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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 23, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ENRON OIL & GAS COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<C> <C>
DELAWARE 47-0684736
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
1400 SMITH STREET, HOUSTON, TEXAS 77002
TELEPHONE NO. (713) 853-6161
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
BARRY HUNSAKER, JR., ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
ENRON OIL & GAS COMPANY
1400 SMITH STREET
HOUSTON, TEXAS 77002
(713) 853-5788
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
Copies to:
<TABLE>
<C> <C>
GARY W. ORLOFF, ESQ. REX R. ROGERS, ESQ.
BRACEWELL & PATTERSON, L.L.P. VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL
SOUTH TOWER PENNZOIL PLACE, SUITE 2900 ENRON CORP.
711 LOUISIANA STREET 1400 SMITH STREET, ROOM 4842
HOUSTON, TEXAS 77002 HOUSTON, TEXAS 77002
(713) 221-1306 (713) 853-3069
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: From time to time after the effective date of this Registration
Statement as determined in light of market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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===========================================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE(1) FEE
- ---------------------------------------------------------------------------------------------------------------------------
Debt Securities
Common Stock, $.01 par value (2) (2) $300,000,000 $88,500
===========================================================================================================================
</TABLE>
(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(o).
(2) Not applicable pursuant to Form S-3 General Instruction II. D under the
Securities Act of 1933.
------------------------
THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT CONTAINS A COMBINED PROSPECTUS THAT ALSO RELATES TO $113,207,962 OF
OTHER SECURITIES TO BE SOLD IN A PRIMARY OFFERING AND 4,940,000 SHARES OF COMMON
STOCK TO BE SOLD IN A SECONDARY OFFERING REGISTERED ON FORM S-3, REGISTRATION
STATEMENT NO. 333-18511, WHICH WAS DECLARED EFFECTIVE ON FEBRUARY 12, 1997 (THE
"PREVIOUSLY REGISTERED SECURITIES"). THIS REGISTRATION STATEMENT CONSTITUTES
POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT NO. 333-18511, PURSUANT
TO WHICH THE TOTAL AMOUNT OF UNSOLD PREVIOUSLY REGISTERED SECURITIES REGISTERED
ON REGISTRATION STATEMENT NO. 333-18511 MAY BE OFFERED AND SOLD TOGETHER WITH
THE SECURITIES REGISTERED HEREUNDER THROUGH THE USE OF THE COMBINED PROSPECTUS
INCLUDED HEREIN. IN THE EVENT SUCH PREVIOUSLY REGISTERED SECURITIES ARE OFFERED
AND SOLD PRIOR TO THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT, THE AMOUNT
OF SUCH PREVIOUSLY REGISTERED SECURITIES SO SOLD WILL NOT BE INCLUDED IN THE
PROSPECTUS HEREUNDER. IN ACCORDANCE WITH RULE 429(B), THE AMOUNT OF THE
PREVIOUSLY PAID FILING FEE ASSOCIATED WITH THE PREVIOUSLY REGISTERED SECURITIES
WAS $60,607.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO CHANGE, COMPLETION OR AMENDMENT
WITHOUT NOTICE. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
SUBJECT TO COMPLETION,
JANUARY 23, 1998
PROSPECTUS
ENRON OIL & GAS COMPANY
DEBT SECURITIES
COMMON STOCK
------------------------
Enron Oil & Gas Company (the "Company") may offer from time to time its
unsecured debt securities consisting of notes, debentures or other evidences of
indebtedness (the "Debt Securities"). The Company and/or Enron Corp. (the
"Selling Stockholder") may also offer and sell from time to time shares of
Common Stock, par value $.01 per share, of the Company (the "Common Stock"). The
Debt Securities and the Common Stock are collectively referred to as the
"Securities". The aggregate initial offering price of the Debt Securities and
the Common Stock to be offered by the Company hereby will not exceed
$413,207,962, and the number of shares of Common Stock offered by the Selling
Stockholder hereby will not exceed 4,940,000. The Securities may be offered in
amounts, at prices and on terms to be determined in light of market conditions
at the time of sale and, to the extent required, set forth in a Prospectus
Supplement.
The Debt Securities may be offered as separate series. The terms of each
series of Debt Securities, including, where applicable, the specific
designation, aggregate principal amount, authorized denominations, maturity,
rate or rates and time or times of payment of any interest, any terms for
optional or mandatory redemption, which may include redemption at the option of
holders upon the occurrence of certain events, or payment of additional amounts
or any sinking fund provisions, and any other specific terms in connection with
the offering and sale of such series (the "Offered Debt Securities") will be set
forth in a Prospectus Supplement.
The Securities may be sold directly by the Company or the Selling
Stockholder to investors, through agents designated from time to time or to or
through underwriters or dealers. See "Plan of Distribution". If any underwriters
are involved in the sale of any Securities in respect of which this Prospectus
is being delivered, the names of such underwriters and any applicable
commissions or discounts will be set forth in a Prospectus Supplement. The net
proceeds to the Company from such sale also will be set forth in a Prospectus
Supplement. The Company will not receive any of the proceeds from the sale of
the Common Stock by the Selling Stockholder. Enron Corp. currently owns
approximately 55% of the outstanding Common Stock.
The Common Stock is listed on the New York Stock Exchange under the symbol
"EOG". On January 22, 1998 the last reported sale price of Common Stock on the
New York Stock Exchange Composite Tape was $20 5/16 per share.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549; and at the following Regional Offices of
the Commission: Midwest Regional Office, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and Northeast Regional Office, 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such material can also be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates, or from
the site maintained by the Commission on the Internet World Wide Web at
http://www.sec.gov. The Company's Common Stock is listed on the New York Stock
Exchange, Inc. ("NYSE"), and reports, proxy statements and other information
concerning the Company can be inspected and copied at the offices of the NYSE at
20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of Registration Statements on Form S-3
(collectively, together with all amendments and exhibits thereto, the
"Registration Statements") filed by the Company with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered hereby. This Prospectus does not contain all of the
information set forth in such Registration Statements, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
Reference is made to such Registration Statements and to the exhibits relating
thereto for further information with respect to the Company and the Securities
offered hereby. Any statements contained herein concerning the provisions of any
document filed as an exhibit to the Registration Statements or otherwise filed
with the Commission or incorporated by reference herein are not necessarily
complete, and in each instance reference is made to the copy of such document so
filed for a more complete description of the matter involved. Each such
statement is qualified in its entirety by such reference.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1996, Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997, June
30, 1997, and September 30, 1997, Current Reports on Form 8-K dated September
29, 1997 and December 1, 1997, and the description of the Common Stock contained
in the Registration Statement on Form 8-A declared effective on October 3, 1989,
are incorporated herein by reference.
Each document filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities pursuant hereto shall be
deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of such document. Any statement contained herein or in a document
all or a portion of which is incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the request of any such person, a copy of any
or all of the foregoing documents incorporated herein by reference, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into the documents that this Prospectus incorporates). Requests
should be directed to Secretary, Enron Oil & Gas Company, at its principal
executive offices, 1400 Smith Street, Houston, Texas 77002 (telephone:
713-853-6161).
---------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICES OF THE SECURITIES
OFFERED HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING, AND SHORT-COVERING
TRANSACTIONS IN SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN
CONNECTION WITH THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN
OF DISTRIBUTION."
2
<PAGE> 4
BUSINESS OF THE COMPANY
GENERAL
The Company, a Delaware corporation organized in 1985, is engaged, either
directly or through a marketing subsidiary with regard to domestic operations or
through various subsidiaries with regard to international operations, in the
exploration for, and the development, production and marketing of, natural gas
and crude oil primarily in major producing basins in the United States, as well
as in Canada, Trinidad and India and, to a lesser extent, selected other
international areas. At December 31, 1997, the Company's estimated net proved
natural gas reserves were 4,001 billion cubic feet ("Bcf"), including 1,180 Bcf
of proved undeveloped methane reserves in the Big Piney deep Paleozoic
formations in Wyoming, and estimated net proved crude oil, condensate and
natural gas liquids reserves were 78 million barrels. At such date,
approximately 67% of the Company's reserves (on a natural gas equivalent basis)
was located in the United States, 10% in Canada, 8% in Trinidad and 15% in
India.
Unless the context requires otherwise, as used in this Prospectus the
"Company" shall mean Enron Oil & Gas Company and its subsidiaries.
EXPLORATION AND PRODUCTION
NORTH AMERICA OPERATIONS
The Company's eight principal United States producing areas are the Big
Piney area of Wyoming, South Texas area, East Texas area, Offshore Gulf of
Mexico area, Canyon/Strawn Trend area of West Texas, Sand Tank and Pitchfork
Ranch areas of New Mexico and Vernal area of Utah. Properties in these areas
comprised approximately 82% of the Company's United States reserves (on a
natural gas equivalent basis) and 76% of the Company's United States net natural
gas deliverability as of December 31, 1997, and are substantially all operated
by the Company.
The Company's other United States natural gas and crude oil producing
properties are located primarily in other areas of Texas, Utah, New Mexico,
Oklahoma, Mississippi, California and Kansas.
At December 31, 1997, 94% of the Company's proved United States reserves
(on a natural gas equivalent basis), including the reserves in the Big Piney
deep Paleozoic formations, was natural gas and 6% was crude oil, condensate and
natural gas liquids. A substantial portion of the Company's United States
natural gas reserves is in long-lived fields with well-established production
histories. The Company believes that opportunities exist to increase production
in many of these fields through continued infill and other development drilling.
The Company also has natural gas and crude oil producing properties located
in Western Canada, primarily in the provinces of Alberta, Saskatchewan and
Manitoba.
OUTSIDE NORTH AMERICA OPERATIONS
The Company has producing operations offshore Trinidad and India and is
evaluating exploration and development opportunities in selected other
international areas.
MARKETING
Wellhead Marketing. The Company's North America wellhead natural gas
production is currently being sold on the spot market and under long-term
natural gas contracts at market responsive prices. In many instances, the
long-term contract prices closely approximate the prices received for natural
gas being sold on the spot market. Wellhead natural gas volumes from Trinidad
are sold at prices that are based on a fixed price schedule with annual
escalations. Under terms of a production sharing contract, natural gas volumes
in India are to be sold to the Government of India or its nominee at a price
linked to a basket of world market fuel oil quotations with floor and ceiling
limits. Approximately 15% of the Company's wellhead natural gas production is
currently being sold to pipeline and marketing subsidiaries of Enron Corp. The
Company believes that the
3
<PAGE> 5
terms of its transactions and agreements with Enron Corp. are and intends that
future such transactions and agreements will be at least as favorable to the
Company as could be obtained from third parties.
Substantially all of the Company's wellhead crude oil and condensate is
sold under various terms and arrangements at market responsive prices.
Approximately 10% of the Company's wellhead crude oil and condensate production
is currently being sold to affiliated companies.
Other Marketing. Enron Oil & Gas Marketing, Inc. ("EOGM"), a wholly-owned
subsidiary of the Company, is a marketing company engaging in various marketing
activities. Both the Company and EOGM contract to provide, under short-term and
long-term agreements, natural gas to various purchasers and then aggregate the
necessary supplies for the sales with purchases from various sources including
third-party producers, marketing companies, pipelines or from the Company's own
production. In addition, EOGM has purchased and constructed several small
gathering systems in order to facilitate its entry into the gathering business
on a limited basis. Both the Company and EOGM utilize other short-term and
long-term hedging and trading mechanisms including sales, purchases, price swaps
and options utilizing NYMEX-related commodity market transactions. These
marketing activities have provided an effective balance in managing a portion of
the Company's exposure to commodity price risks for both natural gas and crude
oil and condensate wellhead prices.
USE OF PROCEEDS
The Company intends to apply any net proceeds it receives from the sale of
the Securities to its general funds to be used for general corporate purposes,
including in certain circumstances to retire outstanding indebtedness. Any
specific allocations of the proceeds to a particular purpose that have been made
at the date of any Prospectus Supplement will be described therein. The Company
will not receive any of the proceeds of the sale of Common Stock by the Selling
Stockholder.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ -------- -------- -------- -------- --------
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Ratio of Earnings to Fixed Charges..... 4.17 9.27 10.64 11.12 7.95 3.95
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes plus interest, net of amounts capitalized.
Fixed charges consist of interest on debt including amounts capitalized,
amortization of debt discount and issuance expense and that portion of rental
expense determined to be representative of interest.
4
<PAGE> 6
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate (the "Offered Debt Securities"). The particular
terms of the Offered Debt Securities and the extent, if any, to which such
general provisions may apply to the Offered Debt Securities will be described in
the Prospectus Supplement relating to such Offered Securities.
The Debt Securities will be unsecured obligations of the Company issued
under an Indenture (the "Indenture") between the Company and Chase Bank of
Texas, National Association (formerly named Texas Commerce Bank National
Association), as Trustee (the "Trustee"), dated as of September 1, 1991. The
following statements are summaries of certain provisions contained in the
Indenture, the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. They do not purport to be complete
statements of all the terms and provisions of the Indenture, and reference is
hereby made to the Indenture for full and complete statements of such terms and
provisions, including the definitions of certain terms used herein. Wherever
reference is made in the following statements to a particular section of the
Indenture, such section shall be deemed to be incorporated in such statements as
a part thereof, and such statements are qualified in their entirety by such
reference. The italicized references below are to the section numbers in the
Indenture.
GENERAL
The Indenture does not limit the aggregate principal amount of unsecured
debentures, notes or other evidences of indebtedness of the Company which may be
issued thereunder from time to time in one or more series by the Company, and
the Company may in the future issue additional securities (in addition to the
Debt Securities) under the Indenture. At December 31, 1997, $350,000,000
principal amount of notes were outstanding under the Indenture. Reference is
made to the Prospectus Supplement for the following terms of the Offered Debt
Securities: (i) the title of the Offered Debt Securities; (ii) any limit upon
the aggregate principal amount of the Offered Debt Securities; (iii) the date or
dates on which the principal of the Offered Debt Securities is payable; (iv) the
rate or rates (which may be fixed or variable), or the method by which such rate
or rates shall be determined, at which the Offered Debt Securities shall bear
interest, if any, the date or dates from which such interest shall accrue, or
the method by which such date or dates shall be determined, the interest payment
dates on which such interest shall be payable and the regular record date for
the interest payable on any interest payment date; (v) the place or places where
the principal of (and premium, if any) and interest on Offered Debt Securities
shall be payable; (vi) the period or periods within which, the price or prices
at which and the terms and conditions upon which Offered Debt Securities may be
redeemed, in whole or in part, at the option of the Company, if the Company is
to have that option; (vii) the obligation, if any, and the option, if any, of
the Company to redeem, purchase or repay Offered Debt Securities pursuant to any
sinking fund or analogous provisions or at the option of a holder thereof and
the period or periods within which, the price or prices at which and the terms
and conditions upon which Offered Debt Securities shall be redeemed, purchased
or repaid in whole or in part, pursuant to such obligation or option; (viii)
whether the Offered Debt Securities are to be issued in whole or in part in the
form of one or more permanent global securities and, if so, the identity of the
depositary for such permanent global securities; (ix) any trustees, paying
agents, transfer agents or registrars with respect to Offered Debt Securities;
and (x) any other term of the Offered Debt Securities (which term shall not be
inconsistent with the provisions of the Indenture. (Section 301.)
The Company will maintain in each place specified by the Company for
payment of any series of Offered Debt Securities an office or agency where
Offered Debt Securities of that series may be presented or surrendered for
payment, where Offered Debt Securities of that series may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Offered Debt Securities of that series and the
Indenture may be served.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered Debt Securities will be issued only in fully registered form,
without coupons, in denominations of $1,000 or integral multiples
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thereof. (Section 302.) No service charge will be made for any transfer or
exchange of such Offered Debt Securities, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
relation thereto. (Section 305.)
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a substantial discount below their
principal amount. Special federal income tax, accounting and other
considerations applicable to any such Original Issue Discount Securities will be
described in any Prospectus Supplement relating thereto. "Original Issue
Discount Securities" means any security which provides for an amount less than
the principal amount thereof to be due and payable upon an Event of Default and
the continuation thereof. (Section 101.)
Unless otherwise indicated in a Prospectus Supplement, the covenants
contained in the Indenture and the Debt Securities would not necessarily afford
holders of the Debt Securities protection in the event of a highly leveraged or
other transaction involving the Company that may adversely affect holders.
PERMANENT GLOBAL DEBT SECURITIES
If any Offered Debt Securities are issuable in permanent global form, the
applicable Prospectus Supplement will describe the circumstances, if any, under
which beneficial owners of interests in any such permanent global Debt Security
may exchange such interests for Debt Securities of such series and of like tenor
and principal amount in any authorized form and denomination. (Section 305.)
Principal of and any premium and interest on a permanent global Debt Security
will be payable in the manner described in the applicable Prospectus Supplement.
LIMITATIONS ON LIENS
The Indenture provides that so long as any of the securities issued under
the Indenture (including the Debt Securities) are outstanding, the Company will
not, and will not permit any Subsidiary to, create or suffer to exist, except in
favor of the Company or any Subsidiary, any Lien upon any Principal Property at
any time owned by it, to secure any Funded Debt of the Company or any
Subsidiary, unless effective provision is made whereby outstanding securities
issued under the Indenture (including the Debt Securities) will be equally and
ratably secured with any and all such Funded Debt and with any other
indebtedness similarly entitled to be equally and ratably secured. This
restriction does not apply to prevent the creation or existence of any: (a)
Acquisition Lien or Permitted Encumbrance; or (b) Lien created or assumed by the
Company or a Subsidiary in connection with the issuance of debt securities the
interest on which is excludable from gross income of the holder of such security
pursuant to the Internal Revenue Code of 1986, as amended, for the purpose of
financing, in whole or in part, the acquisition or construction of property or
assets to be used by the Company or a Subsidiary. In case the Company or any
Subsidiary shall propose to create or permit to exist a Lien on any Principal
Property at any time owned by it to secure any Funded Debt of the Company or any
Subsidiary, other than Funded Debt permitted to be secured under clauses (a) or
(b) above, the Company will prior thereto give written notice thereof to the
Trustee, and the Company will, or will cause such Subsidiary to, prior to or
simultaneously with such creation or permission to exist, by supplemental
indenture executed to the Trustee (or to the extent legally necessary to another
trustee or additional or separate trustee), in form satisfactory to the Trustee,
effectively secure all the securities issued under the Indenture equally and
ratably with such Funded Debt and any other indebtedness entitled to be equally
and ratably secured.
Notwithstanding the foregoing, the Company or a Subsidiary may issue,
assume or guarantee Funded Debt secured by a Lien which would otherwise be
subject to the foregoing restrictions in an aggregate amount which, together
with all other Funded Debt of the Company or a Subsidiary secured by a Lien
which (if originally issued, assumed or guaranteed at such time) would otherwise
be subject to the foregoing restrictions (not including Funded Debt permitted to
be secured under the foregoing exception), does not at the time exceed 10% of
the Consolidated Net Tangible Assets of the Company, as shown on the audited
consolidated financial statements of the Company as of the end of the fiscal
year preceding the date of determination. (Section 1007.)
6
<PAGE> 8
The holder of more than 50% in principal amount of the outstanding
securities issued under the Indenture (including the Debt Securities) may waive
compliance by the Company with the covenant contained in Section 1007 of the
Indenture (and certain other covenants of the Company). (Section 1009.)
The Indenture defines the term "Subsidiary" to mean a corporation more than
50% of the outstanding voting stock of which is owned, directly or indirectly,
by the Company or by one or more other Subsidiaries, or by the Company and one
or more other Subsidiaries. The term "Principal Property" is defined to mean any
property interest in oil and gas reserves located in the United States or
offshore the United States and owned by the Company or any Subsidiary and which
is capable of producing crude oil, condensate, natural gas, natural gas liquids
or other similar hydrocarbon substances in paying quantities, the net book value
of which property interest exceeds two (2) percent of Consolidated Net Tangible
Assets, except any such property interest or interests that in the opinion of
the Board of Directors is not of material importance to the total business
conducted by the Company and its Subsidiaries as a whole. Without limitation,
the term "Principal Property" shall not include (i) accounts receivable and
other obligations of any obligor under a contract for the sale, exploration,
production, drilling, development, processing or transportation of crude oil,
condensate, natural gas, natural gas liquids or other similar hydrocarbon
substances by the Company or any of its Subsidiaries, and all related rights of
the Company or any of its Subsidiaries, and all guarantees, insurance, letters
of credit and other agreements or arrangements of whatever character supporting
or securing payment of such receivables or obligations, or (ii) the production
or any proceeds from production of crude oil, condensate, natural gas, natural
gas liquids or other similar hydrocarbon substances. (Section 101.)
The term "indebtedness," as applied to the Company or any Subsidiaries, is
defined to mean bonds, debentures, notes and other instruments representing
obligations created or assumed by any such corporation for the repayment of
money borrowed (other than unamortized debt discount or premium). All
indebtedness secured by a Lien upon property owned by the Company or any
Subsidiary and upon which indebtedness any such corporation customarily pays
interest, although any such corporation has not assumed or become liable for the
payment of such indebtedness, is also deemed to be indebtedness of any such
corporation. All indebtedness for money borrowed, incurred by other persons,
which is directly guaranteed as to payment of principal by the Company or any
Subsidiary is for all purposes of the Indenture deemed to be indebtedness of any
such corporation, but no other contingent obligation of any such corporation in
respect of indebtedness incurred by other persons is for any purpose deemed
indebtedness of such corporation. Indebtedness of the Company or any Subsidiary
does not include (i) any amount representing capitalized lease obligations; (ii)
indirect guarantees or other contingent obligations in connection with the
indebtedness of others, including agreements, contingent or otherwise, with such
persons or with third persons, with respect to, or to permit or ensure the
payment of, obligations of such other persons, including, without limitation,
agreements to purchase or repurchase obligations of such other persons, to
advance or supply funds to or to invest in such other persons, or agreements to
pay for property, products or services of such other persons (whether or not
conferred, delivered or rendered), and any demand charge, throughput,
take-or-pay, keep-well, make-whole, cash deficiency, maintenance of working
capital or earnings or similar agreements; and (iii) any guarantees with respect
to lease or other similar periodic payments to be made by other persons.
(Section 101.)
The term "Funded Debt" as applied to the Company or any Subsidiary is
defined to mean all indebtedness incurred, created, assumed or guaranteed by the
Company or any Subsidiary, or upon which such corporation customarily pays
interest charges, which matures, or is renewable by such corporation to a date,
more than one year after the date as of which Funded Debt is being determined.
(Section 101.)
"Lien" is defined to mean any mortgage, pledge, lien, security interest or
similar charge or encumbrance. (Section 101.) "Acquisition Lien" is defined to
mean any (i) Lien upon any property acquired before or after the date of the
Indenture, created at the time of acquisition or within one year thereafter to
secure all or a portion of the purchase price thereof, or existing thereon at
the date of acquisition, whether or not assumed by the Company or any
Subsidiary, provided that any such Lien applies only to the property so acquired
and fixed improvements thereon, (ii) Lien upon any property acquired before or
after the date of the Indenture by any corporation that is or becomes a
Subsidiary after the date of the Indenture ("Acquired Entity"), provided that
any such Lien (1) shall either (A) exist prior to the time the Acquired Entity
becomes a Subsidiary or (B) be created at the time the Acquired Entity becomes a
Subsidiary or within one year thereafter to secure all or a
7
<PAGE> 9
portion of the acquisition price thereof and (2) shall only apply to those
properties owned by the Acquired Entity at the time it becomes a subsidiary or
thereafter acquired by it from sources other than the Company or any other
Subsidiary, and (iii) any extension, renewal or refunding, in whole or in part,
of any Lien permitted by clause (i) or (ii) above, if limited to the same
property or any portion thereof subject to, and securing not more than the
amount secured by, the Lien extended, renewed or refunded. (Section 101.)
"Permitted Encumbrance" is defined to mean any (a) Lien reserved in any
oil, gas or other mineral lease for rent, royalty or delay rental under such
lease and for compliance with the terms of such lease; (b) Lien for any
judgments or attachments in an aggregate amount not in excess of $10,000,000, or
Lien for any judgment or attachment the execution or enforcement of which has
been stayed or which has been appealed and secured, if necessary, by the filing
of an appeal bond; (c) sale or other transfer of crude oil, condensate, natural
gas, natural gas liquids or other similar hydrocarbon substances in place, or
the future production thereof, for a period of time until, or in an amount such
that, the transferee will realize therefrom a specified amount (however
determined) of money or a specified amount of such crude oil, condensate,
natural gas, natural gas liquids or other similar hydrocarbon substances or the
sale or other transfer of any other interest in property of the character
commonly referred to as a "production payment," "overriding royalty," "net
profits interest," "royalty" or similar burden on any oil and gas property or
mineral interest owned by the Company or any Subsidiary; (d) Lien consisting of
or reserved in any (i) grant or conveyance in the nature of a farm-out or
conditional assignment to the Company or any Subsidiary entered into in the
ordinary course of business to secure any undertaking of the Company or any
Subsidiary in such grant or conveyance, (ii) interest of an assignee in any
proved undeveloped lease or proved undeveloped portion of any producing property
transferred to such assignee for the purpose of the development of such lease or
property, (iii) unitization or pooling agreement or declaration, (iv) contract
for the sale, purchase, exchange or processing of production, or (v) operating
agreement, area of mutual interest agreement and other agreements which are
customary in the oil and gas business and which agreements do not materially
detract from the value, or materially impair the use of, the properties affected
thereby; (e) Lien arising out of any forward contract, futures contract, swap
agreement or other commodities contract entered into by the Company or any
Subsidiary; (f) Lien on any oil and gas property of the Company or any
Subsidiary thereof, or on production therefrom, to secure any liability of the
Company or such Subsidiary for all or part of the Development Cost for such
property under any joint operating, drilling or similar agreement for
exploration, drilling or development of such property, or any renewal or
extension of such Lien; or (g) certain other Liens as described in the
Indenture. (Section 101.)
MODIFICATION OF THE INDENTURE
With certain exceptions, the Indenture provides that, with the consent of
the holders of more than 50% in principal amount of all outstanding securities
issued under the Indenture (the "Indenture Securities") (including, where
applicable, the Debt Securities) affected thereby, the Company and the Trustee
may enter into a supplemental indenture for the purpose of adding to, changing
or eliminating any of the provisions of the Indenture or modifying in any manner
the rights of the holders of Indenture Securities. Notwithstanding the
foregoing, the consent of the holder of each outstanding Indenture Security
affected thereby will be required to: (a) change the Stated Maturity of the
principal of, or any installment of principal of or interest on, any Indenture
Security, or reduce the principal amount thereof or the rate of interest thereon
or any premium payable upon the redemption thereof, or change any Place of
Payment where, or change the coin or currency in which, any Indenture Security
or any premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date); (b) reduce the percentage in principal amount of the outstanding
Indenture Securities of any series, the consent of whose holders is required for
any supplemental indenture or for any waiver provided for in the Indenture; or
(c) with certain exceptions, modify any of the provisions of the section of the
Indenture which concern waiver of past defaults, waiver of certain covenants or
consent to supplemental indentures, except to increase the percentage of
principal amount of Indenture Securities of any series, the holders of which are
required to effect such waiver or consent or to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent of
the holder of each outstanding Indenture Security affected thereby. The
Indenture provides that a supplemental indenture which changes or eliminates any
covenant or other provision of the Indenture which has expressly been
8
<PAGE> 10
included solely for the benefit of one or more particular series of Indenture
Securities, or which modifies the rights of the holders of Indenture Securities
of such series with respect to such covenant or other provision shall be deemed
not to affect the rights under the Indenture of the holder of Indenture
Securities of any other series. (Section 902.)
EVENTS OF DEFAULT AND RIGHTS UPON DEFAULT
Under the Indenture, the term "Event of Default" with respect to any series
of Indenture Securities, means any one of the following events which shall have
occurred and is continuing: (a) default in the payment of any interest upon any
Indenture Security of that series when it becomes due and payable or default in
the payment of any mandatory sinking fund payment provided for by the terms of
any series of Indenture Securities, and continuance of such default for a period
of 30 days; (b) default in the payment of the principal of (or premium, if any,
on) any Indenture Security of that series at its Maturity; (c) default in the
performance, or breach, of any covenant or warranty of the Company in the
Indenture (other than a covenant or warranty a default in whose performance or
whose breach is otherwise specifically dealt with in the Indenture or which has
been expressly included in the Indenture solely for the benefit of one or more
series of Indenture Securities other than that series), and continuance of such
default or breach for 60 days after there has been given to the Company by the
Trustee, or to the Company and the Trustee by the holders of at least 25% in
principal amount of all outstanding Indenture Securities, a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" under the Indenture; or (d) certain
events involving the Company in bankruptcy, receivership or other insolvency
proceedings or an assignment for the benefit of creditors (Section 501.)
