FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
( ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED:
OR
( X ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM JUNE 1, 1994 TO DECEMBER 31, 1994
Commission File Number: 1-7864
TRITON ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 75-1151855
(State or other jurisdiction of (I.R.S.
Employer
incorporation or organization) Identification
No.)
6688 NORTH CENTRAL EXPRESSWAY
SUITE 1400
DALLAS, TEXAS 75206
(Address of principal executive offices) (Zip
Code)
Registrant's telephone number, including area code: 214-691-5200
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock, $1.00 par value New York Stock
Exchange
Securities registered pursuant to Section 12(g) of the Act:
None.
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES (X) NO
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO
ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED,
TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. (X)
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT AT MARCH 1, 1995 (FOR SUCH PURPOSES ONLY, ALL DIRECTORS AND
EXECUTIVE OFFICERS ARE PRESUMED TO BE AFFILIATES) WAS APPROXIMATELY $1.1
BILLION, BASED ON THE CLOSING SALES PRICE OF $31.00 ON THE NEW YORK STOCK
EXCHANGE.
AS OF MARCH 1, 1995, 35,539,934 SHARES OF THE REGISTRANT'S COMMON STOCK
WERE OUTSTANDING.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE REGISTRANT'S PROXY STATEMENT PERTAINING TO THE
REGISTRANT'S 1995 ANNUAL MEETING OF SHAREHOLDERS ARE INCORPORATED BY REFERENCE
TRITON ENERGY CORPORATION
TABLE OF CONTENTS
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Form 10-K Item Page
PART I
ITEM 1. Business
ITEM 2. Properties
ITEM 3. Legal Proceedings
ITEM 4. Submission of Matters to a Vote of Security Holders
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters
ITEM 6. Selected Financial Data
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
ITEM 8. Financial Statements and Supplementary Data
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
PART III
ITEM 10. Directors and Executive Officers of the Registrant
ITEM 11. Executive Compensation
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
ITEM 13. Certain Relationships and Related Transactionspage
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
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PART I
ITEM 1. BUSINESS
GENERAL
Triton Energy Corporation is an international oil and gas
exploration company primarily engaged in exploration and production through
subsidiaries and affiliates. The Company's principal properties and operations
are located in Colombia and Malaysia-Thailand. The Company also has oil and
gas interests in other Latin American and Asian countries, Europe, Australia
and North America.
The Company changed its fiscal year end to December 31 from May 31,
effective with the period beginning January 1, 1995. Accordingly, this
Transition Report on Form 10-K relates to the seven months ended December 31,
1994. For the seven months ended December 31, 1994, the Company had two
reportable industry segments: (i) the crude oil and natural gas exploration
and production industry and (ii) the aviation sales and services industry.
For certain financial information about the Company's reportable industry
segments, see note 21 of Notes to Consolidated Financial Statements.
Triton was incorporated in Texas in 1962. The Company's principal
executive offices are located at 6688 North Central Expressway, Suite 1400,
Dallas, Texas 75206, and its telephone number is 214/691-5200. The terms
"Company" and "Triton" when used herein mean Triton Energy Corporation and its
subsidiaries and other affiliates through which Triton conducts its business,
unless the context otherwise implies.
OIL AND GAS OPERATIONS
General
Oil and gas exploration and development activities are, or have
been, conducted in Colombia by the Company's wholly owned subsidiaries, Triton
Colombia, Inc. and Triton Resources Colombia, Inc. (collectively, "Triton
Colombia"); in Malaysia-Thailand by the Company's wholly owned subsidiary,
Triton Oil Company of Thailand ("Triton Thailand") including Triton Thailand's
50% owned subsidiary, Carigali - Triton Operating Company SDN. BHD. ("CTOC");
in Argentina primarily by the Company's wholly owned subsidiary, Triton
Argentina, Inc. ("Triton Argentina"); in Guatemala by the Company's wholly
owned subsidiary, Triton Guatemala S.A. ("Triton Guatemala"); in Ecuador by
the Company's wholly owned subsidiary, Triton Ecuador, Inc. LLC ("Triton
Ecuador"); in China by the Company's wholly owned subsidiary, Triton China,
Inc. LLC ("Triton China"); in Europe by the Company's wholly owned (but until
March 31, 1994, 59.5% owned) subsidiary, Triton Europe Limited ("Triton
Europe"), including Triton Europe's wholly owned subsidiaries, Triton France
S.A. ("Triton France") and Triton Mediterranean Oil & Gas N.V. ("Triton
Mediterranean"); in Indonesia by the Company's wholly owned subsidiary, Triton
Indonesia, Inc. ("Triton Indonesia") and the Company's 33.7% owned (but until
August 1994, 63.7% owned) affiliate, New Zealand Petroleum Company Limited
("New Zealand Petroleum"); in the United States by Triton Oil & Gas Corp.
("Triton Oil") and the Company's 49.9% owned affiliate, Crusader Limited
("Crusader"); in New Zealand by New Zealand Petroleum and Crusader; in Canada
by Crusader and by Triton Canada Resources Ltd. ("Triton Canada") until August
1993; and in Australia by Crusader.
A significant portion of Triton's reserves is held through Triton
Colombia and Triton Europe. Additional reserves are held through Triton's
publicly held affiliate, Crusader. Except for Crusader, the financial data
for each of these companies is consolidated with Triton's financial data. For
further information relating to the Company's oil and gas business activities,
see Item 2, "Properties" and notes 21 and 24 of Notes to Consolidated
Financial Statements.
Production and Sales
The following table sets forth for the seven months ended December
31, 1994, and for the years ended May 31, 1994, 1993 and 1992, the net
quantities of oil and gas produced, including that attributable to the
minority interest in the Company's consolidated subsidiaries, the 36.3%
minority interest in New Zealand Petroleum, and the Company's 49.9% ownership
interest in Crusader (which includes the minority interests in Crusader's
consolidated subsidiaries). The production and sales information relating to
properties or subsidiary ownership interests acquired or disposed of is
reflected in the table only since or up to the effective dates of their
respective acquisitions or sales, as the case may be.
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OIL PRODUCTION (1) GAS PRODUCTION
SEVEN MOS. SEVEN MOS.
ENDED ENDED
DEC. 31, YEAR ENDED MAY 31, DEC. 31, YEAR ENDED MAY 31
1994 1994 1993 1992 1994 1994 1993 1992
(IN MBBLS) IN MMCF)
Colombia 435 467 219 --- --- --- --- ---
Argentina --- 18 6 --- --- --- --- ---
France 514 1,053 1,467 1,809 --- --- --- ---
Indonesia (2) 186 441 536 614 --- --- --- ---
United States (3) 66 156 397 421 618 1,150 3,421 4,172
Canada (3) --- 102 279 251 --- 3,521 14,329 15,675
Crusader:
Australia 180 404 491 394 2,707 4,202 3,988 4,150
Canada 99 213 231 190 96 150 121 204
United States 8 32 65 98 6 55 99 165
Total 1,488 2,886 3,691 3,777 3,427 9,078 21,958 24,366
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(1) Includes natural gas liquids and condensate.
(2) The Company has signed a letter of intent to purchase the 6% interest
in the Company's Indonesian operations now held by New Zealand Petroleum
(whose interest is reflected in the table above) in consideration for
cancellation of certain intercompany indebtedness.
(3) During the fiscal year ended May 31, 1994, Triton Oil sold
substantially all its working interests in oil and gas reserves in the
United States and its common equity interest in Triton Canada. See note 4
of Notes to Consolidated Financial Statements.
The following tables summarize for the seven months ended December
31, 1994, and for the years ended May 31, 1994, 1993 and 1992: (i) the average
sales price per barrel of oil and Mcf of natural gas; (ii) the average sales
price per equivalent barrel of production; (iii) the depletion cost per
equivalent barrel of production; and (iv) the production cost per equivalent
barrel of production:
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AVERAGE SALES PRICE AVERAGE SALES PRICE
PER BARREL OF OIL (1) PER MCF OF GAS
SEVEN MOS. SEVEN MOS.
ENDED ENDED
DEC. 31, YEAR ENDED MAY 31, DEC. 31, YEAR ENDED MAY 31
1994 1994 1993 1992 1994 1994 1993 1992
Colombia $ 14.37 $ 12.66 $15.86 $ --- $ --- $ --- $--- $---
Argentina --- 9.22 14.00 --- --- --- --- ---
France 17.64 16.38 20.84 20.74 --- --- --- ---
Indonesia 17.06 16.29 19.49 19.78 --- --- --- ---
United States 15.65 14.19 16.83 16.33 1.55 2.23 2.02 1.48
Canada --- 16.43 16.75 16.19 --- 1.11 1.01 0.98
Crusader:
Australia 18.39 15.33 16.68 16.09 1.43 1.50 1.57 1.84
Canada 14.62 12.43 15.14 17.90 1.01 1.11 1.18 1.12
United States 17.75 15.23 19.90 19.76 1.25 1.53 1.57 1.13
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PER EQUIVALENT BARREL (2)
AVERAGE SALES PRICE DEPLETION
SEVEN MOS. SEVEN MOS.
ENDED ENDED
DEC. 31, YEAR ENDED MAY 31, DEC. 31, YEAR ENDED MAY 31,
1994 1994 1993 1992 1994 1994
Colombia $ 14.37 $ 12.66 $15.86 $ --- $ 1.77 $ 1.96
Argentina --- 9.22 14.00 --- --- ---
France 17.64 16.38 20.84 20.74 4.15 8.97
Indonesia 17.06 16.29 19.49 19.78 1.60 3.09
United States 11.77 13.75 14.06 11.71 7.04 6.58
Canada --- 8.13 7.18 6.79 --- 3.60
Crusader:
Australia 9.53 11.31 12.50 12.87 3.99 3.33
Canada 13.43 11.83 14.50 16.58 2.31 2.97
United States 16.56 13.88 17.78 16.93 5.22 13.82
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PRODUCTION COST
SEVEN MOS.
ENDED
DEC. 31, YEAR ENDED MAY 31,
1993 1992 1994 1994 1993 1992
Colombia $ 2.48 $ --- $ 9.87 $ 9.06 $ 11.01 $---
Argentina --- --- --- 13.83 16.17 ---
France 15.19 7.91 11.25 9.83 9.20 8.31
Indonesia 7.93 7.24 11.04 14.54 11.16 7.33
United States 6.81 7.68 0.85 7.00 2.55 2.56
Canada 3.24 3.20 --- 4.24 3.91 4.15
Crusader:
Australia 2.84 3.63 4.01 3.97 4.22 4.80
Canada 1.89 2.60 7.96 7.44 7.42 6.58
United States 19.95 12.28 6.00 7.77 6.18 3.93
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(1) Includes natural gas liquids and condensate.
(2) Natural gas has been converted into equivalent barrels based on six
Mcf of natural gas per barrel.
Competition
The Company encounters strong competition from major oil companies
(including government-owned companies), independent operators and other
companies for favorable oil and gas leases, drilling rights and markets.
Additionally, the governments of certain countries in which the Company
operates may from time to time give preferential treatment to their nationals.
The oil and gas industry as a whole also competes with other industries in
supplying the energy and fuel requirements of industrial, commercial and
individual consumers. The principal means of competition in the sale of oil
and gas are product availability, price and quality. While it is not possible
for the Company to state accurately its position in the oil and gas industry,
the Company believes that it represents a minor competitive factor.
Markets
Crude oil, natural gas, condensate and other oil and gas products
generally are sold to other oil and gas companies, government agencies and
other industries. The Company does not believe that the loss of any single
customer or contract pursuant to which oil and gas is sold would have a
long-term material adverse effect on the revenues from the Company's oil and
gas operations.
In Colombia, crude oil is exported through the Caribbean port of
Coveas where it is sold at prices based on United States prices, adjusted for
quality and transportation. The oil produced from the Cusiana Field is
transported to the export terminal through pipelines owned by the government
or partially owned by the Company. This pipeline system is in the process of
being upgraded to accommodate additional production from the Cusiana and
Cupiagua fields. Additional pipeline capacity will be needed in the future.
See Item 2, "Properties - Oil and Gas - Colombia" and Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
In France, crude oil is priced by reference to the price of North
Sea crude oil and the Company's French production is sold to Socit Nationale
Elf Aquitaine. The Company believes that there would be other available
markets for its French-produced crude oil if this arrangement were to be
terminated.
Pertamina, the Indonesian government oil company, purchases crude
oil under a contract from the Triton-operated Enim concession in Indonesia,
which expires in 1996, using a formula based on the average market price of
five different crude oils.
Crude oil is sold in Canada at posted field prices, and natural gas
is generally sold to purchasers pursuant to negotiated purchase and sale
contracts.
In the United States, the Company receives royalties on oil and gas
sold by others and has no active working interests.
In Australia, natural gas is sold to the South Australian and New
South Wales markets primarily through the Pipelines Authority of South
Australia and the Australian Gas Light Company, respectively. Gas is supplied
to both of these markets under long-term contracts. Small volumes may be sold
outside these contracts on a "spot" basis when market demands allow. Crude
oil, condensate, natural gasolines and liquefied petroleum gases are freely
traded in both the domestic and export markets.
The availability of ready markets for oil and gas that might be
discovered by the Company and the prices obtained for such oil and gas depend
on many factors beyond the Company's control, including the extent of local
production and imports of oil and gas, the proximity and capacity of pipelines
and other transportation facilities, fluctuating demands for oil and gas, the
marketing of competitive fuels, and the effects of governmental regulation of
oil and gas production and sales. Pipeline facilities do not exist in certain
areas of exploration and, therefore, any actual sales of discovered oil or gas
might be delayed for extended periods until such facilities are constructed.
Certain Factors Relating to Oil and Gas Industry
Oil prices have been subject to significant fluctuations over the
past two decades. Levels of production maintained by the Organization of
Petroleum Exporting Countries member nations and other major oil producing
countries, and the actions of oil traders, are expected to continue to be
major determinants of crude oil price movements in the near term. It is
impossible to predict future oil price movements with any certainty. The
Company may from time to time enter into contracts to hedge its risk against
changing oil prices. See Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
The Company's oil and gas business is subject to all of the
operating risks normally associated with the exploration for and production of
oil and gas, including blowouts, cratering, pollution, earthquakes, labor
disruptions and fires, each of which could result in damage to or destruction
of oil and gas wells, formations, production facilities or properties, or in
personal injury. In accordance with customary industry practices, the Company
maintains insurance coverage limiting financial loss resulting from certain of
these operating hazards. Losses and liabilities arising from uninsured or
underinsured events would reduce revenues and increase costs to the Company.
The Company's oil and gas business is also subject to laws, rules
and regulations in the countries in which it operates, which generally pertain
to pricing, production control, taxation, environmental concerns and other
matters relating to the petroleum industry.
The Company is subject to extensive environmental laws and
regulations. These laws regulate the discharge of oil, gas or other materials
into the environment and may require the Company to remove or mitigate the
environmental effects of the disposal or release of such materials at various
sites. The Company does not believe that its environmental risks are
materially different from those of comparable companies in the oil and gas
industry. Nevertheless, no assurance can be given that environmental laws and
regulations will not, in the future, adversely affect the Company's operations
and financial condition. Pollution and similar environmental risks generally
are not fully insurable. See Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Certain Factors Relating to Foreign Operations
The Company derives a significant portion of its consolidated
revenues from foreign operations. Risks inherent in foreign operations
include loss of revenue, property and equipment from such hazards as
expropriation, nationalization, war, insurrection and other political risks;
risks of increases in taxes and governmental royalties; and renegotiation of
contracts with governmental entities; as well as changes in laws and policies
governing operations of foreign-based companies. Other risks inherent in
foreign operations are the possibility of realizing economic currency exchange
losses when transactions are completed in currencies other than United States
dollars and the Company's ability to freely repatriate its earnings under
existing exchange control laws. To date, the Company's foreign operations
have not been materially affected by these risks.
Certain Factors Relating to Colombia
Triton is a participant in significant oil and gas discoveries
located in the Llanos Basin in the foothills of the Andes Mountains,
approximately 160 kilometers (100 miles) northeast of Bogota, Colombia. The
Company owns interests in three contiguous areas known as the Rio Chitamena,
Santiago de las Atalayas ("SDLA") and Tauramena contract areas. Test results
for the initial exploratory and subsequent delineation wells indicate that
significant oil and gas deposits lie across the Rio Chitamena, SDLA and
Tauramena contract areas (the "Cusiana Field"), and within the SDLA contract
area (the "Cupiagua Field").
Largely due to complex geology, drilling of wells in the Cusiana and
Cupiagua fields has been comparatively difficult, lengthy in duration and
expensive. The Company believes that considerable progress was achieved
during 1994 in reducing the time and expenditures required to drill and
complete wells in the Cusiana and Cupiagua fields based on experience gained
from initial wells drilled. Although there can be no assurance, the Company
believes that the experience gained in the area to date will allow the
operator to continue to reduce the time and expenditures required to drill and
complete wells in the area. However, because the Company is not the operator
of these contract areas, the Company does not control the timing or manner of
these operations. See Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources" and Item 2, "Properties."
Full development of reserves in the Cusiana and Cupiagua fields will
take several years and require additional drilling and extensive production
facilities, which in turn will require significant additional capital
expenditures, the ultimate amount of which cannot be predicted. Pipelines
connect the major producing fields in Colombia to export facilities and to
four refineries. These pipelines are in the process of being upgraded to
accommodate production from the Cusiana and Cupiagua fields. Additional
pipeline capacity will be needed in the future. See Item 2, "Properties -
Oil and Gas - Colombia."
Guerrilla activity in Colombia has from time to time disrupted the
operation of oil and gas projects and increased costs. Although the Colombian
government, the Company and its partners have taken steps to improve security
and improve relations with the local population, there can be no assurance
that attempts to reduce or prevent guerrilla activity will be successful or
that such activity will not disrupt operations in the future.
Employees
At March 1, 1995, the Company employed approximately 240 full-time
employees in its oil and gas exploration and production operations, excluding
employees of Crusader and its subsidiaries.
AVIATION SALES AND SERVICES
General
Through its wholly owned subsidiary, Triton Air Holdings, Inc., the
Company provides a variety of aviation products and services to the general
aviation industry through airport facilities ("FBOs") located at Love Field in
Dallas. The Company has sold all of its other FBOs and its common stock
interest in Aero Services International, Inc., a publicly traded owner and
operator of FBOs. The Company does not intend to invest any additional
amounts in the acquisition of aviation service operations or expansion of
existing operations.
At its Love Field locations, the Company provides charter and line
services, maintains and repairs aircraft and leases hangar, ramp and office
space. The aviation service industry is highly competitive. In addition, the
mobility of aircraft enables the owners to obtain similar services at other
airport locations. The Company's fueling services are generally subject to
competition with other aviation services companies, some of which are
significantly larger than the Company in terms of sales and capital resources.
The competitive market for aviation maintenance services may be local,
regional or national depending upon the particular type of service considered.
For major maintenance, the Company's facilities compete with other facilities
nationwide.
Regulation and Operating Hazards
The Company's aviation service business is regulated by the Federal
Aviation Administration, particularly in the areas of flight charter
operations and aircraft maintenance. The aviation service business involves
the storage, handling and sale of aviation fuel, and the provision of
maintenance and refurbishing services, all of which involve the handling and
use of hazardous materials. Accordingly, the Company is required to comply
with federal, state and local provisions that have been enacted to regulate
the discharge of hazardous materials into the environment. See Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The Company's aviation service business is also subject to other
regulations incident to its operations, including those relating to the safety
of the workplace.
In accordance with customary industry practices, the Company
maintains insurance coverage limiting potential financial loss resulting from
certain operating hazards. Management believes the amounts and coverages of
its insurance protection are reasonable and adequate for the Company's
aviation business operations.
Employees
At March 1, 1995, the Company employed approximately 100 full-time
employees in its aviation operations.
OTHER OPERATIONS
In Australia, coal mining activities are conducted through
Crusader's 58.3%-owned subsidiary, Allied Queensland Coalfields Limited
("AQC"), the shares of which are publicly traded in Australia. AQC and its
subsidiaries have interests under exploration permits and mining leases
primarily in Australia. Koala Smokeless Fuels Limited, a wholly owned
subsidiary of Crusader, has constructed a coal briquetting factory in Ireland.
In August 1992, Crusader purchased Koala Smokeless Fuels from AQC for a total
consideration of $25.5 million.
Crusader has exited the gold business through the sale of its wholly
owned subsidiary, Saracen Minerals Limited, for approximately $14 million.
The sale is subject to government approvals.
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EXECUTIVE OFFICERS
The following table sets forth certain information regarding the
executive officers of the Company at March 1, 1995:
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SERVED WITH
THE COMPANY
NAME AGE POSITION WITH THE COMPANY SINCE
Thomas G. Finck 48 President and Chief Executive Officer
Officer (1) 1992
John P. Tatum 60 Executive Vice President, Operations
Operations 1980
Nick De'Ath 46 Senior Vice President, Exploration Exploration 1993
Robert B. Holland, III 42 Senior Vice President, General Counsel and Secretary
Counsel and Secretary 1993
Peter Rugg 47 Senior Vice President and Chief Financial Officer
Financial Officer 1993
A. E. Turner, III . . . . . . . . . . . . . . . . 46 Senior Vice President, Operations 1994
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(1) William I. Lee, Chairman of the Board of the Company, has informed the
Board of Directors that he will step down as Chairman of the Board
effective immediately following the Annual Meeting of Shareholders to be
held in May 1995. The Board has approved the succession of Mr. Finck to
the additional title of Chairman of the Board following such action.
In August 1992, Mr. Finck became Director, President and Chief
Operating Officer of the Company. Effective January 1993, Mr. Finck became
Chief Executive Officer. From July 1991 to August 1992, Mr. Finck served as
President and Chief Executive Officer of American Energy Group, an independent
oil and natural gas exploration and production company. From May 1984 until
June 1991, Mr. Finck served as President and Chief Executive Officer of Ensign
Oil & Gas, Inc., a private oil and gas exploration company in the United
States.
Mr. Tatum has served as Executive Vice President, Operations of the
Company since 1991, and has served in various positions with the Company since
1980.
Mr. De'Ath became Senior Vice President, Exploration in 1993. From
1992 to 1993, Mr. De'Ath served as President and owner of Pinnacle Ltd., a
management consulting firm providing services to multinational companies in
Colombia, and from 1971 to 1991 served in various positions with subsidiaries
of British Petroleum Company, p.l.c., including general manager of exploration
for BP International Limited in Mexico from 1991 to 1992 and general manager
of BP's Colombian operation from 1986 to 1991.
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Mr. Holland has served as Senior Vice President, General Counsel and
Secretary of the Company since January 1993. For more than five years prior
to joining the Company, Mr. Holland was a partner of the law firm of Jackson &
Walker, L.L.P., Dallas, Texas.
Mr. Rugg became Senior Vice President and Chief Financial Officer in
April 1993. From September 1992 to April 1993, Mr. Rugg served as Vice
President of J.P. Morgan & Co., Incorporated ("J.P. Morgan"), a financial
services firm, and for more than the five years prior to September 1992, Mr.
Rugg served as Vice President of Morgan Guaranty Trust Company of New York, an
international bank owned by J.P. Morgan.
Mr. Turner became Senior Vice President, Operations in March 1994.
From 1988 to February 1994, Mr. Turner served in various positions with
British Gas Exploration & Production, Inc., including Vice President and
General Manager of operations in Africa and the Western Hemisphere from
October 1993.
All executive officers of the Company are appointed annually by the
Board of Directors of the Company to serve in such capacities until removed or
their successors are duly elected and qualified. There are no family
relationships among the executive officers of the Company.
ITEM 2. PROPERTIES
OIL AND GAS
Colombia
Through Triton Colombia, the Company has varying participation
interests in six contract areas in Colombia.
Cusiana and Cupiagua Fields
Contract Terms. In the foothills of the Llanos Basin area of
eastern Colombia, Triton Colombia holds a 12% interest in the Rio Chitamena,
SDLA and Tauramena contract areas, covering approximately 11,600, 66,000 and
41,400 acres, respectively, where an active appraisal and development program
is being carried out in the Cusiana and Cupiagua fields. Triton's partners in
these areas are Empresa Colombiana De Petroleos ("Ecopetrol"), the Colombian
national oil company, with a 50% interest, BP Exploration Company (Colombia)
Limited ("BP"), the operator, with a 19% interest, and TOTAL Exploratie en
Produktie Maatschippij B.V. ("TOTAL"), also with a 19% interest. In 1993,
Ecopetrol declared the Cusiana and Cupiagua fields to be commercial and
exercised its right to acquire a 50% interest. Triton's net revenue interest
is approximately 9.6% after governmental royalties. Triton's net revenue is
reduced by up to 0.36% pursuant to an agreement with an original co-investor,
subject to Triton being reimbursed for a proportionate share of expenditures
relating thereto.
The Company and its private partners have secured the right to
produce oil and gas from the SDLA and Tauramena contract areas through the
years 2010 and 2016, respectively, and from the Rio Chitamena contract area
through 2015 or 2019, depending on contract interpretation. On July 19, 1994,
Triton Colombia, BP, TOTAL and Ecopetrol entered into an Integral Plan for the
Unified Exploitation of the Cusiana Oil Structure in the SDLA, Tauramena and
Rio Chitamena Association Contract Areas. Under the plan, the parties have
agreed to develop the Cusiana oil structure in a technically efficient and
cooperative manner during three consecutive periods of time. During the
initial period, petroleum produced from the unified area will be owned by the
parties according to their respective undivided interests in each contract
area.
Within the first quarter of 2005, an independent determination of
the original barrels of oil equivalent ("BOE") of petroleum in place under the
unified area and under each association contract will be made, as a result of
which a "tract factor" will be calculated for each association contract. Each
tract factor will be the amount of original BOEs of petroleum in place under
the particular association contract as a percentage of the total original BOEs
under the unified area. Each party's unified area interest during the second
period (commencing from the expiration of the SDLA association contract in
2010) and during the final period (commencing from the termination of the
second association contract to termination) will be the aggregate of that
party's interest in each remaining association contract multiplied by the
tract factor for each such contract.
Recent Drilling Results. In the Cusiana Field, Triton Colombia and its
working interest partners have completed and have in service eight producing
wells and three gas injection wells. The injection wells will recycle to the
reservoir most of the gas that is associated with the oil production to
increase the oil recoverable over the life of the field. There are currently
four production wells and two injection wells being drilled as part of 1995
activity. The plan for the year includes the drilling and completion of 13
oil production and gas injection wells, which would bring the year end total
to 24 production and gas injection wells. Full field development drilling is
proceeding on a schedule which is intended to have sufficient well capacity at
all times to meet production capacities of field facilities and export
pipelines from the area.
In the Cupiagua Field, Trition Colombia and its working interest
partners completed the development well, Cupiagua-3, in the Upper Mirador
Formation. Appraisal and development drilling is anticipated to proceed with
a planned three-rig drilling program by mid-year, which is expected to result
in the completion of at least four wells in 1995. The first of these wells,
Cupiagua-4, has drilled through 577 feet (measured depth) of productive
Mirador Formation and 691 feet (measured depth) of productive Barco sandstone
formation that underlies the Mirador. The results of the appraisal drilling
have led the working interest partners to commit to engineering studies that
will define the facilities needed for full field development. In addition to
the appraisal drilling, the partners have begun a 3-D seismic survey that will
assist in defining the reservoir and the placement of future development
wells. As previously reported, the Cupiagua-2 appraisal well has been
suspended due to mechanical problems.
