SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 11-K
------------------------
ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
------------------------
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
------------------------
SANTA FE ENERGY RESOURCES, INC.
1616 SOUTH VOSS ROAD
HOUSTON, TEXAS 77057
1 of 20
<PAGE>
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
INDEX TO FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------------------------------------------
PAGE
(a) Financial Statements:
Report of Independent Accountants 1
Statement of Net Assets Available for Plan Benefits With Fund
Information at December 31, 1997 2
Statement of Net Assets Available for Plan Benefits With Fund
Information At December 31, 1996 3
Statement of Changes in Net Assets Available for Plan Benefits
With Fund Information for the Year Ended December 31, 1997 4
Statement of Changes in Net Assets Available for Plan Benefits
With Fund Information for the Year Ended December 31, 1996 5
Notes to Financial Statements 6 - 12
(b) Additional Information:
Schedule 1
Item 27a - Schedule of Assets Held for Investment Purposes
at December 31, 1997 13
Schedule 2
Item 27d - Schedule of Reportable Transactions for the
Year Ended December 31, 1997 14
* All other schedules required by Section 2520.103-10 of the Department of
Labor Rules and Regulations for Reporting and Disclosure under ERISA have
been omitted because they are not applicable or the required information is
shown in the financial statements or the notes thereto.
(c) Exhibits:
No. 23 - Consent of Independent Accountants 20
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, persons who
administer the Plan have duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
SANTA FE ENERGY RESOURCES
SAVINGS INVESTMENT PLAN
By:
---------------------------------
Mark A. Older
Member - Employee Benefits Committee
Date:
----------------
-3-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Employee Benefits Committee of
Santa Fe Energy Resources Savings Investment Plan
In our opinion, the accompanying statements of net assets available for plan
benefits with fund information and the related statements of changes in net
assets available for plan benefits with fund information present fairly, in all
material respects, the net assets available for plan benefits of the Santa Fe
Energy Resources Savings Investment Plan at December 31, 1997 and 1996, and the
changes in net assets available for plan benefits for the years then ended, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Plan's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
schedules 1 and 2 is presented for purposes of additional analysis and is not a
required part of the basic financial statements but is additional information
required by ERISA. The Fund Information in the statement of net assets available
for plan benefits and the statement of changes in net assets available for plan
benefits is presented for purposes of additional analysis rather than to present
the net assets available for plan benefits and changes in net assets available
for benefits of each fund. Schedules 1 and 2 and the Fund Information have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
PRICE WATERHOUSE LLP
Houston, Texas
June 24, 1998
-4-
<PAGE>
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND INFORMATION
------------------------------------------------------------------------------------------------
PUTNAM
STABLE GROWTH & TOTAL S&P OVERSEAS
VALUE INCOME RETURN INDEX VOYAGER GROWTH
FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
Investments, at fair value:
Mutual funds $9,282,904 $ 2,474,759 $2,632,035 $5,620,618 $3,476,234 $ 1,158,800
Santa Fe Energy common
stock
Loans to participants
-------------- --------------- -------------- --------------- --------------- ---------------
Total investments 9,282,904 2,474,759 2,632,035 5,620,618 3,476,234 1,158,800
-------------- --------------- -------------- --------------- --------------- ---------------
Receivables:
Employer contributions
-------------- --------------- -------------- --------------- --------------- ---------------
Total receivables
-------------- --------------- -------------- --------------- --------------- ---------------
Net assets available for
plan benefits $9,282,904 $ 2,474,759 $2,632,035 $5,620,618 $3,476,234 $ 1,158,800
-------------- --------------- -------------- --------------- --------------- ---------------
FUND INFORMATION
----------------------------------------------------------------------
NEW COMPANY
OPPORTUNITIES STOCK LOAN