If an Event of Default described in clause (a) or (b) in the foregoing
paragraph has occurred and is continuing with respect to Indenture Securities of
any series, the Indenture provides that the Trustee or the holders of not less
than 25% in principal amount of the outstanding Indenture Securities of that
series may declare the principal amount of all of the Indenture Securities of
that series to be due and payable immediately, and upon any such declaration
such principal amount shall become immediately due and payable. If an Event of
Default described in clause (c) or (d) of the foregoing paragraph occurs and is
continuing, the Trustee or the holders of not less that 25% in principal amount
of all of the Indenture Securities then outstanding may declare the principal
amount of all of the Indenture Securities to be due and payable immediately, and
upon any such declaration such principal amount shall become immediately due and
payable. (Section 502.)
A default under other indebtedness of the Company is not an Event of
Default under the Indenture, and an Event of Default under one series of
Indenture Securities will not necessarily be an Event of Default under another
series.
At any time after such a declaration of acceleration with respect to
Indenture Securities of any series (or of all series, as the case may be) has
been made and before judgment or decree for payment of the money due has been
obtained by the Trustee, the holders of a majority in principal amount of the
outstanding Indenture Securities of that series (or of all series, as the case
may be) may rescind and annul such declaration and its consequences, if subject
to certain conditions, all Events of Default with respect to Indenture
Securities of that series (or of all series, as the case may be), other than the
non-payment of the principal of the Indenture Securities due solely by such
declaration of acceleration, have been cured or waived and all payments due
(other than by acceleration) have been paid or deposited with the Trustee.
(Section 502.) With certain exceptions, the holders of not less than a majority
in principal amount of the outstanding Indenture Securities of any series, on
behalf of the holders of all the Indenture Securities of such series, may waive
any past default described in clause (a) or (b) of the first paragraph of this
heading "Events of Default and Rights Upon Default" (or, in the case of a
default described in clause (c) or (d) of such paragraph, the holders of a
majority in principal amount of all outstanding Indenture Securities may waive
any such past default), and its consequences, except a default (a) in the
payment of the principal of (or premium, if any) or interest on any Indenture
Security, or (b) in respect to a covenant or provision of the Indenture which
under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding Indenture Security of such series affected. (Section
513.)
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<PAGE> 11
The holders of not less than a majority in principal amount of the
Indenture Securities of any series at the time outstanding are empowered under
the terms of the Indenture, subject to certain limitations, to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee. (Section
512.)
The Indenture further provides that no holder of an Indenture Security of
any series may enforce the Indenture except in the case of failure by the
Trustee to act for 60 days after notice of a continuing Event of Default with
respect to the Indenture Securities of that series and after request by the
holders of not less than 25% in principal amount of the outstanding Indenture
Securities of such series and the offer to the Trustee of reasonable indemnity,
but this provision will not prevent a holder of any Indenture Security from
enforcing the payment of the principal of, and interest on, such holder's
Indenture Security. (Section 507 and 508.)
The Indenture requires that the Company deliver to the Trustee, within 120
days after the end of each fiscal year, an Officers' Certificate, stating
whether to the best knowledge of the signers thereof the Company is in default
in the performance and observance of certain of the terms of the Indenture, and
if so, specifying each such default and the nature and status thereof of which
the signers may have knowledge. (Section 1008.)
DISCHARGE OF INDENTURE
With certain exceptions, the Company may discharge its obligations under
the Indenture with respect to any series of Indenture Securities by (i) paying
or causing to be paid the principal of (and premium, if any) and interest on all
the Indenture Securities of such series outstanding, as and when the same shall
become due and payable; (ii) delivering to the Trustee all outstanding Indenture
Securities of such series for cancellation; or (iii) entering into an agreement
in form and substance satisfactory to the Company and the Trustee providing for
the creation of an escrow fund and depositing in trust with the Trustee, as
escrow agent of such fund, sufficient funds in cash and/or Eligible Obligations
and/or U.S. Government Obligations, maturing as to principal and interest in
such amounts and at such times, as will be sufficient to pay at the Stated
Maturity or Redemption Date all such Indenture Securities of such series not
previously delivered to the Trustee for cancellation, including principal (and
premium, if any) and interest to the Stated Maturity or Redemption Date.
(Section 401.)
The Indenture defines "Eligible Obligations" to mean interest bearing
obligations as a result of the deposit of which the Indenture Securities are
rated in the highest generic long-term debt rating category assigned to legally
defeased debt by one or more nationally recognized rating agencies. (Section
101).
For federal income tax purposes, there is a substantial risk that a legal
defeasance of a series of Indenture Securities by the deposit of cash, Eligible
Obligations, or U.S. Government Obligations in a trust would be characterized by
the Internal Revenue Service or a court as a taxable exchange by the holders of
the Indenture Securities of that series for either (i) an issue of obligations
of the defeasance trust or (ii) a direct interest in the cash and/or Eligible
Obligations and/or U.S. Government Obligations held in the defeasance trust. If
the defeasance were so characterized, then a holder of an Indenture Security of
the series defeased would be: (i) required to recognize gain or loss (which
would be capital gain or loss if the Indenture Securities were held as a capital
asset) at the time of the defeasance as if the Indenture Security had been sold
at such time for an amount equal to the amount of cash and the fair market value
of the Eligible Obligations and/or U.S. Government Obligations held in the
defeasance trust; (ii) required to include in income in each taxable year the
interest and any original issue discount or gain or loss attributable to either
such defeasance trust obligations or such securities, as the case may be; and
(iii) subject to the market discount provisions of the Internal Revenue Code as
they may pertain to such defeasance trust obligations or such securities. As a
result, a holder of an Indenture Security may be required to pay taxes on any
such gain or income even though such holder may not have received any cash
therefrom. Prospective investors are urged to consult their own advisors as to
the tax consequences of an actual or legal defeasance, including the
applicability and effect of tax laws other than Federal income tax law.
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<PAGE> 12
CONCERNING THE TRUSTEE
Chase Bank of Texas, National Association (formerly named Texas Commerce
Bank National Association), 712 Main Street, Houston, Texas 77002, is the
Trustee under the Indenture. Such bank may from time to time also act as a
depository of funds for, make loans to, and perform other services for, the
Company, or its affiliates in the normal course of business. Forrest E. Hoglund,
Chairman of the Board and Chief Executive Officer, and a Director of the
Company, is also an advisory director of Chase Bank of Texas, National
Association.
The holders of a majority in principal amount of the outstanding securities
issued under the Indenture will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee, subject to certain exceptions. The Indenture provides that if an Event
of Default occurs (and is not cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent person in the
conduct of such person's own affairs. Subject to such provisions, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any holder of securities issued under the Indenture,
unless such holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense and then only to the
extent required by the terms of the Indenture. The Trustee may resign at any
time or may be removed by the Company. If the Trustee resigns, is removed or
becomes incapable of acting as Trustee or if a vacancy occurs in the office of
the Trustee for any cause, a successor Trustee shall be appointed in accordance
with the provisions of the Indenture.
If the Trustee shall have or acquire any "conflicting interest" within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and the Indenture. (Section 608.) The
Trust Indenture Act also contains certain limitations on the right of the
Trustee, as a creditor of the Company, to obtain payment of claims in certain
cases, or to realize on certain property received by it in respect of such
claims, as security or otherwise. (Section 613.)
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<PAGE> 13
THE SELLING STOCKHOLDER
<TABLE>
<CAPTION>
PERCENT OF
BENEFICIAL OWNERSHIP(1) SHARES CLASS TO
----------------------- SHARES TO TO BE OWNED BE OWNED
SELLING STOCKHOLDER SHARES PERCENTAGE BE SOLD AFTER SALE(2) AFTER SALE(1)
------------------- --------- ---------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Enron Corp................. 85,080,000(2) 54.9% 4,940,000(3) 80,140,000(3) 51.7%(3)
</TABLE>
- ---------------
(1) All percentages set forth in the table and the footnotes are based upon the
155,064,256 shares of Common Stock outstanding on December 31, 1997.
(2) Enron Corp. has previously issued certain Exchangeable Notes, which at
maturity may be exchanged for no more than 10,500,000 shares of Common Stock
owned by Enron Corp., subject to adjustment under certain circumstances and
to Enron Corp.'s option to pay an amount in cash in lieu of such mandatory
exchange. The shares that may be delivered upon exchange therefor are
beneficially owned by Enron Corp. until such time, if any, as they are
delivered at maturity of the Exchangeable Notes. If no additional shares of
Common Stock are either sold or bought by Enron Corp. and the maximum number
of shares of Common Stock are delivered at maturity of the Exchangeable
Notes, Enron Corp. will beneficially own 74,580,000 shares of Common Stock
or approximately 48.1% of the outstanding shares.
(3) Enron Corp. may sell hereunder from time to time a number of shares of
Common Stock totaling up to an aggregate of no greater than 4,940,000
shares. If the maximum number of shares of Common Stock are sold hereunder,
no additional shares of Common Stock are bought by Enron Corp. and the
Exchangeable Notes have not matured, Enron Corp. would own approximately
51.7% of the outstanding shares after such sale.
12
<PAGE> 14
RELATIONSHIP BETWEEN THE COMPANY AND ENRON CORP.
Ownership of Common Stock. Enron Corp. owns approximately 55% of the
outstanding shares of Common Stock of the Company. Through its ability to elect
all of the directors of the Company, Enron Corp. generally has the ability to
control matters relating to the management and policies of the Company,
including determinations with respect to acquisition or disposition of Company
assets, the Company's exploration, development, and operating expenditure plans,
future issuances of Common Stock or other securities of the Company and
dividends payable on the Common Stock.
Conflicts of Interest. The nature of the respective businesses of the
Company and Enron Corp. and its other affiliates ("Enron") is such as to give
rise to conflicts of interest between the companies from time to time. Conflicts
may arise, for example, with respect to transactions involving purchases, sales
and transportation of natural gas and other business dealings between the
Company and Enron, potential acquisitions of businesses or crude oil and natural
gas properties or the payment of dividends by the Company. In connection with
its finance and trading business conducted by its subsidiaries, Enron Capital &
Trade Resources Corp. ("ECT") and Enron International Capital & Trade Corp.
("EICT"), Enron provides or arranges financing for others, including exploration
and production companies, some of which compete with the Company. Enron may make
investments in the debt or equity of such companies, may make loans secured by
crude oil and natural gas properties or securities of crude oil and natural gas
companies, may acquire production payments or may receive interests in crude oil
and natural gas properties as equity components of lending transactions. As a
result of its finance and trading business, Enron may also acquire crude oil and
natural gas properties or companies upon foreclosure of secured loans or as part
of a borrower's rearrangement of its obligations. Enron also has interests in
entities such as Joint Energy Development Investments Limited Partnership, which
makes debt and equity investments in energy-related businesses, including
exploration and production companies. The acquisition, exploration, development
and production activities of entities in which Enron has interests may directly
or indirectly compete with the Company's business.
Business Opportunity Agreement. Enron Corp. and the Company have entered
into an Equity Participation and Business Opportunity Agreement (the "Business
Opportunity Agreement") that defines certain obligations that Enron owes to the
Company and relieves Enron from certain obligations to the Company that it might
otherwise have, including the obligation to offer certain business opportunities
to the Company. Enron has advised the Company that, although it believes that it
has conducted its business in a manner that is consistent with its duties as a
majority shareholder of the Company, it was motivated to enter into the Business
Opportunity Agreement because of the difficulty of determining the applicability
of the law relating to duties that Enron may owe to the Company in connection
with Enron's finance and trading business and because of Enron's desire to have
more flexibility in pursuing business opportunities identified by or developed
solely by Enron personnel. The Business Opportunity Agreement was approved by
the board of directors of the Company after it was approved unanimously by a
special committee of the board of directors consisting of the Company's
independent directors. The special committee retained its own legal and
financial advisers in connection with its evaluation of Enron's proposal, and
the Business Opportunity Agreement as executed reflects significant concessions
on Enron's part resulting from its negotiations with members of the special
committee.
The Business Opportunity Agreement provides generally that, so long as such
activities are conducted in compliance with the Business Opportunity Agreement
in all material respects, Enron may pursue business opportunities independently
of the Company. The Business Opportunity Agreement contains an acknowledgment by
the Company that Enron's finance and trading business may result in the
acquisition by Enron of oil and gas properties or companies and that in certain
cases Enron or entities in which Enron has an interest may acquire such assets
pursuant to bidding or auction processes in which the Company is also a bidder.
In the Business Opportunity Agreement, the Company acknowledges and agrees that
such activities may have an impact on the Company or the price it pays for
properties or securities it purchases from others, that Enron or entities in
which it has an interest may acquire direct or indirect interests in oil and gas
properties or
13
<PAGE> 15
companies as a result of such activities, may own, operate and control any such
assets in connection therewith, and may acquire additional oil and gas
properties or companies or pursue opportunities related thereto in connection
therewith, in each case without any duty to offer all or any portion of such
assets or opportunities to the Company. The Business Opportunity Agreement
contains an acknowledgment and agreement by the Company that, to the extent that
a court might hold that the conduct of such activity is a breach of a duty to
the Company (and without admitting that the conduct of such activity is such a
breach of duty), the Company waives any and all claims and causes of action that
it may have to claim that the conduct of such activity is a breach of a duty to
the Company.
The Business Opportunity Agreement contains certain restrictions on the
conduct of Enron's business. It also provides that, except with respect to
business opportunities pursued jointly by Enron and the Company and except as
otherwise agreed to between Enron and the Company, Enron's business will be
conducted through the use of its own personnel and assets and not with the use
of any personnel or assets of the Company. Thus, without the consent of the
Company, the finance and trading business conducted by ECT, EICT or other Enron
entities may only involve business opportunities identified by or presented to
ECT personnel, EICT personnel or other Enron personnel and developed and pursued
solely through the use of the personnel and assets of ECT, EICT or other Enron
entities. Enron has agreed that, so long as it controls the Company, it will not
pursue any business opportunity a majority of the value of which involves oil
and gas properties if the opportunity is first presented to an officer or
director of Enron who is also an officer or director of the Company at the time
such opportunity is presented, unless Enron first offers such opportunity to the
Company. The Business Opportunity Agreement states that its provisions relate
exclusively to the duties that Enron owes the Company and that nothing in the
Business Opportunity Agreement affects the fiduciary or other duties owed to the
Company by any individual director or officer of the Company in his or her
capacity as such. In this connection, Enron has agreed that its representatives
on the Board of Directors of the Company will not, for the purpose of enabling
Enron to pursue an opportunity in the oil and gas business, vote in such a
manner as to effectively prevent, prohibit or restrict the Company from pursuing
such opportunity.
In consideration for the Company's agreements in the Business Opportunity
Agreement, Enron provided valuable consideration to the Company, including
options to purchase common stock of Enron that will give the Company the
opportunity to participate in future appreciation in value of Enron, including
any appreciation in value resulting from activities that the Company has agreed
to permit Enron and its subsidiaries to pursue. Enron granted the Company ten
year options to purchase 3,200,000 shares of Enron common stock at $39.1875 per
share, the closing price per share on the date that the Company's Board of
Directors approved the Business Opportunity Agreement. The options vest in
accordance with a schedule that provides that 25% vested immediately, 15% vest
on the anniversary of the Business Opportunity Agreement in 1998 and 10% vest
each anniversary thereafter until all of the options are vested. Vesting will be
accelerated in the event of a change of control of the Company. For such
purposes a "change of control" means that (a) Enron no longer owns capital stock
of the Company representing at least 35% of the voting power for the election of
directors and (b) a majority of the members of the board of directors of the
Company consists of persons who are not officers or directors of Enron or any
affiliate of Enron other than the Company. The Business Opportunity Agreement
also included (i) an agreement to replace the existing services agreement, under
which Enron provides certain services to the Company, with a new services
agreement under which the Company's payments to Enron will be reduced by $2.8
million per year for certain of the services provided, (ii) an agreement by
Enron relieving the Company of the obligation to bear the costs of any
registration of sales by Enron of shares of Common Stock of the Company, (iii)
an agreement by Enron to pay the costs of registration of the Company'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 the loss by the Company of its status as an "independent producer"
under the Internal Revenue Code, Enron will pay the Company each year through
2006 the lesser of (a) $1 million and (b) an amount which, after payment of
applicable taxes, will compensate the Company for the additional income tax
liability resulting from the loss of independent producer status, (v) an
agreement that if Enron requests that the Company relocate its offices, and if
the Company agrees to do so, Enron will pay the Company's moving expenses,
including expenses of building out or refurbishing the space in its new offices
and expenses of removing and reinstalling the Company's telecommunications and
information systems facilities and (vi) an agreement by Enron to
14
<PAGE> 16
reimburse the Company for the costs and expenses of legal and financial
consultants retained to assist the special committee in connection with the
Business Opportunity Agreement. In addition, pursuant to the Business
Opportunity Agreement Enron agreed to cause its subsidiary, Houston Pipe Line
Company, to enter into various agreements with the Company rearranging certain
existing contractual arrangements between them, and Enron and the Company
entered into a licensing agreement covering the Enron name and mark and
recognizing that the EOG and EOGI names and marks belong to the Company. In the
Business Opportunity Agreement Enron and the Company also entered into
agreements in principle regarding the manner in which they will share the
burdens and benefits of the integrated projects under joint development by Enron
and the Company in Qatar, Mozambique and Uzbekistan. The agreements in principle
provide generally that the Company's interests in these projects will be 20%,
20% and 80%, respectively, of the combined ownership interest of the Company and
Enron.
The Business Opportunity Agreement also contains provisions that give Enron
the right to maintain its equity interest in the Company at certain levels. It
provides that if the Company issues additional shares of its capital stock Enron
will have the right to purchase additional shares of capital stock of the
Company 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 Company 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 Company on a consolidated basis; and
(iii) if Enron accounts for the assets and operations of the Company 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 Company
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).
15
<PAGE> 17
DESCRIPTION OF COMMON STOCK
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
The authorized capital stock of the Company consists of 10,000,000 shares
of Preferred Stock, par value $.01 per share (the "Preferred Stock"), none of
which are outstanding, and 320,000,000 shares of Common Stock, $.01 par value,
of which 155,064,256 shares were outstanding on December 31, 1997. The following
summary description of the capital stock of the Company is qualified in its
entirety by reference to the Restated Certificate of Incorporation of the
Company, as amended, a copy of which is filed as an exhibit to the Registration
Statements of which this Prospectus is a part.
The Board of Directors of the Company is authorized, subject to any
limitations prescribed by law, to provide for the issuance of the shares of
Preferred Stock in series, by filing a certificate pursuant to the applicable
laws of the State of Delaware to establish from time to time the number of
shares to be included in each such series, and to fix the powers, designations,
preferences, and relative, participating, optional or other rights, if any, of
the shares of each such series and any qualifications, limitations, or
restrictions thereof, all without stockholder approval. Any future issuance of
Preferred Stock, while providing desired flexibility in connection with
acquisitions and other corporate purposes, could adversely affect the voting
power or other rights of holders of Common Stock and the likelihood that such
holders will receive dividend payments and payments upon liquidation, and could
have the effect of delaying, deferring or preventing a change of control of the
Company.
The Common Stock possesses ordinary voting rights for the election of
directors and in respect to other corporate matters, each share being entitled
to one vote. There are no cumulative voting rights, meaning that the holders of
a majority of the shares voting for the election of directors can elect all the
directors if they choose to do so. The Common Stock carries no preemptive rights
and is not convertible, redeemable or assessable, or entitled to the benefits of
any sinking fund. The holders of Common Stock are entitled to dividends in such
amounts and at such times as may be declared by the Board of Directors out of
funds legally available therefor.
Upon liquidation or dissolution, holders of Common Stock are entitled to
share ratably in all net assets available for distribution to stockholders after
payment of any corporate debts and any liquidation preference established for
the Preferred Stock. All outstanding shares of Common Stock are duly authorized,
validly issued, fully paid and nonassessable.
The transfer agent and registrar of the Common Stock is First Chicago Trust
Company of New York, Jersey City, New Jersey.
LIMITATION ON DIRECTORS' LIABILITY
Delaware corporation law authorizes corporations to limit or eliminate the
personal liability of directors to corporations and their stockholders for
monetary damages for breach of directors' fiduciary duty of care. The duty of
care requires that, when acting on behalf of the corporation, directors must
exercise an informed business judgment based on all material information
reasonably available to them. Absent the limitations authorized by such laws,
directors are accountable to corporations and their stockholders for monetary
damages for conduct constituting gross negligence in the exercise of their duty
of care. The Delaware laws enable corporations to limit available relief to
equitable remedies such as injunction or rescission. The Restated Certificate of
Incorporation, as amended, of the Company limits the liability of directors of
the Company to the Company or its stockholders (in their capacity as directors
but not in their capacity as officers) to the fullest extent permitted by the
Delaware law. Specifically, directors of the Company will not be personally
liable for monetary damages for breach of a director's fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation Law,
or (iv) for any transaction from which the director derived an improper personal
benefit.
16
<PAGE> 18
This provision in the Restated Certificate of Incorporation may have the
effect of reducing the likelihood of derivative litigation against directors,
and may discourage or deter stockholders or management from bringing a lawsuit
against directors for breach of their duty of care, even though such an action,
if successful, might otherwise have benefited the Company and its stockholders.
17
<PAGE> 19
PLAN OF DISTRIBUTION
The Company and/or the Selling Stockholder may sell the Securities offered
hereby (i) through underwriters, brokers, dealers or agents; or (ii) directly to
purchasers. In addition, the Selling Stockholder may sell any shares of Common
Stock offered hereby from time to time in transactions (including block
transactions in which the Selling Stockholder is the seller) on the NYSE or any
other exchange on which the Common Stock may be traded, or in the
over-the-counter market. The Selling Stockholder may also sell shares of Common
Stock in special offerings, exchange distributions or secondary distributions in
accordance with the rules of the NYSE or such other exchange, in negotiated
transactions, including through the writing of call options or the purchase of
put options on shares of the Common Stock (whether such options are listed on an
options exchange or otherwise), pursuant to Rule 144, or otherwise. The Selling
Stockholder may effect such transactions by selling shares of the Common Stock
to or through underwriters, dealers, brokers or agents. Such underwriters,
dealers, brokers or agents may sell such shares to institutional purchasers in
one or more transactions (including block transactions) on the NYSE or
otherwise. Any sales of the Securities may be made at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. If required in connection with a particular offering of
Securities, a Prospectus Supplement with respect to such offering of Securities
will set forth the terms of the offering of the Securities, including the name
or names of any underwriters, dealers, brokers or agents, the purchase price of
the Securities and the proceeds to the Company and/or the Selling Stockholder
from such sale, any delayed delivery arrangements, any underwriting discounts
and commissions and other items constituting underwriters' compensation, any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
If underwriters are used in the sale, the Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. In
connection with the sale of the Securities, underwriters, brokers, dealers or
agents may be deemed to have received compensation from the Company or the
Selling Stockholder in the form of underwriting discounts or commissions and may
also receive commissions from purchasers of the Securities for whom they may act
as agent or to whom they may sell as principal. Underwriters or agents may sell
the Securities to or through dealers, and such dealers may receive compensation
in the form of discounts, concessions or commissions from the underwriters or
commissions from the purchasers for whom they may act as agent. The Securities
may be offered to the public either through underwriting syndicates represented
by one or more managing underwriters or directly by one or more firms acting as
underwriters. The underwriter or underwriters with respect to a particular
underwritten offering of Securities will be named in the Prospectus Supplement
relating to such offering and, if an underwriting syndicate is used, the
managing underwriter or underwriters will be set forth on the cover of such
Prospectus Supplement. Unless otherwise set forth in the Prospectus Supplement
relating thereto, the obligations of the underwriters to purchase the Securities
will be subject to certain conditions precedent, and the underwriters will be
obligated to purchase all the Securities offered if any are purchased.
In connection with an offering, the underwriters may purchase and sell the
securities offered in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover short
positions created by the underwriters in connection with the offering.
Stabilizing transactions consist of certain bids or purchases for the purpose of
preventing or retarding a decline in the market price of the securities offered;
and short positions created by the underwriters involve the sale by the
underwriters of a greater number of securities than they are required to
purchase from the Company in the offering. The underwriters may also impose a
penalty bid, whereby selling concessions allowed to broker-dealers in respect of
the securities sold in the offering may be reclaimed by the underwriters if such
securities are repurchased by the underwriters in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the securities offered, which may be higher than the price that
might otherwise prevail in the open market; and these activities, if commenced,
may be discontinued at any time. These transactions may be effected in the
over-the-counter market or otherwise.
18
<PAGE> 20
If dealers are utilized in the sale of Securities, the Company and/or the
Selling Stockholder will sell such Securities to the dealers as principals. The
dealers may then resell such Securities to the public at varying prices to be
determined by such dealers at the time of resale. To the extent required, the
names of dealers or brokers acting as dealers and the terms of the transaction
will be set forth in the Prospectus Supplement relating thereto.
The Securities may be sold directly by the Company and/or the Selling
Stockholder or through agents designated by the Company and/or the Selling
Stockholder from time to time. To the extent required, any agent involved in the
offer or sale of the Securities in respect to which this Prospectus is delivered
will be named, and any commissions payable by the Company and/or the Selling
Stockholder to such agent will be set forth, in the Prospectus Supplement
relating thereto. Unless otherwise indicated in the Prospectus Supplement, any
such agent will be acting on a best efforts basis for the period of its
appointment.
If so indicated in the Prospectus Supplement, the Company and/or the
Selling Stockholder will authorize agents, underwriters, brokers or dealers to
solicit offers from certain types of institutions to purchase Securities from
the Company and/or the Selling Stockholder at the public offering price set
forth in the Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject only to those conditions set forth in the Prospectus
Supplement, and the Prospectus Supplement will set forth the commission payable
for solicitation of such contracts.
The Securities (other than the Common Stock), when first issued, will have
no established trading market. Any underwriters or agents to or through whom
Securities are sold by the Company or the Selling Stockholder for public
offering and sale may make a market in such Securities, but such underwriters or
agents will not be obligated to do so and may discontinue any market making at
any time without notice. No assurance can be given as to the liquidity of the
trading market for any such Securities.
Agents, brokers, dealers and underwriters may be entitled under agreements
with the Company and/or the Selling Stockholder to indemnification by the
Company against certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments which such agents,
brokers, dealers or underwriters may be required to make in respect thereof.
Agents, brokers, dealers and underwriters may be customers of, engage in
transactions with or perform services for the Company or the Selling Stockholder
in the ordinary course of business.
VALIDITY OF SECURITIES
The validity of the Securities offered hereby will be passed upon for the
Company by Barry Hunsaker, Jr., Esq., Senior Vice President and General Counsel
of the Company, and for the Underwriters by Bracewell & Patterson, L.L.P. Mr.
Hunsaker owns substantially less than 1% of the outstanding shares of Common
Stock. Bracewell & Patterson, L.L.P. provides services to the Company and to
Enron Corp. and certain of its subsidiaries and affiliates on matters unrelated
to the offering of the Securities.
EXPERTS
The consolidated financial statements and schedule included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996,
incorporated by reference in this Prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
The letter report of DeGolyer and MacNaughton, independent petroleum
consultants, included as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, and the estimates from the reports of that
firm appearing in such Annual Report, are incorporated by reference herein on
the authority of said firm as experts in petroleum engineering and in giving
such reports.
19
<PAGE> 21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth those expenses to be incurred by the Company
in connection with the issuance and distribution of the securities being
registered. Except for the Securities and Exchange Commission registration fee,
all amounts shown are estimates.
<TABLE>
<S> <C>
Filing Fee for Registration Statement....................... $ 88,500
Legal Fees and Expenses..................................... 60,000
Accounting Fees and Expenses................................ 10,000
Transfer Agent's and Trustee's Fees and Expenses............ 15,000
Blue Sky Fees and Expenses.................................. 10,000
Printing and Engraving Expenses............................. 50,000
Miscellaneous............................................... 21,500
--------
Total....................................................... $255,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Restated Certificate of Incorporation, as amended, of the Company (the
"Corporation" therein) contains the following provisions relating to
indemnification of directors and officers, namely:
"Eighth: A.1. A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
2. The foregoing provisions of this Article shall not eliminate or
limit the liability of a director for any act or omission occurring prior
to the effective date of this Restated Certificate of Incorporation. Any
repeal or amendment of this Article by the stockholders of the Corporation
shall be prospective only and shall not adversely affect any limitation on
the personal liability of a director of the Corporation existing at the
time of such repeal or amendment. In addition to the circumstances in which
a director of the Corporation is not personally liable as set forth in the
foregoing provisions of this Article, a director shall not be liable to the
fullest extent permitted by any amendment to the Delaware General
Corporation Law enacted that further limits the liability of a director.
