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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to_____
Commission file number: 0-7062
NOBLE AFFILIATES, INC.
(Exact name of registrant as specified in its charter)
Delaware 73-0785597
(State of incorporation) (I.R.S. employer identification number)
110 West Broadway
Ardmore, Oklahoma 73401
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code)
(580) 223-4110
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange on
Title of Each Class Which Registered
------------------- -----------------
Common Stock, $3.33-1/3 par value New York Stock Exchange, Inc.
Preferred Stock Purchase Rights New York Stock Exchange, Inc.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No[ ]
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 the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
Aggregate market value of Common Stock held by nonaffiliates as of February 14,
2000: $1,089,000,000.
Number of shares of Common Stock outstanding as of February 14, 2000: 56,328,163
DOCUMENT INCORPORATED BY REFERENCE
Portions of the Registrant's definitive proxy statement for the 2000 Annual
Meeting of Stockholders to be held on April 25, 2000, which will be filed with
the Securities and Exchange Commission within 120 days after December 31, 1999,
are incorporated by reference into Part III.
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TABLE OF CONTENTS
PART I.
<S> <C> <C>
Item 1. Business...................................................................................... 1
General........................................................................................ 1
Oil and Gas.................................................................................... 2
Exploration Activities.................................................................. 2
Production Activities .................................................................. 3
Acquisitions of Oil and Gas Properties, Leases and Concessions.......................... 4
Marketing............................................................................... 4
Regulations and Risks................................................................... 5
Competition............................................................................. 6
Unconsolidated Subsidiary...................................................................... 7
Employees...................................................................................... 7
Item 2. Properties..................................................................................... 7
Offices........................................................................................ 7
Oil and Gas.................................................................................... 7
Item 3. Legal Proceedings.............................................................................. 15
Item 4. Submission of Matters to a Vote of Security Holders............................................ 16
Executive Officers of the Registrant........................................................... 16
PART II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.......................... 18
Item 6. Selected Financial Data........................................................................ 20
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.......... 21
Item 7a. Quantitative and Qualitative Disclosures About Market Risk..................................... 30
Item 8. Financial Statements and Supplementary Data.................................................... 33
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........... 58
PART III.
Item 10. Directors and Executive Officers of the Registrant............................................. 59
Item 11. Executive Compensation......................................................................... 59
Item 12. Security Ownership of Certain Beneficial Owners and Management................................. 59
Item 13. Certain Relationships and Related Transactions................................................. 59
PART IV
Item 14. Financial Statement Schedules, Exhibits and Reports on Form 8-K................................ 59
</TABLE>
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PART I
ITEM 1. BUSINESS.
Part I and Part II of this Annual Report on Form 10-K include "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). All statements other than statements
of historical facts included in this Annual Report on Form 10-K and the
documents incorporated herein by reference regarding the Company's estimates of
oil and gas reserves and the future net cash flows attributable thereto,
anticipated capital expenditures, projected timing of planned projects or
activities, business strategy, plans and objectives of management of the Company
for future operations and industry conditions, are forward-looking statements.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from the Company's expectations ("Cautionary
Statements") include without limitation future production levels, future prices
and demand for oil and gas, results of future exploration and development
activities, future operating and development costs, the effect of existing and
future laws and governmental regulations (including those pertaining to the
environment) and the political and economic climate of the United States and the
foreign countries in which the Company operates from time to time, as discussed
in this Annual Report on Form 10-K and the other documents of the Company filed
with the Securities and Exchange Commission. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by the Cautionary Statements.
GENERAL
Noble Affiliates, Inc. is a Delaware corporation organized in 1969, and is
principally engaged, through its subsidiaries, in the exploration, production
and marketing of oil and gas.
In this report, unless otherwise indicated or the context otherwise requires,
the "Company" or the "Registrant" refers to Noble Affiliates, Inc. and its
subsidiaries, "Samedan" refers to Samedan Oil Corporation and its subsidiaries,
"EDC" refers to Energy Development Corporation and its subsidiaries, "NGM"
refers to Noble Gas Marketing, Inc. and its subsidiary, and "NTI" refers to
Noble Trading, Inc. Samedan's subsidiaries include EDC. In this report,
quantities of oil or natural gas liquids are expressed in barrels ("BBLS"); and
quantities of natural gas are expressed in thousands of cubic feet ("MCF"),
millions of cubic feet ("MMCF"), billions of cubic feet ("BCF"), trillions of
cubic feet ("TCF") and million British Thermal Units ("MMBTU"). Equivalent units
are expressed in thousand cubic feet of gas equivalents ("MCFe"), million cubic
feet of gas equivalents ("MMCFe"), billion cubic feet of gas equivalents
("BCFe"), trillion cubic feet of gas equivalents ("TCFe"), converting oil to gas
at one barrel of oil equaling six thousand cubic feet of gas, or barrel of oil
equivalents ("BOE") converting gas to oil at six thousand cubic feet of gas to
one barrel of oil.
The Company's wholly-owned subsidiary, NGM, markets the majority of the
Company's natural gas as well as third-party gas. The Company's wholly-owned
subsidiary, NTI, markets a portion of the Company's oil as well as third-party
oil. For more information regarding NGM's operations and NTI's operations, see
"Item 1. Business--Oil and Gas--Marketing" of this Form 10-K.
The Company has one unconsolidated subsidiary, Atlantic Methanol Capital Company
("AMCCO"), a 50 percent owned joint venture that indirectly owns 90 percent of
Atlantic Methanol Production Company ("AMPCO"), which is constructing a methanol
plant in Equatorial Guinea. AMCCO is accounted for using the equity method
within the Registrant's wholly-owned subsidiary, Samedan of North Africa, Inc.
For more information, see "Item 1. Business--Unconsolidated Subsidiary" of this
Form 10-K.
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OIL AND GAS
The Company's wholly-owned subsidiary, Samedan, directly or through various
arrangements with other companies, investigates potential oil and gas
properties, seeks to acquire exploration rights in areas of interest and
conducts exploration activities. Exploration activities include geophysical and
geological evaluation and exploratory drilling on properties for which the
Company has exploration rights. Samedan has been engaged in the exploration,
production and marketing of oil and gas since 1932. Samedan has exploration,
exploitation and production operations domestically and internationally. The
domestic areas consist of: offshore in the Gulf of Mexico and California; the
Gulf Coast Region (Louisiana, New Mexico and Texas); the Mid-Continent Region
(Oklahoma and Southern Kansas); and the Rocky Mountain Region (Colorado,
Montana, North Dakota, Wyoming and California). The international areas of
operations include Argentina, China, Denmark, Ecuador, Equatorial Guinea, the
Mediterranean Sea, the North Sea and the United Kingdom. For more information
regarding Samedan's oil and gas properties, see "Item 2. Properties--Oil and
Gas" of this Form 10-K.
Exploration Activities
Domestic Offshore. Samedan has been actively engaged in exploration,
exploitation and development of oil and gas properties in the Gulf of Mexico
(offshore Texas, Louisiana, Mississippi and Alabama) and offshore California
since 1968. Generally, offshore properties are characterized by prolific
reservoirs with high production rates, which therefore tend to deplete more
rapidly than the Company's onshore properties. The Company's current offshore
production is derived from 241 wells operated by Samedan and 420 wells operated
by others. During the past 31 years, Samedan has drilled or participated in the
drilling of 922 gross wells offshore. At December 31, 1999, the Company held
offshore federal leases covering 1,034,106 gross developed acres and 826,514
gross undeveloped acres on which the Company currently intends to conduct future
exploration activities. For more information, see "Item 2. Properties--Oil and
Gas" of this Form 10-K.
Domestic Onshore. Samedan has been actively engaged in exploration, exploitation
and development of oil and gas properties in three regions. The Gulf Coast
Region covers onshore Louisiana, New Mexico and Texas. The Company has been
active in this area since the 1930's. Properties in the Gulf Coast Region are
characterized by gas reservoirs with strong production rates and oil fields with
primary and secondary recovery operations that tend to deplete more gradually
than the Company's offshore properties. The Mid-Continent Region covers Oklahoma
and Southern Kansas. The Company has been active in this area since 1932.
Properties in the Mid-Continent Region tend to be characterized by stable oil
and gas production from primary and secondary recovery operations and the
reservoirs tend to produce for longer periods compared to the Company's offshore
properties. The Rocky Mountain Region covers Colorado, Montana, North Dakota,
Wyoming and California. Reservoirs in the Rocky Mountain Region are primarily
characterized by oil and gas production from primary, secondary and horizontally
drilled wells. The Rocky Mountain Region has two unitized gas fields each with
an estimated reserve life of 50 years.
Samedan's current onshore production is derived from 1,541 wells operated by
Samedan and 1,407 wells operated by others. At December 31,1999, the Company
held 627,086 gross developed acres and 306,643 gross undeveloped acres onshore
on which the Company currently intends to conduct future exploration activities.
For more information, see "Item 2. Properties--Oil and Gas" of this 10-K.
Argentina. Samedan, through its subsidiary EDC Argentina, Inc., has been
actively engaged in exploration, exploitation and development of oil and gas
properties in Argentina since 1996. The Company's producing properties are
located in southern Argentina in the El Tordillo field, which is characterized
by secondary recovery oil production from a 10,000 acre reservoir. At December
31, 1999, the Company held 28,988 gross developed acres and 1,235,105 gross
undeveloped acres in southern and northwestern Argentina on which the Company
currently intends to conduct future exploration activities. For more
information, see "Item 2. Properties--Oil and Gas" of this Form 10-K.
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China. Samedan, through its subsidiary EDC China, Inc., has been actively
engaged in exploration, exploitation and development of oil and gas properties
in China since 1996. The Company has two concessions in South Bo Hai Bay,
offshore China. These concessions, Cheng Dao Xi and Cheng Zi Kou, are contiguous
and adjoin non-owned production in the southern portion of Bo Hai Bay. At
December 31, 1999, the Company held 229,066 gross undeveloped acres in China, on
which the Company currently intends to conduct future exploration activities.
For more information, see "Item 2. Properties--Oil and Gas" of this Form 10-K.
Ecuador. Samedan, through its subsidiary EDC Ecuador Ltd., has been actively
engaged in exploration, exploitation and development of oil and gas properties
in Ecuador since 1996. The Company's objective in Ecuador is to develop a gas
market for the Amistad gas field (offshore Ecuador) which was discovered in the
late 1970's. The concession covers 864,126 gross undeveloped acres and
encompasses the Amistad field. For more information, see "Item 2.
Properties--Oil and Gas" of this Form 10-K.
Equatorial Guinea. Samedan has been actively engaged in exploration,
exploitation and development of oil and gas properties offshore Equatorial
Guinea (West Africa) since 1990. The primary offshore Equatorial Guinea
production is from the Alba field. The field produces gas and condensate. The
gas production will be utilized as feedstock by a methanol plant currently under
construction. The plant will be owned by AMPCO, in which the Company indirectly
owns a 45 percent interest. For more information on the methanol plant, see
"Item 1. Business--Unconsolidated Subsidiary" of this Form 10-K. Based on
reserve estimates, the Alba field can deliver gas sufficient for the plant to
operate for 30 years. At December 31, 1999, the Company held 26,650 gross
developed acres and 285,307 gross undeveloped acres offshore Equatorial Guinea,
on which the Company currently intends to conduct future exploration activities.
For more information, see "Item 2. Properties--Oil and Gas" of this Form 10-K.
United Kingdom and the North Sea. Samedan, through its subsidiary EDC (Europe)
Limited (formerly Brabant Petroleum Limited), has been actively engaged in
exploration, exploitation and development of oil and gas properties in the
United Kingdom and the North Sea since 1996. The Company's current oil and gas
production in the United Kingdom and the North Sea is derived from 158 wells
operated by others. Reservoirs in the North Sea tend to have the same attributes
as Gulf of Mexico reservoirs. At December 31, 1999, the Company held 128,661
gross developed acres and 404,669 gross undeveloped acres on which the Company
currently intends to conduct future exploration activities. For more
information, see "Item 2. Properties--Oil and Gas" of this Form 10-K.
Denmark. Samedan, through its subsidiary EDC Denmark, Inc., owns a 40 percent
interest in the offshore Denmark license 13/98 comprising Block 5505/09 and the
southwest portion of Block 5505/05. The license encompasses 80,902 gross
undeveloped acres with water depths ranging from 115 feet to 180 feet. For more
information, see "Item 2. Properties--Oil and Gas" of this Form 10-K.
Mediterranean Sea. In 1998, the Company, through its subsidiary, Samedan,
Mediterranean Sea, entered into a participation agreement with a 40 percent
interest covering 11 licenses, permits or leases encompassing 1,062,675 gross
undeveloped acres. The acreage is located about 20 miles offshore Israel in
water depths ranging from 700 feet to 5,000 feet. For more information, see
"Item 2. Properties--Oil and Gas" of this Form 10-K.
Production Activities
Operated Property Statistics. The percentage of oil and gas wells operated and
the percentage of sales volume from operated properties are shown in the
following table as of December 31:
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1999 1998 1997
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(in percentages) Oil Gas Oil Gas Oil Gas
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Operated well count basis 22.8 61.2 20.7 58.9 15.1 60.8
Operated sales volume basis 48.1 59.8 45.3 59.2 48.8 63.5
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Net Production. The following table sets forth Samedan's net oil and natural gas
production including royalty, for the three years ended December 31:
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1999 1998 1997
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Oil Production
(million BBLS) 11.0 13.6 14.0
Gas Production
(BCF) 166.1 206.8 206.4
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Oil and Gas Equivalents. The following table sets forth Samedan's net production
stated in oil and gas equivalent volumes, for the three years ended December 31:
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1999 1998 1997
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Total Oil Equivalents
(million BOE) 38.6 48.1 48.4
Total Gas Equivalents
(BCFe) 231.8 288.3 290.3
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Acquisitions of Oil and Gas Properties, Leases and Concessions
During 1999, Samedan spent approximately $.1 million on the purchase of
producing oil and gas properties. Samedan spent approximately $48.4 million in
1998 and $3.9 million in 1997 on producing properties. For more information, see
"Item 2. Properties--Oil and Gas" of this Form 10-K.
During 1999, Samedan spent approximately $7.9 million on acquisitions of
unproved properties. These properties were acquired primarily through various
offshore lease sales, domestic onshore lease acquisitions and international
concession negotiations. For more information, see "Item 2. Properties--Oil and
Gas" of this Form 10-K.
Marketing
NGM seeks opportunities to enhance the value of the Company's gas by marketing
directly to end users and accumulating gas to be sold to gas marketers and
pipelines. During 1999, approximately 72 percent of NGM's total sales were to
end users. NGM is also actively involved in the purchase and sale of gas from
other producers. Such third-party gas may be purchased from non-operators who
own working interests in the Company's wells or from other producers' properties
in which the Company may not own an interest. NGM, through its wholly-owned
subsidiary, Noble Gas Pipeline, Inc., engages in the installation, purchase and
operation of gas gathering systems.
Samedan and EDC have short-term gas sales contracts with NGM, whereby Samedan
and EDC are paid an index price for all gas sold to NGM. Samedan and EDC sold 59
percent of their production to NGM in 1999. Sales, including hedging
transactions, are recorded as gathering, marketing and processing revenues. NGM
records as cost of sales in gathering, marketing and processing costs, the
amount paid to Samedan, EDC and third parties. All intercompany sales and
expenses are eliminated in the Company's consolidated financial statements. The
Company has a small number of long-term gas contracts representing less than
five percent of its total gas sales.
Oil produced by the Company is sold to purchasers in the United States and
foreign locations at various prices depending on the location and quality of the
oil. The Company has no long-term contracts with purchasers of its oil
production. Crude oil and condensate are distributed through pipelines and by
trucks to gatherers, transportation companies and end users. NTI markets a
portion of the Company's oil as well as certain third-party oil. The Company
records all of NTI's sales as gathering, marketing and processing revenues and
records cost of sales in gathering, marketing and processing costs. All
intercompany sales and expenses are eliminated in the Company's consolidated
financial statements.
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Oil prices are affected by a variety of factors that are beyond the control of
the Company. The principal factors influencing the prices received by producers
of domestic crude oil continue to be the pricing and production of the members
of the Organization of Petroleum Exporting Countries. The Company's average oil
price increased $4.63 from $11.66 per BBL in 1998 to $16.29 per BBL in 1999. Due
to the volatility of oil prices, the Company, from time to time, has used
derivative hedging and may do so in the future as a means of controlling its
exposure to price changes. For additional information, see "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations", "Item
7a. Quantitative and Qualitative Disclosure About Market Risk" and "Item 8.
Financial Statements and Supplementary Data" of this Form 10-K.
Substantial competition in the natural gas marketplace continued in 1999. Gas
prices, which were once determined largely by governmental regulations, are now
being influenced to a greater extent by the marketplace. The Company's average
gas price increased from $2.18 per MCF in 1998 to $2.23 per MCF in 1999. Due to
the volatility of gas prices, the Company, from time to time, has used
derivative hedging and may do so in the future as a means of controlling its
exposure to price changes. For additional information, see "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations", "Item
7a. Quantitative and Qualitative Disclosure About Market Risk" and "Item 8.
Financial Statements and Supplementary Data" of this Form 10-K.
The largest single non-affiliated purchaser of the Company's oil in 1999 was
Plains Marketing, L.P., which accounted for approximately 23 percent of the
Company's oil sales, representing approximately eight percent of total revenues.
The five largest purchasers accounted for approximately 41 percent of total oil
sales. The largest single non-affiliated purchaser of the Company's gas in 1999
accounted for approximately six percent of its gas sales. The five largest
purchasers accounted for approximately 19 percent of total gas sales. The
Company does not believe that its loss of a major oil or gas purchaser would
have a material effect on the Company.
Regulations and Risks
General. Exploration for and production and sale of oil and gas are extensively
regulated at the national, state and local levels. Oil and gas development and
production activities are subject to various state laws and regulations (and
orders of regulatory bodies pursuant thereto) governing a wide variety of
matters, including allowable rates of production, prevention of waste and
pollution, and protection of the environment. Laws affecting the oil and gas
industry are under constant review for amendment or expansion and frequently
increase the regulatory burden on companies. Numerous governmental departments
and agencies are authorized by statute to issue rules and regulations binding on
the oil and gas industry. Many of these governmental bodies have issued rules
and regulations that are often difficult and costly to comply with, and that
carry substantial penalties for failure to comply. These laws, regulations and
orders may restrict the rate of oil and gas production below the rate that would
otherwise exist in the absence of such laws, regulations and orders. The
regulatory burden on the oil and gas industry increases its costs of doing
business and consequently affects the Company's profitability.
Certain Risks. In Samedan's exploration operations, losses may occur before any
accumulation of oil or gas is found. If oil or gas is discovered, no assurance
can be given that sufficient reserves will be developed to enable Samedan to
recover the costs incurred in obtaining the reserves or that reserves will be
developed at a rate sufficient to replace reserves currently being produced and
sold. Samedan's international operations are also subject to certain political,
economic and other uncertainties including, among others, risk of war,
expropriation, renegotiation or modification of existing contracts, taxation
policies, foreign exchange restrictions, international monetary fluctuations and
other hazards arising out of foreign governmental sovereignty over areas in
which Samedan conducts operations.
Environmental Matters. As a developer, owner and operator of oil and gas
properties, the Company is subject to various federal, state, local and foreign
country laws and regulations relating to the discharge of materials into, and
the protection of, the environment. The unauthorized release or discharge of oil
or certain other regulated substances from Samedan's domestic onshore or
offshore facilities could subject Samedan to liability under federal
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laws and regulations, including the Oil Pollution Act of 1990, the Outer
Continental Shelf Lands Act and the Federal Water Pollution Control Act, as
amended. These laws, among others, impose liability for such a release or
discharge for pollution cleanup costs, damage to natural resources and the
environment, various forms of direct and indirect economic losses, civil or
criminal penalties, and orders or injunctions, including those that can require
the suspension or cessation of operations causing or impacting or potentially
impacting such release or discharge. The liability under these laws for a
substantial such release or discharge, subject to certain specified limitations
on liability, may be extraordinarily large. If any pollution was caused by
willful misconduct, willful negligence or gross negligence within the privity
and knowledge of Samedan, or was caused primarily by a violation of federal
regulations, the Federal Water Pollution Control Act provides that such
limitations on liability do not apply. Certain of Samedan's facilities are
subject to regulations that require the preparation and implementation of spill
prevention control and countermeasure plans relating to the prevention of, and
preparation for, the possible discharge of oil into navigable waters.
The Comprehensive Environmental Response, Compensation and Liability Act, as
amended ("CERCLA"), also known as "Superfund," imposes liability on certain
classes of persons that generated a hazardous substance that has been released
into the environment or that own or operate facilities or vessels onto or into
which hazardous substances are disposed. The Resource Conservation and Recovery
Act, as amended, ("RCRA") and regulations promulgated thereunder, regulate
hazardous waste, including its generation, treatment, storage and disposal.
CERCLA currently exempts crude oil, and RCRA currently exempts certain oil and
gas exploration and production drilling materials, such as drilling fluids and
produced waters, from the definitions of hazardous substance and hazardous
waste, respectively. Samedan's operations, however, may involve the use or
handling of other materials that may be classified as hazardous substances and
hazardous wastes, and therefore, these statutes and regulations promulgated
under them would apply to Samedan's generation, handling and disposal of these
materials. In addition, there can be no assurance that such exemptions will be
preserved in future amendments of such acts, if any, or that more stringent laws
and regulations protecting the environment will not be adopted.
Certain of Samedan's facilities may also be subject to other federal
environmental laws and regulations, including the Clean Air Act with respect to
emissions of air pollutants.
Certain state or local laws or regulations and common law may impose liabilities
in addition to, or restrictions more stringent than, those described herein.
The environmental laws, rules and regulations of foreign countries are generally
less stringent than those of the United States, and therefore, the requirements
of such jurisdictions do not generally impose an additional compliance burden on
Samedan or on its subsidiaries.
Samedan has made and will continue to make expenditures in its efforts to comply
with environmental requirements. The Company does not believe that it has to
date expended material amounts in connection with such activities or that
compliance with such requirements will have a material adverse effect upon the
capital expenditures, earnings or competitive position of the Company. Although
such requirements do have a substantial impact upon the energy industry,
generally they do not appear to affect the Company any differently or to any
greater or lesser extent than other companies in the industry.
Insurance. The Company believes that it has such insurance coverages as are
customary in the industry and that it is adequately protected by public
liability and physical damage insurance.
Competition
The oil and gas industry is highly competitive. Since many companies and
individuals are engaged in exploring for oil and gas and acquiring oil and gas
properties, a high degree of competition for desirable exploratory and producing
properties exists. A number of the companies with which Samedan competes are
larger and have greater financial resources than Samedan.
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The availability of a ready market for Samedan's oil and gas production depends
on numerous factors beyond its control, including the level of consumer demand,
the extent of worldwide oil and gas production, the costs and availability of
alternative fuels, the costs and proximity of pipelines and other transportation
facilities, regulation by state and federal authorities and the costs of
complying with applicable environmental regulations.
UNCONSOLIDATED SUBSIDIARY
The Company has one unconsolidated subsidiary, AMCCO, a 50 percent owned joint
venture that owns an indirect 90 percent interest in AMPCO. The Company accounts
for its interest in AMCCO using the equity method within the Company's
wholly-owned subsidiary, Samedan of North Africa, Inc. For more information, see
"Item 8. Financial Statements and Supplementary Data" of this Form 10-K. Samedan
is participating with a 50 percent expense interest (45 percent ownership net of
a five percent government carried interest) to construct a methanol plant in
Equatorial Guinea. The total projected cost of the plant and supporting
facilities is estimated to be $423.8 million including various contingencies and
capitalized interest, with the Company responsible for $211.9 million. The plant
is designed to produce 2,500 metric tons of methanol per day, which equates to
approximately 20,000 BBLS per day. At this level of production, the plant would
use approximately 120 MMCF of gas per day from the Alba field as feedstock.
Reserve estimates indicate the Alba field can deliver sufficient gas for the
plant to operate 30 years. The construction contract stipulates that first
production should be achieved by the first quarter of 2001. Current marketing
plans are to use two tankers, which are under long-term contracts, to transport
the methanol to markets in Europe and the United States. During 1999, AMCCO
issued $125 million senior secured notes due 2004 that are not included in the
Company's balance sheet. For more information, see "Item 7. Management
Discussion and Analysis of Financial Condition and Results of Operations" of
this Form 10-K.
EMPLOYEES
During the year, the total number of employees of the Company decreased from 630
at December 31, 1998, to 556 at December 31, 1999.
ITEM 2. PROPERTIES.
OFFICES
The principal executive office of the Registrant is located in Ardmore,
Oklahoma. The principal office of Samedan is in Ardmore, Oklahoma. Samedan
maintains offices for international, domestic onshore, and domestic offshore
operations in Houston, Texas. Samedan also maintains offices in the United
Kingdom, China and Ecuador. NGM's office is located in Houston, Texas, and NTI's
office is located in Ardmore, Oklahoma.
OIL AND GAS
Samedan, directly or through various arrangements with others, searches for
potential oil and gas properties, seeks to acquire exploration rights in areas
of interest and conducts exploratory activities. These activities include
geophysical and geological evaluation and exploratory drilling, where
appropriate, on properties for which it acquired exploration rights. During
1999, Samedan drilled or participated in the drilling of 113 gross (49.0 net)
wells, comprised of 41 gross (7.4 net) international wells and 72 gross (41.6
net) domestic wells. For more information regarding Samedan's oil and gas
properties, see "Item 1. Business--Oil and Gas" of this Form 10-K.
Domestic Offshore. In the Gulf of Mexico during 1999, Samedan drilled or
participated in the drilling of 28 gross wells, of which 11 were exploratory
wells (5.7 net) and 17 were development wells (8.7 net) in federal and state
waters offshore Texas, Louisiana, Mississippi and Alabama. Of the 28 gross
wells, 22 wells (11.8 net) were completed as productive and 6 wells (2.6 net)
were abandoned as dry holes. Samedan was high bidder on 19 tracts in the two
federal lease sales during the year and was awarded 18 new leases, of which
eight are located in water depths greater than 1,000 feet. The Company intends
to remain active in these areas of the Gulf of Mexico.
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In 1999, the Company drilled four 100 percent owned wells on its High Island
A-517 Block, offshore Texas. At year end, the property was producing
approximately 51.1 MMCF of gas per day, compared to .6 MMCF at the beginning of
the year.
Drilling and completion operations were finalized on Samedan's 25 percent owned
Vermilion 379 property, located offshore Louisiana in 347 feet of water. The
field commenced production in July and was producing approximately 2,100 BBLS of
oil and 20.7 MMCF of gas per day at year end.
Samedan drilled a second successful well on Viosca Knoll 251 which will allow
the Company to move forward with development plans for the area. The Company
expects a four-pile, six-slot drilling and production platform to be installed
in the third quarter of 2000. Upon installation of a 32-mile pipeline, sales
should commence in the fourth quarter of 2000. Samedan owns a 40 percent working
interest in the 69,120 gross acre unit.
Samedan mobilized a drilling rig on its Main Pass 305/306 "D" platform in the
fourth quarter. Two successful infill oil wells were drilled with four more
scheduled to be drilled early in 2000, which should increase production by
approximately 1,500 BBLS per day if all six wells are successful. The Company
owns 100 percent of the working interest in the field.
In late 1999, the Company made three apparent discoveries; West Cameron 613,
West Delta 59 and Vermilion 408.
West Cameron 613, in which Samedan owns 25 percent, logged 140 feet of gas pay
during November. One additional well may be drilled prior to installation of
production facilities.
At West Delta 59, Samedan encountered approximately 40 feet of oil and 276 feet
of gas pay in 11 zones, as determined from electric logs. The well was finalized
in December and development plans are being formulated. The field, in which the
Company owns 25 percent, is expected to commence production in the third quarter
of 2000.
Samedan logged 167 feet of oil and gas pay in Vermilion 408 during December. The
well is located in 388 feet of water and development options will be evaluated
early in 2000. The Company owns a 20 percent interest in the property.
Domestic Onshore. Samedan participated in drilling 44 gross (27.2 net) domestic
onshore wells during 1999. That compares to 97 gross (56.2 net) wells drilled
during the previous year.
During 1999, Samedan took advantage of the decreased drilling activity to review
its producing property inventory. As a result of the review, the Company sold
numerous wells and fields that did not fit its long-term strategy. Samedan
received approximately $57.5 million for the 5.1 million BBLS of oil and 34.2
BCF of gas reserves sold.
Subsequent to the reduction in onshore producing properties, Samedan
consolidated all domestic onshore operations to Houston. The Oklahoma City and
Denver offices were closed in the fourth quarter of 1999. The Company believes
that the office consolidation will result in improved efficiency and cost
reduction.
With current product prices, the Company expects to increase onshore drilling
activity and exploration expenditures. The Company intends to continue its
activities on prospects in the Gulf Coast, Rocky Mountain and the Mid-Continent
with larger ownership participation.
One such prospect is the Cat Creek #1-19 well located in Beckham County,
Oklahoma. The well, in which the Company has a 52 percent participation, is
targeted to test the Hunton formation at approximately 25,000 feet. The Company
projects potential reserves of 25 BCF of gas and expects the well to cost $7.5
million and take 300 days to drill.
Argentina. The Company participated with a 13 percent working interest in 37
exploitation wells drilled in the El Tordillo field during 1999. At 1999 year
end, the field was producing approximately 2,400 BBLS of oil per day, net to the
Company's interest. The 2000 budget proposed by the field operator consists of
approximately 60 additional exploitation wells.
8
<PAGE> 11
In October 1999, the Company was awarded exploratory block CCyB-17/A containing
approximately 1,150,000 gross undeveloped acres in the Cuyo Basin near Mendosa,
Argentina. The Company has a 100 percent working interest and will commence
seismic activities in 2000.
China. The Company is moving forward with the development of the Cheng Dao Xi
oil field, located offshore China in the Bo Hai Bay. The field has been
partially delineated by wells drilled by the Company in 1998 and prior to that
by the Chinese National Oil Company. Development plans include installation of
two 18-slot drilling and production platforms and a five-mile pipeline.
Development cost of the field is approximately $122 million, which will be
shared 57 percent by the Company and 43 percent by the Chinese National Oil
Company. First oil production from the field is projected for the fourth quarter
of 2001.
The Company drilled an exploratory well on its Cheng Zi Kou permit during the
year. The well logged 45 feet of oil pay, but tests were inconclusive. The
Company will analyze the well test information, logs and other data in order to
formulate a second test program.
Ecuador. The Company owns a 100 percent working interest in the Block 3
concession, located offshore Ecuador in the Gulf of Guayaquil. The concession
includes 864,126 gross undeveloped acres and encompasses the Amistad gas field.
The Company constructed a drilling and production platform for the Amistad gas
field, which is scheduled to be installed in March 2000. A platform drilling rig
has been contracted to drill four wells which should take approximately five
months.
In 1999, the Company recorded 87.5 BCF of gas reserves associated with the
field. The Company expects the drilling results will add additional gas reserves
in 2000.
Gas from the field is targeted to supply an electrical power generation facility
to be constructed near the city of Machala. While various partners for
electrical power generation projects are being evaluated, the Company has made a
deposit with General Electric to hold two combined cycle units which will be
capable of producing 200 megawatts of electricity. The units would be available
for installation in the first quarter of 2001 and ready to receive gas
approximately six months later.
Equatorial Guinea. Plans to expand the gas and condensate production from the
Company's Alba Field are well underway. The overall plan encompasses replacing
the existing minimal production platform, installing a second production
platform, drilling four development wells and installing gas reinjection and
pipeline facilities. The platforms are fabricated and scheduled to be installed
in April 2000. Drilling operations are expected to be conducted between May 2000
and April 2001. Overall field expansion is projected to be completed by April
2001. The Company's net share of the expansion cost is approximately $46.8
million, of which $31.1 million is budgeted as a 2000 expenditure. When the
expansion is completed, the field should be capable of increasing production by
approximately 160 MMCF of gas per day, 10,000 BBLS of condensate per day and 800
BBLS of natural gas liquids per day. The Company owns a 34.8 percent working
interest in the field.
The Company indirectly owns a 45 percent interest in AMPCO, which is
constructing a methanol plant to use gas from the Alba field. The plant is
designed to produce 2,500 metric tons of methanol per day, which is the
equivalent of approximately 20,000 BBLS per day. The plant is designed to use
approximately 120 MMCF of gas per day and is approximately 49 percent complete.
It is being built under a turnkey construction contract and is projected to be
completed in the second quarter of 2001. For additional information, see "Item
1. Business--Unconsolidated Subsidiary" of this Form 10-K.
North Sea. Low oil prices significantly reduced drilling and workover activity
on the Company's North Sea properties. The Company participated in two gross (.6
net) wells for the year.
The Company acquired approximately 175 square miles of 3-D seismic to evaluate
its 28/15 and 29/11 blocks, which the Company will operate with a 40 percent
interest.
Denmark. The Company owns a 40 percent working interest in license 13/98,
located offshore Denmark. The license encompasses 80,902 gross undeveloped acres
with water depths ranging from 115 feet to 180 feet.
9
<PAGE> 12
In 1999, the Company acquired approximately 686 square miles of 3-D seismic to
evaluate the Company's license 13/98.
Mediterranean Sea. The Company has an offshore Israel exploration participation
agreement, which covers 11 licenses, permits or leases encompassing 1,062,675
gross undeveloped acres. The acreage is located in water depths ranging from 700
feet to 5,000 feet.
During 1999, the Company made an exciting gas discovery and has been awarded a
lease granting the right to develop and produce hydrocarbons. The Company
drilled the Noa #1 well in 2,550 feet of water, approximately 20 miles off the
coast. The well logged 64 feet of apparent gas pay in two zones. The well tested
gas at the rate of 30 MMCF per day with minimal drawdown of bottom hole
pressure. The well was temporarily abandoned pending further delineation
drilling in the area.
The Company has a three well commitment for a semi-submersible rig, which is
currently on location. The Company has shot approximately 3,300 miles of
additional seismic lines to assist with selecting drilling locations. It is
anticipated that the three well program will delineate sufficient reserves to
move forward with field development.
Net Exploratory and Developmental Wells. The following table sets forth, for
each of the last three years, the number of net exploratory and development
wells drilled by or on behalf of Samedan. An exploratory well is a well drilled
to find and produce oil or gas in an unproved area, to find a new reservoir in a
field previously found to be productive of oil or gas in another reservoir, or
to extend a known reservoir. A development well, for purposes of the following
table and as defined in the rules and regulations of the Securities and Exchange
Commission, is a well drilled within the proved area of an oil or gas reservoir
to the depth of a stratigraphic horizon known to be productive. The number of
wells drilled refers to the number of wells completed at any time during the
respective year, regardless of when drilling was initiated. Completion refers to
the installation of permanent equipment for the production of oil or gas, or in
the case of a dry hole, to the reporting of abandonment to the appropriate
agency.
<TABLE>
<CAPTION>
Net Exploratory Wells Net Development Wells
-------------------------------------- ----------------------------------------
Productive(1) Dry(2) Productive(1) Dry(2)
-------------------------------------- ----------------------------------------
Year Ended
December 31, U.S. Int'l U.S. Int'l U.S. Int'l U.S. Int'l
- ------------ ----- ----- ----- ----- ------ ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 6.97 2.00 6.14 .55 26.10 4.82 2.42 .01
1998 15.63 .13 15.16 .33 42.21 3.92 10.71
1997 13.98 .76 25.08 3.79 155.93 3.13 7.89
</TABLE>
- ---------------
(1) A productive well is an exploratory or a development well that is not a dry
hole.
(2) A dry hole is an exploratory or development well found to be incapable of
producing either oil or gas in sufficient quantities to justify completion
as an oil or gas well.
At January 31, 2000, Samedan was drilling 10 gross (4.4 net) exploratory wells
and 12 gross (2.3 net) development wells. These wells are located in Oklahoma,
Texas, Louisiana, the Gulf of Mexico and Argentina. These wells have objectives
ranging from approximately 4,800 feet to 25,000 feet. The drilling cost to
Samedan of these wells is approximately $13.4 million if all are dry and
approximately $19.1 million if all are completed as producing wells.
10
<PAGE> 13
Oil and Gas Wells. The number of productive oil and gas wells in which Samedan
held an interest as of December 31, were as follows:
<TABLE>
<CAPTION>
1999(1)(2)(3) 1998(1)(3) 1997(1)(3)
------------ ---------- ----------
Gross Net Gross Net Gross Net
------- ----- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
OIL WELLS
United States - Onshore 1,512.5 683.2 4,571.5 895.8 4,614.5 881.4
United States - Offshore 254.5 128.2 344.0 145.9 327.0 140.3
International 1,041.0 122.9 1,019.0 119.2 549.0 58.5
------- ----- ------- ------- ------- -------
Total 2,808.0 934.3 5,934.5 1,160.9 5,490.5 1,080.2
======= ===== ======= ======= ======= =======
GAS WELLS
United States - Onshore 1,435.5 873.9 1,608.5 944.7 1,568.5 920.9
United States - Offshore 406.5 150.4 410.0 152.2 480.0 176.6
International 27.0 2.5 25.0 2.0 25.0 1.9
------- ----- ------- ------- ------- -------
Total 1,869.0 1,026.8 2,043.5 1,098.9 2,073.5 1,099.4
======= ===== ======= ======= ======= =======
</TABLE>
(1) Productive wells are producing wells and wells capable of production. A
gross well is a well in which a working interest is owned. The number of
gross wells is the total number of wells in which a working interest is
owned. A net well is deemed to exist when the sum of fractional ownership
working interests in gross wells equals one. The number of net wells is the
sum of the fractional working interests owned in gross wells expressed as
whole numbers and fractions thereof.
(2) During 1999, the Company sold 250 net non-strategic wells contributing to
the decreased well count.
(3) One or more completions in the same bore hole is counted as one well in
this table. The following table summarizes multiple completions and
non-producing wells as of December 31 for the years shown. Included in
wells not producing are productive wells awaiting additional action,
pipeline connections or shut-in for various reasons.
<TABLE>
<CAPTION>
1999 1998 1997
-------------------- ---------------------- ----------------------
Gross Net Gross Net Gross Net
----- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
MULTIPLE COMPLETIONS
Oil 14.0 9.2 21.5 15.5 24.5 18.1
Gas 49.0 23.2 47.5 24.7 48.5 21.6
NOT PRODUCING (SHUT-IN)
Oil 857.0 233.5 1,609.5 237.2 1,017.0 127.3
Gas 33.0 4.5 58.5 23.2 79.5 50.1
</TABLE>
At year-end 1999, Samedan had less than five percent of its oil and gas sales
volumes committed to long-term supply contracts and had no similar agreements
with foreign governments or authorities in which Samedan acts as producer.
Since January 1, 1999, no oil or gas reserve information has been filed with, or
included in any report to any federal authority or agency other than the
Securities and Exchange Commission and the Energy Information Administration
("EIA"). Samedan files Form 23, including reserve and other information, with
the EIA.
11
<PAGE> 14
Average Sales Price. The following table sets forth for each of the last three
years the average sales price per unit of oil produced and per unit of natural
gas produced, and the average production cost per unit.
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Average sales price per BBL of oil (1):
United States $ 16.37 $ 11.98 $ 18.49
International $ 16.01 $ 10.28 $ 15.55
Combined (2) $ 16.29 $ 11.66 $ 17.86
Average sales price per MCF of natural gas (1):
United States $ 2.30 $ 2.18 $ 2.48
International $ 1.38 $ 2.13 $ 2.29
Combined (3) $ 2.23 $ 2.18 $ 2.48
Average production (lifting) cost per unit of oil and
natural gas production, excluding depreciation
(MCFe) (4):
United States $ .51 $ .50 $ .53
International $ .49 $ .66 $ .85
Combined $ .50 $ .52 $ .55
</TABLE>
(1) Net production amounts used in this calculation include royalties.
(2) Reflects a reduction of $.19 per BBL in 1997 from hedging.
(3) Reflects a reduction of $.12 per MCF in 1997 from hedging.
(4) Oil production is converted to gas equivalents (MCFe) based on one BBL of
oil equals six MCF of gas.