FUND FUND FUND TOTAL
Investments, at fair value:
Mutual funds $ 3,061,832 $ 27,707,182
Santa Fe Energy common $ 9,864,876 9,864,876
stock
Loans to participants $1,241,372 1,241,372
--------------- ---------------- --------------- -----------------
Total investments 3,061,832 9,864,876 1,241,372 38,813,430
--------------- ---------------- --------------- -----------------
Receivables:
Employer contributions 338,322 338,322
--------------- ---------------- --------------- -----------------
Total receivables 338,322 338,322
--------------- ---------------- --------------- -----------------
Net assets available for
plan benefits $ 3,061,832 $10,203,198 $1,241,372 $ 39,151,752
--------------- ---------------- --------------- -----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND INFORMATION
-----------------------------------------------------------------------------------------------
PUTNAM
STABLE GROWTH & TOTAL S&P OVERSEAS
VALUE INCOME RETURN INDEX VOYAGER GROWTH
FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
Investments, at fair value:
Mutual funds $10,608,556 $1,869,183 $ 2,768,940 $5,111,351 $3,993,220 $ 1,366,681
Santa Fe Energy common
stock
Loans to participants
---------------- --------------- ---------------- -------------- -------------- ---------------
Total investments 10,608,556 1,869,183 2,768,940 5,111,351 3,993,220 1,366,681
---------------- --------------- ---------------- -------------- -------------- ---------------
Receivables:
Employer contributions
---------------- --------------- ---------------- -------------- -------------- ---------------
Total receivables
---------------- --------------- ---------------- -------------- -------------- ---------------
Net assets available for
plan benefits $10,608,556 $1,869,183 $ 2,768,940 $5,111,351 $3,993,220 $ 1,366,681
---------------- --------------- ---------------- -------------- -------------- ---------------
FUND INFORMATION
---------------------------------------------------------------------
NEW COMPANY
OPPORTUNITIES STOCK LOAN
FUND FUND FUND TOTAL
Investments, at fair value:
Mutual funds $ 3,957,474 $ 29,675,405
Santa Fe Energy common
stock $8,480,736 8,480,736
Loans to participants $1,767,837 1,767,837
------------------ --------------- --------------- ----------------
Total investments 3,957,474 8,480,736 1,767,837 39,923,978
------------------ --------------- --------------- ----------------
Receivables:
Employer contributions 542,623 542,623
------------------ --------------- --------------- ----------------
Total receivables 542,623 542,623
------------------ --------------- --------------- ----------------
Net assets available for
plan benefits $ 3,957,474 $9,023,359 $1,767,837 $ 40,466,601
------------------ --------------- --------------- ----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE>
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
-----------------------------------------------------------------
PUTNAM
STABLE GROWTH & TOTAL S&P
VALUE INCOME RETURN INDEX
FUND FUND FUND FUND
<S> <C> <C> <C>
Additions to net assets
attributed to:-
Investment income:
Interest and dividends $ 602,904 $ 315,343 $ 113,982
Net unrealized appreciation (deprecia-
tion) in value of investments 1,822 259,817 $1,044,577
Net realized gain (loss) on sale of assets 52,430 61,624 158,420
Contributions:
Employer
Employees 292,574 288,934 162,111 362,820
--------------- --------------- -------------- ---------------
Total additions 895,478 658,529 597,534 1,565,817
--------------- --------------- -------------- ---------------
Deductions to net assets attributed to:
Trustee fees 88 36 52 58
Loan defaults
Net distributions to participants 900,639 32,179 102,323 118,359
Distributions to the Monterey Resources
Savings Investment Plan 2,495,757 831,029 745,681 1,364,633
--------------- --------------- -------------- ---------------
Total deductions 3,396,484 863,244 848,056 1,483,050
--------------- --------------- -------------- ---------------
Net increase (decrease) prior to
interfund transfers (2,501,006) (204,715) (250,522) 82,767
Interfund transfers 1,175,354 810,291 113,617 426,500
Net assets available for plan benefits:
Beginning of period 10,608,556 1,869,183 2,768,940 5,111,351
--------------- --------------- -------------- ---------------
End of period $ 9,282,904 $ 2,474,759 $2,632,035 $5,620,618
--------------- --------------- -------------- ---------------
-----------------------------------------------------------------
OVERSEAS NEW COMPANY
VOYAGER GROWTH OPPORTUNITIES STOCK
FUND FUND FUND FUND
Additions to net assets
attributed to:-
