BURLINGTON RESOURCES INC, 10-K, 1998-02-13

BURLINGTON RESOURCES INC
10-K, 1998-02-13
CRUDE PETROLEUM & NATURAL GAS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 1-9971

BURLINGTON RESOURCES INC.
5051 WESTHEIMER, SUITE 1400, HOUSTON, TEXAS 77056
TELEPHONE: (713) 624-9500

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INCORPORATED IN THE STATE OF DELAWARE EMPLOYER IDENTIFICATION NO. 91-1413284
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
COMMON STOCK, PAR VALUE $.01 PER SHARE
PREFERRED STOCK PURCHASE RIGHTS

THE ABOVE SECURITIES ARE REGISTERED ON THE NEW YORK STOCK EXCHANGE.

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No_____

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

State the aggregate market value of the voting stock held by non-affiliates
of the registrant: Common Stock aggregate market value as of December 31, 1997:
$7,918,749,701

Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. Class: Common Stock,
par value $.01 per share, on December 31, 1997, Shares Outstanding: 176,708,501

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the
Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated:

Burlington Resources Inc. definitive proxy statement, to be filed not later
than 120 days after the end of the fiscal year covered by this report, is
incorporated by reference into Part III.
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BURLINGTON RESOURCES INC.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I
Items One and Two

Business and Properties................................ 1

Employees.............................................. 10

Item Three

Legal Proceedings...................................... 11

Item Four

Submission of Matters to a Vote of Security Holders.... 11

Executive Officers of the Registrant................... 12

PART II

Item Five

Market for Registrant's Common Equity and Related
Stockholder Matters................................... 13

Item Six

Selected Financial Data................................ 13

Item Seven

Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 14

Item Eight

Financial Statements and Supplementary Financial
Information........................................... 21

Item Nine

Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................... 44

PART III

Items Ten and Eleven

Directors and Executive Officers of the Registrant and
Executive Compensation................................ 44

Item Twelve

Security Ownership of Certain Beneficial Owners and
Management............................................ 44

Item Thirteen

Certain Relationships and Related Transactions......... 44

PART IV

Item Fourteen

Exhibits, Financial Statement Schedules and Reports on
Form 8-K.............................................. 44
</TABLE>
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PART I

ITEMS ONE AND TWO

BUSINESS AND PROPERTIES

Burlington Resources Inc. ("BR") is a holding company engaged, through its
principal subsidiaries, Burlington Resources Oil & Gas Company and The Louisiana
Land and Exploration Company ("LL&E") and their affiliated companies
(collectively the "Company"), in the exploration, development, production and
marketing of oil and gas. The Company is the largest independent oil and gas
company in the United States ("U.S.") based on total proved domestic reserves,
and the second largest U.S. based independent oil and gas company based on total
proved worldwide reserves which were estimated at 7.9 TCFE at December 31, 1997.

On July 17, 1997, BR and LL&E announced that they had entered into an
Agreement and Plan of Merger (the "Merger"). On October 22, 1997, the Merger was
completed and LL&E became a wholly-owned subsidiary of the Company. Pursuant to
the Merger, BR issued 52,795,635 shares of its Common Stock based on an exchange
ratio of 1.525 for each outstanding share of LL&E stock. The Merger was
accounted for as a pooling of interests and qualified as a tax-free
reorganization. The transaction was valued at approximately $3 billion based on
BR's closing stock price on October 22, 1997. All operational and financial
information contained herein includes the combined business activities for BR
and LL&E for all periods presented.

The Company's operations are conducted by five divisions from four offices
located in Farmington, New Mexico, Midland, Texas and two locations in Houston,
Texas. The majority of the Company's oil and gas production is from properties
located in the United States. Following is a description of the Company's major
areas of activity in each division. For definitions of certain oil and gas terms
used herein, see "Certain Definitions" on page 10.

SAN JUAN DIVISION

The San Juan Division ("San Juan"), located in Farmington, New Mexico,
exploits and produces oil and gas primarily in the San Juan Basin, which is
located in northwest New Mexico and southwest Colorado. In 1997, San Juan
capital expenditures, excluding proved property acquisitions, were $93 million
which included investments for over 140 wells and approximately 300 mechanical
workovers. Over 110 of the wells and 200 of the workovers were Company operated.
Net production from San Juan averaged 809 MMCF of gas per day and 1.4 MBbls of
oil per day. San Juan provided 49 percent of the Company's net gas production
and one percent of the Company's net oil production. As of December 31, 1997,
San Juan controlled 44 percent of the Company's reserves.

The four major gas producing horizons in the San Juan Basin are the
Fruitland Coal, the Pictured Cliffs, the Mesaverde, and the Dakota Formations.
These horizons range in depth from approximately 1,000 feet to 8,500 feet. The
Fruitland Coal is the primary producing horizon for San Juan, and the Company
continues to be an industry leader in coal bed methane production. Net
production from the Fruitland Coal averaged a record 430 MMCF of gas per day
during 1997 from approximately 1,200 wells.

A significant portion of the gas production growth in 1997 is associated
with the optimization of the Val Verde gathering system including the activation
of the Antler and Jackrabbit plants and the processing of volumes by third party
processors. The Company owns and operates the Val Verde plant and gathering
system which includes approximately 420 miles of gathering lines and 13
compressor stations. The Val Verde plant continues to operate at full capacity.
The Antler and Jackrabbit plants allow the Company to process and sell
additional volumes which would otherwise be curtailed. This, along with the
processing of volumes by third party processors, enables the Company to optimize
its coal seam gas volumes. Fifty well optimization projects in the Fruitland
Coal, primarily recavitations and wellsite compression, have added to the growth
in coal seam gas volumes during 1997.

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Development of the Mesaverde Formation continues to be a major focus for
San Juan. Net production from the Mesaverde Formation in 1997 averaged 200 MMCF
of gas per day from 3,300 wells. Capital investments in over 100 new wells in
1997 contributed to incremental gas volumes in San Juan. During 1997, an eight
well pilot project was initiated to determine the effect of increasing the well
density in the Mesaverde Formation.

MID-CONTINENT DIVISION

The Mid-Continent Division ("Mid-Continent"), located in Midland, Texas,
explores for and produces oil and gas primarily in the Permian Basin in west
Texas, the Anadarko Basin in western Oklahoma, the Wind River Basin in central
Wyoming and the Williston Basin in western North Dakota, northwest South Dakota
and northeast Montana. In 1997, Mid-Continent capital expenditures, excluding
proved property acquisitions, were $252 million which included investments for
approximately 300 wells and over 320 mechanical workovers. Approximately 200 of
the wells and 275 of the workovers were Company operated. Net production from
Mid-Continent averaged 258 MMCF of gas per day and 34.7 MBbls of oil per day.
Mid-Continent represented 15 percent of the Company's net gas production and 40
percent of the Company's net oil production. As of December 31, 1997,
Mid-Continent controlled 31 percent of the Company's reserves.

In the Permian Basin, the Company's average net production for 1997 was
approximately 13 MBbls of oil per day and 90 MMCF of gas per day. The Company
invested $60 million for 145 new wells in the basin during 1997. The most
productive structural feature in the Permian Basin is the Central Basin Platform
on which the Company controls over 140,000 net acres of mineral interests. Over
20 different formations, ranging in depth from 2,000 feet to over 12,000 feet,
produce oil and gas in the Central Basin Platform. A key component of
Mid-Continent's Permian Basin operations is enhanced oil recovery projects. The
Company operates several waterflood projects on the Waddell Ranch, located 40
miles west of Midland, Texas. The Company operates over 1,500 wells on the
Waddell Ranch with combined average net production of 4.8 MBbls of oil per day
and 22 MMCF of gas per day in 1997 and continues to acquire three dimensional
("3-D") seismic which has proven to be an effective tool for exploration and
development. In 1997, approximately 800 square miles of 3-D seismic data were
acquired in this area.

In the Anadarko Basin, the Company's average net gas production for 1997
was 110 MMCF of gas per day. This basin encompasses over 30,000 square miles and
contains some of the deepest producing formations in the world. The basin
produces from multiple horizons ranging in depth from less than 1,000 feet to
over 26,000 feet. The Company controls over 250,000 net acres principally
located in western Oklahoma. The Company has been concentrating its Anadarko
Basin activity in the Elk City and Strong City Fields where the application of
3-D seismic, computerized modeling and advanced reservoir stimulation continue
to enhance the value of these assets. The primary producing horizons in these
fields are the Morrow, Springer and Cherokee Red Fork Formations. During 1997,
the Company invested $34 million for 54 new wells in this basin.

In the Wind River Basin, the Company's average net gas production for 1997
was 31 MMCF of gas per day. This basin encompasses approximately 4,000 square
miles and produces from multiple horizons ranging in depth from 1,000 feet to
over 25,000 feet. All of the Company's Wind River Basin production comes from
the Madden Field. During 1997, the Company completed the Big Horn 4-36 in the
Madison Formation at a measured depth of 24,600 feet. This well tested 44 gross
MMCF of gas per day and was the third well in the Madison Formation. A 10
percent working interest in the Madden Deep Unit was purchased by the Company in
1997 which resulted in a 45 percent working interest in the Deep Madden Unit in
the Madison Formation. All of the sour gas that is produced from the Madison
Formation is processed at the Lost Cabin Gas Plant, which currently has a
constrained inlet capacity of 55 MMCF of gas per day. The plant is currently
being modified to increase its inlet capacity to approximately 65 MMCF of gas
per day later this year. BR recently began an expansion of this facility to
double its inlet capacity to 130 MMCF of gas per day in the second half of 1999.
The three Madison wells will fully utilize this expanded processing capacity. BR
owns a 47 percent working interest in the plant. Additionally, two wells are
currently testing on the 950,000 gross acre Wind River
2
<PAGE> 5

Indian Reservation exploration license area. This license area includes a highly
prospective, undeveloped portion of the Wind River Basin, which with the use of
seismic could offer significant growth potential for Mid-Continent.

In the Williston Basin, the Company's average net oil production for 1997
was 20 MBbls of oil per day. This basin encompasses approximately 225,000 square
miles and has 18 producing horizons ranging in depth from 4,500 feet to over
15,000 feet. The Company controls over 3.6 million net acres in the basin
through both mineral and leasehold interests. Mid-Continent's activities have
been focused on the use of advanced technologies such as 3-D seismic and
horizontal drilling to continue increasing the value of its assets. The Company
invested over $50 million in the drilling of over 70 horizontal wells in this
basin during 1997. Large waterflood projects in the Eland Unit and East Lookout
Butte Unit are currently being fully implemented. The Cedar Hills Field should
be fully delineated in 1998 and is planned for initial waterflood operations in
1999. The Company acquired over 800 square miles of 3-D seismic data in this
area during 1997.

GULF OF MEXICO DIVISION

The Gulf of Mexico Division ("Gulf of Mexico"), located in Houston, Texas,
explores for and produces oil and gas in the Gulf of Mexico. In 1997, Gulf of
Mexico capital expenditures, excluding proved property acquisitions, were $442
million which included investments for approximately 70 wells and 22 mechanical
workovers. Thirty-seven of the wells and nine of the workovers were Company
operated. Net production from Gulf of Mexico averaged 362 MMCF of gas per day
and 16.6 MBbls of oil per day. Gulf of Mexico represented 22 percent of the
Company's net gas production and 19 percent of the Company's net oil production.
As of December 31, 1997, Gulf of Mexico controlled 10 percent of the Company's
reserves.

Gulf of Mexico produces hydrocarbons from multiple horizons ranging from
2,000 feet to over 17,000 feet. The Company currently has interests in over 370
offshore federal lease blocks with over 145 of these in water depths greater
than 600 feet ("deep water"). The Company continued to strategically increase
its acreage position in the Gulf of Mexico in 1997 by acquiring, through federal
lease sales, 15 blocks on the Outer Continental Shelf (the "Shelf") and
approximately 100 blocks in deep water. Deep water prospects expose the Company
to high potential and high risk prospects which complement the moderate
potential and lower risk prospects being pursued on the Shelf. The complex
geologic conditions and multiple horizons make the Gulf of Mexico an attractive
area for the application of advanced technologies such as 3-D seismic. The
application of 3-D seismic will continue to be instrumental in the exploration
and development of Gulf of Mexico's assets with approximately 9,500 square miles
of data acquired in 1997.

A key component of the Company's overall Gulf of Mexico Shelf strategy is
to fully exploit areas around existing fields using 3-D seismic technology. This
strategy yields beneficial results because the cost to drill these wells is
lower and existing infrastructure can be used to immediately produce the
hydrocarbons discovered. This has resulted in significant discoveries, such as
in the Eugene Island 205 and the South Timbalier 148 Fields.

Undeveloped potential in the non-operated South Timbalier 148 Field was
recognized by the Company in late 1995 after acquiring 3-D seismic data over the
area. Prior to drilling, the Company acquired an additional working interest of
15 percent resulting in a 40 percent working interest in the block. A total of
four successful wells have been drilled and completed subsequent to this
acquisition, increasing the Company's net production from 2 MMCF of gas per day
to a peak production of 34 MMCF of gas per day. Capital investments are
currently being made to increase the pipeline capacity for this increased
deliverability.

In 1996, the Company acquired a 100 percent working interest in the Eugene
Island 205 Field. In December 1996, the Company began an aggressive development
drilling program which resulted in the drilling of eleven wells and the
recompletion of three wells. Prior to the initiation of this development
program, the Company's net production from this field was 5 MMCF of gas per day.
By year-end 1997, the net production had increased to nearly 50 MMCF of gas per
day.

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During 1996, the Company participated in a deep water discovery, known as
the Cinnamon Discovery, which was drilled at Green Canyon 45/89. Located in 690
feet of water, the well encountered high quality reservoirs and pay zones
between 9,500 feet and 10,225 feet. During the first quarter of 1997, the first
delineation well, the Green Canyon 89 No. 2, was drilled which verified the
commercial potential of the prospect. Facility design and fabrication have been
initiated.

GULF COAST DIVISION

The Gulf Coast Division ("Gulf Coast"), located in Houston, Texas, explores
for and produces oil and gas primarily in south Louisiana, south and east Texas
and the panhandle of Florida. In 1997, Gulf Coast capital expenditures,
excluding proved property acquisitions, were $126 million which included
investments for 45 wells and 26 mechanical workovers. Seventeen of the wells and
six of the workovers were Company operated. Net production from Gulf Coast
averaged 167 MMCF of gas per day and 15.5 MBbls of oil per day. Gulf Coast
represented 10 percent of the Company's net gas production and 18 percent of the
Company's net oil production. As of December 31, 1997, Gulf Coast controlled
seven percent of the Company's reserves.

In south Louisiana, the Company's average net production was approximately
130 MMCF of gas per day and 8 MBbls of oil per day. Production is from multiple
zones ranging in depth from less than 2,900 feet to over 18,000 feet. The
Company owns approximately 600,000 acres of fee land in this area. Gulf Coast
actively pursued the acquisition of 3-D seismic surveys over these fee lands and
the surrounding areas in 1997 with the acquisition of over 1,100 square miles.
At present, the Company has 50 different south Louisiana 3-D seismic surveys in
varying stages of acquisition, processing or interpretation. The Company owns in
excess of 20 percent of all 3-D seismic acquired by the industry in south
Louisiana. Approximately 80 percent of the Louisiana fee lands have been covered
by 3-D seismic surveys. In south Louisiana, the Company invested over $100
million in 19 operated wells.

INTERNATIONAL DIVISION

The International Division ("International"), headquartered in Houston,
Texas, explores for and produces oil and gas in areas outside the United States.
In addition to Houston, divisional offices are located in London, England and
Caracas, Venezuela. International operates primarily in the East Irish Sea,
Algeria and Venezuela. In addition, the Company owns non-operated interests in
the United Kingdom ("U.K.") and Dutch sectors of the North Sea, Colombia,
Tunisia, Papua New Guinea and Indonesia. In 1997, International capital
expenditures, excluding proved property acquisitions, were $78 million which
included investments for 26 wells, of which five were operated by the Company.
Net production from International averaged 73 MMCF of gas per day and 19 MBbls
of oil per day. International represented 4 percent of the Company's net gas
production and 22 percent of the Company's net oil production. International
controlled eight percent of the Company's reserves.

In the North Sea, the Company's average net production was 73 MMCF of gas
per day and 14.5 MBbls of oil per day. This production comes from two primary
areas in the North Sea, the U.K. sector and the Dutch sector. In the U.K.
sector, production was initiated from the Thelma Field in the T-Block complex in
late 1996. The field is a subsea tie-back to the Tiffany platform. At the Brae
complex, the Plan of Development for the West Brae Field was approved by the
U.K. government in 1996. This sixth development in the field was placed on
production in late 1997 using subsea completions tied-back to the South Brae
platform. In the Dutch sector of the North Sea, the Company participates in
natural gas exploration and production. Net production averaged 42 MMCF of gas
per day in the Dutch sector of the North Sea.

In December 1997, the Company acquired acreage in the East Irish Sea for
$159 million. These properties are located 25 miles off the coast of England in
approximately 100 feet of water. This acquisition included a 99 percent working
interest in seven operated undeveloped natural gas fields. The timing of the
field development will depend on a number of factors, including the receipt of
appropriate regulatory approvals for the development plan and negotiation of gas
sales contracts and

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processing agreements. Ten licenses encompass approximately 460 square miles and
are covered by high quality 3-D seismic surveys. The Company contemplates
development opportunities on the acquired acreage that will utilize the latest
offshore technology. Development is expected to commence in 1998.

In Algeria, the Company's primary focus has been exploration for
hydrocarbons in Blocks 405 and 215. The Company owns a 65 percent working
interest in these blocks and is the operator. Block 405 comprises nearly 713,000
gross acres and is located in the Berkine Basin of eastern Algeria. Block 215
comprises nearly 840,000 gross acres and is located 65 miles west of Block 405.
As required by the Production Sharing Agreement, the Company will relinquish a
portion of its acreage in 1998. To date, the Company has drilled eight wells and
all but one have been successful.

In late 1997, the delineation well MLN-4 successfully tested with the
highest flow rate on Block 405. The well flowed at a gross rate of 22.7 MBbls of
oil per day and 58 MMCF of gas per day from two Triassic TAG intervals and from
a newly discovered reservoir in a deeper Devonian interval. No formation water
was recovered during any of these tests.

In 1997, the Company drilled its second successful well to confirm the
extension of the Qoubba Field onto the northeastern portion of Block 405. The
Company will participate in the development of this field, of which
approximately six percent extends onto Block 405.

In 1998, the Company's drilling focus will be the delineation of the MLN
Field, participation in the development of the Qoubba Field and exploration for
new structures. In addition to this drilling activity, a 270 square mile 3-D
seismic survey is currently being acquired in Block 405. Information derived
from this survey will assist in the further appraisal of the Triassic TAG
reservoir, provide the basis for additional Devonian delineation drilling and
firm-up additional exploration prospects for drilling during 1998. An
Exploitation License Application, providing for the development of the MLN
Field, will be submitted during 1998. Sonatrach, the national oil and gas
enterprise of Algeria, has the option to participate in the development of
commercial discoveries. The Company is entitled to recover exploration costs out
of production during the exploitation phase.

In Venezuela, the Company completed an acquisition of 217 square miles of
3-D and 230 miles of 2-D seismic data over the 526,000 gross acre Delta Centro
Block in eastern Venezuela in 1997. This highly prospective exploration block is
located in Venezuela's Orinoco River Delta and is on geologic trend with oil
discoveries in surrounding blocks. Early analysis of the 3-D seismic data has
revealed promising leads and preparations are underway to drill the first
exploration well during 1998. Under the terms of its work commitment, the
Company will drill three exploratory wells over a primary term ending in the
year 2001 with the option to extend the exploratory period for an additional
four years. The Company owns a 35 percent working interest in the block and is
the operator.

In Colombia, the Company's average net production was 1.4 MBbls of oil per
day. The Company has a non-operated working interest in 36 wells in the Casanare
Association Contract Area. The Company also holds a 25 percent working interest
in a 280,000 gross acre association contract located in the San Jacinto
Association Contract Area. The contract is located in the Upper Magdalena Valley
Basin. A recent discovery to the north, in the Guadauas Field, lies in a similar
setting with the same reservoir targets which are the Guadalupe and Caballos
Formations. The acquisition of 93 miles of 2-D seismic is planned for 1998.

In Indonesia, the Company's average net production was 3.1 MBbls of oil per
day. The Company has a 15 percent working interest in the KAKAP Production
Sharing Contract. In 1997, the Company completed the tie-back of three subsea
completions. In addition to the activity in the KAKAP Field, exploration success
at Nelayan proved an exploration concept which has led to a renewed exploration
effort for 1998.

The Company and its partners in the KAKAP Field are in the process of
negotiating gas sales agreements to sell gas to Singapore. The gas will be sold
via a pipeline that is scheduled to be completed in the year 2000.
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SECTION 29 TAX CREDITS

A number of formations located within the Company's producing areas have
wells that qualify for tax credits under Section 29 of the Internal Revenue Code
of 1954, as amended ("IRC"). IRC Section 29 provides for a tax credit from
non-conventional fuel sources such as oil produced from shale and tar sands and
natural gas produced from geopressured brine, Devonian shale, coal seams and
tight sands formations. The Company estimates that the tax credit rate will
range from $.52 to $1.04 per MMBTU depending on fuel source. The Company earned
approximately $51 million of Section 29 tax credits in 1997.

CAPITAL EXPENDITURES AND MAJOR PROJECTS

Following are the Company's capital expenditures.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1997 1996 1995
------ ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Oil and Gas Activities.................................. $1,155 $738 $686
Plants and Pipelines.................................... 50 54 79
Administrative.......................................... 40 12 22
------ ---- ----
Total......................................... $1,245 $804 $787
====== ==== ====
</TABLE>

Capital expenditures for oil and gas activities in 1997 of $1,155 million
include 19 percent for proved property acquisitions, 48 percent for development
and 33 percent for exploration. Included in capital expenditures for oil and gas
activities are exploration costs expensed under the successful efforts method of
accounting and capitalized interest.

Drilling Activity. Drilling activity in 1997 was principally in the San
Juan, Gulf Coast, Permian, Anadarko and Williston Basins. Increased net drilling
activity levels, as seen in the table below, are a result of the Company's
expanded development and exploration programs.

The following table sets forth the Company's net productive and dry wells.

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YEAR ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Productive wells
Exploratory..................................... 31.4 25.3 26.4
Development..................................... 248.8 191.7 297.5
---- ---- ----
280.2 217.0 323.9
---- ---- ----
Dry wells
Exploratory..................................... 27.8 18.1 20.0
Development..................................... 8.6 5.9 37.8
---- ---- ----
36.4 24.0 57.8
---- ---- ----
Total net wells......................... 316.6 241.0 381.7
==== ==== ====
</TABLE>

As of December 31, 1997, 55 gross wells, representing approximately 29 net
wells, were being drilled.

