<PAGE> 1
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 16, 1999
---------------
EOG RESOURCES, INC.
(formerly Enron Oil & Gas Company)
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-9743 47-0684736
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation or organization) Number) Identification No.)
1400 SMITH STREET
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip code)
</TABLE>
713/853-6161
(Registrant's telephone number, including area code)
===============================================================================
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Share Exchange
On August 16, 1999, EOG Resources, Inc. (formerly, Enron Oil & Gas
Company; "EOG") consummated the transactions (the "Share Exchange") contemplated
by the previously announced Share Exchange Agreement, dated July 19, 1999,
between EOG and Enron Corp., as amended by two letter agreements. At the
closing, EOG transferred to Enron Corp. all of the shares of a wholly owned
subsidiary of EOG. The assets of this subsidiary included indirectly EOG's China
and India operations, as well as approximately $600 million in cash that EOG
recently had contributed to the subsidiary to fund the subsidiary's
international operations and investments. In return for the shares of EOG's
subsidiary, Enron Corp. transferred to EOG 62,270,000 shares of EOG common stock
which were retired immediately following the Share Exchange. EOG borrowed the
funds for the cash contribution from a commercial bank and repaid $578 million
of the borrowings with the net proceeds of an underwritten public offering by
EOG of 27,000,000 shares of its common stock that closed later the same day.
The transferred China and India operations consisted of exploration,
development, production and marketing assets, including estimated total net
proved reserves at December 31, 1998 of 935 Bcf of natural gas and 44 MMBbl of
oil.
The terms of the Share Exchange, including the consideration received
by EOG for its China and India operations pursuant to the Share Exchange, was
determined through negotiations and discussions involving the managements of EOG
and Enron Corp. and, on behalf of EOG, representatives of a committee of the EOG
Board of Directors consisting of two independent directors (the "Special
Committee"). The members of the Special Committee were not officers, directors
or employees of or otherwise affiliated with Enron Corp. The terms of the Share
Exchange were recommended by the Special Committee which received two opinions
from investment banking firms as to the fairness of the transaction to EOG.
Relationship with Enron Corp.
Immediately prior to the closing of the Share Exchange, Enron Corp.
owned 82,270,000 shares of EOG common stock, representing approximately 53.5
percent of all of the shares of EOG common stock that were issued and
outstanding. As a result of the closing of the Share Exchange, the sale by Enron
Corp. of 8,500,000 shares of EOG common stock as a selling stockholder in the
public offering referred to above, and the completion on August 17, 1999 and
August 20, 1999 of the offering of Enron Corp. notes automatically exchangeable
into up to 11,500,000 million shares of EOG common stock, Enron Corp.'s maximum
remaining interest in EOG after the automatic conversion of its notes on August
17, 2002, will be under two percent (assuming the notes are exchanged for less
than the 11,500,000 shares of EOG common stock).
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<PAGE> 3
Effective as of August 16, 1999, the closing date of the Share
Exchange, the members of the board of directors of EOG who were officers or
directors of Enron Corp. resigned their positions as directors of EOG.
In addition, prior to the closing of the Share Exchange, Enron Corp.
provided EOG with various services, such as maintenance of employee benefit
plans, provision of some telecommunications and computer support services, lease
of office space and the provision of some purchasing and operating services and
other corporate staff and support services. EOG has the right to continue to use
these services for up to one year following the closing of the Share Exchange;
however, EOG plans to transition away from using these services as soon as
reasonably convenient for both Enron Corp. and EOG. EOG believes that it
obtained these services at substantially market terms, and, therefore, it
expects that its costs to obtain these services from third parties will not
change materially in the aggregate.
EOG and Enron Corp. in the past have entered into material transactions
and agreements incident to their respective businesses. Such transactions and
agreements have related to, among other things, the purchase and sale of natural
gas and crude oil and hedging and trading activities. Those transactions and
agreements currently in place will continue, and EOG does not expect any
material changes to such transactions and agreements that would not otherwise
occur in a third-party transaction. EOG and Enron Corp. may enter into similar
types of transactions and agreements in the future. EOG intends that the terms
of any future transactions and agreements between EOG and Enron Corp. will be
similar to those that could be obtained from other third parties.
EOG and Enron Corp. have entered into an agreement regarding the manner
in which they will share the burdens and benefits of the integrated project
under joint development in Mozambique. The agreement provides generally that
EOG's interest in this project will be 20 percent of the combined ownership
interest of EOG and Enron Corp.
