 14 38 33
Colombia 3 1 2 - 3
Indonesia 8 9 - - -
Other 1 1 2 - 1
_______________________________________________________________________________________
16 16 19 40 37
_______________________________________________________________________________________
Total working interest 69 60 66 88 75
Royalty interest 18 24 19 35 26
_______________________________________________________________________________________
Total wells 87 84 85 123 101
_______________________________________________________________________________________
</TABLE>
<TABLE>
GROSS (NET) WELLS DRILLED (by type)
<CAPTION>
Exploratory:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oil 10 (4.3) 14 (1.5) 15 (1.8) 34 (15.2) 26 (13.1)
Gas 19 (4.7) 22 (6.8) 26 (10.3) 18 (3.9) 10 (2.5)
Dry 22 (6.6) 17 (4.2) 22 (9.4) 31 (11.4) 28 (12.4)
_______________________________________________________________________________________
51 (15.6) 53 (12.5) 63 (21.5) 83 (30.5) 64 (28.0)
_______________________________________________________________________________________
Development:
Oil 23 (2.4) 22 (3.2) 7 (1.0) 17 (2.1) 22 (2.6)
Gas 13 (3.2) 9 (2.6) 14 (3.3) 21 (3.4) 6 (1.4)
Dry - - - - 1 (.1) 2 (.3) 9 (.7)
_______________________________________________________________________________________
36 (5.6) 31 (5.8) 22 (4.4) 40 (5.8) 37 (4.7)
_______________________________________________________________________________________
Total wells 87 (21.2) 84 (18.3) 85 (25.9) 123 (36.3) 101 (32.7)
_______________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
SELECTED FINANCIAL DATA*
<CAPTION>
Years ended December 31:
(Millions of dollars, except per share data)
1996 1995 1994 1993 1992
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Revenues $ 862.5 822.2 789.3 793.8 765.8
Operating profit (loss) $ 194.1 113.4 (287.5) 90.7 52.5
Net earnings (loss) $ 80.2 18.8 (226.9) 9.6 (6.8)
Earnings (loss) per share $ 2.35 0.56 (6.80) 0.33 (0.24)
Average shares (millions) 34.2 33.5 33.4 29.5 28.4
_________________________________________________________________________________________
Net cash flows from:
Operating activities $ 318.4 220.5 212.1 178.9 178.7
Investing activities $ (162.9) (174.0) (237.5) (722.3) (116.3)
Financing activities $ (156.8) (48.7) 4.6 536.2 (48.6)
Working capital (deficit):
End of year $ 22.8 6.0 (6.4) 15.6 (20.2)
Current ratio 1.15 1.03 .97 1.09 .88
_________________________________________________________________________________________
Total assets $ 1,364.8 1,467.7 1,478.1 1,838.7 1,209.1
Long-term debt $ 505.7 691.6 739.5 734.5 343.0
Stockholders' equity $ 474.6 370.7 352.4 599.8 416.6
Cash dividends per share $ 0.24 0.24 1.00 1.00 1.00
_________________________________________________________________________________________
*
Includes nonrecurring charges/credits as explained in "Notes to Consolidated Financial
Statements" as follows:
1996 - see Note 3.
1995 - see Note 3.
1994 - see Notes 2, 3 and 5.
1993 - Effective January 1, 1993, the Company changed its method of accounting for
income taxes and recorded a $13.7 million credit to earnings. At the same time,
the Company's 50%-owned affiliate, MaraLou, also changed its method of
accounting for income taxes and recorded a charge to earnings of $6 million ($3
million net to the Company's interest). Also, with the enactment of the Budget
Reconciliation Act of 1993, the Federal statutory corporate income tax rate was
increased from 34% to 35% and the Company recorded a $3 million charge to
earnings. In connection with the negotiation of a credit facility, bank fees
and other costs of $6.7 million were charged to earnings. In December the
Company completed the sale of certain assets in Canada for approximately $42.8
million resulting in a gain of $23.5 million (before income taxes of $10.3
million). At the end of 1993, the refinery inventories exceeded their current
market values resulting in a charge to earnings of $6.5 million (before income
tax benefits of $2.3 million).
1992 - In the first quarter of 1992, the Company recorded a charge of $54.2 million
(before income tax benefits of $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>
1996:
Capital stock price:
High $48 7/8 57 7/8 63 5/8 62 1/2
Low 39 3/8 46 7/8 50 3/8 51 1/2
Cash dividends per share 0.06 0.06 0.06 0.06
_________________________________________________________________________________________
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
_________________________________________________________________________________________
</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>
1996:
Revenues $262.5 246.3 176.9 176.8
Costs and expenses 225.2 212.0 152.4 128.9
_________________________________________________________________________________________
37.3 34.3 24.5 47.9
Other income (expense), net (5.5) (7.8) (6.0) (5.0)
_________________________________________________________________________________________
Earnings before income taxes 31.8 26.5 18.5 42.9
Income tax expense 11.2 9.3 4.8 14.2
_________________________________________________________________________________________
Net earnings $ 20.6 17.2 13.7 28.7
_________________________________________________________________________________________
Earnings per share $ 0.61 0.50 0.40 0.83
_________________________________________________________________________________________
Average shares 33.7 34.2 34.4 34.4
_________________________________________________________________________________________
1995:
Revenues 191.3 210.7 212.4 207.8
Costs and expenses 178.3 193.7 199.3 191.8
_________________________________________________________________________________________
13.0 17.0 13.1 16.0
Other income (expense), net (7.6) (7.2) (10.3) (5.2)
_________________________________________________________________________________________
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
_________________________________________________________________________________________
*
Includes nonrecurring charges/credits as explained in Note 3 of "Notes to Consolidated
Financial Statements."