Asset Rationalization. The Company focuses its acquisition activity in
areas where it has production in order to maximize the efficiencies gained in
combining operations or in new areas where the Company can transfer its
technological expertise or take advantage of premium markets. In addition, the
Company uses a selective acquisition process that emphasizes the purchase of
reserves as well as properties having upside potential that can be developed by
using both conventional and advanced technologies.

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In December 1997, the Company acquired working interests in the East Irish
Sea of the U.K. for $159 million. The Company will continue to pursue
transactions which enable the consolidation of assets and increase operating
efficiencies.

In June 1997, the Company completed its non-strategic divestiture program
which was announced in July 1996. As planned, the Company sold approximately
27,000 wells and related facilities. Before closing adjustments, gross proceeds
for 1997 from sales of oil and gas properties related to this divestiture
program were approximately $450 million (approximately $418 million, net of
closing adjustments). A portion of the net proceeds from asset divestitures were
reinvested in domestic and international oil and gas properties.

On July 31, 1996, the Company completed the sale of its crude oil refinery
and terminal, including crude oil and refined product inventories, for
approximately $70 million. The net book value of refinery property, plant and
equipment and inventory at that date was approximately $68 million.

PRODUCTIVE WELLS, DEVELOPED AND UNDEVELOPED ACREAGE

Working interests in productive wells, developed acreage and undeveloped
acreage at December 31, 1997 follow.

<TABLE>
<CAPTION>
PRODUCTIVE WELLS
- ----------------------------
OIL GAS DEVELOPED ACRES UNDEVELOPED ACRES
- ------------- ------------- --------------------- ----------------------
GROSS NET GROSS NET GROSS NET GROSS NET
- ------ ----- ------ ----- --------- ---------- ---------- ----------
<C> <C> <C> <C> <C> <C> <C> <C>
5,791 2,857 10,829 6,026 5,314,000 2,580,000 16,674,000 11,870,000
</TABLE>

Included in the acreage data are approximately 7.5 million undeveloped
acres of Company-owned oil and gas mineral rights, of which approximately 4
million acres are considered to have potential for oil and gas exploration.

OIL AND GAS PRODUCTION, PRICES AND PRODUCTION COSTS

The Company's average daily production represents its net ownership after
deduction of all royalty interests held by others but includes royalty interests
and net profits interests owned by the Company. The Company's average natural
gas price includes amounts from the sale of NGLs, less the actual costs incurred
to gather, treat, process and transport the hydrocarbons to market. Following
are production and prices.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Production
Gas (MMCF per day)................................. 1,669 1,603 1,496
Oil (MBbls per day)................................ 87.2 91.1 90.9
Average sales prices
Gas per MCF........................................ $ 2.18 $ 2.05 $ 1.40
Oil per barrel..................................... 19.24 20.39 17.04
Average production costs per MCFE.................... .51 .54 .54
Depreciation, depletion and amortization rates
per MCFE........................................... $ .62 $ .62 $ .67
</TABLE>

In 1997, 1996 and 1995, approximately 41 percent, 43 percent and 47
percent, respectively, of the Company's gas production was transported to direct
sale customers through El Paso Natural Gas Company's ("EPNG") pipeline systems.
These transportation arrangements are pursuant to EPNG's approved Federal Energy
Regulatory Commission ("FERC") tariffs applicable to all shippers. The Company
expects to continue to transport a substantial portion of its future gas
production through EPNG's pipeline systems.

7
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RESERVES

The following table sets forth estimates by the Company's petroleum
engineers of proved oil and gas reserves at December 31, 1997. These reserves
have been reduced for royalty interests owned by others.

<TABLE>
<CAPTION>
GAS OIL TOTAL
(BCF) (MMBBLS) (BCFE)
----- -------- ------
<S> <C> <C> <C>
Proved Developed Reserves...................... 4,874 219.5 6,191
Proved Undeveloped Reserves.................... 1,544 34.2 1,749
----- ----- -----
Total Proved Reserves................ 6,418 253.7 7,940
===== ===== =====
</TABLE>

For further information on reserves, including information on future net
cash flows and the standardized measure of discounted future net cash flows, see
"Financial Statements and Supplementary Financial Information--Supplemental Oil
and Gas Disclosures."

MARKETING

Natural Gas. In pursuit of the Company's mission to build long-term
shareholder value, the Company's marketing strategy is to maximize the value of
its production by developing marketing flexibility from the wellhead to the
burnertip. The Company's gas production is gathered, processed, exchanged and
transported utilizing various firm and interruptible contracts and routes to
access the highest value market hubs. The Company's customers include local
distribution companies, electric utilities and a diverse portfolio of industrial
users. The Company maintains the capacity to ensure its production can be
marketed either at the wellhead or downstream at market sensitive prices.

Crude Oil and NGLs. All of the Company's crude oil production is sold to
third parties at the wellhead or transported to market hubs where it is sold or
exchanged. NGLs are typically transported to market hubs, primarily in the
Houston area, and sold to third parties.

International. The Company's international oil and gas is produced from
non-operated properties. These products are sold to third party markets either
directly by the Company or by the operator of the property.

OTHER MATTERS

Competition. The Company actively competes for reserve acquisitions,
exploration leases and sales of oil and gas, frequently against companies with
substantially larger financial and other resources. In its marketing activities,
the Company competes with numerous companies for the sale of oil, gas and NGLs.
Competitive factors in the Company's business include price, contract terms,
quality of service, pipeline access, transportation discounts and distribution
efficiencies.

Regulation of Oil and Gas Production, Sales and Transportation. The oil
and gas industry is subject to regulation by numerous national, state and local
governmental agencies and departments in the countries in which the Company
operates, compliance with which is often difficult and costly and some of which
carry substantial noncompliance penalties and risks. Statutes, rules,
regulations or guidelines require drilling permits, drilling bonds and operating
reports. Most jurisdictions in which the Company operates also have statutes,
rules, regulations or guidelines governing conservation matters, including the
unitization or pooling of oil and gas properties and the establishment of
maximum rates of production from oil and gas wells. Many jurisdictions also
limit production to the market demand for oil and gas. Such statutes, rules,
regulations or guidelines may limit the rate at which oil and gas could
otherwise be produced from the Company's properties. All of the Company's sales
of its domestic gas are deregulated.

The Company operates various gathering systems. The United States
Department of Transportation and certain state agencies regulate, under various
statutes, rules or regulations, the safety and

8
<PAGE> 11

operating aspects of the transportation and storage activities of these
facilities by prescribing standards.

The FERC has implemented policies, subject to court review, allowing
interstate pipeline companies to negotiate their rates with individual shippers.
The FERC is also considering allowing the interstate pipeline companies to
negotiate tariffed terms and conditions of service. The Company will monitor the
effects of these programs on its marketing efforts but does not expect that
these actions will have a materially adverse effect on the consolidated
financial position or results of operations of the Company.

Environmental Regulation. Various federal, state and local laws and
regulations relating to the protection of the environment, including the
discharge of materials into the environment, may affect the Company's domestic
operations and costs as a result of their effect on oil and gas exploration,
development and production operations. In addition, certain of the Company's
international operations are subject to environmental regulations administered
by foreign governments, including political subdivisions thereof, or by
international organizations.

U.S. offshore oil and gas operations are subject to regulations of the U.S.
Department of the Interior which currently imposes absolute liability upon the
lessee under a federal lease for the cost of pollution cleanup resulting from
the lessee's operations and could subject the lessee to possible liability for
pollution damages. In the event of a serious incident of pollution, the U.S.
Department of the Interior may require a lessee under a federal lease to suspend
or cease operations in the affected area.

The Company believes it is in substantial compliance with applicable
environmental laws and regulations. The Company does not anticipate that it will
be required under current environmental laws and regulations to expend amounts
that will have a materially adverse effect on the consolidated financial
position or results of operations of the Company.

Filings of Reserve Estimates With Other Agencies. During 1997, the Company
filed estimates of oil and gas reserves for the year 1996 with the Department of
Energy. These estimates were not materially different from the reserve data
presented herein.

9
<PAGE> 12

CERTAIN DEFINITIONS

Below are certain definitions of key terms used in this Form 10-K.

BCF means billion cubic feet.

BCFE means billion cubic feet of gas equivalent.

MBbls means thousands of barrels.

MCF means thousand cubic feet.

MCFE means thousand cubic feet of gas equivalent.

MMBbls means millions of barrels.

MMBTU means million British Thermal units.

MMCF means million cubic feet.

MMCFE means million cubic feet of gas equivalent.

NGLs mean natural gas liquids.

TCFE means trillion cubic feet of gas equivalent.

Proved reserves represent estimated quantities of oil and gas which
geological and engineering data demonstrate, with reasonable certainty, can
be recovered in future years from known reservoirs under existing economic
and operating conditions. Reservoirs are considered proved if shown to be
economically producible by either actual production or conclusive formation
tests.

Proved developed reserves are the portion of proved reserves which can be
expected to be recovered through existing wells with existing equipment and
operating methods.

Proved undeveloped reserves are the portion of proved reserves which can be
expected to be recovered from new wells on undrilled proved acreage, or
from existing wells where a relatively major expenditure is required for
completion.

Net acreage and net oil and gas wells are obtained by multiplying "gross"
acreage and "gross" oil and gas wells by the Company's working interest
percentage in the properties.

Oil is converted into cubic feet of gas equivalent based on 6 MCF of gas to
one barrel of oil.
- ---------------

EMPLOYEES

The Company had 1,819 and 2,004 employees at December 31, 1997 and 1996,
respectively. Currently, the Company has no union employees.

10
<PAGE> 13

ITEM THREE

LEGAL PROCEEDINGS

On May 25, 1995, the 270th Judicial District Court of Harris County, Texas
entered an order in a lawsuit styled Caroline Altheide, et al. v. Meridian Oil
Inc. (now known as Burlington Resources Oil & Gas Company), et al., which
allowed the suit to be maintained as a class action on behalf of all royalty and
overriding royalty interest owners in all Burlington Resources Oil & Gas Company
("BROG") properties and all working interest owners in properties operated by
BROG who received payments from BROG at any time from and after December 1, 1986
based upon wellhead sales of natural gas to Burlington Resources Trading Inc.
The lawsuit involves claims for unspecified actual and punitive damages based
upon alleged breaches of duties owed to interest owners because of the use of
corporate affiliates to gather, treat and market natural gas. The plaintiffs
allege that BROG's gas producing affiliates have sold natural gas to marketing
affiliates at lower inter-affiliate settlement prices which were then used as
the basis for accounting to interest owners. Plaintiffs also allege that BROG's
pricing includes inappropriate deductions of inflated gathering and
transportation costs. BROG has consistently denied liability and perfected an
interlocutory appeal of the class certification order on May 30, 1995. Oral
argument on the interlocutory appeal of the class certification order was heard
February 28, 1996. Following the argument, but in advance of a decision by the
appellate court, the parties executed a settlement agreement dated August 6,
1996, which the trial court preliminarily approved on August 12, 1996. After
notice to the class members, the court conducted a hearing on November 8, 1996,
and gave final approval to the terms of the parties' settlement agreement in its
Judgment signed on November 12, 1996. Four class members who appeared through
counsel at the November 8, 1996 hearing to object to the settlement filed a
motion for a new trial or, in the alternative, to modify, alter or amend
judgment, which motion was denied by Order signed December 16, 1996. The
objectors purported to perfect an appeal of the Judgment on February 7, 1997. On
July 24, 1997, the Fourteenth Court of Appeals dismissed the appeal. On October
17, 1997, the objectors filed a Petition for Review with The Supreme Court of
Texas. The Company and the Plaintiffs intend to defend this appeal vigorously.

The Company and its subsidiaries are named defendants in numerous lawsuits
and named parties in numerous governmental proceedings arising in the ordinary
course of business. While the outcome of lawsuits and other proceedings cannot
be predicted with certainty, management expects these matters, including the
above-described Altheide litigation, will not have a materially adverse effect
on the consolidated financial position or results of operations of the Company.

ITEM FOUR

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At a special meeting of stockholders of the Company held on October 22,
1997, the stockholders voted to approve the issuance of the Company's Common
Stock pursuant to the Agreement and Plan of Merger dated July 16, 1997 among the
Company, BR Acquisition Corporation (a wholly-owned subsidiary of the Company)
and LL&E.

Approval of the issuance of shares of the Company's Common Stock pursuant
to the Merger was as follows.

<TABLE>
<CAPTION>
FOR AGAINST ABSTENTIONS
- ---------- ------- -----------
<C> <C> <C>
94,752,530 308,225 517,354
</TABLE>

11
<PAGE> 14

EXECUTIVE OFFICERS OF THE REGISTRANT

<TABLE>
<S> <C>
BOBBY S. SHACKOULS, 47 H. LEIGHTON STEWARD, 63
Chairman of the Board, President and Chief Vice Chairman of the Board
Executive Officer Burlington Resources Inc.
Burlington Resources Inc. October 1997 to Present
July 1997 to Present Chairman of the Board, President and Chief Ex-
President and Chief Executive Officer, ecutive Officer, The Louisiana Land and
Burlington Resources Inc., December 1995 to July Exploration Company, November 1996 to October
1997; President and Chief Executive Officer, 1997; Chairman of the Board and Chief Executive
Burlington Resources Oil & Gas Company, October Officer, The Louisiana Land and Exploration
1994 to Present; Executive Vice President and Company, September 1995 to November 1996; and
Chief Operating Officer, Burlington Resources Chairman of the Board, President and Chief
Oil & Gas Company, June 1993 to October 1994; Executive Officer, The Louisiana Land and
President and Chief Operating Officer, Torch Exploration Company, January 1989 to September
Energy Advisors, Inc., July 1991 to May 1993. 1995.
JOHN E. HAGALE, 41 RANDOLPH P. MUNDT, 47
Executive Vice President and Chief Executive Vice President, Marketing
Financial Burlington Resources Inc.
Officer April 1997 to Present
Burlington Resources Inc.
December 1995 to Present Executive Vice President, Marketing, Burlington
Resources Oil & Gas Company, March 1995 to Pres-
Executive Vice President and Chief ent; Senior Vice President, Operations,
Financial Officer, Burlington Resources Oil & Burlington Resources Oil & Gas Company, October
Gas Company, March 1993 to Present; Senior 1994 to March 1995; Senior Vice President,
Vice President and Chief Financial Officer, Acquisitions and Land, Burlington Resources Oil
Burlington Resources Inc., April 1994 to & Gas Company, July 1993 to October 1994; Senior
December 1995; Vice President, Finance, Vice President, Strategic Planning and Asset
Burlington Resources Inc., March 1992 to Management, Burlington Resources Oil & Gas
February 1993. Company, December 1990 to July 1993.
C. RAY OWEN, 52 LOUIS A. RASPINO, 45
Executive Vice President and Chief Senior Vice President, Strategic Planning
Operating Officer and Business Development
Burlington Resources Inc. Burlington Resources Inc.
April 1997 to Present October 1997 to Present
Executive Vice President and Chief Senior Vice President, Chief Financial Officer,
Operating Officer, Burlington Resources Oil & The Louisiana Land and Exploration Company, Sep-
Gas Company, October 1994 to Present; Senior tember 1995 to October 1997; Treasurer, The
Vice President, Operations, Burlington Louisiana Land and Exploration Company, May 1992
Resources Oil & Gas Company, March 1993 to to September 1995.
October 1994; Vice President, Regional
Operations, Burlington Resources Oil & Gas
Company, December 1990 to March 1993.
GERALD J. SCHISSLER, 53 JOHN A. WILLIAMS, 53
Executive Vice President, Law Senior Vice President, Exploration
and Administration Burlington Resources Inc.
Burlington Resources Inc. October 1997 to Present
April 1997 to Present
Senior Vice President, Exploration and
Executive Vice President, Law and Production, The Louisiana Land and Exploration
Corporate Affairs, Burlington Resources Inc. Company, September 1995 to October 1997; Vice
December 1995 to April 1997; Senior Vice President, The Louisiana Land and Exploration
President, Law, Burlington Resources Inc., Company, March 1988 to September 1995.
December 1993 to December 1995; Consultant,
June 1991 to July 1993.
</TABLE>

12
<PAGE> 15

PART II

ITEM FIVE

MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

The Company's Common Stock is traded on the New York Stock Exchange under
the symbol "BR." At December 31, 1997, the number of common stockholders was
23,695.

Information on common stock prices and quarterly dividends is shown on page
43.

ITEM SIX

SELECTED FINANCIAL DATA

The selected financial data for the Company set forth below for the five
years ended December 31, 1997 should be read in conjunction with the
consolidated financial statements. Prior year amounts have been restated to
combine BR and LL&E.

<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues.................................... $2,000 $2,200 $1,734 $1,871 $1,865
Operating Income (Loss)..................... 503 580 (397) (159) 298
Net Income (Loss)........................... 319 335 (261) (73) 266
Basic Earnings (Loss) per Common Share...... 1.80 1.89 (1.47) (.41) 1.52
Diluted Earnings (Loss) per Common Share.... 1.79 1.88 (1.47) (.41) 1.51
BALANCE SHEET DATA
Total Assets................................ 5,821 5,683 5,608 6,285 6,285
Long-term Debt.............................. 1,748 1,853 2,042 2,049 1,554
Stockholders' Equity........................ 3,016 2,808 2,591 2,920 3,208
Cash Dividends Declared per Common Share.... $ .46 $ .44 $ .44 $ .58 $ .58
Common Shares Outstanding................... 177 177 178 177 180
</TABLE>

13
<PAGE> 16

ITEM SEVEN

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE MERGER

On July 17, 1997, Burlington Resources Inc. ("BR") and The Louisiana Land
and Exploration Company ("LL&E") announced that they had entered into an
Agreement and Plan of Merger (the "Merger"). On October 22, 1997, the Merger was
completed and LL&E became a wholly-owned subsidiary of the Company. Pursuant to
the Merger, BR issued 52,795,635 shares of its Common Stock based on an exchange
ratio of 1.525 for each outstanding share of LL&E stock. The Merger was
accounted for as a pooling of interests and qualified as a tax-free
reorganization. The transaction was valued at approximately $3 billion based on
BR's closing stock price on October 22, 1997. All operational and financial
information contained herein includes the combined business activities for BR
and LL&E for all periods presented.

FINANCIAL CONDITION AND LIQUIDITY

The Company's total long-term debt to capital (long-term debt and
stockholders' equity) ratio at December 31, 1997 and 1996 was 37 percent and 40
percent, respectively.

The Company's credit facilities are comprised of a $600 million revolving
credit agreement that expires in July 2001 and a $300 million revolving credit
agreement that expires in July 1998. The $300 million revolving credit agreement
is renewable annually by mutual consent and was renewed in July 1997. In June
1997, LL&E refinanced its existing $350 million revolving credit facility with a
revolving credit facility of a like amount. However, as a result of the Merger
of LL&E and BR, the revolving credit facility was terminated on October 23,
1997. Further, LL&E's commercial paper program was also terminated on that date
and outstanding commercial paper totaling approximately $83 million was retired
by the Company. As of December 31, 1997, there were no borrowings outstanding
under the credit facilities. In April 1997, the Company increased the capacity
under its shelf registration statements from $200 million to $500 million.
Effective November 7, 1997, LL&E withdrew its shelf registration statement of
$500 million.

Effective July 16, 1997, the Company rescinded its stock repurchase
program. From January 1, 1997 through May 31, 1997, the Company repurchased
approximately 1.3 million shares of its Common Stock for $58 million. Since
December 1988, the Company has repurchased approximately 31 million shares. In
conjunction with the Company's stock repurchase program, the Company sold put
options ("options") during the first quarter of 1997. The options entitled the
holders, upon exercise of the options on the expiration dates, to sell shares of
BR Common Stock to the Company at specified prices. Alternatively, the Company
retained the ability to settle the options in cash. In total, options on 500
thousand shares were issued with an average strike price of $44.50 per share. An
average premium of $2.63 per option was received for the option sales. All
options expired without being exercised.

Net cash provided by operating activities for 1997 was $1,122 million
compared to $995 million and $687 million in 1996 and 1995, respectively. The
increase in 1997 compared to 1996 was primarily due to higher operating income,
excluding non-cash items, and working capital changes. Net cash provided by
operating activities in 1996 also included proceeds of $108 million relating to
an obligation to deliver gas from certain coal seam wells through December 31,
2002. The increase in 1996 compared to 1995 was primarily due to significantly
higher operating income and $108 million in proceeds received relating to an
obligation to deliver gas from certain coal seam wells through December 31,
2002. These increases were partially offset by other working capital changes.
Net cash provided by operating activities in 1995 included the sale of a
receivable related to a claim resulting from the breach of a take-or-pay gas
contract and the sale of gas-in-storage inventory for approximately $39 million
and $20 million, respectively.

14
<PAGE> 17

The Company is involved in certain legal and environmental proceedings as
well as other related matters. Although it is possible that new information or
future developments could require the Company to reassess its potential exposure
related to these matters, the Company believes, based upon available
information, the resolution of these issues will not have a materially adverse
effect on the consolidated financial position or results of operations of the
Company.

The Company has certain commitments and uncertainties related to its normal
operations. Management believes that there are no commitments, uncertainties or
contingent liabilities that will have a materially adverse effect on the
consolidated financial position or results of operations of the Company.

CAPITAL EXPENDITURES AND RESOURCES

Capital expenditures during 1997 totaled $1,245 million compared to $804
million and $787 million in 1996 and 1995, respectively. The Company invested
$214 million for proved property acquisitions in 1997 compared to $92 million
and $103 million in 1996 and 1995, respectively. The Company invested $941
million on internal development and exploration during 1997 compared to $646
million and $583 million in 1996 and 1995, respectively.

Capital expenditures for 1998, excluding proved property acquisitions, are
projected to be approximately $1.15 billion. Capital expenditures are expected
to be primarily for internal development and exploration of oil and gas
properties and plant and pipeline expenditures. Capital expenditures will be
funded from existing cash balances and cash flows, supplemented, if needed, by
external financing.

The Company anticipates continued increases in gas production. The
increased gas production is expected to be a result of the continuing
development of the Company's gas reserves, exploration of undeveloped acreage
and the Company's producing property acquisition program. The Company expects to
market its additional gas production in the Gulf Coast, the Midwest, the East
Coast and the traditional California markets.

MARKETING

Natural gas. In pursuit of the Company's mission to build long-term
shareholder value, the Company's marketing strategy is to maximize the value of
its production by developing marketing flexibility from the wellhead to the
burnertip. The Company's gas production is gathered, processed, exchanged and
transported utilizing various firm and interruptible contracts and routes to
access the highest value market hubs. The Company's customers include local
distribution companies, electric utilities and a diverse portfolio of industrial
users. The Company maintains the capacity to ensure its production can be
marketed either at the wellhead or downstream at market sensitive prices.

