SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
F O R M 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993 Commission file number: 1-3423
ENRON CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 47-0255140
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1400 Smith Street, Houston, Texas 77002-7369
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: 713-853-6161
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $.10 Par Value New York Stock Exchange
Midwest Stock Exchange
Pacific Stock Exchange
Cumulative Second Preferred Stock,
$1 Par Value New York Stock Exhange and
$10.50 Convertible Series Midwest Stock Exchange
Notes
10-3/4% due June 1, 1998 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of 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. _____
Aggregate market value of the voting stock held by non-affiliates of
the registrant, based on closing prices in the daily composite list for
transactions on the New York Stock Exchange on January 31, 1994, was
$8,542,059,000. As of March 1, 1994, there were 250,413,810 shares of
registrant's Common Stock, $.10 par value, outstanding.
Documents incorporated by reference. Certain portions of the
registrant's definitive Proxy Statement for the May 3, 1994 Annual Meeting
of Stockholders ("Proxy Statement") are incorporated herein by reference in
Part III of this Form 10-K.
<PAGE>
TABLE OF CONTENTS
PART I
Page
Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . 1
General. . . . . . . . . . . . . . . . . . . . . . . . . 1
Business Segments. . . . . . . . . . . . . . . . . . . . 1
Transportation and Operation . . . . . . . . . . . . . . 2
Gas Services . . . . . . . . . . . . . . . . . . . . . . 7
Gas Processing . . . . . . . . . . . . . . . . . . . . . 9
International Gas and Power Services . . . . . . . . . . 9
Exploration and Production . . . . . . . . . . . . . . . 11
Regulation . . . . . . . . . . . . . . . . . . . . . . . 15
Operating Statistics . . . . . . . . . . . . . . . . . . 19
Current Executive Officers of the Registrant . . . . . . 22
Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . 23
Gas Transmission and Liquid Fuels. . . . . . . . . . . . 23
Oil and Gas Exploration and Production Properties
and Reserves . . . . . . . . . . . . . . . . . . . . 24
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 27
Item 4. Submission of Matters to a Vote of Security Holders . . . . 29
PART II
Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters. . . . . . . . . . . . . 30
Item 6. Selected Financial Data (Unaudited) . . . . . . . . . . . . . 31
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . 32
Item 8. Financial Statements and Supplementary Data . . . . . . . . . 41
Item 9. Disagreements on Accounting and Financial Disclosure. . . . . 41
PART III
Item 10. Directors and Executive Officers of the Registrant. . . . . . 42
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . . 42
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . 42
Item 13. Certain Relationships and Related Transactions. . . . . . . . 42
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K. . . . . . . . . . . . . . . . . . . 43
<PAGE>
PART I
Item 1. BUSINESS
GENERAL
Enron Corp. ("Enron"), a Delaware corporation organized in
1930, is an integrated natural gas company with headquarters in
Houston, Texas. Essentially all of Enron's operations are
conducted through its subsidiaries and affiliates which are
principally engaged in the gathering, transportation and wholesale
marketing of natural gas to markets throughout the United States
and internationally through approximately 44,000 miles of natural
gas pipelines; the exploration for and production of natural gas
and crude oil in the United States and internationally; the
production, purchase, transportation and worldwide marketing of
natural gas liquids and refined petroleum products; the independent
(i.e., non-utility) development, promotion, construction and
operation of natural gas-fired power plants in the United States
and internationally; and the non-price regulated purchasing and
marketing of long-term energy related commitments. As of December
31, 1993, Enron employed approximately 7,100 persons.
As used herein, unless the context indicates otherwise,
"Enron" refers to Enron Corp. and its subsidiaries.
BUSINESS SEGMENTS
Enron's operations are classified into the following business
segments:
1) Transportation and Operation: Transmission of natural
gas; construction, management and operation of natural gas and
natural gas liquids pipelines, liquids plants and power facilities;
crude oil transportation activities and investment in liquids
pipeline operations.
2) Gas Services: Purchasing and marketing of natural gas,
natural gas liquids and power; price risk management and financing
arrangements in connection with natural gas, natural gas liquids
and power transactions; intrastate natural gas pipelines; and
development, acquisition and promotion of natural gas fired power
plants in North America.
3) Gas Processing: Extraction of natural gas liquids in
North America.
4) International Gas and Power Services: Independent (non-
utility) development, acquisition and promotion of power plants,
natural gas liquids facilities and pipelines outside of North
America; and international marketing of natural gas liquids.
5) Exploration and Production: Natural gas and crude oil
exploration and production primarily in the United States, Canada,
and Trinidad.
Enron's business segment information has been reclassified
from prior years to reflect Enron's realignment of its operations
during 1993. For financial information by business segment for the
fiscal years ended December 31, 1991 through December 31, 1993,
please see Note 19 to the Consolidated Financial Statements on page
F-18.
TRANSPORTATION AND OPERATION
Interstate Pipelines
Enron and its subsidiaries operate domestic interstate
pipelines extending from Texas to the Canadian border and across
the southern United States from Florida to California. Included in
Enron's domestic interstate natural gas pipeline operations are
Northern Natural Gas Company ("Northern"), Transwestern Pipeline
Company ("Transwestern"), and Florida Gas Transmission Company
("Florida Gas") (indirectly 50% owned by Enron). Northern,
Transwestern and Florida Gas are interstate pipelines and are
subject to the regulatory jurisdiction of the Federal Energy
Regulatory Commission (the "FERC"). Each pipeline serves customers
in a specific geographical area: Northern, the upper Midwest;
Florida Gas, the State of Florida; and Transwestern, principally
the California market. In addition, Enron holds a 13% interest in
Northern Border Partners, L.P. and operates the Northern Border
Pipeline system, which gives Enron direct access to Canadian gas
supplies. Also, Enron has a 15% interest in Enron Liquids
Pipeline, L.P., which includes natural gas liquids, refined
petroleum products and carbon dioxide pipeline businesses which are
operated by a wholly owned subsidiary of Enron.
Northern Natural Gas Company. Through its approximately
23,500-mile natural gas pipeline system stretching from Texas to
Michigan's Upper Peninsula and the Canadian Border, Northern
transmits gas to points in its traditional market area of Illinois,
Iowa, Kansas, Michigan, Minnesota, Nebraska, South Dakota and
Wisconsin. Gas is transported to town borders for consumption and
resale by non-affiliated gas utilities and municipalities and to
other pipeline companies and end-users. Northern also gathers and
transports gas at various points outside its traditional market
area in the production areas of Colorado, Kansas, Montana, New
Mexico, Oklahoma, Texas and Wyoming for utilities, end-users, and
other pipeline and marketing companies.
In Northern's market area, natural gas is an energy source
available for traditional residential, commercial and industrial
uses. Northern's throughput totaled 1,943 trillion British thermal
units ("Tbtu") in 1993, compared to 1,889 Tbtu in 1992. In its
traditional market area, Northern's throughput increased to 788
Tbtu in 1993 from 706 Tbtu in 1992, an 11.6% increase. Northern's
jurisdictional sales decreased from 66 Tbtu in 1992 to 61 Tbtu in
1993, evidencing a continuing shift from sales to transportation
volumes due to the implementation of open access transportation
service. Transportation of volumes in the traditional market area
rose from 664 Tbtu in 1992 to 787 Tbtu in 1993. The volume of gas
delivered by Northern in its non-traditional market area decreased
to 1,155 Tbtu in 1993 from 1,183 Tbtu in 1992.
Order Nos. 636, 636-A and 636-B were promulgated by the FERC
in 1992. The primary focus of the orders is to create equality of
service between the traditional pipeline merchant sales service and
open-market transportation service. Northern implemented the
service restructuring required by Order Nos. 636, 636-A and 636-B
on November 1, 1993, by unbundling its sales service, offering a
limited market based merchant service and establishing a straight
fixed variable rate design to recover all fixed costs, including
return on equity, in the demand component of its rates. Northern's
merchant role has been reduced to approximately 100 million cubic
feet ("MMcf") per day. The FERC has indicated that Northern will
be authorized to recover all prudently incurred costs associated
with a reduced merchant role resulting from the implementation of
Order Nos. 636, 636-A, and 636-B (See "Regulation - Natural Gas
Rates and Regulations").
Northern competes with other interstate pipelines in the
transportation and storage of gas. Northern competes with other
pipelines, producers, gatherers and gas aggregators for gathering
volumes. As noted above, recent FERC orders have been designed to
introduce more competition into the natural gas industry, and have
had the effect of increasing transportation volumes and decreasing
or eliminating sales by pipelines.
Transwestern Pipeline Company. Transwestern is an open-access
interstate pipeline engaged primarily in the transportation of
natural gas. Through its approximately 4,500-mile pipeline system,
Transwestern transports natural gas from West Texas, Oklahoma,
eastern New Mexico and the San Juan Basin in northwest New Mexico
primarily to the California market, with a developing
transportation business of deliveries off the east end of its
system. Substantially all of Transwestern's total of 1.06 billion
cubic feet ("Bcf") per day of delivery capacity to California is
currently on a firm basis. Transwestern has access to three
significant gas basins for its gas supply: the Permian Basin in
West Texas and eastern New Mexico, the San Juan Basin in
northwestern New Mexico and southern Colorado, and the Anadarko
Basin in the Texas and Oklahoma Panhandles.
In 1992, Transwestern expanded its mainline capacity and built
a lateral pipeline to the San Juan Basin in northwestern New
Mexico. The expansion project allowed Transwestern to (i) access
the San Juan Basin for gas supply, (ii) begin service to northern
California markets, (iii) access the central California enhanced
oil recovery market and (iv) enhance its ability to deliver to
markets east of California. Due to surplus pipeline capacity and
a weak demand market in California, total throughput on
Transwestern's system has not increased as much as anticipated
following the completion of the fully subscribed
expansion/extension. Total throughput volumes to California
averaged approximately 757 MMcf per day in 1993, compared to 744
MMcf per day in 1992.
During 1993, Transwestern developed a new firm transportation
service on the east end of its system to transport Permian and San
Juan Basin supplies into Texas, Oklahoma and the midwestern United
States. Transwestern transported an average of 312 MMcf per day
off the east end of its system in 1993, as compared to 156 MMcf per
day in 1992.
In response to federal regulatory changes, Transwestern has
shifted from a merchant pipeline (buying and reselling gas) to a
transporter of gas for third parties. Currently, substantially all
Transwestern throughput consists of transportation for third
parties.
Transwestern filed its Order No. 636 compliance filing in July
1992, and received FERC approval on February 1, 1993. Under its
Order 636 program, Transwestern now has, among other things, a
capacity release program and a straight fixed variable rate design.
This rate design collects all fixed costs, including income taxes
and return on equity, in monthly demand or reservation fees.
Transwestern is subject to competition from other transporters
into the southern California market, including El Paso Natural Gas
Company, Kern River Gas Transmission Company, Pacific Gas
Transmission Company, and intrastate producers and affiliates of
Southern California Gas Company.
Florida Gas Transmission Company. Enron owns a 50% interest
in Florida Gas by virtue of its 50% interest in Citrus Corp. which
owns all of the capital stock of Florida Gas. An Enron subsidiary
operates the Florida Gas pipeline. Florida Gas transports natural
gas to a variety of industrial customers, electric utilities and
local distribution companies, supplying peninsular Florida through
an approximately 4,400-mile pipeline system originating in South
Texas and terminating near Miami, Florida.
Florida Gas' customer base has historically been grouped into
three categories: sales for resale, transportation services and
direct sales. Sales for resale customers (local gas distributors
which resell gas to retail residential and small commercial and
industrial businesses) and transportation customers (customers who
directly contract for their own supply of gas which in turn is
transported by Florida Gas) are jurisdictional activities. Rates
for these customers are regulated by the FERC. The rates at which
Florida Gas sells to direct sales customers (those sales made
directly to end-use industrial and electric utility customers) are
non-jurisdictional. Florida Gas' rates for these customers are
negotiated with the individual customer and are not set by the
FERC. On November 1, 1993, Florida Gas' services were restructured
under Order No. 636, and virtually all volumes of gas now transported
on the system are transportation-only volumes. Florida Gas currently
makes unbundled sales (sales at the wellhead) only on an
interruptible, month-to-month basis.
Florida Gas' daily deliveries for 1993 and 1992 averaged
approximately 936 billion British Thermal Units ("Bbtu") and 973
Bbtu, respectively. Of Florida Gas' throughput volumes in 1993 and
1992, sales for resale contributed 3% and 8%, transportation
services 96% and 87%, and direct sales 1% and 5%, respectively.
In the process of becoming an open access pipeline, Florida
Gas has moved away from being primarily a major natural gas
supplier with significant non-jurisdictional direct sales volumes
and the related gas commodity price risk, to become primarily a
jurisdictional transporter of gas. The majority of Enron's
merchant sales function in Florida is now being conducted through
50%-owned Citrus Corp.'s non-regulated gas marketing companies. As
a result of contract conversions, Florida Gas' primary source of
net revenues has switched from direct sales and sales for resale
services to transportation services. This switch has resulted in
a reduction of total revenues, since transportation rates do not
include the cost of the gas supplies purchased from third parties.
At the same time, Florida Gas' cost of performing sales services
has been reduced since the cost of gas shipped under transportation
contracts is no longer included.
Florida Gas is the only major natural gas pipeline in
peninsular Florida. From time to time, the construction of a major
gas pipeline into peninsular Florida has been proposed; however,
the construction of such a pipeline would require significant
capital expenditures and would be subject to a stringent
environmental review process. Certain pipeline competitors of
Florida Gas are currently pursuing proposed pipelines to service
the Florida market later in the decade.
In 1993, Florida Gas made its Order No. 636 restructuring
filing with the FERC, which has been accepted. Florida Gas' Order
636 program established a straight fixed variable rate design,
provided for the collection of Order No. 636-related gas supply
realignment costs, unbundled Florida Gas' capacity services from
sales services and established a capacity release program.
Florida Gas has received approval from the FERC to proceed
with its Phase III expansion, which will increase Florida Gas'
delivery capability into Florida from approximately 925 MMcf per
day to approximately 1,455 MMcf per day. The expansion will serve
approximately 29 customers, with Florida Power and Light as the
primary customer. The capital cost of the expansion project is
expected to be approximately $900 million (excluding allowance for
funds used during construction) which will initially be financed by
Enron and Sonat, Inc., Florida Gas' parent companies; however,
Enron and Sonat, Inc. will seek outside financing for at least 65%
of the project during late 1994.
Northern Border Pipeline Company. Northern Border Partners,
L.P., a Delaware limited partnership (the "Partnership"), owns 70%
of Northern Border Pipeline Company, a Texas general partnership
("Northern Border"). An Enron subsidiary holds a 13% interest in
the Partnership, and serves as operator of the pipeline. Northern
Border owns a 969-mile interstate pipeline system that transports
natural gas from the Montana-Saskatchewan border near Port of
Morgan, Montana to interconnecting pipelines in the State of Iowa,
one of which is Northern. The pipeline system has access to
natural gas reserves in the provinces of Alberta, British Columbia
and Saskatchewan, as well as the Williston Basin and the Great
Plains Coal Gasification Project in the United States.
Interconnecting pipeline facilities provide access to markets in
the Midwest, Mid-Atlantic, Northeast, Southwest and Southeast for
the referenced Canadian and U.S. natural gas reserves. Therefore,
Northern Border is strategically situated to transport significant
quantities of natural gas to major gas consuming markets.
Northern Border has focused its efforts primarily on being a
low cost transporter of Canadian gas exported to the United States.
As of January 31, 1994, Northern Border has firm transportation
service agreements, other than those under temporary release, with
five interstate pipeline companies, including Northern, three
domestic producers and marketers, including Enron Gas Marketing,
Inc., eleven Canadian producers and marketers, and numerous
interruptible service contracts. Since 1988, Northern Border has
been transporting volumes at or near its maximum capacity. Based
upon existing contracts and capacity, 100% of Northern Border's
firm capacity (1.7 Bcf of natural gas per day) is contractually
committed through October 1997, and 93% of such capacity is
contractually committed through October 2001. At the present time,
15% of the capacity is contracted by interstate pipelines, with
Northern accounting for 4% of such capacity. The remaining
capacity is contracted to producers and marketers. Enron Gas
Marketing, Inc., along with a marketing affiliate of a general
partner in Northern Border, holds 12% of the contracted capacity.
Northern Border competes with two other pipeline systems that
transport gas from Canada to the Midwest.
Enron Liquids Pipeline Company. Enron owns approximately 15%
of Enron Liquids Pipeline, L.P., a Delaware limited partnership
formed in August 1992. An Enron subsidiary serves as general
partner and operates the partnership's two interstate common
carrier natural gas liquids ("NGL") pipeline systems, and one
carbon dioxide pipeline system. The partnership also operates the
Cora Terminal, a high speed, rail to barge coal transfer facility,
and also owns a 25% interest in an NGL fractionator. The North
System of Enron Liquids Pipeline, a 1,600-mile interstate common
carrier NGL and refined petroleum products pipeline system,
transports, stores and delivers a full range of NGLs and refined
products from south central Kansas to markets in the Midwest and
has interconnects, using third party pipelines, to the eastern
United States. The Cypress Pipeline transports ethane from Mont
Belvieu, Texas to the Lake Charles, Louisiana area. The Central
Basin Pipeline transports carbon dioxide in West Texas for use in
enhanced oil recovery operations in the Permian Basin of West
Texas. The Cora Terminal stores coal and transfers coal mined in
southern Illinois from railcars to barges that transport it to end
users, principally for electricity generation.
The North System and the Cypress Pipeline are interstate
common carrier pipelines, subject to regulation by the FERC. As an
interstate common carrier, the partnership offers interstate
transportation services by means of the North System and Cypress
Pipeline to any shipper of NGLs who requests such services,
provided that the products tendered for transportation satisfy the
conditions and specifications contained in the applicable tariff.
The Central Basin Pipeline is not subject to rate regulation.
Interstate Pipelines' Gas Supply. When Northern was a fully
bundled merchant, it contracted for supply to meet its customers'
full requirements. Northern is in the process of negotiating with
its suppliers to balance its gas supply with its greatly reduced
merchant function. Northern originally developed storage
capabilities to meet its market area sales requirements prior to
open access. Such storage is now offered to its customers on a
contractual basis. In the 1992/1993 season, customers utilized
21.1 Bcf of Northern's capacity. For the 1993/1994 heating season,
Northern utilized 35.4 Bcf for storage services to its customers.
Northern's 56 Bcf of total capacity is held in three storage fields
and two liquefied natural gas plants owned by Northern. All are
located in or near Northern's market area to facilitate delivery
for short notice swing capability and unexpected weather-related
demand.
Since Northern and Transwestern are primarily transportation-
only pipelines, it is no longer necessary for them to have
significant gas supplies committed for sale to them. Of the gas
supplies remaining under contract, the major portion under long-
term contracts covers production in the Anadarko Basin area of the
Texas Panhandle, northwestern Oklahoma and from the Permian Basin
area of West Texas and southeastern New Mexico.
As of November 1, 1993, when its Order No. 636 restructured
services were implemented, Florida Gas became essentially a
transportation-only pipeline. It is thus no longer necessary for
it to have significant gas supplies committed for sales to Florida
Gas. All of Florida Gas' firm gas purchase contracts have now been
either terminated or assigned; volumes required for balancing or
pipeline operations (line pack) are purchased on the spot market.
Of the total natural gas sold by Florida Gas during 1993,
approximately 60% was purchased from non-affiliated entities.
Operation and Management of Power Facilities
Enron's subsidiary companies are involved in the independent
power industry, both as an operator and as an equity partner. Enron,
through its affiliated companies, is involved in the independent
(i.e., non-utility) development, promotion, construction,
acquisition and operation of natural gas-fired power plants, some
of which use combined cycle and cogeneration technology to generate
electricity and steam. Cogeneration is the simultaneous production
of steam and electricity from a single fuel source, such as natural
gas. A conventional electric power plant produces electricity and
discharges resulting exhaust heat as waste. Cogeneration uses this
previously wasted heat to create steam and electricity for
industrial use, requiring less fuel than older methods using
separate electric and thermal energy plants. This dual fuel use
results in a more efficient utilization of energy and provides
lower cost electricity and steam. In addition, Enron has developed
diesel fired power plants for projects in developing countries,
where the development, engineering design and construction are done
on an accelerated basis in order to address severe power shortages
in such countries. (See "International Gas and Power Services" for
a general description of Enron's international power businesses).
Enron/Dominion Cogen Corp., an operation owned 50% by an Enron
subsidiary and 50% by Dominion Resources, Inc., owns the 340
megawatt Clear Lake facility in Pasadena, Texas and the 450
megawatt Texas City, Texas plant. Enron owns a 50% interest in
Richmond Power Enterprises, L.P., which owns a 250 megawatt
combined cycle cogeneration facility in Richmond, Virginia. An
Enron subsidiary owns a 50% interest in a 149 megawatt combined
cycle power plant in Milford, Massachusetts, which became
operational in 1993. Enron subsidiaries or affiliates also own a
50% interest in each of a 105 megawatt and a 116 megawatt facility
located at Batangas and Subic Bay, respectively, in the
Philippines; a 50% interest in a 110 megawatt facility at Puerto
Quetzal, Guatemala; and a 50% interest in a 1,875 megawatt facility
at Teesside, England.
Crude Oil Transportation Services
Certain Enron subsidiary companies purchase at the lease site,
transport, trade and market crude oil. Total North American crude
oil lease volumes were approximately 292,000 barrels per day in
1993 and 280,000 barrels per day in 1992. Trading activities,
including hedging, are bound by dollar exposure limits and credit
controls. During 1993, North American crude oil trading volumes
totaled approximately 208.7 million barrels. However, during
October 1992, the Board of Directors of Enron approved a plan to
divest all of the crude oil trading and transportation operations
of Enron's wholly-owned subsidiary, EOTT Energy Corp. (EOTT),
through a spin-off transaction to holders of Enron common stock.
As a result, Enron classified these activities as discontinued
operations for financial reporting purposes. During the fourth
quarter of 1993, Enron's Board of Directors approved a revised
plan to divest a substantial portion, but not all, of EOTT through
a public offering of units of limited partnership interests in a
master limited partnership, and thus reclassified these activities
as continuing operations.
In January 1994, EOTT Energy Partners, L.P. filed a
registration statement with the Securities and Exchange Commission
to offer up to 11 million common units. Upon completion of this
offering, Enron transferred substantially all of the business and
assets of EOTT to EOTT Energy Partners, L.P., a newly formed
limited partnership. EOTT Energy Corp. is the general partner and
owns a substantial interest in EOTT Energy Partners, L.P.
GAS SERVICES
Enron Gas Services Corp. and its affiliated companies ("EGS")
purchase natural gas, gas liquids and power through a variety of
contractual arrangements, including both short and long term
contracts, the arrangement of production payment and other
financing transactions, and other contractual arrangements, and
market these energy products to local distribution companies,
electric utilities, cogenerators, and both commercial and
industrial end-users. EGS also provides price risk management
services to these customers through both physical delivery and
financial arrangements.
EGS offers a broad range of non-price regulated natural gas
merchant services by tailoring a variety of supply and marketing
options to its customers' specific needs. EGS's strategy is to
provide predictable pricing, reliable delivery and low cost capital
to its customers. EGS provides these services through a variety of
financial instruments, including forward contracts, swap
agreements, options and other contractual commitments. EGS's
services can be categorized into four business lines: Gas, Power,
Finance and Liquids.
Gas. EGS's Gas operations include price risk management and
origination activities as well as the physical natural gas trading
and transportation activities of Enron Gas Marketing, Inc., Houston
Pipe Line Company, Enron Access, Inc., Louisiana Resources Company
and EGS's Canadian gas supply and marketing operations.
Enron Gas Marketing, Inc. ("EGM") was created in the mid-
1980's as natural gas pipelines began the conversion to open access
transportation required by the FERC. EGM has a FERC blanket sales
certificate allowing it authority to sell gas across the United
States. EGM accomplishes the movement of gas throughout the
country by buying and selling gas at various industry-specific
locations ("index points"). Any required transportation of gas
from these index points to the actual market is accomplished
utilizing EGM's or its customers' transportation agreements with
Enron's pipeline systems, as well as numerous other pipelines
throughout the country. Enron Gas Marketing, Inc. Canada purchases
gas supplies for markets in both the United States and Canada.
Houston Pipe Line Company ("HPL") operates an approximately
5,500-mile intrastate pipeline system in Texas which interconnects
with Northern, Transwestern, Florida Gas and numerous other
interstate and intrastate pipelines. HPL's pipeline operation now
functions primarily as a gas gathering and transportation system,
and EGS's natural gas sales in Texas are made primarily by non-
regulated marketing companies to a variety of industrial customers
in the Texas Gulf Coast area that use gas for fuel or raw material
and to utilities and natural gas transmission companies that
purchase gas for resale. HPL's intrastate natural gas sales,
transportation and storage services are subject to seasonal
variation because many of its customers have weather-sensitive gas
requirements. The Railroad Commission of Texas has jurisdiction
over intrastate gas pipeline rates, operations and transactions in
Texas. See "Regulation--Natural Gas Rates and Regulations."
Enron Access, Inc. ("Access") was formed as a result of EGS's
acquisition of Access Energy, Inc., an independent gas marketing
company, in October 1992. Access markets natural gas under a
variety of arrangements to local distribution companies and
commercial customers (such as retail establishments, churches,
hospitals, etc.), as well as industrial users in 38 states. This
is a significant market area as gas pipelines and distribution
companies make transportation services more available to third
parties as contemplated by FERC Order No. 636 and other state and
local regulations.
In April 1993, Enron acquired Louisiana Resources Company,
which includes the rights to a 540-mile intrastate pipeline which
spans the state of Louisiana and serves the industrial complex
along the Mississippi River from Baton Rouge to New Orleans. The
pipeline interconnects with the Henry Hub and has numerous
interconnections with both interstate and intrastate pipelines.
EGS obtains its gas supply from a number of sources which have
been discussed above. During 1993, EGS purchased approximately 91%
of its gas from non-affiliated entities, and the balance was
purchased from Enron affiliates. Not more than 3% of the gas
purchased from non-affiliates was purchased from any single
producer. EGS purchases gas under both short and long-term
agreements at either fixed or market-sensitive prices.
During 1994, growth in the physical and financial trading
activities of EGS's Gas operations is planned despite continued
competition from financial and industrial companies, particularly
in the derivative products area. Additional contract
originations will be sought as the impact of FERC Order 636
becomes more evident. Enron's and other third parties' price-
regulated, interstate pipeline companies are expected to continue
their transition from the merchant function to primarily providing
transportation services.
Power. EGS's Power business consists of various activities
associated with the North American power market such as providing
natural gas contract services through Enron Power Services Inc.
("Power Services"); managing, acquiring, developing and promoting
power-related assets and joint ventures; and marketing and
supplying electricity. Power Services markets natural gas to the
electric power generation industry. Some non-utility electric
power generators have had difficulty obtaining financing for the
construction of gas-fired power plants without long-term natural
gas supply contracts. Power Services offers these supplies under
long-term firm contract commitments with both fixed-price or other
innovative pricing terms. In 1993, Power Services signed a 12-year
contract to supply approximately 182 Bcf of natural gas. Power
Services will continue marketing natural gas to independent power
projects as well as electric utilities converting to natural gas in
response to the Clean Air Act of 1990.
Finance. Enron Finance Corp. ("EFC") secures natural gas
supplies from independent producers through a variety of financial
transactions, primarily volumetric production payments. EFC
arranges these transactions through financial entities and provides
related price risk management services. In 1993, EFC originated
and/or arranged $413 million of funding, thereby gaining access to
approximately 169.5 TBtu's of natural gas and 9.3 million barrels
of crude oil through reserve-based production payments. In
addition, EFC and its affiliates have arranged financing in the
form of secured loans to producers and end-users and have made
equity investments as partners in several limited partnerships.
During 1993, Joint Energy Development Investments Limited
Partnership was formed comprised of an EGS subsidiary as general
partner and the California Public Employees Retirement System as
limited partner. The partnership provides capital for energy
investments.
Liquids. The Liquids business of EGS includes the North
American natural gas liquids (NGL) marketing activities and the
"clean fuels" business which consists of the methanol and methyl
tertiary butyl ether (MTBE) businesses. EGS markets the output of
Enron's NGL and clean fuels plants as well as product purchased
from third parties. During 1994, EGS's Liquids business will
attempt to expand its NGL and clean fuels marketing through
derivative products offerings. Additionally, EGS plans to continue
development of its merchant business by actively marketing long-
term and fixed margin-based pricing arrangements.
GAS PROCESSING
Certain Enron subsidiaries are engaged domestically in the
extraction of natural gas liquids ("NGLs") (ethane, propane, normal
butane and isobutane and natural gasoline). NGLs are typically
extracted from natural gas in liquid form under low temperature and
high pressure conditions. Ethane, propane, normal butane,
isobutane and natural gasoline are used as feedstocks for
petrochemical plants in the production of plastics, synthetic
rubber and other products. Normal butane and natural gasoline are
used by refineries in the blending of motor gasoline. Isobutane is
used in the alkylation process to enhance the octane content of
motor gasoline and is also used in the production of MTBE, which is
used to produce cleaner burning motor gasoline. Propane is used as
fuel for home heating and cooking, crop drying and industrial
facilities and as an engine fuel for vehicles, and ethane is used
as a feedstock for synthetic fuels production. Enron's
subsidiaries engaged in gas processing operations extracted as NGLs
the equivalent of an estimated 43.1 Bcf of natural gas during 1993.
At December 31, 1993, Enron's gas processing businesses had an
interest in 22 hydrocarbon extraction and fractionation facilities,
18 of which are operated by Enron, which generally are located
along Enron's natural gas pipeline systems. During 1993, these
plants extracted 1.3 billion gallons of NGLs. A total of .9
billion gallons of product were fractionated for affiliates and
others. The income before interest and taxes of Enron's gas
processing businesses declined in both 1992 and 1993 as compared to
the applicable preceding years due primarily to lower processing
margins, reflecting higher natural gas feedstock prices and lower
product prices. These businesses' margins are sensitive to the
relationship between NGL prices and the price of natural gas. In
1994, Enron will attempt to mitigate some of this market risk
through hedging techniques.
INTERNATIONAL GAS AND POWER SERVICES
Enron's international activities principally involve the
development, acquisition, promotion, and operation of natural gas
and power projects and the marketing of natural gas liquids. As is
the case in the United States, Enron's emphasis is on businesses in
which natural gas or its components play a significant role.
Development projects are focused on power plants, gas processing
and terminaling facilities, and gas pipelines, while marketing
activities center on fuels used by or transported through such
facilities.
Enron's international activities include management of
ownership interests and operation of power plants in England,
Germany, Guatemala and the Philippines; a 3,800-mile pipeline
system in southern Argentina; retail gas and propane sales in the
Caribbean basin; processing of natural gas liquids at Teesside,
England; and marketing of natural gas liquids worldwide.
During 1993 and the first quarter of 1994, commercial
operations commenced on six Enron projects totaling over 2,300
megawatts in nominal capacity in England, Germany, the Philippines
and Guatemala. Projects with power purchase or services agreements
are in pre-construction phases in Turkey, Latvia and India, and
under construction in Dominican Republic. In addition, Enron is
evaluating potential power development projects in Colombia, Yemen,
Puerto Rico, Indonesia, and China.
Teesside. Enron has a 50% ownership interest in an
independent power facility with a capacity of approximately 1,875
megawatts at ICI Chemicals & Polymers Limited's Wilton Works Plant
on Teesside in northeast England. The gas-fired combined cycle
project was originated, developed, constructed and is operated by
Enron subsidiaries. The remaining 50% ownership interest is held
by four of the twelve regional electric companies operating in
England and Wales. The Teesside plant has the capacity to supply
approximately 4% of all the electricity consumed in the U.K., and
1,725 megawatts of this capacity is committed under long-term
contracts.
In addition to the Teesside power plant, Enron also operates
an adjacent 300 MMcf per day gas liquids processing facility. The
first phase of the liquids plant is in place and producing in
excess of 300,000 gallons of natural gas liquids per day, which is
being sold in the European markets. A second phase of construction
is expected to begin in 1994 in order to be operating by 1996 when
additional natural gas volumes which Enron has purchased from the
J-Block in the North Sea become available.
Enron has long-term contractual rights to 300 MMcf per day
capacity on the Central Area Transmission System, a 1,400 MMcf per
day capacity pipeline from the North Sea. Enron's capacity will be
used to transport J-Block gas to Teesside when that gas becomes
available in 1996. These new supplies will support Enron's future
marketing programs.
Philippines. Enron has interests in three projects in the
Philippines. The Batangas power project is an approximately 105
megawatt fuel-oil-fired diesel engine plant located at Pinamucan,
Batangas, Luzon, which began commercial operation in 1993. The
Subic power project is a 116 megawatt fuel-oil-fired diesel engine
plant located at Subic Bay which began commercial operation in
February 1994. Both projects were developed and are 50% owned by
Enron, and sell power to the National Power Corporation ("NAPOCOR")
of the Philippines. In addition, Enron leases and operates two
plants located at the former Subic Naval Base, which together
generate up to approximately 28 megawatts of power. Enron began
operating these facilities in January 1993, and is selling power to
NAPOCOR.
Guatemala. Enron has a 50% interest in an approximately 110
megawatt fuel-oil-fired diesel engine power plant mounted on
floating platforms at Puerto Quetzal on Guatemala's Pacific Coast.
The U.S. flag vessels built in Louisiana went into commercial
operation in February 1993, and sell all of their power output
under a long-term contract to a large Guatemalan electric utility,
a majority interest in which is owned by Guatemala's national
electric utility.
Germany. During 1993, Enron acquired an approximately
125 megawatt gas-fired plant in Bitterfeld, Germany. Enron
is a 50/50 joint venture partner with the second largest
regional utility company in Germany. The Bitterfeld project
provides Enron with a presence in Germany as well as access
to a site for possible expansion.
India. An Enron affiliate signed a 20-year power purchase
agreement with Maharashtra State Electricity Board in December
1993. The contract supports the first phase of an approximately
2,015 megawatt gas-fired power plant and related facilities, which
will ultimately include a liquefied natural gas (LNG) terminal and
harbor development near Dabhol, which is approximately 100 miles
south of Bombay. Enron's proposed partners in the two-phase
project are affiliates of General Electric, which is supplying
equipment and is expected to acquire a 10% equity interest, and
affiliates of Bechtel, which is the contractor and also is expected
to acquire a 10% equity interest. Enron plans to reduce its
current 80% equity interest to a 50% interest at final closing,
which equates to an equity investment of approximately $135
million. Construction of the 695 megawatt first phase is expected
to begin in 1994 and includes harbor development, fuel facilities,
housing and related activities necessary to complete this project.
Once the LNG supply contracts are obtained, the 1,320 megawatt
second phase addition will be constructed.
Argentina Gas Pipelines. As part of the privatization of
Argentina's state-owned industries, in 1992 Enron acquired an
indirect interest in Transportadora de Gas del Sur ("TGS"), the
formerly state-owned natural gas pipeline in southern Argentina.
Enron holds a net 17.5% interest and operates the 3,800-mile
pipeline system, which has a capacity of approximately 1.7 Bcf per
day. TGS serves four distribution companies under long-term firm
transportation contracts. TGS is expanding its pipeline in 1994 by
240 MMcf per day through the addition of four compressor stations,
in time for the winter season in Argentina. TGS has signed
transportation contracts for 210 MMcf per day of additional
capacity for ten years.
Caribbean Basin. Enron's operations in the Caribbean area are
conducted through Enron Americas and its subsidiary companies.
Enron Americas' subsidiary Industrias Ventane ("Ventane"),
organized in 1953, operates the leading natural gas liquids
transportation and distribution business in Venezuela. In
Venezuela, Enron Americas is also engaged in the manufacture and
distribution of appliances in a joint venture with General Electric
and local investors. Enron Americas has a gas pipeline operation
in Puerto Rico, and liquid fuels businesses in both Puerto Rico and
Jamaica. Enron Americas plans to capitalize on its historic
presence in the Caribbean area to take advantage of significant
potential power generation opportunities in the area.
Liquids Marketing. In late 1993 Enron consolidated the
management of its international liquids marketing business with the
corresponding domestic activities, in order to take advantage of
techniques to enhance profitability and manage risks that have
proven effective for Enron in the U.S. International liquids
marketing volumes declined from 1,180 million gallons in 1992 to
646 million gallons in 1993, reflecting a reduction in spot market
transactions in 1993. However, since spot market transactions
negatively impacted margin during 1992, margins earned by the
international liquids marketing operations improved in 1993.
EXPLORATION AND PRODUCTION
Enron's natural gas and crude oil exploration and production
operations are conducted by its subsidiary, Enron Oil & Gas Company
("EOG"). Enron currently owns 80% of the outstanding common stock
of EOG.
EOG is one of the largest independent (non-integrated) oil and
gas companies in the United States in terms of domestic proved
reserves. EOG is engaged in the exploration for, and development
and production of, natural gas and crude oil reserves primarily in
major producing basins in the United States and, to a lesser
extent, in Canada, Trinidad and selected other international areas.
At December 31, 1993, EOG had estimated net proved natural gas
reserves of 1,772 Bcf and estimated net proved crude oil,
condensate and natural gas liquids reserves of 20.9 million
barrels, and at such date, approximately 78% of EOG's reserves (on
a natural gas equivalent basis) was located in the United States,
16% in Canada and 6% in Trinidad.
EOG's core areas are the Big Piney area in Wyoming, South
Texas primarily centered in the Lobo Trend area, the Matagorda
Trend area located in federal waters offshore Texas, and the Canyon
Trend area located in West Texas. The company's other domestic
natural gas and crude oil producing properties are located
primarily in other areas of Texas, Utah, New Mexico, Oklahoma and
California. At December 31, 1993, 95% of EOG's proved domestic
reserves (on a natural gas equivalent basis) was natural gas and 5%
was crude oil, condensate and natural gas liquids.
EOG's six principal U.S. producing areas are the Big Piney
area, the South Texas area, Matagorda Trend area, the Canyon Trend
area, the Pitchfork Ranch field and the Vernal area. Properties in
these areas comprised approximately 76% of EOG's domestic reserves
(on a natural gas equivalent basis) and 83% of EOG's maximum
domestic net natural gas deliverability as of December 31, 1993 and
are substantially all operated by EOG. EOG also has operations in
Canada and in Trinidad and is conducting exploration in selected
other international areas.
EOG is engaged in the exploration for and the development and
production of natural gas and crude oil and the operation of
natural gas processing plants in western Canada, principally in the
provinces of Alberta, Saskatchewan, and Manitoba. EOG conducts
operations from offices in Calgary. Effective December 31, 1992,
EOG consummated the acquisition of a natural gas property located
in the Sandhills field in Saskatchewan. The property was further
developed in 1993 through the drilling of 150 wells resulting in
deliverability net to EOG from the Sandhills property of
approximately 36 MMcf per day at December 31, 1993. Maximum
Canadian natural gas deliverability net to EOG at December 31, 1993
was approximately 76 MMcf per day, and EOG held approximately
324,000 net undeveloped acres in Canada.
In November 1992, EOG was awarded a 95% working interest
concession in the South East Coast Consortium Block offshore
Trinidad, previously held by three government-owned energy
companies. Three undeveloped fields containing crude oil and
natural gas, including significant condensate, are scheduled for
development over the next three to five years. Existing surplus
processing and transportation capacity at the Pelican Field
facilities owned and operated by Trinidadian companies is being
used to process and transport the production. Natural gas is being
sold into the local market under a take-or-pay agreement with the
National Gas Company of Trinidad and Tobago. At December 31, 1993,
maximum natural gas deliverability net to EOG was approximately 40
MMcf per day and EOG held approximately 74,000 net undeveloped
acres in Trinidad.
EOG continues to pursue other selected opportunities outside
North America. In 1993, two unsuccessful wells were drilled in
Malaysia and one in the United Kingdom North Sea area. During
1994, EOG will pursue other opportunities in countries where
indigenous natural gas reserves have been identified, particularly
where synergies in natural gas transportation, processing and power
cogeneration can be optimized with other Enron affiliated
companies. EOG currently is actively involved in an effort to
obtain joint venture concessions involving two oil fields (Panna
and Mukta) and one natural gas field (Tapti) offshore India in the
Bombay High area.
In 1993, EOG continued expansion of its international
opportunity portfolio in the coalbed methane recovery arena. In
September 1992, EOG entered into an operating agreement under which
it is serving as operator with another partner in a venture in the
Lorraine Basin in France and under which it exercised in March 1994
an option to acquire a 50% working interest in the concession. In
addition, a 100% working interest concession has been obtained in
the Galilee Basin in Queensland, Australia. Protocols have also
been signed and joint venture agreements are in the government
approval process in both Russia and Kazakhstan; joint feasibility
studies are underway in China; and, several other high potential
countries are under active investigation.
EOG actively competes for reserve acquisitions and exploration
leases, licenses and concessions, frequently against companies with
substantially larger financial and other resources. To the extent
EOG's exploration budget is lower than that of certain of its
competitors, EOG may be disadvantaged in effectively competing for
certain reserves, leases, licenses and concessions. Competitive
factors include price, contract terms and quality of service,
including pipeline connection times and distribution efficiencies.
In addition, EOG faces competition from other producers and
suppliers, including increased competition from Canadian natural
gas.