</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, 1996 and 1995, 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,
1996. 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, 1996 and 1995, and
the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1996, in conformity with
generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Houston, Texas
January 28, 1997
<PAGE>
<PAGE>
<TABLE>
MARALOU NETHERLANDS PARTNERSHIP
Consolidated Balance Sheets
December 31, 1996 and 1995
(Expressed in U.S. Dollars)
<CAPTION>
ASSETS 1996 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 15,512,348 8,362,890
Accounts receivable 18,995,542 18,195,607
Income taxes receivable 792,318 1,897,581
Materials and supplies 28,740 132,839
Other current assets 66,580 30,514
Total current assets 35,395,528 28,619,431
Long-term receivable 5,792,577 6,250,390
Property, plant and equipment, at cost, based on
the successful efforts method of accounting for
oil and gas properties 373,618,645 381,561,020
Less accumulated depletion, amortization
and depreciation 239,161,370 220,545,368
Net property, plant and equipment 134,457,275 161,015,652
Deferred charges 84,787 158,462
$ 175,730,167 196,043,935
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliated companies 227,429 209,655
Accounts payable - net profits interest 687,905 89,443
Accrued liabilities 10,165,793 12,199,361
Amounts due to operators of joint ventures 4,864,922 3,429,466
Government royalties payable 1,800,956 1,658,735
Income taxes payable 6,836,182 772,540
Total current liabilities 24,583,187 18,359,200
Long-term debt 96,000,000 96,000,000
Deferred income taxes 23,715,648 30,265,085
Deferred liability - platform abandonment 23,627,970 22,027,271
Minority interest 378,809 1,980,114
Partners' capital (deficit):
Marathon Petroleum Netherlands, Ltd. (3,289,618) 6,704,238
LL&E (Netherlands), Inc. (3,289,618) 6,704,238
Foreign currency translation adjustment 14,003,789 14,003,789
Total partners' capital 7,424,553 27,412,265
$ 175,730,167 196,043,935
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
MARALOU NETHERLANDS PARTNERSHIP
Consolidated Statements of Income
Years Ended December 31, 1996, 1995 and 1994
(Expressed in U.S. Dollars)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Revenues:
Sales $ 96,952,823 85,789,643 68,663,916
Interest income 1,219,495 1,167,368 1,259,380
Total revenues 98,172,318 86,957,011 69,923,296
Costs and expenses:
Costs and operating expenses 22,713,955 22,258,728 11,079,073
Exploration expenses, including dry
hole costs 6,879,661 7,506,437 4,344,427
Depletion, amortization and
depreciation 18,616,002 20,060,105 16,571,265
General and administrative expenses 5,045,413 6,611,751 5,691,285
Royalty expense 2,195,978 1,751,800 996,651
Net profits interest 2,308,468 585,859 96,232
Interest expense 6,957,291 6,765,432 5,467,221
Foreign exchange loss/(gain) 1,763,404 (232,567) 543,705
Total costs and expenses 66,480,172 65,307,545 44,789,859
Income before income taxes 31,692,146 21,649,466 25,133,437
Provision for income taxes 13,241,163 10,001,420 16,940,713
Income after income taxes 18,450,983 11,648,046 8,192,724
Minority interest 2,038,695 1,536,566 1,126,536
Net income $ 16,412,288 10,111,480 7,066,188
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE> MARALOU NETHERLANDS PARTNERSHIP
Consolidated Statements of Partners' Capital
Years Ended December 31, 1996, 1995 and 1994
(Expressed in U.S. Dollars)
<CAPTION>
Marathon
Petroleum LL&E
Netherlands, Inc. (Netherlands), Inc. Total
<S> <C> <C> <C>
Capital, January 1, 1996 $ 6,704,238 6,704,238 13,408,476
Net income 8,206,144 8,206,144 16,412,288
Distribution to Partners (18,200,000) (18,200,000) (36,400,000)
Capital before adjustments (3,289,618) (3,289,618) (6,579,236)
Foreign currency translation
adjustment - - 14,003,789
Capital, December 31, 1996 $(3,289,618) (3,289,618) 7,424,553
</TABLE>
<TABLE>
<CAPTION>
Marathon
Petroleum LL&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 $ 6,704,238 6,704,238 27,412,265
</TABLE>
(Continued)
<PAGE>
<PAGE>
<TABLE>
MARALOU NETHERLANDS PARTNERSHIP
Consolidated Statements of Partners' Capital (Continued)
Years Ended December 31, 1996, 1995 and 1994
(Expressed in U.S. Dollars)
<CAPTION>
Marathon
Petroleum LL&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 $10,748,498 10,748,498 35,500,785
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
MARALOU NETHERLANDS PARTNERSHIP
Consolidated Statements of Cash Flows
Years Ended December 31, 1996, 1995 and 1994
(Expressed in U.S. Dollars)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Net income accruing to MaraLou partners $ 16,412,288 10,111,480 7,066,188
Net (loss)/income accruing to minority
shareholders, net of cash distributions (1,601,305) (283,434) 34,536
Adjustments to reconcile net income to
net cash provided by operating activities:
Depletion, amortization, depreciation
and abandonment 18,616,002 20,060,105 16,571,265
Dry hole costs 6,416,582 7,704,402 3,860,175
Deferred income taxes (6,633,681) 431,900 9,021,323
