-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N+Ig7Dnxyea2RlL/bkCJw4rZGHltr6jLq9YwtHFRTgtMcJ5YdXdWTEy4xuNk6pf0 xjHm2uMFPN/qF7yTaK+6+Q== 0000320321-01-500008.txt : 20010322 0000320321-01-500008.hdr.sgml : 20010322 ACCESSION NUMBER: 0000320321-01-500008 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 22 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010321 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OCEAN ENERGY INC /TX/ CENTRAL INDEX KEY: 0000320321 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 741764876 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-08094 FILM NUMBER: 1573099 BUSINESS ADDRESS: STREET 1: 1001 FANNIN STE 1600 CITY: HOUSTON STATE: TX ZIP: 77002-6714 BUSINESS PHONE: 7132656000 MAIL ADDRESS: STREET 1: 1001 FANNIN, SUITE 1600 CITY: HOUSTON STATE: TX ZIP: 77002-6714 FORMER COMPANY: FORMER CONFORMED NAME: SEAGULL ENERGY CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SEAGULL PIPELINE CORP DATE OF NAME CHANGE: 19830815 10-K405 1 form10k_2000.htm FORM 10-K - 2000 Ocean Energy, Inc. 2000 Form 10-K

Securities And Exchange Commission
Washington, D.C. 20549

Form 10-K

(Mark One)

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

For the fiscal year ended December 31, 2000

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

Commission file number: 1-8094

Ocean Energy, Inc.
(Exact name of registrant as specified in its charter)

               Texas                            74-1764876
(State or other jurisdiction of              (I.R.S. Employer
incorporation or organization)            Identification No.)

1001 Fannin, Suite 1600, Houston, Texas 77002-6714
(Address of principal executive offices) (Zip code)

(713) 265-6000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12 (b) of the Act:

                                                          Name of each exchange on
   Title of each class                 which registered
Common Stock, par value $.10 per share      New York Stock Exchange
      Preferred Stock Purchase Rights            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

As of March 9, 2001, the aggregate market value of the outstanding shares of Common Stock of the Company held by non-affiliates (based on the closing price of these shares on the New York Stock Exchange) was approximately $3,546,420,000.

As of March 9, 2001, 169,016,547 shares of Common Stock, par value $0.10 per share, were outstanding.

                                        Documents Incorporated by Reference
                           Document                                             Part of Form 10-K
                           --------                                             -----------------
                    (1) Annual Report to Shareholders for                         PARTS I and II
                           year ended December 31, 2000
                    (2) Proxy Statement for Annual meeting                           PART III
                  of Shareholders to be held on May 9, 2001

Ocean Energy, Inc.

Index

Part I
Item 1. Business.............................................................. 1
Oil and Gas Operations............................................ 2
U.S. Regulation................................................... 8
Competition....................................................... 11
Environmental Matters............................................. 11
Risk Factors...................................................... 12
Employees......................................................... 16
Executive Officers of the Company................................. 16

Item 2. Properties............................................................ 18
Item 3. Legal Proceedings..................................................... 21
Item 4. Submission of Matters to a Vote of Security Holders................... 22

Part II
Item 5. Market for Registrant's Common Stock and Related Shareholder Matters.. 22
Item 6. Selected Financial Data............................................... 23
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................. 23
Item 7a. Quantitative and Qualitative Disclosures About Market Risk............ 23
Item 8. Financial Statements and Supplementary Data........................... 24
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.............................................. 24

Part III
Item 10. Directors and Executive Officers of the Registrant.................... 24
Item 11. Executive Compensation................................................ 24
Item 12. Security Ownership of Certain Beneficial Owners and Management........ 24
Item 13. Certain Relationships and Related Transactions........................ 24

Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K....... 25
Signatures.......................................................................... 32

(i)

Ocean Energy, Inc.

Part I

Item 1. Business

Ocean Energy, Inc. (the “Company” or “Ocean”) is an independent energy company engaged in the exploration, development, production, and acquisition of crude oil and natural gas. North American operations are focused primarily in the shelf and deepwater areas of the Gulf of Mexico, the Permian Basin, Midcontinent, and Rocky Mountain areas. Internationally, Ocean conducts its oil and gas activities in Equatorial Guinea, Côte d’Ivoire, Angola, Egypt, Tatarstan, Pakistan, and Indonesia.

On March 30, 1999, the Company merged with and into Seagull Energy Corporation (the “Seagull Merger”), and the resulting company was renamed Ocean Energy, Inc. The merger was treated as an acquisition of Seagull by Ocean in a purchase transaction. As such, the financial and operating results and property descriptions presented here, unless expressly noted otherwise, are those of Ocean Energy, Inc. on a stand-alone basis for 1998 and the first quarter of 1999 and of the combined company thereafter.

The Company achieved its best performance ever in 2000. Taking advantage of one of the highest commodity environments for oil and gas in recent years, the Company was able to strengthen its balance sheet and grow reserves. Using cash flows attributable to higher commodity prices and by maintaining a disciplined approach to capital spending, the Company reduced its long-term debt to $1 billion at December 31, 2000, decreasing its debt to total capitalization ratio from 68% at the time of the merger to 47% at the end of 2000 and achieving investment grade status from Standard and Poor’s and Moody’s Investor Services. The Company ended 2000 with a 269% reserve replacement rate and a finding and development cost of $4.28 per barrel of oil equivalent.

The Company remains committed to producing low-cost energy, thereby enhancing shareholder success and value, maintaining its focus on operating efficiency, and continuing to strengthen its capital structure.

Forward-Looking Statements May Prove Inaccurate

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this document, including, without limitation, statements regarding the financial position, business strategy, production and reserve growth and other plans and objectives for the future operations of the Company are forward-looking statements.

Although the Company believes that such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will in fact occur.

Ocean Energy, Inc.

Important factors could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements are subject to risks and uncertainties and include information concerning general economic conditions and possible or assumed future results of operations of the Company, estimates of oil and gas production and reserves, drilling plans, future cash flows, anticipated capital expenditures, the Company’s realization of its deferred tax assets, the level of future expenditures for environmental costs, and management’s strategies, plans and objectives as set forth herein.

Oil and Gas Operations

The Company’s operating activities are focused primarily in three operating areas: (i) certain onshore areas of North America, (ii) the continental shelf and deepwater areas (water depth of over 1,500 feet) of the Gulf of Mexico, and (iii) the international area comprising Equatorial Guinea, Côte d’Ivoire, Egypt, Republic of Tatarstan, Indonesia, Pakistan and Angola.

The Company’s capital investment program during 2001, as recently approved by the Company’s Board of Directors, was increased from the originally approved budget of $700 million to include the Texoil acquisition, other planned activity and higher prices for rig rentals and well services. The spending will be funded from the Company’s cash flow from operations based on anticipated commodity prices and is subject to change if market conditions shift or new opportunities are identified. Of the budget, approximately $325 million to $375 million will be spent in the Gulf of Mexico region, approximately $200 million to $225 million will be spent internationally, and approximately $325 million to $350 million will be spent in the U.S. Onshore region. Approximately 35% to 45% of the budget is allocated to exploratory projects. During the first quarter of 2001 the Company expects to complete its acquisition of Texoil, Inc., an independent oil and gas company with activities in Texas and Louisiana, for a total cash purchase price of approximately $130 million including assumed bank debt of approximately $15 million.

Ocean's principal oil and gas producing areas include the following:

                              Proved Reserves at December 31, 2000
                             --------------------------------------
                              Gas (Bcf)     Oil (MMBbl)      MMBOE
                             -----------   -------------   --------
  Domestic:
     North America Onshore.       844.8          25.1        165.9
     Gulf of Mexico........       377.8          55.6        118.5
  International:
     Equatorial Guinea.....           -          97.1         97.1
     Côte d'Ivoire.........       154.8           4.2         30.0
     Egypt.................          .6          16.0         16.1
     Other International...        52.9          23.6         32.5
                             -----------   -------------    --------
  Total....................     1,430.9         221.6        460.1
                             ===========   =============    ========

For additional information relating to the Company’s oil and gas reserves, see Note 18 to the Consolidated Financial Statements included in the Company’s 2000 Annual Report to Shareholders and as Exhibit 13 attached hereto. As required, Ocean also files estimates of oil

Ocean Energy, Inc.

and gas reserve data with various governmental regulatory authorities and agencies. These estimates were not materially different from the reserve estimates reported in the Consolidated Financial Statements.

Domestic

The Company’s domestic activities reside in two main areas: the Gulf of Mexico and certain onshore areas of North America. The domestic area accounts for 62% of the Company’s reserves and 66% of total production for the year ended December 31, 2000.

Gulf of Mexico – The Company’s Gulf of Mexico properties are located in offshore waters along the coasts of Texas and Louisiana. For 2000, the Gulf of Mexico area had average daily production of approximately 41,000 BOE per day. This area currently accounts for 30% of company-wide production and will be the focus of nearly half of the Company’s planned capital expenditures in 2001.

The major growth area in this area is within Ocean’s deepwater prospects. During 2000, deepwater successes included the Nansen, Boomvang and Magnolia projects. In addition the Company was awarded 10 deepwater blocks near the Nansen and Boomvang discoveries. Development scenarios are being evaluated for these areas and other deepwater projects and Ocean expects to spend approximately $180 million of its planned 2001 capital expenditures on Gulf of Mexico deepwater projects.

North America Onshore – Ocean’s portfolio of onshore properties in North America is focused primarily in the Anadarko Basin of the Texas Panhandle and western Oklahoma, the Arklatex area of east Texas and northwest Louisiana, the Permian Basin, South Texas, and the Bear Paw Field in north central Montana. These properties are located mostly in mature areas where the Company can take advantage of low-cost exploitation to maintain and replace reserves. For 2000, the North America Onshore area had average daily production of approximately 48,000 BOE per day.

International

Internationally, the Company produces in five countries – Equatorial Guinea, Côte d’Ivoire, Egypt, Russia and Indonesia. In addition, the Company has interests in various other countries around the world, including Angola and Pakistan. The following is a description of each of the Company’s major international operating areas.

Equatorial Guinea – In Equatorial Guinea, the Company has three production sharing contracts (“PSCs”) through which the Company holds contract interests ranging from 24% to 38%. For 2000, the Company had production of over 22,000 Bbl per day from the Zafiro Field in Block B where the Jade platform was installed in early 2000 and four development wells were completed. Additional development activity is planned for Block B in 2001. Exploratory efforts in 2001 are concentrated in Block C where Ocean plans to participate in the Oreja Marina well that will test the Isongo formation which the Company believes has significant reserve potential.

Ocean Energy, Inc.

Côte d'Ivoire - In Côte d'Ivoire, the Company operates four PSCs. During 2000, the Company produced approximately 7,800 BOE per day in Côte d'Ivoire.

Egypt – The Company’s Egyptian operations consist of working interests in five concessions that were acquired in the Seagull Merger. Four of these concessions are producing concessions – Qarun, East Zeit, East Beni Suef and West Abu Gharadig. For 2000, Ocean had production in Egypt of over 8,800 BOE per day. Ocean also holds an interest in an exploratory block in the Gulf of Suez.

Other International - - The Company’s other international operations include additional exploratory opportunities and producing properties.

In the Republic of Angola, Ocean holds interests in approximately 1.2 million gross acres in Block 19, in the Lower Congo Basin where several large fields have been discovered, and another approximately 1.2 million gross acres in Block 24 in the neighboring Kwanza Basin – a new deepwater play. In the first half of 2001, the Company expects to drill an exploratory well, Semba, on Block 24.

In Pakistan, the Company is acquiring and evaluating 3-D seismic information over acreage in the Pasni, Gawadar and Makran Central offshore areas.

The Company has a net 45% interest in a joint venture in Tatarstan, a republic in the Russian Federation located west of the Ural Mountains and east of the Volga River. During 2000, the joint venture’s activities included vapor recovery projects and the development and operation of the Onbysk and Demkino fields. During 2000, the Company produced almost 5,000 BOE per day in Russia.

Ocean also owns a 1.7% interest in a joint venture for the exploration, development and production of oil and gas in approximately 1.1 million acres in East Kalimantan, Indonesia. The majority of the joint venture's revenue results from the sale of liquified natural gas.

The Company’s acreage in the international area is generally held pursuant to PSCs with host governments. Generally, under a PSC, the working interest partners pay all of the capital and operating costs and production is split between the government and the working interest partners. Working interest partners recover costs from a percentage of produced and sold petroleum. The remaining oil and gas produced and sold, after cost recovery, is divided between the government and the working interest partners. Included in the government’s share of remaining petroleum are all government royalties and, in certain situations, the applicable income taxes for the working interest partners.

Ocean Energy, Inc.

Production

The following table summarizes the Company’s production, average sales prices and operating costs for the periods indicated:

                                                       Year Ended December 31,
                                             --------------------------------------------
                                                 2000            1999            1998
                                             ------------    ------------    ------------
Domestic :
   Net production:
     Gas (MMcf)..........................        136,722         137,195          99,346
     Oil and NGL (MBbl)..................          9,974          13,532          14,660
   Average sales price: (1)
     Gas (per Mcf).......................     $     3.95      $     2.26     $      2.09
     Oil and NGL (per Bbl)...............     $    25.85      $    17.06     $     12.51
   Average operating costs (per BOE) (2).     $     5.67      $     5.04     $      5.47
Equatorial Guinea:
   Oil production (MBbl).................          8,344           7,323           6,537
   Average oil sales price (per Bbl) (1).     $    26.06      $    17.91     $     11.35
   Average operating costs (per BOE) (2).     $     2.49      $     3.02     $      1.99
Côte d'Ivoire:
   Net production:
     Gas (MMcf)..........................          8,552          11,050           7,824
     Oil and NGL (MBbl)..................          1,409           1,765           1,081
   Average sales price: (1)
     Gas (per Mcf).......................     $     2.28      $     1.68     $      1.64
     Oil and NGL (per Bbl)...............     $    24.15      $    18.24     $     12.56
   Average operating costs (per BOE) (2).     $     3.80      $     3.16     $      3.29
Egypt:
   Net production:
     Gas (MMcf)..........................            217             264               -
     Oil and NGL (MBbl)..................          3,228           2,999               -
   Average sales price: (1)
     Gas (per Mcf).......................     $     5.12      $     3.66     $         -
     Oil and NGL (per Bbl)...............     $    26.61      $    19.32     $         -
   Average operating costs (per BOE) (2).     $     5.08      $     3.51     $         -
Other International:
   Net production:
     Gas (MMcf)..........................          3,312           5,666          10,135
     Oil and NGL  (MBbl).................          1,796           1,366             450
   Average sales price: (1)
     Gas (per Mcf).......................     $     3.78       $     1.81    $      1.37
     Oil and NGL (per Bbl)...............     $    20.14       $    12.32    $     11.78
   Average operating costs (per BOE) (2).     $     9.72       $     3.30    $      3.30

Ocean Energy, Inc.

                                                       Year Ended December 31,
                                             --------------------------------------------
                                                 2000            1999            1998
                                             ------------    ------------    ------------
Total:
   Net production:
     Gas (MMcf)..........................        148,803          154,175        117,305
     Oil and NGL  (MBbl).................         24,751           26,985         22,728
   Average sales price: (1)
     Gas (per Mcf).......................     $     3.85       $     2.21    $      2.00
     Oil and NGL (per Bbl)...............     $    25.51       $    17.38    $     12.16
   Average sales price including hedging: (1)
     Gas (per Mcf).......................     $     3.54       $     2.23    $      2.00
     Oil and NGL (per Bbl)...............     $    22.11       $    15.33    $     13.24
   Average operating costs (per BOE) (2).     $     5.18       $     4.54    $      4.70

⁽¹⁾ Average sales prices are before deduction of production, severance, and other taxes and transportation expenses.

⁽²⁾ Operating costs represent costs incurred to operate and maintain wells and related equipment and facilities. These costs include, among other things, repairs and maintenance, workover expenses, labor, materials, supplies, property taxes, insurance, severance taxes, transportation expenses and general operating expenses.

Oil and Gas Drilling Activities

Ocean’s oil and gas exploratory and developmental drilling activities are as follows for the periods indicated. A well is considered productive for purposes of the following table if it justifies the installation of permanent equipment for the production of oil or gas. The term “gross wells” means the total number of wells in which Ocean owns an interest, while the term “net wells” means the sum of the fractional working interests Ocean owns in gross wells. The information should not be considered indicative of future performance, nor should it be assumed that there is necessarily any correlation between the number of productive wells drilled, quantities of reserves found or economic value.

Ocean Energy, Inc.

                                                 Year Ended December 31,
                      ------------------------------------------------------------------------------
                              2000                         1999                       1998
                      ----------------------     -------------------------    ----------------------
                       Gross         Net          Gross           Net          Gross         Net
                      ---------    ---------     ---------     -----------    ---------    ---------
Domestic:
 Exploratory Drilling:
   Productive Wells...      19            8            21              10           41           25
   Dry Holes..........      25           10            12               6           19           10
 Development Drilling:
   Productive Wells...     165           90           151              93          207           98
   Dry Holes..........      26           21            38              31           17           14
Equatorial Guinea:
 Exploratory Drilling:
   Productive Wells...       -            -             -               -            3            2
   Dry Holes..........       -            -             3               1            5            4
 Development Drilling:
   Productive Wells...       4            1             3               1            5            1
   Dry Holes..........       -            -             -               -            -            -
Côte d'Ivoire:
 Exploratory Drilling:
   Productive Wells...       -            -             -               -            2            2
   Dry Holes..........       -            -             1               -            3            2
 Development Drilling:
   Productive Wells...       1            -             -               -            -            -
   Dry Holes..........       -            -             -               -            -            -
Egypt:
 Exploratory Drilling:
   Productive Wells...       -            -             -               -            -            -
   Dry Holes..........       3            1             1               -            -            -
 Development Drilling:
   Productive Wells...       6            2             5               1            -            -
   Dry Holes..........       -            -             -               -            -            -
Other International:
 Exploratory Drilling:
   Productive Wells...       2            1             1               -           12            8
   Dry Holes..........       3            3             1               1           10            7
 Development Drilling:
   Productive Wells...      33           16            16               8           52           13
   Dry Holes..........       -            -             -               -            2            -
Total:
 Exploratory Drilling:
   Productive Wells...      21            9            22              10           58           37
   Dry Holes..........      31           14            18               8           37           23
 Development Drilling:
   Productive Wells...     209          109           175             103          264          112
   Dry Holes..........      26           21            38              31           19           14

The Company had 31 gross (12 net) exploratory wells and 77 gross (41 net) development wells in progress at December 31, 2000. Wells classified as “in progress” at year-end represent wells where drilling activity is ongoing, wells awaiting installation of permanent equipment and wells awaiting the drilling of additional delineation wells.

Ocean Energy, Inc.

The following table sets forth information regarding the number of productive wells in which the Company held a working interest at December 31, 2000. Productive wells are either producing wells or wells capable of commercial production although currently shut-in. One or more completions in the same borehole are counted as one well.

                                      Gross Wells                                       Net Wells
                     ----------------------------------------------   ----------------------------------------------
                                                        Multiple                                        Multiple
                        Gas        Oil       Total     Completions      Gas       Oil        Total     Completions
                     ----------  ---------  ---------  ------------   --------  ---------  ----------  ------------
Domestic:
   North America
     Onshore.....     2,918       1,601      4,519          118       1,750       164       1,914           69
   Gulf of Mexico       159         275        434           62          66       191         257           43
Equatorial Guinea         -          27         27            -            -        7           7            -
Côte d'Ivoire....         4          13         17            2           2         6           8            1
Egypt............         -          60         60           12            -       25          25            3
Other International       -         246        246            -            -        1           1            -
                     ----------  ---------  ---------  ------------   --------  ---------  ----------  ------------
                      3,081       2,222      5,303          194       1,818       394       2,212          116
                     ==========  =========  =========  ============   ========  =========  ==========  ============

Developed and Undeveloped Oil and Gas Acreage

As of December 31, 2000, the Company owned working interests in the following developed and undeveloped oil and gas acreage (amounts in thousands):

                                 Developed               Undeveloped
                           ----------------------    ----------------------
                             Gross         Net         Gross         Net
                           ---------    ---------    ---------    ---------
Domestic:
   North America Onshore.      967          557        1,887          621
   Gulf of Mexico........      489          221          962          523
International:
   Equatorial Guinea.....       36            8        1,360          440
   Côte d'Ivoire.........       20           10        1,326          800
   Egypt.................      433          115        8,187        3,401
   Other International...       39           20        7,339        4,466
                           ---------    ---------    ---------    ---------
Total                        1,984          931       21,061       10,251
                           =========    =========    =========    =========

Additionally, as of December 31, 2000, the Company owned royalty interests in approximately 185,000 gross (2,000 net) developed acres and approximately 3 million gross (40,000 net) undeveloped acres located primarily in Argentina, Australia and Indonesia.

For additional information relating to oil and gas producing activities, see Note 18 to the Consolidated Financial Statements included in the Company’s 2000 Annual Report to Shareholders and as part of Exhibit 13 attached hereto.

U.S. Regulation

The availability of a ready market for oil and natural gas production depends upon numerous regulatory factors beyond the Company’s control. These factors include regulation of oil and natural gas production, federal and state regulations governing environmental quality and pollution control and state limits on allowable rates of production by a well or proration unit. State and federal regulations generally are intended to prevent waste of oil and natural gas,

Ocean Energy, Inc.

protect rights to produce oil and natural gas between owners in a common reservoir, control the amount of oil and natural gas produced by assigning allowable rates of production and control contamination of the environment.

Regulation of Oil and Natural Gas Exploration and Production. Exploration and production operations of the Company are subject to various types of regulation at the federal, state and local levels. Such regulation includes requiring permits for the drilling of wells, maintaining bonding requirements in order to drill or operate wells, and regulating the location of wells, the method of drilling and casing wells, the surface use and restoration of properties upon which wells are drilling and the plugging and abandonment of wells. The Company’s operations are also subject to various conservation laws and regulations. These include the regulation of the size of drilling and spacing units or proration units and the density of wells which may be drilled and unitization or pooling of oil and gas properties. In this regard, some states allow the forced pooling or integration of tracts to facilitate exploration while other states rely on voluntary pooling of lands and leases. In addition, state conservation laws establish maximum rates of production requirements regarding the ratability of production.

Federal Regulation of Sales and Transportation of Natural Gas. Historically, the transportation and sale of natural gas in U.S. interstate commerce has been regulated pursuant to several laws enacted by Congress and the regulations promulgated under these laws by the Federal Energy Regulatory Commission (“FERC”). The FERC regulates the transportation and sale for resale of natural gas in interstate commerce pursuant to the Natural Gas Act of 1938, or NGA, and the Natural Gas Policy Act of 1978, or NGPA. In the past, the federal government has regulated the prices at which oil and gas could be sold. While “first sales” by producers of natural gas, and all sales of crude oil, condensate and natural gas liquids can currently be made at uncontrolled market prices, Congress could reenact price controls in the future. Deregulation of wellhead sales in the natural gas industry began with the enactment of the NGPA in 1978. In 1989, Congress enacted the Natural Gas Wellhead Decontrol Act. The Decontrol Act removed all NGA and NGPA price and non-price controls affecting wellhead sales of natural gas effective January 1, 1993.

Our sales of natural gas are affected by the availability, terms and cost of transportation. The price and terms for access to pipeline transportation are subject to extensive federal and state regulation. From 1985 to the present, several major regulatory changes have been implemented by Congress and the FERC that affect the economics of natural gas production, transportation and sales.

Commencing in April 1992, the FERC issued Order Nos. 636, 636-A, 636-B, 636-C and 636-D (“Order No. 636”), which require interstate pipelines to provide transportation services separate, or “unbundled,” from the pipelines’ sales of gas. Also, Order No. 636 requires pipelines to provide open access transportation on a nondiscriminatory basis that is equal for all natural gas shippers. Although Order No. 636 does not directly regulate our production activities, the FERC has stated that it intends for Order No. 636 to foster increased competition within all phases of the natural gas industry. It is unclear what impact, if any, increased competition within the natural gas industry under Order No. 636 will have on our activities. The

Ocean Energy, Inc.

courts have largely affirmed the significant features of Order No. 636 and numerous related orders pertaining to the individual pipelines, although certain appeals remain pending and the FERC continues to review and modify their open access regulations. These initiatives may affect the intrastate transportation of gas under certain circumstances.

In particular, the FERC is conducting a broad review of their transportation regulations, including how they operate in conjunction with state proposals for retail gas market restructuring, whether to eliminate cost-of-service rates for short-term transportation, whether to allocate all short-term capacity on the basis of competitive auctions, and whether changes to long-term transportation policies may also be appropriate to avoid a market bias toward short-term contracts. In February 2000, the FERC issued Order No. 637 amending certain regulations governing interstate natural gas pipeline companies in response to the development of more competitive markets for natural gas and natural gas transportation. The goal of Order No. 637 is to “fine tune” the open access regulations implemented by Order No. 636 to accommodate subsequent changes in the market. Key provisions of Order No. 637 include: (1) waiving the price ceiling for short-term capacity release transactions until September 30, 2002, subject to review and possible extension of the program at that time; (2) permitting value-oriented peak/off peak rates to better allocate revenue responsibility between short-term and long-term markets; (3) permitting term-differentiated rates, in order to better allocate risks between shippers and the pipeline; (4) revising the regulations related to scheduling procedures, capacity, segmentation, imbalance management, and penalties; (5) retaining the right of first refusal (“ROFR”) and the 5 year matching cap for long-term shippers at maximum rates, but significantly narrowing the ROFR for customers that the FERC does not deem to be captive; and (6) adopting new web site reporting requirements that include daily transactional data on all firm and interruptible contracts and daily reporting of scheduled quantities at points or segments. The new reporting requirements became effective September 1, 2000. We cannot predict what action the FERC will take on these matters in the future, nor can we accurately predict whether the FERC’s actions will, over the long term, achieve the goal of increasing competition in markets in which our natural gas is sold. We do not believe that we will be affected by any action taken materially differently than other natural gas producers, gatherers and marketers with which we compete.

Offshore Leasing. U.S. offshore operations the Company conducts are on federal oil and gas leases. Ocean must comply with regulatory restrictions from numerous agencies, including the U.S. Minerals Management Service (“MMS”), U.S. Bureau of Land Management, U.S. Coast Guard and U.S. Environmental Protection Agency. For offshore operations, the Company must obtain regulatory approval for exploration, development and production plans prior to the commencement of such operations. These agencies have stringent engineering and construction specifications, safety-related regulations concerning the design and operating procedures for offshore production platforms and pipelines, regulations to prohibit the flaring of liquid hydrocarbons and oil without prior authorization, regulations governing the plugging and abandonment of wells located offshore and the removal of all production facilities and other rules and regulations governing many phases of offshore operations. To cover the various obligations of lessees, governmental agencies generally require substantial bonds or other acceptable assurances that such obligations will be met.

Ocean Energy, Inc.

The restructuring of oil and gas markets has resulted in a shifting of markets downstream from the wells. Deregulation has altered the marketplace such that lessors, including the MMS, are challenging the methods of valuation of production for royalty purposes. In addition, the MMS is conducting an inquiry into certain contract settlement agreements from which producers on MMS leases have received settlement proceeds that are royalty bearing and the extent to which producers have paid the appropriate royalties on those proceeds.

The MMS recently issued a final rule that amended its regulations governing the valuation of crude oil produced from federal leases. This new rule, which became effective June 1, 2000, provides that the MMS will collect royalties based on the market value of oil produced from federal leases. The lawfulness of the new rule has been challenged in federal court. We cannot predict whether this new rule will be upheld in federal court, nor can we predict whether the MMS will take further action on this matter. However, we do not believe that this new rule will affect us any differently than other producers and marketers of crude oil.

Competition

The Company’s competitors in oil and gas exploration, development and production include major oil companies, as well as numerous independent oil and gas companies, individuals and drilling partnerships. Some of these competitors have financial and personnel resources substantially in excess of those available to the Company and, therefore, the Company may be placed at a competitive disadvantage. The Company’s success in discovering reserves will depend on its ability to select suitable prospects for future exploration in today’s competitive environment. For further discussion of the Company’s customers and markets see Note 2 to the Consolidated Financial Statements included in the Company’s 2000 Annual Report to Shareholders and as part of Exhibit 13 attached hereto.

During 2000 and 1999, the Company had one customer who accounted for 44% and 11% of total revenues, respectively. For the years ended December 31, 2000, 1999 and 1998, the Company had a second customer who accounted for 20%, 18% and 15% of total revenues, respectively. In addition, the Company had a third customer who accounted for 16% of total revenues in 1999 and another customer who accounted for 12% of total revenues in 1998. Because a ready market exists for the Company’s oil and gas production the Company does not believe the loss of any individual customer would have a material adverse effect on its financial position or results of operations.

Environmental Matters

Ocean’s operations are subject to federal, foreign, state and local laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. Numerous governmental departments issue rules and regulations to implement and enforce such laws which are often difficult and costly to comply with and which carry substantial

Ocean Energy, Inc.

penalties for failure to comply. These laws and regulations may require the acquisition of a permit before drilling or production commences, restrict the types, quantities and concentration of various substances that can be released into the environment in connection with drilling and production activities, limit or prohibit drilling activities on certain lands lying within wilderness, wetlands and other protected areas, restrict the rate of oil and gas production and impose substantial liabilities for pollution resulting from the Company’s operations. State laws often require some form of remedial action to prevent pollution from former operations, such as pit closure and plugging abandoned wells. In addition, these laws and regulations may impose substantial liabilities and penalties for the Company’s failure to comply with them or for any contamination resulting from the Company’s operations.

The Company has established policies and procedures for continuing compliance with environmental laws and regulations; however the Company does not believe costs relating to these laws and regulations have had a material adverse effect on the Company’s operations or financial condition in the past. As these laws and regulations are becoming more stringent and complex, there is no assurance that changes in or additions to laws or regulations regarding the protection of the environment will not have such an impact in the future. The requirements imposed by these laws and regulations are frequently changed and subject to new interpretations. It is likely that the costs of compliance with environmental laws and regulations could increase the cost of operating drilling equipment or significantly limit drilling and operation or production activities.

Risk Factors

In addition to the other information in this document, investors in our common stock should consider carefully the following risks.

Dependence On Oil and Gas Prices. Ocean’s success will depend on the market prices of oil and gas. These market prices tend to fluctuate significantly in response to factors beyond the Company’s control. Oil and gas prices have reached multi-year highs in some markets in recent months, but we cannot assure you that these price levels will continue. Reductions in oil and gas prices not only reduce revenues and profits, but could also reduce the quantities of reserves that are commercially recoverable and could result in charges to earnings for impairment of the value of these assets.

Significant Capital Requirements. Ocean must make a substantial amount of capital expenditures for the acquisition, exploration and development of oil and gas reserves. Historically, we have paid for these expenditures with cash from operating activities, proceeds from debt and equity financings and asset sales. Ocean’s revenues or cash flows could be reduced because of lower oil and gas prices or for some other reason. If Ocean’s revenues or cash flows decrease, we may not have the funds available to replace our reserves or to maintain production at current levels. If this occurs, our production will decline over time. Other sources of financing may not be available if Ocean’s cash flows from operations are not sufficient to fund its capital expenditure requirements. Where Ocean is not the majority owner or operator of an oil and gas project, it may have no control over the timing or amount of capital expenditures

Ocean Energy, Inc.

associated with the particular project. If Ocean cannot fund its capital expenditures, its interests in some projects may be reduced or forfeited.