15
<PAGE> 18

DIVIDENDS

On January 14, 1998, the Board of Directors declared a common stock
quarterly dividend of $.1375 per share, payable April 1, 1998. Dividend levels
are determined by the Board of Directors based on profitability, capital
expenditures, financing and other factors. The Company declared cash dividends
on Common Stock totaling approximately $82 million during 1997.

RESULTS OF OPERATIONS

Year Ended December 31, 1997 Compared With Year Ended December 31, 1996

The Company reported net income of $319 million or $1.80 basic earnings per
share in 1997 compared to net income of $335 million or $1.89 basic earnings per
share in 1996. The 1997 results include a $.40 per share charge related to the
Merger for severance and related exit costs and transaction costs. The results
also include an $.18 per share gain related to the sales of oil and gas
properties. The 1996 results include an $.11 per share charge related to the
divestiture program and reorganization for severance and other related exit
costs.

Revenues were $2,000 million in 1997 compared to $2,200 million in 1996.
Revenues decreased $264 million as a result of the sale of the refinery on July
31, 1996. Oil sales volumes decreased 4 percent to 87.2 MBbls per day and
average oil prices decreased 6 percent to $19.24 per barrel which decreased
revenues $31 million and $37 million, respectively. These decreases were
partially offset by increases in gas sales volumes of 4 percent to 1,669 MMCF
per day and an average gas price increase of 6 percent to $2.18 per MCF which
increased revenues $46 million and $82 million, respectively. Gas volumes
increased due to continued development of gas properties. Oil volumes were down
primarily due to the divestiture program.

Costs and Expenses were $1,497 million in 1997 compared to $1,620 million
in 1996. Costs and expenses in 1997 included an $80 million charge related to
the Merger for severance and related exit costs and transaction costs. Costs and
expenses in 1996 included a $30 million reorganization charge for severance and
other related exit costs. Excluding the $80 million charge in 1997 and the $30
million charge in 1996, costs and expenses in 1997 decreased $173 million from
1996. The decrease is primarily due to a $254 million decrease in refinery costs
resulting from the sale of the refinery and a $23 million decrease in production
and processing expenses. These decreases were partially offset by a $100 million
increase in exploration costs and a $5 million increase in depreciation,
depletion and amortization.

Interest Expense was $142 million in 1997 compared to $147 million in 1996.
The decrease was primarily due to lower outstanding commercial paper balances
during 1997.

Other Income -- Net was $50 million in 1997 due to a gain related to the
sales of oil and gas properties associated with the divestiture program.

Year Ended December 31, 1996 Compared With Year Ended December 31, 1995

The Company reported net income of $335 million or $1.89 basic earnings per
share in 1996 compared to a net loss of $261 million or $1.47 basic loss per
share in 1995. The 1996 results include an $.11 per share charge related to the
divestiture program and reorganization for severance and other related exit
costs. The 1995 results include a $1.71 per share non-cash charge resulting from
the Company's adoption of Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to
Be Disposed Of ("SFAS No. 121").

Revenues were $2,200 million in 1996 compared to $1,734 million in 1995.
Average gas sales prices increased 46 percent in 1996 to $2.05 per MCF and
average oil prices increased 20 percent to $20.39 per barrel which increased
revenues $381 million and $112 million, respectively. Oil and gas

16
<PAGE> 19

sales volumes increased primarily due to continued development and exploration
of the Company's oil and gas properties and producing property acquisitions. Gas
sales volumes improved 7 percent to 1,603 MMCF per day and oil sales volumes
increased slightly to 91.1 MBbls per day which increased revenues $57 million
and $2 million, respectively. The increases in oil and gas revenue were
partially offset by a $92 million decrease in refinery revenue due to the sale
of the Company's crude oil refinery on July 31, 1996.

Costs and Expenses were $1,620 million in 1996 compared to $2,131 million
in 1995. Costs and expenses in 1995 included a $490 million non-cash charge
related to the impairment of oil and gas properties which resulted from the
Company's adoption of SFAS No. 121, effective September 30, 1995. Excluding the
$490 million non-cash charge, costs and expenses in 1996 decreased $21 million
compared to 1995. The decrease was primarily due to a $91 million decrease in
refinery costs as a result of the sale of the Company's crude oil refinery and a
$9 million decrease in depreciation, depletion and amortization. These decreases
were partially offset by a $48 million increase in exploration costs, a $20
million increase in administrative expenses and a $14 million increase in
production and processing expenses resulting from a 5 percent increase in 1996
production levels. Administrative expenses increased due to a $30 million
reorganization charge for severance and other related exit costs partially
offset by a $9 million decrease in salary expense resulting from employee
reductions.

The effective income tax rate was an expense of 22.5 percent in 1996
compared to a benefit of 51.9 percent in 1995. The higher effective tax rate in
1996 was primarily due to pretax income in 1996 versus a pretax loss in 1995.
Each year includes a beneficial rate of approximately 15 percent due to the
effect of non-conventional fuel tax credits.

OTHER MATTERS

Since 1996, the Company has been in the process of implementing new
financial and operating computer systems. The first phase of implementation was
completed in the first quarter of 1997 for certain operating areas within the
Company. The remaining operating and financial systems are scheduled for
implementation in phases, with project completion scheduled for the fourth
quarter of 1998. These new systems are year 2000 compliant. Additionally, the
Company is in the process of identifying suppliers and business partners who are
not prepared to offer assurance that their systems will be year 2000 compliant.
The cost of achieving year 2000 compliance is not expected to have a materially
adverse effect on the consolidated financial position or results of operations
of the Company.

In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting
Comprehensive Income, which is effective for fiscal years beginning after
December 15, 1997.

SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general-purpose financial statements. It requires (a)
classification of items of other comprehensive income by their nature in a
financial statement and (b) display of the accumulated balance of other
comprehensive income separate from retained earnings and additional paid-in
capital in the equity section of a statement of financial position. The Company
plans to adopt SFAS No. 130 for the quarter ended March 31, 1998.

In June 1997, the FASB also issued SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Information, which is effective for fiscal years
beginning after December 15, 1997.

SFAS No. 131 establishes standards for reporting information about
operating segments in annual financial statements and requires selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. This Statement
supersedes SFAS No. 14, Financial Reporting for Segments of a Business
Enterprise, but retains the requirement to report information about major
customers. The Company plans to adopt SFAS No. 131 for the year ended December
31, 1998.

17
<PAGE> 20

FORWARD-LOOKING STATEMENTS

The Company may, in discussions of its future plans, objectives and
expected performance in periodic reports filed by the Company with the
Securities and Exchange Commission (or documents incorporated by reference
therein) and in written and oral presentations made by the Company, include
projections or other forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act
of 1934, as amended. Such projections and forward-looking statements are based
on assumptions which the Company believes are reasonable, but are by their
nature inherently uncertain. In all cases, there can be no assurance that such
assumptions will prove correct or that projected events will occur, and actual
results could differ materially from those projected. Some of the important
factors that could cause actual results to differ from any such projections or
other forward-looking statements follow.

Commodity Pricing and Demand. Substantially all of the Company's crude oil
and natural gas production is sold on the spot market or under short-term
contracts at market sensitive prices. Spot market prices for domestic crude oil
and natural gas are subject to volatile trading patterns in the commodity
futures markets, including among others, the New York Mercantile Exchange
("NYMEX"), because of seasonal weather patterns, national supply and demand
factors and general economic conditions. Crude oil prices are also affected by
quality differentials, by worldwide political developments and by actions of the
Organization of Petroleum Exporting Countries. Although the futures markets
provide some indication of crude oil and natural gas prices for the subsequent
12 to 18 months, prices in the futures markets are subject to substantial
changes in relatively short periods of time.

There is also a difference between the NYMEX futures contract price for a
particular month and the actual cash price received for that month in a U.S.
producing basin or at a U.S. market hub, which is referred to as the "basis
differential." Basis differentials, like the underlying commodity prices, can be
volatile because of regional supply and demand factors, including seasonal
factors and the availability and price of transportation to consuming areas.

In the ordinary course and conduct of its business, the Company utilizes
futures contracts traded on the NYMEX and the Kansas City Board of Trade, and
over-the-counter price and basis swaps and options with major crude oil and
natural gas merchants and financial institutions to hedge its price risk
exposure related to the Company's U.S. production. The gains and losses realized
as a result of these derivatives transactions are substantially offset in the
cash market when the hedged commodity is delivered. In order to accommodate the
needs of its customers, the Company also uses price swaps to convert gas sold
under fixed price contracts to market prices.

The Company uses a sensitivity analysis technique to evaluate the
hypothetical effect that changes in the market value of crude oil and natural
gas may have on the fair value of the Company's derivative instruments. At
December 31, 1997, the potential decrease in fair value of commodity derivative
instruments assuming a 10 percent adverse movement in the underlying commodities
prices does not have a materially adverse effect on the consolidated financial
position or results of operations of the Company.

For purposes of calculating the hypothetical change in fair value, the
relevant variables are the type of commodity (crude oil or natural gas), the
commodity futures prices, the volatility of commodity prices and the basis and
quality differentials. Due to the short duration of the derivative contracts,
time value of money is ignored. The hypothetical change in fair value is
calculated by multiplying the difference between the hypothetical price
(adjusted for any basis or quality differentials) and the contractual price by
the contractual volumes.

Changes in crude oil and natural gas prices (including basis differentials)
from those assumed in preparing projections and forward-looking statements could
cause the Company's actual financial results to differ materially from projected
financial results and can also impact the Company's determination of proved
reserves and the standardized measure of discounted future net cash flows
relative to crude oil and natural gas reserves. In addition, periods of sharply
lower commodity prices

18
<PAGE> 21

could affect the Company's production levels and/or cause it to curtail capital
spending projects and delay or defer exploration, exploitation or development
projects.

Projections relating to the price received by the Company for natural gas
also rely on assumptions regarding the availability and pricing of
transportation to the Company's key markets. In particular, the Company has
contractual arrangements for the transportation of natural gas from the San Juan
Basin eastward to Eastern and Midwestern markets or to market hubs in Texas,
Oklahoma and Louisiana. The natural gas price received by the Company could be
adversely affected by any constraints in pipeline capacity to serve these
markets.

Exploration and Production Risks. The Company's business is subject to all
of the risks and uncertainties normally associated with the exploration for and
development and production of crude oil and natural gas.

Reserves which require the use of improved recovery techniques for
production are included in proved reserves if supported by a successful pilot
project or the operation of an installed program. The process of estimating
quantities of proved reserves is inherently uncertain and involves subjective
engineering and economic determinations. In this regard, changes in the economic
conditions (including commodity prices) or operating conditions (including,
without limitation, exploration, development and production costs and expenses
and drilling results from exploration and development activity) could cause the
Company's estimated proved reserves or production to differ from those included
in any such forward-looking statements or projections.

Projecting future crude oil and natural gas production is imprecise.
Producing oil and gas reservoirs eventually have declining production rates.
Projections of production rates rely on certain assumptions regarding historical
production patterns in the area or formation tests for a particular producing
horizon. Actual production rates could differ materially from such projections.
Production rates depend on a number of additional factors, including commodity
prices, market demand and the political, economic and regulatory climate.

Another major factor affecting the Company's production is its ability to
replace depleting reservoirs with new reserves through acquisition, exploration
or development programs. Exploration success is extremely difficult to predict
with certainty, particularly over the short term where the timing and extent of
successful results vary widely. Over the long term, the ability to replace
reserves depends not only on the Company's ability to locate crude oil and
natural gas reserves, but on the cost of finding and developing such reserves.
Moreover, development of any particular exploration or development project may
not be justified because of the commodity price environment at the time or
because of the Company's finding and development costs for such project. No
assurances can be given as to the level or timing of success that the Company
will be able to achieve in acquiring or finding and developing additional
reserves.

Projections relating to the Company's production and financial results rely
on certain assumptions about the Company's continued success in its acquisition
and asset rationalization programs and in its cost management efforts.

The Company's drilling operations are subject to various hazards common to
the oil and gas industry, including explosions, fires, and blowouts, which could
result in damage to or destruction of oil and gas wells or formations,
production facilities and other property and injury to people. They are also
subject to the additional hazards of marine operations, such as capsizing,
collision and damage or loss from severe weather conditions.

Development Risk. A significant portion of the Company's development plans
involve large projects in the Gulf of Mexico and other areas. A variety of
factors affect the timing and outcome of such projects including, without
limitation, approval by the other parties owning working interests in the
project, receipt of necessary permits and approvals by applicable governmental
agencies, the availability of the necessary drilling equipment, delivery
schedules for critical equipment and arrangements for the gathering and
transportation of the produced hydrocarbons.

19
<PAGE> 22

Foreign Operations Risk. The Company's operations outside of the U.S. are
subject to risks inherent in foreign operations, including, without limitation,
the loss of revenue, property and equipment from hazards such as expropriation,
nationalization, war, insurrection and other political risks, increases in taxes
and governmental royalties, renegotiation of contracts with governmental
entities, changes in laws and policies governing operations of foreign-based
companies, currency restrictions and exchange rate fluctuations and other
uncertainties arising out of foreign government sovereignty over the Company's
international operations. Laws and policies of the U.S. affecting foreign trade
and taxation may also adversely affect the Company's international operations.

The Company's ability to market oil and natural gas discovered or produced
in its foreign operations, and the price the Company could obtain for such
production, depends on many factors beyond the Company's control, including
ready markets for oil and natural gas, the proximity and capacity of pipelines
and other transportation facilities, fluctuating demand for oil and natural gas,
the availability and cost of competing fuels, and the effects of foreign
governmental regulation of oil and gas production and sales. Pipeline and
processing facilities do not exist in certain areas of exploration and,
therefore, any actual sales of the Company's production could be delayed for
extended periods of time until such facilities are constructed.

Competition. The Company actively competes for property acquisitions,
exploration leases and sales of crude oil and natural gas, frequently against
companies with substantially larger financial and other resources. In its
marketing activities, the Company competes with numerous companies for gas
purchasing and processing contracts and for natural gas and natural gas liquids
at several steps in the distribution chain. Competitive factors in the Company's
business include price, contract terms, quality of service, pipeline access,
transportation discounts and distribution efficiencies.

Political and Regulatory Risk. The Company's operations are affected by
national, state and local laws and regulations such as restrictions on
production, changes in taxes, royalties and other amounts payable to governments
or governmental agencies, price or gathering rate controls and environmental
protection regulations. Changes in such laws and regulations, or interpretations
thereof, could have a significant effect on the Company's operations or
financial results.

Potential Environmental Liabilities. The Company's operations are subject
to various national, state and local laws and regulations covering the discharge
of material into, and protection of, the environment. Such regulations affect
the costs of planning, designing, operating and abandoning facilities. The
Company expends considerable resources, both financial and managerial, to comply
with environmental regulations and permitting requirements. Although the Company
believes that its operations and facilities are in general compliance with
applicable environmental laws and regulations, risks of substantial costs and
liabilities are inherent in crude oil and natural gas operations. Moreover, it
is possible that other developments, such as increasingly strict environmental
laws, regulations and enforcement, and claims for damage to property or persons
resulting from the Company's current or discontinued operations, could result in
substantial costs and liabilities in the future.

20
<PAGE> 23

ITEM EIGHT

FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION

BURLINGTON RESOURCES INC.

CONSOLIDATED STATEMENT OF INCOME

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Revenues................................................... $2,000 $2,200 $1,734
Costs and Expenses......................................... 1,497 1,620 2,131
------ ------ ------
Operating Income (Loss).................................... 503 580 (397)
Interest Expense........................................... 142 147 147
Other Income -- Net........................................ 50 - 1
------ ------ ------
Income (Loss) Before Income Taxes.......................... 411 433 (543)
Income Tax Expense (Benefit)............................... 92 98 (282)
------ ------ ------
Net Income (Loss).......................................... $ 319 $ 335 $ (261)
====== ====== ======
Basic Earnings (Loss) per Common Share..................... $ 1.80 $ 1.89 $(1.47)
====== ====== ======
Diluted Earnings (Loss) per Common Share................... $ 1.79 $ 1.88 $(1.47)
====== ====== ======
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

21
<PAGE> 24

BURLINGTON RESOURCES INC.

CONSOLIDATED BALANCE SHEET

(IN MILLIONS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1997 1996
-------- --------
<S> <C> <C>
ASSETS

Current Assets
Cash and Cash Equivalents................................. $ 152 $ 77
Short-term Investments.................................... 83 -
Accounts Receivable....................................... 376 484
Inventories............................................... 39 35
Other Current Assets...................................... 28 28
------ ------
678 624
------ ------
Oil and Gas Properties (Successful Efforts Method).......... 8,740 8,863
Other Properties............................................ 615 554
------ ------
9,355 9,417
Accumulated Depreciation, Depletion and Amortization...... 4,315 4,489
------ ------
Properties -- Net...................................... 5,040 4,928
------ ------
Other Assets................................................ 103 131
------ ------
Total Assets...................................... $5,821 $5,683
====== ======
LIABILITIES

Current Liabilities
Accounts Payable.......................................... $ 395 $ 348
Taxes Payable............................................. 71 74
Accrued Interest.......................................... 28 28
Dividends Payable......................................... 24 17
Deferred Revenue.......................................... 19 20
Other Current Liabilities................................. 1 29
------ ------
538 516
------ ------
Long-term Debt.............................................. 1,748 1,853
------ ------
Deferred Income Taxes....................................... 203 162
------ ------
Deferred Revenue............................................ 56 75
------ ------
Other Liabilities and Deferred Credits...................... 260 269
------ ------
Commitments and Contingent Liabilities
STOCKHOLDERS' EQUITY

Preferred Stock, Par Value $.01 Per Share (Authorized
75,000,000 Shares;
No Shares Issued)......................................... - -
Common Stock, Par Value $.01 Per Share (Authorized
325,000,000 Shares; Issued 202,795,635 and 202,202,891
Shares for 1997 and 1996, respectively)................... 2 2
Paid-in Capital............................................. 3,001 2,982
Retained Earnings........................................... 1,051 813
------ ------
4,054 3,797
Cost of Treasury Stock (26,087,134 and 25,081,301 Shares for
1997 and 1996, respectively).............................. 1,038 989
------ ------
Stockholders' Equity........................................ 3,016 2,808
------ ------
Total Liabilities and Stockholders' Equity........ $5,821 $5,683
====== ======
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

22
<PAGE> 25

BURLINGTON RESOURCES INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(IN MILLIONS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net Income (Loss)......................................... $ 319 $ 335 $(261)
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided By Operating Activities
Depreciation, Depletion and Amortization............... 538 534 545
Deferred Income Taxes.................................. 36 32 (359)
Exploration Costs...................................... 259 159 111
Gain on Sales of Oil and Gas Properties................ (50) - -
Impairment of Oil and Gas Properties................... - - 490
Working Capital Changes
Accounts Receivable.................................... 108 (135) (28)
Inventories............................................ (4) 39 5
Other Current Assets................................... - 1 (5)
Accounts Payable....................................... 47 (57) 45
Taxes Payable.......................................... (3) 11 12
Accrued Interest....................................... - 2 -
Other Current Liabilities.............................. (22) 37 8
Other..................................................... (106) 37 124
------- ----- -----
Net Cash Provided By Operating Activities......... 1,122 995 687
------- ----- -----
Cash Flows From Investing Activities
Additions to Properties................................... (1,245) (804) (787)
Short-term Investments.................................... (83) - -
Proceeds from Sales and Other............................. 494 193 192
------- ----- -----
Net Cash Used In Investing Activities............. (834) (611) (595)
------- ----- -----
Cash Flows From Financing Activities
Proceeds from Long-term Debt.............................. - 150 178
Reduction in Long-term Debt............................... (105) (337) (184)
Dividends Paid............................................ (74) (77) (78)
Common Stock Purchases.................................... (58) (112) (5)
Other..................................................... 24 38 (4)
------- ----- -----
Net Cash Used In Financing Activities............. (213) (338) (93)
------- ----- -----
Increase (Decrease) in Cash and Cash Equivalents............ 75 46 (1)
Cash and Cash Equivalents
Beginning of Year......................................... 77 31 32
------- ----- -----
End of Year............................................... $ 152 $ 77 $ 31
======= ===== =====
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

23
<PAGE> 26

BURLINGTON RESOURCES INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(IN MILLIONS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COST OF
COMMON PAID-IN RETAINED TREASURY STOCKHOLDERS'
STOCK CAPITAL EARNINGS OTHER STOCK EQUITY
------ ------- -------- ----- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994................... $2 $2,951 $ 893 $(5) $ (921) $2,920
Net Loss................................... (261) (261)
Cash Dividends ($.44 per Share)............ (77) (77)
Stock Purchases (132,900 Shares)........... (5) (5)
Stock Option Activity and Other............ 4 3 7 14
-- ------ ------ --- ------- ------
Balance, December 31, 1995................... 2 2,955 555 (2) (919) 2,591
Net Income................................. 335 335
Cash Dividends ($.44 per Share)............ (77) (77)
Stock Purchases (2,706,000 Shares)......... (112) (112)
Stock Option Activity and Other............ 27 2 42 71
-- ------ ------ --- ------- ------
Balance, December 31, 1996................... 2 2,982 813 - (989) 2,808
Net Income................................. 319 319
Cash Dividends ($.46 per Share)............ (82) (82)
Stock Purchases (1,312,500 Shares)......... (58) (58)
Stock Option Activity and Other............ 19 1 9 29
-- ------ ------ --- ------- ------
Balance, December 31, 1997................... $2 $3,001 $1,051 $ - $(1,038) $3,016
== ====== ====== === ======= ======
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

24
<PAGE> 27

BURLINGTON RESOURCES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

Principles of Consolidation and Reporting

The consolidated financial statements include the accounts of Burlington
Resources Inc. ("BR") and its majority-owned subsidiaries (the "Company"). All
significant intercompany transactions have been eliminated in consolidation. Due
to the nature of financial reporting, management makes estimates and assumptions
in preparing the consolidated financial statements. Actual results could differ
from estimates. The consolidated financial statements include certain
reclassifications that were made to conform to current presentation. Such
reclassifications have no impact on net income or stockholders' equity. All
operational and financial information contained herein includes the combined
business activities for BR and LL&E for all periods presented.

Cash and Cash Equivalents

All short-term investments purchased with a maturity of three months or
less are considered cash equivalents. Cash equivalents are stated at cost, which
approximates market value.

Short-term Investments

Short-term investments consist of highly-liquid debt securities with a
maturity of more than three months. The securities are available for sale and
are carried at fair value based on quoted market prices. As of December 31,
1997, the fair value of these investments approximated amortized cost.
Unrealized gains and losses, net of tax, are included as a component of
stockholders' equity until realized. Realized gains and losses are based on
specific identification of the securities sold.

