<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
UNITED MERIDIAN CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
OCEAN ENERGY, INC.
AND
UNITED MERIDIAN CORPORATION
SUPPLEMENT TO JOINT PROXY STATEMENT/PROSPECTUS
FOR STOCKHOLDERS MEETINGS
TO BE HELD ON MARCH 27, 1998
This Supplement is being furnished by Ocean Energy, Inc., a Delaware
corporation ("OEI") to its stockholders in connection with the solicitation of
proxies by its Board of Directors for use at the annual meeting of stockholders
of OEI to be held on March 27, 1998, at 9:30 a.m., Houston time, at the Four
Seasons Hotel, 1300 Lamar Street, Houston, Texas, or any adjournment or
postponements thereof and by United Meridian Corporation, a Delaware
corporation ("UMC") to its stockholders in connection with the solicitation of
proxies by its Board of Directors for use at the special meeting of
stockholders of UMC to be held on March 27, 1998, at 10:30 a.m., Houston time,
at the Four Seasons Hotel, 1300 Lamar Street, Houston, Texas, or any
adjournment or postponements thereof. The following information hereby
supplements and should be read in conjunction with the Joint Proxy
Statement/Prospectus of OEI and UMC dated February 27, 1998 (the "Joint Proxy
Statement/Prospectus"), copies of which were previously furnished to
stockholders of record of OEI and UMC as of February 20, 1998. Unless
otherwise indicated, defined terms contained herein have the meanings set forth
in the Joint Proxy Statement/Prospectus. Additional copies of the Joint Proxy
Statement/Prospectus are available upon request to Corporate Secretary, Ocean
Energy, Inc., 8440 Jefferson Highway, Suite 420, Baton Rouge, Louisiana 70809
or to Corporate Secretary, United Meridian Corporation, 1201 Louisiana, Suite
1400, Houston, Texas 77002.
This Supplement is first being sent to stockholders of OEI and UMC on
or about March 13, 1998.
PURPOSE OF SUPPLEMENT
As discussed in the Joint Proxy Statement/Prospectus, UMC, its
directors and OEI are parties to two lawsuits brought on behalf of stockholders
of UMC. Newman v. Carson, et al. (Civil Action No. 16109-NC) is pending in
the Court of Chancery of the State of Delaware and Ross v. Brock, et al. (Cause
No. 98-00845) is pending in the 164th Judicial District Court of Harris County,
Texas. These lawsuits challenge the Merger Agreement and the actions taken by
the directors of UMC in connection therewith. The lawsuits also allege that UMC
failed to disclose certain material information in the Joint Proxy
Statement/Prospectus.
In order to settle the lawsuits, UMC and OEI have entered into an
agreement in principle with the plaintiffs under which UMC and OEI have agreed
to supplement the disclosure contained in the Joint Proxy Statement/Prospectus.
Accordingly, the information contained herein supplements the information
contained in the Joint Proxy Statement/Prospectus. References in quotations
are references to those portions of the Joint Proxy Statement/Prospectus
indicated.
SUPPLEMENTAL INFORMATION TO "THE MERGERS--OPINION OF UMC'S FINANCIAL ADVISOR."
The Joint Proxy Statement/Prospectus includes a summary of the
material analyses performed by Merrill Lynch in connection with its preparation
of the UMC Fairness Opinion. This summary includes equity market value ranges
for UMC in varying amounts depending upon the type of analysis performed, in
each case corresponding to an indicated range per share of UMC Common Stock.
The equity market range of $914 million to $1,164 million under "--UMC
Comparable Company Trading Analysis" corresponds to an indicated range per
share of UMC Common Stock of $24.83 to $31.62. The equity market range of
$1,014 million to $1,414 million under "--UMC Comparable Acquisition Analysis"
corresponds to an indicated range per share of UMC Common Stock of $27.54 to
$38.41. The equity market range of $814 million to $964 million for the UMC
Flat Case and $964 million to $1,164 million for the UMC Base Case under "--UMC
Net Asset Value Analysis" corresponds to an indicated range per share of UMC
Common Stock of $22.11 to $26.18 for the UMC Flat Case and $26.18 to $31.62 for
the UMC Base Case. The equity market range of $864 million to $1,314 million
under "--UMC Corporate Discounted
<PAGE> 3
Cash Flow Analysis" corresponds to an indicated range per share of UMC Common
Stock of $23.47 to $35.70. The foregoing per share values are based on 36.8
million shares, which includes 35.8 million shares outstanding, plus an
additional 1.0 million in UMC Common Stock equivalents underlying outstanding
options.