Investment income:
Interest and dividends $ 207,222 $ 67,662 $ 65,480
Net unrealized appreciation (deprecia-
tion) in value of investments 469,612 129,335 840,207 $ 2,183,828
Net realized gain (loss) on sale of assets 60,310 (70,386) (284,683) 1,400,647
Contributions:
Employer 1,431,867
Employees 436,534 203,106 610,097 490,496
--------------- --------------- -------------- ----------------
Total additions 1,173,678 329,717 1,231,101 5,506,838
--------------- --------------- -------------- ----------------
Deductions to net assets attributed to:
Trustee fees 81 46 100 190
Loan defaults
Net distributions to participants 84,232 16,041 65,283 303,454
Distributions to the Monterey Resources
Savings Investment Plan 1,432,170 673,334 1,831,155 1,657,366
--------------- --------------- -------------- ----------------
Total deductions 1,516,483 689,421 1,896,538 1,961,010
--------------- --------------- -------------- ----------------
Net increase (decrease) prior to
interfund transfers (342,805) (359,704) (665,437) 3,545,828
Interfund transfers (174,181) 151,823 (230,205) (2,365,989)
Net assets available for plan benefits:
Beginning of period 3,993,220 1,366,681 3,957,474 9,023,359
--------------- --------------- -------------- ----------------
End of period $3,476,234 $1,158,800 $3,061,832 $10,203,198
--------------- --------------- -------------- ----------------
--------------
LOAN
FUND TOTAL
Additions to net assets
attributed to:-
Investment income:
Interest and dividends $ 133,662 $ 1,506,255
Net unrealized appreciation (deprecia-
tion) in value of investments 4,929,198
Net realized gain (loss) on sale of assets 1,378,362
Contributions:
Employer 1,431,867
Employees 2,846,672
-------------- ----------------
Total additions 133,662 12,092,354
-------------- ----------------
Deductions to net assets attributed to:
Trustee fees 651
Loan defaults 58,792 58,792
Net distributions to participants 33,696 1,656,206
Distributions to the Monterey Resources
Savings Investment Plan 660,429 11,691,554
-------------- ----------------
Total deductions 752,917 13,407,203
-------------- ----------------
Net increase (decrease) prior to
interfund transfers (619,255) (1,314,849)
Interfund transfers 92,790
Net assets available for plan benefits:
Beginning of period 1,767,837 40,466,601
-------------- ----------------
End of period $1,241,372 $39,151,752
-------------- ----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-7-
<PAGE>
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION YEAR ENDED DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND INFORMATION
---------------------------------------------------------------------------------
FIXED S&P GROWTH STABLE
INTEREST INDEX WELLINGTON EQUITY VALUE
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:-
Investment income:
Interest and dividends $ 249,876 $ 8,129 $ 75,822 $ 72,026 $ 275,426
Net unrealized apprecia-
tion (depreciation) in
value of investments
Net realized gain (loss)
on sale of assets 282,683 67,272 121,004
Contributions:
Employer
Employees 199,811 95,691 64,172 66,914 392,118
Transfers from other
plans 14,193,812
----------------- --------------- ------------------------------ ----------------
Total additions 449,687 386,503 207,266 259,944 14,861,356
----------------- --------------- ------------------------------ ----------------
Deductions to net assets
attributed to:
Trustee fees 28,147 171
Loan defaults
Net distributions to
participants 355,425 73,796 15,394 22,541 479,646
Transfers to successor
trustee 14,187,886 5,437,932 2,645,143 2,305,488
----------------- --------------- ------------------------------ ----------------
Total deductions 14,571,458 5,511,728 2,660,537 2,328,029 479,817
----------------- --------------- ------------------------------ ----------------
Net increase (decrease)
prior to interfund transfers (14,121,771) (5,125,225) (2,453,271) (2,068,085) 14,381,539
Interfund transfers (1,229,327) 462,294 436,828 453,147 (3,772,983)
Net assets available for
plan benefits:
Beginning of period 15,351,098 4,662,931 2,016,443 1,614,938
----------------- --------------- ------------------------------ ----------------
End of period $ - $ - $ - $ - $10,608,556
----------------- --------------- ------------------------------ ----------------
FUND INFORMATION
----------------------------------------------------------------------------------------------
PUTNAM
GROWTH & TOTAL S&P OVERSEAS NEW
INCOME RETURN INDEX VOYAGER GROWTH OPPORTUNITIES
FUND FUND FUND FUND FUND FUND
Additions to net assets
attributed to:-
Investment income:
Interest and dividends $ 143,748 $ 76,147 $ 806 $ 251,637 $ 18,578 $ 30,161
Net unrealized apprecia-
tion (depreciation) in
value of investments 30,930 138,536 667,353 (199,778) 79,004 (333,524)
Net realized gain (loss)
on sale of assets (938) 16,446 113,332 38,322 2,494 (35,396)
Contributions:
Employer
Employees 158,196 152,475 157,544 401,590 149,230 511,088
Transfers from other
plans 2,634,461 5,449,274 2,298,902
------------- -------------- --------------- -------------- --------------- -----------------
Total additions 331,936 3,018,065 6,388,309 2,790,673 249,306 172,329
------------- -------------- --------------- -------------- --------------- -----------------
Deductions to net assets
attributed to:
Trustee fees 37 152 125 173 22 198
Loan defaults
Net distributions to
participants 896 28,136 140,538 36,945 6,070 4,213
Transfers to successor
trustee
------------- -------------- --------------- -------------- --------------- -----------------
Total deductions 933 28,288 140,663 37,118 6,092 4,411
------------- -------------- --------------- -------------- --------------- -----------------
Net increase (decrease)
prior to interfund transfers 331,003 2,989,777 6,247,646 2,753,555 243,214 167,918
Interfund transfers 1,538,180 (220,837) (1,136,295) 1,239,665 1,123,467 3,789,556
Net assets available for
plan benefits:
Beginning of period
------------- -------------- --------------- -------------- --------------- -----------------
End of period $ 1,869,183 $2,768,940 $ 5,111,351 $3,993,220 $ 1,366,681 $ 3,957,474
------------- -------------- --------------- -------------- --------------- -----------------
FUND INFORMATION
-------------------------------
COMPANY
STOCK LOAN
FUND FUND TOTAL
Additions to net assets
attributed to:-
Investment income:
Interest and dividends $ 1,124 $ 133,180 $ 1,336,660
Net unrealized apprecia-
tion (depreciation) in
value of investments 2,094,088 2,476,609
Net realized gain (loss)
on sale of assets 862,814 1,468,033
Contributions:
Employer 1,631,631 1,631,631
Employees 210,663 2,559,492
Transfers from other
plans 24,576,449
----------------------------------------------
Total additions 4,800,320 133,180 34,048,874
----------------------------------------------
Deductions to net assets
attributed to:
Trustee fees 196 29,221
Loan defaults 6,758 6,758
Net distributions to
participants 115,135 1,278,735
Transfers to successor
trustee 24,576,449
----------------------------------------------
Total deductions 115,331 6,758 25,891,163
----------------------------------------------
Net increase (decrease)
prior to interfund transfers 4,684,989 126,422 8,157,711
Interfund transfers (2,896,464) 212,769
Net assets available for
plan benefits:
Beginning of period 7,234,834 1,428,646 32,308,890
----------------------------------------------
End of period $9,023,359 $1,767,837 $40,466,601
----------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-8-
<PAGE>
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of the Santa Fe Energy Resources Savings
Investment Plan (the Plan) is provided for general information purposes
only. Participants should refer to the Plan document for a more complete
description of the Plan's provisions, as the document is controlling at
all times.
GENERAL
The Plan is a defined contribution plan for employees of Santa Fe Energy
Resources, Inc. (SFER or the Company) and is subject to the provisions of
the Employee Retirement Security Act of 1974 (ERISA).
ADMINISTRATION OF THE PLAN
The Plan is administered by the Employee Benefits Committee appointed by
the Board of Directors of the Company. Texas Commerce Bank acted as
trustee on behalf of the Plan and Hewitt Associates provided recordkeeping
services to the Plan through March 31, 1996. Effective April 1, 1996,
Putnam Fiduciary Trust Company was appointed trustee and recordkeeper of
the Plan, and all plan assets were transferred to the new trustee's
custody.
ELIGIBILITY
Substantially all salaried full-time employees of the Company are eligible
to participate in the Plan on the first day of the month following their
date of hire. Eligible employees may become participants in the Plan by
authorizing regular payroll deductions and designating investment
allocations for such deductions. At December 31, 1997, there were 358
participants in the Plan.
CONTRIBUTIONS
Participants may elect to contribute from 1% to 12% of their annual base
pay. Tax-deferred contributions to the Plan by individual employees were
limited to $10,000 and $9,500 in 1997 and 1996, respectively. This
limitation is adjusted annually to reflect cost-of-living adjustments.
