MAXUS ENERGY CORP /DE/, 10-K, 1996-03-22

MAXUS ENERGY CORP /DE/
10-K, 1996-03-22
CRUDE PETROLEUM & NATURAL GAS

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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, 1995

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 1-8567-2

MAXUS ENERGY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 75-1891531
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

717 NORTH HARWOOD STREET 75201-6594
DALLAS, TEXAS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

Registrant's telephone number, including area code: (214) 953-2000

Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- ------------------------------------------------------------------ ------------------------
<S> <C>
Common Stock, $1.00 Par Value..................................... None
$2.50 Cumulative Preferred Stock, $1.00 Par Value................. New York Stock Exchange
8 1/2% Sinking Fund Debentures Due April 1, 2008.................. New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
$4.00 Cumulative Convertible Preferred Stock, $1.00 Par Value..... Nasdaq Stock Market
</TABLE>

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. YES /X/ NO / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /

The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 1, 1996 was approximately $190,072,300.

Shares of Common Stock outstanding at March 1, 1996 -- 135,609,772.

DOCUMENTS INCORPORATED BY REFERENCE
None

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<PAGE> 2

PART I

ITEMS 1 AND 2. BUSINESS AND PROPERTIES.

Maxus Energy Corporation ("Maxus" or the "Company") was incorporated in
Delaware in 1983 to hold the stock of various corporations, the oldest of which
was founded in 1910. The Company, together with its subsidiaries, is an oil and
gas exploration and production company with ongoing international activity in
Indonesia, Ecuador, Bolivia, Venezuela and certain other countries, and domestic
activity primarily in the mid-continent region of the United States. Its
principal executive offices are located at 717 North Harwood Street, Dallas,
Texas 75201-6594, and its telephone number is (214) 953-2000. In this report,
the terms "Company" and "Maxus" mean Maxus Energy Corporation, its subsidiaries
and their predecessors unless the context otherwise indicates.

The Company's common stock, $1.00 par value ("Common Stock"), is wholly
owned by YPF Sociedad Anonima ("YPF"), an Argentine sociedad anonima. On March
6, 1995, a tender offer for the Company's Common Stock was commenced by YPF
Acquisition Corp. (the "Purchaser" or "YPFA Corp."), a wholly owned subsidiary
of YPF, at $5.50 per share. Pursuant to the tender offer, in April 1995, the
Purchaser acquired approximately 88.5% of the then-outstanding shares of Common
Stock. On June 8, 1995, a special meeting of the stockholders of the Company was
held to approve the Agreement of Merger ("Merger Agreement") dated February 28,
1995, between the Company, the Purchaser and YPF. The holders of the Company's
Common Stock along with the holders of the Company's $4.00 Cumulative
Convertible Preferred Stock ("$4.00 Preferred Stock") approved the Merger
Agreement; the Purchaser was merged into the Company (the "Merger") on June 8,
1995; and, pursuant to the terms of the Merger Agreement, shares of the
Company's Common Stock outstanding on the date of the Merger were converted into
the right to receive $5.50 per share. The $4.00 Preferred Stock and the
Company's $2.50 Cumulative Preferred Stock ("$2.50 Preferred Stock") remain
outstanding, and the powers, preferences and rights of such preferred stock,
including conversion rights of the $4.00 Preferred Stock, were not affected by
the Merger.

Effective April 1, 1995, the Company used the purchase method of accounting
to record the acquisition of the Company by YPF. In a purchase method
combination, the purchase price is allocated to acquired assets and assumed
liabilities based on their fair values at the date of acquisition. As a result,
the Company's assets and liabilities were revalued to reflect the approximate
$762 million cash purchase price paid by YPF to acquire the Company. Due to the
application of purchase accounting on April 1, 1995, financial information
post-merger is not comparable to prior periods. Therefore, financial information
is presented separately for pre-Merger (years ending December 31, 1994 and 1993,
and the three-month period ending March 31, 1995) and post-Merger periods (nine
months ending December 31, 1995). The Company's sales or transfers between
geographic areas were not significant in each year in the period ended December
31, 1994 and 1993 and the three months ended March 31, 1995 and the nine months
ended December 31, 1995. Operating revenues from export sales to unaffiliated
customers located outside the United States were less than 10% of the Company's
consolidated sales and operating revenues in each year in the two-year period
ended December 31, 1994 and the three months ended March 31, 1995 and the nine
months ended December 31, 1995. Information concerning outside sales and
operating profit by geographic area for the nine months ended December 31, 1995
and identifiable assets by geographic area as of December 31, 1995 is presented
on page F-43 of this report. Information concerning outside sales and operating
profit by geographic area for the three months ended March 31, 1995 and for the
twelve months ended December 31, 1994 and 1993 and identifiable assets by
geographic area as of March 31, 1995 and December 31, 1994 and 1993 is presented
on pages F-9 and F-10 of this report.

Exploration and Production -- International

Indonesia

The Company has interests in production sharing contracts with Pertamina,
Indonesia's state oil company, for the exploration, development and production
of oil and gas in two primary areas in the Java Sea--Southeast Sumatra and
Northwest Java. These areas accounted for 81% of the Company's total net

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production of oil during 1995. The Company's working interest in the Southeast
Sumatra production sharing contract is 55.7% and in the Northwest Java
production sharing contract is 24.3%. The Company is the operator of the
Southeast Sumatra block, and Atlantic Richfield Company ("ARCO") is the operator
of the Northwest Java block.

The Indonesian production sharing contracts allow the Company to recover,
subject to available production, tangible and intangible costs of exploration,
intangible costs of production and operating costs on a current basis and
tangible costs of production generally over a seven-year period. After recovery
of those costs and fulfillment of a domestic market obligation for oil, the
contractors currently receive 34% of the oil produced and 79.5% of the gas
produced before Indonesian taxes, the statutory rate for which is 56%. The
Southeast Sumatra and Northwest Java production sharing contracts extend to 2018
and 2017, respectively.

The Company has gas projects in both the Northwest Java and Southeast
Sumatra contract areas. In 1992, ARCO began developing gas reserves in Northwest
Java. Production from this project, which began delivery to Jakarta in 1993,
averaged 255 million cubic feet per day ("mmcfpd") (gross) during 1995. In
Southeast Sumatra, where the Company has certified (but not included in its
proved reserves because of an absence of a contract of sale) 300 billion cubic
feet ("bcf") of gross gas reserves, the Company is negotiating with Pertamina
for a gas sales contract to supply Jakarta or other markets. Although the
Company cannot give any assurance that a contract will ultimately be signed,
management currently believes that these negotiations will eventually lead to a
satisfactory gas sales contract and a profitable market for the Company's
Southeast Sumatra natural gas.

During 1995, six exploration and 18 development wells were drilled in the
Northwest Java contract area, which added 28 million barrels (gross) of oil and
237 bcf (gross) of gas to proved reserves. During 1995, the Company drilled 14
exploration and 20 development wells in the Southeast Sumatra contract area
which added 19.4 million barrels (gross) of proved oil reserves.

Exploration activities replaced 43% of net production of oil and gas for
the Southeast Sumatra and Northwest Java blocks in 1995. The Company plans to
drill fewer exploration wells (ten) in the Southeast Sumatra block in 1996 than
it did in 1995 (14), and will shift its emphasis and spending toward drilling
in-fill wells, increasing workovers, reducing lifting costs and securing
conditions to commercialize small oil fields discovered in previous years that
were considered uneconomic under then-prevailing operating cost and sales price
assumptions.

Ecuador

The Company is the operator of and has a 35% working interest in the Block
16 project in eastern Ecuador from which production began in 1994. During 1995,
the main access road to the northern and southern fields, the oil pipeline to
the southern fields and water disposal lines were completed, along with the
construction of wellpads for the following southern fields, as well as Water
Disposal Pad #1: Amo B, Iro A and Ginta B. This allowed continued development
drilling in these fields in the southern area which averaged 6,038 gross barrels
of oil production per day during 1995. Production from the Amo field was
recorded in November 1995, and production from the Iro and Ginta fields is
projected to be recorded in the first half of 1996. Production from the northern
fields averaged approximately 22,800 gross barrels of oil per day ("bpd") in
1995.

Pipeline capacity available to the Company is sufficient to transport only
about 60% of the daily oil the Company expects to be able to produce in Ecuador,
and none of the various projects to increase transportation capacity that have
been considered has been approved by the government of Ecuador. In addition, the
Company is involved in a number of contract, auditing and certification disputes
with various government entities. Together, the lack of pipeline capacity and
the various disputes with government entities are retarding the Company's
ability to proceed with the economic development of Block 16. Although the
Company can give no assurances concerning the outcome of the discussions,
progress has recently been made on several important issues. The Company intends
to reduce program spending in Ecuador in 1996 to $19 million from $32 million in
1995.

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<PAGE> 4

Bolivia

In Bolivia, total daily oil production averaged approximately 6,400 gross
bpd during 1995 from ten wells located in the Surubi Field of the Mamore I
Block, a 1.6 million acre concession of which the Company is the operator and
owns a 50% interest. Production in the Mamore I Block increased to 9,500 gross
bpd at year-end 1995, as compared to 4,200 gross bpd at the end of 1994. The
Mamore I Block is currently the source of approximately 30% of Bolivia's liquid
hydrocarbon production; the majority of Bolivian fields produce primarily
natural gas and condensate. Proven Surubi area gross reserves were estimated at
28 million barrels of oil at January 1, 1996 by Gaffney, Cline & Associates
("Gaffney, Cline"), independent reserve engineers. In addition, the Company has
a 12.5% non-operating interest in the Secure Block which is adjacent to and west
of Mamore I. In 1995, the Company conducted a seismic program covering
approximately 450 kilometers of the Secure Block and plans to continue this
program in 1996. During 1995, the Company signed a contract to acquire a 25%
interest in the Caipipendi Block operated by Chevron Corporation.

Venezuela

Discovered in 1928, the Quiriquire field in Venezuela was produced through
1985. In 1993, it was offered as a reactivation field as part of the Venezuelan
second round of bids, at which time Maxus (95%) and Otepi Consultores, S.A.,
predecessor to Corporacion Energetica S.21, C.A., (5%) signed a contract for the
unit with Lagoven, an affiliate of Petroleos de Venezuela, S.A. In 1994, the
Company conveyed a 45% interest in the Quiriquire Unit to BP Exploracion de
Venezuela S.A., reducing its previous 95% interest in the unit to 50%. The
contract with Lagoven requires a $36 million investment in drilling and seismic
programs by mid-year 1997, the Company's share of which is $18 million. To date,
the Company has completed the performance of a three-dimensional seismic program
on the Quiriquire Unit. In addition, it has commenced the drilling of one of two
commitment exploratory wells and has begun a reactivation program, including the
drilling of one delineation well. The Quiriquire Unit currently produces
approximately 2,000 gross bpd of crude oil. In January 1996, the Company
acquired an interest in a second block, Guarapiche, adjacent to the Quiriquire
Unit. The Guarapiche block is operated by BP Exploration Orinoco Limited.

Other Foreign Countries

The Company is also undertaking exploration and production activities in
three other foreign areas. In the East China Sea, the Company operates two
blocks, one in which it has a 60% working interest and one in which it has a
100% working interest. Two and three dimensional seismic surveys on the blocks
have been completed. During 1995, a dry hole was drilled, and in the first
quarter of 1996 a second dry hole was drilled. The Company's exploration
commitment in the East China Sea is fulfilled and management does not intend to
continue activities in that area. In Tunisia, during 1995, the Company
relinquished its interest in the 1.1 million acre Djebel Oust Block. The Company
converted its seismic option on the Zembra permit, Tunisia, to an exploration
license during 1995. In Bulgaria, during 1995, the Company drilled its second
dry hole on a one million acre block which was subsequently relinquished.

During December 1995, the Company sold its overriding royalty interest in
the Recetor Block, Colombia, to British Petroleum for $25 million.

The Company's foreign petroleum exploration, development and production
activities are subject to political and economic uncertainties, expropriation of
property and cancellation or modification of contract rights, foreign exchange
restrictions and other risks arising out of foreign governmental sovereignty
over the areas in which the Company's operations are conducted, as well as risks
of loss in some countries due to civil strife, acts of war, guerrilla activities
and insurrection.

Exploration and Production--Domestic

Through its wholly owned subsidiary, Midgard Energy Company ("Midgard"),
the Company currently focuses its domestic exploration and production efforts in
the Texas Panhandle and western Oklahoma where it has substantial investments in
natural gas gathering systems that are used to aggregate gas produced and
purchased by the Company for processing and resale. The Company owns and
operates two gas processing

4
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plants in the area: its Sunray plant in Moore County, Texas and a plant in Roger
Mills County, Oklahoma. The Sunray plant, which was completed in 1993,
incorporates state-of-the-art technology, including a cold box for extraction of
helium. It can process approximately 200 mmcfpd at peak operation and, as of
February 1, 1996, was processing approximately 175 mmcfpd.

In 1995, Midgard completed 75 net wells, as compared to 26 net wells
completed in 1994. The predominant portion of the wells drilled during 1995 were
completed during the second half of the year. At December 1995, net production
was 138 mmcfpd, an increase of 11% from the average for the first half of 1995
of 125 net mmcpd. Proved reserves of 70.4 bcf equivalent (net) were added during
1995, a significant increase from the 23 bcf equivalent (net) added in 1994.
Midgard acquired 26 bcf equivalent (net) of reserves through producing property
acquisitions in 1995. Twenty-two net wells were recompleted in 1995, an increase
of 14 (net) over 1994's recompletions. Proved reserves as of January 1, 1996
were 594 bcf equivalent (net), an increase of 16% over proved reserves of 513
bcf equivalent (net) as of January 1, 1995. The Company replaced 268% of its
production in 1995.

In 1996, Midgard's development plans include the continuation of its
in-fill drilling program at a level comparable to 1995 and efforts to maximize
processed volumes through gathering systems upgrades. Additionally, Midgard
expects to pursue strategic acquisition opportunities in the gathering,
processing and producing properties sectors, while drilling a portfolio of
higher risk exploration wells to complement its lower risk in-fill drilling
program.

Oil and Gas Operations

Average sales prices and production costs of crude oil and natural gas
produced by geographic area for each year in the two-year period ended December
31, 1994, the three months ended March 31, 1995 and the nine months ended
December 31, 1995 were as follows:

<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED
ENDED THREE MONTHS DECEMBER 31,
DECEMBER 31, ENDED MARCH -----------------
1995 31, 1995 1994 1993
------------ ------------ ------ ------
<S> <C> <C> <C> <C>
United States
Average Sales Price
Crude Oil (per barrel)....................... $16.29 $16.07 $13.89 $16.99
Natural Gas Liquids (per barrel)............. $10.42 $10.27 $10.02 $11.08
Natural Gas Sold (per mcf)(a)................ $ 1.54 $ 1.42 $ 1.89 $ 2.13
Natural Gas Produced (per mcf)(b)............ $ 1.97 $ 1.89 $ 2.10 $ 2.26
Average Production Cost (per barrel)(c)...... $ 3.39 $ 3.74 $ 3.37 $ 3.61
Indonesia
Average Sales Price
Crude Oil (per barrel)....................... $17.01 $17.54 $15.61 $17.31
Natural Gas Liquids (per barrel)............. $14.33 $19.19 $ 9.42 $10.57
Natural Gas Sold (per mcf)(a)................ $ 2.62 $ 2.65 $ 2.24 $ 1.30
Natural Gas Produced (per mcf)(b)............ $ 2.64 $ 2.73 $ 2.53 $ 2.35
Average Production Cost (per barrel)(c)...... $ 6.44 $ 7.42 $ 6.18 $ 6.67
South America
Average Sales Price
Crude Oil (per barrel)....................... $12.79 $12.58 $12.58 NA
Average Production Cost (per barrel)(c)...... $ 6.30 $ 8.99 $ 9.36 NA
</TABLE>

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(a) The average natural gas price for sales volumes is calculated by dividing
the total net sales value for all natural gas sold by the Company,
including residue gas remaining after the removal of natural gas liquids,
by the annual natural gas sales volume.
(b) The average natural gas price for produced volumes is calculated by dividing
the total net value received from the sale of natural gas and natural gas
liquids produced by the Company by the annual natural gas production
volume.
(c) Production or lifting cost is exclusive of depreciation and depletion
applicable to capitalized lease acquisition, exploration and development
expenditures. Average production costs are calculated by dividing total
operating costs by the sum of crude oil and equivalent barrels of oil for
natural gas production. Gas volumes produced were converted to equivalent
barrels of crude oil by dividing the mcf volume by six. Six mcf of gas have
approximately the heating value of one barrel of crude oil.

The Company periodically hedges against the effects of fluctuations in the
prices of crude oil and natural gas through price swap agreements and futures
contracts. A hedging program covered an average of 25% of the Company's United
States natural gas production during 1995 and covered up to 90% of such
production during the first quarter of 1996. Currently, the only remaining 1996
United States natural gas production which is hedged is approximately 30% of
April and June 1996 production; however, management intends to hedge up to 90%
of the remaining production for the year in the event that gas prices reach
certain targeted levels.

Information regarding the Company's oil and gas producing activities for
the periods indicated is set forth on pages F-30 through F-34 and F-64 through
F-68 of this report. The Company's estimates of its net interests in proved
reserves at December 31, 1995 are based upon records regularly prepared and
maintained by its engineers. In 1995, the Company filed estimates of certain of
its proved reserves of crude oil and natural gas in the United States at
December 31, 1994 with the United States Department of Energy. The total reserve
estimates included therein do not differ by more than 5% from the total reserve
estimates for the comparable period for the same reserves included in the
Company's filings with the Securities and Exchange Commission.

The following table shows the Company's average daily sales and net
production (after deducting royalty and operating interests of others) by
geographic area for the periods presented.

<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS YEAR ENDED
ENDED ENDED DECEMBER 31,
DECEMBER 31, MARCH 31, ------------
1995 1995 1994 1993
------------ ------------ ---- ----
<S> <C> <C> <C> <C>
United States
Average Daily Production
Crude Oil (m barrels)............................. 1.1 1.0 2.4 4.9
Natural Gas (mmcf)(a)............................. 130 125 156 208
Average Daily Sales
Natural Gas Liquids (m barrels)................... 8.7 8.8 8.2 7.6
Natural Gas (mmcf)(b)............................. 104 98 131 181
Indonesia
Average Daily Production
Crude Oil (m barrels)............................. 53.0 52.0 59.3 62.4
Average Daily Sales
Natural Gas Liquids (m barrels)................... 1.7 0.9 2.1 1.5
Natural Gas (mmcf)(b)............................. 61 45 44 13
South America
Average Daily Production
Crude Oil (m barrels)............................. 12.4 8.5 4.6 NA
Average Daily Sales
Crude Oil (m barrels)............................. 10.4 6.9 5.2 NA
</TABLE>

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(a) Reflects the average amount of daily wellhead production.

(b) Average daily sales volumes for natural gas production, reduced, in those
cases where the gas is processed for extraction of natural gas liquids, by
the shrinkage resulting therefrom.

In addition to gathering and processing a substantial part of the natural
gas produced by the Company, the Company purchases natural gas in the Texas
Panhandle and western Oklahoma for resale. The majority of this natural gas is
processed through the Company's processing facilities. The table below reflects
the average daily sales and average sales prices received for such purchased
natural gas and the natural gas liquids extracted in processing for the periods
presented.

<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS YEAR ENDED
ENDED ENDED DECEMBER 31,
DECEMBER 31, MARCH 31, ----------------
1995 1995 1994 1993
------------ ------------ ------ ------
<S> <C> <C> <C> <C>
Average Sales Price
Natural Gas Liquids (per barrel).............. $10.57 $10.48 $10.12 $11.19
Natural Gas (per mcf)......................... $ 1.42 $ 1.49 $ 1.90 $ 1.99
Average Daily Sales
Natural Gas Liquids (m barrels)............... 8.9 9.6 9.7 9.8
Natural Gas (mmcf)............................ 68 69 144 184
</TABLE>

The following tables set forth information regarding the Company's wells
and leasehold acres. "Gross" wells or acres are the total number of wells or
acres in which the Company owns any interest. "Net" wells or acres are the sum
of the fractional working interests the Company owns in gross wells or acres.
"Productive" wells are either producing wells or wells capable of commercial
production although currently shut-in. One or more completions ("multiple
completions") in the same bore hole are counted as one well.

At December 31, 1995, total gross and net productive oil and gas wells,
including multiple completions, by geographic area were as follows:

<TABLE>
<CAPTION>
WELLS
---------------------------------
OIL GAS
-------------- ---------------
GROSS NET GROSS NET
----- ----- ----- ------
<S> <C> <C> <C> <C>
Oil and Gas Wells
United States............................................. 363 238.4 1467 1126.4
Indonesia................................................. 708 269.8 12 2.9
South America............................................. 38 15.4 0 0.0
Total................................................ 1109 523.6 1479 1129.3
Multiple Completions
United States............................................. 0 0.0 35 18.2
Indonesia................................................. 84 20.4 0 0
Total................................................ 84 20.4 35 18.2
</TABLE>

At December 31, 1995, total gross and net developed and undeveloped acreage
by geographic area was as follows:

<TABLE>
<CAPTION>
UNITED SOUTH OTHER
STATES INDONESIA AMERICA FOREIGN
------- --------- -------- --------
<S> <C> <C> <C> <C>
Gross Acres
Developed Acres........................... 551,141 143,330 8,405 -0-
Undeveloped Acres......................... 315,605 7,712,042 8,553,752 2,157,677
------- --------- --------- ---------
Total................................ 866,746 7,855,372 8,562,157 2,157,677
Net Acres
Developed Acres........................... 465,982 54,024 3,501 -0-
Undeveloped Acres......................... 179,620 2,709,540 2,289,955 1,799,876
------- --------- --------- ---------
Total................................ 645,602 2,763,564 2,293,456 1,799,876
</TABLE>

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<PAGE> 8

Exploration and Development Activities

Drilling activities of the Company for each year in the three-year period
ended December 31, 1995 are summarized by geographic area in the following
table:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Gross wells drilled(a)
United States
Exploratory
Oil......................................................... 0 0 0
Gas......................................................... 0 1 2
Dry......................................................... 2 6 2
--- --- ---
Total.................................................... 2 7 4
Development
Oil......................................................... 3 2 10
Gas......................................................... 73 44 29
Dry......................................................... 5 4 4
--- --- ---
Total.................................................... 81 50 43
Indonesia
Exploratory
Oil......................................................... 0 3 0
Gas......................................................... 0 0 0
Dry......................................................... 12 7 0
--- --- ---
Total.................................................... 12 10 0
Development
Oil......................................................... 35 38 46
Gas......................................................... 0 1 14
Dry......................................................... 2 2 25
--- --- ---
Total.................................................... 37 41 85
South America
Exploratory
Oil......................................................... 1 1 2
Gas......................................................... 0 0 0
Dry......................................................... 1 0 3
--- --- ---
Total.................................................... 2 1 5
Development
Oil......................................................... 17 13 2
Gas......................................................... 0 0 0
Dry......................................................... 0 0 0
--- --- ---
Total.................................................... 17 13 2
Other Foreign
Exploratory
Oil......................................................... 0 0 0
Gas......................................................... 0 0 0
Dry......................................................... 3 0 0
--- --- ---
Total.................................................... 3 0 0
</TABLE>

8
<PAGE> 9

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
1995 1994 1993
--- --- ---
<S> <C> <C> <C>
Development
Oil......................................................... 0 0 0
Gas......................................................... 0 0 0
Dry......................................................... 0 0 0
--- --- ---
Total.................................................... 0 0 0
Net Wells Drilled (a)
United States
Exploratory
Oil......................................................... 0.0 0.0 0.0
Gas......................................................... 0.0 1.0 1.7
Dry......................................................... 1.5 3.5 1.9
--- --- ---
Total.................................................... 1.5 4.5 3.6
Development
Oil......................................................... 3.0 0.2 1.7
Gas......................................................... 65.7 22.1 18.5
Dry......................................................... 5.0 1.6 2.1
--- --- ---
Total.................................................... 73.7 23.9 22.3
Indonesia
Exploratory
Oil......................................................... 0.0 0.7 0.0
Gas......................................................... 0.0 0.0 0.0
Dry......................................................... 6.4 3.3 0.0
--- --- ---
Total.................................................... 6.4 4.0 0.0
Development
Oil......................................................... 14.5 17.1 17.5
Gas......................................................... 0.0 0.2 3.4
Dry......................................................... 1.1 0.5 9.1
--- --- ---
Total.................................................... 15.6 17.8 30.0
South America
Exploratory
Oil......................................................... .4 0.4 2.0
Gas......................................................... 0.0 0.0 0.0
Dry......................................................... .6 0.0 2.1
--- --- ---
Total.................................................... 1.0 0.4 4.1
Development
Oil......................................................... 7.2 4.6 2.0
Gas......................................................... 0.0 0.0 0.0
Dry......................................................... 0.0 0.0 0.0
--- --- ---
Total.................................................... 7.2 4.6 2.0
Other Foreign
Exploratory
Oil......................................................... 0.0 0.0 0.0
Gas......................................................... 0.0 0.0 0.0
Dry......................................................... 2.6 0.0 0.0
--- --- ---
Total.................................................... 2.6 0.0 0.0
</TABLE>

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<PAGE> 10

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
1995 1994 1993
--- --- ---
<S> <C> <C> <C>
Development
Oil......................................................... 0.0 0.0 0.0
Gas......................................................... 0.0 0.0 0.0
Dry......................................................... 0.0 0.0 0.0
--- --- ---
Total.................................................... 0.0 0.0 0.0
</TABLE>

- ---------------

(a) "Gross" wells means all wells in which the Company has an interest. "Net"
wells means gross wells after deducting interests of others.

At December 31, 1995, the Company was participating in the drilling of 7
gross and 6.3 net wells in the United States, 4 gross and 1.6 net wells in
Indonesia and 2 gross and .8 net wells in areas outside the United States other
than Indonesia.

Competition and Markets

The primary markets for the Company's Indonesian oil production are the
Pacific Rim countries, including Japan, China and Indonesia. The increasing
environmental consciousness of this region has resulted in premium prices for
low sulfur oil such as that produced from the Southeast Sumatra and Northwest
Java areas. The Company has ongoing business relationships with government oil
companies, utilities, refiners and trading companies which are expected to
continue to facilitate sales in this area. The Company believes that the
long-term potential for growth in natural gas demand in North America remains
high due to environmental advantages of natural gas relative to other sources of
energy; however, market prices remain extremely volatile, with weather and
regional supply and demand imbalances causing the potential for large monthly
price swings. The Company has concentrated its domestic natural gas production
in its mid-continent division (Midgard), which encompasses the Texas Panhandle
and western Oklahoma. The Company's Sunray gas plant is located near the
intersection of three major interstate pipelines, giving the Company a choice of
markets for its gas sales, thereby enabling it to maximize prices. Approximately
25% of the Company's natural gas sales in 1995 were made directly to local gas
distribution companies and industrial and agricultural users through term
contracts, and the remaining 75% was sold on the spot market.

The Company sells crude oil, natural gas and natural gas liquids to a wide
number of customers, including refineries, industrial consumers and utilities.
Oil and gas are essentially commodities, and the Company's production represents
only a small fraction of the total world markets for these products. As a
result, the prices the Company receives depend primarily on the relative balance
between supply and demand in these markets.

The world oil market continues to be subject to uncertainty. Iraq has not
yet legally resumed oil sales due to its failure to agree to United Nations
imposed conditions on such sales, but the possibility of renewed Iraqi
production continues to overhang the market. Oil prices showed some positive
gains in 1995, but continue to be subject to volatile price swings due to the
maintenance of lower inventories by refining centers and increased competition
for the limited growth in demand in developed countries from additional
availabilities from non-OPEC countries and excessive OPEC production.

Health, Safety and Environmental Controls

Federal, state and local laws and regulations relating to health and
environmental quality in the United States as well as environmental laws and
regulations of other countries in which the Company operates affect nearly all
of the operations of the Company. These laws and regulations set various
standards regulating certain aspects of health and environmental quality,
provide for penalties and other liabilities for the violation of such standards
and establish in certain circumstances remedial obligations. In addition,
especially stringent measures and special provisions may be appropriate or
required in environmentally sensitive foreign areas of operation, such as those
in Ecuador.

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<PAGE> 11

Many of the Company's United States operations are subject to requirements
of the Safe Drinking Water Act, the Clean Water Act, the Clean Air Act (as
amended in 1990), the Occupational Safety and Health Act, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), and other federal, as well as state, laws. Such laws address, among
other things, limits on the discharge of wastes associated with oil and gas
operations, investigation and clean-up of hazardous substances, and workplace
safety and health. In addition, these laws typically require compliance with
associated regulations and permits and provide for the imposition of penalties
for noncompliance. The Clean Air Act Amendments of 1990 may benefit the
Company's business by increasing the demand for natural gas as a clean fuel.

The Company believes that its policies and procedures in the area of
pollution control, product safety and occupational health are adequate to
prevent unreasonable risk of environmental and other damage, and of resulting
financial liability, in connection with its business. Some risk of environmental
and other damage is, however, inherent in particular operations of the Company
and, as discussed below, the Company has certain potential liabilities
associated with former operations. The Company cannot predict what environmental
legislation or regulations will be enacted in the future or how existing or
future laws or regulations will be administered or enforced. Compliance with
more stringent laws or regulations, as well as more vigorous enforcement
policies of the regulatory agencies, could in the future require material
expenditures by the Company for the installation and operation of systems and
equipment for remedial measures and in certain other respects.

In connection with the sale of the Company's former chemical subsidiary,
Diamond Shamrock Chemicals Company ("Chemicals"), to Occidental Petroleum
Corporation ("Occidental") in 1986, the Company agreed to indemnify Chemicals
and Occidental from and against certain liabilities relating to the business or
activities of Chemicals prior to the September 4, 1986 closing date (the
"Closing Date"), including certain environmental liabilities relating to certain
chemical plants and waste disposal sites used by Chemicals prior to the Closing
Date.

In addition, the Company agreed to indemnify Chemicals and Occidental for
50% of certain environmental costs incurred by Chemicals for which notice is
given to the Company within 10 years after the Closing Date on projects
involving remedial activities relating to chemical plant sites or other property
used in the conduct of the business of Chemicals as of the Closing Date and for
any period of time following the Closing Date, with the Company's aggregate
exposure for this cost sharing being limited to $75 million. The total expended
by the Company under this sharing arrangement was about $39 million as of
December 31, 1995. Occidental Chemical Corporation ("OxyChem"), a subsidiary of
Occidental, and Henkel Corporation ("Henkel"), an assignee of certain of
Occidental's rights and obligations, have filed a declaratory judgment action in
Texas state court with respect to the Company's agreement in this regard. (See
"Item 3. Legal Proceedings.")

In connection with the spin-off of Diamond Shamrock R&M, Inc., now known as
Diamond Shamrock, Inc. ("DSI"), in 1987, the Company and DSI agreed to share the
costs of losses (other than product liability) relating to businesses disposed
of prior to the spin-off, including Chemicals. Pursuant to this cost-sharing
agreement, the Company bore the first $75 million of such costs and DSI bore the
next $37.5 million. Under the arrangement, such ongoing costs are now borne
one-third by DSI and two-thirds by the Company. This arrangement will continue
until DSI has borne an additional $47.5 million, following which such costs will
be borne solely by the Company. As of December 31, 1995, DSI's remaining
responsibility is approximately $8 million.

In 1995, the Company spent $6 million in environmental related expenditures
in its oil and gas operations. Expenditures in 1996 are expected to be
approximately $8 million.

The Company's total expenditures for environmental compliance for disposed
of businesses, including Chemicals, were approximately $38 million in 1995, $12
million of which was recovered from DSI under the above described cost-sharing
agreement. Those expenditures are projected to be approximately $23 million in
1996 after recovery from DSI under such agreement.

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<PAGE> 12

The insurance companies that wrote Chemicals' and the Company's primary and
excess insurance during the relevant periods have to date refused to provide
coverage for most of Chemicals' or the Company's cost of the personal injury and
property damage claims related to environmental claims, including remedial
activities at chemical plant sites and disposal sites. In two actions filed in
New Jersey state court, the Company has been conducting litigation against all
of these insurers for declaratory judgments that it is entitled to coverage for
certain of these claims. In 1989, the trial judge in one of the New Jersey
actions ruled that there is no insurance coverage with respect to the claims
related to the Newark plant (discussed below). The trial court's decision was
upheld on appeal and that action is now ended. The other suit, which is pending,
covers disputes with respect to insurance coverage related to certain other
environmental matters.

Newark, New Jersey. A consent decree, previously agreed upon by the U.S.
Environmental Protection Agency (the "EPA"), the New Jersey Department of
Environmental Protection and Energy (the "DEP") and Occidental, as successor to
Chemicals, was entered in 1990 by the United States District Court of New Jersey
and requires implementation of a remedial action plan at Chemicals' former
Newark, New Jersey agricultural chemicals plant. Engineering for such plan,
which will include an engineering estimate of the cost of construction, is
progressing. Construction is expected to begin in 1997, cost approximately $22
million and take three to four years to complete. The work is being supervised
and paid for by the Company pursuant to its above-described indemnification
obligation to Occidental.

Studies have indicated that sediments of the Newark Bay watershed,
including the Passaic River adjacent to the plant, are contaminated with
hazardous chemicals from many sources. Studies performed by the Company and
others suggest that contaminants historically discharged by the Newark plant are
buried under several feet of more recent sediment deposits and are not moving.
The Company, on behalf of Occidental, negotiated an agreement with the EPA under
which the Company is conducting further testing and studies to characterize
contaminated sediment in a six-mile portion of the Passaic River near the plant
site. The Company currently expects such testing and studies to be completed in
1999 and cost from $4 million to $6 million after December 31, 1995. The Company
has been conducting similar studies under its own auspices for several years.
Until these studies are completed and evaluated, the Company cannot reasonably
forecast what regulatory program, if any, will be proposed for the Passaic River
or the Newark Bay watershed.

Hudson County, New Jersey. Until 1972, Chemicals operated a chromium ore
processing plant at Kearny, New Jersey. According to the DEP, wastes from these
ore processing operations were used as fill material at a number of sites in
Hudson County.

As a result of negotiations between the Company (on behalf of Occidental)
and the DEP, Occidental signed an administrative consent order with the DEP in
1990 for investigation and remediation work at certain chromite ore residue
sites in Kearny and Secaucus, New Jersey. The work is being performed by the
Company on behalf of Occidental, and the Company is funding Occidental's share
of the cost of investigation and remediation of these sites and is currently
providing financial assurance for performance of the work in the form of a
self-guarantee in the amount of $20 million subject to the Company's continuing
ability to satisfy certain financial tests specified by the State. This
financial assurance may be reduced with the approval of the DEP following any
annual cost review. While the Company has participated in the cost of studies
and is implementing interim remedial actions and conducting remedial
investigations and feasibility studies, the ultimate cost of remediation is
uncertain. The Company anticipates submitting its investigation and feasibility
reports to the DEP in late 1996 or 1997. The results of the DEP's review of
these reports could impact the cost of any further remediation that may be
required. In addition, the DEP has indicated that it expects Occidental and the
Company to participate with the other chromium manufacturers in the funding of
certain remedial activities with respect to a number of so-called "orphan"
chrome sites located in Hudson County, New Jersey. Occidental and the Company
have declined participation as to those sites for which there is no evidence of
the presence of residue generated by Chemicals. The Governor of New Jersey
issued an Executive Order requiring state agencies to provide specific
justification for any state requirements more stringent than federal
requirements. The DEP has indicated that it may be revising its soil action
level upwards towards the higher soil screening levels proposed by the EPA in
1994.

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<PAGE> 13

Painesville, Ohio. From about 1912 through 1976, Chemicals operated
manufacturing facilities in Painesville, Ohio. The operations over the years
involved several discrete but contiguous plant sites over an area of about 1,300
acres. The primary area of concern historically has been Chemicals' former
chromite ore processing plant (the "Chrome Plant"). For many years, the site of
the Chrome Plant has been under the administrative control of the EPA pursuant
to an administrative consent order under which Chemicals is required to maintain
a clay cap over the site and to conduct certain ground water and surface water
monitoring. Many other sites have previously been clay-capped and one specific
site, which was a waste disposal site from the mid-1960s until the 1970s, has
been encapsulated and is being controlled and monitored. In September 1995, the
Ohio Environmental Protection Agency (the "OEPA") issued its Directors' Final
Findings and Order (the "Director's Order") by consent ordering that a remedial
investigation and feasibility study (the "RIFS") be conducted at the former
Painesville plant area. The Company has agreed to participate in the RIFS as
required by the Director's Order. It is estimated that the total cost of
performing the RIFS will be $3 million to $5 million over the next three years.
In spite of the many remedial, maintenance and monitoring activities performed,
the former Painesville plant sites have been proposed for listing on the
National Priority List under CERCLA; however, the EPA has stated that the site
will not be listed so long as it is satisfactorily addressed pursuant to the
Director's Order and OEPA's programs. The scope and nature of any further
investigation or remediation that may be required cannot be determined at this
time.

Other Former Plant Sites. Environmental remediation programs are in place
at all other former plant sites where material remediation is required in the
opinion of the Company. Former plant sites where remediation has been completed
are being maintained and monitored to insure continued compliance with
applicable laws and regulatory programs.

Third Party Sites. Chemicals has also been designated as a potentially
responsible party ("PRP") by the EPA under CERCLA with respect to a number of
third party sites, primarily off of Chemicals' properties, where hazardous
substances from Chemicals' plant operations allegedly were disposed of or have
come to be located. Numerous PRPs have been named at substantially all of these
sites. At several of these, Chemicals has no known exposure. Although PRPs are
almost always jointly and severally liable for the cost of investigations,
cleanups and other response costs, each has the right of contribution from other
PRPs and, as a practical matter, cost sharing by PRPs is usually effected by
agreement among them. Accordingly, the ultimate cost of these sites and
Chemicals' share of the costs thereof cannot be estimated at this time, but are
not expected to be material except possibly as a result of the matters described
below.

1. Fields Brook; Ashtabula, Ohio. At the time that Chemicals was sold to
Occidental, Chemicals operated a chemical plant at Ashtabula, Ohio which is
adjacent to Fields Brook. Occidental has continued to operate the Ashtabula
plant. In 1986, Chemicals was formally notified by the EPA that it was a PRP for
the Fields Brook site. The site is defined as Fields Brook, its tributaries and
surrounding areas within the Fields Brook watershed. At least 15 other parties
are presently considered to be financially responsible PRPs. In 1986, the EPA
estimated the cost of sediment remediation at the site would be $48 million. The
PRPs, including Occidental, have developed an allocation agreement for sharing
the costs of the work in Fields Brook ordered by the EPA. Under the allocation,
the Occidental share for Chemicals' ownership of the Ashtabula plant would be
about five percent of the total, assuming all viable PRPs were to participate.

In 1990, the OEPA, as state trustee for natural resources under CERCLA,
advised previously identified PRPs, including Chemicals, that the OEPA intended
to conduct a Natural Resource Damage Assessment of the Fields Brook site to
calculate a monetary value for injury to surface water, groundwater, air, and
biological and geological resources at the site. Also, although Fields Brook
empties into the Ashtabula River which flows into Lake Erie, it is not known to
what extent, if any, the EPA will propose remedial action beyond Fields Brook
for which the Fields Brook PRPs might be asked to bear some share of the costs.
Until all preliminary studies and necessary governmental actions have been
completed and negotiated or judicial allocations have been made, it is not
possible for the Company to estimate what the response costs, response
activities or natural resource damages, if any, may be for Fields Brook or
related areas, the parties responsible therefor or their respective shares.

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<PAGE> 14

It is the Company's position that costs attributable to the Ashtabula plant
fall under the Company's above-described cost sharing arrangement with
Occidental under which the Company bears one-half of certain costs up to an
aggregate dollar cap. Occidental, however, has contended that it is entitled to
full indemnification from the Company for such costs, and the outcome of this
dispute cannot be predicted.

2. French Limited Disposal Site; Crosby, Texas. The PRPs, including
Chemicals (represented by the Company), entered into a consent decree and a
related trust agreement with the EPA with respect to this disposal site. The
consent decree was entered by the federal court as a settlement of the EPA's
claim for remedial action. Chemical's share of the cost to complete remediation
at this site is expected to be approximately $500,000.

3. SCP/Carlstadt Site; Carlstadt, New Jersey. Chemicals' share of
remediation costs at this CERCLA site would be approximately one percent, based
on relative volume of waste shipped to the site. An interim remedy has now been
implemented at the site by the PRPs but no estimate can be made at this time of
ultimate costs of remediation which may extend to certain off-site locations.

4. Chemical Control Site; Elizabeth, New Jersey. The DEP has demanded of
PRPs (including Chemicals) reimbursement of the DEP's alleged $34 million
(including interest through December 31, 1995) in past costs for its partial
cleanup of this site. The PRPs and the EPA have settled the federal claims for
cost recovery and site remediation, and remediation is now complete. Based on
the previous allocation formula, it is expected that Chemicals' share of any
money paid to the DEP for its claim would be approximately two percent.

Employees

As of December 31, 1995, the Company had approximately 2,275 employees.

ITEM 3. LEGAL PROCEEDINGS.

In connection with the tender offer by YPFA Corp. and Merger, a number of
holders of Common Stock sued in the Chancery Court of the State of Delaware. In
the various complaints, the plaintiffs purported to sue individually and on
behalf of classes comprised of the holders of shares of Common Stock,
stockholders of the Company or all holders of the Company's securities. The
complaints named as defendants the Company, the directors and certain of the
officers of the Company, a former director of the Company and, with respect to
some of the complaints, YPF, and alleged, among other things, that the defendant
directors and officers of the Company breached their fiduciary duties in
approving the Offer and the Merger and that YPF aided and abetted the alleged
breach of duties. The plaintiffs purported to seek orders enjoining the
consummation of the Offer and the Merger (or the rescission of those
transactions) or, in the alternative, an accounting for any damages to the
alleged classes, together with their attorneys' fees and other relief. These
lawsuits were consolidated into one action and, in September 1995, were settled
with no payment to the class members. However, as a part of the settlement, the
Company was ordered to pay $800,000 in attorneys' fees to the plaintiffs' class
counsel.