B.1. Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of whom he
or she is the legal representative, is or was a director or officer, of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that
such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or
to be paid in settlement) reasonably incurred or suffered by such person in
connection therewith, and such indemnification shall continue as to a
person who has ceased to be a director, officer, employee or agent
II-1
<PAGE> 22
and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in paragraph 2.
hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated
by such person only if such proceeding (or part thereof) was authorized by
the Board of Directors of the Corporation. The right to indemnification
conferred in this Section shall be a contract right and shall include the
right to be paid by the Corporation the expenses incurred in defending any
such proceeding in advance of its final disposition; provided, however,
that, if the Delaware General Corporation Law requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or
is rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of the proceeding, shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that
such director or officer is not entitled to be indemnified under this
Article or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the
Corporation with the same scope and effect as the foregoing indemnification
of directors and officers.
2. If a claim under paragraph B.1. of this Article is not paid in full
by the Corporation within thirty days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim and,
if successful in whole or in part, the claimant shall be entitled to be
paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation
Law for the Corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the Corporation. Neither
the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification
of the claimant is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Corporation (including
its Board of Directors, independent legal counsel, or its stockholders)
that the claimant has not met such applicable standard of conduct, shall be
a defense to the action or create a presumption that the claimant has not
met the applicable standard of conduct.
3. The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in
this Article shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of the Certificate
of Incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
4. The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
5. If this Article or any portion hereof shall be invalidated on any
ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify and hold harmless each director, officer, employee
and agent of the Corporation, and may nevertheless indemnify and hold
harmless each employee and agent of the Corporation, as to costs, charges
and expenses (including attorneys' fees), judgments, fines, and amounts
paid in settlement with respect to any action, suit or proceeding, whether
civil, criminal, administrative or investigative to the full extent
permitted by any applicable portion of this Article that shall not have
been invalidated and to the full extent permitted by applicable law.
6. For purposes of this Article, reference to the "Corporation" shall
include, in addition to the Corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger prior to (or, in the case of an entity specifically designated in a
resolution of the
II-2
<PAGE> 23
Board of Directors, after) the adoption hereof and which, if its separate
existence had continued, would have had the power and authority to
indemnify its directors, officers and employees or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued."
The Forms of Underwriting Agreement and Agency Agreement filed herewith as
Exhibit 1(a) and Exhibit 1(b), respectively, under certain specified
circumstances, provide for indemnification by the Underwriters or Agents,
respectively, of the directors, officers who sign the Registration Statement and
controlling persons of the Company.
The Company has purchased liability insurance policies covering the
directors and officers of the Company to provide protection where the Company
cannot legally indemnify a director or officer and where a claim arises under
the Employee Retirement Income Security Act of 1974 against a director or
officer based on an alleged breach of fiduciary duty or other wrongful act.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
*1(a) -- Form of Underwriting Agreement -- Debt Securities
(Exhibit 1(a) to Form S-3 Registration Statement No.
333-18511, filed December 20, 1996).
*1(b) -- Form of Agency Agreement for Sales of Common Stock of
Enron Oil & Gas Company (Exhibit 1(b) to Amendment No. 1
to Form S-3 Registration Statement No. 333-09919, filed
September 11, 1996).
*3(a) -- Restated Certificate of Incorporation of Enron Oil & Gas
Company (Exhibit 3.1 to Form S-1 Registration Statement
No. 33-30678, filed August 24, 1989).
*3(b) -- Certificate of Amendment of Restated Certificate of
Incorporation of Enron Oil & Gas Company (Exhibit 4.1(b)
to Form S-8 Registration Statement No. 33-52201, filed
February 8, 1994).
*3(c) -- Certificate of Amendment of Restated Certificate of
Incorporation of Enron Oil & Gas Company (Exhibit 4.1(c)
to Form S-8 Registration Statement No. 33-58103, filed
March 15, 1995).
*3(d) -- Certificate of Amendment of Restated Certificate of
Incorporation of Enron Oil & Gas Company, dated June 11,
1996 (Exhibit 3(d) to Form S-3 Registration Statement No.
333-09919, filed August 9, 1996).
**3(e) -- Certificate of Amendment of Restated Certificate of
Incorporation of Enron Oil & Gas Company, dated May 7,
1997.
*3(f) -- Bylaws of Enron Oil & Gas Company (Exhibit 3.2 to Enron
Oil & Gas Company Annual Report on Form 10-K for the year
ended December 31, 1995).
*4(a) -- Form of Indenture dated as of September 1, 1991, between
Enron Oil & Gas Company and Texas Commerce Bank National
Association (Exhibit 4(a) to Registration Statement No.
33-42640, filed September 6, 1991).
*4(b) -- Form of Debt Security, included in Exhibit 4(a).
*4(c) -- Specimen of Certificate evidencing the Common Stock
(Exhibit 3.3 to Form S-1 Registration Statement No.
33-30678, filed August 24, 1989).
**5 -- Opinion of Barry Hunsaker, Jr., Esq., Senior Vice
President and General Counsel of Enron Oil & Gas Company.
</TABLE>
II-3
<PAGE> 24
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
**10 -- Equity Participation and Business Opportunity Agreement
dated December 9, 1997 between Enron Oil & Gas Company
and Enron Corp.
*12 -- Computation of Ratios of Earnings to Fixed Charges
(Exhibit 12 to Form 10-Q for quarter ended September 30,
1996).
**23(a) -- Consent of Arthur Andersen LLP.
**23(b) -- Consent of DeGolyer and MacNaughton.
23(c) -- The consent of Barry Hunsaker, Jr., Esq. is contained in
his opinion filed as Exhibit 5 hereto.
**24 -- Powers of Attorney.
**25 -- Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of Chase Bank of Texas, National
Association, (formerly named Texas Commerce Bank National
Association).
</TABLE>
- ------------------
* Incorporated by reference as indicated.
** Filed herewith.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to each Registration Statement:
(i) To include any prospectus required in Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of each Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-4
<PAGE> 25
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Company's annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(5) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3 of Regulation
S-X is not set forth in the prospectus, to deliver or cause to be delivered
to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-5
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Enron Oil & Gas
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement or amendment to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Houston, State of Texas, on the 23rd day of
January, 1998.
ENRON OIL & GAS COMPANY
(Registrant)
By: /s/ WALTER C. WILSON
----------------------------------
(Walter C. Wilson)
Senior Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment has been signed by the following persons in
the capacities with Enron Oil & Gas Company indicated and on the 23rd day of
January, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ FORREST E. HOGLUND Chairman of the Board and Chief Executive
- ----------------------------------------------------- Officer and Director (Principal Executive
(Forrest E. Hoglund) Officer)
/s/ WALTER C. WILSON Senior Vice President and Chief Financial
- ----------------------------------------------------- Officer (Principal Financial Officer)
(Walter C. Wilson)
/s/ BEN B. BOYD Vice President and Controller
- ----------------------------------------------------- (Principal Accounting Officer)
(Ben B. Boyd)
FRED C. ACKMAN* Director
- -----------------------------------------------------
(Fred C. Ackman)
JAMES V. DERRICK, JR.* Director
- -----------------------------------------------------
(James V. Derrick, Jr.)
KEN L. HARRISON* Director
- -----------------------------------------------------
(Ken L. Harrison)
KENNETH L. LAY* Director
- -----------------------------------------------------
(Kenneth L. Lay)
EDWARD RANDALL, III* Director
- -----------------------------------------------------
(Edward Randall, III)
JEFFREY K. SKILLING* Director
- -----------------------------------------------------
(Jeffrey K. Skilling)
FRANK G. WISNER* Director
- -----------------------------------------------------
(Frank G. Wisner)
*By /s/ ANGUS H. DAVIS
-------------------------------------------------
(Angus H. Davis)
(Attorney-in-fact for persons indicated)
</TABLE>
II-6
<PAGE> 27
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C> <C>
*1(a) -- Form of Underwriting Agreement -- Debt Securities
(Exhibit 1(a) to Form S-3 Registration Statement No.
333-18511, filed December 20, 1996).
*1(b) -- Form of Agency Agreement for Sales of Common Stock of
Enron Oil & Gas Company (Exhibit 1(b) to Amendment No. 1
to Form S-3 Registration Statement No. 333-09919, filed
September 11, 1996).
*3(a) -- Restated Certificate of Incorporation of Enron Oil & Gas
Company (Exhibit 3.1 to Form S-1 Registration Statement
No. 33-30678, filed August 24, 1989).
*3(b) -- Certificate of Amendment of Restated Certificate of
Incorporation of Enron Oil & Gas Company (Exhibit 4.1(b)
to Form S-8 Registration Statement No. 33-52201, filed
February 8, 1994).
*3(c) -- Certificate of Amendment of Restated Certificate of
Incorporation of Enron Oil & Gas Company (Exhibit 4.1(c)
to Form S-8 Registration Statement No. 33-58103, filed
March 15, 1995).
*3(d) -- Certificate of Amendment of Restated Certificate of
Incorporation of Enron Oil & Gas Company, dated June 11,
1996 (Exhibit 3(d) to Form S-3 Registration Statement No.
333-09919, filed August 9, 1996).
3(e) -- Certificate of Amendment of Restated Certificate of
Incorporation of Enron Oil & Gas Company, dated May 7,
1997.
*3(f) -- Bylaws of Enron Oil & Gas Company (Exhibit 3.2 to Enron
Oil & Gas Company Annual Report on Form 10-K for the year
ended December 31, 1995).
*4(a) -- Form of Indenture dated as of September 1, 1991, between
Enron Oil & Gas Company and Texas Commerce Bank National
Association (Exhibit 4(a) to Registration Statement No.
33-42640, filed September 6, 1991).
*4(b) -- Form of Debt Security, included in Exhibit 4(a).
*4(c) -- Specimen of Certificate evidencing the Common Stock
(Exhibit 3.3 to Form S-1 Registration Statement No.
33-30678, filed August 24, 1989).
5 -- Opinion of Barry Hunsaker, Jr., Esq., Senior Vice
President and General Counsel of Enron Oil & Gas Company.
10 -- Equity Participation and Business Opportunity Agreement
dated December 9, 1997 between Enron Oil & Gas Company
and Enron Corp.
*12 -- Computation of Ratios of Earnings to Fixed Charges
(Exhibit 12 to Form 10-Q for quarter ended September 30,
1996).
23(a) -- Consent of Arthur Andersen LLP.
23(b) -- Consent of DeGolyer and MacNaughton.
23(c) -- The consent of Barry Hunsaker, Jr., Esq. is contained in
his opinion filed as Exhibit 5 hereto.
24 -- Powers of Attorney.
25 -- Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of Chase Bank of Texas, National
Association (formerly named Texas Commerce Bank National
Association).
</TABLE>
- ---------------
* Incorporated by reference as indicated.
<PAGE> 1
EXHIBIT 3(e)
State of Delaware
Office of the Secretary of State
____________________________________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THAT ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "ENRON OIL & GAS COMPANY", FILED IN THIS OFFICE ON THE SEVENTH
DAY OF MAY, A.D. 1997, AT 2 O'CLOCK P.M.
/s/ Edward J. Freel
------------------------------------
Edward J. Freel, Secretary of State
2064000 8100 AUTHENTICATION: 8470052
971161469 DATE: 05-16-97
<PAGE> 2
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
ENRON OIL & GAS COMPANY
Enron Oil & Gas Company, a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Company"), does
hereby certify that:
The amendment to the Company's Restated Certificate of Incorporation
set forth in the following resolution approved by the Company's Board of
Directors and stockholders was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware:
"RESOLVED, that the Restated Certificate of Incorporation of
the Company is hereby amended by deleting Article Fourth thereof in
its entirety and substituting the following therefor:
"FOURTH: A. The total number of shares of all classes
of stock that the Corporation shall have authority to
issue is Three Hundred Thirty Million (330,000,000)
shares, consisting of Three Hundred Twenty Million
(320,000,000) shares of common stock, par value $.01
per share (hereinafter referred to as "Common Stock")
and Ten Million (10,000,000) shares of preferred
stock, par value $.01 per share (hereinafter referred
to as "Preferred Stock").
B. The board of directors of the Corporation is
authorized, subject to any limitations prescribed by
law, to provide for the issuance of the shares of
Preferred Stock in series, by filing a certificate
pursuant to the applicable laws of the State of
Delaware (hereinafter referred to as a "Preferred
Stock Designation") to establish from time to time
the number of shares to be included in each such
series, and to fix the powers, designations,
preferences, and relative, participating, optional or
other rights, if any, of the shares of each such
series and any qualifications, limitations, or
restrictions thereof.
<PAGE> 3
C. Each holder of shares of Common Stock shall be
entitled to one vote for each share of Common Stock
held of record on all matters on which the holders of
shares of Common Stock are entitled to vote."
IN WITNESS WHEREOF, Enron Oil & Gas Company has caused this
Certificate to be signed and attested by its duly authorized officers, this 7th
day of May, 1997.
ATTEST: ENRON OIL & GAS COMPANY
By:/s/ Barry Hunsaker, Jr. By:/s/ Forrest E. Hoglund
---------------------------- -----------------------------
Barry Hunsaker, Jr. Forrest E. Hoglund
Senior Vice President, Chairman and Chief
General Counsel and Executive Officer
Assistant Secretary
Page 3
<PAGE> 1
EXHIBIT 5
Barry Hunsaker, Jr.
Senior Vice President
and General Counsel
Enron Oil & Gas Company
P.O. Box 1188
Houston, TX 77251-1188
January 22, 1998
Enron Oil & Gas Company
1400 Smith Street
Houston, Texas 77002
Gentlemen:
As Senior Vice President and General Counsel of Enron Oil & Gas
Company, a Delaware corporation (the "Company"), I am familiar with
Registration Statement No. 333-18511 on Form S-3 declared effective by the
Securities and Exchange Commission (the "Commission") on February 12, 1997, and
the Registration Statement on Form S-3 (Post-Effective Amendment No. 1 to
Registration Statement No. 333-18511) currently being filed with the Commission
(collectively, the "Registration Statement") relating to the proposed offering
by the Company from time to time of up to an aggregate amount of $413,207,962
of Company Debt Securities and/or Common Stock, par value $.01 per share, and
the proposed offering by Enron Corp. from time to time of up to 4,940,000
shares of Common Stock of the Company (the Debt Securities and Common Stock
collectively referred to herein as the "Securities"). In connection therewith,
I have examined, among other things, a copy of the Restated Certificate of
Incorporation and Bylaws of the Company as amended to the date hereof, the
corporate proceedings taken to date with respect to the authorization, issuance
and sale of the Securities, a copy of the Indenture dated as of September 1,
1991 (the "Indenture") between the Company and Texas Commerce Bank National
Association, as Trustee, and I have performed such other investigations as I
have considered appropriate as the basis for the opinions expressed herein.
Capitalized terms used but not defined herein are used as defined in the
Registration Statement.
Based on the foregoing, I am of the opinion that:
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware.
2. The Debt Securities of the Company covered by the Registration
Statement have been validly authorized for issuance, and
(subject to the Registration Statement becoming effective and
any applicable
<PAGE> 2
state securities or Blue Sky laws being complied with), when
the terms thereof and of their issue and sale have been duly
established, upon issuance and delivery thereof as set forth in
the Registration Statement, and upon receipt by the Company of
the purchase price thereof, the Debt Securities will be validly
issued and will be binding obligations of the Company.
3. The issuance of the shares of Common Stock to be issued by the
Company pursuant to the Registration Statement has been duly
authorized, and (subject to the Registration Statement becoming
effective and applicable Blue Sky laws being complied with),
when the terms of their issue and sale have been duly
established, upon the issuance and delivery thereof as set
forth in the Registration Statement, and upon the receipt by
the Company of the purchase price thereof, such shares of
Common Stock will be validly issued, fully paid and
nonassessable.
4. The shares of Common Stock of the Company to be sold by the
Selling Stockholder pursuant to the Registration Statement are,
and upon sale will be, validly issued, fully paid and
nonassessable.
I am a member of the bar of the State of Texas. The opinions set forth
above are limited in all respects to the laws of the State of Texas, the
General Corporation Law of the State of Delaware and federal law.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to me under the caption "Validity
of Securities" in the Prospectus constituting part of the Registration
Statement and to the filing of this opinion as an exhibit thereto. By giving
such consent, I do not admit that I am an expert with respect to any part of
the Registration Statement, including this exhibit, within the meaning of the
term "expert" as used in the Securities Act of 1933, as amended, or the rules
and regulations of the Commission issued thereunder.
Very truly yours,
/s/ Barry Hunsaker, Jr.
Barry Hunsaker, Jr.
<PAGE> 1
EXHIBIT 10
EXECUTION COPY
EQUITY PARTICIPATION AND BUSINESS OPPORTUNITY AGREEMENT
This Equity Participation and Business Opportunity Agreement
("Agreement") is made and entered into as of December 9, 1997, by and between
Enron Oil & Gas Company, a Delaware corporation, and Enron Corp., an Oregon
corporation.
WHEREAS, EOG is engaged in the exploration for and the development,
production and marketing of natural gas and crude oil in the United States and
internationally; and
WHEREAS, a majority of the outstanding capital stock of EOG is owned
by Enron; the remaining shares are owned by the public; and Enron may have
certain duties to EOG resulting from its ownership of EOG; and
WHEREAS, ECT (as defined below) and EII (as defined below) are
wholly-owned subsidiaries of Enron; ECT and EII are engaged in the Finance and
Trading Business (as defined below), and their activities in such business
include without limitation activities involving the E&P Business (as defined
below) and may have an impact on EOG; and
WHEREAS, Enron engages in other activities that may have an impact on
EOG; and
WHEREAS, the application of the law relating to duties that Enron may
owe to EOG in particular circumstances is often difficult to predict; and if a
court were to hold that Enron breached any such duty Enron could be held liable
for damages in a legal action brought on behalf of EOG; and
WHEREAS, EOG and Enron desire to enter into this Agreement in order
(i) to define duties that Enron will owe to EOG with respect to business
opportunities and rights that Enron will have with respect to business
opportunities and (ii) to specify circumstances in which no breach of duty will
be deemed to have occurred; and
WHEREAS, Enron and EOG desire to enter into other agreements that
relate to matters of concern to each of them; and
WHEREAS, Enron desires to provide valuable consideration to EOG,
including options to purchase Common Stock of Enron that will give EOG the
opportunity to participate in future appreciation in value of Enron and
including other financial benefits;
NOW, THEREFORE, in consideration of the mutual covenants, rights, and
obligations set forth in this Agreement, and the benefits to be derived
herefrom, and other good and valuable consideration, the receipt and the
sufficiency of which each of the parties hereto acknowledges and confesses, the
parties hereto agree as follows:
<PAGE> 2
1. Certain Defined Terms; Exhibits. In addition to the
terms defined in this Agreement, the capitalized terms used in this Agreement
will have the meanings ascribed to such terms in Exhibit A hereto. Exhibit A
and each other exhibit to this Agreement are hereby made a part of this
Agreement as if set forth in full in this Agreement
2. Representation by Enron. Enron represents and warrants
to EOG that it has disclosed to the chief executive officer and the other
directors of EOG all information in Enron's possession that is material to a
decision by EOG to enter into this Agreement. Enron also represents that it has
furnished to the chief executive officer of EOG, to the other directors of EOG
and to the attorneys and financial advisers retained by the special committee
of the Board of Directors of EOG access to all information in Enron's
possession necessary to permit such persons to verify the accuracy of the
information furnished.
3. Agreement by EOG Regarding Enron Business Activities.
EOG acknowledges and agrees that, so long as such activities are conducted in
compliance with this Agreement in all material respects (including the
provisions of Section 4 hereof), Enron is free to conduct business activities
that are within Enron's traditional lines of business and any other lines of
business in which Enron chooses to engage in the future. Without limiting the
foregoing, EOG acknowledges and agrees that, so long as such activities are
conducted in compliance with this Agreement in all material respects (including
the provisions of Section 4 hereof), Enron may engage in the Finance and
Trading Business, including without limitation activities in such business
involving the E&P Business, and that such Finance and Trading Business may
include without limitation activities such as those conducted by ECT directly
or through ECT Securities Corp. ("ECT Securities"), Joint Energy Development
Investments Limited Partnership and Cactus Hydrocarbon III Limited Partnership,
pursuant to which ECT provides funds to third parties in return for production
payments or other property interests, including without limitation capital
stock, partnership interests, debentures, notes or oil and gas royalty,
overriding royalty, net profits or working interests or other securities or
property, or pursuant to which ECT Securities arranges for transactions in
securities for the account of others or underwrites securities. EOG also agrees
that, so long as such activities are conducted in compliance with this
Agreement in all material respects (including the provisions of Section 4
hereof), such Finance and Trading Business may include without limitation
activities such as those proposed to be conducted by EII. In connection with
the foregoing, EOG acknowledges that such activities may result in the
acquisition by Enron of E&P Business Assets, and in certain cases Enron or
entities in which Enron has an interest may acquire E&P Business Assets
pursuant to bidding or auction processes in which EOG is also a bidder. EOG
acknowledges and agrees that such activities may have an impact on EOG or the
price it pays for properties or securities it purchases from others. EOG
acknowledges and agrees that Enron or entities in which it has an interest may
acquire direct or indirect interests in E&P Business Assets as a result of the
activities described above, may own, operate and control any such assets in
connection therewith, and may acquire additional E&P Business Assets or pursue
opportunities related thereto in connection therewith, in each case without any
duty to offer all or any portion of such assets or opportunities to EOG.
2
<PAGE> 3
4. Agreement by Enron Regarding Separate Conduct of
Business. Enron agrees that, except with respect to business opportunities
pursued jointly by Enron and EOG and except as otherwise agreed to between
Enron and EOG, Enron's business will be conducted through the use of its own
personnel and assets and not with the use of any personnel or assets of EOG.
Without limiting the foregoing, Enron agrees that, without the consent of EOG,
the Finance and Trading Business conducted by ECT, EII or other Enron entities
will only involve business opportunities identified by or presented to ECT
personnel, EII personnel or other Enron personnel and developed and pursued
solely through the use of the personnel and assets of ECT, EII or other Enron
entities. Enron agrees that it will not pursue any business opportunity that
involves E&P Business Assets that is first presented to an officer or director
of Enron who is also an officer or director of EOG at the time such opportunity
is presented (i.e. the first officer or director of Enron to receive notice of
such opportunity from a third party is also an officer or director of EOG),
unless Enron first offers such opportunity to EOG and EOG notifies Enron in
writing that EOG elects not to pursue such opportunity; provided that the
foregoing agreement will not be applicable to opportunities first presented on
or after the first date on which Enron no longer controls EOG and no longer
owns directly or indirectly at least 40% of the capital stock of EOG having
ordinary voting power for the election of directors. For purposes of the
foregoing, (a) a business opportunity that involves E&P Business Assets shall
not include any opportunity where E&P Business Assets represent less than a
majority of the value of the opportunity, as determined by the officer or
director of Enron to whom such opportunity is first presented, based on
information available to such officer at the time such opportunity is first
presented (which determination shall be conclusive if made in good faith), (b)
senior officers of EOG who are members or ad hoc members of the Management
Committee of Enron or any similar committee shall not, by virtue of such
membership or ad hoc membership, be deemed to be Enron personnel, and (c) it
will not be a breach of Enron's agreement to develop and pursue business
opportunities solely through the use of the personnel and assets of ECT, EII or
other Enron entities if one or more senior officers of Enron who serve on the
Board of Directors of EOG participate, as officers of Enron, in evaluating,
developing or approving business opportunities that were identified by other
Enron personnel or first presented to other Enron personnel (i.e. the first
Enron person to receive notice of such opportunity from a third party was not
also an officer or director of EOG). The provisions of this Section 4 relate
exclusively to the duties that Enron owes EOG, and nothing herein shall affect
the fiduciary or other duties owed to EOG by any individual director or officer
of EOG in his or her capacity as such. In this connection, Enron agrees that
its representatives on the Board of Directors of EOG will not, for the purpose
of enabling Enron to pursue an opportunity in the E&P Business, vote in such a
manner as to effectively prevent, prohibit or restrict EOG from pursuing such
opportunity.
5. Agreement and Waiver. In further consideration of the
benefits received and to be received by EOG pursuant to this Agreement, EOG
acknowledges and agrees that, if any business opportunity is presented to or
identified by Enron, except as otherwise provided in Section 4 of this
Agreement Enron may pursue such opportunity without any obligation to offer it
to EOG, provided that Enron's activities in pursuing such business opportunity
are conducted in compliance with this Agreement in all material respects
(including the provisions of Section 4 hereof). EOG acknowledges and agrees
that in such case, to the extent that a court might hold that the conduct of
3
<PAGE> 4
such activity is a breach of a duty to EOG (and without admitting that the
conduct of such activity is such a breach of duty), EOG hereby waives any and
all claims and causes of action that EOG may have to claim that the conduct of
such activity is a breach of a duty to EOG. The waivers and agreements herein
apply equally to activities to be conducted in the future and activities that
have been conducted in the past.
6. Agreement to Supply Information. Enron agrees that, in
connection with any opportunity presented to EOG pursuant to Section 4 of this
Agreement, Enron will furnish to EOG all information in Enron's possession or
reasonably available to Enron regarding the opportunity in question that is
material to a decision by EOG whether or not to pursue such opportunity.
7. Options to Purchase Enron Common Stock. In
consideration of EOG's agreements herein, Enron hereby grants to EOG options to
purchase Common Stock of Enron as follows:
(a) The total number of shares issuable upon exercise of
such options is 3,200,000 shares.
(b) The option exercise price shall be $39.1875 per share.
(c) Options shall become vested and exercisable as follows:
options have vested on the date hereof and are exercisable as to 25%
of the total shares covered by the options on or following the date
hereof. Subject to the provisions of Section 7(e) below, additional
options will vest and will become exercisable on the anniversary of
the date of this Agreement as follows:
<TABLE>
<CAPTION>
Number of Shares Covered
Year in Which By Options that Vest
Anniversary Occurs and Become Exercisable
------------------ ------------------------
<S> <C>
1998 15%
1999 10%
2000 10%
2001 10%
2002 10%
2003 10%
2004 10%
</TABLE>
(d) Vested options may be exercised in whole or in part at
any time and from time to time until the tenth anniversary of this
Agreement.
4
<PAGE> 5
(e) If there is a change of control of EOG, then any
remaining unvested options will vest. For such purposes a "change of
control" means that (a) Enron no longer owns capital stock of EOG
representing at least 35% of the voting power for the election of
directors and (b) a majority of the members of the board of directors
of EOG consists of persons who are not officers or directors of Enron
or any affiliate of Enron other than EOG.
(f) Enron will afford EOG registration rights with respect
to the shares of Common Stock acquired by EOG upon exercise of options
granted herein. Such registration rights will be set forth in the
Stock Restriction and Registration Agreement in the form attached as
Exhibit B. Enron and EOG hereby agree to enter into such Stock
Restriction and Registration Agreement promptly upon execution of this
Agreement.
8. Agreements Regarding Certain Foreign Projects. In
further consideration of EOG's agreements herein, Enron hereby agrees to enter
into, or to cause its appropriate subsidiaries to enter into, agreements with
EOG relating to existing projects in Qatar, Mozambique and Uzbekistan on the
terms and conditions set forth in Exhibits C, D and E, respectively. Such
agreements will be subject to the Standard Cost Sharing and Co-Ownership
Matters set forth in Exhibit F. EOG agrees to enter into, or to cause its
appropriate subsidiaries to enter into, such agreements with Enron. EOG
acknowledges and agrees that Exhibits C, D, E and F set forth all terms and
conditions of such agreements that are material to a decision by EOG to enter
into this Agreement. The parties acknowledge and agree that the failure by
either party to agree on any term or provision of any such agreement (as long
as such failure to agree is not inconsistent with C, D, E or F) shall not serve
as a basis for invalidating this Agreement (through lack of consideration or
otherwise) or for any claim that a party breached this Agreement.
9. Agreement Regarding Enron Name and Marks. In further
consideration of EOG's agreements herein, Enron hereby agrees to enter into a
Non-Exclusive License Agreement with EOG in the form attached as Exhibit G.
Enron and EOG hereby agree to enter into such NonExclusive License Agreement
promptly upon execution of this Agreement.