Further, the Internal Revenue Code (the Code) limits the total amount of
contributions and forfeitures to the Plan (and all other defined
contribution plans of the Company) to the lesser of 25% of total annual
compensation or $30,000 per participant. The Plan is also subject to the
"top-heavy" rules of the Code and regulations promulgated thereunder.
These rules generally provide that for any Plan year in which the Plan is
"top-heavy," certain additional restrictions apply to contributions made
on behalf of key employees. There were no such restrictions on the Plan
due to "top-heavy" provisions during 1997 or 1996.
The Company matches employee contributions for an amount up to 4% of each
participant's base salary (the Regular Matching Contribution). In
addition, if at the end of each fiscal year the Company's financial
performance for such year has met or exceeded certain predetermined
criteria, each participant will receive an additional matching
contribution (the Performance Matching Contribution) up to 50% of the
Regular Matching Contribution. For the years ended December 31, 1997 and
1996, the Company made Performance Matching Contributions of $338,322 and
$542,623, respectively. The Performance Matching Contribution amounts for
1997 and 1996 are accrued as a receivable from employer in the statement
of net assets available for plan benefits at December 31, 1997 and 1996,
respectively. Both the Regular and Performance Matching Contributions are
entirely in the form of Company stock and are held in the Company Stock
Fund.
-9-
<PAGE>
A participant who receives a qualifying distribution from a former
employer's retirement or savings plan may contribute the distribution to
the Plan, provided that such contribution qualifies as a "rollover"
contribution in accordance with Section 402 of the Code or is made by a
direct trust-to-trust transfer.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution
and an allocation of (a) the Company's contribution, (b) Plan earnings of
each fund in which the participant has invested and (c) forfeitures of
terminated participants' nonvested accounts. Allocations are based on
participant earnings or account balances, as defined.
VESTING
Participants are 100% vested at all times with respect to their
contributions and rollover accounts. Participants' employer contributions
accounts vest at a rate of 20% per year for each full year of service and
become 100% vested after five full years of service, or in the case of
death, total disability, attainment of normal retirement age or in certain
other circumstances.
INVESTMENTS
Participants can direct all contributions made on their behalf into one or
all of the Plan's investment funds. The Plan's investment options changed
effective April 1, 1996 in connection with the appointment of Putnam
Fiduciary Trust Company as the Plan's trustee and recordkeeper.
Contribution rates may be changed at any time.
For the period January 1 to March 31, 1996, the five investment funds of
the Plan were as follows:
o FUND 1 - the "Fixed Interest Fund" invested on a fixed-income basis,
primarily in investment contracts issued by insurance companies and a
bank company collective trust fund that invested primarily in money
market instruments. Such investments generally provided for a guarantee
of the principal amount of the fund and a guaranteed fixed interest
rate, which rate was subject to modification from time to time.
o FUND 2 - the "S&P Index Fund" invested in an undivided interest in the
Wells Fargo Equity Index Fund managed by Wells Fargo Institutional
Trust Company. This bank collective trust fund consisted of investments
that attempted to mirror the performance of the Standard & Poor's 500
Stock Composite Index.
o FUND 3 - The "Wellington Fund" invested in the Vanguard Wellington
Fund which invested in a diversified and balanced mix of bonds and
common stocks, with the objectives of principal preservation and
achievement of reasonable income and capital appreciation without
significant risk. This fund was managed by the Vanguard Group of
Investment Companies (Vanguard).
-10-
<PAGE>
o FUND 4 - The "Growth Equity Fund" invested in the Vanguard World Fund
- Growth Portfolio which invested primarily in common stocks with the
objective of long-term capital appreciation. This fund was managed by
Vanguard.
o FUND 5 - the "Company Stock Fund" invested in the common stock of the
Company. Dividends and other distributions or amounts received in
respect of Company stock were reinvested in additional shares, and each
participant's account was credited with a proportionate number of the
incremental shares.
Notwithstanding the foregoing, the trustee could invest a portion of any
of the above funds in cash or short-term cash equivalents, subject to
liquidity needs.