The Company believes considerable progress was achieved during 1994
in reducing the time and expenditures required to drill and complete wells in
the Cusiana and Cupiagua fields. The drilling time and costs to drill both
the Cusiana BA-6 and Cupiagua B-4 wells were significantly reduced in
comparison to earlier wells. Although there can be no assurance, the Company
believes that further improvements can be achieved with experience gained in
the area. The Company expects that additional rigs will be mobilized as
needed in both fields to efficiently develop the oil and gas reserves.
Production Facilities and Pipelines. The first two of four early
production units of the Cusiana Field central processing facility have been
placed in service, and the Company expects that the other two units will
commence operation during 1995. As of December 31, 1994, the looping of a
93-kilometer (57-mile) segment of the Central Llanos pipeline, as well as pump
station upgrades along the pipelines, have been completed. A new pump station
on the Oleoducto de Colombia ("ODC") pipeline has been substantially
completed. These pipeline upgrades are designed to carry 185,000 barrels of
daily production throughput from the Cusiana Field.
Design work is under way to increase production from the Cusiana and
Cupiagua fields to 500,000 barrels per day by the end of 1997. Additional
pipeline capacity is required to meet the transportation needs associated with
full field development of these fields. To that end, in December 1994, Triton
Pipeline Colombia, Inc., a wholly owned subsidiary of the Company, along with
Ecopetrol, BP Colombia Pipelines Ltd., Total Pipeline Colombie, S.A., IPL
Enterprises (Colombia) Inc. and TCPL International Investments Inc., formed a
company, Oleoducto Central S.A. ("OCENSA"), to own and finance pipeline and
port facilities to be constructed and operated for the transport of crude oil
from the Cusiana and Cupiagua fields to the port of Covenas. Triton's equity
participation in OCENSA is 9.6%. Negotiations of definitive agreements are
continuing among the parties. See Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Funding
Alternatives."
This pipeline project consists of a 793-kilometer (495-mile)
pipeline system from the Cusiana and Cupiagua fields to the port of Coveas.
It loops and generally follows the route of the two existing pipelines: the
Central Llanos pipeline from El Porvenir to Vasconia and the ODC pipeline from
Vasconia to Covenas. The Central Llanos loop and pump station upgrades at El
Porvenir and Miraflores are expected to be acquired by OCENSA. Construction
of the remainder of the system is currently scheduled to be completed in 1997.
Other Colombia Areas
Triton owns the rights to three additional contract areas in
Colombia. In the Middle Magdalena Valley basin and adjacent foothills, Triton
owns a 100% interest (before certain royalties and government participation)
in the El Pial contract area, which covers approximately 142,250 acres
approximately 330 kilometers (205 miles) north of Bogota. In the southern part
of El Pinal, Triton discovered and confirmed the La Liebre Field with two wells
(the La Liebre-1 and -2) during the past two years. Triton believes the
results will support Triton's application to Ecopetrol during 1995 to declare
the La Liebre Field commercial.
Triton recently tested a third well, the La Liebre Deep-1, which was
drilled to explore a separate structural block beneath the block productive at
the La Liebre-1 and -2. The tests confirmed the presence of oil deeper and
farther to the north in the La Liebre Field but at noncommercial production
rates.
<PAGE>
Triton also is planning to drill a wildcat well, Yumeca-1, in the
northern part of the El Pinal area during 1995. The well will test a new play
concept in the foothills of the Middle Magdalena Valley.
In the Upper Magdalena Valley basin, Triton Colombia has 22.5% and
20% interests (before certain royalties), respectively, in the 32,834-acre
Tolima-B and 32,240-acre San Luis contract areas, approximately 180 and 130
kilometers (110 and 80 miles) southwest of Bogota. HOCOL S.A., a unit of Royal
Dutch/Shell, is operator in both areas. Ecopetrol has granted commerciality
of one small field in each of the two areas.
Malaysia-Thailand
In April 1994, Triton Thailand became a party to a production
sharing contract covering an area located offshore, designated as Block A-18
of the Malaysia-Thailand Joint Development Area. The contract area, which
encompasses approximately 730,000 acres, had been the subject of overlapping
claims between Malaysia and Thailand. The other parties to the production
sharing contract are the Malaysia-Thailand Joint Authority, which has been
established by treaty to administer the Joint Development Area, and the
Malaysian national oil company. The treaty provides for the development of a
Joint Development Area that includes Block A-18 and that had been the subject
of overlapping boundary claims. Triton Thailand previously held a concession
from Thailand that covered part of the Joint Development Area.
Simultaneously with the execution of the production sharing
contract, the parties executed a joint operating agreement governing Block
A-18 operations. The operating agreement designated as operator CTOC, a newly
formed company owned equally by Triton Thailand and the Malaysian national oil
company.
The first phase of Block A-18 operations, which the Company expects
will continue through mid-1996, has included seismic surveys covering
approximately 5,700 kilometers (3,542 miles) and data analysis, and is
expected to include the drilling of at least four wells. The wells are
expected to be drilled in water depths of less than 200 feet. The nature and
extent of the second phase of development and appraisal of the area, which is
expected to include 3-D seismic surveys and further drilling, will depend on
the parties' assessment of the results of phase-one activities.
Argentina
Triton Argentina holds a working interest in five blocks in
Argentina. In the oil and gas producing Neuquen Basin of western Argentina,
Triton Argentina holds a 100% working interest in the Agua Botada, Cerro Dona
Juana, Loma Cortaderal and Sierra Azul Sur concessions, each approximately
50,000 acres, and a 75% working interest in the 220,000-acre Malargue Sur
Block. During 1994, Triton completed a 159-kilometer (99-mile) seismic
program in Malargue Sur to identify prospects in the structurally complex
"Triangle Zone," located in the foothills of the Andes Mountains. During
1995, the Company expects to drill two exploratory wells.
<PAGE>
Guatemala
Through Triton Guatemala, the Company has acquired an interest in
two contiguous blocks in Guatemala. Both blocks are governed by seismic
option contracts that will allow Triton to evaluate further the hydrocarbon
potential of these prospective areas before committing to a drilling program.
During 1994, Triton completed environmental impact studies for both areas.
The studies were approved by the Guatemalan government in November 1994. The
combined work commitment for the two blocks consists of the acquisition of 350
kilometers of new seismic data during the first two years of the contracts.
The blocks lie on the border with Mexico in an extension of the Chiapas fold
belt province. Triton expects to test the extension of the Chiapas fold belt
trend into Guatemala.
Ecuador
Through Triton Ecuador, the Company has acquired an interest in
Block 19 located in the Ecuadorian foothills. Triton's work program
commitments for Block 19 consist of the acquisition of 400 kilometers of new
seismic data and the drilling of two exploratory wells during a four-year
exploration period. The first phase of the project will consist of the
completion of an environmental impact study, which is expected to be completed
in 1995. Seismic operations are scheduled to begin in late 1995 with drilling
expected to follow.
China
Through Trition China, the Company was awarded the right to explore
and develop Contract Area 16/22 located approximately 175 kilometers (110
miles) offshore from Hong Kong in water depths ranging from 300 to 600 feet.
The 791,000-acre block is in the Huizhou subbasin of the Pearl River Mouth
Basin. A production sharing contract was signed with the China National
Offshore Oil Company in February 1995. The block has a primary three year
exploration term with a commitment of reprocessing 500 kilometers (310 miles)
of existing seismic and the drilling of an exploration well for a total
expenditure of not less than $7.5 million.
Europe
On March 31, 1994, the Company purchased the 40.5% of Triton
Europe's shares not already owned by the Company.
France. The Company's activities in France are conducted through
Triton France. Triton France has a nonoperating interest in the Villeperdue,
Fontaine-au-Bron, Hautefeuille and La Motte Noire concessions, which provided
the majority of Triton's French production during the seven months ended
December 31, 1994. As a result of ongoing field operations, production
decline has slowed, notably in the Villeperdue Concession. The Company
continues to assist the operator of these licenses in identifying further
development and optimization opportunities. Triton France also owns varying
interests in four Paris Basin exploration permits, and one exploration permit
in the Alps. As a result of the Company's review of its exploration efforts
in Europe, the Company expects to relinquish two of the Paris Basin permits in
1995 and, during the year ended May 31, 1994, Triton France sold its operating
interests in four production licenses (Saint-Germain, Sivry, Maincy and les
Bagneaux) in the Paris Basin for approximately $1.5 million.
Italy. Triton Mediterranean holds a 10.91% interest in the onshore
Monte Caruso license where one unsuccessful well was drilled in fiscal 1994.
Triton Mediterranean has a 40% interest in the DR71 and DR72 licenses
operated by Enterprise Oil, plc, in the Adriatic Sea offshore Italy. Triton
has applied for five new licenses onshore in the southern Apennine Mountains.
Crusader
Oil and gas activities in Australia are conducted through the
Company's 49.9% owned affiliate, Crusader, whose shares are publicly traded in
Australia. Crusader has an interest in the Cooper Basin Gas and Liquids Unit
of South Australia. Crusader holds varying interests in several permits in
Queensland. Within the Gippsland and Otway Basins of Victoria, Crusader has
interests in two offshore and two onshore exploration licenses, respectively.
Crusader has an approximate 48.9% equity interest in Australian Hydrocarbons
Limited ("AHY"), a publicly traded Australian company. Two Crusader directors
and one alternate Crusader director are members of the three-member AHY Board
of Directors and Crusader consolidates AHY in its financial and reserve
disclosures. AHY owns various interests in oil and gas exploration projects
in Australia including the South West Queensland Gas Unit.
In addition, Crusader is involved in oil and gas exploration and
production and gas processing in Canada through its wholly owned subsidiary,
Ausquacan Energy Limited. Crusader also is engaged in exploration in
Argentina.
Indonesia
Triton Indonesia is the operator of a secondary
recovery/rehabilitation project on the southeastern portion of the island of
Sumatra pursuant to a contract that expires in October 1996. New Zealand
Petroleum, through its wholly owned subsidiary Triton Oil (N.Z.) Limited, owns
a 6% interest in this project. The Company has signed a letter of intent to
purchase this 6% interest in consideration for cancellation of certain
intercompany indebtedness.
United States
During the fiscal year ended May 31, 1994, the Company sold
substantially all of its working interests in oil and gas reserves in the
United States, retaining only various royalty and mineral interests.
<PAGE>
RESERVES
The following tables set forth the estimated oil and gas reserves of
the Company and the estimated discounted future net cash inflows before income
taxes at December 31, 1994. The first table is a summary of separate reports
of estimates of the Company's net proved reserves, estimated by the
independent petroleum engineers, DeGolyer and MacNaughton, with respect to all
proved reserves in Colombia; by the independent petroleum engineers, McDaniel
& Associates Consultants Ltd., for Crusader's Canadian reserves; and by the
Company's own petroleum engineers with respect to all other reserves. This
table sets forth the estimated net quantities of proved developed and
undeveloped oil and gas reserves and total proved oil and gas reserves owned
by the Company and its consolidated subsidiaries in Colombia, France,
Indonesia and the United States and its proportionate interest in reserves
owned in Australia and Canada by Crusader. The second table sets forth, for
the net quantities so reported, the future net cash inflows (by reserve
categories and country of location) discounted to present value at an annual
rate of 10%. The discounted future net cash inflows were calculated in
accordance with current Securities and Exchange Commission ("Commission")
guidelines concerning the use of constant oil and gas prices and operating
costs in reserve evaluations. Future income tax expenses have not been taken
into account in estimating the future net cash inflows. At December 31, 1994,
the Company had no proved developed or proved undeveloped reserves in
Malaysia-Thailand, Argentina, Guatemala, Ecuador or China. See note 24 of
Notes to Consolidated Financial Statements.
Applicable Commission guidelines do not permit disclosure in
documents filed with the Commission of oil and gas reserves other than those
classified as proved developed or proved undeveloped.
The estimated reserves and future net cash inflows set forth in the
tables below include information attributable to the Company's 33.7% ownership
interest in New Zealand Petroleum and the Company's 49.9% ownership interest
in Crusader (which includes the minority interests in Crusader's consolidated
subsidiaries). Oil reserves data include natural gas liquids and condensate.
Net Proved Reserves at December 31, 1994:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROVED PROVED TOTAL
DEVELOPED UNDEVELOPED PROVED
OIL GAS OIL GAS OIL GAS
(MBBLS) (MMCF) (MBBLS) (MMCF) (MBBLS) (MMCF)
Colombia(1) 47,789 14,721 56,604 --- 104,393 14,721
France 6,244 --- --- --- 6,244 ---
Indonesia 402 --- --- --- 402 ---
United States 596 7,197 --- --- 596 7,197
Crusader:
Australia 2,656 46,087 507 13,028 3,163 59,115
Canada 823 1,836 --- --- 823 1,836
Total 58,510 69,841 57,111 13,028 115,621 82,869
</TABLE>
Future net cash inflows before income taxes discounted at 10% per annum at
December 31, 1994 (in thousands of dollars):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PROVED PROVED TOTAL
DEVELOPED UNDEVELOPED PROVED
Colombia(1) $ 339,128 $ 254,933 $594,061
France 25,759 --- 25,759
Indonesia 974 --- 974
United States 11,824 --- 11,824
Crusader:
Australia 41,707 3,923 45,630
Canada 4,531 --- 4,531
Total $ 423,923 $ 258,856 $682,779
</TABLE>
____________________
(1) Includes 1,385 Mbbls of liquids based on current oil prices in the
Cusiana and Cupiagua fields to be recovered from Ecopetrol as
reimbursement for $17.7 million of precommerciality expenditures.
Future net cash inflows from reserves at December 31, 1994, were calculated on
the basis of prices in effect on that date. The prices used by country in
this calculation were:
<TABLE>
<CAPTION>
<S> <C> <C>
OIL GAS
(PER BBL) (PER MCF)
Colombia $ 16.72 $ 1.30
France 16.90 ---
Indonesia 16.61 ---
United States 14.87 1.56
Crusader:
Australia 15.99 1.87
Canada 13.84 0.85
</TABLE>
Revenue and costs associated with the French, Canadian and
Australian reserves are reported in US dollar equivalents based on exchange
values of French franc equivalent to US$0.1887; Canadian $1 equivalent to
US$0.7130; and Australian $1 equivalent to US$0.7849. The Colombian and
Indonesian reserves are evaluated in United States dollars.
The foregoing estimated pretax discounted future net cash inflow
figures relate only to the reserves tabulated above. The estimates were
prepared without consideration of income taxes and indirect costs such as
interest and administrative expenses, and are not to be construed as
representative of the fair market values of the properties to which they
relate.
Reserve estimates are imprecise and may be expected to change as
additional information becomes available. Furthermore, estimates of oil and
gas reserves, of necessity, are projections based on engineering data, and
there are uncertainties inherent in the interpretation of such data as well as
the projection of future rates of production and the timing of development
expenditures. Reservoir engineering is a subjective process of estimating
underground accumulations of oil and gas that cannot be measured in an exact
way, and the accuracy of any reserve estimate is a function of the quality of
available data and of engineering and geological interpretation and judgment.
Accordingly, there can be no assurance that the reserves set forth herein will
ultimately be produced nor can there be assurance that the proved undeveloped
reserves will be developed within the periods anticipated. The Company
emphasizes with respect to the estimates prepared by independent petroleum
engineers, as well as those estimates prepared by the Company's engineers,
that the discounted future net cash inflows should not be construed as
representative of the fair market value of the proved oil and gas properties
belonging to the Company, since discounted future net cash inflows are based
upon projected cash inflows that provide for neither changes in oil and gas
prices nor for escalation of expenses and capital costs. The meaningfulness
of such estimates is highly dependent upon the accuracy of the assumptions
upon which they were based. See note 24 of Notes to Consolidated Financial
Statements.
No estimates of total proved net oil or gas reserves have been filed
by the Company with, or included in any report to, any United States authority
or agency pertaining to the Company's individual reserves since the beginning
of the Company's last fiscal year.
ACREAGE
The following table shows the total gross and net developed and
undeveloped oil and gas acreage (including acreage attributable to mineral,
royalty and overriding royalty interests) held by Triton at December 31, 1994,
including acreage attributable to the Company's 33.7% ownership interest in
New Zealand Petroleum and the Company's 49.9% ownership interest in Crusader
(which includes the minority interests in Crusader's consolidated
subsidiaries). "Gross" refers to the total number of acres in an area in
which the Company holds any interest without adjustment to reflect the actual
percentage interest held therein by the Company. "Net" refers to the gross
acreage as adjusted for interests owned by parties other than the Company.
<PAGE>
"Developed" acreage is acreage spaced or assignable to productive
wells. "Undeveloped" acreage is acreage 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 such acreage contains proved
reserves.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DEVELOPED UNDEVELOPED
ACREAGE ACREAGE(1)(2)
GROSS NET GROSS NET
(In thousands)
Colombia 27 3 299 165
Malaysia-Thailand --- --- 731 366
Argentina --- --- 423 368
France 46 22 532 389
Guatemala --- --- 608 608
Italy --- --- 568 205
United Kingdom (North Sea) --- --- 111 12
United Kingdom (Onshore) --- --- 431 311
Indonesia (3) 3 3 70 70
United States 223 14 528 118
Crusader:
Argentina --- --- 1,272 112
Australia 1,055 26 30,326 866
Canada 16 1 45 11
United States 16 2 108 25
Philippines --- --- 4,043 363
Total 1,386 71 40,095 3,989
</TABLE>
____________________
(1) Triton's interests in certain of this acreage may expire if not
developed at various times in the future pursuant to the terms and
provisions of the leases, licenses, concessions, contracts, permits or
other agreements under which it was acquired.
(2) Undeveloped acreage figures are not reported for Ecuador or China
because the Company's interests therein were not acquired prior to
December 31, 1994. The Company estimates its gross and net undeveloped
acreage in Ecuador to be approximately 494,000 and 494,000, respectively,
and in China to be approximately 791,000 and 791,000, respectively.
(3) New Zealand Petroleum owns a 6% interest in this acreage.
PRODUCTIVE WELLS AND DRILLING ACTIVITY
In this section, "gross" wells refers to the total number of wells
drilled in an area in which the Company holds any interest without adjustment
to reflect the actual ownership interest held. "Net" refers to the gross
number of wells drilled adjusted for interests owned by parties other than the
Company. Well interests include wells attributable to the Company's 33.7%
ownership interest in New Zealand Petroleum and the Company's 49.9% ownership
interest in Crusader (which includes the minority interests in Crusader's
consolidated subsidiaries).
The following table summarizes the approximate total gross and net
interests held by Triton in productive wells at December 31, 1994:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PRODUCTIVE WELLS
GROSS NET
OIL GAS OIL GAS
Colombia 17 1 4.74 0.20
France 104 --- 51.75 ---
Indonesia 73 --- 73.00 ---
Crusader:
Australia 228 346 5.26 8.10
Canada 380 7 12.92 1.05
Total 802 354 147.67 9.35
</TABLE>
The following tables set forth the results of the oil and gas well
drilling activity on a gross basis for wells in which the Company held an
interest for the seven months ended December 31, 1994, and for the years ended
May 31, 1994, 1993 and 1992.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS EXPLORATORY WELLS
PRODUCTIVE (1) DRY
SEVEN MOS. SEVEN MOS.
ENDED ENDED
DEC. 31, YEAR ENDED MAY 31, DEC. 31, DEC. 31,
1994 1994 1993 1992 1994 1994
Colombia 1 3 4 4 ---
Argentina --- --- --- --- ---
France --- --- --- 1 ---
Italy --- --- --- --- ---
United Kingdom --- --- --- --- ---
New Zealand --- 1 --- --- ---
Canada --- --- 2 7 ---
Gabon --- --- --- --- ---
Crusader:
Argentina 1 --- --- --- --- ---
Australia 9 5 --- 6 3
Canada --- --- 1 2 ---
United States --- 2 2 7 2
Philippines --- --- --- --- 1
Total 11 11 9 27 6
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS EXPLORATORY WELLS
TOTAL
SEVEN MOS.
ENDED
YEAR ENDED MAY 31, DEC. 31, YEAR ENDED MAY 31,
1994 1993 1992 1994 1994 1993 1992
Colombia --- --- --- 1 3 4 4
Argentina --- --- 1 --- --- --- 1
France --- --- 11 --- --- --- 12
Italy 1 --- --- --- 1 --- ---
United Kingdom --- --- 1 --- --- --- 1
New Zealand --- --- --- --- 1 --- ---
Canada --- 3 1 --- --- 5 8
Gabon --- --- 1 --- --- --- 1
Crusader:
Argentina --- --- --- 1 --- --- ---
Australia 2 2 2 12 7 2 8
Canada 1 1 --- --- 1 2 2
United States 1 4 8 2 3 6 15
Philippines --- --- --- 1 --- --- ---
Total 5 10 25 17 16 19 52
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS DEVELOPMENT WELLS
PRODUCTIVE (1) DRY
SEVEN MOS. SEVEN MOS.
ENDED ENDED
DEC. 31, YEAR ENDED MAY 31, DEC. 31, YEAR ENDED MAY 31,
1994 1994 1993 1992 1994 1994 1993
Colombia 3 --- --- --- --- --- ---
France --- --- 1 10 --- --- ---
Indonesia --- 3 --- 20 --- 1 ---
United States --- --- --- 4 --- --- ---
Canada --- --- 26 8 --- --- 3
Crusader:
Australia 8 13 15 2 1 1 5
Canada --- 9 26 6 --- --- 4
United States 1 --- --- --- --- 1 ---
Total 12 25 68 50 1 3 12
<PAGE>
<S> <C> <C> <C> <C> <C> <C>
GROSS DEVELOPMENT WELLS
TOTAL
SEVEN MOS.
ENDED
DEC. 31, YEAR ENDED MAY 31,
1992 1994 1994 1993 1992
Colombia --- 3 --- --- ---
France 1 --- --- 1 11
Indonesia 8 --- 4 --- 28
United States --- --- --- --- 4
Canada 3 --- --- 29 11
Crusader:
Australia 1 9 14 20 3
Canada 2 --- 9 30 8
United States --- 1 1 --- ---
Total 15 13 28 80 65
</TABLE>
The following tables set forth the results of drilling activity on a
net basis for wells in which the Company held an interest for the seven months
ended December 31, 1994 and for the years ended May 31, 1994, 1993 and 1992
(those wells acquired or disposed of since May 31, 1991 are reflected in the
following tables only since or up to the effective dates of their respective
acquisitions or sales, as the case may be):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET EXPLORATORY WELLS
PRODUCTIVE (1) DRY
SEVEN MOS. SEVEN MOS.
ENDED ENDED
DEC. 31, YEAR ENDED MAY 31, DEC. 31, YEAR ENDED MAY 31,
1994 1994 1993 1992 1994 1994 1993
Colombia(2) 0.12 1.24 1.36 2.06 --- --- ---
Argentina --- --- --- --- --- --- ---
France(3) --- --- --- 0.40 --- --- ---
Italy --- --- --- --- --- 0.10 ---
United Kingdom --- --- --- --- --- --- ---
United States --- --- --- --- --- --- ---
New Zealand --- 0.20 --- --- --- --- ---
Canada(3) --- --- 1.50 3.10 --- --- 1.50
Gabon --- --- --- --- --- --- ---
Crusader(4):
Argentina 0.12 --- --- --- --- --- ---
Australia 0.15 0.10 --- 1.40 0.63 0.02 0.30
Canada --- --- 0.10 0.60 --- 0.50 0.10
United States --- 0.20 0.10 1.00 0.40 0.10 0.30
Philippines --- --- --- --- 0.20 --- ---
Total 0.39 1.74 3.06 8.56 1.23 0.72 2.20
<PAGE>
<S> <C> <C> <C> <C> <C> <C>
NET EXPLORATORY WELLS
TOTAL
SEVEN MOS.
ENDED
DEC. 31, YEAR ENDED MAY 31,
1992 1994 1994 1993 1992
Colombia(2) --- 0.12 1.24 1.36 2.06
Argentina 0.20 --- --- --- 0.20
France(3) 4.60 --- --- --- 5.00
Italy --- --- 0.10 --- ---
United Kingdom 0.10 --- --- --- 0.10
United States --- --- --- --- ---
New Zealand --- --- 0.20 --- ---
Canada(3) 0.40 --- --- 3.00 3.50
Gabon 0.30 --- --- --- 0.30
Crusader(4):
Argentina --- 0.12 --- --- ---
Australia 1.30 0.78 0.12 0.30 2.70
Canada --- --- 0.50 0.20 0.60
United States 1.20 0.40 0.30 0.40 2.20
Philippines --- 0.20 --- --- ---
Total 8.10 1.62 2.46 5.26 16.66
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET DEVELOPMENT WELLS
PRODUCTIVE (1) DRY
SEVEN MOS. SEVEN MOS.
ENDED ENDED
DEC. 31, YEAR ENDED MAY 31, DEC. 31,
1994 1994 1993 1992 1994
Colombia (2) 0.36 --- --- --- ---
France --- --- 0.50 4.70 ---
Indonesia(3) --- 3.00 --- 20.00 ---
United States --- --- --- 2.00 ---
Canada(3) --- --- 13.50 4.60 ---
Crusader(4):
Australia 0.17 0.40 0.40 0.60 0.01
Canada --- 2.00 4.20 2.00 ---
United States 0.20 --- --- --- ---
Total 0.73 5.40 18.60 33.90 0.01
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET DEVELOPMENT WELLS
TOTAL
SEVEN MOS.
ENDED
YEAR ENDED MAY 31, DEC. 31, YEAR ENDED MAY 31,
1994 1993 1992 1994 1994 1993 1992
Colombia (2) --- --- --- 0.36 --- --- ---
France --- --- 0.50 --- --- 0.50 5.20
Indonesia(3) 1.00 --- 8.00 --- 4.00 --- 28.00
United States --- --- --- --- --- --- 2.00
Canada(3) --- 1.60 1.10 --- --- 15.10 5.70
Crusader(4):
Australia 0.02 0.10 0.30 0.18 0.42 0.50 0.90
Canada --- 0.70 0.50 --- 2.00 4.90 2.50
United States 0.20 --- --- 0.20 0.20 --- ---
Total 1.22 2.40 10.40 0.74 6.62 21.00 44.30
</TABLE>
____________________
(1) A productive well is producing or capable of producing oil and/or gas
in commercial quantities. Multiple completions have been counted as one
well. Any well in which one of the multiple completions is an oil
completion is classified as an oil well.
(2) Adjusted to reflect the national oil company participation at
commerciality for the Cusiana and Cupiagua fields.
(3) Not adjusted to reflect any minority interests.
(4) Adjusted to reflect the Company's 49.9% interest in Crusader.
OTHER
The Company owns or has interests in oil and gas production
facilities relating to its oil and gas production operations throughout the
world. In addition, the Company leases or owns office space, manufacturing
and other properties for its various operations throughout the world.
In connection with its aviation-related services, the Company's
aviation service facilities are predominantly leased under multi-year
agreements with the City of Dallas where the aviation service operations are
located. The unexpired terms of the Company's aviation service leases extend
up to more than 30 years.
For additional information on the Company's leases, including its
office leases, see note 19 of Notes to Consolidated Financial Statements.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
LITIGATION
On or about June 22, 1994, the Company and numerous other defendants
were served by the State of Nevada, Division of Environmental Protection (the
"NDEP") in a state court proceeding in Clark County, Nevada. The action seeks
to hold the defendants responsible for remediation of certain underground
water contamination at the McCarran International Airport and seeks civil
penalties of up to $25,000 per day. The Company has been advised by the NDEP
that the action was filed to toll the running of the statute of limitations on
certain potential causes of action. The Company denies responsibility for the
contamination at issue and does not believe that the action will have a
material adverse affect on its consolidated financial position.
From time to time, the Company's predecessor and former partner in
Indonesia has threatened to bring a fraud or racketeering action against the
Company. The Company believes that any such action asserted against the
Company would be without factual merit and subject to several legal defenses.
