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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------
Form 10-Q
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WASHINGTON, D. C. 20549
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-9743
ENRON OIL & GAS COMPANY
(Exact name of registrant as specified in its charter)
Delaware 47-0684736
(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
------------
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of April 30, 1997.
Common Stock, $.01 Par Value 157,511,490 shares
- --------------------------------------- -----------------------
Class Number of Shares
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ENRON OIL & GAS COMPANY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
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<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Statements of Income - Three Months Ended March 31, 1997 and 1996 3
Consolidated Balance Sheets - March 31, 1997 and December 31, 1996 4
Consolidated Statements of Cash Flows - Three Months Ended March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 8
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 12
ITEM 4. Submission of Matters to a Vote of Security Holders 12
ITEM 6. Exhibits and Reports on Form 8-K 12
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ENRON OIL & GAS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
- ---------------------------------------------------------------------------------------
1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C>
NET OPERATING REVENUES Natural Gas (Note 3)
Associated Companies $ (2,599) $ 28,132
Trade 141,171 90,495
Crude Oil, Condensate and Natural Gas Liquids (Note 3)
Associated Companies 9,681 12,626
Trade 31,211 24,224
Gains on Sales of Reserves and Related Assets 206 1,860
Other 981 1,689
-------- --------
TOTAL 180,651 159,026
OPERATING EXPENSES
Lease and Well 23,469 18,756
Exploration 15,483 11,918
Dry Hole 984 2,511
Impairment of Unproved Oil and Gas Properties 6,013 4,863
Depreciation, Depletion and Amortization 62,639 63,321
General and Administrative 13,607 14,189
Taxes Other Than Income 17,286 11,471
-------- --------
TOTAL 139,481 127,029
-------- --------
OPERATING INCOME 41,170 31,997
OTHER INCOME (EXPENSE), NET 1,256 (515)
-------- --------
INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES 42,426 31,482
INTEREST EXPENSE, NET 5,115 4,144
-------- --------
INCOME BEFORE INCOME TAXES 37,311 27,338
INCOME TAX PROVISION 14,246 1,415
-------- --------
NET INCOME $ 23,065 $ 25,923
======== ========
EARNINGS PER SHARE OF COMMON STOCK $ .15 $ .16
===== =====
AVERAGE NUMBER OF COMMON SHARES 158,866 159,934
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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PART I. FINANCIAL INFORMATION - (Continued)
ITEM 1. FINANCIAL STATEMENTS - (Continued)
ENRON OIL & GAS COMPANY
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
- -------------------------------------------------------------------------------------------------------------
1997 1996
- -------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 3,610 $ 7,644
Accounts Receivable
Associated Companies 45,455 82,059
Trade 178,727 195,239
Inventories 28,186 20,746
Other 17,879 20,222
----------- -----------
TOTAL 273,857 325,910
OIL AND GAS PROPERTIES (SUCCESSFUL EFFORTS METHOD) 3,879,686 3,753,199
Less: Accumulated Depreciation, Depletion and Amortization (1,714,706) (1,653,610)
----------- -----------
Net Oil and Gas Properties 2,164,980 2,099,589
OTHER ASSETS 31,600 32,854
----------- -----------
TOTAL ASSETS $ 2,470,437 $ 2,458,353
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable
Associated Companies $ 41,433 $ 77,522
Trade 187,464 200,069
Accrued Taxes Payable 19,488 18,554
Dividends Payable 4,781 4,818
Other 12,710 16,397
----------- -----------
TOTAL 265,876 317,360
LONG-TERM DEBT 518,145 466,089
OTHER LIABILITIES 38,948 44,483
DEFERRED INCOME TAXES 314,400 308,948
DEFERRED REVENUE 83,029 56,383
SHAREHOLDERS' EQUITY
Common Stock, $.01 Par, 320,000,000 Shares Authorized and
160,000,000 Shares Issued 201,600 201,600
Additional Paid In Capital 388,092 388,212
Unearned Compensation (5,469) (5,727)
Cumulative Foreign Currency Translation Adjustment (11,179) (10,179)