Our Oil and Gas Reserve Information Is Estimated. The proved oil and gas reserve information included in this document represents only estimates. These estimates are based primarily on reports prepared by internal reserve engineers. The estimates were calculated using oil and gas prices as of December 31, 2000, which could change. Petroleum engineering is a subjective process of estimating underground accumulations of oil and gas that cannot be measured in an exact manner. Estimates of economically recoverable oil and gas reserves and of future net cash flows necessarily depend upon a number of variable factors and assumptions, including the following:

historical production from the area compared with production from other producing areas;
the assumed effects of regulations by governmental agencies;
assumptions concerning future oil and gas prices; and
assumptions concerning future operating costs, severance and excise taxes, development costs and workover and remedial costs.

Because all reserve estimates are to some degree subjective, each of the following items may differ materially from those assumed in estimating reserves:

the quantities of oil and gas that are ultimately recovered;
the production and operating costs incurred;
the amount and timing of future development expenditures; and
future oil and gas sales prices.

Furthermore, different reserve engineers may make different estimates of reserves and cash flows based on the same available data. Ocean’s actual production, revenues and expenditures with respect to reserves will likely be different from estimates and the differences may be material. The discounted future net cash flows included in this document should not be considered as the current market value of the estimated oil and gas reserves attributable to Ocean’s properties. As required by the SEC, the estimated discounted future net cash flows from proved reserves are generally based on prices and costs as of the date of the estimate, while actual future prices and costs may be materially higher or lower. Actual future net cash flows also will be affected by factors such as:

the amount and timing of actual production;
supply and demand for oil and gas;
increases or decreases in consumption; and
changes in governmental regulations or taxation.

Ocean Energy, Inc.

In addition, the 10% discount factor, which is required by the SEC to be used to calculate discounted future net cash flows for reporting purposes, is not necessarily the most appropriate discount factor based on interest rates in effect from time to time and risks associated with the Company or the oil and gas industry in general.

Ocean Operates in Foreign Countries and Will Be Subject to Political, Economic and Other Uncertainties. Ocean conducts significant operations in foreign countries. Ocean may also operate in other countries in the future. Operations in foreign countries, particularly in the oil and gas business, are subject to political, economic and other uncertainties, including:

the risk of war, revolution, border disputes, expropriation, renegotiation or modification of existing contracts, import, export and transportation regulations and tariffs;
taxation policies, including royalty and tax increases and retroactive tax claims;
exchange controls, currency fluctuations and other uncertainties arising out of foreign government sovereignty over Ocean's international operations;
laws and policies of the United States affecting foreign trade, taxation and investment; and
the possibility of having to be subject to the exclusive jurisdiction of foreign courts in connection with legal disputes and the possible inability to subject foreign persons to the jurisdiction of courts in the United States.

Foreign countries have occasionally asserted rights to land, including oil and gas properties, through border disputes. If a country claims superior rights to oil and gas leases or concessions granted to Ocean by another country, Ocean’s interests could be lost or decreased in value. Various regions of the world have a history of political and economic instability. This instability could result in new governments or the adoption of new policies that might assume a substantially more hostile attitude toward foreign investment. In an extreme case, such a change could result in termination of contract rights and expropriation of foreign-owned assets. This could adversely affect Ocean’s interests. The Company seeks to manage these risks by, among other things, concentrating its international exploration efforts in areas where the Company believes that the existing government is favorably disposed towards United States exploration and production companies.

Oil and Gas Operations Involve Substantial Costs and Are Subject to Various Economic Risks. The oil and gas operations of Ocean are subject to the economic risks typically associated with exploration, development and production activities, including the necessity of significant expenditures to locate and acquire producing properties and to drill exploratory wells. In conducting exploration and development activities, the presence of unanticipated pressure or irregularities in formations, miscalculations or accidents may cause Ocean’s exploration, development and production activities to be unsuccessful. This could result in a total loss of Ocean’s investment. In addition, the cost and timing of drilling, completing and operating wells is often uncertain.

Ocean Energy, Inc.

Drilling Oil and Gas Wells Could Involve Blowouts, Hurricanes, Environmental Hazards and Other Operating Risks. The nature of the oil and gas business involves certain operating hazards such as well blowouts, cratering, explosions, uncontrollable flows of oil, gas or well fluids, fires, formations with abnormal pressures, pollution, releases of toxic gas and other environmental hazards and risks. Any of these operating hazards could result in substantial losses to Ocean. In addition, Ocean may be liable for environmental damages caused by previous owners of property purchased by Ocean or its predecessors. As a result, substantial liabilities to third parties or governmental entities may be incurred. The payment of these amounts could reduce or eliminate the funds available for exploration, development or acquisitions. These reductions in funds could result in a loss of Ocean’s properties. Additionally, some of Ocean’s oil and gas operations are located in areas that are subject to tropical weather disturbances. Some of these disturbances can be severe enough to cause substantial damage to facilities and possibly interrupt production. In accordance with customary industry practices, Ocean maintains insurance against some, but not all, of such risks and losses. The occurrence of an event that is not fully covered by insurance could have a material adverse effect on the financial position and results of operations of Ocean.

Competition Within the Oil and Gas Industry is Intense. The exploration and production business is highly competitive. Many of Ocean’s competitors have substantially larger financial resources, staffs and facilities than Ocean. These competitors include other independent oil and gas producers such as Anadarko Petroleum Corporation, Apache Corporation, Burlington Resources Inc., Devon Energy Corporation, EOG Resources, Inc., Kerr-McGee Corporation, Noble Affiliates, Inc., Pioneer Natural Resources Company, and Unocal Corporation as well as major oil and gas companies such as Exxon Mobil Corporation, Shell Oil Company and BP Amoco Corporation.

Government Agencies Can Increase Costs and Can Terminate or Suspend Operations. Ocean’s business is subject to foreign, federal, state and local laws and regulations relating to the exploration for, and the development, production and transportation of, oil and gas, as well as environmental and safety matters. Many of these laws and regulations have become stricter in recent years. These laws and regulations often impose greater liability on a larger number of potentially responsible parties. Under some circumstances, the U.S. Minerals Management Service may require the operations of Ocean on federal leases to be suspended or terminated. These circumstances include Ocean’s failure to pay royalties, Ocean’s failure to comply with safety and environmental regulations and the MMS’ reaction to political pressure to limit offshore drilling in environmentally sensitive areas. This could have a material adverse effect on Ocean’s financial condition and operations. The requirements imposed by these laws and regulations are frequently changed and subject to new interpretations. It is likely that the costs of compliance could increase the cost of operating offshore drilling equipment or significantly limit drilling activity.

Ocean Energy, Inc.

Employees

As of February 28, 2001, the Company had 1,051 employees. In addition to the services of its full time employees, the Company contracts, as needed, the services of consulting geologists, engineers, regulatory consultants, contract pumpers and certain other temporary employees. Except for local national employees in Côte d’Ivoire, none of the Company’s employees are represented by a labor union. The Company considers its relations with its employees to be satisfactory.

Executive Officers of the Company

The executive officers of the Company, each of whom has been elected to serve until his successor is elected and qualified, are as follows:

Name Age Present Position and Prior Business Experience
- ---- --- ----------------------------------------------

James T. Hackett*.............. 47 President and Chief Executive Officer since March 1999 and Chairman of
the Board since January 2000; President and Chief Executive Officer of
Seagull from September 1998 and Chairman of the Board of Seagull from
January 1999 to March 1999; Group President of Duke Energy's unregulated
operations and Executive Vice President of Panenergy from January 1996
to September 1998.

William L. Transier*........... 46 Executive Vice President and Chief Financial Officer since March 1999;
Executive Vice President and Chief Financial Officer of Seagull from
September 1998 to March 1999; Senior Vice President and Chief Financial
Officer of Seagull from May 1996 to September 1998; For the previous 20
years, he held a variety of positions at KPMG LLP including partner from
July 1986 until April 1996.

Robert K . Reeves*............. 43 Executive Vice President, General Counsel and Secretary since March
1999; Executive Vice President, General Counsel and Secretary of Old
Ocean from June 1997 to March 1999; Senior Vice President, General
Counsel and Secretary of Old Ocean from May 1994 to June 1997.

John D. Schiller, Jr*.......... 41 Executive Vice President, Operations since March 2000; Senior Vice
President, North America Onshore and International Operations from March
1999 to March 2000; Senior Vice President, Operations of Seagull from
September 1998 to March 1999; Production Manager - Gulf Coast Division
of Burlington Resources from October 1997 to August 1998; Engineering
Manager - Offshore Division of Burlington Resources from April 1994 to
September 1997.

William S. Flores, Jr......... 44 Senior Vice President, Drilling since March 1999; Vice President,
Drilling of Old Ocean from March 1998 to March 1999; Vice President,
Operations of Old Ocean from August 1993 to March 1998.

Ocean Energy, Inc.

Name Age Present Position and Prior Business Experience
- ---- --- ----------------------------------------------
Scott A. Griffiths............ 47 Senior Vice President of International Exploration since March 1999;
Senior Vice President Domestic Exploration of Seagull from September
1998 to March 1999; Vice President Domestic Exploration of Seagull from
May 1997 to September 1998; Vice President of Domestic Exploration of
Seagull from October 1996 to May 1997; Vice President of Exploration of
Global Natural Resources from 1992 to October 1996.

Stephen A. Thorington*......... 45 Senior Vice President, Finance, Treasury and Corporate Development since
March 1999; Vice President, Finance and Treasurer of Seagull from May
1996 to March 1999; Managing Director of Chase Securities Inc. from
April 1994 to May 1996.

Bruce Busmire ................ 43 Vice President, Investor Relations since February 2000; Controller of
Altura Energy Ltd. from March 1997 to January 2000; For the previous 16
years, Mr. Busmire held a variety of positions in finance, accounting
and investor relations at Amoco Corporation.

Mario M. Coll, III............ 39 Vice President, Operational Planning and Chief Information Officer since
March 2001; Vice President, Operational Planning from March 1999 to
March 2001; Vice President, Planning - Corporate and International of
Old Ocean from April 1998 to March 1999; Business Planning Coordinator
of Old Ocean from September 1996 to April 1998; From 1987 to September
1996, Mr. Coll held a variety of positions in engineering and business
development at Mobil Exploration and Producing U.S., Inc. and Mobil New
Business Development.

Peggy T. d'Hemecourt.......... 49 Vice President, Human Resources since March 1999; Director, Human
Resources of Old Ocean from March 1998 to February 1999; Vice President,
Human Resources of UMC Petroleum Corporation from April 1997 to February
1998; Director, Human Resources of United Meridian Corporation ("UMC")
from January 1996 to March 1997.

Philip J. Iracane............. 46 Vice President, Marketing since December 2000; Vice President, Sales and
Services, Columbia Gas of Virginia from December 1998 to December 2000.
For the previous 11 years, Mr. Iracane was Sr. Vice President,
Marketing-East Coast of Coastal Gas Marketing.

John J. Patton................ 60 Vice President and Associate General Counsel, since September 1999; Vice
President and Assistant General Counsel - International of Old Ocean
from March 1998 to March 1999; Senior Vice President and General Counsel
of UMC from April 1995 to March 1998.

Andrew J. Sheu................ 38 Vice President, Tax since March 1999; Assistant Vice President, Tax of
Seagull from January 1998 to March 1999; Director, Tax of Torch Energy
Advisors, Inc. from December 1995 to January 1998.

Winston M. Talbert............ 38 Assistant Treasurer since October 1999; Assistant Treasurer of
PennzEnergy Company from November 1998 to October 1999; Manager,
International Finance of Pennzoil Company from December 1996 to November
1998; Manager, Corporate Development & Finance of Brown & Root from
February 1996 to December 1996.

Ocean Energy, Inc.

Name Age Present Position and Prior Business Experience
- ---- --- ----------------------------------------------

Robert L. Thompson*............ 54 Vice President and Controller of the Company since January 2001; Senior
Consultant with Cambridge Energy Research Associates from January 2000
to January 2001; Member of merger transition team of Kerr McGee Corp.
from February 1999 to December 1999;Vice President, Planning and
Controller of Oryx Energy Company ("Oryx") from September 1997 to
February 1999; Comptroller and Corporate Planning Director of Oryx from
January 1995 to September 1997.

Janice Aston White............ 48 Vice President, Corporate Communications since December 2000; Director,
Corporate Communications of Ocean from November 1999 to November 2000;
Owner and President of Acclaim Communications from January 1997 to
November 1999; Director of Corporate Communications of Tenneco Energy
from February 1990 to December 1996.

Frank D. Willoughby........... 35 Vice President, Financial Planning since March 1999; Prior to the
Seagull Merger, Mr. Willoughby held various financial positions with Old
Ocean, including Treasurer and Controller.

Carl E. Volke................. 57 Vice President, Administration since March 1999; Vice President,
Administration of Seagull from November 1996 to March 1999; Director,
Administration of Seagull from November 1986 to November 1996.

* Denotes persons deemed “officers” for purposes of Section 16 of the Securities Exchange Act of 1934. Other persons listed are not deemed “officers” for that purpose.

Defined Terms

Natural gas is stated herein in billion cubic feet (“Bcf”), million cubic feet (“MMcf”) or thousand cubic feet (“Mcf”). Oil, condensate and natural gas liquids (“NGL”) are stated in barrels (“Bbl”) or thousand barrels (“MBbl”). Oil, condensate and NGL are converted to gas at a ratio of one barrel of liquids per six Mcf of gas, based on relative energy content. MMBOE, MBOE and BOE represent one million barrels, one thousand barrels and one barrel of oil equivalent, respectively, with six Mcf of gas converted to one barrel of liquid. “Net” acres, production or wells refers to the total acres, production or wells in which the Company has a working interest, multiplied by the percentage working interest owned by the Company.

Item 2. Properties

The following information presents production and wells drilled information for the registrant – formerly Seagull Energy Corporation – in compliance with the requirements of Item 2. As such this information represents historical Seagull on a stand-alone basis for the first quarter of 1999 and of the combined company thereafter, compared to Seagull’s results for 1998 on a stand-alone basis. The remainder of the information required by Item 2 is incorporated herein by reference to Item 1 of this Annual Report on Form 10-K.

Ocean Energy, Inc.

Production - Historical Information for Seagull Energy Corporation for 1999 and 1998

The following table summarizes the registrant’s production, average sales prices and operating costs for the periods indicated:

                                                                    Year Ended December 31,
                                                             ---------------------------------------
                                                                   1999                  1998
                                                             -----------------     -----------------
Domestic:
   Net production:
     Gas (MMcf)........................................            137,896               104,023
     Oil and NGL (MBbl)................................             10,318                 1,834
   Average sales price: (1)
     Gas (per Mcf).....................................         $     2.24           $      2.05
     Oil and NGL (per Bbl).............................         $    19.42           $     11.41
   Average operating costs (per BOE) (2)...............         $     4.87           $      3.67
Equatorial Guinea:
   Oil production (MBbl)...............................              5,577                     -
   Average oil sales price (per Bbl) (1)...............         $    19.99           $         -
   Average operating costs (per BOE) (2)...............         $     2.79           $         -
Côte d'Ivoire:
   Net production:
     Gas (MMcf)........................................              9,814                 3,106
     Oil and NGL (MBbl)................................              1,449                   360
   Average sales price: (1)
     Gas (per Mcf).....................................         $     1.64           $      1.59
     Oil and NGL (per Bbl).............................         $    20.10           $     10.51
   Average operating costs (per BOE) (2)...............         $     3.39           $      3.11
Egypt:
   Net production:
     Gas (MMcf)........................................                300                   301
     Oil and NGL (MBbl)................................              3,911                 4,002
   Average sales price: (1)
     Gas (per Mcf).....................................         $     3.63           $      1.42
     Oil and NGL (per Bbl) ............................         $    17.36           $     11.92
   Average operating costs (per BOE) (2)...............         $     3.70           $      4.31
Other International:
   Net production:
     Gas (MMcf)........................................              3,143                 2,867
     Oil and NGL  (MBbl)...............................              1,637                 1,568
   Average sales price: (1)
     Gas (per Mcf).....................................         $     2.18           $      2.31
     Oil and NGL (per Bbl).............................         $    11.10           $      7.93
   Average operating costs (per BOE ) (2)..............         $     5.02           $      6.76

Ocean Energy, Inc.

                                                                    Year Ended December 31,
                                                             ---------------------------------------
                                                                   1999                  1998
                                                             -----------------     -----------------
Total:
   Net production:
     Gas (MMcf)........................................            151,153               110,297
     Oil and NGL  (MBbl)...............................             22,892                 7,764
   Average sales price: (1)
     Gas (per Mcf).....................................         $     2.20           $      2.05
     Oil and NGL (per Bbl).............................         $    18.66           $     10.93
   Average sales price including hedging: (1)
     Gas (per Mcf).....................................         $     2.23           $      2.04
     Oil and NGL (per Bbl).............................         $    16.24           $     10.93
   Average operating costs (per BOE) (2)                        $     4.44           $      3.99

⁽¹⁾ Average sales prices are before deduction of production, severance, and other taxes and transportation expenses.

Ocean Energy, Inc.

Oil and Gas Drilling Activities - Historical Information for Seagull Energy Corporation for 1999 and 1998

The registrant's oil and gas exploratory and developmental drilling activities are as follows for the periods indicated.

                                                             Year ended December 31,
                                           -------------------------------------------------------------
                                                       1999                            1998
                                           -----------------------------    ----------------------------
                                              Gross             Net           Gross             Net
                                           -------------    ------------    -----------     ------------
Domestic:
 Exploratory Drilling:
   Productive Wells...................               10             5.6              7              1.5
   Dry Holes..........................                8             3.6             12              5.0
 Development Drilling:
   Productive Wells...................              137            88.5            138             60.9
   Dry Holes..........................               38            31.4             11              7.0
Equatorial Guinea:
 Exploratory Drilling:
   Dry Holes..........................                3             0.7              -                -
 Development Drilling:
   Productive Wells...................                1             0.2              -                -
Côte d'Ivoire:
 Exploratory Drilling:
   Productive Wells...................                -               -              1              0.1
   Dry Holes..........................                1             0.4              1              0.2
Egypt :
 Exploratory Drilling:
   Productive Wells...................                -               -              4              1.3
   Dry Holes..........................                1             0.3             13              5.1
 Development Drilling:
   Productive Wells...................                5             1.5              7              2.8
   Dry Holes..........................                -               -              3              1.3
Other International:
 Development Drilling:
    Productive Wells..................                4             2.0             10              5.0
    Dry Holes.........................                -               -              1              0.5
Total:
 Exploratory Drilling:
   Productive Wells...................               10             5.6             12              2.9
   Dry Holes..........................               13             5.0             26             10.3
 Development Drilling:
   Productive Wells...................              147            92.2            155             68.7
   Dry Holes..........................               38            31.4             15              8.8

Item 3. Legal Proceedings

The Company is a named defendant in lawsuits and is a party in governmental proceedings from time to time arising in the ordinary course of business. While the outcome of such lawsuits or other proceedings against the Company cannot be predicted with certainty, management does not expect these matters to have a material adverse effect on the financial position or results of operations of the Company.

Ocean Energy, Inc.

Item 4. Submission of Matters to a Vote of Security Holders

None during the fourth quarter of 2000.

Part II

Item 5. Market for Registrant’s Common Stock and Related Shareholder Matters

A. The Company’s Common Stock (the “Common Stock”) is traded on the New York Stock Exchange under the ticker symbol “OEI.” The high and low sales prices on the New York Stock Exchange Composite Tape for each quarterly period during the last two fiscal years for the registrant, formerly Seagull Energy Corporation, were as follows:

                                                2000                                          1999
                               ---------------------------------------       ---------------------------------------
                                     High                  Low                     High                  Low
                               -----------------     -----------------       -----------------     -----------------
First Quarter.............          $14.38                 $7.00                  $ 7.63                 $4.31
Second Quarter............           16.50                 11.75                   10.94                  6.38
Third Quarter.............           18.13                 10.50                   11.81                  9.13
Fourth Quarter............           18.13                 12.59                   10.69                  6.31

B. As of March 9, 2001, there were approximately 2,884 holders of record of Common Stock.

C. On December 18, 2000 the Company’s Board of Directors declared a dividend of four cents per share on the Company’s outstanding common stock, payable on January 19, 2001, to stockholders of record at the close of business on January 5, 2001. The amount of future dividends will be determined on a quarterly basis, and will depend on earnings, financial condition, capital requirements and other factors. The Company did not declare any cash dividends on its Common Stock in 1999 or 1998. The Company’s revolving credit agreement and outstanding indentures restrict the Company’s declaration or payment of dividends on and repurchases of Common Stock. Under the most restrictive of these tests, as of December 31, 2000, approximately $268 million was available for payment of dividends or repurchase of Common Stock. For a description of such restrictions, reference is made to Note 8 to the Consolidated Financial Statements included in the Company’s 2000 Annual Report to Shareholders and as part of Exhibit 13 attached hereto. In addition, the terms of the Company’s Series C Convertible Preferred Stock and certain debt securities limit the Company’s ability to pay cash dividends.

Ocean Energy, Inc.

Item 6. Selected Financial Data

Selected Financial Data ⁽¹⁾
(Amounts in Thousands Except Per Share Data)

                                                                 Year Ended December 31,
                                     ---------------------------------------------------------------------------------
                                         2000             1999            1998             1997             1996
                                     -------------    -------------   --------------   --------------   --------------
Revenues (2)......................    $ 1,073,554      $   757,565     $   535,871      $   562,423      $  406,635
Net income (loss) from continuing
  operations (3)..................        213,203          (21,552)       (406,879)          62,220          55,000
Earnings (loss) from continuing
  operations per share (3):
   Basic..........................          1.26            (0.16)          (4.04)             0.67            0.65
   Diluted........................          1.22            (0.16)          (4.04)             0.64            0.62
Cash dividends declared on common
  stock (per share)...............          0.04                -               -                 -               -
Net cash provided by operating
  activities before changes in
  operating assets and liabilities        694,310          336,148         219,075          332,115         227,183
Net cash provided by operating
  activities......................        585,706          333,751         229,924          364,202         207,249
Total assets......................      2,890,400        2,783,143       2,006,960        1,642,995       1,121,241
Long-term debt....................      1,032,564        1,333,410       1,371,890          672,298         440,974
Shareholders' equity..............      1,152,688          947,695         376,943          725,337         493,072
Capital expenditures..............        577,518          369,026         961,979          845,376         445,783
Acquisitions, net of cash acquired          5,598          991,409               -                -               -
Standardized measure of
  discounted future net cash
  flows..........................       5,846,993        2,415,418         903,823        1,220,407       1,326,514

⁽¹⁾ Includes the effect of the Seagull Merger since March 30, 1999.

⁽²⁾ Revenues have been restated to reflect transportation expenses as operating expenses instead of as a reduction from revenues as previously recorded. The effect was an increase in revenues of $24 million, $22 million, $14 million, $13 million, and $12 million in 2000, 1999, 1998, 1997, and 1996, respectively.

⁽³⁾ Includes after-tax impairments of $13 million, $43 million and $335 million in 2000, 1999 and 1998, respectively, and after-tax merger and integration costs of $2 million, $31 million and $33 million in 2000, 1999 and 1998, respectively.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Incorporated herein by reference to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s 2000 Annual Report to Shareholders and as part of Exhibit 13 attached hereto.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

Incorporated herein by reference to the Market Risk Disclosures included in the Company’s 2000 Annual Report to Shareholders and as part of Exhibit 13 attached hereto.

Ocean Energy, Inc.

Item 8. Financial Statements and Supplementary Data

Incorporated herein by reference to the Consolidated Financial Statements included in the Company’s 2000 Annual Report to Shareholders and as part of Exhibit 13 attached hereto.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Part III

Item 10. Directors and Executive Officers of the Registrant

Incorporated herein by reference to “Election of Directors” included in the Proxy Statement for the Company’s Annual Meeting of Shareholders to be held on May 9, 2001 (the “Proxy Statement”). See also “Executive Officers of the Company” included in Part I of this Annual Report on Form 10-K, which is incorporated by reference herein.

Item 11. Executive Compensation

Incorporated herein by reference to “Executive Compensation--Summary Compensation Table,” “--Compensation Arrangements,” “--Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Values,” “--Option/SAR Grants in Last Fiscal Year,” and “--Executive Supplemental Retirement Plan” and “Election of Directors--Compensation of Directors” included in the Proxy Statement. Notwithstanding any provision in this Annual Report on Form 10-K to the contrary, under no circumstances are the “Report of the Organization and Compensation Committee on Executive Compensation” or the information under the heading “Shareholder Return Performance Presentation” incorporated herein for any purpose.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Incorporated herein by reference to "Principal Shareholders" and "Election of Directors--Security Ownership of Directors and Management" included in the Proxy Statement.

Item 13. Certain Relationships and Related Transactions

Incorporated herein by reference to “Election of Directors--Certain Transactions” included in the Proxy Statement.

Ocean Energy, Inc.

Part IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) 1. Financial Statements:

The Consolidated Financial Statements, Notes to Consolidated Financial Statements and Independent Auditors’ Reports thereon are included in the Company’s 2000 Annual Report to Shareholders and as part of Exhibit 13 attached hereto, and are incorporated herein by reference.

2. Schedules:

All schedules have been omitted because the required information is insignificant or not applicable.

3. Exhibits:

    3.1           Articles of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1
                  to the Company's Form 10-Q for the period ended June 30, 1999).

    3.2           Bylaws of the Company, as amended through March 7, 1997
                  (incorporated by reference to Exhibit 4.9 to Form S-3 filed
                  with the Securities and Exchange Commission on September 18,
                  1997.)

    4.1           Amended and Restated Rights Agreement dated March 17, 1989, as amended effective June 13, 1992,
                  and amended and restated as of December 12, 1997, between the Company and BankBoston, N.A. (as
                  successor to NCNB Texas National Bank), including Form of Statement of Resolution Establishing
                  the Series B Junior Participating Preferred Stock, the Form of Right Certificate and Form of
                  Summary of Rights to Purchase Preferred Shares (the Agreement is incorporated by reference to
                  Exhibit 2 to Current Report on Form 8-K dated December 15, 1997; Amendment No. 1 dated November
                  24, 1998 is incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed on
                  December 1, 1998).  Amendment No. 2, dated as of March 10, 1999, is incorporated by reference to
                  Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange
                  Commission on March 12, 1999; Amendment No. 3, dated as of May 19, 1999, is incorporated by
                  reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Securities
                  and Exchange Commission on May 21, 1999).   Amendment No. 4, dated as of May 19, 2000, is
                  incorporated by reference to the Company's Current Report on Form 8-K filed with the Securities
                  and Exchange Commission on May 22, 2000.

    4.2           Certificate of Designations for the Series C Convertible Preferred Stock of Ocean Energy, Inc.,
                  incorporated by reference to Exhibit 4.1 of Form 10-Q for the period ended September 30, 1998 of
                  Ocean Energy, Inc. (Registration No. 0-25058).

    4.3           Revolving Credit Agreement, dated as of March 30, 1999, among the Company, Chase Bank of Texas, National
                  Association ("Chase Texas") (Individually and as Administrative Agent), The Chase Manhattan Bank ("Chase
                  Manhattan") (as Auction Administrative Agent), Bank of America National Trust and Savings Association ("Bank of
                  America") (Individually and as Syndication Agent), Bank One Texas, N. A. ("Bank One") (Individually and as
                  Documentation Agent), Societe Generale, Southwest Agency ("Societe Generale") (Individually and as Managing
                  Agent), the Bank of Montreal (Individually and as Managing Agent), and the other Banks signatory thereto
                  (incorporated by reference to Exhibit 4.1 to the Company's Form 10-Q for the period ended March 31, 1999); First
                  Amendment, dated as of February 29, 2000, incorporated by reference to the Company’s Form 10-Q for the period
                  ending March 31, 2000.

    4.4           Senior Indenture dated as of July 15, 1993, relating to the 7?% Notes due 2003, by and between
                  the Company and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 to
                  Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.  First Supplemental
                  Indenture, dated as of March 30, 1999, is incorporated by reference to Exhibit 4.11 to the
                  Company's Form 10-Q for the period ended March 31, 1999).

Ocean Energy, Inc.


    4.5           Senior Subordinated Indenture dated as of July 15, 1993, relating to the 8?% Notes due 2005 by
                  and between the Company and The Bank of New York, as Trustee (the Indenture is incorporated by
                  reference to Exhibit 4.2 to Quarterly Report on Form 10-Q for the quarter ended March 31, 1998;
                  the First Supplemental Indenture, dated as of March 30, 1999, is incorporated by reference to
                  Exhibit 4.12 to the Company's Form 10-Q for the period ended March 31, 1999).

    4.6           Senior Indenture among the Company and The Bank of New York, as Trustee, and Specimen of 7 1/2%
                  Senior Notes (incorporated by reference to Exhibit 4.4 to Annual Report on Form 10-K for the
                  year ended December 31, 1997; the First Supplemental Indenture, dated as of March 30, 1999, is
                  incorporated by reference to Exhibit 4.10 to the Company's Form 10-Q for the period ended March
                  31, 1999).

    4.7           Terms Agreement and the resolutions of adoption by the Chairman of the Board of Directors
                  related to Exhibit 4.6 (incorporated by reference to Exhibit 2.3 to Current Report on Form 8-K
                  filed with the Securities and Exchange Commission on October 17, 1997).

    4.8           Indenture, dated as of July 8, 1998, among Ocean Energy, Inc., its Subsidiary Guarantors, and
                  U.S. Bank Trust National Association, relating to the 8 3/8% Series A Senior Subordinated Notes
                  due 2008 and the 8 3/8% Series B Senior Subordinated Notes due 2008 (the Indenture is
                  incorporated by reference to Exhibit 10.22 to the Form 10-Q for the period ended June 30, 1998
                  of Ocean Energy, Inc. (Registration No. 0-25058); the First Supplemental Indenture, dated March
                  30, 1999, is incorporated by reference to Exhibit 4.3 to the Company's Form 10-Q for the period
                  ended March 31, 1999).

    4.9           Indenture, dated as of July 8, 1998, among Ocean Energy, Inc., its Subsidiary Guarantors, and
                  Norwest Bank Minnesota, National Association (Norwest Bank) as Trustee, relating to the 7 5/8%
                  Senior Notes due 2005 (the Indenture is incorporated by reference to Exhibit 10.23 to the Form
                  10-Q for the period ended June 30, 1998 of Ocean Energy, Inc. (Registration No. 0-25058); the
                  First Supplemental Indenture, dated March 30, 1999, is incorporated by reference to Exhibit 4.4
                  to the Company's Form 10-Q for the period ended March 31, 1999).

    4.10          Indenture, dated as of July 8, 1998, among Ocean Energy, Inc., its Subsidiary Guarantors, and
                  Norwest Bank as Trustee, relating to the 8 1/4% Senior Notes due 2018 (the Indenture is
                  incorporated by reference to Exhibit 10.24 to the Form 10-Q for the period ended June 30, 1998
                  of Ocean Energy, Inc. (Registration No. 0-25058); the First Supplemental Indenture, dated March
                  30, 1999, is incorporated by reference to Exhibit 4.5 to the Company's Form 10-Q for the period
                  ended March 31, 1999).

    4.11          Indenture, dated as of July 2, 1997, among Ocean Energy, Inc., the Subsidiary Guarantors Named
                  Therein and State Street Bank and Trust Company, as Trustee, relating to the 8 7/8% Senior
                  Subordinated Notes due 2007 (the Indenture is incorporated by reference to Exhibit 4.1 to the
                  Registration Statement on Form S-4 (No. 333-32715) of Ocean Energy, Inc.; the First Supplemental
                  Indenture, dated as of March 27, 1998, is incorporated by reference to Exhibit 10.11 to the Form
                  8-K of Ocean Energy, Inc. (Registration No. 0-25058) filed with the SEC on March 31, 1998; the
                  Second Supplemental Indenture, dated as of March 30, 1999 is incorporated by reference to
                  Exhibit 4.6 to the Company's Form 10-Q for the period ended March 31, 1999).

