FORCENERGY INC, S-4, 1997-07-21

FORCENERGY INC
S-4, 1997-07-21
CRUDE PETROLEUM & NATURAL GAS

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<PAGE> 1
DRAFT DATED JULY 18, 1997
As filed with the Securities and Exchange Commission on July 11, 1997
Registration No. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM S-4

REGISTRATION STATEMENT

Under

THE SECURITIES ACT OF 1933

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

FORCENERGY INC
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 1311 65-0429338
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)

E. JOSEPH GRADY
VICE PRESIDENT -- TREASURER
AND CHIEF FINANCIAL OFFICER
2730 SW 3RD AVENUE, SUITE 800 2730 SW 3RD AVENUE, SUITE 800
MIAMI, FLORIDA 33129-2237 MIAMI, FLORIDA 33129-2237
(305) 856-8500 (305) 856-8500
(Address, including zip code, and telephone (Name, address, including zip code, and
number, including area code, of telephone number, including area
registrant's principal executive offices) code, of agent for service)

Copies to:

T. MARK KELLY PAUL E. PRYZANT JOHN F. WOMBWELL
VINSON & ELKINS L.L.P. SNELL & SMITH, P.C. ANDREWS & KURTH L.L.P.
1001 FANNIN, SUITE 2300 1000 LOUISIANA, SUITE 3650 4200 TEXAS COMMERCE TOWER
HOUSTON, TEXAS 77002-6760 HOUSTON, TEXAS 77002 HOUSTON, TEXAS 77002
(713) 758-4592 (713) 652-3323 (713) 220-4396
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable following the effectiveness of this
Registration Statement.

If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

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

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================
TITLE OF EACH CLASS OF PROPOSED AMOUNT OF
SECURITIES TO BE MAXIMUM AGGREGATE REGISTRATION
REGISTERED OFFERING PRICE(1) FEE
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $0.01 par value $89,006,726 $26,972
================================================================================
</TABLE>

(1) Pursuant to Rule 457(f)(1) and 457(c) promulgated under the Securities Act
of 1933, as amended, and estimated solely for purposes of calculating the
registration fee, the proposed maximum aggregate offering price is
$89,606,725, which equals the sum of (i) the average of the high and low
prices of the common stock, par value $.01 per share ("Edisto Common
Stock"), of Edisto Resources Corporation ("Edisto") of $9.09, as reported
on the American Stock Exchange (the "ASE") on July 15, 1997, (less $4.89
per share to be paid in cash) multiplied by 14,674,725, the total number of
shares of Edisto Common Stock (including shares issuable pursuant to the
exercise of outstanding options to purchase Edisto Common Stock) to be
canceled in the merger of a subsidiary of Forcenergy Inc ("Forcenergy")
with and into Edisto and (ii) the average of the high and low prices of the
common stock, par value $.01 per share, of Convest Energy Corporation
("Convest Common Stock"), of $8.19, as reported on the ASE on July 15,
1997, multiplied by 3,434,232, the total number of shares of Convest Common
Stock (including shares issuable pursuant to the exercise of outstanding
options to purchase Convest Common Stock, but excluding shares owned by
Edisto) to be canceled in the merger of Convest Energy Corporation with and
into Forcenergy.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
[EDISTO LOGO]

EDISTO RESOURCES CORPORATION
2401 FOUNTAIN VIEW DRIVE, SUITE 700
HOUSTON, TEXAS 77057
(713) 782-0095

Dear Stockholders:

You are cordially invited to attend a Special Meeting of Stockholders (the
"Edisto Special Meeting") of Edisto Resources Corporation ("Edisto") to be held
at 2401 Fountain View Drive, Suite 700, Houston, Texas 77057, on __________,
__________, 1997 at ____ a.m. local time.

At the Edisto Special Meeting, you will be asked to consider and vote upon
a proposal to approve an Agreement and Plan of Merger dated as of June 19,
1997, as amended (the "Merger Agreement"), among Edisto, Convest Energy
Corporation ("Convest"), Forcenergy Inc ("Forcenergy") and a Forcenergy
subsidiary providing for the mergers (the "Mergers") of the Forcenergy
subsidiary into Edisto and Convest into Forcenergy. After the Mergers are
consummated, Edisto will be liquidated. If the Mergers are consummated, each
share of Common Stock of Edisto will be converted into the right to receive (i)
$4.886 in cash and (ii) a fractional interest in a share of Forcenergy Common
Stock equal to $5.064 divided by the average weighted daily trading price of
Forcenergy Common Stock for the ten trading days ending two trading days prior
to the closing date; provided, however, that the price of the Forcenergy Common
Stock used in such calculation will not be less than $28.96 nor more than
$34.96.

The Merger Agreement and the Mergers are discussed in more detail in the
accompanying Joint Proxy Statement/Prospectus. Please review and consider the
enclosed materials carefully.

THE BOARD OF DIRECTORS OF EDISTO BELIEVES THAT THE PROPOSED MERGER
AGREEMENT IS FAIR TO, AND IN THE BEST INTERESTS OF, EDISTO'S STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE MERGER AGREEMENT.

In making that recommendation, the Board of Directors of Edisto received
and took into account the written opinion dated June 19, 1997 of Rauscher
Pierce Refsnes, Inc. ("Rauscher Pierce"), an investment banking firm retained
by Edisto for that purpose, that, as of such date, the consideration to be
received by stockholders of Edisto in the Merger Agreement is fair to the
stockholders of Edisto from a financial point of view, Rauscher Pierce
subsequently delivered to the Board of Directors of Edisto its written opinion
to the same effect dated the date of the Joint Proxy Statement/Prospectus (the
"Rauscher Pierce Opinion"). A copy of the Rauscher Pierce Opinion is included
in the accompanying Joint Proxy Statement/Prospectus as Appendix C thereto.

Whether or not you plan to attend the Edisto Special Meeting, please
complete, sign, date and return your proxy card in the enclosed envelope. If
you attend the Edisto Special Meeting, you may vote in person even though you
have previously returned your proxy. It is important that your shares be
represented and voted at the Edisto Special Meeting.

Sincerely,

MICHAEL Y. McGOVERN
Chairman and Chief Executive Officer
<PAGE> 3
EDISTO RESOURCES CORPORATION
2401 FOUNTAIN VIEW DRIVE, SUITE 700
HOUSTON, TEXAS 77057
(713) 782-0095

NOTICE OF SPECIAL MEETING OF EDISTO STOCKHOLDERS
To be held on ______________, 1997

To the Stockholders of Edisto Resources Corporation:

A Special Meeting of Stockholders (the "Edisto Special Meeting") of Edisto
Resources Corporation, a Delaware corporation ("Edisto"), will be held on
________________, ___________________, 1997 at ___:00 a.m., local time, at 2401
Fountain View Drive, Suite 700, Houston, Texas 77057 for the following
purposes:

1. To consider and vote upon a proposal to approve the Agreement
and Plan of Merger dated as of June 19, 1997, as amended (the "Merger
Agreement"), among Forcenergy Inc, a Delaware corporation ("Forcenergy"),
a Forcenergy subsidiary, Convest Energy Corporation, a Texas corporation
("Convest"), and Edisto, a copy of which is attached as Appendix A to the
accompanying Joint Proxy Statement/Prospectus. Pursuant to the Merger
Agreement, the Forcenergy subsidiary will be merged into Edisto and
Convest will be merged into Forcenergy (the "Mergers") and, among other
things, each share of Common Stock of Edisto outstanding at the effective
time of the Merger would be converted into (i) $4.886 in cash and (ii) a
fractional interest in a share of Forcenergy Common Stock valued at $5.064
divided by the average weighted daily trading price of Forcenergy Common
Stock for the ten trading days ending two trading days prior to the
closing date; provided, however, that the price of the Forcenergy Common
Stock used in such calculation will not be less than $28.96 nor more than
$34.96. After the Mergers are consummated, Edisto will be liquidated.
The Mergers and other related matters are described in the accompanying
Joint Proxy Statement/Prospectus and in the Appendices thereto; and

2. To transact such other business as may properly come before
the Edisto Special Meeting or any adjournment thereof.

The Board of Directors of Edisto has fixed the close of business on
_______________, 1997 as the record date for the determination of stockholders
entitled to notice of, and to vote at, the Edisto Special Meeting and any
adjournment thereof. Only holders of record of shares of Edisto Common Stock at
the close of business on the record date are entitled to notice of, and to vote
at, the Edisto Special Meeting. A complete list of such stockholders will be
available for examination at the offices of Edisto in Houston, Texas during
normal business hours by any Edisto stockholder, for any purpose germane to the
Edisto Special Meeting, for a period of ten days prior to the meeting.
Stockholders of Edisto may be entitled to appraisal or dissenter's rights under
the Delaware General Corporation Law in respect of the Merger Agreement.

Your vote is important. The affirmative vote of the holders of a majority
of the outstanding shares of Edisto Common Stock is required for approval and
adoption of the Merger Agreement. Even if you plan to attend the Edisto
Special Meeting in person, we request that you sign and return the enclosed
proxy or voting instruction card and thus ensure that your shares will be
represented at the Edisto Special Meeting if you are unable to attend. If you
do attend the Edisto Special Meeting and wish to vote in person, you may
withdraw your proxy and vote in person.

By Order of the Board of Directors

Houston, Texas Steven G. Ives
______________, 1997 Corporate Secretary
<PAGE> 4
[CONVEST LOGO]

CONVEST ENERGY CORPORATION
2401 FOUNTAIN VIEW DRIVE, SUITE 700
HOUSTON, TEXAS 77057
(713) 780-1952

Dear Stockholders:

You are cordially invited to attend a Special Meeting of Stockholders (the
"Convest Special Meeting") of Convest Energy Corporation ("Convest") to be held
at 2401 Fountain View Drive, Suite 700, Houston, Texas 77057, on __________,
__________, 1997 at ____ a.m. local time.

At the Convest Special Meeting, you will be asked to consider and vote
upon a proposal to approve and adopt an Agreement and Plan of Merger dated as
of June 19, 1997 and related Plan and Agreement of Merger, as amended
(collectively, the "Merger Agreement"), among Convest, Edisto Resources
Corporation ("Edisto"), Forcenergy Inc ("Forcenergy") and a Forcenergy
subsidiary providing for the mergers (the "Mergers") of Convest into Forcenergy
and the Forcenergy subsidiary into Edisto. If the Mergers are consummated,
each share of Common Stock of Convest will be converted into the right to
receive a fractional interest in a share of Forcenergy Common Stock equal to
$8.88 divided by the average weighted daily trading price of Forcenergy Common
Stock for the ten trading days ending two trading days prior to the closing
date; provided, however, that the price of the Forcenergy Common Stock used in
such calculation will not be less than $28.96 nor more than $34.96.

The Merger Agreement and the Mergers are discussed in more detail in the
accompanying Joint Proxy Statement/Prospectus. Please review and consider the
enclosed materials carefully.

THE BOARD OF DIRECTORS OF CONVEST BELIEVES THAT THE PROPOSED MERGER
AGREEMENT IS FAIR TO, AND IN THE BEST INTERESTS OF, CONVEST'S STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE MERGER AGREEMENT.

In making that recommendation, the Board of Directors of Convest received
and took into account the written opinion dated June 19, 1997 of Petrie Parkman
& Co. ("Petrie Parkman"), an investment banking firm retained by Convest for
that purpose, that, as of such date, the consideration to be received by
stockholders of Convest in the Merger Agreement is fair to the stockholders of
Convest from a financial point of view. Petrie Parkman subsequently delivered
to the Board of Directors of Convest its written opinion to the same effect
dated the date of the Joint Proxy Statement/Prospectus (the "Petrie Parkman
Opinion"). A copy of the Petrie Parkman Opinion is included in the
accompanying Joint Proxy Statement/Prospectus as Appendix D thereto.

Whether or not you plan to attend the Convest Special Meeting, please
complete, sign, date and return your proxy card in the enclosed envelope. If
you attend the Convest Special Meeting, you may vote in person even though you
have previously returned your proxy. It is important that your shares be
represented and voted at the Convest Special Meeting.

Sincerely,

MICHAEL Y. McGOVERN
Chairman and Chief Executive Officer
<PAGE> 5
CONVEST ENERGY CORPORATION
2401 FOUNTAIN VIEW DRIVE, SUITE 700
HOUSTON, TEXAS 77057
(713) 780-1952

NOTICE OF SPECIAL MEETING OF CONVEST STOCKHOLDERS
To be held on ______________, 1997

To the Stockholders of Convest Energy Corporation:

A Special Meeting of Stockholders (the "Convest Special Meeting") of
Convest Energy Corporation, a Texas corporation ("Convest"), will be held on
________________, ___________________, 1997 at ___:00 a.m., local time, at
______________________, for the following purposes:

1. To consider and vote upon a proposal to approve the Agreement
and Plan of Merger dated as of June 19, 1997, among Forcenergy Inc, a
Delaware corporation ("Forcenergy"), Convest, Edisto Resources
Corporation, a Delaware corporation ("Edisto"), and a Forcenergy
subsidiary and related Plan and Agreement of Merger among Forcenergy and
Convest, as amended (collectively, the "Merger Agreement"), a copy of
which is attached as Appendix A to the accompanying Joint Proxy
Statement/Prospectus. Pursuant to the Merger Agreement, Convest will be
merged into Forcenergy and the Forcenergy subsidiary will be merged into
Edisto (the "Mergers") and, among other things, each share of Common Stock
of Convest outstanding at the effective time of the Merger would be
converted into a fractional interest in a share of Forcenergy Common Stock
equal to $8.88 divided by the average weighted daily trading price of
Forcenergy Common Stock for the ten trading days ending two trading days
prior to the closing date; provided, however, that the price of the
Forcenergy Common Stock used in such calculation will not be less than
$28.96 nor more than $34.96. The Mergers and other related matters are
described in the accompanying Joint Proxy Statement/Prospectus and in the
Appendices thereto; and

2. To transact such other business as may properly come before
the Convest Special Meeting or any adjournment thereof.

The Board of Directors of Convest has fixed the close of business on
_______________, 1997 as the record date for the determination of stockholders
entitled to notice of, and to vote at, the Convest Special Meeting and any
adjournment thereof. Only holders of record of shares of Convest Common Stock
at the close of business on the record date are entitled to notice of, and to
vote at, the Convest Special Meeting. A complete list of such stockholders will
be available for examination at the offices of Convest in Houston, Texas during
normal business hours by any Convest stockholder, for any purpose germane to
the Convest Special Meeting, for a period of ten days prior to the meeting.
Stockholders of Convest are not entitled to any appraisal or dissenter's rights
under the Texas Business Corporation Act in respect of the Merger Agreement.

Your vote is important. The affirmative vote of the holders of two-thirds
of the outstanding shares of Convest Common Stock is required for approval and
adoption of the Merger Agreement. Even if you plan to attend the Convest
Special Meeting in person, we request that you sign and return the enclosed
proxy or voting instruction card and thus ensure that your shares will be
represented at the Convest Special Meeting if you are unable to attend. If you
do attend the Convest Special Meeting and wish to vote in person, you may
withdraw your proxy and vote in person.

By Order of the Board of Directors

Houston, Texas Steven G. Ives
______________, 1997 Corporate Secretary
<PAGE> 6
SUBJECT TO COMPLETION, DATED JULY ______, 1997

EDISTO RESOURCES CORPORATION
AND
CONVEST ENERGY CORPORATION
JOINT PROXY STATEMENT

________________________

FORCENERGY INC.
PROSPECTUS

SPECIAL MEETING OF STOCKHOLDERS OF EDISTO RESOURCES CORPORATION
TO BE HELD ON _________, 1997

SPECIAL MEETING OF STOCKHOLDERS OF CONVEST ENERGY CORPORATION
TO BE HELD ON _________, 1997

This Joint Proxy Statement/Prospectus ("Joint Proxy Statement/Prospectus')
is being furnished to stockholders of Edisto Resources Corporation, a Delaware
corporation ("Edisto"), and to shareholders of Convest Energy Corporation, a
Texas corporation ("Convest"), in connection with the solicitation of proxies
by the Board of Directors of each corporation for use at the Special Meeting of
Stockholders of Edisto (the "Edisto Special Meeting") and the Special Meeting
of Stockholders of Convest (the "Convest Special Meeting," and together with
the Edisto Special Meeting, the "Special Meetings"), respectively, in each case
including any adjournments or postponements thereof. The Special Meetings are
both scheduled to be held on _____________, 1997. This Joint Proxy
Statement/Prospectus relates to the proposed mergers which are contingent upon
each other (collectively, the "Mergers") that will result in both a subsidiary
of Forcenergy Inc, a Delaware corporation ("Forcenergy") being merged into
Edisto and Convest being merged into Forcenergy, pursuant to the Agreement and
Plan of Merger dated as of June 19, 1997, as amended, among Edisto, Convest,
Forcenergy and a Forcenergy subsidiary and related Plan and Agreement of Merger
among Forcenergy and Convest (collectively, the "Merger Agreement"). After the
Mergers are consummated, Edisto will be liquidated. Edisto holds approximately
72% of the outstanding Convest Common Stock.

As a result of the Mergers, (a) each issued and outstanding share of
common stock, $.01 par value per share, of Edisto ("Edisto Common Stock") will
be converted into the right to receive (i) $4.886 in cash and (ii) a fractional
interest in a share of common stock, $.01 par value per share, of Forcenergy
("Forcenergy Common Stock") equal to $5.064 divided by the Weighted Average
Trading Price (as defined below) of Forcenergy Common Stock, and (b) each
issued and outstanding share of common stock, $.01 par value per share, of
Convest ("Convest Common Stock") will be converted into the right to receive a
fractional interest in a share of Forcenergy Common Stock equal to $8.88
divided by the Weighted Average Trading Price of Forcenergy Common Stock;
provided, however, that in no event shall the Weighted Average Trading Price of
Forcenergy Common Stock be less than $28.96 nor more than $34.96. The
"Weighted Average Trading Price" of Forcenergy Common Stock will be calculated
by taking the average of the following daily calculations to be made for each
of the ten trading days ending two trading days prior to the closing date for
the Mergers: (i) grouping together all shares of Forcenergy Common Stock
traded on such day at the same trading price, (ii) multiplying the aggregate
number of shares in each price group by the trading price for such group to
calculate a product (the total sold shares value) for each group, (iii) adding
all of such products from each group, and (iv) dividing the resulting total by
the aggregate number of shares traded on such trading day. Cash will be paid
in lieu of fractional shares of Forcenergy Common Stock. See "Certain Terms of
the Merger Agreement -- Manner and Basis of Converting Shares."

This Joint Proxy Statement/Prospectus also constitutes a prospectus of
Forcenergy with respect to shares of Forcenergy Common Stock to be issued
pursuant to the Merger Agreement in exchange for currently outstanding shares
of Edisto Common Stock and Convest Common Stock and additional shares of Edisto
Common Stock and Convest Common Stock that may become outstanding prior to the
Mergers upon the exercise of options to purchase Edisto Common Stock and
Convest Common Stock outstanding on the date of the Merger Agreement ("Edisto
Options" and "Convest Options," respectively).

The shares of Forcenergy Common Stock are listed on the New York Stock
Exchange ("NYSE") under the symbol "FEN," the shares of Edisto Common Stock are
listed on the American Stock Exchange ("ASE") under the symbol "EDT," and the
shares of Convest Common Stock are listed on the ASE under the symbol ("COV").
On ____________, 1997, the last reported sales price of Forcenergy Common Stock
on the NYSE Composite Tape was $___________ and the closing prices of the
Edisto Common Stock and Convest Common Stock, as reported by the ASE, were
$__________ and $_________, respectively.
<PAGE> 7
SEE "RISK FACTORS" BEGINNING ON PAGE ___ FOR INFORMATION ON CERTAIN RISKS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SECURITIES
OFFERED HEREBY.

This Joint Proxy Statement/Prospectus, the accompanying applicable form of
proxy and the other enclosed documents are first being mailed to shareholders
of Edisto and Convest on or about ________, 1997.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY OTHER STATE COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

The date of this Joint Proxy Statement/Prospectus is _____________, 1997
<PAGE> 8
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 9
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IN CONNECTION WITH THE SOLICITATION OF PROXIES OR THE
OFFERING OF SECURITIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY FORCENERGY,
EDISTO OR CONVEST. NEITHER THE DELIVERY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES OFFERED HEREBY
SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF FORCENERGY, EDISTO OR CONVEST SINCE THE DATE HEREOF OR
THAT THE INFORMATION SET FORTH OR INCORPORATED BY REFERENCE HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS JOINT PROXY STATEMENT/PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO
PURCHASE, ANY SECURITIES, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION
IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION OF AN OFFER OR PROXY SOLICITATION.

THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES CERTAIN DOCUMENTS BY
REFERENCE THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. FORCENERGY,
EDISTO AND CONVEST EACH UNDERTAKE TO PROVIDE COPIES OF SUCH DOCUMENTS (OTHER
THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE), WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS JOINT PROXY STATEMENT/PROSPECTUS IS DELIVERED,
UPON WRITTEN OR ORAL REQUEST TO, IN THE CASE OF DOCUMENTS RELATING TO
FORCENERGY, 2730 SW 3RD AVENUE, SUITE 800, MIAMI, FL 33129-2237, ATTENTION:
MICHAEL MCNAMARA, IN THE CASE OF DOCUMENTS RELATING TO EDISTO OR CONVEST, 2401
FOUNTAIN VIEW DRIVE, SUITE 700, HOUSTON, TX 77057, ATTENTION: KAREN CLINGAN.
IN ORDER TO ENSURE DELIVERY OF THE DOCUMENTS, SUCH REQUESTS SHOULD BE RECEIVED
BY ____________, 1997.

AVAILABLE INFORMATION

Forcenergy, Edisto and Convest are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, file reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements and other information filed by Forcenergy, Edisto and
Convest can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, NW, Washington, D.C. 20549,
and at the Commission's Regional Offices at Seven World Trade Center, 13th
Floor, New York, New York 10048 and CitiCorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60621-2511. Copies of such material can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, NW, Washington, D.C. 20549, at prescribed rates. In addition,
reports, proxy statements and other information concerning Forcenergy may be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005. Edisto Common Stock and Convest Common Stock are traded and listed on
the ASE and certain of their reports, proxy statements and other information
can be inspected at the offices of the ASE, 86 Trinity Place, New York, New
York 10006. Certain of such reports, proxy statements and other information
filed by Forcenergy, Edisto and Convest are also available on the Commission's
World Wide Web site at http://www.sec.gov.

Forcenergy has filed with the Commission a Registration Statement on Form
S-4 (together with all amendments, supplements and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Forcenergy Common Stock to be issued
pursuant to the Merger Agreement. The information contained herein with
respect to Forcenergy and its affiliates, including its subsidiary, EDI
Acquisition Corporation ("EDI-Sub"), has been provided by Forcenergy, and the
information contained herein with respect to Edisto and Convest and their
affiliates has been provided by Edisto and Convest. This Joint Proxy
Statement/Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which were omitted in accordance with
the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement. Any statements
contained herein concerning the provisions of any document filed as an exhibit
to the Registration Statement or otherwise filed with the Commission are not
necessarily complete, and in each instance reference is made to the copy of
such document so filed. Each such statement is qualified in its entirety by
such reference.

2
<PAGE> 10
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, which have been filed with the Commission pursuant
to the Exchange Act, are incorporated herein by reference:

1. For Forcenergy:

(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1996;

(b) Quarterly Report on Form 10-Q for the quarter ended March 31,
1997;

(d) The description of Forcenergy Common Stock contained in
Forcenergy's Registration Statement on Form 8-A filed with the
Commission on July 17, 1995, and any amendment or report filed for
the purpose of updating such description.

2. For Edisto:

(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1996;

(b) Amendment to Annual Report on Form 10-K/A for the fiscal year
ended December 31, 1996;

(d) Current Report on Form 8-K filed on July 3, 1997.

3. For Convest:

(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1996;

(b) Amendment to Annual Report on Form 10-K/A for the fiscal year
ended December 31, 1996;

(d) Current Report on Form 8-K filed on July 3, 1997.

All documents filed by Forcenergy pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Joint Proxy
Statement/Prospectus and prior to the date of the special meetings of the
stockholders of Edisto and Convest shall be deemed to be incorporated herein by
reference and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes
of this Joint Proxy Statement/Prospectus to the extent that a statement
contained herein or in any other subsequently filed document that also is or is
deemed to be incorporated herein by reference modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Joint Proxy
Statement/Prospectus.

3
<PAGE> 11
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Recommendations of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Opinions of Financial Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Interests of Certain Persons in the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Mergers and the Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Anticipated Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Exchange of Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Comparative Rights of Edisto and Forcenergy Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Comparative Rights of Convest and Forcenergy Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Market Price Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Forcenergy -- Summary Historical Consolidated Financial Information . . . . . . . . . . . . . . . . . . . . . . 16
Edisto -- Summary Historical Consolidated Financial Information . . . . . . . . . . . . . . . . . . . . . . . . 18
Convest -- Summary Historical Consolidated Financial Information . . . . . . . . . . . . . . . . . . . . . . . . 19
Comparative Per Share Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

THE COMPANIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Forcenergy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
EDI-Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Edisto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Convest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

THE SPECIAL MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Date, Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Purposes of the Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Record Date and Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Voting and Revocation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

THE MERGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
General Description of the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Background of Edisto/Convest Turnaround . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Background of the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Recommendation of the Boards of Directors of Edisto and Convest; Reasons for the Mergers . . . . . . . . . . . . 33
Forcenergy's Reasons for the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Opinions of Financial Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>

4
<PAGE> 12
<TABLE>
<S> <C>
Interests of Certain Persons in the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Restrictions on Resales by Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Rights of Dissenting Stockholders of Edisto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

CERTAIN TERMS OF THE MERGER AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Effective Time of the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Manner and Basis of Converting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Edisto Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Convest Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Conditions to the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Certain Covenants; Conduct of Business Prior to the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . 51
No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Expenses and Termination Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

SHAREHOLDER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

PRO FORMA FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

INFORMATION REGARDING FORCENERGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

INFORMATION REGARDING EDISTO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

INFORMATION REGARDING CONVEST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

DESCRIPTION OF FORCENERGY CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

COMPARATIVE RIGHTS OF FORCENERGY AND EDISTO STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

EDISTO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

CONVEST FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-
</TABLE>

Appendices:
A -- Merger Agreement
B -- Plan and Agreement of Merger
C -- Opinion of Rauscher Pierce
D -- Opinion of Petrie Parkman
E -- Section 262 of the Delaware General Corporation Law

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<PAGE> 13
SUMMARY

The following is a summary of certain information contained elsewhere in
this Joint Proxy Statement/Prospectus. Reference is made to, and this summary
is qualified in its entirety by, the more detailed information contained in or
incorporated by reference in this Joint Proxy Statement/Prospectus and the
Appendices hereto. Stockholders are urged to read carefully this Joint Proxy
Statement/Prospectus and the Appendices hereto in their entirety. As used in
this Joint Proxy Statement/Prospectus, unless otherwise required by the
context, the term "Forcenergy" means Forcenergy Inc and its consolidated
subsidiaries, the term "Edisto" means Edisto Resources Corporation and its
consolidated subsidiaries, and the term "Convest" means Convest Energy
Corporation and its consolidated subsidiaries. Capitalized terms used herein
without definition are, unless otherwise indicated, defined in the Merger
Agreement and used herein with such meanings.

GENERAL

At the Special Meetings, the stockholders of Edisto and Convest will be
asked to approve an Agreement and Plan of Merger dated as of June 19, 1997, as
amended, among Edisto, Convest, Forcenergy and a Forcenergy subsidiary and
related Plan and Agreement of Merger among Forcenergy and Convest
(collectively, the "Merger Agreement") pursuant to which the Forcenergy
subsidiary ,EDI-Sub, will merge with and into Edisto; Edisto will be
subsequently liquidated, and Convest will merge with and into Forcenergy
(collectively, the "Mergers"). A copy of the Merger Agreement is attached to
the Joint Proxy Statement/Prospectus as Appendix A. Upon consummation of the
Mergers, the separate existence of Edisto and Convest will cease.

As a result of the Mergers, (a) each share of Edisto Common Stock will be
converted into the right to receive (i) $4.886 in cash and (ii) a fractional
interest in a share of Forcenergy Common Stock equal to $5.064 divided by the
Weighted Average Trading Price of Forcenergy Common Stock, and (b) each share
of Convest Common Stock will be converted into the right to receive a
fractional interest in a share of Forcenergy Common Stock equal to $8.88
divided by the Weighted Average Trading Price of Forcenergy Common Stock. The
Weighted Average Trading Price of Forcenergy Common Stock will be determined
during the ten trading days ending two days prior to the closing date (which is
expected to be the same day as the Special Meetings); provided, however, that
the Weighted Average Trading Price of Forcenergy Common Stock will in no event
be less than $28.96 nor more than $34.96.

Certain majority stockholders of Edisto have agreed to vote their shares of
Edisto Common Stock for approval of the Merger Agreement. Edisto owns
approximately 72% of the outstanding shares of Convest Common Stock and has
agreed in the Merger Agreement to vote for approval of the Merger Agreement.
Accordingly, the approvals of the Merger Agreement by the Edisto and Convest
stockholders are expected to occur.

This Joint Proxy Statement/Prospectus describes these matters in more
detail below.

THE COMPANIES

FORCENERGY AND EDI-SUB. Forcenergy is an independent oil and gas company
engaged in the exploration, acquisition, development, exploitation and
production of oil and natural gas properties. EDI-Sub is a wholly owned
subsidiary of Forcenergy. The principal executive offices of Forcenergy are
located at 2730 SW 3rd Avenue, Suite 800, Miami, Florida 33129-2237, and its
telephone number at such offices is (305) 856-8500. See "Information Regarding
Forcenergy."

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<PAGE> 14
of Forcenergy's net proved reserves on such date were oil and approximately 78%
of proved reserves were classified as proved developed. Forcenergy currently
operates approximately 75% of its Gulf of Mexico production. Forcenergy's
primary focus is its Gulf of Mexico and Alaska activities; however, Forcenergy
has also acquired interests in certain high-potential undeveloped international
leasehold acreage, primarily in Gabon, Africa and Australia.

EDISTO. Edisto is involved in oil and gas exploration and production by
virtue of its 72% interest in Convest. Edisto's principal executive offices
are located at 2401 Fountain View Drive, Suite 700, Houston, Texas 77057, and
its telephone number is (713) 782-0095.

CONVEST. Convest is an independent oil and gas exploration and production
company. At December 31, 1996, Convest held interests in approximately 965
producing wells consisting of working interests, royalty interests and
overriding royalty interests. The producing wells are primarily located in
Alabama, Kansas, Louisiana, Nebraska, Oklahoma, Texas, Utah, Wyoming and
offshore Gulf of Mexico. Approximately 49% of Convest's oil and gas reserves
are oil and approximately 51% are gas, measured in energy equivalent barrels of
oil basis (natural gas being converted to oil equivalent at the rate of six Mcf
of gas for each barrel of oil). In addition to its interests in producing oil
and gas properties, Convest owns an undivided interest of approximately 13% in
the Altamont Gas Plant. Producing and nonproducing acreage holdings aggregate
approximately 105,966 net acres as of December 31, 1996. Convest serves as the
operator of approximately 30% of the producing wells in which it owns a working
interest, and the remaining 70% are operated by other working interest owners in
the properties. Convest's principal executive offices are located at 2401
Fountain View Drive, Suite 700, Houston, Texas 77057, and its telephone number
is (713) 780-1952.

THE SPECIAL MEETINGS

DATE, TIME AND PLACE

The Special Meeting of stockholders of Edisto (the "Edisto Special
Meeting") will be held on ____________, _______________, 1997, at 2401 Fountain
View, Suite 700, Houston, Texas 77057 commencing at ___:00 a.m. local time.

The Special Meeting of stockholders of Convest (the "Convest Special
Meeting") will be held on ____________, _______________, 1997, at 2401 Fountain
View, Suite 700, Houston, Texas 77057 commencing at ___:00 a.m. local time.

PURPOSES

The purposes of the Edisto Special Meeting are (i) to consider and vote
upon a proposal to approve and adopt the Merger Agreement; and (ii) to transact
such other business as may properly come before the Edisto Special Meeting.

The purposes of the Convest Special Meeting are (i) to consider and vote
upon a proposal to approve and adopt the Merger Agreement; and (ii) to transact
such other business as may properly come before the Convest Special Meeting.

RECORD DATES; SHARES ENTITLED TO VOTE

The Board of Directors of Edisto has fixed the close of business on
____________, 1997 as the record date (the "Edisto Record Date") for the
determination of stockholders entitled to notice of, and to vote at, the Edisto
Special Meeting and any adjournment thereof. Only holders of record of shares
of Edisto Common Stock at the close of business on the Edisto Record Date are
entitled to notice of and to vote at the Edisto Special Meeting. On such date,
there were _____________ shares of Edisto Common Stock outstanding, each of
which will be entitled to one vote on each matter to be acted upon at the
Edisto Special Meeting.

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<PAGE> 15
The Board of Directors of Convest has fixed the close of business on
____________, 1997 as the record date (the "Convest Record Date") for the
determination of stockholders entitled to notice of, and to vote at, the
Convest Special Meeting and any adjournment thereof. Only holders of record of
shares of Convest Common Stock at the close of business on the Convest Record
Date are entitled to notice of and to vote at the Convest Special Meeting. On
such date, there were _____________ shares of Convest Common Stock outstanding,
each of which will be entitled to one vote on each matter to be acted upon at
the Convest Special Meeting.

QUORUM; VOTE REQUIRED

The presence, in person or by proxy, at the Edisto Special Meeting of the
holders of a majority of the shares of Edisto Common Stock outstanding and
entitled to vote at the Edisto Special Meeting is necessary to constitute a
quorum at the meeting. The affirmative vote of the holders of a majority of
the shares of Edisto Common Stock outstanding and entitled to vote thereon at
the Edisto Special Meeting is required under the General Corporation Law of the
State of Delaware (the "DGCL") to approve and adopt the Merger Agreement. In
determining whether the Merger Agreement has received the requisite number of
affirmative votes, abstentions and broker non-votes will have the same effect
as a vote against the Merger Agreement.

Investment funds and accounts managed by TCW Special Credits and Oaktree
Capital Management, L.L.C., affiliates of Trust Company of the West (the "TCW
Entities") and certain officers and directors of Edisto, representing in the
aggregate 51.5% of the outstanding shares of Edisto Common Stock as of the
Edisto Record Date, have agreed to vote for the Merger Agreement. Accordingly,
the approval of the Merger Agreement by the requisite vote of Edisto
stockholders is expected to occur irrespective of whether or the manner in
which other Edisto stockholders vote their shares.

The presence, in person or by proxy, at the Convest Special Meeting of the
holders of a majority of the shares of Convest Common Stock outstanding and
entitled to vote at the Convest Special Meeting is necessary to constitute a
quorum at the meeting. The affirmative vote of the holders of two-thirds of
the shares of Convest Common Stock outstanding and entitled to vote thereon at
the Convest Special Meeting is required under the Texas Business Corporation
Act (the "TBCA") to approve and adopt the Merger Agreement. In determining
whether the Merger Agreement has received the requisite number of affirmative
votes, abstentions and broker non-votes will have the same effect as a vote
against the Merger Agreement.

Edisto and certain officers and directors of Convest, representing in the
aggregate 72.5% of the outstanding shares of Convest Common Stock as of the
Convest Record Date, have agreed to vote for the Merger Agreement, unless the
Merger Agreement is terminated in accordance with its terms. Accordingly, the
approval of the Merger Agreement by the requisite vote of Convest stockholders
is expected to occur irrespective of whether or the manner in which other
Convest stockholders vote their shares.

RECOMMENDATIONS OF THE BOARD OF DIRECTORS

RECOMMENDATION OF THE BOARD OF DIRECTORS OF EDISTO. THE BOARD OF DIRECTORS
OF EDISTO HAS DETERMINED THAT THE MERGER OF THE FORCENERGY SUBSIDIARY,
EDI-SUB, WITH AND INTO EDISTO (THE "EDISTO MERGER") IS FAIR TO, AND IN THE BEST
INTERESTS OF, THE STOCKHOLDERS OF EDISTO AND UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS OF EDISTO APPROVE THE MERGER AGREEMENT. See "The Mergers --
Background of the Mergers" and "Recommendations of the Boards of Directors of
Edisto and Convest; Reasons for the Mergers." In considering the
recommendation of the Edisto Board with respect to the Edisto Merger, Edisto
stockholders should be aware that certain officers and directors of Edisto have
certain interests respecting the Edisto Merger, apart from their interests as
stockholders of Edisto. See "The Mergers -- Interests of Certain Persons in
the Mergers."

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<PAGE> 16
RECOMMENDATION OF THE BOARD OF DIRECTORS OF CONVEST. THE BOARD OF
DIRECTORS OF CONVEST HAS DETERMINED THAT THE MERGER OF CONVEST WITH AND INTO
FORCENERGY (THE "CONVEST MERGER") IS FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF CONVEST AND RECOMMENDS THAT THE STOCKHOLDERS OF CONVEST APPROVE
THE MERGER AGREEMENT. See "The Mergers -- Background of the Mergers" and
"Recommendations of the Boards of Directors of Edisto and Convest; Reasons for
the Mergers." In considering the recommendation of the Convest Board with
respect to the Convest Merger, Convest stockholders should be aware that
certain officers and directors of Convest have certain interests respecting the
Convest Merger, apart from their interests as stockholders of Convest. See
"The Mergers -- Interests of Certain Persons in the Mergers."

OPINIONS OF FINANCIAL ADVISORS

Rauscher Pierce Refsnes, Inc. ("Rauscher Pierce") has delivered its written
opinion dated __________, 1997 to the Board of Directors of Edisto that the
consideration to be received by stockholders of Edisto pursuant to the Merger
Agreement is fair, from a financial point of view, to the holders of Edisto
Common Stock. For information regarding the opinion of Rauscher Pierce,
including the assumptions made, matters considered and limits of such opinion,
see "The Mergers -- Opinions of Financial Advisors -- Opinion of Edisto
Financial Advisor." Stockholders of Edisto are urged to read in its entirety
the opinion of Rauscher Pierce, a copy of which is included in this Joint Proxy
Statement/Prospectus as Appendix C.

Petrie Parkman & Co., Inc. ("Petrie Parkman") has delivered its written
opinion dated ________, 1997 to the Board of Directors of Convest that the
consideration to be received by the Convest stockholders in the Convest Merger
is fair, from a financial point of view, to the holders of Convest Common
Stock. For information regarding the opinion of Petrie Parkman, including the
assumptions made, matters considered and limits of such opinion, see "The
Mergers -- Opinions of Financial Advisors -- Opinion of Convest Financial
Advisor." Stockholders of Convest are urged to read in its entirety the
opinion of Petrie Parkman, a copy of which is attached to this Joint Proxy
Statement/Prospectus as Appendix D.

INTERESTS OF CERTAIN PERSONS IN THE MERGERS

SEVERANCE AND BONUS AGREEMENTS WITH EDISTO AND CONVEST OFFICERS. Upon the
consummation of the Mergers, Michael Y. McGovern will be terminated as the
Chairman and CEO of Edisto and Convest. Pursuant to his Employment Agreement,
Mr. McGovern will receive a severance payment of $275,000 and he will be
entitled to participate, for a period of twelve months after his termination,
in all health, life and disability insurance and other employee benefit
programs in which he was participating immediately prior to such termination.
If such participation is not allowed because he is no longer an employee, then
comparable benefits must be provided. Mr. McGovern also will receive a stay
bonus of $183,333 upon consummation of the Mergers.

Also upon consummation of the Mergers, it is anticipated that each of the
other executive officers of Edisto and Convest will be terminated. Under the
Company's severance policy for executive officers, any executive officer (other
than Mr. McGovern) who is terminated for any reason other than cause is
entitled to receive a severance payment in a lump sum equal to six months of
salary and is eligible to receive an additional six months of severance pay if
approved by the Board of Directors. Convest has six executive officers covered
by this policy (other than Mr. McGovern) and the maximum amount payable is
approximately $580,000. Each of these executive officers also is eligible to
receive a stay bonus of between one-third to two-thirds of such officer's base
salary. The maximum stay bonus payable to these officers is approximately
$385,000.

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Edisto Option. Each of the Convest Options outstanding immediately prior to
the Mergers will be redeemed for a cash payment equal to the difference between
$8.88 and the exercise price of such Convest Options. Michael Y. McGovern has
240,000 Edisto Options and 112,924 Convest Options and will receive an
aggregate of $1,533,642 in cash to redeem such stock options upon consummation
of the Mergers.

Also upon consummation of the Mergers, (i) the outside directors of Edisto
will receive an aggregate of $161,175 in cash to redeem their Edisto Options,
(ii) the outside directors of Convest will receive an aggregate of $362,900 in
cash to redeem their Convest Options and (iii) the six Convest executive
officers (other than Mr. McGovern) will receive an aggregate of $532,430 in
cash to redeem their Convest Options.

JOINT REPRESENTATIONS ON EDISTO AND CONVEST BOARDS. Four of the six
members of the Convest Board are also directors of Edisto. To avoid any
conflict of interest between Edisto and Convest relating to the allocation of
the purchase price between the two companies, the members of the Affiliate
Transaction Review Committee of the Convest Board were requested by the Convest
Board to review the Mergers from the perspective of the minority shareholders
of Convest. The purpose of this review was to examine the fairness of the
purchase price allocation between Edisto and Convest. The two members of this
Committee, Murray Gullatt and Franklin Myers, have no affiliation with Edisto.
On June 19, 1997, this Committee met with representatives of Petrie Parkman and
Convest's outside legal counsel to review the terms of the Mergers. The
Committee subsequently recommended to the full Convest Board that it approve
the Merger Agreement. For their service, Murray Gullatt, as Chairman, received
$7,500 and Franklin Myers received $5,000.

INDEMNIFICATION OF EDISTO AND CONVEST DIRECTORS AND OFFICERS. The Merger
Agreement provides for the indemnification by Forcenergy of the present and
former directors and officers of Edisto and Convest after the Mergers. In
addition, Forcenergy has agreed to maintain liability insurance for such
persons, subject to certain conditions.

THE MERGERS AND THE MERGER AGREEMENT

TERMS OF THE MERGERS. As a result of the Mergers, (a) each share of Edisto
Common Stock will be converted into the right to receive (i) $4.886 in cash and
(ii) a fractional interest in a share of Forcenergy Common Stock equal to
$5.064 divided by the Weighted Average Trading Price of Forcenergy Common
Stock, and (b) each share of Convest Common Stock will be converted into the
right to receive a fractional interest in a share of Forcenergy Common Stock
equal to $8.88 divided by the Weighted Average Trading Price of Forcenergy
Common Stock. The Weighted Average Trading Price of Forcenergy Common Stock
will be determined during the ten trading days ending two days prior to the
closing date (which is expected to be the same day as the Special Meetings);
provided, however, that the Weighted Average Trading Price of Forcenergy Common
Stock will in no event be less than $28.96 nor more than $34.96.

Based on the number of shares of Forcenergy Common Stock, Edisto Common
Stock and Convest Common Stock outstanding as of the Edisto Record Date and the
Convest Record Date and assuming a trading price of $34.96 and $28.96 per share
of Forcenergy Common stock (the maximum and minimum per share trading price for
calculation of the Weighted Average Trading Price of Forcenergy Common Stock
pursuant to the Merger Agreement), ________ shares and ________ shares,
respectively, of Forcenergy Common Stock would be issuable in exchange for
Edisto Common Stock and Convest Common Stock pursuant to the Merger Agreement
(assuming no exercise prior to the Edisto Merger Effective Time of Edisto
Options or Convest Options), representing approximately ___% and ___%,
respectively, of the total Forcenergy Common Stock to be outstanding after the
issuance of the shares in the Mergers.

EFFECTIVE TIME OF THE MERGERS. The Edisto Merger will become effective
upon the filing of a certificate of merger with the Secretary of State of the
State of Delaware which will be the Edisto Merger Effective Time, unless the
certificate of merger specifies a later Edisto Merger Effective Time. Assuming
all conditions to the Edisto Merger contained in the Merger Agreement are
satisfied or, if permissible, waived prior thereto, it is anticipated that the
Edisto Merger Effective Time of the Edisto Merger will occur as soon as
practicable following the Edisto Special Meeting.

10
<PAGE> 18
The Convest Merger will become effective upon the later to occur of (i) the
filing of articles of merger with the Secretary of State of the State of Texas
and the issuance of a certificate of merger and (ii) the filing of a
certificate of merger with the Secretary of State of the State of Delaware
which will be the Convest Merger Effective Time, unless the articles of merger
specify a later Convest Merger Effective Time. Assuming all conditions to the
Convest Merger contained in the Merger Agreement are satisfied or, if
permissible, waived prior thereto, it is anticipated that the Convest Merger
Effective Time of the Convest Merger will occur as soon as practicable
following the Convest Special Meeting.

CERTAIN CONDITIONS TO THE CONSUMMATION OF THE MERGERS. The respective
obligations of Forcenergy, Edisto and Convest to consummate the Mergers are
subject to the satisfaction of certain conditions, including: (a) the Merger
Agreement and the Edisto Merger shall have been approved and adopted by the
requisite vote of the stockholders of Edisto and the Merger Agreement and the
Convest Merger shall have been approved and adopted by the requisite vote of
the stockholders of Convest (which approvals are expected to occur); (b) the
receipt of the opinion of Coopers & Lybrand L.L.P. to the effect that the
Convest Merger will qualify as a tax-free reorganization; and (c) other
conditions customary for transactions of this nature.

NO SOLICITATION. As an inducement to Forcenergy to enter into the Merger
Agreement, Edisto and Convest have agreed not to initiate, solicit, negotiate,
encourage or provide confidential information to facilitate any proposal or
offer to acquire all or any substantial part of the business and properties of
either Edisto or Convest or any of their subsidiaries or any capital stock of
either Edisto or Convest or any of their subsidiaries, whether by merger,
purchase of assets, tender offer or otherwise, whether for cash, securities or
any other consideration or combination thereof. See "Certain Terms of the
Merger Agreement - No Solicitation."

TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be
terminated at any time prior to the Closing Date, whether before or after
approval by the stockholders of Convest and Edisto, by the mutual written
consent of Forcenergy, Edisto and Convest. It may also be terminated by the
parties in certain events, including, if the Mergers are not completed by
October 31, 1997.

Either Edisto or Convest may terminate the Merger Agreement if it receives
an offer or proposal with respect to a merger, sale of substantial assets or
other business combination, and such company's Board of Directors determines,
in good faith and after consultation with an independent financial advisor,
that such offer or proposal (if consummated pursuant to its terms) would result
in a transaction more favorable to such company's stockholders from a financial
point of view than the relevant Merger and such company's Board of Directors
shall conclude in good faith after consultation with its legal counsel that
such action is necessary in order for such Board of Directors to act in a
manner that is consistent with its fiduciary obligations under applicable law
and Forcenergy fails to agree to amend the Merger Agreement so that the Mergers
would be, in the good faith determination of such Board of Directors, at least
as favorable to such company's stockholders from a financial point of view as
the other proposal. Upon termination of the Merger Agreement under the
circumstances described in the preceding sentence, Edisto and Convest would be
required to pay Forcenergy a termination fee of $3 million. See "Certain Terms
of the Merger Agreement -- Termination" and "-- Expenses and Termination Fees."

SHAREHOLDER AGREEMENTS. Concurrently with the execution of the Merger
Agreement, Forcenergy and the TCW Entities, which own approximately 51% of the
outstanding shares of Edisto Common Stock, entered into a Shareholder Agreement
pursuant to which the TCW Entities have agreed to vote their shares of Edisto
Common Stock in favor of the Merger Agreement, unless Edisto's Board of
Directors approves an alternative transaction with a value of at least $10.95
per share. The TCW Entities also have agreed to not solicit or encourage any
offer from any party concerning the possible disposition of all or any
substantial portion of Edisto's or Convest's business assets or a controlling
equity interest in Edisto or Convest. For a period of 180 days after the
Mergers have been consummated, the TCW Entities have agreed that they will not
sell or otherwise dispose of 80% of the shares of Forcenergy Common Stock they
receive pursuant to the Mergers. Forcenergy has agreed to file a shelf
registration statement to register the shares of Forcenergy

11
<PAGE> 19
Common Stock to be received by the TCW Entities pursuant to the Mergers under
the Securities Act, and has also granted the TCW Entities certain piggyback
registration rights.

Pursuant to the Merger Agreement, Edisto, which owns 72% of the outstanding
shares of Convest Common Stock, has agreed to vote its shares of Convest Common
Stock in favor of the Merger Agreement. Edisto has also agreed not to solicit
or encourage any offer from any party concerning the possible disposition of
all or any substantial portion of Edisto's or Convest's business assets or a
controlling equity interest in Convest.

Concurrently with the execution of the Merger Agreement, Forcenergy and
certain affiliated stockholders, each of the directors and executive officers
of Edisto and Convest (each, a "Supporting Stockholder") also entered into
agreements pursuant to which each Supporting Stockholder has agreed that such
Supporting Stockholder will vote its respective shares of Edisto Common Stock
and Convest Common Stock in favor of the Merger Agreement. The Supporting
Stockholders own an aggregate of 20,214 shares of Edisto Common Stock and
40,284 shares of Convest Common Stock.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

Each Edisto and Convest stockholder should consult his or her own tax
advisor regarding the tax consequences of the Mergers in light of such
stockholder's own situation, including the application and the effect of any
state, local or foreign income and other tax laws. For a more detailed
discussion of these and other federal income tax considerations for Edisto and
Convest stockholders, see "The Mergers -- Certain Federal Income Tax
Consequences."

EDISTO STOCKHOLDERS. For U.S. federal income tax purposes, the Edisto
Merger will be treated as an acquisition of the Edisto Common Stock by
Forcenergy in a taxable transaction and not as a tax-free reorganization.
Accordingly, a stockholder of Edisto who exchanges shares of Edisto Common
Stock for Forcenergy Common Stock and cash will recognize taxable gain or loss
in an amount equal to the difference between such stockholder's basis in such
shares of Edisto Common Stock and the amount of cash and fair market value of
Forcenergy Common Stock received in the Edisto Merger.

CONVEST STOCKHOLDERS. For U.S. federal income tax purposes, the Convest
Merger is intended to qualify as a reorganization under Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and if it so qualifies,
no gain or loss will be recognized by Convest stockholders upon the conversion
of their Convest Common Stock into shares of Forcenergy Common Stock, except to
the extent of cash received, if any, in lieu of fractional shares of Forcenergy
Common Stock.

ANTICIPATED ACCOUNTING TREATMENT

Forcenergy will record the acquisition of the Edisto Common Stock and
Convest Common Stock as a purchase in accordance with Accounting Principles
Board Opinion No. 16 and generally accepted accounting principles.

APPRAISAL RIGHTS

In connection with the Edisto Merger, holders of Edisto Common Stock
who comply with certain requirements and procedures set forth in Section 262 of
the DGCL may be entitled to seek an appraisal of their shares and to obtain the
"fair value" of their shares. To exercise appraisal rights, holders of Edisto
Common Stock must comply strictly with the procedural requirements of Section
262 of the DGCL, a description of which is set forth under "The Mergers --
Rights of Dissenting Stockholders of Edisto," and the full text of which is
included as Appendix E hereto.

Under Texas law, holders of Convest Common Stock will not be entitled to
any appraisal or dissenter's rights in connection with the Convest Merger. See
"The Mergers -- Rights of Dissenting Stockholders of Edisto."

12
<PAGE> 20
EXCHANGE OF STOCK CERTIFICATES

Within ten business days after consummation of the Mergers, Forcenergy will
mail a letter of transmittal with instructions to each holder of record of
Edisto Common Stock and Convest Common Stock immediately before the Edisto
Merger Effective Time and Convest Merger Effective Time for use in exchanging
certificates formerly representing shares of Edisto Common Stock and Convest
Common Stock for certificates representing shares of Forcenergy Common Stock
and cash as well as cash in lieu of any fractional shares. Certificates should
not be surrendered by the holders of Edisto Common Stock and Convest Common
Stock until they have received the letter of transmittal from Forcenergy. For
more detailed information in this regard, see "Certain Terms of the Merger
Agreement -- Manner and Basis of Converting Shares."

COMPARATIVE RIGHTS OF EDISTO AND FORCENERGY STOCKHOLDERS

Rights of stockholders of Edisto are currently governed by the DGCL, the
Certificate of Incorporation, as amended, of Edisto (the "Edisto Charter") and
Edisto's Bylaws, as amended (the "Edisto Bylaws"). Upon consummation of the
Edisto Merger, Edisto stockholders will become stockholders of Forcenergy and
their rights as stockholders of Forcenergy will be governed by the DGCL, the
Amended and Restated Certificate of Incorporation of Forcenergy (the
"Forcenergy Charter") and Forcenergy's Bylaws (the "Forcenergy Bylaws"). There
are various differences between the rights of Edisto stockholders and the
rights of Forcenergy stockholders. See "Comparative Rights of Forcenergy and
Edisto Stockholders" and "Description of Forcenergy Capital Stock."

COMPARATIVE RIGHTS OF CONVEST AND FORCENERGY STOCKHOLDERS

Rights of stockholders of Convest are currently governed by the TBCA, the
Certificate of Incorporation, as amended, of Convest (the "Convest Charter")
and Convest's Bylaws, as amended (the "Convest Bylaws"). Upon consummation of
the Convest Merger, Convest stockholders will become stockholders of Forcenergy
and their rights as stockholders of Forcenergy will be governed by the DGCL,
the Forcenergy Charter and the Forcenergy Bylaws. There are various differences
between the rights of Convest stockholders and the rights of Forcenergy
stockholders. See "Comparative Rights of Forcenergy and Convest Stockholders"
and "Description of Forcenergy Capital Stock."

RISK FACTORS

Edisto and Convest stockholders are urged to consider the matters set forth
under "Risk Factors," in deciding whether to vote for the approval and adoption
of the Merger Agreement.

FORWARD-LOOKING STATEMENTS

This Joint Proxy Statement/Prospectus includes forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. The words "anticipate," "believe," "expect," "plan," "intend,"
"estimate," "project," "will," "could," "may," "predict" and similar
expressions are intended to identify forward-looking statements. No assurance
can be given that actual results may not differ materially from those in the
forward-looking statements herein for reasons including the effect of
competition, the level of petroleum industry exploration and production
expenditures, world economic conditions, prices of and the demand for crude oil
and natural gas, drilling activity, weather, the legislative environment in the
United States and other countries, OPEC policy, conflict in the Middle East and
other major petroleum producing regions and the condition of the capital and
equity markets.

13
<PAGE> 21
MARKET PRICE DATA

MARKET PRICES. Forcenergy Common Stock commenced trading on the New York
Stock Exchange (the "NYSE") under the symbol "FEN" on June 18, 1997. Prior to
then, Forcenergy Common Stock was quoted on the Nasdaq National Market (the
"NASDAQ"). Edisto Common Stock is listed on the American Stock Exchange (the
"ASE") under the symbol "EDT." Convest Common Stock is listed on the ASE under
the symbol "COV." The following table sets forth, for the periods indicated,
the range of high and low per share sales prices for Forcenergy Common Stock,
Edisto Common Stock and Convest Common Stock as reported on the NASDAQ, NYSE
and the ASE.

<TABLE>
<CAPTION>
FORCENERGY EDISTO CONVEST
---------- ------ -------
HIGH LOW HIGH LOW HIGH LOW
---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C>
1995
First Quarter . . . . . . . . . . . . . . . . -- -- $ 6.38 $ 5.63 $ 4.81 $ 3.13
Second Quarter . . . . . . . . . . . . . . . . -- -- $ 8.63 $ 5.88 $ 4.38 $ 3.13
Third Quarter (1) . . . . . . . . . . . . . . $ 11.38 $ 10.00 $ 7.38 $ 6.00 $ 3.88 $ 3.06
Fourth Quarter . . . . . . . . . . . . . . . . $ 11.50 $ 9.25 $ 7.38 $ 5.00 $ 4.00 $ 3.06
1996
First Quarter . . . . . . . . . . . . . . . . $ 11.69 $ 10.50 $ 8.25 $ 5.88 $ 4.69 $ 3.25
Second Quarter . . . . . . . . . . . . . . . . $ 19.25 $ 11.63 $ 10.75 $ 8.00 $ 5.63 $ 4.38
Third Quarter . . . . . . . . . . . . . . . . $ 24.88 $ 17.75 $ 11.50 $ 9.13 $ 5.63 $ 4.63
Fourth Quarter . . . . . . . . . . . . . . . . $ 37.88 $ 22.75 $ 10.50 $ 8.00 $ 6.63 $ 4.75
1997
First Quarter . . . . . . . . . . . . . . . . $ 37.13 $ 25.38 $ 10.25 $ 8.38 $ 6.38 $ 5.06
Second Quarter . . . . . . . . . . . . . . . . $ 35.13 $ 27.13 $ 11.50 $ 9.00 $ 8.63 $ 5.56
Third Quarter (through July 14, 1997) . . . . $ 30.44 $ 28.00 $ 9.31 $ 9.06 $ 8.38 $ 8.06
</TABLE>

- ----------
(1) Forcenergy commenced trading on the NASDAQ on July 28, 1995. No public
market existed for Forcenergy Common Stock prior to that date.

On June 19, 1997, the last trading day prior to the date of the joint
announcement by Forcenergy, Edisto and Convest that they had entered into the
Merger Agreement, the closing per share sales prices of Forcenergy Common
Stock, Edisto Common Stock and Convest Common Stock, as reported on the NYSE
and the ASE, were $30.50, $11.00 and $8.50 respectively. See the cover page of
this Joint Proxy Statement/Prospectus for recent closing prices of Forcenergy
Common Stock, Edisto Common Stock and Convest Common Stock.

Following the Mergers, Forcenergy Common Stock will continue to be traded
on the NYSE, Edisto Common Stock and Convest Common Stock will cease to be
traded on the ASE and there will be no further market for the Edisto Common
Stock and the Convest Common Stock.

14
<PAGE> 22
FORCENERGY

SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

The following selected historical financial information for each of the
years ended December 31, 1992 through 1994 and for December 31, 1995 through
December 31, 1996 have been derived from Forcenergy's Consolidated Financial
Statements, which have been audited by Price Waterhouse LLP and Coopers &
Lybrand L.L.P., independent public accountants, respectively. The selected
consolidated financial data for the three months ended March 31, 1996 and 1997
have been derived from the unaudited consolidated financial statements of
Forcenergy, which have been prepared on the same basis as the Consolidated
Financial Statements of Forcenergy and, in the opinion of Forcenergy, reflect
and include all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the financial position and results of
operations of Forcenergy for such periods. The information set forth below is
qualified by reference to and should be read in conjunction with the
consolidated financial statements and related notes included in Forcenergy's
Annual Report on Form 10-K for the year ended December 31, 1996 and its
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997,
incorporated by reference in this Joint Proxy Statement/Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
--------------------- ------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- -------- --------- ---------
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Oil and gas sales . . . . . . . . . . $ 70,580 $ 28,342 $ 138,698 $ 72,147 $ 58,354 (1) $ 49,652(1) $ 24,937
Other . . . . . . . . . . . . . . . . 425 126 $ 683 $ 494 $ 388 (1) $ 441(1) $ 475
--------- --------- --------- --------- -------- --------- ---------
71,005 28,468 139,381 72,641 58,742 50,093 25,412
--------- --------- --------- --------- -------- --------- ---------
Expenses:
Lease Operating . . . . . . . . . . . 16,185 8,736 38,786 24,507 23,744 16,632 7,769
Depreciation, depletion and
amortization . . . . . . . . . . 25,457 11,556 58,464 31,295 24,572 19,889 8,014
Production taxes . . . . . . . . . . 1,059 724 3,454 1,868 1,701 1,560 606
General and administrative, net . . 3,682 1,790 7,971 5,670 6,463 3,166 2,523
--------- --------- --------- --------- -------- --------- ---------
Total operating expenses . . . . . . 46,383 22,806 108,675 63,340 56,480 41,247 18,912
--------- --------- --------- --------- -------- --------- ---------
Income from operations . . . . . . . . . 24,622 5,662 30,706 9,301 2,262 8,846 6,500
Interest and other income (loss) . . . . 322 111 650 (561) 789 545 197
Interest expense, net of amounts
capitalized . . . . . . . . . . . . . (6,848) (2,874) (13,367) (11,668) (9,529) (6,192) (2,303)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes . . . 18,096 2,899 17,989 (2,928) (6,478) 3,199 4,394
Income tax provision (benefit) (2) . . . 6,922 1,081 6,711 (1,075) (2,403) 2,337 --
Minority interest . . . . . . . . . . . -- -- -- -- -- 107 132
--------- --------- --------- --------- -------- --------- ---------
Net income (loss) (2) $ 11,174 $ 1,818 $ 11,278 $ (1,853) $ (4,075) $ 755 $ 4,262
========= ========= ========= ========= ========= ========= =========
Net income (loss) per common and
common equivalent share (2) . . . . . $ .47 $ .10 $ .57 $ (.14) $ (.50)
========= ========= ========= ========= ========
UNAUDITED PRO FORMA DATA(2):
Income before income taxes, including
minority interest . . . . . . . . . . $ 3,092 $ 4,262
Income tax provision . . . . . . . . . . 1,207 1,639
--------- ---------
Net income . . . . . . . . . . . . . . . 1,885 2,623
========= =========
Net income per share . . . . . . . . . . $ .29 $ .41
========= =========
Weighted average common and common
equivalent shares . . . . . . . . . . 23,943 18,260 19,726 12,910 8,188 6,520 6,451
BALANCE SHEET DATA (AT END OF PERIOD):
Property, plant and equipment, net $ 625,837 $ 316,227 $ 523,711 $ 298,832 $186,241 $ 152,659 $ 112,441
Total assets . . . . . . . . . . . . . . 744,116 354,179 585,925 335,090 220,287 187,786 127,685
Total long-term debt . . . . . . . . . . 375,100 144,533 272,932 130,729 131,646 127,234 75,758
Stockholders' equity . . . . . . . . . . 260,271 156,779 248,936 154,961 71,061 43,336 45,252
OTHER FINANCIAL DATA:
Capital Expenditures (3) . . . . . . . . $ 119,740 $ 28,790 $ 283,977 $ 144,689 $ 58,169 $ 53,371 $ 67,660
EBITDA (4) . . . . . . . . . . . . . . . 50,401 17,329 89,820 40,035 27,623 29,280 14,711
Ratio of Earnings to Fixed Charges (5) . 3.2x 1.7x 2.0x N/M N/M 1.4x 2.9x
EBITDA Interest Coverage (6) . . . . . . 6.4x 5.1x 5.8x 2.8x 2.5x 4.5x 6.4x
</TABLE>

15
<PAGE> 23
- ----------
(1) Natural gas liquid revenues for 1993 and 1994 have been reclassified from
plant processing and other revenues to oil and gas sales for consistent
presentation with 1995 and 1996 revenues.
(2) Prior to September 14, 1993, Forcenergy was exempt from United States
federal and certain state income taxes as a result of its partnership
status. The unaudited pro forma data reflects the income tax expense that
would have been recorded had Forcenergy not been exempt from paying such
income taxes. Net income per share data for 1992 and 1993 is described as
unaudited pro forma because of Forcenergy's former partnership status.
(3) Capital expenditures include acquisitions of oil and gas properties,
including a non-cash item relating to a 1995 acquisitions, amounting to
$46.4 million.
(4) EBITDA is defined as earnings (including interest and other income) before
interest expense, taxes, depletion, depreciation and amortization and is
presented because it is a widely accepted financial indication of a
company's ability to service and incur debt. EBITDA should not be
considered as an alternative to earnings (loss) as an indicator of
Forcenergy's operating performance or to cash flows as a measure of
liquidity.
(5) For purposes of determining the ratio of earnings to fixed charges,
earnings are computed as net income (loss) before income taxes, plus fixed
charges. Fixed charges consist of interest expense, whether expensed or
capitalized, on all indebtedness plus amortization of debt issuance costs.
Earnings did not cover fixed charges in the years ended December 31, 1995
and 1994 by $5.5 million and $8.0 million, respectively.
(6) Represents the multiple by which EBITDA exceeds interest expense.

16
<PAGE> 24
EDISTO

SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

The following table sets forth summary consolidated financial information
for Edisto as of the dates and for the periods indicated. The summary
historical consolidated financial information for each of the years ended
December 31, 1992 through 1996 have been derived from Edisto's Consolidated
Financial Statements, which have been audited by Arthur Andersen LLP,
independent public accountants. The summary consolidated financial information
for the three months ended March 31, 1996 and 1997 have been derived from the
unaudited consolidated financial statements of Edisto, which have been
prepared on the same basis as that of the Consolidated Financial Statements of
Edisto and, in the opinion of Edisto, reflect and include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the financial position and results of operations of Edisto for
such periods. Edisto's results of operations for the periods after June 30,
1993 are not comparable in all respects to its results of operations for the
periods prior to June 30, 1993 due to the adoption of fresh-start reporting in
conjunction with Edisto's emergence from bankruptcy on June 29, 1993. Prior
periods for the predecessor entity have not been restated to reflect the
discontinued transmission, marketing and manufacturing segments. The summary
consolidated financial information should be reviewed in conjunction with the
consolidated financial statements of Edisto and the notes thereto and Edisto's
Management's Discussion and Analysis of Financial Condition and Results of
Operations set forth elsewhere in this Joint Proxy Statement/Prospectus. See
"Information Regarding Edisto." The information set forth in the table below
is not covered by the report of Edisto's independent public accountants
included elsewhere in this Joint Proxy Statement/Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED SIX MONTHS
MARCH 31, YEAR ENDED DECEMBER 31, ENDED
--------------------- ---------------------------------- DECEMBER 31,
1997 1996 1996 1995 1994 1993
--------- --------- --------- --------- --------- ---------
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Oil and gas production revenues ....... $ 13,670 $ 11,520 $ 47,222 $ 51,450 $ 46,788 $ 29,520
Gas marketing revenues ................ -- -- -- -- -- --
Total revenues ........................ 13,670 11,520 47,222 51,450 46,788 29,520
Income (loss) from continuing
operations ........................ 3,492 1,344 5,603 (3,174) 8,735 8,934
Net income (loss) attributable to
Common Stock ...................... 3,492 4,103 20,154 (6,597) 7,151 5,600
Net income (loss) per common share:
Continuing operations ............. .25 .11 .41 (.25) .68 .70
Discontinued operations ........... -- .21 1.08 (.26) (.13) (.26)
Extraordinary gain ................ -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Net income (loss) per common
share ........................ $ .25 $ .32 $ 1.49 $ (.51) $ .55 $ .44
========= ========= ========= ========= ========= =========
Weighted average common shares
outstanding ....................... 13,947 12,934 13,496 12,954 12,926 12,848
Current assets ........................ $ 82,769 $ 60,884 $ 84,459 $ 58,669 $ 66,542 $ 50,601

Total assets .......................... 141,845 124,261 141,437 125,852 116,463 111,877
Current liabilities ................... 21,402 19,097 21,816 19,232 28,705 27,620
Long-term liabilities ................. 19,340 33,688 22,898 39,092 13,576 18,167
Pre-petition liabilities:
Subject to compromise -
long-term .................... -- -- -- -- -- --
Not subject to compromise -
long-term .................... -- -- -- -- -- --
Stockholders' equity .................. 101,103 71,476 96,723 67,528 74,182 66,090

SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1993 1992
--------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
Oil and gas production revenues ....... $ 35,419 $ 64,941
Gas marketing revenues ................ 172,514 315,070
Total revenues ........................ 212,282 385,469
Income (loss) from continuing
operations ........................ (71,188) (40,341)
Net income (loss) attributable to
Common Stock ...................... (66,217) (46,124)
Net income (loss) per common share:
Continuing operations ............. (52.77) (35.25)
Discontinued operations ........... (4.85) (4.65)
Extraordinary gain ................ 8.53 --
--------- ---------
Net income (loss) per common
share ........................ $ (49.09) $ (39.90)
========= =========
Weighted average common shares
outstanding ....................... 1,349 1,156
Current assets ........................ $ 48,596 $ 104,911

Total assets .......................... 131,855 325,769
Current liabilities ................... 55,250 117,429
Long-term liabilities ................. 16,115 57,082
Pre-petition liabilities:
Subject to compromise -
long-term .................... -- 112,726
Not subject to compromise -
long-term .................... -- 13,046
Stockholders' equity .................. 60,490 25,486
</TABLE>

17
<PAGE> 25
CONVEST

SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

On June 26, 1995, Convest purchased from Edisto all of the capital stock of
Edisto's oil and gas subsidiary, Edisto Exploration & Production Company
("Edisto E&P"). The consideration paid to Edisto was shares of newly issued
Convest Common Stock and combined with Edisto's existing 31% interest, gave
Edisto approximately 72% of the outstanding shares of Convest Common Stock.
This transaction resulted in a "reverse acquisition" by Edisto E&P of Convest
(e.g., as an acquisition of Convest by Edisto E&P) since Edisto's interest in
Convest increased to 72% and Edisto's affiliates became a majority of Convest's
Board of Directors. Accordingly, under applicable accounting rules, Edisto
E&P's historical financial statements replaced Convest's financial statements
as the historical financial statements of Convest for periods prior to June 26,
1995.

The following summary consolidated financial information for each of the
years ended December 31, 1992 through 1996 have been derived from Convest's
Consolidated Financial Statements, which have been audited by Arthur Andersen
LLP, independent public accountants. The summary consolidated financial
information for the three months ended March 31, 1996 and 1997 have been
derived from the unaudited consolidated financial statements of Convest, which
have been prepared on the same basis as the Consolidated Financial Statements
of Convest and, in the opinion of Convest, reflect and include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the financial position and results of operations of Convest for
such periods. The accompanying historical financial information is that of
Edisto E&P and NRM Energy Company, L.P. (the predecessor to Edisto E&P) ("NRM
Energy"). Edisto E&P's results of operations are not comparable in all
respects to the results of NRM Energy for the periods prior to June 30, 1993
due to the adoption of fresh-start reporting in conjunction with Edisto's
emergence from bankruptcy on June 29, 1993. Further, because of the accounting
treatment used for a reverse acquisition, Convest's financial information for
the years ended December 31, 1995 and 1996 is not comparable to the financial
information for prior periods.

This financial information should be reviewed in conjunction with the
consolidated financial statements of Convest and the notes thereto and
Convest's Management's Discussion and Analysis of Financial Condition and
Results of Operations set forth elsewhere in this Joint Proxy
Statement/Prospectus. See "Information Regarding Convest." This information
set forth in the tables is not covered by the report of Convest's independent
public accountants included elsewhere in this Joint Proxy Statement/Prospectus.

18
<PAGE> 26

<TABLE>
<CAPTION>
CONVEST NRM ENERGY
---------------------------------------------------------------------- -----------------------
THREE MONTHS ENDED SIX MONTHS SIX MONTHS
MARCH 31, YEAR ENDED DECEMBER 31, ENDED ENDED YEAR ENDED
--------------------- ---------------------------------- DECEMBER 31, JUNE 30, DECEMBER 31,
1997 1996 1996 1995 1994 1993 1993 1992
--------- --------- --------- --------- --------- --------- --------- ---------
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues .......................... $ 13,891 $ 12,436 $ 49,745 $ 50,980 $ 51,868 $ 31,980 $ 32,768 $ 59,392
Reorganization items .............. -- -- -- -- -- -- (51,335) (12,365)
Income (loss) from continuing
operations .................... 4,472 2,087 8,070 (940) 11,266 7,696 (52,526) (41,733)
Net income (loss) ................. 4,472 2,087 8,070 (940) 11,266 7,696 (41,018) (45,603)
Net income (loss) per weighted
average common share(1)(2) ... .43 .20 .78 (.11) 1.82 1.24 -- --

Net income (loss) per unit(2):
Continuing operations ......... -- -- -- -- -- -- (20.49) (16.28)
Discontinued operations ....... -- -- -- -- -- -- -- (1.51)
Extraordinary gain ............ -- -- -- -- -- -- 4.49 --
--------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss) per unit .... $ -- $ -- $ -- $ -- $ -- $ -- $ (16.00) $ (17.79)
========= ========= ========= ========= ========= ========= ========= =========
Weighted average common shares
outstanding(1)(2) ............ 10,436 10,413 10,413 8,374 6,185 6,185 -- --

Weighted average common units
outstanding ................... -- -- -- -- -- -- 2,563 2,563
Current assets .................... $ 12,432 $ 15,938 $ 14,784 $ 15,440 $ 11,514 $ 27,317 $ 24,198 $ 33,406
Total assets ...................... 71,957 79,230 72,212 81,957 58,178 88,592 97,979 157,771
Current liabilities ............... 17,429 18,008 17,342 17,597 26,463 31,909 28,009 10,890
Long-term liabilities ............. 6,860 24,118 11,732 29,343 12,088 18,167 15,496 12,125

Pre-petition liabilities:
Subject to compromise --
long-term ................ -- -- -- -- -- -- -- 112,726
Not subject to compromise --
long-term ................ -- -- -- -- -- -- -- 26,733
Equity:
Stockholders' ................. 47,668 37,104 43,138 35,017 19,627 38,516 -- --
Partners' ..................... -- -- -- -- -- -- 54,474 (4,703)
</TABLE>

(1) In accordance with the rules of accounting for a reverse acquisition,
Edisto E&P's capital structure was retroactively restated for periods prior
to the Edisto Transaction as more fully discussed under Notes 1 and 3 under
"Notes to Consolidated Financial Statements" included elsewhere herein.
(2) The Company considers net income per share information for periods prior to
June 30, 1995 to be of limited value since Edisto E&P was a wholly-owned
subsidiary of Edisto prior to the Edisto Transaction.

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<PAGE> 27
COMPARATIVE PER SHARE DATA

The information set forth below should be read in conjunction with the
respective audited and unaudited consolidated financial statements and related
notes of Forcenergy, Edisto and Convest incorporated by reference in this Joint
Proxy Statement/Prospectus and the unaudited pro forma condensed financial
information and notes thereto included elsewhere in this Joint Proxy
Statement/Prospectus.

FORCENERGY

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
1996 1997
------------ ---------------
<S> <C> <C>
HISTORICAL PER COMMON SHARE DATA:
Income from continuing operations . . . . . . $ 0.57 $ 0.47
Book value . . . . . . . . . . . . . . . . . 11.03 11.49

PRO FORMA PER COMMON SHARE DATA:
Income from continuing operations . . . . . . $ 1.29 $ 0.58
Book value . . . . . . . . . . . . . . . . . 13.57 13.98
</TABLE>

EDISTO

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
1996 1997
------------ ---------------
<S> <C> <C>
HISTORICAL PER COMMON SHARE DATA:
Income from continuing operations . . . . . . $ 0.41 $ 0.25
Book value . . . . . . . . . . . . . . . . . 6.97 7.21
</TABLE>

CONVEST

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
1996 1997
------------ ---------------
<S> <C> <C>
HISTORICAL PER COMMON SHARE DATA:
Income from continuing operations . . . . . . $ 0.77 $ 0.43
Book value . . . . . . . . . . . . . . . . . 4.14 4.56
</TABLE>

20
<PAGE> 28
RISK FACTORS

The following risk factors, as well as the other information set forth in
this Joint Proxy Statement/Prospectus, should be carefully evaluated prior to
making a decision with respect to the Mergers.

VOLATILITY OF NATURAL GAS AND OIL PRICES

Revenues generated from Forcenergy's operations are highly dependent upon
the price of, and demand for, oil and natural gas. Historically, the markets
for oil and natural gas have been volatile and are likely to continue to be
volatile in the future. Prices for oil and natural gas are subject to wide
fluctuations in response to relatively minor changes in the supply of and
demand for oil and natural gas, market uncertainty and a variety of additional
factors that are beyond the control of Forcenergy. These factors include the
level of consumer product demand, weather conditions, domestic and foreign
governmental regulations, the price and availability of alternative fuels,
political conditions in the Middle East, the foreign supply of oil and natural
gas, the price of foreign imports and overall economic conditions. It is
impossible to predict future oil and natural gas price movements with any
certainty. Declines in oil and natural gas prices may materially adversely
affect Forcenergy's financial condition, liquidity and results of operations.
Lower oil and natural gas prices also may reduce the amount of Forcenergy's oil
and natural gas that can be produced economically. In order to reduce its
exposure to price risks in the sale of its oil and natural gas, Forcenergy
enters into hedging arrangements from time to time. Forcenergy's hedging
arrangements apply to only a portion of its production and provide only limited
price protection against fluctuations in the oil and natural gas markets.
While the use of hedging arrangements limits the downside risk of adverse price
movements, they may also limit future revenues from favorable price movements.

Forcenergy uses the full cost method of accounting for its investment in
oil and natural gas properties. Under the full cost method of accounting, all
costs of acquisition, exploration and development of oil and natural gas
reserves are capitalized into a "full cost pool" as incurred, and properties in
the pool are depleted and charged to operations using the unit-of-production
method based on the ratio of current production to total proved oil and natural
gas reserves. To the extent that such capitalized costs (net of accumulated
depreciation, depletion and amortization) less deferred taxes exceed the
present value (using a 10% discount rate) of estimated future net cash flows
from proved oil and natural gas reserves, and the lower of cost or fair value
of unproved properties after income tax effects, such excess costs are charged
to operations. Once incurred, a write-down of oil and natural gas properties
is not reversible at a later date even if oil or natural gas prices increase.
While Forcenergy has never been required to write-down its asset base,
significant downward revisions of reserve estimates or declines in oil and gas
prices which are not offset by other factors could result in a write-down for
impairment of oil and gas properties.

REPLACEMENT OF RESERVES

In general, the volume of production from oil and gas properties declines
as reserves are depleted. The rate of decline depends on reservoir
characteristics, and varies from the steep decline rate characteristic of Gulf
of Mexico reservoirs, where Forcenergy has a significant portion of its
production, to the relatively slow decline rate characteristic of the
long-lived fields in the Rocky Mountain, Gulf Coast, Southwest and Appalachian
regions. Except to the extent Forcenergy acquires properties containing proved
reserves or conducts successful development and exploration activities, or
both, the proved reserves of Forcenergy will decline as reserves are produced.
Forcenergy's future oil and natural gas production is, therefore, highly
dependent upon its level of success in finding or acquiring additional
reserves. The business of exploring for, developing or acquiring reserves is
capital intensive. To the extent cash flows from operations is reduced and
external sources of capital become limited or unavailable, Forcenergy's ability
to make the necessary capital investment to maintain or expand its asset base
of oil and natural gas reserves would be impaired. In addition, there can be
no assurance that Forcenergy's future development, acquisition and exploration
activities will result in additional proved reserves or that Forcenergy will be
able to drill productive wells at acceptable costs.

UNCERTAINTY OF RESERVE INFORMATION AND FUTURE NET REVENUE ESTIMATES

There are numerous uncertainties inherent in estimating oil and natural gas
reserves and their estimated values, including many factors beyond the control
of the producer. The reserve data set forth in Forcenergy's Annual Report
represents only estimates. Reservoir engineering is a subjective process of
estimating underground accumulations of oil and natural gas that cannot be
measured in an exact manner. Estimates of economically recoverable oil and gas
reserves

21
<PAGE> 29
and of future net cash flows necessarily depend upon a number of variable
factors and assumptions, such as historical production from the area compared
with production from other producing areas, the assumed effects of regulations
by governmental agencies and assumptions concerning future oil and gas prices,
future operating costs, severance and excise taxes, development costs and
workover and remedial costs, all of which may in fact vary considerably from
actual results. For these reasons, estimates of the economically recoverable
quantities of oil and natural gas attributable to any particular group of
properties, classifications of such reserves based on risk of recovery, and
estimates of the future net cash flows expected therefrom prepared by different
engineers or by the same engineers at different times may vary substantially
and such reserve estimates may be subject to downward or upward adjustment
based upon such factors. Actual production, revenues and expenditures with
respect to Forcenergy's reserves will likely vary from estimates, and such
variances may be material.

The present values of estimated future net cash flows referred to in
Forcenergy's Annual Report should not be construed as the current market value
of the estimated oil and natural gas reserves attributable to Forcenergy's
properties. In accordance with applicable requirements of the Commission, the
estimated discounted future net cash flows from proved reserves are generally
based on prices and costs as of the date of the estimate, whereas actual future
prices and costs may be materially higher or lower. In fact, prices received
for production have declined since the date on which such values were
calculated. Actual future net cash flows also will be affected by factors such
as the amount and timing of actual production, supply and demand for oil and
natural gas, curtailments or increases in consumption by gas purchasers and
changes in governmental regulations or taxation. The timing of actual future
net cash flows from proved reserves, and their actual present value, will be
affected by the timing of both the production and the incurrence of expenses in
connection with development and production of oil and gas properties. In
addition, the calculation of the present value of the future net revenues using
a 10% discount as required by the Commission, is not necessarily the most
appropriate discount factor based on interest rates in effect from time to time
and risks associated with Forcenergy's reserves or the oil and gas industry in
general.

CONTROL BY PRINCIPAL SECURITYHOLDERS

Forcenergy's principal stockholder, Forcenergy AB ("FAB"), as of May 31,
1997 owned approximately 39% of the outstanding shares of Common Stock of
Forcenergy. After consummation of the Mergers, FAB would own approximately 34%
of the outstanding shares of Forcenergy Common Stock. FAB is a publicly traded
Swedish company with two classes of stock, A shares and B shares. As of May
31, 1997, there were 1,000,000 outstanding A shares, each of which is entitled
to one vote per share, and 13,392,000 outstanding B shares, each of which is
entitled to 1/10th of a vote per share. The B shares of FAB are listed on the
Stockholm Stock Exchange. Victor Forss, his family and certain of their
affiliates owned all 1,000,000 A shares and 1,820,733 B shares of FAB as of May
31, 1997. Accordingly, the Forss family had a 5.05% voting interest and a
19.6% economic interest in FAB. Under Swedish law, new issues of FAB
securities are subject to preferential rights of existing stockholders which
gives the Forss family the ability to maintain voting control over FAB in the
event of future stock issuances.

SUBSTANTIAL CAPITAL REQUIREMENTS

Forcenergy makes, and will continue to make, substantial capital
expenditures for the development, exploration, acquisition and production of
oil and natural gas reserves. Historically, Forcenergy has financed these
expenditures primarily with proceeds from bank borrowings, private placements
and public offerings of debt and equity securities and cash generated by
operations. Forcenergy made capital expenditures (including expenditures for
acquisitions) of $144.7 million during 1995 and $284.0 million during 1996.
Forcenergy plans to make capital expenditures, not including expenditures for
acquisitions, of approximately $195 million in 1997. Forcenergy believes that
it will have sufficient cash provided by operating activities and borrowings
under its bank facilities to fund planned capital expenditures in 1997. If
revenues decrease as a result of lower oil and gas prices or operating
difficulties, Forcenergy may be limited in its ability to expend the capital
necessary to undertake or complete its drilling program in future years. There
can be no assurance that additional debt or equity financing or cash generated
by operations will be available to meet these requirements.

DRILLING RISKS

Drilling involves numerous risks, including the risk that no commercially
productive natural gas or oil reservoirs will be encountered. The cost of
drilling, completing and operating wells is often uncertain, and drilling
operations may

22
<PAGE> 30
be curtailed, delayed or canceled as a result of a variety of factors,
including unexpected drilling conditions, pressure or irregularities in
formations, equipment failures or accidents, adverse weather conditions and
shortages or delays in the delivery of equipment. Forcenergy's future drilling
activities may not be successful and, if unsuccessful, such failure will have
an adverse effect on Forcenergy's future results of operations and financial
condition.

ACQUISITION RISKS

Forcenergy's rapid growth in recent years has been largely the result of
acquisitions of producing properties. Forcenergy expects to continue to
evaluate and pursue acquisition opportunities which are available on terms
management considers favorable to Forcenergy. The successful acquisition of
producing properties requires an assessment of recoverable reserves, future oil
and gas prices, operating costs, potential environmental and other liabilities
and other factors beyond Forcenergy's control. Such assessments are
necessarily inexact and their accuracy inherently uncertain. In connection
with such an assessment, Forcenergy performs a review of the subject properties
that it believes to be generally consistent with industry practices. Such a
review, however, will not reveal all existing or potential problems nor will it
permit a buyer to become sufficiently familiar with the properties to fully
assess their deficiencies and capabilities. Inspections may not always be
performed on every platform or well, and structural and environmental problems
are not necessarily observable even when an inspection is undertaken.
Forcenergy is generally not entitled to contractual indemnification for
pre-closing liabilities, including environmental liabilities, and generally
acquires interests in the properties on an "as is" basis.

DEPENDENCE ON KEY PERSONNEL

Forcenergy depends to a large extent on the services of its founder, Stig
Wennerstrom, and certain other senior management personnel. The loss of the
services of Mr. Wennerstrom and other senior management personnel could have a
material adverse effect on Forcenergy's operations. Forcenergy has entered
into employment agreements with Messrs. Wennerstrom, J. Russell Porter and E.
Joseph Grady. Forcenergy believes that its success is also dependent upon its
ability to continue to employ and retain skilled technical personnel.

GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS

Forcenergy's business is regulated by certain local, state and federal laws
and regulations relating to the exploration for, and the development,
production, marketing, pricing, transportation and storage of, oil and natural
gas. Forcenergy's business is also subject to extensive and changing
environmental and safety laws and regulations governing plugging and
abandonment, the discharge of materials into the environment or otherwise
relating to environmental protection. As with any owner of property,
Forcenergy is also subject to cleanup costs and liability for hazardous
materials, asbestos or any other toxic or hazardous substance that may exist on
or under any of its properties. In addition, Forcenergy is subject to changing
and extensive tax laws, and the effect of newly enacted tax laws cannot be
predicted. The implementation of new, or the modification of existing, laws or
regulations, including amendments to the Oil Pollution Act of 1990 or
regulations which may be promulgated thereunder, could have a material adverse
effect on Forcenergy.