In November 1995, OxyChem filed suit in Texas state court seeking a
declaration of certain of the parties' rights and obligations under the sales
agreement pursuant to which the Company sold Chemicals to Occidental. Henkel
joined in said lawsuit as a plaintiff in January 1996. Specifically, OxyChem and
Henkel are seeking a declaration that the Company is required to indemnify them
for 50% of certain environmental costs incurred on projects involving remedial
activities relating to chemical plant sites or other property used in connection
with the business of Chemicals on the Closing Date which relate to, result from
or arise out of conditions, events or circumstances discovered by OxyChem or
Henkel and as to which the Company is provided written notice by OxyChem or
Henkel prior to the expiration of ten years following the Closing Date,
irrespective of when OxyChem or Henkel incurs and gives notice of such costs,
subject to an aggregate $75 million cap. The Company believes that this lawsuit
is without merit and intends to defend same vigorously.

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<PAGE> 15

See also the heading "Health, Safety and Environmental Controls" under
"Items 1 and 2. Business and Properties" of this report for a description of
certain other legal proceedings, which description is incorporated herein by
reference.

The Company is involved in various other legal proceedings incidental to
its business, the outcome of any of which should not have a material adverse
effect on its financial position.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.

Inapplicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

There is no established public trading market for the Common Stock. At
March 1, 1996, YPF was the sole holder of record of the Common Stock.

Midgard and Maxus Indonesia, Inc., subsidiaries of the Company, are parties
to separate credit agreements which places certain restrictions on the ability
of these subsidiaries to make or declare certain payments, advances and loans
specified therein, including dividends to the Company. (For a further
description of these credit agreements, see "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations--Significant Events
1995"). While these restrictions could impact the ability of the Company to pay
dividends on its Common Stock, the Company has paid no such dividends since
1987, and cash flows are currently being dedicated to exploration and
development projects rather than to such payment. The Company intends to
continue paying regular quarterly dividends on its $4.00 Preferred Stock, $9.75
Cumulative Convertible Preferred Stock ("$9.75 Preferred Stock") and $2.50
Preferred Stock.

15
<PAGE> 16

ITEM 6. SELECTED FINANCIAL DATA.

FIVE-YEAR FINANCIAL SUMMARY
(DOLLARS IN MILLIONS, EXCEPT FOR PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 31, MARCH 31,
1995 1995 1994 1993 1992 1991
------------ ------------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Sales and operating revenues...... $ 463.8 $ 142.5 $ 682.1 $ 786.7 $ 718.4 $ 790.8
Net income (loss) before
extraordinary item and
cumulative effect of change in
accounting principle............ (73.7) (56.9) (22.7) (37.9) 74.2 (11.2)
Extraordinary item................ (7.1)
Cumulative effect of change in
accounting principle............ (4.4)
-------- -------- -------- -------- --------
Net income (loss)................. $ (73.7) $ (56.9) $ (22.7) $ (49.4) $ 74.2 $ (11.2)
FINANCIAL POSITION
Current assets.................... $ 266.4 $ 394.6 $ 441.9 $ 404.7 $ 391.2 $ 205.7
Current liabilities............... 306.4 224.3 171.0 263.4 327.9 249.3
Properties and equipment, less
accumulated depreciation,
depletion and amortization...... 2,363.6 1,110.7 1,088.4 1,305.6 1,138.3 1,075.2
Total assets...................... 2,716.8 1,692.1 1,706.7 1,987.4 1,811.6 1,451.5
Long-term debt, including current
portion......................... 1,295.5 975.6 975.6 1,055.1 829.4 788.9
Deferred income taxes............. 551.2 199.7 199.3 198.3 152.9 142.9
Redeemable preferred stock........ 125.0 125.0 125.0 250.0 250.0 250.0
Stockholders' equity (deficit).... 240.0 13.5 91.1 147.9 171.6 (55.9)
OTHER DATA
Expenditures for properties and
equipment--including dry
hole costs...................... $ 137.4 $ 53.6 $ 166.2 $ 340.0 $ 261.1 $ 272.3
Total exploration and development
expenditures (whether
capitalized or expensed)........ 165.5 60.6 197.2 376.8 256.7 303.0
Preferred dividends paid.......... 28.8 9.6 43.6 41.7 41.7 41.7
Depreciation, depletion and
amortization.................... 142.1 29.9 140.2 153.6 174.4 203.6
PER COMMON SHARE
Net income (loss) before
extraordinary item and
cumulative effect of change in
accounting principle............ $ (.76) $ (.49) $ (.49) $ (.60) $ .27 $ (.52)
Extraordinary item................ (.05)
Cumulative effect of change in
accounting principle............ (.03)
-------- -------- -------- -------- --------
Net income (loss)................. $ (.76) $ (.49) $ (.49) $ (.68) $ .27 $ (.52)
</TABLE>

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<PAGE> 17

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Significant Events 1995

On June 8, 1995, a special meeting of the stockholders of Maxus Energy
Corporation (the "Company" or "Maxus") was held to approve the Agreement of
Merger ("Merger Agreement") dated February 28, 1995, between the Company, YPF
Acquisition Corp. (the "Purchaser" or "YPFA Corp.") and YPF Sociedad Anonima
("YPF"). The holders of the Company's common stock, $1.00 par value per share
(the "Shares"), and $4.00 Cumulative Convertible Preferred Stock (the "$4.00
Preferred Stock" and together with the Shares, the "Voting Shares") approved the
Merger Agreement, and the Purchaser was merged into the Company (the "Merger")
on June 8, 1995 (the "Merger Date").

Pursuant to the Merger Agreement, a tender offer (the "Offer") was
commenced on March 6, 1995 by the Purchaser for all the outstanding Shares at
$5.50 per Share. Pursuant to the Offer, in April 1995 the Purchaser acquired
120,000,613 Shares representing approximately 88.5% of the then-outstanding
Shares of the Company. As a result of the Merger, each outstanding Share (other
than Shares held by the Purchaser, YPF or any of their subsidiaries or in the
treasury of the Company, all of which were cancelled in the second quarter of
1995, and Shares of holders who perfected their appraisal rights under Section
262 of the Delaware General Corporation Law) was converted into the right to
receive $5.50 in cash, and YPF became the sole holder of all outstanding Shares.
The Company's preferred stock, consisting of the $4.00 Preferred Stock, $2.50
Cumulative Preferred Stock (the "$2.50 Preferred Stock") and $9.75 Cumulative
Convertible Preferred Stock (the "9.75 Preferred Stock"), remain outstanding.
YPF currently owns approximately 96.9% of the outstanding Voting Shares.

The total amount of funds required by the Purchaser to acquire the entire
common equity interest in the Company, including the purchase of Shares pursuant
to the Offer and the payment for Shares converted into the right to receive cash
pursuant to the Merger, was approximately $762 million. On April 5, 1995, the
Purchaser entered into a credit agreement (the "Credit Agreement") with lenders
for which The Chase Manhattan Bank (National Association) ("Chase") acted as
agent, pursuant to which the lenders extended to the Purchaser a credit facility
for up to $550 million (the "Purchaser Facility"). On April 5, 1995, the
Purchaser borrowed $442 million under the Purchaser Facility and received a
capital contribution of $250 million from YPF. The Purchaser used borrowings
under the Purchaser Facility and the funds contributed to it by YPF to purchase
120,000,613 Shares pursuant to the Offer. Subsequent to the Merger, these Shares
and all other outstanding Shares vested in YPF.

Following the Merger, Chase provided two additional credit facilities
aggregating $425 million: (i) a credit facility of $250 million extended to
Midgard Energy Company ("Midgard"), a wholly owned subsidiary of the Company,
and (ii) a credit facility of $175 million extended to Maxus Indonesia, Inc.
("Holdings"), a wholly owned subsidiary of the Company. The proceeds of the
loans made pursuant to these facilities were used to repay, in part, the
Purchaser Facility, which was assumed by the Company pursuant to the Merger. In
addition, the Company applied $8 million of its available cash to repayment of
the Purchaser Facility and used approximately $86 million of its available cash
to pay holders of Shares converted into the right to receive cash in the Merger.

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<PAGE> 18

Significant Events 1994

Maxus responded to many financial and operational challenges in 1994 which
culminated with the Company's agreement to merge with YPF in 1995.

Financially, significant natural gas and crude oil price declines in 1994
contributed to Maxus' decision to streamline operations by decreasing overhead
and operating expenses, lowering program spending and redeeming certain
preferred stock. During the second quarter of 1994, the Company also sold its
interest in Diamond Shamrock Offshore Partners Limited Partnership ("Offshore
Partners") and certain producing oil and gas properties in Maxus' U.S. Southern
Division for $325 million net ("the Divested Properties"). Additionally, the
Company sold its geothermal subsidiary, Thermal Power Company, for approximately
$58 million net in cash and a note for $6.5 million. A portion of the proceeds
from these sales was used to reduce debt and redeem 625,000 shares of the $9.75
Preferred Stock for $63 million.

Operationally, the Company initiated production from all three of Maxus'
South American operations--Ecuador, Bolivia and Venezuela. The Sunray gas plant
experienced its first full year of operation and achieved the operating
efficiencies and cost savings (approximately $14 million annually) that had been
anticipated. Additionally, net production from the Northwest Java gas project
averaged approximately 44 million cubic feet per day ("mmcfpd") during 1994,
resulting in $30 million of additional revenues.

Results for the Nine Months Ended December 31, 1995

For the nine months ended December 31, 1995, Maxus reported a net loss of
$74 million. Comparative information for the nine months ended December 31,
1994, is not presented due to the Merger with YPF which was effective April 1,
1995.

Sales and Operating Revenues. Sales and operating revenues for the nine
months ended December 31, 1995, were $464 million composed of $298 million from
Maxus' Indonesian operations, $129 million from U.S. operations and $37 million
from South American operations.

Maxus' net worldwide crude oil sales volumes were 64 thousand barrels per
day ("mbpd") during the nine-month period ended December 31, 1995, which were
comprised of 53 mbpd from Maxus' Indonesian operations, 10 mbpd from South
American operations and one mbpd from U.S. operations. Maxus' net worldwide
crude oil sales volumes increased from 60 mbpd in the third quarter of 1995 to
73 mbpd in the fourth quarter of 1995 due primarily to the recognition of
cumulative year-to-date production from the Southern Amo Field in Ecuador in the
fourth quarter of 1995, as this production had not previously been approved by
the Ecuadorian government, and the sole crude oil sale in Bolivia in October
1995. Despite natural declines in gross crude oil production in Indonesia over
the nine months ended December 31, 1995, Indonesian crude oil sales volumes
increased slightly due primarily to higher cost recovery. During the nine months
ended December 31, 1995, Maxus' average worldwide crude oil price was $16.31 per
barrel.

During the nine-month period ended December 31, 1995, U.S. natural gas
sales volumes were 172 mmcfpd and U.S. natural gas prices averaged $1.49 per
thousand cubic feet ("mcf"). Although U.S. natural gas sales volumes remained
relatively flat over the nine months ended December 31, 1995, the success of the
1995 Midgard infill drilling program offset the natural declines from the area.
In the future, Maxus expects its Midgard infill drilling program to continue to
offset any natural declines. U.S. natural gas prices rose from $1.40 per mcf in
the third quarter of 1995 to $1.64 per mcf in the fourth quarter of 1995 which
favorably impacted revenues $4 million. During the nine-month period ended
December 31, 1995, Northwest Java natural gas sales volumes were 61 mmcfpd and
Northwest Java natural gas prices averaged $2.62 per mcf.

Natural gas liquids sales volumes in the U.S. were 18 mbpd and U.S. natural
gas liquids prices averaged $10.49 per barrel.

Costs and Expenses. Costs and expenses were $536 million during the nine
months ended December 31, 1995. Costs and expenses during this period included
operating expenses of $174 million; gas purchase costs of

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$41 million; exploration expenses of $51 million; depreciation, depletion and
amortization ("DD&A") of $142 million; interest and debt expenses of $105
million and other costs and expenses totaling $23 million.

DD&A of $142 million during the nine-month period ended December 31, 1995,
included $43 million of additional DD&A reflecting the impact of the purchase
price allocation which increased the book value of the Company's oil and gas
properties and equipment. The book value of oil and gas properties and equipment
increased approximately $1.3 billion as a result of the purchase price
allocation.

In the nine-month period ended December 31, 1995, interest and debt
expenses of $105 million included $27 million of interest expense associated
with the Purchaser Facility and, Midgard and Holdings credit facilities. Also
included in interest and debt expenses during this period was $6 million of
interest associated with the accretion of discount on the Company's long-term
debt which was outstanding prior to the Merger. These borrowings were recorded
at their fair market value in the purchase method of accounting which resulted
in a reduction in their carrying value of $115 million. This reduction in
carrying value will be amortized to interest expense over the remaining term of
the borrowings.

Other Revenues, Net. During the nine months ended December 31, 1995, other
revenues, net were $7 million which included $10 million of interest income, a
$2 million gain which represented the final settlement of the Company's sole
interest rate swap agreement prior to its termination and a $2 million gain
recognized on the sale of U.S. Treasury notes partially offset by a $3 million
production bonus payment stemming from the Company's Indonesian operations and
$5 million of accrued expenses. In the future, the Company anticipates
recognizing less interest income as a result of maintaining only minimal
balances of cash, cash equivalents and short-term investments to cover working
capital fluctuations. Capital contributions from YPF are expected to cover any
additional funding needs.

Income Taxes. Income tax expense of $9 million for the nine-month period
ended December 31, 1995, included $63 million of current foreign income tax
expense primarily from Indonesian operations partially offset by a $49 million
deferred tax benefit due primarily to the higher DD&A associated with the
increase in book value of the Company's oil and gas properties and equipment as
a result of the purchase price allocation. In addition, the Company received $5
million of interest income on U.S. federal income tax refunds. This interest
income was not previously accrued in prior periods. In the future, the Company
expects to realize additional deferred tax benefits as a result of the higher
DD&A.

Comparison of Results

Three Months Ended March 31, 1995 vs. Three Months Ended March 31, 1994

Maxus reported a net loss of $57 million for the first quarter of 1995
compared to a net loss of $11 million for the first quarter of 1994. The first
quarter 1995 results reflect $42 million of pre-Merger costs incurred by the
Company prior to the Merger. Such costs included expenses associated with
financial consulting and legal services, severance payments pursuant to change
of control agreements and payments for surrender of stock options and restricted
stock.

Sales and Operating Revenues. Sales and operating revenues for the first
quarter of 1995 were $143 million, compared to $187 million for the same 1994
period. The loss of production from the Divested Properties which were sold in
the second quarter of 1994 and lower volumes of purchased gas accounted for $45
million of the revenue decline. Additionally, U.S. natural gas prices fell,
which also unfavorably impacted revenues $12 million for the three months ended
March 31, 1995. These declines were partially offset by first quarter 1995
revenue of $8 million from South America. Initial sales from the Company's South
American operations were recorded in the third quarter 1994.

Net worldwide crude oil production was 60 mbpd in the first quarter 1995,
compared to 69 mbpd in the same quarter a year ago. Domestic crude oil volumes
declined four mbpd during the period due to the loss of production from the
Divested Properties resulting in lower revenues of $5 million. Crude oil sales
from the Company's Indonesian operations were also down 12 mbpd during the
period primarily as a result of lower entitlements due to higher crude oil sales
prices and lower production. Offsetting these declines, production from South
America of seven mbpd provided an additional $8 million of revenues in 1995.

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U. S. natural gas sales for the first quarter of 1995 were 167 mmcfpd, a
decrease of 208 mmcfpd as compared to the first quarter 1994 resulting in lower
revenues of $42 million. The decline was driven by the loss of production from
the Divested Properties and lower volumes of gas purchased for resale. The
average gas price received in the U. S. was $1.45 per mcf in the first quarter
1995 as compared to $2.24 per mcf in the same 1994 period.

Northwest Java natural gas volumes of 40 mmcfpd in the first quarter 1995
were eight mmcfpd higher than the first quarter 1994. Natural gas sales prices
improved to an average of $2.65 per mcf during the first quarter 1995 from $1.81
per mcf during the same period last year due to the change in contract terms
which increased the price received for "old" gas production from $0.20 per mcf
to $2.65 per mcf effective January 1, 1995. The higher Northwest Java natural
gas volumes coupled with the higher average natural gas price resulted in
increased revenues of $4 million in the first quarter of 1995.

Natural gas liquids sales in the U. S. for the first quarter 1995 were 18
mbpd, a slight decrease over first quarter last year. The average sales price
for U.S. natural gas liquids in the first quarter of 1995 was $10.38 per barrel,
an increase of $1.15 per barrel from 1994.

Costs and Expenses. Costs and expenses for the first quarter of 1995 were
$190 million which were relatively flat compared to the first quarter of 1994.
Costs and expenses for the first quarter of 1995 included Maxus pre-Merger costs
of $42 million which were partially offset by lower gas purchase costs of $31
million when compared to the first quarter of 1994.

Gas purchase costs were $31 million lower in the first quarter of 1995 as
compared to first quarter 1994 due to the lower volumes of gas purchased to
aggregate with the production from the Divested Properties, the reduction in
volumes of gas purchased for resale and lower natural gas prices.

DD&A of $30 million for the first quarter 1995 was $8 million lower than
the same period of the prior year. Approximately $11 million of this decline
represents DD&A from the Divested Properties included in the first quarter of
1994. Partially offsetting this decline was $4 million of DD&A in the first
quarter of 1995 associated with South American operations which did not go into
production until late 1994.

Income Taxes. Income tax expense was $19 million and $16 million in the
first quarters of 1995 and 1994, respectively. The increase in income tax
expense was primarily due to higher Indonesian taxes as a result of increased
taxable income from the Company's Indonesian operations.

Comparison of Results

Twelve Months Ended December 31, 1994 vs. Twelve Months Ended December 31,
1993

Maxus reported a net loss of $23 million in 1994 compared to a net loss of
$49 million in 1993.

Sales and Operating Revenues. Sales and operating revenues dropped 13%, or
$105 million, during 1994 when compared to 1993. The loss of production from the
Divested Properties and lower volumes of purchased gas which were aggregated and
sold with the production from the Divested Properties accounted for $86 million
of the revenue decline. Additionally, worldwide oil and gas prices fell, which
further compounded the loss of revenues. However, initial production from South
America and new gas production from Northwest Java added $54 million to revenues
during 1994, partially offsetting the overall negative revenue variances.

The Company's total net crude oil production was 67 mbpd in 1994,
essentially flat compared to 1993. Production from South American operations
added five mbpd during 1994 and favorably impacted revenues by $24 million.
Crude oil volumes in the United States declined three mbpd, resulting in a $15
million negative volume variance, primarily from the loss of production from the
Divested Properties. Crude oil sales from the Company's Indonesian operations
were also down approximately three mbpd ($20 million negative volume variance),
primarily in Northwest Java. A portion of the 1994 decline was the result of
temporary production problems, which were corrected. Also, the 1993 volumes in
Northwest Java reflected additional barrels received through cost recovery due
to the substantial capital outlay for the gas project, which was completed in
late 1993. Maxus' 1994 average worldwide crude price hit a five-year low of
$15.31 per barrel, negatively impacting income by $39 million.

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United States natural gas sales volumes fell from 365 mmcfpd to 275 mmcfpd
in 1994 with the decline attributable to the loss of production from the
Divested Properties and the decrease in purchased gas volumes which were
aggregated and sold with the production from the Divested Properties. The
decline was partially offset by increased sales volumes of nine mmcfpd from
Midgard. United States natural gas revenues declined approximately $83 million
during 1994, with $68 million occurring as a result of the Divested Properties
and $14 million attributable to declining prices. Maxus' United States natural
gas prices averaged $1.95 per mcf in 1994 and $2.08 per mcf in 1993.

Northwest Java gas volumes increased from 13 mmcfpd in 1993 to 44 mmcfpd
during 1994. The Company realized an additional $30 million of revenues during
1994 from the Northwest Java gas project, which came on stream in fourth quarter
1993.

Natural gas liquids sales in the United States increased slightly from 17.4
mbpd to 17.9 mbpd in 1994 but average prices received declined from $11.14 per
barrel in 1993 to $10.07 per barrel. Overall, liquids revenues were down $5
million compared to 1993 due to the price declines.

Costs and Expenses. Costs and expenses, excluding restructuring, were $728
million in 1994 compared to $781 million in 1993. The decline was primarily due
to the elimination of expenses related to the Divested Properties.

Overall, operating expenses were down $21 million, of which approximately
$15 million related to the Divested Properties. Operating expenses declined in
Indonesia as well as in the United States, but were partially offset by the
additional operating expenses incurred in South America due to the start-up of
production in Ecuador, Bolivia and Venezuela.

Gas purchase costs were $39 million lower than 1993 primarily as a result
of lower purchased gas prices and the reduction in volumes of purchased gas
which were previously aggregated and sold with the production from the Divested
Properties.

Exploration expenses were $24 million lower than 1993 due to management's
decision to curtail exploratory spending in new frontiers during 1994. The
Company had previously announced its decision to concentrate spending in its
core areas of the United States and Indonesia and its emerging areas in South
America.

DD&A declined $13 million in 1994. The Divested Properties created a $32
million favorable variance. Partially offsetting this favorable variance was a
$7 million increase in DD&A in South America due to the start-up of production
in Ecuador, Bolivia and Venezuela. DD&A in Indonesia was also up $13 million as
a result of higher DD&A rates and additional depreciation from the Northwest
Java gas project, which came on-stream in fourth quarter 1993.

The Company increased its reserve for environmental liabilities in 1994 by
$60 million, primarily in response to the EPA's recently proposed chromium
clean-up standards and for additional costs expected to be incurred at the
Company's former Newark, New Jersey plant site. The 1993 environmental accrual
of $18 million related to expected costs of engineering studies for the Passaic
River in New Jersey and the Newark plant site.

Restructuring. The 1994 results reflect a $101 million pre-tax net benefit
from the Company's restructuring activities, which included a pre-tax gain of
$202 million from the Divested Properties. This gain was partially offset by
restructuring costs, including a non-cash, pre-tax $70 million write-off
associated with the Company's undeveloped Alaska coal leases. The restructuring
also included costs associated with staff reductions and the write-off of
non-producing assets outside the Company's core areas.

Other Revenues, Net. Other revenues, net were approximately $31 million
lower in 1994 compared to 1993. This decline was due primarily to a loss of $13
million stemming from the sale of the Company's geothermal subsidiary in the
third quarter of 1994 and to gains recorded on the sale of investments in U.S.
Treasury notes and other securities of $12 million during 1993.

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Income Taxes. The Company's provision for income taxes in 1994 was
comprised primarily of Indonesian income tax. The 1994 Indonesian tax was $12
million less than that of 1993 as a result of lower operating profit. United
States federal and state taxes increased $9 million in 1994 compared to 1993.
This increase was the result of tax on asset sales, which was offset by tax
benefit from the write-off of undeveloped Alaska coal leases and the favorable
resolution of a federal tax refund suit.

Change in Accounting Principle. In 1993, Maxus adopted Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits," which requires an accrual method of recognizing
postemployment benefits. The Company recognized a one-time charge of $4 million
to recognize the cumulative effect of the change in accounting for
postemployment benefits.

Extraordinary Item. During 1993, the Company recorded an extraordinary loss
of $7 million after tax, representing call premium and unamortized issuance
costs for the early retirement of debt. Approximately $115 million of
outstanding 11 1/4% sinking fund debentures were redeemed at 105.329% of the
principal amount.

Liquidity and Capital Resources

Liquidity refers to the ability of an enterprise to generate adequate
amounts of cash to satisfy its financial needs. Maxus' primary needs for cash
are to fund its exploration and development program, service debt, pay existing
trade obligations, meet redemption obligations on redeemable preferred stock and
pay dividends to preferred stockholders. The Company's primary sources of
liquidity have been from operating activities, asset sales, debt financing and
equity issuances.

Pursuant to the Merger Agreement, in the event that the Company is unable
to meet its obligations as they come due, whether at maturity or otherwise,
including, solely for the purposes of this undertaking, dividend and redemption
payments with respect to the $9.75 Preferred Stock, the $4.00 Preferred Stock
and the $2.50 Preferred Stock, YPF has agreed to capitalize the Company in an
amount necessary to permit the Company to meet such obligations; provided that
YPF's aggregate obligation will be: (i) limited to the amount of debt service
obligations under the Purchaser Facility, the Midgard credit facility and the
Holdings credit facility and (ii) reduced by the amount, if any, of capital
contributions by YPF to the Company after the Merger Date and by the amount of
the net proceeds of any sale by the Company of common stock or non-redeemable
preferred stock after the Merger Date. The foregoing obligations of YPF (the
"Keepwell Covenant") will survive until June 8, 2004. In addition, YPF has
guaranteed the Company's outstanding debt as of the Merger Date, the principal
amount of which was approximately $976 million. The debt covered by the YPF
guarantee includes the Company's outstanding 11 1/4%, 11 1/2% and 8 1/2% Sinking
Fund Debentures, its outstanding 9 7/8%, 9 1/2% and 9 3/8% Notes, and its
outstanding medium-term notes. YPF has also guaranteed the payment and
performance of the Company's obligations to the holders of its $9.75 Preferred
Stock.

Each of the Midgard facility and the Holdings facility contains restrictive
covenants including limitations upon the sale of assets, mergers and
consolidations, the creation of liens and additional indebtedness, investments,
dividends, the purchase or repayment of subordinated indebtedness, transactions
with affiliates and modifications to certain material contracts. The obligors
under the Midgard facility and the Holdings facility may not permit (a)
consolidated tangible net worth to be less than $200 million, in the case of the
Midgard facility, or $350 million, in the case of the Holdings facility, plus
(or minus), in the case of Midgard, the amount of any adjustment in the book
value of assets or, in the case of Holdings, 70% of the amount of any adjustment
to net worth, resulting from the merger of YPFA Corp. into the Company, (b) the
ratio of consolidated cash flow to consolidated debt service to be less than 1.1
to 1.0 at the end of any fiscal quarter and (c) the ratio of consolidated cash
flow to consolidated interest expense to be less than 1.25 to 1.0 at the end of
any fiscal quarter. In addition, mandatory prepayments of the loans under the
Midgard facility and the Holdings facility may be required in connection with
certain asset sales and casualty losses, upon the issuance of subordinated
indebtedness and in 1996 and in each year thereafter if, after semi-annual
review, the agent and the lenders determine that a borrowing base deficiency
exists. No borrowing base deficiencies existed at December 31, 1995.

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Maxus has guaranteed the obligation under the Midgard facility (the
"Midgard Guaranty") and under the Holdings facility (the "Subsidiaries
Guaranty"). The Midgard Guaranty and the Subsidiaries Guaranty contain
restrictions upon mergers and consolidations, the creation of liens and the
business activities in which Maxus and its subsidiaries may engage. In addition,
Midgard, in the case of the Midgard Guaranty, and Holdings and its subsidiaries,
in the case of the Subsidiaries Guaranty, are required to be wholly owned
subsidiaries of Maxus, except to the extent YPF or a subsidiary of YPF (other
than Maxus or a subsidiary of Maxus) makes capital contributions to Midgard or
Holdings or one of Holdings subsidiaries, as the case may be.

In management's opinion, cash on hand and cash from operations will be
inadequate to fund the 1996 program spending budget, service debt, meet
redemption obligations on redeemable preferred stock and pay preferred stock
dividends and trade obligations. During 1996 through the date of this report,
YPF has made capital contributions to the Company in the aggregate amount of $64
million pursuant to the terms of the Keepwell Covenant. It is anticipated that
YPF could be required to make capital contributions in 1996 totaling
approximately $200 million to $250 million to fund the Company's obligations.
Actual capital contributions made by YPF could vary significantly depending on,
among other circumstances, oil and gas prices and program spending commitments.
Such capital contributions will be credited to YPF's obligations under the
Keepwell Covenant and will entitle YPF to shares of Common Stock.

Operating Activities. During the nine months ended December 31, 1995, net
cash provided by operating activities was $57 million. Excluding the change in
working capital requirements, net cash from operating activities was $44 million
during this period. Working capital requirements provided an additional $13
million primarily as a result of U.S. federal income tax refunds of
approximately $60 million. These tax refunds were partially offset by lower
accrued liabilities of $32 million due primarily to payment of Maxus pre-Merger
costs coupled with higher inventories of $13 million.

Net cash provided by operating activities during the three months ended
March 31, 1995, was $62 million of which $18 million was provided by operating
activities and $44 million was from working capital. Working capital was
favorably impacted by higher accrued liabilities of $26 million of which $11
million was due to higher accrued interest, lower oil and gas receivables of $24
million and a U.S. federal income tax refund of $9 million partially offset by
lower accounts payable of $15 million.

Net cash provided by operating activities totaled $70 million and $137
million in 1994 and 1993, respectively. Excluding the change in working capital
requirements, net cash from operating activities was $58 million lower in 1994
than in 1993. Cash flow from operations was negatively impacted by lower crude
oil and natural gas prices, the loss of production from the Divested Properties
and costs associated with staff reductions, but was partially offset by
additional gas volumes from Northwest Java ($30 million). Net working capital
requirements of $42 million for 1994 were $9 million higher than 1993 due to
lower accounts payable primarily as a result of timing of expenditures in
Ecuador.

Investing Activities. During 1995, the Company continued to concentrate its
capital spending in core areas of the United States, Indonesia and Ecuador plus
development of the emerging areas: the Mamore Block in Bolivia and the
Quiriquire Block in Venezuela. Spending in 1995 increased modestly compared to
1994, with the largest increase occurring in the U.S. due to the implementation
of an aggressive program of infill drilling designed to increase production and
cash flow. Only Ecuador experienced lower capital spending in 1995 as spending
for major infrastructure and facilities was completed in 1994. Approximately 45%
of the 1994 capital spending was for development of oil reserves in South
America. Initial production began in the third quarter of 1994 in Ecuador,
Bolivia and Venezuela. Spending in Ecuador in 1994 was $31 million below 1993 as
spending for major infrastructure and facilities was being completed. In 1993,
the development of gas reserves in Northwest Java and development of Block 16 in
Ecuador alone accounted for $167 million of spending. The Northwest Java gas
project was completed on time and within budget in the fourth quarter of 1993.
Additionally, construction of the Sunray gas plant in the Texas Panhandle, which
was started in mid-1991, was completed during the first quarter of 1993.

In December 1995, the Company sold its overriding royalty interest in the
Recetor Block in Colombia for $25 million. There was no gain or loss recognized
on this transaction.

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On April 25, 1994, Offshore Partners sold its interests in Main Pass Blocks
72, 73 and 74. On April 26, 1994, Maxus and its subsidiaries sold all of their
partnership interests in Offshore Partners. In the second quarter of 1994, Maxus
also sold the McFarlan Field and Grand Isle Block 25, both producing oil and gas
properties. In total, the Company received $325 million of proceeds and recorded
a pre-tax gain of $202 million from these transactions. A portion of the
proceeds from these sales was used to reduce senior debt by $70 million net and
to redeem $63 million of the $9.75 Preferred Stock due in February 1995.

During the second quarter of 1994, Maxus Bolivia, Inc., a subsidiary of
Maxus, signed an agreement to take BHP Petroleum as a partner in its Bolivian
oil development project. The Company received $10 million from BHP in exchange
for a 50% interest in the project. Also during the second quarter of 1994, Maxus
Venezuela (C.I.) Ltd. ("Maxus Venezuela"), a subsidiary of Maxus, signed an
agreement with BP Exploracion de Venezuela S.A., granting BP a 45% interest in
the Quiriquire Unit in eastern Venezuela. Maxus Venezuela remains the operator
with a 50% interest and Corporacion Energetica S. 21, C.A., a Venezuelan
company, holds the remaining 5%.

The Company sold its geothermal subsidiary, Thermal Power Company, in
September 1994. The sale was for $58 million net in cash and a $7 million
promissory note due from the purchaser in 1997. The Company recorded a loss of
$13 million on the transaction.

In 1993, the Company purchased $52 million of U.S. Treasury notes. To
partially fund the 1993 capital program budget and cover working capital
fluctuations, the Company subsequently sold $142 million of U.S. Treasury notes
realizing a gain of $8 million. Additionally, during 1993, Maxus received stock
and other securities from The LTV Corporation ("LTV") in settlement of its
bankruptcy claims against LTV. The Company sold these securities for
approximately $22 million, realizing a $2 million gain. During 1994, the Company
purchased an additional $112 million of short-term investments with the proceeds
from the sales of assets. To partially fund the capital program budget and pay
Merger-related costs in 1995, the Company liquidated all its short-term
investments. Additionally, the Company sold its remaining long-term investment
in U.S. Treasury notes for $31 million realizing a gain on the sale of $2
million. In the future, the Company anticipates maintaining only minimal
balances of cash, cash equivalents and short-term investments to cover working
capital fluctuations.

During 1995, the Company was able to release a significant portion of its
restricted cash, of which $48 million supporting letters of credit were released
and $17 million of assets held in trust as required by certain insurance
policies were released due to YPF's guarantees. Additionally, in 1995, the
Company restricted $8 million as required by the Holdings credit agreement.
During 1993, the Company restricted $36 million backing its spending commitment
in Venezuela. The $36 million in restricted cash backing the letters of credit
in Venezuela were released in 1994 when the Company took on a partner and
reduced its interest to 50%.

Financing Activities. During 1995, most of Maxus' financing activity was
impacted by the Merger. The Company received $851 million from the issuance of
debt under the Purchaser Facility and the Midgard and Holdings credit facilities
and a $250 million capital infusion from YPF to partially fund the Merger. In
connection with the Merger, the Company also paid $14 million to redeem rights
attached to Shares, repaid the Purchaser Facility, and, pursuant to the Merger,
either assumed or paid $746 million of purchase consideration for the Shares
outstanding plus transaction costs. Of the approximate $762 million purchase
price paid by YPF to acquire the Company, as of December 31, 1995, $16 million
remained to be paid in respect of Shares and Merger costs. This liability was
recorded in accrued liabilities.

At December 31, 1995, the Company had $7 million of advances outstanding
from YPF. The Company and YPF intend to enter into a loan agreement during 1996
to facilitate short-term loans by YPF to the Company and short-term loans by the
Company to YPF of excess cash balances. It is expected that loans will be made
by the parties under the loan agreement during 1996; however, the number and
amounts thereof are not presently known.

The Company's only derivative financial instruments are an interest rate
swap agreement, natural gas price swap agreements and natural gas and crude oil
futures contracts, which are not used for trading purposes. During the third
quarter of 1995 the Company recorded a $2 million gain which represented the
final

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settlement of the Company's sole interest rate swap agreement prior to its
termination. This gain was recorded in other revenues, net. The Company also
received a $5 million termination payment, which has been deferred.

Over the two-year period from January 1, 1993, to December 31, 1994, Maxus
took steps to restructure its debt and equity position. The overall intent was
to provide immediate funding for its major development and construction projects
(the Sunray gas plant, the Northwest Java gas project and the development of
Block 16 in Ecuador) and to match the repayment schedules of the debt with the
future cash flow expected from these projects while maintaining necessary
working capital balances required for flexibility. The Company was able to take
advantage of lower interest rates and, at the same time, to extend the average
debt maturities.

Debt rose significantly in 1993 due to the completion of two of the
Company's major projects and the near completion of the initial phase of the
Ecuador project. These projects contributed to substantial capital spending in
1993. To cover the shortfall between cash from operations and the cash used in
investing activities, incremental new debt was issued. Of the $412 million
proceeds received in 1993 from the issuance of long-term debt, $204 million was
used to refinance currently maturing debt and to fund the early retirement of a
portion of the Company's 11 1/4% sinking fund debentures, with the remainder
partially funding the 1993 capital spending program.

During 1994, the Company issued $101 million of additional long-term debt.
Debt issuances, along with a portion of the proceeds from asset sales, were used
to repay approximately $170 million of debt obligations due 1994 and beyond and
to prepay $63 million of $9.75 Preferred Stock due in February 1995.

In 1993, Maxus issued a new class of preferred stock, the $2.50 Preferred
Stock. Of the $85 million in net proceeds received from the offering, $63
million was used to redeem 625,000 shares of $9.75 Preferred Stock as required
in February 1994.

Accounting Standards

Environmental Matters

Federal, state and local laws and regulations relating to health and
environmental quality in the United States, as well as environmental laws and
regulations of other countries in which the Company operates, affect nearly all
of the operations of the Company. These laws and regulations set various
standards regulating certain aspects of health and environmental quality,
provide for penalties and other liabilities for the violation of such standards
and establish in certain circumstances remedial obligations. In addition,
especially stringent measures and special provisions may be appropriate or
required in environmentally sensitive foreign areas of operation, such as those
in Ecuador.

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and workplace safety and health. In addition, these laws typically require
compliance with associated regulations and permits and provide for the
imposition of penalties for noncompliance. The Clean Air Act Amendments of 1990
may benefit the Company's business by increasing the demand for natural gas as a
clean fuel.

In addition, the Company agreed to indemnify Chemicals and Occidental for
50% of certain environmental costs incurred by Chemicals for which notice is
given to the Company within 10 years after the Closing Date on projects
involving remedial activities relating to chemical plant sites or other property
used in the conduct of the business of Chemicals as of the Closing Date and for
any period of time following the Closing Date, with the Company's aggregate
exposure for this cost sharing being limited to $75 million. The total expended
by the Company under this cost sharing arrangement was about $39 million as of
December 31, 1995. Occidental Chemical Corporation ("OxyChem"), a subsidiary of
Occidental, and Henkel Corporation ("Henkel"), an assignee of certain of
Occidental's rights and obligations, have filed a declaratory judgment action in
Texas state court with respect to the Company's agreement in this regard (see
"Legal Proceedings").

For the year ended December 31, 1995, the Company spent $6 million in
environmental related expenditures in its oil and gas operations. Expenditures
in 1996 are expected to be approximately $8 million.

The Company's total expenditures for environmental compliance for disposed
of businesses, including Chemicals, were approximately $38 million in 1995, $12
million of which were recovered from DSI under the above described cost-sharing
agreement. Those expenditures are projected to be approximately $23 million in
1996 after recovery from DSI under such agreement.

At December 31, 1995, reserves for the environmental contingencies
discussed herein totaled $119 million. Management believes it has adequately
reserved for all environmental contingencies which are probable and can be
reasonably estimated; however, changes in circumstances could result in changes,
including additions, to such reserves in the future.

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the personal injury and property damage claims related to environmental claims,
including remedial activities at chemical plant sites and disposal sites. In two
actions filed in New Jersey state court, the Company has been conducting
litigation against all of these insurers for declaratory judgments that it is
entitled to coverage for certain of these claims. In 1989, the trial judge in
one of the New Jersey actions ruled that there is no insurance coverage with
respect to the claims related to the Newark plant (discussed below). The trial
court's decision was upheld on appeal and that action is now ended. The other
suit, which is pending, covers disputes with respect to insurance coverage
related to certain other environmental matters.

Newark, New Jersey. A consent decree, previously agreed upon by the U.S.
Environmental Protection Agency (the "EPA"), the New Jersey Department of
Environmental Protection and Energy (the "DEP") and Occidental, as successor to
Chemicals, was entered in 1990 by the United States District Court of New Jersey
and requires implementation of a remedial action plan at Chemicals' former
Newark, New Jersey agricultural chemicals plant. Engineering for such plan,
which will include an engineering estimate of the cost of construction, is
progressing. Construction is expected to begin in 1997, cost approximately $22
million and take three to four years to complete. The work is being supervised
and paid for by the Company pursuant to its above described indemnification
obligation to Occidental. The Company has fully reserved the estimated costs of
performing the remedial action plan and required ongoing maintenance costs.

Studies have indicated that sediments of the Newark Bay watershed,
including the Passaic River adjacent to the plant, are contaminated with
hazardous chemicals from many sources. Studies performed by the Company and
others suggest that contaminants historically discharged by the Newark plant are
buried under several feet of more recent sediment deposits and are not moving.
The Company, on behalf of Occidental, negotiated an agreement with the EPA under
which the Company is conducting further testing and studies to characterize
contaminated sediment in a six-mile portion of the Passaic River near the plant
site. The Company currently expects such testing and studies to be completed in
1999 and cost from $4 million to $6 million after December 31, 1995. The Company
has reserved its estimate of the remaining costs to be incurred in performing
these studies as of December 31, 1995. The Company has been conducting similar
studies under its own auspices for several years. Until these studies are
completed and evaluated, the Company cannot reasonably forecast what regulatory
program, if any, will be proposed for the Passaic River or the Newark Bay
watershed and therefore cannot estimate what additional costs, if any, will be
required to be incurred.

As a result of negotiations between the Company (on behalf of Occidental)
and the DEP, Occidental signed an administrative consent order with the DEP in
1990 for investigation and remediation work at certain chromite ore residue
sites in Kearny and Secaucus, New Jersey. The work is being performed by the
Company on behalf of Occidental, and the Company is funding Occidental's share
of the cost of investigation and remediation of these sites and is currently
providing financial assurance for performance of the work in the form of a
self-guarantee in the amount of $20 million subject to the Company's continuing
ability to satisfy certain financial tests specified by the State. This
financial assurance may be reduced with the approval of the DEP following any
annual cost review. While the Company has participated in the cost of studies
and is implementing interim remedial actions and conducting remedial
investigations and feasibility studies, the ultimate cost of remediation is
uncertain. The Company anticipates submitting its investigation and feasibility
reports to the DEP in late 1996 or 1997. The results of the DEP's review of
these reports could impact the cost of any further remediation that may be
required. The Company has reserved its best estimate of the remaining cost to
perform the investigations and remedial work as being $50 million at December
31, 1995. In addition, the DEP has indicated that it expects Occidental and the
Company to participate with the other chromium manufacturers in the funding of
certain remedial activities with respect to a number of so-called "orphan"
chrome sites located in Hudson County, New Jersey. Occidental and the Company
have declined participation as to those sites for which there is no evidence of
the presence of residue generated by Chemicals. The Governor of New Jersey
issued an Executive Order requiring state agencies to provide specific
justification for

27
<PAGE> 28

any state requirements more stringent than federal requirements. The DEP has
indicated that it may be revising its soil action level upwards towards the
higher soil screening levels proposed by the EPA in 1994.