  #10.1           1999 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Form
                  10-Q for the period ended June 30, 1999).

  #10.2           Seagull Energy Corporation 1981 Stock Option Plan (Restated), including forms of agreements, as
                  amended (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q for the
                  quarter ended March 31, 1998).

Ocean Energy, Inc.


  #10.3           Seagull Energy Corporation 1983 Stock Option Plan (Restated), including forms of agreements, as
                  amended (incorporated by reference to Exhibit 10.4 to Quarterly Report on Form 10-Q for the
                  quarter ended March 31, 1998).

  #10.4           Seagull Energy Corporation 1986 Stock Option Plan (Restated), including forms of agreements, as
                  amended (incorporated by reference to Exhibit 10.5 to Quarterly Report on Form 10-Q for the
                  quarter ended March 31, 1998).

  #10.5           Seagull Energy Corporation 1990 Stock Option Plan, including forms of agreements, as amended
                  (incorporated by reference to Exhibit 10.22 to Annual Report on Form 10-K for the year ended
                  December 31, 1995; Form of Amendment to Stock Option Agreement(s) is incorporated by reference
                  to Exhibit 10.7 to Annual Report on Form 10-K for the year ended December 31, 1996).

  #10.6           Global Natural Resources Inc. 1989 Key Employees Stock Option Plan (the Plan is incorporated by
                  reference to Exhibit 4.1 to Registration Statement No. 33-31537 of Global Natural Resources
                  Inc.; the Form of Stock Option Agreement is incorporated by reference to Exhibit 4.2 to
                  Registration Statement No. 33-31537 of Global Natural Resources Inc.; Form of Amendment to Stock
                  Option Agreement(s) is incorporated by reference to Exhibit 10.8 to Annual Report on Form 10-K
                  for the year ended December 31, 1996).

 *#10.7           Global Natural Resources Inc. 1992 Stock Option Plan  and Form of Stock Option Agreement filed
                  herewith; Form of Amendment to Stock Option Agreement(s) is incorporated by reference to Exhibit
                  10.9 to Annual Report on Form 10-K for the year ended December 31, 1996).

  #10.8           Seagull Energy Corporation 1993 Nonemployee Directors' Stock Option Plan, including forms of
                  agreements, as amended (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form
                  10-Q for the quarter ended September 30, 1997).

  #10.9           Seagull Energy Corporation 1993 Stock Option Plan, as amended (incorporated by reference to
                  Exhibit 10.3 to Quarterly Report on Form 10-Q for the quarter ended September 30, 1997).

 *#10.10          1995 Omnibus Stock Plan filed herewith; (Form of Amendment to Stock Option Agreement(s) is
                  incorporated by reference to Exhibit 10.12 to Annual Report on Form 10-K for the year ended
                  December 31, 1996).

  #10.11          1998 Omnibus Stock Plan (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form
                  10-Q for the quarter ended June 30, 1998).

 *#10.12          UMC 1987 Nonqualified Stock Option Plan, as amended, (the Plan is incorporated herein by
                  reference to Exhibit 10.3 to UMC's Form S-1 (No. 33-63532) filed with the SEC on May 28, 1993;
                  the Third Amendment, dated November 16, 1993, filed herewith; the Fourth Amendment, dated April
                  6, 1994, filed herewith; the Fifth Amendment, dated November 19, 1997, is incorporated by
                  reference to Exhibit 4.7 to UMC's Form S-3 (No. 333-42467); the Sixth Amendment, dated March 27,
                  1998, and the Seventh Amendment, dated February 1, 1999, are incorporated by reference to
                  Exhibit 10.3 to Form 10-Q for the period ended March 31, 1999).

  #10.13          UMC 1994 Employee Nonqualified Stock Option Plan, as amended (the Plan is incorporated by
                  reference to Exhibit 4.14 to UMC's Form S-8 (No. 33-79160) filed with the SEC on May 19, 1994;
                  the First Amendment, dated November 16, 1994, is incorporated by reference to Exhibit 4.11.1 to
                  UMC's Form S-8 (No. 33-86480) filed with the SEC on November 18, 1994; the Second Amendment,
                  dated May 22, 1996, is incorporated by reference to Exhibit 4.3.2 to UMC's Form S-8 (No.
                  333-05401) filed with the SEC on June 6, 1996; the Third Amendment, dated November 13, 1996, is
                  incorporated by reference to Exhibit 4.3.3 to UMC's Form S-8 (No. 333-28017) filed with the SEC
                  on May 29, 1997; the Fourth Amendment, dated May 29, 1997, is

Ocean Energy, Inc.


                  incorporated herein by reference to Exhibit 4.3.4 to UMC's Form S-8 (No. 333-28017) filed
                  with the SEC on May 29, 1997; the Fifth Amendment, dated November 19, 1997, is incorporated
                  by reference to Exhibit 4.8 to UMC's Form S-3 (No. 333-42467) filed with the SEC on December
                  17, 1997; the Sixth Amendment, dated March 27, 1998 is incorporated by reference to Exhibit
                  10.4 to Form 10-Q for the period ended March 31, 1999).

  #10.14          Amendment to UMC 1994 Non-Qualified Stock Option Agreement for Former Employees of General
                  Atlantic Resources, Inc. dated as of April 16, 1996 among UMC and Donald D. Wolf (incorporated
                  by reference to Exhibit 10.22 to UMC's Form 10-Q for the period ended September 30, 1996).

  #10.15          UMC 1994 Outside Directors' Nonqualified Stock Option Plan, as amended (the Plan is incorporated
                  herein by reference to Exhibit 4.15 to UMC's Form S-8 (No. 33-79160) filed with the SEC on May
                  19, 1994; the First Amendment, dated May 22, 1996, is incorporated by reference to Exhibit 4.4.1
                  to UMC's Form S-8 (No. 333-05401) filed with the SEC on June 6, 1996; the Second Amendment,
                  dated November 13, 1996, is incorporated herein by reference to Exhibit 4.4 to UMC's Form S-8
                  (No. 333-28017) filed with the SEC on May 29, 1997; the Third Amendment, dated November 19,
                  1997, is incorporated by reference to Exhibit 4.9 to UMC's Form S-3 (No. 333-42467) filed with
                  the SEC on December 17, 1997; Fourth Amendment, dated March 27, 1998 is incorporated by
                  reference to Exhibit 10.6 to Form 10-Q for the period ended March 31, 1999).

  #10.16          1994 Long-Term Incentive Plan (the Plan, as amended, is incorporated by reference to Exhibit
                  10.3 to Amendment No. 2 to the Registration Statement on Form S-1 (No. 33-84308) of Ocean
                  Energy, Inc. (Registration No. 0-25058); the Second Amendment, dated March 27, 1998 is
                  incorporated by reference to Exhibit 4.2 to Form 10-Q for the period ended March 31, 1999).

  #10.17          1996 Long-Term Incentive Plan, as amended (the Plan, as amended, is incorporated by reference to
                  Exhibit 99.1 to the Form S-8 (No. 333-45117) of Ocean Energy, Inc. (Registration No. 0-25058)
                  filed with the SEC on January 29, 1998; the Second Amendment, dated March 27, 1998, is
                  incorporated by reference to Exhibit 4.2 to Form 10-Q for the period ended March 31, 1999).

  #10.18          Long-Term Incentive Plan for Non-Executive Employees, as amended (the Plan, as amended, is
                  incorporated by reference to Exhibit 99.1 to the Form S-8 (No. 333-45119) of Ocean Energy, Inc.
                  (Registration No. 0-25058); Amendment No. 2, incorporated by reference to Exhibit 99.2 to the
                  Form S-8 (No. 333-49185) of Ocean Energy, Inc.; Amendment No. 3, dated as of May 20, 1998, is
                  incorporated by reference to Exhibit 10.46 to the Annual Report on Form 10-K for the year ended
                  December 31, 1998, of Ocean Energy, Inc. (Registration No. 0-25058); Amendment No. 4 is
                  incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the
                  year ended December 31, 1999.
  #10.19          1998 Long-Term Incentive Plan (incorporated by reference to Appendix E to Ocean Energy, Inc.'s
                  Joint Proxy Statement Prospectus on Form S-4 (333-43933) filed with the SEC on January 9, 1998).

 *#10.20          Seagull Energy Corporation Management Stability Plan filed herewith; the First Amendment is
                  incorporated by reference to Exhibit 10.13 to Annual Report on Form 10-K for the year ended
                  December 31, 1996; the Second and Third Amendments are incorporated by reference to Exhibit 10.4
                  to Quarterly Report on Form 10-Q for the quarter ended September 30, 1998; the Fourth Amendment
                  is incorporated by reference to Exhibit 10.12 to the Annual Report on Form 10-K for the year
                  ended December 31, 1998; the Fifth Amendment is incorporated by reference to Exhibit 10.14 to
                  Form 10-Q for the period ended March 31, 1999).

Ocean Energy, Inc.

*#10.21 Outside Directors Deferred Fee Plan, as amended and restated effective March 30, 1999, (the Plan
is incorporated by reference to Exhibit 10.23 to Annual Report on Form 10-K for the year ended
December 31, 1999) and the First Amendment, dated December 14, 2000, filed herewith.

#10.22 Executive Supplemental Retirement Plan, as amended (the Plan, as amended, is incorporated by
reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended September 30,
1996; the Third Amendment is incorporated by reference to Exhibit 10.11 to Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998).

*#10.23 Ocean Energy, Inc. Supplemental Benefit Plan, effective January 1, 2000, filed herewith; the
First Amendment dated September 29, 2000, is incorporated by reference to the Company's Form
10-Q for the quarter ended September 30, 2000; Merger and Amendment dated December 14, 2000,
filed herewith.

*#10.24 Ocean Energy, Inc. Excess Benefit Plan dated September 29, 2000, incorporated by reference to
the Company's Form 10-Q for the quarter ended September 30, 2000; First Amendment thereto, dated
December 14, 2000, filed herewith.

#10.25 Ocean Energy, Inc. 1999 Change of Control Severance Plan dated February 8, 1999; the First
Amendment dated March 29, 1999 (incorporated by reference to Exhibit 10.17 to Form 10-Q for the
period ended March 31, 1999).

#10.26 Form of Indemnification Agreements among the Company and certain executive officers and
directors (incorporated by reference to Exhibit 10.19 to Form 10-Q for the period ended March
31, 1999).

#10.27 Employment Agreement by and between the Company and James T. Hackett, as amended (the Agreement
is incorporated by reference to Exhibit 10.6 to Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998; Amendment to Employment Agreement dated November 24, 1998 is
incorporated by reference to Exhibit 10.15 to Form 10-Q for the period ended March 31, 1999;
Second Amendment to Employment Agreement, effective as of December 15, 1999, is incorporated by
reference to Exhibit 99.2 to Current Report on Form 8-K filed with the Securities and Exchange
Commission on January 7, 2000).

#10.28 Employment and Consulting Agreement by and between the Company and Barry J. Galt, as amended
(the Agreement is incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for
the quarter ended September 30, 1998; Amendment to Employment and Consulting Agreement dated
November 24, 1998 is incorporated by reference to Exhibit 10.16 to Form 10-Q for the period
ended March 31, 1999; Second Amendment to Employment and Consulting Agreement is incorporated by
reference to Exhibit 10.6 to Form 10-Q for the period ended June 30, 1999).
#10.29 Form of Employment Agreement between the Company and Robert K. Reeves (incorporated by reference
to Exhibit 10.41 to Form 10-Q for the period ended June 30, 1999).

#10.30 Form of Employment Agreement between the Company and William L. Transier (incorporated by
reference to Exhibit 10.5 to Form 10-Q for the period ended June 30, 1999).

#10.31 Employment Agreement between the Company and John D. Schiller Jr. dated July 20, 2000
(incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q for the period ended
September 30, 2000).

*#10.32 Form of Employment Agreement between the Company and William S. Flores, Jr., filed herewith.

Ocean Energy, Inc.

*#10.33 Executive Supplemental Retirement Plan Membership Agreement by and between the Company and James
T. Hackett (incorporated by reference to Exhibit 10.7 to Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998); First Amendment to Executive Supplemental Retirement Plan
Membership Agreement effective as of June 26, 2000, incorporated by reference to the Company's
Form 10-Q for the period ended September 30, 2000; Second Amendment to Executive Supplemental
Retirement Plan Membership Agreement effective as of January 1, 2001, filed herewith.

#10.34 Executive Supplemental Retirement Plan Membership Agreement between the Company and Barry J.
Galt dated as of February 3, 1986, as amended (incorporated by reference to Exhibit 10.2 to
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996).

*#10.35 Executive Supplemental Retirement Plan Membership Agreement by and between the Company and
Robert K. Reeves effective January 1, 2001 filed herewith.

*#10.36 Executive Supplemental Retirement Plan Membership Agreement by and between the Company and John
D. Schiller effective January 1, 2001 filed herewith.

*#10.37 Executive Supplemental Retirement Plan Membership Agreement by and between the Company and
William L. Transier effective January 1, 2001 filed herewith.

#10.38 Severance Agreement between the Company and James T. Hackett, as amended (incorporated by
reference to Exhibit 10.8 to Quarterly Report on Form 10-Q for the quarter ended September 30,
1998). Amendment to Severance Agreement, effective as of December 15, 1999, incorporated by
reference to Exhibit 99.1 to Current Report on Form 8-K filed with the Securities and Exchange
Commission on January 7, 2000.

#10.39 Severance Agreement, including Amendment and Second Amendment to Severance Agreement, between
the Company and Barry J. Galt (incorporated by reference to Exhibit 10.2 to Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998).

*#10.40 Severance Agreement between the Company Robert L. Thompson dated January 16, 2001, filed
herewith.

10.41 Promissory Note between John D. Schiller, Jr. and Seagull (incorporated by reference to Exhibit
10.31 to Annual Report on Form 10-K for the year ended December 31, 1998).

10.42 Promissory Note between William L. Transier and Seagull (incorporated by reference to Exhibit
10.32 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998).

10.43 Purchase and Sale Agreement dated June 15, 1999, between the Company, as Seller, and SEMCO
ENERGY, Inc., as Purchaser, for the sale of ENSTAR (incorporated by reference to Exhibit 10.2 to
Form 10-Q for the period ended June 30, 1999).

*10.44 Natural Gas Purchase and Sale Agreement dated October 1, 1999 between the Company as Seller and
Duke Energy Trading and Marketing, L.L.C., as Buyer (incorporated by reference to Exhibit 10.45
to the Company's Annual Report on Form 10-K for the year ended December 31, 1999); Amendment
thereto dated September 28, 2000, filed herewith.

*13.0 2000 Annual Report of the Company (selected portions), filed herewith.

*21.1 Subsidiaries of Ocean Energy, Inc.

*23.1 Consent of KPMG LLP.

Ocean Energy, Inc.


  *23.2           Consent of Arthur Andersen LLP.

* Filed herewith.

# Identifies management contracts and compensatory plans or arrangements.

(b) Reports on Form 8-K

On December 18, 2000, the Company filed a Current Report on Form 8-K dated December 18, 2000 concerning the Company’s current estimates of its operating statistics for the first quarter of 2001 and full year ended December 31, 2001.

On March 19, 2001, the Company filed a Current Report on Form 8-K dated March 19, 2001 concerning the Company’s current estimates of its operating statistics for the first quarter of 2001 and full year ended December 31, 2001.

Ocean Energy, Inc.

Signatures

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

Ocean Energy, Inc.

Date:      March 21, 2001                                 By:      /s/ James T. Hackett
                                                                   ------------------------------------------------
                                                                   James T. Hackett, Chairman of the Board,
                                                                   President and Chief Executive Officer

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

By:        /s/ James T. Hackett                               By:     /s/ Peter J. Fluor
           -------------------------------------------------          -----------------------------------------------
           James T. Hackett, Chairman of the Board,                   Peter J. Fluor, Director
           President, Chief Executive Officer and Director    Date:   March 21, 2001
           (Principal Executive Officer)
Date:      March 21, 2001                                     By:     /s/ Barry J. Galt
                                                                      -----------------------------------------------
                                                                      Barry J. Galt, Director
By:        /s/ William L. Transier                            Date:   March 21, 2001
           -------------------------------------------------
           William L. Transier, Executive Vice President
           and Chief Financial Officer                                /s/ Robert L. Howard
                                                                      -----------------------------------------------
           (Principal Financial Officer)                      By:     Robert L. Howard, Director
Date:      March 21, 2001                                     Date:   March 21, 2001

By:        /s/ Robert L. Thompson                                     /s/ Elvis L. Mason
           -------------------------------------------------          -----------------------------------------------
           Robert L. Thompson, Vice President and             By:     Elvis L. Mason, Director
           Controller (Principal Accounting Officer)          Date:   March 21, 2001
Date:      March 21, 2001
                                                                      /s/ Charles F. Mitchell, M.D.
                                                                      -----------------------------------------------
By:        /s/ J. Evans Attwell                               By:     Charles F. Mitchell, M.D., Director
           -------------------------------------------------
           J. Evans Attwell, Director                         Date:   March 21, 2001
Date:      March 21, 2001
                                                                      /s/ David K. Newbigging
                                                                      -----------------------------------------------
By:        /s/ John B. Brock                                  By:     David K. Newbigging, Director
           -------------------------------------------------
           John B. Brock, Director                            Date:   March 21, 2001
Date:      March 21, 2001
                                                                      /s/ Dee S. Osborne
                                                                      -----------------------------------------------
By:        /s/ Milton Carroll                                 By:     Dee S. Osborne, Director
           -------------------------------------------------
           Milton Carroll, Director                           Date:   March 21, 2001
Date:      March 21, 2001

By:        /s/ Thomas D. Clark, Jr.
           -------------------------------------------------
           Thomas D. Clark, Jr., Director
Date:      March 21, 2001

Ocean Energy, Inc.
Exhibit Index


    3.1           Articles of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1
                  to the Company's Form 10-Q for the period ended June 30, 1999).

    3.2           Bylaws of the Company, as amended through March 7, 1997
                  (incoporated by reference to Exhibit 4.9 to Form S-3 filed
                  with the Securities and Exchange Commission on September 18,
                  1997.)

    4.1           Amended and Restated Rights Agreement dated March 17, 1989, as amended effective June 13, 1992,
                  and amended and restated as of December 12, 1997, between the Company and BankBoston, N.A. (as
                  successor to NCNB Texas National Bank), including Form of Statement of Resolution Establishing
                  the Series B Junior Participating Preferred Stock, the Form of Right Certificate and Form of
                  Summary of Rights to Purchase Preferred Shares (the Agreement is incorporated by reference to
                  Exhibit 2 to Current Report on Form 8-K dated December 15, 1997; Amendment No. 1 dated November
                  24, 1998 is incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed on
                  December 1, 1998).  Amendment No. 2, dated as of March 10, 1999, is incorporated by reference to
                  Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange
                  Commission on March 12, 1999; Amendment No. 3, dated as of May 19, 1999, is incorporated by
                  reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Securities
                  and Exchange Commission on May 21, 1999).   Amendment No. 4, dated as of May 19, 2000, is
                  incorporated by reference to the Company's Current Report on Form 8-K filed with the Securities
                  and Exchange Commission on May 22, 2000.

    4.2           Certificate of Designations for the Series C Convertible Preferred Stock of Ocean Energy, Inc.,
                  incorporated by reference to Exhibit 4.1 of Form 10-Q for the period ended September 30, 1998 of
                  Ocean Energy, Inc. (Registration No. 0-25058).

    4.3           Revolving Credit Agreement, dated as of March 30, 1999, among the Company, Chase Bank of Texas, National
                  Association ("Chase Texas") (Individually and as Administrative Agent), The Chase Manhattan Bank ("Chase
                  Manhattan") (as Auction Administrative Agent), Bank of America National Trust and Savings Association ("Bank of
                  America") (Individually and as Syndication Agent), Bank One Texas, N. A. ("Bank One") (Individually and as
                  Documentation Agent), Societe Generale, Southwest Agency ("Societe Generale") (Individually and as Managing
                  Agent), the Bank of Montreal (Individually and as Managing Agent), and the other Banks signatory thereto
                  (incorporated by reference to Exhibit 4.1 to the Company's Form 10-Q for the period ended March 31, 1999); First
                  Amendment, dated as of February 29, 2000, incorporated by reference to the Company’s Form 10-Q for the period
                  ending March 31, 2000.

    4.4           Senior Indenture dated as of July 15, 1993, relating to the 7?% Notes due 2003, by and between
                  the Company and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 to
                  Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.  First Supplemental
                  Indenture, dated as of March 30, 1999, is incorporated by reference to Exhibit 4.11 to the
                  Company's Form 10-Q for the period ended March 31, 1999).

    4.5           Senior Subordinated Indenture dated as of July 15, 1993, relating to the 8?% Notes due 2005 by
                  and between the Company and The Bank of New York, as Trustee (the Indenture is incorporated by
                  reference to Exhibit 4.2 to Quarterly Report on Form 10-Q for the quarter ended March 31, 1998;
                  the First Supplemental Indenture, dated as of March 30, 1999, is incorporated by reference to
                  Exhibit 4.12 to the Company's Form 10-Q for the period ended March 31, 1999).

Ocean Energy, Inc.
Exhibit Index


    4.6           Senior Indenture among the Company and The Bank of New York, as Trustee, and Specimen of 7 1/2%
                  Senior Notes (incorporated by reference to Exhibit 4.4 to Annual Report on Form 10-K for the
                  year ended December 31, 1997; the First Supplemental Indenture, dated as of March 30, 1999, is
                  incorporated by reference to Exhibit 4.10 to the Company's Form 10-Q for the period ended March
                  31, 1999).

    4.7           Terms Agreement and the resolutions of adoption by the Chairman of the Board of Directors
                  related to Exhibit 4.6 (incorporated by reference to Exhibit 2.3 to Current Report on Form 8-K
                  filed with the Securities and Exchange Commission on October 17, 1997).

    4.8           Indenture, dated as of July 8, 1998, among Ocean Energy, Inc., its Subsidiary Guarantors, and
                  U.S. Bank Trust National Association, relating to the 8 3/8% Series A Senior Subordinated Notes
                  due 2008 and the 8 3/8% Series B Senior Subordinated Notes due 2008 (the Indenture is
                  incorporated by reference to Exhibit 10.22 to the Form 10-Q for the period ended June 30, 1998
                  of Ocean Energy, Inc. (Registration No. 0-25058); the First Supplemental Indenture, dated March
                  30, 1999, is incorporated by reference to Exhibit 4.3 to the Company's Form 10-Q for the period
                  ended March 31, 1999).

    4.9           Indenture, dated as of July 8, 1998, among Ocean Energy, Inc., its Subsidiary Guarantors, and
                  Norwest Bank Minnesota, National Association (Norwest Bank) as Trustee, relating to the 7 5/8%
                  Senior Notes due 2005 (the Indenture is incorporated by reference to Exhibit 10.23 to the Form
                  10-Q for the period ended June 30, 1998 of Ocean Energy, Inc. (Registration No. 0-25058); the
                  First Supplemental Indenture, dated March 30, 1999, is incorporated by reference to Exhibit 4.4
                  to the Company's Form 10-Q for the period ended March 31, 1999).

    4.10          Indenture, dated as of July 8, 1998, among Ocean Energy, Inc., its Subsidiary Guarantors, and
                  Norwest Bank as Trustee, relating to the 8 1/4% Senior Notes due 2018 (the Indenture is
                  incorporated by reference to Exhibit 10.24 to the Form 10-Q for the period ended June 30, 1998
                  of Ocean Energy, Inc. (Registration No. 0-25058); the First Supplemental Indenture, dated March
                  30, 1999, is incorporated by reference to Exhibit 4.5 to the Company's Form 10-Q for the period
                  ended March 31, 1999).

    4.11          Indenture, dated as of July 2, 1997, among Ocean Energy, Inc., the Subsidiary Guarantors Named
                  Therein and State Street Bank and Trust Company, as Trustee, relating to the 8 7/8% Senior
                  Subordinated Notes due 2007 (the Indenture is incorporated by reference to Exhibit 4.1 to the
                  Registration Statement on Form S-4 (No. 333-32715) of Ocean Energy, Inc.; the First Supplemental
                  Indenture, dated as of March 27, 1998, is incorporated by reference to Exhibit 10.11 to the Form
                  8-K of Ocean Energy, Inc. (Registration No. 0-25058) filed with the SEC on March 31, 1998; the
                  Second Supplemental Indenture, dated as of March 30, 1999 is incorporated by reference to
                  Exhibit 4.6 to the Company's Form 10-Q for the period ended March 31, 1999).

  #10.1           1999 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Form
                  10-Q for the period ended June 30, 1999).

  #10.2           Seagull Energy Corporation 1981 Stock Option Plan (Restated), including forms of agreements, as
                  amended (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q for the
                  quarter ended March 31, 1998).

  #10.3           Seagull Energy Corporation 1983 Stock Option Plan (Restated), including forms of agreements, as
                  amended (incorporated by reference to Exhibit 10.4 to Quarterly Report on Form 10-Q for the
                  quarter ended March 31, 1998).

Ocean Energy, Inc.
Exhibit Index


  #10.4           Seagull Energy Corporation 1986 Stock Option Plan (Restated), including forms of agreements, as
                  amended (incorporated by reference to Exhibit 10.5 to Quarterly Report on Form 10-Q for the
                  quarter ended March 31, 1998).

  #10.5           Seagull Energy Corporation 1990 Stock Option Plan, including forms of agreements, as amended
                  (incorporated by reference to Exhibit 10.22 to Annual Report on Form 10-K for the year ended
                  December 31, 1995; Form of Amendment to Stock Option Agreement(s) is incorporated by reference
                  to Exhibit 10.7 to Annual Report on Form 10-K for the year ended December 31, 1996).

  #10.6           Global Natural Resources Inc. 1989 Key Employees Stock Option Plan (the Plan is incorporated by
                  reference to Exhibit 4.1 to Registration Statement No. 33-31537 of Global Natural Resources
                  Inc.; the Form of Stock Option Agreement is incorporated by reference to Exhibit 4.2 to
                  Registration Statement No. 33-31537 of Global Natural Resources Inc.; Form of Amendment to Stock
                  Option Agreement(s) is incorporated by reference to Exhibit 10.8 to Annual Report on Form 10-K
                  for the year ended December 31, 1996).

 *#10.7           Global Natural Resources Inc. 1992 Stock Option Plan  and Form of Stock Option Agreement filed
                  herewith; Form of Amendment to Stock Option Agreement(s) is incorporated by reference to Exhibit
                  10.9 to Annual Report on Form 10-K for the year ended December 31, 1996).

  #10.8           Seagull Energy Corporation 1993 Nonemployee Directors' Stock Option Plan, including forms of
                  agreements, as amended (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form
                  10-Q for the quarter ended September 30, 1997).

  #10.9           Seagull Energy Corporation 1993 Stock Option Plan, as amended (incorporated by reference to
                  Exhibit 10.3 to Quarterly Report on Form 10-Q for the quarter ended September 30, 1997).

 *#10.10          1995 Omnibus Stock Plan filed herewith; (Form of Amendment to Stock Option Agreement(s) is
                  incorporated by reference to Exhibit 10.12 to Annual Report on Form 10-K for the year ended
                  December 31, 1996).

  #10.11          1998 Omnibus Stock Plan (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form
                  10-Q for the quarter ended June 30, 1998).

 *#10.12          UMC 1987 Nonqualified Stock Option Plan, as amended, (the Plan is incorporated herein by
                  reference to Exhibit 10.3 to UMC's Form S-1 (No. 33-63532) filed with the SEC on May 28, 1993;
                  the Third Amendment, dated November 16, 1993, filed herewith; the Fourth Amendment, dated April
                  6, 1994, filed herewith; the Fifth Amendment, dated November 19, 1997, is incorporated by
                  reference to Exhibit 4.7 to UMC's Form S-3 (No. 333-42467); the Sixth Amendment, dated March 27,
                  1998, and the Seventh Amendment, dated February 1, 1999, are incorporated by reference to
                  Exhibit 10.3 to Form 10-Q for the period ended March 31, 1999).

  #10.13          UMC 1994 Employee Nonqualified Stock Option Plan, as amended (the Plan is incorporated by
                  reference to Exhibit 4.14 to UMC's Form S-8 (No. 33-79160) filed with the SEC on May 19, 1994;
                  the First Amendment, dated November 16, 1994, is incorporated by reference to Exhibit 4.11.1 to
                  UMC's Form S-8 (No. 33-86480) filed with the SEC on November 18, 1994; the Second Amendment,
                  dated May 22, 1996, is incorporated by reference to Exhibit 4.3.2 to UMC's Form S-8 (No.
                  333-05401) filed with the SEC on June 6, 1996; the Third Amendment, dated November 13, 1996, is
                  incorporated by reference to Exhibit 4.3.3 to UMC's Form S-8 (No. 333-28017) filed with the SEC
                  on May 29, 1997; the Fourth Amendment, dated May 29, 1997, is incorporated herein by reference
                  to Exhibit 4.3.4 to UMC's Form S-8 (No. 333-28017) filed with the SEC on May 29, 1997; the Fifth
                  Amendment, dated November 19, 1997, is incorporated by reference to Exhibit 4.8 to UMC's Form
                  S-3 (No. 333-42467) filed with the SEC on December 17, 1997; the Sixth Amendment, dated March
                  27, 1998 is incorporated by reference to Exhibit 10.4 to Form 10-Q for the period ended March
                  31, 1999).

Ocean Energy, Inc.
Exhibit Index


  #10.14          Amendment to UMC 1994 Non-Qualified Stock Option Agreement for Former Employees of General
                  Atlantic Resources, Inc. dated as of April 16, 1996 among UMC and Donald D. Wolf (incorporated
                  by reference to Exhibit 10.22 to UMC's Form 10-Q for the period ended September 30, 1996).

  #10.15          UMC 1994 Outside Directors' Nonqualified Stock Option Plan, as amended (the Plan is incorporated
                  herein by reference to Exhibit 4.15 to UMC's Form S-8 (No. 33-79160) filed with the SEC on May
                  19, 1994; the First Amendment, dated May 22, 1996, is incorporated by reference to Exhibit 4.4.1
                  to UMC's Form S-8 (No. 333-05401) filed with the SEC on June 6, 1996; the Second Amendment,
                  dated November 13, 1996, is incorporated herein by reference to Exhibit 4.4 to UMC's Form S-8
                  (No. 333-28017) filed with the SEC on May 29, 1997; the Third Amendment, dated November 19,
                  1997, is incorporated by reference to Exhibit 4.9 to UMC's Form S-3 (No. 333-42467) filed with
                  the SEC on December 17, 1997; Fourth Amendment, dated March 27, 1998 is incorporated by
                  reference to Exhibit 10.6 to Form 10-Q for the period ended March 31, 1999).

  #10.16          1994 Long-Term Incentive Plan (the Plan, as amended, is incorporated by reference to Exhibit
                  10.3 to Amendment No. 2 to the Registration Statement on Form S-1 (No. 33-84308) of Ocean
                  Energy, Inc. (Registration No. 0-25058); the Second Amendment, dated March 27, 1998 is
                  incorporated by reference to Exhibit 4.2 to Form 10-Q for the period ended March 31, 1999).

  #10.17          1996 Long-Term Incentive Plan, as amended (the Plan, as amended, is incorporated by reference to
                  Exhibit 99.1 to the Form S-8 (No. 333-45117) of Ocean Energy, Inc. (Registration No. 0-25058)
                  filed with the SEC on January 29, 1998; the Second Amendment, dated March 27, 1998, is
                  incorporated by reference to Exhibit 4.2 to Form 10-Q for the period ended March 31, 1999).

