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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant To Section 13 of 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 18, 1996
______________
KCS Energy, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-11698 22-2889587
________________________________________________________________________________
State or other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
379 Thornall Street, Edison, New Jersey 08837
________________________________________________________________________________
(Address of principal executive offices) (Zip Code)
(908) 632-1770
________________________________________________________________________________
Registrant's telephone number, including area code
NOT APPLICABLE
________________________________________________________________________________
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
KCS Energy, Inc. issued a press release and announced that it had
received the opinion of the Supreme Court of Texas in its litigation of an
above-market-price, take-or-pay gas purchase agreement with Tennessee Gas
Pipeline that affirmed KCS Energy Inc.'s position on all issues.
The press release is attached as an exhibit.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) None.
(b) None.
(c) Exhibits.
99 Press Release dated April 18, 1996 announcing the opinion issued
by the Supreme Court of Texas in favor of the Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KCS ENERGY, INC.
By: /s/ HENRY A. JURAND
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Henry A. Jurand
Vice President, Chief Financial Officer
and Secretary
DATED: April 18, 1996
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EXHIBIT 99
KCS ENERGY, INC. ANNOUNCES FAVORABLE SUPREME COURT DECISION
Plans Accelerated Capital Spending Program
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Edison, NJ, April 18, 1996 -- KCS Energy, Inc. (NYSE:KCS) today announced it
has received the opinion of the Supreme Court of Texas in its litigation of an
above-market-price, take-or-pay gas purchase agreement ("GPA") with Tennessee
Gas Pipeline Company ("TGT").
In its opinion, the Texas Supreme Court affirmed the Company's position
on all issues, stating that the price payable by TGT for the gas escalates
monthly in accordance with section 102(b)(2) of the Natural Gas Policy Act
(the "Act"), currently $8.32 per MMBtu plus reimbursement of severance taxes;
that KCS has the right to pool the leases; that TGT has no legal or contractual
right to question or determine whether certain leases are no longer committed
to the GPA; and that the GPA is not an output contract governed by section
2.306 of the Texas Uniform Commercial Code.
"We are extremely pleased with the Supreme Court's decision which
upholds the validity of our contract, its pricing and pooling provisions and
requires TGT to take or pay for 85% of the deliverability from the wells
subject to the GPA," KCS President and Chief Executive Officer James W.
Christmas said.
"This favorable decision should remove the cloud that has hung over the
Company since the litigation was initiated by TGT in 1990 and opens the way for
our recovery of approximately $60 million that TGT has currently withheld under
an interim agreement approved by the District Court, which is the balance of the
purchase price for production since September 17, 1994," said Mr. Christmas.
Under the interim agreement with TGT, in which TGT posted $206 million of
supersedeas bonds, TGT paid $3.00 per MMBtu for all gas purchased under the GPA
from that date. The agreement also provided that if the Court determined, as it
has, that the gas price is to be calculated under section 102(b)(2) of the Act,
TGT would pay the difference between the section 102(b)(2) price and $3.00
promptly after the Court's determination. The earnings previously reported by
the Company reflected the full contract price so that the recovery of the
receivable will not affect reported earnings.
"Sales of gas production under the GPA, which runs through January 1999,
were 6.92 Bcf in 1995 and 6.85 Bcf in 1994. Proved gas reserves attributable to
the acreage covered by the TGT contract were 31.7 Bcf at December 31, 1995, not
all of which can be produced during the remaining life of the contract,"
according to Mr. Christmas.
"Before the Texas Supreme Court's ruling, KCS had set a capital
spending budget of $70 million for 1996. With the favorable decision, we will
be able to accelerate our drilling and acquisition programs," continued
Mr. Christmas.
According to Mr. Christmas, "There are two related TGT lawsuits
(previously reported) which we believe to be without merit and which the
Company will continue vigorously to defend."
KCS is an independent energy company primarily engaged in the
acquisition, exploration, development and production of natural gas and crude
oil. The company also operates natural gas transportation and energy marketing
and services businesses.
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