Exchange loss (gain) 1,780,977 (193,026) 374,213
Interest on EBN repayment 740,135 118,451 281,812
Increase in accounts receivable (2,177,922) (1,116,282) (2,041,325)
Decrease (increase) in accounts receivable
- net profits interest - 385,371 (19,222)
Decrease (increase) in materials and
supplies 104,099 64,973 (190,902)
Decrease (increase) in other current
assets 92,958 (19,958) 206,155
Decrease in deferred charges 72,799 25,291 64,096
(Decrease) increase in accounts
payable-affiliates 39,846 148,198 (3,255)
Increase in accounts payable-net
profits 653,906 203,856 -
Increase (decrease) in accrued
liabilities (1,975,499) 169,047 1,483,332
Increase (decrease) in amounts due to
operator of joint venture 1,671,521 1,885,328 (2,558,160)
(Decrease) increase in government
royalties payable 249,941 49,040 (131,600)
(Decrease) increase in income taxes
payable/receivable 7,422,123 445,126 (15,179,834)
Net cash provided by operating
activities 41,884,770 40,189,868 18,838,797
Cash flows from investing activities:
Net proceeds/payments for sale/
purchase of equipment 3,130,647 (18,387,901) (24,241,343)
Net cash (used in) provided by
investing activities 3,130,647 (18,387,901) (24,241,343)
</TABLE>
(Continued)
<PAGE>
<PAGE>
<TABLE>
MARALOU NETHERLANDS PARTNERSHIP
Consolidated Statements of Cash Flows (Continued)
Years Ended December 31, 1996, 1995 and 1994
(Expressed in U.S. Dollars)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Cash flows from financing activities:
Borrowing under revolving credit
agreement $ - - 8,200,000
Cash distribution to partners (36,400,000) (18,200,000) (10,920,000)
Net cash used in financing activities (36,400,000) (18,200,000) (2,720,000)
Effect of exchange rate on cash (1,465,959) 640,022 766,758
Net increase (decrease) in cash and cash
equivalents 7,149,458 4,241,989 (7,355,788)
Cash and cash equivalents at beginning of
year 8,362,890 4,120,901 11,476,689
Cash and cash equivalents at end of year $ 15,512,348 8,362,890 4,120,901
Supplemental disclosure of cash flow information:
Cash paid (received) during the year for:
Interest $ 6,041,259 7,166,142 4,487,259
Foreign taxes 8,406,952 11,682,068 23,621,088
Federal taxes 4,300,000 (1,591,489) (518,116)
Supplemental schedule of noncash investing and financing activities:
Long-term receivable for EBN
reimbursement $ (457,813) 476,172 154,362
Accrued liability established for
repayment to EBN (5,885) 844,590 732,141
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
MARALOU NETHERLANDS PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1996, 1995 and 1994
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 six operators of the joint ventures.
The amounts reported by the operators of the joint ventures
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.
Audits for the year 1995 have been conducted for two of the
more significant joint ventures with no material items
discovered. The remaining operators' 1995 expenditures were
not material enough 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.
The adoption of SFAS No. 121 resulted in no write-down of
long-lived assets. 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 deter-
mined to be impaired, an impairment loss equal to the dif-
ference between the carrying value and the fair value of the
<PAGE>
<PAGE>
depletable unit 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.
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 of the assets.
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.
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.
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 affiliate. Such
charges were approximately $3,032,408, $2,803,322 and
$2,183,002 for 1996, 1995 and 1994, respectively. Salaries
and related social charges included therein amounted to
$154,603, $2,007,984 and $1,449,062 for 1996, 1995 and 1994,
respectively.
MaraLou transactions with related parties consisted of charges
for administrative services rendered by an affiliate amounting
to $63,252, $60,900 and $59,880 in 1996, 1995 and 1994,
respectively.
<PAGE>
<PAGE>
3. Property, plant and equipment
Changes in property, plant and equipment for the years ended
December 31, 1996, 1995 and 1994 are as follows (in thousands
of U.S. dollars):
<TABLE>
<CATION>
Balance Additions Dry Hole Balance
12/31/95 (Reductions) Costs 12/31/96
<S> <C> <C> <C> <C>
Concession $ 5,988 (2,437) - 3,551
Wells and platforms 311,059 (7,457) - 303,602
Incomplete construction - 886 - 886
Uncompleted wells 5,610 782 (2,374) 4,018
Pipelines 51,897 (323) - 51,574
Gas processing facilities 6,645 2,921 - 9,566
Furniture and fixtures 362 59 - 421
381,561 (5,569) (2,374) 373,618
Depletion and amortization 220,189 18,600 - 238,789
Depreciation-furniture and
fixtures 356 16 - 372
220,545 18,616 - 239,161
Net property, plant
and equipment $ 161,016 134,457
</TABLE>
<TABLE>
<CAPTION>
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>
<PAGE>
<PAGE>
<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>
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.