10. Agreements Relating to Houston Pipe Line Company. In
further consideration of EOG's agreements herein, Enron hereby agrees to cause
its subsidiary, Houston Pipe Line Company ("HPL"), to enter into agreements
with EOG upon the terms and conditions set forth in Exhibit H to this
Agreement. Enron and EOG hereby agree that such agreements will be entered into
promptly upon execution of this Agreement.
11. Further Consideration. In further consideration of the
agreements herein, the parties agree as follows:
(a) Enron and EOG will enter into a Services Agreement, in
the form attached as Exhibit I to this Agreement, which services
agreement will replace the 1994 Services Agreement dated as of January
1, 1994.
5
<PAGE> 6
(b) Enron and EOG will enter into an amendment to the Stock
Restriction and Registration Agreement dated as of August 23, 1989,
between Enron Oil & Gas Company and Enron Corp., as amended, in the
form attached as Exhibit J to this Agreement, to provide that all
Registration Expenses (as defined therein) incident to any
registration of stock or other action by EOG under the Stock
Restriction and Registration Agreement dated as of August 23, 1989,
that is primarily for the benefit of Enron will be borne by Enron.
(c) If at any time following the date of this Agreement
Enron takes any action that results in the loss by EOG of its status
as an "independent producer" under the provisions of Section 613A of
the United States Internal Revenue Code, Enron shall pay to EOG within
120 days following the end of the calendar year in which the loss of
such status occurs, and within 120 days following the end of each
subsequent calendar year during which EOG would otherwise be eligible
for independent producer status but for the actions of Enron, the
lesser of (a) $1 million and (b) an amount which, after payment of
applicable taxes, will compensate EOG for the additional income tax
liability of EOG for such calendar year because of EOG's loss of
independent producer status. The provisions of this Section 11(c) will
not apply to any calendar year after the year ending December 31,
2006.
(d) If Enron requests that EOG relocate its offices, and if
EOG agrees to do so, Enron will pay EOG's direct, out-of-pocket
expenses associated with such relocation of EOG's offices, including,
without limitation, moving expenses, expenses incurred in building out
or refurbishing the space in its new offices so that it is comparable
to EOG's existing space in the Enron Building, and expenses of
removing and reinstalling EOG's telecommunications and information
systems facilities. The agreement in this Section 11(d) will terminate
on the tenth anniversary of the date of this Agreement.
12. Equity Participation Agreement. EOG agrees that, in the
event that for any purpose EOG desires to issue additional shares of its
authorized but unissued capital stock or to sell treasury shares to any party
other than Enron, it will notify Enron at least thirty days in advance of such
issuance or sale (except in the case of shares issued or sold pursuant to
benefit plans or the exercise of any conversion option by holders of
convertible securities, in which case EOG will notify Enron promptly after EOG
is notified that the right to receive such stock will be or has been
exercised), and Enron will have the right to purchase additional shares of
capital stock of EOG as follows:
(a) If (i) at the time of such notice Enron owns capital
stock representing a majority of the ordinary voting power for the
election of directors of EOG and (ii) such issuance or sale to the
party other than Enron would cause Enron's ownership interest in EOG
to represent less than a majority of such voting power, Enron will
have the right to purchase such number of additional shares of Common
Stock of EOG as will cause it to own capital stock of EOG representing
a majority of the ordinary voting power for the election of directors
of EOG following the issuance or sale to the party other than Enron.
6
<PAGE> 7
(b) If (i) at the time of such notice Enron accounts for
the assets and operations of EOG on a consolidated basis for financial
reporting purposes but owns capital stock representing less than a
majority of the ordinary voting power for the election of directors of
EOG and (ii) such issuance or sale to the party other than Enron would
cause Enron's ownership interest in EOG to represent less than an
amount that Enron in its reasonable judgment deems appropriate to
permit it to continue to account for the assets and operations of EOG
on a consolidated basis for financial reporting purposes, then Enron
will have the right to purchase such number of additional shares of
Common Stock of EOG as will cause it to own capital stock of EOG
representing an amount that Enron in its reasonable judgment deems
appropriate to permit it to continue to account for the assets and
operations of EOG on a consolidated basis for financial reporting
purposes following the issuance or sale to the party other than Enron.
(c) If (i) at the time of such notice Enron accounts for
the assets and operations of EOG using the equity method for financial
reporting purposes and (ii) such issuance or sale to the party other
than Enron would cause Enron's ownership interest in EOG to represent
less than an amount that Enron in its reasonable judgment deems
appropriate to permit it to continue to account for the assets and
operations of EOG using the equity method for financial reporting
purposes, then Enron will have the right to purchase such number of
additional shares of Common Stock of EOG as will cause it to own
capital stock of EOG representing an amount that Enron in its
reasonable judgment deems appropriate to permit it to continue to
account for the assets and operations of EOG using the equity method
for financial reporting purposes following the issuance or sale to the
party other than Enron.
(d) Any purchase by Enron of additional shares of Common
Stock of EOG pursuant to this Section 12 shall be for cash, and the
consideration shall be payable and the shares issuable
contemporaneously with the issuance or sale to the party other than
Enron (except in the case of stock issued pursuant to benefit plans or
the exercise of any conversion option by holders of convertible
securities, in which case such closing shall occur on the fifth
business day after EOG has received timely notice from Enron that it
elects to exercise its right under this Section 12). The purchase
price thereof payable by Enron shall be 97% of the average closing
price per share of Common Shares in EOG reported at the close of
trading on the New York Stock Exchange for the 20 trading days
immediately preceding the second trading day prior to the issuance or
sale to the party other than Enron (reflecting a 3% private placement
discount). Enron will have registration rights with respect to such
shares that are identical to those it now has with respect to its
shares of capital stock of EOG, taking into consideration Section
11(b).
(e) Enron shall notify EOG in writing within five business
days after receipt of notice of the proposed issuance or sale of
capital stock by EOG whether Enron will exercise any right granted in
this Section 12 to purchase such additional shares of capital stock of
EOG. The failure of Enron to notify EOG of its election within such
five day period shall conclusively be deemed an election not to
exercise its right to purchase such stock.
7
<PAGE> 8
13. Existing Agreements. Except as expressly provided
herein, nothing in this Agreement shall impair or otherwise affect the duties
or obligations of Enron or EOG under existing agreements.
14. Confidentiality Agreements, etc. Each of the parties
agrees that if it or any of its subsidiaries or any other affiliate directly or
indirectly controlled by it executes any confidentiality agreement, area of
mutual interest agreement, standstill agreement or other agreement to which
neither the other party nor any of its affiliates is a party, but which
nevertheless purports to bind the other party or any of its affiliates, (i)
such agreement shall not be binding on the other party or any of its affiliates
(each party acknowledging that neither it nor any of its subsidiaries or
controlled affiliates has any authority to bind the other party or the other
party's affiliates), (ii) the other party and its affiliates shall have no
liability for any breach of such agreement, and (iii) it will indemnify, defend
and hold harmless the other party and its affiliates against any claims arising
from or relating to such agreement or any alleged breach thereof. In the event
that any third party requires that EOG execute any confidentiality or
standstill agreement as a condition to Enron's right to furnish to EOG the
information required by this Agreement in order to permit EOG to exercise any
right of first refusal granted by this Agreement, Enron's obligation in this
Agreement to furnish such information and its obligation to afford EOG such
right of first refusal will be conditioned upon the execution of such agreement
by EOG.
15. Outside Advisers. Each of the parties agrees that the
other may engage any investment banker or engineering, accounting, legal or
other professional adviser to perform services for it, notwithstanding the fact
that the other party may also employ such person, and each party waives the
right to claim that the other party breached any duty to it in connection with
such engagement. Nothing herein shall be deemed to grant any rights to any
person performing investment banking or other professional services for Enron
or EOG or to preclude any claim by either Enron or EOG against any person that
violates any duty owed by such person to Enron or EOG.
16. Right of EOG to Engage in Other Activities. The parties
acknowledge that nothing in this Agreement is intended to limit or restrict the
present or future lines of business of EOG and that this Agreement imposes upon
EOG no duty to refrain from competing with Enron in any line of business.
17. Notices. Without limiting any other manner in which
such an election may be made, any election by EOG under Section 4 not to pursue
a business opportunity involving E&P Business Assets may be made by the Chief
Executive Officer of EOG or such officer's designee.
18. Certain Expenses. Enron agrees to reimburse EOG for any
costs and expenses incurred by EOG in respect of consultants (including,
without limitation, legal and financial consultants) retained to assist any of
the independent directors of Enron Oil & Gas Company in their due diligence and
analysis in connection with this Agreement.
8
<PAGE> 9
19. Governing Law and Venue. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware without regard to principles of conflicts of law. The Parties agree
that the courts of the State of Delaware shall be the exclusive venue for any
judicial proceeding relating to the validity, interpretation or enforcement of
this Agreement.
EXECUTED as of the date first set forth above.
ENRON OIL & GAS COMPANY
By: /s/ FORREST E. HOGLUND
--------------------------------------
Name: Forrest E. Hoglund
Title: Chairman of the Board and
Chief Executive Officer
ENRON CORP.
By: /s/ J. CLIFFORD BAXTER
--------------------------------------
Name: J. Clifford Baxter
Title: Senior Vice President,
Corporate Development
9
<PAGE> 10
EXHIBIT A
CERTAIN DEFINED TERMS
In addition to such other defined terms as may be set forth in the
Agreement of which this Exhibit A is a part, as used in such Agreement or in
this Exhibit A, the following terms have the following respective meanings:
"E&P Business" means the oil and gas exploration, exploitation,
development and production business and includes without limitation (a) the
ownership of oil and gas property interests (including concessions and
production sharing agreements, and including agreements referred to in the
international oil and gas industry as "service contracts" whereby a company
involved in the E&P Business agrees to explore, develop and operate oil and gas
properties in return for a fee for each unit of production), (b) the ownership
and operation of real and personal property used or useful in connection with
exploration for Hydrocarbons, development of Hydrocarbon reserves upon
discovery thereof and production of Hydrocarbons from wells located on oil and
gas properties and (c) debt of or equity interests in corporations,
partnerships or other entities engaged in the exploration for Hydrocarbons, the
development of Hydrocarbon reserves and the production and sale of Hydrocarbons
from wells located on oil and gas properties in which the entity conducting the
E&P Business owns an interest; but such term does not include the oilfield
service business.
"E&P Business Assets" means interests in oil and gas properties
(including concessions, production sharing agreements and service contracts, as
such terms are used in clause (a) of the definition of E&P Business), real and
personal property used or useful in connection with the production and sale of
Hydrocarbons from wells located on oil and gas properties and notes and
securities issued by corporations, partnerships or other entities engaged in
the E&P Business.
"ECT" means Enron Capital & Trade Resources Corp., together with its
subsidiaries and other affiliated entities directly or indirectly controlled by
it.
"EII" means Enron International Inc., together with its subsidiaries
and other affiliated entities directly or indirectly controlled by it.
"Enron" means Enron Corp. together with its subsidiaries and other
affiliated entities directly or indirectly controlled by it, other than EOG and
entities directly or indirectly controlled by it.
"EOG" means Enron Oil & Gas Company together with its subsidiaries and
other affiliated entities directly or indirectly controlled by it.
"Finance and Trading Business" means the business of trading in
securities, arranging transactions in securities for the accounts of others,
providing funds or other assets to third parties
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in return for securities or other assets, underwriting securities or making
investments in securities or other assets.
"Hydrocarbons" means oil, gas or other liquid or gaseous hydrocarbons.
A-2
<PAGE> 12
EXHIBIT B
STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT
THIS STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT (the
"Agreement") dated as of December 9, 1997, is between ENRON CORP., an Oregon
corporation (the "Company"), and ENRON OIL & GAS COMPANY, a Delaware
corporation (the "Holder").
W I T N E S S E T H:
WHEREAS, the Holder owns a substantial number of options to purchase
shares of common stock, without par value (the "Common Stock"), of the Company
(the "Options");
WHEREAS, the Options are, and the Common Stock to be issued upon
exercise of such Options will be, "restricted securities" under the Securities
Act of 1933 (the "Securities Act"); and
WHEREAS, under the provisions of the Securities Act and the General
Rules and Regulations promulgated by the Securities and Exchange Commission
(the "SEC") thereunder, the Holder may be limited in the manner of selling the
shares of Common Stock owned by the Holder, absent registration under the
Securities Act of the sale of such Common Stock or the availability of another
exemption from the registration requirements of the Securities Act; and
WHEREAS, the Company and the Holder desire to set forth certain
registration rights as to such shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereby agree as follows:
1. Agreement Not to Sell or Transfer Restricted Stock For a
Period of Time. The Holder agrees that it will not offer, sell, contract to
sell or otherwise dispose of any Options or shares of Common Stock except
pursuant to a registration statement under the Securities Act or an applicable
exemption therefrom.
2. Demand Registration.
a. Request for Registration. As used in this Agreement,
"Restricted Stock" shall mean all shares of Common Stock issued upon exercise
of the Options, together with any securities issued or issuable with respect to
any such Common Stock by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Restricted Stock, once issued
such securities shall cease to be Restricted Stock when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been
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disposed of in accordance with such registration statement, (b) such securities
shall have been sold pursuant to Rule 144 (or any successor provision) under
the Securities Act, or (c) such securities shall have been otherwise
transferred, new certificates representing such securities not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of such securities shall not require registration or
qualification of such securities under the Securities Act or any similar state
law then in force. The Holder and any permitted assignee of the Holder's rights
and duties hereunder are referred to herein as the "Holders." Unless the
context otherwise requires, any reference herein to a Holder or Holders of
Restricted Stock shall be deemed to include reference to a holder of Options,
and any reference herein to a number of shares of Restricted Stock, to a
majority in number of shares of Restricted Stock or to all or a portion of
shares of Restricted Stock of any Holder or Holders shall be deemed to include
reference to a number of shares of Restricted Stock issuable upon exercise
thereof or to a combination of shares of Restricted Stock issuable and issued
upon exercise of Options (provided that the Company shall not be required to
file any registration statement covering resales of Options). Subject to the
conditions and limitations set forth in Section 5 of this Agreement, the Holder
or Holders of Restricted Stock holding in the aggregate at least 500,000 shares
of Restricted Stock may make a written request for registration under the
Securities Act of all or part of its or their Restricted Stock pursuant to this
Section 2 ("Demand Registration"), provided that the number of shares of
Restricted Stock proposed to be sold shall be at least 500,000 shares (subject
to appropriate adjustment for any stock dividend, stock split, combination,
recapitalization, merger, consolidation, reorganization or other occurrence
affecting the number of shares of Restricted Stock). Such request will specify
the aggregate number of shares of Restricted Stock proposed to be sold and will
also specify the intended method of disposition thereof. Within ten days after
receipt of such request, the Company will give written notice of such
registration request to all other Holders of Restricted Stock and include in
such registration all Restricted Stock with respect to which the Company has
received written requests for inclusion therein within fifteen business days
after the receipt by the applicable Holder of the Company's notice. Each such
request will also specify the aggregate number of shares of Restricted Stock to
be registered and the intended method of disposition thereof. No other party,
including the Company (but excluding another Holder of Restricted Stock), shall
be permitted to offer securities under any such Demand Registration unless the
Holder or Holders requesting the Demand Registration shall consent in writing.
b. Priority on Demand Registrations. If the Holders of a
majority in number of shares of the Restricted Stock to be registered in a
Demand Registration so elect, the offering of such Restricted Stock pursuant to
such Demand Registration shall be in the form of an underwritten offering. In
such event, if the managing underwriter or underwriters of such offering advise
the Company and the Holders in writing that in their opinion the aggregate
amount of Restricted Stock requested to be included in such offering is so
large that it will materially and adversely affect the success of such
offering, the Company will include in such registration the aggregate number of
shares of Restricted Stock which in the opinion of such managing underwriter or
underwriters can be sold without any such material adverse effect, and such
number of shares shall be allocated pro rata among the Holders of Restricted
Stock on the basis of the number of shares of Restricted Stock requested to be
included in such registration by their Holders. To the extent Restricted Stock
so
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requested to be registered are excluded from the offering, then the Holders of
such Restricted Stock shall have the right to one additional Demand
Registration under this Section with respect to such Restricted Stock, provided
that the failure of such Restricted Stock to be registered is through no fault
of such Holder.
c. Selection of Underwriters and Counsel. If any Demand
Registration is in the form of an underwritten offering, the Holders of a
majority in number of shares of Restricted Stock to be registered will select
and obtain the services of the investment banker or investment bankers and
manager or managers that will administer the offering and the counsel to such
investment bankers and managers; provided that such investment bankers,
managers and counsel must be approved by the Company, which approval shall not
be unreasonably withheld.
3. Piggyback Registration. If the Company proposes to file a
registration statement under the Securities Act with respect to an offering for
its own account of any class of its equity securities (other than a
registration statement on Form S-8 (or any successor form) or any other
registration statement relating solely to employee benefit plans or filed in
connection with an exchange offer, a transaction to which Rule 145 under the
Securities Act applies or an offering of securities solely to the Company's
existing stockholders), then the Company shall in each case give written notice
of such proposed filing to the Holders of Restricted Stock as soon as
practicable (but no later than five business days) before the anticipated
filing date, and such notice shall offer such Holders the opportunity to
register such number of shares of Restricted Stock as each such Holder may
request. Each Holder of Restricted Stock desiring to have such Holder's
Restricted Stock included in such registration statement shall so advise the
Company in writing within five business days after the date of Company's
notice, setting forth the amount of such Holder's Restricted Stock for which
registration is requested. If the Company's offering is to be an underwritten
offering, the Company shall, subject to the further provisions of this
Agreement, use its reasonable efforts to cause the managing underwriter or
underwriters of a proposed underwritten offering to permit the Holders of the
Restricted Stock, requested to be included in the registration for such
offering, to include such securities in such offering on the same terms and
conditions as any similar securities of the Company included therein. Moreover,
if the registration of which the Company gives notice does involve an
underwriting, the right of each Holder to registration pursuant to this Section
3 shall, unless the Company otherwise assents, be conditioned upon such
Holder's participation as a seller in such underwriting and its execution of an
underwriting agreement with the managing underwriter or underwriters selected
by the Company. Notwithstanding the foregoing, if the managing underwriter or
underwriters of such offering deliver a written opinion to the Holders of
Restricted Stock that either because of (A) the kind of securities which the
Holders, the Company and any other person or entities intend to include in such
offering or (B) the size of the offering which the Holders, the Company and
other persons intend to make, the success of the offering would be materially
and adversely affected by inclusion of the Restricted Stock requested to be
included, then (i) in the event that the size of the offering is the basis of
such managing underwriter's opinion, the number of shares to be offered for the
accounts of Holders of Restricted Stock shall be reduced pro rata or to the
extent necessary to reduce the total amount of securities to be included in
such offering to the amount recommended by such managing underwriter or
underwriters; provided that if securities are being
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<PAGE> 15
offered for the account of other persons or entities as well as the Company,
such reduction shall not represent a greater fraction of the number or kind of
securities intended to be offered by Holders of Restricted Stock than the
fraction of similar reductions imposed on such other persons or entities over
the amount of securities of such kind they intended to offer; and (ii) in the
event that the combination of securities to be offered is the basis of such
managing underwriter's opinion, (x) the Restricted Stock to be included in such
offering shall be reduced as described in clause (i) above (subject to the
proviso in clause (i)) or, (y) if the actions described in clause (x) would, in
the judgment of the managing underwriter, be insufficient to substantially
eliminate the adverse effect that inclusion of the Restricted Stock requested
to be included would have on such offering, such Restricted Stock will be
excluded from such offering. Any Restricted Stock excluded from an underwriting
shall be withdrawn from registration and shall not, without the consent of the
Company and the manager of the underwriting, be transferred in a public
distribution prior to the earlier of 90 days (or such other shorter period of
time as the manager of the underwriting may require) after the effective date
of the registration statement or 150 days after the date the Holders of such
Restricted Stock are notified of such exclusion.
4. Registration Procedures. Whenever, pursuant to Section 2 or 3,
the Holders of Restricted Stock have requested that any Restricted Stock be
registered, the Company will, subject to the provisions of Section 5, use all
reasonable efforts to effect the registration and the sale of such Restricted
Stock in accordance with the intended method of disposition thereof as promptly
as practicable, and in connection with any such request, the Company will:
a. in connection with a request pursuant to Section 2,
prepare and file with the SEC, not later than 60 days after receipt of a
request to file a registration statement with respect to Restricted Stock, a
registration statement on any form for which the Company then qualifies and
which counsel for the Company shall deem appropriate and which form shall be
available for the sale of such Restricted Stock in accordance with the intended
method of distribution thereof, and use its reasonable efforts to cause such
registration statement to become effective; provided that if the Company shall
furnish to the Holders making such a request a certificate signed by either the
chief financial officer or the chief accounting officer of the Company stating
that in his good faith judgment it would be significantly disadvantageous to
the Company for such a registration statement to be filed on or before the date
filing would be required, the Company shall have an additional period of not
more than 90 days within which to file such registration statement; and
provided further, (i) that before filing a registration statement or prospectus
or any amendments or supplements thereto, the Company will furnish to one
counsel selected by the Holders of a majority in number of shares of the
Restricted Stock covered by such registration statement copies of all such
documents proposed to be filed, which documents will be subject to the review
of such counsel, and (ii) that after the filing of the registration statement,
the Company will promptly notify each selling Holder of Restricted Stock of any
stop order issued or, to the knowledge of the Company, threatened by the SEC
and take all reasonable actions to prevent the entry of such stop order or to
remove it if entered;
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b. in connection with a registration pursuant to Section
2, prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective for a period of not
less than 270 days or such shorter period as shall terminate when all
Restricted Stock covered by such registration statement have been sold (but not
before the expiration of the 90-day period referred to in Section 4(3) of the
Securities Act and Rule 174 thereunder, if applicable), and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the Selling Holders
thereof set forth in such registration statement;
c. as soon as reasonably practicable, furnish to each
selling Holder, prior to filing a registration statement, copies of such
registration statement as proposed to be filed, and thereafter furnish to such
selling Holder such number of copies of such registration statement, each
amendment and supplement thereto (in each case, if specified by such Holder,
including all exhibits thereto), the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents as
such selling Holder may reasonably request in order to facilitate the
disposition of the Restricted Stock owned by such selling Holder;
d. with reasonable promptness, use its reasonable efforts
to register or qualify such Restricted Stock under such other securities or
blue sky laws of such jurisdictions within the United States as any selling
Holder reasonably (in light of such selling Holder's intended plan of
distribution) requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such selling Holder to consummate
the disposition in such jurisdictions of the Restricted Stock owned by such
selling Holder; provided that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subsection d., (ii) subject itself to taxation
in any such jurisdiction or (iii) consent to general service of process in any
such jurisdiction;
e. with reasonable promptness, use reasonable efforts to
cause the Restricted Stock covered by such registration statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the Company to
enable the selling Holder or Holders thereof to consummate the disposition of
such Restricted Stock;
f. promptly notify each selling Holder of such Restricted
Stock, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the occurrence of any event known to the
Company requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Restricted Stock, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and promptly make
available to each selling Holder any such supplement or amendment;
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g. in connection with a request pursuant to Section 2,
enter into an underwriting agreement in customary form, the form and substance
of such underwriting agreement being subject to the reasonable satisfaction of
the Company;
h. with reasonable promptness make available for
inspection by any selling Holder, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such selling Holder or underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the
"Records"') as shall be reasonably necessary to enable them to exercise their
due diligence responsibility, and cause the Company's officers and employees to
supply all information reasonably requested for such purpose by any such
Inspector in connection with such registration statement; provided, however,
that the selection of any Inspector other than a selling Holder shall be
subject to the consent of the Company, which shall not be unreasonably
withheld. Each Inspector that actually reviews Records supplied by the Company
that include information that the Company determines, in good faith, to be
confidential ("Confidential Information") shall be required, prior to any such
review, to execute an agreement with the Company providing that such Inspector
shall not disclose any Confidential Information unless such disclosure is
required by applicable law or legal process. Each selling Holder of Restricted
Stock agrees that Confidential Information obtained by it as a result of such
inspections shall not be used by it as the basis for any transactions in
securities of the Company unless and until such information is made generally
available to the public. Each selling Holder of Restricted Stock further agrees
that it will, upon learning that disclosure of Confidential Information is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at its expense, to undertake appropriate action to prevent
disclosure of the Confidential Information. Each selling Holder also agrees
that the due diligence investigation made by the Inspectors shall be conducted
in a manner which shall not unreasonably disrupt the operations of the Company
or the work performed by the Company's officers and employees;
i. in the event such sale is pursuant to an underwritten
offering, use its reasonable efforts to obtain a comfort letter or letters from
the Company's independent public accountants in customary form and covering
such matters of the type customarily covered by comfort letters as the managing
underwriter reasonably requests;
j. otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering a
period of twelve months, beginning within three months after the effective date
of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act; and
k. with reasonable promptness, use its reasonable efforts
to cause all such Restricted stock to be listed on each securities exchange on
which the Common Stock of the Company is then listed, provided that the
applicable listing requirements are satisfied.
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Each selling Holder of Restricted Stock agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in subsection f. hereof, such selling Holder will forthwith discontinue
disposition of Restricted Stock pursuant to the registration statement covering
such Restricted Stock until such selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subsection f. hereof, and,
if so directed by the Company, such selling Holder will deliver to the Company
(at the Company's expense) all copies, other than permanent file copies then in
such selling Holder's possession, of the prospectus covering such Restricted
Stock current at the time of receipt of such notice. In the event the Company
shall give any such notice, the Company shall extend the period during which
such registration statement shall be maintained effective pursuant to this
Agreement (including the period referred to in subsection b.) by the number of
days during the period from and including the date of the giving of such notice
pursuant to subsection f. hereof to and including the date when each selling
Holder of Restricted Stock covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
subsection f. hereof. Each selling Holder also agrees to notify the Company if
any event relating to such selling Holder occurs which would require the
preparation of a supplement or amendment to the prospectus so that such
prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
5. Conditions and Limitations.
a. The Company's obligations under Section 2 shall be
subject to the following limitations:
i. the Company need not file a registration
statement either (x) during the period starting with the date 60 days prior to
the Company's estimated date of filing of, and ending 90 days after the
effective date of, any registration statement pertaining to securities of the
Company (other than a registration of securities in a Rule 145 transaction or
exchange offer or with respect to an employee benefit plan or dividend
reinvestment plan), provided that if such Company registration statement is not
filed within 90 days after the first date on which the Company notifies a
Holder of Restricted Stock that it will delay a Demand Registration pursuant to
this clause (x), the Company may not further postpone such Demand Registration
pursuant to this clause; or (y) during the period specified in the first
proviso of subparagraph a. of Section 4;
ii. the Company shall not be required to furnish
any audited financial statements other than those audited statements
customarily prepared at the end of its fiscal year, or to furnish any unaudited
financial information with respect to any period other than its regularly
reported interim quarterly periods unless in the absence of such other
unaudited financial information the registration statement would contain an
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
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iii. except as provided in Section 2.b., the
Company shall not be required to file more than two Demand Registrations. A
registration statement will not count as a Demand Registration until it has
become effective; and
iv. the Company shall have received the
information and documents specified in Section 6 and each selling Holder shall
have observed or performed its other covenants and conditions contained in such
section and Section 8.
b. The Company's obligation under Section 3 shall be
subject to the limitations and conditions specified in such section and in
clauses (i), (ii) and (iv) of subsection a. of this Section 5, and to the
condition that the Company may at any time terminate its proposal to register
its shares and discontinue its efforts to cause a registration statement to
become or remain effective.
6. Information from and Certain Covenants of Holders of Restricted
Stock. Notices and requests delivered to the Company by Holders for whom
Restricted Stock are to be registered pursuant to this Agreement shall contain
such information regarding the Restricted Stock to be so registered, the Holder
and the intended method of disposition of such Restricted Stock as shall
reasonably be required in connection with the action to be taken. Any Holder
whose Restricted Stock is included in a registration statement pursuant to this
Agreement shall execute all consents, powers of attorney, registration
statements and other documents reasonably required to be signed by it in order
to cause such registration statement to become effective. Each selling Holder
covenants that, in disposing of such Holder's shares, such Holder will comply
with Regulation M of the SEC adopted pursuant to the Securities Exchange Act of
1934 (the "Exchange Act").