The Company is also subject to ordinary litigation that is
incidental to its business, none of which is expected to have a material
adverse effect on the Company's consolidated financial position.
REGULATORY MATTER
The Company continues to cooperate with inquiries by the Securities
and Exchange Commission and the Department of Justice regarding possible
violations of the Foreign Corrupt Practices Act in connection with the
Company's operations in Indonesia. Based upon the information available to
the Company to date, the Company believes that it will be able to resolve any
issues that either agency ultimately might raise concerning these matters in a
manner that would not have a material adverse effect on the Company's
consolidated financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted by the Company during the period from
November 30, 1994 (the last day of the most recent fiscal quarter for which a
Form 10-Q was filed) to December 31, 1994 through the solicitation of proxies
or otherwise.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Triton's common stock is listed on the New York Stock Exchange and
is traded under the symbol OIL. Triton's common stock is also listed on the
Toronto Stock Exchange. Set forth below are the high and low closing sales
prices of Triton's common stock as reported on the New York Stock Exchange
Composite Tape for the periods indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
CALENDAR PERIODS HIGH LOW
1992:
First Quarter $48 1/8 $31 3/8
Second Quarter 34 1/2 27
Third Quarter 38 1/2 26 3/4
Fourth Quarter 42 5/8 32 3/8
1993:
First Quarter 38 7/8 28 3/8
Second Quarter 43 7/8 33 1/2
Third Quarter 34 3/4 27 3/4
Fourth Quarter 33 3/4 28 3/4
1994:
First Quarter 32 26 3/4
Second Quarter 35 7/8 25 1/8
Third Quarter 36 30
Fourth Quarter 37 1/4 31
1995:
First Quarter* 33 7/8 31
</TABLE>
_______________________
*Through March 1, 1995.
Triton has not declared any cash dividends on its shares of common
stock since fiscal 1990. The Company's current intent is to retain earnings
for use in the Company's business and the financing of its capital
requirements. The payment of any future cash dividends is necessarily
dependent upon the earnings and financial needs of the Company, along with
applicable legal and contractual restrictions.
The payment of dividends on the Company's capital stock is
restricted pursuant to the indentures under which its publicly traded notes
were issued.
Under applicable corporate law, the Company may pay dividends or
make other distributions to its shareholders if (i) it would be solvent after
giving effect to the distribution and (ii) the distribution would not exceed
the Company's surplus. "Surplus" is defined as the excess of the net assets
of the Company over its stated capital (stated capital being the total par
value of the Company's outstanding capital stock plus all amounts transferred
to stated capital, minus legal reductions from such sum).
In connection with the acquisition in March 1994 of the common
shares of Triton Europe not owned by Triton, the Company issued 522,460 shares
of its 5% Convertible Preferred Stock ("5% preferred stock") to the former
holders of the Triton Europe ordinary shares. Each share of the 5% preferred
stock may be converted into one share of Triton common stock at any time on or
after October 1, 1994. Each share of 5% preferred stock bears a cash
dividend, which has priority over dividends on Triton's common stock, equal to
5% per annum on the redemption price of $34.41 per share, payable
semi-annually on March 30 and September 30, commencing on September 30, 1994.
The 5% preferred stock has priority over Triton common stock upon liquidation,
and may be redeemed at Triton's option at any time on or after March 30, 1998
(or such earlier date as at least 75% of the shares originally issued have
been converted into common stock) for cash equal to the redemption price. Any
shares of 5% preferred stock that remain outstanding on March 30, 2004 must be
redeemed at the redemption price either for cash or, at the Company's option,
for shares of Triton common stock. See note 15 of Notes to Consolidated
Financial Statements.
In June 1990, the Board of Directors of the Company adopted a
Shareholder Rights Plan under which preferred stock rights were issued to
holders of its common stock at the rate of one right for each share of common
stock held as of the close of business on June 26, 1990.
Generally, the rights become exercisable only if a person acquires
beneficial ownership of 15% or more of Triton's Common Stock or announces a
tender offer for 15% or more of the common stock. If, among other events, any
person becomes the beneficial owner of 15% or more of Triton's common stock,
each right not owned by such person generally becomes the right to purchase
such number of shares of common stock of the Company, which is equal to the
amount obtained by dividing the right's exercise price (currently $40) by 50%
of the market price of the common stock on the date of the first occurrence.
In addition, if the Company is subsequently merged or certain other
extraordinary business transactions are consummated, each right generally
becomes a right to purchase such number of shares of common stock of the
acquiring person which is equal to the amount obtained by dividing the right's
exercise price by 50% of the market price of the common stock on the date of
the first occurrence. Under certain circumstances, the Company's directors
may determine that a tender offer or merger is fair to all shareholders and
prevent the rights from being exercised. The Company will be entitled to
redeem the rights at $0.01 per right at any time until the 10th day following
the public announcement that a 15% position has been acquired. The rights
will expire on June 26, 2000.
At March 1, 1995, there were 6,844 record holders of the Company's
common stock.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AS OF OR FOR
SEVEN MONTHS ENDED
DECEMBER 31, AS OF OR FOR YEAR ENDED MAY 31,
1994 1993 1994
OPERATING DATA:
Sales and other operating revenues (1) $ 26,853 $ 39,204 $ 56,093
Total revenues (1) 31,504 97,198 120,389
Earnings (loss) from continuing operations (1)(2) (27,708) 15,652 (8,691)
Earnings (loss) before extraordinary
items and cumulative effect of
accounting change (27,708) 15,652 (9,341)
Net earnings (loss) (2) (27,708) 15,652 (9,341)
Weighted average number of common
shares outstanding 34,944 34,701 34,775
Earnings (loss) per common share:
Continuing operations (1) (2) $ (0.81) $ 0.45 $ (0.25)
Before extraordinary item and
cumulative effect of accounting change (0.81) 0.45 (0.27)
Net earnings (loss) (0.81) 0.45 (0.27)
Cash dividends per common share --- --- ---
BALANCE SHEET DATA:
Net property and equipment $ 399,658 $ 278,853 $ 308,498
Total assets 619,201 633,277 616,101
Long-term debt 315,258 281,590 294,441
Redeemable preferred stock of
subsidiaries --- --- ---
Shareholders' equity 237,195 268,627 263,422
<S> <C> <C> <C> <C>
1993 1992 1991 1990
OPERATING DATA:
Sales and other operating revenues (1) $ 104,278 $ 119,431 $ 175,498 $186,212
Total revenues (1) 110,240 125,982 209,311 196,575
Earnings (loss) from continuing operations (1)(2) (81,842) (91,596) (11,933) (58,782)
Earnings (loss) before extraordinary
items and cumulative effect of
accounting change (93,552) (94,037) 4,745 (54,769)
Net earnings (loss) (2) (89,535) (94,037) 6,185 (54,176)
Weighted average number of common
shares outstanding 34,241 29,898 20,368 20,346
Earnings (loss) per common share:
Continuing operations (1) (2) $ (2.39) $ (3.11) $ (0.86) $ (3.15)
Before extraordinary item and
cumulative effect of accounting change (2.73) (3.19) (0.04) (2.96)
Net earnings (loss) (2.61) (3.19) 0.03 (2.93)
Cash dividends per common share --- --- --- 0.10
BALANCE SHEET DATA:
Net property and equipment $ 330,151 $ 385,979 $ 391,862 $424,850
Total assets 561,931 571,169 553,809 646,128
Long-term debt 159,147 27,587 160,667 233,134
Redeemable preferred stock of
subsidiaries 11,399 12,972 13,608 22,615
Shareholders' equity 255,432 336,013 186,503 173,796
</TABLE>
____________________
(1) Operating data for the years ended May 31, 1992, 1991 and 1990 are
restated to give effect to accounting for discontinued operations in 1993.
(2) Gives effect to the writedown of assets and loss provisions of $1.0
million, $32.0 million $45.8 million, $103.4 million, $55.4 million, $4.4
million, and $36.3 million for the seven months ended December 31, 1994
and 1993 and the years ended May 31, 1994, 1993, 1992, 1991 and 1990,
respectively.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
Beginning in fiscal 1993, the Company initiated several strategic
changes with respect to its exploration and development programs and non-oil
and gas businesses. As a result, the Company is focusing its resources on what
it regards as high-potential exploration and development opportunities such as
those in Colombia, Malaysia-Thailand and other areas. Producing properties,
publicly owned subsidiaries and affiliates, and non-oil and gas assets have
been re-evaluated, and in some cases sold or restructured, in order to sharpen
this focus.
Liquidity and Capital Resources
Net working capital was $29.7 million, $116.8 million and $42.8
million at December 31, 1994, May 31, 1994 and May 31, 1993, respectively,
while the Company's debt as a percentage of total capital was 58%, 53% and 41%
at December 31, 1994, May 31, 1994 and May 31, 1993, respectively. Cash, cash
equivalents and marketable securities totaled $72.3 million, $161.3 million
and $77.2 million at December 31, 1994, May 31, 1994 and May 31, 1993,
respectively.
The Company incurred capital expenditures and other capital
investments of $89.9 million, $86.8 million and $124.9 million during the
seven months ended December 31, 1994 and the years ended May 31, 1994 and
1993, respectively, primarily for exploration and development of the Cusiana
and Cupiagua fields. Capital expenditures incurred during the seven months
ended December 31, 1994 were funded by cash and equivalents and net proceeds
from both marketable securities ($30.8 million) and debt ($17.2 million). The
principal sources of funds for the year ended May 31, 1994 used to support
operations, capital expenditures and debt repayment were $100 million in
proceeds from the sale of assets and approximately $124 million from the
issuance of $170 million in principal amount of 9 3/4% Senior Subordinated
Discount Notes ("9 3/4% Notes") due December 2000. Proceeds of approximately
$126 million from the issuance of $240 million principal amount of 12 1/2%
Senior Subordinated Discount Notes ("1997 Notes") due November 1997 and asset
sales ($29.4 million) were the primary sources of funds during 1993.
Capital Requirements and Funding Alternatives
Continued funding for development of the oil fields in Colombia,
including drilling and production facilities, as well as commitments for
seismic, drilling and other exploration expenditures under various license,
production sharing and other agreements, will require significant capital.
The Company's capital budget for the year ending December 31, 1995 is
approximately $175 million, excluding capitalized interest, of which
approximately $100 million relates to the Cusiana and Cupiagua fields and $29
million relates to Block A-18 of the Malaysia-Thailand Joint Development Area.
Capital requirements for full field development of the Cusiana and Cupiagua
fields are expected to continue at substantial levels into 1997, when the 1997
Notes will mature.
Negotiations among the Company and the other working interest
owners of the Cusiana and Cupiagua fields and TransCanada PipeLines Colombia
Limited and IPL Energy (Colombia) Limited led to the execution of certain
agreements relating to OCENSA in December 1994.
The agreements contemplate that the capitalization of OCENSA will be
approximately 70% senior debt and 30% equity. OCENSA is expected to borrow
all senior debt under four separate facilities, each of which would be
severally and separately supported by certain performance obligations under
various transportation, advance tariff and other agreements of one of the
initial shipper group consisting of the Company, Ecopetrol, BP Exploration
Company (Colombia) Limited and TOTAL. Proposals for the contemplated debt
financing of OCENSA are being evaluated, although no commitments have been
signed.
The Company has received a commitment from the Export-Import Bank of
the United States ("Eximbank") for a guarantee of up to $35 million of
borrowings to purchase United States-sourced exports under credit facilities
to be negotiated. On December 30, 1994, the Company entered into a $25
million short-term credit facility with a bank . The facility accrues
interest at prime plus 1/2%, is secured by Crusader common stock owned by the
Company, and matures on March 30, 1995. The Company borrowed $10 million
under this facility on December 30, 1994. The Company expects to replace
this facility with another credit facility. Due to limitations on additional
indebtedness under covenants relating to the Company's senior subordinated
notes, the Company's ability to borrow under the above facilities may be
restricted.
The Company expects to meet the balance of its direct capital needs
in 1995 and later years with increasing cash flow from Colombian operations,
cash on hand, marketable securities, proceeds from asset sales (including
possible forward sales of oil), and possibly the issuance of equity or other
securities. Other indenture covenants relating to the Company's senior
subordinated notes would require the Company to offer to purchase a portion of
the notes if the Company's shareholders' equity is less than $225 million at
the end of two consecutive quarters. As a result of the $27.7 million net
loss experienced by the Company during the seven month period ended December
31, 1994, shareholders' equity declined to $237 million at the end of the
period. Although the Company may experience further losses for certain
interim periods during 1995, the Company does not anticipate that any such
losses would cause it to violate any indenture covenants.
Seven Months Ended December 31, 1994 and 1993
Results of Operations
The Company reported a net loss of $27.7 million (before preferred
dividends) for the seven months ended December 31, 1994 compared to net income
of $15.7 million in the comparable 1993 period. The 1993 period included an
after-tax gain of $48 million related to the sales of the Company's Canadian
subsidiary and certain working interest properties in the United States, which
were offset by a writedown of $12.8 million, after taxes and minority
interest, of oil properties in France.
Revenues
Sales and other operating revenues decreased $12.4 million in 1994
compared to 1993 primarily due to the 1993 sales of the Company's investment
in Triton Canada ($6.8 million), working interest properties in the United
States ($1.7 million) and three aviation fixed base operations ($2.5 million).
Revenues were also lower in France ($2.4 million) and Indonesia ($1.4
million) mainly due to lower volumes produced. Revenues in Colombia increased
$2.3 million in 1994 compared to 1993 due to the start-up of two early
production units of the Cusiana central processing facilities in late 1994.
Total revenues in 1993 included a gain of $47.9 million from the
sale of Triton Canada. Other income decreased during 1994 due to a $7 million
gain realized in 1993 on the sale of oil and gas properties in the United
States, which was offset by an increase in interest income of $1.5 million
earned on proceeds from the 9 3/4% Notes issued in December 1993.
Costs and Expenses
Operating expenses decreased from $27.7 million in 1993 to $18
million in 1994 principally due to the 1993 sales of Triton Canada ($3.7
million), working interest properties in the United States ($1 million) and
three aviation fixed base operations ($1.5 million). Lower production volumes
in France and Indonesia reduced operating expenses by $2.1 million and $1.6
million, respectively; however, France incurred $1.8 million for workovers in
1994 ($1 million in 1993) to reduce the production decline of the field and
improve recoverable reserves. Start-up of the two early production units in
the Cusiana central processing facilities in late 1994 partially offset the
decrease in operating expenses from 1993.
The 1993 operating expenses also included an accrual of $2.1 million
for environmental clean-up costs: $.4 million related to oil and gas and $1.7
million related to aviation services.
General and administrative expenses decreased $1.7 million from
$18.9 million in 1993 to $17.2 million in 1994 due to a 1993 restructuring of
European operations ($2.2 million), the sale of Triton Canada ($.5 million)
and cost cutting in the aviation segment ($.3 million). Personnel and other
costs at corporate increased by $2.3 million compared to 1993.
Depreciation, depletion and amortization decreased from $14 million
in 1993 to $7.6 million in 1994 due to lower production and prior writedowns
of properties in France ($4.2 million) and the sales of Triton Canada and
working interest properties in the United States ($3 million).
The Company recorded writedowns of oil and gas properties of $1
million and $32 million in 1994 and 1993, respectively, resulting from
application of the Securities and Exchange Commission ("SEC") full cost
ceiling limitation. The writedown in 1994 resulted from lower United States
gas prices while the writedown in 1993 resulted from lower oil prices in
France.
Interest expense before capitalization increased $8.2 million during
1994 to $19.8 million primarily due to the issuance of the 9 3/4% Notes.
Capitalized interest in 1994 and 1993 totaled $11.8 million and $8.1 million,
respectively.
Equity in earnings of Crusader decreased $3.5 million in 1994 due to
a realized loss on the sale of oil and gas properties in the United States,
writedowns of unproved oil and gas properties in the Philippines and
Argentina, deferred tax adjustments and lower oil sales in Australia.
Income Taxes
The 1994 income tax provision primarily reflected deferred taxes in
Colombia, Argentina and Guatemala. The 1993 income tax provision included
current tax expense of $6.7 million resulting from the sale of Triton Canada
and a deferred tax benefit of $10.7 million resulting from the release of
deferred tax liabilities in France.
At December 31, 1994, the Company had net operating losses and
depletion loss carryforwards for United States tax purposes of approximately
$241 million and $7 million, respectively. In addition, at December 31, 1994,
certain subsidiaries had separate return limitation years ("SRLY") operating
loss and depletion carryforwards of approximately $60 million and $14 million,
respectively. Depletion loss carryforwards are available indefinitely. The
net operating losses expire from 1996 through 2009 and the SRLY operating loss
carryforwards expire from 1995 through 2001. See note 12 of Notes to the
Consolidated Financial Statements.
The Company recorded a net deferred tax asset of $34.5 million at
December 31, 1994. The minimum amount of future taxable income necessary to
realize the deferred tax asset is approximately $98 million. Although
realization is not assured based on operating losses realized by the Company
in the current transition period and prior three fiscal years, management
believes the deferred tax asset will be realized through increasing income
from its operations in Colombia and tax planning strategies involving the
Company's corporate structure.
Minority Interest in Losses of Subsidiaries
The Company acquired the minority interest shares in Triton Europe
on March 31, 1994.
Years Ended May 31, 1994, 1993 and 1992
Revenues
Sales and other operating revenues were $56.1 million in 1994,
$104.3 million in 1993 and $119.4 million in 1992. Oil and gas revenues
decreased by $37.8 million from 1993 to 1994, while aviation sales and
services decreased $7 million, due to the divestiture of Triton Canada and
non-core assets. Total revenues in 1994 include a $47.9 million gain on the
sale of the Company's investment in Triton Canada. Other income increased
during 1994 due to a $7 million gain on the sale of United States oil and gas
properties, a $1.5 million gain on the sale of an interest in Aero Services
International, Inc. ("Aero") and higher interest income of $2.4 million. The
decrease in sales and operating revenues in 1993 compared to 1992 resulted
from declines in oil and gas revenues ($5.1 million) and aviation sales and
services ($8.8 million).
Costs and Expenses
Operating expenses of $41.6 million for the year ended May 31, 1994
decreased $14.4 million from the previous year primarily due to oil and gas
operations ($8.3 million), aviation operations ($2.1 million), and gas
gathering and pipeline operations ($3.8 million) which have been sold.
Operating expenses decreased $10.1 million from 1992 to 1993 principally due
to lower aviation operating expenses of $10.6 million.
General and administrative expenses decreased $5.9 million from 1993
to 1994 as lower expenses in the oil and gas and aviation segments were
partially offset by increases in personnel at the corporate office. General
and administrative expenses during 1993 increased compared to 1992 due to
severance costs and corporate staff increases, offset by staff reductions in
the United States, Indonesia, France and Canada, and lower directors'
compensation.
Depreciation, depletion and amortization of $20.5 million in 1994
decreased $25.9 million from 1993 due to lower depletion related to oil and
gas operations. The increase from 1992 to 1993 was also related to oil and
gas operations.
Writedown of assets and loss provisions were $45.8 million, $103.4
million and $55.4 million for 1994, 1993 and 1992, respectively. Writedowns
of oil and gas properties totaled $44.4 million in 1994, $91.2 million in 1993
and $35.8 million in 1992. Writedowns of aviation assets were $3.5 million
and $6.3 million in 1993 and 1992, respectively. The Company also recorded
loss provisions of $5.5 million in 1993 and $10 million in 1992 relating to
the cost of actual or contemplated settlements and legal costs associated with
pending litigation during those years.
The increase in interest expense since 1992 was due to higher
outstanding debt resulting from the issuance of the 1997 Notes in November
1992 and the 9 3/4% Notes in December 1993, offset by capitalized interest.
Equity in earnings (loss) of affiliates was comprised of the
following (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED MAY 31,
1994 1993 1992
Crusader, 49.9% owned $ 554 $ (3,512) $ (2,878)
Aero, 28% owned --- (9,481) (14,088)
Other 91 500 320
$ 645 $ (12,493) $ (16,646)
</TABLE>
Crusader's 1994 earnings improvement resulted from a decrease in
losses from the smokeless fuel operation in Ireland of $3.4 million and lower
writedowns of $4.4 million. The 1993 Crusader loss was primarily a result of
pre-operating costs associated with the smokeless fuel operation in Ireland
($8.4 million) and writedowns of its United States oil and gas properties
($5.3 million). The 1992 loss at Crusader resulted from writedowns of $9.8
million, of which $6.3 million pertained to coal properties and $3.5 million
related to other property and equipment.
For the years ended May 31, 1993 and 1992, the Company's equity in
the losses of Aero reflected loss provisions of $7.3 million and $11.8
million, respectively. These loss provisions reduced the carrying amounts of
preferred stock, common stock, outstanding loans from the Company and
receivables.
Income Taxes
The Company adopted Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes," effective June 1, 1992. The
cumulative benefit of the change to the liability based method under SFAS No.
109 in 1993 was $4 million, or $.12 per share.
The income tax benefit of $6.5 million in 1994 was due to a foreign
tax benefit of $10.7 million resulting from the ceiling test writedown of oil
and gas properties in France, a gain of $1 million relating to a refund
collected for taxes paid in connection with the 1991 sale of the North Sea
properties and a $2 million refund due in France for the use of net operating
losses. These benefits were partially offset by $6.7 million of Canadian
taxes due following the sale of the Company's investment in Triton Canada.
Also included in the 1994 tax provision is deferred tax expense of $10 million
related to Colombia and Argentina and a deferred tax benefit of $9.4 million
related to the United States .
The income tax benefit for fiscal 1993 was $43.9 million,
principally due to a foreign tax benefit resulting from the writedown of oil
properties in France and recognition of a $25 million net deferred tax asset
in the United States.
Minority Interest in Loss of Subsidiaries
The changes in minority interest corresponded with movements in
operating losses realized by Triton Europe in 1992, 1993 and up until March
31, 1994, the date on which the Company acquired the minority interest shares
in Triton Europe.
Discontinued Operations
The results of operations for the wholesale fuel products segment
have been reported as discontinued operations. The 1994 losses were offset
against a loss provision recorded of $16.1 million, net of tax, at May 31,
1993. An additional accrual of $.7 million, net of tax, was recorded at May
31, 1994 for estimated operating losses associated with the final disposition
of this segment. Also reported as a discontinued operation during fiscal 1992
were the results of operations for the Company's seismic equipment sales and
services segment. The Company realized a net gain of $13.8 million during
its first quarter of 1993 as a result of this sale. The Company's equity in
the earnings of Input/Output, Inc. was $2.1 million in 1992.
Segment Review
Oil and Gas Activities
Oil and gas sales decreased by $37.8 million in 1994 compared to
1993 primarily due to the sale of the Company's investment in Triton Canada
($14.5 million), sale of working interests properties in the United States
($8.6 million) and lower revenues in France resulting from a drop in
production. Average oil prices per barrel dropped by $3.88 between 1993 and
1994, resulting in an $8.1 million decrease in revenues during 1994,
principally from price decreases in France ($4.46 per barrel or a $4.7 million
effect). Price decreases in Indonesia, the United States and Colombia had a
lesser impact, representing in the aggregate a $3.3 million effect in 1994.
Colombian production increased to 467,000 barrels in 1994 from 219,000 barrels
in 1993.
Oil and gas production costs (operating expenses) were $26.6 million
in 1994, $34.9 million in 1993 and $34.3 million in 1992. The decrease in 1994
was principally due to the sale of Triton Canada and United States properties
($9 million effect) and lower production in France ($3.1 million effect),
partially offset by increased production in Colombia ($1.8 million effect) and
an accrual for environmental clean-up costs in the United States ($1.5
million). The increase in 1993 over 1992 was principally due to start-up
costs in Colombia and additional workover costs in Indonesia and France.
These cost increases were partially offset by the lower production volumes
during 1993. Average production costs per equivalent barrel of oil and gas
production were $8.83 in 1994, $5.95 in 1993 and $5.35 in 1992. The increase
per barrel in 1994 was primarily due to the United States environmental
clean-up costs and lower United States production from the sale of working
interest properties.
General and administrative expenses in this segment have decreased
from $18 million in 1992 and 1993 to $11 million in 1994. Lower expenses in
1994 were primarily due to the restructuring in Europe ($4.6 million effect),
the sale of Triton Canada ($1.4 million effect), and higher capitalization ($2
million effect) reflecting increased activity in Malaysia-Thailand. Affecting
1993 and 1992 were severance costs and other restructuring related expenses in
Europe in 1993 and Canada in 1992, and growth in activity and personnel in
Colombia. These were offset partially by the effect of staff reductions in
the United States, Canada and Indonesia.
Operating profits for this segment were significantly affected by
writedowns of $43.2 million and $74.9 million in Europe during 1994 and 1993,
respectively. During 1994, the writedowns related to SEC ceiling limitation
requirements for the Company's cost pool in France. The 1993 writedowns
reflected a decision to eliminate certain future development activities in the
Villeperdue Field, for which the Company recorded a significant decrease in
its proved undeveloped reserves. A resulting drop in the SEC ceiling
limitation for these properties led to a $55.7 million writedown of costs
associated with the Company's proved oil properties. Additionally, in
connection with Triton Europe's decision to eliminate certain exploration
activities in both France and the United Kingdom, approximately $19.2 million
of unevaluated properties were considered to be impaired. These costs were
associated with various license areas that were relinquished or allowed to
expire. Further, writedowns occurred in the United Kingdom, New Zealand and
Indonesia during both 1992 and 1993 because of lower prices, downward
adjustments of reserves or impairment. The 1992 writedown in Gabon resulted
from the Company's relinquishment of its license area due to a lack of
exploration success.
Aviation Sales and Services
Sales and operating expenses in this segment continued to decrease
principally from the divestiture of three fixed base operations and a
reduction in charter and maintenance revenues in 1994. The decreases in 1993
compared to 1992 were from reductions in aircraft sales, charter and
maintenance revenues and 1991 divestitures. Writedowns were recorded during
1993 and 1992 to reflect the permanent impairment of value or contemplation of
various asset sales, pursuant to a restructuring plan initiated during 1990.
FOREIGN OPERATIONS
The Company derives a significant portion of its consolidated
revenues from foreign operations. A risk inherent in foreign operations is
the possibility of realizing economic currency exchange losses when
transactions are completed in currencies other than United States dollars.
The Company's risk of realizing foreign currency exchange losses is largely
mitigated because the Company receives United States dollars for sales of its
petroleum products in France, Colombia and Indonesia.
The Company's 49.9% owned affiliate, Crusader, operates primarily in
Australia, Canada and the United Kingdom. In April 1994, Crusader issued $41
million of exchangeable notes, which are denominated in United States dollars.
The notes are exchangeable into 1,114,000 shares of Triton common stock held
in escrow by Crusader. Although the notes are exposed to movements in
exchange rates for financial reporting purposes, the exchange feature to
Triton common stock acts as an economic hedge to Crusader. During the seven
months ended December 31, 1994, Crusader recorded gross unrealized gains of
approximately $2 million associated with the exchangeable notes.
HEDGING ACTIVITIES
The Company enters into short-term crude oil contracts to hedge its
risk against changing oil prices for sales of oil. The contracts usually have
a maturity of two months or less and are limited to quantities expected to be
sold during the Company's liftings of oil production. Gains or losses on such
contracts are deferred and recognized at the time of sale.
The Company may from time to time enter into other contracts to
hedge foreign currency, oil price or interest rate risk. It is Company policy
not to enter into speculative transactions. At December 31, 1994, the Company
had no other hedging arrangements.