12
<PAGE> 15
[GRAPH]
SIGNIFICANT OFFSHORE UNDEVELOPED LEASE HOLDINGS (interests rounded to nearest
whole percent)
<TABLE>
<CAPTION>
Net Working
Block Interest (%)
- ----- ------------
East Breaks
- -----------
<S> <C>
279 33
420* 50
421* 50
464* 50
465* 50
475* 100
510* 33
519* 100
563* 100
588* 100
589* 100
632* 100
633* 100
Green Canyon
- ------------
23* 50
24* 43
25* 43
27* 43
85* 50
227* 50
228* 50
303* 40
955* 7
Galveston
- ---------
249-L 50
250-L 50
274-L 50
275-L 50
340-S 50
341-S 50
349-S 50
Ship Shoal
- ----------
313 40
South Marsh Island
- ------------------
62 67
63 67
64 67
65 67
70 50
104 100
167 100
179 35
180 35
185 35
186 35
191 50
195 50
Mississippi Canyon
- ------------------
524* 50
573 100
583* 50
595* 25
618* 50
639* 25
661* 25
665* 50
705* 25
849* 50
South Timbalier
- ---------------
98 50
156 67
315 30
West Cameron
- ------------
136 40
583 100
602 100
614 25
Brazos
- ------
A-2 17
A-5 17
A-6 17
308-L 50
336-L 50
337-L 50
542 17
543 100
Ewing Bank
- ----------
833* 14
834* 14
993 50
995 43
996 43
Vermilion
- ---------
232 50
278 50
280 50
283 50
285 50
286 100
300 50
312 100
345 75
349 75
360 67
361 67
365 50
366 75
377 100
394 75
Eugene Island
- -------------
300 67
317 67
High Island
- -----------
A-232 100
A-426 33
A-435 33
A-516 100
South Pass
- ----------
41 50
Garden Banks
- ------------
25 100
34 100
35 100
62 25
63 25
64 25
78 100
107 25
116 100
122 100
154 100
163 100
326* 100
751* 100
795* 100
841* 40
Viosca Knoll
- ------------
344 100
697 50
820 50
Main Pass
- ---------
192 100
Atwater Valley
- --------------
327* 40
533* 40
</TABLE>
13
<PAGE> 16
The developed and undeveloped acreage (including both leases and concessions)
that Samedan held as of December 31, 1999, is as follows:
<TABLE>
<CAPTION>
Developed Acreage (1)(2) Undeveloped Acreage (2)(3)
---------------------------- ----------------------------
Location Gross Acres Net Acres Gross Acres Net Acres
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
United States Onshore
Alabama 2,396 506
California 5,542 2,318 3,155 867
Colorado 65,408 61,968 25,305 20,780
Kansas 92,601 53,073 20,042 11,908
Louisiana 18,435 6,221 2,748 1,039
Mississippi 878 34 1,884 51
Montana 172,844 119,234 26,435 8,353
New Mexico 3,117 1,766 3,785 2,246
North Dakota 9,376 3,983 15,791 11,413
Oklahoma 144,252 56,466 56,224 21,766
Texas 84,470 37,714 86,046 51,745
Wyoming 24,963 12,004 58,709 36,458
Other 5,200 2,443 4,123 1,327
--------- ------- --------- ---------
Total United States Onshore 627,086 357,224 306,643 168,459
--------- ------- --------- ---------
United States Offshore (Federal Waters)
Alabama 69,120 27,648 42,883 23,458
California 33,074 5,727 63,884 6,283
Florida 11,520 2,304
Louisiana 634,800 277,290 429,081 223,010
Mississippi 33,931 24,061 51,840 22,560
Texas 263,181 105,584 227,306 156,376
--------- ------- --------- ---------
Total United States Offshore (Federal Waters) 1,034,106 440,310 826,514 433,991
--------- ------- --------- ---------
International
Argentina 28,988 3,977 1,235,105 1,162,339
Australia 938,999 373,252
China 229,066 178,327
Denmark 80,902 32,361
Ecuador 864,126 864,126
Equatorial Guinea 26,650 9,272 285,307 99,263
Ireland 296,797 169,174
Israel 1,062,675 425,070
United Kingdom 128,661 4,168 404,669 141,592
------- ----- ------- -------
Total International 184,299 17,417 5,397,646 3,445,504
------- ------ --------- ---------
Total 1,845,491 814,951 6,530,803 4,047,954
========= ======= ========= =========
</TABLE>
(1) Developed acreage is acreage spaced or assignable to productive wells.
(2) A gross acre is an acre in which a working interest is owned. A net acre is
deemed to exist when the sum of fractional ownership working interests in
gross acres equals one. The number of net acres is the sum of the
fractional working interests owned in gross acres expressed as whole
numbers and fractions thereof.
(3) Undeveloped acreage is considered to be those leased acres on which wells
have not been drilled or completed to a point that would permit the
production of commercial quantities of oil and gas regardless of whether or
not such acreage contains proved reserves. Included within undeveloped
acreage are those leased acres (held by production under the terms of a
lease) that are not within the spacing unit containing, or acreage assigned
to, the productive well so holding such lease.
14
<PAGE> 17
ITEM 3. LEGAL PROCEEDINGS.
Noble Drilling Corp., Noble Drilling Services Inc., and Noble Drilling (U.S.)
Inc. (the "Plaintiffs") filed suit on January 6, 2000 in Harris County State
Court, Texas against Samedan. The Plaintiffs claim that a contract existed
between one of the Plaintiffs and Samedan regarding the alleged commitment by
Samedan to use the semi-submersible rig known as the Noble Homer Ferrington for
a period of two and one half years at a set rate of $158,500 per day. Thus, the
Plaintiffs seek to have the court recognize the alleged agreement as
enforceable. The Plaintiffs further claim that Samedan has breached the alleged
agreement by requesting assurances from the Plaintiffs that the Noble Homer
Ferrington rig will have certain performance characteristics, which
characteristics the Plaintiffs allege exceed the agreed characteristics under
the alleged agreement. The Plaintiffs claim that Samedan's breach has caused
them unspecified damages.
Alternatively, the Plaintiffs claim that if there was no valid and binding
agreement whereby Samedan would use the rig at the stated amount, then the
Plaintiffs believed that Samedan represented and promised that it would pay the
stated amount for the use of the rig. Under this alternative claim, Plaintiffs
allege that they built the rig in justifiable reliance on Samedan's
representations and promises, thus allowing the Plaintiffs to recover the costs
of the rig's construction (which the Plaintiffs claim is in excess of
$176,000,000) from Samedan and an unrelated co-defendant. Finally, the
Plaintiffs seek to recover their attorneys fees incurred in connection with this
matter.
Samedan claims that the alleged agreement is no more than a letter of intent
that did not materialize into an agreement requiring Samedan to use the Noble
Homer Ferrington rig and pay the daily rate, including based on the Plaintiffs'
characterization of the alleged agreement as a letter of intent that was not a
final agreement. Further, Samedan claims that the letter of intent expired by
its own terms in May 1998. Samedan further claims that the Noble Homer
Ferrington rig does not conform to the representations of operating efficiency
that the Plaintiffs advised Samedan that the Noble Homer Ferrington rig would be
able to achieve. Thus, Samedan believes it is not obligated to accept the rig or
pay the Plaintiffs and intends to vigorously defend this matter.
15
<PAGE> 18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders during the fourth
quarter of 1999.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information, as of March 13, 2000, with
respect to the executive officers of the Registrant.
<TABLE>
<CAPTION>
Name Age Position
- ---------------- --- --------------------------------------------------------------------
<S> <C> <C>
Robert Kelley (1) 54 Chairman of the Board, President, Chief Executive Officer, Director
Dan O. Dinges (2) 46 Senior Vice President and Operating Committee Member of Samedan
James L. McElvany (3) 46 Vice President-Finance and Treasurer of the Registrant and Operating
Committee Member of Samedan
W. A. Poillion (4) 50 Senior Vice President and Operating Committee Member of Samedan
Orville Walraven (5) 55 Corporate Secretary of the Registrant and Senior Vice President and
Operating Committee Member of Samedan
James C. Woodson (6) 57 Senior Vice President and Operating Committee Member of Samedan
</TABLE>
- -----------------------
(1) Robert Kelley has served as President and Chief Executive Officer of the
Registrant since August 1, 1986, and as Chairman of the Board since October
27, 1992. Prior to August 1986, he had served as Executive Vice President
of the Registrant from January 1986. Mr. Kelley also serves as President
and Chief Executive Officer of Samedan, positions he has held since 1984.
For more than five years prior thereto, Mr. Kelley served as an officer of
Samedan. He has served as a director of the Company since 1986.
(2) Dan O. Dinges was promoted to Senior Vice President and Division General
Manager, Offshore Division of Samedan on January 1, 1998. Prior thereto, he
had served as Vice President and General Manager Offshore Division of
Samedan since January 1989. Mr. Dinges has been a member of the Operating
Committee of Samedan since January 31, 1995.
(3) James L. McElvany has served as Vice President-Finance and Treasurer of the
Registrant since July 1, 1999. Prior to July 1999, he had served as Vice
President-Controller of the Registrant since December 1997. Prior thereto,
he served as Controller of the Registrant since December 1983. He has been
a member of the Operating Committee of Samedan since July 1, 1999.
(4) W. A. Poillion was promoted to Senior Vice President-Production and
Drilling of Samedan on January 1, 1998. Prior thereto, he had served as
Vice President-Production and Drilling of Samedan since November 1990. He
has been a member of the Operating Committee of Samedan since November 1,
1990. From March 1, 1985 to October 31, 1990, he served as Manager of
Offshore Production and Drilling for Samedan.
(5) Orville Walraven has served as Corporate Secretary of the Registrant since
January 1, 1989. He was promoted to Senior Vice President-Land of Samedan
on January 1, 1998. Prior thereto, he had served as Vice President-Land of
Samedan since January 1, 1989. He has been a member of the Operating
Committee of Samedan since January 1, 1989.
16
<PAGE> 19
(6) James C. Woodson was promoted to Senior Vice President-Exploration of
Samedan on January 1, 1998. Prior thereto, he had served as Vice
President-Exploration since September 1, 1983. Mr. Woodson has been a
member of the Operating Committee of Samedan since August 1, 1986.
The terms of office for the officers of the Registrant continue until their
successors are chosen and qualified. No officer or executive officer of the
Registrant has an employment agreement with the Registrant or any of its
subsidiaries. There are no family relationships between any of the Registrant's
officers.
17
<PAGE> 20
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Common Stock. The Registrant's Common Stock, $3.33 1/3 par value ("Common
Stock"), is listed and traded on the New York Stock Exchange under the symbol
"NBL." The declaration and payment of dividends are at the discretion of the
Board of Directors of the Registrant and the amount thereof will depend on the
Registrant's results of operations, financial condition, contractual
restrictions, cash requirements, future prospects and other factors deemed
relevant by the Board of Directors.
Stock Prices and Dividends by Quarters. The following table sets forth, for the
periods indicated, the high and low sales price per share of Common Stock on the
New York Stock Exchange and quarterly dividends paid per share.
<TABLE>
<CAPTION>
Dividends
High Low Per Share
---- --- ----------
1999
- ----
<S> <C> <C> <C>
First quarter $31 7/16 $19 1/4 $.04
Second quarter $35 $24 7/8 $.04
Third quarter $33 7/8 $27 $.04
Fourth quarter $29 3/16 $19 1/8 $.04
1998
- ----
First quarter $46 3/16 $32 3/4 $.04
Second quarter $44 3/4 $35 5/16 $.04
Third quarter $38 1/4 $22 5/8 $.04
Fourth quarter $35 7/16 $21 15/16 $.04
</TABLE>
Transfer Agent and Registrar. The transfer agent and registrar for the Common
Stock is First Chicago Trust Company, 525 Washington Boulevard, Jersey City, New
Jersey 07310.
Stockholders' Profile. As of December 31, 1999, the number of holders of record
of Common Stock was 1,295. The following chart indicates the common stockholders
by category.
<TABLE>
<CAPTION>
Shares
December 31, 1999 Outstanding
- ----------------- -----------
<S> <C>
Individuals 417,368
Joint accounts 71,343
Fiduciaries 159,301
Institutions 2,513,874
Nominees 53,878,134
Foreign 5,043
----------
Total 57,045,063
==========
</TABLE>
Recent Sales of Unregistered Securities. The Company's unconsolidated
subsidiary, Atlantic Methanol Capital Company ("AMCCO"), is a 50 percent owned
joint venture that indirectly owns 90 percent of Atlantic Methanol Production
Company ("AMPCO"), which is constructing a methanol plant in Equatorial Guinea.
On November 10, 1999, AMCCO issued $125 million of 8.95% Series A-2 Senior
Secured Notes Due 2004, which are not included in the Company's balance sheet
(the "Series A-2 Notes") to fund the Company's portion of the remaining
construction payments.
The Company has guaranteed the payment of interest on the Series A-2 Notes. In
addition, the Company established a new series of preferred stock, Series B
Mandatorily Convertible Preferred Stock, par value $1.00 per share (the "Series
B Preferred"). The Company issued, in a private placement pursuant to Section
4(2) of the Securities Act, 125,000 shares of the Series B Preferred to Noble
Share Trust, which is a Delaware statutory business trust, in exchange for all
of the beneficial ownership interests in Noble Share Trust.
18
<PAGE> 21
Noble Share Trust holds the 125,000 shares of Series B Preferred for the benefit
of the holders of the Series A-2 Notes. The Series A-2 indenture trustee, and
the holders of 25% of the outstanding principal amount of the Series A-2 Notes,
would have the right to require a public offering of the Series B Preferred to
generate proceeds sufficient to repay the Series A-2 Notes, upon the occurrence
of certain events ("Trigger Dates"), including (i) defaults under the Indenture
governing the Series A-2 Notes, (ii) a default and acceleration of the Company's
debt exceeding 5% of the Company's consolidated net tangible assets, and (iii)
the simultaneous occurrence of a downgrade of the Company's unsecured senior
debt rating to "Ba1" or below by Moody's or "BB+" or below by Standard & Poor's
and a decline in the closing price of the Company's common stock for three
consecutive trading days to below $17.50. The exercise of this mandatory
remarketing right is subject to certain forbearance provisions that would allow
the Company the opportunity to obtain funds for the repayment of the Series A-2
Notes by alternative means for a specified period of time.
The terms of the Series B Preferred, including dividend and conversion features,
would be reset at the time of the remarketing, based on the recommendation of
Donaldson, Lufkin & Jenrette, as Remarketing Agent, as to the terms necessary to
generate proceeds to repay the Series A-2 Notes. If the Remarketing Agent is not
able to complete a registered public offering of the Series B Preferred, it may
under certain circumstances conduct a private placement of such stock. If it is
impossible for legal reasons to remarket the Series B Preferred, the Company
would be obligated to repay the Series A-2 Notes.
The Series B Preferred stock would be mandatorily convertible into the Company's
common stock three years after remarketing (or failed remarketing). Generally,
each share of Series B Preferred would then be mandatorily convertible at the
"Mandatory Conversion Rate," which is equal to the following number of shares of
the Company's common stock:
(a) if the Mandatory Conversion Date Market Price is greater than or equal
to the Threshold Appreciation Price, the quotient of (i) $1,000 divided by
(ii) the Threshold Appreciation Price;
(b) if the Mandatory Conversion Date Market Price is less than the
Threshold Appreciation Price but is greater than the Reset Price, the
quotient of $1,000 divided by the Mandatory Conversion Date Market Price;
and
(c) if the Mandatory Conversion Date Market Price is less than or equal to
the Reset Price, the quotient of $1,000 divided by the Reset Price.
"Mandatory Conversion Date Market Price" means the average closing price per
share of the Company's common stock for the 20 consecutive trading days
immediately prior to, but not including, the mandatory conversion date.
"Threshold Appreciation Price" means the product of (i) the Reset Price (as the
same may be adjusted from time to time) and (ii) 110 percent.
"Reset Price" means the higher of (i) the closing price of a share of the
Company's common stock on the Trigger Date or (ii) the quotient (rounded up to
the nearest cent) of $125,000,000 divided by the number, as of the Trigger Date,
of the authorized but unissued shares of common stock that have not been
reserved as of the Trigger Date by the Company's Board of Directors for other
purposes.
In addition to the mandatory conversion discussed above, each share of the
Series B Preferred is generally convertible, at the option of the holder thereof
at any time before the mandatory conversion date, into 36.364 shares of the
Company's common stock (the "Optional Conversion Rate"); provided, however, that
the Optional Conversion Rate shall adjust, as of the earlier to occur of
remarketing or failed remarketing, to the quotient of (i) $1,000 divided by (ii)
the Threshold Appreciation Price.
19
<PAGE> 22
ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------
(in thousands, except per share amounts and ratios) 1999 1998 1997 1996 1995
---------- ----------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
REVENUES AND INCOME
Revenues $ 909,842 $ 911,616 $1,116,623 $ 887,203 $487,018
Net cash provided by operating activities 347,103 324,275 445,571 380,945 238,920
Net income 49,461 (164,025) 99,278 83,880 4,086
PER SHARE DATA
Basic earnings per share $ .87 $ (2.88) $ 1.75 $ 1.63 $ .08
Cash dividends $ .16 $ .16 $ .16 $ .16 $ .16
Year-end stock price $ 21.44 $ 24.63 $ 35.25 $ 47.88 $ 29.88
Basic weighted average shares outstanding 57,005 56,955 56,872 51,414 50,046
FINANCIAL POSITION (at year end)
Property, plant and equipment, net:
Oil and gas mineral interests,
equipment and facilities $1,242,370 $ 1,429,667 $1,546,426 $1,559,691 $831,827
Total assets 1,450,351 1,686,080 1,852,782 1,956,938 989,176
Long-term obligations:
Long-term debt, net of current portion 445,319 745,143 644,967 798,028 376,992
Deferred income taxes 83,075 106,823 144,083 108,434 69,445
Other 53,877 52,868 56,425 50,603 33,650
Shareholders' equity 683,609 642,080 812,989 720,067 411,911
Ratio of debt to book capital .39 .54 .44 .54 .48
CAPITAL EXPENDITURES
Oil and gas mineral interests,
equipment and facilities $ 121,077 $ 445,910 $ 320,561 $ 982,499 $252,977
Other 1,410 2,733 8,499 3,485 6,265
----------- ----------- ---------- ---------- --------
Total capital expenditures $ 122,487 $ 448,643 $ 329,060 $ 985,984 $259,242
=========== =========== ========== ========== ========
</TABLE>
For additional information, see "Item 8. Financial Statements and Supplementary
Data" of this Form 10-K.
OPERATING STATISTICS
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ----------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
GAS
Sales (in millions) $ 359.8 $ 441.8 $ 499.4 $ 365.4 $ 167.4
Production (MMCF per day) 455.1 566.6 565.4 469.4 272.2
Average price (per MCF) $ 2.23 $ 2.18 $ 2.48 $ 2.17 $ 1.72
OIL
Sales (in millions) $ 174.9 $ 154.3 $ 243.6 $ 225.2 $ 153.5
Production (BBLS per day) 30,003 37,217 38,345 34,520 25,617
Average price (per BBL) $ 16.29 $ 11.66 $ 17.86 $ 18.28 $ 16.78
Royalty sales (in millions) $ 14.0 $ 13.1 $ 18.1 $ 13.9 $ 7.2
</TABLE>
20
<PAGE> 23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY
The Company's net cash provided from operations in 1999 was essentially flat
with 1998, due to lower average daily oil and gas production offset by
significantly higher commodity prices during the second half of the year for
crude oil and natural gas. The decrease in 1998 compared to 1997 was a result of
lower commodity prices and sales volumes.
The oil price received by the Company in 1999 increased 40 percent from 1998 and
the gas price received by the Company increased two percent in 1999 over the
price received in 1998. In 1998, the Company's oil price declined 35 percent and
the natural gas price declined 12 percent compared to 1997.
<TABLE>
<CAPTION>
CASH PROVIDED FROM OPERATIONS
(MILLIONS OF DOLLARS)
<S> <C>
1997 $445.6
1998 324.3
1999 323.9
</TABLE>
<TABLE>
<CAPTION>
AVERAGE OIL PRICES
(PER BBL)
<S> <C>
1997 $ 17.86
1998 11.66
1999 16.29
</TABLE>
<TABLE>
<CAPTION>
AVERAGE GAS PRICES
(PER MCF)
<S> <C>
1997 $ 2.48
1998 2.18
1999 2.23
</TABLE>
The Company's unconsolidated subsidiary, Atlantic Methanol Capital Company
("AMCCO"), is a 50 percent owned joint venture that indirectly owns 90 percent
of Atlantic Methanol Production Company ("AMPCO"), which is constructing a
methanol plant in Equatorial Guinea. During 1999, AMCCO issued $125 million
senior secured notes due 2004 net to the Company's interest (which are not
included in the Company's balance sheet) to fund the remaining construction
payments. The plant construction started during 1998 and commercial production
is expected during the second quarter of 2001. The construction cost of the
turnkey contract is $322.5 million. Other associated expenditures required to
complete the project and produce marketable supplies of methanol are projected
to be $101.3 million. The total cost of the methanol project is estimated to be
$423.8 million including various contingencies and capitalized interest, with
the Company responsible for $211.9 million. Payments are due upon the completion
of specific phases of the construction. During 1999, the Company paid $89.6
million toward the project including $86.9 million in construction contract
payments. The Company has construction contract phase payments totaling $61.1
million due in 2000.
During 1999, $125.4 million was spent on exploration and development projects
and $89.6 million on the methanol project, for total expenditures of $215.0
million. The 2000 exploration and development budget is $459.9 million, $72.6
million for the methanol project and $387.3 million for other projects.
The Company's current ratio (current assets divided by current liabilities) was
.80:1 at December 31, 1999, compared with 1.35:1 at December 31, 1998. The
decrease in the current ratio was due in part to debt reduction of $225 million
in the fourth quarter of 1999. The Company's cash and short-term investments
decreased from $19.1 million at December 31, 1998, to $2.9 million at December
31, 1999.
21
<PAGE> 24
FINANCING
The Company's total long-term debt, net of unamortized discount, at December 31,
1999, was $445 million compared to $745 million at December 31, 1998. The ratio
of debt to book capital (defined as the Company's debt plus its equity) was 39
percent at December 31, 1999, compared with 54 percent at December 31, 1998.
The Company's long-term debt is comprised of: $100 million of 7 1/4% Notes Due
2023, $250 million of 8% Senior Notes Due 2027, and $100 million of 7 1/4%
Senior Debentures Due 2097. There is no principal payment due on long term debt
during the next five years.
The Company has a $300 million credit facility which exposes the Company to the
risk of earnings or cash flow loss due to changes in market interest rates. At
December 31, 1999, there was no borrowing against the credit facility which has
a maturity date of December 24, 2002. The interest rate is based upon a
Eurodollar rate plus a range of 17.5 to 50 basis points. At year-end 1998, the
Company had $300 million outstanding on this facility which was repaid during
1999.
On June 17, 1999, the Company entered into a new $100 million 364 day credit
agreement with certain commercial lending institutions. There is no balance
outstanding on this agreement which is based upon a Eurodollar rate plus 37.5 to
87.5 basis points depending upon the percentage of utilization.
On November 11, 1999, the Company announced that AMCCO had sold $125 million
principal amount, net to the Company's interest, of its senior secured notes due
2004, without registration rights, in a private offering to institutional
investors. Donaldson, Lufkin and Jenrette was the placement agent for the
offering. Approximately $63 million of the proceeds, minus transaction expenses,
were used to fund a portion of the Company's obligations to pay the costs of
construction of the methanol plant and related facilities in Equatorial Guinea.
The remainder of the proceeds was used by AMCCO to acquire from the Company, at
book value, its subsidiary that held the Company's ownership interest in the
project. The Company has guaranteed payment of interest on the notes and
provided certain other credit support.
On December 31, 1999, the Company had $23 million outstanding on its note
payable with AMCCO, an unconsolidated subsidiary. The note payable will be
repaid by the second quarter of 2000 and has an interest rate of 8.95 percent.
The note payable is included in other current liabilities.
OTHER
The Company has paid quarterly cash dividends of $.04 per share since 1989, and
currently anticipates it will continue to pay quarterly dividends of $.04 per
share.
The Company has sold a number of non-strategic oil and gas properties over the
past three years. Total amounts of oil and gas reserves associated with the
1999, 1998 and 1997 dispositions were 5.1 million BBLS of oil and 34.2 BCF of
gas, .2 million BBLS of oil and 2.2 BCF of gas and 5.0 million BBLS of oil and
29.2 BCF of gas, respectively. The Company believes the disposition of
non-strategic properties furthers the goal of concentrating its efforts on
strategic properties.
The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standard ("SFAS") No. 133, "Accounting for Derivative Instruments and
Hedging Activities" in June 1998. The Statement establishes accounting and
reporting standards requiring every derivative instrument (including certain
derivative instruments embedded in other contracts) to be recorded in the
balance sheet as either an asset or liability measured at its fair value. The
Statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met wherein
gains and losses are reflected in stockholder equity until the hedged item is
recognized. Special accounting for qualifying hedges allows a derivative's gains
and losses to offset
22
<PAGE> 25
related results on the hedged item in the income statement, and requires that a
company formally document, designate and assess the effectiveness of
transactions that receive hedge accounting.
Due to the issuance of SFAS No. 137, which deferred the effective date of SFAS
No. 133, the Company is required to adopt the statement for fiscal year
beginning after June 15, 2000. A company may also implement the statement as of
the beginning of any fiscal quarter after the statement's issuance (that is,
fiscal quarters beginning June 16, 1998, and thereafter). SFAS No. 133 must be
applied to (a) derivative instruments and (b) certain derivative instruments
embedded in hybrid contracts that were issued, acquired, or substantively
modified after December 31, 1997 (and, at the Company's election, before January
1, 1998). The Company has not quantified the impact of adopting SFAS No. 133 but
plans on adopting the statement by January 1, 2001.
UNCONSOLIDATED SUBSIDIARY
The Company has one unconsolidated subsidiary, AMCCO, a 50 percent owned joint
venture that indirectly owns 90 percent of AMPCO, which is constructing a
methanol plant in Equatorial Guinea. AMCCO is accounted for using the equity
method within the Company's wholly-owned subsidiary, Samedan of North Africa,
Inc. The Company's net equity investment in the unconsolidated subsidiary was
$15.6 million at December 31, 1999.
RESULTS OF OPERATIONS
NET INCOME AND REVENUES
The Company's net income for 1999 of $49.5 million was primarily the result of a
40 percent and two percent increase in the average oil and gas price to $16.29
per BBL and $2.23 per MCF, respectively, compared to 1998. The impact of the
increased oil price was approximately $51 million in additional oil revenues
compared to 1998. The impact of the increase in the 1999 average natural gas
price was approximately eight million dollars in additional gas revenues
compared to 1998. The decrease in net income for 1998 compared to 1997, is due
to the $143.0 million charge for SFAS No. 121 coupled with dramatically lower
crude oil prices and lower natural gas prices.
NET INCOME (LOSS)
(MILLIONS OF DOLLARS)
<TABLE>
<S> <C>
1997 $ 99.3
1998 (164.0)
1999 49.5
</TABLE>
NATURAL GAS REVENUES
(MILLIONS OF DOLLARS)
<TABLE>
<S> <C>
1997 $ 499.4
1998 441.8
1999 359.8
</TABLE>
CRUDE OIL REVENUES
(MILLIONS OF DOLLARS)
<TABLE>
<S> <C>
1997 $ 243.6
1998 154.3
1999 174.9
</TABLE>
23
<PAGE> 26
NATURAL GAS INFORMATION
Natural gas revenues declined in 1999, despite a slight increase in the
Company's average price. Revenues were down because natural gas production
declined 20 percent compared to the historic high set in 1998. The natural gas
production decline is due in part to the Company's decision to defer drilling
activity during the first half of the year due to low natural gas prices.
Natural gas accounted for 67 percent of the Company's total gas and oil revenues
in 1999. Gas sales and average daily production for 1998 decreased 12 percent
and increased less than one percent, respectively from 1997. The average gas
price in 1998 decreased 12 percent from 1997.
AVERAGE DAILY GAS PRODUCTION
[PIE CHART] [PIE CHART] [PIE CHART]
<TABLE>
<CAPTION>
OFFSHORE ONSHORE INT'L
<S> <C> <C> <C>
1997-565.4 MMCF 66.3% 28.0% 3.7%
1998-566.6 MMCF 71.4% 24.6% 4.0%
1999-455.1 MMCF 67.0% 25.7% 7.3%
</TABLE>
CRUDE OIL INFORMATION
Crude oil revenues increased during 1999 due to significantly stronger oil
prices. The 40 percent increase in the average price received for the Company's
1999 oil production offset a decline of 19 percent in the average daily
production. The crude oil production decline is due in part to the Company's
decision to defer drilling activity during the first half of the year due to low
crude oil prices. Crude oil accounted for 33 percent of the Company's total oil
and gas revenues in 1999. Oil sales and average daily production for 1998
decreased 37 percent and three percent, respectively from 1997. The average oil
price in 1998 decreased 35 percent from 1997.
AVERAGE DAILY OIL PRODUCTION
[PIE CHART] [PIE CHART] [PIE CHART]
<TABLE>
<CAPTION>
OFFSHORE ONSHORE INT'L
<S> <C> <C> <C>
1997-38,345 BBLS 44.9% 33.7% 21.4%
1998-37,217 BBLS 47.2% 33.6% 19.2%
1999-30,003 BBLS 45.0% 33.0% 22.0%
</TABLE>
24
<PAGE> 27
HEDGING ACTIVITY
The Company, through its subsidiaries, from time to time, uses various hedging
arrangements in connection with anticipated crude oil and natural gas sales to
minimize the impact of product price fluctuations. Such arrangements include
fixed price hedges, costless collars, and other contractual arrangements.
Although these hedging arrangements expose the Company to credit risk, the
Company monitors the creditworthiness of its counterparties, which generally are
major financial institutions, and believes that losses from nonperformance are
unlikely to occur. Hedging gains and losses related to the Company's oil and gas
production are recorded in oil and gas sales and royalties. The swap component
of the contracts discussed in the following paragraphs was treated as a hedge
for accounting purposes only. There was no payment obligation in 1999.
The Company has entered into three crude oil premium swap contracts related to
its production for calendar year 2000. Two of the contracts provide for payments
based on daily NYMEX settlement prices. These contracts relate to 2,500 BBLS per
day and 2,000 BBLS per day and have trigger prices of $21.73 per BBL and $22.45
per BBL, respectively, and both have knockout prices of $17.00 per BBL. These
two contracts entitle the Company to receive settlements from the counterparties
in amounts, if any, by which the settlement price for each NYMEX trading day is
less than the trigger price, provided the NYMEX price is also greater than the
$17.00 per BBL knockout price. If a daily settlement price is $17.00 per BBL or
less, then neither party will have any liability to the other for that day. If a
daily settlement price is above the applicable trigger price, then the Company
will owe the counterparty for the excess of the settlement price over the
trigger price for that day. Payment is made monthly under each of these
contracts, in an amount equal to the net amount due to either party based on the
sum of the daily amounts determined as described in this paragraph for that
month.
The third contract relates to 2,500 BBLS per day and provides for payments based
on monthly average NYMEX settlement prices. The contract entitles the Company to
receive monthly settlements from the counterparty in an amount, if any, by which
the arithmetic average of the daily NYMEX settlement prices for the month is
less than the trigger price, which is $21.73 per BBL, multiplied by the number
of days in the month, provided such average NYMEX price is also greater than the
$17.00 per BBL knockout price. If the average NYMEX settlement price for the
month is $17.00 per BBL or less, then neither party will have any liability to
the other for that month. If the average NYMEX settlement price for the month is
above the trigger price, then the Company will pay the counterparty an amount
equal to the excess of the average settlement price over the trigger price,
multiplied by the number of days in the month.
The Company has treated the swap component of these contracts as a hedge (for
accounting purposes only), at swap prices ranging from $19.40 per BBL to $20.20
per BBL, which existed at the dates it entered into these contracts. In
addition, the Company has separately accounted for the premium component of
these contracts by marking them to market, resulting in a gain of $2,990,000
recorded in other income for the year ended December 31, 1999.
In addition to the premium swap crude oil hedging contracts, the Company has
entered into crude oil costless collar hedges from January 1, 2000, to April 30,
2000, for volumes of 2,000 BBLS per day. These costless collars have a floor
price ranging from $21.53 per BBL to $23.27 per BBL and a cap price ranging from
$25.83 per BBL to $27.31 per BBL. These costless collar contracts entitle the
Company to receive settlements from the counterparties in amounts, if any, by
which the monthly average settlement price for each NYMEX trading day during a
contract month is less than the floor price. If the monthly average settlement
price is above the applicable cap price, then the Company will owe the
counterparties for the excess of the monthly average settlement price over the
applicable cap price. If the monthly average settlement price falls between the
applicable floor and cap price, then neither party will have any liability to
the other party for that month. Payment, if any, is made monthly under each of
the contracts in an amount equal to the net amount due either party based on the
volumes per day multiplied by the difference between the NYMEX average price and
the cap, if the NYMEX average price exceeds the cap price, or if the NYMEX
average price is less than the floor price, then the volumes per day multiplied
by the difference between the floor price and the NYMEX average price.
25
<PAGE> 28
During 1999 and 1998, the Company had no oil or gas hedging transactions for its
production.
During 1997, the Company had natural gas hedging contracts that ranged from 20
percent to 32 percent of its average daily natural gas production. Natural gas
hedges were in the price range of $1.88 per MMBTU to $3.30 per MMBTU. The net
effect of these 1997 hedges was a $.12 per MCF reduction in the average natural
gas price realized by the Company. At December 31, 1997, the Company had no
natural gas hedging contracts for its production.
During 1997, the Company had crude oil hedging contracts that ranged from 19
percent to 50 percent of its average daily oil production. Crude oil hedges were
in the price range of $16.81 per BBL to $24.35 per BBL. The net effect of these
1997 hedges was a $.19 per BBL reduction in the average crude oil price realized
by the Company. At December 31, 1997, the Company had no crude oil hedging
contracts for its production.
In addition to the hedging arrangements pertaining to the Company's production
as described above, Noble Gas Marketing, Inc. ("NGM") employs various hedging
arrangements in connection with its purchases and sales of third party
production to lock in profits or limit exposure to gas price risk. Most of the
purchases made by NGM are on an index basis; however, purchasers in the markets
in which NGM sells often require fixed or NYMEX related pricing. NGM may use a
hedge to convert the fixed or NYMEX sale to an index basis thereby determining
the margin and minimizing the risk of price volatility. During 1999, NGM had
hedging transactions with broker-dealers that ranged from 146,000 MMBTU's to
815,000 MMBTU's of gas per day. At December 31, 1999, NGM had in place hedges
ranging from approximately 10,000 MMBTU's to 776,000 MMBTU's of gas per day for
January 2000 to March 2001 for future physical transactions.
In 1998, NGM had hedging transactions with broker-dealers that ranged from
508,811 MMBTU's to 1,061,536 MMBTU's of gas per day. During 1997, NGM had
hedging transactions with broker-dealers that ranged from 317,693 MMBTU's to
768,599 MMBTU's of gas per day. NGM records hedging gains or losses relating to
fixed term sales as gathering, marketing and processing revenues in the periods
in which the related contract is completed.
COSTS AND EXPENSES
Oil and gas operations expense, consisting of lease operating expense,
production taxes and other related lifting costs decreased 22 percent in 1999
from 1998 and seven percent in 1998 compared to 1997. The chart below depicts
total operating expenses and operating expenses per MCFe, converting oil to gas
on a 1:6 basis for the last three years.
OPERATING EXPENSES
(MILLIONS OF DOLLARS)
<TABLE>
<S> <C>
1997 $160.8
1998 $149.0
1999 $116.7
</TABLE>
OPERATING EXPENSES
PER MCFE
<TABLE>
<S> <C>
1997 $0.55
1998 $0.52
1999 $0.50
</TABLE>
26
<PAGE> 29
Oil and gas exploration expense consists of dry hole expense, undeveloped lease
amortization, abandoned assets, seismic and other miscellaneous exploration
expense. The chart below depicts the exploration expense for the last three
years.
<TABLE>
<CAPTION>
(in thousands) 1997 1998 1999
- ------------------------------- -------- -------- --------
<S> <C> <C> <C>
Dry hole expense $ 46,902 $ 57,736 $ 19,204
Undeveloped lease amortization 8,146 7,953 9,645
Abandoned assets 4,923 15,325 2,483
Seismic 19,095 15,754 7,797
Other 7,632 13,390 7,655
-------- -------- --------
Total Exploration Expense $ 86,698 $110,158 $ 46,784
-------- -------- --------
</TABLE>
In 1999, depreciation, depletion and amortization ("DD&A") expense decreased 19
percent, compared to last year, due to lower oil and gas production volumes
coupled with the impairment of operating assets in 1998. This decrease reflects
a 19 percent decrease in oil volumes and a 20 percent decrease in natural gas
production volumes. In 1998 DD&A expense increased four percent compared to
1997, due to recording additional development costs and downward reserve
revisions related to certain producing properties. The chart below depicts total
DD&A expense and DD&A expense per MCFe, converting oil to gas on a 1:6 basis for
the last three years.
<TABLE>
<CAPTION>
DD&A EXPENSE
------------
DD&A Expenses DD&A Expenses per MCFe
------------- ----------------------
(millions of dollars)
<S> <C> <C>
1997 $300 $1.03
1998 $313 $1.09
1999 $255 $1.10
</TABLE>
The Company provides for the cost of future liabilities related to restoration
and dismantlement costs for offshore facilities. This provision is based on the
Company's best estimate of such costs to be incurred in future years based on
information from the Company's engineers. These estimated costs are provided
through charging DD&A expense using a ratio of production divided by reserves
multiplied by the estimated costs to dismantle and restore. The Company's
accumulated provision for future dismantlement and restoration cost was $83.0
million at December 31, 1999, $68.8 million at December 31, 1998 and $59.5
million at December 31, 1997. Total estimated future dismantlement and
restoration costs of $123.1 million are included in future production and
development costs for purposes of estimating the future net revenues relating to
the Company's proved reserves.
IMPAIRMENT OF OPERATING ASSETS
The Company recorded no asset impairments under SFAS No. 121 during 1999 or
1997. In the fourth quarter of 1998, the Company recorded a $223.3 million
pre-tax charge for the write-down of properties due to downward reserve
revisions. The write-down was taken under SFAS No. 121. The assets impaired
under SFAS No. 121 are oil and gas properties maintained under the successful
efforts method of accounting. The excess of the net book value over the
projected discounted future net revenue of the impaired properties was charged
to "Impairment of Operating Assets" expense.
27
<PAGE> 30
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A")
The increase in the SG&A per MCFe rate in 1999 is due to the decreased oil and
natural gas production volumes coupled with approximately $2 million of
non-recurring charges associated with the closing of the Company's Denver,
Colorado and Oklahoma City, Oklahoma offices. The SG&A decrease in 1998 is due
in part to lower overall salaries and wages incurred in 1998 compared to 1997.
The chart below illustrates SG&A costs for the last three years.
<TABLE>
<CAPTION>
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
-----------------------
SG&A Expenses SG&E Expenses per MCFe
------------- ----------------------
(millions of dollars)
<S> <C> <C>
1997 $0.17 $50.5
1998 $0.17 $48.1
1999 $0.21 $47.9
</TABLE>
GATHERING, MARKETING AND PROCESSING
NGM markets the majority of the Company's natural gas, as well as certain
third-party gas. NGM sells gas directly to end-users, gas marketers, industrial
users, interstate and intrastate pipelines, and local distribution companies.
NTI markets a portion of the Company's oil, as well as certain third-party oil.
The Company records all of NGM's and NTI's sales and expenses as gathering,
marketing and processing revenues and expenses. All intercompany sales and
expenses have been eliminated in the Company's consolidated financial
statements.
<TABLE>
<CAPTION>
GATHERING, MARKETING AND
PROCESSING GROSS MARGINS
(millions of dollars)
---------------------
NGM NTI
--- ---
<S> <C> <C>
1997 $9.6 $6.5
1998 $7.0 $6.6
1999 $7.3 $7.4
</TABLE>
28
<PAGE> 31
The gathering, marketing and processing revenues less expenses for both NGM and
NTI are reflected in the chart on the previous page. The margins for NGM on a
per MMBTU basis were $.026 for 1999, $.049 for 1998 and $.031 for 1997. The
decrease in NGM's margin on a per MMBTU basis for each of the years presented is
due primarily to increased transportation expenses. The margins for NTI on a per
BBL basis were $.87 for 1999, $.63 for 1998 and $.63 for 1997. The increase in
NTI's margin on a per BBL basis for each of the years presented is due primarily
to improved crude oil prices coupled with lower transportation costs.
FUTURE TRENDS
The Company expects flat oil and gas volumes in 2000 compared to 1999, with
increasing volumes in 2001 and 2002. The 2001 volume increase would be primarily
due to the Alba field condensate production and gas feedstock for the methanol
plant in Equatorial Guinea and the Amistad gas field production in Ecuador along
with domestic exploitation. The 2002 volume increase would be primarily due to
oil production in China.