Painesville, Ohio. From about 1912 through 1976, Chemicals operated
manufacturing facilities in Painesville, Ohio. The operations over the years
involved several discrete but contiguous plant sites over an area of about 1,300
acres. The primary area of concern historically has been Chemicals' former
chromite ore processing plant (the "Chrome Plant"). For many years, the site of
the Chrome Plant has been under the administrative control of the EPA pursuant
to an administrative consent order under which Chemicals is required to maintain
a clay cap over the site and to conduct certain ground water and surface water
monitoring. Many other sites have previously been clay-capped and one specific
site, which was a waste disposal site from the mid-1960s until the 1970s, has
been encapsulated and is being controlled and monitored. In September 1995, the
Ohio Environmental Protection Agency (the "OEPA") issued its Directors' Final
Findings and Order (the "Director's Order") by consent ordering that a remedial
investigation and feasibility study (the "RIFS") be conducted at the former
Painesville plant area. The Company has agreed to participate in the RIFS as
required by the Director's Order. It is estimated that the total cost of
performing the RIFS will be $3 million to $5 million over the next three years.
In spite of the many remedial, maintenance and monitoring activities performed,
the former Painesville plant site has been proposed for listing on the National
Priority List under CERCLA; however, the EPA has stated that the site will not
be listed so long as it is satisfactorily addressed pursuant to the Director's
Order and OEPA's programs. The Company has accrued the estimate of its share of
the cost to perform the RIFS. The scope and nature of any further investigation
or remediation that may be required cannot be determined at this time; however,
as the RIFS progresses, the Company will continuously assess the condition of
the Painesville plant site and make any changes, including additions, to its
reserve as may be required.

28
<PAGE> 29

Brook for which the Fields Brook PRPs might be asked to bear some share of the
costs. Until all preliminary studies and necessary governmental actions have
been completed and negotiated or judicial allocations have been made, it is not
possible for the Company to estimate what the response costs, response
activities or natural resource damages, if any, may be for Fields Brook or
related areas, the parties responsible therefore or their respective shares.

Legal Proceedings

As of December 31, 1995, the Company had paid OxyChem and Henkel a total of
approximately $39 million against said $75 million cap. The Company cannot
predict what portion of the approximately $36 million remaining as of that date
Occidental and Henkel may actually pay or incur prior to September 4, 1996, the
tenth anniversary of the Closing Date if they accelerate spending with regard to
such environmental costs; however, the Company has approximately $7 million
reserved at December 31, 1995, based on 50% of OxyChem's and Henkel's historical
annual expenditures. In the event OxyChem and Henkel prevail in this lawsuit,
the Company could be required to provide up to approximately $29 million in
additional reserves related to this indemnification.

29
<PAGE> 30

The Company has established reserves for legal contingencies in situations
where a loss is probable and can be reasonably estimated.

Future Outlook

In addition to maintaining and developing its core and emerging areas, it
is expected that, beginning in 1996, the Company will acquire or assume
responsibility for certain YPF exploration interests in South America (outside
Argentina) and the United States Gulf of Mexico. The Company will continue to
focus on maximizing the value of its core producing assets and seek new
investment opportunities in associated ventures.

Maxus currently projects total program spending (capital expenditures plus
exploration expenses) for 1996 to be approximately $249 million, compared to
$231 million in 1995. Indonesia will receive nearly $79 million, Midgard (U.S.)
$72 million, South America $62 million and exploration interests outside
Argentina acquired or assumed from YPF $25 million. The remaining $11 million
will be allocated to domestic and overseas new ventures. Funding for the 1996
spending program is expected to be provided through cash and cash equivalents on
hand at the beginning of the year, expected cash from operations and capital
contributions from YPF as necessary. In addition to the 1996 program, Maxus has
financial and/or performance commitments for exploration and development
activities in 1997 and beyond none of which are material except for the recently
acquired Guarapiche block in Venezuela discussed below.

In January 1996, the Company and its partners were successful in acquiring
the highly prospective Guarapiche block in Venezuela's first auction awards for
equity production in over 20 years. Guarapiche is located on the same trend as
the five billion barrel El Furrial field in northeastern Venezuela. The Company,
together with its partners, paid $109 million (approximately $27 million net to
the Company) to the Venezuelan government for rights to explore the Guarapiche
block. BP Exploration Orinoco Limited is the operator with a 37.5% working
interest while Amoco Production Company and the Company hold 37.5% and 25%
working interests, respectively. The Company's net exploration commitment is
anticipated to total approximately $15 million over the next five years.

The Company has begun discussions with other companies concerning the
establishment of a joint venture or other alliance with regard to Midgard's
business and assets. The objectives of such a joint venture or alliance would be
lowering unit costs, creating economies of scale and improving marketing
leverage. No joint venture or other partner has been selected and no assurances
can be given that the attempts to establish a joint venture or other alliance
will be successful. In addition, Maxus is considering a number of possible
capital and business restructuring alternatives; however, no decisions have been
made to take any specific action nor can there be any assurance that any
specific action will be taken.

By the end of 1995, management had streamlined the Maxus organizational
structure, reduced Maxus' overhead costs and improved communications and
decision making. In addition, a "management by objectives" program was
introduced to make each business unit and staff group directly responsible for
their accomplishments. These actions are expected to result in significant cost
savings.

The Company's foreign petroleum exploration, development and production
activities are subject to political and economic uncertainties, expropriation of
property and cancellation or modification of contract rights, foreign exchange
restrictions and other risks arising out of foreign governmental sovereignty
over the areas in which the Company's operations are conducted, as well as risks
of loss in some countries due to civil strife, guerrilla activities and
insurrection. Areas in which the Company has significant operations include the
United States, Indonesia, Ecuador, Bolivia and Venezuela.

In Ecuador, pipeline capacity available to the Company is sufficient to
transport only about 60% of the oil the Company expected to be able to produce
daily, and none of the various projects to increase transportation capacity that
have been considered has been approved by the government of Ecuador. In
addition, the Company is involved in a number of contract, auditing and
certification disputes with various government entities. Together, the lack of
pipeline capacity and the various disputes with government entities are
retarding the Company's ability to proceed with the economic development of
Block 16. Although the Company can

30
<PAGE> 31

give no assurances concerning the outcome of these discussions, progress has
recently been made on several important issues. The Company intends to reduce
program spending in Ecuador in 1996 to $19 million from $32 million in 1995.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information required by this item appears on pages F-1 to F-69 of this
report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Inapplicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Executive Officers of the Company

The following table sets forth certain information as of March 1, 1996
concerning the executive officers of the Company.

<TABLE>
<CAPTION>
SERVED
AS AN
OFFICER
NAME POSITION WITH THE COMPANY AGE SINCE
- ------------------------------ -------------------------------------- --- -------
<S> <C> <C> <C>
Roberto Monti................. President and Chief Executive Officer 57 1995
W. Mark Miller................ Executive Vice President and Treasurer 42 1995
Michael C. Forrest............ Senior Vice President 62 1992
David A. Wadsworth............ Vice President, Legal 46 1995
Linda R. Engelbrecht.......... Controller 40 1995
</TABLE>

Officers are elected annually by the Board of Directors (sometimes referred
to as the "Board") and may be removed at any time by the Board. There are no
family relationships among the executive officers listed and there are no
arrangements or understandings with third parties pursuant to which any of them
were elected as officers, except that Mr. Monti received $120,000 from YPF in
respect of the period from August 21, 1995, when he was elected President, Chief
Executive Officer and a director of the Company, until October 9, 1995, when he
became an employee of the Company. Certain information regarding the principal
occupations and employment of each of the officers named above during the prior
five years is set forth below.

Mr. Monti was elected President and Chief Executive Officer and a director
of the Company effective August 21, 1995 and became an employee of the Company
on October 9, 1995. Prior to joining Maxus, Mr. Monti served as the President of
Dowell, a division of Schlumberger Limited. Since joining the oilfield services
company in 1963, Mr. Monti has held various positions with Schlumberger,
including president and vice president of various divisions or subsidiaries.

Mr. Miller was elected Executive Vice President and Treasurer of the
Company in November 1995. Mr. Miller joined a former subsidiary of Maxus in 1981
as Manager, Taxes and has held various positions with the Company since such
time, including Director, Exploration and Production Taxes; Director, Operations
Auditing; General Manager, Indonesia; and Vice President of the Company.

Mr. Forrest joined the Company in 1992 as special assistant to the Chairman
and later that year was elected Vice Chairman and Chief Operating Officer. Prior
to 1992, he was with Shell U.S.A. for more than five years, last serving as
President of its subsidiary, Pecten International Company. Mr. Forrest was named
Senior Vice President, Business Development of the Company in 1994. Mr. Forrest
has been a Senior Vice President of the Company since 1994.

Mr. Wadsworth was elected Vice President, Legal of the Company in June
1995. Mr. Wadsworth joined Natomas Company, a former subsidiary of Maxus, in
1979. He has served in various positions with the Company, including Associate
General Counsel and Corporate Secretary, since such time.

31
<PAGE> 32

Mrs. Engelbrecht was elected Controller of the Company in November 1995.
She joined a former subsidiary of the Company in 1978 as a financial associate
and has held various positions with the Company, including Director of Financial
Reporting and Assistant Controller, since such time.

Directors of the Company

Certain information regarding each director, including his age, is set
forth below. Each director is elected at the annual meeting of stockholders for
a term of one year.

CHARLES L. BLACKBURN: 68, a director of the Company since 1986. For more
than five years prior to his retirement in April 1995, he was also the Chairman,
President and Chief Executive Officer of Maxus. He is currently an international
consultant for the Company. Mr. Blackburn also serves as a director of Lone Star
Technologies, Inc. and Landmark Graphics Corporation.

CEDRIC BRIDGER: 60, a director of the Company since April 1995. Mr. Bridger
has been Vice President, Finance and Corporate Development of YPF since 1992.
From 1989 to 1992, he was employed by CBV Industrias Mecanicas in Brazil, last
serving as Marketing Manager. Previously, he was associated with Hughes Tool
Company from 1964 to 1989.

GEORGE L. JACKSON: 67, a director of the Company since 1987. Mr. Jackson
has been an oil field service consultant for more than five years.

NELLS LEON: 69, a director of the Company since June 1995. Mr. Leon has
been a director of YPF since 1991, and was elected President of YPF in May 1995.
Mr. Leon held various positions with YPF from 1956 to 1977 and from 1983 to
1987. Since 1990, he has served as Executive Vice President. He was Vice
President of Operations of Sol Petroleo S.A. from 1987 to 1990.

JAMES R. LESCH: 74, a director of the Company since April 1995. Mr. Lesch
has been a director of YPF since 1993. He is currently retired, having retired
from Hughes Tool Company in 1986. He was Chief Executive Officer (1979-1986) and
Chairman of the Board (1981-1986) of Hughes Tool Company and also served as
Commissioner, State of Texas Department of Commerce (1988-1992). Previously, he
served as Director of the American Petroleum Institute. Mr. Lesch also serves as
a director of TransTexas Gas Corporation.

ROBERTO MONTI: 57, a director, President and Chief Executive Officer of the
Company since August 1995. Prior to such time, Mr. Monti had been employed since
1963 by Schlumberger Limited, an oil field services company, in various
capacities. He most recently served as President of Dowell, a division of
Schlumberger Limited.

P. DEXTER PEACOCK: 54, a director of the Company since April 1995. Mr.
Peacock has been a partner of the law firm of Andrews & Kurth L.L.P. since 1975.
He is a member of the firm's Management Committee. He currently serves as a
director of Texas Commerce Bank National Association and as an alternate
director of YPF.

R. A. WALKER: 39, a director of the Company since 1994. He is a Managing
Director of Prudential Capital Group and a Vice President of The Prudential
Insurance Company of America ("Prudential"). Mr. Walker has held similar
positions with Prudential Capital Group for the past five years. He was elected
to the Board of Directors of Maxus by Prudential pursuant to the terms of the
$9.75 Preferred Stock.

ITEM 11. EXECUTIVE COMPENSATION.

DIRECTOR COMPENSATION

The Company pays each director who is not an employee of the Company or YPF
(other than Mr. Blackburn) an annual retainer of $20,000 and a fee of $1,000 for
each meeting of the Board attended and for each committee meeting attended. For
so long as Mr. Blackburn is an international consultant to the Company, he will
not be entitled to such compensation paid to other non-employee Directors.
See--"Employment Contracts and Termination of Employment and Change in Control
Agreements."

32
<PAGE> 33

EXECUTIVE OFFICER COMPENSATION

The following tables set forth compensation awarded to, earned by or paid
to the executive officers named below in 1993, 1994 and 1995.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND SALARY BONUS OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) (#) ($)
- ------------------------------------------ ---- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Roberto Monti............................. 1995 302,052(1) 30,000(2) 0 10,923(3)
President and Chief Executive Officer 1994 N/A N/A N/A N/A
1993 N/A N/A N/A N/A
W. Mark Miller............................ 1995 174,900 60,000 0 87,086(4)
Executive Vice President and Treasurer 1994 N/A N/A N/A N/A
1993 N/A N/A N/A N/A
Michael C. Forrest........................ 1995 261,016 60,000 0 1,291,032(5)
Senior Vice President 1994 304,020 100,000 65,000 18,241(3)
1993 298,020 75,000 0 17,881(3)
David A. Wadsworth........................ 1995 155,640 52,000 0 9,338(3)
Vice President, Legal 1994 N/A N/A N/A N/A
1993 N/A N/A N/A N/A
Linda R. Engelbrecht...................... 1995 119,910 36,000 0 7,195(3)
Controller 1994 N/A N/A N/A N/A
1993 N/A N/A N/A N/A
Charles L. Blackburn...................... 1995 209,331 0 0 4,996,344(6)
Chairman, President and Chief 1994 519,996 200,000 185,000 31,200(3)
Executive Officer 1993 512,496 100,000 0 30,750(3)
(executive officer through April 21,
1995)
Peter Gaffney............................. 1995 300,000(7) 0 0 0
President and Chief Executive Officer 1994 N/A N/A N/A N/A
(executive officer from April 21,
1995 1993 N/A N/A N/A N/A
through August 21, 1995)
G. W. Pasley.............................. 1995 167,703 0 0 1,007,245(8)
Senior Vice President 1994 208,440 100,000 65,000 12,506(3)
(executive officer through 1993 198,840 45,000 0 11,930(3)
August 31, 1995)
Glen R. Brown............................. 1995 189,582 0 0 942,434(9)
Vice President and Controller 1994 174,420 55,000 28,000 10,465(3)
(executive officer through 1993 165,375 25,000 0 9,923(3)
December 15, 1995)
</TABLE>

33
<PAGE> 34

- ---------------

(1) Mr. Monti became a consultant, officer and director of the Company on August
21, 1995, and an employee of the Company on October 9, 1995. He received
$120,000 of this amount from YPF in respect of his serving as President and
Chief Executive Officer of the Company prior to the date on which he became
an employee.
(2) Mr. Monti was paid this amount as a signing bonus upon commencement of his
employment with the Company.
(3) These payments represent the Company's matching contributions to this
individual's qualified and non-qualified savings plans' accounts.
(4) $76,592 of this amount represents a payment made in accordance with Mr.
Miller's employment agreement (see--"Employment Contracts, Termination of
Employment and Change in Control Agreements"), and $10,494 of such amount
represents the Company's matching contributions to Mr. Miller's qualified
and non-qualified savings plan accounts.
(5) $1,075,383 of this amount represents a payment made in accordance with Mr.
Forrest's change in control agreement (see--"Employment Contracts,
Termination of Employment and Change in Control Agreements"); $199,988
represents payment in respect of the surrender pursuant to the terms of the
Merger Agreement of options and stock appreciation rights ("SARs") held by
Mr. Forrest (see table below entitled "Aggregated Option/SAR Exercises in
the Last Fiscal Year and FY-End Option/SAR Values"); and $15,661 of such
amount represents the Company's matching contributions to Mr. Forrest's
qualified and non-qualified savings plan accounts.
(6) $120,000 of this amount represents payments in connection with Mr.
Blackburn's consulting agreement with the Company (see--"Employment
Contracts and Termination of Employment and Change in Control Agreements"),
$2,662,070 of such amount represents a severance payment made in accordance
with Mr. Blackburn's change in control agreement (see "-- Employment
Contracts, Termination of Employment and Change in Control Agreements");
$1,943,632 of such amount represents a lump sum payment to Mr. Blackburn in
respect of the Company's retirement plans, including the Supplemental
Executive Retirement Plan; $298,396 represents a distribution from Mr.
Blackburn's savings plan accounts; $104,588 represents payment in respect of
restricted shares of Common Stock, the restrictions on which lapsed on May
1, 1995 in accordance with their terms; and $10,400 of such amount
represents the Company's matching contributions to Mr. Blackburn's qualified
and non-qualified savings plan accounts.
(7) Mr. Gaffney became a consultant and an officer of the Company on April 21,
1995 and an employee of the Company on June 6, 1995. Pursuant to an
agreement between Mr. Gaffney and the Company, he received a total of
$300,000, $195,721 of which was paid with respect of the period during which
he was an employee of the Company.
(8) $835,893 of this amount represents a severance payment made in accordance
with Mr. Pasley's change in control agreement (see--"Employment Contracts,
Termination of Employment and Change in Control Agreements"); $162,774
represents a distribution or rights to a distribution from Mr. Pasley's
savings plan accounts; and $8,578 of such amount represents the Company's
matching contributions to Mr. Pasley's qualified and non-qualified savings
plan accounts.
(9) $619,877 of this amount represents a severance payment made in accordance
with Mr. Brown's change in control agreement (see--"Employment Contracts,
Termination of Employment and Change in Control Agreements"); $84,999
represents payment in respect of the surrender pursuant to the terms of the
Merger Agreement of options and SARs held by Mr. Brown (see table below
entitled "Aggregated Option/SAR Exercises in the Last Fiscal Year and FY-End
Option/SAR Values"); $13,772 represents payment in respect of restricted
shares of Common Stock, the restrictions on which lapsed on May 1, 1995 in
accordance with their terms; $213,560 represents a distribution or rights to
a distribution from Mr. Brown's savings plan accounts; and $10,226
represents the Company's matching contributions to Mr. Brown's qualified and
non-qualified savings plan accounts.

AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SARS AT OPTIONS/SARS
ON VALUE FY-END(#) AT FY-END ($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(1) UNEXERCISABLE UNEXERCISABLE
----------------------------------------- -------- -------- --------------- -------------
<S> <C> <C> <C> <C>
Roberto Monti............................ 0 0 0 0/0
W. Mark Miller........................... 0 138,532 0 0/0
Michael C. Forrest....................... 0 199,998(2) 0 0/0
David A. Wadsworth....................... 0 10,930 0 0/0
Linda R. Engelbrecht..................... 0 740 0 0/0
Charles L. Blackburn..................... 0 0(2) 0 0/0
Peter Gaffney............................ 0 0 0 0/0
G. W. Pasley............................. 0 25,000(2) 0 0/0
Glen R. Brown............................ 0 84,999(2) 0 0/0
</TABLE>

34
<PAGE> 35

- ---------------

(1) These payments were made in respect of the surrender of options and any SARs
held by the named executive officers as contemplated by the terms of the
Merger Agreement. No shares of stock were acquired in these transactions.

(2) Although each of these named executive officers surrendered all of his
options and SARs in 1995, payment was not made in 1995 by the Company in
respect of a certain number of such options and SARs due to then pending tax
and other questions. Such questions have been resolved and these named
officers received the following amounts in 1996 for their surrendered
options and SARs: Mr. Monti--0; Mr. Miller--0; Mr. Forrest--$182,102; Mr.
Wadsworth--0; Mrs. Engelbrecht--0; Mr. Blackburn--$939,256; Mr. Gaffney--0;
Mr. Pasley--$307,173; and Mr. Brown--$87,502.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
AGREEMENTS

Employment Contracts. On April 5, 1995, the Company entered into an
agreement with Mr. Gaffney, a director and the President and Chief Executive
Officer of the Company from April 21, 1995 to August 21, 1995, whereby Mr.
Gaffney served in the capacity of chief executive officer of the Company in
consideration of payment of $50,000 a month from the date of such agreement
through September 30, 1995. A total of $300,000 was paid to Mr. Gaffney under
this agreement, $195,721 during the period he was an employee. In addition,
Gaffney, Cline, an oil and gas technical and management consulting firm of which
Mr. Gaffney is a Senior Partner, entered into an agreement with the Company
obligating the Company to pay Gaffney, Cline $500,000 in consideration of
Gaffney, Cline granting Mr. Gaffney a leave of absence to enable him to serve as
the Company's chief executive officer.

The Company entered into an agreement effective July 1, 1995 in replacement
of a change in control agreement dated November 1, 1991 with Mr. Miller,
Executive Vice President and Treasurer of the Company, under which Mr. Miller is
to be employed for a term of four years at not less than his then current
salary, plus an annual bonus not less than the amount of the largest bonus paid
to Mr. Miller in respect of the years 1992, 1993 or 1994, and a "sign-on" bonus
in the amount of $76,592. In addition, a "stay on" bonus in the amount of
$76,592 is payable under this agreement on each of July 1, 1996, 1997 and 1998
provided, as to each such "stay on" bonus, that Mr. Miller continues to be an
employee of the Company on the respective payment date. Under the agreement, in
the event that Mr. Miller's employment is terminated under certain
circumstances, severance compensation will be paid to Mr. Miller as specified
therein.

On December 27, 1995, the Company entered an agreement with Mr. Monti, a
director and the President and Chief Executive Officer of the Company, pursuant
to which his Foreign Service Pay, as defined in such agreement, payable with
respect to services rendered from and after January 1, 1996 will be credited by
the Company to a deferral account which will bear interest at a specified rate
and the balance of which will be paid to Mr. Monti under certain circumstances,
including termination of his employment with the Company.

Mr. Blackburn, a director and formerly the Chairman, President and Chief
Executive Officer of the Company, became an international consultant during 1995
to YPF pursuant to a consulting agreement which was subsequently assigned to
Maxus. Under the two-year contract, Mr. Blackburn will be available to render
consulting services for a minimum of 60 days per year and be paid a retainer of
$180,000 per year. Mr. Blackburn will be paid $3,000 per day for each day of
consulting provided in excess of 60 days per year. Office space is made
available to him in Dallas and Buenos Aires. During 1995, Mr. Blackburn was paid
a total of $120,000 under the terms of this contract.

Termination of Employment Agreements. On August 3, 1995, the Company
entered into an agreement with Mr. Monti under which he will receive a severance
payment from the Company in the amount of $3 million in the event that his
employment with the Company is terminated (i) by Mr. Monti or the Company for
reason of death or disability; (ii) by the Company other than for cause; (iii)
by Mr. Monti for any reason within six months following a take-over (other than
to accept employment with YPF); and (iv) by Mr. Monti for any reason after
reaching age 65.

Separation Pay Plan. Under the Separation Pay Plan, most employees (other
than non-resident aliens), excluding Mr. Monti (who has waived any rights
thereunder) but including the other named executive

35
<PAGE> 36

officers, are eligible for separation pay if their employment is terminated for
any reason other than death, voluntary termination of employment, voluntary
retirement or discharge for reasons of criminal activity, willful misconduct,
gross negligence in the performance of duties or violation of Company policy.
The payment to be received under the plan by a particular employee depends on
his job classification and length of service and whether termination occurs
after the elimination of the employee's position or a change in control of the
Company (as defined in the plan). In the case of the named executive officers,
the plan provides in most cases for separation pay in an amount equal to
two-weeks' base pay for each year of service with the Company, plus three
months' base pay, not to exceed a maximum of 12 months' base pay; and, in the
case of a change in control of the Company, separation pay in an amount equal to
one month's base pay for each year of service with the Company, but not less
than 12 months' base pay nor more than 24 months' base pay. The plan requires
that employees sign releases as a condition of receiving separation pay.
Executive officers are not entitled to separation pay under the plan to the
extent they receive severance payments under the change in control agreements
discussed below or employment contracts discussed above. The acquisition of the
Company by YPF constitutes a change in control under the Separation Pay Plan,
thereby triggering the post-change in control separation formula until April 5,
1997.

Change in Control Agreements. In 1987 or thereafter, the Company entered
into agreements with certain executives including Messrs. Blackburn, Forrest,
Brown, Pasley and Miller which were binding upon execution but were to become
operative on a change of control of the Company. Pursuant to the terms of said
agreements, they became operative when YPF acquired control of the Company.

Under these agreements, the executive officer is entitled to continue in
the employ of the Company until the earlier of the expiration of the third
anniversary of the occurrence of a "change in control" or the executive's death
at an annual base salary of not less than the rate in effect upon the occurrence
of a change in control plus an incentive award of not less than the highest such
award received by the executive for any year in the three calendar years
immediately preceding the change in control. Under the agreements, a "change of
control" includes the following: (i) the merger, consolidation or reorganization
of the Company after which a majority of voting power of the Company is held by
persons other than the holders thereof prior to such event; (ii) the sale of all
or substantially all of the assets of the Company to an entity, the majority of
the voting power of which is not held by holders of the voting power of the
Company before such sale; (iii) a report is filed on Schedule 13D or Schedule
14D-1 showing that a person is the beneficial owner of 25% or more of the voting
power of the Company; (iv) the Company files a Form 8-K or proxy statement
disclosing that a change in control has or may occur; or (v) a change in the
composition of the majority of the Board under certain circumstances occurs
during any period of two consecutive years. In the event the Company terminates
the executive's employment during such term without cause, the executive will be
entitled to receive as severance compensation a lump-sum payment equal to the
present value of the cash compensation payable under the agreement in the
absence of such termination, not to exceed 299% of his "base amount" as defined
in the Internal Revenue Code of 1986, as amended (the "Code"), without any
reduction for subsequent earnings.

Under these agreements, continuation of benefits under employee benefit
plans of the Company is provided after termination during the remainder of the
original term of employment. The agreements include provisions which limit the
amounts payable under them in certain circumstances in which the net after-tax
amount received by the officer would be reduced as a result of the applicability
of the 20% excise tax imposed in respect of certain change in control payments
under the Code. The Company has assumed the obligation to pay certain fees and
expenses of counsel incurred by the executive officers if legal action is
required to enforce their rights under the agreements and has secured such
obligation by obtaining a letter of credit issued by a commercial bank.

On April 7, 1995, all of the Company's then executive officers, including
Messrs. Blackburn, Forrest, Pasley and Brown, gave notice of their intent to
resign under circumstances in which they had the right to receive severance
payments under the change in control agreements. In order to facilitate the
transition following the acquisition by YPF, the Company and the eight executive
officers who were parties to such agreements (Messrs. Blackburn, Forrest,
Pasley, Brown, S. G. Crowell, M. J. Barron, M. J. Gentry and M. Middlebrook)
agreed that such executive officers would continue to work for the Company in
their then present positions at their then current levels of compensation until
June 30, 1995 or such date as otherwise

36
<PAGE> 37

mutually agreed. The Company also agreed to pay such executive officers' said
severance payments no later than April 15, 1995. Mr. Blackburn resigned as
Chairman, Chief Executive Officer and President of the Company on April 21, 1995
and retired as an employee of the Company on April 30, 1995. Messrs. Brown and
Pasley resigned effective December 15, 1995 and August 31, 1995, respectively.
All of such other executive officers resigned on June 30, 1995, except Mr.
Forrest who agreed to continue in the employment of the Company at a reduced
salary and as an "at will" employee. Pursuant to said agreements and the change
in control agreements, the named executive officers and all of the executive
officers as a group (including said former executive officers) received
"severance" payments in the following amounts: Mr. Monti--$0; Mr. Miller--$0;
Mr. Forrest--$1.0 million; Mr. Wadsworth--$0; Mrs. Engelbrecht--$0; Mr.
Blackburn--$2.7 million; Mr. Gaffney--$0; Mr. Pasley--$0.9 million; and Mr.
Brown--$0.6 million and the executive officers (including said former executive
officers) as a group, $7.9 million.

RETIREMENT PROGRAM

Effective February 1, 1987, the Company adopted a new retirement income
plan (the "New Retirement Income Plan") applicable to most of its employees to
replace the Company's former retirement income plans under which such employees
ceased to accrue benefits on January 31, 1987. Under the New Retirement Income
Plan, a covered employee acquires a right upon retirement to a yearly amount
equal to 2% of the employee's earnings during each year from February 1, 1987
forward (rather than on final compensation or average final compensation)
without offset for social security benefits. Benefits under the New Retirement
Income Plan become vested after five years of service. Benefits may be paid in
equal monthly installments, starting on the date of retirement and continuing
until death, or employees may select one of a number of optional forms of
payment having equal actuarial value as provided in the plan. The benefits
payable under the New Retirement Income Plan are subject to maximum limitations
under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code. In the case of the named executives, if benefits at the time of
retirement exceed the then permissible limits of such statutes, the excess would
be paid by the Company from the "SERP" described below.

The Company has an unfunded Supplemental Executive Retirement Plan that
provides additional benefits to the Company's highest ranking officer, the other
named executives and to certain executive employees designated by the highest
ranking officer. Under the SERP, a participant acquires the right to a lump sum
amount upon retirement which is the actuarial equivalent of a straight life or,
if married, a 50% joint and survivor annuity payable monthly in an amount equal
to (a) the sum of (i) 1.6% of the participant's average monthly compensation in
1986 times the years of service through January 31, 1987, plus (ii) 2% of the
participant's average monthly compensation after January 31, 1987 times the
years of service after January 31, 1987 plus an additional five years less (b)
the amount of the benefits calculated for such participant under the Company's
other retirement plans. The maximum benefit payable is 60% of the participant's
high three-year average pay. The amounts calculated under the SERP are not
subject to any reduction for Social Security and are not determined primarily by
final compensation or average final compensation and years of service. If a
participant dies while still employed by the Company and is survived by an
eligible spouse, the surviving spouse will receive a lump-sum payment equal to
the present value of one-half of the benefit which would have been payable to
the participant at his normal retirement age under the SERP assuming the
participant had terminated employment with the Company at the time of death with
a vested interest under the SERP and that the participant survived to the normal
retirement age. In the case of retirement after age 55 but before age 60, the
supplemental retirement benefits generally will be reduced by 5% for each year
that the employee's actual retirement date precedes age 60. The benefits
provided under the plan will vest upon completion of five years of service or
attainment of age 55.

The estimated annual benefits payable upon retirement at normal retirement
age (or January 1, 1996 in those cases where the participant's age on that date
was greater than normal retirement age) under the Company's retirement plans as
supplemented by the SERP based on service and compensation through December 31,
1995 for the executive officers named in the compensation table are as follows:
Mr. Monti-- $82,668, Mr. Miller--$46,751, Mr. Forrest--$64,502, Mr.
Wadsworth--$52,900, Mrs. Engelbrecht--$33,863 and Mr. Gaffney--$0. The annual
benefits payable under the Company's retirement plans as supplemented by

37
<PAGE> 38

the SERP to Mr. Blackburn who retired on April 30, 1995 (and received a lump sum
distribution of his retirement benefits) were $193,006. The annual benefits
payable at normal retirement age to Mr. Brown who resigned from the Company
effective December 15, 1995 are $61,207 and to Mr. Pasley who resigned from the
Company effective August 31, 1995 are $58,002.

Whether any amounts actually become payable in whole or in part depends on
the contingencies and conditions governing the applicable retirement plan.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

From January 1, 1995 to April 21, 1995, the Compensation Committee of the
Board of Directors consisted of J. David Barnes, B. Clark Burchfiel, Charles W.
Hall, George L. Jackson and Richard W. Murphy. From April 21, 1995 to June 7,
1995, the Compensation Committee consisted of Jose Estenssoro, Cedric Bridger
and James R. Lesch. On June 7, 1995, Nells Leon replaced Mr. Estenssoro.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Except as provided in the next succeeding sentence, the following table
sets forth the beneficial ownership (as defined in the rules of the Securities
and Exchange Commission) as of February 1, 1996 of the equity securities of the
Company and YPF by the directors, the named executive officers and all directors
and executive officers as a group. At such date, none of the directors or
executive officers beneficially owned any $4.00 Preferred Stock, $9.75 Preferred
Stock or $2.50 Preferred Stock.

<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF SECURITIES
BENEFICIALLY
NAME OF BENEFICIAL OWNER TITLE OF SECURITY OWNED
- --------------------------------------- ----------------------------------- -----------------
<S> <C> <C>
C. L. Blackburn........................ Common Stock....................... -0-
YPF Class "D"...................... -0-
Cedric Bridger......................... Common Stock....................... -0-(1)
YPF Class "D"...................... 3,942
Glen R. Brown.......................... Common Stock....................... -0-
YPF Class "D"...................... -0-
Linda Engelbrecht...................... Common Stock....................... -0-
YPF Class "D"...................... -0-
Michael C. Forrest..................... Common Stock....................... -0-
YPF Class "D"...................... 3,000
Peter Gaffney.......................... Common Stock....................... -0-
YPF Class "D"...................... -0-
George L. Jackson...................... Common Stock....................... -0-
YPF Class "D"...................... -0-
Nells Leon............................. Common Stock....................... -0-(1)(2)
YPF Class "D"...................... -0-
James R. Lesch......................... Common Stock....................... -0-(1)
YPF Class "D"...................... 2,000
W. Mark Miller......................... Common Stock....................... -0-
YPF Class "D"...................... -0-
Roberto Monti.......................... Common Stock....................... -0-
YPF Class "D"...................... -0-
George W. Pasley....................... Common Stock....................... -0-
YPF Class "D"...................... -0-
P. Dexter Peacock...................... Common Stock....................... -0-(1)
YPF Class "D"...................... 3,000
David A. Wadsworth..................... Common Stock....................... -0-
YPF Class "D"...................... -0-
</TABLE>

38
<PAGE> 39

- ---------------

(1) Does not include Common Stock owned by YPF, as to which each of Messrs.
Bridger, Leon, Lesch and Peacock disclaim any beneficial ownership.

(2) Does not include 347 YPF Class "D" shares owned by Mr. Leon's wife, as to
which Mr. Leon disclaims any beneficial ownership.

(3) Does not include equity securities owned by Prudential, as to which Mr.
Walker disclaims beneficial ownership.

(4) Directors and executive officers individually and as a group did not own
more than 1% of the Common Stock or YPF Class D shares.

To the knowledge of the Company, as of February 1, 1996, no person
beneficially owned more than 5% of any class of the Company's voting securities
except as set forth below:

<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER TITLE OF CLASS OWNED OF CLASS
- --------------------------------------------------- -------------- ----------- --------
<S> <C> <C> <C>
YPF Sociedad Anonima............................... Common Stock 135,609,772 100%
Avenida Pte. Roque
Saenz Pena 777
1364 Buenos Aires
Argentina
The Prudential Insurance Company of America........ Common Stock 7,910,000(1) 5.6%
$9.75
Prudential Plaza Preferred 1,250,000(2) 100.0%
Newark, New Jersey 07102-3777 Stock
Kidder, Peabody Group Inc.......................... Common Stock 8,000,000(3) 5.6%
10 Hanover Square
New York, New York 10005
</TABLE>

- ---------------

(1) Prudential reported on Amendment No. 7 to Schedule 13G, dated February 12,
1996, in connection with beneficial ownership at December 31, 1995, that it
had sole voting and dispositive power with respect to all 7,910,000 shares
of Common Stock indicated above as beneficially owned by it. The information
herein regarding such shares assumes that Prudential's ownership had not
changed as of February 1, 1996 and is included in reliance on such Amendment
No. 7, except that the percent of class is based upon the Company's
calculations made in reliance upon the information regarding such shares
contained in such Amendment No. 7.

(2) On February 28, 1995, the Company and Prudential entered into an agreement
pursuant to which Prudential waived certain rights, including conversion
rights and registration rights. See "Item 13. Certain Relationships and
Related Transactions."

(3) Kidder, Peabody Group Inc. ("Kidder") reported on Schedule 13D, dated
October 10, 1992, that it owns 8,000,000 warrants, each representing the
right to purchase from the Company at any time prior to 5:00 p.m. on October
10, 1997 one share of Common Stock at a price of $13.00 per share. The
8,000,000 shares of Common Stock reported as beneficially owned by Kidder
result from the assumed exercise of all 8,000,000 of such warrants.
According to said Schedule 13D, General Electric Company is the indirect
parent of Kidder. The information herein regarding such shares assumes that
Kidder's beneficial ownership thereof had not changed as of February 1, 1996
and is included herein in reliance on such filing, except that the percent
of class is based upon the Company's calculations made in reliance upon the
information regarding such shares contained in such filing.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The Company has business transactions and relationships in the ordinary
course of business with unaffiliated corporations and institutions with which
certain of its directors, executive officers and substantial stockholders are
affiliated, including the transactions discussed below. All such transactions
are conducted on an arm's-length basis.

39
<PAGE> 40

Gaffney, Cline, an oil and gas technical and management consulting firm of
which Mr. Gaffney, the President and Chief Executive Officer and a director of
the Company from April 21, 1995 to August 21, 1995, is a Senior Partner, has
provided oil and gas technical and management consulting services to the Company
for which the Company paid Gaffney, Cline approximately $490,000 during 1995.
The Company and Gaffney, Cline have agreed that Gaffney, Cline will continue to
provide such services in 1996 and it is anticipated that the fees for such
services will be lower.

During 1996 through the date of this report, YPF has made capital
contributions to the Company in the aggregate amount of $64 million pursuant to
the terms of the Keepwell Covenant (see "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources"). It is anticipated that YPF could be required to make capital
contributions in 1996 totaling approximately $200 million to $250 million to
fund the Company's obligations. Actual capital contributions made by YPF could
vary significantly depending on, among other circumstances, oil and gas prices
and program spending commitments. Such capital contributions will be credited to
YPF's obligations under the Keepwell Covenant and will entitle YPF to shares of
Common Stock.

During 1995, YPF made an advance to the Company in the amount of $7
million. The Company and YPF intend to enter into a loan agreement during 1996
to facilitate short-term loans by YPF to the Company and short-term loans by the
Company to YPF of excess cash balances. It is expected that loans will be made
by the parties under the loan agreement during 1996, and while the number and
amounts thereof are not presently known, it is expected that they will aggregate
in excess of $60,000.

Mr. Peacock, a director of the Company, is a partner in the law firm of
Andrews & Kurth L.L.P. Andrews & Kurth provided certain legal services to the
Company (including services rendered to YPFA Corp. in connection with the
Merger), the fees for which the Company paid Andrews & Kurth approximately
$3,180,000 in 1995. It is anticipated that Andrews & Kurth will continue to
provide legal services to the Company during 1996 and that the fees for such
services will be significantly lower.

The Company and YPF intend to enter into a services agreement whereby the
Company would render or arrange for services to be rendered to or for the
benefit of YPF and YPF would render or arrange for services to be rendered to or
for the benefit of the Company, and each party would be compensated on the basis
of the cost to them of such services. It is not presently known what the cost of
these services will be to either party but it is expected that it will exceed
$60,000.

During 1995, Prudential was the record or beneficial owner of more than 5%
of one or more of the classes of the Company's voting securities. Mr. Walker, an
officer of Prudential, was elected as a director of the Company by Prudential as
holder of all of the $9.75 Preferred Stock and pursuant to the terms thereof.
The Company offers its employees the opportunity to participate in medical
programs administered by Prudential. In addition, Prudential provides services
and coverages relating to pension and life insurance programs for retired
employees of Gateway Coal Company, a partnership owned by the Company. During
1995, the Company paid Prudential approximately $238,000 for these services. The
Company and Prudential have agreed that Prudential will continue to perform such
services during 1996 and anticipate that the fees for the year will be somewhat
higher.

Also during 1995, Prudential and the Company entered into an agreement to
induce Prudential, as the holder of the $9.75 Preferred Stock, to consent to the
Merger as required by the terms of the Company's Restated Certificate of
Incorporation. Under the agreement, the Company and Prudential agreed to waive
certain rights and covenants with respect to the $9.75 Preferred Stock and the
Company paid Prudential a restructuring fee of $250,000.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

During 1995, a former director of the Company, Raymond A. Hay, filed a Form
4 reporting a sale of Common Stock in the month following the date upon which
such filing was due.

40
<PAGE> 41

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) Documents filed as part of this report:

(1) Financial Statements--The following financial statements appear on
pages F-1 through F-26 and F-30 through F-69 of this report.

Consolidated Statement of Operations for the years ended December 31,
1994 and 1993, the three months ended March 31, 1995 and nine months
ended December 31, 1995.

Consolidated Balance Sheet at December 31, 1995 and 1994.

Consolidated Statement of Cash Flows for the years ended December 31,
1994 and 1993, the three months ended March 31, 1995 and nine months
ended December 31, 1995.

Notes to Consolidated Financial Statements.

Report of Independent Public Accountants.

Supplementary Financial Information (unaudited).

Quarterly Data (unaudited).

(2) Financial Statement Schedules.

None

Condensed parent company financial information has been omitted, since the
amount of restricted net assets of consolidated subsidiaries does not exceed 25%
of total consolidated net assets. Also, footnote disclosure regarding
restrictions on the ability of both consolidated and unconsolidated subsidiaries
to transfer funds to the parent company has been omitted since the amount of
such restrictions does not exceed 25% of total consolidated net assets.

(3) Exhibits.

Each document marked by an asterisk is incorporated herein by reference to
the designated document previously filed with the Securities and Exchange
Commission (the "Commission"). Each of Exhibits Nos. 10.1 through 10.10 and
10.15 through 10.25 is a management contract or compensatory plan, contract or
arrangement required to be filed as an exhibit hereto by Item 14(c) of Form
10-K.