ENVIRONMENTAL MATTERS
The Company is subject to extensive environmental laws and
regulations. These laws regulate the discharge of materials into the
environment and may require the Company to remove or mitigate the
environmental effects of the disposal or release of petroleum substances at
various sites. Also, the Company remains liable for certain environmental
matters that may arise from formerly owned fuel businesses that were involved
in the storage, handling and sale of hazardous materials, including fuel
storage in underground tanks. The Company believes that the level of future
expenditures for environmental matters, including clean-up obligations, is
impractical to determine with any reliable degree of accuracy. Management
believes that such costs, when finally determined, will not have a material
adverse effect on the Company's operations or consolidated financial
conditions. During the seven months ended December 31, 1994, and the years
ended May 31, 1994, 1993 and 1992, the Company accrued nil, $4.4 million, nil
and $1.2 million, respectively, for environmental costs. See Item 1.
"Business - Oil and Gas Operations," "Business - Litigation" and note 19 of
Notes to Consolidated Financial Statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this item begin at page F-1
hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information relating to the Company's directors and nominees for
election as directors of the Company is incorporated herein by reference from
the Company's Proxy Statement (herein so called) for its 1995 Annual Meeting
of Shareholders, specifically the discussion under the heading "Election of
Directors." It is currently anticipated that the Proxy Statement will be
publicly available and mailed to shareholders in April 1995. Certain
information as to executive officers is included herein under Item 1.
"Business - Executive Officers."
ITEM 11. EXECUTIVE COMPENSATION
The discussion under "Management Compensation" in the Company's
Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The discussion under "Voting and Principal Shareholders" in the
Company's Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The discussion under "Management Compensation" in the Company's
Proxy Statement is incorporated herein by reference.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Transition
Report on Form 10-K:
1. Financial Statements: The financial statements filed as part of
this report are listed in the "Index to Financial Statements and Schedules" on
page F-1 hereof.
2. Financial Statement Schedules: The financial statement schedules
filed as part of this report are listed in the "Index to Financial Statements
and Schedules" on page F-1 hereof.
3. Exhibits required to be filed by Item 601 of Regulation S-K.
(Where the amount of securities authorized to be issued under any of
Crusader's long-term debt agreements does not exceed 10% of the Company's
assets, pursuant to paragraph (b)(4) of Item 601 of Regulation S-K, in lieu of
filing such as exhibits, the Company hereby agrees to furnish to the
Commission upon request a copy of any agreement with respect to such long-term
debt.)
3.1 Restated Articles of Incorporation.(16)
3.2 Amended and Restated Bylaws of Triton Energy Corporation.(16)
4.1 Specimen Stock Certificate of Common Stock, $1.00 par value, of the
Company.(3)
4.4 Rights Agreement dated as of June 26, 1990, between Triton and
NationsBank of Texas, N.A. (f/k/a NCNB Texas, N.A.), as Rights Agent.(3)
4.5 Statement of Cancellation of Redeemable Shares, dated October 1,
1991.(7)
4.6 Form of Debt Securities.(12)
4.7 Proposed Form of Senior Indenture.(12)
4.8 Proposed Form of Senior Subordinated Indenture.(12)
4.9 Senior Subordinated Indenture by and between the Company and United
States Trust Company of New York, dated as of December 15, 1993.(11)
4.10 First Supplemental Indenture by and between the Company and United
States Trust Company of New York, dated as of December 15, 1993.(11)
4.11 Statement of Resolution Establishing and Designating a Series of
Shares of the Company, 5 % Convertible Preferred Stock, no par value,
dated as of March 30, 1994.(13)
10.1 Triton Energy Corporation Amended and Restated Retirement Income
Plan.(11)(18)
10.2 Triton Energy Corporation Amended and Restated Supplemental Executive
Retirement Income Plan.(11)(18)
10.3 1981 Employee Non-Qualified Stock Option Plan of Triton Energy
Corporation.(2)(18)
10.4 Amendment No. 1 to the 1981 Employee Non-Qualified Stock Option Plan
of Triton Energy Corporation.(6)(18)
10.5 Amendment No. 2 to the 1981 Employee Non-Qualified Stock Option Plan
of Triton Energy Corporation.(2)(18)
10.6 Amendment No. 3 to the 1981 Employee Non-Qualified Stock Option Plan
of Triton Energy Corporation.(11)(18)
10.7 1985 Stock Option Plan of Triton Energy Corporation.(3)(18)
10.8 Amendment No. 1 to the 1985 Stock Option Plan of Triton Energy
Corporation.(2)(18)
10.9 Amendment No. 2 to the 1985 Stock Option Plan of Triton Energy
Corporation.(11)(18)
10.10 Triton Energy Corporation Amended and Restated 1986 Convertible
Debenture Plan.(11)(18)
10.11 1988 Stock Appreciation Rights Plan of Triton Energy
Corporation.(5)(18)
10.12 Triton Energy Corporation 1989 Stock Option Plan.(8)(18)
10.13 Amendment No. 1 to the Triton Energy Corporation 1989 Stock Option
Plan.(2)(18)
10.14 Amendment No. 2 to the Triton Energy Corporation 1989 Stock Option
Plan.(11)(18)
10.15 Triton Energy Corporation Amended and Restated 1992 Stock Option
Plan (11)(18)
10.16 Form of Amended and Restated Employment Agreement by and among
Triton Energy Corporation and certain officers of Triton Energy
Corporation.(11)(18)
10.17 Triton Energy Amended and Restated Restricted Stock Plan.(11)(18)
10.18 Deed of Trust Note dated April 11, 1988, executed by Triton Aviation
Services, Inc. and API Terminal, Inc. and related documents, including
Guaranty of Triton Energy Corporation.(5)
10.19 Triton Energy Corporation Executive Life Insurance Plan.(4)(18)
10.20 Triton Energy Corporation Long Term Disability Income Plan.(4)(18)
10.21 Triton Energy Corporation Amended and Restated Retirement Plan for
Directors.(3)(18)
10.22 Indenture dated as of November 13, 1992 between Triton and Chemical
Bank, with respect to the issuance of Senior Subordinated Discount Notes
due 1997.(9)
10.23 Supplemental Indenture dated as of July 1, 1993 between Triton
Energy Corporation and Chemical Bank.(5)
10.24 Supplemental Indenture dated as of August 16, 1993 between Triton
Energy Corporation and Chemical Bank.(5)
10.25 Underwriting Agreement dated June 18, 1993 among Triton Canada
Resources Ltd., Triton Energy Corporation and the underwriters named
therein.(10)
10.26 Purchase and Sale Agreement among Triton Oil and Gas Corp., Triton
Energy Corporation and Torch Energy Advisors Incorporated dated effective
as of January 1, 1993.(5)
10.27 Agreement for Purchase and Sale of Assets Among Triton Fuel Group,
Inc. and AVFUEL Corporation dated August 25, 1993.(5)
10.28 Contract for Exploration and Exploitation for Santiago de Atalayas I
with an effective date of July 1, 1982, between Triton Colombia, Inc., and
Empresa Colombiana De Petroleos.(5)
10.29 Contract for Exploration and Exploitation for Tauramena with an
effective date of July 4, 1988, between Triton Colombia, Inc., and Empresa
Colombiana De Petroleos.(5)
10.30 Summary of Assignment legalized by Public Instrument No. 1255 dated
September 15, 1987 (Assignment is in Spanish language).(5)
10.31 Summary of Assignment legalized by Public Instrument No. 1602 dated
June 11, 1990 (Assignment is in Spanish language).(5)
10.32 Summary of Assignment legalized by Public Instrument No. 2586 dated
September 9, 1992 (Assignment is in Spanish language).(5)
10.33 Guaranty between the Company and Comerica Bank Texas.(11)
10.34 Triton Energy Corporation 401(K) Savings Plan.(11)
10.36 Contract between Malaysia-Thailand and Joint Authority and Petronas
Carigali SDN.BHD. and Triton Oil Company of Thailand relating to
Exploration and Production of Petroleum for Malaysia-Thailand Joint
Development Area Block A-18.(14)
21.1 Subsidiaries of the Company.(1)
23.1 Consent of Price Waterhouse LLP.(1)
23.2 Consent of KPMG Peat Marwick, LLP, Dallas, Texas.(1)
23.3 Consent of KPMG Peat Marwick, Brisbane, Australia.(1)
23.4 Consent of DeGolyer and MacNaughton.(1)
23.5 Consents of McDaniel & Associates Consultants, Ltd.(1)
24.1 The power of attorney of officers and directors of the Company as set
forth on the signature page hereof.(1)
27.1 Financial Data Schedule.(1)
99.1 Rio Chitamena Association Contract.(15)
99.2 Rio Chitamena Purchase and Sale Agreement.(15)
99.3 Integral Plan - Cusiana Oil Structure.(15)
99.4 Letter Agreements with co-investor in Colombia.(15)
99.5 Colombia Pipeline Memorandum of Understanding.(15)
99.6 Oleoducto Central Agreement.(17)
(1) Filed herewith.
(2) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1992 and incorporated herein by
reference.
(3) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1990 and incorporated herein by
reference.
(4) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1991 and incorporated herein by
reference.
(5) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1993 and incorporated by reference
herein.
(6) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1989 and incorporated by reference
herein.
(7) Previously filed as an exhibit to the Company's Registration Statement
on Form S-3 (No. 33-42430) and incorporated herein by reference.
(8) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1988 and incorporated herein
by reference.
(9) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1992 and incorporated herein
by reference.
(10) Previously filed as an exhibit to the Company's Current Report on
Form 8-K dated as of July 14, 1993 and incorporated herein by reference.
(11) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1993 and incorporated by
reference herein.
(12) Previously filed as an exhibit to the Company's Registration
Statement on Form S-3 (No. 33-69230) and incorporated herein by reference.
(13) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended February 28, 1994 and incorporated by
reference herein.
(14) Previously filed as an exhibit to the Company's current report on
Form 8-K dated April 21, 1994 and incorporated by reference herein.
(15) Previously filed as an exhibit to the Company's current report on
Form 8-K/A dated July 15, 1994 and incorporated by reference herein.
(16) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1994 and incorporated herein by
reference.
(17) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1994 and incorporated herein
by reference.
(18) Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Transition Report on
Form 10-K to be signed by the undersigned thereunto duly authorized on the
15th day of March, 1995.
TRITON ENERGY CORPORATION
By: /s/ Thomas G. Finck
Thomas G. Finck
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of Triton Energy Corporation (the "Company") hereby constitutes and
appoints Thomas G. Finck, Robert B. Holland, III, and Peter Rugg, or any of
them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution, for him and on
his behalf and in his name, place and stead, in any and all capacities, to
sign, execute, and file any and all documents relating to the Company's
Transition Report on Form 10-K for the transition period from June 1, 1994 to
December 31, 1994, including any and all amendments and supplements thereto,
with any regulatory authority, granting unto said attorneys, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he himself might
or could do if personally present, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, or their or his substitute
or substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Transition Report on Form 10-K has been signed below by the following persons
on behalf of the Registrant and in the capacities indicated on the 15th day of
March, 1995.
Signature
Title
/s/ Thomas G. Finck
President, Chief Executive Officer
Thomas G. Finck and Director
/s/ Peter Rugg
Senior Vice President and
Peter Rugg Chief Financial Officer
/s/ Herbert L. Brewer
Director
Herbert L. Brewer
/s/ John P. Lewis
Director
John P. Lewis
/s/ Michael E. McMahon Director
Michael E. McMahon
/s/ Ernest E. Cook
Director
Ernest E. Cook
Director
Sheldon R. Erikson
/s/ Ray H. Eubank
Director
Ray H. Eubank
/s/ Jesse E. Hendricks
Director
Jesse E. Hendricks
Director
Fitzgerald S. Hudson
Director
John R. Huff
/s/ William I. Lee
Director
William I. Lee
/s/ Wellslake D. Morse, Jr.
Director
Wellslake D. Morse, Jr.
/s/ Edwin D. Williamson Director
Edwin D. Williamson
Director
J. Otis Winters
TRITON ENERGY CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
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PAGE
TRITON ENERGY CORPORATION AND SUBSIDIARIES:
Report of Independent Accountants - December 31, 1994,
May 31, 1994 and 1993 F-2
Report of Independent Accountants - May 31, 1992 F-3
Consolidated Statements of Operations - Seven months ended December 31, 1994
and years ended May 31, 1994, 1993 and 1992 F-4
Consolidated Balance Sheets - December 31, 1994, May 31, 1994 and 1993 F-5
Consolidated Statements of Cash Flows - Seven months ended December 31, 1994
and years ended May 31, 1994, 1993 and 1992 F-6
Consolidated Statements of Shareholders' Equity - Seven months ended
December 31, 1994 and years ended May 31, 1994, 1993 and 1992 F-7
Notes to Consolidated Financial Statements F-8
</TABLE>
<TABLE>
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SCHEDULES:
II - Valuation and Qualifying Accounts - Seven months ended
December 31, 1994 and years ended May 31, 1994, 1993 and 1992 F-49
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
CRUSADER LIMITED AND SUBSIDIARIES:
Report of Independent Accountants - May 31, 1992 F-50
Consolidated Statement of Earnings - Year ended May 31, 1992 F-51
Consolidated Statement of Shareholders' Equity - Year ended May 31, 1992 F-52
Consolidated Statement of Cash Flows - Year ended May 31, 1992 F-53
Notes to Consolidated Financial Statements F-54
</TABLE>
All other schedules are omitted as the required information is inapplicable or
presented in the consolidated financial statements or related notes
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Triton Energy Corporation
In our opinion, the consolidated financial statements as of and for the seven
months ended December 31, 1994 and as of and for the years ended May 31, 1994
and 1993 listed in the accompanying index present fairly, in all material
respects, the financial position of Triton Energy Corporation and its
subsidiaries at December 31, 1994 and May 31, 1994 and 1993, and the results
of their operations and their cash flows for the seven months ended December
31, 1994 and the years ended May 31, 1994 and 1993 in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
As discussed in notes 1 and 4, the Company decided to discontinue its
wholesale fuel products segment in 1993. The financial statements for 1992
have been restated to reflect the wholesale fuel products as a discontinued
operation. We have audited the adjustments that were applied to restate the
1992 financial statements. In our opinion, such adjustments are appropriate
and have been properly applied to the 1992 financial statements.
As discussed in notes 6 and 12, respectively, the Company changed its methods
of accounting for investments in marketable securities at May 31, 1994 and
income taxes in 1993.
PRICE WATERHOUSE LLP
Dallas, Texas
February 14, 1995
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Triton Energy Corporation
We have audited the consolidated statements of operations, shareholders'
equity and cash flows of Triton Energy Corporation and subsidiaries for the
year ended May 31, 1992 (before restatement for discontinued wholesale fuel
products operations). In connection with our audit of the consolidated
financial statements, we also have audited the financial statement schedule as
listed in the accompanying index for the year ended May 31, 1992. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial statement schedule
based on our audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of Triton Energy Corporation and subsidiaries for the year ended May
31, 1992, in conformity with generally accepted accounting principles. Also,
in our opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Dallas, Texas
August 14, 1992
TRITON ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED
DECEMBER 31, YEAR ENDED MAY 31,
1994 1994 1993 1992
REVENUES:
Sales and other operating revenues $ 26,853 $ 56,093 $ 104,278 $ 119,431
Gain on sale of Triton Canada common stock --- 47,865 --- ---
Other income 4,651 16,431 5,962 6,551
31,504 120,389 110,240 125,982
COSTS AND EXPENSES:
Operating, including $2,075, $7,538 and $8,436 in the
years ended May 31, 1994, 1993 and 1992 to affiliate 17,993 41,641 56,031 66,093
General and administrative 17,194 32,747 38,657 37,820
Depreciation, depletion and amortization 7,587 20,490 46,404 41,213
Writedown of assets and loss provisions 984 45,754 103,370 55,409
Interest 7,939 7,852 5,287 1,631
Equity in (earnings) loss of affiliates, net 4,102 (645) 12,493 16,646
Foreign exchange (gain) loss (383) (252) 776 4,557
55,416 147,587 263,018 223,369
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES, MINORITY INTEREST AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (23,912) (27,198) (152,778) (97,387)
Income tax expense (benefit) 3,796 (6,536) (43,881) (1,937)
(27,708) (20,662) (108,897) (95,450)
Minority interest in loss of subsidiaries --- 11,971 27,055 3,854
LOSS FROM CONTINUING OPERATIONS BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (27,708) (8,691) (81,842) (91,596)
DISCONTINUED OPERATIONS:
Loss from operations --- --- (9,474) (2,441)
Loss on disposal --- (650) (16,077) ---
Gain on public stock offering --- --- 13,841 ---
LOSS BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE (27,708) (9,341) (93,552) (94,037)
CUMULATIVE EFFECT OF ACCOUNTING CHANGE --- --- 4,017 ---
NET LOSS (27,708) (9,341) (89,535) (94,037)
DIVIDENDS ON PREFERRED STOCK 449 --- --- 1,386
LOSS APPLICABLE TO COMMON STOCK $ (28,157) $ (9,341) $ (89,535) $ (95,423)
Weighted average common shares outstanding 34,944 34,775 34,241 29,898
LOSS PER COMMON SHARE:
Continuing operations $ (0.81) $ (0.25) $ (2.39) $ (3.11)
Discontinued operations --- (0.02) (0.34) (0.08)
Cumulative effect of accounting change --- --- 0.12 ---
NET LOSS $ (0.81) $ (0.27) $ (2.61) $ (3.19)
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
TRITON ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ASSETS DECEMBER 31, MAY 31, MAY 31,
1994 1994 1993
CURRENT ASSETS:
Cash and equivalents $ 22,341 $ 69,005 $ 52,939
Short-term marketable securities 26,657 63,431 24,253
Trade receivables 6,087 6,454 11,317
Other receivables 12,401 8,125 5,399
Inventories, prepaid expenses and other 6,391 4,095 6,570
Net assets of discontinued operations --- 4,566 21,789
TOTAL CURRENT ASSETS 73,877 155,676 122,267
Long-term marketable securities 23,264 28,831 ---
Investments in unconsolidated affiliates 34,162 36,809 50,115
Property and equipment, at cost, net 399,658 308,498 330,151
Deferred income taxes 34,486 34,426 25,000
Other assets 53,754 51,861 34,398
$ 619,201 $ 616,101 $ 561,931
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current installments of long-term debt $ 257 $ 312 $ 3,440
Short-term borrowings 17,351 1,640 3,280
Accounts payable and accrued liabilities 26,608 30,251 38,840
Liabilities of discontinued operations --- 6,700 31,360
Deferred income taxes --- --- 2,583
TOTAL CURRENT LIABILITIES 44,216 38,903 79,503
Long-term debt, excluding current installments 315,258 294,441 159,147
Deferred income taxes 14,672 10,037 13,178
Deferred income and other 7,860 9,298 9,100
Minority interest in subsidiaries --- --- 34,172
Redeemable preferred stock of subsidiary --- --- 11,399
Convertible debentures due to employees --- --- ---
SHAREHOLDERS' EQUITY:
Preferred stock, without par value; authorized 5,000,000 shares;
issued 522,412 and 522,460 shares at December 31, 1994 and
May 31, 1994, respectively, stated value $34.41 17,976 17,978 ---
Common stock, par value $1; authorized 200,000,000 shares;
issued 35,577,009, 35,519,103 and 35,231,142 shares at
December 31, 1994, May 31, 1994 and 1993, respectively 35,577 35,519 35,231
Additional paid-in capital 505,256 505,122 502,217
Accumulated deficit (314,014) (286,306) (276,965)
Foreign currency translation adjustment (5,639) (7,163) (4,087)
Other (1,384) (1,046) (246)
237,772 264,104 256,150
Less cost of common shares in treasury 577 682 718
TOTAL SHAREHOLDERS' EQUITY 237,195 263,422 255,432
Commitments and contingencies (note 19)
$ 619,201 $ 616,101 $ 561,931
</TABLE>
The Company uses the full cost method to account for its oil and gas producing
activities.
See accompanying notes to consolidated financial statements.
TRITON ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED
DECEMBER 31, YEAR ENDED MAY 31,
1994 1994 1993 1992
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (27,708) $ (9,341) $ (89,535) $ (94,037)
Adjustments to reconcile net loss to net cash provided
(used) by operating activities:
Depreciation, depletion and amortization 7,587 20,490 50,742 42,826
Amortization of debt discount 7,939 7,852 7,810 2,178
Gain on Input/Output, Inc. public stock offering --- --- (13,841) ---
Gain (loss) on sale of assets, net 201 (8,328) (228) (264)
Gain on sale of Triton Canada common stock --- (47,865) --- ---
Equity in (earnings) loss of affiliates, net 4,102 (645) 13,600 15,742
Writedown of assets and discontinued operations 984 46,404 118,916 45,830
Cumulative effect of accounting change --- --- (4,017) ---
Deferred income taxes 4,569 (10,224) (43,877) 1,044
Minority interest in undistributed loss of subsidiaries --- (11,971) (27,055) (3,854)
Other, net 1,096 2,735 4,591 8,305
Changes in working capital:
Marketable debt securities - trading 10,429 --- --- ---
Receivables (3,064) (1,797) (5,759) (5,048)
Inventories, prepaid expenses and other (2,314) 1,268 5,604 3,985
Net assets of discontinued operations (2,094) (7,578) --- ---
Accounts payable and accrued liabilities 2,657 (12,126) (10,103) 17,877
Income taxes (6,398) 6,162 (1,429) (12,089)
Net cash provided (used) by operating activities (2,014) (24,964) 5,419 22,495
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and investments (89,895) (86,819) (124,925) (98,424)
Purchases of investments and marketable securities (5,879) (190,025) (69,207) (9,811)
Proceeds from sale of investments and marketable securities 36,664 119,905 44,970 10,300
Sales of property and equipment and other assets 539 22,816 5,242 5,460
Proceeds from Input/Output, Inc. public stock offering --- --- 24,144 ---
Proceeds from sale of Triton Canada common stock --- 59,029 --- ---
Proceeds from sale of discontinued operations 1,737 18,450 --- ---
Other, principally pledged securities in 1993 (3,509) (4,370) (11,410) (1,785)
Net cash used by investing activities (60,343) (61,014) (131,186) (94,260)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 1,701 123,408 132,138 5,013
Proceeds from short-term borrowings with
maturities greater than three months 7,671 --- 9,117 5,050
Short-term borrowings, net 8,040 (1,640) (8,179) (8,420)
Payments on long-term debt (212) (3,150) (10,492) (22,877)
Payments on debt associated with discontinued operations (1,883) (18,959) --- ---
Issuance of common stock 639 3,164 6,397 120,496
Preferred dividends (449) --- --- (1,386)
Other (258) (1,054) (2,318) (1,528)
Net cash provided by financing activities 15,249 101,769 126,663 96,348
Effects of exchange rate changes on cash and equivalents 444 275 (558) 537
Net increase (decrease) in cash and equivalents (46,664) 16,066 338 25,120
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 69,005 52,939 52,601 27,481
CASH AND EQUIVALENTS AT END OF YEAR $ 22,341 $ 69,005 $ 52,939 $ 52,601
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
TRITON ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED
DECEMBER 31, YEAR ENDED MAY 31,
1994 1994 1993 1992
PREFERRED STOCK:
Balance at beginning of year $ 17,978 $ --- $ --- $ 65,738
Redemption of $2 par value - issued fiscal 1986 --- --- --- (65,738)
Purchase of minority interest in Triton Europe --- 17,978 --- ---
Conversion of 5% preferred stock (2) --- --- ---
Balance at end of year 17,976 17,978 --- ---
COMMON STOCK:
Balance at beginning of year 35,519 35,231 34,649 21,497
Conversion of $2 par value preferred stock --- --- --- 3,321
Exercise of employee stock options and debentures 58 288 582 860
Conversion of Liquid Yield Options Notes --- --- --- 5,274
Conversion of 8 1/2% Convertible Debentures --- --- --- 697
Issuance of common stock --- --- --- 3,000
Balance at end of year 35,577 35,519 35,231 34,649
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of year 505,122 502,217 488,580 193,139
Cash dividends, $2 par value preferred stock --- --- --- (1,386)
Cash dividends, 5% preferred stock (449) --- --- ---
Conversion of $2 par value preferred stock --- --- --- 61,635
Exercise of employee stock options and debentures 464 2,876 5,815 10,747
Conversion of Liquid Yield Options Notes --- --- --- 94,805
Conversion of 8 1/2% Convertible Debentures --- --- --- 16,834
Issuance of common stock --- --- --- 105,889
Sale of the Company's stock by Crusader --- --- 3,920 6,917
Utilization of tax loss carryforwards --- --- 3,920 ---
Other, net 119 29 (18) ---
Balance at end of year 505,256 505,122 502,217 488,580
ACCUMULATED DEFICIT:
Balance at beginning of year (286,306) (276,965) (187,430) (93,393)
Net loss (27,708) (9,341) (89,535) (94,037)
Balance at end of year (314,014) (286,306) (276,965) (187,430)
FOREIGN CURRENCY TRANSLATION ADJUSTMENT:
Balance at beginning of year (7,163) (4,087) 1,236 1,793
Sale of Triton Canada --- (3,341) --- ---
Adjustments due to translation changes 1,524 265 (5,323) (557)
Balance at end of year (5,639) (7,163) (4,087) 1,236
OTHER, NET:
Balance at beginning of year (1,046) (246) (307) (1,562)
Valuation reserve on marketable securities (429) (955) --- ---
Debt guarantee for ESOP --- --- 307 1,255
Adjustment for minimum pension liability 91 155 (246) ---
Balance at end of year (1,384) (1,046) (246) (307)
TREASURY STOCK:
Balance at beginning of year (682) (718) (715) (709)
Purchase of treasury stock (3) (5) (3) (6)
Transfer of shares to employee benefit plans 108 41 --- ---
Balance at end of year (577) (682) (718) (715)
TOTAL SHAREHOLDERS' EQUITY $ 237,195 $ 263,422 $ 255,432 $ 336,013
</TABLE>
See accompanying notes to condolidated financial statments.
TRITON ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS ACTIVITIES
Triton Energy Corporation (together with its majority-owned subsidiaries, the
"Company") is an international oil and gas company primarily engaged in
exploration and production activities. The Company's principal properties and
operations are located in Colombia, France, Malaysia-Thailand, other Latin
American and Asian countries, Europe, Australia and North America, with a
significant portion of its proved reserves located in Colombia.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company.
All significant intercompany balances and transactions have been eliminated in
consolidation. Investments in 20% to 50% owned affiliates in which the
Company exercises significant influence over operating and financial policies
are accounted for using the equity method. Investments in less than 20% owned
affiliates are accounted for using the cost method.
CASH EQUIVALENTS
Cash equivalents are highly liquid investments purchased with an original
maturity of three months or less.
INVESTMENTS IN MARKETABLE SECURITIES
Investments in marketable debt securities are reported at fair value except
for those investments that management has the positive intent and the ability
to hold to maturity. Investments available-for-sale are classified based on
the stated maturity of the securities and changes in fair value are reported
as a separate component of shareholders' equity. Trading investments are
classified as current regardless of the stated maturity of the underlying
securities and changes in fair value are reported in other income.
Investments that will be held-to-maturity are classified based on the stated
maturity of the securities. Prior to May 31, 1994, the Company accounted for
its investments in debt securities at amortized cost and classified such
investments according to the stated maturity of the underlying securities.
PROPERTY AND EQUIPMENT
The Company follows the full cost method of accounting for exploration and
development of oil and gas reserves, whereby all productive and nonproductive
costs are capitalized. Individual countries are designated as separate cost
centers. All capitalized costs plus the undiscounted future development costs
of proved reserves are depleted using the unit of production method based on
total proved reserves applicable to each country. A gain or loss
is recognized on sales of oil and gas properties only when the sale involves
significant reserves.