All of EOG's oil and gas activities are subject to the risks
normally incident to the exploration for and development and
production of natural gas and crude oil, including blowouts,
cratering and fires, each of which could result in damage to life
and property. Offshore operations are subject to usual marine
perils, including hurricanes and other adverse weather conditions,
and governmental regulations as well as interruption or termination
by governmental authorities based on environmental and other
considerations. In accordance with customary industry practices,
insurance is maintained by EOG against some, but not all, of the
risks. Losses and liabilities arising from such events could
reduce revenues and increase costs to EOG to the extent not covered
by insurance.
EOG's overseas operations are subject to certain risks,
including expropriation of assets, risks of increases in taxes and
government royalties, renegotiation of contracts with foreign
governments, political instability, payment delays, limits on
allowable levels of production and current exchange and
repatriation losses, as well as changes in laws and policies
governing operations of overseas-based companies generally.
The following table sets forth certain information regarding
EOG's wellhead volumes of and average prices for natural gas per
thousand cubic feet ("Mcf"), crude oil and condensate, and natural
gas liquids per barrel ("Bbl"), and average lease and well expenses
per thousand cubic feet equivalent ("Mcfe" - natural gas
equivalents are determined using the ratio of 6.0 Mcf of natural
gas to 1.0 barrel of crude oil and condensate or natural gas
liquids) delivered during each of the three years in the period
ended December 31, 1993:
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992 1991
Volumes (per day)
<S> <C> <C> <C>
Natural Gas (MMcf)
United States 648.6(1) 533.6(1) 465.8
Canada 58.4 30.0 24.8
Trinidad 2.3 - -
Total 709.3(1) 563.6(1) 490.6
Crude Oil and Condensate (MBbl)
United States 6.6 6.3 5.9
Canada 2.2 2.2 2.3
Trinidad .1 - -
Total 8.9 8.5 8.2
Natural Gas Liquids (MBbl)
United States .2 .3 .3
Canada .4 .4 .3
Trinidad - - -
Total .6 .7 .6
Average Prices
Natural Gas ($/Mcf)
United States $ 1.97(2) $ 1.61(2) $ 1.38
Canada 1.34 1.18 1.32
Trinidad .89 - -
Composite 1.92(2) 1.58(2) 1.37
Crude Oil and Condensate ($/Bbl)
United States $ 16.96 $ 18.29 $ 19.24
Canada 14.63 16.80 17.58
Trinidad 14.36 - -
Composite 16.37 17.90 18.78
Natural Gas Liquids ($/Bbl)
United States $ 13.85 $ 11.56 $ 10.79
Canada 9.46 10.05 12.48
Trinidad - - -
Composite 11.12 10.69 11.64
Lease and Well Expenses ($/Mcfe)
United States $ .18 $ .20 $ .23
Canada .48 .50 .57
Trinidad 1.46 - -
Composite .21 .22 .25
<FN>
_________________
(1) Includes 81.0 MMcf per day in 1993 and 27.6 MMcf per day in
1992 delivered under the terms of a volumetric production
payment agreement effective October 1, 1992, as amended.
(2) Includes an average equivalent wellhead value of $1.57 per Mcf
in 1993 and $1.70 per Mcf in 1992 for the volumes described in
note (1), net of transportation costs.
</TABLE>
<PAGE>
The following table sets forth certain information regarding
EOG's volumes of natural gas delivered under other marketing and
volumetric production payment arrangements, and the resulting average
of sale prices and per unit amortization of deferred revenues along
with associated costs during each of the three years in the period
ended December 31, 1993.
Year Ended December 31,
1993 1992 1991
Volumes (MMcf per day) . . . . . . 293.4(1) 254.9(1) 237.2
Average Gross Revenue ($Mcf) . . . $ 2.57(2) $ 2.62(2) $ 2.63
Associated Costs ($/Mcf) (4) . . . 2.32(3) 1.99(3) 1.75
Margin ($/Mcf) . . . . . . . . . . $ 0.25 $ 0.63 $ 0.88
___________________
(1) Includes 81.0 MMcf per day in 1993 and 27.6 MMcf per day in
1992 delivered under the terms of volumetric production
payment and exchange agreements effective October 1, 1992, as
amended.
(2) Includes per unit deferred revenue amortization for the
volumes detailed in note (1) at an equivalent of $2.50 per Mcf
($2.40 per million British thermal units) in 1993 and $2.51
per Mcf ($2.40 per million British thermal units) in 1992.
(3) Includes an average value of $2.20 per Mcf in 1993 and $2.37
per Mcf in 1992, including average equivalent wellhead value,
any applicable transportation costs and exchange
differentials, for the volumes detailed in note (1).
(4) Including transportation and exchange differentials.
REGULATION
General
Enron's interstate natural gas pipeline companies are subject to
the regulatory jurisdiction of the FERC under the Natural Gas Act
("NGA") with respect to rates, accounts and records, addition of
facilities, the extension of services in some cases, the
abandonment of services and facilities, the curtailment of gas
sales and other matters. Enron's intrastate pipeline companies are
subject to state and some federal regulation. Enron's importation
of natural gas from Canada is subject to approval by the Office of
Fossil Energy of the Department of Energy. Certain activities of
Enron are subject to the Natural Gas Policy Act of 1978 ("NGPA").
Enron's pipelines which carry natural gas liquids and refined
petroleum products are subject to the regulatory jurisdiction of
the FERC under the Interstate Commerce Act as to rates and
conditions of service.
Domestic legislation affecting the oil and gas industry is under
constant review for amendment or expansion. Also, numerous
departments and agencies, both federal and state, are authorized by
statute to issue and have issued rules and regulations which, among
other things, require permits for the drilling of wells, regulate
the spacing of wells, prevent the waste of natural gas and crude
oil resources through proration, require drilling bonds and
regulate environmental and safety matters. The regulatory burden
on the oil and gas industry increases its cost of doing business
and, consequently, affects its profitability.
A substantial portion of EOG's oil and gas leases in the Big Piney
area and in the Gulf of Mexico, as well as some in other areas, are
granted by the federal government and administered by the Bureau of
Land Management (the "BLM") and the Minerals Management Service
(the "MMS") federal agencies. Operations conducted by EOG on
federal oil and gas leases must comply with numerous statutory and
regulatory restrictions. Certain operations must be conducted
pursuant to appropriate permits issued by the BLM and the MMS.
Various federal, state and local laws and regulations covering the
discharge of materials into the environment, or otherwise relating
to the protection of the environment, may affect Enron's operations
and costs through their effect on the oil and gas exploration,
development and production operations as well as their effect on
the construction, operation and maintenance of pipeline and
terminaling facilities. It is not anticipated that Enron will be
required in the near future to expend amounts that are material in
relation to its total capital expenditures program by reason of
environmental laws and regulations, but inasmuch as such laws and
regulations are frequently changed, Enron is unable to predict the
ultimate cost of compliance.
Enron's non-domestic businesses are subject to regulation by and
the actions of the governments of the countries in which they
operate.
Natural Gas Rates and Regulations
Northern, Transwestern, Florida Gas and Northern Border are
"natural gas companies" under the NGA and, as such, are subject to
the jurisdiction of the FERC. The FERC has jurisdiction over,
among other things, the construction and operation of pipeline and
related facilities used in the transportation, storage and sale of
natural gas in interstate commerce, including the extension,
expansion or abandonment of such facilities. The FERC also has
jurisdiction over the rates and charges for the transportation of
natural gas in interstate commerce and the sale by a natural gas
company of natural gas in interstate commerce for resale.
Northern, Transwestern, Florida Gas and Northern Border hold the
required certificates of public convenience and necessity issued by
the FERC authorizing them to construct and operate all of their
pipelines, facilities and properties for which certificates are
required in order to transport and sell natural gas for resale in
interstate commerce. Enron Gas Marketing, a marketing company
which sells gas on both a spot and long-term basis to markets both
on and off the various Enron pipeline systems, holds a blanket
sales certificate issued by the FERC which enables it to make sales
for resale in interstate commerce of gas subject to the NGA.
As necessary, Northern, Florida Gas, Transwestern and Northern
Border file applications with the FERC for changes in their rates
and charges designed to allow them to recover fully their costs of
providing service to resale and transportation customers, including
a reasonable rate of return. These rates are normally allowed to
become effective after a suspension period, subject to refund under
applicable law, until such time as the FERC rules on the allowable
level of rates. Although the FERC's jurisdiction extends to the
regulation of gas transported in interstate commerce or sold in
interstate commerce for resale, the price at which gas is sold to
direct industrial customers by a natural gas company is not subject
to the FERC's jurisdiction.
In June 1988, the FERC issued Order No. 497 ("Order 497") which
imposes requirements on interstate pipelines with marketing
affiliates, intended to eliminate an interstate pipeline's ability
to give its affiliates preferential treatment. Among other things,
Order 497 requires interstate pipelines to separate their operating
personnel and facilities from those of their affiliates to the
maximum extent practicable.
On September 18, 1991, the FERC issued Order No. 555 to revise its
regulations governing authorizations to construct natural gas
pipeline facilities and its environmental regulations. Order No.
555 proposed substantive revisions to the construction options and
rate provisions for interstate pipelines. Although the Order was
to become effective on November 19, 1991, pursuant to motions by
various parties, including Enron, motions for stay and/or requests
for rehearing, the FERC postponed the effective date of Order No.
555 until 30 days after publication in the Federal Register of an
order on rehearing. The FERC has conducted technical conferences
and received supplemental pleadings with respect to both
environmental and non-environmental issues, but has not yet issued
another rule. Enron cannot determine at this time what effect, if
any, the ultimate action by the FERC on this matter will have.
Since 1985, the FERC has endeavored to make natural gas
transportation more accessible to gas buyers and sellers on an open
and non-discriminatory basis. These efforts have significantly
altered the marketing and pricing of natural gas. The FERC's
latest action in this area is Order No. 636, issued in April 1992,
which mandates a fundamental restructuring of interstate pipeline
sales and transportation services. Order No. 636 requires
interstate natural gas pipelines to "unbundle" or segregate the
sales, transportation, storage, and other components of their
existing sales service, and to separately state the rates for each
unbundled service. Under Order No. 636, unbundled pipeline sales
can be made only in the production areas. Order No. 636 also
requires interstate pipelines to assign capacity rights they have
on upstream pipelines to such pipelines' former sales customers and
provides for the recovery by interstate pipelines of costs
associated with the transition from providing bundled sales
services to providing unbundled transportation and storage
services. The purpose of Order No. 636 is to further enhance
competition in the natural gas industry by assuring the
comparability of pipeline sales service and services offered by a
pipelines' competitors. Various aspects of Order No. 636 were
challenged, including alleged shifts of costs between pipeline
customer groups and the continuing reliability of unbundled
services. In two subsequent orders on rehearing of Order No. 636
(Order Nos. 636-A and 636-B), the FERC modified the original order
in response to these and other concerns. Numerous parties have
filed petitions for court review of Order Nos. 636, 636-A and 636-
B, as well as orders in individual pipeline restructuring
proceedings. Upon such judicial review, these orders may be
reversed in whole or in part. With Order No. 636 only partially
implemented and subject to court review, it is difficult to predict
with precision its effects.
Enron believes that, overall, Order No. 636 will have a positive
impact on Enron and the natural gas industry as a whole. The
structural changes mandated by Order No. 636 will result in a more
competitive industry. The straight fixed variable rate design
included in Order No. 636 allows pipelines to recover in the demand
component of their rates all fixed costs allocated to firm
customers. Since a pipeline recovers demand costs regardless of
whether gas is ever transported, the straight fixed variable rate
design is expected to reduce the volatility of the revenue stream
to pipelines.
Enron's interstate pipelines have all successfully completed their
transitions under FERC Order No. 636, and have completely unbundled
their sales services from their transportation services. As
required by Order No. 636, Northern, Transwestern and Florida Gas
each has implemented a straight fixed variable rate design which
provides that all fixed costs allocated to firm customers,
including income taxes and return on equity, are to be received
through fixed monthly demand or capacity reservation charges which
are not a function of volumes transported. Under their respective
restructuring orders, Enron's interstate pipelines are entitled to
recover FERC Order No. 636 transition costs from customers.
Transition costs incurred of $168 million have been deferred
pending recovery from customers over varying time periods,
generally of up to five years. Future transition costs are subject
to ongoing negotiations and market factors. Enron believes that
the ultimate resolution of FERC Order No. 636 transition costs will
not have a material impact on Enron's financial position or results
of operations.
On October 28, 1993, the FERC issued a Notice of Public Conference
in Docket No. RM94-4-000 in order for the FERC to explore issues
such as the extent to which it should exercise NGA Sections 4 and
5 jurisdiction over the rates, terms and conditions for gathering
services performed by interstate pipelines and their affiliates,
production-area transportation rates and rate design, and the
proper treatment of interstate pipeline profits from the sale of
gathering systems to an affiliate or non-related entity. The FERC
has received written comments as well as conducted the technical
conference. Enron cannot determine at this time what effect, if
any, the ultimate action by the FERC on this matter will have.
The rates at which natural gas is sold in Texas to gas utilities
serving customers within an incorporated area and directly to
customers in rural and unincorporated areas are subject to the
original jurisdiction of the Railroad Commission of Texas. The
rates set by city councils or commissions for gas sold within their
jurisdiction may be appealed to the Railroad Commission.
Regulation of intrastate gas sales and transportation by the
Railroad Commission is governed by certain provisions of the Texas
Gas Utility Regulatory Act of 1983. The Railroad Commission also
regulates production activities and to some degree the operation of
affiliated special marketing programs.
Oil Pipeline Rates and Regulations
The North System and Cypress Pipeline of Enron Liquids Pipeline
Operating Limited Partnership (the "Partnership") are interstate
common carrier pipelines, subject to regulation by the FERC under
the Interstate Commerce Act ("ICA"). The ICA requires the
Partnership to maintain tariffs on file with the FERC, which
tariffs set forth the rates the Partnership charges for providing
transportation services on the interstate common carrier pipelines,
as well as the rules and regulations governing these services.
Environmental Regulations
Enron and its subsidiaries are subject to extensive federal, state
and local laws and regulations covering the discharge of materials
into the environment, or otherwise relating to the protection of
the environment, and which require expenditures for remediation at
various operating facilities and waste disposal sites, as well as
expenditures in connection with the construction of new facilities.
Enron believes that its operations and facilities are in general
compliance with applicable environmental regulations.
Environmental laws and regulations have changed substantially and
rapidly over the last 20 years, and Enron anticipates that there
will be continuing changes. The clear trend in environmental
regulation is to place more restrictions and limitations on
activities that may impact the environment, such as emissions of
pollutants, generation and disposal of wastes and use and handling
of chemical substances. Increasingly strict environmental
restrictions and limitations have resulted in increased operating
costs for Enron and other businesses throughout the United States,
and it is possible that the costs of compliance with environmental
laws and regulations will continue to increase. Enron will attempt
to anticipate future regulatory requirements that might be imposed
and to plan accordingly in order to remain in compliance with
changing environmental laws and regulations and to minimize the
costs of such compliance.
The Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), also known as the "Superfund" law,
requires payments for cleanup of certain abandoned waste disposal
sites, even though such waste disposal activities were undertaken
in compliance with regulations applicable at the time of disposal.
Under the Superfund legislation, one party may, under certain
circumstances, be required to bear more than its proportional share
of cleanup costs at a site where it has responsibility pursuant to
the legislation, if payments cannot be obtained from other
responsible parties. Other legislation mandates cleanup of certain
wastes at facilities that are currently being operated. States
also have regulatory programs that can mandate waste cleanup.
CERCLA authorizes the Environmental Protection Agency ("EPA") and,
in some cases, third parties to take actions in response to threats
to the public health or the environment and to seek to recover from
the responsible classes of persons the costs they incur. The scope
of financial liability under these laws involves inherent
uncertainties. Enron has entered into a consent decree with the
EPA and other potentially responsible parties ("PRPs") with respect
to the cleanup of one Superfund site. Enron has received requests
for information from the EPA and state agencies concerning what
wastes Enron may have sent to certain sites, and it has also
received requests for contribution from other parties with respect
to the cleanup of other sites. However, management does not
believe that any costs incurred in connection with these sites
(either individually or in the aggregate) will have a material
impact on Enron's financial condition or results of operations.
(See Item 3, "Legal Proceedings").
<PAGE>
OPERATING STATISTICS
The following table presents selected statistical
information for Enron's natural gas and liquid fuels business
segments as well as revenue data for all of Enron's businesses.
Natural gas volumes for the Gas Services Group exclude volumes
delivered on the Enron pipeline system. Revenue amounts are in
thousands of dollars.
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992 1991
<S> <C> <C> <C>
Natural Gas Volumes (Bcf/d)
Interstate Sales Volumes 0.61 0.79 1.06
Interstate Transportation Volumes 5.48 4.77 4.61
6.09 5.56 5.67
Gas Services Group Physical Volumes 4.89 3.02 2.71
Total 10.98 8.58 8.38
Liquid Fuels
Total NGL Production (MMgal) 1,334 1,296 1,153
Total NGL Marketing (MMgal) 3,152 4,568 3,881
</TABLE>
<TABLE>
Revenues by Business Segment
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Transportation and Operation
Natural Gas Sales
Unaffiliated $ 453,621 $ 504,720 $ 677,279
Intersegment 22,779 4,068 9,611
476,400 508,788 686,890
Transportation Services
Unaffiliated 751,896 671,520 619,125
Intersegment 35,841 44,443 67,009
787,737 715,963 686,134
Other Revenues
Unaffiliated 180,408 242,521 222,743
Intersegment 21,461 34,002 33,310
201,869 276,523 256,053
TOTAL 1,466,006 1,501,274 1,629,077
Gas Services
Natural Gas Sales
Unaffiliated 3,852,714 2,407,684 1,985,051
Intersegment 141,636 62,047 65,045
3,994,350 2,469,731 2,050,096
Natural Gas Liquids
Unaffiliated 802,292 1,017,316 792,034
Intersegment 69,963 89,788 31,716
872,255 1,107,104 823,750
Transportation Services
Unaffiliated 15,976 16,596 17,777
Intersegment 547 564 683
16,523 17,160 18,460
Other Revenues
Unaffiliated 721,139 364,492 106,520
Intersegment 31,500 (28) (16,133)
752,639 364,464 90,387
TOTAL 5,635,767 3,958,459 2,982,693
Gas Processing
Natural Gas Liquids
Unaffiliated 26,620 18,687 16,979
Intersegment 344,140 330,687 305,272
370,760 349,374 322,251
Other Revenues
Unaffiliated 31,205 47,293 50,271
Intersegment 42,836 30,356 23,958
74,041 77,649 74,229
TOTAL 444,801 427,023 396,480
International Gas and Power Services
Natural Gas Liquids
Unaffiliated 598,472 496,377 604,773
Intersegment 12,697 7,436 -
611,169 503,813 604,773
Other Revenues
Unaffiliated 152,903 368,318 418,225
Intersegment 6,516 3,093 7,778
159,419 371,411 426,003
TOTAL 770,588 875,224 1,030,776
Exploration and Production
Natural Gas Sales
Unaffiliated 364,643 229,338 147,488
Intersegment 280,363 257,680 256,797
645,006 487,018 404,285
Other Revenues
Unaffiliated 20,593 24,411 24,676
Intersegment 21,328 42,695 41,081
41,921 67,106 65,757
TOTAL 686,927 554,124 470,042
Intersegment Eliminations (1,031,607) (906,831) (826,127)
Total Revenues $7,972,482 $6,409,273 $5,682,941
</TABLE>
<PAGE>
CURRENT EXECUTIVE OFFICERS OF THE REGISTRANT
Name and Age Present Principal Position and Other Material
Positions Held During Last Five Years
Kenneth L. Lay (51) Chairman of the Board and Chief Executive
Officer since February 1986. President from
February 1989 to October 1990.
Richard D. Kinder (49) President and Chief Operating Officer since
October 1990. Vice Chairman of the Board
from December 1988 to October 1990, and
Chairman and Chief Executive Officer of Enron
Gas Pipeline Group from January 1989 to
October 1990. Executive Vice President and
Chief of Staff from August 1987 to December
1988.
Ronald J. Burns (40) Chairman and Chief Executive Officer
(Marketing and Supply), Enron Gas Services
Corp., since June 1993. Chairman and Chief
Executive Officer, Enron Pipeline and Liquids
Group from 1992 to June 1993. Chairman and
Chief Executive Officer, Enron Corp. Gas
Pipeline Group from October 1990 to October
1992. President, Enron Corp. Interstate
Pipeline Group from 1988 to October 1990.
Rodney L. Gray (41) Chairman and Chief Executive Officer, Enron
International Inc. since June 1993. Senior
Vice President, Finance and Treasurer from
October 1992 to June 1993. Vice President,
Finance and Treasurer from 1988 to October
1992.
Jeffrey K. Skilling (40) Chairman and Chief Executive Officer (Risk
Management and Power), Enron Gas Services
Corp., since June 1993. Chairman and Chief
Executive Officer of Enron Gas Services Corp.
from January 1991 to June 1993. Chairman and
Chief Executive Officer of Enron Finance Corp.
since August 1990; Partner, McKinsey &
Company, Consultants, from 1979 to August
1990.
Thomas E. White (50) Chairman and Chief Executive Officer of Enron
Operations Corp. since June 1993. Chairman
and Chief Executive Officer of Enron Power
Corp. since July 1991; Brigadier General,
United States Army, from 1988 to 1990;
Executive Assistant to Chairman of the Joint
Chiefs of Staff from 1989 to 1990.
Robert C. Kelly (47) Executive Vice President and Chief Strategy
Officer since July 1993. President of Enron
Emerging Technologies, Inc. since January
1994. Chairman and Chief Executive Officer
of Enron International Inc. from December
1992 to July 1993. Vice Chairman and Chief
Development Officer of Enron Power Corp.
from May 1989 to December 1992.
Edmund P. Segner,III (40) Executive Vice President and Chief of Staff
since October 1992. Senior Vice President,
Investor, Public & Government Relations
from October 1990 to October 1992. Vice
President, Public and Investor Relations
from February 1988 until October 1990.
James V. Derrick, Jr.(49) Senior Vice President and General Counsel
since June 1991. Partner, Vinson & Elkins
from January 1977 until June 1991.
Jack I. Tompkins (48) Senior Vice President and Chief Information,
Administrative and Accounting Officer since
October 1992. Senior Vice President and
Chief Financial Officer from January 1988
to October 1992. Partner, Arthur Andersen
& Co. from September 1981 until January 1988.
Kurt S. Huneke (40) Vice President, Finance and Treasurer since
July 1993; Executive Vice President, Finance
and Administration, Enron International Inc.,
from July 1992 to July 1993; Senior Vice
President and Chief Financial Officer, Enron
Europe Limited, from January 1991 to July
1992; Assistant Treasurer, Enron Corp.,
from February 1989 to January 1991.
Item 2. PROPERTIES
Gas Transmission and Liquid Fuels
Enron's natural gas facilities include approximately 44,000 miles of
transmission and gathering lines, 111 mainline compressor stations, four
underground gas storage fields and two liquefied natural gas storage
facilities. Other properties in which Enron and its subsidiaries have an
ownership interest or lease include 22 natural gas liquids extraction plants
in Texas, Louisiana, Wyoming, Kansas, Florida, New Mexico and North Dakota.
A large number of railroad tank and hopper cars, truck transports and bulk
vehicles are owned or leased and used for the delivery of liquids products.
Enron also owns interests in pipeline and related facilities associated with
its participation and investments in jointly-owned pipeline systems.
Substantially all the gathering and transmission lines of Enron are
constructed on rights-of-way granted by the apparent record owners of such
property. In many instances, lands over which rights-of-way have been
obtained are subject to prior liens which have not been subordinated to the
right-of-way grants. In some cases, not all of the apparent record owners
have joined in the right-of-way grants, but in substantially all such cases,
signatures of the owners of majority interests have been obtained. Permits
have been obtained from public authorities to cross over or under, or to
lay facilities in or along, water courses, county roads, municipal streets
and state highways, and in some instances, such permits are revocable at
the election of the grantor. Permits have also been obtained from railroad
companies to cross over or under lands or rights-of-way, many of which are
also revocable at the grantor's election. Some such permits require annual
or other periodic payments. In a few minor cases, property for pipeline
purposes was purchased in fee.
Most of Enron's transmission subsidiaries have the right of eminent
domain to acquire rights-of-way and lands necessary for their pipelines and
appurtenant facilities.
Enron's gas processing plants and regulator and compressor stations and
offices are located on tracts of land owned by it in fee or leased from
others.
In the case of oil and gas leases, definitive examination and curing of
title defects are usually deferred until such time as funds are expended in
connection with drilling of such properties.
Enron is of the opinion that it has generally satisfactory title to its
rights-of-way and lands used in the conduct of its businesses, subject to
liens for current taxes, liens incident to operating agreements and minor
encumbrances, easements and restrictions which do not materially detract
from the value of such property or the interest of Enron therein or the use
of such properties in such businesses.
Oil and Gas Exploration and Production Properties and Reserves
Reserve Information
For estimates of EOG's net proved reserves and proved developed reserves
of natural gas and crude oil, see Note 20 to the Consolidated Financial
Statements.
Estimates of proved and proved developed reserves at December 31, 1991,
1992 and 1993 were based on studies performed by EOG's engineering staff for
reserves in both the United States and Canada. Opinions by DeGolyer and
MacNaughton, independent petroleum consultants, for the years ended December
31, 1991, 1992 and 1993 covering producing areas containing 73%, 69% and 65%,
respectively, of proved reserves of EOG on a net-equivalent-cubic-feet-of-gas
basis, indicate that the estimates of proved reserves prepared by EOG's
engineering staff for the properties reviewed by DeGolyer and MacNaughton,
when compared in total on a net-equivalent-cubic-feet-of-gas basis, do not
differ materially from the estimates prepared by DeGolyer and MacNaughton.
Such estimates by DeGolyer and MacNaughton in the aggregate varied by not
more than 5% from those prepared by EOG's engineering staff. All reports
by DeGolyer and MacNaughton were developed utilizing geological and
engineering data provided by EOG.
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. The reserve data set forth in Note 20 to the Consolidated
Financial Statements represents only estimates. Reserve engineering is a
subjective process of estimating underground accumulations of natural gas
and liquids, including crude oil, condensate and natural gas liquids. 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 ultimately recovered. The meaningfulness
of such estimates is highly dependent upon the accuracy of the assumptions
upon which they were based.
In general, the volume of production from oil and gas properties owned
by EOG declines as reserves are depleted. Except to the extent EOG acquires
additional properties containing proved reserves or conducts successful
exploration and development activities, or both, the proved reserves of EOG
will decline as reserves are produced. Volumes generated from future
activities of EOG are therefore highly dependent upon the level of success
in acquiring or finding additional reserves and the costs incurred in doing
so.
EOG's estimates of reserves filed with other federal agencies agree with
the information set forth in Note 20.
Producing Oil and Gas Wells
The following summary reflects EOG's ownership at December 31, 1993 in
gas wells in 316 fields and oil wells in 75 fields located in Texas,
offshore Texas and Louisiana in the Gulf of Mexico, Oklahoma, New Mexico,
Utah, Wyoming, California and various other states, Canada and Trinidad.
"Net" is obtained by multiplying "Gross" by EOG's working interests in the
properties. Gross oil and gas wells include 229 with multiple completions.
<TABLE>
<CAPTION>
Productive Productive Total
Gas Wells Oil Wells Productive Wells
Gross Net Gross Net Gross Net
<C> <C> <C> <C> <C> <C>
4,674 3,170 884 527 5,558 3,697
</TABLE>
<PAGE>
Acreage
The following table summarizes EOG's developed and undeveloped acreage
at December 31, 1993. Excluded is acreage in which EOG's interest is
limited to owned royalty, overriding royalty and other similar interests.
<TABLE>
<CAPTION>
Developed Undeveloped Total
Gross Net Gross Net Gross Net
<S> <C> <C> <C> <C> <C> <C>
United States
Texas 411,223 306,705 252,543 229,348 663,766 536,053
Federal Offshore 199,053 96,719 280,701 253,233 479,754 349,952
Wyoming 164,836 109,528 211,414 159,676 376,250 269,204
Oklahoma 102,495 58,724 45,640 39,136 148,135 97,860
Utah 58,540 47,032 32,772 27,435 91,312 74,467
New Mexico 85,294 38,227 58,846 32,713 144,140 70,940
Kansas 4,148 4,048 27,402 26,029 31,550 30,077
California 13,235 11,680 12,897 12,182 26,132 23,862
Colorado 10,111 1,490 29,715 14,318 39,826 15,808
Mississippi 1,940 1,852 7,876 7,178 9,816 9,030
Montana 1,301 1,169 8,250 6,437 9,551 7,606
North Dakota 2,395 961 1,509 1,228 3,904 2,189
Louisiana 946 797 1,445 712 2,391 1,509
Other 163 132 861 841 1,024 973
Total 1,055,680 679,064 971,871 810,466 2,027,551 1,489,530
Canada
Alberta 329,677 145,804 227,872 141,602 557,549 287,406
Saskatchewan 140,929 121,791 179,818 179,818 320,747 301,609
Manitoba 11,611 9,661 3,260 2,900 14,871 12,561
British Columbia 656 164 - - 656 164
Total Canada 482,873 277,420 410,950 324,320 893,823 601,740
Other International
Australia - - 9,600,000 9,600,000 9,600,000 9,600,000
Trinidad 975 926 78,076 74,172 79,051 75,098
United Kingdom - - 199,855 49,964 199,855 49,964
Total Other
International 975 926 9,877,931 9,724,136 9,878,906 9,725,062
Total 1,539,528 957,410 11,260,752 10,858,922 12,800,280 11,816,332
</TABLE>
<PAGE>
Drilling and Acquisition Activities
During each of the years ended December 31, 1993, 1992 and 1991, EOG
spent approximately $430.1 million, $395.7 million and $254.8 million,
respectively, for exploratory and development drilling and acquisition of
leases and producing properties. EOG drilled, participated in the drilling
of or acquired wells as set out in the table below for the periods indicated:
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992 1991
Gross Net Gross Net Gross Net
<S> <C> <C> <C> <C> <C> <C>
Development Wells Completed
Gas 579 469.10 486 401.06 201 170.58
Oil 49 22.51 32 22.50 15 12.39
Dry 70 54.43 69 60.17 33 24.29
Exploratory Wells Completed
Gas 28 21.43 18 14.47 17 12.37
Oil 5 3.40 5 4.09 2 1.39
Dry 42 29.43 20 16.27 22 15.86
Total 773 600.30 630 518.56 290 236.88
Wells in Progress at End of
Period 82 61.09 82 60.75 32 21.60
Total 855 661.39 712 579.31 322 258.48
Wells Acquired
Gas 44 26.44(*) 641 597.29(*) 100 70.10(*)
Oil - 12.80(*) 28 25.80(*) 5 4.10(*)
Total 44 39.24 669 623.09 105 74.20
<FN>
(*) Includes acquisition of additional interests in certain wells in which
EOG previously held an interest.
</TABLE>
All of EOG's drilling activities are conducted on a contract basis with
independent drilling contractors. EOG owns no drilling equipment.
Item 3. LEGAL PROCEEDINGS
Enron is a party to various claims and litigation, the significant
items of which are discussed below. Although no assurances can be given,
Enron believes, based on its experience to date and after considering
appropriate reserves that have been established, that the ultimate
resolution of such items, individually or in the aggregate, will not have
a materially adverse impact on Enron's financial position or results of
operations.
Litigation
TransAmerican Natural Gas Corporation (TransAmerican) has filed
a petition in the 93rd District Court, Hidalgo County, Texas, against
Enron Corp. and EOG alleging breach of confidentiality agreements,
misappropriation of trade secrets and unfair competition, with
specific reference to four tracts in Webb County, Texas, which EOG
leased for their oil and gas exploration and development potential.
TransAmerican seeks actual damages of $100 million and exemplary damages
of $300 million. EOG has filed claims against TransAmerican and its sole
shareholder alleging fraud, negligent misrepresentation and breach of
state antitrust laws. Trial is set for September 12, 1994. Although no
assurances can be given, Enron believes that TransAmerican's claims are
without merit and that the ultimate resolution of this matter will not
have a materially adverse effect on its financial position or results of
operations.
A pipeline company in which an Enron affiliate has a minority
interest and for which an Enron affiliate has served as operator has
filed a petition against Enron and certain affiliates alleging an
unspecified amount of damages relating to the operation of such pipeline
company. Based upon information currently available, it is not possible
to predict the outcome of such litigation; however, Enron believes that
the results will not have a materially adverse effect on Enron's
financial position or results of operations.
Like other companies in the natural gas industry, Enron has
certain gas purchase contracts which provide for take-or-pay obligations
and fixed prices. Certain suppliers have made claims, either formally or
informally, for payment under take-or-pay provisions. At December 31,
1993, amounts of pending take-or-pay claims and litigation are not
material.
Peruvian Operations
During 1985, the Peruvian government unilaterally cancelled
certain exploration and production agreements between the government-
owned oil company and Belco Petroleum Corporation of Peru (BPCP), a
wholly-owned subsidiary of Enron, and subsequently nationalized the
operations of BPCP. Enron filed claims with its insurers in connection
with the nationalization and in February 1989, the insurers paid Enron
approximately $162 million. On September 21, 1993, the Peruvian
government signed a settlement agreement with American International
Group, Inc. and BPCP which will allow Enron to recover its remaining
investment of approximately $33 million.
Environmental Matters
Enron is subject to extensive Federal, state and local
environmental laws and regulations. These laws and regulations require
expenditures in connection with the construction of new facilities, the
operation of existing facilities and for remediation at various operating
sites. The implementation of the Clean Air Act Amendments is expected to
result in increased operating expenditures. The related future cost is
indeterminable, as many of the rules implementing the Clean Air Act's
requirements have not yet been finalized. However, any increased
operating expenses are not expected to have a material impact on Enron's
financial position or results of operations.
During May 1992, Enron entered into a Consent Decree with the
EPA concerning the cleanup of the Peoples Natural Gas Superfund Site in
Dubuque, Iowa, where a coal gasification plant had operated during the
first half of this century. The EPA had claimed that Enron was a PRP
because a predecessor company of Enron had purchased the site in the late
1950's after coal gas operations ceased, and had conducted surface
operations there, including the dismantling of buildings. In the second
quarter of 1992, Enron recorded the expense and related liability for
these cleanup costs and under the Consent Decree agreed to make five
equal, annual payments of $590,000. Two of such installments have been
paid and the third installment is due and payable in June 1994.
In addition, Enron has received requests for information from
the EPA and state environmental agencies inquiring whether Enron has
disposed of materials at other waste disposal sites. Enron has also
received requests for contribution from other parties with respect to the
cleanup of other sites. Enron may be required to share in the costs of
the cleanup of some of these sites. However, based upon the amounts
claimed and the nature and volume of materials sent to sites at which
Enron has an interest, management does not believe that any potential
costs incurred in connection with these notices and third party claims,
either taken individually or in the aggregate, will have a material
impact on Enron's financial position or results of operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
the fourth quarter of 1993.
<PAGE>
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Common Stock
On August 16, 1993, Enron effected a two-for-one common stock split
on all issued common stock in the form of a stock dividend. The
following table indicates the high and low sales prices for the common
stock of Enron as reported on the New York Stock Exchange (consolidated
transactions reporting system), the principal market in which the
securities are traded, and dividends paid per share for the calendar
quarters indicated (1992 sales prices and dividends paid per share have
been restated to reflect the stock split). The common stock is also
listed for trading on the Midwest Stock Exchange and the Pacific Stock
Exchange, as well as the London Stock Exchange and Frankfurt Stock
Exchange.
<TABLE>
<CAPTION>
1993 1992
High Low Dividends High Low Dividends
<S> <C> <C> <C> <C> <C> <C>
First Quarter............. $31 3/4 $22 1/8 $.175 $19 $15 1/4 $.1625
Second Quarter............ 31 1/4 26 7/8 .175 22 16 7/8 .1625
Third Quarter............. 36 3/4 32 1/8 .175 24 1/2 20 1/4 .1625
Fourth Quarter............ 37 27 .1875 25 22 .175
</TABLE>
$10.50 Cumulative Second Preferred Convertible Stock
The following table indicates the high and low sales prices for the
$10.50 Cumulative Second Preferred Convertible Stock ("Second Preferred
Stock") of Enron as reported on the New York Stock Exchange (consolidated
transactions reporting system), the principal market in which the
securities are traded, and dividends paid per share for the calendar
quarters indicated. The Second Preferred Stock is also listed for
trading on the Midwest Stock Exchange.
<TABLE>
<CAPTION>
1993 1992
High Low Dividends High Low Dividends
<S> <C> <C> <C> <C> <C> <C>
First Quarter............. $413 $306 1/2 $2.625 $238 1/2 $215 3/4 $2.625
Second Quarter............ 419 7/8 388 1/4 2.625 288 3/8 237 1/2 2.625
Third Quarter............. 500 3/4 445 2.625 331 318 1/4 2.625
Fourth Quarter............ 480 375 3/8 2.625 335 3/8 307 1/4 2.625
</TABLE>
At December 31, 1993, there were approximately 27,000 record holders
of common stock, and 276 record holders of Second Preferred Stock.
Other information required by this item is set forth on page 31
under Item 6 -- "Selected Financial Data (Unaudited) - Common Stock
Statistics" for the years 1988-1993.
<PAGE>
Item 6
SELECTED FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues (In Millions) $ 7,972 $ 6,409 $ 5,683 $5,428 $4,618 $4,526
Total Assets (In Millions) $11,504 $10,312 $10,070 $9,849 $9,105 $8,735
Common Stock Statistics(1)
Income before extraordinary items(2)
Total (in millions) $386.5 $328.8 $232.1 $202.2 $226.1 $130.2
Per share - primary $1.55 $1.39 $1.03 $0.88 $1.01 $0.50
Per share - fully diluted $1.46 $1.30 $0.98 $0.86 $0.97 $0.50
Earnings on common stock(2)
Total (in millions) $369.6 $284.1 $207.4 $177.2 $201.0 $72.9
Per share - primary $1.55 $1.29 $1.03 $0.88 $1.01 $0.39
Per share - fully diluted $1.46 $1.21 $0.98 $0.86 $0.97 $0.39
Dividends
Total (in millions) $170.5 $148.2 $127.0 $125.0 $124.7 $117.5
Per share $0.71 $0.66 $0.63 $0.62 $0.62 $0.62
Shares outstanding (in millions)(3)
Actual at year end 241.6 237.2 202.4 201.8 201.4 189.4
Average for the year 239.0 220.0 202.1 201.6 199.4 189.4
Capitalization (in millions)
Long-term debt $2,661 $2,459 $3,109 $2,983 $3,184 $3,335
Preferred stock of subsidiary 214
Redeemable preferred stock 102
Minority interest 196 179 101 97 93 3
Shareholders' equity 2,623 2,518 1,901 1,838 1,767 1,618
Total capitalization $5,694 $5,156 $5,111 $4,918 $5,044 $5,058
<FN>
(1) All share and per share amounts reflect two-for-one stock split paid in August 1993.
(2) The impact of the $54.0 million ($.23 per primary share) corporate statutory income tax
rate adjustment is excluded from the 1993 computations.
(3) Excludes 7.5 million shares of common stock held by Enron Corp. Flexible Equity Trust.
</TABLE>
<PAGE>
Item 7. Enron Corp. and Subsidiaries
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following review of the results of operations and
financial condition of Enron Corp. and subsidiaries (Enron)
should be read in conjunction with the Consolidated
Financial Statements.
Results of Operations
Consolidated Net Income
Enron's net income for 1993 was $387 million, exclusive of a
primarily non-cash charge of $54 million to adjust the
deferred tax liability for the increase in the corporate
Federal statutory income tax rate from 34% to 35%, compared
to $306 million and $232 million for 1992 and 1991,
respectively. Net income for all three years reflects
improved income before interest, minority interest and
income taxes as compared to the applicable preceding year.
Net income for 1993 includes a $64 million pretax gain from
the sale of limited partnership units in Northern Border
Partners, L.P., substantially offset by the establishment of
reserves for litigation and other contingencies. The net
income for 1993 also includes $13 million in pretax gains
from the sales of oil and gas properties and a $10 million
net share of a deferred tax reduction at Enron Oil & Gas
Company (EOG).
Net income for 1992 includes a $60 million nontaxable gain
from the sale of stock by EOG, a $52 million pretax gain
from the sale of Enron's remaining investment in Mobil
Corporation common stock (Mobil stock), $6 million in pretax
gains from the sales of oil and gas properties and an $11
million gain on the sale of investments. These amounts were
partially offset by a $57 million pretax charge reflecting
the establishment of reserves for litigation and other
contingencies and a $23 million extraordinary charge
relating to the early retirement of high coupon debt.
Net income for 1991 includes a $28 million pretax gain from
the sale of a portion of Enron's investment in Mobil stock,
a $24 million pretax gain from two favorable litigation
settlements, $15 million in pretax gains from the sales of
oil and gas properties and a $14 million pretax gain from
the sale of certain gas processing assets.
Primary earnings per share of common stock was $1.32 in
1993, after a $0.23 per share charge applicable to the $54
million tax rate change adjustment, as compared to $1.29 and
$1.03 in 1992 and 1991, respectively.