The Company recently set its 2000 exploration and development budget at $459.9
million. Such expenditures are planned to be funded through internally generated
cash flows and $61.6 million of borrowings from the $300 million credit facility
to complete the methanol project. The Company believes that it is well
positioned to take advantage of strategic acquisitions as they become available,
through internally generated cash flows or borrowings.
Management believes that the Company is well positioned with its balanced
reserves of oil and gas to take advantage of future price increases that may
occur. However, the uncertainty of oil and gas prices continues to affect the
oil and gas industry. The Company can not predict the extent to which its
revenues will be affected by inflation, government regulation or changing
prices.
The Company's Board of Directors authorized a repurchase of up to $50 million in
the Company's common stock. As of March 1, 2000, the Company had completed 60.5
percent of the repurchase plan. The repurchase of 1,385,900 shares at an average
cost of $21.84 per share was funded from the Company's current cash flow.
The Year 2000 issue is a result of computer programs being written using two
digits rather than four to define the applicable year. Computer equipment,
software and devices with embedded technology that are time-sensitive may
recognize a date using "00" as the year 1900 rather than the year 2000. This can
result in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
The Company took various initiatives intended to ensure that its computer
equipment and software would function properly with respect to dates in the year
2000 and thereafter. For this purpose, the term "computer equipment and
software" includes systems that are commonly thought of as information
technology ("IT") systems, including accounting, data processing, telephone/PBX
systems, and other miscellaneous systems, as well as systems that are not
commonly thought of as IT systems, such as field operations equipment, alarm
systems, sprinkler systems, fax machines, or other miscellaneous systems. Both
IT and non-IT systems may contain imbedded technology, which complicates the
Company's Year 2000 identification, assessment, remediation, and testing
efforts. In addition, in the ordinary course of replacing computer equipment and
software, the Company attempted to obtain replacements that it believed were
Year 2000 compliant. Utilizing internal resources to identify and assess needed
Year 2000 remediation, the Company completed its Year 2000 identification,
assessment, remediation, and testing efforts, which began in
29
<PAGE> 32
January 1998. As of December 31, 1999, the Company had completed 100 percent of
the initiatives necessary to fully address potential Year 2000 issues relating
to its computer equipment and software.
<TABLE>
<CAPTION>
Percent
Year 2000 Initiative Time Frame Complete
- -------------------- ------------------------------------------
<S> <C> <C>
Identification and assessment of IT systems March 31, 1999 100%
(Company and subsidiaries)
Identification and assessment of critical non-IT systems October 31, 1999 100%
(Company and subsidiaries)
Remediation and testing of IT and non-IT systems of December 31, 1998 100%
subsidiaries other than Samedan and subsidiaries
Remediation and testing of IT and non-IT systems of September 30, 1999 100%
Samedan and subsidiaries
Remediation and testing of Company's central IT June 30, 1999 100%
and non-IT systems
Replacement and testing of third party software December 31, 1999 100%
Identification and assessment of field equipment used in October 31, 1999 100%
oil and gas producing operations
Remediation and testing of field equipment October 31, 1999 100%
</TABLE>
The Company mailed letters to its significant vendors and service providers and
verbally communicated with many strategic customers to determine the extent to
which interfaces with such entities were vulnerable to Year 2000 issues and
whether the products and services purchased from or by such entities were Year
2000 compliant.
The Company funded its Year 2000 efforts primarily with internal resources and
does not anticipate making any expenditures in connection therewith except for
the purchase of third party software that it otherwise would not have purchased
or would have purchased at a later date. Although the Company did not separately
track its internal costs related to Year 2000 efforts, which included
compensation of employees working on Year 2000 projects, it believes that such
costs did not exceed $80,000. The Company believes that these internal and
external costs represented less than five percent of total IT-related costs for
1998 and 1999 and that none of the Company's IT initiatives that were not
related to the Year 2000 issue were materially delayed or impacted by Year 2000
efforts.
The Company believes that the Year 2000 issue did not pose significant
operational problems for the Company. However, if all Year 2000 issues were not
properly identified, or assessment, remediation, and testing were not fully
effected, there can be no assurance that the Year 2000 issue will not materially
impact the Company's results of operations or adversely affect the Company's
relationships with customers, vendors, or others. Additionally, there can be no
assurance that the Year 2000 issues of other entities will not have a material
adverse impact on the Company's systems or results of operations. In addition,
variability of definitions of "compliance with Year 2000" may lead to claims on
the Company, the impact of which is not currently estimable. No assurance can be
given that the aggregate cost of defending and resolving such claims, if any,
will not materially affect the Company's results of operations.
As of February 29, 2000, the Company has encountered no significant Year 2000
problems.
ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed to market risk in the normal course of its business
operations. Management believes that the Company is well positioned with its mix
of oil and gas reserves to take advantage of future price increases that may
occur. However, the uncertainty of oil and gas prices continues to impact the
domestic oil and gas industry. Due to the volatility of oil and gas prices, the
Company, from time to time, has used derivative hedging and may do so in the
future as a means of controlling its exposure to price changes. The Company had
no crude oil or natural gas hedges for its production in 1999. The swap
component of the contracts discussed in the following paragraphs was treated as
a hedge for accounting purposes only. There was no payment obligation in 1999.
30
<PAGE> 33
The Company has entered into three crude oil premium swap contracts related to
its production for calendar year 2000. Two of the contracts provide for payments
based on daily NYMEX settlement prices. These contracts relate to 2,500 BBLS per
day and 2,000 BBLS per day and have trigger prices of $21.73 per BBL and $22.45
per BBL, respectively, and both have knockout prices of $17.00 per BBL. These
two contracts entitle the Company to receive settlements from the counterparties
in amounts, if any, by which the settlement price for each NYMEX trading day is
less than the trigger price, provided the NYMEX price is also greater than the
$17.00 per BBL knockout price. If a daily settlement price is $17.00 per BBL or
less, then neither party will have any liability to the other for that day. If a
daily settlement price is above the applicable trigger price, then the Company
will owe the counterparty for the excess of the settlement price over the
trigger price for that day. Payment is made monthly under each of these
contracts, in an amount equal to the net amount due to either party based on the
sum of the daily amounts determined as described in this paragraph for that
month.
The third contract relates to 2,500 BBLS per day and provides for payments based
on monthly average NYMEX settlement prices. The contract entitles the Company to
receive monthly settlements from the counterparty in an amount, if any, by which
the arithmetic average of the daily NYMEX settlement prices for the month is
less than the trigger price, which is $21.73 per BBL, multiplied by the number
of days in the month, provided such average NYMEX price is also greater than the
$17.00 per BBL knockout price. If the average NYMEX settlement price for the
month is $17.00 per BBL or less, then neither party will have any liability to
the other for that month. If the average NYMEX settlement price for the month is
above the trigger price, then the Company will pay the counterparty an amount
equal to the excess of the average settlement price over the trigger price,
multiplied by the number of days in the month.
The Company has treated the swap component of these contracts as a hedge (for
accounting purposes only), at swap prices ranging from $19.40 per BBL to $20.20
per BBL, which existed at the dates it entered into these contracts. In
addition, the Company has separately accounted for the premium component of
these contracts by marking them to market, resulting in a gain of $2,990,000
recorded in other income for the year ended December 31, 1999.
In addition to the premium swap crude oil hedging contracts, the Company has
entered into crude oil costless collar hedges from January 1, 2000, to April 30,
2000, for volumes of 2,000 BBLS per day. These costless collars have a floor
price ranging from $21.53 per BBL to $23.27 per BBL and a cap price ranging from
$25.83 per BBL to $27.31 per BBL. These costless collar contracts entitle the
Company to receive settlements from the counterparties in amounts, if any, by
which the monthly average settlement price for each NYMEX trading day during a
contract month is less than the floor price. If the monthly average settlement
price is above the applicable cap price, then the Company will owe the
counterparties for the excess of the monthly average settlement price over the
applicable cap price. If the monthly average settlement price falls between the
applicable floor and cap price, then neither party will have any liability to
the other party for that month. Payment, if any, is made monthly under each of
the contracts in an amount equal to the net amount due either party based on the
volumes per day multiplied by the difference between the NYMEX average price and
the cap, if the NYMEX average price exceeds the cap price, or if the NYMEX
average price is less than the floor price, then the volumes per day multiplied
by the difference between the floor price and the NYMEX average price.
NGM, from time to time, employs hedging arrangements in connection with its
purchases and sales of production. While most of NGM's purchases are made for an
index-based price, NGM's customers often require prices that are either fixed or
related to NYMEX. In order to establish a fixed margin and mitigate the risk of
price volatility, NGM may convert a fixed or NYMEX sale to an index-based sales
price (such as by purchasing an index-based futures contract obligating NGM for
delivery of production). Due to the size of such transactions and certain
restraints imposed by contract and by Company guidelines, as of December 31,
1999, the Company had no material market risk exposure from NGM's hedging
activity.
31
<PAGE> 34
The Company has a $300 million credit agreement (see Note 3 - Debt, to the
Consolidated Financial Statements) which exposes the Company to the risk of
earnings or cash flow loss due to changes in market interest rates. At December
31, 1999, there was no borrowing against the credit facility which has a
maturity date of December 24, 2002. The interest rate is based upon a Eurodollar
rate plus a range of 17.5 to 50 basis points. All other Company long-term debt
is fixed-rate and, therefore, does not expose the Company to the risk of
earnings or cash flow loss due to changes in market interest rates.
On June 17, 1999, the Company entered into a new $100 million 364 day credit
agreement with certain commercial lending institutions. There is no balance
outstanding on this agreement which is based upon a Eurodollar rate plus 37.5 to
87.5 basis points depending upon the percentage of utilization.
The Company does not invest in foreign currency derivatives. The U.S. dollar is
considered the primary currency for each of the Company's international
operations. Transactions that are completed in a foreign currency are translated
into U.S. dollars and recorded in the financial statements. Translation gains or
losses were not material in any of the periods presented and the Company does
not believe it is currently exposed to any material risk of loss on this basis.
Such gains or losses are included in other expense on the income statement.
However, certain sales transactions are concluded in foreign currencies and the
Company therefore is exposed to potential risk of loss based on fluctuation in
exchange rates from time to time.
32
<PAGE> 35
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Public Accountants................................................................ 34
Consolidated Balance Sheet as of December 31, 1999 and 1998............................................. 35
Consolidated Statement of Operations for each of the three years in the period ended
December 31, 1999..................................................................................... 36
Consolidated Statement of Cash Flows for each of the three years in the period ended
December 31, 1999..................................................................................... 37
Consolidated Statement of Shareholders' Equity for each of the three years in the period ended
December 31, 1999..................................................................................... 38
Notes to Consolidated Financial Statements.............................................................. 39
Supplemental Oil and Gas Information (Unaudited)........................................................ 52
Interim Financial Information (Unaudited)............................................................... 58
</TABLE>
All financial statement schedules have been omitted because the required
information is not present or is not present in amounts sufficient to require
submission of the schedule or because the information required is included in
the financial statements, including the notes thereto.
33
<PAGE> 36
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Noble Affiliates, Inc.:
We have audited the accompanying consolidated balance sheet of Noble
Affiliates, Inc. (a Delaware corporation) and subsidiaries as of December 31,
1999 and 1998, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 financial statements referred to above present fairly,
in all material respects, the financial position of Noble Affiliates, Inc. and
subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma
January 28, 2000
34
<PAGE> 37
CONSOLIDATED BALANCE SHEET NOBLE AFFILIATES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
December 31,
------------------------------
(in thousands, except share amounts) 1999 1998
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and short-term cash investments $ 2,925 $ 19,100
Accounts receivable - trade 98,794 106,513
Materials and supplies inventories 5,517 3,006
Other current assets 40,678 59,670
------------- -------------
Total current assets 147,914 188,289
------------- -------------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Oil and gas mineral interests, equipment and facilities
(successful efforts method of accounting) 2,786,848 2,873,076
Other 43,945 42,841
------------- -------------
2,830,793 2,915,917
Accumulated depreciation, depletion and amortization (1,588,423) (1,486,250)
------------- -------------
Total property, plant and equipment, net 1,242,370 1,429,667
------------- -------------
INVESTMENT IN UNCONSOLIDATED SUBSIDIARY 15,625 25,061
------------- -------------
OTHER ASSETS 44,442 43,063
------------- -------------
TOTAL ASSETS $ 1,450,351 $ 1,686,080
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 103,753 $ 108,538
Other current liabilities 48,215 28,815
Income taxes - current 32,503 1,813
------------- -------------
Total current liabilities 184,471 139,166
------------- -------------
DEFERRED INCOME TAXES 83,075 106,823
------------- -------------
OTHER DEFERRED CREDITS AND NONCURRENT LIABILITIES 53,877 52,868
------------- -------------
LONG-TERM DEBT 445,319 745,143
------------- -------------
SHAREHOLDERS' EQUITY:
Preferred stock - par value $1.00; 4,000,000 shares authorized, none issued
Common stock - par value $3.33 1/3; 100,000,000 shares authorized;
58,569,963 and 58,505,908 shares issued in 1999 and 1998, respectively 195,231 195,018
Capital in excess of par value 360,983 360,008
Retained earnings 142,813 102,472
------------- -------------
699,027 657,498
Less common stock in treasury, at cost (1999 and 1998, 1,524,900 shares) (15,418) (15,418)
------------- -------------
Total shareholders' equity 683,609 642,080
------------- -------------
TOTAL LIABILITIES AND EQUITY $ 1,450,351 $ 1,686,080
------------- -------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
35
<PAGE> 38
CONSOLIDATED STATEMENT OF OPERATIONS NOBLE AFFILIATES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
(in thousands, except per share amounts) 1999 1998 1997
----------- ----------- -----------
REVENUES:
<S> <C> <C> <C>
Oil and gas sales and royalties $ 548,733 $ 609,164 $ 761,145
Gathering, marketing and processing 338,046 284,407 329,868
Other income 23,063 18,045 25,610
----------- ----------- -----------
Total Revenue 909,842 911,616 1,116,623
----------- ----------- -----------
COSTS AND EXPENSES:
Oil and gas exploration 46,784 110,158 86,698
Oil and gas operations 116,698 149,030 160,765
Gathering, marketing and processing 323,314 270,826 313,807
Depreciation, depletion and amortization 254,515 313,191 300,354
Impairment of operating assets 223,251
Selling, general and administrative 47,859 48,110 50,545
Interest 48,935 50,511 53,008
Interest capitalized (5,894) (6,753) (6,239)
----------- ----------- -----------
Total Expenses 832,211 1,158,324 958,938
----------- ----------- -----------
INCOME (LOSS) BEFORE TAXES 77,631 (246,708) 157,685
----------- ----------- -----------
INCOME TAX PROVISION (BENEFIT):
Current 24,508 (19,679) 25,569
Deferred 3,662 (63,004) 32,838
----------- ----------- -----------
Total Tax Provision (Benefit) 28,170 (82,683) 58,407
----------- ----------- -----------
NET INCOME (LOSS) $ 49,461 $ (164,025) $ 99,278
----------- ----------- -----------
BASIC EARNINGS (LOSS) PER SHARE $ .87 $ (2.88) $ 1.75
----------- ----------- -----------
DILUTED EARNINGS (LOSS) PER SHARE $ .86 $ (2.88) $ 1.73
----------- ----------- -----------
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 57,005 56,955 56,872
Diluted 57,349 56,955 57,421
----------- ----------- -----------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
36
<PAGE> 39
CONSOLIDATED STATEMENT OF CASH FLOWS NOBLE AFFILIATES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
(in thousands) 1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 49,461 $ (164,025) $ 99,278
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 254,515 313,191 300,354
Impairment of operating assets 223,251
Amortization of undeveloped leasehold costs, net 9,645 7,953 8,146
(Gain) loss on disposal of assets (12,079) 15,434 (11,007)
Noncurrent deferred income taxes (23,749) (37,260) 35,650
(Income) loss from unconsolidated subsidiary 37
Increase (decrease) in other deferred credits 1,011 (3,558) 5,822
(Increase) decrease in other (1,296) 12,709 1,684
Changes in working capital, not including cash:
(Increase) decrease in accounts receivable 7,719 56,154 43,484
(Increase) decrease in other current assets 16,571 (44,423) (25,053)
Increase (decrease) in accounts payable (4,785) (55,025) (29,845)
Increase (decrease) in other current liabilities 26,845 (126) 17,058
------------ ------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 323,895 324,275 445,571
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (122,920) (431,716) (326,958)
Investment in unconsolidated subsidiary (51,962) (25,061)
Proceeds from the transfer of our interest
to unconsolidated subsidiary 61,987
Proceeds from sale of property, plant and equipment 58,137 3,412 54,543
------------ ------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (54,758) (453,365) (272,415)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options 1,189 2,228 2,744
Cash dividends paid (9,120) (9,113) (9,100)
Repayment of bank debt (300,000) (549,000)
Repayment of notes payable - unconsolidated subsidiary (38,101)
Proceeds from notes payable - unconsolidated subsidiary 60,720
Proceeds from issuance of long-term debt 100,000 342,507
------------ ------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (285,312) 93,115 (212,849)
------------ ------------ ------------
INCREASE (DECREASE) IN CASH AND SHORT-TERM CASH INVESTMENTS (16,175) (35,975) (39,693)
CASH AND SHORT-TERM CASH INVESTMENTS AT BEGINNING OF YEAR 19,100 55,075 94,768
------------ ------------ ------------
CASH AND SHORT-TERM CASH INVESTMENTS AT END OF YEAR $ 2,925 $ 19,100 $ 55,075
------------ ------------ ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest (net of amount capitalized) $ 44,845 $ 43,368 $ 46,140
Income taxes $ 30,000 $ 4,276 $ 32,415
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
37
<PAGE> 40
NOBLE AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Capital in Treasury
Common Stock Excess of Stock at Retained
(in thousands, except shares issued) Shares Issued Amount Par Value Cost Earnings
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
JANUARY 1, 1997 58,321,297 $ 194,402 $ 355,651 $ (15,418) $ 185,432
Net Income 99,278
Exercise of stock options 102,141 341 2,403
Cash dividends ($.16 per share) (9,100)
------------ ------------- ------------- ------------- -------------
DECEMBER 31, 1997 58,423,438 $ 194,743 $ 358,054 $ (15,418) $ 275,610
------------ ------------- ------------- ------------- -------------
Net Loss (164,025)
Exercise of stock options 82,470 275 1,954
Cash dividends ($.16 per share) (9,113)
------------ ------------- ------------- ------------- -------------
DECEMBER 31, 1998 58,505,908 $ 195,018 $ 360,008 $ (15,418) $ 102,472
------------ ------------- ------------- ------------- -------------
Net Income 49,461
Exercise of stock options 64,055 213 975
Cash dividends ($.16 per share) (9,120)
------------ ------------- ------------- ------------- -------------
DECEMBER 31, 1999 58,569,963 $ 195,231 $ 360,983 $ (15,418) $ 142,813
------------ ------------- ------------- ------------- -------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
38
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in tables, unless otherwise indicated,
are in thousands, except per share amounts)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated accounts include Noble Affiliates, Inc. (the "Company") and the
consolidated accounts of its wholly-owned subsidiaries: Noble Gas Marketing,
Inc. ("NGM"); Noble Trading, Inc. ("NTI"); NPM, Inc.; and Samedan Oil
Corporation ("Samedan"). Listed below are consolidated entities at December 31,
1999.
NOBLE AFFILIATES, INC.
Noble Gas Marketing, Inc.
Noble Gas Pipeline, Inc.
Noble Trading, Inc.
NPM, Inc.
Samedan Oil Corporation
Samedan of North Africa, Inc.
Samedan International
Samedan Transfer Sub
Samedan, Mediterranean Sea
Samedan Power .
Samedan Pipe Line Corporation
Samedan Royalty Corporation
Samedan of Tunisia, Inc.
Energy Development Corporation ("EDC")
EDC Argentina, Inc.
EDC Australia, Ltd.
EDC China, Inc.
EDC Denmark, Inc.
EDC Ecuador Ltd.
EDC (Europe) Limited
EDC HIPS, Inc.
EDC Portugal Ltd.
Gasdel Pipeline System Incorporated
HGC, Inc.
Producers Service, Inc.
NATURE OF OPERATIONS
The Company is an independent energy company engaged through its subsidiaries in
the exploration, development, production and marketing of oil and gas. Samedan
operates throughout the major basins in the United States, including the Gulf of
Mexico, as well as international operations in Argentina, China, Ecuador,
Equatorial Guinea, the Mediterranean, the North Sea and the United Kingdom. The
Company markets its oil and gas production through NGM, NTI and Samedan.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities. Such estimates and
assumptions also affect the disclosure of contingent assets and liabilities at
the date of the financial statements as well as amounts of revenues and expenses
recognized during the reporting period. Of the estimates and assumptions that
affect reported results, the estimate of the Company's oil and gas reserves is
the most significant.
39
<PAGE> 42
FOREIGN CURRENCY TRANSLATION
The U.S. dollar is considered the primary currency for each of the Company's
international operations. Transactions that are completed in a foreign currency
are translated into U.S. dollars and recorded in the financial statements.
Translation gains or losses were not material in any of the periods presented
and are included in other expense on the income statement.
INVENTORIES
Materials and supplies inventories, consisting principally of tubular goods and
production equipment, are stated at the lower of cost or market, with cost being
determined by the first-in, first-out method.
PROPERTY, PLANT AND EQUIPMENT
The Company accounts for its oil and gas properties under the successful efforts
method of accounting. Under this method, costs to acquire mineral interests in
oil and gas properties, to drill and equip exploratory wells that find proved
reserves and to drill and equip development wells are capitalized. Capitalized
costs of producing oil and gas properties are amortized to operations by the
unit-of-production method based on proved developed oil and gas reserves on a
property by property basis as estimated by Company engineers. Estimated future
restoration and abandonment costs are recorded by charges to depreciation,
depletion and amortization ("DD&A") expense over the productive lives of the
related properties. The Company has provided $83.0 million for such future costs
classified with accumulated DD&A in the December 31, 1999, balance sheet. The
total estimated future dismantlement and restoration costs of $123.1 million are
included in future production and development costs for purposes of estimating
the future net revenues relating to the Company's proved reserves. Upon sale or
retirement of depreciable or depletable property, the cost and related
accumulated DD&A are eliminated from the accounts and the resulting gain or loss
is recognized.
Individually significant undeveloped oil and gas properties are periodically
assessed for impairment of value and a loss is recognized at the time of
impairment by providing an impairment allowance. Other undeveloped properties
are amortized on a composite method based on the Company's experience of
successful drilling and average holding period. Geological and geophysical
costs, delay rentals and costs to drill exploratory wells which do not find
proved reserves are expensed. Repairs and maintenance are charged to expense as
incurred.
Developed oil and gas properties and other long-lived assets are periodically
assessed to determine if circumstances indicate that the carrying amount of an
asset may not be recoverable. The Company performs this review of recoverability
by estimating future cash flows. If the sum of the expected future cash flows is
less than the carrying amount of the asset, an impairment is recognized based on
the discounted amount of such cash flows.
INCOME TAXES
The Company files a consolidated federal income tax return. Deferred income
taxes are provided for temporary differences between the financial reporting and
tax bases of the Company's assets and liabilities.
CAPITALIZATION OF INTEREST
The Company capitalizes interest costs associated with the development and
construction of significant properties or projects.
40
<PAGE> 43
STATEMENT OF CASH FLOWS
For purposes of reporting cash flows, cash and short-term investments include
cash on hand and investments purchased with original maturities of three months
or less.
BASIC EARNINGS PER SHARE AND DILUTED EARNINGS PER SHARE
Basic income per share of common stock has been computed on the basis of the
weighted average number of shares outstanding during each period. The diluted
net income per share of common stock includes the effect of outstanding stock
options. The following table summarizes the calculation of basic earnings per
share ("EPS") and diluted EPS components required by SFAS No. 128, as of
December 31:
<TABLE>
<CAPTION>
1999 1998(1) 1997
--------------------------- ------------------------- ---------------------------
(in thousands Income Shares Income Shares Income Shares
except per share amounts) (Numerator) (Denominator) (Numerator) (Denominator) (Numerator) (Denominator)
----------- ------------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net income/shares $49,461 57,005 $(164,025) 56,955 $99,278 56,872
BASIC EPS $.87 $(2.88) $1.75
Net income/shares $49,461 57,005 $(164,025) 56,955 $99,278 56,872
Effect of Diluted Securities
Stock options 344 549
Adjusted net income
and shares $49,461 57,349 $(164,025) 56,955 $99,278 57,421
DILUTED EPS $.86 $(2.88) $1.73
</TABLE>
(1) In 1998, the diluted EPS is antidilutive as a result of the net
operating loss; therefore, the basic EPS and diluted EPS are the same.
REVENUE RECOGNITION AND GAS IMBALANCES
Samedan and EDC have gas sales contracts with NGM, whereby Samedan and EDC are
paid an index price for all gas sold to NGM. NGM records sales, including
hedging transactions, as gathering, marketing and processing revenues. NGM
records as cost of sales in gathering, marketing and processing costs, the
amount paid to Samedan, EDC and third parties. All intercompany sales and costs
have been eliminated.
The Company follows an entitlements method of accounting for its gas imbalances.
Gas imbalances occur when the Company sells more or less gas than its entitled
ownership percentage of total gas production. Any excess amount received above
the Company's share is treated as a liability. If less than the Company's
entitlement is received, the underproduction is recorded as a receivable. The
Company records the noncurrent liability in Other Deferred Credits and
Noncurrent Liabilities, and the current liability in Other Current Liabilities.
The Company's gas imbalance liabilities were $12.0 million and $14.8 million for
1999 and 1998, respectively. The Company records the noncurrent receivable in
Other Assets, and the current receivable in Other Current Assets. The Company's
gas imbalance receivables were $17.9 million and $19.1 million for 1999 and
1998, respectively, and are valued at the amount which is expected to be
received.
TAKE-OR-PAY SETTLEMENTS
The Company records gas contract settlements which are not subject to recoupment
in Other Income when the settlement is received.
41
<PAGE> 44
TRADING AND HEDGING ACTIVITIES
The Company, through its subsidiaries, from time to time, uses various hedging
arrangements in connection with anticipated crude oil and natural gas sales to
minimize the impact of product price fluctuations. Such arrangements include
fixed price hedges, costless collars, and other contractual arrangements.
Although these hedging arrangements expose the Company to credit risk, the
Company monitors the creditworthiness of its counterparties, which generally are
major financial institutions, and believes that losses from nonperformance are
unlikely to occur. Hedging gains and losses related to the Company's oil and gas
production are recorded in oil and gas sales and royalties. The swap component
of the contracts discussed in the following paragraphs was treated as a hedge
for accounting purposes only. There was no payment obligation in 1999.
The Company has entered into three crude oil premium swap contracts related to
its production for calendar year 2000. Two of the contracts provide for payments
based on daily NYMEX settlement prices. These contracts relate to 2,500 BBLS per
day and 2,000 BBLS per day and have trigger prices of $21.73 per BBL and $22.45
per BBL, respectively, and both have knockout prices of $17.00 per BBL. These
two contracts entitle the Company to receive settlements from the counterparties
in amounts, if any, by which the settlement price for each NYMEX trading day is
less than the trigger price, provided the NYMEX price is also greater than the
$17.00 per BBL knockout price. If a daily settlement price is $17.00 per BBL or
less, then neither party will have any liability to the other for that day. If a
daily settlement price is above the applicable trigger price, then the Company
will owe the counterparty for the excess of the settlement price over the
trigger price for that day. Payment is made monthly under each of these
contracts, in an amount equal to the net amount due to either party based on the
sum of the daily amounts determined as described in this paragraph for that
month.
The third contract relates to 2,500 BBLS per day and provides for payments based
on monthly average NYMEX settlement prices. The contract entitles the Company to
receive monthly settlements from the counterparty in an amount, if any, by which
the arithmetic average of the daily NYMEX settlement prices for the month is
less than the trigger price, which is $21.73 per BBL, multiplied by the number
of days in the month, provided such average NYMEX price is also greater than the
$17.00 per BBL knockout price. If the average NYMEX settlement price for the
month is $17.00 per BBL or less, then neither party will have any liability to
the other for that month. If the average NYMEX settlement price for the month is
above the trigger price, then the Company will pay the counterparty an amount
equal to the excess of the average settlement price over the trigger price,
multiplied by the number of days in the month.
The Company has treated the swap component of these contracts as a hedge (for
accounting purposes only), at swap prices ranging from $19.40 per BBL to $20.20
per BBL, which existed at the dates it entered into these contracts. In
addition, the Company has separately accounted for the premium component of
these contracts by marking them to market, resulting in a gain of $2,990,000
recorded in other income for the year ended December 31, 1999.
In addition to the premium swap crude oil hedging contracts, the Company has
entered into crude oil costless collar hedges from January 1, 2000, to April 30,
2000, for volumes of 2,000 BBLS per day. These costless collars have a floor
price ranging from $21.53 per BBL to $23.27 per BBL and a cap price ranging from
$25.83 per BBL to $27.31 per BBL. These costless collar contracts entitle the
Company to receive settlements from the counterparties in amounts, if any, by
which the monthly average settlement price for each NYMEX trading day during a
contract month is less than the floor price. If the monthly average settlement
price is above the applicable cap price, then the Company will owe the
counterparties for the excess of the monthly average settlement price over the
applicable cap price. If the monthly average settlement price falls between the
applicable floor and cap price, then neither party will have any liability to
the other party for that month. Payment, if any, is made monthly under each of
the contracts in an amount equal to the net amount due either party based on the
volumes per day multiplied by the difference between the NYMEX average price and
the cap, if the NYMEX average price exceeds the cap price, or if the NYMEX
average price is less than the floor price, then the volumes per day multiplied
by the difference between the floor price and the NYMEX average price.
42
<PAGE> 45
During 1999 and 1998, the Company had no oil or gas hedging transactions for its
production.
During 1997, the Company had natural gas hedging contracts that ranged from 20
percent to 32 percent of its average daily natural gas production. Natural gas
hedges were in the price range of $1.88 per MMBTU to $3.30 per MMBTU. The net
effect of these 1997 hedges was a $.12 per MCF reduction in the average natural
gas price realized by the Company. At December 31, 1997, the Company had no
natural gas hedging contracts for its production.
During 1997, the Company had crude oil hedging contracts that ranged from 19
percent to 50 percent of its average daily oil production. Crude oil hedges were
in the price range of $16.81 per BBL to $24.35 per BBL. The net effect of these
1997 hedges was a $.19 per BBL reduction in the average crude oil price realized
by the Company. At December 31, 1997, the Company had no crude oil hedging
contracts for its production.
In addition to the hedging arrangements pertaining to the Company's production
as described above, Noble Gas Marketing, Inc. ("NGM") employs various hedging
arrangements in connection with its purchases and sales of third party
production to lock in profits or limit exposure to gas price risk. Most of the
purchases made by NGM are on an index basis; however, purchasers in the markets
in which NGM sells often require fixed or NYMEX related pricing. NGM may use a
hedge to convert the fixed or NYMEX sale to an index basis thereby determining
the margin and minimizing the risk of price volatility. During 1999, NGM had
hedging transactions with broker-dealers that ranged from 146,000 MMBTU's to
815,000 MMBTU's of gas per day. At December 31, 1999, NGM had in place hedges
ranging from approximately 10,000 MMBTU's to 776,000 MMBTU's of gas per day for
January 2000 to March 2001 for future physical transactions.
In 1998, NGM had hedging transactions with broker-dealers that ranged from
508,811 MMBTU's to 1,061,536 MMBTU's of gas per day. During 1997, NGM had
hedging transactions with broker-dealers that ranged from 317,693 MMBTU's to
768,599 MMBTU's of gas per day. NGM records hedging gains or losses relating to
fixed term sales as gathering, marketing and processing revenues in the periods
in which the related contract is completed.
SELF-INSURANCE
The Company self-insures the medical and dental coverage provided to certain of
its employees, certain workers' compensation and the first $200,000 of its
general liability coverage.
A provision for self-insured claims is recorded when sufficient information is
available to reasonably estimate the amount of the loss.
UNCONSOLIDATED SUBSIDIARY
The Company has one unconsolidated subsidiary, Atlantic Methanol Capital Company
("AMCCO"), a 50 percent owned joint venture that indirectly owns 90 percent of
Atlantic Methanol Production Company ("AMPCO"), which is constructing a methanol
plant in Equatorial Guinea. AMCCO is accounted for using the equity method
within the Company's wholly-owned subsidiary, Samedan of North Africa, Inc. The
plant construction started during 1998 and is scheduled to be completed during
the second quarter of 2001. The Company's net equity investment in the
unconsolidated subsidiary was $15.6 million at December 31, 1999.
RECLASSIFICATION
Certain reclassifications have been made to the 1997 and 1998 consolidated
financial statements to conform to the 1999 presentation.
RECENTLY ISSUED PRONOUNCEMENTS
The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standard ("SFAS") No. 133, "Accounting for Derivative Instruments and
Hedging Activities" in June 1998. The Statement establishes
43
<PAGE> 46
accounting and reporting standards requiring every derivative instrument
(including certain derivative instruments embedded in other contracts) to be
recorded in the balance sheet as either an asset or liability measured at its
fair value. The Statement requires that changes in the derivative's fair value
be recognized currently in earnings unless specific hedge accounting criteria
are met wherein gains and losses are reflected in stockholder equity until the
hedged item is recognized. Special accounting for qualifying hedges allows a
derivative's gains and losses to offset related results on the hedged item in
the income statement, and requires that a company formally document, designate
and assess the effectiveness of transactions that receive hedge accounting.
Due to the issuance of SFAS No. 137, which deferred the effective date of SFAS
No. 133, the Company is required to adopt the statement for fiscal year
beginning after June 15, 2000. A company may also implement the statement as of
the beginning of any fiscal quarter after the statement's issuance (that is,
fiscal quarters beginning June 16, 1998, and thereafter). SFAS No. 133 must be
applied to (a) derivative instruments and (b) certain derivative instruments
embedded in hybrid contracts that were issued, acquired, or substantively
modified after December 31, 1997 (and, at the Company's election, before January
1, 1998). The Company has not quantified the impact of adopting SFAS No. 133 but
plans on adopting the statement by January 1, 2001.
NOTE 2 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments pursuant to the requirements of SFAS No.
107, "Disclosures about Fair Value of Financial Instruments."
CASH AND SHORT-TERM INVESTMENTS
The carrying amount approximates fair value due to the short maturity of the
instruments.
OIL AND GAS PRICE HEDGE AGREEMENTS
The fair value of oil and gas price hedges is the estimated amount the Company
would receive or pay to terminate the hedge agreements at the reporting date
taking into account creditworthiness of the hedging parties.
LONG-TERM DEBT
The fair value of the Company's long-term debt is estimated based on the quoted
market prices for the same or similar issues or on the current rates offered to
the Company for debt of the same remaining maturities.
The carrying amounts and estimated fair values of the Company's financial
instruments as of December 31, for each of the years are as follows:
<TABLE>
<CAPTION>
1999 1998
---------------------------- ---------------------------
Carrying Fair Carrying Fair
(in thousands) Amount Value Amount Value
- -------------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Cash and short-term investments $ 2,925 $ 2,925 $ 19,100 $ 19,100
Long-term debt (including current portion) $ 445,319 $ 407,500 $ 745,143 $ 760,750
Oil hedge agreements $ $ (7,879) $ $
</TABLE>
44
<PAGE> 47
NOTE 3 - DEBT
A summary of debt at December 31 follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
- -------------- ---------- ----------
<S> <C> <C>
$300 million Credit Agreement $ $ 300,000
7 1/4% Notes Due 2023 100,000 100,000
8% Senior Notes Due 2027 250,000 250,000
7 1/4% Senior Debentures Due 2097 100,000 100,000
---------- ----------
Outstanding debt 450,000 750,000
---------- ----------
Less: unamortized discount 4,681 4,857
---------- ----------
Long-term debt $ 445,319 $ 745,143
---------- ----------
</TABLE>
The Company's total long-term debt, net of unamortized discount, at December 31,
1999, was $445 million compared to $745 million at December 31, 1998. The ratio
of debt to book capital (defined as the Company's debt plus its equity) was 39
percent at December 31, 1999, compared with 54 percent at December 31, 1998.
The Company's long-term debt is comprised of: $100 million of 7 1/4% Notes Due
2023, $250 million of 8% Senior Notes Due 2027, and $100 million of 7 1/4%
Senior Debentures Due 2097. There is no principal payment due on long term debt
during the next five years.
The Company has a $300 million credit facility which exposes the Company to the
risk of earnings or cash flow loss due to changes in market interest rates. At
December 31, 1999, there was no borrowing against the credit facility which has
a maturity date of December 24, 2002. The interest rate is based upon a
Eurodollar rate plus a range of 17.5 to 50 basis points. At year-end 1998, the
Company had $300 million outstanding on this facility which was repaid during
1999.
On June 17, 1999, the Company entered into a new $100 million 364 day credit
agreement with certain commercial lending institutions. There is no balance
outstanding on this agreement which is based upon a Eurodollar rate plus 37.5 to
87.5 basis points depending upon the percentage of utilization.
On November 11, 1999, the Company announced that AMCCO had sold $125 million
principal amount of its senior secured notes due 2004, without registration
rights, in a private offering to institutional investors. Donaldson, Lufkin and
Jenrette was the placement agent for the offering. Approximately $63 million of
the proceeds, minus transaction expenses, were used to fund a portion of the
Company's obligations to pay the costs of construction of the methanol plant and
related facilities in Equatorial Guinea. The remainder of the proceeds was used
by AMCCO to acquire from the Company, at book value, its subsidiary that held
the Company's ownership interest in the methanol plant project. The Company has
guaranteed payment of interest on the notes and provided certain other credit
support. In addition, the Company established a new series of preferred stock,
Series B Mandatory Convertible Preferred Stock, par value $1.00 per share (the
"Series B Preferred"). The Company issued, in a private placement pursuant to
Section 4(2) of the Securities Act, 125,000 shares of the Series B Preferred to
Noble Share Trust, which is a Delaware statutory business trust, in exchange for
all of the beneficial ownership interests in Noble Share Trust. Noble Share
Trust holds the 125,000 shares of Series B Preferred for the benefit of the
holders of the Series A-2 Notes.
On December 31, 1999, the Company had $23 million outstanding on its note
payable with AMCCO, an unconsolidated subsidiary. The note payable will be
repaid by the second quarter of 2000 and has an interest rate of 8.95 percent.
The note payable is included in other current liabilities.
45
<PAGE> 48
NOTE 4 - INCOME TAXES
The following table details the difference between the federal statutory tax
rate and the effective tax rate for the years ended December 31:
<TABLE>
<CAPTION>
(amounts expressed in percentages) 1999 1998 1997
- ---------------------------------- ------ ------ -----
<S> <C> <C> <C>
Statutory rate (benefit) 35.0 (35.0) 35.0
Effect of:
Percentage depletion (.1)
State taxes (.2)
Foreign taxes 1.8 .4 .8
Losses from international operations 1.3 .9 1.4
Other, net (1.8) .4 (.1)
------ ------ -----
Effective rate 36.3 (33.5) 37.0
------ ------ -----
</TABLE>
The net current deferred tax asset (liability) in the following table is
classified as Other Current Assets in the Consolidated Balance Sheet. The tax
effects of temporary differences which gave rise to deferred tax assets and
liabilities as of December 31 were:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
- -------------- ----------- -----------
<S> <C> <C>
U.S. and State Current Deferred Tax Assets:
Accrued expenses $ 525 $ 1,684
Deferred income 36 1,386
Minimum tax 17,939
Allowance for doubtful accounts 284 304
Net operating loss carryforward 6,710
Other 14 436
----------- -----------
Net current deferred tax asset 859 28,459
----------- -----------
U.S. and State Non-current Deferred Tax Liabilities:
Property, plant and equipment, principally due to
differences in depreciation, amortization, lease
impairment and abandonments (84,969) (104,691)
Accrued expenses 8,041 6,449
Deferred income 2,748 3,306
Allowance for doubtful accounts 4,865 3,930
Income tax accruals 9,244 10,465
Other 2,552 2,448
----------- -----------
Net non-current deferred liability (57,519) (78,093)
----------- -----------
U.S. and state net deferred tax liability (56,660) (49,634)
----------- -----------
Foreign Deferred Tax Liabilities:
Property, plant and equipment of
foreign operations (25,556) (28,730)
----------- -----------
Deferred tax liability (25,556) (28,730)
----------- -----------
Total net deferred tax liability $ (82,216) $ (78,364)
----------- -----------
</TABLE>
The components of income from operations before income taxes for each year are
as follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
- -------------- --------- --------- ---------
<S> <C> <C> <C>
Domestic $ 83,439 $(225,692) $ 159,535
Foreign (5,808) (21,016) (1,850)
--------- --------- ---------
$ 77,631 $(246,708) $ 157,685
--------- --------- ---------
</TABLE>
46
<PAGE> 49
The income tax provisions (benefit) relating to operations for each year consist
of the following:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
- -------------- ----------- ----------- -----------
<S> <C> <C> <C>
U.S. current $ 18,962 $ (20,842) $ 22,146
U.S. deferred 7,151 (62,366) 34,344
State current 313 236 587
State deferred (313) (1,080) (622)
Foreign current 5,232 927 2,836
Foreign deferred (3,175) 442 (884)
----------- ----------- -----------
$ 28,170 $ (82,683) $ 58,407
----------- ----------- -----------
</TABLE>
NOTE 5 - COMMON STOCK, STOCK OPTIONS AND STOCKHOLDER RIGHTS
The Company has two stock option plans, the 1992 Stock Option and Restricted
Stock Plan ("1992 Plan") and the 1988 Non-Employee Director Stock Option Plan
("1988 Plan"). The Company accounts for these plans under APB Opinion 25, under
which no compensation cost has been recognized in the accompanying financial
statements.
