<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No.___)
ENRON OIL & GAS COMPANY
-----------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
--------------------------------------
(Title of Class of Securities)
293562 10 4
--------------
(CUSIP Number)
Rex R. Rogers
Vice President and Associate General Counsel
Enron Corp.
1400 Smith Street
Houston, TX 77002
(713) 853-3069
-------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 1, 1998
-----------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Section 240.13d-1(e), Section 240.13d-1(f) or
Section 240.13d-1(g), check the following box: [X]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
SCHEDULE 13D
CUSIP NO. 293562 10 4 Page 2 of 13 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Enron Corp.
I.R.S. No. 47-0255140
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
N/A
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
BK, WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Oregon
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 82,270,000
-------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
-------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 82,270,000
-------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
82,270,000 shares of common stock.
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
N/A
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
53.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
<PAGE> 3
STATEMENT ON SCHEDULE 13D
Item 1. Security and Issuer.
This statement relates to the shares of common stock, par value $.01
per share ("Common Stock"), of Enron Oil & Gas Company (the "Issuer"). The
address of the principal executive office of the Issuer is 1400 Smith Street,
Houston, Texas 77002.
Item 2. Identity and Background.
This statement is being filed by Enron Corp., an Oregon corporation
("Enron"), which is an integrated natural gas and electricity company that
engages, through its subsidiaries and affiliates, in the exploration for and
production of natural gas and crude oil in the United States and
internationally; the transportation of natural gas through pipelines to markets
throughout the United States; the generation and transmission of electricity to
markets in the northwestern United States; the marketing of natural gas,
electricity and other commodities and related risk management and finance
services worldwide; and the development, construction and operation of power
plants, pipelines and other energy related assets in international markets.
The address of the principal business office of Enron is 1400 Smith
Street, Houston, Texas 77002. Schedule I attached hereto sets forth certain
additional information with respect to each director and each executive officer
of Enron.
Neither Enron nor, to its knowledge, any person listed on Schedule I
hereto, has been, during the last five years (a) convicted in any criminal
proceeding (excluding traffic violations or similar misdemeanors) or (b) a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, U.S. federal or state securities laws or
finding any violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Prior to October 4, 1989, Enron owned 99.4% of the outstanding shares
of Common Stock of the Issuer, and the remaining 0.6% of the outstanding shares
of Common Stock were owned by Forrest Hoglund, who currently serves as Chairman
of the Board of the Issuer.
On October 4, 1989, the Issuer sold 23,000,000 shares (after giving
effect to the Issuer's June 1994 2-for-1 stock split effected as a stock
dividend) of Common Stock in an initial public offering (the "IPO"). Upon
completion of the IPO, Enron owned approximately 84.3% of the outstanding shares
of Common Stock. Also on October 4, 1989, the Securities and Exchange Commission
(the "SEC") declared effective the registration of the Issuer's Common Stock
pursuant to Section 12(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
Page 3 of 13
<PAGE> 4
Between the time of the IPO and December 1995, Enron did not effect any
acquisitions or dispositions of shares of Common Stock. In December 1995, Enron
sold 31,050,000 shares of Common Stock in an underwritten public offering
registered under the Securities Act of 1933, as amended (the "Securities Act").
This sale was made in conjunction with a contemporaneous public offering of
Enron's 6 1/4% Exchangeable Notes due December 13, 1998, which were mandatorily
exchangeable into shares of Common Stock (the "Exchangeable Notes").
From March 1996 until December 1996, Enron sold in the open market an
aggregate of 12,010,000 shares of Common Stock.
On November 25, 1997, Enron purchased 140,000 shares of Common Stock in
the open market. On May 1, 1998, Enron purchased 7,690,000 shares of Common
Stock in the open market for an aggregate consideration of $179,753,750. The
source of funds for such purchase was working capital.
Pursuant to the terms of the Exchangeable Notes, on December 14, 1998,
Enron delivered an aggregate of 10,500,000 shares of Common Stock in exchange
for all outstanding Exchangeable Notes. After giving effect to such delivery,
Enron owns an aggregate of 82,270,000 shares of Common Stock.
Item 4. Purpose of Transaction.