Income Before Interest, Minority Interest and Income Taxes
The following table presents income before interest,
minority interest and income taxes (IBIT) for each of
Enron's operating segments:
<TABLE>
<CAPTION>
(In Millions) 1993 1992 1991
<S> <C> <C> <C>
Transportation and Operation $382 $378 $343
Gas Services 169 147 71
Gas Processing 28 56 94
International Gas and Power Services 132 33 69
Exploration and Production 122 102 75
Corporate and Other (35) 51 63
Total $798 $767 $715
</TABLE>
Transportation and Operation
The transportation and operation segment includes Enron's
regulated natural gas pipelines, construction, management
and operation of pipelines, liquids plants and power
facilities, Enron's crude oil marketing and transportation
operations conducted by EOTT Energy Corp. (EOTT) and Enron's
investment in liquids pipeline operations. The segment
realized a $4 million increase in IBIT in 1993 as
compared to 1992. The increase was due primarily to
increases in IBIT realized by the regulated natural gas
pipelines and the crude oil marketing and transportation operations,
offset by declines in earnings from the liquids pipeline
operations due to the sale of a significant portion of these
operations in August 1992 and reduced revenues on completed
construction projects. During 1992, the transportation and
operations segment's IBIT increased 10% as compared to 1991
reflecting higher regulated natural gas pipeline earnings
and increased revenues recognized in connection with the
construction of various power projects. These increases
were offset by lower earnings from EOTT and from liquids
pipeline operations. The following discussion analyzes the
significant changes in the various components of income
before interest, minority interest and income taxes for the
transportation and operation segment.
Revenues
Regulated Natural Gas Pipelines
Revenues of the regulated natural gas pipelines increased
approximately $60 million (5%) during 1993 after declining
$120 million (9%) in 1992 as compared to the applicable
preceding year. The increase in revenues reflects increased
transportation revenues recognized by Northern Natural Gas
Company (Northern) primarily as a result of higher commodity
volumes and increased capacity utilization, combined with
management fees earned in connection with the operation of
the Argentina pipeline in which Enron owns a 17.5% interest.
These increases were offset by reduced sales revenues for
both Northern and Transwestern Pipeline Company
(Transwestern) as those companies are now primarily
transporters of natural gas.
During 1992, revenues of the regulated natural gas pipeline
companies declined primarily as a result of lower sales
revenues realized by Northern reflecting a 27% decline in
sales volumes due to the shifting of customers from sales
service to transport service and lower revenues earned by
Transwestern. The decline in Transwestern's revenues
reflects lower transport rates as a result of the completion
by Transwestern of the recovery of certain transition costs
in early 1992. These declines were partially offset by
higher transportation volumes resulting from Transwestern's
mainline expansion and San Juan extension which became
operational at the end of the first quarter of 1992. In
addition, Northern's transportation revenues increased 17%
during 1992 as a result of higher volumes.
Sales and transportation volumes were as follows:
<TABLE>
<CAPTION>
Billion British Thermal Sales*
Units per Day - (Bbtu/d) 1993 1992 1991
<S> <C> <C> <C>
Northern 342 495 682
Transwestern 20 33 80
<FN>
*Includes intercompany amounts.
</TABLE>
<TABLE>
<CAPTION>
Billion British Thermal Transportation*
Units per Day - (Bbtu/d) 1993 1992 1991
<S> <C> <C> <C>
Northern 4,030 3,740 3,691
Transwestern 1,049 867 785
<FN>
*Includes intercompany amounts.
</TABLE>
Construction and Management Revenues
Revenues earned in connection with the construction and
operation of power projects totaled $27 million in 1993 as
compared to $52 million and $23 million during 1992 and
1991, respectively. The decline during 1993 reflects
reduced construction revenues in connection with the
Teesside power project in the United Kingdom as a result of
the completion of that project in March 1993, offset by
revenues earned in connection with the sales of fuel to a
joint venture power project in Guatemala and fees earned in
connection with the management and construction of the
Milford power project in the United States.
Liquids Pipeline and EOTT
Revenues earned in connection with the liquids pipeline
operations declined in 1993 and 1992 primarily as a result
of the sale of those assets to Enron Liquids Pipeline, L.P.,
a master limited partnership formed in August 1992. Net
revenues from EOTT increased approximately 39% during 1993
as a result of higher product margins.
Cost of Gas and Other Products Sold
The cost of gas and other products sold by the
transportation and operation segment decreased by less than
1% during 1993 as compared to 1992 primarily as a result of
higher average per unit gas purchase costs being offset by
lower purchase volumes. During 1992, the cost of gas and
other products sold by the transportation and operations
segment declined 19% as compared to 1991 due primarily to a
27% decline in Northern's sales volumes combined with a 59%
reduction in Transwestern's sales volumes. These declines
were offset in part by higher average per unit gas purchase
costs.
Operating Expenses
Operating expenses in the transportation and operation
segment declined 10% during 1993 as compared to 1992. The
decline reflects lower expenses of the regulated natural gas
pipelines as a result of efficiencies gained in connection
with system modernization projects, combined with a decline
in operating expenses due to the previously discussed sale
of the liquids pipeline operations. During 1992, operating
expenses of the transportation and operation segment
declined by 10% as compared to 1991 primarily as a result of
lower operating expenses of the regulated pipeline group as
a result of lower transmission and compression expenses
reflecting lower sales volumes and the sale of the liquids
pipeline operations.
Amortization of deferred contract reformation costs declined
by 12% during 1993 and 19% during 1992 as compared to the
applicable preceding year primarily as a result of
Transwestern's completion of the recovery of certain
transition costs in early 1992.
Depreciation expense for the transportation and operation
segment increased $5 million (4%) during 1993 as compared to
1992 primarily as a result of a 10% increase in depreciation
expense recognized by the regulated natural gas pipeline
group reflecting Northern's adjustment in 1993 of
accumulated depreciation in accordance with a Federal Energy
Regulatory Commission (FERC) ruling. The increase in
depreciation by Northern was partially offset by a decline
in depreciation recorded for the liquids pipeline
operations.
Other Income and Deductions
Equity in earnings of unconsolidated subsidiaries declined
by $14 million (39%) during 1993 as compared to 1992
reflecting reduced earnings from Northern Border Pipeline
Company (Northern Border) as a result of Enron's
contribution of its investment in Northern Border to
Northern Border Partners, L.P., a master limited partnership
(the Partnership) and Enron's subsequent sale of a portion
of its interest in the Partnership in an underwritten public
offering (see Note 9 to the Consolidated Financial Statements).
Additionally, during 1993 equity in earnings from Mojave Pipeline
Company (Mojave) decreased as a result of the sale of Enron's
investment in Mojave during 1993. Equity in earnings of
unconsolidated subsidiaries of the transportation and operation
segment remained virtually unchanged in 1992 as compared to 1991
as increased earnings from Northern Border were offset by lower
earnings from Citrus Corp. and Mojave.
Outlook
Transportation and Operation
The transportation and operation segment should continue to
provide stable earnings and cash flows during 1994. Full
implementation of FERC Order 636 and the successful
settlement of all significant regulatory issues by the
regulated natural gas pipelines during 1993 should allow for
a constant and reliable stream of cash flow. Additionally,
the segment will actively promote engineering and
construction services to provide incremental earnings and
will seek to selectively monetize assets and reinvest
proceeds in system modernization projects and reduce its
overall cost structure. Expansion of the Florida Gas
pipeline system should also provide growth
opportunities for the transportation and operations segment.
In January 1994, Enron filed a registration statement with
the Securities and Exchange Commission to sell units in a
master limited partnership which will contain substantially
all of the operations and assets of EOTT. EOTT will serve
as general partner and own a substantial interest in the new
limited partnership (see Note 3 to the Consolidated
Financial Statements).
Gas Services
Enron's Gas Services segment (EGS) had a $22 million (15%)
increase in income before interest, minority interest and
income taxes in 1993 as compared to 1992. The increase was
due primarily to increased production payments arranged,
successful long-term contracting efforts and the continued
growth of the physical and financial risk management
services provided to the natural gas business. Offsetting
these increases were declines in earnings associated with
EGS's North American power ventures and natural gas liquids
(NGL) marketing activities. Each year's results also
include earnings from the Sithe Energies contract (Sithe).
The Sithe contract, which was signed in 1992, provides for
Enron Power Services Inc. to deliver approximately 1.5
trillion cubic feet of gas over the next 20 years (five
years on a fixed-price basis) to fuel Sithe's independent
power project in upstate New York. Income before interest,
minority interest and income taxes increased $76 million
(107%) in 1992 as compared to 1991 due primarily to long-
term contracting and production payment activities.
Statistics for the gas services segment are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
Physical and Notional Sales (Bbtu/d)*
<S> <C> <C> <C>
Firm 4,310 2,632 1,593
Interruptible 828 893 1,597
Financial Settlements (notional) 5,027 1,536 424
Total 10,165 5,061 3,614
Transportation Volumes (Bbtu/d)* 571 536 498
Liquids Marketing Volumes
NGL Marketed (MMgal) 2,506 3,388 2,512
Gross Margin ($/Gal) $0.008 $0.009 $0.010
MTBE
Marketing Volumes (MMgal) 254 28 -
Owned Production (MMgal) 128 15 -
Gross Margin ($/Gal) $0.197 $0.175 $ -
Production Payments and Financings Arranged
(in millions) $ 413 $ 516** $ 121
Fixed Price Contract Originations (TBtue) 3,781 2,165 964
<FN>
*Includes intercompany amounts.
**Includes $327 million of production payments promoted for EOG.
</TABLE>
EGS's strategy is to provide predictable pricing, reliable
delivery and low cost capital to its customers. EGS
provides these services through a variety of financial
instruments including forward contracts, swap agreements,
options, futures and other contractual commitments.
These services can be categorized into four business lines:
Gas, Power, Finance and Liquids. The following discussion
analyzes the contributions to income before interest,
minority interest and income taxes and the future outlook
for each of the businesses.
Gas. The Gas operations include price risk management and
origination activities as well as the physical natural gas
trading and transportation activities of Enron Gas
Marketing, Houston Pipe Line Company, Enron Access, the
Louisiana Resources companies and the Canadian gas supply
and marketing operations. The earnings from these
activities increased 30% in 1993 primarily as a result of
increases in sales volumes. The volume increase is
primarily attributable to continued growth in the
derivatives business, the September 1992 acquisition of
Enron Access, the April 1993 acquisition of Louisiana
Resources and expansion into the Canadian market. The 1993
results also include earnings from significant fixed and
index-priced contract originations and management of the
existing contract portfolio. Earnings during 1992 included
fixed price originations and earnings from the marketing and
trading activities and was virtually unchanged as compared
to 1991.
During 1994, EGS anticipates continued strong performance
from its gas business. Growth in the physical and financial
trading activities is expected despite continued competition
from financial and industry companies, particularly in the
derivatives area. Additionally, contract originations
should increase as the impact of FERC Order 636 becomes more
evident.
Power. EGS's Power business includes activities in North
America such as providing natural gas contract services to
the power industry; managing, acquiring and developing power-
related assets and joint ventures; and marketing and
supplying electricity. Power's earnings declined 15% during
1993 due primarily to the inclusion in 1992 of earnings
associated with the Richmond and Milford power projects.
The 1993 and 1992 results also included earnings related to
the gas forward sales contract with Sithe. Earnings in 1993
and 1992 also included significant contract originations
involving sales of gas to other power generation facilities.
The 1992 results were significantly higher than 1991
reflecting the initiation of contract origination
activities.
The Power operations will benefit in 1994 from the
opportunities being created in the power marketing area as a
result of the continuing regulatory and economic changes in
the electric industry. During 1994, EGS expects to compete
as an independent marketer of electricity.
Additionally, EGS will aggressively continue marketing of
natural gas to independent power projects as well as
electric utilities converting to natural gas in response to
the Clean Air Act of 1990.
Finance. Enron Finance Corp. (EFC) secures natural gas
supplies from independent producers through a variety of
financial transactions, primarily volumetric production
payments. EFC arranges these transactions through financial
entities and provides related price risk management
services. Additionally, EGS purchases the natural gas and
crude oil associated with these transactions. EFC's
earnings increased 50% in 1993 due primarily to increased
non-affiliated production payments and financings arranged.
EFC's earnings increased during 1992 as compared to 1991 due
to increased production payment activities. From inception
through December 31, 1993, production payments and
financings arranged total over $1 billion.
In 1994, EFC expects continued growth in its business
resulting primarily from offerings of innovative alternative
financing to producers. This activity will include
production payments, debt and equity financings, as well as
other products. During 1993, Joint Energy Development
Investments, a limited partnership, was formed
comprised of an EGS subsidiary as general partner and the
California Public Employees Retirement System (CalPERS) as
limited partner. The partnership will provide significant
capital for energy investments.
Liquids. The Liquids business of EGS includes the North
American natural gas liquids (NGL) marketing activities and
the Clean Fuels business which consists of the methanol and
methyl tertiary butyl ether (MTBE) businesses. Liquids
earnings were virtually unchanged from 1992 to 1993.
Earnings from the Clean Fuels business increased as a result
of higher MTBE volumes and the impact of reflecting
contractual commitments at market value. The Clean Fuels
increase was partially offset by a decrease in the NGL
marketing results due to lower volumes and margins. Liquids
earnings declined 40% from 1991 to 1992 due
primarily to expenses associated with the start-up of the
Clean Fuels business and the impact of lower NGL prices.
During 1994, EGS's Liquids business expects to improve its
NGL marketing results by expanding to provide derivative
products in that area. Additionally, in the MTBE business,
EGS plans to continue development of its merchant business
by actively marketing MTBE, including long-term and fixed
margin-based pricing terms. Although current MTBE prices
continue to be weak, market conditions are expected to
improve as the Clean Air Act of 1990 mandates the increased
use of reformulated gasoline (a primary market for MTBE).
Other. EGS's net unallocated expenses such as rent, systems
expenses and other support group costs increased 27% in 1993
as compared to 1992 due primarily to continued
expansion into new markets, system upgrades and the
generally increased level of activity. Expenses increased
45% from 1991 to 1992 due also to increased activity
and establishment of certain contingency reserves.
Gas Processing
The income before interest and taxes of the gas processing
segment totaled $28 million in 1993 as compared to $56
million in 1992 and $94 million in 1991. The declines in
both 1992 and 1993 as compared to the applicable preceding
years were attributable primarily to lower processing
margins reflecting higher natural gas feedstock prices and
lower product prices. Volume and price statistics for the
gas processing segment (including intercompany amounts) are
detailed below:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Total Production Volumes (MMgal) 1,334 1,296 1,153
Gross Margin (per gal.) $0.089 $0.112 $0.163
Product Prices
Average at Mt. Belvieu (cents/gallon)
Ethane 21.09 23.64 22.32
Propane 31.24 32.06 33.95
Normal Butane 36.52 39.17 42.44
Isobutane 40.09 46.39 47.21
Natural Gasoline 40.97 45.51 49.60
</TABLE>
Revenues
Revenues of the gas processing segment increased 4% during
1993 after an increase of 8% during 1992 as compared to the
applicable preceding year. In both 1993 and 1992, the
increase in revenues was primarily caused by increased
production volumes partially offset by reduced product
prices.
Costs and Expenses
The cost of products sold by the gas processing segment
increased 22% in 1993 as compared to 1992 and 20% in 1992 as
compared to 1991. The increases in both years were
attributable to higher natural gas feedstock prices combined
with higher production volumes. The increases in cost of
products sold coupled with reduced product prices resulted
in declines in gross margin of the domestic gas processing
segment of 48% in 1993 and 18% in 1992.
Other Income and Deductions
Other income increased $23 million during 1993 as compared
to 1992 primarily as a result of gains realized on the sales
of certain coal handling and NGL assets.
Outlook
In 1994, Enron plans to mitigate the market risk inherent in
the gas processing business through hedging techniques.
Additionally, cost cutting and streamlining actions have
recently been completed, positioning the business to
maximize earnings opportunities.
International Gas and Power Services
Enron's international gas and power services segment
includes its international power, pipeline and natural gas liquids
marketing operations. International power operations
include the development and promotion of power and natural
gas projects worldwide. Income before interest and
taxes for the international gas and power services group
totaled $132 million during 1993, $33 million in 1992 and
$69 million in 1991. The increase in IBIT between 1992 and
1993 and the decline between 1991 and 1992 primarily
reflects the promotion and development activities of its
power operations. The 1993 increase also reflects earnings
from the Argentina pipeline operations acquired in the fourth
quarter of 1992.
Revenues
Revenues of the international gas and power services segment
declined 12% during 1993 as compared to 1992 primarily as a
result of decreased revenues earned by the international gas
liquids marketing operations. These declines were caused by
a 45% decline in marketing volumes as compared to the prior
year, reflecting reduced spot market activity. The decline
in liquids marketing revenues was partially offset by a $102
million increase in revenues in the power operations.
The increase reflects revenues earned in connection with the
promotion and development of liquids and power projects of
which approximately $55 million is related to revenues
earned in connection with the promotion and sale of liquids
processing facilities at Teesside.
During 1992, revenues of the international gas and power
services segment declined 15% as compared to 1991 primarily
as a result of lower liquids marketing and power revenues.
Liquids marketing revenues declined by 13% reflecting a 14%
decline in marketing volumes. Power revenues declined $46
million (87%) primarily as a result of promotion and
development revenues earned in connection with the Teesside
power project in 1991.
Costs and Expenses
The cost of gas and other products sold by the international
gas and power services segment declined by 24% in 1993 as
compared to 1992 and reflected the previously mentioned
decline in international liquids marketing volumes.
Operating expenses increased $20 million (40%) during 1993
as compared to 1992 primarily as a result of higher
operating expenses incurred in connection with increased
activities in the power operations area.
Operating income for the segment increased $69 million during 1993 as
compared to 1992 as a result of the previously mentioned
successful power development and promotion activities and
improved margins earned by the international liquids marketing
operations reflecting a reduction in spot market transactions which
negatively impact margin. Operating income declined by $45
million during 1992 as compared to 1991 primarily as a
result of the recognition in 1991 of promotion and
development revenues earned in connection with the Teesside
power project.
Other Income and Deductions
Equity in earnings of unconsolidated subsidiaries of the
international gas and power services segment increased $36
million during 1993 as compared to 1992 primarily as a
result of $23 million in earnings from the Argentina pipeline
project and $12 million in earnings from the Teesside power
project which was placed in commercial operation during the
first quarter of 1993. Other income, net, declined $7 million
during 1993 primarily as a result of lower interest income earned by the
power operations in 1993 as compared with 1992 combined with
gains on asset sales realized by Enron's operations in South
America (Enron Americas) during 1992. Other income
increased $8 million during 1992 as compared to 1991
primarily as a result of the gain on asset sales realized by
Enron Americas.
Outlook
The objective of the international gas and power services
segment is to deliver Enron's extensive product line to the
international marketplace including Enron's product concepts
in the areas of marketing and risk management of natural gas
based products. Growth opportunities in that market should
result from the current and projected high demand for
electrical power generation, the under utilization of
natural gas reserves throughout the world and increased
environmental awareness.
Exploration and Production
Income before interest, minority interest and income taxes
for EOG increased $20 million (20%) during 1993 and $27
million (36%) during 1992 as compared to the applicable
preceding year due primarily to higher natural gas prices
and volumes, and lower per unit operating costs.
Volume and price statistics are as follows (including
intercompany amounts):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Wellhead Delivered Volumes
Natural Gas (MMcf/d) 709(a) 564(a) 491
Crude Oil and Condensate (MBbl/d) 8.9 8.5 8.2
Natural Gas Liquids (MBbl/d) 0.6 0.7 0.6
Wellhead Average Prices
Natural Gas ($/Mcf) $ 1.92(b) $ 1.58(b) $ 1.37
Crude Oil and Condensate ($/Bbl) $16.37 $17.90 $18.78
Natural Gas Liquids ($/Bbl) $11.12 $10.69 $11.64
Other Natural Gas Marketing
Volumes (MMcf/d) 293(a) 255(a) 237
Average Gross Revenue ($/Mcf) $ 2.57 $ 2.62 $ 2.63
Associated Costs ($/Mcf)
(including transportation and exchange
differentials) $ 2.32 $ 1.99 $1.75
<FN>
(a) Includes an annual average of 81.0 MMcf per day in
1993 and 27.6 MMcf per day in 1992 delivered under the terms of a
volumetric production payment agreement effective October 1,
1992, as amended.
(b) Includes an average equivalent wellhead value of
$1.57 per Mcf in 1993 and $1.70 per Mcf in 1992 for the
volumes detailed in Note (a) above, net of transportation
costs.
</TABLE>
The following discussion further analyzes the significant
changes in EOG's results.
Revenues
EOG's gross revenues increased $133 million (24%) during
1993 and $84 million (18%) in 1992 as compared to the
applicable preceding year. The increased revenues in 1993
are attributable to a 22% increase in average wellhead
natural gas prices combined with a 26% increase in average
wellhead natural gas volumes. The increased natural gas
volumes primarily reflect the effects of exploration and
development activities relating to tight gas sand
formations. The increased revenues in 1992 are attributable
to a 15% increase in average wellhead natural gas delivered
volumes combined with a 15% increase in average wellhead
natural gas prices. Although exploration and development
efforts resulted in deliverability increases in certain core
areas, the earnings in 1992 and 1991 were mitigated by
voluntary curtailments initiated due to lower than
acceptable prices during certain periods.
Costs and Expenses
The cost of gas sold by the exploration and production
segment in connection with other natural gas marketing
activities increased 18% in 1993 as compared to 1992 and 23%
in 1992 as compared to 1991. The increase in 1993 as
compared to 1992 was due to 17% higher average associated
costs per Mcf combined with a 15% increase in natural gas
marketing volumes. The increase in 1992 was due to 14%
higher average associated costs per Mcf combined with 8%
higher other natural gas marketing volumes.
Operating expenses for the exploration and production
segment increased $35 million (24%) in 1993 compared to 1992
and remained stable in 1992 as compared to 1991. The
increase in 1993 relates to higher lease and well expenses
and exploration expenses primarily due to expanded domestic
and international operations. Depreciation, depletion and
amortization expense increased 39% in 1993 and 12% in 1992
as compared to prior years. The increases in both years
primarily reflect increased production volumes. On a per
unit natural gas equivalent volumes delivered basis,
depreciation, depletion and amortization expense increased
to $0.89 per thousand cubic feet equivalent ("Mcfe" -
natural gas equivalents are determined using the ratio of
6.0 Mcf of natural gas to 1.0 barrel of crude oil,
condensate or natural gas liquids) in 1993 from $0.79 per
Mcfe in 1992 and $0.81 per Mcfe in 1991 primarily due to
higher costs associated with tight gas sand drilling
activities.
Taxes, other than income taxes, increased $7 million (25%)
from 1992 to 1993 due to increased production volumes and
revenues, partially offset by continuing benefits associated
with certain state severance tax exemptions allowed on high
cost natural gas sales and a refund received in 1993 of
franchise taxes paid in prior years. Taxes, other than
income taxes, increased $10 million (56%) from 1991 to 1992
due to increased production volumes and revenues, increases
in certain ad valorem and state franchise taxes in 1992, and
earnings benefits realized in 1991 associated with the
refund of certain state natural gas severance taxes
resulting from overpayments in prior years. These increases
were mitigated by Texas severance tax exemptions for high
cost gas production that were in effect for the full year.
Total per unit operating costs for lease and well expense,
DD&A, general and administrative expense, interest expense,
and taxes other than income increased $0.03 Mcfe, averaging
$1.43 per Mcfe during 1993 compared to $1.40 per Mcfe for 1992.
Other Income and Deductions
The exploration and production segment's other income was
$20 million in 1993 as compared to $3 million in 1992 and
$12 million in 1991. Gains on property sales were the
primary components of other income during each of the three
years and totaled $13 million in 1993, $6 million in 1992
and $15 million in 1991.
Outlook
While there still exists a good deal of uncertainty as to
the direction of future natural gas price trends, some
recent experiences may suggest a converging of the overall
supply/demand relationship reflecting, at least partially,
the significantly reduced level of drilling activity during
recent years. EOG's management remains confident that
continually increasing recognition of natural gas as a more
environmentally friendly source of energy along with the
availability of significant domestically sourced supplies
will result in further increases in demand and a
strengthening of the overall natural gas market over time.
Being primarily a natural gas producer, EOG is more
significantly impacted by changes in natural gas prices than
by changes in crude oil and condensate prices. However, the
use by the exploration and production segment from time to
time of various commodity price hedging mechanisms will tend
to mitigate this level of sensitivity. Enron has hedged the
vast majority of its anticipated 1994 natural gas production
by selling forward at recent prices.
EOG will continue to focus development and certain
exploration expenditures in its core and other major
producing areas, and include limited exploratory exposure in
areas outside of North America. Expenditure plans for 1994
will continue to be focused toward certain areas that were
not addressed as actively in the recent past due to the
increased emphasis on tight gas sand drilling opportunities
during 1991 and 1992. EOG will continue expenditures in new
areas outside of North America, primarily for additional
development operations in Trinidad, new development
operations in other countries and the continued evaluation
of coalbed methane recovery potential in France, Australia,
China and certain other countries.
Corporate and Other
The corporate and other segment's income before interest,
minority interest and income taxes was an expense of $35
million in 1993 as compared to income of $51 million in 1992
and $63 million in 1991. During 1993, the segment
recognized higher administrative and general expenses.
Included in 1992 are the previously discussed gains from
the sale of stock by EOG and sales of Mobil stock partially offset
by charges related to the establishment of reserves for
litigation and other contingencies. Included in 1991 are the previously
discussed gains related to sales of Mobil stock, two
favorable litigation settlements and the sale of certain gas
processing assets.
Interest Expense and Income Taxes
Interest and related charges, net, is shown on the
Consolidated Income Statement net of interest capitalized.
The net expense for 1993 decreased $30 million (9%) from
1992. The decrease is primarily due to lower interest
rates. The net expense for 1992 decreased $43 million (12%)
from 1991. The decrease is primarily due to a decrease in
short-term interest rates and lower total obligations. Short-
term borrowings averaged $591 million during 1993 as
compared to $588 million during 1992 and $500 million during
1991 while the average interest rate on short-term debt fell
to 3.3% in 1993 from 3.9% in 1992 and 6.3% in 1991.
Exclusive of the adjustment for the increase in the U.S.
corporate Federal statutory income tax rate from 34% to 35%,
income tax expense declined slightly during 1993 as compared
to 1992 as increased pretax income was offset by utilization
of increased tight gas sand tax credits. Although income
before income taxes increased, income taxes decreased in
1992 as compared to 1991 primarily due to the inclusion of a
nontaxable gain from the sale of stock by EOG and
utilization of increased tight gas sand tax credits.
Extraordinary Items
The extraordinary loss results primarily from the early
retirement of $599 million principal amount of 10.625%
senior subordinated debentures in September 1992.
Financial Condition
Cash From Operating Activities
Net cash provided by operating activities totaled $468
million during 1993 as compared to $330 million in 1992.
The increase primarily reflects higher income levels in 1993
and the prepayment of $150 million made in 1992 for
information technology services.
Cash From Investing Activities
Cash used in investing activities totaled $639 million
during 1993 as compared to $43 million during 1992. The
change primarily reflects increased expenditures in
connection with Enron's investment in Argentina pipeline
operations, Teesside and other power projects.
Additionally, during 1992, EOG recorded proceeds of $327
million under the terms of a volumetric production payment
transaction (see Note 8 to the Consolidated Financial
Statements). Proceeds from the sales of assets totaled $454
million during 1993 as compared to $388 million during 1992.
The 1993 amounts include approximately $217 million in
connection with the sale of Enron's interest in Northern
Border Partners, L.P., $100 million from the sale of
information technology assets and $42 million realized
from the sale of exploration and production properties.
Proceeds from the sale of assets during 1992 included
$62 million from the sale of Mobil stock, $138 million,
net, realized on the sale of certain liquids pipeline
assets to Enron Liquids Pipeline, L.P., $121 million from
the sale of certain pipeline assets by Enron Gas Services
and $33 million realized from the sale of exploration and
production properties.
Cash From Financing Activities
Net cash provided by financing activities totaled $170
million during 1993 as compared to the use of $339 million
in 1992. The difference in cash flow from financing
activities between 1993 and 1992 was the retirement in 1992
of $1.1 billion of long-term debt primarily through the
utilization of call provisions available on higher coupon
debt issues. The repayments of long-term debt were
partially funded by proceeds from the sales of common stock
by Enron and EOG. During 1993, Enron issued $614 million of
long-term debt while retiring $450 million principal amount
of long-term borrowings. Other cash outflows during 1993
included $190 million of cash dividend payments on common
and preferred stock and $23 million in repayments of other
long-term obligations. In addition to the debt issuances
discussed above, financing cash inflows during 1993 included
$214 million from the issuance of preferred stock by a
wholly-owned subsidiary of Enron (see Note 10 to the
Consolidated Financial Statements).
Working Capital
At December 31, 1993, Enron had a working capital deficit of
$657 million. Enron is able to fund its deficit in working
capital through the utilization of credit facilities which,
at December 31, 1993, provided for up to $2.2 billion of
committed and uncommitted credit. Certain of the credit
agreements contain prefunding covenants. However, such
covenants are not expected to materially restrict Enron's
access to funds under these agreements. At December 31,
1993, Enron had $144 million outstanding under the
uncommitted agreements. In addition, Enron sells commercial
paper and has agreements to sell up to $800 million of
accounts receivable, thus providing short-term financing to
meet seasonal working capital needs. Management believes
that the sources of funding described above are sufficient
to meet short- and long-term liquidity needs not met by cash
flows from operations.
Capital Expenditures
Capital expenditures by operating segment are detailed as
follows:
<TABLE>
<CAPTION>
1994
(In Millions) Estimate 1993 1992 1991
<S> <C> <C> <C> <C>
Transportation and Operation $123 $152 $140 $396
Gas Services 45 78 45 47
Gas Processing 8 24 34 110
International Gas and Power Services 16 53 41 28
Exploration and Production* 394 383 362 212
Corporate and Other 8 5 12 35
Total $594 $695 $634 $828
<FN>
*Excludes exploration expenses of $56 million (estimate), $55 million,
$44 million, and $46 million for 1994, 1993, 1992 and 1991, respectively.
</TABLE>
Capital expenditures by the transportation and operation
segment increased $12 million during 1993 as compared to
1992. The decline during 1992 as compared to 1991 reflects
the completion in early 1992 of Transwestern's pipeline
expansion project and its San Juan lateral project which
began during 1991.
Capital expenditures of the gas services segment increased
$33 million during 1993 as compared to 1992 primarily as a
result of the acquisition of gas storage assets and systems
improvement costs.
The exploration and production segment's capital
expenditures increased from $362 million in 1992 to $383
million in 1993. The increase was primarily attributable to
increased domestic drilling activity with reduced emphasis
on development drilling expenditures associated with tight
gas sand formations. Enron also implemented its first
development program outside of North America. The increase
in capital spending by the exploration and production
segment in 1992 compared to 1991 reflects development
drilling expenditures associated with tight gas sand
drilling activities and the acquisition in December 1992 of
$40 million of producing properties in Canada.
Capital expenditures during 1994 are expected to total
approximately $594 million. However, the overall level of
capital spending as well as spending by individual business
segments will vary depending upon conditions in the energy
market and other related economic conditions. In addition,
equity investments are expected to be approximately $387
million of which approximately $150 million for the Florida
Gas Transmission Company expansion and approximately $160
million for various international power projects.
Management believes that the capital expenditure program
will be funded by a combination of internally generated
funds and proceeds from dispositions of selected assets.
Capitalization
Total capitalization at December 31, 1993 of $5.7 billion
was comprised of total long-term debt of $2.7 billion,
shareholders' equity of $2.6 billion, preferred stock of
subsidiary company of $.2 billion and minority interests of
$.2 billion. Debt as a percentage of total capitalization
decreased to 46.7% at December 31, 1993 as compared to 47.7%
at December 31, 1992. The improvement primarily reflects
higher net income and the issuance of preferred stock by
Enron Capital L.L.C., the proceeds of which were used to
reduce debt and other corporate purposes. Additionally, the
average cost of long-term debt declined to 8.2% at December
31, 1993 from 8.9% at December 31, 1992. The decline was
accomplished primarily through the retirement of additional
higher coupon long-term debt which was subject to call
provisions during 1993.
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required hereunder is included in this report as set
forth in the "Index to Financial Statements" on page F-1.
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 of Form 10-K relating to (i)
directors who are nominees for election as directors at Enron's Annual
Meeting of Stockholders to be held on May 3, 1994, and (ii) compliance
by directors and executive officers with Section 16(a) of the Securities
Exchange Act of 1934 is set forth, respectively, under the captions
entitled "Election of Directors" and "Compensation of Directors and
Executive Officers - Certain Transactions" in Enron's Proxy Statement,
and is incorporated herein by reference.
The information required by Item 10 of Form 10-K with respect to
executive officers is set forth in Part I of this Form 10-K under the
heading "Current Executive Officers of the Registrant".
There are no family relationships among the officers listed, and
there are no arrangements or understandings pursuant to which any of
them were elected as officers. Officers are appointed or elected
annually by the Board of Directors at its first meeting following the
Annual Meeting of Stockholders, each to hold office until the
corresponding meeting of the Board in the next year or until a
successor shall have been elected, appointed or shall have qualified.
Item 11. EXECUTIVE COMPENSATION
The information regarding executive compensation is set forth
in the Proxy Statement under the captions "Compensation of Directors
and Executive Officers - Director Compensation; Executive Compensation;
Stock Option Grants During 1993; Aggregated Stock Option/SAR Exercises
During 1993 and Stock Option/SAR Values as of December 31, 1993;
Long-Term Incentive Plans - Awards in 1993; Retirement and Severance
Plans; Employment Contracts"; and "Compensation Committee Interlocks
and Insider Participation", and is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security ownership of certain beneficial owners
The information regarding security ownership of certain
beneficial owners is set forth in the Proxy Statement
under the caption "Election of Directors - Stock Ownership
of Certain Beneficial Owners", and is incorporated herein
by reference.
(b) Security ownership of management
The information regarding security ownership of management
is set forth in the Proxy Statement under the caption
"Election of Directors - Stock Ownership of Management
and Board of Directors", and is incorporated herein by
reference.
(c) Changes in control
None.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information regarding certain relationships and related
transactions is set forth in the Proxy Statement under the caption
"Compensation of Directors and Executive Officers - Certain
Transactions"; and "Compensation Committee Interlocks and Insider
Participation", and is incorporated herein by reference.
<PAGE>
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) and (2) Financial Statements and Financial Statement Schedules. See
"Index to Financial Statements" set forth on page F-1.
(a)(3) Exhibits:
*3.01 - Restated Certificate of Incorporation of Enron Corp., as amended
(Exhibit 4(d) to Registration Statement No. 33-50641, filed
October 15, 1993).
*3.02 - Bylaws of Enron Corp. as currently in effect (Exhibit 3.02 to
Enron Form 10-K for 1990, File No. 1-3423).
*4 - Indenture dated as of November 1, 1985, between Enron and Harris
Trust and Savings Bank (Form T-3 Application for Qualification
of Indentures under the Trust Indenture Act of 1939, File No.
22-14390, filed October 24, 1985). There have not been filed
as exhibits to this Form 10-K other debt instruments defining
the rights of holders of long-term debt of Enron, none of
which relates to authorized indebtedness that exceeds 10% of
the consolidated assets of Enron and its subsidiaries. Enron
hereby agrees to furnish a copy of any such instrument to the
Commission upon request.
Executive Compensation Plans and Arrangements (Exhibits 10.01 through 10.48)
*10.01 - Enron Executive Supplemental Survivor Benefits Plan, effective
January 1, 1987 (Exhibit 10.01 to Enron Form 10-K for 1992,
File No. 1-3423).
*10.02 - Enron Corp. 1988 Stock Plan (Exhibit 4.3 to Registration
Statement No. 33-27893).
*10.03 - Enron Corp. 1984 Stock Option Plan (Exhibit 28-1 to Registration
Statement No. 2-90992).
*10.04 - Enron Corp. 1986 Stock Option Plan with Stock Appreciation
Rights (Exhibit 4.3 to Registration Statement No. 33-13498).
*10.05 - Executive Incentive Plan (Exhibit 10.13 to Enron Form 10-K
for 1987, File No. 1-3423).
*10.06 - Enron Corp. 1988 Deferral Plan (Exhibit 10.19 to Enron Form
10-K for 1987, File No. 1-3423).
*10.07 - Enron Corp. 1991 Stock Plan (Exhibit 10.08 to Enron Form 10-K
for 1991, File No. 1-3423).
*10.08 - Enron Corp. 1992 Deferral Plan (Exhibit 10.09 to Enron Form
10-K for 1991, File No. 1-3423).
*10.09 - Enron Corp. Directors' Deferred Income Plan (Exhibit 10.09
to Enron Form 10-K for 1992, File No. 1-3423).
*10.10 - Employment Agreement between Enron and Kenneth L. Lay dated
as of September 1, 1989 (Exhibit 10.12 to Enron Form 10-K
for 1989, File No. 1-3423).
10.11 - First Amendment to Employment Agreement between Enron and
Kenneth L. Lay, dated August 21, 1990.
10.12 - Second Amendment to Employment Agreement between Enron and
Kenneth L. Lay, dated March 5, 1992.
10.13 - Third Amendment to Employment Agreement between Enron and
Kenneth L. Lay, dated August 10, 1993.
10.14 - Fourth Amendment to Employment Agreement between Enron and
Kenneth L. Lay, dated October 15, 1993.
10.15 - Fifth Amendment to Employment Agreement between Enron and
Kenneth L. Lay, dated February 28, 1994.
*10.16 - Employment Agreement between Enron and Richard D. Kinder
dated as of September 1, 1989 (Exhibit 10.14 to Enron Form
10-K for 1989, File No. 1-3423).
*10.17 - First Amendment to Employment Agreement between Enron and
Richard D. Kinder dated August 13, 1990 (Exhibit 10.17 to
Enron Form 10-K for 1991, File No. 1-3423).
*10.18 - Second Amendment to Employment Agreement between Enron and
Richard D. Kinder dated September 10, 1991 (Exhibit 10.18
to Enron Form 10-K for 1991, File No. 1-3423).
*10.19 - Third Amendment to Employment Agreement between Enron and
Richard D. Kinder dated March 5, 1992 (Exhibit 10.19 to
Enron Form 10-K for 1992, File No. 1-3423).
10.20 - Fourth Amendment to Employment Agreement between Enron and
Richard D. Kinder dated August 16, 1993.
10.21 - Fifth Amendment to Employment Agreement between Enron and
Richard D. Kinder, dated October 15, 1993.
10.22 - Sixth Amendment to Employment Agreement between Enron and
Richard D. Kinder, dated February 28, 1994.
10.23 - Employment Agreement between Enron International Inc. and
Rodney L. Gray, dated as of July 1, 1993.
*10.24 - Employment Agreement between Enron and Ronald J. Burns
dated as of July 1, 1989 (Exhibit 10.15 to Enron Form 10-K
for 1989, File No. 1-3423).
*10.25 - First Amendment to Employment Agreement between Enron and
Ronald J. Burns dated June 21, 1990 (Exhibit 10.20 to Enron
Form 10-K for 1991, File No. 1-3423).
*10.26 - Second Amendment to Employment Agreement between Enron and
Ronald J. Burns dated August 19, 1991 (Exhibit 10.21 to
Enron Form 10-K for 1991, File No. 1-3423).
*10.27 - Employment Agreement between Enron and Jack I. Tompkins
dated October 1, 1991 (Exhibit 10.22 to Enron Form 10-K
for 1991, File No. 1-3423).
*10.28 - Consulting Services Agreement between Enron and John A.
Urquhart dated August 1, 1991 (Exhibit 10.23 to Enron
Form 10-K for 1991, File No. 1-3423).
*10.29 - First Amendment to Consulting Services Agreement between
Enron and John A. Urquhart, dated August 27, 1992
(Exhibit 10.25 to Enron Form 10-K for 1992, File No. 1-3423).
*10.30 - Second and Third Amendments to Consulting Services Agreement
between Enron and John A. Urquhart, dated November 24, 1992
and February 26, 1993, respectively (Exhibit 10.26 to Enron
Form 10-K for 1992, File No. 1-3423).
*10.31 - Employment Agreement between Enron and Edmund P. Segner, III
dated October 1, 1991 (Exhibit 10.24 to Enron Form 10-K for
1991, File No. 1-3423).
*10.32 - First Amendment to Employment Agreement between Enron and
Edmund P. Segner, III dated February 12, 1993 (Exhibit 10.28
to Enron Form 10-K for 1992, File No. 1-3423).
*10.33 - Employment Agreement between Enron and Jeffrey K. Skilling,
effective August 1, 1990 (Exhibit 10.18 to Enron Form 10-K
for 1990, File No. 1-3423).
*10.34 - First Amendment to Employment Agreement between Enron and
Jeffrey K. Skilling, dated August 1, 1990 (Exhibit 10.30
to Enron Form 10-K for 1992, File No. 1-3423).
*10.35 - Second Amendment to Employment Agreement between Enron and
Jeffrey K. Skilling, dated June 1, 1991 (Exhibit 10.31 to
Enron Form 10-K for 1992, File No. 1-3423).
*10.36 - Third Amendment to Employment Agreement between Enron and
Jeffrey K. Skilling, dated February 10, 1992 (Exhibit 10.32
to Enron Form 10-K for 1992, File No. 1-3423).
*10.37 - Loan Commitment Agreement between Enron and Jeffrey K.
Skilling, dated April 13, 1992 (Exhibit 10.33 to Enron
Form 10-K for 1992, File No. 1-3423).
*10.38 - Fourth Amendment to Employment Agreement between Enron and
Jeffrey K. Skilling, dated June 23, 1992 (Exhibit 10.34 to
Enron Form 10-K for 1992, File No. 1-3423).