<TABLE>
<C> <S>
3(i) --Restated Certificate of Incorporation of the Company (Exhibit 3(i).2
to the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995).*
3(ii) --By-Laws of the Company (Exhibit 3(ii).2 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995).*
4.1 --Indenture dated as of April 1, 1978 between Diamond Shamrock
Corporation ("Diamond") and Mellon Bank, N.A. relating to Diamond's
$150,000,000 8 1/2% Sinking Fund Debentures due April 1, 2008 (Exhibit
4.1 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1992 [the "1992 Form 10-K"]).*
4.2 --First Supplemental Indenture dated as of January 26, 1984 among the
Company, Diamond Shamrock Chemicals Company ("Chemicals") and Mellon
Bank, N.A. supplementing the Indenture described in Exhibit 4.1 above
(Exhibit 4.2 to the 1992 Form 10-K).*
</TABLE>

41
<PAGE> 42

<TABLE>
<C> <S>
4.3 --Tri Party Agreement dated January 24, 1993 appointing Chemical Bank as
successor trustee under the Indenture described in Exhibit 4.1 above
(Exhibit 4.3 to the Company's Current Report on Form 8-K dated January
12, 1994 [the "January 12 Form 8-K"]).*
4.4 --Indenture dated as of May 1, 1983 between Diamond and The Bank of New
York, successor in interest to NationsBank of Texas, N.A., successor
trustee to Mellon Bank, N.A. relating to unspecified Debt Securities
of Diamond (Exhibit 4.4 to the 1992 Form 10-K).*
4.5 --Resolutions of the Board of Directors of Diamond supplementing the
Indenture described in Exhibit 4.4 above and establishing terms and
conditions of Diamond's $150,000,000 11 1/4% Sinking Fund Debentures
due May 1, 2013 (Exhibit 4.5 to the 1992 Form 10-K).*
4.6 --First Supplemental Indenture dated as of January 26, 1984 among the
Company, Chemicals and Mellon Bank, N.A. supplementing the Indenture
and the resolutions described in Exhibits 4.4 and 4.5, respectively,
above (Exhibit 4.6 to the 1992 Form 10-K).*
4.7 --Tri Party Agreement dated January 12, 1994 appointing NationsBank of
Texas, N.A. as successor trustee under the Indenture described in
Exhibit 4.4 above (Exhibit 4.1 to the January 12 Form 8-K).*
4.8 --Indenture dated as of November 1, 1985 between the Company and The
Bank of New York, successor in interest to NationsBank of Texas, N.A.,
successor trustee to Mellon Bank, N.A. relating to unspecified Debt
Securities of the Company (Exhibit 4.8 to the 1992 Form 10-K).*
4.9 --Resolutions of an ad hoc committee of the Board of Directors of the
Company supplementing the Indenture described in Exhibit 4.8 above and
establishing terms and conditions of the Company's $150,000,000
11 1/2% Sinking Fund Debentures due November 15, 2015 (Exhibit 4.9 to
the 1992 Form 10-K).*
4.10 --Tri Party Agreement dated January 12, 1994 appointing NationsBank of
Texas, N.A. as successor trustee under the Indenture described in
Exhibit 4.8 above (Exhibit 4.2 to the January 12 Form 8-K).*
4.11 --Indenture dated as of April 1, 1988 between the Company and Chemical
Bank relating to unspecified debt securities of the Company (Exhibit
4.11 to the 1992 Form 10-K).*
4.12 --Officers' Certificate dated June 1, 1988 establishing a series of debt
securities ($150,000,000 Medium-Term Notes, Series A) to be issued
under the Indenture described in Exhibit 4.11 above (Exhibit 4.12 to
the 1992 Form 10-K).*
4.13 --Indenture dated as of November 1, 1990 between the Company and
Chemical Bank relating to unspecified debt securities of the Company
(Exhibit 4.13 to the 1992 Form 10-K).*
4.14 --Officers' Certificate dated February 13, 1991 establishing a series of
debt securities ($150,000,000 Medium-Term Notes, Series B) to be
issued under the Indenture described in Exhibit 4.13 above (Exhibit
4.14 to the 1992 Form 10-K).*
4.15 --Officers' Certificate dated September 28, 1992 establishing a series
of debt securities ($250,000,000 9 7/8% Notes Due 2002) to be issued
under the Indenture described in Exhibit 4.13 above (Exhibit 4.15 to
the 1992 Form 10-K).*
4.16 --Officers' Certificate dated January 26, 1993 establishing a series of
debt securities ($100,000,000 9 1/2% Notes Due 2003) to be issued
under the Indenture described in Exhibit 4.13 above (Exhibit 4.16 to
the 1992 Form 10-K).*
</TABLE>

42
<PAGE> 43

<TABLE>
<C> <S>
4.17 --Officer's Certificate dated June 30, 1993 establishing a series of
debt securities ($150,000,000 Medium-Term Notes, Series C) to be
issued under the Indenture described in Exhibit 4.13 above (Exhibit 4
to the Company's Current Report on Form 8-K dated June 21, 1993).*
4.18 --Officer's Certificate dated October 27, 1993 establishing a series of
debt securities ($200,000,000 9 3/8% Notes due 2003) to be issued
under the Indenture described in Exhibit 4.13 above (Exhibit 4 to the
Company's Current Report on Form 8-K dated October 20, 1993).*
4.19 --Officer's Certificate dated January 18, 1994 establishing a series of
debt securities ($60,000,000 9 3/8% Notes due 2003) to be issued under
the Indenture described in Exhibit 4.13 (Exhibit 4 to the Company's
Current Report on Form 8-K dated January 10, 1994).*
4.20 --Preferred Stock Purchase Agreement dated February 1, 1987 (the
"Preferred Stock Purchase Agreement") between the Company and The
Prudential Insurance Company of America ("Prudential") (Exhibit 4.17
to the 1992 Form 10-K).*
4.21 --Amendment dated February 8, 1987 to the Preferred Stock Purchase
Agreement (Exhibit 4.18 to the 1992 Form 10-K).*
4.22 --Registration Rights Agreement dated as of February 1, 1987 between the
Company and Prudential (Exhibit 4.19 to the 1992 Form 10-K).*
4.23 --Agreement dated April 12, 1990 amending the Preferred Stock Purchase
Agreement (Exhibit 4.20 to the 1992 Form 10-K).*
4.24 --Waiver of Certain Rights Relating to $9.75 Preferred Stock dated June
5, 1990 between the Company and Prudential (Exhibit 4.21 to the 1992
Form 10-K).*
4.25 --Waiver of Certain Equity Offering Rights dated April 12, 1990 between
the Company and Prudential amending the Preferred Stock Purchase
Agreement (Exhibit 4.22 to the 1992 Form 10-K).*
4.26 --Agreement dated February 28, 1995 between Prudential and the Company
(Exhibit 2 to the Company's Schedule 14D-9 dated March 3, 1995 [the
"Schedule 14D-9"]).*
4.27 --Waiver of Certain Rights Relating to $9.75 Preferred Stock dated June
8, 1995 between Prudential and the Company, filed herewith.
4.28 --Warrant Certificate No. 1 dated October 10, 1992 issued to Kidder,
Peabody Group Inc. for 8,000,000 warrants each representing the right
to purchase from the Company on or prior to October 10, 1997 one share
of common stock, $1.00 par value, of the Company at a price of $13.00
per share (Exhibit 4.23 to the 1992 Form 10-K).*
4.29 --Registration Rights Agreement dated as of October 10, 1992 between
Kidder, Peabody Group Inc. and the Company (Exhibit 4.24 to the 1992
Form 10-K).*
4.30 --Agreement of Merger, dated February 28, 1995, among the Company, YPF
Sociedad Anonima ("YPF") and YPF Acquisition Corp. ("YPFA") (Exhibit 3
to the Schedule 14D-9).*
4.31 --Credit Agreement dated as of June 8, 1995, between Midgard Energy
Company, the lenders signatory thereto and The Chase Manhattan Bank
(National Association) ("Chase"), as agent (Exhibit 4.1 to the
Company's Current Report on Form 8-K dated June 8, 1995 [the "June 8,
1995 Form 8-K"]).*
4.32 --Credit Agreement dated as of June 16, 1995, between Maxus Indonesia,
Inc., Maxus Northwest Java Inc., Maxus Southeast Sumatra, Inc., the
lenders signatory thereto and Chase, as agent (Exhibit 4.2 to the June
8, 1995 Form 8-K).*
</TABLE>

43
<PAGE> 44

<TABLE>
<C> <S>
10.1 --Performance Incentive Plan of the Company, as amended effective
January 1, 1986 (Exhibit 10.6 to the 1992 Form 10-K).*
10.2 --Specimen copy of Change of Control Agreement between the Company and
certain of its former its executive officers (Exhibit 10.7 to the 1992
Form 10-K).*
10.3 --Specimen copy of letter agreement between the Company and certain of
its former executive officers relating to the Agreements referred to
in Exhibit 10.2 above (Exhibit 10.8 to the 1992 Form 10-K).*
10.4 --Specimen copy of disability benefit arrangement between the Company
and its executive officers (Exhibit 10.10 to the 1992 Form 10-K).*
10.5 --Supplemental Executive Retirement Plan of the Company, effective May
1, 1987 (Exhibit 10.11 to the 1992 Form 10-K).*
10.6 --Supplemental Executive Retirement Plan of the Company, effective March
1, 1990 (Exhibit 10.12 to the 1992 Form 10-K).*
10.7 --Specimen copy of supplemental death benefit arrangement between the
Company and its executive officers (Exhibit 10.13 to the 1992 Form
10-K).*
10.8 --Maxus Energy Corporation Supplemental Savings Plan (as amended and
restated effective June 8, 1995), filed herewith.
10.9 --Trust Agreement dated December 18, 1986 between the Company and
AmeriTrust Company National Association (Exhibit 10.15 to the 1992
Form 10-K).*
10.10 --Deferred Compensation Plan for Executives of the Company, effective
September 28, 1993 (Exhibit 10.17 to the 1993 Form 10-K).*
10.11 --Distribution Agreement dated as of April 22, 1987 between the Company
and Diamond Shamrock R&M, Inc. (Exhibit 10.23 to the 1992 Form 10-K).*
10.12 --Rights Agreement dated as of September 2, 1988 between the Company and
AmeriTrust Company National Association (Exhibit 10.24 to the 1992
Form 10-K).*
10.13 --Stock Purchase Agreement by and among the Company and Occidental
Petroleum Corporation, et. al. dated September 4, 1986 (Exhibit 10.25
to the 1992 Form 10-K).*
10.14 --Agreement of Merger dated as of February 28, 1995 among YPF, YPFA
Corp. and the Company (Exhibit 3 to the Schedule 14D-9).*
10.15 --International Consulting Agreement, dated May 1, 1995 between C. L.
Blackburn and YPF, filed herewith.
10.16 --Assignment of International Consulting Agreement, dated November 2,
1995 between C. L. Blackburn, YPF, and the Company, filed herewith.
10.17 --Maxus Severance Agreement dated August 3, 1995 between the Company and
Roberto Luis Monti, filed herewith.
10.18 --Compensation Agreement dated December 27, 1995 between the Company and
Roberto L. Monti, filed herewith.
10.19 --Services Agreement dated April 5, 1995 between the Company and Peter
D. Gaffney, filed herewith.
10.20 --Secondment Agreement dated April 5, 1995 between the Company, YPF and
Gaffney, Cline & Associates, Inc., filed herewith.
10.21 --Amendment to Change in Control Agreement dated May 11, 1995 between
the Company and W. Mark Miller, filed herewith.
10.22 --Employment Agreement effective as of July 1, 1995 between the Company
and W. Mark Miller, filed herewith.
</TABLE>

44
<PAGE> 45

<TABLE>
<C> <S>
10.23 --Specimen copy of a letter agreement regarding Change in Control
Agreement dated April 7, 1995 between the Company and certain of its
executive officers, filed herewith.
10.24 --Letter Agreement regarding Change in Control Agreement dated April 13,
1995 between the Company and Michael C. Forrest, filed herewith.
10.25 --Specimen copy of a letter agreement regarding Change in Control
Agreement dated ------------, 1995 between the Company and certain of
its executive officers, filed herewith.
21.1 --List of Subsidiaries of the Company, filed herewith.
23.1 --Consent of Independent Accountants, filed herewith.
23.2 --Consent of Independent Accountants, filed herewith.
24.1 --Powers of Attorney of directors and officers of the Company, filed
herewith.
24.2 --Power of Attorney of the Company, filed herewith.
27.1 --Financial Data Schedule, filed herewith.
</TABLE>

(b) Reports on Form 8-K.

None.

45
<PAGE> 46

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.

MAXUS ENERGY CORPORATION

By ROBERTO MONTI*
Roberto Monti
President and
Chief Executive Officer

March 21, 1996

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 date indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- --------------------------------------------
<C> <S>
President and Chief Executive Officer and
ROBERTO MONTI* Director
Roberto Monti
Executive Vice President and Treasurer
W. MARK MILLER* (principal financial officer)
W. Mark Miller

LINDA R. ENGELBRECHT* Controller
Linda R. Engelbrecht (principal accounting officer)

CHARLES L. BLACKBURN* Director
Charles L. Blackburn

CEDRIC BRIDGER* Director
Cedric Bridger

GEORGE L. JACKSON* Director
George L. Jackson

NELLS LEON* Director
Nells Leon

JAMES R. LESCH* Director
James R. Lesch

P. DEXTER PEACOCK Director
P. Dexter Peacock

R. A. WALKER* Director
R. A. Walker

</TABLE>

Lynne P. Ciuba, by signing her name hereto, does hereby sign this report on
Form 10-K on behalf of each of the above-named officers and directors of the
registrant pursuant to a power of attorney executed by each of such officers and
directors.

<TABLE>
<C> <S>
*By LYNNE P. CIUBA March 21, 1996
Lynne P. Ciuba
Attorney-in-fact
</TABLE>

46
<PAGE> 47

MAXUS ENERGY CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED DECEMBER 31,
MARCH 31, ----------------
1995 1994 1993
------------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE)
<S> <C> <C> <C>
Revenues
Sales and operating revenues................................. $142.5 $682.1 $786.7
Other revenues, net.......................................... 9.6 9.0 40.4
------ ------ ------
152.1 691.1 827.1
Costs and Expenses
Operating expenses........................................... 64.6 242.8 263.9
Gas purchase costs........................................... 12.7 116.9 155.6
Exploration, including exploratory dry holes................. 8.9 35.5 59.8
Depreciation, depletion and amortization..................... 29.9 140.2 153.6
General and administrative expenses.......................... 4.2 22.4 25.7
Taxes other than income taxes................................ 3.1 12.9 15.9
Interest and debt expenses................................... 24.1 96.7 88.4
Pre-merger costs............................................. 42.4
Environmental studies and remediation........................ 60.5 17.9
Restructuring:
Gain on sale of assets.................................. (201.9)
Restructuring costs..................................... 100.9
------ ------ ------
189.9 626.9 780.8
------ ------ ------
Income (Loss) Before Income Taxes, Extraordinary Item and
Cumulative Effect of Change in Accounting Principle............. (37.8) 64.2 46.3
Income Taxes................................................. 19.1 86.9 84.2
------ ------ ------
Net Loss Before Extraordinary Item and
Cumulative Effect of Change in Accounting Principle............. (56.9) (22.7) (37.9)
Extraordinary item, net of tax benefit of $.1................ (7.1)
Cumulative effect of change in accounting principle.......... (4.4)
------ ------ ------
Net Loss.......................................................... (56.9) (22.7) (49.4)
Dividend requirement on Preferred Stock...................... (9.6) (43.6) (41.7)
------ ------ ------
Net Loss Applicable to Common Shares.............................. $(66.5) $(66.3) $(91.1)
====== ====== ======
Net Loss Per Common Share Before Extraordinary Item and
Cumulative Effect of Change in Accounting Principle............. $ (.49) $ (.49) $ (.60)
Extraordinary item........................................... (.05)
Cumulative effect of change in accounting principle.......... (.03)
------ ------ ------
Net Loss Per Common Share......................................... $ (.49) $ (.49) $ (.68)
====== ====== ======
Average Common Shares Outstanding................................. 135.5 134.7 133.9
</TABLE>

See Notes to Consolidated Financial Statements.

F-1
<PAGE> 48

MAXUS ENERGY CORPORATION

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1995 1994
---------- --------- -------------
(IN MILLIONS, EXCEPT SHARES)
<S> <C> <C>
Current Assets
Cash and cash equivalents....................................... $ 91.6 $ 40.6
Short-term investments.......................................... 65.0 103.8
Receivables, less allowance for doubtful accounts............... 127.8 152.4
Taxes receivable................................................ 13.7 23.8
Inventories..................................................... 28.6 27.9
Restricted cash................................................. 48.5 46.4
Prepaids and other current assets............................... 19.4 18.7
--------- ----------
Total Current Assets....................................... 394.6 413.6
Properties and Equipment, less accumulated depreciation, depletion
and amortization................................................... 1,110.7 1,088.4
Investments and Long-Term Receivables................................ 41.5 40.2
Restricted Cash...................................................... 79.9 94.2
Intangible Assets, less accumulated amortization..................... 35.5 35.8
Deferred Income Taxes................................................ 9.4 9.4
Deferred Charges..................................................... 20.5 25.1
--------- ----------
$ 1,692.1 $ 1,706.7
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
---------------------------------------------------------------
Current Liabilities
Long-term debt.................................................. $ 4.7 $ 4.7
Accounts payable................................................ 49.8 65.1
Accrued liabilities............................................. 169.8 101.2
--------- ----------
Total Current Liabilities.................................. 224.3 171.0
Long-Term Debt....................................................... 970.9 970.9
Deferred Income Taxes................................................ 199.7 199.3
Other Liabilities and Deferred Credits............................... 158.7 149.4
$9.75 Redeemable Preferred Stock, $1.00 par value
Authorized and issued shares--1,250,000............................ 125.0 125.0
Stockholders' Equity
$2.50 Preferred Stock, $1.00 par value
Authorized shares--5,000,000
Issued shares--3,500,000...................................... 3.5 3.5
$4.00 Preferred Stock, $1.00 par value
Authorized shares--5,915,017
Issued shares--4,356,958 and 4,358,658........................ 4.4 4.4
Common Stock, $1.00 par value
Authorized shares--300,000,000
Issued shares--135,897,899 and 135,694,722.................... 135.9 135.7
Paid-in capital................................................. 966.2 988.1
Accumulated deficit............................................. (1,073.3) (1,016.4)
Minimum pension liability....................................... (18.3) (18.3)
Unrealized loss on marketable securities........................ (1.3) (2.4)
Common Treasury Stock, at cost--310,535 and 295,995............. (3.6) (3.5)
--------- ----------
Total Stockholders' Equity................................. 13.5 91.1
--------- ----------
$ 1,692.1 $ 1,706.7
========= ==========
</TABLE>

See "Commitments and Contingencies."
See Notes to Consolidated Financial Statements.
The Company uses the successful efforts method to account for its oil and gas
producing activities.

F-2
<PAGE> 49

MAXUS ENERGY CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
TWELVE MONTHS
THREE MONTHS ENDED DECEMBER
ENDED 31,
MARCH 31, -----------------
1995 1994 1993
------------- ------- -------
<S> <C> <C> <C>
(IN MILLIONS)
Cash Flows From Operating Activities:
Net loss................................................... $ (56.9) $ (22.7) $ (49.4)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Extraordinary item.................................... 7.1
Cumulative effect of change in accounting principle... 4.4
Depreciation, depletion and amortization.............. 29.9 140.2 153.6
Dry hole costs........................................ 1.0 2.8 5.7
Deferred income taxes................................. 0.4 (9.3) 22.3
Net gain on sale of assets and investments............ (1.7) (166.7) (13.8)
Postretirement benefits............................... 1.4 6.2 6.6
Pre-merger costs...................................... 42.4
Restructuring costs................................... 91.0
Environmental studies and remediation................. 60.5 17.9
Other................................................. 1.3 9.2 15.1
Changes in components of working capital:
Receivables...................................... 23.8 (1.8) (21.5)
Inventories, prepaids and other current assets... (1.4) (2.3) (6.4)
Accounts payable................................. (15.1) (22.3) 9.0
Accrued liabilities.............................. 26.3 (12.5) (5.2)
Taxes payable/receivable......................... 10.1 (2.8) (8.8)
------- ------- -------
Net Cash Provided by Operating Activities... 61.5 69.5 136.6
------- ------- -------
Cash Flows From Investing Activities:
Expenditures for properties and equipment--including dry
hole costs............................................... (53.6) (166.2) (340.0)
Expenditures for investments............................... (20.1) (20.4)
Proceeds from sales of assets.............................. 2.1 377.0 20.4
Proceeds from sale/maturity of short-term investments...... 63.4 10.9 171.3
Purchases of short-term investments........................ (24.6) (111.8) (53.1)
Restricted cash............................................ 12.2 19.6 (35.5)
Other...................................................... 9.8 (10.8) (20.4)
------- ------- -------
Net Cash Provided by (Used in) Investing
Activities................................ 9.3 98.6 (277.7)
------- ------- -------
Cash Flows From Financing Activities:
Net borrowings from joint venture partners................. (4.4) 4.4
Interest rate swap......................................... 3.4 (7.9) 5.8
Proceeds from issuance of short-term debt.................. 30.0 32.7
Repayment of short-term debt............................... (69.1) (32.7)
Proceeds from issuance of long-term debt................... 101.3 412.5
Repayment of long-term debt................................ (137.5) (203.7)
Stock rights redemption.................................... (13.6)
Proceeds from issuance of Preferred Stock.................. 85.7
Redemption of Preferred Stock.............................. (125.0)
Dividends paid on Preferred Stock.......................... (9.6) (43.6) (41.7)
------- ------- -------
Net Cash Provided by (Used in) Financing
Activities................................ (19.8) (256.2) 263.0
------- ------- -------
Net Increase (Decrease) in Cash and Cash Equivalents............ 51.0 (88.1) 121.9
Cash and Cash Equivalents at Beginning of Year.................. 40.6 128.7 6.8
------- ------- -------
Cash and Cash Equivalents at End of Year........................ $ 91.6 $ 40.6 $ 128.7
======= ======= =======
</TABLE>

See Notes to Consolidated Financial Statements.

F-3
<PAGE> 50

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PRESENTATION

On June 8, 1995, a special meeting of the stockholders of Maxus Energy
Corporation (together with its foreign and domestic subsidiaries, the "Company"
or "Maxus") was held to approve the Agreement of Merger ("Merger Agreement")
dated February 28, 1995, between the Company, YPF Acquisition Corp. (the
"Purchaser") and YPF Sociedad Anonima ("YPF"). The holders of the Company's
common stock, $1.00 par value per share, and $4.00 Cumulative Convertible
Preferred Stock approved the Merger Agreement, and the Purchaser was merged into
the Company (the "Merger") on June 8, 1995.

The following pre-Merger data is for the three months ended March 31, 1995,
and the years ended December 31, 1994 and 1993 and dollar amounts in tables are
in millions, except per share amounts. The financial statements for the
three-month period ended March 31, 1995, and the years ended December 31, 1994
and 1993 are presented separately as pre-Merger and post-Merger financial
information are not comparable. Certain data for 1994 and 1993 has been
reclassified to conform with the 1995 presentation.

NOTE ONE--SIGNIFICANT ACCOUNTING POLICIES

The Consolidated Financial Statements have been prepared in conformity with
generally accepted accounting principles, the most significant of which are
described below.

Consolidation and Equity Accounting

The Consolidated Financial Statements include the accounts of Maxus Energy
Corporation and all domestic and foreign subsidiaries. The Company used the
equity method to account for its less than majority owned investments in
affiliates and joint ventures ("Associated Companies"). Under the equity method,
the Company recognizes its proportionate share of the net income or loss of
Associated Companies currently, rather than when realized through dividends or
disposal. The Company used the proportionate consolidation method to account for
its investment in Diamond Shamrock Offshore Partners Limited Partnership
("Offshore Partners"). The Company sold its investment in Offshore Partners in
the second quarter of 1994 (See Note Four). All significant intercompany
accounts and transactions have been eliminated.

Statement of Cash Flows

Investments with original maturities of three months or less at the time of
original purchase are considered cash equivalents for purposes of the
accompanying Consolidated Statement of Cash Flows. Short-term investments
include investments with maturities over three months but less than one year.

F-4
<PAGE> 51

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Net cash provided by operating activities reflects cash receipts for
interest income and cash payments for interest expense and income taxes as
follows:

<TABLE>
<CAPTION>
TWELVE MONTHS
THREE MONTHS ENDED DECEMBER
ENDED 31,
MARCH 31, --------------
1995 1994 1993
------------ ----- -----
<S> <C> <C> <C>
Interest receipts................................... $ 7.0 $12.4 $13.5
Interest payments................................... 12.2 98.7 82.0
Income tax payments................................. 18.6 98.1 73.4
</TABLE>

Inventory Valuation

Inventories are valued at the lower of historical cost or market value and
are primarily comprised of well equipment and supplies. Historical cost is
determined primarily by using the weighted average cost method.

Properties and Equipment

Properties and equipment are carried at cost. Major additions are
capitalized; expenditures for repairs and maintenance are charged against
earnings.

The Company uses the successful efforts method to account for costs
incurred in the acquisition, exploration, development and production of oil and
gas reserves. Under this method, all geological and geophysical costs are
expensed; all development costs, whether or not successful, are capitalized as
costs of proved properties; exploratory drilling costs are initially
capitalized, but if the effort is determined to be unsuccessful, the costs are
then charged against earnings; depletion is computed based on an aggregation of
properties with common geologic structural features or stratigraphic conditions,
such as reservoirs or fields.

For investment in unproved properties in the United States, a valuation
allowance (included as an element of depletion) is provided by a charge against
earnings to reflect the impairment of unproven acreage. Investment in
international non-producing leasehold costs are reviewed periodically by
management to insure the carrying value is recoverable based upon the geological
and engineering estimates of total possible and probable reserves expected to be
added over the remaining life of each concession. Based upon increases to proved
reserves determined by reserve reports, a portion of the investment in
international non-producing leasehold costs will be periodically transferred to
investment in proved properties.

Depreciation and depletion related to the costs of all development
drilling, successful exploratory drilling and related production equipment is
calculated using the unit of production ("UOP") method based upon estimated
proved developed reserves. Leasehold costs are amortized using the UOP method
based on estimated total proved reserves. Other properties and equipment are
depreciated generally on the straight-line method over their estimated useful
lives. Intangible assets are amortized on the straight-line method over their
legal or estimated useful lives, not to exceed 40 years. Estimated future
dismantlement, restoration and abandonment costs for major facilities, net of
salvage value, are taken into account in determining depreciation, depletion and
amortization.

The Company capitalizes the interest cost associated with major property
additions and mineral development projects while in progress, such amounts being
amortized over the useful lives, and applying the same depreciation method, as
that used for the related assets.

When complete units of depreciable property are retired or sold, the asset
cost and related accumulated depreciation are eliminated with any gain or loss
reflected in other revenues, net. When less than complete units of depreciable
property are disposed of or retired, the difference between asset cost and
salvage or sales value is charged or credited to accumulated depreciation and
depletion.

F-5
<PAGE> 52

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Deferred Charges

Deferred charges are primarily comprised of debt issuance costs and are
amortized over the terms of the related debt agreements.

Revenue Recognition

Oil and gas sales are recorded on the entitlements method. Differences
between the Company's actual production and entitlements result in a receivable
when underproduction occurs and a payable when overproduction occurs. These
underproduced or overproduced volumes are valued based on the weighted average
sales price for each respective property. The Company's gross underproduced and
overproduced values at March 31, 1995, are not material.

Pensions

The Company has a number of trusteed noncontributory pension plans covering
substantially all full-time employees. The Company's funding policy is to
contribute amounts to the plans sufficient to meet the minimum funding
requirements under governmental regulations, plus such additional amounts as
management may determine to be appropriate. The benefits related to the plans
are based on years of service and compensation earned during years of
employment. The Company also has a noncontributory supplemental retirement plan
for executive officers.

Other Postretirement and Postemployment Benefits

The Company provides certain health care and life insurance benefits for
retired employees and certain insurance and other postemployment benefits for
individuals whose employment is terminated by the Company prior to their normal
retirement. The Company accrues the estimated cost of retiree benefit payments,
other than pensions, during employees' active service period. Employees become
eligible for these benefits if they meet minimum age and service requirements.
The Company accounts for benefits provided after employment but before
retirement by accruing the estimated cost of postemployment benefits when the
minimum service period is met, payment of the benefit is probable and the amount
of the benefit can be reasonably estimated. The Company's policy is to fund
other postretirement and postemployment benefits as claims are incurred.

Environmental Expenditures

Environmental liabilities are recorded when environmental assessments
and/or remediation are probable and material and such costs to the Company can
be reasonably estimated. The Company's estimate of environmental assessment
and/or remediation costs to be incurred are based on either 1) detailed
feasibility studies of remediation approach and cost for individual sites or 2)
the Company's estimate of costs to be incurred based on historical experience
and publicly available information, based on the stage of assessment and/or
remediation of each site. As additional information becomes available regarding
each site or as environmental remediation standards change, the Company revises
its estimate of costs to be incurred in environmental assessment and/or
remediation.

Income Taxes

The Company reports income taxes in accordance with Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), Accounting for Income Taxes. SFAS 109
requires the use of an asset and liability approach to measure deferred tax
assets and liabilities resulting from all expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns. Additionally, SFAS 109 requires that annual taxes are to be allocated
to interim periods on the basis of the requirements of

F-6
<PAGE> 53

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Accounting Principles Board Opinion No. 28 ("APB 28"), Interim Financial
Reporting. The reporting requirements of APB 28 are based on the view that each
interim period is an integral part of the related annual period.

Because the tax year of the Company did not close in any relevant
jurisdiction on March 31, 1995, taxes were not measured on deferred tax
liabilities and assets at that time. In accordance with APB 28 and SFAS 109,
taxes were allocated to the period based on the estimated annual effective tax
rate for the period ended December 31, 1995.

Earnings per Share

Primary earnings per share are based on the weighted average number of
shares of common stock and common stock equivalents outstanding, unless the
inclusion of common stock equivalents has an antidilutive effect on earnings per
share. Fully diluted earnings per share are not presented due to the
antidilutive effect of including all potentially dilutive common stock
equivalents.

Financial Instruments with Off-Balance-Sheet Risk and Concentrations of Credit
Risk

The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash equivalents, short-term investments,
restricted cash and trade receivables.

The Company's cash equivalents, short-term investments and restricted cash
represent high-quality securities placed with various high investment grade
institutions. This investment practice limits the Company's exposure to
concentrations of credit risk.

The Company's trade receivables are dispersed among a broad domestic and
international customer base; therefore, concentrations of credit risk are
limited. The Company carefully assesses the financial strength of its customers.
Letters of credit are the primary security obtained to support lines of credit.

The Company has minimal exposure to credit losses in the event of
nonperformance by the counterparties to its interest rate swap agreement,
natural gas price swap agreements and nonderivative financial assets. The
Company does not obtain collateral or other security to support financial
instruments subject to credit risk but restricts such arrangements to
investment-grade counterparties.

Investments in Marketable Securities

Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, ("SFAS 115") "Accounting for Certain Investments
in Debt and Equity Securities." SFAS 115 requires that investments in debt and
equity securities be reported at fair value except for those investments in debt
securities which management has the intent and the ability to hold to maturity.
Investments in debt securities which are held-for-sale are classified based on
the stated maturity and management's intent to sell the securities. Unrealized
gains and losses on investments in marketable securities, except for debt
securities classified as "held-to-maturity", are reported as a separate
component of stockholders' equity. The cumulative effect of adopting SFAS 115 of
$2.4 million was recorded as a valuation reserve in shareholders' equity. The
Company's gross unrealized loss on its involvement in marketable securities
which are included in long-term investments at March 31, 1995, was $1.3 million
which was entirely comprised of unrealized losses on the Company's investment in
U. S. Treasury Notes. Prior to the adoption of SFAS 115, the Company accounted
for its investments in debt securities at amortized cost and classified such
investments according to the stated maturity of the underlying securities.

F-7
<PAGE> 54

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Derivatives

The Company periodically hedges the effects of fluctuations in the price of
crude oil and natural gas through price swap agreements and futures contracts.
The Company historically has hedged no more than 50% of its U. S. gas
production. Gains and losses on these hedges are deferred until the related
sales are recognized and are recorded as a component of sales and operating
revenues. The Company periodically enters into interest rate swap agreements to
hedge interest on long-term debt. The gain or loss on interest rate swaps is
recognized monthly as a decrease or increase to interest expense.

Take-or-Pay Obligations

The Company records payments received for take-or-pay obligations for
unpurchased contract volumes as deferred revenue, which is included in Other
Liabilities in the consolidated balance sheet. The deferred revenue is
recognized in the income statement as quantities are delivered which fulfill the
take-or-pay obligation. At March 31, 1995, the Company had $13.6 million in
deferred revenue as a result of a take-or-pay payment received related to its
Indonesian operations.

NOTE TWO--MASTER LIMITED PARTNERSHIP

In 1994, the Company sold its interests in Offshore Partners, a master
limited partnership, which explored for and produced natural gas and crude oil
on federal offshore leases in the Gulf of Mexico (See Note Four). Maxus Offshore
Exploration Company, a wholly owned subsidiary of the Company, and the Company
had a combined 1% general partner's interest in Offshore Partners and were the
managing general partner and special general partner, respectively. The Company
had an aggregate interest in Offshore Partners of approximately 87.1% at
December 31, 1993.

NOTE THREE--PRE-MERGER COSTS

In March 1995, the Company recorded $42.4 million of pre-merger costs
associated with the Merger. Such costs, which included expenses associated with
financial consulting and legal services, severance payments pursuant to change
of control agreements and payments for surrender of stock options and restricted
stock, were recorded in accrued liabilities in the consolidated balance sheet.

NOTE FOUR--RESTRUCTURING

Asset Sales

On April 25, 1994, Offshore Partners sold its interests in Main Pass Blocks
72, 73 and 74. On April 26, 1994, Maxus and its subsidiaries sold all of their
partnership interests in Offshore Partners. On June 22, 1994, Maxus also sold
the McFarlan Field and Grand Isle Block 25, both producing oil and gas
properties. In total, the Company received $324.6 million of proceeds and
recorded a net gain of $201.9 million from these transactions.

Restructuring Costs

In June 1994, the Company recorded a $100.9 million restructuring charge.
The charge included a $69.8 million write-off associated with undeveloped Alaska
coal leases, the development of which does not fit within the Company's strategy
to commit funds only to oil and gas exploration and production. The charge also
included costs associated with staff reductions and the write-off of
non-producing assets outside the Company's core areas.

F-8
<PAGE> 55

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE FIVE--ASSET ACQUISITIONS AND DIVESTITURES

In September of 1994, the Company sold its geothermal subsidiary, Thermal
Power Company, for approximately $58 million net in cash and a $6.5 million
promissory note due from the purchaser in 1997. A $12.6 million loss on the sale
of these assets was recognized.

In November of 1993, the Company transferred its working interest in the
Recetor Block in Colombia to its partner for partial recoupment of its
investment. Maxus received $10 million and retained an overriding royalty
interest ("ORI"). There was no gain or loss recognized on this transaction. In
December 1995, the Company sold its ORI to the same party for $25 million.

In October 1993, the Company and its Venezuelan partner, Otepi Consultores,
S.A., were awarded an operating service agreement to reactivate Venezuelan oil
fields with Lagoven, S.A., an affiliate of the national oil company, Petroleos
de Venezuela, S.A. Under the terms of the operating service agreement, Maxus
will be a contractor for Lagoven and will be responsible for overall operations
of the Quiriquire Unit, including all necessary investments to reactivate the
fields comprising the unit. Maxus will receive a fixed fee in U.S. dollars for
each barrel of crude oil produced based on an average international crude oil
price. Maxus is reimbursed in U.S. dollars for its capital expenditures,
provided that such fee and expense reimbursement cannot exceed the maximum
dollar amount per barrel set forth in the agreement. The Venezuelan government
will retain full ownership of all hydrocarbons in the field.

During the second quarter of 1994, Maxus Venezuela (C.I.) Ltd., a
subsidiary of Maxus, signed an agreement with BP Exploracion de Venezuela S.A.,
granting BP a 45% interest in the Quiriquire Unit in eastern Venezuela. Maxus
Venezuela remained the operator with a 50% interest and Otepi Consultores, a
Venezuelan company, holds the remaining 5%. Also, during the second quarter of
1994, Maxus Bolivia, Inc., a subsidiary of Maxus, signed an agreement to take
BHP Petroleum as a partner in its Bolivian oil development project. The Company
received $10 million from BHP in exchange for a 50% interest in the project.

NOTE SIX--GEOGRAPHIC DATA

The Company is engaged primarily in the exploration for and the production
and sale of crude oil and natural gas. Sales, operating profit and identifiable
assets by geographic area were as follows:

<TABLE>
<CAPTION>
SALES AND OPERATING REVENUES
----------------------------------
THREE MONTHS YEAR ENDED
ENDED DECEMBER 31,
MARCH 31, -----------------
1995 1994 1993
------------ ------ ------
<S> <C> <C> <C>
United States.................................. $ 41.6 $276.9 $380.7
Indonesia...................................... 93.1 381.2 406.0
South America.................................. 7.8 24.0
------ ------ ------
$142.5 $682.1 $786.7
====== ====== ======
</TABLE>

F-9
<PAGE> 56

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
OPERATING PROFIT (LOSS)
----------------------------------
THREE MONTHS YEAR ENDED
ENDED DECEMBER 31,
MARCH 31, -----------------
1995 1994 1993
------------ ------ ------
<S> <C> <C> <C>
United States.................................. $ 2.9 $ 35.0 $ 26.3
Indonesia...................................... 36.8 138.5 169.1
South America.................................. (3.7) (2.6) (13.0)
Other foreign.................................. (1.7) (11.6) (20.4)
------ ------ ------
34.3 159.3 162.0
Equity earnings................................ 5.2 10.2
General corporate expenses..................... (5.6) (104.6) (37.5)
Interest and debt expenses..................... (24.1) (96.7) (88.4)
Pre-merger costs............................... (42.4)
Restructuring costs............................ 101.0
------ ------ ------
$(37.8) $ 64.2 $ 46.3
====== ====== ======
</TABLE>

<TABLE>
<CAPTION>
IDENTIFIABLE ASSETS
-----------------------------------
DECEMBER 31,
MARCH 31, ---------------------
1995 1994 1993
--------- -------- --------
<S> <C> <C> <C>
United States............................... $ 295.7 $ 327.0 $ 521.1
Indonesia................................... 639.0 647.5 665.5
South America............................... 317.2 304.2 218.9
Other foreign............................... 15.3 11.4 3.9
-------- -------- --------
1,267.2 1,290.1 1,409.4
Corporate assets............................ 424.9 416.6 489.7
Investments in Associated Companies......... 88.3
-------- -------- --------
$ 1,692.1 $1,706.7 $1,987.4
======== ======== ========
</TABLE>

Net foreign assets were $685.5 million at March 31, 1995, $701.4 million at
December 31, 1994 and $673.5 million at December 31, 1993.

Income from foreign operations, after applicable local income taxes, was
$16.7 million for the three months ended March 31, 1995 and $63.9 million and
$77.8 million for the years ended December 31, 1994 and 1993, respectively.

Sales to three customers for the three months ended March 31, 1995 and the
year ended December 31, 1994 and 1993 each represented 10% or more of
consolidated sales:

<TABLE>
<CAPTION>
THREE MONTHS TWELVE MONTHS
ENDED ENDED DECEMBER 31,
MARCH 31, ------------------------
1995 1994 1993
------------ ------ -------------
<S> <C> <C> <C>
Phillips Petroleum Company................ $ 14.3 $ 56.4 $ 41.1
Mitsubishi Corporation.................... 23.4 66.5 83.3
Indonesian Government..................... 36.4 145.8 148.0
</TABLE>

The Company does not believe that the loss of Mitsubishi Corporation and
Phillips Petroleum Company as customers would adversely affect the Company's
ability to market its oil and gas production. Sales to the Company's largest
customer, the Indonesian Government, are made primarily pursuant to long-term

F-10
<PAGE> 57

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

production sharing contracts between the Company's Indonesian operations and the
Indonesian Government. The Indonesian Government is required to purchase a
specified amount of the Company's oil and gas production throughout the life of
its operations in Indonesia based on these contracts.

NOTE SEVEN--TAXES

The Company reports income taxes in accordance with SFAS 109 (See Note
One). The standard was adopted in January 1993. Adoption, which was made
prospectively, had no impact on 1993 earnings or cash flow; however, $21.0
million of deferred tax liabilities which were considered current under SFAS 96
were reclassified as noncurrent and $4.1 million of deferred tax assets were
reclassified as current assets.

Income before income taxes, extraordinary item and cumulative effect of
change in accounting principle was comprised of income (loss) from:

<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED DECEMBER 31,
MARCH 31, -----------------
1995 1994 1993
------------ ------ ------
<S> <C> <C> <C>
United States.................................. $(69.2) $(60.1) $(89.4)
Foreign........................................ 31.4 124.3 135.7
------ ------ ------
$(37.8) $ 64.2 $ 46.3
====== ====== ======
</TABLE>

The Company's provision for income taxes was comprised of the following:

<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED DECEMBER 31,
MARCH 31, ----------------
1995 1994 1993
------------ ------ -----
<S> <C> <C> <C>
Current
Federal.................................... $(20.1) $ .4
Foreign.................................... $ 18.7 73.7 60.9
State and local............................ 5.5 .6
----- ------ -----
18.7 59.1 61.9
Deferred
Federal.................................... 24.7
Foreign.................................... .4 3.1 22.3
----- ------ -----
.4 27.8 22.3
----- ------ -----
Provision for income taxes...................... $ 19.1 $ 86.9 $84.2
===== ====== =====
</TABLE>

F-11
<PAGE> 58

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The principal reasons for the difference between tax expense at the
statutory federal income tax rate of 35% and the Company's provision for income
taxes were:

<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED DECEMBER 31,
MARCH 31, ----------------
1995 1994 1993
------------ ------ ------
<S> <C> <C> <C>
Tax expense at statutory federal rate............. $(13.2) $ 22.5 $ 16.2
Increase (reduction) resulting from:
Taxes on foreign income...................... 12.4 49.5 53.7
Excess statutory depletion................... (.7) (1.0)
Asset sales.................................. 20.5
Alternative minimum tax...................... (.3) .3
Settlement of claims relating to Natomas
acquisition................................ (.3) (2.4)
Nondeductible pre-Merger costs............... 4.4
Valuation allowance.......................... 13.9 24.9 30.0
Items not related to current year earnings... 1.5 (33.4) (13.7)
Other, net................................... .1 4.2 1.1
------ ------ ------
Provision for income taxes................... $ 19.1 $ 86.9 $ 84.2
====== ====== ======
</TABLE>

"Items not related to current year earnings" in 1994 includes tax benefit
from the favorable resolution of a federal tax refund suit.