7. Registration Expenses. All Registration Expenses (as defined
herein) will be borne by the Company. Underwriting discounts and commissions
applicable to the sale of Restricted Stock shall be borne by the Holder of the
Restricted Stock to which such discount or commission relates, and each selling
Holder shall be responsible for the fees and expenses of any legal counsel,
accountants or other agents retained by such selling Holder and all other
out-of-pocket expenses incurred by such selling Holder in connection with any
registration under this Agreement.
As used herein, the term Registration Expenses means all expenses
incident to the Company's performance of or compliance with this Agreement
(whether or not the registration in connection with which such expenses are
incurred ultimately becomes effective), including without limitation all
registration and filing fees, fees and expenses of compliance with securities
or blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Restricted Stock), rating agency
fees, printing expenses, messenger and delivery expenses incurred by the
Company, internal expenses incurred by the Company (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the fees and expenses incurred in connection with
the listing of the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed, and fees and
disbursements of counsel for the Company and its independent certified public
accountants (including the expenses of any special audit or comfort letters
required by or incident to such
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performance), securities acts liability insurance (if the Company elects to
obtain such insurance), the reasonable fees and expenses of any special experts
retained by the Company in connection with such registration and the fees and
expenses of other persons retained by the Company.
8. Indemnification; Contribution.
a. Indemnification by the Company. The Company agrees to
indemnify and hold harmless each selling Holder of Restricted Stock, its
officers, directors and agents and each person, if any, who controls such
selling Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement
of a material fact contained in any registration statement or prospectus
relating to the Restricted Stock or in any amendment or supplement thereto or
in any preliminary prospectus relating to the Restricted Stock, or arising out
of or based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of, or are based upon, any such untrue statement or omission
or allegation thereof based upon information furnished in writing to the
Company by such selling Holder or on such selling Holder's behalf expressly for
use therein and provided further, that with respect to any untrue statement or
omission or alleged untrue statement or omission made in any preliminary
prospectus, the indemnity agreement contained in this subsection shall not
apply to the extent that any such loss, claim, damage, liability or expense
results from the fact that a copy of the final prospectus was not sent or given
to the person asserting any such losses, claims, damages, liabilities or
expenses at or prior to the written confirmation of the sale of the Restricted
Stock concerned to such person. The Company also agrees to include in any
underwriting agreement with any underwriters of the Restricted Stock provisions
indemnifying and providing for contribution to such underwriters, their
officers and directors and each person who controls such underwriters on
substantially the same basis as the provisions of this Section 8 indemnifying
and providing for contribution to the selling Holders.
b. Indemnification by Holders of Restricted Stock. Each
selling Holder agrees to indemnify and hold harmless the Company, its officers,
directors and agents and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to the
Restricted Stock or in any amendment or supplement thereto or in any
preliminary prospectus relating to the Restricted Stock, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, provided (i) that such losses, claims, damages, liabilities or
expenses arise out of, or are based upon, any such untrue statement or omission
or allegation thereof based upon information furnished in writing to the
Company by such selling Holder or on such selling Holder's behalf expressly for
use therein, (ii) that with respect to any untrue statement or
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omission or alleged untrue statement or omission made in any preliminary
prospectus, the indemnity agreement contained in this subsection shall not
apply to the extent that any such loss, claim, damage, liability or expense
results from the fact that a copy of the final prospectus was not sent or given
to the person asserting any such losses, claims, damages, liabilities or
expenses at or prior to the written confirmation of the sale of the Restricted
Stock concerned to such person, and (iii) that no selling Holder shall be
liable for any indemnification under this Section 8 in an aggregate amount
which exceeds the total net proceeds (before deducting expenses) received by
such selling Holder from the offering. Each selling Holder also agrees to
include in any underwriting agreement with underwriters of the Restricted Stock
provisions indemnifying and providing for contribution to such underwriters,
their officers and directors and each person who controls such underwriters on
substantially the same basis as the provisions of this Section 8 indemnifying
and providing for contribution to the Company.
c. Conduct of Indemnification Proceedings. If any action
or proceeding (including any governmental investigation) shall be brought or
asserted against any indemnified party in respect of which indemnity may be
sought from an indemnifying party, the indemnifying party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such indemnified party, and shall assume the payment of all expenses. Such
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party has agreed to pay such fees and expenses, or (ii) the
indemnifying party shall have failed to assume the defense of such action or
proceeding and employ counsel reasonably satisfactory to such indemnified party
or (iii) the named parties to any such action or proceeding (including any
impleaded parties) include both such indemnified party and such indemnifying
party, and such indemnified party shall have been advised by counsel that there
may be one or more legal defenses available to such indemnified party which are
different from or additional to those available to the indemnifying party (in
which case, if such indemnified party notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action or proceeding on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (together with appropriate
local counsel) at any time for such indemnified party, which firm shall be
designated in writing by such indemnified party). The indemnifying party shall
not be liable for any settlement of any such action or proceeding effected
without its written consent, but if settled with its written consent, or if
there is a final judgment for the plaintiff in any such action or proceeding,
the indemnifying party agrees to indemnify and hold harmless such indemnified
party from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment.
d. Contribution. If the indemnification provided for in
this Section 8 is unavailable to the Company or the selling Holders in respect
of any losses, claims, damages,
B-10
<PAGE> 22
liabilities or judgments referred to therein, then each such indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and judgments, in such proportion as is
appropriate to reflect the relative fault of each such party in connection with
such statements or omissions, as well as any other relevant equitable
considerations. The relative fault of each such party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the selling Holders agree that it would not
be just and equitable if contribution pursuant to this Section 8.d.
were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigation or
defending any such action or claim. Notwithstanding the provisions of
this Section 8.d., no selling Holder shall be required to contribute
any amount in excess of the amount by which the total price at which
the Restricted Stock of such selling Holder were offered to the public
exceeds the amount of any damages which such selling Holder has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
9. Cashless Exercises. The Company agrees to cooperate with the
Holder in order to permit the Holder to effect "cashless exercises" of Options.
10. Amendments. This Agreement may be amended or modified upon the
written consent thereto of the Company and the Holders of not less than 66-2/3%
of Restricted Stock.
11. Assignments. This Agreement shall be binding on and inure to the
benefit of the respective successors and assigns of the parties hereto.
12. Entire Agreement; Governing Law. This Agreement constitutes the
entire agreement of the parties relating to the subject matter hereof; all
prior or contemporaneous written or oral agreements are merged herein; this
Agreement shall be governed by the laws of the State of Texas.
13. Notices. Any notice, request, instruction, correspondence or
other document to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered personally or
mailed, postage prepaid, or by telegram or telecopier, as follows:
B-11
<PAGE> 23
If to the Company:
Enron Corp.
1400 Smith Street
P. O. Box 1188
Houston, Texas 77251-1188
Attention: Vice President and Secretary
Telecopier No.: 713-853-3920
If to the Holder:
Enron Oil & Gas Company
1400 Smith Street
Houston, Texas 77002
Attention: General Counsel
Telecopier No.: 713-646-2750
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. Any party may change any address
to which Notice is to be given to it by giving Notice as provided above of such
change of address.
IN WITNESS WHEREOF, the Company and the Holder have caused this
Agreement to be signed by their respective officers thereunto duly authorized.
ENRON CORP.
By: /s/ J. CLIFFORD BAXTER
---------------------------------------
Name: J. Clifford Baxter
Title: Senior Vice President, Corporate
Development
ENRON OIL & GAS COMPANY
By: /s/ FORREST E. HOGLUND
---------------------------------------
Name: Forrest E. Hoglund
Title: Chairman of the Board and
Chief Executive Officer
B-12
<PAGE> 24
EXHIBIT C
AGREEMENTS RELATING TO QATAR PROJECT
Project Ownership
o 80% Enron-20% EOG
Project Scope
o Enron's 35% interest in Project Company to be formed with QGPC which
will own and operate all facilities in Qatar relating to five million
tons per year LNG facility including gas production and transmission
facilities, gas liquefication facilities and export facilities at Ras
Laffan
o any future expansions using the Project Company facilities will also
be split on an 80/20 basis -- all other activities will be outside the
scope of the Project and will be subject to general principles of the
Agreement
o services to be provided by Enron to Project Company pursuant to
Project Services Agreement will be allocated among Enron and EOG based
on available expertise with a goal of an 80/20 allocation
Lead
o Enron will be overall Lead Party for Project
o Enron to select operator of onshore facilities including LNG plant,
condensate stabilization and LNG shipping (if necessary)
o EOG will represent Enron's interest in the selection of the operator
of the License Area, gathering system and transmission system to the
shore
Costs
o all historic and future costs to be shared 80% Enron and 20% EOG in
accordance with Exhibit F provided that:
o costs allocated to Project shall include Marketing Costs including
Israel, Jordan and India, however EOG's share of India Marketing
Costs shall be limited to $8 million of India Marketing Costs
incurred prior to the time that Enron Fuel Services India Limited
is a party to contracts for it to sell at least 5 million tons
per year of LNG or regassified LNG from the Project. The term
"Marketing Costs" means the following costs and expenditures
incurred in connection with the identification and solicitation
of prospective purchasers of LNG produced by the Project or
natural gas obtained from the regasification of such LNG, and the
negotiation and execution of definitive agreements for such
purchases:
1. Salaries, wages and benefit costs (including, without
limitation, costs of holidays, vacation, sickness and
disability benefits, living and housing allowances, travel
time, bonuses and other customary allowances applicable to
such employees, as well as
C-1
<PAGE> 25
costs of group life insurance, group medical insurance,
hospitalization, retirement and other benefit plans) of
employees directly engaged in such activities, and
expenditures or contributions made pursuant to assessments
imposed by governmental authorities for payments with respect
to such salaries, wages and benefits or on account of such
employees;
2. Reasonable expenses (including, without limitation, travel
costs) of those employees referred to in clause 1 above
incurred in connection with such activities;
3. Costs of relocating employees to or from the countries in
which such prospective purchasers are located (allocated to
the Project on an equitable basis if such employees will be
engaged in other activities in addition to those referred to
above);
4. Costs of maintaining any offices in the countries in which
such prospective purchasers are located (allocated to the
Project on an equitable basis if such offices are also used
for other activities in addition to those referred to above);
5. Charges for exclusively owned equipment of Enron located in
the countries in which such prospective purchasers are
located, at rates not to exceed the average commercial rates
of non-affiliated third parties then prevailing for like
equipment for use in such area (allocated to the Project on
an equitable basis if such equipment is also used for other
activities in addition to those referred to above);
6. The cost of services provided by third parties, including,
without limitation, fees and expenses of legal, accounting,
tax, public relations, marketing and other consultants that
are reasonably necessary for the activities described above;
and
7. Any other costs and expenditures incurred by Enron that are
reasonably necessary for the activities described above.
If employees are engaged in other activities in addition to the
solicitation of purchasers, the cost of such employees shall be
allocated to the Project on an equitable basis.
o historic costs allocated to Project shall include costs incurred
with respect to Oman (excluding power generation) but shall
exclude costs incurred with respect to Yemen
o each party's interest shall bear its pro rata share of and be
reduced proportionately by all existing commitments, if any,
including pursuant to agreements with Mohamed Ajami and his
related entities.
Risks
o all risks incident to the FOB LNG Sales Contract take or pay
commitments which are not funded as due by payments from other sources
shall be borne 80% Enron and 20% EOG
C-2
<PAGE> 26
o EOG shall participate in 20% of the costs and benefits of any risk
mitigation strategies employed by Enron with respect to the risk of
the take or pay commitment
o all risks, obligations and credit support relating to Project Company
(including financing of QGPC equity share) and all obligations under
the Project documents to be borne 80% Enron and 20% EOG
o EOG to provide credit support for required Enron guarantees of EOG
share of obligations
Co-Ownership Issues
o as set forth on Exhibit F with respect to joint 35% interest except:
o Enron designates all Enron directors on Project Company board
o Enron votes all shares of Project Company stock owned by Enron or
EOG
Refund of Amounts Paid
o if within six months following the execution of the Agreement Enron
determines not to supply energy from the Project to Enron's Dabhol
power project in India, Enron will refund to EOG the lesser of (a)
$3,000,000 and (b) amounts attributable to the Project and included in
amounts payable by EOG to Enron for purposes of completing the
Settlement Payment (as defined in Exhibit F) and any other amounts
paid by EOG to Enron in respect of the Qatar Project through the date
of such determination.
C-3
<PAGE> 27
EXHIBIT D
AGREEMENTS RELATING TO MOZAMBIQUE PROJECT
Project Ownership
o 80% Enron-20% EOG
o each party's interest shall bear its pro rata share of and be reduced
proportionately by all existing commitments including commitments, if
any, to William J. Friedman and related companies
Project Scope
o all operations and activities from the Pande gas reservoir to FOB
sales of steel at Maputo, including exploration, drilling, production,
gathering, gas transmission, gas sales, steel plant construction and
operation and sales of steel production
o any participation interest in iron ore reduction plant in South Africa
using gas from Mozambique gas reservoir
o any future expansions involving the Project Company facilities will be
split 80% Enron-20% EOG
o all other projects in Mozambique (including new License Areas) or
South Africa will not be considered part of the Project and may be
pursued independently by Enron and EOG in accordance with the
Agreement
Lead
o Enron will be the Lead Party in accordance with Exhibit F except:
o Enron will designate the operator of gas pipeline and Maputo
steel plant provided that the terms of such operatorship will be
on an arms-length basis
o EOG will represent Enron's interest in connection with the
designation of the operator of License Area and gathering system
provided that the terms of such operatorship will be on an
arms-length basis
Costs and Risks
o all historic and future costs and risks relating to the Project to be
shared 80% Enron and 20% EOG in accordance with Exhibit F
D-1
<PAGE> 28
EXHIBIT E
AGREEMENTS RELATING TO UZBEKISTAN PROJECT
Co-Ownership
o 80% EOG-20% Enron
o Each party's interest will bear its pro rata share of and be reduced
proportionately by the following commitments:
o Uzbekneftegaz has a carried interest of 44.9%
o MD International Petroleum, Inc., has the option to acquire 10%
of the working interest available to Enron and EOG, but MDI's
interest will never be greater than 5% or less than 4.5% of 100%
of all interests. MDI pays its share of Uzbekneftegaz' carried
interest.
o Botas International Ltd. has been offered the right to acquire up
to 40% of the working interest available to Enron and EOG in the
project for the following consideration: (i) cash payment of
$250,000; (ii) the obligation to pay 100% of the incremental
project development costs from the date a joint development
agreement is signed with Botas until cumulative expenditures paid
by Botas equals $3.76 million; and (iii) the obligation to pay
100% of the cost to re-enter and production test two drilled,
cased and suspended gas development wells in Kandym Field. Botas
pays its share of Uzbekneftegaz' carried interest.
Project Scope
o Co-owned activities in Uzbekistan limited to upstream activities:
o Gas reservoir to export pipeline including exploration, drilling,
production, gathering, gas processing, delivery of gas to export
pipeline, marketing of liquids and other valuable products
o Downstream activities including contract services, transmission,
marketing, provision of services to national natural gas
infrastructure projects, procurements of pipeline capacity and
transmission and marketing of natural gas to Gazprom or final market
shall be outside the Project Scope and will be subject to the general
principles of the Agreement
o EOG and Enron agree on transfer pricing of gas at suitable location
(Uzbek-Kazak border or plant tailgate)
Lead
o EOG will be Lead Party for Project
Costs
o all historic and future costs attributable to Project will be shared
80% EOG and 20% Enron in accordance with Exhibit F
Risks
o all historic and future costs and risks associated with the Project
shall be borne 80% EOG- 20% Enron in accordance with Exhibit F
E-1
<PAGE> 29
EXHIBIT F
STANDARD COST SHARING AND CO-OWNERSHIP MATTERS
Historic Costs
o all historic third party costs previously incurred by Enron and EOG in
connection with each Project through a date to be agreed upon (the
"Settlement Date") will be pooled and reallocated between EOG and
Enron based on their agreed ownership of the Project, and the party
that has borne less than its share of such costs will make a payment
(the "Settlement Payment") to the other party on the date of execution
of the Agreement so that each party bears its share of the costs
previously incurred
o for purposes of determining the Settlement Payment, internal costs
will be allocated to the Project in accordance with standard Company
procedures and will be reviewed by the parties prior to the date of
execution of the Agreement and, unless otherwise agreed, will be
pooled and redistributed between EOG and Enron based on their agreed
ownership of the Project
o for purposes of determining the Settlement Payment, unless otherwise
agreed, such third party and internal costs incurred prior to the date
of the Agreement will be settled on a project-by-project basis by a
payment from Enron to EOG or from EOG to Enron as the case may be on
the Date of execution of the Agreement
o The settlement on the date of execution of the Agreement of all
historic third party and internal costs incurred prior to and
including the Settlement Date shall be final and binding and shall not
be subject to adjustment or change by either party for any reason
(including, without limitation, accounting errors, the failure to
include costs properly allocable to the Project and the inclusion of
costs not properly allocable to the Project).
Future Costs
o all future costs, risks and liabilities incurred with respect to the
Project from and after the Settlement Date (third party and internal)
will be borne and paid in accordance with ownership interest in the
Project
o future costs will be incurred in accordance with approved development
budgets
o internal costs will be allocated to the Project in accordance with
prior practice
o individual performance bonuses attributable to the Project will be
included as Project Costs
o with respect to each Project, the costs incurred by each party will be
pooled and balanced by appropriate cash transfers on a quarterly basis
Co-Ownership Matters
o all decisions as to Project structure, terms and conditions of project
documents and project financing, selection of third party vendors and
contractors will be made by Lead Party on behalf of both parties
o in the event Lead Party elects to bring a strategic partner into the
Project, both parties' interests will be reduced pro rata
o in the event either party elects to sell down their interest in
Project, it will offer the Other Party the opportunity to participate
in such sale on a pro rata basis if possible
o if Lead Party elects to sell all or a majority of its interest to a
Buyer who requires acquisition of all or a majority of the interest,
Other Party shall participate in such sale on a pro rata basis
F-1
<PAGE> 30
o directors attributable to EOG's and Enron's interest in any joint
entity with third parties formed with respect to Project will be
designated by Lead Party
F-2
<PAGE> 31
EXHIBIT G
NON-EXCLUSIVE LICENSE AGREEMENT
This Non-Exclusive License Agreement ("Agreement") is entered into as of
December 9, 1997, by and between Enron Corp., a corporation organized and
existing under the laws of the State of Oregon with its headquarters at 1400
Smith Street, Houston, Texas 77002 ("Licensor"), and Enron Oil & Gas Company, a
corporation organized and existing under the laws of the State of Delaware with
its headquarters at 1400 Smith, Houston, Texas 77002, on behalf of itself and
its subsidiaries, whether existing now or in the future (collectively referred
to as "Licensee").
WHEREAS, Licensor is the owner of the names and/or marks listed on
Attachment A, attached hereto and incorporated for all purposes herein ("Names
and/or Marks"), any domestic or foreign Registrations or Applications for
registrations of the Names and/or Marks, as well as the goodwill and business
interest associated with the Names and/or Marks; and
WHEREAS, Licensee is desirous of using the Names and/or Marks in
association with the business, goods and services of Licensee in accordance
with the terms and conditions of this Agreement. Licensee is also desirous of
obtaining a right and license in certain names and/or marks that may be adopted
or acquired in the future by Licensor which become a member of the Enron Corp.
family of names and marks.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the receipt and sufficiency of which are hereby acknowledged,
Licensor and Licensee agree as follows:
1. Except as otherwise provided herein, Licensor hereby grants to
Licensee, and Licensee accepts, a non-exclusive, non-transferable, royalty-free
and worldwide right and license to adopt and use the Names and/or Marks in
connection with Licensee's business, goods and services. Licensee represents
and warrants that it is not now using, and shall not in the future use, any of
Licensor's trade names, trademarks or service marks that are not listed on
Exhibit A. Provided, however, in the case of the names and marks ENRON OIL &
GAS COMPANY, ENRON OIL & GAS, ENRON GAS & OIL, ENRON OIL or ENRON EXPLORATION
Licensee may, without the prior written permission of Licensor, adopt and
commence using any such name and mark with various suffixes thereon that denote
countries, geographical areas, or limited liability (e.g., ENRON OIL & GAS
COMPANY--INDIA or ENRON OIL & GAS COMPANY--FAR EAST.) Each such derivation of
any such root name and mark shall be a Name and Mark owned by Licensor and the
rights and obligations of the parties with respect to such Name and Mark shall
be governed by this Agreement. Upon request, Licensee shall provide Licensor
with a listing of all such Names and Marks. If [i] Licensor hereafter adopts
(or acquires) and uses any other terms or logos as trade names, trademarks or
service marks, and [ii] Licensor allows its entire family of companies to use
such trade names, trade marks, or service marks, and [iii] Licensor gives
Licensee prior written authorization to use such terms or logos, Licensee's use
of such terms or logos shall be pursuant to the terms and conditions of this
Agreement; however, until such time as Licensor grants Licensee written
authorization to use such additional trade names, trademarks and/or service
marks, Licensee shall have no right or license to use such additional trade
names, trademarks, and service marks and Licensee agrees that it shall not
G-1
<PAGE> 32
use such additional trade names, trademarks and service marks without such
prior written authorization.
2. Notwithstanding anything to the contrary provided herein, Licensee
agrees that it shall not use the Names and/or Marks, or any terms confusingly
similar thereto, in connection with the marketing or distribution of oil, gas
or any other goods or services in India; provided that the foregoing will not
prohibit Licensee from (a) using the Names and/or Marks in performing services
(other than marketing of oil, gas or any other goods or services for third
parties) under any joint operating agreements relating to oil or gas properties
in or offshore of India or (b) entering into contracts providing for sales for
Licensee's own account to the Government of India or entities controlled by it
if and to the extent such sales are required or permitted to be made pursuant
to the terms of any production sharing agreement or similar agreement.
3. Licensee shall use the Names and/or Marks only as authorized herein by
Licensor and in accordance with such standards of quality as Licensor may
establish. Licensor shall at all times remain the owner of the Names and/or
Marks and related Applications and Registrations; all use of the Names and/or
Marks by Licensee shall inure to the benefit of Licensor; and Licensee shall
obtain no right, title or interest in and to the Names and/or Marks or any
other word, words, term, design, name or mark that is confusingly similar
thereto other than the non-exclusive license granted herein.
4. The term of this Agreement shall be one year from the date of this
Agreement. The non-exclusive license granted herein shall be renewed and
extended automatically and repetitively for similar terms unless otherwise
terminated in accordance with the provisions set forth herein.
5. This Agreement and the non-exclusive license granted herein shall
terminate as follows:
(a) This Agreement and the non-exclusive license granted herein may be
terminated by either party at any time for Cause, which is defined as a
material breach of the obligations of this Agreement, by the giving of a
written notice of breach to the defaulting party, and, if such breach is
not cured within thirty (30) days, by the giving of a written notice of
termination. This Agreement and the non-exclusive license granted herein
shall then terminate effective upon the receipt of such written notice of
termination.
(b) This Agreement and the non-exclusive license granted herein may be
terminated by Licensor at any time and for any reason if Licensor's stock
ownership in Licensee is less than 35% of the issued and outstanding
common stock of Licensee having the right to vote for directors of
Licensee.
6. Upon termination of this Agreement and the non-exclusive license
granted herein, Licensee shall immediately cease all use of the Names and/or
Marks and shall thereafter make no use of any word, words, term, design, name
or mark confusingly similar with any of the Names and/or Marks; provided,
however, that Licensee shall have the right in any contract or other legal
instrument to be identified by its then current name, followed by the words
"formerly known as Enron Oil & Gas Company" or any similar phrase.
G-2
<PAGE> 33
7. Licensor agrees that during the term of this Agreement and for a period
of eighteen (18) months after the date of termination, Licensor shall not use
the term ENRON OIL & GAS COMPANY in connection with any business, goods or
services, or license others to do so; thereafter, Licensor may freely use the
term ENRON OIL & GAS COMPANY as a name or mark in connection with any and all
businesses, goods or services.
8. Licensor and Licensee acknowledge and agree that the name and mark EOG,
when used separate and apart from Licensor's name and mark ENRON OIL & GAS,
presents a commercial impression that is different and separate from Licensor's
name and mark ENRON OIL & GAS and that the name and mark EOGI, when used
separate and apart from Licensor's name and mark ENRON OIL & GAS INTERNATIONAL,
presents a commercial impression that is different and separate from Licensor's
name and mark ENRON OIL & GAS INTERNATIONAL. Subject to the condition
subsequent that the license granted under this Agreement is terminated,
Licensor quitclaims unto Licensee (a) all of Licensor's right, title and
interest, if any, in and to the name and mark EOG, and the goodwill associated
therewith, as used in connection with Licensee's business, goods or services in
a fashion that presents a different and separate commercial impression from
Licensor's name and mark ENRON OIL & GAS and (b) all of Licensor's right, title
and interest, if any, in and to the name and mark EOGI, and the goodwill
associated therewith, as used in connection with Licensee's business, goods or
services in a fashion that presents a different and separate commercial
impression from Licensor's name and mark ENRON OIL & GAS INTERNATIONAL.
However, Licensee agrees that after termination of this Agreement, Licensee
shall not use the names and marks EOG and EOGI in any fashion that is likely to
lead the public to believe that such name and mark refers to ENRON OIL & GAS or
ENRON OIL & GAS INTERNATIONAL or that Licensee's business, goods or services
are associated or affiliated with or sponsored by Licensor (e.g., Licensee
shall adopt and commence using some new name, such as EMPIRE OIL & GAS, or EOG,
INC., that is not likely to cause confusion in the marketplace with Licensor's
business, goods and services).
9. The relationship of Licensor and Licensee pursuant to this Agreement
shall be that of independent contractors. Licensor shall not by virtue of this
Agreement control or have the right to control the methods and means by which
Licensee offers its goods or services in association with the Names and/or
Marks.
10. The non-exclusive license granted by Licensor to Licensee is personal
to Licensee and may not be assigned, sub-licensed or transferred by Licensee in
any manner. To the extent that Licensee has subsidiary corporations that
utilize Licensor's Names and/or Marks, each such subsidiary corporation shall
also sign this Agreement.
11. This Agreement constitutes the entire agreement and understanding
between the parties with respect to the subject matter hereof and merges all
prior discussions, representations and negotiations with respect to the subject
matter hereof.
12. This Agreement shall be interpreted, construed and enforced pursuant
to the laws of the State of Texas.
IN WITNESS WHEREOF, Licensor and Licensee, appearing through their duly
authorized representatives, have executed this instrument to be effective as of
the date first set forth above.
G-3
<PAGE> 34
ENRON CORP.
By: /s/ J. CLIFFORD BAXTER
------------------------
Name: J. Clifford Baxter
Title: Senior Vice President, Corporate Development
ENRON OIL & GAS COMPANY
By: /s/ FORREST E. HOGLUND
------------------------
Name: Forrest E. Hoglund
Title: Chairman of the Board and
Chief Executive Officer
G-4
<PAGE> 35
EXHIBIT A
TO
NON-EXCLUSIVE LICENSE AGREEMENT
BETWEEN
ENRON CORP. AND ENRON OIL & GAS COMPANY
Enron Corp.'s Names and Marks
that Enron Oil & Gas Company is authorized to use:
1. Enron, ENRON AND FANCIFUL O DESIGN logo, and ENRON AND FANCIFUL
E DESIGN logo
2. Enron Corp. and ENRON CORP, ENRON AND FANCIFUL O DESIGN logo, and
ENRON AND FANCIFUL E DESIGN logo
3. Enron Oil & Gas Company, along with various suffixes that
designate countries, geographical areas or limited liability
4. SOCKET AND FLAME logo
5. NATURAL GAS. ELECTRICITY. ENDLESS POSSIBILITIES. slogan
6. ENDLESS POSSIBILITIES slogan
7. Enron Oil & Gas, along with various suffixes that designate
countries, geographical areas or limited liability
8. Enron Gas & Oil, along with various suffixes that designate
countries, geographical areas or limited liability
9. Enron Oil, along with various suffixes that designate countries,
geographical areas or limited liability
10. Enron Exploration, along with various suffixes that designate
countries, geographical areas or limited liability
11. Enron Oil & Gas Capital Management I, Ltd.
12. Enron Oil & Gas Property Management, Inc.
13. Enron Oil & Gas Investments, Inc.
14. Enron Oil & Gas Acquisitions L.P.
15. Enron Oil & Gas Marketing, Inc.
G-5
<PAGE> 36
EXHIBIT H
TERMS AND PROVISIONS OF AGREEMENTS BETWEEN HPL AND EOG
H-1
<PAGE> 37
HOUSTON PIPE LINE COMPANY/ENRON OIL & GAS COMPANY
TERM SHEET DATED AS OF AUGUST 1, 1997, SUBJECT TO CONSUMMATION OF
EQUITY PARTICIPATION AND BUSINESS OPPORTUNITY AGREEMENT
This term sheet sets out the agreements among Enron Oil & Gas Company ("EOG")
and Houston Pipe Line Company ("HPL"), a wholly owned subsidiary of Enron
Corp., HPL Resources Company ("HPLR"), a wholly owned subsidiary of HPL, and
Intratex Gas Company ("IGC"), a wholly owned subsidiary of HPL, which are being
entered into upon the condition of the consummation of that certain Equity
Participation and Business Opportunity Agreement among EOG and Enron Corp. and
various of its subsidiary companies. HPL, HPLR, IGC and EOG agree to
diligently work toward completion of documentation on or before October 17,
1997 acceptable to all parties reflecting the agreements herein set forth.
