<PAGE> 1
Filed pursuant to rule 424(b)(2)
Registration Statement No.'s 33-47154 and 33-50077.
PROSPECTUS SUPPLEMENT
(To Prospectus dated May 2, 1994)
$300,000,000
Burlington Resources Inc.
7.15% NOTES DUE 1999
------------------------
Interest payable May 1 and November 1
------------------------
THE NOTES WILL MATURE ON MAY 1, 1999.
THE NOTES ARE NOT REDEEMABLE AT ANY TIME PRIOR TO MATURITY AND HAVE NO SINKING
FUND PROVISIONS.
------------------------
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 SUPPLEMENT OR THE PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
PRICE 99.737% AND ACCRUED INTEREST
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
------------------ ------------------ ------------------
<S> <C> <C> <C>
Per Note................... 99.737% .600% 99.137%
Total...................... $299,211,000 $1,800,000 $297,411,000
</TABLE>
- ------------
(1) Plus accrued interest from May 1, 1994.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $300,000.
------------------------
The Notes are offered, subject to prior sale, when, as and if accepted by
the Underwriter named herein, and subject to the approval of certain legal
matters by Cravath, Swaine & Moore, counsel for the Underwriter. It is expected
that delivery of the Debt Securities will be made on or about May 9, 1994 at the
office of Morgan Stanley & Co. Incorporated, New York, N.Y., against payment
therefor in New York funds.
------------------------
MORGAN STANLEY & CO.
Incorporated
May 2, 1994
<PAGE> 2
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY THE NOTES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents by Reference........................ S-3
Recent Developments.................................................... S-3
Use of Proceeds........................................................ S-3
Capitalization......................................................... S-4
Selected Financial Data................................................ S-5
Certain Terms of the Notes............................................. S-6
Underwriting........................................................... S-6
Legal Matters.......................................................... S-6
Experts................................................................ S-7
PROSPECTUS
Available Information.................................................. 2
Incorporation of Certain Documents by Reference........................ 2
The Company............................................................ 3
Use of Proceeds........................................................ 3
Ratio of Earnings to Fixed Charges..................................... 3
Description of Debt Securities......................................... 3
Plan of Distribution................................................... 8
Legal Matters.......................................................... 9
Experts................................................................ 9
</TABLE>
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Reference is made to "Incorporation of Certain Documents by Reference" in
the accompanying Prospectus. At the date of this Prospectus Supplement, the
documents incorporated by reference herein include:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1993; and
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994.
RECENT DEVELOPMENTS
On April 26, 1994, the Company acquired Maxus Energy Corporation's
("Maxus") 87.1 percent interest in Diamond Shamrock Offshore Partners Limited
Partnership (the "Partnership"), including the general partner interests in the
Partnership. The Company also announced its intention to acquire the remaining
12.9 percent of the Partnership in a transaction expected to close in July 1994.
The Partnership is engaged in the exploration and production of natural gas and
crude oil on Federal leases in the Gulf of Mexico off the coast of Texas and
Louisiana. In a separate transaction, the Company purchased an additional
offshore property and one onshore property from Maxus. The aggregate net
purchase price, including the remaining 12.9 percent of the Partnership, is $375
million. The proved and probable reserves acquired by the Company are
approximately 375 billion cubic feet of gas equivalent, located on approximately
100,000 developed and 200,000 undeveloped acres. The acquired properties
currently produce approximately 95 million cubic feet per day of natural gas and
4 thousand barrels of oil per day from 49 structures of which approximately 50
percent are operated by the Partnership or Maxus.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Notes
will be added to working capital and used for general corporate purposes,
including acquisition of oil and gas properties, repayment of commercial paper,
capital expenditures and repurchases of the Company's common stock.
S-3
<PAGE> 4
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of March 31, 1994 and as adjusted to reflect the issuance of the
Notes. This table should be read in conjunction with the consolidated financial
statements and the notes thereto incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1994
----------------------
ACTUAL AS ADJUSTED
------ -----------
(IN MILLIONS)
<S> <C> <C>
Long-term Debt.......................................................... $ 817 $ 1,117
------ -----------
Stockholders' Equity(a):
Common Stock, $.01 par value, 325,000,000 shares authorized;
150,000,000 shares issued.......................................... 2 2
Paid-in Capital....................................................... 2,937 2,937
Retained Earnings..................................................... 497 497
Cost of Treasury Stock (20,283,335 shares)............................ 797 797
------ -----------
Total Stockholders' Equity............................................ 2,639 2,639
------ -----------
Total Capitalization.......................................... $3,456 $ 3,756
------ -----------
------ -----------
</TABLE>
- ---------------
(a) The Company is authorized to issue 75,000,000 shares of $.01 par value
preferred stock, of which 3,250,000 have been designated as Series A
Preferred Stock. As of March 31, 1994, no shares of preferred stock were
issued.