Effective April 1, 1996 and continuing through December 31, 1997, the
eight investment funds of the Plan were as follows:
o FUND 1 - the "Stable Value Fund" invests primarily in a collective
investment trust consisting of high-quality annuity investment
contracts issued by insurance companies or banks to preserve capital
and maintain a consistent yield of current income. As of December 31,
1996, the fund also maintains investments in two previously negotiated
guaranteed investment contracts issued by an insurance company that
were transferred to the fund from the Plan's previous trustee. For
liquidity purposes, a portion of the fund's assets are invested in
high-quality money market instruments. The fund is managed by Putnam
Investments, Inc.
o FUND 2 - the "Growth and Income Fund" invests primarily in the stock
of large, well-established corporations in a variety of industries with
an above-average history of dividend payments, with the goal of
obtaining long-term capital appreciation while also providing current
income. The fund is managed by Putnam Investments, Inc.
o FUND 3 - the "Total Return Fund" invests in a combination of (a) large
corporation stocks that are historically strong performers and (b)
high-quality fixed-income securities, with the objective of achieving a
high total return, long-term capital appreciation and current income.
The fund is managed by Invesco Funds Group, Inc.
o FUND 4 - the "Putnam S&P Index Fund" invests in the common stock of
the 500 industrial, utility, financial and transportation companies
that comprise Standard & Poor's 500 Stock Composite Index in an attempt
to mirror the performance of such index. The fund is managed by Putnam
Investments, Inc.
o FUND 5 - the "Voyager Fund" invests primarily in the common stock of
smaller, growth-oriented companies and larger, well-established
corporations that the fund manager believes offer above-average growth
potential. The fund's investment objective is rapid capital
appreciation. The fund is managed by Putnam Investments, Inc.
o FUND 6 - the "Overseas Growth Fund" invests in stock of companies
located outside of North America that offer above-average growth
potential, with an overall objective of long-term capital appreciation.
The fund is managed by Putnam Investments, Inc.
-11-
<PAGE>
o FUND 7 - the "New Opportunities Fund" invests primarily in the common
stock of companies within certain emerging industry groups as
identified by the fund manager as having above-average potential for
growth with an overall objective of achieving long-term capital
appreciation. The fund is managed by Putnam Investments, Inc.
o FUND 8 - the "Company Stock Fund" invests in the common stock of the
Company. Dividends and other distributions or amounts received in
respect of Company stock are reinvested in additional shares, and each
participant's account is credited with a proportionate number of the
incremental shares.
LOANS
Loans may be made pursuant to the Plan. With respect to Plan loans, the
provisions of the Plan (1) provide for the securing of loans by, among
other things, the value of the participant's vested account balance, (2)
provide a reasonable rate of interest, (3) set forth the maximum loan
term, (4) establish any minimum and maximum loan amounts and (5) provide a
fixed repayment schedule. Two loans per employee may be outstanding at one
time, and a third loan will not be permitted until one of the prior loans
has been paid in full.
During 1997, $897,051 of new loans were issued to participants and
$804,058 of principal payments were received from participants. At
December 31, 1997, the interest rate charged on loans from the Plan ranged
from 6.62% to 12.5% depending upon the length and terms of the loan.
WITHDRAWALS, TRANSFERS AND FORFEITURES
In the event of a participant's death, 100% of the participant's account
balance is paid to designated beneficiaries. In the event of termination
of employment, participants receive a distribution equal to the vested
value of their account as of the valuation date on or following their
termination of employment or normal retirement date. As allowed by the
Code, the Plan also provides for hardship withdrawals under certain
circumstances. Distributions may be made in a lump-sum payment or through
monthly instalments for a specified period, or in the case of accounts
invested in the Company Stock Fund, may be paid all in stock or part in
stock and part in cash.
Forfeitures of unvested employer contributions are applied against future
employer contributions. Such forfeitures were $31,129 and $12,880 for the
years ended December 31, 1997 and 1996, respectively.
AMENDMENT AND TERMINATION
The Board of Directors of the Company may, at any time, amend, discontinue
contributions or terminate the Plan subject to the provisions of ERISA. In
the event of Plan termination, participants become fully vested in their
accounts.
-12-
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
METHOD OF ACCOUNTING
Financial statements of the Plan are prepared on the accrual basis of
accounting and include all adjustments necessary to present fairly the
financial statements of the Plan in accordance with generally accepted
accounting principles.