Retained Earnings 715,882 697,564
Common Stock Held in Treasury, 1,781,705 shares at
March 31, 1997 and 242,882 shares at December 31, 1996 (38,887) (6,380)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 1,250,039 1,265,090
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,470,437 $ 2,458,353
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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PART I. FINANCIAL INFORMATION - (Continued)
ITEM 1. FINANCIAL STATEMENTS - (Continued)
ENRON OIL & GAS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
- ------------------------------------------------------------------------------------------------------------
1997 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Reconciliation of Net Income to Net Operating Cash
Inflows:
Net Income $ 23,065 $ 25,923
Items Not Requiring (Providing) Cash
Depreciation, Depletion and Amortization 62,639 63,321
Impairment of Unproved Oil and Gas Properties 6,013 4,863
Deferred Income Taxes 5,589 (6,516)
Other, Net (122) (600)
Exploration Expenses 15,483 11,918
Dry Hole Expenses 984 2,511
Gains on Sales of Reserves and Related Assets (206) (1,860)
Other, Net (3,357) (2,763)
Changes in Components of Working Capital and Other Liabilities
Accounts Receivable 50,523 4,742
Inventories (7,440) (1,979)
Accounts Payable (12,271) (18,137)
Accrued Taxes Payable 934 (5,929)
Other Liabilities 2,760 5,104
Other, Net (1,070) 1,649
Amortization of Deferred Revenue (10,688) (10,807)
Changes in Components of Working Capital Associated with
Investing and Financing Activities 2,495 15,833
-------- --------
NET OPERATING CASH INFLOWS 135,331 87,273
INVESTING CASH FLOWS
Additions to Oil and Gas Properties (136,170) (70,261)
Exploration Expenses (15,483) (11,918)
Dry Hole Expenses (984) (2,511)
Proceeds from Sales of Reserves and Related Assets 2,982 4,868
Changes in Components of Working Capital Associated with
Investing Activities (2,495) (15,595)
Other, Net (2,404) (3,240)
-------- --------
NET INVESTING CASH OUTFLOWS (154,554) (98,657)
FINANCING CASH FLOWS
Long-Term Debt
Affiliate - (105,503)
Other 52,600 135,266
Dividends Paid (4,784) (4,795)
Treasury Stock Purchased (34,078) (17,044)
Proceeds from Sales of Treasury Stock 1,185 7,184
Other, Net 266 (238)
-------- --------
NET FINANCING CASH INFLOWS 15,189 14,870
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (4,034) 3,486
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,644 23,039
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,610 $ 26,525
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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PART I. FINANCIAL INFORMATION - (Continued)
ITEM 1. FINANCIAL STATEMENTS - (Continued)
ENRON OIL & GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements of Enron Oil & Gas Company and
subsidiaries (the "Company") included herein have been prepared by
management without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they reflect all
adjustments which are, in the opinion of management, necessary for a
fair presentation of the financial results for the interim periods.
Certain information and notes normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations.
However, management believes that the disclosures are adequate to
make the information presented not misleading. These consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Certain reclassifications have been made to prior period financial
statements to conform with the current presentation.
2. Income tax provision for the three-month periods ended March 31, 1997 and
1996 includes tax benefits of $3.2 million and $1.3 million, respectively,
related to tight gas sand federal income tax credit utilization. Income tax
provision for the three-month period ended March 31, 1996 included a
reduction of $8.5 million primarily associated with a reassessment of
deferred tax requirements and the successful resolution on audit of
Canadian income taxes for certain prior years.
3. Associated natural gas revenues for the three-month periods ended March 31,
1997 and 1996, include wellhead revenues of $53.4 million and $56.8
million, respectively and other natural gas marketing revenue reductions of
$56.0 million and $28.7 million, respectively.