VARIOUS IGC/EOG DEDICATED GAS CONTRACTS
1. EOG and IGC agree to terminate the following dedicated gas contracts
between EOG and IGC, identified below by reference to IGC internal
contract number:
IGC # 18-40228-171 Omnibus
IGC # 18-40228-102 Ward County
IGC # 18-40228-104 Loving County
IGC # 18-40228-107 Ward County
IGC # 18-40228-133 Reeves County
IGC # 18-40228-134 Reeves County
IGC # 18-40228-135 Ward County
IGC # 18-40228-152 Loving County
IGC # 18-40228-160 Schleicher County
IGC # 18-40228-162 Sutton County
IGC # 18-16006-101 Ward County
IGC # 18-28850-101 Sutton County
IGC # 18-28850-102 Sutton County
IGC # 18-32500-110 Ward County
OMNIBUS DEDICATED CONTRACT
2. HPL, HPLR and EOG agree to terminate that certain Gas Purchase
Contract dated effective October 1, 1987, between EOG and HPL (HPL
contract # 12-40228-167), and its related evergreen excess gas
purchase contract dated January 8, 1988, between EOG and HPLR (HPLR
contract # 078-40228-119) (collectively, the "Omnibus Contract");
provided, the termination of the Omnibus Contract relieving the
parties of their rights and obligations thereunder is subject to the
fulfillment of the following conditions:
a. The termination of the Omnibus Contract shall be partial in
that the Omnibus
1
<PAGE> 38
Contract shall survive to cover the interests of Black Hawk Oil
Company purchased from EOG as of March 1, 1994 and to which the
Omnibus Contract continues to have effect among Black Hawk Oil
Company, HPL and HPLR.
b. EOG will dedicate for purchase by HPL or its designee all
current and future interests it may own or control in all fields now
committed under the Omnibus Contract for purchase by HPL (and
expressly including the "Zapata Released Gas Properties" described in
that certain Gas Purchase Contract Amendment dated December 1, 1995),
currently connected to HPL's pipeline system or wherein production
attributable to such fields is currently sold to HPL or HPLR under the
Omnibus Contract (the "Omnibus Fields"). The Omnibus Fields are
listed below and more particularly described in Appendix "1"
incorporated herein for all purposes; provided, it is expressly agreed
that there shall be excepted from the Omnibus Fields the well bores,
and production therefrom, identified in Appendix "1-A" (the "Omnibus
Well Bore Exceptions"). It is expressly agreed that the Omnibus
Fields shall include certain fields and wells subject to that certain
Gas Purchase Contract Amendment dated December 1, 1995 identified
therein as the "Zapata Excess Released Gas Properties;" provided, the
"Zapata Excess Released Gas Properties" shall continue to be released
subject to the provision of transportation by HPL of said gas under
the terms of the Gas Transportation Agreement dated April 1,1997,
between HPL and Enron Oil & Gas Marketing, Inc. for the term thereof,
or any similar subsequent agreement. EOG and HPL or its designee will
enter into gas purchase agreements committing the Omnibus Fields,
excepting the Omnibus Well Bore Exceptions, for a primary term through
December 31, 2003 at the contract prices set forth below referring to
the common field name set forth in Appendix "1."
Hundido, Zapata County
Per MMBtu, 100 percent of the Houston Ship Channel/Beaumont, Texas
Index for large packages of gas as published in the first publication
of the month in Inside F.E.R.C.' s Gas Market Report LESS $0.12
J.C. Martin, Zapata County
Per MMBtu, 95 percent of the Houston Ship Channel/Beaumont, Texas
Index for large packages of gas as published in the first publication
of the month in Inside F.E.R.C.'s Gas Market Report
La Perla, Zapata and Webb Counties
Per MMBtu, 95 percent of the Houston Ship Channel/Beaumont, Texas
Index for large packages of gas as published in the first publication
of the month in Inside F.E.R.C.'s Gas Market Report
2
<PAGE> 39
Las Ovejas, Zapata County
Per MMBtu, 100 percent of the Houston Ship Channel/Beaumont, Texas
Index for large packages of gas as published in the first publication
of the month in Inside F.E.R.C.'s Gas Market Report LESS $0.12
San Ygnacio, Zapata County
Per MMBtu, 100 percent of the Houston Ship Channel/Beaumont, Texas
Index for large packages of gas as published in the first publication
of the month in Inside F.E.R.C.'s Gas Market Report LESS $0.09 and
LESS the sum of any fees and charges incurred by buyer to have the gas
transported from the applicable points of delivery to the pipeline
system of HPL
Volpe, Zapata County
Per MMBtu, 100 percent of the Houston Ship Channel/Beaumont, Texas
Index for large packages of gas as published in the first publication
of the month in Inside F.E.R.C.'s Gas Market Report LESS $0.09 at the
Thompsonville point of delivery
Sprint South, Kleberg County
Per MMBtu, 100 percent of the Houston Ship Channel/Beaumont, Texas
Index for large packages of gas as published in the first publication
of the month in Inside F.E.R.C.'s Gas Market Report LESS $0.15
BIG COWBOY DEDICATED CONTRACT
3. HPL, HPLR and EOG agree to continue throughout its term that certain
Gas Purchase Contract dated effective October 10, 1978, as previously
amended, between EOG and HPL (HPL contract # 12-40228-162), and its
related evergreen excess gas purchase contract dated March 1, 1988, as
previously amended, between EOG and HPLR (HPLR contract #
078-40228-120) (collectively, the "Big Cowboy Contract") in accordance
with the following:
a. All current and future interests owned or controlled by EOG
within the "Area of Mutual Interest" set forth in that certain Big
Cowboy System Construction, Ownership, Operating and Maintenance
Agreement dated August 20, 1992 between HPL and Gulf Energy Pipeline
Co. (HPL contract # 012-35422-40-003) (the "AMI Fields") will remain
dedicated pursuant to the terms of the Big Cowboy Contract, except as
set forth in item d below.
b. All current and future interests owned or controlled by EOG
now dedicated under the Big Cowboy Contract for purchase by HPL (and
expressly including the "Webb Released Gas Properties" described in
that certain Gas Purchase Contract Amendment dated December 1, 1995),
currently connected to HPL's pipeline system or wherein production
attributable to such fields is currently sold to HPL or HPLR under the
Big Cowboy Contract, other than the AMI Fields, and excepting
therefrom the wells and associated leases identified as the "Juanita
3
<PAGE> 40
Field Wells" listed in Appendix "2-B" (the "Other Big Cowboy Fields"),
will remain dedicated pursuant to the terms of the Big Cowboy
Contract. The AMI Fields and the Other Big Cowboy Fields are more
particularly described in Appendix "2" incorporated herein for all
purposes; provided, it is expressly agreed that there shall be
excepted from the AMI Fields and the Other Big Cowboy Fields the well
bores, and production therefrom, identified in Appendix "2-A" (the
"Big Cowboy Well Bore Exceptions"). It is expressly agreed that the
AMI Fields and the Other Big Cowboy Fields include certain fields and
wells subject to that certain Gas Purchase Contract Amendment dated
December 1, 1995 identified therein as the "Webb Excess Released Gas
Properties;" provided, the "Webb Excess Released Gas Properties" shall
continue to be released subject to the provision of transportation by
HPL of said gas under the terms of the Gas Transportation Agreement
dated April 1,1997, between HPL and Enron Oil & Gas Marketing, Inc.
for the term thereof, or a similar subsequent agreement, if any.
c. The contract price for the AMI Fields and the Other Big Cowboy
Fields, excepting the Big Cowboy Well Bore Exceptions, shall remain as
currently stated in the Big Cowboy Contract for the remaining term
thereof.
d. HPL and HPLR will permanently release from the Big Cowboy
Contract those certain properties recently acquired by EOG and as more
particularly described on Appendix "2-C" (the "Amoco Fields")
coincident with EOG's execution of those certain agreements between
EOG and Webb-Duval Gatherers and Exxon Gas Company USA regarding all
production from the South Callaghan, Casa Verde, Umbrella and Cinco
Compadres fields which comprise a portion of the Amoco Fields through
a term to December 31, 2003.
e. HPL and HPLR will permanently release all acreage from the Big
Cowboy Contract except (i) the AMI Fields, (ii) the Other Big Cowboy
Fields, (iii) the Amoco Fields (to be released in accordance with item
d above), (iv) the interests of Black Hawk Oil Company purchased from
EOG as of March 1, 1994 and to which the Big Cowboy Contract continues
to have effect among Black Hawk Oil Company, HPL and HPLR, and (v) the
interests of Sonat Exploration Company purchased from EOG as of August
1, 1994 and to which the Big Cowboy Contract continues to have effect
among Sonat Exploration Company, HPL and HPLR.
BAMMEL DEDICATED CONTRACT
4. HPL, HPLR and EOG agree to terminate that certain Gas Purchase
Contract dated effective August 1, 1966, between EOG and HPL (HPL
contract # 12-40228-168), and its related evergreen excess gas
purchase contract dated March 1, 1988, between EOG and HPLR (HPLR
contract # 078-40228-124) (collectively, the "Bammel Contract");
provided, the termination of the Bammel Contract relieving the
parties of their rights and obligations thereunder is subject to the
fulfillment of
4
<PAGE> 41
the following conditions:
a. EOG will dedicate for purchase by HPL or its designee all
current and future interests it may own or control in the Bammel/North
Milton fields committed under the Bammel Contract for purchase by HPL
or HPLR (the "Bammel Fields"). The Bammel Fields are more
particularly described in Appendix "3" incorporated herein for all
purposes. EOG and HPL or its designee will enter into a gas purchase
agreement committing the Bammel Fields for a term coincident with the
term of all real property interests attributable to gas production
within the fields owned or controlled by EOG, and any and all
renewals, extensions or replacements of same.
b. The contract price for the Bammel Fields, per MMBtu, is 94
percent of the Houston Ship Channel/Beaumont, Texas Index for large
packages of gas as published in the first publication of the month in
Inside F.E.R.C.'s Gas Market Report.
EOG and HPL or its designee will enter into supporting agreements to
reflect the following matters:
c. At no charge to EOG, HPL will maintain the current conditions
at the Bammel Fields' central delivery point into HPL's compression
facilities (the 8 inch flange) wherein (i) the pipeline operating
pressures shall be maintained at or below 450 psig, except in the
event of emergency circumstances or other short term conditions
wherein the operating pressures may exceed 450 psig up to 490 psig,
and (ii) EOG is able to continue delivering gas that has not been
dehydrated to meet pipeline specifications.
d. At no charge to EOG, HPL will provide gathering lines and
metering for future wells completed in the Bammel Fields based upon a
well-connect criteria of two BCF of recoverable reserves for each mile
of pipeline. This criteria will be reviewed and reestablished by the
parties every two years.
e. At no charge to HPL, EOG will continue to operate and pump in
accordance with prudent operating standards the Erhardt and the Hamill
Nos. 1, 2 and 3 Wells and associated leases for the term of the
contract covering the Bammel Fields provided for above. EOG will
discharge any and all existing claims of EOG against HPL and HPLR for
past performance of these activities.
f. At no charge to HPL, EOG will perform all the necessary
accounting, including, without limitation, royalty check payments,
division order updates and similar activities, associated with HPL's
production on behalf of HPL. EOG will discharge any and all existing
claims of EOG against HPL and HPLR for past performance of these
activities.
5
<PAGE> 42
g. EOG commits to remediate, at its sole cost and in a timely
manner, the drilling mud and cuttings disposal sites according to
processes and procedures generally accepted within the industry and by
applicable regulatory bodies and will continue its operations in a
manner acceptable to HPL and in accordance with applicable law and
regulations.
h. HPL will discharge any and all existing claims of HPL against
EOG relating to work performed by HPL or its designee in the Bammel
Fields through July 31, 1997. For the period commencing after July
31, 1997, HPL will invoice EOG for (i) work performed at the written
request of EOG or (ii) work performed that is directly related to, and
reasonably necessary for, the handling of EOG's production from the
Bammel Fields, taking into consideration the location of the Bammel
Fields in relation to the Bammel storage facility owned by HPL (either
category (i) or (ii), a "Condition"). EOG agrees to make payment to
HPL for the performance of work if such work meets a Condition, to the
extent the costs charged therefor are reasonably comparable to
industry standard charges for such work, except with regard to
prospective charges as provided in paragraph 4.d above. HPL agrees to
provide EOG, or cause its designee to provide EOG, reasonable advance
notice of the commencement of the performance of any work directly
related to, and reasonably necessary for, the handling of EOG's
production, except where emergency circumstances exist.
WOODBINE PROSPECT, POLK AND TYLER COUNTIES (TEXAS)
5. EOG agrees to dedicate interests owned or controlled by EOG in the
Woodbine Prospect acreage to HPLR for purchase under the same
contractual arrangements as exist between HPLR and Black Stone Energy
Company by ratification of that certain Gas Purchase Agreement dated
July 1, 1997 between HPLR and Black Stone Energy Company.
FURTHER ASSURANCES
6. With regard to all other areas within the States of Texas or Louisiana
where EOG currently or in the future conducts exploration and
production operations, EOG ensures HPL that HPL will be accorded the
same rights and opportunities to compete for EOG's business as other
third party gatherers, transporters and supply purchasers.
6
<PAGE> 43
The parties do hereby execute this term sheet in multiple counterparts
effective as of August 1, 1997.
ENRON OIL & GAS COMPANY
By: /s/ MARK G. PAPA
----------------------------
Name: Mark G. Papa
--------------------------
Title: President
-------------------------
Date: August 18, 1997
--------------------------
HOUSTON PIPE LINE COMPANY
By: /s/ MICHAEL S. MCCONNELL
----------------------------
Name: Michael S. McConnell
--------------------------
Title: President
-------------------------
Date: August 18,1997
--------------------------
INTRATEX GAS COMPANY
By: /s/ MICHAEL S. MCCONNELL
----------------------------
Name: Michael S. McConnell
--------------------------
Title: President
-------------------------
Date: August 18, 1997
--------------------------
HPL RESOURCES COMPANY
By: /s/ MICHAEL S. MCCONNELL
----------------------------
Name: Michael S. McConnell
--------------------------
Title: President
-------------------------
Date: August 18, 1997
--------------------------
7
<PAGE> 44
APPENDIX "1"
Omnibus Fields
The Omnibus Fields include the acreage and all depths covered by leases, fee
interests and all other real property interests of whatever nature attributable
to gas production from the wells identified herein. The identification of the
particular wells herein is for reference only and does not limit the forgoing.
<PAGE> 45
APPENDIX "1"
OMNIBUS FIELDS
EOG PROPERTIES CONNECTED TO HPL
EOG CONTRACT NUMBERS: HPL99001, NGM99001
HPL CONTRACT NUMBER: 12-40228-167
HPLR CONTRACT NUMBER: 078-40228-119
<TABLE>
<CAPTION>
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER RCI API
- ----------------- --------- --------- ---------- --------------------------- --------------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SAN YGNACIO FIELD 297 SAN YGNACIO ZAPATA GARZA, AMERICA ET AL 1 125326 4250532351
LA PERLA FIELD 5155 LA PERLA WEBB HEIN, LUZ A. ESTATE 10 144313 4247935653
5155 LA PERLA ZAPATA BRUNI MINERAL TRUST A-A 1 069973 4250530529
5155 LA PERLA ZAPATA BRUNI MINERAL TRUST A-A 12 142469 4250532913
5155 LA PERLA ZAPATA BRUNI MINERAL TRUST A-A 13 144382 4250532950
5155 LA PERLA ZAPATA BRUNI MINERAL TRUST A-B 3 077960 4250530975
5155 LA PERLA ZAPATA BRUNI MINERAL TRUST A-B 7 134065 4250532638
5155 LA PERLA ZAPATA BRUNI MINERAL TRUST A-B 14 144341 4250532975
5155 LA PERLA ZAPATA BRUNI MINERAL TRUST AA 17 147687 4250533121
5155 LA PERLA ZAPATA BRUNI MINERAL TRUST AB 9 139464 4250532772
5155 LA PERLA ZAPATA BRUNI MINERAL TRUST AB 10 141749 4250532860
5155 LA PERLA ZAPATA BRUNI MINERAL TRUST AB 16 146526 4250533067
5155 LA PERLA ZAPATA HEIN, A.O. 1 131965 4250530090
5155 LA PERLA ZAPATA HEIN, A.O. 4 153183 4250533275
5155 LA PERLA ZAPATA HEIN, LUZ A. 4 139223 4250532779
5155 LA PERLA WEBB HEIN, LUZ A. ESTATE 5 141296 4247935386
5155 LA PERLA WEBB HEIN, LUZ A. ESTATE 6 141842 4247935445
5155 LA PERLA WEBB HEIN, LUZ A. ESTATE 7 142849 4247935544
5155 LA PERLA WEBB HEIN, LUZ A. ESTATE 8 142846 4247935563
5155 LA PERLA ZAPATA HEIN-BRUNI GU 1 143775 4250532937
5155 LA PERLA ZAPATA SULLIVAN HEIN 4 083852 4250531084
J.C. MARTIN 5263 BENAVIDES ZAPATA ADRIAN EUDOXIO MARTINEZ GU 1 161735 NYA
5263 BENAVIDES ZAPATA LAURO-ACELA MARTINEZ B GU 2 156455 4250533321
5263 BENAVIDES ZAPATA MARSHALL, STANLEY G. 3 126242 4250532391
5263 J C MARTIN ZAPATA MARTINEZ, A. GAS UNIT 2 075822 4250530940
5263 J C MARTIN ZAPATA MARTINEZ, ACELA 1 077343 4250530981
5263 J C MARTIN ZAPATA MARTINEZ, ACELA 2 096183 4250531299
5263 BENAVIDES ZAPATA MARTINEZ, ACELA 3 123140 4250532239
5263 BENAVIDES ZAPATA MARTINEZ, ACELA 5 156060 4250533315
5263 BENAVIDES ZAPATA MARTINEZ, ADRIAN 7 154447 4250533296
5263 J C MARTIN ZAPATA MARTINEZ, ADRIAN GAS UNIT 1 074921 4250530906
5263 J C MARTIN ZAPATA MARTINEZ, ADRIAN GAS UNIT 4 153625 4250533280
5263 J C MARTIN ZAPATA MARTINEZ, ADRIAN GAS UNIT 6 154233 4250533284
5263 J C MARTIN ZAPATA MARTINEZ, EUDOXIO 1 075657 4250530869
5263 BENAVIDES ZAPATA MARTINEZ, EUDOXIO 3 122571 4250532230
5263 BENAVIDES ZAPATA MARTINEZ, EUDOXIO 8 126685 4250523240
5263 BENAVIDES ZAPATA MARTINEZ, EUDOXIO 10 157149 4250533353
5263 BENAVIDES ZAPATA MARTINEZ, EUDOXIO GAS UNIT 2 073452 4250530873
5263 BENAVIDES ZAPATA MARTINEZ, EUDOXIO GAS UNIT 6 124581 4250532308
5263 BENAVIDES ZAPATA MARTINEZ, EUDOXIO GAS UNIT 7 125756 4250532376
5263 BENAVIDES ZAPATA MARTINEZ, LAURO 1 072247 4250530598
5263 BENAVIDES ZAPATA MARTINEZ, LAURO 3 121431 4250532187
5263 BENAVIDES ZAPATA MARTINEZ, LAURO-ACELA GAS UNIT 1 131195 4250532541
5263 BENAVIDES ZAPATA MARTINEZ, LAURO-EUDOXIO GU 1 157155 4250533357
5263 BENAVIDES ZAPATA SAN FERNANDO MINERALS 1 NYA NYA
5263 BENAVIDES ZAPATA SAN FERNANDO MINERALS 2 125447 4250532362
5263 BENAVIDES ZAPATA SAN FERNANDO MINERALS 3 128986 4250532454
5263 BENAVIDES ZAPATA SANCHEZ, CARMEN D. MEIRS 1 125197 4250532337
5263 BENAVIDES ZAPATA SANCHEZ, CARMEN D. MEIRS 2 128406 4250532470
5263 BIG MAC ZAPATA SANCHEZ-SAN FERNANDO MIN. GU 1 144473 4250532973
6103 J C MARTIN ZAPATA MARSHALL, STANLEY G. 2 113321 4250531833
</TABLE>
Page 1
<PAGE> 46
<TABLE>
<CAPTION>
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER RCI API
- ----------------- --------- ------------- ---------- --------------------------- --------------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
6103 BENAVIDES ZAPATA MARSHALL, STANLEY G. 3 126242 4250532391
LAS OVEJAS 5353 LAS OVEJAS ZAPATA LAUREL, OSCAR M. 1 079647 4250530967
5353 LAS OVEJAS ZAPATA LAUREL, OSCAR M. 4 125956 4250532379
5353 JENNINGS WEST ZAPATA LAUREL, SERGIO 3 147314 4250531820
5353 J J & J ZAPATA LAUREL, SERGIO 6 144480 4250532893
5353 LAS OVEJAS ZAPATA LAUREL-STATE 1 079646 4250531003
5353 LAS OVEJAS ZAPATA URIBE, AURELIANO HEIRS 3 158767 4250533409
5357 HUNDIDO ZAPATA MARSHALL, S.G. 3 107214 4250531657
5357 MCASKILL ZAPATA MARSHALL, S.G. ET AL 4 117290 4250532033
6067 LAS OVEJAS WEST ZAPATA MARSHALL, S.G. 7 117239 4250531934
6067 POK-A-DOT ZAPATA MARSHALL, S.G. 8 122768 4250532245
6067 POK-A-DOT ZAPATA MARSHALL, S.G. 9 123171 4250532270
6067 POK-A-DOT ZAPATA MARSHALL, S.G. 10 124135 4250532303
6067 POK-A-DOT ZAPATA MARSHALL, S.G. 11 124659 4250532325
6067 POK-A-DOT ZAPATA MARSHALL, S.G. 12 124742 4250532326
6067 POK-A-DOT ZAPATA MARSHALL, S.G. 13 125128 4250532341
6067 POK-A-DOT ZAPATA MARSHALL, S.G. 15 125358 4250532468
6067 POK-A-DOT ZAPATA MARSHALL, S.G. 18 133350 4250532598
6067 POK-A-DOT ZAPATA MARSHALL, S.G. 19 135145 4250532659
6067 LAS OVEJAS WEST ZAPATA MARSHALL, S.G. 20 144509 4250532899
6067 POK-A-DOT ZAPATA MARSHALL, S.G. 23 143874 4250532956
6067 POK-A-DOT ZAPATA MARSHALL, STANLEY G. 6 111434 4250531781
6067 J J & J ZAPATA MARTINEZ, L. 2 114070 4250531899
6067 J J & J ZAPATA MARTINEZ, L. 3 116773 4250531953
6067 LAS OVEJAS ZAPATA MARTINEZ, M. 1 119603 4250531662
6067 POK-A-DOT ZAPATA MARTINEZ, M. 2 136399 4250531920
6067 POK-A-DOT ZAPATA MARTINEZ, M. 4 122996 4250532259
6067 POK-A-DOT ZAPATA MARTINEZ, M. 5 124660 4250532302
6067 POK-A-DOT ZAPATA MARTINEZ, M. 6 129202 4250532491
6067 POK-A-DOT ZAPATA MARTINEZ, M. 7 132276 4250532592
6067 POK-A-DOT ZAPATA MARTINEZ, M. 8 133492 4250532611
6067 POK-A-DOT ZAPATA MARTINEZ, M. 9 135304 4250532660
6067 POK-A-DOT ZAPATA MARTINEZ, M. 10 136476 4250532719
6067 POK-A-DOT ZAPATA MARTINEZ, M. 11 137793 4250532754
6067 J J & J ZAPATA MARTINEZ, M.B. 1 142684 4250532891
6067 J J & J ZAPATA MARTINEZ, OMAR 1 113497 4250531831
6067 J J & J ZAPATA RAMIREZ, R.A. GU 1 142491 4250532904
6067 J J & J ZAPATA URIBE, I.C. 1 143000 4250532885
6067 J J & J ZAPATA URIBE, I.C. 2 142541 4250532914
6067 J J & J ZAPATA URIBE, I.C. GU 4 159594 4250533447
6067 POK-A-DOT ZAPATA URIBE, SERAFIN 1 135497 4250532689
6067 POK-A-DOT ZAPATA URIBE, SERAFIN 2 136860 4250532733
6067 POK-A-DOT ZAPATA URIBE, SERAFIN 3 138235 4250532771
HUNDIDO 6487 HUNDIDO NE ZAPATA RANGEL, B.M. 2 131102 4250532501
6487 MCMURREY SW ZAPATA TOMASA 1 NYA NYA
6748 HUNDIDO ZAPATA BENAVIDES, BELIA B 8 144453 4250532954
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. B 1 143730 4250531333
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. B 4 148985 4250531552
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. B 5 143731 4250531607
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. B 6 106618 4250531668
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. B 9 158107 4250533134
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. B 10 148274 4250533146
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. B 12 150705 4250533207
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. B 16 159486 4250533385
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. B 11L 150718 4250533181
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. B 13L 156907 4250533230
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. B 14L 154548 4250533299
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. B 15L 155904 4250533351
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. B 15U NYA NYA
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. C 1 149544 4250533172
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. C 3 157441 4250533372
6748 LOS MOGOTES N ZAPATA BENAVIDES, BELIA R. C 1A 074836 4250530601
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. C 4A 082509 4250531067
6760 HUNDIDO ZAPATA MARTINEZ TRUST 1 NYA 4250532992
</TABLE>
Page 2
<PAGE> 47
<TABLE>
<CAPTION>
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER RCI API
- ----------------- --------- ------------- ---------- --------------------------- --------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
6776 HUNDIDO ZAPATA MARTINEZ, S. 1 075828 4250530888
6776 HUNDIDO ZAPATA MARTINEZ, S. 2 110746 4250530960
6776 HUNDIDO ZAPATA MARTINEZ, S. 3 142847 4250530998
SPRINT SOUTH 6882 SOUTH SPRINT KLEBERG SOUTH SPRINT STATE GU #1 1 046021 4227300064
6882 SOUTH SPRINT KLEBERG SOUTH SPRINT STATE GU #2 1 053640 4227330001
6882 SOUTH SPRINT KLEBERG SOUTH SPRINT STATE GU #3 1 120342 4260230158
VOLPE 268 VOLPE ZAPATA GARCIA, SALVADOR F 17 NYA NYA
268 VOLPE ZAPATA GARCIA, SALVADOR F 20 NYA NYA
268 VOLPE ZAPATA GARCIA, SALVADOR F 23 NYA NYA
268 VOLPE ZAPATA GARCIA, SALVADOR G 16 NYA NYA
268 VOLPE ZAPATA GARCIA, SALVADOR G 24 NYA NYA
</TABLE>
Page 3
<PAGE> 48
APPENDIX "1-A"
Omnibus Well Bore Exceptions
<PAGE> 49
APPENDIX "1-A"
Omnibus Well Bore Exceptions
<TABLE>
<CAPTION>
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER RCI API
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
LA PERLA FIELD 5155 LA PERLA WEBB HEIN, LUZ A. ESTATE 10 144313 4247935653
5155 LA PERLA ZAPATA BRUNI MINERAL TRUST A-A 12 142469 4250532913
5155 LA PERLA ZAPATA BRUNI MINERAL TRUST A-A 13 144382 4250532950
5155 LA PERLA ZAPATA BRUNI MINERAL TRUST A-B 14 144341 4250532975
5155 LA PERLA ZAPATA BRUNI MINERAL TRUST AB 9 139464 4250532772
5155 LA PERLA ZAPATA BRUNI MINERAL TRUST AB 10 141749 4250532860
5155 LA PERLA ZAPATA HEIN, LUZ A. 4 138223 4250532779
5155 LA PERLA WEBB HEIN, LUZ A. ESTATE 5 141296 4247935386
5155 LA PERLA WEBB HEIN, LUZ A. ESTATE 6 141842 4247935445
5155 LA PERLA WEBB HEIN, LUZ A. ESTATE 7 142849 4247935544
5155 LA PERLA WEBB HEIN, LUZ A. ESTATE 8 142845 4247935563
5155 LA PERLA ZAPATA HEIN-BRUNI GU 1 143775 4250532937
J.C. MARTIN 5263 BENAVIDES ZAPATA MARTINEZ, LAURO 3 121431 4250532187
5263 BIG MAC ZAPATA SANCHEZ-SAN FERNANDO MIN. GU 1 144473 4250532973
LAS OVEJAS 5353 JJ & J ZAPATA LAUREL, SERGIO 6 144480 4250532893
6067 LAS OVEJAS WEST ZAPATA MARSHALL, S.G. 20 144509 4250532899
6067 POK-A-DOT ZAPATA MARSHALL, S.G. 23 143574 4250532956
6067 JJ & J ZAPATA MARTINEZ, L. 2 114070 4250531899
6067 JJ & J ZAPATA MARTINEZ, M.B. 1 142584 4250532891
6067 JJ & J ZAPATA RAMIREZ, R.A. GU 1 142491 4250532904
6067 JJ & J ZAPATA URIBE, I.C. 1 143000 4250532885
6067 JJ & J ZAPATA URIBE, I.C. 2 142541 4250532914
HUNDIDO 6748 HUNDIDO ZAPATA BENAVIDES, BELIA B 8 144453 4250532954
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. B 1 143730 4250531333
6748 HUNDIDO ZAPATA BENAVIDES, BELIA R. B 5 143731 4250531607
6760 HUNDIDO ZAPATA MARTINEZ TRUST 1 NYA 4250532992
</TABLE>
<PAGE> 50
APPENDIX "2"
AMI Fields and Other Big Cowboy Fields
The AMI Fields include all acreage and all depths covered by leases, fee
interests and all other real property interests of whatever nature in the "Area
of Mutual Interest" set forth in that certain Big Cowboy System Construction,
Ownership, Operating and Maintenance Agreement dated August 20, 1992 between
HPL and Gulf Energy Pipeline Co. (HPL contract # 012-35422-40-003). The "Area
of Mutual Interest" is shown on the plat included in this Appendix "2" and the
identification of the particular wells herein is for reference only and does
not limit the foregoing.