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>
1996 1995 1994
<S> <C> <C> <C>
Current tax expense (benefit):
Federal $ 6,670 25 (860)
Foreign 13,116 9,543 8,779
Deferred tax expense (benefit):
Federal (5,198) 1,463 2,673
Foreign (1,347) (1,030) 6,349
Total provision for income taxes $13,241 10,001 16,941
</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>
1996 1995 1994
<S> <C> <C> <C>
Computed "expected" tax expense $ 12,483 9,416 10,267
Increase (decrease) in income taxes
resulting from:
Foreign tax greater than federal
income tax - - 4,178
Increase in deferred tax valuation
allowance 1,040 1,225 2,852
Other (282) (640) (356)
Provision for income taxes $ 13,241 10,001 16,941
</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, 1996, 1995 and 1994 relate to the
following (in thousands of U.S. dollars):
<TABLE>
<CAPTION>
U.S. - Deferred 1996 1995 1994
<S> <C> <C> <C>
Deferred Tax Assets:
Foreign tax credit carryover $ - 701 -
Benefit for foreign deferred taxes 4,249 3,810 3,733
Abandonment accrual 8,271 7,708 7,354
Valuation allowance (6,864) (5,824) (4,599)
Total deferred tax assets $ 5,656 6,395 6,488
Deferred Tax Liabilities:
Property, plant and equipment differences
in depreciation and amortization $17,231 23,168 21,798
Total deferred tax liabilities $17,231 23,168 21,798
Total U.S. - deferred $11,575 16,773 15,310
/TABLE
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Foreign State Profit Share - Deferred 1996 1995 1994
<S> <C> <C> <C>
Deferred Tax Assets:
Abandonment accrual $ 2,512 2,915 2,809
Morgan loan currency revaluation - - 270
Valuation allowance (368) (261) (723)
Total deferred tax assets $ 2,144 2,654 2,356
Deferred Tax Liabilities:
Property, plant and equipment differences
in depreciation and amortization $ 14,285 16,146 15,771
Total deferred tax liabilities $ 14,285 16,146 15,771
Total Foreign State Profit Share - deferred $ 12,141 13,492 13,415
</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, 1995 to December 31, 1996 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, 1996 and December 31, 1995 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, 1996 and December 31, 1995 were 6.250% and
6.1875%, 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, 1996
and December 31, 1995 was $125,000,000 and $132,000,000,
respectively. The agreement provides that the borrowing base
is reduced periodically over the term of the facility which is
currently scheduled to expire on September 30, 2002. The
borrowing base and the scheduled reductions may be adjusted
based on a redetermination of the net present value of the
projections of certain cash flows included in an Engineering
Report prepared by petroleum engineers.
The outstanding balances for MaraLou and CLAM, respectively,
were $-0- and $96,000,000, at December 31, 1996 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, 1995. At December 31, 1996, the required
reductions to the borrowing base in each of the next five
years are $-0- in 1997, $9,600,000 in 1998, $28,000,000 in
1999, $22,400,000 in 2000, $22,000,000 in 2001 and $14,000,000
thereafter.
CLAM has an unsecured combined short-term loan and overdraft
facility of Dfl. 80,000,000 ($46,248,121 at year-end exchange
rates). On December 31, 1996 and December 31, 1995 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 and effective.
<PAGE>
<PAGE>
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. Effective
January 1, 1996, new entitlements were agreed upon and CLAM
made a cash payment of $7,881,509 to equalize past investment.
8. Reserves of oil and gas (unaudited)
CLAM's share, including net profits interest, of proven gas
reserves at January 1, 1997 and 1996 are 270,148 MMCF and
245,107 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
<PAGE>
<PAGE>
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 1999.
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 1999, 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 $5,792,577
long-term receivable, based on discounted cash flows, is
approximately $4,545,000.
<PAGE>
<PAGE>
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 8, 1997, which the Registrant
will file pursuant to Regulation 14A not later than 120 days after
December 31, 1996, 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 herein under the heading "Executive Officers of the
Registrant" in Part I 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, 1996.
<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 (as
amended and restated on May 9, 1996) among the
Registrant and First Chicago Trust Company (as
Rights Agent) - (Incorporated by reference to
Exhibit 4 to the Registrant's Current Report
on Form 8-K dated May 10, 1996 - 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)
(Incorporated by reference to the Exhibit
10(a)(i) to the Registrant's Annual Report on
Form 10-K for the year ended December 31,
1995 - Commission File No. 1-959.).
(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 (Incorporated by
reference to the Exhibit 10(a)(ii) to the
Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995 - Commission
File No. 1-959.).
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.).
(continued)<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Index to Exhibits
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.).
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 (Incorporated by
reference to the Exhibit 10(i) to the
Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995 - Commission
File No. 1-959.).
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.).
(continued)<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Index to Exhibits
Exhibit 10(l)(i) Amendment No. 1 to Credit Agreement dated as
of June 8, 1995 (Incorporated by reference to
Exhibit 10(l)(i) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June
30, 1996 - Commission File No. 1-959.).
Exhibit 10(m) Agreement and General Release.
Exhibit 21 Subsidiaries of the Registrant.
Exhibit 23 Consent of Experts.
Exhibit 24 Powers of Attorney.
Exhibit 27 Financial Data Schedules:
Year Ended December 31, 1996
Year Ended December 31, 1995 (Restated)
Year Ended December 31, 1994 (Restated)
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 14, 1997 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 14, 1997 *H. Leighton Steward
_____________________________________
H. Leighton Steward
Director, Chairman, President and
Chief Executive Officer
(Principal Executive Officer)
Date: March 14, 1997 *Robert E. Howson
_____________________________________
Robert E. Howson
Director
Date: March 14, 1997 *Eamon M. Kelly
_____________________________________
Eamon M. Kelly
Director
Date: March 14, 1997 *Kenneth W. Orce
_____________________________________
Kenneth W. Orce
Director
Date: March 14, 1997 *Victor A. Rice
_____________________________________
Victor A. Rice
Director
<PAGE>
<PAGE>
Date: March 14, 1997 *John F. Schwarz
_____________________________________
John F. Schwarz
Director
Date: March 14, 1997 *Orin R. Smith
_____________________________________
Orin R. Smith
Director
Date: March 14, 1997 *Carroll W. Suggs
_____________________________________
Carroll W. Suggs
Director
Date: March 14, 1997 *Arthur R. Taylor
_____________________________________
Arthur R. Taylor
Director
Date: March 14, 1997 *W. R. Timken, Jr.
_____________________________________
W. R. Timken, Jr.
Director
Date: March 14, 1997 *Carlisle A. H. Trost
_____________________________________
Carlisle A. H. Trost
Director
Date: March 14, 1997 *Louis A. Raspino, Jr.
_____________________________________
Louis A. Raspino, Jr.