Natural Gas Net Operating Revenues are comprised of the following (in
millions):
Three Months Ended
March 31,
- --------------------------------------------------------------------------------
1997 1996
- --------------------------------------------------------------------------------
Wellhead Natural Gas Revenues
Associated Companies (1)(2) $ 53.4 $ 56.8
Trade 128.8 68.6
------- ------
TOTAL $ 182.2 $125.4
======= ======
Other Natural Gas Marketing Activities
Gross Revenues from:
Associated Companies $ 29.9 $ 18.9
Trade (3) 35.9 39.5
------- ------
TOTAL 65.8 58.4
Associated Costs from:
Associated Companies (1)(4) 48.7 33.0
Trade 23.0 17.6
------- ------
TOTAL 71.7 50.6
------- ------
Net (5.9) 7.8
Commodity Price Transaction Revenue Reductions
Trading (2.0) (1.2)
Non-Trading (5) (35.7) (13.4)
------- ------
TOTAL (37.7) (14.6)
------- ------
TOTAL $ (43.6) $ (6.8)
======= ======
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<PAGE> 7
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 1. FINANCIAL STATEMENTS - (Concluded)
ENRON OIL & GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Crude Oil, Condensate and Natural Gas Liquids Net Operating Revenues
are comprised of the following (in millions):
Three Months Ended
March 31,
- --------------------------------------------------------------------------------
1997 1996
- --------------------------------------------------------------------------------
Wellhead Crude Oil, Condensate and
Natural Gas Liquids Revenues
Associated Companies $ 12.3 $ 13.6
Trade 31.2 24.2
------ ------
TOTAL $ 43.5 $ 37.8
====== ======
Other Crude Oil and Condensate Marketing Activities
Commodity Price Hedging Revenue Reductions(5) $ (2.6) $ (1.0)
====== ======
- --------------------------------------------------------------------------------
1) Wellhead Natural Gas Revenues include $37.1 million and $32.8 million
for the three-month periods ended March 31, 1997 and 1996,
respectively, associated with deliveries by Enron Oil & Gas Company to
Enron Oil & Gas Marketing, Inc., a wholly-owned subsidiary, reflected
as a cost in Other Natural Gas Marketing Activities - Associated Costs.
2) Includes $10.7 million and $4.0 million for the three-month periods
ended March 31, 1997 and 1996, respectively, associated with the
equivalent wellhead value of volumes delivered under the terms of a
volumetric production payment agreement effective October 1, 1992, as
amended, net of transportation.
3) Includes $10.7 million and $10.8 million for the three-month periods
ended March 31, 1997 and 1996, respectively, associated with the
amortization of deferred revenues under the terms of a volumetric
production payment agreement effective October 1, 1992, as amended.
4) Includes $12.7 million and $8.2 million for the three-month periods
ended March 31, 1997 and 1996, respectively, for volumes delivered
under the terms of a volumetric production payment agreement effective
October 1, 1992, as amended, including equivalent wellhead value, any
applicable transportation costs and exchange differentials.
5) Represents revenue reductions associated with commodity price swap
transactions primarily with Enron Corp. affiliated companies based on
NYMEX-related commodity prices in effect on dates of execution, less
customary transaction fees. These transactions were originally entered
into as price hedges for a portion of wellhead sales.
4. As reported in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, the Company has been named as a potentially responsible
party in certain Comprehensive Environmental Response Compensation and
Liability Act proceedings. However, management does not believe that any
potential assessments resulting from such proceedings will individually or
in the aggregate have a materially adverse effect on the financial
condition or results of operations of the Company.
5. In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128 - "Earnings
per Share" effective for interim and annual periods after December 15,
1997. This statement replaces primary earnings per share ("EPS") with a
newly defined basic EPS and modifies the computation of diluted EPS. The
Company does not anticipate that implementation of SFAS 128 will have a
material impact on its computation of EPS.
6. In February 1997, the FASB issued SFAS No. 129 - "Disclosures of
Information about Capital Structures" which is applicable to all entities
that issue securities other than ordinary common stock and is effective for
all periods ending after December 15, 1997. There are no additional
disclosures required of the Company at this time relating to the issuance
of SFAS No. 129.
7. On May 6, 1997, the shareholders of the Company approved a resolution
submitted by the Board of Directors to amend the Restated Certificate of
Incorporation of the Company to provide for 10 million shares of preferred
stock, $.01 par value.
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<PAGE> 8
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ENRON OIL & GAS COMPANY
The following review of operations for the three-month periods ended
March 31, 1997 and 1996 should be read in conjunction with the consolidated
financial statements of the Company and Notes thereto.
Results of Operations
Three Months Ended March 31, 1997
vs. Three Months Ended March 31, 1996
In the first quarter of 1997, Enron Oil & Gas Company (the "Company")
generated net income of $23 million compared to net income of $26 million for
the first quarter of 1996. Income before income taxes of $37 million was $10
million higher than the first quarter of 1996. Net operating revenues for the
first quarter of 1997 were $181 million as compared to $159 million for the
first quarter of 1996.