The Other Big Cowboy Fields include the acreage and all depths covered by
leases, fee interests and all other real property interests of whatever nature
attributable to gas production from the wells identified herein and not located
within the boundaries of the "Area of Mutual Interest." The identification of
the particular wells herein is for reference only and does not limit the
forgoing.
<PAGE> 51
APPENDIX "2"
AMI AND OTHER BIG COWBOY FIELDS
EOG PROPERTIES CONNECTED TO HPL
EOG CONTRACT NUMBERS: HPL42028, NGM42001
HPL CONTRACT NUMBER: 12-40228-162
HPLR CONTRACT NUMBER: 078-40228-120
<TABLE>
<CAPTION>
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER RCI API
- ----------------- ----- ------------ ------ --------------------- ----------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
RANCHO VIEJO 6546 RANCHO VIEJO WEBB APPLEGATE 2367 1 135559 4247934965
6546 RANCHO VIEJO WEBB APPLEGATE 2367 2 161116 4247936511
6548 RANCHO VIEJO WEBB APPLEGATE-ALLEY GAS UNIT 1 132263 4247934902
BRISCOE 6679 BRISCOE WEBB HUGHES RANCH 1 140166 4247935298
6679 BRISCOE WEBB HUGHES RANCH 2 141297 4247935412
6679 BRISCOE WEBB HUGHES RANCH 3 142477 4247935550
DESPARADO 6707 DESPARADO WEBB LUNDELL 40 2 141301 4247934998
6707 DESPARADO WEBB LUNDELL 40 3 141882 4247935480
6707 DESPARADO WEBB LUNDELL 40 4 142616 4247935512
6707 DESPARADO WEBB LUNDELL 44 1 144314 4247935581
BLACK CREEK 6728 BLACK CREEK WEBB DESPAIN 1 144464 4247935486
6728 BLACK CREEK WEBB DESPAIN 3 144477 4247935701
6728 BLACK CREEK WEBB DESPAIN 5 144494 4247935751
6728 BLACK CREEK WEBB DESPAIN 6 144490 4247935737
6728 BLACK CREEK WEBB DESPAIN 7 150681 4247935777
6728 BLACK CREEK WEBB DESPAIN 8 152432 4247935750
6742 BLACK CREEK WEBB DESPAIN 10 155275 4247936303
6742 BLACK CREEK WEBB BRISCOE D 1 144466 4247935618
6742 BLACK CREEK WEBB BRISCOE D 2 144469 4247935665
6742 BLACK CREEK WEBB BRISCOE D 3 144471 4247935678
6742 BLACK CREEK WEBB BRISCOE D 4 144482 4247935680
6742 BLACK CREEK WEBB BRISCOE D 5 144493 4247935679
6742 BLACK CREEK WEBB BRISCOE D 6 144491 4247935738
6742 BLACK CREEK WEBB BRISCOE D 8 150164 4247936094
6742 BLACK CREEK WEBB BRISCOE D 9 151280 4247936157
6742 BLACK CREEK WEBB BRISCOE D 10 152403 4247936203
6742 BLACK CREEK WEBB BRISCOE D 11 153167 4247936221
6742 BLACK CREEK WEBB BRISCOE D 12 157621 4247936410
6742 BLACK CREEK WEBB BRISCOE D 13 157585 4247936400
6742 BLACK CREEK WEBB BRISCOE D 14 157768 4247936422
6742 BLACK CREEK WEBB BRISCOE D 15 158102 4247936439
6742 BLACK CREEK WEBB BRISCOE D 16 158138 4247936459
6742 BLACK CREEK WEBB BRISCOE D 17 158231 4247936476
6742 BLACK CREEK WEBB BRISCOE D 19 161159 4247936525
6742 BLACK CREEK WEBB BRISCOE E 2A NYA NYA
LA MANGANA 6763 LA MANGANA WEBB 1 PENA, HL 1 145813 4247935752
6763 LA MANGANA WEBB 2 PENA, HL 2 146395 4250533059
6763 LA MANGANA WEBB 3 PENA, HL 3 158861 4247935980
6763 LA MANGANA WEBB 4 PENA, HL 4 159403 4247936193
6763 LA MANGANA WEBB 5 PENA, HL 5 159602 4247936226
6763 LA MANGANA WEBB 6 PENA, HL 6 160639 4247936573
6763 LA MANGANA WEBB 7 PENA, HL 7 182236 NYA
BRISCOE M&B 8751 CALICHE CREEK WEBB BRISCOE B 1 142683 4247935528
8751 CALICHE CREEK WEBB BRISCOE B 2 143772 4247935582
8751 CALICHE CREEK WEBB BRISCOE B 3 145693 4247935699
</TABLE>
Page 1
<PAGE> 52
<TABLE>
<CAPTION>
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER RCI API
- ----------------- ----- ------------ ------ --------------------- ----------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
8751 BLACK CREEK WEBB BRISCOE M 1 162137 NYA
8751 CALICHE CREEK WEBB BRISCOE N 2046 2 NYA NYA
8751 CALICHE CREEK WEBB BRISCOE-OLMITOS 2A NYA NYA
8751 CALICHE CREEK WEBB BRISCOE-OLMITOS RANCH 1 162162 NYA
8751 CALICHE CREEK WEBB BRISCOE-OLMITOS RANCH 1A NYA NYA
</TABLE>
Page 2
<PAGE> 53
Area of Mutual Interest Plat
[The original contains a detailed map of the Big Cowboy Area of Mutual Interest]
<PAGE> 54
APPENDIX "2-A"
Big Cowboy Well Bore Exceptions
<PAGE> 55
APPENDIX "2-A"
BIG COWBOW WELL BORE EXCEPTIONS
<TABLE>
<CAPTION>
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER RCI API
- ----------------- ------- ------- -------- ----------- -------------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
BRISCOE 6679 BRISCOE WEBB HUGHES RANCH 1 140166 4247935292
6679 BRISCOE WEBB HUGHES RANCH 2 141297 4247935412
6679 BRISCOE WEBB HUGHES RANCH 3 142477 4247935550
DESPARADO 6707 DESPARADO WEBB LUNDELL 40 2 141301 4247934998
6707 DESPARADO WEBB LUNDELL 40 3 141882 4247935480
6707 DESPARADO WEBB LUNDELL 40 4 142616 4247935512
6707 DESPARADO WEBB LUNDELL 44 1 144314 4247935581
BLACK CREEK 6728 BLACK CREEK WEBB DESPAIN 1 144464 4247935486
6728 BLACK CREEK WEBB DESPAIN 3 144477 4247935701
6728 BLACK CREEK WEBB DESPAIN 6 144490 4247935737
6742 BLACK CREEK WEBB BRISCOE D 1 144466 4247935618
6742 BLACK CREEK WEBB BRISCOE D 2 144469 4247935665
6742 BLACK CREEK WEBB BRISCOE D 3 144471 4247935678
6742 BLACK CREEK WEBB BRISCOE D 4 144482 4247935680
6742 BLACK CREEK WEBB BRISCOE D 5 144493 4247935679
6742 BLACK CREEK WEBB BRISCOE D 6 144491 4247935738
BRISCOE M&B 8751 CALICHE CREEK WEBB BRISCOE B 1 142683 4247935528
8751 CALICHE CREEK WEBB BRISCOE B 2 143772 4247935582
8751 CALICHE CREEK WEBB BRISCOE B 3 145693 4247935699
</TABLE>
Page 1
<PAGE> 56
APPENDIX "2-B"
Juanita Field Wells
The Juanita Field Wells include the acreage and all depths covered by leases,
fee interests and all other real property interests of whatever nature
attributable to gas production from the wells identified herein. The
identification of the particular wells herein is for reference only and does
not limit the forgoing.
<PAGE> 57
APPENDIX "2-B"
JUANITA FIELD WELLS
<TABLE>
<CAPTION>
EOG
PROPERTY
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER NUMBER API
- ----------------- ----- ----- ------ --------- ----------- -------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
JUANITA 5434 JUANITA WEBB, TX BRUNI HIRSCH GAS UNIT 1 2810 4247934820
5434 JUANITA WEBB, TX BRUNI MINERAL A 1 2811 4247932255
5434 JUANITA WEBB, TX BRUNI MINERAL A 2 2812 4247932323
5434 JUANITA WEBB, TX BRUNI MINERAL A 3 2813 4247932410
5434 JUANITA WEBB, TX BRUNI MINERAL A 8 2818 4247934645
5434 JUANITA WEBB, TX BRUNI MINERAL A 9 2819 4247934838
5434 JUANITA WEBB, TX BRUNI MINERAL A NCT 10 1080 4247934929
5434 JUANITA WEBB, TX BRUNI MINERAL A 11 1171 4247934959
5434 JUANITA WEBB, TX BRUNI MINERAL A 12 1181 4247934967
5434 JUANITA WEBB, TX BRUNI MINERAL A 14 19810 4247935242
5434 JUANITA WEBB, TX BRUNI MINERAL A NCT 15 21441 4247935463
5434 JUANITA WEBB, TX BRUNI MINERAL A NCT 16 21922 4247935541
5434 JUANITA WEBB, TX BRUNI MINERAL B 1 2820 4247932514
5434 JUANITA WEBB, TX BRUNI MINERAL B 2 2823 4247932637
5434 JUANITA WEBB, TX BRUNI MINERAL B 3 2824 4247932515
5434 JUANITA WEBB, TX BRUNI MINERAL B 7 2827 4247933368
5434 JUANITA WEBB, TX BRUNI MINERAL B 9 2829 4247934484
5434 JUANITA WEBB, TX BRUNI MINERAL B 10 2821 4204790347
5434 JUANITA WEBB, TX BRUNI MINERAL B 11 2822 4247934919
5434 JUANITA WEBB, TX BRUNI MINERAL B 12 19315 4247935149
5434 JUANITA WEBB, TX BRUNI MINERAL B 13 19608 4247935196
5434 JUANITA WEBB, TX BRUNI MINERAL B 14 19683 4247935210
5434 JUANITA WEBB, TX BRUNI MINERAL C 1 2831 4247932045
5434 JUANITA WEBB, TX BRUNI MINERAL C 2 2832 4247932556
5434 JUANITA WEBB, TX BRUNI MINERAL C 3 2833 4247933433
5434 JUANITA WEBB, TX BRUNI MINERAL C 4 2834 4247934813
5434 JUANITA WEBB, TX BRUNI MINERAL C 5 1010 4247934927
5434 JUANITA WEBB, TX BRUNI MINERAL C 6 2835 4247934859
5434 JUANITA WEBB, TX BRUNI MINERAL C 7 1281 4247934979
5434 JUANITA WEBB, TX BRUNI MINERAL C 8 19145 4247934990
5434 JUANITA WEBB, TX BRUNI MINERAL C 9 19615 4247935197
5434 JUANITA WEBB, TX BRUNI MINERAL C 10 19633 4247935194
5434 JUANITA WEBB, TX BRUNI MINERAL C 11 19737 4247935228
5434 JUANITA WEBB, TX BRUNI MINERAL C 12 22235 4247935526
5434 JUANITA WEBB, TX BRUNI MINERAL C 13 24313 4247935919
5434 JUANITA WEBB, TX BRUNI MINERAL C GU 1 831 4247934861
5434 JUANITA WEBB, TX BRUNI MINERAL D 2 2837 4247932759
5434 JUANITA WEBB, TX BRUNI MINERAL TRUST IN B 1 2849 4247931013
</TABLE>
Page 1
<PAGE> 58
APPENDIX "2-C"
The Amoco Fields
[THE ORIGINAL CONTAINS TWO DETAILED MAPS OF
THE AMOCO FIELDS IN WEBB COUNTY, TEXAS]
<PAGE> 59
APPENDIX "3"
Bammel Fields
The Bammel Fields include the acreage and all depths covered by leases, fee
interests and all other real property interests of whatever nature attributable
to gas production from the wells identified herein. The identification of the
particular wells herein is for reference only and does not limit the forgoing.
<PAGE> 60
APPENDIX "3"
BAMMEL FIELDS
EOG PROPERTIES CONNECTED TO HPL
EOG CONTRACT NUMBERS: HPL42037, NGM42002
HPL CONTRACT NUMBER: 12-40228-168
HPLR CONTRACT NUMBER: 078-40228-124
<TABLE>
<CAPTION>
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER RCI API
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NORTH MILTON FIELD 3081 MILTON NORTH HARRIS EHRHARDT (WILCOX)GU #1 5 150320 4220132363
3081 MILTON NORTH HARRIS EHRHARDT GAS UNIT #1 2 148092 4220132328
3082 MILTON NORTH HARRIS DWYER 1 162912 4220132456
3082 MILTON NORTH HARRIS DWYER 2 NYA 4220132460
3082 MILTON NORTH HARRIS EHRHARDT (WILCOX)GU #1 3 150650 4220132348
3082 MILTON NORTH HARRIS EHRHARDT (WILCOX)GU #1 4 150317 4220132336
3082 MILTON NORTH HARRIS EHRHARDT JOHN (WILCOX) GU #1 1 041633 4220107901
3082 MILTON NORTH HARRIS GRAVES B UNIT 1 149888 4220132333
3082 MILTON NORTH HARRIS GRAVES B UNIT 2 151237 4220132366
3082 MILTON NORTH HARRIS GRAVES B UNIT 3 153191 4220132397
3082 MILTON NORTH HARRIS GRAVES ESTATE (WILCOX)GU #1 1 154137 4220132367
3082 MILTON NORTH HARRIS GRAVES ESTATE (WILCOX)GU #1 2 151617 4220132382
3082 MILTON NORTH HARRIS GRAVES ESTATE (WILCOX)GU #1 3 152691 4220132392
3082 MILTON NORTH HARRIS GRAVES ESTATE (WILCOX)GU #1 4 153354 4220132398
3082 MILTON NORTH HARRIS HAMILL (WILCOX) GU #1 3 154069 4220132324
3082 MILTON NORTH HARRIS HAMILL GAS UNIT #1 1 039890 4220107859
3082 MILTON NORTH HARRIS HAMILL GAS UNIT #1 2 149628 4220132326
3082 MILTON NORTH HARRIS HAMILL GAS UNIT #2 1 040188 4220120260
3082 MILTON NORTH HARRIS HAMILL GAS UNIT #3 1 040559 4220107868
9631 MILTON NORTH HARRIS HAMILL GAS UNIT #3 2 151235 4220132369
MCLAUGHLIN 1 160962 4220132442
</TABLE>
<PAGE> 61
EXHIBIT I
SERVICES AGREEMENT
I-1
<PAGE> 62
SERVICES AGREEMENT
This Agreement is made and entered into as of the 1st day of January,
1997, between Enron Corp., an OREGON corporation ("Enron"), and Enron Oil & Gas
Company, a Delaware corporation ("EOG").
For and in consideration of the mutual promises and conditions
contained herein, the parties hereto agree as follows:
1. In order to assist the continued and orderly conduct of
certain corporate functions currently performed by Enron for the benefit of
EOG, Enron agrees to provide and EOG agrees to purchase, subject to the terms
and conditions set forth herein, certain corporate staff and support services
(collectively, the "Services").
2. This Agreement shall become effective and Enron shall make the
Services available to EOG pursuant to the terms of this Agreement commencing on
January 1, 1997, and shall continue thereafter for a period of 10 years (unless
otherwise specified herein) and from year to year thereafter unless terminated
upon written notice by either party 60 days prior to the anniversary date of
this Agreement. IF ENRON'S STOCK OWNERSHIP IN EOG FALLS BELOW 35% OF THE
ISSUED AND OUTSTANDING COMMON STOCK OF EOG HAVING THE RIGHT TO VOTE FOR
DIRECTORS OF EOG, THEN EITHER PARTY SHALL HAVE THE RIGHT TO TERMINATE THIS
AGREEMENT BY GIVING WRITTEN NOTICE TO THE OTHER PARTY, SUCH TERMINATION TO BE
EFFECTIVE AS OF THE DATE SET FORTH IN SUCH NOTICE; PROVIDED,
<PAGE> 63
HOWEVER, THAT EOG SHALL HAVE THE RIGHT TO DELAY THE EFFECTIVE DATE OF ANY SUCH
TERMINATION BY ENRON FOR A PERIOD OF UP TO ONE YEAR IN ORDER FOR EOG TO MAKE
NECESSARY ARRANGEMENTS FOR THE SERVICES TO BE PROVIDED BY THIRD PARTIES BY SO
NOTIFYING ENRON WITHIN 15 DAYS AFTER RECEIPT OF ENRON'S NOTICE OF TERMINATION.
3. The parties understand and agree that the Services shall be
substantially identical in nature and quality to the Services provided to EOG
by Enron during the 12-month period prior to the effective date of this
Agreement.
4. EOG, as compensation for the performance of the Services,
agrees to reimburse Enron for: (i) all expenses actually incurred by Enron and
readily identifiable to EOG relating to corporate staff and support services
provided by Enron hereunder ("Direct Charges"), as identified in Exhibit A
attached hereto, which calculation shall be based on the cost incurred by Enron
in providing such Services and charged to EOG, IN EACH INSTANCE, USING THE
METHODOLOGY THAT MOST REASONABLY REFLECTS THE USE OF THE SPECIFIC SERVICE BY
EOG AND ITS SUBSIDIARIES, ON THE ONE HAND, AND BY ENRON AND ITS OTHER
SUBSIDIARIES OR AFFILIATED COMPANIES, ON THE OTHER HAND (excepting the
calculation of charges for "Rent and LHI" as indicated in Exhibit A for any
square footage occupied during the term hereof) , (ii) the actual cost of any
goods or services purchased for EOG by Enron from third parties unaffiliated
with Enron ("Operating Charges"), (iii) the actual cost or charge for
<PAGE> 64
outsourced services provided by any third party unaffiliated with Enron for EOG
under an Enron or Enron affiliate agreement with such third party ("Outsourced
Charges") and (iv) AN ALLOCATED PORTION OF ADMINISTRATIVE AND GENERAL EXPENSES
INCURRED BY ENRON FOR CORPORATE STAFF AND SUPPORT SERVICES, COMPOSED OF THOSE
SERVICES AS IDENTIFIED IN EXHIBIT B ATTACHED HERETO (EXCLUDING THOSE SERVICES
ON EXHIBIT B FOR WHICH THE AMOUNT SHOWN UNDER THE HEADING "EOG" IS $0), AND FOR
WHICH EOG DOES NOT RECEIVE DIRECT CHARGES ("ALLOCATED CHARGE"). THE ALLOCATED
CHARGE PAYABLE BY EOG UNDER CLAUSE (IV) OF THE IMMEDIATELY PRECEDING SENTENCE
WILL BE (I) THE PORTION OF THE EXPENSES REFERRED TO IN CLAUSE (IV) ALLOCATED TO
EOG USING THE MODIFIED MASSACHUSETTS FORMULA, MINUS (II) $2,800,000 PER YEAR
BEGINNING JANUARY 1, 1997; PROVIDED, HOWEVER, THAT THE ALLOCATED CHARGE DURING
ANY YEAR SHALL NOT EXCEED THE ALLOCATED CHARGE CEILING (AS DEFINED BELOW). The
$2,800,000 will be adjusted annually, in the same manner that the Allocated
Charge Ceiling is adjusted below, based upon any change in the SEASONALLY
ADJUSTED Consumer Price Index for all Urban Consumers as determined by the U.S.
Department of Labor, Bureau of Labor Statistics (the "CPI-U").
THE ALLOCATED CHARGE CEILING FOR THE YEAR 1997 SHALL BE $5,300,000. THE
ALLOCATED CHARGE CEILING FOR EACH YEAR THEREAFTER SHALL BE ADJUSTED ANNUALLY,
AS HEREINAFTER PROVIDED, FOR CHANGES IN THE CPI-U, AND ROUNDED TO THE NEAREST
$100,000.
<PAGE> 65
FOR THE PURPOSE OF COMPUTING THE EFFECTS OF THE CPI-U CHANGE ON THE
ALLOCATED CHARGE CEILING, THE PARTIES HERETO AGREE THAT THE BASE PERIOD FOR THE
CPI-U IS "1982/84 EQUALS 100", AND THE CPI-U INDEX NUMBER FOR DECEMBER 31, 1996
IS 159.2. CPI-U ADJUSTMENTS TO THE ALLOCATED CHARGE CEILING SHALL BE MADE
ANNUALLY, BASED UPON THE CPI-U INDEX NUMBER FOR THE MONTH OF DECEMBER FOR THE
IMMEDIATELY PRECEDING YEAR (SUCH ADJUSTMENTS ARE TO BE EFFECTED UPON
PUBLICATION OF THE CPI-U INDEX NUMBER FOR SUCH MONTH). IN THE EVENT THE BUREAU
OF LABOR STATISTICS SHIFTS THE CPI-U REFERRED TO HEREIN FROM THE "1982/84
EQUALS 100" BASE PERIOD TO A DIFFERENT BASE PERIOD, EOG AND ENRON AGREE TO USE
THE REBASING FACTORS PUBLISHED BY THE BUREAU OF LABOR STATISTICS FOR CONVERTING
THE "1982/84 EQUALS 100" BASE PERIOD TO THE NEW APPLICABLE BASE. IN THE EVENT
(I) WITH RESPECT TO THE CPI-U, REBASING FACTORS ARE NOT PUBLISHED OR (II) THE
CPI-U IS DISCONTINUED, A PROPER INDEX OR CLASSIFICATION WITH APPROPRIATE
ADJUSTMENT FACTORS SHALL BE SUBSTITUTED BY WRITTEN AGREEMENT BETWEEN ENRON AND
EOG.
IF THE COMPENSATION FOR ANY SERVICE DOES NOT INCLUDE SALES, USE, EXCISE
VALUE ADDED OR SIMILAR TAXES, AND IF ANY SUCH TAXES ARE IMPOSED ON THE SERVICES
AFTER THE EFFECTIVE DATE OF THIS AGREEMENT, THEN SUCH TAXES SHALL BE PAID BY
EOG.
THE METHODOLOGIES USED FOR DETERMINING DIRECT CHARGES,
<PAGE> 66
OPERATING CHARGES, OUTSOURCED CHARGES AND ALLOCATED CHARGES TO EOG WILL BE
EVALUATED PERIODICALLY TO DETERMINE WHETHER MORE ACCURATE METHODOLOGIES MAY BE
AVAILABLE FOR DETERMINING SUCH CHARGES THAN THOSE BEING USED ON THE EFFECTIVE
DATE OF THIS AGREEMENT. CHANGES IN METHODOLOGIES WILL BE IMPLEMENTED ONLY
AFTER BEING AGREED TO BY BOTH ENRON AND EOG.
5. Enron shall invoice EOG by the 15th working day of each month
for all Direct Charges, Operating Charges, Outsourced Charges and Allocated
Charges, all with respect to the preceding month. All invoices shall reflect
in reasonable detail a description of the Services performed during the
preceding month, and shall be due and payable on the last day of the month of
the invoice. In the event of default in payment by EOG, and if such payment is
not made within thirty days after written notice is sent to EOG by certified
mail to the address specified below, Enron may terminate this Agreement as to
those Services which relate to the unpaid portion of the invoice by giving
written notice of such election to EOG. In the event of a dispute as to the
propriety of invoiced amounts, EOG shall pay all undisputed amounts on each
invoice, but shall be entitled to withhold payment of any amount in dispute and
shall promptly notify Enron of its dispute. Enron shall provide EOG with
records relating to the disputed amount so as to enable the parties to resolve
the dispute. So long as the parties are attempting in good faith to resolve
the dispute, Enron shall not be entitled to terminate the Services related to
and by reason of the disputed charge.
<PAGE> 67
6. Any input necessary for Enron or any third party to perform
any Services shall be submitted by EOG in a manner consistent with the
practices utilized during the period prior to the effective date of this
Agreement, which manner shall not be altered except by mutual written agreement
of the parties. Should EOG's failure to supply such input render Enron's or
any third party's performance of any Services unreasonably difficult, Enron or
any third party, upon reasonable notice, may refuse to perform such Services
until such input is supplied.
7. EOG acknowledges that the Services shall be provided only with
respect to the business of EOG. EOG will not request performance of any
Services for the benefit of any entity other than EOG and its subsidiaries or
affiliates. EOG represents and agrees that it will use the Services only in
accordance with all applicable federal, state and local laws and regulations
and communications and common carrier tariffs, and in accordance with the
reasonable conditions, rules, regulations and specifications which may be set
forth in any manuals, materials, documents or instructions in existence on the
effective date of this Agreement and furnished by Enron to EOG. Enron or any
third party reserves the right to take all actions, including termination of
any particular Services, that Enron or any third party reasonably believes to
be necessary to assure compliance with applicable laws, regulations and
tariffs.
8. Enron will assign to EOG all user codes, passwords or numbers,
or other control or identifying cards or numbers, necessary for Enron to
perform the Services. EOG assumes full
<PAGE> 68
responsibility for selection and use of any such codes, passwords, cards or
numbers that may be permitted or required in connection with the Services
involved.
9. The Services will be of the same nature and quality as those
provided to EOG during the 12-month period prior to the effective date of this
Agreement.
ALL PRODUCTS OBTAINED FOR EOG ARE AS IS, WHERE IS, WITH ALL FAULTS.
NEITHER ENRON, ANY ENRON AFFILIATE NOR ANY THIRD PARTY PERFORMING ANY SERVICES
HEREUNDER MAKE ANY WARRANTIES OR REPRESENTATIONS WHATSOEVER, EXPRESS OR
IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE WITH RESPECT TO THE SERVICES RENDERED OR PRODUCTS OBTAINED FOR EOG.
IN NO EVENT SHALL ENRON BE LIABLE TO EOG OR ANY OTHER PERSON FOR ANY
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM ANY ERROR IN THE
PERFORMANCE OF SERVICES OR FROM THE BREACH OF THIS AGREEMENT, REGARDLESS OF
ENRON OR ANY THIRD PARTY FAULT. TO THE EXTENT ANY THIRD PARTY HAS LIMITED ITS
LIABILITY TO ENRON FOR SERVICES UNDER AN OUTSOURCING OR OTHER AGREEMENT, EOG
AGREES TO BE BOUND BY SUCH LIMITATION OF LIABILITY FOR ANY PRODUCT OR SERVICE
PROVIDED TO EOG BY SUCH THIRD PARTY UNDER ENRON'S AGREEMENT.