  #10.18          Long-Term Incentive Plan for Non-Executive Employees, as amended (the Plan, as amended, is
                  incorporated by reference to Exhibit 99.1 to the Form S-8 (No. 333-45119) of Ocean Energy, Inc.
                  (Registration No. 0-25058); Amendment No. 2, incorporated by reference to Exhibit 99.2 to the
                  Form S-8 (No. 333-49185) of Ocean Energy, Inc.; Amendment No. 3, dated as of May 20, 1998, is
                  incorporated by reference to Exhibit 10.46 to the Annual Report on Form 10-K for the year ended
                  December 31, 1998, of Ocean Energy, Inc. (Registration No. 0-25058); Amendment No. 4 is
                  incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the
                  year ended December 31, 1999.
  #10.19          1998 Long-Term Incentive Plan (incorporated by reference to Appendix E to Ocean Energy, Inc.'s
                  Joint Proxy Statement Prospectus on Form S-4 (333-43933) filed with the SEC on January 9, 1998).

 *#10.20          Seagull Energy Corporation Management Stability Plan filed herewith; the First Amendment is
                  incorporated by reference to Exhibit 10.13 to Annual Report on Form 10-K for the year ended
                  December 31, 1996; the Second and Third Amendments are incorporated by reference to Exhibit 10.4
                  to Quarterly Report on Form 10-Q for the quarter ended September 30, 1998; the Fourth Amendment
                  is incorporated by reference to Exhibit 10.12 to the Annual Report on Form 10-K for the year
                  ended December 31, 1998; the Fifth Amendment is incorporated by reference to Exhibit 10.14 to
                  Form 10-Q for the period ended March 31, 1999).

 *#10.21          Outside Directors Deferred Fee Plan, as amended and restated effective March 30, 1999, (the Plan
                  is incorporated by reference to Exhibit 10.23 to Annual Report on Form 10-K for the year ended
                  December 31, 1999) and the First Amendment, dated December 14, 2000, filed herewith.

  #10.22          Executive Supplemental Retirement Plan, as amended (the Plan, as amended, is incorporated by

Ocean Energy, Inc.
Exhibit Index

reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended September 30,
1996; the Third Amendment is incorporated by reference to Exhibit 10.11 to Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998).

#10.26 Form of Indemnification Agreements among the Company and certain executive officers and
directors (incorporated by reference to Exhibit 10.19 to Form 10-Q for the period ended March
31, 1999).

#10.30 Form of Employment Agreement between the Company and William L. Transier (incorporated by
reference to Exhibit 10.5 to Form 10-Q for the period ended June 30, 1999).

*#10.32 Form of Employment Agreement between the Company and William S. Flores, Jr., filed herewith.

Ocean Energy, Inc.
Exhibit Index

Executive Supplemental Retirement Plan Membership Agreement effective as of January 1, 2001, filed
herewith.

*#10.35 Executive Supplemental Retirement Plan Membership Agreement by and between the Company and
Robert K. Reeves effective January 1, 2001 filed herewith.

*#10.36 Executive Supplemental Retirement Plan Membership Agreement by and between the Company and John
D. Schiller effective January 1, 2001 filed herewith.

*#10.37 Executive Supplemental Retirement Plan Membership Agreement by and between the Company and
William L. Transier effective January 1, 2001 filed herewith.

*#10.40 Severance Agreement between the Company Robert L. Thompson dated January 16, 2001, filed
herewith.

10.41 Promissory Note between John D. Schiller, Jr. and Seagull (incorporated by reference to Exhibit
10.31 to Annual Report on Form 10-K for the year ended December 31, 1998).

10.42 Promissory Note between William L. Transier and Seagull (incorporated by reference to Exhibit
10.32 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998).

*13.0 2000 Annual Report of the Company (selected portions), filed herewith.

*21.1 Subsidiaries of Ocean Energy, Inc.

*23.1 Consent of KPMG LLP.

*23.2 Consent of Arthur Andersen LLP.

* Filed herewith.

# Identifies management contracts and compensatory plans or arrangements.

EX-10 2 ex10-7_123100.htm EXHIBIT 10.7 GNR 1992 Stock Option Plan

                                                                                  EXHIBIT 10.7
                                 GLOBAL NATURAL RESOURCES INC.

                                  1992 STOCK OPTION PLAN

                                   1. Purpose of the Plan


     The GLOBAL  NATURAL  RESOURCES  INC. 1992 STOCK OPTION PLAN (the "Plan") is
intended  to provide a means  whereby  certain  employees,  directors  and other
persons who perform services for or on behalf of GLOBAL NATURAL  RESOURCES INC.,
a New Jersey  corporation  (the  "Company"),  its subsidiaries and certain other
entities,  or who are deemed to be in a position to perform such services in the
future,  may develop a sense of proprietorship  and personal  involvement in the
development  and  financial  success of the Company,  and to  encourage  them to
remain  with and devote  their  best  efforts to the  business  of the  Company,
thereby   advancing  the   interests  of  the  Company  and  its   stockholders.
Accordingly,  the Company may grant to such individuals the option ("Option") to
purchase shares of the Common Stock of the Company ("Stock"), as hereinafter set
forth.  Options  granted under the Plan may be either  incentive  stock options,
within the meaning of section  422(b) of the Internal  Revenue Code of 1986,  as
amended  (the  "Code"),  ("Incentive  Stock  Options")  or options  which do not
constitute Incentive Stock Options.
                                            11. Administration

     The Plan shall be administered by a committee (the "Committee") which shall
be  constituted  so as to permit the Plan to continue to comply with Rule 16b-3,
as currently in effect or as hereafter  modified or amended,  promulgated  under
the Securities Exchange Act of 1934, as amended (the "1934 Act"). The members of
the  Committee  shall be members of the Board of  Directors  of the Company (the
"Board")  and shall be  appointed  by the Board.  Subject to the  provisions  of
Paragraph  VIII hereof,  the Committee  shall have sole  authority to select the
individuals  who are to be granted  Options from among those eligible  hereunder
and to establish the number of shares which may be issued under each Option. The
Committee is  authorized  to interpret  the Plan and may from time to time adopt
such rules and  regulations,  consistent  with the provisions of the Plan, as it
may deem advisable to carry out the Plan. All decisions made by the Committee in
selecting the individuals to whom Options shall be granted,  in establishing the
number of shares  which may be issued  under each Option and in  construing  the
provisions of the Plan shall be final.  The  provisions of this Paragraph H with
respect to decisions  made by, and authority of, the Committee  shall be subject
to the controlling provisions of Paragraph VIII hereof






                                       111. Option Agreements

     Subject to the  provisions of Paragraph  VIII hereof,  each Option shall be
evidenced by an Option  Agreement and shall  contain such terms and  conditions,
and may be  exercisable  for such periods,  as may be approved by the Committee.
The  terms  and  conditions  of the  respective  Option  Agreements  need not be
identical.  Specifically,  an Option  Agreement may provide for the surrender of
the right to purchase shares under the Option in return for a payment in cash or
shares of Stock or a  combination  of cash and shares of Stock equal in value to
the  excess of the fair  market  value of the shares  with  respect to which the
right to  purchase  is  surrendered  over the  option  price  therefore  ("Stock
Appreciation Rights"), on such terms and conditions as the Committee in its sole
discretion  may  prescribe;  provided,  that with respect to Stock  Appreciation
Rights  granted  to  employees  who are  subject  to Section 16 of the 1934 Act,
except as provided in  Subparagraph  IX(c) hereof,  the  Committee  shall retain
final authority (i) to determine whether an optionee shall be permitted, or (ii)
to approve  an  election  by an  optionee,  to  receive  cash in full or partial
settlement  of Stock  Appreciation  Rights.  Moreover,  an Option  Agreement may
provide for a  "cashless  exercise"  of the  Option-by  establishing  procedures
whereby the optionee,  by a  properly-executed  written  notice,  directs (i) an
immediate  market sale or margin loan  respecting all or a part of the shares of
Stock to which he is entitled upon  exercise  pursuant to an extension of credit
by the Company to the  optionee of the option  price,  (ii) the  delivery of the
shares of Stock from the  Company  directly  to a  brokerage  firm and (iii) the
delivery  of the  option  price  from  sale or  margin  loan  proceeds  from the
brokerage firm directly to the Company. Further, an Option Agreement may provide
for the payment of the option  price,  in whole or in part, by the delivery of a
number of shares of Stock (plus cash if  necessary)  having a fair market  value
equal to such option  price.  For all purposes  under the Plan,  the fair market
value of a share of Stock on a particular date shall be equal to the mean of the
reported  high and low sales  prices of the  Common  Stock on the New York Stock
Exchange Composite Tape on that date, or if no prices are reported on that date,
on the last preceding date on which such prices of the Stock are so reported. If
the Stock is traded  over the  counter at the time a  determination  of its fair
market  value is required to be made  hereunder,  its fair market value shall be
deemed to be equal to the average  between the reported  high and low or closing
bid and  asked  prices  of Stock  on the most  recent  date on which  Stock  was
publicly  traded.  In the  event  Stock  is not  publicly  traded  at the time a
determination of its value is required to be made hereunder,  the  determination
of its fair  market  value shall be made by the  Committee  in such manner as it
deems  appropriate.  Each Option and all rights granted  thereunder shall not be
transferable  other than by will or the laws of descent  and  distribution,  and
shall be exercisable during the optionee's  lifetime only by the optionee or the
optionee's  guardian  or  legal   representative.   Each  Option  shall  not  be
exercisable after the expiration of ten years from its date of grant.
                                        IV. Eligibility of Optionee

     Options may be granted only to (i) individuals who are employees (including
officers and  directors who are also  employees)of  the Company or any parent or
subsidiary corporation (as defined in section 424 of the Code) of the Company at
the time the Option is granted, (ii) individuals who are directors (but not also
employees) of the Company or any such parent or
                                                          -2






subsidiary corporation,  and (iii) any other persons who perform services for or
on  behalf  of the  Company  or  any  such  parent  or  subsidiary  corporation,
affiliates or any entity in which the Company has an interest, or who are deemed
by the  Committee  to be in a position to perform  such  services in the future;
provided, however, that (A) Options which constitute Incentive Stock Options may
only be granted to employees  described in clause (i) above,  and (B) members of
the Committee shall only be granted  Options  pursuant to Paragraph VIII hereof.
Options  may be granted to the same  individual  on more than one  occasion.  No
Incentive  Stock  Option shall be granted to an  individual  if, at the time the
Option is granted,  such individual  owns stock  possessing more than 10% of the
total combined voting power of all classes of stock of the individual's employer
corporation  or of its parent or subsidiary  corporation,  within the meaning of
section 422(b)(6) of the Code, unless (i) at the time such Option is granted the
option price is at least 110% of the fair market  value of the Stock  subject to
the  Option  and (ii)  such  Option by its  terms is not  exercisable  after the
expiration  of five  years  from  the  date of  grant.  To the  extent  that the
aggregate fair market value  (determined  at the time the  respective  Incentive
Stock Option is granted) of stock with respect to which  Incentive Stock Options
are  exercisable  for the first time by an  individual  during any calendar year
under all incentive stock option plans of the individual's  employer corporation
and its parent and  subsidiary  corporations  exceeds  $100,000,  such Incentive
Stock  Options  shall be treated as options  which do not  constitute  Incentive
Stock Options.  The Committee  shall  determine,  in accordance  with applicable
provisions  of  the  Code,   Treasury   Regulations  and  other   administrative
pronouncements,  which  of  an  optionee's  Incentive  Stock  Options  will  not
constitute  Incentive  Stock Options because of such limitation and shall notify
the  optionee  of  such   determination  as  soon  as  practicable   after  such
determination.

                                    V.  Shares Subject to the Plan

     The aggregate  number of shares which may be issued under  Options  granted
under the Plan  shall not  exceed  1,000,000  shares of Stock.  Such  shares may
consist of authorized but unissued  shares of Stock or previously  issued shares
of Stock reacquired by the Company. Any of such shares which remain unissued and
which are not  subject to  outstanding  Options at the  termination  of the Plan
shall cease to be subject to the Plan,  but, until  termination of the Plan, the
Company shall at all times make available a sufficient  number of shares to meet
the  requirements of the Plan.  Should any Option  hereunder expire or terminate
prior to its exercise in full, the shares theretofore subject to such Option may
again be subject to an Option  granted under the Plan.  The aggregate  number of
shares which may be issued under the Plan shall be subject to  adjustment in the
same manner as provided in  Paragraph  IX hereof with respect to shares of Stock
subject  to  Options  then  outstanding.  Exercise  of an Option in any  manner,
including an exercise  involving a Stock  Appreciation  Right, shall result in a
decrease in the number of shares of Stock  which may  thereafter  be  available,
both for purposes of the Plan and for sale to any one individual,  by the number
of shares as to which the Option is exercised. Separate stock certificates shall
be issued by the Company for those shares  acquired  pursuant to the exercise of
an Incentive Stock Option and for those shares acquired pursuant to the exercise
of any Option which does not constitute an Incentive Stock Option.

                                                          -3






                                             VI. Option Price

     Subject to the provisions of Paragraph  VIII hereof,  the purchase price of
Stock issued under each Option shall be determined by the Committee,  but (i) in
the case of an Incentive  Stock Option,  such  purchase  price shall not be less
than the fair market value of stock subject to the Option on the date the Option
is  granted,  and (ii) in the case of an option  that,  does not  constitute  an
Incentive  Stock Option,  such purchase  price shall not be less than 50% of the
fair  market  value of Stock  subject  to the  Option on the date the  Option is
granted.  The  purchase  price of Stock  under an Option may be  adjusted in the
event of extraordinary distributions respecting the Stock.

                                            VII. Term of Plan
     The Plan shall be  effective  upon the date of its  adoption  by the Board,
provided the Plan is approved by the  stockholders  of the Company within twelve
months  thereafter.  Except with  respect to Options  then  outstanding,  if not
sooner  terminated under the provisions of Paragraph X, the Plan shall terminate
upon and no further  Options shall be granted after the  expiration of ten years
from the date of its adoption by the Board.

                           VIII. Grants to Non-Employee Directors (1)

     Subject  to the  limitation  on the  number of shares of Stock set forth in
Paragraph V hereof,  each member of the Board of Directors of the Company who is
not also an employee of the Company or any parent or subsidiary  corporation (as
defined in section 424 of the Code) of the Company (a  "Non-Employee  Director")
on the first business day next following the 1992 Annual Meeting of Stockholders
is hereby  granted,  effective on such date, an Option to purchase 10,000 shares
of Stock at a price  equal to the fair  market  value of the Stock on such grant
date. Moreover, each Non-Employee Director thereafter newly-elected to the Board
of  Directors  of the  Company  during  the term of the Plan is hereby  granted,
effective on the first business day next  following such election,  an Option to
purchase 10,000 shares of Stock at a price equal to the fair market value of the
Stock on such grant date. Additionally,  each Non-Employee Director who received
an  initial  grant  under  the Plan and who is a  Non-Employee  Director  on the
applicable  effective date of the annual grant is hereby  granted,  effective on
the first business day next following the anniversary of such initial grant date
in each calendar  year during the term of the Plan, an option to purchase  2,500
shares of Stock at a price equal to the fair  market  value of the Stock on such
grant date. Each such option shall be fully exercisable after the date of grant,
with  payment  in cash  or  stock,  may be  exercised  only by the  Non-Employee
Director or by the  Non-Employee  Director's  guardian  or legal  representative
during  the  Non-Employee  Director's  lifetime,  may  exercised  only while the
Non-Employee  Director  remains a member of the Board and  during  the  one-year
period  immediately  following the loss of such membership  status,  may, in the
event of the Non-Employee  Director's death while the Option is exercisable,  be
exercised by the administrator of the Non-Employee  Director's estate during the
one-year  period  following  such  date of death  and  must,  in any  event,  be
exercised prior to the expiration of ten
                                                          4

    Section VIII. deleted from Plan per Board action on November 7, 1996.






years from the date of grant. Each such Option shall not constitute an Incentive
Stock  Option and shall not provide  for Stock  Appreciation  Rights.  Each such
Option shall provide for "cashless exercise" rights in accordance with the Plan.
In the event the number of shares of Stock  available  for grants under the Plan
is insufficient to make all grants provided in this Paragraph VIII as of a grant
date, then all  Non-Employee  Directors who are entitled to a grant on such date
shall share  ratably in the number of shares of Stock then  available  for grant
under the Plan,  and shall have no right to receive a grant with  respect to any
such  deficiency.  All Options under this  Paragraph  VIII shall be evidenced by
Option  Agreements.  Except as expressly provided in this Paragraph VIII, grants
made  pursuant  to this  Paragraph  VIII  shall  be  subject  to the  terms  and
conditions of the Plan;  however,  if there is a conflict  between the terms and
conditions of the Plan and this Paragraph VIII, then the terms and conditions of
this Paragraph VIII shall control. The Committee may not exercise any discretion
with respect to this Paragraph VIII which would be inconsistent  with the intent
that (i) the  Plan  meet  the  requirements  of Rule  16b-3  promulgated  by the
Securities  Exchange  Commission  under  the 1934 Act and (ii) any  Non-Employee
Director who is eligible to receive a grant or to whom a grant is made  pursuant
to this  Paragraph  VIII will not for such reason  cease to be a  "disinterested
person" within the meaning of such Rule 16b-3 with respect to the Plan and other
stock related plans of the Company or any of its  affiliates.  Specifically,  in
the event of a Corporate  Change, as defined in Subparagraph  IX(c) hereof,  the
Committee  may, with respect to Options under this  Paragraph VIII only exercise
the  alternative  in clause  (3) of  Subparagraph  IX(c)  hereof,  or such other
alternatives  specified  in  Subparagraph  IX(c) as would not, in the opinion of
legal  counsel  of  the  Company,  violate  the  limitations  contained  in  the
immediately preceding sentence.

                             IX. Recapitalization or Reorganization

     (a) The existence of the Plan and the Options  granted  hereunder shall not
affect  in any way the right or power of the  Board or the  stockholders  of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital  structure or its business,  any merger or
consolidation of the Company, any issue of debt or equity securities ahead of or
affecting  Stock or the rights  thereof,  the  dissolution or liquidation of the
Company or any sale, lease,  exchange or other disposition of all or any part of
its assets or business or any other corporate act or proceeding.

     (b) The shares with  respect to which  Options may be granted are shares of
Stock as presently constituted, but if, and whenever, prior to the expiration of
an Option  theretofore  granted,  the  Company  shall  effect a  subdivision  or
consolidation  of shares of Stock or the  payment of a stock  dividend  on Stock
without receipt of consideration  by the Company,  the number of shares of Stock
with respect to which such Option may  thereafter  be exercised (i) in the event
of an  increase in the number of  outstanding  shares  shall be  proportionately
increased,  and the purchase price per share shall be  proportionately  reduced,
and (ii) in the event of a reduction in the number of  outstanding  shares shall
be  proportionately   reduced,  and  the  purchase  price  per  share  shall  be
proportionately increased.

     (c)  If  the  Company   recapitalizes  or  otherwise  changes  its  capital
structure, thereafter upon
                                                          -5






     any  exercise  of an  Option  theretofore  granted  the  optionee  shall be
entitled  to  purchase  under  such  Option,  in lieu of the number and class of
shares of Stock as to which such Option  shall then be  exercisable,  the number
and class of shares of stock and  securities  to which the  optionee  would have
been  entitled  pursuant to the terms of the  recapitalization  if,  immediately
prior to such  recapitalization,  the  optionee had been the holder of record of
the number of shares of Stock as to which such  Option is then  exercisable.  If
(i) the Company shall not be the surviving entity in any merger or consolidation
(or  survives  only  as a  subsidiary  of an  entity  other  than  a  previously
wholly-owned  subsidiary  of the  Company),  (ii) the Company  sells,  leases or
exchanges or agrees to sell, lease or exchange all or  substantially  all of its
assets to any other person or entity  (other than a  wholly-owned  subsidiary of
the  Company),  (iii) the Company is to be dissolved  and  liquidated,  (iv) any
person or entity, including a "group" as contemplated by Section 13(d)(3) of the
1934 Act, acquires or gains ownership or control (including, without limitation,
power to vote) of more than 50% of the outstanding  shares of Stock, or (v) as a
result of or in connection with a contested  election of directors,  the persons
who were directors of the Company before such election shall cease to constitute
a majority of the Board  (each such event is referred to herein as a  "Corporate
Change"), then effective as of a date (selected by the Committee) within (a) ten
days after the  approval  by the  stockholders  of the  Company of such  merger,
consolidation, sale, lease or exchange of assets or dissolution or such election
of directors or (b) thirty days of such change of control, the Committee, acting
in its sole discretion  without the consent or approval of any optionee,  shall,
subject to the  provisions of Paragraph  VIII hereof,  effect one or more of the
following  alternatives,   which  may  vary  among  individual  optionees:   (1)
accelerate the time at which Options then  outstanding  may be exercised so that
such Options may be exercised in full for a limited  period of time on or before
a specified date (before or after such Corporate Change) fixed by the Committee,
after which specified date all  unexercised  Options and all rights of optionees
thereunder shall terminate,  (2) require the mandatory  surrender to the Company
by selected  optionees  of some or all of the  outstanding  Options held by such
optionees  (irrespective of whether such Options are then exercisable  under the
provisions  of the Plan) as of a date,  before or after such  Corporate  Change,
specified by the Committee,  in which event the Committee shall thereupon cancel
such  Options and pay to each  optionee an amount of cash per share equal to the
excess of the  amount  calculated  in  Subparagraph  (d) below  (the  "Change of
Control Value") of the shares subject to such Option over the exercise  price(s)
under such Options for such shares,  (3) make such  adjustments  to Options then
outstanding as the Committee deems  appropriate to reflect such Corporate Change
(provided, however, that the Committee may determine in its sole discretion that
no  adjustment  is necessary to Options  then  outstanding)  or (4) provide that
thereafter upon any exercise of an Option theretofore granted the optionee shall
be entitled to purchase  under such  Option,  in lieu of the number of shares of
Stock as to which such Option shall then be exercisable, the number and class of
shares of stock or other securities or property to which the optionee would have
been entitled pursuant to the terms of the agreement of merger, consolidation or
sale  of  assets  and  dissolution  if,   immediately   prior  to  such  merger,
consolidation or sale of assets and dissolution the optionee had been the holder
of record of the  number  of  shares  of Stock as to which  such  Option is then
exercisable.

     (d) For the purposes of clause (2) in Subparagraph  (c) above,  the "Change
of Control  Value"  shall equal the amount  determined  in clause  (i),  (ii) or
(iii), whichever is applicable, as
                                                          -6






follows:  (i) the per share price offered to  stockholders of the Company in any
such merger, consolidation,  sale of assets or dissolution transaction, (ii) the
price per share  offered to  stockholders  of the Company in any tender offer or
exchange  offer  whereby  a  Corporate  Change  takes  place,  or  (iii) if such
Corporate  Change occurs other than pursuant to a tender or exchange offer,  the
fair  market  value  per share of the  shares  into  which  such  Options  being
surrendered  are  exercisable,  as  determined  by the  Committee as of the date
determined by the Committee to be the date of cancellation and surrender of such
Options.  In the event that the  consideration  offered to  stockholders  of the
Company in any transaction  described in this  Subparagraph  (d) or Subparagraph
(c) above consists of anything other than cash,  the Committee  shall  determine
the fair cash  equivalent of the portion of the  consideration  offered which is
other than cash.

     (e) Any adjustment  provided for in Subparagraphs (b) or (c) above shall be
subject to any required stockholder action.

     (f) Except as hereinbefore  expressly provided, the issuance by the Company
of shares of stock of any class or securities  convertible  into shares of stock
of any class, for cash, property,  labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe  therefore,  or upon  conversion  of
shares or  obligations  of the  Company  convertible  into such  shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no  adjustment  by reason  thereof  shall be made with respect to, the number of
shares of Stock subject to Options theretofore granted or the purchase price per
share.
                          X. Amendment or Termination of the Plan

     The Board in its discretion may terminate the Plan at any time with respect
to any shares for which Options have not  theretofore  been  granted.  The Board
shall have the right to alter or amend the Plan or any part thereof from time to
time;  provided,  that no change in any Option  theretofore  granted may be made
which  would  impair  the rights of the  optionee  without  the  consent of such
optionee;  and provided,  further, that the Board may not make any alteration or
amendment which would materially  increase the benefits accruing to participants
under the Plan,  increase  the  aggregate  number of shares  which may be issued
pursuant to the provisions of the Plan, change the class of individuals eligible
to receive  Options  under the Plan or extend the term of the Plan,  without the
approval of the stockholders of the Company.

                                            XI. Securities Laws

     The  Company  shall not be  obligated  to issue any Stock  pursuant  to any
Option granted under the Plan at any time when the shares covered by such Option
have not been  registered  under the Securities Act of 1933 and such other state
and federal laws,  rules or  regulations  as the Company or the Committee  deems
applicable  and, in the opinion of legal  counsel for the  Company,  there is no
exemption from the registration  requirements of such laws, rules or regulations
available for the issuance and sale of such shares.

                                                         -7~





                                                           FIRST AMENDMENT TO
                                                     GLOBAL NATURAL RESOURCES INC.
                                                         1992 STOCK OPTION PLAN

     WHEREAS,  OCEAN ENERGY,  INC., formerly known as SEAGULL ENERGY CORPORATION
(the "Company"),  has heretofore  adopted the GLOBAL NATURAL RESOURCES INC. 1992
STOCK OPTION PLAN (the "GNR 1992 Plan"); and

     WHEREAS, the Company desires to amend the GNR 1992 Plan;

     NOW, THEREFORE, the GNR 1992 Plan shall be amended as follows, effective as
of December 15, 1999:

     I. The following  language  shall be added to Paragraph III of the GNR 1992
Plan:
     "Contrary Plan or Option Agreement provisions  notwithstanding,  any Option
granted  under the Plan that  does not  constitute  an  Incentive  Stock  Option
(including,  without  limitation,  that portion of any Option  denominated as an
Incentive Stock Option which does not qualify as an incentive stock option under
section  422 of the  Code) may be  transferred  by the  optionee  to one or more
permitted transferees; provided that (i) there may be no consideration given for
such transfer,  (ii) the optionee (or such optionee's estate or  representative)
shall remain  obligated to satisfy all employment tax and other  withholding tax
obligations  associated with the exercise of the transferred  Option,  (iii) the
optionee  shall notify the Company in writing that such  transfer has  occurred,
the identity and address of the permitted transferee and the relationship of the
permitted  transferee to the optionee,  and (iv) such transfer shall be effected
pursuant to transfer  documents  approved from time to time by the Company.  Any
permitted  transferee may not further assign or transfer the transferred  Option
otherwise  than by will or the laws of descent and  distribution.  Following any
permitted  transfer,  any such Option  shall  continue to be subject to the same
terms and conditions as were applicable to the Option  immediately  prior to the
transfer,  provided that the term 'optionee' as used in the Plan shall be deemed
to refer also to each  permitted  transferee  where  required by the context.  A
transferred Option may only be exercised by a transferee to the same extent such
Option  could,  at such  time,  be  exercised  by the  optionee  'but  for' such
transfer.  The  term  'permitted  transferees'  shall  mean  one or  more of the
following:  (i) any  member of the  optionee's  immediate  family;  (ii) a trust
established  for the exclusive  benefit of one or more members of such immediate
family;  or (iii) a partnership in which such  immediate  family members are the
only  partners.  The term  'immediate  family'  is defined  for such  purpose as
spouses,  children,  stepchildren and  grandchildren,,  including  relationships
arising from adoption."

2. As amended hereby, the GNR 1992 Plan is specifically ratified and reaffirmed.





                           GLOBAL NATURAL RESOURCES INC.

                        NONSTATUTORY STOCK OPTION AGREEMENT
                        -----------------------------------


AGREEMENT  made as of the 22nd day of  January,  1996,  between  GLOBAL  NATURAL
RESOURCES INC., a New Jersey  corporation  (the "Company") and  ("Employee),  to
carry out the purposes of the GLOBAL  NATURAL  RESOURCES  INC. 1992 STOCK OPTION
PLAN (the "Plan"),  by affording  Employee the opportunity to purchase shares of
common  stock of the  Company  ("Stock"),  and in  consideration  of the  mutual
agreements  and other matters set forth herein and in the Plan,  the Company and
Employee  hereby  agree as  follows:  I. Grant of  Option.  The  Company  hereby
irrevocably  grants to Employee the right and option  ("Option") to purchase all
or any  part of an  aggregate  of  5,000  shares  of  Stock,  on the  terms  and
conditions set forth herein and in the Plan,  which Plan is incorporated  herein
by reference as a part of this Agreement. This Option shall not be treated as an
incentive  stock  option  within the meaning of section  422(b) of the  Internal
Revenue Code of 1986, as amended (the  "Code").  This Option shall be subject to
administrative  actions of the Committee  appointed by the Board of Directors of
the Company (the "Committee") in accordance with the provisions of the Plan.

          2. Purchase Price.  The purchase price of Stock purchased  pursuant to
     the  exercise of this Option  shall be $10.6875  per share,  which has been
     determined to be not less than 50% of the fair market value of the Stock at
     the date of grant of this Option. For all purposes of this Agreement,  fair
     market value of Stock shall be determined in accordance with the provisions
     of the Plan.  In the event that the Company  shall  effect a  distribution,
     other than a normal and customary cash dividend,  upon shares of Stock, the
     purchase  price per share for shares of Stock not issued and sold hereunder
     prior to the  record  date for said  distribution  shall be  reduced  by an
     amount equal to the purchase  price,  as set forth above,  multiplied  by a
     fraction,  the  numerator of which shall be the value of such  distribution
     and the denominator of which shall be the value of all of the Company's net
     assets immediately  preceding such distribution.  The Board of Directors of
     the Company shall conclusively  determine the value of the distribution and
     of the Company's net assets,  and the Board of Directors of the Company may
     take such  additional  measures  as they deem  fair and  equitable  if such
     adjustment  shall not be sufficient to prevent  significant  dinuinution in
     the value of Options as a result of any such distribution.

          3.  Exercise  of Option.  Subject to the  earlier  expiration  of this
     Option as herein provided,  this Option may be exercised, by written notice
     to the Company at its principal executive office addressed to the attention
     of its Chief Executive Officer, at any time and from time to time after the
     date of grant  hereof,  but this Option shall not be  exercisable  for more
     than a percentage of the aggregate  number of shares offered by this Option
     in accordance with the following schedule:





                                                                 Percentage of Shares
               Amount of Time                                    That May Be Purchased
               --------------                                    ---------------------

               Six Months                                                  20%
               1year                                                       40%
               2 year                                                      60%
               3 years                                                     80%
               4 years                                                    100%

          This Option is not transferable by Employee  otherwise than by will or
     the  laws  of  descent  and  distribution,  may be  exercised  only  during
     Employee's  lifetime  by  Employee  (or by  Employee's  guardian  or  legal
     representative)  and  may be  exercised  only  while  Employee  remains  an
     employee of the Company and will terminate and cease to be exercisable upon
     Employee's termination of employment with the Company, except that:

(a)  If  Employee's   employment  with  the  Company  terminates  by  reason  of
     disability  (within  the  meaning of section  22(e)(3)  of the Code),  this
     Option may be exercised in full by Employee (or by  Employee's  guardian or
     legal representative) (or Employee's estate or the person who acquires this
     Option by will or the laws of descent  and  distribution  or  otherwise  by
     reason of the death of  Employee) at any time during the period of one year
     following such termination.

(b)  If Employee dies while in the employ of the Company,  Employee's estate, or
     the  person who  acquires  this  Option by will or the laws of descent  and
     distribution or otherwise by reason of the death of Employee,  may exercise
     this Option in full at any time during the period of one year following the
     date of Employee's death.