Inventories

Inventories of materials, supplies and products are valued at the lower of
average cost or market.

Properties

Oil and gas properties are accounted for using the successful efforts
method. Under this method, all development costs and acquisition costs of proved
properties are capitalized and amortized on a units-of-production basis over the
remaining life of proved developed reserves and proved reserves, respectively.
Costs of drilling exploratory wells are initially capitalized, but charged to
expense if and when a well is determined to be unsuccessful. In addition,
unamortized capital costs at a field level are reduced to fair value if the sum
of expected undiscounted future cash flows is less than net book value.

Costs of retired, sold or abandoned properties that constitute a part of an
amortization base are charged or credited, net of proceeds, to accumulated
depreciation, depletion and amortization. Gains or losses from the disposal of
other properties are recognized currently. Expenditures for maintenance, repairs
and minor renewals necessary to maintain properties in operating condition are
expensed as incurred. Major replacements and renewals are capitalized. All
properties are stated at cost.

Revenue Recognition

Gas revenues are recorded on the entitlement method. Under the entitlement
method, revenue is recorded based on the Company's net interest.

Functional Currency

Foreign exploration and production operations are considered an extension
of the Company's operations. The assets, liabilities and operations of foreign
locations are therefore measured using the

25
<PAGE> 28

United States dollar as the functional currency. Foreign currency transaction
adjustments, which were not material, are included in net income.

Hedging and Related Activities

In order to mitigate the risk of market price fluctuations, oil and gas
futures, swaps and options contracts may be entered into as hedges of the
Company's production. Changes in the market value of these contracts are
deferred until the gain or loss is recognized on the hedged commodity. To
qualify as a hedge, these transactions must be designated as a hedge and changes
in their fair value must correlate with changes in the price of anticipated
future production such that the Company's exposure to the effects of commodity
price changes is reduced. The Company also enters into swap agreements to
convert fixed price gas sales contracts to market-sensitive contracts. Gains or
losses resulting from these transactions are included in revenue as the related
physical production is delivered.

These instruments are measured for effectiveness on an enterprise basis
both at the inception of the contract and on an ongoing basis. If these
instruments are terminated prior to maturity, resulting gains or losses continue
to be deferred until the hedged item is recognized in income.

Credit and Market Risks

The Company manages and controls market and counterparty credit risk
through established formal internal control procedures which are reviewed on an
ongoing basis. The Company attempts to minimize credit risk exposure to
counterparties through formal credit policies, monitoring procedures and through
establishment of valuation reserves related to counterparty credit risk. In the
normal course of business, collateral is not required for financial instruments
with credit risk.

Income Taxes

Income taxes are provided based on earnings reported for tax return
purposes in addition to a provision for deferred income taxes. Deferred income
taxes are provided to reflect the tax consequences in future years of
differences between the financial statement and tax basis of assets and
liabilities. Tax credits are accounted for under the flow-through method, which
reduces the provision for income taxes in the year the tax credits are earned. A
valuation allowance is established to reduce deferred tax assets if it is more
likely than not that the related tax benefits will not be realized.

Stock-Based Compensation

The Company uses the intrinsic value based method of accounting for
stock-based compensation. Under this method, the Company records no compensation
expense for stock options granted when the exercise price for options granted is
equal to the fair market value of the Company's stock on the date of the grant.

Earnings per Common Share

Basic earnings per common share ("EPS") is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. The weighted average number of common shares
outstanding for computing basic EPS was 177 million, 177 million and 178 million
for the years ended December 31, 1997, 1996 and 1995, respectively. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
The weighted average number of common shares outstanding for computing diluted
EPS, including dilutive stock options, was 178 million for the years ended
December 31, 1997, 1996 and 1995. No adjustments were made to reported net
income (loss) in the computation of EPS.

26
<PAGE> 29

2. MERGER

On July 17, 1997, Burlington Resources Inc. and The Louisiana Land and
Exploration Company announced that they had entered into an Agreement and Plan
of Merger (the "Merger"). On October 22, 1997, the Merger was completed and LL&E
became a wholly-owned subsidiary of the Company. Pursuant to the Merger, BR
issued 52,795,635 shares of its Common Stock based on an exchange ratio of 1.525
for each outstanding share of LL&E stock. The Merger was accounted for as a
pooling of interests and qualified as a tax-free reorganization. The transaction
was valued at approximately $3 billion based on BR's closing stock price on
October 22, 1997. During the fourth quarter of 1997, the Company recorded a
pretax charge of $80 million ($71 million after tax) for direct costs associated
with the Merger. These costs primarily consist of $44 million for severance and
related exit costs and $36 million for direct transaction costs. Approximately
$44 million of accrued unpaid costs remained on the consolidated balance sheet
as of December 31, 1997.

The separate results of operations of BR and LL&E are as follows. Certain
reclassifications were made to the results of LL&E to conform to the
presentation used by BR.

<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS YEAR ENDED
ENDED DECEMBER 31,
SEPTEMBER 30, -----------------
1997 1996 1995
------------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
BR...................................................... $ 987 $ 1,293 $ 873
LL&E.................................................... 441 863 822
Conforming reclassifications............................ 31 44 39
------ ------- -------
Combined................................................ $1,459 $ 2,200 $ 1,734
====== ======= =======
Net Income (Loss)
BR...................................................... $ 249 $ 255 $ (280)
LL&E.................................................... 33 80 19
------ ------- -------
Combined................................................ $ 282 $ 335 $ (261)
====== ======= =======
</TABLE>

3. HEDGING ACTIVITIES

Gas Swaps

The Company enters into gas swap agreements to offset the effects of
long-term fixed-price contracts for natural gas. The Company also enters into
gas swap agreements to fix the price of natural gas in the short-term.

The Company is a fixed-price payor on approximately 2.9 BCF (which is less
than 1 percent of the Company's 1997 gas production) at prices ranging from
$2.02 to $2.21 per MMBTU for production through March 31, 1999. These
transactions convert fixed-price contracts to market-sensitive contracts. The
Company is a fixed-price receivor on approximately 18.5 BCF (which approximates
3 percent of the Company's 1997 gas production) at prices ranging from $1.82 to
$3.36 per MMBTU for production through October 31, 1998. These transactions are
a hedge of the Company's underlying production. The deferred gain on these types
of transactions as of December 31, 1997 was approximately $7 million.

Futures Contracts

The Company sells crude oil and natural gas futures contracts on the New
York Mercantile Exchange ("NYMEX") and sells natural gas futures contracts on
the Kansas City Board of Trade ("KBOT"). These contracts allow the Company to
sell crude oil and natural gas at a future date for a specified price.
Outstanding crude oil futures contracts as of December 31, 1997 totaled 1.7
MMBbls (which approximates 5 percent of the Company's 1997 oil production) at
NYMEX prices ranging from $20.50 to $22.00 per bbl for production through
November 30, 1998. Outstanding natural gas futures contracts as of December 31,
1997 totaled 16.4 BCF (which approximates 3 percent of the Company's

27
<PAGE> 30

1997 gas production) at NYMEX and KBOT prices ranging from $1.95 to $3.73 per
MMBTU for production through October 31, 1998. The deferred gain on crude oil
and natural gas futures contracts as of December 31, 1997 was approximately $11
million.

Options Contracts

The Company utilizes options and swaps which set a floor price for
anticipated future crude oil and natural gas production and allow the Company to
participate in market price increases which exceed specific non-participation
ranges and floor prices. At December 31, 1997, the Company had approximately 57
BCF of 1998 gas production (which approximates 9 percent of the Company's 1997
gas production) hedged at an average floor price of $1.80 per MMBTU and a
non-participation range in market price increases limited to $.24 per MMBTU. At
December 31, 1997, the Company had approximately 38 BCF of 1999 gas production
(which approximates 6 percent of the Company's 1997 gas production) hedged at an
average floor price of $1.79 per MMBTU and non-participation range in market
price increases limited to $.23 per MMBTU. At December 31, 1997, these
transactions had a deferred loss of approximately $3 million for 1998 gas
production and a deferred gain of $300 thousand for 1999 gas production. At
December 31, 1997, the Company had approximately 2 MMBbls of 1998 oil production
(which approximates 6 percent of 1997 oil production) hedged at an average floor
price of $19.38 per barrel and a non-participation range in market price
increases limited to $2.25 per barrel. The deferred gain on these transactions,
as of December 31, 1997, was approximately $4 million.

4. INCOME TAXES

The jurisdictional components of income (loss) before income taxes follow.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1997 1996 1995
---- ---- -----
(IN MILLIONS)
<S> <C> <C> <C>

Domestic.................................................... $369 $400 $(594)
Foreign..................................................... 42 33 51
---- ---- -----
Total............................................. $411 $433 $(543)
==== ==== =====
</TABLE>

The provision (benefit) for income taxes follows.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1997 1996 1995
---- ---- -----
(IN MILLIONS)
<S> <C> <C> <C>
Current
Federal................................................... $44 $53 $ 62
State..................................................... 2 11 12
Foreign................................................... 10 2 3
--- --- -----
56 66 77
--- --- -----
Deferred
Federal................................................... 30 18 (321)
State..................................................... 11 9 (39)
Foreign................................................... (5) 5 1
--- --- -----
36 32 (359)
--- --- -----
Total............................................. $92 $98 $(282)
=== === =====
</TABLE>

28
<PAGE> 31

Reconciliation of the federal statutory income tax rate to the effective
income tax rate follows.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Statutory rate.............................................. 35.0% 35.0% (35.0)%
State income taxes net of federal tax benefit............... 2.1 3.0 (3.2)
Foreign income taxes net of federal tax benefit............. 2.1 .2 .6
Tax credits................................................. (18.5) (15.0) (15.4)
Merger costs................................................ 4.6 -- --
Other....................................................... (2.8) (.7) 1.1
----- ----- -----
Effective rate.................................... 22.5% 22.5% (51.9)%
===== ===== =====
</TABLE>

Deferred income tax liabilities (assets) follow.

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1997 1996
----- -----
(IN MILLIONS)
<S> <C> <C>
Deferred income tax liabilities
Excess of book over tax basis of properties............... $ 548 $ 426
----- -----
Deferred income tax assets
AMT credit carryforward................................... (255) (213)
Deferred foreign tax credits.............................. (66) (61)
Net operating loss carryforward........................... (4) (14)
Foreign tax credit carryforward........................... (2) (4)
Financial accruals and other.............................. (51) (6)
----- -----
(378) (298)
Less valuation allowance.......................... 33 34
----- -----
Net deferred income tax liabilities....................... $ 203 $ 162
===== =====
</TABLE>

The above net deferred tax liabilities as of December 31, 1997 and 1996,
include deferred state income tax liabilities of approximately $39 million and
$28 million, respectively.

The Alternative Minimum Tax ("AMT") credit carryforward, related primarily
to nonconventional fuel tax credits, is available to offset future federal
income tax liabilities. The AMT credit carryforward has no expiration. The
benefit of these tax credits is recognized in net income for accounting
purposes. The benefit is reflected in the current tax provision to the extent
the Company is able to utilize the credits for tax return purposes.

The foreign tax credit carryforward is available through the year 2001 to
offset future federal income taxes. The federal income tax net operating loss
carryforward is available through the year 2009 to offset future federal taxable
income, subject to the separate return limitation provisions of the federal
income tax regulations.

A valuation allowance is provided for uncertainties surrounding the
realization of certain foreign tax credit carryforwards and certain deferred
foreign tax credits.

29
<PAGE> 32

5. LONG-TERM DEBT

Long-term Debt follows.

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
------ ------
(IN MILLIONS)
<S> <C> <C>
Commercial Paper............................................ $ - $ 105
Notes, 7.15%, due 1999...................................... 300 300
Notes, 6 7/8%, due 1999..................................... 150 150
Notes, 9 5/8%, due 2000..................................... 150 150
Notes, 8 1/2%, due 2001..................................... 150 150
Notes, 8 1/4%, due 2002..................................... 100 100
Debentures, 9 7/8%, due 2010................................ 150 150
Debentures, 7 5/8%, due 2013................................ 100 100
Debentures, 9 1/8%, due 2021................................ 150 150
Debentures, 7.65%, due 2023................................. 200 200
Debentures, 8.20%, due 2025................................. 150 150
Debentures, 6 7/8%, due 2026................................ 150 150
Other, including discounts -- net........................... (2) (2)
------ ------
Total............................................. $1,748 $1,853
====== ======
</TABLE>

The Company has debt maturities of $450 million, $150 million, $150 and
$100 million, due in 1999, 2000, 2001 and 2002, respectively.

The Company's credit facilities are comprised of a $600 million revolving
credit agreement that expires in July 2001 and a $300 million revolving credit
agreement that expires in July 1998. The $300 million revolving credit agreement
is renewable annually by mutual consent and was renewed in July 1997. Annual
fees are .10 and .06 percent, respectively, of the commitments. At the Company's
option, interest on borrowings is based on the Prime rate or Eurodollar rates.
The unused commitment under these agreements is available to cover certain debt
due within one year; therefore, commercial paper is classified as long-term
debt. Under the covenants of these agreements, debt cannot exceed 52.5 percent
of the sum of debt and tangible net worth (as defined in the agreements).
Additionally, tangible net worth cannot be less than $1.3 billion. As of
December 31, 1997, there were no borrowings outstanding under these credit
facilities. In addition, the Company has the capacity to issue $500 million of
debt securities under shelf registration statements filed with the Securities
and Exchange Commission.

6. TRANSPORTATION ARRANGEMENTS WITH EL PASO NATURAL GAS COMPANY

In 1997, 1996 and 1995, approximately 41 percent, 43 percent and 47
percent, respectively, of the Company's gas production was transported to direct
sale customers through El Paso Natural Gas Company's ("EPNG") pipeline systems.
These transportation arrangements are pursuant to EPNG's approved Federal Energy
Regulatory Commission tariffs applicable to all shippers. The Company expects to
continue to transport a substantial portion of its future gas production through
EPNG's pipeline system. See Note 9 for demand charges paid to EPNG which provide
the Company with firm and interruptible transportation capacity rights on
interstate and intrastate pipeline systems.

7. CAPITAL STOCK

Stock Options

The Company's 1993 Stock Incentive Plan (the "1993 Plan") succeeds its 1988
Stock Option Plan which expired by its terms in May 1993 but remains in effect
for options granted prior to May 1993. The

30
<PAGE> 33

1993 Plan provides for the grant of stock options, restricted stock, stock
purchase rights and stock appreciation rights or limited stock appreciation
rights (together "SARs").

Under the 1993 Plan, options may be granted to officers and key employees
at fair market value on the date of grant, exercisable in whole or part by the
optionee after completion of at least one year of continuous employment from the
grant date and have a term of ten years. At December 31, 1997, 5,711,034 shares
of options were available for grant under the 1993 Plan. Under the 1997 Employee
Stock Incentive Plan (the "1997 Plan"), stock options and restricted stock
("Awards") may be granted to employees who are not eligible to participate in
the 1993 Plan. The options are granted at fair market value on the grant date,
become exercisable in whole after the completion of at least one year of
continuous employment and have a term of ten years. The 1997 Plan limits Awards,
in aggregate, to a maximum of one million annually.

Activity in the Company's stock option plans follows.

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
OPTIONS EXERCISE PRICE
------- ----------------
<S> <C> <C>
Balance, December 31, 1994.................................. 5,503,248 $28.85
Granted................................................... 1,128,843 29.47
Exercised................................................. (298,984) 26.31
Cancelled................................................. (49,448) 30.88
----------
Balance, December 31, 1995.................................. 6,283,659 29.07
Granted................................................... 2,896,483 47.35
Exercised................................................. (2,288,458) 26.91
Cancelled................................................. (105,615) 34.74
----------
Balance, December 31, 1996.................................. 6,786,069 37.51
Granted................................................... 2,253,627 40.99
Exercised................................................. (886,009) 27.09
Cancelled................................................. (210,613) 47.82
----------
Balance, December 31, 1997.................................. 7,943,074 $39.39
==========
</TABLE>

The following table summarizes information related to stock options
outstanding and exercisable at December 31, 1997.

<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE WEIGHTED
AVERAGE REMAINING AVERAGE
SHARES RANGE OF EXERCISE EXERCISE CONTRACTUAL SHARES EXERCISE
OUTSTANDING PRICES PRICE LIFE EXERCISABLE PRICE
- ----------- ----------------- -------- ----------- ----------- --------
<C> <C> <C> <C> <C> <C>
3,328,674 $19.51 to $38.00 $28.95 5.9 years 2,683,181 $28.25
4,614,400 39.93 to 52.03 46.92 9.1 years 1,234,150 46.27
--------- ---------
7,943,074 $19.51 to $52.03 $39.39 7.7 years 3,917,331 $33.93
========= =========
</TABLE>

Exercisable stock options and weighted average exercise prices at December
31, 1996 and 1995 follow.

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES EXERCISE
EXERCISABLE PRICE
----------- --------
<S> <C> <C>
December 31, 1996........................................... 3,593,423 $30.79
========= ======
December 31, 1995........................................... 5,021,203 $29.13
========= ======
</TABLE>

31
<PAGE> 34

The weighted average fair values of options granted during the years 1997,
1996 and 1995 were $10.45, $12.45 and $8.24, respectively. The fair values of
employee stock options were calculated using a variation of the Black-Scholes
stock option valuation model with the following weighted average assumptions for
grants in 1997, 1996 and 1995: stock price volatility of 18.35 percent, 18.62
percent and 20.63 percent, respectively; risk free rate of return ranging from
5.91 percent to 6.53 percent; dividend yield of 1.07 percent, 1 percent and .93
percent, respectively; and an expected term of 5 years. If the fair value based
method of accounting had been applied, the Company's net income and EPS would
have been reduced to the pro forma amounts indicated below. The fair value of
stock options included in the pro forma amounts is not necessarily indicative of
future effects on net income and EPS.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1997 1996 1995
------ ------ -------
(IN MILLIONS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C> <C>
Net Income (Loss) -- as reported............................ $ 319 $ 335 $ (261)
Net Income (Loss) -- pro forma.............................. 308 329 (262)
Basic Earnings (Loss) per Common Share -- as reported....... 1.80 1.89 (1.47)
Basic Earnings (Loss) per Common Share -- pro forma......... 1.74 1.86 (1.47)
Diluted Earnings (Loss) per Common Share -- as reported..... 1.79 1.88 (1.47)
Diluted Earnings (Loss) per Common Share -- pro forma....... $1.73 $1.85 $(1.47)
</TABLE>

Stock Appreciation Rights

The Company has granted SARs in connection with certain outstanding options
under the 1988 Stock Option Plan. SARs are subject to the same terms and
conditions as the related options. A SAR entitles an option holder, in lieu of
exercise of an option, to receive a cash payment equal to the difference between
the option price and the fair market value of the Company's common stock based
upon the plan provisions. To the extent the SAR is exercised, the related option
is cancelled and to the extent the option is exercised the related SAR is
cancelled. The outstanding SARs are exercisable only under certain circumstances
related to significant changes in the ownership of the Company or its holdings,
or certain changes in the constitution of its Board of Directors. At December
31, 1997, there were 391,267 SARs outstanding related to stock options with a
weighted average exercise price of $27.09 per share.

Preferred Stock and Preferred Stock Purchase Rights

The Company is authorized to issue 75,000,000 shares of preferred stock,
par value $.01 per share, and as of December 31, 1997 there were no shares
issued. On December 15, 1988, the Company's Board of Directors designated
3,250,000 of the authorized preferred shares as Series A Preferred Stock. Upon
issuance each one-hundredth of a share of Series A Preferred Stock will have
dividend and voting rights approximately equal to those of one share of Common
Stock of the Company. In addition, on December 15, 1988, the Board of Directors
declared a dividend distribution of one Right for each outstanding share of
Common Stock of the Company. The Rights were amended on February 23, 1989. The
Rights become exercisable if, without the Company's prior consent, a person or
group acquires securities having 15 percent or more of the voting power of all
of the Company's voting securities (an "Acquiring Person") or ten days following
the announcement of a tender offer which would result in such ownership. Each
Right, when exercisable, entitles the registered holder to purchase from the
Company one-hundredth of a share of Series A Preferred Stock at a price of $95
per one-hundredth of a share, subject to adjustment. If, after the Rights become
exercisable, the Company were to be involved in a merger or other business
combination in which its Common Stock was exchanged or changed or 50% or more of
the Company's assets or earning power were sold, each Right would permit the
holder to purchase, for the exercise price, stock of the acquiring company
having a value of twice the exercise price (the "Merger Right"). In addition,
except for certain permitted offers, if any person

32
<PAGE> 35

or group becomes an Acquiring Person, each Right would permit the purchase, for
the exercise price, of Common Stock of the Company having a value of twice the
exercise price (the "Subscription Right"). Rights owned by an Acquiring Person
are void as they relate to the Subscription Right or the Merger Right. The
Rights may be redeemed by the Company under certain circumstances until their
expiration date for $.05 per Right.

8. RETIREMENT BENEFITS

Pension

The Company's pension plans are non-contributory defined benefit plans
covering substantially all employees. The benefits are based on years of
credited service and final average compensation. Contributions to the plans are
limited to amounts that are currently deductible for tax purposes. Contributions
are intended to provide not only for benefits attributed to service to date but
also for those expected to be earned in the future.

The following tables set forth the amounts recognized in the Consolidated
Balance Sheet and Statement of Income.

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1997 1996
-------- --------
(IN MILLIONS)
<S> <C> <C>
Actuarial present value of benefit obligations
Accumulated benefit obligation, including vested
benefits of $127 and $120.............................. $ 131 $ 124
======== ========

Projected benefit obligation for service to date.......... $ 178 $ 161
Plan assets, primarily marketable equity and debt
securities, at fair value................................. (161) (144)
-------- --------
Funded status of projected benefit obligation............... 17 17
Unrecognized net loss....................................... (26) (27)
Unamortized net transition obligation....................... (2) (2)
-------- --------
Net prepaid pension asset................................... $ (11) $ (12)
======== ========
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1997 1996 1995
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Pension cost for the plans includes the following components
Service cost -- benefits earned during the period......... $ 9 $ 9 $ 8
Interest cost on projected benefit obligation............. 12 12 11
Actual return on plan assets.............................. (28) (19) (23)
Net amortization and deferred amounts..................... 18 12 16
---- ---- ----
Net pension cost.......................................... $ 11 $ 14 $ 12
==== ==== ====
</TABLE>

The projected benefit obligation was determined using a weighted average
discount rate of 7.25 percent in 1997 and 7.75 percent in 1996, and a rate of
increase in future compensation levels of 5 percent. The expected long-term rate
of return on plan assets was 9 percent in both 1997 and 1996.