COMPETITION

The oil and gas industry is highly competitive. Forcenergy encounters
competition from other oil and gas companies in all areas of its operations,
including the acquisition of producing properties. Forcenergy's competitors
include major integrated oil and natural gas companies and numerous independent
oil and gas companies, individuals and drilling and income programs. Many of
its competitors are large, well-established companies with substantially larger
operating staffs and greater capital resources than Forcenergy and which, in
many instances, have been engaged in the energy business for a much longer time
than Forcenergy. Such companies may be able to pay more for productive oil and
natural gas properties and exploratory prospects and to define, evaluate, bid
for and purchase a greater number of properties and prospects than Forcenergy's
financial or human resources permit. Forcenergy's ability to acquire
additional properties and to discover reserves in the future will be dependent
upon its ability to evaluate and select suitable properties and to consummate
transactions in a highly competitive environment.

23
<PAGE> 31
OPERATING RISKS OF OIL AND GAS OPERATIONS

The oil and gas business involves certain operating hazards such as well
blowouts, cratering, explosions, uncontrollable flows of oil, natural gas or
well fluids, fires, formations with abnormal pressures, pollution, releases of
toxic gas and other environmental hazards and risks, any of which could result
in substantial losses to Forcenergy. Forcenergy's offshore operations also are
subject to the additional hazards of marine operations, such as severe weather,
capsizing and collision. The availability of a ready market for Forcenergy's
oil and natural gas production also depends on the proximity of reserves to,
and the capacity of, oil and gas gathering systems, pipelines and trucking or
terminal facilities. In addition, Forcenergy may be liable for environmental
damages caused by previous owners of property purchased and leased by
Forcenergy. As a result, substantial liabilities to third parties or
governmental entities may be incurred, the payment of which could reduce or
eliminate the funds available for development, acquisitions or exploration, or
result in the loss of Forcenergy's properties. In accordance with customary
industry practices, Forcenergy maintains insurance against some, but not all,
of such risks and losses. Forcenergy does not carry business interruption
insurance. The occurrence of an event not fully covered by insurance could
have a material adverse effect on the financial condition and results of
operations of Forcenergy.

24
<PAGE> 32
THE COMPANIES

FORCENERGY

Forcenergy is an independent oil and gas company engaged in the
exploration, acquisition, development, exploitation and production of oil and
natural gas. Forcenergy has experienced significant growth in the last six
years, primarily through the exploitation, enhancement and development of
acquired working interests in producing properties in the Gulf of Mexico and
the acquisition of producing properties in the Cook Inlet, Alaska. At December
31, 1996, Forcenergy had net proved reserves of 585 Bcfe, 58% of which were
located in the Gulf of Mexico and 27% of which were located in Alaska.
Approximately 56% of Forcenergy's net proved reserves on such date were oil and
approximately 78% of proved reserves were classified as proved developed.
Forcenergy currently operates approximately 75% of its Gulf of Mexico
production. Although Forcenergy's primary focus is its Gulf of Mexico and
Alaska activities, Forcenergy has also acquired interests in certain
high-potential undeveloped international leasehold acreage, primarily in Gabon,
Africa and Australia. See "Information Regarding Forcenergy," elsewhere in
this Joint Proxy Statement/Prospectus. Additional information concerning
Forcenergy and its subsidiaries is included in the Forcenergy documents filed
with the Commission, which are incorporated by reference herein. See
"Incorporation of Certain Documents by Reference."

EDI-SUB

EDI-Sub is a wholly owned subsidiary of Forcenergy incorporated on June 11,
1997 in the State of Delaware for the sole purpose of effecting the Edisto
Merger. EDI-Sub conducts no business and has no material assets or
liabilities.

EDISTO

Edisto's operating activities include only oil and gas exploration and
production, which is conducted through its 72% interest in Convest.

Prior to December 10, 1996, Edisto was engaged in the purchase and resale
of natural gas to a diversified customer base, primarily industrial/commercial
companies, local distribution companies, and industry partners. Edisto
conducted its gas marketing operations (i) in the United States through its
subsidiary Energy Source, Inc. ("Energy Source"), and (ii) in Western Canada
through its subsidiary Energy Source Canada, Inc. Energy Source aggregated
natural gas supplies from producing basins in the United States and Canada,
arranged transportation through pipelines from points of purchase to points of
sale, and resold natural gas volumes to customers under a variety of standard
and customized arrangements. These arrangements included a variety of
short-term and long-term market sensitive and fixed priced contracts and
financial instruments. On December 10, 1996, Energy Source and Energy Source
Canada sold substantially all of their assets to two subsidiaries of Pacific
Gas Transmission Company.

Prior to the completion of Edisto's acquisition of a majority interest in
Convest on June 26, 1995, Edisto's oil and gas operations were conducted
through its subsidiary, Edisto E&P. Edisto E&P was formed in June 1993, upon
the emergence from bankruptcy of Edisto and certain of its exploration and
production subsidiaries.

On November 18, 1994, Edisto purchased 1,321,371 shares of Common Stock of
Convest from two subsidiaries of Windsor Energy Corp. The purchased shares
constituted approximately 31% of the outstanding Convest Common Stock. The
purchase price was $8.9 million in cash, or $6.74 per share.

On June 26, 1995, Convest purchased the stock of Edisto's oil and gas
exploration and production subsidiary, Edisto E&P, in consideration for
6,185,400 newly issued shares of Convest Common Stock and $10,000 in cash.
These newly issued shares increased Edisto's interest in Convest from 31% to
72% of the outstanding Common Stock of Convest. Upon the closing of the
transaction with Convest, the Convest Board of Directors was restructured so
that affiliates of Edisto constituted a majority of Convest's Board of
Directors. In April 1996, Edisto purchased an additional 92,000 shares of
Convest Common Stock on the open market which increased its interest in Convest
to 73%. Edisto owns 7,598,771 shares of Convest Common Stock.

See "Information Regarding Edisto," elsewhere in this Joint Proxy
Statement/Prospectus. Additional information concerning Edisto and its
subsidiaries is included in the Edisto documents filed with the Commission,
which are incorporated by reference herein. See "Incorporation of Certain
Documents by Reference."

25
<PAGE> 33
CONVEST

Convest is an independent oil and gas exploration and production company.
At December 31, 1996, Convest held interests in approximately 965 producing
wells consisting of working interests, royalty interests and overriding royalty
interests. The producing wells are primarily located in Alabama, Kansas,
Louisiana, Nebraska, Oklahoma, Texas, Utah, Wyoming and offshore Gulf of
Mexico. Approximately 49% of Convest's oil and gas reserves are oil and
approximately 51% are gas, measured in energy equivalent barrels of oil basis
(natural gas being converted to oil equivalent at the rate of six Mcf of gas
for each barrel of oil). In addition to its interests in producing oil and gas
properties, Convest owns an undivided interest of approximately 13% in a gas
processing plant located in Duchesne County, Utah (the "Altamont Gas Plant").
Producing and nonproducing acreage holdings aggregate approximately 105,966 net
acres as of December 31, 1996. Convest serves as the operator of approximately
30% of the producing wells in which it owns a working interest, and the
remaining 70% are operated by other working interest owners in the properties.

See "Information Regarding Convest," elsewhere in this Joint Proxy
Statement/Prospectus. Additional information concerning Convest and its
subsidiaries is included in the Convest documents filed with the Commission,
which are incorporated by reference herein. See "Incorporation of Certain
Documents by Reference."

THE SPECIAL MEETINGS

DATE, TIME AND PLACE

The Edisto Special Meeting of stockholders of Edisto will be held on
____________, _______________, 1997, at 2401 Fountain View Drive, Suite 700,
Houston, Texas 77057 commencing at ___:00 a.m. local time.

The Convest Special Meeting of stockholders of Convest will be held on
____________, _______________, 1997, at 2401 Fountain View Drive, Suite 700,
Houston, Texas 77057 commencing at ___:00 a.m. local time.

PURPOSES OF THE SPECIAL MEETINGS

The purpose of the Edisto Special Meeting is to consider and vote upon (i)
a proposal to approve and adopt the Merger Agreement and the Edisto Merger; and
(ii) such other matters as may properly be brought before the Edisto Special
Meeting.

The purpose of the Convest Special Meeting is to consider and vote upon (i)
a proposal to approve and adopt the Merger Agreement and the Convest Merger;
and (ii) such other matters as may properly be brought before the Convest
Special Meeting.

RECORD DATE AND OUTSTANDING SHARES

Only holders of record of Edisto Common Stock at the close of business on
the Edisto Record Date (________, 1997) are entitled to notice of, and to vote
at, the Edisto Special Meeting. There were approximately holders of
record of Edisto Common Stock on the Edisto Record Date, with
shares of Edisto Common Stock issued and outstanding. Each share of Edisto
Common Stock entitles the holder thereof to one vote on each matter submitted
for stockholder approval. See "Principal Stockholders of Forcenergy, Edisto and
Convest" for information regarding persons known to the management of Edisto to
be the beneficial owners of more than 5% of the outstanding Edisto Common
Stock.

Only holders of record of Convest Common Stock at the close of business on
the Convest Record Date (________, 1997) are entitled to notice of, and to vote
at, the Convest Special Meeting. There were approximately ________ holders of
record of Convest Common Stock on the Convest Record Date, with _____________
shares of Convest Common Stock issued and outstanding. Each share of Convest
Common Stock entitles the holder thereof to one vote on each matter submitted
for stockholder approval. See "Principal Stockholders of Forcenergy, Edisto and
Convest" for information regarding persons known to the management of Convest
to be the beneficial owners of more than 5% of the outstanding Convest Common
Stock.

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<PAGE> 34
VOTING AND REVOCATION OF PROXIES

All properly executed proxies that are not revoked will be voted at the
Edisto Special Meeting in accordance with the instructions contained therein.
If a holder of Edisto Common Stock executes and returns a proxy and does not
specify otherwise, the shares represented by such proxy will be voted "for"
approval and adoption of the Merger Agreement in accordance with the
recommendation of the Board of Directors of Edisto. A stockholder of Edisto
who has executed and returned a proxy may revoke it at any time before it is
voted at the Edisto Special Meeting by (i) executing and returning a proxy
bearing a later date, (ii) filing written notice of such revocation with the
Secretary of Edisto, stating that the proxy is revoked or (iii) attending the
Edisto Special Meeting and voting in person.

All properly executed proxies that are not revoked will be voted at the
Convest Special Meeting in accordance with the instructions contained therein.
If a holder of Convest Common Stock executes and returns a proxy and does not
specify otherwise, the shares represented by such proxy will be voted "for"
approval and adoption of the Merger Agreement in accordance with the
recommendation of the Board of Directors of Convest. A stockholder of Convest
who has executed and returned a proxy may revoke it at any time before it is
voted at the Convest Special Meeting by (i) executing and returning a proxy
bearing a later date, (ii) filing written notice of such revocation with the
Secretary of Convest, stating that the proxy is revoked or (iii) attending the
Convest Special Meeting and voting in person.

VOTE REQUIRED

The presence at the Edisto Special Meeting, in person or by proxy, of the
holders of a majority of the outstanding shares of Edisto Common Stock entitled
to vote thereat will constitute a quorum for the transaction of business, and
approval and adoption of the Merger Agreement requires the affirmative vote of
a majority of the issued and outstanding Edisto Common Stock entitled to vote
thereon. On the Edisto Record Date, there were ________ shares of Edisto
Common Stock outstanding and entitled to vote at the Edisto Special Meeting. In
determining whether the Merger Agreement has received the requisite number of
affirmative votes, abstentions and broker non-votes will have the same effect
as a vote against the Merger Agreement.

The TCW Entities and certain officers and directors of Edisto, representing
in the aggregate 51.5% of the outstanding shares of Edisto Common Stock as of
the Edisto Record Date, have agreed to vote for the Merger Agreement.
Accordingly, the approval of the Merger Agreement by the requisite vote of
Edisto stockholders is expected to occur irrespective of whether or the manner
in which other Edisto stockholders vote their shares. See "Shareholders
Agreements."

The presence at the Convest Special Meeting, in person or by proxy, of the
holders of a majority of the outstanding shares of Convest Common Stock
entitled to vote thereat will constitute a quorum for the transaction of
business, and approval and adoption of the Merger Agreement requires the
affirmative vote of two-thirds of the issued and outstanding Convest Common
Stock entitled to vote thereon. On the Convest Record Date, there were ________
shares of Convest Common Stock outstanding and entitled to vote at the Convest
Special Meeting. In determining whether the Merger Agreement has received the
requisite number of affirmative votes, abstentions and broker non-votes will
have the same effect as a vote against the Merger Agreement.

SOLICITATION OF PROXIES

In addition to solicitation by mail, the directors, officers, employees and
agents of Edisto may solicit proxies from its stockholders by personal
interview, telephone, telegram or otherwise. Edisto will bear the costs of the
solicitation of proxies from its stockholders, except that Forcenergy will pay
one-half and Edisto will pay one-quarter of the cost of printing this Joint
Proxy Statement/Prospectus. Arrangements will also be made with brokerage
firms and other custodians, nominees and fiduciaries who hold of record voting
securities of Edisto for the forwarding of solicitation materials to the
beneficial owners thereof. Edisto will reimburse such brokers, custodians,
nominees and fiduciaries for

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the reasonable out-of-pocket expenses incurred by them in connection therewith.
Edisto has engaged the services of Corporate Investor Communications to
distribute proxy solicitation materials to brokers, banks and other nominees
and to assist in the solicitation of proxies from Edisto stockholders for a fee
of approximately $2,500 plus reasonable out-of-pocket expenses.

In addition to solicitation by mail, the directors, officers, employees and
agents of Convest may solicit proxies from its stockholders by personal
interview, telephone, telegram or otherwise. Convest will bear the costs of
the solicitation of proxies from its stockholders, except that Forcenergy will
pay one-half and Convest will pay one-quarter of the cost of printing this
Joint Proxy Statement/Prospectus. Arrangements will also be made with
brokerage firms and other custodians, nominees and fiduciaries who hold of
record voting securities of Convest for the forwarding of solicitation
materials to the beneficial owners thereof. Convest will reimburse such
brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket
expenses incurred by them in connection therewith. Convest has engaged the
services of Corporate Investor Communications to distribute proxy solicitation
materials to brokers, banks and other nominees and to assist in the
solicitation of proxies from Convest stockholders for a fee of approximately
$2,500 plus reasonable out-of-pocket expenses.

OTHER MATTERS

At the date of this Joint Proxy Statement/Prospectus, the Board of
Directors of Edisto does not know of any business to be presented at the Edisto
Special Meeting other than as set forth in the notice accompanying this Joint
Proxy Statement/Prospectus. If any other matters should properly come before
the Edisto Special Meeting, it is intended that the shares represented by
proxies will be voted with respect to such matters in accordance with the
judgment of the persons voting such proxies.

At the date of this Joint Proxy Statement/Prospectus, the Board of
Directors of Convest does not know of any business to be presented at the
Convest Special Meeting other than as set forth in the notice accompanying this
Joint Proxy Statement/Prospectus. If any other matters should properly come
before the Convest Special Meeting, it is intended that the shares represented
by proxies will be voted with respect to such matters in accordance with the
judgment of the persons voting such proxies.

THE MERGERS

GENERAL DESCRIPTION OF THE MERGERS

Edisto Merger

The Merger Agreement provides that, at the Edisto Merger Effective Time,
EDI-Sub will be merged with and into Edisto with Edisto being the surviving
corporation. Also at the Edisto Merger Effective Time, each outstanding share
of Edisto Common Stock (other than shares of Edisto Common Stock held in the
treasury of Edisto or owned by Forcenergy or by any direct or indirect wholly
owned subsidiary of Forcenergy or of Edisto, all of which will be canceled)
will be converted into (i) $4.886 in cash and (ii) a fractional interest in a
share of Forcenergy Common Stock equal to $5.064 divided by the Weighted
Average Trading Price of Forcenergy Common Stock; provided, however, that the
price of Forcenergy Common Stock used in such calculation will not be less than
$28.96 nor more than $34.96. The "Weighted Average Trading Price" of
Forcenergy Common Stock will be calculated by taking the average of the
following daily calculations to be made for each of the ten trading days ending
two trading days prior to the closing date for the Mergers: (i) grouping
together all shares of Forcenergy Common Stock traded on such day at the same
trading price, (ii) multiplying the aggregate number of shares in each price
group by the trading price for such group to calculate a product (the total
sold shares value) for each group, (iii) adding all of such products from each
group, and (iv) dividing the resulting total by the aggregate number of shares
traded on such trading day. Cash will be paid in lieu of fractional shares of
Forcenergy Common Stock. Any resulting fractional shares will be settled in
cash in the manner described under "Certain Terms of the Merger Agreement -
Manner and Basis of Converting Shares." Following the Edisto Merger Effective
Time, the surviving corporation of the Edisto Merger will be liquidated, with
its assets distributed to Forcenergy.

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Convest Merger

The Merger Agreement provides that, at the Convest Merger Effective Time,
Convest will be merged with and into Forcenergy with Forcenergy being the
surviving corporation. Also at the Convest Merger Effective Time, each
outstanding share of Convest Common Stock (other than shares of Convest Common
Stock held in the treasury of Convest or owned by Forcenergy or by any direct
or indirect wholly owned subsidiary of Forcenergy or of Convest, all of which
will be canceled) will be converted into a fractional interest in a share of
Forcenergy Common Stock valued at $8.88. The valuation of Forcenergy Common
Stock will be based on the Weighted Average Trading Price of Forcenergy Common
Stock; provided, however, that the price of Forcenergy Common Stock used in
such valuation will not be less than $28.96 nor more than $34.96. Any
resulting fractional shares will be settled in cash in the manner described
under "Certain Terms of the Merger Agreement -- Manner and Basis of Converting
Shares."

Based on the number of shares of Forcenergy Common Stock, Edisto Common
Stock and Convest Common Stock outstanding as of the Edisto Record Date and the
Convest Record Date and assuming a trading price of $34.96 and $28.96 per share
of Forcenergy Common Stock (the maximum and minimum of the Weighted Average
Trading Price of Forcenergy Common Stock pursuant to the Merger Agreement),
________ shares and ________ shares, respectively, of Forcenergy Common Stock
will be issuable in exchange for Edisto Common Stock and Convest Common Stock
pursuant to the Merger Agreement (assuming no exercise prior to the Edisto
Merger Effective Time of Edisto Options or Convest Options), representing
approximately ___% and ___%, respectively, of the total Forcenergy Common Stock
to be outstanding after the issuance of the shares in the Mergers.

BACKGROUND OF EDISTO/CONVEST TURNAROUND

Bankruptcy and Sale of Non-Core Assets. On October 26, 1992, Edisto and
certain of its affiliates filed voluntary petitions for reorganization under
Chapter 11 of the United States Bankruptcy Code. On June 29, 1993, Edisto's
plan of reorganization became effective, and Edisto substantially consummated
its restructuring.

The bankruptcy caused a change of control of Edisto, and subsequently,
Edisto's Board of Directors and senior management were replaced. Subsequent to
the effective date of the plan on June 29, 1993, (i) the existing Board of
Directors resigned and a new Board was elected, (ii) the new Board elected
Michael Y. McGovern as Edisto's new Chairman of the Board and Chief Executive
Officer, and (iii) all of the senior management of Edisto, including management
of its oil and gas operations and its pipeline and gas marketing operations,
either resigned or were terminated and were replaced.

From March 1990 until March 1994, Edisto's 80% owned subsidiary, Multiflex
International, Inc., manufactured subsea umbilical connections used in the
offshore oil and gas industry. In March 1994, this subsidiary sold the stock
of its operating subsidiaries to Oceaneering International, Inc. for net
proceeds of approximately $9.0 million after repayment of debt.

From July 1990 until February 1994, Edisto conducted gas transmission
operations in Missouri. In February 1994, Edisto executed a definitive
agreement to sell its 218-mile Missouri intrastate natural gas pipeline to
UtiliCorp United Inc. The sale closed in January 1995 for net proceeds of
approximately $32.5 million, after repayment of debt.

Natural Gas Marketing Operations. Prior to December 10, 1996, Edisto was
engaged in the purchase and resale of natural gas to a diversified customer
base, primarily industrial/commercial companies, local distribution companies,
and industry partners. Edisto conducted its gas marketing operations (i) in
the United States through its subsidiary, Edisto Source, Inc., and (ii) in
Western Canada through its subsidiary Energy Source Canada, Inc. The gas
marketing operations grew dramatically from daily average sales volumes of .3
Bcf in 1994 to 2.5 Bcf in November 1996.

In March 1996, Edisto engaged an investment banking firm, Petrie Parkman &
Co., Inc., to identify and evaluate strategic partners for Edisto's gas
marketing operations. Edisto made this decision because it concluded that the
critical mass necessary to compete effectively in the gas marketing industry
had risen substantially and would continue to rise in the future. In 1995 and
early 1996, the gas marketing industry had consolidated so that the industry
was being divided into either companies with a large market share, such as
Enron Corp., NGC Corporation and PanEnergy Corporation, or smaller niche
companies that had limited growth potential. Edisto also concluded that its
lack of strategic assets, such as pipelines or gas production, would continue
to hinder Edisto's growth as the gas marketing industry continued to
consolidate. Therefore, Edisto began looking for a strategic partner with
strategic assets that could create operational and financial synergies with
Edisto's gas marketing operations.

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On December 10, 1996, Energy Source and Energy Source Canada sold
substantially all of their assets to two subsidiaries of Pacific Gas
Transmission Company, a subsidiary of PG&E Corp. The sale price was $23.3
million in cash, plus the working capital of Energy Source at July 31, 1996
(approximately $20.0 million). In connection with the sale, all employees of
Edisto and Energy Source became employees of the purchaser, other than Michael
Y. McGovern, the Chairman and CEO of Edisto.

Oil and Gas Exploration and Production. Edisto's oil and gas operations
are conducted through its 72% owned subsidiary, Convest. Prior to Edisto's
acquisition of a majority interest in Convest on June 26, 1995, Edisto's oil
and gas operations were conducted through its subsidiary, Edisto E&P. Edisto
E&P was formed in June 1993, upon the emergence from bankruptcy of Edisto and
certain of its exploration and production subsidiaries.

On November 18, 1994, Edisto purchased 1,321,371 shares of Common Stock of
Convest for $8.9 million in cash, or $6.74 per share. The purchased shares
constituted approximately 31% of Convest's outstanding Common Stock.

On June 26, 1995, Convest purchased the stock of Edisto's oil and gas
exploration and production subsidiary, Edisto E&P, in consideration for
6,185,400 newly issued shares of Convest Common Stock and $10,000 in cash.
These newly issued shares increased Edisto's interest in Convest from 31% to
72% of the outstanding Common Stock of Convest. Upon the closing of this
transaction, the Convest Board of Directors was restructured so that affiliates
of Edisto constituted a majority of Convest's Board of Directors. In April
1996, Edisto purchased an additional 92,000 shares of Convest Common Stock on
the open market which increased its shares of Convest Common Stock to
7,598,771.

BACKGROUND OF THE MERGERS

Although the June 1995 transaction between Edisto and Convest substantially
increased the size of the reserves under Convest management, Convest was still
small in relation to other industry participants. The management of Edisto and
Convest believed that an oil and gas company needed at least $200 million of
assets to be cost efficient and compete effectively in the industry. The
available options were to: (i) sell or merge Convest with another oil and gas
company, (ii) acquire additional oil and gas reserves by purchasing either
properties or another company, or (iii) substantially increase Convest's
drilling activities to explore for additional oil and gas reserves. In the
last half of 1995 and 1996, Convest's management held discussions with various
parties for a merger of Convest with other similarly sized or larger oil and
gas companies, but there were no opportunities that management felt were
sufficiently attractive. Throughout this period, Convest substantially
increased its drilling activities, especially offshore in the Gulf of Mexico,
with over $10 million of annual capital expenditures in each of 1995 and 1996.

In late 1995 and early 1996, Edisto made the strategic decision to sell its
gas marketing operations for the reasons discussed above. In planning the
sale, Edisto analyzed different structures for the sale including (i) the sale
of Edisto and Convest together, (ii) the sale of Edisto by itself after a
distribution to Edisto's stockholders of its Convest shares, or (iii) the sale
of only the gas marketing operations. After this analysis, Edisto concluded
that a sale of only the gas marketing operations would maximize the value of
this business unit. During the sale process, which took nine months, Edisto's
conclusions were confirmed because no buyers for the gas marketing operations
emerged who were interested in either Edisto and Convest together or Edisto by
itself.

After the sale of the gas marketing operations in December 1996, Edisto was
left with approximately $68 million in cash, its interest in Convest and
certain contingent assets and liabilities. Edisto believed that Edisto's cash
and Convest's oil and gas properties would be an attractive combination to a
larger oil and gas company, especially if the purchaser issued its stock for
all or a portion of the purchase price. In late December 1996 and early
January 1997, Edisto held very preliminary discussions with an interested
purchaser who wanted to make a pre-emptive bid, but the discussions were
terminated prior to a formal offer being made.

At a joint meeting of the Edisto and Convest Boards of Directors on January
7, 1997, representatives of Petrie Parkman discussed different alternatives for
maximizing stockholder value for Edisto and Convest. A press release was
issued on January 9, 1997 announcing that Petrie Parkman had been hired by both
Edisto and Convest to recommend strategic alternatives to enhance stockholder
value including identifying and evaluating potential strategic partners in the
oil and gas industry.

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In February and March 1997, Petrie Parkman contacted 31 parties to
ascertain their interest in acquiring Edisto and Convest. As part of the
process, Edisto and Convest entered into confidentiality agreements with
potentially interested parties, including Forcenergy, and provided 13 companies
with information about Edisto and Convest. For the five parties expressing
continued interest, Edisto and Convest also provided access to a data room
containing more detailed information about Edisto and Convest and to their
management personnel. Although a sixth party did not visit the data room, this
party continued to express interest.

J. Russell Porter, the Vice President - Corporate Development of
Forcenergy, called Michael Y. McGovern, the Chairman and CEO of Edisto and
Convest, in January 1997 shortly after the press release regarding Petrie
Parkman. On January 30, 1997, Mr. Porter visited Mr. McGovern at Edisto's
office and a potential business combination was discussed. Forcenergy
representatives visited the data room in Houston on March 3, 1997 and Convest's
independent engineering firms on March 13-14, 1997. Mr. McGovern also had
dinner on March 10, 1997 in Miami with Mr. Porter and Forcenergy's President
and Chief Executive Officer, Stig Wennerstrom, to discuss a possible merger of
the companies.

On March 25, 1997, Forcenergy submitted a written proposal for a merger
with only Convest. At that time, Forcenergy had recently completed a debt
offering of $200 million of senior subordinated notes, and accordingly was less
interested in Edisto's cash holdings. Edisto also received written proposals
from two other parties on March 24, 1997 and March 31, 1997, respectively, for
a merger with both Edisto and Convest.

On April 7, 1997, Edisto, Convest and Petrie Parkman performed preliminary
due diligence at Forcenergy's offices in Metairie, Louisiana. Edisto and
Convest also performed preliminary due diligence on the other two bidders
during April 1997.

In mid-April 1997, discussions with Forcenergy were put on hold since it
had bid on only Convest, and the other two potential purchasers had submitted
more attractive bids for both Edisto and Convest. During late April and early
May, Edisto, Convest and Petrie Parkman continued discussions with the two
other potential purchasers regarding potential transaction structures. During
this time period, Mr. McGovern also met in Los Angeles with one of the
potential purchasers and representatives of Edisto's majority stockholder
group, investment funds and accounts managed by Oaktree Capital Management,
L.L.C. and TCW Special Credits. Mr. McGovern initiated this meeting because
the potential transactions being discussed would result in these investment
funds becoming substantial stockholders in the purchaser. In this meeting and
subsequent discussions with representatives of Edisto's majority stockholder
group, these representatives expressed a preference for a portion of the
consideration to be paid in cash and for the merger partner to be a larger
company with a more liquid stock than Edisto or Convest.

In early May, one of the potential purchasers terminated further
discussions when its board of directors directed management to pursue another
alternative. Mr. McGovern terminated discussions with the other potential
purchaser because of concerns with the proposed transaction structure and the
low liquidity of the purchaser's stock.

During that same time period, Mr. McGovern reopened discussions with Mr.
Porter of Forcenergy for a transaction that would pay a portion of the
consideration to Edisto's shareholders in cash with the Convest minority
stockholders receiving only stock. Accordingly, Mr. McGovern and Mr. Porter
negotiated a deal structure that would use Edisto's cash holdings of
approximately $68 million as the cash portion of the consideration for Edisto
with the remainder of the consideration in Forcenergy Common Stock. This deal
structure provided for only stock consideration to be paid to the Convest
minority stockholders (i.e., the non-Edisto stockholders with approximately 28%
of the outstanding Convest stock) because Convest believed that an all stock
transaction would be more attractive to the Convest stockholders because it
would be tax-free to the Convest stockholders, would provide greater value and
would allow the Convest stockholders to continue their investment in the oil
and gas industry with a much larger industry player.

On May 13, 1997, Petrie Parkman held a meeting with representatives of
another potential purchaser and received a verbal offer for Edisto and Convest.
Further discussions between Petrie Parkman and this other potential purchaser
failed to produce an offer that was more attractive than Forcenergy's offer.

On May 16, 1997, Forcenergy submitted a written offer providing for a
payment of $4.886 in cash and $5.064 in Forcenergy Common Stock for each share
of Edisto Common Stock, and $8.88 in Forcenergy Common Stock for each share of
Convest Common Stock. During the week of May 26, 1997, Forcenergy performed
additional due diligence

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on Edisto and Convest in Houston. During the week of June 2, 1997, Edisto,
Convest and Petrie Parkman performed financial/legal due diligence on
Forcenergy at its corporate offices in Miami, and negotiated the terms of a
definitive merger agreement.

In early June, Edisto hired Rauscher Pierce to render a fairness opinion to
the Edisto stockholders. Even though Petrie Parkman had served as the
financial advisor to both Edisto and Convest during the sale process, the
Edisto and Convest Boards had jointly agreed at the beginning of the sale
process that if a transaction for both Edisto and Convest was pursued, Petrie
Parkman would render a fairness opinion for only Convest to avoid any potential
conflict of interest over the allocation of the purchase price between the two
companies. Therefore, it was necessary for Edisto to hire a separate
investment banking firm to render a fairness opinion for its stockholders.

At the beginning of the sale process, the Edisto and Convest Boards of
Directors also had agreed that once a transaction was negotiated, the Affiliate
Transaction Review Committee of the Convest Board of Directors would review the
terms of the transaction from the standpoint of the minority stockholders of
Convest. The purpose of this review would be to examine the fairness of the
purchase price allocation between Edisto and Convest. This Committee was
composed of the two outside members of the Convest Board who have no
affiliation with Edisto, Murray Gullatt and Franklin Myers. On June 19, 1997,
the Committee met with Petrie Parkman representatives and Edisto's outside
legal counsel to review the terms of the Merger Agreement and the fairness of
the purchase price allocation between Edisto and Convest. The Committee
subsequently recommended approval of the Merger Agreement to the full Convest
Board. For their services on this Committee, Murray Gullatt, as Chairman,
received $7,500 and Franklin Myers received $5,000.

The Convest Board of Directors met on June 19, 1997 immediately after the
Committee meeting. At the meeting, the Convest Board reviewed the terms of the
Merger Agreement with management, outside legal counsel and Petrie Parkman, and
received a fairness opinion from Petrie Parkman on the fairness from a
financial point of view of the consideration to be received by the Convest
stockholders in the Convest Merger. After these reviews, the Convest Board
unanimously approved the Merger Agreement.

After the Convest Board meeting, the Edisto Board met to review the terms
of the Merger Agreement with management, outside legal counsel, Petrie Parkman
and Rauscher Pierce, and received a fairness opinion from Rauscher Pierce on
the fairness from a financial point of view. After these reviews, the Edisto
Board unanimously approved the Merger Agreement. Later that day,
representatives of Edisto, Convest and Forcenergy executed the Merger
Agreement.

RECOMMENDATION OF THE BOARDS OF DIRECTORS OF EDISTO AND CONVEST; REASONS FOR
THE MERGERS

THE BOARDS OF DIRECTORS OF EDISTO AND CONVEST HAVE UNANIMOUSLY APPROVED THE
MERGER AGREEMENT, DETERMINED THAT THE MERGERS ARE IN THE BEST INTEREST OF THE
RESPECTIVE STOCKHOLDERS OF EDISTO AND CONVEST, AND RECOMMENDED THAT EDISTO AND
CONVEST STOCKHOLDERS VOTE FOR THE APPROVAL OF THE MERGERS.

In reaching their respective decisions to approve the Merger Agreement and
to recommend that the Edisto and Convest stockholders vote to approve the
Merger Agreement, the Boards of Directors of Edisto and Convest considered,
among other things, the following factors:

1. Their knowledge of the business, reserves, results of operations and
financial condition of Edisto and Convest, and the risks inherent in
remaining independent.

2. The advantages that the Mergers would bring to the combined entity,
which include the following:

(a) the economies of scale and operating efficiencies resulting
from combining Convest's assets with those of Forcenergy,
including a substantial reduction of the general and
administrative expenses associated with operating Edisto and
Convest as separate public companies; and

(b) the strategic fit of Convest's and Forcenergy's respective
offshore and Altamont/Bluebell properties.

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3. The fact that the Mergers would provide Edisto stockholders an
opportunity to continue to participate in the oil and gas business for
a portion of their investment and the Convest stockholders for all of
their investment, with the following advantages for the Edisto and
Convest stockholders:

(a) such investment would be in a much larger oil and gas company with
a market capitalization nearly ten times larger than Convest;

(b) the Forcenergy Common Stock is a more actively traded stock that
offers greater liquidity than the Edisto Common Stock or the
Convest Common Stock;

(d) Forcenergy has greater access to the capital markets than Convest,
as evidenced by its recent $200 million debt financing at
attractive interest rates, and;

(e) Forcenergy has a management team with a track record of growth and
an orientation to increasing stockholder value.

4. The presentation of Edisto's financial advisor, Petrie Parkman,
including its evaluations of Convest and Forcenergy from various
perspectives, and Petrie Parkman's opinion that the consideration to
be received by Convest's stockholders in the Convest Merger is fair to
them from a financial point of view.

5. The presentation of Edisto's financial advisor, Rauscher Pierce,
including its evaluations of Edisto, Convest and Forcenergy from
various perspectives, and Rauscher Pierce's opinion that the
consideration to be received by Edisto's stockholders in the Edisto
Merger is fair to them from a financial point of view.

6. The structure of the Convest Merger would permit the Convest
stockholders to exchange all of their shares of Convest Common Stock
in a transaction intended, in general, to be tax-free for federal
income tax purposes except to the extent of cash received in lieu of
fractional shares of Forcenergy Common Stock.

7. The sales process conducted by Petrie Parkman which resulted in the
receipt of proposals from other companies and provided Edisto's and
Convest's Board of Directors with comparison proposals to use in
evaluating the offer of Forcenergy.

8. The terms of the Merger Agreement which were the product of extensive
arms' length negotiations.

The foregoing discussion of the information and factors considered and
given weight by the Convest and Edisto Boards of Directors is not intended to
be exhaustive. In view of the variety of factors considered in connection with
their respective evaluations of the Mergers, the Boards of Directors of Edisto
and Convest did not quantify or otherwise assign any weights to the specific
factors considered in reaching their respective determinations. In addition,
individual directors of Edisto and Convest may have given different weights to
different factors. For a discussion of the interests of the members of
Edisto's and Convest's management and their respective Boards of Directors in
the Mergers and the interrelationships between Edisto and Convest, see "The
Mergers -- Interests of Certain Persons in the Mergers."

FORCENERGY'S REASONS FOR THE MERGERS

Forcenergy's purpose for pursuing Edisto and Convest is that the
acquisitions provide Forcenergy both near-term and longer-term benefits to
Forcenergy through a stock transaction that is accretive on a discretionary
cash flow basis while also strengthening the balance sheet. Convest is a
unique strategic and operating fit with Forcenergy's existing assets and
operating capabilities and the acquisitions increase Forcenergy's prospect
inventory of under-exploited Gulf of Mexico blocks. Specifically, it is an
opportunity to acquire, on an economical basis, substantial proved producing
reserves in 43 blocks in the Gulf of Mexico and in two long-life shallow
decline properties in which Forcenergy already owns a sizeable interest and
provides Forcenergy the opportunity to utilize its state-of-the-art 3-D
technology and geological and geophysical experience and expertise to create
additional shareholder value through exploitation and exploratory drilling on
the Gulf of Mexico blocks. The management of the producing properties and the
further evaluation of the exploitation potential of the offshore blocks can be
performed by current Forcenergy personnel.

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Therefore, efficiencies in operating costs and general and administrative
expenses can be obtained by combining the entities. The use of Forcenergy
stock in the transaction also allows Forcenergy the opportunity to reduce its
leverage ratio (debt to total capitalization) from 59% to 51% through a cash
flow accretive acquisition.

OPINIONS OF FINANCIAL ADVISORS

Opinion of Rauscher Pierce to Edisto Board of Directors. The Edisto Board
of Directors engaged Rauscher Pierce to evaluate the fairness, from a financial
point of view, to the stockholders of Edisto Common Stock of the consideration
to be received by them in connection with the Edisto Merger and, in such
regard, to conduct such investigations as Rauscher Pierce deemed appropriate
for such purpose.

On June 19, 1997, Rauscher Pierce rendered its written opinion to the
Edisto Board that, as of such date, the consideration to be received by the
stockholders of Edisto Common Stock was fair to them from a financial point of
view. Rauscher Pierce confirmed, by delivery of its written opinion as of the
date of this Joint Proxy Statement/Prospectus, its opinion of June 19, 1997.
In rendering such confirmation, Rauscher Pierce performed procedures to update
certain of its analyses made in connection with its June 19, 1997 opinion and
reviewed the assumptions on which such analyses were based and the factors
considered in connection therewith.

THE FULL TEXT OF RAUSCHER PIERCE'S WRITTEN OPINION, WHICH CONTAINS A
DESCRIPTION OF THE ASSUMPTION MADE, THE MATTERS CONSIDERED BY RAUSCHER PIERCE,
AND THE LIMITS OF ITS REVIEW IS ATTACHED HERETO AS APPENDIX C, AND IS
INCORPORATED HEREIN BY REFERENCE. EDISTO STOCKHOLDERS ARE ENCOURAGED TO READ
THE OPINION CAREFULLY IN ITS ENTIRETY.

Rauscher Pierce, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes.

In connection with its opinion, Rauscher Pierce reviewed certain internal
financial information and certain publicly available information. Rauscher
Pierce also held discussions with members of the senior management of Edisto
regarding the business and prospects of Edisto. In addition, Rauscher Pierce
(i) compared certain financial information with similar information for
selected companies within the industry whose securities are publicly traded,
(ii) reviewed the financial terms of certain recent business combinations which
were deemed comparable in whole or in part and (iii) performed such other
studies and analyses and considered such other factors as they deemed
appropriate. Rauscher Pierce also reviewed the Merger Agreement.

Rauscher Pierce did not independently verify the information described
above and, for purposes of its opinion, assumed the accuracy and completeness
thereof. With respect to information relating to the prospects of Edisto,
Rauscher Pierce assumed that such information reflects the best currently
available estimates and judgments of management of Edisto as to the likely
future financial performance of Edisto's assets. In addition, Rauscher Pierce
did not make an independent evaluation or appraisal of Edisto's assets.
Rauscher Pierce's opinion was based on market, economic and other conditions as
they existed and could be evaluated as of the date of Rauscher Pierce's
opinion.

The following paragraphs summarize the principal analyses conducted by
Rauscher Pierce as a basis for its fairness opinion. Rauscher Pierce primarily
considered factors that would have been logical items to be considered by an
actual buyer of Edisto.

As part of its analysis, Rauscher Pierce considered the net asset value
("NAV") of Edisto. The majority of Edisto's asset value was derived from two
components: (i) its $68.7 million cash balance (as of 3/31/97) and (ii) its
investment in Convest. Convest's stock traded at $7.50 per share on May 30,
1997, prior to the announcement of Forcenergy's pending acquisition. Edisto's
ownership of 7,598,771 Convest Common Stock valued at $7.50 per share, plus
Edisto's cash, other assets and liabilities, indicated a NAV of $9.03 per
Edisto share, which is well below the $9.95 Forcenergy offer. By using the
Forcenergy offer price for Convest of $8.88 per share in a similar calculation,
the NAV of Edisto was also estimated by Rauscher Pierce at $9.76 per share.

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Rauscher Pierce considered the NAV of Convest as estimated independently of
Convest's stock price or the Forcenergy offer. Convest's NAV was estimated at
$86.0 million, or $62.8 million for Edisto's 72% interest. Using the estimated
Convest NAV ($62.8 million), Edisto would have an NAV of $9.43 per share.

Rauscher Pierce considered that much of the oil and gas industry knew that
Edisto was essentially for sale in early 1997. A company interested in
acquiring Edisto could have seen the public disclosure and had the opportunity
to contact Edisto or its advisors indicating its level of interest. In
addition, Edisto's financial advisors contacted 31 oil and gas companies
between December, 1996 and June, 1997, in an effort to sell Edisto.

Rauscher Pierce reviewed information concerning Forcenergy and concluded
that the market price of Forcenergy's Common Stock in recent weeks appeared to
represent a normal and reliable fair market value for that security.

Rauscher Pierce compared selected financial data of Edisto's assets with
certain data from selected publicly traded companies, but Rauscher Pierce did
not consider any of those companies to be comparable to Edisto.

Rauscher Pierce reviewed 10 recent oil and gas acquisitions, but Rauscher
Pierce did not consider any of the acquisition ratios to be useful in
evaluating the fairness of the offer for Edisto from Forcenergy.

Rauscher Pierce also considered 88 oil and gas property acquisitions which
occurred during 1996-1997. The acquisition value per barrel of oil equivalent
("BOE") ranged from $1.56 to $12.12, but these amounts were not meaningful in
Rauscher Pierce's analysis.

The summary set forth above does not purport to be a complete description
of either Rauscher Pierce's analyses or presentations to the Edisto Board of
Directors. Rauscher Pierce believes that its analyses must be considered as a
whole and that selecting portions of its analyses and factors considered,
without considering all factors and analyses, could create an incomplete view
of the processes underlying its opinion. The preparation of a fairness opinion
is a complex process and not necessarily susceptible to partial analyses or
summary description. In its analyses, Rauscher Pierce considered numerous
assumptions with respect to industry performance, general business and economic
conditions and other matters, many of which are beyond Edisto's control. Any
estimates contained therein are not necessarily indicative of actual values,
which may be significantly more or less favorable than as set forth therein.
Because such assumptions or estimates are inherently subject to uncertainty,
neither Edisto nor Rauscher Pierce or any other person assumes responsibility
for their accuracy.

Pursuant to the terms of the engagement letter between Rauscher Pierce and
Edisto dated June 9, 1997, Edisto has paid Rauscher Pierce a fee of $75,000.
In addition, Edisto has also agreed to reimburse Rauscher Pierce for its
out-of-pocket expenses, including reasonable fees and expenses of counsel, and
to indemnify Rauscher Pierce and certain related persons against certain
liabilities relating to or arising out of its engagement, including certain
liabilities under the federal securities laws.

Opinion of Petrie Parkman to Convest Board of Directors. The Convest and
Edisto Boards of Directors announced on January 9, 1997 that they had hired
Petrie Parkman to make recommendations to each of them for strategic
alternatives to enhance shareholder value. In connection with such engagement,
Petrie Parkman identified and evaluated potential strategic partners for Edisto
and Convest in the oil and gas industry. In addition, the Convest Board
instructed Petrie Parkman, in its role as financial advisor, to evaluate the
fairness, from a financial point of view, to the holders of Convest Common
Stock of the consideration to be received by them in connection with the
Convest Merger and, in such regard, to conduct such investigations as Petrie
Parkman deemed appropriate for such purpose.

On June 19, 1997, Petrie Parkman rendered its written opinion to the
Convest Board that, as of such date, the consideration to be received by the
holders of Convest Common Stock was fair to them from a financial point of
view. Petrie Parkman confirmed, by delivery of its written opinion as of the
date of this Joint Proxy Statement/Prospectus, its opinion of June 19, 1997.
In rendering such confirmation, Petrie Parkman performed procedures to update
certain of its analyses made in connection with its June 19, 1997 opinion and
reviewed the assumptions on which such analyses were based and the factors
considered in connection therewith. Petrie Parkman considered, among other
things, Convest's and Forcenergy's recent financial performance and recent
market conditions and developments based on the foregoing.

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THE FULL TEXT OF PETRIE PARKMAN'S WRITTEN OPINION, WHICH CONTAINS A
DESCRIPTION OF THE ASSUMPTIONS MADE, THE MATTERS CONSIDERED BY PETRIE PARKMAN,
AND THE LIMITS OF ITS REVIEW IS ATTACHED HERETO AS APPENDIX D, AND IS
INCORPORATED HEREIN BY REFERENCE. CONVEST'S STOCKHOLDERS ARE ENCOURAGED TO
READ THE OPINION CAREFULLY IN ITS ENTIRETY.

In connection with its opinion, Petrie Parkman, among other things (i)
reviewed certain publicly available business and financial information relating
to Convest and Forcenergy, including the audited financial statements on Form
10-K for Convest and Forcenergy as of December 31, 1996, (ii) reviewed the
unaudited financial statements on Form 10-Q for Convest and Forcenergy as of
March 31, 1997, and the audited financial statements of Great Western Resources
Inc. ("Great Western") as of September 30, 1996, (iii) reviewed the unaudited
consolidated statement of operations of Great Western for the six month period
ending March 31, 1996 and the three month, 21 day period ending January 21,
1997 (iv) reviewed certain estimates of reserves including: estimates of
proved, probable, and possible oil and gas reserves of Convest, as prepared by
Ryder Scott Company Petroleum Engineers as of December 31, 1996 and Netherland,
Sewell & Associates, Inc. as of January 1, 1997, (v) reviewed certain estimates
of oil and gas reserves of Convest in the Gulf of Mexico as prepared by the
management and staff of Convest as of March 31, 1997, (vi) reviewed certain
estimates of proved oil and gas reserves of Forcenergy in the Gulf of Mexico
and onshore United States including Alaska, as prepared by Netherland Sewell &
Associates, Inc. as of January 1, 1997, (vii) reviewed certain estimates of
proved, probable, and possible reserves of Forcenergy in the Gulf of Mexico, as
prepared by Collarini Engineering Inc. as of January 1, 1997; (viii) reviewed
certain estimates of oil and gas reserves of Great Western in the Gulf of
Mexico and onshore United States as prepared by Ryder Scott Company Petroleum
Engineers as of September 30, 1996, (ix) reviewed certain estimates of oil
reserves of Stewart Petroleum Company in Alaska as prepared by the management
and staff of Forcenergy as of January 1, 1997, (x) analyzed certain financial
and operating data and budgets concerning Convest and Forcenergy, all of which
were prepared or provided by the managements of Convest and Forcenergy, as the
case may be, (xi) discussed the current operations and prospects of Convest and
Forcenergy with the managements and operating staffs of Convest and Forcenergy,
as the case may be, (xii) reviewed the historical trading histories and prices
of the shares of Convest Common Stock and Forcenergy Common Stock, (xiii)
compared recent stock market capitalization indicators for Convest and
Forcenergy with the recent stock market capitalization indicators for certain
other publicly-traded independent energy companies, (xiv) compared the
financial terms of the Convest Merger with the financial terms of certain other
transactions which they deemed to be relevant, (xv) reviewed the Merger
Agreement and the form of Shareholder Agreement between Forcenergy and the
Stockholder party thereto, both dated June 19, 1997, and (xvi) made such other
analyses and examinations as they deemed necessary or appropriate.

In rendering its opinion, Petrie Parkman assumed and relied upon, without
assuming any responsibility for verification, the accuracy and completeness of
the financial, operating, and other information reviewed by it and assumed that
the financial and operating data and budgets provided to it had been reasonably
prepared on bases reflecting the best currently available estimates and
judgments relating to the future financial and operational performance of
Convest and Forcenergy (including taking into account the impact of the
Merger). Petrie Parkman did not make independent evaluations or appraisals of
the assets or liabilities of Convest or Forcenergy nor, except for the reserve
estimates referred to in its opinion, was Petrie Parkman furnished with any
such evaluations or appraisals. Petrie Parkman's opinion relates only to the
consideration to be received by the Convest stockholders in the Convest Merger
and does not constitute a recommendation to any holder of Convest Common Stock
as to how such holder should vote at the Convest Special Meeting.

In rendering its opinion, Petrie Parkman conducted several analyses
including (i) discounted cash flow analyses of each of Convest and Forcenergy
("Discounted Cash Flow Analyses"); (ii) comparisons with selected
publicly-traded companies ("Capital Market Comparisons"); (iii) analyses of
selected comparable industry transactions ("Comparable Transactions Analyses");
(iv) analyses of the potential future financial performance of Forcenergy
("Going Concern Analyses"); and (v) an analysis of the potential financial
effects of the Convest Merger ("Pro Forma Merger Analysis"). These analyses
are described below. Based upon the reference value ranges resulting from the
various analyses and subject to the assumptions and limitations set forth in
its opinion, Petrie Parkman came to a composite range of equity reference
values for Convest of $7.50 to $9.00 per primary share of Convest Common Stock
and for Forcenergy of $29.00 to $36.00 per primary share of Forcenergy Common
Stock.

Discounted Cash Flow Analysis - Convest. Under this method, Petrie Parkman
calculated estimates of future after-tax cash flows for the reserve assets
based on the reserve estimates referred to above and for the non-reserve assets
utilizing information provided by Convest. Three scenarios were evaluated in
which the principal variables were oil and

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gas prices. The three pricing scenarios used by Petrie Parkman were based on
benchmarks for posted prices for West Texas Intermediate equivalent crude oil
and for spot sales of Louisiana offshore gas delivered to an interstate
pipeline ("Pricing Case I", "Pricing Case II", "Pricing Case III"). To these
benchmarks, Petrie Parkman applied appropriate quality and transportation
adjustments. For Pricing Cases I, II, and III, benchmark oil prices were
projected to be $19.00, $21.00, and $22.50 per barrel, respectively, for 1997
and were escalated annually thereafter at the rates of 4.0%, 5.0%, and 5.0%,
respectively; oil prices in each pricing case were capped at $50.00 per barrel.
For Pricing Cases I, II, and III benchmark gas prices were projected to be
$1.90, $2.10, and $2.25 per million British thermal units ("MMBtu"),
respectively, for 1997 and were escalated annually thereafter at the rates of
4.0%, 5.0%, and 5.0%, respectively; gas prices in each pricing case were capped
at $6.00 per MMBtu. Operating and capital costs were escalated at 3.0% per
year. Other factors involved in this analysis included the use of after-tax
discount rates ranging from 10.0% to 50.0% depending on reserve category, a
carry-over of Convest's existing tax positions, and the evaluation of certain
non-reserve assets of Convest. This methodology resulted in asset reference
value ranges of $72.1 million to $80.5 million for Pricing Case I, $85.2
million to $94.9 million for Pricing Case II, and $93.5 million to $103.9
million for Pricing Case III. Convest has no long-term debt so that dividing
the asset reference value ranges by the number of primary shares of Convest
Common Stock outstanding yields equity reference value ranges per primary share
of $6.86 to $7.66 for Pricing Case I, $8.11 to $9.03 for Pricing Case II, and
$8.90 to $9.89 for Pricing Case III.

Comparable Transactions Analysis - Convest. Petrie Parkman reviewed
certain publicly-available information on 50 oil and gas property acquisition
transactions with consideration greater than five million dollars involving
Gulf of Mexico, Rocky Mountain, and Mid-Continent assets which took place
between January 1995 and April 1997 (and two such transactions for which Petrie
Parkman had proprietary information). Petrie Parkman calculated purchase price
multiples of equivalent reserves for the acquired assets in each transaction.
The highest, average, and lowest multiples of equivalent reserves for the Gulf
of Mexico transactions were $1.49, $0.90, and $0.18 per thousand cubic feet
equivalent using a six thousand cubic feet ("Mcf") of gas to one barrel of oil
conversion ratio ("Mcfe6"), respectively. The highest, average, and lowest
multiples of Mcfe6 for the Rocky Mountain transactions were $0.82, $0.55, and
$0.30, respectively. The highest, average, and lowest multiples of Mcfe6 for
the Mid-Continent transactions were $1.22, $0.71, and $0.34, respectively. The
highest, average, and lowest multiples of equivalent reserves for the Gulf of
Mexico transactions were $1.49, $0.77, and $0.18 per thousand cubic feet
equivalent using a ten Mcf of gas to one barrel of oil conversion ratio
("Mcfe10"), respectively. The highest, average, and lowest multiples of Mcfe10
for the Rocky Mountain transactions were $0.80, $0.49, and $0.19, respectively.
The highest, average, and lowest multiples of Mcfe10 for the Mid-Continent
transactions were $1.15, $0.61, and $0.20, respectively. Petrie Parkman
determined that, with respect to Convest, the appropriate benchmark multiples
for equivalent proved reserves for the Gulf of Mexico, Rocky Mountain, and
Mid-Continent assets were in the ranges of $0.90 to $1.10 per Mcfe6, $0.55 to
$0.80 per Mcfe6, and $0.75 to $0.85 per Mcfe6, respectively, and in the ranges
of $0.80 to $1.00 per Mcfe10, $0.55 to $0.65 per Mcfe10, and $0.50 to $0.60 per
Mcfe10, respectively. These benchmarks were applied by Petrie Parkman to
Convest's corresponding proved and proved plus probable reserve figures for
each of the geographic regions to yield asset reference value ranges for
Convest's reserves. Following adjustments for Convest's non-reserve assets,
Petrie Parkman determined from the asset reference value ranges implied by
these multiples a composite asset reference value range under this method of
$65.0 million to $80.0 million. Convest has no long-term debt so that dividing
the composite asset reference value range by the number of primary shares of
Convest Common Stock outstanding yields a composite equity reference value
range per primary share of $6.19 to $7.62.

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cash flow and equivalent proved reserves. Petrie Parkman also performed a
premium analysis which compared the offer price per target company share with
the target company's share price for the periods of one day, 30 days, and 60
days prior to public announcement of the offer. The highest, average, and
lowest premiums (excess of offer price over target company's price stated as a
percentage above the target company's share price) were 86.6%, 20.8%, and -2.9%
for one day prior, respectively, 75.6%, 27.3%, and 2.8% for 30 days prior,
respectively, and 86.6%, 24.8%, and 5.9% for 60 days prior, respectively.
Petrie Parkman determined that, with respect to Convest, the appropriate
benchmarks for premium to target company's price one day prior, 30 days prior,
and 60 days prior were in the ranges of 15% to 25%, 20% to 30%, and 20% to 30%,
respectively. These premium benchmarks were applied by Petrie Parkman to the
corresponding stock prices of Convest. Petrie Parkman determined from the
asset reference value ranges implied by these multiples a composite asset
reference value range under this method of $75.0 million to $95.0 million.
Convest has no long-term debt so that dividing the composite asset reference
value range by the number of primary shares of Convest Common Stock outstanding
yields a composite equity reference value range per primary share of $7.14 to
$9.04.

Common Stock Comparison - Convest. Using publicly-available information,
Petrie Parkman calculated adjusted capitalization multiples of certain
historical financial criteria (such as gross pre-tax cash flow and operating
cash flow) and of equivalent proved reserves, and market capitalization (market
value of common equity) multiples of certain historical financial criteria
(such as discretionary cash flow) for a universe of 124 publicly-traded
independent oil and gas companies. The adjusted capitalization of each company
was obtained by adding the sum of its long-term and short-term debt to the sum
of the market value of its common equity, the market value of its preferred
stock (if publicly-traded, otherwise liquidation or book value), and the book
value of its minority interest in other companies and subtracting its cash.

Nineteen of these companies - Abraxas Petroleum Corporation, American
Exploration Company, Bellwether Exploration Company, Cairn Energy USA, Inc.,
Chieftain International, Inc., Clayton Williams Energy, Inc., Columbus Energy
Corp., DLB Oil & Gas, Inc., Equity Oil Company, Forcenergy Inc, Forest Oil
Corporation, Goodrich Petroleum Corporation, Key Production Company, Inc.,
Maynard Oil Company, PetroCorp Incorporated, Snyder Oil Corporation, Southern
Mineral Corporation, St. Mary Land & Exploration Company, and Stone Energy
Corporation - which in Petrie Parkman's judgment were relevant to an evaluation
of Convest in the context of reserve location and reserve life, were examined
in greater detail. For these 19 companies, the highest, average, and lowest
adjusted capitalization multiples of gross pre-tax cash flow were 14.7x, 7.0x,
and 3.7x, respectively. The highest, average, and lowest adjusted
capitalization multiples of operating cash flow were 13.4x, 6.2x, and 3.3x,
respectively. The highest, average, and lowest adjusted capitalization
multiples of equivalent proved reserves were $2.23, $1.41, and $0.66 per Mcfe6,
respectively. The highest, average, and lowest adjusted capitalization
multiples of equivalent proved reserves were $1.34, $0.84, and $0.39 per
Mcfe10, respectively. The highest, average, and lowest market capitalization
multiples of discretionary cash flow were 11.3x, 6.1x, and 1.7x, respectively.
Petrie Parkman determined that, with respect to Convest, the appropriate
benchmarks for adjusted capitalization multiples for gross pre-tax cash flow,
operating cash flow, and equivalent proved reserves were in the ranges of 3.5
to 5.5x, 3.0 to 5.0x, $1.00 to $1.20 per Mcfe6 and $0.70 to 0.80 per Mcfe10,
respectively, and that the appropriate benchmark market capitalization
multiples for discretionary cash flow were in the range of 3.0 to 5.0x. These
benchmark multiples were applied by Petrie Parkman to Convest's historical
gross pre-tax cash flow, operating cash flow, equivalent proved reserves, and
discretionary cash flow, respectively. From the asset reference value ranges
implied by these multiples, Petrie Parkman determined a composite asset
reference value range under this method of $90.0 million to $110.0 million.
Convest has no long-term debt so that dividing the composite asset reference
value range by the number of primary shares of Convest Common Stock outstanding
yields a composite equity reference value range per primary share of $8.57 to
$10.47.

Discounted Cash Flow Analysis - Forcenergy. Under this method, Petrie
Parkman calculated estimates of future after-tax cash flows for the reserve
assets based on the reserve estimates referred to above and for the non-reserve
assets utilizing information provided by Forcenergy. Three scenarios were
evaluated in which the principal variables were the oil and gas price scenarios
described above. Other factors involved in this analysis included the use of
after-tax discount rates ranging from 10.0% to 40.0% depending on reserve
category, a carry-over of Forcenergy's existing tax positions, and the
evaluation of certain other assets of Forcenergy. This methodology resulted in
asset reference value ranges of $673.2 million to $782.0 million for Pricing
Case I, $843.5 million to $985.8 million for Pricing Case II, and $941.7
million to $1,100.7 million for Pricing Case III. After deducting long-term
obligations of Forcenergy of $375.1 million from the asset reference value
ranges and dividing by the number of primary shares of Forcenergy Common Stock
outstanding, the equity reference value ranges per primary share are $13.15 to
$17.95 for Pricing Case I, $20.66 to $26.94 for Pricing Case II, and $25.00 to
$32.01 for Pricing Case III.

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Comparable Transactions Analysis - Forcenergy. Petrie Parkman reviewed
certain publicly-available information on 62 oil and gas property acquisition
transactions with consideration greater than five million dollars involving
Gulf of Mexico, Rocky Mountains, Mid-Continent/Permian, and Alaska assets which
took place between January 1995 and May 1997 (and two such transactions for
which Petrie Parkman had proprietary information). Petrie Parkman calculated
purchase price multiples of equivalent reserves for the acquired assets in each
transaction. The highest, average, and lowest multiples of equivalent reserves
for the Gulf of Mexico transactions were $8.96, $5.43, and $1.06 per barrel of
oil equivalent using a six Mcf of gas to one barrel of oil conversion ratio
("BOE6"), respectively . The highest, average, and lowest multiples of BOE6
for the Rocky Mountain transactions were $4.90, $3.30, and $1.78, respectively.
The highest, average, and lowest multiples of BOE6 for the
Mid-Continent/Permian transactions were $9.23, $4.21, and $1.39, respectively.
The highest, average, and lowest multiples of BOE6 for the Alaska transactions
were $7.08, $5.62, and $4.16, respectively. The highest, average, and lowest
multiples of equivalent reserves for the Gulf of Mexico transactions were
$14.94, $7.67, and $1.77 per barrel of oil equivalent using a ten Mcf of gas to
one barrel of oil conversion ratio ("BOE10"), respectively. The highest,
average, and lowest multiples of BOE10 for the Rocky Mountain transactions were
$8.00, $4.90, and $1.94, respectively. The highest, average, and lowest
multiples of BOE10 for the Mid-Continent/Permian transactions were $15.38,
$5.92, and $1.39, respectively. The highest, average, and lowest multiples of
BOE10 for the Alaska transactions were $7.08, $5.62, and $4.16, respectively.
Petrie Parkman determined that, with respect to Forcenergy, the appropriate
benchmark multiples for equivalent proved reserves for the Gulf of Mexico,
Rocky Mountain, Mid-Continent/Permian, and Alaska assets were in the ranges of
$7.00 to $8.25 per BOE6, $3.50 to $5.00 per BOE6, $4.50 to $5.50 per BOE6, and
$4.00 to $7.50 per BOE6, respectively, and in the ranges of $9.00 to $12.00 per
BOE10, $5.50 to $6.50 per BOE10, $5.50 to $6.50 per BOE10, and $4.00 to $7.50
per BOE10, respectively. These benchmarks were applied by Petrie Parkman to
Forcenergy's corresponding proved and proved plus probable reserve figures for
each of the geographic regions to yield asset reference value ranges for
Forcenergy's reserves. Following adjustments for Forcenergy's non-reserve
assets, Petrie Parkman determined from the asset reference value ranges implied
by these multiples a composite asset reference value range under this method of
$650 million to $850 million. After deducting long-term obligations of
Forcenergy of $375.1 million from the composite asset reference value range and
dividing by the number of primary shares of Forcenergy Common Stock
outstanding, the resulting composite equity reference value range per primary
share is $12.13 to $20.95.

In addition, Petrie Parkman reviewed certain publicly-available information
on 20 company acquisition transactions and offers for control in the oil and
gas exploration and production industry which took place between March 1995 and
May 1997. Using publicly-available information, Petrie Parkman calculated
total investment multiples of gross pre-tax cash flow for the target company in
each transaction. For these 20 transactions, the highest, average, and lowest
multiples of gross pre-tax cash flow were 29.8x, 9.1x, and 0.7x, respectively.
Petrie Parkman also calculated purchase price multiples of discretionary cash
flow and implied purchase price of reserves multiples of equivalent proved
reserves for the target company in each transaction. The highest, average, and
lowest multiples of discretionary cash flow were 24.6x, 7.5x, and 0.8x,
respectively. The highest, average, and lowest multiples of equivalent proved
reserves were $12.50, $5.77, and $2.84 per BOE6, respectively. The highest,
average, and lowest multiples of equivalent proved reserves were $12.50, $7.66,
and $3.50 per BOE10, respectively. Petrie Parkman determined that, with
respect to Forcenergy, the appropriate benchmark multiples for gross pre-tax
cash flow, discretionary cash flow, and equivalent proved reserves were in the
ranges of 5.0 to 6.5x, 4.5 to 6.0x, and $5.00 to $6.50 per BOE6, respectively.
These benchmark multiples were applied by Petrie Parkman to Forcenergy's
historical gross pre-tax cash flow, discretionary cash flow, and equivalent
proved reserves. Petrie Parkman also performed a premium analysis which
compared the offer price per target company share with the target company's
share price for the periods of one day, 30 days, and 60 days prior to public
announcement of the offer. The highest, average, and lowest premiums for each
of these three periods were 86.6%, 20.8%, and -2.9% for one day prior,
respectively, 75.6%, 27.3%, and 2.8% for 30 days prior, respectively, and
86.6%, 24.8%, and 5.9% for 60 days prior, respectively. Petrie Parkman
determined that, with respect to Forcenergy, the appropriate benchmarks for
premium to target company's share price one day prior, 30 days prior, and 60
days prior were in the ranges of 15% to 25%, 20% to 30%, and 20% to 30%,
respectively. These premium benchmarks were applied by Petrie Parkman to the
corresponding share price of Forcenergy. Petrie Parkman determined from the
asset reference value ranges implied by these multiples a composite asset
reference value range under this method of $1,100.0 million to $1,250.0
million. After deducting long-term obligations of Forcenergy of $375.1 million
from the composite asset reference value range and dividing by the number of
primary shares of Forcenergy Common Stock outstanding, the resulting composite
equity reference value range per primary share is $31.98 to $38.60.

Common Stock Comparisons - Forcenergy. Using publicly-available
information, Petrie Parkman calculated adjusted capitalization multiples of
certain historical financial criteria (such as gross pre-tax cash flow,
operating cash

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flow, and standardized measure of after-tax discounted future net cash flows
("SEC Value")) and of equivalent proved reserves, and market capitalization
multiples of certain historical financial criteria (such as discretionary cash
flow) for a universe of 124 publicly-traded independent oil and gas companies.

Thirteen of these companies - Apache Corporation, Cross Timbers Oil
Company, Devon Energy Corporation, Enron Oil & Gas Company, Forest Oil
Corporation, HS Resources, Inc., Louisiana Land and Exploration Company,
Newfield Exploration Company, Pogo Producing Company, Santa Fe Energy
Resources, Inc., Seagull Energy Corporation, United Meridian Corporation, and
Vastar Resources, Inc - which in Petrie Parkman's judgement were more relevant
to an evaluation of Forcenergy in terms of reserve location and reserve life,
were examined in greater detail. For these 13 companies, the highest, average,
and lowest adjusted capitalization multiples of gross pre-tax cash flow were
10.4x, 7.3x, and 4.7x, respectively. The highest, average, and lowest adjusted
capitalization multiples of operating cash flow were 9.7x, 6.6x, and 4.4x,
respectively. The highest, average, and lowest adjusted capitalization
multiples of SEC Value were 2.4x, 1.3x, and 0.8x, respectively. The highest,
average, and lowest adjusted capitalization multiples of equivalent proved
reserves were $15.17, $8.32, and $4.47 per BOE6, respectively. The highest,
average, and lowest market capitalization multiples of discretionary cash flow
were 10.8x, 6.5x, and 4.2x, respectively. Petrie Parkman determined that, with
respect to Forcenergy, the appropriate benchmark adjusted capitalization
multiples for gross pre-tax cash flow, operating cash flow, SEC Value, and
equivalent proved reserves were in the ranges of 6.0 to 7.5x, 5.5 to 6.5x, 1.1
to 1.3x, and $6.50 to $8.50 per BOE6, respectively, and that the appropriate
benchmark market capitalization multiples for discretionary cash flow were in
the range of 5.5 to 7.0x. These benchmark multiples were applied by Petrie
Parkman to Forcenergy's historical gross pre-tax cash flow, operating cash
flow, SEC Value, discretionary cash flow, and equivalent proved reserves based
on the reserve estimates referred to above. From the asset reference value
ranges implied by these multiples, Petrie Parkman determined a composite asset
reference value range under this method of $1,025.0 million to $1,225.0
million. After deducting long-term obligations of Forcenergy of $375.1 million
from the composite asset reference value range and dividing by the number of
primary shares of Forcenergy Common Stock outstanding, the resulting composite
equity reference value range per primary share is $28.67 to $37.49.

Going Concern Analysis - Forcenergy. Under this method, Petrie Parkman
projected potential financial performance of Forcenergy without giving effect
to the Mergers for the five year period 1997 through 2001 using the three oil
and gas pricing scenarios described above. These projections were prepared
utilizing certain information and projections prepared or provided by
Forcenergy management as well as numerous assumptions, including two capital
cases ("No Reinvestment Case" and "Budget Case", respectively). The
No-Reinvestment Case was based on Forcenergy's development plan as set forth in
its December 31, 1996 reserve reports plus estimates of its exploration efforts
in Alaska and the Gulf of Mexico and free cash flow was assumed to accrue and
was not reinvested beyond currently identified projects. The Budget Case
employed the same assumptions as the No-Reinvestment Case but assumed reserve
additions based on a finding cost of $6.00 per BOE6. Capital expenditure
levels were based on Forcenergy's 1997 estimated capital budget with 10% annual
escalation thereafter. Other factors included discount rates of 15.0% to
17.5%, terminal multiples of 5.0x, 6.0x, and 7.0x projected 2001 discretionary
cash flow, and utilization of Forcenergy's existing tax position.

This methodology resulted in ranges of equity reference values per primary
share of Forcenergy Common Stock using a terminal multiple of 5.0x projected
2001 discretionary cash flow under the No-Reinvestment Case of $15.83 to $17.26
using Pricing Case I, $27.22 to $29.66 using Pricing Case II, and $37.70 to
$41.08 using Pricing Case III, and under the Budget Case of $25.23 to $27.50
using Pricing Case I, $33.81 to $36.85 using Pricing Case II, and $43.10 to
$46.98 using Pricing Case III. Using a terminal multiple of 6.0x projected
2001 discretionary cash flow yielded equity reference values per primary share
of Forcenergy Common Stock under the No-Reinvestment Success Case of $19.35 to
$21.09 using Pricing Case I, $32.14 to $35.03 using Pricing Case II, and $43.81
to $47.75 using Pricing Case III, and under the Budget Case of $30.35 to $33.08
using Pricing Case I, $40.86 to $44.53 using Pricing Case II, and $51.62 to
$56.26 using Pricing Case III. Using a terminal multiple of 7.0x projected
2001 discretionary cash flow yielded equity reference values per primary share
of Forcenergy Common Stock under the No-Reinvestment Case of $22.87 to $24.93
using Pricing Case I, $37.06 to $40.39 using Pricing Case II, and $49.93 to
$54.41 using Pricing Case III, and under the Budget Case of $35.47 to $38.65
using Pricing Case I, $47.90 to $52.21 using Pricing Case II, and $60.14 to
$65.55 using Pricing Case III. From these equity reference value ranges,
Petrie Parkman determined a composite equity reference value range per primary
share of Forcenergy Common Stock under this method of $32.00 to $37.00 for the
No-Reinvestment Case and $37.00 to $44.00 for the Budget Case.

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Pro Forma Merger Analysis. Petrie Parkman analyzed certain pro forma
financial effects of the Mergers for the five-year period 1997 through 2001.
In connection with such analysis, Petrie Parkman assessed the past performance
of the managements of Convest and Forcenergy, reviewed the estimates and
projections prepared or provided by the managements of Convest and Forcenergy,
and had discussions with members of the management of Convest and Forcenergy
with respect to the current operations and the future financial and operating
performance of Forcenergy on a stand-alone basis and after giving effect to the
Merger, but relied only to a limited degree on these estimates and projections
in conducting its pro forma merger analysis. This analysis indicated that the
contemplated transaction would be accretive to projected Forcenergy earnings
per share for the period 1997 through 2001 and accretive to Forcenergy's
discretionary cash flow per share over the two year period 1997 through 1998
but dilutive to discretionary cash flow from 1999 through 2001. The analysis
also indicated that the contemplated transaction would result in lower total
debt to total book capitalization ratios than projected for Forcenergy on a
stand-alone basis for the period 1997 through 2001. Petrie Parkman concluded
that, based on these projections, the contemplated transaction would not be
dilutive to earnings per share over the period analyzed and would not result in
higher financial leverage, thus supporting its opinion.

The description set forth above constitutes a summary of the material
analyses and assumptions employed by Petrie Parkman in rendering its opinion to
the Convest Board of Directors. Petrie Parkman believes that it analyses must
be considered as a whole and that selecting portions of its analyses or the
factors considered by it, without considering all analyses and factors, could
create an incomplete view of the process underlying its opinion. The
preparation of a fairness opinion is a complex process, judgmental in nature,
and not necessarily susceptible to partial analysis or summary description. In
its analyses, Petrie Parkman made numerous assumptions with respect to industry
performance, capital market conditions, general business, political, and
economic conditions, and other matters, many of which are beyond the control of
Convest and Forcenergy. Any estimates contained therein are not necessarily
indicative of actual values, which may be significantly more or less favorable
than as set forth therein. The analyses were prepared solely for the purpose
of Petrie Parkman's providing its opinion to the Convest Board of Directors as
to the fairness of the Convest Merger to the Convest stockholders. Analyses
based on forecasts of future results are not necessarily indicative of future
results, which may be significantly more or less favorable than suggested by
such analyses. Estimates of reference values of companies do not purport to be
appraisals or necessarily reflect the prices at which companies may actually be
sold. Because such estimates are inherently subject to uncertainty and based
upon numerous factors or events beyond the control of the parties or their
respective advisors, no assurances can be given that such estimates will prove
to be accurate.

As described above, Petrie Parkman's opinion and presentation to the
Convest Board of Directors was one of many factors taken into consideration by
the Convest Board of Directors in making its determination to approve and
recommend the Convest Merger as contemplated in the Merger Agreement.

Petrie Parkman, as part of its investment banking business, is continually
engaged in the evaluation of energy-related businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements, and
valuations for corporate and other purposes. Convest selected Petrie Parkman
as its financial advisor because it is a nationally recognized investment
banking firm that has substantial experience in transactions similar to the
Mergers.

Pursuant to the terms of the engagement letter between Petrie Parkman and
Convest dated February 6, 1997, Convest has paid Petrie Parkman an advisory fee
of $37,500 which will be fully creditable against a transaction fee to be
calculated as 1.50% of the aggregate consideration to be received by Convest
and/or its shareholders (the "Convest Transaction Fee") which is contingent
upon and payable upon consummation of the Mergers. Pursuant to the terms of
the engagement letter between Petrie Parkman and Edisto, dated February 6,
1997, Edisto has paid Petrie Parkman an advisory fee of $37,500 which will be
fully creditable against a transaction fee of $200,000 (the "Edisto Transaction
Fee") and which is contingent upon and payable upon consummation of a
transaction involving Edisto. The Edisto Transaction Fee is fully creditable
against the Convest Transaction Fee. If the Mergers are consummated, the
aggregate amount of the Convest Transaction Fee and Edisto Transaction Fee
would be approximately $1,436,000. Whether or not the Mergers are consummated,
Convest and Edisto have also agreed to reimburse Petrie Parkman for its
out-of-pocket expenses, including reasonable fees and expenses of counsel, and
to indemnify Petrie Parkman and certain related persons against certain
liabilities relating to or arising out of its engagement, including certain
liabilities under the federal securities laws.

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INTERESTS OF CERTAIN PERSONS IN THE MERGERS

Also upon consummation of the Mergers, it is anticipated that each of the
other executive officers of Edisto and Convest will be terminated. Under
Convest's severance policy for executive officers, any executive officer (other
than Mr. McGovern) who is terminated for any reason other than cause is
entitled to receive a severance payment in a lump sum equal to six months of
salary and is eligible to receive an additional six months of severance pay if
approved by the Board of Directors. Convest has six executive officers covered
by this policy (other than Mr. McGovern) and the maximum amount payable is
approximately $580,000. Each of these executive officers also is eligible to
receive a stay bonus of between one-third to two-thirds of such officer's base
salary. The maximum stay bonus payable to these officers is approximately
$385,000.

EMPLOYEE STOCK OPTIONS HELD BY EDISTO AND CONVEST OFFICERS AND DIRECTORS.
Under the Merger Agreement, each of the Edisto Options and Convest Options
outstanding under the respective stock option plans of Edisto and Convest is
required to be redeemed or exercised prior to the Mergers. Each of the Edisto
Options, outstanding immediately prior to the Mergers will be redeemed for a
cash payment equal to the difference between $9.95 and the exercise price of
such Edisto Option. Each of the Convest Options outstanding immediately prior
to the Mergers will be redeemed for a cash payment equal to the difference
between $8.88 an the excise price of such Convest Option. Michael Y. McGovern
has 240,000 Edisto Options and 112,924 Convest Options and will receive an
aggregate of $1,533,642 in cash to redeem such stock options upon consummation
of the Mergers.

JOINT REPRESENTATIONS ON EDISTO AND CONVEST BOARDS. Four of the six
members of the Convest Board are also directors of Edisto. To avoid any
conflict of interest between Edisto and Convest relating to the allocation of
the purchase price between the two companies, the members of the Affiliate
Transaction Review Committee of the Convest Board were requested by the Convest
Board to review the Mergers from the perspective of the minority shareholders
of Convest. The purpose of this review was to examine the fairness of the
purchase price allocation between Edisto and Convest. The two members of this
Committee, Murray Gullatt and Franklin Myers, have no affiliation with Edisto.
On June 19, 1997, this Committee met with representatives of Petrie Parkman and
Convest's outside legal counsel to review the terms of the Merger Agreement.
The Committee subsequently recommended to the full Convest Board that it
approve the Mergers. For their service, Murray Gullatt, as Chairman, received
$7,500 and Franklin Myers received $5,000.

INDEMNIFICATION OF EDISTO AND CONVEST OFFICERS AND DIRECTORS. Pursuant to
the Merger Agreement, Forcenergy has agreed to indemnify and hold harmless the
present and former directors and officers of Edisto and Convest, against any
costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities arising out of the fact that he or she
was a director or officer of Edisto or Convest or any of their subsidiaries
prior to the Edisto Merger Effective Time and the Convest Merger Effective
Time, respectively, to the full extent permitted under Delaware law, Edisto and
Convest's respective Certificates of Incorporation and Bylaws, and any written
indemnification agreements in effect on the date of the Merger Agreement. In
addition, Forcenergy has agreed to maintain in effect for a period of six years
after the Edisto Merger Effective Time and the Convest Merger Effective Time,
respectively, Edisto's and Convest's existing directors and officers liability
insurance or equivalent liability insurance, which will provide coverage for
those persons who are directors and officers of Edisto and Convest as of such
effective time, so long as the annual premium therefor is not in excess of 150%
of the last annual premium paid by Edisto or Convest prior to the date of the
Merger Agreement.

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CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following discussion summarizes certain federal income tax consequences
of the Edisto Merger and the Convest Merger and, except as otherwise provided
herein, represents the opinion of Coopers & Lybrand L.L.P., tax advisors to
Forcenergy. This discussion is intended to provide only a general summary and
does not include a complete analysis of the consequences that may vary with or
are contingent upon individual circumstances, such as a taxpayer who is subject
to special provisions of the Code and is not a citizen or resident of the
United States. This discussion does not address any aspect of state, local or
foreign tax laws. HOLDERS OF EDISTO COMMON STOCK AND HOLDERS OF CONVEST COMMON
STOCK ARE ADVISED TO CONSULT THEIR OWN TAX ADVISERS REGARDING THE FEDERAL
INCOME TAX CONSEQUENCES OF THE EDISTO MERGER AND THE CONVEST MERGER IN LIGHT OF
THEIR PERSONAL CIRCUMSTANCES AND THE CONSEQUENCES UNDER STATE, LOCAL AND
FOREIGN TAX LAWS.

In rendering its opinion, Coopers & Lybrand L.L.P. has relied upon certain
written representations of Forcenergy, Edisto and Convest. Such opinion is not
binding on the IRS, and no assurance can be given that the IRS will not adopt a
contrary position or that a contrary IRS position would not be sustained by a
court. None of Edisto, Convest or Forcenergy has requested a ruling from the
IRS with respect to the federal income tax consequences of the Edisto Merger or
the Convest Merger. No assurance can be given that future legislation,
regulations, administrative pronouncements or court decisions will not
significantly change the law and materially affect the conclusions expressed
herein. Any such change, even though made after the consummation of the Edisto
Merger and the Convest Merger, could be applied retroactively.

EDISTO MERGER. The Edisto Merger will be treated as an acquisition of the
Edisto Common Stock by Forcenergy in a taxable transaction and not as a
tax-free reorganization. Accordingly, a stockholder of Edisto who exchanges
shares of Edisto Common Stock for Forcenergy Common Stock and cash will
recognize taxable gain or loss in an amount equal to the difference between
such stockholder's basis in such shares of Edisto Common Stock and the amount
of cash and fair market value of Forcenergy Common Stock received in the Edisto
Merger. The stockholder's basis in the Forcenergy Common Stock received in
connection with the Edisto Merger will be equal to its fair market value at the
Edisto Merger Effective Time.

Edisto stockholders who perfect their dissenter's rights and receive cash
in exchange for their shares of Edisto Common Stock will realize taxable income
or loss in an amount equal to the difference between their basis in the shares
of Edisto Common Stock and the amount of cash they receive.

Neither Edisto nor Forcenergy should realize a gain or loss upon
consummation of the Edisto Merger.

CONVEST MERGER. The Convest Merger will, under current law, constitute a
reorganization within the meaning of section 368(a) of the Code, and Convest
and Forcenergy will each be a party to that reorganization. As a
reorganization under section 368(a) of the Code, the Convest Merger will have
the following federal income tax consequences:

(a) no gain or loss will be recognized by Convest or Forcenergy by reason
of the Convest Merger;

(b) no gain or loss will be recognized by a holder of Convest Common Stock
upon the exchange of all of such holder's shares of Convest Common Stock solely
for shares of Forcenergy Common Stock pursuant to the Convest Merger;

(c) the aggregate basis of the shares of Forcenergy Common Stock received
by a holder of Convest Common Stock will be the same as the aggregate basis of
the shares of Convest Common Stock surrendered in exchange therefor, less any
amount allocable to fractional share interests for which cash is received;

(d) the holding period of the shares of Forcenergy Common Stock received
by a holder of Convest Common Stock will include the holding period of the
shares of Convest Common Stock surrendered in exchange therefor, provided that
such shares of Convest Common Stock are held as capital assets at the Convest
Merger Effective Time; and

(e) a holder of Convest Common Stock who receives cash in lieu of a
fractional share of Forcenergy Common Stock will be treated as receiving such
cash in exchange for such fractional share and will recognize gain or loss
equal to the difference, if any, between such stockholder's basis allocable to
the fractional share and the amount of cash received.

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Such gain or loss will be eligible for long-term capital gain or loss treatment
if the Convest Common Stock is held by such stockholder as a capital asset at
the Convest Merger Effective Time and the holding period allocable to the
fractional share is more than one year.

ACCOUNTING TREATMENT

The Edisto Merger and the Convest Merger will be accounted for as
purchases. Under the purchase method of accounting, the purchase price, based
on the fair market value of Forcenergy Common Stock issued for Edisto Common
Stock and Convest Common Stock in the Mergers and the cash consideration, will
be compared to the fair value of the net assets acquired and the difference
(after an acquisition adjustment) generally will be recorded as additional
investment in oil and gas properties and will be amortized over the productive
life of Forcenergy's reserves.

RESTRICTIONS ON RESALES BY AFFILIATES

The shares of Forcenergy Common Stock to be received by Edisto and Convest
stockholders in connection with the Mergers have been registered under the
Securities Act and, except as set forth in this paragraph, may be traded
without restriction. The shares of Forcenergy Common Stock to be issued in
connection with the Mergers and received by persons who are deemed to be
"affiliates" (as that term is defined in Rule 144 under the Securities Act) of
Edisto or Convest prior to the Mergers may be resold by them only in
transactions permitted by the resale provisions of Rule 145 under the
Securities Act (or, in case any such person should become an affiliate of
Forcenergy, Rule 144 under the Securities Act) or as otherwise permitted under
the Securities Act. Accordingly, the Merger Agreement provides that each of
Edisto and Convest will use all reasonable efforts to cause its affiliates to
execute an agreement (an "Affiliates Agreement"), to the effect that such
persons will not sell, transfer or otherwise dispose of any shares of Edisto
Common Stock, Convest Common Stock or Forcenergy Common Stock, as the case may
be, at any time in violation of the Securities Act or the rules and regulations
promulgated thereunder, including Rule 145. Forcenergy, Edisto and Convest
have heretofore obtained executed Affiliates Agreements from all persons known
to the managements of Forcenergy, Edisto or Convest to be affiliates of such
corporations, respectively.

RIGHTS OF DISSENTING STOCKHOLDERS OF EDISTO

A holder of Edisto Common Stock who makes the demand described below with
respect to such shares, who continuously is the holder of record of such shares
through the Edisto Merger Effective Time, and who otherwise complies strictly
with the statutory requirements of Section 262 of the DGCL ("Section 262") will
be entitled to have such shares of Edisto Common Stock appraised by the
Delaware Court of Chancery (the "Delaware Court") and to receive payment of the
"fair value" of such shares in lieu of the shares of Forcenergy Common Stock
and cash to be received by holders of Edisto Common Stock pursuant to the
Merger Agreement.

In order to exercise appraisal rights, holders of Edisto Common Stock must
demand and perfect their rights in strict accordance with the conditions
established by Section 262. All references in this summary of appraisal rights
to a "holder" or "holders of Edisto Common Stock" are to be the holder or
holders of record of Edisto Common Stock.

THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE LAW RELATING TO
APPRAISAL RIGHTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SECTION 262,
WHICH IS REPRINTED IN ITS ENTIRETY AS APPENDIX E TO THIS JOINT PROXY
STATEMENT/PROSPECTUS. THIS DISCUSSION SHOULD BE REVIEWED CAREFULLY BY ANY
HOLDER OF EDISTO COMMON STOCK WHO WISHES TO EXERCISE STATUTORY APPRAISAL
RIGHTS, OR WHO WISHES TO PRESERVE THE RIGHT TO DO SO, BECAUSE FAILURE TO TIMELY
AND STRICTLY COMPLY WITH THE PROCEDURES SET FORTH HEREIN OR THEREIN WILL RESULT
IN THE LOSS OF APPRAISAL RIGHTS.

Under Section 262, where a merger is to be submitted for approval at a
meeting of stockholders, as in the case of the Edisto Special Meeting, not less
than 20 days prior to such meeting, each constituent corporation must notify
each of the holders of its stock for which appraisal rights are available that
such appraisal rights are available and include in each such notice a copy of
Section 262. This Joint Proxy Statement/Prospectus shall constitute such
notice to holders of Edisto Common Stock.