Until the consummation of the IPO, Enron owned 99.4% of the Common
Stock of the Issuer. Pursuant to the IPO, the Issuer sold 23,000,000 shares
(after giving effect to the Issuer's June 1994 2-for-1 stock split effected as a
stock dividend). Subsequent to the completion of the IPO, the Issuer has
remained a majority-owned subsidiary of Enron, and its assets, liabilities and
results of operations are included in the consolidated financial statements of
Enron and its consolidated subsidiaries.
The Board of Directors of the Issuer consists of eleven directors. Of
these directors, five serve as executive officers of Enron:
Name Position with Enron
-------------------- -----------------------------------------
Kenneth L. Lay Director, Chairman of the Board and
Chief Executive Officer
Jeffrey K. Skilling Director, President and Chief
Operating Officer
Ken L. Harrison Director, Vice Chairman
James V. Derrick Senior Vice President and General Counsel
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<PAGE> 5
Richard A. Causey Senior Vice President and Chief
Accounting, Information and
Administrative Officer
In addition, John H. Duncan, who serves as a non-employee director of
Enron and as Chairman of the Executive Committee of Enron's Board of Directors,
also serves as a director of the Issuer.
Enron currently holds its shares of Common Stock for the purpose of
controlling the assets and operations of the Issuer with a view toward
maximizing shareholder value for Enron's shareholders.
Enron reviews and analyzes on a continuing basis its investments in
each of its subsidiaries and other operations, including the Issuer, in order to
determine whether shareholder value for Enron's shareholders is better served by
holding those investments, disposing of or monetizing those investments or
recapitalizing or otherwise restructuring those investments. These reviews and
analyses are based upon a variety of factors, including without limitation, the
price of, and other market conditions relating to, the Common Stock, subsequent
developments affecting the Issuer, the Issuer's business and prospects, other
investment and business opportunities available to Enron, general stock market
and economic conditions, tax considerations and other factors deemed relevant.
As part of this periodic review, Enron is currently evaluating a number
of alternatives, including without limitation, whether Enron should:
(i) continue to hold all of its shares of Common Stock;
(ii) sell all or a portion of its shares of Common Stock in
privately negotiated transactions with one or more purchasers,
which transactions could also include the sale of other
subsidiaries or assets owned by Enron;
(iii) acquire all or a portion of the outstanding shares of Common Stock;
or
(iv) monetize all or a portion of Enron's investment pursuant
to a leveraged recapitalization or similar transaction.
If Enron elects to pursue one of the transactions described in clauses
(ii) through (iv) above, it is possible that one or more of the consequences
listed in paragraphs (a) - (j) of Item 4 of Schedule 13D could occur.
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<PAGE> 6
For example, a number of consequences could result if Enron were to
consummate a sales transaction described in clause (ii) above or an acquisition
transaction or leveraged recapitalization described in clause (iii) or (iv)
above. Each of these transactions could result in an exchange offer, tender
offer, merger or similar transaction pursuant to which all of the outstanding
shares of capital stock of the Issuer were exchanged or converted into cash,
another security, property or a combination thereof, as a result of which the
composition of the Issuer's Board of Directors would change and the outstanding
capital stock of the Issuer would be delisted. Furthermore, it is possible that
Enron could receive, or be offered, different consideration than is received by,
or offered to, the other stockholders of the Issuer.
Enron has received an unsolicited indication of interest from a third
party with respect to exploring a possible transaction pursuant to which the
third party would acquire Enron's shares of Common Stock, and offer to acquire
the remaining shares of outstanding Common Stock. Under the third party
expression of interest, Enron would also dispose of certain other assets not
owned by the Issuer as part of the transaction. If the preliminary discussions
with the third party proceed, then both the third party and Enron would need to
conduct significant due diligence investigations with respect to the Issuer and
any other assets that would be included in a transaction. Furthermore, if Enron
and the third party decide to proceed with a transaction, then Enron and/or the
third party would make a proposal to the Board of Directors of the Issuer, and
the matter would be subject to, among other conditions, the approval of a
majority of the disinterested directors of the Issuer.