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities for the three
months ended March 31, 1995, December 31, 1994 and 1993 were as follows:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1994
--------- ------------
<S> <C> <C>
U. S. deferred tax liabilities
Properties and equipment.......................... $ 5.1 $ 5.0
Other............................................. .2
------- -------
Deferred U. S. tax liabilities............... 5.3 5.0
------- -------
U. S. deferred tax assets
Foreign deferred taxes............................ (69.9) (69.7)
Book accruals..................................... (34.4) (35.1)
Loss carryforwards................................ (50.8) (36.3)
Credit carryforwards.............................. (23.2) (23.2)
Other............................................. (.6) (.4)
------- -------
Gross deferred U. S. tax assets.............. (178.9) (164.7)
------- -------
Valuation allowance.................................... 163.9 150.0
------- -------
Net deferred U. S. tax assets.......................... (15.0) (14.7)
------- -------
Net deferred U. S. taxes............................... (9.7) (9.7)
------- -------
Foreign deferred tax liabilities
Properties and equipment.......................... 199.7 199.4
------- -------
Net deferred foreign taxes................... 199.7 199.4
------- -------
Net deferred taxes..................................... $ 190.0 $ 189.7
======= =======
</TABLE>

F-12
<PAGE> 59

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The valuation allowance was $92.6 million upon adoption of SFAS 109. The
valuation allowance was increased $23.4 million during 1994 and $13.9 million
during the first three months of 1995, primarily due to the increase in loss
carryforwards.

Because the tax year of the Company did not close on March 31, 1995, tax
carryovers are not measured at that date. At December 31, 1994, the Company had
$13.1 million of general business credit carryforwards that expire between 1996
and 2002; $103.8 million of U.S. net operating loss carryforwards that expire in
2003, 2005 and 2008; and $10.1 million of minimum tax credit that can be carried
forward indefinitely.

As a result of the Merger, effective April 1, 1995, the Company's ability
to utilize its existing net operating loss carryforwards will be limited by
statute to approximately $92.0 million each year until exhausted. To the extent
certain gains are recognized in the future, the annual limitation may be
increased to the extent that the gains are built-in gains within the meaning of
the U.S. Internal Revenue Code.

There are accumulated undistributed earnings after applicable local taxes
of foreign subsidiaries of $6.4 million at March 31, 1995 for which no provision
was necessary for foreign withholding or other income taxes because that amount
had been reinvested in properties and equipment and working capital in the
foreign jurisdictions.

Taxes other than income taxes were comprised of the following:

<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED DECEMBER 31,
MARCH 31, --------------
1995 1994 1993
------------ ----- -----
<S> <C> <C> <C>
Gross production.................................... $1.2 $ 6.5 $ 8.0
Real and personal property.......................... 1.8 5.5 7.4
Other............................................... .1 .9 .5
---- ----- -----
$3.1 $12.9 $15.9
==== ===== =====
</TABLE>

NOTE EIGHT--POSTEMPLOYMENT BENEFITS

Pensions

The components of net periodic pension expense are as follows:

<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED DECEMBER 31,
MARCH 31, ---------------
1995 1994 1993
------------ ----- ------
<S> <C> <C> <C>
Service cost for benefits earned during the
period........................................... $ .5 $ 2.9 $ 2.1
Interest cost on projected benefit obligation...... 2.2 8.7 9.3
Actual return on plan assets....................... (4.5) (2.5) (10.4)
Net amortization and deferrals..................... 2.5 (5.4) .6
----- ----- ------
$ .7 $ 3.7 $ 1.6
===== ===== ======
</TABLE>

Due to an early retirement program offered to former employees, the Company
recognized a settlement loss of $1.7 million on one of its plans in 1994.

F-13
<PAGE> 60

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Plan assets are primarily invested in short-term investments and stocks and
bonds. The principal assumptions used to estimate the benefit obligations of the
plans on the measurement date, October 1, 1994 were as follows:

<TABLE>
<S> <C>
Discount rate.......................................................... 8.5%
Expected long-term rate of return on plan assets....................... 9.0%
Rate of increase in compensation levels................................ 5.5%
</TABLE>

The funded status of the plans at March 31, 1995 and December 31, 1994 were
as follows:

<TABLE>
<CAPTION>
PLANS WITH
--------------------------------------------------------
ACCUMULATED ASSETS ACCUMULATED ASSETS
BENEFITS EXCEEDING BENEFITS EXCEEDING
EXCEEDING ACCUMULATED EXCEEDING ACCUMULATED
ASSETS BENEFITS ASSETS BENEFITS
3/31/95 3/31/95 12/31/94 12/31/94
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation......... $ 86.3 $ 9.8 $ 87.6 $ 9.4
------- ----- ------ -----
Accumulated benefit obligation.... $ 90.6 $11.9 $ 91.9 $11.5
------- ----- ------ -----
Projected benefit obligation...... $ 91.4 $15.0 $ 92.7 $14.6
Plan assets at fair value.............. 76.2 14.5 78.0 14.2
------- ----- ------ -----
Plan assets less than projected benefit
obligation........................... $ (15.2) $ (.5) $ (14.7) (.4)
Unrecognized net loss.................. 24.1 1.0 24.1 1.0
Unrecognized net transition obligation
(asset).............................. (3.8) .1 (3.8) .1
Unrecognized prior service cost........ (.3) (.9) (.3) (.9)
Adjustment required to recognize
minimum liability.................... (18.3) (18.3)
------- ----- ------ -----
Prepaid (accrued) pension cost......... $ (13.5) $ (.3) $ (13.0) $ (.2)
======= ===== ====== =====
</TABLE>

At March 31, 1995 and December 31, 1994, the Company's accumulated
postretirement benefit obligation ("APBO") exceeded the plan assets. In
accordance with Statement of Financial Accounting Standards No. 87, "Employers'
Accounting for Pensions," the Company recorded a minimum pension liability of
$19.2 million and a charge to equity of $18.3 million at March 31, 1995 and
December 31, 1994.

In addition to the defined benefit plans, the Company has a defined
contribution plan which covers Indonesian nationals. Employee contributions of
2% of each covered employee's compensation are matched by the Company with a
contribution of 6% of compensation by the Company. Contributions to the plan
were $.1 million in the first quarter of 1995 and $.4 million in 1994.

Other Postretirement Benefits

As a result of the Merger, the Company was required to fully accrue its
obligation for postretirement benefits other than pensions in purchase
accounting (See Note Two). Therefore, effective April 1, 1995, the Company
increased its balance sheet liability by $31.7 million to reflect any previously
unrecognized gains and unrecognized transition obligation at March 31, 1995.

The components of net periodic postretirement benefit expense for the nine
months ended December 31, 1995 are as follows:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
DECEMBER
31,
1995
-----------
<S> <C>
Service cost for benefits earned during the period.............. $ .3
Interest cost on accumulated postretirement benefit
obligation.................................................... 2.6
-----
$ 2.9
=====
</TABLE>

F-47
<PAGE> 94

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The APBO as of December 31, 1995 was $46.6 million. The amount recognized
in the Company's statement of financial position at December 31, 1995 is as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------
<S> <C>
Retirees.......................................................... $ 39.9
Fully eligible active employees................................... 2.3
Other active employees............................................ 4.4
------
Total............................................................. 46.6
Unrecognized net loss............................................. (1.6)
------
$ 45.0
======
</TABLE>

A discount rate of 7.5% was used in determining the APBO at December 31
1995. The APBO was based on a 9% increase in the medical cost trend rate, with
the rate trending downward .5% per year to 5% in 2003 and remaining at 5%
thereafter. This assumption has a significant effect on annual expense, as it is
estimated that a 1% increase in the medical trend rate would increase the APBO
at December 31, 1995 by $4.6 million and increase the net periodic
postretirement benefit cost by $.4 million per year.

NOTE SEVEN--FINANCIAL INSTRUMENTS

Restricted Cash

The fair value of the Company's restricted cash, which is invested
primarily in U. S. Treasury notes, marketable securities and trust accounts, is
based on the quoted market prices for the same or similar securities at the
reporting date. The Company's gross unrealized gain on its restricted cash was
$2.3 million at December 31, 1995.

Long-Term Debt

The estimated fair value of the Company's financial instruments are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1995
---------------------
CARRYING FAIR
AMOUNT VALUE
-------- --------
<S> <C> <C>
Assets
Restricted cash, including current and long-term
portion.......................................... $ 80.4 $ 82.7
Liabilities
Long-term debt, including current portion.......... 1,295.5 1,408.7
$9.75 Preferred Stock.............................. 125.0 125.8
</TABLE>

For information on the Company's derivative financial instruments, see Note
Thirteen.

F-48
<PAGE> 95

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE EIGHT--RECEIVABLES

<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------
<S> <C>
Trade receivables................................................. $ 101.4
Notes and other receivables....................................... 41.3
Less--Allowance for doubtful receivables.......................... .9
-------
$ 141.8
=======
</TABLE>

NOTE NINE--PROPERTIES AND EQUIPMENT

<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------
<S> <C>
Proved properties................................................. $ 1,597.1
Unproved properties............................................... 763.1
Gas plants and other.............................................. 130.0
---------
Total Oil and Gas....................................... 2,490.2
Corporate......................................................... 13.3
---------
2,503.5
Less--Accumulated depreciation, depletion and amortization........ 139.9
--------
$2,363.6
========
</TABLE>

The charge against earnings for depreciation, depletion and amortization of
property and equipment was $142.1 million for the nine months ended December 31,
1995 and the charge against earnings for maintenance and repairs, which is
included in operating expenses, was $25 million.

NOTE TEN--RESTRICTED CASH

At December 31, 1995 the Company had $80.4 million in restricted cash, of
which $30.7 million represented collateral for outstanding letters of credit and
$7.4 million represented six months of interest on outstanding borrowings as
required by the Holdings credit agreement. Assets held in trust as required by
certain insurance policies were $42.3 million. Approximately $19.0 million of
collateral for outstanding letters of credit at December 31, 1995, was
classified as a current asset as these amounts are expected to be released
during 1996.

NOTE ELEVEN--ACCRUED LIABILITIES

<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------
<S> <C>
Accrued interest payable.......................................... $ 24.2
Joint interest billings for international operations.............. 41.7
Merger reserve.................................................... 31.4
Environmental reserve............................................. 28.5
Overlift payable.................................................. 6.6
Postretirement and postemployment benefits........................ 4.5
Accrued compensation, benefits and withholdings................... 8.1
Other............................................................. 28.4
-------
$ 173.4
=======
</TABLE>

F-49
<PAGE> 96

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE TWELVE--LONG-TERM DEBT AND CREDIT ARRANGEMENTS

<TABLE>
<CAPTION>
DECEMBER 31, 1995
---------------------------------
FACE UNAMORTIZED CARRYING
VALUE DISCOUNT VALUE
-------- ----------- --------
<S> <C> <C> <C>
Senior Indebtedness
Sinking Fund Debentures
11 1/4% due 2013, effective rate
13.45%............................. $ 16.9 $ 2.5 $ 14.4
11 1/2% due 2001-2015, effective rate
13.82%............................. 109.6 15.0 94.6
8 1/2% due 1998-2008, effective rate
12.60%............................. 93.8 17.7 76.1
Notes
9 7/8% due 2002, effective rate 12.26%.... 247.8 26.7 221.1
9 1/2% due 2003, effective rate 12.22%.... 100.0 12.7 87.3
9 3/8% due 2003, effective rate 12.03%.... 260.0 34.5 225.5
Medium-term notes.............................. 144.9 .1 144.8
Bank and other loans........................... .1 .1
Midgard Credit Facility........................ 250.0 250.0
Holdings Credit Facility....................... 175.0 175.0
Advances from parent........................... 6.6 6.6
-------- ------- --------
Total senior
indebtedness............. 1,404.7 109.2 1,295.5
Less--current portion.......................... 34.3 34.3
-------- ------- --------
$1,370.4 $ 109.2 $1,261.2
======== ======= ========
</TABLE>

As a result of the Merger, the Company was required to revalue its
outstanding debt to market value. Consequently, the Company reduced the carrying
amount of its debt by recording $115.1 million of unamortized discount on April
1, 1995. Total debt outstanding at April 1, 1995 of $1,295.4 million, as
included in the accompanying unaudited balance sheet, reflected the unamortized
discount. For the nine months ended December 31, 1995 $5.9 million of discount
amortization was included as a component of interest expense.

The aggregate maturities of long-term debt outstanding at December 31,
1995, for the next five years will be as follows:

At December 31, 1995, the Company had $144.8 million of medium-term notes
outstanding, which were issued in prior years, with maturities from 1996 to 2004
and annual interest rates ranging from 7.57% to 11.08%.

The Company maintains a $25.0 million uncommitted credit facility (the
"credit facility"), which is used for the issuance of documentary or standby
letters of credit and/or the payment of shipping documents. The credit facility
can be secured by cash or the accounts receivable which are financed through the
letters of credit. At December 31, 1995, there were $13.8 million of cash
collateralized letters of credit outstanding under this credit facility.

F-50
<PAGE> 97

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Total interest and debt expenses incurred, including capitalized interest,
were as follows:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
DECEMBER
31,
1995
-----------
<S> <C>
Interest and debt expenses......................................... $ 104.9
Capitalized interest............................................... 1.4
------
$ 106.3
=======
</TABLE>

CREDIT FACILITIES

On April 5, 1995, the Company borrowed $442 million under the Purchaser
Facility (See Note Two) and received a capital contribution of $250 million from
YPF. The Purchaser used borrowings under the Purchaser Facility and the funds
contributed to it by YPF to purchase 120,000,613 Shares pursuant to the Offer.

Pursuant to a commitment letter from Chase, Chase provided two additional
credit facilities aggregating $425 million: (i) a credit facility of $250
million extended to Midgard Energy Company ("Midgard"), a wholly owned
subsidiary of the Company and (ii) a credit facility of $175 million extended to
Maxus Indonesia, Inc. ("Holdings"), a wholly owned subsidiary of the Company.
The proceeds of these loans were used to repay in part, the Purchaser Facility,
which was assumed by the Company. In addition, the Company applied $8 million of
its available cash to repayment of the Purchaser Facility. The Company
capitalized $16.8 million of debt issue costs during 1995 in connection with the
Midgard and Holdings credit facilities. These costs are recorded as deferred
charges and amortized over the terms of the related borrowings. For the nine
months ended December 31, 1995 $1.2 million of debt issue costs amortization was
included as a component of interest expense.

Midgard Facility. Approximately $250 million of the loans under the
Purchaser Facility were repaid on June 8, 1995 with funds provided to the
Company by Midgard. Midgard provided these funds from the proceeds of a $250
million loan (the "Midgard Loan") extended to it pursuant to a credit agreement
(the "Midgard Facility") entered into on such date. In addition, approximately
$8 million of the loans outstanding under the Purchaser Facility, including
accrued interest on the Purchaser Facility loans, were repaid on June 8, 1995
utilizing cash held by the Company.

The Midgard Loan, which was made in a single drawing, will mature on
December 31, 2003 and will be repaid in up to 28 consecutive equal quarterly
installments commencing on March 31, 1997, subject to semi-annual borrowing base
redeterminations. At December 31, 1995, the borrowing base for the Midgard
Facility was $250 million. The borrowing base is subject to redetermination on
April 1, 1996. At Midgard's option, the interest rate applicable to the Midgard
Loan will be, until March 31, 1997, either (i) the one-, two- or three-month
London Interbank Offered Rate ("LIBOR") plus a margin of 1 3/4% or (ii) the Base
Rate (as defined in the Midgard Facility) plus a margin of 3/4% and,
thereafter, either (iii) the one-, two- or three-month LIBOR plus a margin of
2 1/4% or (iv) the Base Rate plus a margin of 1 1/4%. At December 31, 1995, the
interest rate on the Midgard Facility based on the one-month LIBOR plus 1 3/4%
was 7.6875%. The Midgard Loan is not secured but is guaranteed by YPF and the
Company. The agreement evidencing the Midgard Loan contains, among other things,
a negative pledge on all assets of Midgard, subject to customary exceptions. It
is anticipated that the Midgard Loan will be repaid with funds generated by
Midgard's business operations.

Holdings Facility. Approximately $175 million of the Purchaser Facility was
repaid with funds provided on June 16, 1995 to the Company by Holdings. Holdings
provided these funds from the proceeds of a $175 million loan (the "Subsidiaries
Loan") extended to it pursuant to a credit agreement (the "Holdings Facility")
entered into on such date.

F-51
<PAGE> 98

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Subsidiaries Loan, which was made in a single drawing on June 16, 1995,
will mature on December 31, 2002 and will be repaid in up to 24 consecutive
equal quarterly installments commencing on March 31, 1997, subject to
semi-annual borrowing base redeterminations. At December 31, 1995, the borrowing
base for the Holdings Facility was $175 million. The borrowing base is subject
to redetermination on April 1, 1996. At the option of Holdings, the interest
rates applicable to the Subsidiaries Loan will be, until March 31, 1997, either
(i) the one-, two- or three-month LIBOR plus a margin of 2 1/4% or (ii) the Base
Rate (as defined in the Holdings Facility) plus a margin of 1 1/4% and,
thereafter, either (iii) the one-, two- or three-month LIBOR plus a margin of
2 3/4% or (iv) the Base Rate plus a margin of 1 3/4%. At December 31, 1995, the
interest rate on the Holdings Facility based on the one-month LIBOR plus 2 1/4%
was 8.125%. The Subsidiaries Loan to Holdings is secured by the stock of Maxus
Northwest Java, Inc. ("Java") and Maxus Southeast Sumatra, Inc. ("Sumatra")
(collectively, the "Holdings Subsidiaries") and by the interest of Holdings,
Java and Sumatra in certain accounts maintained at Chase into which the proceeds
of sales of hydrocarbons are to be deposited, and is guaranteed by Java,
Sumatra, YPF and the Company. The agreement evidencing the Subsidiaries Loan
contains a negative pledge on all of the other assets of Holdings, subject to
customary exceptions. It is anticipated that the Subsidiaries Loan will be
repaid with funds generated by the Holdings Subsidiaries' business operations.

Each of the Midgard Facility and the Holdings Facility contains restrictive
covenants including limitations upon the sale of assets, mergers and
consolidations, the creation of liens and additional indebtedness, investments,
dividends, the purchase or repayment of subordinated indebtedness, transactions
with affiliates and modifications to certain material contracts. The obligors
under the Midgard Facility and the Holdings Facility may not permit (a)
consolidated tangible net worth to be less than $200 million, in the case of the
Midgard Facility, or $350 million, in the case of the Holdings Facility, plus
(or minus), in the case of Midgard, the amount of any adjustment in the book
value of assets or, in the case of Holdings, 70% of the amount of any adjustment
to net worth, resulting from the merger of YPF Acquisition Corp. into the
Company, (b) the ratio of consolidated cash flow to consolidated debt service to
be less than 1.1 to 1.0 at the end of any fiscal quarter and (c) the ratio of
consolidated cash flow to consolidated interest expense to be less than 1.25 to
1.0 at the end of any fiscal quarter. In addition, mandatory prepayments of the
loans under the Midgard Facility and the Holdings Facility may be required in
connection with certain asset sales and casualty losses, upon the issuance of
subordinated indebtedness and in 1996 and in each year thereafter if, after
semi-annual review, the agent and the lenders determine that a borrowing base
deficiency exists. No borrowing base deficiencies existed at December 31, 1995.

The guaranty by Maxus of the obligation under the Midgard Facility (the
"Midgard Guaranty") and under the Holdings Facility (the "Subsidiaries
Guaranty") contains restrictions upon mergers and consolidations, the creation
of liens and the business activities in which Maxus and its subsidiaries may
engage. In addition, Midgard, in the case of the Midgard Guaranty, and Holdings
and its subsidiaries, in the case of the Subsidiaries Guaranty, are required to
be wholly owned subsidiaries of Maxus, except to the extent YPF or a subsidiary
of YPF (other than Maxus or a subsidiary of Maxus) makes capital contributions
to Midgard or Holdings or one of Holdings subsidiaries, as the case may be.

Keepwell Covenant

F-52
<PAGE> 99

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

nonredeemable preferred stock after the Merger Date. The foregoing obligations
of YPF (the "Keepwell Covenant") will survive until June 8, 2004. YPF has made
no capital contributions under the Keepwell Covenant as of December 31, 1995. In
addition, YPF has guaranteed the Company's outstanding debt as of the Merger
Date, the principal amount of which was approximately $976 million. The debt
covered by the YPF guarantee includes the Company's outstanding 11 1/4%, 11 1/2%
and 8 1/2% Sinking Fund Debentures, its outstanding 9 7/8%, 9 1/2% and 9 3/8%
Notes, and its outstanding medium-term notes. YPF has also guaranteed the
payment and performance of the Company's obligations to the holders of its $9.75
Preferred Stock.

Advances from Parent

Based on 1996 projections, the Company anticipates that YPF will make
capital contributions of approximately $200 million to $250 million under the
Keepwell Covenant during 1996. At December 31, 1995, the Company had $6.6
million outstanding of advances from its parent, YPF, which is included in long-
term debt.

The Company and YPF intend to enter into a loan agreement during 1996 to
facilitate short-term loans by YPF to the Company and short-term loans by the
Company to YPF of excess cash balances. It is expected that loans will be made
by the parties under the loan agreement during 1996; however, the number and
amounts thereof are not presently known.

NOTE THIRTEEN--DERIVATIVE FINANCIAL INSTRUMENTS

The Company's only derivative financial instruments are natural gas price
swap agreements and crude oil and natural gas futures contracts, which are not
used for trading purposes. During the nine-month period ended December 31, 1995,
the Company unwound its sole interest rate swap agreement and recorded a $2.4
million final settlement gain in other revenues. The Company also received a
$4.5 million termination payment, which has been deferred.

Natural Gas Price Swap Agreements

Under the price swap agreements used to hedge fluctuations in the price of
natural gas, the Company receives or makes payments based on the differential
between the Company's specified price and the counterparty's specified price of
natural gas. Depending on the agreement, the Company pays a fixed or variable
price per million British Thermal Units ("Mmbtu") and receives a fixed or
variable price per Mmbtu. During the nine months ended December 31, 1995, the
Company had swap agreements with other companies to exchange payments on 10.7
million Mmbtu of gas. Under these swap agreements, the Company paid fixed or
variable prices averaging $1.68 per Mmbtu and received fixed or variable prices
averaging $1.53 per Mmbtu. Gross losses realized on these swap agreements of
$2.1 million were partially offset by gross gains of $0.5 million resulting in a
net loss of $1.6 million during the nine months ended December 31, 1995.

As of December 31, 1995, the Company has outstanding price swap agreements
with other companies to exchange payments on 5.5 million Mmbtu of gas during the
first quarter of 1996. Under these swap agreements, the Company will pay
variable prices averaging $2.00 per Mmbtu and receive fixed prices averaging
$1.74 per Mmbtu resulting in gross unrealized losses of $1.4 million based on
gas sales prices at period end. Actual gains and losses realized upon settlement
of these price swap agreements will depend upon the variable prices received at
the time of settlement.

Natural Gas and Crude Oil Futures Contracts

F-53
<PAGE> 100

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

with other companies on 4.9 million Mmbtu of gas. Under these futures contracts,
the Company received selling prices averaging $1.71 per Mmbtu and paid
settlement prices averaging $1.70 per Mmbtu. Realized gross gains and losses on
these futures contracts were immaterial.

As of December 31, 1995, the Company had outstanding futures contracts with
other companies to sell 3.6 million Mmbtu of gas. Under these futures contracts,
the Company will receive selling prices averaging $2.01 per Mmbtu and pay
settlement prices averaging $2.76 per Mmbtu resulting in gross unrealized losses
of $2.7 million based on gas prices at period end. Actual gains and losses
realized upon expiration of these futures contracts will depend upon the
settlement prices.

Under the crude oil futures contracts used to hedge fluctuations in the
price of crude oil, the Company receives or makes payments based on the
differential between the selling price and the settlement price per barrel.
During the nine-month period ended December 31, 1995, crude oil volumes hedged
under these futures contracts were insignificant as were gross unrealized gains
and losses. The Company had no open crude oil futures contracts at December 31,
1995.

NOTE FOURTEEN--PREFERRED STOCK

$9.75 Cumulative Convertible Preferred Stock

In 1987, the Company sold 3,000,000 shares of $9.75 Preferred Stock. Since
such time, the Company has entered into various agreements, most recently on
June 8, 1995, with the sole holder of the $9.75 Preferred Stock pursuant to
which, among other things, the Company has repurchased 500,000 shares and the
parties have waived or amended various covenants, agreements and restrictions
relating to such stock. Currently, 1,250,000 shares of $9.75 Preferred Stock are
outstanding, each receiving an annual cash dividend of $9.75. In addition,
375,000 of such shares (the "Conversion Waiver Shares") each receive an
additional quarterly cash payment of $.25 ($.50 in certain circumstances). For
the twelve month period commencing February 1, 1996, each share of the $9.75
Preferred Stock has a liquidation value of $100.00 ($125.0 million in the
aggregate) plus accrued dividends. Since February 1, 1994, the stock has been
subject to mandatory redemption at the rate of 625,000 shares per year. The
$9.75 Preferred Stock currently is neither convertible by the holder nor
redeemable at the Company's option and has no associated registration rights.
The $9.75 Preferred Stock entitles the holder to vote only on certain matters
separately affecting such holder, and the $9.75 Preferred Stock other than the
Conversion Waiver Shares entitles the holder to elect one individual to the
Board of Directors of the Company. In addition, pursuant to the June 8, 1995
agreement, the holder of the $9.75 Preferred Stock waived previously granted
rights to approve certain "self-dealing" transactions and certain financial
covenants pertaining to the Company, and the Company waived its right of first
offer with respect to the transfer of the $9.75 Preferred Stock and certain
transfer restrictions on such stock.

$4.00 Cumulative Convertible Preferred Stock

Each outstanding share of $4.00 Preferred Stock is entitled to one vote, is
convertible at any time into shares of the Company's Common Stock (2.29751
shares at December 31, 1995), is entitled to receive annual cash dividends of
$4.00 per share, is callable at and has a liquidation value of $50.00 per share
($217.8 million in the aggregate at December 31, 1995) plus accrued but unpaid
dividends, if any.

F-54
<PAGE> 101

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

$2.50 Cumulative Preferred Stock

Each outstanding share of the $2.50 Preferred Stock is entitled to receive
annual cash dividends of $2.50 per share, is callable after December 1, 1998 at
and has a liquidation value of $25.00 per share ($87.5 million in the aggregate
at December 31, 1995) plus accrued but unpaid dividends, if any.

NOTE FIFTEEN--COMMON STOCK

<TABLE>
<CAPTION>
SHARES AMOUNT
---------- ------
<S> <C> <C>
April 1, 1995.................................................. 135,897,899 $135.9
Employee Shareholding and Investment Plan................. 18,182
Cancellation of treasury shares........................... (306,307) (.3)
Fractional shares exchanged for cash...................... (2)
----------- ------
December 31, 1995.............................................. 135,609,772 $135.6
=========== ======
</TABLE>

Pursuant to the offer in April 1995, YPF acquired 120,000,613 shares of
Maxus Common Stock at $5.50 per Share representing 88.5% of the then-outstanding
Shares of the Company. As a result of the Merger, each outstanding Share (other
than Shares held by YPF or any of their subsidiaries or in the treasury of the
Company, all of which were cancelled in the second quarter of 1995, and Shares
of holders who perfected their appraisal rights under Section 262 of the
Delaware General Corporation Law) was converted into the right to receive $5.50,
and accordingly, the Company's common stock ceased to be publicly traded. (See
Note Two).

At December 31, 1995, there were 10.0 million shares of Common Stock
reserved for issuance upon conversion of Preferred Stock. However, since the
Company's Common Stock is not publicly traded, there would be no market for the
common shares.

The Company has an Employee Shareholding and Investment Plan ("ESIP") which
allows eligible participating employees to contribute a certain percentage of
their salaries (1%-10%) to a trust for investment in any of five funds. Prior to
the Merger employees could also invest in a fund consisting of the Company's
Common Stock. However, the Maxus Energy Stock Fund was eliminated from the ESIP
plan effective April 19, 1995. The Company matches the participating employees
contributions to the ESIP (up to 6% of base pay). Such matching contribution is
charged against earnings and prior to April 19, 1995, was invested in the ESIP
fund which consisted of the Company's Common Stock. Subsequent to April 19,
1995, the Company's matching contribution is invested in any of five funds as
directed by the employee. For the nine months ended December 31, 1995, the
charge against earnings for the Company's contribution was $1.7 million.

F-55
<PAGE> 102

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE SIXTEEN--PAID-IN CAPITAL AND ACCUMULATED DEFICIT

<TABLE>
<CAPTION>
PAID-IN ACCUMULATED
CAPITAL DEFICIT
------- -----------
<S> <C> <C>
April 1, 1995........................................... $ 118.2
Net loss........................................... $ (73.7)
Dividends on Preferred Stock....................... (9.2)
Cancellation of treasury shares.................... (3.2)
Employee Shareholding and Investment Plan.......... .1
Restricted stock................................... (.1)
------- -------
December 1, 1995........................................ $ 105.8 $ (73.7)
======= =======
</TABLE>

NOTE SEVENTEEN--UNREALIZED GAIN ON INVESTMENT IN MARKETABLE SECURITIES

The amortized cost and estimated fair value of marketable securities at
December 31, 1995 are as follows:

<TABLE>
<CAPTION>
GROSS
AMORTIZED UNREALIZED MARKET
COST GAINS VALUE
--------- ---------- ------
<S> <C> <C> <C>
Held-to-maturity:
Corporate and other debt securities.......... $ 108.4 $2.3 $110.7
</TABLE>

At December 31, 1995, securities categorized as held-to-maturity are
included in cash equivalents, short-term investments and short- and long-term
restricted cash.

NOTE EIGHTEEN--COMMON TREASURY STOCK

<TABLE>
<CAPTION>
SHARES AMOUNT
-------- ------
<S> <C> <C>
April 1, 1995............................................. (310,535) $(3.6)
Restricted Stock..................................... (5,660)
Director Stock Compensation Plan..................... 9,888 .1
Cancellation of Treasury Shares...................... 306,307 3.5
-------- -----
December 31, 1995......................................... -- --
======== =====
</TABLE>

See Note Two.

NOTE NINETEEN--STOCK OPTIONS

The Director Stock Option Plan became effective on September 1, 1992. Under
this plan, non-employee directors received options to purchase shares of Common
Stock on the effective date of the plan. Thereafter, upon initial election or
re-election of a non-employee director at an annual meeting, the non-employee
directors automatically received options to purchase shares of Common Stock. The
plan terminated on June 7, 1995.

F-56
<PAGE> 103

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Stock option activity was as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------
<S> <C>
Outstanding at April 1.......................................... 2,190,573
Cancelled.................................................. (16,133)
Surrendered................................................ (2,174,440)
----------
Outstanding at December 31...................................... --
----------
Available for future grants at December 31...................... 3,789,124
----------
Performance units held for vesting at December 31............... 27,640
----------
</TABLE>

There will be no further grants of stock options, restricted stock or
performance units subsequent to April 1, 1995 under the Company's Long-Term
Incentive Plans. Effective upon the Merger, all stock options and restricted
stock outstanding under Company-sponsored incentive plans were surrendered to
the Company. The Company anticipates replacing the Long-Term Incentive Plans in
1996.

In 1993, the Company issued performance units under the 1992 Long-Term
Incentive Plan. The performance unit entitles the grantee to the value of a
share of Common Stock contingent upon the performance of the Company compared to
a selected group of peer companies. The value of the performance unit is
amortized over the vesting period based on a weighted probability of expected
payout levels. There was no earnings activity related to performance units for
the nine months period ended December 31, 1995 as outstanding performance units
had no value.

NOTE TWENTY--LEASES

The Company leases certain machinery and equipment, facilities and office
space under cancelable and noncancelable operating leases, most of which expire
within 20 years and may be renewed.

Minimum annual rentals for non-cancelable operating leases at December 31,
1995, were as follows:

<TABLE>
<S> <C>
1996................................................................ $ 39.9
1997................................................................ 27.9
1998................................................................ 18.9
1999................................................................ 15.7
2000................................................................ 11.3
December 31, 2001 and thereafter.................................... 63.2
------
$176.9
======
</TABLE>

Minimum annual rentals have not been reduced by minimum sublease rentals of
$36.9 million due in the future under noncancelable subleases.

F-57
<PAGE> 104

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Rental expense for operating leases was as follows:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
DECEMBER
31,
1995
-----------
<S> <C>
Total rentals...................................................... $44.1
Less--Sublease rental income....................................... 2.1
-----
Rental expense..................................................... $42.0
=====
</TABLE>

NOTE TWENTY-ONE--RELATED PARTY TRANSACTIONS

A director of the Company, who is also a member of the Audit Committee of
the Board of Directors, is a partner in a law firm which provides legal services
to the Company. Fees for such services amounted to $3.2 million during 1995.
Additionally, the Company has $6.6 million outstanding in advances from its
parent, YPF.

NOTE TWENTY-TWO--COMMITMENTS AND CONTINGENCIES

F-58
<PAGE> 105

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

including certain environmental liabilities relating to certain chemical plants
and waste disposal sites used by Chemicals prior to the Closing Date.

In addition, the Company agreed to indemnify Chemicals and Occidental for
50% of certain environmental costs incurred by Chemicals for which notice is
given to the Company within 10 years after the Closing Date on projects
involving remedial activities relating to chemical plant sites or other property
used in the conduct of the business of Chemicals as of the Closing Date and for
any period of time following the Closing Date, with the Company's aggregate
exposure for this cost sharing being limited to $75 million. The total expended
by the Company under this cost sharing arrangement was about $39 million as of
December 31, 1995. Occidental Chemical Corporation ("OxyChem"), a subsidiary of
Occidental, and Henkel Corporation ("Henkel"), an assignee of certain of
Occidental's rights and obligations, have filed a declaratory judgment action in
Texas state court with respect to the Company's agreement in this regard (see
"Legal Proceedings").

In connection with the spin-off of Diamond Shamrock R&M, Inc., now known as
Diamond Shamrock, Inc. ("DSI"), in 1987, the Company and DSI agreed to share the
costs of losses (other than product liability) relating to businesses disposed
of prior to the spin-off, including Chemicals. Pursuant to this cost-sharing
agreement, the Company bore the first $75 million of such costs and DSI bore the
next $37.5 million. Under the arrangement, such ongoing costs are now borne
onethird by DSI and two-thirds by the Company. This arrangement will continue
until DSI has borne an additional $47.5 million, following which such costs will
be borne solely by the Company. As of December 31, 1995, DSI's remaining
responsibility is approximately $8 million and is included in accounts
receivable in the accompanying balance sheet.

During the nine months ended December 31, 1995, the Company spent $5
million in environmental related expenditures in its oil and gas operations.
Expenditures for the full year 1996 are expected to be approximately $8 million.

For the nine months ended December 31, 1995, the Company's total
expenditures for environmental compliance for disposed of businesses, including
Chemicals, were approximately $30 million, $9 million of which was recovered
from DSI under the above described cost-sharing agreement. Those expenditures
are projected to be approximately $23 million for the full year 1996 after
recovery from DSI under such agreement.

F-59
<PAGE> 106

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

take three to four years to complete. The work is being supervised and paid for
by the Company pursuant to its above described indemnification obligation to
Occidental. The Company has fully reserved the estimated costs of performing the
remedial action plan and required ongoing maintenance costs.

Studies have indicated that sediments of the Newark Bay watershed,
including the Passaic River adjacent to the plant, are contaminated with
hazardous chemicals from many sources. Studies performed by the Company and
others suggest that contaminants historically discharged by the Newark plant are
buried under several feet of more recent sediment deposits and are not moving.
The Company, on behalf of Occidental, negotiated an agreement with the EPA under
which the Company is conducting further testing and studies to characterize
contaminated sediment in a six-mile portion of the Passaic River near the plant
site. The Company currently expects such testing and studies to be completed in
1999 and cost from $4 million to $6 million after December 31, 1995. The Company
has reserved its estimate of the remaining costs to be incurred in performing
these studies as of December 31, 1995. The Company has been conducting similar
studies under its own auspices for several years. Until these studies are
completed and evaluated, the Company cannot reasonably forecast what regulatory
program, if any, will be proposed for the Passaic River or the Newark Bay
watershed and therefore cannot estimate what additional costs, if any, will be
required to be incurred.

As a result of negotiations between the Company (on behalf of Occidental)
and the DEP, Occidental signed an administrative consent order with the DEP in
1990 for investigation and remediation work at certain chromite ore residue
sites in Kearny and Secaucus, New Jersey. The work is being performed by the
Company on behalf of Occidental, and the Company is funding Occidental's share
of the cost of investigation and remediation of these sites and is currently
providing financial assurance for performance of the work in the form of a
self-guarantee in the amount of $20 million subject to the Company's continuing
ability to satisfy certain financial tests specified by the State. This
financial assurance may be reduced with the approval of the DEP following any
annual cost review. While the Company has participated in the cost of studies
and is implementing interim remedial actions and conducting remedial
investigations and feasibility studies, the ultimate cost of remediation is
uncertain. The Company anticipates submitting its investigation and feasibility
reports to the DEP in late 1996 or 1997. The results of the DEP's review of
these reports could impact the cost of any further remediation that may be
required. The Company has reserved its best estimate of the remaining cost to
perform the investigations and remedial work as being $50 million at December
31, 1995. In addition, the DEP has indicated that it expects Occidental and the
Company to participate with the other chromium manufacturers in the funding of
certain remedial activities with respect to a number of so-called "orphan"
chrome sites located in Hudson County, New Jersey. Occidental and the Company
have declined participation as to those sites for which there is no evidence of
the presence of residue generated by Chemicals. The Governor of New Jersey
issued an Executive Order requiring state agencies to provide specific
justification for any state requirements more stringent than federal
requirements. The DEP has indicated that it may be revising its soil action
level upwards towards the higher soil screening levels proposed by the EPA in
1994.

F-60
<PAGE> 107

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

In September 1995, the Ohio Environmental Protection Agency (the "OEPA") issued
its Directors' Final Findings and Order (the "Director's Order") by consent
ordering that a remedial investigation and feasibility study (the "RIFS") be
conducted at the former Painesville plant area. The Company has agreed to
participate in the RIFS as required by the Director's Order. It is estimated
that the total cost of performing the RIFS will be $3 million to $5 million over
the next three years. In spite of the many remedial, maintenance and monitoring
activities performed, the former Painesville plant site has been proposed for
listing on the National Priority List under CERCLA; however, the EPA has stated
that the site will not be listed so long as it is satisfactorily addressed
pursuant to the Director's Order and OEPA's programs. The Company has accrued
the estimate of its share of the cost to perform the RIFS. The scope and nature
of any further investigation or remediation that may be required cannot be
determined at this time; however, as the RIFS progresses, the Company will
continuously assess the condition of the Painesville plant site and make any
changes, including additions, to its reserve as may be required.

It is the Company's position that costs attributable to the Ashtabula plant
fall under the Company's above-described cost sharing arrangement with
Occidental under which the Company bears one-half of

F-61
<PAGE> 108

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

certain costs up to an aggregate dollar cap. Occidental, however, has contended
that it is entitled to full indemnification from the Company for such costs, and
the outcome of this dispute cannot be predicted. The Company has reserved its
estimate of its share of potential cleanup costs based on the assumption that
this site falls under the Occidental cost sharing arrangement.

Legal Proceedings. In November 1995, OxyChem filed suit in Texas state
court seeking a declaration of certain of the parties' rights and obligations
under the sales agreement pursuant to which the Company sold Chemicals to
Occidental. Henkel joined in said lawsuit as a plaintiff in January 1996.
Specifically, OxyChem and Henkel are seeking a declaration that the Company is
required to indemnify them for 50% of certain environmental costs incurred on
projects involving remedial activities relating to chemical plant sites or other
property used in connection with the business of Chemicals on the Closing Date
which relate to, result from or arise out of conditions, events or circumstances
discovered by OxyChem or Henkel and as to which the Company is provided written
notice by OxyChem or Henkel prior to the expiration of ten years following the
Closing Date, irrespective of when OxyChem or Henkel incurs and gives notice of
such costs, subject to an aggregate $75 million cap. The Company believes that
this lawsuit is without merit and intends to defend same vigorously. The Company
has established reserves based on its 50% share of costs expected to be paid or
incurred by OxyChem and Henkel prior to September 1996.

The Company has established reserves for legal contingencies in situations
where a loss is probable and can be reasonably estimated.

In Ecuador, pipeline capacity available to the Company is sufficient to
transport only about 60% of the oil the Company expects to be able to produce
daily, and none of the various projects to increase transportation capacity that
have been considered has been approved by the government of Ecuador. In
addition, the Company is involved in a number of contract, auditing and
certification disputes with various government entities. Together, the lack of
pipeline capacity and the various disputes with government entities are
retarding

F-62
<PAGE> 109

MAXUS ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

the Company's ability to proceed with the economic development of Block 16.
Although the Company can give no assurances concerning the outcome of these
discussions, progress has recently been made on several important issues. The
Company intends to reduce program spending in Ecuador in 1996 to $19 million
from $32 million in 1995.

NOTE TWENTY-THREE--SUBSEQUENT EVENTS

In January 1996, the Company and its partners were successful in acquiring
the highly prospective Guarapiche block in Venezuela's first auction awards for
equity production in over 20 years. Guarapiche is located on the same trend as
the five billion barrel El Furrial field in northeastern Venezuela. The Company,
together with its partners, paid $109 million ($27 million net to Maxus) to the
Venezuelan government for rights to explore the Guarapiche block. BP Exploration
Orinoco Limited is the operator with a 37.5% working interest while Amoco
Production Company and the Company hold the remaining 37.5% and 25%,
respectively. The Company's net exploration commitment for this block is
anticipated to total approximately $15 million over the next five years.