*10.39 - Fifth Amendment to Employment Agreement between Enron and
Jeffrey K. Skilling, dated December 18, 1992 (Exhibit 10.35
to Enron Form 10-K for 1992, File No. 1-3423).
*10.40 - Buyout Agreement between Enron and Jeffrey K. Skilling,
dated December 18, 1992 (Exhibit 10.36 to Enron Form 10-K
for 1992, File No. 1-3423).
*10.41 - First Amendment to Buyout Agreement between Enron and
Jeffrey K. Skilling, dated December 23, 1992 (Exhibit 10.37
to Enron Form 10-K for 1992, File No. 1-3423).
*10.42 - Loan Agreement between Enron and Jeffrey K. Skilling, dated
January 1, 1993 (Exhibit 10.38 to Enron Form 10-K for 1992,
File No. 1-3423).
*10.43 - Agreement among Enron Corp., Enron Power Corp., and Thomas E.
White, dated December 9, 1992 (Exhibit 10.39 to Enron Form 10-K
for 1992, File No. 1-3423).
*10.44 - Employment Agreement between Enron and James V. Derrick, Jr.,
dated June 11, 1991 (Exhibit 10.40 to Enron Form 10-K for 1992,
File No. 1-3423).
*10.45 - Enron Gas Services Group Phantom Equity Plan (Exhibit 10.26
to Enron Form 10-K for 1991, File No. 1-3423).
*10.46 - Enron Power Corp. Executive Compensation Plan (Exhibit 10.42
to Enron Form 10-K for 1992, File No. 1-3423).
*10.47 - Enron Corp. Performance Unit Plan (Exhibit A to Enron
Definitive Proxy Statement filed on March 25, 1994).
*10.48 - Enron Corp. Annual Incentive Plan (Exhibit B to Enron
Definitive Proxy Statement filed on March 25, 1994).
11 - Statement re calculation of earnings per share.
12 - Statement re computation of ratios of earnings to fixed charges.
21 - Subsidiaries of registrant.
23.01 - Consent of Arthur Andersen & Co.
23.02 - Consent of DeGolyer and MacNaughton.
23.03 - Letter Report of DeGolyer and MacNaughton dated January 27,
1994.
24 - Powers of Attorney for the officers and directors signing this
Form 10-K.
* Asterisk indicates exhibits incorporated by reference as indicated;
all other exhibits are filed herewith.
(b) Reports on Form 8-K
(i) Form 8-K Current Report dated October 29, 1993 concerning
financial information for the three months ended September
30, 1993.
(ii) Form 8-K Current Report dated November 12, 1993 concerning
documents relating to Enron Capital LLC 8% Cumulative
Guaranteed Monthly Income Preferred Shares.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
ENRON CORP.
Page No.
Consolidated Financial Statements
Report of Independent Public Accountants F-2
Consolidated Income Statement for the years ended
December 31, 1993, 1992 and 1991 F-3
Consolidated Balance Sheet as of December 31, 1993 and 1992 F-4
Consolidated Statement of Cash Flows for the years
ended December 31, 1993, 1992 and 1991 F-6
Consolidated Statement of Changes in Shareholders'
Equity Accounts for the years ended December 31,
1993, 1992 and 1991 F-7
Notes to the Consolidated Financial Statements F-8
Supplemental Financial Information (Unaudited) F-25
Financial Statements Schedules
Report of Independent Public Accountants on
Financial Statements Schedules S-1
Schedule II - Amounts Receivable from Related
Parties, Underwriters, Promoters and
Employees other than Related Parties S-2
Schedule V - Property, Plant and Equipment S-3
Schedule VI - Accumulated Depreciation, Depletion
and Amortization of Property, Plant
and Equipment S-4
Schedule VIII - Valuation and Qualifying Accounts S-5
Schedule X - Supplementary Income Statement
Information S-6
Other financial statement schedules have been omitted because
they are inapplicable or the information required therein is
included elsewhere in the financial statements or notes thereto.
F-1
<PAGE>
Report of Independent Public Accountants
To the Shareholders and Board of Directors of Enron Corp.:
We have audited the accompanying consolidated balance sheet
of Enron Corp. (a Delaware corporation) and subsidiaries as
of December 31, 1993 and 1992, and the related consolidated
statements of income, cash flows and changes in
shareholders' equity accounts for each of the three years in
the period ended December 31, 1993. These financial
statements are the responsibility of Enron Corp.'s
management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Enron Corp. and subsidiaries as of December 31,
1993 and 1992, and the results of their operations, cash
flows and changes in shareholders' equity accounts for each
of the three years in the period ended December 31, 1993, in
conformity with generally accepted accounting principles.
Arthur Andersen & Co.
Houston, Texas
February 18, 1994
<PAGE>
<TABLE>
Enron Corp. and Subsidiaries
Consolidated Income Statement
(In Thousands, Except Per Share Amounts)
<CAPTION>
Year Ended December 31,
1993 1992 1991
(Restated) (Restated)
<S> <C> <C> <C>
Revenues
Natural gas and gas liquids $6,125,638 $4,712,422 $4,270,720
Transportation 767,911 688,297 637,082
Other 1,078,933 1,008,554 775,139
7,972,482 6,409,273 5,682,941
Costs and Expenses
Cost of gas sold 3,856,499 2,502,253 2,029,232
Cost of other products sold 1,709,527 1,720,142 1,616,611
Operating expenses 1,057,415 936,040 914,538
Amortization of deferred
contract reformation costs 89,240 101,253 124,947
Oil and gas exploration expenses 75,743 59,178 58,959
Depreciation, depletion and
amortization 458,188 376,019 365,957
Taxes, other than income taxes 108,386 100,616 74,760
7,354,998 5,795,501 5,185,004
Operating Income 617,484 613,772 497,937
Other Income and Deductions
Equity in earnings of
unconsolidated subsidiaries 73,293 56,545 55,228
Interest income 31,457 53,623 56,051
Gain on sale of stock by
subsidiary company - 59,615 -
Other, net 75,433 (16,373) 106,086
Income Before Interest, Minority
Interest and Income Taxes 797,667 767,182 715,302
Interest and Related Charges, net 300,149 330,282 373,492
Dividends on Preferred Stock of
Subsidiary 2,137 - -
Minority Interest 27,605 17,632 7,210
Income Taxes 89,077 90,468 102,454
Income Tax Rate Adjustment 46,177 - -
Income Before Extraordinary Items 332,522 328,800 232,146
Extraordinary Items - (22,615) -
Net Income 332,522 306,185 232,146
Preferred Stock Dividends 16,919 22,109 24,740
Earnings on Common Stock $ 315,603 $ 284,076 $ 207,406
Earnings Per Share of Common Stock
Primary
Income before extraordinary
items $ 1.32 $ 1.39 $ 1.03
Extraordinary items - (.10) -
$ 1.32 $ 1.29 $ 1.03
Fully Diluted
Income before extraordinary
items $ 1.25 $ 1.30 $ .98
Extraordinary items - (.09) -
$ 1.25 $ 1.21 $ .98
Average Number of Common Shares
Used in Primary Computation 239,019 219,965 202,080
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
<TABLE>
Enron Corp. and Subsidiaries
Consolidated Balance Sheet
<CAPTION>
December 31,
(In Thousands) 1993 1992
(Restated)
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 140,240 $ 141,689
Trade receivables (net of allowance for
doubtful accounts of $21,873 and $14,555,
respectively) 783,603 514,505
Other receivables 205,956 96,227
Transportation and exchange gas receivable 102,887 123,572
Inventories 197,737 293,809
Deferred contract reformation costs 103,520 103,520
Assets from price risk management activities 279,715 170,279
Other 204,952 208,255
Total Current Assets 2,018,610 1,651,856
Investments and Other Assets
Investments in and advances to unconsolidated
subsidiaries 697,084 636,062
Deferred contract reformation costs 168,479 266,466
Assets from price risk management activities 887,342 360,861
Other 1,010,028 850,595
Total Investments and Other Assets 2,762,933 2,113,984
Property, Plant and Equipment, at cost
Transportation and operations 4,070,325 3,862,076
Gas services 3,543,991 3,483,504
Exploration and production, successful
efforts accounting 2,772,220 2,475,371
International gas and power services 135,918 54,672
Gas processing 265,782 326,505
Corporate and other 98,622 213,148
10,886,858 10,415,276
Less accumulated depreciation, depletion
and amortization 4,164,086 3,869,513
Net Property, Plant and Equipment 6,722,772 6,545,763
Total Assets $11,504,315 $10,311,603
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
<TABLE>
Enron Corp. and Subsidiaries
Consolidated Balance Sheet
<CAPTION>
December 31,
(In Thousands) 1993 1992
(Restated)
<S> <C> <C>
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 1,477,290 $ 1,323,782
Transportation and exchange gas payable 98,569 107,559
Accrued taxes 88,837 105,692
Accrued interest 53,292 52,712
Billings in excess of costs on uncompleted
contracts 45,380 55,487
Liabilities from price risk management activities 609,403 283,877
Deferred revenue 48,804 87,599
Other 254,014 201,220
Total Current Liabilities 2,675,589 2,217,928
Long-Term Debt 2,661,240 2,458,924
Deferred Credits and Other Liabilities
Deferred income taxes 1,860,237 1,879,027
Deferred revenue 327,802 439,847
Liabilities from price risk management activities 330,209 135,233
Other 615,839 482,930
Total Deferred Credits and Other Liabilities 3,134,087 2,937,037
Commitments and Contingencies (Notes 9, 14, 15,
16 and 18)
Minority Interests 196,275 179,397
Preferred Stock of Subsidiary Company 213,750 -
Shareholders' Equity
Preferred stock, cumulative, $100 par value,
1,500,000 shares authorized, no shares issued - -
Preference stock, cumulative, $1 par value,
10,000,000 shares authorized, no shares issued - -
Second preferred stock, cumulative, $1 par value,
5,000,000 shares authorized, 1,496,677 shares
and 1,829,641 shares of $10.50 Cumulative Second
Preferred Convertible Stock issued, respectively 149,668 182,964
Common stock, 600,000,000 shares authorized,
249,095,312 shares $0.10 par value, and
118,766,088 shares $10.00 par value, issued,
respectively 24,910 1,187,661
Additional paid-in capital 1,707,938 324,944
Retained earnings 1,104,986 959,522
Cumulative foreign currency translation
adjustment (138,704) (118,160)
Common stock held in treasury (174,700 shares
at December 31, 1992) - (8,100)
Other (including Flexible Equity Trust, Note 11) (225,424) (10,514)
Total Shareholders' Equity 2,623,374 2,518,317
Total Liabilities and Shareholders' Equity $11,504,315 $10,311,603
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
<TABLE>
Enron Corp. and Subsidiaries
Consolidated Statement of Cash Flows
<CAPTION>
Year Ended December 31,
(In Thousands) 1993 1992 1991
(Restated) (Restated)
<S> <C> <C> <C>
Cash Flows From Operating Activities
Reconciliation of net income to net cash
provided by operating activities
Income before extraordinary items $ 332,522 $ 328,800 $ 232,146
Depreciation, depletion and amortization 458,188 376,019 365,957
Oil and gas exploration expenses 75,743 59,178 58,959
Amortization of deferred contract
reformation costs 89,240 101,253 124,947
Deferred income taxes 51,200 (14,647) (42,942)
Gains on sales of stock by subsidiary
company and other assets (115,586) (136,249) (58,353)
Regulatory, litigation and other
contingency adjustments 58,944 42,549 (11,036)
Changes in components of working capital (76,513) (157,234) 349,264
Deferred contract reformation costs (136,383) (129,694) (84,512)
Deferred revenues 12,669 32,679 20,851
Prepaid information technology services - (150,000) -
Net assets from price risk management
activities (115,415) (15,892) (96,138)
Other, net (166,320) (6,898) (45,463)
Net Cash Provided by Operating Activities 468,289 329,864 813,680
Cash Flows From Investing Activities
Proceeds from sales of investments and
other assets 453,977 387,788 277,086
Production payment transactions, net (73,867) 301,395 -
Additions to property, plant and
equipment (688,032) (596,885) (707,083)
Other capital expenditures (7,405) (37,656) (120,837)
Other, net (323,916) (97,961) (71,231)
Net Cash Used in Investing Activities (639,243) (43,319) (622,065)
Cash Flows From Financing Activities
Net increase (decrease) in short-term
borrowings 42,767 (142,651) (261,179)
Issuance of long-term debt 613,938 700,000 412,783
Decrease in long-term debt (450,161) (1,116,911) (59,120)
Decrease in other long-term obligations (22,757) (72,140) (73,972)
Issuance of preferred stock of
subsidiary 213,750 - -
Issuance of common stock 22,882 399,355 -
Issuance of common stock by subsidiary - 111,861 -
Dividends paid (189,769) (174,880) (154,274)
Net acquisition of treasury stock (71,145) (37,524) (65,755)
Other, net 10,000 (5,818) 18,000
Net Cash Provided by (Used in) Financing
Activities 169,505 (338,708) (183,517)
Increase (Decrease) in Cash and Cash
Equivalents (1,449) (52,163) 8,098
Cash and Cash Equivalents, Beginning of Year 141,689 193,852 185,754
Cash and Cash Equivalents, End of Year $ 140,240 $ 141,689 $ 193,852
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
<TABLE>
Enron Corp. and Subsidiaries
Consolidated Statement of Changes in
Shareholders' Equity Accounts
<CAPTION>
Cumulative
Foreign Other
Convertible Additional Retained Currency (Including
Preferred Common Paid-in Earnings Translation Treasury Flexible
(In Thousands, Stock Stock Capital (Restated) Adjustment Stock Equity Trust)
Except Per Share Amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1990 $237,585 $ 506,244 $ 260,792 $ 966,096 $ (76,982) $ (6,555) $ (49,633)
Net income 232,146
Cash dividends
Common stock (126,957)
Preferred stock (24,740)
Treasury stock reissued (620) 16,837 (3,483)
Purchase of treasury stock (76,696)
Exchange of common stock for
convertible preferred stock (14,850) 5,068 9,782
Exchange of common stock for
convertible debentures 2,000 8,524
Common stock issued 3,032 13,909
Translation adjustments (128)
Common stock split 516,344 (293,482) (222,862)
Other 1,095 (984) 19,449
Balance at December 31, 1991 222,735 1,032,688 - 823,683 (77,110) (67,398) (33,667)
Net income 306,185
Cash dividends
Common stock (148,237)
Preferred stock (22,109)
Treasury stock reissued (12,083) 49,737 (351)
Purchase of treasury stock (62,933)
Exchange of common stock for
convertible preferred stock (39,771) 27,147 12,624
Exchange of common stock for
convertible debentures 12,346 5,117 73,043
Common stock issued 115,480 319,794
Translation adjustments (41,050)
Other (508) (549) 23,504
Balance at December 31, 1992 182,964 1,187,661 324,944 959,522 (118,160) (8,100) (10,514)
Net income 332,522
Cash dividends
Common stock (170,457)
Preferred stock (16,919)
Treasury stock reissued (7,607) 42,665 (5,601)
Purchase of treasury stock (89,105)
Exchange of common stock for
convertible preferred stock (33,296) 3,573 (25,289) 55,012
Common stock issued 4,645 245,227 (219,563)
Common stock split and re-
duction of par value to $0.10 (1,170,969) 1,170,969
Translation adjustments (20,544)
Other (306) 318 (472) 10,254
Balance at December 31, 1993 $149,668 $ 24,910 $1,707,938 $1,104,986 $(138,704) $ - $(225,424)
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
Enron Corp. and Subsidiaries
Notes to the Consolidated Financial Statements
1. Summary of Significant Accounting Policies
A. Consolidation
The consolidated financial statements include the accounts
of all majority-owned subsidiaries of Enron Corp. after the
elimination of significant intercompany accounts and
transactions. Investments in unconsolidated subsidiaries
are accounted for by the equity method.
"Enron" is used from time to time herein as a collective
reference to Enron Corp. and its subsidiaries and
affiliates. In material respects, the businesses of Enron
are conducted by Enron Corp.'s subsidiaries and affiliates
whose operations are managed by their respective officers.
Financial statements for prior periods have been restated to
reflect the adoption of Statement of Financial Accounting
Standards (SFAS) No. 109 (see E below) and the
reclassification of EOTT Energy Corp.'s net assets and
results of operations to continuing operations (see Note 3).
B. Cash Equivalents
Enron records as cash equivalents all highly liquid short-
term investments with original maturities of three months or
less.
C. Inventories
Inventories consisting primarily of natural gas in storage
of $77.3 million and $116.2 million, crude oil and refined
products of $75.5 million and $97.4 million and liquid
petroleum products of $37.3 million and $71.7 million at
December 31, 1993 and 1992, respectively, are priced at the
lower of cost or market.
D. Depreciation, Depletion and Amortization
The provision for depreciation and amortization with respect
to operations other than oil and gas producing activities
(see below) is computed using the straight-line or Federal
Energy Regulatory Commission (FERC) mandated method based on
estimated economic lives. Composite depreciation rates are
applied to functional groups of property having similar
economic characteristics.
Provisions for depreciation, depletion and amortization of
proved oil and gas properties are calculated using the units-
of-production method. Estimated future dismantlement,
restoration and abandonment costs, net of salvage credits,
are taken into account in determining depreciation,
depletion and amortization.
E. Income Taxes
Enron adopted the provisions of SFAS No. 109 - "Accounting
for Income Taxes" effective January 1, 1993 and applied the
provisions of the statement retroactively. Enron previously
accounted for income taxes under the provisions of SFAS No.
96 which was superceded by SFAS No. 109. SFAS No. 109
retains the asset and liability approach for accounting for
income taxes. Under this approach, deferred tax assets and
liabilities are recognized based on anticipated future tax
consequences attributable to differences between financial
statement carrying amounts of assets and liabilities and
their respective tax bases. The adoption of SFAS No. 109
did not have a material impact on Enron's results of
operations or financial position.
F. Earnings Per Share
Primary earnings per share is computed on the basis of the
average number of common shares outstanding during the
periods. Common shares held by the Enron Corp. Flexible
Equity Trust are not included in the computation of earnings
per share (see Note 11). Dilutive common stock equivalents
are not material and are not included in the computation of
primary earnings per share. Fully diluted earnings per
share is computed based upon the average number of common
stock and common stock equivalent shares outstanding plus
the average number of common shares issuable upon the
assumed conversion of convertible securities.
G. Accounting for Price Risk Management Activities
Enron, through its Gas Services Group (EGS), provides price
risk management services in the energy sector (these
services are further described in Note 2). Enron accounts
for these activities using the mark-to-market method of
accounting. Under mark-to-market accounting, forwards,
swaps, options, futures contracts and other financial
instruments with third parties are reflected at market
value, net of future servicing costs, with resulting
unrealized gains and losses recorded as assets and
liabilities from price risk management activities in the
Consolidated Balance Sheet. Terms regarding cash
settlements of these contracts vary with respect to the
actual timing of cash receipts and payments. The amounts
shown in the Consolidated Balance Sheet related to price
risk management activities also include assets or
liabilities which arise as a result of the actual timing of
settlements related to these contracts. Current period
changes in the assets and liabilities from price risk
management activities (resulting primarily from newly
originated transactions and the impact of price movements)
are recognized as revenues in the Consolidated Income
Statement.
The market prices used to value these transactions reflect
management's best estimate of market prices considering
various factors including closing exchange and over-the-
counter quotations, time value and volatility factors
underlying the commitments. These market prices are
adjusted to reflect the potential impact of liquidating
Enron's position in an orderly manner over a reasonable
period of time under present market conditions.
Periodically, Enron's other businesses also enter into
forwards, futures and other contracts to hedge the impact of
market fluctuations on inventories, production or other
contractual commitments. Changes in the market value of
these transactions are deferred until the gain or loss is
recognized on the hedged inventory or commitment.
Disclosures regarding the fair value of these financial
instruments are included in Note 18.
H. Accounting for Oil and Gas Producing Activities
Enron accounts for oil and gas exploration and production
activities under the successful efforts method of
accounting. Under such method, oil and gas lease
acquisition costs are capitalized when incurred. Unproved
properties with significant acquisition costs are assessed
quarterly on a property-by-property basis, and any
impairment in value is recognized. Unproved properties with
acquisition costs that are not individually significant are
aggregated, and the portion of such costs estimated to be
unproductive based on historical experience and future
expected abandonments, is amortized over the average holding
period. If the unproved properties are determined to be
productive, the appropriate related costs are transferred to
proved oil and gas properties. Lease rentals are expensed
as incurred.
Oil and gas exploration costs, other than the costs of
drilling exploratory wells, are charged to expense as
incurred. The costs of drilling exploratory wells are
capitalized pending determination of whether the wells have
discovered proved commercial reserves. If proved commercial
reserves are not discovered, such drilling costs are
expensed. The costs of all development wells and related
equipment used in the production of crude oil and natural
gas are capitalized.
I. Accounting for Sales of Stock by Subsidiary Companies
Enron recognizes gains or losses on sales of stock by its
subsidiary companies when such sales are not made as part of
a larger plan of corporate reorganization. Such gains or
losses are based upon the difference between the book value
of Enron's investment in the subsidiary immediately after
the sale and the historical book value of Enron's investment
immediately prior to the sale.
During August 1992, Enron Oil & Gas Company (EOG) completed
a public offering and sale of 4.1 million shares of its
common stock, reducing Enron's ownership interest from 84%
to 80%. The shares were priced to the public at $28.50 per
share and net proceeds from the transaction after
underwriting commissions and expenses totaled $111.9
million. A gain in the amount of $59.6 million was
recognized by Enron on the transaction. No income tax
expense was recorded related to this transaction, consistent
with U.S. tax law.
J. Foreign Currency Translation
For subsidiaries whose functional currency is deemed to be
other than the U.S. dollar, asset and liability accounts are
translated at year-end rates of exchange and revenue and
expenses are translated at average exchange rates prevailing
during the year. Translation adjustments are included as a
separate component of shareholders' equity.
2. Price Risk Management Activities
EGS provides price risk intermediation services to its
customers. These services primarily relate to commodities
associated with the energy sector (natural gas, crude oil,
natural gas liquids), but in some instances also include
financial products (interest rates and Canadian dollars).
EGS provides these services through a variety of financial
instruments including forward contracts involving physical
delivery of an energy commodity, swap agreements, which
require payments to (or receipt of payments from)
counterparties based on the differential between a fixed and
variable price for the commodities specified by the
contract, options, futures and other contractual
arrangements.
Market Risk
EGS's price risk management activities involve offering
fixed or known price commitments into the future. These
transactions give rise to market risk, which represents the
potential loss that can be caused by a change in the market
value of a particular commitment. As discussed in Note 1,
Enron accounts for these activities at market value. As a
result, the impact of changes in market prices are reflected
currently in the consolidated financial statements. It is
Enron's policy to prohibit speculation on market
fluctuations and EGS's objective to maintain a balanced
portfolio. However, net open positions often result from
the timing of the origination of new transactions.
Accordingly, EGS closely monitors and manages its exposure
to market risk. Policies are in place which limit the
amount of total net exposure and net exposure during any
twelve month period for each commodity traded and all traded
commodities combined. Procedures exist which allow for real
time monitoring of all commitments and positions with daily
reporting of positions to senior Enron management.
Additionally, sensitivities to changes in market prices of
each commodity are examined on a daily basis. Accordingly,
Enron does not anticipate a materially adverse effect on
financial position or results of operations as a result of
market fluctuations.
SFAS No. 105, - "Disclosures of Information about Financial
Instruments with Off-Balance-Sheet Risk and Financial
Instruments with Concentrations of Credit Risk," requires
the disclosure, as set forth below, of the notional amounts
of financial instruments that give rise to off-balance-sheet
risk. The notional amounts and terms of these agreements,
as well as volumetric information regarding EGS's future
fixed price commitments, at December 31, 1993 are set forth
below (volumes in billions of British thermal units
(Bbtus), U.S. dollars in millions):
<TABLE>
<CAPTION>
Fixed Price Fixed Price Maximum
Product Payor Receiver Terms in
Years
<S> <C> <C> <C>
Energy Commodities (Bbtus)
Swaps 1,715,355 1,480,787 10
Options 269,984 382,098 14
Forwards 795,626 1,195,368 20
Futures 240,971 115,424 3
Financial Products (millions $)
Interest rate swaps,
forwards and futures $ 610 $ 1,028 30
Canadian Dollar
swaps and futures 289 313 20
</TABLE>
EGS also has sales and purchase commitments associated with
contracts based on market prices totaling 4,900,000 Bbtus,
with terms extending up to 21 years. The midpoint of EGS's
entire portfolio of price risk management activities as of
December 31, 1993 was approximately 4.5 years (based on the
weighted average value of each transaction).
Credit Risk
Credit risk relates to the risk of loss that Enron would
incur as a result of nonperformance by counterparties
pursuant to the terms of their contractual obligations. The
counterparties associated with EGS's price risk management
services as of December 31, 1993 are summarized as follows
(amounts in millions):
<TABLE>
<CAPTION>
Assets from Price Risk Management Activities
Investment Below
Grade(a) Investment Grade Total
<S> <C> <C> <C>
Independent Power Producers $ 348 $ 17 $ 365
Gas and Electric Utilities 162 22 184
Oil and Gas Producers 380 39 419
Industrials 17 21 38
Financial Institutions 96 - 96
Other 128 40 168
Total $1,131 $139 1,270
Credit and Other Reserves 103
Assets from Price Risk
Management Activities(b) $1,167
<FN>
(a) After consideration of collateral, which encompass
standby letters of credit, parent company guarantees and
property interests, including oil and gas reserves.
(b) Three customers' exposures each comprise greater than
5% of assets from price risk management activities.
</TABLE>
This concentration of counterparties may impact EGS's
overall exposure to credit risk, either positively or
negatively, in that the counterparties may be similarly
affected by changes in economic, regulatory or other
conditions.
EGS maintains credit policies with regard to its
counterparties that management believes significantly
minimizes overall credit risk. These policies include a
thorough review of potential counterparties' financial
condition (including credit rating), collateral requirements
under certain circumstances and the use of standardized
agreements which allow for the netting of positive and
negative exposures associated with a single counterparty.
EGS maintains a credit reserve which is based on
management's evaluation of the credit risk of the overall
portfolio. This reserve is objectively determined using an
implied risk profile based on the difference between risk-
free rates of return and each counterparty's cost of
borrowing. This implied risk is then used to evaluate the
exposure (based on current market value) to each
counterparty adjusted for collateral provisions and overall
concentration of exposure. Based on EGS's policies, its
current exposures and the credit reserve, Enron does not
anticipate a materially adverse effect on the financial
position or results of operations as a result of
counterparty nonperformance.
3. Discontinued Operations Subsequently Retained
During October 1992, the Board of Directors approved a plan
to divest all of the crude oil trading and transportation
operations of Enron's wholly-owned subsidiary, EOTT Energy
Corp. (EOTT), through a spin-off transaction to holders of
Enron common stock . As a result, Enron classified these
activities as discontinued operations for financial
reporting purposes. During the fourth quarter of 1993,
Enron's Board of Directors approved a revised plan to divest
a majority, but not all, of EOTT through a public offering
of limited partnership interests in a master limited
partnership.
In January 1994, EOTT Energy Partners, L.P. filed a
registration statement with the Securities and Exchange
Commission (SEC) to offer common units. Under terms of this
offering, Enron will sell substantially all of the business
and assets of EOTT to EOTT Energy Partners, L.P., a newly
formed limited partnership. Enron will be the general
partner and own a substantial interest in EOTT Energy
Partners, L.P. after completion of the transaction.
Enron reclassified the net assets and results of operations
of EOTT, from discontinued operations, for all periods
presented. EOTT's total assets and total liabilities as of
December 31, 1992, the year it was reported as discontinued
operations, were $695.7 million and $598.4 million,
respectively. The components of EOTT's net revenues are as
follows:
<TABLE>
<CAPTION>
(In Thousands) 1993 1992 1991
<S> <C> <C> <C>
Revenues $6,358,820 $7,696,734 $8,235,529
Cost of sales 6,231,583 7,605,273 8,102,917
Net revenues $ 127,237 $ 91,461 $ 132,612
</TABLE>
4. Income Taxes
In August 1993, the U.S. corporate Federal income tax rate
increased from 34% to 35% retroactive to January 1, 1993.
Under the provisions of SFAS No. 109, the effect of a change
in the tax rate is recognized in income for the period of
enactment. The principal components of Enron's net deferred
income tax liability at December 31, 1993 and 1992 are as
follows:
<TABLE>
<CAPTION>
(In Millions) 1993 1992
<S> <C> <C>
Deferred income tax assets -
Alternative minimum tax credit carryforward $ 219 $ 189
Other 18 28
237 217
Deferred income tax liabilities -
Depreciation, depletion and amortization 1,565 1,552
Deferred contract reformation costs 73 107
Other 464 377
2,102 2,036
Net deferred income tax liabilities* $1,865 $1,819
<FN>
*Includes $5 million in other current liabilities for 1993
and $60 million in other current assets for 1992.
</TABLE>
The components of income before income taxes and
extraordinary items are as follows:
<TABLE>
<CAPTION>
(In Thousands) 1993 1992 1991
<S> <C> <C> <C>
U.S. $336,445 $337,618 $269,970
Foreign 131,331 81,650 64,630
$467,776 $419,268 $334,600
</TABLE>
Total income tax expense is summarized as follows:
<TABLE>
<CAPTION>
(In Thousands) 1993 1992 1991
<S> <C> <C> <C>
Payable currently -
Federal $ 57,093 $ 78,109 $117,402
State 14,692 13,284 6,074
Foreign 12,269 13,722 21,920
84,054 105,115 145,396
Payment deferred -
Federal (26,070) (40,361) (72,214)
State 15,724 13,375 26,909
Foreign 15,369 12,339 2,363
5,023 (14,647) (42,942)
89,077 90,468 102,454
Effect of tax rate increase on
deferred tax liability 46,177 - -
Total Income Tax Expense $135,254 $ 90,468 $102,454
</TABLE>
The differences between taxes computed at the U.S. Federal
statutory rate and Enron's effective rate are as follows:
<TABLE>
<CAPTION>
(In Thousands) 1993 1992 1991
<S> <C> <C> <C>
Statutory Federal income tax
provision $163,722 $142,551 $113,764
Net state income taxes 18,980 17,595 21,769
ESOP dividends (5,356) (6,859) (7,115)
Revision of prior years' tax estimates (25,000) (11,200) (6,351)
Tax rate increase 46,177 - -
Net operating loss utilization - - (6,656)
Tight gas sands tax credit (65,172) (42,500) (16,926)
Asset and stock sale differences (21) (21,324) -
Other 1,924 12,205 3,969
$135,254 $ 90,468 $102,454
</TABLE>
Enron has an alternative minimum tax (AMT) credit
carryforward of approximately $219 million which can be used
to offset regular income taxes payable in future years. The
AMT credit has an indefinite carryforward period.
Foreign subsidiaries' cumulative undistributed earnings of
approximately $185 million are considered to be indefinitely
reinvested outside the U.S. and, accordingly, no U.S.
Federal or state income taxes have been provided thereon.
In the event of a distribution of those earnings in the form
of dividends, Enron may be subject to both foreign
withholding taxes and U.S. income taxes, net of allowable
foreign tax credits. Determination of any potential amount
of unrecognized deferred income tax liability is not
practicable.
5. Supplemental Cash Flow Information
Cash paid for income taxes and interest expense is as
follows:
<TABLE>
<CAPTION>
(In Thousands) 1993 1992 1991
<S> <C> <C> <C>
Income taxes $ 39,307 $111,125 $ 74,416
Interest (net of amounts
capitalized) 228,034 299,469 284,285
</TABLE>
Non-cash investing and financing activities during 1993
included the exchange of common stock for convertible
preferred stock of $33.3 million.
Non-cash investing and financing activities during 1992
included the exchange of common stock for convertible
subordinated debentures and convertible preferred stock in
transactions valued at $90.5 million and $39.8 million,
respectively, and the acquisition of retail gas marketing
operations in exchange for common stock valued at $18.3
million. During 1991, non-cash investing and financing
activities included the exchange of common stock for
convertible subordinated debentures and convertible
preferred stock in transactions valued at $10.5 million and
$14.9 million, respectively.
Changes in components of working capital are as follows:
<TABLE>
<CAPTION>
(In Thousands) 1993 1992 1991
<S> <C> <C> <C>
Receivables $(360,206) $ 118,854 $ 403,840
Inventories 92,228 (22,741) (15,597)
Payables 144,518 (55,188) (248,307)
Accrued taxes (11,941) (24,690) 50,307
Accrued interest 2,913 (25,088) 13,804
Other 55,975 (148,381) 145,217
Total $ (76,513) $(157,234) $ 349,264
</TABLE>
6. Credit Facilities, Short-Term Borrowings and Long-Term
Debt
Enron and EOG have credit facilities with domestic and
foreign banks which at December 31, 1993 provided for an
aggregate of $1.1 billion in long-term committed credit.
Expiration dates of the committed facilities range from
December 1994 to January 1997. Interest rates on borrowings
are based upon the London Interbank Offered Rate,
certificate of deposit rates or other short-term interest
rates. Certain credit facilities contain covenants which
must be met for Enron to borrow funds. Such debt covenants
are not anticipated to materially restrict Enron's ability
to borrow funds under such facilities. Compensating
balances are not required, but Enron is required to pay a
commitment or facility fee. During 1993, no amounts were
borrowed under these facilities.
Enron and EOG have also entered into agreements which
provide for uncommitted lines of credit totaling $1.06
billion at December 31, 1993. The uncommitted lines have no
stated expiration dates. Neither compensating balances nor
commitment fees are required as borrowings under the
uncommitted credit lines are available subject to agreement
by the participating banks. At December 31, 1993, Enron had
outstanding $144 million under certain of the uncommitted
lines at average interest rates of 3.6%. In addition to
borrowing from banks on a short-term basis, Enron and
certain of its subsidiaries sell commercial paper to provide
short-term financing for various corporate purposes. As of
December 31, 1993, 1992 and 1991, short-term borrowings of
$143.8 million, $101.0 million, and $243.7 million,
respectively, have been reclassified as long-term debt based
upon the availability of committed credit facilities with
expiration dates exceeding one year and management's intent
to maintain such amounts in excess of one year subject to
overall reductions in debt levels. Similarly, at December
31, 1993, 1992 and 1991, $132.4 million, $292.3 million, and
$289.8 million, respectively, of long-term debt due within
one year remained classified as long-term.
Detailed information on short-term borrowings by Enron is as
follows:
<TABLE>
<CAPTION>
(Dollars In Millions) 1993 1992 1991
<S> <C> <C> <C>
As of end of year
Borrowings from -
Commercial paper $ - $ 75.0 $ 189.2
Banks and other 143.8 26.0 54.5
Amount reclassified
as long-term debt (143.8) (101.0) (243.7)
Total short-term borrowings $ - $ - $ -
Weighted average interest rate
at end of year(a) 3.6% 3.7% 5.5%
For the year ended
Maximum borrowings
at any month end(a) $1,087.1 $885.5 $ 743.2
Average borrowings(a)(b) 590.9 588.0 500.3
Weighted average interest rate
during the year(a)(c) 3.3% 3.9% 6.3%
<FN>
(a) Before reclassification as long-term debt.
(b) Computed using the ending balance at each month end.
(c) Computed using the weighted average interest rates
of debt outstanding at each month end.
</TABLE>
Detailed information on long-term debt is as follows:
<TABLE>
<CAPTION>
December 31,
(In Thousands) 1993 1992
<S> <C> <C>
Enron Corp.
Debentures
6.75% due 2005 - senior subordinated $ 200,000 $ -
8.25% due 2012 - senior subordinated 150,000 150,000
Notes Payable
Variable rates - 10,000
8.15% to 9.25% due from 1994 to 1996 200,000 393,702
9.50% to 10.75% due from 1998 to 2001 342,777 342,777
7.625% to 9.875% due from 2003 to 2006 692,200 692,200
7% due 2023 100,000 -
Other 57,512 10,484
Northern Natural Gas Company
Notes Payable
11.00% due 1995 - 88,573
8.00% due 1999 250,000 250,000
6.875% due 2005 100,000 -
Houston Pipe Line Company
Notes Payable
12.125% due 1995 100,000 100,000
Other - 24,062
Transwestern Pipeline Company
Notes Payable
7.55% to 9.10% due 2000 123,000 123,000
9.20% due 1998 to 2004 27,000 27,000
Enron Oil & Gas Company
Notes Payable
8.92% to 8.98% due 1995 50,000 50,000
9.10% due 1994 to 1998 100,000 100,000
Other 33,000 -
Amount reclassified from short-term debt 143,774 101,007
Unamortized debt discount and premium (8,023) (3,881)
Total Long-Term Debt $2,661,240 $2,458,924
</TABLE>
The aggregate annual maturity requirements applicable to
long-term debt outstanding at December 31, 1993 are $132.4
million, $153.4 million, $133.1 million, $22.9 million and
$169.0 million for 1994 through 1998, respectively. In
addition, based upon available committed credit facilities,
$143.8 million of short-term debt which has been
reclassified as long-term debt would be due in 1995.
During 1992, Enron retired, pursuant to call provisions,
$836 million principal amount of long-term debt with
interest rates ranging from 8.7% to 11.5%. The early
retirement of debt resulted in extraordinary items of $22.6
million, net of tax.
7. Accounts Receivable
Enron has entered into agreements which provide for the sale
of up to $800.0 million of trade accounts receivable with
limited recourse provisions. Included in this amount is a
$300.0 million agreement which will expire in April 1994 with
the remainder expiring in February 1995. At December 31,
1993 and 1992, $700.1 million and $700.0 million,
respectively, of receivables were sold under these
agreements.
The fees incurred on the sales of accounts receivables
totaled $20.6 million, $23.5 million and $37.8 million for
1993, 1992 and 1991, respectively. Additionally, fees
incurred in connection with other long-term obligations and
the sales of rights to certain recoverable take-or-pay
buyout and contract reformation costs totaled $5.1 million,
$12.5 million and $30.7 million, respectively, for 1993,
1992 and 1991 and are included in "Interest and Related
Charges, net", in the Consolidated Income Statement.
Enron affiliates have concentrations of customers in the
electric and gas utility industries. These concentrations
of customers may impact Enron's overall exposure to credit
risk, either positively or negatively, in that the customers
may be similarly affected by changes in economic or other
conditions. However, Enron's management believes that the
portfolio of receivables is well diversified and that such
diversification minimizes any potential credit risk. Credit
losses incurred on receivables in these industries compare
favorably to losses experienced on Enron's receivables
portfolio as a whole. Receivables are generally not
collateralized.
8. Production Payment Agreement
In September 1992, EOG entered into a transaction with a
limited partnership under which EOG conveyed an interest in
approximately 124 billion cubic feet equivalent (136
trillion British thermal units) of natural gas and other
hydrocarbons in the Big Piney area of Wyoming for
consideration of $326.8 million (the production payment
agreement). The natural gas and other hydrocarbons were
originally scheduled to be produced and delivered over a
period of forty-five months, which period commenced October
1, 1992. Effective October 1, 1993, the agreement was
amended providing for the extension of the original term of
the volumetric production payment through March 31, 1999
based on a revised schedule of daily quantities of
hydrocarbons to be delivered which is approximately one-half
of the original schedule. EOG retains responsibility for
its working interest share of the cost of operations.
Proceeds from the sale were used to repay long-term debt and
for other corporate purposes. Enron has accounted for the
proceeds received in the transaction as deferred revenue
which is being amortized into revenue as natural gas and
other hydrocarbons are produced and delivered during the
term of the amended agreement. Annual remaining
amortization of deferred revenue, based on scheduled
deliveries under the amended production payment agreement at
December 31, 1993, is approximately $43.3 million per year
through 1998 and $10.7 million for 1999. Reserves dedicated
to the transaction are included in the estimate of proved
oil and gas reserves (see Note 20).
9. Unconsolidated Subsidiaries
Enron has investments in and advances to unconsolidated
subsidiaries as follows:
<TABLE>
<CAPTION>
Ownership
Investee Interest December 31,
(In Thousands) 1993 1992
<S> <C> <C> <C>
Citrus Corp. 50% $169,984 $178,050
Northern Border Pipeline Company 35% - 207,459
Northern Border Partners, L.P. 13% 55,731 -
Teesside Power Limited 50% 173,915 20,475
Enron/Dominion Cogen Corp. 50% 46,243 49,911
Mojave Pipeline Company 50% - 42,464
Trailblazer Pipeline Company 33% 25,717 25,538
Oasis Pipe Line Company 25% 7,884 10,140
Madosa 42% 12,894 12,151
Argentina Southern Gas
Pipeline System 18% 97,450 23,689
Enron Liquids Pipeline, L.P. 15% 24,036 22,368
Other 83,230 43,817
$697,084 $636,062
</TABLE>
Enron's equity in earnings (losses) of unconsolidated
subsidiaries is as follows:
<TABLE>
<CAPTION>
Investee Year Ended December 31,
(In Thousands) 1993 1992 1991
<S> <C> <C> <C>
Citrus Corp. $(8,066) $(11,059) $(4,601)
Northern Border Pipeline Company 22,934 34,004 24,181
Northern Border Partners, L.P. 1,368 - -
Teesside Power Limited 12,444 - -
Enron/Dominion Cogen Corp. 5,703 7,485 6,776
Mojave Pipeline Company 2,435 6,749 11,982
Trailblazer Pipeline Company 3,514 6,687 3,623
Oasis Pipe Line Company 1,299 2,879 5,830
Madosa 5,522 5,873 2,747
Argentina Southern Gas Pipeline
System 22,904 - -
Other 3,236 3,927 4,690
$73,293 $ 56,545 $55,228
</TABLE>
Summarized combined financial information of Enron's
unconsolidated subsidiaries is presented below:
<TABLE>
<CAPTION>
December 31,
(In Thousands) 1993 1992
<S> <C> <C>
Balance Sheet
Current assets $ 921,850 $1,476,459
Property, plant and equipment, net 4,054,780 4,853,117
Other noncurrent assets 2,330,387 600,060
Current liabilities 982,874 645,981
Noncurrent liabilities 4,584,922 5,174,091
Owners' equity 1,739,221 1,109,564
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
(In Thousands) 1993 1992 1991
<S> <C> <C> <C>
Income Statement
Operating revenues $2,351,177 $1,825,158 $1,352,232
Operating expenses 2,016,977 1,528,770 1,064,360
Net income 204,262 122,346 163,886
Distributions Paid to Enron 59,585 42,490 45,973
</TABLE>
Northern Border Partners, L.P. During October 1993,
Northern Plains Natural Gas Company, a wholly-owned
subsidiary of Enron, along with two of the other three
general partners in Northern Border Pipeline Company
contributed all of their combined 70% interest in Northern
Border to Northern Border Partners, L.P., a Delaware limited
partnership (the Partnership), in exchange for general
partner interests, subordinated units and common units in
the Partnership. Northern Plains sold its common units in
the Partnership in an underwritten public offering and
received net proceeds of approximately $217 million
resulting in a pretax gain of approximately $64 million.