Senior Vice President-Chief Financial
Officer (Principal Financial Officer)
Date: March 14, 1997 *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, 1996
__________________________
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 (as
amended and restated on May 9, 1996) among the
Registrant and First Chicago Trust Company (as
Rights Agent) - (Incorporated by reference to
Exhibit 4 to the Registrant's Current Report
on Form 8-K dated May 10, 1996 - 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)
(Incorporated by reference to the Exhibit
10(a)(i) to the Registrant's Annual Report on
Form 10-K for the year ended December 31,
1995 - Commission File No. 1-959.).
(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 (Incorporated by
reference to the Exhibit 10(a)(ii) to the
Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995 - Commission
File No. 1-959.).
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.).
(continued)<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Index to Exhibits
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.).
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 (Incorporated by
reference to the Exhibit 10(i) to the
Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995 - Commission
File No. 1-959.).
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.).
(continued)<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Index to Exhibits
Exhibit 10(l)(i) Amendment No. 1 to Credit Agreement dated as
of June 8, 1995 (Incorporated by reference to
Exhibit 10(l)(i) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June
30, 1996 - Commission File No. 1-959.).
Exhibit 10(m) Agreement and General Release.
Exhibit 21 Subsidiaries of the Registrant.
Exhibit 23 Consent of Experts.
Exhibit 24 Powers of Attorney.
Exhibit 27 Financial Data Schedules:
Year Ended December 31, 1996
Year Ended December 31, 1995 (Restated)
Year Ended December 31, 1994 (Restated)
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(m)
AGREEMENT AND GENERAL RELEASE
<PAGE>
<PAGE>
Exhibit 10(m)
AGREEMENT AND GENERAL RELEASE
THIS AGREEMENT is made and entered into as of this
5th day of December, 1996 by and between RICHARD A. BACHMANN (the
"Executive") and THE LOUISIANA LAND AND EXPLORATION COMPANY, a
Maryland corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the Executive has been employed by the Company;
and
WHEREAS, the Executive has resigned all officer positions
with the Company and its subsidiaries, and resigned his membership
on the Boards of Directors and all Committees of the Company and
its subsidiaries and will terminate his status as an employee and
retire from the Company as an early retiree effective January 1,
1997; and
WHEREAS, the Executive and the Company desire to settle
fully and finally all matters between them to date, including, but
in no way limited to, any issues that might arise out of the
Executive's employment or the termination of his employment;
NOW, THEREFORE, in consideration of the mutual covenants
and promises contained herein, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Effective upon his early retirement on January 1,
1997, the Executive shall become entitled to all of the benefits
provided to retirees under the terms of the Company's employee
benefit plans, including without limitation full vesting in all
outstanding restricted stock and all outstanding stock options
becoming fully exercisable until their respective expiration dates
in accordance with their terms and subject to the conditions set
forth in such options. The Executive's benefits under the
Compensatory Benefits Agreement and under The LL&E Compensatory
Benefits and Supplemental Excess Plan shall be distributed in ten
annual installments commencing in January 2000 (with the amount of
each annual installment to be determined by dividing the amount
then credited to the Executive's accounts by the number of
installments remaining to be paid).
2. The Company will provide the Executive with a
furnished office and part-time secretarial support in the United
States city of his choosing for such reasonable period of time as
the Chief Executive Officer of the Company may determine, it being
understood that such period shall in no event be less than one
year.
<PAGE>
<PAGE>
3. The Company shall pay to the Executive, at such
times and otherwise in accordance with the Company's standard
payroll practices, periodic amounts at an annual rate equal to the
Executive's annual base salary in effect on the date hereof, until
June 30, 1999.
4. The Executive shall receive a cash bonus pursuant to
the Company's Incentive Bonus Program for each of 1996 and 1997, in
each case only if such cash bonus is earned in accordance with the
terms of the Incentive Bonus Program for such year (deeming, for
this purpose only, that the Executive had continued as an executive
officer of the Company through the end of such year). Each such
bonus shall be paid at the time Incentive Bonuses are scheduled to
be paid with respect to the applicable year. If there is a change
in control of the Company as that term is defined with Company's
Pension Plan and the Executive continues to be in compliance with
the terms of this Agreement, the Incentive Bonus payable with
respect to 1997 shall not be less than the target level bonus
applicable to the 1996 Incentive Bonus Program. The Company shall
provide the Executive with information available to all Program
participants relative to the achievement of Program goals at the
end of each Program.
5. With respect to any performance shares granted by
the Company to the Executive and for which the Performance Cycle
has not expired on the date hereof, the Executive shall remain
entitled to receive the percentage of performance shares earned in
accordance with the terms of such grant (determined without regard
to any reduction that would otherwise occur solely by reason of the
termination of Executive's employment). Any outstanding
performance share award agreements with the Executive are deemed
amended to the extent necessary to conform with this Section 5.
The Company shall provide Executive with information available to
all holders of performance shares with respect to the achievement
of performance goals relative to each applicable Performance Cycle
at the end of each Cycle.
6. Any payments and benefits provided for under this
Agreement shall be paid net of any applicable withholding required
under Federal, state or local law and any debts or other
obligations owed to the Company by the Executive.
7. The Executive understands and agrees that the
consideration described in Sections 3, 4 and 5 of this Agreement is
more than the Executive would otherwise be entitled to under the
Company's existing plans and policies and that such excess
constitutes consideration to the Executive for his undertaking and
performing the obligations specified in this Agreement. Except as
otherwise expressly provided in this Agreement, the Executive after
January 1, 1997 shall be entitled to none of the benefits or other
perquisites of employment extended to employees of the Company, and
the Executive shall have no right to any benefits under any plan,
program, policy or arrangement of the Company which otherwise might
be available if his employment had continued after January 1, 1997.