F-63
<PAGE> 110

FINANCIAL SUPPLEMENTARY INFORMATION (Unaudited)

DATA IS FOR THE NINE MONTHS ENDED DECEMBER 31, 1995. THE DOLLAR
AMOUNTS IN TABLES ARE IN MILLIONS, EXCEPT PER SHARE)

OIL AND GAS PRODUCING ACTIVITIES

The following are disclosures about the oil and gas producing activities of
the Company as required by Statement of Financial Accounting Standards No. 69
("SFAS 69").

Results of Operations

Results of operations for the nine months ended December 31, 1995 from all
oil and gas producing activities are shown below. These results exclude revenues
and expenses related to the purchase of natural gas and the subsequent
processing and resale of such natural gas plus the sale of natural gas liquids
extracted therefrom.

<TABLE>
<CAPTION>
UNITED SOUTH OTHER
STATES INDONESIA AMERICA FOREIGN WORLDWIDE
------ --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Sales............................... $ 75.4 $ 298.3 $ 36.5 $ 410.2
------ ------ ------ ------- -------
Production costs.................... 21.2 114.5 21.5 157.2
Exploration costs................... 10.8 18.0 6.9 $ 15.5 51.2
Depreciation, depletion and
amortization...................... 48.8 67.7 20.8 .2 137.5
Gain on sale of assets.............. (.1) (.1)
Other............................... 8.5(a) 9.4 (1.2) (.1) 16.6
------ ------ ------ ------- -------
89.2 209.6 48.0 15.6 362.4
------ ------ ------ ------- -------
Income (loss) before tax
provision......................... (13.8) 88.7 (11.5) (15.6) 47.8
Provision (benefit) for income
taxes............................. 43.5 (12.7) 30.8
------ ------ ------ ------- -------
Results of operations............... $(13.8) $ 45.2 $ 1.2 $ (15.6) $ 17.0
====== ====== ====== ======= =======
</TABLE>

- ---------------

(a) Includes United States gathering and processing costs related to sales. Such
costs were $9.1 million for the nine months ended December 31, 1995.

F-64
<PAGE> 111

CAPITALIZED COSTS

Included in properties and equipment are capitalized amounts applicable to
the Company's oil and gas producing activities. Such capitalized amounts include
the cost of mineral interests in properties, completed and incomplete wells and
related support equipment. In addition, the Company's gas plants that process
not only the Company's gas but also third party gas, has been included in
capitalized costs. Approximately 52% of the volumes processed through the
Company's gas plants is the Company's gas. Only the revenue and cost related to
the Company's produced gas is included in results of operations and costs
incurred. Capitalized costs at December 31, 1995 were:

<TABLE>
<CAPTION>
UNITED SOUTH OTHER
STATES INDONESIA AMERICA FOREIGN WORLDWIDE
------ --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Proved properties:
Wells and related equipment
and facilities........... $501.6 $ 704.0 $307.0 $1,512.6
Support equipment and
facilities............... 128.7 128.7
Uncompleted well, equipment
and facilities........... 11.0 18.6 50.5 80.1
Unproved properties............. 79.9 435.3 252.3 $ 1.3 768.8
------ ------- ------ ----- --------
721.2 1,157.9 609.8 1.3 2,490.2
------ ------- ------ ----- --------
Less-Accumulated depreciation,
depletion and amortization.... 50.4 67.7 20.9 .2 139.2
------ ------- ------ ----- --------
$670.8 $1,090.2 $588.9 $ 1.1 $2,351.0
====== ======= ====== ===== ========
</TABLE>

COSTS INCURRED

Costs incurred by the Company in its oil and gas producing activities for
the nine months ended December 31, 1995 (whether capitalized or charged against
earnings) were as follows:

<TABLE>
<CAPTION>
UNITED SOUTH OTHER
STATES INDONESIA AMERICA FOREIGN WORLDWIDE
------ --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Property acquisition costs...... $ 2.1 $ 2.1
Exploration costs............... 10.1 $ 19.8 $ 7.6 $15.7 53.2
Development costs............... 37.5 44.2 28.2 .3 110.2
------ -------- ------ ----- -------
$ 49.7 $ 64.0 $ 35.8 $16.0 $ 165.5
====== ======== ====== ===== =======
</TABLE>

Oil and Gas Reserves

The following table represents the Company's net interest in estimated
quantities of developed and undeveloped reserves of crude oil, condensate,
natural gas liquids and natural gas and changes in such quantities for the nine
months ended December 31, 1995. Net proved reserves are the estimated quantities
of crude oil and natural gas 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 are proved reserve volumes that can be expected to be recovered through
existing wells with existing equipment and operating methods. Proved undeveloped
reserves are proved reserve volumes that are expected to be recovered from new
wells on undrilled acreage or from existing wells where a significant
expenditure is required for recompletion.

Estimates of reserves for December 31, 1995 were prepared by Gaffney, Cline
& Associates, petroleum engineers, using standard geological and engineering
methods generally accepted by the petroleum industry and in accordance with the
rules and regulations of the Securities and Exchange Commission ("SEC"). The
choice of method or combination of methods employed in the analysis of each
reservoir was determined by experience in the area, stage of development,
quality and completeness of basic data, and production history.

F-65
<PAGE> 112

There are numerous uncertainties inherent in estimating quantities of proved
reserves and in projecting future rates of production and timing of development
expenditures, including many factors beyond the control of the producer. Reserve
engineering is a subjective process of estimating underground accumulations of
crude oil and natural gas that cannot be measured in an exact manner, and the
accuracy of any reserve estimate is a function of the quality of available data
and of engineering and geological interpretation and judgment. As a result,
estimates of different engineers often vary. In addition, results of drilling,
testing and production subsequent to the date of an estimate may justify
revision of such estimate. Accordingly, reserve estimates are often different
from the quantities of crude oil and natural gas that are ultimately recovered.
The meaningfulness of such estimates is highly dependent upon the accuracy of
the assumption upon which they were based. The reserve estimates were subjected
to economic tests to determine economic limits. The estimates may change as a
result of numerous factors including, but not limited to, additional development
activity, evolving production history, and continued reassessment of the
viability of production under varying economic conditions.

<TABLE>
<CAPTION>
DECEMBER 31, 1995
------------------------------------------
UNITED SOUTH
CRUDE OIL STATES INDONESIA AMERICA TOTAL
----------------------------------------- ------ --------- ------- -----
(MILLIONS OF BARRELS)
<S> <C> <C> <C> <C>
Net Proved Developed and Undeveloped
Reserves
Beginning of period, March 31, 1995...... 3.7 154.1 66.3 224.1
Revisions of previous estimates..... .2 (2.6)(a) (4.5) (6.9)
Purchase of reserves in place.......
Extensions, discoveries and other
additions......................... .5 7.1(a) 2.7 10.3
Production.......................... (.3) (14.5) (3.4)(c) (18.2)
Sales of reserves in place..........
------ --------- ------- -----
End of period............................ 4.1 144.1 61.1 209.3
------ --------- ------- -----
Net Proved Developed Reserves
Beginning of period...................... 2.8 136.8 14.0 153.6
End of period............................ 3.6 128.1 32.8 164.5
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1995
------------------------------
UNITED
NATURAL GAS(B) STATES INDONESIA TOTAL
------------------------------------------------------------ ------ --------- -----
(BILLIONS OF CUBIC FEET)
<S> <C> <C> <C>
Net Proved Developed and Undeveloped Reserves
Beginning of period, March 31, 1995......................... 505 300 805
Revisions of previous estimates........................ 7 18 25
Purchase of reserves in place..........................
Extensions, discoveries and other additions............ 94 14 108
Production............................................. (36) (19) (55)
Sales of reserves in place.............................
---- --- ----
End of period............................................... 570 313 883
---- --- ----
Net Proved Developed Reserves
Beginning of period......................................... 373 103 476
End of period............................................... 449 138 587
</TABLE>

F-66
<PAGE> 113

<TABLE>
<CAPTION>
DECEMBER 31, 1995
------------------------------
UNITED
NATURAL GAS LIQUIDS STATES INDONESIA TOTAL
------------------------------------------------------------ ------ --------- -----
(MILLIONS OF BARRELS)
<S> <C> <C> <C>
Net Proved Developed and Undeveloped Reserves
Beginning of period, March 31, 1995......................... 36.1 9.3 45.4
Revisions of previous estimates........................ 1.5 .1 1.6
Purchase of reserves in place..........................
Extensions, discoveries and other additions............ 7.4 7.4
Production............................................. (2.4) (.4) (2.8)
---- ----
End of period............................................... 42.6 9.0 51.6
---- ----
Net Proved Developed Reserves Beginning of period........... 28.9 3.1 32.0
End of period............................................... 33.4 4.3 37.7
</TABLE>

- ---------------

(a) The changes reflect the impact of the change in the price of crude oil on
the barrels to which the Company is entitled under the terms of the
Indonesian production sharing contracts. The Indonesian production sharing
contracts allow the Company to recover tangible production and exploration
costs, as well as operating costs. As the price of crude oil fluctuates,
the Company is entitled to more or less barrels of cost recovery oil.
Increasing prices resulted in a decrease of 9.9 million barrels in 1995.

(b) Natural gas is reported on the basis of actual or calculated volumes which
remain after removal, by lease or field separation facilities, of
liquefiable hydrocarbons and of non-hydrocarbons where they occur in
sufficient quantities to render the gas unmarketable. Natural gas reserve
volumes include liquefiable hydrocarbons approximating 11% of total gas
reserves in the United States and 4% in Indonesia which are recoverable at
natural gas processing plants downstream from the lease or field separation
facilities. Such recoverable liquids also have been included in natural gas
liquids reserve volumes.

(c) Reserves in Venezuela are attributable to an operating service agreement
under which all hydrocarbons are owned by the Venezuelan government,
however, the Company receives payment for production and development
services performed based on production.

Future Net Cash Flows

The standardized measure of discounted future net cash flows relating to
the Company's proved oil and gas reserves as of December 31, 1995 is calculated
and presented in accordance with Statement of Financial Accounting Standards No.
69. Accordingly, future cash inflows were determined by applying year-end oil
and gas prices (adjusted for future fixed and determinable price changes) to the
Company's estimated share of future production from proved oil and gas reserves.
Future income taxes were derived by applying year-end statutory tax rates to the
estimated net future cash flows. A prescribed 10% discount factor was applied to
the future net cash flows.

F-67
<PAGE> 114

<TABLE>
<CAPTION>
UNITED SOUTH
STATES INDONESIA AMERICA WORLDWIDE
------- --------- ------- ---------
<S> <C> <C> <C> <C>
Future cash flows............... $1,161.0 $ 3,461.9 $ 822.5 $ 5,445.4
Future production costs......... (331.2) (2,004.7) (221.3) (2,557.2)
Future development costs........ (70.6) (288.2) (122.3) (481.1)
-------- --------- ------- ---------
Future net cash flows, before
income taxes.................. 759.2 1,169.0 478.9 2,407.1
Discount for estimated timing of
future cash flows............. (342.9) (459.4) (200.0) (1,002.3)
-------- --------- ------- ---------
Present value of future net cash
flows, before income taxes.... 416.3 709.6 278.9 1,404.8
Future income taxes, discounted
at 10% (a).................... (67.8) (321.7) (34.3) (423.8)
-------- --------- ------- ---------
Standardized measure of
discounted future net cash
flows......................... $ 348.5 $ 387.9 $ 244.6 $ 981.0
======== ========= ======= =========
</TABLE>

- ---------------

(a) Future income taxes undiscounted are $161.6 for the United States, $508.2
for Indonesia and $57.1 for South America at December 31, 1995.

The following are the principal sources for change in the standardized
measure:

<TABLE>
<CAPTION>
1995
-------
<S> <C>
January 1, 1995..................................................... $ 929.8
Sales and transfers of oil and gas produced, net of production
costs......................................................... (322.7)
Net changes in prices and production costs, net of future
production and development costs.............................. 99.6
Extensions, discoveries and improved recovery, less related
costs......................................................... 79.5
Development costs incurred during the year that reduced future
development costs............................................. 140.6
Revisions of previous quantity estimates....................... 51.5
Purchase of reserves in place.................................. 16.3
Sale of reserves in place...................................... (.1)
Net change in income taxes..................................... (42.8)
Accretion of discount.......................................... 131.1
Changes in production rates (timing) and other................. (101.8)
-------
December 31, 1995................................................... $ 981.0
=======
</TABLE>

The principle sources for change in the standardized measure are presented
for the year-ended December 31, 1995, rather than the nine months period ended
December 31, 1995, as reserve reports from which this information is derived are
only prepared on an annual basis.

F-68
<PAGE> 115

Quarterly Data

<TABLE>
<CAPTION>
1995
---------------------------------------------------------------------
NINE MONTHS
ENDED
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
--------- -------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales and operating revenues......... $ 142.5 $150.7 $ 141.8 $171.3 $463.8
Gross profit(a)...................... 35.2 34.3 24.5 48.0 106.8
Net loss............................. (56.9) (23.0) (28.1) (22.6) (73.7)
Per Common Share
Net loss........................ (.49) (.24) (.28) (.24) (.76)
Market price per share:
Common
High....................... 529/32 5 1/2
Low........................ 3 5 3/8
$4.00 Preferred
High....................... 38 1/4 41 40 1/2 44 3/4 44 3/4
Low........................ 30 32 1/2 38 38 32 1/2
$2.50 Preferred
High....................... 21 3/4 24 1/4 25 5/8 26 1/8 26 1/8
Low........................ 1745/64 19 1/8 23 5/8 17 5/8 17 5/8
</TABLE>

<TABLE>
<CAPTION>
1994
---------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, FOR THE YEAR
--------- -------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales and operating revenues......... $ 187.1 $167.5 $ 170.2 $157.3 $682.1
Gross profit(a)(b)................... 41.2 42.0 54.7 44.3 182.2
Net income (loss).................... (11.2) 30.1 (16.0) (25.6)(c) (22.7)
Per Common Share
Net income (loss)............... (.17) .13 (.19) (.26) (.49)
Market price per share:
Common
High....................... 5 7/8 5 1/4 5 7/8 4 3/4 5 7/8
Low........................ 4 1/8 4 1/8 4 1/2 3 1/4 3 1/4
$4.00 Preferred
High....................... 45 3/4 41 1/8 40 1/2 37 3/4 45 3/4
Low........................ 39 33 5/8 37 30 1/8 30 1/8
$2.50 Preferred
High....................... 25 3/4 23 1/4 23 3/8 22 3/4 25 3/4
Low........................ 21 1/4 20 21 3/4 17 1/2 17 1/2
</TABLE>

- ---------------

(a) Gross profit is sales and operating revenues less purchases and operating
expenses, gas purchase costs and depreciation, depletion and amortization.

(b) Gross profit has been restated to conform to the 1995 presentation.

(c) In the fourth quarter of 1994, the Company increased its reserve for future
environmental liabilities by $49.0 million.

F-69
<PAGE> 116

EXPLORATION AND PRODUCTION STATISTICS (historic)

<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 31, MARCH 31,
1995 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
NET PROVED OIL RESERVES (millions of barrels)
United States 4.1 3.7 3.4 12.3 12.2 14.6
Indonesia 144.1 154.1 158.9 180.1 155.2 162.8
South America 61.1 66.3 67.0 71.6 53.1 27.5
- -------------------------------------------------------------------------------------------------------------------------
Worldwide Total 209.3 224.1 229.3 264.0 220.5 204.9
NET PROVED NATURAL GAS RESERVES
(billions of cubic feet)
United States 570 505 492 679 584 635
Indonesia 313 300 303 262 245 37
- -------------------------------------------------------------------------------------------------------------------------
Worldwide Total 883 805 795 941 829 672
NET OIL SALES (mbpd)
United States 1.1 1.0 2.4 4.9 5.7 9.9
Indonesia 53.0 52.0 59.3 62.4 61.9 67.3
South America 10.4 6.9 5.2
- -------------------------------------------------------------------------------------------------------------------------
Worldwide Total 64.5 59.9 66.9 67.3 67.6 77.2
AVERAGE OIL SALES PRICE (per bbl)
United States $16.29 $16.07 $13.89 $16.99 $18.28 $19.49
Indonesia 17.01 17.54 15.61 17.31 18.40 19.59
South America 12.79 12.58 12.58
Worldwide Average 16.31 16.94 15.31 17.28 18.39 19.58
NET NATURAL GAS SALES (mmcfpd)
United States produced 104 98 131 181 200 207
United States purchased for processing 68 69 77 86 51 48
United States purchased for resale 67 98 29 13
Indonesia 61 40 44 13 8 7
- -------------------------------------------------------------------------------------------------------------------------
Worldwide Total 233 207 319 378 288 275
AVERAGE NATURAL GAS SALES PRICE (per mcf)
United States produced $ 1.54 $ 1.42 $ 1.89 $ 2.13 $ 1.80 $ 1.66
United States purchased for processing 1.42 1.49 1.81 1.91 1.62 1.49
United States purchased for resale 2.00 2.06 1.84 1.57
Indonesia 2.62 2.65 2.24 1.30 .20 .20
Worldwide Average 1.79 1.68 1.99 2.03 1.73 1.59
UNITED STATES NGL SALES (mbpd)
Produced 8.7 8.8 8.2 7.6 8.9 8.8
Purchased 8.9 9.6 9.7 9.8 9.0 7.9
- -------------------------------------------------------------------------------------------------------------------------
United States Total 17.6 18.4 17.9 17.4 17.9 16.7
UNITED STATES AVERAGE NGL SALES PRICE (per bbl)
Produced $10.42 $10.27 $10.02 $11.08 $11.51 $12.16
Purchased 10.57 10.48 10.12 11.19 11.13 12.04
United States Average 10.49 10.38 10.07 11.14 11.32 12.11
INDONESIAN NGL SALES (mbpd) 1.7 .9 2.1 1.5 1.6 1.4
INDONESIAN AVERAGE NGL SALES PRICE (per bbl) $14.33 $19.19 $ 9.42 $10.57 $11.93 $10.36
NET NATURAL GAS PRODUCTION (mmcfpd)
United States 130 125 156 208 227 238
Indonesia 70 45 47 13 13 11
- -------------------------------------------------------------------------------------------------------------------------
Worldwide Total 200 170 203 221 240 249
GROSS CRUDE OIL PRODUCTION (mbpd)
Indonesia 232 250 259 270 294 324
South America 40 32 16
</TABLE>

F-70
<PAGE> 117

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ---------- ------------------------------------------------------------------------ ------------
<C> <S> <C>
3(i) --Restated Certificate of Incorporation of the Company (Exhibit 3(i).2
to the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995).*
3(ii) --By-Laws of the Company (Exhibit 3(ii).2 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995).*
4.1 --Indenture dated as of April 1, 1978 between Diamond Shamrock
Corporation ("Diamond") and Mellon Bank, N.A. relating to Diamond's
$150,000,000 8 1/2% Sinking Fund Debentures due April 1, 2008 (Exhibit
4.1 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1992 [the "1992 Form 10-K"]).*
4.2 --First Supplemental Indenture dated as of January 26, 1984 among the
Company, Diamond Shamrock Chemicals Company ("Chemicals") and Mellon
Bank, N.A. supplementing the Indenture described in Exhibit 4.1 above
(Exhibit 4.2 to the 1992 Form 10-K).*
4.3 --Tri Party Agreement dated January 24, 1993 appointing Chemical Bank as
successor trustee under the Indenture described in Exhibit 4.1 above
(Exhibit 4.3 to the Company's Current Report on Form 8-K dated January
12, 1994 [the "January 12 Form 8-K"]).*
4.4 --Indenture dated as of May 1, 1983 between Diamond and The Bank of New
York, successor in interest to NationsBank of Texas, N.A., successor
trustee to Mellon Bank, N.A. relating to unspecified Debt Securities
of Diamond (Exhibit 4.4 to the 1992 Form 10-K).*
4.5 --Resolutions of the Board of Directors of Diamond supplementing the
Indenture described in Exhibit 4.4 above and establishing terms and
conditions of Diamond's $150,000,000 11 1/4% Sinking Fund Debentures
due May 1, 2013 (Exhibit 4.5 to the 1992 Form 10-K).*
4.6 --First Supplemental Indenture dated as of January 26, 1984 among the
Company, Chemicals and Mellon Bank, N.A. supplementing the Indenture
and the resolutions described in Exhibits 4.4 and 4.5, respectively,
above (Exhibit 4.6 to the 1992 Form 10-K).*
4.7 --Tri Party Agreement dated January 12, 1994 appointing NationsBank of
Texas, N.A. as successor trustee under the Indenture described in
Exhibit 4.4 above (Exhibit 4.1 to the January 12 Form 8-K).*
4.8 --Indenture dated as of November 1, 1985 between the Company and The
Bank of New York, successor in interest to NationsBank of Texas, N.A.,
successor trustee to Mellon Bank, N.A. relating to unspecified Debt
Securities of the Company (Exhibit 4.8 to the 1992 Form 10-K).*
4.9 --Resolutions of an ad hoc committee of the Board of Directors of the
Company supplementing the Indenture described in Exhibit 4.8 above and
establishing terms and conditions of the Company's $150,000,000
11 1/2% Sinking Fund Debentures due November 15, 2015 (Exhibit 4.9 to
the 1992 Form 10-K).*
4.10 --Tri Party Agreement dated January 12, 1994 appointing NationsBank of
Texas, N.A. as successor trustee under the Indenture described in
Exhibit 4.8 above (Exhibit 4.2 to the January 12 Form 8-K).*
</TABLE>
<PAGE> 118

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ---------- ------------------------------------------------------------------------ ------------
<C> <S> <C>
4.11 --Indenture dated as of April 1, 1988 between the Company and Chemical
Bank relating to unspecified debt securities of the Company (Exhibit
4.11 to the 1992 Form 10-K).*
4.12 --Officers' Certificate dated June 1, 1988 establishing a series of debt
securities ($150,000,000 Medium-Term Notes, Series A) to be issued
under the Indenture described in Exhibit 4.11 above (Exhibit 4.12 to
the 1992 Form 10-K).*
4.13 --Indenture dated as of November 1, 1990 between the Company and
Chemical Bank relating to unspecified debt securities of the Company
(Exhibit 4.13 to the 1992 Form 10-K).*
4.14 --Officers' Certificate dated February 13, 1991 establishing a series of
debt securities ($150,000,000 Medium-Term Notes, Series B) to be
issued under the Indenture described in Exhibit 4.13 above (Exhibit
4.14 to the 1992 Form 10-K).*
4.15 --Officers' Certificate dated September 28, 1992 establishing a series
of debt securities ($250,000,000 9 7/8% Notes Due 2002) to be issued
under the Indenture described in Exhibit 4.13 above (Exhibit 4.15 to
the 1992 Form 10-K).*
4.16 --Officers' Certificate dated January 26, 1993 establishing a series of
debt securities ($100,000,000 9 1/2% Notes Due 2003) to be issued
under the Indenture described in Exhibit 4.13 above (Exhibit 4.16 to
the 1992 Form 10-K).*
4.17 --Officer's Certificate dated June 30, 1993 establishing a series of
debt securities ($150,000,000 Medium-Term Notes, Series C) to be
issued under the Indenture described in Exhibit 4.13 above (Exhibit 4
to the Company's Current Report on Form 8-K dated June 21, 1993).*
4.18 --Officer's Certificate dated October 27, 1993 establishing a series of
debt securities ($200,000,000 9 3/8% Notes due 2003) to be issued
under the Indenture described in Exhibit 4.13 above (Exhibit 4 to the
Company's Current Report on Form 8-K dated October 20, 1993).*
4.19 --Officer's Certificate dated January 18, 1994 establishing a series of
debt securities ($60,000,000 9 3/8% Notes due 2003) to be issued under
the Indenture described in Exhibit 4.13 (Exhibit 4 to the Company's
Current Report on Form 8-K dated January 10, 1994).*
4.20 --Preferred Stock Purchase Agreement dated February 1, 1987 (the
"Preferred Stock Purchase Agreement") between the Company and The
Prudential Insurance Company of America ("Prudential") (Exhibit 4.17
to the 1992 Form 10-K).*
4.21 --Amendment dated February 8, 1987 to the Preferred Stock Purchase
Agreement (Exhibit 4.18 to the 1992 Form 10-K).*
4.22 --Registration Rights Agreement dated as of February 1, 1987 between the
Company and Prudential (Exhibit 4.19 to the 1992 Form 10-K).*
4.23 --Agreement dated April 12, 1990 amending the Preferred Stock Purchase
Agreement (Exhibit 4.20 to the 1992 Form 10-K).*
4.24 --Waiver of Certain Rights Relating to $9.75 Preferred Stock dated June
5, 1990 between the Company and Prudential (Exhibit 4.21 to the 1992
Form 10-K).*
4.25 --Waiver of Certain Equity Offering Rights dated April 12, 1990 between
the Company and Prudential amending the Preferred Stock Purchase
Agreement (Exhibit 4.22 to the 1992 Form 10-K).*
</TABLE>
<PAGE> 119

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ---------- ------------------------------------------------------------------------ ------------
<C> <S> <C>
4.26 --Agreement dated February 28, 1995 between Prudential and the Company
(Exhibit 2 to the Company's Schedule 14D-9 dated March 3, 1995 [the
"Schedule 14D-9"]).*
4.27 --Waiver of Certain Rights Relating to $9.75 Preferred Stock dated June
8, 1995 between Prudential and the Company, filed herewith.
4.28 --Warrant Certificate No. 1 dated October 10, 1992 issued to Kidder,
Peabody Group Inc. for 8,000,000 warrants each representing the right
to purchase from the Company on or prior to October 10, 1997 one share
of common stock, $1.00 par value, of the Company at a price of $13.00
per share (Exhibit 4.23 to the 1992 Form 10-K).*
4.29 --Registration Rights Agreement dated as of October 10, 1992 between
Kidder, Peabody Group Inc. and the Company (Exhibit 4.24 to the 1992
Form 10-K).*
4.30 --Agreement of Merger, dated February 28, 1995, among the Company, YPF
Sociedad Anonima ("YPF") and YPF Acquisition Corp. ("YPFA") (Exhibit 3
to the Schedule 14D-9).*
4.31 --Credit Agreement dated as of June 8, 1995, between Midgard Energy
Company, the lenders signatory thereto and The Chase Manhattan Bank
(National Association) ("Chase"), as agent (Exhibit 4.1 to the
Company's Current Report on Form 8-K dated June 8, 1995 [the "June 8,
1995 Form 8-K"]).*
4.32 --Credit Agreement dated as of June 16, 1995, between Maxus Indonesia,
Inc., Maxus Northwest Java Inc., Maxus Southeast Sumatra, Inc., the
lenders signatory thereto and Chase, as agent (Exhibit 4.2 to the June
8, 1995 Form 8-K).*
10.1 --Performance Incentive Plan of the Company, as amended effective
January 1, 1986 (Exhibit 10.6 to the 1992 Form 10-K).*
10.2 --Specimen copy of Change of Control Agreement between the Company and
certain of its former its executive officers (Exhibit 10.7 to the 1992
Form 10-K).*
10.3 --Specimen copy of letter agreement between the Company and certain of
its former executive officers relating to the Agreements referred to
in Exhibit 10.2 above (Exhibit 10.8 to the 1992 Form 10-K).*
10.4 --Specimen copy of disability benefit arrangement between the Company
and its executive officers (Exhibit 10.10 to the 1992 Form 10-K).*
10.5 --Supplemental Executive Retirement Plan of the Company, effective May
1, 1987 (Exhibit 10.11 to the 1992 Form 10-K).*
10.6 --Supplemental Executive Retirement Plan of the Company, effective March
1, 1990 (Exhibit 10.12 to the 1992 Form 10-K).*
10.7 --Specimen copy of supplemental death benefit arrangement between the
Company and its executive officers (Exhibit 10.13 to the 1992 Form
10-K).*
10.8 --Maxus Energy Corporation Supplemental Savings Plan (as amended and
restated effective June 8, 1995), filed herewith.
10.9 --Trust Agreement dated December 18, 1986 between the Company and
AmeriTrust Company National Association (Exhibit 10.15 to the 1992
Form 10-K).*
10.10 --Deferred Compensation Plan for Executives of the Company, effective
September 28, 1993 (Exhibit 10.17 to the 1993 Form 10-K).*
10.11 --Distribution Agreement dated as of April 22, 1987 between the Company
and Diamond Shamrock R&M, Inc. (Exhibit 10.23 to the 1992 Form 10-K).*
</TABLE>
<PAGE> 120

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ---------- ------------------------------------------------------------------------ ------------
<C> <S> <C>
10.12 --Rights Agreement dated as of September 2, 1988 between the Company and
AmeriTrust Company National Association (Exhibit 10.24 to the 1992
Form 10-K).*
10.13 --Stock Purchase Agreement by and among the Company and Occidental
Petroleum Corporation, et. al. dated September 4, 1986 (Exhibit 10.25
to the 1992 Form 10-K).*
10.14 --Agreement of Merger dated as of February 28, 1995 among YPF, YPFA
Corp. and the Company (Exhibit 3 to the Schedule 14D-9).*
10.15 --International Consulting Agreement, dated May 1, 1995 between C. L.
Blackburn and YPF, filed herewith.
10.16 --Assignment of International Consulting Agreement, dated November 2,
1995 between C. L. Blackburn, YPF, and the Company, filed herewith.
10.17 --Maxus Severance Agreement dated August 3, 1995 between the Company and
Roberto Luis Monti, filed herewith.
10.18 --Compensation Agreement dated December 27, 1995 between the Company and
Roberto L. Monti, filed herewith.
10.19 --Services Agreement dated April 5, 1995 between the Company and Peter
D. Gaffney, filed herewith.
10.20 --Secondment Agreement dated April 5, 1995 between the Company, YPF and
Gaffney, Cline & Associates, Inc., filed herewith.
10.21 --Amendment to Change in Control Agreement dated May 11, 1995 between
the Company and W. Mark Miller, filed herewith.
10.22 --Employment Agreement effective as of July 1, 1995 between the Company
and W. Mark Miller, filed herewith.
10.23 --Specimen copy of a letter agreement regarding Change in Control
Agreement dated April 7, 1995 between the Company and certain of its
executive officers, filed herewith.
10.24 --Letter Agreement regarding Change in Control Agreement dated April 13,
1995 between the Company and Michael C. Forrest, filed herewith.
10.25 --Specimen copy of a letter agreement regarding Change in Control
Agreement dated ------------, 1995 between the Company and certain of
its executive officers, filed herewith.
21.1 --List of Subsidiaries of the Company, filed herewith.
23.1 --Consent of Independent Accountants, filed herewith.
23.2 --Consent of Independent Accountants, filed herewith.
24.1 --Powers of Attorney of directors and officers of the Company, filed
herewith.
24.2 --Power of Attorney of the Company, filed herewith.
27.1 --Financial Data Schedule, filed herewith.
</TABLE>

<PAGE> 1
EXHIBIT 4.27

WAIVER OF CERTAIN RIGHTS RELATING TO
$9.75 PREFERRED STOCK

THIS WAIVER OF CERTAIN RIGHTS RELATING TO $9.75 PREFERRED
STOCK (the "Waiver") is executed by The Prudential Insurance Company of
America, a New Jersey corporation ("Prudential"), and Maxus Energy Corporation,
a Delaware corporation (the "Company"), dated as of this 8th day of June, 1995.

RECITALS

A. Prudential and Maxus entered into a Preferred Stock
Purchase Agreement dated February 1, 1987, providing for the issuance to
Prudential of 3,000,000 shares (the "Shares") of $9.75 Cumulative Convertible
Preferred Stock, par value $1.00 per share (the "$9.75 Preferred Stock"), of
the Company having the rights set forth in the Certificate of Designations for
the $9.75 Preferred Stock (the "Certificate of Designations");

B. The Preferred Stock Purchase Agreement was
subsequently amended by agreements between Prudential and the Company dated
February 8, 1987 and April 12, 1990; pursuant to the April 12, 1990 agreement
(the "Second Stock Purchase Agreement") (1) the Company reacquired from
Prudential 500,000 of the Shares, and (2) Prudential executed and delivered a
Waiver of Certain Equity Offering Rights dated as of April 12, 1990 and a
Waiver of Certain Rights Relating to $9.75 Preferred Stock dated June 5, 1990;

C. Prudential and the Company entered into a letter
agreement dated February 28, 1995 (the "Letter Agreement") pursuant to which
Prudential, upon the request of the Company, and the Company agreed to execute
irrevocable and unconditional waivers of certain provisions of the Certificate
of Designation, such waivers to be effective upon the effectiveness of a
guaranty (the "YPF Guaranty") by YPF Sociedad Anonima, a sociedad anonima
organized under the laws of the Republic of Argentina ("YPF");

D. The YPF Guaranty has become effective; and

E. Simultaneously with such effectiveness Prudential and
the Company are executing and delivering this Waiver pursuant to the Letter
Agreement.

NOW, THEREFORE, in consideration of the premises and the
covenants contained herein, and for other consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

1. Prudential Waiver of Certain Rights. Prudential
hereby unconditionally, irrevocably and permanently waives any and all rights
of the holders of the Shares under Section 2(b), Section 3(b), Section 8 and
Section 9 of the Certificate of Designations.
<PAGE> 2
2. Company Waiver of Certain Rights. The Company hereby
unconditionally, irrevocably and permanently waives any and all rights the
Company may have under Section 5(a) and Section 5(c) of the Certificate of
Designations.

3. Transfers; Legends. Prudential hereby agrees that if
it shall at any time or from time to time sell, transfer or otherwise dispose
of any Shares, any transferee, as a condition of the transfer shall, by written
agreement satisfactory to the Company and its counsel delivered to the Company
at least five business days prior to the proposed effective date of such
transfer, expressly assume all of Prudential's obligations, waivers, duties and
covenants under the Stock Purchase Agreement, the Second Stock Purchase
Agreement, the Letter Agreement and this Waiver (as each may have been amended
or modified, or any provisions thereof waived, and shall at such time be in
effect), including without limitation Prudential's obligations under this
paragraph 3 as to the Shares to be so transferred, and shall agree to so bind
its subsequent transferees.

As soon as practicable following the execution and
delivery hereof, the certificates currently evidencing the Shares are being
surrendered against delivery to Prudential of one or more certificates
evidencing a like aggregate number of Shares which, in addition to any other
legend placed upon such certificate(s), shall bear a legend to the following
effect:

"The securities represented by this certificate are
subject to certain provisions of an agreement, dated
April 12, 1990, and the provisions of an agreement,
dated February 28, 1995, each between the Corporation
and The Prudential Insurance Company of America, the
terms of which require the holder hereof to execute
certain unconditional and irrevocable waivers of
certain rights of the holder, including without
limitation the right to convert these securities into
Common Stock of the Corporation, to receive increased
dividends in certain circumstances and to vote in
respect of certain matters, and, under certain
circumstances, to consent to amendments of, or, at
the request of the Company, waivers with respect to,
the Certificate of Designations and amendments of
certain agreements to which the Corporation is a
party. Pursuant to said Agreement dated February 28,
1995 the Corporation and The Prudential Insurance
Company of America have entered into a further
agreement dated June 8, 1995 effecting certain
unconditional and irrevocable waivers with respect to
the Certificate of Designations. Copies of such
agreements are on file at the principal executive
offices of the Corporation."

4. Representations and Warranties. Each of Prudential
and the Company hereby represents and warrants that this Waiver has been duly
authorized, executed and

2
<PAGE> 3
delivered by it and is its valid and binding obligation. This Waiver shall be
binding upon and inure to the benefit of the Company and Prudential and their
successors and assigns.

IN WITNESS WHEREOF Prudential and the Company have caused this
Waiver to be duly executed as of the date first above written.

THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA

By: /s/ R.G. GWIN
Print Name: R.G. Gwin
Title: Vice President

MAXUS ENERGY CORPORATION

By: /s/ DAVID WADSWORTH
Print Name: David Wadsworth
Title: Vice President

<PAGE> 1
EXHIBIT 10.8

MAXUS ENERGY CORPORATION

SUPPLEMENTAL SAVINGS PLAN

(AS AMENDED AND RESTATED EFFECTIVE JUNE 8, 1995)

- --------------------------------------------------------------------------------

The Maxus Energy Corporation Supplemental Savings Plan, formerly named
the Employee Shareholding and Investment Supplemental Benefits Plan (the
"Plan"), an unfunded, nonqualified deferred compensation plan originally
adopted in 1976, is hereby amended and restated effective as of June 8, 1995.

1. Purpose

The purpose of the Plan is to provide additional benefits for certain
highly compensated employees of Maxus Energy Corporation, a Delaware
corporation, and its subsidiaries (the "Corporation").

2. Definitions The following definitions are used throughout the Plan.

(a) "Actuarial Equivalent" means a form of benefit under which the
aggregate payments expected to be received are equal in value to the aggregate
payments expected to be received under a different form of benefit using the
following assumptions:

Mortality table: 1984 Unisex Pension

Interest rate: If the Participant (or his eligible
spouse) is eligible to elect the lump sum payment
option under the Career Average Plan, then the
interest rate shall be the same interest rate
assumption which would be used in calculating a lump
sum payment for such person under the Career Average
Plan; otherwise, the interest rate shall be the
Applicable Rate or such other rate as may

-1-
<PAGE> 2
be established by the Board.

The foregoing actuarial assumptions may be changed from time to time by
amendment to the Plan. The Actuarial Equivalent of a Participant's or an
eligible spouse's benefit under this Plan shall be computed under the actuarial
assumptions in effect on the date the payment of such benefit is made.

(b) "Applicable Rate" means an annual rate of interest equal to 120%
of the interest rate set by the Pension Benefit Guaranty Corporation to value
immediate annuities for single employer pension plans in effect at the
beginning of the Plan Year.

(c) "Benefits Committee" means the committee appointed by the
Chairman of the Board from time to time to administer the Corporation's
retirement benefit programs.

(d) "Board" means the Board of Directors of the Corporation or the
Compensation Committee of such Board of Directors.

(e) "Career Average Plan" means the Maxus Energy Corporation Career
Average Retirement Income Plan which is sponsored by the Corporation and is
intended to qualify under Section 401(a) of the Code.

(f) "Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time.

(g) "Corporate Account" means an account into which contributions of
the Corporation have been credited and which is credited with interest at the
Applicable Rate, compounded daily, until the account has been fully distributed
to the Participant.

(h) "Earnings" means a Participant's base salary. Bonuses,

-2-
<PAGE> 3
commissions and any other remuneration of any kind paid to a Participant shall
be excluded from the computation of Earnings. In the case of a Participant
receiving benefits under the Corporation's salary continuation plan, Earnings
shall include payments the Participant receives under such plan in lieu of
salary.

(i) "Participant" means an employee of the Corporation meeting the
eligibility requirements of Section 3 of the Plan. The term "Participant"
shall include the beneficiary or eligible spouse of a deceased Participant.

(j) "Participant Account" means an account into which deferred
Earnings of a Participant have been credited and which is credited with
interest at the Applicable Rate, compounded daily, or such other rate as may be
established by the Board until the account has been fully distributed to such
Participant.

(k) "Pension Benefit" has the meaning set forth in Section 5.

(l) "Plan Year" means the calendar year.

(m) "Reduced Savings Plan Benefit" means, for any Plan Year, the
amount by which (i) six percent (6%) of the Participant's Earnings during such
Plan Year, exceeds (ii) the maximum employer matching contribution permitted
under the Savings Plan during such Plan Year as a result of the limitations
under the Code.

(n) "Savings Plan" means the Employee Savings Plan sponsored by the
Corporation.

3. Eligibility

An exempt employee of the Corporation or of any operating

-3-
<PAGE> 4
subsidiary of the Corporation who is eligible to participate in the Savings
Plan for any plan year of the Savings Plan and who has been designated a grade
10 (or the equivalent thereof) or higher grade for the same plan year of the
Savings Plan shall be eligible to participate in the Plan. Once an employee
has become a Participant, he will not lose eligibility to participate in the
Plan merely because he is reclassified to a lower grade level.

4. Savings Plan Supplemental Award

If a Participant has a Reduced Savings Plan Benefit for any Plan Year,
such Participant's Corporate Account shall be credited with an amount equal to
the amount of the Reduced Savings Plan Benefit of the Participant for such Plan
Year.

5. Deferred Earnings

A Participant may elect, in accordance with procedures established by
the Benefits Committee, to defer under this Plan a portion of his Earnings for
a Plan Year. The amount of Earnings which a Participant may elect to defer
during a Plan Year shall be equal to the amount by which:

(a) the amount of before-tax contributions which such Participant
elected to contribute to the Savings Plan during such Plan Year,
exceeds

(b) the maximum amount of before-tax contributions which such
Participant is permitted to make to the Savings Plan during such Plan
Year as a result of the limitations under Code Sections 401(a)(17),
401(k), 402(g) and 415.

A Participant's deferrals of Earnings under this Plan shall be
credited to his Participant Account.

A Participant who is eligible to receive a benefit under the

-4-
<PAGE> 5
Career Average Plan shall be entitled to receive a supplemental pension benefit
(the "Pension Benefit") under the Plan in an amount equal to the excess, if
any, of (i) over (ii), where:

(i) equals the aggregate amount of monthly income that would be
payable to the Participant under the Career Average Plan (as computed
without the maximum benefit limitations under Code Section 415 or any
limitations imposed as a consequence of applying the annual
compensation cap set forth in Section 401(a)(17) of the Code (adjusted
for changes in the cost of living as provided in Section 401(a)(17) of
the Code and 415(d) of the Code) if the Participant's deferrals of
Earnings pursuant to this Section for any year were included in the
Participant's compensation as reported on Internal Revenue Service
Form W-2 for such year; and

(ii) equals the aggregate amount of monthly income that is actually
payable to the Participant under the Career Average Plan, the Maxus
Energy Corporation Supplemental Executive Retirement Plan and the
Maxus Energy Corporation Excess Benefits Plan.