S-4
<PAGE> 5
SELECTED FINANCIAL DATA
The selected financial data set forth below should be read in conjunction
with the consolidated financial statements and the notes thereto contained in
documents incorporated by reference in this Prospectus. Information for the
three-month periods ended March 31, 1994 and 1993 is unaudited but, in the
opinion of management, reflects all material adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of the results of
operations for such periods. Results of operations for the three months ended
March 31, 1994 are not necessarily indicative of the results of operations to be
expected for the entire year.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
------------------- --------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
------- ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE AND RATIO AMOUNTS)
FOR THE PERIOD ENDED --
CONTINUING OPERATIONS:
Revenues................ $ 320 $ 316 $1,249 $1,141 $1,036 $1,025 $ 797
Operating Income........ 69 66 256 240 177 216 90
Income from Continuing
Operations........... 48 45 255 190 100 124 77
Earnings per Common
Share(a)............. $ 0.37 $ 0.35 $ 1.95 $ 1.44 $ 0.75 $ 0.87 $ 0.52
Ratio of Earnings to
Fixed Charges(b)..... 3.48x 3.11x 4.79x 3.49x 1.95x 2.97x 3.27x
Cash Dividends Declared
per Common
Share(c)............. $0.1375 $0.1375 $ 0.55 $ 0.60 $ 0.70 $ 0.70 $ 0.61
AT PERIOD END:
Total Assets(d)......... $ 4,469 $ 4,405 $4,448 $4,470 $5,480 $5,250 $4,625
Long-term Debt(e)....... $ 817 $ 935 $ 819 $1,003 $1,298 $ 529 $ 87
Stockholders'
Equity(d)............ $ 2,639 $ 2,455 $2,608 $2,406 $2,907 $3,024 $3,223
</TABLE>
- ---------------
(a) Excluding non-recurring items totaling $0.45, $0.24, and $0.08 per share,
earnings per common share from continuing operations would have been $1.50,
$1.20 and $0.67 for the years ended 1993, 1992 and 1991, respectively.
(b) Earnings represent pretax income from continuing operations available for
fixed charges, less equity in undistributed earnings of 20-50% owned
companies, together with a portion of rent under long-term operating leases
representative of an interest factor. Fixed charges represent interest
expense, capitalized interest and a portion of rent under long-term
operating leases representative of an interest factor.
(c) On April 7, 1994 the Company's Board of Directors declared dividends of
$0.1375 per common share, payable on July 1, 1994. In July 1992, the
quarterly dividend rate was reduced to $0.125 per share to reflect the June
30, 1992 spin-off of El Paso Natural Gas Company ("EPNG") to the Company's
stockholders.
(d) On June 30, 1992 the Company distributed its EPNG common stock to the
Company's stockholders of record as of June 15, 1992. The distribution was
accounted for as a $575 million non-cash dividend.
(e) Excludes current maturities.
S-5
<PAGE> 6
CERTAIN TERMS OF THE NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Debt Securities (as such
term is used in the accompanying Prospectus) set forth under the heading
"Description of Debt Securities" in the accompanying Prospectus, to which
description reference is hereby made.
The Notes will be limited to $300 million aggregate principal amount and
will mature on May 1, 1999. The Notes will bear interest from May 1, 1994 at the
rate per annum set forth on the cover page hereof, payable on May 1 and November
1 of each year, commencing November 1, 1994 to the persons in whose names such
Notes are registered, subject to certain exceptions, at the close of business on
the April 15 or October 15, as the case may be, next preceding such interest
payment date. Principal and interest will be payable, and transfer of the Notes
will be registrable, at the office of the Trustee, but payment of interest may
be made at the option of the Company by check mailed to the address of the
person entitled thereto as shown on the Securities Register. The Notes will be
issuable in registered form only in denominations of $1,000 and integral
multiples thereof.
The Notes will not be redeemable prior to maturity and will not be subject
to any sinking fund provisions. The covenant and defeasance provisions described
in the accompanying Prospectus under "Description of Debt Securities" will apply
to the Notes.
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof between the Company and Morgan Stanley & Co.
Incorporated (the "Underwriter"), the Underwriter has agreed to purchase, and
the Company has agreed to sell to the Underwriter, the entire principal amount
of the Notes.