VALUATION OF INVESTMENTS
Investments in the Fixed Interest Fund are valued at contract or fair
market value. Valuation of investments in common stock and shares in
registered investment company funds is based upon published quotations for
the last business day of the Plan year. The valuation of the investment in
the S&P Index Fund is based upon its closing sales price reported for the
last business day of the year. Loans are valued at cost which approximates
fair market value.
CONTRIBUTIONS
Employee contributions are recorded in the period during which the Company
makes payroll deductions from the Plan participants' earnings. Matching
Company contributions are recorded in the comparable period.
INCOME RECOGNITION
Investment income for dividends and interest is recorded on the accrual
basis, with dividends accrued on the ex-dividend date.
BENEFITS
Benefit claims are accrued when they have been processed and approved for
payment by the Plan. Claims processed and approved, but unpaid as of the
Plan's fiscal year end, are not shown as liabilities on the statement of
net assets available for plan benefits but are reflected as liabilities on
the Plan's Form 5500.
EXPENSES
Plan administrative expenses are borne by the Company, except for loan
origination and maintenance fees related to Plan loans which are paid by
the participant.
USE OF ESTIMATES
The preparation of the Plan's financial statements in conformity with
generally accepted accounting principles requires management to make
certain estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and
liabilities and the periods in which certain items of revenue and expense
are included. Actual results may differ from such estimates.
3. TAX STATUS OF THE PLAN
The Internal Revenue Service has issued a favorable letter of
determination with respect to the tax status of the Plan dated November
19, 1997. Although the Plan has been subsequently amended, management
believes that such amendments do not require an updated determination
letter, as the Plan design and operations are in compliance with the
applicable requirements of the Internal Revenue Code (Code).
Therefore, the related trust is exempt from federal income tax under Code
Section 501(a).
-13-
<PAGE>
4. NET REALIZED GAIN (LOSS) ON INVESTMENTS
The net realized gain (loss) on the Plan's fund investments represents
sales of fund shares, or SFER common stock, the proceeds of which have
been distributed to participants or transferred to other funds. In
accordance with ERISA guidelines, realized gains (losses) are calculated
as sales proceeds less current value at the beginning of the year or
acquisition cost if acquired during the year. Under certain circumstances,
the cost basis of the common stock for tax purposes may differ from the
cost basis for financial reporting purposes.
Net realized gains (losses) for the year ended December 31, 1997 were as
follows:
ERISA
ERISA REALIZED
PROCEEDS COST GAIN (LOSS)
Growth & Income Fund $ 484,988 $ 432,558 $ 52,430
Total Return Fund 525,851 464,227 61,624
Putnam S&P Index Fund 948,128 789,708 158,420
Voyager Fund 814,395 754,085 60,310
Overseas Growth Fund 259,266 329,652 (70,386)
New Opportunities Fund 1,189,086 1,473,769 (284,683)
Company Stock Fund 7,483,241 6,082,594 1,400,647
-------------- ------------- --------------
$11,704,955 $10,326,593 $1,378,362
-------------- ------------- --------------
Net realized gains (losses) for the year ended December 31, 1996 were as
follows:
ERISA
ERISA REALIZED
PROCEEDS COST GAIN (LOSS)
S&P Index Fund $10,376,187 $10,093,504 $ 282,683
Wellington Fund 5,650,414 5,583,142 67,272
Growth Equity Fund 5,936,188 5,815,184 121,004
Growth & Income Fund 109,561 110,499 (938)
Total Return Fund 1,344,935 1,328,489 16,446
Putnam S&P Index Fund 2,275,162 2,161,830 113,332
Voyager Fund 839,784 801,462 38,322
Overseas Growth Fund 92,307 89,813 2,494
New Opportunities Fund 445,448 480,844 (35,396)
Company Stock Fund 4,108,895 3,246,081 862,814
------------- ------------- ------------
$31,178,881 $29,710,848 $1,468,033
------------- ------------- ------------
-14-
<PAGE>
5. MONTEREY RESOURCES, INC. COMMON STOCK DISTRIBUTION
On July 25, 1997, the Company distributed pro rata to its common
shareholders all of the shares of Monterey Resources, Inc. (Monterey)
common stock that it owned at a rate of .44 common shares of Monterey for
each common share of Santa Fe.
Effective October 31, 1997, all Monterey shares were automatically sold by
the Trustee and reinvested in the Putnam Stable Value Fund, unless
otherwise directed by the participant.