Under the Company's 1992 Plan, the Board of Directors may grant stock options
and award restricted stock. No restricted stock has been issued under the 1992
Plan. Since the adoption of the 1992 Plan, stock options have been issued at the
market price on the date of grant. The earliest the granted options may be
exercised is over a three year period at the rate of 33 1/3% each year
commencing on the first anniversary of the grant date. The options expire ten
years from the grant date. The 1992 Plan was amended in 1997, by a vote of the
shareholders, to increase the maximum number of shares of common stock that may
be issued under the 1992 Plan to 4,000,000 shares. At December 31, 1999, the
Company had reserved 3,789,180 shares of common stock for issuance, including
487,945 shares available for grant, under its 1992 Plan.
The Company's 1988 Plan allows stock options to be issued to certain
non-employee directors at the market price on the date of grant. The options may
be exercised one year after issue and expire ten years from the grant date. The
1988 Plan provides for the grant of options to purchase a maximum of 550,000
shares of the Company's authorized but unissued common stock. At December 31,
1999, the Company had reserved 419,000 shares of common stock for issuance,
including 195,500 shares available for grant, under its 1988 Plan.
The Company adopted a stockholder rights plan on August 27, 1997, designed to
assure that the Company's stockholders receive fair and equal treatment in the
event of any proposed takeover of the Company and to guard against partial
tender offers and other abusive takeover tactics to gain control of the Company
without paying all stockholders a fair price. The rights plan was not adopted in
response to any specific takeover proposal. Under the rights plan, the Company
declared a dividend of one right ("Right") on each share of Noble Affiliates,
Inc. common stock. Each Right will entitle the holder to purchase one
one-hundredth of a share of a new Series A Junior Participating Preferred Stock,
par value $1.00 per share, at an exercise price of $150.00. The Rights are not
currently exercisable and will become exercisable only in the event a person or
group acquires beneficial ownership of 15 percent or more of Noble Affiliates,
Inc. common stock. The dividend distribution was made on September 8, 1997, to
stockholders of record at the close of business on that date. The Rights will
expire on September 8, 2007.
47
<PAGE> 50
Stock options outstanding under the plans mentioned above and two previously
terminated plans are presented for the periods indicated.
<TABLE>
<CAPTION>
Number Option
of Shares Price Range
----------- --------------
<S> <C> <C>
OUTSTANDING DECEMBER 31, 1996 1,602,098 $ 10.63-$40.38
----------- --------------
Granted 707,307 $ 39.63-$39.88
Exercised (102,141) $ 10.63-$40.38
Canceled (1,929) $ 24.25-$27.25
----------- --------------
OUTSTANDING DECEMBER 31, 1997 2,205,335 $ 11.63-$40.38
----------- --------------
Granted 722,604 $ 35.94-$37.75
Exercised (82,470) $ 11.63-$40.38
Canceled (28,227) $ 24.25-$40.38
----------- --------------
OUTSTANDING DECEMBER 31, 1998 2,817,242 $ 13.38-$40.38
----------- --------------
Granted 810,895 $ 20.06-$27,50
Exercised (64,055) $ 13.38-$24.25
Canceled (85,812) $ 20.06-$40.38
----------- --------------
OUTSTANDING DECEMBER 31, 1999 3,478,270 $ 13.50-$40.38
----------- --------------
EXERCISABLE AT DECEMBER 31, 1999 2,207,545 $ 13.50-$40.38
----------- --------------
</TABLE>
The SFAS No. 123 method of accounting is based on several assumptions and should
not be viewed as indicative of the operations of the Company in future periods.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1999, 1998 and 1997, respectively as follows:
<TABLE>
<CAPTION>
(amounts expressed in percentages) 1999 1998 1997
- ---------------------------------- -------- -------- -------
<S> <C> <C> <C>
Interest rate 5.50 5.75 6.03
Dividend yield .40 .40 .40
Expected volatility 42.95 32.66 32.97
Expected life 8.80 9.74 7.00
</TABLE>
The weighted average fair value of options granted using the Black-Scholes
option pricing model for 1999, 1998 and 1997, respectively is as follows:
<TABLE>
<CAPTION>
(amounts expressed in dollars) 1999 1998 1997
- ------------------------------ -------- -------- -------
<S> <C> <C> <C>
Black-Scholes model weighted average fair value
option price $10.01 $19.02 $18.28
</TABLE>
The Company applies APB Opinion No. 25 in accounting for its fixed price stock
options. Accordingly, no compensation cost for options has been recognized in
the financial statements. The chart below sets forth the Company's net income
and earnings per share for each of the years ended December 31, as reported and
on a pro forma basis as if the compensation cost of stock options had been
determined consistent with SFAS No. 123, "Accounting for Stock-Based
Compensation."
<TABLE>
<CAPTION>
(in thousands except per share amounts) 1999 1998 1997
- --------------------------------------- ------- ---------- --------
<S> <C> <C> <C>
Net Income:
As Reported $49,461 $ (164,025) $ 99,278
Pro Forma $41,176 $ (171,741) $ 95,591
Basic Earnings Per Share:
As Reported $ .87 $ (2.88) $ 1.75
Pro Forma $ .72 $ (3.02) $ 1.68
Diluted Earnings Per Share:
As Reported $ .86 $ (2.88) $ 1.73
Pro Forma $ .72 $ (3.02) $ 1.66
</TABLE>
48
<PAGE> 51
NOTE 6 - EMPLOYEE BENEFIT PLANS
PENSION PLAN AND OTHER POSTRETIREMENT BENEFIT PLANS
The Company has a non-contributory defined benefit pension plan covering
substantially all of its domestic employees. The benefits are based on an
employee's years of service and average earnings for the 60 consecutive calendar
months of highest compensation. The Company also has an unfunded restoration
plan to ensure payments of amounts for which employees are entitled under the
provisions of the pension plan, but which are subject to limitations imposed by
federal tax laws. The Company's funding policy has been to make annual
contributions equal to the actuarially computed liability to the extent such
amounts are deductible for income tax purposes. Plan assets consist of equity
securities and fixed income investments.
The Company sponsors other plans for the benefit of its employees and retirees.
These plans include health care and life insurance benefits. The following table
reflects the required SFAS No. 132, "Employers' Disclosures About Pension and
Other Postretirement Benefits," disclosures at December 31:
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
--------------------------- --------------------------
(in thousands) 1999 1998 1999 1998
- -------------- --------- --------- -------- --------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $ 82,823 $ 62,487 $ 3,187 $ 2,384
Service cost 3,802 3,811 294 268
Interest cost 4,720 4,704 188 185
Plan participants' contributions 38 22
Amendments 489 (363)
Actuarial (gain) loss (24,294) 14,059 (533) 358
Benefit paid (2,857) (2,727) (72) (30)
--------- --------- -------- --------
Benefit obligation at year end $ 64,194 $ 82,823 $ 2,739 $ 3,187
--------- --------- -------- --------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year $ 60,559 $ 55,611 $ $
Actual return on plan assets 1,083 7,322
Employer contribution 383 351 72 30
Benefit paid (2,857) (2,725) (72) (30)
--------- --------- -------- --------
Fair value of plan at end of year $ 59,168 $ 60,559 $ $
--------- --------- -------- --------
Fund status $ (5,026) $ (22,264) $ (2,738) $ (3,187)
Unrecognized net actuarial loss (gain) (18,989) 2,157 222 790
Unrecognized prior service cost 3,035 3,327 (334)
Unrecognized net transition obligation (assets) 1,239 1,263
--------- --------- -------- --------
Prepaid (accrued) benefit costs $ (19,741) $ (15,517) $ (2,850) $ (2,397)
--------- --------- -------- --------
COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost $ 3,802 $ 3,811 $ 294 $ 268
Interest cost 4,720 4,704 188 185
Expected return on plan assets (4,264) (3,908)
Transition (assets) obligation recognition 24 24
Amortization of prior service cost 291 291 (30)
Recognized net actuarial loss 35 286 34 23
--------- --------- -------- --------
Net periodic benefit cost $ 4,608 $ 5,208 $ 486 $ 476
--------- --------- -------- --------
WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31,
Discount rate 8.00% 6.75% 8.00% 6.75%
Expected return on plan assets 8.50% 8.50%
Rate of compensation increase 5.50% 5.50% 5.50% 5.50%
</TABLE>
49
<PAGE> 52
The following table reflects the aggregate pension obligation components
required by SFAS No. 132 for the defined benefit pension plan and the
restoration benefit plan, which are aggregated in the previous tables, at
December 31:
<TABLE>
<CAPTION>
Defined Benefit Restoration
Pension Plan Benefit Plan
------------------- --------------------
(in thousands) 1999 1998 1999 1998
- ------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
AGGREGATED PENSION BENEFITS
Aggregate fair value of plan assets $59,168 $60,559 $ $
Aggregate accumulated benefit obligation 56,092 68,283 8,102 14,540
------- ------- ------- --------
Fund status of net periodic
benefit assets (obligation) $ 3,076 $(7,724) $(8,102) $(14,540)
------- ------- ------- --------
</TABLE>
Assumed health care cost trend rates have a significant effect on the amounts
reported for health care plans. A one-percentage-point change in assumed health
care cost trend rates would have the following results:
<TABLE>
<CAPTION>
1-Percentage- 1-Percentage-
(in thousands) Point increase Point decrease
- -------------- -------------- --------------
<S> <C> <C>
Total service and interest cost components $ 544 $ 429
Total postretirement benefit obligation $3,048 $2,474
</TABLE>
EMPLOYEE SAVINGS PLAN ("ESP")
The Company has an ESP which is a defined contribution plan. Participation in
the ESP is voluntary and all regular employees of the Company are eligible to
participate. The Company may match up to 100 percent of the participant's
contribution not to exceed six percent of the employee's base compensation. The
following table indicates the Company's contribution for the years ended
December 31:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
- -------------- ------ ------ ------
<S> <C> <C> <C>
Employers' plan contribution $1,823 $1,938 $1,369
</TABLE>
NOTE 7 - ADDITIONAL BALANCE SHEET AND STATEMENT OF OPERATIONS INFORMATION
Included in accounts receivable-trade is an allowance for doubtful accounts at
December 31:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
- -------------- ------ ------
<S> <C> <C>
Allowance for doubtful accounts $1,237 $1,146
</TABLE>
Other current assets include the following at December 31:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
- -------------- ------- -------
<S> <C> <C>
Deferred tax asset $ 859 $28,459
Prepaid federal income taxes $30,000 $ 4,276
</TABLE>
Other current liabilities include the following at December 31:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
- -------------- ------- -------
<S> <C> <C>
Gas imbalance liabilities $ 2,604 $ 4,761
Note payable unconsolidated subsidiary $23,245 $
Accrued interest payable $10,897 $12,251
Louisiana workers compensation $ 4,751 $ 4,345
</TABLE>
Oil and gas operations expense included the following for the years ended
December 31:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
- -------------- --------- --------- ---------
<S> <C> <C> <C>
Lease operating expense $ 112,997 $ 142,673 $ 151,712
Production taxes 6,679 8,436 11,947
Other (2,978) (2,079) (2,894)
--------- --------- ---------
Total operations expense $ 116,698 $ 149,030 $ 160,765
--------- --------- ---------
</TABLE>
50
<PAGE> 53
Oil and gas exploration expense included the following for the years ended
December 31:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
- -------------- -------- -------- --------
<S> <C> <C> <C>
Dry hole expense $19,204 $ 57,736 $46,902
Undeveloped lease amortization 9,645 7,953 8,146
Abandoned assets 2,483 15,325 4,923
Seismic 7,797 15,754 19,095
Other 7,655 13,390 7,632
------- -------- -------
Total exploration expense $46,784 $110,158 $86,698
------- -------- -------
</TABLE>
During the past three years, there was no purchaser that accounted for more than
ten percent of total oil and gas sales and royalties.
NOTE 8 - IMPAIRMENT OF LONG-LIVED ASSETS
The Company follows SFAS No. 121 and any assets impaired are oil and gas
properties maintained under the successful efforts method of accounting. The
excess of the net book value over the projected discounted future net revenue of
the impaired properties is charged to "Impairment of Operating Assets." The
Company recorded no asset impairments under SFAS No. 121 during 1999 or 1997. In
December 1998, the Company recorded a $223.3 million pre-tax charge for the
write-down under SFAS No. 121 of properties due to downward reserve revisions.
51
<PAGE> 54
SUPPLEMENTAL OIL AND GAS INFORMATION
(Unaudited)
There are numerous uncertainties inherent in estimating quantities of proved oil
and gas reserves. Oil and gas reserve engineering is a subjective process of
estimating underground accumulations of oil and gas that cannot be precisely
measured, and estimates of engineers other than Samedan's might differ
materially from the estimates set forth herein. The accuracy of any reserve
estimate is a function of the quality of available data and of engineering and
geological interpretation and judgment. Results of drilling, testing and
production subsequent to the date of the estimate may justify revision of such
estimate. Accordingly, reserve estimates are often different from the quantities
of oil and gas that are ultimately recovered.
PROVED GAS RESERVES (Unaudited)
The following reserve schedule was developed by the Company's reserve engineers
and sets forth the changes in estimated quantities of proved gas reserves of the
Company during each of the three years presented.
<TABLE>
<CAPTION>
Natural Gas and Casinghead Gas (MMCF)
---------------------------------------------------------------------------------------
United Other Equatorial United
PROVED RESERVES AS OF: States Int'l Guinea Ecuador Argentina Kingdom Total
- --------------------- --------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
JANUARY 1, 1999 873,222 321,642 5,386 39,056 1,239,306
Revisions of previous estimates (15,700) 63,478 482 (2,392) 45,868
Extensions, discoveries and
other additions 87,293 87,500 192 174,985
Production (150,871) (1,018) (647) (10,404) (162,940)
Sale of minerals in place (34,165) (34,165)
Purchase of minerals in place 2 2
- ----------------------------- --------- ---------- ---------- ---------- ---------- ---------- ----------
DECEMBER 31, 1999 759,781 384,102 87,500 5,221 26,452 1,263,056
- ----------------- --------- ---------- ---------- ---------- ---------- ---------- ----------
PROVED RESERVES AS OF:
- --------------------- --------- ---------- ---------- ---------- ---------- ---------- ----------
JANUARY 1, 1998 1,107,158 322,205 5,565 47,287 1,482,215
Revisions of previous estimates (155,314) 396 27 (1,030) (155,921)
Extensions, discoveries and
other additions 71,061 71,061
Production (196,220) (959) (206) (7,201) (204,586)
Sale of minerals in place (2,232) (2,232)
Purchase of minerals in place 48,769 48,769
- ----------------------------- --------- ---------- ---------- ---------- ---------- ---------- ----------
DECEMBER 31, 1998 873,222 321,642 5,386 39,056 1,239,306
- ----------------- --------- ---------- ---------- ---------- ---------- ---------- ----------
PROVED RESERVES AS OF:
- --------------------- --------- ---------- ---------- ---------- ---------- ---------- ----------
JANUARY 1, 1997 1,079,607 26,601 5,676 44,366 1,156,250
Revisions of previous estimates (1,228) (2,554) 545 (5) 904 (2,338)
Extensions, discoveries and
other additions 226,546 322,205 7,025 555,776
Production (195,085) (1,892) (545) (106) (5,008) (202,636)
Sale of minerals in place (6,934) (22,299) (29,233)
Purchase of minerals in place 4,252 144 4,396
- ----------------------------- --------- ---------- ---------- ---------- ---------- ---------- ----------
DECEMBER 31, 1997 1,107,158 322,205 5,565 47,287 1,482,215
- ----------------- --------- ---------- ---------- ---------- ---------- ---------- ----------
PROVED DEVELOPED GAS RESERVES AS OF:
- ------------------------------------
January 1, 2000 703,166 11,687 5,221 26,452 746,526
January 1, 1999 818,787 12,862 5,386 39,056 876,091
January 1, 1998 1,022,192 13,425 5,565 47,287 1,088,469
January 1, 1997 1,010,837 26,601 5,676 17,981 1,061,095
</TABLE>
52
<PAGE> 55
PROVED OIL RESERVES (Unaudited)
The following reserve schedule was developed by the Company's reserve engineers
and sets forth the changes in estimated quantities of proved oil reserves of the
Company during each of the three years presented.
<TABLE>
<CAPTION>
Crude Oil and Condensate (BBLS in thousands)
------------------------------------------------------------------------------
United Other Equatorial United
PROVED RESERVES AS OF: States Int'l Guinea Argentina Kingdom Total
- ---------------------- -------- -------- ---------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
JANUARY 1, 1999 77,306 22,001 11,128 6,146 116,581
Revisions of previous estimates (1,394) 9,617 (24) (57) 8,142
Extensions, discoveries and
other additions 3,687 9,768 354 13,809
Production (8,952) (934) (819) (657) (11,362)
Sale of minerals in place (5,125) (5,125)
Purchase of minerals in place 1 1
-------- -------- -------- -------- -------- --------
DECEMBER 31, 1999 65,523 9,768 30,684 10,285 5,786 122,046
-------- -------- -------- -------- -------- --------
PROVED RESERVES AS OF:
- ----------------------
JANUARY 1, 1998 89,065 22,766 11,997 7,035 130,863
Revisions of previous estimates (5,935) 166 16 (129) (5,882)
Extensions, discoveries and
other additions 4,802 35 4,837
Production (11,540) (931) (885) (795) (14,151)
Sale of minerals in place (155) (155)
Purchase of minerals in place 1,069 1,069
-------- -------- -------- -------- -------- --------
DECEMBER 31, 1998 77,306 22,001 11,128 6,146 116,581
-------- -------- -------- -------- -------- --------
PROVED RESERVES AS OF:
- ----------------------
JANUARY 1, 1997 82,317 3,435 8,276 13,007 8,712 115,747
Revisions of previous estimates 1,516 1,676 117 (133) (795) 2,381
Extensions, discoveries and
other additions 16,501 (1) 15,212 31,712
Production (11,450) (426) (839) (877) (882) (14,474)
Sale of minerals in place (184) (4,797) (4,981)
Purchase of minerals in place 365 113 478
-------- -------- -------- -------- -------- --------
DECEMBER 31, 1997 89,065 22,766 11,997 7,035 130,863
-------- -------- -------- -------- -------- --------
PROVED DEVELOPED OIL RESERVES AS OF:
- ------------------------------------
January 1, 2000 60,618 9,768 14,743 10,285 3,986 99,400
January 1, 1999 72,949 11,425 11,128 4,346 99,848
January 1, 1998 82,713 12,191 11,997 5,234 112,135
January 1, 1997 78,564 3,322 6,956 13,007 6,049 107,898
</TABLE>
- ------------------
Proved Reserves. Proved reserves are estimated quantities of crude oil, natural
gas, natural gas liquids and condensate liquids which geological and engineering
data demonstrate with reasonable certainty to be recoverable in future years
from known reservoirs under existing economic and operating conditions.
Proved Developed Reserves. Proved developed reserves are proved reserves which
are expected to be recovered through existing wells with existing equipment and
operating methods.
53
<PAGE> 56
OIL AND GAS OPERATIONS (Unaudited)
Aggregate results of operations for each period ended December 31, in connection
with the Company's oil and gas producing activities are shown below. Amounts are
presented in accordance with SFAS No. 19, and may not agree with amounts
determined using traditional industry definitions.
<TABLE>
<CAPTION>
(in thousands)
- --------------
United Other Equatorial United
DECEMBER 31, 1999 States Int'l Guinea Ecuador Argentina Kingdom Total
- ---------------------------------- --------- --------- ---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 493,718 $ $ 16,036 $ $ 14,302 $ 24,677 $ 548,733
Production costs 125,803 3,183 4,640 7,106 140,732
Exploration expenses 45,461 2,779 196 130 542 4,270 53,378
DD&A and valuation provision 231,157 849 3,212 16 6,401 19,687 261,322
--------- --------- ---------- --------- --------- --------- ---------
Income (loss) 91,297 (3,628) 9,445 (146) 2,719 (6,386) 93,301
Income tax expense (benefit) 31,646 (1,094) 4,428 1,651 (733) 35,898
--------- --------- ---------- --------- --------- --------- ---------
Result of operations from
producing activities (excluding
corporate overhead and interest
costs) $ 59,651 $ (2,534) $ 5,017 $ (146) $ 1,068 $ (5,653) $ 57,403
--------- --------- ---------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
(in thousands)
- --------------
United Other Equatorial United
DECEMBER 31, 1999 States Int'l Guinea Ecuador Argentina Kingdom Total
- ---------------------------------- --------- --------- ---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 564,771 $ $ 10,282 $ $ 9,105 $ 25,006 $ 609,164
Production costs 154,594 2,962 6,274 9,044 172,874
Exploration expenses 90,614 9,987 658 87 5,828 107,174
DD&A and valuation provision 513,725 46 2,998 6,083 13,869 536,721*
--------- --------- ---------- --------- --------- --------- ---------
Income (loss) (194,162) (10,033) 3,664 (3,339) (3,735) (207,605)
Income tax expense (benefit) (68,764) (2,489) 1,786 (1,822) (794) (72,083)
--------- --------- ---------- --------- --------- --------- ---------
Result of operations from
producing activities (excluding
corporate overhead and interest
costs) $(125,398) $ (7,544) $ 1,878 $ $ (1,517) $ (2,941) $(135,522)
--------- --------- ---------- --------- --------- --------- ---------
</TABLE>
*Includes a pre-tax charge of $223.3 million pursuant to SFAS No. 121.
<TABLE>
<CAPTION>
(in thousands)
- --------------
United Other Equatorial United
DECEMBER 31, 1999 States Int'l Guinea Ecuador Argentina Kingdom Total
- ----------------------------------- -------- -------- ---------- ---------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $696,882 $ 9,944 $ 14,824 $ $ 14,777 $ 24,718 $761,145
Production costs 164,441 4,778 3,600 5,555 8,220 186,594
Exploration expenses 56,177 12,345 3,464 804 7,942 80,732
DD&A and valuation provision 280,862 2,642 1,889 5,037 12,399 302,829
-------- -------- -------- ---------- -------- -------- --------
Income (loss) 195,402 (9,821) 5,871 3,381 (3,843) 190,990
Income tax expense (benefit) 67,934 (4,470) 4,654 2,680 (3,047) 67,751
-------- -------- -------- ---------- -------- -------- --------
Result of operations from
producing activities (excluding
corporate overhead and interest
costs) $127,468 $ (5,351) $ 1,217 $ $ 701 $ (796) $123,239
-------- -------- -------- ---------- -------- -------- --------
</TABLE>
54
<PAGE> 57
COSTS INCURRED IN OIL AND GAS ACTIVITIES (Unaudited)
Costs incurred in connection with the Company's oil and gas acquisition,
exploration and development activities for each of the years are shown below.
Amounts are presented in accordance with SFAS No. 19, and may not agree with
amounts determined using traditional industry definitions.
<TABLE>
<CAPTION>
(in thousands)
- --------------
United Other Equatorial United
DECEMBER 31, 1999 States Int'l Guinea Ecuador Argentina Kingdom Total
- ---------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Property acquisition costs
Proved $ 69 $ $ $ $ $ $ 69
Unproved 7,280 620 7,900
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total $ 7,349 $ 620 $ $ $ $ $ 7,969
---------- ---------- ---------- ---------- ---------- ---------- ----------
Exploration costs $ 43,999 $ 7,382 $ 123 $ 130 $ 340 $ 3,229 $ 55,203
---------- ---------- ---------- ---------- ---------- ---------- ----------
Development costs $ 48,042 $ 1,012 $ 1,748 $ 2,569 $ 3,851 $ 4,972 $ 62,194
---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
(in thousands)
- --------------
United Other Equatorial United
DECEMBER 31, 1999 States Int'l Guinea Ecuador Argentina Kingdom Total
- ---------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Property acquisition costs
Proved $ 48,444 $ $ $ $ $ $ 48,444
Unproved 36,760 500 311 37,571
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total $ 85,204 $ 500 $ $ $ $ 311 $ 86,015
---------- ---------- ---------- ---------- ---------- ---------- ----------
Exploration costs $ 132,958 $ 9,663 $ 465 $ $ 473 $ 5,328 $ 148,887
---------- ---------- ---------- ---------- ---------- ---------- ----------
Development costs $ 242,838 $ 10,251 $ 10,977 $ $ 7,918 $ 9,761 $ 281,745
---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
(in thousands)
- --------------
United Other Equatorial United
DECEMBER 31, 1999 States Int'l Guinea Ecuador Argentina Kingdom Total
- ---------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Property acquisition costs
Proved $ 3,884 $ 28 $ $ $ $ $ 3,912
Unproved 16,668 3,178 19,846
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total $ 20,552 $ 3,206 $ $ $ $ $ 23,758
---------- ---------- ---------- ---------- ---------- ---------- ----------
Exploration costs $ 81,141 $ 14,528 $ 9,907 $ $ $ 11,588 $ 117,164
---------- ---------- ---------- ---------- ---------- ---------- ----------
Development costs $ 201,788 $ 1,538 $ 2,871 $ $ 5,558 $ 4,213 $ 215,968
---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
AGGREGATE CAPITALIZED COSTS (Unaudited)
Aggregate capitalized costs relating to the Company's oil and gas producing
activities, and related accumulated DD&A, as of December 31 are shown below:
<TABLE>
<CAPTION>
1999 1998
--------------------------------------------- ---------------------------------------------
(in thousands) U. S. Int'l TOTAL U. S. Int'l TOTAL
- ------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Unproved oil and gas properties $ 79,823 $ 13,288 $ 93,111 $ 86,844 $ 15,302 $ 102,146
Proved oil and gas properties 2,389,937 303,800 2,693,737 2,507,767 263,163 2,770,930
----------- ----------- ----------- ----------- ----------- -----------
2,469,760 317,088 2,786,848 2,594,611 278,465 2,873,076
Accumulated DD&A (1,471,889) (88,154) (1,560,043) (1,401,218) (59,357) (1,460,575)
----------- ----------- ----------- ----------- ----------- -----------
Net capitalized costs $ 997,871 $ 228,934 $ 1,226,805 $ 1,193,393 $ 219,108 $ 1,412,501
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
55
<PAGE> 58
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL
AND GAS RESERVES (Unaudited)
The following information is based on the Company's best estimate of the
required data for the Standardized Measure of Discounted Future Net Cash Flows
as of December 31, 1999, 1998 and 1997 in accordance with SFAS No. 69. The
Standard requires the use of a 10 percent discount rate. This information is not
the fair market value nor does it represent the expected present value of future
cash flows of the Company's proved oil and gas reserves.
<TABLE>
<CAPTION>
United Other Equatorial United
DECEMBER 31, 1999 States Int'l Guinea Ecuador Argentina Kingdom Total
- ---------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(in millions of dollars)
Future cash inflows $ 3,565 $ 220 $ 779 $ 320 $ 243 $ 181 $ 5,308
Future production and
development costs 1,566 105 189 73 102 85 2,120
Future income tax expenses 376 22 111 46 27 18 600
---------- ---------- ---------- ---------- ---------- ---------- ----------
Future net cash flows 1,623 93 479 201 114 78 2,588
10% annual discount for
estimated timing of cash flows 686 39 203 85 49 33 1,095
---------- ---------- ---------- ---------- ---------- ---------- ----------
Standardized measure of
discounted future net
cash flows $ 937 $ 54 $ 276 $ 116 $ 65 $ 45 $ 1,493
---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
United Other Equatorial United
DECEMBER 31, 1999 States Int'l Guinea Ecuador Argentina Kingdom Total
- ---------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(in millions of dollars)
Future cash inflows $ 2,647 $ $ 301 $ $ 96 $ 113 $ 3,157
Future production and
development costs 1,146 140 30 62 1,378
Future income tax expenses 182 19 8 6 215
---------- ---------- ---------- ---------- ---------- ---------- ----------
Future net cash flows 1,319 142 58 45 1,564
10% annual discount for
estimated timing of cash flows 490 53 22 17 582
---------- ---------- ---------- ---------- ---------- ---------- ----------
Standardized measure of
discounted future net
cash flows $ 829 $ $ 89 $ $ 36 $ 28 $ 982
---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
United Other Equatorial United
DECEMBER 31, 1999 States Int'l Guinea Ecuador Argentina Kingdom Total
- ---------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(in millions of dollars)
Future cash inflows $ 4,330 $ $ 498 $ $ 196 $ 259 $ 5,283
Future production and
development costs 2,040 148 121 61 2,370
Future income tax expenses 612 93 20 53 778
---------- ---------- ---------- ---------- ---------- ---------- ----------
Future net cash flows 1,678 257 55 145 2,135
10% annual discount for
estimated timing of cash flows 615 95 20 53 783
---------- ---------- ---------- ---------- ---------- ---------- ----------
Standardized measure of
discounted future net
cash flows $ 1,063 $ $ 162 $ $ 35 $ 92 $ 1,352
---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
Construction of AMPCO's Equatorial Guinea methanol plant is scheduled to be
completed in the second quarter of 2001. The future net cash inflows for 1998
and 1999 do not include cash flows relating to the Company's anticipated future
methanol sales. For more information regarding Samedan's methanol plant, see
Item 1. "Business--Unconsolidated Subsidiary" and Item 2. "Properties--Oil and
Gas" of this Form 10-K.
56
<PAGE> 59
Future cash inflows are estimated by applying year-end prices of oil and gas
relating to the Company's proved reserves to the year-end quantities of those
reserves, with consideration given to the effect of existing hedging contracts,
if any.
The year-end weighted average oil market price utilized in the computation of
future cash inflows was approximately $23.62 per BBL. West Texas intermediate
crude oil price in mid February was approximately $27.25 per BBL, an increase of
$3.63 per BBL compared to year-end 1999. The Company estimates that a $1.00 per
BBL change in the average oil price from the year-end price would change
discounted future net cash flows before income taxes by approximately $67
million.
The year-end weighted average gas market price utilized in the computation of
future cash inflows was approximately $2.15 per MCF. Natural gas index prices at
Henry Hub have increased approximately $.41 per MCF to $2.56 per MCF in mid
February compared with the year-end price. The Company estimates that a $.10 per
MCF change in the average gas price from the year-end price would change
discounted future net cash flows before income taxes by approximately $68
million.
Future production and development costs, which include dismantlement and
restoration expense, are computed by estimating the expenditures to be incurred
in developing and producing the Company's proved oil and gas reserves at the end
of the year, based on year-end costs, and assuming continuation of existing
economic conditions.
Future income tax expenses are computed by applying the appropriate year-end
statutory tax rates to the estimated future pretax net cash flows relating to
the Company's proved oil and gas reserves, less the tax bases of the properties
involved. The future income tax expenses give effect to tax credits and
allowances, but do not reflect the impact of general and administrative costs
and exploration expenses of ongoing operations relating to the Company's proved
oil and gas reserves.
At December 31, 1999, the Company had estimated gas imbalance receivables of
$17.9 million and estimated gas imbalance liabilities of $12.0 million; at
year-end 1998, $19.1 million in receivables and $14.8 million in liabilities;
and at year-end 1997, $18.5 million in receivables and $21.6 million in
liabilities. Neither the gas imbalance receivables nor gas imbalance liabilities
have been included in the standardized measure of discounted future net cash
flows as of each of the three years ended December 31, 1999, 1998 and 1997.
57
<PAGE> 60
SOURCES OF CHANGES IN DISCOUNTED FUTURE NET CASH FLOWS (Unaudited)
Principal changes in the aggregate standardized measure of discounted future net
cash flows attributable to the Company's proved oil and gas reserves, as
required by Financial Accounting Standards Board's SFAS No. 69, at year end are
shown below.
<TABLE>
<CAPTION>
(in millions of dollars) 1999 1998 1997
- ------------------------------------------ ------- ------- -------
<S> <C> <C> <C>
Standardized measure of discounted
future net cash flows at the beginning
of the year $ 982 $ 1,352 $ 2,222
Extensions, discoveries and improved
recovery, less related costs 410 39 501
Revisions of previous quantity estimates 89 (132) 13
Changes in estimated future
development costs (202) (17) (15)
Purchases (sales) of minerals in place (58) 46 (45)
Net changes in prices and production costs 673 (443) (1,259)
Accretion of discount 102 189 310
Sales of oil and gas produced, net of
production costs (425) (454) (594)
Development costs incurred during
the period 21 127 38
Net change in income taxes (317) 503 332
Change in timing of estimated future
production, and other 218 (228) (151)
------- ------- -------
Standardized measure of discounted
future net cash flows at the end
of the year $ 1,493 $ 982 $ 1,352
- ------------------------------------------ ------- ------- -------
</TABLE>
INTERIM FINANCIAL INFORMATION (Unaudited)
Interim financial information for the years ended December 31, 1999 and 1998 is
as follows:
<TABLE>
<CAPTION>
Quarter Ended
----------------------------------------------------------
(in thousands except per share amounts) Mar. 31, June 30, Sept. 30, Dec. 31,(1)
- --------------------------------------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
1999
Revenues $ 175,865 $ 216,245 $ 241,971 $ 252,698
Gross profit from operations $ 128 $ 22,959 $ 41,453 $ 38,087
Net income $ (8,901) $ 9,179 $ 27,654 $ 21,529
Basic earnings per share $ (.16) $ .16 $ .49 $ .38
Diluted earnings per share $ (.16) $ .16 $ .48 $ .38
1998
Revenues $ 246,535 $ 237,392 $ 205,803 $ 203,841
Gross profit (loss) from operations $ 31,838 $ 27,326 $ (25,616) $ (235,922)
Net income $ 13,718 $ 12,135 $ (25,150) $ (164,728)
Basic earnings per share $ .24 $ .21 $ (.44) $ (2.89)
Diluted earnings per share $ .24 $ .21 $ (.44) $ (2.89)
</TABLE>
(1) During the fourth quarters of 1999 and 1998, DD&A expense increased $7.6
million and $9.8 million, respectively, relating to the cumulative effect
of oil and gas reserve revisions on the DD&A provision for the preceding
three quarters.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
58
<PAGE> 61
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The section entitled "Election of Directors" in the Registrant's proxy statement
for the 2000 annual meeting of stockholders sets forth certain information with
respect to the directors of the Registrant and is incorporated herein by
reference. Certain information with respect to the executive officers of the
Registrant is set forth under the caption "Executive Officers of the Registrant"
in Part I of this report.
The section entitled "Section 16(a) Beneficial Ownership Reporting Compliance"
in the Registrant's proxy statement for the 2000 annual meeting of stockholders
sets forth certain information with respect to compliance with Section 16(a) of
the Securities Exchange Act of 1934, as amended, and is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION.
The section entitled "Executive Compensation" in the Registrant's proxy
statement for the 2000 annual meeting of stockholders sets forth certain
information with respect to the compensation of management of the Registrant,
and except for the report of the Compensation and Benefits Committee and Stock
Option Committee of the Board of Directors and the information therein under
"Executive Compensation--Performance Graph" is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The sections entitled "Security Ownership of Certain Beneficial Owners" and
"Security Ownership of Directors and Executive Officers" in the Registrant's
proxy statement for the 2000 annual meeting of stockholders set forth certain
information with respect to the ownership of the Registrant's common stock and
are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The section entitled "Certain Transactions" in the Registrant's proxy statement
for the 2000 annual meeting of stockholders sets forth certain information with
respect to certain relationships and related transactions, and is incorporated
herein by reference.
PART IV
ITEM 14. FINANCIAL STATEMENT SCHEDULES, EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report:
(1) Financial Statements and Financial Statement Schedules and
Supplementary Data: These documents are listed in the Index to
Consolidated Financial Statements in Item 8 hereof.
(2) Exhibits: The exhibits required to be filed by this Item 14 are
set forth in the Index to Exhibits accompanying this report.
(b) The Registrant made no filings on Form 8-K during 1999.
59
<PAGE> 62
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.
NOBLE AFFILIATES, INC.
Date: March 13, 2000 By: /s/ James L. McElvany
---------------------------------------------
James L. McElvany,
Vice President-Finance and Treasurer
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.
<TABLE>
<CAPTION>
Signature Capacity in which signed Date
- --------- ------------------------ ----
<S> <C> <C>
/s/ Robert Kelley Chairman of the Board, President, March 13, 2000
- ------------------------------------ Chief Executive Officer and
Robert Kelley Director (Principal Executive
Officer)
/s/ James L. McElvany Vice President-Finance and Treasurer March 13, 2000
- ------------------------------------ (Principal Financial and Accounting
James L. McElvany Officer)
/s/ Alan A. Baker Director March 13, 2000
- ------------------------------------
Alan A. Baker
/s/ Michael A. Cawley Director March 13, 2000
- ------------------------------------
Michael A. Cawley
/s/ Edward F. Cox Director March 13, 2000
- ------------------
Edward F. Cox
/s/ Thomas E. Hassen Director March 13, 2000
- ------------------------------------
Thomas E. Hassen
/s/ Dale P. Jones Director March 13, 2000
- ------------------------------------
Dale P. Jones
/s/ Harold F. Kleinman Director March 13, 2000
- ------------------------------------
Harold F. Kleinman
/s/ T. Don Stacy Director March 13, 2000
- ------------------------------------
T. Don Stacy
</TABLE>
60
<PAGE> 63
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit **
- ------ ----------
<S> <C> <C>
3.1 -- Certificate of Incorporation, as amended, of the Registrant as
currently in effect (filed as Exhibit 3.2 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1987
and incorporated herein by reference).
3.2 -- Certificate of Designations of Series A Junior Participating
Preferred Stock of the Registrant dated August 27, 1997 (filed
Exhibit A of Exhibit 4.1 to the Registrant's Registration
Statement on Form 8-A filed on August 28, 1997 and incorporated
herein by reference).
3.3 -- Composite copy of Bylaws of the Registrant as currently in effect
(filed as Exhibit 3.4 to the Registrants' Annual Report on Form
10-K for the year ended December 31, 1997 and incorporated herein
by reference).
3.4 -- Certificate of Designations of Series B Mandatorily Convertible
Preferred Stock of the Registrant dated November 9, 1999.
4.1 -- Indenture dated as of October 14, 1993 between the Registrant and
U.S. Trust Company of Texas, N.A., as Trustee, relating to the
Registrant's 7 1/4% Notes Due 2023, including form of the
Registrant's 7 1/4% Notes Due 2023 (filed as Exhibit 4.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993 and incorporated herein by reference).
4.2 -- Indenture relating to Senior Debt Securities dated as of April 1,
1997 between the Registrant and U.S. Trust Company of Texas,
N.A., as Trustee (filed as Exhibit 4.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1997 and incorporated herein by reference).
4.3 -- First Indenture Supplement relating to $250 million of the
Registrant's 8% Senior Notes Due 2027 dated as of April 1, 1997
between the Registrant and U.S. Trust Company of Texas, N.A., as
Trustee (filed as Exhibit 4.2 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997 and
incorporated herein by reference).
4.4 -- Second Indenture Supplement, between the Company and U.S. Trust
Company of Texas, N.A. as trustee, relating to $100 million of
the Registrant's 7 1/4% Senior Debentures Due 2097 dated as of
August 1, 1997 (filed as Exhibit 4.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997
and incorporated herein by reference).
4.5 -- Rights Agreement, dated as of August 27, 1997, between the
Registrant and Liberty Bank and Trust Company of Oklahoma City,
N.A., as Right's Agent (filed as Exhibit 4.1 to the Registrant's
Registration Statement on Form 8-A filed on August 28, 1997 and
incorporated herein by reference).