The Underwriting Agreement provides that the obligation of the Underwriter
to pay for and accept delivery of the Notes is subject to the approval of
certain legal matters by its counsel and to certain other conditions. The
Underwriter is obligated to take and pay for all the Notes offered hereby if any
are taken.
The Underwriter proposes to offer all or part of the Notes directly to the
public at the public offering price set forth on the cover page hereof and all
or part to certain dealers at a price which represents a concession not in
excess of .350% of the principal amount of the Notes. The Underwriter may allow,
and any such dealer may reallow, a concession to certain other dealers not in
excess of .250% of the principal amount of the Notes. After the initial offering
of the Notes, the offering price and other selling terms may from time to time
be varied by the Underwriter.
The Company has agreed to indemnify the Underwriter against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriter that it presently
intends to make a market in the Notes as permitted by applicable laws and
regulations. The Underwriter is not obligated, however, to make a market in the
Notes, and any such market making may be discontinued at any time at the sole
discretion of the Underwriter. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the Notes.
The Underwriter and its affiliates engage in transactions with and perform
services for the Company and its affiliates in the ordinary course of business.
LEGAL MATTERS
The validity of the Notes will be passed upon for the Company by Andrews &
Kurth L.L.P., Houston, Texas, and for the Underwriter by Cravath, Swaine &
Moore, New York, New York.
S-6
<PAGE> 7
EXPERTS
The consolidated financial statements and financial statement schedules of
the Company as of December 31, 1993 and 1992, and for the years ended December
31, 1993, 1992 and 1991, have been incorporated herein in reliance on the
reports of Coopers & Lybrand, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
S-7
<PAGE> 8
PROSPECTUS
BURLINGTON RESOURCES INC.
DEBT SECURITIES
------------------------
Burlington Resources Inc. (the "Company") may offer from time to time its
unsecured debt securities consisting of notes, debentures or other evidences of
indebtedness (the "Debt Securities") up to an aggregate principal amount of
$500,000,000 or, if applicable, the equivalent thereof in any other currency or
currency unit. The Debt Securities may be offered as separate series in amounts,
at prices and on terms to be determined in light of market conditions at the
time of sale and set forth in a Prospectus Supplement or Prospectus Supplements.
The terms of each series of Debt Securities, including, where applicable,
the specific designation, aggregate principal amount, authorized denominations,
maturities, rate or rates and time or times of payment of any interest, any
terms for optional or mandatory redemption or payment of additional amounts or
any sinking fund provisions, any initial public offering price, the proceeds to
the Company and any other specific terms in connection with the offering and
sale of such series will be set forth in a Prospectus Supplement or Prospectus
Supplements. As used herein, the Debt Securities shall include securities
denominated in U.S. dollars or, at the option of the Company as so specified in
an applicable Prospectus Supplement, in any other currency or currency units or
in amounts determined by reference to an index.
The Debt Securities may be sold directly by the Company, through agents
designated from time to time or to or through underwriters or dealers. See "Plan
of Distribution." If any agents of the Company or any underwriters are involved
in the sale of any Debt Securities in respect of which this Prospectus is being
delivered, the names of such agents or underwriters and any applicable
commissions or discounts will be set forth in a Prospectus Supplement.
------------------------
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.
------------------------
May 2, 1994
<PAGE> 9
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IN
CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER,
DEALER OR AGENT. THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY DEBT SECURITIES
BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE THEREOF.
------------------------
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance therewith,
files reports and other information with the Securities and Exchange Commission
(the "Commission"). Such reports and other information may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549; 7 World Trade
Center, Suite 1300, New York, New York 10048; and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may
also be obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Judiciary Plaza, Washington D.C. 20549. In
addition, reports and other information concerning the Company can be inspected
at the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
The Company has filed with the Commission a Registration Statement
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "1993 Act"), with
respect to the Debt Securities. This Prospectus does not contain all the
information set forth in the Registration Statement and reference is hereby made
to the Registration Statement for further information with respect to the
Company and the Debt Securities.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission pursuant
to the 1934 Act, are hereby incorporated by reference in this Prospectus:
(a) Annual Report on Form 10-K for the year ended December 31, 1993;
and
(b) Quarterly Report on Form 10-Q for the quarter ended March 31,
1994.
All documents filed by the Company pursuant to Section 13(a), 14 or 15(d)
of the 1934 Act subsequent to the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated by reference in
this Prospectus, and to be a part hereof from the date of filing of such
documents. Any statement 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 other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement 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, including
any beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any document incorporated by
reference in this Prospectus (other than exhibits to such documents unless such
exhibits are specifically incorporated by reference to such documents). Requests
for such copies should be directed to Wendi L. Shackelford, Corporate Secretary,
Burlington Resources Inc., 5051 Westheimer, Suite 1400, Houston, Texas 77056
(telephone (713) 831-1600).