Wellhead volume and price statistics are as follows:
- --------------------------------------------------------------------------------
1997 1996
- --------------------------------------------------------------------------------
Natural Gas Volumes (MMcf/d)(1)
North America (2) 738 715
Trinidad 112 133
---- ----
TOTAL 850 848
==== ====
Average Natural Gas Prices ($/Mcf)(3)
North America (4) $ 2.58 $ 1.74
Trinidad 1.04 1.00
Composite 2.38 1.62
Crude Oil/Condensate Volumes (MBbl/d)(1)
North America 13.1 11.3
Trinidad 3.7 7.1
India 2.8 3.0
---- ----
TOTAL 19.6 21.4
===== =====
Average Crude Oil/Condensate Prices ($/Bbl)(3)
North America $21.55 $18.41
Trinidad 21.56 17.96
India 22.99 17.36
Composite 21.76 18.11
(1) Million cubic feet per day or thousand barrels per day, as applicable.
(2) Includes 48 MMcf per day for the three-month periods ended March
31, 1997 and 1996 delivered under the terms of a volumetric
production payment agreement effective October 1, 1992, as
amended.
(3) Dollars per thousand cubic feet or per barrel, as applicable.
(4) Includes an average equivalent wellhead value of $2.47/Mcf and
$.91/Mcf for the three-month periods ended March 31, 1997 and
1996, respectively, for the volumes described in note (2), net of
transportation costs.
Wellhead revenues increased 38% to $226 million in the first quarter of
1997 compared to $163 million in the first quarter of 1996. This increase
reflects increased North America volumes and increased average wellhead prices
for natural gas, crude oil and condensate and natural gas liquids.
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PART I. FINANCIAL INFORMATION - (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
ENRON OIL & GAS COMPANY
First quarter 1997 average wellhead natural gas prices were up
approximately 47% from the comparable period in 1996 increasing net operating
revenues by approximately $58 million. This is primarily attributable to a 48%
increase in North America wellhead natural gas prices in the first quarter 1997
compared to the first quarter a year ago. Increases in North America wellhead
natural gas volumes in the first quarter 1997 were basically offset by a
reduction in Trinidad wellhead natural gas volumes. The higher Trinidad natural
gas volumes in the first quarter of 1996 reflected higher purchaser nominations
to meet market requirements which exceeded base contract levels. A 20% increase
in wellhead crude oil and condensate average prices in the first quarter of 1997
as compared to first quarter of 1996 increased net operating revenues by
approximately $6 million while an 8% decrease in wellhead crude oil and
condensate volumes reduced net operating revenues by approximately $3 million
compared to the first quarter of 1996, resulting primarily from lower condensate
volumes from the Kiskadee field associated with lower natural gas deliveries and
a decline in crude oil production from the Ibis field offshore Trinidad.
Other marketing activities associated with sales and purchases of natural
gas, natural gas and crude oil price hedging and trading transactions and
margins related to the volumetric production payment reduced net operating
revenue by $46 million during the first quarter of 1997, compared to an $8
million reduction in the first quarter of 1996. A $36 million revenue reduction
related to natural gas commodity price hedging activities utilizing
NYMEX-related commodity market transactions in the first quarter of 1997
compares to a $13 million reduction associated with similar transactions a year
ago. A decrease in margins associated with sales and purchases of natural gas
and the volumetric production payment reduced net operating revenues by
approximately $6 million as compared to an $8 million addition in the first
quarter of 1996, as a result of the higher costs of natural gas delivered in
1997. Deferred revenue reductions of approximately $26 million related to the
closing of 1997 natural gas price hedging transactions will be recognized during
the remainder of 1997.
During the first quarter of 1997, operating expenses of $139 million were
approximately $12 million higher than in the first quarter of 1996. Lease and
well expenses increased $5 million primarily due to increased production
activities at higher costs in North America to realize the higher product prices
available in the first quarter of 1997 and higher costs associated with start up
operations for the Tapti field offshore India . Worldwide increases in
exploration activities in the first quarter of 1997 over the first quarter of
1996 increased exploration expenses by approximately $4 million. First quarter
1997 taxes other than income increased approximately $6 million over the
comparable period in 1996 primarily reflecting increased wellhead revenues in
North America.
The per unit operating costs of the Company for lease and well, DD&A,
general and administrative, interest expense, and taxes other than income
averaged $1.37 per thousand cubic feet equivalent ("Mcfe") during the first
quarter of 1997 compared to $1.24 per Mcfe during the first quarter of 1996.