4.6 -- Amendment No. 1 to Rights Agreement dated as of December 8, 1998,
between the Registrant and Bank One Trust Company, as successor
Rights Agent to Liberty Bank and Trust Company of Oklahoma City,
N.A. (filed as Exhibit 4.2 to the Registrant's Registration
Statement on Form 8-A/A (Amendment No. 1) filed on December 14,
1998 and incorporated herein by reference).
10.1* -- Samedan Oil Corporation Bonus Plan, as amended and restated on
September 24, 1996 (filed as Exhibit 10.1 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1996 and incorporated herein by reference).
10.2* -- Restoration of Retirement Income Plan for certain participants in
the Noble Affiliates Retirement Plan dated September 21, 1994,
effective as of May 19, 1994 (filed as Exhibit 10.5 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994 and incorporated herein by reference).
10.3 * -- Noble Affiliates Thrift Restoration Plan dated May 9, 1994 (filed
as Exhibit 10.6 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 and incorporated
herein by reference).
</TABLE>
61
<PAGE> 64
<TABLE>
<CAPTION>
Exhibit
Number Exhibit **
- ------ ----------
<S> <C> <C>
10.4* -- Noble Affiliates Restoration Trust dated September 21, 1994,
effective as of October 1, 1994 (filed as Exhibit 10.7 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 and incorporated herein by reference).
10.5* -- Noble Affiliates, Inc. 1992 Stock Option and Restricted Stock
Plan, as amended and restated, dated November 2, 1992 (filed as
Exhibit 4.1 to the Registrant's Registration Statement on Form
S-8 (Registration No. 33-54084) and incorporated herein by
reference).
10.6* -- 1982 Stock Option Plan of the Registrant (filed as Exhibit 4.1 to
the Registrant's Registration Statement on Form S-8 (Registration
No. 2-81590) and incorporated herein by reference).
10.7* -- Amendment No. 1 to the 1982 Stock Option Plan of the Registrant
(filed as Exhibit 4.2 to the Registrant's Registration Statement
on Form S-8 (Registration No. 2-81590) and incorporated herein by
reference).
10.8* -- Amendment No. 2 to the 1982 Stock Option Plan of the Registrant
(filed as Exhibit 10.11 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1995 and incorporated herein
by reference).
10.9* -- 1988 Nonqualified Stock Option Plan for Non-Employee Directors of
the Registrant, as amended and restated, effective as of January
30, 1996 (filed as Exhibit 10.13 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1996 and
incorporated herein by reference).
10.10* -- Form of Indemnity Agreement entered into between the Registrant
and each of the Registrant's directors and bylaw officers (filed
as Exhibit 10.18 to the Registrant's Annual Report of Form 10-K
for the year ended December 31, 1995 and incorporated herein by
reference).
10.11 -- Guaranty of the Registrant dated October 28, 1982, guaranteeing
certain obligations of Samedan (filed as Exhibit 10.12 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993 and incorporated herein by reference).
10.12 -- Stock Purchase Agreement dated as of July 1, 1996, between
Samedan Oil Corporation and Enterprise Diversified Holdings
Incorporated (filed as Exhibit 2.1 to the Registrant's Current
Report on Form8-K (Date of Event: July 31, 1996) dated August 13,
1996 and incorporated herein by reference).
10.13* -- Noble Affiliates, Inc. 1992 Stock Option and Restricted Stock
Plan, as amended and restated on December 10, 1996, subject to
the approval of stockholders (filed as Exhibit 10.21 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996 and incorporated herein by reference).
10.14 -- Amended and Restated Credit Agreement dated as of December 24,
1997 among the Registrant, as borrower, and Union Bank of
Switzerland, Houston agency, as the agent for the lender, and
NationsBank of Texas, N.A. and Texas Commerce Bank National
Association, as managing agents, and Bank of Montreal, CIBC Inc.,
The First National Bank of Chicago, Royal Bank of Canada, and
Societe Generale, Southwest agency, as co-agents, and certain
commercial lending institutions, as lenders (filed as Exhibit
10.20 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 and incorporated herein by
reference).
</TABLE>
62
<PAGE> 65
<TABLE>
<CAPTION>
Exhibit
Number Exhibit **
- ------ ----------
<S> <C> <C>
10.15 -- Noble Preferred Stock Remarketing and Registration Rights
Agreement dated as of November 10, 1999 by and among the
Registrant, Noble Share Trust, The Chase Manhattan Bank, and
Donaldson, Lufkin & Jenrette Securities Corporation.
21 -- Subsidiaries
23 -- Consent of Arthur Andersen LLP.
27 -- Financial Data Schedule.
* Management contract or compensatory plan or arrangement required
to be filed as an exhibit hereto.
** Copies of exhibits will be furnished upon prepayment of 25 cents
per page. Requests should be addressed to the Vice
President-Finance and Treasurer, Noble Affiliates, Inc., Post
Office Box 1967, Ardmore, Oklahoma 73402.
</TABLE>
63
<PAGE> 66
<TABLE>
<S> <C>
DIRECTORS DIRECTORS EMERITI
ROBERT KELLEY EDGAR HOLT
Chairman of the Board, GEORGE J. MCLEOD
President and Chief Executive Officer, JOHN F. SNODGRASS
Noble Affiliates, Inc. JACK D. WILKES
ALAN A. BAKER EXECUTIVE OFFICERS
Consultant and former Chairman and
Chief Executive Officer, ROBERT KELLEY
Halliburton Energy Services Chairman of the Board,
President and Chief Executive Officer,
MICHAEL A. CAWLEY Noble Affiliates, Inc.
Trustee, President and Chief Executive Officer,
The Samuel Roberts Noble Foundation, Inc. DAN O. DINGES
Senior Vice President and
EDWARD F. COX Division General Manager of
Partner, law firm of Samedan Oil Corporation
Patterson, Belknap, Webb and Tyler
JAMES L. MCELVANY
THOMAS E. HASSEN Vice President-Finance
Managing Director, Co-head and Treasurer, Noble Affiliates, Inc.
Global Energy Resources Group,
Credit Suisse First Boston Corporation W. A. POILLION
Senior Vice President-Production and Drilling
DALE P. JONES of Samedan Oil Corporation
Consultant and former Vice Chairman and
President, Halliburton Company ORVILLE WALRAVEN
Corporate Secretary of Noble Affiliates, Inc. and
HAROLD F. KLEINMAN Senior Vice President-Land of
Partner, law firm of Samedan Oil Corporation
Thompson & Knight L.L.P.
JAMES C. WOODSON
T. DON STACY Senior Vice President-Exploration of
Former Chairman and Samedan Oil Corporation
President of Amoco Eurasia Petroleum Co.
</TABLE>
64
<PAGE> 67
<TABLE>
<S> <C>
CORPORATE AND SUBSIDIARY OFFICES OPERATIONAL OFFICES
NOBLE AFFILIATES, INC.
DOMESTIC OFFSHORE
CORPORATE HEADQUARTERS Samedan Oil Corporation
110 West Broadway 350 Glenborough
Post Office Box 1967 Suite 240
Ardmore, Oklahoma 73402 Houston, Texas 77067
(580) 223-4110
DOMESTIC ONSHORE
INVESTOR RELATIONS Samedan Oil Corporation
William R. McKown III 12600 Northborough
Assistant Treasurer Suite 250
(580) 221-1235 Houston, Texas 77067
[email protected]
INTERNATIONAL
Samedan Oil Corporation
SUBSIDIARY HEADQUARTERS 350 Glenborough
Suite 300
SAMEDAN OIL CORPORATION Houston, Texas 77067
110 West Broadway
Post Office Box 909 INDEPENDENT PUBLIC ACCOUNTANTS
Ardmore, Oklahoma 73402 Arthur Andersen LLP
Oklahoma City, Oklahoma
ENERGY DEVELOPMENT CORPORATION
110 West Broadway TRANSFER AGENT AND REGISTRAR
Post Office Box 786 First Chicago Trust Company
Ardmore, Oklahoma 73402 525 Washington Boulevard
Jersey City, New Jersey 07310
NOBLE GAS MARKETING, INC.
350 Glenborough COMMON STOCK LISTED
Suite 180 New York Stock Exchange
Houston, Texas 77067 Symbol - NBL
NOBLE TRADING, INC.
110 West Broadway
Post Office Box 909
Ardmore, Oklahoma 73402
</TABLE>
Annual Meeting
The Annual Meeting of Stockholders of Noble Affiliates, Inc. will be held on
Tuesday, April 25, 2000, at 10:00 a.m. at the Charles B. Goddard Center located
at "D" Street and First Avenue S.W. in Ardmore, Oklahoma. All stockholders are
cordially invited to attend.
Form 10-K
The Company's Annual Report on Form 10-K for the year ended December 31, 1999,
as filed with the Securities and Exchange Commission, is included in this
report. Additional copies are available without charge upon request by writing
to the Vice President-Finance and Treasurer, Noble Affiliates, Inc., P. O. Box
1967, Ardmore, Oklahoma 73402, or via the Securities and Exchange Commission's
Internet website: http://www.sec.gov.
65
<PAGE> 1
EXHIBIT 3.4
CERTIFICATE OF DESIGNATIONS
OF
SERIES B MANDATORILY CONVERTIBLE PREFERRED STOCK
OF
NOBLE AFFILIATES, INC.
----------------------------------
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
----------------------------------
NOBLE AFFILIATES, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "CORPORATION"), does
hereby certify that, pursuant to the authority conferred on the Board of
Directors of the Corporation by the Certificate of Incorporation, as amended, of
the Corporation (the "CERTIFICATE OF INCORPORATION") and in accordance with
Section 151 of the General Corporation Law of the State of Delaware, the Board
of Directors of the Corporation on October 26, 1999, adopted the following
resolution (in relevant part) establishing and creating a series of Preferred
Stock, $1.00 par value, of the Corporation designated as Series B Mandatorily
Convertible Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of convertible preferred stock, par value
$1.00 per share, of the Corporation is hereby created, and that there is hereby
established a special committee of this Board of Directors (the "Special
Committee") consisting of Robert Kelley, Thomas E. Hassen and Harold F.
Kleinman, and the Special Committee is hereby delegated full authority to fix
the designation, preferences and rights (including without limitation rights
relating to voting, dividends, redemption, dissolution, distribution of assets
of the Corporation in respect thereof or the conversion into, or the exchange of
such shares for, shares of any other class or classes or any other series of the
same or any other class or classes of stock of the Corporation) and to fix the
number of shares of such series of Preferred Stock (and to increase or decrease
such number from time to time).
Pursuant to the authority delegated to it by the Board of Directors,
and in accordance with Section 151 of the General Corporation Law of the State
of Delaware, the Special Committee of the Board of Directors of the Corporation
adopted the following resolution (in relevant part):
RESOLVED, that, pursuant to the authority vested in the
Special Committee by resolutions duly adopted by the Board of Directors of the
Corporation in accordance with the provisions of the Certificate of
Incorporation, as amended, of the Corporation, the designation and number of
shares of the new series of Preferred Stock and the voting and other powers,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations and restrictions
thereof, are as follows:
<PAGE> 2
SERIES B MANDATORILY CONVERTIBLE PREFERRED STOCK
Section 1. Definitions. Capitalized terms used but not defined herein shall have
the meanings assigned thereto in the Certificate of Incorporation. In addition,
the following terms shall have the following meanings when used herein:
"Average Trading Price" for any given period, including a single day,
means, for a security, an amount equal to (i) the sum of the Closing Price for
such security on each Trading Day in such period divided by (ii) the total
number of Trading Days in such period.
"Board of Directors" shall mean the Board of Directors of the
Corporation.
"Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which commercial banking institutions in New York, New York, Wilmington,
Delaware or the State of Oklahoma are authorized or obligated by law or
executive order to close.
"Closing Price" means, for a security, the closing price for such
security on the Trading Day in question (or if such day is not a Trading Day
then as of the Trading Day next preceding such day) as reported by Bloomberg
L.P., or if not so reported by Bloomberg L.P., as reported by another recognized
source selected by the Board of Directors of the Corporation.
"Common Stock" shall have the meaning specified in Section 6(i) hereof.
"Dividend Payment Date" shall have the meaning specified in Section
3(a) hereof.
"Failed Remarketing" shall have the meaning assigned to such term in
the Remarketing Agreement.
"Final Sale Date" shall have the meaning assigned to such term in the
Remarketing Agreement.
"junior stock" shall mean (and references to shares ranking "junior to"
the Mandatorily Convertible Preferred Stock shall refer to), with respect to
Sections 3 and 7, Common Stock, the Series A Junior Participating Preferred
Stock of the Corporation and any other class or series of stock of the
Corporation which by its terms is not entitled to receive any dividends unless
all dividends required to have been paid or declared and set apart for payment
on the Mandatorily Convertible Preferred Stock shall have been so paid or
declared and, with respect to Sections 4 and 7, Common Stock, the Series A
Junior Participating Preferred Stock of the Corporation and any other class or
series of stock of the Corporation which by its terms is not entitled to receive
any assets upon the liquidation, dissolution or winding up of the affairs of the
Corporation until the Mandatorily Convertible Preferred Stock shall have
received the entire amount to which such stock is entitled upon liquidation,
dissolution or winding up.
"Mandatory Conversion" shall have the meaning specified in Section 6(a)
hereof.
<PAGE> 3
"Mandatory Conversion Date" means the third anniversary of the Rate
Reset Date.
"Mandatory Conversion Date Market Price" shall have the meaning
specified in Section 6(a) hereof.
"Mandatory Conversion Rate" shall have the meaning specified in Section
6(a) hereof.
"Noble Remarketing Agent" shall have the meaning assigned to such term
in the Remarketing Agreement.
"Optional Conversion" shall have the meaning specified in Section 6(b)
hereof.
"Optional Conversion Rate" shall have the meaning specified in Section
6(b) hereof.
"parity stock" shall mean (and references to shares ranking "on a
parity with" the Mandatorily Convertible Preferred Stock shall refer to), with
respect to Sections 3 and 7, any class or series of stock of the Corporation
which by its terms is entitled to receive payment of dividends on a parity with
the Mandatorily Convertible Preferred Stock and, with respect to Sections 4 and
7, any class or series of stock of the Corporation which by its terms is
entitled to receive assets upon the liquidation, dissolution or winding up of
the affairs of the Corporation on a parity with the Mandatorily Convertible
Preferred Stock.
"Principal Market" means the principal exchange on which the security
in question is traded or the principal market on which such security is quoted,
as determined by the Board of Directors of the Corporation.
"Pro Rata Repurchase" means any purchase of shares of Common Stock by
the Corporation or any affiliate thereof (as defined in Rule 12b-2 under the
Securities Exchange Act of 1934 (the "Exchange Act")) pursuant to any tender
offer or exchange offer subject to Section 13(e) of the Exchange Act, or
pursuant to any other offer available to substantially all holders of Common
Stock, whether for cash, shares of capital stock of the Corporation, other
securities of the Corporation, evidences of indebtedness of the Corporation or
any other person or any other property (including, without limitation, shares of
capital stock, other securities or evidences of indebtedness of a Subsidiary),
or any combination thereof, effected while any of the shares of Mandatorily
Convertible Preferred Stock are outstanding; provided, however, that "Pro Rata
Repurchase" shall not include any purchase of shares by the Corporation or any
affiliate thereof made in open market transactions substantially in accordance
with the requirements of Rule 10b-18 as in effect under the Exchange Act or on
such other terms and conditions as the Board of Directors shall have determined
are reasonably designed to prevent such purchases from having a material effect
on the trading market for the Common Stock. A Pro Rata Repurchase shall be
deemed to be effective on the date of acceptance of shares for purchase or
exchange under any tender or exchange offer which is a Pro Rata Repurchase or
the date of purchase with respect to any Pro Rata Repurchase that is not a
tender or exchange offer.
"Rate Reset Date" shall have the meaning assigned to such term in the
Remarketing Agreement.
<PAGE> 4
"Redemption Event" means the occurrence of any of the following: (i)
any consolidation or merger of the Corporation with or into another corporation
or entity or the statutory exchange of securities with another corporation or
entity, unless in connection with such consolidation, merger or exchange the
outstanding shares of Common Stock immediately preceding the consummation of
such consolidation, merger or exchange are converted into, exchanged for or
otherwise represent at least a majority of the outstanding shares of common
stock of the surviving or resulting corporation or entity immediately succeeding
the consummation of such consolidation, merger or exchange; or (ii) the
Corporation sells or conveys to another entity (other than a Subsidiary) all or
substantially all of the assets of the Corporation.
"Remarketing Agreement" shall mean the Noble Preferred Stock
Remarketing and Registration Rights Agreement dated as of November 10, 1999
among the Corporation, the Noble Share Trust, The Chase Manhattan Bank, as
Series A-2 Indenture Trustee, and Donaldson, Lufkin & Jenrette Securities
Corporation, as Remarketing Agent.
"Reset Common Yield" shall mean the quotient of (i) the product of (x)
4 and (y) the amount of the ordinary quarterly cash dividend on one share of
Common Stock most recently declared prior to the Series A-2 Note Trigger Date
(as appropriately adjusted for the events referred to in Section 6(c)(1)),
unless subsequent to such declaration and prior to the Series A-2 Note Trigger
Date, the Corporation has publicly announced a change to, or elimination of, its
ordinary quarterly cash dividend and filed with the Securities and Exchange
Commission a document including such change or elimination, in which case the
amount of such proposed ordinary quarterly cash dividend or $0.00 if such
dividend is to be eliminated, divided by (ii) the Reset Price (provided,
however, that if as of the Series A-2 Note Trigger Date there is more than one
class of Common Stock, then the Reset Common Yield shall be calculated with
respect to each then outstanding class of Common Stock, and the Reset Common
Yield as used herein shall be the amount calculated with respect to the class of
Common Stock resulting in the greatest Reset Common Yield).
"Reset Dividend Rate" shall mean an amount per share per annum equal to
the product of (i) $1,000 and (ii) the sum of (x) the Reset Common Yield
(expressed as a percentage), plus (y) 7.0% (rounded to the nearest cent).
"Reset Price" shall mean the higher of (i) the Closing Price of a share
of Common Stock on the Series A-2 Note Trigger Date or (ii) the quotient
(rounded up to the nearest cent) of $125,000,000 divided by the number, as of
the Series A-2 Note Trigger Date, of the authorized but unissued shares of
Common Stock that have not been reserved as of the Series A-2 Note Trigger Date
by the Board of Directors for other purposes subject to adjustment as provided
in Section 6.
"Rights" means rights or warrants distributed by the Corporation under
a shareholder rights plan or agreement to all holders of Common Stock entitling
the holders thereof to subscribe for or purchase shares of the Corporation's
capital stock (either initially or under certain circumstances), which rights or
warrants, until the occurrence of a specified event or events ("Rights Events"):
(i) are deemed to be transferred with such shares of Common Stock,
<PAGE> 5
(ii) are not exercisable, and
(iii) are also issued in respect of future issuances of Common
Stock.
"Rights Events" shall have the meaning assigned to such term in the
definition of Rights.
"senior stock" shall mean (and references to shares ranking "senior to"
or "prior to" the Mandatorily Convertible Preferred Stock shall refer to), with
respect to Sections 3 and 7, any class or series of stock of the Corporation
ranking senior to the Mandatorily Convertible Preferred Stock in respect of the
right to receive dividends and, with respect to Sections 4 and 7, any class or
series of stock of the Corporation ranking senior to the Mandatorily Convertible
Preferred Stock with respect to the right to receive assets upon the
liquidation, dissolution or winding up of the affairs of the Corporation. All
classes or series of stock of the Corporation other than junior stock or parity
stock shall be senior stock with respect to the Mandatorily Convertible
Preferred Stock, except to the extent expressly provided otherwise in the
Certificate of Incorporation, including any Certificate of Designations
Establishing a Series of Preferred Stock.
"Series A-2 Notes" shall have the meaning assigned to such term in the
Remarketing Agreement.
"Series A-2 Note Trigger Date" shall mean the earlier of (A) the
Successful Repricing Date or (B) the date of a Failed Remarketing.
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors, or other individuals performing similar functions, are
at the time directly or indirectly owned by the Corporation.
"Successful Repricing Date" shall have the meaning assigned to such
term in the Remarketing Agreement.
"Threshold Appreciation Price" means the product of (i) the Reset
Price (as the same may be adjusted from time to time) and (ii) 1.1.
"Trading Day" means a day on which the Principal Market with respect to
the security in question is regularly scheduled to be open for trading. For
purposes of this definition, a day on which any such exchange is scheduled to
close (as opposed to unexpectedly closing) prior to its regular closing time
shall not constitute a Trading Day.
Section 2. Designation and Amount. The distinctive designation of the
series of Preferred Stock created by this Certificate of Designations shall be
the "Series B Mandatorily Convertible Preferred Stock." The number of shares
that shall constitute such series shall be 125,000 shares.
Section 3. Dividends.
<PAGE> 6
(a) The holders of the Mandatorily Convertible Preferred Stock shall
not be entitled to receive any dividends prior to, or with respect to any period
ending prior to, the Rate Reset Date. The holders of the Mandatorily Convertible
Preferred Stock, in preference to the rights of holders of any junior stock but
subject to the rights of holders of any senior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of any funds
legally available therefor, cumulative cash dividends from the Rate Reset Date
at the Reset Dividend Rate, and no more, payable on the dates as set forth in
this Section 3. Dividends shall accrue on any given share of Mandatorily
Convertible Preferred Stock from the Rate Reset Date. Dividends shall be payable
quarterly in arrears on each January 1, April 1, July 1, and October 1
commencing on the first such date following the Rate Reset Date (each such date
being hereinafter referred to as a "DIVIDEND PAYMENT DATE"), or, if any Dividend
Payment Date is not a Business Day, then the Dividend Payment Date shall be the
next succeeding Business Day. Each such dividend shall be payable to holders of
record as they appear on the books of the Corporation or any transfer agent for
the Mandatorily Convertible Preferred Stock on such record dates as shall be
fixed by the Board of Directors subject to applicable law (which record date
shall be no more than 60 days prior to the date fixed for the payment thereof).
Dividends on the Mandatorily Convertible Preferred Stock shall accrue on a daily
basis commencing on and including the Rate Reset Date, and accrued dividends for
each dividend period or portion thereof shall cumulate, to the extent not paid,
as of the date on which they were to have been paid. A dividend period shall
commence on a Dividend Payment Date or the Rate Reset Date, as the case may be,
and continue to the day next preceding the next succeeding Dividend Payment
Date. Accumulated unpaid dividends shall not accrue interest. Dividends (or cash
amounts equal to accrued and unpaid dividends) payable on the Mandatorily
Convertible Preferred Stock for any period less than or more than a full
quarterly period shall be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in any period less than one
month. Dividends on the Mandatorily Convertible Preferred Stock shall accrue
whether or not the Corporation has earnings, whether or not there are funds
legally available for the payment of such dividends and whether or not such
dividends are declared. Dividends in arrears for any past dividend periods or
portions thereof may be declared and paid at any time without reference to any
regular Dividend Payment Date to holders of record on such date as shall be
fixed by the Board of Directors subject to applicable law. Dividends on the
Mandatorily Convertible Preferred Stock shall cease to accrue on the earlier of
(i) the day immediately preceding the Mandatory Conversion Date, or (ii) the day
immediately prior to their earlier conversion.
(b) As long as any shares of Mandatorily Convertible Preferred Stock
are outstanding, no dividends or other distributions for any dividend period
(other than dividends or other distributions payable in shares of, or warrants,
rights or options exercisable for or convertible into, junior stock, and cash in
lieu of fractional shares of such junior stock in connection with any such
dividend or distribution) will be paid on any junior stock unless: (i) full
dividends, if any, on all outstanding shares of senior stock, parity stock and
Mandatorily Convertible Preferred Stock have been paid, or declared and set
aside for payment, for all dividend periods terminating on or prior to the
payment date of such junior stock dividend or distribution, to the extent such
dividends on senior stock, parity stock or Mandatorily Convertible Preferred
Stock are cumulative; (ii) the Corporation has paid or set aside all amounts, if
any, then or theretofore required to be paid or set aside for all purchase,
retirement, and sinking funds, if any, for any outstanding shares of senior
stock, parity stock and Mandatorily Convertible Preferred Stock; and (iii) the
Corporation is not in default on any of its
<PAGE> 7
obligations to redeem any outstanding shares of senior stock, parity stock or
Mandatorily Convertible Preferred Stock.
In addition, as long as any Mandatorily Convertible Preferred Stock is
outstanding, no shares of any junior stock may be purchased, redeemed, or
otherwise acquired by the Corporation or any Subsidiary (except in connection
with a reclassification or exchange of any junior stock through the issuance of
other junior stock (and cash in lieu of fractional shares of such junior stock
in connection therewith) and except for the acquisition of shares of any junior
stock pursuant to contractual obligations binding against the Corporation or any
Subsidiary that were entered into prior to the date of the first issuance of
shares of Mandatorily Convertible Preferred Stock or pursuant to contractual
obligations that are entered into at a time subsequent thereto when such
acquisitions of shares could be made pursuant to this Subsection 3(b)) nor may
any funds be set aside or made available for any sinking fund for the purchase
or redemption of any junior stock unless: (i) full dividends, if any, on all
outstanding shares of senior stock, parity stock and Mandatorily Convertible
Preferred Stock have been paid, or declared and set aside for payment, for all
dividend periods terminating on or prior to the date of such purchase,
redemption or acquisition, to the extent dividends on such senior stock, parity
stock or Mandatorily Convertible Preferred Stock dividends are cumulative; (ii)
the Corporation has paid or set aside all amounts, if any, then or theretofore
required to be paid or set aside for all purchase, retirement, and sinking
funds, if any, for any outstanding shares of senior stock, parity stock and
Mandatorily Convertible Preferred Stock; and (iii) the Corporation is not in
default on any of its obligations to redeem any outstanding shares of senior
stock, parity stock or Mandatorily Convertible Preferred Stock. Subject to the
provisions described above, such dividends or other distributions (payable in
cash, property, or junior stock) as may be determined from time to time by the
Board of Directors may be declared and paid on the shares of any junior stock
and from time to time junior stock may be purchased, redeemed or otherwise
acquired by the Corporation or any Subsidiary. In the event of the declaration
and payment of any such dividends or other distributions, the holders of such
junior stock will be entitled, to the exclusion of holders of any outstanding
senior stock or parity stock, to share therein according to their respective
interests.
(c) As long as any Mandatorily Convertible Preferred Stock is
outstanding, dividends or other distributions for any dividend period may not be
paid on any outstanding shares of parity stock (other than dividends or other
distributions payable in shares of, or warrants, rights or options exercisable
for or convertible into, parity stock or junior stock and cash in lieu of
fractional shares of such parity stock or junior stock in connection with any
such dividend), unless either: (a) (i) full dividends, if any, on all
outstanding shares of senior stock, parity stock and Mandatorily Convertible
Preferred Stock have been paid, or declared and set aside for payment, for all
dividend periods terminating on or prior to the payment date of such senior
stock, parity stock or Mandatorily Convertible Preferred Stock dividend or
distribution, to the extent dividends on such senior stock, parity stock or
Mandatorily Convertible Preferred Stock are cumulative; (ii) the Corporation has
paid or set aside all amounts, if any, then or theretofore required to be paid
or set aside for all purchase, retirement and sinking funds, if any, for any
outstanding shares of senior stock, parity stock and Mandatorily Convertible
Preferred Stock; and (iii) the Corporation is not in default on any of its
obligations to redeem any outstanding shares of senior stock, parity stock or
Mandatorily Convertible Preferred Stock; or (b) any such dividends are declared
and paid pro rata so that the amounts of any dividends declared and paid per
share on outstanding Mandatorily Convertible Preferred Stock and each share of
such parity stock will in all cases bear to each other the same ratio that
accrued and
<PAGE> 8
unpaid dividends (including any accumulation with respect to unpaid dividends
for prior dividend periods, if such dividends are cumulative), if any, per share
of outstanding Mandatorily Convertible Preferred Stock and such outstanding
shares of parity stock bear to each other.
In addition, as long as any Mandatorily Convertible Preferred Stock is
outstanding, no shares of any parity stock may be purchased, redeemed or
otherwise acquired by the Corporation or any Subsidiary (except with any junior
stock and cash in lieu of fractional shares of such junior stock in connection
therewith and except for the acquisition of shares of any parity stock pursuant
to contractual obligations binding against the Corporation or any Subsidiary
that were entered into prior to the date of the first issuance of shares of
Mandatorily Convertible Preferred Stock or pursuant to contractual obligations
that are entered into at a time subsequent thereto when such acquisitions of
shares could be made pursuant to this Subsection 3(c)) unless: (i) full
dividends, if any, on all outstanding shares of senior stock, parity stock and
Mandatorily Convertible Preferred Stock have been paid, or declared and set
aside for payment, for all dividend periods terminating on or prior to the date
of such purchase, redemption or other acquisition, to the extent dividends on
such senior stock, parity stock or Mandatorily Convertible Preferred Stock are
cumulative; (ii) the Corporation has paid or set aside all amounts, if any, then
or theretofore required to be paid or set aside for all purchase, retirement,
and sinking funds, if any, for any outstanding shares of senior stock, parity
stock and Mandatorily Convertible Preferred Stock; and (iii) the Corporation is
not in default of any of its obligations to redeem any outstanding shares of
senior stock, parity stock or Mandatorily Convertible Preferred Stock, unless
all parity stock and Mandatorily Convertible Preferred Stock as to which such a
default exists is purchased or redeemed on a pro rata basis.
(d) Any dividend payment made on the Mandatorily Convertible Preferred
Stock shall first be credited against the earliest accrued but unpaid dividend
due with respect to the Mandatorily Convertible Preferred Stock.
(e) All dividends paid with respect to the Mandatorily Convertible
Preferred Stock shall be paid pro rata to the holders entitled thereto.
(f) Holders of the Mandatorily Convertible Preferred Stock shall be
entitled to receive dividends in preference to and in priority over any
dividends upon any shares of the Corporation ranking junior to the Mandatorily
Convertible Preferred Stock as to dividends, but subject to the rights of
holders of any senior stock or parity stock.
Section 4. Liquidation Preference. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, then, before any distribution or payments shall be made to the
holders of any junior stock, but subject to the rights of holders of any senior
stock or parity stock, the holders of the Mandatorily Convertible Preferred
Stock shall be entitled to be paid in full in cash the amount of $1,000 per
share, together with accrued dividends to the date of such distribution or
payment, whether or not earned or declared. If such payment shall have been made
in full to the holders of the Mandatorily Convertible Preferred Stock and all
preferential payments or distributions to be made with respect to senior stock
and parity stock have been made in full, the remaining assets and funds of the
Corporation shall be distributed among the holders of the junior stock,
according to their respective rights and preferences and in each case according
to their respective shares. If, upon any liquidation, dissolution or winding up
of the affairs
<PAGE> 9
of the Corporation, the amounts so payable are not paid in full to the holders
of all shares of the Mandatorily Convertible Preferred Stock and parity stock,
the holders of the Mandatorily Convertible Preferred Stock, together with
holders of parity stock, shall share ratably in any distribution of assets in
proportion to the full amounts to which they would otherwise be respectively
entitled. Neither the consolidation or merger of the Corporation or the
statutory exchange of securities with another entity, nor the sale, lease,
transfer, exchange or conveyance of all or a part of its assets, shall be deemed
a liquidation, dissolution or winding up of the affairs of the Corporation
within the meaning of the foregoing provisions of this Section 4.
Section 5. Redemption. The Corporation shall have the right to redeem
all, but not part, of the outstanding Mandatorily Convertible Preferred Stock at
any time following a Redemption Event and prior to a Rate Reset Date at the
redemption price of $1,000 per share, together with accrued but unpaid dividends
to the date of payment, whether or not earned or declared (the "REDEMPTION
PRICE"). The Corporation shall not have the right to redeem any or all of the
Mandatorily Convertible Preferred Stock at any other time. Notice of a
redemption of the Mandatorily Convertible Preferred Stock shall be mailed,
addressed to the holder or holders of record of such shares at their respective
addresses as they shall appear on the books of the Corporation, such mailing to
be at least two Business Days and not more than 60 days prior to the date fixed
for redemption. Each such notice of redemption shall specify the date fixed for
redemption and the Redemption Price. On or after the date fixed for redemption
as stated in such notice, each holder of the shares called for redemption shall
surrender the certificate evidencing such shares to the Corporation and shall
thereupon be entitled to receive payment of the Redemption Price. If, on the
date fixed for redemption, funds necessary for the redemption shall be available
therefor and shall have been irrevocably deposited or set aside, then,
notwithstanding that the certificates evidencing any shares so called for
redemption shall not have been surrendered, the dividends with respect to the
shares so called shall cease to accrue after the date fixed for redemption, the
shares shall no longer be deemed outstanding, and all rights whatsoever with
respect to the shares so called for redemption (except the right of the holders
to receive the Redemption Price without interest upon surrender of their
certificates therefor) shall terminate.
Section 6. Conversion.
(a) Unless previously converted at the option of the holder in
accordance with the provisions hereof, on the Mandatory Conversion Date each
outstanding share of Mandatorily Convertible Preferred Stock shall, without
additional notice to holders thereof, convert automatically (the "MANDATORY
CONVERSION") into (i) a number of fully paid and non-assessable shares of Common
Stock at the Mandatory Conversion Rate (as defined herein) in effect on the
Mandatory Conversion Date; and (ii) the right to receive an amount in cash equal
to all accrued and unpaid dividends on such share of Mandatorily Convertible
Preferred Stock (other than previously declared dividends payable to a holder of
record as of a prior date) to and including the day immediately prior to the
Mandatory Conversion Date, whether or not earned or declared, out of funds
legally available therefor (and if sufficient funds are not then legally
available therefor, the Corporation shall pay such amount, if any, pro rata
(based on the amounts so owing) to the holders of the Mandatorily Convertible
Preferred Stock and any parity stock then entitled to similar payment as is then
legally available therefor and shall pay any deficiency thereafter as soon as
funds are legally available therefor). The "MANDATORY CONVERSION RATE" is equal
to the following number of shares of
<PAGE> 10
Common Stock per share of Mandatorily Convertible Preferred Stock: (a) if the
Mandatory Conversion Date Market Price is greater than or equal to the Threshold
Appreciation Price, the quotient of (i) $1,000 divided by (ii) the Threshold
Appreciation Price; (b) if the Mandatory Conversion Date Market Price is less
than the Threshold Appreciation Price but is greater than the Reset Price, the
quotient of $1,000 divided by the Mandatory Conversion Date Market Price; and
(c) if the Mandatory Conversion Date Market Price is less than or equal to the
Reset Price, the quotient of $1,000 divided by the Reset Price, subject to
adjustment as provided in this Section 6. "MANDATORY CONVERSION DATE MARKET
PRICE" shall mean the Average Trading Price per share of Common Stock for the 20
consecutive Trading Days immediately prior to, but not including, the Mandatory
Conversion Date; provided, however, that if an event occurs during such 20
consecutive Trading Days that would require an adjustment to the Mandatory
Conversion Rate pursuant to Section 6(c) or 6(e), the Board of Directors may
make such adjustments to the Average Trading Price for shares of Common Stock
for such 20 Trading Day period as it reasonably deems appropriate to effectuate
the intent of the adjustments in Sections 6(c) and 6(e), in which case any such
determination by the Board of Directors shall be set forth in a resolution of
the Board of Directors and shall be conclusive absent manifest error.
Dividends on the Mandatorily Convertible Preferred Stock shall cease to
accrue, and Mandatorily Convertible Preferred Stock shall cease to be
outstanding, on the Mandatory Conversion Date. The Corporation shall make such
arrangements as it deems appropriate for the issuance of certificates
representing Common Stock and for the payment of cash in respect of such accrued
and unpaid dividends, if any, or cash in lieu of fractional shares, if any, in
exchange for and contingent upon surrender of certificates representing the
Mandatorily Convertible Preferred Stock, and the Corporation may defer the
payment of dividends on such Common Stock and the voting thereof until, and make
such payment and voting contingent upon, the surrender of such certificates
representing the Mandatorily Convertible Preferred Stock, provided that the
Corporation shall give the holders of the Mandatorily Convertible Preferred
Stock such notice of any such actions as the Corporation deems appropriate and
upon such surrender such holders shall be entitled to receive such dividends
declared and paid on such Common Stock subsequent to the Mandatory Conversion
Date. Amounts payable in cash in respect of the Mandatorily Convertible
Preferred Stock or in respect of such Common Stock shall not bear interest.
(b) Shares of Mandatorily Convertible Preferred Stock are convertible,
at the option of the holders thereof ("OPTIONAL CONVERSION") at any time after
the date hereof and before the Mandatory Conversion Date, into Common Stock at a
rate equal to 36.364 shares of Common Stock per share of Mandatorily Convertible
Preferred Stock (the "OPTIONAL CONVERSION RATE"), subject to adjustment as set
forth in this Section 6; provided, however, that the Optional Conversion Rate
shall adjust as of the Rate Reset Date (regardless of the adjustments made to
the Optional Conversion Rate after the issuance of the shares of Mandatorily
Convertible Preferred Stock and prior to the Rate Reset Date) to the following
number of shares of Common Stock per share of Mandatorily Convertible Preferred
Stock: the quotient of (i) $1,000 divided by (ii) the Threshold Appreciation
Price, subject to further adjustment as set forth in this Section 6. An Optional
Conversion of shares of Mandatorily Convertible Preferred Stock may be effected
by delivering certificates evidencing such shares of Mandatorily Convertible
Preferred Stock, together with written notice of conversion and, if required by
the Corporation, a proper assignment of such certificates to the Corporation or
in blank (and, if applicable as provided in the following paragraph, cash
payment of an amount equal to the
<PAGE> 11
dividends attributable to the current dividend period payable on such shares),
to the office of the transfer agent for the shares of Mandatorily Convertible
Preferred Stock or to any other office or agency maintained by the Corporation
for that purpose and otherwise in accordance with Optional Conversion procedures
established by the Corporation. Each Optional Conversion shall be deemed to have
been effected immediately before the close of business on the date on which the
foregoing requirements shall have been satisfied. The Optional Conversion shall
be at the Optional Conversion Rate in effect at such time and on such date.
Holders of shares of Mandatorily Convertible Preferred Stock at the
close of business on a record date for any payment of declared dividends shall
be entitled to receive the dividend attributable to the current dividend period
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the Optional Conversion of such shares following such record
date and on or prior to such Dividend Payment Date. However, shares of
Mandatorily Convertible Preferred Stock surrendered for Optional Conversion
after the close of business on a record date for any payment of declared
dividends and before the opening of business on the next succeeding Dividend
Payment Date must be accompanied by payment in cash of an amount equal to the
dividends attributable to the current dividend period payable on such shares on
such next succeeding Dividend Payment Date. Except as provided above, upon any
Optional Conversion, the Corporation shall make no payment of or allowance for
unpaid dividends, whether or not in arrears, on such converted shares of
Mandatorily Convertible Preferred Stock as to which Optional Conversion has been
effected or for previously declared dividends or distributions on the shares of
Common Stock issued upon such Optional Conversion.
(c) The Optional Conversion Rate shall be adjusted from time to time,
and the Mandatory Conversion Rate shall be adjusted from time to time after the
Rate Reset Date, as follows:
(1) In case the Corporation shall (i) pay a dividend on its
Common Stock in other Common Stock, (ii) subdivide or split its
outstanding Common Stock into a greater number of shares, (iii) combine
its outstanding Common Stock into a smaller number of shares, or (iv)
issue by reclassification of its Common Stock any other Common Stock
(including in connection with a merger in which the Corporation is a
surviving corporation), then, in any such event, (1) the Mandatory
Conversion Rate in effect immediately prior to such event shall be
adjusted such that the Reset Price shall be adjusted by multiplying it
by a fraction (the "RECAPITALIZATION ADJUSTMENT RATIO") (which fraction
and all other fractions referred to herein may be improper fractions),
the numerator of which is one and the denominator of which is the
number of shares of Common Stock that a holder of one share of Common
Stock prior to any event described above would hold after such event
(assuming the issuance of fractional shares), and (2) the Optional
Conversion Rate in effect immediately prior to such event shall be
adjusted by multiplying it by a fraction, the numerator of which is one
and the denominator of which is the Recapitalization Adjustment Ratio.
Such adjustments shall become effective immediately after the effective
date of any such event (or the earlier record date in the case of any
such dividend) whenever any of the events listed above shall occur.