(c)  If Employee's  employment with the Company  terminates for any reason other
     than  as  described  in (a)  or  (b)  above,  unless  Employee  voluntarily
     terminates  without the written consent of the Company or is terminated for
     cause, this Option may be exercised by Employee (or by Employee's  guardian
     or legal  representative)  at any time  during the  period of three  months
     following  such  termination  or by  Employee's  estate  (or the person who
     acquires  this  Option by will or the laws of descent and  distribution  or
     other-wise by reason of the death of Employee)  during a period of one year
     following Employee's death if Employee dies during such three-month period,
     but in each case only as to the number of shares  Employee  was entitled to
     purchase  hereunder upon exercise of this Option as of the date  Employee's
     employment so  terminates.  For purposes of this  Agreement,  "cause" shall
     mean Employee's  gross  negligence or willful  misconduct in performance of
     the duties of Employee's  employment,  or Employee's  final conviction of a
     felony or of a misdemeanor involving moral turpitude.





          This Option shall not be exercisable in any event after the expiration
     of ten years from the date of grant  thereof.  The purchase price of shares
     as to which this Option is  exercised  shall be paid in full at the time of
     exercise (a) in cash (including check, bank draft or money order payable to
     the order of the Company), (b) by delivering to the Company shares of Stock
     having  a fair  market  value  equal  to the  purchase  price,  or (c)  any
     combination  of cash or Stock.  No  fraction  of a share of Stock  shall be
     issued by the Company upon exercise of an Option or accepted by the Company
     in payment of the purchase price thereof,  rather, Employee shall provide a
     cash  payment for such amount as is  necessary  to effect the  issuance and
     acceptance of only whole shares of Stock.  Any remaining  fractional  share
     shall be paid by the  Company in cash.  Unless and until a  certificate  or
     certificates representing such shares shall have been issued by the Company
     to Employee,  Employee (or the person  permitted to exercise this Option in
     the event of  Employee's  death)  shall not be or have any of the rights or
     privileges  of  a  shareholder  of  the  Company  with  respect  to  shares
     acquirable upon an exercise of this Option.

          IV. Cashless  Exercise.  Employee (or the person permitted to exercise
     this  Option  in  the  event  of  Employee's   death)  may  direct,   in  a
     properly-executed  written notice,  an immediate market sale or margin loan
     respecting  all or any part of the shares of Stock to which he is  entitled
     upon  exercise of this Option  pursuant  to an  extension  of credit by the
     Company on an  interest-free  basis, to the Employee of the purchase price.
     In such event,  the Company shall deliver the specified number of shares of
     Stock  directly  to the broker  specified  in the  notice and shall  accept
     payment  of the  purchase  price in cash or by check  from  such  broker on
     behalf of the Employee  and shall take all action  necessary to comply with
     the provisions of the applicable Regulations of the Securities Exchange Act
     of  1934  and  with  such  additional  rules  and  regulations  as  may  be
     applicable.  Notwithstanding  the  foregoing,  the  Company  shall  not  be
     required to comply with the  provisions of this Paragraph 4 if, as a result
     of a change in the  accounting  rules  and  regulations  applicable  to the
     Company, or the interpretation  thereof,  compliance with the provisions of
     this  Paragraph  4 will result in the  imposition  of  substantial  adverse
     financial reporting requirements on the Company.

          V.  Withholding of Tax. To the extent that the exercise of this Option
     or the  disposition  of shares of Stock acquired by exercise of this Option
     results in  compensation  income to Employee  for  federal,  state or local
     income tax purposes,  Employee  shall deliver to the Company at the time of
     such  exercise  or  disposition  such  amount of money as the  Company  may
     require to meet its obligation  under  applicable tax laws or  regulations,
     and, if Employee falls to do so, the Company is authorized to withhold from
     any cash or Stock  remuneration then or thereafter  payable to Employee any
     tax  required  to be  withheld  by  reason of such  resulting  compensation
     income.  Upon an exercise of this Option, the Company is further authorized
     in its discretion to satisfy any such  withholding  requirement  out of any
     cash or shares of Stock distributable to Employee upon such exercise.

          VI. Status of Stock.  The Company  intends to register for issue under
     the  Securities  Act of 1933,  as amended  (the  "Act") the shares of Stock
     acquirable  upon  exercise of this  Option,  and to keep such  registration
     effective throughout the period this Option is exercisable.  In the absence
     of such effective  registration or an available exemption from registration
     under the Act, issuance of shares of Stock acquirable upon exercise of this
     Option will be delayed until registration of such shares is effective or an
     exemption from registration under the Act is available. The Company




intends to use its best efforts to ensure that no such delay will occur.  In the
event  exemption from  registration  under the Act is available upon exercise of
this Option,  Employee (or the person  permitted to exercise  this Option in the
event of Employee's death or incapacity),  if requested by the Company to do so,
will execute and deliver to the Company in writing an agreement  containing such
provisions  as the  Company  may require to assure  compliance  with  applicable
securities laws.

          Employee agrees that the shares of Stock which Employee may acquire by
     exercising  this  Option will not be sold or  otherwise  disposed of in any
     manner  which would  constitute a violation  of any  applicable  securities
     laws,  whether  federal  or  state.  Employee  also  agrees  (i)  that  the
     certificates  representing  the shares of Stock purchased under this Option
     may bear such legend or legends as the Committee deems appropriate in order
     to assure compliance with applicable securities laws, (ii) that the Company
     may refuse to register the transfer of the shares of Stock  purchased under
     this Option on the stock  transfer  records of the Company if such proposed
     transfer  would in the  opinion  of  counsel  satisfactory  to the  Company
     constitute a violation of any applicable  securities law and (iii) that the
     Company may give related  instructions  to its transfer  agent,  if any, to
     stop  registration  of the transfer of the shares of Stock  purchased under
     this Option.

VII. Employment Relationship.  For purposes of this Agreement, Employee shall be
     considered  to be in the  employment  of the  Company  as long as  Employee
     remains  an  employee  of  either  the  Company,  a  parent  or  subsidiary
     corporation  (as defined in section 424 of the Code) of the  Company,  or a
     corporation  or a parent or  subsidiary  of such  corporation  assuming  or
     substituting  a new option for this Option.  Any question as to whether and
     when there has been a termination of such employment, and the cause of such
     termination,  shall be determined by the Committee,  and its  determination
     shall be final.

VIII.Binding  Effect.  This  Agreement  shall be  binding  upon and inure to the
     benefit of any successors to the Company and all persons lawfully  claiming
     under Employee.

IX.  Governing  Law.  This  Agreement  shall be governed  by, and  construed  in
     accordance with, the laws of the State of Texas.

          IN WITNESS  WHEREOF,  the Company has caused this Agreement to be duly
     executed  by its  officer  thereunto  duly  authorized,  and  Employee  has
     executed this Agreement, all as of the day and year first above written.

                                           GLOBAL NATURAL RESOURCES INC.



                                           ----------------------------------------
                                           ROBERT F. VAGT
                                           PRESIDENT AND CHIEF EXECUTIVE OFFICER



                                           OPTION HOLDER

EX-10 3 ex10-10_123100.htm EXHIBIT 10.10 1995 Omnibus Stock Plan

Exhibit 10.10

SEAGULL ENERGY CORPORATION
1995 OMNIBUS STOCK PLAN

I. PURPOSE

The purpose of the SEAGULL ENERGY CORPORATION 1995 OMNIBUS STOCK PLAN (the “Plan”) is to provide a means through which SEAGULL ENERGY CORPORATION, a Texas corporation (the “Company”), and its subsidiaries may attract able persons to enter the employ of the Company and to provide a means whereby those key employees upon whom the responsibilities of the successful administration and management of the Company rest, and whose present and potential contributions to the welfare of the Company are of importance, can acquire and maintain stock ownership, thereby strengthening their concern for the welfare of the Company and their desire to remain in its employ. A further purpose of the Plan is to provide such key employees with additional incentive and reward opportunities designed to enhance the profitable growth of the Company. Accordingly, the Plan provides for granting Incentive Stock Options, options which do not constitute Incentive Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Long-Term Incentive Awards, Phantom Stock Awards, or any combination of the foregoing, as is best suited to the circumstances of the particular employee as provided herein.

II. DEFINITIONS

The following definitions shall be applicable throughout the Plan unless specifically modified by any paragraph:

(a) "Award" means, individually or collectively, any Option, Restricted Stock Award, Phantom Stock Award, Long-Term Incentive Award or Stock Appreciation Right.

(b) "Board" means the Board of Directors of the Company.

(c) “Change of Control” means the occurrence of any of the following events: (i) the Company shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Company), (ii) the Company sells, leases or exchanges all or substantially all of its assets to any other person or entity (other than a wholly-owned subsidiary of the Company), (iii) the Company is to be dissolved and liquidated, (iv) any person or entity, including a “group” as contemplated by Section 13(d)(3) of the 1934 Act, acquires or gains ownership or control (including, without limitation, power to vote) of more than 40% of the outstanding shares of the Company’s voting stock (based upon voting power), or (v) as a result of or in connection with a contested election of directors, the persons who were directors of the Company before such election shall cease to constitute a majority of the Board.

(d) “Change of Control Value” shall mean (i) the per share price offered to shareholders of the Company in any such merger, consolidation, reorganization, sale of assets or dissolution transaction, (ii) the price per share offered to shareholders of the Company in any tender offer or exchange offer whereby a Change of Control takes place, or (iii) if such Change of Control occurs other than pursuant to a tender or exchange offer, the Fair Market Value per share of the shares into

which Awards are exercisable, as determined by the Committee. In the event that the consideration offered to shareholders of the Company consists of anything other than cash, the Committee shall determine the fair cash equivalent of the portion of the consideration offered which is other than cash.

(e) “Code” means the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to any section and any regulations under such section.

(f) “Committee” means the Compensation Committee of the Board which shall be (i) constituted so as to permit the Plan to comply with Rule 16b-3 and (ii) constituted solely of “outside directors,” within the meaning of section 162(m) of the Code and applicable interpretive authority thereunder.

(g) "Company" means Seagull Energy Corporation.

(h) “Director” means an individual elected to the Board by the shareholders of the Company or by the Board under applicable corporate law who is serving on the Board on the date the Plan is adopted by the Board or is elected to the Board after such date.

(i) An “employee” means any person (including an officer or a Director) in an employment relationship with the Company or any parent or subsidiary corporation (as defined in section 424 of the Code).

(j) "1934 Act" means the Securities Exchange Act of 1934, as amended.

(k) “Fair Market Value” means, as of any specified date, the reported closing price of the Stock on the New York Stock Exchange Composite Tape on that date, or if no closing price is reported on that date, on the last preceding date on which such closing price of the Stock is so reported. In the event Stock is not publicly traded at the time a determination of its value is required to be made hereunder, the determination of its fair market value shall be made by the Committee in such manner as it deems appropriate.

(l) "Holder" means an employee who has been granted an Award.

(m) "Incentive Stock Option" means an incentive stock option within the meaning of section 422(b) of the Code.

(n) "Long-Term Incentive Award" means an Award granted under Paragraph X of the Plan.

(o) “Long-Term Incentive Award Agreement” means a written agreement between the Company and a Holder with respect to a Long-Term Incentive Award.

(p) “Option” means an Award granted under Paragraph VII of the Plan and includes both Incentive Stock Options to purchase Stock and Options which do not constitute Incentive Stock Options to purchase Stock.

(q) "Option Agreement" means a written agreement between the Company and a Holder with respect to an Option.

(r) "Phantom Stock Award" means an Award granted under Paragraph XI of the Plan.

(s) “Phantom Stock Award Agreement” means a written agreement between the Company and a Holder with respect to a Phantom Stock Award.

(t) “Plan” means the Seagull Energy Corporation 1995 Omnibus Stock Plan, as amended from time to time.

(u) “Restricted Stock Agreement” means a written agreement between the Company and a Holder with respect to a Restricted Stock Award.

(v) "Restricted Stock Award" means an Award granted under Paragraph IX of the Plan.

(w) “Rule 16b-3” means SEC Rule 16b-3 promulgated under the 1934 Act, as such may be amended from time to time, and any successor rule, regulation or statute fulfilling the same or a similar function.

(x) “Spread” means, in the case of a Stock Appreciation Right, an amount equal to the excess, if any, of the Fair Market Value of a share of Stock on the date such right is exercised over the exercise price of such Stock Appreciation Right.

(y) "Stock" means the common stock of the Company.

(z) "Stock Appreciation Right" means an Award granted under Paragraph VIII of the Plan.

(aa) “Stock Appreciation Rights Agreement” means a written agreement between the Company and a Holder with respect to an Award of Stock Appreciation Rights.

III. EFFECTIVE DATE AND DURATION OF THE PLAN

The Plan shall be effective upon the date of its adoption by the Board, provided the Plan is approved by the shareholders of the Company within twelve months thereafter and on or prior to the date of the first annual meeting of shareholders of the Company held subsequent to the acquisition of an equity security by a Holder hereunder for which exemption is claimed under Rule 16b-3. No further Awards may be granted under the Plan after the expiration of ten years from the date of its adoption by the Board. The Plan shall remain in effect until all Awards granted under the Plan have been satisfied or expired.

IV. ADMINISTRATION

(a) Committee. The Plan shall be administered by the Committee.

(b) Powers. Subject to the provisions of the Plan, the Committee shall have sole authority, in its discretion, to determine which employees shall receive an Award, the time or times when such Award shall be made, whether an Incentive Stock Option, nonqualified Option or Stock Appreciation Right shall be granted, the number of shares of Stock which may be issued under each Option, Stock Appreciation Right or Restricted Stock Award, and the value of each Long-Term Incentive Award and Phantom Stock Award. In making such determinations the Committee may take into account the nature of the services rendered by the respective employees, their present and potential contribution to the Company’s success and such other factors as the Committee in its discretion shall deem relevant.

(c) Additional Powers. The Committee shall have such additional powers as are delegated to it by the other provisions of the Plan. Subject to the express provisions of the Plan, the Committee is authorized to construe the Plan and the respective agreements executed thereunder, to prescribe such rules and regulations relating to the Plan as it may deem advisable to carry out the Plan, and to determine the terms, restrictions and provisions of each Award, including such terms, restrictions and provisions as shall be requisite in the judgment of the Committee to cause designated Options to qualify as Incentive Stock Options, and to make all other determinations necessary or advisable for administering the Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in any agreement relating to an Award in the manner and to the extent it shall deem expedient to carry it into effect. The determinations of the Committee on the matters referred to in this Article IV shall be conclusive.

V. GRANT OF OPTIONS, STOCK APPRECIATION RIGHTS,
RESTRICTED STOCK AWARDS,
LONG-TERM INCENTIVE AWARDS
AND PHANTOM STOCK AWARDS;
SHARES SUBJECT TO THE PLAN

(a) Stock Grant and Award Limits. The Committee may from time to time grant Awards to one or more employees determined by it to be eligible for participation in the Plan in accordance with the provisions of Paragraph VI. Subject to Paragraph XII, the aggregate number of shares of Stock that may be issued under the Plan shall not exceed 1,200,000 shares. Shares shall be deemed to have been issued under the Plan only (i) to the extent actually issued and delivered pursuant to an Award, or (ii) to the extent an Award granted under Paragraph VII, VIII, IX or XI is settled in cash. To the extent that an Award lapses or the rights of its Holder terminate, any shares of Stock subject to such Award shall again be available for the grant of an Award. Separate stock certificates shall be issued by the Company for those shares acquired pursuant to the exercise of an Incentive Stock Option and for those shares acquired pursuant to the exercise of any Option which does not constitute an Incentive Stock Option. Notwithstanding any provision in the Plan to the contrary, the maximum number of shares of Stock that may be subject to Awards granted to any one employee during any calendar year is 250,000 shares of Stock (subject to adjustment in the same manner as provided in Paragraph XII with respect to shares of Stock subject to Awards then outstanding). The limitation set forth in the preceding sentence shall be applied in a manner which will permit compensation generated in connection with the exercise of Options and Stock Appreciation Rights and, if determined by the Committee, Restricted Stock Awards to constitute “performance-based” compensation for purposes of section 162(m) of the Code, including, without limitation, counting against such maximum number of shares, to the extent required under section 162(m) of the Code and applicable interpretive authority thereunder, any shares subject to Options, Stock Appreciation Rights and, if applicable, Restricted Stock Awards, that are cancelled or repriced. Further, notwithstanding any provision of the Plan to the contrary, the maximum number of shares of Stock that may be granted as Restricted Stock Awards under Paragraph IX during the term of the Plan is 200,000 shares of Stock (subject to adjustment in the same manner as provided in Paragraph XII with respect to shares of Stock subject to Awards then outstanding).

(b) Stock Offered. The stock to be offered pursuant to the grant of an Award may be authorized but unissued Stock or Stock previously issued and outstanding and reacquired by the Company.

VI. ELIGIBILITY

Awards may be granted only to persons who, at the time of grant, are key employees. Awards may not be granted to any Director who is not an employee. An Award may be granted on more than one occasion to the same person, and, subject to the limitations set forth in the Plan, such Award may include an Incentive Stock Option or an Option which is not an Incentive Stock Option, a Stock Appreciation Right, a Restricted Stock Award, a Long-Term Incentive Award, a Phantom Stock Award or any combination thereof.

VII. STOCK OPTIONS

(a) Option Period. The term of each Option shall be as specified by the Committee at the date of grant.

(b) Limitations on Exercise of Option. An Option shall be exercisable in whole or in such installments and at such times as determined by the Committee.

(c) Special Limitations on Incentive Stock Options. To the extent that the aggregate Fair Market Value (determined at the time the respective Incentive Stock Option is granted) of Stock with respect to which Incentive Stock Options granted after 1986 are exercisable for the first time by an individual during any calendar year under all incentive stock option plans of the Company and its parent and subsidiary corporations exceeds $100,000, such Incentive Stock Options shall be treated as options which do not constitute Incentive Stock Options. The Committee shall determine, in accordance with applicable provisions of the Code, Treasury Regulations and other administrative pronouncements, which of an optionee’s Incentive Stock Options will not constitute Incentive Stock Options because of such limitation and shall notify the optionee of such determination as soon as practicable after such determination. No Incentive Stock Option shall be granted to an individual if, at the time the Option is granted, such individual owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent or subsidiary corporation, within the meaning of section 422(b)(6) of the Code, unless (i) at the time such Option is granted the option price is at least 110% of the Fair Market Value of the Stock subject to the Option and (ii) such Option by its terms is not exercisable after the expiration of five years from the date of grant.

(d) Option Agreement. Each Option shall be evidenced by an Option Agreement in such form and containing such provisions not inconsistent with the provisions of the Plan as the Committee from time to time shall approve, including, without limitation, provisions to qualify an Incentive Stock Option under section 422 of the Code. An Option Agreement may provide for the payment of the option price, in whole or in part, by the delivery of a number of shares of Stock (plus cash if necessary) having a Fair Market Value equal to such option price. Each Option Agreement shall provide that the Option may not be exercised earlier than six months from the date of grant and shall specify the effect of termination of employment on the exercisability of the Option. Moreover, an Option Agreement may provide for a “cashless exercise” of the Option by establishing procedures whereby the Holder, by a properly-executed written notice, directs (i) an immediate market sale or margin loan respecting all or a part of the shares of Stock to which he is entitled upon exercise pursuant to an extension of credit by the Company to the Holder of the option price, (ii) the delivery of the shares of Stock from the Company directly to a brokerage firm and (iii) the delivery of the option price from sale or margin loan proceeds from the brokerage firm directly to the Company. Such Option Agreement may also include, without limitation, provisions relating to (i) subject to the provisions hereof accelerating such vesting on a Change of Control, vesting of Options, (ii) tax matters (including provisions (y) permitting the delivery of additional shares of Stock or the withholding of shares of Stock from those acquired upon exercise to satisfy federal or state income tax withholding requirements and (z) dealing with any other applicable employee wage withholding requirements), and (iii) any other matters not inconsistent with the terms and provisions of this Plan that the Committee shall in its sole discretion determine. The terms and conditions of the respective Option Agreements need not be identical.

(e) Option Price and Payment. The price at which a share of Stock may be purchased upon exercise of an Option shall be determined by the Committee, but such purchase price (i) shall not be less than the Fair Market Value of a share of Stock on the date such Option is granted, and (ii) shall be subject to adjustment as provided in Paragraph XII. The Option or portion thereof may be exercised by delivery of an irrevocable notice of exercise to the Company. The purchase price of the Option or portion thereof shall be paid in full in the manner prescribed by the Committee.

(f) Shareholder Rights and Privileges. The Holder shall be entitled to all the privileges and rights of a shareholder only with respect to such shares of Stock as have been purchased under the Option and for which certificates of stock have been registered in the Holder’s name.

(g) Options and Rights in Substitution for Stock Options Granted by Other Corporations. Options and Stock Appreciation Rights may be granted under the Plan from time to time in substitution for stock options held by individuals employed by corporations who become employees as a result of a merger or consolidation of the employing corporation with the Company or any subsidiary, or the acquisition by the Company or a subsidiary of the assets of the employing corporation, or the acquisition by the Company or a subsidiary of stock of the employing corporation with the result that such employing corporation becomes a subsidiary.

VIII. STOCK APPRECIATION RIGHTS

(a) Stock Appreciation Rights. A Stock Appreciation Right is the right to receive an amount equal to the Spread with respect to a share of Stock upon the exercise of such Stock Appreciation Right. Stock Appreciation Rights may be granted in connection with the grant of an Option, in which case the Option Agreement will provide that exercise of Stock Appreciation Rights will result in the surrender of the right to purchase the shares under the Option as to which the Stock Appreciation Rights were exercised. Alternatively, Stock Appreciation Rights may be granted independently of Options in which case each Award of Stock Appreciation Rights shall be evidenced by a Stock Appreciation Rights Agreement which shall contain such terms and conditions as may be approved by the Committee. The terms and conditions of the respective Stock Appreciation Rights Agreements need not be identical. The Spread with respect to a Stock Appreciation Right may be payable either in cash, shares of Stock with a Fair Market Value equal to the Spread or in a combination of cash and shares of Stock. With respect to Stock Appreciation Rights that are subject to Section 16 of the 1934 Act, however, the Committee shall, except as provided in Paragraph XII(c), retain sole discretion (i) to determine the form in which payment of the Stock Appreciation Right will be made (i.e., cash, securities or any combination thereof) or (ii) to approve an election by a Holder to receive cash in full or partial settlement of Stock Appreciation Rights. Each Stock Appreciation Rights Agreement shall provide that the Stock Appreciation Rights may not be exercised earlier than six months from the date of grant and shall specify the effect of termination of employment on the exercisability of the Stock Appreciation Rights.

(b) Exercise Price. The exercise price of each Stock Appreciation Right shall be determined by the Committee, but such exercise price (i) shall not be less than the Fair Market Value of a share of Stock on the date the Stock Appreciation Right is granted (or such greater exercise price as may be required if such Stock Appreciation Right is granted in connection with an Incentive Stock Option that must have an exercise price equal to 110% of the Fair Market Value of the Stock on the date of grant pursuant to Paragraph VII(c)), and (ii) shall be subject to adjustment as provided in Paragraph XII.

(c) Exercise Period. The term of each Stock Appreciation Right shall be as specified by the Committee at the date of grant.

(d) Limitations on Exercise of Stock Appreciation Right. A Stock Appreciation Right shall be exercisable in whole or in such installments and at such times as determined by the Committee.

IX. RESTRICTED STOCK AWARDS

(a) Forfeiture Restrictions To Be Established by the Committee. Shares of Stock that are the subject of a Restricted Stock Award shall be subject to restrictions on disposition by the Holder and an obligation of the Holder to forfeit and surrender the shares to the Company under certain circumstances (the “Forfeiture Restrictions”). The Forfeiture Restrictions shall be determined by the Committee in its sole discretion, and the Committee may provide that the Forfeiture Restrictions shall lapse upon (i) the attainment of targets established by the Committee that are based on (1) the price of a share of Stock, (2) the Company’s earnings per share, (3) the Company’s revenue, (4) the revenue of a business unit of the Company designated by the Committee, (5) the return on stockholders’ equity achieved by the Company, or (6) the Company’s pre-tax cash flow from operations (ii) the Holder’s continued employment with the Company for a specified period of time, or (iii) a combination of any two or more of the factors listed in clauses (i) and (ii) of this sentence. Each Restricted Stock Award may have different Forfeiture Restrictions, in the discretion of the Committee. The Forfeiture Restrictions applicable to a particular Restricted Stock Award shall not be changed except as permitted by Paragraph IX(b) or Paragraph XII.

(b) Other Terms and Conditions. Stock awarded pursuant to a Restricted Stock Award shall be represented by a stock certificate registered in the name of the Holder of such Restricted Stock Award. The Holder shall have the right to receive dividends with respect to Stock subject to a Restricted Stock Award, to vote Stock subject thereto and to enjoy all other shareholder rights, except that (i) the Holder shall not be entitled to delivery of the stock certificate until the Forfeiture Restrictions shall have expired, (ii) the Company shall retain custody of the Stock until the Forfeiture Restrictions shall have expired, (iii) the Holder may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the Stock until the Forfeiture Restrictions shall have expired, and (iv) a breach of the terms and conditions established by the Committee pursuant to the Restricted Stock Agreement, shall cause a forfeiture of the Restricted Stock Award. At the time of such Award, the Committee may, in its sole discretion, prescribe additional terms, conditions or restrictions relating to Restricted Stock Awards, including, but not limited to, rules pertaining to the termination of employment (by retirement, disability, death or otherwise) of a Holder prior to expiration of the Forfeiture Restrictions. Such additional terms, conditions or restrictions shall be set forth in a Restricted Stock Agreement made in conjunction with the Award. Such Restricted Stock Agreement may also include, without limitation, provisions relating to (i) subject to the provisions hereof accelerating vesting on a Change of Control, vesting of Awards, (ii) tax matters (including provisions (y) covering any applicable employee wage withholding requirements and (z) prohibiting an election by the Holder under section 83(b) of the Code), and (iii) any other matters not inconsistent with the terms and provisions of this Plan that the Committee shall in its sole discretion determine. The terms and conditions of the respective Restricted Stock Agreements need not be identical.

(c) Payment for Restricted Stock. The Committee shall determine the amount and form of any payment for Stock received pursuant to a Restricted Stock Award, provided that in the absence of such a determination, a Holder shall not be required to make any payment for Stock received pursuant to a Restricted Stock Award, except to the extent otherwise required by law.

(d) Agreements. At the time any Award is made under this Paragraph IX, the Company and the Holder shall enter into a Restricted Stock Agreement setting forth each of the matters contemplated hereby and such other matters as the Committee may determine to be appropriate. The terms and provisions of the respective Restricted Stock Agreements need not be identical.

X. LONG-TERM INCENTIVE AWARDS

(a) Performance Period. The Committee shall establish, with respect to and at the time of each Long-Term Incentive Award, a performance period over which the performance of the Holder shall be measured.

(b) Long-Term Incentive Awards. Each Long-Term Incentive Award shall have a maximum value established by the Committee at the time of such Award.

(c) Performance Measures. A Long-Term Incentive Award shall be awarded to an employee contingent upon future performance of the employee, the Company or any subsidiary, division or department thereof by or in which is he employed during the performance period. The Committee shall establish the performance measures applicable to such performance prior to the beginning of the performance period but subject to such later revisions as the Committee shall deem appropriate to reflect significant, unforeseen events or changes.

(d) Awards Criteria. In determining the value of Long-Term Incentive Awards, the Committee shall take into account an employee’s responsibility level, performance, potential, other Awards and such other considerations as it deems appropriate.

(e) Payment. Following the end of the performance period, the Holder of a Long-Term Incentive Award shall be entitled to receive payment of an amount, not exceeding the maximum value of the Long-Term Incentive Award, based on the achievement of the performance measures for such performance period, as determined by the Committee. Payment of a Long-Term Incentive Award may be made in cash, Stock or a combination thereof, as determined by the Committee. Payment shall be made in a lump sum or in installments as prescribed by the Committee. Any payment to be made in Stock shall be based on the Fair Market Value of the Stock on the payment date. If a payment of cash is to be made on a deferred basis, the Committee shall establish whether interest shall be credited, the rate thereof and any other terms and conditions applicable thereto.

(f) Termination of Employment. A Long-Term Incentive Award shall terminate if the Holder does not remain continuously in the employ of the Company at all times during the applicable performance period, except as may be determined by the Committee or as may otherwise be provided in the Award at the time granted.

' (g) Agreements. At the time any Award is made under this Paragraph X, the Company and the Holder shall enter into a Long-Term Incentive Award Agreement setting forth each of the matters contemplated hereby, and, in addition such matters as are set forth in Paragraph IX(b) as the Committee may determine to be appropriate. The terms and provisions of the respective agreements need not be identical.

XI. PHANTOM STOCK AWARDS

(a) Phantom Stock Awards. Phantom Stock Awards are rights to receive shares of Stock (or cash in an amount equal to the Fair Market Value thereof), or rights to receive an amount equal to any appreciation in the Fair Market Value of Stock (or portion thereof) over a specified period of time, which vest over a period of time or upon the occurrence of an event (including without limitation a Change of Control) as established by the Committee, without payment of any amounts by the Holder thereof (except to the extent otherwise required by law) or satisfaction of any performance criteria or objectives. Each Phantom Stock Award shall have a maximum value established by the Committee at the time of such Award.

(b) Award Period. The Committee shall establish, with respect to and at the time of each Phantom Stock Award, a period over which or the event upon which the Award shall vest with respect to the Holder.

(c) Awards Criteria. In determining the value of Phantom Stock Awards, the Committee shall take into account an employee’s responsibility level, performance, potential, other Awards and such other considerations as it deems appropriate.

(d) Payment. Following the end of the vesting period for a Phantom Stock Award, the Holder of a Phantom Stock Award shall be entitled to receive payment of an amount, not exceeding the maximum value of the Phantom Stock Award, based on the then vested value of the Award. Payment of a Phantom Stock Award may be made in cash, Stock or a combination thereof as determine by the Committee. Payment shall be made in a lump sum or in installments as prescribed by the Committee in its sole discretion. Any payment to be made in Stock shall be based on the Fair Market Value of the Stock on the payment date. Cash dividend equivalents may be paid during or after the vesting period with respect to a Phantom Stock Award, as determined by the Committee. If a payment of cash is to be made on a deferred basis, the Committee shall establish whether interest shall be credited, the rate thereof and any other terms and conditions applicable thereto.

(e) Termination of Employment. A Phantom Stock Award shall terminate if the Holder does not remain continuously in the employ of the Company at all times during the applicable vesting period, except as may be otherwise determined by the Committee or as set forth in the Award at the time of grant.

(f) Agreements. At the time any Award is made under this Paragraph XI, the Company and the Holder shall enter into a Phantom Stock Award Agreement setting forth each of the matters contemplated hereby and, in addition such matters as are set forth in Paragraph IX(b) as the Committee may determine to be appropriate. The terms and provisions of the respective agreements need not be identical.

XII. RECAPITALIZATION OR REORGANIZATION

(a) The shares with respect to which Awards may be granted are shares of Stock as presently constituted, but if, and whenever, prior to the expiration of an Award theretofore granted, the Company shall effect a subdivision or consolidation of shares of Stock or the payment of a stock dividend on Stock without receipt of consideration by the Company, the number of shares of Stock with respect to which such Award may thereafter be exercised or satisfied, as applicable, (i) in the event of an increase in the number of outstanding shares shall be proportionately increased, and the purchase price per share shall be proportionately reduced, and (ii) in the event of a reduction in the number of outstanding shares shall be proportionately reduced, and the purchase price per share shall be proportionately increased.