ITEM 5. OTHER EVENTS.
On August 30, 1999, Enron Oil & Gas Company changed its name to EOG
Resources, Inc.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information
The following unaudited condensed consolidated pro forma statements of
income for the year ended December 31, 1998 and the six months ended June 30,
1999, give effect to the offering and the Share Exchange as described below, as
though they occurred on January 1, 1998. The unaudited condensed consolidated
pro forma balance sheet at June 30, 1999 gives effect to the offering and the
Share Exchange as though they occurred on June 30, 1999.
3
<PAGE> 4
The unaudited condensed consolidated pro forma statements of income and
balance sheet have been prepared based upon the historical consolidated
statements of income and balance sheet of EOG included in EOG's Annual Report on
Form 10-K for the year ended December 31, 1998, as amended by Amendment No. 1 on
Form 10-K/A, and EOG's Quarterly Report on Form 10-Q for the three-month and
six-month periods ended June 30, 1999, and have been prepared based upon
available information and assumptions that management believes are reasonable.
The unaudited condensed consolidated pro forma statements of income are for
informational purposes only, and do not necessarily represent what EOG's actual
results of operations would have been had the offering and the Share Exchange
occurred on January 1, 1998. The unaudited condensed consolidated pro forma
balance sheet is for informational purposes only, and does not purport to
represent EOG's actual financial position had the offering and the Share
Exchange occurred on June 30, 1999. In addition, the unaudited condensed
consolidated pro forma financial statements are not necessarily indicative of
EOG's future results of operations or financial position and should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements of EOG and
the related notes included in EOG's Annual Report on Form 10-K for the year
ended December 31, 1998, as amended by Amendment No. 1 on Form 10-K/A, and EOG's
Quarterly Report on Form 10-Q for the three-month and six-month periods ended
June 30, 1999.
4
<PAGE> 5
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF INCOME
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS AS ADJUSTED
---------- ----------- -----------
<S> <C> <C> <C>
NET OPERATING REVENUES
Natural Gas
Trade......................................... $244,775 $(25,920)(a) $218,855
Associated Companies(h)....................... 41,094 41,094
Crude Oil, Condensate and Natural Gas Liquids
Trade......................................... 63,257 (14,349)(a) 48,908
Associated Companies(h)....................... 1,259 1,259
Losses on Sales of Reserves and Related Assets
and Other, Net................................ (4,236) (4,236)
-------- -------- --------
Total.................................... 346,149 (40,269) 305,880
OPERATING EXPENSES
Lease and Well................................... 47,607 (7,145)(a) 40,462
Exploration Costs................................ 27,091 (1,647)(a) 25,444
Dry Hole Costs................................... 2,475 2,475
Impairment of Unproved Oil and Gas Properties.... 15,987 15,987
Depreciation, Depletion and Amortization......... 170,803 (5,811)(a) 164,992
General and Administrative....................... 50,019 (10,533)(a) 39,486
Taxes Other Than Income.......................... 26,076 (4,302)(a) 21,774
-------- -------- --------
Total.................................... 340,058 (29,438) 310,620
-------- -------- --------
OPERATING INCOME (LOSS)............................ 6,091 (10,831) (4,740)
OTHER INCOME, NET.................................. 58,290 927 (a) 59,217
-------- -------- --------
INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES.... 64,381 (9,904) 54,477
INTEREST EXPENSE
Incurred
Trade......................................... 35,208 1,868 (b) 37,076
Affiliate(h).................................. 139 139
Capitalized...................................... (6,306) 2,100 (a) (4,206)
-------- -------- --------
Net Interest Expense.......................... 29,041 3,968 33,009
-------- -------- --------
INCOME BEFORE INCOME TAXES......................... 35,340 (13,872) 21,468
INCOME TAX PROVISION............................... 9,636 (3,657)(a) 5,325
(654)(b)
-------- -------- --------
NET INCOME......................................... $ 25,704 $ (9,561) $ 16,143
======== ======== ========
NET INCOME PER SHARE OF COMMON STOCK
Basic............................................ $ 0.17 $ 0.14
======== ========
Diluted.......................................... $ 0.17 $ 0.13
======== ========
AVERAGE NUMBER OF COMMON SHARES
Basic............................................ 153,779 118,509
======== ========
Diluted.......................................... 154,943 119,673
======== ========
</TABLE>
The following notes are an integral part of these condensed consolidated
pro forma financial statements.