SUPPLEMENTAL INFORMATION TO "THE COMPANIES--OCEAN ENERGY, INC."
RESERVES
The following table sets forth estimated quantities of proved
developed and proved undeveloped reserves of crude oil and natural gas owned by
OEI as of December 31, 1997. The information set forth in the following table
is based in part upon reserve reports prepared by Netherland, Sewell &
Associates, Inc., independent petroleum engineers, ("NSA"), and in part upon
reserve reports prepared by OEI, in each case in accordance with the rules and
regulations of the Commission. OEI includes as proven reserves, future gas
production estimated by NSA to be used as fuel gas.
<TABLE>
<CAPTION>
BARRELS OF OIL EQUIVALENTS
OIL (MBBLS) NATURAL GAS (MMCF) (MBOE)
- ---------------------------------------- ------------------------------------- ----------------------------------
DEVELOPED UNDEVELOPED TOTAL DEVELOPED UNDEVELOPED TOTAL DEVELOPED UNDEVELOPED TOTAL
- --------- ------------- ---------- --------- ----------- ---------- --------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
53,289 15,493 68,782 174,233 63,451 237,684 82,328 26,068 108,396
</TABLE>
ACREAGE AND PRODUCTIVE WELLS
The following table sets forth the approximate developed and
undeveloped acreage in which OEI held a leasehold mineral or other interest at
December 31, 1997.
<TABLE>
<CAPTION>
DEVELOPED ACRES UNDEVELOPED ACRES
------------------------- ------------------------
GROSS NET GROSS NET
---------- -------- --------- --------
<S> <C> <C> <C> <C>
Federal waters . . . . . . . . . . . . 122,157 74,688 230,069 125,039
State waters and onshore . . . . . . . 60,954 56,851 97,747 70,700
---------- -------- --------- --------
Total . . . . . . . . . . . . . 183,111 131,539 327,816 195,739
========== ======== ========= ========
</TABLE>
As of December 31, 1997, OEI holds options covering approximately
10,869 gross acres (5,435 net) in Cameron Parish, Louisiana, and 16,727 gross
and net acres in Plaquemines Parish, Louisiana, which allow the Company to
conduct 3-D seismic operations on such acreage and to subsequently acquire oil
and gas leases.
The following table sets forth OEI's existing productive wells as of
December 31, 1997:
<TABLE>
<CAPTION>
GROSS NET
----------- ---------
<S> <C> <C>
Oil . . . . . . . . . . . . . . . . . . . . . 623 547
Gas . . . . . . . . . . . . . . . . . . . . . 98 75
----------- ----------
Total Productive Wells . . . . . . . . 721 622
=========== ==========
</TABLE>
Productive wells consist of producing wells and wells capable of
production, including gas wells awaiting pipeline connections. Wells that are
completed in more than one producing horizon are counted as one well. Of the
gross wells reported above, 53 had multiple completions.