(b) If the Company recapitalizes or otherwise changes its capital structure, thereafter upon any exercise or satisfaction, as applicable, of an Award theretofore granted the Holder shall be entitled to (or entitled to purchase, if applicable) under such Award, in lieu of the number of shares of Stock then covered by such Award, the number and class of shares of stock and securities to which the Holder would have been entitled pursuant to the terms of the recapitalization if, immediately prior to such recapitalization, the Holder had been the holder of record of the number of shares of Stock then covered by such Award.

(c) In the event of a Change of Control, outstanding Awards other than Options shall immediately vest and become exercisable or satisfiable, as applicable. The Committee, in its discretion, may determine that upon the occurrence of a Change of Control, each Award other than an Option outstanding hereunder shall terminate within a specified number of days after notice to the Holder, and such Holder shall receive, with respect to each share of Stock subject to such Award, cash in an amount equal to the excess, if any, of the Change of Control Value. Further, in the event of a Change of Control, the Committee, in its discretion shall act to effect one or more of the following alternatives with respect to outstanding Options, which may vary among individual Holders and which may vary among Options held by any individual Holder: (1) accelerate the time at which Options then outstanding may be exercised so that such Options may be exercised in full for a limited period of time on or before a specified date (before or after such Change of Control) fixed by the Committee, after which specified date all unexercised Options and all rights of Holders thereunder shall terminate, (2) require the mandatory surrender to the Company by selected Holders of some or all of the outstanding Options held by such Holders (irrespective of whether such Options are then exercisable under the provisions of the Plan) as of a date, before or after such Change of Control, specified by the Committee, in which event the Committee shall thereupon cancel such Options and the Company shall pay to each Holder an amount of cash per share equal to the excess, if any, of the Change of Control Value of the shares subject to such Option over the exercise price(s) under such Options for such shares, (3) make such adjustments to Options then outstanding as the Committee deems appropriate to reflect such Change of Control (provided, however, that the Committee may determine in its sole discretion that no adjustment is necessary to Options then outstanding) or (4) provide that thereafter upon any exercise of an Option theretofore granted the Holder shall be entitled to purchase under such Option, in lieu of the number of shares of Stock then covered by such Option the number and class of shares of stock or other securities or property (including, without limitation, cash) to which the Holder would have been entitled pursuant to the terms of the agreement of merger, consolidation or sale of assets and dissolution if, immediately prior to such merger, consolidation or sale of assets and dissolution the Holder had

been the holder of record of the number of shares of Stock then covered by such Option. The provisions contained in this paragraph shall be inapplicable to an Award granted within six (6) months before the occurrence of a Change of Control if the Holder of such Award is subject to the reporting requirements of Section 16(a) of the 1934 Act. The provisions contained in this paragraph shall not terminate any rights of the Holder to further payments pursuant to any other agreement with the Company following a Change of Control.

(d) In the event of changes in the outstanding Stock by reason of recapitalization, reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in capitalization occurring after the date of the grant of any Award and not otherwise provided for by this Paragraph XII, any outstanding Awards and any agreements evidencing such Awards shall be subject to adjustment by the Committee at its discretion as to the number and price of shares of Stock or other consideration subject to such Awards. In the event of any such change in the outstanding Stock, the aggregate number of shares available under the Plan may be appropriately adjusted by the Committee, whose determination shall be conclusive.

(e) The existence of the Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities ahead of or affecting Stock or the rights thereof, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act of proceeding.

(f) Any adjustment provided for in Subparagraphs (a), (b), (c) or (d) above shall be subject to any required shareholder action.

(g) Except as hereinbefore expressly provided, the issuance by the Company of shares of stock of any class or securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares of obligations of the Company convertible into such shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Stock subject to Awards theretofore granted or the purchase price per share, if applicable.

XIII. AMENDMENT AND TERMINATION OF THE PLAN

The Board in its discretion may terminate the Plan at any time with respect to any shares for which Awards have not theretofore been granted. The Board shall have the right to alter or amend the Plan or any part thereof from time to time; provided that no change in any Award theretofore granted may be made which would impair the rights of the Holder without the consent of the Holder (unless such change is required in order to cause the benefits under the Plan to qualify as performance-based compensation within the meaning of section 162(m) of the Code and applicable interpretive authority thereunder), and provided, further, that the Board may not, without approval of the shareholders, amend the Plan:

(a) to increase the maximum number of shares which may be issued on exercise or surrender of an Award, except as provided in Paragraph XII;

(b) to change the Option price;

(c) to change the class of employees eligible to receive Awards or materially increase the benefits accruing to employees under the Plan;

(d) to extend the maximum period during which Awards may be granted under the Plan;

(e) to modify materially the requirements as to eligibility for participation in the Plan; or

(f) to decrease any authority granted to the Committee hereunder in contravention of Rule 16b-3.

XIV. MISCELLANEOUS

(a) No Right To An Award. Neither the adoption of the Plan by the Company nor any action of the Board or the Committee shall be deemed to give an employee any right to be granted an Award to purchase Stock, a right to a Stock Appreciation Right, a Restricted Stock Award, a Long-Term Incentive Award or a Phantom Stock Award or any of the rights hereunder except as may be evidenced by an Award or by an Option Agreement, Stock Appreciation Rights Agreement, Restricted Stock Agreement, Long-Term Incentive Award Agreement or Phantom Stock Award Agreement duly executed on behalf of the Company, and then only to the extent and on the terms and conditions expressly set forth therein. The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of funds or assets to assure the payment of any Award.

(b) No Employment Rights Conferred. Nothing contained in the Plan shall (i) confer upon any employee any right with respect to continuation of employment with the Company or any subsidiary or (ii) interfere in any way with the right of the Company or any subsidiary to terminate his or her employment at any time.

(c) Other Laws; Withholding. The Company shall not be obligated to issue any Stock pursuant to any Award granted under the Plan at any time when the shares covered by such Award have not been registered under the Securities Act of 1933 and such other state and federal laws, rules or regulations as the Company or the Committee deems applicable and, in the opinion of legal counsel for the Company, there is no exemption from the registration requirements of such laws, rules or regulations available for the issuance and sale of such shares. No fractional shares of Stock shall be delivered, nor shall any cash in lieu of fractional shares be paid. The Company shall have the right to deduct in connection with all Awards any taxes required by law to be withheld and to require any payments required to enable it to satisfy its withholding obligations.

(d) No Restriction on Corporate Action. Nothing contained in the Plan shall be construed to prevent the Company or any subsidiary from taking any corporate action which is deemed by the Company or such subsidiary to be appropriate or in its best interest, whether or not such action would have an adverse effect on the Plan or any Award made under the Plan. No employee, beneficiary or other person shall have any claim against the Company or any subsidiary as a result of any such action.

(e) Restrictions on Transfer. An Award shall not be transferable otherwise than by will or the laws of descent and distribution or pursuant to a “qualified domestic relations order” as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder, and shall be exercisable during the Holder’s lifetime only by such Holder or the Holder’s guardian or legal representative.

(f) Rule 16b-3. It is intended that the Plan and any grant of an Award made to a person subject to Section 16 of the 1934 Act meet all of the requirements of Rule 16b-3. If any provision of the Plan or any such Award would disqualify the Plan or such Award under, or would otherwise not comply with, Rule 16b-3, such provision or Award shall be construed or deemed amended to conform to Rule 16b-3.

(g) Section 162(m). It is intended that the Plan comply fully with and meet all the requirements of Section 162(m) of the Code so that Options and Stock Appreciation Rights granted hereunder and, if determined by the Committee, Restricted Stock Awards, shall constitute “performance-based” compensation within the meaning of such section. If any provision of the Plan would disqualify the Plan or would not otherwise permit the Plan to comply with Section 162(m) as so intended, such provision shall be construed or deemed amended to conform to the requirements or provisions of Section 162(m); provided that no such construction or amendment shall have an adverse effect on the economic value to a Holder of any Award previously granted hereunder.

(h) Governing Law. This Plan shall be construed in accordance with the laws of the State of Texas.

EX-10 4 ex10-12_123100.htm EXHIBIT 10.12 Third Amendment to UMC 1987 Nonqualified Stock Option Plan

                                                                                EXHIBIT 10.12
                                                THIRD AMENDMENT TO
                                            UNITED MERIDIAN CORPORATION
                                        1987 NONQUALIFIED STOCK OPTION PLAN

1.   The United Meridian Corporation 1987 Nonqualified Stock Option Plan is hereby amended by amending and
restating section 4(d) to read in its entirety as follows:

(d)      Manner of Exercise.  Option Shares purchased upon exercise of options shall at the time of purchase be
         ------------------
           paid for in full.  To the extent that the right to purchase shares has accrued hereunder, options may
           be exercised from time to time by written notice to the Company stating the full number of shares with
           respect to which the option is being exercised and the time of delivery thereof, which shall be at
           least fifteen days after the giving of such notice unless an earlier date shall have been mutually
           agreed upon, accompanied by full payment for the shares by certified or official bank check or the
           equivalent thereof acceptable to the Company.  At the time of delivery, the Company shall, without
           transfer or issue tax to the optionee (or other person entitled to exercise the option), deliver to
           the optionee (or to such other person) at the principal office of the Company, or such other place as
           shall be mutually agreed upon, a certificate or certificates for the Option Shares, provided; however,
           that the time of delivery may be postponed by the Company for such period as may be required for it
           with reasonable diligence to comply with the any requirements of law.  The Company shall satisfy its
           employment ax and other tax withholding tax, if any, that must be paid under federal, state and local
           law due to the exercise of the option, subject to such restrictions or procedures as the Company deems
           necessary to satisfy Rule 16b-3 of the Securities Exchange Act of 1934.  In the even the Option Shares
           issuable upon exercise are not registered under the Securities Act of 19933 (the "Act"), then the
           Company at the time of exercise will require, in addition, that the registered owner deliver an
           investment representation in form acceptable to the Company and its counsel, and the Company will
           place a legend on such certificate restricting the transfer of same.  There shall be no obligation or
           duty for the Company to register under the Act at any time the Options Shares issuable upon exercise
           of the options.

2.   The United Meridian Corporation 1987 Nonqualifed Stock Option Plan is hereby further amended by amending
Section 3 of Appendix A to read in its entirety as follows:
             ----------

3.       Manner of Exercise.  The Optionee (or other person entitled to exercise this option) shall purchase
         ------------------
         shares of stock of the Company subject hereto by the payment to the Company of the purchase price in
         full and the amount of withholding tax due upon the exercise of the option. This option may be exercised
         from time to time of delivery thereof, which shall be at least fifteen days after the giving of notice
         unless an earlier date shall have been agreed upon between the Optionee (or other person entitled to
         exercise this option) and the Company, accompanied by full payment for the shares by certified or
         official bank check or the equivalent thereof acceptable to the Company.  The Company will, as soon as
         is reasonably possible, notify the Optionee of the amount of employment tax and other withholding tax,
         if any, that must be paid under federal, state and local law due to the exercise of the option.  The
         Company shall have no obligation to deliver certificates for the shares purchased until the Optionee
         pays to the Company the amount of withholding specified in the Company's notice by certified or official
         bank check or the equivalent thereof acceptable to the Company.  At the time of delivery, the Company
         shall, without transfer or issue tax to the Optionee (or other personal entitled to exercise this
         option) deliver at the principal office of the Company, or at such other place as shall be mutually
         agreed upon, a certificate or certificates for such shares, provided, however, that the time of delivery
         may be postponed by the Company for such period as may be required for it to comply with reasonable
         diligence with any requirements of law.

3.   The United Meridian Corporation 1987 Nonqualified Stock Option Plan is hereby amended by amending and
restating Section 3 to read in its entirety as follows:

     3.  Participants.  All directors who are employees of the Company and all officers and other employees of
         ------------
the Company or any of its Affiliates may be granted options under the Plan.

4.   The United Meridian Corporation 1987 Nonqualified Stock Option Plan is hereby further amended by amending
and restating Section 5(1) to read in its entirety as follows:

     5.  Administration.
         --------------

         (a)  The plan shall be administered by a Compensation Committee (the "Committee") consisting of not less
than three (3) directors each of whom is a "disinterested person" as defined in Rule 16b-3(c) promulgated under
the Securities Exchange Act of 1934.  The members of the Committee shall be appointed by the Board of Directors.
The Board of Directors may, from time to time, remove members from or add members to the Committee.  Vacancies in
the Committee, however cuase, shall be filled by the Board of Directors.  The Committee shall select one of its
members chairman and shall hold meetings at such times and places as it may determine.  The Committee may appoint
a secretary and, subject to the provisions of the Plan and to policies determined by the Board of Directors of
the Company, may make such rules and regulations of the conduct of its business as it shall deem advisable.  A
majority of the Committee shall constitute a quorum. All actions of the Committee shall be taken by a majority of
its members.  Any action may be taken by a written instrument signed by a majority of the members, and action so
taken shall be fully as effective as if it had been taken by a vote of the majority of the members at a meeting
duly called and held.

     IN WITNESS WHEREOF, the undersigned has caused this Amendment to be executed by its duly authorized officer
as of November ___, 1993.

                                            UNITED MERIDIAN CORPORATION

                                            By:______________________________

                                            Name: ___________________________

                                            Title: ____________________________

                                                          FOURTH AMENDMENT TO
                                                      UNITED MERIDIAN CORPORATION
                                                  1987 NONQUALIFED STOCK OPTION PLAN


1.       The United Meridian Corporation 1987 Nonqualified Stock Option Plan is hereby amended by amending and restating Section 4(d)
to red in its entirety as follows:

         (d)  Manner Of Exercise
              ------------------

         (1)  Option Shares purchased upon exercise of options shall at the time of purchase be paid for in full.  To the extent that the
right to purchase shares has accrued hereunder, options may be exercised from time to time by written notice to the Company stating
the full number of share with respect to which the option is being exercised and the time of delivery thereof, which shall be at
least fifteen days after the giving of such notice unless an earlier date shall have been mutually agreed upon, accompanied by full
payment for the shares (i) by certified or official bank check, (ii) by the delivery of a number of shares of Common Stock (plus cash
if necessary) having a market value equal to such payment amount or (iii) by delivery of the equivalent thereof acceptable to the
Company.  For purposes of this Plan, the "market value" of each share of Common Stock means (A) if the Common Stock is listed on a
national securities exchange, the closing sale price per share as reported by NASDAQ, (C) if the Common Stock is traded in the
over-the-counter market but not quoted in the National Market System, the average of the closing bid and asked quotations per share
as reported by NASDAQ, or any other nationally accepted reporting medium if NASDAQ quotations shall be unavailable, or (D) if none of
the foregoing applies, market value of the Common Stock will be the fair value of the Common Stock as reasonably determined in the
good faith judgment of the Company's Board of Directors.

         (2)  At the time of delivery, the Company shall, without transfer or issue tax to the optionee (or other persona entitled to
exercise the option), deliver to the optionee (or to such other person) at the principal office of the Comp[any, or such other place
as shall be mutually agreed upon, a certificate  or certificates for the Option Shares, provided, however, that the time of delivery
may be postponed by the Company for such period as may be required for it with reasonable diligence to comply with any requirements
of law.  The Company shall satisfy its employment tax and other tax withholding tax, if any, that must be paid under federal, state
and local law due to the exercise of the option, subject to such restrictions or procedures as the Company deems necessary to satisfy
Rule 16b-3 of the Securities Exchange Act of 1934. The payment of such employment and withholding tax may be by certified or official
bank check or by the delivery of a number of shares of Common Stock (plus cash if necessary) having a market value equal to the
amount of such employment and withholding tax or by delivery of the equivalent thereof acceptable to the Company.  In the event the
Option Shares issuable upon exercise are not registered under the Securities Act of 1933 (the "Act"), then the Company at the time of
exercise will require, in addition, that the registered owner deliver an investment representation inform acceptable to the Company
and its counsel, and the Company will place a legend of such certificate restricting the transfer of same.  There shall be no
obligation or duty for the Company to register under the Act at any time the Option Shares issuable upon exercise of the options.

     2.  The United Meridian Corporation 1987 Nonqualified Stock Option Plan is hereby further amended by amending and restating
Section 4(f)(1) and Section 4(f)(2) and including Section 4(f)(3):

         (1) In the event that optionee terminates or is terminated from his relationship with the Company and its Affiliates, and the
provisions of  Sections 4(f)(2), 4(f)(3) and 4(i) do not apply, the options granted to optionee pursuant to this Plan may be
exercised to the extent the optionee was entitled to exercise the option immediately prior to such termination, at any time within
ninety (90) days after the date of such termination (if otherwise within the option period).

         (2) In the event that optionee shall die before his relationship with the Company (or an Affiliate) terminates, or if
optionee's relationship with the Company (or an Affiliate) is terminated because optionee has become disabled within the meaning of
Section 105(d)(4) of the Code, such option shall continue to vest in accordance with the Plan and the Nonqualified Stock Option
Agreement in effect for a period of twelve (12) months from the date of death of such optionee or termination of his relationship due
to disability, and optionee, his estate or beneficiary shall have the right to exercise the options at any time within such twelve
(12) month period (if otherwise within the term of the option).  Notwithstanding the foregoing, the provisions of this Section
4(f)(2) shall be subject to Sections 4(b), 4(h), and 4(i) as may earlier terminate the option.

         (3)      In the event that optionee retires from service of the Company and its Affiliates in accordance with the Company's
or its Affiliates' retirement policies in effect from time to time, the options granted to optionee pursuant to this Plan shall
continue to vest during the lifetime of the optionee in accordance with the Plan and the Nonqualified Stock Option Agreement in
effect and may be exercised at any time during the remaining term of the option.  If an optionee that has retired dies subsequent to
such optionee's retirement during the term of the option, such option shall continue to vest in accordance with the Plan and the
Nonqualified Stock Option Agreement in effect and may be exercised within twelve (12) months of such optionee's death (if otherwise
within the option period), but not thereafter.  Notwithstanding the foregoing, the provisions of this Section 4(f)(3) shall be
subject to Sections 4(b), 4(h) and 4(i) as may earlier terminate the option.

     3.  The United Meridian Corporation 1987 Nonqualified Stock Option Plan is hereby further amended by amending and restating
Section 3 of Appendix A to read in its entirety as follows:

         3.       Manner of Exercise.  The Optionee (or other person entitled to exercise this option) shall purchase shares of stock
                  ------------------
of the Company subject hereto by the payment to the Company of the purchase price in full and the amount of employment tax and
withholding tax due upon the exercise of the option.  This option may be exercised for time to time by written notice to the Company
stating the full number of shares to be purchased and the time of delivery thereof, which shall be at least fifteen days after the
giving of notice unless an earlier date shall have been agreed upon between the Optionee (or other person entitled to exercise this
option) and the Company, accompanied by full payment for the shares (i) by certified or official bank check, (ii) by the delivery of
a number of shsares of Common Stock (plus cash if necessary) having a market value (as such term is defined in Section 4(d)(1) of the
Plan) equal to such payment amount or (iii) by delivery of the equivalent thereof acceptable to the Company.  The Company will, as
soon as is reasonably possible, notify the Optionee of the amount of employment tax and other withholding tax, if any, that must be
paid under federal, state and local law due to the exercise of the option.  The Company shall have no obligation to deliver
certificates for the shares purchased until the Optionee pays to the Company the purchase price in full and the amount of employment
tax and withholding tax specified in the Company's notice by certified or official bank check or by the delivery of a umber of shares
of Common Stock (plus cash if necessary) having a market value equal to the amount of the purchase price and the employment tax and
withholding tax or the equivalent thereof acceptable to the Company.  At the time of delivery, the Company shall, without transfer or
issue tax to the Optionee (or other person entitled to exercise this option) deliver at the principal office of the Company, or at
such other place as shall be mutually agreed upon, a certificate or certificates for such shares, provided, however, that the time of
delivery may be postponed by the Company for such period as maybe required for it to comply with the reasonable diligence with any
requirements of law.

     4.  The United Meridian Corporation 1987 Nonqualified Stock Option Plan is hereby further amended by amending and restating
Section 4of Appendix A to read in its entirety as follows:

         4.       Termination of Relationship.
                  ----------------------------

                  (a) In the event that Optionee shall die before his relationship with the Company (or an Affiliate terminate, or if
Optionee's relationship with the Company (or an Affiliate) is terminated because Optionee has become disabled within the meaning of
Section 105(d)(4) of the Code, this option shall continue to vest in accordance with the Plan and this Option Agreement for a period
of twelve (12) months from the date of death of Optionee or termination of his relationship due to disability, and Optionee, his
estate or beneficiary shall have the right to exercise this option at any time within such twelve (12) month period (if otherwise
within the term of the Option).  Notwithstanding the foregoing, the provisions of this Section 4(a) shall be subject to Sections 1(a)
and 6 hereof, which may earlier terminate the option.

                  (b) In the event that the Optionee retires from service from the Company and its Affiliates in accordance with the
Company's (or its Affiliates') retirement policies in effect from time to time, this option shall continue to vest during the
lifetime of the Optionee in accordance with the terms of the Plan and this Option Agreement and maybe exercised at any time during
the remaining of the option.  If Optionee does subsequent to his retirement during the term of this option, this option shall
continue to vest in accordance with the Plan and this Option Agreement and may be exercised within twelve (12) months of Optionee's
death (if otherwise within the option period), but not thereafter.  Notwithstanding the foregoing, the provisions of this Section
4(b) shall be subject to Sections 1(a) and 6, which may earlier terminate the option.

                  (c) In the event that Optionee terminates or is terminated from his relationship with the Company and its
Affiliates, and the provisions of Section 4(a) and 4(b) hereof and Section 4(i) of the Plan do not apply, Optionee may exercise this
option, to the extent Optionee was entitled to exercise this option immediately prior to such termination, at any time within ninety
(90) days after the date of such termination (if otherwise within the option period).

     5.  In accordance with Section 7 of the United Meridian Corporation 1987 Nonqualified Stock Option Plan, Sections 3 and 4 of all
outstanding Nonqualified Stock Option Agreements entered into between the Company and certain directors, officers and employees of
the Company and its Affiliates are hereby amended and restated in their entirety to conform with the above amendments to Sections 3
and 4 of Appendix A of the Plan.  The amendments do not, however, apply to Section 4 of the Nonqualified Stock Option Agreements
entered into between the Company and Joseph D. Mahaffey, Bill Haynes, George Wilder and Douglas Bailey.

     IN WITNESS WHEREOF, the undersigned has caused this Amendment to be executed by its duly authorized officers as of April 6, 1994.

                                                     UNITED MERIDIAN CORPORATION



                                               By: ___________________________________
                                               Name: _________________________________
                                               Title: __________________________________

EX-10 5 ex10-20_123100.htm EXHIBIT 10.20 Management Stability Plan

                                                                           EXHIBIT 10.20
                                             SEAGULL ENERGY CORPORATION

                                              MANAGEMENT STABILITY PLAN



         The SEAGULL ENERGY  CORPORATION  MANAGEMENT  STABILITY PLAN (the "Plan") is hereby adopted pursuant to the
authorization of the Board of Directors of SEAGULL ENERGY  CORPORATION  (the "Company") for its eligible  employees
as follows:

                                                         I.

                                            DEFINITIONS AND CONSTRUCTION

         1.1      Definitions.  Where the  following  words and  phrases  appear in the Plan,  they  shall have the
respective meanings set forth below, unless their context clearly indicates to the contrary.

                  (a)      "Board" shall mean the Board of Directors of the Company.

                  (b)      "Change  in  Duties"  shall mean the  occurrence,  within two years  after the date upon
which a Change of Control occurs, of any one or more of the following:

                           (1)      with  respect  to a  Covered  Employee  of Grade 16 or  higher,  a  significant
         reduction in the duties of such Covered  Employee from those  applicable to him  immediately  prior to the
         date on which a Change of Control occurs;

                           (2)      a reduction in a Covered  Employee's annual salary or target  opportunity under
         any applicable  bonus or incentive  compensation  plan from that provided to him immediately  prior to the
         date on which a Change of Control occurs;

                           (3)      receipt of employee  benefits  (including  but not limited to medical,  dental,
         life insurance,  accidental, death, and dismemberment,  and long-term disability plans) and perquisites by
         a Covered  Employee after the date on which a Change of Control  occurs that are  materially  inconsistent
         with the  employee  benefits  and  perquisites  provided by the  Employer to other  employees  of the same
         grade; or

                           (4)      a change in the location of a Covered Employee's  principal place of employment
         by the  Employer by more than 50 miles from the location  where he was  principally  employed  immediately
         prior to the date on which a Change of Control occurs.

                  (c)      "Change of Control" shall mean the occurrence of either of the following events:

                           (1)      the Company (A) shall not be the surviving entity in any merger,  consolidation
         or  other  reorganization  (or  survives  only  as a  subsidiary  of an  entity  other  than a  previously
         wholly-owned  subsidiary of the Company) or (B) is to be dissolved and  liquidated,  and as a result of or
         in  connection  with  such  transaction,  the  persons  who were  directors  of the  Company  before  such
         transaction cease to constitute a majority of the Board; or

                           (2)      any person or entity,  including a "group" as contemplated by Section  13(d)(3)
         of the  Securities  Exchange  Act of 1934,  acquires or gains  ownership  or control  (including,  without
         limitation,  power to vote) of 20% or more of the outstanding  shares of the Company's voting stock (based
         upon  voting  power),  and as a result of or in  connection  with such  transaction,  the persons who were
         directors of the Company before such transaction cease to constitute a majority of the Board.

                  (d)      "Code" shall mean the Internal Revenue Code of 1986, as amended.

                  (e)      "Committee" shall mean the Compensation Committee of the Board.

                  (f)      "Company" shall mean Seagull Energy Corporation.

                  (g)      "Compensation"  shall mean the greater of (1) a Covered  Employee's  annual  salary plus
his  Targeted  EIP  Award,  if any,  immediately  prior to the date on which a Change  of  Control  occurs or (2) a
Covered  Employee's annual salary plus his Targeted EIP Award, if any, at the time of his Involuntary  Termination.
"Six  Months'  Compensation"  shall  mean  Compensation  divided  by 2.  "Three  Months'  Compensation"  shall mean
Compensation divided by 4.  "Semi-Monthly Compensation" shall mean Compensation divided by 24.

                  (h)      "Covered  Employee"  shall mean any  individual  who, on the date upon which a Change of
Control occurs,  is a regular,  full-time  salaried  employee of the Employer or an hourly employee of the Employer
who is  normally  scheduled  to work 550 or more  hours per year,  other  than (1) any  individual  whose  terms of
employment  are  governed  by a  collective  bargaining  agreement  between a  collective  bargaining  unit and the
Employer unless such agreement  provides for coverage of such individual  under the Plan, (2) any individual who is
a party to a  written  agreement  with the  Employer  providing  for  severance  payments  or  benefits  upon  such
individual's  termination  of employment  with the Employer,  and (3) an employee who is classified as a temporary,
casual, or an independent contractor under the Employer's employment policies.

                  (i)      "Effective Date" shall mean the date the Board approves the Plan.

                  (j)      "EIP"  shall  mean  the  Seagull  Energy  Corporation  Executive  Incentive  Plan or any
successor thereto.

                  (k)      "Employer"  shall mean the  Company  and each  eligible  organization  designated  as an
Employer in accordance with the provisions of Section 4.4 of the Plan.

                  (l)      "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.

                  (m)      "Grade"  shall mean the greater of (1) a Covered  Employee's  salary  classification  by
the Employer  immediately prior to the date on which a Change of Control occurs or (2) a Covered  Employee's salary
classification by the Employer at the time of his Involuntary Termination.

                  (n)      "Involuntary   Termination"   shall  mean  any  termination  of  a  Covered   Employee's
employment with the Employer which:

                           (1)      does not result from a voluntary  resignation  by the Covered  Employee  (other
         than a resignation pursuant to Clause (2) of this Section 1.1(n)); or

                           (2)      results from a  resignation  by a Covered  Employee on or before the date which
         is sixty days after the date the Covered Employee receives notice of a Change in Duties;

provided,  however,  that the term  "Involuntary  Termination"  shall not  include a  Termination  for Cause or any
termination as a result of a Covered  Employee's death,  disability under  circumstances  entitling him to benefits
under the Employer's long-term disability plan or Retirement.

                  (o)      "Objective EIP Award" shall mean, with respect to any Covered  Employee,  the amount, if
any,  earned under the objective  criterion of the EIP in effect for the calendar year  preceding  such  Employee's
Involuntary Termination.

                  (p)      "Retirement"  shall  mean the  Covered  Employee's  resignation  on or after the date he
reaches age sixty-five.

                  (q)      "Targeted  EIP Award" shall mean the Covered  Employee's  Incentive  Target as set forth
under the EIP in effect  for the year with  respect to which such  award is being  determined,  if any,  or for the
last  preceding year in which an EIP was in effect,  expressed as a dollar amount based on such Covered  Employee's
annual salary for such year.

                  (r)      "Termination  for Cause" shall mean any termination of a Covered  Employee's  employment
with the Employer by reason of the Covered  Employee's (1) conviction of a felony or a misdemeanor  involving moral
turpitude,  (2)  engagement in conduct which is injurious  (monetarily  or otherwise) to the Employer or any of its
affiliates  (including,  without  limitation,  misuse of the Employer's or an affiliate's funds or other property),
(3)  engagement  in business  activities  which are in conflict with the business  interests of the  Employer,  (4)
insubordination  or (5) engagement in conduct which is in violation of the Employer's  safety rules or standards or
which otherwise may cause or causes injury to another employee or any other person.

                  (s)      "Welfare Benefit Coverages" shall mean the medical,  dental, life insurance,  accidental
death and dismemberment and long-term disability coverages provided by the Employer to its active employees.

         1.2      Number and Gender.  Wherever  appropriate  herein,  word used in the singular shall be considered
to include the plural and the plural to include  the  singular.  The  masculine  gender,  where  appearing  in this
Plan, shall be deemed to include the feminine gender.

         1.3      Headings.  The headings of Articles and Sections  herein are included  solely for convenience and
if there is any conflict between such headings and the text of the Plan, the text shall control.

                                                        II.

                                                 SEVERANCE BENEFITS

         2.1      Severance  Benefits.  Subject to the  provisions of Section 2.2 hereof,  if a Covered  Employee's
employment  by the  Employer or  successor  thereto  shall be subject to an  Involuntary  Termination  which occurs
within  two  years  after the date upon  which a Change of  Control  occurs,  then the  Covered  Employee  shall be
entitled to the following severance benefits:

                  (a)      A lump sum cash payment in accordance with the following schedule:

                  Grade                              Benefit Amount

                  16 - 18  2 x Compensation

                    15              1.5 x Compensation

                    14              1.25 x Compensation

                  12 - 13  1 x Compensation

                  0 - 11            Lesser of:

                                    (1)     the  sum  of  (A)  Semi-Monthly  Compensation  as  of  his  Involuntary
                                            Termination  for each  full year and  fraction  thereof  of  continuous
                                            employment  with  the  Employer  as a  Covered  Employee  from his most
                                            recent date of hire, and (B)  Semi-Monthly  Compensation  for each full
                                            $10,000  increment  of such  Covered  Employee's  annual  salary at the
                                            time of his  Involuntary  Termination;  provided,  however,  that in no
                                            event  shall any  Covered  Employee  receive  less than  Three  Months'
                                            Compensation; or

                                    (2)     1 x Compensation.

                  (b)      A lump sum cash  payment  in an amount  equal to the  remaining  portion of any award to
         the  Covered  Employee  under  any  prior  years'  EIP.  Further,  if  a  Covered  Employee's  Involuntary
         Termination  occurs  on or after the date an award has been  earned  under the EIP,  but prior to the date
         such award is paid, the Covered  Employee  shall receive an additional  lump sum cash payment in an amount
         equal to two times his Objective EIP Award.