Costs related to acquisition, holding and initial exploration of concessions
in countries with no proved reserves are initially capitalized and
periodically evaluated for impairment. The Company capitalizes internal costs
directly identified with acquisition, exploration and development activities
and does not include costs related to production, general overhead or similar
activities.
The net capitalized costs of oil and gas properties for each cost center,
less related deferred income taxes, cannot exceed the sum of (i) the estimated
future net revenues from the properties, discounted at 10%; (ii) unevaluated
costs not being amortized; and (iii) the lower of cost or estimated fair value
of unproved properties being amortized; less (iv) income tax effects related
to differences between the financial statement basis and tax basis of oil and
gas properties.
The estimated costs, net of salvage value, of dismantling facilities or
projects with limited lives or facilities that are required to be dismantled
by contract, regulation or law, and the estimated costs of restoration and
reclamation associated with oil and gas operations are accrued during
production and classified as a long-term liability.
Support equipment and facilities are depreciated using the unit of production
method based on total reserves of the field related to the support equipment
and facilities. Other property and equipment, which includes furniture and
fixtures, vehicles, aircraft and leasehold improvements, are depreciated
principally on a straight-line basis over estimated useful lives ranging from
3 to 30 years.
Repairs and maintenance are expensed as incurred and renewals and
improvements are capitalized.
ENVIRONMENTAL MATTERS
Environmental costs are expensed or capitalized depending on their future
economic benefit. Costs that relate to an existing condition caused by past
operations and have no future economic benefit are expensed. Liabilities for
future expenditures of a noncapital nature are recorded when future
environmental expenditures and/or remediation is deemed probable, and the
costs can be reasonably estimated.
INCOME TAXES
Deferred tax liabilities or assets are recognized for the anticipated future
tax effects of temporary differences between the financial statement basis and
the tax basis of the Company's assets and liabilities using the enacted tax
rates in effect at year end. A valuation allowance for deferred tax assets is
recorded when it is more likely than not that the benefit from the deferred
tax asset will not be realized. Prior to June 1, 1992, the Company deferred
the tax effects of timing differences between financial reporting and taxable
income.
REVENUE RECOGNITION
Oil and gas revenues are recognized at the point of first measurement after
production which is generally upon delivery into field storage tank/processing
facilities or pipelines. Cost reimbursements arising from carried interests
granted by the Company are revenues to the extent the reimbursements are
contingent upon and derived from production. Obligations arising from net
profits interest conveyances are recorded as operating expenses when the
obligation is incurred.
FOREIGN CURRENCY TRANSLATION
The United States dollar is the designated functional currency for all of the
Company's foreign operations, except for foreign operations of certain
affiliates where the local currencies are used as the functional currency.
The cumulative translation effects from translating balance sheet accounts
from the functional currency into United States dollars at current exchange
rates are included as a separate component of shareholders' equity.
DISCONTINUED OPERATIONS AND RECLASSIFICATIONS
During 1993, the Company decided to discontinue its wholesale fuel products
segment. The results of operations for this segment have been reported
separately as discontinued operations in the Consolidated Statements of
Operations.
Certain other previously reported financial information has been reclassified
to conform to the current period's presentation.
EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) per common share is based on the weighted average number of
shares of common stock and common stock equivalents outstanding, unless the
inclusion of common stock equivalents has an antidilutive effect. The
Company's proportionate shares owned by Crusader Limited ("Crusader") are not
considered outstanding for purposes of determining weighted average number of
shares outstanding. Fully diluted earnings (loss) per common share is not
presented due to the antidilutive effect of including all potentially dilutive
securities.
THE USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS
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, disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period.
2. CHANGE IN FISCAL YEAR END
In May 1994, the Company changed its fiscal year end from May 31 to December
31 effective January 1, 1995. These financial statements cover the Company's
transition period for the seven months ended December 31, 1994.
The results of operations of the Company for the seven months ended December
31, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
SEVEN MONTHS ENDED
DEC. 31, 1994 DEC. 31, 1993
(UNAUDITED)
Sales and other operating revenues $ 26,853 $ 39,204
Total revenues 31,504 97,198
Gross profit (loss) 289 (34,528)
Income tax expense (benefit) 3,796 (4,288)
Earnings (loss) from continuing operations (27,708) 15,652
Net earnings (loss) (27,708) 15,652
Dividends on preferred stock 449 ---
Net earnings (loss) applicable to common stock (28,157) 15,652
Earnings (loss) per common share (0.81) 0.45
</TABLE>
The results of operations for the seven months ended December 31, 1993
included a net after-tax benefit of $48 million, or $1.38 per common share,
relating to the sales of the Company's Canadian subsidiary and certain working
interest properties in the United States, which were partially offset by a
writedown of oil properties in France of $12.8 million, after taxes and
minority interest, or $0.37 per common share.
3. PURCHASE OF THE TRITON EUROPE MINORITY INTEREST
On March 31, 1994, the Company acquired all of the outstanding shares not
owned by the Company, representing the minority shareholders' 40.5% interest
in Triton Europe plc ("Triton Europe"), in exchange for 522,460 shares of the
Company's 5% Convertible Preferred Stock ("5% preferred stock"), with a value
of $18 million, and $2.6 million in cash, including transaction costs. The
transaction was recorded as a purchase, and accordingly, 100% of Triton
Europe's operating results have been included in the Company's results of
operations since March 31, 1994. The excess of the purchase price over the
carrying value of the minority interest in Triton Europe of $3.5 million has
been allocated to the full cost pools within Triton Europe.
4. DIVESTITURES AND DISCONTINUED OPERATIONS
In the first quarter of fiscal 1994, the Company completed the sale of its 76%
interest in the common stock of Triton Canada Resources Ltd. ("Triton
Canada"). The Company received net proceeds of $59 million on September 10,
1993 and recorded a gain of $47.9 million.
In August and October 1993, the Company sold its United States working
interest properties for net proceeds of $19.5 million, resulting in a gain of
$7 million. The properties that were sold accounted for approximately 55.7%
of discounted future net revenues associated with United States proved
properties at May 31, 1993.
In fiscal 1993, the Company initiated a plan to discontinue its remaining
operations in the wholesale fuel products segment. An accrual for $16.1
million was recorded at May 31, 1993 as an estimate of the results of
operations for discontinued operations during fiscal 1994 and the anticipated
loss on disposal of the segment. An additional accrual of $.7 million was
recorded at May 31, 1994 for estimated operating losses caused by closing the
sale of several operating divisions later than originally anticipated. All
operations have been sold.
Summarized information for the wholesale fuel products segment portion of
discontinued operations follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED YEAR ENDED MAY 31,
DEC. 31, 1994 1994 1993 1992
Revenues $ 8,820 $ 81,383 $170,493 $108,476
Loss before income taxes $ (2,070) $ (14,422) $ (9,657) $ (4,518)
Income tax expense (benefit) 5 7 (158) 28
Net loss $ (2,075) $ (14,429) $ (9,499) $ (4,546)
</TABLE>
On August 12, 1992, the Company sold its remaining 26.9% interest in
Input/Output, Inc. through a secondary public offering. The net proceeds from
the offering were $24.1 million and resulted in a net gain on the disposition
of $13.8 million. The Company's equity in the earnings of Input/Output, Inc.
of $25,000 and $2 million for fiscal 1993 and 1992, respectively, has been
included in discontinued operations.
5. WRITEDOWN OF ASSETS AND LOSS PROVISIONS
Writedown of assets and loss provisions are summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED YEAR ENDED MAY 31,
DEC. 31, 1994 1994 1993 1992
Evaluated oil and gas properties $ 984 $ 44,123 $ 65,354 $22,665
Unevaluated oil and gas properties --- 251 25,817 13,113
Other property and equipment --- --- 1,887 4,579
Inventory --- 1,064 1,001 2,570
Investments and other assets --- 316 3,811 2,532
Litigation --- --- 5,500 9,950
$ 984 $ 45,754 $103,370 $55,409
</TABLE>
During fiscal 1994, the carrying amounts of the Company's evaluated oil
properties in France were written down by $43.2 million through application of
the ceiling limitation prescribed by the Securities and Exchange Commission
(the "Commission" or "SEC") principally as a result of a temporary drop in oil
prices and a downward revision in estimated reserves.
Included in the writedowns of evaluated and unevaluated properties during
fiscal 1993 were $55.7 million and $11 million, respectively, of costs
associated with operations in France and an $8.2 million writedown of
unevaluated costs associated with onshore properties in the United Kingdom.
These writedowns resulted from Triton Europe's decision to curtail certain
exploration and development activities in Europe. As such, proved undeveloped
reserves in Europe were reduced, thereby requiring a writedown of evaluated
costs as a result of the SEC ceiling limitation for these properties. The
writedowns of unevaluated costs in both France and the United Kingdom were
associated with various license areas that were relinquished or allowed to
expire.
Similar cutbacks in Indonesia resulted in writedowns of costs associated with
evaluated properties of $8.7 million in fiscal 1993 and $13.7 million in
fiscal 1992. Also, during 1992 writedowns were recorded in Gabon
(unevaluated, $7 million), the United States (evaluated, $2.2 million) and
Canada (evaluated, $6.8 million).
In fiscal 1993, the Company settled or reached agreement to settle a number of
lawsuits for which a loss provision of $5.5 million was recorded.
In August 1992, the Company's share of a lawsuit settlement with the Company's
former controller was $9.5 million. A loss provision of $10 million,
including an estimate of outstanding legal fees and other expenses, was
recorded in fiscal 1992.
6. INVESTMENTS IN MARKETABLE SECURITIES
Effective May 31, 1994, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." The cumulative effect of adopting this standard of $1
million was recorded as a valuation reserve in shareholders' equity at May 31,
1994.
The amortized cost and estimated fair value of held-to-maturity and
available-for-sale marketable securities are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DEC. 31, 1994 MAY 31, 1994
GROSS GROSS
AMORTIZED UNREALIZED MARKET AMORTIZED UNREALIZED MARKET
COST LOSSES VALUE COST LOSSES VALUE
Held-to-maturity:
Corporate and other
debt securities $ 7,437 $ 35 $ 7,402 $ 38,528 $ 262 $38,266
Available-for-sale:
Corporate and other
debt securities 29,605 1,384 28,221 29,786 955 28,831
$ 37,042 $ 1,419 $35,623 $ 68,314 $ 1,217 $67,097
</TABLE>
At December 31, 1994, all securities categorized as held-to-maturity were
classified as short-term investments. The maturities for the securities
available-for-sale range from one to three years with the exception of one
floating rate investment totalling $2 million which has a stated maturity in
excess of ten years. Trading investments of approximately $14 million and
$25 million at December 31, 1994 and May 31, 1994, respectively, were included
in short-term marketable securities.
7. INVESTMENTS IN UNCONSOLIDATED AFFILIATES
A summary of investments in unconsolidated affiliates accounted for by the
equity method follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DEC. 31, MAY 31, MAY 31,
1994 1994 1993
Crusader (49.9%) $ 34,162 $ 36,809 $ 36,937
Aero (28%) --- --- 3,000
Transwest Gas Systems Ltd. (50% owned by Triton Canada) --- --- 9,647
Other --- --- 531
$ 34,162 $ 36,809 $ 50,115
</TABLE>
CRUSADER
Crusader is an Australian public company engaged in oil and gas exploration
and production, coal processing and mining, and gas processing in Australia,
Canada, Ireland, the United States and other areas. The Company's equity
investment in Crusader's common stock was $26.2 million, $29.3 million and
$29.9 million at December 31, 1994, May 31, 1994 and 1993, respectively. At
December 31, 1994, May 31, 1994 and 1993, the Company's investment in Crusader
also included $8 million, $7.5 million and $7.1 million, respectively, of
convertible subordinated debentures issued by Crusader in 1989, which bear
interest at 12% and are due January 31, 1999. The quoted market value of the
Company's investment in Crusader's common stock and convertible subordinated
debentures at December 31, 1994 was $53.1 million and $8.8 million,
respectively.
At December 31, 1994, May 31, 1994 and 1993, Crusader owned approximately 3%
of the Company's common stock. Crusader's investment in the Company, using
the cost method of accounting, was $12.2 million, $11.6 million and $10.8
million at December 31, 1994, May 31, 1994 and 1993, respectively. The
Company's investment in Crusader and additional paid-in capital have each been
reduced to eliminate the Company's proportionate share of its common stock
owned by Crusader. During 1993 and 1992, Crusader recognized gains of $4.6
million and $8.7 million, respectively, on the sale of 245,000 and 400,647
shares, respectively, of the Company's common stock. The Company's share of
the sale proceeds has been credited to additional paid-in capital.
On April 28, 1994, Crusader issued $40.9 million aggregate principal amount of
6% Exchangeable Senior Notes due February 14, 2004 (the "6% Notes"). The 6%
Notes are exchangeable at the option of the holder after July 27, 1994 into
the shares of the Company's common stock held by Crusader at a price of $36.75
per share upon certain terms.
Summarized financial information for Crusader follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DEC. 31, MAY 31, MAY 31,
1994 1994 1993
Current assets $ 32,656 $ 37,656 $ 24,858
Noncurrent assets 138,909 127,817 118,276
$171,565 $165,473 $143,134
Current liabilities $ 14,251 $ 15,741 $ 25,489
Noncurrent liabilities 79,705 66,212 35,178
Minority interest in subsidiaries 12,628 12,907 12,807
Shareholders' equity 64,981 70,613 69,660
$171,565 $165,473 $143,134
</TABLE>
<TABLE>
<CAPTION>
Summarized financial information for Crusader continued:
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED YEAR ENDED MAY 31,
DEC. 31, 1994 1994 1993 1992
Revenues $ 22,535 $ 40,193 $ 54,924 $ 95,784
Costs and expenses (25,145) (40,574) (54,477) (96,587)
Income tax (expense) benefit (6,934) 476 (3,419) (6,276)
Minority interest 1,052 716 313 9,524
Earnings (loss) before cumulative effect of
accounting change (8,492) 811 (2,659) 2,445
Cumulative effect of accounting change --- --- 1,734 ---
Net earnings (loss) $ (8,492) $ 811 $ (925) $ 2,445
Company's equity in earnings (loss) before
cumulative effect of accounting change $ (4,102) $ 554 $ (3,512) $ (2,878)
Company's share of dividends $ --- $ 620 $ 840 $ 910
</TABLE>
The Company's equity in undistributed earnings of Crusader accounted for by
the equity method was approximately $20.7 million at December 31, 1994.
AERO
Aero is a public company that provides aviation related services. The Company
sold all of its interest in Aero except for 134,592 shares of series A
preferred stock as of May 20, 1994. The Company received proceeds of $1.5
million and recorded a gain for the same amount. The Company loaned to Aero
$.4 million, $2.7 million and $2 million in the years ended May 31, 1994, 1993
and 1992, respectively, and during the year ended May 31, 1994 retired a $6.9
million loan of Aero's that the Company had previously guaranteed and
collateralized. No loans were outstanding at May 31, 1994. The Company's
equity in Aero's loss (based on Aero's results of operations for each of the
three years in the period ended March 31, 1994) was nil, $9.5 million and
$14.1 million, in the years ended May 31, 1994, 1993 and 1992, respectively.
The Company's equity in Aero's loss included loss provisions of $7.3 million
and $11.8 million in the years ended May 31, 1993 and 1992,
respectively, relating to the Company's investment in Aero's common and
preferred stock and receivables from Aero.
8. PROPERTY AND EQUIPMENT
Property and equipment, at cost, are summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DEC. 31, MAY 31, MAY 31,
1994 1994 1993
Oil and gas properties, full cost method:
Evaluated $684,222 $629,871 $725,996
Unevaluated 99,330 97,169 66,600
Support equipment and facilities 78,601 45,688 24,983
Other 30,555 24,394 37,714
892,708 797,122 855,293
Less accumulated depreciation and depletion 493,050 488,624 525,142
$399,658 $308,498 $330,151
</TABLE>
The Company capitalizes interest on qualifying assets, principally unevaluated
oil and gas properties and support equipment and facilities. Capitalized
interest amounted to $11.8 million in the seven months ended December 31,
1994, and $16.9 million, $6.4 million and $6.5 million in the years ended May
31, 1994, 1993 and 1992, respectively. The Company capitalized general and
administrative expenses of $9.5 million in the seven months ended December
31, 1994, and $11.2 million, $9 million and $10.4 million in the years ended
May 31, 1994, 1993 and 1992, respectively.
9. OTHER ASSETS
Other assets consisted of the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DEC. 31, MAY 31, MAY 31,
1994 1994 1993
Investment in Colombian pipelines $ 18,848 $11,108 $ 7,567
Securities pledged to secure guarantees --- 10,155 10,658
Central Llanos pipeline receivable 14,303 8,798 1,320
Unamortized debt issue costs 8,403 9,347 4,994
Property held for sale 3,754 3,821 3,399
Cash surrender value of life insurance 3,714 3,210 2,398
Defined benefit plans - intangible asset 1,122 2,377 2,058
Other 3,610 3,045 2,004
$ 53,754 $51,861 $34,398
</TABLE>
During December 1994, the Company's wholly owned subsidiary Triton Pipeline
Colombia, Inc. ("Triton Pipeline") invested $7.7 million for its initial
equity contribution to the newly formed pipeline company Oleoducto Central
S.A. ("OCENSA"). OCENSA was formed to own and finance expanded pipeline and
port facilities to be constructed and operated for the transport of crude oil
from the Cusiana and Cupiagua fields to the port of Covenas.
In fiscal 1994 and 1993, Triton Colombia, Inc. ("Triton Colombia"), a wholly
owned subsidiary of the Company, purchased interests totaling approximately
6.6% in Oleoducto de Colombia S.A. ("ODC"), a pipeline company in Colombia,
for total consideration of $11.1 million. The purchases were made to secure
the transport capacity for the Company's oil production in Colombia.
As part of the purchase of ODC, the Company has agreed to assume by counter
guarantee, directly and proportionally to part of the interest purchased, the
guarantees granted to bank creditors of ODC through Shell Petroleum Company
Ltd. and Shell Overseas Trading Limited. Securities pledged to secure the
guarantees have been replaced with letters of credit as of December 31, 1994.
Triton Colombia, along with its joint venture partners in the Company's
Cusiana and Cupiagua fields in Colombia, committed to provide advances to
upgrade the capacity of the Central Llanos pipeline that is owned by Empresa
Colombiana de Petroleos ("Ecopetrol"). The Company advanced to Ecopetrol
total costs of $21.3 million through December 31, 1994, including $7 million
reflected in other receivables. The Company will recover this cost through
lower pipeline tariffs as crude oil is transported through the pipeline.
Upgrades to the pipeline and pump stations have been completed as of December
31, 1994.
The Company amortizes debt issue costs over the life of the borrowing using
the interest method. Amortization related to the Company's debt issue costs
was $1.3 million in the seven months ended December 31, 1994 and $1.5 million,
$.5 million and $.1 million in the years ended May 31, 1994, 1993 and 1992,
respectively.
10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities are summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DEC. 31, MAY 31, MAY 31,
1994 1994 1993
Accounts payable, principally trade $ 8,466 $ 7,088 $ 8,976
Employee compensation and benefits 3,584 2,799 2,825
Royalties and property taxes, franchise
taxes and other taxes 3,752 3,084 5,178
Litigation and environmental matters 2,769 3,102 4,926
Joint venture billings 2,657 3,000 9,656
Income taxes payable 42 6,440 287
Stock appreciation rights 1,137 1,328 1,898
Other 4,201 3,410 5,094
$ 26,608 $30,251 $38,840
</TABLE>
11. DEBT
SHORT-TERM BORROWINGS
The Company borrowed $10 million on December 30, 1994 under a $25 million
revolving credit facility with a bank which matures on March 30, 1995. The
facility is secured by the stock of Crusader owned by the Company and bears
interest at prime (8.5% at December 31, 1994) plus 1/2%. Certain restrictive
covenants in the agreement limit the Company and its subsidiaries from selling
certain assets.
During the seven months ended December 31, 1994, a wholly owned subsidiary
renewed and increased its revolving credit facility with a bank to $10
million ($7.4 million outstanding at December 31, 1994), which is guaranteed
by the Company. This facility bears interest at prime to prime plus 1/2% and
matures on June 23, 1995, but may be extended at the sole discretion of the
lender. Certain restrictive covenants in the agreement limit the Company and
its subsidiaries from engaging in mergers, certain forms of indebtedness,
certain investments and selling certain assets.
The weighted average interest rates on short-term borrowings outstanding were
8.8%, 7.25% and 6.5% as of December 31, 1994, May 31, 1994 and 1993,
respectively.
LONG-TERM DEBT
A summary of long-term debt follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DEC. 31, MAY 31, MAY 31,
1994 1994 1993
Senior Subordinated Discount Notes due 2000 $ 141,122 $ 133,505 $ ---
Senior Subordinated Discount Notes due 1997 170,274 158,618 140,509
Revolving credit facility 1,700 --- 1,000
Triton Canada revolving credit facility --- --- 15,630
Other notes and capitalized leases 2,419 2,630 5,448
315,515 294,753 162,587
Less current installments 257 312 3,440
$ 315,258 $ 294,441 $159,147
</TABLE>
On December 15, 1993, the Company completed the sale of $170 million in
principal amount of 9 3/4% Senior Subordinated Discount Notes ("9 3/4% Notes")
due December 15, 2000, providing net proceeds to the Company of approximately
$124 million. The original issue price was 75.1% of par, representing a yield
to maturity of 9 3/4%. No interest is payable on the 9 3/4% Notes during the
first three years of issue. Commencing December 15, 1996, interest on the 9
3/4% Notes will accrue at the rate of 9 3/4% per annum and will be payable
semi-annually on June 15 and December 15, beginning on June 15, 1997. The
Indenture, as amended, for the 9 3/4% Notes contains financial covenants that
include certain limitations on indebtedness, dividends, certain investments,
transactions with affiliates, and engaging in mergers and consolidations.
Additional provisions include optional and mandatory redemptions, and
requirements associated with changes in control.
On November 13, 1992, the Company completed the sale of $240 million in
principal amount of Senior Subordinated Discount Notes ("1997 Notes") due
November 1, 1997, providing net proceeds to the Company of approximately $126
million. The original issue price was 54.76% of par, representing a yield to
maturity of 12 1/2% per annum compounded on a semi-annual basis without
periodic payments of interest. The Indenture, as amended, for the 1997 Notes
contains financial covenants including certain limitations on
indebtedness, dividends, certain investments, transactions with affiliates,
mergers and consolidations. In addition, if the Company's consolidated net
worth is less than $225 million for two consecutive quarters, the Company is
required to offer to purchase 20% of the original principal amount of the 1997
Notes. Additional provisions include optional and mandatory redemptions, and
requirements associated with changes in control.
As of December 31, 1994, the Company had a 7 1/2 year revolving credit
facility with a bank with a borrowing base of $11.7 million. Borrowings bear
interest at the London Interbank Offered Rate (6% at December 31, 1994) plus
3/4%. At December 31, 1994, the Company had utilized $11.1 million of the
line of credit through borrowings of $1.7 million and issuances of letters of
credit and other guarantees.
The aggregate maturities of long-term debt for the five years in the period
ending December 31, 1999 are as follows: 1995 - $.3 million; 1996 - $.3
million; 1997 - $170.5 million; 1998 - $.3 million; and 1999 - $.3 million.
The 1997 amount excludes accretion of interest on the 1997 Notes.
12. INCOME TAXES
Effective June 1, 1992, the Company adopted SFAS No. 109, "Accounting for
Income Taxes." The cumulative benefit of the change in fiscal 1993 was $4
million. For the year ended May 31, 1992, the provision was calculated in
accordance with Accounting Principles Board Opinion No. 11 ("APB 11").
The components of earnings (loss) from continuing operations before income
taxes, minority interest, and cumulative effect of accounting change are as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED YEAR ENDED MAY 31,
DEC. 31, 1994 1994 1993 1992
United States $ (24,275) $ 29,775 $ (45,401) $ (57,524)
Foreign 363 (56,973) (107,377) (39,863)
$ (23,912) $ (27,198) $ (152,778) $ (97,387)
</TABLE>
The components of the provision for income taxes on continuing operations are
as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED YEAR ENDED MAY 31,
DEC. 31, 1994 1994 1993 1992
Current:
United States $ 71 $ (8) $ (411) $ (6)
Foreign (844) 3,696 176 (2,975)
Deferred:
United States (61) (9,426) (21,080) ---
Foreign 4,630 (798) (22,566) 1,044
$ 3,796 $ (6,536) $ (43,881) $ (1,937)
</TABLE>
A reconciliation of the differences between the United States federal
statutory tax rate and the Company's effective income tax rate follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED YEAR ENDED MAY 31,
DEC. 31, 1994 1994 1993 1992
Tax provision at statutory tax rate $ (8,370) $ (9,519) $ (51,945) $ (32,088)
Increase (decrease) resulting from:
United States losses without tax benefit --- --- 15,026 18,920
Net change in valuation allowance 28,336 1,027 (21,080) ---
Items not related to current year earnings (19,222) --- --- ---
Foreign items without tax benefit 2,434 4,350 6,053 12,930
Tax on earnings of foreign subsidiaries --- --- 8,065 (1,699)
Federal tax rate change --- (2,765) --- ---
Other 618 371 --- ---
$ 3,796 $ (6,536) $ (43,881) $ (1,937)
</TABLE>
The deferred income tax provision for 1992 under APB No.11 resulted primarily
from timing differences in the capitalization, depletion and writedown of
costs relating to oil and gas properties.
The components of the net deferred tax asset and liability under SFAS 109 are
as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1994 MAY 31, 1994 MAY 31, 1993
U.S. FOREIGN U.S. FOREIGN U.S. FOREIGN
Deferred tax asset:
Net operating loss carryforwards $ 105,250 $ 9,963 $ 96,054 $ 8,884 $ 84,625 $ 4,944
Depreciable/depletable property --- --- --- --- 2,546 ---
Credit carryforwards 17,175 --- 14,552 --- 3,135 ---
Reserves 6,861 --- 5,354 --- 5,460 187
Other 1,941 524 2,035 316 2,060 705
Gross deferred tax asset 131,227 10,487 117,995 9,200 97,826 5,836
Valuation allowances (95,226) (6,963) (69,366) (4,487) (72,826) ---
Net deferred tax asset 36,001 3,524 48,629 4,713 25,000 5,836
Deferred tax liability:
Accruals --- --- --- --- --- (3,475)
Depreciable/depletable property (1,515) (18,196) (14,203) (14,750) --- (18,122)
Total net deferred tax liability (1,515) (18,196) (14,203) (14,750) --- (21,597)
Net deferred tax asset (liability) 34,486 (14,672) 34,426 (10,037) 25,000 (15,761)
Less current deferred tax asset (liability) --- --- --- --- --- (2,583)
Noncurrent deferred tax asset (liability) $ 34,486 $ (14,672) $ 34,426 $ (10,037) $ 25,000 $ (13,178)
</TABLE>
At December 31, 1994, the Company had net operating loss ("NOL") and depletion
carryforwards for United States tax purposes of $241.1 million and $6.8
million, respectively. In addition, at December 31, 1994, certain subsidiaries
had separate return limitation year ("SRLY") operating loss and depletion
carryforwards of $59.6 million and $13.5 million, respectively, which are
available to offset only the future taxable income of those subsidiaries. The
depletion carryforwards are available indefinitely. The NOL and SRLY operating
loss carryforwards expire from 1995 through 2009 as follows:
<TABLE>
<CAPTION>
<C> <S> <C>
NOLS SRLYS
EXPIRING EXPIRING
BY YEAR BY YEAR
1995 $ --- $ 7,479
1996 758 11,602
1997 11,594 11,804
1998 8,809 8,437
1999 7,315 10,224
2000 20,713 10,045
2001-2009 191,900 32
Total $241,089 $ 59,623
</TABLE>
If certain changes in the Company's ownership should occur, there would be an
annual limitation on the amount of NOL carryforwards that can be utilized. To
the extent a change in ownership does occur, the limitation is not expected to
materially impact the utilization of such carryforwards.