5
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UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS AS ADJUSTED
---------- ----------- -----------
<S> <C> <C> <C>
NET OPERATING REVENUES
Natural Gas
Trade............................................ $558,376 $(48,722)(a) $509,654
Associated Companies(h).......................... 62,929 62,929
Crude Oil, Condensate and Natural Gas Liquids
Trade............................................ 120,366 (24,115)(a) 96,251
Associated Companies(h).......................... 9,266 9,266
Gains on Sales of Reserves and Related Assets and
Other, Net....................................... 18,251 18,251
-------- -------- --------
Total....................................... 769,188 (72,837) 696,351
OPERATING EXPENSES
Lease and Well...................................... 98,868 (11,119)(a) 87,749
Exploration Costs................................... 65,940 (2,532)(a) 63,408
Dry Hole Costs...................................... 22,751 22,751
Impairment of Unproved Oil and Gas Properties....... 32,076 32,076
Depreciation, Depletion and Amortization............ 315,106 (9,320)(a) 305,786
General and Administrative.......................... 69,010 (11,043)(a) 57,967
Taxes Other Than Income............................. 51,776 (6,615)(a) 45,161
-------- -------- --------
Total....................................... 655,527 (40,629) 614,898
-------- -------- --------
OPERATING INCOME...................................... 113,661 (32,208) 81,453
OTHER INCOME (EXPENSE), NET........................... (4,800) 5,106 (a) 306
-------- -------- --------
INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES....... 108,861 (27,102) 81,759
INTEREST EXPENSE
Incurred
Trade............................................ 60,701 (99)(a) 65,134
4,532 (b)
Affiliate(h)..................................... 589 589
Capitalized......................................... (12,711) 3,978 (a) (8,733)
-------- -------- --------
Net Interest Expense............................. 48,579 8,411 56,990
-------- -------- --------
INCOME BEFORE INCOME TAXES............................ 60,282 (35,513) 24,769
INCOME TAX PROVISION (BENEFIT)........................ 4,111 (10,469)(a) (7,944)
(1,586)(b)
-------- -------- --------
NET INCOME............................................ $ 56,171 $(23,458) $ 32,713
======== ======== ========
NET INCOME PER SHARE OF COMMON STOCK
Basic............................................... $ 0.36 $ 0.27
======== ========
Diluted............................................. $ 0.36 $ 0.27
======== ========
AVERAGE NUMBER OF COMMON SHARES
Basic............................................... 154,345 119,075
======== ========
Diluted............................................. 155,054 119,784
======== ========
</TABLE>
The following notes are an integral part of these condensed consolidated
pro forma financial statements.
6
<PAGE> 7
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
AT JUNE 30, 1999
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
ADDITIONAL EXCHANGE OF
BORROWINGS TRANSFERRED
AND EQUITY SUBSIDIARIES OTHER
HISTORICAL ISSUANCE SHARES ADJUSTMENTS AS ADJUSTED
----------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents.................. $ 11,411 $ 45,400(b) $ (606,287)(d) $(13,355)(f) $ 5,759
577,740(c) (12,000)(e) 2,850 (g)
Accounts Receivable
Trade.................................... 159,469 (59,139)(d) 100,330
Associated Companies(h).................. 12,795 12,795
Inventories................................ 35,175 (10,058)(d) 25,117
Other...................................... 6,420 (1,354)(d) 5,066
----------- -------- ----------- -------- -----------
Total................................ 225,270 623,140 (688,838) (10,505) 149,067
OIL AND GAS PROPERTIES (SUCCESSFUL EFFORTS
METHOD).................................... 4,965,113 (262,085)(d) 4,703,028
Less: Accumulated Depreciation, Depletion
and Amortization......................... (2,298,265) 19,933 (d) (2,278,332)
----------- -------- ----------- -------- -----------
Net Oil and Gas Properties........... 2,666,848 (242,152) 2,424,696
OTHER ASSETS................................. 69,928 4,600(b) (1,188)(d) 73,340
----------- -------- ----------- -------- -----------
TOTAL ASSETS................................. $ 2,962,046 $627,740 $ (932,178) $(10,505) $ 2,647,103
=========== ======== =========== ======== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable
Trade.................................... $ 119,664 $ (29,898)(d) $ 89,766
Associated Companies(h).................. 41,014 (8,352)(f) 32,662
Accrued Taxes Payable...................... 16,465 (1,685)(d) 29 (f) 14,809
Dividends Payable.......................... 4,736 4,736
Other...................................... 17,608 (9,090)(d) 1,000 (g) 9,518