Postretirement

The Company has postretirement medical and dental care plans for a closed
group of retirees and their dependents and certain employees who retire by the
end of 1999. The Company also maintains a

33
<PAGE> 36

Medicare Part B reimbursement plan and life insurance coverage for a closed
group of retirees of a former subsidiary.

The postretirement benefit plans are unfunded and the Company funds claims
on a cash basis. The following tables set forth the amounts recognized in the
Consolidated Balance Sheet and Statement of Income.

<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1997 1996
---- ----
(IN MILLIONS)
<S> <C> <C>
Accumulated postretirement benefit obligation
Retirees.................................................. $22 $22
Employees eligible to retire.............................. 4 4
Other employees........................................... 7 5
--- ---
33 31
Unrecognized net loss....................................... (3) (2)
--- ---
Accrued postretirement benefit cost......................... $30 $29
=== ===
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1997 1996 1995
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Service cost................................................ $1 $1 $1
Interest cost............................................... 3 3 2
-- -- --
Net postretirement benefit cost............................. $4 $4 $3
== == ==
</TABLE>

Assumptions utilized to measure the accumulated postretirement obligation
at December 31, 1997 and 1996 were: discount rates of 7.25 percent and 7.5
percent, respectively; health care cost trend rates of: 1997 -- 5 percent
declining to 4 percent in the year 2002; 1996 -- 8 percent declining to 4
percent in the year 2002 and held constant thereafter. A one percent increase in
the assumed trend rates would have resulted in increases in the accumulated
postretirement benefit obligation at December 31, 1997 and 1996 of approximately
$3 million for both years. The aggregate of service cost and interest cost for
the years ended December 31, 1997 and 1996 would have increased by $400 thousand
and $500 thousand, respectively.

9. COMMITMENTS AND CONTINGENT LIABILITIES

Demand Charges

The Company has entered into contracts which provide firm transportation
capacity rights on interstate and intrastate pipeline systems. The remaining
terms on these contracts range from 1 to 10 years and require the Company to pay
transportation demand charges regardless of the amount of pipeline capacity
utilized by the Company. The Company paid $49 million, $61 million and $53
million of demand charges of which $34 million, $47 million and $40 million was
paid to EPNG for the years ended December 31, 1997, 1996 and 1995, respectively.

34
<PAGE> 37

Future transportation demand charge commitments at December 31, 1997
follow.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------
(IN MILLIONS)
<S> <C>
1998........................................................ $ 60
1999........................................................ 61
2000........................................................ 49
2001........................................................ 43
2002........................................................ 43
Thereafter.................................................. 168
----
Total.................................................. $424
====
</TABLE>

Lease Obligations

The Company has operating leases for office space and other property and
equipment. The Company incurred lease rental expense of $18 million, $20 million
and $19 million for the years ended December 31, 1997, 1996 and 1995,
respectively.

Future minimum annual rental commitments at December 31, 1997 follow.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------
(IN MILLIONS)
<S> <C>
1998........................................................ $ 18
1999........................................................ 18
2000........................................................ 15
2001........................................................ 14
2002........................................................ 14
Thereafter.................................................. 79
----
Total.................................................. $158
====
</TABLE>

Legal Proceedings

35
<PAGE> 38

alternative, to modify, alter or amend judgment, which motion was denied by
Order signed December 16, 1996. The objectors purported to perfect an appeal of
the Judgment on February 7, 1997. On July 24, 1997, the Fourteenth Court of
Appeals dismissed the appeal. On October 17, 1997, the objectors filed a
Petition for Review with The Supreme Court of Texas. The Company and the
Plaintiffs intend to defend this appeal vigorously.

10. DIVESTITURE PROGRAM AND REORGANIZATION

In June 1997, the Company completed its non-strategic divestiture program
which was announced in July 1996. As planned, the Company sold approximately
27,000 wells and related facilities. Before closing adjustments, gross proceeds
for 1997 from the sales of oil and gas properties related to this divestiture
program were approximately $450 million (approximately $418 million, net of
closing adjustments). During the second quarter of 1997, the Company recorded a
pretax gain of approximately $50 million related to the sales of oil and gas
properties. This program allowed the Company to reorganize and resulted in a
reduction of 456 employees. As of December 31, 1997, this program was complete.

11. DEFERRED REVENUE

In September 1996, the Company received cash proceeds of $108 million for a
transaction in which it is obligated to deliver gas through December 31, 2002.
The proceeds were recorded as deferred revenue and are being amortized into
revenues as the gas is delivered. Approximately $20 million and $13 million of
deferred revenue was recognized in 1997 and 1996, respectively.

12. IMPAIRMENT OF OIL AND GAS PROPERTIES

Effective September 30, 1995, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 121 which requires that long-lived assets held
and used by an entity be reviewed for impairment whenever events or changes
indicate that the net book value of the asset may not be recoverable. An
impairment loss is recognized if the sum of expected undiscounted future cash
flows from the use of the asset is less than the net book value of the asset.

Under SFAS No. 121, the Company evaluates impairment of its oil and gas
properties on a field-by-field basis rather than in the aggregate. Based upon
this evaluation, in 1995, certain properties were deemed to be impaired. For
those properties, the Company adjusted the net book value of the properties to
their fair value based upon expected future discounted cash flows. As a result
of the Company's adoption of SFAS No. 121 in September 1995, combined with a
weak gas market, the Company recognized a non-cash, pretax charge of $490
million ($304 million after tax) related to its oil and gas properties.

13. RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, Reporting Comprehensive Income, which is effective for fiscal years
beginning after December 15, 1997.

36
<PAGE> 39

In June 1997, the FASB also issued SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Information, which is effective for fiscal years
beginning after December 15, 1997.

14. SUPPLEMENTAL CASH FLOW INFORMATION

The following is additional information concerning supplemental disclosures
of cash flow activities.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1997 1996 1995
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Interest Paid..................................... $149 $154 $158
Income Taxes Paid--Net............................ $ 56 $ 60 $ 62
</TABLE>

15. SEGMENT INFORMATION

The Company's operations are primarily related to oil and gas exploration
and production. Accordingly, such operations are classified as one business
segment. Financial information by geographic area follows.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1997 1996 1995
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Domestic................................ $1,795 $1,989 $1,532
Foreign................................. 205 211 202
------ ------ ------
Total Revenues..................... $2,000 $2,200 $1,734
====== ====== ======

Operating Income (Loss)
Domestic................................ $ 450 $ 526 $ (428)
Foreign................................. 53 54 31
------ ------ ------
Total Operating Income (Loss)...... $ 503 $ 580 $ (397)
====== ====== ======
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
------ ------
(IN MILLIONS)
<S> <C> <C>
Total Assets
Domestic............................................ $5,184 $5,129
Foreign............................................. 637 554
------ ------
$5,821 $5,683
====== ======
</TABLE>

37
<PAGE> 40

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Burlington Resources Inc.

We have audited the accompanying consolidated balance sheet of Burlington
Resources Inc. as of December 31, 1997 and 1996, and the related consolidated
statements of income, cash flows and stockholders' equity for each of the three
years in the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Burlington
Resources Inc. at December 31, 1997 and 1996, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.

As discussed in Note 12 to the consolidated financial statements, the
Company changed its method of accounting for the impairment of long-lived assets
in 1995.

Coopers & Lybrand L.L.P.

Houston, Texas
January 14, 1998

38
<PAGE> 41

BURLINGTON RESOURCES INC.

SUPPLEMENTARY FINANCIAL INFORMATION

SUPPLEMENTAL OIL AND GAS DISCLOSURES--UNAUDITED

The supplemental data presented herein reflects information for all of the
Company's oil and gas producing activities.

Capitalized costs for oil and gas producing activities follow.

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
------ ------
(IN MILLIONS)
<S> <C> <C>
Proved properties........................................... $8,590 $8,678
Unproved properties......................................... 150 185
------ ------
8,740 8,863
Accumulated depreciation, depletion and amortization........ 4,003 4,300
------ ------
Net capitalized costs............................. $4,737 $4,563
====== ======
</TABLE>

Costs incurred for oil and gas property acquisition, exploration and
development activities follow.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-----------------------------
DOMESTIC FOREIGN TOTAL
-------- ------- ------
(IN MILLIONS)
<S> <C> <C> <C>
Property acquisition
Unproved................................................. $ 93 $ 5 $ 98
Proved................................................... 54 160 214
Exploration................................................ 241 48 289
Development................................................ 539 15 554
---- ---- ------
Total costs incurred............................. $927 $228 $1,155
==== ==== ======
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------
DOMESTIC FOREIGN TOTAL
-------- ------- -----
(IN MILLIONS)
<S> <C> <C> <C>
Property acquisition
Unproved.................................................. $ 48 $ 9 $ 57
Proved.................................................... 92 - 92
Exploration................................................. 134 29 163
Development................................................. 402 24 426
---- --- ----
Total costs incurred.............................. $676 $62 $738
==== === ====
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
----------------------------
DOMESTIC FOREIGN TOTAL
-------- ------- -----
(IN MILLIONS)
<S> <C> <C> <C>
Property acquisition
Unproved.................................................. $ 49 $11 $ 60
Proved.................................................... 103 - 103
Exploration................................................. 119 20 139
Development................................................. 356 28 384
---- --- ----
Total costs incurred.............................. $627 $59 $686
==== === ====
</TABLE>

39
<PAGE> 42

Results of operations for oil and gas producing activities follow.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
----------------------------
DOMESTIC FOREIGN TOTAL
-------- ------- ------
(IN MILLIONS)
<S> <C> <C> <C>
Net revenues................................................ $1,747 $ 205 $1,952
------ ------ ------
Production costs............................................ 363 42 405
Exploration and leasehold impairment costs.................. 234 25 259
Operating expenses.......................................... 220 10 230
Depreciation, depletion and amortization.................... 422 75 497
------ ------ ------
1,239 152 1,391
------ ------ ------
Operating income............................................ 508 53 561
Income tax provision........................................ 103 27 130
------ ------ ------
Results of operations for oil and gas producing
activities................................................ $ 405 $ 26 $ 431
====== ====== ======
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------
DOMESTIC FOREIGN TOTAL
-------- ------- ------
(IN MILLIONS)
<S> <C> <C> <C>
Net revenues................................................ $1,682 $ 211 $1,893
------ ------ ------
Production costs............................................ 372 51 423
Exploration and leasehold impairment costs.................. 145 14 159
Operating expenses.......................................... 224 11 235
Depreciation, depletion and amortization.................... 408 81 489
------ ------ ------
1,149 157 1,306
------ ------ ------
Operating income............................................ 533 54 587
Income tax provision........................................ 131 20 151
------ ------ ------
Results of operations for oil and gas producing
activities................................................ $ 402 $ 34 $ 436
====== ====== ======
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
----------------------------
DOMESTIC FOREIGN TOTAL
-------- ------- ------
(IN MILLIONS)
<S> <C> <C> <C>
Net revenues................................................ $1,129 $ 201 $1,330
------ ------ ------
Production costs............................................ 351 53 404
Exploration and leasehold impairment costs.................. 89 22 111
Operating expenses.......................................... 224 14 238
Depreciation, depletion and amortization.................... 415 81 496
Impairment of oil and gas properties........................ 490 - 490
------ ------ ------
1,569 170 1,739
------ ------ ------
Operating income (loss)..................................... (440) 31 (409)
Income tax provision (benefit).............................. (253) 14 (239)
------ ------ ------
Results of operations for oil and gas producing
activities................................................ $ (187) $ 17 $ (170)
====== ====== ======
</TABLE>

40
<PAGE> 43

The following table reflects estimated quantities of proved oil and gas
reserves. These reserves have been reduced for royalty interests owned by
others. These reserves have been estimated by the Company's petroleum engineers.
The Company considers such estimates to be reasonable, however, due to inherent
uncertainties, estimates of underground reserves are imprecise and subject to
change over time as additional information becomes available.

<TABLE>
<CAPTION>
OIL (MMBBLS) GAS (BCF)
-------------------------- --------------------------
DOMESTIC FOREIGN TOTAL DOMESTIC FOREIGN TOTAL
-------- ------- ----- -------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
PROVED DEVELOPED AND UNDEVELOPED RESERVES
December 31, 1994............................ 236.6 44.6 281.2 6,175 310 6,485
Revision of previous estimates............ 4.9 (3.8) 1.1 18 8 26
Extensions, discoveries and other
additions............................... 36.2 5.3 41.5 582 15 597
Production................................ (24.8) (8.4) (33.2) (520) (26) (546)
Purchases of reserves in place............ 9.5 - 9.5 147 - 147
Sales of reserves in place................ (4.8) (1.6) (6.4) (205) (18) (223)
----- ---- ----- ----- --- -----
December 31, 1995............................ 257.6 36.1 293.7 6,197 289 6,486
Revision of previous estimates............ 6.6 (.4) 6.2 (8) 28 20
Extensions, discoveries and other
additions............................... 33.1 2.3 35.4 474 34 508
Production................................ (26.1) (7.2) (33.3) (559) (28) (587)
Purchases of reserves in place............ 8.0 - 8.0 78 - 78
Sales of reserves in place................ (4.2) - (4.2) (274) - (274)
----- ---- ----- ----- --- -----
December 31, 1996............................ 275.0 30.8 305.8 5,908 323 6,231
Revisions of previous estimates........... (15.6) (2.6) (18.2) 68 (4) 64
Extensions, discoveries and other
additions............................... 44.9 .3 45.2 913 1 914
Production................................ (24.6) (7.2) (31.8) (583) (26) (609)
Purchases of reserves in place............ 1.4 - 1.4 116 240 356
Sales of reserves in place................ (48.7) - (48.7) (538) - (538)
----- ---- ----- ----- --- -----
December 31, 1997............................ 232.4 21.3 253.7 5,884 534 6,418
===== ==== ===== ===== === =====
PROVED DEVELOPED RESERVES
January 1, 1995.............................. 210.0 37.3 247.3 5,078 272 5,350
December 31, 1995............................ 224.8 30.3 255.1 5,064 271 5,335
December 31, 1996............................ 242.0 25.4 267.4 4,870 265 5,135
December 31, 1997............................ 203.9 15.6 219.5 4,641 233 4,874
</TABLE>

41
<PAGE> 44

A summary of the standardized measure of discounted future net cash flows
relating to proved oil and gas reserves is shown below. Future net cash flows
are computed using year end sales prices, costs and statutory tax rates
(adjusted for tax credits and other items) that relate to the Company's existing
proved oil and gas reserves.

<TABLE>
<CAPTION>
DECEMBER 31, 1997
------------------------------
DOMESTIC FOREIGN TOTAL
-------- ------- -----
(IN MILLIONS)
<S> <C> <C> <C>
Future cash inflows......................................... $15,934 $ 1,800 $17,734
Less related future
Production costs....................................... 4,076 702 4,778
Development costs...................................... 736 214 950
Income taxes........................................... 2,767 200 2,967
------- ------- -------
Future net cash flows............................. 8,355 684 9,039
10% annual discount for estimated timing of cash flows.... 3,960 234 4,194
------- ------- -------
Standardized measure of discounted future net cash
flows................................................ $ 4,395 $ 450 $ 4,845
======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------
DOMESTIC FOREIGN TOTAL
-------- ------- -----
(IN MILLIONS)
<S> <C> <C> <C>
Future cash inflows......................................... $25,089 $ 1,261 $26,350
Less related future
Production costs....................................... 5,514 216 5,730
Development costs...................................... 702 74 776
Income taxes........................................... 5,295 319 5,614
------- ------- -------
Future net cash flows............................. 13,578 652 14,230
10% annual discount for estimated timing of cash flows.... 6,513 212 6,725
------- ------- -------
Standardized measure of discounted future net cash
flows................................................ $ 7,065 $ 440 $ 7,505
======= ======= =======
</TABLE>

A summary of the changes in the standardized measure of discounted future
net cash flows applicable to proved oil and gas reserves follows.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
January 1................................................... $ 7,505 $ 4,393 $ 3,967
------- ------- -------
Revisions of previous estimates
Changes in prices and costs............................... (4,167) 4,981 284
Changes in quantities..................................... (23) 119 16
Changes in rate of production............................. (436) (77) 189
Additions to proved reserves resulting from extensions,
discoveries and improved recovery, less related costs..... 655 782 461
Purchases of reserves in place.............................. 246 148 120
Sales of reserves in place.................................. (667) (177) (162)
Accretion of discount....................................... 1,048 529 471
Sales of oil and gas, net of production costs............... (1,547) (1,470) (926)
Net change in income taxes.................................. 1,697 (1,652) (128)
Other....................................................... 534 (71) 101
------- ------- -------
Net change.................................................. (2,660) 3,112 426
------- ------- -------
December 31................................................. $ 4,845 $ 7,505 $ 4,393
======= ======= =======
</TABLE>

42
<PAGE> 45

BURLINGTON RESOURCES INC.

QUARTERLY FINANCIAL DATA--UNAUDITED

<TABLE>
<CAPTION>
1997(C) 1996(C)
------------------------------------ ------------------------------------
4TH 3RD 2ND 1ST 4TH 3RD 2ND 1ST
------ ------ ------ ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................... $ 541 $ 464 $ 427 $ 568 $ 589 $ 526 $ 552 $ 533

Operating Income(a)........ 87 116 93 207 222 116 133 109

Net Income(a)(b)........... 37 65 86 131 139 73 65 58

Basic Earnings per Common
Share.................... .20 .37 .49 .74 .78 .41 .37 .33

Diluted Earnings per Common
Share.................... .20 .37 .49 .73 .78 .41 .36 .33

Dividends Declared per
Common Share............. .14 .10 .11 .11 .11 .11 .11 .11

Common Stock Price Range
High..................... 53 5/8 53 3/16 48 5/8 54 1/2 53 1/2 47 1/8 43 1/4 40 1/4
Low...................... $42 1/2 $43 5/8 $39 3/4 $42 5/8 $44 1/8 $41 5/8 $35 1/8 $35 5/8
</TABLE>

- ---------------

(a) During the fourth quarter of 1997, as a result of the Merger, the Company
recorded a pretax charge of $80 million($71 million after tax). During the
third quarter of 1996, as a result of the divestiture program and
reorganization, the Company recorded a pretax charge of approximately $30
million($19 million after tax).

(b) During the second quarter of 1997, as a result of the divestiture program,
the Company recorded a pretax gain of $50 million($31 million after tax).

43
<PAGE> 46

ITEM NINE

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None
PART III

ITEMS TEN AND ELEVEN

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AND EXECUTIVE COMPENSATION

A definitive proxy statement for the 1998 Annual Meeting of Stockholders of
Burlington Resources Inc. will be filed no later than 120 days after the end of
the fiscal year with the Securities and Exchange Commission. The information set
forth therein under "Election of Directors" and "Executive Compensation" is
incorporated herein by reference. Executive Officers of the Company are listed
on page 12 of this Form 10-K.

ITEM TWELVE

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information required is set forth under the caption "Election of Directors"
in the Proxy Statement for the 1998 Annual Meeting of Stockholders and is
incorporated herein by reference.

ITEM THIRTEEN

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information required is set forth under the caption "Election of Directors"
in the Proxy Statement for the 1998 Annual Meeting of Stockholders and is
incorporated herein by reference.

PART IV

ITEM FOURTEEN

EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION
Consolidated Statement of Income.......................... 21
Consolidated Balance Sheet................................ 22
Consolidated Statement of Cash Flows...................... 23
Consolidated Statement of Stockholders' Equity............ 24
Notes to Consolidated Financial Statements................ 25
Report of Independent Accountants......................... 38
Supplemental Oil and Gas Disclosures -- Unaudited......... 39
Quarterly Financial Data -- Unaudited..................... 43

AMENDED EXHIBIT INDEX....................................... *
</TABLE>

REPORTS ON FORM 8-K

The Company filed a Form 8-K dated November 6, 1997, which included as an
exhibit a Press Release dated October 22, 1997, announcing that an Agreement and
Plan of Merger with The Louisiana Land and Exploration Company was consummated
following the favorable votes of each company's stockholders.

- ---------------

* Included in Form 10-K filed with the Securities and Exchange Commission.

44
<PAGE> 47

SIGNATURES REQUIRED FOR FORM 10-K

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Burlington Resources Inc. has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

BURLINGTON RESOURCES INC.

By BOBBY S. SHACKOULS
------------------------------------
Bobby S. Shackouls
Chairman of the Board, President and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of Burlington
Resources Inc. and in the capacities and on the dates indicated.

<TABLE>
<C> <S> <C>
By BOBBY S. SHACKOULS Chairman of the Board, January 14, 1998
----------------------------------------------------- President and Chief
Bobby S. Shackouls Executive Officer

JOHN E. HAGALE Executive Vice President and January 14, 1998
- -------------------------------------------------------- Chief Financial Officer
John E. Hagale

PHILIP W. COOK Vice President, January 14, 1998
- -------------------------------------------------------- Controller and Chief
Philip W. Cook Accounting Officer

H. LEIGHTON STEWARD Vice Chairman of the Board January 14, 1998
- --------------------------------------------------------
H. Leighton Steward

JOHN V. BYRNE Director January 14, 1998
- --------------------------------------------------------
John V. Byrne

S. PARKER GILBERT Director January 14, 1998
- --------------------------------------------------------
S. Parker Gilbert

LAIRD I. GRANT Director January 14, 1998
- --------------------------------------------------------
Laird I. Grant

JOHN T. LAMACCHIA Director January 14, 1998
- --------------------------------------------------------
John T. LaMacchia

JAMES F. MCDONALD Director January 14, 1998
- --------------------------------------------------------
James F. McDonald

KENNETH W. ORCE Director January 14, 1998
- --------------------------------------------------------
Kenneth W. Orce

DONALD M. ROBERTS Director January 14, 1998
- --------------------------------------------------------
Donald M. Roberts

JOHN F. SCHWARZ Director January 14, 1998
- --------------------------------------------------------
John F. Schwarz

WALTER SCOTT, JR. Director January 14, 1998
- --------------------------------------------------------
Walter Scott, Jr.

WILLIAM E. WALL Director January 14, 1998
- --------------------------------------------------------
William E. Wall
</TABLE>

45
<PAGE> 48

REPORT OF MANAGEMENT

The management of Burlington Resources is responsible for the preparation
and integrity of all information contained in this Annual Report. The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles. The financial statements include
amounts that are management's best estimates and judgments.

BR maintains a system of internal control and a program of internal
auditing that provides management with reasonable assurance that BR's assets are
protected and that published financial statements are reliable and free of
material misstatement. Management is responsible for the effectiveness of
internal controls. This is accomplished through established codes of conduct,
accounting and other control systems, policies and procedures, employee
selection and training, appropriate delegation of authority and segregation of
responsibilities.