The Company's share of the cumulative undistributed earnings of its
consolidated foreign subsidiaries that is intended to be permanently
reinvested, and on which no United States taxes have been provided, was
approximately $5.6 million at December 31, 1994. Unrecognized deferred taxes
on remittance of these funds are not expected to be material.
During the year ended May 31, 1993, the Company added $3.9 million to
additional paid-in capital for United States tax benefits attributable to the
utilization of net operating loss carryforwards. These carryforwards related
to periods prior to the Company's corporate readjustments.
13. EMPLOYEE BENEFITS
PENSION PLANS
The Company has a defined benefit pension plan covering substantially all
employees in the United States. The benefits are based on years of service
and the employee's final average monthly compensation. Contributions are
intended to provide for benefits attributed to past and future services. The
Company also has a supplemental executive retirement plan ("SERP") that is
unfunded and provides supplemental pension benefits to a select group of
management or key employees.
The funding status of the plans follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1994 MAY 31, 1994 MAY 31, 1993
DEFINED DEFINED DEFINED
BENEFIT SERP BENEFIT SERP BENEFIT SERP
PLAN PLAN PLAN PLAN PLAN PLAN
Actuarial present value of benefit
obligations:
Vested benefit obligations $ 3,440 $ 3,345 $ 3,669 $ 3,357 $ 2,921 $ 3,069
Accumulated benefit obligations $ 3,570 $ 3,345 $ 3,819 $ 3,357 $ 2,963 $ 3,449
Projected benefit obligations $ 4,136 $ 4,299 $ 4,408 $ 4,241 $ 3,487 $ 3,708
Plan assets at fair value, primarily
listed stocks and United States
government securities 3,188 --- 3,475 --- 3,556 ---
Unfunded (funded) projected benefit
obligations 948 4,299 933 4,241 (69) 3,708
Unrecognized net loss (576) (157) (696) (401) (633) (504)
Prior service cost not yet recognized
in net periodic pension cost (765) (165) (798) (172) --- ---
Unrecognized net asset (liability) at
adoption 15 (1,792) 16 (1,890) 18 (2,058)
Adjustment required to recognize
minimum liability 760 1,160 889 1,579 --- 2,303
Accrued (prepaid) pension cost $ 382 $ 3,345 $ 344 $ 3,357 $ (684) $ 3,449
</TABLE>
A summary of the components of pension expense follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN YEAR ENDED MAY 31,
MONTHS ENDED
DEC. 31, 1994 1994 1993 1992
Service cost - benefits earned
during the period $ 454 $ 733 $ 259 $ 177
Interest cost on projected benefit obligation 344 553 463 455
Actual return on plan assets 219 111 (398) (246)
Net amortization and deferral (256) (173) 296 162
$ 761 $ 1,224 $ 620 $ 548
</TABLE>
<PAGE>
The projected benefit obligations at December 31, 1994, May 31, 1994 and 1993
assume a discount rate of 8%, 7% and 7%, respectively, and a rate of increase
in compensation expense of 5%, 5% and 6%, respectively. The impact of the
change in the discount rate from 7% to 8% reduced the projected benefit
obligation at December 31, 1994 for both the defined benefit plan and SERP by
$.5 million. The impact of the change in the rate of increase in compensation
expense from 6% to 5% reduced the projected benefit obligation of the defined
benefit plan and SERP at May 31, 1994 by $.5 million and $.3 million,
respectively. The expected long-term rate of return on assets is 9% for the
defined benefit plan.
EMPLOYEE STOCK OWNERSHIP PLAN
Effective January 1, 1994, the Company amended and restated the employee
stock ownership plan to form a 401(k) plan ("the plan"). The Company
recognizes expense relating to the plan based on actual amounts contributed
since inception of the plan. The Company recognized expense of $.2 million
during the seven months ended December 31, 1994 and $.2 million from inception
to May 31, 1994. The Company used the shares allocated method prior to the
January 1, 1994 amendment ($.3 million in 1993 and $1.3 million in 1992).
14. REDEEMABLE PREFERRED STOCK OF SUBSIDIARY
Redeemable preferred stock of Triton Canada, a former subsidiary, for 1993 was
shown net of the unamortized discounts recorded at the date of acquisition.
Dividends on the redeemable preferred stocks are included in minority interest
in the accompanying consolidated statements of operations. The principal
terms and changes in the redeemable preferred stocks are summarized as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TRITON
TRITON TRITON CANADA
CANADA CANADA SENIOR
PREFERRED PREFERRED PREFERRED
SERIES A SERIES B SERIES 1 TOTAL
Liquidation value per share C$20 C$10 C$10
Cumulative quarterly dividend per share C$.4625 C$.30 C$.25
Shares outstanding - May 31, 1993 701,400 239,075 165,729
Redemption value at May 31, 1993 $ 11,034 $ 1,881 $ 1,304 $14,219
Balance at May 31, 1991 $ 9,380 $ 2,036 $ 2,192 $13,608
Amortization and translation effect (309) (95) (103) (507)
Redemption --- (67) (62) (129)
Balance at May 31, 1992 9,071 1,874 2,027 12,972
Amortization and translation effect (332) (115) (73) (520)
Redemption (301) (100) (652) (1,053)
Balance at May 31, 1993 $ 8,438 $ 1,659 $ 1,302 $11,399
</TABLE>
15. SHAREHOLDERS' EQUITY
PREFERRED STOCK
In connection with the acquisition of the minority interest in Triton Europe,
the Company designated a series of 550,000 preferred shares (522,460 shares
issued) as 5% preferred stock, no par value, with a stated value of $34.41 per
share. Each share of the Company's 5% preferred stock series is convertible
into one common share, subject to adjustment in certain events. The 5%
preferred stock is convertible anytime on or after October 1, 1994, and bears
a fixed cumulative cash dividend of 5% per annum payable semi-annually on
March 30 and September 30, commencing September 30, 1994. If not converted
earlier, each 5% preferred share will be redeemed on March 30, 2004, either
for cash, or at the option of the Company, for the Company's common stock.
COMMON STOCK
Changes in issued common shares are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SEVEN
MONTHS ENDED
DEC. 31, YEAR ENDED MAY 31, YEAR ENDED MAY 31,
1994 1994 1993 1992
Balance at beginning of period 35,519,103 35,231,142 34,649,148 21,497,255
Conversion of $2 par value preferred stock --- --- --- 3,321,176
Conversion of 5% preferred stock 48 --- --- ---
Exercise of employee stock options
and debentures 57,858 287,961 581,994 859,824
Conversion of liquid yield option notes --- --- --- 5,274,282
Conversion of 8 1/2% convertible
debentures --- --- --- 696,611
Issuance of common stock --- --- --- 3,000,000
Balance at end of period 35,577,009 35,519,103 35,231,142 34,649,148
</TABLE>
Changes in common shares held in treasury are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED
DEC. 31, YEAR ENDED MAY 31,
1994 1994 1993 1992
Balance at beginning of period 54,354 57,483 57,400 57,250
Purchase of treasury stock 98 149 83 150
Transfer of shares to employee benefit plans (8,615) (3,278) --- ---
Balance at end of period 45,837 54,354 57,483 57,400
</TABLE>
<PAGE>
STOCK OPTIONS
Options to purchase the Company's common stock have been granted to officers
and employees under various stock option plans. Grants generally become
exercisable in 25% cumulative annual increments beginning one year from the
date of issuance and expire at the end of ten years. At December 31, 1994,
964,490 shares were available for grant under the plans. Pursuant to the
1992 stock option plan, each nonemployee director receives an option to
purchase 15,000 shares each year. A summary of option transactions follows:
<TABLE>
<CAPTION>
<S> <C> <C>
NUMBER OF OPTION PRICE
SHARES PER SHARE
Outstanding at May 31, 1991 1,523,649 $8.38 - 21.22
Granted 787,500 19.88 - 52.50
Exercised (646,551) 8.38 - 21.22
Cancelled (20,274) 11.29 - 19.22
Outstanding at May 31, 1992 1,644,324 8.38 - 52.50
Granted 680,000 28.25 - 41.88
Exercised (552,828) 8.38 - 35.00
Cancelled (50,090) 11.29 - 52.50
Outstanding at May 31, 1993 1,721,406 8.38 - 42.25
Granted 1,414,800 28.63 - 33.50
Exercised (133,411) 8.38 - 16.25
Cancelled (336,250) 8.38 - 42.00
Outstanding at May 31, 1994 2,666,545 8.38 - 42.25
Granted 544,500 30.75 - 36.25
Exercised (48,691) 8.38 - 11.50
Cancelled (87,500) 39.63 - 42.00
Outstanding at December 31, 1994 3,074,854 8.38 - 42.25
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
NUMBER OF OPTION PRICE
SHARES PER SHARE
Shares exercisable:
May 31, 1992 313,437 $8.38 - 19.23
May 31, 1993 564,402 8.38 - 42.25
May 31, 1994 563,741 8.38 - 42.25
December 31, 1994 873,551 8.38 - 42.25
</TABLE>
The weighted average exercise price of options outstanding at December 31,
1994 was $33.80.
CONVERTIBLE DEBENTURE PLAN
The Company has a convertible debenture plan under which key management
personnel and others may purchase debentures that are convertible into shares
of the Company's common stock. The aggregate number of common shares issuable
upon conversion of the debentures cannot exceed 1,000,000 shares, subject to
adjustment in certain events. Each debenture represents an unsecured,
subordinated obligation due in seven to ten years and may be redeemed after
three years at a redemption price of 120% of the principal amounts. The
debentures outstanding at December 31, 1994 bear interest at the prime rate,
have a conversion date of one year following the date of issuance and may be
converted into the Company's common stock at a price of $25.13 per share,
subject to adjustment in certain events. At December 31, 1994, 253,977 shares
were available for grant under the plan.
The participants in the plan purchased debentures by delivery of promissory
notes to the Company. The promissory notes are secured by the debentures that
are held as security by the Company, are due on the earlier of 2004 or
termination of employment and require annual interest payments equal to prime
plus 1/8%. The debentures are reflected as a noncurrent liability, net of the
related promissory notes, in the Consolidated Balance Sheets as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DEC. 31, 1994 MAY 31, 1994 MAY 31, 1993
Convertible debentures due employees $ 6,281 $ 6,355 $ 1,906
Promissory notes (6,281) (6,355) (1,906)
$ --- $ $--- $ $---
Number of shares outstanding 250,000 259,167 163,717
</TABLE>
SHAREHOLDER RIGHTS PLAN
In June 1990, the Company's board of directors adopted a Shareholder Rights
Plan pursuant to which preferred stock purchase rights were issued to holders
of its common stock at the rate of one right for each share of common stock
held as of the record date, June 26, 1990. The rights become exercisable only
if a holder acquires beneficial ownership of 15% or more or announces a tender
offer for 15% or more of the Company's common stock. Each right not owned by
such 15% holder entitles the holder under such circumstance to purchase shares
of common stock having a value equal to twice the $40 exercise price. The
Company may redeem the rights at $.01 per right at any time until the tenth
day following the public announcement that a 15% position has been acquired.
Unless the rights become exercisable, they will expire on June 26, 2000.
<PAGE>
STOCK APPRECIATION RIGHTS PLAN
The Company has a stock appreciation rights ("SARs") plan which authorizes the
granting of SARs to nonemployee directors of the Company. Upon exercise,
SARs allow the holder to receive the difference between the SARs' exercise
price and the fair market value of the common shares covered by SARs on the
exercise date and expire at the earlier of ten years or a date based on the
termination of the holder's membership on the board of directors. At December
31, 1994, May 31, 1994, 1993 and 1992, SARs covering 45,454, 55,454, 65,604
and 85,604 common shares, respectively, were outstanding. At December 31,
1994, exercise prices ranged from $8.00 to $13.20 per share, 45,454 shares
were exercisable and 17,940 shares were available for future grant.
Compensation expense (benefit) of $.1 million, $(.3 million), $.9 million and
$3.4 million for the seven months ended December 31, 1994 and the years ended
May 31, 1994, 1993 and 1992, respectively, was recorded based on the quoted
market value of the shares and the exercise provisions.
RESTRICTED STOCK PLAN
The Company has a restricted stock plan that provides for the award of up to
50,000 common shares to eligible key officers and employees. At the November
11, 1993 annual meeting, this plan was amended to also serve as an employee
stock purchase plan. At December 31, 1994, 39,415 shares were available for
issuance under the plan.
CORPORATE READJUSTMENTS
To permit payments of common stock dividends from future earnings without
being penalized by an accumulated deficit, Article 4.13B of the Texas Business
Corporation Act formerly provided that a company may, subject to its board of
directors' approval, eliminate that deficit through application of additional
paid-in capital. Pursuant to board of directors' approvals on January 12,
1987 and August 6, 1986, the Company eliminated accumulated deficits of $5.3
million at November 30, 1986 and $28.7 million at May 31, 1986.
16. FAIR VALUE OF FINANCIAL INSTRUMENTS AND CREDIT RISK
CONCENTRATIONS
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments:
Cash and cash equivalents - The carrying amount approximates fair value due
to the short maturities of such instruments.
<PAGE>
Marketable securities - Marketable securities consist primarily of marketable
debt securities. Estimated fair value is determined by quoted market prices.
Short- and long-term debt - The carrying amount of the Company's short-term
bank borrowings and current portion of long-term debt approximates fair value.
The fair values of the Company's senior subordinated debentures due in 1997
and 2000 are based on quoted market prices.
Redeemable preferred stock of subsidiary - The fair value of redeemable
preferred stock of subsidiary is based on quoted market prices.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DEC. 31, 1994 MAY 31, 1994 MAY 31, 1993
CARRYING FAIR CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
Financial assets:
Marketable securities $ 49,921 $49,886 $ 92,262 $92,000 $ 24,253 $24,253
Financial liabilities:
Long-term debt (including
current portion) 315,515 299,916 294,753 299,430 162,587 177,406
Redeemable preferred stock
of subsidiary --- --- --- --- 11,399 13,771
</TABLE>
The Company entered into a foreign exchange contract in fiscal 1994 to
purchase C$8.6 million to hedge exposure to a Canadian tax liability resulting
from the sale of Triton Canada common stock. At May 31, 1994, the fair value
of the foreign exchange contract, which matured in July 1994, was based on
quoted rates for contracts with similar terms and maturity dates; however,
such fair value was offset by gains on the tax liability hedged by the
contract, so there was no significant difference between the recorded value
and the fair value of the Company's net foreign exchange position.
CONCENTRATION OF CREDIT RISK
Financial instruments that are potentially subject to concentrations of credit
risk consist of cash equivalents, marketable securities and receivables. The
Company sells crude oil, natural gas, condensate and other oil and gas
products to other oil and gas companies and government agencies. During the
seven months ended December 31, 1994 and the years ended May 31, 1994, 1993
and 1992, a single customer in France accounted for 34%, 31%, 29% and 31%,
respectively, and in Indonesia a single customer accounted for 12%, 13%, 10%
and 10%, respectively, of consolidated sales and other operating revenues.
The Company does not believe that the loss of any single customer or contract
pursuant to which oil and gas is sold would have a long-term material adverse
effect on its oil and gas revenues.
<PAGE>
17. OTHER INCOME
Other income is summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED YEAR ENDED MAY 31,
DEC. 31, 1994 1994 1993 1992
Interest and dividends $ 4,144 $ 6,602 $4,217 $4,840
Gain on sale of United States
working interest properties --- 7,028 --- ---
Gain on sale of Aero common stock --- 1,500 --- ---
Other 507 1,301 1,745 1,711
$ 4,651 $ 16,431 $5,962 $6,551
</TABLE>
18. STATEMENTS OF CASH FLOWS
Supplemental disclosures of cash payments and noncash investing and financing
activities follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED YEAR ENDED MAY 31,
DEC. 31, 1994 1994 1993 1992
Cash paid during the year for:
Interest (net of amount capitalized) $ --- $ --- $ --- $ 2,074
Income taxes 5,557 222 1,321 11,734
Noncash investing and financing
activities:
Preferred stock issued for purchase of Triton
Europe minority interest --- 17,978 --- ---
Conversion of long-term debt into common stock --- --- --- 119,921
Conversion of preferred stock into common stock --- --- --- 65,568
Sale of the Company's shares by Crusader --- --- 3,920 6,917
Liabilities resulting from acquisitions --- --- 1,265 2,715
Property and equipment exchanged for
a long-term note receivable --- 1,980 --- ---
</TABLE>
19. COMMITMENTS AND CONTINGENCIES
The Company is currently involved in the development of significant
discoveries in the Cusiana and Cupiagua fields (the "Fields") of Colombia.
The first two early production units at the central processing facility at
Cusiana began operation in October and December 1994, with gross production
reaching 90,000 barrels in early February 1995. Capital requirements for full
field development of the Fields are expected to continue at substantial levels
into 1997, but should be substantially covered by the proceeds from Colombian
oil sales during this period.
Negotiations among the Company and the other working interest owners of the
Fields and TransCanada PipeLines Colombia Limited and IPL Energy (Colombia)
Limited led to the execution of certain agreements relating to OCENSA in
December 1994.
The agreements contemplate that capitalization of OCENSA will be approximately
70% senior debt and 30% equity. OCENSA is expected to borrow all senior debt
under four separate facilities, each of which would be severally and
separately supported by performance obligations under various transportation,
advance tariff and other agreements of one of the initial shipper group
consisting of the Company, Ecopetrol, BP Exploration Company (Colombia)
Limited and TOTAL. Proposals for the contemplated debt financing of OCENSA
are being evaluated, although no commitments have been signed.
The Company's 9.6% share of OCENSA is owned through Triton Pipeline. The
Company has guaranteed Triton Pipeline's performance under an equity
subscription agreement with OCENSA.
The Company's capital budget for the year ending December 31, 1995 is
approximately $175 million, excluding capitalized interest, of which
approximately $100 million relates to the Fields and $29 million relates to
Block A-18 of the Malaysia-Thailand Joint Development Area. The Company
expects to meet the balance of its direct capital needs in 1995 and later
years with cash on hand, marketable securities, increasing cash flow from
Colombian operations, proceeds from asset sales (including possible forward
sales of oil), and possibly the issuance of equity or other securities.
During the normal course of business, the Company is subject to the terms of
various operating agreements and capital commitments associated with the
exploration and development of its oil and gas properties. Many of these
commitments are discretionary on the part of the Company. It is management's
belief that such commitments, including the capital requirements in Colombia,
discussed above, will be met without any material adverse effect on the
Company's operations or consolidated financial condition.
The Company leases office space, other facilities and equipment under various
operating leases expiring through 2009. Total rental expense was $1.3 million
for the seven months ended December 31, 1994 and $2.6 million, $4 million and
$5 million for the years ended May 31, 1994, 1993 and 1992, respectively,
including rental expense for discontinued operations of $.8 million and $.2
million for fiscal years 1993 and 1992, respectively. At December 31, 1994,
the minimum payments required over the next five years and thereafter are as
follows: 1995 - $2.8 million; 1996 - $2.7 million; 1997 - $2.1 million; 1998
- - - $1.7 million; 1999 - $1.6 million and thereafter - $1.8 million.
GUARANTEES
At December 31, 1994, the Company had guaranteed loans of approximately $7.7
million of a Colombian pipeline company in which the Company has an ownership
interest and guaranteed performance of $9.1 million in future exploration
expenditures in various countries. These commitments are backed by letters of
credit, bank guarantees and pledged securities.
REGULATORY MATTERS
The Company continues to cooperate with inquiries by the Commission and the
Department of Justice (the "Department") regarding possible violations of the
Foreign Corrupt Practices Act in connection with the Company's operations in
Indonesia. Based upon the information available to the Company to date, the
Company believes that it will be able to resolve any issues that either the
Commission or the Department ultimately might raise concerning these matters
in a manner that would not have a material adverse effect on the Company's
operations or consolidated financial condition.
ENVIRONMENTAL MATTERS
The Company is subject to extensive environmental laws and regulations. These
laws regulate the discharge of materials into the environment and may require
the Company to remove or mitigate the environmental effects of the disposal or
release of petroleum substances at various sites. Also, the Company remains
liable for certain environmental matters that may arise from formerly owned
fuel businesses that were involved in the storage, handling and sale of
hazardous materials, including fuel storage in underground tanks. The Company
believes that the level of future expenditures for environmental matters,
including clean-up obligations, is impracticable to determine with a precise
and reliable degree of accuracy. Management believes that such costs, when
finally determined, will not have a material adverse effect on the Company's
operations or consolidated financial condition. During the seven months ended
December 31, 1994 and the years ended May 31, 1994, 1993 and 1992, the Company
accrued nil, $4.4 million, nil and $1.2 million, respectively, for
environmental costs.
LITIGATION
The Company is also subject to ordinary litigation that is incidental to its
business, none of which is expected to have a material adverse effect on the
Company's operations or consolidated financial condition.
<PAGE>
20. RELATED PARTY TRANSACTIONS
Net assets of discontinued operations at May 31, 1993, and investment in
affiliates at May 31, 1992, included $1.9 million and $1.7 million,
respectively, due from Aero for fuel purchases. Total fuel sales to Aero were
$1 million in fiscal 1994, $4 million in fiscal 1993 and $2.9 million in
fiscal 1992. In fiscal 1992, the Company purchased certain equipment from
Aero for $.5 million and leased the equipment back to Aero pursuant to an
operating lease with annual rentals of $.1 million over a five-year term.
The Company charged Crusader $.3 million for the seven months ended December
31, 1994 and $.6 million for the years ended May 31, 1994, 1993 and 1992 for
administrative services. Also during fiscal 1994, the Company was paid $1.2
million by Crusader for acting as agent in issuing its 6% Notes and recorded
$.6 million as other income.
<PAGE>
21. SEGMENT AND GEOGRAPHIC DATA
For the seven months ended December 31, 1994 and the years ended May 31, 1994,
1993 and 1992, the Company had two reportable industry segments: (i) the
crude oil and natural gas exploration and production industry and (ii) the
aviation sales and services industry. The Company's oil and gas business is
subject to operating risks normally associated with the exploration and
production of oil and gas, including blowouts, cratering, pollution and acts
of nature that could result in damage to oil and gas wells, production
facilities or formations. In addition, oil and gas prices have fluctuated
substantially over recent years as a result of numerous factors, including
changes in worldwide production and demand levels, various worldwide political
and economic events and other events which are outside of the Company's
control. Segment data follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED
DEC. 31, YEAR ENDED MAY 31,
1994 1994 1993 1992
SALES AND OTHER OPERATING REVENUES:
Oil and gas $ 20,521 $ 41,239 $ 79,057 $ 84,126
Aviation sales and services 6,117 12,903 19,864 28,707
Other 215 1,951 5,357 6,598
Consolidated $ 26,853 $ 56,093 $ 104,278 $ 119,431
OPERATING LOSS:
Oil and gas $ (2,463) $ (59,102) $ (109,254) $ (42,413)
Aviation sales and services (1,053) (4,087) (5,143) (9,471)
Other (766) (249) (1,654) (5,181)
Consolidated (4,282) (63,438) (116,051) (57,065)
Equity in earnings (loss) of affiliates, net (4,102) 645 (12,493) (16,646)
Other income, including gain on sale of
Triton Canada in the year ended May 31, 1994 4,651 64,296 5,962 6,551
General corporate expenses (12,623) (20,785) (23,375) (23,633)
Foreign exchange gain (loss) 383 252 (776) (4,557)
Writedown of other investments --- (316) (758) (406)
Interest expense (7,939) (7,852) (5,287) (1,631)
Loss from continuing operations
before income taxes and minority interest $ (23,912) $ (27,198) $ (152,778) $ (97,387)
TRADE AND OTHER RECEIVABLES:
Oil and gas $ 16,356 $ 11,960 $ 14,138 $ 14,286
Aviation sales and services 764 730 1,289 2,910
Other 1,368 1,889 1,289 611
Consolidated $ 18,488 $ 14,579 $ 16,716 $ 17,807
</TABLE>
<PAGE>
Segment data continued:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED
DEC. 31, YEAR ENDED MAY 31,
1994 1994 1993 1992
IDENTIFIABLE ASSETS:
Oil and gas $ 441,559 $ 346,879 $382,120 $384,762
Aviation sales and services 6,806 6,537 10,510 18,664
Other 18,106 13,353 9,294 10,639
Consolidated 466,471 366,769 401,924 414,065
Net assets of discontinued operations --- 4,566 21,789 35,873
Investment in unconsolidated affiliates 34,162 36,809 50,115 71,433
Corporate assets 118,568 207,957 88,103 49,798
Total assets at period-end $ 619,201 $ 616,101 $561,931 $571,169
DEPRECIATION, DEPLETION AND AMORTIZATION:
Oil and gas $ 5,221 $ 17,308 $ 43,598 $ 38,119
Aviation sales and services 248 669 1,351 1,589
Other 2,118 2,513 1,455 1,505
Consolidated $ 7,587 $ 20,490 $ 46,404 $ 41,213
CAPITAL EXPENDITURES, INCLUDING
CAPITALIZED INTEREST:
Oil and gas $ 93,529 $ 100,800 $102,294 $ 79,864
Aviation sales and services 231 107 74 267
Other 5,785 3,278 1,675 1,328
Consolidated $ 99,545 $ 104,185 $104,043 $ 81,459
</TABLE>
The Company's principal properties and operations are located in Colombia and
Malaysia-Thailand. The Company also has oil and gas interests in other Latin
American and Asian countries, Europe, Australia and North America. Operating
in foreign countries subjects the Company to inherent risks such as a loss of
revenue, property and equipment from such hazards as expropriation,
nationalization, war and other political risks, risks of increase of taxes and
governmental royalties, renegotiation of contracts with governmental entities
and changes in laws in policies governing operations of foreign based
companies.
<PAGE>
Information about the Company's operations by geographic area follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
UNITED
COLOMBIA FRANCE INDONESIA STATES CANADA OTHER CONSOLIDATED
December 31, 1994:
Sales $ 6,249 $ 9,179 $ 3,174 $ 8,251 $ --- $ --- $ 26,853
Operating profit (loss) (192) 722 (75) (2,479) --- (2,258) (4,282)
Trade and other receivables 10,006 3,866 1,257 2,614 --- 745 18,488
Identifiable assets 335,474 27,038 2,553 46,474 --- 54,932 466,471
May 31, 1994:
Sales $ 5,911 $ 17,494 $ 7,186 $ 18,514 $ 6,759 $ 229 $ 56,093
Operating loss (503) (49,734) (4,582) (5,287) (47) (3,285) (63,438)
Trade and other receivables 5,508 3,431 1,303 2,786 --- 1,551 14,579
Identifiable assets 237,397 28,954 3,978 44,030 --- 52,410 366,769
May 31, 1993:
Sales $ 3,474 $ 30,897 $ 10,449 $ 36,702 $ 22,651 $ 105 $ 104,278
Operating loss (672) (79,336) (10,425) (4,537) (986) (20,095) (116,051)
Trade and other receivables 510 2,357 1,571 4,517 4,169 3,592 16,716
Identifiable assets 147,280 78,830 6,042 86,142 48,667 34,963 401,924
May 31, 1992:
Sales $ --- $ 37,844 $ 12,146 $ 45,604 $ 23,837 $ --- $ 119,431
Operating profit (loss) (759) 2,319 (13,181) (21,333) (11,389) (12,722) (57,065)
Trade and other receivables 65 4,724 2,341 5,570 3,478 1,629 17,807
Identifiable assets 58,632 166,970 19,557 77,768 52,394 38,744 414,065
</TABLE>
All oil sales in France were to Societe Nationale Elf Aquitaine, which is
principally owned by the French government. All oil sales in Indonesia are to
Pertamina, the Indonesian government oil company.