2
<PAGE> 10
THE COMPANY
The Company is a holding company engaged, through its principal subsidiary,
Meridian Oil Holding Inc., and its subsidiaries (collectively, "Meridian"), in
the exploration, development and production of oil and gas, and related
marketing activities, which include aggregation and resale of third party oil
and gas. Meridian also owns and operates natural gas gathering systems and
intrastate natural gas pipelines and has an interest in a crude oil pipeline.
Meridian is the largest independent (nonintegrated) oil and gas company in the
United States in terms of total domestic proved equivalent reserves which were
estimated at 6.2 trillion cubic feet of gas equivalent at December 31, 1993.
The Company's principal executive offices are located at 5051 Westheimer,
Suite 1400, Houston, Texas 77056 (telephone (713) 831-1600).
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Offered
Debt Securities (as defined below) will be used as set forth in a Prospectus
Supplement relating to such Offered Debt Securities.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges was 4.79x, 3.49x, 1.95x,
2.97x and 3.27x for the years ended December 31, 1993, 1992, 1991, 1990 and
1989, respectively. For purposes of calculating the ratio of earnings to fixed
charges, earnings represent pretax income from continuing operations available
for fixed charges, less equity in undistributed earnings of 20-50% owned
companies, together with a portion of rent under long-term operating leases
representative of an interest factor. Fixed charges represent interest expense,
capitalized interest and a portion of rent under long-term operating leases
representative of an interest factor.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement
(the "Offered Debt Securities") and the extent, if any, to which such general
provisions do not apply to the Offered Debt Securities will be described in the
Prospectus Supplement relating to such Offered Debt Securities.
The Offered Debt Securities will be issued under an Indenture dated as of
April 1, 1992 (the "Indenture") between the Company and Citibank, N.A., as
Trustee (the "Trustee"). The following statements are subject to the detailed
provisions of the Indenture, which is on file as an exhibit to the Registration
Statement. References appearing below are to the Indenture and wherever
particular provisions are referred to, such provisions are incorporated by
reference as a part of the statements made, and such statements are qualified in
their entirety by such reference. Whenever a capitalized term is referred to and
not herein defined, the definition thereof is contained in the Indenture.
GENERAL
The Debt Securities will be unsecured obligations of the Company. The
Indenture does not limit the amount of Debt Securities that may be issued
thereunder. The Debt Securities offered by this Prospectus are limited to
$500,000,000 aggregate principal amount. The Debt Securities may be issued from
time to time in one or more series.
A Prospectus Supplement relating to a particular series of Offered Debt
Securities will describe the following terms of such Debt Securities: (a) the
title of the Offered Debt Securities; (b) any limit upon the aggregate principal
amount of the Offered Debt Securities; (c) the date or dates on which the
principal of the Offered Debt Securities is payable; (d) the rate or rates at
which the Offered Debt Securities will bear interest, if any, or the method for
calculating such rate, and the date or dates from which such interest will
3
<PAGE> 11
accrue; (e) the dates on which such interest will be payable and the record
dates for the interest payment dates; (f) the place or places where the
principal of and interest, if any, on the Offered Debt Securities will be
payable; (g) the period or periods, if any, within which, the price or prices at
which, and the terms and conditions upon which, the Offered Debt Securities may
be redeemed at the option of the Company or otherwise; (h) any mandatory or
optional sinking fund or analogous provisions; (i) if other than denominations
of $1,000 and integral multiples thereof, the denominations in which the Offered
Debt Securities shall be issuable; (j) if other than the principal amount
thereof, the portion of the principal amount of such Offered Debt Securities
which shall be payable upon declaration of the acceleration of the maturity
thereof; (k) if other than U.S. dollars, the currency or currency units in which
the Offered Debt Securities are denominated and/or in which payment of the
principal of (and premium, if any) and/or interest on the Offered Debt
Securities will or may be payable; (l) any deletions, modifications or additions
to the Events of Default or covenants of the Company pertaining to the Offered
Debt Securities; and (m) any other terms not inconsistent with the Indenture,
including, without limitation, the addition of covenants applicable with respect
to the Offered Debt Securities. (Section 3.01)
Unless otherwise indicated in the Prospectus Supplement, the Offered Debt
Securities will be issued only in fully registered form without coupons in
denominations of $1,000 or any integral multiple thereof. No service charge will
be made for any registration of transfer or exchange of Offered Debt Securities,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
CERTAIN RESTRICTIONS
Limitation on Liens. The Company will not, nor will it permit any
Subsidiary to, create, assume, incur or suffer to exist any Mortgage upon any
stock or Debt, whether owned on the date of the Indenture or thereafter
acquired, of any Subsidiary (other than a Subsidiary, the stock or Debt of which
at the date of the Indenture is subject to a Mortgage or is required to be
subject to a Mortgage, but without increase in the principal amount which is
secured thereby and limited to the stock or Debt then subject to such Mortgage),
to secure any Debt of the Company or any other person (other than the Debt
Securities), without in any such case making effective provision whereby the
Debt Securities then outstanding shall be directly secured equally and ratably
with such Debt. There will be excluded from this restriction any Mortgage upon
stock or Debt of a corporation existing at the time such corporation becomes a
Subsidiary or at the time stock or Debt of a Subsidiary is acquired and any
extension, renewal or replacement of any such Mortgage (without increase in the
principal amount which is secured thereby and limited to the stock or Debt then
subject to such Mortgage). The Indenture defines "Mortgage" as any mortgage,
pledge, lien, charge, security interest, conditional sale or other title
retention agreement or other similar encumbrance, and "Debt" as indebtedness for
money borrowed.