Each holder of Edisto Common Stock electing to exercise appraisal rights
must deliver to Edisto written demand for appraisal before the vote on the
adoption of the Merger Agreement and approval of the Edisto Merger. In
general, stockholders electing to exercise their appraisal rights (if
available) must satisfy all of the conditions of Section 262 and

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must not vote for adoption of the Merger Agreement and approval of the Edisto
Merger. It is unsettled under Delaware law whether a stockholder (other than a
record owner of shares held by multiple beneficial owners, as discussed below)
can split its holdings (whether by class or by shares within the same class)
and vote some shares in favor of the adoption of the Merger Agreement and
approval of the Edisto Merger while abstaining or voting against adoption of
the Merger Agreement and approval of the Edisto Merger with respect to other
shares in an effort to preserve appraisal rights with respect to the shares not
voted in favor of adoption of the Merger Agreement and approval of the Edisto
Merger. A stockholder who signs and returns a proxy without expressly
specifying that such shares be voted against adoption of the Merger Agreement
and approval of the Edisto Merger or that an abstention be registered with
respect to such shares in connection with the Edisto Merger will effectively
have thereby waived his or her appraisal rights because, in the absence of
express contrary instructions, such shares will be voted in favor of the Edisto
Merger. See "The Special Meetings -- Voting and Revocation of Proxies."

Only a holder of record of Edisto Common Stock is entitled to exercise
appraisal rights for the Edisto Common Stock registered in that holder's name.
A demand for appraisal must be executed by or on behalf of the holder of record
fully and correctly, as such holder's name appears on his or her stock
certificates, and must reasonably inform Edisto of the identity of the holder
of record and that such holder intends thereby to demand appraisal of the
Edisto Common Stock. A person having a beneficial interest in Edisto Common
Stock held of record in the name of another person, such as a broker, fiduciary
(such as a trustee, guardian or custodian) or other nominee, must act promptly
to cause the record holder to follow properly and in a timely manner the steps
summarized herein to perfect such person's appraisal rights. If the Edisto
Common Stock is owned of record by a person other than the beneficial owner,
including a broker, fiduciary or other nominee, such demand must be executed by
or on behalf of the record owner. If the Edisto Common Stock is owned of
record by more than one person, as in a joint tenancy or tenancy in common,
such demand must be executed by or on behalf of all joint owners. An
authorized agent, including an agent for two or more joint owners, may execute
the demand for appraisal for a holder of record; however, the agent must
identify the record owner or owners and expressly disclose the fact that, in
exercising the demand, such person is acting as agent for the record owner. A
record owner, such as a broker, fiduciary or other nominee, who holds Edisto
Common Stock as a nominee for others, may exercise appraisal rights with
respect to the shares held for all or less than all beneficial owners of shares
as to which such person is the record owner. In such case, the written demand
must set forth the number of shares covered by such demand. Where the number
of shares is not expressly stated, the demand will be presumed to cover all
Edisto Common Stock outstanding in the name of such record owner.

A holder of Edisto Common Stock who elects to exercise appraisal rights
should mail or deliver his or her written demand to Edisto at its principal
executive offices, attention: Corporate Secretary. The written demand for
appraisal should specify the holder's name and mailing address, the number of
shares of Edisto Common Stock owned, and that the stockholder is thereby
demanding appraisal of his or her shares.

Within ten days after the Edisto Merger Effective Time, Edisto, as the
surviving corporation, must provide notice to all holders, who have complied
with Section 262 that the Merger has become effective. Within 120 days after
the Effective Time, either Edisto, as the surviving corporation, or any holder
of Edisto Common Stock who has complied with the required conditions of Section
262, may file a petition in the Delaware Court demanding a determination of the
fair value of the shares of all holders seeking appraisal. There is no present
intent on the part of Edisto to file an appraisal petition, and holders of
Edisto Common Stock seeking to exercise appraisal rights should not assume that
Edisto will file such a petition. Holders of Edisto Common Stock who desire to
have their shares appraised should initiate any steps required to perfect their
appraisal rights within the time periods and in the manner prescribed in
Section 262. Within 120 days after the Edisto Merger Effective Time, any
holder of Edisto Common Stock who has theretofore complied with subsections (a)
and (d) of Section 262 will be entitled, upon written request, to receive from
Edisto a statement setting forth the aggregate number of shares of Edisto
Common Stock with respect to which demands for appraisal have been received by
Edisto, and the aggregate number of holders of such shares. Such statement
must be mailed within ten days after the written request therefor has been
received by Edisto or within ten days after expiration of the time for delivery
of demands for appraisal under Section 262, whichever is later. If no petition
for appraisal is filed with the Delaware Court within 120 days after the Edisto
Merger Effective Time, the rights of holders of Edisto Common Stock to
appraisal shall cease.

If a petition for an appraisal is timely filed, at the hearing on such
petition, the Delaware Court will determine the holders of Edisto Common Stock,
if any, entitled to appraisal rights. The Delaware Court may require the
holders who have demanded an appraisal of the Edisto Common Stock and who had
stock represented by certificates to submit their

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certificates of stock to the Register in Chancery for notation thereon of the
pendency of the appraisal proceedings; and if any holder of Edisto Common Stock
fails to comply with such direction, the Delaware Court may dismiss the
proceedings as to such holder. After determining the holders of Edisto Common
Stock entitled to appraisal, the Delaware Court will appraise the Edisto Common
Stock owned by such holders, determining the fair value of such shares
exclusive of any element of value arising from the accomplishment of
expectation of the Edisto Merger, together with a fair rate of interest, if
any, to be paid upon the amount determined to be the fair value. In
determining fair value, the Delaware Court is to take into account all relevant
factors. In Weinberger v. UOP Inc., the Delaware Court discussed the factors
that could be considered in determining fair value in an appraisal proceeding,
stating that "proof of value by any techniques or methods which are generally
considered acceptable in the financial community and otherwise admissible in
court" should be considered, and that "fair price obviously requires
consideration of all relevant factors involving the value of the company." The
Delaware Supreme Court stated that in making this determination of fair value
the court must consider "market value, asset value, dividends, earnings
prospect, the nature of the enterprise and any other facts which were known or
which could be ascertained as of the date of the merger which throw light on
future prospects of the merged corporation." In Weinberger, the Delaware
Supreme Court stated that "elements of future value, including the nature of
the enterprise, which are known or susceptible of proof as of the date of the
merger and not the product of speculation, may be considered." Section 262,
however, provides that fair value is to be "exclusive of any element of value
arising from the accomplishment of expectation of the merger." Delaware courts
have decided that the statutory appraisal remedy, depending on factual
circumstances, may or may not be a dissenter's exclusive remedy.

Holders of Edisto Common Stock considering demanding appraisal of their
shares should recognize that the fair value of their shares determined under
Section 262 could be more than, the same as or less than the consideration they
are entitled to receive pursuant to the Merger Agreement if they do not seek
appraisal of their shares, and that investment banking opinions as to fairness
from a financial point of view are not necessarily opinions as to fair value as
determined under Section 262. The cost of the appraisal proceeding may be
determined by the Delaware Court and assessed against the parties as the
Delaware Court deems equitable in the circumstances. Upon application of a
holder of Edisto Common Stock seeking appraisal, the Delaware Court may order
that all or a portion of the expenses incurred by any holder of Edisto Common
Stock in connection with the appraisal proceeding, including, without
limitation, reasonable attorney's fees and the fees and expenses of experts, be
charged pro rata against the value of all Edisto Common Stock entitled to
appraisal. In the absence of such a determination or assessment, each party
bears its own expenses.

Any holder of Edisto Common Stock who has duly demanded appraisal in
compliance with Section 262 will not, after the Edisto Merger Effective Time,
be entitled to vote for any purposes any shares subject to such demand or to
receive payment of dividends or other distributions on such shares, except for
dividends or distributions payable to holders of record of Edisto Common Stock
at a date prior to the Edisto Merger Effective Time.

Any holder of Edisto Common Stock may withdraw such holder's demand for
appraisal by delivering to Edisto a written withdrawal of such demand for
appraisal and acceptance of the terms of the Edisto Merger, except (i) that any
such attempt to withdraw such demand made more than 60 days after the Edisto
Merger Effective Time will require written approval of Edisto and (ii) that no
appraisal proceeding properly instituted in the Delaware Court shall be
dismissed as to any holder of Edisto Common Stock without the approval of the
Delaware Court, and such approval may be conditioned upon such terms as the
Delaware Court deems just.

Under Texas law, holders of Convest Common Stock will not be entitled to
any appraisal or dissenter's rights in connection with the Convest Merger.

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CERTAIN TERMS OF THE MERGER AGREEMENT

The following description does not purport to be complete and is qualified
in its entirety by reference to the Merger Agreement, a copy of which is
attached as Appendix A to this Joint Proxy Statement/Prospectus and is
incorporated herein by reference.

EFFECTIVE TIME OF THE MERGERS

The Merger Agreement provides that, as promptly as practicable following
the satisfaction or waiver of the conditions to effecting the Mergers or at
such other time as the parties to the Merger Agreement may agree, the parties
shall cause the Edisto Merger to be consummated by filing Certificates of
Merger with the Secretary of State of the State of Delaware, in such form as
required by, and executed in accordance with, the relevant provisions of the
DGCL and the Convest Merger to be consummated by filing articles or a
certificate of merger with the Secretary of State of the States of Texas and
Delaware, in such forms as required by, and executed in accordance with, the
relevant provisions of the TBCA and the DGCL. It is anticipated that, if the
Merger Agreement is approved and adopted at the Special Meetings and all other
conditions to the Mergers have been satisfied or waived, (i) the Edisto Merger
Effective Time will occur on the date of the Edisto Special Meeting or as soon
thereafter as practicable and (ii) the Convest Merger Effective Time will occur
as soon as practicable following the Edisto Merger Effective Time.

MANNER AND BASIS OF CONVERTING SHARES

The "Weighted Average Trading Price" of Forcenergy Common Stock shall be
calculated by (a) making the following calculation for each of the ten trading
days ending on the day that is two trading days prior to the Closing Date: (i)
grouping together all shares of Forcenergy Common Stock traded on such day at
the same trading price, (ii) multiplying the aggregate number of shares in each
price group by the trading price for such group to calculate a product (the
total sold shares value) for each group, (iii) adding all of such products from
each group and (iv) dividing the resulting total by the aggregate number of
shares traded on such trading day, and (b) calculating the arithmetic mean of
the resulting ten amounts.

Promptly following the Convest Merger Effective Time but in no event later
than ten business days, American Stock Transfer & Trust Company, which has been
selected by Forcenergy to act as exchange agent pursuant to the Merger
Agreement (the "Exchange Agent"), will mail to each record holder of Edisto
Common Stock and Convest Common Stock immediately prior to the Edisto Merger
Effective Time and the Convest Merger Effective Time, as the case may be,
information advising such holder of the consummation of the Mergers and a
letter of transmittal for use in exchanging certificates of Edisto Common Stock
and Convest Common Stock, as the case may be, for Forcenergy Common Stock
certificates and cash in lieu of fractional shares. Letters of transmittal
will also be available following the Convest Merger Effective Time at the
offices of the Exchange Agent at __________, ________, ______, and holders of
certificates that previously evidenced Edisto Common Stock or Convest Common
Stock may, at their option after the Convest Merger Effective Time, surrender
such certificates for certificates evidencing Forcenergy Common Stock at the
offices of the Exchange Agent in person. After the Edisto Merger Effective
Time and the Convest Merger Effective Time, there will be no further
registration of transfers on the stock transfer books of Edisto or Convest of
shares of Edisto Common Stock or Convest Common Stock, respectively, that were
outstanding immediately prior to the Edisto Merger Effective Time or the
Convest Merger Effective Time, respectively. Share certificates should not be
surrendered for exchange by stockholders of Edisto or Convest prior to the
Edisto Merger Effective Time and the Convest Merger Effective Time.

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No fractional shares of Forcenergy Common Stock will be issued in the
Mergers. Each stockholder of Edisto and Convest entitled to a fractional share
will receive an amount in cash, without interest thereon, equal to such
fractional amount multiplied by the Weighted Average Trading Price, $34.96 or
$28.96, depending on which price is used for purposes of the merger exchange
ratio calculations described above.

Until so surrendered and exchanged, each certificate previously evidencing
Edisto Common Stock or Convest Common Stock shall be deemed, for all purposes
other than the payment of dividends and other distributions, to evidence whole
shares of Forcenergy Common Stock and the right to receive cash and cash in
lieu of fractional shares of Forcenergy Common Stock. Unless and until any
such certificates that previously evidenced Edisto Common Stock or Convest
Common Stock shall be so surrendered and exchanged, no dividends or other
distributions payable to the holders of record of Forcenergy Common Stock as of
any time on or after the Edisto Merger Effective Time and the Convest Merger
Effective Time shall be paid to the holders of such certificates previously
evidencing Edisto Common Stock or Convest Common Stock; provided, however,
that, upon any such surrender and exchange of such certificates, there shall be
paid to the record holders of the certificates issued and exchanged therefor
(i) the amount, without interest thereon, of dividends and other distributions,
if any, with a record date on or after the Edisto Merger Effective Time and the
Convest Merger Effective Time theretofore paid with respect to such whole
shares of Forcenergy Common Stock and (ii) at the appropriate payment date, the
amount of dividends or other distributions, if any, with a record date on or
after the Edisto Merger Effective Time and the Convest Merger Effective Time
but prior to surrender and a payment date occurring after surrender, payable
with respect to such whole shares of Forcenergy Common Stock.

EDISTO OPTIONS

The Merger Agreement provides that each outstanding stock option or warrant
granted to employees and directors of Edisto and its subsidiaries or to any
other persons with respect to Edisto Common Stock (an "Edisto Option") shall be
either (i) redeemed by Edisto or (ii) exercised or canceled in accordance with
its terms, in each case, prior to the Edisto Merger. If any Edisto Option is
redeemed, the Merger Agreement requires such redemption to be at a price no
greater than the amount (if any) by which $9.95 exceeds the exercise price of
such Edisto Option (unless otherwise consented to by Forcenergy). The total
amount that may be expended to effect any such redemptions may not exceed
$1,500,000.

CONVEST OPTIONS

The Merger Agreement provides that each outstanding stock option or warrant
granted to employees and directors of Convest and its subsidiaries or to any
other persons with respect to Convest Common Stock (a "Convest Option") shall
be either (i) redeemed by Convest or (ii) exercised or canceled in accordance
with its terms, in each case, prior to the Convest Merger. If any Convest
Option is redeemed, the Merger Agreement requires redemption to be at a price
no greater than the amount (if any) by which $8.88 exceeds the exercise price
of such Convest Option. The total amount that may be expended to effect any
such redemptions may not exceed $2,300,000.

CONDITIONS TO THE MERGERS

The respective obligations of Forcenergy, Edisto and Convest to consummate
the Mergers are subject to the satisfaction of the following conditions, any or
all of which may be waived in writing by Edisto, Convest and Forcenergy, in
whole or in part, to the extent permitted by applicable law: (a) the Merger
Agreement and the Edisto Merger shall have been approved and adopted by the
requisite vote of the stockholders of Edisto and the Merger Agreement and the
Convest Merger shall have been approved and adopted by the requisite vote of
the stockholders of Convest; (b) the shares of Forcenergy Common Stock to be
issued in the Mergers and those to be reserved for issuance upon exercise of
stock options or warrants or the conversion of convertible securities shall
have been authorized for listing on the NYSE or such other exchange on which
Forcenergy Common Stock is then primarily traded, upon official notice of
issuance; (c) the Registration Statement shall have been declared effective by
the Commission under the Securities Act, no stop order suspending the
effectiveness of the Registration Statement shall have been issued by the
Commission and no proceedings for that purpose shall have been initiated by the
Commission or any state regulatory authority; (d) no preliminary or permanent
injunction or other order or decree by any federal or state court which
prevents the consummation of any of the Mergers shall have been issued and
remain in effect; (e) no action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United States which would prevent the consummation
of any of the Mergers or make the consummation of any of the Mergers illegal;
(f) all

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governmental waivers, consents, orders and approvals legally required for the
consummation of the Mergers and the transactions contemplated by the Merger
Agreement, and all consents from lenders required to consummate the Mergers,
shall have been obtained and be in effect at the Edisto Merger Effective Time,
except where the failure to obtain the same would not be reasonably likely to
have a Material Adverse Effect following the Edisto Merger Effective Time; and
(g) the parties shall have received an opinion of Coopers & Lybrand L.L.P. to
the effect that the Convest Merger will qualify as a reorganization under
Section 368 of the Code.

The obligations of Edisto and Convest (collectively, the "Sellers") to
effect the Mergers are also subject to the satisfaction at or prior to the
Closing Date of the following conditions, any or all of which may be waived in
writing by the Sellers, in whole or in part, to the extent permitted by
applicable law: (a) Forcenergy and EDI-Sub (collectively, the "Purchasers")
shall have performed in all material respects their agreements contained in the
Merger Agreement required to be performed on or prior to the Closing Date and
the representations and warranties of the Purchasers contained in the Merger
Agreement shall be true and correct in all material respects as of the date of
the Merger Agreement and as of the Closing Date as though made again as of the
Closing Date; (b) since the date of the Merger Agreement, there shall have been
no changes that constitute, and no events (including, without limitation,
litigation developments) shall have occurred which have resulted in or
constitute, either individually or in the aggregate, a Material Adverse Change
(as defined below); (c) all governmental waivers, consents, orders, and
approvals legally required for the consummation of the Mergers and the
transactions contemplated by the Merger Agreement shall have been obtained and
be in effect at the Closing Date except for such waivers, consents, orders and
approvals the failure of which to have been obtained would not have, either
individually or in the aggregate, a Material Adverse Effect (as defined below),
and no governmental authority shall have promulgated after the date of the
Merger Agreement any statute, rule or regulation which, when taken together
with all such promulgations, would cause a Material Adverse Change; and (d) the
respective financial advisors shall have delivered their bring-down fairness
opinions.

The obligations of the Purchasers to effect the Mergers are also subject to
the satisfaction at or prior to the Closing Date of the following conditions,
any or all of which may be waived in writing by the Purchasers, in whole or in
part, to the extent permitted by applicable law: (a) the Sellers shall have
performed in all material respects their agreements contained in the Merger
Agreement required to be performed on or prior to the Closing Date and the
representations and warranties of the Sellers contained in the Merger Agreement
shall be true and correct in all material respects as of the date of the Merger
Agreement and as of the Closing Date as though made again as of the Closing
Date; (b) Forcenergy shall have received the Affiliate Agreements and the
Shareholders Agreements; (c) each Edisto Option and each Convest Option shall
have either been redeemed, exercised or canceled pursuant to the Merger
Agreement; (d) since the date of the Merger Agreement, there shall have been no
changes that constitute, and no event or events (including, without limitation,
litigation developments) shall have occurred which have resulted in or
constitute, either individually or in the aggregate, a Material Adverse Change;
(e) all governmental waivers, consents, orders, and approvals legally required
for the consummation of the Mergers and the transactions contemplated by the
Merger Agreement shall have been obtained and be in effect at the Closing Date
except for such waivers, consents, orders and approvals the failure of which to
have been obtained would not have, either individually or in the aggregate, a
Material Adverse Effect, and no governmental authority shall have promulgated
after the date of the Merger Agreement any statute, rule or regulation which,
when taken together with all such promulgations, would cause a Material Adverse
Change; (f) the number of Dissenting Shares shall not exceed three percent of
the total number of shares of Edisto Common Stock outstanding on the date of
the Merger Agreement; (g) Sellers shall have obtained a waiver in writing of
the preferential purchase rights of Coral Reserves Energy Corp. ("Coral") or
Coral shall have exercised such preferential right; and (h) Sellers shall have
obtained a written consent of Enron Reserve Acquisition Corp. ("ERAC") to
transfer the interest of Edisto E&P in the subject property pursuant to the
Merger Agreement and the succession by Forcenergy or its subsidiaries to the
interest and obligations of Edisto E&P under such agreement.

"Material Adverse Change" means an adverse change in the business,
operations, assets, liabilities, properties, condition (financial or other) or
results of operations which (i), in the case of Sellers and their respective
subsidiaries, taken as a whole, may result in an aggregate change or liability
of $2.0 million or greater or (ii), in the case of Forcenergy and its
subsidiaries, taken as a whole, may result in an aggregate change or liability
of $15.0 million or greater.

"Material Adverse Effect" means an adverse effect on the business,
operations, assets, liabilities, properties, condition (financial or other), or
results of operations which (i), in the case of Sellers and their respective
subsidiaries, taken as a whole, may result in an aggregate change or liability
of $2.0 million or greater or (ii), in the case of Forcenergy and its
subsidiaries, taken as a whole, may result in an aggregate change or liability
of $15.0 million or greater.

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There can be no assurance that all of the conditions to the Mergers will be
satisfied.

REPRESENTATIONS AND WARRANTIES

The Merger Agreement contains various representations and warranties of
each of the Sellers and the Purchasers relating to, among other things, (i) its
organization and similar corporate matters, (ii) its capitalization, (iii) the
authorization, execution, delivery, performance and enforceability of the
Merger Agreement, (iv) the absence of conflicts, violations and defaults under
its charter and bylaws and certain other agreements and documents, (v) the
filings and statutory approvals required to effect the Mergers, (vi) its
financial statements, (vii) the absence of undisclosed liabilities, (viii) the
absence of certain changes and events, (ix) its litigation, (x) accuracy of
the information in the Registration Statement and this Joint Proxy
Statement/Prospectus, (xi) compliance with laws, (xii) compliance with
agreements, (xiii) its taxes, (xiv) its employee benefit plans, (xv) the
absence of labor controversies, (xvi) certain environmental matters, (xvii) its
reserve report and exploration project information, (xviii) title to its
properties, (xix) insurance, (xx) compliance with production quotas, (xxi)
certain gas payment and balancing matters, (xxii) the absence of prepayments or
refunds owed, (xxiii) its drilling obligations, and (xxiv) its development
operations.

CERTAIN COVENANTS; CONDUCT OF BUSINESS PRIOR TO THE MERGERS

BUSINESS MAINTENANCE. Each of the Sellers has agreed that, prior to the
Closing Date, unless expressly contemplated by the Merger Agreement or
otherwise consented to in writing by Forcenergy, it will and will cause its
subsidiaries (a) to conduct their respective businesses in the ordinary course
of business consistent with past custom and practice (including with respect to
quantity and frequency) ("Ordinary Course of Business"); (b) to use all
reasonable efforts to preserve intact their respective business organizations
and goodwill, keep available the services of their respective present officers
and key employees, and preserve the goodwill and business relationships with
customers and others having business relationships with them and not engage in
any action, directly or indirectly, with the intent to adversely impact the
transactions contemplated by the Merger Agreement; (c) confer on a regular and
frequent basis with one or more representatives of Forcenergy to report
operational matters of materiality and the general status of ongoing operations
(subject to restrictions imposed by applicable law); and (d) use commercially
reasonable efforts to maintain with financially responsible insurance companies
insurance on its tangible assets and its businesses in such amounts and against
such risks and losses as are consistent with past practice.

NEGATIVE COVENANTS. Each of the Sellers has agreed that, prior to the
Closing Date, subject to certain exceptions and unless expressly contemplated
by the Merger Agreement or otherwise consented to in writing by Forcenergy, it
will not do, and will not permit any of its subsidiaries to do, any of the
following: (i) (A) amend or propose to amend their respective charter or
by-laws, (B) split, combine or reclassify their outstanding capital stock or
(C) declare, set aside or pay any dividend or distribution payable in cash,
stock, property or otherwise, except for the payment of dividends or
distributions by a wholly owned subsidiary; (ii) issue, sell, pledge or dispose
of, or agree to issue, sell, pledge or dispose of, any additional shares of, or
any options, warrants or rights of any kind to acquire any shares of their
capital stock of any class or any debt or equity securities convertible into or
exchangeable for such capital stock, except that a Seller may issue shares upon
conversion of convertible securities and exercise of options and warrants
outstanding on the date of the Merger Agreement; (iii) (A) incur or become
contingently liable with respect to any indebtedness for borrowed money other
than (x) borrowings in the Ordinary Course of Business or (y) borrowings to
refinance existing indebtedness on terms which are reasonably acceptable to
Forcenergy, (B) except as contemplated by the Merger Agreement, redeem,
purchase, acquire or offer to purchase or acquire any shares of its capital
stock or any options, warrants or rights to acquire any of its capital stock or
any security convertible into or exchangeable for its capital stock, (C) take
or fail to take any action which action or failure to take action would cause
either Seller or its stockholders (except to the extent that any stockholders
receive cash) to recognize gain or loss for federal income tax purposes as a
result of the consummation of the Convest Merger or would otherwise cause the
Convest Merger not to qualify as a reorganization under Section 368 of the
Code, (D) make any acquisition of any assets or businesses other than
expenditures for current assets in the ordinary course of business, (E) sell,
pledge, dispose of or encumber any assets or businesses without the approval of
Forcenergy or (F) enter into any binding contract, agreement, commitment or
arrangement with respect to any of the foregoing; (iv) enter into or amend any
employment, severance, special pay arrangement with respect to termination of
employment or other similar arrangements or agreements with any directors,
officers or employees; (v) adopt, enter into or amend any bonus, profit
sharing, compensation, stock option, pension, retirement, deferred
compensation, health care, employment or other employee benefit plan,
agreement, trust, fund or arrangement for the benefit or welfare of any
employee or retiree, except as required to comply with changes in applicable
law; (vi) make,

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change or revoke any material tax election or make any material agreement or
settlement regarding taxes with any taxing authority; (vii) change any method
of accounting or accounting practice, except for any such change required by
GAAP; and (viii) enter into any future, hedge, swap, collar, put, call, floor,
cap, option or other contracts that are intended to benefit from or reduce or
eliminate the risk of fluctuations in the price of commodities, including
hydrocarbons, or securities, other than such as are entered into in the
Ordinary Course of Business solely for the purpose of terminating an existing
hedge.

ACCESS TO INFORMATION. During the pendency of the Merger Agreement,
Forcenergy, Edisto and Convest have each agreed to afford, and to cause its
subsidiaries to afford, to the other party and its representatives full access
during normal business hours to their respective properties, books, contracts,
commitments, books and records. Each of them has also agreed to furnish, and
to cause its subsidiaries to furnish, to the other party and its
representatives such information concerning the business, properties, and
personnel of such party and its subsidiaries as may be reasonably requested.
If the Merger Agreement is terminated in accordance with its terms, a party
that has received information pursuant to the Merger Agreement is obligated to
return all non-public information.

NO SOLICITATION

As an inducement to Forcenergy to enter into the Merger Agreement, the
Sellers have agreed not to (and have agreed to not permit any of their
subsidiaries, officers, directors, employees or representatives to initiate,
solicit, negotiate, encourage or provide confidential information to facilitate
any proposal or offer to acquire all or any substantial part of the business
and properties of either Seller or any of their Subsidiaries or any capital
stock of either Seller or any of their Subsidiaries, whether by merger,
purchase of assets, tender offer or otherwise, whether for cash, securities or
any other consideration or combination thereof ("Acquisition Transaction").
The Sellers will immediately notify Forcenergy of any such inquiries and
proposals received by the Sellers or any of their subsidiaries provided,
however, that (i) either Seller may, in response to an unsolicited written
proposal or unsolicited written indication of interest with respect to a
potential or proposed Acquisition Transaction ("Acquisition Proposal"), furnish
(subject to the execution of a confidentiality agreement and standstill
agreement in substantially the form executed by Forcenergy) confidential or
non-public information to a financially capable corporation, partnership,
person or other entity or group (a "Potential Acquirer") and negotiate with
such Potential Acquirer if the Board of Directors of such Seller after
consulting with its outside legal counsel, determines in good faith that the
failure to provide such confidential or non-public information to or negotiate
with such Potential Acquirer would constitute a breach of its fiduciary duty to
its stockholders and (ii) such Seller's Board of Directors may take and
disclose to its stockholders a position contemplated by Rule 14e-2 under the
Exchange Act.

TERMINATION

The Merger Agreement may be terminated at any time prior to the Closing
Date, whether before or after approval by the stockholders of the Sellers, by
the mutual written consent of Forcenergy and the Sellers or as follows:

(i) The Sellers shall have the right to terminate the Merger
Agreement:

(A) if the representations and warranties of Purchasers in the
Merger Agreement shall fail to be true and correct in all material respects
on and as of the date made or, except in the case of any such
representations and warranties made as of a specified date, on and as of
any subsequent date as if made at and as of such subsequent date and such
failure shall not have been cured in all material respects within 30 days
after written notice of such failure is given to Forcenergy by the Sellers;

(B) if the Mergers are not completed by October 31, 1997 (unless
due to a delay or default on the part of a Seller);

(C) if any of the Mergers is enjoined by a final, unappealable
court order not entered at the request or with the support of a Seller and
if the Sellers shall have used reasonable efforts to prevent the entry of
such order;

(D) if (w) a Seller receives an offer or proposal from any
Potential Acquirer (excluding any affiliate of a Seller or any group of
which any affiliate of a Seller is a member) with respect to a merger, sale
of substantial assets or other business combination involving such Seller,
(x) such Seller's Board of Directors determines, in good faith

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and after consultation with an independent financial advisor, that such
offer or proposal (if consummated pursuant to its terms) would result in an
Acquisition Transaction more favorable to such Seller's stockholders from a
financial point of view than the relevant Merger (any such offer or
proposal being referred to as a "Superior Proposal" and resolves to accept
such Superior Proposal, (y) the Board of Directors of the Seller shall
conclude in good faith after consultation with its legal counsel that such
action is necessary in order for the Board of Directors of the Seller to
act in a manner that is consistent with its fiduciary obligations under
applicable law and (z) the Seller shall have furnished Forcenergy with a
copy of the definitive agreement at least five business days prior to its
execution and Forcenergy shall have failed within such five business day
period to offer to amend the terms of this Agreement so that the Mergers
would be, in the good faith determination of the Board of Directors of the
Seller, at least as favorable to the Seller's stockholders from a financial
point of view as the Acquisition Transaction; provided however, that such
termination shall not be effective until such time as the termination fee
(described below) shall have been received by Forcenergy;

(E) if (w) a tender or exchange offer is commenced by a Potential
Acquirer (excluding any Affiliate of a Seller or any group of which any
Affiliate of a Seller is a member) for all outstanding shares of such
Seller's common stock, (x) such Seller's Board of Directors determines, in
good faith and after consultation with an independent financial advisor,
that such offer constitutes a Superior Proposal and resolves to accept such
Superior Proposal or recommend to the stockholders that they tender their
shares in such tender or exchange offer, (y) the Board of Directors of the
Seller shall conclude in good faith after consultation with its legal
counsel that such action is necessary in order for the Board of Directors
of the Seller to act in a manner that is consistent with its fiduciary
obligations under applicable law and (z) the Seller shall have furnished
Forcenergy with a copy of the definitive agreement at least five business
days prior to its execution and Forcenergy shall have failed within such
five business day period to offer to amend the terms of this Agreement so
that the Mergers would be, in the good faith determination of the Board of
Directors of the Seller, at least as favorable to the Seller's stockholders
from a financial point of view as the Acquisition Transaction; provided,
however, that such termination shall not be effective until such time as
the termination fee (described below) shall have been received by
Forcenergy; or

(F) if (x) Forcenergy fails to perform in any material respect any
of its material covenants in this Agreement ("Default"), (y) Forcenergy
does not cure such Default in all material respects within 30 days after
notice of such Default is given to Forcenergy by the Sellers and (z)
neither Seller is itself in Default.

(ii) Forcenergy shall have the right to terminate the Merger
Agreement:

(A) if the representations and warranties of the Sellers shall
fail to be true and correct in all material respects on and as of the date
made or, except in the case of any such representations and warranties made
as of a specified date, on and as of any subsequent date as if made at and
as of such subsequent date and such failure shall not have been cured in
all material respects within 30 days after written notice of such failure
is given to the Sellers by Forcenergy;

(B) if the Mergers are not completed by October 31, 1997 (unless
due to a delay or default on the part of Forcenergy);

(C) if any of the Mergers is enjoined by a final, unappealable
court order not entered at the request or with the support of Forcenergy
and if Forcenergy shall have used reasonable efforts to prevent the entry
of such order;

(D) if the Board of Directors of a Seller shall have resolved to
accept a Superior Proposal or shall have recommended to the stockholders of
such Seller that they tender their shares in a tender or an exchange offer
commenced by a third party (excluding any affiliate of Forcenergy or any
group of which any affiliate of Forcenergy is a member);

(E) if (A) a Seller is in Default, (B) such Seller does not cure
such Default in all material respects within 30 days after notice of such
Default is given to such Seller by Parent, and (C) Forcenergy is not itself
in Default; or

(F) if the Sellers fail to receive the requisite stockholder
approvals for the Mergers.

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EXPENSES AND TERMINATION FEES

All costs and expenses incurred by the Sellers and the Purchasers will be
borne by the party incurring such expenses; provided, however, that the
allocable share of Forcenergy and the Sellers for all expenses related to
printing, filing and mailing this Joint Proxy Statement/Prospectus and all
Commission and other regulatory filing fees incurred in connection with the
Registration Statement or this Joint Proxy Statement/Prospectus shall be shared
equally by Forcenergy and the Sellers.

The Merger Agreement provides that the Sellers will pay Forcenergy a fee
equal to $3,000,000, if:

(A) either Seller terminates the Merger Agreement pursuant to clause
(i) (D) or (E) as described above under "Termination";

(B) Forcenergy terminates the Merger Agreement pursuant to clause (ii)
(D) as described above under "Termination; or

(C) Forcenergy terminates the Merger Agreement pursuant to clause (ii)
(F) as described above under "Termination" as a result of a failure of
Convest to receive the requisite stockholder approvals.

The Merger Agreement provides that Forcenergy will pay to the Sellers, a
fee equal to $3,000,000 if Sellers are not in breach or violation of the Merger
Agreement and Forcenergy terminates the Merger Agreement for any reason other
than pursuant to clause (ii) as described above under "Termination."

INDEMNIFICATION

The Merger Agreement provides that, (i) from and after the Edisto Merger
Effective time, with respect to Edisto, and the Convest Merger Effective Time,
with respect to Convest, Forcenergy will indemnify and hold harmless each
present and former director and/or officer of a Seller, determined as of such
effective time (the "Indemnified Parties"), that is made a party or threatened
to be made a party to any threatened, pending or completed, action, suit,
proceeding or claim, whether civil, criminal, administrative or investigative,
by reason of the fact that he or she was a director or officer of a Seller or
any subsidiary of a Seller prior to such effective time and arising out of
actions or omissions of the Indemnified Party in any such capacity occurring at
or prior to such effective time (a "Claim") against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities reasonably incurred in connection with any Claim,
whether asserted or claimed prior to, at or after such effective time, to the
fullest extent that such Seller would have been permitted under Delaware law,
the respective charters or by-laws of such Seller or written indemnification
agreements in effect at the date hereof, including provisions therein relating
to the advancement of expenses incurred in the defense of any action or suit;
(ii) for a period of six years after the Edisto Merger Effective Time and the
Convest Merger Effective Time, respectively, Purchasers shall maintain the
Sellers' existing directors and officers liability insurance or equivalent
liability insurance, which will provide coverage for those persons who are
directors and officers of the Sellers as of such effective time, so long as the
annual premium therefor is not in excess of 150% of the last annual premium
paid by the Sellers prior to the date hereof.

In lieu of such insurance arrangement, Purchasers may, on or before the
Closing, enter into alternative insurance arrangements, providing that such
arrangements are approved by each of the Sellers and are no less advantageous
to the Indemnified Parties so long as no lapse in coverage occurs as a result
of such substitution.

SHAREHOLDER AGREEMENTS

Concurrently with the execution of the Merger Agreement, Forcenergy and the
TCW Entities, which own approximately 51% of the outstanding shares of Edisto
Common Stock, entered into a Shareholder Agreement pursuant to which the TCW
Entities have agreed to vote their shares of Edisto Common Stock in favor of
the Merger Agreement, unless Edisto's Board of Directors approves an
alternative transaction with a value of at least $10.95 per share. The TCW
Entities also have agreed to not solicit or encourage any offer from any party
concerning the possible disposition of all or any substantial portion of
Edisto's or Convest's business assets or a controlling equity interest in
Edisto or Convest. For a period of 180 days after the Mergers have been
consummated, the TCW Entities have agreed that they

53
<PAGE> 61
will not sell or otherwise dispose of 80% of the shares of Forcenergy Common
Stock they receive pursuant to the Mergers. Forcenergy has agreed to file a
shelf registration statement to register the shares of Forcenergy Common Stock
to be received by the TCW Entities pursuant to the Mergers under the Securities
Act, and has also granted the TCW Entities certain piggyback registration
rights.

Pursuant to the Merger Agreement, Edisto, which owns 72% of the outstanding
shares of Convest Common Stock, has agreed to vote its shares of Convest Common
Stock in favor of the Convest Merger and the Merger Agreement. Edisto has also
agreed not to solicit or encourage any offer from any party concerning the
possible disposition of all or any substantial portion of Edisto's or Convest's
business assets or a controlling equity interest in Convest.

Concurrently with the execution of the Merger Agreement, Forcenergy and
certain affiliated stockholders, each of the directors and executive officers
of Edisto and Convest (each, a "Supporting Stockholder") also entered into
agreements pursuant to which each Supporting Stockholder has agreed that such
Supporting Stockholder will vote their respective shares of Edisto Common Stock
and Convest Common Stock in favor of the Merger Agreement. The Supporting
Stockholders own an aggregate of 20,214 shares of Edisto Common Stock and
40,284 shares of Convest Common Stock.

54
<PAGE> 62
PRO FORMA FINANCIAL INFORMATION

The unaudited pro forma consolidated statement of operations for the three
months ended March 31, 1997 gives effect to the Edisto and Convest Mergers, the
acquisition of Great Western Resources, Inc. ("Great Western") and the
acquisition of Cook Inlet properties from Stewart Petroleum Company (the "1997
Acquisitions"), as if such transactions had been consummated on January 1,
1996. The unaudited pro forma consolidated statement of operations for the
year ended December 31, 1996 gives effect to the Marathon Acquisition, the
Amerada Hess Acquisition (the 1996 "Acquisitions"), the conversion during 1996
of the 7% Exchangeable Subordinated Notes (the "Exchangeable Notes") into
2,343,047 shares of Forcenergy Common Stock, the 1996 exercise of 214,866
options to purchase Forcenergy Common Stock by certain holders of the
Exchangeable Notes, the sale of 1,635,408 shares of Forcenergy Common Stock in
1996 (the "Common Stock Offering"), the 1996 issuance of $175,000,000 of 9 1/2%
Senior Subordinated Notes (the "1996 Notes Offering") (collectively, the "1996
Transactions"), the 1997 issuance of the $200,000,000 of 8 1/2% Senior
Subordinated Notes (the "1997 Notes Offering"), the Edisto and Convest Mergers
and the 1997 Acquisitions as if such transactions had occurred on January 1,
1996. The results of operations of the 1996 Acquisitions and the Stewart
Acquisition include only the historical oil revenues and direct operating
expenses for periods presented which does not constitute a complete statement
of operations. The results of operations of Edisto and Great Western excludes
the results of discontinued operations for the year ended December 31, 1996.
The unaudited pro forma consolidated balance sheet as of March 31, 1997 gives
effect to the issuance of 3,128,911 shares of Forcenergy's Common Stock and $72
million in cash to purchase all of the outstanding stock of Edisto and Convest,
and the $18.7 million cash consideration paid in connection with the Stewart
Acquisition, as if such transactions had been consummated on March 31, 1997.
The unaudited pro forma information has been prepared based on estimates and
assumptions deemed by Forcenergy to be appropriate and does not purport to be
indicative of the financial position or results of operations which would
actually have been obtained if the 1996 Acquisitions, the 1996 Transactions,
the 1997 Notes Offering, the Edisto and Convest Mergers and the 1997
Acquisitions had occurred as presented in such statements or the results which
may be obtained in the future. Future results may vary significantly from the
results reflected in such statements due to price changes, production declines,
supply and demand, acquisitions and other factors.

The pro forma financial information presented does not incorporate
anticipated reductions in the general and administrative expenses (the "G&A")
associated with Edisto, Convest and Great Western. In the opinion of
its management, Forcenergy will be able to eliminate substantially all of the
G&A of Edisto and Convest, and the majority of the G&A associated with Great
Western. Forcenergy has realized a significant reduction in the G&A associated
with Great Western subsequent to the acquisition, and such reductions are
reflected in Forcenergy's historical consolidated results of operations for the
three months ended March 31, 1997. Forcenergy anticipates eliminating
substantially all of the G&A associated with Edisto, Convest and Great Western
in the future.

The pro forma financial information should be read in conjunction with the
historical financial statements of Forcenergy and the audited financial
information on the Amerada Hess Acquisition and the Marathon Acquisition, which
are incorporated herein by reference and the historical financial statements of
Edisto and Convest which are presented elsewhere within this Joint Proxy
Statement/Prospectus.

55
<PAGE> 63
FORCENERGY INC
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(unaudited)

<TABLE>
<CAPTION>
Forcenergy Great Pro Forma
Historical Edisto (A) Western (B) Stewart (C) Adjustments Pro Forma
---------- ---------- ----------- ----------- ----------- ---------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Oil and gas sales ........................... $ 70,580 $ 13,670 $ 2,105 $ 2,418 $ -- $ 88,773
Other ....................................... 425 -- 13 -- 438
-------- -------- -------- -------- -------- --------
Total revenues ......................... 71,005 13,670 2,118 2,418 -- 89,211

Operating Expenses:
Lease operating ............................. 16,185 3,175 578 485 -- 20,423
Depletion, depreciation and amortization .... 25,457 3,623 5,709 (D) 31,166
498 (4,121)(D)
Abandonment and exploration costs ........... -- 1,091 (1,091)(E) --
Production taxes ............................ 1,059 293 6 -- 1,358
General and administrative, net ............. 3,682 1,547 745 -- (F) 5,974
-------- -------- -------- -------- -------- --------
Total operating expenses ............... 46,383 9,729 1,821 491 497 58,921
-------- -------- -------- -------- -------- --------

Income from operations .......................... 24,622 3,941 297 1,927 (497) 30,290
Interest and other income ....................... 322 1,041 66 -- 1,429
Interest expense, net of amounts capitalized .... (6,848) (56) (196) 624 (G) (6,476)
Minority interest ............................... -- (1,336) 1,336 (H) --
-------- -------- -------- -------- -------- --------
Income before income taxes ...................... 18,096 3,590 167 1,927 1,463 25,243
Income tax provision ............................ 6,922 98 2,648 (I) 9,668
-------- -------- -------- -------- -------- --------

Net income ...................................... $ 11,174 $ 3,492 $ 167 $ 1,927 $ (1,185) $ 15,575
======== ======== ======== ======== ======== ========

Net income per share............................. $ 0.47 $ 0.58
======== ========

Weighted average shares outstanding.............. 23,943 27,072
</TABLE>

56
<PAGE> 64
FORCENERGY INC
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(unaudited)

Forcenergy Amerada Great
Historical (J) Hess (K) Marathon (L) Edisto (M) Western (N) Stewart (O)
-------------- --------- ------------ ---------- ----------- -----------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Oil and gas sales ................... $ 138,698 $ 9,263 $ 49,619 $ 47,222 $ 27,409 $ 14,928
Other ............................... 683 -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Total revenues ................. 139,381 9,263 49,619 47,222 27,409 14,928
--------- --------- --------- --------- --------- ---------

Operating Expenses:
Lease operating ..................... 38,786 2,317 19,338 13,716 4,599 4,014
Depletion, depreciation and
amortization ........................ 58,464 -- -- 16,541 8,882 --

Abandonment and exploration costs ... -- -- -- 2,021 3,081
Impairments of oil and gas
properties .......................... -- -- -- 2,633
Production taxes .................... 3,454 -- 297 1,272 42
General and administrative, net ..... 7,971 -- -- 6,376 3,306
--------- --------- --------- --------- --------- ---------
Total operating expenses ....... 108,675 2,317 19,635 42,559 19,868 4,056
--------- --------- --------- --------- --------- ---------

Income from operations ................ 30,706 6,946 29,984 4,663 7,541 10,872
Interest and other income ............. 650 -- -- 4,585 740
Interest expense, net ................. (13,367) -- -- (1,068) (1,923)
Minority interest ..................... -- -- -- (2,190)
--------- --------- --------- --------- --------- ---------
Income before income taxes ............ 17,989 6,946 29,984 5,990 6,358 10,872
Income tax provision .................. 6,711 -- -- 387 77 --
--------- --------- --------- --------- --------- ---------

Net income ............................ $ 11,278 $ 6,946 $ 29,984 $ 5,603 $ 6,281 $ 10,872
========= ========= ========= ========= ========= =========

Net income per share................... $ 0.57
=========

Weighted average shares outstanding... 19,727

<CAPTION>
Pro Forma
Adjustments
------------
Acquisitions Pro Forma
------------ ---------

<S> <C> <C>
Revenues:
Oil and gas sales ................... $ -- $ 287,139
Other ............................... -- 683
--------- ---------
Total revenues ................. -- 287,822
--------- ---------

Operating Expenses:
Lease operating ..................... -- 82,770
Depletion, depreciation and
amortization ........................ 51,280 (D) 109,744
(25,423)(D)
Abandonment and exploration costs ... (5,102)(E) --
Impairments of oil and gas
properties .......................... (2,633)(E) --
Production taxes .................... -- 5,065
General and administrative, net ..... -- (F) 17,653
--------- ---------
Total operating expenses ....... 18,122 215,232
--------- ---------

Income from operations ................ (18,122) 72,590
Interest and other income ............. (1,586)(E) 4,339
Interest expense, net ................. (4,915)(P) (21,273)
Minority interest ..................... 2,190 (H) --
--------- ---------
Income before income taxes ............ (22,433) 55,706
Income tax provision .................. 13,603 (I) 20,778
--------- ---------

Net income ............................ $ (36,036) $ 34,928
========= =========

Net income per share................... $ 1.29
=========

Weighted average shares outstanding... 27,048
</TABLE>

57
<PAGE> 65
FORCENERGY INC
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1997
(unaudited)

<TABLE>
<CAPTION>
FORCENERGY PRO FORMA
HISTORICAL EDISTO (Q) ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash .......................................... $ 50,029 $ 74,797 $ (72,000)(R) $ 34,083
(18,743)(S)
Restricted cash ............................... -- 333 333
Margin deposits ............................... -- 67 67
Accounts receivable, net ...................... 33,719 6,981 (1,000) 39,700
Other current assets .......................... 11,490 591 12,081
--------- --------- --------- ---------
Total current assets ..................... 95,238 82,769 (91,743) 82,264
INVESTMENTS IN SURETY BONDS, AT COST .............. 3,981 -- 3,981

PROPERTY, PLANT & EQUIPMENT, AT COST
(full cost method) net of accumulated depletion
depreciation and amortization ..................... 625,837 56,840 166,194 (R) 757,095
(101,103)(R)
18,743 (S)
(9,416)(R)
4,289 (R)
OTHER ASSETS ...................................... 19,060 2,236 (1,205)(R) 24,380
--------- --------- --------- ---------
$ 744,116 $ 141,845 $ (14,241) $ 871,720
========= ========= ========= =========

LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable .............................. $ 15,386 $ 10,622 $ $ 26,008
Other accrued liabilities ..................... 65,362 10,780 6,705 (R) 79,023
(1,858)(R)
(1,966)(R)
--------- --------- --------- ---------
Total current liabilities ................ 80,748 21,402 2,881 105,031
LONG TERM DEBT .................................... 375,100 3 72,000 (R) 375,103
(72,000)(R)
DEFERRED REVENUE .................................. -- 561 (561)(R) 0
MINORITY INTEREST ................................. -- 12,297 (12,297)(R) 0
Other noncurrent liabilities ...................... 6,479 (7,450)(R) 3,318
4,289 (R)
DEFERRED INCOME TAXES ............................. 27,997 27,997

STOCKHOLDER'S EQUITY
Preferred stock, $.01 par value; 5,000,000
shares authorized; none issued or
outstanding
Common stock, $.01 par value; 50,000,000
authorized; 22,643,396 issued and
outstanding at March 31, 1997 ............ 226 141 (141)(R) 257
31 (R)
Capital in excess of par value ................ 246,193 71,561 (71,561)(R) 346,162
99,969 (R)
Retained earnings ............................. 13,852 29,800 (29,800)(R) 13,852
Foreign currency translation .................. -- (37) 37 (R) 0
Treasury stock, at cost, 52,214 shares ........ -- (362) 362 (R) 0
--------- --------- --------- ---------
Total stockholder's equity ............... 260,271 101,103 (1,103) 360,271
--------- --------- --------- ---------
$ 744,116 $ 141,845 $ (14,241) $ 871,720
========= ========= ========= =========
</TABLE>

58
<PAGE> 66
ADJUSTMENTS

(A) This column reflects consolidated Edisto unaudited historical results of
operations for the three months ended March 31, 1997 which includes the
results of operations of Convest.
(B) This column reflects Great Western unaudited historical results of
operations for the twenty-one days ended January 21, 1997, exclusive of
severance payments.
(C) This column reflects the unaudited historical oil revenues and direct
operating expenses for the properties acquired in the Stewart
Acquisition for the three months ended March 31, 1997.
(D) Adjustment to depletion, depreciation and amortization of oil and gas
properties giving consideration to the transactions reflected herein.
(E) Adjustments to convert Convest and Great Western from the successful
efforts method of accounting to the full cost method of accounting
utilized by Forcenergy.
(F) Though it is inappropriate to reflect an increase in the results of
operations for anticipated reductions in general and administrative
costs subsequent to acquisition, in the opinion of management, the
Company will eliminate substantially all of the general and
administrative expenses of Edisto and a majority of those of Great
Western.
(G) Net decrease in interest expense assuming a weighted average interest
rate of 8.97% and average actual debt outstanding for the period
adjusted for capitalized interest.
(H) Adjustment to eliminate the minority interest in Convest acquired
pursuant to the Edisto and Convest Mergers.
(I) Adjustment to income tax expense reflecting the results of transactions
herein using Forcenergy's historical combined federal and state
statutory rate of 38.3% and 37.3% for the periods ended March 31, 1997
and December 31, 1996, respectively.
(J) Forcenergy Historical Results include the historical oil and gas
revenues and direct operating expenses for the Amerada Hess Acquisition
from closing date June 28, 1996 to December 31, 1996 and Marathon
Acquisition from December 30, 1996 to December 31, 1996.
(K) This column includes the historical oil revenues and direct operating
expenses for the Amerada Hess Acquisition from January 1, 1996 to June
27, 1996.
(L) This column indicates the historical oil revenues and direct operating
expenses for the Marathon Acquisition from January 1, 1996 to December
31, 1996.
(M) This column reflects Edisto consolidated historical results of
operations, which includes Convest for the year ended December 31, 1996,
excluding the effects of discontinued operations.
(N) This column reflects Great Western's unaudited historical results of
operations for the year ended December 31, 1996, excluding the effect of
discontinued operations.
(O) This column reflects the unaudited historical oil revenues and direct
operating expenses for the properties acquired in the Stewart
Acquisition for the year ended December 31,1996.
(P) Net increase in interest expense assuming the following transactions
occurred on January 1, 1996: (i) the 1996 conversion of the Exchangeable
Notes; (ii) the 1996 Common Stock Offering; (iii) the 1996 Notes
Offering; (iv) the 1997 Notes Offering; (v) the Edisto and Convest
Mergers; and (vi) the 1997 Acquisitions; and assuming a weighted average
interest rate of 8.97% and average actual debt outstanding for the
period (excluding the Exchangeable Notes) adjusted for 1996 Acquisitions
costs, debt issuance cost and capitalized interest.
(Q) This column reflects Edisto's historical financial position as of March
31, 1997.
(R) Purchase accounting adjustments and consolidating entries to reflect the
Edisto and Convest Mergers.
(S) Adjustment to record the Stewart Acquisition.

59
<PAGE> 67
INFORMATION REGARDING FORCENERGY

OVERVIEW

Forcenergy, formerly Forcenergy Gas Exploration, Inc., is an independent
oil and gas company engaged in the exploration, acquisition, development,
exploitation and production of oil and natural gas. Forcenergy, and its
predecessors, have been engaged in the oil and gas exploration and production
business since 1982, the year in which it was founded by the President and
Chief Executive Officer, Stig Wennerstrom.

On August 2, 1995, Forcenergy completed an initial public offering of
6,210,000 shares of common stock of Forcenergy, at $10.00 per share, resulting
in net proceeds of $55.7 million (the "1995 Offering").

Forcenergy has experienced significant growth in the last six years,
primarily through the exploitation, enhancement and development of acquired
producing properties in the Gulf of Mexico and the 1996 acquisition of
producing properties in the Cook Inlet, Alaska. At December 31, 1996,
Forcenergy had net proved reserves of approximately 585 Bcfe, 58% of which were
located in the Gulf of Mexico and 27% of which were located in Alaska.
Approximately 56% of Forcenergy's net proved reserves on such date were oil and
approximately 78% of proved reserves were classified as proved developed.
Forcenergy currently operates approximately 75% of its Gulf of Mexico
production. Forcenergy's primary focus is its Gulf of Mexico and Alaska
activities, however, Forcenergy has also acquired interests in certain
high-potential undeveloped international leasehold acreage, primarily in Gabon,
Africa and Australia.

STRATEGY

Gulf of Mexico. Forcenergy's business strategy is to increase reserves
and cash flows primarily through the exploration, exploitation and
development of its producing properties while also acquiring additional
properties in the Gulf of Mexico. Forcenergy believes it has assembled at
least a three year inventory of development, exploitation and exploratory
drilling opportunities in the Gulf of Mexico on acreage currently held by
production. Most of the prospects comprising this inventory are located in
fields which have prolific production histories and which Forcenergy believes
will yield significant additional reserves through the application of modern
exploration and development technologies. Forcenergy believes that its high
quality asset base positions it for future growth through a continuing program
of further development through selective exploitation and exploratory drilling
and through the enhancement of production through workovers and recompletions.
Forcenergy emphasizes the use of 3-D seismic and computer-aided exploration
technology together with geologic and engineering studies of its properties to
evaluate and prioritize drilling prospects. Focusing drilling activities on
producing properties in a relatively concentrated area in the Gulf of Mexico
permits Forcenergy to utilize its base of geological, engineering and production
experience in the region to maximize its drilling success and to minimize
finding and development costs. Furthermore, Forcenergy's concentration of
drilling activities on its producing properties allows the utilization of
existing infrastructure which greatly reduces incremental lease operating
expenses and capital costs associated with new production facilities and
minimizes timing delays in commencing production. Forcenergy plans to continue
to pursue acquisitions of working interests in producing properties that offer
further development potential and provide operating synergies with existing
properties.

Forcenergy prefers to operate its Gulf of Mexico properties because
functioning in that capacity positions it to more effectively manage production
performance and operating expenses and allows it to control the timing and
amount of capital expenditures. Forcenergy operates 91 structures and 177
wells in the Gulf of Mexico, and believes that the operating expertise and
experience of its personnel have been instrumental in its ability to
significantly enhance and improve production rates and cash flows. Of
particular importance, a significant portion of the drilling prospects
Forcenergy expects to pursue during the next three to five years are accessible
from existing production facilities operated by Forcenergy.

Cook Inlet, Alaska. Forcenergy's business strategy in the Cook Inlet area
is to increase production and cash flow through the exploitation of existing
producing properties as well as conducting selective exploration activities.
Forcenergy believes that it has assembled a high quality producing asset base
with exploitation potential as well as exploratory lease positions that will
give Forcenergy an opportunity to add significant new reserves through
drilling. Since its discovery, oil and gas activities in the Cook Inlet area
have been dominated by major oil companies. Forcenergy believes that it will
be able to economically exploit opportunities previously not pursued by the
major oil

60
<PAGE> 68
companies by utilizing proprietary 3-D seismic data, smaller, automated
offshore production facilities and other methods that have proven successful in
Forcenergy's operations in the Gulf of Mexico.

TECHNOLOGY

Forcenergy utilizes advanced technology in its exploration and development
activities in order to reduce drilling risks and finding costs and to more
effectively prioritize drilling prospects based on return potential.
Forcenergy currently has acquired 825 square miles of 3-D seismic surveys on 64
of its offshore Gulf of Mexico lease blocks and 635 square miles on other Gulf
of Mexico blocks in which Forcenergy currently does not own an interest.
Forcenergy also owns approximately 64,500 linear miles of high quality 2-D
seismic data on Gulf of Mexico blocks. The ability to obtain the 3-D seismic
data for offshore properties at reasonable costs has enabled Forcenergy to
identify multiple development and exploratory prospects in mature producing
fields which were not identified through earlier technologies. Forcenergy
currently employs 18 geologists/geophysicists experienced in interpreting 3-D
data and has invested in 23 Landmark geophysical workstations for that purpose.

RECENT DEVELOPMENTS

From January 1996 to June 1997, Forcenergy has spent an aggregate of
approximately $234.4 million on several acquisitions including, (1) Marathon
Oil Company's interest in certain producing crude oil properties in the Cook
Inlet area and Prudhoe Bay Unit, Alaska, (the "Marathon Acquisition") and a 30%
interest in the Cook Inlet Pipeline Company, (2) Great Western Resources, Inc.,
an independent oil and gas company ("Great Western Acquisition"), (3) interests
in certain producing crude oil properties in the West McArthur River Field,
located in Cook Inlet, Alaska from Stewart Petroleum Company (the "Stewart
Acquisition") and (4) various working interests in other oil and gas properties
in the Gulf of Mexico and the Permian Basin.

The Marathon Acquisition. In December 1996, Forcenergy acquired the 48%
average working interest of Marathon Oil Company ("Marathon") in the McArthur
River Field (Trading Bay Unit) and Marathon's 50% interest in the Trading Bay
Field, both in the Cook Inlet, and Marathon's 0.05% working interest in the
Prudhoe Bay Unit for $107.8 million. In January 1997, Forcenergy acquired
Marathon's interest in the Cook Inlet Pipeline Company for $7.4 million in cash
and the guarantee of $6.7 million in Cook Inlet Pipeline Company debt. Net
production from the interests acquired is currently approximately 7,000 Bbls of
oil per day ("BOPD"). Net proved reserves associated with the Trading Bay
Unit, Trading Bay Field and Prudhoe Bay Unit totaled approximately 25.9 MMbbls
of oil as of December 31, 1996.

The Unocal Alliance. In December 1996, Forcenergy entered into an alliance
with Union Oil Company of California ("Unocal"), operator of Forcenergy's
properties in the Cook Inlet, to jointly pursue lease sale activities and to
further develop Unocal's existing Cook Inlet properties in Alaska. The
agreement requires Forcenergy to expend up to $30 million within the next five
years on lease acquisition and development and exploratory drilling on
prospects generated as a result of this alliance. It also provides Forcenergy
access to Unocal's geologic and geophysical data base in the Cook Inlet,
including approximately 37,000 linear miles of 2-D seismic data and 6,000
square miles of 3-D seismic data. The agreement also provides that Forcenergy
and Unocal shall each contribute technical staff to the alliance in a joint
effort to identify development prospects in and around Unocal's existing Cook
Inlet properties as well as exploratory opportunities in the area. Forcenergy
has identified a number of prospects that will be further evaluated for
drilling potential. During 1997, Forcenergy plans to spend $15.0 million on
several development and exploitation wells and to undertake a 3-D seismic
survey over a Cook Inlet prospect.

As part of its alliance with Unocal, in December 1996, Forcenergy acquired
a 50% interest in 17 State of Alaska lease tracts. Forcenergy's net
expenditure in the lease sale was approximately $1.7 million.

Great Western Acquisition. In January 1997, Forcenergy acquired all of the
outstanding stock of Great Western for approximately $48.3
million. Great Western had oil and gas operations located primarily in the
onshore Gulf Coast regions of Louisiana and Texas and offshore Gulf of Mexico.
Great Western's highest value asset was South Marsh Island 18, which is
strategically located adjacent to Forcenergy's recent SMI 11 #54 discovery.
Great Western also had a 20% interest in an exploration concession in Peru. As
of September 30, 1996, Great Western had total proved reserves of approximately
33.2 Bcfe of natural gas. Great Western's current net daily production is
approximately 1,000 Bbls of oil and 12,000 Mcf of natural gas.

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<PAGE> 69
Stewart Acquisition. In June 1997, Forcenergy acquired a 97.75% working
interest in the West McArthur River Field, located in Cook Inlet, Alaska from
Stewart Petroleum Company for $18.7 million and assumed operations of the
field. Net production is currently approximately 1100 Bbls of oil per day.
Net proved reserves approximated 2.6 MMbbl at June 5, 1997.

Other Working Interest Acquisitions. In June 1996, Forcenergy acquired
working interests in eleven Gulf of Mexico producing fields from Amerada Hess
Corporation (the "Amerada Hess Acquisition") for a cash consideration of $6.9
million. In August 1996, Forcenergy acquired an additional working interest in
one of these fields, Mustang Island 742/754, for approximately $4.0 million,
increasing its total working interest in this field to 100%. In December 1996,
Forcenergy acquired interests in eight fields in the Gulf of Mexico in three
separate transactions for an aggregate purchase price of $23.5 million. The
first transaction involved the acquisition of a 33% working interest position
in Mustang Island Block 746, bringing Forcenergy's ownership in the block to
100%. In the second transaction Forcenergy acquired a 33% working interest
position in the South Marsh Island Block 136/137 field, also bringing
Forcenergy's ownership in the field to 100%. In the third transaction,
Forcenergy acquired an average 20% working interest in seven fields in the Gulf
of Mexico. Estimated net proven reserves associated with these acquisitions
include approximately 862 Mbbls of oil and 21.7 Bcfe of natural gas. The
interests acquired were producing approximately 500 BOPD and 12,000 Mcf of
natural gas per day ("MCFPD"), net to Forcenergy's interest at the end of 1996.
In February 1997, Forcenergy acquired an average 75% non-operated working
interest in producing fields in the Permian Basin for an aggregate purchase
price of $14.5 million. Estimated proven reserves associated with the
properties totaled approximately 3.4 MMbbls of oil and 7.2 Bcf of natural gas
as of the acquisition date. Current average net daily production from the
properties is approximately 300 Bbls of oil and 700 Mcf of natural gas.

During 1996, Forcenergy also acquired interests in certain undeveloped
leasehold acreage or concessions in international areas primarily offshore
Australia and Gabon, Africa. Exploratory activities in these areas have begun
in 1997.

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<PAGE> 70
GULF OF MEXICO PROPERTIES

Forcenergy currently holds working interests in 121 Gulf of Mexico and Gulf
Coast lease blocks, including a 100% working interest in 43 of these blocks and
50% or greater working interest in 18 other blocks, and operates 53 of the
producing blocks representing 75% of its current Gulf of Mexico/Gulf Coast
production. On a pro forma basis, reflecting the Edisto and Convest Mergers,
interests held in the Gulf of Mexico/Gulf Coast area will be increased to 164
lease blocks, including 64 blocks with greater than 50% working interests. The
following table lists the average working interest, net proved reserves and the
operator for Forcenergy's 13 largest offshore Gulf of Mexico properties,
comprising approximately 82% of Forcenergy's net proved reserves in the Gulf of
Mexico and 47% of Forcenergy's total net proved reserves, as of December 31,
1996:

<TABLE>
<CAPTION>
ESTIMATED NET
PROVED RESERVES AT
DECEMBER 31, 1996
------------------------------
AVERAGE NATURAL
WORKING OIL GAS TOTAL
FIELD INTEREST (MBBLS) (MMCF) (MMCFE) OPERATOR
----- -------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C>
South Marsh Island 6/10/11/18/19/285 Complex: 100% 5,352 30,471 62,583 Forcenergy
South Marsh Island Block 106 North and
Block 106 South/Block 115 100% 3,519 12,156 33,270 Forcenergy
South Marsh Island 137 Field, Block 136/137 100% 886 21,071 26,387 Forcenergy
Ship Shoal 230 Field, Block 219 100% 1,963 5,835 17,613 Forcenergy
West Cameron 205 Field 100% 103 13,719 14,337 Forcenergy
High Island A-467 Field 100% 93 10,453 11,011 Forcenergy
Ship Shoal 26 Field 100% 292 8,392 10,144 Forcenergy
Chandeleur 25 Field 100% -- 8,959 8,959 Forcenergy
High Island A-280 Field 100% 38 8,979 9,207 Forcenergy
Mustang Island 754 100% 20 4,604 4,724 Forcenergy
Vermilion 262 Field 88% 873 8,525 13,763 Forcenergy
East Cameron 14 Field 50% 358 12,150 14,298 Forcenergy
South Pass 24 Field 71% 6,606 10,405 50,041 Third Party
</TABLE>

ALASKA PROPERTIES

Forcenergy currently holds an average 48% working interest in the McArthur
River Field (Trading Bay Unit) and a 50% working interest in the Trading Bay
Field located in the Cook Inlet. These fields had estimated net proved
reserves of 25.9 million barrels of oil and comprised approximately 27% of
Forcenergy's total estimated net proved reserves at December 31, 1996.
Forcenergy also purchased in June 1997 a 97.75% working interest in the West
McArthur River Field located in the Cook Inlet. Forcenergy operates this field
which had net proved reserves of 2.6 MMbbls of oil at June 5, 1997.

1996 AND 1997 OFFSHORE AND GULF COAST DRILLING ACTIVITY

During 1996 and continuing through May 1997, Forcenergy has continued to
focus on increasing reserves and cash flow by targeting development,
exploitation and exploration prospects on recently acquired properties,
developed in most cases through the use of 3-D seismic data. Forcenergy spent
$130.4 million in capital drilling expenditures during 1996, including $4.5
million in capitalized internal costs and $4.4 million on geological and
geophysical costs, including 3-D seismic data. During the five months ended
May 1997, Forcenergy spent $90.5 million on capital drilling expenditures,
including $4.3 million in capitalized internal costs and $6.0 million on
geological and geophysical costs. In the Gulf of Mexico, Forcenergy
successfully drilled nineteen of nineteen development wells and seven of ten
exploratory wells during 1996. All seven development wells drilled and nine of
sixteen exploratory wells drilled proved successful during the five months
ended May 1997. The following is a brief description of properties where
significant activity occurred during 1996 and 1997, all of which were operated
by Forcenergy except for South Pass 24 field. The working interest ownership
of Forcenergy is noted in parenthesis.

63
<PAGE> 71
South Marsh Island Block 106 North (SMI 106 N/2) and Block 106 South (SMI
106 S/2) and South Marsh Island 115 (100% working interest). Forcenergy
acquired its working interests in these fields in a series of acquisitions from
1993 to 1995. During 1996, Forcenergy successfully drilled and completed six
development and two exploratory wells in SMI 106 N/2. As of December 31, 1996,
these eight wells were producing at a combined net average rate of 2,581 BOPD
and 8,862 MCFPD. During 1997, two development wells were successfully drilled
and are currently producing 152 BOPD and 3,608 MCFPD, net to Forcenergy's
interest.

East Cameron 14 Field (50% average working interest). A development well
was completed in the first quarter of 1996. The well averaged 2,667 MCFPD, net
to Forcenergy, increasing total net production in this field to 84 BOPD and
3,317 MCFPD by the end of 1996. Reserves were encountered in seven other zones
in this well. Forcenergy is currently evaluating plans for additional drilling
in the field.

South Pass 24 Field (approximate 71% average working interest). During
1996, five development wells were drilled, all of which were completed.
Initial production tests from the five completed wells totaled 335 BOPD and 238
MCFPD, net to Forcenergy increasing total net production in this field to 2,623
BOPD and 3,368 MCFPD by the end of 1996, compared with net production of 891
BOPD and 501 MCFPD at the time of acquisition of the properties. Under
Louisiana law, new wells permitted prior to June 30, 1996, or wells which have
been shut in for more than two years and which are permitted prior to that
date, qualify for a five year exemption from the state severance tax of 12.5%
on the value of oil production sold and $.07 per Mcf on the volume of natural
gas sold during the five years following June 30, 1996. Four development wells
are planned for the remainder of 1997, one of which is currently being drilled.

Ship Shoal 230 Field, Block 219 (100% working interest). One dually
completed well was drilled and completed in April 1996. Production from this
well was averaging 450 BOPD and 618 MCFPD, net to Forcenergy by the end of
1996. Average net production in this field was 966 BOPD and 2,970 MCFPD based
on May 1997 production.

High Island 467 Field (100% working interest). Forcenergy completed all
three wells of a three-well drilling project during 1996. Two development
wells and one exploratory well were drilled and were producing at a combined
average rate of 153 BOPD and 10,118 MCFPD, net to Forcenergy, as of December
31, 1996. Total net field production was 146 BOPD and 16,956 MCFPD based on
May 1997 production. Forcenergy plans to drill one exploratory well at High
Island 467 during 1997 and two wells (one development and one exploratory) in
the adjacent High Island 470 field.

South Marsh Island 6/10/11/18/19/285 Complex (100% working interest). In
September 1996, Forcenergy completed drilling operations on an exploratory well
which encountered approximately 140 feet of TVD (true vertical depth) pay in
four sands and which added approximately 22.1 BCFE in estimated net proved
reserves. This well was producing at net rates of 647 BOPD and 4,416 MCFPD as
of December 31, 1996. During the fourth quarter of 1996, Forcenergy completed
two development wells and drilled one exploratory dryhole. The two development
wells were producing at a combined net rate of 578 BOPD and 5,699 MCFPD by the
end of 1996. These drilling activities brought total net field production to
1,499 BOPD and 12,542 MCFPD for the field complex, as of December 31, 1996. In
1997, Forcenergy completed a development well and an exploratory well that
added 17.5 BCFE in estimated net proved reserves and are currently producing
approximately 837 BOPD and 14,083 MCFPD. Three exploitation/exploratory wells
are planned for the remainder of 1997.

South Timbalier 148 (15.5% working interest). One exploratory well was
completed during 1996. The well was producing 150 BOPD and 3,984 MCFPD, net to
Forcenergy as of December 31, 1996. During 1997, two exploratory wells were
completed and are currently producing 2,547 BOPD and 8,085 MCFPD, net to
Forcenergy, prior to pipeline curtailments. Forcenergy plans to drill one
additional exploratory well during the remainder of 1997.

High Island 552 (100% working interest). During April 1997, two
exploratory wells were successfully completed and are currently producing
11,361 MCFPD, net to Forcenergy. Forcenergy plans to drill two additional
exploratory wells during the remainder of 1997.

64
<PAGE> 72
ADDITIONAL FUTURE PROJECTS

In addition to the activity described above, Forcenergy has identified a
substantial inventory of additional exploitation, development, exploratory,
workover and recompletion projects on its existing offshore properties which it
may undertake over the next three to five years. Many of these projects are
currently being reviewed by Forcenergy's geologists and geophysicists utilizing
3-D seismic data acquired in the last three years.

ONSHORE PROPERTIES

Forcenergy owns working and royalty interests in approximately 2,461
producing oil and gas wells in 224 fields in the Rocky Mountain, Gulf Coast,
Permian Basin and Appalachian regions of the United States. Management
believes that Forcenergy's stable reserve base of long-lived, primarily
non-operated, onshore properties complements the Gulf of Mexico operations by
providing an additional source of cash flow that requires limited management
involvement. Forcenergy's onshore properties accounted for approximately 15%
of estimated net proved reserves at December 31, 1996. Approximately $4.3
million in capital was spent on onshore properties during 1996, 40% of which
was incurred on the waterflood project in the Howard Glasscock/Snyder field.
Capital expenditures on onshore properties were insignificant during the five
months ended May 31, 1997. The following is a summary of Forcenergy's most
significant onshore properties:

Altamont/Bluebell Field. The Altamont/Bluebell Field is located in
Duchesne and Uinta Counties, Utah. Forcenergy owns working interests ranging
from less than 1% to 27.9% (average approximately 7%) in approximately 250
active wells and has overriding royalty interests in another 190 wells.
Forcenergy also owns an 8.125% working interest in the Altamont natural gas
processing plant. In the month of May 1997, Forcenergy's net production,
including gas plant liquids, averaged 411 BOPD and 1,212 MCFPD. Estimated net
proved reserves as of December 31, 1996 were 1,108 Mbbls and 3,189 MMcf.

Whitney Canyon Field. Forcenergy owns working interests ranging from 14.1%
to 18.9% in three wells in this Uinta County, Wyoming field and a 3.02% working
interest in the Whitney Canyon gas processing plant. Forcenergy's share of
total sales from processed gas and condensate and plant liquids currently
averages 135 BOPD and 1,090 MCFPD. Net proved reserves as of December 31, 1996
for Forcenergy's Whitney Canyon wells and share of the gas processing plant
were estimated at 223 Mbbls and 10,913 MMcf. Nine wells were connected during
1996 to the gas processing plant along a recently installed extension of the
gathering system which currently processes gas from the Yellow Creek field
located approximately 35 miles south of the plant.

Howard Glasscock/Snyder Field. During 1995, Forcenergy acquired an
approximate 50% non-operated working interest position in the Howard
Glasscock/Snyder Field located in Howard County, Texas. During May 1996,
Forcenergy increased its position in the Howard Glasscock/Snyder Field to 75%.
Forcenergy and its partners drilled twenty water injection wells during 1996
and completed its planned secondary waterflood project in December 1996, with
response anticipated during the second half of 1997. The field is experiencing
an initial response to the waterflood project on several leases. During May
1997, production increased by 8% over the prior month. This response is
expected to increase over the next three to four years. As of December 31,
1996, Forcenergy's net proved reserves were estimated at 2,170 Mbbls. Current
daily production from primary recovery methods is 274 BOPD, net to Forcenergy.

ACREAGE DATA

The following table sets forth the approximate developed and undeveloped
acreage in which Forcenergy held a leasehold, mineral or other interest at
December 31, 1996. Undeveloped acreage includes leased acres on which wells
have not been drilled or completed to a point that would permit the production
of commercial quantities of oil and gas, regardless of whether or not such
acreage contains proved reserves.

65
<PAGE> 73
<TABLE>
<CAPTION>
DEVELOPED ACRES UNDEVELOPED ACRES
------------------------ --------------------------
GROSS NET GROSS NET
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Offshore - Gulf of Mexico . . . . . . . . . . . . . 364,660 172,354 138,062 87,592
Offshore - Coastal Alaska . . . . . . . . . . . . . 113,348 76,658 43,907 22,772
Onshore - United States . . . . . . . . . . . . . . 717,189 78,120 348,980 90,702
Offshore - Australia . . . . . . . . . . . . . . . -- -- 2,786,623 696,656
Offshore - Gabon, Africa . . . . . . . . . . . . . -- -- 682,428 102,364
Onshore - Other international . . . . . . . . . . . -- -- 649,393 266,100
---------- ----------- ----------- ------------
Total . . . . . . . . . . . . . . . . . . . . 1,195,197 327,132 4,649,393 1,266,186
========== =========== =========== ============
</TABLE>

OIL AND GAS RESERVES

The following table summarizes the estimates of Forcenergy's historical net
proved reserves as of January 1, 1997 and the present values attributable to
those reserves on such date using constant prices and operating costs as of the
valuation date, discounted at a rate of 10% per annum, in accordance with
Commission guidelines. The reserve data and present values as of January 1,
1997 for the onshore properties, the Alaska properties and a small portion of
the offshore properties have been estimated by Netherland, Sewell & Associates,
Inc., independent petroleum engineering consultants. The reserve data and
present values as of January 1, 1997 for the majority of the offshore
properties have been estimated by Collarini Engineering Inc., independent
petroleum engineering consultants. (See Note 15 to Forcenergy's Financial
Statements)

<TABLE>
<CAPTION>
AS OF JANUARY 1, 1997
---------------------
<S> <C>
NET PROVED RESERVES:
Liquids (Mbbls)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,659
Natural gas (Mmcf) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256,913
Total (MMcfe) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 584,867
Present value of future net revenues before income taxes (thousands) . . . . . . $ 1,055,911
Standardized measure of discounted future net cash flows (thousands)(2) . . . . . 802,145
</TABLE>

- -------------------
(1) Includes crude oil, condensate and natural gas liquids.
(2) The standardized measure of discounted future net cash flows represents the
present value of future net revenues after income taxes discounted at 10%
in accordance with Statement of Financial Accounting Standards No. 69.

Since January 1, 1996, Forcenergy has not filed any estimates of proved oil
and gas reserves with any federal authority or agency other than with the
Commission.

DRILLING ACTIVITY

The following table sets forth the drilling activity of Forcenergy on its
properties for the twelve month periods ended December 31, 1996, 1995 and 1994.

66
<PAGE> 74
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1996 1995 1994
---------------- ---------------- ----------------
GROSS NET GROSS NET GROSS NET
------- ---- -------- ---- -------- ----
<S> <C> <C> <C> <C> <C> <C>
OFFSHORE DRILLING ACTIVITY:

Development:
Oil . . . . . . . . . . . . . . . . . 11 10.4 8 5.9 1 1.0
Gas . . . . . . . . . . . . . . . . . 8 5.7 2 1.7 5 3.7
Non productive . . . . . . . . . . . 1 .2 -- -- 1 1.0
-- ---- -- --- -- ---
Total . . . . . . . . . . . . . 20 16.3 10 7.6 7 5.7
== ==== == === == ===

Exploratory:
Oil . . . . . . . . . . . . . . . . . 5 4.4 5 5.0 -- --
Gas . . . . . . . . . . . . . . . . . 2 1.3 2 1.5 1 0.3
Non productive . . . . . . . . . . . 4 1.4 2 2.0 -- --
-- ---- -- --- -- ---
Total . . . . . . . . . . . . . 11 7.1 9 8.5 1 0.3
== ==== == === == ===

ONSHORE DRILLING ACTIVITY:

Development:
Oil . . . . . . . . . . . . . . . . . 4 2.0 2 0.1 9 0.5
Gas . . . . . . . . . . . . . . . . . -- -- -- -- 4 1.7
Non productive . . . . . . . . . . . -- -- -- -- -- --
-- ---- -- --- -- ---
Total . . . . . . . . . . . . . 4 2.0 2 0.1 13 2.2
== ==== == === == ===

Exploratory:
Oil . . . . . . . . . . . . . . . . . -- -- -- -- -- --
Gas . . . . . . . . . . . . . . . . . -- -- 1 0.5 4 0.2
Non productive . . . . . . . . . . . 1 .2 3 2.0 4 2.8
-- ---- -- --- -- ---
Total . . . . . . . . . . . . . 1 .2 4 2.5 8 3.0
== ==== == === == ===
</TABLE>

PRODUCTIVE WELLS

The following table sets forth the number of productive oil and gas wells in
which Forcenergy owned a working interest at December 31, 1996:

<TABLE>
<CAPTION>
TOTAL PRODUCTIVE WELLS GROSS NET
---------------------- ---------- ----------
<S> <C> <C>
Oil . . . . . . . . . . . . . . . . . . . . . . 1,540 543
Gas . . . . . . . . . . . . . . . . . . . . . . 512 250
---------- ----------
Total . . . . . . . . . . . . . . . . . . 2,052 793
========== ==========
</TABLE>

Productive wells consist of producing wells and wells capable of
production, including gas wells awaiting pipeline connections. Forcenergy has
only 16 wells that are completed in more than one producing horizon; those
wells have been counted as single wells.

67
<PAGE> 75
INFORMATION REGARDING EDISTO

BUSINESS OF EDISTO

Edisto's operating activities include only oil and gas exploration and
production, which is conducted through its 72% interest in Convest.

Prior to December 10, 1996, Edisto was engaged in the purchase and resale
of natural gas to a diversified customer base, primarily industrial/commercial
companies, local distribution companies, and industry partners. Edisto
conducted its gas marketing operations (i) in the United States through its
subsidiary Energy Source, Inc. ("Energy Source"), and (ii) in Western Canada
through its subsidiary Energy Source Canada, Inc. ("Energy Source Canada").
Energy Source aggregated natural gas supplies from producing basins in the
United States and Canada, arranged transportation through pipelines from points
of purchase to points of sale, and resold natural gas volumes to customers
under a variety of standard and customized arrangements. These arrangements
included a variety of short-term and long-term market sensitive and fixed
priced contracts and financial instruments. On December 10, 1996, Energy
Source and Energy Source Canada sold substantially all of their assets to two
subsidiaries of Pacific Gas Transmission Company.

In April 1996, Edisto sold an 11% interest in the Zarat Permit covering
approximately 246,000 acres offshore Tunisia for $1.4 million which resulted in
a gain of approximately $0.3 million. This was Edisto's last remaining
international oil and gas property.

68
<PAGE> 76
EDISTO

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

The following table sets forth selected consolidated financial information
for Edisto as of the dates and for the periods indicated. The following
selected historical consolidated financial information for each of the years
ended December 31, 1992 through 1996 have been derived from Edisto's
Consolidated Financial Statements, which have been audited by Arthur Andersen
LLP, independent public accountants. The selected consolidated financial
information for the three months ended March 31, 1996 and 1997 have been derived
from the unaudited consolidated financial statements of Edisto, which have been
prepared on the same basis as that of the Consolidated Financial Statements of
Edisto and, in the opinion of Edisto, reflect and include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the financial position and results of operations of Edisto for
such periods. Edisto's results of operations for the periods after June 30,
1993 are not comparable in all respects to its results of operations for the
periods prior to June 30, 1993 due to the adoption of fresh-start reporting in
conjunction with Edisto's emergence from bankruptcy on June 29, 1993. Prior
periods for the predecessor entity have not been restated to reflect the
discontinued transmission, marketing and manufacturing segments. The selected
consolidated financial information should be reviewed in conjunction with the
consolidated financial statements of Edisto and the notes thereto and Edisto's
Management's Discussion and Analysis of Financial Condition and Results of
Operations set forth elsewhere in this Joint Proxy Statement/Prospectus. See
"Information Regarding Edisto." The information set forth in the table below is
not covered by the report of Edisto's independent public accountants included
elsewhere in this Joint Proxy Statement/Prospectus.

Income (loss) from continuing operations .... 3,492 1,344 5,603 (3,174) 8,735 8,934

Net income (loss) attributable to Common
Stock ................................... 3,492 4,103 20,154 (6,597) 7,151 5,600

Net income (loss) per common share:
Continuing operations ................... .25 .11 .41 (.25) .68 .70

Discontinued operations ................. -- .21 1.08 (.26) (.13) (.26)
Extraordinary gain ...................... -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Net income (loss) per common share ...... $ .25 $ .32 $ 1.49 $ (.51) $ .55 $ .44
========= ========= ========= ========= ========= =========
Weighted average common shares
outstanding ............................. 13,947 12,934 13,496 12,954 12,926 12,848

Current assets .............................. $ 82,769 $ 60,884 $ 84,459 $ 58,669 $ 66,542 $ 50,601

Total assets ................................ 141,845 124,261 141,437 125,852 116,463 111,877

Current liabilities ......................... 21,402 19,097 21,816 19,232 28,705 27,620

Long-term liabilities ....................... 19,340 33,688 22,898 39,092 13,576 18,167

Pre-petition liabilities:
Subject to compromise - long-term ....... -- -- -- -- -- --
Not subject to compromise -
long-term .......................... -- -- -- -- -- --

Stockholders' equity ........................ 101,103 71,476 96,723 67,528 74,182 66,090

SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1993 1992
--------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
Oil and gas production revenues ............. $ 35,419 $ 64,941
Gas marketing revenues ...................... 172,514 315,070
Total revenues .............................. 212,282 385,469

Income (loss) from continuing operations .... (71,188) (40,341)

Net income (loss) attributable to Common
Stock ................................... (66,217) (46,124)

Net income (loss) per common share:
Continuing operations ................... (52.77) (35.25)

Discontinued operations ................. (4.85) (4.65)
Extraordinary gain ...................... 8.53 --
--------- ---------
Net income (loss) per common share ...... $ (49.09) $ (39.90)
========= =========
Weighted average common shares
outstanding ............................. 1,349 1,156

Current assets .............................. $ 48,596 $ 104,911

Total assets ................................ 131,855 325,769

Current liabilities ......................... 55,250 117,429

Long-term liabilities ....................... 16,115 57,082

Pre-petition liabilities:
Subject to compromise - long-term ....... -- 112,726
Not subject to compromise -
long-term .......................... -- 13,046

Stockholders' equity ........................ 60,490 25,486
</TABLE>

69
<PAGE> 77
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Edisto conducts its oil and gas operations through its 72% ownership
interest in Convest. Edisto owns 7,598,771 shares of Convest Common Stock.
During December 1996, Edisto sold substantially all of the assets of its gas
marketing affiliates, Energy Source and Energy Source Canada (collectively
"Energy Source") for approximately $43.3 million. Subsequent to the sale of
Energy Source, Edisto's only line of business is its oil and gas operations
conducted through its ownership in Convest.

FINANCIAL RESULTS

The significant events during the first quarter of 1997 are described
below:

Results of Operations. Edisto had net income for the three months ended
March 31, 1997 of $3.5 million. See "Results of Operations" below. The
following table summarizes Edisto's income between its investment in Convest
and other corporate income:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, 1997
--------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C>
Convest Energy Corporation, net of
minority interest . . . . . . . . . . $ 3,134

Corporate and other . . . . . . . . . . . 358
-------

Total Operating Income . . . . . . . $ 3,492
=======
</TABLE>

High Island Block 195 Drilling. During January 1997, Convest participated
in the drilling of an exploratory well on Block 195 of the High Island area of
the Gulf of Mexico to test a prospect identified by 3-D seismic. The 195 #3
well was directionally drilled to approximately 13,000' and discovered
productive gas sands in the Upper Rob "M." The well was briefly tested at
rates in excess of 9 MMcf of gas per day and shut-in to await further drilling
and flowline hookup. Total cost of the well was approximately $1.1 million net
to Convest's 23.4% working interest.

During March 1997 Convest participated in an additional exploratory test
well on Block 195 to test a deeper prospect on the block identified by 3-D
seismic. The 195 #4 well was directionally drilled to approximately 15,200'
and encountered productive gas sands in the Lower Rob "M." A brief production
test yielded rates in excess of 12 MMcf of gas per day, and the well was
shut-in to install facilities and a gas flowline. Total cost of the well was
approximately $1.3 million net to Convest's 23.4% working interest.

Convest anticipates that the flowline installation will be complete and
production will commence by July 1, 1997. Gross production from the four wells
on the block is projected to increase from the current 15 MMcf of gas per day
to in excess of 70 MMcf of gas per day. Convest has a net revenue interest of
19.5% in the production from the block.