2
<PAGE> 4
PRODUCTION, UNIT PRICES AND COSTS
The following table presents certain information with respect to oil
and gas production and lease operating expenses attributable to all oil and gas
property interests owned by OEI for the periods indicated.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------
1997 1996 1995
------------- -------------- --------------
<S> <C> <C> <C>
Production:
Oil (MBbls) . . . . . . . . . . . . . . 9,945 7,149 6,057
Gas (MMcf) . . . . . . . . . . . . . . . 38,916 18,720 12,393
Average Sales Prices (1):
Oil (per Bbl) . . . . . . . . . . . . . $ 19.09 $ 21.58 $ 17.39
Gas (per Mcf) . . . . . . . . . . . . . 2.63 2.79 1.82
Average lease operating
expenses (per BOE) . . . . . . . . . . . $ 3.46 $ 3.52 $ 3.70
</TABLE>
- --------------------
(1) Excludes results of hedging activities. Including the effect of
hedging activities, the Company's average oil price per Bbl received
was $17.27, $19.70 and $19.08 in the years ended December 31, 1995,
1996 and 1997, respectively, and the average gas price per Mcf
received was $1.84, $2.50 and $2.63 in the years ended December 31,
1995, 1996 and 1997, respectively.
DRILLING ACTIVITIES
The following table sets forth the drilling of OEI on its properties
for each of the three years ended December 31, 1997.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------
1997 1996 1995
--------------------- ------------------- ------------------
GROSS NET GROSS NET GROSS NET
--------- --------- ---------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Exploratory Wells:
Productive . . . . . . . . . . . 17 14.9 6 5.5 1 1.0
Nonproductive . . . . . . . . . 8 7.4 6 4.6 3 2.0
Development Wells:
Productive . . . . . . . . . . . 36 32.4 24 23.7 17 17.0
Nonproductive . . . . . . . . . -- -- 1 1.0 -- --
--------- --------- ---------- ------- --------- -------
Total . . . . . . . . . . . 61 54.7 37 34.8 21 20.0
========= ========= ========== ======= ========= =======
</TABLE>
SUPPLEMENTAL INFORMATION TO "THE COMPANIES--UNITED MERIDIAN CORPORATION."
RESERVES
The following table sets forth estimated of proved developed and
proved undeveloped reserves of crude oil and natural gas of UMC at December 31,
1997, as evaluated by Ryder Scott Company, Netherland, Sewell & Associates,
Inc. and McDaniel & Associates Consultants Ltd., UMC's independent petroleum
reserve engineers:
<TABLE>
<CAPTION>
BARRELS OF OIL EQUIVALENTS
OIL (MBBLS) NATURAL GAS (MMCF) (MBOE)
------------------------------- ------------------------------- -------------------------------
DEVELOPED UNDEVELOPED TOTAL DEVELOPED UNDEVELOPED TOTAL DEVELOPED UNDEVELOPED TOTAL
--------- ----------- ----- --------- ----------- ----- --------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gulf Coast ......... 1,912 96 2,008 53,168 14,923 68,091 10,774 2,583 13,357
Permian Basin ...... 6,796 545 7,341 27,450 4,066 31,516 11,371 1,223 12,594
Midcontinent ....... 1,966 404 2,370 60,667 8,098 68,765 12,077 1,754 13,831
Rocky Mountains .... 6,669 1,778 8,447 130,954 26,773 157,727 28,495 6,240 34,735
------- ------- ------- --------- -------- -------- -------- -------- --------
Sub-Total U.S. ... 17,343 2,823 20,166 272,239 53,860 326,099 62,717 11,800 74,517
Canada ............. 3,383 -- 3,383 97,862 -- 97,862 19,693 -- 19,693
Cote d'Ivoire ...... 1,861 3,396 5,257 40,313 95,977 136,290 8,580 19,393 27,973
Equatorial Guinea .. 11,482 28,532 40,014 -- -- -- 11,482 28,532 40,014
------- ------- ------- --------- -------- -------- -------- -------- --------
Total Company .... 34,069 34,751 68,820 410,414 149,837 560,251 102,472 59,725 162,197
======= ======= ======= ========= ======== ======== ======== ======== ========
</TABLE>
3
<PAGE> 5
ACREAGE AND PRODUCTIVE WELLS
The following table sets forth UMC's developed and undeveloped acreage
at December 31, 1997. In North America, UMC holds its acreage through oil and
natural gas leases. The leases have a variety of primary terms and may require
delay rentals to continue the primary term if not productive. The leases may
be surrendered by the operator at any time by notice to the lessors, by the
cessation of production, by the fulfillment of commitments, or by failure to
make timely payment of delay rentals.