Northern Plains retained a 13% interest in the Partnership.
Teesside Power Limited (Teesside). Enron has a 50%
ownership interest in Teesside, a joint venture cogeneration
company which owns a 1,875 megawatt independent power
facility in northeast England. The remaining 50% ownership
interest is held by four of the twelve regional electric
companies operating in England.
Under the terms of the Shareholder Agreement relating to
Teesside, Enron made a capital investment of $151 million on
April 1, 1993. An affiliate of Enron operates the facility
which was placed in commercial operation on March 27, 1993.
Construction revenue and profit have been recognized on the
portion of the joint venture not owned by Enron using the
percentage of completion method of accounting. Revenue and
profit on that portion of the joint venture owned by Enron
have been deferred and are being amortized.
Enron has guaranteed the payment of Teesside's obligation in
connection with certain grid connection charges which could
become due should the power plant terminate operations.
Further, Enron has guaranteed the payment of its
proportionate share of amounts which could become due in the
event of default by Teesside under the terms of the power
sales agreements (see Note 16).
Under the terms of certain gas supply agreements extending
through 2008, Teesside is obligated to take-or-pay for an
average of up to 240 billion British Thermal Units of
natural gas per day at indexed prices. Enron has guaranteed
70% of Teesside's payment obligation under the gas supply
agreements. However, Enron believes there are alternative
markets for such gas should the gas not be taken by
Teesside.
Joint Energy Development Investments. In 1993, Joint
Energy Development Investments (JEDI), a limited partnership,
was formed, comprised of an Enron Subsidiary as general
partner and the California Public Employees Retirement System
(CalPERS) as limited partner, to acquire energy investments.
Enron and CalPERS each own a 50% interest and have each
committed to invest $250 million of capital over the next
three years in JEDI, $5 million of which has already been
contributed as of December 31, 1993. Enron intends to meet
its required capital commitments by contributing Enron common stock.
10. Preferred Stock
Convertible Preferred Stock. Each share of the $10.50
Cumulative Second Preferred Convertible Stock is convertible
at any time at the option of the holder thereof into 13.652
shares of Enron's common stock, subject to certain
adjustments. The Convertible Preferred Stock is currently
subject to call at Enron's option at a price of $100 per
share plus accrued dividends. Upon involuntary liquidation,
holders would be entitled to $100 per share. During 1993,
1992 and 1991, 332,964 shares, 397,710 shares and 148,497
shares, respectively, of the Convertible Preferred Stock
were converted into common stock.
Preferred Stock of Subsidiary Company. During November
1993, Enron's wholly-owned subsidiary Enron Capital LLC
issued 8.55 million shares of 8% Cumulative Guaranteed
Monthly Income Preferred Shares (MIPS) at a price of $25 per
share. Net proceeds of approximately $207 million were used
by Enron to reduce indebtedness and for other corporate
purposes. The MIPS are redeemable at the option of Enron in
whole or in part beginning November 1998 at a redemption
price of $25 per share plus accumulated and unpaid
dividends. Upon liquidation of Enron Capital LLC, the
holders of the MIPS are entitled to $25 per share.
11. Common Stock and Dividends
On July 28, 1993, Enron increased the number of authorized
shares of common stock from 300,000,000 to 600,000,000
shares and decreased the par value of such common stock from
$10.00 to $0.10 per share. The reduced par value of $9.90
for each share outstanding, or $1.18 billion, was
transferred to additional paid-in capital. On August 16,
1993, Enron effected, in the form of a stock dividend, a two-
for-one common stock split on all issued common stock. The
par value of $11.9 million for 119,486,623 additional shares
was transferred from additional paid-in capital to common
stock. Appropriate references in the financial statements
and supplemental financial information to number of shares
and related prices, per share amounts and stock option
information reflect the stock split.
The dividend history during each of the three years in the
period ended December 31, 1993 is as follows: Enron paid
quarterly cash dividends on common stock of $.155 per share
($.62 per share annually) until the final quarter of 1991 at
which time the dividend was increased to $.1625 per share
($.65 per share annually). The dividend was increased to
$.175 per share ($.70 per share annually) for the final
quarter of 1992 and was further increased to $.1875 per
share ($.75 per share annually) for the final quarter of
1993. Enron's debt agreements do not limit the payment of
cash dividends on common stock. Common stock information is
as follows:
<TABLE>
<CAPTION>
(In Thousands) 1993(a) 1992 1991
<S> <C> <C> <C>
Common Stock, beginning of year 237,532 103,269 50,625
Issued to Employee Benefit Plans 1,394 11,149 303
Conversions 2,447 3,949 707
Other 156 399 -
Dividend reinvestment 66 - -
Flexible Equity Trust 7,500 - -
Stock Split - - 51,634
Common Stock, end of year 249,095 118,766 103,269
<FN>
(a) Presented as if the 1993 stock split was January 1, 1993.
</TABLE>
Treasury stock information is as follows:
<TABLE>
<CAPTION>
1993(d) 1992 1991
<S> <C> <C> <C>
Treasury Stock, beginning of year 349,400 2,050,644 177,755
Employee Benefit Plans
Issued (1,435,687) (1,314,196) (343,249)
Returned 98,381 15,021 7,754
Open Market Purchases(a) 3,005,200 1,610,100 1,173,800
Conversions(b) (2,043,090) (2,205,393) -
Other(c) 69,404 18,524 9,262
Dividend Reinvestment Plan (43,608) - -
Stock Split - - 1,025,322
Treasury Stock, end of year - 174,700 2,050,644
<FN>
(a) Purchased in connection with a stock repurchase
program authorized by the Board of Directors.
(b) Conversions of convertible subordinated debentures
in 1992 and convertible preferred stock in 1993.
(c) Purchased pursuant to compensation agreements.
(d) Presented as if the 1993 stock split was January 1, 1993.
</TABLE>
During 1993, Enron issued 130,329,224 shares of its common
stock in connection with certain transactions including the
two-for-one stock split, the conversion of preferred stock
and employee benefit plans.
Enron has various stock option plans (the Plans) under which
options for shares of Enron's common stock have been or may
be granted to officers, key employees and non-employee
members of the Board of Directors. Under the Plans, options
granted may be either incentive stock options or
nonqualified stock options and are granted at not less than
the fair market value of the stock at the time of grant.
Expiration dates of the options outstanding at December 31,
1993 range from July 9, 1994 to September 23, 2003. The
Plans provide for options to be granted with stock
appreciation rights (SAR); however, Enron does not presently
intend to issue additional options with an SAR feature.
Summarized information for the Plans is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Shares under option,
beginning of year 7,314,332 8,996,560 9,406,204
Granted 4,253,233 1,409,480 2,992,000
Exercised (1,621,680) (2,807,984) (2,868,092)
Cancelled or expired (266,166) (283,724) (533,552)
Shares under option, end of year 9,679,719 7,314,332 8,996,560
Shares available for grant at
end of year 1,500,301* 5,582,480* 6,954,400*
Shares exercisable at end of year 3,104,722 2,199,224 2,983,784
Average price of options exercised
during the year $13.30 $11.82 $11.05
Average price of options outstanding
at end of year $19.64 $13.47 $12.60
<FN>
*Excludes up to 2,528,560 shares, 2,730,780 shares
and 2,750,000 shares as of December 31, 1993, 1992 and 1991,
respectively, which may be issued as either Restricted Stock
or as stock options.
</TABLE>
Under the Plans, participants may be granted stock without
cost to the participant (restricted stock). The shares
issued under the Plans vest to the participants at various
times ranging from immediate vesting to vesting at the end
of a five year period. The following is an analysis of
shares of restricted stock:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Outstanding at beginning of year 35,588 365,088 223,624
Granted 203,700 19,220 270,080
Cancelled or expired (3,632) - (9,840)
Issued (13,998) (348,720) (118,776)
Outstanding at end of year 221,658 35,588 365,088
Available for grant at end of year 2,528,560 2,730,780 2,750,000
Average price per share
on date of grant $27.50 $11.18 $11.08
</TABLE>
Flexible Equity Trust (the Trust). In December 1993, Enron
established the Trust to fund a portion of
its obligations arising from its various employee
compensation and benefit plans. Enron issued 7.5 million
shares of common stock to the Trust in exchange for cash and
an interest bearing promissory note. The note held by Enron
is reflected as a reduction of "Other" shareholders' equity.
Common shares held by the Trust are not included in the computation
of earnings per share.
12. Retirement Benefits Plan and ESOP
Enron maintains a retirement plan (the Enron Plan) which is
a noncontributory defined benefit plan covering
substantially all employees in the United States and certain
employees in foreign countries. Participants in the Enron
Plan with five years or more of service are entitled to
retirement benefits based on a formula that uses a
percentage of final average pay and years of service.
Enron maintains a noncontributory employee stock ownership
plan (ESOP) which covers all eligible employees.
Allocations to individual employees' retirement accounts
within the ESOP offset a portion of benefits earned under
the Enron Plan. To the extent allocations to the individual
employees retirement account within the ESOP exceed accrued
benefits under the Enron Plan at the date of retirement, the
individual employees receive the additional shares.
The components of pension expense are as follows:
<TABLE>
<CAPTION>
(In Thousands) 1993 1992 1991
<S> <C> <C> <C>
Service cost - benefits earned
during the year $ 11,709 $ 10,224 $ 7,960
Interest cost on projected
benefit obligation 25,230 22,699 20,008
Actual return on plan assets (37,507) (52,141) (43,092)
Amortization and deferrals 11,184 28,897 21,775
Early retirement termination benefits - 166 -
Pension expense $ 10,616 $ 9,845 $ 6,651
</TABLE>
The valuation date of the Enron Plan and the ESOP is
September 30. The funded status as of the valuation date of
the Enron Plan and the ESOP reconciles with the amount
detailed below which is included in other assets on the
Consolidated Balance Sheet at December 31, 1993 and 1992.
Assets of the ESOP offset retirement benefits accrued under
the Enron Plan only to the extent allocated to individual
employee retirement accounts.
<TABLE>
<CAPTION>
(In Thousands) 1993 1992
<S> <C> <C>
Actuarial present value of accumulated
benefit obligation at September 30
Vested $(284,559) $(204,176)
Nonvested (27,862) (15,696)
Additional amounts related to
projected wage increases (66,641) (65,796)
Projected benefit obligation (379,062) (285,668)
Plan assets at fair value(a) 404,397 300,755
Projected benefit obligation less than
Plan assets 25,335 15,087
Unrecognized net loss 29,690 51,762
Unrecognized prior service cost 14,113 15,810
Unrecognized net asset at transition (48,272) (56,634)
Contributions 815 2,004
Prepaid pension cost at December 31 $ 21,681 $ 28,029
Discount rate 7.00% 9.00%
Long-term rate of return on assets 10.50 10.50
Rate of increase in wages 4.00 5.00
<FN>
(a) Includes plan assets of the ESOP of $286,041 and
$193,144 for the years 1993 and 1992, respectively.
</TABLE>
Assets of the Enron Plan are comprised primarily of equity
securities, fixed income securities and temporary cash
investments. It is Enron's policy to fund all pension costs
accrued to the minimum amount required by federal tax
regulations.
13. Postretirement Benefits Other Than Pensions
Enron provides certain medical, life insurance and dental
benefits to eligible employees who retire under the Enron
Retirement Plan and their eligible surviving spouses.
Benefits are provided under the provisions of a contributory
defined dollar benefit plan. Enron is currently funding
that portion of its obligations under its postretirement
benefit plan which is expected to be recoverable through
rates by its regulated pipelines.
Effective January 1, 1993, Enron adopted the provisions of
SFAS No. 106 - "Employers Accounting for Postretirement
Benefits Other Than Pensions". SFAS No. 106 requires that
employers providing postretirement benefits accrue those
costs over the service lives of the employees expected to be
eligible to receive such benefits. Enron has elected the
prospective transition approach and is amortizing the
transition obligation which existed at January 1, 1993 over
a period of approximately 19 years.
The following table sets forth the plan's funded status
reconciled with the amounts reported in the Consolidated
Balance Sheet.
<TABLE>
<CAPTION>
(In Thousands) 1993
<S> <C>
Actuarial present value of accumulated
postretirement benefit obligation (APBO)
Retirees $ (93,101)
Fully eligible active plan participants (2,748)
Other employees (21,611)
Total APBO (117,460)
Plan assets at fair value 1,938
Accumulated postretirement benefit
obligation in excess of plan assets (115,522)
Unrecognized transition obligation 79,547
Unrecognized prior service costs 19,297
Unrecognized net loss 14,249
Accrued postretirement benefit obligation $ (2,429)
</TABLE>
The components of net periodic postretirement benefit
expenses are as follows:
<TABLE>
<CAPTION>
(In Thousands) 1993
<S> <C>
Service costs $ 850
Interest costs 7,374
Return on plan assets (39)
Amortization of transition obligation 4,744
Postretirement benefit expense $12,929
</TABLE>
The measurement of the APBO assumes a 7% discount rate and a
health care cost trend rate of 13% in 1993 decreasing to 5%
by the year 2005 and beyond. A 1% increase in the health
care cost trend rate would have the effect of increasing the
APBO and the net periodic expense by approximately $9.7
million and $0.6 million, respectively.
14. Natural Gas Rates and Regulatory Issues
Regulatory issues on Enron's regulated pipelines are subject
to final determination by the FERC. Enron has provided a
reserve related to pending regulatory issues and believes
that the ultimate resolution of such issues will not have a
materially adverse impact on Enron's financial position or
results of operations.
The regulated pipelines have all successfully completed
their transitions under FERC Order 636 (currently under
appeal before the U.S. Court of Appeals for the 11th
Circuit), and have completely unbundled their sales services
from their transportation services. As required by Order 636,
each of the regulated pipelines has implemented a straight
fixed variable rate design which provides that all fixed costs
to firm customers including return on equity, are to be
received through fixed monthly demand or capacity reservation
charges which are not a function of volumes transported.
Under their respective restructuring orders, the regulated
pipelines are entitled to recover FERC Order 636 transition
costs from customers. Transition costs incurred of $168
million have been deferred pending recovery from customers
over varying time periods, generally of up to five years. Future
transition costs are subject to ongoing negotiations and
market factors. Enron believes that the ultimate resolution
of FERC Order 636 transition costs will not have a material
impact on Enron's financial position or results of
operations.
15. Litigation and Other Contingencies
Enron is party to various claims and litigation, the
significant items of which are discussed below. Although no
assurances can be given, Enron believes, based on its
experience to date and after considering appropriate
reserves that have been established, that the ultimate
resolution of such items, individually or in the aggregate,
will not have a materially adverse impact on Enron's
financial position or results of operations.
Litigation
TransAmerican Natural Gas Corporation (TransAmerican) has
filed a petition against Enron Corp. and EOG alleging breach
of confidentiality agreements, misappropriation of trade
secrets and unfair competition, with specific reference to
four tracts in Webb County, Texas, which EOG leased for
their oil and gas exploration and development potential.
TransAmerican seeks actual damages of $100 million and
exemplary damages of $300 million. EOG has filed claims
against TransAmerican and its sole shareholder alleging
fraud, land fraud, negligent misrepresentation and breach of
state antitrust laws. Trial is set for May 2, 1994.
Although no assurances can be given, Enron believes that
TransAmerican's claims are without merit and that the
ultimate resolution of this matter will not have a
materially adverse effect on its financial position or
results of operations.
A pipeline company in which an Enron affiliate has a
minority interest and for which an Enron affiliate has
served as operator, has filed a petition against Enron and
certain affiliates alleging an unspecified amount of damages
relating to the operation of such pipeline company. Based
upon information currently available, it is not possible to
predict the outcome of such litigation; however, Enron
believes that the results will not have a materially adverse
effect on Enron's financial position or results of
operations.
Like other companies in the natural gas industry, Enron has
certain gas purchase contracts which provide for take-or-pay
obligations and fixed prices. Certain suppliers have made
claims, either formally or informally, for payment under
take-or-pay provisions. At December 31, 1993, amounts of
pending take-or-pay claims and litigation are not material.
Peruvian Operations
During 1985, the Peruvian government unilaterally cancelled
certain exploration and production agreements between the
government-owned oil company and Belco Petroleum Corporation
of Peru (BPCP), a wholly-owned subsidiary of Enron, and
subsequently nationalized the operations of BPCP. Enron
filed claims with its insurers in connection with the
nationalization and in February 1989, the insurers paid
Enron approximately $162 million. On September 21, 1993,
the Peruvian government signed a settlement agreement with
American International Group, Inc. and BPCP which will allow
Enron to recover its remaining investment of approximately
$33 million.
Environmental Matters
Enron is subject to extensive Federal, state and local
environmental laws and regulations. These laws and
regulations require expenditures in connection with the
construction of new facilities, the operation of existing
facilities and for remediation at various operating sites.
The implementation of the Clean Air Act Amendments is
expected to result in increased operating expenditures.
These increased operating expenses are not expected to have
a material impact on Enron's financial position or results
of operations.
In addition, Enron received requests for information from
the Environmental Protection Agency (EPA) and state
environmental agencies inquiring whether Enron has disposed
of materials at certain waste disposal sites. Enron has
received notices from EPA and state agencies that it is a
"potentially responsible party" (PRP) under the
Comprehensive Environmental Response, Compensation and
Liability Act and analogous state statutes, and may be
required to share in the costs of the cleanup of other,
similar sites. However, management does not believe that
any potential assessments in connection with these PRP
notices and third party claims, either taken individually or
in the aggregate, will have a material impact on Enron's
financial position or results of operations.
16. Commitments
Firm Transportation Obligations
Enron has firm transportation agreements with various joint
ventures. Under these agreements, Enron must make
specified minimum payments each month. The estimated
aggregate amounts of such required future payments at
December 31, 1993, were:
<TABLE>
<CAPTION>
(In Millions)
<C> <C>
1994 $ 40.2
1995 40.1
1996 108.2
1997 117.2
1998 118.9
Later years 1,240.0
Total $1,664.6
</TABLE>
The costs incurred under these agreements, including
commodity charges on actual quantities shipped, totaled
$38.2 million, $42.7 million and $53.8 million in 1993, 1992
and 1991, respectively. Enron has assigned a firm
transportation contract with one of its joint venture pipelines
to a third party and guaranteed minimum payments under the
contract averaging approximately $43 million annually
through 2001.
Other Commitments
Enron leases property, operating facilities and equipment
under various operating leases, certain of which contain
renewal and purchase options and residual value guarantees.
Guarantees under the leases total $955 million at December
31, 1993.
During July 1992, Enron modified and extended an agreement
entered into in 1988 for a substantial amount of data
processing facilities management services. The modification
extends the original 10 year agreement for a period of three
years through 2001. As part of the agreement, Enron prepaid
$150 million for certain services to be performed over the
life of the agreement.
Future commitments related to these items at December 31,
1993 are as follows:
<TABLE>
<CAPTION>
(In Millions)
<C> <C>
1994 $ 194.1
1995 243.4
1996 334.9
1997 114.3
1998 105.3
Later years 650.3
Total minimum payments $1,642.3
</TABLE>
Total rent expense incurred during 1993, 1992 and 1991 was
$104.1 million, $64.7 million and $85.9 million, respectively.
Enron guarantees certain long-term contracts for the sale of
electrical power and steam from the Texas City cogeneration
facility owned by one of Enron's equity investees. Under
terms of the contracts, which initially extend through June
1999, Enron could be liable for penalties should, under
certain conditions, the contracts be terminated early.
Enron also guarantees the performance of certain of its
subsidiaries in connection with letters of credit issued on
behalf of those subsidiaries. At December 31, 1993, a total
of $124 million of such guarantees were outstanding.
Management does not expect to incur any material liabilities
as a result of these obligations. In addition, Enron is a
guarantor on certain debt of unconsolidated joint ventures
and unconsolidated subsidiaries and other companies totaling
approximately $305 million. Management does not consider it
likely that there would be any losses associated with these
guarantees. In addition, certain commitments have been made
related to 1994 planned capital expenditures.
17. Other Income, Net
The components of Other Income, Net are as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
(In Thousands) 1993 1992 1991
<S> <C> <C> <C>
Gains on sales of Mobil stock $ - $ 52,048 $27,944
Gains on sales of oil and
gas properties 13,318 6,037 14,983
Gains on sales of other
assets and investments 102,268 18,549 15,426
Regulatory, contingency
and other adjustments (55,689) (40,927) 11,036
Litigation adjustments and
settlements, net 4,282 (41,870) 27,086
Other 11,254 (10,210) 9,611
$75,433 $(16,373) $106,086
</TABLE>
18. Financial Instruments
The following disclosures on the estimated fair value of
financial instruments are presented in accordance with the
requirements of SFAS No. 107 - "Disclosures About Fair Value
of Financial Instruments." Fair value as used in SFAS No.
107 represents the amount at which the instrument could be
exchanged in a current transaction between willing parties.
The estimated fair value amounts have been determined by
Enron using available market data and valuation
methodologies. Judgement is necessarily required in
interpreting market data and the use of different market
assumptions or estimation methodologies may affect the
estimated fair value amounts. The amounts disclosed below
exclude Enron's price risk management activities discussed
in Notes 1 and 2.
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
Carrying Estimated Carrying Estimated
(In Millions) Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
Balance Sheet Financial
Instruments
Long-term debt $2,661.2 $2,903.4 $2,458.9 $2,603.0
Other Financial Instruments
Interest rate swap agreements - (2.3) - (4.8)
Foreign currency contracts - (0.1) - 0.3
Guarantees - (2.7) - (9.3)
</TABLE>
Long-Term Debt. The fair market value of long-term debt is
the estimated cost to acquire the debt, including a premium
or discount for the differential between the issue rate and
the year-end market rate. The fair value of long-term debt
is based upon quoted market prices and, where such prices
are not available, upon interest rates available to Enron.
Interest Rate Swap Agreements. Enron and EOG have entered
into various interest rate swap transactions to hedge
certain floating interest rate exposure in 1993 and 1994.
This floating interest rate exposure arises primarily from
short-term interest bearing debt as well as certain
operating lease obligations and accounts receivable sales
for which payments are subject to floating interest rates
(see Notes 6, 7 and 16).
At December 31, 1993, Enron and EOG had outstanding interest
rate swap agreements with a notional principal amount of
$3.6 billion. During January 1994, Enron executed
additional swap agreements with notional principal amounts
totaling $700 million. Included in the $4.3 billion total
swap agreements is $2.1 billion notional principal amount of
interest rate swap agreements which expired subsequent to
December 31, 1993 and which were executed to hedge
anticipated floating rate exposure in 1993. Also included
are approximately $2.1 billion notional principal amount of
interest rate swap agreements executed to hedge anticipated
floating rate exposure in 1994. The remaining notional
principal amounts include swap agreements extending beyond
1994. The fair value of interest rate swap agreements is
based upon termination values obtained from third parties.
Credit Risk. While notional contract amounts are used to
express the volume of interest rate swap agreements, the
amounts potentially subject to credit risk, in the event of
nonperformance by the third parties, are substantially
smaller. Enron does not anticipate any material impact to
its financial position or results of operations as a
result of nonperformance by the third parties.
Price Risk Management. Enron entered into certain price
swap agreements to, in effect, hedge the market risk caused
by fluctuations in the price of natural gas. The agreements
call for Enron to make payments to (or receive payments
from) the other party based upon the differential between a
fixed and a variable price for natural gas as specified by
the contract. The current swap agreements run for periods
of ten years and have a notional contract amount of
approximately $299 million at December 31, 1993.
Foreign Currency Contracts. Foreign currency contracts are
entered into to hedge currency exposure from commercial
transactions. At December 31, 1993, foreign currency
contracts with a principal amount of $38.3 million were
outstanding. Fair value of such contracts are based upon
year-end fair market values.
Guarantees. As more fully discussed in Notes 9 and 16,
Enron is a guarantor on certain debt and lease obligations.
The fair value of such guarantees is based upon Enron's
estimation of the cost of securing third party letters of
credit equal to Enron's obligations under such guarantees.
19. Business and Geographic Segment Information
Enron's operations are classified into five business
segments:
Transportation and Operation - Transmission of natural gas.
Construction, management and operation of pipelines, liquids
plants and power facilities. Crude oil transportation
activities and investment in liquids pipeline operations.
Gas Services - Purchasing, marketing and financing of natural
gas, natural gas liquids and power. Price risk management
in connection with natural gas and natural gas liquids transactions.
Intrastate natural gas pipelines. Development, acquisition
and promotion of natural gas fired power plants in North
America.
Gas Processing - Extraction of natural gas liquids in North America.
International Gas and Power Services - Independent (non-
utility) development, acquisition and promotion of natural
gas-fired power plants, natural gas liquids facilities and
pipelines outside of North America. International marketing of
natural gas liquids.
Exploration and Production - Natural gas and crude oil
exploration and production primarily in the United States,
Canada and Trinidad.
Enron's business segment information has been reclassified
from prior years to reflect the realignment of Enron's
operations. Financial information by business and
geographic segment for each of the three years in the period
ended December 31, 1993, is presented below.
Operations In Business and Geographic Segments
Business Segments
<TABLE>
<CAPTION>
International
Transportation Gas and Exploration Corporate
and Gas Gas Power and and
(In Thousands) Operation Services Processing Services Production Other(c)(d) Total
<S> <C> <C> <C> <C> <C> <C> <C>
1993
Unaffiliated Revenues(a) $1,385,925 $5,392,121 $ 57,825 $ 751,375 $ 385,236 $ - $ 7,972,482
Intersegment Revenues(b) 80,081 243,646 386,976 19,213 301,691 (1,031,607) -
Total Revenues 1,466,006 5,635,767 444,801 770,588 686,927 (1,031,607) 7,972,482
Depreciation, Depletion
and Amortization 115,922 74,677 6,283 9,081 249,704 2,521 458,188
Operating Income (Loss) 341,272 149,886 5,687 64,582 102,241 (46,184) 617,484
Equity in Earnings of
Unconsolidated Subsidiaries 22,427 8,821 - 41,962 - 83 73,293
Other Income, net 18,437 10,115 22,351 24,835 19,953 11,199 106,890
Income Before Interest,
Minority Interest
and Income Taxes 382,136 168,822 28,038 131,379 122,194 (34,902) 797,667
Additions to Property,
Plant and Equipment 144,835 78,453 24,065 52,545 383,064 5,070 688,032
Identifiable Assets 2,808,816 5,165,809 186,354 492,297 1,668,395 485,560 10,807,231
Investments in and Advances
to Unconsolidated Subsidiaries 278,912 83,360 - 315,461 - 19,351 697,084
Total Assets $3,087,728 $5,249,169 $186,354 $ 807,758 $1,668,395 $ 504,911 $11,504,315
1992
Unaffiliated Revenues(a) $1,418,761 $3,806,088 $65,980 $ 864,695 $ 253,749 $ - $ 6,409,273
Intersegment Revenues(b) 82,513 152,371 361,043 10,529 300,375 (906,831) -
Total Revenues 1,501,274 3,958,459 427,023 875,224 554,124 (906,831) 6,409,273
Depreciation, Depletion
and Amortization 111,141 70,438 6,283 6,897 179,839 1,421 376,019
Operating Income (Loss) 314,412 160,167 54,132 (4,502) 99,572 (10,009) 613,772
Equity in Earnings of
Unconsolidated Subsidiaries 36,628 12,391 1,926 5,505 - 95 56,545
Other Income, net 27,267 (26,012) (211) 32,074 2,561 61,186 96,865
Income Before Interest,
Minority Interest
and Income Taxes 378,307 146,546 55,847 33,077 102,133 51,272 767,182
Additions to Property,
Plant and Equipment 144,468 33,584 34,211 10,236 362,403 11,983 596,885
Identifiable Assets 2,420,053 4,085,861 222,727 388,248 1,563,136 995,516 9,675,541
Investments in and Advances
to Unconsolidated Subsidiaries 479,246 75,483 - 79,991 - 1,342 636,062
Total Assets $2,899,299 $4,161,344 $222,727 $ 468,239 $1,563,136 $ 996,858 $10,311,603
1991
Unaffiliated Revenues(a) $1,519,147 $2,901,382 $ 67,250 $1,022,998 $ 172,164 $ - $ 5,682,941
Intersegment Revenues(b) 109,930 81,311 329,230 7,778 297,878 (826,127) -
Total Revenues 1,629,077 2,982,693 396,480 1,030,776 470,042 (826,127) 5,682,941
Depreciation, Depletion
and Amortization 108,922 85,342 5,377 4,648 160,885 783 365,957
Operating Income (Loss) 275,013 56,994 91,534 40,117 63,401 (29,122) 497,937
Equity in Earnings of
Unconsolidated Subsidiaries 37,000 13,355 - 4,643 - 230 55,228
Other Income, net 31,393 765 2,636 24,075 11,768 91,500 162,137
Income Before Interest,
Minority Interest
and Income Taxes 343,406 71,114 94,170 68,835 75,169 62,608 715,302
Additions to Property,
Plant and Equipment 368,756 40,849 43,216 7,934 211,673 34,655 707,083
Identifiable Assets 2,682,546 3,763,396 265,636 346,494 1,410,244 1,043,327 9,511,643
Investments in and Advances
to Unconsolidated Subsidiaries 502,737 33,625 - 20,280 - 1,385 558,027
Total Assets $3,185,283 $3,797,021 $265,636 $ 366,774 $1,410,244 $1,044,712 $10,069,670
<FN>
(a) Unaffiliated revenues include sales to unconsolidated
subsidiaries.
(b) Intersegment sales are made at prices comparable to those
received from unaffiliated customers and in some instances are
affected by regulatory considerations.
(c) Corporate and Other assets consist of cash and cash
equivalents, investments in marketable securities, receivables
transferred from subsidiaries in connection with the receivables
sale program and miscellaneous other assets.
(d) Includes consolidating eliminations.
</TABLE>
Geographic Segments
<TABLE>
<CAPTION>
Year Ended December 31,
(In Thousands) 1993 1992 1991
<S> <C> <C> <C>
Operating Revenues from
Unaffiliated Customers
United States $ 7,058,088 $5,515,600 $4,644,267
Foreign 914,394 893,673 1,038,674
$ 7,972,482 $6,409,273 $5,682,941
Intersegment Sales
United States $ 20,785 $ 54,498 $ 267,119
Foreign 66,574 24,108 23,545
$ 87,359 $ 78,606 $ 290,664
Operating Income
United States $ 553,956 $ 628,542 $ 471,091
Foreign 63,528 (14,770) 26,846
$ 617,484 $ 613,772 $ 497,937
Income Before Interest,
Minority Interest and Taxes
United States $ 663,276 $ 743,623 $ 656,169
Foreign 134,391 23,559 59,133
$ 797,667 $ 767,182 $ 715,302
Identifiable Assets
United States $ 9,939,618 $8,982,307 $8,855,302
Foreign 867,613 693,234 656,341
$10,807,231 $9,675,541 $9,511,643
</TABLE>
20. Oil and Gas Producing Activities
The following information regarding Enron's oil and gas producing
activities should be read in conjunction with Note 1.
Capitalized Costs Relating to Oil and Gas Producing Activities
<TABLE>
<CAPTION>
December 31,
(In Thousands) 1993 1992
<S> <C> <C>
Proved properties $2,675,419 $2,396,601
Unproved properties 96,801 78,770
2,772,220 2,475,371
Accumulated depreciation,
depletion and amortization (1,226,175) (1,007,360)
Net capitalized costs $1,546,045 $1,468,011
</TABLE>
Costs Incurred in Oil and Gas Property Acquisition, Exploration
and Development Activities(a)
<TABLE>
<CAPTION>
Foreign
(In Thousands) United States Canada Other Total
<S> <C> <C> <C> <C>
1993
Acquisition of properties
Unproved $ 23,686 $ 4,556 $ 887 $ 29,129
Proved 6,625 2,598 - 9,223
Total 30,311 7,154 887 38,352
Exploration 53,918 9,096 19,439 82,453
Development 247,705 28,045 41,785 317,535
Total $331,934 $44,295 $62,111 $438,340
1992
Acquisition of properties
Unproved $ 21,844 $ 1,173 $ 3 $ 23,020
Proved 25,958 39,281 - 65,239
Total 47,802 40,454 3 88,259
Exploration 38,547 5,787 11,141 55,475
Development 256,814 5,162 735 262,711
Total $343,163 $51,403 $11,879 $406,445
1991
Acquisition of properties
Unproved $12,156 $ 223 $ 176 $ 12,555
Proved 40,039 2,362 - 42,401
Total 52,195 2,585 176 54,956
Exploration 39,916 5,369 15,062 60,347
Development 132,200 10,338 - 142,538
Total $224,311 $18,292 $15,238 $257,841
<FN>
(a) Costs have been categorized on the basis of Financial
Accounting Standards Board definitions which include costs of oil
and gas producing activities whether capitalized or charged to
expense as incurred.
</TABLE>
Results of Operations for Oil and Gas Producing Activities(a)
The following tables set forth results of operations for oil and
gas producing activities for the three years in the period ended
December 31, 1993:
<TABLE>
<CAPTION>
Foreign
(In Thousands) United States Canada Other Total
<S> <C> <C> <C> <C>
1993
Operating Revenues
Associated Companies $369,824 $ 9,637 $ - $379,461
Trade 140,552 33,228 1,209 174,989
Total 510,376 42,865 1,209 554,450
Exploration expenses,
including dry hole costs 35,029 6,657 13,590 55,276
Production costs 75,767 14,063 1,496 91,326
Impairment of unproved
oil and gas properties 19,499 968 - 20,467
Depreciation, depletion
and amortization 234,292 14,630 541 249,463
Income (loss) before
income taxes 145,789 6,547 (14,418) 137,918
Income tax expense (benefit) (20,329) 2,447 (2,762) (20,644)
Results of Operations $166,118 $ 4,100 $(11,656) $158,562
1992
Operating Revenues
Associated Companies $251,649 $10,074 $ - $261,723
Trade 106,633 19,313 - 125,946
Total 358,282 29,387 - 387,669
Exploration expenses,
including dry hole costs 29,705 3,829 10,508 44,042
Production costs 63,571 9,271 - 72,842
Impairment of unproved
oil and gas properties 12,001 1,034 2,101 15,136
Depreciation, depletion
and amortization 167,767 11,719 327 179,813
Income (loss) before
income taxes 85,238 3,534 (12,936) 75,836
Income tax expense (benefit) (16,030) 1,202 (4,398) (19,226)
Results of Operations $101,268 $ 2,332 $(8,538) $ 95,062
1991 (Restated)
Operating Revenues
Associated Companies $197,841 $10,244 $ - $208,085
Trade 78,964 19,004 - 97,968
Total 276,805 29,248 - 306,053
Exploration expenses,
including dry hole costs 28,107 3,659 14,402 46,168
Production costs 56,167 9,418 - 65,585
Impairment of unproved
oil and gas properties 10,342 2,449 - 12,791
Depreciation, depletion
and amortization 148,401 12,385 99 160,885
Income (loss) before
income taxes 33,788 1,337 (14,501) 20,624
Income tax expense (benefit) (5,076) 455 (4,930) (9,551)
Results of Operations $38,864 $ 882 $ (9,571) $ 30,175
<FN>
(a) Excludes net revenues associated with other marketing
activities, interest charges, general corporate expenses and
certain gathering and handling fees for each of the three years
in the period ended December 31, 1993. The gathering and handling
fees and other marketing net revenues are directly associated
with oil and gas operations with regard to required segment
reporting, but are not part of required disclosures about oil and
gas producing activities.
</TABLE>
Oil and Gas Reserve Information (Unaudited)
The following summarizes the policies used by Enron in
preparing the accompanying oil and gas supplemental reserve
disclosures, Standardized Measure of Discounted Future Net
Cash Flows Relating to Proved Oil and Gas Reserves and
reconciliation of such standardized measure from period to
period.
Estimates of proved and proved developed reserves at
December 31, 1993, 1992 and 1991 were based on studies
performed by Enron's engineering staff for reserves in the
United States, Canada and Trinidad. Opinions by DeGolyer
and MacNaughton, independent petroleum consultants, for the
years ended December 31, 1993, 1992 and 1991 covering
producing areas containing 65%, 69% and 73%, respectively,
of proved reserves of Enron on a net-equivalent-cubic-feet-
of-gas basis, indicate that the estimates of proved reserves
prepared by Enron's engineering staff for the properties
reviewed by DeGolyer and MacNaughton, when compared in total
on a net-equivalent-cubic-feet-of-gas basis, do not differ
by more than 5% from those prepared by DeGolyer and
MacNaughton's engineering staff. All reports by DeGolyer and
MacNaughton were developed utilizing geological and
engineering data provided by Enron.
The standardized measure of discounted future net cash flows
does not purport, nor should it be interpreted, to present
the fair market value of Enron's crude oil and natural gas
reserves. An estimate of fair value would also take into
account, among other things, the recovery of reserves not
presently classified as proved reserves, anticipated future
changes in prices and costs and a discount factor more
representative of the time value of money and the risks
inherent in reserve estimates.
Standardized Measure of Discounted Future
Net Cash Flows Relating to Proved
Oil and Gas Reserves(a)
<TABLE>
<CAPTION>
(In Thousands) United States Canada Trinidad Total
<S> <C> <C> <C> <C>
1993
Future revenues(b) $3,343,900(d) $592,845 $147,542 $4,084,287(d)
Future production costs (639,760) (230,230) (45,385) (915,375)
Future development costs (165,473) (21,001) (7,582) (194,056)
Future net cash flows
before income taxes 2,538,667 341,614 94,575 2,974,856
Discount to present value
at 10% annual rate (951,748) (143,992) (20,097) (1,115,837)
Present value of future net
cash flows before income taxes 1,586,919 197,622 74,478 1,859,019
Future income taxes discounted
at 10% annual rate(c) (219,228) (37,851) (24,899) (281,978)
Standardized measure of
discounted future net cash
flows relating to proved oil
and gas reserves(b) $1,367,691(e) $159,771 $ 49,579 $1,577,041(e)
1992
Future revenues(b) $3,017,188(d) $363,284 $ - $3,380,472(d)
Future production costs (573,763) (105,802) - (679,565)
Future development costs (194,246) (12,881) - (207,127)
Future net cash flows
before income taxes 2,249,179 244,601 - 2,493,780
Discount to present value
at 10% annual rate (790,027) (91,126) - (881,153)
Present value of future net
cash flows before income taxes 1,459,152 153,475 - 1,612,627
Future income taxes discounted
at 10% annual rate(c) (147,736) (28,056) - (175,792)
Standardized measure of
discounted future net cash
flows relating to proved oil
and gas reserves(b) $1,311,416(e) $125,419 $ - $1,436,835(e)
1991
Future revenues(b) $2,501,439 $269,917 $ - $2,771,356
Future production costs (504,420) (79,413) - (583,833)
Future development costs (189,091) (6,132) - (195,223)
Future net cash flows before
income taxes 1,807,928 184,372 - 1,992,300
Discount to present value
at 10% annual rate (618,919) (62,137) - (681,056)
Present value of future net
cash flows before income taxes 1,189,009 122,235 - 1,311,244
Future income taxes discounted
at 10% annual rate(c) (127,188) (27,979) - (155,167)
Standardized measure of
discounted future net
cash flows relating to proved
oil and gas reserves(b) $1,061,821 $ 94,256 $ - $1,156,077
<FN>
(a) Includes amounts attributable to a 20% minority
interest at December 31, 1993 and 1992 and a 16% minority
interest at December 31, 1991.
(b) Based on year-end market prices determined at the
point of delivery from the producing unit.
(c) Future income taxes before discount were $540.3
million U.S., $91.7 million Canada and $35.5 million
Trinidad, $394.1 million U.S. and $63.0 million Canada
and $279.4 million U.S. and $53.0 million Canada for the
years ended December 31, 1993, 1992 and 1991, respectively.
(d) "Future revenues" includes approximately $189.1
million ($146.9 million discounted at 10% annual rate for
1993) and $203.5 million ($174.5 million discounted at 10%
annual rate for 1992) related to volumes associated with a
volumetric production payment sold effective October 1,
1992, as amended, to be delivered over a seventy-eight month
period which period commenced October 1, 1992 (see Note 8).