(2) In case the Corporation shall issue rights or warrants to
all holders of its Common Stock entitling them (for a period, except in
the case of Rights, expiring within 45 days after the record date for
determination of the shareholders entitled to receive such rights
<PAGE> 12
or warrants) to subscribe for or purchase Common Stock at a price per
share of Common Stock less than the current market price per share of
Common Stock (as defined in Section 6(d) below) on such record date,
then in each such case the Mandatory Conversion Rate on the date of
such issuance shall be adjusted such that the Reset Price shall be
adjusted by multiplying it by a fraction (the "ANTI-DILUTION ADJUSTMENT
RATIO"), the numerator of which shall be the sum of (x) the number of
shares of Common Stock outstanding immediately prior to such issuance,
plus (y) the number of additional shares of Common Stock which the
aggregate offering price of the total number of shares of Common Stock
so offered for subscription or purchase would purchase at the Average
Trading Price for a share of Common Stock for the record date for such
issuance, and the denominator of which shall be the sum of (x) the
number of shares of Common Stock outstanding immediately prior to such
issuance, plus (y) the number of additional shares of Common Stock
offered for subscription or purchase pursuant to such rights or
warrants and (B) the Optional Conversion Rate in effect on the record
date described below shall be adjusted by multiplying it by a fraction,
the numerator of which is one and the denominator of which is the
Anti-Dilution Adjustment Ratio. For the purposes of this Subsection
(2): the issuance of rights or warrants to subscribe for or purchase
securities exercisable for, convertible into, or exchangeable for,
shares of Common Stock shall be deemed to be the issuance of rights or
warrants to purchase the shares of Common Stock into which such
securities are exercisable, convertible or exchangeable at an aggregate
offering price equal to the aggregate offering price of such securities
plus the minimum aggregate amount (if any) payable upon the exercise,
conversion or exchange of such securities. Such adjustment shall become
effective at the opening of business on the Business Day next following
the record date for such rights or warrants. To the extent that any
shares of Common Stock, or securities exercisable for, convertible
into, or exchangeable for, shares of Common Stock so offered for
subscription or purchase are not so subscribed or purchased by the
expiration of such rights or warrants, the Mandatory Conversion Rate,
the Reset Price and the Optional Conversion Rate shall each be
readjusted to the rates or amounts, respectively, which would then be
in effect, had the adjustment made upon the issuance of such rights or
warrants been made upon the basis of the issuance of rights or warrants
in respect of only the number of shares of Common Stock and securities
exercisable for, convertible into, or exchangeable for, shares of
Common Stock actually issued upon exercise of such rights or warrants.
(3) If the Corporation shall pay a dividend or make a
distribution to all holders of its Common Stock consisting of evidences
of its indebtedness or other assets (including capital shares of the
Corporation other than Common Stock but excluding any Ordinary Cash
Dividends (as defined below)), or shall issue to all holders of its
Common Stock rights or warrants to subscribe for or purchase any of its
securities (other than those referred to in Subsection (2) above), then
in each such case the Mandatory Conversion Rate in effect immediately
prior to such event shall be adjusted such that the Reset Price shall
be adjusted by multiplying it by a fraction (the "DISTRIBUTION
ADJUSTMENT RATIO"), the numerator of which shall be the Average Trading
Price for a share of Common Stock on the record date for such dividend,
distribution or issuance, minus the fair market value as of such record
date of the portion of evidences of indebtedness or other assets so
distributed, or of such subscription rights or warrants, applicable to
one share of Common Stock (provided that such numerator shall never be
less than $1.00) and the denominator of which shall be the Average
<PAGE> 13
Trading Price for a share of Common Stock on such record date and (B)
the Optional Conversation Rate in effect immediately prior to such
event shall be adjusted by multiplying it by a fraction, the numerator
of which is one and the denominator of which is the Distribution
Adjustment Ratio. Such adjustment shall become effective on the opening
of business on the Business Day next following the record date for such
dividend, distribution or issuance or the determination of shareholders
entitled to receive such dividend, distribution or rights or warrants,
as the case may be. "ORDINARY CASH DIVIDENDS" shall mean (i) any
regular cash dividend on the Common Stock that does not exceed the per
share amount of the immediately preceding regular cash dividend on the
Common Stock (as adjusted to appropriately reflect any of the events
referred to in Section 6(c)(1)) and (ii) any other cash dividend or
distribution which, when combined on a per share basis with the per
share amount of all other cash dividends and distributions paid on the
Common Stock during the 365-day period ending on the date of
declaration of such dividend or distribution (as adjusted to
appropriately reflect any of the events referred to in Section 6(c)(1)
and excluding cash dividends or distributions that resulted in an
adjustment to the Mandatory Conversion Rate or the Optional Conversion
Rate), does not exceed 10% of the current market price per share of
Common Stock (determined pursuant to Section 6(d)) on the Trading Day
immediately preceding the date of declaration of such dividend or
distribution.
(d) For the purpose of any computation under Section 6(c) above, the
"CURRENT MARKET PRICE PER SHARE OF COMMON STOCK" on any date in question shall
mean the Average Trading Price for shares of Common Stock for the 15 consecutive
Trading Days ending on the earlier of the day in question and, if applicable,
the day before the "ex" date with respect to the issuance or distribution
requiring such computation; provided, however, that if another event occurs that
would require an adjustment pursuant to Section 6(c), the Board of Directors of
the Corporation may make such adjustments to the Average Trading Price for
shares of Common Stock during such 15 Trading Day period as it reasonably deems
appropriate to effectuate the intent of the adjustments in Section 6(c), in
which case any such determination by the Board of Directors of the Corporation
shall be set forth in a Board resolution and shall be conclusive absent manifest
error. For purposes of this paragraph, the term "'EX' DATE", when used with
respect to any issuance or distribution, means the first date on which the
shares of Common Stock trade regular way on the relevant exchange or in the
relevant market from which the Average Trading Price was obtained without the
right to receive such issuance or distribution. For the purpose of any
computation under Section 6(c) above, the "FAIR MARKET VALUE" of any assets,
evidences of indebtedness, subscription rights or warrants on any date in
question: (i) in the event any such item is a publicly traded security
("PUBLICLY TRADED SECURITY"), shall be determined for such date pursuant to the
provisions of this Section 6(d) for determination of the "current market price
per share of Common Stock", except that (x) each reference therein to "Common
Stock" shall be deemed to mean such Publicly Traded Security, and (y) if such
Publicly Traded Security does not trade on a "when issued" basis for the 15
consecutive Trading Days preceding the "ex" date, such determination shall be
made for the period of 15 consecutive Trading Days commencing on the "ex" date;
and (ii) in the event any such item is not a Publicly Traded Security, shall be
reasonably determined in good faith for such date by the Board of Directors of
the Corporation, as evidenced by a resolution of the Board, whose determination
shall be conclusive absent manifest error.
<PAGE> 14
(e) In any case of any reclassification of Common Stock (other than a
reclassification of the Common Stock referred to in Section 6(c)(1)); any
consolidation or merger of the Corporation with or into another corporation or
other entity (other than a merger resulting in a reclassification of the Common
Stock referred to in Section 6(c)(1)); any sale or conveyance to another entity
(other than a Subsidiary) of all or substantially all of the assets of the
Corporation; or the statutory exchange of securities with another corporation or
entity (other than in connection with a merger or acquisition) (any such event
referred to herein as a "TRANSACTION"), then the Optional Conversion Rate and
Mandatory Conversion Rate shall be adjusted so that after consummation of such a
Transaction the holders of shares of Mandatory Convertible Preferred Stock will
receive, in lieu of the number of shares of Common Stock which such holder would
have received upon conversion but for such Transaction, the kind and amount of
securities, cash or other property receivable upon consummation of such
Transaction by a holder of such number of shares of Common Stock, subject to
further adjustment as provided in this Section 6, including without limitation,
an adjustment to the Optional Conversion Rate on the Rate Reset Date if such
Transaction occurs prior to the Rate Reset Date. On and after the consummation
of any such Transaction, the Mandatory Conversion Date Market Price, which shall
be used for purposes of the determination as to which of clauses (a), (b) or (c)
of the definition of Mandatory Conversion Rate applies, shall mean the sum of
(i) the product of the Average Trading Price of any Publicly Traded Security
received upon consummation of such Transaction for the 20 consecutive Trading
Days immediately prior to, but not including, the Mandatory Conversion Date
multiplied by the fraction of such security received in such Transaction per
share of Common Stock (assuming the issuance of fractional shares) plus (ii) the
fair market value of the cash and other property received upon consummation of
such Transaction per share of Common Stock as of the day preceding the Mandatory
Conversion Date as determined in accordance with Subsection 6(d). In determining
the kind and amount of securities, cash or other property receivable upon
consummation of such Transaction by a holder of shares of Common Stock, it shall
be assumed that such holder is not a person or entity with which the Corporation
consolidated or into which the Corporation was merged or which merged into the
Corporation or with which such statutory exchange occurred, as the case may be,
or an affiliate of any such person or entity and that such holder of Common
Stock failed to exercise rights of election, if any, as to the kind or amount of
securities, cash, or other property receivable upon consummation of such
transaction (provided that, if the kind or amount of securities, cash, or other
property receivable upon consummation of such Transaction is not the same for
each non-electing share, then the kind and amount of securities, cash or other
property receivable upon consummation of such transaction for each non-electing
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). In the event of such a reclassification,
consolidation, merger, sale, conveyance or exchange, effective provision shall
be made in the certificate of incorporation or similar document of the resulting
or surviving corporation or entity so that the conversion rate applicable to any
securities or property into which the shares of the Mandatorily Convertible
Preferred Stock shall then be convertible shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Subsections (1) to (3)
of Section 6(c) inclusive, above, and the other provisions of this Section 6
with respect to the Common Stock shall apply on terms as nearly equivalent as
practicable to any such other securities and property deliverable upon
conversion of shares of Mandatorily Convertible Preferred Stock.
<PAGE> 15
(f) Whenever any adjustments are required in the shares of Common Stock
into which each share of Mandatorily Convertible Preferred Stock is convertible,
the Corporation shall forthwith (a) compute the adjusted Mandatory Conversation
Rate and Optional Conversion Rate in accordance herewith and prepare a
certificate signed by an officer of the Corporation setting forth the adjusted
Mandatory Conversion Rate and the Optional Conversion Rate, describing in
reasonable detail the method of calculation used and the facts requiring such
adjustment and upon which such adjustment is based, which certificate shall be
conclusive, final and binding evidence of the correctness of the adjustment and
file with the transfer agent of the Mandatorily Convertible Preferred Stock such
certificate and (b) cause a copy of such certificate to be mailed to each holder
of record of the Mandatorily Convertible Preferred Stock as of or promptly after
the effective date of such adjustment and, with respect to adjustments
applicable after the Rate Reset Date, make a prompt public announcement of such
adjustment.
(g) The Corporation shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued shares of Common
Stock for the purpose of issuance upon conversion of the Mandatorily Convertible
Preferred Stock a number of shares of Common Stock at least equal to the product
of (i) the number of shares of Common Stock then deliverable at such time upon
an Optional Conversion of all shares of the Mandatorily Convertible Preferred
Stock multiplied by (ii) 1.1.
(h) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes that may be payable in respect of the issuance or
delivery of shares of Common Stock on conversion of shares of the Mandatorily
Convertible Preferred Stock pursuant to Section 6. The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involving the issue and delivery of shares of Common Stock in a name
other than that in which the shares of Mandatorily Convertible Preferred Stock
so converted were registered and no such issue and delivery shall be made unless
and until the person requesting such issue has paid to the Corporation the
amount of any such tax, or has established, to the satisfaction of the
Corporation, that such tax has been paid.
(i) For the purpose of this Section 6, the term "COMMON STOCK" shall
include any shares of the Corporation of any class or series which has no
preference or priority in the payment of dividends or in the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of the Corporation and which is not subject to redemption by the Corporation.
However, Common Stock issuable upon conversion of the Mandatorily Convertible
Preferred Stock shall include only shares of the class designated as Common
Stock as of the original date of issuance of the Mandatorily Convertible
Preferred Stock, or shares of the Corporation of any classes or series resulting
from any reclassification or reclassifications thereof (including
reclassifications referred to in clause (iv) of Subsection 6(c)(1)) and which
have no preference or priority in the payment of dividends or in the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation and which are not subject to
redemption by the Corporation, provided that, if at any time, there shall be
more than one such resulting class or series, the shares of such class and
series then so issuable shall be in the same proportion, if possible, or if not
possible, in substantially the same proportion which the total number of shares
of such class and series resulting from all such reclassifications bears to the
total number of shares of all classes and series resulting from all such
reclassifications.
<PAGE> 16
(j) No fractional shares or scrip representing fractional shares shall
be issued upon the conversion of the Mandatorily Convertible Preferred Stock. If
any such conversion would otherwise require the issuance of a fractional share,
an amount equal to such fraction multiplied by the current market price per
share of Common Stock (determined as provided in Section 6(d)) on the date of
conversion shall be paid to the holder in cash by the Corporation. If on such
date there is no current market price per share of Common Stock, the fair market
value of a share of Common Stock (determined as provided in Section 6(d)) on
such date, shall be used. If more than one share of Mandatorily Convertible
Preferred Stock shall be surrendered for conversion at one time by or for the
same holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of
Mandatorily Convertible Preferred Stock so surrendered.
(k) All shares of the Mandatorily Convertible Preferred Stock purchased
or otherwise acquired by the Corporation (including shares surrendered for
conversion) shall be canceled and thereupon restored to the status of authorized
but unissued shares of Preferred Stock undesignated as to series.
(l) No adjustment in the Mandatory Conversion Rate and the Optional
Conversion Rate shall be required unless such adjustment (plus any adjustments
not previously made by reason of this Section 6(l)) would require an increase or
decrease of at least 1% in the number of shares of Common Stock into which each
share of the Mandatorily Convertible Preferred Stock is then convertible;
provided, however, that any adjustments which by reason of this Section 6(l) are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment and provided further that any adjustment shall be required
and made in accordance with the provisions of Section 6(c) not later than such
time as may be required in order to preserve the tax free nature of a
distribution to the holders of shares of Common Stock. If any action or
transaction would require adjustment to the Mandatory Conversion Rate or the
Optional Conversion Rate pursuant to this Section 6, only one adjustment shall
be made and such adjustment shall be the amount of the adjustment that has the
highest absolute value. All calculations under this Section 6 shall be made to
the nearest one-thousandth of a share of Common Stock.
(m) The Board of Directors may make such upward adjustments in the
Mandatory Conversion Rate and the Optional Conversion Rate, in addition to those
required by this Section 6, as shall be determined by the Board of Directors, as
evidenced by a resolution of the Board of Directors, to be advisable in order
that any stock dividends, subdivisions of shares, distribution of rights to
purchase stock or securities, or distribution of securities convertible into or
exchangeable for stock (or any transaction that could be treated as any of the
foregoing transactions pursuant to Section 305 of the Internal Revenue Code of
1986, as amended) made by the Corporation to its stockholders after the Rate
Reset Date shall not be taxable. The determination of the Board of Directors as
to whether an adjustment should be made pursuant to the provisions of this
Subsection (m), and if so, as to what adjustment should be made and when, shall
be conclusive, final and binding on the Corporation and all stockholders of the
Corporation.
(n) In any case in which Section 6 shall require that an adjustment as
a result of any event become effective at the opening of business on the
Business Day next following a record date and the
<PAGE> 17
date fixed for conversion occurs after such record date, but before the
occurrence of such event, the Corporation may, in its sole discretion, elect to
defer the following until after the occurrence of such event: (A) issuing to the
holder of any converted Mandatorily Convertible Preferred Stock the additional
shares of Common Stock issuable upon such conversion over the shares of Common
Stock issuable before giving effect to such adjustments and (B) paying to such
holder any amount in cash in lieu of a fractional share of Common Stock pursuant
to Section 6(j).
(o) Notwithstanding the foregoing provisions of this Section 6, no
adjustment of the Optional Conversion Rate or the Mandatory Conversion Rate
shall be required to be made upon the issuance of any shares of Common Stock
pursuant to any present or future plan providing for the reinvestment of
dividends or interest payable on securities of the Corporation and the
investment of additional optional amounts in shares of Common Stock under any
such plan.
(p) Notwithstanding any other provision of this Section 6, the issuance
or distribution of Rights shall not be deemed to constitute an issuance or a
distribution or dividend of rights, warrants, or other securities to which any
of the adjustment provisions described above applies until the occurrence of the
earliest Rights Event.
(q) For purposes of this Section 6, shares of Common Stock owned by, or
held for the account of, the Corporation, a Subsidiary or another entity of
which a majority of the common stock or common equity interests are owned,
directly or indirectly, by the Corporation shall be deemed not to be
outstanding.
Section 7. Voting Rights. The holders of Mandatorily Convertible
Preferred Stock shall have no right to vote except as otherwise specifically
provided herein, in the Certificate of Incorporation, or as required by statute.
(a) So long as any shares of Mandatorily Convertible Preferred Stock
are outstanding, in addition to any other vote or consent of shareholders
required in the Certificate of Incorporation or by law, the consent of the
holders of at least a majority of the Mandatorily Convertible Preferred Stock,
given in person or by proxy, either in writing without a meeting (if permitted
by law) or by vote at any meeting called for the purpose, shall be necessary for
effecting or validating:
(1) any amendment, alteration or repeal of any of the
provisions of the Certificate of Incorporation, which affects adversely
the powers, rights or preferences of the holders of the Mandatorily
Convertible Preferred Stock or reduces the minimum time required for
any notice to which holders of Mandatorily Convertible Preferred Stock
then outstanding may be entitled; provided, that the amendment of the
provisions of the Certificate of Incorporation so as to authorize or
create, or to increase the authorized amount of, any junior stock or
parity stock shall not be deemed to affect adversely the powers, rights
or preferences of the holders of the Mandatorily Convertible Preferred
Stock and shall not be subject to approval by the holders of the
Mandatorily Convertible Preferred Stock and such holders shall not be
entitled to vote thereon to the fullest extent permitted by law;
<PAGE> 18
(2) the authorization, creation or issuance of, or the
increase in the authorized amount of, any stock of any class or series,
or any security convertible into stock of any class or series, ranking
senior to the Mandatorily Convertible Preferred Stock; or
(3) the merger or consolidation of the Corporation with or
into any other corporation or other entity or a statutory share
exchange with another corporation or entity, unless in connection with
such merger, consolidation or statutory share exchange each holder of
shares of Mandatorily Convertible Preferred Stock immediately preceding
such merger, consolidation or share exchange shall either (I) with
respect to a merger, consolidation or statutory share exchange
consummated prior to, on or after the Rate Reset Date, receive or
continue to hold in the surviving or resulting corporation or other
corporation or entity the same number of shares, with substantially the
same rights and preferences (except as contemplated by Subsection 6(e)
and except for those rights and preferences that could be affected
without the vote of the holders of the Mandatorily Convertible
Preferred Stock, such as the authorization and issuance of junior
stock), as correspond to the shares of Mandatorily Convertible
Preferred Stock held immediately prior to such merger or consolidation
or (II) with respect to a merger, consolidation or statutory share
exchange consummated after the Rate Reset Date, receive the kind and
amount of securities, cash and other property that would have been
receivable upon consummation of such merger, consolidation or share
exchange by such holder (subject to the assumptions set forth in
Section 6(e)) if the Mandatory Conversion had occurred immediately
prior to the consummation of such merger, consolidation or share
exchange and the Mandatory Conversion Rate was determined as of such
time (and if clause (I) or (II) is applicable, then such merger,
consolidation or statutory share exchange shall not be subject to
approval by the holders of the Mandatorily Convertible Preferred Stock
and such holders shall not be entitled to vote thereon).
(b) Holders of Mandatorily Convertible Preferred Stock shall not be
entitled to receive notice of any meeting of shareholders at which they are not
entitled to vote or consent except as otherwise required by applicable law.
Section 8. Other Rights. Shares of Mandatorily Convertible Preferred
Stock shall not have any relative, participating, optional or other special
rights or powers other than as set forth herein, in the Certificate of
Incorporation or as required by law.
Section 9. Notices. In case, at any time while any shares of
Mandatorily Convertible Preferred Stock are outstanding, (i) the Corporation
shall declare a dividend (or any other distribution) on its Common Stock,
excluding any cash dividends, (ii) the Corporation shall authorize the issuance
to all holders of its Common Stock of rights or warrants to subscribe for or
purchase shares of Common Stock or of securities exercisable for, convertible
into, or exchangeable for, shares of Common Stock, (iii) the Corporation shall
authorize any reclassification of its Common Stock (other than a subdivision or
combination thereof) or any consolidation or merger or statutory share exchange
to which the Corporation is a party and for which approval of any stockholders
of the Corporation is required (except for a merger of the Corporation into one
of its Subsidiaries solely for the purpose of changing the corporate name or
corporate domicile of the Corporation to another state of the United States and
in connection with which there is no substantive change in the rights or
privileges of any securities of the Corporation other than changes resulting
from differences in the
<PAGE> 19
corporate statutes of the then existing and the new state of domicile), or the
sale or transfer to another corporation of the property of the Corporation as an
entirety or substantially as an entirety, (iv) the Corporation shall authorize
the voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, or (v) there shall occur any Pro Rata Repurchase, then the
Corporation shall cause to be filed at each office or agency maintained for the
purpose of conversion of the Mandatorily Convertible Preferred Stock, and shall
cause to be mailed to the holders of Mandatorily Convertible Preferred Stock at
their last addresses as they shall appear on the stock register, at least 10
days before the date hereinafter specified (or the earlier of the dates
hereinafter specified, in the event that more than one date is specified), a
notice stating (A) the date on which a record is to be taken for the purpose of
such dividend, distribution, rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights or warrants are to be determined, or (B)
the date on which any such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up or Pro Rata Repurchase is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their Common
Stock for securities or other property (including cash), if any, deliverable
upon such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up or Pro Rata Repurchase; provided, however, that if any
such action requiring such notice is to occur prior to the Rate Reset Date, then
such notice need only be given on or before the date of such action. The failure
to give or receive the notice required hereby or any defect therein shall not
affect the legality or validity of such dividend, distribution, right or warrant
or other action.
<PAGE> 20
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be duly executed in its corporate name on this 9th day of
November, 1999.
NOBLE AFFILIATES, INC.
By: /s/ James L. McElvany
----------------------------------------
James L. McElvany
Vice President - Finance and Treasurer
<PAGE> 1
EXHIBIT 10.15
EXECUTION COPY
NOBLE AFFILIATES, INC.
(a Delaware Corporation)
NOBLE SHARE TRUST
(a Delaware Trust)
THE CHASE MANHATTAN BANK, as Series A-2 Indenture Trustee
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
as
Noble Remarketing Agent
NOBLE PREFERRED STOCK
REMARKETING AND REGISTRATION
RIGHTS AGREEMENT
Dated as of November 10, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. Definitions............................................................... 2
SECTION 2. Appointment of Noble Remarketing Agent.................................... 7
SECTION 3. Agreement to Register Noble Preferred Stock............................... 8
SECTION 4. Additional Covenants of Noble............................................. 10
SECTION 5. Representations and Warranties of the Noble Offerors...................... 12
SECTION 6. Registration Procedures................................................... 15
SECTION 7. New Series; Remarketing Events............................................ 18
SECTION 8. Remarketing Procedures.................................................... 20
SECTION 9. Fees and Expenses......................................................... 23
SECTION 10. Resignation and Removal of the Noble Remarketing Agent;
Additional Agents.................................................. 23
SECTION 11. Dealing in Noble Securities; Redemption of Noble Remarketing
Agent's Shares..................................................... 24
SECTION 12. Conditions to Noble Remarketing Agent's Obligations....................... 25
SECTION 13. Indemnification........................................................... 27
SECTION 14. Termination of Obligations of Noble Remarketing Agent..................... 30
SECTION 15. Noble Remarketing Agent's Performance; Duty of Care; Liability............ 30
SECTION 16. GOVERNING LAW............................................................. 31
SECTION 17. Term of Agreement......................................................... 31
SECTION 18. Successors and Assigns.................................................... 32
SECTION 19. Headings.................................................................. 32
SECTION 20. Severability.............................................................. 32
SECTION 21. Noble Remarketing Agent Not Acting as Underwriter......................... 32
SECTION 22. Amendments................................................................ 33
SECTION 23. Notices................................................................... 33
SECTION 24. Counterparts.............................................................. 35
SECTION 25. Regarding the Series A-2 Indenture Trustee................................ 35
SECTION 26. Limitation of Liability of Noble Share Trustee............................ 35
</TABLE>
Schedule I - Certain transactions described in Section 3(e)
Schedule II - Registration rights described in Section 5(l)
Schedule III - Eligible Noble Remarketing Agents
i
<PAGE> 3
NOBLE PREFERRED STOCK REMARKETING AND REGISTRATION RIGHTS AGREEMENT,
dated as of November 10, 1999 (this "Agreement"), among Noble Affiliates, Inc.,
a Delaware corporation ("Noble"); the Noble Share Trust, a statutory business
trust formed under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Business Code, 12 Del. C. ss.
3801 et seq.) (the "Noble Share Trust" and, together with Noble, the "Noble
Offerors"); The Chase Manhattan Bank, not in its individual capacity but solely
as trustee (the "Series A-2 Indenture Trustee") under a Series A-2 Indenture
dated as of November 10, 1999 between AMCCO and the Series A-2 Indenture Trustee
(the "Series A-2 Indenture"); and Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ" or the "Noble Remarketing Agent"). Capitalized terms used
herein without definition have the meanings assigned to such terms in Section 1
hereof.
WHEREAS, Noble has sold, assigned, transferred, conveyed and set over
125,000 shares of Noble Preferred Stock, with an initial aggregate liquidation
preference of $125,000,000, to the Noble Share Trust in exchange for Noble Share
Trust Certificates pursuant to the Noble Share Trust Agreement, and has reserved
for issuance 10,000,000 shares of Noble Common Stock for issuance upon
conversion of such Noble Preferred Stock;
WHEREAS, each share of Noble Preferred Stock has been issued with an
initial liquidation preference of $1,000 plus accrued and unpaid dividends
thereon, if any, and an initial optional conversion rate of 36.364 shares of
Noble Common Stock per share of Noble Preferred Stock with mandatory conversion
provisions as provided in the Noble Preferred Stock Certificate of Designations,
which conversion provisions adjust in certain circumstances and upon the Rate
Reset Date;
WHEREAS, Noble and the Noble Share Trust have requested DLJ to act as
Noble Remarketing Agent with respect to the Noble Preferred Stock under this
Agreement for the purpose of (i) using its commercially reasonable efforts upon
a Series A-2 Note Trigger Event to recommend to Noble the terms and quantity of
shares of Noble Mandatorily Convertible Preferred Stock or shares of Noble
Common Stock which, if sold by Noble, would generate net proceeds at least equal
to the Series A-2 Repayment Amount, and (ii) using its commercially reasonable
efforts following a Remarketing Event to remarket a sufficient amount of the
Noble Preferred Stock held by the Noble Share Trust to generate net proceeds at
least equal to the Series A-2 Repayment Amount (to the extent not discharged
following the offering of the New Series), including receiving payment of the
purchase price for the Noble Preferred Stock subject to such remarketing and
paying such purchase price to the Series A-2 Indenture Trustee;
WHEREAS, the parties hereto agree that it is advisable, in connection
with the remarketing activities to be undertaken by the Noble Remarketing Agent,
for the resale of the Noble Preferred Stock held by the Noble Share Trust to be
registered with the Commission under the Securities Act;
WHEREAS, AMCCO has issued the Series A-2 Notes as of the date hereof,
and is pledging its rights hereunder to the Series A-2 Indenture Trustee to
secure AMCCO's repayment obligations with respect to the Series A-2 Notes;
<PAGE> 4
WHEREAS, each of the parties herein is willing to assume the duties
ascribed to it hereunder on the terms and conditions expressly set forth herein;
and
WHEREAS, this Agreement is being entered into pursuant to the terms of
the Participation Agreement;
NOW, THEREFORE, for and in consideration of the covenants herein made,
and subject to the conditions herein set forth, the parties hereto agree as
follows:
SECTION 1. Definitions. Capitalized terms used and not defined in this
Agreement shall have the meanings assigned to them in Appendix A to the
Participation Agreement dated as of November 10, 1999 among Noble, AMCCO, the
Noble Share Trust and the Series A-2 Indenture Trustee (each, as defined
therein). In addition, as used herein:
"Capital Requirements" has the meaning set forth in Section 7(a)(ii)
hereof.
"Closing Price" for any Trading Day, means, for a security, an amount
equal to the closing price for such security on such Trading Day as reported by
Bloomberg L.P., another recognized source or the Noble Remarketing Agent.
"Conditions Precedent" has the meaning set forth in Section 12 hereof.
"Distribution Agreement" means an underwriting, purchase, distribution
or placement agency agreement to be entered into among Noble, the Noble Share
Trust, the Noble Remarketing Agent and any other Persons engaged by the Noble
Share Trust or the Noble Remarketing Agent to remarket or distribute the Noble
Preferred Stock pursuant to the provisions hereof (such agreement to be in a
form customary for a firm commitment underwritten public offering (in the case
of an underwriting agreement), a firm commitment underwritten private offering
(in the case of a purchase or distribution agreement) or a best efforts private
placement (in the case of a placement agency agreement), including without
limitation, representations and warranties, covenants, conditions precedent,
indemnification and other provisions as are then customary for such agreements),
and to be prepared, executed and delivered by Noble and the Noble Share Trust to
the Noble Remarketing Agent on or prior to the Successful Repricing Date, as set
forth in Section 12 hereof.
"Effectiveness Period" has the meaning set forth in Section 3(b)
hereof.
"Eligible Noble Remarketing Agent" means any nationally or
internationally recognized investment banking firm listed on Schedule III
hereto; provided that Schedule III hereto may be amended by Noble at any time
and from time to time to add any investment banking firm that is ranked among
the top ten placement agents for all domestic equity-related securities
offerings (by either aggregate dollar value of such offerings or by number of
issues credited to the lead manager) according to the rankings most recently
published by Investment Dealers' Digest or any equivalent publication or to
subtract any investment banking firm that does not make a market in Noble Common
Stock at such time.
"Failed Registration" means a failure (i) by Noble to file a
Registration Statement no later than 21 days following a Series A-2 Note Trigger
Event (unless a Shelf Registration
2
<PAGE> 5
Statement is then not legally permitted, in which case a failure by Noble to
provide no later than 21 days following a Series A-2 Note Trigger Event to the
Noble Remarketing Agent written assurance, reasonably acceptable to the Noble
Remarketing Agent, that the Registration Statement will be declared, or will
otherwise become, effective promptly after a Pricing of the Noble Preferred
Stock) or otherwise have an effective Registration Statement available in
accordance with Section 3(a) hereof; (ii) by Noble to use its reasonable best
efforts to diligently pursue the registration of the Noble Preferred Stock (and
the underlying Noble Common Stock) when so required by this Agreement; (iii) of
the Registration Statement to be declared effective no later than 90 days
following a Series A-2 Note Trigger Event; or (iv) by Noble to satisfy the
applicable Conditions Precedent specified in Section 12 within the time periods
set forth therein.
"Failed Remarketing" means a failure to remarket the Noble Preferred
Stock or Noble Additional Shares required to be issued hereunder because of a
Legal Impossibility.
"Failed Repricing" means a failure to establish a Remarketed Rate on
any Repricing Date, including due to any events set forth in Section 12.
"Failed Repricing Date" means any Repricing Date on which a Failed
Repricing occurs.
"Filed Documents" means all documents filed by Noble with the
Commission under the Securities Act or the Exchange Act that are, or are
required to be, incorporated by reference into the Registration Statement or
Prospectus or any applicable private placement memorandum.
"Final Sale Date" means the date that the Noble Share Trust has sold
all of the Noble Preferred Stock.
"Initial Repricing Date" means, (a) with respect to a public offering
of the Noble Preferred Stock, the later of (i) the date on which the
Registration Statement is declared effective (or if a Shelf Registration
Statement is then not legally permitted, the first date on which Noble provides
the Noble Remarketing Agent written assurance, reasonably acceptable to the
Noble Remarketing Agent, that the Registration Statement will be declared, or
will otherwise become, effective promptly after a Pricing of the Noble Preferred
Stock) and (ii) the tenth Trading Day following the Remarketing Notification
Date, and (b) if a Failed Registration has occurred, the earliest date upon
which Milbank, Tweed, Hadley & McCloy LLP, or other national or international
securities counsel selected by the Noble Remarketing Agent and approved by
Noble, advises, in writing, that a private placement of the Noble Preferred
Stock may be commenced in compliance with applicable securities laws.
"Legal Impossibility" means (i) with respect to the remarketing of
Noble Preferred Stock, (A) upon or at any time after the Initial Repricing Date
it is impossible for legal reasons to remarket the Noble Preferred Stock or (B)
on or after a Series A-2 Note Trigger Event a material breach by Noble of its
obligations hereunder has occurred, including without limitation, due to the
failure of Noble to satisfy the Conditions Precedent specified in paragraphs (b)
and (c) of Section 12 within the time periods set forth therein except for any
breach by Noble which pursuant to the terms hereof would result in a Failed
Registration and
3
<PAGE> 6
(ii) with respect to the remarketing of Noble Additional Shares, (A) upon or at
any time after the Rate Reset Date it is impossible for legal reasons to
remarket the Noble Additional Shares, including without limitation, due to the
failure of Noble to have a sufficient number of additional shares of authorized
but unissued Noble Common Stock that have not been reserved for other purposes
as of any date on which any Noble Additional Shares are sold or (B) the Noble
Remarketing Agent is unable to sell sufficient Noble Additional Shares as
contemplated by Section 8(g) within 180 days following the Rate Reset Date.
"Majority Holders" has the meaning assigned to such term in the Series
A-2 Indenture.
"Marketed Amount" has the meaning set forth in Section 7(a)(ii) hereof.
"Minimum Amount" has the meaning set forth in Section 7(a)(ii) hereof.
"NASD" means the National Association of Securities Dealers, Inc.
"New Series" has the meaning set forth in Section 2(a) hereof.
"New Series Distribution Agreement" means an underwriting, purchase,
distribution or placement agency agreement to be entered into among Noble, the
Noble Remarketing Agent and any other Persons engaged by Noble (including the
lead underwriters if Noble elects not to have the Noble Remarketing Agent serve
as the lead underwriter) or the Noble Remarketing Agent (with the approval of
Noble, such approval not to be unreasonably withheld or delayed) to market and
sell the New Series as contemplated herein (such agreement to be in a form
customary for a firm commitment underwritten public offering (in the case of an
underwriting agreement), a firm commitment underwritten private offering (in the
case of a purchase or distribution agreement) or a best efforts private
placement (in the case of a placement agency agreement), including without
limitation, representations and warranties, covenants, conditions precedent,
indemnification and other provisions as are then customary for such agreements),
and to be prepared, executed and delivered by Noble to the Noble Remarketing
Agent on or prior to the Pricing of the New Series.
"Noble Additional Shares" means shares of Noble Common Stock or, if
authorized by the Board of Directors of Noble, Noble Mandatorily Convertible
Preferred Stock, in each case to be issued by Noble following a Partial
Remarketing pursuant to Section 8(g) hereof.
"Noble Mandatorily Convertible Preferred Stock" means preferred stock
of Noble similar to the Noble Preferred Stock or Noble equity securities (within
the meaning of Rule 16a-1(d) under the Exchange Act) which contemplate the
mandatory issuance of shares of Noble Common Stock.
"Partial Remarketing" means a remarketing of all of the Noble Preferred
Stock as to which, although a Failed Remarketing has not occurred, net proceeds
at least equal to the Series A-2 Repayment Amount are not generated.
4
<PAGE> 7
"Pricing" means, with respect to any security, the determination of the
price at which the underwriter(s) (in a firm commitment underwriting
arrangement) or the purchaser(s) are willing to purchase, and the holder of such
security (or issuer thereof, if such security is being newly issued) is willing
to sell, such security.
"Prospectus" means any preliminary or final prospectus or prospectus
supplement or other offering document to be used by the Noble Remarketing Agent
in connection with a public offering of the Noble Preferred Stock.
"Rate Reset Date" means the earlier of (i) the date of the consummation
of the remarketing of the Noble Preferred Stock (which is expected to be on or
about the third Trading Day following the Successful Repricing Date) or (ii) the
date a Failed Remarketing is declared.
"Records" has the meaning set forth in Section 6(i) hereof.
"Registration Expenses" means any and all expenses incident to the
performance of or compliance by Noble and the Noble Share Trust with this
Agreement, including without limitation: (i) all Commission, stock exchange or
NASD registration and filing fees, (ii) all necessary fees and expenses not
exceeding $5,000 in the aggregate incurred in connection with compliance with
state securities or "blue sky" laws (including reasonable fees and disbursements
of counsel for the Noble Remarketing Agent in connection with blue sky
qualification of any of the Noble Preferred Stock, Noble Mandatorily Convertible
Preferred Stock or Noble Common Stock) and compliance with the rules of the
NASD, (iii) all expenses authorized by Noble or the Noble Share Trust of any
Persons in preparing or assisting in preparing, word processing, printing and
distributing any Remarketing Documents and any amendments or supplements
thereto, and in preparing or assisting in preparing, printing and distributing
the Distribution Agreement and any other agreements or documents relating to the
performance and compliance by the Noble Remarketing Agent with this Agreement,
(iv) all rating agency fees incurred in connection with the remarketing process,
(v) the fees and disbursements of counsel for Noble and the Noble Share Trust
and of the independent certified public accountants of Noble and the Noble Share
Trust, including the expenses of any "comfort letters" required by or incident
to such performance and compliance, (vi) the fees and expenses of the Noble
Share Trustee, and any transfer agent or custodian, (vii) all fees and expenses
incurred in connection with the listing, if any, of any of the Noble Preferred
Stock, the Noble Mandatorily Convertible Preferred Stock or the Noble Common
Stock into which the Noble Preferred Stock and the Noble Mandatorily Convertible
Preferred Stock are convertible on any securities exchange or quotation system
and (viii) the reasonable fees and expenses of any special experts retained by
Noble or the Noble Share Trust in connection with any Shelf Registration
Statement, including fees of counsel to the Noble Remarketing Agent.
"Registration Statement" means any registration statement of Noble for
the registration of the Noble Preferred Stock (and the underlying Noble Common
Stock) with the Commission pursuant to the provisions of this Agreement, and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, and in each case including the Prospectus contained
therein (if any), all exhibits thereto and all information incorporated by
reference therein, and if no Prospectus is required to be delivered at the time
of
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such registration, any term sheet or other document prescribed by the Commission
to describe the securities to be sold thereunder.
"Remarketed Rate" means the price at which the Noble Remarketing Agent
can sell the fewest number of shares of Noble Preferred Stock that will generate
net proceeds which are at least equal to the Series A-2 Repayment Amount or if
the Noble Remarketing Agent cannot generate net proceeds which are at least
equal to the Series A-2 Repayment Amount through the sale of all of the Noble
Preferred Stock, then the highest price at which the Noble Remarketing Agent can
sell all of the Noble Preferred Stock.
"Remarketing Conditions" has the meaning set forth in Section 8 hereof.
"Remarketing Documents" means any documents prepared by or at the
direction of or in conjunction with Noble and/or the Noble Share Trust that are
intended to be used by the Noble Remarketing Agent in the remarketing of the
Noble Preferred Stock, including without limitation, (i) in the case of a public
offering, the Registration Statement and all exhibits thereto, (ii) any
Prospectus or private placement memoranda, and (iii) any Filed Document
incorporated by reference therein.
"Remarketing Event" has the meaning set forth in Section 7(b) hereof.
"Remarketing Notification Date" means the date on which the Noble
Remarketing Agent receives notice pursuant to Section 8(a) hereof from the Noble
Share Trustee, AMCCO or the Series A-2 Indenture Trustee of its obligation to
commence the remarketing of the Noble Preferred Stock.
"Remarketing Period" means the period beginning on and including the
Remarketing Notification Date and continuing until and including the Rate Reset
Date.
"Repricing Date" means the Initial Repricing Date and each Trading Day
thereafter until the Rate Reset Date.
"Series A-2 Note Trigger Event" has the meaning assigned to such term
in the Series A-2 Indenture.
"Series A-2 Notes" means the 8.95% Senior Secured Notes due 2004 issued
by AMCCO pursuant to the Series A-2 Indenture in the original aggregate
principal amount of $125,000,000.
"Shares" means the Noble Preferred Stock, Noble Additional Shares and
Noble Mandatorily Convertible Preferred Stock, or the portion thereof that is
then required to be issued or available for marketing as the context requires.