Although Enron currently intends to actively explore alternative
transactions (including the unsolicited indication of interest described above)
for maximizing value for Enron's shareholders, there can be no assurance that
any such transaction will be pursued, or if pursued, will be consummated.
Item 5. Interest in Securities of the Issuer.
(a) According to the Issuer's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998, the Issuer had 153,695,172 outstanding shares
of Common Stock as of October 31, 1998. As of the date hereof, Enron
beneficially owned 82,270,000 shares of Common Stock, or 53.5% of such number of
outstanding shares.
To Enron's knowledge, except for the shares of Common Stock set forth
on Schedule II (the "Officer and Director Shares"), none of the persons
identified on Schedule I beneficially owns any shares of Common Stock.
Enron disclaims beneficial ownership of the Officer and Director Shares
and the executive officers and directors disclaim beneficial ownership of the
shares of Common Stock beneficially owned by Enron.
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<PAGE> 7
(b) Enron has sole voting and dispositive power with respect to the
shares of Common Stock indicated to be beneficially owned by it in paragraph
(a).
To Enron's knowledge, except as set forth on Schedule II, each of the
officers and directors set forth on Schedule II has sole voting and dispositive
power with respect to the shares of Common Stock set forth next to such
individual's name on Schedule II.
(c) Except for the delivery of shares of Common Stock pursuant to the
terms of the Exchangeable Notes (as described in Item 3, which is incorporated
by reference herein), neither Enron nor, to its knowledge, any of the persons
named in Schedule I hereto, has effected any transactions in the Common Stock
during the preceding sixty days, except as follows: on October 31, 1998 and
November 30, 1998, shares of Common Stock were acquired in the Enron Corp
Savings Plan at an acquisition price per share of $16.6875 and $15.00,
respectively, as follows: Andrew S. Fastow - 59.4854 and 49.1598 shares and
his wife - 1.4762 and .5749 shares; Mark A. Frevert - 10.2896 and 19.6077
shares; Stanley C. Horton - 26.0273 and 17.4999 shares and his wife - .7817
and 1.4892 shares; and Kenneth D. Rice - 15.7716 and 14.0056 shares. On
December 10, 1998, 184.2436 shares were disposed of at $14.00 per share in an
intra-plan transfer by Mr. Fastow's wife in such plan. On November 30,
1998, Ken L. Harrison purchased 2,300 shares in the open market at
$14.1516 per share.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
Except as described in Items 3 and 4 (which are incorporated by
reference herein) and except as described below, Enron has no contracts,
arrangements, understandings or relationships with respect to securities of the
Issuer that are required to be described herein.
Stock Restriction and Registration Agreement. Pursuant to the terms of
a Stock Restriction and Registration Agreement with Enron, the Issuer has agreed
that upon the request of Enron (or certain assignees), the Issuer will register
under the Securities Act, and applicable state securities laws the sale of the
Common Stock owned by Enron that Enron has requested to be registered. The
Issuer's obligation is subject to certain limitations relating to a minimum
amount of Common Stock required for registration, the timing of registration and
other similar matters.
Business Opportunity Agreement. In December 1997, Enron and the Issuer
entered into an Equity Participation and Business Opportunity Agreement (the
"Business Opportunity Agreement") that defines certain obligations that Enron
owes to the Issuer and relieves Enron from certain obligations to the Issuer
that it might otherwise have, including the obligation to offer certain business
opportunities to the Issuer. The Business Opportunity Agreement also includes
(i) an agreement to replace the existing services agreement, under which Enron
provides certain services to the Issuer, with a new services agreement under
which the Issuer's maximum payments to Enron for allocated indirect costs will
be reduced by $2.8 million per year, (ii) an agreement by Enron relieving the
Issuer of the obligation to bear the costs of any registration of sales by Enron
of shares of Common Stock, (iii) an agreement by Enron to pay the costs of
registration of the Issuer's sales of Enron common stock acquired upon exercise
of the options granted in the Business Opportunity Agreement, (iv) an agreement
that if Enron takes any action that results in
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<PAGE> 8
the loss by the Issuer of its status as an "independent producer" under the
Internal Revenue Code, Enron will pay the Issuer each year through 2006 the
lesser of (a) $1 million and (b) an amount which, after payment of applicable
taxes, will compensate the Issuer for the additional income tax liability
resulting from the loss of independent producer status, (v) an agreement that if
Enron requests that the Issuer relocate its offices, and if the Issuer agrees to
do so, Enron will pay the Issuer's moving expenses, including expenses of
building out or refurbishing the space in its new offices and expenses of
removing and reinstalling the Issuer's telecommunications and information
systems facilities and (vi) an agreement by Enron to reimburse the Issuer for
the costs and expenses of legal and financial consultants retained to assist the
special committee in connection with the Business Opportunity Agreement.