West Cameron Block 607 Drilling. In March 1997, Convest participated in
the drilling of an exploratory test well which was drilled from the existing
platform on Block 607 of the West Cameron area of the Gulf of Mexico. The
block had previously produced in excess of 30 billion cubic feet of gas from
the three existing wells on the block, all of which had ceased producing. The
607 A-4 exploratory well successfully discovered gas reserves in three new
sands and was dually completed. Gross production from the well is currently
averaging approximately 20 MMcf of gas per day and is being processed through
the existing facilities on the platform. Convest owns a 49.6% working interest
in the block and a 36.0% net revenue interest. Total cost of the well was
approximately $2.2 million net to Convest's working interest.

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<PAGE> 78
Repayment of Outstanding Debt. During the first quarter of 1997, Convest
repaid the remaining $4.0 million of outstanding debt under its long-term
credit facility. As of March 31, 1997, borrowings available under the credit
facility totaled approximately $15.9 million. See "Capital Resources and
Liquidity -- Credit Facility and Long-Term Debt" below.

OVERVIEW AND ANALYSIS OF KNOWN TRENDS

Summary of Significant Developments

Set forth below is a summary of the major events which occurred during
1996.

Results of Operations in 1996. Edisto had net income for 1996 of $20.2
million. Set forth below is a table summarizing Edisto's results of operations
during 1996 by business segment:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
(In Thousands)
<S> <C>
Convest Energy Corporation, net of minority
interest . . . . . . . . . . . . . . . . . . . . . $ 5,880

Corporate and other . . . . . . . . . . . . . . . . (277)
-----------

Net Income From Continuing Operations . . . . . 5,603

Discontinued Natural Gas Marketing Operations . . . . (761)

Gain on Sale of Gas Marketing Assets . . . . . . . . 15,312
-----------

NET INCOME . . . . . . . . . . . . . . . . . . . $ 20,154
===========
</TABLE>

At the end of 1996, Edisto had $72.1 million in cash and cash equivalents
(including restricted cash), which includes $4.0 million in cash and cash
equivalents (including restricted cash) at Convest.

Sale of Natural Gas Marketing Operations. Until December 10, 1996,
Edisto's gas marketing operations were conducted through its subsidiaries,
Energy Source in the United States, and Energy Source Canada in Canada. On
December 10, 1996, Edisto sold substantially all of the assets of its natural
gas marketing operations to subsidiaries of Pacific Gas Transmission Company
("PGT"), a subsidiary of Pacific Gas and Electric Company. The sales price was
$23.3 million in cash, plus the working capital of Energy Source at July 31,
1996 (approximately $20.0 million). The sales price, however, is subject to
adjustment after the closing by the adjusted consolidated net income or loss of
Energy Source from August 1, 1996 to November 30, 1996. Edisto and PGT have
not yet finalized the purchase price adjustment. As a condition of the sale,
Edisto also retained certain assets and liabilities of Energy Source which are
explained in more detail below. In connection with this sale, Edisto
recognized a gain of approximately $15.3 million, net of approximately $700,000
of income tax.

The sales price was reduced by approximately $5.3 million from the original
sales price in the definitive Purchase Agreement when two of Energy Source
Canada's gas trading partners, NESI Energy Marketing Canada, Ltd. (formerly
Chandler Energy Company) ("NESI") and Tarpon Gas Marketing ("Tarpon"), sought
protection from creditors under Canadian bankruptcy law. When these trading
partners defaulted on their gas purchase and supply contracts, Energy Source
Canada was forced to replace such contracts with new contracts with other
suppliers at the then higher market prices. Since the losses on these
contracts were approximately $5.3 million, Edisto agreed to reduce the sales
price by this amount. Of this price reduction, $4.5 million related to the
contracts with NESI and $.8 million related to the contracts with Tarpon.

Retained Assets and Liabilities. In connection with the sale, Edisto
retained the contracts with NESI and Tarpon, together with all related rights
and liabilities. On December 20, 1996, Edisto filed a lawsuit in Calgary
against certain

71
<PAGE> 79
affiliates of NESI, NIPSCO Industries, Inc., NIPSCO Energy Services Inc. and
NIPSCO Energy Services Canada Inc., claiming that, among other things, these
affiliates induced Energy Source Canada to extend credit to NESI on an
unsecured basis. The lawsuit seeks to recover the losses incurred by Energy
Source Canada on the NESI contracts and is in the very preliminary stages.

Edisto retained the contracts of Energy Source Canada with MultiEnergies,
Inc., another gas trading partner of Energy Source Canada that went bankrupt in
October 1996, together with all related rights and liabilities. Edisto
sustained a loss of approximately $165,000 on these contracts and is pursuing
its claims in the MultiEnergies bankruptcy proceeding.

Edisto also retained certain liabilities and counterclaims against
PanEnergy Corporation and Panhandle Eastern Pipe Line Company that are the
subject of a lawsuit filed in December 1996 in the District Court of Harris
County, Texas. The lawsuit relates to (i) a contract dispute involving
approximately $1.5 million in disputed Annual Revenue Amount and other charges
which PanEnergy and Panhandle Eastern claim are owed by Energy Source under two
gas transportation agreements between the companies, (ii) a claim by Energy
Source that PanEnergy overbilled Energy Source by approximately $1.0 million
for services under such transportation contracts which PanEnergy has refused to
refund, (iii) $216,000 in gas balancing penalties paid by Energy Source under
protest for which Edisto is seeking a refund, (iv) a claim by Energy Source
under Texas antitrust laws that PanEnergy exerted unlawful monopoly power and
engaged in anticompetitive conduct to the detriment of Energy Source, and (v) a
claim by Energy Source that PanEnergy tortiously interfered with a prospective
contractual relationship between Energy Source and its largest customer at that
time. Edisto believes that it has meritorious defenses to PanEnergy's claims
and plans to vigorously assert such defenses and its counterclaims against
PanEnergy in the lawsuit.

Separate from the lawsuit with PanEnergy, Edisto retained as an asset all
rights to receive a refund from PanEnergy of approximately $1.0 million under a
proposed settlement of certain rate cases pending before the Federal Energy
Regulatory Commission. This settlement relates to rates that Energy Source was
charged for transportation during 1991 and 1992 by PanEnergy. The settlement
proceeds are scheduled to be paid to Edisto by the end of the second quarter of
1997.

Edisto also retained as an asset approximately 1.2 Bcf of natural gas
stored by Energy Source in a storage facility operated by Midwest Storage, Inc.
in the Carbon Field in Indiana. Edisto filed suit in August 1996 against
Midwest Storage and other affiliates in the Circuit Court of Cook County,
Illinois to recover the gas and other damages sustained by Energy Source when
Midwest Storage failed to deliver the gas under the agreements with Energy
Source. This lawsuit is in the very preliminary stages.

See Note 4 "Consolidating Balance Sheets" in the Notes to Edisto's
Consolidated Financial Statements for consolidating balance sheets of Edisto
and its consolidated subsidiary, Convest, at December 31, 1996 which set forth
the remaining assets and liabilities of Edisto at such date.

Other Matters Relating to the Sale of Gas Marketing Operations. In
connection with the sale to PGT, all employees of Edisto and Energy Source
became employees of the purchaser, other than Michael Y. McGovern, the Chairman
and CEO of Edisto. Mr. McGovern continued as the Chairman and CEO of both
Edisto and Convest. Subsequent to the closing with PGT, the corporate
headquarters of Edisto were moved to Convest's offices, and Mr. McGovern and
four other employees of Convest have divided their time between Edisto and
Convest.

Upon closing of the PGT sale, Edisto vested in full approximately 453,000
stock options outstanding to the Energy Source employees who became employees
of the purchaser. Under the terms of the stock option plan, the former
employees have one year to exercise their stock options.

Engagement of Investment Banker for Edisto and Convest. On January 8,
1997, Edisto and Convest jointly engaged the investment banking firm of Petrie
Parkman & Co., Inc. to make recommendations for strategic alternatives to
enhance shareholder value for both Edisto and Convest. Petrie Parkman's
engagement included identifying and evaluating potential strategic partners in
the oil and gas industry for a sale or merger of Edisto and Convest.

Exercise of Warrants. Warrants for the purchase of 918,070 shares of
Edisto Common Stock were exercised prior to the June 28, 1996 expiration date.
These Warrants were issued in connection with the consummation of Edisto's

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bankruptcy on June 29, 1993 and entitled the holder to purchase Edisto Common
Stock for $9.74 per share. Edisto received $8.9 million from the exercise of
the Warrants, which adds to its existing working capital.

Sale of Offshore Tunisian Property. In April 1996, Edisto sold its 11%
interest in the Zarat Permit offshore of Tunisia for $1.4 million which
resulted in a gain of approximately $0.3 million. This was Edisto's last
remaining international oil and gas property.

RESULTS OF OPERATIONS

Three Months Ended March 31, 1997 and 1996.

Convest Energy Corporation:

Revenues. Oil and gas revenue increased by approximately $1.9 million or
17% between the three months ended March 31, 1997 and 1996. The average price
Convest received for its oil and gas sales increased by 21% and 35%,
respectively, between the corresponding periods. Oil production increased by
9% between the periods while gas production decreased by 19%. During 1996 and
early 1997, Convest participated in 20 new exploratory and development wells of
which 16 were successful. As a result of this drilling, production from
several of Convest's properties increased substantially. The additional
production associated with Convest's drilling success was partially offset by
the sale or abandonment of a number of marginal properties during 1996 and
early 1997 and the effects of depletion on Convest's offshore Gulf of Mexico
gas producing properties. Convest's offshore gas properties are subject to
inherent steep production declines. These declines were partially offset
during 1996 and early 1997 by the aforementioned drilling success. In order to
minimize the future effects of such declines, Convest must replace its reserves
through its exploratory and development drilling and acquisition activities.
Convest's gas plant revenue increased by $241,000 or 67% between the
corresponding periods due primarily to higher prices received for output from
the plant.

Price Risk Management/Hedging. Convest uses a combination of futures
contracts traded on the New York Mercantile Exchange ("NYMEX") and over the
counter price swaps with major financial institutions to hedge against the
volatility of natural gas and oil prices. Gains and losses recognized upon
settlement of Convest's hedge positions are deferred and recognized as oil and
gas sales revenue in the month of the underlying physical production being
hedged. As a result of Convest's hedging activities, it recorded hedging
losses of approximately $92,700 and $1.7 million for the three month periods
ended March 31, 1997 and 1996, respectively. Such amounts were recorded as oil
and gas sales revenue in the accompanying statements of operations, and
accordingly, such amounts are reflected in the per unit price Convest received
for its oil and gas sales.

Production Expenses. Production expenses decreased by approximately $1.0
million or 24% between the corresponding periods. The decrease in lease
operating expenses was primarily due to the aforementioned sale or abandonment
of a number of marginal producing properties during 1996 and early 1997 which
tended to have high operating expense. Production expenses per BOE was $4.52
for the three months ended March 31, 1997 compared to $5.26 for the
corresponding period of 1996.

Abandonment and Exploration Costs. Abandonment and exploration costs
increased by approximately $1.0 million due to the aforementioned abandonment
of several offshore properties during the first quarter of 1997 and the write
off of two unsuccessful exploratory wells drilled during the first quarter of
1997. Neither of the exploratory wells proved to be commercially viable and,
accordingly, the drilling costs associated with the wells was written off in
accordance with the successful efforts method of accounting.

General and Administrative Expense. General and administrative expense
decreased by approximately 9% between the corresponding periods due primarily
to the resignation of the former President and Chief Operating Officer and the
former Chief Financial Officer of Convest during late 1996. Subsequent to the
resignation of the two former executive officers, neither position was replaced
resulting in lower salary expense for 1997.

Interest Expense. Interest expense decreased by $311,000 or 85% between
the corresponding periods due to the repayment of all outstanding borrowing
under Convest's credit facility during early 1997.

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Depreciation, Depletion and Amortization. DD&A on oil and gas properties
decreased by approximately $525,000 or 13% between the corresponding periods.
The decrease in DD&A was primarily due to 11% decline in overall production
volumes on a per BOE basis. DD&A per BOE was $4.99 for the three months ended
March 31, 1997 compared to $5.07 for the corresponding period of 1996.

Gain on Asset Sales. In January 1996, Convest completed the sale of an
offshore oil and gas property for sale proceeds of approximately $2.0 million.
As a result of the sale, Convest recorded a gain on the property sale of
approximately $620,000 during the first quarter of 1996. Convest has continued
to review its properties with a focus on profitability and as a result has sold
several non-strategic properties with marginal profitability during the first
quarter of 1997. Aggregate sale proceeds totaled approximately $268,000 and
resulted in a gain of approximately $122,000 for the three months ended March
31, 1997.

Operating Cash Flow. As a result of the aforementioned changes, Convest
had operating cash flow, before changes in working capital, of $8.6 million for
the three months ended March 31, 1997 compared to $5.4 million for the
corresponding period of 1996. The increase in operating cash flow enabled
Convest to fund its expanded exploratory and development program and repay the
remaining outstanding balance under its long-term credit facility.

Corporate and Other:

Interest Income. Interest income increased by $684,000 between the
corresponding periods due primarily to Edisto having higher cash balances
available for investment. The higher cash balances are a result of the sale of
Energy Source completed in December 1996. Edisto invests its available cash
balances in high grade short-term debt issues, money market accounts and
overnight investments with major financial institutions.

General and Administrative Expense. General and administrative expense
decreased by $212,000 or 34% between the corresponding periods. Subsequent to
the sale of Energy Source, Edisto's only line of business is its 73% interest
in Convest. As a result of the Energy Source sale, Edisto has incurred lower
corporate general and administrative expense.

Discontinued Operations. As previously stated, Edisto sold substantially
all of the assets of Energy Source during December 1996. For the three months
ended March 31, 1996, income from Energy Source's gas marketing operations
totaled approximately $2.8 million.

Years Ended December 31, 1996 and 1995

Edisto had net income of $20.2 million for the year ended December 31, 1996
compared to a net loss of $6.6 million for the corresponding period of 1995.
Results for 1996 include an after-tax gain of approximately $15.3 million from
the sale of Edisto's natural gas marketing operations. Income from continuing
operations totaled $5.6 million primarily from Edisto's 73% ownership in
Convest. The results of Edisto's business segments are discussed in more
detail below. See "Information Regarding Convest -- Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Result of
Operations."

Discontinued Natural Gas Marketing Operations

On December 10, 1996, Edisto sold substantially all of the assets of its
gas marketing operations to subsidiaries of PGT. The sales price was $23.3
million in cash, plus the working capital of Energy Source and Energy Source
Canada at July 31, 1996 (approximately $20.0 million). The sales price,
however, is subject to adjustment after the closing by the adjusted
consolidated net income or loss of Energy Source and Energy Source Canada from
August 1, 1996 to November 30, 1996. Edisto and PGT have not yet finalized the
purchase price adjustment. Pursuant to the Purchase Agreement, Edisto retained
certain assets and liabilities of Energy Source and Energy Source Canada. The
gain on the sale was approximately $15.3 million after taxes.

For the year ended December 31, 1996, Edisto recorded a net loss from
discontinued gas marketing operations of $761,000. Gross margin was $8.7
million for 1996 compared to $1.2 million in 1995. The increase in gross
margin was primarily due to the volatility in the natural gas markets
experienced during early 1996 as a result of harsh winter conditions over much
of the United States. Additional improvement in 1996 resulted from the
termination of any further

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expense in 1996 under the price protection provision of a gas sales agreement
with Laclede Gas Company for 55 Mmcf of gas per day. In 1995, Edisto's gross
margin reflected the price protection liability of $3.5 million under the
Laclede agreement.

Other Consolidated Income and Expenses

General and administrative expenses decreased by approximately 25% due
primarily to the transfer of all of Edisto's employees to its wholly-owned gas
marketing subsidiary effective January 1, 1996. As previously stated, the gas
marketing subsidiary was sold during December 1996, and accordingly, such
amount is included under discontinued operations.

Interest income decreased by $66,000 primarily due to Edisto having lower
available cash balances since these funds were being used in the natural gas
marketing operations.

Interest expense decreased by approximately 48% due primarily to the
decrease in outstanding borrowings under Convest's long-term credit facility.
During 1996, Convest repaid approximately $15.2 million under its credit
facility.

In addition to the Convest property sales previously discussed, Edisto
recognized a gain of $342,000 related to the sale of its Tunisian property
during 1996.

Years Ended December 31, 1995 and 1994

Edisto had a net loss of $6.6 million for the year ended December 31, 1995.
Of this total, the discontinued gas marketing operations had a net loss of $9.8
million, Convest had a net loss of $940,000, and corporate and other entities
had a net loss of $2.2 million. These operating losses were partially offset
by the gains of $2.6 million and $3.8 million, respectively, from the sale of
the gas transmission operations and manufacturing operations. These results
are discussed in more detail below. See "Information Regarding Convest --
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Result of Operations."

Discontinued Natural Gas Marketing Operations

Edisto's discontinued gas marketing operations had a net loss from
operations of $9.8 million for the year ended December 31, 1995. Included in
the results for 1995 are approximately $10.5 million of non-recurring expenses
which are described as follows: (i) the settlement of $6.0 million and
litigation expenses of approximately $1.0 million from its lawsuit with NOARK
Pipeline System and Southwestern Energy, and (ii) an operating expense of
approximately $3.5 million for the price protection requirement in the gas
sales agreement with Laclede Gas Company. On December 31, 1995, Edisto accrued
the full amount of the price protection credit for the contract year ended
October 31, 1996 based on the current economics of the Laclede agreement.

Edisto's gas marketing revenues and associated gas purchases for the year
ended December 31, 1995 increased by 54% and 56%, respectively, compared to
1994. Volumes sold increased by 91% during the same period. The corresponding
gross profit margin was $1.2 million in 1995 compared to a gross profit margin
of $3.8 million in 1994. This gross margin decrease reflects the price
protection liability of $3.5 million to Laclede Gas Company discussed above.
Gas prices were higher during 1995, but the costs associated with the Laclede
agreement and low margins associated with building market share resulted in the
decrease in margin.

Other Consolidated Income and Expenses

General and administrative expense increased by $3.8 million for the year
ended December 31, 1995 compared to 1994. The increase is primarily
attributable to the acquisition of the interest in Convest.

Abandonment expense increased by $0.7 million for 1995 compared to 1994.
Abandonment expense for 1995 includes $0.6 million related to the drilling of
the Zarat #2, a delineation well in Edisto's Zarat Permit in Tunisia. The well
tested oil and gas, but Edisto believes that the fault block in which the well
was drilled is unlikely to be commercially developed.

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Interest income increased from $1.3 million in 1994 to $1.6 million in
1995. The increase was due to increased cash balances available for investment
from cash earned from operations and the net proceeds from the sale of the
transmission operations.

Interest expense increased by $1.3 million for the year ended December 31,
1995 compared to 1994. The increase was attributable to interest on debt
associated with the Convest credit facility.

Gain on asset sales for 1994 included a $4.8 million gain on the sale of
certain Gulf Coast properties. During 1995, Convest realized a loss of
approximately $660,000 related to the sale of another offshore property.

The preacquisition loss of subsidiary is the loss attributable to the
shares of Convest not owned by Edisto prior to the effective date of the
Convest transaction on June 26, 1995.

Edisto recognized a gain from the sale of its Missouri pipeline of $2.6
million in the first quarter of 1995. The sale of this pipeline closed in
January 1995. Edisto also recorded a gain on the sale of its MINT subsidiaries
of $3.8 million in the first quarter of 1995.

Effects of Inflation

Edisto is affected by the volatility of the prices of crude oil and natural
gas on the open market, which results from fluctuations in supply and demand.
The price that Edisto and its subsidiaries received for crude oil and natural
gas sales increased significantly during calendar 1996 compared to the price
received in calendar year 1995. Edisto is unable to predict the future effects
of such volatility of crude oil and natural gas prices; however, such
volatility could have a significant impact on Edisto's future earnings.

CAPITAL RESOURCES AND LIQUIDITY

Edisto Working Capital

At March 31, 1997, Edisto had cash and cash equivalents of approximately
$75.1 million, which included $6.4 million of cash and cash equivalents
(including restricted cash) at Convest. In addition, Convest had assets from
risk management activities of $67,000, which consisted primarily of cash on
deposit at brokerage houses, including margin accounts, and receivables from
counterparties in swap transactions. The cash and cash equivalents at Edisto
are invested in short-term, highly liquid investments which are readily
convertible into cash and have original maturities of three months or less.

At March 31, 1997, Edisto had net working capital totaling $66.0 million
(excluding the $5.0 million working capital deficit of Convest) comprised
primarily of $68.8 million of cash and cash equivalents. As previous stated,
the substantial increase in available cash balances was primarily attributable
to the sale of Edisto's gas marketing operations in December 1996. Proceeds
from the sale of the gas marketing operations totaled $15.3 million (gross
proceeds of $43.3 million less approximately $27.9 million of cash balances
held by the gas marketing subsidiary on the closing date of the sale).

Convest Working Capital

At March 31, 1997, Convest had a working capital deficit of approximately
$5.0 million. This working capital deficit was caused primarily by the
inclusion in current liabilities of an aggregate of approximately $5.4 million
of accrued liabilities for abandonment, operating expenses attributable to the
sale of a production payment on two properties and gas imbalance liabilities
(deferred revenues). There is no offsetting current asset for any of these
current liabilities since they will be repaid from the operating cash flow from
the oil and gas properties, which are reflected as a long-term asset on the
balance sheet in accordance with generally accepted accounting principles.

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Convest's net revenues from its oil and gas properties are expected to decline
significantly, although the drilling success in 1996 and early 1997 has
mitigated the steep production decline from its offshore gas properties.

Based on the cash flow from Convest's existing properties coupled with the
aforementioned incremental production capacity added on High Island Block 195
and West Cameron Block 607, management believes that Convest has the financial
capability to satisfy its working capital deficit, while sustaining its 1997
capital expenditures program and meeting operating needs arising in the
ordinary course of business.

Convest Capital Expenditures

Convest has budgeted capital expenditures totaling $12.4 million for the
remainder of 1997, primarily related to the drilling activities conducted on
High Island Block 195 and new drilling on other offshore properties. In
addition, it is anticipated that an additional well will be proposed on High
Island Block 195 for which no costs are currently included in Convest's
budgeted capital expenditures. As previously stated, management believes that
the cash flow generated from Convest's properties coupled with the available
borrowings under Convest's credit facility will be adequate to fund the
anticipated capital expenditures for 1997.

Convest Credit Facility and Long-Term Debt

On June 26, 1995, Convest entered into a new credit agreement which
terminates January 1, 1999. This facility is secured by a first lien on
substantially all of Convest's assets, including its oil and gas properties and
gas plant. The borrowing base under the credit facility is subject to
redetermination semi-annually (on May 31 and November 30) using engineering
determinations and pricing and other assumptions designated by the bank group.
Effective December 1, 1996, the new borrowing base under the credit facility
was $19.2 million, based on the lending banks' semi-annual redetermination,
which began reducing by $1.0 million per month beginning January 1, 1997.
Effective January 28, 1997, the borrowing base was reduced by $300,000 to give
effect to the sale of an oil and gas property securing the credit facility.
After giving effect to the monthly borrowing base reductions and the reduction
resulting from the property sale, Convest's borrowing base under the credit
facility was approximately $15.9 million on March 31, 1997. Convest's
borrowing capacity will be substantially reduced over the next year (by at
least $12.0 million) unless there is substantial improvement in oil and gas
prices or it is successful in proving up additional reserve quantities.

During 1997, Convest repaid $4.0 million of debt under the credit facility.
Subsequent to the repayment made during 1997 there were no borrowings
outstanding under Convest's credit facility, however, the credit facility will
remain available for future credit needs.

Volatility of Natural Gas and Oil Prices

The revenues generated from oil and gas operations are highly dependant
upon the prices of oil and natural gas. Historically, the markets for natural
gas and oil have been volatile and are likely to continue to be volatile in the
future. Prices for natural gas and oil are subject to wide fluctuation in
response to relatively minor changes in the supply of and demand for natural
gas and oil, market uncertainty and a variety of additional factors that are
beyond the control of Convest. These factors include the level of consumer
product demand, weather conditions, domestic and foreign governmental
regulations, the price and availability of alternative fuels, political
conditions in the Middle East, the foreign supply of natural gas and oil, the
price of foreign imports and overall economic conditions. It is impossible to
predict future natural gas and oil price movements with any certainty.
Declines in natural gas and oil prices may adversely affect Convest's financial
condition, liquidity and results of operations. Lower natural gas and oil
prices also may reduce the amount of Convest's natural gas and oil that can be
produced economically.

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INFORMATION REGARDING CONVEST

BUSINESS OF CONVEST

Convest is an independent oil and gas exploration and production company.
At December 31, 1996, Convest held interests in approximately 965 producing
wells consisting of working interests, royalty interests and overriding royalty
interests. The producing wells are primarily located in Alabama, Kansas,
Louisiana, Nebraska, Oklahoma, Texas, Utah, Wyoming and offshore Gulf of
Mexico. Approximately 49% of Convest's oil and gas reserves are oil and
approximately 51% are gas, measured in energy equivalent barrels of oil basis
(natural gas being converted to oil equivalent at the rate of six Mcf of gas
for each barrel of oil). In addition to its interests in producing oil and gas
properties, Convest owns an undivided interest of approximately 13% in the
Altamont Gas Plant. Producing and nonproducing acreage holdings aggregate
approximately 105,966 net acres as of December 31, 1996. Convest serves as the
operator of approximately 30% of the producing wells in which it owns a working
interest, and the remaining 70% are operated by other working interest owners
in the properties.

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CONVEST

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

On June 26, 1995, Convest purchased from Edisto all of the capital stock of
Edisto E&P. The consideration paid to Edisto was shares of newly issued
Convest Common Stock and combined with Edisto's existing 31% interest, gave
Edisto approximately 72% of the outstanding shares of Convest Common Stock.
This transaction (the "Edisto Transaction" resulted in a "reverse acquisition"
by Edisto E&P of Convest (e.g., as an acquisition of Convest by Edisto E&P)
since Edisto's interest in Convest increased to 72% and Edisto's affiliates
became a majority of the Convest Board of Directors. Accordingly, under
applicable accounting rules, Edisto E&P's historical financial statements
replaced Convest's financial statements as the historical financial statements
of Convest for periods prior to June 26, 1995.

The following selected consolidated financial information for each of the
years ended December 31, 1992 through 1996 have been derived from Convest's
Consolidated Financial Statements, which have been audited by Arthur Andersen
LLP, independent public accountants. The selected consolidated financial
information for the three months ended March 31, 1996 and 1997 have been
derived from the unaudited consolidated financial statements of Convest, which
have been prepared on the same basis as the Consolidated Financial Statements
of Convest and, in the opinion of Convest, reflect and include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the financial position and results of operations of Convest for
such periods. The accompanying historical financial information is that of
Edisto E&P and NRM Energy Company, L.P. (the predecessor to Edisto E&P) ("NRM
Energy"). Edisto E&P's results of operations are not comparable in all
respects to the results of NRM Energy for the periods prior to June 30, 1993
due to the adoption of fresh-start reporting in conjunction with Edisto's
emergence from bankruptcy on June 29, 1993. Further, because of the accounting
treatment used for a reverse acquisition, Convest's financial information for
the years ended December 31, 1995 and 1996 is not comparable to the financial
information for prior periods.

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<TABLE>
<CAPTION>
CONVEST NRM ENERGY
---------------------------------------------------------------------- ------------------------
THREE MONTHS ENDED SIX MONTHS SIX MONTHS
MARCH 31, YEAR ENDED DECEMBER 31, ENDED ENDED YEAR ENDED
--------------------- ---------------------------------- DECEMBER 31, JUNE 30, DECEMBER 31,
1997 1996 1996 1995 1994 1993 1993 1992
--------- --------- --------- --------- --------- --------- --------- ---------
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues ........................ $ 13,891 $ 12,436 $ 49,745 $ 50,980 $ 51,868 $ 31,980 $ 32,768 $ 59,392
Reorganization items ............ -- -- -- -- -- -- (51,335) (12,365)
Income (loss) from continuing
operations .................... 4,472 2,087 8,070 (940) 11,266 7,696 (52,526) (41,733)
Net income (loss) ............... 4,472 2,087 8,070 (940) 11,266 7,696 (41,018) (45,603)
Net income (loss) per weighted
average common share(1)(2) .... .43 .20 .78 (.11) 1.82 1.24 -- --

Weighted average common units
outstanding ................... -- -- -- -- -- -- 2,563 2,563
Current assets .................. $ 12,432 $ 15,938 $ 14,784 $ 15,440 $ 11,514 $ 27,317 $ 24,198 $ 33,406
Total assets .................... 71,957 79,230 72,212 81,957 58,178 88,592 97,979 157,771
Current liabilities ............. 17,429 18,008 17,342 17,597 26,463 31,909 28,009 10,890
Long-term liabilities ........... 6,860 24,118 11,732 29,343 12,088 18,167 15,496 12,125

Pre-petition liabilities:
Subject to compromise --
long-term .................... -- -- -- -- -- -- -- 112,726
Not subject to compromise --
long-term .................... -- -- -- -- -- -- -- 26,733
Equity:
Stockholders' ................. 47,668 37,104 43,138 35,017 19,627 38,516 -- --
Partners' ..................... -- -- -- -- -- -- 54,474 (4,703)

</TABLE>

(1) In accordance with the rules of accounting for a reverse acquisition,
Edisto E&P's capital structure was retroactively restated for periods prior
to the Edisto Transaction as more fully discussed under Notes 1 and 3 under
"Notes to Consolidated Financial Statements" included elsewhere herein.
(2) Convest considers net income per share information for periods prior to
June 30, 1995 to be of limited value since Edisto E&P was a wholly-owned
subsidiary of Edisto prior to the Edisto Transaction.

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

The following discussion and analysis should be read in conjunction with
Convest's consolidated financial statements and the notes thereto.

OVERVIEW AND SIGNIFICANT DEVELOPMENTS

Summary of Significant Developments

The significant events during the first quarter of 1997 are described
below:

Results of Operations. Convest had net income of approximately $4.5
million for the quarter ended March 31, 1997 compared to $2.1 million for the
corresponding quarter of 1996. See "Results of Operations" below.

During March 1997, Convest participated in an additional exploratory test
well on Block 195 to test a deeper prospect on the block. The 195 #4 well was
directionally drilled to approximately 15,200' and encountered productive gas
sands in the Lower Rob "M." A brief production test yielded rates in excess of
12 MMcf of gas per day, and the well was shut-in to install facilities and a
gas flowline. Total cost of the well was approximately $1.3 million net to
Convest's 23.4% working interest.

Repayment of Outstanding Debt. During the first quarter of 1997, Convest
repaid the remaining $4.0 million of outstanding debt under its long-term
credit facility. Following the debt repayment, the credit facility will
continue to be available for future borrowings if needed. As of March 31,
1997, borrowings available under the credit facility totaled approximately
$15.9 million. See "Liquidity and Capital Resources -- Credit Facility and
Long-Term Debt" below.

The most significant events during 1996 and early 1997 were:

Results of Operations. Convest had net income of $8.1 million for 1996
compared to a net loss of $0.9 million in 1995. These results for 1996
included (i) a $1.2 million gain on the sale of properties during the year,
(ii) a $1.3 million gain from the favorable settlements of two lawsuits filed
by Convest against third parties, (iii) a $2.6 million impairment loss under
Statement of Financial Accounting Standard No. 121 "Accounting For the
Impairment of Long-Lived Assets to be Disposed Of" ("SFAS 121") with respect to
Convest's oil and gas properties, as explained further below, and (iv) a $7.8
million hedging loss, as explained in more detail below. Convest's results
were aided significantly by the high oil and gas prices received by Convest
during the fourth quarter of 1996 (average prices of $20.35 per barrel of oil
and $2.63 per Mcf of gas). Convest's net income during the fourth quarter of
1996 was approximately $5.5 million.

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Drilling Results. Convest was very active in 1996 and early 1997,
especially on its offshore properties in the Gulf of Mexico. Convest has
interests in 43 offshore blocks, many of which have presented attractive
drilling opportunities during the past year and which continue to present
drilling opportunities. Convest's total capital expenditures during 1996 were
$10.9 million, the bulk of which was devoted to drilling offshore wells.
Eleven of the fifteen wells drilled in 1996 were successful, with successful
wells at High Island Block 195, Eugene Island Block 281, South Timbalier Block
221, Grand Isle Block 82 and Eugene Island Blocks 313 and 333. Of the eleven
successful wells, only one had been quantified in the year-end 1995 reserve
report as proved reserves, therefore, ten of these wells represent new
additions to Convest's reserves in 1996. As outlined in more detail below,
Convest's drilling success in late 1995 and 1996 has mitigated the steep
production decline from Convest's offshore gas properties.

Oil and Gas Reserves. Based on Convest's reserve report at December 31,
1996, Convest had total estimated proved reserves at such date of 6,344 Mbbl of
crude oil and 37,582 Mmcf of natural gas. While this represents a decline from
Convest's reserves at December 31, 1995 of 6,523 Mbbl of crude oil and 40,546
Mmcf of natural gas, Convest's production during 1996 was 960 MBbls of crude
oil and 13,162 Mmcf of natural gas.

Also based on Convest's reserve reports at December 31, 1996, Convest had
approximately $146.0 million of pre-tax estimated discounted future net
revenues from its proved oil and gas reserves, as determined in accordance with
Securities and Exchange Commission Guidelines. This amount is almost double
the $74.5 million of pre-tax estimated discounted future net revenues reported
at December 31, 1995. Convest cautions, however, that under Commission
guidelines, this reserve estimate was made using average prices at December 31,
1996 which were $26.01 per barrel of oil and $3.87 per Mcf of gas, whereas the
average prices at December 31, 1995 were $19.48 per barrel of oil and $2.16 per
Mcf of gas. Accordingly, a substantial portion of the increase in the estimated
future net revenues is due to the increase in prices between the two dates.
Since oil and gas prices have dropped substantially since year-end 1996, such
reserve estimates may not be indicative of the fair market value of Convest's
oil and gas reserves. See "Liquidity and Capital Resources -- Working Capital"
below for a more detailed analysis of Convest's estimated future net revenues at
December 31, 1995 and 1996.

Engagement of Investment Banker for Edisto and Convest. On January 8,
1997, Edisto and Convest jointly engaged the investment banking firm of Petrie
Parkman & Co., Inc. to make recommendations for strategic alternatives to
enhance shareholder value for both Edisto and Convest. Petrie Parkman's
engagement will include identifying and evaluating potential strategic partners
in the oil and gas industry for a sale or merger of Edisto and Convest.

1997 Capital Expenditures. During 1997, Convest plans to continue
investing a substantial portion of its cash flow in drilling operations on its
offshore properties. The capital expenditure budget for 1997 will be
approximately $16 million.

Price Risk Management/Hedging. Convest uses a combination of futures
contracts traded on the NYMEX and price swaps with major financial institutions
to hedge against the volatility of natural gas and oil prices. Gains and
losses recognized upon settlement of Convest's hedge positions are deferred and
recognized as oil and gas sales revenue in the month of the underlying physical
production being hedged. As a result of Convest's hedging activities, Convest
recorded a hedging loss of approximately $7.8 million for 1996. This amount
was recorded as a reduction in oil and gas sales revenue in the accompanying
statements of operations, and accordingly, is reflected in the per unit price
Convest received for its oil and gas sales.

The hedges affecting 1996 were implemented early in the fourth quarter of
1995 when oil and gas prices were substantially lower, and were made as a
defensive measure to assure stable cash flows in 1996. The harsh winter at the
beginning of 1996, however, drove prices up substantially. These high prices
have continued during most of 1996 which caused the hedging losses. Convest
has substantially decreased its hedging activities for 1997.

At December 31, 1996, Convest had NYMEX futures contracts hedging
approximately 90 Mbls of oil and 3,300 Mmcf of natural gas (or approximately
10% and 27% of Convest's estimated 1997 oil and gas production, respectively).
The contracts for natural gas range from approximately $2.34 to $3.09 per Mcf
for the period February 1997 to November 1997 with an average price of $2.53
per Mcf. The contracts for oil range from $20.73 to $24.64 for the period
February 1997 to October 1997 with an average price of $22.50 per Bbl.

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SFAS 121 Impairment Loss. Convest recorded a $2.6 million impairment loss
in 1996 as a result of Convest's evaluation of its proved oil and gas
properties under SFAS 121 regarding accounting for long-lived assets. Under
SFAS 121, Convest is required to recognize an impairment loss with respect to
its proved oil and gas properties if the carrying value of such properties
(i.e., capitalized costs less accumulated depreciation and depletion) exceeds
the undiscounted expected future cash flows attributable to such oil and gas
properties. SFAS 121 requires Convest to assess the need for an impairment of
capitalized costs of oil and gas properties on a property-by-property basis.
$1.1 million of the impairment loss was recognized in the second quarter of
1996 and the remaining $1.5 million was recognized in the fourth quarter of
1996. Convest assessed the need for an impairment at December 31, 1996 using
the prices of $22.73 per barrel of oil and $2.21 per Mcf of gas.

Repayment of Outstanding Debt. During 1996, Convest has repaid a net $15.2
million of outstanding debt under its long-term line of credit facility. The
amount of debt at December 31, 1996 was $4.0 million which has been repaid in
full in February 1997. This credit facility, however, will remain available
for future credit needs.

Property Sales. During January 1996, Convest sold its interest in
Vermilion Block 284 for approximately $2.0 million. Convest also sold other
nonstrategic oil and gas properties during 1996 for aggregate sales proceeds of
approximately $991,000. As a result of these sales, Convest recorded a gain of
approximately $1.2 million during 1996.

Lawsuit Settlements. Convest favorably settled two lawsuits in 1996. In
the first lawsuit, a ship collided with an offshore platform for one of
Convest's offshore properties in which Convest had a 21% working interest. In
addition to the damage to the platform, the economic life of the property was
impaired. Convest's share of the net settlement proceeds was $1.3 million, and
Convest recognized an $873,000 gain. In the second lawsuit, Convest and other
parties had sued the buyer under certain gas purchase contracts alleging that
the buyer had not paid the correct amounts under the gas purchase contracts.
Under the settlement, Convest's share of the net settlement proceeds, and its
gain, was $437,000.

Volatility of Natural Gas and Oil Prices

The revenues generated from operations are highly dependant upon the prices
of oil and natural gas. Historically, the markets for natural gas and oil have
been volatile and are likely to continue to be volatile in the future. Prices
for natural gas and oil are subject to wide fluctuation in response to
relatively minor changes in the supply of and demand for natural gas and oil,
market uncertainty and a variety of additional factors that are beyond the
control of Convest. These factors include the level of consumer product
demand, weather conditions, domestic and foreign governmental regulations, the
price and availability of alternative fuels, political conditions in the Middle
East, the foreign supply of natural gas and oil, the price of foreign imports
and overall economic conditions. It is impossible to predict future natural
gas and oil price movements with any certainty. Declines in natural gas and
oil prices may adversely affect Convest's financial condition, liquidity and
results of operations. Lower natural gas and oil prices also may reduce the
amount of Convest's natural gas and oil that can be produced economically.

Hedging Activities

From time to time, Convest has utilized hedging transactions with respect
to a portion of its oil and gas production to achieve a more predictable cash
flow, as well as to reduce its exposure to price fluctuations. While the use
of these hedging arrangements limits the downside risk of adverse price
movements, they may also limit future revenues from favorable price movements.
See "Price Risk Management/Hedging" above and Note 5 to the Consolidated
Financial Statements.

As a result of the hedging activities, Convest is exposed to credit losses
in the event of nonperformance by the counterparties to its hedging agreements.
Convest has evaluated such risks and believes that overall business risk is
minimized since these hedging contracts are with major investment-grade
financial institutions.

Convest will continue to monitor energy prices and may enter into
subsequent hedging transactions in the ordinary course of business as
management deems appropriate.

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LIQUIDITY AND CAPITAL RESOURCES

Credit Facility and Long-Term Debt

On June 26, 1995, Convest entered into a new credit agreement which
terminates January 1, 1999. This facility is secured by a first lien on
substantially all of Convest's assets, including its oil and gas properties and
gas plant. The borrowing base under the credit facility is subject to
redetermination semi-annually (on May 31 and November 30) using engineering
determinations and pricing and other assumptions designated by the bank group.
Effective December 1, 1996, the new borrowing base under the credit facility
was $19.2 million, based on the lending banks' semi-annual redetermination,
which began reducing by $1.0 million per month beginning January 1, 1997.
Effective January 28, 1997, the borrowing base was reduced by $300,000 to give
effect to the sale of an oil and gas property securing the credit facility.
After giving effect to the monthly borrowing base reductions and the reduction
resulting from the property sale, Convest's borrowing base under the credit
facility was approximately $15.9 million on March 31, 1997. Convest's
borrowing capacity will be substantially reduced over the next year (by at
least $12.0 million) unless there is substantial improvement in oil and gas
prices or Convest is successful in proving up additional reserve quantities.

During 1997, Convest repaid $4.0 million of debt under the credit facility.
Subsequent to the repayment made during 1997 there were no borrowings
outstanding under Convest's credit facility.

Working Capital

Convest's ability to reduce the existing working capital deficit while
maintaining an active drilling program and normal operations will depend upon
the net cash flows generated from its oil and gas properties. In this regard,
Convest's net revenues from its oil and gas properties are expected to decline
significantly, although the drilling success in 1996 and early 1997 has
mitigated the steep production decline from Convest's offshore gas properties.

Capital Expenditures

Convest has budgeted capital expenditures totaling $12.4 million for the
remainder of 1997, primarily related to the drilling activities conducted on
High Island Block 195 and new drilling on other offshore properties. In
addition, it is anticipated that an additional well will be proposed on High
Island Block 195 for which no costs are currently included in Convest's
budgeted capital expenditures. As previously stated, Convest believes that the
cash flow generated from Convest's properties coupled with the available
borrowings under Convest's credit facility will be adequate to fund the
anticipated capital expenditures for 1997.

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RESULTS OF OPERATIONS

The following table highlights certain statements of operations data of
Convest and production expenses for the three months ended March 31, 1997 and
1996 and for the years ended December 31, 1996, 1995 and 1994.

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDING MARCH 31, YEARS ENDING DECEMBER 31,
----------------- ---------------------------
1997 1996 1996 1995(2) 1994(2)
------- ------- ------- ------- -------
(in thousands except for barrel data)
<S> <C> <C> <C> <C> <C>
Production Volumes:
Oil (MBbls) ........................... 236 217 960 1,219 584
Gas (including NGLs) (Mmcf) ........... 2,902 3,572 13,537 18,488 19,295
BOE (MBbls)(1) ........................ 719 812 3,216 4,300 3,800

Prices:
Oil ($/Bbl) ........................... $ 21.05 $ 17.37 $ 18.47 $ 17.20 $ 15.51
Gas ($/Mcf) ........................... 2.79 2.07 $ 2.06 $ 1.57 $ 1.96

Gross Oil and Gas Revenue:
Oil ................................... $ 4,959 $ 3,760 $17,735 $20,963 $ 9,056
Gas (including NGLs) .................. 8,103 7,399 27,887 28,954 37,732
------- ------- ------- ------- -------
Total Oil and Gas Revenue ........ $13,062 $11,159 $45,622 $49,917 $46,788
======= ======= ======= ======= =======
Production Expenses:
Lease Operating Expenses .............. $ 2,955 $ 3,961 $12,998 $16,790 $12,033
Production Taxes ...................... 293 310 1,272 1,167 247
------- ------- ------- ------- -------
Total Production Expenses ........ $ 3,248 $ 4,271 $14,270 $17,957 $12,280
======= ======= ======= ======= =======
Abandonment and Exploration Costs ......... $ 1,091 $ 42 $ 1,775 $ 2,279 $ 2,135
======= ======= ======= ======= =======
General and Administrative Expenses ....... $ 1,130 $ 1,239 $ 4,792 $ 4,882 $ 4,588
======= ======= ======= ======= =======
Interest Expense .......................... $ 56 $ 367 $ 1,065 $ 2,015 $ 747
======= ======= ======= ======= =======

Depreciation, Depletion and Amortization
of Oil and Gas Properties .............. $ 3,586 $ 4,112 $16,364 $19,886 $18,222
======= ======= ======= ======= =======
Production Expense per BOE ................ $ 4.52 $ 5.26 $ 4.44 $ 4.18 $ 3.23
======= ======= ======= ======= =======
Depreciation, Depletion and Amortization
per BOE ................................ $ 4.99 $ 5.07 $ 5.09 $ 4.62 $ 4.80
======= ======= ======= ======= =======
</TABLE>

(1) Natural gas is converted into oil equivalents at a rate of six Mcf per
barrel of oil
(2) Convest acquired Edisto E&P on June 26, 1995 in a transaction that was
accounted for as a "reverse acquisition" because Edisto became the majority
shareholder of Convest. See Note 1 to the Notes to Convest's Consolidated
Financial Statements. Accordingly, the information presented for 1994
includes only Edisto E&P while the information presented for 1995 and 1996
includes both Convest and Edisto E&P.

Three Months Ended March 31, 1997 and 1996

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<PAGE> 93
depletion on Convest's offshore Gulf of Mexico gas producing properties.
Convest's offshore gas properties are subject to inherent steep production
declines. These declines were partially offset during 1996 and early 1997 by
the aforementioned drilling success. In order to minimize the future effects
of such declines, Convest must replace its reserves through its exploratory and
development drilling and acquisition activities. Convest's gas plant revenue
increased by $241,000 or 67% between the corresponding periods due primarily to
higher prices received for output from the plant.

Price Risk Management/Hedging. Convest uses a combination of futures
contracts traded on the NYMEX and over the counter price swaps with major
financial institutions to hedge against the volatility of natural gas and oil
prices. Gains and losses recognized upon settlement of Convest's hedge
positions are deferred and recognized as oil and gas sales revenue in the month
of the underlying physical production being hedged. As a result of Convest's
hedging activities, Convest recorded hedging losses of approximately $92,700
and $1.7 million for the three month periods ended March 31, 1997 and 1996,
respectively. Such amounts were recorded as oil and gas sales revenue in the
accompanying statements of operations, and accordingly, such amounts are
reflected in the per unit price Convest received for its oil and gas sales.

Abandonment and Exploration Costs. Abandonment and exploration costs
increased by approximately $1.0 million due to the aforementioned abandonment
of several offshore properties during the first quarter of 1997 and the write
off of two unsuccessful exploratory wells drilled during the first quarter of
1997. Neither of the exploratory wells proved to be commercially viable and
accordingly, the drilling cost associated with the wells was written off in
accordance with the successful efforts method of accounting.

General and Administrative Expense. General and administrative expense
decreased by approximately 9% between the corresponding periods due primarily
to the resignation of the former President and Chief Operating Officer and the
former Chief Financial Officer during late 1996. Subsequent to the resignation
of the two former executive officers, neither position was replaced resulting
in lower salary expense for 1997.

Interest Expense. Interest expense decreased by $311,000 or 85% between
the corresponding periods due to the repayment of all outstanding borrowing
under Convest's credit facility during early 1997.

Depreciation, Depletion and Amortization. DD&A on oil and gas properties
decreased by approximately $525,000 or 13% between the corresponding periods.
The decrease in DD&A was primarily due to 11% decline in overall production
volumes on a per BOE basis. DD&A per BOE was $4.99 for the three months ended
March 31, 1997 compared to $5.07 for the corresponding period of 1996.

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Comparison of the Years Ended December 31, 1996 and 1995

Overview. Convest had net income of $8.1 million for 1996 compared to a
net loss of $0.9 million in 1995. These results for 1996 included (i) a $1.2
million gain on the sale of properties during the year, (ii) a $1.3 million
gain from the favorable settlements of two lawsuits filed by Convest against
third parties, and (iii) a $2.6 million impairment loss under SFAS 121 with
respect to Convest's oil and gas properties, as explained further below.
Convest's results were aided significantly by the high oil and gas prices
received by Convest during the fourth quarter of 1996 (average prices of $20.35
per barrel of oil and $2.63 per Mcf of gas). Convest's net income during the
fourth quarter of 1996 was approximately $5.5 million.

Revenues. Oil and gas revenue decreased by approximately $4.3 million or
9% between the twelve month periods ended December 31, 1996 and 1995. The
average price Convest received for its oil and gas sales increased by 7% and
31%, respectively, between the corresponding periods. Oil and gas production
decreased by 21% and 27%, respectively. The decrease in production volumes was
due primarily to the sale of producing oil and gas properties coupled with the
steep production decline associated with Convest's offshore Gulf of Mexico
properties. The effects of these production declines were partially offset by
the additional drilling on Convest's South Timbalier Block 144 property
completed in late 1995 and the addition of the Sensor properties purchased in
mid 1995. As previously stated, Convest's offshore properties are subject to
inherent steep production declines. In order to minimize the future effects of
such declines, Convest must replace its reserves through exploratory and
development drilling and acquisition activities.

Price Risk Management/Hedging. Convest uses a combination of futures
contracts traded on the NYMEX and over the counter price swaps with major
financial institutions to hedge against the volatility of natural gas and oil
prices. Gains and losses recognized upon settlement of Convest's hedge
positions are deferred and recognized as oil and gas sales revenue in the month
of the underlying physical production being hedged. As a result of Convest's
hedging activities, Convest recorded hedging losses of approximately $7.8
million and $421,000 for the twelve month periods ended December 31, 1996 and
1995, respectively. Such amounts were recorded as oil and gas sales revenue in
the accompanying statements of operations, and accordingly, such amounts are
reflected in the per unit price Convest received for its oil and gas sales.

The hedges affecting 1996 were implemented early in the fourth quarter of
1995 when oil and gas prices were substantially lower. These hedges were made
as a defensive measure to assure stable cash flows in 1996. The past harsh
winter, however, drove prices up substantially and these high prices have
continued during most of 1996 which caused the hedging losses in 1996. Convest
has substantially decreased its hedging activities for 1997.

Production Expenses. Production expenses decreased by approximately $3.7
million or 20% between the corresponding periods. The decrease in production
expenses is primarily due to a decrease in workover activity during the twelve
months ended December 31, 1996, and the sale of producing oil and gas
properties during 1995 and early 1996. The decline in production expenses was
offset by the incremental operating expenses associated with the Sensor
properties. Production expenses per BOE was $4.44 and $4.18 for the twelve
months ended December 31, 1996 and 1995, respectively. The increase in
production expense per BOE is caused by the decreased offshore production
without a corresponding decrease in production expense.

Abandonment and Exploration Costs. Abandonment and exploration costs
decreased by approximately $500,000 between the corresponding periods. The
decrease in abandonment and exploration costs is primarily due to Convest
accruing its estimated cost of abandonment of its offshore properties in prior
periods. Based upon a review of the reserve for abandonment, it was determined
that Convest had substantially provided for its future abandonment liability,
and accordingly, no additional accrual was provided for 1996.

Impairment of Oil and Gas Properties Under SFAS 121. Prior to 1995,
Convest provided an impairment reserve for proved oil and gas properties to the
extent that total capitalized costs less accumulated depreciation and
depletion, exceeded undiscounted future revenues attributable to proved oil and
gas reserves on an overall basis. During March 1995, the Financial Accounting
Standards Board issued SFAS 121 which requires Convest to provide an impairment
reserve for proved oil and gas properties to the extent that total capitalized
costs, less accumulated depreciation and depletion, exceed undiscounted
expected future cash flows attributable to proved oil and gas reserves on a
property-by-property basis. Convest adopted the provisions of SFAS 121 and was
required to record an impairment loss of approximately $5.9 million during the
fourth quarter of 1995.

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Convest recorded a $2.6 million impairment loss in 1996 as a result of
Convest's evaluation of its proved oil and gas properties under SFAS 121
regarding accounting for long-lived assets. Under SFAS 121, Convest is
required to recognize an impairment loss with respect to its proved oil and gas
properties if the carrying value of such properties (i.e., capitalized costs
less accumulated depreciation and depletion) exceeds the undiscounted expected
future cash flows attributable to such oil and gas properties. SFAS 121
requires Convest to assess the need for an impairment of capitalized costs of
oil and gas properties on a property-by-property basis. $1.1 million of the
impairment loss was recognized in the second quarter of 1996 and the remaining
$1.5 million was recognized in the fourth quarter of 1996. Convest assessed
the need for an impairment at December 31, 1996 using the prices of $22.73 per
barrel of oil and $2.20 per Mcf of gas.

General and Administrative Expenses. General and administrative expenses
decreased by approximately $90,000 between the corresponding periods. The
primary contributor to the decrease in general and administrative expense as
the inclusion of employee severance cost in 1995 subsequent to Convest's
reorganization upon closing of the Edisto Transaction. In addition, Convest
incurred lower office rent expense after Edisto E&P terminated its existing
office lease in mid 1995.

Interest Expense. Interest expense decreased by approximately 47% due to
the repayment of a short-term promissory note issued in connection with
Convest's purchase of the oil and gas assets of a former affiliate. The
short-term promissory note was repaid simultaneously with the closing of the
Edisto Transaction. In addition, Convest repaid a substantial portion of its
outstanding borrowings under its long-term credit facility during 1996.

Depreciation, Depletion and Amortization. DD&A on oil and gas properties
decreased by approximately $3.5 million or 18% between the corresponding
periods. The decrease in DD&A was due primarily to the production declines
discussed above. DD&A per BOE was $5.09 for the twelve month period ended
December 31, 1996, compared to $4.62 for the corresponding period of 1995.

Gain on Asset Sales. In mid-January 1996, Convest completed the sale of an
offshore oil and gas property for sale proceeds of approximately $2.0 million,
which resulted in a gain of approximately $620,000. In addition, Convest sold
several other nonstrategic oil and gas properties during 1996 for aggregate
sale proceeds of approximately $991,000 which resulted in a gain of
approximately $619,000.

Comparison of the Years Ended December 31, 1995 and 1994.

As previously explained, because of the Edisto transaction that occurred on
June 26, 1995 and the reverse acquisition method of accounting used to account
for such transaction, the results of operations for the year ended December 31,
1995 are not comparable to the results of operations for the year ended
December 31, 1994. Accordingly, management of Convest does not believe that
the comparisons set forth below of these two years provides meaningful
information. All references below to "CEC" refer to Convest prior to the
Edisto Transaction.

Overview. Results for the year ended December 31, 1995 include the results
of CEC from January 1, 1995 and the results of the Sensor acquisition from the
acquisition dates (May 1, 1995 and June 14, 1995), whereas results for the year
ended December 31, 1994 represent Edisto E&P only. Convest recorded a net loss
for 1995 of $0.9 million, or ($0.11) per share, compared to net income of $11.3
million, or $1.82 per share, for the corresponding period of 1994. In computing
net income for 1995, CEC's loss of approximately $1.7 million for the period
preceding the Edisto Transaction (the six months ended June 30, 1995) was added
back to Convest's net income (see Note 1 under "Notes to Consolidated Financial
Statements" included elsewhere herein). During the fourth quarter of 1995,
Convest recorded a charge of $5.9 million resulting from a change in Convest's
method of accounting for impairment of oil and gas properties. Total revenue
decreased by approximately 2% between the periods primarily due to a $4.8
million gain on the sale of oil and gas properties recorded during 1994.
Production expenses increased by approximately $6.2 million primarily due to
the inclusion of the CEC properties following the Edisto Transaction and are
discussed further below.

Revenues. Oil and gas revenue increased by approximately $3.1 million or
7% between the year ended December 31, 1995 and the corresponding period of
1994. The average price Convest received for its crude oil sales increased by
$1.69 per barrel between the corresponding periods while the average price
Convest received for its gas sales decreased by $0.39 per mcf. Oil production
increased by 97% while gas production decreased by only 3% between the periods
due primarily to the inclusion of CEC revenues and expenses in the consolidated
revenues and expenses of Convest (See

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<PAGE> 96
Notes 1 and 3 under "Notes to Consolidated Financial Statements" included
herein). Oil and gas production from the existing Edisto E&P properties
decreased by approximately 5% and 17%, respectively. The decrease in volumes
was due in part to the sale of certain offshore properties during 1994 coupled
with the inherent steep production declines associated with offshore
properties. The aforementioned decline in Edisto E&P's oil production was
partially offset by the additional production added through Edisto E&P's
acquisition of the Sensor Properties.

Production Expenses. Production expenses increased by approximately $5.7
million between the corresponding periods. Operating expenses associated with
the CEC properties totaled approximately $6.4 million for the year ended
December 31, 1995. As the CEC properties consist of several large waterflood
units, these properties tend to have higher operating expenses than
non-waterflood properties. In addition, substantially all of CEC's properties
are onshore properties and therefore are subject to severance taxes by state
taxing authorities while substantially all of Edisto E&P's properties are
offshore and are not subject to severance tax. Production expenses on Edisto
E&P's existing properties decreased by approximately 6% due primarily to the
sale of certain properties and the production declines previously discussed.

Abandonment and Exploration Costs. Abandonment and exploration costs
increased by approximately $144,000 due primarily to Edisto E&P's abandonment
of an offshore property during 1995. During 1995, the operator of one of
Edisto E&P's offshore properties proposed an operation on the property and
Convest elected not to participate. The operation subsequently proved
unsuccessful and Edisto E&P abandoned its interest.

General and Administrative Expenses. General and administrative expenses
increased by 6% between the corresponding periods due primarily to the
inclusion of approximately $500,000 of employee severance costs during 1995
associated with its restructuring following the Edisto Transaction. In
addition, CEC and Edisto E&P entered into a management agreement effective
January 1, 1995, whereby CEC managed the oil and gas property interest owned by
Edisto E&P in exchange for $50,000 per month. As a result, Edisto E&P incurred
limited general and administrative expense for the period prior to the Edisto
Transaction. The Edisto E&P amounts reflect the $50,000 per month management
fee as general and administrative expense while CEC amounts reflect the
management fee as a reduction of its general and administrative expense. The
management agreement terminated upon closing of the Edisto Transaction.

Interest Expense. Interest expense increased by approximately $1.3 million
between the corresponding periods. Interest expense is comprised of interest
on a short-term promissory note issued to an affiliate of CEC related to a
property acquisition and interest on CEC's outstanding bank debt which was
outstanding prior to the Edisto Transaction. The short-term promissory note
was repaid at closing of the Edisto Transaction.

Depreciation, Depletion and Amortization. DD&A on oil and gas properties
increased by approximately $1.7 million or 9% between the corresponding
periods. DD&A attributable to CEC's properties totaled approximately $6.1
million for the year ended December 31, 1995. DD&A attributable to Edisto
E&P's oil and gas properties decreased by approximately $4.5 million due to an
upward revision in estimated recoverable reserves at December 31, 1995, and the
lower production volumes previously discussed. DD&A per equivalent unit of oil
production was $4.62 and $4.80 for the year ended December 31, 1995 and 1994,
respectively.

Impairment of Oil and Gas Properties. Prior to 1995, Convest provided an
impairment reserve for proved oil and gas properties to the extent that total
capitalized costs less accumulated depreciation and depletion, exceed
undiscounted future net revenues attributable to proved oil and gas reserves on
an overall basis. The provisions of SFAS 121 require Convest to provide an
impairment reserve for proved oil and gas properties to the extent that total
capitalized costs less accumulated depreciation and depletion, exceed
undiscounted expected future cash flows attributable to proved oil and gas
reserves on a property-by-property basis. Convest adopted the provisions of
SFAS 121 during the fourth quarter of 1995. Upon the adoption of SFAS 121,
Convest was required to record an impairment of approximately $5.9 million
during the fourth quarter of 1995.

Equity in Loss of Affiliate. The $1.7 million equity in earnings (loss) of
affiliates for 1994 reflects a $1.7 million loss from CEC. Edisto E&P acquired
its 31% interest in CEC at the end of November 1994 and accounted for such
interest using the equity method of accounting. Accordingly, since CEC
suffered a $5.5 million loss in December 1994, Edisto E&P's equity in CEC's
loss was $1.7 million. During January 1995, Edisto E&P transferred the
purchased shares of CEC Common Stock to Edisto.

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Gain/Loss on Asset Sale. Edisto E&P realized a $4.8 million gain primarily
related to the sale of an offshore property during the year ended December 31,
1994. During 1995, Edisto E&P realized a loss of approximately $660,000
related to the sale of another offshore property.

Additional information concerning Convest and its subsidiaries is included
in the Convest documents filed with the Commission, which are incorporated by
reference herein. See "Incorporation of Certain Documents by Reference."

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DESCRIPTION OF FORCENERGY CAPITAL STOCK

Forcenergy's authorized capital stock consists of 50,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock, par value $0.01 per
share.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share in the election
of directors and on all other matters submitted to a vote of common
stockholders and do not have cumulative voting rights. Holders of Common Stock
are entitled to receive ratably such dividends, if any, as may be declared by
the Board of Directors out of funds legally available therefore, subject to any
preferential dividend rights of holders of outstanding Preferred Stock. Upon
the liquidation, dissolution or winding up of Forcenergy, the holders of Common
Stock are entitled to receive ratably the net assets of Forcenergy available
after payment of all debts and other liabilities, subject to the prior rights
of any outstanding shares of Preferred Stock. Holders of Common Stock have no
preemptive, subscription, redemption or conversion rights.

PREFERRED STOCK

The Board of Directors of Forcenergy is empowered, without approval of the
stockholders, to cause shares of Preferred Stock to be issued in one or more
series, with the numbers of shares of each series to be determined by it. The
Board of Directors is authorized to fix and determine variations in the
designations, preferences, and relative, participating, optional or other
special rights (including, without limitation, special voting rights to receive
dividends or assets upon liquidation, rights of conversion into Common Stock or
other securities, redemption provisions and sinking fund provisions) between
series and between the Preferred Stock or any series thereof and the Common
Stock, and the qualifications, limitations or restrictions of such rights; and
the shares of Preferred Stock or any series thereof may have full or limited
voting powers, or be without voting powers.

Although Forcenergy has no present intention to issue shares of Preferred
Stock, the issuance of shares of Preferred Stock, or the issuance of rights to
purchase such shares, could be used to discourage an unsolicited acquisition
proposal. For instance, the issuance of a series of Preferred Stock might
impede a business combination by including class voting rights that would
enable the holders to block such a transaction; or such issuance might
facilitate a business combination by including voting rights that would provide
a required percentage vote of the stockholders. In addition, under certain
circumstances, the issuance of Preferred Stock could adversely affect the
voting power of the holders of the Common Stock. Although the Board of
Directors is required to make any determination to issue such stock based on
its judgment as to the best interests of the stockholders of Forcenergy, the
Board of Directors could act in a manner that would discourage an acquisition
attempt or other transaction in that some or a majority of the stockholders
might believe to be in their best interest or in which stockholders might
receive a premium for their stock over the then market price for such stock.
The Board of Directors does not at present intend to seek stockholder approval
prior to any issuance of currently authorized stock, unless otherwise required
by law or the regulations of the exchange on which its Common Stock is listed.

WARRANTS

In connection with a previous offering of debt securities, Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ") was granted warrants to
purchase 98,337 shares of Forcenergy's Common Stock at an exercise price of
$14.51 per share. The warrants are currently exercisable and have an
expiration date of September 14, 1998. DLJ exercised 49,168 warrants on April
1, 1997.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Forcenergy Common Stock is
American Stock Transfer & Trust Company.

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<PAGE> 99
COMPARATIVE RIGHTS OF FORCENERGY AND EDISTO STOCKHOLDERS

If the Edisto Merger is consummated, the stockholders of Edisto will become
stockholders of Forcenergy. The rights of the stockholders of both Forcenergy
and Edisto are governed by and subject to the provisions of the DGCL. The
rights of current Edisto stockholders following the Edisto Merger will be
governed by the Forcenergy Amended and Restated Certificate of Incorporation
(the "Forcenergy Charter") and Forcenergy Bylaws rather than the provisions of
the Edisto Certificate of Incorporation (the "Edisto Charter") and Edisto
Bylaws. The following is a brief summary of certain differences between the
rights of Forcenergy stockholders and the rights of Edisto stockholders, and is
qualified in its entirety by reference to the relevant provisions of the DGCL,
the Forcenergy Charter and Bylaws and the Edisto Charter and Bylaws.

NUMBER, CLASSIFICATION AND REMOVAL OF DIRECTORS

The Forcenergy Bylaws authorize that the number of directors to serve on
its Board of Directors may be increased or decreased with the approval of a
majority of the then-authorized number of directors. Newly created
directorships resulting from any increase in the authorized number of directors
and any vacant directorships may be filled by the affirmative vote of a
majority of the directors then in office. This provision of the Forcenergy
Bylaws may be altered, amended, or repealed by the affirmative vote of the
majority of either the Forcenergy Board of Directors or the outstanding shares
of capital stock of Forcenergy entitled to vote.

The Edisto Bylaws authorize no fewer than one (1) and no more than thirteen
(13) persons to serve on its Board of Directors. Edisto presently has five
directors. The number of directors may be increased or decreased within the
authorized range by resolution approved by the unanimous vote of the
then-authorized directors. Vacancies and newly created directorships resulting
from any such increase may be filled by a majority of the directors then in
office though less than a quorum, or by a sole remaining director. This
provision of the Edisto Bylaws may be altered, amended, or repealed by the
affirmative vote of the majority of either the Edisto Board of Directors or the
outstanding shares of capital stock of Edisto entitled to vote.

The Forcenergy Charter provides that a director may be removed with or
without cause by the affirmative vote of the holders of a majority of the stock
entitled to vote for the election of directors. Under Section 141(k) of the
DGCL, Edisto directors may be removed with or without cause by an affirmative
vote of a majority of the stockholders entitled to vote for the election of
directors.

VOTING RIGHTS

The Forcenergy Charter does not provide for cumulative voting rights for
the election of directors or otherwise. Therefore, Forcenergy shareholders
elect directors by straight voting. Under section 216 of the DGCL Forcenergy
directors are 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.

The Edisto Charter provides for cumulative voting for directors if 120 days
prior to a stockholder's meeting in which directors will be elected, a holder
or holders of not less than 20% of the outstanding shares of stock entitled to
vote upon the election of directors furnish written notice to the corporation
electing to cumulate their votes.

Upon the consummation of the Edisto Merger, former Edisto stockholders will
not have the right to vote cumulatively for Forcenergy directors.

POWER TO CALL SPECIAL MEETINGS

The Forcenergy Charter provides that a special meeting of stockholders may
be called only by the Forcenergy Board of Directors or the President. Written
notice of a special meeting must be mailed not fewer than 10 nor more than 60
days before the meeting to each stockholder of record entitled to vote.

The Edisto Charter provides that a special meeting of stockholders may be
called by the Chairman, the President, any Vice President, the Secretary or any
Assistant Secretary at the written request of a majority of the Board of
Directors,

92
<PAGE> 100
or by a holder or holders of not less than 20% of the Edisto capital stock
entitled to vote by requesting such meeting in writing not less than 10 nor
more than 60 days before such meeting. Such request shall state the purpose or
purposes of such meeting. If the Edisto Merger is consummated, Edisto
stockholders will not have the right to call a special meeting of stockholders.

STOCKHOLDER VOTE REQUIRED FOR CERTAIN TRANSACTIONS

The Forcenergy Charter requires for approval of certain business
combinations and transactions with certain stockholders or with corporations
which are affiliated therewith, an affirmative vote of 75% of the votes which
the holders of the then outstanding shares of capital stock of Forcenergy
excluding those shares beneficially owned by such stockholder unless such
transaction is approved by a majority of disinterested stockholders. The
Forcenergy Charter also provides that a 75% approval of disinterested
stockholders is required to amend the provisions concerning interested
transactions.

The Edisto Charter permits Edisto to enter into interested transactions or
transactions with a Related Person (as defined in the Edisto Charter) provided
that the holders of at least 80% of the capital stock entitled to vote together
with the holders of at least a majority of the capital stock not beneficially
owned by a Related Person approve such transaction. Notwithstanding this
required vote of stockholders, such a transaction may be entered into if it has
been approved by at least a majority vote of the nonrelated directors.

If the Edisto Merger is consummated, the Edisto stockholders shall be
subject to the provisions for approving interested transactions provided in the
Forcenergy Charter.

ACTION BY WRITTEN CONSENT

Both the Forcenergy Charter and the Edisto Charter provide that no action
required or permitted to be taken by the stockholders of the corporation may be
effected by consent in writing. Such action must be effected at an annual or
special meeting of stockholders.

AMENDMENTS OF BYLAWS

Both the Forcenergy Bylaws and the Edisto Bylaws may be amended, altered or
repealed either by their respective Boards of Directors or by the holders of a
majority of the then outstanding shares of their respective capital stock
present and entitled to vote at a meeting as provided in their respective
Charters and Bylaws.

COMPARATIVE RIGHTS OF FORCENERGY AND CONVEST STOCKHOLDERS

If the Convest Merger is consummated, the stockholders of Convest will
become stockholders of Forcenergy. The rights of stockholders of Convest are
governed by and subject to the provisions of the TBCA and the Convest
Certificate of Incorporation (the "Convest Charter") and Convest Bylaws. The
rights of current Convest stockholders following the Convest Merger will be
governed by the Forcenergy Charter and Forcenergy Bylaws and the provisions of
the DGCL rather than the Convest Charter and Bylaws and the provisions of the
TBCA. The following is a brief summary of certain differences between the
rights of Forcenergy stockholders and the rights of Convest stockholders, and
is qualified in its entirety by reference to the relevant provisions of the
DGCL and the TBCA, the Forcenergy Charter and Bylaws and the Convest Charter
and Bylaws.

NUMBER, CLASSIFICATION AND REMOVAL OF DIRECTORS

The Forcenergy Bylaws authorize that the number of directors to serve on
its Board of Directors may be increased or decreased with the approval of a
majority of the then authorized number of directors. Newly created
directorships resulting from any increase in the authorized number of directors
and any vacant directorships may be filled by the affirmative vote of a
majority of the directors then in office. This provision of the Forcenergy
Bylaws may be altered, amended, or repealed by the affirmative vote of the
majority of either the Forcenergy Board of Directors or the outstanding shares
of capital stock of Forcenergy entitled to vote.

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<PAGE> 101
The Convest Bylaws authorizes no fewer than three and no more than 13
persons to serve on its Board of Directors, but the number of directors may be
increased or decreased from time to time by amendment to the Bylaws or by
resolution of the Board of Directors. Vacancies may be filled by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the Board of Directors. Passage of a resolution requires approval
by a majority of a voting quorum of Directors. This provision of the Convest
Bylaws may be altered, amended or repealed by the affirmative vote of the
majority of either the Convest Board of Directors present at a meeting
satisfying quorum, or the outstanding shares of Convest capital stock entitled
to vote.

VOTING RIGHTS

Neither the Forcenergy Charter nor the Convest Charter expressly provides
for cumulative voting rights for the election of directors or otherwise.

Forcenergy stockholders elect directors by straight voting. Under section
216 of the DGCL, unless otherwise specified in the certificate of
incorporation, Forcenergy directors are 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.

Under Article 2.29, section D of the TBCA and subject to the written notice
requirements therein, a Convest stockholder may cumulate his votes by giving
one candidate as many votes as the number of such directors multiplied by his
shares shall equal, or by distributing such votes on the same principle among
any number of such candidates.

If the Convest Merger is consummated Convest stockholders will not have the
right to cumulate their votes in the election of directors.

POWER TO CALL SPECIAL MEETINGS

The Forcenergy Charter provides that a special meeting of stockholders may
be called by the Forcenergy Board of Directors or the President. Written
notice of a special meeting must be mailed not fewer than 10 nor more than 60
days before the meeting to each stockholder of record entitled to vote.

The Convest Charter provides that special meetings of the stockholders of
the corporation may be called by the President of the corporation, the Board of
Directors, such person as may be authorized by the Bylaws, or the holders of at
least 50% of all the shares entitled to vote at the proposed special meeting.

STOCKHOLDER VOTE REQUIRED FOR CERTAIN TRANSACTIONS

The Convest Charter requires the approval of a majority of disinterested
directors to enter into certain transactions with interested or affiliated
parties. Unless approved by a majority of disinterested directors, Convest may
not enter into transactions with Affiliates (as defined) of Convest involving
5% or more of the corporation's total assets or involving the issuance of
securities representing an aggregate of more than 5% of Convest voting
securities in any 12-month period to any Affiliate of the corporation.
Affiliate is defined in the Convest Charter as any person, directly or
indirectly the beneficial owner of more than 10% of the common stock or other
class of voting equity of the corporation, or who is a director or an officer
of the corporation, or any person otherwise, directly or indirectly,
controlling or controlled by or under direct or indirect common control with
the corporation.

Upon the consummation of the Convest Merger, the Convest stockholders will
have the power to approve interested and other transactions by an affirmative
vote of 75% of the disinterested stockholders.

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<PAGE> 102
ACTION BY WRITTEN CONSENT

The Forcenergy Charter provides that no action required or permitted to be
taken by the stockholders of the corporation may be effected by consent in
writing. Such action must be effected at an annual or special meeting of
stockholders.

The Convest Charter provides that any action permitted or required to be
taken by the stockholders of the corporation may be taken without a meeting,
without prior notice, and without a vote, if a consent or consents in writing
shall have been signed by the holder or holders of shares having the number of
votes required to take such action at a meeting at which the holders of all
shares entitled to vote on the action were present and voted.

If the Convest Merger is consummated, the present Convest stockholders will
not be permitted to effect action by written consent once their shares are
exchanged for shares of Forcenergy Common Stock.

AMENDMENTS OF BYLAWS

Both the Forcenergy Bylaws and the Convest Bylaws may be amended, altered
or repealed either by their respective Boards of Directors or by the holders of
a majority of the outstanding shares of their respective capital stock present
and entitled to vote at a meeting as provided in their respective Charters and
Bylaws.

See "Description of Forcenergy Capital Stock."

LEGAL MATTERS

The validity of the Forcenergy Common Stock to be issued in the Mergers has
been passed upon for Forcenergy by Vinson & Elkins L.L.P., Houston, Texas.

EXPERTS

The consolidated financial statements of Forcenergy for the years ended
December 31, 1995 and 1996, incorporated by reference to the Annual Report on
Form 10-K of Forcenergy for the year ended December 31, 1996, have been so
incorporated in reliance on the report of Coopers & Lybrand L.L.P., independent
accountants, given on authority of said firm as experts in auditing and
accounting.

The historical statement of revenues and direct operating expenses of the
properties acquired by Forcenergy from Amerada Hess Corporation for the year
ended December 31, 1995, incorporated herein by reference to the current report
on Form 8-K/A of Forcenergy, have been so incorporated in reliance on the
report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.

The historical statements of revenues and direct operating expenses of the
properties acquired by Forcenergy from Marathon Oil Company for the years ended
December 31, 1996 and 1995, incorporated herein by reference to the current
report on Form 8-K/A of Forcenergy, have been so incorporated in reliance on
the report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.

The consolidated financial statements of Forcenergy for the year ended
December 31, 1994 incorporated herein by reference to the Annual Report on Form
10-K of Forcenergy for the year ended December 31, 1996 have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on authority of said firm as experts in auditing and
accounting.

The audited financial statements included herein and elsewhere in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts (or, as
experts in accounting and auditing) in giving said reports.

95
<PAGE> 103
The estimates of Forcenergy's net proved oil and natural gas reserves as of
January 1, 1996 and 1997, incorporated herein by reference to Forcenergy's
Annual Report on Form 10-K, have been prepared by Collarini Engineering, Inc.
and Netherland, Sewell & Associates, Inc. and by Collarini Engineering, Inc.
and Joe C. Neal & Associates as of January 1, 1995 and 1994. The reserve
estimates prepared by such firms as of January 1, 1995 have also been audited
by Netherland, Sewell & Associates, Inc.

Certain of Convest's estimates of net proved oil and natural gas reserves
as of December 31, 1996, 1995 and 1994 were prepared by Ryder Scott Company
Petroleum Engineers. Additional estimates of Convest's net proved oil and
natural gas reserves as of January 1, 1997 and 1996, were prepared by
Netherland, Sewell & Associates, Inc. The aforementioned reserve estimates are
incorporated by reference herein to Convest's Annual Report on Form 10-K for
the year ended December 31, 1996.

96
<PAGE> 104

CONVEST ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<PAGE> 105

EDISTO FINANCIAL STATEMENTS

INDEX TO EDISTO FINANCIAL STATEMENTS

YEAR ENDED DECEMBER 31, 1996:
<TABLE>
<CAPTION>

FINANCIAL STATEMENTS PAGE
----
<S> <C>
Report of Independent Public Accountants ..........................................F-2
Consolidated Balance Sheets at December 31, 1996 and 1995..........................F-3
Consolidated Statements of Operations - Years Ended December 31, 1996,
1995 and 1994..................................................................F-4
Consolidated Statements of Stockholders' Equity - Years Ended
December 31, 1996, 1995 and 1994...............................................F-5
Consolidated Statements of Cash Flows - Years Ended December 31, 1996,
1995 and 1994..................................................................F-6
Notes to Consolidated Financial Statements.........................................F-7

FINANCIAL STATEMENT SCHEDULES

Schedule I - Edisto Resources Corporation (Parent Company) Condensed
Financial Statements:
Balance Sheets at December 31, 1996 and 1995......................................F-27
Statements of Operations - Years Ended December 31, 1996, 1995 and 1994...........F-28
Statements of Cash Flows - Years Ended December 31, 1996, 1995 and 1994...........F-29
Schedule II - Edisto Resources Corporation - Valuation and Qualifying
Accounts - Years Ended December 31, 1996, 1995 and 1994.......................F-30

QUARTER ENDED MARCH 31, 1997

Consolidated Balance Sheets at March 31, 1997 and December 31, 1996...............F-31
Consolidated Statements of Operations Three Months Ended March 31,
1997 and 1996.................................................................F-32
Consolidated Statements of Stockholders' Equity...................................F-33
Consolidated Statements of Cash Flows -- Three Months Ended March 31,
1997 and 1996.................................................................F-34
Notes to Consolidated Financial Statements........................................F-35

</TABLE>

<PAGE> 106

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of
Edisto Resources Corporation:

We have audited the accompanying consolidated balance sheets of Edisto
Resources Corporation, a Delaware corporation, and subsidiaries as of December
31, 1996 and 1995, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements and the schedules referred
to below are the responsibility of Edisto Resources Corporation's management.
Our responsibility is to express an opinion on these financial statements and
schedules 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Edisto Resources
Corporation and subsidiaries as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted
accounting principles.

As discussed in Note 1, as of October 1, 1995, Edisto Resources Corporation
changed its method of accounting for the impairment of long-lived assets to
conform with Statement of Financial Accounting Standards No. 121.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index of
financial statement schedules are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly state in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

ARTHUR ANDERSEN LLP

Houston, Texas
March 20, 1997

F-2

<PAGE> 107

EDISTO RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
December 31,
---------------------------
1996 1995
--------- ---------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 71,765 $ 19,506
Restricted cash 333 333
Margin deposits 979 5,123
Accounts receivable 9,835 7,959
Net assets of discontinued gas marketing operations -- 23,979
Other current assets 1,547 1,769
--------- ---------
Total current assets 84,459 58,669

Property and equipment:
Oil and gas properties using the successful
efforts method of accounting 117,306 115,250
Other 641 644
Less - accumulated depreciation, depletion and amortization (63,147) (50,358)
--------- ---------
54,800 65,536

Other assets 2,178 1,647
--------- ---------
$ 141,437 $ 125,852
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ -- $ 1,723
Accounts payable 9,840 9,609
Accrued liabilities and other 9,863 5,890
Deferred revenue 2,113 2,010
--------- ---------
Total current liabilities 21,816 19,232

Long-term liabilities:
Long-term debt, net of current maturities 4,003 17,635
Deferred revenue 559 691
Minority interest 10,850 9,092
Other noncurrent liabilities 7,486 11,674
--------- ---------
22,898 39,092
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 50,000,000 shares authorized, 13,930,052
issued at December 31, 1996 and 12,977,960
issued at December 31, 1995 139 130
Additional paid-in capital 70,675 61,528
Retained earnings 26,308 6,154
Foreign currency translation (37) (95)
Treasury stock, at cost, 52,214 shares at December 31,
1996, and 23,714 shares at December 31, 1995 (362) (189)
--------- ---------
Total stockholders' equity 96,723 67,528
--------- ---------

$ 141,437 $ 125,852
========= =========
</TABLE>

See the accompanying notes to the consolidated financial statements.

F-3
<PAGE> 108

EDISTO RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1996 1995 1994
----------- ----------- ------------

<S> <C> <C> <C>
Oil and gas revenues $ 47,222 $ 51,450 $ 46,788

Costs and expenses:
Lease operating and production taxes 14,988 18,689 12,229
Abandonment and exploration costs 2,021 2,871 2,135
Restructuring -- -- 2,684
Depreciation, depletion and amortization 16,541 20,402 19,118
Impairments of oil and gas properties 2,633 5,911 --
General and administrative 6,376 8,536 4,751
-------- -------- --------
42,559 56,409 40,917
-------- -------- --------
Operating income (loss) 4,663 (4,959) 5,871
-------- -------- --------

Other income (expense):
Interest income 1,549 1,615 1,320
Interest expense (1,068) (2,036) (747)
Equity in earnings (loss) of affiliates -- -- (1,731)
Gain (loss) on asset sales 1,586 (652) 4,754
Minority interest (2,190) 726 (69)
Other, net 1,450 1,260 (516)
-------- -------- --------
1,327 913 3,011
-------- -------- --------

Income (loss) before income taxes 5,990 (4,046) 8,882
Preacquisition loss of subsidiary -- 1,478 --
Income tax (provision) benefit (387) (606) (147)
-------- -------- --------
Income (loss) from continuing operations 5,603 (3,174) 8,735
-------- -------- --------

Discontinued operations:
Income (loss) from gas marketing operations (761) (9,804) (1,083)
Gain on sale of gas marketing operations 15,312 -- --
Loss from transmission operations -- -- (501)
Gain on sale of transmission operations -- 2,557 --
Gain on sale of manufacturing operations -- 3,824 --
-------- -------- --------
Net income (loss) $ 20,154 $ (6,597) $ 7,151
======== ======== ========

Net income (loss) per common share:
Continuing operations $ .41 $ (.25) $ .68
Discontinued operations 1.08 (.26) (.13)
-------- -------- --------
Net income (loss) per common share $ 1.49 $ (.51) $ .55
======== ======== ========

Weighted average common shares
outstanding 13,496 12,954 12,926
======== ======== ========

</TABLE>

See the accompanying notes to the consolidated financial statements.

F-4
<PAGE> 109

EDISTO RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

Number of Additional Foreign
Common Common Paid-In Retained Currency Treasury
Shares Stock Capital Earnings Translation Stock Total
--------- ------ ---------- -------- ----------- -------- -----

<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 12,848 $128 $60,362 $ 5,600 $ -- $ -- $ 66,090
Issuance of common stock 141 2 1,166 -- -- -- 1,168
Foreign currency translation -- -- -- -- (38) -- (38)
Treasury stock, at cost -- -- -- -- -- (189) (189)
Net income -- -- -- 7,151 -- -- 7,151
------ ---- ------- -------- ---- ----- --------

Balance at December 31, 1994 12,989 130 61,528 12,751 (38) (189) 74,182
Cancellation of untendered
Common Stock pursuant to
the Plan of Reorganization (11) -- -- -- -- -- --
Foreign currency translation -- -- -- -- (57) -- (57)
Net loss -- -- -- (6,597) -- -- (6,597)
------ ---- ------- -------- ---- ----- --------

Balance at December 31, 1995 12,978 130 61,528 6,154 (95) (189) 67,528
Exercise of warrants 918 9 8,932 -- -- -- 8,941
Exercise of options 34 -- 215 -- -- -- 215
Foreign currency translation -- -- -- -- 58 -- 58
Treasury stock, at cost -- -- -- -- -- (173) (173)
Net income -- -- -- 20,154 -- -- 20,154
------ ---- ------- -------- ---- ----- --------

Balance at December 31, 1996 13,930 $139 $70,675 $ 26,308 $(37) $(362) $ 96,723
====== ==== ======= ======== ==== ===== =========
</TABLE>

See the accompanying notes to the consolidated financial statements.

F-5
<PAGE> 110

EDISTO RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1996 1995 1994
------------ ------------ ------------

<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 20,154 $ (6,597) $ 7,151
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation, depletion and amortization 17,236 17,204 22,595
Impairments of oil and gas properties 2,633 5,911 --
Abandonment and exploration cost 1,592 2,390 1,810
Gains on sales of assets and investments (16,901) (5,729) (4,732)
Restructuring expense -- -- 2,684
Equity in (income) loss of affiliates (444) (316) 1,658
Minority interest 2,190 (726) (69)
Other 951 (32) 1,147
Changes in assets and liabilities:
Accounts receivable (151,225) (32,796) 34,001
Accounts payable and accrued liabilities 168,560 22,774 (20,221)
Increase (decrease) in gas storage inventory (1,778) (5,126) --
Other (5,894) 66 (595)
--------- -------- --------
Net cash provided (used) by operating activities 37,074 (2,977) 45,429
--------- -------- --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of gas marketing operations 15,350 -- --
Proceeds from sales of assets, including discontinued
transportation and manufacturing operations 4,389 72,034 8,446
Proceeds from sales of investments -- -- 9,000
Investment in subsidiaries (419) -- --
Purchase (sale) of assets from risk management activities 764 (9,428) (9,648)
Acquisition, exploration and development costs (10,949) (10,648) (6,398)
Gas transmission expenditures -- (10) (673)
Acquisitions -- -- (9,347)
Cash from acquisition of Convest -- 716 --
Advances from affiliates -- 51 106
Purchase of other current and noncurrent assets (1,740) (3,527) (5,114)
--------- -------- --------
Net cash provided (used) by investing activities 7,395 49,188 (13,628)
--------- -------- --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on short and long-term debt and capital leases 3,100 6,575 7,806
Payments on long-term debt and capital leases (18,209) (60,229) (12,665)
Stock issue on exercise of warrants and options 9,156 -- --
Repurchase of common shares (173) -- --
Currency translation 58 57 38
--------- -------- --------
Net cash used by financing activities (6,068) (53,597) (4,821)

Net increase (decrease) in cash and cash equivalents 38,401 (7,386) 26,980
Cash and cash equivalents, at beginning of period 33,697 41,083 14,103
--------- -------- --------
Cash and cash equivalents, at end of period $ 72,098 $ 33,697 $ 41,083
========= ======== ========

SUPPLEMENTAL DISCLOSURES Cash paid (received) during the period for:
Interest $ 1,506 $ 1,568 $ 4,816
========= ======== ========
Taxes $ 358 $ 1,465 $ 294
========= ======== ========
</TABLE>

See the accompanying notes to the consolidated financial statements.