----------- -------- ----------- -------- -----------
Total................................ 199,487 (40,673) (7,323) 151,491
LONG-TERM DEBT
Trade...................................... 1,073,883 50,000(b) 1,123,883
Affiliate.................................. 66,000 66,000
OTHER LIABILITIES
Trade...................................... 19,004 1,850 (g) 20,854
Associated Companies(h).................... 26,085 (8,352)(f) 17,733
DEFERRED INCOME TAXES........................ 265,444 (15,499)(d) 3,516 (f) 253,461
DEFERRED REVENUES............................ 2,099 2,099
SHAREHOLDERS' EQUITY
Common Stock, $.01 Par, 320,000,000 Shares
Authorized and 160,000,000 Shares Issued
Historical and 187,000,000 Shares Pro
Forma.................................... 201,600 270(c) 201,870
Additional Paid In Capital................. 401,042 577,470(c) 978,512
Unearned Compensation...................... (4,183) (4,183)
Cumulative Foreign Currency Translation
Adjustment............................... (26,124) (26,124)
Retained Earnings.......................... 854,846 595,478 (d) (196)(f) 1,438,128
(12,000)(e)
Common Stock Held in Treasury, 6,104,863
Shares Historical and 68,374,863 Shares
Pro Forma................................ (117,137) (1,459,484)(d) (1,576,621)
----------- -------- ----------- -------- -----------
Total Shareholders' Equity........... 1,310,044 577,740 (876,006) (196) 1,011,582
----------- -------- ----------- -------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY... $ 2,962,046 $627,740 $ (932,178) $(10,505) $ 2,647,103
=========== ======== =========== ======== ===========
</TABLE>
The following notes are an integral part of these condensed consolidated
pro forma financial statements.
7
<PAGE> 8
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA FINANCIAL STATEMENTS
The following pro forma adjustments give effect to the sale by EOG of
27,000,000 shares of its common stock on August 16, 1999, additional borrowings
of $50.0 million under new revolving credit facilities executed on July 28,
1999, and the Share Exchange (see note (a)), as though these transactions
occurred on January 1, 1998 for income statement purposes, and give effect to
these transactions as though they occurred on June 30, 1999 for balance sheet
purposes. EOG's historical results were derived from its historical financial
statements included in EOG's Annual Report on Form 10-K for the year ended
December 31, 1998, as amended by Amendment No. 1 on Form 10-K/A, and its
Quarterly Report on Form 10-Q for the three-month and six-month periods ended
June 30, 1999.
(a) To reflect the elimination of the historical results of
operations of EOGI-India, Inc., Enron Oil & Gas India Ltd.,
EOGI China Company, Enron Oil & Gas China Ltd., EOGI-China,
Inc. and Enron Oil & Gas China International Ltd.
(collectively referred to as the "Transferred Subsidiaries"),
all wholly owned subsidiaries of EOG prior to August 16, 1999.
All of EOG's interest in the common shares of each of the
Transferred Subsidiaries was transferred to Enron Corp. in
exchange for 62,270,000 shares of EOG's common stock owned by
Enron Corp. on August 16, 1999 (the "Share Exchange").
(b) To reflect the borrowing of $50.0 million under a new
revolving credit facility. Borrowings are assumed to be at
6.0% per annum, plus the amortization of commitment fees of
$4.6 million ($1.5 million for 1998 and $0.4 million for the
six months ended June 30, 1999). Commitment fees are deferred
as "Other Assets" and are amortized over the related
commitment or loan period, as applicable.
(c) To reflect the net proceeds of $577.7 million received from
the offering of 27,000,000 shares of EOG's common stock.
(d) To reflect the elimination of the balances of the Transferred
Subsidiaries and the receipt of 62,270,000 shares of EOG's
common stock pursuant to the Share Exchange. The shares of
EOG's common stock received are reflected at their fair market
value on the date of the transfer and a gain is reflected for
the difference between the fair market value of the shares of
common stock received and the historical cost basis in the
Transferred Subsidiaries. The fair market value is based on
the closing market price per share on August 13, 1999 of
$23.438. EOG's Board of Directors authorized the retirement of
the 62,270,000 shares effective immediately following the
Share Exchange. Prior to the Share Exchange, EOG contributed
to the transferred subsidiaries approximately $600.0 million
in the form of cash capital contributions plus contributions
of net intercompany accounts receivable of $173.2 million at
June 30, 1999. The Share Exchange was in the form of a
non-taxable
8
<PAGE> 9
exchange of shares; accordingly, no income taxes have been
provided with respect to the recognized gain.