Enron shall have no obligation to perform the Services if its failure
to do so is caused by or results from any act of God, governmental action,
natural disaster, strike, failure of essential equipment or any other cause or
circumstance beyond the control of Enron. Enron agrees that upon restoring
service
<PAGE> 69
following any failure of any equipment necessary for Enron to provide any
Services, Enron will allow EOG to have equal priority, in accordance with prior
practice, with respect to access to the restored service. At its election,
Enron may cause one or more of its subsidiaries (other than EOG) , affiliates
or third party contractors to provide the services called for by this
Agreement; however, such action shall not release Enron from its obligations
under this Agreement.
10. In the event any portion of this Agreement shall be found by a
court of competent jurisdiction to be unenforceable, that portion of the
Agreement will be null and void and the remainder of the Agreement will be
binding on the parties as if the unenforceable provisions had never been
contained herein.
11. This Agreement shall not be assignable by either of the
parties hereto except by operation of law.
12. This Agreement constitutes the entire agreement of the parties
relating to the performance of the Services and all prior or contemporaneous
written or oral agreements are merged herein. This Agreement may not be
changed except by a writing signed by both parties. This Agreement shall be
governed by the laws of the State of Texas.
13. Any notice, request, instruction, correspondence or other
document to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered personally or
mailed, postage prepaid, or by facsimile or telegram, as follows:
<PAGE> 70
IF TO ENRON:
Enron Corp.
1400 Smith Street
P. 0. Box 1188
Houston, Texas 77251-1188
Attention: Senior Vice President,
Chief Accounting and Information
Officer
Facsimile No.: 713-853-3920
IF TO EOG:
Enron Oil & Gas Company
1400 Smith Street
P. 0. Box 4362
Houston, Texas 77210-4362
Attention: Senior Vice President and
Chief Financial Officer
Facsimile No.: 713-646-2113
Notice given by personal delivery or mail shall be effective upon actual
receipt by the party to whom addressed. Notice given by facsimile or telegram
shall be effective upon actual receipt if received during the recipient's
normal business hours, or at the beginning of the recipient's next business day
after receipt if not received during the recipient's normal business hours.
Any party may change any address to which Notice is to be given to it by giving
Notice as provided above of such change of address.
<PAGE> 71
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
on the date(s) noted below on their behalf by their duly authorized officers
effective as of January 1, 1997.
ENRON CORP.
By: /s/ J. CLIFFORD BAXTER
------------------------------------
J. Clifford Baxter,
Senior Vice President,
Corporate Development
Date: December 9, 1997
ENRON OIL & GAS COMPANY
By: /s/ FORREST E HOGLUND
------------------------------------
Forrest E. Hoglund
Chairman of the Board
and Chief Executive Officer
Date: December 9, 1997
<PAGE> 72
EXHIBIT A
<TABLE>
<CAPTION>
Major Sub
Cat. Cat. RC# Title Charge Basis
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PENSION, THRIFT & MEDICAL
2320 Savings Plan Head Count
* 2321 Retirement Plan Demographics (see note below)
2323 EE Life, AD&D Dep Head Count
2324 Long Term Disability Head Count
* 2325 Supp. Exec. Retirement Plan Demographics (see note below)
2326 ESOP Admin. Fees Head Count
2338(2333) Business Travel Insurance Head Count
* 2335 FAS 106 Demographics (see note below)
2356 Adm. Fees For Met Life Head Count
2330 HMO Premiums Head Count
2331 Drug Plan - Admin. Chgs. Head Count
2337 Active Medical/Dental Head Count
</TABLE>
*NOTE: The effective date for change in methodology for these items
will be the later of January 1, 1996 or the beginning of the 22nd month
prior to the date of the Equity Participation and Business Opportunity
Agreement between EOG and Enron Corp.
<TABLE>
<S> <C> <C> <C> <C>
COMPENSATION PLANS
2314 Restricted Stock Actual Participation
0028 Long-term Incentive Plan Actual Participation
1148 Perf. Based Rest. Stock Actual Participation
AVIATION
0781 Aviation Reservation Fee Usage
0782 Aviation Usage Usage
BUILDING FACILITIES & SERVICES
Building Rent & Related
0566 Construction Services Usage
0580 Facility Planning Usage
0581 Facility Maintenance EB Space
0629 Corporate Security EB Space
0666 Recycling Usage
0692 EPCO-Churn Relocation Usage
0898 Office Relocation/Furniture EB Space
1829 International Security Usage
2234 Facilities Operatons EB Space
2441 Building Utilities EB Space
2455 Building Rent and LHI EB Space @ 13.50/sq. ft. up to
170K sq. ft. Amounts over 170K
will be negotiated separately.
Parking Garage Svcs. and Transp. Subs.
0060 Service Garage Employee Election
2478 Parking Employee Election
2334 Transportation Subsidy Employee Election
Copy, Graphics & Audio Visual Services
0224 Forms Management Usage
0228 Copier Center Usage
0339 Artistic Services Usage
0703 Audio Visual Services Usage
2255 Convenience Copiers Usage
</TABLE>
<PAGE> 73
EXHIBIT A
<TABLE>
<CAPTION>
Major Sub
Cat. Cat. RC# Title Charge Basis
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BUILDING FACILITIES & SERVICES(continued)
Mail, Shipping & Receiving
0103 Shipping & Receiving Usage
0492 Mail Center Usage
Records Related Costs
0215 Record Center Houston Usage
0489 Record & Info Management Usage
Real Estate Management
0075 EPCO Administration Usage
0508 Real Estate Management Usage
0752 EPCO Legal Services Usage
Health & Employee Services
0647 Health & Employee Services Headcount
0776 Manager - Wellness Headcount
2453 Cafeteria Headcount
2454 Body Shop Headcount
2460 Employee Recreation Headcount
2475 Coffee Headcount
2477 Corporate Special Events Mgt. Comm. Member Head Count
Telecommunications
0117 Enron Information Services % of Total EIS Services
2357 Telecomm. Houston Operations Usage
2358 Computer Services Usage
2359 Ardmore Center Usage
OUTSIDE PROFESSIONAL SERVICES
2349 Outside Auditing Fees Per AA&Co.
0408 Contract Audit Services Per AA&Co.
INSURANCE
2411 Insurance Premiums/Cost Methodology representing
basis for premiums
DATA PROCESSING COSTS
EIS Charges Usage
EDS Charges Usage
Amortization of EDS Pre-paids Historical Usage
HR & BENEFITS RELATED
0071 Alcohol/Drug Testing Usage
0208 Compensation & Benefits Replaced by 2012
0319 Corporate Human Resources Head Count
0246 Payroll Head Count
0649 Benefits Accounting Replaced by 2012
2012 EMI Management Fee Head Count
2242 Fair Employment Head Count
</TABLE>
<PAGE> 74
EXHIBIT A
<TABLE>
<CAPTION>
Major Sub
Cat. Cat. RC# Title Charge Basis
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RECRUITING, TRAINING & FAIR EMPLOYMENT PRACTICES
0658 Corp. Org. Development & Trng. Head Count
1150 Corp HR Services Usage-moved from HR
1121 VP - Recruit, Trng. & FEP Head Count
TREASURY, FINANCE & RISK MANAGEMENT
Bank Fees Usage
0410 Risk Management Primarily % of Premiums
0451 Treasury Usage
0041 Corporate Finance Usage
TAX
0441 State Tax Group Usage
0564 Ad Valorem Tax Dept. Usage
LEGAL
0610 Corporate Secretary Usage
0611 Misc. MLP Expenses Usage
0854 Legal Litigation Usage
0860 Corporate Legal Usage
0861 Environmental Legal Usage
2416 Legal Library Attny. Head Count
INVESTOR RELATIONS
0405 Investor Relations Usage
EMPLOYEE MATCHING
2381 Corp. Contributions - Houston Employee Elections
CORPORATE EVENTS
1274 Management Conference Attendees
1137 Enron Earth Day Headcount
1140 Volunteer Events Headcount
1284 Employee Picnic Headcount
2397 Employee Communications Headcount
</TABLE>
<PAGE> 75
EXHIBIT B
<TABLE>
<CAPTION>
Total Enron
RC Net Oil &
Description* Number Expenses Gas
- -------------------------------- ------- ----------- ----------
<S> <C> <C> <C>
MMF % 22.10%
Direct Cost In - Shared Services $14,166,000 $3,130,686
Direct Cost In - Other 2,783,457 615,144
Executive Consultants 89 2,000,000 442,000
Corporate Financial Planning 137 1,008,000 222,768
Corporate Accounting & Reporting 138 1,811,000 400,231
Competitive Analysis 150 440,000 0
Sr. Vice President - Corporate Mkt. & Resources 302 1,117,000 246,857
Sr. Vice President - CIAAO 303 602,000 133,042
President and COO 304 1,800,000 397,800
Chief of Staff 305 693,000 153,153
Corporate Affairs 307 619,000 136,799
Executive Reception 308 544,000 120,224
Political Action Committee 309 34,000 7,514
Workforce Diversity 315 383,000 84,643
Investor Relations 405 1,663,000 0
Vice President - Tax 445 2,816,000 0
Corporate Development 460 706,000 156,026
Vice President & Treasurer 588 473,000 104,533
Corporate Secretary 610 1,616,000 0
MLP Services 611 60,000 0
Organizational Development & Testing 658 0 0
Government Affairs & Public Policy 808 0 0
Public Policy Analysis 848 192,000 0
Corporate Legal 860 1,259,000 0
Federal Government Affairs 866 1,283,000 283,543
State Government Affairs 870 913,000 201,773
Chairman and CEO 890 2,100,000 464,100
Corporate Advertising 1109 0 0
Corporate Aircraft Usage 2001 4,365,300 964,731
NQ Stock Plan 2315 0 0
Exec Perqs 2317 0 0
Employee Performance Awards 2318 150,000 33,150
Corporate Contributions - Houston 2381 0 0
Corporate Memberships 2396 490,000 108,290
Employee Communications 2397 359,800 79,516
Corporate Communications 2398 684,600 151,297
Media Relations 2399 1,942,000 429,182
Executive Board Meeting Expenses 2418 1,034,400 228,602
1997 EOG Service Agreement Reduction (2,800,000)
1997 EOG Service Agreement Cap Adjustment 0 (1,186,000)
----------- ----------
TOTAL $50,107,557 $5,309,604 **
=========== ==========
</TABLE>
* May vary as new costs centers are created.
** The calculated 1997 amount based on the 1/94 Enron/EOG Service agreement is
$8.1mm.
<PAGE> 76
EXHIBIT J
AMENDMENT TO STOCK RESTRICTION AND REGISTRATION AGREEMENT
This amendment (this "Amendment") to the Stock Restriction and
Registration Agreement dated as of August 23, 1989 (the "Agreement") is dated
as of December 9, 1997, and is entered into by Enron Oil & Gas Company, a
Delaware corporation (the "Company"), and Enron Corp., an Oregon corporation
(the "Holder").
WHEREAS, Section 7 of the Agreement provides that the Company will be
obligated to pay Registration Expenses, defined in the Agreement to include
generally all expenses incident to the performance by the Company of its
obligations under the Agreement; and
WHEREAS, the Company and the Holder desire to provide that the Holder will
be obligated to pay the expenses incident to the performance by the Company of
its obligations under the Agreement, with certain specified exceptions;
NOW, THEREFORE, in consideration of the agreements herein and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agree that the Agreement is hereby amended as
follows:
1. AMENDMENT TO SECTION 7. Section 7 of the Agreement is hereby amended to
read as follows:
7. Registration Expenses. All Registration Expenses (as defined
herein) will be borne by the selling Holders in proportion to the
number of shares registered.
As used herein, the term Registration Expenses means (a)
underwriting discounts and commissions applicable to the sale of
Restricted Stock, fees and expenses of any legal counsel, accountants
or other agents retained by any selling Holder and all other
out-of-pocket expenses incurred by any selling Holder in connection
with any registration under this Agreement and (b) all out-of-pocket
expenses incident to the Company's performance of or compliance with
this Agreement (whether or not the registration in connection with
which such expenses are incurred ultimately becomes effective),
including without limitation all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Restricted Stock), rating agency fees,
printing expenses, messenger and delivery expenses incurred by the
Company, the fees and expenses incurred in connection with the listing
of the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed, and
fees and disbursements of counsel for the Company and its independent
certified public accountants (including the expenses of any special
audit or comfort letters required by or incident to such performance),
securities acts liability insurance (if the Company elects to obtain
such insurance), the reasonable fees and expenses of any special
experts retained by the Company in connection with such registration
and the fees and expenses of other persons retained by the Company.
The term Registration Expenses shall not include any portion of
expenses that would have been incurred by the Company in the absence
of registration, such as depreciation or rent or other charges for use
of Company property, and such term shall not include any portion of
the Company's internal expenses, such as salaries
J-1
<PAGE> 77
and expenses of its officers and employees performing drafting, due
diligence, legal or accounting duties.
2. CERTAIN DEFINED TERMS. Capitalized terms used but not defined herein
are used as defined in the Agreement.
3. GOVERNING LAW. This Amendment will be governed by and construed in
accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, this Amendment has been executed as of the date first
written above.
ENRON OIL & GAS COMPANY
By: /s/ FORREST E. HOGLUND
------------------------
Name: Forrest E. Hoglund
Title: Chairman of the Board and
Chief Executive Officer
ENRON CORP.
By: /s/ J. CLIFFORD BAXTER
------------------------
Name: J. Clifford Baxter
Title: Senior Vice President,
Corporate Development
J-2
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report on the consolidated
financial statements of Enron Oil & Gas Company and subsidiaries dated February
17, 1997, included in Enron Oil & Gas Company's Form 10-K for the year ended
December 31, 1996, and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Houston, Texas
January 22, 1997
<PAGE> 1
EXHIBIT 23(b)
[DEGOLYER AND MACNAUGHTON LETTERHEAD]
January 20, 1998
Enron Oil & Gas Company
1400 Smith Street
Houston, Texas 77002
Gentlemen:
In connection with the Registration Statement on Form S-3 (the Registration
Statement), to be filed with the Securities and Exchange Commission on or about
January 22, 1998, by Enron Oil & Gas Company (the Company), DeGolyer and
MacNaughton (the firm) hereby consents to the incorporation in said
Registration Statement of the references to the firm and to the opinions
delivered to the Company regarding the comparison of estimates prepared by the
firm with those furnished to it by the Company of the proved oil, condensate,
natural gas liquids, and natural gas reserves of certain selected properties
owned by the Company. The opinions are contained in the firm's letter reports
dated January 13, 1995, January 22, 1996, and January 17, 1997, for estimates
as of January 1, 1995, December 31, 1995, and December 31, 1996, respectively.
The opinions are referred to in the section "Supplemental Information to
Consolidated Financial Statements-Oil and Gas Producing Activities" in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
DeGolyer and MacNaughton also consents to the references to it in section
"Experts" in the Prospectus that is a part of the Registration Statement.
Very truly yours,
/s/ DEGOLYER & MACNAUGHTON
DeGOLYER and MacNAUGHTON
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration by Enron Oil & Gas Company, a Delaware corporation (the
"Company"), of Debt Securities and Common Stock, $.01 par value, in connection
with the proposed sale of such Debt Securities by the Company and Common Stock
by the Company and/or Enron Corp. as a "Selling Stockholder" of the Company,
the undersigned officer or director of the Company hereby constitutes and
appoints Walter C. Wilson, Barry Hunsaker, Jr., and Angus H. Davis, 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 a registration
statement on Form S-3 relating to such securities to be filed with the
Securities and Exchange Commission, together with all amendments 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 22nd day
of January, 1998.
/s/ Fred C. Ackman
------------------------
Fred C. Ackman
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration by Enron Oil & Gas Company, a Delaware corporation (the
"Company"), of Debt Securities and Common Stock, $.01 par value, in connection
with the proposed sale of such Debt Securities by the Company and Common Stock
by the Company and/or Enron Corp. as a "Selling Stockholder" of the Company,
the undersigned officer or director of the Company hereby constitutes and
appoints Walter C. Wilson, Barry Hunsaker, Jr., and Angus H. Davis, 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 a registration
statement on Form S-3 relating to such securities to be filed with the
Securities and Exchange Commission, together with all amendments 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 22nd day
of January, 1998.
/s/ James V. Derrick, Jr.
------------------------------
James V. Derrick, Jr.
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration by Enron Oil & Gas Company, a Delaware corporation (the
"Company"), of Debt Securities and Common Stock, $.01 par value, in connection
with the proposed sale of such Debt Securities by the Company and Common Stock
by the Company and/or Enron Corp. as a "Selling Stockholder" of the Company,
the undersigned officer or director of the Company hereby constitutes and
appoints Walter C. Wilson, Barry Hunsaker, Jr., and Angus H. Davis, 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 a registration
statement on Form S-3 relating to such securities to be filed with the
Securities and Exchange Commission, together with all amendments 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 22nd day
of January, 1998.
/s/ Ken L. Harrison
--------------------------
Ken L. Harrison
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration by Enron Oil & Gas Company, a Delaware corporation (the
"Company"), of Debt Securities and Common Stock, $.01 par value, in connection
with the proposed sale of such Debt Securities by the Company and Common Stock
by the Company and/or Enron Corp. as a "Selling Stockholder" of the Company,
the undersigned officer or director of the Company hereby constitutes and
appoints Walter C. Wilson, Barry Hunsaker, Jr., and Angus H. Davis, 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 a registration
statement on Form S-3 relating to such securities to be filed with the
Securities and Exchange Commission, together with all amendments 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 22nd day
of January, 1998.
/s/ Kenneth L. Lay
--------------------------
Kenneth L. Lay
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration by Enron Oil & Gas Company, a Delaware corporation (the
"Company"), of Debt Securities and Common Stock, $.01 par value, in connection
with the proposed sale of such Debt Securities by the Company and Common Stock
by the Company and/or Enron Corp. as a "Selling Stockholder" of the Company,
the undersigned officer or director of the Company hereby constitutes and
appoints Walter C. Wilson, Barry Hunsaker, Jr., and Angus H. Davis, 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 a registration
statement on Form S-3 relating to such securities to be filed with the
Securities and Exchange Commission, together with all amendments 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 22nd day
of January, 1998.
/s/ Edward Randall, III
-----------------------------
Edward Randall, III
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration by Enron Oil & Gas Company, a Delaware corporation (the
"Company"), of Debt Securities and Common Stock, $.01 par value, in connection
with the proposed sale of such Debt Securities by the Company and Common Stock
by the Company and/or Enron Corp. as a "Selling Stockholder" of the Company,
the undersigned officer or director of the Company hereby constitutes and
appoints Walter C. Wilson, Barry Hunsaker, Jr., and Angus H. Davis, 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 a registration
statement on Form S-3 relating to such securities to be filed with the
Securities and Exchange Commission, together with all amendments 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 22nd day
of January, 1998.
/s/ Jeffrey K. Skilling
-----------------------------
Jeffrey K. Skilling
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration by Enron Oil & Gas Company, a Delaware corporation (the
"Company"), of Debt Securities and Common Stock, $.01 par value, in connection
with the proposed sale of such Debt Securities by the Company and Common Stock
by the Company and/or Enron Corp. as a "Selling Stockholder" of the Company,
the undersigned officer or director of the Company hereby constitutes and
appoints Walter C. Wilson, Barry Hunsaker, Jr., and Angus H. Davis, 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 a registration
statement on Form S-3 relating to such securities to be filed with the
Securities and Exchange Commission, together with all amendments 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 22nd day
of January, 1998.
/s/ Frank G. Wisner
--------------------------
Frank G. Wisner
<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)____
----------------
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(FORMERLY TEXAS COMMERCE BANK NATIONAL ASSOCIATION)
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
A NATIONAL BANKING ASSOCIATION 74-0800980
(State of Incorporation if not a U.S. (I.R.S. Employer
national bank) Identification No.)
712 MAIN STREET
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
</TABLE>
----------------
ENRON OIL & GAS COMPANY
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 47-0684736
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 SMITH STREET
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
</TABLE>
----------------
ENRON OIL & GAS COMPANY DEBT
SECURITIES
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING
AUTHORITY TO WHICH IT IS SUBJECT.
Comptroller of the Currency, Washington, D.C.
Federal Deposit Insurance Corporation,
Washington, D.C.
Board of Governors of The Federal Reserve System,
Washington, D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST
POWERS.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.
The obligor is not an affiliate of the trustee.
ITEM 3. VOTING SECURITIES OF THE TRUSTEE.
FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING
SECURITIES OF THE TRUSTEE:
<TABLE>
<S> <C>
COL. A COL. B
TITLE OF CLASS AMOUNT OUTSTANDING
-------------- ------------------
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.
IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER
WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY
OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING
INFORMATION:
(a) TITLE OF THE SECURITIES OUTSTANDING UNDER EACH SUCH
OTHER INDENTURE.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
(b) A BRIEF STATEMENT OF THE FACTS RELIED UPON AS A BASIS
FOR THE CLAIM THAT NO CONFLICTING INTEREST WITHIN THE MEANING OF
SECTION 310(b)(1) OF THE ACT ARISES AS A RESULT OF THE TRUSTEESHIP
UNDER ANY SUCH OTHER INDENTURE, INCLUDING A STATEMENT AS TO HOW THE
INDENTURE SECURITIES WILL RANK AS COMPARED WITH THE SECURITIES ISSUED
UNDER SUCH OTHER INDENTURE.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
2
<PAGE> 3
ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR
OR UNDERWRITERS.
IF THE TRUSTEE OR ANY OF THE DIRECTORS OR EXECUTIVE OFFICERS
OF THE TRUSTEE IS A DIRECTOR, OFFICER, PARTNER, EMPLOYEE, APPOINTEE OR
REPRESENTATIVE OF THE OBLIGOR OR OF ANY UNDERWRITER FOR THE OBLIGOR, IDENTIFY
EACH SUCH PERSON HAVING ANY SUCH CONNECTION AND STATE THE NATURE OF EACH SUCH
CONNECTION.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES
OF THE TRUSTEE OWNED BENEFICIALLY BY THE OBLIGOR AND EACH DIRECTOR, PARTNER AND
EXECUTIVE OFFICER OF THE OBLIGOR.
<TABLE>
<S> <C> <C> <C>
COL. A COL. B COL. C COL. D
PERCENTAGE OF
VOTING SECURITIES
REPRESENTED BY
AMOUNT OWNED AMOUNT GIVEN
NAME OF OWNER TITLE OF CLASS BENEFICIALLY IN COL. C
------------- -------------- ------------ -----------------
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES
OF THE TRUSTEE OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH
DIRECTOR, PARTNER AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER.
<TABLE>
<S> <C> <C> <C>
Col. A Col. B Col. C Col. D
Percent of
voting securities
represented by
Amount owned amount given
Name of owner Title of class beneficially in Col. C
------------- -------------- ------------ -----------------
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
3
<PAGE> 4
ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
FURNISH THE FOLLOWING INFORMATION AS TO SECURITIES OF THE
OBLIGOR OWNED BENEFICIALLY OR HELD AS COLLATERAL SECURITY FOR OBLIGATIONS IN
DEFAULT BY THE TRUSTEE.
<TABLE>
<S> <C> <C> <C>
COL. A COL. B COL. C COL. D
WHETHER THE AMOUNT OWNED
SECURITIES BENEFICIALLY OR HELD PERCENT OF CLASS
ARE VOTING AS COLLATERAL SECURITY REPRESENTED BY
OR NONVOTING FOR OBLIGATIONS AMOUNT GIVEN
TITLE OF CLASS SECURITIES IN DEFAULT IN COL. C
------------- -------------- ------------ -----------------
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL
SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE
OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF
SUCH UNDERWRITER ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.
<TABLE>
<S> <C> <C> <C>
COL. A COL. B COL. C COL. D
AMOUNT OWNED
BENEFICIALLY OR HELD PERCENT OF CLASS
AS COLLATERAL SECURITY REPRESENTED BY
NAME OF ISSUER AND AMOUNT FOR OBLIGATIONS IN AMOUNT GIVEN
TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C
------------- -------------- ------------ -----------------
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL
SECURITY FOR OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE
KNOWLEDGE OF THE TRUSTEE (1) OWNS 10 PERCENT OR MORE OF THE VOTING SECURITIES
OF THE OBLIGOR OR (2) IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR,
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON:
<TABLE>
<S> <C> <C> <C>
COL. A COL. B COL. C COL. D
AMOUNT OWNED
BENEFICIALLY OR HELD PERCENT OF CLASS
AS COLLATERAL SECURITY REPRESENTED BY
NAME OF ISSUER AND AMOUNT FOR OBLIGATIONS IN AMOUNT GIVEN
TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C
------------- -------------- ------------ -----------------
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
4
<PAGE> 5
ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL
SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE
KNOWLEDGE OF THE TRUSTEE, OWNS 50 PERCENT OR MORE OF THE VOTING SECURITIES OF
THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES
OF SUCH PERSON ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.
<TABLE>
<S> <C> <C> <C>
COL. A COL. B COL. C COL. D
AMOUNT OWNED
BENEFICIALLY OR HELD PERCENT OF CLASS
AS COLLATERAL SECURITY REPRESENTED BY
NAME OF ISSUER AND AMOUNT FOR OBLIGATIONS IN AMOUNT GIVEN
TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C
------------- -------------- ------------ -----------------
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS
INDEBTED TO THE TRUSTEE, FURNISH THE FOLLOWING INFORMATION:
<TABLE>
<S> <C> <C>
COL. A COL. B COL. C
NATURE OF AMOUNT
INDEBTEDNESS OUTSTANDING DATE DUE
------------ ----------- --------
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 13. DEFAULTS BY THE OBLIGOR.
(a) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH
RESPECT TO THE SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH
DEFAULT.
There is not, nor has there been, a default with respect to
the securities under this indenture. (See Note on Page 6.)
(b) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE
UNDER WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION
IN ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE
THAN ONE OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER
THERE HAS BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE
INDENTURE OR SERIES AFFECTED, AND EXPLAIN THE NATURE OF ANY SUCH DEFAULT.
There has not been a default under any such indenture or
series. (See Note on Page 6.)
5
<PAGE> 6
ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.
IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE
EACH SUCH AFFILIATION.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 15. FOREIGN TRUSTEE.
IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE FOREIGN
TRUSTEE IS AUTHORIZED TO ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO
BE QUALIFIED UNDER THE ACT.
Not applicable.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY.
o 1 -- A copy of the articles of association of the trustee
as now in effect.
# 2 -- A copy of the certificate of authority of the trustee
to commence business.
* 3 -- A copy of the authorization of the trustee to
exercise corporate trust powers.
[ ]4 -- A copy of the existing by-laws of the trustee.
5 -- Not applicable.
6 -- The consent of the trustee required by Section 321(b)
of the Act.
+ 7 -- A copy of the latest report of condition of the
trustee published pursuant to law or the requirements
of its supervising or examining authority.
8 -- Not applicable.
9 -- Not applicable.
o Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities
and Exchange Commission as an exhibit to the Form S-3
File No. 33-56195.
# Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities
and Exchange Commission as an exhibit to the Form S-3
File No. 33-42814.
* Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities
and Exchange Commission as an exhibit to the Form
S-11 File No. 33-25132.
[ ] Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities
and Exchange Commission as an exhibit to the Form S-3
File No. 33-65055.
+ Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities
and Exchange Commission as an exhibit to the Form S-3
File No. 333-34045.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment of all
facts on which to base a responsive answer to Item 13, the answer to said Item
is based on incomplete information. Such item may, however, be considered as
correct unless amended by an amendment to this Form T-1.
6
<PAGE> 7
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE TRUST INDENTURE ACT OF
1939, THE TRUSTEE, TEXAS COMMERCE BANK NATIONAL ASSOCIATION, A NATIONAL BANKING
ASSOCIATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES OF
AMERICA, HAS DULY CAUSED THIS STATEMENT OF ELIGIBILITY TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ALL IN THE CITY OF
HOUSTON AND STATE OF TEXAS, ON THE 22ND DAY OF JANUARY, 1998.
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION
By: /s/ Ronda L. Parman
-----------------------------------
Ronda L. Parman
Corporate Trust Officer
7
<PAGE> 8
Exhibit 6
<PAGE> 9
Exhibit 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939 in connection with the proposed issue of Enron Oil & Gas Company
Debt Securities, we hereby consent that reports of examinations by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION
By: /s/ Ronda L. Parman
------------------------------------
Ronda L. Parman
Corporate Trust Officer
Dated: January 22, 1998