6. Treatment of Stock Units

If and to the extent a Participant was credited with "Stock Units" (as
defined below) in his Corporate and/or Participant Accounts as of June 8, 1995,
such Participant's Corporate and Participant Accounts, respectively, will be
credited as of that date with an amount equal to the number of Stock Units
credited to such Account on June 8, 1995 times $5.50. As used herein, the term
"Stock Unit" shall have the meaning assigned to that term in the Plan as in
effect immediately prior to this amendment and restatement.

7. Vesting

Subject to the rights of general creditors as set forth in Section 11
and the right of the Corporation to discontinue the Plan as provided in Section
13(c), a Participant shall:

-5-
<PAGE> 6
(a) be vested in his Corporate Accounts to the same extent as such
Participant is vested in matching contributions of the Corporation under the
Savings Plan;

(b) be vested in his Pension Benefit to the same extent as such
Participant is vested in his accrued benefit under the Career Average Plan; and

8. Commencement of Benefits

The vested Corporate Accounts, vested Pension Benefit, and the
Participant Accounts payable to a Participant under this Plan shall be paid
within 30 days following the date the Participant terminates employment for any
reason. A Participant may not elect to borrow or withdraw from the Plan any
portion of the benefits provided under this Plan.

9. Form of Benefits

(a) A Participant's Corporate Account and Participant Account shall be
paid in a single lump sum cash payment.

(b) A Participant's Pension Benefit shall be paid in the form of a
lump sum payment which is the Actuarial Equivalent of a monthly life annuity in
the amount of the Pension Benefit beginning when the Participant reaches age 62
and continuing for the remaining life expectancy of the Participant.

10. Death Benefits

If a Participant who is entitled to receive a benefit under the Plan
dies before terminating his employment with the Corpora-

-6-
<PAGE> 7
tion:

(a) The amount of his Corporate Account and Participant Account shall
be paid to the person or persons (including his estate) who are recognized as
his beneficiary under the Savings Plan for purposes of the Savings Plan benefit
within 30 days following the date of the Participant's death; and

(b) The Participant's eligible spouse, if any, under the Career
Average Plan shall be paid within 30 days following the date of the
Participant's death a lump sum amount which is the Actuarial Equivalent of a
monthly life annuity beginning on the earliest date at which such an annuity
could begin for such eligible spouse under the Career Average Plan and
continuing for the remaining life expectancy of such eligible spouse in the
amount of the Participant's Pension Benefit (reduced as describe below). In
calculating such lump sum, the Pension Benefit shall first be reduced by any
and all factors or adjustments, if any, that would be used under the Career
Average Plan to adjust the monthly single life annuity amount of the
Participant to a 50% monthly life annuity for the eligible spouse that begins
on the earliest date at which a life annuity could begin for such eligible
spouse.

11. Funding of Benefits

(a) The Plan shall be unfunded. All benefits payable under the Plan
shall be paid from the Corporation's general assets, and nothing contained in
the Plan shall require the Corporation to set aside or hold in trust any funds
for the benefit of a Participant, who shall have the status of a general
unsecured creditor with respect to the Corporation's obligation to make
payments under the Plan. Any funds of the Corporation available to pay
benefits under the Plan shall be subject to the claims of general creditors of
the Corporation and may be used for any purpose by the Corporation.

(b) Notwithstanding the provisions of subsection (a), the Corporation
may, at the direction and in the absolute discretion of the Benefits Committee,
transfer to the trustee of one or more

-7-
<PAGE> 8
irrevocable trusts established for the benefit of one or more Participants
assets from which all or a portion of the benefits provided under the Plan will
be satisfied, provided that such assets held in trust shall at all times be
subject to the claims of general unsecured creditors of the Corporation, and no
Participant shall at any time have a prior claim to such assets.

12. Administration of the Plan

The Benefits Committee shall administer the Plan and shall keep a
written record of its action and proceedings regarding the Plan and all dates,
records and documents relating to its administration of the Plan. The Benefits
Committee is authorized to interpret the Plan, to make, amend and rescind such
rules as it deems necessary for the proper administration of the Plan, to make
all other determinations necessary or advisable for the administration of the
Plan and to correct any defect or supply any omission or reconcile any
inconsistency in the Plan in the manner and to the extent that the Benefits
Committee deems desirable to carry the Plan into effect. The powers and duties
of the Benefits Committee shall include, without limitation, the following:

(a) Determining the amount of benefits payable to Participants and
authorizing and directing the Corporation with respect to the payment of
benefits under the Plan;

(b) Construing and interpreting the Plan whenever necessary to carry
out its intention and purpose and making and publishing such rules for the
regulations of the Plan as are not inconsistent with the terms of the Plan; and

-8-
<PAGE> 9
(c) Compiling and maintaining all records it determines to be
necessary, appropriate or convenient in connection with the administration of
the Plan.

Any action taken or determination made by the Benefits Committee shall
be conclusive on all parties. No member of the Benefits Committee shall vote
on any matter relating specifically to such member. In the event that a
majority of the members of the Benefits Committee will be specifically affected
by any action proposed to be taken (as opposed to being affected in the same
manner as each other Participant in the Plan), such action shall be taken by
the Board.

13. Miscellaneous

(a) Nothing in the Plan shall confer upon a Participant the right to
continue in the employ of the Corporation or an affiliate of the Corporation or
shall limit or restrict the right of the Corporation or any affiliate to
terminate the employment of a Participant at any time with or without cause.

(b) Except as otherwise provided in the Plan, no right or benefit
under the Plan shall be subject to anticipation, alienation, sale, assignment,
pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell,
assign, pledge, encumber or charge such right or benefit shall be void. No
such right or benefit shall in any manner be liable for or subject to the
debts, liabilities or torts of a Participant.

-9-
<PAGE> 10
increasing, directly or indirectly, the benefit of any Participant. The Plan
may also be amended or terminated by the Board at any time, and any amendment
adopted by the Board shall supersede any prior or later amendment adopted by
the Benefits Committee that is inconsistent with the action of the Board. No
amendment shall have the effect of decreasing a Participant's accrued benefit.
However, if the Board determines that payments under the Plan would have a
material adverse effect on the Corporation's ability to carry on its business,
the Board may suspend such payments for such time as in its absolute discretion
it deems advisable.

(d) The Plan is intended to provide benefits for "management or highly
compensated" employees within the meaning of Sections 201, 301 and 401 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
therefore to be exempt from the provisions of Parts 2, 3 and 4 of Title I of
ERISA. Accordingly, if it is determined by a court of competent jurisdiction
or by an opinion of counsel that the Plan constitutes an employee pension
benefit plan within the meaning of Section 3 (2) of ERISA which is not so
exempt, the Plan shall terminate and no further benefits shall accrue
hereunder.

(e) The Corporation shall have the right to deduct any taxes required
by law to be withheld from all amounts paid pursuant to the Plan.

(f) If any provision in the Plan is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the

-10-
<PAGE> 11
remaining provisions shall nevertheless continue to full force and effect
without being impaired or invalidated in any way.

(g) The Plan shall be construed and governed in all respects in
accordance with applicable federal law and, to the extent not preempted by such
federal law, in accordance with the law of the State of Texas.

(h) Nothing herein is intended to nor shall be construed to reduce
the amount of any Participant's benefit accrued under the Plan as of June 8,
1995.

IN WITNESS WHEREOF, the Corporation has caused this amended and
restated Plan to be executed in its name by its duly authorized officers
effective as of the 8th day of June, 1995.

MAXUS ENERGY CORPORATION

By: /s/ W. Mark Miller
--------------------------------

ATTEST:

/s/ H. R. Smith
- --------------------------------
H. R. Smith, Secretary

-11-

<PAGE> 1
Exhibit 10.15

INTERNATIONAL CONSULTING AGREEMENT

YPF Sociedad Anonima (hereinafter referred to as the "Company"), a
sociedad anonima organized under the laws of the Republic of Argentina, with
principal offices at Avenida Pte. Roque Saenz Pena 777, Buenos Aires 1364,
Argentina, and C. L. Blackburn (hereinafter referred to as "Consultant"), whose
address is 3705 Gillon Avenue, Dallas, Texas 75205, hereby agree as follows:

1. The Company desires to engage Consultant on the terms and for
the period set forth herein as an international consultant (the "Consulting
Services"). Consultant agrees to provide the Consulting Services on the terms
and for the period set forth herein. In performing the Consulting Services,
Consultant shall have direct access to Jose A. Estenssoro and Nells Leon, the
Company's President and Chief Executive Officer and Executive Vice President
and Chief Operating Officer, respectively, or their successors.

2. The term of this Agreement shall commence on May 1, 1995 and
shall remain in effect for a term of two years; provided, however, that this
Agreement will terminate upon Consultant's death if he should die during the
term hereof.

3. As the fee for the Consulting Services, the Company shall pay
Consultant a retainer of US$180,000 per year, payable in monthly installments
of US$15,000 on or before the first day of
<PAGE> 2
every month during the term hereof. Should Consultant provide more than 60 days
of Consulting Services during the first or second 12-month period hereof,
Company shall pay him US $3000 for each day during which Consulting Services
are so provided in excess of 60 days in either 12-month period. Consultant
shall invoice the Company monthly for Consulting Services performed in excess
of 60 days in such a 12-month period, and Consultant's invoices shall set forth
the total number of days in which Consulting Services were performed during the
applicable month. Consultant is to send any such invoices to Cedric Bridger at
the address given for the Company first above. Such invoices will be paid
within ten (10) business days after receipt.

If and to the extent Consultant serves as a director of Maxus Energy
Corporation, a majority owned subsidiary of the Company (Maxus"), during the
term hereof, Consultant waives the right to receive compensation in addition to
that provided herein for his service as a director of Maxus unless he has
previously provided Consulting Services in excess of 60 days during the
relevant 12-month period. However, it is understood and agreed that time spent
performing duties as a director of Maxus shall be deemed to be the performance
of Consulting Services.

4. Within ten (10) business days after receipt of an invoice,
the Company shall reimburse Consultant for reasonable travel, entertainment,
out of town living and similar expenses incurred by him in connection with the
Consulting Services rendered

-2-
<PAGE> 3
hereunder. Such invoices are to be sent to Cedric Bridger at the address given
for the Company first above.

5. Subject to the other provisions hereof, during the term
hereof, Consultant will make himself available to perform the Services at least
60 days during each of the first and second 12-month periods hereof.

The Company specifically acknowledges and agrees that Consultant is
free to serve as a director of companies or other entities not affiliated with
the Company, provided that and for so long as such other companies and entities
do not in any material way compete with, provide goods or services to, or
otherwise generate conflicts with the Company.

6. The Company agrees to provide Consultant with mutually
agreeable office space, reserved parking, supplies and support services,
including secretarial support, at its headquarters' offices in Buenos Aires,
Argentina and at Maxus' headquarters' offices in Dallas, Texas, U.S.A. as may
be necessary or appropriate in connection with Consultant's performance of the
Consulting Services at such locations.

7. Consultant is an independent contractor hereunder with the
responsibility for, and control over, the details and means of performing the
Consulting Services. In this connection, it is understood and agreed that the
Company is interested in results and

-3-
<PAGE> 4
shall not have the right to control the details of the Services to be performed
hereunder or the manner in which they are performed.

8. Confidentiality. All data and information which may be
received by Consultant from the Company, directly or indirectly, or developed
by him in connection with his performing the Consulting Services shall be kept
confidential by him and will be utilized only for the purposes of carrying out
the Consulting Services to be provided hereunder.

9. The Company represents that if any approval of this Agreement
by its Board of Directors or any committee thereof is required to make this
Agreement binding on the Company, such approval has been given.

10. This Agreement may not be assigned by Consultant and may be
assigned by the Company only to a corporation into which the Company is merged
or which acquires substantially all of the Company's assets.

11. This Agreement is entered into in Dallas, County, Texas,
U.S.A. All payments provided for herein are payable in Dallas County, Texas,
U.S.A. in United States dollars.

-4-
<PAGE> 5
12. This Agreement shall be construed under the laws of the State
of Texas, without giving effect to its conflicts of laws principles.

13. (a) The Company consents to the non-exclusive jurisdiction of
any court of the State of Texas or any United States federal court sitting in
Dallas, Dallas County, Texas, U.S.A., and any appellate court from any thereof,
and waives any immunity from the jurisdiction of such courts over any suit,
action or proceeding that may be brought in connection with this Agreement.
The Company irrevocably waives, to the fullest extent permitted by law, any
objection to any suit, action or proceeding that may be brought in connection
with this Agreement in such courts whether on the grounds of venue, residence
or domicile or on the ground that any such suit, action or proceeding has been
brought in an inconvenient forum. The Company agrees that final judgment in
any such suit, action or proceeding brought in such court shall be conclusive
and binding upon the Company and may be enforced in any court to the
jurisdiction of which the Company is subject by suit upon such judgment.
Notwithstanding the foregoing, any suit, action or proceeding brought in
connection with this Agreement may be instituted in any competent court in
Argentina.

(b) The Company agrees that service of all writs, process and
summonses in any suit, action or proceeding brought in connection with this
Agreement against the Company in any court sitting in Dallas, Dallas County,
Texas, U.S.A. may be made upon the General

-5-
<PAGE> 6
Counsel of Maxus Energy Corporation, 717 N. Harwood St., Dallas, Texas 75201,
U.S.A., whom the Company irrevocably appoints as its authorized agent for
service of process for purposes of this Agreement and all actions brought in
connection herewith. The Company represents and warrants that Maxus' General
Counsel has agreed to act as the Company's agent for service of process. The
Company agrees that such appointment shall be irrevocable so long as this
Agreement shall remain in effect or until the irrevocable appointment by the
Company of a successor in Dallas, Texas as its authorized agent for such
purpose and the acceptance of such appointment by such successor. The Company
shall provide Consultant in writing the name and address of such successor
agent. With respect to any such action in any court of the State of Texas or
any United States federal court in Dallas, Dallas County, Texas, U.S.A. service
of process upon Maxus' General Counsel, as the authorized agent of the Company
for service of process, and written notice of such service to the Company,
shall be deemed, in every respect, effective service of process upon the
Company.

(c) Nothing in this Section 14 shall affect the right of any party
to serve legal process in any other manner permitted by law or affect the right
of any party to bring any action or proceeding against any other party or its
property in the courts of other jurisdictions.

14. Should any provision hereof be unenforceable or otherwise
illegal, the remainder of this Agreement shall not be affected, and

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<PAGE> 7
the provision held to be unenforceable or illegal shall be reformed to the
extent (and only to the extent) necessary to make it enforceable and legal.

Executed as of the 1st day of May, 1995.

YPF SOCIEDAD ANONIMA

By: [ILLEGIBLE]
-----------------------------------

/s/ C. L. BLACKBURN
-----------------------------------
C. L. Blackburn

-7-

<PAGE> 1
Exhibit 10.16

ASSIGNMENT OF

INTERNATIONAL CONSULTING AGREEMENT

This Assignment of International Consulting Agreement is entered into
as of this 2nd day of November, 1995 by and among YPF Sociedad Anonima, a
sociedad anonima organized under the laws of the Republic of Argentina ("YPF"),
Maxus Energy Corporation, a Delaware corporation ("Maxus"), and C. L. Blackburn
("Blackburn").

WHEREAS, YPF and Blackburn have heretofore entered into an
International Consulting Agreement (the "Consulting Agreement") effective as of
May 1, 1995; and

WHEREAS, YPF owns all of the issued and outstanding common stock of
Maxus; and

WHEREAS, YPF has determined that Maxus will be its principal
international oil and gas exploration and production subsidiary, responsible
for substantially all oil and gas exploration and production activities outside
Argentina; and

WHEREAS, consistent with Maxus' role as YPF's principal international
oil and gas exploration and production subsidiary, YPF has transferred or
intends to transfer certain rights to explore for and produce oil and gas in
Bolivia, Peru, Ecuador, the United States and other countries; and

WHEREAS, the parties hereto have agreed that in view of Maxus' role as
YPF's principal international oil and gas exploration and production subsidiary
it is appropriate and in the parties' interests for YPF to assign its rights
and obligations under the Consulting Agreement to Maxus;

NOW THEREFORE, for and in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:

1. YPF hereby assigns, and Maxus hereby accepts and agrees to perform
on the terms and conditions set forth herein, all of YPF's rights and
obligations under the Consulting Agreement effective as of May 1, 1995.

2. Blackburn hereby consents to the assignment of YPF's rights and
obligations under the Consulting Agreement to Maxus on the terms and conditions
set forth herein and that the "Consulting Services" (as defined in the
Consulting Agreement) will be performed for Maxus.
<PAGE> 2
3. Any provision in this Agreement or the Consulting Agreement to the
contrary notwithstanding, the parties hereto agree as follows:

a. In lieu of the access contemplated by Section 1 of the
Consulting Agreement, Blackburn shall have direct access to Nells
Leon, the Chief Executive Officer of YPF and a director of Maxus, and
Roberto Monti, the President and Chief Executive Officer of Maxus, or
their successors.

b. Blackburn shall send any invoices for or in connection
with Consulting Services or expense reimbursement as contemplated by
Sections 3 and 4 of the Consulting Agreement, respectively, to Maxus
Energy Corporation, 717 N. Harwood Street, Suite 3300, Dallas, Texas
75201, Attn: Controller, or such other address as may be specified in
writing by Maxus.

c. Maxus shall provide Blackburn office space, parking,
supplies and support services in Maxus' headquarters' offices in
Dallas on an as needed basis if and when Blackburn determines to
perform Consulting Services at such offices, and YPF shall provide
Blackburn office space, parking, supplies and support services in
YPF's headquarters' offices in Buenos Aires, Argentina on an as needed
basis if and when Blackburn determines to perform Consulting Services
at such offices.

4. Maxus and Blackburn agree that the Consulting Agreement remains in
full force and effect as modified hereby.

THIS Assignment of International Consulting Agreement may be signed in
any number of counterparts and shall be effective when executed by all three
parties identified below.

YPF SOCIEDAD ANoNIMA

Date:

November 7, 1995 By /s/ CEDRIC BRIDGER
------------------------------------

MAXUS ENERGY CORPORATION

Date:

November 9, 1995 By /s/ W. MARK MILLER
------------------------------------

Date:

November 2, 1995 By /s/ C. L. BLACKBURN
-----------------------------------
C. L. BLACKBURN

bcc w/enc: L. Englebrecht
R. Clabiorne

<PAGE> 1
Exhibit 10.17

MAXUS SEVERANCE AGREEMENT

This Severance Agreement is made and entered into between Maxus
Energy Corporation ("Maxus") and Roberto Luis Monti ("Executive"), effective
for all purposes as of August 3, 1995.

WHEREAS, as an additional inducement to Executive to accept
employment with Maxus and to devote his best efforts to the business of Maxus,
Maxus is desirous of offering him this severance agreement; and

WHEREAS, Executive is desirous of accepting employment with Maxus
and receiving this severance agreement;

NOW, THEREFORE, Maxus and Executive hereby agree to the following:

SECTION 1 - DEFINITIONS

Whenever used herein, the following capitalized terms shall have
the meanings set forth below, unless expressly provided otherwise.

(a) BENEFICIARY means the beneficiary designated (and not
revoked) by Executive in writing, filed with Maxus in a form
acceptable to it, to receive any payment to be made on
behalf of Executive after his death pursuant to this
Agreement, and if no such designation exists, his surviving
spouse or, if none, his estate.

(b) BOARD means the Board of Directors of Maxus.

(c) CAUSE means the termination of Executive's employment with
Maxus due to (i) the willful and continued failure for a
period of 30 days by Executive to perform substantially all
of Executive's duties with Maxus, following a demand by
Maxus for substantial performance of his duties, which
demand specifies the manner in which Executive has not
performed his duties, other than any such failure resulting
from Executive's incapacity due to physical or mental
illness, or (ii) the willful engaging by Executive in gross
misconduct materially and demonstrably injurious to Maxus.
For purposes of this definition, an act or failure to act on
Executive's part shall not be considered "willful" if done
or omitted to be done by Executive in good faith and with
reasonable belief that Executive's action or omission was in
the best interest of Maxus.

(d) DISABILITY means a mental or physical disability of
Executive, which, in the opinion of Executive's physician,
prevents Executive
<PAGE> 2
from performing his regular duties and is expected to be of
long continued duration or to result in death.

(e) EMPLOYMENT means employment with Maxus.

(f) SEVERANCE PAYMENT means a payment in cash or by wire
transfer of U.S. $3 million, less any other severance
payment, if any, due Executive by Maxus.

(g) TAKEOVER means either (i) any transfer of shares or other
corporate restructuring whereby Maxus ceases to be a
corporation directly or indirectly controlled by YPF S.A., a
corporation organized under the laws of Argentina ("YPF");
or (ii) a "controlled acquisition"of YPF, as defined in
Section 7(d) of YPF's by-laws or any successor provision
thereto, or a change in the composition of the Class D
directors of YPF, at any Stockholders' Meeting or over any
period of time encompassing not more than two successive
Stockholders' Meetings, so that a majority of the Class D
directors are persons who were not proposed as candidates by
the Class D directors sitting at the date or dates the new
directors comprising such majority were elected.

SECTION 2 - PAYMENT OF SEVERANCE

If Executive's Employment is terminated (i) by either Executive or
Maxus because of his Disability or death, or (ii) by Maxus other than for
Cause, or (iii) by Executive within six months following a Takeover for any
reason (other than to accept employment with YPF), or (iv) by Executive for any
reason on or after reaching the age of 65 years, Maxus shall immediately pay to
Executive the Severance Payment. If, however, Executive's Employment is
terminated by Executive for any other reason, including, without limitation, to
accept employment with YPF, no Severance Payment shall be due or payable to
Executive under this Agreement.

SECTION 3 - NO EMPLOYMENT RIGHTS

Nothing contained herein shall be construed as a contract of
employment between Maxus and Executive, or as granting Executive a continued
right of employment or as a limitation on the right of Maxus to discharge
Executive at any time, with or without Cause.

SECTION 4 - NON-ALIENATION OF BENEFITS

No right or payment under this Agreement shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance or charge by
Executive (or his Beneficiary), and any attempt to anticipate, alienate, sell,
assign,

-2-
<PAGE> 3
pledge, encumber or charge the same will be void. Further, no right or payment
hereunder shall in any manner be liable for or subject to any debts, contracts,
liabilities or torts of Executive (or his Beneficiary). If Executive (or his
Beneficiary) shall become bankrupt or attempt to anticipate, alienate, assign,
sell, pledge, encumber or charge any right or payment hereunder, or if any
creditor shall attempt to subject the same to a writ of garnishment,
attachment, execution, sequestration, or any other form of process or
involuntary lien or seizure, then such right or payment shall be held by Maxus
for the sole benefit of Executive (or his Beneficiary, as the case may be) in
such manner as the Board shall deem proper, free and clear of the claims of any
other party whatsoever.

SECTION 5 - WITHHOLDING OF TAXES

Maxus shall deduct from any payment due Executive (or his
Beneficiary) hereunder, any taxes which it determines are required by law to be
withheld from such payment.

SECTION 6 - ARBITRATION

Any dispute under this Agreement shall be settled by arbitration.
Either party by notice in writing to the other may request arbitration and
shall specify the nature of the dispute. Within five days thereafter the
parties may designate a single arbitrator, or absent such mutual designation,
within the next five days each party shall appoint an arbitrator, who in turn
shall jointly select a third arbitrator within the next five days. Absent
agreement on such third arbitrator, the parties agree to seek the assistance of
the American Arbitration Association in this regard. The decision of the
single arbitrator or the joint decision of the three arbitrators, which shall
also apportion the arbitration expense between the parties, shall be binding
and enforceable on the parties in the same manner as a final decision of a
court of competent jurisdiction.

The provisions of the foregoing paragraph shall survive
termination of this Agreement.

SECTION 7 - AMENDMENT

No provision of this Agreement may be modified, waived or
discharged unless evidenced by written agreement executed by both parties.

SECTION 8 - GOVERNING LAW

The validity, construction, interpretation and effect of this
Agreement and all rights of any and all persons having or claiming o have any
interest in the Agreement shall be governed by the laws of the State of Texas.

-3-
<PAGE> 4

IN WITNESS WHEREOF, Maxus and Executive have executed this
Agreement in one or more counterparts, each of which shall be deemed an
original and all of which shall constitute one and the same instrument,
effective for all purposes as of the date first provided above.

MAXUS ENERGY CORPORATION

BY: /s/ W. MARK MILLER
---------------------------------
Vice President

EXECUTIVE

/s/ ROBERTO LUIS MONTI
---------------------------------
Roberto Luis Monti

-4-

<PAGE> 1
Exhibit 10.18

COMPENSATION AGREEMENT

THIS AGREEMENT is made on the 27th day of December, 1995 between Maxus Energy
Corporation, a company incorporated under the laws of the State of Delaware,
United States of America, whose principal office is located at 717 North
Harwood Street, Dallas, Texas 75201 (the "Company") and Roberto L. Monti (the
"Executive").

WHEREAS, the Executive and the Company have entered into certain understandings
related to the payment of compensation, performance of services and location of
duties to be performed, and

WHEREAS, the Executive and the Company have agreed that to defer payment of
certain compensation that may be earned by the Executive, and

WHEREAS, such agreement was made prior to the Executive's performance of any
duties for the Company and its affiliates in the United States or earning any
compensation with respect thereto in or for periods subsequent to December 31,
1995, and

WHEREAS, the Executive and the Company desire to memorialize such agreements in
a written agreement,

IT IS HEREBY AGREED as follows:

1. Time Covered
The Executive shall be compensated by the Company under the terms of
this Agreement beginning with the first day of January 1996. This
Agreement may be terminated at any time by the Executive or the
Company. In no event shall any payments be due under this Agreement
until the date specified in paragraph 5 of this Agreement.
<PAGE> 2
2. Services Covered
The Executive shall hold office and serve the Company as President and
Chief Executive Officer at the pleasure of the Board of Directors of
the Company (the "Board"). In such capacity, the Executive shall
perform the duties and exercise the powers consistent with such
offices which may from time to time be assigned to or vested in him by
the By-Laws of the Company and Board, and the Executive shall from
time to time give to the Board all such information regarding such
matters as it shall require and shall implement and apply the policy
of the Company.

From time to time, the Executive will be required to perform services
on behalf of the Company or its affiliates outside of the United
States. Said duties will include, but not be limited to, review of
acquisition candidates, stewardship duties, management liaison and
other strategic corporate functions.

It is expected that such acquisition candidates will normally be
located outside of the United States, and the services performed in
connection with any reviews shall be performed outside of the United
States. It is also expected that stewardship and management liaison
services will normally require visits to and meetings at the offices
of YPF Sociedad Anonima, the Company's controlling shareholder in
Argentina.

3. Compensation for Services
During the term of this Agreement, the Company shall pay the Executive
(a) for services performed outside of the United States while a
resident in the United States a monthly base salary of US$16,667 (the
"Foreign Service Pay") and (b) for other services performed a monthly
base salary of US $50,000.

-2-
<PAGE> 3
4. Deferral of Payment
The Company and the Executive agree to defer payment of the Foreign
Service Pay. It is agreed that the Company shall instead credit, on
the last day of each month US$16,667 to a "deferral account." In
addition, the Company shall add to the deferral account, on the first
day and the 15th day of each month, beginning February 15, 1996, an
amount equal to 1/24 of the prime rate multiplied by the balance in
the deferral account as of the close of the preceding day (the
"earnings addition"). For this purpose, the prime rate applicable to
a given date shall be equal to the month end prime lending rate as
reported in the Wall Street Journal for the immediately preceding
month or, if the Wall Street Journal does not report such rate, the
prime rate applicable to a given date will be equal to the month end
prime lending rate offered by the Chase Manhattan Bank, New York, N.Y.
for the immediately preceding month.

At no time while resident in the United States shall the Executive
have any control over payment of the amounts in the deferral account,
nor shall the obligation be funded or secured, nor shall the Executive
have any right against the Company or any of its affiliates with
respect to any portion of the deferral account, except as a general
unsecured creditor.

5. Payment of Balance in Deferral Account
The Executive shall be entitled to payment of such amounts as
determined in paragraph 4 thirty (30) days after the termination of
the Executive's employment with the Company and the payment will be
made in a lump-sum.

-3-
<PAGE> 4
The Executive shall be entitled to make a one time, irrevocable
election to withdraw the balance in the deferral account within 15
days after December 31, 1998 in the event that he has not received or
is otherwise not entitled to receive payment. If such election is
made, an amount equal to the most recent annual "earnings addition"
will be deducted from the deferral account before payment to the
Executive. In addition, the Executive shall be entitled to withdraw
the entire amount in the deferral account in the event that the
Executive experiences a "financial hardship." The determination of
the existence of a financial hardship shall be made solely by the
Company, taking into consideration the severity of the hardship and
other sources of funds available to the Executive, but the balance in
the deferral account shall not be unreasonably withheld. No deduction
of any "earnings addition" shall be made from the deferral account if
withdrawal is made on account of "financial hardship."

6. Scope of Agreement
Nothing in this Agreement is intended to or shall be construed to
impact, enhance, impair or reduce the Executive's right to participate
in or coverage, obligations or rights under (a) the Company's
qualified and non-qualified benefit plans, policies and arrangements
or (b) that certain Severance Agreement dated August 3, 1995 between
the Executive and the Company.

-4-
<PAGE> 5
7. Governing Laws
This contract shall be governed by and construed under the Laws of the
State of Delaware.

/s/ Roberto L. Monti
- --------------------------------
Roberto L. Monti

MAXUS ENERGY CORPORATION

By: /s/ W. MARK MILLER
-----------------------------
Executive Vice President

-5-

<PAGE> 1
EXHIBIT 10.19

SERVICES AGREEMENT

THIS SERVICES AGREEMENT (this "Agreement") is entered into as of April
5, 1995 (the "Effective Date"), by and between PETER D. GAFFNEY ("Gaffney") and
MAXUS ENERGY CORPORATION, a Delaware corporation ("Maxus").

WHEREAS:

YPF, S.A. ("YPF") has tendered for all of the issued and outstanding
common stock of Maxus, resulting in Maxus becoming a subsidiary of YPF.

Recognizing Gaffney's unique knowledge, abilities and expertise, the
board of directors of Maxus (the "Maxus Board") and the management of YPF have
requested that Gaffney serve as Chief Executive Officer of Maxus.

NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:

1. EMPLOYMENT. Maxus hereby agrees to employ Gaffney, and Gaffney
hereby agrees to be employed by Maxus, for a term commencing on the date hereof
and terminating on September 30, 1995 (the "Employment Period"), subject to
extension by the mutual consent of the parties or earlier termination in
accordance with Section 4 hereof.

2. SERVICES. During the Employment Period, Gaffney will hold the
position of Chief Executive Officer of Maxus and in this capacity shall have
such responsibilities and duties as are consistent with such position, as well
as such additional duties as may be designated by the Maxus Board, provided
that in no event shall the scope of Gaffney's duties and the extent of
Gaffney's responsibilities be substantially different from the duties and
responsibilities usually associated with the position of chief executive
officer of a corporation similar in size and function to Maxus. In performing
his duties, Gaffney shall report, and be answerable only to, the Maxus Board,
acting through its Chairman of the Board or collectively. During the Employment
Period, Gaffney shall devote his best efforts and substantially all of his
business time, skill and attention to the business of Maxus. Notwithstanding
anything to the contrary set forth herein, Gaffney shall be entitled to
participate in such business and professional activities as may be approved
from time to time by the Maxus Board. In any event, Gaffney shall not be
prevented from devoting reasonable periods of time during normal business hours
to (a) serving the Society of Petroleum Engineers ("SPE") as President or in
any other capacity and performing related functions, (b) engaging in any
professional, civic or charitable activity consistent with his employment, and
(c) investing and managing Gaffney's personal assets. It is expressly
understood and agreed that to the extent any such activities have been
conducted by Gaffney prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not be deemed to interfere with
the performance of Gaffney's responsibilities to Maxus.

<PAGE> 2
3. COMPENSATION AND BENEFITS.

(a) Salary. From the Effective Date until the date of
termination of this Agreement in accordance with its terms, Maxus shall pay
Gaffney a salary of $50,000 per month, payable in arrears on the first business
day of each month. Gaffney's salary shall not be reduced during the Employment
Period. Upon the execution of this Agreement, Maxus shall pay Gaffney all
salary amounts earned under this Section 3(a) since the Effective Date but not
paid as of the date of execution hereof.

(b) Benefits. In addition to the compensation specified
above, Gaffney shall be entitled to only the following benefits:

(i) participation in any health insurance,
disability insurance or other welfare benefit program made generally available
to the officers of Maxus, including, without limitation, full health,
disability and dental coverage for Gaffney and spouse;

(ii) a period of vacation with salary consistent
with the current policy of Maxus, as the same may be changed from time to time;

expenses incurred by Gaffney in furtherance of the interests of Maxus in
accordance with the current policy of Maxus, as the same may be changed from
time to time;

(iv) reimbursement for reasonable expenses
incurred by Gaffney and spouse in connection with attending SPE meetings and
related functions and reimbursement of reasonable expenses incurred by Gaffney
in connection with other professional and energy industry meetings and related
functions;

(v) all reasonable costs associated with
Gaffney's relocation to Dallas, Texas and the performance of services under
this Agreement, including, without limitations, payment or reimbursement of,
rental of a suitable furnished apartment or house in Dallas, Texas, the lease
of an automobile, legal costs associated with U.S. immigration compliance and
other legal costs incurred by Gaffney in connection with his employment with
Maxus; and

(vi) payment of initiation and monthly (or other
periodic) fees and dues for Gaffney to be a full member of the Dallas Petroleum
Club during the Employment Period.

(c) Maxus shall have the right to deduct and withhold
from compensation payable to Gaffney all social security and other federal,
state and local taxes and charges which are currently or which may hereafter be
required by law.

(d) Notwithstanding anything in this Agreement or in any
compensation or employee benefit plan or program of Maxus that provides for
incentive or deferred compensation or retiree benefits, including health
insurance, life insurance or pension benefits (whether pursuant to a qualified
or nonqualified plan), to the contrary, Gaffney hereby expressly agrees and

2
<PAGE> 3
acknowledges that he shall not be entitled to participate in or receive any
such incentive or deferred compensation or retiree benefits and, to the extent
applicable, Gaffney hereby waives his automatic participation in such plans and
programs.

4. TERMINATION OF EMPLOYMENT. The following provisions shall be
applicable to a termination of employment under this Agreement:

(a) Maxus may terminate Gaffney's employment under this
Agreement at any time. If Maxus terminates Gaffney's employment, Gaffney shall
be entitled to any unpaid salary (pro rated through and including the date of
termination). In addition, Gaffney shall be entitled to receive an amount equal
to the compensation he would have been entitled to receive under this Agreement
through the end of the Employment Period. The aforesaid cash payments shall be
payable in a single lump sum upon termination.

(b) Gaffney shall be entitled to terminate his employment
hereunder at any time. If Gaffney terminates his employment hereunder, the
provisions of Section 4(a) shall apply.

(c) Any termination by act of Maxus or Gaffney pursuant
to Sections 4(a) or (b) above shall be communicated by a written notice of
termination to the other party hereto and, further, in the event Gaffney shall
terminate this Agreement such notice shall be sent to Maxus at least thirty
(30) days prior to the date of termination.

5. CONFIDENTIAL INFORMATION. Gaffney shall take all reasonable
steps to safeguard Confidential Information (as herein defined) and to protect
such Confidential Information against disclosure, misuse, loss or theft. The
term "Confidential Information" shall mean any information not generally known
in the relevant trade or industry, which was obtained from Maxus or which was
learned, discovered, developed, conceived, originated or prepared during or as
a result of the performance of any services by Gaffney on behalf of Maxus.

6. DIRECTORSHIP. During the Employment Period and for so long
thereafter as Gaffney may remain employed by Maxus, Maxus agrees to nominate
Gaffney to the Maxus Board at each meeting of stockholders called for the
purpose of electing directors of Maxus. Maxus further agrees that Gaffney shall
be appointed to the Executive Committee (or any committee with similar
functions and powers) of the Maxus Board, if any.

7. CONTINUANCE OF LEGAL PROTECTIONS. Maxus agrees that
all rights to indemnification and exculpation in respect of actions taken by
Gaffney during the Employment Period, which rights shall be those now existing
in favor of the employees, agents, directors or officers of Maxus as provided
in the certificate of incorporation or bylaws of Maxus shall survive the
termination of employment and continue in full force and effect. Maxus shall
cause to be maintained in effect throughout the Employment Period, and for a
period of seven years from the date of termination of employment, the current
policies of directors' and officers' liability insurance (or policies that have
substantially the same coverages and other material terms as contained in the
current policies of directors' and officers' liability insurance) with respect
to all matters occurring during, or as a result of, Gaffney's employment by
Maxus; provided that if any claim is asserted or made within such period, such
insurance will be continued in respect of such claim until the final
disposition thereof. Notwithstanding the foregoing, in the event that policies

3
<PAGE> 4
of directors' and officers' liability insurance are not being issued by
reputable carriers with coverages and other material terms substantially the
same as contained in current policies maintained by Maxus, Maxus shall obtain
and maintain policies of directors' and officers' liability insurance with the
maximum coverages then commercially available.

8. CERTAIN PUBLIC INFORMATION. Any press release or other public
information concerning Gaffney, or the position held by Gaffney at Maxus,
including without limitation, any press release relating to the termination of
Gaffney's employment, shall be submitted to Gaffney for prior written approval,
which approval shall not be unreasonably withheld.

9. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon,
and inure to the benefit of, Maxus and its affiliates and its successors and
assigns, and shall be binding upon and inure to the benefit of Gaffney, and his
legal representatives and assigns.

10. MODIFICATION OR WAIVER. No amendment, modification, waiver,
termination or cancellation of this Agreement shall be binding or effective for
any purpose unless it is made in a writing signed by the party against whom
enforcement of such amendment, modification, waiver, termination or
cancellation is sought.

11. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (EXCLUSIVE OF
CONFLICTS OF LAW PRINCIPLES) AND WILL, TO THE MAXIMUM EXTENT PRACTICABLE, BE
DEEMED TO CALL FOR PERFORMANCE IN DALLAS COUNTY, TEXAS.

12. SEVERABILITY. Whenever possible, each provision and term of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or term of this Agreement shall be
held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provisions or term or the remaining provisions or terms of
this Agreement.

13. COUNTERPARTS. This Agreement may be executed on separate
counterparts each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

14. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties with respect to the subject matter hereof.

4
<PAGE> 5
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.

"MAXUS"

By: /s/ MARK GENTRY
----------------------------------
Name: Mark Gentry
----------------------------------
Title: Vice President
----------------------------------

5
<PAGE> 6

"Gaffney"

/s/ PETER D. GAFFNEY
----------------------------------
Peter D. Gaffney

<PAGE> 1
EXHIBIT 10.20

SECONDMENT AGREEMENT

THIS SECONDMENT AGREEMENT (this "Agreement") is entered into as of
April 5, 1995 (the "Effective Date"), by and between Gaffney, Cline &
Associates, Inc. ("GCA"), YPF, S.A. ("YPF") and Maxus Energy Corporation
("Maxus").

W H E R E A S:

YPF and Maxus have requested that Peter D. Gaffney ("Gaffney") serve
as Chief Executive Officer and a Director of Maxus.

Gaffney is currently a principal of GCA and its affiliates.

GCA and its affiliates are international energy consultants providing
services to a broad base of clients, including YPF and Maxus.

GCA is willing to consent to the secondment of Gaffney to Maxus on the
terms and conditions described herein.

NOW THEREFORE, in consideration of the premises and the mutual
consents and agreements set forth herein, the parties hereto agree as follows:

1. Secondment. GCA consents to the secondment of Gaffney to Maxus
for a term commencing on the date hereof and terminating September 30, 1995
(the "Initial Term"); provided that the term may be extended (each extension,
an "Extension Period") by mutual consent of the parties.

2. Initial Fee; Extension Fees. Upon execution of this Agreement,
Maxus shall pay GCA a fee (the "Initial Fee") of $500,000 (U.S.). In the event
the parties agree to an Extension Period, Maxus shall pay an additional fee (an
"Extension Fee") of $500,000 (U.S.) on or before the commencement of such
Extension Period. The Initial Fee and any Extension Fee are nonrefundable
notwithstanding the termination of Gaffney's employment with Maxus during the
Initial Term or during any Extension Period, as the case may be.

3. Existing Arrangements. Each of the parties hereto acknowledges
that YPF and Maxus have existing contractual arrangements with GCA (the
"Existing Arrangements") pursuant to which GCA provides professional services
to YPF, Maxus and their respective affiliates. Each of the parties hereto
further acknowledges that such Existing Arrangements are anticipated to
continue in effect for the foreseeable future. By executing this Agreement, YPF
and Maxus each ratifies and affirms such Existing Arrangements and expressly
waives any actual or potential conflict of interest now existing, or that may
hereafter arise, as a result of or relating to Gaffney's secondment to Maxus
and the continued performance of GCA under the Existing Arrangements during and
after the Initial Term and any Extension Period.