UMC's acreage holdings in Cote d'Ivoire, Equatorial Guinea, Pakistan,
Bangladesh and Angola are evidenced by PSCs or other concession agreements with
the governments of those countries. Among the terms that may be in place are
obligations of UMC to conduct exploration operations (including the drilling of
wells) and the manner in which any oil and natural gas that may be produced
will be allocated among the parties to the contract.
<TABLE>
<CAPTION>
DEVELOPED ACREAGE UNDEVELOPED ACREAGE TOTAL
---------------------- ----------------------- -----------------------
GROSS NET GROSS NET GROSS NET
-------- -------- -------- --------- --------- ---------
(IN THOUSANDS) (IN THOUSANDS) (IN THOUSANDS)
---------------------- ---------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
Gulf Coast Onshore . . . . 61 15 357 52 418 67
Gulf Coast Offshore . . . . 149 41 253 145 402 186
Midcontinent . . . . . . . 181 64 190 42 371 106
Rocky Mountains . . . . . . 412 253 648 238 1,060 491
Other U.S. . . . . . . . . 43 8 67 8 110 16
-------- --------- -------- --------- --------- ---------
Sub-Total U.S. . . . . 846 381 1,515 485 2,361 866
Canada . . . . . . . . . . 498 118 445 158 943 276
Bangladesh . . . . . . . . -- -- 3,309 1,323 3,309 1,323
Cote d'Ivoire . . . . . . . 13 4 2,136 851 2,149 855
Equatorial Guinea . . . . . 36 9 1,798 1,202 1,834 1,211
Pakistan . . . . . . . . . -- -- 7,689 5,843 7,689 5,843
-------- --------- -------- --------- --------- ---------
Total (1) . . . . . . 1,393 512 16,892 9,862 18,285 10,374
======== ========= ======== ========= ========= =========
</TABLE>
- -----------------
(1) Does not include 1.2 million gross acres (0.2 million net acres) in Angola
where UMC was awarded a participation in the deepwater Block 19 in February
1998.
The following table sets forth UMC's existing productive wells as of
December 31, 1997:
<TABLE>
<CAPTION>
GROSS NET
----------- ----------
<S> <C> <C>
Oil . . . . . . . . . . . . . . . . . . 3,994 467
Gas . . . . . . . . . . . . . . . . . . 1,954 835
----------- ----------
Total Productive Wells . . . . . 5,948 1,302
=========== ==========
</TABLE>
4
<PAGE> 6
PRODUCTION, UNIT PRICES AND COSTS
The following table sets forth information with respect to UMC's
production and average unit prices and costs for the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------------------------------------
1997 1996 1995
------------- ------------ -----------
<S> <C> <C> <C>
Production:
Oil (MBbls)
United States . . . . . . . . . . . . . . . . . . 2,214 2,022 1,826
Canada . . . . . . . . . . . . . . . . . . . . . . 439 511 649
Cote d'Ivoire . . . . . . . . . . . . . . . . . . 1,027 894 285
Equatorial Guinea . . . . . . . . . . . . . . . . 4,453 967 --
------------- ------------ -----------
Total . . . . . . . . . . . . . . . . . . . . 8,133 4,394 2,760
============= ============ ===========
Natural gas (Mmcf)
United States . . . . . . . . . . . . . . . . . . 42,238 47,719 38,878
Canada . . . . . . . . . . . . . . . . . . . . . . 7,630 5,339 5,383
Cote d'Ivoire . . . . . . . . . . . . . . . . . . 4,939 2,387 192
------------- ------------ -----------
Total . . . . . . . . . . . . . . . . . . . . 54,807 55,445 44,453
============= ============ ===========
Average net sales price, including hedging:
Oil ($ per bbl)
United States . . . . . . . . . . . . . . . . . . $ 17.96 $ 20.91 $ 16.41
Canada . . . . . . . . . . . . . . . . . . . . . . $ 17.97 $ 19.43 $ 16.59
Cote d'Ivoire . . . . . . . . . . . . . . . . . . $ 18.35 $ 20.56 $ 15.45
Equatorial Guinea . . . . . . . . . . . . . . . . $ 17.71 $ 22.17 $ --
Average . . . . . . . . . . . . . . . . . . . $ 17.87 $ 20.94 $ 16.35
Natural gas ($ per Mcf)
United States . . . . . . . . . . . . . . . . . . $ 2.18 $ 2.15 $ 1.58
Canada . . . . . . . . . . . . . . . . . . . . . . $ 1.40 $ 1.44 $ 1.17
Cote d'Ivoire . . . . . . . . . . . . . . . . . . $ 1.81 $ 1.80 $ 1.72