(e) Includes approximately $92.6 million in 1993 and
$111.2 million in 1992 representing the discounted present
value at a discount rate of 10% of the "future revenues"
detailed in Note (d) after deducting future income taxes.
</TABLE>
Changes in Standardized Measure of
Discounted Future Net Cash Flows
<TABLE>
<CAPTION>
(In Thousands) United States Canada Trinidad Total
<S> <C> <C> <C> <C>
December 31, 1990 $ 928,584 $130,742 $ - $1,059,326
Sales and transfers of
oil and gas produced, net
of production costs (220,638) (19,830) - (240,468)
Net changes in prices
and production costs (150,061) (51,609) - (201,670)
Extensions, discoveries,
additions and improved
recovery, net of related
costs 212,097 4,802 - 216,899
Development costs incurred 36,719 11 - 36,730
Revisions of estimated
development costs 1,640 2,833 - 4,473
Revisions of previous
quantity estimates 37,535 1,178 - 38,713
Accretion of discount 116,559 17,823 - 134,382
Net change in income taxes 109,821 19,512 - 129,333
Purchases of reserves in place 38,350 (558) - 37,792
Sales of reserves in place (17,321) (2,328) - (19,649)
Changes in timing and other (31,464) (8,320) - (39,784)
December 31, 1991 1,061,821 94,256 - 1,156,077
Sales and transfers of oil
and gas produced, net of
production costs (294,711) (20,116) - (314,827)
Net changes in prices and
production costs 257,572 8,190 - 265,762
Extensions, discoveries,
additions and improved
recovery, net of related
costs 275,231 8,999 - 284,230
Development costs incurred 49,668 177 - 49,845
Revisions of estimated
development costs (19,540) 1,406 - (18,134)
Revisions of previous
quantity estimates (45,863) (7,539) - (53,402)
Accretion of discount 118,901 12,224 - 131,125
Net change in income taxes (20,548) (77) - (20,625)
Purchases of reserves in place 28,884 32,533 - 61,417
Sales of reserves in place (34,984) (15) - (34,999)
Changes in timing and other (65,015) (4,619) - (69,634)
December 31, 1992 1,311,416 125,419 - 1,436,835
Sales and transfers of oil
and gas produced, net of
production costs (434,609) (28,802) 287 (463,124)
Net changes in prices and
production costs 180,240 28,400 - 208,640
Extensions, discoveries,
additions and improved
recovery, net of related
costs 275,722 27,785 74,191 377,698
Development costs incurred 58,500 13,900 - 72,400
Revisions of estimated
development costs 32,196 (1,345) - 30,851
Revisions of previous
quantity estimates (26,118) 5,668 - (20,450)
Accretion of discount 145,915 15,348 - 161,263
Net change in income taxes (71,492) (9,795) (24,899) (106,186)
Purchases of reserves in place 9,462 2,707 - 12,169
Sales of reserves in place (38,498) (1,140) - (39,638)
Changes in timing and other (75,043) (18,374) - (93,417)
December 31, 1993 $1,367,691 $159,771 $ 49,579 $1,577,041
</TABLE>
Reserve Quantity Information
Enron's estimates of net proved and proved developed
reserves of crude oil, condensate, natural gas liquids and
natural gas and of changes in net proved reserves were as
follows:
<TABLE>
<CAPTION>
United States Foreign(d) Total
<S> <C> <C> <C>
Natural gas (MMcf)
Proved reserves at
December 31, 1990(a) 1,343,467 131,508 1,474,975
Revisions of previous estimates 48,371 35 48,406
Purchases in place 45,030 2,885 47,915
Extensions, discoveries and
other additions 199,410 6,193 205,603
Sales in place (6,933) (2,477) (9,410)
Production (173,460) (9,237) (182,697)
Proved reserves at
December 31, 1991(a) 1,455,885 128,907 1,584,792
Revisions of previous estimates (46,325) (4,082) (50,407)
Purchases in place 30,537 112,592 143,129
Extensions, discoveries and
other additions 228,044 6,336 234,380
Sales in place (27,707) (2) (27,709)
Production (200,054) (11,249) (211,303)
Proved reserves at
December 31, 1992(a) 1,440,380(b) 232,502 1,672,882
Revisions of previous estimates (31,282) 11,058 (20,224)
Purchases in place 9,183 2,627 11,810
Extensions, discoveries and
other additions 234,858 148,970 383,828
Sales in place (12,453) (1,501) (13,954)
Production (240,014) (22,137) (262,151)
Proved reserves at
December 31, 1993(a) 1,400,672(b) 371,519 1,772,191
United States Foreign(d) Total
Liquids (MBbl)(c)
Proved reserves at
December 31, 1990(a) 16,272 6,856 23,128
Revisions of previous estimates (86) 256 170
Purchases in place 173 42 215
Extensions, discoveries and
other additions 983 310 1,293
Sales in place (1,248) (25) (1,273)
Production (2,272) (927) (3,199)
Proved reserves at
December 31, 1991(a) 13,822 6,512 20,334
Revisions of previous estimates 365 (885) (520)
Purchases in place 65 - 65
Extensions, discoveries and
other additions 2,320 698 3,018
Sales in place (296) (4) (300)
Production (2,411) (963) (3,374)
Proved reserves at
December 31, 1992(a) 13,865(b) 5,358 19,223
Revisions of previous estimates 1,490 (536) 954
Purchases in place 15 489 504
Extensions, discoveries and
other additions 3,552 3,366 6,918
Sales in place (3,230) (23) (3,253)
Production (2,520) (965) (3,485)
Proved reserves at
December 31, 1993(a) 13,172(b) 7,689 20,861
Proved developed reserves
Natural gas (MMcf)
December 31, 1990 1,023,711 114,045 1,137,756
December 31, 1991 1,138,530 112,975 1,251,505
December 31, 1992 1,168,386(b) 194,366 1,362,752
December 31, 1993 1,167,313(b) 321,965 1,489,278
Liquids (MBbl)(c)
December 31, 1990 15,269 6,804 22,073
December 31, 1991 13,002 6,484 19,486
December 31, 1992 12,762(b) 5,329 18,091
December 31, 1993 11,165(b) 7,000 18,165
<FN>
(a) Includes reserves attributable to a 20% minority
interest at December 31, 1993 and 1992 and a 16% minority
interest at December 31, 1991 and 1990.
(b) Includes approximately 87 billion cubic feet
equivalent (96 trillion British thermal units) in 1993 and
114 billion cubic feet equivalent (126 trillion British
thermal units) in 1992 associated with a volumetric production
payment sold effective October 1, 1992, as amended, to be
delivered over a seventy-eight month period which period
commenced October 1, 1992 (see Note 8).
(c) Includes crude oil, condensate and natural gas liquids.
(d) Includes Canada and Trinidad.
</TABLE>
Enron Corp. and Subsidiaries
Supplemental Financial Information (unaudited)
Quarterly Results(b)
<TABLE>
<CAPTION>
Income Fully
Before Primary Diluted
Interest, Earnings Earnings
(In Thousands, Minority Per Share(a) Per Share(a)
Except Per Share Operating Gross Interest and Net Net Net
Amounts) Revnues Profit Income Taxes Income Income Income
<S> <C> <C> <C> <C> <C> <C>
1993
First Quarter $1,857,455 $600,994 $268,249 $146,228 $.60 $.55
Second Quarter 1,907,115 530,388 151,673 61,245 .24 .23
Third Quarter 1,933,666 649,663 168,834 20,995 .07 .07
Fourth Quarter 2,274,246 625,411 208,911 104,054 .42 .39
1992
First Quarter $1,519,092 $565,268 $237,249 $115,764 $.54 $.49
Second Quarter 1,335,424 481,332 155,032 50,565 .21 .21
Third Quarter 1,521,794 513,766 150,179 40,887 .15 .15
Fourth Quarter 2,032,963 626,512 224,722 98,969 .40 .37
<FN>
(a) The sum of earnings per share for the four quarters
may not equal the total earnings per share for the year due
to changes in the average number of common shares
outstanding.
(b) Reclassified, see Note 1.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To Enron Corp.:
We have audited in accordance with generally accepted
auditing standards, the consolidated financial statements
included in this Form 10-K, and have issued our report
thereon dated February 18, 1994. Our audits were made for
the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedules listed in Item
14(a)2 are the responsibility of Enron Corp.'s management.
These schedules are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not
part of the basic financial statements. These schedules
have been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our
opinion, fairly state in all material respects the financial
data required to be set forth therein in relation to the
basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Houston, Texas
February 18, 1994
S-1
<PAGE>
<TABLE>
SCHEDULE II
ENRON CORP. AND SUBSIDIARIES
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES, UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In Thousands)
<CAPTION>
Column A Column B Column C Column D Column E
Balance at Deductions Balance at
Beginning Amounts Amounts End of Year
Names of Debtor of Year Additions Collected Written Off Current Noncurrent
<S> <C> <C> <C> <C> <C> <C>
1993
Kenneth L. Lay, Chairman and
Chief Executive Officer
Enron Corp.(1) $ 7,400 $ 100 $ 350 $ - $7,150 $ -
Richard D. Kinder, President and
Chief Operating Officer
Enron Corp.(1) 3,053 - - - - 3,053
Jeffrey K. Skilling, Chairman
Enron Gas Services Group(2) 1,025 2,082 3,107 - - -
Ronald J. Burns, Chairman
Enron Gas Services Group(3) 1,000 - - - - 1,000
$12,478 $2,182 $3,457 $ - $7,150 $ 4,053
1992
Kenneth L. Lay, Chairman and
Chief Executive Officer
Enron Corp.(1) $ 7,500 $ 475 $ 575 $ - $ - $ 7,400
Richard D. Kinder, President and
Chief Operating Officer
Enron Corp.(1) 3,053 - - - - 3,053
Jeffrey K. Skilling, Chairman
Enron Gas Services Group(2) 713 550 - 238(4) - 1,025
Ronald J. Burns, Chairman
Enron Gas Pipeline Group(3) 1,000 - - - - 1,000
$12,266 $1,025 $ 575 $ 238 $ - $12,478
1991
Kenneth L. Lay, Chairman and
Chief Executive Officer
Enron Corp.(1) $ 7,500 $ - $ - $ - $ - $ 7,500
Richard D. Kinder, President and
Chief Operating Officer
Enron Corp.(1) 3,053 - - - - 3,053
Jeffrey K. Skilling, Chairman
Enron Gas Services Group(2) 713 - - - - 713
Ronald J. Burns, Chairman
Enron Gas Pipeline Group(3) - 1,000 - - - 1,000
$11,266 $1,000 $ - $ - $ - $12,266
<FN>
(1) Mr. Lay and Mr. Kinder entered into employment agreements with Enron
in September 1989 which were renewed in February 1994. The agreements
provided for interest-bearing advances of $5 million and $3 million to
Mr. Lay and Mr. Kinder, respectively, to be used to purchase shares of
Enron common stock (which shares are pledged as collateral). The agreements
also provided for interest-bearing loans, collateralized with pledged personal
properties of $2.5 million and $1.5 million to Mr. Lay and Mr. Kinder,
respectively. If the shares of common stock pledged as collateral for the
advances are insufficient to cover the amount of the advances and accrued
interest, then Messrs. Lay and Kinder are liable for one-third of the
advances as well as unpaid interest. In the event of either Mr. Lay's or
Mr. Kinder's death or permanent disability, his obligation to repay the
advance is forgiven. Enron has purchased insurance on Messrs. Lay and
Kinder, with Enron as the owner and beneficiary, which policies will
allow Enron to recover any outstanding advances in the event of the
death or permanent disability of Mr. Lay or Mr. Kinder. Mr. Lay and Mr.
Kinder renewed their employment contracts in February 1994. Within 30
days of the execution of the renewed contract, Mr. Lay will repay all
outstanding advances and loans as well as accrued interest thereon. Mr.
Lay will then be provided with a new non-collateralized, interest
bearing line of credit in an aggregate amount not to exceed $4 million,
payable February 8, 1999. Mr. Kinder's current loan and advance, as
well as interest thereon, will now be payable on February 8, 1999.
However, if mutually satisfactory terms pertaining to Mr. Kinder's
future employment with Enron have not been agreed to as of February 8,
1997, then the principal and interest balances of his loan and advance
will be forgiven.
(2) Mr. Skilling entered into an employment agreement with Enron in August 1990
which, as amended, provided for a loan of $1.4 million from Enron. The loan
bore interest and was collateralized with pledged personal properties. In
April 1992, Mr. Skilling received an additional loan of $100,000, which
accrued interest at an annual rate of 7%. Effective as of January 1, 1993,
both of the then existing loans, as well as accrued interest thereon, were
repaid with the proceeds from a new nonrecourse, interest bearing loan in
the amount of $1,606,719, which was payable on or before January 2, 1995 and
was collateralized with Enron stock options and phantom equity in Enron
Gas Services Corp. The new loan, as well as accrued interest thereon,
was repaid in full on July 1, 1993.
(3) Mr. Burns entered into an employment agreement with Enron in July 1989 which
provides for a loan of $1 million from Enron. Mr. Burns received the full
principal amount of the loan during 1991. The loan bears interest and is
collateralized with pledged personal properties.
(4) Forgiven and waived pursuant to the terms of the loan agreement.
</TABLE>
S-2
<PAGE>
<TABLE>
SCHEDULE V
ENRON CORP. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT(1)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In Thousands)
<CAPTION>
Column A Column B Column C Column D Column E Column F
Balance at Other
Beginning Additions Changes Balance at
Classification of Year at Cost Retirements Add (Deduct)(2) End of Year
<S> <C> <C> <C> <C> <C>
1993
Transportation and operation $ 3,862,076 $144,835 $ 93,256 $156,670(3) $ 4,070,325
Gas services 3,483,504 78,453 15,019 (2,947) 3,543,991
Exploration and production 2,475,371 383,064 55,617 (30,598) 2,772,220
International gas and power
services 54,672 52,545 13,903 42,604 135,918
Gas processing 326,505 24,065 65,316 (19,472) 265,782
Corporate and other 213,148 5,070 62,309 (57,287) 98,622
Total $10,415,276 $688,032 $305,420 $ 88,970 $10,886,858
1992
Transportation and operation $ 3,953,434 $144,468 $246,745 $ 10,919 $ 3,862,076
Gas services 3,589,519 33,584 135,455 (4,144) 3,483,504
Exploration and production 2,228,634 362,403 80,242 (35,424) 2,475,371
International gas and power
services 51,088 10,236 941 (5,711) 54,672
Gas processing 307,513 34,211 13,060 (2,159) 326,505
Corporate and other 210,274 11,983 4,780 (4,329) 213,148
Total $10,340,462 $596,885 $481,223 $(40,848) $10,415,276
1991
Transportation and operation $ 3,599,894 $368,756 $ 33,345 $ 18,129(4) $ 3,953,434
Gas services 3,558,038 40,849 10,193 825 3,589,519
Exploration and production 2,065,999 211,673 38,339 (10,699) 2,228,634
International gas and power
services 51,965 7,934 434 (8,377) 51,088
Gas processing 277,072 43,216 67,803 55,028(5) 307,513
Corporate and other 189,334 34,655 14,172 457 210,274
Total $ 9,742,302 $707,083 $164,286 $ 55,363 $10,340,462
<FN>
(1) For discussion of bases of provision for depreciation, depletion and
amortization, reference is made to Note 1 of Notes to the Consolidated
Financial Statements.
(2) Represents net transfers, reclassifications and adjustments, except as
noted.
(3) Includes $55.6 million of natural gas in pipelines reclassified from current
inventory in accordance with FERC Order 636.
(4) Includes $14.3 million of natural gas in storage reclassified from current
inventory.
(5) Includes $28.3 million related to the acquisition of operations from Tenneco
Inc. and $26.8 million reclassified from investments and other assets.
</TABLE>
S-3
<PAGE>
<TABLE>
SCHEDULE VI
ENRON CORP. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In Thousands)
<CAPTION>
Column A Column B Column C Column D Column E Column F
Additions
Balance at Charged to Other
Beginning Costs and Changes Balance at
Classification of Year Expenses Retirements Add (Deduct)(1) End of Year
<S> <C> <C> <C> <C> <C>
1993
Transportation and operation $2,025,630 $115,922 $ 55,501 $(15,742) $2,070,309
Gas services 642,403 74,677 4,773 (10,199) 702,108
Exploration and production 1,007,360 249,704 26,818 (4,071) 1,226,175
International gas and power
services 22,044 9,081 224 (5,547) 25,354
Gas processing 130,036 6,283 34,168 6,740 108,891
Corporate and other 42,040 2,521 (1,236) (14,548) 31,249
Total $3,869,513 $458,188 $120,248 $(43,367) $4,164,086
1992
Transportation and operation $2,049,011 $111,141 $127,061 $ (7,461) $2,025,630
Gas services 583,382 70,438 13,334 1,917 642,403
Exploration and production 888,968 179,839 52,681 (8,766) 1,007,360
International gas and power
services 20,774 6,897 248 (5,379) 22,044
Gas processing 115,333 6,283 445 8,865 130,036
Corporate and other 31,436 1,421 3,638 12,821 42,040
Total $3,688,904 $376,019 $197,407 $ 1,997 $3,869,513
1991
Transportation and operation $1,963,287 $108,922 $ 32,579 $ 9,381 $2,049,011
Gas services 503,214 85,342 3,747 (1,427) 583,382
Exploration and production 760,863 160,885 30,802 (1,978) 888,968
International gas and power
services 19,824 4,648 396 (3,302) 20,774
Gas processing 152,834 5,377 58,537 15,659 115,333
Corporate and other 21,102 783 415 9,966 31,436
Total $3,421,124 $365,957 $126,476 $ 28,299 $3,688,904
<FN>
(1) Represents net transfers, reclassifications and adjustments.
</TABLE>
S-4
<PAGE>
<TABLE>
SCHEDULE VIII
ENRON CORP. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In Thousands)
<CAPTION>
Column A Column B Column C Column D Column E
Additions Deductions
Balance at Charged to Charged For Purpose For
Beginning Costs and to Other Which Reserves Balance at
Description of Year Expenses Accounts Were Created End of Year
<S> <C> <C> <C> <C> <C>
1993
Reserves deducted from
assets to which they apply
Allowance for doubtful
accounts $14,555 $ 6,558 $ 2,955 $ 2,195 $ 21,873
Assets from price risk
management activities $74,108 $60,207 $ - $31,795 $102,520
Reserve for regulatory issues
Current $ 8,799 $29,282 $(24,345) $(7,994) $ 21,730
Noncurrent $ 3,677 $ 8,069 $ 9,672 $ - $ 21,418
1992
Reserves deducted from
assets to which they apply
Allowance for doubtful
accounts $15,386 $ 4,577 $ 9,228 $14,636 $ 14,555
Assets from price risk
management activities $32,224 $49,270 $ - $ 7,386 $ 74,108
Reserve for regulatory issues
Current $ 6,105 $ 6,939 $ 8,161 $12,406 $ 8,799
Noncurrent $12,568 $ - $ - $ 8,891 $ 3,677
1991
Reserves deducted from
assets to which they apply
Allowance for doubtful
accounts $ 17,158 $ 4,071 $ 170 $ 6,013 $ 15,386
Assets from price risk
management activities $ - $32,224 $ - $ - $ 32,224
Reserve for regulatory issues
Current $ 7,344 $ (687) $ 7,183 $ 7,735 $ 6,105
Noncurrent $ 7,567 $ 6,246 $ 3,908 $ 5,153 $ 12,568
</TABLE>
S-5
<PAGE>
<TABLE>
SCHEDULE X
ENRON CORP. AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In Thousands)
<CAPTION>
Column A Column B
Charged to Costs and Expenses
Item 1993 1992 1991
<S> <C> <C> <C>
Maintenance and repairs $103,103 $116,299 $126,538
Taxes, other than payroll and income taxes $ 92,133 $ 83,681 $ 57,548
</TABLE>
S-6
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized, on
this 28th day of March, 1994.
ENRON CORP.
(Registrant)
By: JACK I. TOMPKINS
(Jack I. Tompkins)
Senior Vice President and
Chief Information, Administrative
and Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below on March 28, 1994 by the following
persons on behalf of the Registrant and in the capacities indicated.
Signature Title
KENNETH L. LAY Chairman of the Board, Chief Executive
(Kenneth L. Lay) Officer and Director (Principal
Executive Officer)
JACK I. TOMPKINS Senior Vice President and Chief
(Jack I. Tompkins) Information, Administrative and
Accounting Officer (Principal Accounting
Officer)
KURT S. HUNEKE Vice President, Finance and Treasurer
(Kurt S. Huneke) (Principal Financial Officer)
WILLIAM A. ANDERS* Director
(William A. Anders)
ROBERT A. BELFER* Director
(Robert A. Belfer)
NORMAN P. BLAKE, JR. Director
(Norman P. Blake, Jr.)
JOHN H. DUNCAN* Director
(John H. Duncan)
JOE H. FOY* Director
(Joe H. Foy)
WENDY L. GRAMM* Director
(Wendy L. Gramm)
ROBERT K. JAEDICKE* Director
(Robert K. Jaedicke)
RICHARD D. KINDER* Director and President and Chief
(Richard D. Kinder) Operating Officer
CHARLES A. LEMAISTRE* Director
(Charles A. LeMaistre)
JOHN A. URQUHART* Director
(John A. Urquhart)
CHARLS E. WALKER* Director
(Charls E. Walker)
HERBERT S. WINOKUR, JR.* Director
(Herbert S. Winokur, Jr.)
*By: PEGGY B. MENCHACA
(Peggy B. Menchaca)
(Attorney-in-fact for persons indicated)
Exhibit 10.11
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This Agreement, made and entered into on this 21st day
of August, 1990, and made effective as of September 1, 1989,
by and between Enron Corp. ("Enron"), a Delaware corporation
having its headquarters at 1400 Smith Street, Houston, Texas
77002, and Kenneth L. Lay ("Employee"), an individual
residing in Houston, Texas, is an amendment to that certain
Employment Agreement between the parties effective September
1, 1989 (the "Employment Agreement").
WHEREAS, the Employment Agreement incorporates the
terms and provisions of a Stock Finance Agreement attached
to the Employment Agreement a Exhibit C, as though recited
therein in their entirety; and
WHEREAS, the parties desire to amend and clarify
certain provisions of the Stock Finance Agreement;
NOW, THEREFORE, in consideration thereof and of the
mutual covenants contained herein, the parties agree as
follows:
1. Section 5.02 of the Stock Finance Agreement is deleted
in its entirety and the following is substituted in its
place:
"SECTION 5.02. Other Consideration. (a) Based On
Average Purchase Price. When shares of Enron Corp.
common stock are purchased with an Advance pursuant to
the provisions of this Agreement, then in the event
that the average purchase price paid for such shares is
greater than Fifty Dollars per share:
(i) if before the Termination Date Borrower sells any
of such shares, then within fifteen days following
notification thereof by Employee to Company, Company
shall pay Employee a cash payment in the amount equal
to A where A = ((S1 x MV) + (S1 x D)) - ((S2 x MV) +
(S2 x D)), where MV is the sales price, S1 is the
number of shares sold divided by the total number of
shares purchased pursuant to Section 2.02 of this
Agreement multiplied by 100,000, S2 is the number of
shares sold, and D is the aggregate amount of dividends
paid on a share of such stock during the period from
September 1, 1989 until the date of such sale by
Borrower; and
(ii) if upon the Termination Date Borrower has not
sold all of such shares, then within thirty days
thereof Employee shall give notification of the number
of unsold shares to Company and within fifteen days
following its receipt of such notification, Company
shall pay Employee a cash payment in the amount equal
to A where A = ((S1 x MV) + (S1 x D)) - ((S2 x MV) +
(S2 x D)), where MV is the closing price of such stock
on the Termination Date, S1 is the number of shares not
sold as of the Termination Date divided by the total
number of shares purchased pursuant to Section 2.02 of
this Agreement multiplied by 100,000, S2 is the number
of such shares not sold, and D is the aggregate amount
of dividends paid on a share of such stock during the
period from September 1, 1989 until the Termination
Date.
If such payment, in either event, is not paid within
said fifteen days, Employee shall be entitled to
interest thereon until the payment is paid, at an
annualized rate of interest of nine and one half
percent (9.5%).
(b) Example. For example, if before the
Termination Date, Borrower sells 25,874 shares of stock
at $55.00 per share, and the aggregate dividends paid
on a share of stock since September 1, 1989 were $1.24,
then Company would pay Borrower $117,305.46. If on the
Termination Date there remained 33,333 shares not sold,
the closing price per share was $65 per share, and the
aggregate dividends paid on a share of stock since
September 1, 1989 were $3.72, then Company would pay
Borrower $184,657.47."
2. This Agreement is an amendment to the Employment
Agreement, and the parties agree that all other terms,
conditions and stipulations contained in the Employment
Agreement shall remain in full force and effect and without
any change or modification, except as provided herein.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
ENRON CORP.
By: CHARLES A. LeMAISTRE
Title: Chairman, Compensation Committee
of the Board of Directors
KENNETH L. LAY
KENNETH L. LAY
Employee
Exhibit 10.12
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
This Agreement, made and entered into on this 5th day
of March, 1992, and made effective as of March 1, 1992, by
and between Enron Corp. ("Enron"), a Delaware corporation
having its headquarters at 1400 Smith Street, Houston, Texas
77002, and Kenneth L. Lay ("Employee"), an individual
residing in Houston, Texas, is an amendment to that certain
Employment Agreement between the parties effective September
1, 1989 (the "Employment Agreement").
WHEREAS, the Employment Agreement incorporates the
terms and provisions of a Stock Finance Agreement attached
to the Employment Agreement as Exhibit C, as though recited
therein in their entirety; and
WHEREAS, the parties desire to amend a certain
provision of the Stock Finance Agreement;
NOW, THEREFORE, in consideration thereof and of the
mutual covenants contained herein, the parties agree as
follows:
1. Section 2.04 of the Stock Finance Agreement is deleted
in its entirety and the following is substituted in its
place:
"SECTION 2.04. Interest. The Borrower shall pay
interest, compounded annually, on the unpaid principal and
interest at an annual rate of seven and five-tenths of one
percent (7.5%)."
2. This Agreement is an amendment to the Employment
Agreement, and the parties agree that all other terms,
conditions and stipulations contained in the Employment
Agreement, as amended by any prior amendments thereto, shall
remain in full force and effect and without any change or
modification, except as provided herein.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
ENRON CORP.
By: JOHN H. DUNCAN
Title: Chairman, Executive Committee of Board
KENNETH L. LAY
KENNETH L. LAY
Employee
Exhibit 10.13
THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
This Agreement, made and entered into on this 10th day
of August, 1993, and made effective as of August 10, 1993,
by and between Enron Corp. ("Enron"), a Delaware corporation
having its headquarters at 1400 Smith Street, Houston, Texas
77002, and Kenneth L. Lay ("Employee"), an individual residing
in Houston, Texas, is an amendment to that certain Employment
Agreement between the parties effective September 1, 1989 (the
"Employment Agreement").
WHEREAS, the Employment Agreement incorporates the terms
and provisions of a Stock Finance Agreement attached to the
Employment Agreement as Exhibit C, as though recited therein
in their entirety; and
WHEREAS, the parties desire to amend a certain provision
of the Stock Finance Agreement;
NOW, THEREFORE, in consideration thereof and of the
mutual covenants contained herein, the parties agree as
follows:
1. Section 5.02 of the Stock Finance Agreement is deleted in
its entirety and the following is substituted in its place:
"Section 5.02. Other Consideration. On August 12th,
1993, Company agrees to pay Employee a lump sum payment
in the amount of One Million Ninety-Five Thousand One
Hundred Twenty-Eight and No/100 Dollars ($1,095,128.00)
as Other Consideration. Employee shall not be required
to use the Other Consideration made in this Third
Amendment to the Employment Agreement to repay any
outstanding Advances under the Stock Finance Agreement
and/or the Loan Commitment Agreement, respectively.
Employee shall repay any outstanding Advances under the
Stock Finance Agreement and/or the Loan Commitment
Agreement in accordance with the terms and conditions set
forth at Article II of the Stock Finance Agreement and
the Loan Commitment Agreement, respectively."
2. This Agreement is an amendment to the Employment
Agreement, and the parties agree that all other terms,
conditions and stipulations contained in the Employment
Agreement shall, as amended by any prior amendments thereto,
remain in full force and effect and without any change or
modification, except as provided herein.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
ENRON CORP.
By: CHARLES A. LeMAISTRE
Title: Charles A. LeMaistre
Chairman, Compensation Committee
KENNETH L. LAY
KENNETH L. LAY
Employee
Exhibit 10.14
FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT
This Agreement, made and entered into on this 15th day
of October, 1993, and made effective as of January 1, 1993,
by and between Enron Corp. ("Enron"), a Delaware corporation
having its headquarters at 1400 Smith Street, Houston, Texas
77002, and Kenneth L. Lay, ("Employee"), an individual
residing in Houston, Texas, is an amendment to that certain
Employment Agreement between the parties effective September
1, 1989 (the "Employment Agreement").
WHEREAS, the Employment Agreement incorporates the
terms and provisions of a Stock Finance Agreement attached
to the Employment Agreement as Exhibit C and a Loan
Commitment Agreement attached to the Employment Agreement as
Exhibit D, as though recited therein in their entirety; and
WHEREAS, the parties desire to amend a certain
provision of the Stock Finance Agreement and the Loan
Commitment Agreement;
NOW THEREFORE, in consideration thereof and of the
mutual covenants contained herein, the parties agree as
follows:
1. Section 2.04 of the Stock Finance Agreement is deleted
in its entirety and the following is substituted in its
place:
"SECTION 2.04. Interest. The Borrower shall pay
interest, compounded annually, on the unpaid principle
and interest at an annual rate determined under the
following formula: I = A x AFR, where "I" is the
amount of interest, "A" is the amount of the Advance,
and "AFR" is the applicable federal rate as defined
under U.S. Internal Revenue Code Section 1274 (d) in
effect during each month that the Advance is
outstanding."
2. Section 2.05 of the Loan Commitment Agreement is
deleted in its entirety and the following is substituted in
its place:
"SECTION 2.05. Interest. The Borrower shall pay
interest compounded annually, on the unpaid principal
and interest at an annual rate determined under the
following formulas for each Advance: I = A x AFR,
where "I" is the amount of interest, "A" is the amount
of the Advance, and "AFR" is the applicable federal
rate as defined under U.S. Internal Revenue Code
Section 1274 (d) in effect during each month that the
Advance is outstanding. The Borrower shall make
payments of accrued interest with respect to each
Advance on the anniversary date of an Advance, or at
the election of Borrower on the subsequent 31st day of
December."
3. This Agreement is an amendment to the Employment
Agreement, and the parties agree that all other terms,
conditions and stipulations contained in the Employment
Agreement, as amended by any prior amendments thereto, shall
remain in full force and effect and without any change or
modification, except as provided herein.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
ENRON CORP.
CHARLES A. LeMAISTRE
By: CHARLES A. LeMAISTRE
Title: Chairman, Compensation Committee,
Enron Corp. Board of Directors
KENNETH L. LAY
KENNETH L. LAY
Exhibit 10.15
FIFTH AMENDMENT TO EMPLOYMENT AGREEMENT
This Agreement, made and entered into on this 28th day of
February, 1994, ("Execution Date") and made effective as of
February 8, 1994, by and between Enron Corp. ("Company"), a
Delaware corporation having its headquarters at 1400 Smith
Street, Houston, Texas 77002, and Kenneth L. Lay ("Employee"),
an individual residing in Houston, Texas, is an amendment to
that certain Employment Agreement between the parties
effective September 1, 1989 (the "Employment Agreement").
WHEREAS, the Employment Agreement incorporates the terms
and provisions of a Loan Commitment Agreement attached to the
Employment Agreement as Exhibit D, as though recited therein
in their entirety; and
WHEREAS, the parties desire to amend and clarify certain
provisions of the Employment Agreement and the Loan Commitment
Agreement;
NOW, THEREFORE, in consideration thereof and of the
mutual covenants contained herein, the parties agree as
follows:
1. Article 2: Term of Employment of the Employment Agreement
is deleted in its entirety and the following is substituted in
its place:
"Unless sooner terminated pursuant to other provisions
hereof, Employee's period of employment under this
Agreement shall be for a period of five (5) years
beginning on the effective date of this Amendment
("Term"), and thereafter for such period, if any, as may
be agreed upon in writing by Employee and Company. At
the expiration of three years during the Term hereunder,
Employee may terminate this Employment Agreement without
penalty and as if this Employment Agreement were
fulfilled. Employee shall have the option to continue
employment with the Company for the full term under this
Amendment."
2. Article 3: Compensation and Benefits of the Employment
Agreement is deleted in its entirety and the following is
substituted in its place:
"3.1 Base Salary. During the period beginning February
8, 1994 and ending February 7, 1997, Employee's annual
base salary shall be equal to and not more than Nine
Hundred Ninety Thousand and No/100 Dollars ($990,000.00),
which shall be earned and paid in equal semimonthly
installments in accordance with Company's standard
payroll practice. Any raises after the three year period
described above, shall be at the discretion of the
Compensation Committee of the Board of Directors of the
Company."
3. (a) The following shall be added to the end of paragraph
3.8 of the Employment Agreement:
"Notwithstanding any provision to the contrary in this
Agreement or the Exhibits and attachments hereto (including,
without limitation, the Stock Finance Agreement attached to
this Agreement as Exhibit C and the attachments thereto (the
'Stock Finance Documents') and the Loan Commitment Agreement
attached to this Agreement as Exhibit D and the attachments
thereto (the 'Loan Commitment Documents')), within thirty (30)
days of the Execution Date of this Amendment, the sum total of
any and all Advances outstanding, in the amount of Seven and
a half Million Dollars ($7,500,000.00), including principal
and interest, under the Stock Finance Documents and the Loan
Commitment Documents together, shall be repaid by Employee.
(b) The following shall be added to the end of Article
II, Section 2.01, of the Loan Commitment Agreement:
Notwithstanding any provision to the contrary in this
Agreement or the Exhibits and attachments hereto, the Lender
agrees, conditioned on future performance of substantial
employment services by Borrower, and on the terms and
conditions hereinafter set forth, to make Advances to the
Borrower (a "Borrowing") from time to time on any Business Day
during the period from the Effective Date of this Amendment
until February 8, 1999, in an aggregate amount not to exceed,
at any time, the amount of Four Million Dollars
($4,000,000.00). Employee shall repay any amounts outstanding
in excess of Four Million Dollars within thirty (30) days of
the Execution Date of this Amendment.
4. The following shall be added to the end of Article V,
Section 5.01, of the Stock Finance Agreement:
(c) "Notwithstanding any provision to the contrary in
this Agreement or the Exhibits and attachments thereto,
Employee has received a grant of Option (which does not
constitute an Incentive Stock Option), under and pursuant to
the terms and provisions of Company's Enron Corp. 1991 Stock
Plan, as made by such Plan's Committee at its meeting of
February 7, 1994, to purchase One Million Two Hundred Thousand
(1,200,000.00) shares of common stock of the Company. Such
grant shall be made in the form of a Non-Qualified Stock
Option Agreement as reflected in Exhibit A to this Fourth
Amendment to the Employment Agreement between Company and
Employee for a term of seven (7) years beginning February 8,
1994 and ending February 7, 2001. The grant price of such
Option shall be Thirty-Four and No/100 Dollars ($34.00), the
closing price of the common stock of the Company on February
8, 1994. Such Option shall vest 20% immediately upon the date
of grant with the remainder to vest six (6) years and ten (10)
months from date of issue (February 8, 1994), accordingly:
(A) Upon Grant % Vested Exercisable
240,000 20% Six (6) months after
date of grant
(2-8-94)
Six Years 10 Months % Vested Exercisable
960,000 80% 12-8-00 unless
previously vested
and exercised
(B) Notwithstanding the above, provided the performance
criteria of 15% annual earnings per share (EPS) growth is
achieved in calendar years 1994, 1995, and 1996, as set forth
below, vesting shall occur at the rate of 33% each year of
the remaining shares to be vested as follows:
1994 1995 1996
320,000 320,000 320,000
Earnings per share target*:
1994 $1.783
1995 $2.050
1996 $2.357
* 1993 adjusted earnings per share - $1.55
For purposes of vesting, 15% compounded growth in
earnings per share will be cumulative so that any short fall
in 1994, 1995, and/or 1996 can be made up in subsequent years
(including years after 1996) so long as the average growth in
earnings per share for all previous years beginning in 1994 is
at least 15% per year.
No additional vesting of the Option will occur if, and
after Employee leaves the Company, however all vested Options
at the date of Employee's termination of employment with
Company can be exercised up until the end of February 7, 2001.
(d) Notwithstanding any other provision in said Stock
Plan or in the grant of said Option reflected in said Exhibit
A, the vesting provision described in paragraphs (A) and (B)
above shall be the sole and exclusive method of vesting."
5. This Agreement is the Fourth Amendment to the Employment
Agreement, and the parties agree that all other terms,
conditions and stipulations contained in the Employment
Agreement shall remain
in full force and effect and without any change or
modification, except as provided herein.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
ENRON CORP.
By: CHARLES A LeMAISTRE
Charles A. LeMaistre
Title: Chairman, Compensation
Committee of Board of
Directors
ENRON CORP.
By: JOHN H. DUNCAN
Name: John H. Duncan
Title: Chairman, Executive
Committee of Board of
Directors
KENNETH L. LAY
KENNETH L. LAY
Employee
Exhibit 10.20
FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT
This Agreement, made and entered into on this 16th day
of August, 1993, and made effective as of August 16, 1993,
by and between Enron Corp. ("Enron"), a Delaware corporation
having its headquarters at 1400 Smith Street, Houston, Texas
77002, and Richard D. Kinder ("Employee"), an individual
residing in Houston, Texas, is an amendment to that certain
Employment Agreement between the parties effective September
1, 1989 (the "Employment Agreement").
WHEREAS, the Employment Agreement incorporates the terms
and provisions of a Stock Finance Agreement attached to the
Employment Agreement as Exhibit C, as though recited therein
in their entirety; and
WHEREAS, the parties desire to amend a certain provision
of the Stock Finance Agreement;
NOW, THEREFORE, in consideration thereof and of the
mutual covenants contained herein, the parties agree as
follows:
1. Section 5.02 of the Stock Finance Agreement is deleted in
its entirety and the following is substituted in its place:
"Section 5.02. Other Consideration. On August 19,
1993, Company agrees to pay Employee a lump sum payment
in the amount of Three Hundred Sixty-Three Thousand Five
and 50/100 Dollars ($363,005.50) as Other Consideration.
Employee shall not be required to use the Other
Consideration made in this Fourth Amendment to the
Employment Agreement to repay any outstanding Advances
under the Stock Finance Agreement and/or the Loan
Commitment Agreement, respectively. Employee shall repay
any outstanding Advances under the Stock Finance
Agreement and/or the Loan Commitment Agreement in
accordance with the terms and conditions set forth at
Article II of the Stock Finance Agreement and the Loan
Commitment Agreement, respectively."
2. This Agreement is an amendment to the Employment
Agreement, and the parties agree that all other terms,
conditions and stipulations contained in the Employment
Agreement, as amended by any prior amendments thereto, shall
remain in full force and effect and without any change or
modification, except as provided herein.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
ENRON CORP.
By: KENNETH L. LAY
Title:
RICHARD D. KINDER
RICHARD D. KINDER
Employee
Exhibit 10.21
FIFTH AMENDMENT TO EMPLOYMENT AGREEMENT
This Agreement, made and entered into on this 15th day
of October, 1993, and made effective as of January 1, 1993,
by and between Enron Corp. ("Enron"), a Delaware corporation
having its headquarters at 1400 Smith Street, Houston, Texas
77002, and Richard D. Kinder, ("Employee"), an individual
residing in Houston, Texas, is an amendment to that certain
Employment Agreement between the parties effective September
1, 1989 (the "Employment Agreement").
WHEREAS, the Employment Agreement incorporates the
terms and provisions of a Stock Finance Agreement attached
to the Employment Agreement as Exhibit C and a Loan
Commitment Agreement attached to the Employment Agreement as
Exhibit D, as though recited therein in their entirety; and
WHEREAS, the parties desire to amend a certain
provision of the Stock Finance Agreement and the Loan
Commitment Agreement;
NOW THEREFORE, in consideration thereof and of the
mutual covenants contained herein, the parties agree as
follows:
1. Section 2.04 of the Stock Finance Agreement is deleted
in its entirety and the following is substituted in its
place:
"SECTION 2.04. Interest. The Borrower shall pay
interest, compounded annually, on the unpaid principle
and interest at an annual rate determined under the
following formula: I = A x AFR, where "I" is the
amount of interest, "A" is the amount of the Advance,
and "AFR" is the applicable federal rate as defined
under U.S. Internal Revenue Code Section 1274 (d) in
effect during each month that the Advance is
outstanding."
2. Section 2.05 of the Loan Commitment Agreement is
deleted in its entirety and the following is substituted in
its place:
"SECTION 2.05. Interest. The Borrower shall pay
interest compounded annually, on the unpaid principal
and interest at an annual rate determined under the
following formulas for each Advance: I = A x AFR,
where "I" is the amount of interest, "A" is the amount
rate as defined under U.S. Internal Revenue Code
Section 1274 (d) in effect during each month that the
Advance is outstanding. The Borrower shall make
payments of accrued interest with respect to each
Advance on the anniversary date of an Advance, or at
the election of Borrower on the subsequent 31st day of December."