F-6

<PAGE> 111

EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND PRESENTATION

The accompanying consolidated financial statements include the
accounts of Edisto Resources Corporation, a Delaware corporation ( the
"Company" or "Edisto"), and its wholly and majority owned subsidiaries. Since
the sale of the Company's gas marketing operations on December 10, 1996, the
Company's only line of business has been oil and gas exploration and production
which is conducted through a 73% interest in Convest Energy Corporation
("Convest"), an independent oil and gas exploration and production company
listed on the American Stock Exchange. Edisto owns 7,598,771 shares of Convest
Common Stock. Prior to acquiring its interest in Convest, the Company conducted
its oil and gas activities through Edisto Exploration & Production Company
("Edisto E&P"). See Note 3 -- "Acquisitions - Convest Energy Corporation."

Prior to December 10, 1996, the Company conducted gas marketing
operations through its subsidiaries, Energy Source, Inc. in the United States,
and Energy Source Canada, Inc. in Canada (collectively, "Energy Source"). On
December 10, 1996, Energy Source sold substantially all of its assets to two
subsidiaries of Pacific Gas Transmission Company. See Note 2--"Discontinued
Operations" for a discussion of the sale of the gas marketing operations.

References to the "Company" or "Edisto" shall refer to Edisto
Resources Corporation and all of its consolidated subsidiaries, including
Convest. References to "Convest" shall refer to Convest and the oil and gas
activities conducted through Edisto E&P prior to acquiring the interest in
Convest.

Edisto conducted gas transmission activities from July 1990 through
the first quarter of 1994 when Edisto executed a definitive agreement to sell
its intrastate natural gas pipeline. The sale was subject to regulatory
approval and was closed in January 1995. Accordingly, at December 31, 1994,
Edisto reported its investment in the pipeline operations as "Net Assets of
Discontinued Transmission Operations." In March 1994, Edisto's 80% subsidiary,
Multiflex International, Inc., sold all the stock of its operating subsidiaries
to Oceaneering International, Inc., at which time the corporate name was
changed to MINT Holding Company ("MINT"). See Note 2--"Discontinued Operations"
for a discussion of both the sale of the pipeline and the MINT subsidiaries.

CASH AND CASH EQUIVALENTS

Cash equivalents consist of short-term highly liquid investments which
are readily convertible into cash and have original maturities of three months
or less. The Company's investment policy for its available cash balances allows
for investment in high grade short-term debt issues as well as investments in
money market accounts and overnight investments with major financial
institutions. At December 31, 1996, the Company had cash and cash equivalents,
including restricted cash, of $72.1 million of which $4.0 million of cash and
cash equivalents (including restricted cash) was held at Convest.

For purposes of the Consolidated Balance Sheets, approximately $13.9
million of the ending cash balance as of December 31, 1995 was reclassified to
"Net Assets of Discontinued Gas Marketing Operations."

NET INCOME PER SHARE

Income (loss) per share is based on the weighted average number of
common shares outstanding. The effect of common share equivalents was
immaterial and not dilutive for 1996, 1995 or 1994.

INCOME TAXES

Edisto records income taxes in accordance with the Financial
Accounting Standards Board - Statement of Financial Accounting Standards No.
109 ("SFAS 109"), "Accounting for Income Taxes." SFAS 109 requires the balance

F-7

<PAGE> 112
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

sheet approach of income tax accounting whereby deferred income taxes are
provided at the balance sheet date for the differences existing in the tax
basis of assets and liabilities and their financial statement carrying amounts.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

RECLASSIFICATIONS AND CONSOLIDATION

Certain reclassifications have been made to the 1995 and 1994
consolidated financial statements to conform to the presentation for 1996. All
significant intercompany balances and transactions have been eliminated.

CHANGES IN ACCOUNTING PRINCIPLES

Edisto adopted 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 121"), in the fourth quarter of 1995. Convest took a
$5.9 million write-down in the value of its oil and gas properties in 1995 due
to the adoption of SFAS 121. See "Property and Equipment" below for a more
detailed explanation of this accounting change and write-down.

CONVEST ENERGY CORPORATION

RESTRICTED CASH. Restricted cash consists of $333,000 of certificates
of deposit held by various financial institutions. The certificates of deposit
are held in escrow as collateral for letters of credit issued for (i) lease
payments on certain offshore platforms and (ii) estimated plugging and
abandonment costs expected to be incurred on certain onshore oil and gas
properties.

PROPERTY AND EQUIPMENT. Convest follows the successful efforts method
of accounting for its oil and gas properties. Costs of productive wells,
developmental drilling expenditures, including developmental dry holes, and
productive leases are capitalized. Exploratory drilling costs, including
stratigraphic test wells, are initially capitalized, but charged to expense if
and when the well is determined to be unsuccessful. The capitalized costs of
oil and gas properties are charged to operations as depreciation, depletion and
amortization using the unit-of-production method based on the ratio of current
production to proved recoverable oil and gas reserves (as defined by the
Securities and Exchange Commission) on a lease by lease basis. Reserve
estimates for Convest's properties were prepared or audited by independent
petroleum engineering firms at year end. Gas is converted to equivalent barrels
of oil on an energy content basis of 6 Mcf of gas to 1 barrel of oil.
Depreciation, depletion and amortization per equivalent unit of oil production
was $5.09, $4.62 and $4.80 for the years ended December 31, 1996, 1995 and
1994, respectively. Oil and gas leasehold costs are capitalized when incurred.
Unproved properties are assessed periodically on a property-by-property basis
and impairments in value are charged to expense. Exploratory expenses,
including geological and geophysical expenses and annual delay rentals, are
charged to expense as incurred.

Prior to 1995, Convest provided an impairment reserve for proved oil
and gas properties to the extent that total capitalized costs less accumulated
depreciation and depletion, exceed expected undiscounted future net revenues
attributable to proved oil and gas reserves on an overall basis. During March
1995, the Financial Accounting Standards Board issued SFAS 121 which requires
Convest to recognize an impairment loss for proved oil and gas properties if
the carrying value of such properties (i.e., total capitalized costs less
accumulated depreciation and depletion) exceeds the undiscounted expected
future cash flows attributable to such properties. Under SFAS 121, Convest must
assess the need each quarter for an impairment of capitalized costs of oil and
gas properties on a property-by-property basis. If an

F-8

<PAGE> 113
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

impairment is indicated based on undiscounted expected future cash flows, then
an impairment loss is recognized to the extent that net capitalized costs
exceed discounted expected future cash flows.

During the fourth quarter of 1995, Convest adopted SFAS 121 which
required Convest to recognize an impairment loss in 1995 of approximately $5.9
million. Convest assessed the need for an impairment of its proved oil and gas
properties at December 31, 1995 using the prices of $17.42 per barrel of oil
and $1.61 per Mcf of gas. In 1996, Convest recognized an impairment loss of
$2.6 million. Convest assessed the need for an impairment at December 31, 1996
using the prices of $22.73 per barrel of oil and $2.21 per Mcf of gas.

OTHER PROPERTY, PLANT AND EQUIPMENT. Other fixed assets are recorded
at cost and depreciated over their estimated useful lives using the
straight-line method of depreciation.

ABANDONMENT RESERVE. Convest records its estimate of future
abandonment costs of offshore properties. Such costs are accrued using a
unit-of-production method based upon estimated proved recoverable reserves.
Abandonment costs are estimated under current regulations using current costs
and are reviewed periodically and adjusted as new information becomes
available. Abandonment costs on onshore properties are typically nominal due to
the salvage value of well equipment.

Upon emerging from bankruptcy in July 1993, Edisto E&P entered into a
settlement with the United States Minerals Management Service relating to
estimated plugging and abandonment costs for 14 Gulf of Mexico OCS leases in
which Edisto E&P owned interests. Pursuant to this settlement, the operator of
the leases, Edisto E&P and other co-lessees were required to provide security
for payment of such costs through quarterly payments to an Abandonment Fund.
Subsequent to the Edisto Transaction, Convest continues to be subject to the
Abandonment Fund payments. As of December 31, 1996 and 1995, Convest was
subject to total Abandonment Fund payments of $4.2 million and $4.3 million,
respectively.

As of December 31, 1996 and 1995, Convest had made payments totaling
$4.2 million and $3.7 million to the Abandonment Fund, respectively. These
payments were applied to the total long-term abandonment reserve of $7.7
million and $10.2 million, as of December 31, 1996 and 1995, respectively,
resulting in a net long-term abandonment reserve of $3.5 million and $6.5
million as of those dates. The current portion of the abandonment reserve was
$2.3 million and $556,000 as of December 31, 1996 and 1995, respectively. The
current portion of the abandonment reserve is included in "Accrued Liabilities
and Other" and the noncurrent portion is included in "Other Noncurrent
Liabilities" in the consolidated financial statements.

LEASE OPERATING EXPENSES. In connection with a 1992 sale of certain
future production volumes of oil to Enron Reserve Acquisition Corp., Convest
established a reserve for the expenses associated with the volumes sold and
amortizes this reserve as the volumes are delivered. As of December 31, 1996
and 1995, the current balance of this reserve was $1.6 million and $1.8
million, respectively, and the long-term balance was $3.7 million and $4.6
million, respectively, and were presented in "Accrued Liabilities and Other"
and "Other Noncurrent Liabilities," respectively, in the consolidated financial
statements.

GAS BALANCING. Convest uses the entitlement method of accounting for
gas imbalances. Receivables resulting from undertakes of gas production at
December 31, 1996 and 1995 were $2.3 million and $1.4 million, respectively,
and are included in "Oil and Gas Production Accounts Receivables" and "Other
Noncurrent Assets" in the consolidated financial statements. Deferred revenue
and payables resulting from overtakes of gas production at December 31, 1996
and 1995 were $2.7 million and $2.7 million, respectively, and are included in
"Deferred Revenue" and "Other Noncurrent Liabilities" in the consolidated
financial statements.

ACCOUNTING FOR INCOME TAXES. Convest records income taxes in
accordance with SFAS 109, "Accounting for Income Taxes." SFAS 109 requires the
balance sheet approach of income tax accounting whereby deferred income taxes

F-9
<PAGE> 114
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

are provided at the balance sheet date for the differences existing in the tax
basis of assets and liabilities and their financial statement carrying amounts.

CONCENTRATION OF CREDIT RISK. Convest's oil and gas production
revenues are derived principally from uncollateralized sales to customers in
the oil and gas industry. The concentration of credit risk in a single industry
affects Convest's overall exposure to credit risk because customers may be
similarly affected by changes in economic and other conditions. Convest has not
experienced significant credit losses on receivables from such sales.

RISK MANAGEMENT/HEDGING ACTIVITIES. Convest from time to time engages
in commodity hedging activities to minimize the risk of market fluctuations
associated with the price of crude oil and natural gas production. The hedging
objectives include assurance of stable and known cash flows and fixed favorable
prices. The hedges are effected through the purchase and sale of futures
contracts on the New York Mercantile Exchange ("NYMEX") and over the counter
price swap agreements. The credit risk of futures contracts is limited due to
the daily cash settlement of the net change in the value of open contracts and
because of certain NYMEX procedures. Gains or losses on Convest's hedging
agreements are deferred and recognized when the hedged transaction occurs, and
are recorded as oil and gas sales revenue.

(2) DISCONTINUED OPERATIONS

SALE OF GAS MARKETING OPERATIONS. From 1990 until December 1996,
Edisto conducted natural gas marketing operations through Energy Source. On
December 10, 1996, Energy Source sold substantially all of the assets of its
gas marketing operations to subsidiaries of Pacific Gas Transmission Company
("PGT"), a subsidiary of Pacific Gas and Electric Company (NYSE "PGE"). The
sales price was $23.3 million in cash, plus the working capital of Energy
Source at July 31, 1996 (approximately $20.0 million). The sales price,
however, is subject to adjustment after the closing by the adjusted
consolidated net income or loss of Energy Source from August 1, 1996 to
November 30, 1996. The Company and PGT have not yet finalized the purchase
price adjustment. Under the Purchase Agreement, Edisto also retained certain
assets and liabilities of Energy Source which are explained in more detail
below. In connection with this sale, Edisto recognized a gain of approximately
$15.3 million, net of approximately $700,000 of income tax.

With certain exceptions, PGT assumed substantially all of the
liabilities of Energy Source as of November 30, 1996, the effective date of the
sale. The assumed liabilities included all existing leases for office space
being used by Energy Source.

As a condition to the sale, Edisto retained the rights and liabilities
associated with the gas purchase and supply contracts with three of Energy
Source's Canadian trading partners, each of whom defaulted under their
contracts and sought protection under Canadian bankruptcy laws. Edisto also
retained as assets approximately 1.2 Bcf of natural gas in storage which the
storage operator failed to deliver. Edisto is pursuing its claims in each of
these matters.

Pursuant to the Purchase Agreement, Edisto also retained the
liabilities and counterclaims against PanEnergy Corporation and Panhandle
Eastern Pipe Line Company under a lawsuit in the District Court of Harris
County, Texas. This lawsuit is described in Note 12--"Commitments and
Contingencies" herein.

Separate from the lawsuit with PanEnergy, Edisto retained as an asset
all rights to receive a refund from PanEnergy of approximately $1.0 million
under a proposed settlement of certain rate cases pending before the Federal
Energy Regulatory Commission. The proposed settlement has been reflected on the
Consolidated Balance Sheet as of December 31, 1996 and is included in "Accounts
Receivable." This settlement relates to rates that Energy Source was charged
for transportation during 1991 and 1992 by PanEnergy. The settlement proceeds
are scheduled to be paid to Edisto by the end of the second quarter of 1997.

See Note 4--"Consolidating Balance Sheets" for consolidating balance
sheets of Edisto and its consolidated subsidiary, Convest, at December 31,
1996, which set forth the remaining assets and liabilities of Edisto at such
date.

F-10

<PAGE> 115
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

Gross revenues from the gas marketing operations for the years ended
December 31, 1996, 1995 and 1994 were $847.0 million, $418.8 million and $249.4
million, respectively. Net assets of the discontinued gas marketing operations
at December 31, 1995 consisted of the following:

NET ASSETS OF DISCONTINUED GAS MARKETING OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
Year Ended
December 31,
1995
------------
<S> <C>

Cash and cash equivalents $ 13,858
Accounts receivable 71,041
Net assets from price risk
management activities 9,267
Accounts payable (73,797)
Property and equipment, net 1,281
Other assets 8,717
Other liabilities (6,388)
---------
$ 23,979
=========
</TABLE>

GAS TRANSMISSION OPERATIONS/SALE OF PIPELINE. Edisto conducted gas
transmission activities from July 1990 through the execution of a definitive
agreement in February 1994 for the sale of the Company's 218-mile Missouri
intrastate natural gas pipeline to UtiliCorp United Inc. The sale was subject
to regulatory approval and was closed in January 1995. The Company continued to
operate the pipeline from the date of the definitive agreement until the close
of the sale, and reported assets, liabilities and results of operations as
discontinued operations.

The gross sales price, including adjustments for net working capital
and capital expenditures, was $78.1 million in cash. $45.6 million of the
proceeds was used to pay outstanding debt, including interest and prepayment
penalties, to three lenders. Edisto recorded a gain on the sale of the pipeline
of approximately $2.6 million in the first quarter of 1995.

Gross revenues from transmission operations for the twelve months
ended December 31, 1994 were $11.4 million. For the same period, the Company
reported a net loss of $.5 million for transmission operations under
discontinued operations.

MANUFACTURING OPERATIONS/SALE OF MINT SUBSIDIARIES. From 1990 until
March 1994, Edisto's 80% subsidiary, Multiflex International, Inc. (now called
MINT Holding Company ["MINT"]), manufactured subsea umbilical connections used
in the offshore oil and gas industry. In March 1994, MINT sold the stock of its
operating subsidiaries to Oceaneering International, Inc. for a purchase price
of $12.6 million in cash. After the payment of approximately $3.6 million to
third party lenders to retire debt of MINT and certain expenses associated with
the sale, the net proceeds were approximately $9 million. Under the terms of
the purchase agreement, MINT retained $9 million in cash for the one year
indemnification period to settle any possible indemnification claims after the
sale. After the indemnification period ended in March 1995 with no claims being
made, MINT repaid $8.8 million of its outstanding debt owed to Edisto.
Approximately $450,000 was left in MINT at such time to cover potential
remaining liabilities of MINT. Edisto recognized a gain on the MINT sale of
$3.8 million in March 1995.

F-11
<PAGE> 116
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

(3) ACQUISITIONS

CONVEST ENERGY CORPORATION

On June 26, 1995, Edisto and Convest closed the purchase (the "Convest
Transaction") by Convest of all of the capital stock of Edisto's oil and gas
exploration and production subsidiary, Edisto E&P. Prior to the closing, Edisto
owned approximately 31% of the outstanding Common Stock of Convest and had
three representatives on Convest's Board of Directors. The consideration paid
to Edisto in the Convest Transaction was 6,185,400 newly issued shares of
Common Stock of Convest and $10,000 in cash. These newly issued shares,
combined with Edisto's existing 31% interest in Convest, increased Edisto's
interest in Convest to approximately 72% of the outstanding Common Stock of
Convest. Upon the closing of the Convest Transaction, the Convest Board of
Directors was restructured so that affiliates of Edisto constituted a majority
of Convest's Board of Directors. In April 1996, Edisto purchased an additional
92,000 shares of Convest Common Stock on the open market which increased its
interest in Convest to 73%.

Since Edisto acquired control of Convest through its 72% stock
ownership and majority of the Convest Board, the Convest Transaction was
accounted for as a reverse acquisition. Under the accounting rules for a
reverse acquisition, Edisto E&P is considered the acquiring entity and Convest
is considered the acquired entity. As a result, Edisto E&P's historical
financial statements became the historical financial statements of Convest and
the purchase price was allocated to the assets and liabilities of Convest based
on their respective fair values at the acquisition date.

Edisto accounted for the Convest Transaction using the purchase method
of accounting. Edisto's Consolidated Statement of Operations for the year ended
December 31, 1995 includes the results of operations for Convest as if Convest
was consolidated beginning January 1, 1995. However, the share of the Convest
loss attributable to the interest not owned by Edisto prior to the date of the
Convest Transaction has been added back as a preacquisition loss in the
accompanying Consolidated Statement of Operations for such period. Periods
prior to January 1, 1995 have not been restated to include the Convest results
of operations, and therefore are not comparable to the 1995 results of
operations.

SENSOR PROPERTIES ACQUIRED BY CONVEST

On May 1, 1995 and June 14, 1995, prior to the closing of the Convest
Transaction, Edisto E&P and Convest acquired from Sensor Oil & Gas, Inc.
("Sensor") certain oil and gas properties located in Kansas, Oklahoma and
Nebraska (the "Sensor Properties"). The aggregate purchase price was $7.4
million plus the assumption of approximately $250,000 of net liabilities
primarily related to real estate taxes. Additionally, Edisto E&P and Convest
incurred approximately $332,000 of aggregate transaction costs in connection
with the purchase. Since Edisto E&P and Convest each acquired identical
interests in the Sensor Properties, the purchase of such properties did not
affect the purchase price of the Convest Transaction.

(4) CONSOLIDATING BALANCE SHEETS

Set forth below are the Consolidating Balance Sheets of Edisto and its
consolidated subsidiary, Convest, at December 31, 1996.

F-12
<PAGE> 117

EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
Consolidated
Edisto (1) Convest Eliminations Edisto
---------- ------- ------------ ------------

<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 68,087 $ 4,011 $ -- $ 72,098
Margin deposits -- 979 -- 979
Accounts receivable 1,996 8,506 (667) 9,835
Other current assets 259 1,288 -- 1,547
-------- -------- --------- --------
Total current assets 70,342 14,784 (667) 84,459
-------- -------- --------- --------

Property and equipment, net 76 54,724 -- 54,800
-------- -------- --------- --------

Investment in Convest 32,288 -- (32,288) --
-------- -------- --------- --------

Other assets 24 2,704 (550) 2,178
-------- -------- --------- --------

$102,730 $ 72,212 $ (33,505) $141,437
======== ======== ========= ========

LIABILITIES AND EQUITY:
Accounts payable $ 1,320 $ 9,187 $ (667) $ 9,840
Accrued liabilities and other 3,822 6,041 -- 9,863
Deferred revenue -- 2,113 -- 2,113
-------- -------- --------- --------
Total current liabilities 5,142 17,341 (667) 21,816
-------- -------- --------- --------

Long-term debt -- 4,003 -- 4,003
Minority interest -- -- 10,850 10,850
Other noncurrent liabilities 315 7,730 -- 8,045
-------- -------- --------- --------
Total long-term liabilities 315 11,733 10,850 22,898
-------- -------- --------- --------

Stockholders' equity 97,273 43,138 (43,688) 96,723
-------- -------- --------- --------

$102,730 $ 72,212 $ (33,505) $141,437
======== ======== ========= ========
</TABLE>

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

(1) Includes Edisto and its wholly owned subsidiaries.

(5) HEDGING ACTIVITIES

As previously stated, Convest conducts its hedging activities through
major financial institutions. Set forth below is the contract amount and term
of all futures contracts held for price risk management purposes by Convest at
December 31, 1996 and 1995:

F-13
<PAGE> 118
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

1996 1995
----- ----
Oil Gas Oil Gas
--- --- --- ---
<S> <C> <C> <C> <C>
Quantity Sold 90 Mbbls 3,300 Mmcf 285 MBbls 8,220 MMcf
Maximum Term 9 Months 10 Months 11 Months 10 Months
Average Price $22.50 $2.53 $17.23 $1.86

</TABLE>

At December 31, 1996, Convest had hedged approximately 10% and 27% of
its projected 1997 oil and gas production, respectively. Convest will continue
its hedging activities during 1997 in order to mitigate the volatility of its
crude oil and natural gas prices. Gains and losses realized upon the settlement
of Convest's hedge positions are deferred and recognized as oil and gas sales
revenue in the month of the underlying physical production being hedged.
Convest's losses from hedging were $7.8 million and $421,000 during 1996 and
1995, respectively. The fair value of Convest's open positions at December 31,
1996 was $728,230. The fair value of the Company's hedges was based on the cost
that would have been incurred to buy out those hedges in a loss position and
the consideration that would have been received to terminate those hedges in a
gain position. The cash margin required by the counterparts to Convest's
hedging activities totaled $1.0 and $5.1 million as of December 31, 1996 and
1995, respectively, and are included in margin deposits.

(6) RELATED PARTY TRANSACTIONS

As described in Note 3 herein, Edisto and Convest consummated the
Convest Transaction on June 26, 1995. As also described in Note 3, Edisto E&P
and Convest purchased the Sensor Properties in May and June 1995.

In the Convest Transaction, Edisto retained the tax benefits of the
net operating loss carryforwards ("NOL's") of Edisto E&P. The tax benefits
included a $3.3 million NOL usable for regular taxable income and a $3.6
million NOL usable for alternative minimum taxable income. Convest determined
that the use of these NOLs would reduce Convest's taxes for 1995 by
approximately $437,000. In addition, based on projections of Convest's future
taxable income, Convest determined that the remaining NOLs of Edisto E&P would
be a valuable asset that could be utilized by Convest in the future.
Accordingly, Edisto allowed Convest to utilize the NOLs of Edisto E&P in
consideration for the payment by Convest of $550,000.

Since January 1995, Convest has had a gas marketing arrangement with
Energy Source, Inc. ("Energy Source"), which until December 1996 was a
wholly-owned subsidiary of Edisto. Under this arrangement, Energy Source
markets a substantial portion of Convest's gas production and assumes certain
related administrative functions. Energy Source marketed approximately 84% of
Convest's 1996 gas production. During 1996, Convest received a minimum price of
98% of the index price for the applicable pipeline. Under the agreement, Energy
Source takes title to the gas before reselling it, thereby creating an account
receivable from Energy Source for the sold gas. At December 31, 1996, the
account receivable from Energy Source was $3.6 million, which is included in
"Accounts Receivable" on the Consolidated Balance Sheet. Convest sells such gas
to Energy Source on open credit without requiring a letter of credit or other
security.

In December 1996, Energy Source was sold by Edisto to an unrelated
third party. See Note 2--"Discontinued Operations" for a description of this
transaction. In connection with the sale, Convest and Energy Source agreed to
extend the gas marketing agreement to December 31, 1997 and to increase the
minimum price from 98% to 100% of the index price for the applicable pipeline.

F-14

<PAGE> 119
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

became employees of the purchaser of Energy Source. Since Convest continued to
need an AS400 computer system to run its accounting system, the Energy Source
purchaser agreed to provide Convest with access to the AS400 computer system
and MIS support through December 31, 1997. The cost to Convest is $12,645 per
month. This agreement may be terminated by Convest at any time after June 30,
1997 upon 90 days notice.

Energy Source executes trades of futures contracts on the New York
Mercantile Exchange on behalf of Convest. In this regard, Energy Source acts
solely in a ministerial capacity to purchase or sell the futures contracts at
price levels directed by Convest's management. Energy Source charges a
commission of $.0025 per Mcf of gas or barrel of crude oil for each trade
executed to cover Energy Source's administrative costs to perform such service.

Edisto and Convest have a directors' and officers' fiduciary insurance
policy that covers both companies. The annual insurance premium was allocated
68% to Edisto, for a cost of $204,000, based on the relative percentage that
the total assets of Edisto bear to the total assets of both Edisto and Convest.

Each of the affiliated party transactions described above was approved
by either a special committee of the Convest Board, which was composed of
outside directors with no affiliation to Edisto, or the unanimous consent of
the Convest Board.

Effective July 1, 1995, the Company and Convest agreed to share
certain administrative costs to reduce the overall cost that would otherwise be
incurred by each of them in the absence of such an arrangement. Under the
arrangement, certain costs associated with shareholder communication services
and certain administrative staff who perform duties on behalf of both entities
are shared by Edisto and Convest based on their respective utilization. In
addition, the salary of Michael Y. McGovern, who serves as the Chairman and
Chief Executive Officer of Edisto and Convest is apportioned equally between
the two entities. Edisto and Convest may enter into additional cost sharing
arrangements in the future.

(7) LONG-TERM DEBT

Long-term debt consisted of the following (in thousands):

<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
------------ ------------

<S> <C> <C>
Convest Credit Agreement $ 4,000 $ 19,175
Capital leases - 175
Other 3 8
--------- ---------
Total debt 4,003 19,358
Less current maturities - (1,723)
--------- ---------
$ 4,003 $ 17,635
========= =========
</TABLE>

CONVEST ENERGY CORPORATION CREDIT AGREEMENT

On June 26, 1995, simultaneous with the closing of the Convest
Transaction, Convest entered into an Amended and Restated Secured Revolving
Credit Agreement (the "Agreement") with Bank One, Texas, N.A. ("Bank One"), and
Compass Bank-Houston. This facility, which terminates January 1, 1999, combined
the existing credit facilities of Convest and Edisto E&P. Bank One serves as
agent bank of the Agreement. The Agreement is secured by a first lien on all of
Convest's assets, including its oil and gas properties and gas plant. The
borrowing base is redetermined semi-annually on May 31 and November 30 of each
year by the lending banks based on engineering criteria established by the
banks. Interest on borrowings under the Agreement is computed at (i) the agent
bank's prime lending rate (the "Base

F-15

<PAGE> 120
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 1996, 1995 and 1994

Rate") plus 3/4% or (ii) the London Inter Bank Offering Rate ("LIBOR") plus
2-3/4%. In addition, Convest pays a commitment fee equal to 1/2% on any
commitment amount in excess of outstanding borrowings.

The Agreement contains certain covenants regarding Convest's
consolidated net worth and cash flow to debt service. In addition, the
Agreement places certain limitations on Convest's ability to incur certain
types of additional debt.

During December 1996, Convest was notified by its lending banks that
its redetermined borrowing base was $19.2 million effective December 1, 1996
and will reduce by $1.0 million monthly beginning January 1, 1997 based on the
lending banks estimate of production. As of December 31, 1996 and 1995, Convest
had outstanding borrowing under its credit facility totaling $4.0 million and
$19.2 million, respectively. In addition, Convest had an additional $200,000 of
letters of credit outstanding at December 31, 1996, primarily related to
performance bonds issued for oil and gas operations. As of December 31, 1996,
all of Convest's outstanding borrowings were subject to Base Rate interest at
an effective rate of 9% per annum.

(8) COMMON STOCK AND STOCK OPTIONS

The Company's Common Stock has a par value of $.01 per share. At
December 31, 1996, there were 50,000,000 shares authorized, of which 13,930,052
shares were issued. Treasury stock held by the Company at such date was 52,214
shares.

In December 1995, the Company's Board of Directors authorized the
Company to repurchase up to 1,000,000 shares of Edisto's Common Stock. In the
first quarter of 1996, the Company repurchased 28,500 shares. At March 14,
1997, the Company had 14,034,674 issued and outstanding shares of Common Stock.

In 1993, the Company adopted the 1993 Stock Option Plan and the 1993
Director Stock Option Plan. The aggregate number of shares that may be issued
under options granted under these plans is 1,200,000 shares for the 1993 Stock
Option Plan and 150,000 shares for the 1993 Director Stock Option Plan. The
following table summarizes the activity in options under the 1993 Stock Option
Plan and the 1993 Director Stock Option Plan:

Granted 138,890 8.88 339,067 6.27 391,806 6.23

Exercised (27,286) 6.39 - - - -

Canceled (90,139) 6.18 (40,871) 6.24 (278,000) 9.75
------- ------- --------
End of year 717,467 $ 6.79 696,002 $ 6.38 397,806 $ 6.29
------- ------- --------
Exercisable, end of year 595,133 $ 6.89 111,712 $ 6.92 2,000 $ 9.75

Weighted average fair value
of options granted $ 1.73 $ 1.53

</TABLE>

F-16
<PAGE> 121
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 1996, 1995 and 1994

Edisto applies Accounting Principles Board (APB) Opinion 25 and
related interpretations in accounting for its stock option plans. In accordance
with APB Opinion 25, no compensation expense has been recognized for stock
options granted for the years 1996, 1995 and 1994. Had compensation costs for
these plans been determined based on the fair value for awards under those
plans, consistent with the method of Statement of Financial Accounting
Standards No. 123 ("SFAS 123") "Accounting for Stock-Based Compensation,"
Edisto's net income and earnings per share would have been as follows:

<TABLE>
<CAPTION>
(in thousands, except per share amounts)
1996 1995
-------- --------
<S> <C> <C> <C>
Net Income/(Loss)
As Reported $ 20,154 ($6,597)

Pro Forma 19,171 (7,132)

Earnings Per Share
As Reported $ 1.49 $ (0.51)

Pro Forma $ 1.42 $ (0.55)
</TABLE>

The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted
average assumptions used for grants in 1996 and 1995, respectively: risk-free
interest rates of 5.49% and 5.85%; expected lives of one year and two years;
expected volatility of 43.51% and 34.87%. No dividends are expected. The pro
forma amounts above include approximately $700,000 and $25,000 of compensation
expense for 1996 and 1995, respectively, which relate to Convest's stock option
plan, had grants related to Convest's plan been recorded at fair value.

574,351 of the 717,467 options outstanding at December 31, 1996 have
exercise prices between $6.00 and $6.75 with a weighted average exercise price
of $6.22. 455,017 of these options are exercisable. The remaining 143,116
option have exercise prices between $7.33 and $10.69 with a weighted average
exercise price of $9.08. 128,116 of these options are exercisable; their
weighted average exercise price is $9.25. As a result of the sale of the gas
marketing operations, completed on December 10, 1996, virtually all options,
other than those held by Directors of the Company and the Chairman of the
Company, vested upon closing of the sale and have a remaining contractual life
of one year.

(9) PROPERTY SALES

1996 ASSET SALES

In April 1996, Edisto sold its 11% interest in the Zarat Permit
offshore of Tunisia for $1.4 million which resulted in a gain of approximately
$0.3 million. This was Edisto's last remaining international oil and gas
property.

In mid-January 1996, Convest completed the sale of an offshore oil and
gas property for sale proceeds of approximately $2.0 million, which resulted in
a gain of approximately $620,000. In addition, Convest sold several other
nonstrategic oil and gas properties during 1996 for aggregate sale proceeds of
approximately $991,000 which resulted in a gain of approximately $619,000.

1994 ASSET SALES

During 1994, Edisto E&P sold its interest in two areas of its Gulf
Coast oil and gas properties. The sales price for the combined properties was
approximately $9.4 million, and the net gain on the sales was approximately
$4.7
F-17
<PAGE> 122

EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 1996, 1995 and 1994

million. The properties sold were estimated to have reserves of approximately 8
Bcf, one-half of which were undeveloped and would have required significant
capital resources to develop for production. The amount of assets sold did not
exceed 10% of the total assets of the Company so the pro forma effect of these
sales is not presented.

(10) FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable to
estimate that value. Changes in the assumptions or estimation methodologies may
have a material effect on these estimated fair values.

CASH AND CASH EQUIVALENTS

The fair value approximates carrying value because of the short
maturity of these investments.

BANK DEBT

The fair value approximates carrying value based on floating interest
rates associated with such debt or on recent negotiations with lending
institutions.

HEDGING

See Note 5--"Hedging Activities" herein for a description of Convest's
hedging activities.

OTHER

The carrying amount approximates fair value based on the short
maturity of these instruments.

(11) INCOME TAXES

The Company accounts for income taxes in accordance with the
provisions of SFAS 109 which requires that deferred tax assets and liabilities
be recorded for temporary differences between the financial statement and tax
bases of assets and liabilities using the currently enacted tax rate expected
to be in effect when the taxes are actually paid.

The provision for income taxes for the years ended December 31, 1996,
1995 and 1994 consists of the following (in thousands):

<TABLE>
<CAPTION>
Year Ended
----------
December 31, December 31, December 31,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Current
Federal $ 142 $ 347 $ -
State 245 259 147
----------- ------------ ------------

Income tax provision $ 387 $ 606 $ 147
=========== ============ ============
</TABLE>

A reconciliation of the Company's effective tax rate to the statutory
tax rate follows:

F-18
<PAGE> 123
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1996 1995 1994
---- ---- ----

<S> <C> <C> <C>
Federal statutory rate 34% (34)% 34%
Foreign tax provision -- -- --
State tax provision 4 10 2
Utilization of net deferred tax asset (34) -- (34)
Tax benefit reserved -- 34 --
Federal alternative minimum tax 2 14 --
------ ------ ------

Effective rate 6% 24% 2%
====== ====== ======

</TABLE>

Temporary differences and carryforwards, which give rise to deferred
income tax assets and liabilities, consist of the following (in thousands):

<TABLE>
<CAPTION>
December 31,
1996 1995
---- ----

<S> <C> <C>
Deferred tax liabilities $ (127) $ --

Deferred tax assets:
Net operating loss carryforwards 36,396 49,304
Tax credit carryforwards 410 --
Property and equipment differences 724 2,008
Abandonment reserves -- 1,456
Other 1,013 2,618
-------- --------
Total 38,543 55,386
Valuation Allowance (38,416) (55,386)
-------- --------

Net deferred tax asset (liability) $ -- $ --
======== ========
</TABLE>

At December 31, 1996 and 1995, the Company recognized valuation
allowances for the net deferred tax assets including net operating loss
carryforwards for which the Company believes it is more likely than not that
the assets are not realizable.

At December 31, 1996, the Company had consolidated net operating loss
carryforwards of approximately $137 million for regular tax purposes and $96
million for alternative minimum tax reporting purposes. These carryforwards
expire (if not utilized) in the years 2005 to 2010.

Due to a change of more than 50% of ownership in the Company that
occurred on the effective date of the Plan of Reorganization, the Company's
ability to utilize its existing net operating losses to offset future taxable
income became significantly limited under Section 382 of the Internal Revenue
Code of 1986, as amended (the "Code"). The Company will be able to utilize
approximately $6.1 million of its net operating loss carryforwards each year
for the next 15 years. To the extent gains are recognized subsequent to the
reorganization, which constitute built-in gains within the meaning of Section
382(h) of the Code, the annual limitation may be increased to the extent of a
portion or all of such gains recognized.

F-19

<PAGE> 124
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 1996, 1995 and 1994

(12) COMMITMENTS AND CONTINGENCIES

LITIGATION

Bruce W. McConkey, et al v. James R. McNab, Jr., et al. (Cause No.
93-002587 in the 125th District Court of Harris County, Texas). In January
1993, Bruce W. McConkey and two other shareholders of MINT, who collectively
hold 20% of the outstanding MINT common stock, filed a lawsuit against Edisto,
MINT and certain of its former directors who were former officers of Edisto.
The lawsuit, among other things, (i) alleges that MINT constructively
terminated Mr. McConkey's employment as the President and CEO of MINT, thereby
breaching his employment agreement; (ii) alleges that certain directors of MINT
breached their fiduciary duties to the plaintiffs, in their capacity as
minority shareholders, and (iii) asserts derivative claims on behalf of MINT
against certain directors for alleged mismanagement of MINT. The plaintiffs
seek actual damages in an unspecified amount, punitive damages and attorney's
fees. In October 1996, the trial court granted an interlocutory summary
judgment in favor of Edisto, MINT and the individual defendants on all claims
other than the claim against MINT that it constructively terminated Mr.
McConkey's employment. Based on developments of the case to date, the Company's
management does not believe the outcome of this lawsuit will have a material
adverse effect on the Company's consolidated financial position.

Panhandle Eastern Pipe Line Company v. Energy Source, Inc. (Cause No.
96-60925 in the 152nd District Court of Harris County, Texas). The lawsuit,
which was filed in December 1996, relates to (i) a contract dispute involving
approximately $1.5 million in disputed Annual Revenue Amount and other charges
which PanEnergy and Panhandle Eastern claim are owed by Energy Source under two
gas transportation agreements between the companies, (ii) a claim by Energy
Source that PanEnergy over billed Energy Source by approximately $1.0 million
for services under such transportation contracts which PanEnergy has refused to
refund, (iii) $216,000 in gas balancing penalties paid by Energy Source under
protest for which Edisto is seeking a refund, (iv) a claim by Energy Source
under Texas antitrust laws that PanEnergy exerted unlawful monopoly power and
engaged in anticompetitive conduct to the detriment of Energy Source, and (v) a
claim by Energy Source that PanEnergy tortiously interfered with a prospective
contractual relationship between Energy Source and its largest customer at that
time. Edisto believes that it has meritorious defenses to PanEnergy's claims
and plans to vigorously assert such defenses and its counterclaims against
PanEnergy in the lawsuit. Based on developments of the case to date, the
Company's management does not believe the outcome of this lawsuit will have a
material adverse effect on the Company's consolidated financial position.

Potential Retained Liabilities from Sale of Gas Marketing Operations.
As a condition to the sale of the natural gas marketing operations in December
1996, Edisto retained the rights and liabilities associated with the gas
purchase and supply contracts with three of Energy Source's Canadian trading
partners. Each of these trading partners defaulted under their contracts and
sought protection under Canadian bankruptcy laws. Edisto is pursuing its claims
in these matters.

LEASE COMMITMENTS

Minimum future payments under operating leases are $275,000 during
1997, $21,000 during 1998, $10,000 during 1999, $4,000 during 2000 and zero
thereafter.

(13) RESTRUCTURING ITEMS

Restructuring expense in 1994 includes the costs of the Company's
implementation of a restructuring and consolidation plan. Thirty-one (31)
employees who were involved primarily in corporate administration and
exploration and production operations in the Dallas office were laid off as
part of the Company's restructuring and its associated move to Houston, Texas.
Pursuant to this plan, Edisto recorded the following restructuring expenses at
December 31, 1994 (in thousands):

F-20

<PAGE> 125
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 1996, 1995 and 1994

<TABLE>
<S> <C>
Consolidation of office space requirements $1,821
Reduction in workforce 863
------
$2,684
======
</TABLE>

The liability remaining under the Company's restructuring plan as of
December 31, 1996 and 1995, relates to the consolidation of the Company's
office lease requirements. As of December 31, 1996 and 1995, the Company had
made payments totaling $1.9 million and $1.5 million associated with its
restructuring plan, respectively. These payments were applied to the total
restructuring liability of $2.7 million. The current portion of the
restructuring liability was $538,000 and $619,000 as of December 31, 1996 and
1995, respectively. The current portion of the restructuring liability is
included in "Accrued Liabilities and Other" and the long-term portion is
included in "Other Noncurrent Liabilities."

(14) EMPLOYEE BENEFITS

Edisto has an Employee Profit Sharing Retirement Plan and Trust which
is available to all full-time employees of Edisto and certain of its
affiliates. Under the terms of the Plan, an employee may contribute up to a
maximum of 15% of their pre-tax annual compensation and Edisto will make
matching contributions to the account of the participant equal to 6% of the
participant's annual compensation up to a maximum limit of $1,864 per year. In
addition, the Board of Directors of Edisto may determine, on a year-by-year
basis, to contribute an additional amount which would be allocated to
participating employees based on their relative compensation. During 1996,
Edisto made matching contributions of $117,377 and additional contributions of
$159,235. During 1995, Edisto made matching contributions of $103,625 and
additional contributions of $140,016. During 1994, Edisto made matching
contributions of $147,545 and additional contributions of $226,744.

In connection with the sale of the gas marketing operations on
December 10, 1996 (see Note 2--"Discontinued Operations"), all of the employees
of Edisto, other than the Chairman of Edisto, became employees of the
purchaser. Since Edisto no longer has any active employees, the Edisto Board of
Directors on December 31, 1996 approved terminating the Plan. This termination
is expected to occur by the end of 1997.

During 1995, Convest maintained a plan qualified under Section 401(k)
of the Internal Revenue Code (the "Plan"). All qualified employees of Convest
were entitled to participate in the Plan upon completion of twelve months of
service. Effective, January 1, 1994, a participant could contribute up to 15%
of their compensation to the Plan on a pre-tax basis and Convest contributed
matching contributions to the account of the participant equal to 75% of the
participant's contribution, not to exceed 4.5% of the participant's
compensation. Contributions by Convest vested over five years of service at a
rate of 20% per year. During 1995, Convest made matching contributions of
approximately $70,000 in accordance with the Plan.

During December 1995, Convest amended and restated the Plan effective
January 1, 1996. Under the amended Plan, all qualified employees of Convest are
entitled to participate, regardless of time of service with Convest; however, a
new entrant to the Plan may only do so on January 1 and July 1. Under the terms
of the Plan, an employee may contribute up to a maximum of 15% of their pre-tax
annual compensation and Convest will make matching contributions to the account
of the participant equal to 6% of the participant's annual compensation up to a
maximum limit of $1,864 per year. In addition, the Board of Directors may
determine, on a year-by-year basis, to contribute an additional amount which
would be allocated to participating employees based on their relative
compensation. During 1996, Convest made matching contributions of $178,000.

F-21

<PAGE> 126
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 1996, 1995 and 1994

(15) CONVEST OIL AND GAS RESERVES INFORMATION (UNAUDITED)

The provisions of Statement of Financial Accounting Standards No. 69
require the disclosure of the following information relative to Convest's oil
and gas reserves and producing activities.

<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995 1994
---- ---- -----
(In Thousands)
<S> <C> <C> <C>
CAPITALIZED COSTS RELATING TO OIL AND GAS
PRODUCING ACTIVITIES

Proved oil and gas properties $ 114,063 $ 110,373 $ 66,617

Unproved oil and gas properties 3,244 3,828 997
--------- --------- --------
117,307 114,201 67,614

Accumulated depreciation, depletion and amortization
(62,847) (50,144) (29,289)
--------- --------- --------

Net capitalized costs $ 54,460 $ 64,057 $ 38,325
========= ========= ========

COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION,
EXPLORATION AND DEVELOPMENT ACTIVITIES

Acquisition of producing properties and leasehold costs:

Proved $ 163 $ 3,069 $ 15

Unproved -- -- 17

Reverse Acquisition of Convest -- 40,935 --

Exploratory drilling costs 3,907 -- 210

Development drilling costs 9,249 6,406 3,812
--------- --------- --------

$ 13,319 $ 50,410 $ 4,054
========= ========= ========
</TABLE>

UNAUDITED RESERVE QUANTITY INFORMATION

The following table sets forth the estimates of Convest's share of net
quantities of proved reserves of oil and gas and a reconciliation of the
changes in such quantities, developed or audited by independent petroleum
engineers in accordance with guidelines established by the Securities and
Exchange Commission and the Financial Accounting Standards Board. Convest
emphasizes that reserve quantity estimates are inherently imprecise.
Accordingly, these estimates are expected to change as future information
becomes available. Changes in reserve quantities or prices and costs in future
reserve estimates could have a significant effect on future depreciation,
depletion and amortization or impairments of oil and gas properties. All
reserves are located in the United States.

F-22

<PAGE> 127
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>
Oil and
Condensate Natural Gas
(Mbbls) (Mmcf)
---------- -----------

<S> <C> <C>
Proved reserves, December 31, 1993 1,012 59,340
Revisions of previous estimates 220 10,134
Sales of minerals in place (11) (7,236)
Extensions, discoveries and other additions -- --
Production (584) (19,295)
------ -------
Proved reserves, December 31, 1994 637 42,943
Revision of previous estimates 872 (5,797)
Sale of minerals in place (50) (133)
Reverse acquisition of Convest 5,474 17,509
Acquisition of Sensor Properties (a) 756 172
Extensions, discoveries and other additions 140 3,820
Production (1,306) (17,968)
------ -------
Proved reserves, December 31, 1995 6,523 40,546
Revisions of previous estimates 889 5,757
Sales of minerals in place (341) (2,105)
Extensions, discoveries and other additions 296 6,546
Production (1,023) (13,162)
------ -------
Proved reserves, December 31, 1996 6,344 37,582
====== =======
Proved developed reserves:
December 31, 1993 949 49,111
December 31, 1994 607 42,540
December 31, 1995 5,818 39,231
December 31, 1996 5,493 35,075

</TABLE>

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

(a) Reserve additions associated with the Sensor Properties acquisition
represents only the reserves associated with Edisto E&P's interest as
Convest's interest in the Sensor Properties was considered to have
been acquired by Edisto E&P in the Edisto Transaction.

F-23
<PAGE> 128
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 1996, 1995 and 1994

UNAUDITED STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
AND CHANGES THEREIN RELATING TO PROVED OIL AND GAS RESERVES

The following table presents the standardized measure of discounted
future net cash flows and changes therein relating to proved oil and gas
reserves pursuant to Securities and Exchange Commission Regulation S-X, Rule
4-10 and Statement of Financial Accounting Standards No. 69. In computing this
data, assumptions other than those required by the Securities and Exchange
Commission and the Financial Accounting Standards Board could produce different
results. Accordingly, the data may not be construed as representative of the
fair market value of Convest's proved oil and gas reserves.

Future cash flow estimates were derived by applying year-end prices
and costs to estimated future production. Convest's gas production is either
sold at fixed prices contracted for with given purchasers or at prevailing spot
market prices. Future production and development costs were computed by
estimating the expenditures to be incurred in developing and producing the
proved oil and gas reserves, based on year-end costs and continued existing
economic conditions. The standardized measure of discounted future net cash
flows represents the present value of estimated future net cash flows,
discounted at a rate of 10% per year.

Numerous uncertainties are inherent in estimating quantities of proved
reserves, projecting future rates of production and the timing of development
expenditures. Future prices received for such production and future production
costs may vary, perhaps significantly, from the prices and costs assumed for
purposes of these estimates. Estimates of economically recoverable oil and gas
reserves and of the future net revenues therefrom are based upon a number of
variable factors and assumptions, all of which may in fact vary considerably
from actual results. All such estimates are to some degree speculative, and
classifications of reserves are only attempts to define the degree of
speculation involved. Convest emphasizes that the actual production, revenues,
severance and excise taxes, development expenditures and operating expenditures
with respect to its reserves will likely vary from such estimates, and such
variances may be material.

F-24
<PAGE> 129
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>
At December 31,
---------------
1996 1995 1994
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
Future cash inflows $ 310,591 $ 214,687 $ 79,331
Future production and development costs (117,030) (116,343) (48,733)
Future income taxes (33,366) (2,925) --
--------- --------- --------
Future net cash flows 160,195 95,419 30,598
10% annual discount for estimated timing (38,841) (23,452) (3,143)
of cash flows --------- --------- --------
Standardized measure of discounted future
net cash flows $ 121,354 $ 71,967 $ 27,455
========= ========= ========

Beginning of period $ 71,967 $ 27,455 $ 75,020
Changes resulting from:
Sales of oil and gas produced, net of (32,360) (32,763) (34,559)
production costs
Net changes in prices and production costs 55,216 9,443 (26,666)
Extensions and discoveries, less related costs 23,442 8,601 --
Reverse acquisition of Convest -- 53,102 --
Acquisition of Sensor Properties (a) -- 4,838 --
Sales of reserves in place (4,091) (519) (8,434)
Revisions of previous quantity estimates 23,015 (622) 9,809
Accretion of discount 7,197 2,746 7,502
Changes in future development costs (24) 1,905 3,379
Net change in income taxes (22,181) (2,509) --
Changes in timing and other (827) 290 1,404
--------- --------- --------
End of period $ 121,354 $ 71,967 $ 27,455
========= ========= ========

At December 31,
---------------
Average Prices 1996 1995 1994
-------------- ---- ---- ----

Oil (per Bbl) $ 26.01 $ 19.48 $ 14.67
Gas (per Mcf) $ 3.87 $ 2.16 $ 1.63

</TABLE>

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

(a) Discounted future net revenues associated with the Sensor Properties
acquisition represents only the discounted future net revenues
associated with Edisto E&P's interest as Convest's interest in the
Sensor Properties was considered to have been acquired by Edisto E&P
in the Edisto Transaction.

F-25
<PAGE> 130
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 1996, 1995 and 1994

in the prior month. This decrease in prices would have had an effect on the
Standardized Measure of Discounted Cash Flows of the Company's proved reserves
at January 1, 1997.

(16) SELECTED QUARTERLY DATA (UNAUDITED)

The following tables set forth certain quarterly results of operations
of Edisto (in thousands, except per share data):

<TABLE>
<CAPTION>
First Second Third Fourth Year to
Quarter Quarter Quarter Quarter Date
1996 1996 1996 1996 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $ 11,520 10,513 11,601 13,588 47,222
Operating income (loss) $ 1,013 (401) 1,003 3,048 4,663
Income (loss) from continuing operations $ 1,344 127 464 3,668 5,6030
Income (loss) from discontinued gas marketing
and trading operations $ 2,759 (1,287) (2,170) (63) (761)
Gain from discontinued gas marketing operations $ -- -- -- 15,312 15,312
Net income (loss) $ 4,103 (1,160) (1,706) 18,917 20,154
Net income (loss) per common share:
Continuing operations $ .11 .01 .03 .26 .41
Discontinued operations $ .21 (.10) (.15) 1.10 1.08
Net income (loss) per common
share $ .32 (.09) (.12) 1.36 1.49
$ 12,934 13,440 13,846 13,856 13,496
Weighted average common shares
outstanding

</TABLE>

First Second Third Fourth Year to
Quarter Quarter Quarter Quarter Date
1995 1995 1995 1995 1995
---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C>
Revenues $ 13,221 13,323 11,786 13,120 51,450
Operating income (loss) (26) (642) 223 (4,514) (4,959)
Income (loss) from continuing operations (61) (328) (349) (2,436) (3,174)
Income (loss) from discontinued gas marketing and
trading operations (2,068) 1,033 (106) (8,663) (9,804)
Gain from discontinued transmission operations 2,557 -- -- -- 2,557
Gain from discontinued manufacturing operations 3,824 -- -- -- 3,824
Net income (loss) 4,252 705 (455) (11,099) (6,597)
Net income (loss) per common share:
Continuing operations -- (.03) (.03) (.19) (.25)
Discontinued operations .33 .08 (.01) (.66) (.26)
Net income (loss) per common share .33 .05 (.04) (.85) (.51)

Weighted average common shares outstanding 12,966 12,966 12,954 12,954 12,954

</TABLE>

F-26
<PAGE> 131
SCHEDULE I
EDISTO RESOURCES CORPORATION (PARENT COMPANY)
CONDENSED BALANCE SHEETS
(IN THOUSANDS)

ASSETS

December 31,
------------
1996 1995
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 67,626 $ 18,318
Accounts receivable 4,800 69
Notes receivable from affiliates -- 9,502
Other 380 237
-------- --------
Total current assets 72,806 28,126
-------- --------

Property and equipment
Other -- 1,395
Less accumulated depreciation -- (823)
-------- --------
-- 572
-------- --------

Investment in subsidiaries 25,842 41,327
-------- --------

Total assets $ 98,648 $ 70,025
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current maturities of long-term debt $ -- $ 96
Accounts payable 947 1,130
Accrued liabilities and other 738 619
-------- --------
1,685 1,845
-------- --------
Long-term liabilities:
Long-term debt, net of current maturities -- 80
Other noncurrent liabilities 240 572
-------- --------
240 652
-------- --------
Stockholders' equity:
Common stock 139 130
Additional paid-in capital 70,675 61,528
Retained earnings 26,308 6,154
Foreign currency translation (37) (95)
Treasury stock (362) (189)
-------- --------

Total stockholders' equity 96,723 67,528
-------- --------

$ 98,648 $ 70,025
======== ========

</TABLE>

See "Notes to Consolidated Financial Statements" of the Edisto Resources
Corporation Consolidated Financial Statements included in this report.

F-27

<PAGE> 132

SCHEDULE I
(Continued)

EDISTO RESOURCES CORPORATION (PARENT COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
December 31, December 31, December 31,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Costs and expenses:
General and administrative $ 1,584 $ 3,628 $ 363
Depreciation and amortization 66 314 2,508
-------- -------- --------
1,650 3,942 2,871
-------- -------- --------
Operating loss (1,650) (3,942) (2,871)
-------- -------- --------

Other income (expense):
Interest income 1,253 1,197 420
Minority interest (2,190) 726 --
Other 407 1,119 (361)
-------- -------- --------
(530) 3,042 59
-------- -------- --------

Income (loss) before equity in income
(loss) of subsidiaries (2,180) (900) (2,812)
-------- -------- --------

Equity in income (loss) of subsidiaries:
Convest 8,070 (1,125) 11,366
MINT 20 135 339
Tunisia 342 (599) --
Edisto Gas Storage (425) (83) (132)
-------- -------- --------
8,007 (1,672) 11,573
-------- -------- --------

Income (loss) before income taxes 5,827 (2,572) 8,761
Income tax provision (224) (602) (26)
-------- -------- --------
Income (loss) from continuing operations 5,603 (3,174) 8,735

Discontinued operations:
Loss from gas marketing and trading operations (761) (9,804) (1,083)
Loss from transmission operations -- -- (501)
Gain on sale of gas marketing and trading operations 15,312 -- --
Gain on sale of transmission operations -- 2,557 --
Gain on sale of manufacturing operations -- 3,824 --
-------- -------- --------
Net income (loss) $ 20,154 $ (6,597) $ 7,151
======== ======== ========

</TABLE>

See "Notes to Consolidated Financial Statements" of the Edisto Resources
Corporation Consolidated Financial Statements included in this report.

F-28
<PAGE> 133

SCHEDULE I
(Continued)

EDISTO RESOURCES CORPORATION (PARENT COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

Year Year Year
Ended Ended Ended
December 31, December 31, December 31,
1996 1995 1994
---- ---- ----

<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 20,154 $ (6,597) $ 7,151
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 66 314 --
Gain on sales of assets and investments (15,312) (6,381) --
Equity in (income) loss of subsidiaries (7,246) 11,476 (9,989)
Restructuring expense -- -- 2,508
Amortization of goodwill -- -- 206
Minority interest 2,190 (726) (69)
Other -- 14 100
Changes in assets and liabilities
affecting operating activities:
Accounts receivable (4,225) (984) 4,351
Accounts payable (396) (1,075) 431
-------- -------- -------
Net cash provided (used) by operations (4,769) (3,959) 4,689

Cash flows from investing activities:
Proceeds from sales of property, equipment,
investments and other assets -- 244 --
(Advances to) payments from affiliates 3,134 9,302 (973)
Acquisition of Enex -- -- (686)
Dividends from (contributions to) subsidiaries 43,293 20,386 (3,137)
Acquisition of Convest (419) (7,230) --
Other (796) (473) --
-------- -------- -------

Net cash provided (used) by investing activities 45,212 22,229 (4,796)
-------- -------- -------

Cash flows from financing activities:
Stock issue on exercise of warrants and options 9,156 -- --
Repurchase of common shares (173) -- --
Payments of long-term capital leases (176) (114) --
Foreign currency translation 58 57 38
-------- -------- -------
Net cash provided (used) by financing activities 8,865 (57) 38
Net increase (decrease) in cash and
cash equivalents 49,308 18,213 (69)

Cash and cash equivalents, at beginning of period 18,318 105 174
-------- -------- -------

Cash and cash equivalents, at end of period $ 67,626 $ 18,318 $ 105
======== ======== =======

</TABLE>

See "Notes to Consolidated Financial Statements" of the Edisto Resources
Corporation Consolidated Financial Statements included in this report.

F-29
<PAGE> 134
SCHEDULE II

EDISTO RESOURCES CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

Balance at Charged to Balance
Beginning Costs and Other at End
of Period Expenses Changes(1) of Period
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Year ended
December 31, 1996
Reserves and allowances:
Accounts receivable $1,483 $ 768 $ (162) $2,089
Inventory -- 2,127 -- 2,127
------ ------- ------- ------
$1,483 $ 2,895 $ (162) $4,216
====== ======= ======= ======

Year ended
December 31, 1995
Reserves and allowances:
Accounts receivable $1,345 $ 163 $ (25) $1,483
====== ======= ======= ======

Year ended
December 31, 1994
Reserves and allowances:
Accounts receivable $3,031 $ -- $(1,686) $1,345
Other 120 -- (120) --
------ ------- ------- ------
$3,151 $ -- $(1,806) $1,345
====== ======= ======= ======

</TABLE>

(1) Primarily reflects write-offs of amounts expensed in previous periods.

F-30
<PAGE> 135

EDISTO RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
(Unaudited)
ASSETS

<S> <C> <C>
Current assets:
Cash and cash equivalents $ 74,797 $ 71,765
Restricted cash 333 333
Margin deposits 67 979
Accounts receivable 6,981 9,835
Other current assets 591 1,547
--------- ---------
Total current assets 82,769 84,459

Property and equipment:
Oil and gas properties using the successful
efforts method of accounting 117,417 117,306
Other 676 641
Less - accumulated depreciation, depletion and amortization (61,253) (63,147)
--------- ---------
56,840 54,800
Other noncurrent assets 2,236 2,178
--------- ---------
$ 141,845 $ 141,437
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $ 10,622 $ 9,840
Accrued liabilities and other 8,704 9,863
Deferred revenue 2,076 2,113
--------- ---------
Total current liabilities 21,402 21,816

Long-term liabilities:
Long-term debt 3 4,003
Deferred revenue 561 559
Minority interest 12,297 10,850
Other noncurrent liabilities 6,479 7,486
--------- ---------
19,340 22,898
Commitments and contingencies

Stockholders' equity:
Common stock, $.01 par value, 50,000,000 shares authorized, 14,072,945
issued at March 31, 1997 and 13,930,052
issued at December 31, 1996 141 139
Additional paid-in capital 71,561 70,675
Retained earnings 29,800 26,308
Foreign currency translation (37) (37)
Treasury stock, at cost, 52,214 shares at March 31,
1997 and December 31, 1996 (362) (362)
--------- ---------
Total stockholders' equity 101,103 96,723
--------- ---------

$ 141,845 $ 141,437
========= =========

</TABLE>

See the accompanying notes to the consolidated financial statements.

F-31
<PAGE> 136

EDISTO RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
------------ ------------

<S> <C> <C>
Oil and gas revenues $ 13,670 $ 11,520

Costs and expenses:
Lease operating and production taxes 3,468 4,393
Abandonment and exploration costs 1,091 42
Depreciation, depletion and amortization 3,623 4,204
General and administrative 1,547 1,868
-------- --------
9,729 10,507
-------- --------
Operating income 3,941 1,013
-------- --------

Other income (expense):
Interest income 992 304
Interest expense (56) (370)
Gain on asset sales 122 813
Minority interest (1,336) (582)
Other, net (73) 336
-------- --------
(351) 501
-------- --------
Income before income taxes 3,590 1,514

Income tax provisions (98) (170)
-------- --------

Income from continuing operations 3,492 1,344
-------- --------
Discontinued operations:
Income from gas marketing operations -- 2,759
-------- --------
Net income $ 3,492 $ 4,103
======== ========

Net income per common share:
Continuing operations $ .25 $ .11
Discontinued operations -- .21
-------- --------
Net income per common share $ .25 $ .32
======== ========

Weighted average common shares
outstanding 13,947 12,934
======== ========

</TABLE>

See the accompanying notes to the consolidated financial statements.

F-32
<PAGE> 137

EDISTO RESOURCES CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)

Number of Additional Foreign
Common Common Paid-In Retained Currency Treasury
Shares Stock Capital Earnings Translation Stock Total
--------- ------ ---------- -------- ----------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Stockholder's equity,
December 31, 1996 13,930 $139 $70,675 $26,308 $(37) $(362) $ 96,723

Net income -- -- -- 3,492 -- -- 3,492

Exercise of employee stock
options 143 2 886 -- -- -- 888
------ ---- ------- ------- ---- ----- --------

Stockholder's equity,
March 31, 1997 14,073 $141 $71,561 $29,800 $(37) $(362) $101,103
====== ==== ======= ======= ==== ===== ========

</TABLE>

See the accompanying notes to the consolidated financial statements.

F-33
<PAGE> 138

EDISTO RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,492 $ 4,103
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 3,623 4,365
Abandonments and exploration costs 691 --
Gains on sales of assets (122) (815)
Equity in income of affiliates -- (113)
Minority interest expense 1,336 582
Other -- 133
Changes in assets and liabilities:
Accounts receivable and inventory 2,779 (25,411)
Accounts payable and accrued liabilities (954) 30,130
Other (127) (2,345)
-------- --------
Net cash provided by operating activities 10,718 10,629
-------- --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from sales of assets 268 3,538
(Purchase) sale of hedging instruments 1,281 (954)
Acquisition, exploration and development costs (6,045) (2,557)
Payments to affiliates -- (69)
Purchase of other current and noncurrent assets (78) (831)
-------- --------
Net cash used in investing activities (4,574) (873)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt and capital leases (4,000) (5,020)
Exercised employee stock options 888 --
Repurchase of common shares -- (173)
Currency translation -- (1)
-------- --------
Net cash used by financing activities (3,112) (5,194)
-------- --------

Net increase in cash and cash equivalents 3,032 4,562
Cash and cash equivalents, including restricted cash,
at beginning of period 72,098 33,697
-------- --------
Cash and cash equivalents, including restricted cash,
at end of period $ 75,130 $ 38,259
======== ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 185 $ 431
======== ========
Taxes $ 448 $ 259
======== ========

</TABLE>

See the accompanying notes to the consolidated financial statements.

F-34
<PAGE> 139

EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND PRESENTATION

The accompanying consolidated financial statements include the
accounts of Edisto Resources Corporation, a Delaware corporation ( the
"Company" or "Edisto"), and its wholly and majority owned subsidiaries. On
December 10, 1996, the Company sold substantially all of the assets of its gas
marketing subsidiaries, Energy Source, Inc. and Energy Source Canada, Inc.
(collectively "Energy Source"), to two subsidiaries of Pacific Gas Transmission
Company. Since this sale, the Company's only line of business has been oil and
gas exploration and production which is conducted through a 73% interest in
Convest Energy Corporation ("Convest"), an independent oil and gas exploration
and production company listed on the American Stock Exchange. Edisto owns
7,598,771 shares of Convest Common Stock.

References to the "Company" or "Edisto" shall refer to Edisto
Resources Corporation and all of its consolidated subsidiaries, including
Convest. References to "Convest" shall refer only to Convest.

The information presented in this Form 10-Q is unaudited, but in the
opinion of management reflects all adjustments (all of which were normal and
recurring) necessary to fairly present such information. Interim results are
not necessarily indicative of a full year of operations.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

EDISTO

CASH AND CASH EQUIVALENTS. Cash equivalents consist of short-term
highly liquid investments which are readily convertible into cash and have
original maturities of three months or less. The Company's investment policy
for its available cash balances allows for investment in high grade short-term
debt issues as well as investments in money market accounts and overnight
investments with major financial institutions. At March 31, 1997, the Company
had cash and cash equivalents, including restricted cash, of $75.1 million of
which $6.4 million was held at Convest.

NET INCOME PER SHARE. Net income per share is computed based on the
weighted average number of shares outstanding which were 13,947,037 and
12,933,576 for the three months ended March 31, 1997 and 1996, respectively. No
effect has been given to options outstanding under the Company's stock option
plans because their effect is antidilutive or immaterial.

USE OF ESTIMATES. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

INCOME TAXES . Edisto records income taxes in accordance with the
Financial Accounting Standards Board - Statement of Financial Accounting
Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." SFAS 109

F-35

<PAGE> 140
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

requires the balance sheet approach of income tax accounting whereby deferred
income taxes are provided at the balance sheet date for the differences
existing in the tax basis of assets and liabilities and their financial
statement carrying amounts.

PRINCIPLES OF CONSOLIDATION AND RECLASSIFICATIONS. All significant
intercompany balances and transactions have been eliminated. Certain
reclassifications have been made to the 1996 consolidated financial statements
to conform to the presentation for 1997.

CONVEST

PROPERTY AND EQUIPMENT. Convest follows the successful efforts method
of accounting for its oil and gas properties. Costs of productive wells,
developmental drilling expenditures, including developmental dry holes, and
productive leases are capitalized. Exploratory drilling costs, including
stratigraphic test wells, are initially capitalized, but charged to expense if
and when the well is determined to be unsuccessful. The capitalized costs of
oil and gas properties are charged to operations as depreciation, depletion and
amortization using the unit-of-production method based on the ratio of current
production to proved recoverable oil and gas reserves (as defined by the
Securities and Exchange Commission) on a lease by lease basis. Reserve
estimates for Convest's properties were prepared or audited by independent
petroleum engineering firms at year end. Gas is converted to equivalent barrels
of oil on an energy content basis of 6 Mcf of gas to 1 barrel of oil.
Depreciation, depletion and amortization per equivalent unit of oil production
was $4.99 and $5.07 for the three month periods ended March 31, 1997 and 1996,
respectively. Oil and gas leasehold costs are capitalized when incurred.
Unproved properties are assessed periodically on a property-by-property basis
and impairments in value are charged to expense. Exploratory expenses,
including geological and geophysical expenses and annual delay rentals, are
charged to expense as incurred.

Under Statement of Financial Accounting Standards No. 121 ("SFAS 121")
regarding accounting for the impairment of long-lived assets, Convest is
required to recognize an impairment loss for its proved oil and gas properties
if the carrying value of such properties (i.e., total capitalized costs less
accumulated depreciation and depletion) exceeds the undiscounted expected
future cash flows attributable to such properties. Convest must assess the need
for an impairment of capitalized costs of oil and gas properties on a
property-by-property basis. If an impairment is indicated based on undiscounted
expected future cash flows, then an impairment loss is recognized to the extent
that net capitalized costs exceed expected future cash flows. No such provision
was required for the three month periods ended March 31, 1997 and 1996.

OTHER PROPERTY, PLANT AND EQUIPMENT. Convest's other fixed assets are
recorded at cost and depreciated over their estimated useful lives using the
straight-line method of depreciation.

F-36

<PAGE> 141
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

information becomes available. Abandonment costs on onshore properties are
typically nominal due to the salvage value of well equipment.

Convest is a party to a settlement with the United States Minerals
Management Service relating to estimated plugging and abandonment costs for 14
Gulf of Mexico OCS leases. Pursuant to this settlement, the operator of the
leases, Convest and other co-lessees were required to provide security for
payment of such costs through quarterly payments to an Abandonment Fund. During
the first quarter of 1997, Convest made its final scheduled payment under the
Abandonment Fund, and accordingly, is no longer subject to additional future
payments.

As of March 31, 1997 and December 31, 1996, Convest had made payments
totaling approximately $4.3 million and $4.2 million to the Abandonment Fund,
respectively. These payments were applied to the total long-term abandonment
reserve of $7.5 million and $7.7 million, as of March 31, 1997 and December 31,
1996, respectively, resulting in a net long-term abandonment reserve of $3.2
million and $3.5 million as of those dates. The current portion of the
abandonment reserve was $2.0 million and $2.3 million as of March 31, 1997 and
December 31, 1996, respectively. The current portion of the abandonment reserve
is included in "Accrued Liabilities and Other" and the noncurrent portion is
included in "Other Noncurrent Liabilities" in the accompanying consolidated
financial statements.

LEASE OPERATING EXPENSES. In connection with a 1992 sale of certain
future production volumes of oil to Enron Reserve Acquisition Corp., Convest
established a reserve for the expenses associated with the volumes sold and
amortizes this reserve as the volumes are delivered. As of March 31, 1997 and
December 31, 1996, the current balance of this reserve was $1.6 million,
respectively, and the long-term balance was $3.1 million and $3.7 million,
respectively, and were presented in "Accrued Liabilities and Other" and "Other
Noncurrent Liabilities," respectively, in the consolidated financial
statements.

GAS BALANCING. Convest uses the entitlement method of accounting for
gas imbalances. Receivables resulting from undertakes of gas production at
March 31, 1997 and December 31, 1996 were $2.2 million and $2.3 million,
respectively, and are included in "Accounts Receivable" and "Other Noncurrent
Assets" in the accompanying consolidated financial statements. Deferred revenue
and payables resulting from overtakes of gas production at March 31, 1997 and
December 31, 1996 were $2.4 million and $2.7 million, respectively, and are
included in "Current Liabilities - Deferred Revenue" and "Long-Term Liabilities
- - Deferred Revenue" in the accompanying consolidated financial statements.

RISK MANAGEMENT/HEDGING ACTIVITIES. Convest from time to time engages
in commodity hedging activities to minimize the risk of market fluctuations
associated with the price of crude oil and natural gas production. The hedging
objectives include assurance of stable and known cash flows and fixed favorable
prices. The hedges are effected through the purchase and sale of futures
contracts on the New York Mercantile Exchange ("NYMEX") and over the counter
price swap agreements. The credit risk of futures contracts is limited due to
the daily cash settlement of the net change in the value of open contracts and
because of certain NYMEX procedures. Gains or losses on Convest's hedging
agreements are deferred and recognized as oil and gas sales revenue when the
hedged transaction occurs.

F-37
<PAGE> 142
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

(2) DISCONTINUED OPERATIONS

From 1990 until December 1996, Edisto conducted natural gas marketing
operations through Energy Source. On December 10, 1996, Energy Source sold
substantially all of its assets to Pacific Gas Transmission Company, a
subsidiary of Pacific Gas and Electric Company (NYSE "PGE"). The sales price
was $23.3 million in cash, plus the working capital of Energy Source at July
31, 1996 (approximately $20.0 million). The sales price, however, is subject to
adjustment after the closing by the adjusted consolidated net income or loss of
Energy Source from August 1, 1996 to November 30, 1996. The Company and PGT
have not yet finalized the purchase price adjustment. Under the Purchase
Agreement, Edisto also retained certain assets and liabilities of Energy
Source. In connection with this sale, Edisto recognized a gain of approximately
$15.3 million during 1996, net of approximately $700,000 of income tax.

Separate from the lawsuit with Panhandle, Edisto retained as an asset
all rights to receive a refund from Panhandle under a proposed settlement of
certain rate cases pending before the Federal Energy Regulatory Commission. In
April 1997, the settlement was finalized and Panhandle acknowledged Edisto's
right to receive a refund of approximately $1.0 million, but offset it against
amounts which it believes are owed to Panhandle by the Company. This refund is
included in Accounts Receivable on the accompanying Consolidated Balance Sheet
at March 31, 1997 and December 31, 1996.

F-38
<PAGE> 143

EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

(3) CONSOLIDATING BALANCE SHEETS

Set forth below are the Consolidating Balance Sheets of Edisto and its
consolidated subsidiary, Convest, at March 31, 1997.

CONSOLIDATING BALANCE SHEETS
MARCH 31, 1997
(IN THOUSANDS)

<TABLE>
<CAPTION>
CONSOLIDATED
EDISTO (1) CONVEST ELIMINATIONS EDISTO
---------- ------- ------------ ------
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 68,752 $ 6,378 $ -- $ 75,130
Margin deposits -- 67 -- 67
Accounts receivable 1,930 5,473 (422) 6,981
Other current assets 77 514 -- 591
-------- -------- --------- --------
Total current assets 70,759 12,432 (422) 82,769
-------- -------- --------- --------

Property and equipment, net 77 56,763 -- 56,840
-------- -------- --------- --------

Investment in Convest 35,371 -- (35,371) --
-------- -------- --------- --------

Other assets 24 2,762 (550) 2,236
-------- -------- --------- --------

$106,231 $ 71,957 $ (36,343) $141,845
======== ======== ========= ========

LIABILITIES AND EQUITY:
Accounts payable $ 976 $ 10,068 $ (422) $ 10,622
Accrued liabilities and other 3,419 5,285 -- 8,704
Deferred revenue -- 2,076 -- 2,076
-------- -------- --------- --------
Total current liabilities 4,395 17,429 (422) 21,402
-------- -------- --------- --------

Long-term debt -- 3 -- 3
Minority interest -- -- 12,297 12,297
Other noncurrent liabilities 183 6,857 -- 7,040
-------- -------- --------- --------
Total long-term liabilities 183 6,860 12,297 19,340
-------- -------- --------- --------

Stockholders' equity 101,653 47,668 (48,218) 101,103
-------- -------- --------- --------

$106,231 $ 71,957 $ (36,343) $141,845
======== ======== ========= ========

</TABLE>

- -------------
(1) Includes Edisto and its subsidiaries other than Convest.

F-39

<PAGE> 144
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

(4) HEDGING ACTIVITIES

<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------------- ---------------------
Oil Gas Oil Gas
--- --- --- ---

<S> <C> <C> <C> <C>
Quantity Sold 60 Mbbls 2,460 Mmcf 90 MBbls 3,300 MMcf
Maximum Term 6 Months 7 Months 9 Months 10 Months
Average Price $21.72 $2.33 $22.50 $2.53

</TABLE>

Convest will continue its hedging activities during 1997 in order to
mitigate the volatility of its crude oil and natural gas prices. Gains and
losses realized upon the settlement of Convest's hedge positions are deferred
and recognized as oil and gas sales revenue in the month of the underlying
physical production being hedged. The fair value of Convest's open positions at
March 31, 1997 were $918,950. As a result of fluctuations in the price of crude
oil and natural gas subsequent to March 31, 1997, the stated fair value of
Convest's open positions is not indicative of the value which would be received
if the positions were closed at current prices. The fair value of Convest's
hedges was based on the cost that would have been incurred to buy out those
hedges in a loss position and the consideration that would have been received
to terminate those hedges in a gain position. The cash margin required by the
counterparties to Convest's hedging activities totaled $67,000 and $1.0 million
as of March 31, 1997 and December 31, 1996, respectively, and are included in
"Margin Deposits" in the accompanying consolidated balance sheets.

(5) RELATED PARTY TRANSACTIONS

From January 1995 until its sale in December 1996, Energy Source had
marketed a substantial portion of Convest's gas production. Under the gas
marketing arrangement, Convest received a minimum price of 98% of the index for
the applicable pipeline. In connection with the sale of Energy Source, Convest
and Energy Source agreed to extend the gas marketing arrangement to December
31, 1997. Effective January 1, 1997, the gas marketing arrangement was amended
to increase the price received by Convest from 98% to 100% of the index price
for the applicable pipeline.

In connection with the Energy Source sale, all Edisto employees other
than Michael Y. McGovern, the Chairman and Chief Executive Officer of Convest
and Edisto, became employees of the purchaser. Subsequently, Edisto's corporate
headquarters were moved to Convest's offices, and Mr. McGovern and four other
employees of Convest have divided their time between Edisto and Convest.
Effective December 1, 1996, Mr. McGovern's base salary and benefits have been
apportioned 70% to Convest and 30% to Edisto. The base salary and benefits of
the other Convest employees who perform work for Edisto are also apportioned
based on the approximate amount of time they work for each company.

Prior to the sale of Energy Source, Edisto had provided Convest with
access to an AS400 computer system to run its accounting system and had
provided MIS support. The monthly cost to Convest was approximately $12,555 per
month. In connection with the sale of Energy Source, Edisto sold the AS400
computer system and its MIS personnel became employees of the purchaser of
Energy Source. Since Convest continued to need an AS400 computer system to run
its accounting system, the Energy Source purchaser agreed to provide Convest
with access to the AS400 computer

F-40
<PAGE> 145
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

system and MIS support through December 31, 1997. The cost to Convest is
$12,645 per month. This agreement may be terminated by Convest at any time
after June 30, 1997 upon 90 days notice.

In addition, the Company and Convest have a directors' and officers'
fiduciary insurance policy that covers both companies. The annual insurance
premium was allocated 68% to the Company, for a cost of $204,000 based on the
relative percentage that the assets of the Company bear to the total assets of
both the Company and Convest.

(6) INCOME TAXES

The Company records current income taxes based on its estimated actual
tax liability for the year. The Company provides for deferred income taxes
under SFAS No. 109 based upon differences between the tax basis of the
Company's assets and liabilities and their financial statement carrying amounts
multiplied by the Company's expected future effective tax rate.

For the three months ended March 31, 1997 and 1996, the Company
recorded current income tax expense of $98,000 and $170,000, respectively. The
Company has provided a valuation allowance against substantially all of its net
deferred tax assets as the "more-likely-than-not" criteria for recognition
under SFAS No. 109 has not been met.

(7) CONVEST CREDIT FACILITY AND LONG-TERM DEBT

Convest has a revolving credit facility with Bank One, Texas, N.A.
("Bank One"), and Compass Bank-Houston which terminates on January 1, 1999.
Bank One serves as agent bank of the facility. The facility is secured by a
first lien on all of Convest's assets, including its oil and gas properties and
gas plant. The borrowing base is redetermined semi-annually on May 31 and
November 30 of each year by the lending banks based on engineering criteria
established by the banks. Interest on borrowings under the facility is computed
at (i) the agent bank's prime lending rate (the "Base Rate") plus 3/4% or (ii)
the London InterBank Offering Rate ("LIBOR") plus 2-3/4%. In addition, Convest
pays a commitment fee equal to 1/2% on any commitment amount in excess of
outstanding borrowings.

Effective December 1, 1996, the borrowing base was $19.2 million and
will reduce by $1.0 million monthly beginning January 1, 1997 based on the
lending banks' estimate of production. Effective January 28, 1997, the
borrowing base was reduced by $300,000 to give effect to the sale of an oil and
gas property securing the credit facility. After giving effect to the monthly
borrowing base reductions and the reduction resulting from the property sale,
Convest's borrowing base under the credit facility was $15.9 million on March
31, 1997. Convest had no outstanding borrowings under its credit facility at
March 31, 1997 and $4.0 million outstanding at December 31, 1996. In addition,
Convest had an additional $200,000 of letters of credit outstanding at March
31, 1997 and December 31, 1996, primarily related to performance bonds issued
for oil and gas operations. As of March 31, 1997, borrowings under the credit
facility were subject to Base Rate interest at an effective rate of 9.25% per
annum.

F-41

<PAGE> 146
EDISTO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

(8) COMMITMENTS AND CONTINGENCIES

Bruce W. McConkey, et al v. James R. McNab, Jr., et al. (Cause No.
93-002587 in the 125th District Court of Harris County, Texas). In January
1993, Bruce W. McConkey and two other shareholders of MINT Holding Company
("MINT"), who collectively hold 20% of the outstanding MINT common stock, filed
a lawsuit against Edisto, MINT and certain of its former directors who were
former officers of Edisto. The lawsuit, among other things, (i) alleges that
MINT constructively terminated Mr. McConkey's employment as the President and
CEO of MINT, thereby breaching his employment agreement; (ii) alleges that
certain directors of MINT breached their fiduciary duties to the plaintiffs, in
their capacity as minority shareholders, and (iii) asserts derivative claims on
behalf of MINT against certain directors for alleged mismanagement of MINT. The
plaintiffs seek actual damages in an unspecified amount, punitive damages and
attorney's fees. In October 1996, the trial court granted an interlocutory
summary judgment in favor of Edisto, MINT and the individual defendants on all
claims other than the claim against MINT that it constructively terminated Mr.
McConkey's employment. Based on developments of the case to date, the Company's
management does not believe the outcome of this lawsuit will have a material
adverse effect on the Company's consolidated financial position.

In addition, the Company is named as defendant in several lawsuits
arising in the ordinary course of business. While the outcome of lawsuits and
other proceedings against the Company cannot be predicted with certainty,
management does not expect these matters to have a material adverse effect on
the Company's financial position or results of operations.

F-42
<PAGE> 147

CONVEST FINANCIAL STATEMENTS

INDEX TO CONVEST FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
YEAR ENDED DECEMBER 31, 1996:

Report of Independent Public Accountants of Convest Energy Corporation ............................. F-45

Consolidated Balance Sheets of Convest Energy Corporation at December 31, 1996 and 1995............. F-46

Consolidated Statements of Operations of Convest Energy Corporation for the Years Ended
December 31, 1996, 1995 and 1994........................................................... F-47

Consolidated Statements of Stockholders' Equity of Convest Energy Corporation for the Years Ended
December 31, 1996, 1995 and 1994........................................................... F-48

Consolidated Statements of Cash Flows of Convest Energy Corporation for the Years Ended
December 31, 1996, 1995 and 1994........................................................... F-49

Notes to Consolidated Financial Statements of Convest Energy Corporation............................ F-50

QUARTER ENDED MARCH 31, 1997:

Consolidated Balance Sheets at March 31, 1997 and December 31, 1996................................. ..F-64

Consolidated Statements of Operations -- Three Months Ended March 31, 1997 and 1996....................F-65

Consolidated Statement of Stockholders' Equity........................................................F-66

Consolidated Statement of Cash Flows -- Three Months Ended March 31, 1997 and 1996.....................F-67

Notes to Consolidated Financial Statements............................................................F-68

</TABLE>

F-43
<PAGE> 148

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of
Convest Energy Corporation:

We have audited the accompanying consolidated balance sheets of Convest Energy
Corporation (a Texas corporation) and subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1996. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Convest Energy
Corporation and subsidiaries as of December 31, 1996 and 1995, and the results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.

As discussed in Note 2, as of October 1, 1995, the Company changed its method
of accounting for the impairment of long-lived assets to conform with Statement
of Financial Accounting Standards No. 121.

ARTHUR ANDERSEN LLP

Houston, Texas
March 20, 1997

F-44
<PAGE> 149

CONVEST ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands)

<TABLE>
<CAPTION>
December 31,
------------
1996 1995
---- ----
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,678 $ 674
Restricted cash 333 333
Accounts receivable:
Oil and gas production - less allowance for doubtful
accounts of $657 and $820, respectively 7,908 7,958
Other 598 252
Other current assets 2,267 6,223
--------- ---------
Total current assets 14,784 15,440
--------- ---------

Property and equipment:
Oil and gas properties, successful efforts method 117,307 114,201
Other 478 364
Less accumulated depreciation, depletion and amortization (63,061) (50,225)
--------- ---------
54,724 64,340
--------- ---------

Other assets 2,704 2,177
--------- ---------

$ 72,212 $ 81,957
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current maturities of long-term debt $ -- $ 1,625
Accounts payable:
Oil and gas production 8,521 9,609
Affiliates 667 550
Accrued liabilities and other 6,041 3,803
Deferred revenue 2,113 2,010
--------- ---------
Total current liabilities 17,342 17,597
--------- ---------

Long-term liabilities:
Long-term debt, net of current maturities 4,003 17,553
Deferred revenue 559 691
Other noncurrent liabilities 7,170 11,099
--------- ---------
11,732 29,343
--------- ---------
Commitments and contingencies

Stockholders' equity:
Preferred stock, $1 par value; authorized 5 million shares;
none issued or outstanding
Common stock $.01 par value; 20,000,000 shares
authorized, 10,428,602 and 10,412,722 issued and outstanding
at December 31, 1996 and 1995, respectively 104 104
Additional paid-in capital 47,849 47,798
Retained earnings (deficit) (4,815) (12,885)
--------- ---------
43,138 35,017
--------- ---------

$ 72,212 $ 81,957
========= =========

</TABLE>

The accompanying notes are an integral part of these financial statements.

F-45
<PAGE> 150

CONVEST ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)

<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Revenues:
Oil and gas sales $45,622 $49,917 $46,788
Gas plant revenues 1,517 1,295 --
Gain (loss) on asset sale 1,239 (660) 4,754
Other, net 1,367 428 326
------- ------- -------
49,745 50,980 51,868
------- ------- -------

Expenses:
Production:
Lease operating expense 12,998 16,790 12,033
Production taxes 1,272 1,167 247
Gas plant operating expense 510 492 --
Abandonment and exploration costs 1,775 2,279 2,135
General and administrative expenses 4,792 4,882 4,588
Interest expense 1,065 2,015 747
Depreciation, depletion and amortization 16,473 20,039 18,911
Impairment of oil and gas properties 2,633 5,911 --
Equity in loss of affiliates -- -- 1,731
41,518 53,575 40,392
------- ------- -------
Income (loss) before elimination of preacquisition 8,227 (2,595) 11,476
net loss and income taxes
Elimination of preacquisition
net loss of predecessor -- 1,664 --
------- ------- -------
Net income (loss) before income taxes 8,227 (931) 11,476
Income tax provision (benefit):
Current 157 559 210
Deferred -- (550) --
------- ------- --------
157 9 210
Net income (loss) $ 8,070 $ (940) $11,266
======= ======= =======

Net income (loss) per share (See Note 2) $ 0.77 $ (0.11) $ 1.82
======= ======= =======

Weighted average common shares outstanding 10,413 8,374 6,185
======= ======= =======

</TABLE>

The accompanying notes are an integral part of these financial statements.