Average . . . . . . . . . . . . . . . . . . . $ 2.04 $ 2.07 $ 1.53
Additional disclosures ($ per BOE):
Production and operating costs (1) . . . . . . . . . $ 2.65 $ 3.12 $ 3.50
Ad valorem and production taxes . . . . . . . . . . . $ 0.62 $ 0.64 $ 0.72
Oil and natural gas depletion and depreciation (2) . . $ 5.45 $ 6.00 $ 5.19
</TABLE>
- --------------------
(1) Costs incurred to operate and maintain wells and related equipment,
excluding ad valorem and production taxes.
(2) Does not include impairments of proved oil and gas property.
5
<PAGE> 7
DRILLING ACTIVITY
During the periods indicated, UMC drilled or participated in the
drilling of the following exploratory and development wells:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------
1997 1996 1995
--------------------- ------------------- ------------------
GROSS NET GROSS NET GROSS NET
--------- --------- ---------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Exploratory:
Productive . . . . . . . . . . . 30 13.8 23 7.8 18 5.2
Non-Productive . . . . . . . . . 31 12.9 25 8.6 15 3.2
--------- --------- ---------- ------- --------- -------
Total . . . . . . . . . . . 61 26.7 48 16.4 33 8.4
========= ========= ========== ======= ========= =======
Development:
Productive: . . . . . . . . . . 253 69.9 113 26.8 114 19.4
Non-Productive . . . . . . . . . 23 12.9 9 4.4 22 3.3
--------- --------- ---------- ------- --------- -------
Total . . . . . . . . . . . 276 82.8 122 31.2 136 22.7
========= ========= ========== ======= ========= =======
Total:
Productive . . . . . . . . . . . 283 83.7 136 34.6 132 24.6
Non-Productive . . . . . . . . . 54 25.8 34 13.0 37 6.5
--------- --------- ---------- ------- --------- -------
Total . . . . . . . . . . . 337 109.5 170 47.6 169 31.1
========= ========= ========== ======= ========= =======
</TABLE>
At December 31, 1997, UMC was participating in the drilling or
completion of 57 gross (17.2 net) wells. All of UMC's drilling activities are
conducted with independent contractors.
SUPPLEMENTAL INFORMATION TO "THE MERGERS--INTERESTS OF CERTAIN PERSONS IN THE
MERGERS."
The following table sets forth information concerning the value of
exercisable and unexercisable options held by UMC's Chief Executive Officer and
each of the four other most highly compensated executive officers of UMC, all
executive officers of UMC as a group, and all of UMC's non-employee directors
as a group as of December 31, 1997. No options have been granted to such
persons after such date. As a result of the UMC Merger, all unexercisable
options will become exercisable. Absent the UMC Merger or other similar merger
transaction, the Unexercisable Options set forth below will become exercisable
over various periods of time (up to 4 years) provided the officer or director
remains employed or in the service of UMC or upon the retirement of the officer
or director after meeting certain retirement criteria.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF UMC
COMMON STOCK VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS, HELD AT
OPTIONS HELD AT DECEMBER 31, 1997 (1)
DECEMBER 31, 1997
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John B. Brock (2) 104,375 203,750 $1,561,015 $1,135,781
James L. Dunlap (2) 187,500 112,500 $0 $0
Jonathan M. Clarkson 74,375 78,125 $1,182,266 $471,172
James E. Smitherman 0 78,125 $0 $511,016
Gary R. McGregor 15,075 39,005 $207,835 $361,832
All executive officers as a
group (8 persons) (3) 424,982 597,930 $3,683,864 $3,062,373
All non-employee directors as
a group (10 persons) 441,308 57,000 $8,471,764 $83,125
</TABLE>
(1) Computed based on the difference between aggregate fair market
value and aggregate exercise price. The fair value of UMC Common
Stock on December 31, 1997 was $27.375 based on the average of the
high and low sales prices on the New York Stock Exchange on such
date.