This increase is primarily due to the increases in lease and well expenses and
taxes other than income discussed above. However, full year unit rates for 1997
are expected to be in line with the prior year.
Income tax provision increased $13 million for the first quarter of 1997 as
compared to the first quarter of 1996 primarily due to a $9 million benefit
recognized in the first quarter of 1996 associated with a reassessment of
deferred tax requirements and the successful resolution on audit of Canadian
income taxes for certain prior years.
Federal income taxes accrued in interim periods are calculated using the
estimated annual effective income tax rate.
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<PAGE> 10
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
ENRON OIL & GAS COMPANY
Capital Resources and Liquidity
The Company's primary sources of cash during the three months ended March
31, 1997 included funds generated from operations and proceeds from new
borrowings. Primary cash outflows included funds used in operations, exploration
and development expenditures, common stock repurchases, dividends paid to
Company shareholders and the repayment of debt.
Discretionary cash flow, a frequently used measure of performance for
exploration and production companies, is derived by adjusting net income to
eliminate the effects of depreciation, depletion and amortization, impairment of
unproved oil and gas properties, deferred income taxes, gains on sales of
reserves and related assets, certain other miscellaneous non-cash amounts,
except for amortization of deferred revenue, and exploration and dry hole
expenses and to include proceeds from sales of reserves and related assets. The
Company generated discretionary cash flow of $113 million during the first three
months of 1997 compared to $102 million generated for the comparable period in
1996 primarily reflecting higher net operating revenues net of higher related
cash operating expenses.
Net operating cash flows of $135 million for the first three months of 1997
increased approximately $48 million as compared to the first three months of
1996 primarily reflecting the same factors addressed above with regard to
discretionary cash flow along with reduced working capital requirements. Based
upon existing economic and market conditions, management believes net operating
cash flow and available financing alternatives in 1997 will be sufficient to
fund net investing and other cash requirements of the Company for the remainder
of the year.
Exploration and development expenditures for the first three months of 1997
and 1996 are as follows (in millions):
- --------------------------------------------------------------------------------
1997 1996
- --------------------------------------------------------------------------------
North America $ 115 $ 71
Outside North America
India 26 9
Other 12 5
----- -----
TOTAL $ 153 $ 85
===== =====
- --------------------------------------------------------------------------------
Exploration and development expenditures for the first three months of 1997
were higher than expenditures in the first three months of 1996 primarily due to
increased lease acquisitions in North America and increased developmental
drilling activities in North America and India.
The level of exploration and development expenditures will vary in future
periods depending on energy market conditions and other related economic
factors. The Company has significant flexibility with respect to financing
alternatives and the ability to adjust its exploration and development
expenditure budget as circumstances warrant. There are no material continuing
commitments associated with expenditure plans.
-10-
<PAGE> 11
PART I. FINANCIAL INFORMATION - (Concluded)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Concluded)
ENRON OIL & GAS COMPANY
Subsequent Event
As previously announced, initial natural gas production from Tapti field
offshore India, being developed by a consortium of the Company, Reliance
Industries Limited and Oil and Natural Gas Corporation, Ltd., began flowing to
production facilities on March 31, 1997. By April 10, the consortium facilities
were fully pressured and ready to commence deliveries of the Tapti natural gas.
However, as of the date of this filing, the natural gas is temporarily shut-in
pending achieving agreement to allow the introduction of these volumes into the
transmission system owned by an affiliate of the government. The Company is
actively pursuing early resolution of such agreement.
Information Regarding Forward Looking Statements
This Quarterly Report on Form 10-Q includes forward looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Although the Company believes that its
expectations are based on reasonable assumptions, it can give no assurance that
such expectations will be achieved. Important factors that could cause actual
results to differ materially from those in the forward looking statements herein
include, but are not limited to, the timing and extent of changes in commodity
prices for crude oil, natural gas and related products and interest rates, the
extent of the Company's success in discovering, developing and producing
reserves and in acquiring oil and gas properties, political developments around
the world and conditions of the capital and equity markets during the periods
covered by the forward looking statements.
-11-
<PAGE> 12
PART II. OTHER INFORMATION
ENRON OIL & GAS COMPANY
ITEM 1. Legal Proceedings
See Part I, Item 1, Note 4 to Consolidated Financial Statements which is
incorporated herein by reference.