4. Indemnification.

a. Scope of Indemnity. Each of YPF and Maxus shall
indemnify GCA and its affiliates and their respective officers, directors,
shareholders, employees, agents and attorneys (each, a "GCA Indemnitee")
against and hold GCA Indemnitee harmless from any judgments,

<PAGE> 2
fines, losses, claims, costs (including, without limitation, court costs and
costs of settlement incurred by GCA Indemnitee) and reasonable expenses
(including, without limitation, reasonable attorneys' fees) sustained or
incurred by GCA Indemnitee in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (including any action by or in the right of YPF or Maxus, as
the case may be), if GCA Indemnitee is or was a party or is threatened to be
made a party thereto by reason of (directly or indirectly) (i) the fact that
Gaffney is or was a director or officer of Maxus, (ii) the fact that Gaffney is
or was serving at the request of YPF or Maxus as a director, officer, employee,
agent or trustee of another corporation, partnership, joint venture, trust or
other enterprise, or (iii) any action or inaction (negligent or otherwise) by
Gaffney while acting as a director or officer of Maxus or as a director,
officer, employee, agent or trustee of another corporation, partnership, joint
venture, trust or other enterprise at the request of YPF or Maxus. In the event
that any claim or demand for which YPF or Maxus would be liable to GCA
Indemnitee hereunder is asserted against or sought to be collected from GCA
Indemnitee by a third party, YPF or Maxus, as the case may be, shall, at its
sole cost and expense, assume the defense of such claim or demand; provided,
however, that in the event GCA is advised by counsel that it may have defenses
different from or in addition to those that may be asserted by YPF or Maxus in
its own behalf, GCA Indemnitee shall have the right to retain separate legal
counsel to monitor the status and disposition of any claim or demand for which
YPF or Maxus would be liable to GCA Indemnitee hereunder and, further, GCA
Indemnitee and GCA Indemnitee's counsel shall be entitled to participate in,
jointly with the counsel of YPF or Maxus in defending such action and the costs
of so doing shall be fully covered by the indemnity provided by this Agreement.

b. Expenses Related to Indemnity. Expenses incurred by
GCA Indemnitee in defending an action, suit or proceeding referenced in Section
4(a) hereof shall be paid by YPF or Maxus, as the case may be, in advance of
the final disposition of such action, suit or proceeding at the written request
of the GCA Indemnitee and upon the presentation of documents supporting the
expenses for which reimbursement is sought. Prompt payment shall be made of any
request for an advance pursuant to this Section 4(b) and in any event within
ten (10) business days of receipt of the written request of the GCA Indemnitee.
GCA Indemnitee may contest any refusal to make an advance by petitioning a
court of appropriate jurisdiction to make an independent determination
respecting Indemnitee's right to receive an advance, in accordance with the
terms of Section 4(c) hereof.

c. Enforcement of Indemnity Rights. The right to
indemnification or advances as provided by this Agreement shall be enforceable
by GCA Indemnitee in any court of competent jurisdiction. YPF or Maxus, as the
case may be, shall have the burden of proving that indemnification or advances
are not required. YPF and Maxus agree to indemnify GCA Indemnitee against and
hold GCA Indemnitee harmless from any judgments, fines, losses, claims, costs
(including, without limitation, costs of settlement incurred by GCA Indemnitee)
and reasonable expenses (including, without limitation, reasonable attorney's
fees and court costs) sustained or incurred by GCA Indemnitee in connection
with an action, suit or proceeding to establish GCA Indemnitee's rights to
indemnification or advances pursuant to this Agreement if such right to
indemnification is established or agreed to in part or in whole.

d. Survival of Indemnity Rights. The indemnity rights
set forth in this Section 4 shall survive the termination of Gaffney's
employment with Maxus.

2
<PAGE> 3
5. Successors and Assigns. This Agreement will be binding upon,
and inure to the benefit of Maxus, YPF and their respective affiliates,
successors and assigns and shall be binding upon and inure to the benefit of
GCA and its affiliates (including, without limitation, each GCA Indemnitee),
successors and assigns.

6. Modification or Waiver. No amendment, modification, waiver,
termination or cancellation for this Agreement shall be binding or effective
for any purpose unless it is made in a writing signed by the party against whom
enforcement of such amendment, modification, waiver, termination or
cancellation is sought; it being understood and agreed that GCA shall be
entitled to amend, modify, waive, terminate or cancel this Agreement on the
behalf of any GCA Indemnitee.

7. Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (EXCLUSIVE OF
CONFLICTS OF LAW PRINCIPLES) AND WILL, TO THE MAXIMUM EXTENT PRACTICABLE, BE
DEEMED TO CALL FOR PERFORMANCE IN DALLAS COUNTY, TEXAS.

8. Severability. Whenever possible, each provision and term of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or term of this Agreement shall be
held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provisions or term or the remaining provisions or terms of
this Agreement.

9. Counterparts. This Agreement may be executed on separate
counterparts each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

10. Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties with respect to the subject matter hereof.

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<PAGE> 4
IN WITNESS WHEREOF, the undersigned have executed this Agreement this
2nd day of May, 1995 effective as of the date first above written.

MAXUS ENERGY CORPORATION

By: /s/ MARK GENTRY
---------------------------------------
Name: Mark Gentry
---------------------------------
Title: Vice President
--------------------------------

YPF, S.A.

By: /s/ CEDRIC D. BRIDGER
---------------------------------------
Name: Cedric D. Bridger
---------------------------------
Title: Vice President
--------------------------------

GAFFNEY, CLINE & ASSOCIATES, INC.

By: /s/ WILLIAM B. CLINE
---------------------------------------
William B. Cline, President

<PAGE> 1
Exhibit 10.21

[MAXUS LETTERHEAD]

May 11, 1995

TO: W. Mark Miller

RE: AMENDMENT TO CHANGE IN CONTROL AGREEMENT

Dear Mark:

As you know, a "Change in Control," for purposes of the Change in
Control Agreement between you and Maxus Energy Corporation ("Maxus") dated
December 1, 1991 (the "Agreement"), occurred on April 5, 1995. In conjunction
with the Change in Control, Maxus has agreed to request executives to agree to
a post-Change in Control "standstill" period with respect to their agreements.
The purpose of the "standstill" period is to help facilitate an orderly
transition in the management of Maxus following the Change in Control. As
consideration for your agreeing to a "standstill" period, Maxus will protect
any severance benefits that could be lost under the terms of the Agreement by
your continued employment during this "standstill" period. Accordingly, Maxus
is hereby requesting that you agree to the following amendments to your
Agreement:

1. Maxus agrees to continue your employment at your current job,
at your current rate of base pay and with employee plan benefits at the levels
and on the terms currently provided to you until June 30, 1995, and you agree
not to terminate your employment prior to July 1, 1995.

2. If Maxus terminates your employment prior to July 1, 1995 for
any reason other than for "Cause", as defined in the Agreement, it will pay you
the severance compensation and benefits as set forth in the Agreement, without
reduction with respect to the period of your continued employment following the
date of the Change in Control.

3. If you terminate your employment prior to July 1, 1995, you
will not be entitled to any payments or benefits under the Agreement.

4. The "Period of Employment", as defined in the Agreement, will
be deemed for all purposes of the Agreement to commence on July 1, 1995.
<PAGE> 2
5. If you continue your employment with Maxus after June 30,
1995, the Agreement shall remain in full force and effect as originally
written, except as amended by the terms of this letter.

If you agree to this letter amendment to your Agreement, please
promptly sign, date and return this letter to the undersigned. The enclosed
copy is for your files.

Sincerely,

/s/ MARK J. GENTRY

Mark J. Gentry

AGREED TO THIS
19th DAY OF May, 1995

/s/ W. MARK MILLER
- -----------------------
W. Mark Miller

<PAGE> 1
Exhibit 10.22

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT ("Agreement"), effective as of July 1, 1995,
by and between Maxus Energy Corporation, a Delaware corporation (the "Company")
and W. Mark Miller (the Executive").

WITNESSETH:

WHEREAS, the Executive is a senior executive of the Company and is
expected to make major contributions to the success of the Company; and

WHEREAS, the Company desires to continue receiving the services of the
Executive; and

WHEREAS, the Executive is willing to continue rendering services to
the Company on the terms and subject to the conditions set forth in this
Agreement;

NOW, THEREFORE, the Company and the Executive agree as follows:

1. Term of Agreement: The period during which this Agreement shall
be in effect (the "Term") shall commence as of July 1, 1995 and, subject to the
further provisions hereof, shall expire as of the close of business on June 30,
1999.

2. Employment: (a) Subject to the further terms and conditions of
this Agreement, during the Term the Company shall continue the Executive in its
employ at a grade level that is the same as, or is equivalent to, or, in the
Company's discretion is higher than, his grade level immediately prior to the
commencement of the Term. The Company may change the Executive's position,
title, duties and/or responsibilities with the Company

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from time to time during the Term; provided, however, the Company shall not
assign the Executive to a position the base pay of which would generally be
valued in a competitive market as materially less than the Executive's Base Pay
(as that term is hereafter defined). For purposes of this Agreement,
employment with an affiliate of the Company shall be deemed employment with the
Company. Throughout the Term, the Executive shall devote substantially all of
his time during normal business hours (subject to vacations, sick leave and
other absences in accordance with the policies of the Company as in effect for
senior executives) to the business and affairs of the Company, but nothing in
this Agreement shall preclude the Executive from devoting reasonable periods of
time during normal business hours to (i) serving as a director, trustee or
member of or participant in any organization or business so long as such
activity would not constitute Competitive Activity (as that term is hereafter
defined) if conducted by the Executive after the Executive's Termination Date
(as that term is hereafter defined), (ii) engaging in charitable and community
activities, or (iii) managing his personal investments.

(b) During the Term, the Executive shall be subject to reassignment
to any of the Company's foreign or domestic locations at any time. On
reassignment, the Company will attempt to take into account a number of
factors, including the personal goals and desires, experience and performance
of the Executive, and the needs of the Company. While an effort will be made
to consider the needs and requirements of the Executive, the Company does not
represent or promise that the Executive's needs will be accommodated and the
Company reserves the right to select the location of the Executive's work
assignment.

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<PAGE> 3
3. Compensation During Term: (a) During the Term, the Executive
shall (i) receive an annual salary at a rate not less than the Executive's
annual base salary payable monthly or otherwise as in effect immediately prior
to the commencement of the Term or such higher rate as may be determined from
time to time thereafter by the Board of Directors of the Company (the "Board")
or the Compensation Committee thereof (which base salary at such rate is herein
referred to as "Base Pay") and (ii) participate in such incentive pay plan(s)
or program(s) maintained by the Company for its senior executives at a level
commensurate with similarly situated senior executives of the Company;
provided, however, the sum of the Executive's Base Pay and incentive pay (the
"Total Pay") for any year during the Term shall not be less than the sum of (x)
the Executive's Base Pay as of the effective date of this Agreement and (y) the
highest annual cash incentive amount paid to the Executive by the Company with
respect to 1992, 1993 or 1994.

(b) During the Term, the Executive shall be a participant in, and
shall be entitled on the same basis as similarly situated senior executives to
the perquisites, benefits and service credit for benefits as provided under,
any and all employee retirement income and welfare benefit policies, plans,
programs, or arrangements in which similarly situated senior executives of the
Company participate, including, without limitation, any savings, pension,
supplemental executive retirement or other retirement income or welfare
benefit, deferred compensation, group and/or executive life, health,
medical/hospital or other insurance (whether funded by actual insurance or
self-insured by the Company), disability, salary continuation, expense
reimbursement and other employee benefit policies, plans, programs or
arrangements, including, if and for so long as the Executive is assigned to a
work location

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<PAGE> 4
outside the United States, such premiums, allowances and/or other benefits and
any relocation policies afforded to similarly situated senior expatriate
employees at such location on the same terms and subject to the same
limitations afforded to such other senior expatriate employees (collectively,
"Employee Benefits"); provided, however, that the Executive's rights thereunder
shall be governed by the terms thereof and shall not be enlarged hereunder or
otherwise affected hereby.

(c) The Executive shall receive $76,592 within five business days
after signing this Agreement and delivering same to the Company.

(d) If the Executive remains employed with the Company until June 30,
1996, then within five business days following that date the Company shall pay
the Executive $76,592 in a lump sum as a "stay-on" bonus, regardless of whether
the Executive continues his employment following June 30, 1996.

(e) If the Executive remains employed with the Company until June
30, 1997, then within five business days following that date the Company shall
pay the Executive $76,592 in a lump sum as an additional "stay-on" bonus,
regardless of whether the Executive continues his employment following June 30,
1997.

4. Termination: (a) This Agreement may be terminated by the Company
during the Term only upon the occurrence of one or more of the following
events:

(i) If the Executive is unable to perform the essential functions of
his job (with or without reasonable accommodation) because he has
become permanently disabled within the meaning of, and actually begins
to receive disability benefits

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<PAGE> 5
pursuant to, the long-term disability plan in effect for senior
executives of the Company; or

(ii) The Executive refuses to accept a reassignment to a new work
location; or

(iii) For "Cause", which for purposes of this Agreement shall mean
that, prior to any other termination of employment, the Executive
shall have committed:

(A) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment with the
Company;

(B) intentional wrongful damage to property of the Company;

(D) intentional wrongful engagement in any Competitive
Activity; and any such foregoing act shall have been materially
harmful to the Company. For purposes of this Agreement, an act, or
failure to act, on the part of the Executive shall be deemed
"intentional" only if done, or omitted to be done, by the Executive
not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated
for "Cause" hereunder unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the Board then in
office at a meeting of the Board called and held for such purpose
(after reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before the Board)
finding that,

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<PAGE> 6
in the good faith opinion of the Board, the Executive had committed an
act set forth above in this Section 4(a)(iii) and specifying the
particulars thereof in detail. Nothing herein shall limit the right
of the Executive or his beneficiaries to contest the validity or
propriety of any such determination.

(b) This Agreement may be terminated by the Executive during the Term
with the right to benefits as provided in Section 5(a) hereof only upon the
occurrence of one or more of the following events:

(i) Any termination of the employment of the Executive by the
Company for any reason other than for Cause, by reason of the
Executive's disability and the actual receipt of disability
benefits as described in Section 4(a)(i) hereof, or due to
the Executive's refusal to accept a reassignment to a new work
location; or

(ii) The occurrence of any of the following events:

(A) A reduction in the Executive's grade level from
his grade level, or its equivalent, immediately prior to the
commencement of the Term, a reduction in the Executive's Total
Pay or the termination of the Executive's ability to
participate in any incentive plan or Employee Benefits in
which other similarly situated senior executives of the
Company continue to be entitled to participate;

(B) The liquidation, dissolution, merger,
consolidation or reorganization of the Company or transfer of
all or a significant portion of its business and/or assets,
unless the successor or successors (by liquidation,

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<PAGE> 7
merger, consolidation, reorganization or otherwise) to which
all or a significant portion of its business and/or assets
have been transferred shall have assumed (directly or by
operation of law) all duties and obligations of the Company
under this Agreement pursuant to Section 10 hereof; or

(C) Any material breach of this Agreement by the
Company or any successor thereto, which is not remedied
within ten business days after written notice of such breach
is given to the Company by the Executive.

(c) This Agreement shall terminate on the date of the Executive's
termination of employment for any reason not covered by Section 4(a) or (b) or
Section 5(b), including, without limitation, the death of the Executive.

(d) Except as provided below, a termination of the Executive's
employment, whether by the Company or by the Executive, shall not affect any
rights which the Executive may have pursuant to any other agreement, policy,
plan, program or arrangement of the Company providing Employee Benefits, which
rights shall be governed by the terms thereof. However, notwithstanding the
foregoing, the Executive hereby agrees and acknowledges that, regardless of the
reason for his termination of employment, the amount of separation or
severance pay and/or benefits he is entitled to receive, if any, under the
Maxus Energy Corporation Separation Pay Plan, the Maxus International Energy
Company Separation Pay Plan For Expatriate Employees or any other severance
plan or program of the Company or its affiliates, as in effect on the date of
termination, shall be reduced by any severance compensation he receives or is
entitled to receive under Section 5 hereof. Moreover, if the Executive is not
eligible to receive separation or severance pay and/or benefits under such

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<PAGE> 8
severance plans and programs, the Company agrees (without duplicaton) to pay
the Executive upon termination a minimum severance payment under this Agreement
in an amount, if any, equal to the amount the Executive would have been
entitled to receive under such separation or severance plans or programs had he
been eligible thereunder in the absence of this Agreement, less any severance
compensation the Executive receives under Section 5 hereof.

5. Severance Compensation: (a) If the Company shall terminate the
Executive's employment during the Term other than pursuant to Section 4(a)
hereof, or if the Executive shall terminate his employment during the Term
pursuant to Section 4(b) hereof, then, subject to the further provisions of
this Section 5, the Company shall pay to the Executive the amount specified in
Section 5(a)(i) hereof within five business days after the date the Executive's
employment is terminated (the "Termination Date") and shall provide for the
Continuing Employee Benefits specified in Section 5(a)(ii):

(i) In lieu of any further payments of Base Pay and incentive
compensation to the Executive for periods subsequent to the
Termination Date, the Company shall pay the Executive a lump sum
amount (the "Severance Payment") equal to his Total Pay calculated
at the highest rate theretofore paid during the Term multiplied by the
number of years (including fractional years) remaining in the Term,
but not to exceed three years (such period being the "Continuation
Period"); and

(ii) For the remainder of the Continuation Period, the Company shall
provide the Executive with Employee Benefits substantially similar to
those which (and

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<PAGE> 9
on the same terms as) the Executive was receiving or entitled to
receive immediately prior to the Termination Date (the "Continuing
Employee Benefits") (and if and to the extent that such benefits
cannot be paid or provided under any policy, plan, program or
arrangement of the Company, then the Company shall itself pay or
provide for the payment to the Executive, his dependents and
beneficiaries, such Continuing Employee Benefits). Without limiting
the generality of the foregoing, the Continuation Period shall be
considered, to the extent permitted by applicable law, service with
the Company for the purpose of service credits under the Company's
qualified retirement plans and supplemental executive retirement and
other nonqualified benefit plans applicable to the Executive or his
beneficiaries immediately prior to the Termination Date. If and to
the extent any such benefits cannot be paid or provided under the
applicable plan solely due to the fact the Executive is no longer an
officer or employee of the Company, the Company shall itself pay or
provide such benefits to the Executive or, if applicable, his
dependents and beneficiaries. Further, without otherwise limiting the
purposes or effect of Section 6 hereof, the Continuing Employee
Benefits provided to or on behalf of the Executive pursuant to this
Section 5(a)(ii) by reason of any "welfare benefit plan" of the
Company (as the term "welfare benefit plan" is defined in Section 3(1)
of the Employee Retirement Income Security Act of 1974, as amended)
shall be reduced to the extent comparable welfare benefits are
actually received by the Executive from another employer during the
Continuation Period.

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<PAGE> 10
(b) If the Executive's employment with the Company is terminated
prior to July 1, 1997, whether by the Company or the Executive, due to his
refusal to accept a reassignment to a new work location, the Company shall pay
the Executive within five business days of such Termination Date an amount
equal to (x) one-twelfth of his Base Pay at the rate in effect immediately
prior to the termination ("Final Base Pay") times his total years of service
with the Company and its affiliates, including partial years ("Years of
Service"), if the Executive's work location immediately prior to termination is
in the United States, or (y) one-twelfth of his Final Base Pay times his total
Years of Service times two, if the Executive's work location immediately prior
to termination is outside the United States; provided, however in no event
shall such applicable payment exceed two times the amount of the Executive's
Final Base Pay.

(c) Notwithstanding any provision of this Agreement to the contrary,
in no event shall any payment made or to be made and/or any benefits provided
or to be provided to or on behalf of the Executive pursuant to this Agreement
that constitutes a "parachute payment", within the meaning of section 280G of
the Internal Revenue Code (the "Code"), individually or collectively, or when
aggregated with any other parachute payment to the Executive, whether or not
made pursuant to this Agreement, results in the Executive receiving an "excess
parachute payment," within the meaning of section 280G of the Code which gives
rise to liability for an excise tax under Section 4999 of the Code, and to the
extent it is necessary to avoid such an excess parachute payment, the
applicable payment and/or benefits otherwise due hereunder shall be
automatically reduced in whole or in part so that no such payment or benefit
hereunder constitutes such an excess parachute

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<PAGE> 11
payment. However, in the event of any such reduction, the Executive shall
have the option to elect to receive, in lieu of all or a portion of the
applicable payment, one or more of the Continuing Employee Benefits, provided
that prior to the receipt of such payment, the Executive gives the Company
notice of such election specifying the Continuing Employee Benefit(s) so
elected to be received. Further, in the event the Executive inadvertently
receives a payment and/or benefit hereunder that is subsequently determined to
be such an excess parachute payment, the Executive shall be obligated to
return such portion of the payment, with interest, and/or reimburse the Company
for such Continuing Employee Benefit(s), all in a manner that results in the
Executive not having received such an excess parachute payment.

(d) The determination of whether any amount or benefit otherwise
payable or provided under this Agreement would be such an excess parachute
payment shall be made by tax counsel selected by the Company and reasonably
acceptable to the Executive. The costs of obtaining such determination shall
be borne by the Company. The fact that the Executive shall have his right to a
payment or benefit reduced as a result of the limitations contained in this
Section 5 shall not limit or otherwise affect any rights of the Executive
arising other than pursuant to this Agreement; provided, however, the Company
shall not be obligated to make any payment to the Executive whether under this
Agreement or otherwise, that would constitute an excess parachute payment that
gives rise to liability for an excise tax under Section 4999 of the Code.

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(e) There shall be no right of set-off or counterclaim in respect of
any claim, debt or obligation against any payment to or for the benefit of the
Executive provided for in this Agreement.

6. No Mitigation Obligation: The Company hereby acknowledges that it
will be difficult, and may be impossible, for the Executive to find reasonably
comparable employment following the Termination Date and that the
noncompetition covenant contained in Section 7 hereof will further limit the
employment opportunities for the Executive. In addition, the Company
acknowledges that its severance pay plans applicable in general to its salaried
employees do not provide for mitigation, offset or reduction of any severance
payment received thereunder. Accordingly, the parties hereto expressly agree
that the payment of the severance compensation by the Company to the Executive
in accordance with the terms of this Agreement will be liquidated damages, and
that the Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other obligation on
the part of the Executive hereunder or otherwise, except as expressly provided
in Section 5 hereof.

7. Competitive Activity: During a period ending one year following
the Termination Date, if the Executive shall have received or shall be
receiving benefits under Section 5 hereof, the Executive shall not, without the
prior consent of the Company, which consent shall not be unreasonably withheld,
engage in any Competitive Activity. For purposes of this Agreement, the term
"Competitive Activity" shall mean the Executive's

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participation in the management of any business enterprise which is principally
engaged in the exploration for or production of hydrocarbons in Texas,
Oklahoma, Indonesia, Argentina, Bolivia, Colombia, Ecuador, or Venezuela.
"Competitive Activity" shall not include (i) the mere ownership of securities
in any such enterprise and exercise of rights appurtenant thereto or (ii)
participation in management of any such enterprise or business operation
thereof other than in connection with the competitive operation of such
enterprise.

8. Legal Fees and Expenses: (a) It is the intent of the Company
that the Executive not be required to incur the expenses associated with the
enforcement of his rights under this Agreement by litigation or other legal
action because the cost and expense thereof would substantially detract from
the benefits intended to be extended to the Executive hereunder. Accordingly,
if it should appear to the Executive that the Company has failed to comply with
any of its obligations under this Agreement or in the event that the Company or
any other person takes any action to declare this Agreement void and
unenforceable, or institutes any litigation designed to deny, or to recover
from, the Executive the benefits intended to be provided to the Executive
hereunder, the Company irrevocably authorizes the Executive from time to time
to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the initiation or
defense of any litigation or other legal action, whether by or against the
Company or any director, officer, stockholder or other person affiliated with
the Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the Company
irrevocably consents to the

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Executive's entering into an attorney-client relationship with such counsel
(other than Andrews & Kurth L.L.P. or Jones, Day, Reavis & Pogue), and in that
connection the Company and the Executive agree that a confidential relationship
shall exist between the Executive and such counsel. The Company shall pay or
cause to be paid and shall be solely responsible for any and all attorneys' and
related fees and expenses incurred by the Executive as a result of the
Company's failure to perform this Agreement or any provision thereof or as a
result of the Company or any person contesting the validity or enforceability
of this Agreement or any provision thereof as aforesaid.

(b) In order to ensure the benefits intended to be provided to the
Executive under Section 8(a) hereof, the Company has established an irrevocable
standby Letter of Credit in favor of the Executive drawn on a bank selected
by the Company (the "Letter of Credit") which provides for a credit amount of
$250,000 being made available to the Executive against presentation at any time
and from time to time of his clean sight drafts, accompanied by statements of
his counsel for fees and expenses, in an aggregate amount not to exceed
$250,000.

(c) The Company's obligations under this Article 8 and specifically
(without limitation) the obligation to maintain the Letter of Credit shall
continue until the later of (A) the earlier of (i) June 30, 1999, or (ii) six
months after the termination of this Agreement under Section 4(a), (b) or (c)
or (B) if any litigation or legal action as contemplated in Section 8(a) is
commenced within six months after the termination of this Agreement under
Section 4(a), (b) or (c), the conclusion of such litigation or other legal
action.

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9. Withholding of Taxes: The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as shall
be required pursuant to any law or government regulation or ruling.

10. Successors and Binding Agreement: (a) The Company shall require
any successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business and/or
assets of the Company, or any of its affiliates of either the Company or such a
successor that is or becomes the Executive's employer, by agreement in form and
substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent the Company
would be required to perform if no such succession had taken place. This
Agreement shall be binding upon and inure to the benefit of the Company and any
successor to the Company, including without limitation any persons acquiring
directly or indirectly all or substantially all of the business and/or assets
of the Company whether by purchase, merger, consolidation, reorganization or
otherwise (and such successor shall thereafter be deemed the "Company" for the
purposes of this Agreement), but shall not otherwise be assignable,
transferable or delegable by the Company.

(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and/or legatees.

(c) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in Section 10(a) hereof. Without

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limiting the generality of the foregoing, the Executive's right to receive
payments hereunder shall not be assignable, transferable or delegable, whether
by pledge, creation of a security interest or otherwise, other than by a
transfer by his will or by the laws of descent and distribution and, in the
event of any attempted assignment or transfer contrary to this Section 10(c),
the Company shall have no liability to pay any amount so attempted to be
assigned, transferred or delegated.

(d) The Company and the Executive recognize that each party will have
no adequate remedy at law for breach by the other of any of the agreements
contained herein and, in the event of any such beach, the Company and the
Executive hereby agree and consent that the other shall be entitled to a
decree of specific performance, mandamus or other appropriate remedy to enforce
performance of this Agreement.

11. Notices: For all purposes of this Agreement, all communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered or five business days after having been mailed by United
States registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company (to the attention of the Secretary of the Company) at
its principal executive offices and to the Executive at his principal
residence, or to such other address as any party may have furnished to the
other in writing and in accordance herewith, except that notices of change of
address shall be effective only upon receipt.

12. Governing Law: The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Delaware, without giving effect to the principles of conflict of laws of such
State.

-16-
<PAGE> 17
13. Validity: If any provision of this Agreement or the application
of any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.

14. Miscellaneous: No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.

15. Prior Agreements: This Agreement is voluntarily entered into and
supersedes and takes the place of all prior change in control and employment
agreements, as amended, between the parties hereto. The parties hereto
expressly agree and hereby declare that any and all prior change in control and
employment agreements, as amended, are hereby terminated and of no further
force or effect.

16. Counterparts: This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.

-17-
<PAGE> 18
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.

MAXUS ENERGY CORPORATION

By: /s/ MARK J. GENTRY
-----------------------------------
Vice President

EXECUTIVE

/s/ W. MARK MILLER
---------------------------------------
W. Mark Miller

-18-

<PAGE> 1
Exhibit 10.23

April 7, 1995

TO: ________________

RE: CHANGE IN CONTROL AGREEMENT DATED __________

Dear ________:

This has reference to the Change in Control Agreement (the
"Agreement") dated ___________ between you and Maxus Energy Corporation
("Maxus"). Notwithstanding anything in the Agreement to the contrary, you and
Maxus agree that a "Change in Control," as defined in the Agreement, occurred
on April 5, 1995 and a significant adverse change in the nature and scope of
the authorities or duties of your position with Maxus has occurred.
Consequently, you have given notice of your intention to terminate your
employment with Maxus immediately pursuant to paragraph 4(b)(ii) of the
Agreement. Maxus recognizes its obligation to pay and agrees to pay you
severance compensation, including benefits, to the full extent provided for in
paragraph 5 of the Agreement within five days after the amount payable
thereunder is determined (but not later than __________) without reduction for
any payments contemplated below except as provided herein. In order to
facilitate the transition required by these events, you and Maxus agree as
follows: (a) Maxus agrees to employ you at your current position, at your
current job site, at your current rate of base pay and with employee plan
benefits at the levels and on the terms currently provided to you until
___________ and (b) you agree to work for Maxus in such position and on such
terms and conditions until June 30, 1995. If you terminate your employment
prior to ____________ without the written consent of Maxus, an amount equal to
the base salary paid to you from the date hereof through your termination date
will be deducted from the amount payable to you under the Agreement and either
refunded by you or deducted from any amounts Maxus may owe you.

Please indicate your agreement to the foregoing by dating, signing and
returning a copy of this letter to the undersigned.

Sincerely,
<PAGE> 2

AGREED TO THIS
__ DAY OF APRIL, 1995

- --------------------------------
[Executive]

Agreed to by YPF Sociedad Anonima and YPF Acquisition Corp., who agree that
this agreement does not constitute a breach of Maxus' representations,
warranties or covenants contained in the Agreement of Merger dated as of
February 28, 1995.

YPF Sociedad Anonima YPF Acquisition Corp.

By: By:
--------------------------- ----------------------------

<PAGE> 1
Exhibit 10.24

[MAXUS LETTERHEAD]

April 13, 1995

TO: Michael C. Forrest

RE: Change in Control Agreement

Dear Mike:

This letter has reference to the letter agreement dated April 7, 1995
between you and Maxus concerning Maxus' obligations under that certain Change
in Control Agreement dated June 1, 1992. You and Maxus are engaged in
discussions concerning your possible employment beyond the June 30, 1995 date
specified in said letter. In order to facilitate such discussions, you and
Maxus have mutually agreed to extend the date by which Maxus must pay you
severance compensation as contemplated in said letter agreement until July 3,
1995. Except as modified as to the payment date by the preceding sentence,
Maxus' obligations under said April 7 letter agreement remain in full force and
effect.

Please indicate your agreement to the foregoing by signing and
returning a copy of this letter.

MAXUS ENERGY CORPORATION

/s/ MARK J. GENTRY

Mark J. Gentry, Vice President

AGREED TO
APRIL 13, 1995

/s/ MICHAEL C. FORREST
- -------------------------------
Michael C. Forrest

<PAGE> 1
Exhibit 10.25

____________, 1995

TO: _______________

RE: Change in Control Severance Payment

Dear _________:

This letter has two primary purposes. The first is to evidence your
receipt of $_________ (the "Estimated Payment") from Maxus. The second is to
set forth your and Maxus' understanding and agreement with respect to such
payment.

1. The Estimated Payment represents an initial estimate of the
lump sum "Severance Payment" you are due pursuant to paragraph
5(a)(i) of the Change in Control Agreement (the "Agreement")
dated _____________ between you and Maxus.

2. You have not designated the "Employee Benefits" (as defined in
the Agreement) you want to receive pursuant to the Agreement.
However, you acknowledge and agree that to the extent the
receipt of any Employee Benefits constitutes "parachute
payments" (as defined in Section 280G of the Internal Revenue
Code of 1986, as amended ("Section 280G")) you will not be
entitled to receive any such Employee Benefits that would
cause the "present value" (as determined under Section 280G)
of all parachute payments made to you by Maxus to exceed 299%
of your "base amount" (as defined in Section 280G).

3. If and to the extent the Estimated Payment is

(a) less than the present value of the sum of your
aggregate "Base Pay" and aggregate "Incentive Pay"
calculated in the manner prescribed in paragraph
5(a)(i) (the "Gross Severance Amount") and

(b) the total of the Estimated Payment, the present value
of any Employee Benefits you elect to receive that
constitute parachute payments, and the present value
of any other parachute payments you receive from
Maxus also is less than 299% of your base amount,

Maxus agrees to pay you the difference between the Estimated
Payment and the Gross Severance Amount, but in no event will
such
<PAGE> 2
Severance Payment
_________, 1995
Page 2

payment exceed an amount that when added to all other
parachute payments received by you would cause you to receive
parachute payments in excess of 299% of your base amount.

4. Nothing in this letter, the Agreement or any other agreement
or understanding between you and Maxus is intended to and
shall not be construed to obligate Maxus to pay you any
parachute payment that when added to all other parachute
payments received by you would cause you to receive parachute
payments in excess of 299% of your base amount. In this
connection,

(a) all parachute payments made by Maxus to you are
subject to an automatic reduction if and to the
extent they would cause you to receive total
parachute payments in excess of 299% of your base
amount, and

(b) you specifically agree to reimburse Maxus promptly if
and to the extent it makes any payment to you which
would cause you to receive total parachute payments
in excess of 299% of your base amount.

5. Nothing in this letter is intended to and shall not be
construed to alter your obligation to reimburse Maxus for a
portion of the Severance Payment to which you are otherwise
entitled as set forth in that certain letter agreement dated
____________ if you terminate your employment with Maxus prior
to ___________ without Maxus' prior consent.

Please acknowledge receipt of the Estimated Payment and your agreement
to the foregoing by signing and returning one copy of this letter.

MAXUS ENERGY CORPORATION

--------------------------

I ACKNOWLEDGE RECEIPT OF THE
ESTIMATED PAYMENT AND AGREE
TO THE TERMS OF THIS LETTER

- ---------------------------------
[Executive]
[Date]

<PAGE> 1
EXHIBIT 21.1

LIST OF SUBSIDIARIES, MAXUS ENERGY
CORPORATION

MAXUS ENERGY CORPORATION - Delaware
Diamond Shamrock Europe Limited - England
Maxus Gas Marketing Company - Delaware
Maxus Indonesia, Inc. - Delaware
Maxus Northwest Java. Inc. - Delaware
Maxus Southeast Sumatra, Inc. - Delaware
Maxus Industrial Gas Company - Delaware
Maxus Offshore Exploration Company - Delaware
Maxus (U.S.) Exploration Company - Delaware
Natomas North America, Inc. - California
Trice Properties, Inc - Delaware
Wheeling Gateway Coal Company - Delaware
Gateway Coal Company - Pennsylvania
MAXUS INTERNATIONAL ENERGY COMPANY - Delaware
Diamond Shamrock China Petroleum Limited - Bahamas
Falcon Seaboard, Inc. - Delaware
Maxus Angola, Inc. - Delaware
Maxus Aru Inc. - Delaware
Maxus Bolivia, Inc. - Delaware
Maxus Bulgaria, Inc. - Delaware
Maxus Chile, Inc. - Delaware
Maxus China (C.I.) Ltd. - Cayman Islands
Maxus Colombia, Inc. - Delaware
Maxus Ecuador Inc. - Delaware
Maxus Egypt, Inc. - Delaware
Maxus Energy Co. (U.K.) Limited - England
Maxus Energy Global B.V. - The Netherlands
Maxus Energy Trading Company - Delaware
Maxus Ethiopia, Inc. - Delaware
Maxus Fifi Zaitun, Inc. - Delaware
Maxus Gabon Inc - Delaware
Maxus Guarapiche Ltd. - Cayman Islands
Maxus International Services Company - Texas
Maxus Madagascar, Inc. - Delaware
Maxus Mahdia East, Inc. - Delaware
Maxus Morocco, Inc. - Delaware
Maxus New Zealand Limited - New Zealand
Maxus North Sea, Inc. - Delaware
Maxus Paraguay, Inc. - Delaware
Maxus Slovakia, Inc - Delaware
Maxus Southeast Asia New Ventures, Inc. - Delaware
Maxus Spain, Inc. - Delaware
<PAGE> 2
Maxus Tasmania, Inc. - Delaware
Maxus Tunisia Inc. - Delaware
Maxus Venezuela (C.I.) Ltd. - Cayman Islands
Maxus Venezuela S.A. - Venezuela
Natamos Overseas Finance N.V. - Netherlands Antilles
Transworld Petroleum Corporation - Delaware
MIDGARD ENERGY COMPANY - Delaware
MAXUS CORPORATE COMPANY - Delaware
Biospecific Technologies, Inc. - Delaware
Boja Realty Corp. - New York
Quail Hollow Properties, Inc. - Ohio
Chemical Land Holdings, Inc. - Delaware
Crile Road Investments, Inc. - Ohio
Delaware City Plastics Corporation - Delaware
Diamond Gateway Coal Company (Partner of Gateway Coal
Company) - Delaware
Diamond Shamrock Venezolana, S.A. - Venezuela
DSC Acquisition, Inc. - Delaware
DSC Holdings, Inc. - Delaware
DSC Investment Management Company - Delaware
DSC Receivables, Inc. - Delaware
DST Corporation - Delaware
Duolite International, Inc. - Delaware
Emerald Mining Company - Delaware
Gateway Land Company - Delaware
Greenstone Assurance Ltd. - Bermuda
Insulating Aggregates, Inc. - Louisiana
Leon Properties, Inc. (d/b/a Riverside Farms) - Texas
RMC Securities - Texas
Maxus Agricultural Chemicals, Inc. - Delaware
DSC Products International, Inc. - Delaware
Fint Corporation - Delaware
Maxus International Corporation - Delaware
Maxus Realty Company - Texas
OCV Corporation - Delaware
QHRP Investments, Inc. - Ohio
The Harbor Land Company - Ohio
V.E.P. Corporation - Delaware

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K, into the Company's previously filed
Registration Statement on Form S-8 (No. 33-28353), as amended.

/s/ Arthur Andersen LLP
------------------------
Arthur Andersen LLP

Dallas, Texas
March 20, 1996

<PAGE> 1
EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-28353) of Maxus Energy Corporation, of our report
dated February 28, 1995 appearing on page F-29 of this Form 10-K.

/s/ Price Waterhouse LLP
------------------------
Price Waterhouse LLP

Dallas, Texas
March 20, 1996

<PAGE> 1
Exhibit 24.1
POWER OF ATTORNEY

THE STATE OF TEXAS
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS

That the undersigned hereby constitutes and appoints Lynne P. Ciuba,
H. R. Smith and David A. Wadsworth, and each of them, his true and lawful
attorney or attorneys-in-fact with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign on his behalf
as a director or officer, or both, as the case may be, of Maxus Energy
Corporation (the "Corporation"), the Corporation's Form 10-K Annual Report
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, for
fiscal year ended December 31, 1995, and to sign any or all amendments to such
Form 10-K, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney or attorneys-in-fact, and to each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.

January 15, 1996

/s/ ROBERTO MONTI
----------------------------------------
Roberto Monti
<PAGE> 2
Exhibit 24.1

POWER OF ATTORNEY

THE STATE OF TEXAS
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS

January 15, 1996

/s/ W. MARK MILLER
----------------------------------------
W. Mark Miller
<PAGE> 3
Exhibit 24.1

POWER OF ATTORNEY

THE STATE OF TEXAS
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS

That the undersigned hereby constitutes and appoints Lynne P. Ciuba,
H. R. Smith and David A. Wadsworth, and each of them, her true and lawful
attorney or attorneys-in-fact with full power of substitution and
resubstitution, for her and in her name, place and stead, to sign on her behalf
as a director or officer, or both, as the case may be, of Maxus Energy
Corporation (the "Corporation"), the Corporation's Form 10-K Annual Report
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, for
fiscal year ended December 31, 1995, and to sign any or all amendments to such
Form 10-K, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney or attorneys-in-fact, and to each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as she might or could do in person, hereby ratifying and confirming
all that said attorney or attorneys-in-fact or any of them or their substitute
or substitutes may lawfully do or cause to be done by virtue hereof.

January 15, 1996

/s/ LINDA R. ENGELBRECHT
----------------------------------------
Linda R. Engelbrecht
<PAGE> 4
Exhibit 24.1

THE STATE OF TEXAS
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS

January 15, 1996

/s/ CHARLES L. BLACKBURN
----------------------------------------
Charles L. Blackburn
<PAGE> 5
Exhibit 24.1

THE STATE OF TEXAS
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS

January 15, 1996

/s/ CEDRIC BRIDGER
----------------------------------------
Cedric Bridger
<PAGE> 6
Exhibit 24.1

POWER OF ATTORNEY

THE STATE OF TEXAS
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS

January 15, 1996

/s/ GEORGE L. JACKSON
----------------------------------------
George L. Jackson
<PAGE> 7
Exhibit 24.1

POWER OF ATTORNEY

THE STATE OF TEXAS
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS

January 15, 1996

/s/ NELLS LEON
----------------------------------------
Nells Leon
<PAGE> 8
Exhibit 24.1

POWER OF ATTORNEY

THE STATE OF TEXAS
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS

That each undersigned hereby constitutes and appoints Lynne P. Ciuba,
H. R. Smith and David A. Wadsworth, and each of them, his true and lawful
attorney or attorneys-in-fact with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign on his behalf
as a director or officer, or both, as the case may be, of Maxus Energy
Corporation (the "Corporation"), the Corporation's Form 10-K Annual Report
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, for
fiscal year ended December 31, 1995, and to sign any or all amendments to such
Form 10-K, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney or attorneys-in-fact, and to each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.

January 15, 1996

/s/ JAMES R. LESCH
----------------------------------------
James R. Lesch
<PAGE> 9
Exhibit 24.1

POWER OF ATTORNEY

THE STATE OF TEXAS
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS

January 15, 1996

/s/ P. DEXTER PEACOCK
----------------------------------------
P. Dexter Peacock
<PAGE> 10
Exhibit 24.1

POWER OF ATTORNEY

THE STATE OF TEXAS
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS

January 15, 1996

/s/ R. A. WALKER
----------------------------------------
R. A. Walker

<PAGE> 1
Exhibit 24.2

POWER OF ATTORNEY

THE STATE OF TEXAS
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS

That the undersigned, Maxus Energy Corporation, hereby constitutes and
appoints Lynne P. Ciuba, H. R. Smith and David A. Wadsworth, and each of them
the true and lawful attorney or attorneys-in-fact with full power of
substitution and resubstitution, to sign on the Corporation's behalf the Form
10-K Annual Report of the Corporation, pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended, for fiscal year ended December 31, 1995, and
to sign any or all amendments to such Form 10-K, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, and to each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorney or
attorneys-in-fact or any of them or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.

MAXUS ENERGY CORPORATION

/s/ ROBERTO MONTI
----------------------------------------
Roberto Monti
President and Chief Executive Officer

March 1, 1996

<ARTICLE> 5
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 38
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<ALLOWANCES> 1
<INVENTORY> 41
<CURRENT-ASSETS> 266
<PP&E> 2,364
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<BONDS> 1,261
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78
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<OTHER-SE> 26
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</TABLE>