                  (c)      A Covered  Employee  shall be entitled to continue  the Welfare  Benefit  Coverages  for
         himself and,  where  applicable,  his eligible  dependents  following his  Involuntary  Termination  for a
         number of months determined in accordance with the following schedule:

                           Grade    Number of Months

                           16 - 18          24

                             15             18

                             14             15

                           12 - 13          12

                           0 - 11           The number of months for which cash  payments are made under  Paragraph
                                            (a) above (rounded to the nearest whole month if necessary);

         provided  however,  the Covered Employee must continue either to pay the premiums paid by active employees
         of the Employer for such coverages or to pay the actual  (nonsubsidized)  cost of such coverages for which
         the Employer  does not  subsidize  for active  employees.  Such  benefit  rights shall apply only to those
         Welfare  Benefit  Coverages which the Employer has in effect from time to time for active  employees,  and
         the  applicable  payments  shall adjust as premiums for active  employees of the Employer or actual costs,
         whichever is applicable,  change.  Welfare  Benefit  Coverage(s)  shall  immediately  end upon the Covered
         Employee's  obtainment of new employment and eligibility for similar  Welfare  Benefit  Coverage(s)  (with
         the Covered  Employee  being  obligated  hereunder to promptly  report such  eligibility to the Employer).
         Nothing herein shall be deemed to adversely affect in any way the additional rights,  after  consideration
         of this extension period,  of Covered Employees and their eligible  dependents to health care continuation
         coverage as required pursuant to Part 6 of Title I of ERISA.

                  (d)      A Covered  Employee of Grade 16 or higher  shall be  entitled  to receive  out-placement
         services in connection with obtaining new employment up to a maximum cost of $6,000.

                  (e)      The severance  benefits  payable under this Plan shall be paid to a Covered  Employee at
         the time he receives his final  termination pay, or as soon as  administratively  practicable  thereafter,
         subject to the conditions  set forth in Section 2.2 of the Plan.  Any severance  benefits paid pursuant to
         this Section will be deemed to be a severance payment and not  "Compensation"  for purposes of determining
         benefits under the Employer's qualified plans and shall be subject to any required tax withholding.

         2.2      Release and Full  Settlement.  Anything to the contrary  herein  notwithstanding,  as a condition
to the receipt of any severance  payment  hereunder,  a Covered  Employee whose employment by the Employer has been
subject to an  Involuntary  Termination  shall first execute a release,  in the form  established by the Committee,
releasing the Committee, the Employer, and the Employer's shareholders,  partners, officers,  directors,  employees
and agents from any and all claims and from any and all causes of action of any kind or  character,  including  but
not limited to all claims or causes of action arising out of such Covered  Employee's  employment with the Employer
or the  termination  of such  employment,  and the  performance  of the  Employer's  obligations  hereunder and the
receipt of any benefits  provided  hereunder by such Covered  Employee shall constitute full settlement of all such
claims and causes of action.

         2.3      Mitigation.  A Covered  Employee  shall not be  required  to  mitigate  the amount of any payment
provided for in this  Article II by seeking  other  employment  or  otherwise,  nor shall the amount of any payment
provided for in this Article II be reduced by any  compensation  or benefit  earned by the Covered  Employee as the
result of employment by another  employer or by retirement  benefits.  The benefits  under the Plan are in addition
to any other benefits to which a Covered Employee is otherwise entitled.

         2.4 Severance Pay Plan  Limitation.  This Plan is intended to be an employee  welfare  benefit plan within
the  meaning of section  3(1) of ERISA and the Labor  Department  regulations  promulgated  thereunder.  Therefore,
anything to the contrary  herein  notwithstanding,  in no event shall any Covered  Employee  receive total payments
under the Plan that exceed the equivalent of twice such Covered Employee's  "annual  compensation" (as such term is
defined in 29 CFR "2510.3-2(b)(2))  during the year immediately  preceding his Involuntary  Termination.  If total
payments under the Plan to a Covered  Employee  would  otherwise  exceed the limitation in the preceding  sentence,
the amount payable to such Covered  Employee  pursuant to Section  2.1(b) and, if necessary,  the amount payable to
such Covered Employee pursuant Section 2.1(a), shall be reduced in order to satisfy such limitation.

         2.5      Parachute  Payments.  Anything to the contrary herein  notwithstanding,  if the Covered  Employee
is a "disqualified  individual" (as defined in Section 280G(c) of the Code),  and the severance  benefits  provided
for in Section 2.1,  together with any other payments which the Covered  Employee has the right to receive from the
Employer,  would  constitute a "parachute  payment " (as defined in Section  280G(b)(2) of the Code), the severance
benefits  provided  hereunder  shall be either (a) reduced  (but not below zero) so that the present  value of such
total amounts  received by the Covered  Employee from the Employer will be one dollar ($1.00) less than three times
the  Covered  Employee's  base  amount  (as  defined  in  Section  280G of the Code) and so that no portion of such
amounts  received by the Covered  Employee  shall be subject to the excise tax imposed by Section  4999 of the Code
or (b) paid in full,  whichever  produces the better net after-tax  position to the Covered  Employee  (taking into
account  any  applicable  excise  tax  under  Section  4999  of the  Code  and  any  applicable  income  tax).  The
determination  as to whether any such reduction in the amount of the severance  benefits is necessary shall be made
by the Employer in good faith,  and such  determination  shall be conclusive  and binding on the Covered  Employee.
If a reduced  cash  payment is made and  through  error or  otherwise  that  payment,  when  aggregated  with other
payments from the Employer (or its affiliates)  used in determining if a "parachute  payment"  exists,  exceeds one
dollar ($1.00) less than three times the Covered  Employee's base amount,  the Covered  Employee shall  immediately
repay such excess to the Employer upon notification that an overpayment has been made.

                                                        III.

                                               ADMINISTRATION OF PLAN

         3.1      Committee's  Powers and Duties.  It shall be a principal  duty of the  Committee  to see that the
Plan is carried out, in accordance  with its terms,  for the exclusive  benefit of persons  entitled to participate
in the Plan.  The Committee  shall be the named  fiduciary and shall have full power to administer  the Plan in all
of its  details,  subject to  applicable  requirements  of law.  For this  purpose,  the  Committee's  powers shall
include, but not be limited to, the following authority, in addition to all other powers provided by this Plan:

                  (a)      to make and enforce such rules and  regulations as it deems  necessary or proper for the
         efficient administration of the Plan;

                  (b)      to interpret  the Plan,  its  interpretation  thereof to be final and  conclusive on all
         persons claiming benefits under the Plan;

                  (c)      to  decide  all  questions  concerning  the Plan and the  eligibility  of any  person to
         participate in the Plan;

                  (d)      to make a  determination  as to the  right of any  person  to a  benefit  under the Plan
         (including,  without  limitation,  to determine whether and when there has been a termination of a Covered
         Employee's employment and the cause of such termination);

                  (e)      to appoint such agents,  counsel,  accountants,  consultants,  claims  administrator and
         other persons as may be required to assist in administering the Plan;

                  (f)      to allocate  and  delegate its  responsibilities  under the Plan and to designate  other
         persons  to carry out any of its  responsibilities  under the Plan,  any such  allocation,  delegation  or
         designation to be in writing;

                  (g)      to sue or cause suit to be brought in the name of the Plan; and

                  (h)      to  obtain  from  the  Employer  and  from  Covered  Employees  such  information  as is
         necessary for the proper administration of the Plan.

         3.2      Member's Own  Participation.  No Covered  Employee or agent of the  Committee  may act,  vote, or
otherwise influence a decision of the Committee specifically relating to himself as a participant in the Plan.

         3.3      Indemnification.  The Company  shall  indemnify  and hold  harmless  each member of the Committee
against  any  and  all  expenses  and  liabilities  arising  out  of  his  administrative  functions  or  fiduciary
responsibilities,  including  any  expenses  and  liabilities  that are caused by or result from an act or omission
constituting  the  negligence  of such  member  in the  performance  of such  functions  or  responsibilities,  but
excluding  expenses  and  liabilities  that are caused by or result  from such  member's  own gross  negligence  or
willful  misconduct.  Expenses  against which such member shall be indemnified  hereunder  shall  include,  without
limitation,  the amounts of any  settlement  or judgment,  costs,  counsel  fees,  and related  charges  reasonably
incurred in connection with a claim asserted or a proceeding brought or settlement thereof.

         3.4      Compensation,  Bond and  Expenses.  The members of the Committee  shall not receive  compensation
with respect to their  services for the  Committee.  To the extent  required by applicable  law, but not otherwise,
Committee  members  shall  furnish bond or security for the  performance  of their duties  hereunder.  Any expenses
properly  incurred  by the  Committee  incident  to the  administration,  termination  or  protection  of the Plan,
including the cost of furnishing bond, shall be paid by the Company.

         3.5      Claims  Procedure.  Any employee  that the  Committee  determines  is entitled to a benefit under
the Plan is not  required to file a claim for  benefits.  Any  employee  who is not paid a benefit and who believes
that he is entitled to a benefit or who has been paid a benefit and who  believes  that he is entitled to a greater
benefit may file a claim for benefits  under the Plan in writing with the  Committee.  In any case in which a claim
for Plan benefits by a Covered  Employee is denied or modified,  the Committee  shall furnish written notice to the
claimant within ninety days (or within 180 days if additional  information requested by the Committee  necessitates
an extension of the ninety-day period), which notice shall:

                  (a)      state the specific reason or reasons for the denial or modification;

                  (b)      provide  specific  reference  to  pertinent  Plan  provisions  on which  the  denial  or
         modification is based;

                  (c)      provide a  description  of any  additional  material or  information  necessary  for the
         Covered  Employee or his  representative  to perfect the claim, and an explanation of why such material or
         information is necessary; and

                  (d)      explain the Plan's claim review procedure as contained herein.

In the event a claim for Plan  benefits  is denied or  modified,  if the  Covered  Employee  or his  representative
desires to have such denial or modification  reviewed,  he must,  within sixty days following receipt of the notice
of such denial or modification,  submit a written request for review by the Committee of its initial  decision.  In
connection with such request,  the Covered Employee or his representative  may review any pertinent  documents upon
which such denial or  modification  was based and may submit  issues and  comments in  writing.  Within  sixty days
following such request for review the Committee  shall,  after  providing a full and fair review,  render its final
decision in writing to the Covered  Employee and his  representative,  if any,  stating  specific  reasons for such
decision  and making  specific  references  to  pertinent  Plan  provisions  upon which the  decision is based.  If
special  circumstances  require an extension of such sixty-day period,  the Committee's  decision shall be rendered
as soon as  possible,  but not later than 120 days after  receipt of the  request for review.  If an  extension  of
time for review is required,  written  notice of the extension  shall be furnished to the Covered  Employee and his
representative, if any, prior to the commencement of the extension period.

         3.6      Mandatory  Arbitration.  If a Covered  Employee or his  representative  is not satisfied with the
decision  of  the  Committee  pursuant  to the  Plan's  claims  review  procedure,  such  Covered  Employee  or his
representative  may,  within  sixty days of receipt of the written  decision of the  Committee,  request by written
notice to the Committee,  that his claim be submitted to  arbitration  pursuant to the labor  arbitration  rules of
the American  Arbitration  Association.  Such arbitration shall be the sole and exclusive  procedure available to a
Covered  Employee or his  representative  for review of a decision of the  Committee.  In reviewing the decision of
the  Committee,  the  arbitrator  shall use the  standard  of  review  which  would be used by a  Federal  court in
reviewing such decision  under the provisions of ERISA.  The Covered  Employee or his  representative  and the Plan
shall share equally the cost of such  arbitration.  The  arbitrator's  decision shall be final and legally  binding
on both parties.  This Section shall be governed by the provisions of the Federal Arbitration Act.

                                                         IV.

                                                 GENERAL PROVISIONS

         4.1      Funding.  The  benefits  provided  herein  shall  be  unfunded  and  shall be  provided  from the
Employer's general assets.

         4.2      Cost of Plan.  The entire cost of the Plan shall be borne by the  Employer  and no  contributions
shall be required of the Covered Employees.

         4.3      Plan Year.  The Plan shall  operate on a plan year  consisting  of the twelve  consecutive  month
period  commencing on January 1 of each year with a short plan year  commencing on the Effective Date and ending on
December 31, 1995.

         4.4      Other Participating  Employers.  The Committee may designate any entity or organization  eligible
by law to participate in this Plan as an Employer by written  instrument  delivered to the Secretary of the Company
and the  designated  Employer.  Such  written  instrument  shall  specify  the  effective  date of such  designated
participation,  may  incorporate  specific  provisions  relating  to the  operation  of the Plan which apply to the
designated  Employer only and shall become, as to such designated  Employer and its employees,  a part of the Plan.
Each  designated  Employer shall be  conclusively  presumed to have consented to its designation and to have agreed
to be bound by the terms of the Plan and any and all  amendments  thereto upon its submission of information to the
Committee required by the terms of or with respect to the Plan; provided,  however,  that the terms of the Plan may
be  modified so as to increase  the  obligations  of an  Employer  only with the  consent of such  Employer,  which
consent shall be  conclusively  presumed to have been given by such Employer upon its submission of any information
to the  Committee  required by the terms of or with  respect to the Plan.  Except as modified by the  Committee  in
its written instrument,  the provisions of this Plan shall be applicable with respect to each Employer  separately,
and amounts payable hereunder shall be paid by the Employer which employs the particular Covered Employee.

         4.5      Amendment  and  Termination.  The Plan  may be  amended  from  time to time,  or  terminated  and
discontinued,  at any time, in each case at the discretion of the Board.  Notwithstanding the foregoing,  this Plan
may not be amended to reduce  benefits or rights to benefits or terminated  within two years  following a Change of
Control.  For purposes of this Section,  a change in the  designation by the Committee of  Participating  Employers
pursuant to Section 4.4 shall be deemed to be an amendment to the Plan.

         4.6      Not Contract of  Employment.  The adoption and  maintenance of the Plan shall not be deemed to be
a contract of  employment  between the Employer and any person or to be  consideration  for the  employment  of any
person.  Nothing  herein  contained  shall be deemed to give any person the right to be  retained  in the employ of
the Employer or to restrict  the right of the  Employer to  discharge  any person at any time nor shall the Plan be
deemed to give the  Employer  the right to  require  any  person to  remain  in the  employ of the  Employer  or to
restrict any person's right to terminate his employment at any time.

         4.7      Severability.   Any  provision  in  the  Plan  that  is  prohibited  or   unenforceable   in  any
jurisdiction  by reason of applicable law shall,  as to such  jurisdiction,  be  ineffective  only to the extent of
such prohibition or  unenforceability  without  invalidating or affecting the remaining  provisions hereof, and any
such  prohibition  or  unenforceability  in any  jurisdiction  shall not  invalidate or render  unenforceable  such
provision in any other jurisdiction.

         4.8      Nonalienation.  Covered  Employees  shall not have any right to pledge,  hypothecate,  anticipate
or assign benefits or rights under the Plan, except by will or the laws of descent and distribution.

         4.9      Effect of Plan.  This Plan is intended  to  supersede  all prior oral or written  policies of the
Employer and all prior oral or written  communications  to Covered  Employees  with  respect to the subject  matter
hereof,  and all such  prior  policies  or  communications  are hereby  null and void and of no  further  force and
effect.  Further,  this Plan shall be binding  upon the Employer and any  successor of the  Employer,  by merger or
otherwise, and shall inure to the benefit of and be enforceable by the Employer's Covered Employees.

         4.10     Governing  Law. The Plan shall be  interpreted  and construed in accordance  with the laws of the
State of Texas, except to the extent preempted by federal law.



         EXECUTED this ______ day of _____________________________, 1995.

                                                     SEAGULL ENERGY CORPORATION



                                                     By:
                                                     Name:
                                                     Title:

EX-10 6 ex10-21_123100.htm EXHIBIT 10.21

EXHIBIT 10.21

FIRST AMENDMENT TO THE
OCEAN ENERGY, INC. OUTSIDE DIRECTORS DEFERRED FEE PLAN

WHEREAS, OCEAN ENERGY, INC., a Texas corporation (the "Company"), has heretofore adopted the OCEAN ENERGY, INC. OUTSIDE DIRECTORS DEFERRED FEE PLAN (the "Plan"); and

WHEREAS, the Company amended and restated the Plan effective as of March 30,1999; and

WHEREAS, the Company desires to further amend the Plan;

NOW, THEREFORE, the Plan shall be amended as follows, effective as of February 1, 2001:

1. Section 4 of the Plan shall be deleted and the following shall be substituted therefor:

4. Crediting of Deferred Fees to Plan Accounts.

(a) Establishment of Plan Accounts. The Committee shall establish a memorandum bookkeeping account or accounts (the “Plan Accounts”) for each Participant in the Plan. As of the Effective Date, a Participant’s Required Deferral Account and Elective Deferral Account shall be combined into a single Plan Account. The Committee shall credit to each Participant’s Plan Accounts the Participant’s deferred fees as of the date such fees are earned by the Participant.

(b) Deemed Investment of Funds.

(1) The amounts credited to each Participant’s Plan Accounts shall be deemed to be invested in the Fidelity Money Market Trust: Retirement Money Market Portfolio until such Participant designates, in accordance with the procedures established from time to time by the Committee, the manner in which amounts credited to his Plan Accounts shall be deemed to be invested from among the investment funds made available from time to time by the Committee for the deemed investment of Plan Accounts (the “Investment Funds”). A Participant may designate one of such Investment Funds for the deemed investment of all the amounts credited to his Plan Accounts or he may split the deemed investment of the amounts credited to his Plan Accounts among such Investment Funds in such increments as the Committee may prescribe. Notwithstanding the foregoing, a Participant may not (i) designate an Investment Fund investing in the common stock of the Company, par value $.10 per share (a “Stock Fund”) for the deemed investment of amounts credited to his Plan Accounts within six months after revoking an election to have all or a portion of his Plan Accounts deemed invested in Phantom Stock under Section 4(c) of the Plan as in effect on January 31, 2001 or (ii) designate a Stock Fund for the deemed investment of amounts credited to his Plan Accounts within six months after changing or converting a deemed investment election from a Stock Fund pursuant to Paragraph (b)(2) below.

(2) A Participant may (i) change his deemed investment designation for future amounts to be credited to his Plan Accounts or (ii) convert his deemed investment designation with respect to the amounts already credited to his Plan Accounts. Any such change or conversion shall be made in accordance with the procedures established by the Committee, and the frequency of such changes may be limited by the Committee. Notwithstanding the foregoing, a Participant may not change or convert the designation of a Stock Fund for the deemed investment of amounts credited to his Plan Accounts within six months after designating a Stock Fund for the deemed investment of amounts credited to his Plan Accounts pursuant to Paragraph (b)(1) above.

(c) Allocation of Net Income or Net Loss Equivalents. The balance of each Participant’s Plan Accounts shall be adjusted at such times and in such manner as the Committee deems appropriate to reflect the net income (or net loss) of the Investment Funds. A Participant’s Plan Accounts shall continue to be adjusted for the net income (or net loss) of the Investment Funds so long as there is any balance credited to such account.

(c) Invalid Elections. A deemed investment designation of a Stock Fund pursuant to Paragraph (b)(1) above that is attempted within six months of a deemed investment designation from a Stock Fund pursuant to Paragraph (b)(2) above, or a deemed investment designation from a Stock Fund pursuant to Paragraph (b)(2) above that is attempted within six months of a deemed investment designation of a Stock Fund pursuant to Paragraph (b)(1) in violation of the prohibitions of such Paragraphs shall have no force or effect and shall be null and void.

(d) Transition Rule for Amounts Credited Prior to February 1, 2001. With respect to a Participant who has a balance credited to his Plan Accounts as of February 1, 2001, (1) the portion of his Plan Accounts, if any, that was credited with Interest Equivalents prior to February 1, 2001, shall be deemed to be invested in the Fidelity Money Market Trust: Retirement Money Market Portfolio and (2) the .portion of his Plan Accounts, if any, that was credited with Phantom Stock prior to February 1, 2001 shall be deemed to be invested in a Stock Fund.”

2. The provisions of Section 5(e) of the Plan pertaining to determination of the value of amounts credited to a Participant’s Plan Accounts for purposes of payment shall be deemed to be amended to the extent necessary to correspond with the revised income crediting provisions of Section 4 of the Plan.

3. The reference to "Paragraph 4(d)" in Section 5(h) of the Plan shall be deemed to be a reference to "Section 4" of the Plan.

4. As amended hereby, the Plan is specifically ratified and reaffirmed.

EXECUTED this ________ day of December, 2000.

OCEAN ENERGY, INC.
a Texas corporation

By:______________________________

EX-10 7 ex10-23_123100.htm EXHIBIT 10.23 Supplemental Benefit Plan

EXHIBIT 10.23

MERGER OF
THE OCEAN ENERGY, INC. SUPPLEMENTAL BENEFIT PLAN
WITH AND INTO
THE OCEAN ENERGY, INC. SUPPLEMENTAL BENEFIT PLAN
AND AMENDMENT OF
THE OCEAN ENERGY, INC. SUPPLEMENTAL BENEFIT PLAN

WHEREAS, OCEAN ENERGY, INC., a Texas corporation (the "Company"), as successor to Ocean Energy, Inc, a Delaware corporation, has heretofore adopted the OCEAN ENERGY, INC. SUPPLEMENTAL BENEFIT PLAN (the "OEI Supplemental Plan"); and

WHEREAS, the Company and certain other Participating Employers have heretofore adopted the OCEAN ENERGY, INC. SUPPLEMENTAL BENEFIT PLAN, formerly known as the Seagull Energy Corporation Supplemental Benefit Plan (the “Plan”), for the benefit of their employees; and

WHEREAS, the Company desires to merge the OEI Supplemental Plan with and into the Plan in order to streamline the administration of its executive benefit programs; and

WHEREAS, the Company further desires to amend the Plan on behalf of itself and the other Participating Employers;

NOW, THEREFORE, effective as of January 1, 2001:

1. The OEI Supplemental Plan shall be merged with and into the Plan, with the result that the provisions of the Plan shall replace in their entirety the provisions of the OEI Supplemental Plan; provided, however, that, if prior to January 1, 2001 (the “Plan Merger Date”), a participant in the OEI Supplemental Plan (an “OEI Participant”) elected a form of benefit that is not permitted under the terms of the Plan, then the terms of the Plan shall be deemed to be amended to the extent necessary to accommodate such election unless and until such OEI Participant changes such election in accordance with the provisions of the Plan. Each OEI Participant as of the Plan Merger Date shall become a Participant in the Plan as of such date.

2. References to the “Ocean Energy, Inc. Employee Stock Ownership Plan” or the “ESOP” shall be deemed to refer to the “ESOP” established under Article XXI of the Ocean Retirement Savings Plan and references to a Participant’s “Stock Account” and/or “Investment Account” under the ESOP shall be deemed to refer to the Participant’s “ESOP Account” under the Ocean Retirement Savings Plan.

3. References to the "Ocean Energy, Inc. Thrift Plan" or the "Thrift Plan" shall be deemed to refer to the "Ocean Retirement Savings Plan."

4. Section 1.1(13) of the Plan shall be deleted and the following shall be substituted therefor:

"(13) Employer Contributions: Contributions made to the ESOP by the Employer with respect to a Participant pursuant to Section 21.6 the Thrift Plan."

5. The following new Section 1.1(17A) shall be added to Article I of the Plan:

“(17A) Investment Funds: The investment funds designated from time to time for the deemed investment of Accounts under Section 3.6.”

6. The following new Section 1.1(22A) shall be added to Article I of the Plan:

"(22A) Stock Fund: An Investment Fund investing in the common stock of the Company, par value $.10 per share."

7. Section 3.6 of the Plan shall be deleted and the following shall be substituted therefor:

"3.6 Crediting of Income.

(a) Deemed Investment of Funds.

(1) The amounts credited to each Participant’s Accounts shall be deemed to be invested in the Fidelity Money Market Trust: Retirement Money Market Portfolio until such Participant designates, in accordance with the procedures established from time to time by the Committee, the manner in which amounts credited to his Accounts shall be deemed to be invested from among the Investment Funds made available from time to time for such purpose by the Committee. A Participant may designate one of such Investment Funds for the deemed investment of all the amounts credited to his Accounts or he may split the deemed investment of the amounts credited to his Accounts among such Investment Funds in such increments as the Committee may prescribe. Notwithstanding the foregoing, a Participant may not (i) designate a Stock Fund for the deemed investment of amounts credited to his Accounts within six months after revoking an election to have all or a portion of his Accounts deemed invested in Phantom Stock under Section 3.6(d) of the Plan as in effect on December 31, 2000 or (ii) designate a Stock Fund for the deemed investment of amounts credited to his Accounts within six months after changing or converting a deemed investment election from a Stock Fund pursuant to Paragraph (a)(2) below.

(2) A Participant may (i) change his deemed investment designation for future amounts to be credited to his Accounts or (ii) convert his deemed investment designation with respect to the amounts already credited to his Accounts. Any such change or conversion shall be made in accordance with the procedures established by the Committee, and the frequency of such changes may be limited by the Committee. Notwithstanding the foregoing, a Participant may not change or convert the designation of a Stock Fund for the deemed investment of amounts credited to his Accounts within six months after designating a Stock Fund for the deemed investment of amounts credited to his Accounts pursuant to Paragraph (a)(1) above.

(b) Allocation of Net Income or Net Loss Equivalents. The balance of each Participant’s Accounts shall be adjusted at such times and in such manner as the Committee deems appropriate to reflect the net income (or net loss) of the Investment Funds. A Participant’s Accounts shall continue to be adjusted for the net income (or net loss) of the Investment Funds so long as there is any balance credited to such account.

(c) Invalid Elections. A deemed investment designation of a Stock Fund pursuant to Paragraph (a)(1) above that is attempted within six months of a deemed investment designation from a Stock Fund pursuant to Paragraph (a)(2) above, or a deemed investment designation from a Stock Fund pursuant to Paragraph (a)(2) above that is attempted within six months of a deemed investment designation of a Stock Fund pursuant to Paragraph (a)(1) in violation of the prohibitions of such Paragraphs shall have no force or effect and shall be null and void.

(d) Transition Rule for Amounts Credited Prior to January 1, 2001. With respect to a Participant who has a balance credited to his Accounts as of January 1, 2001, (1) the portion of his Accounts, if any, that was credited with Interest Equivalents prior to January 1, 2001, shall be deemed to be invested in the Fidelity Money Market Trust: Retirement Money Market Portfolio and (2) the .portion of his Accounts, if any, that was credited with Phantom Stock prior to January 1, 2001 shall be deemed to be invested in a Stock Fund.”

8. The provisions of Article V of the Plan pertaining to determination of the value of amounts credited to a Participant’s Accounts for purposes of payment shall be deemed to be amended to the extent necessary to correspond with the revised income crediting provisions of Section 3.6 of the Plan.

9. The reference to "Paragraph 3.6(c)" in Section 5.4 of the Plan shall be deemed to be a reference to "Section 3.6" of the Plan.

10. As amended hereby, the Plan is specifically ratified and reaffirmed.

EXECUTED this ________ day of December, 2000.

OCEAN ENERGY, INC.,
a Texas corporation

By:______________________________
EX-10 8 ex10-24_123100.htm EXHIBIT 10.24 First Amendment to Excess Benefit Plan

EXHIBIT 10.24

FIRST AMENDMENT TO
OCEAN ENERGY, INC. EXCESS BENEFIT PLAN

WHEREAS, the Company desires to amend the Plan on behalf of itself and the other Participating Employers; have heretofore adopted the OCEAN ENERGY, INC. EXCESS BENEFIT PLAN (the "Plan") for the benefit of their employees; and

WHEREAS, the Company desires to amend the Plan on behalf of itself and the other Participating Employers;

NOW, THEREFORE, the Plan shall be amended as follows, effective as of January 1, 2001:

The Plan shall be renamed the “Ocean Retirement Savings Plus Plan” and all references to the name of the Plan shall be deemed to refer to the Plan as renamed herein.
References to the "Ocean Energy, Inc. Thrift Plan" shall be deemed to refer to the "Ocean Retirement Savings Plan."
Article V of the Plan shall be deleted and the following shall be substituted therefor:

V. Amount of Benefit

The Committee shall establish a memorandum bookkeeping account (the ‘Excess Plan Account’) for each Employee whose allocations of Employer Contributions under the Basic Plan have been limited pursuant to section 415 of the Code. As of the end of each Plan Year, the Committee shall credit such Employee’s Excess Plan Account in an amount equal to the sum of (a), (b) and (c), where (a) equals the excess, if any, of:

(1) the amount that would have been allocated to the Employer Discretionary Contribution Account of such Employee under the Basic Plan as of the end of such Plan Year if the provisions of the Basic Plan were administered without regard to the maximum amount of retirement income limitations of section 415 of the Code,

over

(2) the amount that was in fact allocated as of the end of such Plan Year to the Employer Discretionary Contribution Account of such Employee under the Basic Plan;

(b) equals the excess, if any, of:

(1)the amount that would have been allocated to the ESOP Account of such Employee under the Basic Plan as of the end of such Plan Year if the provisions of the Basic Plan were administered without regard to the maximum amount of retirement income limitations of section 415 of the Code,

over

(2) the amount that was in fact allocated as of the end of such Plan Year to the ESOP Account of such Employee under the Basic Plan; and

(1) the amount that would have been allocated to the Employer Matching Contribution Account of such Employee under the Basic Plan as of the end of such Plan Year if the provisions of the Basic Plan were administered without regard to the maximum amount of retirement income limitations of section 415 of the Code,

over

(2)the amount that was in fact allocated as of the end of such Plan Year to the Employer Matching Contribution Account of such Employee under the Basic Plan.

An Employee’s Vested Interest in his Excess Plan Account shall be the same percentage as his Vested Interest in his Employer Contribution Accounts under the Basic Plan. Therefore, if any portion of an Employee’s Employer Contribution Accounts under the Basic Plan is forfeited for any reason, the Committee shall debit such Employee’s Excess Plan Account by an amount equal to the percentage of such Excess Plan Account which corresponds to the percentage of his Employer Contribution Accounts under the Basic Plan that were forfeited.

Benefits payable under this Excess Plan to any recipient shall be computed in accordance with the foregoing and with the objective that such recipient should receive under this Excess Plan and the Basic Plan that total amount which would have been payable to that recipient solely under the Basic Plan had section 415 of the Code not been applicable thereto. This Excess Plan is intended to constitute an unfunded ‘excess benefit plan’ within the meaning of section 3(36) and section 4(b)(5) of the Act.”

4. Article VI of the Plan shall be deleted and the following shall be substituted therefor:

VI. Deemed Investment of Excess Plan Accounts and Adjustment
for Net Income or Loss

The amounts credited to each Employee’s Excess Plan Account shall be deemed to be invested in the Fidelity Money Market Trust: Retirement Money Market Portfolio until such Employee designates, in accordance with the procedures established from time to time by the Committee, the manner in which amounts credited to his Excess Plan Account shall be deemed to be invested from among the Investment Funds made available from time to time for such purpose by the Committee. An Employee may designate one of such Investment Funds for the deemed investment of all the amounts credited to his Excess Plan Account or he may split the deemed investment of the amounts credited to his Excess Plan Account among such Investment Funds in such increments as the Committee may prescribe. An Employee may (a) change his deemed investment designation for future amounts to be credited to his Excess Plan Account or (b) convert his deemed investment designation with respect to the amounts already credited to his Excess Plan Account. Any such change or conversion shall be made in accordance with the procedures established by the Committee, and the frequency of such changes may be limited by the Committee.

The balance of each Employee’s Excess Plan Account shall be adjusted at such times and in such manner as the Committee deems appropriate to reflect the net income (or net loss) of the Investment Funds. An Employee’s Excess Plan Account shall continue to be adjusted for the net income (or net loss) of the Investment Funds so long as there is any balance credited to such account.”