(e) To reflect $12.0 million of transaction costs directly related
to the Share Exchange. As noted in footnote (d), the Share
Exchange was in the form of a non-taxable exchange of shares;
accordingly, such transaction costs are not deductible for
income tax purposes.
(f) To reflect a net payment of $13.4 million from EOG to Enron
Corp. to settle amounts payable to Enron Corp. and other
income tax related issues, which were resolved as part of the
Share Exchange and the termination of the Tax Sharing
Agreement, as amended, between EOG and Enron Corp.
(g) To reflect the payment by Enron Corp. of $1.9 million and the
assumption by EOG of a liability of the same amount related to
certain unvested benefit obligations under an Enron Corp. Cash
Balance Plan and the payment by Enron Corp. of $1.0 million
and the assumption by EOG of a liability of the same amount
related to employee medical reimbursement accounts concurrent
with the loss of control of EOG by Enron Corp.
(h) Associated companies and affiliate balances result from
transactions with Enron Corp., its subsidiaries or affiliates.
If as a result of the offering and the Share Exchange, Enron
Corp.'s ownership of our common stock declines to a level that
Enron Corp. accounts for its investment in EOG on the cost
method, any balances with associated companies or affiliates
would be reclassified as trade.
9
<PAGE> 10
(c) Exhibits
2.1 Share Exchange Agreement, dated as of July 19, 1999,
between Enron Corp. and EOG (the "Share Exchange
Agreement") (incorporated by reference to Exhibit 2.1
to EOG's Registration Statement on Form S-3
(Registration No. 333-83533), as filed with the
Securities and Exchange Commission on July 23, 1999).
*2.2 Letter Agreement, dated July 30, 1999, between Enron
Corp. and EOG, amending the Share Exchange Agreement.
*2.3 Letter Agreement, dated August 10, 1999, between
Enron Corp. and EOG, amending the Share Exchange
Agreement.
- -----------------------------
* Filed herewith.
10
<PAGE> 11
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EOG RESOURCES, INC.
Date: August 31, 1999 By: /s/ W. C. Wilson
---------------------------------
Walter C. Wilson
Senior Vice President and
Chief Financial Officer
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
2.1 Share Exchange Agreement, dated as of July 19, 1999, between
Enron Corp. and EOG (the "Share Exchange Agreement")
(incorporated by reference to Exhibit 2.1 to EOG's
Registration Statement on Form S-3 (Registration No.
333-83533), as filed with the Securities and Exchange
Commission on July 23, 1999).
*2.2 Letter Agreement, dated July 30, 1999, between Enron Corp. and
EOG, amending the Share Exchange Agreement.
*2.3 Letter Agreement, dated August 10, 1999, between Enron Corp.
and EOG, amending the Share Exchange Agreement.
</TABLE>
- -------------------------
* Filed herewith.
<PAGE> 1
EXHIBIT 2.2
July 30, 1999
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Dear Sirs:
Reference is made to the Share Exchange Agreement, dated July 19, 1999,
between Enron Corp. and Enron Oil & Gas Company (the "Share Exchange
Agreement"). Capitalized terms used, but not defined in this letter agreement,
have the respective meanings given them in the Share Exchange Agreement.
EOG understands that the Convertible Securities that Enron is proposing
to issue pursuant to Section 6.2(b) of the Share Exchange Agreement in the
Public Offering will be mandatorily convertible into up to 10,000,000 Retained
Shares, or, if the underwriters exercise their over-allotment option, up to
11,500,000 Retained Shares. Furthermore, EOG and Enron anticipate that the
underwriters' over-allotment option relating to the sale by EOG of shares of EOG
Common Stock in the Public Offering is to be satisfied by the sale by Enron of
Retained Shares. If both of the over-allotment options referred to above are
fully exercised by the respective underwriters, a total of 15,550,000 Retained
Shares will be involved (either directly or underlying Convertible Securities)
in the Public Offering, which is more than the 10,000,000 Retained Shares
contemplated by Section 6.2(b) of the Share Exchange Agreement and which would
involve the direct sale of Retained Shares (as opposed to the sale of only
Convertible Securities contemplated by Section 6.2(b)). In this connection, EOG
hereby consents to the sale of shares of EOG Common Stock pursuant to the
aforementioned underwriters over-allotment options in the manner described above
and waives the provisions of the first sentence of Section 6.2(b) of the Share
Exchange Agreement solely to the extent necessary to permit such sales, provided
that the Public Offering meets the provisions of Section 6.2 of the Share
Exchange Agreement other than such first sentence of Section 6.2(b). This letter
agreement shall constitute an amendment to the Share Exchange Agreement if and
to the extent necessary under the terms of the Share Exchange Agreement.