The Business Opportunity Agreement also contains provisions that give
Enron the right to maintain its equity interest in the Issuer at certain levels.
It provides that, if the Issuer issues additional shares of its capital stock,
Enron will have the right to purchase additional shares of capital stock of the
Issuer as follows: (i) if Enron owns a majority interest, Enron will have the
right to purchase sufficient shares to permit it to retain its majority
interest; (ii) if Enron does not own a majority interest but accounts for the
assets and operations of the Issuer on a consolidated basis for financial
reporting purposes Enron will have the right to purchase sufficient shares to
permit it to continue to account for the Issuer on a consolidated basis; and
(iii) if Enron accounts for the assets and operations of the Issuer using the
equity method for financial reporting purposes Enron will have the right to
purchase sufficient shares to permit it to continue to account for the Issuer
using the equity method. Any such purchase by Enron will be for cash at 97% of
the average closing price per share over a specified 20 day period (reflecting a
3% private placement discount).
The summaries of the agreements described in this Item 6 are qualified
in their entirety by reference to the actual agreements, which are filed as
exhibits to this Schedule 13D.
Item 7. Material to be Filed as Exhibits.
A. Stock Restriction and Registration Agreement dated as of
August 23, 1989 by and between Enron and the Issuer
(incorporated by reference to Exhibit 10.2 to Registration
Statement on Form S-1 of the Issuer, Registration Statement
No. 33-30678, filed August 24, 1989).
B. Amendment to Stock Restriction and Registration Agreement
dated December 9, 1997 by and between Enron and the Issuer
(incorporated by reference to Exhibit 10.7 to Annual Report on
Form 10-K of the Issuer for the year ended December 31, 1997).
C. Equity Participation and Business Opportunity Agreement,
dated December 9, 1997, between Enron and the Issuer
(incorporated by reference to Exhibit 10 to Registration
Statement on Form S-3 of the Issuer, Registration Statement
No. 333-44785, filed January 23, 1998).
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<PAGE> 9
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: December 15, 1998 ENRON CORP.
By: /s/ Peggy B. Menchaca
-----------------------
Peggy B. Menchaca
Vice President and Secretary
Page 9 of 13
<PAGE> 10
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
ENRON CORP.
<TABLE>
Name and Business Address Citizenship Position and Occupation
------------------------- ----------- -----------------------
<S> <C> <C>
Robert A. Belfer U.S.A. Director
Belco Oil & Gas Corp. Chairman, President and Chief
767 Fifth Avenue, 46th Fl. Executive Officer,
New York, NY 10153 Belco Oil & Gas Corp.
Norman P. Blake, Jr. U.S.A. Director
USF&G Corporation Chairman, United States Fidelity
6225 Smith Ave. LA0300 and Guaranty Company
Baltimore, MD 21209
Ronnie C. Chan U.S.A. Director
Hang Lung Development Chairman of Hang Lung
Company Limited Development Group
281F, Standard Chartered
Bank Building
4 Des Vouex Road Central
Hong Kong
John H. Duncan U.S.A. Director
5851 San Felipe, Suite 850 Investments
Houston, TX 77057
Joe H. Foy U.S.A. Director
404 Highridge Dr. Retired Senior Partner,
Kerrville, TX 78028 Bracewell & Patterson, L.L.P.