"Shelf Registration Statement" means a "shelf" Registration Statement
of Noble pursuant to the provisions of Section 3 of this Agreement which
registers the continuous offer and sale by the Noble Share Trust and, to the
extent required, Noble of all of the Noble Preferred Stock (and the underlying
Noble Common Stock) on an appropriate form under Rule 415 under the Securities
Act or any similar or successor rule that may be adopted by the Commission, and
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all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein (if any), all exhibits thereto and all information incorporated by
reference therein.
"Subsequent Shelf Registration Statement" has the meaning set forth in
Section 3(c) hereof.
"Successful Repricing Date" means the Repricing Date on which the
Pricing by the Noble Remarketing Agent of the Noble Preferred Stock at the
Remarketed Rate occurs.
SECTION 2. Appointment of Noble Remarketing Agent.
(a) Noble hereby appoints DLJ and DLJ hereby accepts such appointment,
as Noble Remarketing Agent (subject to Section 10), for the purpose of (i) using
its commercially reasonable efforts upon a Series A-2 Note Trigger Event to
recommend to Noble the terms and quantity of shares of Noble Mandatorily
Convertible Preferred Stock or shares of Noble Common Stock (each, a "New
Series") which would generate net proceeds at least equal to the Series A-2
Repayment Amount, and, if requested by Noble, to market and sell such New Series
pursuant to the New Series Distribution Agreement, and/or (ii) using its
commercially reasonable efforts following a Remarketing Event to remarket and
sell a sufficient amount of the Noble Preferred Stock held by the Noble Share
Trust and any Noble Additional Shares to generate net proceeds at least equal to
the Series A-2 Repayment Amount (to the extent not discharged following the
offering of the New Series), in each case subject to the terms and conditions
herein, including receiving payment of the purchase price for the New Series or
the Noble Preferred Stock and any Noble Additional Shares subject to such
remarketing and paying such purchase price to the Series A-2 Indenture Trustee.
(b) The Noble Remarketing Agent agrees, in consultation with the other
Eligible Noble Remarketing Agent(s), if any:
(i) to use its commercially reasonable efforts to recommend the
applicable terms of the New Series and the Pricing thereof in order to
generate net proceeds at least equal to the Series A-2 Repayment Amount
and, if requested by Noble, to market such New Series in accordance with
the New Series Distribution Agreement;
(ii) to use its commercially reasonable efforts to remarket the Noble
Preferred Stock during the Remarketing Period;
(iii) to use its commercially reasonable efforts to establish the
Remarketed Rate on each Repricing Date until (and including) the Successful
Repricing Date;
(iv) to notify Noble, the Noble Share Trustee, AMCCO and the Series A-2
Indenture Trustee promptly of the Remarketed Rate and to notify Noble, the
Noble Share Trustee, AMCCO and the Series A-2 Indenture Trustee of a Failed
Remarketing;
(v) to use its commercially reasonable efforts to remarket any Noble
Additional Shares to be issued by Noble following a Partial Remarketing
pursuant to Section 8(g) hereof; and
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(vi) to accept Shares for remarketing and receive payment of the
purchase price for remarketed Shares and pay such purchase price in respect
of each such remarketed Share to the Series A-2 Indenture Trustee.
(c) The Noble Remarketing Agent may appoint a co-marketing agent or
agents or authorize any broker-dealer to assist in the remarketing of the Noble
Preferred Stock, in each case with the consent of Noble, which consent shall not
be unreasonably withheld or delayed. Noble may appoint another Eligible Noble
Remarketing Agent to market the New Series pursuant to a New Series Distribution
Agreement, acting alone or together with the Noble Remarketing Agent or other
Eligible Noble Remarketing Agents appointed by Noble.
SECTION 3. Agreement to Register Noble Preferred Stock.
(a) Unless an effective Registration Statement of Noble would permit
the remarketing and resale of Noble Preferred Stock hereunder, Noble shall
prepare and file with the Commission, as soon as practicable (taking into
account the legal requirements for registration at such time) but in any event
no later than 21 days following a Series A-2 Note Trigger Event, a Shelf
Registration Statement for an offering to be made by the Noble Share Trust on a
continuous basis covering all of the Noble Preferred Stock and the Noble Common
Stock into which the Noble Preferred Stock is convertible (unless a Shelf
Registration Statement is then not legally permitted, in which case Noble shall
provide no later than 21 days following a Series A-2 Note Trigger Event to the
Noble Remarketing Agent written assurance, reasonably acceptable to the Noble
Remarketing Agent, that the Registration Statement will be declared, or will
otherwise become, effective promptly after a Pricing of the Noble Preferred
Stock). The Shelf Registration Statement shall be filed on Form S-3 or another
appropriate form permitting registration of the offer and sale of such Noble
Preferred Stock by the Noble Share Trust for remarketing in the manner
designated herein. Noble and the Noble Share Trust shall undertake no offer or
sale of Noble Preferred Stock under such outstanding Shelf Registration
Statement such that the Noble Remarketing Agent can no longer rely on such
outstanding Shelf Registration Statement to remarket and resell the Noble
Preferred Stock.
(b) Noble shall use its reasonable best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act as soon
as practicable (taking into account the legal requirements for registration at
such time) but in any event no later than 90 days following a Series A-2 Note
Trigger Event, and to keep the Shelf Registration Statement continuously
effective under the Securities Act during the period (the "Effectiveness
Period") that begins on the date of effectiveness of the Shelf Registration
Statement and extends to the earlier of (i) the date on which all shares of
Noble Preferred Stock have been remarketed under such initial Shelf Registration
Statement or (ii) the date on which all of the Series A-2 Notes cease to be
outstanding.
(c) If the Shelf Registration Statement or any Subsequent Shelf
Registration Statement ceases to be effective for any reason at any time during
the Effectiveness Period, Noble shall use its reasonable best efforts to obtain
the prompt withdrawal of any order suspending the effectiveness thereof, and in
any event shall within 30 days of such cessation of effectiveness amend the
Shelf Registration Statement in a manner reasonably expected to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional Shelf
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Registration Statement (a "Subsequent Shelf Registration Statement"). If a
Subsequent Shelf Registration Statement is filed, Noble shall use its reasonable
best efforts to cause its effectiveness as soon as practicable after such filing
and to keep the Subsequent Shelf Registration Statement continuously effective
during the Effectiveness Period. As used herein, the term "Shelf Registration
Statement" means the initial Shelf Registration Statement and any Subsequent
Shelf Registration Statements.
(d) A Shelf Registration Statement pursuant to this Section 3 will be
deemed effective when declared effective by the Commission; provided that, if,
after it has been declared effective, the offering of Noble Preferred Stock
pursuant to a Shelf Registration Statement is subject to any stop order,
injunction or other order or requirement of the Commission or any other
governmental agency or court, such Shelf Registration Statement will be deemed
not to have been effective during the period of such interference until the
offering of Noble Preferred Stock pursuant to such Shelf Registration Statement
may legally resume. Noble will be deemed not to have used its reasonable best
efforts to cause the Shelf Registration Statement to become or to remain
effective during the requisite period if Noble voluntarily takes any action
knowing that it would result in any such Shelf Registration Statement not being
declared effective or in the Noble Remarketing Agent not being able to remarket
such Noble Preferred Stock during the applicable period unless such action is
required by applicable law or governmental order.
(e) Noble and the Noble Share Trust agree not to issue, sell or offer
for sale (or permit the offer or sale in any manner that would require the
consent or participation of Noble), or engage in marketing efforts in respect
of, securities that are exchangeable for or convertible into equity securities
of Noble (whether as a term of any such security, or by means of a unit or
combination of any one or more securities or financial instruments or otherwise)
or permit the issue, offer or sale of, or marketing efforts in respect of, any
security of any trust in which Noble or any subsidiary of Noble (collectively,
the "Noble Group") has an interest that is guaranteed by any member of the Noble
Group that is exchangeable for or convertible into an equity security of Noble,
from the date of any Series A-2 Note Trigger Event to not less than 10 days
after the Rate Reset Date (the "Restriction Termination Date"), without the
prior written consent of the Series A-2 Indenture Trustee, given at the
direction of the Majority Holders; provided, however, that the foregoing shall
not restrict any of the following: (i) the issue, offer, sale or marketing
efforts in respect of the New Series, Noble Preferred Stock or Noble Additional
Shares in accordance with this Agreement, (ii) the issue, offer, sale or
marketing efforts in respect of securities of any member of the Noble Group that
are not exchangeable for or convertible into equity securities of Noble, (iii)
any member of the Noble Group from complying with any of its obligations
pursuant to arrangements entered into before the Closing Date described on
Schedule I hereto, (iv) any member of the Noble Group or any third party from
consummating a sale or issuance (or any related offer or marketing efforts) of
any such securities if the Pricing of such securities has occurred prior to the
date of any Series A-2 Note Trigger Event, (v) the offer, issuance or sale of a
security, including any related marketing efforts, consisting of the conversion,
exercise or exchange of another security in accordance with its terms, which
original security has been issued either in a registered public offering or as
consideration for an acquisition or merger, (vi) any sale, offer, issuance or
marketing effort in connection with any employee benefit plan of any member of
the Noble Group or any dividend reinvestment plan of any member of the Noble
Group, or (vii) any filing or processing of any registration statement in
respect of any security with the Commission or any state securities regulator
that does not involve the issuance, sale or
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marketing efforts by any member of the Noble Group of (or in respect of) any
equity security (other than Noble Common Stock) prior to the Restriction
Termination Date or (viii) any issuance, sale or offer in connection with a
shareholder rights plan, as such term is commonly used. Noble further agrees
that it shall not enter into any agreement that would require it or permit any
third party to contravene the provisions of this Section 3(e).
(f) In the event that, at any time a Shelf Registration Statement is
required to be effective hereunder, the shelf registration procedures set forth
in Rule 415 or any successor rule are not available to Noble and the Noble Share
Trust, Noble shall use its reasonable best efforts to cause another appropriate
Registration Statement with regard to all Noble Preferred Stock and the
remarketing thereof hereunder to be effective on each subsequent Repricing Date.
(g) Noble shall, to the extent required by the remarketing of the Noble
Preferred Stock hereunder and by any listing or quotation of the Noble Preferred
Stock reasonably requested by the Noble Remarketing Agent, file a Registration
Statement with the Commission under the Exchange Act.
(h) Noble shall, to the extent permitted by law, upon a Partial
Remarketing register and issue such amount of Noble Additional Shares as shall
be necessary to discharge in full the Series A-2 Indenture, in accordance with
Section 8(g) hereof; provided that Noble's obligation to issue Noble Additional
Shares shall be limited to the number of the then authorized but unissued shares
of Noble Common Stock that have not been reserved for other purposes.
(i) Noble shall maintain the reservation of 10,000,000 shares of Noble
Common Stock into which the Noble Preferred Stock may be convertible until the
Rate Reset Date at which time Noble shall increase or decrease such share
reservation so as to at least equal the number of shares of Noble Common Stock
into which the Noble Preferred Stock is then convertible; provided that the
reservation of shares of Noble Common Stock issuable upon conversion of the
Noble Preferred Stock may be revoked by the Board of Directors of Noble
effective upon the consummation of the sale of the New Series and the
application of the proceeds thereof to satisfy the Series A-2 Indenture, if such
proceeds are at least equal to the Series A-2 Repayment Amount. Noble shall also
reserve for issuance such shares of Noble Common Stock issuable upon conversion
or exercise of the New Series and Noble Additional Shares (other than Noble
Common Stock) in connection with the issuance of such New Series or Noble
Additional Shares.
SECTION 4. Additional Covenants of Noble. Noble covenants with the
Noble Remarketing Agent as follows:
(a) Noble will provide prompt notice to the Noble Remarketing Agent of
any notification by a Rating Agency to Noble of any change downwards, or the
placing on credit watch with negative implications (or comparable status), with
respect to the ratings of Noble's senior unsecured long-term debt.
(b) Noble will, as promptly as reasonably possible after a Series A-2
Note Trigger Event, furnish to the Noble Remarketing Agent:
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(i) after the same have been prepared by Noble, the Remarketing
Documents (including in each case any amendment or supplement thereto and
each document incorporated therein by reference);
(ii) each Filed Document filed after the date hereof;
(iii) notice of the occurrence of any events that would reasonably be
expected to cause the conditions precedent set forth herein or in the
Distribution Agreement not to be fulfilled within the time period specified
herein or therein, or if no time period is specified, then within a
reasonable period of time; and
(iv) in connection with the remarketing of Noble Preferred Stock, such
other information as the Noble Remarketing Agent may reasonably request
from time to time.
Noble agrees to provide the Noble Remarketing Agent with as many copies of the
foregoing written materials referred to in (i) and (ii) and other information as
the Noble Remarketing Agent may reasonably request for use in connection with
the remarketing of Noble Preferred Stock and consents to the use thereof for
such purpose.
(c) If, at any time after a Series A-2 Note Trigger Event and during
which the Noble Remarketing Agent would be obligated to take any action under
this Agreement, any event or condition known to Noble relating to or affecting
Noble, any subsidiary thereof or the Noble Preferred Stock shall occur that
could reasonably be expected to affect the accuracy or completeness of any
statement of a material fact contained in the Remarketing Documents, Noble shall
promptly notify the Noble Remarketing Agent in writing of the circumstances and
details of such event or condition.
(d) If, at any time when the Prospectus is required by the Securities
Act to be delivered in connection with remarketing of the Noble Preferred Stock,
any event shall occur or condition exist as a result of which it is necessary,
in the reasonable view of counsel for the Noble Remarketing Agent or counsel for
Noble, further to amend or supplement the Prospectus in order that the
Prospectus not include an untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading in the
light of circumstances existing at the time it is delivered to a purchaser, or
if it shall be necessary, in the reasonable view of such counsel or the Noble
Remarketing Agent, at any such time to amend or supplement the Remarketing
Documents in order to comply with the requirements of the Securities Act or the
rules and regulations thereunder, Noble will promptly prepare and, to the extent
applicable, file with the Commission such amendment or supplement, whether by
filing documents pursuant to the Exchange Act or otherwise, as may be necessary
to correct such untrue statement or omission or to make the Remarketing
Documents comply with such requirements.
(e) Noble will notify the Noble Remarketing Agent of its intention to
file or prepare any amendment or supplement to any Remarketing Document
(including any post-effective amendment and any revised prospectus which Noble
proposes for use by the Noble Remarketing Agent in connection with the
remarketing of the Noble Preferred Stock which differs from the prospectus on
file at the Commission at the time the Registration
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Statement becomes effective, whether or not such revised prospectus is required
to be filed pursuant to Rule 424(b) under the Securities Act) other than Filed
Documents, and will not file or use any such amendment or supplement or other
documents in a form to which the Noble Remarketing Agent or counsel to the Noble
Remarketing Agent shall reasonably object.
(f) Noble, during the period when the Prospectus is required to be
delivered under the Securities Act, will file promptly all documents required to
be filed with the Commission pursuant to Section 13 or 14 of the Exchange Act.
(g) Noble will provide to the Noble Share Trustee, AMCCO and the Series
A-2 Indenture Trustee copies of all notices and reports and all other
information received by it from the Noble Remarketing Agent in connection with
the remarketing process under this Agreement.
(h) Noble will not grant on or after the date hereof registration
rights to any Person under which such Person could request registration of its
securities on any Registration Statement used to register the Noble Preferred
Stock.
SECTION 5. Representations and Warranties of the Noble Offerors. Noble
and the Noble Share Trust jointly and severally represent and warrant to, and
agree with, the Noble Remarketing Agent as follows:
(a) Any Filed Documents will, when they are filed, conform in all
material respects with the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations thereunder; and no such
document, when it is filed, will contain an untrue statement of a material fact
or will omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances in
which they were made, not misleading.
(b) The shares of Noble Preferred Stock have been duly authorized for
issuance and sale and are validly issued and fully paid and non-assessable
securities of Noble, were not issued in violation of any preemptive or similar
rights and conform as to legal matters to the description thereof contained in
the Offering Memorandum and any amendment or supplement thereto; the issuance of
the Noble Preferred Stock is not subject to preemptive or other similar rights;
holders of Noble Preferred Stock will be entitled to the same limitation of
personal liability extended to shareholders of corporations under the Delaware
Business Corporation Act.
(c) Each of the Noble Share Trust Agreement and this Agreement has been
duly authorized by all necessary corporate or trust action, as applicable, by
each of Noble and the Noble Share Trust, other than the issuance of the New
Series which will require future approval by the Board of Directors of Noble,
and has been duly executed and delivered by Noble and the Noble Share Trustee,
and each is a legal, valid and binding obligation of Noble and the Noble Share
Trust, enforceable against Noble and the Noble Share Trust in accordance with
its terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally or by general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity).
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(d) The Noble Share Trust has been duly organized and is validly
existing and in good standing as a business trust under the Delaware Act with
all requisite trust power and authority to own property and to conduct its
business as described in the Offering Memorandum and to enter into and perform
its obligations under this Agreement and the Noble Share Trust Agreement and to
own the Noble Preferred Stock; the Noble Share Trust is duly qualified to
transact business as a foreign trust and is in good standing in each
jurisdiction in which such qualification is necessary; the Noble Share Trust is
not a party to any agreement other than the Transaction Documents described in
the Offering Memorandum and any amendment or supplement thereto and has not
engaged in any activities since its organization (other than those incidental to
its organization and other appropriate steps including the issuance of
certificates of beneficial interest, the execution of the Transaction Documents
to which it is a party executed on or prior to the date hereof and the
activities referred to in or contemplated by such Transaction Documents), and
has not made any distributions since its organization; and the Noble Share Trust
is and will be, under current law, disregarded as an entity separate from Noble
for United States federal, state and local income tax purposes.
(e) Noble has been duly incorporated, is validly existing as a
corporation under the laws of the State of Delaware and has the corporate power
and authority to own, lease and operate its properties and to carry on its
business as presently conducted and as described in the Offering Memorandum
(including any documents incorporated by reference therein) and to enter into
and perform its obligations under, or as contemplated under, this Agreement, the
Noble Share Trust Agreement and the other Transaction Documents, and to
purchase, own and hold the trust certificate of beneficial interest issued by
the Noble Share Trust. Noble is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in which the
nature of its business or ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not result in a
Material Adverse Effect on Noble.
(f) (i) Neither the execution or delivery by Noble of, nor the
performance by Noble of its obligations under, this Agreement will conflict with
or result in a breach of any terms or provisions of its articles of
incorporation or bylaws; (ii) neither the execution or delivery by the Noble
Share Trust of, nor the performance by the Noble Share Trust of its obligations
under, this Agreement will conflict with or result in a breach of any terms or
provisions of the Noble Share Trust Agreement or its certificate of trust filed
with the State of Delaware on November 8, 1999; and (iii) neither Noble nor the
Noble Share Trust is in default in the performance of any obligation, agreement,
covenant or condition contained in any indenture, loan agreement, mortgage,
lease or other agreement or instrument to which Noble or the Noble Share Trust
is a party or by which either of them or any of their respective properties is
bound, except where any such violation or default would not have a Material
Adverse Effect on Noble or the Noble Share Trust, as the case may be.
(g) None of the offer, sale or delivery of the Noble Preferred Stock by
the Noble Share Trust, the issuance of the Noble Preferred Stock by Noble, the
execution, delivery or performance of this Agreement by the Noble Offerors or
the consummation by the Noble Offerors of the transactions contemplated hereby
and compliance by the Noble Offerors with their respective obligations hereunder
(i) requires any consent, approval, authorization or other order of, or
qualification, registration or filing with, any court or governmental body,
agency or
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official, except, with respect to the Noble Share Trust, the filing of a
certificate of trust with the State of Delaware, and except such as have been
obtained and made under the federal or state securities laws and such as may be
required under federal or state securities or blue sky laws in connection with
the sale of the Noble Preferred Stock, the Noble Additional Shares or the New
Series, or under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, in connection with a private placement of any such shares, or conflicts
or will conflict with or constitutes or will constitute a breach of any of the
terms or provisions of, or a default under, the articles of incorporation or
bylaws of Noble or the Noble Share Trust Agreement or certificate of trust of
the Noble Share Trust, or (ii) conflicts or will conflict with or constitutes or
will constitute a breach of any of the terms or provisions of, or a default
under, any indenture, loan agreement, mortgage, lease or other agreement or
instrument to which Noble or the Noble Share Trust is a party or by which either
of them or any of their respective properties is bound, or (iii) violates or
will violate or conflicts or will conflict with any applicable law, rule,
regulation, judgment, order or decree of any court or any governmental body or
agency having jurisdiction over Noble or the Noble Share Trust or any of their
respective properties as such law, rule, regulation, judgment, order or decree
is in effect as of the date hereof, or (iv) will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
Noble or the Noble Share Trust pursuant to the terms of any agreement or
instrument to which any of them is a party or by which any of them may be bound
or to which any of the property or assets of any of them is subject, or (v)
result in the suspension, termination or revocation of any material Permit of
the Noble Share Trust or Noble or any other impairment of the rights of the
holder of any such material Permit as such Permit and such rights are in effect
as of the date hereof; except, in the case of clauses (ii) through (v), as would
not have a Material Adverse Effect on Noble or the Noble Share Trust, as the
case may be.
(h) Noble is not, and after giving effect to the issuance of the Noble
Preferred Stock to the Noble Share Trust will not be, and the Noble Share Trust
is not, and after giving effect to the issuance of the Noble Preferred Stock to
the Noble Share Trust will not be required to register as, an "investment
company", in each case as such term is defined under the Investment Company Act
of 1940, as amended.
(i) Neither the Noble Share Trust nor Noble is subject to regulation by
the Commission or by any state as a "holding company", a "subsidiary company" of
a "holding company", an "affiliate" or an "associate company" of a "holding
company" or an "affiliate" of a "subsidiary company" of a "holding company", in
each case as such terms are defined in the Public Utility Holding Company Act of
1935, as amended.
(j) The Noble Share Trust is the beneficial owner of the Noble
Preferred Stock, free and clear of any lien or claims of any Person, except as
otherwise provided in the Transaction Documents.
(k) Except as disclosed in Noble's Form 10-K for the year ended
December 31, 1998, Noble's Forms 10-Q for the quarters ended March 31, 1999 and
June 30, 1999, or Noble's Forms 8-K, if any, filed since December 31, 1998,
which were delivered to the Noble Remarketing Agent prior to the date hereof,
there is no action, suit or proceeding pending against Noble, or to the
knowledge of Noble, threatened against Noble, before any Governmental
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Authority in which there is a reasonable possibility of an adverse decision
which could have a Material Adverse Effect.
(l) Other than as disclosed in Schedule II hereto, there are no
contracts, agreements or understandings (other than this Agreement) between
Noble and any Person granting such Person the right to register any securities
of Noble pursuant to any Registration Statement used to register the Noble
Preferred Stock.
(m) Other than as disclosed in Schedule I hereto, there are no
contracts, agreements or understandings between Noble and any Person which, if
entered into after the date of this Agreement, would cause Noble or a third
party to contravene the provisions of Section 3(e) hereof (without giving effect
to clause (iii) of such Section 3(e)).
SECTION 6. Registration Procedures. In connection with the obligations
of Noble with respect to any Shelf Registration Statement pursuant to Sections
3(a), 3(b) and 3(c) hereof, Noble shall after any Series A-2 Note Trigger Event:
(a) as far in advance as practical before filing any Registration
Statement or any amendment thereto, provide the Noble Remarketing Agent and its
counsel with reasonably complete drafts of all such documents proposed to be
filed (including exhibits), and the Noble Remarketing Agent shall have the
opportunity to object to any information pertaining to the Noble Remarketing
Agent that is contained therein and to make comments and suggestions as to the
presentation of the information therein, and Noble will make the corrections and
other changes reasonably requested by the Noble Remarketing Agent with respect
to such information regarding the Noble Remarketing Agent prior to filing any
such Registration Statement (including any amendment thereto) unless it has a
reasonable basis not to do so;
(b) prepare and file with the Commission such amendments and
supplements to each Shelf Registration Statement as may be necessary to keep
such Shelf Registration Statement continuously effective for the Effectiveness
Period and to any Prospectus used in connection therewith as may be necessary to
maintain the effectiveness of such Shelf Registration Statement or the veracity,
accurateness or completeness of the information contained therein, and to comply
with the provisions of the Securities Act with respect to the disposition of all
Noble Preferred Stock covered by such Shelf Registration Statement in accordance
with the remarketing procedures set forth herein, until the end of the
Effectiveness Period;
(c) promptly notify the Noble Remarketing Agent and its counsel:
(i) when any Registration Statement or any Prospectus to be used
hereunder, or any amendment or supplement thereto, has been filed and, with
respect to such Registration Statement or any post-effective amendment
thereto, when the same has become effective;
(ii) of any written comments from the Commission with respect to any
filing referred to in clause (i) and of any written request by the
Commission for amendments or supplements to such Registration Statement or
Prospectus;
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(iii) of the notification to Noble by the Commission of (x) its
initiation of any proceeding with respect to the issuance by the
Commission, or (y) the issuance by the Commission, of any stop order
suspending the effectiveness of such Registration Statement;
(iv) of the receipt by Noble of any notification with respect to the
suspension of the qualification of the Noble Preferred Stock for sale under
the applicable securities or blue sky laws of any jurisdiction;
(v) of the happening of any event that makes any statement made in such
Registration Statement or related Prospectus, or any document incorporated
or deemed to be incorporated therein by reference, untrue in any material
respect or that requires the making of any changes in such Registration
Statement, Prospectus or related documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and, in the case
of the Prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and
(vi) the reasonable determination of Noble or the Noble Share Trust
that a post-effective amendment to the Registration Statement would be
appropriate.
(d) register or qualify all Noble Preferred Stock under such other
securities or blue sky laws of such jurisdictions as the Noble Remarketing Agent
shall reasonably request, to keep such registration or qualification in effect
for so long as any Registration Statement under the Securities Act remains
effective, and take any other action which may be reasonably necessary or
advisable to enable the Noble Remarketing Agent to remarket the Noble Preferred
Stock in any jurisdiction it may reasonably request, except that Noble and the
Noble Share Trust shall not for any such purpose be required (except to the
extent required by the Commission or by the explicit terms of this Agreement)
(i) to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this paragraph (d)
be obligated to be so qualified, (ii) to subject itself to taxation in any such
jurisdiction or (iii) to consent to general service of process in any
jurisdiction;
(e) use its reasonable best efforts to cause all Noble Preferred Stock
to be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the Noble Remarketing Agent to
remarket the Noble Preferred Stock in accordance with the remarketing procedures
set forth herein, except that Noble and the Noble Share Trust shall not for any
such purpose be required (except to the extent required by the Commission or by
the explicit terms of this Agreement) (i) to qualify generally to do business as
a foreign corporation in any jurisdiction wherein it would not but for the
requirements of this paragraph (e) be obligated to be so qualified, (ii) to
subject itself to taxation in any such jurisdiction or (iii) to consent to
general service of process in any jurisdiction;
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(f) use its reasonable best efforts to prevent the issuance of any
order suspending the effectiveness of a Registration Statement and to obtain the
withdrawal of any order suspending the effectiveness of a Registration Statement
as soon as practicable;
(g) cooperate with the Noble Share Trustee to facilitate the timely
preparation and delivery of certificates representing Noble Preferred Stock to
be remarketed that do not bear any restrictive legends (to the extent
appropriate), and cause such Noble Preferred Stock to be issued in such
denominations and registered in such names as the Noble Remarketing Agent may
reasonably request at least two Business Days prior to the Rate Reset Date;
(h) upon the occurrence of any circumstance contemplated by Section
3(c), 6(c)(iii), 6(c)(v) or 6(c)(vi) hereof, use its reasonable best efforts to
prepare a supplement or post-effective amendment to a Registration Statement or
the related Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the purchasers
of the Noble Preferred Stock, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; and Noble agrees to notify the Noble Remarketing Agent as
promptly as practicable after the occurrence of such an event; and the Noble
Remarketing Agent agrees that, following such notice, it will suspend use of the
Prospectus until Noble has amended or supplemented the Prospectus to correct
such misstatement or omission;
(i) furnish to the Noble Remarketing Agent: (a) copies of each report
or other document filed by Noble with the Commission including any Registration
Statement and the Remarketing Document relating to the Noble Preferred Stock
(including in each case any documents incorporated therein by reference), (b)
notice of the occurrence of any of the events set forth in Section 12(d) hereof,
and (c) in connection with each remarketing of Noble Preferred Stock, such other
information as the Noble Remarketing Agent may reasonably request from time to
time, in such form as the Noble Remarketing Agent may reasonably request,
including but not limited to information regarding the financial condition of
Noble; provided, however, that information referred to in clause (c) which Noble
and the Noble Share Trust determine, in good faith, to be confidential and which
they notify the Noble Remarketing Agent is confidential shall not be disclosed
by the Noble Remarketing Agent; provided that the Noble Remarketing Agent may
disclose any such information (i) as has become generally available to the
public through no fault of the Noble Remarketing Agent, (ii) as may be required
in any report, statement or testimony submitted to any municipal, state, federal
or foreign regulatory or supervisory body or agency having or claiming to have
jurisdiction over the Noble Remarketing Agent, (iii) as may be required in
response to any summons or subpoena or in connection with any litigation, (iv)
in order to comply with any law, order, regulation or ruling applicable to the
Noble Remarketing Agent, and (v) as may be necessary for the Noble Remarketing
Agent to comply with the Transaction Documents. Upon learning that disclosure of
such information identified by Noble as confidential is sought or required
pursuant to clauses (ii), (iii) or (iv) above, the Noble Remarketing Agent shall
give notice to Noble and the Noble Share Trust as soon as reasonably practicable
and allow them at their expense to undertake appropriate action to prevent
disclosure of the information determined, or notified by, Noble to be
confidential and the Noble Remarketing Agent shall cooperate with Noble in such
action undertaken by Noble to the extent reasonably requested by Noble. Noble
agrees to provide the Noble Remarketing Agent with as
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many copies of the foregoing materials and information as the Noble Remarketing
Agent may reasonably request for use in connection with each remarketing of
Noble Preferred Stock and Noble Mandatorily Convertible Preferred Stock and
consents to the use thereof for such purpose. If, at any time during the term of
this Agreement, any event or condition known to Noble relating to or affecting
Noble, or the Noble Preferred Stock or Noble Mandatorily Convertible Preferred
Stock shall occur which might affect the accuracy or completeness of any
statement of a material fact contained in any Remarketing Document, Noble shall
promptly notify the Noble Remarketing Agent in writing of the circumstances and
details of such event or condition;
(j) make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) commencing at the end of
the fiscal quarter in which the Rate Reset Date occurs;
(k) cooperate with the Noble Remarketing Agent and any other Person, if
any, participating in the remarketing and/or the disposition of the Noble
Preferred Stock and their respective counsel in connection with filings, if any,
required to be made with the NASD;
(l) use their respective reasonable best efforts to take all other
steps necessary to effect the registration of the Noble Preferred Stock in
connection with the remarketing thereof as contemplated herein.
The Noble Remarketing Agent hereby agrees that, upon receipt of any
notice from Noble or the Noble Share Trust of the happening of any event of the
kind described in Section 6(c), the Noble Remarketing Agent will forthwith
discontinue its remarketing of Noble Preferred Stock pursuant to the
Registration Statement relating thereto until the Noble Remarketing Agent shall
have received copies of the supplemented or amended Prospectus contemplated by
Section 6(h) and, if so directed by Noble, will deliver to Noble (at the expense
of Noble) all copies, other than permanent file copies, then in its possession
of the Prospectus relating to the Noble Preferred Stock that was current at the
time of receipt of such notice.
SECTION 7. New Series; Remarketing Events.
(a) If a Series A-2 Note Trigger Event (whatever the reason for such
Series A-2 Note Trigger Event and whether it shall be voluntary or involuntary
or be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body) shall have occurred and be continuing,
(i) (A) Subject to further approval by the Board of Directors of Noble,
if required, Noble shall have the right to offer and sell as soon as
practicable such number of shares of the New Series in accordance with the
New Series Distribution Agreement in order to generate net proceeds at
least equal to the Series A-2 Repayment Amount and (B) to the extent
permitted under law, Noble and the Noble Share Trust shall comply with the
provisions of this Agreement with respect to the registration of the Noble
Preferred Stock.
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(ii) The Noble Remarketing Agent shall use its commercially reasonable
efforts to recommend to Noble the terms and quantity of shares of the New
Series (the "Minimum Amount") which would generate net proceeds at least
equal to the Series A-2 Repayment Amount or, if in the reasonable judgment
of such Remarketing Agent shares of the New Series cannot be marketed for
net proceeds at least equal to the Series A-2 Repayment Amount, then the
amount of the net proceeds which the Noble Remarketing Agent believes may
be received from the marketing of the New Series. Noble may choose to
market the New Series whether or not the Noble Remarketing Agent believes
the New Series can be marketed for net proceeds at least equal to the
Series A-2 Repayment Amount, or Noble may choose to market the New Series
in an amount in excess of such Minimum Amount, in which case Noble shall
deliver to the Noble Remarketing Agent an irrevocable written notice
executed by its treasurer or chief financial officer (A) specifying such
amount of the New Series which Noble chooses to market (the "Marketed
Amount"), (B) stating in reasonable detail the amount and intended use of
the anticipated net proceeds of such Marketed Amount other than the
repayment of the Series A-2 Notes (the "Capital Requirements") and (C)
certifying why Noble deems it necessary in good faith to market such
Marketed Amount in accordance with its corporate requirements. If the Noble
Remarketing Agent advises Noble in writing that in its opinion the shares
of the New Series cannot be marketed to receive net proceeds at least equal
to the Series A-2 Repayment Amount or the aggregate of the Minimum Amount
plus the Marketed Amount exceeds the amount of shares that can be sold
without a material reduction in the selling price of such shares and would
generate net proceeds less than the aggregate of the Series A-2 Repayment
Amount and the Capital Requirements, the Noble Remarketing Agent will have
no obligation to market the New Series or to enter into the New Series
Distribution Agreement. In the event the Noble Remarketing Agent so advises
Noble, Noble shall have the right to appoint one or more Eligible Noble
Remarketing Agents to market the New Series on its behalf, and each such
replacement Eligible Noble Remarketing Agent shall enter into the New
Series Distribution Agreement or a similar distribution agreement with
respect to the offering and sale of the New Series, but shall not become a
Remarketing Agent for any other purpose under this Agreement.
(iii) Upon the sale of the New Series, Noble shall cause (A) if clause
(iv) of this Section 7(a) is applicable, all of the net proceeds thereof to
be deposited by AMCCO or the Series A-2 Indenture Trustee, as the case may
be, in the Distribution Account created under the Series A-2 Indenture to
be applied to the repayment of the Series A-2 Notes in accordance with the
Series A-2 Indenture, and (B) in any other case, all or a portion of the
net proceeds thereof up to the Series A-2 Repayment Amount to be deposited
by AMCCO or the Series A-2 Indenture Trustee, as the case may be, in the
Distribution Account to be applied to the repayment of the Series A-2 Notes
in accordance with the Series A-2 Indenture; provided, that in the case of
this clause (B), if the amount of net proceeds of the New Series actually
received is less than aggregate of the Series A-2 Repayment Amount and the
Capital Requirements and Noble had notified the Noble Remarketing Agent of
its Capital Requirements in accordance with Section 7(a)(ii) hereof, the
amount of net proceeds actually deposited in the Distribution Account shall
equal the proportion that the Series A-2 Repayment Amount bears to the
aggregate of the
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Series A-2 Repayment Amount plus the Capital Requirements intended to be
generated by such sale of the New Series.
(iv) If the amount of net proceeds of the marketing of the New Series
is at least equal to the Series A-2 Repayment Amount, the Noble Share Trust
shall be authorized to release and, if requested, shall release all or a
portion of the Noble Preferred Stock to the Noble Remarketing Agent to
permit the sale of such amount of the New Series to be settled by delivery
of such amount of Noble Preferred Stock, but only if the New Series
Distribution Agreement or similar distribution agreement with respect to
the offering of the New Series requires a firm commitment underwriting and
provides that net proceeds at least equal to the Series A-2 Repayment
Amount shall be paid directly to the Noble Share Trust; and the Share Trust
hereby agrees to deposit the net proceeds thereof immediately upon receipt
in the Distribution Account created under the Series A-2 Indenture and the
Series A-2 Indenture Trustee hereby agrees to apply such net proceeds to
the repayment of the Series A-2 Notes in accordance with the Series A-2
Indenture.
(b) If Noble fails to consummate the sale of the New Series in
accordance with its obligations under Section 7(a)(i) hereof within 60 days
following such Series A-2 Note Trigger Event, or if within 21 days after such
Series A-2 Note Trigger Event Noble fails to file a registration statement for,
or fails to demonstrate that it is diligently pursuing the registration of, a
New Series (a "Remarketing Event"), (i) the Noble Share Trust hereby agrees to
cause the Noble Remarketing Agent to offer and sell all or a portion of the
Noble Preferred Stock held by the Noble Share Trust through the remarketing
procedures set forth herein; (ii) the Noble Remarketing Agent shall notify the
Series A-2 Indenture Trustee and AMCCO of such Remarketing Event; (iii) the
Series A-2 Indenture Trustee in accordance with the Series A-2 Indenture shall
cause AMCCO to exercise AMCCO's rights under this Agreement to cause the Noble
Share Trust to remarket the Noble Preferred Stock held by the Noble Share Trust
through the remarketing procedures set forth herein; and (iv) upon any such
remarketing, the net proceeds thereof shall be deposited by AMCCO or the Series
A-2 Indenture Trustee, as the case may be, in the Distribution Account created
under the Series A-2 Indenture and shall be applied to the repayment of the
Series A-2 Notes as a mandatory redemption in accordance with the Series A-2
Indenture.
SECTION 8. Remarketing Procedures.
(a) Upon a Remarketing Event, the Noble Share Trust, AMCCO or the
Series A-2 Indenture Trustee, as the case may be, shall deliver to Noble and the
Noble Remarketing Agent a written notice to commence the process of remarketing
the Noble Preferred Stock.
(b) If the conditions precedent to a public offering of the Noble
Preferred Stock have been met pursuant to Section 12 hereof, the Noble
Remarketing Agent shall be obligated to commence such public offering in
accordance with the following remarketing procedures. If a Failed Registration
has occurred, then any actions undertaken with respect to a public offering of
the Noble Preferred Stock shall cease, and the Noble Remarketing Agent shall be
obligated to commence a private placement of the Noble Preferred Stock in
accordance with the following remarketing procedures; provided that (x) no
actions shall be undertaken by the Noble Remarketing Agent with respect to such
private placement until the earliest date upon which
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Milbank, Tweed, Hadley & McCloy LLP, or other national or international
securities counsel selected by the Noble Remarketing Agent and approved by
Noble, advises, in writing, that a private placement of the Noble Preferred
Stock may be commenced in compliance with applicable securities law and (y) the
Noble Share Trust and the Noble Remarketing Agent shall cause such private
placement to be consummated as and upon the terms directed by the Series A-2
Indenture Trustee.
(c) In determining the Remarketed Rate for the Noble Preferred Stock,
the Noble Remarketing Agent will, after taking into account market conditions as
reflected in the prevailing yields on mandatorily convertible preferred stock of
other comparable issuers:
(i) consider (A) short-term and long-term market rates and indices of
such short-term and long-term rates, (B) market supply and demand for
short-term and long-term securities, (C) yield curves for short-term and
long-term securities comparable to the Noble Preferred Stock (considering
the terms applicable thereto on and after the Rate Reset Date), (D)
industry and financial conditions that may affect the Noble Preferred
Stock, including without limitation the condition (financial or otherwise),
results of operations, business affairs, management and prospects of Noble
as described in the Remarketing Documents (including any Filed Documents
incorporated by reference therein), as applicable, relating to the offering
of Noble Preferred Stock, (E) the number of shares of Noble Preferred Stock
to be remarketed, (F) the number of potential purchasers, (G) the current
ratings by nationally recognized statistical rating organizations of
long-term subordinated debt and preferred securities of Noble, (H) the
market price of the Noble Common Stock, (I) the discount appropriate for a
private placement of the Noble Preferred Stock, if applicable and (J) the
terms and Pricing of the New Series and the market reactions to the
marketing of the New Series, if applicable (collectively, the "Remarketing
Conditions") and
(ii) contact, by telephone or otherwise, prospective purchasers and
ascertain the prices at which they would be willing to hold or purchase
such Noble Preferred Stock.
(d) The following remarketing procedures shall be subject to the right
of the Noble Remarketing Agent under Section 12 hereof to declare in good faith
a Failed Remarketing, with the consequences set forth in said Section 12.