<PAGE> 2
If the foregoing correctly reflects our understanding, please execute
this letter agreement in the space provided below.
Very truly yours,
ENRON OIL & GAS COMPANY
By: /s/ W. C. WILSON
---------------------------------
Walter C. Wilson
Senior Vice President and
Chief Financial Officer
Agreed and accepted:
ENRON CORP.
By: /s/ TIMOTHY J. DETMERING
-------------------------------
Timothy J. Detmering
Vice President, Corporate Development
<PAGE> 1
EXHIBIT 2.3
August 10, 1999
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Dear Sirs:
Reference is made to the Share Exchange Agreement, dated July 19, 1999,
between Enron Corp. and Enron Oil & Gas Company (as amended by that certain
letter agreement (the "Letter Agreement") dated July 30, 1999, between Enron
Corp. and Enron Oil & Gas Company, the "Share Exchange Agreement"). Capitalized
terms used, but not defined in this letter agreement, have the respective
meanings given them in the Share Exchange Agreement.
Pursuant to the Share Exchange Agreement, and subject to the terms and
conditions set forth in the Letter Agreement, EOG consented to the sale by Enron
of (i) Convertible Securities that Enron is proposing to issue pursuant to
Section 6.2(b) of the Share Exchange Agreement in the Public Offering that will
be mandatorily convertible into up to 10,000,000 Retained Shares, or, if the
underwriters exercise their over-allotment option, up to 11,500,000 Retained
Shares and (ii) up to 4,050,000 Retained Shares upon exercise of the
underwriters' over-allotment option relating to the sale by EOG of shares of EOG
Common Stock in the Public Offering.
In addition to the foregoing, EOG and Enron now understand from the
underwriters in the Public Offering that there is sufficient demand from
potential investors that up to an additional 4,000,000 Retained Shares may be
sold directly by Enron in the Public Offering (or up to an additional 4,450,000
Retained Shares if the underwriters' overallotment option is fully exercised).
Accordingly, if both of the over-allotment options referred to above
are fully exercised by the respective underwriters, a total of 20,000,000
Retained Shares will be sold to the public (either directly or underlying
Convertible Securities) in the Public Offering, which is more than the
15,550,000 Retained Shares to which EOG has previously consented pursuant to the
Letter Agreement (subject to the terms and conditions of the Letter Agreement).
<PAGE> 2
Enron Corp.
August 10, 1999
Page 2
In this connection, EOG hereby consents to the sale by Enron of
4,000,000 shares of EOG Common Stock directly in connection with the Public
Offering, the sale by Enron of Convertible Securities that will be mandatorily
convertible into up to 10,000,000 shares of Retained Shares and the sale by
Enron of up to 6,000,000 additional shares pursuant to the aforementioned
underwriters' over-allotment options in the Public Offering in the manner
described above and waives the provisions of the first sentence of Section
6.2(b) of the Share Exchange Agreement solely to the extent necessary to permit
such sales, provided that the Public Offering meets the provisions of Section
6.2 of the Share Exchange Agreement other than such first sentence of Section
6.2(b) to the extent waived hereunder and in the Letter Agreement. This letter
agreement shall constitute an amendment to the Share Exchange Agreement if and
to the extent necessary under the terms of the Share Exchange Agreement.
If the foregoing correctly reflects our understanding, please execute
this letter agreement in the space provided below.
Very truly yours,
ENRON OIL & GAS COMPANY
By: /s/ W. C. WILSON
-----------------------------------
Walter C. Wilson
Senior Vice President and
Chief Financial Officer
Agreed and accepted:
ENRON CORP.
By: /s/ TIMOTHY J. DETMERING
------------------------------------
Name: Timothy J. Detmering
------------------------
Title: Vice President
------------------------