F-46

<PAGE> 151

CONVEST ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY For the Years Ended
December 31, 1996, 1995 and 1994
(In Thousands)

Common Common Additional
Shares Stock, Paid-In Retained
Outstanding $.01 par Capital Earnings Total
----------- -------- ---------- -------- -----

<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993 6,185 $ 62 $30,758 $ 7,696 $ 38,516

Capital contributions -- -- 100 -- 100

Dividends -- -- -- (30,255) (30,255)

Net income -- -- -- 11,266 11,266
------ ---- ------- -------- --------

Balance at December 31, 1994 6,185 62 30,858 (11,293) 19,627

Distribution of certain assets
and liabilities to affiliates in
accordance with the stock
purchase agreement -- -- -- (652) (652)

Stock issuance - reverse
acquisition of CEC by
Edisto E&P 4,227 42 16,940 -- 16,982

Net loss -- -- -- (940) (940)
------ ---- ------- -------- --------

Balance at December 31, 1995 10,412 104 47,798 (12,885) 35,017

Exercise of employee stock
options 16 -- 51 -- 51

Net income -- -- -- 8,070 8,070
------ ---- ------- -------- --------

Balance at December 31, 1996 10,428 $104 $47,849 $ (4,815) $ 43,138
====== ==== ======= ======== ========

</TABLE>

The accompanying notes are an integral part of these financial statements.

F-47
<PAGE> 152

CONVEST ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995 1994
---- ---- ----

<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 8,070 $ (940) $ 11,266
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation, depletion and amortization 16,496 16,503 18,911
Impairment of oil and gas properties 2,633 5,911 --
(Gain) loss on sale of assets and investments (1,239) 660 (4,754)
Abandonment and exploration costs 1,592 1,797 1,810
(Increase) decrease in accounts receivable (354) (4,284) 6,064
Decrease in accounts payable and accrued liabilities (4,361) (3,969) (3,198)
Other 176 (121) 295
-------- -------- --------
Net cash flow provided by operating activities 23,013 15,557 30,394
-------- -------- --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash received in reverse acquisition of
CEC by Edisto E&P -- 716 --
Acquisition, exploration and development of oil and
gas properties (10,949) (10,232) (6,298)
Advances to working interest owners (1,225) -- --
Proceeds from the sale of oil and gas properties 2,991 384 8,444
(Purchase) sale of investment in affiliates -- 7,351 (9,183)
(Purchase) sale of natural gas hedging contracts 4,412 (4,225) (898)
Increase in other current and noncurrent assets (114) (1,123) (4,339)
-------- -------- --------
Net cash used in investing activities (4,885) (7,129) (12,274)
-------- -------- --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on long-term debt and capital leases 3,100 6,575 7,788
Payments on long-term debt and capital leases (18,275) (12,750) (9,578)
Payment of note payable -- (5,212) --
Cash dividends -- -- (25,015)
Distribution of certain assets and
liabilities to affiliate -- (652) --
Exercised employee stock options 51 -- --
Other -- (338) 25
-------- -------- --------
Net cash used by financing activities (15,124) (12,377) (26,780)
-------- -------- --------

Net increase (decrease) in cash and cash equivalents 3,004 (3,949) (8,660)
Cash and cash equivalents, beginning of period 1,007 4,956 13,616
-------- -------- --------
Cash and cash equivalents, end of period $ 4,011 $ 1,007 $ 4,956
======== ======== ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 1,305 $ 1,413 $ 410
======== ======== ========

Cash paid during the period for taxes $ 157 $ 46 $ 80
======== ======== ========
Non-cash transactions - property dividend $ -- $ -- $ 5,240
======== ======== ========

</TABLE>

The accompanying notes are an integral part of these financial statements.

F-48
<PAGE> 153
CONVEST ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

GENERAL

Convest Energy Corporation ("Convest" or the "Company"), a Texas
corporation whose common stock is traded on the American Stock Exchange, is an
active independent oil and gas exploration and production company. The Company
was formed in June 1990 to participate in a series of mergers and other
transactions consummated in December 1990 pursuant to which the company
succeeded to the assets, liabilities, operations and common management of
ConVest Energy Partners, Ltd., a former publicly-held Texas limited
partnership, and certain of its affiliates.

EDISTO TRANSACTION

On June 26, 1995, Convest acquired all of the outstanding capital
stock of Edisto Exploration & Production Company, a Delaware corporation
("Edisto E&P") from Edisto Resources Corporation ("Edisto") in exchange for
6,185,400 newly issued shares of Convest's common stock and $10,000 in cash
(the "Edisto Transaction"). The newly issued shares of Convest common stock
increased Edisto's interest in Convest from 31% to 72%. Upon closing of the
Edisto Transaction, Convest's Board was restructured so that affiliates of
Edisto constituted a majority of the directors. Edisto subsequently increased
its interest in Convest to 73% through the purchase of 92,000 additional shares
of Convest common stock on the open market. The Edisto Transaction resulted in
a reverse acquisition by Edisto E&P of Convest, as further described below.
Accordingly, all future references to "Convest" or the "Company" will apply to
Edisto E&P. Any references to "CEC" are intended to apply solely to Convest
Energy Corporation prior to the reverse acquisition.

REVERSE ACQUISITION METHOD OF ACCOUNTING FOR EDISTO TRANSACTION

Since Edisto acquired control of CEC through its 72% stock ownership
and majority of the CEC Board, the acquisition of Edisto E&P by CEC has been
accounted for as a reverse acquisition. Under accounting rules for a reverse
acquisition, Edisto E&P is considered the acquiring entity and CEC is
considered the acquired entity. As a result, the historical financial
statements of CEC for periods prior to the date of the Edisto Transaction are
no longer presented. Instead, the historical financial statements of the
Company for periods prior to the date of the Edisto Transaction are those of
Edisto E&P. Therefore, in accordance with the accounting rules for a reverse
acquisition, the following should be noted with respect to the consolidated
financial statements presented herein:

(i) The Consolidated Statements of Operations of the Company for the
year ended December 31, 1995 set forth the combined results of
operations of CEC and Edisto E&P as if the Edisto Transaction had
occurred on January 1, 1995, with the preacquisition net loss of
CEC being eliminated for purposes of determining net income. The
Consolidated Statements of Operations for the year ended December
31, 1994 are those of Edisto E&P and do not include the
historical results of CEC for such period;

(ii) The Consolidated Statements of Stockholders' Equity of the
Company for the years ended December 31, 1995 and 1994 have been
retroactively restated to reflect the number of shares of CEC
common stock received by Edisto in the Edisto Transaction, as if
such shares had been issued as of the beginning of the period,
and to reflect the CEC shares outstanding prior to the Edisto
Transaction as being issued on the date of the Edisto
Transaction; and

(iii)The Consolidated Statements of Cash Flows of the Company for the
years ended December 31, 1995 and 1994 do not include the cash
flows of CEC for periods prior to the Edisto Transaction. For
purposes of the Consolidated Statements of Cash Flows, the Edisto
Transaction was substantially excluded since it was completed
primarily with CEC Common Stock and accordingly resulted in a
noncash transaction. Instead, only the cash balances of CEC at
June 26, 1995 have been included as cash received by Edisto E&P
as a result of the reverse acquisition.

F-49
<PAGE> 154
CONVEST ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EDISTO E&P PRIOR TO THE EDISTO TRANSACTION

On October 26, 1992, Edisto and certain of its affiliates,
including Edisto E&P, filed voluntary petitions for reorganization pursuant to
Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy
Court for the District of Delaware. On June 29, 1993, Edisto's plan of
reorganization became effective, and Edisto substantially consummated its
restructuring. Edisto E&P's historical financial statements have been presented
in conformity with the AICPA's Statement of Position 90-7, "Financial Reporting
By Entities in Reorganization Under the Bankruptcy Code", issued November 1990
("SOP 90-7"). In accordance with SOP 90-7, Edisto E&P adopted fresh start
reporting as of June 30, 1993, which provides for the allocation of the
reorganization value of the entity among the reorganized assets on the basis of
the purchase method of accounting.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION. All significant intercompany accounts and
activities have been eliminated.

PROPERTY AND EQUIPMENT. The Company follows the successful efforts
method of accounting for its oil and gas properties. Costs of productive wells,
developmental drilling expenditures, including developmental dry holes, and
productive leases are capitalized. Exploratory drilling costs, including
stratigraphic test wells, are initially capitalized, but charged to expense if
and when the well is determined to be unsuccessful. The capitalized costs of
oil and gas properties are charged to operations as depreciation, depletion and
amortization using the unit-of-production method based on the ratio of current
production to proved recoverable oil and gas reserves (as defined by the
Securities and Exchange Commission) on a lease by lease basis. Reserve
estimates for the Company's properties were prepared or audited by independent
petroleum engineering firms at year end. Gas is converted to equivalent barrels
of oil on an energy content basis of 6 Mcf of gas to 1 barrel of oil.
Depreciation, depletion and amortization per equivalent unit of oil production
was $5.09, $4.62 and $4.80 for the years ended December 31, 1996, 1995 and
1994, respectively. Oil and gas leasehold costs are capitalized when incurred.
Unproved properties are assessed periodically on a property-by-property basis
and impairments in value are charged to expense. Exploratory expenses,
including geological and geophysical expenses and annual delay rentals, are
charged to expense as incurred.

Prior to 1995, the Company provided an impairment reserve for proved
oil and gas properties to the extent that total capitalized costs less
accumulated depreciation and depletion, exceed expected undiscounted future net
revenues attributable to proved oil and gas reserves on an overall basis.
During March 1995, the Financial Accounting Standards Board issued 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 121").
SFAS 121 requires the Company to recognize an impairment loss for proved oil
and gas properties if the carrying value of such properties (i.e., total
capitalized costs less accumulated depreciation and depletion) exceeds the
undiscounted expected future cash flows attributable to such properties. Under
SFAS 121, the Company must assess the need for an impairment of capitalized
costs of oil and gas properties on a property-by-property basis. If an
impairment is indicated based on undiscounted expected future cash flows, then
an impairment loss is recognized to the extent that net capitalized costs
exceed discounted expected future cash flows.

During the fourth quarter of 1995, the Company adopted SFAS 121 which
required the Company to recognize an impairment loss in 1995 of approximately
$5.9 million. The Company assessed the need for an impairment of its proved oil
and gas properties at December 31, 1995 using the prices of $17.42 per barrel
of oil and $1.61 per Mcf of gas. In 1996, the Company recognized an impairment
loss of $2.6 million. The Company assessed the need for an impairment at
December 31, 1996 using the prices of $22.73 per barrel of oil and $2.21 per
Mcf of gas.

OTHER PROPERTY, PLANT AND EQUIPMENT. Other fixed assets are recorded
at cost and depreciated over their estimated useful lives using the
straight-line method of depreciation.

F-50
<PAGE> 155

ABANDONMENT RESERVE. The Company records its estimate of future
abandonment costs of offshore properties. Such costs are accrued using a
unit-of-production method based upon estimated proved recoverable reserves.
Abandonment costs are estimated under current regulations using current costs
and are reviewed periodically and adjusted as new information becomes
available. Abandonment costs on onshore properties are typically nominal due to
the salvage value of well equipment.

Upon emerging from bankruptcy in July 1993, Edisto E&P entered into a
settlement with the United States Minerals Management Service relating to
estimated plugging and abandonment costs for 14 Gulf of Mexico OCS leases in
which Edisto E&P owned interests. Pursuant to this settlement, the operator of
the leases, Edisto E&P and other co-lessees were required to provide security
for payment of such costs through quarterly payments to an Abandonment Fund.
Subsequent to the Edisto Transaction, the Company continues to be subject to
the Abandonment Fund payments. During the second quarter of 1995, the Company
sold its interest in one of the offshore properties covered by the settlement
agreement and as such, is no longer subject to the Abandonment Fund payments
associated with the property. As of December 31, 1996 and 1995, the Company was
subject to total Abandonment Fund payments of $4.2 million and $4.3 million,
respectively.

As of December 31, 1996 and 1995, the Company had made payments
totaling $4.2 million and $3.7 million to the Abandonment Fund, respectively.
These payments were applied to the total long-term abandonment reserve of $7.7
million and $10.2 million, as of December 31, 1996 and 1995, respectively,
resulting in a net long-term abandonment reserve of $3.5 million and $6.5
million as of those dates. The current portion of the abandonment reserve was
$2.3 million and $556,000 as of December 31, 1996 and 1995, respectively. The
current portion of the abandonment reserve is included in "Accrued Liabilities
and Other" and the noncurrent portion is included in "Other Noncurrent
Liabilities" in the consolidated financial statements.

LEASE OPERATING EXPENSES. In connection with a 1992 sale of certain
future production volumes of oil to Enron Reserve Acquisition Corp., the
Company established a reserve for the expenses associated with the volumes sold
and amortizes this reserve as the volumes are delivered. As of December 31,
1996 and 1995, the current balance of this reserve was $1.6 million and $1.8
million, respectively, and the long-term balance was $3.7 million and $4.6
million, respectively, and were presented in "Accrued Liabilities and Other"
and "Other Noncurrent Liabilities," respectively, in the consolidated financial
statements.

GAS BALANCING. The Company uses the entitlement method of accounting
for gas imbalances. Receivables resulting from undertakes of gas production at
December 31, 1996 and 1995 were $2.3 million and $1.4 million, respectively,
and are included in "Oil and Gas Production Accounts Receivables" and "Other
Noncurrent Assets" in the consolidated financial statements. Deferred revenue
and payables resulting from overtakes of gas production at December 31, 1996
and 1995 were $2.7 million and $2.7 million, respectively, and are included in
"Deferred Revenue" and "Other Noncurrent Liabilities" in the consolidated
financial statements. The Company assumed a nominal gas imbalance liability
from CEC in the Edisto Transaction.

ACCOUNTING FOR INCOME TAXES. The Company records income taxes in
accordance with the Financial Accounting Standards Board - Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
Taxes." SFAS 109 requires the balance sheet approach of income tax accounting
whereby deferred income taxes are provided at the balance sheet date for the
differences existing in the tax basis of assets and liabilities and their
financial statement carrying amounts.

CONCENTRATION OF CREDIT RISK. The Company's oil and gas production
revenues are derived principally from uncollateralized sales to customers in
the oil and gas industry. The concentration of credit risk in a single industry
affects the Company's overall exposure to credit risk because customers may be
similarly affected by changes in economic and other conditions. The Company has
not experienced significant credit losses on receivables from such sales. See
Note 10 herein for a discussion of major purchasers of the Company's oil and
gas production.

NET INCOME PER SHARE. Net income per share is computed based on the
weighted average number of shares outstanding which were 10,412,826 for the
year ended December 31, 1996, 8,374,342 for the year ended December 31, 1995
and 6,185,400 for the year ended December 31, 1994. No effect has been given to
options outstanding under the Company's stock option plans because their effect
is antidilutive or immaterial. See Notes 1 and 8 herein which discuss

F-51
<PAGE> 156
CONVEST ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the restated capital structure of the Company. The Company considers net income
per share information for periods prior to June 30, 1995 to be of limited value
since Edisto E&P was a wholly-owned subsidiary of Edisto prior to the Edisto
Transaction.

RISK MANAGEMENT/HEDGING ACTIVITIES. The Company from time to time
engages in commodity hedging activities to minimize the risk of market
fluctuations associated with the price of crude oil and natural gas production.
The hedging objectives include assurance of stable and known cash flows and
fixed favorable prices. The hedges are effected through the purchase and sale
of futures contracts on the New York Mercantile Exchange ("NYMEX") and over the
counter price swap agreements. The credit risk of futures contracts is limited
due to the daily cash settlement of the net change in the value of open
contracts and because of certain NYMEX procedures. Gains or losses on the
Company's hedging agreements are deferred and recognized when the hedged
transaction occurs, and are recorded as oil and gas sales revenue.

STATEMENT OF CASH FLOWS. For purposes of the consolidated statements
of cash flows, the Company considers all highly liquid investments purchased
with a maturity of three months or less to be cash equivalents.

(3) ACQUISITIONS

EDISTO TRANSACTION

The Edisto Transaction is described in Note 1 herein. As described
therein, the Edisto Transaction has been accounted for as a reverse acquisition
since Edisto acquired control of CEC.

The total purchase price of the Edisto Transaction was $17.3 million
which was allocated to the CEC assets acquired and liabilities assumed based on
their estimated fair values as of June 26, 1995. Assets acquired and
liabilities assumed were assumed to have fair values equal to their historic
book values except for oil and gas properties. The purchase price of $17.3
million was computed by totaling (i) Edisto's net cost basis of $7.0 million as
of June 26, 1995 incurred to acquire 31.3% of the issued and outstanding shares
of CEC in November 1994, (ii) the fair market value of the 6,185,400 newly
issued shares of CEC Common Stock which was calculated as 40.8% of the market
capitalization of CEC immediately prior to the closing of the Edisto
Transaction on June 26, 1995, using the $3.25 market price per share of CEC
Common Stock on such date, and (iii) the historical value of CEC's equity of
$4.7 million attributable to non-Edisto shareholders of CEC subsequent to the
Edisto Transaction.

Since the Edisto Transaction was completed primarily with the issuance
of newly issued shares of CEC common stock, the Company's Consolidated Balance
Sheet following the Edisto Transaction reflects the reverse acquisition of CEC,
but such noncash activity is excluded from the accompanying Consolidated
Statement of Cash Flows for the period prior to the Edisto Transaction. The
following table summarizes the noncash activity associated with the Edisto
Transaction:

<TABLE>
<CAPTION>
(in thousands)
--------------

<S> <C>
Working Capital (Deficit), net of $716,000 cash acquired (6,631)

Property and Equipment 41,085

Long-term debt (17,850)

</TABLE>

<PAGE> 157
CONVEST ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SENSOR PROPERTIES ACQUISITION

On May 1, 1995 and June 14, 1995, prior to the closing of the Edisto
Transaction, CEC and Edisto E&P acquired from Sensor Oil & Gas ("Sensor")
certain oil and gas properties located in Kansas, Oklahoma and Nebraska (the
"Sensor Properties"). CEC and Edisto E&P each paid one half of the aggregate
purchase price of $7.7 million (including approximately $332,000 of transaction
costs) plus the assumption of approximately $250,000 of net liabilities. The
bulk of the Sensor Properties were acquired on May 1, 1995, and the remaining
property interests, which were subject to limited partnerships, were acquired
on June 14, 1995. Since Edisto E&P and CEC each acquired identical interests in
the Sensor Properties, the purchase of such properties did not affect the
purchase price of the Edisto Transaction.

Edisto E&P recorded its share of the Sensor Properties acquisition at
cost, and accordingly, such amounts are included in the accompanying
Consolidated Statements of Cash Flows. However, the Sensor Properties acquired
by CEC were considered to have been acquired by Edisto E&P in the Edisto
Transaction, and accordingly have been excluded from the Statement of Cash
Flows as a noncash transaction. See Note 1 for a discussion of the reverse
acquisition method of accounting used for the Edisto Transaction.

The accompanying Consolidated Statements of Operations for the year
ended December 31, 1995 includes revenues of approximately $3.5 million and
direct operating expenses of approximately $1.4 million attributable to both
CEC's and Edisto E&P's interests in the Sensor Properties from the dates of the
acquisitions.

(4) RELATED PARTY TRANSACTIONS

On June 26, 1995, CEC and Edisto consummated the Edisto Transaction as
described in Note 1 herein. In connection with the Edisto Transaction, CEC
granted registration rights to Edisto for the 7,506,771 shares of CEC common
stock owned by Edisto. On May 1, 1995 and June 14, 1995, CEC and Edisto E&P
each purchased one half of the Sensor Properties as described in Note 3 herein.

In the Edisto Transaction, Edisto retained the tax benefits of the net
operating loss carryforwards ("NOL's") of Edisto E&P. The tax benefits include
a $3.3 million NOL usable for regular taxable income and a $3.6 million NOL
usable for alternative minimum taxable income. The Company determined that the
use of these NOLs would reduce its taxes for 1995 by approximately $437,000.
In addition, based on current projections of the Company's future taxable
income, it was determined that the remaining NOLs of Edisto E&P would be a
valuable asset that could be utilized by Convest in the near future.
Accordingly, Edisto allowed Convest to utilize the NOLs of Edisto E&P in
consideration for the payment by Convest of $550,000. At December 31, 1995 and
1996, the Company recorded a deferred tax asset of $550,000 and a corresponding
accounts payable to Edisto which is presented in "Other Noncurrent Assets" and
"Accounts Payable Affiliates," respectively, in the consolidated financial
statements.

Since January 1995, Convest has had a gas marketing arrangement with
Energy Source, Inc. ("Energy Source"), which until December 1996 was a
wholly-owned subsidiary of Edisto. Under this arrangement, Energy Source
markets a substantial portion of the Company's gas production and assumes
certain related administrative functions. Energy Source marketed approximately
84% of the Company's 1996 gas production. During 1996, Convest received a
minimum price of 98% of the index for the applicable pipeline. Under the
agreement, Energy Source takes title to the gas before reselling it, thereby
creating an account receivable from Energy Source for the sold gas. At December
31, 1996, the account receivable from Energy Source was $3.6 million, which is
included in "Accounts Receivable - Oil and Gas Production" on the Consolidated
Balance Sheet. Convest sells such gas to Energy Source on open credit without
requiring a letter of credit or other security. Management believes the terms
of the Energy Source gas marketing arrangement are no less favorable to the
Company than those available from unaffiliated third parties.

In December 1996, Energy Source was sold by Edisto to an unrelated
third party. In connection with the sale, Convest and Energy Source agreed to
extend the gas marketing agreement to December 31, 1997. Effective January 1,
1997, the gas marketing agreement with Energy Source was amended to increase
the minimum price received by the Company from 98% to 100% of the index price
for the applicable pipeline.

F-53
<PAGE> 158
CONVEST ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company and Edisto have a directors' and officers' fiduciary
insurance policy that covers both companies. During 1996 the annual insurance
premium was allocated 32% to the Company, for a cost of $96,000 based on the
relative percentage that the assets of the Company bear to the total assets of
both the Company and Edisto.

Each of the affiliated party transactions described above was approved
by either a special committee of the Company's Board, which was composed of
outside directors with no affiliation to Edisto, or the unanimous consent of
the Company's Board.

Effective July 1, 1995, the Company and Edisto agreed to share certain
administrative costs to reduce the overall cost that would otherwise be
incurred by each of them in the absence of such an arrangement. Under the
arrangement, certain costs associated with shareholder communication services
and certain administrative staff who perform duties on behalf of both entities
are shared by Convest and Edisto based on their respective utilization. In
addition, the salary of Michael Y. McGovern, who serves as the Chairman and
Chief Executive Officer of Edisto and Convest, is apportioned equally between
the two entities.

The Company and Edisto may enter into additional cost sharing
arrangements in the future. In order to avoid conflicts of interest in reaching
any such arrangements, the Company's Board of Directors established an
Affiliate Transaction Review Committee initially comprised of two non-employee
directors having no affiliation with Edisto. The Affiliate Transaction Review
Committee is responsible for conducting an appropriate review and unanimously
approving all affiliate party transactions, including, without limitation, all
transactions between the Company and Edisto and approving the method or basis
for allocating any shared administrative expenses between Edisto and the
Company.

Energy Source also executes trades of futures contracts on the New
York Mercantile Exchange on behalf of the Company. In this regard, Energy
Source acts solely in a ministerial capacity to purchase or sell the futures
contracts at price levels directed by the Company's management. Energy Source
charges a commission of $.0025 per Mcf of gas or barrel of crude oil for each
trade executed to cover Energy Source's administrative costs to perform such
service.

(5) HEDGING ACTIVITIES

As previously stated, the Company conducts its hedging activities
through major financial institutions. Set forth below is the contract amount
and term of all futures contracts held for price risk management purposes by
the Company at December 31, 1996 and 1995:

<TABLE>
<CAPTION>
1996 1995
---- ----
Oil Gas Oil Gas
--- --- --- ---

<S> <C> <C> <C> <C>
Quantity Sold 90 MBbls 3,300 Mmcf 285 MBbls 8,220 Mmcf
Maximum Term 9 Months 10 Months 11 Months 10 Months
Average Price $22.50 $2.53 $17.23 $1.86
</TABLE>

At December 31, 1996, the Company had hedged approximately 10% and 27%
of its projected 1997 oil and gas production, respectively. The Company will
continue its hedging activities during 1997 in order to mitigate the volatility
of its crude oil and natural gas prices. Gains and losses realized upon the
settlement of the Company's hedge positions are deferred and recognized as oil
and gas sales revenue in the month of the underlying physical production being
hedged. The Company's losses from hedging were $7.8 million and $421,000 during
1996 and 1995, respectively. The fair value of the Company's open positions at
December 31, 1996 were $728,230. The fair value of the Company's hedges was
based on the cost that would have been incurred to buy out those hedges in a
loss position and the consideration that would have been received to terminate
those hedges in a gain position. The cash margin required by the counterparts
to the Company's hedging activities totaled $1.0 and $5.1 million as of
December 31, 1996 and 1995, respectively, and are included in other current
assets.

F-54
<PAGE> 159
CONVEST ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(6) INCOME TAXES

The Company records current income taxes based on its estimated actual
tax liability for the year. The Company provides for deferred income taxes
under SFAS 109 based upon differences between the tax basis of the Company's
assets and liabilities and their financial statement carrying amounts
multiplied by the Company's expected future effective tax rate.

The following table summarizes the Company's deferred tax assets and
liabilities and related valuation allowances as of December 31, 1996 and 1995:

(in thousands)
1996 1995
---- ----
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 5,025 $ 6,688
Plugging & abandonment reserve 4,461 4,218
Depreciation of property & equipment 2,611 3,409
Other 1,123 2,571
------- -------
13,220 16,886

Deferred tax liabilities (1,630) (1,889)

Valuation allowance (11,040) (14,447)
------- -------

Net deferred income tax asset $ 550 $ 550
======= =======

</TABLE>

At December 31, 1996, the Company had net operating loss carryforwards
of $12.7 million, which expire (if not utilized) in the years 1997 to 2010. Due
to the Edisto transaction, the amount of CEC's separate company net operating
loss carryforward which can be utilized in any year is limited to approximately
$800,000 per year due to the change in control.

The deferred tax assets are due principally to previous write downs
incurred on oil and gas properties for book purposes which were not recorded
for tax purposes and accruals which were made for abandonment costs for book
purposes which were not made for tax purposes. The deferred tax liability
relates principally to prepaid costs being expensed for tax purposes and
capitalized for financial reporting purposes.

The Company has provided a valuation allowance against deferred tax
assets which do not meet the "more-likely-than-not" criteria for recognition of
a deferred tax asset under SFAS 109. At December 31, 1995, the Company
purchased approximately $3.3 million of NOL tax benefits from Edisto. See
Footnote 4 under "Notes to Consolidated Financial Statements."

The following summarizes the major differences between the Company's
statutory and effective tax rates for each of the three years ended December
31:

<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----

<S> <C> <C> <C>
Statutory tax rate 35% 35% 35%
Utilization of net operating losses (33) (35) (33)
--- --- ---
Effective rate 2% -% 2%
=== === ===
</TABLE>

F-55
<PAGE> 160
CONVEST ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(7) LONG-TERM DEBT

On June 26, 1995, simultaneous with the closing of the Edisto
Transaction, the Company entered into an Amended and Restated Secured Revolving
Credit Agreement (the "Agreement") with Bank One, Texas, N.A. ("Bank One"), and
Compass Bank-Houston. This facility, which terminates January 1, 1999, combined
the existing credit facilities of CEC and Edisto E&P. Bank One serves as agent
bank of the Agreement. The Agreement is secured by a first lien on all of the
Company's assets, including its oil and gas properties and gas plant. The
borrowing base is redetermined semi-annually on May 31 and November 30 of each
year by the lending banks based on engineering criteria established by the
banks. Interest on borrowings under the Agreement is computed at (i) the agent
bank's prime lending rate (the "Base Rate") plus 3/4% or (ii) the London Inter
Bank Offering Rate ("LIBOR") plus 2-3/4%. In addition, the Company pays a
commitment fee equal to 1/2% on any commitment amount in excess of outstanding
borrowings.

The Agreement contains certain covenants regarding the Company's
consolidated net worth and cash flow to debt service. In addition, the
Agreement places certain limitations on the Company's ability to incur certain
types of additional debt.

During December 1996, the Company was notified by its lending banks
that its redetermined borrowing base was $19.2 million effective December 1,
1996 and will reduce by $1.0 million monthly beginning January 1, 1997 based on
the lending banks estimate of production. As of December 31, 1996 and 1995, the
Company had outstanding borrowing under its credit facility totaling $4.0
million and $19.2 million, respectively. In addition, the Company had an
additional $200,000 of letters of credit outstanding at December 31, 1996,
primarily related to performance bonds issued for oil and gas operations. As of
December 31, 1996, all of the Company's outstanding borrowings were subject to
Base Rate interest at an effective rate of 9% per annum.

(8) CAPITAL STOCK

In accordance with the accounting rules for a reverse acquisition,
Edisto E&P has assumed CEC's capital structure as of the date of the Edisto
Transaction (June 26, 1995) and prior period equity balances and earnings per
share have been retroactively adjusted to reflect this change. See Note 1 for a
more detailed description of the capital structure changes.

At December 31, 1996, the Company's authorized capital consists of (i)
5,000,000 shares of preferred stock, $1 par value per share, none of which are
issued and outstanding, and (ii) 20,000,000 shares of common stock, $.01 par
value per share, 10,428,602 of which were issued and outstanding at such date.

In 1990, CEC adopted the 1990 Employee Stock Option Plan (the "1990
Plan") pursuant to which CEC could grant options for up to 260,000 shares of
common stock. In 1993, CEC adopted the 1993 Incentive Stock Plan (the "1993
Plan") pursuant to which CEC could grant options and stock bonuses for up to
95,000 shares of common stock, no more than 15,000 of which could be issued as
stock bonuses. Options granted under both the 1990 Plan and the 1993 Plan vest
at 25% per year on each anniversary of the grant while stock bonuses granted
under the 1993 Plan may be granted at such time and subject to such conditions
as determined by the Compensation Committee of the Board of Directors.

On October 3, 1995, the Board of Directors approved, subject to
shareholder approval, (i) the 1995 Stock Incentive Plan (the "1995 Plan")
pursuant to which up to 1,000,000 shares of common stock may be issued and
which includes formula grants to the outside directors, (ii) the issuance of
405,000 options to employees at an exercise price of $3.25, subject to certain
conditions, and (iii) the issuance of 50,000 options to the outside directors
at an exercise price of $3.25. The Company's shareholders approved the 1995
Plan on June 3, 1996. Certain of the options granted to the employees required
their agreement to cancel any options outstanding under the 1990 Plan and the
1993 Plan. Accordingly, as of December 31, 1996, all of the options under the
1990 Plan and the 1993 Plan have either expired or been canceled, and the 1990
Plan and the 1993 Plan have been terminated.

The following table summarizes the activity in options under the 1990
Plan, the 1993 Plan and the 1995 Plan. As of December 31, 1996, the only
options outstanding were under the 1995 Plan.

F-56

<PAGE> 161
CONVEST ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
1996 1995 1994
----- ----- ----
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Outstanding,
Beginning of year 259,250 $ 6.38 302,500 $ 6.64 211,750 $ 5.81
Granted 477,932 3.41 17,500 3.44 107,500 8.25
Exercised (15,880) 3.25 -- -- (5,000) 5.55
Canceled (264,250) 6.32 (60,750) 6.85 (11,750) 6.77
-------- ------- -------
End of year 457,052 $ 3.42 259,250 $ 6.38 302,500 6.64
------- ------- -------

Exercisable, end of year 269,029 $ 3.25 206,625 6.21 250,750 5.78

Weighted average fair value
of options granted $ 2.13 $ 1.99

</TABLE>

Convest applies Accounting Principles Board (APB) Opinion 25 and
related interpretations in accounting for its stock option plans. In accordance
with APB Opinion 25, no compensation expense has been recognized for stock
options granted for the years 1996, 1995 and 1994. Had compensation costs for
these plans been determined based on the fair value for awards under those
plans, consistent with the method of Statement of Financial Accounting
Standards No. 123 "Accounting for Stock-Based Compensation," Convest's net
income and earnings per share would have been as follows:

<TABLE>
<CAPTION>
(in thousands, except per share amounts)

1996 1995
---- ----
<S> <C> <C>
Net Income/(Loss)
As Reported 8,070 (940)
Pro Forma 7,053 (975)

Earnings Per Share
As Reported .77 (.11)
Pro Forma .68 (.12)

</TABLE>

410,581 of the 457,052 options have an exercise price of $3.25 and a
remaining contractual life of 9 years. 269,029 of these options are exercisable
at December 31, 1996. The remaining 46,471 options have exercise prices between
$5.18 and $5.32, with a weighted average exercise price of $5.26 and a weighted
average contractual life of 9.5 years. None of these options are exercisable at
December 31, 1996.

(9) EMPLOYEE BENEFITS

During 1995, the Company maintained a plan qualified under Section
401(k) of the Internal Revenue Code (the "Plan"). All qualified employees of
the Company were entitled to participate in the Plan upon completion of twelve
months of service with the Company. As previously amended by the Board of
Directors, effective January 1, 1994, a participant could contribute up to 15%
of their compensation to the Plan on a pre-tax basis and the Company
contributed matching contributions to the account of the participant equal to
75% of the participant's contribution, not to exceed

F-57
<PAGE> 162

CONVEST ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.5% of the participant's compensation. Contributions by the Company vested
over five years of service at a rate of 20% per year. During the year ended
December 31, 1995, the Company expensed approximately $70,000 associated with
matching contributions in accordance with the Plan.

The Plan was amended and restated effective January 1, 1996. Under the
amended Plan, all qualified employees of the Company are entitled to
participate, regardless of time of service with the Company; however, a new
entrant to the Plan may only do so on January 1 and July 1. Under the terms of
the Plan, an employee may contribute up to a maximum of 15% of their pre-tax
annual compensation and the Company will make matching contributions to the
account of the participant equal to 6% of the participant's annual compensation
up to a maximum limit of $1,864 per year. In addition, the Board of Directors
may determine, on a year-by-year basis, to contribute an additional amount
which would be allocated to participating employees based on their relative
compensation. The Board of Directors of the Company approved an additional
matching contribution of 5% for the 1996 plan year.

(10) MARKETING ARRANGEMENTS AND MAJOR CUSTOMERS

During May 1995, the Company entered into a marketing agreement with a
third party to market a substantial portion of the Company's crude oil
production. While the percentage of the Company's oil production marketed under
this agreement will vary from time to time, the percentage marketed in 1996 was
approximately 53% of the Company's crude oil production. Under the agreement,
the Company receives no less than the amount it would have received by selling
its crude oil production volumes based on the posted field price. The Company
requires the third party to post a letter of credit each month to secure the
crude oil production volumes sold, which is canceled upon receipt of the sale
proceeds. This agreement continues on a month-to-month basis subject to
cancellation upon sixty days written notice.

The Company marketed approximately 84% of its 1996 gas production
under an agreement with Energy Source, Inc. See Note 4 herein for a description
of this agreement.

The following customers individually accounted for 10% of the oil and
gas sales of Convest during one or more of the three years ended December 31,
1996:

<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995 1994
---- ---- ----

<S> <C> <C> <C>
Natural Gas Clearinghouse --% 1% 21%
Energy Source, Inc. 49 37 --
Chevron USA, Inc. 1 2 17
Texon 20 9 --
-- -- --
70% 49% 38%
== == ==
</TABLE>

Since oil and gas are readily marketable commodities, management
believes the loss of any of these major purchasers would not have a significant
impact on the Company's operations.

(11) COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS. Elizabeth Holt, et al. v. Sun E & P Company, et
al., No. 3,217 in the 84th District Court, Hansford County, Texas. This suit
was originally filed in August 1984, seeking to cancel a 13-section lease
because there was no gas production for a period of approximately 120 days in
1983 when the gas purchaser's pipeline was shutdown for repairs. The plaintiff
sought to terminate the lease by reason of non-production as of September 23,
1983. If the plaintiff is successful, the Company would be liable for damages
on past production in the range of $300,000 to $350,000, plus pre-judgment
interest and attorneys fees, which would total approximately $400,000 to
$450,000. The court entered a judgment on December 20, 1996 denying all relief
sought by the plaintiffs against Convest. This judgment is being appealed by
the plaintiffs. The predecessor in interest to Convest has indemnified Convest
to a maximum of $357,000 in value for the well provided that total damages
exceed $250,000.

F-58

<PAGE> 163
CONVEST ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

LEASE COMMITMENTS. Minimum future payments under operating leases are
$275,000 during 1997, $21,000 during 1998, $10,000 during 1999, $4,000 during
2000 and zero thereafter.

(12) SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
(In Thousands, Except Per Share Data)

Quarter Ended
-------------
March 31, June 30, September 30, December 31,
1996 1996 1996 1996
---- ---- ---- ----

<S> <C> <C> <C> <C>
Revenues $ 12,436 $ 10,619 $ 11,440 $ 15,250

Oil & gas sales, net of production costs $ 7,126 $ 6,421 $ 8,024 $ 10,789

Impairment of oil and gas properties $ -- $ 1,120 $ -- $ 1,513

Net income (loss) $ 2,087 $ (638) $ 1,149 $ 5,472

Net income (loss) per weighted average
share outstanding $ 0.20 $ (0.06) $ 0.11 $ 0.52

</TABLE>

Quarter Ended
-------------
March 31, June 30, September 30, December 31,
1996 1996 1996 1996
---- ---- ---- ----

<S> <C> <C> <C> <C>
Revenues $ 13,286 $ 13,056 $ 11,482 $ 13,156

Oil & gas sales, net of production costs $ 8,471 $ 8,108 $ 7,115 $ 9,069

Impairment of oil and gas properties $ -- $ -- $ -- $ (5,911)

Elimination of preacquisition net loss of $ 640 $ 1,024 $ -- $ --
CEC

Net income (loss) $ 1,872 $ (1,029) $ 46 $ (3,887)

Net income (loss) per weighted average
share outstanding $ 0.30 $ (0.16) $ -- $ (0.37)

</TABLE>

F-59
<PAGE> 164
CONVEST ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(13) SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION

The provisions of Statement of Financial Accounting Standards No. 69
require the disclosure of the following information relative to Convest's oil
and gas reserves and producing activities.

<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995 1994
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
CAPITALIZED COSTS RELATING TO OIL AND GAS
PRODUCING ACTIVITIES

Proved oil and gas properties $ 114,063 $ 110,373 $ 66,617
Unproved oil and gas properties 3,244 3,828 997
--------- --------- ---------
117,307 114,201 67,614

Accumulated depreciation, depletion and amortization
(62,847) (50,144) (29,289)
--------- --------- ---------

Net capitalized costs $ 54,460 $ 64,057 $ 38,325
========= ========= =========

COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION,
EXPLORATION AND DEVELOPMENT ACTIVITIES
Acquisition of producing properties and leasehold costs:
Proved $ 163 $ 3,069 $ 15
Unproved -- -- 17
Reverse Acquisition of CEC -- 40,935 --
Exploration costs 3,907 -- 210
Development costs 9,249 6,406 3,812
--------- --------- ---------

$ 13,319 $ 50,410 $ 4,054
========= ========= =========

</TABLE>

RESERVE QUANTITY INFORMATION (UNAUDITED)

F-60
<PAGE> 165

<TABLE>
<CAPTION>
Oil and
Condensate Natural Gas
(MBbls) (Mmcf)
---------- -----------

<S> <C> <C>
Proved reserves, December 31, 1993 1,012 59,340
Revisions of previous estimates 220 10,134
Sales of minerals in place (11) (7,236)
Extensions, discoveries and other additions -- --
Production (584) (19,295)
------- -------
Proved reserves, December 31, 1994 637 42,943
Revision of previous estimates 872 (5,797)
Sale of minerals in place (50) (133)
Reverse acquisition of CEC 5,474 17,509
Acquisition of Sensor Properties (a) 756 172
Extensions, discoveries and other additions 140 3,820
Production (1,306) (17,968)
------- -------
Proved reserves, December 31, 1995 6,523 40,546
Revisions of previous estimates 889 5,757
Sales of minerals in place (341) (2,105)
Extensions, discoveries and other additions 296 6,546
Production (1,023) (13,162)
------- -------
Proved reserves, December 31, 1996 6,344 37,582
====== =======
Proved developed reserves:
December 31, 1993 949 49,111
December 31, 1994 607 42,540
December 31, 1995 5,818 39,231
December 31, 1996 5,493 35,075

</TABLE>

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

(a) Reserve additions associated with the Sensor Properties acquisition
represents only the reserves associated with Edisto E&P's interest as
CEC's interest in the Sensor Properties was considered to have been
acquired by Edisto E&P in the Edisto Transaction.

F-61

<PAGE> 166
CONVEST ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
AND CHANGES THEREIN RELATING TO PROVED OIL AND GAS RESERVES (UNAUDITED)

The following table presents the standardized measure of discounted
future net cash flows and changes therein relating to proved oil and gas
reserves pursuant to Securities and Exchange Commission Regulation S-X, Rule
4-10 and Statement of Financial Accounting Standards No. 69. In computing this
data, assumptions other than those required by the Securities and Exchange
Commission and the Financial Accounting Standards Board could produce different
results. Accordingly, the data should not be construed as representative of the
fair market value of Convest's proved oil and gas reserves.

Numerous uncertainties are inherent in estimating quantities of proved
reserves, projecting future rates of production and the timing of development
expenditures. Future prices received for such production and future production
costs may vary, perhaps significantly, from the prices and costs assumed for
purposes of these estimates. Estimates of economically recoverable oil and gas
reserves and of the future net revenues therefrom are based upon a number of
variable factors and assumptions, all of which may in fact vary considerably
from actual results. All such estimates are to some degree speculative, and
classifications of reserves are only attempts to define the degree of
speculation involved. The Company emphasizes that the actual production,
revenues, severance and excise taxes, development expenditures and operating
expenditures with respect to its reserves will likely vary from such estimates,
and such variances may be material.

F-62

<PAGE> 167

<TABLE>
<CAPTION>
At December 31,
---------------
1996 1995 1994
---- ---- ----
(In Thousands)

<S> <C> <C> <C>
Future cash inflows $ 310,591 $ 214,687 $ 79,331
Future production and development costs (117,030) (116,343) (48,733)
Future income taxes (33,366) (2,925) --
--------- --------- --------
Future net cash flows 160,195 95,419 30,598
10% annual discount for estimated timing of cash flows (38,841) (23,452) (3,143)
--------- --------- --------

Standardized measure of discounted future net cash flows $ 121,354 $ 71,967 $ 27,455
========= ========= ========

Beginning of period $ 71,967 $ 27,455 $ 75,020
Changes resulting from:
Sales of oil and gas produced, net of production costs (32,360) (32,763) (34,559)
Net changes in prices and production costs 55,216 9,443 (26,666)
Extensions and discoveries, less related costs 23,442 8,601 --
Reverse acquisition of CEC -- 53,102 --
Acquisition of Sensor Properties (a) -- 4,838 --
Sales of reserves in place (4,091) (519) (8,434)
Revisions of previous quantity estimates 23,015 (622) 9,809
Accretion of discount 7,197 2,746 7,502
Changes in future development costs (24) 1,905 3,379
Net change in income taxes (22,181) (2,509) --
Changes in timing and other (827) 290 1,404
--------- --------- --------
End of period $ 121,354 $ 71,967 $ 27,455
========= ========= ========

At December 31,
---------------
Average Prices 1996 1995 1994
- -------------- ---- ---- ----

Oil (per Bbl) $ 26.01 $ 19.48 $ 14.67
Gas (per Mcf) $ 3.87 $ 2.16 $ 1.63

</TABLE>

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

(a) Discounted future net revenues associated with the Sensor Properties
acquisition represents only the discounted future net revenues
associated with Edisto E&P's interest as CEC's interest in the Sensor
Properties was considered to have been acquired by Edisto E&P in the
Edisto Transaction.

Subsequent to the reserve valuation date of December 31, 1996, prices
for oil and natural gas have decreased substantially. The average prices
received for February 1997 were $20.75 per barrel and $2.85 per Mcf. Prices
have continued to decline since then so the Company expects that the prices it
will receive in March 1997 will be lower than in the prior month. This decrease
in prices would have had an effect on the Standardized Measure of Discounted
Cash Flows of the Company's proved reserves at January 1, 1997.

F-63
<PAGE> 168

CONVEST ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS
(In Thousands)

<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- ------------
(Unaudited)
ASSETS

<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,045 $ 3,678
Restricted cash 333 333
Accounts receivable:
Oil and gas production - less allowance
for doubtful accounts of $625 and $657, respectively 5,288 7,908
Other 185 598
Other current assets 581 2,267
--------- ---------
Total current assets 12,432 14,784
--------- ---------

Property and equipment:
Oil and gas properties, successful efforts method 117,417 117,307
Other 513 478
Less accumulated depreciation and depletion (61,167) (63,061)
--------- ---------
56,763 54,724
--------- ---------

Other noncurrent assets 2,762 2,704
--------- ---------

$ 71,957 $ 72,212
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable:
Oil and gas production $ 9,645 $ 8,521
Affiliates 423 667
Accrued liabilities and other 5,285 6,041
Deferred revenue 2,076 2,113
--------- ---------
Total current liabilities 17,429 17,342
--------- ---------

Long-term liabilities:
Long-term debt 3 4,003
Deferred revenue 561 559
Other noncurrent liabilities 6,296 7,170
--------- ---------
6,860 11,732
--------- ---------

Commitments and contingencies

Stockholders' equity:
Preferred stock, $1 par value; authorized 5 million shares;
none issued or outstanding -- --
Common stock $.01 par value; 20,000,000 shares
authorized, 10,446,402 and 10,428,602 issued and outstanding at
March 31, 1997 and December 31, 1996, respectively 104 104
Additional paid-in capital 47,907 47,849
Retained deficit (343) (4,815)
--------- ---------
47,668 43,138
--------- ---------

$ 71,957 $ 72,212
========= =========

</TABLE>

See accompanying notes to consolidated financial statements.

F-64
<PAGE> 169

CONVEST ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)

<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
1997 1996
---- ----
(Unaudited)
<S> <C> <C>
Revenues:
Oil and gas sales $13,062 $11,159
Gas plant revenues 602 361
Gain on asset sale 122 813
Other, net 105 103
------- -------

13,891 12,436
------- -------

Expenses:
Production:
Lease operating expense 2,955 3,961
Gas plant operating expense 174 123
Production taxes 293 310
Abandonment and exploration costs 1,091 42
General and administrative expenses 1,130 1,239
Interest expense 56 367
Depreciation, depletion and amortization 3,623 4,138
------- -------

9,322 10,180
------- -------

Net income before income taxes 4,569 2,256

Income tax provision 97 169
------- -------

Net income $ 4,472 $ 2,087
======= =======

Net income per share $ 0.43 $ 0.20
======= =======

Weighted average common shares outstanding 10,436 10,413
======= =======

</TABLE>

F-65
<PAGE> 170

CONVEST ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(In Thousands)

(Unaudited)

<TABLE>
<CAPTION>
Common Common Additional
Shares Stock, Paid-In Retained
Outstanding $.01 par Capital Deficit Total
----------- -------- ----------- ----------- ---------

<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 10,428 $ 104 $ 47,849 $ (4,815) $ 43,138

Exercised employee stock options 18 - 58 - 58

Net income - - - 4,472 4,472
----------- -------- ----------- ----------- ---------

Balance at March 31, 1997 10,446 $ 104 $ 47,907 $ (343) $ 47,668
=========== ======== =========== ============ =========

</TABLE>

See accompanying notes to consolidated financial statements.

F-66
<PAGE> 171

CONVEST ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

Three Months Ended
March 31,
---------
1997 1996
---- ----
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,472 $ 2,087
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 3,623 4,138
Gain on sale of oil and gas properties (122) (813)
Abandonment and exploration costs 691 --
Decrease (increase) in accounts receivable 2,619 (411)
Decrease in accounts payable and accrued liabilities (424) (476)
Other 24 180
-------- -------
Net cash flow provided by operating activities 10,883 4,705
-------- -------

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition, exploration and development of oil and
gas properties (6,045) (1,756)
Proceeds from sales of oil and gas properties 268 2,207
(Purchase) sale of short-term investments 1,281 (203)
Increase in other current and noncurrent assets (78) (8)
-------- -------
Net cash provided by (used in) investing activities (4,574) 240
-------- -------

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (4,000) (5,000)
Exercised employee stock options 58 --
-------- -------
Net cash used in financing activities (3,942) (5,000)
-------- -------

Net increase (decrease) in cash and cash equivalents 2,367 (55)
Cash and cash equivalents, beginning of period 4,011 1,007
-------- -------
Cash and cash equivalents, end of period $ 6,378 $ 952
======== =======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 185 $ 419
======== =======

Cash paid during the period for taxes $ 97 $ 248
======== =======

</TABLE>

See accompanying notes to consolidated financial statements.

F-67
<PAGE> 172
CONVEST ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

GENERAL

Convest Energy Corporation ("Convest" or the "Company"), a Texas
corporation whose common stock is traded on the American Stock Exchange, is an
active independent oil and gas exploration and production company. On June 26,
1995, Convest acquired all of the outstanding capital stock of Edisto
Exploration & Production Company, a Delaware corporation ("Edisto E&P"), from
Edisto Resources Corporation ("Edisto") in exchange for 6,185,400 newly issued
shares of Convest's common stock and $10,000 in cash (the "Edisto
Transaction"). The newly issued shares of Convest common stock increased
Edisto's interest in Convest from 31% to 72%. During April, 1996, Edisto
increased its interest in Convest to 73% through the purchase of 92,000
additional shares of Convest common stock on the open market.

These financial statements should be read in conjunction with the
audited financial statements and the notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996. Reference also
is made to the "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this report. The information
presented in this Form 10-Q is unaudited, but in the opinion of management
reflects all adjustments (all of which were normal and recurring) necessary to
fairly present such information. Interim results are not necessarily indicative
of a full year of operations.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION. All significant intercompany accounts and
activities have been eliminated.

PROPERTY AND EQUIPMENT. The Company follows the successful efforts
method of accounting for its oil and gas properties. Costs of productive wells,
developmental drilling expenditures, including developmental dry holes, and
productive leases are capitalized. Exploratory drilling costs, including
stratigraphic test wells, are initially capitalized, but charged to expense if
and when the well is determined to be unsuccessful. The capitalized costs of
oil and gas properties are charged to operations as depreciation, depletion and
amortization using the unit-of-production method based on the ratio of current
production to proved recoverable oil and gas reserves (as defined by the
Securities and Exchange Commission) on a lease by lease basis. Reserve
estimates for the Company's properties were prepared or audited by independent
petroleum engineering firms at year end. Gas is converted to equivalent barrels
of oil on an energy content basis of 6 Mcf of gas to 1 barrel of oil.
Depreciation, depletion and amortization per equivalent unit of oil production
was $4.99 and $5.07 for the three month periods ended March 31, 1997 and 1996,
respectively. Oil and gas leasehold costs are capitalized when incurred.
Unproved properties are assessed periodically on a property-by-property basis
and impairments in value are charged to expense. Exploratory expenses,
including geological and geophysical expenses and annual delay rentals, are
charged to expense as incurred.

Under Statement of Financial Accounting Standards No. 121 ("SFAS 121")
regarding accounting for the impairment of long-lived assets, the Company is
required to recognize an impairment loss for its proved oil and gas properties
if the carrying value of such properties (i.e., total capitalized costs less
accumulated depreciation and depletion) exceeds the undiscounted expected
future cash flows attributable to such properties. Convest must assess the need
for an impairment of capitalized costs of oil and gas properties on a
property-by-property basis. If an impairment is indicated based on undiscounted
expected future cash flows, then an impairment loss is recognized to the extent
that net capitalized costs exceed expected future cash flows. No such provision
was required for the three month periods ended March 31, 1997 and March 31,
1996.

F-68

<PAGE> 173
CONVEST ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OTHER PROPERTY, PLANT AND EQUIPMENT. Other fixed assets are recorded
at cost and depreciated over their estimated useful lives using the
straight-line method of depreciation.

Edisto E&P is a party to a settlement with the United States Minerals
Management Service relating to estimated plugging and abandonment costs for 14
Gulf of Mexico OCS leases. Pursuant to this settlement, the operator of the
leases, Edisto E&P and other co-lessees were required to provide security for
payment of such costs through quarterly payments to an Abandonment Fund. During
the first quarter of 1997, the Company made its final scheduled payment under
the Abandonment Fund, and accordingly, is no longer subject to additional
future payments.

As of March 31, 1997 and December 31, 1996, the Company had made
payments totaling approximately $4.3 million and $4.2 million to the
Abandonment Fund, respectively. These payments were applied to the total
long-term abandonment reserve of $7.5 million and $7.7 million, as of March 31,
1997 and December 31, 1996, respectively, resulting in a net long-term
abandonment reserve of $3.2 million and $3.5 million as of those dates. The
current portion of the abandonment reserve was $2.0 million and $2.3 million as
of March 31, 1997 and December 31, 1996, respectively. The current portion of
the abandonment reserve is included in "Accrued Liabilities and Other" and the
noncurrent portion is included in "Other Noncurrent Liabilities" in the
consolidated financial statements.

LEASE OPERATING EXPENSES. In connection with a 1992 sale of certain
future production volumes of oil to Enron Reserve Acquisition Corp., the
Company established a reserve for the expenses associated with the volumes sold
and amortizes this reserve as the volumes are delivered. As of March 31, 1997
and December 31, 1996, the current balance of this reserve was $1.6 million,
respectively, and the long-term balance was $3.1 million and $3.7 million,
respectively, and were presented in "Accrued Liabilities and Other" and "Other
Noncurrent Liabilities," respectively, in the consolidated financial
statements.

GAS BALANCING. The Company uses the entitlement method of accounting
for gas imbalances. Receivables resulting from undertakes of gas production at
March 31, 1997 and December 31, 1996 were $2.2 million and $2.3 million,
respectively, and are included in "Accounts Receivable - Oil and Gas
Production" and "Other Noncurrent Assets" in the consolidated financial
statements. Deferred revenue and payables resulting from overtakes of gas
production at March 31, 1997 and December 31, 1996 were $2.4 million and $2.7
million, respectively, and are included in "Current Liabilities Deferred
Revenue" and "Long-Term Liabilities - Deferred Revenue" in the consolidated
financial statements.

NET INCOME PER SHARE. Net income per share is computed based on the
weighted average number of shares outstanding which were 10,435,685 and
10,412,722 for the three months ended March 31, 1997 and 1996,

F-69
<PAGE> 174

CONVEST ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

respectively. No effect has been given to options outstanding under the
Company's stock option plans because their effect is antidilutive or
immaterial.

RISK MANAGEMENT/HEDGING ACTIVITIES. The Company from time to time
engages in commodity hedging activities to minimize the risk of market
fluctuations associated with the price of crude oil and natural gas production.
The hedging objectives include assurance of stable and known cash flows and
fixed favorable prices. The hedges are effected through the purchase and sale
of futures contracts on the New York Mercantile Exchange ("NYMEX") and over the
counter price swap agreements. The credit risk of futures contracts is limited
due to the daily cash settlement of the net change in the value of open
contracts and because of certain NYMEX procedures. Gains or losses on the
Company's hedging agreements are deferred and recognized as oil and gas sales
revenue when the hedged transaction occurs.

(3) RELATED PARTY TRANSACTIONS

During December 1996, Edisto sold substantially all of the assets of
its wholly owned gas marketing subsidiary, Energy Source, Inc. , to an
unrelated third party. From January 1995 until its sale in December 1996,
Energy Source had marketed a substantial portion of the Company's gas
production. Under the gas marketing arrangement, Convest received a minimum
price of 98% of the index for the applicable pipeline. In connection with the
sale of Energy Source, Convest and Energy Source agreed to extend the gas
marketing arrangement to December 31, 1997. Effective January 1, 1997, the gas
marketing arrangement was amended to increase the price received by the Company
from 98% to 100% of the index price for the applicable pipeline.

In addition, the Company and Edisto have a directors' and officers'
fiduciary insurance policy that covers both companies. The annual insurance
premium was allocated 32% to the Company, for a cost of $96,000 based on the
relative percentage that the assets of the Company bear to the total assets of
both the Company and Edisto.

F-70
<PAGE> 175
CONVEST ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(4) HEDGING ACTIVITIES

<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
Oil Gas Oil Gas
--- --- --- ---

<S> <C> <C> <C> <C>
Quantity Sold 60 Mbbls 2,460 Mmcf 90 MBbls 3,300 Mmcf
Maximum Term 6 Months 7 Months 9 Months 10 Months
Average Price $21.72 $2.33 $22.50 $2.53

</TABLE>

The Company will continue its hedging activities during 1997 in order
to mitigate the volatility of its crude oil and natural gas prices. Gains and
losses realized upon the settlement of the Company's hedge positions are
deferred and recognized as oil and gas sales revenue in the month of the
underlying physical production being hedged. The fair value of the Company's
open positions at March 31, 1997 were $918,950. As a result of fluctuations in
the price of crude oil and natural gas subsequent to March 31, 1997, the stated
fair value of the Company's open positions is not indicative of the value which
would be received if the positions were closed at current prices. The fair
value of the Company's hedges was based on the cost that would have been
incurred to buy out those hedges in a loss position and the consideration that
would have been received to terminate those hedges in a gain position. The cash
margin required by the counterparties to the Company's hedging activities
totaled $67,000 and $1.0 million as of March 31, 1997 and December 31, 1996,
respectively, and are included in other current assets.

(5) INCOME TAXES

For the three months ended March 31, 1997 and 1996, the Company
recorded current income tax expense of $97,000 and $169,000, respectively. The
Company has provided a valuation allowance against substantially all of its net
deferred tax assets as the "more-likely-than-not" criteria for recognition
under SFAS No. 109 was not met. During 1995, the Company purchased
approximately $3.3 million of NOL tax benefits from Edisto for $550,000 which
is included in "Other Noncurrent Assets" in the accompanying balance sheets. No
valuation allowance was taken against such amount under SFAS No. 109 since the
Company anticipates that the purchased NOLs will be utilized against the
Company's current income tax.

(6) CREDIT FACILITY AND LONG-TERM DEBT

The Company has a revolving credit facility with Bank One, Texas, N.A.
("Bank One"), and Compass Bank-Houston which terminates on January 1, 1999.
Bank One serves as agent bank of the facility. The facility is secured by a
first lien on all of the Company's assets, including its oil and gas properties
and gas plant. The borrowing base is redetermined semi-annually on May 31 and
November 30 of each year by the lending banks based on engineering criteria
established by the banks. Interest on borrowings under the facility is computed
at (i) the agent bank's prime lending rate (the "Base Rate") plus 3/4% or (ii)
the London InterBank Offering Rate ("LIBOR") plus 2-3/4%. In

F-71
<PAGE> 176
CONVEST ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

addition, the Company pays a commitment fee equal to 1/2% on any commitment
amount in excess of outstanding borrowings.

Effective December 1, 1996, the borrowing base was $19.2 million and
will reduce by $1.0 million monthly beginning January 1, 1997 based on the
lending banks' estimate of production. Effective January 28, 1997, the
borrowing base was reduced by $300,000 to give effect to the sale of an oil and
gas property securing the credit facility. After giving effect to the monthly
borrowing base reductions and the reduction resulting from the property sale,
the Company's borrowing base under the credit facility was $15.9 million on
March 31, 1997. The Company had no outstanding borrowings under its credit
facility at March 31, 1997 and $4.0 million outstanding at December 31, 1996.
In addition, the Company had an additional $200,000 of letters of credit
outstanding at March 31, 1997 and December 31, 1996, primarily related to
performance bonds issued for oil and gas operations. As of March 31, 1997,
borrowings under the credit facility were subject to Base Rate interest at an
effective rate of 9.25% per annum.

(7) COMMITMENTS AND CONTINGENCIES

F-72
<PAGE> 177
APPENDIX A

AMENDED AND RESTATED

AGREEMENT AND PLAN OF MERGER

AMONG

FORCENERGY INC,

EDI ACQUISITION CORPORATION,

EDISTO RESOURCES CORPORATION

AND

CONVEST ENERGY CORPORATION

JULY 15, 1997
<PAGE> 178
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 2. The Mergers and the Dissolution . . . . . . . . . . . . . . . . . 7
(a) Merger 1 . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) Effective Time of Merger 1 . . . . . . . . . . . . . . . . . 7
(c) Dissolution . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Effective Time of Dissolution . . . . . . . . . . . . . . . 7
(e) Merger 2 . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(f) Effective Time of Merger 2 . . . . . . . . . . . . . . . . . 7
(g) Consummation . . . . . . . . . . . . . . . . . . . . . . . . 8

Section 3. The Surviving Corporations. . . . . . . . . . . . . . . . . . . . 8
(a) Certificate of Incorporation; Articles of Incorporation . . 8
(b) By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Directors . . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Section 4. Conversion of Shares; Closing . . . . . . . . . . . . . . . . . . 9
(a) Conversion of Sellers' Capital Stock . . . . . . . . . . . . 9
(b) Other Conversions . . . . . . . . . . . . . . . . . . . . . 10
(c) Sellers Options . . . . . . . . . . . . . . . . . . . . . . 10
(d) Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . 10
(e) No Fractional Securities . . . . . . . . . . . . . . . . . . 13
(f) Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(g) Closing of Transfer Books. . . . . . . . . . . . . . . . . . 13
(h) Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . 14

Section 5. Representations and Warranties of the Sellers . . . . . . . . . . 14
(a) Organization, Qualification, and Corporate Power . . . . . . 14
(b) Capitalization . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Authorization of Transaction . . . . . . . . . . . . . . . . 15
(d) Non-Contravention . . . . . . . . . . . . . . . . . . . . . 16
(e) Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . 16
(f) Reports and Financial Statements . . . . . . . . . . . . . . 16
(g) Absence of Undisclosed Liabilities . . . . . . . . . . . . . 17
(h) Absence of Certain Changes or Events . . . . . . . . . . . . 17
(i) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 17
(j) Registration Statement and Information Statement . . . . . 18
(k) No Violation of Law. . . . . . . . . . . . . . . . . . . . . 18
(l) Compliance with Agreements . . . . . . . . . . . . . . . . . 18
(m) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(n) Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . 20
(o) Labor Controversies . . . . . . . . . . . . . . . . . . . . 21
(p) Environmental Matters . . . . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE> 179
<TABLE>
<S> <C>
(q) Non-competition Agreements . . . . . . . . . . . . . . . . 23
(r) Reserve Report and Exploration Project Information . . . . 23
(s) Title . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(t) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 26
(u) Allowable Production Quotas . . . . . . . . . . . . . . . . 26
(v) Gas Payments; Balancing . . . . . . . . . . . . . . . . . . 26
(w) No Prepayments Made or Refunds Owed . . . . . . . . . . . . 27
(x) Drilling Obligations . . . . . . . . . . . . . . . . . . . . 27
(y) Development Operations . . . . . . . . . . . . . . . . . . . 27
(z) Regulatory Authority . . . . . . . . . . . . . . . . . . . . 27
(aa) Full Disclosure . . . . . . . . . . . . . . . . . . . . . . 27
(bb) Certain Agreements . . . . . . . . . . . . . . . . . . . . . 28
(cc) Shareholders Agreement . . . . . . . . . . . . . . . . . . . 28
(dd) Brokers and Finders . . . . . . . . . . . . . . . . . . . . 28
(ee) Opinion of Financial Advisor . . . . . . . . . . . . . . . . 28
(ff) Edisto Cash Balance . . . . . . . . . . . . . . . . . . . . 28
(gg) Affiliate Transactions . . . . . . . . . . . . . . . . . . . 28
(hh) WARN . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(ii) Cumulative Representations . . . . . . . . . . . . . . . . . 29

Section 6. Representations and Warranties of Purchasers . . . . . . . . . . 29
(a) Organization, Qualification, and Corporate Power . . . . . . 29
(b) Capitalization . . . . . . . . . . . . . . . . . . . . . . . 29
(c) Authorization of Transaction . . . . . . . . . . . . . . . . 29
(d) Non-Contravention . . . . . . . . . . . . . . . . . . . . . 29
(e) Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 30
(f) Reports and Financial Statements . . . . . . . . . . . . . . 30
(g) Absence of Undisclosed Liabilities . . . . . . . . . . . . . 30
(h) Absence of Certain Changes or Events . . . . . . . . . . . . 31
(i) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 31
(j) Registration Statement and Proxy Statements . . . . . . . . 31
(k) No Violation of Law . . . . . . . . . . . . . . . . . . . . 31
(l) Compliance with Agreements . . . . . . . . . . . . . . . . . 32
(m) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(n) Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . 32
(o) Labor Controversies . . . . . . . . . . . . . . . . . . . . 34
(p) Environmental Matters . . . . . . . . . . . . . . . . . . . 34
(q) Reserve Report and Exploration Project Information . . . . 35
(r) Title . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(s) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 37
(t) Allowable Production Quotas . . . . . . . . . . . . . . . . 37
(u) Gas Payments; Balancing . . . . . . . . . . . . . . . . . . 37
(v) No Prepayments Made or Refunds Owed . . . . . . . . . . . . 38
(w) Drilling Obligations . . . . . . . . . . . . . . . . . . . . 38
(x) Development Operations . . . . . . . . . . . . . . . . . . . 38
(y) Regulatory Authority . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
<PAGE> 180
<TABLE>
<S> <C>
(z) Full Disclosure . . . . . . . . . . . . . . . . . . . . . . 39
(aa) Affiliate Transactions . . . . . . . . . . . . . . . . . . . 39
(bb) Cumulative Representations . . . . . . . . . . . . . . . . . 39

Section 7. Conduct of Business Pending the Mergers . . . . . . . . . . . . . 39
(a) Conduct of Business by the Sellers Pending the Mergers . . . 39
(b) Control of the Sellers' Operations . . . . . . . . . . . . . 41
(c) Acquisition Transactions . . . . . . . . . . . . . . . . . . 41
(d) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 42

Section 8. Additional Agreements . . . . . . . . . . . . . . . . . . . . . . 42
(a) Access to Information . . . . . . . . . . . . . . . . . . . 42
(b) Registration Statement and Proxy Statements . . . . . . . . 43
(c) Stockholders' Approvals . . . . . . . . . . . . . . . . . . 43
(d) Employee Matters . . . . . . . . . . . . . . . . . . . . . . 43
(e) Quotation . . . . . . . . . . . . . . . . . . . . . . . . . 44
(f) Agreement to Cooperate . . . . . . . . . . . . . . . . . . . 44
(g) Public Statements . . . . . . . . . . . . . . . . . . . . . 44
(h) Notification of Certain Matters . . . . . . . . . . . . . . 44
(i) Corrections to the Joint Proxy Statements/Prospectus and
Registration Statement . . . . . . . . . . . . . . . . . . . 45
(j) Indemnification; Directors' and Officers' Insurance . . . . 45
(k) Shareholders Agreement; Compliance with the Securities Act . 46
(l) Convest Shares . . . . . . . . . . . . . . . . . . . . . . . 46
(m) Credit Agreement . . . . . . . . . . . . . . . . . . . . . . 47

Section 9. Conditions . . . . . . . . . . . . . . . . . . . . . . . . . 47
(a) Conditions to Each Party's Obligation to Effect
the Mergers. . . . . . . . . . . . . . . . . . . . . . . . . 47
(b) Conditions to Obligation of the Sellers to Effect
the Mergers. . . . . . . . . . . . . . . . . . . . . . . . . 48
(c) Conditions to Obligations of Purchasers to Effect
the Mergers. . . . . . . . . . . . . . . . . . . . . . . . . 48

Section 10. Termination, Amendment and Waiver . . . . . . . . . . . . . . . 49
(a) Termination . . . . . . . . . . . . . . . . . . . . . . . . 49
(b) Expenses and Fees . . . . . . . . . . . . . . . . . . . . . 52
(c) Effect of Termination . . . . . . . . . . . . . . . . . . . 52
(d) Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 52
(e) Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Section 11. General Provisions . . . . . . . . . . . . . . . . . . . . . . . 53
(a) Non-Survival of Representations and Warranties . . . . . . . 53
(b) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(c) Interpretation . . . . . . . . . . . . . . . . . . . . . . . 54
(d) Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 54
(e) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 54
(f) Parties In Interest . . . . . . . . . . . . . . . . . . . . 54
</TABLE>
<PAGE> 181
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER

This Amended and Restated Agreement and Plan of Merger, dated
as of July 15, 1997 (the "Agreement"), is entered into by and among Forcenergy
Inc, a Delaware corporation ("Parent"), EDI Acquisition Corporation, a Delaware
corporation and wholly owned subsidiary of Parent ("EDI-Sub"), Edisto Resources
Corporation, a Delaware corporation ("Edisto"), and Convest Energy Corporation,
a Texas corporation ("Convest"). Parent and EDI-Sub are each sometimes
referred to herein as a "Purchaser" and collectively as the "Purchasers."
Edisto and Convest and their respective Subsidiaries are each sometimes
referred to herein as a "Seller" and collectively as the "Sellers." The
Purchasers and the Sellers are sometimes collectively referred to herein as the
"Parties."

WHEREAS, previously the Boards of Directors of Parent, EDI-
Sub, Edisto and Convest have approved (i) the merger of EDI-Sub with and into
Edisto ("Merger 1"), (ii) the merger of the surviving corporation of Merger 1
with and into Parent ("Parent/Edisto Merger") and (iii) the merger of Convest
with and into Parent ("Merger 2") on the terms set forth in the Agreement and
Plan of Merger, dated as of June 19, 1997 (the "Merger Agreement");

WHEREAS, the Parties no longer wish to carry out the
Parent/Edisto Merger and, instead, Parent, as sole stockholder of Edisto
immediately after Merger 1 will dissolve Edisto pursuant to Section 275(c) of
the DGCL (the "Dissolution," and, collectively with Merger 1 and Merger 2, the
"Mergers") with all assets of Edisto being distributed upon the Dissolution to
Parent;

WHEREAS, to reflect the above-mentioned changes, the Parties
wish to amend and restate the Merger Agreement in full;

WHEREAS, the Parties intend Merger 2 to qualify as a tax-free
reorganization under the provisions of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code"), and the regulations thereunder;

WHEREAS, in connection with the Mergers and as an inducement
to Parent to enter into the Merger Agreement, (i) Parent, Edisto and a
principal shareholder of Edisto have executed a voting agreement in favor of
Parent with respect to, among other things, the voting of shares of capital
stock of Edisto held or to be held by such shareholder in favor of Merger 1,
and (ii) Parent, Edisto and Convest have executed a voting agreement in favor
of Parent with respect to, among other things, the voting of shares of capital
stock of Convest held or to be held by Edisto in favor of Merger 2.

NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
Parties hereto, intending to be legally bound, hereby amend and restate the
Merger Agreement as follows:

SECTION 1. Definitions.

"Affiliate" of, or a person "affiliated" with, a specified
person means a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the person specified.

"Affiliate Agreement" has the meaning set forth in Section
8(k).
<PAGE> 182
"Agreement" means this Agreement as executed as of the date
first above written or, if amended as provided herein, as amended.

"Claim" has the meaning set forth in Section 8(j).

"Closing" has the meaning set forth in Section 4(f).

"Closing Date" has the meaning set forth in Section 4(f).

"Code" means the Internal Revenue Code of 1986, as amended.

"Convest" has the meaning set forth in the first paragraph of
this Agreement.

"Convest Certificates" has the meaning set forth in Section
4(d)(i).

"Convest Common Stock" means the common stock, par value $0.01
per share, of Convest.

"Convest Option" has the meaning set forth in Section
4(c)(ii).

"Convest Stockholder" means any Person who or which holds any
of the Convest Common Stock.

"Default" has the meaning set forth in Section 10(a)(i)(F).

"DGCL" means the General Corporation Law of the State of
Delaware, as amended.

"Dissolution" has the meaning set forth in the second recital
above.

"Dissolution Certificate" means the Certificate of Dissolution
for the Dissolution, in substantially the form as shall be agreed upon by the
Parties.

"Dissolution Effective Time" has the meaning set forth in
Section 2(d).

"Dissolution Filing" has the meaning set forth in Section
2(d).

"Dollar" or "$" shall mean one dollar of the currency of the
United States of America.

"Edisto" has the meaning set forth in the first paragraph of
this Agreement.

"Edisto Certificates" has the meaning set forth in Section
4(d)(i).

"Edisto Common Stock" means the common stock, par value $0.01
per share, of Edisto.

"Edisto E&P" has the meaning set forth in Section 7(d).

"Edisto Option" has the meaning set forth in Section 4(c)(i).

2
<PAGE> 183
"Edisto Stockholder" means any Person who or which holds any
of the Edisto Common Stock.

"EDI-Sub" has the meaning set forth in the first paragraph of
this Agreement.

"EDI-Sub Common Stock" means the Common Stock, par value $0.01
per share, of EDI-Sub.

"Environmental Laws" has the meaning set forth in Section
5(p)(ii).

"ERISA" means the Employer Retirement Income Security Act of
1974, as amended.

"Exchange Act" means the Securities Exchange Act of 1934, as
amended.

"Exchange Agent" means American Stock Transfer and Trust
Company.

"Exchange Fund" has the meaning set forth in Section
4(d)(iii).

"GAAP" means United States generally accepted accounting
principles as in effect from time to time.

"Hazardous Substance" has the meaning set forth in Section
5(p)(iii).

"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.

"Including" means "including, but not limited to."

"Indemnified Parties" has the meaning set forth in Section
8(j).

"IRS" means the Internal Revenue Service.

"Joint Proxy Statements/Prospectus" has the meaning set forth
in Section 5(j).

"Knowledge" means the actual knowledge of the president or any
vice president of the affected entity.

"Material Adverse Change" means an adverse change in the
business, operations, assets, liabilities, properties, condition (financial or
other) or results of operations which (i), in the case of Sellers and their
respective Subsidiaries, taken as a whole, may result in an aggregate change or
liability of $2.0 million or greater or (ii), in the case of Parent and its
Subsidiaries, taken as a whole, may result in an aggregate change or liability
of $15.0 million or greater.

"Material Adverse Effect" means an adverse effect on the
business, operations, assets, liabilities, properties, condition (financial or
other), or results of operations which (i), in the case of Sellers and their
respective Subsidiaries, taken as a whole, may result in an aggregate change or
liability of $2.0 million or greater or (ii), in the case of Parent and its
Subsidiaries, taken as a whole, may result in an aggregate change or liability
of $15.0 million or greater.

3
<PAGE> 184
"Merger Agreement" has the meaning set forth in the second
recital above.

"Merger Certificates" means, collectively, the Merger 1
Certificate, Merger 2 Certificate and Merger 2 Articles.

"Merger 1 Certificate" means the Certificate of Merger for
Merger 1, in substantially the form as shall be agreed upon by the Parties.

"Merger 2 Certificate" means the Certificate of Merger for
Merger 2, in substantially the form as shall be agreed upon by the Parties.

"Merger 2 Articles" means the Articles of Merger for Merger 2,
together with the Plan of Merger attached as Annex A thereto, in substantially
the form attached hereto as Exhibit A.

"Merger Filings" has the meaning set forth in Section 2(f).

"Merger 1" has the meaning set forth in the first recital
above.

"Merger 1 Cash Consideration" has the meaning set forth in
Section 4(a)(i)(A).

"Merger 1 Consideration" has the meaning set forth in Section
4(a)(i)(A).

"Merger 1 Effective Time" has the meaning set forth in Section
2(b).

"Merger 1 Exchange Ratio" has the meaning set forth in Section
4(a)(i)(A).

"Merger 1 Filing" has the meaning set forth in Section 2(b).

"Merger 2" has the meaning set forth in the first recital
above.

"Merger 2 Consideration" has the meaning set forth in Section
4(a)(ii)(A).

"Merger 2 Effective Time" has the meaning set forth in Section
2(f).

"Merger 2 Exchange Ratio" has the meaning set forth in Section
4(a)(ii)(A).

"Merger 2 Delaware Filing" has the meaning set forth in
Section 2(f).

"Merger 2 Texas Filing" has the meaning set forth in Section
2(f).

"Mergers" has the meaning set forth in the second recital
above.

"New Shares" has the meaning set forth in Section 8(l).

"NYSE" means The New York Stock Exchange, Inc.

4
<PAGE> 185
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).

"Parent" has the meaning set forth in Section 4(b)(iii).

"Parent Common Stock" means the common stock, par value $0.01
per share, of Parent.

"Parent/Edisto Merger" has the meaning set forth in the first
recital above.

"Parent Financial Statements" has the meaning set forth in
Section 6(f).

"Parent Representatives" has the meaning set forth in Section
8(a)(i).

"Parent SEC Reports" has the meaning set forth in Section
6(f).

"Parties" has the meaning set forth in the first paragraph of
this Agreement.

"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).

"Petrie Parkman" means Petrie Parkman & Co., Inc.

"Proxy Statement" has the meaning set forth in Section 5(j).

"Purchaser" and "Purchasers" have the meanings set forth in
the first paragraph of this Agreement.

"Purchasers Plans" has the meaning set forth in Section 6(n).

"Purchasers Assets" has the meaning set forth in Section
6(r)(v).

"Purchasers Disclosure Schedule" means the disclosure schedule
delivered by the Purchasers concurrently with this Agreement, which shall
specifically modify the lettered and numbered paragraphs hereof to which it
expressly refers.

"Purchasers Evaluated Properties" has the meaning set forth in
Section 6(q).

"Purchasers Permits" has the meaning set forth in Section
6(k).

"Purchasers Petroleum Engineers" has the meaning set forth in
Section 6(q)(i).

"Purchasers Project Information" has the meaning set forth in
Section 6(q)(iii).

"Purchasers Projects" has the meaning set forth in Section
6(q)(iii).

"Purchasers Required Statutory Approvals" has the meaning set
forth in Section 6(e).

5
<PAGE> 186
"Purchasers Reserve Reports" has the meaning set forth in
Section 6(q)(i).

"Rauscher Pierce" means Rauscher, Pierce, Refsnes, Inc.

"Registration Statement" has the meaning set forth in Section
5(j).

"Requisite Stockholder Approvals" has the meaning set forth in
Section 5(c)(ii).

"SEC" means the Securities and Exchange Commission.

"Securities Act" means the Securities Act of 1933, as amended.

"Seller" and "Sellers" have the meanings set forth in the
first paragraph of this Agreement.

"Seller Representatives" has the meaning set forth in Section
8(a)(i).

"Sellers Assets" has the meaning set forth in Section 5(s)(v).

"Sellers Disclosure Schedule" means the disclosure schedule
delivered by the Sellers concurrently with this Agreement, which shall
specifically modify the numbered paragraphs hereof to which it expressly
refers.

"Sellers Evaluated Properties" has the meaning set forth in
Section 5(r)(i).

"Sellers Financial Statements" has the meaning set forth in
Section 5(f).

"Sellers Permits" has the meaning set forth in Section 5(k).

"Sellers Plans" has the meaning set forth in Section 5(n)(i).

"Sellers Project Information" has the meaning set forth in
Section 5(r)(iii).

"Sellers Projects" has the meaning set forth in Section
5(r)(iii).

"Sellers Required Statutory Approvals" has the meaning set
forth in Section 5(e).

"Sellers Reserve Reports" has the meaning set forth in Section
5(r)(i).

"Sellers SEC Reports" has the meaning set forth in Section
5(f).

"Shareholders Agreement" has the meaning set forth in Section
5(cc).

"Shares" has the meaning set forth in Section 5(b)(i).

"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.

6
<PAGE> 187
"Surviving Corporation 1" has the meaning set forth in Section
2(a).

"Surviving Corporation 2" has the meaning set forth in Section
2(e).

"TBCA" means the Business Corporation Act of the State of
Texas, as amended.

"Tax Return" has the meaning set forth in Section 5(m)(iii).

"Taxes" has the meaning set forth in Section 5(m)(ii).

"WARN" means the Federal Worker Adjustment and Retraining
Notification Act of 1988.

"Weighted Average Trading Price" has the meaning set forth in
Section 4(a)(iii).

SECTION 2. The Mergers and the Dissolution.

(a) Merger 1. Upon the terms and subject to the
conditions of this Agreement, at the Merger 1 Effective Time (as defined in
Section 2(b)) in accordance with the DGCL, EDI-Sub shall be merged with and
into Edisto, the separate existence of EDI-Sub shall thereupon cease, and
Edisto shall be the surviving corporation in Merger 1, hereinafter sometimes
referred to as "Surviving Corporation 1."

(b) Effective Time of Merger 1. Merger 1 shall become
effective at such time (the "Merger 1 Effective Time") as the Merger 1
Certificate is filed with the Secretary of State of the State of Delaware in
accordance with the DGCL (the "Merger 1 Filing"). The Merger 1 Filing shall
be made simultaneously with or as soon as practicable after the Closing of the
transactions contemplated by this Agreement in accordance with Section 4(f).

(c) Dissolution. Upon the terms and subject to the
conditions of this Agreement, at the Dissolution Effective Time (as defined in
Section 2(d)) in accordance with the DGCL, Surviving Corporation 1 shall be
dissolved and the separate existence of Surviving Corporation 1 shall thereupon
cease.

(d) Effective Time of the Dissolution. The Dissolution
shall become effective at such time (the "Dissolution Effective Time") as the
Dissolution Certificate is filed with the Secretary of State of the State of
Delaware in accordance with the DGCL (the "Dissolution Filing"). The
Dissolution Filing shall be made as soon as practicable following the Merger 1
Effective Time.

(e) Merger 2. Upon the terms and subject to the
conditions of this Agreement and the Merger 2 Articles, at the Merger 2
Effective Time (as defined in Section 2(f)) in accordance with the DGCL and the
TBCA, Convest shall be merged with and into Parent, the separate existence of
Convest shall thereupon cease, and Parent shall be the surviving corporation in
Merger 2 and is hereinafter sometimes referred to as "Surviving Corporation 2."

(f) Effective Time of Merger 2. Merger 2 shall become
effective at such time (the "Merger 2 Effective Time") as is the later to occur
of (i) the time that the Merger 2 Certificate is filed with the Secretary of
State of the State of Delaware in accordance with the DGCL (the "Merger 2
Delaware Filing"), and (ii) the time that the Merger 2 Articles are filed with
the Secretary of State of the State of Texas and a certificate of merger is
issued thereby in accordance with the TBCA (the "Merger 2 Texas Filing" and,

7
<PAGE> 188
together with the Merger 2 Delaware Filing, the "Merger 2 Filings"). The
Merger 2 Filings shall be made as soon as practicable following the Dissolution
Effective Time. The Merger 1 Filing, the Dissolution Filing and the Merger 2
Filings are collectively referred to herein as the "Merger Filings."

(g) Consummation. The Parties acknowledge that it is
their mutual desire and intent to consummate the Mergers as soon as practicable
after the date hereof. Accordingly, the parties shall, subject to the
provisions hereof and to the fiduciary duties of their respective boards of
directors, use all reasonable efforts to consummate, as soon as practicable,
the transactions contemplated by this Agreement in accordance with Section
4(d).

SECTION 3. The Surviving Corporations.

(a) Certificate of Incorporation; Articles of
Incorporation. The Certificate of Incorporation of EDI-Sub as in effect
immediately prior to the Merger 1 Effective Time shall be the Certificate of
Incorporation of Surviving Corporation 1 after the Merger 1 Effective Time, and
thereafter may be amended in accordance with its terms and as provided in the
DGCL. The Certificate of Incorporation of Parent as in effect immediately
prior to the Merger 2 Effective Time shall be the Certificate of Incorporation
of Surviving Corporation 2 after the Merger 2 Effective Time, and thereafter
may be amended in accordance with its terms and as provided in the DGCL.

(b) By-Laws. The By-laws of EDI-Sub as in effect
immediately prior to the Merger 1 Effective Time shall be the By-laws of
Surviving Corporation 1 after the Merger 1 Effective Time, and thereafter may
be amended in accordance with their terms and as provided by the Certificate of
Incorporation of Surviving Corporation 1 and the DGCL. The By-laws of Parent
as in effect immediately prior to the Merger 2 Effective Time shall be the By-
laws of Surviving Corporation 2 after the Merger 2 Effective Time, and
thereafter may be amended in accordance with their terms and as provided by the
Certificate of Incorporation of Surviving Corporation 2 and the DGCL.

(c) Directors. The directors of EDI-Sub in office
immediately prior to the Merger 1 Effective Time shall be the directors of
Surviving Corporation 1 after the Merger 1 Effective Time, and such directors
shall serve in accordance with the By-laws of Surviving Corporation 1 until
their respective successors are duly elected or appointed and qualified. The
directors of Parent in office immediately prior to the Merger 2 Effective Time
shall be the directors of Surviving Corporation 2 after the Merger 2 Effective
Time, and such directors shall serve in accordance with the By-laws of
Surviving Corporation 2 until their respective successors are duly elected or
appointed and qualified.

(d) Officers. The officers of EDI-Sub in office
immediately prior to the Merger 1 Effective Time shall be the officers of
Surviving Corporation 1 after the Merger 1 Effective Time, and such officers
shall serve in accordance with the By-laws of Surviving Corporation 1 until
their respective successors are duly elected or appointed and qualified. The
officers of Parent in office immediately prior to the Merger 2 Effective Time
shall be the officers of Surviving Corporation 2 after the Merger 2 Effective
Time, and such officers shall serve in accordance with the By-laws of Surviving
Corporation 2 until their respective successors are duly elected or appointed
and qualified.

8
<PAGE> 189
SECTION 4. Conversion of Shares; Closing.