3. This Agreement is an amendment to the Employment
Agreement, and the parties agree that all other terms,
conditions and stipulations contained in the Employment
Agreement, as amended by any prior amendments thereto, shall
remain in full force and effect and without any change or
modification, except as provided herein.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
ENRON CORP.
By: CHARLES A. LeMAISTRE
Title: Chairman, Compensation Committee,
Enron Corp. Board of Directors
RICHARD D. KINDER
RICHARD D. KINDER
Exhibit 10.22
SIXTH AMENDMENT TO EMPLOYMENT AGREEMENT
This Agreement, made and entered into on this 28th day
of February, 1994, ("Execution Date") and made
effective as of February 8, 1994, by and between Enron Corp.
("Company"), a Delaware corporation having its headquarters
at 1400 Smith Street, Houston, Texas 77002, and Richard D.
Kinder ("Employee"), an individual residing in Houston,
Texas, is an amendment to that certain Employment Agreement
between the parties effective September 1, 1989 (the
"Employment Agreement").
WHEREAS, the Employment Agreement incorporates the
terms and provisions of a Stock Finance Agreement attached
to the Employment Agreement as Exhibit C and a Loan
Commitment Agreement attached to the Employment Agreement as
Exhibit D, respectively, as though recited therein in their
entirety; and
WHEREAS, the parties desire to amend and clarify
certain provisions of the Employment Agreement, the Stock
Finance Agreement, and the Loan Commitment Agreement;
NOW, THEREFORE, in consideration thereof and of the
mutual covenants contained herein, the parties agree as
follows:
1. Article 2: Term of Employment of the Employment
Agreement is deleted in its entirety and the following is
substituted in its place:
"Unless sooner terminated pursuant to other provisions
hereof, Employee's period of employment under this
Agreement shall be for a period of five (5) years
beginning on the effective date of this Amendment
("Term"), and thereafter for such period, if any, as
may be agreed upon in writing by Employee and Company.
At the expiration of three years during the Term
hereunder, if Employee and Company are unable to
mutually agree upon an acceptable employment position
for the last two years of the five year Term, Employee
may terminate this Employment Agreement without penalty
and as if this Employment Agreement were fulfilled."
2. Article 3: Compensation and Benefits of the Employment
Agreement is deleted in its entirety and the following is
substituted in its place:
"3.1 Base Salary. During the Term of employment, as
descibed at Article 2 of the Employment Agreement and
amended by this Fourth Amendment to the Employment
Agreement, Employee's annual base salary shall be not
less than Six Hundred Sixty Thousand and No/100 Dollars
($660,000.00), which shall be earned and paid in equal
semimonthly installments in accordance with Company's
standard payroll practice. Employee shall be eligible
for annual increases at the discretion of the
Compensation Committee of the Board of Directors of the
Company."
3. The following shall be added to the end of paragraph
3.9 of the Employment Agreement:
"Notwithstanding any provision to the contrary in this
Agreement or the Exhibits and attachments hereto (including,
without limitation, the Stock Finance Agreement attached to
this Agreement as Exhibit C and the attachments thereto (the
'Stock Finance Documents') and the Loan Commitment Agreement
attached to this Agreement as Exhibit D and the attachments
thereto (the 'Loan Commitment Documents')), effective
February 8, 1994, the sum total of any and all Advances
outstanding, including principal and interest, under the
Stock Finance Documents and the Loan Commitment Documents,
shall be rolled forward with interest accumulating. All
principal and interest existing at the end of the three year
period ending February 7, 1997, shall be forgiven if Company
and Employee have not reached an agreement regarding a
mutually acceptable employment position."
4. The following shall be added to the end of Article V,
Section 5.01, of the Stock Finance Agreement:
"(c) Notwithstanding any provision to the contrary in
this Agreement or the exhibits and attachments thereto,
Employee has received a grant of Option (which does not
constitute an Incentive Stock Option), under and pursuant to
the terms and provisions of Company's Enron Corp. 1991 Stock
Plan, as made by such Plan's Committee at its meeting of
February 7, 1994, to purchase One Million (1,000,000.00)
shares of common stock of the Company. Such grant shall be
made in the form of a Non-Qualified Stock Option Agreement
as reflected in Exhibit A to this Sixth Amendment to the
Employment Agreement between Company and Employee for a term
of seven (7) years beginning February 8, 1994 and ending
February 7, 2001. The grant price of such Option shall be
Thirty-Four and No/100 Dollars ($34.00), the closing price
of the common stock of the Company on February 8, 1994.
Such Option shall vest 20% immediately upon the date of
grant with the remainder to vest six (6) years and ten (10)
months from date of issue (February 8, 1994), accordingly:
(A) Upon Grant % Vested Exercisable
200,000 20% Six (6) months
after date of
grant
(2-8-94)
Six Years 10 Months % Vested Exercisable
800,000 80% 12-8-00 unless
previously
vested and
exercised
(B) Notwithstanding the above, provided the
performance criteria of 15% annual earnings per share (EPS)
growth is achieved in calendar years 1994, 1995, and 1996,
as set forth below, vesting shall occur at the rate of 33%
each year of the remaining shares to be vested as follows:
1994 1995 1996
266,666 266,666 266,668
Earnings per share target*:
1994 $1.783
1995 $2.050
1996 $2.357
* 1993 adjusted earnings per share - $1.55
For purposes of vesting, 15% compounded growth in
earnings per share will be cumulative so that any short fall
in 1994, 1995, and/or 1996 can be made up in subsequent
years (including years after 1996) so long as the average
growth in earnings per share for all previous years
beginning in 1994 is at least 15% per year.
No additional vesting of the Option will occur if, and
after Employee leaves the Company, however all vested
Options at the date of Employee's termination of employment
with Company can be exercised up until the end of February
7, 2001.
(d) Notwithstanding any other provision in said Stock
Plan or in the grant of said Option reflected in said
Exhibit A, the vesting provision described in paragraphs (A)
and (B) above shall be the sole and exclusive method of
vesting."
5. This Agreement is the Fourth Amendment to the
Employment Agreement, and the parties agree that all other
terms, conditions and stipulations contained in the
Employment Agreement, as amended by any prior amendments
thereto, shall remain in full force and effect and without
any change or modification, except as provided herein.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
ENRON CORP.
By: CHARLES A. LeMAISTRE
Name: Charles A. LeMaistre
Title: Chairman, Compensation
Committee of Board of
Directors
ENRON CORP.
By: JOHN H. DUNCAN
Name: John H. Duncan
Title: Chairman, Executive
Committee of Board of
Directors
RICHARD D. KINDER
RICHARD D. KINDER
Employee
Exhibit 10.23
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), including the
attached Exhibit "A" and Exhibit "B", are entered into
between Enron International Inc., ("Employer"), a Delaware
corporation and subsidiary of Enron Corp. ("Enron"), having
offices at 1400 Smith Street, Houston, Texas 77573, and
Rodney L. Gray, an individual currently residing at 4146
Marquette, Houston, Texas 77005 ("Employee"), to be
effective as of July 1, 1993 (the "Effective Date").
WITNESSETH:
WHEREAS, Employer is desirous of employing Employee
pursuant to the terms and conditions and for the
consideration set forth in this Agreement, and Employee is
desirous of entering the employ of Employer pursuant to such
terms and conditions and for such consideration.
NOW, THEREFORE, for and in consideration of the mutual
promises, covenants, and obligations contained herein,
Employer and Employee agree as follows:
ARTICLE 1: EMPLOYMENT AND DUTIES:
1.1. Employer agrees to employ Employee, and Employee
agrees to be employed by Employer, beginning as of the
Effective Date and continuing until the date set forth on
Exhibit "A" (the "Term"), subject to the terms and
conditions of this Agreement.
1.2. Employee initially shall be employed in the
position set forth on Exhibit "A". Employer may
subsequently assign Employee to a different position or
modify Employee's duties and responsibilities. Moreover,
Employer may assign this Agreement and Employee's employment
to Enron or any affiliates of Enron. Employee agrees to
serve in the assigned position and to perform diligently and
to the best of Employee's abilities the duties and services
appertaining to such position as determined by Employer, as
well as such additional or different duties and services
appropriate to such position which Employee from time to
time may be reasonably directed to perform by Employer.
Employee shall at all times comply with and be subject to
such policies and procedures as Employer may establish from
time to time.
1.3. Employee shall, during the period of Employee's
employment by Employer, devote Employee's full business
time, energy, and best efforts to the business and affairs
of Employer. Employee may not engage, directly or
indirectly, in any other business, investment, or activity
that interferes with Employee's performance of Employee's
duties hereunder, is contrary to the interests of Employer
or Enron, or requires any significant portion of Employee's
business time.
1.4. Employee acknowledges and agrees that Employee
owes a fiduciary duty of loyalty, fidelity and allegiance to
act at all times in the best interests of the Employer and
to do no act which would injure Employer's business, its
interests, or its reputation. It is agreed that any direct
or indirect interest in, connection with, or benefit from
any outside activities, particularly commercial activities,
which interest might in any way adversely affect Employer,
Enron, or any of their affiliates, involves a possible
conflict of interest. In keeping with Employee's fiduciary
duties to Employer, Employee agrees that Employee shall not
knowingly become involved in a conflict of interest with
Employer, Enron, or their affiliates, or upon discovery
thereof, allow such a conflict to continue. Moreover,
Employee agrees that Employee shall disclose to Employer's
General Counsel any facts which might involve such a
conflict of interest that has not been approved by
Employer's President.
1.5. Employer and Employee recognize that it is impos-
sible to provide an exhaustive list of actions or interests
which constitute a "conflict of interest." Moreover,
Employer and Employee recognize there are many borderline
situations. In some instances, full disclosure of facts by
the Employee to Employer's General Counsel may be all that
is necessary to enable Employer, Enron, or their affiliates
to protect its interests. In others, if no improper
motivation appears to exist and the interests of Employer,
Enron, or their affiliates have not suffered, prompt
elimination of the outside interest will suffice. In still
others, it may be necessary for Employer to terminate the
employment relationship. Employer and Employee agree that
Employer's determination as to whether a conflict of
interest exists shall be conclusive. Employer reserves the
right to take such action as, in its judgment, will end the
conflict.
ARTICLE 2: COMPENSATION AND BENEFITS:
2.1. Employee's base salary during the Term shall be
not less than the amount set forth under the heading "Base
Salary" on Exhibit "A", which shall be paid in semimonthly
installments in accordance with Employer's standard payroll
practice.
2.2. While employed by Employer (both during the Term
and thereafter), Employee shall be allowed to participate,
on the same basis generally as other employees of Employer,
in all general employee benefit plans and programs,
including improvements or modifications of the same, which
on the effective date or thereafter are made available by
Employer to all or substantially all of Employer's
employees. Such benefits, plans, and programs may include,
without limitation, medical, health, and dental care, life
insurance, disability protection, and pension plans. Except
that Employee shall not be entitled to any annual bonus,
unless approved by the Compensation Committee of the Board
of Directors of Enron Corp. in its sole discretion. Nothing
in this Agreement is to be construed or interpreted to
provide greater rights, participation, coverage, or benefits
under such benefit plans or programs than provided to
similarly situated employees pursuant to the terms and
conditions of such benefit plans and programs.
2.3. Employer shall not by reason of this Article 2 be
obligated to institute, maintain, or refrain from changing,
amending, or discontinuing, any such incentive compensation
or employee benefit program or plan, so long as such actions
are similarly applicable to covered employees generally.
Moreover, unless specifically provided for in a written plan
document adopted by the Board of Directors of either
Employer or Enron, none of the benefits or arrangements
described in this Article 2 shall be secured or funded in
any way, and each shall instead constitute an unfunded and
unsecured promise to pay money in the future exclusively
from the general assets of Employer.
2.4. Employer may withhold from any compensation,
benefits, or amounts payable under this Agreement all
federal, state, city, or other taxes as may be required
pursuant to any law or governmental regulation or ruling.
2.5. Employee has received a grant of an Option (which
does not constitute an Incentive Stock Option), under and
pursuant to the terms and provisions of the Enron Corp. 1991
Stock Plan, as made by such Plan's Committee at its meeting
on June 21, 1993, to purchase Sixty-Four Thousand (64,000)
shares of common stock of Company. Such grant was approved
and made in the form of a Non-Qualified Stock Option
Agreement which is attached hereto as Exhibit "B".
2.6. On the condition that Employee is in the position
set forth on Exhibit "A" hereto on the last day of the
calendar year for which a grant, as provided in the granting
schedule in paragraph A below, is scheduled to be made the
following February, Employee shall be entitled to receive
under and pursuant to the terms and provisions of the 1991
Enron Corp. Stock Plan, a grant of shares of Restricted
Stock in amounts designated in paragraph A below if, and
only if, Enron International Inc. meets the earnings target
set for it by the Board of Directors of Enron Corp., in its
sole discretion, for such year (the "Earnings Target"). The
Restricted Stock will be granted as follows:
A. Granting Schedule. Restricted Stock will be
granted pursuant to written grant agreements on
the condition that Enron International Inc. meets
the Earnings Target for the previous calendar year
according to the following granting schedule:
February, 1994 - 4,700 shares, if 1993 Earnings Target met.
February, 1995 - 9,400 shares, if 1994 Earnings Target met.
February, 1996 - 9,400 shares, if 1995 Earnings Target met.
December 30, 1996 - 9,400 shares, if 1996 Earnings Target met.
The number of shares of Restricted Stock granted
according to this granting schedule shall be
adjusted for splits or consolidations occurring
after July 1, 1993.
B. Carry Back of Earnings Target Overages. In the
event that a grant is not made because Enron
International Inc. failed to meet the previous
year's Earnings Target, the grant will be made in
a following February if the Earnings Target for
that year is exceeded by at least the amount of
the underage from the previous year. Earnings
must be applied to the current year's Earnings
Target first, before being carried back to meet a
previous year's Earnings Target. For example, if
the Earnings Target for 1994 is $100 million and
actual earnings for 1994 are $80 million (under by
$20 million), no grant will be made in February,
1995. However, if the Earnings Target for 1995 is
$120 million and actual earnings for 1995 are $140
million (Earnings Target for 1995 exceeded by $20
million) then a grant for 18,800 shares (9,400 for
1995 earnings and 9,400 carried forward from 1994)
will be made in February, 1996. Multiple future
years' actual earnings in excess of Earnings
Targets may be used to make up for a previous
year's missed Earnings Target. However, actual
earnings in excess of an Earnings Target cannot be
banked for potential future missed Earnings
Targets.
C. Vesting. All shares granted pursuant to the
granting schedule will vest on December 31, 1996.
D. Value of Stock at Vesting. If on the vesting
date of December 31, 1996, the value of the shares
of Restricted Stock, including accrued dividends,
granted to Employee under this Section 2.6 is less
than $3,000,000, then the difference between the
actual value of the shares of Restricted Stock
including accrued dividends and Three Million
Dollars ($3,000,000.00) will be paid by Company
(the "Payment"), provided, however, if for any
reason Employee has not been granted a total
32,900 shares, as adjusted for stock splits or
consolidations, of Restricted Stock pursuant to
the granting schedule, then the amount of the
Payment will be decreased to reflect the
percentage (rounded to 3 decimal points) of 32,900
shares, as adjusted for stock splits or
consolidations, which the actual number of shares
of Restricted Stock granted to Employee
represents. For example, if Employee is granted a
total of 14,100 shares of Restricted Stock, and on
the vesting date said shares and accrued dividends
are worth One Million Dollars ($1,000,000) then
Employee would receive a Payment in the amount of
Two Hundred Eighty Seven Thousand and No/100
Dollars ($287,000.00). [Example Calculation:
($3,000,000.00 x 14,100/32,900) - $1,000,000.00 =
$287,000.00]. Payment will be made either in cash
or Enron common stock ("Enron Stock"; such stock
will be issued pursuant to the terms described in
Section 2.7), at Company's option.
2.7. Stock issued as the Payment referenced at Section
2.6D above, if any, will be issued according to the
following terms and conditions:
A. Employee Representations. With respect to
Employee's agreement to accept and receive shares of
Enron Stock as provided for in Section 2.6D above,
Employee represents and warrants that:
(i) Employee is an "accredited investor" within
the meaning of Rule 501 of the General Rules and
Regulations under the Securities Act of 1933, as
amended;
(ii) Employee has sufficient knowledge and
experience in financial and investment matters so
that Employee is able to evaluate the risks and
merits of Employee's investment in Enron Stock and
is able financially to bear the economic risks
thereof;
(iii) Employee will acquire the shares of Enron
Stock for Employee's own account and not with a
view to or for sale in connection with any
distribution thereof in violation of any
securities laws, and Employee has no present or
future intention of selling or distributing any of
such securities in violation of any securities
laws; and
(iv) Employee is familiar with the business and
financial condition, properties and operations and
prospects of Enron, has received copies of Enron's
1992 Annual Report to Stockholders, Annual Report
on Form 10-K for the year ended December 31, 1992
and Proxy Statement with respect to the 1993
Annual Meeting of Stockholders, and has read
carefully and understands the information
contained in such documents, and has been afforded
the opportunity to ask questions and receive
answers from Enron's officers and directors
concerning the business and financial condition,
properties, operations and prospects of Enron, and
has asked such questions as Employee desires to
ask and all such questions have been answered to
Employee's full satisfaction.
B. Enron Representations. Enron hereby represents to
Employee that:
(i) the shares of Enron Stock which may be issued
to Employee hereunder, if and when issued, will be
validly authorized and duly issued shares of Enron
and will be fully paid and nonassessable and upon
issuance will be free and clear of any pledge,
lien, charge, encumbrance or other adverse claim;
and
(ii) Enron has the requisite power and authority
to execute this Agreement and to enter into the
transactions contemplated hereby.
C. Stock Certificate Legend. Enron may, at its
option, cause to conspicuously appear on all stock
certificates representing Enron Stock which are issued
and delivered to Employee pursuant to the provisions of
this Section 2.7, the legend set forth below, the
provisions of which are agreed to by Employee:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
(I) SUCH OFFERING AND SALE OR OTHER TRANSFER HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT, OR (II) THE HOLDER
HEREOF PROVIDES THE CORPORATION WITH (A) A WRITTEN
OPINION OF LEGAL COUNSEL, WHICH COUNSEL AND OPINION (IN
FORM AND SUBSTANCE) SHALL BE REASONABLY SATISFACTORY TO
THE CORPORATION, TO THE EFFECT THAT THE PROPOSED
TRANSFER OF SUCH SECURITY MAY BE EFFECTED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT, OR (B) SUCH
OTHER EVIDENCE AS MAY BE REASONABLY SATISFACTORY TO THE
CORPORATION THAT THE PROPOSED TRANSFER OF THIS SECURITY
MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT.
D. Employee's Put Rights. Employee shall have the
following put rights ("Put Rights") for the shares of
Enron Stock (the "Shares") which are issued to Employee
under this Agreement unless otherwise provided in the
following paragraph E, or unless there is an effective
registration statement covering such Shares, or unless
Employee is entitled to sell such Shares pursuant to
Rule 144 under the Securities Act of 1933, as amended.
At any time after June 30, 1997, and from time to time
when Employee has Put Rights, at Employee's sole
option, Enron agrees, upon receipt of a written request
of Employee, together with duly endorsed stock
certificates representing the Shares to be repurchased
by Enron, for the account of and charge to Employer, to
repurchase any or all of the Shares (provided that
Employee must tender and make such a request for at
least the lesser of (i) 3,000 of the Shares or (ii) all
of the Shares then held by Employee) at a purchase
price per share equal to the closing sales price on the
New York Stock Exchange for Enron Stock on the date
such written request and such stock certificates are
received by Enron. Enron shall pay the purchase price
for such Shares to Employee within five (5) business
days after the date Enron receives the written request
and the duly endorsed stock certificates representing
the Shares to be repurchased by Enron.
E. Registration of Enron Stock. Enron may, at its
option, file and cause to become effective with the
Securities and Exchange Commission one or more
registration statements under the Securities Act of
1933 relating to the offering and sale of the Shares by
Employee from time to time on the New York Stock
Exchange at prevailing market prices. In the event
Enron elects to effect such registration, Employee,
with respect to Employee's Shares covered by the
registration statement or statements, shall have no Put
Rights following the effectiveness of such registration
statement or statements if (a) Enron has filed with the
New York Stock Exchange the number of copies of the
final prospectus or final prospectuses included therein
required by the New York Stock Exchange rules to permit
such offering and sale to occur and (b) such prospectus
or prospectuses contain such information as shall
permit such offering and sale to occur. Employee shall
have no Put Rights with respect to Shares that Employee
elects not to be offered or sold pursuant to such
registration statement. In the event the information
in any such registration statement or prospectus is
required to be revised or updated in order to permit
such offering and sale to occur, Employee shall have no
Put Rights during the thirty day period following the
first day on which such registration statement or
prospectus is required to be revised or updated in
order to permit such offering and sale to occur.
Employee agrees that, at the time of any sale pursuant
to any such registration statement, Employee will
obtain from Enron confirmation that the prospectus or
prospectuses on file with the New York Stock Exchange
contain such information as shall permit such offering
and sale to occur. Enron will bear all expenses
incurred by it in connection with the filing of the
registration statements pursuant to this paragraph E
(other than underwriting discounts and commissions and
brokerage commissions and fees and expenses, if any,
payable with respect to Shares sold by Employee and
fees and expenses of counsel for Employee).
ARTICLE 3: TERMINATION PRIOR TO
EXPIRATION OF TERM AND EFFECTS
OF SUCH TERMINATION:
3.1. Notwithstanding any other provisions of this
Agreement, Employer shall have the right to terminate
Employee's employment under this Agreement at any time prior
to the expiration of the Term for any of the following
reasons:
(i) For "cause" upon the good faith
determination by the Employer's
management committee (or, if there is no
management committee, the highest
applicable level of management) of
Employer that "cause" exists for the
termination of the employment
relationship. As used in this Section
3.1(i), the term "cause" shall mean
[a] Employee's gross negligence or
willful misconduct in the performance of
the duties and services required of
Employee pursuant to this Agreement; or
[b] Employee's final conviction of a
felony or of a misdemeanor involving
moral turpitude; [c] Employee's
involvement in a conflict of interest as
referenced in Sections 1.5-1.6 for which
Employer makes a determination to
terminate the employment of Employee; or
[d] Employee's material breach of any
material provision of this Agreement
which remains uncorrected for thirty
(30) days following written notice to
Employee by Employer of such breach. It
is expressly acknowledged and agreed
that the decision as to whether "cause"
exists for termination of the employment
relationship by Employer is delegated to
the management committee (or, if there
is no management committee, the highest
applicable level of management) of
Employer for determination. If Employee
disagrees with the decision reached by
Employer, the dispute will be limited to
whether the management committee (or, if
there is no management committee, the
highest applicable level of management)
of Employer reached its decision in good
faith;
(ii) for any other reason whatsoever, with or
without cause, in the sole discretion of
the management committee (or, if there
is no management committee, the highest
applicable level of management) of
Employer;
(iii) upon Employee's death; or
(iv) upon Employee's becoming incapacitated
by accident, sickness, or other circum-
stance which renders him or her mentally
or physically incapable of performing
the duties and services required of
Employee.
The termination of Employee's employment by Employer prior
to the expiration of the Term shall constitute a
"Termination for Cause" if made pursuant to Section 3.1(i);
the effect of such termination is specified in Section 3.4.
The termination of Employee's employment by Employer prior
to the expiration of the Term shall constitute an "Involun-
tary Termination" if made pursuant to Section 3.1(ii); the
effect of such termination is specified in Section 3.5. The
effect of the employment relationship being terminated
pursuant to Section 3.1(iii) as a result of Employee's death
is specified in Section 3.6. The effect of the employment
relationship being terminated pursuant to Section 3.1(iv) as
a result of the Employee becoming incapacitated is specified
in Section 3.7.
3.2. Notwithstanding any other provisions of this
Agreement except Section 7.5, Employee shall have the right
to terminate the employment relationship under this
Agreement at any time prior to the expiration of the Term of
employment for any of the following reasons:
(i) a material breach by Employer of any material
provision of this Agreement which remains
uncorrected for 30 days following written
notice of such breach by Employee to
Employer; or
(ii) for any other reason whatsoever, in the sole
discretion of Employee.
The termination of Employee's employment by Employee prior
to the expiration of the Term shall constitute an
"Involuntary Termination" if made pursuant to Section
3.2(i); the effect of such termination is specified in
Section 3.5. The termination of Employee's employment by
Employee prior to the expiration of the Term shall
constitute a "Voluntary Termination" if made pursuant to
Section 3.2(ii); the effect of such termination is specified
in Section 3.3.
3.3. Upon a "Voluntary Termination" of the employment
relationship by Employee prior to expiration of the Term,
all future compensation to which Employee is entitled and
all future benefits for which Employee is eligible shall
cease and terminate as of the date of termination. Employee
shall be entitled to pro rata salary through the date of
such termination, but Employee shall not be entitled to any
individual bonuses or individual incentive compensation not
yet paid at the date of such termination.
3.4. If Employee's employment hereunder shall be
terminated by Employer for Cause prior to expiration of the
Term, all future compensation to which Employee is entitled
and all future benefits for which Employee is eligible shall
cease and terminate as of the date of termination. Employee
shall be entitled to pro rata salary through the date of
such termination, but Employee shall not be entitled to any
individual bonuses or individual incentive compensation not
yet paid at the date of such termination.
3.5. Upon an Involuntary Termination of the employment
relationship by either Employer or Employee prior to
expiration of the Term, Employee shall be entitled, in
consideration of Employee's continuing obligations hereunder
after such termination (including, without limitation,
Employee's non-competition obligations), to receive the
compensation specified in Section 2.1 and an amount equal to
twenty-five percent (25%) of the amount specified in Section
2.1 as if Employee's employment (which shall cease on the
date of such Involuntary Termination) had continued for the
full Term of this Agreement. Employee shall not be under
any duty or obligation to seek or accept other employment
following Involuntary Termination and the amounts due
Employee hereunder shall not be reduced or suspended if
Employee accepts subsequent employment. Employee's rights
under this Section 3.5 are Employee's sole and exclusive
rights against Employer, Enron, or their affiliates, and
Employer's sole and exclusive liability to Employee under
this Agreement, in contract, tort, or otherwise, for any
Involuntary Termination of the employment relationship.
Employee covenants not to sue or lodge any claim, demand or
cause of action against Employer for any sums for Involun-
tary Termination other than those sums specified in this
Section 3.5. If Employee breaches this covenant, Employer
shall be entitled to recover from Employee all sums expended
by Employer (including costs and attorneys fees) in
connection with such suit, claim, demand or cause of action.
3.6. Upon termination of the employment relationship as
a result of Employee's death, Employee's heirs,
administrators, or legatees shall be entitled to Employee's
pro rata salary through the date of such termination, but
Employee's heirs, administrators, or legatees shall not be
entitled to any individual bonuses or individual incentive
compensation not yet paid to Employee at the date of such
termination.
3.7. Upon termination of the employment relationship as
a result of Employee's incapacity, Employee shall be
entitled to his or her pro rata salary through the date of
such termination, but Employee shall not be entitled to any
individual bonuses or individual incentive compensation not
yet paid to Employee at the date of such termination.
3.8. In all cases, the compensation and benefits
payable to Employee under this Agreement upon termination of
the employment relationship shall be offset against any
amounts to which Employee may otherwise be entitled under
any and all severance plans, and policies of Employer,
Enron, or its affiliates.
3.9. Termination of the employment relationship does
not terminate those obligations imposed by this Agreement
which are continuing obligations, including, without
limitation, Employee's obligations under Articles 5 and 6.
ARTICLE 4: CONTINUATION OF EMPLOYMENT
BEYOND TERM; TERMINATION AND
EFFECTS OF TERMINATION:
4.1. Should Employee remain employed by Employer beyond
the expiration of the Term specified on Exhibit "A," such
employment shall convert to a month-to-month relationship
terminable at any time by either Employer or Employee for
any reason whatsoever, with or without cause. Upon such
termination of the employment relationship by either
Employer or Employee for any reason whatsoever, all future
compensation to which Employee is entitled and all future
benefits for which Employee is eligible shall cease and
terminate. Employee shall be entitled to pro rata salary
through the date of such termination, but Employee shall not
be entitled to any individual bonuses or individual
incentive compensation not yet paid at the date of such
termination.
ARTICLE 5: OWNERSHIP AND PROTECTION OF INFORMATION;
COPYRIGHTS:
5.1. All information, ideas, concepts, improvements,
discoveries, and inventions, whether patentable or not,
which are conceived, made, developed or acquired by Employ-
ee, individually or in conjunction with others, during
Employee's employment by Employer (whether during business
hours or otherwise and whether on Employer's premises or
otherwise) which relate to Employer's business, products or
services (including, without limitation, all such
information relating to corporate opportunities, research,
financial and sales data, pricing and trading terms, evalua-
tions, opinions, interpretations, acquisition prospects, the
identity of customers or their requirements, the identity of
key contacts within the customer's organizations or within
the organization of acquisition prospects, or marketing and
merchandising techniques, prospective names, and marks)
shall be disclosed to Employer and are and shall be the sole
and exclusive property of Employer. Moreover, all drawings,
memoranda, notes, records, files, correspondence, drawings,
manuals, models, specifications, computer programs, maps and
all other writings or materials of any type embodying any of
such information, ideas, concepts, improvements,
discoveries, and inventions are and shall be the sole and
exclusive property of Employer.
5.2. Employee acknowledges that the business of
Employer, Enron, and their affiliates is highly competitive
and that their strategies, methods, books, records, and
documents, their technical information concerning their
products, equipment, services, and processes, procurement
procedures and pricing techniques, the names of and other
information (such as credit and financial data) concerning
their customers and business affiliates, all comprise
confidential business information and trade secrets which
are valuable, special, and unique assets which Employer,
Enron, or their affiliates use in their business to obtain a
competitive advantage over their competitors. Employee
further acknowledges that protection of such confidential
business information and trade secrets against unauthorized
disclosure and use is of critical importance to Employer,
Enron, and their affiliates in maintaining their competitive
position. Employee hereby agrees that Employee will not, at
any time during or after his or her employment by Employer,
make any unauthorized disclosure of any confidential
business information or trade secrets of Employer, Enron, or
their affiliates, or make any use thereof, except in the
carrying out of his or her employment responsibilities
hereunder. Enron and its affiliates shall be third party
beneficiaries of Employee's obligations under this Section.
As a result of Employee's employment by Employer, Employee
may also from time to time have access to, or knowledge of,
confidential business information or trade secrets of third
parties, such as customers, suppliers, partners, joint
venturers, and the like, of Employer, Enron, and their
affiliates. Employee also agrees to preserve and protect
the confidentiality of such third party confidential
information and trade secrets to the same extent, and on the
same basis, as Employer's confidential business information
and trade secrets. Employee acknowledges that money damages
would not be sufficient remedy for any breach of this
Article 6 by Employee, and Employer shall be entitled to
enforce the provisions of this Article 6 by terminating any
payments then owing to Employee under this Agreement and/or
to specific performance and injunctive relief as remedies
for such breach or any threatened breach. Such remedies
shall not be deemed the exclusive remedies for a breach of
this Article 5, but shall be in addition to all remedies
available at law or in equity to Employer, including the
recovery of damages from Employee and his or her agents
involved in such breach.
5.3. All written materials, records, and other
documents made by, or coming into the possession of,
Employee during the period of Employee's employment by
Employer which contain or disclose confidential business
information or trade secrets of Employer, Enron, or their
affiliates shall be and remain the property of Employer,
Enron, or their affiliates, as the case may be. Upon
termination of Employee's employment by Employer, for any
reason, Employee promptly shall deliver the same, and all
copies thereof, to Employer.
5.4. If, during Employee's employment by Employer,
Employee creates any original work of authorship fixed in
any tangible medium of expression which is the subject
matter of copyright (such as videotapes, written
presentations on acquisitions, computer programs, drawings,
maps, architectural renditions, models, manuals, brochures,
or the like) relating to Employer's business, products, or
services, whether such work is created solely by Employee or
jointly with others (whether during business hours or
otherwise and whether on Employer's premises or otherwise),
Employee shall disclose such work to Employer. Employer
shall be deemed the author of such work if the work is
prepared by Employee in the scope of his or her employment;
or, if the work is not prepared by Employee within the scope
of his or her employment but is specially ordered by
Employer as a contribution to a collective work, as a part
of a motion picture or other audiovisual work, as a trans-
lation, as a supplementary work, as a compilation, or as an
instructional text, then the work shall be considered to be
work made for hire and Employer shall be the author of the
work. If such work is neither prepared by the Employee
within the scope of his or her employment nor a work spec-
ially ordered and is deemed to be a work made for hire, then
Employee hereby agrees to assign, and by these presents does
assign, to Employer all of Employee's worldwide right,
title, and interest in and to such work and all rights of
copyright therein.
5.5. Both during the period of Employee's employment by
Employer and thereafter, Employee shall assist Employer and
its nominee, at any time, in the protection of Employer's
worldwide right, title, and interest in and to information,
ideas, concepts, improvements, discoveries, and inventions,
and its copyrighted works, including without limitation, the
execution of all formal assignment documents requested by
Employer or its nominee and the execution of all lawful
oaths and applications for applications for patents and
registration of copyright in the United States and foreign
countries.
ARTICLE 6: POST-EMPLOYMENT NON-COMPETITION OBLIGATIONS:
6.1. As part of the consideration for the compensation
and benefits to be paid to Employee hereunder, and as an
additional incentive for Employer to enter into this
Agreement, Employer and Employee agree to the non-
competition provisions of this Article 6. Employee agrees
that during the period of Employee's non-competition
obligations hereunder, Employee will not, directly or
indirectly for Employee or for others, in any geographic
area or market where Employer or Enron or any of their
affiliated companies are conducting any business as of the
date of termination of the employment relationship or have
during the previous twelve months conducted any business:
(i) engage in any business competitive with
the business conducted by Employer;
(ii) render advice or services to, or
otherwise assist, any other person,
association, or entity who is engaged,
directly or indirectly, in any business
competitive with the business conducted
by Employer;
(iii) induce any employee of Employer or
Enron or any of their affiliates to
terminate his or her employment with
Employer, Enron, or their affiliates,
or hire or assist in the hiring of any
such employee by person, association,
or entity not affiliated with Enron.
These non-competition obligations shall extend until the
latter of [a] the expiration of the Term or [b] one year
after termination of the employment relationship.
6.2. Employee understands that the foregoing
restrictions may limit his or her ability to engage in
certain businesses anywhere in the world during the period
provided for above, but acknowledges that Employee will
receive sufficiently high remuneration and other benefits
(e.g., the right to receive compensation under Section 3.5
for the remainder of the Term upon Involuntary Termination)
under this Agreement to justify such restriction. Employee
acknowledges that money damages would not be sufficient
remedy for any breach of this Article 6 by Employee, and
Employer shall be entitled to enforce the provisions of this
Article 6 by terminating any payments then owing to Employee
under this Agreement and/or to specific performance and
injunctive relief as remedies for such breach or any
threatened breach. Such remedies shall not be deemed the
exclusive remedies for a breach of this Article 6, but shall
be in addition to all remedies available at law or in equity
to Employer, including, without limitation, the recovery of
damages from Employee and his or her agents involved in such
breach.
6.3. It is expressly understood and agreed that
Employer and Employee consider the restrictions contained in
this Article 6 to be reasonable and necessary to protect the
proprietary information of Employer. Nevertheless, if any
of the aforesaid restrictions are found by a court having
jurisdiction to be unreasonable, or overly broad as to
geographic area or time, or otherwise unenforceable, the
parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and
enforceable and, as so modified by the court, to be fully
enforced.
ARTICLE 7: MISCELLANEOUS:
7.1. For purposes of this Agreement the terms
"affiliates" or "affiliated" means an entity who directly,
or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with Enron or
Employer.
7.2. For purposes of this Agreement, notices and all
other communications provided for herein shall be in writing
and shall be deemed to have been duly given when personally
delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Employer, to:
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Corporate Secretary
If to Employee, to the address shown on the first page
hereof.
Either Employer or Employee may furnish a change of address
to the other in writing in accordance herewith, except that
notices of changes of address shall be effective only upon
receipt.
7.3. This Agreement shall be governed in all respects
by the laws of the State of Texas, excluding any conflict-
of-law rule or principle that might refer the construction
of the Agreement to the laws of another State or country.
7.4. No failure by either party hereto at any time to
give notice of any breach by the other party of, or to
require compliance with, any condition or provision of this
Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time.
7.5. If a dispute arises out of or related to this
Agreement, other than a dispute regarding Employee's
obligations under Sections 5.2, Article 5, or Section 6.1,
and if the dispute cannot be settled through direct
discussions, then Employer and Employee agree to first
endeavor to settle the dispute in an amicable manner by
mediation, before having recourse to any other proceeding or
forum. Thereafter, if either party to this Agreement brings
legal action to enforce the terms of this Agreement, the
party who prevails in such legal action, whether plaintiff
or defendant, in addition to the remedy or relief obtained
in such legal action shall be entitled to recover its, his,
or her expenses incurred in connection with such legal
action, including, without limitation, costs of Court and
attorneys fees.
7.6. It is a desire and intent of the parties that the
terms, provisions, covenants, and remedies contained in this
Agreement shall be enforceable to the fullest extent
permitted by law. If any such term, provision, covenant, or
remedy of this Agreement or the application thereof to any
person, association, or entity or circumstances shall, to
any extent, be construed to be invalid or unenforceable in
whole or in part, then such term, provision, covenant, or
remedy shall be construed in a manner so as to permit its
enforceability under the applicable law to the fullest
extent permitted by law. In any case, the remaining
provisions of this Agreement or the application thereof to
any person, association, or entity or circumstances other
than those to which they have been held invalid or
unenforceable, shall remain in full force and effect.
7.7. This Agreement shall be binding upon and inure to
the benefit of Employer and any other person, association,
or entity which may hereafter acquire or succeed to all or
substantially all of the business or assets of Employer by
any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise. Employee's rights and
obligations under Agreement hereof are personal and such
rights, benefits, and obligations of Employee shall not be
voluntarily or involuntarily assigned, alienated, or
transferred, whether by operation of law or otherwise,
without the prior written consent of Employer.
7.8. There exist other agreements between Employer and
Employee relating to the employment relationship between
them, e.g., the agreement with respect to company policies
contained in Employer's Conduct of Business Affairs booklet
and agreements with respect to benefit plans. This
Agreement replaces and merges previous agreements and
discussions pertaining to the following subject matters
covered herein: the nature of Employee's employment
relationship with Employer and the term and termination of
such relationship. This Agreement constitutes the entire
agreement of the parties with regard to such subject
matters, and contains all of the covenants, promises, repre-
sentations, warranties, and agreements between the parties
with respect such subject matters. Each party to this
Agreement acknowledges that no representation, inducement,
promise, or agreement, oral or written, has been made by
either party with respect to such subject matters, which is
not embodied herein, and that no agreement, statement, or
promise relating to the employment of Employee by Employer
that is not contained in this Agreement shall be valid or
binding. Any modification of this Agreement will be
effective only if it is in writing and signed by each party
whose rights hereunder are affected thereby, provided that
any such modification must be authorized or approved by the
Board of Directors of Employer.
IN WITNESS WHEREOF, Employer and Employee have duly
executed this Agreement in multiple originals to be
effective on the date first stated above.
ENRON INTERNATIONAL INC.
By: RICHARD D. KINDER
Name: Richard D. Kinder
Title:
This 1st day of July, 1993
EMPLOYEE
RODNEY L. GRAY
Name: Rodney L. Gray
This 1st day of July, 1993
<PAGE>
EXHIBIT "A"
Employee: Rodney L. Gray
Term: July 1, 1993 through December 31, 1996
Title: Chairman and Chief Executive Officer of Enron
International Inc.
*Base Salary: Twenty-Nine Thousand One Hundred Sixty-Six
and 67/100 Dollars ($29,166.67) per month
* When applicable, Base Salary shall be adjusted
to reflect annual merit increases as earned by
Employee.
ENRON INTERNATIONAL INC.
By: RICHARD D. KINDER
Name: Richard D. Kinder
Title:
This 1st day of July, 1993
EMPLOYEE
RODNEY L. GRAY
Name: Rodney L. Gray
This 1st day of July, 1993
<PAGE>
EXHIBIT "B"
ENRON CORP.
NOTICE OF GRANT OF STOCK OPTION
AND GRANT AGREEMENT
RODNEY L. GRAY
4146 MARQUETTE
HOUSTON TX 77005
Dear 1993 Stock Option Grantee:
A. NOTICE OF GRANT OF STOCK OPTION
Congratulations! You have been granted an Option to
purchase shares of $10.00 par value common stock of Enron
Corp. ("Stock") as follows:
Employee ID ###-##-####
Non-Qualified Stock Option Grant No. 004453
Date of Grant 06/21/93
Enron Corp. 1991 Stock Plan
Price per Share $60.2500
Total Number of Shares Granted 64,000
Total Price of Shares Granted $3,856,000.00
The Option will become vested according to the percentages
of Total Shares in the vesting schedule below and will be
exercisable after vesting until canceled according to the
provisions of this Grant Agreement on the conditions that;
(1) you are in the position of Chairman and Chief Executive
Officer of Enron International Inc. on a vesting date, and
(2) Enron International Inc. meets the earnings target set
for it by the Board of Directors of Enron Corp. for each
year described in the vesting schedule ("Earnings Target"):
Vesting Date Percentage of Total Shares Becoming Vested
========= ===========================
February 1, 1994 14.29% of Total Shares, if 1993 Earnings
Target met
February 1, 1995 28.57% of Total Shares, if 1994 Earnings
Target met
February 1, 1996 28.57% of Total Shares, if 1995 Earnings
Target met
December 31, 1996 28.57% of Total Shares, if 1996 Earnings
Target met
In the event that shares under the Option are not vested because
Enron International Inc. failed to meet the previous year's
Earnings Target, the shares will become vested on a following
February 1, if the Earnings Target for that year is exceeded by at
least the amount of the underage from the previous year. Earnings
must be applied to the current year's Earnings Target first, before
being carried back to meet a previous year's Earnings Target. For
example, if the Earnings Target for 1994 is $100 million and actual
earnings for 1994 are $80 million (under by $20 million), no shares
under the Option will become vested in February, 1995. However, if
the Earnings Target for 1995 is $120 million and actual earnings
for 1995 are $140 million (Earnings Target for 1995 exceeded by $20
million) then 57.14% of the Total Shares (28.57% for 1995 earnings,
and 28.57% of the Total Shares carried forward from 1994), will
become vested in February, 1996. Multiple future years' actual
earnings in excess of Earnings Targets may be used to make up for
a previous year's missed Earnings Target. However, actual earnings
in excess of an Earnings Target cannot be banked for potential
future missed Earnings Targets.