22. SUBSEQUENT EVENTS (UNAUDITED)
EXPLORATION CONTRACT IN CHINA
On February 8, 1995, the Company and the China National Offshore Oil Company
signed a production sharing contract in Beijing that will allow the Company to
explore for hydrocarbons on Contract Area 16/22 in the Pearl River Mouth Basin
about 110 miles southeast of Hong Kong.
EXPLORATION CONTRACT IN ECUADOR
On February 16, 1995, the Company signed an exploration agreement with
Petroecuador for Block 19, which calls for the Company to acquire 250 miles of
new seismic data and drill two exploratory wells during a four year
exploration period.
<PAGE>
23. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIRST SECOND ONE
TRANSITION PERIOD ENDED QUARTER QUARTER MONTH
December 31, 1994:
Sales and other operating revenues $12,614 $ 10,324 $ 3,915
Gross profit (loss) 340 (24) (27)
Net earnings (loss) (8,173) (11,100) (8,435)
Net earnings (loss) per common share (0.23) (0.33) (0.24)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
QUARTER
FISCAL YEARS ENDED FIRST SECOND THIRD FOURTH
May 31, 1994:
Sales and other operating revenues $ 22,565 $ 13,407 $ 9,599 $ 10,522
Gross loss (11,209) (14,399) (17,405) (8,463)
Net earnings (loss) 35,078 (11,237) (19,985) (13,197)
Net earnings (loss) per common share 1.01 (0.32) (0.57) (0.38)
May 31, 1993:
Sales and other operating revenues $ 28,113 $ 24,529 $ 26,084 $ 25,552
Gross profit (loss) 3,432 (2,814) (96,218) (5,926)
Earnings (loss) before cumulative
effect of accounting change 1,134 (5,908) (65,123) (23,655)
Net earnings (loss) 5,151 (5,908) (65,123) (23,655)
Earnings (loss) per common share:
Before cumulative effect of
accounting change 0.03 (0.17) (1.90) (0.69)
Net earnings (loss) 0.15 (0.17) (1.90) (0.69)
</TABLE>
Gross profit (loss) consists of sales and other operating revenues less
operating expenses, depreciation, depletion and amortization and writedowns
pertaining to operating assets.
In the month ended December 31, 1994, the Company recorded equity in losses of
Crusader of $4.2 million due principally to adjustments to deferred taxes and
writedowns of unproved oil and gas properties in the Philippines and
Argentina.
<PAGE>
In the fourth quarter of the year ended May 31, 1994, the Company recorded
writedowns of $6.8 million, primarily resulting from application of the SEC
ceiling limitation caused by a downward revision in the estimated reserves for
France. The Company also recognized a gain of $1.5 million on the sale of its
investment in Aero.
In the fourth quarter of the year ended May 31, 1993, the Company recorded a
loss provision of $16.1 million on the discontinued operations of the
wholesale fuel segment. The Company also recorded a $25 million income tax
benefit, of which $3.9 million was booked to additional paid-in capital, with
the adoption of SFAS No. 109 due to the then pending sale of Triton Canada,
the sale of certain domestic properties and anticipated income from Colombian
operations.
On January 1, 1995, the Company began operating on a calendar year. Quarterly
results restated for calendar 1994 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
QUARTER
FIRST SECOND THIRD FOURTH
December 31, 1994:
Sales and other operating revenues $ 9,648 $ 11,849 $11,387 $$ $ 10,855
Gross profit (loss) (8,421) (8,601) 142 (95)
Net earnings (loss) (14,058) (13,826) (7,870) (16,947)
Net earnings (loss) per common share (0.40) (0.40) (0.24) (0.48)
</TABLE>
In the fourth calendar quarter of 1994, the Company recorded equity in losses
of Crusader of $4.5 million due principally to adjustments to deferred taxes
and writedowns of unproved oil and gas properties in the Philippines and
Argentina.
24. OIL AND GAS DATA
The following tables provide additional information about the Company's oil
and gas exploration and production activities. Equity affiliate amounts
reflect only the Company's proportionate interest in Crusader.
<PAGE>
RESULTS OF OPERATIONS
The results of operations for oil and gas producing activities, considering
direct costs only, follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
UNITED TOTAL
COLOMBIA FRANCE INDONESIA STATES CANADA OTHER WORLDWIDE
December 31, 1994:
Revenues $ 6,249 $ 9,179 $ 3,174 $ 1,919 $ --- $ --- $ 20,521
Costs:
Production costs 4,290 5,784 2,054 144 --- --- 12,272
Depletion and depreciation 1,184 2,132 298 1,189 --- --- 4,803
Writedown of assets --- --- --- 984 --- --- 984
Income taxes 74 421 --- --- --- --- 495
Results of operations $ 701 $ 842 $ 822 $ (398) $ --- $ --- $ 1,967
May 31, 1994:
Revenues $ 5,911 $ 17,252 $ 7,186 $ 4,700 $ 5,961 $ 229 $ 41,239
Costs:
Production costs 4,230 10,347 6,413 2,436 2,919 281 26,626
Depletion 917 9,443 1,363 2,290 2,482 --- 16,495
Writedown of assets --- 43,201 922 --- --- 251 44,374
Income taxes 85 --- --- --- 466 --- 551
Results of operations $ 679 $ (45,739) $ (1,512) $ (26) $ 94 $ (303) $ (46,807)
May 31, 1993:
Revenues $ 3,474 $ 30,574 $ 10,449 $ 14,032 $ 20,423 $ 105 $ 79,057
Costs:
Production costs 2,411 13,494 5,984 2,471 10,431 97 34,888
Depletion 544 22,287 4,250 6,587 8,633 --- 42,301
Writedown of assets --- 66,765 8,734 879 --- 14,793 91,171
Income taxes 195 --- --- --- 1,466 --- 1,661
Results of operations $ 324 $ (71,972) $ (8,519) $ 4,095 $ (107) $ (14,785) $ (90,964)
May 31, 1992:
Revenues $ --- $ 37,515 $ 12,146 $ 13,423 $ 21,042 $ --- $ 84,126
Costs:
Production costs --- 15,034 4,501 2,857 11,874 --- 34,266
Depletion --- 14,314 4,445 8,570 9,155 --- 36,484
Writedown of assets --- --- 13,672 2,169 6,824 13,113 35,778
Income taxes --- 2,102 --- 558 --- --- 2,660
Results of operations $ --- $ 6,065 $ (10,472) $ (731) $ (6,811) $ (13,113) $ (25,062)
</TABLE>
<PAGE>
The Company's equity share of Crusader's results of operations for oil and
gas producing activities follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
UNITED
AUSTRALIA CANADA STATES OTHER TOTAL
December 31, 1994 $ 1,339 $ 243 $ 36 $ (1,662) $ (44)
May 31, 1994 $ 2,904 $ 712 $ (1,270) $ --- $2,346
May 31, 1993 $ 3,771 $1,259 $ (3,338) $ --- $1,692
May 31, 1992 $ 2,856 $ 352 $ 71 $ --- $3,279
</TABLE>
COSTS INCURRED AND CAPITALIZED COSTS
The costs incurred in oil and gas acquisition, exploration and
development activities and related capitalized costs follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MALAYSIA- UNITED TOTAL
COLOMBIA THAILAND FRANCE INDONESIA STATES CANADA OTHER WORLDWIDE
December 31, 1994:
Costs incurred:
Property acquisition $ 9,824 $ --- $ --- $ --- $ --- $ --- $ 1,058 $ 10,882
Exploration 21,691 5,151 79 --- --- --- 7,088 34,009
Development 31,892 --- 5 1 1 --- --- 31,899
Depletion per equivalent
barrel of production 1.77 --- 4.15 1.60 7.04 --- --- 3.37
Cost of properties at period-end:
Unevaluated $ 38,000 $ 20,334 $ 281 $ --- $ 9,202 $ --- $31,513 $ 99,330
Evaluated $175,281 $ --- $265,284 $ 44,594 $ 190,396 $ --- $ 8,667 $ 684,222
Support equipment and
facilities $ 78,601 $ --- $ --- $ --- $ --- $ --- $ --- $ 78,601
Accumulated depletion and
depreciation at period-end $ 2,645 $ --- $244,264 $ 44,097 $ 178,623 $ --- $ 8,667 $ 478,296
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MALAYSIA- UNITED TOTAL
COLOMBIA THAILAND FRANCE INDONESIA STATES CANADA OTHER WORLDWIDE
May 31, 1994:
Costs incurred:
Property acquisition $ --- $ 750 $ --- $ --- $ --- $ 94 $ --- $ 844
Exploration 24,865 4,775 205 --- --- 260 12,366 42,471
Development 29,833 --- 3,575 1,050 300 2,022 --- 36,780
Depletion per equivalent
barrel of production 1.96 --- 8.97 3.09 6.58 3.60 --- 5.47
Cost of properties at period-end:
Unevaluated $ 47,833 $ 15,183 $ 212 $ --- $ 10,094 $ --- $23,847 $ 97,169
Evaluated $118,215 $ --- $266,231 $ 47,677 $ 190,033 $ --- $ 7,715 $ 629,871
Support equipment and
facilities $ 45,688 $ --- $ --- $ --- $ --- $ --- $ --- $ 45,688
Accumulated depletion
at period-end $ 1,461 $ --- $243,084 $ 46,560 $ 176,450 $ --- $ 7,715 $ 475,270
May 31, 1993:
Costs incurred:
Property acquisition $ --- $ --- $ --- $ --- $ --- $ 205 $ 2,781 $ 2,986
Exploration 27,115 2,431 1,677 --- --- 1,487 3,647 36,357
Development 27,988 --- 2,512 1,417 348 5,703 --- 37,968
Depletion per equivalent
barrel of production 2.48 --- 15.19 7.93 6.81 3.24 --- 7.22
Cost of properties at period-end:
Unevaluated $ 33,460 $ 9,658 $ 164 $ --- $ 10,514 $ 1,321 $11,483 $ 66,600
Evaluated $ 77,890 $ --- $264,004 $ 46,246 $ 202,874 $119,393 $15,589 $ 725,996
Support equipment
and facilities $ 24,983 $ --- $ --- $ --- $ --- $ --- $ --- $ 24,983
Accumulated depletion
at period-end $ 544 $ --- $190,440 $ 43,983 $ 174,419 $ 76,940 $15,589 $ 501,915
May 31, 1992:
Costs incurred:
Property acquisition $ --- $ --- $ --- $ --- $ --- $ 238 $ 1,579 $ 1,817
Exploration 20,231 1,603 11,184 --- 1,191 3,287 10,629 48,125
Development 9,224 --- 9,683 7,090 2,767 1,158 --- 29,922
Depletion per equivalent
barrel of production --- --- 7.91 7.24 7.68 3.20 --- 5.70
Cost of properties at period-end:
Unevaluated $ 24,069 $ 6,950 $ 9,511 $ 2,428 $ 10,605 $ 1,907 $20,411 $ 75,881
Evaluated $ 33,846 $ --- $256,853 $ 42,342 $ 202,435 $118,199 $ 4,626 $ 658,301
Accumulated depletion
at period-end $ --- $ --- $107,774 $ 30,951 $ 166,950 $ 72,390 $ 4,626 $ 382,691
</TABLE>
A summary of costs excluded from depletion at December 31, 1994 by year
incurred follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
MAY 31,
DEC. 31, MAY 31, MAY 31, MAY 31, 1991
TOTAL 1994 1994 1993 1992 AND PRIOR
Property acquisition $ 6,854 $ 921 $ 750 $ 1,950 $ --- $ 3,233
Exploration 62,823 25,662 16,710 4,134 4,271 12,046
Capitalized interest 29,653 8,347 16,863 1,888 945 1,610
$
Total worldwide $99,330 $ 34,930 $34,323 $ 7,972 $ 5,216 $ 16,889
</TABLE>
The Company has significant property acquisition and exploration costs that
have not been evaluated and are not currently subject to depletion. At this
time the Company is unable to predict either the timing of the inclusion of
those costs and the related oil and gas reserves in its depletion computation
or their potential future impact on depletion rates. Drilling or other
exploration activities are being conducted in each of these cost centers.
The Company's equity share of costs incurred by Crusader follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
UNITED
AUSTRALIA CANADA STATES OTHER TOTAL
Cost of property acquisition,
exploration and development:
December 31, 1994 $ 3,557 $ 313 $ 26 $1,028 $ 4,924
May 31, 1994 $ 2,955 $1,099 $1,687 $ --- $ 5,741
May 31, 1993 $ 1,631 $1,153 $ 807 $ --- $ 3,591
May 31, 1992 $ 3,740 $ 680 $4,110 $ 118 $ 8,648
Net capitalized costs:
December 31, 1994 $ 28,987 $3,889 $ --- $1,340 $34,216
May 31, 1994 $ 27,001 $4,395 $3,750 $ --- $35,146
May 31, 1993 $ 26,336 $4,374 $2,846 $ --- $33,556
May 31, 1992 $ 30,851 $3,984 $6,337 $ 430 $41,602
</TABLE>
(AMOUNTS IN TABLES IN THOUSANDS)
TRITON ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN TABLES IN THOUSANDS, EXCEPT FOR SHARE DATA)
OIL AND GAS RESERVE DATA (UNAUDITED)
The following tables present the Company's estimates of its proved oil and
gas reserves. These estimates were prepared by the Company's independent and
internal petroleum reservoir engineers. The Company emphasizes that reserve
estimates are inherently imprecise and are expected to change as future
information becomes available. Oil reserves are stated in thousands of
barrels and gas reserves are stated in millions of cubic feet. The largest
portion of the Company's reserves relate to the SDLA, Tauramena and Rio
Chitamena Association Contract Areas in Colombia. The Company had a 20% and
50% interest in the reserves of SDLA and Tauramena, respectively, for 1992 and
1991. The reserves for 1994 and 1993 reflect the equalization of these
interests to 24% and Ecopetrol's decision to exercise its contractual right to
acquire 50% of the working interest through the declaration of commerciality.
The Company consequently has a 9.6% working interest in these areas after 20%
governmental royalties.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
COLOMBIA FRANCE INDONESIA UNITED STATES CANADA
OIL GAS OIL OIL OIL GAS OIL
Proved developed and
undeveloped reserves:
As of May 31, 1991 13,952 84,110 28,352 3,660 2,405 22,072 2,035
Revisions --- (84,110) (2,414) (1,322) 449 (1,148) 104
Sales --- --- --- --- (144) (157) ---
Extensions and discoveries 15,284 1,530 --- --- --- --- 130
Production --- --- (1,809) (614) (421) (4,172) (251)
As of May 31, 1992 29,236 1,530 24,129 1,724 2,289 16,595 2,018
Revisions 5,398 14,720 (14,574) (237) 57 8,271 197
Purchases of minerals in place --- --- 101 --- --- --- ---
Extensions and discoveries 51,801 --- --- --- 3 104 750
Production (219) --- (1,467) (536) (397) (3,421) (279)
As of May 31, 1993 86,216 16,250 8,189 951 1,952 21,549 2,686
Revisions 3,682 --- (2,177) 165 23 (1,644) ---
Sales --- --- (502) --- (1,171) (11,426) (2,584)
Extensions and discoveries 3,173 --- --- --- --- --- ---
Production (467) --- (1,053) (441) (156) (1,150) (102)
As of May 31, 1994 92,604 16,250 4,457 675 648 7,329 ---
Revisions 10,113 (1,529) 2,301 (87) 14 486 ---
Sales --- --- --- --- --- --- ---
Purchases of minerals in place 2,111 --- --- --- --- --- ---
Production (435) --- (514) (186) (66) (618) ---
As of December 31, 1994 104,393 14,721 6,244 402 596 7,197 ---
<S> <C> <C> <C> <C>
ARGENTINA TOTAL WORLDWIDE
GAS OIL OIL GAS
Proved developed and
undeveloped reserves:
As of May 31, 1991 99,046 --- 50,404 205,228
Revisions (6,170) --- (3,183) (91,428)
Sales --- --- (144) (157)
Extensions and discoveries 2,747 --- 15,414 4,277
Production (15,675) --- (3,095) (19,847)
As of May 31, 1992 79,948 --- 59,396 98,073
Revisions 6,332 6 (9,153) 29,323
Purchases of minerals in place --- --- 101 ---
Extensions and discoveries 6,498 --- 52,554 6,602
Production (14,329) (6) (2,904) (17,750)
As of May 31, 1993 78,449 --- 99,994 116,248
Revisions --- 18 1,711 (1,644)
Sales (74,928) --- (4,257) (86,354)
Extensions and discoveries --- --- 3,173 ---
Production (3,521) (18) (2,237) (4,671)
As of May 31, 1994 --- --- 98,384 23,579
Revisions --- --- 12,341 (1,043)
Sales --- --- --- ---
Purchases of minerals in place --- --- 2,111 ---
Production --- --- (1,201) (618)
As of December 31, 1994 --- --- 111,635 21,918
</TABLE>
TRITON ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN TABLES IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COLOMBIA FRANCE INDONESIA UNITED STATES CANADA ARGENTINA
OIL GAS OIL OIL OIL GAS OIL GAS OIL
Proved developed reserves at:
May 31, 1992 --- --- 7,468 1,724 2,138 16,396 2,018 79,948 ---
May 31, 1993 --- --- 8,189 951 1,945 21,540 2,516 78,449 ---
May 31, 1994 1,237 --- 4,457 675 648 7,329 --- --- ---
December 31, 1994 47,789 14,721 6,244 402 596 7,197 --- --- ---
<S> <C> <C>
TOTAL WORLDWIDE
OIL GAS
Proved developed reserves at:
May 31, 1992 13,348 96,344
May 31, 1993 13,601 99,989
May 31, 1994 7,017 7,329
December 31, 1994 55,031 21,918
</TABLE>
The Company's proportional equity interest in Crusader's estimated proved
developed and undeveloped oil and gas reserves is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AUSTRALIA CANADA UNITED STATES TOTAL
OIL GAS OIL GAS OIL GAS OIL GAS
May 31, 1992 1,464 43,923 1,069 2,766 115 308 2,648 46,997
May 31, 1993 2,803 39,646 1,108 2,615 83 167 3,994 42,428
May 31, 1994 2,574 40,174 963 2,790 48 122 3,585 43,086
December 31, 1994 3,163 59,115 823 1,836 --- --- 3,986 60,951
</TABLE> TRITON ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(AMOUNTS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH INFLOWS AND CHANGES
THEREIN (UNAUDITED)
The following table presents a standardized measure of discounted future net
cash inflows relating to proved oil and gas reserves. Future cash inflows
were computed by applying year end prices of oil and gas relating to the
Company's proved reserves to the estimated year end quantities of those
reserves. Future price changes were considered only to the extent provided by
contractual agreements in existence at year end. Future production and
development costs were computed by estimating those expenditures expected to
occur in developing and producing the proved oil and gas reserves at the end
of the year, based on year end costs. Actual future cash inflows may vary
considerably and the standardized measure does not necessarily represent the
fair value of the Company's oil and gas reserves.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
UNITED TOTAL
COLOMBIA FRANCE INDONESIA STATES CANADA WORLDWIDE
December 31, 1994:
Future cash inflows $ 1,764,939 $105,523 $ 6,677 $20,072 $ --- $1,897,211
Future production and
development costs 440,227 59,558 5,645 1,845 --- 507,275
Future net cash inflows before
income taxes $ 1,324,712 $ 45,965 $ 1,032 $18,227 $ --- $1,389,936
Future net cash inflows before
income taxes discounted at 10%
per annum $ 594,061 $ 25,759 $ 974 $11,824 $ --- $ 632,618
Future income taxes discounted at
10% per annum 132,948 --- --- --- --- 132,948
Standardized measure of discounted
future net cash inflows $ 461,113 $ 25,759 $ 974 $11,824 $ --- $ 499,670
May 31, 1994:
Future cash inflows $$1,591,448 $ 76,755 $ 10,278 $23,562 $ --- $1,702,043
Future production and
development costs 474,382 44,603 7,575 1,945 --- 528,505
Future net cash inflows before
income taxes $$1,117,066 $ 32,152 $ 2,703 $21,617 $ --- $1,173,538
Future net cash inflows before
income taxes discounted at 10%
per annum $ $506,022 $ 23,147 $ 2,570 $14,008 $ --- $ 545,747
Future income taxes discounted at
10% per annum 150,537 --- --- --- --- 150,537
Standardized measure of discounted
future net cash inflows $ $355,485 $ 23,147 $ 2,570 $14,008 $ --- $ 395,210
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
UNITED TOTAL
COLOMBIA FRANCE INDONESIA STATES CANADA WORLDWIDE
May 31, 1993:
Future cash inflows $1,608,471 $163,367 $ 18,095 $70,347 $162,208 $2,022,488
Future production and
development costs 498,032 79,593 13,926 10,575 85,035 687,161
Future net cash inflows before
income taxes $1,110,439 $ 83,774 $ 4,169 $59,772 $ 77,173 $1,335,327
Future net cash inflows before
income taxes discounted at 10%
per annum $ 455,077 $ 54,594 $ 3,630 $38,693 $ 56,322 $ 608,316
Future income taxes discounted at
10% per annum 149,033 --- --- --- 7,801 156,834
Standardized measure of discounted
future net cash inflows $ 306,044 $ 54,594 $ 3,630 $38,693 $ 48,521 $ 451,482
May 31, 1992:
Future cash inflows $ 581,806 $527,701 $ 30,492 $63,978 $146,211 $1,350,188
Future production and
development costs 347,588 236,150 17,049 12,237 82,247 695,271
Future net cash inflows before
income taxes $ 234,218 $291,551 $ 13,443 $51,741 $ 63,964 $ 654,917
Future net cash inflows before
income taxes discounted at 10%
per annum $ 64,969 $160,581 $ 11,560 $35,485 $ 45,489 $ 318,084
Future income taxes discounted at
10% per annum 19,208 33,576 --- --- 2,921 55,705
Standardized measure of discounted
future net cash inflows $ 45,761 $127,005 $ 11,560 $35,485 $ 42,568 $ 262,379
</TABLE>
The Company's proportional equity interest in Crusader's standardized measure
of discounted future net cash inflows follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
UNITED
AUSTRALIA CANADA STATES TOTAL
December 31, 1994 $ 32,492 $3,424 $ --- $35,916
May 31, 1994 $ 35,306 $3,997 $ 526 $39,829
May 31, 1993 $ 35,939 $6,016 $1,175 $43,130
May 31, 1992 $ 31,549 $4,964 $1,701 $38,214
</TABLE>
<PAGE>
Changes in the standardized measure of discounted future net cash inflows
follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DEC. 31, MAY 31,
1994 1994 1993 1992
Total worldwide, excluding equity share:
Beginning of period $395,210 $451,482 $ 262,379 $ 281,664
Extensions, discoveries and improved recovery --- 16,521 276,834 35,959
Sales, net of production costs (8,249) (14,613) (44,169) (49,860)
Net change in prices and production costs (14,746) (54,143) (4,958) 91,844
Purchases of reserves 9,573 --- 674 ---
Sales of reserves --- (83,462) --- (936)
Revisions of quantity estimates 43,816 879 (58,019) (111,575)
Accretion of discount 31,835 60,831 31,809 34,617
Development and facilities costs incurred 45,152 57,485 62,951 29,922
Change in future development costs 3,695 (57,459) 19,228 (53,767)
Changes in production rates and other (24,205) 11,392 5,882 (4,284)
Net change in income taxes 17,589 6,297 (101,129) 8,795
End of period $499,670 $395,210 $ 451,482 $ 262,379
</TABLE>
At May 31, 1993 and 1992, $33.4 million and $61.4 million, respectively, of
the consolidated standardized measure of discounted future net cash inflows
was attributable to minority interests in consolidated subsidiaries. The
Company's weighted average oil price per barrel during the seven months ended
December 31, 1994, and at December 31, 1994, was $16.25 and $16.46,
respectively.
SCHEDULE II
TRITON ENERGY CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING CHARGED TO OTHER AT CLOSE
CLASSIFICATIONS OF YEAR EARNINGS ACCOUNTS DEDUCTIONS OF YEAR
Year ended May 31, 1992 -
Allowance for doubtful
receivables $ 2,632 $ 2,648 $ 14 $ (516) $ 4,778
Year ended May 31, 1993 -
Allowance for doubtful
receivables $ 4,778 $ 964 $ --- $ (4,580) $ 1,162
Allowance for deferred
tax asset $ --- $ 21,080 $ 51,746 $ --- $ 72,826
Year ended May 31, 1994 -
Allowance for doubtful
receivables, excluding
discontinued operations $ 1,162 $ (149) $ 4 $ (144) $ 873
Allowance for deferred
tax asset $ 72,826 $ 1,027 $ --- $ --- $ 73,853
Period ended Dec 31, 1994 -
Allowance for doubtful
receivables $ 873 $ 19 $ 20 $ 15 $ 897
Allowance for deferred
tax asset $ 73,853 $ 28,336 $ --- $ --- $102,189
</TABLE>
___________________
Note - Deductions in the year ended May 31, 1993 relate primarily to
discontinued operations.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Crusader Limited
We have audited the consolidated financial statements of Crusader Limited and
subsidiaries as listed in the accompanying index, which, as described in note
1(a), have been prepared on the basis of accounting principles accepted in the
United States by restating the primary consolidated financial statements of
Crusader Limited which are denominated in Australian dollars and prepared in
accordance with Australian Accounting Standards. 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 audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of Crusader Limited and subsidiaries for the year ended May 31, 1992, in
conformity with accounting principles generally accepted in the United States.
KPMG PEAT MARWICK
Brisbane, Australia
August 14, 1992
<PAGE>
CRUSADER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED MAY 31, 1992
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
<S> <C>
Revenue:
Sales and other operating revenues $78,825
Interest 7,678
Other income 583
87,086
Costs and expenses:
Operating 54,390
General and administrative 12,020
Depreciation and depletion 15,607
Writedown of assets 9,876
Foreign exchange gain (739)
Interest 5,433
96,587
(9,501)
Gain on disposal of investment securities (note 2) 8,698
Loss before income taxes and minority interest (803)
Income taxes (note 3) 6,276
(7,079)
Minority interest in loss of subsidiaries 9,524
Net earnings $ 2,445
Net earnings per common share
$ 0.03
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CRUSADER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
YEAR ENDED MAY 31, 1992
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
TOTAL
ADDITIONAL CURRENCY TOTAL
COMMON STOCK PAID-IN RETAINED TRANSLATION SHAREHOLDERS'
SHARE AMOUNT CAPITAL EARNINGS ADJUSTMENT EQUITY
Balance at May 31, 1991 94,509,180 $18,616 $ 14,617 $ 57,696 $ (11,130) $ 79,799
Net earnings --- --- --- 2,445 --- 2,445
Cash dividends, A$.025 per share --- --- --- (1,807) --- (1,807)
Convertible subordinated unsecured
notes converted to common stock 643 --- --- --- --- ---
Foreign currency translation
adjustment --- --- --- --- 18 18
Balance at May 31, 1992 94,509,823 $18,616 $ 14,617 $ 58,334 $ (11,112) $ 80,455
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CRUSADER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED MAY 31, 1992
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net earnings $ 2,445
Adjustments to reconcile net earnings to net cash flow from operating activities:
Depreciation and depletion 15,607
Writedown of assets 9,876
Receivables (11,378)
Inventories 1,897
Prepaid expenses and other current assets 349
Deferred revenue 24,122
Accounts payable and accrued liabilities 2,872
Income tax payable 9,250
Deferred income tax (7,289)
Gain on disposal of investment securities (8,698)
Foreign exchange transaction gain (739)
Minority interest in loss of subsidiary (9,524)
Net cash provided by operating activities 28,790
Cash flows from investing activities:
Purchases of property and equipment (37,420)
Proceeds from disposal of property and equipment 497
Proceeds from disposal of investment securities 14,084
Loan to Triton Energy Corporation 3,500
Other assets (137)
Net cash used in investing activities (19,476)
Cash flows from financing activities:
Short-term borrowings, net (1,257)
Proceeds from long-term debt 17,138
Payments on long-term debt (13,278)
Other liabilities (54)
Dividends paid (1,807)
Net cash provided by financing activities 742
Effects of exchange rate changes on cash 3,418
Net increase in cash 13,474
Cash and equivalents at beginning of year 30,381
Cash and equivalents at end of year $ 43,855
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) $ 5,374
Income taxes $ 4,207
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CRUSADER LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) PRINCIPLES OF PRESENTATION AND CONSOLIDATION
Crusader Limited is incorporated in Queensland, Australia. The primary
consolidated financial statements of Crusader Limited and its subsidiaries
(the "Company") are denominated in Australian dollars and prepared in
accordance with Australian Accounting Standards.