The Company will not, nor will it permit any Restricted Subsidiary (as
defined below) to, create, assume, incur or suffer to exist any Mortgage upon
any Principal Property, whether owned or leased on the date of the Indenture or
thereafter acquired, to secure any Debt of the Company or any other person
(other than the Debt Securities), without in any such case making effective
provision whereby all of the Debt Securities then outstanding shall be directly
secured equally and ratably with such Debt. The Indenture defines "Principal
Property" as (i) any property owned or leased by the Company or any Subsidiary,
or any interest of the Company or any Subsidiary or property, located within the
United States or Canada (including offshore property leased from any
governmental body) which is considered by the Company to be capable of producing
oil or gas in commercial quantities and (ii) any refinery, processing or
manufacturing plant owned or leased by the Company or any Subsidiary and located
within the United States or Canada except (A) facilities related thereto
employed in transportation, distribution or marketing or (B) any such plant
which, in the opinion of the Board of Directors, is not a principal plant in
relation to the activities of the Company and its Restricted Subsidiaries as a
whole. "Restricted Subsidiary" is defined as any Subsidiary which owns or leases
(as lessor or lessee) a Principal Property, but such term will not include any
Subsidiary the principal business of which is leasing machinery, equipment,
vehicles or other properties none of which is a Principal Property, or financing
accounts receivable, or engaging in ownership and development of any real
property which is not a Principal Property. There will be excluded from this
restriction (i) any Mortgage upon property owned or leased by any
4
<PAGE> 12
corporation existing at the time such corporation becomes a Restricted
Subsidiary, (ii) any Mortgage upon property existing at the time of acquisition
of such property, (iii) any Mortgage to secure payment of any part of the
purchase price of property or any Debt incurred prior to, at the time of or
within 180 days after the acquisition of such property to finance the purchase
thereof, other than a purchase by a Subsidiary from a Restricted Subsidiary or
from the Company, (iv) any Mortgage upon property to secure any part of the cost
of exploration, drilling, development, construction, alteration, repair or
improvement of such property, or Debt incurred prior thereto, at the time
thereof or within 180 days thereafter to finance such cost, provided that such
cost is incurred to obtain, or materially increase the production and revenues
from, such property, (v) any Mortgage securing Debt of a Restricted Subsidiary
owing to the Company or to another Restricted Subsidiary, (vi) any Mortgage
existing on the date of the Indenture, and (vii) any extension, renewal or
replacement in whole or in part of any such Mortgage (without increase in
principal amount secured or the amount of property subject to such Mortgage).