B. STOCK OPTION GRANT AGREEMENT
To carry out the purposes of the Enron Corp. 1991 Stock Plan
(the "Plan"), and in consideration of the mutual agreements and
other terms and provisions set forth herein, in the Notice and in
the Plan, the Company and Employee hereby agree as follows to the
stipulations in this Agreement and in the Notice:
1. GRANT OF OPTION. The Company hereby irrevocably grants
to Employee the right and option ("Option") to purchase all or any
part of an aggregate of the number of Shares of Company common
stock ("Stock") listed in the Notice, on the terms and conditions
set forth herein, in the Notice and in the Plan, the terms of which
are incorporated as though fully stated herein. This Option shall
not constitute an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
2. EXERCISE OF OPTION. Subject to the earlier expiration
of this Option as herein provided and subject to the provisions of
the Plan providing for the disposition of the Options upon the
occurrence of certain transactions, any unexercised vested Shares
under this Option may be exercised, by written notice to the
Company, at any time and from time to time after the date of grant
given on the Notice.
This option is not transferable by Employee otherwise than by
will or the laws of descent and distribution, and may be exercised
only by Employee during Employee's lifetime and while Employee
remains an employee of the Company, except that if Employee's
employment with the Company terminates because of death,
Disability, Retirement or Involuntary Termination, Employee,
Employee's estate or the person who acquires this Option by bequest
or inheritance by reason of the death of Employee, may exercise
this Option at any time during the period of twelve months
following the date of Employee's death, Disability, Retirement or
Involuntary Termination, up to the number of unexercised vested
Shares of Stock Employee was entitled to in the Notice as of the
date of such event resulting in Employee's termination. Except as
provided herein and in the Notice, this Option shall expire and no
longer be exercisable upon Employee ceasing to be employed by the
Company or an Affiliate.
This Option shall not be exercisable in any event after the
expiration of the number of years stated in the Notice from the
date of the grant given in the Notice. This Option may be
exercised in whole or in part from time to time by written request
to the Company, attention of such officer as is then responsible
for administering agreements of this nature. Payment in full,
including applicable tax withholding amounts, shall be made at the
time of each exercise or, if Employee so elects and the Committee
hereinafter referred so permits, payment of the exercise price and
any applicable tax withholding amounts may be made, in whole or in
part, by delivery of a number of Shares of Stock, other awards,
other property or any combination thereof having a fair market
value equal to such amount or part thereof provided that the fair
market value of Stock so delivered shall be equal to the closing
price of the Stock as reported in the "NYSE -- Composite
Transactions" section of the Midwest Edition of the Wall Street
Journal on the date of actual receipt by the Company of the written
notice exercising this Option or, if no prices are so reported on
such day, on the last preceding day on which such prices of Stock
are so reported.
If the Committee permits, this Option may be exercised by
written request to the Company, through a broker financed exercise
pursuant to the provisions of Regulation T of the Federal Reserve
Board. If the Company receives payment of the purchase price for
the exercise of the Option before the end of the next business day
following the broker's execution of the sale of Stock for the
financed exercise, the exercise shall be effective at the time of
such sale. Otherwise, the exercise shall be effective when the
Company receives payment of the purchase price.
No fraction of a Share of Stock shall be issued by the Company
upon exercise of an Option or accepted by the Company in payment of
the exercise price thereof; rather, Employee shall provide a
cashier's check for such cash amount as is necessary to effect the
issuance and acceptance of only whole Shares of Stock. Unless and
until a certificate or certificates representing such Shares shall
have been issued by the Company to Employee, Employee (or the
person permitted to exercise this Option in the event of Employee's
death or incapacity) shall not be or have any of the rights or
privileges of a Stockholder of the Company with respect to the
Shares acquirable upon an exercise of this Option.
3. LIMITATION OF EXERCISE. Notwithstanding anything to the
contrary herein, if Employee is then a person subject to Section 16
of the Securities Exchange Act of 1934, as amended, with respect to
securities of the Company, the Option may not be exercised prior to
the expiration of six months from the date of grant hereof.
4. STATUS OF STOCK. The Company intends to register for
issue under the Securities Act of 1933, as amended ("The Act"), the
Shares of Stock acquirable pursuant to the Notice, and to keep such
registration effective throughout the period the Notice is in
effect. In the absence of such effective registration or an
available exemption from registration under the Act, delivery of
Shares of Stock acquirable pursuant to the Notice shall be delayed
until registration of such Shares is effective or an exemption from
registration under the Act is available. The Company intends to
use its best efforts to ensure that no such delay will occur. In
the event exemption from registration under the Act is available,
Employee (or Employee's estate or personal representative in the
event of the Employee's death or incapacity), if requested by the
Company to do so, will execute and deliver to the Company in
writing an agreement containing such provisions as the Company may
require to assure compliance with applicable securities laws.
No sale or disposition of Shares of Stock acquired pursuant to
the Notice by Employee who is an Affiliate shall be made in the
absence of an effective registration statement with respect to such
Shares under the Act unless an opinion of counsel satisfactory to
the Company that such sale or disposition will not constitute a
violation of the Act or any other applicable securities laws is
first obtained. In the event that Employee proposes to sell or
otherwise dispose of Shares of Stock in such a manner that an
exemption from the registration requirements of the Act is
unavailable for such sale or disposition, and upon request to the
Company by Employee, the Company, at its sole cost and expense,
shall cause a registration statement to be prepared and filed with
respect to such sale or disposition by Employee and shall use its
best efforts to have such registration statement declared
effective, and, in connection therewith, shall execute and deliver
such documents as shall be necessary, including without limitation,
agreements providing for the indemnification of underwriters for
any loss or damage incurred in connection with such sale or
disposition.
The certificates representing Shares of Stock acquired under
the Notice may bear such legend as the Company deems appropriate,
referring to the provisions of this part 4.
5. EMPLOYMENT RELATIONSHIP. Employee shall be
considered to be in the employment of the Company or an Affiliate
of Company as long as Employee remains an active employee of either
the Company or an Affiliate of the Company. Any question as to
whether and when there has been a termination or cessation of such
employment, and the cause thereof, shall be determined by the
Committee in its sole discretion, and its determination shall be
final.
6. BINDING EFFECT. This agreement shall be binding upon
and inure to the benefit of any successors of the Company and all
persons lawfully claiming under Employee. By signing below, you
and Enron Corp. agree that this Option is granted under and
governed by the terms and conditions of the Enron Corp. 1991 Stock
Plan, as amended, which is attached hereto and made a part of this
document. To make this grant effective, you must sign both copies
of this Notice of Grant of Stock Option and Grant Agreement, and
return the copy marked "Original Contract File" to Elaine Overturf
EB4839D.
By: CHARLES A. LeMAISTRE
Chairman, Compensation Committee
Date: July 1, 1993
RODNEY L. GRAY
RODNEY L. GRAY
Date: July 1, 1993
<TABLE>
Exhibit 11
ENRON CORP. AND SUBSIDIARIES
Calculation of Earnings Per Share
(Unaudited)
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in thousands except
per share amounts)
<S> <C> <C> <C>
Primary Earnings Per Share
Earnings on common stock
Income before extraordinary items $332,522 $328,800 $232,146
Preferred stock dividends (16,919) (22,109) (24,740)
315,603 306,691 207,406
Extraordinary items - (22,615) -
$315,603 $284,076 $207,406
Average number of common shares outstanding 239,019 219,965 202,080
Primary earnings per share of common stock
Income before extraordinary items $ 1.32 $ 1.39 $ 1.03
Extraordinary items - (.10) -
$ 1.32 $ 1.29 $ 1.03
Fully Diluted Earnings Per Share
Adjusted earnings on common stock
Income before extraordinary items $332,522 $328,800 $232,146
Preferred stock dividends (16,919) (22,109) (24,740)
Add back:
Dividends on convertible preferred stock 16,919 22,109 24,740
Interest paid on convertible debentures - 1,463 6,309
332,522 330,263 238,455
Extraordinary items - (22,615) -
$332,522 $307,648 $238,455
Average number of common shares outstanding
on a fully diluted basis
Average number of common shares
outstanding 239,019 219,965 202,080
Additional shares issuable upon:
Conversion of preferred stock 22,379 29,248 32,192
Conversion of convertible debentures - 1,966 7,618
Exercise of stock options reduced
by the number of shares which could
have been purchased with the proceeds
from exercise of such options 3,930 3,064 972
265,328 254,243 242,862
Fully diluted earnings per share of
common stock
Income before extraordinary items $ 1.25 $ 1.30 $ .98
Extraordinary items - (.09) -
$ 1.25 $ 1.21 $ .98
</TABLE>
<TABLE>
Exhibit 12
ENRON CORP. AND SUBSIDIARIES
Computation of Ratio of Earnings to
Fixed Charges
(Unaudited)
<CAPTION>
(In Thousands) Year Ended December 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Earnings available for fixed charges
Income from continuing operations $332,522 $328,800 $232,146 $202,180 $226,109
Less:
Undistributed earnings and
losses of less than 50% owned
affiliates (20,232) (32,526) (8,890) (15,468) 5,809
Capitalized interest of
nonregulated companies (25,434) (66,401) (36,537) (8,145) (5,107)
Add:
Fixed charges(1) 471,278 452,014 454,607 425,177 428,579
Minority interest 27,605 17,632 7,210 7,129 335
Income tax expense 148,104 88,630 105,859 62,739 71,850
Total $933,843 $788,149 $754,395 $673,612 $727,575
Fixed charges
Interest expense(1) $436,211 $430,406 $425,945 $400,548 $405,013
Rental expense representative of
interest factor 35,067 21,608 28,662 24,629 23,566
Total $471,278 $452,014 $454,607 $425,177 $428,579
Ratio of earnings to fixed charges 1.98 1.74 1.66 1.58 1.70
<FN>
(1) Amounts exclude costs incurred on sales of accounts receivable.
</TABLE>
Exhibit 21
ENRON CORP. SUBSIDIARIES
Atlantic Commercial Finance B.V. (The Netherlands)
Enron Colombia Transportation B.V. (The Netherlands)
Enron International C.V. (The Netherlands) (99.9%)
Enron Pipeline Colombia C.V. (The Netherlands) (99%)
Enron Power Colombia C.V. (The Netherlands) (99%)
Enron Power Holdings C.V. (The Netherlands) (99.9%)
Enron Power Honduras C.V. (The Netherlands) (99%)
Enron Power Honduras S. de R.L. de C.V. (Honduras)
(99%)
Offshore Power Production C.V. (The Netherlands) (99.9%)
Enron Mauritius Company (Mauritius)
Dabhol Power Company (India)
Travamark Two B.V. (The Netherlands)
Enron Power El Salvador C.V. (The Netherlands) (1%)
Belco Petroleum Corporation (Delaware)
EGP Fuels Company (Delaware)
Enron Americas, Inc. (Delaware)
Enron Oil Corp. (Delaware)
The Protane Corporation (Delaware)
Citadel Corporation Limited (Cayman Islands)
Citadel Venezolana, S.A. (Venezuela)
Interruptores Especializados Lara, S.A.
(Venezuela) (66%)
Industrial Gases Limited (Jamaica)
Manufacturera de Aparatos Domesticos, S.A.(MADOSA)
(Venezuela) (45.58%)
Enron Americas Limited (Cayman Islands)
Enron Liquid Fuels Argentina S.A. (Argentina)
ProCaribe, Inc. (Puerto Rico)
Progasco, Inc. (Puerto Rico)
V. Holdings Industries, S.A. (Venezuela)
Finven Financial Institution Limited (Cayman
Islands)
Industrias Ventane, S.A. (Venezuela)
Industrial Larcada, S.A. (Venezuela)
Servicios Consolidados Ventane, S.A. (Venezuela)
Servicios Vengas, S.A. (Venezuela)
Transporte Mil Ruedas, S.A. (Venezuela)
Vengas de Caracas, S.A. (Venezuela)
Vengas de Occidente, S.A. (Venezuela)
Vengas de Oriente, S.A. (Venezuela)
Vengas del Centro, S.A. (Venezuela)
Manufacturera de Aparatos Domesticos, S.A. (MADOSA)
(Venezuela) (10%)
Enron Capital LLC (Turks and Caicos Islands) (99%)
Enron Coal Company (Delaware)
Enron Coal Pipeline Company (Delaware)
Enron Emerging Technologies, Inc. (Delaware)
Enron Energy Investments S.A. (Argentina) (99%)
Enron Expat Services Inc. (Delaware)
Enron Foundation (Nebraska)
Enron Gas Liquids (Europe) Limited (U.K.)
Enron Gas Services Corp. (Delaware)
EGS New Ventures Corp. (Delaware)
LGMI, Inc. (Delaware)
LRCI, Inc. (Delaware)
Louisiana Gas Marketing Company (Delaware)
Louisiana Gas Pipeline Company Limited Partnership
(Oklahoma) (99%)
Louisiana Resources Company (Delaware)
Louisiana Resources Pipeline Company Limited
Partnership (Oklahoma) (99%)
ENGASCO Corp. (Delaware)
Enron Access Corporation (Delaware)
Enron Administrative Services Corp. (Delaware)
Enron Big Piney Corp. (Delaware)
Enron Capital Corp. (Delaware)
Joint Energy Development Investments Limited
Partnership (Delaware) (50%)
Enron Cactus III Corp. (Delaware)
Cactus Hydrocarbon III Limited Partnership
(Delaware) (1%)
Enron Field Services Company (Delaware)
Enron Finance Corp. (Delaware)
Enron Hydrocarbons Marketing Corp. (Delaware)
Enron Reserve Acquisition Corp. (Delaware)
Enron Risk Management Services Corp. (Delaware)
Enron Gas Gathering, Inc. (Delaware)
Enron Gas Marketing Canada Inc. (Alberta)
Enron Gas Marketing, Inc. (Delaware)
Enron GasBank, Inc. (Delaware)
Enron Hub Trading, Inc. (Delaware)
Enron MW Gas Marketing, Inc. (Delaware)
Enron Mexico, Inc. (Texas)
Enron Minority Development Corp. (Delaware)
Enron Power Marketing, Inc. (Delaware)
Enron Power Services, Inc. (Delaware)
Enron Producer Services Corp. (Delaware)
EnVestor Group 1992-A, Inc. (Delaware)
HPL Resources Company (Texas)
MPP Pipeline Corporation (Delaware)
Enron Gas Services Holding Company Inc. (Delaware)
Enron International Inc. (Delaware)
Enron Jawa Power Corp. (Delaware)
Enron Pasuruan Power Corp. (Delaware)
Enron Pipeline Company - Colombia G.P. Inc. (Texas)
Enron Pipeline Company - Colombia, Ltd. (Texas) (1%)
India Power Ventures Inc. (Delaware)
Enron Liquid Fuels, Inc. (Delaware)
Clyde River Inc. (Liberia) (99%)
Enron Liquids Holding Corp. (Delaware)
EOTT Energy Corp. (Delaware)
EOTT Canada Ltd. (Canada)
EOTT Energy Ltd. (Canada)
EOTT Energy Texas, Inc. (Texas)
EOTT Energy Pipeline Limited Partnership (Delaware)
(1%)
EOTT Energy Operating Limited Partnership
(Delaware) (99%)
EOTT Energy Canada Limited Partnership
(Delaware) (99%)
EOTT Energy Partners, L.P. (Delaware) (99%)
Enron Far East Pte. Ltd. (Singapore)
Enron U.K. Limited (U.K.)
JMRM Energy Corp.
Enron Gas Liquids, Inc. (Delaware)
Enron Arbross Ship Management Co. Ltd. (Hong Kong)
(50%)
Enron Fertilizer U.K. Ltd. (U.K.)
Enron Gas Liquids Canada, Ltd. (Canada)
Enron Gas Liquids Europe S.A.R.L. (France)
Enron Gas Liquids Holding B. V. (The Netherlands)
Enron Gas Liquids B. V. (The Netherlands)
Enron Petrochemicals B.V. (The Netherlands)
Enron Gas Liquids International (UK), Ltd. (U.K.)
Enron Liquid Fuels Far East Pte. Ltd. (Singapore)
Enron Petrochemicals Limited (Hong Kong)
Halton International Limited (Liberia) (50%)
Enron Gas Liquids Far East, Ltd. (Liberia)
Mundogas Services Limited (Liberia)
Mundogas (Storage) Inc. (Liberia)
Mundogas Trading Limited (Liberia)
Mundogas (UK) Ltd. (U.K.)
Norelf Limited (Bermuda) (42.5%)
Veldmoor International Limited (Liberia)
Weddell Corporation (Liberia)
Enron Gas Processing Company (Delaware)
Enron Equipment Company (Delaware)
Enron Louisiana Energy Company (Delaware)
Enron Louisiana Transportation Company (Delaware)
Enron Methanol Company (Delaware)
Enron Liquids Pipeline Company (Delaware)
Enron Liquids Pipeline, L.P. (Delaware) (14.9%)
Enron Liquids Pipeline Operating Limited Partnership
(Delaware) (1.01%)
Enron Transportation Services, L.P. (Delaware) (1%)
Enron Natural Gas Liquids Corporation (Delaware)
Enron Marketing Services, Inc. (Delaware)
Enron Products Marketing Company (Delaware)
Enron Products Pipeline, Inc. (Delaware)
NGP Pipeline Company (Delaware)
Enron Minerals Company (Delaware)
Enron NGV Company (Delaware)
Enfuels Corporation (Delaware) (50%)
Enron Oil & Gas Company (Delaware) (80%)
Enron Asia-Middle East Exploration Company (Texas)
Enron Oil Egypt Ltd. (Cayman Islands)
Enron Oil Malaysia Inc. (Texas)
Enron Oil Malaysia, Limited (Cayman Islands)
Enron Exploration Company (Delaware)
Enron Exploration Company, Australia (Delaware)
Enron Australia Exploration Company (Cayman
Islands)
Enron Exploration Australia Pty Ltd (Australia)
Enron Exploration Company, France (Delaware)
Enron Exploration France S.A. (France)
Enron Exploration Company, Kazakhstan (Delaware)
Enron Exploration and Production (Kazakhstan)
Limited (Cyprus)
Enron Exploration Company, Russia (Delaware)
Enron Exploration and Production (Russia)
Limited (Cyprus)
Enron Exploration Company, South America (Delaware)
Enron Exploration S.A. (Argentina)
Enron Exploration Company, Trinidad (Delaware)
Enron Trinidad Exploration Company (Cayman Islands)
Enron Gas & Oil Trinidad Limited (Trinidad)
Enron Exploration Company, United Kingdom (Delaware)
Galliford Projects Nederland B.V. (The Netherlands)
Enron Oil U.K. Limited (U.K.)
Enron Oil & Gas Marketing, Inc. (Delaware)
I N Holdings, Inc. (Delaware)
Enron Oil Canada Ltd. (Alberta)
Enron Operations Corp. (Delaware)
Hobbs Processing Company (Delaware)
NBP Services Corporation (Delaware)
Enron Overthrust Pipeline Company (Delaware)
Enron Peru, Inc. (Delaware)
Enron Pipeline Company (Delaware)
Black Marlin Pipeline Company (Texas)
Enron Preferred Capital Corp. (Delaware)
Enron TW Pipeline Corp. (Delaware)
Northern Natural Gas Company (Delaware)
Transwestern Pipeline Company (Delaware)
Transwestern Pipeline Company, L.P. (Delaware) (99%)
Enron Pipeline Company - Argentina S.A. (Argentina) (99.99%)
Compania de Inversiones de Energia S.A. (Argentina) (25%)
Transportadora de Gas del Sur S.A. (Argentina) (70%)
Enron Power Corp. (Delaware)
Cuenca Austral S.A. (Argentina)
Enron Development Corp. (Delaware)
Electricidad Enron de Guatemala, Sociedad Anonima
(Guatemala)
Enron-Citizens of Panama, S.A. (Panama)
Enron Power (Central Puerto) S.A. (Argentina)
Puerto Quetzal Power Corp. (Delaware)
Western Caribbean Finance L.P. (Texas) (98%)
Enron/Dominion Cogen Corp. (Delaware) (50%)
Clear Lake Cogeneration Limited Partnership (Texas)
(98%)
Enron Bayou Co-Gen, Inc. (Delaware)
Enron Cogeneration Five Company (Delaware)
Enron Cogeneration One Company (Delaware)
Cogenron Inc. (Delaware)
Enron Cogeneration Three Company (Delaware)
Clear Lake Cogeneration Limited Partnership (Texas)
(2%)
Enron Europe Limited (U.K.)
Enron Europe Liquids Processing (U.K.) (50%)
Enron Gas Processing (Europe) Limited (U.K.)
Enron Gas Processing (U.K.) Limited (U.K.)
Enron Power Construction Limited (U.K.)
Enron Power (Europe) Limited (U.K.)
Enron Power Oil Supply Corp. (Delaware)
Enron Power Operations Limited (U.K.)
Falco UPG, Limited (U.K.)
UPG Falco Limited (U.K.)
Kent Power Limited (U.K.)
Teesside Gas Processing Limited (U.K.)
Teesside Gas Transportation Limited (U.K.) (50%)
Teesside Power Limited (U.K.) (50%)
Trenron Limited (U.K.)
Enron Power Corp. - U.S. (Delaware)
Enron Milford Construction Co. (Massachusetts)
Enron Milford Operating Company (Delaware)
Enron Power Construction Company (Delaware)
Enron Power Fuel Corp. (Delaware)
Enron Power Oil Supply Corp. (Delaware)
Enron Power Philippine Operating Corp. (Delaware)
Enron-Richmond Power Corp. (Delaware)
Richmond Power Enterprise L.P. (Delaware)
Enron Power Enterprise Corp. (Delaware)
Enron Power Holdings B.V. (The Netherlands)
Enron Power Holdings Gmbh (Germany)
Kraftwerk Bitterfeld Gmbh (Germany) (50%)
Enron Power Operating Company (Delaware)
Enron Power (Panama) Ltd. (Delaware)
Enron Power Philippines Corp. (Philippines)
Batangas Power Corp. (Philippines)
Subic Power Corp. (Philippines) (99%)
Enron Subic Power Corp. (Philippines) (99%)
Enron Power Ventures Corp. (Delaware)
Milford Power Associates, Inc. (Massachusetts)
Milford Power Limited Partnership (Massachusetts) (1%)
Enron Property Company (Delaware)
Access Real Estate Advisors, Inc. (Delaware)
Enron Services Corp. (Delaware)
Enron Storage Company (Delaware)
Napoleonville Storage Company Limited Partnership (Texas)
(1%)
Enron Trailblazer Pipeline Company (Delaware)
Enron Venture Capital Company (Delaware)
Enron Washington, Inc. (Delaware)
Gulf Company Ltd. (Bermuda)
Houston Pipe Line Company (Delaware)
Citrus Corp. (Delaware) (50%)
Citrus Energy Services, Inc. (Delaware)
Citrus Industrial Sales Company, Inc. (Delaware)
Citrus Marketing, Inc. (Florida)
Citrus Trading Corp. (Delaware)
Florida Gas Transmission Company (Delaware)
Border Gas, Inc. (Delaware) (3.33%)
Coal Properties Corporation (Illinois)
Enron Gas Pipeline Operating Company (Texas)
Enron Advisory Services, Inc. (Delaware)
Enron Industrial Natural Gas Company (Texas)
Enron Interstate Pipeline Company (Delaware)
Enron Texoma Gas Company (Texas)
HPL Gas Company (Texas)
HT Gathering Company (Texas) (50%)
Houston Pipe Line Marketing Company (Texas)
Intratex Gas Company (Delaware)
Natural Gas Marketing and Storage Company (Texas)
Oasis Pipe Line Company (Delaware) (25%)
Oasis Pipe Line Finance Company (Delaware)
Panhandle Gas Company (Delaware)
Riverside Farms Company (Illinois)
San Marco Pipeline Company (Colorado) (50%)
Seagull Shoreline System Transmission Company (Texas)
(30%)
The Standard Shale Products Company (Colorado) (30%)
Transgulf Pipeline Company (Florida)
Webb-Duval Pipeline, Inc. (Delaware)
Northern Plains Natural Gas Company (Delaware)
Northern Border Partners, L.P. (Delaware) (14%)
Northern Border Intermediate Limited Partnership
(Delaware) (99%)
Northern Border Pipeline Company (Delaware) (70%)
Northern Border Pipeline Corporation (Delaware)
Organizational Partner, Inc. (Delaware)
San Juan Gas Company, Inc. (Puerto Rico)
Smith Street Land Company (Delaware)
Block 321 Partnership (Texas) (99%)
Exhibit 23.01
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports dated February 18, 1994
included in this Form 10-K into Enron Corp.'s previously
filed Registration Statement Nos. 2-90992 (1984 Stock Option
Plan), 2-86917 (Dividend Reinvestment Plan), 33-13397
(Savings Plan), 33-34796 (Savings Plan), 33-52261 (Savings
Plan), 33-13498 (1986 Stock Option Plan), 33-35065 (Employee
Stock Ownership Plan), 33-43324 ($300 million Debt
Securities), 33-50641 (Enron Corp. Debt Securities and
Second Preferred Stock and Enron Capital LLC Preferred
Shares), 33-27893 (1988 Stock Option Plan), 33-46459 ($700
million Senior Subordinated Debt Securities), 33-55580
(569,354 Shares of Common Stock), 33-54132 (395,935 Shares
of Common Stock), 33-52768 (Enron Corp. 1991 Stock Plan), 33-
49839 (1,253,768 Shares of Common Stock), and 33-52143
(955,640 Shares of Common Stock). It should be noted that
we have not audited any financial statements of Enron Corp.
subsequent to December 31, 1993 or performed any audit
procedures subsequent to the date of our report.
ARTHUR ANDERSEN & CO.
Houston, Texas
March 29, 1994
Exhibit 23.02
March 23, 1994
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Gentlemen:
We hereby consent to the references to our firm
and to our opinions delivered to Enron Oil & Gas Company
(the Company) relating to our comparison of estimates
prepared by us to those furnished to us by the Company of
proved oil, condensate, natural gas, and natural gas liquids
reserves of certain selected properties owned by the Company
as prepared in our letter reports dated January 23, 1992,
January 20, 1993, and January 27, 1994, for estimates as of
January 1, 1992, January 1, 1993, and January 1, 1994,
respectively, to be included in the section "Oil and Gas
Exploration and Production Properties and Reserves --
Reserve Information" and Note 20 to Enron Corp.'s
Consolidated Financial Statements entitled "Oil and Gas
Producing Activities -- Oil and Gas Reserve Information" in
Enron Corp.'s Annual Report on Form 10-K for the year ended
December 31, 1993, to be filed with the Securities and
Exchange Commission on or about March 28, 1994. We also
consent to the inclusion of our letter report, dated January
27, 1994, addressed to the Company as an Exhibit (23.03) to
Enron Corp.'s Form 10-K. Additionally, we hereby consent
to the incorporation by reference of such references to our
firm and to our opinions included in Enron Corp.'s Form 10-K
in Enron Corp.'s previously filed Registration Statement
nos. 2-90992, 2-86917, 33-13397, 33-13498, 33-27893, 33-
34796, 33-35065, 33-43324, 33-46459, 33-55580, 33-54132, 33-
52768, 33-52261, 33-50641, 33-49839, and 33-52143.
Very truly yours,
DeGOLYER and MacNAUGHTON
DeGOLYER and MacNAUGHTON
Exhibit 23.03
January 27, 1994
Enron Oil & Gas Company
1400 Smith Street
Houston, Texas 77002
Gentlemen:
Pursuant to your request, we have prepared
estimates, as of January 1, 1994, of the proved oil,
condensate, natural gas liquids, and natural gas reserves of
certain selected properties in the United States and Canada
owned by Enron Oil & Gas Company, hereinafter referred to as
"Enron." The properties consist of working interests
located in the states of New Mexico, Texas, Utah, and
Wyoming and in the offshore waters of Texas in the United
States and in the province of Saskatchewan in Canada. Our
estimates are reported in detail in our "Report as of
January 1, 1994 on Proved Reserves of Certain Properties in
the United States owned by Enron Oil & Gas Company -
Selected Properties" and our "Report as of January 1, 1994
on Proved Reserves of Certain Properties in Canada owned by
Enron Oil & Gas Company - Selected Properties." We also
have reviewed data provided to us by Enron that it
represents to be Enron's estimates of the reserves, as of
January 1, 1994, for the same properties as those included
in our aforementioned reports.
Proved reserves estimated by us and referred to
herein are judged to be economically producible in future
years from known reservoirs under existing economic and
operating conditions and assuming continuation of current
regulatory practices using conventional production methods
and equipment. Proved reserves are defined as those that
have been proved to a high degree of certainty by reason of
actual completion, successful testing, or in certain cases
by adequate core analyses and electrical-log interpretation
when the producing characteristics of the formation are
known from nearby fields. These reserves are defined
areally by reasonable geological interpretation of structure
and known continuity of oil- or gas-saturated material.
This definition is in agreement with the definition of
proved reserves prescribed by the Securities and Exchange
Commission.
Enron represents that its estimates of the proved
reserves, as of January 1, 1994, net to its leasehold
interests in the properties included in our report are as
follows:
Oil, Condensate, and Natural Gas Net Equivalent
Natural Gas Liquids (million cubic Million Cubic Feet
(thousand barrels) feet)
6,737 1,216,700 1,257,122
Note: Net equivalent million cubic feet is based on 1 barrel of oil,
condensate, or natural gas liquids being equivalent to 6,000 cubic feet
of gas.
Enron has advised us, and we have assumed, that
its estimates of proved oil, condensate, natural gas
liquids, and natural gas reserves are in accordance with the
rules and regulations of the Securities and Exchange
Commission.
Proved reserves estimated by us for the properties
included in our reports, as of January 1, 1994, are as
follows:
Oil, Condensate, and
Natural Gas Liquids Natural Gas Net Equivalent
(thousand barrels) (million cubic feet) Million Cubic Feet
6,533 1,191,431 1,230,629
Note: Net equivalent million cubic feet is based on 1 barrel of oil,
condensate, or natural gas liquids being equivalent to 6,000 cubic feet
of gas.
In making a comparison of the detailed estimates
prepared by us and by Enron of the properties involved, we
have found differences, both positive and negative, in
reserve estimates for individual fields. These differences
appear to be compensating to a great extent when considering
the reserves of Enron in the properties included in our
reports, resulting in overall differences not being
substantial. It is our opinion that the reserve estimates
prepared by Enron on the properties reviewed by us and
referred to above, when compared on a net-equivalent-cubic-
feet-of-gas basis, do not differ materially from those
prepared by us.
Submitted,
DeGOLYER and MacNAUGHTON
W. G. McGILVRAY
W. G. McGilvray, P.E.
Senior Vice President
DeGolyer and MacNaughton
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection
with the filing by Enron Corp., a Delaware corporation (the
"Company"), of its Annual Report on Form 10-K for the year
ended December 31, 1993 with the Securities and Exchange
Commission, the undersigned officer or director of the
Company hereby constitutes and appoints Kenneth L. Lay, Jack
I. Tompkins, Kurt S. Huneke and Peggy B. Menchaca, and each
of them (with full power to each of them to act alone), his
true and lawful attorney-in-fact and agent, for him and on
his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and file such Annual Report on
Form 10-K together with any amendments or supplements
thereto, with all exhibits and any and all documents required
to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and 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 in order to effectuate the same as fully to all
intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and confirming all the
said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set
his hand this 14th day of February, 1994.
WILLIAM ANDERS
William A. Anders
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection
with the filing by Enron Corp., a Delaware corporation (the
"Company"), of its Annual Report on Form 10-K for the year
ended December 31, 1993 with the Securities and Exchange
Commission, the undersigned officer or director of the
Company hereby constitutes and appoints Kenneth L. Lay, Jack
I. Tompkins, Kurt S. Huneke and Peggy B. Menchaca, and each
of them (with full power to each of them to act alone), his
true and lawful attorney-in-fact and agent, for him and on
his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and file such Annual Report on
Form 10-K together with any amendments or supplements
thereto, with all exhibits and any and all documents required
to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and 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 in order to effectuate the same as fully to all
intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and confirming all the
said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set
his hand this 14th day of February, 1994.
ROBERT A. BELFER
Robert A. Belfer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection
with the filing by Enron Corp., a Delaware corporation (the
"Company"), of its Annual Report on Form 10-K for the year
ended December 31, 1993 with the Securities and Exchange
Commission, the undersigned officer or director of the
Company hereby constitutes and appoints Kenneth L. Lay, Jack
I. Tompkins, Kurt S. Huneke and Peggy B. Menchaca, and each
of them (with full power to each of them to act alone), his
true and lawful attorney-in-fact and agent, for him and on
his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and file such Annual Report on
Form 10-K together with any amendments or supplements
thereto, with all exhibits and any and all documents required
to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and 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 in order to effectuate the same as fully to all
intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and confirming all the
said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set
his hand this 14th day of February, 1994.
NORMAN P. BLAKE, JR.
Norman P. Blake, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection
with the filing by Enron Corp., a Delaware corporation (the
"Company"), of its Annual Report on Form 10-K for the year
ended December 31, 1993 with the Securities and Exchange
Commission, the undersigned officer or director of the
Company hereby constitutes and appoints Kenneth L. Lay, Jack
I. Tompkins, Kurt S. Huneke and Peggy B. Menchaca, and each
of them (with full power to each of them to act alone), his
true and lawful attorney-in-fact and agent, for him and on
his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and file such Annual Report on
Form 10-K together with any amendments or supplements
thereto, with all exhibits and any and all documents required
to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and 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 in order to effectuate the same as fully to all
intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and confirming all the
said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set
his hand this 17th day of February, 1994.
JOHN H. DUNCAN
John H. Duncan
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection
with the filing by Enron Corp., a Delaware corporation (the
"Company"), of its Annual Report on Form 10-K for the year
ended December 31, 1993 with the Securities and Exchange
Commission, the undersigned officer or director of the
Company hereby constitutes and appoints Kenneth L. Lay, Jack
I. Tompkins, Kurt S. Huneke and Peggy B. Menchaca, and each
of them (with full power to each of them to act alone), his
true and lawful attorney-in-fact and agent, for him and on
his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and file such Annual Report on
Form 10-K together with any amendments or supplements
thereto, with all exhibits and any and all documents required
to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and 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 in order to effectuate the same as fully to all
intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and confirming all the
said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set
his hand this 14th day of February, 1994.
JOE H. FOY
Joe H. Foy
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection
with the filing by Enron Corp., a Delaware corporation (the
"Company"), of its Annual Report on Form 10-K for the year
ended December 31, 1993 with the Securities and Exchange
Commission, the undersigned officer or director of the
Company hereby constitutes and appoints Kenneth L. Lay, Jack
I. Tompkins, Kurt S. Huneke and Peggy B. Menchaca, and each
of them (with full power to each of them to act alone), her
true and lawful attorney-in-fact and agent, for her and on
her behalf and in her name, place and stead, in any and all
capacities, to sign, execute and file such Annual Report on
Form 10-K together with any amendments or supplements
thereto, with all exhibits and any and all documents required
to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and 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 in order to effectuate the same as fully to all
intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and confirming all the
said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set
her hand this 10th day of February, 1994.
WENDY L. GRAMM
Wendy L. Gramm
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection
with the filing by Enron Corp., a Delaware corporation (the
"Company"), of its Annual Report on Form 10-K for the year
ended December 31, 1993 with the Securities and Exchange
Commission, the undersigned officer or director of the
Company hereby constitutes and appoints Kenneth L. Lay, Jack
I. Tompkins, Kurt S. Huneke and Peggy B. Menchaca, and each
of them (with full power to each of them to act alone), his
true and lawful attorney-in-fact and agent, for him and on
his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and file such Annual Report on
Form 10-K together with any amendments or supplements
thereto, with all exhibits and any and all documents required
to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and 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 in order to effectuate the same as fully to all
intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and confirming all the
said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set
his hand this 14th day of February, 1994.
ROBERT K. JAEDICKE
Robert K. Jaedicke
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection
with the filing by Enron Corp., a Delaware corporation (the
"Company"), of its Annual Report on Form 10-K for the year
ended December 31, 1993 with the Securities and Exchange
Commission, the undersigned officer or director of the
Company hereby constitutes and appoints Kenneth L. Lay, Jack
I. Tompkins, Kurt S. Huneke and Peggy B. Menchaca, and each
of them (with full power to each of them to act alone), his
true and lawful attorney-in-fact and agent, for him and on
his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and file such Annual Report on
Form 10-K together with any amendments or supplements
thereto, with all exhibits and any and all documents required
to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and 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 in order to effectuate the same as fully to all
intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and confirming all the
said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set
his hand this 14th day of February, 1994.
RICHARD D. KINDER
Richard D. Kinder
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection
with the filing by Enron Corp., a Delaware corporation (the
"Company"), of its Annual Report on Form 10-K for the year
ended December 31, 1993 with the Securities and Exchange
Commission, the undersigned officer or director of the
Company hereby constitutes and appoints Kenneth L. Lay, Jack
I. Tompkins, Kurt S. Huneke and Peggy B. Menchaca, and each
of them (with full power to each of them to act alone), his
true and lawful attorney-in-fact and agent, for him and on
his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and file such Annual Report on
Form 10-K together with any amendments or supplements
thereto, with all exhibits and any and all documents required
to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and 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 in order to effectuate the same as fully to all
intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and confirming all the
said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set
his hand this 14th day of February, 1994.
KENNETH L. LAY
Kenneth L. Lay
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection
with the filing by Enron Corp., a Delaware corporation (the
"Company"), of its Annual Report on Form 10-K for the year
ended December 31, 1993 with the Securities and Exchange
Commission, the undersigned officer or director of the
Company hereby constitutes and appoints Kenneth L. Lay, Jack
I. Tompkins, Kurt S. Huneke and Peggy B. Menchaca, and each
of them (with full power to each of them to act alone), his
true and lawful attorney-in-fact and agent, for him and on
his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and file such Annual Report on
Form 10-K together with any amendments or supplements
thereto, with all exhibits and any and all documents required
to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and 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 in order to effectuate the same as fully to all
intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and confirming all the
said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set
his hand this 10th day of February, 1994.
CHARLES A. LeMAISTRE
Charles A. LeMaistre
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection
with the filing by Enron Corp., a Delaware corporation (the
"Company"), of its Annual Report on Form 10-K for the year
ended December 31, 1993 with the Securities and Exchange
Commission, the undersigned officer or director of the
Company hereby constitutes and appoints Kenneth L. Lay, Jack
I. Tompkins, Kurt S. Huneke and Peggy B. Menchaca, and each
of them (with full power to each of them to act alone), his
true and lawful attorney-in-fact and agent, for him and on
his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and file such Annual Report on
Form 10-K together with any amendments or supplements
thereto, with all exhibits and any and all documents required
to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and 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 in order to effectuate the same as fully to all
intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and confirming all the
said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set
his hand this 14th day of February, 1994.
JOHN A. URQUHART
John A. Urquhart
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection
with the filing by Enron Corp., a Delaware corporation (the
"Company"), of its Annual Report on Form 10-K for the year
ended December 31, 1993 with the Securities and Exchange
Commission, the undersigned officer or director of the
Company hereby constitutes and appoints Kenneth L. Lay, Jack
I. Tompkins, Kurt S. Huneke and Peggy B. Menchaca, and each
of them (with full power to each of them to act alone), his
true and lawful attorney-in-fact and agent, for him and on
his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and file such Annual Report on
Form 10-K together with any amendments or supplements
thereto, with all exhibits and any and all documents required
to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and 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 in order to effectuate the same as fully to all
intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and confirming all the
said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set
his hand this 15th day of February, 1994.
CHARLS E. WALKER
Charls E. Walker
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection
with the filing by Enron Corp., a Delaware corporation (the
"Company"), of its Annual Report on Form 10-K for the year
ended December 31, 1993 with the Securities and Exchange
Commission, the undersigned officer or director of the
Company hereby constitutes and appoints Kenneth L. Lay, Jack
I. Tompkins, Kurt S. Huneke and Peggy B. Menchaca, and each
of them (with full power to each of them to act alone), his
true and lawful attorney-in-fact and agent, for him and on
his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and file such Annual Report on
Form 10-K together with any amendments or supplements
thereto, with all exhibits and any and all documents required
to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and 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 in order to effectuate the same as fully to all
intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and confirming all the
said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set
his hand this 14th day of February, 1994.
HERBERT S. WINOKUR, JR.
Herbert S. Winokur, Jr.