(e) On or prior to the Initial Repricing Date, the Series A-2 Indenture
Trustee, upon the written request of the Noble Remarketing Agent, shall deliver
to the Noble Remarketing Agent, AMCCO and Noble an Officer's Certificate setting
forth the amounts available in the Collection Account and the Distribution
Account to be used in determining the Series A-2 Repayment Amount, and shall
undertake to notify the Noble Remarketing Agent, AMCCO and Noble if any such
amount should change prior to the Rate Reset Date.
(f) By approximately 1:00 p.m., New York City time, on the Initial
Repricing Date, the Noble Remarketing Agent will notify Noble, the Noble Share
Trustee, AMCCO and the Series A-2 Indenture Trustee by telephone, confirmed in
writing, of (i) whether the Noble Remarketing Agent was able to establish a
Remarketed Rate and (ii) if so, the Remarketed Rate, the Rate Reset Date and the
number of shares of Noble Preferred Stock to be remarketed. If on
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such Repricing Date, a Failed Repricing has occurred but there has not occurred
a Failed Remarketing, then the Noble Remarketing Agent will continue to seek to
establish a Remarketed Rate on the next succeeding Repricing Date. Noble, the
Noble Share Trust and the Noble Remarketing Agent shall enter into the
Distribution Agreement upon a Successful Repricing Date.
(g) Upon a Partial Remarketing, to the extent permitted by law, Noble
shall issue Noble Additional Shares in an amount which, when remarketed by the
Noble Remarketing Agent pursuant to this Agreement, shall be sufficient to
generate net proceeds which, together with the net proceeds of such Partial
Remarketing, are at least equal to the Series A-2 Repayment Amount; provided
that Noble's obligation to issue Noble Additional Shares shall be limited to the
number of the then authorized but unissued shares of Noble Common Stock that
have not been reserved for issuance by the Board of Directors of Noble for other
purposes. The Noble Remarketing Agent shall use its commercially reasonable
efforts to remarket such Noble Additional Shares as soon as practicable upon
such terms as will result in the generation of such proceeds, or the largest
portion thereof as shall be practicable.
(h) In the event of a Failed Remarketing, the Noble Remarketing Agent
shall promptly notify Noble, the Noble Share Trustee, AMCCO and the Series A-2
Indenture Trustee in writing of such Failed Remarketing. The Noble Remarketing
Agent may consult with counsel in making such determination and may conclusively
rely on the advice or opinion of any such counsel with respect thereto. In the
event of a Failed Remarketing, (i) Noble shall pay to the Series A-2 Indenture
Trustee the Series A-2 Repayment Amount (minus the net proceeds of any
remarketing of Noble Preferred Stock and Noble Additional Shares, if any, used
to satisfy a portion of the Series A-2 Notes and any amounts due and owing under
the Series A-2 Indenture) to release the lien on the Samedan Methanol stock
constituting Security for the Series A-2 Notes and (ii) until Noble has complied
with clause (i) above, the Noble Remarketing Agent shall, upon the direction of
the Series A-2 Indenture Trustee, continue to seek a Pricing of the Noble
Preferred Stock at the Remarketed Rate, and consummate the sale of such shares
as soon as practicable in accordance with such direction.
(i) On the date of the consummation of any sale of Noble Preferred
Stock and Noble Additional Shares, if any, the Noble Remarketing Agent will make
payment (or arrange for payment to be made in accordance with the Distribution
Agreement) of the purchase price for the Noble Preferred Stock or Noble
Additional Shares, if any, that have been sold in the remarketing to the Series
A-2 Indenture Trustee or to its order by the close of business on such date,
against delivery through DTC of such shares. The Series A-2 Indenture Trustee
shall cause such purchase price to be deposited in the Distribution Account and
applied to the repayment of the Series A-2 Notes in accordance with the Series
A-2 Indenture.
(j) In the event of a private placement of the Noble Preferred Stock,
the offer and sale of the Noble Preferred Stock shall be done in a manner that
will not require approval by the shareholders of Noble pursuant to the
provisions of Rule 312 of the rules published in the New York Stock Exchange
Listed Company Manual or any successor rule or other requirement of the New York
Stock Exchange, if applicable at the time of such private placement.
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SECTION 9. Fees and Expenses.
(a) For its services in performing its duties set forth hereunder with
respect to remarketing the Shares, on the Rate Reset Date and on the closing of
any remarketing of Noble Additional Shares (if applicable), the Noble
Remarketing Agent will receive from Noble a commission of 2-3/4% of the gross
sales proceeds of Noble Preferred Stock or Noble Additional Shares,
respectively, actually remarketed by it and sold, payable by wire transfer in
same day funds.
(b) In addition to its obligation under Section 9(a), and in addition
to its obligations under Section 13 hereof, Noble shall, from time to time upon
the request of the Noble Remarketing Agent, pay the reasonable fees and expenses
of counsel incurred by the Noble Remarketing Agent after a Series A-2 Note
Trigger Event in connection with the performance of its duties hereunder. The
obligations of Noble to make the payments required by this Section 9 shall
survive the termination of this Agreement or the termination of the obligations
of the Noble Remarketing Agent hereunder and remain in full force and effect
until all such payments shall have been made in full.
(c) Without limiting the effect of the foregoing, Noble shall pay all
Registration Expenses in connection with the registration pursuant to Section 3
hereof and will reimburse the Noble Remarketing Agent for the reasonable fees
and disbursements of its counsel incurred in connection with a Shelf
Registration Statement hereunder.
SECTION 10. Resignation and Removal of the Noble Remarketing Agent;
Additional Agents.
(a) The Noble Remarketing Agent may resign and be discharged from its
duties and obligations hereunder at any time, such resignation to be effective
30 days after delivery of notice to Noble, the Noble Share Trustee, AMCCO and
the Series A-2 Indenture Trustee of such resignation, subject to clause (d) of
this Section 10. In such case, Noble will use its reasonable best efforts to
appoint a successor Noble Remarketing Agent from among the Eligible Noble
Remarketing Agents and to enter into a new remarketing agreement with such
Person and the Noble Share Trust as soon as reasonably practicable, such
agreement to be substantially in the form of this Agreement in which such Person
has agreed to conduct the remarketing in accordance with the terms and
conditions described herein. It shall be the sole obligation of Noble to appoint
a successor Noble Remarketing Agent, but the resigning Noble Remarketing Agent
will reasonably cooperate in handing over the responsibilities of Noble
Remarketing Agent to such successor.
(b) The Series A-2 Indenture Trustee may replace the Noble Remarketing
Agent for cause upon the direction of the Majority Holders, with the successor
Noble Remarketing Agent to be an Eligible Noble Remarketing Agent. For purposes
of this Section 10(b), "cause" means the failure of the Noble Remarketing Agent
to comply with its obligations under clauses (ii) and (iii) of Section 2(b)
following the Remarketing Notification Date.
(c) Following any notice of removal or resignation of the Noble
Remarketing Agent, Noble or the Series A-2 Indenture Trustee, as the case may
be, shall endeavor to cause an
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Eligible Noble Remarketing Agent to be appointed as a replacement within 60 days
of the delivery of such notice.
(d) No resignation or removal of the Noble Remarketing Agent hereunder
shall become effective until Noble or the Series A-2 Indenture Trustee, as the
case may be, shall have appointed an Eligible Noble Remarketing Agent as
successor Noble Remarketing Agent and such successor Noble Remarketing Agent
shall have become a party to this Agreement or entered into a new remarketing
agreement substantially in the form of this Agreement in which it has agreed to
conduct the remarketing in accordance with the terms and conditions described
herein.
(e) The Noble Remarketing Agent may, at its discretion and expense,
make arrangements to be assisted by any broker-dealer or underwriting firm
reasonably acceptable to Noble in connection with the remarketing of the Noble
Preferred Stock (and if appropriate, to have such Persons become parties to the
Distribution Agreement), with such compensation therefor, if any, as may be
agreed between the Noble Remarketing Agent and such Person. In addition, if so
requested by the Series A-2 Indenture Trustee, one or more additional Noble
Remarketing Agents may be appointed hereunder and may be made parties to the
Distribution Agreement with the Noble Remarketing Agent to be given
responsibility for remarketing a specified liquidation amount of Noble Preferred
Stock as the Noble Remarketing Agents may decide in consultation with Noble and
the Series A-2 Indenture Trustee (or failing agreement between the Noble
Remarketing Agents, by the Series A-2 Indenture Trustee), in which case all
references herein shall be deemed to apply, mutatis mutandis, to all Noble
Remarketing Agents severally but not jointly and in such case the compensation
to be paid by Noble to the Noble Remarketing Agents hereunder shall be split
among all the Noble Remarketing Agents in the manner agreed to by the Noble
Remarketing Agents.
(f) If so requested by Noble, one or more Eligible Noble Remarketing
Agents (including the lead underwriters if Noble elects not to have the Noble
Remarketing Agent serve as the lead underwriter) may be appointed hereunder
solely for the purpose of recommending the terms of and marketing the New Series
in conjunction with the Noble Remarketing Agent originally appointed hereunder
and shall be made parties to the New Series Distribution Agreement, with the
Noble Remarketing Agent to be given responsibility for marketing a specified
amount of the New Series as the Noble Remarketing Agents may decide in
consultation with Noble (or failing agreement between the Noble Remarketing
Agents, by Noble), in which case all references herein shall be deemed to apply,
mutatis mutandis, to all Noble Remarketing Agents severally but not jointly (to
the extent applicable).
SECTION 11. Dealing in Noble Securities; Redemption of Noble
Remarketing Agent's Shares. DLJ, when acting as the Noble Remarketing Agent or
in its individual or any other capacity, may, to the extent permitted by law,
buy, sell, hold and deal in any of the Noble Preferred Stock, the New Series or
the Noble Additional Shares. Notwithstanding the foregoing, the Noble
Remarketing Agent is not obligated to purchase any Noble Preferred Stock that
would otherwise remain unsold in a remarketing. The Noble Remarketing Agent, as
a holder of the Noble Preferred Stock, the New Series, or the Noble Additional
Shares, may exercise any vote or join as a holder in any action which any holder
of such securities may be entitled to exercise or take pursuant to the terms
thereof with like effect as if it were not acting in any capacity
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hereunder. The Noble Remarketing Agent, in its capacity either as principal or
agent, may also engage in or have an interest in any financial or other
transaction with Noble as freely as if it were not acting in any capacity
hereunder to the extent permitted by law.
SECTION 12. Conditions to Noble Remarketing Agent's Obligations. The
obligations of the Noble Remarketing Agent under this Agreement have been
undertaken in reliance on, and shall be subject to, compliance with the
conditions precedent set forth in the following paragraphs (a) through (d) (the
"Conditions Precedent") on or prior to the indicated dates.
(a) On or prior to the Initial Repricing Date, and upon each successive
Repricing Date:
(i) Noble and the Noble Share Trust shall have complied in all material
respects with their respective obligations and agreements as set forth in
this Agreement; and
(ii) with respect to a public offering of the Noble Preferred Stock,
Noble and the Noble Share Trust shall have filed a Registration Statement
covering the Noble Preferred Stock (and the Noble Common Stock into which
such Noble Preferred Stock is convertible) and the remarketing thereof,
which Registration Statement shall have been declared effective by the
Commission, and no stop order suspending the effectiveness thereof shall
have been issued and not withdrawn or revoked under the Securities Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the Noble
Remarketing Agent.
If the Noble Remarketing Agent shall reasonably determine without any obligation
to consult with any other party to this Agreement that the Conditions Precedent
set forth in this paragraph (a) are not fulfilled, the Noble Remarketing Agent
shall declare a Failed Repricing with regard to such Repricing Date and shall
not be obligated to remarket the Noble Preferred Stock until the next succeeding
Repricing Date in accordance with the provisions of paragraph (f) of Section 8;
provided that if such a Failed Repricing has occurred and continues for a period
of five Trading Days thereafter, then the Noble Remarketing Agent shall declare
a Failed Registration with regard to such Repricing Date and shall not be
obligated to remarket the Noble Preferred Stock until such time as a private
placement of such shares may be commenced in accordance with the provisions of
paragraph (b) of Section 8.
(b) On any Repricing Date on which the Noble Remarketing Agent has
established a Remarketed Rate:
(i) Noble and the Noble Share Trust shall enter into the Distribution
Agreement;
(ii) Noble and the Noble Share Trust shall have complied in all
material respects with their respective obligations and agreements set
forth herein and in the Distribution Agreement; and
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<PAGE> 28
(iii) the representations and warranties contained herein and in the
Distribution Agreement shall be true, complete and correct in all material
respects as if made on such date except as otherwise disclosed in the
Remarketing Documents.
If the Noble Remarketing Agent shall reasonably determine without any obligation
to consult with any other party to this Agreement that the Conditions Precedent
set forth in this paragraph (b) are not fulfilled, then the Noble Remarketing
Agent shall declare a Failed Repricing with regard to such Repricing Date and
shall not be obligated to remarket the Noble Preferred Stock until the next
succeeding Repricing Date in accordance with the provisions of paragraph (d) of
Section 8; provided that if such a Failed Repricing has occurred and continues
for a period of five Trading Days thereafter or if Noble intentionally fails to
comply with the Conditions Precedent set forth in this paragraph (b), then the
Noble Remarketing Agent shall declare a Failed Remarketing, with the
consequences set forth in paragraph (h) of Section 8.
(c) Following the execution of any Distribution Agreement, in addition
to the Conditions Precedent set forth in paragraph (b) above, the conditions
precedent set forth in the Distribution Agreement shall have been fulfilled and
the sale of the Noble Preferred Stock thereunder shall have been consummated on
the closing date set forth in the Distribution Agreement. If the Noble
Remarketing Agent shall reasonably determine without any obligation to consult
with any other party to this Agreement that the Conditions Precedent set forth
in this paragraph (c) are not fulfilled, then the Noble Remarketing Agent shall
declare a Failed Remarketing, with the consequences set forth in paragraph (h)
of Section 8.
(d) (i) Promptly upon request following a Series A-2 Note Trigger
Event, Noble and the Noble Share Trust shall deliver to the Noble Remarketing
Agent such current or updated Remarketing Documents and other current
information and other materials as the Noble Remarketing Agent shall reasonably
request, and (ii) at all times during the Remarketing Period and prior to the
Successful Repricing Date and at all times during any remarketing of Noble
Additional Shares, none of the following events shall have occurred:
(x) trading in any securities of Noble shall have been
suspended or materially limited by the Commission or the New York Stock
Exchange, or if trading generally on the American Stock Exchange or the
New York Stock Exchange or in the Nasdaq National Market shall have
been suspended or materially limited, or minimum or maximum prices for
trading shall have been fixed, or maximum ranges for prices shall have
been required, by any of said exchanges or by such system or by order
of the Commission, the NASD or any other governmental authority, or if
a banking moratorium shall have been declared by either Federal or New
York authorities; or
(y) there shall have occurred any material adverse change in
the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or
other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or
economic conditions, in each case the effect of which is such as to
make it, in the judgment of the Noble Remarketing Agent, impracticable
to remarket the Noble Preferred Stock or Noble Additional Shares, as
the case may
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be, or to enforce contracts for the sale of the Noble Preferred Stock
or Noble Additional Shares, as the case may be.
If, on any Repricing Date the Noble Remarketing Agent shall reasonably determine
without any obligation to consult with any other party to this Agreement that
the Conditions Precedent set forth in this paragraph (d) are not fulfilled, then
the Noble Remarketing Agent shall declare a Failed Repricing with regard to such
Repricing Date and shall not be obligated to remarket the Noble Preferred Stock
until the next succeeding Repricing Date in accordance with the provisions of
paragraph (f) of Section 8; provided that if all Conditions Precedent other than
those set forth in this paragraph (d) are met by the fifth Repricing Date after
the Initial Repricing Date, the Conditions Precedent set forth in this paragraph
(d) shall no longer be applicable and shall not prevent the establishment of a
Remarketed Rate.
(e) The Noble Remarketing Agent may consult with counsel in making any
determination which may be made by it pursuant to this Section 12 and may
conclusively rely on the advice or opinion of any such counsel with respect
thereto.
SECTION 13. Indemnification.
(a) Each of the Noble Share Trust and Noble jointly and severally
agrees, to the extent permitted by law, to indemnify and hold harmless the Noble
Remarketing Agent, its directors, its officers and each Person, if any, who
controls the Noble Remarketing Agent within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any and all losses,
claims, damages, liabilities and judgments, joint or several (including, without
limitation, any legal or other expenses incurred in connection with
investigating or defending any matter, including any action, that could give
rise to any such losses, claims, damages, liabilities or judgments) arising out
of or based upon (i) all remarketing activity undertaken by the Noble
Remarketing Agent or any of its respective officers, employees and agents in
respect of the Noble Preferred Stock, and any other action taken by the Noble
Remarketing Agent or any of its respective officers, employees and agents in
furtherance of this Agreement or (ii) any untrue statement or alleged untrue
statement of a material fact contained in any Remarketing Document or in any
Filed Document, or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages, liabilities or
judgments arise solely out of or are based solely upon (x) the gross negligence
or willful misconduct of the Noble Remarketing Agent in connection with clause
(i) or (y) any untrue statement or omission or alleged untrue statement or
omission which has been made therein or omitted therefrom in reliance upon and
in conformity with information furnished in writing to the Noble Offerors by or
on behalf of the Noble Remarketing Agent expressly for use therein; provided,
however, that the indemnification contained in this paragraph (a) with respect
to any preliminary Remarketing Document shall not inure to the benefit of any
Noble Remarketing Agent (or to the benefit of any Person controlling the Noble
Remarketing Agent) on account of any such loss, claim, damage, liability or
judgment arising from the sale of the Noble Preferred Stock by the Noble
Remarketing Agent to any Person if the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
preliminary Remarketing Document was corrected in a final Remarketing Document
and the Noble Remarketing Agent sold Noble Preferred Stock to that Person
without sending or giving at or prior to the written confirmation of such sale,
a copy of
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<PAGE> 30
the final Remarketing Documents (as then amended or supplemented) if Noble has
previously complied with Section 4(d) of this Agreement.
(b) The Noble Remarketing Agent agrees to indemnify and hold harmless
the Noble Share Trust, the Noble Share Trustee on behalf of the Noble Share
Trust, Noble, Noble's directors and officers and any Person who controls Noble
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from the Noble Share
Trust and Noble to the Noble Remarketing Agent, but only with reference to
information furnished in writing by or on behalf of the Noble Remarketing Agent
expressly for use in a Remarketing Document or Filed Document in connection with
the remarketing of the Noble Preferred Stock hereunder, or any amendment or
supplement thereto.
(c) If any action shall be commenced against the Noble Remarketing
Agent or any Person controlling the Noble Remarketing Agent in respect of which
indemnity may be sought against the Noble Share Trust and Noble, the Noble
Remarketing Agent or such controlling Person shall promptly notify Noble and the
Noble Share Trust, and Noble shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the indemnified party and
payment of all fees and expenses of such counsel, as incurred (and in the case
of any action in respect of which indemnity may be sought pursuant to both
Sections 13(a) and 13(b) hereof, the Noble Remarketing Agent shall not be
required to assume the defense thereof, but may employ separate counsel and
participate in the defense thereof, but the fees and expenses of such counsel,
except as provided below, shall be at the Noble Remarketing Agent's expense).
The Noble Remarketing Agent or any such controlling Person shall have the right
to employ separate counsel in any such action, but the fees and expenses of such
counsel shall be at the expense of the Noble Remarketing Agent or such
controlling Person unless (i) the employment of such counsel has been
specifically authorized in writing by Noble, (ii) Noble shall have failed to
assume the defense of such action or employ counsel reasonably satisfactory to
the indemnified party, or (iii) the named parties to any such action (including
any impleaded parties) include both the Noble Remarketing Agent or such
controlling Person and the Noble Share Trust or Noble, and the Noble Remarketing
Agent or such controlling Person shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case Noble
shall not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the Noble Share Trust and Noble together
shall not, in connection with any one such action, suit or proceeding or
separate but substantially similar or related actions, suits or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
the Noble Remarketing Agent and controlling Persons, which firm shall be
designated in writing by the Noble Remarketing Agent, and all such fees and
expenses shall be reimbursed as they are incurred. Noble and the Noble Share
Trust shall indemnify and hold harmless the indemnified party from and against
any and all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with Noble's written consent or (ii)
effected without Noble's written consent if (and only if) the settlement is
entered into more than twenty business days after Noble and the Noble Share
Trust shall have received a request from the indemnified party for reimbursement
for the fees and expenses of counsel (in any case where such fees and expenses
are at the expense of Noble and the Noble Share Trust) and, prior to the date of
such settlement, Noble and the Noble Share Trust
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shall have failed to comply with such reimbursement request. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement, compromise or consent relating to any pending or threatened
action, suit or proceeding in respect of which any indemnified party is a party
and indemnity could have been sought hereunder by such indemnified party, unless
such settlement, compromise or consent (i) includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding and (ii) does not include a statement as to
or an admission of fault or culpability by or on behalf of such indemnified
party.
(d) If the indemnification provided for in this Section 13 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or judgments (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Noble Share Trust and Noble on the one hand and the Noble Remarketing Agent
on the other hand from the offering of the Noble Preferred Stock, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Noble Share
Trust and Noble on the one hand and the Noble Remarketing Agent on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Noble Share
Trust and Noble on the one hand and the Noble Remarketing Agent on the other
shall, if a remarketing of the Noble Preferred Stock hereunder has occurred, be
deemed to be in the same proportion as the total net proceeds from the offering
of Noble Preferred Stock (after deducting underwriting discounts and
commissions, but before deducting expenses) received by the Noble Share Trust
bear to the total compensation received by the Noble Remarketing Agent under
Section 9(a) hereof. The relative fault of the Noble Share Trust and Noble on
the one hand and the Noble Remarketing Agent on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Noble Offerors on the one
hand or by the Noble Remarketing Agent on the other hand and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) The Noble Share Trust, Noble and the Noble Remarketing Agent agree
that it would not be just and equitable if contribution pursuant to this Section
13 were determined by a pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities and expenses referred to in
paragraph (d) above shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any claim or defending any such action,
suit or proceeding. Notwithstanding the provisions of this Section 13, the Noble
Remarketing Agent shall not be required to contribute any amount in excess of
the amount by which the total sales proceeds of the Noble Preferred Stock
underwritten or distributed by it exceeds the amount of any damages which the
Noble
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Remarketing Agent has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this Section
13 and the representations and warranties of the Noble Share Trust and Noble set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of the Noble
Remarketing Agent or any Person controlling the Noble Remarketing Agent, the
Noble Share Trust, the Noble Share Trustee on behalf of the Noble Share Trust,
Noble, Noble's directors or officers, or any Person controlling Noble, (ii)
acceptance of any Noble Preferred Stock and payment therefor hereunder, and
(iii) any termination of this Agreement. A successor to any Noble Remarketing
Agent or any Person controlling the Noble Remarketing Agent, or to the Noble
Share Trust, the Noble Share Trustee on behalf of the Noble Share Trust, Noble,
Noble's directors or officers, or any Person controlling Noble, shall be
entitled to the benefits of the indemnity, contribution, and reimbursement
agreements contained in this Section 13.
(g) The remedies provided for in this Section 13 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
SECTION 14. Termination of Obligations of Noble Remarketing Agent. The
obligations of the Noble Remarketing Agent shall terminate upon the removal or
resignation of the Noble Remarketing Agent and the appointment of a successor
Noble Remarketing Agent in accordance with the provisions of Section 10 hereof;
provided that, in any such case, the rights of the Noble Remarketing Agent under
Sections 9 and 13 and the obligations of the Noble Remarketing Agent under
Sections 6(i) and 13 with regard to remarketing activity already carried out in
accordance with the terms of this Agreement shall continue and remain in full
force and effect.
SECTION 15. Noble Remarketing Agent's Performance; Duty of Care;
Liability.
(a) The duties and obligations of the Noble Remarketing Agent shall be
determined solely by the express provisions of this Agreement and the Noble
Share Trust Agreement. No implied covenants or obligations of or against the
Noble Remarketing Agent shall be read into this Agreement or the Noble Share
Trust Agreement. In the absence of bad faith on the part of the Noble
Remarketing Agent, the Noble Remarketing Agent may conclusively rely upon any
document furnished to it, which purports to conform to the requirements of this
Agreement or the Noble Share Trust Agreement, as to the truth of the statements
expressed in any of such documents. The Noble Remarketing Agent shall be
protected in acting upon any document or communication believed by it to have
been signed, presented or made by the proper party or parties. The Noble
Remarketing Agent shall incur no liability to any of Noble, the Noble Share
Trust, AMCCO, the Series A-2 Indenture Trustee or the purchasers of Noble
Preferred Stock in its individual capacity or as Noble Remarketing Agent for any
action or failure to act in connection with a remarketing or otherwise, except
as a
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result of gross negligence, willful misconduct or willful breach of this
Agreement on its part and as provided in Section 13.
(b) The Noble Remarketing Agent may consult with counsel, accountants
and other skilled Persons to be selected and employed by it, and it shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the advice or opinion of any such counsel, accountants or other skilled
Persons. The Noble Remarketing Agent shall not be required to take any action
under this Agreement if the Noble Remarketing Agent shall reasonably determine
or shall have been advised by counsel that such action is contrary to applicable
law, rules or regulations. The Noble Remarketing Agent shall incur no liability
if, by reason of any provision of any future law or regulation thereunder, the
Noble Remarketing Agent shall be prevented or forbidden from doing or performing
any act or thing which the terms of this Agreement provide shall or may be done
or performed by it.
(c) Except as otherwise provided in Section 13 hereof, the Noble
Remarketing Agent shall be under no obligation to appear in, prosecute or defend
any action or take, suffer or omit from taking any action under this Agreement
which in its opinion may require it to incur any out-of-pocket expense or any
liability, unless it shall be furnished with security and indemnity reasonably
satisfactory to it against such expense or liability as it may require, and any
reasonable out-of-pocket cost of the Noble Remarketing Agent as a result of such
actions shall be paid by Noble.
(d) The parties hereto acknowledge that any sale of the Noble Preferred
Stock (and the Noble Additional Shares, if any) pursuant to this Agreement and
the Distribution Agreement may be at prices and on terms less favorable to Noble
than those obtainable in a public or private offering by Noble under different
circumstances. Except as provided in Section 13, the Noble Remarketing Agent
shall incur no liability as a result of the sale of the Noble Preferred Stock
(and the Noble Additional Shares, if any), including any Partial Remarketing,
made in accordance with this Agreement and the Distribution Agreement.
SECTION 16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE.
SECTION 17. Term of Agreement. Unless otherwise terminated in
accordance with the provisions hereof, this Agreement shall remain in full force
and effect until the earliest to occur of the following events: (i) the Noble
Preferred Stock shall have been successfully remarketed on the Rate Reset Date
and a Partial Remarketing has not occurred, (ii) Noble shall have delivered the
Series A-2 Repayment Amount in accordance with Section 8(h) hereof or (iii) no
Series A-2 Notes shall remain outstanding. Regardless of any termination of this
Agreement pursuant to any of the provisions hereof, the obligations of Noble
pursuant to Section 9, the obligations of the Noble Remarketing Agent pursuant
to Section 6(i) and the obligations of all parties pursuant to Section 13 hereof
shall remain operative and in full force and effect until fully satisfied.
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SECTION 18. Successors and Assigns. The rights and obligations of Noble
hereunder may not be assigned or delegated to any other Person without the prior
written consent of the Noble Remarketing Agent. The rights and obligations of
the Noble Remarketing Agent hereunder may not be assigned or delegated to any
other Person without the prior written consent of Noble, the Noble Share Trustee
on behalf of the Noble Share Trust and AMCCO. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns, and will not confer any benefit upon any other
Person other than Persons, if any, controlling the Noble Remarketing Agent
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, or any Person entitled to indemnity or contribution to the extent
provided in Section 13 hereof. The terms "successors" and "assigns" shall not
include any purchaser of any Noble Preferred Stock merely because of such
purchase.
SECTION 19. Headings. Section headings have been inserted in this
Agreement as a matter of convenience of reference only, and it is agreed that
such section headings are not a part of this Agreement and will not be used in
the interpretation of any provisions of this Agreement.
SECTION 20. Severability. If any provision of this Agreement shall be
held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable
as applied in any particular case in any or all jurisdictions because it
conflicts with any provision of any constitution, statute, rule or public policy
or for any other reason, such circumstances shall not have the effect of
rendering the provision in question invalid, inoperative or unenforceable in any
other case, circumstance or jurisdiction, or of rendering any other provision or
provisions of this Agreement invalid, inoperative or unenforceable to any extent
whatsoever.
SECTION 21. Noble Remarketing Agent Not Acting as Underwriter.
(a) It is expressly understood and agreed by all parties hereto that
the Noble Remarketing Agent's only obligations hereunder are as set forth in
Sections 2(b), 6(i), 8, 10, 12, 13 and 22 of this Agreement. When engaged in
remarketing any Noble Preferred Stock, the Noble Remarketing Agent shall act
only as agent for and on behalf of the Noble Share Trust. The Noble Remarketing
Agent shall not act as underwriter for the Noble Preferred Stock (except if and
to the extent otherwise agreed in the Distribution Agreement) and shall in no
way be obligated to advance or use its own funds to purchase any Noble Preferred
Stock (except in its individual capacity as purchaser of those Noble Preferred
Stock it shall elect, in accordance with Section 11 hereof, to purchase, in its
sole discretion) or to otherwise expend or risk its own funds or incur or become
exposed to financial liability in the performance of its duties hereunder.
(b) It is expressly understood and agreed by all parties hereto that
the obligation of the Noble Remarketing Agent with respect to the New Series are
limited to those set forth in Section 2(b)(i) hereof and those expressly set
forth in the New Series Distribution Agreement. The Noble Remarketing Agent
shall not act as underwriter for the New Series (except if and to the extent
otherwise agreed in the Distribution Agreement) and shall in no way be obligated
to advance or use its own funds to purchase any shares of the New Series (except
in its individual capacity as purchaser of those shares of the New Series it
shall elect, in accordance with Section
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11 hereof, to purchase, in its sole discretion) or to otherwise expend or risk
its own funds or incur or become exposed to financial liability in the
performance of its duties hereunder.
(c) It is expressly understood and agreed by all parties hereto that
the obligation of the Noble Remarketing Agent to remarket the Noble Preferred
Stock or market the New Series is undertaken on a "best-efforts" basis only
(except if and to the extent otherwise agreed in the Distribution Agreement or
the New Series Distribution Agreement, respectively), and the Noble Remarketing
Agent shall incur no liability to any Person in connection with a failure to
remarket the Noble Preferred Stock or market the New Series if the Noble
Remarketing Agent has acted in accordance with the provisions of this Agreement.
SECTION 22. Amendments. This Agreement may be amended by any instrument
in writing signed by all of the parties hereto so long as this Agreement as
amended is not inconsistent with the Noble Share Trust Agreement or the
Participation Agreement in effect as of the date of any such amendment.
SECTION 23. Notices. Except as otherwise expressly provided herein in
any particular case, all notices, approvals, consents, requests and other
communications hereunder shall be in writing and shall, if addressed as provided
in the following sentence, be deemed to have been given, (i) when delivered by
hand, (ii) one Business Day after being sent by a private nationally or
internationally recognized overnight courier service, or (iii) when sent by
telecopy, if immediately after transmission the sender's facsimile machine
records in writing the correct answer back. Actual receipt at the address of an
addressee, regardless of whether in compliance with the foregoing, is effective
notice hereunder. Until otherwise so notified by the respective parties, all
notices, approvals, consents, requests and other communications shall be
addressed to the following addresses:
If to Noble:
Noble Affiliates, Inc.
P.O. Box 1967
Ardmore, OK 73402
Attention: Treasurer
Telecopier No.: 580-221-1386
Telephone No.: 580-223-4110
with a copy to:
Thompson & Knight L.L.P.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Attention: Kenn W. Webb
Telecopier No.: (214) 969-1751
Telephone No.: (214) 969-1700
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If to AMCCO:
Atlantic Methanol Capital Company
c/o Maples and Calder
P.O. Box 309, Ugland House
South Church Street, George Town
Grand Cayman, Cayman Islands
Attention: Gareth Griffiths
Telecopier No.: (345) 949-8080
Telephone No.: (345) 949-8066
with a copy to:
Noble Affiliates, Inc.
P.O. Box 1967
Ardmore, OK 73402
Attention: Treasurer
Telecopier No.: 580-221-1386
Telephone No.: 580-223-4110
If to the Noble Share Trust or the Noble Share Trustee:
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telecopier No.: 302-651-8882
Telephone No.: 302-651-1000
If to the Series A-2 Indenture Trustee:
The Chase Manhattan Bank
c/o Chase Bank of Texas, National Association
600 Travis Street, Suite 1150
Houston, TX 77210-4717
Attention: Corporate Trust Administration
Telecopier No.: (713) 216-4100
Telephone No.: (713) 216-6686
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If to the Noble Remarketing Agent:
Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, NY 10172
Attention: Dominic Capolongo
Telecopier No.: (212) 892-7272
Telephone No.: (212) 892-3000
with a copy to:
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, NY 10005
Attention: Trayton M. Davis; Elizabeth A. Besio
Telecopier No.: (212) 530-5219
Telephone No.: (212) 530-5000
A duplicate copy of each notice, approval, consent, request or other
communication given hereunder by each of the Parties to any one of the others
shall also be given to all of the others. However, failure to give notice to any
Party shall not affect effectiveness of notice to Parties as to whom notice has
been given in accordance with the first two sentences of this Section 23. Each
of the Parties may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, approvals, consents, requests
or other communications shall be sent or persons to whose attention the same
shall be directed.
SECTION 24. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be regarded as an original and all of which
shall constitute one and the same document.
SECTION 25. Regarding the Series A-2 Indenture Trustee. The Series A-2
Indenture Trustee shall be afforded all of the rights, powers, immunities and
indemnities set forth in the Series A-2 Indenture and the Participation
Agreement as if such rights, powers, immunities and indemnities were
specifically set forth herein.
SECTION 26. Limitation of Liability of Noble Share Trustee. It is
expressly understood and agreed by the parties hereto with respect to the Noble
Share Trust that (a) this Agreement is executed and delivered by Wilmington
Trust Company, not individually or personally but solely as trustee of the Noble
Share Trust, in the exercise of the powers and authority conferred and vested in
it under the Noble Share Trust Agreement, respectively, (b) each of the
representations, undertakings and agreements herein made on the part of the
Noble Share Trust is made and intended not as personal representations,
undertaking and agreements by Wilmington Trust Company but is made and intended
for the purpose of binding only the Noble Share Trust, and (c) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Noble Share Trust or be liable
for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Noble Share Trust under this Agreement or the
other related documents; provided,
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however, this Section shall not limit the liability expressly assumed by
Wilmington Trust Company under the Noble Share Trust Agreement.
[signature pages follow]
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IN WITNESS WHEREOF, each of Noble, the Noble Share Trust, the Series
A-2 Indenture Trustee and the Noble Remarketing Agent has caused this Agreement
to be executed in its name and on its behalf by one of its duly authorized
officers as of the date first above written.
NOBLE AFFILIATES, INC.
By
--------------------------------------------------
Name:
Title:
NOBLE SHARE TRUST
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but solely in its capacity as
trustee
By
--------------------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, not in its
individual capacity, but solely as Series A-2
Indenture Trustee, solely for purposes of Sections 7,
8, 10 and 25 hereof
By
--------------------------------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By
--------------------------------------------------
Name:
Title:
37
<PAGE> 40
Schedule I
Certain transactions described in
Section 3(e)
None.
38
<PAGE> 41
Schedule II
Registration Rights described in
Section 5(1)
None.
39
<PAGE> 42
Schedule III
Eligible Noble Remarketing Agents
Goldman Sachs & Co
Morgan Stanley Dean Witter
Merrill Lynch & Co Inc
Salomon Smith Barney
Credit Suisse First Boston
JP Morgan & Co Inc
Donaldson Lufkin & Jenrette
Deutsche Bank
Lehman Brothers
Bear Stearns
40
<PAGE> 1
EXHIBIT 21
TO FORM 10-K
SUBSIDIARIES
<TABLE>
<CAPTION>
State or Jurisdiction of
Name Organization Ref
- -------------------------------------------------------------- ------------------------ ---
<S> <C> <C>
Samedan Oil Corporation Delaware (1)
Samedan Oil of Canada, Inc. Delaware (3)
Samedan of North Africa, Inc. Delaware (3)
Samedan North Sea, Inc. Delaware (3)
Samedan Oil of Indonesia, Inc. Delaware (3)
Samedan Pipe Line Corporation Delaware (3)
Samedan Royalty Corporation Delaware (3)
Samedan of Tunisia, Inc. Delaware (3)
Samedan, Mediterranean Sea Cayman Islands (5)
Samedan, Mediterranean Sea, Inc. Delaware (3)
Noble Gas Marketing, Inc. Delaware (1)
Noble Gas Pipeline, Inc. Delaware (2)
Noble Trading, Inc. Delaware (1)
NPM, Inc. Delaware (1)
Samedan International Cayman Islands (4)
Samedan Transfer Sub Cayman Islands (5)
Atlantic Methanol Capital Company Cayman Islands (7)
Samedan Methanol Cayman Islands (8)
Atlantic Methanol Associates LLC Cayman Islands (9)
Atlantic Methanol Production Company LLC Cayman Islands (10)
AMPCO Marketing LLC Michigan (11)
AMPCO Services LLC Michigan (11)
Samedan Power Cayman Islands (5)
Alba Associates LLC Cayman Islands (12)
Alba Plant LLC Cayman Islands (13)
Energy Development Corporation New Jersey (3)
Energy Development Corporation (Argentina), Inc. Delaware (6)
Energy Development Corporation (China), Inc. Delaware (6)
Energy Development Corporation (HIPS), Inc. Delaware (6)
EDC Ecuador Ltd. Delaware (6)
EDC Ecuador Limited Cayman Islands (17)
EDC (Denmark) Inc. Delaware (6)
EDC Australia Ltd. Delaware (6)
EDC Portugal Ltd. Delaware (6)
Gasdel Pipeline System Incorporated New Jersey (6)
Producers Services, Inc. New Jersey (6)
HGC, Inc. Delaware (6)
EDC (UK) Ltd Delaware (6)
EDC (Europe) Limited United Kingdom (14)
Industrial Scotland Energy Ltd. United Kingdom (15)
Brabant Oil Ltd. United Kingdom (15)
Brabant Oilex Ltd. United Kingdom (15)
Burnside Overseas Exploration Limited United Kingdom (16)
(1) 100% owned by Noble Affiliates, Inc. (Registrant)
(2) 100% owned by Noble Gas Marketing, Inc.
(3) 100% owned by Samedan Oil Corporation
(4) 100% owned by Samedan of North Africa, Inc.
(5) 100% owned by Samedan International
(6) 100% owned by Energy Development Corporation
(7) 50% owned by Samedan North Africa, Inc.
(8) 100% owned by Atlantic Methanol Capital Company
(9) 50% owned by Samedan Methanol
(10) 90% owned by Atlantic Methanol Associates LLC
(11) 50% owned by Samedan North Africa, Inc.
(12) 34.7% owned by Samedan International
(13) 50% owned by Alba Associates LLC
(14) 100% owned by EDC (UK) Ltd
(15) 100% owned by EDC (Europe) Limited
(16) 100% owned by Brabant Oil Ltd.
(17) 100% owned by EDC Ecuador
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated January 28, 2000, included on page 32 of the Company's 1999 Form
10-K, into the previously filed registration statements on Form S-3 (File Nos.
333-18929 and 333-82953) and on Form S-8 (File Nos. 333-39299, 2-64600, 2-81590,
33-32692, 2-66654 and 33-54084).
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma
March 13, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 2,925
<SECURITIES> 0
<RECEIVABLES> 98,794
<ALLOWANCES> 0
<INVENTORY> 5,517
<CURRENT-ASSETS> 147,914
<PP&E> 2,830,793
<DEPRECIATION> 1,588,423
<TOTAL-ASSETS> 1,450,351
<CURRENT-LIABILITIES> 184,471
<BONDS> 445,319
0
0
<COMMON> 195,231
<OTHER-SE> 503,796
<TOTAL-LIABILITY-AND-EQUITY> 1,450,351
<SALES> 548,733
<TOTAL-REVENUES> 909,842
<CGS> 0
<TOTAL-COSTS> 783,276
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,935
<INCOME-PRETAX> 77,631
<INCOME-TAX> 28,170
<INCOME-CONTINUING> 49,461
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,461
<EPS-BASIC> .87
<EPS-DILUTED> .86
</TABLE>