The Audit Committee of the Board of Directors, composed solely of directors
who are not officers or employees, meets regularly with the independent
certified public accountants, financial management, counsel and corporate audit.
To ensure complete independence, the certified public accountants and corporate
audit have full and free access to the Audit Committee to discuss the results of
their audits, the adequacy of internal controls and the quality of financial
reporting.

Our independent certified public accountants provide an objective
independent review by their audit of the Company's financial statements. Their
audit is conducted in accordance with generally accepted auditing standards and
includes a review of internal accounting controls to the extent deemed necessary
for the purposes of their audit.

John E. Hagale Philip W. Cook
Executive Vice President and Vice President, Controller and
Chief Financial Officer Chief Accounting Officer

CORPORATE INFORMATION

<TABLE>
<S> <C> <C>
PRINCIPAL CORPORATE OFFICE STOCK EXCHANGE LISTING Additional copies of this Annual
Burlington Resources Inc. New York Stock Exchange Report are available, without charge,
5051 Westheimer, Suite 1400 Symbol: BR by writing or calling:
Houston, Texas 77056
(713) 624-9500

ANNUAL MEETING STOCK TRANSFER AGENT AND Corporate Secretary
The Annual Meeting of Stockholders REGISTRAR Burlington Resources Inc.
will be in Houston, Texas, on March Bank Boston, N.A. P.O. Box 4239
26, 1998. Formal notice of the c/o Boston EquiServe, L.P. Houston, Texas 77210
meeting will be mailed in advance. Investor Relations Department (713) 624-9500
P.O. Box 8040/MS 45-02-64
Boston, Massachusetts 02266
1 (800) 736-3001
http: //www.equiserve.com
</TABLE>

46
<PAGE> 49

BURLINGTON RESOURCES INC.

AMENDED EXHIBIT INDEX

The following exhibits are filed as part of this report.

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
<S> <C> <C>
3.1 Certificate of Incorporation of Burlington Resources Inc. as
amended (Exhibit 3.1 to Form 8, filed March 1990)........... *
3.2 By-Laws of Burlington Resources Inc. amended and restated as
of October 22, 1997.........................................
4.1 Form of Rights Agreement dated as of December 16, 1988,
between Burlington Resources Inc. and The First National
Bank of Boston which includes, as Exhibit A thereto, the
form of Certificate of Designation specifying terms of the
Series A Preferred Stock and, as Exhibit B thereto, the form
of Rights Certificate (Exhibit 1 to Form 8-A, filed December
1988)....................................................... *
Amendment No. 1 to Form of Rights Agreement (Exhibit 2 to
Form 8-K, filed March 1989)................................. *
Amendment No. 2 to Form of Rights Agreement (Exhibit 5 to
Form 8-A/A, filed October 1996)............................. *
4.2 Indenture, dated as of June 15, 1990, between the registrant
and Citibank, N.A., including Form of Debt Securities
(Exhibit 4.2 to Form 8, filed February 1992)................ *
4.3 Indenture, dated as of October 1, 1991, between the
registrant and Citibank, N.A., including Form of Debt
Securities (Exhibit 4.3 to Form 8, filed February 1992)..... *
4.4 Indenture, dated as of April 1, 1992, between the registrant
and Citibank, N.A., including Form of Debt Securities
(Exhibit 4.4 to Form 8, filed March 1993)................... *
4.5 Indenture dated as of June 15, 1992 among the Registrant and
Texas Commerce Bank National Association (as Trustee)
(Exhibit 4.1 LL&E's Form S-3, as amended, filed November
1993)....................................................... *
10.1 The 1988 Burlington Resources Inc. Stock Option Incentive
Plan as amended (Exhibit 10.4 to Form 8, filed March
1993)....................................................... *
+10.2 Burlington Resources Inc. Incentive Compensation Plan as
amended and restated (Exhibit 10.2 to Form 10-K, filed
February 1997).............................................. *
+10.3 Burlington Resources Inc. Senior Executive Survivor Benefit
Plan dated as of January 1, 1989 (Exhibit 10.11 to Form 8,
filed February 1989)........................................ *
+10.4 Burlington Resources Inc. Deferred Compensation Plan as
amended and restated (Exhibit 10.4 to Form 10-K, filed
February 1997).............................................. *
+10.5 Burlington Resources Inc. Supplemental Benefits Plan as
amended and restated (Exhibit 10.5 to Form 10-K, filed
February 1997).............................................. *
+10.6 Employment Contract between Burlington Resources Inc. and
Bobby S. Shackouls (Exhibit 10.7 to Form 10-K, filed
February 1996).............................................. *
Amendment to Employment Contract between Burlington
Resources Inc. and Bobby S. Shackouls, dated July 9, 1997...
+10.7 Employment Contract between Burlington Resources Inc. and H.
Leighton Steward, dated October 22, 1997....................
+10.8 Burlington Resources Inc. Compensation Plan for Non-Employee
Directors as amended and restated (Exhibit 10.8 to Form
10-K, filed February 1997).................................. *
</TABLE>

A-1
<PAGE> 50
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
<S> <C> <C>
+10.9 Burlington Resources Inc. Key Executive Severance Protection
Plan as amended June 8, 1989 (Exhibit 10.20 to Form 8, filed
February 1992).............................................. *
+10.10 Burlington Resources Inc. Retirement Savings Plan as amended
(Exhibits to Form S-8, No. 2-97533, filed December 1989).... *
Amendment No. 1 to Burlington Resources Inc. Retirement
Savings Plan
(Exhibit 10.15 to Form 8, filed March 1993)................. *
Amendment No. 2 to Burlington Resources Inc. Retirement
Savings Plan
(Exhibit 10.21 to Form 8, filed February 1992).............. *
Amendment No. 3 to Burlington Resources Inc. Retirement
Savings Plan
(Exhibit 10.15 to Form 8, filed March 1993)................. *
Amendment No. 4 to Burlington Resources Inc. Retirement
Savings Plan
(Exhibit 10.10 to Form 10-K, filed February 1996)........... *
Amendment No. 5 to Burlington Resources Inc. Retirement
Savings Plan................................................
+10.11 Burlington Resources Inc. Retirement Income Plan for
Directors (Exhibit 10.21 to Form 8, filed February 1991).... *
+10.12 Burlington Resources Inc. Phantom Stock Plan for
Non-Employee Directors, effective March 21, 1996 (Exhibit
10.12 to Form 10-K, filed February 1996).................... *
+10.13 Burlington Resources Inc. 1991 Director Charitable Award
Plan, dated as of January 16, 1991 (Exhibit 10.22 to Form 8,
filed February 1991)........................................ *
10.14 Master Separation Agreement and documents related thereto
dated January 15, 1992 by and among Burlington Resources
Inc., El Paso Natural Gas Company and Meridian Oil Holding
Inc., including exhibits (Exhibit 10.24 to Form 8, filed
February 1992).............................................. *
+10.15 Burlington Resources Inc. 1992 Stock Option Plan for
Non-employee Directors (Exhibit 28.1 of Form S-8, No.
33-46518, filed March 1992)................................. *
+10.16 Burlington Resources Inc. Key Executive Retention Plan and
Amendments No. 1 and 2 (Exhibit 10.20 to Form 8, filed March
1993)....................................................... *
Amendments No. 3 and 4 to the Burlington Resources Inc. Key
Executive Retention Plan (Exhibit 10.17 to Form 10-K, filed
February 1994).............................................. *
+10.17 Burlington Resources Inc. 1992 Performance Share Unit Plan
as amended and restated (Exhibit 10.17 to Form 10-K, filed
February 1997).............................................. *
+10.18 Burlington Resources Inc. 1993 Stock Incentive Plan (Exhibit
10.22 to Form 10-K, filed February 1994).................... *
+10.19 Petrotech Long Term Incentive Plan (Exhibit 10.22 to Form
10-K, filed February 1995).................................. *
+10.20 Burlington Resources Inc. 1994 Restricted Stock Exchange
Plan (Exhibit 10.23 to Form 10-K, filed February 1995)...... *
+10.21 Burlington Resources Inc. 1997 Performance Share Unit Plan,
(Exhibit 10.21 to Form 10-K, filed February 1997)........... *
10.22 $300 million Short-term Revolving Credit Agreement, dated as
of July 20, 1994, between Burlington Resources Inc. and
Citibank, N.A., as agent (Exhibit 10.22 to Form 10-K, filed
February 1996).............................................. *
First Amendment to Short-term Revolving Credit Agreement,
dated as of July 14, 1995 (Exhibit 10.22 to Form 10-K, filed
February 1997).............................................. *
</TABLE>

A-2
<PAGE> 51
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
<S> <C> <C>
Second Amendment to Short-term Revolving Credit Agreement,
dated as of July 12, 1996 (Exhibit 10.22 to Form 10-K, filed
February 1997).............................................. *
10.23 Second Amended and Restated $600 million Long-term Revolving
Credit Agreement, dated as of July 12, 1996, between
Burlington Resources Inc. and Citibank, N.A. as agent
(Exhibit 10.23 to Form 10-K, filed February 1997)........... *
+10.24 Form of Termination Agreement with Certain Senior Management
Personnel as amended (Exhibit 10(a)(i) to LL&E's Form 10-K,
filed March 1996)........................................... *
+10.25 Pension Agreement, dated as of December 27, 1994 (Exhibit
10(e) to LL&E's Form 10-K filed March 1995)................. *
+10.26 Form of The Louisiana Land and Exploration Company Deferred
Compensation Arrangement for Selected Key Employees (Exhibit
10(g) to LL&E's Form 10-K filed March 1991)................. *
+10.27 The LL&E Supplemental Excess Plan (Exhibit 10(j) to LL&E's
Form 10-K filed March 1993)................................. *
21.1 Subsidiaries of the Registrant..............................
23.1 Consent of Independent Accountants..........................
27.1 Financial Data Schedule..................................... **
</TABLE>

- ---------------

*Exhibit incorporated by reference as indicated.

**Exhibit required only for filings made electronically using the Securities and
Exchange Commission's EDGAR System.

+Exhibit constitutes a management contract or compensatory plan or arrangement
required to be filed as an exhibit to this report pursuant to Item 14(c) of
Form 10-K.

A-3

<PAGE> 1
EXHIBIT 3.2

BY-LAWS

BURLINGTON RESOURCES INC.

AS AMENDED THROUGH OCTOBER 22, 1997
<PAGE> 2
BY-LAWS
OF
BURLINGTON RESOURCES INC

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1 Registered Office and Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2 Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 4 Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5 Fixing of Record Date for Determining Stockholders . . . . . . . . . . . . . . . . 2
Section 6 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 7 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 8 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 9 Inspectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 10 List of Stockholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE III BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Section 1 Number, Qualification and Term of Office . . . . . . . . . . . . . . . . . . . . . 5
Section 2 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4 Removals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5 Place of Meetings; Books and Records . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6 Annual Meeting of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 7 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 8 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 9 Quorum and Manner of Acting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 10 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 11 Consent of Directors in Lieu of Meeting . . . . . . . . . . . . . . . . . . . . . . 7
Section 12 Telephonic Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 13 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>

-i-
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE IV COMMITTEES OF THE BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Section 1 Executive Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2 Finance Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3 Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4 Compensation and Nominating Committee . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5 Committee Chairman, Books and Records . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6 Alternates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7 Other Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 8 Quorum and Manner of Acting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE V OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Section 1 Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2 Election, Term of Office and Qualifications . . . . . . . . . . . . . . . . . . . . 11
Section 3 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4 Removals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6 Compensation of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 8 Vice Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 9 President and Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . 12
Section 10 Executive Vice President and Chief Financial Officer . . . . . . . . . . . . . . . 14
Section 11 Executive Vice President, Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 12 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 13 Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 14 Absence or Disability of Officers . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE VI STOCK CERTIFICATES AND TRANSFER THEREOF . . . . . . . . . . . . . . . . . . . . . . . . . 15

Section 1 Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2 Transfer of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3 Transfer Agent and Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4 Additional Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5 Lost, Destroyed or Mutilated Certificates . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE VII DIVIDENDS, SURPLUS, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE VIII SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE IX FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>

-ii-
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE X IDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Section 1 Right to Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2 Right of Indemnitee to Bring Suit . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3 Nonexclusivity of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4 Insurance, Contracts and Funding . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5 Definition of Director and Officer . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6 Indemnification of Employees and Agents of the Corporation . . . . . . . . . . . . 19

ARTICLE XI CHECKS, DRAFTS, BANK ACCOUNTS, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Section 1 Checks, Drafts, Etc.; Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE XII AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>

-iii-
<PAGE> 5
BY-LAWS
OF
BURLINGTON RESOURCES INC.

ARTICLE I

OFFICES

SECTION 1. REGISTERED OFFICE AND AGENT.

The registered office of the corporation is located at Corporation
Trust Center, 1209 Orange Street in the City of Wilmington, County of New
Castle, State of Delaware, and the name of its registered agent at such address
is The Corporation Trust Company.

SECTION 2. OTHER OFFICES.

The corporation may have offices at such other places both within and
without the State of Delaware as the Board of Directors may from time to time
determine or the business of the corporation may require.

ARTICLE II

STOCKHOLDERS

SECTION 1. ANNUAL MEETINGS.

A meeting of the stockholders for the purpose of electing directors
and for the transaction of such other business as may properly be brought
before the meeting shall be held annually at ten (10) o'clock A.M. on the
third Thursday of April, or at such other time on such other day as shall be
fixed by resolution of the Board of Directors. If the day fixed for the annual
meeting shall be a legal holiday such meeting shall be held on the next
succeeding business day.

SECTION 2. SPECIAL MEETINGS.

Special meetings of the stockholders for any purpose or purposes may
be called only by a majority of the Board of Directors, the Chairman of the
Board, or the President. (Amended February 22, 1989)

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SECTION 3. PLACE OF MEETINGS.

The annual meeting of the stockholders of the corporation shall be
held at the general offices of the corporation in the City of Houston, State of
Texas, or at such other place in the United States as may be stated in the
notice of the meeting. All other meetings of the stockholders shall be held at
such places within or without the State of Delaware as shall be stated in the
notice of the meeting. (Amended December 6, 1995)

SECTION 4. NOTICE OF MEETINGS.

4.1 Giving of Notice. Except as otherwise provided by statute,
written notice of each meeting of the stockholders, whether annual or special,
shall be given not less than ten nor more than sixty days before the date of
the meeting to each stockholder entitled to vote at such meeting. If mailed,
notice shall be given when deposited in the United States mails, postage
prepaid, directed to such stockholder at his address as it appears in the stock
ledger of the corporation. Each such notice shall state the place, date and
hour of the meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called.

4.2 Notice of Adjourned Meetings. When a meeting is adjourned to
another time and place, notice of the adjourned meeting need not be given if
the time and place thereof are announced at the meeting at which the
adjournment is given. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.

4.3 Waiver of Notice.

4.3.1 Whenever any notice is required to be given to any stockholder
under the provisions of these By-Laws, the Certificate of Incorporation or the
General Corporation Law of Delaware, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.

4.3.2 The attendance of a stockholder at a meeting shall constitute a
waiver of notice of such meeting, except when a stockholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.

SECTION 5. FIXING OF RECORD DATE FOR DETERMINING STOCKHOLDERS.

5.1 Meetings. For the purpose of determining stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, the Board may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted by the
Board, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the Board,
the record date for

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determining stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to
vote at the meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board may fix a new record date for the
adjourned meeting.

5.2 Dividends, Distributions and Other Rights. For the purpose of
determining stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board may fix a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted, and which record date shall be not more than sixty
days prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board adopts the resolution relating thereto.

SECTION 6. QUORUM.

A majority of the outstanding shares of stock of the corporation
entitled to vote, present in person or represented by proxy, shall constitute a
quorum at a meeting of the stockholders; provided that where a separate vote by
a class or classes or by a series of a class is required, a majority of the
outstanding shares of such class or classes or of such series of a class,
present in person or represented by proxy at the meeting, shall constitute a
quorum entitled to take action with respect to the vote on that matter. If
less than a majority of the outstanding shares entitled to vote are represented
at a meeting, a majority of the shares so represented may adjourn the meeting
from time to time without further notice. If a quorum is present or
represented at a reconvened meeting following such an adjournment, any business
may be transacted that might have been transacted at the meeting as originally
called. The stockholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.

SECTION 7. ORGANIZATION.

At each meeting of the stockholders, the Chairman of the Board, or in
his absence such person as shall have been designated by the Board of
Directors, or in the absence of such designation a person elected by the
holders of a majority in number of shares of stock present in person or
represented by proxy and entitled to vote, shall act as Chairman of the
meeting.

The Secretary, or in his absence or in the event he shall be presiding
over the meeting in accordance with the provisions of this Section, an
Assistant Secretary or, in the absence of the Secretary and all of the
Assistant Secretaries, any person appointed by the Chairman of the meeting,
shall act as Secretary of the meeting.

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SECTION 8. VOTING.

8.1 Generally. Unless otherwise provided in the Certificate of
Incorporation or a resolution of the Board of Directors creating a series of
stock, at each meeting of the stockholders, each holder of shares of any series
or class of stock entitled to vote at such meeting shall be entitled to one
vote for each share of stock having voting power in respect of each matter upon
which a vote is to be taken, standing in his name on the stock ledger of the
corporation on the record date fixed as provided in these By-Laws for
determining the stockholders entitled to vote at such meeting. In all matters
other than the election of Directors, if a quorum is present, the affirmative
vote of the majority of the shares present in person or represented by proxy at
the meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the vote of a greater number is required by these By-Laws,
the Certificate of Incorporation or the General Corporation Law of Delaware.
Where a separate vote by a class or classes or by a series of a class is
required, if a quorum is present, the affirmative vote of the majority of
shares of such class or classes or series of a class present in person or
represented by proxy at the meeting shall be the act of such class or classes
or series of a class.

8.2 Voting for Directors. At each election of Directors the voting
shall be by ballot. Directors shall be elected by a plurality of the votes of
the shares present in person or represented by proxy at the meeting and
entitled to vote on the election of Directors.

8.3 Shares Held or Controlled by the Corporation. Shares of its own
capital stock belonging to the corporation, or to another corporation if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the corporation, shall neither be entitled to vote
nor counted for quorum purposes.

8.4 Proxies. A stockholder may vote by proxy executed in writing by
the stockholder or by his attorney-in-fact. Such proxy shall be filed with
the Secretary of the corporation before or at the time of the meeting. A proxy
shall become invalid three years after the date of its execution, unless
otherwise provided in the proxy. A proxy with respect to a specified meeting
shall entitle the holder thereof to vote at any reconvened meeting following
adjournment of such meeting but shall not be valid after the final adjournment
thereof.

SECTION 9. INSPECTORS.

Prior to each meeting of stockholders, the Board of Directors shall
appoint two Inspectors who are not directors, candidates for directors or
officers of the corporation, who shall receive and determine the validity of
proxies and the qualifications of voters, and receive, inspect, count and
report to the meeting in writing the votes cast on all matters submitted to a
vote at such meeting. In case of failure of the Board of Directors to make such
appointments or in case of failure of any Inspector so appointed to act, the
Chairman of the Board shall make such appointment or fill such vacancies. Each
Inspector, immediately before entering upon his duties, shall subscribe to an
oath or affirmation faithfully to execute the duties of Inspector at such
meeting with strict impartiality and according to the best of his ability.

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<PAGE> 9
SECTION 10. LIST OF STOCKHOLDERS.

The Secretary or other officer or agent having charge of the stock
ledger of the corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at said meeting, arranged in alphabetical order and showing the address of
each stockholder and the number of shares of each class and series registered
in the name of each such stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. Such list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list required by this section, or the books of
the corporation, or to vote in person or by proxy at any such meeting.

ARTICLE III

BOARD OF DIRECTORS

SECTION 1. NUMBER, QUALIFICATION AND TERM OF OFFICE.

The business, property and affairs of the corporation shall be managed
by a Board consisting of not less than one Director. The Board of Directors
shall from time to time by a vote of a majority of the Directors then in office
fix the specific number of Directors to constitute the Board. At each annual
meeting of stockholders a Board of Directors shall be elected by the
stockholders for a term of one year. Each Director shall serve until his
successor is elected and shall qualify.

SECTION 2. VACANCIES.

Vacancies in the Board of Directors and newly created directorships
resulting from any increase in the authorized number of Directors may be filled
by a majority of the Directors then in office, although less than a quorum, or
by a sole remaining Director, at any regular or special meeting of the Board of
Directors.

SECTION 3. RESIGNATIONS.

Any Director may resign at any time upon written notice to the
Secretary of the corporation. Such resignation shall take effect on the date
of receipt of such notice or at any later date specified therein; and the
acceptance of such resignation, unless required by the terms thereof, shall not
be necessary to make it effective. When one or more Directors shall resign
effective at a future date, a majority of the Directors then in office,
including those who have

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<PAGE> 10
resigned, shall have power to fill such vacancy or vacancies to take effect
when such resignation or resignations shall become effective.

SECTION 4. REMOVALS.

Any Director may be removed, with cause, at any special meeting of the
stockholders called for that purpose, by the affirmative vote of the holders of
a majority in number of shares of the corporation entitled to vote for the
election of such Director, and the vacancy in the Board caused by any such
removal may be filled by the stockholders at such a meeting.

SECTION 5. PLACE OF MEETINGS; BOOKS AND RECORDS.

The Board of Directors may hold its meetings, and have an office or
offices, at such place or places within or without the State of Delaware as the
Board from time to time may determine.

The Board of Directors, subject to the provisions of applicable
statutes, may authorize the books and records of the corporation, and offices
or agencies for the issue, transfer and registration of the capital stock of
the corporation, to be kept at such place or places outside of the State of
Delaware as, from time to time, may be designated by the Board of Directors.

SECTION 6. ANNUAL MEETING OF THE BOARD.

The first meeting of each newly elected Board of Directors, to be
known as the Annual Meeting of the Board, for the purpose of electing officers,
designating committees and the transaction of such other business as may come
before the Board, shall be held as soon as practicable after the adjournment of
the annual meeting of stockholders, and no notice of such meeting shall be
necessary to the newly elected Directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event such meeting is not
held due to the absence of a quorum, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the newly elected Directors.

SECTION 7. REGULAR MEETINGS.

The Board of Directors shall, by resolution, provide for regular
meetings of the Board at such times and at such places as it deems desirable.
Notice of regular meetings need not be given.

SECTION 8. SPECIAL MEETINGS.

Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President and shall be called by the Secretary on
the written request of three Directors on such notice as the person or persons
calling the meeting shall deem appropriate in the circumstances. Notice of
each such special meeting shall be mailed to each Director or delivered to him
by telephone, telegraph or any other means of electronic communication, in each
case

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addressed to his residence or usual place of business, or delivered to him in
person or given to him orally. The notice of meeting shall state the time and
place of the meeting but need not state the purpose thereof. Whenever any
notice is required to be given to any Director under the provisions of these
By-Laws, the Certificate of Incorporation or the General Corporation Law of
Delaware, a waiver thereof in writing, signed by the person or persons entitled
to such notice, whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
or any committee appointed by the Board need be specified in the waiver of
notice of such meeting. Attendance of a Director at any meeting shall
constitute a waiver of notice of such meeting except when a Director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting was not lawfully called or convened. (Amended July 7,
1992)

SECTION 9. QUORUM AND MANNER OF ACTING.