Notwithstanding the foregoing, the Company may, and may permit any Restricted
Subsidiary to, create, assume, incur or suffer to exist any Mortgage upon any
Principal Property that is not excepted by clauses (i) through (vii) above
without equally and ratably securing the Debt Securities, provided that the
aggregate amount of all Debt then outstanding secured by such Mortgage and all
similar Mortgages, together with all net sale proceeds from Sale-Leaseback
Transactions (as defined below) which are not permitted pursuant to clauses (i)
and (ii) of the following paragraph, does not exceed 5% of the total
consolidated stockholders' equity of the Company as shown on the audited
consolidated balance sheet contained in the Company's latest Annual Report on
Form 10-K. For the purpose of this restriction, the following types of
transactions shall not be deemed to create a Mortgage to secure any Debt: (i)
the sale or other transfer of (A) any oil or gas or minerals in place for a
period of time until, or in an amount such that, the purchaser will realize
therefrom a specified amount of money (however determined) or a specified amount
of such oil or gas or minerals or (B) any other interest commonly referred to as
a "production payment" and (ii) any Mortgage in favor of the United States or
any state, or any other country, or any political subdivision thereof to secure
partial, progress, advance or other payments pursuant to any contract or
statute, or any Mortgage securing industrial development, pollution control or
similar revenue bonds. (Section 10.04)
Restriction on Sale-Leasebacks. The Company will not, nor will it permit
any Restricted Subsidiary to, sell or transfer any Principal Property with the
Company or any Restricted Subsidiary taking back a lease of such Principal
Property (a "Sale-Leaseback Transaction"), unless (i) such Sale-Leaseback
Transaction occurs within 180 days from the date of acquisition of such
Principal Property or the date of the completion of construction or commencement
of full operations on such Principal Property, whichever is later or (ii) the
Company, within 120 days after such Sale-Leaseback Transaction, applies or
causes to be applied to the retirement of Funded Debt of the Company or any
Restricted Subsidiary (other than Funded Debt of the Company which by its terms
or the terms of the instrument pursuant to which it was issued is subordinate in
right of payment to the Debt Securities) an amount not less than the net
proceeds of the sale of such Principal Property. "Funded Debt" means all Debt
maturing one year or more from the date of the creation thereof, all Debt
directly or indirectly renewable or extendible, at the option of the debtor, by
its terms or by the terms of any instrument or agreement relating thereto, to a
date one year or more from the date of the creation thereof, and all Debt under
a revolving credit or similar agreement obligating the lender or lenders to
extend credit over a period of one year or more. Notwithstanding the foregoing,
the Company may, and may permit any Subsidiary to, effect any Sale-Leaseback
Transaction involving any Principal Property, provided that (a) the net sale
proceeds from such Sale-Leaseback Transaction, together with all Debt secured by
Mortgages not excepted by clauses (i) through (vii) of the preceding paragraph,
do not exceed 5% of the total consolidated stockholders' equity of the Company
as shown on the audited consolidated balance sheet contained in the Company's
latest Annual Report on Form 10-K or (b) the Sale-Leaseback Transaction involves
a lease for a period, including renewals, of not more than 36 months. (Section
10.04)
Compliance by the Company with the foregoing restrictions may be waived,
either before or after the time for such compliance, by the holders of a
majority in principal amount of the outstanding Debt Securities of each series.
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EVENTS OF DEFAULT
An Event of Default will occur under the Indenture with respect to Debt
Securities of a particular series if (a) the Company shall fail to pay when due
all or any part of the principal of such series of the Debt Securities (whether
at maturity or upon acceleration or otherwise), (b) the Company shall fail to
pay when due any installment of interest on such series of Debt Securities and
such default shall continue for 30 days, (c) the Company shall fail to make,
when due by the terms of the Debt Securities of such series, the deposit of any
sinking fund payment, (d) the Company shall fail to perform or observe any other
term, covenant or agreement contained in the Indenture or the Debt Securities
with respect to such series of Debt Securities for a period of 60 days after
written notice thereof, as provided in the Indenture, (e) a default shall occur
which involves the failure to pay principal of, or interest on, Debt of the
Company or any Subsidiary (including any other series of Debt Securities) in
excess of $25 million at the stated maturity thereof, or which results in the
acceleration of Debt of the Company or any Subsidiary in excess of $25 million,
and such acceleration shall not be rescinded, stayed or annulled or such Debt
shall not have been discharged within 15 days after a written notice thereof, as
provided in the Indenture, or (f) certain events of bankruptcy, insolvency or
reorganization shall have occurred. (Section 5.01)
The Indenture provides that (1) if an Event of Default due to the default
in payment of principal of, or interest on, a series of Debt Securities or due
to a failure to perform or observe any other term, covenant or agreement
contained in the Indenture with respect to a series of Debt Securities (but not
with respect to all series of Debt Securities) shall have occurred and be
continuing, either the Trustee or the holders of 25% in principal amount of Debt
Securities of such series then outstanding may declare the principal of all Debt
Securities of such series and interest accrued thereon to be due and payable
immediately or (2) if an Event of Default due to a failure to perform or observe
any other term, covenant or agreement in the Indenture with respect to all
series of Debt Securities then outstanding, any default described in clause (e)
in the preceding paragraph and certain events of bankruptcy, insolvency and
reorganization of the Company shall have occurred and be continuing, either the
Trustee or the holders of 25% in principal amount of all Debt Securities then
outstanding which have not previously become due and payable (treated as one
class) may declare the principal of all Debt Securities and interest accrued
thereon to be due and payable immediately. Upon certain conditions such
declarations may be annulled by the holders of a majority in principal amount of
Debt Securities of each series affected (voting as a separate class) and past
defaults may be waived (except a continuing default in payment of principal of
or interest on any series of Debt Securities) by the holders of a majority in
principal amount of Debt Securities of each series affected (voting as a
separate class). (Sections 5.02 and 5.13)
The holders of a majority in principal amount of the outstanding Debt
Securities of any series affected (each series voting as a separate class) may
direct with respect to such series 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, provided that such direction shall not be in
conflict with any rule of law or the Indenture. (Section 5.12) Before proceeding
to exercise any right or power under the Indenture with respect to such series
at the direction of such holders, the Trustee shall be entitled to receive from
such holders reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with any such direction.