(2) Also members of the UMC Board.
(3) Includes the five above-named executive officers.
6
<PAGE> 8
SUPPLEMENTAL INFORMATION TO "THE MERGERS--BACKGROUND OF THE MERGERS" AND
"--REASONS FOR THE MERGERS; RECOMMENDATIONS OF THE BOARDS--REASONS FOR THE
MERGER-UMC."
In September and November 1997, the UMC Board concluded that it would
be difficult, if not impossible, to capture the long-term value of UMC in a
current sale and, therefore, that such a sale would not be in the best
interests of UMC stockholders because a sale would not enable UMC's
stockholders to participate in such long-term value. In coming to this
conclusion, the UMC Board did not determine a value or range of values of UMC.
Any quantification of such values would, by necessity, be highly dependent upon
a variety of assumptions applicable over a substantial period of time and
subject to substantial risk analysis. The UMB Board instead considered the
various valuation methodologies generally used for oil and gas exploration and
production companies and the overall prospects of UMC, including the future
international opportunities of UMC. The UMC Board concluded that such
methodologies would not ascribe full credit to UMC for such future prospects.
The UMC Board, therefore, made a subjective determination that until such
opportunities could be realized through discoveries, UMC would not be given
full credit relative to its potential and long-term value. Although the UMC
Board believed that UMC may be able to capture a portion of its long-term value
by pursuing its stand alone business plan, the UMC Board believes that the UMC
Merger with OEI will provide significant benefits that will enhance UMC's
ability to achieve such value. Such benefits include diversification, lowering
its risk profile, enabling it to retain a greater portion of large-scale
exploration and development projects, facilitating and minimizing financial
risks in securing scarce drilling rigs and other oil field services, obtaining
better credit ratings, more flexible financing, greater stock liquidity and
lower financing costs. The UMC Board believes that the UMC Merger will provide
such benefits without sacrificing UMC's own individual potential growth rate.
The UMC Board determined that OEI was the most attractive candidate for a
strategic combination with UMC because of the fit with UMC's current
operations, the exploration and development prospects of OEI and the
similarities in size and projected growth, production, reserves and financial
measures, including cash flow.
SUPPLEMENTAL INFORMATION TO "THE MERGERS--BACKGROUND OF THE MERGERS."
The representative of Lehman Brothers, financial advisor to OEI, who
was formerly with Merrill Lynch, financial advisor to UMC, was among the
representatives of Merrill Lynch who reviewed with UMC in early 1997 a possible
strategic combination with OEI. The representative, subsequent to his
employment by Lehman Brothers, was actively involved in the transaction on
behalf of OEI. In light of the fact that management of each of OEI and UMC was
aware that all material confidential information concerning its company would
be disclosed to management of the other company in connection with the
investigatory phase of the merger negotiations, in the opinion of UMC, the
former employment by Merrill Lynch of the representative of Lehman Brothers had
no effect on the negotiation of the Mergers or the sharing or withholding of
confidential information between OEI and UMC.
VOTING ON MERGER AGREEMENT
Any person executing a proxy card may revoke it prior to its exercise
by filing with the Corporate Secretary of OEI or UMC, as the case may be, prior
to or at the applicable Stockholders' Meeting, at the address specified under
the caption "Available Information" in the Joint Proxy Statement/Prospectus,
either an instrument revoking the proxy or a duly executed proxy bearing a
later date.
By Order of the Board of Directors of By Order of the Board of Directors of
Ocean Energy, Inc. United Meridian Corporation
Dated: March 13, 1998
7