Except as otherwise provided by statute, the Certificate of
Incorporation, or these By-Laws, the presence of a majority of the total number
of Directors shall constitute a quorum for the transaction of business at any
regular or special meeting of the Board of Directors, and the act of a majority
of the Directors present at any such meeting at which a quorum is present shall
be the act of the Board of Directors. In the absence of a quorum, a majority
of the Directors present may adjourn the meeting, from time to time, until a
quorum is present. Notice of any such adjourned meeting need not be given.

SECTION 10. ORGANIZATION.

At every meeting of the Board of Directors, the Chairman of the Board
or in his absence the President or, if both of the said officers are absent, a
Chairman chosen by a majority of the Directors present shall act as Chairman of
the meeting. The Secretary, or in his absence, an Assistant Secretary, or in
the absence of the Secretary and all the Assistant Secretaries, any person
appointed by the Chairman of the meeting, shall act as Secretary of the
meeting. (Amended July 7, 1992)

SECTION 11. CONSENT OF DIRECTORS IN LIEU OF MEETING.

Unless otherwise restricted by the Certificate of Incorporation or by
these By-Laws, any action required or permitted to be taken at any meeting of
the Board of Directors, or any committee designated by the Board, may be taken
without a meeting if all members of the Board or committee consent thereto in
writing, and such written consent is filed with the minutes of the proceedings
of the Board or committee.

SECTION 12. TELEPHONIC MEETINGS.

Members of the Board of Directors, or any committee designated by the
Board of Directors, may participate in a meeting of the Board or committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in

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<PAGE> 12
the meeting can hear each other, and participation in such a meeting shall
constitute presence in person at such meeting.

SECTION 13. COMPENSATION.

Each Director, who is not a full-time salaried officer of the
corporation or any of its wholly owned subsidiaries, when authorized by
resolution of the Board of Directors, may receive as a Director a stated salary
or an annual retainer and in addition may be allowed a fixed fee and his
reasonable expenses for attendance at each regular or special meeting of the
Board of any Committee thereof.

ARTICLE IV

COMMITTEES OF THE BOARD OF DIRECTORS

SECTION 1. EXECUTIVE COMMITTEE.

The Board of Directors may, in its discretion, designate annually an
Executive Committee consisting of not less than five Directors as it may from
time to time determine. The Committee shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business and affairs of the corporation and may authorize the seal of the
corporation to be affixed to all papers which may require it, but the Committee
shall have no power or authority to amend the Certificate of Incorporation
(except that the Committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the Board
of Directors, fix the designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such
shares for, shares of any other class or classes or any other series of the
same or any other class or classes of stock of the corporation or fix the
number of shares of any series of stock or authorize the increase or decrease
of the shares of any series), adopt an agreement of merger or consolidation,
recommend to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommend to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
amend the By-Laws of the corporation, elect officers or fill vacancies on the
Board of Directors or any Committee of the Board, declare a dividend, authorize
the issuance of stock, or such other powers as the Board may from time to time
eliminate.

SECTION 2. FINANCE COMMITTEE.

The Board of Directors may, in its discretion, designate annually a
Finance Committee, consisting of such number of Directors as the Board of
Directors may from time to time determine. The Committee shall monitor,
review, appraise and recommend to the Board of Directors appropriate action
with respect to the corporation's capital structure, its source of funds and
its financial position; review and recommend appropriate delegations of
authority to management on expenditures and other financial commitments; review
terms and conditions of

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financing plans; develop and recommend dividend policies and recommend to the
Board specific dividend payments; review the performance of the trustee of the
corporation's pension trust fund, and any proposed change in the investment
policy of the trustee with respect to such fund; and such other duties,
functions and powers as the Board may from time to time prescribe.

SECTION 3. AUDIT COMMITTEE.

The Board of Directors shall designate annually an Audit Committee
consisting of not less than three Directors as it may from time to time
determine, none of whom shall be officers of the corporation. The Committee
shall review with the independent accountants the corporation's financial
statements, basic accounting and financial policies and practices, competency
of control personnel, standard and special tests used in verifying the
corporation's statements of account and in determining the soundness of the
corporation's financial condition and report to the Board the results of such
reviews; review the policies and practices pertaining to publication of
quarterly and annual statements to assure consistency with audited results and
the implementing of policies and practices recommended by the independent
accountants; ensure that suitable independent audits are made of the operations
and results of subsidiary corporations and affiliates; monitor compliance with
the corporation's code of business conduct, and such other duties, functions
and powers as the Board may from time to time prescribe.

SECTION 4. COMPENSATION AND NOMINATING COMMITTEE.

The Board of Directors shall designate annually a Compensation and
Nominating Committee consisting of such number of Directors as the Board of
Directors may from time to time determine. The Committee shall review, report
and make recommendations to the Board of Directors on the following matters:

(a) The compensation of the Chief Executive Officer and all senior
officers of the corporation and its principal operating
subsidiaries reporting directly to the Chief Executive Officer
following an annual review of management's recommendations for
the individuals involved. If circumstances involving individuals
require a salary adjustment between such reviews, a
recommendation may be made directly to the Board of Directors by
the Chief Executive Officer without the necessity of a meeting of
the Compensation and Nominating Committee.

(b) The size and composition of the Board and nominees for
Directors; evaluate the performance of the officers of the
corporation and together with management, select and recommend
to the Board appropriate individuals for election, appointment
and promotion as officers of the corporation and ensure the
continuity of able capable management.

(c) Any proposed stock option plans, stock purchase plans, retirement
plans, and any other plans, systems and practices of the
corporation relating to the compensation of any employees of the
corporation and any proposed plans

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of any subsidiary company involving the issuance or purchase of
capital stock of the corporation.

(d) Such other matters as the Board may from time to time prescribe.

The Committee shall carry out the duties assigned to the Committee
under any existing stock option plans or other existing compensation or benefit
plans; and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe. (Amended July 7, 1992 and
December 6, 1995)

SECTION 5. COMMITTEE CHAIRMAN, BOOKS AND RECORDS.

Each Committee shall elect a Chairman to serve for such term as it may
determine, shall fix its own rules of procedure and shall meet at such times
and places and upon such call or notice as shall be provided by such rules. It
shall keep a record of its acts and proceedings, and all action of the
Committee shall be reported to the Board of Directors at the next meeting of
the Board.

SECTION 6. ALTERNATES.

Alternate members of the Committees prescribed by this Article IV may
be designated by the Board of Directors from among the Directors to serve as
occasion may require. Whenever a quorum cannot be secured for any meeting of
any such Committee from among the regular members thereof and designated
alternates, the member or members of such Committee present at such meeting and
not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board to act at the meeting in
the place of such absent or disqualified member.

Alternative members of such Committees shall receive a reimbursement
for expenses and compensation at the same rate as regular members of such
Committees.

SECTION 7. OTHER COMMITTEES.

The Board of Directors may designate such other Committees, each to
consist of two or more Directors, as it may from time to time determine, and
each such Committee shall serve for such term and shall have and may exercise,
during intervals between meetings of the Board of Directors, such duties,
functions and powers as the Board of Directors may from time to time prescribe.

SECTION 8. QUORUM AND MANNER OF ACTING.

At each meeting of any Committee the presence of a majority of the
members of such Committee, whether regular or alternate, shall be necessary to
constitute a quorum for the transaction of business, and if a quorum is present
the concurrence of a majority of those present shall be necessary for the
taking of any action; provided, however, that no action may be taken

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by the Executive Committee or the Finance Committee when two or more officers
of the corporation are present as members at a meeting of either such Committee
unless such action shall be concurred in by the vote of two or more members of
such Committee who are not officers of the corporation.

ARTICLE V

OFFICERS

SECTION 1. NUMBER.

The officers of the corporation shall be a Chairman of the Board, a
President and Chief Executive Officer, a Vice Chairman, an Executive Vice
President and Chief Financial Officer, an Executive Vice President, Law, a
Secretary, a Treasurer, and such other officers as may be elected or appointed
by the Board of Directors. Any number of offices may be held by the same
person. (Amended July 7, 1992, December 6, 1995 and October 22, 1997)

SECTION 2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS.

The officers of the corporation shall be elected annually by the Board
of Directors. Each officer elected by the Board of Directors shall hold office
until his successor shall have been duly elected and qualified, or until he
shall have died, resigned or been removed in the manner hereinafter provided.

SECTION 3. RESIGNATIONS.

Any officer may resign at any time upon written notice to the
Secretary of the corporation. Such resignation shall take effect at the date
of its receipt, or at any later date specified therein; and the acceptance of
such resignation, unless required by the terms thereof, shall not be necessary
to make it effective.

SECTION 4. REMOVALS.

Any officer elected or appointed by the Board of Directors may be
removed, with or without cause, by the Board of Directors at a regular meeting
or special meeting of the Board. Any officer or agent appointed by any officer
or committee may be removed, either with or without cause, by such appointing
officer or committee.

SECTION 5. VACANCIES.

Any vacancy occurring in any office of the corporation shall be filled
for the unexpired portion of the term in the same manner as prescribed in these
By-Laws for regular election or appointment to such office.

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<PAGE> 16
SECTION 6. COMPENSATION OF OFFICERS.

The compensation of all officers elected by the Board of Directors
shall be approved or authorized by the Board of Directors or by the President
and Chief Executive Officer when so authorized by the Board of Directors or
these By- Laws. (Amended July 7, 1992 and December 6, 1995)

SECTION 7. CHAIRMAN OF THE BOARD.

The Chairman of the Board shall, when present, preside at all meetings
of the stockholders and of the Board of Directors; have authority to call
special meetings of the stockholders and of the Board of Directors; have
authority to sign and acknowledge in the name and on behalf of the corporation
all stock certificates, contracts or other documents and instruments except
when the signing thereof shall be expressly delegated to some other officer or
agent by the Board of Directors or required by law to be otherwise signed or
executed and, unless otherwise provided by law or by the Board of Directors,
may authorize any officer, employee or agent of the corporation to sign,
execute and acknowledge in his place and stead all such documents and
instruments. He shall consult with the President and Chief Executive Officer
regarding the strategic direction and business and affairs of the corporation
and shall have such other powers and perform such other duties as from time to
time may be assigned to him by the Board of Directors or the Executive
Committee. (Amended July 7, 1992 and December 6, 1995)

SECTION 8. VICE CHAIRMAN.

The Vice Chairman of the Board who was designated by the Board as the
successor to the Chairman, or if no Vice Chairman is so designated, the Vice
Chairman first elected to such office, shall in the absence of the Chairman of
the Board, preside at all meetings of the stockholders and of the Board; have
authority to sign and acknowledge in the name and on behalf of the corporation
all stock certificates, contracts or other documents and instruments, except
when the signing thereof shall be expressly delegated to some other officer or
agent by the Board, the Chairman of the Board, the President and Chief
Executive Officer, or required by law to be otherwise signed or executed and,
unless otherwise provided by law or by the Board, may authorize any officer,
employee or agent of the corporation to sign, execute and acknowledge in his
place and stead, all such documents and instruments. He shall have such other
powers and perform such other duties as from time to time any be assigned to
him by the Board of Directors, the Executive Committee, the Chairman of the
Board, or the President and Chief Executive Officer. A Vice Chairman of the
Board shall have such power and authority as is usual, customary and desirable
to perform the duties of the office. (Amended October 22, 1997)

SECTION 9. PRESIDENT AND CHIEF EXECUTIVE OFFICER.

The President and Chief Executive Officer shall, in the absence of the
Chairman of the Board, preside at all meetings of the stockholders and of the
Board of Directors and have authority to call special meetings of the
stockholders and of the Board of Directors. The President and Chief Executive
Officer shall have general authority over the property, business and affairs of
the

12
<PAGE> 17
corporation, and over all other officers, agents and employees of the
corporation, subject to the control and direction of the Board of Directors and
the Executive Committee, including the power to sign and acknowledge in the
name and on behalf of the corporation all stock certificates, contracts or
other documents and instruments except when the signing thereof shall be
expressly delegated to some other officer or agent by the Board of Directors or
required by law to be otherwise signed or executed and, unless otherwise
provided by law or by the Board of Directors, may authorize any officer,
employee or agent of the corporation to sign, execute and acknowledge in his
place and stead all such documents and instruments; he shall fix the
compensation of officers of the corporation other than his own compensation and
that of the senior officers of the corporation and its principal operating
subsidiaries reporting directly to him; and he shall approve proposed employee
compensation and benefit plans of subsidiary companies not involving the
issuance or purchase of capital stock of the corporation.

The President and Chief Executive Officer is hereby authorized,
without further approval of the Finance Committee or the Board of Directors:

(a) To approve any expenditure by the corporation of up to $20 million
for those expenditure categories presented to the Board of
Directors in the annual budget and up to $10 million for any
expenditure categories not presented, including investments,
leases, options to purchase or lease assets, business acquisitions
and land purchases

(b) To approve individual cost overruns of up to 10% of any amounts
approved by or presented to the Board of Directors.

(c) To approve disposition of assets and interests in securities of
subsidiaries or related commitments, provided that the aggregate
market value of the assets being disposed of in any one such
transaction does not exceed $10 million.

(d) To enter into leases or extensions thereof and other agreements
with respect to the assets of the corporation, including interests
in minerals and real estate, for a term of not more than 10 years
or for an unlimited term if the aggregate initial rentals, over
the term of the lease, including renewal options, do not exceed $3
million.

(e) To approve increases in the capital budgets of the corporation's
operating subsidiaries provided such increases in the aggregate do
not exceed 10% of the corporation's capital budget for the fiscal
year.

(f) To approve in emergency situations commitments in excess of the
above-described limits provided they are in the interests of the
corporation.

13
<PAGE> 18
The above delegation of authority does not authorize the corporation or its
subsidiaries to make a significant change in its business or to issue the
corporation's capital stock without the specific approval of the Board of
Directors. Notwithstanding these limitations, the President and Chief
Executive Officer shall have such power and authority as is usual, customary
and desirable to perform all the duties of the office. (Amended July 7, 1992
and December 6, 1995)

SECTION 10. EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER.

The Executive Vice President and Chief Financial Officer shall have
responsibility for development and administration of the corporation's
financial plans and all financial arrangements, its insurance programs, its
cash deposits and short term investments, its accounting policies, and its
federal and state tax returns. Such officer shall also be responsible for the
corporation's internal control procedures and for its relationship with the
financial community. (Amended July 7, 1992 and December 6, 1995)

14
<PAGE> 19
SECTION 11. EXECUTIVE VICE PRESIDENT, LAW.

The Executive Vice President, Law shall be the chief legal advisor of
the corporation and shall have charge of the management of the legal affairs
and litigation of the corporation. (Amended July 7, 1992 and December 6,
1995)

SECTION 12. SECRETARY.

The Secretary shall record the proceedings of the meetings of the
stockholders and directors, in one or more books kept for that purpose; see
that all notices are duly given in accordance with the provisions of the
By-Laws or as required by law; have charge of the corporate records and of the
seal of the corporation; affix the seal of the corporation or a facsimile
thereof, or cause it to be affixed, to all certificates for shares prior to the
issue thereof and to all documents the execution of which on behalf of the
corporation under its seal is duly authorized by the Board of Directors or
otherwise in accordance with the provisions of the By-Laws; keep a register of
the post office address of each stockholder, director or member, sign with the
Chairman of the Board or the President, certificates for shares of stock of the
corporation, the issuance of which shall have been duly authorized by
resolution of the Board of Directors; have general charge of the stock transfer
books of the corporation; and in general, perform all duties incident to the
office of Secretary and such other duties as from time to time may be assigned
to him by the Board of Directors, the Executive Committee, the Chairman of the
Board, the President, or the Executive Vice President, Law. (Amended July 7,
1992 and December 6, 1995)

SECTION 13. TREASURER.

The Treasurer shall have the responsibility for the custody and
safekeeping of all funds of the corporation and shall have charge of their
collection, receipt and disbursement; shall receive and have authority to sign
receipts for all monies paid to the corporation and shall deposit the same in
the name and to the credit of the corporation in such banks or depositories as
the Board of Directors shall approve; shall endorse for collection on behalf of
the corporation all checks, drafts, notes and other obligations payable to the
corporation; shall sign or countersign all notes, endorsements, guaranties and
acceptances made on behalf of the corporation when and as directed by the Board
of Directors; shall give bond for the faithful discharge of his duties in such
sum and with such surety or sureties as the Board of Directors may require;
shall have the responsibility for the custody and safekeeping of all securities
of the corporation; and in general shall have such other powers and perform
such other duties as are incident to the office of Treasurer and as from time
to time may be prescribed by the Board of Directors or be delegated to him by
the Chairman of the Board, the President or the Executive Vice President and
Chief Financial Officer. (Amended July 7, 1992 and December 6, 1995)

SECTION 14. ABSENCE OR DISABILITY OF OFFICERS.

In the absence or disability of the Chairman of the Board, Vice
Chairmanor the President, the Board of Directors may designate, by resolution,
individuals to perform the duties

15
<PAGE> 20
of those absent or disabled. The Board of Directors may also delegate this
power to a committee or to a senior corporate officer. (Amended July 7, 1992)

ARTICLE VI

STOCK CERTIFICATES AND TRANSFER THEREOF

SECTION 1. STOCK CERTIFICATES.

Except as otherwise permitted by statute, the Certificate of
Incorporation or resolution or resolutions of the Board of Directors, every
holder of stock in the corporation shall be entitled to have a certificate,
signed by or in the name of, the corporation by the Chairman of the Board, the
President, or a Vice President, and by the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary of the corporation, certifying the
number of shares, and the class and series thereof, owned by him in the
corporation. Any and all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue. (Amended July
7, 1992)

SECTION 2. TRANSFER OF STOCK.

Transfer of shares of the capital stock of the corporation shall be
made only on the books of the corporation by the holder thereof, or by his
attorney duly authorized, and on surrender of the certificate or certificates
for such shares. A person in whose name shares of stock stand on the books of
the corporation shall be deemed the owner thereof as regards the corporation,
and the corporation shall not, except as expressly required by statute, be
bound to recognize any equitable or other claim to, or interest in, such shares
on the part of any other person whether or not it shall have express or other
notice thereof.

SECTION 3. TRANSFER AGENT AND REGISTRAR.

The corporation shall at all times maintain a transfer office or
agency in the Borough of Manhattan, The City of New York, in charge of a
transfer agent designated by the Board of Directors (who shall have custody,
subject to the direction of the Secretary, of the original stock ledger and
stock records of the corporation), where the shares of the capital stock of the
corporation of each class shall be transferable, and also a registry office in
the Borough of Manhattan, The City of New York, other than its transfer office
or agency in said city, in charge of a registrar designated by the Board of
Directors, where its stock of each class shall be registered. The corporation
may, in addition to the said offices, if and whenever the Board of Directors
shall so determine, maintain in such place or places as the Board shall
determine, one or more additional transfer offices or agencies, each in charge
of a transfer agent designated by the Board, where the shares of capital stock
of the corporation of any class or classes shall be

16
<PAGE> 21
transferable, and also one or more additional registry offices, each in charge
of a registrar designated by the Board of Directors, where such shares of stock
of any class or classes shall be registered. Except as otherwise provided by
resolution of the Board of Directors in respect of temporary certificates, no
certificates for shares of capital stock of the corporation shall be valid
unless countersigned by a transfer agent and registered by a registrant
authorized as aforesaid.

SECTION 4. ADDITIONAL REGULATIONS.

The Board of Directors may make such additional rules and regulations
as it may deem expedient concerning the issue, transfer and registration of
certificates for shares of the capital stock of the corporation.

SECTION 5. LOST, DESTROYED OR MUTILATED CERTIFICATES.

The Board of Directors may provide for the issuance of new
certificates of stock to replace certificates of stock lost, stolen, mutilated
or destroyed, or alleged to be lost, stolen, mutilated or destroyed, upon such
terms and in accordance with such procedures as the Board of Directors shall
deem proper and prescribe.

ARTICLE VII

DIVIDENDS, SURPLUS, ETC.

Except as otherwise provided by statute or the Certificate of
Incorporation, the Board of Directors may declare dividends upon the shares of
its capital stock either (1) out of its surplus, or (2) in case there shall be
no surplus, out of its net profits for the fiscal year, whenever, and in such
amounts as, in its opinion, the condition of the affairs of the corporation
shall render it advisable. Dividends may be paid in cash, in property, or in
shares of the capital stock of the corporation.

ARTICLE VIII

SEAL

The Board of Directors shall adopt a suitable corporate seal which
shall be in the form imprinted hereon. The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any other manner reproduced.

17
<PAGE> 22

ARTICLE IX

FISCAL YEAR

The fiscal year of the corporation shall begin on the first day of
January of each year.

ARTICLE X

INDEMNIFICATION

SECTION 1. RIGHT TO INDEMNIFICATION.

Each person who was or is made a party or is threatened to be made a
party to or is involved (including, without limitation, as a witness) in any
actual or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that he or she 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 an employee benefit plan
(hereinafter an "indemnitee"), 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 such a director, officer, employee or
agent, shall be indemnified and held harmless by the corporation to the full
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), or by other applicable law as then in effect, against all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts to be paid in settlement) actually and
reasonably incurred or suffered by such indemnitee in connection therewith and
such indemnification shall continue as to an indemnitee who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators, provided, however, that
except as provided in Section 2 of this Article with respect to proceedings
seeking to enforce rights to indemnification, the corporation shall indemnify
any such indemnitee seeking indemnification in connection with a proceeding (or
part thereof) initiated by such indemnitee 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
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee 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 indemnitee while
a Director or officer, including, without limitation, service to an employee
benefit plan) shall be made only upon delivery to the corporation of an
undertaking, by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be

18
<PAGE> 23
determined that such indemnitee is not entitled to be indemnified under this
Section 1, or otherwise.

SECTION 2. RIGHT OF INDEMNITEE TO BRING SUIT.

If a claim under Section 1 of this Article is not paid in full by the
corporation within sixty days after a written claim has been received by the
corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty days, the indemnitee may at
any time thereafter bring suit against the corporation to recover the unpaid
amount of the claim and, to the extent successful in whole or in part, the
indemnitee shall be entitled to be paid also the expense of prosecuting such
suit. The indemnitee shall be presumed to be entitled to indemnification under
this Article upon submission of a written claim (and, in an action brought to
enforce a claim for an advancement of expenses, where the required undertaking,
if any is required, has been tendered to the corporation), and thereafter the
corporation shall have the burden of proof to overcome the presumption that the
indemnitee is not so entitled. 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
suit that indemnification of the indemnitee is proper in the circumstances nor
an actual determination by the corporation (including its Board of Directors,
independent legal counsel or its stockholders) that the indemnitee is not
entitled to indemnification shall be a defense to the suit or create a
presumption that the indemnitee is not so entitled.