(Section 6.03)
The Company will be required to furnish to the Trustee annually a statement
of certain officers of the Company to the effect that to the best of their
knowledge the Company is not in default in the performance of the terms of the
Indenture or, if they have knowledge that the Company is in default, specifying
such default. (Section 7.04) The Indenture requires the Trustee to give to all
holders of outstanding Debt Securities notice of any default by the Company,
unless such default shall have been cured or waived; however, except in the case
of a default in the payment of principal or of interest on any outstanding Debt
Securities, the Trustee is entitled to withhold such notice in the event that
the board of directors, the executive committee or a trust committee of
directors or certain officers of the Trustee in good faith determine that
withholding such notice is in the interest of the holders of the outstanding
Debt Securities. (Section 6.02)
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DEFEASANCE AND DISCHARGE
Under arrangements reasonably satisfactory to the Trustee, the Company may
discharge certain obligations to holders of Debt Securities of any series which
have not already been delivered to the Trustee for cancellation and which have
either become due and payable or are by their terms due and payable within one
year or are to be called for redemption within one year by irrevocably
depositing with the Trustee funds in an amount sufficient to pay at maturity the
principal of and interest on such series of Debt Securities. (Section 4.01)
The Indenture also provides that the Company will be discharged from
obligations in respect of any series of Debt Securities under the Indenture
(including its obligation to comply with the provisions referred to under
"Certain Restrictions," if applicable, but excluding certain other obligations,
such as the obligation to pay principal of and interest on the Debt Securities
of such series then outstanding, obligations of the Company in the event of
acceleration following default under clause (e) referred to above under "Events
of Default" and obligations to register the transfer or exchange of such
outstanding Debt Securities of such series and to replace stolen, lost or
mutilated certificates), upon the irrevocable deposit, in trust, of cash or U.S.
Government Obligations which through the payment of interest and principal
thereof in accordance with their terms will provide cash in an amount sufficient
to pay any installment of principal of and interest on such outstanding Debt
Securities of such series on the stated maturity of such payments in accordance
with the terms of the Indenture and such outstanding Debt Securities of such
series, provided that the Company has received an opinion of counsel or a
favorable ruling of the IRS to the effect that such a discharge will not be
deemed, or result in, a taxable event with respect to holders of the outstanding
Debt Securities of such series and that certain other conditions are met.
(Section 4.01)
CHANGES IN CONTROL AND HIGHLY LEVERAGED TRANSACTIONS
The Indenture does not contain provisions requiring redemption of the Debt
Securities by the Company, or adjustment to any terms of the Debt Securities,
upon any change in control of the Company.
Other than restrictions on Mortgages and Sale-Leaseback Transactions
described under "Certain Restrictions" above, the Indenture does not contain any
covenants or other provisions designed to afford holders of the Debt Securities
protection in the event of a highly leveraged transaction involving the Company.
MODIFICATION OF THE INDENTURE
The Indenture provides that the Company and the Trustee may enter into
supplemental indentures without the consent of the holders of Debt Securities
to: (a) secure any of the Debt Securities, (b) evidence the assumption by a
successor corporation of the obligations of the Company, (c) add covenants and
Events of Default for the protection of the holders of all or any particular
series of Debt Securities, (d) change or eliminate any of the provisions of the
Indenture, provided that any such change or elimination shall become effective
only after there are no Debt Securities of any series entitled to the benefit of
such provision outstanding, (e) establish the forms or terms of Debt Securities
of any series, (f) cure any ambiguity or correct any inconsistency in the
Indenture, or (g) evidence the acceptance of appointment by a successor trustee.