ITEM 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of Enron Oil & Gas Company was held
on May 6, 1997 in Houston, Texas, for the purpose of electing a board of
directors, ratifying the appointment of auditors and approving an amendment to
the Restated Certificate of Incorporation of the Company to provide for a new
class of 10 million shares of preferred stock. Proxies for the meeting were
solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934, and
there was no solicitation in opposition to management's solicitations.
(a) Each of the directors nominated by the Board and listed in the
proxy statement was elected with votes as follows:
Shares Shares
Nominee For Withheld
------- ----- --------
Fred C. Ackman 140,846,256 614,955
Forrest E. Hoglund 140,730,756 730,455
Kenneth L. Lay 140,727,856 733,355
Edward Randall, III 140,820,656 640,555
Edmund P. Segner, III 140,728,624 732,587
(b) The appointment of Arthur Andersen LLP, independent public
accountants, as auditors for the year ending December 31, 1997 was approved by
the following vote: 141,312,443 shares for; 108,522 shares against; and 40,246
shares abstaining.
(c) An amendment of the Restated Certificate of Incorporation of the
Company to provide for 10 million shares of preferred stock, $.01 par value, was
ratified by the following vote: 118,760,066 shares for; 11,545,560 shares
against; and 482,328 shares abstaining.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges
b) Reports on Form 8-K - There were no reports on Form 8-K filed
for the quarterly period ended March 31, 1997.
-12-
<PAGE> 13
SIGNATURES
Pursuant to the requirements 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.
ENRON OIL & GAS COMPANY
(Registrant)
Date: May 15, 1997 By /S/ W. C. WILSON
-----------------------
W. C. Wilson
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: May 15, 1997 By /S/ BEN B. BOYD
-------------------------
Ben B. Boyd
Vice President and Controller
(Principal Accounting Officer)
-13-
<PAGE> 14
EXHIBIT INDEX
Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges
Exhibit 27 - Financial Data Schedule
<PAGE> 1
Exhibit 12
Enron Oil & Gas Company
Computation of Ratio of Earnings to Fixed Charges
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended Year Ended December 31
- --------------------------------------------------------------------------------------------------------------------
3/31/97 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS AVAILABLE FOR
FIXED CHARGES:
Net Income $ 23,065 $140,008 $142,118 $147,998 $138,025 $ 97,580
Less: Capitalized Interest
Expense (3,232) (9,136) (6,490) (6,124) (5,457) (3,580)
Add: Fixed Charges 8,347 21,997 18,414 14,613 15,378 25,869
Income Tax Provision(Benefit) 14,246 50,954 41,936 5,937 (25,752) (17,736)
-------- -------- -------- -------- -------- --------
EARNINGS AVAILABLE $ 42,426 $203,823 $195,978 $162,424 $122,194 $102,133
======== ======== ======== ======== ======== ========
FIXED CHARGES:
Interest Expense 5,013 12,370 11,310 8,135 9,921 22,289
Capitalized Interest 3,232 9,136 6,490 6,124 5,457 3,580
Rental Expense Representative of
Interest Factor 102 491 614 354 - -
-------- -------- -------- -------- -------- --------
TOTAL FIXED CHARGES $ 8,347 $ 21,997 $ 18,414 $ 14,613 $ 15,378 $ 25,869
======== ========= ======== ======== ======== ========
RATIO OF EARNINGS TO
FIXED CHARGES 5.08 9.27 10.64 11.12 7.95 3.95
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,610
<SECURITIES> 0
<RECEIVABLES> 224,182
<ALLOWANCES> 0
<INVENTORY> 28,186
<CURRENT-ASSETS> 273,857
<PP&E> 3,879,686
<DEPRECIATION> (1,714,706)
<TOTAL-ASSETS> 2,470,437
<CURRENT-LIABILITIES> 265,876
<BONDS> 0
201,600
0
<COMMON> 0
<OTHER-SE> 1,048,439
<TOTAL-LIABILITY-AND-EQUITY> 2,470,437
<SALES> 179,464
<TOTAL-REVENUES> 180,651
<CGS> 0
<TOTAL-COSTS> 139,481
<OTHER-EXPENSES> (1,256)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,115
<INCOME-PRETAX> 37,311
<INCOME-TAX> 14,246
<INCOME-CONTINUING> 23,065
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,065
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