(a) Conversion of Sellers' Capital Stock

(i) Conversion of Edisto Shares in Merger 1. At
the Merger 1 Effective Time, by virtue of Merger 1 and without any
action on the part of any holder of any capital stock of Parent or
Edisto:

(A) each share of Edisto Common Stock
shall, subject to Sections 4(c) and 4(d), be converted into
the right to receive the following (hereinafter referred to as
the "Merger 1 Consideration"), without interest: (x) a
fractional interest in a share of Parent Common Stock equal to
$5.064 divided by the Weighted Average Trading Price (the
"Merger 1 Exchange Ratio"); provided, however, (i) if such
Weighted Average Trading Price exceeds $34.96, then the Merger
1 Exchange Ratio shall be equal to $5.064 divided by $34.96
and (ii) if such Weighted Average Trading Price is less than
$28.96, then the Merger 1 Exchange Ratio shall be equal to
$5.064 divided by $28.96, and (y) $4.886 cash (the "Merger 1
Cash Consideration"); and

(B) each share of capital stock of
Edisto, if any, owned by Parent or any Subsidiary of Parent or
held in treasury by Edisto or any Subsidiary of Edisto
immediately prior to the Merger 1 Effective Time shall be
canceled and no consideration shall be paid in exchange
therefor and shall cease to exist from and after the Merger 1
Effective Time.

(ii) Conversion of Convest Shares in Merger 2. At
the Merger 2 Effective Time, by virtue of Merger 2 and without any
action on the part of any holder of any capital stock of Parent or
Convest:

(A) each share of Convest Common Stock
shall, subject to Sections 4(c) and 4(d), be converted into
the right (hereinafter referred to as the "Merger 2
Consideration") to receive, without interest, a fractional
interest in a share of Parent Common Stock equal to $8.88
divided by the Weighted Average Trading Price (the "Merger 2
Exchange Ratio"); provided, however, (i) if such Weighted
Average Trading Price exceeds $34.96, then the Merger 2
Exchange Ratio shall be equal to $8.88 divided by $34.96 and
(ii) if such Weighted Average Trading Price is less then
$28.96, then the Merger 2 Exchange Ratio shall be equal to
$8.88 divided by $28.96; and

(B) each share of capital stock of
Convest, if any, owned by Parent or any Subsidiary of Parent
or held in treasury by Convest or any Subsidiary of Convest
immediately prior to the Merger 2 Effective Time shall be
canceled and no consideration shall be paid in exchange
therefor and shall cease to exist from and after the Merger 2
Effective Time.

(iii) The "Weighted Average Trading Price" of
Parent Common Stock shall be calculated by (a) making the following
calculation for each of the ten trading days ending on the day that is
two trading days prior to the Closing Date: (i) grouping together all
shares of Parent Common Stock traded on such day at the same trading
price, (ii) multiplying the aggregate number of shares in each price
group by the trading price for such group to calculate a product (the
total sold shares

9
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value) for each group, (iii) adding all of such products from each
group and (iv) dividing the resulting total by the aggregate number of
shares traded on such trading day, and (b) calculating the arithmetic
mean of the resulting ten amounts.

(b) Other Conversions.

(i) At the Merger 1 Effective Time, by virtue of
Merger 1 and without any action on the part of Parent as the sole
stockholder of EDI-Sub, each issued and outstanding share of EDI-Sub
Common Stock shall be converted into one share of common stock, par
value $.01 per share, of Surviving Corporation 1.

(ii) At the Dissolution Effective Time, by virtue
of the Dissolution and without any action on the part of Parent as the
sole stockholder of Surviving Corporation 1, each issued and
outstanding share of the common stock of Surviving Corporation 1 shall
be retired and canceled.

(iii) Notwithstanding the provisions of paragraph
(ii) hereof, Surviving Corporation 1 shall continue, pursuant to
Section 278 of the DGCL, solely for the purposes of suit and winding
up affairs and Parent shall remain the sole stockholder of Surviving
Corporation 1 entitled to receive all distributions of assets made
pursuant to Section 281 of the DGCL.

(i) Edisto Options. Each outstanding stock
option or warrant granted to employees and directors of Edisto and its
Subsidiaries or to any other Persons with respect to Edisto Common
Stock (an "Edisto Option") shall be either (A) redeemed by Edisto or
(B) exercised or canceled in accordance with its terms, in each case,
prior to Merger 1. If any Edisto Option is redeemed pursuant to this
provision, such redemption shall be at a price no greater than the
amount (if any) by which $9.95 exceeds the exercise price of such
Edisto Option (unless otherwise consented to by Parent). The total
amount that may be expended to effect any such redemptions may not
exceed $1,500,000.

(ii) Convest Options. Each outstanding stock
option or warrant granted to employees and directors of Convest and
its Subsidiaries or to any other Persons with respect to Convest
Common Stock (a "Convest Option") shall be either (A) redeemed by
Convest or (B) exercised or canceled in accordance with its terms, in
each case, prior to Merger 1. If any Convest Option is redeemed
pursuant to this provision, such redemption shall be at a price no
greater than the amount (if any) by which $8.88 exceeds the exercise
price of such Convest Option. The total amount that may be expended
to effect any such redemptions may not exceed $2,300,000.

(d) Exchanges.

(i) From and after the Merger 1 Effective Time,
each holder of an outstanding certificate which immediately prior to
the Merger 1 Effective Time represented shares of Edisto Common Stock
(an "Edisto Certificate") shall be entitled to receive in exchange
therefor, upon surrender thereof to the Exchange Agent, a certificate
or certificates representing the number of whole shares of Parent
Common Stock to which such holder is entitled pursuant to Section
4(a)(i)(A) and the amount of Merger 1 Cash Consideration to which such
holder is entitled.

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From and after the Merger 2 Effective Time, each holder of an
outstanding certificate which immediately prior to the Merger 2
Effective Time represented shares of Convest Common Stock (a "Convest
Certificate") shall be entitled to receive in exchange therefor, upon
surrender thereof to the Exchange Agent, a certificate or certificates
representing the number of whole shares of Parent Common Stock to
which such holder is entitled pursuant to Section 4(a)(ii)(A).
Notwithstanding any other provision of this Agreement, (A) until
holders or transferees of Edisto Certificates or Convest Certificates
have surrendered them for exchange as provided herein, no dividends
shall be paid with respect to any shares represented by such
certificates and no payment for fractional shares shall be made and
(B) without regard to when such Edisto Certificates or Convest
Certificates are surrendered for exchange as provided herein, no
interest shall be paid on any dividends or any payment for fractional
shares. Upon surrender of an Edisto Certificate or a Convest
Certificate, respectively, there shall be paid to the holder of such
certificate the amount of any dividends which theretofore became
payable, but which were not paid by reason of the foregoing, with
respect to the number of whole shares of Parent Common Stock
represented by the certificate or certificates issued upon such
surrender.

(ii) If any certificate for shares of Parent
Common Stock is to be issued in a name other than that in which the
Edisto Certificate or Convest Certificate surrendered in exchange
therefor is registered, it shall be a condition of such exchange that
the person requesting such exchange shall pay any applicable transfer
or other taxes required by reason of such issuance.

(iii) Promptly after the Merger 2 Effective Time,
Parent shall make available to the Exchange Agent (A) the certificates
representing shares of Parent Common Stock required to effect the
exchanges referred to in paragraphs (d)(i) and (ii) above and (B)
funds sufficient for the payment of the aggregate Merger 1 Cash
Consideration required to effect the exchange referred to in paragraph
(i) above and for payment of any fractional shares referred to in
Section 4(e) (the "Exchange Fund"), it being understood that any and
all interest earned on funds made available to the Exchange Agent
pursuant to this Agreement shall be for the account of, and shall
remain the property of, Parent.

(iv) (A) Promptly after the Merger 2
Effective Time, but in no event later than ten business days,
the Exchange Agent shall mail to each holder of record of an
Edisto Certificate (x) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and
title to the Edisto Certificates shall pass, only upon actual
delivery of the Edisto Certificates to the Exchange Agent) and
(y) instructions for use in effecting the surrender of the
Edisto Certificates in exchange for certificates representing
shares of Parent Common Stock and Merger 1 Cash Consideration.
Upon surrender of Edisto Certificates for cancellation to the
Exchange Agent, together with a duly executed letter of
transmittal and such other documents as the Exchange Agent
shall reasonably require, the holder of such Edisto
Certificates shall be entitled to receive in exchange therefor
(1) a certificate representing that number of whole shares, if
any, of Parent Common Stock into which the shares of Edisto
Common Stock theretofore represented by the Edisto
Certificates so surrendered shall have been converted pursuant
to the provisions of Section 4(a)(i)(A)(x), and (2) the amount
of Merger 1 Cash Consideration into which the number of shares
of Edisto Common Stock previously represented by such Edisto
Certificates so surrendered shall have been converted pursuant
to the provisions of Section 4(a)(i)(A)(y), and the Edisto
Certificates so surrendered shall be canceled.
Notwithstanding the foregoing, neither the

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Exchange Agent nor any party hereto shall be liable to a
holder of shares of Edisto Common Stock for any shares of
Parent Common Stock or dividends or distributions thereon
delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.

(B) Promptly after the Merger 2
Effective Time, but in no event later than ten business days,
the Exchange Agent shall mail to each holder of record of a
Convest Certificate (x) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and
title to the Convest Certificates shall pass, only upon actual
delivery of the Convest Certificates to the Exchange Agent)
and (y) instructions for use in effecting the surrender of the
Convest Certificates in exchange for certificates representing
shares of Parent Common Stock. Upon surrender of Convest
Certificates for cancellation to the Exchange Agent, together
with a duly executed letter of transmittal and such other
documents as the Exchange Agent shall reasonably require, the
holder of such Convest Certificates shall be entitled to
receive in exchange therefor a certificate representing that
number of whole shares, if any, of Parent Common Stock into
which the shares of Convest Common Stock theretofore
represented by the Convest Certificates so surrendered shall
have been converted pursuant to the provisions of Section
4(a)(ii)(A), and the Convest Certificates so surrendered shall
be canceled. Notwithstanding the foregoing, neither the
Exchange Agent nor any party hereto shall be liable to a
holder of shares of Convest Common Stock for any shares of
Parent Common Stock or dividends or distributions thereon
delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.

(v) Promptly following the date which is one year
after the Closing Date, the Exchange Agent shall deliver to Parent all
cash (including any remaining balance in the Exchange Fund),
certificates (including any Parent Common Stock) and other documents
in its possession relating to the transactions described in this
Agreement, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of an Edisto Certificate or a Convest
Certificate may surrender such certificate to Parent and (subject to
applicable abandoned property, escheat and similar laws) receive in
exchange therefor the Parent Common Stock and Merger 1 Cash
Consideration (if applicable), without any interest thereon. If
outstanding Edisto Certificates or Convest Certificates are not
surrendered prior to six years after the Merger 2 Effective Time (or,
in any particular case, prior to such earlier date on which any Merger
1 Consideration issuable in respect of such Edisto Certificates or
Merger 2 Consideration issued in respect of such Convest Certificates
or the dividends and other distributions, if any, described below
would otherwise escheat to or become the property of any governmental
unit or agency), the Merger 1 Consideration issuable in respect of
such Edisto Certificates or Merger 2 Consideration issuable in respect
of such Convest Certificates, and the amount of dividends and other
distributions, if any, which have become payable and which thereafter
become payable thereon as provided herein shall, to the extent
permitted by applicable law, become the property of Parent, free and
clear of all claims or interest of any Person previously entitled
thereto. Notwithstanding the foregoing, neither the Exchange Agent or
the Parties shall be liable to a holder of shares of Edisto Common
Stock or Convest Common Stock for any shares of Parent Common Stock or
Merger 1 Cash Consideration delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.

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(vi) In the event any Edisto Certificate or
Convest Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such Edisto
Certificate or Convest Certificate to be lost, stolen or destroyed and,
subject to the following sentence, Surviving Corporation 2 shall issue
in exchange for such lost, stolen or destroyed Edisto Certificate or
Convest Certificate the Merger 1 Consideration or Merger 2
Consideration, respectively, deliverable in respect thereof determined
in accordance with this Section 4. Surviving Corporation 2 may, in its
discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate to give
such corporation such indemnity, bond or insurance as it may reasonably
direct as protection against any claim that may be made against such
corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.

(e) No Fractional Securities. Notwithstanding any other
provision of this Agreement, no certificates or scrip for fractional shares of
Parent Common Stock shall be issued in the Mergers and no Parent Common Stock
dividend, stock split or interest shall relate to any fractional security, and
such fractional interests shall not entitle the owner thereof to vote or to any
other rights of a security holder. In lieu of any such fractional share, each
holder of shares of Edisto Common Stock or Convest Common Stock who would
otherwise have been entitled to receive a fraction of a share of Parent Common
Stock upon surrender of Edisto Certificates or Convest Certificates for
exchange pursuant to this Section 4 shall be entitled to receive from the
Exchange Agent a cash payment equal to such fraction multiplied by either (i)
the Weighted Average Trading Price, (ii) $34.96 or (iii) $28.96, depending on
which of the foregoing prices is used for the ratio calculations pursuant to
Section 4(a).

(f) Closing. The closing (the "Closing") of the
transactions contemplated by this Agreement shall take place at a location
mutually agreeable to Parent, Edisto and Convest as promptly as practicable
following the date on which the last of the conditions set forth in Section 9
is fulfilled or waived, or at such other time and place as Parent, Edisto and
Convest shall agree. The date on which the Closing occurs is referred to in
this Agreement as the "Closing Date."

(g) Closing of Transfer Books.

(i) Edisto. At and after the Merger 1 Effective
Time, holders of Edisto Certificates shall cease to have any rights as
stockholders of Edisto, except for the right to receive shares of
Parent Common Stock and Merger 1 Cash Consideration pursuant to
Section 4(a)(i) and the right to receive cash for payment of
fractional shares pursuant to Section 4(e). At the Merger 1 Effective
Time, the stock transfer books of Edisto shall be closed and no
transfer of shares of Edisto Common Stock which were outstanding
immediately prior to the Merger 1 Effective Time shall thereafter be
made. If, after the Merger 1 Effective Time, subject to the terms and
conditions of this Agreement, Edisto Certificates formerly
representing shares of Edisto Common Stock are presented to Parent,
they shall be canceled and exchanged for shares of Parent Common Stock
in accordance with this Section 4.

(ii) Convest. At and after the Merger 2 Effective
Time, holders of Convest Certificates shall cease to have any rights
as stockholders of Convest, except for the right to receive shares of
Parent Common Stock pursuant to Section 4(a)(ii) and the right to
receive cash for payment of fractional shares pursuant to Section
4(e). At the Merger 2 Effective Time, the stock transfer books of
Convest shall be closed and no transfer of shares of Convest Common
Stock which were outstanding immediately prior to the Dissolution
Effective Time shall thereafter be made. If,

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<PAGE> 194
after the Merger 2 Effective Time, subject to the terms and conditions
of this Agreement, Convest Certificates formerly representing shares
of Convest Common Stock are presented to Parent, they shall be
canceled and exchanged for shares of Parent Common Stock in accordance
with this Section 4.

(h) Appraisal Rights. Notwithstanding anything in this
Agreement to the contrary, in the event that appraisal rights are available in
connection with Merger 1 pursuant to Section 262 of the DGCL, shares of Edisto
Common Stock that are issued and outstanding immediately prior to the Merger 1
Effective Time and that are held by Edisto Stockholders who did not vote in
favor of Merger 1 and who comply with all of the relevant provisions of Section
262 of the DGCL (the "Dissenting Shares") shall not be converted into or be
exchangeable for the right to receive the Merger 1 Consideration, unless and
until such Edisto Stockholders shall have failed to perfect or shall have
effectively withdrawn or lost such right, and such Edisto Stockholders' shares
of Edisto Common Stock shall thereupon be deemed to have been converted into
and to have become exchangeable for the right to receive, as of the Merger 1
Effective Time, the Merger 1 Consideration without any interest thereon.
Edisto shall give Parent (i) prompt notice of any written demands for appraisal
of shares of Edisto Common Stock received by Edisto and (ii) the opportunity to
direct all negotiations and proceedings with respect to any such demands.
Edisto shall not, without the prior consent of Parent, voluntarily make any
payment with respect to, or settle or offer to settle, any such demands.

SECTION 5. Representations and Warranties of the Sellers.

Except for those matters included in the Sellers Disclosure
Schedule, which inclusion will not be deemed an admission by Sellers that any
such matter is material or has or would have a Material Adverse Effect or
represents a Material Adverse Change, each Seller represents and warrants to
the Purchaser as follows:

(a) Organization, Qualification, and Corporate Power.
Each of the Sellers and their respective Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Set forth on the Sellers Disclosure
Schedule is a list of all Subsidiaries of each Seller, and a list of those
jurisdictions where each of the Sellers and their respective Subsidiaries are
qualified to conduct business. Each of the Sellers and its respective
Subsidiaries is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required,
except for failures that would not have a Material Adverse Effect. The Sellers
Disclosure Schedule correctly sets forth the name of each Subsidiary of each
Seller, the jurisdiction of its incorporation and the Persons owning its
outstanding capital stock.

(b) Capitalization.

(i) (x) The entire authorized capital stock of
Edisto consisted of 50,000,000 shares of Edisto Common Stock and
10,000,000 shares of preferred stock, of which 14,138,274 shares
(excluding treasury shares) of Edisto Common Stock and no shares of
preferred stock were issued and outstanding as of June 16, 1997, and
(y) the entire authorized capital stock of Convest consisted of
20,000,000 shares of Convest Common Stock and 5,000,000 shares of
preferred stock, of which 10,544,411 shares (excluding treasury
shares) of Convest Common Stock and no shares of preferred stock were
issued and outstanding as of June 16, 1997. Edisto is the beneficial
owner

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<PAGE> 195
of 7,598,771 shares of Convest Common Stock (the "Shares"), free and
clear of any liens, claims, options, charges or other encumbrances.

(ii) Except for employee and director stock
options disclosed on Sellers Disclosure Schedule, there are no
outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require either Seller to issue,
sell, or otherwise cause to become outstanding any of its capital
stock or any other securities convertible into or evidencing the right
to subscribe for any of its capital stock. There are no outstanding
or authorized stock appreciation, phantom stock, profit participation,
or similar rights with respect to either Seller. At and as of the
Closing, neither Seller will be a party to any agreement relating to
the registration under the Securities Act of shares of capital stock
of such Seller or any successor entity. The Sellers Disclosure
Schedule shall indicate, by holder, the shares of capital stock of
each Seller subject to any options, warrants or similar rights, and
the exercise price, expiration date and vesting period thereof.

(i) Each Seller has corporate power and authority
to execute and deliver this Agreement, and, subject to the Requisite
Stockholder Approvals, to consummate the transactions contemplated
hereby. The Board of Directors of Edisto, has approved this Agreement
and Merger 1 in accordance with the applicable provisions of the DGCL
and (A) recommended approval of this Agreement and Merger 1 by the
Edisto Stockholders, and (B) duly and validly authorized the execution
and delivery of this Agreement by Edisto and the consummation by
Edisto of the transactions contemplated hereby. The Board of
Directors of Convest has approved this Agreement and Merger 2 in
accordance with the applicable provisions of the TBCA and (A)
recommended approval of this Agreement and Merger 2 by the Convest
Stockholders, and (B) duly and validly authorized the execution and
delivery of this Agreement by Convest and the consummation by Convest
of the transactions contemplated hereby. Except for the Requisite
Stockholder Approvals, no other corporate proceedings on the part of
either Seller are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been
duly executed and delivered on behalf of each Seller and, subject to
the Requisite Stockholder Approvals, constitutes the valid and legally
binding obligation of each Seller, enforceable against each Seller in
accordance with its terms and conditions, except that (A) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.

(ii) The only votes of Edisto Stockholders
required to adopt the Agreement and approve Merger 1 are the
affirmative vote of the holders of a majority of Edisto Common Stock
pursuant to Section 216 of the DGCL, Edisto's Restated Certificate of
Incorporation, as amended, and Section 5 of Edisto's By-laws,
represented in person or by proxy, at a stockholder meeting called by
Edisto for the purpose of considering and voting upon the Agreement
and Merger 1 or by written consent in lieu of a meeting pursuant to
Section 228 of the DGCL and in accordance with Edisto's Restated
Certificate of Incorporation, as amended; the only votes of Convest
Stockholders required to adopt the Agreement and approve Merger 2 are
the affirmative vote of the holders of two-thirds of the outstanding
shares of Convest Common Stock pursuant to Article XII.A. of

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Convest's Articles of Incorporation and Article 5.03 of the TBCA,
represented in person or by proxy, at a stockholder meeting called by
Convest for the purpose of considering and voting upon the Agreement
and Merger 2 or by written consent in lieu of a meeting pursuant to
Article XII.B. of Convest's Articles of Incorporation and Article
9.10.A. of the TBCA (collectively, the "Requisite Stockholder
Approvals"). The Convest Stockholders will not have any appraisal or
dissenter's rights under the TBCA as a result of the transactions
contemplated by this Agreement.

(d) Non-Contravention. The execution and delivery of
this Agreement by each Seller do not violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result
in the termination of, or accelerate the performance required by, or result in
a right of termination or acceleration under, or result in the creation of any
lien, security interest, charge, encumbrance or preferential right to purchase
upon any of the properties or assets of either Seller or any of its respective
Subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or by-laws of either Seller or any of its respective
Subsidiaries, (ii) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any court or governmental
authority applicable to either Seller or any of its respective Subsidiaries or
any of their respective properties or assets or (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which either
Seller or any of its respective Subsidiaries is now a party or by which either
Seller or any of its respective Subsidiaries or any of their respective
properties or assets may be bound or affected. The consummation by the Sellers
of the transactions contemplated hereby will not result in any violation,
conflict, breach, termination, acceleration or creation of liens or
preferential right to purchase under any of the terms, conditions or provisions
described in clauses (i) through (iii) of the preceding sentence, subject (x)
in the case of the terms, conditions or provisions described in clause (ii)
above, to obtaining (prior to the Merger 1 Effective Time) the Requisite
Stockholder Approvals and (y) in the case of the terms, conditions or
provisions described in clause (iii) above, to obtaining (prior to the Merger 1
Effective Time) consents required from commercial lenders, lessors or other
third parties as specified on the Sellers Disclosure Schedule. Excluded from
the foregoing sentences of this paragraph (d), insofar as they apply to the
terms, conditions or provisions described in clauses (ii) and (iii) of the
first sentence of this paragraph (d), are such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of liens, security
interests, charges or encumbrances that would not, in the aggregate, have a
Material Adverse Effect.

(e) Approvals. Except for (i) the filing of the Joint
Proxy Statement/Prospectus with the SEC pursuant to the Exchange Act and the
Securities Act, and the declaration of the effectiveness thereof by the SEC and
any filings with various state blue sky authorities and, (ii) the making of the
Merger Filings with the Secretaries of State of the States of Delaware and
Texas in connection with the Mergers (the filings and approvals referred to in
clauses (i) and (ii) are collectively referred to as the "Sellers Required
Statutory Approvals"), no declaration, filing or registration with, or notice
to, or authorization, consent or approval of, any governmental or regulatory
body or authority is necessary for the execution and delivery of this Agreement
by either Seller or the consummation by either Seller of the transactions
contemplated hereby, including pursuant to the HSR Act, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not, in the
aggregate, have a Material Adverse Effect.

(f) Reports and Financial Statements. Each Seller has
filed with the SEC all forms, statements, reports and documents (including all
exhibits, post-effective amendments and supplements

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thereto) required to be filed by it under each of the Securities Act, the
Exchange Act and the respective rules and regulations thereunder, all of which,
as amended if applicable, complied when filed in all material respects with all
applicable requirements of the appropriate act and the rules and regulations
thereunder. Each Seller has previously delivered to Parent copies (including
all exhibits, post-effective amendments and supplements thereto) of its (a)
Annual Reports on Form 10-K for the fiscal year ended December 31, 1996 and for
the two immediately preceding fiscal years, as filed with the SEC, (b) proxy
and information statements relating to (i) all meetings of its stockholders
(whether annual or special) and (ii) actions by written consent in lieu of a
stockholders' meeting from January 1, 1994, until the date hereof, and (c) all
other reports and registration statements filed by each Seller with the SEC
since January 1, 1994 (the documents referred to in clauses (a), (b) and (c)
filed prior to the date hereof are collectively referred to as the "Sellers SEC
Reports"). The Sellers SEC Reports are identified on the Sellers Disclosure
Schedule. As of their respective dates, the Sellers SEC Reports did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The audited consolidated financial statements and unaudited interim
consolidated financial statements of each Seller included in such reports
(collectively, the "Sellers Financial Statements") have been prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the financial position of
each Seller and their respective Subsidiaries as of the dates thereof and the
results of their operations and changes in financial position for the periods
then ended, subject, in the case of the unaudited interim financial statements,
to normal year-end and audit adjustments and any other adjustments described
therein.

(g) Absence of Undisclosed Liabilities. Except as
disclosed in the Sellers SEC Reports or the Sellers Disclosure Schedule,
neither Seller nor any of their respective Subsidiaries had at December 31,
1996, or has incurred since that date, any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of any nature, except liabilities,
obligations or contingencies which: (i) are accrued or reserved against in the
Sellers Financial Statements or reflected in the notes thereto, (ii) would not,
in the aggregate, have a Material Adverse Effect, (iii) have been discharged or
paid in full prior to the date hereof, or (iv) are of a nature not required to
be reflected in the consolidated financial statements of either Seller and
their respective Subsidiaries prepared in accordance with GAAP consistently
applied and which were incurred in the Ordinary Course of Business.

(h) Absence of Certain Changes or Events. Since the date
of the most recent Sellers SEC Report for each Seller that contains
consolidated financial statements of such Seller, there has not been any
Material Adverse Change.

(i) Litigation. Except as disclosed in the Sellers SEC
Reports or in the Sellers Disclosure Schedule, there are no claims, suits,
actions or proceedings pending or, to the knowledge of either Seller,
threatened against, relating to or affecting either Seller or any of its
respective Subsidiaries, before any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator that seek to restrain
or enjoin the consummation of any of the Mergers or which if decided adversely
to either Seller or its respective Subsidiary could, either alone or in the
aggregate with all such claims, actions or proceedings, have a Material Adverse
Effect. Except as set forth in the Sellers SEC Reports, neither Seller nor any
of its Subsidiaries is subject to any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator which prohibits or restricts the
consummation of the transactions contemplated hereby or which if decided
adversely to either

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Seller or its respective Subsidiary could, either individually or in the
aggregate, have a Material Adverse Effect.

(j) Registration Statement and Information Statement.
None of the information to be supplied by either Seller or its Subsidiaries for
inclusion in (a) the Registration Statement on Form S-4 to be filed under the
Securities Act with the SEC by Parent in connection with the Mergers for the
purpose of registering the shares of Parent Common Stock to be issued in the
Mergers (the "Registration Statement") or (b) the proxy statements to be
distributed in connection with the approval of this Agreement and the
transactions contemplated hereby by the stockholders of the respective Sellers
(the "Proxy Statements" and, together with the prospectus included in the
Registration Statement, the "Joint Proxy Statements/Prospectus") will, in the
case of the Proxy Statement or any amendments thereof or supplements thereto,
at the time of the mailing of the Proxy Statement and any amendments or
supplements thereto, and at the time of any action by the stockholders of the
respective Sellers in connection with the transactions contemplated by this
Agreement, or, in the case of the Registration Statement, as amended or
supplemented, at the time it becomes effective and at the time of such action
by the stockholders of the respective Sellers, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading. The Joint Proxy
Statements/Prospectus will, as of its mailing date, comply as to form in all
material respects with all applicable laws, including the provisions of the
Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation is made by either Seller with respect
to information supplied by any Purchaser for inclusion therein.

(k) No Violation of Law. Except as disclosed in the
Sellers SEC Reports or in the Sellers Disclosure Schedule, neither Seller nor
any of its respective Subsidiaries is in violation of, or has been given notice
or been charged with any violation of, any law, statute, order, rule,
regulation, ordinance, or judgment (including, without limitation, any
applicable environmental law, ordinance or regulation) of any governmental or
regulatory body or authority, except for violations which, in the aggregate,
could not have a Material Adverse Effect. Except as disclosed in the Sellers
SEC Reports or in the Sellers Disclosure Schedule, as of the date of this
Agreement, to the knowledge of either Seller, no investigation or review by any
governmental or regulatory body or authority is pending or threatened, nor has
any governmental or regulatory body or authority indicated an intention to
conduct the same, other than, in each case, those the outcome of which, either
individually or in the aggregate, will not have a Material Adverse Effect.
Each Seller and its respective Subsidiaries has all permits, licenses,
franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to conduct its businesses as
presently conducted (collectively, the "Sellers Permits"), except for permits,
licenses, franchises, variances, exemptions, orders, authorizations, consents
and approvals the absence of which, alone or in the aggregate, would not have a
Material Adverse Effect. Each Seller and its respective Subsidiaries is not in
violation of the terms of any Sellers Permit, except for delays in filing
reports or violations which, alone or in the aggregate, would not have a
Material Adverse Effect.

(l) Compliance with Agreements. Except as disclosed in
the Sellers SEC Reports, neither Seller nor any of its respective Subsidiaries
is in breach or violation of or in default in the performance or observance of
any term or provision of, and no event has occurred which, with lapse of time
or action by a third party, could result in a default under (i) the respective
charter, by-laws or other similar organizational instruments of either Seller
or any of its Subsidiaries or (ii) any contract, commitment, agreement,
indenture, mortgage, loan agreement, note, lease, bond, license, approval or
other instrument to which either Seller or any of its Subsidiaries is a party
or by which any of them is bound or to which any of

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their property is subject, other than, in the case of clause (ii) of this
paragraph (l), breaches, violations and defaults which would not have, either
individually or in the aggregate, a Material Adverse Effect.

(m) Taxes.

(i) Each Seller and its respective Subsidiaries
have (A) duly filed with the appropriate governmental authorities all
Tax Returns required to be filed by them for all periods ending on or
prior to the Merger 1 Effective Time, other than those Tax Returns the
failure of which to file would not, either individually or in the
aggregate, have a Material Adverse Effect, and such Tax Returns are
true, correct and complete in all material respects and (B) duly paid
in full or made adequate provision for the payment of all Taxes for
all past and current periods, except for those Taxes, the failure to
have paid would not, either individually or in the aggregate, have a
Material Adverse Effect. The liabilities and reserves for Taxes
reflected in each Seller's balance sheet included in such Seller's
latest Sellers SEC Reports are adequate to cover all Taxes for all
periods ending at or prior to the date of such balance sheet and there
is no liability for Taxes for any period beginning after such date
other than Taxes arising in the Ordinary Course of Business. There
are no material liens for Taxes upon any property or assets of either
Seller or any Subsidiary thereof, except for liens for Taxes not yet
due. Except as set forth on the Sellers Disclosure Schedule, neither
Seller nor its respective Subsidiaries has received notice of an audit
from any taxation authority There are no unresolved issues of law or
fact arising out of a notice of deficiency, proposed deficiency or
assessment from the IRS or any other governmental taxing authority
with respect to Taxes of either Seller or any of its Subsidiaries
which, if decided adversely, singly or in the aggregate, would have a
Material Adverse Effect. Neither Seller nor its respective
Subsidiaries has waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a Tax assessment or
deficiency other than waivers and extensions which are no longer in
effect. Neither Seller nor any of its respective Subsidiaries is a
party to any agreement providing for the allocation or sharing of
Taxes with any entity that is not, directly or indirectly, a wholly
owned corporate Subsidiary of such Seller other than agreements the
consequences of which are fully and adequately reserved for in the
Sellers Financial Statements. Neither Seller nor any of its
respective corporate Subsidiaries has, with regard to any assets or
property held, acquired or to be acquired by any of them, filed a
consent to the application of Section 341(f) of the Code.

(ii) For purposes of this Agreement, the term
"Taxes" shall mean all taxes, including, without limitation, income,
gross receipts, excise, property, sales, withholding, social security,
occupation, use, service, license, payroll, franchise, transfer and
recording taxes, fees and charges, windfall profits, severance,
customs, import, export, employment or similar taxes, charges, fees,
levies or other assessments imposed by the United States, or any
state, local or foreign government or subdivision or agency thereof,
whether computed on a separate, consolidated, unitary, combined or any
other basis, and such term shall include any interest, fines,
penalties or additional amounts and any interest in respect of any
additions, fines or penalties attributable or imposed or with respect
to any such taxes, charges, fees, levies or other assessments.

(iii) For purposes of this Agreement, the term "Tax
Return" shall mean any return, report or other document or information
required to be supplied to a taxing authority in connection with
Taxes.

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(n) Employee Benefit Plans; ERISA.

(i) Except as disclosed in the Sellers SEC
Reports or Sellers Disclosure Schedule, at the date hereof, Sellers
and their Subsidiaries do not maintain or contribute to or have any
obligation or liability to or with respect to any material employee
benefit plans, including employee benefit plans within the meaning set
forth in Section 3(3) of ERISA, programs, arrangements, practices or
other similar material arrangements for the provision of benefits
(such plans, programs, arrangements or practices of Sellers and their
Subsidiaries being referred to as the "Sellers Plans"), but excluding
any "Multiemployer Plan" within the meaning of Section 3(37) of ERISA
or a "Multiple Employer Plan" within the meaning of Section 413(c) of
the Code. The Sellers Disclosure Schedule lists all Multiemployer
Plans to which any of them makes contributions or has any obligation
or liability to make contributions. Neither Seller nor any of its
respective Subsidiaries maintains or has any liability with respect to
any Multiple Employer Plan, which, individually or in the aggregate,
could have a Material Adverse Effect. Neither Seller nor any of its
respective Subsidiaries has any obligation to create or contribute to
any additional such plan, program, arrangement or practice or to amend
any such plan, program, arrangement or practice so as to increase
benefits or contributions thereunder, except as required under the
terms of the Sellers Plans or to comply with applicable law.

(ii) Except as disclosed in the Sellers SEC
Reports or Sellers Disclosure Schedule, (A) there have been no
prohibited transactions within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code with respect to any of the Sellers
Plans that could result in penalties, taxes or liabilities which,
singly or in the aggregate, could have a Material Adverse Effect, (B)
except for premiums due, there is no outstanding material liability,
whether measured alone or in the aggregate, under Title IV of ERISA
with respect to any of the Sellers Plans, (C) neither the Pension
Benefit Guaranty Corporation nor any plan administrator has instituted
proceedings to terminate any of the Sellers Plans subject to Title IV
of ERISA other than in a "standard termination" described in Section
4041(b) of ERISA, (D) none of the Sellers Plans has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA
and Section 412 of the Code), whether or not waived, as of the last
day of the most recent fiscal year of each of the Sellers Plans ended
prior to the date of this Agreement, (E) the current present value of
all projected benefit obligations under each of the Sellers Plans
which is subject to Title IV of ERISA did not, as of its latest
valuation date, exceed the then current value of the assets of such
plan allocable to such benefit liabilities by more than the amount, if
any, disclosed in the Sellers SEC Reports as of March 31, 1997, based
upon reasonable actuarial assumptions currently utilized for such
Sellers Plan, (F) each of the Sellers Plans has been operated and
administered in all material respects in accordance with applicable
laws during the period of time covered by the applicable statute of
limitations, (G) each of the Sellers Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has been
determined by the IRS to be so qualified and such determination has
not been modified, revoked or limited by failure to satisfy any
condition thereof or by a subsequent amendment thereto or a failure to
amend, except that it may be necessary to make additional amendments
retroactively to maintain the "qualified" status of such Sellers
Plans, and the period for making any such necessary retroactive
amendments has not expired, (H) with respect to Multiemployer Plans,
neither Seller nor any of its respective Subsidiaries has made or
suffered a "complete withdrawal" or a "partial withdrawal," as such
terms are respectively defined in Sections 4203, 4204 and 4205 of
ERISA and, to the best knowledge of each Seller and its respective
Subsidiaries, no event has occurred or is expected to occur which
presents a material risk of a

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<PAGE> 201
complete or partial withdrawal under said Sections 4203, 4204 and
4205, (I) to the best knowledge of each Seller and its respective
Subsidiaries, there are no material pending, threatened or anticipated
claims involving any of the Sellers Plans other than claims for
benefits in the ordinary course, (J) each Seller and its respective
Subsidiaries have no current material liability under Title IV of
ERISA, and each Seller and its respective Subsidiaries do not
reasonably anticipate that any such liability will be asserted against
either Seller or any of its Subsidiaries, and (K) no act, omission or
transaction (individually or in the aggregate) has occurred with
respect to any Sellers Plan that has resulted or could result in any
material liability (direct or indirect) of either Seller or any
respective Subsidiary under Sections 409 or 502(c)(i) or (l) of ERISA
or Chapter 43 of Subtitle (A) of the Code. None of the Sellers Plans
has an "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code) or is required to provide security
to a Sellers Plan pursuant to Section 401(a)(29) of the Code. Each
Sellers Plan can be unilaterally terminated by a Seller or a
Subsidiary at any time without material liability, other than for
amounts previously reflected in the financial statements (or notes
thereto) included in the Sellers SEC Reports.

(iii) The Sellers SEC Reports or the Sellers
Disclosure Schedule contain a true and complete summary or list of or
otherwise describe all material employment contracts and other
employee benefit arrangements with "change of control" or similar
provisions and all severance agreements with executive officers
(including, in each case, the amount of any payments which may be due
as a result of the transactions contemplated by this Agreement).
Section 5(n)(iii) of the Sellers Disclosure Schedule sets forth in
reasonable detail all severance pay, vacation pay, stay bonuses or
other payments arising out of or otherwise relating or due to the
termination or resignation of any officers, directors or employees of
either Seller or their Subsidiaries or otherwise arising out of or
relating or due to the transactions contemplated by this Agreement.
Any payments described in the foregoing sentence have been approved by
all necessary corporate action by the Board of Directors of each
Seller.

(iv) Except as set forth in the Sellers Disclosure
Schedule, there are no agreements which will or may provide payments
to any officer, employee, stockholder, or highly compensated
individual which will be "parachute payments" under Code Section 280G
that are nondeductible to the Sellers or subject to tax under Code
Section 4999 for which a Seller or any ERISA Affiliate would have
withholding liability.

(o) Labor Controversies. Except as disclosed in the
Sellers SEC Reports, (i) there are no significant controversies pending or, to
the knowledge of either Seller, threatened between either Seller or its
Subsidiaries and any representatives of any of their employees and (ii) to the
knowledge of either Seller, there are no material organizational efforts
presently being made involving any of the presently unorganized employees of
either Seller and its Subsidiaries except for such controversies and
organizational efforts which, singly or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.

(p) Environmental Matters.

(i) Except as disclosed in the Sellers SEC
Reports or the Sellers Disclosure Schedule, (A) each Seller and its
respective Subsidiaries have conducted their respective businesses in
compliance with all applicable Environmental Laws, including, without
limitation, having all permits, licenses and other approvals and
authorizations necessary for the operation of their respective
businesses as presently conducted, (B) none of the properties owned by
either Seller or

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<PAGE> 202
any of its respective Subsidiaries contain any Hazardous Substance as
a result of any activity of either Seller or any of its respective
Subsidiaries in amounts exceeding the levels permitted by applicable
Environmental Laws, (C) neither Seller nor any of its respective
Subsidiaries has received any notices, demand letters or requests for
information from any Federal, state, local or foreign governmental
entity or third party indicating that either Seller or any of its
respective Subsidiaries may be in violation of, or liable under, any
Environmental Law in connection with the ownership or operation of
their businesses, (D) there are no civil, criminal or administrative
actions, suits, demands, claims, hearings, investigations or
proceedings pending or threatened, against either Seller or any of its
respective Subsidiaries relating to any violation, or alleged
violation, of any Environmental Law, (E) no reports have been filed,
or are required to be filed, by either Seller or any of its respective
Subsidiaries concerning the release of any Hazardous Substance or the
threatened or actual violation of any Environmental Law, (F) no
Hazardous Substance has been disposed of, released or transported in
violation of any applicable Environmental Law from any properties
owned by either Seller or any of its respective Subsidiaries as a
result of any activity of either Seller or any of its respective
Subsidiaries during the time such properties were owned, leased or
operated by either Seller or any of its respective Subsidiaries, (G)
there have been no environmental investigations, studies, audits,
tests, reviews by or which are in the possession of either Seller or
its respective Subsidiaries relating to the activities of a Seller or
its respective Subsidiaries which have not been delivered to Parent
prior to the date hereof, (H) there are no underground storage tanks
on, in or under any properties owned by either Seller or any of its
respective Subsidiaries and no underground storage tanks have been
closed or removed from any of such properties during the time such
properties were owned, leased or operated by either Seller or any of
its respective Subsidiaries, (I) there is no asbestos or asbestos
containing material present in any of the properties owned by either
Seller and its respective Subsidiaries, and no asbestos has been
removed from any of such properties during the time such properties
were owned, leased or operated by such Seller or any of its respective
Subsidiaries, and (J) neither Seller, its respective Subsidiaries nor
any of their respective properties are subject to any liabilities or
expenditures (fixed or contingent) relating to any suit, settlement,
court order, administrative order, regulatory requirement, judgment or
claim asserted or arising under any Environmental Law, except for
violations of the foregoing clauses (A) through (J) that, singly or in
the aggregate, would not reasonably be expected to have a Material
Adverse Effect.

(ii) As used herein, "Environmental Law" means any
Federal, state, local or foreign law, statute, ordinance, rule,
regulation, code, license, permit, authorization, approval, consent,
legal doctrine, order, judgment, decree, injunction, requirement or
agreement with any governmental entity relating to (x) the protection,
preservation or restoration of the environment (including, without
limitation, air, water vapor, surface water, groundwater, drinking
water supply, surface land, subsurface land, plant and animal life or
any other natural resource) or to human health or safety or (y) the
exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or
disposal of Hazardous Substances, in each case as amended and as in
effect on the Closing Date. The term "Environmental Law" includes,
without limitation, (A) the Federal Comprehensive Environmental
Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Air Act, the Federal Clean
Water Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the
Federal Solid Waste Disposal Act and the Federal Toxic Substances
Control Act, the Federal Insecticide, Fungicide and Rodenticide Act,
and the Federal Occupational Safety and Health

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Act of 1970, each as amended and as in effect on the Closing Date, and
(B) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result
of, the presence of, effects of or exposure to any Hazardous
Substance.

(iii) As used herein, "Hazardous Substance" means
any substance presently or hereafter listed, defined, designated or
classified as hazardous, toxic, radioactive, or dangerous, or
otherwise regulated, under any Environmental Law. Hazardous Substance
includes any substance to which exposure is regulated by any
government authority or any Environmental Law including, without
limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial
substance or petroleum or any derivative or by-product thereof, radon,
radioactive material, asbestos, or asbestos containing material, urea
formaldehyde foam insulation, lead or polychlorinated biphenyls.

(q) Non-competition Agreements. Except as disclosed in
the Sellers Disclosure Schedule, neither Seller nor any respective Subsidiary
thereof is a party to any agreement which purports to restrict or prohibit in
any material respect any of them from, directly or indirectly, engaging in any
material business currently engaged in by either Seller or Parent, or any
corporations affiliated with either of them. None of the Sellers' officers,
directors or key employees is a party to any agreement which, by virtue of such
person's relationship with a Seller, restricts in any material respect either
Seller or any respective Subsidiary thereof from, directly or indirectly,
engaging in any of the businesses described above.

(r) Reserve Report and Exploration Project Information.

(i) The Sellers have made available to the
Purchasers certain reports dated February 25, 1997 prepared by the
independent petroleum engineering firm of Ryder Scott Company (with
respect to offshore properties of Convest as of December 31, 1996) and
dated February 24, 1997 by the independent petroleum engineering firm
of Netherland Sewell & Associates, Inc. (with respect to onshore
properties of Convest as of January 1, 1997), true and correct copies
of which have been previously provided to the Parent (together, the
"Sellers Reserve Reports"). The Sellers Reserve Reports are the
latest reserve reports available to the Sellers relating to their and
their Subsidiaries' reserves of oil and gas. The oil and gas
properties evaluated in the Sellers Reserve Reports are referred to
herein as the "Sellers Evaluated Properties." The Sellers have
provided no false or misleading information to and have not withheld
any material information from Ryder Scott Company or Netherland Sewell
and Associates, with respect to the preparation of the Sellers Reserve
Reports
.
(ii) Except as set forth on Sellers Disclosure
Schedule, the Sellers are not aware of any facts or circumstances that
should reasonably cause the Sellers to conclude that any of the
information that was supplied by the Sellers to Ryder Scott Company or
Netherland Sewell and Associates, in connection with their preparation
of the Sellers Reserve Reports is not currently correct in all
material respects (other than normal depletion by production in the
ordinary course), and to the Sellers' knowledge the information
utilized in preparing the Sellers Reserve Reports is correct in all
material respects.

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(iii) The Sellers have made available to Parent
certain information (the "Sellers Project Information") with respect
to exploration projects in which the Sellers are currently engaged
(the "Sellers Projects"), which information and Sellers Projects are
set forth on the Sellers Disclosure Schedule. The Sellers Project
Information provided by the Sellers does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements contained therein not misleading.

(s) Title.

(i) The leasehold, royalty, mineral and similar
interests owned by each Seller and their respective Subsidiaries
entitle it to receive not less than the interest set forth in the
Sellers Reserve Reports as the Net Revenue Interest from all oil and
gas and associated minerals produced, saved and marketed in respect of
each Sellers Evaluated Property listed in the Sellers Reserve Reports,
and obligate it to bear costs and expenses relating to the maintenance
and development of, and the operations with respect to, each such
Sellers Evaluated Property in an amount not greater than the Working
Interest set forth in the Sellers Reserve Reports (unless there is a
corresponding increase in the Net Revenue Interest), except for such
deficiencies which, individually or in the aggregate, would not have a
Material Adverse Effect. Except as noted in the Sellers Reserve
Reports, the Net Revenue Interest and the Working Interest with
respect to each such Sellers Evaluated Property are not subject to
change or adjustment upon the occurrence of payout or any similar or
other event.

(ii) The Sellers and their Subsidiaries have, and
on the Closing Date will have, good and valid title to all of their
leasehold, royalty, mineral and similar interests in the Sellers
Evaluated Properties, other than the properties disposed of since
January 1, 1997 as disclosed on the Sellers Disclosure Schedule or
since the date hereof with the written consent of the Parent, free and
clear of all encumbrances and title defects except for (A) the
encumbrances and title defects specifically described in the Sellers
Disclosure Schedule, (B) statutory liens not yet delinquent, (C)
imperfections of title, easements, liens (including operator's liens)
and encumbrances, the character, amount or extent of which,
individually or in the aggregate, would not have a Material Adverse
Effect, (D) contracts and agreements for the sale of oil and gas
entered into in the Ordinary Course of Business, (E) lessor's
royalties, overriding royalties, and division orders, reversionary
interests and similar burdens and all existing operating agreements
and unit agreements, if the net cumulative effect of the same does not
operate to reduce the Net Revenue Interests of the Sellers Evaluated
Properties to less than the Net Revenue Interests set forth in the
Sellers Reserve Report or increase the Working Interests of the
Sellers Evaluated Properties to more than the Working Interests set
forth in the Sellers Reserve Report (unless there is a corresponding
increase in the Net Revenue Interests); (F) any and all federal and
state regulatory orders and rules to which the Sellers Evaluated
Properties are presently subject; (G) preferential rights to purchase
and required third-party consents to assignments and similar
agreements (none of which arise or are required in connection with the
transactions contemplated by this Agreement); (H) liens for Taxes not
due or not delinquent at the time of Closing or the validity of which
are being contested in good faith by appropriate actions; (I) all
rights to consent by, required notices to, filings with, or other
actions by governmental entities in connection with the sale or
conveyance of oil, gas and mineral leases or interests therein if the
same are customarily obtained after such sale or conveyance; (J)
easements, rights-of-way, servitudes, permits, surface leases and
other rights in respect of surface operations, pipelines, grazing,
logging, canals, ditches, reservoirs or the like; and easements for
streets, alleys, highways,

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pipelines, telephone lines, power lines, railways and other easements
and rights-of-way, on, over or in respect of any of the Sellers
Evaluated Properties; (K) liens of operators relating to obligations
not yet due or not delinquent; and (L) title deficiencies commonly
encountered in the oil and gas business which would not be considered
material by a reasonable and prudent person engaged in the business of
the ownership, development and operating of oil and gas properties
with knowledge of all the facts and appreciation of their legal
significance.

(iii) Except where the failure would not have a
Material Adverse Effect, (A) neither Seller nor its respective
Subsidiaries are dependent with respect to the Sellers Evaluated
Properties on the right to use the properties of others, except under
valid and enforceable leases, contracts, pooling or unitization
agreements, rights or other arrangements, (B) the Sellers and their
respective Subsidiaries own, or have the right to use under valid and
enforceable leases, contracts, rights or other arrangements, all gas
processing facilities necessary for the current operations of the
Sellers and their respective Subsidiaries, (C) all buildings,
machinery and equipment currently used in the operations related to
the Sellers Evaluated Properties are adequate for their normal
operation consistent with industry practice, are in good working order
and conform with all applicable Environmental Laws and (D) there is no
pending or threatened condemnation or expropriation of any part of the
Sellers Evaluated Properties.

(iv) Except where the failure would not have a
Material Adverse Effect, the Sellers Evaluated Properties are being
developed, operated and maintained in compliance in all material
respects with all leases, contracts and commitments to which either
Seller or any respective Subsidiary is a party or by which either
Seller or any respective Subsidiary or any of the Sellers Evaluated
Properties is bound.

(v) The Sellers and the Subsidiaries have good
and valid title to all the properties and assets of every kind,
character and description (real, personal or mixed, tangible and
intangible), including, without limitation, all parcels of real
property, pipelines, rights-of-way and easements and other incidental
rights and permits, but excluding the Sellers Evaluated Properties,
reflected in the Sellers Financial Statements or which would have been
reflected in the Sellers Financial Statements if acquired prior to
March 31, 1997, (the "Sellers Assets") free and clear of all
encumbrances of any nature except for (A) the encumbrances and title
defects specifically described in the Sellers Disclosure Schedule; (B)
mortgages and encumbrances which secure indebtedness or obligations
which are properly reflected in the Sellers Financial Statements; (C)
liens for Taxes not yet payable or any Taxes being contested in good
faith; (D) liens arising as a matter of law in the ordinary course of
business, provided that the obligations secured by such liens are not
delinquent or are being contested in good faith; (E) such
imperfections of title and encumbrances which, individually or in the
aggregate, would not have a Material Adverse Effect; (F) any and all
federal and state regulatory orders and rules to which the Sellers
Assets are presently subject; (G) preferential rights to purchase and
required third-party consents to assignments and similar agreements,
none of which arise or are required in connection with the
transactions contemplated by this Agreement; (H) statutory liens not
yet delinquent; (I) all rights to consent by, required notices to,
filings with, or other actions by governmental entities in connection
with the sale or conveyance of oil, gas and mineral leases or
interests therein if the same are customarily obtained after such sale
or conveyance; (J) easements, rights-of-way, servitude, permits,
surface leases and other rights in respect of surface operations,
pipelines, grazing, logging, canals, ditches, reservoirs or the like;
and easements for streets, alleys, highways, pipelines, telephone
lines, power lines, railways and other

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<PAGE> 206
easements and rights-of-way, on, over or in respect of any of the
Sellers Assets; (K) liens of operators relating to obligations not yet
due or not delinquent; and (L) title deficiencies commonly encountered
in the oil and gas business which will not have a Material Adverse
Effect. The Sellers and the Subsidiaries have valid leasehold
interests in all leases reflected as capital leases in the Sellers
Financial Statements and, to the knowledge of the Sellers, generally
have the right to use all other property and assets as to which they
do not have title but which are currently being used in the conduct of
each Seller's business, except any rights of use the loss of which
would not have a Material Adverse Effect.

(t) Insurance. The Sellers Disclosure Schedule lists all
material insurance policies covering the Sellers Assets, the Sellers Evaluated
Properties, employees and operations of the Sellers and their respective
Subsidiaries as of the date hereof (other than insurance owned or held by
operators for those Sellers Assets or Sellers Evaluated Properties where a
party other than a Seller or one of its Subsidiaries is the operator). Such
policies are in full force and effect, there are no defaults thereunder.
Except for claims previously made, to the knowledge of either Seller or its
respective Subsidiaries, there is no basis for any action or claim nor any
facts which would reasonably be anticipated to give rise to such action or
claim. To the knowledge of either Seller or its respective Subsidiaries, there
does not exist any event that, with the giving of notice or the lapse of time
or both, would constitute such a default. Neither Seller nor any of its
respective Subsidiaries is a co-insurer under any such policies of insurance
except to the extent of the amount of the deductible, self-retention or similar
amounts applicable to such policies.

(u) Allowable Production Quotas. To the knowledge of
either Seller, no production from any of the Sellers Evaluated Properties prior
to the date hereof was in excess of allowable production quotas allowed or
permitted by any governmental body having jurisdiction thereover so as to
subject any production from such Sellers Evaluated Property on or after the
date hereof to restrictions or penalties except as will not have a Material
Adverse Effect.

(v) Gas Payments; Balancing. (i) There are no material
claims asserted or material disputes evidenced in writing under any contract to
which either Seller or any Subsidiary thereof is a party regarding payments for
natural gas not taken pursuant to any "take or pay" or similar arrangement;
(ii) the Sellers and their respective Subsidiaries have not received any
material quantity of natural gas or liquids to be paid for thereafter other
than in the normal cycle of billing or received prepayments, advance payments
or loans which will require a Seller or any of its respective Subsidiaries to
perform services or deliver hydrocarbons under such contracts on or after the
Closing Date without being currently paid therefor; (iii) no sales contract
obligates either Seller or any Subsidiary thereof to deliver specific minimum
volumes of gas; (iv) no contract obligates either Seller or any Subsidiary
thereof to sell gas at prices substantially lower than the prevailing market
prices or to purchase gas at prices substantially higher than prevailing market
prices; (v) the Sellers and their respective Subsidiaries have made or will,
prior to the Closing Date, make all payments due to producers or others for all
gas and liquids delivered into any of their respective plants for which payment
for same is due prior to the Closing Date, including, without limitation, all
payments due for the purchase of gas and liquids under any contract; (vi) to
the knowledge of either Seller or any of its respective Subsidiaries, all gas
delivered into any of the plants has been purchased, and all residue gas from
the plants has been sold, in compliance with the Natural Gas Policy Act of
1978, all orders, rules and regulations of the Federal Energy Regulatory
Commission and all other applicable laws, orders, rules and regulations; (vii)
to the knowledge of either Seller or any of its respective Subsidiaries, there
exists no material claim or dispute with respect to the purchase, or the
failure to purchase, or pay for whether or not purchased, gas under any gas
purchase contracts to which either Seller or any Subsidiary thereof is a party

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or the applicable price to be paid for gas delivered, or residue gas or liquids
or products sold from the plants; and (viii) none of the Sellers Evaluated
Properties or the Sellers Assets is subject to requirements to make Btu
adjustments or affect gas or liquids balancing in favor of third parties which
would result in either Seller or any Subsidiary thereof being required to
deliver material volumes of gas or liquids after the Closing Date or otherwise
to compensate a third party for gas or liquids receipts into, or deliveries
from, the plants which occurred prior to the Closing Date. The Sellers
Disclosure Schedule sets forth an estimate of the amount of any net imbalances
and is within ten percent (10%) of the actual amount.

(w) No Prepayments Made or Refunds Owed. Sellers and
their respective Subsidiaries have not received any prepayment, advance
payment, deposits or similar payments, and have no refund obligation, other
than obligations in the aggregate of less than $250,000 incurred in the
Ordinary Course of Business, with respect to any gas or products purchased,
sold, gathered, processed or marketed through their plants. The Sellers and
their respective Subsidiaries have not received any compensation for gathering
or processing services relating to the plants which would be subject to any
refund or create any repayment obligation, other than obligations of less than
$250,000 incurred in the Ordinary Course of Business, either by or to the
Sellers and their respective Subsidiaries, and the Sellers and their respective
Subsidiaries are not aware of any basis for a claim that a refund is due.

(x) Drilling Obligations. The Sellers and their
respective Subsidiaries do not have any material drilling obligations or other
development commitments that are not terminable at will by the Seller or the
Subsidiary party thereto without penalty, other than commitments and
obligations that arose in the Ordinary Course of Business where the sole
consequence to the Seller or the Subsidiary party thereto for a failure to
participate is to suffer a "non-consent" penalty or forfeit an interest in the
undeveloped lands subject to the commitment or obligation.

(y) Development Operations. To the knowledge of either
Seller or its respective Subsidiaries, there are in existence no facts or
circumstances that should reasonably cause a Seller or a Subsidiary to conclude
that any development operations on the Sellers Evaluated Properties that are
contemplated by the Sellers Reserve Report will not be permitted under
applicable laws and governmental rules and regulations or that any third party
may have a reasonable basis to cause any court or governmental agency with
jurisdiction over such operations to cause the suspension or termination of
such operations.

(z) Regulatory Authority. As of the date hereof, neither
Seller nor any of its respective Subsidiaries is subject to regulation as (a) a
"holding company," an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company" or a "public utility," as each of such terms is
defined in the Public Utility Holding Company Act of 1935, as amended, and the
rules and regulations thereunder; (b) a gas utility or utility under applicable
state law; and (c) an "investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.

(aa) Full Disclosure. To the knowledge of either Seller,
the representations, warranties or other statements by the Sellers in this
Agreement or in the Sellers Disclosure Schedule or Exhibits hereto or any
documents distributed generally to the Edisto Stockholders or the Convest
Stockholders, taken as a whole, do not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained therein not misleading. There is, to the knowledge of either Seller,
no fact pertaining particularly to Sellers Evaluated Properties or the Sellers
Assets (as opposed to public information concerning general industry or
economic conditions or governmental policies) which has a Material Adverse
Effect on or in the future would be reasonably expected to have a Material
Adverse Effect on the Sellers

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Evaluated Properties or the Sellers Assets or the ownership, operation or
maintenance of any of the Sellers Evaluated Properties or the Sellers Assets
that has not been disclosed to the Purchaser.

(bb) Certain Agreements. There are no contracts,
agreements, arrangements or understandings to which either Seller or any of
their Subsidiaries is a party which create, govern or purport to govern the
right of another party (other than Purchasers) to acquire either Seller or any
of their Subsidiaries.

(cc) Shareholders Agreement. Set forth on the Form 10-K/A
of each Seller, as filed with the SEC on April 30, 1997, is a list of the
officers, directors and owners of 5% or more of the capital stock of the
respective Sellers. Edisto has obtained from The TCW Group, Inc. and its
affiliates and delivered to Parent (i) a written agreement (a "Shareholders
Agreement") to the effect that such person will vote shares of Edisto Common
Stock and Convest Common Stock beneficially owned by such person in favor of
the Mergers, and (ii) an Affiliate Agreement.

(dd) Brokers and Finders. Except for the fees and
expenses payable to Petrie Parkman and Rauscher Pierce, which fees are
reflected in their agreements with Sellers (a copy of which has been delivered
to the Parent), Sellers have not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of
either Seller to pay any finder's fees, brokerage or agent commissions or other
like payments in connection with the transactions contemplated hereby. Except
for the fees and expenses paid or payable to Petrie Parkman and to Rauscher
Pierce, there is no claim for payment by either Seller of any investment
banking fees, finder's fees, brokerage or agent commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.

(ee) Opinion of Financial Advisor. The financial advisor
of Edisto, Rauscher Pierce, has rendered a written opinion to the Board of
Directors of Edisto to the effect that the Merger 1 Consideration is fair from
a financial point of view to the Edisto Stockholders. The financial advisor of
Convest, Petrie Parkman, has rendered a written opinion to the Board of
Directors of Convest to the effect that the Merger 2 Consideration is fair from
a financial point of view to the Convest Stockholders.

(ff) Edisto Cash Balance. As of the date of this
Agreement and as of the Closing Date, Edisto will have at least $68.0 million
in cash on hand (the "Edisto Cash Balance"); provided, however, that (i) the
Edisto Cash Balance may be reduced by an amount not to exceed an aggregate of
$1,500,000 in order to effect the redemption or cancellation of any Edisto
Option prior to Merger 1 in accordance with the terms of Section 4(c)(i), and
(ii) Edisto and Convest may collectively expend an amount not to exceed an
aggregate of $2,300,000 in order to effect the severance payments set forth in
Section 5(n)(iii) of the Sellers Disclosure Schedule. The Edisto Cash Balance
is not, and at the Closing Date will not be, subject to any pledge,
encumbrance, lien or other limitation prohibiting its free use or distribution
by Edisto or its successors.

(gg) Affiliate Transactions. To Sellers knowledge there
are no transactions between (i) the Sellers or any of their Subsidiaries and
(ii) any of their Affiliates, which are required to be disclosed in the Sellers
SEC Reports which are not disclosed.

(hh) WARN. Sellers Disclosure Schedule sets forth the
total number of employees of the Sellers and their Subsidiaries and independent
contractors as determined in accordance with WARN or any similar applicable
law. The obligations of Sellers and their Subsidiaries under this Agreement,
including,

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without limitation, Section 8(d), will not give rise to any notice requirement
or payment obligation or liability under WARN on the part of Sellers or
Purchasers or their respective Subsidiaries.

(ii) Cumulative Representations. To the extent the
representations and warranties of Sellers set forth herein are modified by the
terms Material Adverse Change or Material Adverse Effect or similar terms, the
effect of the occurrence of all such effects or changes would not in the
aggregate cause a Material Adverse Change or Material Adverse Effect on Sellers
and their respective Subsidiaries taken as a whole.

SECTION 6. Representations and Warranties of Purchasers.

Except for those matters included in the Purchasers
Disclosure Schedule, which inclusion will not be deemed an admission by
Purchasers that any such matter is material or has or would have a Material
Adverse Effect or represents a Material Adverse Change, each Purchaser
represents and warrants to the Sellers as follows:

(a) Organization, Qualification, and Corporate Power.
Each of the Purchasers is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. Each of
the Purchasers is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required,
except for failures that would not have a Material Adverse Effect, and has not
received notice of an audit from any state taxation authority.

(b) Capitalization. The entire authorized capital stock
of Parent consisted of 50,000,000 shares of Parent Common Stock and 5,000,000
shares of preferred stock, of which 22,673,749 shares of Parent Common Stock
and no shares of preferred stock were issued and outstanding as of May 31,
1997. The shares of Parent Common Stock to be issued pursuant to this
Agreement will, when issued, be duly authorized, validly issued, fully paid and
nonassessable.

(c) Authorization of Transaction. Each Purchaser has
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. No other corporate
proceedings on the part of the Purchasers are necessary to authorize this
Agreement or to consummate the transactions so contemplated. The Parent, as
sole shareholder of Edisto, will take the necessary action to effect the
Dissolution immediately following the Merger 1 Effective Time. This Agreement
has been duly executed and delivered on behalf of each Purchaser and
constitutes the valid and legally binding obligation of each Purchaser,
enforceable against each Purchaser in accordance with its terms and conditions,
except that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought.

(d) Non-Contravention. Except as disclosed in the
Purchasers Disclosure Schedule, the execution and delivery of this Agreement by
each Purchaser do not violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right
of termination or acceleration under, or result in the creation of any lien,
security interest, charge, encumbrance or preferential right to purchase upon
any of the properties or assets of either Purchaser under any of the terms,
conditions or provisions of (i) the respective charters or by-laws of either
Purchaser, (ii) any

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statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority applicable to
either Purchaser or any of their respective properties or assets or (iii) any
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which either Purchaser is now a party or by which either Purchaser or
any of their respective properties or assets may be bound or affected. Except
as disclosed in the Purchasers Disclosure Schedule, the consummation by the
Purchasers of the transactions contemplated hereby will not result in any
violation, conflict, breach, termination, acceleration or creation of liens or
preferential right to purchase under any of the terms, conditions or provisions
described in clauses (i) through (iii) of the preceding sentence. Excluded
from the foregoing sentences of this paragraph (d), insofar as they apply to
the terms, conditions or provisions described in clauses (ii) and (iii) of the
first sentence of this paragraph (d), are such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of liens, security
interests, charges or encumbrances that would not, in the aggregate, have a
Material Adverse Effect.

(e) Approvals. Except for (i) the filing of the Joint
Proxy Statements/Prospectus with the SEC pursuant to the Exchange Act and the
Securities Act, and the declaration of the effectiveness thereof by the SEC and
filings with various state blue sky authorities, and (ii) the making of the
Merger Filings with the Secretaries of State of the States of Delaware and
Texas in connection with the Mergers (the filings and approvals referred to in
clauses (i) and (ii) are collectively referred to as the "Purchasers Required
Statutory Approvals"), no declaration, filing or registration with, or notice
to, or authorization, consent or approval of, any governmental or regulatory
body or authority is necessary for the execution and delivery of this Agreement
by either Purchaser or the consummation by either Purchaser of the transactions
contemplated hereby, including pursuant to the HSR Act, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not, in the
aggregate, have a Material Adverse Effect.

(f) Reports and Financial Statements. Since August 2,
1995, Parent has filed with the SEC all forms, statements, reports and
documents (including all exhibits, post-effective amendments and supplements
thereto) required to be filed by it under each of the Securities Act, the
Exchange Act and the respective rules and regulations thereunder (collectively
the "Parent SEC Reports"), all of which, as amended if applicable, complied
when filed in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder. As of their
respective dates, the Parent SEC Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim consolidated financial
statements of Parent included in such reports (collectively, the "Parent
Financial Statements") have been prepared in accordance with GAAP applied on a
consistent basis (except as may be indicated therein or in the notes thereto)
and fairly present the financial position of each Seller and their respective
Subsidiaries as of the dates thereof and the results of their operations and
changes in financial position for the periods then ended, subject, in the case
of the unaudited interim financial statements, to normal year-end and audit
adjustments and any other adjustments described therein.

(g) Absence of Undisclosed Liabilities. Except as
disclosed in the Parent SEC Reports or the Purchasers Disclosure Schedule,
neither Purchaser had at December 31, 1996, or has incurred since that date,
any liabilities or obligations (whether absolute, accrued, contingent or
otherwise) of any nature, except liabilities, obligations or contingencies
which (i) are accrued or reserved against in the Purchasers Financial
Statements or reflected in the notes thereto, (ii) would not, in the aggregate,
have a Material

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Adverse Effect, (iii) have been discharged or paid in full prior to the date
hereof, or (iv) are of a nature not required to be reflected in the
consolidated financial statements of Parent prepared in accordance with GAAP
consistently applied and which were incurred in the Ordinary Course of
Business.

(h) Absence of Certain Changes or Events. Since the date
of the most recent Parent SEC Report that contains consolidated financial
statements, there has not been any Material Adverse Change.

(i) Litigation. Except as disclosed in the Parent SEC
Reports or in the Purchasers Disclosure Schedule, there are no claims, suits,
actions or proceedings pending or, to the knowledge of either Purchaser,
threatened against, relating to or affecting either Purchaser, before any
court, governmental department, commission, agency, instrumentality or
authority, or any arbitrator that seek to restrain or enjoin the consummation
of any of the Mergers or which if decided adversely to such Purchaser could,
either alone or in the aggregate with all such claims, actions or proceedings,
have a Material Adverse Effect. Except as set forth in the Parent SEC Reports,
neither Purchaser is subject to any judgment, decree, injunction, rule or order
of any court, governmental department, commission, agency, instrumentality or
authority or any arbitrator which prohibits or restricts the consummation of
the transactions contemplated hereby or which if decided adversely to such
Purchaser could, either individually or in the aggregate, have a Material
Adverse Effect.

(j) Registration Statement and Proxy Statements. None of
the information to be supplied by either Purchaser for inclusion in (a) the
Registration Statement or (b) the Proxy Statements will, in the case of the
Proxy Statements or any amendments thereof or supplements thereto, at the time
of the mailing of the Proxy Statements and any amendments or supplements
thereto, and at the time of any action by the stockholders of the respective
Sellers in connection with the transactions contemplated by this Agreement, or,
in the case of the Registration Statement, as amended or supplemented, at the
time it becomes effective and at the time of such action by the stockholders of
the respective Sellers, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they are made, not misleading. The Joint Proxy Statements/Prospectus will, as
of its mailing date, comply as to form in all material respects with all
applicable laws, including the provisions of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder, except that
no representation is made by either Purchaser with respect to information
supplied by any Seller or the stockholders of any Seller for inclusion therein.

(k) No Violation of Law. Except as disclosed in the
Parent SEC Reports or in the Purchasers Disclosure Schedule, neither Purchaser
is in violation of, or has been given notice or been charged with any violation
of, any law, statute, order, rule, regulation, ordinance, or judgment
(including, without limitation, any applicable environmental law, ordinance or
regulation) of any governmental or regulatory body or authority, except for
violations which, in the aggregate, could not have a Material Adverse Effect.
Except as disclosed in the Parent SEC Reports or in the Purchasers Disclosure
Schedule, as of the date of this Agreement, to the knowledge of either
Purchaser, no investigation or review by any governmental or regulatory body or
authority is pending or threatened, nor has any governmental or regulatory body
or authority indicated an intention to conduct the same, other than, in each
case, those the outcome of which, either individually or in the aggregate, will
not have a Material Adverse Effect. Each Purchaser has all permits, licenses,
franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to conduct its businesses as
presently conducted (collectively, the "Purchasers Permits"), except for
permits, licenses, franchises, variances, exemptions,

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orders, authorizations, consents and approvals the absence of which, alone or
in the aggregate, would not have a Material Adverse Effect. Each Purchaser is
not in violation of the terms of any Purchasers Permit, except for delays in
filing reports or violations which, alone or in the aggregate, would not have a
Material Adverse Effect.

(l) Compliance with Agreements. Except as disclosed in
the Parent SEC Reports, neither Purchaser is in breach or violation of or in
default in the performance or observance of any term or provision of, and no
event has occurred which, with lapse of time or action by a third party, could
result in a default under (i) the respective charter, by-laws or other similar
organizational instruments of either Purchaser or (ii) any contract,
commitment, agreement, indenture, mortgage, loan agreement, note, lease, bond,
license, approval or other instrument to which either Purchaser is a party or
by which any of them is bound or to which any of their property is subject,
other than, in the case of clause (ii) of this paragraph (l), breaches,
violations and defaults which would not have, either individually or in the
aggregate, a Material Adverse Effect.

(m) Taxes. Each Purchaser has (A) duly filed with the
appropriate governmental authorities all Tax Returns required to be filed by
them for all periods ending on or prior to the Merger 1 Effective Time, other
than those Tax Returns the failure of which to file would not, either
individually or in the aggregate, have a Material Adverse Effect, and such Tax
Returns are true, correct and complete in all material respects and (B) duly
paid in full or made adequate provision for the payment of all Taxes for all
past and current periods, except for those Taxes, the failure to have paid
would not, either individually or in the aggregate, have a Material Adverse
Effect. The liabilities and reserves for Taxes reflected in Parent's balance
sheet included in the latest Parent SEC Reports are adequate to cover all Taxes
for all periods ending at or prior to the date of such balance sheet and there
is no liability for Taxes for any period beginning after such date other than
Taxes arising in the Ordinary Course of Business. There are no material liens
for Taxes upon any property or assets of either Purchaser, except for liens for
Taxes not yet due. Except as set forth on the Purchasers Disclosure Schedule,
neither Purchaser nor its respective Subsidiaries has received notice of an
audit from any taxation authority which could reasonably be expected to have a
Material Adverse Change. There are no unresolved issues of law or fact arising
out of a notice of deficiency, proposed deficiency or assessment from the IRS
or any other governmental taxing authority with respect to Taxes of either
Purchaser which, if decided adversely, singly or in the aggregate, would have a
Material Adverse Effect. Neither Purchaser has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency other than waivers and extensions which are
no longer in effect. Neither Purchaser is a party to any agreement providing
for the allocation or sharing of Taxes with any entity that is not, directly or
indirectly, a wholly owned corporate Subsidiary of such Purchaser other than
agreements the consequences of which are fully and adequately reserved for in
the Parent Financial Statements. Neither Purchaser has, with regard to any
assets or property held, acquired or to be acquired by any of them, filed a
consent to the application of Section 341(f) of the Code.

(n) Employee Benefit Plans; ERISA.

(i) Except as disclosed in the Parent SEC Reports
or Purchasers Disclosure Schedule, at the date hereof, Purchasers do
not maintain or contribute to or have any obligation or liability to
or with respect to any material employee benefit plans, including
employee benefit plans within the meaning set forth in Section 3(3) of
ERISA, programs, arrangements, practices or other similar material
arrangements for the provision of benefits (such plans, programs,
arrangements or practices of Purchasers being referred to as the
"Purchasers Plans"), but excluding any

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"Multiemployer Plan" within the meaning of Section 3(37) of ERISA or a
"Multiple Employer Plan" within the meaning of Section 413(c) of the
Code. The Purchasers Disclosure Schedule lists all Multiemployer Plans
to which any of them makes contributions or has any obligation or
liability to make contributions. Neither Purchaser maintains or has
any liability with respect to any Multiple Employer Plan, which,
individually or in the aggregate, could have a Material Adverse
Effect. Neither Purchaser has any obligation to create or contribute
to any additional such plan, program, arrangement or practice or to
amend any such plan, program, arrangement or practice so as to
increase benefits or contributions thereunder, except as required
under the terms of the Purchasers Plans, under existing collective
bargaining agreements or to comply with applicable law.

(ii) Except as disclosed in the Parent SEC Reports
or Purchasers Disclosure Schedule, (A) there have been no prohibited
transactions within the meaning of Section 406 or 407 of ERISA or
Section 4975 of the Code with respect to any of the Purchasers Plans
that could result in penalties, taxes or liabilities which, singly or
in the aggregate, could have a Material Adverse Effect, (B) except for
premiums due, there is no outstanding material liability, whether
measured alone or in the aggregate, under Title IV of ERISA with
respect to any of the Purchasers Plans, (C) neither the Pension
Benefit Guaranty Corporation nor any plan administrator has instituted
proceedings to terminate any of the Purchasers Plans subject to Title
IV of ERISA other than in a "standard termination" described in
Section 4041(b) of ERISA, (D) none of the Purchasers Plans has
incurred any "accumulated funding deficiency" (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, as
of the last day of the most recent fiscal year of each of the
Purchasers Plans ended prior to the date of this Agreement, (E) the
current present value of all projected benefit obligations under each
of the Purchasers Plans which is subject to Title IV of ERISA did not,
as of its latest valuation date, exceed the then current value of the
assets of such plan allocable to such benefit liabilities by more than
the amount, if any, disclosed in the Parent SEC Reports as of March
31, 1997, based upon reasonable actuarial assumptions currently
utilized for such Purchasers Plan, (F) each of the Purchasers Plans
has been operated and administered in all material respects in
accordance with applicable laws during the period of time covered by
the applicable statute of limitations, (G) each of the Purchasers
Plans which is intended to be "qualified" within the meaning of
Section 401(a) of the Code has been determined by the IRS to be so
qualified and such determination has not been modified, revoked or
limited by failure to satisfy any condition thereof or by a subsequent
amendment thereto or a failure to amend, except that it may be
necessary to make additional amendments retroactively to maintain the
"qualified" status of such Purchasers Plans, and the period for making
any such necessary retroactive amendments has not expired, (H) with
respect to Multi-employer Plans, neither Purchaser has made or
suffered a "complete withdrawal" or a "partial withdrawal," as such
terms are respectively defined in Sections 4203, 4204 and 4205 of
ERISA and, to the best knowledge of each Purchaser, no event has
occurred or is expected to occur which presents a material risk of a
complete or partial withdrawal under said Sections 4203, 4204 and
4205, (I) to the best knowledge of each Purchaser, there are no
material pending, threatened or anticipated claims involving any of
the Purchasers Plans other than claims for benefits in the ordinary
course, (J) each Seller and its Subsidiaries have no current material
liability under Title IV of ERISA, and Purchasers do not reasonably
anticipate that any such liability will be asserted against either
Purchaser, and (K) no act, omission or transaction (individually or in
the aggregate) has occurred with respect to any Purchasers Plan that
has resulted or could result in any material liability (direct or
indirect) of either Purchaser under Sections 409 or 502(c)(i) or (l)
of ERISA or Chapter 43 of Subtitle (A) of the Code. None of the
Purchasers Plans has an "accumulated funding deficiency" (as defined
in Section 302 of ERISA and Section 412 of the Code)

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or is required to provide security to a Purchasers Plan pursuant to
Section 401(a)(29) of the Code. Each Purchasers Plan can be
unilaterally terminated by a Purchaser at any time without material
liability, other than for amounts previously reflected in the
financial statements (or notes thereto) included in the Parent SEC
Reports.

(iii) The Parent SEC Reports or the Purchasers
Disclosure Schedule contain a true and complete summary or list of or
otherwise describe all employment contracts and other employee benefit
arrangements with "change of control" or similar provisions and all
severance agreements with directors, executive officers or employees.

(o) Labor Controversies. Except as disclosed in the
Parent SEC Reports or the Purchasers Disclosure Schedule, (i) there are no
significant controversies pending or, to the knowledge of either Purchaser,
threatened between either Purchaser and any representatives of any of their
employees and (ii) to the knowledge of either Purchaser, there are no material
organizational efforts presently being made involving any of the presently
unorganized employees of either Purchaser except for such controversies and
organizational efforts which, singly or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.

(p) Environmental Matters. Except as disclosed in the
Parent SEC Reports or in the Purchasers Disclosure Schedule, (A) each Purchaser
has conducted its respective businesses in compliance with all applicable
Environmental Laws, including, without limitation, having all permits, licenses
and other approvals and authorizations necessary for the operation of their
respective businesses as presently conducted, (B) none of the properties owned
by Purchasers contain any Hazardous Substance as a result of any activity of
either Purchaser in amounts exceeding the levels permitted by applicable
Environmental Laws, (C) neither Purchaser has received any notices, demand
letters or requests for information from any Federal, state, local or foreign
governmental entity or third party indicating that either Purchaser may be in
violation of, or liable under, any Environmental Law in connection with the
ownership or operation of their businesses, (D) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings, investigations or
proceedings pending or threatened, against either Purchaser relating to any
violation, or alleged violation, of any Environmental Law, (E) no reports have
been filed, or are required to be filed, by either Purchaser concerning the
release of any Hazardous Substance or the threatened or actual violation of any
Environmental Law, (F) no Hazardous Substance has been disposed of, released or
transported in violation of any applicable Environmental Law from any
properties owned by either Purchaser as a result of any activity of either
Purchaser during the time such properties were owned, leased or operated by
either Purchaser, (G) there have been no environmental investigations, studies,
audits, tests, reviews by or which are in the possession of either Purchaser
relating to the activities of a Purchaser which have not been delivered to
Sellers prior to the date hereof, (H) there are no underground storage tanks
on, in or under any properties owned by either Purchaser and no underground
storage tanks have been closed or removed from any of such properties during
the time such properties were owned, leased or operated by either Purchaser,
(I) there is no asbestos or asbestos containing material present in any of the
properties owned by either Purchaser, and no asbestos has been removed from any
of such properties during the time such properties were owned, leased or
operated by Purchasers, and (J) neither Purchaser nor any of their respective
properties are subject to any liabilities or expenditures (fixed or contingent)
relating to any suit, settlement, court order, administrative order, regulatory
requirement, judgment or claim asserted or arising under any Environmental Law,
except for violations of the foregoing clauses (A) through (J) that, singly or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.

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(q) Reserve Report and Exploration Project Information.

(i) The Purchasers have made available to the
Sellers certain reports dated March 3, 1997, prepared by the
independent petroleum engineering firm of Netherland, Sewell &
Associates, Inc., with respect to onshore properties, and dated
February 7, 1997, prepared by the independent petroleum engineering
firm of Collarini Engineering Inc., with respect to offshore
properties (collectively, the "Purchasers Petroleum Engineers") true
and correct copies of which have been previously provided to the
Sellers (together, the "Purchasers Reserve Reports"). The Purchasers
Reserve Reports are the latest reserve reports available to the
Purchasers relating to their and their Subsidiaries reserves of oil
and gas. The oil and gas properties evaluated in the Purchasers
Reserve Reports are referred to herein as the "Purchasers Evaluated
Properties." The Purchasers have provided no materially false or
misleading information to and have not withheld any material
information from the Purchasers Petroleum Engineers, with respect to
the preparation of the Purchasers Reserve Reports.

(ii) Except as set forth on the Purchasers
Disclosure Schedule, the Purchasers are not aware of any facts or
circumstances that should reasonably cause the Purchasers to conclude
that any of the information that was supplied by the Purchasers to the
Purchasers Petroleum Engineers, in connection with their preparation
of the Purchasers Reserve Reports is not currently correct in all
material respects (other than normal depletion by production in the
ordinary course), and to the Purchasers' knowledge the information
utilized in preparing the Reserve Reports is correct in all material
respects.

(iii) The Purchasers have made available to Sellers
certain information (the "Purchasers Project Information") with
respect to certain exploration projects in which the Purchasers are
currently engaged (the "Purchasers Projects"), which information and
Purchasers Projects are set forth on the Purchasers Disclosure
Schedule. The Purchasers Project Information provided by the
Purchasers does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements
contained therein not misleading.

(r) Title.

(i) The leasehold, royalty, mineral and similar
interests owned by the Purchasers and their respective Subsidiaries
entitle them to receive not less than the interest set forth in the
Purchasers Reserve Reports as the Net Revenue Interest from all oil
and gas and associated minerals produced, saved and marketed in
respect of each Purchasers Evaluated Property listed in the Purchasers
Reserve Reports, and obligate it to bear costs and expenses relating
to the maintenance and development of, and the operations with respect
to, each such Purchasers Evaluated Property in an amount not greater
than the Working Interest set forth in the Purchasers Reserve Reports
(unless there is a corresponding increase in the Net Revenue
Interest), except for such deficiencies which, individually or in the
aggregate, would not have a Material Adverse Effect. Except as noted
in the Purchasers Reserve Reports, the Net Revenue Interest and the
Working Interest with respect to each such Purchasers Evaluated
Property are not subject to change or adjustment upon the occurrence
of payout or any similar or other event.

(ii) The Purchasers have, and on the Closing Date
will have, good and valid title to all of their leasehold, royalty,
mineral and similar interests in the Purchasers Evaluated Properties,

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other than the properties disposed of since the date hereof, free and
clear of all encumbrances and title defects except for (A) the
encumbrances and title defects specifically described in the Parent
Financial Statements or Purchasers Disclosure Schedule, (B) statutory
liens not yet delinquent, (C) imperfections of title, easements, liens
(including operator's liens) and encumbrances, the character, amount
or extent of which, individually or in the aggregate, would not have a
Material Adverse Effect, (D) contracts and agreements for the sale of
oil and gas entered into in the Ordinary Course of Business, (E)
lessor's royalties, overriding royalties, and division orders,
reversionary interests and similar burdens and all existing operating
agreements and unit agreements, if the net cumulative effect of the
same does not operate to reduce the Net Revenue Interests of the
Purchasers Evaluated Properties to less than the Net Revenue Interests
set forth in Purchasers Reserve Report or increase the Working
Interests of the Purchasers Evaluated Properties to more than the
Working Interests set forth in the Purchasers Reserve Report (unless
there is a corresponding increase in the Net Revenue Interests); (F)
any and all federal and state regulatory orders and rules to which the
Purchasers Evaluated Properties are presently subject; (G)
preferential rights to purchase and required third-party consents to
assignments and similar agreements; (H) liens for Taxes not due or not
delinquent at the time of Closing or the validity of which are being
contested in good faith by appropriate actions; (I) all rights to
consent by, required notices to, filings with, or other actions by
governmental entities in connection with the sale or conveyance of
oil, gas and mineral leases or interests therein if the same are
customarily obtained after such sale or conveyance; (J) easements,
rights-of-way, servitudes, permits, surface leases and other rights in
respect of surface operations, pipelines, grazing, logging, canals,
ditches, reservoirs or the like; and easements for streets, alleys,
highways, pipelines, telephone lines, power lines, railways and other
easements and rights-of-way, on, over or in respect of any of the
Purchasers Evaluated Properties; (K) liens of operators relating to
obligations not yet due or not delinquent; and (L) title deficiencies
commonly encountered in the oil and gas business which would not be
considered material by a reasonable and prudent person engaged in the
business of the ownership, development and operating of oil and gas
properties with knowledge of all the facts and appreciation of their
legal significance.

(iii) Except where the failure would not have a
Material Adverse Effect, (A) neither Purchaser is dependent with
respect to the Purchasers Evaluated Properties on the right to use the
properties of others, except under valid and enforceable leases,
contracts, pooling or unitization agreements, rights or other
arrangements, (B) the Purchasers own, or have the right to use under
valid and enforceable leases, contracts, rights or other arrangements,
all gas processing facilities necessary for the current operations of
the Purchasers, (C) all buildings, machinery and equipment currently
used in the operations related to the Purchasers Evaluated Properties
are adequate for their normal operation consistent with industry
practice, are in good working order and substantially conform with all
applicable Environmental Laws and (D) to the knowledge of either
Purchaser there is no pending or threatened condemnation or
expropriation of any part of the Purchasers Evaluated Properties.

(iv) Except where the failure would not have a
Material Adverse Effect, the Purchasers Evaluated Properties are being
developed, operated and maintained in compliance in all material
respects with all leases, contracts and commitments to which either
Purchaser is a party or by which either Purchaser or any of the
Purchasers Evaluated Properties is bound.