(Sections 3.01 and 9.01)
The Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
principal amount of all series of Debt Securities then outstanding (each such
series voting as a separate class) affected thereby, to add any provisions to,
or change in any manner or eliminate any of the provisions of, the Indenture, or
modify in any manner the rights of the holders of such Debt Securities, provided
that the Company and the Trustee may not, without the consent of the holder of
each outstanding Debt Security affected thereby, (a) change the stated maturity
of the principal of or any installment of interest on any Debt Security, reduce
the principal amount thereof, reduce the rate of interest thereon, change the
place of payment where, or the coin or currency in which, interest is payable,
or impair the right to institute suit for the enforcement of any such payment
when due or (b) reduce the aforesaid percentage in principal amount of Debt
Securities, the consent of the holders of which is required for any such
modification. (Section 9.02)
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CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
The Company may, without the consent of the Trustee or the holders of Debt
Securities, consolidate or merge with, or convey, transfer or lease its
properties and assets substantially as an entirety to, any other corporation,
provided that such successor corporation is a corporation organized under the
laws of the United States or any state thereof and expressly assumes all
obligations of the Company under the Debt Securities, and that immediately after
giving effect to such transaction no Event of Default, or event which, after
notice or lapse of time, or both, would become an Event of Default, shall have
occurred and be continuing and that certain other conditions are met, and,
thereafter, except in the case of a lease, the Company shall be relieved of all
obligations thereunder. (Article Eight)
APPLICABLE LAW
The Debt Securities and the Indenture will be governed by and construed in
accordance with the law of the State of New York. (Section 1.13)
CONCERNING THE TRUSTEE
Citibank, N.A. will be the Trustee under the Indenture. Citibank, N.A.
serves as trustee under various indentures relating to obligations of the
Company. The Company has customary banking relationships with Citibank, N.A.,
including participation as agent bank in the Company's Revolving Credit
Agreement.
PLAN OF DISTRIBUTION
The Company may sell Offered Debt Securities (i) through agents, (ii)
through underwriters, (iii) through dealers, or (iv) directly to purchasers
(through a specific bidding or auction process or otherwise). The Offered Debt
Securities may include previously issued Debt Securities which have been
acquired and are being remarketed on behalf of the Company.
Debt Securities may be offered and sold through agents designated by the
Company from time to time. Any such agent involved in the offer or sale of the
Offered Debt Securities will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be acting
on a best efforts basis for the period of its appointment. Any such agent may be
deemed to be an underwriter, as that term is defined in the 1933 Act, of the
Debt Securities so offered and sold. Agents may be entitled under agreements
which may be entered into with the Company to indemnification by the Company
against certain liabilities, including liabilities under the 1933 Act, and may
be customers of, engage in transactions with or perform services for, the
Company in the ordinary course of business.
If an underwriter or underwriters are utilized in the sale of Offered Debt
Securities, the Company will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached,
and the names of the specific managing underwriter or underwriters, as well as
any other underwriters, and the terms of the transaction, including compensation
of the underwriters and dealers, if any, will be set forth in the Prospectus
Supplement, which will be used by the underwriters to make resales of Offered
Debt Securities. The underwriters may be entitled, under the relevant
underwriting agreement, to indemnification by the Company against certain
liabilities, including liabilities under the 1933 Act.
If a dealer is utilized in the sale of Offered Debt Securities, the Company
will sell such Debt Securities to the dealer, as principal. The dealer may then
resell such Debt Securities to the public at varying prices to be determined by
such dealer at the time of resale. Dealers may be entitled, under agreements
which may be entered into with the Company, to indemnification by the Company
against certain liabilities, including liabilities under the 1933 Act.
Offers to purchase Debt Securities may be solicited directly by the Company
and sales thereof may be made by the Company directly to institutional investors
or others. The terms of any such sales, including the
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terms of any bidding or auction process if utilized, will be described in the
Prospectus Supplement relating thereto.
The place and time of delivery of Offered Debt Securities are set forth in
the accompanying Prospectus Supplement.
LEGAL MATTERS
The validity of the Debt Securities will be passed upon for the Company by
Andrews & Kurth L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements and financial statement schedules of
the Company as of December 31, 1993 and 1992, and for the years ended December
31, 1993, 1992 and 1991, included in the Company's 1993 Annual Report on Form
10-K, as amended, have been incorporated herein in reliance on the reports of
Coopers & Lybrand, independent accountants, given on the authority of that firm
as experts in accounting and auditing.
9