The accompanying consolidated financial statements reflect the result of
restating the primary consolidated financial statements of the Company into
United States dollars and in accordance with United States generally accepted
accounting principles for inclusion as supplementary information in the Form
10-K of Triton Energy Corporation ("Triton") which at May 31, 1992 owned
approximately 49.9% of the issued common stock of the Company.
All significant intercompany balances and transactions have been eliminated in
consolidation.
(B) INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out or average)
or market value.
(C) PROPERTY AND EQUIPMENT
The Company follows the full cost method of accounting for costs of
exploration and development of oil and gas reserves, whereby all productive
and nonproductive costs, including costs applicable to internal technical
personnel directly associated with these efforts, are capitalized. Individual
countries are designated as separate cost centers. All capitalized costs plus
the undiscounted future development costs of proved reserves are depleted on
the unit-of-production method based on total proved reserves applicable to
each country. Gain or loss is recognized only on sale of oil and gas
properties involving significant reserves.
Costs related to acquisition, holding and initial exploration of areas in
which proved reserves have not been established are capitalized and
periodically evaluated for possible impairment.
Costs related to exploration and development of hardrock mineral properties
are capitalized in respect of each separate area of interest until such time
as a discovery is made or the area is abandoned. Exploration and development
expenditures which are not expected to be recovered from future production or
those associated with abandoned properties are charged to expense at the time
impairment of value is determined. Costs related to producing areas are
amortized on the units-of-production method based on total reserves applicable
to the area.
<PAGE>
CRUSADER LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Restoration work is carried out progressively during the course of mining.
Provision is made over the life of the mine for the cost of finally restoring
distributed areas after mining is completed.
Substantially all depreciation of other property is provided at rates based on
the estimated useful lives of the property.
The Company capitalizes interest on qualifying assets, principally coal
briquetting plant and unevaluated oil and gas properties. Interest capitalized
was $2,161,000 in 1992.
The coal briquetting plant was constructed during fiscal 1992 and will
commence commercial production during fiscal 1993.
Repairs and maintenance are expensed as incurred and renewals and betterments
are capitalized.
(D) FOREIGN CURRENCY TRANSLATION
The Company's primary financial statements have been translated into United
States dollars in accordance with Statement of Financial Accounting Standards
("SFAS") No. 52. Exchange adjustments resulting from foreign currency
transactions are recognized in income, whereas adjustments resulting from
translations of financial statements are reflected as a separate component of
shareholders' equity. Local currencies are used as the functional currencies.
(E) INCOME TAXES
Deferred income taxes are provided for the tax effect of timing differences
in the recognition of revenue and expense for income tax and financial
accounting purposes.
In February 1992, the Financial Accounting Standards Board issued SFAS No.
109, "Accounting for Income Taxes," which will require the Company to change
its method of accounting for income taxes. The Company currently accounts for
income taxes under APB 11, having elected not to adopt SFAS No. 96 prior to
its required effective date. SFAS No. 109 will change the Company's method of
accounting for income taxes from the deferred method required by APB 11 to the
asset and liability method. The Company is currently required to adopt the
provisions on either a prospective or retroactive basis during its fiscal year
ending May 31, 1994. The Company has not yet determined the effects of
adopting the new statement, nor whether the statement will be prospectively or
retroactively applied.
<PAGE>
CRUSADER LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(F) EARNINGS PER COMMON SHARE
Earnings per common share is based on earnings applicable to the weighted
average shares outstanding. Shares issuable upon conversion of the
convertible notes issued during 1989 are excluded from the computation as the
effect is antidilutive.
(G) STATEMENT OF CASH FLOWS
The Company generally considers all highly liquid investments purchased with
a maturity of three months or less to be cash equivalents.
2. INVESTMENTS
INVESTMENT IN TRITON ENERGY CORPORATION
At May 31, 1992, the Company owned approximately 4% of Triton's common stock.
The Company's investment in Triton, using the cost method, was $14,632,000 at
May 31, 1992. During 1989, a subsidiary of the Company advanced to Triton
from surplus U.S. dollar funds an amount of $7,000,000, bearing interest at
12.5%, and repayable in four equal installments commencing February 1990. The
unpaid balance of the advances was nil and $3,500,000 at May 31, 1992 and
1991, respectively. Triton also performs administrative services on behalf of
the Company. Fees for these services amounted to $585,000 in 1992.
In February and May, 1992, the Company sold 400,647 shares of Triton common
stock for $14,084,000, resulting in a gain of $8,698,000.
INVESTMENT IN AUSTRALIAN HYDROCARBONS N.L. ("AHY")
At May 31, 1992 the Company owned approximately 49% of AHY, a company which
operates in the oil and gas industry in Australia and the United States. As a
result of the ownership and majority representation on the AHY Board of
Directors, the Company began consolidating its interest in AHY during 1991.
The results of AHY's operations are not material to the Company's consolidated
financial statements.
<PAGE>
CRUSADER LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. INCOME TAXES
The components of income tax expense consisted of the following for the year
ended May 31, 1992 (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Current $13,565
Deferred (7,289)
$ 6,276
</TABLE>
A reconciliation of the differences between the amounts computed by applying
the Australian federal statutory tax rate of 39% to loss before income taxes
and minority interest and the actual income taxes for the year ended May 31,
1992 follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Computed "expected" tax benefit $ (313)
Increase (decrease) resulting from:
Nontaxable gain on disposals of assets (3,162)
Operating losses, no tax benefit recognized 7,574
Capital allowance (261)
Nonallowed depletion and abandonments 1,931
Variance of tax rates 56
All other, net 451
$ 6,276
</TABLE>
Deferred taxes arose primarily due to deferred income for financial statement
purposes and variations in the Company's capitalization policies concerning
exploration expenditures and related depletion for income tax and financial
reporting purposes.
4. RETIREMENT PLANS
The Company contributes to a defined benefit retirement plan administered by
a Board of Trustees, covering substantially all employees. Contributions and
benefits are actuarially determined. A subsidiary of the Company also
contributes to a defined contribution retirement plan, administered by a Board
of Trustees, covering substantially all its employees. Another subsidiary
contributes to a deferred profit sharing plan administered by a Board of
Trustees covering substantially all of its employees. Total plan contributions
were $511,000 in 1992.
<PAGE>
CRUSADER LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. COMMITMENTS AND CONTINGENCIES
The Company leases office facilities, motor vehicles and plant with minimum
average annual rentals of approximately $633,000 under terms of various leases
expiring from 1992 through 1996.
The Company has an interest in the Cooper Basin Gas and Liquids Unit of South
Australia. The owners' participation factors in production, capital
investment and certain operating expenses are periodically reviewed in
relation to each party's interest in the reserves of the unit. In fiscal
1990, the Company recorded adjustments to reflect a downward adjustment of its
interest in the unit, to approximately 6% which was retroactive to January 1,
1987. The 6% interest has been utilized in the financial statements for 1992.
On June 18, 1991, the Supreme Court of South Australia decided that this
January 1, 1987 review and adjustment was invalid. The effect of this
decision is that the January 1, 1987 review and adjustment will be redone and
meanwhile each party will be restored to their pre-January 1, 1987
participation factors. Two further review and adjustments, effective
retroactive to January 1, 1989 and January 1, 1991, have been suspended
pending the outcome of the January 1, 1987 review and adjustment.
As a result of the above, net revenue totaling $23,750,000 has been deferred
for the period January 1, 1987 to May 31, 1992.
The Company is presently undergoing an audit by the Australian Taxation
Office ("ATO") in respect of the 1989 and 1990 fiscal years as part of the
ATO's program to audit all major Australian public companies. Discussions are
continuing between the Company, its advisors and the ATO, particularly in
respect of submissions made by the ATO regarding interest on certain
intercompany offshore loans.
The outcome of the audit is uncertain at this point in time and the Company
is presently unable to estimate the likely amount of any additional or penalty
taxes that may be assessed to the Company. Any such taxes will be vigorously
disputed by the Company. Although the outcome of this matter cannot presently
be determined, the Company does not believe that it would be material to its
financial condition.
6. FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATIONS
Financial instruments that are potentially subject to concentration of credit
risk consist principally of cash equivalents and receivables. Cash equivalents
consist of high credit quality financial instruments. At May 31, 1992, no
receivable from any customer exceeded 5% of shareholders' equity and, except
for two purchasers of the Company's gas production in Australia and
two purchasers of the Company's coal production, no customer accounted for
more than 5% of sales and other operating revenues in 1992. See note 7
regarding concentration of receivables by business segment and geographic area
at May 31, 1992.
<PAGE>
CRUSADER LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. SEGMENT DATA
The Company is engaged principally in oil and gas exploration and production,
coal mining, coal processing and gas processing. Segment data follows for
1992 (thousands of dollars):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
OIL AND COAL COAL GAS
GAS MINING PROCESSING PROCESSING CONSOLIDATED
Sales $ 39,431 $ 34,354 $ 2,042 $ 2,998 $ 78,825
Operating profit (loss) $ 2,186 $ (11,537) $ (3,631) $ (86) $ (13,068)
Gain on disposal of
investment securities 8,698
Interest and other income 9,000
Interest expense (5,433)
Loss before income
taxes and minority interest $ (803)
Receivables $ 5,206 $ 3,178 $ 849 $ --- $ 9,233
Identifiable assets $141,687 $ 33,138 $ 18,045 $ 11,158 $ 204,028
Corporate assets and investments 35,326
Total assets at end of year $ 239,354
Depreciation and depletion $ 12,129 $ 1,448 $ 276 $ 1,366 $ 15,219
Corporate depreciation 388
$ 15,607
Capital expenditures $ 17,344 $ 1,261 $ 16,717 $ 136 $ 35,458
Corporate capital expenditures 1,962
$ 37,420
</TABLE>
<PAGE>
CRUSADER LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Contracts with two unaffiliated customers accounted for approximately
$8,829,000 and $6,484,000 in 1992 of gas sales in Australia. Most of the
Company's coal production is exported to Japan and Europe under short-term
contracts. Two unaffiliated customers, accounted for sales of approximately
$9,214,000 and $8,826,000 in 1992.
Geographical segment information follows for 1992 (thousands of dollars):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SOUTH
UNITED EAST
AUSTRALIA CANADA STATES ASIA EUROPE CONSOLIDATED
Sales $ 46,479 $10,120 $4,266 $15,918 $ 2,042 $ 78,825
Operating profit (loss) (7,551) 1,514 (681) (2,719) (3,631) (13,068)
Identifiable assets 118,929 21,320 25,042 20,692 18,045 204,028
</TABLE>
Other is grouped with Australia in all years.
Subsequent to May 31, 1992, the Company sold its two Indonesian subsidiaries
which conducted its coal operations in South East Asia for $5,160,000 in cash.
The cash proceeds are to be used to improve working capital. The loss
resulting from this sale of $3,135,000 has been reflected in the writedown of
unevaluated coal properties in the year ended May 31, 1992.
Writedown of assets for the year ended May 31, 1992 included $2,353,000
relating to proved coal properties and plant, $4,020,000 relating to
unevaluated coal properties and $3,503,000 relating to other property and
equipment.
<PAGE>
CRUSADER LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. OIL AND GAS DATA
The following tables provide additional information about the Company's oil
and gas exploration and production activities for 1992:
RESULTS OF OPERATIONS
The results of operations considering direct costs only for oil and gas
producing activities follow (thousands of dollars)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
UNITED TOTAL
AUSTRALIA CANADA STATES WORLDWIDE
Revenue $ 28,043 $7,122 $4,266 $ 39,431
Costs:
Production costs 10,463 2,940 991 14,394
Depletion expense 7,911 1,160 3,058 12,129
Income taxes 3,941 2,316 74 6,331
Results of operations $ 5,728 $ 706 $ 143 $ 6,577
</TABLE>
COSTS INCURRED AND CAPITALIZED COSTS
The total costs incurred in oil and gas property acquisition, exploration and
development activities and related capitalized costs follow (thousands of
dollars, except per barrel data):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
UNITED TOTAL
AUSTRALIA CANADA STATES OTHER* WORLDWIDE
Costs incurred:
Property acquisition $ --- $ --- $5,000 $ --- $ 5,000
Exploration 875 189 867 237 2,168
Development 5,730 1,070 1,696 --- 8,496
Interest capitalized 895 105 680 --- 1,680
Depletion per equivalent barrel
of production $ 3.63 $ 2.60 $12.28 $ --- $ 4.22
Cost of properties being depleted
at year end $ 127,196 $12,101 $8,800 $ --- $ 148,097
Cost of properties not being depleted
at year end $ 9,344 $ 1,197 $8,382 $ 861 $ 19,784
Accumulated depletion at year end $ 74,664 $ 5,307 $4,473 $ --- $ 84,444
</TABLE>
* In segment information, "other" is grouped with Australia.
<PAGE>
CRUSADER LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OIL AND GAS RESERVE DATA (UNAUDITED)
The following table presents the Company's estimates of its proved oil and
gas reserves. These estimates were prepared by the Company's independent
petroleum reservoir engineers. The Company emphasizes that reserve estimates
are inherently imprecise and are expected to change as future information
becomes available. Liquid reserves are stated in thousands of barrels and gas
reserves are stated in millions of cubic feet.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AUSTRALIA CANADA UNITED STATES TOTAL WORLDWIDE
LIQUIDS GAS LIQUIDS GAS LIQUIDS GAS LIQUIDS GAS
Balance at May 31, 1991 3,109 89,328 1,762 5,730 407 1,135 5,278 96,193
Revisions 618 7,088 588 (469) (15) (221) 1,191 6,398
Extensions and discoveries --- --- 174 696 36 33 210 729
Production (791) (8,323) (379) (410) (197) (330) (1,367) (9,063)
Balance at May 31, 1992 2,936 88,093 2,145 5,547 231 617 5,312 94,257
Proved developed reserves
at May 31, 1992 2,830 82,627 2,145 5,547 231 617 5,206 88,791
</TABLE>
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS AND CHANGES THEREIN
(UNAUDITED)
The following table (thousands of dollars) presents a standardized measure of
discounted future net cash flows and changes therein relating to proved oil
and gas reserves. Future cash inflows were computed by applying year end
prices of oil and gas relating to the Company's proved reserves to the
estimated year end quantities of these reserves. Future price changes were
considered only to the extent provided by contractual agreements in existence
at year end. Future production and development costs were computed by
estimating the expenditures to be incurred in developing and producing the
proved oil and gas reserves at the end of the year, based on year end costs.
The standardized measure of discounted future cash flows represents the
present value of estimated future net cash flows using a discount rate of 10%
per annum. Actual future cash inflows may vary considerably and the
standardized measure does not necessarily represent the fair value of the
Company's oil and gas reserves.
<PAGE>
CRUSADER LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
UNITED TOTAL
AUSTRALIA CANADA STATES WORLDWIDE
Future cash flows $ 210,532 $40,732 $5,024 $ 256,288
Future production and development costs 71,033 19,544 1,006 91,583
Future net cash inflows before income taxes $ 139,499 $21,188 $4,018 $ 164,705
Future net cash inflows before income taxes
discounted at 10% per annum $ 92,824 $15,217 $3,412 $ 111,453
Future income taxes discounted at 10% per annum 29,548 5,262 --- 34,810
Standardized measure of discounted
future net cash flows $ 63,276 $ 9,955 $3,412 $ 76,643
</TABLE>
Changes in the standardized measure of discounted future cash flows
follow (thousands of dollars):
<TABLE>
<CAPTION>
<S> <C>
Beginning of year $ 81,400
Extensions and discoveries 1,873
Sales, net of production costs (25,037)
Net change in prices and production costs (3,512)
Revisions of quantity estimates 11,481
Accretion of discount 11,789
Changes in production rates and other (3,033)
Net change in income taxes 1,682
End of year $ 76,643
</TABLE>
9. RELATED PARTY DISCLOSURES
A subsidiary of the Company has entered into an agreement with PT Karimtanisa
Utama ("Karimtanisa"), a company in which the wife of a director of the
subsidiary has an interest. Under the agreement the subsidiary will farm into
exploration areas in Indonesia in which Karimtanisa has interests. These
agreements were, in the main, entered into before the director became so
related and all before he became a director. They require the subsidiary to
fund exploration and development (if any) and to pay certain sums to
Karimtanisa in the future at various stages if the subsidiary chooses to
proceed to commercially develop any of these interests. Subsequent to May 31,
1992, the Company sold this subsidiary. In addition, the director has
resigned subsequent to May 31, 1992.
<PAGE>
CRUSADER LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Triton owns 49.9% of Crusader's 12% Convertible Subordinated Unsecured Notes
on which Triton received $957,000 in interest during fiscal 1992.
10. EVENTS (UNAUDITED) SUBSEQUENT TO THE DATE OF THE REPORT OF
INDEPENDENT ACCOUNTANTS
In February 1993, a settlement of the January 1, 1987 Review and Adjustment
dispute (see note 5) was reached in principle between Crusader and Santos
Limited. Under the terms of the settlement, Crusader's interest in an
expanded area of interest is fixed at 4.75%. Previously, Crusader's interests
have been limited to the Cooper Basin Unit and the Nappacoongee Murteree
Block. Under the terms of the settlement agreement, Crusader's interests
would be expanded to include certain additional leases. Also in connection
with this arrangement the total of net revenues that were deferred by Crusader
since January 1, 1987, was remitted to the Unit Operator.
The audit by the Australian Taxation Office (ATO) (see note 5) has been
completed and as a result an additional tax expense of approximately
US$800,300 was recorded in the 1993 fiscal year.
The coal briquetting plant commenced production during the first quarter of
fiscal 1994.
Exhibit 21.1
TRITON ENERGY CORPORATION
as of March 1, 199
<TABLE>
<CAPTION>
<S> <C> <C>
NAME JURISDICTION PERCENT OF
OF ORGANIZATION VOTING SECURITIES
Triton Energy Corporation Texas Public
Antilles Enterprises, N.V. Netherlands Antilles 100%
Inlet Oil & Minerals (U.K.) Limited United Kingdom 100%
Inlet North Sea Corporation Delaware 100%
New Zealand Petroleum Company Limited New Zealand 33.66%
Southland Energy Resources Limited New Zealand 100%
Triton Oil (N.Z.) Limited New Zealand 100%
Triton Air Holdings, Inc. Texas 100%
Jet East, Inc. Texas 100%
North Central Aviation, Inc. Texas 100%
Servion, Inc. Delaware 100%
Aviation Petroleum, Inc. Texas 100%
Triton Development Corporation Delaware 100%
Triton Exploration Services, Inc. Delaware 100%
Exploration & Development Services, Inc. Delaware 100%
Triton International Oil Corporation Delaware 100%
Triton Argentina, Inc. Delaware 100%
Triton Colombia, Inc. Delaware 100%
Triton Resources Colombia, Inc. Colorado 100%
Triton Guatemala S.A. British Virgin Islands 100%
Triton Indonesia, Inc. Delaware 100%
Triton Mexico, Inc. Delaware 100%
Triton Oil Company of Thailand Texas 100%
Triton Oil Company of Thailand (JDA) Limited Cayman Islands 100%
Carigali-Triton Operating Company Malaysia 50%
Triton International Petoleum, Inc. Cayman Islands 100%
Triton Ecuador, Inc. LLC Cayman Islands 100%
Triton Pipeline Colombia, Inc. Cayman Islands 100%
Triton Resources Colombia, Inc. LLC Cayman Islands 100%
Triton Newco, Inc. LLC Cayman Islands 100%
Triton China, Inc. LLC Cayman Islands 100%
Triton Oil & Gas Corp. Delaware 100%
Triton Europe Ltd. United Kingdom 100%
Triton Mediterranean Oil & Gas N.V. Netherlands 100%
Triton France S.A. France 100%
Triton Holdings (UK) Ltd. United Kingdom 100%
Triton Oil (G.B.) Ltd. United Kingdom 100%
Triton Resources (UK) Ltd. United Kingdom 100%
Triton Oil (Holdings) Pty. Limited Australia 100%
Crudader Limited Australia 49.9%
Crusader Inc. Delaware 100%
CAB Resources Inc. Delaware 100%
Ausquacan Energy Limited Canada 100%
Crusader Resources N.L. Australia 100%
Pursuit Exploration Pty. Ltd. Australia 100%
Australian Hydrocarbons Limited Australia 49%
Australian Hydrocarbons Inc. Delaware 100%
Crudader Oil & Minerals Pty. Ltd. Australia 100%
Crudader (Victoria) Pty. Ltd. Australia 100%
Crusader (Carnavon) Pty. Ltd. Australia 100%
Crensham Pty. Ptd. Australia 100%
Crusader (Ireland) Pty. Ltd. Australia 100%
Koala Smokeless Fuels Ltd. Rep. Ireland 100%
Supafuels Ltd. Rep. Ireland 100%
Crusader (JILD) Pty. Ltd. Australia 100%
Crusader (Mawson) Pty. Ltd. Australia 100%
Saracen Mineral Limited Australia 100%
Saracen Minerals (Solomon Islands) Limited New Zealand 100%
Saracen Minerals (N.Z.) Ltd. New Zealand 100%
Mt. Coolon Gold Ltd. Australia 100%
Crusader Investments Pty. Ltd. Australia 100%
Crusader (Philippines) Pty. Ltd. Australia 100%
Crusader (Commercial) Pty. Ltd. Australia 100%
Allied Queensland Coalfields Ltd. Australia 58.35%
AQC (Kogan Creek) Pty. Ltd. Australia 100%
AQC (Wilkie Creek) Pty. Ltd. Australia 100%
Baralaba Coal Pty. Ltd. Australia 100%
Lemon Grove Investments Pty. Ltd. Australia 100%
Aberdare Collieries Pty. Ltd. Australia 100%
New Whitwood Collieries Pty. Ltd. Australia 100%
Riverview Coal Terminal Pty. Ltd. Australia 100%
Tiaro Coal Pty. Ltd. Australia 100%
</TABLE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-8 (Nos. 2-80978,
33-4042, 33-27203, 33-29498, 33-46968 and 33-51691) and Form S-3 (Nos.
33-11920, 33-15793, 33-17614, 33-21984, 33-23058, 33-25634, 33-31319,
33-45847, 33-69230, 33-55347and 33-46292) of Triton Energy Corporation of our
report dated February 14, 1995 appearing on page F-2 of this Form 10-K.
Price Waterhouse LLP
Dallas, Texas
March 14, 1995
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Triton Energy Corporation
We consent to incorporation by reference in the Registration Statements on
Form S-8 (Nos. 2-80978, 33-4042, 33-27203, 33-29498, 33-46968 and 33-51691)
and Form S-3 (Nos. 33-11920, 33-15793, 33-17614, 33-21984, 33-23058, 33-25634,
33-31319, 33-45847, 33-69230, 33-55347 and 33-46292) of Triton Energy
Corporation of our report dated August 14, 1992, relating to the consolidated
statements of operations, shareholders' equity and cash flows of Triton Energy
Corporation and subsidiaries for the year ended May 31, 1992 and related
schedule (before restatement for discontinued wholesale fuel products
operations) which report appears in the December 31, 1994 transition report on
Form 10-K of Triton Energy Corporation.
Dallas, Texas
March 14, 1995
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Triton Energy Corporation
We consent to incorporation by reference in the Registration Statements on
Form S-8 (Nos. 2-80978, 33-4042, 33-27203, 33-29498, 33-46968 and 33-51691)
and Form S-3 (Nos. 33-11920, 33-15793, 33-17614, 33-21984, 33-23058, 33-25634,
33-31319, 33-45847, 33-69230, 33-55347 and 33-46292) of Triton Energy
Corporation of our report dated August 14, 1992 relating to the consolidated
statements of earnings, shareholders' equity and cash flows of Crusader
Limited and subsidiaries for the year ended May 31, 1992 which report appears
in the December 31, 1994 transition report on Form 10-K of Triton Energy
Corporation.
Brisbane, Australia
March 14, 1995
Exhibit 23.4
March 14, 1995
Triton Energy Corporation
6688 North Central Expressway
Suite 1400
Dallas, Texas 75206
Re: Triton Energy Corporation/Annual Report on Form 10-K
Gentlemen:
We hereby consent to (i) the use of information in our report dated
January 30, 1995, entitled "Appraisal Report as of December 31, 1994 on
Certain Properties in Colombia owned by Triton Colombia Incorporated" under
the caption "Properties - Reserves" in Item 2 of the Form 10-K for the
transition period ended December 31, 1994, of Triton Energy Corporation, and
(ii) the references to our firm under such caption.
Very truly yours,
DeGOLYER and MacNAUGHTON
Exhibit 23.5
March 14, 1995
Triton Energy Corporation
6688 North Central Expressway
Suite 1400
Dallas, Texas 75206
Reference: Consent of Independent Petroleum Engineers
Dear Gentlemen:
We hereby consent to the incorporation by reference from Triton Energy
Corporation's (the "Company") Annual Report on Form 10-K for the transition
period ended December 31, 1994 of the estimates of the net proved reserves and
future net cash inflows of the Company prepared by our firm in our evaluation
of Ausquacan Energy Ltd. as of December 31, 1994. We also hereby consent to
the references to our firm as "experts" and the specific references to our
firm in "Business-Reserves" and "Experts."
Very truly yours,
McDANIEL & ASSOCIATES CONSULTANTS LTD.
____________________________
B.H. Emslie, Vice President
Calgary, Alberta, Canada
Dated March 14, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 12/31/94
FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 7-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 22,341
<SECURITIES> 26,657
<RECEIVABLES> 19,385
<ALLOWANCES> (897)
<INVENTORY> 2,505
<CURRENT-ASSETS> 73,877
<PP&E> 892,708
<DEPRECIATION> 493,050
<TOTAL-ASSETS> 619,201
<CURRENT-LIABILITIES> 44,216
<BONDS> 0
<COMMON> 35,577
0
17,976
<OTHER-SE> 183,642
<TOTAL-LIABILITY-AND-EQUITY> 619,201
<SALES> 26,853
<TOTAL-REVENUES> 26,853
<CGS> 17,993
<TOTAL-COSTS> 17,993
<OTHER-EXPENSES> 7,587
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,939
<INCOME-PRETAX> (23,912)
<INCOME-TAX> 3,796
<INCOME-CONTINUING> (27,708)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (27,708)
<EPS-PRIMARY> (0.81)
<EPS-DILUTED> (0.81)
</TABLE>