<PAGE>
<PAGE>
8. The Executive, to the best of his knowledge, has
returned or will as soon as practicable (but in any event no later
than 30 days after his resignation as an executive officer of the
Company) return to the Company all Company Information and related
reports, files, memoranda, and records; credit cards, cardkey
passes; door and file keys; computer access codes; software; and
other physical or personal property which the Executive received or
prepared or helped prepare in connection with his employment and
which are in his actual possession or control on or after the date
of his resignation as an executive officer of the Company. The
Executive has not, to the best of his knowledge, retained and will
not intentionally retain any copies, duplicates, reproductions, or
excerpts thereof. The term "Company Information" as used in this
Agreement means all information relating to the Company or any of
its subsidiaries which is not already in the public domain and
which is regarded by the Company as confidential, proprietary or
private in nature, including, without limitation, information
received from third parties under confidential conditions,
technical, business, or financial information, and other
information concerning the business, contemplated future business
prospects, and other affairs of the Company.
9. The Executive agrees that in the course of his
employment with the Company, he has acquired Company Information as
defined in Section 8. The Executive understands and agrees that
such Company Information has been disclosed to the Executive in
confidence and for Company use only. The Executive understands and
agrees that he (i) will keep Company Information confidential at
all times following his resignation as an executive officer of the
Company, (ii) will not disclose or communicate Company Information
to any third party, and (iii) will not make use of Company
Information on the Executive's own behalf, or on behalf of any
third party. In view of the nature of the Executive's employment
and the nature of Company Information which the Executive has
received during the course of his employment, the Executive agrees
that any unauthorized disclosure to third parties of Company
Information or other violation, or threatened violation, of this
Agreement would cause irreparable damage to the trade secret status
of Company Information and to the Company, and that, therefore, the
Company shall be entitled to an injunction prohibiting the
Executive from any such disclosure, attempted disclosure,
violation, or threatened violation. When Company Information
becomes generally available to the public other than by the
Executive's acts or omissions, it is no longer subject to these
restrictions. The undertakings set forth in this Section 9 shall
survive the termination of this Agreement or other arrangements
contained in this Agreement without limitation.
<PAGE>
<PAGE>
10. The Executive agrees and promises that, unless
legally required, he will not make any oral or written statements
or reveal any information to any person, company, or agency which
may be construed to be negative, disparaging or damaging to the
reputation or business of the Company, its subsidiaries, directors,
officers or affiliates, which would interfere in any way with the
business relations between the Company or any of its subsidiaries
or affiliates and any of their customers, suppliers or joint
venture partners or potential customers, suppliers or joint venture
partners or which would adversely affect or conflict with the
interests of the Company.
11. In consideration of the payments and benefits to the
Executive under this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged by the Executive, the Executive shall not, during the
Noncompetition Period (as hereinafter defined), directly or
indirectly, (a) act as a director, officer, employee, manager,
trustee, agent, partner, advisor, joint venturer, or consultant of,
with or to, or otherwise engage in, any business or businesses that
engage in direct competition with those businesses in which the
Company and its subsidiaries engaged or proposed to be engaged on
January 1, 1997 without the prior written consent of the Company,
it being understood that an activity or circumstance shall be
deemed to constitute direct competition for purposes of this
Section 11(a) only if such activity or circumstance involves or
relates to any of the prospects, plays or asset developments
contemplated in the Company's 1997 Budget Summaries, or (b) solicit
for employment any of the current employees of the Company. For
purposes of this Section 11, the "Noncompetition Period" shall mean
the period beginning November 24, 1996 and ending on December 31,
1998.
12. For a period of ten years from the date of this
Agreement (the "Restricted Period"), except as specifically
requested in writing by the Company, the Executive, singly or with
any other person or directly or indirectly, shall not propose,
enter into, or agree to enter into, or encourage any other person
to propose, enter into, or agree to enter into (a) any form of
business combination, acquisition or other transaction relating to
the Company, (b) any form of restructuring, recapitalization or
similar transaction with respect to the Company, or (c) any demand,
request or proposal to amend, waive or terminate any provision of
this Section 12 of this Agreement. Furthermore, during the
Restricted Period, except as specifically requested in writing by
the Company, the Executive shall not, singly or with any other
<PAGE>
<PAGE>
person or directly or indirectly, (1) acquire, or offer, propose or
agree to acquire, by tender offer, purchase or otherwise, any
voting securities of the Company except through the exercise of
options, (2) make, or in any way participate in, encourage, advise
or otherwise facilitate any solicitation of proxies or written
consents with respect to voting securities of the Company (it being
understood that the mere execution by the Executive of a proxy or
written consent shall not be treated as constituting participation
in such a solicitation), (3) become a participant in any election
contest with respect to the Company, (4) seek to influence any
person with respect to the voting or disposition of any voting
securities of the Company, (5) demand a copy of the Company's list
of stockholders or its other books and records, (6) participate in,
encourage, advise with regard to, or otherwise facilitate the
formation of any partnership, syndicate or other group that owns or
seeks or offers to acquire beneficial ownership of any voting
securities of the Company or that seeks to affect control of the
Company or for the purpose of circumventing any provision of this
Agreement or (7) otherwise act to seek or to offer to control or
influence, in any manner, the management, Board of Directors or
policies of the Company.