Wendy L. Gramm U.S.A. Director
P. O. Box 39134 Economist; Former Chairman,
Washington, D.C. 20016 U.S. Commodity
Futures Trading Commission
Robert K. Jaedicke U.S.A. Director,
Graduate School of Business Professor (Emeritus), Graduate
Stanford University School of Business
Stanford, CA 94305 Stanford University
</TABLE>
Page 10 of 13
<PAGE> 11
<TABLE>
Name and Business Address Citizenship Position and Occupation
------------------------- ----------- -----------------------
<S> <C> <C>
Charles A. LeMaistre U.S.A. Director
13104 Travis View Loop President (Emeritus), University of
Austin, TX 78732 Texas M. D. Anderson Cancer Center
Jerome J. Meyer U.S.A. Director
26600 S. W. Parkway Chairman and Chief Executive
Building 63; P. O. Box 1000 Officer, Tektronix, Inc.
Wilsonville, OR 97070-1000
John A. Urquhart U.S.A. Director
John A. Urquhart Assoc. President, John A. Urquhart
111 Beach Road Associates
Fairfield, CT 06430
John Wakeham U.K. Director
Pingleston House Former U.K. Secretary of State for
Old Alresford Energy and Leader of the
Hampshire S024 9TB Houses of Commons and Lords
United Kingdom
Charls E. Walker U.S.A. Director
Walker & Walker, LLC Chairman, Walker & Walker, LLC
10220 River Road, Ste. 105
Potomac, Maryland 20854
Herbert S. Winokur, Jr. U.S.A. Director
Winokur Holdings, Inc. President, Winokur Holdings,
30 East Elm Ct. Inc.
Greenwich, CT 06830
</TABLE>
Page 11 of 13
<PAGE> 12
<TABLE>
Name and Business Address Citizenship Position and Occupation
------------------------- ----------- -----------------------
<S> <C> <C>
1400 Smith Street
Houston, TX 77002
Kenneth L. Lay U.S.A. Director, Chairman and Chief
Executive Officer
Jeffrey K. Skilling U.S.A. Director, President and Chief
Operating Officer
J. Clifford Baxter U.S.A. Senior Vice President, Corporate Development
Richard A. Causey U.S.A. Senior Vice President and Chief Accounting,
Information and Administrative Officer
James V. Derrick, Jr. U.S.A. Senior Vice President and General Counsel
Andrew S. Fastow U.S.A. Senior Vice President and Chief
Financial Officer
Mark A. Frevert U.S.A. President and CEO, Enron Europe, Ltd.
Ken L. Harrison U.S.A. Director
Vice Chairman of Enron Corp.
Stanley C. Horton U.S.A. Chairman and Chief Executive Officer, Enron
Gas Pipeline Group
Rebecca P. Mark U.S.A. Vice Chairman
Lou L. Pai U.S.A. Chairman and CEO, Enron Energy Services, Inc.
Kenneth D. Rice U.S.A. Chairman and CEO, Enron Capital & Trade
Resources Corp.
Joseph W. Sutton U.S.A. President and CEO, Enron International, Inc.
</TABLE>
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<PAGE> 13
SCHEDULE II
BENEFICIAL OWNERSHIP OF SHARES
BY DIRECTORS AND EXECUTIVE OFFICERS OF ENRON
<TABLE>
Number of Shares of Common Stock
Beneficially Owned
==============================================================
NAME OF DIRECTOR Sole Voting and Shared Voting and
OR EXECUTIVE OFFICER Dispositive Power Dispositive Power
==============================================================
<S> <C> <C>
Robert A. Belfer 13,300 27,600(1)
Norman P. Blake, Jr. 2,000
James V. Derrick, Jr. 500
John H. Duncan 28,825
Andrew S. Fastow 19,212
Joe H. Foy 7,000
Mark A. Frevert 16,343
Ken L. Harrison 2,300
Stanley C. Horton 1,344 476
Kenneth L. Lay 20,000 30,000
Kenneth D. Rice 2,351
Jeffrey K. Skilling 100,000
Joseph W. Sutton 21,000
Charls E. Walker 3,000
</TABLE>
- -------------------------
(1) Includes 17,000 shares held by trusts of which Mr. Belfer's wife is
trustee for their children and 2,600 shares held by his daughter, in all of
which shares Mr. Belfer disclaims beneficial ownership and 8,000 shares
held in a charitable foundation in which Mr. Belfer has no pecuniary interest.
Page 13 of 13