In conjunction with the Company's spin-off of Monterey, qualifying
distributions to Monterey employees totaling $11,691,554 were made by a
trust-to-trust transfer to the Monterey Resources Savings Investment Plan.
6. PLAN AMENDMENTS
Effective April 1, 1996, the Plan was amended to change the available
investment fund options as outlined in Note 1 and to provide for daily
valuation.
-15-
<PAGE>
ADDITIONAL INFORMATION
-16-
<PAGE>
SCHEDULE 1
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
LINE 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(A) (C) (E)
PARTY-IN- (B) DESCRIPTION NUMBER (D) CURRENT
INTEREST ISSUER OF INVESTMENT OF SHARES COST VALUE
<S> <C> <C> <C>
* Putnam Investments, Inc. Company Stock Fund 876,878 $ 6,338,836 $ 9,864,876
Invesco Funds Group, Inc. Total Return Fund 90,479 2,188,233 2,632,035
* Putnam Investments, Inc. Growth & Income Fund 126,651 2,428,605 2,474,759
* Putnam Investments, Inc. Voyager Fund 182,479 3,170,517 3,476,234
* Putnam Investments, Inc. Stable Value Fund 9,282,904 9,278,552 9,282,904
* Putnam Investments, Inc. New Opportunities Fund 62,936 2,803,522 3,061,832
* Putnam Investments, Inc. Overseas Growth Fund 69,514 1,053,809 1,158,800
* Putnam Investments, Inc. S&P Index Fund 249,030 3,914,834 5,620,618
Participant loans Range of maturities -
March 31, 1998 - February 25, 2013 1,241,372 1,241,372
------------- -------------
$32,418,280 $38,813,430
------------- -------------
</TABLE>
* Invested with a party-in-interest to the Plan as defined by ERISA.
-17-
<PAGE>
SCHEDULE 2
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
LINE 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1997
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(C) (D)
PURCHASE SELLING
PRICE PRICE (H)
(CURRENT (CURRENT CURRENT
NUMBER OF VALUE AT VALUE AT VALUE ON
------------------ TRANSACTION TRANSACTION (G) TRANSACTION
PURCHASES SALES DATE) DATE) COST DATE
<S> <C> <C> <C> <C>
Putnam Invest- SFER Company Stock Fund 158 $ 2,330,748 $ 1,746,244
ments, Inc. 192 $ 3,204,513 $ 3,204,513
Putnam Invest- Growth & Income A Fund 62 484,988 445,962
ments, Inc. 127 1,867,342 1,867,342
Putnam Invest- Voyager Fund 122 814,295 789,869
ments, Inc. 108 1,199,612 1,199,612
Putnam Invest- Stable Value Fund 143 4,388,036 4,388,036
ments, Inc. 175 5,558,051 5,558,051
Putnam Invest- New Opportunities Fund 128 1,189,086 1,225,396
ments, Inc. 119 1,569,029 1,569,029
Putnam Invest- S&P 500 Index Fund 77 948,128 783,562
ments, Inc. 124 1,619,032 1,619,032
Invesco Funds Total Return Fund 54 549,293 495,461
Group Inc. 63 767,580 767,580
</TABLE>
(I)
NUMBER OF NET
------------------ REALIZED
PURCHASES SALES GAIN (LOSS)
Putnam Invest- SFER Company Stock Fund 158 $ 584,504
ments, Inc. 192
Putnam Invest- Growth & Income A Fund 62 39,026
ments, Inc. 127
Putnam Invest- Voyager Fund 122 24,426
ments, Inc. 108
Putnam Invest- Stable Value Fund 143
ments, Inc. 175
Putnam Invest- New Opportunities Fund 128 (36,310)
ments, Inc. 119
Putnam Invest- S&P 500 Index Fund 77 164,566
ments, Inc. 124
Invesco Funds Total Return Fund 54 53,832
Group Inc. 63
Columns (e) and (f) have been omitted because they are not applicable.
-18-
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. PAGE
23. Consent of Independent Accountants 20
-19-
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-37175, 33-44541, 33-44542, 33-58613, 33-59255,
333-07949 and 333-34135) of Santa Fe Energy Resources, Inc. of our report dated
June 24, 1998 appearing on page 4 of this Form 11-K.
PRICE WATERHOUSE LLP
Houston, Texas
June 24, 1998
-20-