13. In consideration of the payments and benefits to the
Executive under this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged by the Executive, the Executive knowingly, voluntarily
and unconditionally hereby forever waives, releases and discharges,
and covenants never to sue on, any and all claims, liabilities,
causes of actions, judgments, orders, assessments, penalties,
fines, expenses and costs (including without limitation attorneys'
fees) and/or suits of any kind arising out of any actions, events
or circumstances before the date of execution of this Agreement
("Claims") which the Executive has, ever had or may have,
including, without limitation, any Claims arising in whole or in
part from the Executive's employment or the termination of the
Executive's employment with the Company or the manner of said
termination; provided, however, that this Section 13 shall not
apply to any of the obligations of the Company specifically
provided for in this Agreement. This Agreement is intended as a
full and final settlement and compromise of each, every and all
Claims of every kind and nature, whether known or unknown, which
have been or could be asserted against the Company and/or any of
its subsidiaries, shareholders, officers, directors, agents, and
employees, past or present, and their respective heirs, successors
and assigns (collectively, the "Releasees"), including, without
limitation --
(1) any Claims arising out of any employment agreement or
other contract, side-letter, resolution, promise or
understanding of any kind, whether written or oral or
express or implied;
<PAGE>
<PAGE>
(2) any Claims arising under the Age Discrimination in
Employment Act ("ADEA"), as amended, 29 U.S.C. Section
621 et seq.; and
(3) any Claims arising under any federal, state, or local
civil rights, human rights, anti-discrimination, labor,
employment, contract or tort law, rule, regulation, order
or decision, including, without limitation, the Americans
with Disabilities Act of 1990, 42 U.S.C. Section 12101 et
seq., and Title VII of the Civil Rights Act of 1964,
42 U.S.C. Section 2000e et seq., and as each of these
laws have been or will be amended,
except to the extent that any governmental authority or other third
party, i.e., other than one of the Releasees, files a charge or
institutes an investigation, lawsuit or any proceeding against the
Executive based on any event, occurrence or omission during the
period of the Executive's employment with the Company, in which
case the Executive will be permitted to implead or bring a court
action against the Company and/or any of the Releasees for
indemnification of any liability or other appropriate remedy,
provided such impleader or court action would be available but for
this Agreement.
Notwithstanding anything to the contrary in this
Section 13, the Executive does not release (i) any claim he may
have under any employee benefit plan in which he was a participant
during his employment with the Company for the payment of a benefit
thereunder to which he would be entitled upon his termination of
employment on January 1, 1997 in accordance with the terms of such
plan or (ii) any claim that he may have under this Agreement.
14. The Executive understands that this Agreement
affects significant rights and represents and agrees that he has
carefully read and fully understands all of the provisions of this
Agreement, that he is voluntarily entering into this Agreement, and
that he has been advised to consult with and has in fact consulted
with legal counsel before entering into this Agreement. In
particular, the Executive acknowledges that he has been given
twenty-one (21) days to carefully consider and voluntarily approve
the terms of this Agreement. The Executive understands that,
pursuant to the provisions of the ADEA, he shall have a period of
seven (7) days from the date of execution of this Agreement during
which he may revoke this Agreement via hand delivery of a notice of
revocation to the Company's offices to the attention of Frederick
J. Plaeger, II, General Counsel. This Agreement shall not become
effective or enforceable until the revocation period has expired.
<PAGE>
<PAGE>
15. In the event of any breach by the Executive of this
Agreement, the Executive shall relinquish and forfeit (to the
fullest extent permitted by law) all payments and benefits
hereunder (including, without limitation, payments and benefits
already received) to the extent in excess of the payments and
benefits he would have received following termination of his
employment on January 1, 1997 in the absence of this Agreement,
such excess constituting consideration paid and promised to be paid
to the Executive for his performing his obligations under this
Agreement. To the extent that any payments or benefits have
already been received, the Executive shall promptly pay all such
relinquished and forfeited payments and benefits to the Company.
In addition, the parties acknowledge that money damages will not be
an adequate remedy in respect of a breach by the Executive of his
obligations under this Agreement and, accordingly, the Executive
agrees that the Company shall be entitled to equitable relief to
enforce the provisions of this Agreement.
16. This Agreement constitutes the entire understanding
and agreement between the Company and the Executive with regard to
all matters herein and supersedes all prior oral and written
agreements and understandings of the parties with respect to such
matters, whether express or implied. There are no other
agreements, conditions, or representations, oral or written,
express or implied, with regard thereto. This Agreement may be
amended only in a writing of even or subsequent date, signed by all
parties hereto.
17. If any term or provision of this Agreement, or the
application thereof to any person or circumstances, will to any
extent be invalid or unenforceable, the remainder of this
Agreement, or the application of such terms to persons or
circumstances other than those as to which it is invalid or
unenforceable, will not be affected thereby, and each term of this
Agreement will be valid and enforceable to the fullest extent
permitted by law.
18. This Agreement shall be construed and enforced in
accordance with the laws of the State of Maryland without reference
to its choice of law provisions and shall be binding upon the
parties and their respective heirs, executors, successors and
assigns. The parties hereto (a) agree that any litigation with
respect to this Agreement will be brought only in the Federal
District Court in New Orleans or in any court of competent
jurisdiction in the State of Maryland, and (b) consent to the
personal jurisdiction of such courts.
<PAGE>
<PAGE>
19. This Agreement does not constitute any admission of
wrongdoing, or evidence thereof, on the part of any parties hereto
or the Releases. Except as required by court order, or to enforce
the terms of this Agreement, this Agreement may not be used in any
court or administrative proceeding.
20. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Executive have
caused this Agreement to be executed as of the date first above
written.