(v) The Purchasers have good and valid title to
all the properties and assets of every kind, character and description
(real, personal or mixed, tangible and intangible), including,

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without limitation, all parcels of real property, pipelines,
rights-of-way and easements and other incidental rights and permits,
but excluding the Purchasers Evaluated Properties, reflected in the
Parent Financial Statements or which would have been reflected in the
Parent Financial Statements if acquired prior to March 31, 1997, (the
"Purchasers Assets") free and clear of all encumbrances of any nature
except for (A) the encumbrances and title defects specifically
described in the Purchasers Disclosure Schedule; (B) mortgages and
encumbrances which secure indebtedness or obligations which are
properly reflected in the Parent Financial Statements; (C) liens for
Taxes not yet payable or any Taxes being contested in good faith; (D)
liens arising as a matter of law in the ordinary course of business,
provided that the obligations secured by such liens are not delinquent
or are being contested in good faith; (E) such imperfections of title
and encumbrances which, individually or in the aggregate, would not
have a Material Adverse Effect; (F) any and all federal and state
regulatory orders and rules to which the Purchasers Assets are
presently subject; (G) preferential rights to purchase and required
third-party consents to assignments and similar agreements; (H)
statutory liens not yet delinquent; (I) all rights to consent by,
required notices to, filings with, or other actions by governmental
entities in connection with the sale or conveyance of oil, gas and
mineral leases or interests therein if the same are customarily
obtained after such sale or conveyance; (J) easements, rights-of-way,
servitude, permits, surface leases and other rights in respect of
surface operations, pipelines, grazing, logging, canals, ditches,
reservoirs or the like; and easements for streets, alleys, highways,
pipelines, telephone lines, power lines, railways and other easements
and rights-of-way, on, over or in respect of any of the Purchasers
Assets; (K) liens of operators relating to obligations not yet due or
not delinquent; and (L) title deficiencies commonly encountered in the
oil and gas business which will not have a Material Adverse Effect.
The Purchasers have valid leasehold interests in all leases reflected
as capital leases in the Parent Financial Statements and, to the
knowledge of the Purchasers, generally have the right to use all other
property and assets as to which they do not have title but which are
currently being used in the conduct of the Purchasers' business,
except any rights of use the loss of which would not have a Material
Adverse Effect.

(s) Insurance. The Purchasers Disclosure Schedule lists
all material insurance policies covering the Purchasers Assets, the Purchasers
Evaluated Properties, employees and operations of the Purchasers as of the date
hereof (other than insurance owned or held by operators for those Purchasers
Assets or Purchasers Evaluated Properties where a party other than a Purchaser
is the operator). Such policies are in full force and effect, there are no
defaults thereunder. Except for claims previously made, to the knowledge of
either Purchaser there is no basis for any action or claim nor any facts which
would reasonably be anticipated to give rise to such action or claim. To the
knowledge of either Purchaser, there does not exist any event that, with the
giving of notice or the lapse of time or both, would constitute such a default.
Neither Purchaser is a co-insurer under any such policies of insurance except
to the extent of the amount of the deductible, self-retention or similar
amounts applicable to such policies.

(t) Allowable Production Quotas. To the knowledge of
either Purchaser, no production from any of the Purchasers Evaluated Properties
prior to the date hereof was in excess of allowable production quotas allowed
or permitted by any governmental body having jurisdiction thereover so as to
subject any production from such Purchasers Evaluated Property on or after the
date hereof to restrictions or penalties except as will not have a Material
Adverse Effect.

(u) Gas Payments; Balancing. (i) There are no material
claims asserted or material disputes evidenced in writing under any contract to
which either Purchaser is a party regarding payments for

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natural gas not taken pursuant to any "take or pay" or similar arrangement;
(ii) the Purchasers have not received any material quantity of natural gas or
liquids to be paid for thereafter other than in the normal cycle of billing or
received prepayments, advance payments or loans which will require a Purchaser
to perform services or deliver hydrocarbons under such contracts on or after
the Closing Date without being currently paid therefor; (iii) no sales contract
obligates either Purchaser to deliver specific minimum volumes of gas; (iv) no
contract obligates either Purchaser to sell gas at prices substantially lower
than the prevailing market prices or to purchase gas at prices substantially
higher than prevailing market prices; (v) the Purchasers have made or will,
prior to the Closing Date, make all payments due to producers or others for all
gas and liquids delivered into any of their respective plants for which payment
for same is due prior to the Closing Date, including, without limitation, all
payments due for the purchase of gas and liquids under any contract; (vi) to
the knowledge of either Purchaser, all gas delivered into any of the plants has
been purchased, and all residue gas from the plants has been sold, in
compliance with the Natural Gas Policy Act of 1978, all orders, rules and
regulations of the Federal Energy Regulatory Commission and all other
applicable laws, orders, rules and regulations; (vii) to the knowledge of
either Purchaser, there exists no material claim or dispute with respect to the
purchase, or the failure to purchase, or pay for whether or not purchased, gas
under any gas purchase contracts to which either Purchaser is a party or the
applicable price to be paid for gas delivered, or residue gas or liquids or
products sold from the plants; and (viii) none of the Purchasers Evaluated
Properties or the Purchaser Assets is subject to requirements to make Btu
adjustments or affect gas or liquids balancing in favor of third parties which
would result in either Purchaser being required to deliver material volumes of
gas or liquids after the Closing Date or otherwise to compensate a third party
for gas or liquids receipts into, or deliveries from, the plants which occurred
prior to the Closing Date. The Purchasers Disclosure Schedule sets forth an
estimate of the amount of any material net imbalances and is within ten percent
(10%) of the actual amount.

(v) No Prepayments Made or Refunds Owed. Purchasers have
not received any prepayment, advance payment, deposits or similar payments, and
have no refund obligation, other than obligations in the aggregate of less than
$500,000 incurred in the Ordinary Course of Business, with respect to any gas
or products purchased, sold, gathered, processed or marketed through their
plants. The Purchasers have not received any compensation for gathering or
processing services relating to the plants which would be subject to any refund
or create any repayment obligation, other than obligations of less than
$500,000 incurred in the Ordinary Course of Business, either by or to the
Purchasers, and the Purchasers are not aware of any basis for a claim that a
refund is due.

(w) Drilling Obligations. The Purchasers do not have any
material drilling obligations or other development commitments that are not
terminable at will by the Purchaser party thereto without penalty, other than
commitments and obligations that arose in the Ordinary Course of Business where
the sole consequence to the Purchaser party thereto for a failure to
participate is to suffer a "non-consent" penalty or forfeit an interest in the
undeveloped lands subject to the commitment or obligation.

(x) Development Operations. To the knowledge of either
Purchaser, there are in existence no facts or circumstances that should
reasonably cause a Purchaser to conclude that any development operations on the
Purchasers Evaluated Properties that are contemplated by the Purchasers Reserve
Report will not be permitted under applicable laws and governmental rules and
regulations or that any third party may have a reasonable basis to cause any
court or governmental agency with jurisdiction over such operations to cause
the suspension or termination of such operations.

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(y) Regulatory Authority. As of the date hereof, neither
Purchaser is subject to regulation as (a) a "holding company," an "affiliate"
of a "holding company" or a "subsidiary company" of a "holding company" or a
"public utility," as each of such terms is defined in the Public Utility
Holding Company Act of 1935, as amended, and the rules and regulations
thereunder; (b) a gas utility or utility under applicable state law; and (c) an
"investment company," or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.

(z) Full Disclosure. To the knowledge of either
Purchaser, the representations, warranties or other statements by the
Purchasers in this Agreement or in the Purchasers Disclosure Schedule or
Exhibits hereto or any documents distributed generally to the Edisto
Stockholders or the Convest Stockholders, taken as a whole, do not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements contained therein not misleading. There is, to the
knowledge of either Purchaser, no fact pertaining particularly to Purchasers
Evaluated Properties or the Purchasers Assets (as opposed to public information
concerning general industry or economic conditions or governmental policies)
which has a Material Adverse Effect on or in the future would be reasonably
expected to have a Material Adverse Effect on the Purchasers Evaluated
Properties or the Purchasers Assets or the ownership, operation or maintenance
of any of the Purchasers Evaluated Properties or the Purchasers Assets that has
not been disclosed to the Sellers.

(aa) Affiliate Transactions. To Purchasers knowledge
there are no transactions between (i) the Purchasers or any of their
Subsidiaries and (ii) any of their Affiliates which are required to be
disclosed in the Parent SEC Reports which are not disclosed.

(bb) Cumulative Representations. To the extent the
representations and warranties of Purchasers set forth herein are modified by
the terms Material Adverse Change or Material Adverse Effect or similar terms,
the effect of the occurrence of all such effects or changes would not in the
aggregate cause a Material Adverse Change or Material Adverse Effect on the
Purchasers and their respective Subsidiaries taken as a whole.

SECTION 7. Conduct of Business Pending the Mergers.

(a) Conduct of Business by the Sellers Pending the
Mergers. Except as otherwise contemplated by this Agreement or disclosed in
the Sellers Disclosure Schedule, after the date hereof and prior to the Closing
Date or earlier termination of this Agreement, unless Parent shall otherwise
agree in writing, each Seller shall, and shall cause its Subsidiaries to:

(i) conduct their respective businesses in the
Ordinary Course of Business;

(ii) not (A) amend or propose to amend their
respective charter or by-laws, (B) split, combine or reclassify their
outstanding capital stock or (C) declare, set aside or pay any
dividend or distribution payable in cash, stock, property or
otherwise, except for the payment of dividends or distributions by a
wholly owned Subsidiary;

(iii) not issue, sell, pledge or dispose of, or
agree to issue, sell, pledge or dispose of, any additional shares of,
or any options, warrants or rights of any kind to acquire any shares
of their capital stock of any class or any debt or equity securities
convertible into or exchangeable for

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such capital stock, except that a Seller may issue shares upon
conversion of convertible securities and exercise of options and
warrants outstanding on the date hereof;

(iv) not (A) incur or become contingently liable
with respect to any indebtedness for borrowed money other than (x)
borrowings in the Ordinary Course of Business or (y) borrowings to
refinance existing indebtedness on terms which are reasonably
acceptable to Parent, (B) except as contemplated by Section 4(c)
hereof, redeem, purchase, acquire or offer to purchase or acquire any
shares of its capital stock or any options, warrants or rights to
acquire any of its capital stock or any security convertible into or
exchangeable for its capital stock, (C) take or fail to take any
action which action or failure to take action would cause either
Seller or its stockholders (except to the extent that any stockholders
receive cash) to recognize gain or loss for federal income tax
purposes as a result of the consummation of Merger 2 or would
otherwise cause Merger 2 not to qualify as a reorganization under
Section 368 of the Code, (D) make any acquisition of any assets or
businesses other than expenditures for current assets in the ordinary
course of business, (E) sell, pledge, dispose of or encumber any
assets or businesses without the approval of Parent or (F) enter into
any binding contract, agreement, commitment or arrangement with
respect to any of the foregoing;

(v) use all reasonable efforts to preserve intact
their respective business organizations and goodwill, keep available
the services of their respective present officers and key employees,
and preserve the goodwill and business relationships with customers
and others having business relationships with them and not engage in
any action, directly or indirectly, with the intent to adversely
impact the transactions contemplated by this Agreement;

(vi) subject to restrictions imposed by applicable
law, confer on a regular and frequent basis with one or more
representatives of Parent to report operational matters of materiality
and the general status of ongoing operations;

(vii) not enter into or amend any employment,
severance, special pay arrangement with respect to termination of
employment or other similar arrangements or agreements with any
directors, officers or employees;

(viii) not adopt, enter into or amend any bonus,
profit sharing, compensation, stock option, pension, retirement,
deferred compensation, health care, employment or other employee
benefit plan, agreement, trust, fund or arrangement for the benefit or
welfare of any employee or retiree, except as required to comply with
changes in applicable law;

(ix) use commercially reasonable efforts to
maintain with financially responsible insurance companies insurance on
its tangible assets and its businesses in such amounts and against
such risks and losses as are consistent with past practice;

(x) not make, change or revoke any material Tax
election or make any material agreement or settlement regarding Taxes
with any taxing authority;

(xi) not change any method of accounting or
accounting practice, except for any such change required by GAAP; and

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(xii) not enter into any future, hedge, swap,
collar, put, call, floor, cap, option or other contracts that are
intended to benefit from or reduce or eliminate the risk of
fluctuations in the price of commodities, including hydrocarbons, or
securities, other than such as are entered into in the Ordinary Course
of Business solely for the purpose of terminating an existing hedge.

(b) Control of the Sellers' Operations. Nothing
contained in this Agreement shall give to Parent, directly or indirectly,
rights to control or direct the operations of Edisto or Convest or their
respective Subsidiaries prior to the Merger 1 Effective Time or the Merger 2
Effective Time, respectively. Prior to such Effective Times, the Sellers shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision of their respective operations.

(i) After the date hereof and prior to the Merger
2 Effective Time or earlier termination of this Agreement, the Sellers
shall not, and shall not permit any of their Subsidiaries to,
initiate, solicit, negotiate, encourage or provide confidential
information to facilitate, and the Sellers shall, and shall cause each
of their Subsidiaries to, cause any officer, director or employee of,
or any attorney, accountant, investment banker, financial advisor or
other agent retained by them, not to initiate, solicit, negotiate,
encourage or provide non-public or confidential information to
facilitate, any proposal or offer to acquire all or any substantial
part of the business and properties of either Seller or any of their
Subsidiaries or any capital stock of either Seller or any of their
Subsidiaries, whether by merger, purchase of assets, tender offer or
otherwise, whether for cash, securities or any other consideration or
combination thereof (any such transactions being referred to herein as
an "Acquisition Transaction").

(ii) Notwithstanding the provisions of subsection
(i) above, (A) either Seller may, in response to an unsolicited
written proposal or unsolicited written indication of interest with
respect to a potential or proposed Acquisition Transaction
("Acquisition Proposal"), furnish (subject to the execution of a
confidentiality agreement and standstill agreement in substantially
the form executed by Parent) confidential or non-public information to
a financially capable corporation, partnership, person or other entity
or group (a "Potential Acquirer") and negotiate with such Potential
Acquirer if the Board of Directors of such Seller after consulting
with its outside legal counsel, determines in good faith that the
failure to provide such confidential or non-public information to or
negotiate with such Potential Acquirer would constitute a breach of
its fiduciary duty to its stockholders and (B) such Seller's Board of
Directors may take and disclose to its stockholders a position
contemplated by Rule 14e-2 under the Exchange Act. It is understood
and agreed that negotiations conducted in accordance with this
subsection (ii) shall not constitute a violation of subsection (i) of
this Section 7(c).

(iii) The Sellers shall immediately notify Parent
after receipt of any Acquisition Proposal or any request for nonpublic
information relating to a Seller or its Subsidiaries in connection
with an Acquisition Proposal or for access to the properties, books or
records of a Seller or any Subsidiary by any person or entity that
informs the Board of Directors of a Seller or such Subsidiary that it
is considering making, or has made, an Acquisition Proposal. Such
notice to Parent shall be made orally and in writing and shall
indicate in reasonable detail the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact. Seller
shall immediately provide Parent a copy of all information provided to
a third party.

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(iv) Each Party (i) acknowledges that a breach of
any of its covenants contained in this Section 7(c) will result in
irreparable harm to the other Party which will not be compensable in
money damages, and (ii) agrees that such covenant shall be
specifically enforceable and that specific performance and injunctive
relief shall be a remedy properly available to the other Party for a
breach of such covenant. In any event, if a Seller enters into an
Acquisition Transaction, it will immediately pay to Parent the sums
described in Section 10(b) below.

(d) Subsidiaries. Each Seller will, following direction
from Parent, dissolve all inactive Subsidiaries (other than MINT Holding
Company) prior to Merger 1. Prior to Merger 1, Sellers will cause the merger
of Edisto Exploration & Production Company ("Edisto E&P") into Convest.

Section 8. Additional Agreements.

(a) Access to Information.

(i) The Sellers and their Subsidiaries shall
afford to Purchasers and their respective accountants, counsel,
financial advisors and other representatives (the "Parent
Representatives") and Parent and its Subsidiaries shall afford to the
Sellers and their accountants, counsel, financial advisors and other
representatives (the "Seller Representatives") full access during
normal business hours throughout the period prior to the Merger 1
Effective Time to all of their respective properties, books,
contracts, commitments and records (including, but not limited to, Tax
Returns) and, during such period, shall furnish promptly to one
another (A) a copy of each report, schedule and other document filed
or received by any of them pursuant to the requirements of federal or
state securities laws or filed by any of them with the SEC in
connection with the transactions contemplated by this Agreement and
(B) such other information concerning their respective businesses,
properties and personnel as a Purchaser or Seller, as the case may be,
shall reasonably request; provided, however, that no investigation
pursuant to this Section 8(a) shall amend or modify any
representations or warranties made herein or the conditions to the
obligations of the respective parties to consummate the Mergers.
Parent and its Subsidiaries shall hold and shall use their reasonable
best efforts to cause the Parent Representatives to hold, and the
Sellers and their Subsidiaries shall hold and shall use their
reasonable best efforts to cause the Seller Representatives to hold,
in strict confidence all non-public documents and information
furnished to a Purchaser or Seller, as the case may be, in connection
with the transactions contemplated by this Agreement, except that (x)
a Purchaser or Seller may disclose such information as may be
necessary in connection with seeking the Purchasers Required Statutory
Approvals, the Sellers Required Statutory Approvals and the Requisite
Stockholder Approvals and (y) a Purchaser or Seller may disclose any
information that it is required by law or judicial or administrative
order to disclose.

(ii) In the event that this Agreement is
terminated in accordance with its terms, each Party shall promptly
redeliver to the other all non-public written material provided
pursuant to this Section 8(a) and shall not retain any copies,
extracts or other reproductions in whole or in part of such written
material. In such event, all documents, memoranda, notes and other
writings prepared by a Purchaser or Seller based on the information in
such material shall be destroyed (and Parent and the Sellers shall use
their respective reasonable best efforts to cause their advisors and
representatives to similarly destroy their documents, memoranda and
notes), and such destruction (and reasonable best efforts) shall be
certified in writing by an authorized officer supervising such
destruction.

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(iii) The Sellers shall promptly advise Parent and
Parent shall promptly advise the Sellers in writing of any change or
the occurrence of any event after the date of this Agreement having,
or which, insofar as can reasonably be foreseen, in the future may
have, either individually or in the aggregate, any Material Adverse
Effect.

(b) Registration Statement and Proxy Statements. Parent
and the Sellers shall file with the SEC as soon as is reasonably practicable
after the date hereof the Joint Proxy Statements/Prospectus and shall use all
reasonable efforts to have the Registration Statement declared effective by the
SEC as promptly as practicable. Parent shall also take any action reasonably
required to be taken under applicable state blue sky or securities laws in
connection with the issuance of Parent Common Stock pursuant hereto. Parent
and the Sellers shall promptly furnish to each other all information, and take
such other actions, as may reasonably be requested in connection with any
action by any of them in connection with the preceding sentence. The
information provided and to be provided by Parent and the Sellers,
respectively, for use in the Joint Proxy Statements/Prospectus shall not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

(c) Stockholders' Approvals. Each Seller shall, as
promptly as practicable, submit this Agreement and the transactions
contemplated hereby for the approval of its stockholders at a meeting of
stockholders or by written consent and shall use its best efforts to obtain the
Requisite Stockholder Approvals and adoption of this Agreement and the
transactions contemplated hereby. Such meeting of stockholders shall be held
or written consent effected as soon as practicable following the date upon
which the Registration Statement becomes effective. The Sellers shall, through
their respective Boards of Directors, recommend to their stockholders approval
of the transactions contemplated by this Agreement. Each Seller (i)
acknowledges that a breach of its covenant contained in this Section 8(c) to
convene a meeting of its stockholders and call for a vote thereat with respect
to the approval of this Agreement and the Mergers will result in irreparable
harm to Parent which will not be compensable in money damages and (ii) agrees
that such covenant shall be specifically enforceable and that specific
performance and injunctive relief shall be a remedy properly available to
Parent for a breach of such covenant.

(d) Employee Matters.

(i) Not less than five business days prior to the Closing
Date each Seller and their Subsidiaries shall provide Parent a current
list of their respective officers, directors and employees. Except as
otherwise designated by Parent, at least five business days prior to
the Closing, each Seller and their Subsidiaries shall obtain the
resignation or shall terminate each of their respective officers,
directors and employees effective not later than the Merger 2
Effective Time. At or immediately prior to Closing, the Sellers shall
pay any severance pay, stay bonuses or similar payments required to be
paid pursuant to the terms of the agreements described on Section
5(n)(iii) of the Sellers Disclosure Schedule. Without limiting the
foregoing, this provision will cause a termination of Michael Y.
McGovern under the employment agreement between him and Edisto, a copy
of which has been previously provided to the Purchasers.

(ii) Parent agrees that, following the Merger 2 Effective
Time, it will provide continuation coverage, as required by the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), to
be given to any employee of Sellers or their respective Subsidiaries
whose employment has been or will be terminated. The parties
understand that COBRA may require that

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such continuation coverage be provided for a period of up to
thirty-six months as provided in Section 4980B of the Code at the
qualified beneficiary's expense.

(iii) Prior to the Merger 1 Effective Time, Edisto and
Convest shall have taken all steps, subject to Parent's approval,
necessary or appropriate so that the Convest Savings and Investment
Plan and Trust, the Edisto Savings and Investment Plan and Trust and
any other Sellers Plan that is or is intended to be a "qualified" plan
under Section 401(a) of the Code shall have been terminated.

(e) Quotation. Parent shall use its reasonable best
efforts to effect, at or before the Merger 1 Effective Time, authorization for
listing on the NYSE or such other exchange on which Parent Common Stock is then
primarily traded, upon official notice of issuance, of the shares of Parent
Common Stock to be issued pursuant to the Mergers.

(f) Agreement to Cooperate.

(i) Subject to the terms and conditions herein
provided and subject to the fiduciary duties of the respective boards
of directors of the Parent and the Sellers, each of the Parties hereto
shall use all reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including
using its reasonable efforts to obtain all necessary or appropriate
waivers, consents or approvals of third parties required in order to
preserve material contractual relationships of the Sellers and their
respective Subsidiaries, all necessary or appropriate waivers,
consents and approvals and SEC "no-action" letters to effect all
necessary registrations, filings and submissions and to lift any
injunction or other legal bar to the Mergers (and, in such case, to
proceed with the Mergers as expeditiously as possible).

(ii) In the event any litigation is commenced by
any person or entity relating to the transactions contemplated by this
Agreement, including any Acquisition Transaction, Parent shall have
the right, at its own expense, to participate therein, and the Sellers
will not settle any such litigation without the consent of Parent,
which consent will not be unreasonably withheld.

(g) Public Statements. The Parties shall consult with
each other prior to issuing any press release or any written public statement
with respect to this Agreement or the transactions contemplated hereby and
shall not issue any such press release or written public statement prior to
such consultation.

(h) Notification of Certain Matters. Each of the
Purchasers and the Sellers agrees to give prompt notice to each other of, and
to use their respective reasonable best efforts to prevent or promptly remedy,
(A) the occurrence or failure to occur or the impending or threatened
occurrence or failure to occur, of any event which occurrence or failure to
occur would be likely to cause any of its representations or warranties in this
Agreement to be untrue or inaccurate in any material respect at any time from
the date hereof to the Merger 1 Effective Time and (B) any material failure on
its part to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Paragraph 8(h) shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.

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(i) Corrections to the Joint Proxy Statements/Prospectus
and Registration Statement. Prior to the date of approval of the Mergers by
the Sellers' respective stockholders, each of the Purchasers and Sellers shall
correct promptly any information provided by it to be used specifically in the
Joint Proxy Statements/Prospectus and Registration Statement that shall have
become false or misleading in any material respect and shall take all steps
necessary to file with the SEC and have declared effective or cleared by the
SEC any amendment or supplement to the Joint Proxy Statements/Prospectus or the
Registration Statement so as to correct the same and to cause the Joint Proxy
Statements/Prospectus as so corrected to be disseminated to the stockholders of
the Sellers, in each case to the extent required by applicable law.

(j) Indemnification; Directors' and Officers' Insurance.

(i) From and after the Merger 1 Effective Time,
with respect to Edisto, and the Merger 2 Effective Time, with respect
to Convest, Parent agrees that it will indemnify and hold harmless
each present and former director and/or officer of a Seller,
determined as of such effective time (the "Indemnified Parties"), that
is made a party or threatened to be made a party to any threatened,
pending or completed, action, suit, proceeding or claim, whether
civil, criminal, administrative or investigative, by reason of the
fact that he or she was a director or officer of a Seller or any
subsidiary of a Seller prior to such effective time and arising out of
actions or omissions of the Indemnified Party in any such capacity
occurring at or prior to such effective time (a "Claim") against any
costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities reasonably incurred in
connection with any Claim, whether asserted or claimed prior to, at or
after such effective time, to the fullest extent that such Seller
would have been permitted under Delaware law, the respective charters
or by-laws of such Seller or written indemnification agreements in
effect at the date hereof, including provisions therein relating to
the advancement of expenses incurred in the defense of any action or
suit.

(ii) Any Indemnified Party wishing to claim
indemnification under paragraph (i) of this Section 8(j) upon learning
of any such Claim, shall promptly notify Parent thereof, but the
failure to so notify shall not relieve Parent of any liability it may
have to such Indemnified Party if such failure does not materially
prejudice the indemnifying party. In the event of any such Claim
(whether arising before or after the Merger 1 Effective Time or the
Merger 2 Effective Time, as the case may be), (A) Parent shall have
the right to assume the defense thereof and Parent shall not be liable
to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if Parent elects
not to assume such defense, the Indemnified Parties may retain counsel
reasonably satisfactory to Parent, and Parent shall pay reasonable
fees and expenses of such counsel for the Indemnified Parties;
provided, however, that Parent shall be obligated pursuant to this
paragraph (ii) to pay for only one firm or counsel for all Indemnified
Parties unless the use of one counsel for such Indemnified Parties
would present such counsel with a conflict of interest, (B) the
Indemnified Parties will cooperate in the defense of any such matter
and (C) Parent shall not be liable for any settlement effected without
its prior written consent, which consent will not be unreasonably
withheld; and provided, further, however, that Parent shall not have
any obligation hereunder to any Indemnified Party when and if a court
of competent jurisdiction shall ultimately determine, and such
determination shall have become final and non-appealable, that the
indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable law. If such indemnity is not
available with respect to any Indemnified Party, then Parent and the
Indemnified Party shall contribute to the amount payable in such
proportion as is appropriate

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to reflect relative faults and benefits, with any respect of "fault"
otherwise allocable to a Seller being allocated to Parent.

(iii) For a period of six years after the Merger 1
Effective Time and the Merger 2 Effective Time, respectively,
Purchasers shall maintain the Sellers' existing directors and officers
liability insurance or equivalent liability insurance, which will
provide coverage for those persons who are directors and officers of
the Sellers as of such effective time, so long as the annual premium
therefor is not in excess of 150% of the last annual premium paid by
the Sellers prior to the date hereof.

(iv) In lieu of the insurance arrangement referred
to in clause (iii) of this Section 8(j), Purchasers may, on or before
the Closing, enter into alternative insurance arrangements, providing
that such arrangements are approved by each of the Sellers and are no
less advantageous to the Indemnified Parties so long as no lapse in
coverage occurs as a result of such substitution.

(v) The obligations of Purchasers under this
Section 8(j) are intended to benefit, and be enforceable against
Purchasers directly by the Indemnified Parties, and shall be binding
on all respective successors of Purchasers.

(k) Shareholders Agreement; Compliance with the
Securities Act. Each Seller shall each use their reasonable best efforts to
cause each principal executive officer, each director and each other person who
is an Affiliate of either Seller to deliver to Parent on or prior to the Merger
1 Effective Time (i) a written agreement (an "Affiliate Agreement") to the
effect that such person will not offer to sell, sell or otherwise dispose of
any shares of Parent Common Stock issued in the Mergers, except, in each case,
pursuant to an effective registration statement or in compliance with Rule 145,
as amended from time to time, or in a transaction which, in the opinion of
legal counsel satisfactory to Parent, is exempt from the registration
requirements of the Securities Act and (ii) a Shareholders Agreement. Parent
shall be entitled to place appropriate legends on the certificates evidencing
any Parent Common Stock to be received by such Affiliates pursuant to the terms
of this Agreement, and to issue appropriate stop transfer instructions to the
transfer agent for the Parent Common Stock, consistent with the terms of the
Affiliate Agreements.

(1) Convest Shares.

(i) Transfer and Encumbrance. Edisto agrees not
to transfer, sell, exchange, pledge or otherwise dispose of or
encumber the Shares or any New Shares (as hereinafter defined) or to
make any offer or agreement relating thereto, at any time prior to the
Expiration Date. As used herein, the term "Expiration Date" shall
mean the earlier to occur of (A) such date and time as each of the
Mergers shall have become effective in accordance with the terms and
provisions of the Merger Agreement, (B) the termination of this Merger
Agreement in accordance with its terms.

(ii) New Shares. Edisto agrees that any shares of
capital stock of Convest that Edisto purchases or with respect to
which Edisto otherwise acquires beneficial ownership after the date of
this Agreement and prior to the Expiration Date ("New Shares") shall
be subject to the terms and conditions of this Agreement to the same
extent as if they constituted Shares.

(iii) Agreement to Vote Shares. Unless this Merger
Agreement is terminated pursuant to its terms, at every meeting of the
stockholders of Convest held prior to the Merger 2

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Effective Time called with respect to any of the following, and at
every adjournment thereof, and on every action or approval by written
consent of the stockholders of Convest with respect to any of the
following, Edisto shall vote the Shares and any New Shares: (A) in
favor of approval of this Agreement, the Merger 2 Articles and the
Mergers and any matter that could reasonably be expected to facilitate
the Mergers; and (B) against approval of any proposal made in
opposition to the consummation of the Mergers, this Agreement or the
Merger 2 Articles, against any merger, consolidation, sale of assets,
reorganization or recapitalization with any party other than Parent
and its Affiliates and against any liquidation or winding up of
Convest (each of the foregoing is referred to as an "Opposing
Proposal"). To the extent inconsistent with the provisions of this
Agreement, Edisto hereby revokes any and all proxies with respect to
the Shares or any other voting securities of Convest.

(m) Credit Agreement. Sellers agree, if requested by
Parent, to cooperate with Parent to cause the termination of the Amended and
Restated Secured Revolving Credit Agreement, dated June 23, 1995, by and among
Convest, Edisto E&P, BankOne, Texas, National Association, as Agent, and
Compass Bank - Houston and BankOne, Texas, National Association, as Banks,
including the termination and release of any security arrangements or other
obligations of any nature thereunder.

SECTION 9. Conditions.

(a) Conditions to Each Party's Obligation to Effect the
Mergers. The respective obligations of each party to effect the Mergers shall
be subject to the fulfillment at or prior to the Closing Date of the following
conditions:

(i) this Agreement and the transactions
contemplated hereby shall have been approved and adopted by the
Requisite Stockholder Approvals of the Sellers under applicable law
and applicable listing requirements;

(ii) the shares of Parent Common Stock issuable in
the Mergers and those to be reserved for issuance upon exercise of
stock options or warrants or the conversion of convertible securities
shall have been authorized for quotation on the NYSE, or such other
exchange on which Parent Common Stock is then primarily traded, upon
official notice of issuance;

(iii) the Registration Statement shall have become
effective in accordance with the provisions of the Securities Act, and
no stop order suspending such effectiveness shall have been issued and
remain in effect and no proceeding for that purpose shall have been
instituted by the SEC or any state regulatory authorities;

(iv) no preliminary or permanent injunction or
other order or decree by any federal or state court which prevents the
consummation of any of the Mergers shall have been issued and remain
in effect (each party agreeing to use its reasonable efforts to have
any such injunction, order or decree lifted);

(v) no action shall have been taken, and no
statute, rule or regulation shall have been enacted, by any state or
federal government or governmental agency in the United States which
would prevent the consummation of any of the Mergers or make the
consummation of any of the Mergers illegal;

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(vi) all governmental waivers, consents, orders
and approvals legally required for the consummation of the Mergers and
the transactions contemplated hereby, and all consents from lenders
required to consummate the Mergers, shall have been obtained and be in
effect at the Merger 1 Effective Time, except where the failure to
obtain the same would not be reasonably likely to have a Material
Adverse Effect following the Merger 1 Effective Time; and

(vii) the Sellers and Purchasers shall have
received an opinion of Coopers & Lybrand L.L.P., in form and substance
reasonably satisfactory to the Sellers and Purchasers, dated the
Closing Date, to the effect that (A) Merger 2 will qualify as a
reorganization under Section 368 of the Code and (B) Parent and
Convest will each be a "party to a reorganization" within the meaning
of 368(b) of the Code with respect to Merger 2.

(b) Conditions to Obligation of the Sellers to Effect the
Mergers. Unless waived by the Sellers, the obligation of the Sellers to effect
the Mergers shall be subject to the fulfillment at or prior to the Closing Date
of the following additional conditions:

(i) Purchasers shall have performed in all
material respects their agreements contained in this Agreement
required to be performed on or prior to the Closing Date and the
representations and warranties of Purchasers contained in this
Agreement shall be true and correct in all material respects on and as
of the date made and (except to the extent that such representations
and warranties speak as of an earlier date) on and as of the Closing
Date as if made at and as of such date, and the Sellers shall have
received a certificate of the President or a Vice President of Parent
and of the President or a Vice President of EDI-Sub to that effect;

(ii) since the date hereof, there shall have been
no changes that constitute, and no event or events (including, without
limitation, litigation developments) shall have occurred which have
resulted in or constitute, either individually or in the aggregate, a
Material Adverse Change;

(iii) all governmental waivers, consents, orders,
and approvals legally required for the consummation of the Mergers and
the transactions contemplated hereby shall have been obtained and be
in effect at the Closing Date except for such waivers, consents,
orders and approvals the failure of which to have been obtained would
not have, either individually or in the aggregate, a Material Adverse
Effect, and no governmental authority shall have promulgated after the
date hereof any statute, rule or regulation which, when taken together
with all such promulgations, would cause a Material Adverse Change;
and

(iv) each Seller shall have received the
bring-down opinion of its respective financial advisor, dated as of
the date of the definitive Joint Proxy Statement/Prospectus, to the
effect that the consideration to be received in the Mergers by the
respective holders of the Convest Common Stock and the Edisto Common
Stock is fair to such holders from a financial point of view.

(c) Conditions to Obligation of Purchasers to Effect the
Mergers. Unless waived by Parent, the obligations of Purchasers to effect the
Mergers shall be subject to the fulfillment at or prior to the Merger 1
Effective Time of the additional following conditions:

(i) the Sellers shall have performed in all
material respects their agreements contained in this Agreement
required to be performed on or prior to the Closing Date and the

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representations and warranties of the Sellers contained in this
Agreement shall be true and correct in all material respects on and as
of the date made and on and as of the Closing Date as if made at and
as of such date, and Parent shall have received a Certificate of the
Chairman and Chief Executive Officer, President or of a Vice President
of each Seller to that effect;

(ii) the Affiliate Agreements and Shareholders
Agreements required to be delivered to Parent pursuant to Section 8(k)
shall have been furnished as required by Section 8(k);

(iii) each Edisto Option and each Convest Option
shall have either been redeemed, exercised or canceled in accordance
with Section 4(c);

(iv) since the date hereof, there shall have been
no changes that constitute, and no event or events (including, without
limitation, litigation developments) shall have occurred which have
resulted in or constitute, either individually or in the aggregate, a
Material Adverse Change;

(v) all governmental waivers, consents, orders
and approvals legally required for the consummation of the Mergers and
the transactions contemplated hereby shall have been obtained and be
in effect at the Closing Date except for such waivers, consents,
orders and approvals the failure of which to have been obtained would
not have, either individually or in the aggregate, a Material Adverse
Effect, and no governmental authority shall have promulgated after the
date hereof any statute, rule or regulation which, when taken together
with all such promulgations, would cause a Material Adverse Change;

(vi) the number of Dissenting Shares shall not
exceed three percent of the total number of shares of Edisto Common
Stock outstanding on the date hereof;

(vii) with respect to that certain letter
agreement, dated May 1, 1995, among Convest, Edisto E&P and Coral
Reserves Energy Corp. ("Coral"), and the preferential purchase right
of Coral contained therein, Sellers shall have obtained (a) the
written waiver of such right by Coral, or (b) the exercise of such
right by Coral in accordance with the terms of such agreement for a
price of $14,000,000; and

(viii) with respect to that certain Conveyance of
Production Payment dated February 4, 1992, between NRM Operating
Company, L.P. and Enron Reserve Acquisition Corp. ("ERAC"), Sellers
shall have obtained the express written consent of ERAC to (a) the
transfer of the interest of Edisto E&P in the subject property
pursuant to this Agreement, and (b) the succession, by Parent or by
any Subsidiary of Parent selected from time to time by Parent in its
sole discretion, to Edisto E&P's interests and obligations under such
agreement; provided, however, that such successor shall not be
required to assume any obligations, other than those currently borne
by Edisto E&P, in order for Sellers to obtain such consent.

Section 10. Termination, Amendment and Waiver.

(a) Termination. This Agreement may be terminated at any
time prior to the Closing Date, whether before or after approval by the
stockholders of the Sellers, by the mutual written consent of the Parent and
the Sellers or as follows:

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(i) The Sellers shall have the right to
terminate this Agreement:

(A) if the representations and
warranties of Purchasers shall fail to be true and correct in
all material respects on and as of the date made or, except in
the case of any such representations and warranties made as of
a specified date, on and as of any subsequent date as if made
at and as of such subsequent date and such failure shall not
have been cured in all material respects within 30 days after
written notice of such failure is given to Parent by the
Sellers;

(B) if the Mergers are not completed by
October 31, 1997 (unless due to a delay or default on the part
of a Seller);

(C) if any of the Mergers is enjoined by
a final, unappealable court order not entered at the request
or with the support of a Seller and if the Sellers shall have
used reasonable efforts to prevent the entry of such order;

(D) if (w) a Seller receives an offer or
proposal from any Potential Acquirer (excluding any Affiliate
of a Seller or any group of which any Affiliate of a Seller is
a member) with respect to a merger, sale of substantial assets
or other business combination involving such Seller, (x) such
Seller's Board of Directors determines, in good faith and
after consultation with an independent financial advisor, that
such offer or proposal (if consummated pursuant to its terms)
would result in an Acquisition Transaction more favorable to
such Seller's stockholders from a financial point of view than
the relevant Merger (any such offer or proposal being referred
to as a "Superior Proposal") and resolves to accept such
Superior Proposal, (y) the Board of Directors of the Seller
shall conclude in good faith after consultation with its legal
counsel that such action is necessary in order for the Board
of Directors of the Seller to act in a manner that is
consistent with its fiduciary obligations under applicable law
and (z) the Seller shall have furnished the Parent with a copy
of the definitive agreement at least five business days prior
to its execution and Parent shall have failed within such five
business day period to offer to amend the terms of this
Agreement so that the Mergers would be, in the good faith
determination of the Board of Directors of the Seller, at
least as favorable to the Seller's stockholders from a
financial point of view as the Acquisition Transaction;
provided, however, that such termination shall not be
effective until such time as the payment required by Section
10(b)(ii) shall have been received by Parent;

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shall have failed within such five business day period to
offer to amend the terms of this Agreement so that the Mergers
would be, in the good faith determination of the Board of
Directors of the Seller, at least as favorable to the Seller's
stockholders from a financial point of view as the Acquisition
Transaction; provided, however, that such termination shall
not be effective until such time as the payment required by
Section 10(b)(ii) shall have been received by Parent; or

(F) if (x) Parent fails to perform in
any material respect any of its material covenants in this
Agreement ("Default"), (y) Parent does not cure such Default
in all material respects within 30 days after notice of such
Default is given to Parent by the Sellers and (z) neither
Seller is itself in Default.

(ii) Parent shall have the right to terminate this
Agreement:

(A) if the representations and
warranties of the Sellers shall fail to be true and correct in
all material respects on and as of the date made or, except in
the case of any such representations and warranties made as of
a specified date, on and as of any subsequent date as if made
at and as of such subsequent date and such failure shall not
have been cured in all material respects within 30 days after
written notice of such failure is given to the Sellers by
Parent;

(B) if the Mergers are not completed by
October 31, 1997 (unless due to a delay or default on the part
of Parent);

(C) if any of the Mergers is enjoined by
a final, unappealable court order not entered at the request
or with the support of Parent and if Parent shall have used
reasonable efforts to prevent the entry of such order;

(D) if the Board of Directors of a
Seller shall have resolved to accept a Superior Proposal or
shall have recommended to the stockholders of such Seller that
they tender their shares in a tender or an exchange offer
commenced by a third party (excluding any Affiliate of Parent
or any group of which any Affiliate of Parent is a member);

(E) if (A) a Seller is in Default, (B)
such Seller does not cure such Default in all material
respects within 30 days after notice of such Default is given
to such Seller by Parent, and (C) Parent is not itself in
Default; or

(F) if the Sellers fail to receive the
Requisite Stockholder Approvals.

(iii) As used in this Section 10(a) "group" has the
meaning set forth in Section 13(d) of the Exchange Act and the rules
and regulations thereunder.

(iv) Each party (i) acknowledges that a breach of
any of its requirements for a termination pursuant to Section
10(a)(i)(D) and 10(a)(i)(E) will result in irreparable harm to the
other party which will not be compensable in money damages, and (ii)
agrees that such requirements shall be specifically enforceable and
that specific performance and injunctive relief shall be a remedy
properly available to the other party for a breach of such
requirements. In any event, if a

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Seller enters into an Acquisition Transaction, it will immediately pay
to Parent the sums described in Section 10(b) below.

(b) Expenses and Fees.

(i) All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, except that those expenses
incurred in connection with printing and filing the Joint Proxy
Statements/Prospectus shall be shared equally by Parent and the
Sellers.

(ii) The Sellers agree to immediately pay to
Parent a fee equal to $3,000,000, if:

(A) either Seller terminates this
Agreement pursuant to clause (D) or (E) of Section 10(a)(i);

(B) Parent terminates this Agreement
pursuant to clause (D) of Section 10(a)(ii); or

(C) Parent terminates this Agreement
pursuant to clause (F) of Section 10(a)(ii) as a result of a
failure of Convest to receive the Requisite Stockholder
Approvals.

(iii) Parent agrees to pay to the Sellers, as
liquidated damages and as the sole remedy and payment for any damages,
a fee equal to $3,000,000 if Sellers are not in breach or violation of
this Agreement and Parent terminates this Agreement for any reason
other than pursuant to Section 10(a)(ii).

(c) Effect of Termination. In the event of termination
of this Agreement by either Parent or the Sellers pursuant to the provisions of
Section 10(a), this Agreement shall forthwith become void and there shall be no
further obligation on the part of any Party or their respective officers or
directors (except as set forth in this Section 10(c), in the second sentence of
Section 8(a)(i) and in Sections 8(a)(ii) and 10(b), all of which shall survive
the termination). Nothing in this Section 10(c) shall relieve any Party from
liability for any willful or intentional breach of this Agreement; provided,
however, that any termination of this Agreement in accordance with the
procedures and payments set forth in Section 10(b) shall relieve the
terminating Party of any such liability.

(d) Amendment. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto and
in compliance with applicable law. Such amendment may take place at any time
prior to the Closing Date, whether before or after approval by the stockholders
of the Sellers.

(e) Waiver. At any time prior to the Merger 1 Effective
Time, the Dissolution Effective Time or Merger 2 Effective Time, as the case
may be, the Parties hereto may (i) extend the time for the performance of any
of the obligations or other acts of the other Parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the

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part of a Party hereto to any such extension or waiver shall be valid if set
forth in an instrument in writing signed on behalf of such Party.

SECTION 11. General Provisions.

(a) Non-Survival of Representations and Warranties. No
representations or warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Mergers. The covenants and
agreements of the parties to be performed after the Closing contained in this
Agreement shall survive the Closing.

(b) Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, mailed by registered or certified mail (return receipt requested)
or sent via facsimile to the parties at the following addresses (or at such
other address for a Party as shall be specified by like notice):

(i) If to Parent or EDI-Sub to:

Forcenergy Inc
2730 SW 3rd Avenue
Suite 800
Miami, Florida 33129-2237
Attention: Stig Wennerstrom
Telecopy: (305) 856-4300

with a copy to:

Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: John F. Wombwell
Telecopy: (713) 220-4285

(ii) If to the Sellers, to:

Edisto Resources Corporation
2401 Fountain View Drive
Suite 700
Houston, Texas 77057
Attention: Michael Y. McGovern
Telecopy: (281) 290-9665

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with a copy to:

Snell & Smith, P.C.
1000 Louisiana, Suite 3650
Houston, Texas 77002
Attention: Paul E. Pryzant
Telecopy: (713) 651-8010

(c) Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. In this Agreement, unless a
contrary intention appears, (i) the words "herein," "hereof" and "hereunder"
and other words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision and (ii) reference to any
Article or Section means such Article or Section hereof. No provision of this
Agreement shall be interpreted or construed against any party hereto solely
because such party or its legal representative drafted such provision.

(d) Miscellaneous. This Agreement (including the
documents and instruments referred to herein) (i) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof, (ii) is not intended to confer upon any other person any
rights or remedies hereunder and (iii) shall not be assigned by operation of
law or otherwise, except that EDI-Sub may assign this Agreement to any other
wholly owned subsidiary of Parent. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE
STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY
WITHIN SUCH STATE.

(e) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.

(f) Parties In Interest. This Agreement shall be binding
upon and inure solely to the benefit of each Party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.

54
<PAGE> 235
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.

FORCENERGY INC

By:
---------------------------------------------
Name: Stig Wennerstrom
Title: President and Chief Executive Officer

EDI ACQUISITION CORPORATION

By:
---------------------------------------------
Name: Stig Wennerstrom
Title: President and Chief Executive Officer

EDISTO RESOURCES CORPORATION

By:
---------------------------------------------
Name: Michael Y. McGovern
Title: Chairman and Chief Executive Officer

CONVEST ENERGY CORPORATION

By:
---------------------------------------------
Name: Michael Y. McGovern
Title: Chairman and Chief Executive Officer

55
<PAGE> 236
APPENDIX B

PLAN AND AGREEMENT OF MERGER

THIS PLAN AND AGREEMENT OF MERGER (the "Merger Agreement") is
made and entered into as of , 1997, by and among
Forcenergy Inc, a Delaware corporation (the "Company") and Convest Energy
Corporation, a Texas corporation ("Convest").

WITNESSETH

WHEREAS, the Company is a corporation duly organized and validly
existing under the laws of the State of Delaware, with authorized capital stock
consisting of 50,000,000 shares of Common Stock, $0.01 par value per share
("Company Common Stock"), of which shares are issued and
outstanding on the date hereof, and 5,000,000 shares of preferred stock, of
which no shares are issued and outstanding as of the date hereof;

WHEREAS, Convest is a corporation duly organized, validly
existing and in good standing in the State of Texas, with authorized capital
stock consisting of 20,000,000 shares of common stock, $0.01 par value
("Convest Common Stock"), of which shares were issued and
outstanding on the date hereof, and 5,000,000 shares of preferred stock, of
which no shares are issued and outstanding on the date hereof;

WHEREAS, the respective Boards of Directors of the Company and
Convest have determined that it is advisable and to the advantage of such
corporations and their shareholders that Convest merge with and into the
Company (the "Merger") upon the terms and conditions herein provided; and

WHEREAS, the Boards of Directors of the Company and Convest have
approved this Merger Agreement.

NOW, THEREFORE, in consideration of the mutual agreements and
covenants set forth herein, it is agreed as follows:

1. Merger. Convest shall be merged with and into the Company on the
terms and conditions hereinafter expressed (the "Merger"). At the Effective
Time (as defined hereinafter), the separate existence of Convest shall cease
and the Company shall be the surviving entity (the "Surviving Entity"). The
Merger shall become effective at such time (the "Effective Time") as is the
later to occur of (i) the time that the Articles of Merger, together with a
copy of this Merger Agreement, are filed with the Secretary of State of the
State of Texas and a certificate of merger is issued thereby in accordance with
the Texas Business Corporation Act ("TBCA"), and (ii) the time that a
Certificate of Merger is filed with the Secretary of State of the State of
Delaware in accordance with the Delaware General Corporate Law ("DGCL").
<PAGE> 237
2. Governing Documents and Directors and Officers. The Certificate
of Incorporation of the Company in effect immediately prior to the Effective
Time shall continue to be the Certificate of Incorporation of the Surviving
Entity after the Effective Time without change or amendment. The Bylaws of the
Company in effect immediately prior to the Effective Time shall continue to be
the Bylaws of the Surviving Entity after the Effective Time without change or
amendment. The directors and officers of the Company immediately prior to the
Effective Time shall be the directors and officers of the Surviving Entity
after the Effective Time, and shall serve until their successors have been duly
appointed or elected in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Entity.

3. Succession. At the Effective Time, the Surviving Entity shall
succeed to Convest in the manner of and as more fully set forth in Section 259
of the DGCL. All rights, title and interests to all real estate and other
property owned by Convest shall be allocated to and vested in the Surviving
Entity without reversion or impairment, without further act or deed, and
without any transfer or assignment having occurred, but subject to any existing
liens or other encumbrances thereon. All liabilities and obligations of
Convest shall be allocated to the Surviving Entity and the Surviving Entity
shall be the primary obligor therefor and, except as otherwise provided by law
or contract, no other party to the Merger shall be liable therefor.

4. Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action by the holder of any capital stock of the Company
or Convest:

(a) Each share of Convest Common Stock shall be converted into
the right to receive, without interest, a fractional interest in a share
of Company Common Stock equal to $8.88 divided by the Weighted Average
Trading Price (as defined below) (the "Exchange Ratio"); provided,
however, (i) if such Weighted Average Trading Price exceeds $34.96, then
the Exchange Ratio shall be equal to $8.88 divided by $34.96 and (ii) if
such Weighted Average Trading Price is less than $28.96, then the
Exchange Ratio shall be equal to $8.88 divided by $28.96. Only whole
shares of Company Common Stock shall be issued. In lieu of any
fractional share of Company Common Stock, each holder of shares of
Convest Common Stock who would otherwise have been entitled to receive a
fraction of a share of Company Common Stock shall be entitled to receive
a cash payment equal to such fraction multiplied by either (i) the
Weighted Average Trading Price, (ii) $34.96 or (iii) $28.96, depending
on which of the foregoing prices is used for the above calculation of
the Exchange Ratio.

(b) Each share of capital stock of Convest, if any, owned by
the Company or any subsidiary of the Company or held in treasury by
Convest or any subsidiary of Convest immediately prior to the Effective
Time shall be canceled and no consideration shall be paid in exchange
therefor and shall cease to exist from and after the Effective Time.

(c) Each share of Company Common Stock issued and outstanding
immediately prior to the Merger shall, upon consummation of the Merger,
be converted into one share of common stock of the Surviving Entity.

-2-
<PAGE> 238
(d) The "Weighted Average Trading Price" of Company Common
Stock shall be calculated by (x) making the following calculation for
each of the ten trading days ending on the day that is two days prior to
the Closing Date of the Merger: (i) grouping together all shares of
Company Common Stock traded on such day at the same trading price, (ii)
multiplying the aggregate number of shares in each price group by the
trading price for such group to calculate a product (the total sold
shares value) for each group, (iii) adding all of such products from
each group and (iv) dividing the resulting total by the aggregate number
of shares traded on such trading day, and (y) calculating the arithmetic
mean of the resulting ten amounts.

5. Surrender of Stock Certificates; Payment. From and after the
Effective Time, each holder of an outstanding certificate which prior to that
time represented shares of Convest Common Stock, shall be entitled to receive
in exchange therefor, upon surrender to ,
the Exchange Agent for the Merger, a certificate or certificates representing
the number of whole shares of Company Common Stock, and cash in lieu of any
fractional share, in each case to which such holder is entitled pursuant to
Section 4(a) above.

-3-
<PAGE> 239
IN WITNESS WHEREOF, this Merger Agreement, having first been duly
approved by resolutions of the Boards of Directors of the Company and Convest
and by the shareholders of Convest, is hereby executed on behalf of each of
said corporations by their respective officers thereunto duly authorized.

CONVEST ENERGY CORPORATION
A Texas corporation

By:
---------------------------
Name:
Title:

ATTEST:

By:
--------------------------------
Secretary

FORCENERGY INC
A Delaware corporation

By:
---------------------------
Name:
Title:
ATTEST:

By:
--------------------------------
Secretary

-4-
<PAGE> 240

APPENDIX C

June 19, 1997

Board of Directors
Edisto Resources Corporation
2401 Fountain View Drive
Suite 700
Houston, Texas 77057

Gentlemen:

You have advised Rauscher Pierce Refsnes, Inc. ("RPR") that Forcenergy
Inc, a Delaware corporation ("Forcenergy"), has proposed to acquire the
outstanding common stock of Edisto Resources Corporation ("Edisto") at a price
of approximately $9.95 per Edisto share payable in (1) shares of common stock
of Forcenergy to have a current market value of $5.064, based on the average
market price of Forcenergy's common stock for ten trading days prior to closing
(subject to certain "floor" and "ceiling" provisions) plus (2) $4.886 in cash.
You have requested that RPR issue an opinion ("Opinion") as to the fairness
from a financial point of view to the stockholders of Edisto of the financial
terms of the proposed transaction as set forth in the draft Agreement and Plan
of Merger dated June 19, 1997, which we understand is the latest draft.

RPR, as part of its investment banking business, is continually engaged in
the valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes.

In arriving at our opinion, we have, among other things:

1. Reviewed the draft "Agreement and Plan of Merger" dated June 19, 1997
between Edisto and Forcenergy;

2. Reviewed Forcenergy's May 16, 1997 offer letter written by Mr. Stig
Wennerstrom, President and CEO;

<PAGE> 241
Edisto Resources Corporation
June 19, 1997
Page 2

3. Reviewed Edisto's 10-K report for the year ended December 31,
1996 with Financial Statements audited by Arthur Andersen L.L.P.;

4. Reviewed Edisto's 10-Q report for the quarter ended March 31,
1997;

5. Reviewed an internal monthly financial package prepared by Edisto
as of March 31, 1997;

6. Reviewed Convest Energy Corporation's ("Convest's") 10-K report
for the year ended December 31, 1996 with Financial Statements
audited by Arthur Andersen, L.L.P. (Edisto owns 73% of Convest's
common stock);

7. Reviewed Convest's 10-Q report for the quarter ended March 31,
1997;

8. Reviewed an internal monthly financial package prepared by
Convest as of March 31, 1997;

9. Reviewed "Estimate of Revenues and Future Reserves to the Convest
Energy Corporation" as of January 1, 1997 prepared by
Netherland, Sewell & Associates, Inc.;

10. Reviewed a reserve report prepared by Ryder Scott Company as of
12/31/96 for Convest;

11. Reviewed Forcenergy's Annual Report and 10-K for the year ending
December 31, 1996 with financial statements audited by Coopers &
Lybrand, L.L.P.;

12. Reviewed Forcenergy's 10-Q report for the quarter ending March
31, 1997;
<PAGE> 242
Edisto Resources Corporation
June 19,1997
Page 3

13. Reviewed Forcenergy's reserve report prepared by Netherland,
Sewell & Associates, Inc. prepared as of 1/l/97 and reports on
the Stewart Petroleum Acquisition, dated 2/18/97;

14. Reviewed Forcenergy's 1997 Budget prepared on April 7, 1997;

15. Reviewed Forcenergy's offering memorandum dated 2/11/97 for its
issuance of $200,000,000 senior subordinates notes;

16. Reviewed several research reports on Forcenergy written by
various brokerage firms in 1997;

17. Reviewed confidential information memorandum for Edisto and
Convest prepared by Petrie Parkman & Co. in February, 1997;

18. Considered such other information, financial studies, analyses
and investigations as we deemed relevant under the circumstances;
and

19. Discussed with management of Edisto and Convest the outlook for
future operating results, the assets and liabilities of the
companies, material in the foregoing documents, and other matters
we considered relevant to our inquiry.

In our review and in arriving at our opinion, we have, with your
permission, (i) not independently verified any of the foregoing information and
have relied upon its being complete and accurate in all material respects and
(ii) not made an independent evaluation or appraisal of specific assets of
Edisto or Convest. Our opinion is provided to you pursuant to the terms of our
engagement letter dated June 9, 1997.
<PAGE> 243
Edisto Resources Corporation
June 19, 1997
Page 4

Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the consideration to be received pursuant to the proposed
transaction is fair to the stockholders of Edisto from a financial point of
view.

RAUSCHER PIERCE REFSNES, INC.

By: /s/ G. CLYDE BUCK
---------------------------
G. Clyde Buck
Managing Director
<PAGE> 244

APPENDIX D

OPINION OF PETRIE PARKMAN

PETRIE PARKMAN & Co.

6350 TEXAS COMMERCE TOWER
HOUSTON, TEXAS 77002
713/650-3383 - Fax: 713/650-8461

June 19, 1997

The Board of Directors
Convest Energy Corporation
2401 Fountain View Drive
Suite 700
Houston, Texas 77057

Dear Directors:

You have asked us to advise you with respect to the fairness, from a
financial point of view, to the stockholders of Convest Energy Corporation, a
Texas corporation ("Convest") of the merger consideration (the "Merger
Consideration") consisting of a fraction of a share of Forcenergy Inc
("Forcenergy") common stock, par value $0.01 per share ("Forcenergy Common
Stock"), equal to $8.88 divided by the average of the Weighted Average Daily
Trading Price (as defined in the Merger Agreement) of Forcenergy Common Stock
for the ten trading days ending two trading days prior to the Closing Date
(as defined in the Merger Agreement); provided, however, (i) if such average of
the Weighted Average Daily Trading Price of Forcenergy Common Stock exceeds
$34.96, then the Convest Exchange Ratio (as defined in the Merger Agreement)
shall be equal to 0.25400 and (ii) if such average of the Weighted Average
Daily Trading Price of Forcenergy Common Stock is less than $28.96, then the
Convest Exchange Ratio shall be equal to 0.30663, in exchange for each share of
outstanding Convest common stock, par value $0.01 per share ("Convest Common
Stock"), pursuant to the terms of the Agreement and Plan of Merger, dated as of
June 19, 1997 (the "Merger Agreement"), among Forcenergy, a Delaware
corporation, EDI Acquisition Corporation, a Delaware corporation and
wholly-owned subsidiary of Forcenergy, Edisto Resources Corporation, a Delaware
corporation, and Convest. The Merger Agreement provides for, among other
things, the merger (the "Merger") of Convest with a subsidiary of Forcenergy
pursuant to which each issued and outstanding share of Convest Common Stock
will be converted into a fraction of a share of Forcenergy Common Stock as
described above.

In arriving at our opinion, we have, among other things:

(i) reviewed (i) certain publicly available business and financial
information relating to Convest and Forcenergy, including the
audited financial statements on Form 10-K for Convest and
Forcenergy as of December 31, 1996, and the unaudited financial
statements on Form 10-Q for Convest and Forcenergy as of March
31, 1997, and (ii) the audited financial statements of Great
Western Resources Inc. ("Great Western") as of September 30,
1996, and (iii) the unaudited consolidated

<PAGE> 245
statement of operations of Great Western for the six
month period ending March 31, 1996 and the three
month, 21 day period ending January 21, 1997;

(ii) reviewed certain estimates of reserves including: (i)
estimates of proved, probable, and possible oil and
gas reserves of Convest, as prepared by Ryder Scott
Company Petroleum Engineers as of December 31, 1996
and Netherland Sewell & Associates, Inc. as of
January 1, 1997, (ii) certain estimates of oil and
gas reserves of Convest in the Gulf of Mexico as
prepared by the management and staff of Convest as of
March 31, 1997, (iii) estimates of proved oil and gas
reserves of Forcenergy in the Gulf of Mexico and
onshore United States including Alaska, as prepared
by Netherland Sewell & Associates, Inc. as of January
1, 1997, (iv) estimates of proved, probable, and
possible reserves of Forcenergy in the Gulf of
Mexico, as prepared by Collarini Engineering Inc. as
of January 1, 1997; (v) certain estimates of oil and
gas reserves of Great Western in the Gulf of Mexico
and onshore United States as prepared by Ryder Scott
Company Petroleum Engineers as of September 30, 1996,
and (vi) certain estimates of oil and gas reserves of
Stewart Petroleum Company in Alaska as prepared by
the management and staff of Forcenergy as of January
1, 1997;

(iii) analyzed certain financial and operating data and
budgets concerning Convest and Forcenergy, all
of which were prepared or provided by the managements
of Convest and Forcenergy, as the case may be;

(iv) discussed the current operations and prospects of
Convest and Forcenergy with the managements and
operating staffs of Convest and Forcenergy, as the
case maybe;

(v) reviewed the historical trading histories and prices
of the shares of Forcenergy Common Stock and Convest
Common Stock;

(vi) compared recent stock market capitalization indicators
for Forcenergy and Convest with the recent stock
market capitalization indicators for certain other
publicly-traded independent energy companies;

(vii) compared the financial terms of the Merger with
the financial terms of certain other transactions
which we deemed to be relevant;

(viii) reviewed the Merger Agreement and the form of
Shareholder Agreement between Forcenergy and the
Stockholder party thereto, both dated June 19, 1997;
and

(ix) made such other analyses and examinations as we have
deemed necessary or appropriate.

We have assumed and relied upon, without assuming any responsibility
for verification, the accuracy and completeness of such information, including
without limitation, the statements

<PAGE> 246
made in the discussions referred to above. We have further relied upon the
assurances of the managements of both Convest and Forcenergy that they are
unaware of any facts that would make the information provided to us incomplete
or misleading in any material respect. With respect to financial and operating
data and budgets, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments relating
to the future financial and operational performance of Convest and Forcenergy
(including taking into account the impact of the Merger). With respect to the
estimates of oil and gas reserves, we have assumed that they have been
reasonably prepared on bases reflecting the best available estimates and
judgments relating to Convest's and Forcenergy's oil and gas properties. In
addition, we have not made an independent evaluation or appraisal of the assets
or liabilities of Convest or Forcenergy nor, except for the estimates of oil
and gas reserves referred to above, have we been furnished with such an
evaluation or appraisal. Consistent with the Merger Agreement, we have assumed
that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended.

Our opinion relates solely to the fairness from a financial point of view
to the holders of Convest Common Stock of the Merger Consideration pursuant to
the Merger. Our opinion does not constitute a recommendation to any
stockholder as to how such stockholder should vote on the proposed Merger or
any matter related thereto. We have not been requested to, and do not, express
any opinion regarding the fairness of the Merger Consideration to Forcenergy,
or any stockholder of Forcenergy. Our engagement and the opinion expressed
herein are solely for the benefit of the Convest Board of Directors and are not
on behalf of, and are not intended to confer rights or remedies upon,
Forcenergy, any holder of Convest Common Stock or Forcenergy Common Stock, or
any person other than the Convest Board of Directors. In addition, we have not
been asked to consider, and this opinion does not address, the price at which
the Forcenergy Common Stock will actually trade following the announcement or
consummation of the Merger. This letter may not be used for any other purpose
without our prior written consent; provided, however, that this letter may be
reproduced in fall in a proxy statement/prospectus relating to the Merger. As
you are aware, we have acted as financial advisor to Edisto Resources
Corporation ("Edisto") and we will receive fees from Convest and Edisto that
are contingent upon the consummation of the Merger and the merger of Edisto as
described in the Merger Agreement.

Our opinion is rendered on the basis of conditions in the securities
markets and the oil and gas markets prevailing as of the date hereof and the
condition and prospects, financial and otherwise, of Convest and Forcenergy as
they have been represented to us as of the date hereof or as they were
reflected in the materials and discussions described above.

Based upon and subject to the foregoing, and based upon such other matters
as we consider relevant, it is our opinion that, as of the date hereof, the
Merger Consideration is fair from a financial point of view to the holders of
Convest Common Stock.

Very truly yours,

/s/ JOHN C. HUGHES

3
<PAGE> 247
APPENDIX E

SECTION 262 OF THE

DELAWARE GENERAL CORPORATION LAW

262 APPRAISAL RIGHTS--(a) Any stockholder of a corporation of this
State who holds shares of stock on the date of the making of a demand pursuant
to subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation,
who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to Section 228 of this title shall be entitled to an appraisal
by the Court of Chancery of the fair value of the stockholder's shares of stock
under the circumstances described in subsections (b) and (c) of this section.
As used in this section, the word "stockholder" means a holder of record of
stock in a stock corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what is ordinarily
meant by those words and also membership or membership interest of a member of
a nonstock corporation; and the words "depository receipt" mean a receipt or
other instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.

(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), Section 252, Section 254, Section 257, Section
258, Section 263 or Section 264 of this title:

(1) Provided, however, that no appraisal rights under
this section shall be available for the shares of any class or series of stock,
which stock, or depository receipts in respect thereof, at the record date
fixed to determine the stockholders entitled to receive notice of and to vote
at the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held of
record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its approval
the vote of the stockholders of the surviving corporation as provided in
subsection (f) of Section 251 of this title.

(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the shares of any
class or series of stock of a constituent corporation if the holders thereof
are required by the terms of an agreement of merger or consolidation pursuant
to Section 251, Section 252, Section 254, Section 257, Section 258, Section 263
or Section 264 of this title to accept for such stock anything except:

a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or
depository receipts in respect thereof;

b. Shares of stock of any other corporation, or
depository receipts in respect thereof, which shares
of stock or depository receipts at the effective date
of the merger or consolidation will be either listed
on a national securities exchange or designated as a
national market system security on an interdealer
quotation system by the National Association of
Securities Dealers, Inc. or held of record by more
than 2,000 holders;

<PAGE> 248
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing
subparagraphs a. and b. of this paragraph; or

d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or
fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of his
paragraph.

(3) In the event all of the stock of a subsidiary
Delaware corporation party to a merger effected under Section 253 of this title
is not owned by the parent corporation immediately prior to the merger,
appraisal rights shall be available for the shares of the subsidiary Delaware
corporation.

(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be available for
the shares of any class or series of its stock as a result of an amendment to
its certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or substantially
all of the assets of the corporation. If the certificate of incorporation
contains such a provision, the procedures of this section, including those set
forth in subsections (d) and (e) of this section, shall apply as nearly as is
practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be submitted for
approval at a meeting of stockholders, the corporation, not less than 20 days
prior to the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal rights
are available for any or all of the shares of the constituent corporations and
shall include in such notice a copy of this section. Each stockholder electing
to demand the appraisal of his shares shall deliver to the corporation, before
the taking of the vote on the merger or consolidation, a written demand for
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares. A proxy or
vote against the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the effective date of such
merger or consolidation the surviving or resulting corporation shall notify
each stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or

(2) If the merger or consolidation was approved pursuant
to Section 228 or Section 253 of this title, each constituent corporation,
either before the effective date of the merger or consolidation or within ten
days thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights of
the approval of the merger or consolidation and that appraisal rights are
available for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy of this
section; provided that, if the notice is given on or after the effective date
of the merger or consolidation, such notice shall be given by the surviving or
resulting corporation to all such holders of any class or series of stock of a
constituent corporation that are entitled to appraisal rights. Such notice
may, and, if given on or after the effective date of the merger or
consolidation, shall, also notify such

-2-
<PAGE> 249
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such holders on or
within 10 days after such effective date; provided, however, that if such
second notice is sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder who is
entitled to appraisal rights and who has demanded appraisal of such holder's
shares in accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is
required to give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive either notice,
each constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that if
the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record date
is fixed and the notice is given prior to the effective date, the record date
shall be the close of business on the day next preceding the day on which the
notice is given.

(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who
has complied with subsections (a) and (d) hereof and who is otherwise entitled
to appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the
merger or consolidation, any stockholder who has complied with the requirements
of subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10
days after his written request for such a statement is receiving by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.

(f) Upon the filing of any such petition by a stockholder, service
of a copy thereof shall be made upon the surviving or resulting corporation,
which shall within 20 days after such service file in the office of the
Register in Chancery in which the petition was filed a duly verified list
containing the names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the value of their
shares have not been reached by the surviving or resulting corporation. If the
petition shall be filed by the surviving or resulting corporation, the petition
shall be accompanied by such a duly verified list. The Register in Chancery,
if so ordered

-3-
<PAGE> 250
by the Court, shall give notice of the time and place fixed for the hearing of
such petition by registered or certified mail to the surviving or resulting
corporation and to the stockholders shown on the list at the addresses therein
stated. Such notice shall also be given by 1 or more publications at least 1
week before the day of the hearing, in a newspaper of general circulation
published in the City of Wilmington, Delaware or such publication as the Court
deems advisable. The forms of the notices by mail and by publication shall be
approved by the Court, and the costs thereof shall be borne by the surviving or
resulting corporation.

(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.

(h) After determining the stockholders entitled to an appraisal,
the Court shall appraise the shares, determining their fair value exclusive of
any element of value arising from the accomplishment or expectation of the
merger or consolidation, together with a fair rate of interest, if any, to be
paid upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to subsection
(f) of this section and who has submitted his certificates of stock to the
Register in Chancery, if such is required, may participate fully in all
proceedings until it is fully determined that he is not entitled to appraisal
rights under this section.

(i) The Court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or resulting
corporation to the stockholders entitled thereto. Interest may be simple or
compound, as the Court may direct. Payment shall be so made to each such
stockholder, in the case of holders of uncertificated stock forthwith, and the
case of holders of shares represented by certificates upon the surrender to the
corporation of the certificates representing such stock. The Court's decree
may be enforced as other decrees in the Court of Chancery may be enforced,
whether such surviving or resulting corporation be a corporation of this State
or of any state.

(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.

-4-
<PAGE> 251
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded his appraisal rights as provided
in subsection (d) of this section shall be entitled to vote such stock for nay
purpose or to receive payment of dividends or other distributions on the stock
(except dividends or other distributions payable to stockholders of record at a
date which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal of
his demand for an appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the merger or consolidation
as provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the
Court of Chancery shall be dismissed as to any stockholder without the approval
of the court, and such approval may be conditioned upon such terms as the Court
deems just.

(l) The shares of the surviving or resulting corporation to which
the shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.

-5-
<PAGE> 252
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL"), a Delaware corporation has the power, under specified
circumstances, to indemnify its directors, officers, employees and agents in
connection with threatened, pending or completed actions, suits or proceedings,
whether civil, criminal, administrative or investigative (other than an action
by or in right of the corporation), brought against them by reason of the fact
that they were or are such directors, officers, employees or agents, against
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred in any such action, suit or proceeding. Article XII of the
Forcenergy's Amended and Restated Certificate of Incorporation together with
Article VII of its Bylaws provide for indemnification of each person who is or
was made a party to any actual or threatened civil, criminal, administrative or
investigative action, suit or proceeding because such person is or was an
officer or director of the Forcenergy or is a person who is or was serving at
the request of the Forcenergy as a director, officer, employee or trustee of
another corporation or of a partnership, joint venture trust or other
enterprise, including service relating to employee benefit plans, to the
fullest extent permitted by the DGCL as it existed at the time the
indemnification provisions of the Forcenergy's Certificate of Incorporation and
the Bylaws were adopted or as may be thereafter amended. Article VII of the
Forcenergy's Bylaws expressly provides that it is not the exclusive method of
indemnification.

Article VII of the Bylaws provides that the Forcenergy may maintain
insurance, at its own expense, to protect itself and any director, officer,
employee or agent of the Forcenergy or of another entity against any expense,
liability or loss, regardless of whether the Forcenergy would have the power to
indemnify such person against such expense, liability or loss under the DGCL.

Section 102(b)(7) of the DGCL provides that a certificate of
incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the DGCL (relating to liability for unauthorized acquisitions or redemptions
of, or dividends on, capital stock) or (iv) for any transaction from which the
director derived an improper personal benefit. Article XII of the Forcenergy's
Amended and Restated Certificate of Incorporation contains such a provision.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
- ------ -----------------------
<S> <C>
2.1 Agreement and Plan of Merger dated as of June 19, 1997, as amended,
by and among Forcenergy, EDI-Sub, Edisto and Convest (included
as Appendix A to the Joint Proxy Statement/Prospectus).

2.2 Shareholder Agreement dated as of June 19, 1997 by and among
Forcenergy and TCW Entities.

2.3 Form of Shareholder Agreement by and among Forcenergy and certain
officers and directors of Edisto and Convest.

4.1 Amended and Restated Certificate of Incorporation of Forcenergy
dated July 25, 1995 (filed as Exhibit 3.1 to the Quarterly Form on
10-Q filed on November 14, 1995 for the nine month period ending
September 30, 1995 and is included herein by reference (File No.
0-26444)) and Amendment No. 1 thereto (filed with Amendment No. 2
to the Registration Statement on Form S-1 filed on June 6, 1996 and
is included herein by reference (File No. 333-4600)

</TABLE>

II-1
<PAGE> 253

<TABLE>
<S> <C>
4.2 Bylaws of Forcenergy (filed as Exhibit 3.2 to the Registration
Statement on Form S-1 filed on June 2, 1995, as amended on July 6,
1995 and July 25, 1995 and is included herein by reference (File
No. 33-93020)).

5.1* Opinion of Vinson & Elkins L.L.P. regarding the legality of the
securities.

8.1* Opinion of Coopers & Lybrand L.L.P. regarding tax matters.

11.1 Computation of Earnings per Share dated as of March 31, 1997 and
December 31, 1996 (set forth in the Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997 and the Annual Report on Form
10-K for the fiscal year December 31, 1996, respectively. These
reports have been incorporated herein by reference).

12.1 Computation of Ratios.

23.1 Consent of Vinson & Elkins L.L.P. (set forth in Exhibit 5.1).

23.2 Consent of Coopers & Lybrand L.L.P.

23.3A Consent of Arthur Andersen LLP (Edisto).

23.3B Consent of Arthur Andersen LLP (Convest).

23.4 Consent of Price Waterhouse LLP (Forcenergy).

23.5 Consent of Netherland, Sewell & Associates, Inc. (Edisto and
Convest).

23.6 Consent of Collarini Engineering, Inc.

23.7 Consent of Joe C. Neal & Associates.

23.8 Consent of Ryder Scott Company (Edisto and Convest).

23.9 Consent of Netherland, Sewell & Associates, Inc. (Forcenergy).

24.1 Powers of Attorney (set forth on signature page).

99.1* Form of Edisto Proxy.

99.2* Form of Convest Proxy.

99.3 Consent of Rauscher Pierce Refsnes, Inc.

99.4 Consent of Petrie Parkman & Co.
</TABLE>

- ----------
* To be filed by amendment.

II-2
<PAGE> 254
Financial Statement Schedules:

Not applicable.

ITEM 22. UNDERTAKINGS.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:

(i) To include any prospectus required in Section 10(a) (3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;

provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement;

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof;

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering;

(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
tide offering thereof;

(5) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the Registration Statement through the date of responding to the
request;

(6) That, prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form
with respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other Items of the applicable
form;

(7) That every prospectus (i) that is filed pursuant to paragraph (6)
immediately preceding, or (ii) that purports to meet the requirements of
section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-

II-3
<PAGE> 255
effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof; and

(8) To supply by means of a post-effective amendment all information
concerning a transaction, and the Company being acquired involved therein, that
was not the subject of and included in the Registration Statement when it
became effective.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 20 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

II-4
<PAGE> 256
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Miami, State of Florida,
on the 18th day of July, 1997.

Forcenergy Inc

By: /s/ E. JOSEPH GRADY
----------------------------------------
E. Joseph Grady
Vice President - Chief Financial Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints E. Joseph Grady and Everett Burrell, or either
of them, his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes may lawfully do or cause to be done by virtue
hereof. Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ STIG WENNERSTROM
- ------------------------------- President and Chief Executive Officer July 18, 1997
Stig Wennerstrom (Principal Executive Officer)

/s/ E. JOSEPH GRADY
- ------------------------------- Vice President - Chief Financial Officer July 18, 1997
E. Joseph Grady (Principal Financial and Accounting Officer)

/s/ BRUCE L. BURNHAM
- ------------------------------- Director July 18, 1997
Bruce L. Burnham

/s/ ERIC FORSS
- ------------------------------- Director July 18, 1997
Eric Forss

/s/ ROBERT ISSAL
- ------------------------------- Chairman of the Board of Directors July 18, 1997
Robert Issal

/s/ WILLIAM F. WALLACE
- ------------------------------- Director July 18, 1997
William F. Wallace
</TABLE>

II-5
<PAGE> 257
EXHIBIT INDEX

Exhibit
Number Description of Exhibits
- ------ -----------------------

2.1 Agreement and Plan of Merger dated as of June 19, 1997, as amended,
by and among Forcenergy, EDI-Sub, Edisto and Convest (included
as Appendix A to the Joint Proxy Statement/Prospectus).

2.2 Shareholder Agreement dated as of June 19, 1997 by and among
Forcenergy and TCW Entities.

2.3 Form of Shareholder Agreement by and among Forcenergy and certain
officers and directors of Edisto and Convest.

4.2 Bylaws of Forcenergy (filed as Exhibit 3.2 to the Registration
Statement on Form S-1 filed on June 2, 1995, as amended on July 6,
1995 and July 25, 1995 and is included herein by reference (File
No. 33-93020)).

5.1* Opinion of Vinson & Elkins L.L.P. regarding the legality of the
securities.

8.1* Opinion of Coopers & Lybrand L.L.P. regarding tax matters.

12.1 Computation of Ratios.

23.1 Consent of Vinson & Elkins L.L.P. (set forth in Exhibit 5.1).

23.2 Consent of Coopers & Lybrand L.L.P.

23.3A Consent of Arthur Andersen LLP (Edisto).

23.3B Consent of Arthur Andersen LLP (Convest).

23.4 Consent of Price Waterhouse LLP (Forcenergy).

23.5 Consent of Netherland, Sewell & Associates, Inc. (Edisto and
Convest).

23.6 Consent of Collarini Engineering, Inc.

23.7 Consent of Joe C. Neal & Associates.

23.8 Consent of Ryder Scott Company (Edisto and Convest).

23.9 Consent of Netherland, Sewell & Associates, Inc. (Forcenergy).

24.1 Powers of Attorney (set forth on signature page).

99.1* Form of Edisto Proxy.

99.2* Form of Convest Proxy.

99.3 Consent of Rauscher Pierce Refsnes, Inc.

99.4 Consent of Petrie Parkman & Co.

- ----------
* To be filed by amendment.

<PAGE> 1
EXHIBIT 12.1

<TABLE>
<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
-------------------------------------------------------------------------
1992 1993 1994 1995 1996 1996 1997
---------- --------- ---------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Net income before income taxes . $ 4,394 $ 3,199 $ (6,478)$ (2,928)$ 17,989 $ 2,899 $ 18,096
Fixed Charges(1) . . . . . . . . 2,303 6,192 9,529 11,668 13,367 2,874 6,922
---------- --------- ---------- ---------- --------- ---------- ---------
Earnings . . . . . . . . . $ 6,697 $ 9,391 $ 3,051 $ 8,740 $ 31,356 $ 5,773 $ 25,018
========== ========= ========== ========== ========= ========== =========
Fixed Charges(2) . . . . . $ 2,303 $ 6,549 $ 11,058 $ 14,234 $ 15,594 $ 3,408 $ 7,901
========== ========= ========== ========== ========= ========== =========
Ratio of Earnings to Fixed Charges 2.9x 1.4x 0.3x 0.6x 2.0x 1.7x 3.2x
========== ========= ========== ========== ========= ========== =========
</TABLE>

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

(1) Includes interest expense, excluding amounts capitalized, plus amortization
of debt issuance costs.

(2) Includes interest expense plus amortization of debt issuance costs.

<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the Incorporation by reference in this registration statement on
Form S-4 of our report dated February 17, 1997, on our audits of the
consolidated financial statements of Forcenergy Inc as of December 31, 1996 and
1995 and for the years then ended, which report is included in the annual
report on Form 10-K filed with the Securities and Exchange Commission pursuant
to the Securities Exchange Act of 1934. We consent to the incorporation by
reference in this registration statement on Form S-4 of our report dated August
30, 1996, on our audit of the historical statement of revenues and direct
operating expenses of the properties acquired by Forcenergy Inc from Amerada
Hess Corporation for the year ended December 31, 1995, which report is included
in the Form 8-K/A filed with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934. We consent to the Incorporation by
reference in this registration statement on Form S-4 of our report dated March
13, 1997, on our audits of the historical statements of revenues and direct
operating expenses of the properties acquired by Forcenergy Inc from Marathon
Oil Company for the years ended December 31, 1996 and 1995, which report is
included in the Form 8-K/A filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934. We also consent to the
reference to our firm under the captions "Experts" and "Selected Financial
Data".

Coopers & Lybrand L.L.P.
Miami, Florida
July 17, 1997

<PAGE> 1
EXHIBIT 23.3A

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
included in or made a part of this registration statement and to the
incorporation by reference in this registration statement of our report dated
March 20, 1997 included in Edisto Resources Corporation's Form 10-K for the
year ended December 31, 1996 and to all references to our Firm included in this
registration statement.

/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP

Houston, Texas
July 16, 1997

<PAGE> 1
EXHIBIT 23.3B

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
included in or made a part of this registration statement and to the
incorporation by reference in this registration statement of our report dated
March 20, 1997 included in Convest Energy Corporation's Form 10-K for the year
ended December 31, 1996 and to all references to our Firm included in this
registration statement.

/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP

Houston, Texas
July 16, 1997

<PAGE> 1
EXHIBIT 23.4

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Joint Proxy
Statement/Prospectus constituting part of this Registration Statement on Form
S-4 of Forcenergy Inc of our report dated June 1, 1995, except as to the common
stock reclassification and conversion described in Note 1 which is as of July
6, 1995, appearing on page F-3 of Forcenergy Inc's Annual Report on Form 10-K
for the year ended December 31, 1996. We also consent to the reference to us
under the headings "Experts" and "Selected Financial Data" in such Prospectus.
However, it should be noted that Price Waterhouse LLP has not prepared or
certified such "Selected Financial Data."

Price Waterhouse LLP
Houston, Texas
July 16, 1997

<PAGE> 1
EXHIBIT 23.5

CONSENT OF INDEPENDENT PETROLEUM ENGINEERS AND GEOLOGISTS

We hereby consent to the use of our report dated February 25, 1997 and of
the estimates of net proved oil and natural gas reserves of Convest Energy
Corporation, and its wholly-owned subsidiary Edisto Exploration & Production
Company, and their present values, as of January 1, 1997 and 1996,
respectively, in this Form S-4 Registration Statement (Registration No. ______)
and the prospectus incorporated therein, and all references to our firm
therein.

NETHERLAND, SEWELL & ASSOCIATES, INC.

By: /s/ CLARENCE M. NETHERLAND
-------------------------------------
Clarence M. Netherland
Chairman

Dallas, Texas
July 17, 1997

<PAGE> 1
EXHIBIT 23.6

July 16, 1997

To the Board of Directors of Forcenergy Inc:

We hereby consent to the use of our reports dated February 7, 1997,
February 9, 1996 and May 26, 1995, and our estimates of the net proved natural
gas and oil reserves of Forcenergy Inc (the "Company"), as of January 1, 1997,
1996 and 1995, and to all references to our estimates of the net proved natural
gas and oil reserves of the Company as of those dates, and to the references to
our firm under the heading "Experts" in the prospectus.

COLLARINI ENGINEERING INC.

Cheryl R. Collarini, P.E.
President

<PAGE> 1
EXHIBIT 23.7

CONSENT OF INDEPENDENT PETROLEUM ENGINEERS

As independent petroleum engineers, we hereby consent to the use of our
reports dated February 24, 1994 and May 24, 1995 and our estimates of net proved
oil and natural gas reserves of Forcenergy Inc. as of January 1, 1994 and 1995
and to all references to our firm included in this Registration Statement.

Joe C. Neal & Associates

Midland, Texas
July 16, 1997

<PAGE> 1
EXHIBIT 23.8

CONSENT OF RYDER SCOTT COMPANY
PETROLEUM ENGINEERS

We hereby consent to the use of our report dated February 24, 1997 and of
the estimates of net proved oil and material gas reserves of Convest Energy
Corporation, and its wholly-owned subsidiary Edisto Exploration & Production
Company, and their present values, as of December 31, 1996, 1995 and 1994,
respectively, in this Form S-4 Registration Statement and the prospectus
incorporated therein, and all references to our firm therein.

Ryder Scott Company Petroleum Engineers

By: /s/ RYDER SCOTT COMPANY PETROLEUM ENGINEERS
--------------------------------------------

Houston, Texas
July 18, 1997

<PAGE> 1
EXHIBIT 23.9

CONSENT OF NETHERLAND, SEWELL & ASSOCIATES, INC.

To the Board of Directors of Forcenergy Inc:

We hereby consent to the use of our reports dated March 3, 1997 and March
1, 1996, of the estimates of net proved oil and natural gas reserves of
Forcenergy Inc, and their present values, as of January 1, 1997 and 1996, and
the inclusion of our audit report dated May 25, 1995, of the estimates of the
net proved oil and natural gas reserves of Forcenergy Inc and their present
values, as of January 1, 1995, in this Form S-4 Registration Statement and the
prospectus incorporated therein, and all references to our firm therein.

NETHERLAND, SEWELL & ASSOCIATES, INC.

By: /s/ DANNY D. SIMMONS
-----------------------------------
Danny D. Simmons
Senior Vice President

Houston, Texas
July 16, 1997

<PAGE> 1
EXHIBIT 99.3
CONSENT
OF
RAUSCHER PIERCE REFSNES, INC.

We hereby consent to the (i) inclusion of our opinion letter to the Board
of Directors of Edisto Resources Corporation ("Edisto") as Annex C to the Joint
Proxy Statement/Prospectus of Edisto, Convest Energy Corporation ("Convest")
and Forcenergy Inc ("Forcenergy") relating to the proposed merger transactions
involving Edisto, Convest and Forcenergy, and (ii) references made to our firm
and such opinion in such Joint Proxy Statement/Prospectus under the captions
entitled "SUMMARY -- Opinions of Financial Advisors" and "THE MERGERS --
Opinions of Financial Advisors." In giving such consent, we do not admit that
we come within the category of persons whose consent is required under, and we
do not admit that we are "experts" for purposes of, the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.

/s/ RAUSCHER PIERCE REFSNES, INC.
-----------------------------------
RAUSCHER PIERCE REFSNES, INC.

Houston, Texas
July 18, 1997

<PAGE> 1
EXHIBIT 99.4
CONSENT
OF
PETRIE PARKMAN

The undersigned hereby consents to the use of its opinion letter to the
Board of Directors of Convest Energy Corporation in the Joint Proxy
Statement/Prospectus forming a part of this Registration Statement on Form S-4
and to references to such opinion in this Registration Statement on Form S-4.
In giving such consent, we do not admit and we hereby disclaim that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder, nor do we hereby admit and we
hereby disclaim that we are experts with respect to any part of the Registration
Statement within the meaning of the term "expert" as used in the Securities Act
of 1933, as amended, or the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.

/s/ PETRIE PARKMAN & CO.
-----------------------------
PETRIE PARKMAN & CO.

July 17, 1997