SECTION 3. NONEXCLUSIVITY OF RIGHTS.

The rights to indemnification and to the advancement of expenses
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.

SECTION 4. INSURANCE, CONTRACTS AND FUNDING.

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 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. The corporation may enter into
contracts with any indemnitee in furtherance of the provisions of this Article
and may create a trust fund, grant a security interest or use other means
(including, without limitation, a letter of credit) to ensure the payment of
such amounts as may be necessary to effect indemnification as provided in this
Article.

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<PAGE> 24
SECTION 5. DEFINITION OF DIRECTOR AND OFFICER.

Any person who is or was serving as a Director or officer of a wholly
owned subsidiary of the corporation shall be deemed, for purposes of this
Article only, to be a Director or officer of the corporation entitled to
indemnification under this Article.

SECTION 6. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE
CORPORATION.

The corporation may, by action of the Board of Directors from time to
time, grant rights to indemnification and advancement of expenses to employees
and agents of the corporation with the same scope and effect as the provisions
of this Article with respect to the indemnification and advancement of expenses
of Directors and officers of the corporation.

ARTICLE XI

CHECKS, DRAFTS, BANK ACCOUNTS, ETC.

SECTION 1. CHECKS, DRAFTS, ETC.; LOANS.

All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation shall be
signed by such officer or officers, agent or agents of the corporation and in
such manner as shall, from time to time, be determined by resolution of the
Board of Directors. No loans shall be contracted on behalf of the corporation
unless authorized by the Board of Directors. Such authority may be general or
confined to specific circumstances. (Amended July 7, 1992)

SECTION 2. DEPOSITS.

All funds of the corporation shall be deposited, from time to time, to
the credit of the corporation in such banks, trust companies or other
depositories as the Board of Directors may select, or as may be selected by any
officer or officers, agent or agents of the corporation to whom such power may,
from time to time, be delegated by the Board of Directors; and for the purpose
of such deposit, the Chairman of the Board, the President, any Vice President,
the Treasurer or any Assistant Treasurer, the Secretary or any Assistant
Secretary, or any other officer or agent to whom such power may be delegated by
the Board of Directors, may endorse, assign and deliver checks, drafts and
other order for the payment of money which are payable to the order of the
corporation.

20
<PAGE> 25
ARTICLE XII

AMENDMENTS

These By-Laws may be altered or repealed and new By-Laws may be made
by the affirmative vote, at any meeting of the Board, of a majority of the
whole Board of Directors, subject to the rights of the stockholders of the
corporation to amend or repeal By-Laws made or amended by the Board of
Directors by the affirmative vote of the holders of record of a majority in
number of shares of the outstanding stock of the corporation present or
represented at any meeting of the stockholders and entitled to vote thereon,
provided that notice of the proposed action be included in the notice of such
meeting.

21
<PAGE> 26
(Amended
February 22, 1989)

(Amended
July 7, 1992)

(Amended
December 6, 1995)

(Amended
October [22], 1997)

<PAGE> 1
EXHIBIT 10.6

July 9, 1997

Mr. Bobby S. Shackouls
5051 Westheimer
Houston, Texas 77056-2124

Dear Bobby:

Your Employment Agreement with Burlington Resources Inc. (the "Company") is
dated December 6, 1995 (the "Agreement"). The Board of Directors (the "Board")
of the Company has deemed it advisable and in the best interests of the Company
and its stockholders to amend the Agreement with respect to the matters
addressed herein. Accordingly, this letter, when accepted by you in the space
provided below, will amend the Agreement, effective immediately, in the
following particulars:

1. Position. Your position will be that of Chairman of the Board,
President and Chief Executive Officer of the Company.

2. Base Salary. Your minimum salary will be $750,000 per annum or
such higher rate as may be fixed from time to time by the Board.

3. Term of Obligations. Each reference in the Agreement to December
15, 2000 shall be replaced with July 9, 2002.

The Agreement, as amended hereby, shall remain in full force and effect in
accordance with its terms. If this letter correctly sets forth our agreement,
please sign the original and return it to me. Please retain a copy for your
records.

Very truly yours,

BURLINGTON RESOURCES INC.

/s/ GERALD J. SCHISSLER
- --------------------------------
BY Gerald J. Schissler
Its Executive Vice President,
Law and Administration

ACCEPTED AND AGREED TO
this 9th day of July, 1997.

/s/ BOBBY S. SHACKOULS
------------------------------------
Bobby S. Shackouls

<PAGE> 1
EXHIBIT 10.7

October 22, 1997

Mr. H. Leighton Steward
909 Poydras Street
New Orleans, Louisiana 70112

Dear Leighton,

This letter constitutes your Employment Agreement with
Burlington Resources Inc. (the "Company") when accepted by you in the space
provided below. Reference is hereby made to the Agreement and Plan of Merger
dated as of July 16, 1997 among the Company, The Louisiana Land and Exploration
Company ("LL&E") and BR Acquisition Corporation (the "Merger Agreement").

1. POSITION AND TERM. The Company agrees to employ you
and you agree to act as its Vice Chairman of the Board of Directors of the
Company (the "Board") during the period commencing at the Effective Time of the
Merger, as those terms are defined in the Merger Agreement, and continuing
through December 1, 1999. The Company will amend its By-Laws to provide that
the position of Vice Chairman of the Board will constitute an officer position
within the Company. For at least so long as you serve as Vice Chairman, you
will also serve as Chairman of the Executive Committee of the Board.

2. BASE SALARY. Your minimum salary will be $450,000
per annum or such higher rate as may be fixed from time to time by the Board.

3. STOCK OPTIONS. You shall participate in the
Company's 1993 Stock Incentive Plan in accordance with the Company's normal
option grant process as to amounts and timing and options granted thereunder
shall be at an option price per share equal to 100% of the fair market value of
such stock on such date of grant and become exercisable on the first
anniversary of such date of grant; provided, however, that the second grant to
you of stock options shall in no event become exercisable later than November
30, 1999.

4. INCENTIVE COMPENSATION, LONG-TERM INCENTIVES AND
OTHER BENEFITS. You will participate with other senior executives of the
Company in compensation and benefit plans in effect from time to time including
the Incentive Compensation Plan, the Stock Incentive Plan, the Performance
Share Unit Plan, the Deferred Compensation Plan, the Supplemental Benefits
Plan, the Key Executive Severance Protection Plan and any other plan or
perquisites available to other executives at your level of responsibility in
the Company, including a company
<PAGE> 2
Mr. H. Leighton Steward
October 22, 1997
Page 2

automobile and company-provided country and luncheon club memberships but not
including the Senior Executive Survivor Plan. You will also participate in
health, retirement, survivor and disability plans available to all employees of
the Company. You understand that the Company may amend, modify or terminate
these plans at any time. You shall also be entitled to receive $50,000 per
year, payable in monthly installments, as a housing allowance and such amount
shall be paid to you whether or not you incur any housing expenses. For
purposes of computing all benefits (other than Incentive Compensation) that are
tied to the level of your compensation, your salary shall be treated as the
greater of your actual salary hereunder or your actual annual salary rate from
LL&E immediately before the effective date of this agreement.

Your maximum bonus opportunity under the Incentive
Compensation Plan will be 100% of base salary. Annual bonuses are determined
by the Compensation and Nominating Committee of the Board (the "Compensation
Committee") based on Company and individual performance. All plans referenced
in this section are plans of the Company.

You and the Company agree that, for purposes of the letter
agreement dated December 27, 1994 between you and LL&E, you will not be treated
as having terminated employment for purposes of paragraph 2 and Appendix A of
said letter agreement until your employment with the Company terminates.

5. SEVERANCE BENEFIT. If your employment is terminated
by the Company for any reason before December 1, 1999 other than as a result of
your death, permanent disability or for Cause, or is initiated by you for Good
Reason, the Company will pay you within 10 days after the date of termination
an amount equal to the product of the number of whole and partial months
remaining from the date of your termination until December 1, 1999, times your
then current monthly base salary. The terms Cause and Good Reason are defined
in the Key Executive Severance Protection Plan.

6. COORDINATION WITH OTHER PLANS. If your termination
entitles you to benefits under the Key Executive Severance Protection Plan, you
may elect to receive the benefits payable under Section 5 of this agreement in
lieu of those benefits. If you elect to receive the benefits under this
agreement, you will nevertheless be eligible to receive the additional benefits
related to the gross-up payment for excise taxes under Article 6 of that plan.

7. TERMINATION AGREEMENT. The Company agrees that it
shall pay or cause to be paid to you the benefits described in the Termination
Agreement dated March 13, 1996 between you and LL&E (the "Termination
Agreement") if (i) you are terminated by the Company on any grounds whatsoever
except for "cause" during the "Protection Period" or if you terminate your
<PAGE> 3
Mr. H. Leighton Steward
October 22, 1997
Page 3

employment with the Company voluntarily within the "Protection Period" (it
being acknowledged that there has been a significant change in the nature or
scope of your duties and/or responsibilities for the purposes of the
Termination Agreement) or (ii) your employment with the Company terminates by
reason of your death during the "Protection Period", or (iii) you become
disabled during the "Protection Period" under circumstances entitling you to
disability benefits under the Company's long-term disability plan or under
Social Security. Terms in quotation marks in this Section 7 shall have the
meaning set forth in the Termination Agreement. The benefits provided under
this Section 7 shall be in addition to any other benefits to which you may be
entitled under the plans of the Company. You acknowledge and agree that you
shall not become a participant in the Company's Executive Survivor Benefit Plan
and hereby waive any benefits to which you would otherwise become entitled
under such plan.

8. NON-DISCLOSURE. As an officer of the Company, you
will have access to and continue to receive and develop confidential and
proprietary information and trade secrets pertaining to the business of the
Company and its affiliates, including, without limitation, reports, maps, data
(including geologic and seismic data and interpretations thereof), plans, and
contracts. As part of the consideration for this agreement and in return for
receiving access to such confidential information, you agree to keep all such
confidential and proprietary information confidential. In particular, you
agree that you will not divulge, communicate or otherwise disclose any
confidential information furnished to you or obtained or developed by you while
employed by the Company to any person, firm, corporation or entity other than
to an authorized representative of the Company. You agree that if your
employment with the Company is terminated, you will not discuss the Company's
business, operations, plans, strategies, personnel or business relationships or
agreements with the press or with any of the Company's current or prospective
customers or suppliers or with any other person with which the Company has
business relationships.

9. NON-COMPETITION. In order to enforce your
obligations under Section 8 and in consideration for the benefits of employment
described in this agreement, you agree to the covenant not to compete in this
Section 9. You agree and acknowledge that this covenant not to compete is
ancillary to your commitment as set forth in Section 8 to refrain from
disclosing such confidential information. If you initiate the termination of
your employment with the Company other than for Good Reason during the term of
this agreement, you agree that you will not for a period of two years after
your termination be employed by, consult with, provide advice or information
to, otherwise perform services for, own, manage, operate, join, control or
participate in the ownership of more than 5% of the voting power of equity
securities of, management, operation or control of any Competitor (as defined
in this agreement) unless released by the Company from such obligation in
writing with respect to a specific situation, it being understood
<PAGE> 4
Mr. H. Leighton Steward
October 22, 1997
Page 4

that your serving as a director of a public entity will not be in violation of
the foregoing provision, provided that you are not at such time serving as a
director of the Company, and, provided further, that your obligations under
Section 8 will continue to be in effect during any such service. A Competitor
is defined as any entity (i) that is engaged in exploring for and producing oil
and natural gas in Louisiana, Montana, New Mexico, North Dakota, Oklahoma,
Texas or federal or state waters in the Gulf of Mexico or in the oil and gas
marketing business in the mainland United States and (ii) whose assets
associated with such oil and gas business exceed $50 million.

10. NON-INTERFERENCE. For a period ending two years
after you terminate employment with the Company, you agree not to solicit,
directly or indirectly, any officer or employee of the Company to leave and
work for any other employer. During this same period, you agree not to suggest
to others that they approach or solicit any officers or employees of the
Company with respect to potential employment elsewhere.

11. SEVERABILITY AND ENFORCEMENT. It is the desire of
the parties hereto that this agreement be enforced to the maximum extent
permitted by law, and should any provision contained herein be held
unenforceable, the parties hereby agree and consent that such provision will be
reformed to make it a valid and enforceable provision to the maximum extent
permitted by law. Any provision hereof not capable of such reformation and
determined to be prohibited by or unenforceable under applicable law of any
jurisdiction will as to such jurisdiction be deemed ineffective and deleted
from this agreement without affecting any other provision of this agreement.

In the event of a breach by you of any of the provisions of
Sections 8, 9 or 10, you understand and agree that the Company may, in addition
to any other rights or remedies existing in its favor, apply to any court of
law or equity of competent jurisdiction for specific performance and injunctive
or other relief in order to enforce or prevent any violations of such
provisions.

You understand and agree that this agreement is being executed
by the Company on behalf of itself and each of its affiliates, and that all
rights of the Company under this agreement and all of your obligations and
duties under this agreement will inure to the benefit of and may be enforced by
the Company or any of its affiliates.
<PAGE> 5
\Mr. H. Leighton Steward
October 22, 1997
Page 5

If the above correctly sets forth our agreement, please sign
the original and return it to me. Please retain a copy for your records.

Very truly yours,

BURLINGTON RESOURCES INC.

/s/ BOBBY S. SHACKOULS
-----------------------------------------
By Bobby S. Shackouls
Its Chairman of the Board, President
and Chief Executive Officer

ACCEPTED and AGREED TO
this 22 day of October, 1997

/s/ H. LEIGHTON STEWARD
- ---------------------------------
H. Leighton Steward

<PAGE> 1
Exhibit 10.10

Amendment Five
to the
Burlington Resources Inc.
Retirement Savings Plan

Whereas, Burlington Resources Inc. (the "Company") maintains the Burlington
Resources Inc. Retirement Savings Plan (the "Plan"), as adopted effective as of
January 1, 1990, which has been previously amended on four occasions;

Whereas, the Company desires to amend the Plan's hardship withdrawal provisions
to adopt the "safe harbor" provisions for "distributions deemed to be on
account of an immediate and heavy financial need" and "distributions deemed
necessary to satisfy financial need," as set forth in Treas. Reg. section
1.401(k)-1(d)(2)(iv)(A) and (B); and

Whereas, section 12.1 of the Plan provides that the Company may amend the Plan
from time to time.

Now, therefore, in accordance with the provisions of such section 12.1, the
Plan is hereby amended as follows:

1. Subsections (a), (d), (e), (f) and (g) of section 7.7 of the Plan
are hereby deleted and replaced with the following subsections:

(a) Any Participant or inactive Participant shall be
permitted to make a cash withdrawal, in any whole
percentage increment or dollar amount, of up to one
hundred percent (100%) of the unwithdrawn amount in his
or her Basic Account (excluding any earnings arising
after 1988 on before-tax Basic Contributions, Flex
Contributions, and other similar Code section 401(k)
deferrals that may have been transferred directly to
this Plan from an Other Plan), his Supplemental Account,
his Company Match Account, his Rollover Account, and his
ESOP Rollover Account if such withdrawal is made on
account of the Participant's hardship. A distribution is
made on account of hardship only if the distribution
both is made on account of an immediate and heavy
financial need of a Participant and is necessary to
satisfy the financial need. The determination of the
existence of an immediate and heavy financial need and
the amount necessary to meet the need shall be made in
accordance with the standards set forth in this section
7.7.

1
<PAGE> 2
(d) A hardship withdrawal shall be deemed to be made on
account of an immediate and heavy financial need of a
Participant only if the Participant represents in
writing, in any manner prescribed by the Committee, that
he requires the distribution to meet an immediate and
heavy financial need which falls under one of the
following categories:
(1) Expenses for medical care (described in Code
section 213(d) previously incurred by the
Participant, the Participant's spouse, or any of
the Participant's dependents (as defined in Code
section 152) or necessary for these persons to
obtain such medical care;
(2) Costs directly related to the purchase of a
principal residence for the Participant (excluding
mortgage payments);
(3) Payment of tuition, related educational fees, and
room and board expenses (which shall not include,
among other things, books and wearing apparel),
for the next twelve (12) months of post-secondary
education for the Participant, or the
Participant's spouse, children, or dependents (as
defined in Code section 152);
(4) Payments necessary to prevent the eviction of the
Participant from the Participant's principal
residence or foreclosure on the mortgage on that
residence;
(5) Payment of funeral expenses for the Participant's
spouse, child or dependent (as defined in Code
section 152); or
(6) Any other financial need specifically listed by
the U.S. Secretary of the Treasury or the
Commissioner of Internal Revenue in Income Tax
Regulations or revenue rulings, notices or other
documents of general applicability of the U.S.
Department of the Treasury or the Internal Revenue
Service that would allow the Plan to make hardship
distributions.

(e) A hardship withdrawal shall be deemed necessary to
satisfy an immediate and heavy financial need of a
Participant only if all of the following requirements
are satisfied:
(1) The hardship distribution is not in excess of the
amount of the immediate and heavy
financial need of the Participant. The amount of
the immediate and heavy financial need may include
any amounts necessary to pay any federal, state or
local income taxes or penalties reasonably
anticipated to result from the distribution.

2
<PAGE> 3
(2) The Participant has obtained all distributions,
other than hardship distributions, and all
non-taxable (at the time of the loan) loans
currently available under the Plan and under all
other plans maintained by the Company or an
Affiliate.
(3) The Participant's Basic Contributions under the
Plan and similar elective contributions and
employee contributions under all other qualified
and nonqualified plans of deferred compensation
(including stock option, stock purchase and
similar plans) maintained by the Company or an
Affiliate shall be suspended for at least twelve
months after receipt of the hardship distribution.
To the extent that any other such plan or plans
maintained by the Company or an Affiliate, in
which the Participant participates during such
twelve-month period, do not provide for such a
twelve-month suspension of contributions, the
Participant shall be required to agree, in
writing, in any manner specified by the Committee,
not to make any elective contributions or employee
contributions under any such plans for at least
the duration of such twelve-month period.
(4) The Participant's Basic Contributions, together
with any other elective contributions of the
Participant under the Plan and all other plans
maintained by the Company and/or an Affiliate, for
the Participant's taxable year immediately
following the year of the Participant's hardship
withdrawal shall not exceed the applicable limit
under Code section 402(g) for that year, less the
amount of the Participant's elective contributions
for the year of the hardship withdrawal.

(f) The Committee shall not approve a hardship withdrawal
for any reason unless such withdrawal complies with any
applicable Treasury regulations. In addition, hardship
withdrawals shall be limited to prevent the distribution
of earnings arising after 1988 on before-tax Basic
Contributions and Flex Contributions, and also to
prevent the distribution of Company Matching
Contributions and the earnings thereon to the extent
necessary to satisfy the withdrawal restrictions of Code
section 401(k)(2)(B) in the event that such Company
Matching Contributions are used to satisfy the average
deferral percentage test of section 4.11.

3
<PAGE> 4
(g) Amounts that are withdrawn pursuant to this section 7.7
may not be subsequently repaid to the Plan.

2. Except as amended herein, the terms of the Plan as in effect
prior to this amendment shall continue unchanged.

3. This Amendment Five shall be effective as of February 1, 1997.

In Witness Whereof, the authorized officers of the Company have signed this
document and have affixed the corporate seal on February 3, 1997, but
effective as of February 1, 1997.

BURLINGTON RESOURCES INC.

ATTEST:
By /s/ Bobby S. Shackouls
_____________________________________

Its President and CEO
_________________________________
By /s/ William B. Usher
_____________________________________

Its Vice President HR & (Corporate Seal)
__________________________________

Administration

<PAGE> 1

EXHIBIT 21.1

BURLINGTON RESOURCES INC.

SUBSIDIARIES OF THE REGISTRANT

The following is a list of the significant subsidiaries of Burlington
Resources Inc. showing the place of incorporation and the percentage of voting
securities owned.

<TABLE>
<CAPTION>
PERCENTAGE
OF VOTING
SECURITIES OWNED
DIRECTLY OR
JURISDICTION OF INDIRECTLY BY
NAME OF COMPANY INCORPORATION IMMEDIATE PARENT
--------------- --------------- ----------------
<S> <C> <C>
Burlington Resources Hydrocarbons Inc. ..................... Delaware 100%
Burlington Resources Oil & Gas Company...................... Delaware 100%
Burlington Resources Trading Inc. .......................... Delaware 100%
Glacier Park Company........................................ Delaware 100%
The Louisiana Land and Exploration Company.................. Maryland 100%
</TABLE>

The names of certain subsidiaries are omitted as such subsidiaries,
considered as a single subsidiary, would not constitute a significant
subsidiary.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration statements
of Burlington Resources Inc. on Form S-8 (Registration Nos. 33-22493, 33-25807,
33-26024 (as amended in Registration No. 2-97533), 33-33626, 33-46518, 33-53973,
333-02029, 333-32603 and 333-40565) and on Form S-3 (Registration Nos. 33-54477
and 333-24999) of our report dated January 14, 1998, on our audits of the
consolidated financial statements of Burlington Resources Inc. as of December
31, 1997 and 1996, and for each of the three years in the period ended December
31, 1997, which report is included in this 1997 Annual Report on Form 10-K.

COOPERS & LYBRAND L.L.P.

February 12, 1998
Houston, Texas

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE BURLINGTON
RESOURCES INC. CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997 AND THE
RELATED CONSOLIDATED STATEMENT OF INCOME FOR THE TWELVE MONTH PERIOD ENDED
DECEMBER 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 152
<SECURITIES> 83
<RECEIVABLES> 376
<ALLOWANCES> 0
<INVENTORY> 39
<CURRENT-ASSETS> 678
<PP&E> 9,355
<DEPRECIATION> 4,315
<TOTAL-ASSETS> 5,821
<CURRENT-LIABILITIES> 538
<BONDS> 0
0
0
<COMMON> 2
<OTHER-SE> 3,014
<TOTAL-LIABILITY-AND-EQUITY> 5,821
<SALES> 2,000
<TOTAL-REVENUES> 2,000
<CGS> 1,497
<TOTAL-COSTS> 1,497
<OTHER-EXPENSES> (50)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 142
<INCOME-PRETAX> 411
<INCOME-TAX> 92
<INCOME-CONTINUING> 319
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 319
<EPS-PRIMARY> 1.80
<EPS-DILUTED> 1.79

</TABLE>