THE LOUISIANA LAND AND
EXPLORATION COMPANY
By:______________________________
/s/ H. Leighton Steward
Chairman and Chief
Executive Officer
WITNESS:
_____________________________ ______________________________
/s/ Kenneth W. Orce /s/ Richard A. Bachmann
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, 1996
<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 New South Wales
LL&E (Australia) Pty., Ltd. 100 New South Wales
LL&E Canada Holdings, Inc. 100 Delaware
LL&E Colombia, Inc. 100 Delaware
LL&E Erave Pty., Ltd. 100 Papua New Guinea
LL&E (Europe-Africa-Middle East) Inc. 100 Delaware
LL&E Gas Marketing, Inc. 100 Delaware
LL&E Gippsland Pty., Ltd. 100 New South Wales
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 Mining, L.L.C. 100 Louisiana
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 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 Timor Sea Pty., Ltd. 100 New South Wales
LL&E Tunisia, Ltd. 100 Bermuda
LL&E (U.K.) Inc. 100 Delaware
LL&E Venezuela, Ltd. 100 Bermuda
Administradora General Delta Centro, S.A. 22.75 Venezuela
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, 1996
<CAPTION>
% Ownership Jurisdiction
by Immediate of
Parent Incorporation
_______________________________________________________________________________________
<S> <C> <C>
Delta Centro Operating Company, Ltd. 100 Bermuda
Evangeline Gas Corp. 45 Delaware
Inexco Oil Company 100 Delaware
Wilson Brothers Drilling Company 100 Delaware
LL&E Petroleum Resources Marketing, L.P. 100 Louisiana
LLOXY Holdings, Inc. 100 Maryland
Westland Royalty Company 100 Colorado
White Pine Leasing, Inc. 100 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, No. 33-50991
and No. 333-16191 on Form S-3 and No. 33-6593 on Form S-4 of The Louisiana
Land and Exploration Company of our reports dated February 7, 1997, relating
to the consolidated balance sheets of The Louisiana Land and Exploration
Company and subsidiaries as of December 31, 1996 and 1995 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, 1996
which reports appear in the December 31, 1996 annual report on Form 10-K of
The Louisiana Land and Exploration Company. Our reports refer 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 28, 1997, relating to
the consolidated balance sheets of MaraLou Netherlands Partnership and
subsidiary as of December 31, 1996 and 1995 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, 1996 which report appears
in the December 31, 1996 annual report on Form 10-K of The Louisiana Land
and Exploration Company.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
March 19, 1997
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. 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 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 14th day of March, 1997.
/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. 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 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 14th day of March, 1997.
/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. 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 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 14th day of March, 1997.
/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. 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 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 14th day of March, 1997.
/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. 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 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 14th day of March, 1997.
/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. 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 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 14th day of March, 1997.
/s/ John F. Schwarz
_____________________________
John F. Schwarz
<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. 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 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 14th day of March, 1997.
/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 her capacity as a director of
The Louisiana Land and Exploration Company hereby appoints Louis A. Raspino,
Jr. and Frederick J. Plaeger, II and each of them severally, her 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 her name,
place, and stead, in her 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 14th day of March, 1997.
/s/ Carroll W. Suggs
_____________________________
Carroll W. Suggs
<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. 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 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 14th day of March, 1997.
/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. 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 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 14th day of March, 1997.
/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. 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 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 14th day of March, 1997.
/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 James N. Wood, Jr. 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 14th day of March, 1997.
/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 14th day of March, 1997.
/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-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 9,000
<SECURITIES> 0
<RECEIVABLES> 150,700
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 171,100
<PP&E> 3,100,600
<DEPRECIATION> 1,940,900
<TOTAL-ASSETS> 1,364,800
<CURRENT-LIABILITIES> 148,300
<BONDS> 505,700
<COMMON> 5,100
0
0
<OTHER-SE> 469,500
<TOTAL-LIABILITY-AND-EQUITY> 1,364,800
<SALES> 862,500
<TOTAL-REVENUES> 862,500
<CGS> 0
<TOTAL-COSTS> 678,300
<OTHER-EXPENSES> 30,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,500
<INCOME-PRETAX> 119,700
<INCOME-TAX> 39,500
<INCOME-CONTINUING> 80,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 80,200
<EPS-PRIMARY> 2.35
<EPS-DILUTED> 2.35
<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. THIS SCHEDULE HAS BEEN RESTATED
TO CONFORM TO FINANCIAL STATEMENT CLASSIFICATIONS ADOPTED IN 1996.
</LEGEND>
<RESTATED>
<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> 5,000
0
0
<OTHER-SE> 365,700
<TOTAL-LIABILITY-AND-EQUITY> 1,467,700
<SALES> 822,200
<TOTAL-REVENUES> 822,200
<CGS> 0
<TOTAL-COSTS> 718,100
<OTHER-EXPENSES> 36,700
<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
<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. THIS SCHEDULE HAS BEEN RESTATED
TO CONFORM TO FINANCIAL STATEMENT CLASSIFICATIONS ADOPTED IN 1996.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 12,500
<SECURITIES> 0
<RECEIVABLES> 128,300
<ALLOWANCES> 0
<INVENTORY> 31,800
<CURRENT-ASSETS> 184,100
<PP&E> 3,049,900
<DEPRECIATION> 1,809,500
<TOTAL-ASSETS> 1,478,100
<CURRENT-LIABILITIES> 190,500
<BONDS> 739,500
<COMMON> 5,000
0
0
<OTHER-SE> 347,400
<TOTAL-LIABILITY-AND-EQUITY> 1,478,100
<SALES> 789,300
<TOTAL-REVENUES> 789,300
<CGS> 0
<TOTAL-COSTS> 1,086,900
<OTHER-EXPENSES> 22,400
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,600
<INCOME-PRETAX> (345,600)
<INCOME-TAX> (118,700)
<INCOME-CONTINUING> (226,900)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (226,900)
<EPS-PRIMARY> (6.80)
<EPS-DILUTED> (6.80)