5. As amended hereby, the Plan is specifically ratified and reaffirmed.

EXECUTED this ________ day of December, 2000.

OCEAN ENERGY, INC.
a Texas corporation

By:______________________________
EX-10 9 ex10-32_123100.htm EXHIBIT 10.32 Employment Agreement - Wm. Flores

                                                                                                EXHIBIT 10.32
                                               EMPLOYMENT AGREEMENT

         This  Employment  Agreement  ("Agreement")  is  entered  into  effective  as  of  __________________  (the
"Effective   Date"),   by  and  between  Ocean   Energy,   Inc.,  a  Texas   corporation   (the   "Company"),   and
_____________________ ("Employee").

         WHEREAS,  the Company has  heretofore  assumed the  Employment  Agreement  entered  into  effective  as of
___________________,  by and  between  Ocean  Energy,  Inc. a Delaware  corporation,  and  Employee  which has been
previously amended in certain minor respects and is currently in effect (the "Employment Agreement"); and
         WHEREAS,  the Company employs  Employee and desires to continue such employment  relationship and Employee
desires to continue such employment; and
         WHEREAS,  the Company and Employee desire to enter into an agreement  reflecting the current terms of such
employment relationship that replaces the Employment Agreement;
         NOW,  THEREFORE,  in consideration of the mutual covenants,  representations,  warranties,  and agreements
contained  herein,  and  for  other  valuable  consideration,   the  receipt  and  adequacy  of  which  are  hereby
acknowledged, the parties agree as follows:
         1.       Effect  of  Agreement.  Effective  as of  the  Effective  Date,  this  Agreement  supersedes  and
                  ---------------------
replaces the  Employment  Agreement in its entirety and the Employment  Agreement  shall be null and void and of no
further force and effect.
         2.       Employment.  The Company hereby employs Employee,  and Employee hereby accepts  employment by the
                  ----------
Company, on the terms and conditions set forth in this Agreement.
         3.       Term  of  Employment.  Subject  to the  provisions  for  earlier  termination  provided  in  this
                  --------------------
Agreement, the term of this Agreement (the "Term") shall be five (5) years commencing on the Effective Date.
         4.       Employee's   Duties.   During   the   Term  of  this   Agreement,   Employee   shall   serve   as
                  -------------------
____________________________________  of the  Company,  with such duties and  responsibilities  as may from time to
time be assigned to him by the board of  directors  of the Company  (the  "Board"),  provided  that such duties are
consistent with the customary duties of such position.
         Employee  agrees to devote his full  attention and time during normal  business  hours to the business and
affairs of the Company and to use  reasonable  best efforts to perform  faithfully and  efficiently  his duties and
responsibilities.  Employee shall not,  either  directly or indirectly,  enter into any business or employment with
or for any person,  firm,  association  or corporation  other than the Company  during the Term of this  Agreement;
provided,  however,  that Employee shall not be prohibited from making  financial  investments in any other company
or business or from serving on the board of directors of any other  company.  Employee  shall at all times  observe
and comply with all lawful directions and instructions of the Board.
         5.       Base  Compensation.  For services  rendered by Employee under this  Agreement,  the Company shall
                  ------------------
pay to Employee a base salary ("Base  Compensation")  of  ______________  per annum payable in accordance  with the
Company's  customary pay periods and subject to customary  withholdings.  The amount of Base Compensation  shall be
reviewed by the Board on an annual  basis as of the close of each  fiscal year of the Company and may be  increased
as the Board may deem  appropriate.  In the event the Board  deems it  appropriate  to increase  Employee's  annual
base salary, said increased amount shall thereafter be the "Base  Compensation."  Employee's Base Compensation,  as
increased  from time to time,  may not  thereafter  be decreased  unless agreed to by Employee.  Nothing  contained
herein  shall  prevent  the Board  from  paying  additional  compensation  to  Employee  in the form of  bonuses or
otherwise during the Term of this Agreement.
         6.       Additional  Benefits.  In addition  to the Base  Compensation  provided  for in Section 5 herein,
                  --------------------
Employee shall be entitled to the following:
                  (a)      Expenses.  The Company  shall,  in  accordance  with any rules and policies  that it may
                           --------
         establish from time to time for executive  officers,  reimburse Employee for business expenses  reasonably
         incurred  in the  performance  of his duties.  It is  understood  that  Employee  is  authorized  to incur
         reasonable   business  expenses  for  promoting  the  business  of  the  Company,   including   reasonable
         expenditures  for travel,  lodging,  meals and client or  business  associate  entertainment.  Request for
         reimbursement for such expenses must be accompanied by appropriate documentation.
                  (b)      Disability   Insurance.   The  Company  has   heretofore   purchased  and  maintained  a
                           ----------------------
         disability  insurance  policy  on  Employee.  Employee  owns and  benefits  from such  insurance,  and the
         Company has no interest  whatsoever  in such  policy.  The Company will  continue to maintain  such policy
         through  February,  2000, and Employee will assume the  responsibility  for any maintenance of such policy
         after February, 2000.
                  (c)      Vacation.  Employee  shall be entitled to five (5) weeks of vacation  per year,  without
                           --------
         any loss of  compensation  or benefits.  Employee shall not be entitled to  compensation  for, or to carry
         forward, any unused vacation time.
                  (d)      General  Benefits.  Employee shall be entitled to  participate  in the various  employee
                           -----------------
         benefit plans or programs  provided to the employees of the company in general,  including but not limited
         to, health,  dental,  disability and life insurance plans,  subject to the eligibility  requirements  with
         respect to each of such  benefit  plans or  programs,  and such other  benefits or  perquisites  as may be
         approved by the Board  during the Term of this  Agreement.  Nothing in this  paragraph  shall be deemed to
         prohibit the Company from making any changes in any of the plans,  programs or benefits  described in this
         Section 6, provided the change similarly affects all officers of the Company similarly situated.
                  (e)      Options.  Upon the  occurrence  of a  "Corporate  Change" as  defined  in Section  8(e),
                           -------
         Employee  shall be  considered  as  immediately  and totally  vested in any and all stock options or other
         similar  awards  previously  made to  Employee  by the  Company  or its  subsidiaries  under a "Long  Term
         Incentive  Plan" duly adopted by the Board (such options or similar  awards are  hereinafter  collectively
         referred to as "Options").
         7.       Confidential  Information.  Employee,  during the Term,  may have  access to and become  familiar
                  -------------------------
with  confidential  information,  secrets and  proprietary  information  concerning the business and affairs of the
Company.  As to such confidential information, Employee agrees as follows:
                  (a)      During the  employment  of Employee with the Company and  thereafter  Employee will not,
         either  directly  or  indirectly,  disclose  to any third party  without  the  written  permission  of the
         Company,  nor use in any way (except as required in the course of his  employment  with the  Company)  any
         confidential  information,  secret or proprietary  information of the Company. In the event of a breach or
         threatened  breach of the provisions of this Section 7(a),  the Company shall be entitled,  in addition to
         any other remedies available to the Company,  to an injunction  restraining  Employee from disclosing such
         confidential information.
                  (b)      Upon  termination  of  employment  of Employee,  for  whatever  reason,  Employee  shall
         surrender to the Company any and all  documents,  manuals,  correspondence,  reports,  records and similar
         items then or thereafter  coming into the  possession of Employee which contain any  confidential,  secret
         or proprietary information of the Company.
         8.       Termination.  This Agreement may be terminated prior to the end of its Term as set forth below:
                  -----------
                  (a)      Resignation  (other than for Good Reason).  Employee may resign,  including by reason of
                           -----------------------------------------
         retirement,  his  position  at any time by  providing  written  notice of  resignation  to the  Company in
         accordance  with Section 11 hereof.  In the event of such  resignation,  except in the case of resignation
         for Good Reason (as defined  below),  this Agreement shall terminate and Employee shall not be entitled to
         further  compensation  pursuant to this Agreement  other than the payment of any unpaid Base  Compensation
         accrued hereunder as of the date of Employee's resignation.
                  (b)      Death.  If Employee's  employment is terminated due to his death,  this Agreement  shall
                           -----
         terminate  and the  Company  shall have no  obligations  to  Employee  or his legal  representatives  with
         respect to this  Agreement  other than the  payment of any unpaid  Base  Compensation  previously  accrued
         hereunder.
                  (c)      Discharge.
                           ---------
                           (i)      The  Company may  terminate  Employee's  employment  for any reason at any time
                  upon written notice thereof  delivered to Employee in accordance  with Section 11 hereof.  In the
                  event that  Employee's  employment  is  terminated  during the Term by the Company for any reason
                  other than his Misconduct or Disability  (both as defined below),  then (A) the Company shall pay
                  in lump sum in cash to Employee,  within fifteen (15) days following the date of termination,  an
                  amount equal to the product of (i) Employee's Base  Compensation as in effect  immediately  prior
                  to Employee's  termination,  multiplied by (ii) three,  (B) for three years following the date of
                  termination,  the Company,  at its cost,  shall provide or arrange to provide  Employee  (and, as
                  applicable,   Employee's   dependents)  with  accident  and  group  health   insurance   benefits
                  substantially  similar  to those  which  Employee  (and  Employee's  dependents)  were  receiving
                  immediately prior to Employee's  termination;  however, the welfare benefits otherwise receivable
                  by  Employee  pursuant  to this  clause (B) shall be reduced  to the  extent  comparable  welfare
                  benefits are actually  received by Employee  (and/or  Employee's  dependents)  during such period
                  under any other  employer's  welfare  plan(s) or  program(s),  with Employee  being  obligated to
                  promptly  disclose to the Company any such comparable  welfare  benefits,  (C) in addition to the
                  aforementioned  compensation and benefits,  the Company shall pay in lump sum in cash to Employee
                  within  fifteen (15) days  following  the date of  termination  an amount equal to the product of
                  (i)  Employee's  average  bonus  paid by the  Company  during  the  most  recent  two  (2)  years
                  immediately  prior to the date of  termination,  multiplied by (ii) three and (D) Employee  shall
                  be  considered  as  immediately  and  totally  vested in any and all Options  previously  made to
                  Employee by Company or its subsidiaries.
                           (ii)     Notwithstanding  the  foregoing  provisions  of this  Section  8, in the  event
                  Employee is terminated because of Misconduct,  the Company shall have no obligations  pursuant to
                  this  Agreement  after  the  Date of  Termination  other  than the  payment  of any  unpaid  Base
                  Compensation  accrued through the Date of  Termination.  As used herein,  "Misconduct"  means (A)
                  the continued  failure by Employee to  substantially  perform his duties with the Company  (other
                  than any such failure  resulting from Employee's  incapacity due to physical or mental illness or
                  any such  actual  or  anticipated  failure  after the  issuance  of a Notice  of  Termination  by
                  Employee for Good Reason),  after a written  demand for  substantial  performance is delivered to
                  Employee  by the  Board,  which  demand  specifically  identifies  the  manner in which the Board
                  believes that Employee has not substantially  performed his duties,  (B) the engaging by Employee
                  in  conduct  which is  demonstrably  and  materially  injurious  to the  Company,  monetarily  or
                  otherwise  (other than such  conduct  resulting  from  Employee's  incapacity  due to physical or
                  mental  illness or any such  actual or  anticipated  conduct  after the  issuance  of a Notice of
                  Termination by Employee for Good Reason),  or (C)  Employee's  conviction for the commission of a
                  felony.  Anything  contained  in  this  Agreement  to the  contrary  notwithstanding,  the  Chief
                  Executive  Officer of the  Company  shall  have the sole power and  authority  to  terminate  the
                  employment of Employee on behalf of the Company.
                  (d)      Disability.  If  Employee  shall have been  absent  from the  full-time  performance  of
                           ----------
         Employee's  duties with the Company for ninety (90)  consecutive  calendar  days as a result of Employee's
         incapacity due to physical or mental illness,  Employee's  employment may be terminated by the Company for
         "Disability"  and  Employee  shall not be entitled  to further  compensation  pursuant to this  Agreement,
         except  that  Employee  shall be  considered  as  immediately  and  totally  vested in any and all Options
         previously granted to Employee by Company or its subsidiaries.
                  (e)      Resignation  for Good Reason.  Employee  shall be entitled to terminate  his  employment
                           ----------------------------
         for Good Reason as defined  herein.  If Employee  terminates  his  employment  for Good Reason he shall be
         entitled to the  compensation  and benefits  provided in Paragraph  8(c)(i)  hereof.  "Good  Reason" shall
         mean the occurrence of any of the following  circumstances  without  Employee's  express  written  consent
         unless such breach or  circumstances  are fully  corrected  prior to the Date of Termination  specified in
         the Notice of Termination given in respect hereof:
                           (i)      the material  breach of any of the Company's  obligations  under this Agreement
                  without Employee's express written consent;
                           (ii)     the  continued  assignment  to  Employee  of any duties  inconsistent  with the
                  office of __________________________;
                           (iii)    the  failure  by the  Company to pay to  Employee  any  portion  of  Employee's
                  compensation on the date such compensation is due;
                           (iv)     the  failure by the  Company to  continue  to provide  Employee  with  benefits
                  substantially  similar  to  those  enjoyed  by  other  officers  who have  entered  into  similar
                  employment  agreements  with  Employer  under any of the  Company's  medical,  health,  accident,
                  and/or disability plans in which Employee was participating immediately prior to such time;
                           (v)      a change in the location of  Employee's  principal  place of  employment by the
                  Company by more than 50 miles from the location  where he was  principally  employed  immediately
                  prior to the date of such change; or
                           (vi)     the  failure  of the  Company  to  obtain  a  satisfactory  agreement  from any
                  successor to assume and agree to perform this Agreement, as contemplated in Section 13 hereof.
                           In  addition,  the  occurrence  of  any  Corporate  Change  (as  defined  below),  shall
                  constitute  "Good  Reason"  hereunder,  but only if Employee  terminates  his  employment  within
                  ninety (90) days following the effective date of such Corporate Change.
                           A  "Corporate  Change"  shall occur if (A) the  Company  (1) shall not be the  surviving
                  entity in any merger,  consolidation  or other  reorganization  (or survives only as a subsidiary
                  of an entity  other than a  previously  wholly-owned  subsidiary  of the Company) or (2) is to be
                  dissolved  and  liquidated,  and as a result  of or in  connection  with  such  transaction,  the
                  persons who were  directors of the Company  before such  transaction  shall cease to constitute a
                  majority of the Board,  (B) any person or entity,  including a "group" as contemplated by Section
                  13(d)(3) of the  Securities  Exchange  Act of 1934,  as amended,  acquires or gains  ownership or
                  control (including,  without limitation,  power to vote) of 20% or more of the outstanding shares
                  of the  Company's  voting stock (based upon voting  power),  and as a result of or in  connection
                  with such  transaction,  the persons who were  directors of the Company  before such  transaction
                  shall  cease  to  constitute  a  majority  of  the  Board,  or  (C)  the  Company  sells  all  or
                  substantially  all of the  assets of the  Company  to any other  person or entity  (other  than a
                  wholly-owned  subsidiary of the Company) in a  transaction  that  requires  shareholder  approval
                  pursuant to the Texas Business Corporation Act.
                  (f)      Notice of  Termination.  Any  purported  termination  of  Employee's  employment  by the
                           ----------------------
         Company under Sections 8(c) or 8(d), or by Employee under Section 8(e),  shall be  communicated by written
         Notice of  Termination  to the other party hereto in  accordance  with Section 11 hereof.  For purposes of
         this  Agreement,  a "Notice  of  Termination"  shall mean a notice  which,  if by the  Company  and if for
         Misconduct  or  Disability,  shall set forth in  reasonable  detail  the reason  for such  termination  of
         Employee's  employment,  or in the case of  resignation  by  Employee  for Good  Reason,  said notice must
         specify in reasonable  detail the basis for such  resignation.  A Notice of Termination  given by Employee
         pursuant  to Section  8(e) shall be  effective  even if given after the receipt by Employee of notice that
         the Board has set a meeting to consider  terminating  Employee for Misconduct.  Any purported  termination
         for which a Notice of Termination  is required  which is not effected  pursuant to this Section 8(f) shall
         not be effective.
                  (g)      Date of  Termination.  "Date  of  Termination"  shall  mean the  date  specified  in the
                           --------------------
         Notice of  Termination,  provided  that the Date of  Termination  shall be at least 15 days  following the
         date the  Notice of  Termination  is given.  Notwithstanding  the  foregoing,  in the  event  Employee  is
         terminated  for  Misconduct,  the Company may refuse to allow  Employee  access to the  Company's  offices
         (other than to allow Employee to collect his personal  belongings under the Company's  supervision)  prior
         to the Date of Termination.
                  (h)      Mitigation.  Employee  shall not be  required  to  mitigate  the  amount of any  payment
                           ----------
         provided for in this  Section 8 by seeking  other  employment  or  otherwise,  nor shall the amount of any
         payment  provided for in this Agreement be reduced by any  compensation  earned by Employee as a result of
         employment by another  employer,  except that any severance  amounts  payable to Employee  pursuant to the
         Company's  severance  plan or policy for  employees in general shall reduce the amount  otherwise  payable
         pursuant to Sections 8(c)(i) or 8(e).
                  (i)      Excess  Parachute   Payments.   Notwithstanding   anything  in  this  Agreement  to  the
                           ----------------------------
         contrary,  to the extent that any payment or benefit  received or to be received by Employee  hereunder in
         connection with the termination of Employee's  employment  would, as determined by tax counsel selected by
         the  Company,  constitute  an "Excess  Parachute  Payment"  (as  defined in Section  280G of the  Internal
         Revenue  Code),  the Company  shall fully  "gross-up"  such payment so that  Employee is in the same "net"
         after-tax  position he would have been if such payment and gross-up  payments had not  constituted  Excess
         Parachute Payments.
                  (j)      Resignation  from Board.  In the event  Employee  is a member of the board of  directors
                           -----------------------
         of the Company or any of its  subsidiaries,  and  Employee's  employment by the Company is terminated  for
         any reason (other than Employee's  death),  Employee shall immediately resign as a member of such board of
         directors  upon the  written  request of the  Chairman  of the Board.  Nothing  herein  shall be deemed to
         limit  the power of the  shareholders  of the  Company  to at any time  remove  any  director,  including,
         without limitation, Employee, in accordance with applicable law.
         9.       Non-exclusivity  of  Rights.  Nothing  in  this  Agreement  shall  prevent  or  limit  Employee's
                  ---------------------------
continuing or future  participation  in any benefit,  bonus,  incentive,  or other plan or program  provided by the
Company or any of its affiliated  companies and for which Employee may qualify,  nor shall anything herein limit or
otherwise  adversely  affect  such rights as  Employee  may have under any  Options  with the Company or any of its
affiliated companies.
         10.      Assignability.  The  obligations  of Employee  hereunder  are personal and may not be assigned or
                  -------------
delegated  by him or  transferred  in any  manner  whatsoever,  nor are such  obligations  subject  to  involuntary
alienation,  assignment  or transfer.  The Company  shall have the right to assign this  Agreement  and to delegate
all rights, duties and obligations hereunder,  either in whole or in part, to any parent,  affiliate,  successor or
subsidiary  organization or company of the Company,  so long as the obligations of the Company under this Agreement
remain the obligations of the Company.
         11.      Notice.  For the purpose of this  Agreement,  notices and all other  communications  provided for
                  ------
in this  Agreement  shall be in writing  and shall be deemed to have been duly given  when  delivered  or mailed by
United  States  registered  mail,  return  receipt  requested,  postage  prepaid,  addressed  to the Company at its
principal office address,  directed to the attention of the Board with a copy to the Secretary of the Company,  and
to  Employee at  Employee's  residence  address on the  records of the  Company or to such other  address as either
party may have  furnished to the other in writing in  accordance  herewith  except that notice of change of address
shall be effective only upon receipt.
         12.      Validity.  The  invalidity  or  unenforceability  of any  provision of this  Agreement  shall not
                  --------
affect the validity or  enforceability  of any other provision of this Agreement,  which shall remain in full force
and effect.
         13.      Successors; Binding Agreement.
                  -----------------------------
                  (a)      The Company  will  require any  successor  (whether  direct or  indirect,  by  purchase,
         merger,  consolidation  or otherwise)  to all or  substantially  all of the business  and/or assets of the
         Company to  expressly  assume  and agree to  perform  this  Agreement  in the same  manner and to the same
         extent that the Company  would be required to perform it if no such  succession  had taken place.  Failure
         of the Company to obtain such  agreement  prior to the  effectiveness  of any such  succession  shall be a
         breach of this Agreement and shall entitle  Employee to  compensation  from the Company in the same amount
         and on the same terms as he would be  entitled to  hereunder  if he  terminated  his  employment  for Good
         Reason,  except that for purposes of  implementing  the foregoing,  the date on which any such  succession
         becomes  effective  shall be deemed the Date of  Termination.  As used herein,  the term  "Company"  shall
         include any  successor  to its  business  and/or  assets as  aforesaid  which  executes  and  delivers the
         Agreement  provided for in this Section 13 or which  otherwise  becomes bound by all terms and  provisions
         of this Agreement by operation of law.
                  (b)      This  Agreement and all rights of Employee  hereunder  shall inure to the benefit of and
         be enforceable by Employee's personal or legal  representatives,  executors,  administrators,  successors,
         heirs,  distributees,  devisees and  legatees.  If Employee  should die while any amounts would be payable
         to him hereunder if he had continued to live, all such amounts,  unless otherwise  provided herein,  shall
         be paid in accordance with the terms of this Agreement to Employee's  devisee,  legatee, or other designee
         or, if there be no such designee, to Employee's estate.
         14.      Miscellaneous.  No  provision of this  Agreement  may be modified,  waived or  discharged  unless
                  -------------
such  waiver,  modification  or discharge is agreed to in writing and signed by Employee and such officer as may be
specifically  authorized  by the  Board.  No waiver by either  party  hereto at any time of any breach by the other
party hereto of, or in  compliance  with,  any  condition  or  provision of this  Agreement to be performed by such
other  party  shall be deemed a waiver of similar or  dissimilar  provisions  or  conditions  at the same or at any
prior  or  subsequent  time.  This  Agreement  is  an  integration  of  the  parties  agreement;  no  agreement  or
representations,  oral or otherwise,  express or implied,  with respect to the subject matter hereof have been made
by either  party,  except those which are set forth  expressly in this  Agreement.  THE  VALIDITY,  INTERPRETATION,
CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
         15.      Counterparts.  This  Agreement may be executed in one or more  counterparts,  each of which shall
                  ------------
be deemed to be an original but all of which together will constitute one and the same instrument.
         16.       Arbitration.  Either  party  may elect  that any  dispute  or  controversy  arising  under or in
                   -----------
connection  with this  Agreement be settled by arbitration  in Houston,  Texas in accordance  with the rules of the
American  Arbitration  Association then in effect. If the parties cannot mutually agree on an arbitrator,  then the
arbitration  shall be conducted by a three arbitrator  panel,  with each party selecting one arbitrator and the two
arbitrators  so selected  selecting  a third  arbitrator.  The  findings  of the  arbitrator(s)  shall be final and
binding,  and judgment may be entered thereon in any court having  jurisdiction.  The findings of the arbitrator(s)
shall not be subject to appeal to any court,  except as otherwise  provided by  applicable  law. The  arbitrator(s)
may, in his or her (or their) own discretion, award legal fees and costs to the prevailing party.
         IN WITNESS  WHEREOF,  the parties  have  executed  this  Agreement  on  _____________,  effective  for all
purposes as provided above.

                                                OCEAN ENERGY, INC.



                                             By:
                                             Name:
                                             Title:


                                             EMPLOYEE:



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

EX-10 10 ex10-33_123100.htm EXHIBIT 10.33 Second Amendment to ESRP Membership Agreement - Hackett

EXHIBIT 10.33

SECOND AMENDMENT TO
OCEAN ENERGY, INC.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
MEMBERSHIP AGREEMENT

WHEREAS, OCEAN ENERGY, INC., a Texas corporation, formerly known as Seagull Energy Corporation (the “Company”), and JAMES T. HACKETT (the “Employee”) have heretofore executed an instrument entitled “SEAGULL ENERGY CORPORATION EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN MEMBERSHIP AGREEMENT” (the “Agreement”), evidencing the terms and conditions of the Employee’s membership in the OCEAN ENERGY, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN, formerly known as the Seagull Energy Corporation Executive Supplemental Retirement Plan ( the “Plan”); and

WHEREAS, the Company and the Employee desire to amend the Agreement;

NOW, THEREFORE, the parties hereto agree as follows, effective as of January 1, 2001:

For purposes of Section 1.01(14) of the Plan, Employee’s Normal Retirement Date shall be the date upon which the Employee attains fifty-five years of age.
As amended hereby, the Agreement is specifically ratified and reaffirmed.

EXECUTED this 14th day of December 2000.

                                                              OCEAN ENERGY, INC.


                                                              By:_________________________________
                                                                       Name: Peggy T. d'Hemecourt
                                                                       Title: Vice President - Human Resources

                                                              EMPLOYEE


                                                              ------------------------------------
                                                              James T. Hackett

EX-10 11 ex10-35_123100.htm EXHIBIT 10.35 ESRP Membership Agreement - Reeves

EXHIBIT 10.35

OCEAN ENERGY, INC.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
MEMBERSHIP AGREEMENT

WHEREAS, Robert K. Reeves ("Employee") has been selected as eligible to become a Member of the OCEAN ENERGY, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN (the "Plan"); and

WHEREAS, the Plan provides that each Member shall execute a Membership Agreement setting forth the terms and conditions of his membership; and

WHEREAS, Employee desires to become a Member of the Plan on the terms and conditions set forth therein and in this Membership Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

Employee agrees to become a Member of the Plan, effective as of January 1, 2001.
Employee's Applicable Percentage under the Plan shall be 50%.
For purposes of Section 1.01(5) of the Plan, Employee’s considered period shall be his last thirty-six consecutive months of employment or, if less, all of his completed months of employment.
For purposes of Section 1.01(8) of the Plan, Employee's Compensation shall include all amounts received by Employee as bonuses from the Company.
For purposes of Section 1.01(14) of the Plan, Employee’s Normal Retirement Date shall be the date upon which the Employee attains fifty-five years of age.
For purposes of Section 1.01(15) of the Plan, Employee's Pension shall be a series of monthly payments for a term certain of fifteen years.
Employee's Vested Interest in his benefit under the Plan shall be determined in accordance with the following Vesting Schedule:

                                                                   Vested Interest
         Prior to January 1, 2006                                        0%
         As of January 1, 2006                                         100%

Notwithstanding the foregoing, in the event that (a) Employee’s employment is terminated and, in connection with such termination, the Company is obligated to provide compensation and benefits to Employee following such termination pursuant to the Employment Agreement between the Company and Employee (the “Employment Agreement”) or (b) Employee’s job is eliminated or substantially reduced in scope following a Corporate Change (as such term is defined in the Employment Agreement), Employee’s Vested Interest in his benefit under the Plan shall be that percentage equal to a fraction, the numerator of which is the number of full months since the Employee became a Member of the Plan and the denominator of which is 60.

For purposes of Article IV of the Plan, each monthly payment of Employee’s Pension shall be equal to his Applicable Percentage of his Average Monthly Compensation.
For purposes of Section 4.04 of the Plan, the survivor annuity with respect to Employee shall be paid for a maximum of fifteen years or, if less, the remaining term of Employee’s Pension.
For purposes of Section 4.05 of the Plan, Employee’s Pension shall be reduced by benefits received by him under the Ocean Energy, Inc. Long Term Disability Plan, and payment of such Pension shall commence as of the first day of the month coinciding with or next following Employee’s Normal Retirement Date.

         EXECUTED this 14th day of December 2000.

                                                              OCEAN ENERGY, INC.


                                                              By:      _________________________
                                                                       Name:    Peggy T. d'Hemecourt
                                                                       Title:   Vice President - Human Resources

                                                              EMPLOYEE


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

EX-10 12 ex10-36_123100.htm EXHIBIT 10.36 ESRP Membership Agreement - Schiller

EXHIBIT 10.36

OCEAN ENERGY, INC.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
MEMBERSHIP AGREEMENT

WHEREAS, John D. Schiller ("Employee") has been selected as eligible to become a Member of the OCEAN ENERGY, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN (the "Plan"); and

WHEREAS, the Plan provides that each Member shall execute a Membership Agreement setting forth the terms and conditions of his membership; and

WHEREAS, Employee desires to become a Member of the Plan on the terms and conditions set forth therein and in this Membership Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

Employee agrees to become a Member of the Plan, effective as of January 1, 2001.
Employee's Applicable Percentage under the Plan shall be 50%.
For purposes of Section 1.01(5) of the Plan, Employee’s considered period shall be his last thirty-six consecutive months of employment or, if less, all of his completed months of employment.
For purposes of Section 1.01(8) of the Plan, Employee's Compensation shall include all amounts received by Employee as bonuses from the Company.
For purposes of Section 1.01(14) of the Plan, Employee’s Normal Retirement Date shall be the date upon which the Employee attains fifty-five years of age.
For purposes of Section 1.01(15) of the Plan, Employee's Pension shall be a series of monthly payments for a term certain of fifteen years.
Employee's Vested Interest in his benefit under the Plan shall be determined in accordance with the following Vesting Schedule:

                                                                                Vested Interest
         Prior to January 1, 2006                                                   0%
         As of January 1, 2006                                                          100%

For purposes of Article IV of the Plan, each monthly payment of Employee’s Pension shall be equal to his Applicable Percentage of his Average Monthly Compensation.
For purposes of Section 4.04 of the Plan, the survivor annuity with respect to Employee shall be paid for a maximum of fifteen years or, if less, the remaining term of Employee’s Pension.
For purposes of Section 4.05 of the Plan, Employee’s Pension shall be reduced by benefits received by him under the Ocean Energy, Inc. Long Term Disability Plan, and payment of such Pension shall commence as of the first day of the month coinciding with or next following Employee’s Normal Retirement Date.

EXECUTED this 14th day of December 2000.

                                                              OCEAN ENERGY, INC.


                                                              By:      _____________________________
                                                                       Name:    Peggy T. d'Hemecourt
                                                                       Title:   Vice President - Human Resources

                                                              EMPLOYEE


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

EX-10 13 ex10-37_123100.htm EXHIBIT 10.37 ESRP Membership Agreement - Transier

EXHIBIT 10.37

OCEAN ENERGY, INC.

EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN

MEMBERSHIP AGREEMENT

WHEREAS,William L. Transier ("Employee") has been selected as eligible to become a Member of the OCEAN ENERGY, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN (the "Plan"); and

WHEREAS, the Plan provides that each Member shall execute a Membership Agreement setting forth the terms and conditions of his membership; and

WHEREAS, Employee desires to become a Member of the Plan on the terms and conditions set forth therein and in this Membership Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

Employee agrees to become a Member of the Plan, effective as of January 1, 2001.
Employee's Applicable Percentage under the Plan shall be 50%.
For purposes of Section 1.01(5) of the Plan, Employee’s considered period shall be his last thirty-six consecutive months of employment or, if less, all of his completed months of employment.
For purposes of Section 1.01(8) of the Plan, Employee's Compensation shall include all amounts received by Employee as bonuses from the Company.
For purposes of Section 1.01(14) of the Plan, Employee’s Normal Retirement Date shall be the date upon which the Employee attains fifty-five years of age.
For purposes of Section 1.01(15) of the Plan, Employee's Pension shall be a series of monthly payments for a term certain of fifteen years.
Employee's Vested Interest in his benefit under the Plan shall be determined in accordance with the following Vesting Schedule:

                                                                                Vested Interest
         Prior to January 1, 2006                                                   0%
         As of January 1, 2006                                                          100%

For purposes of Article IV of the Plan, each monthly payment of Employee’s Pension shall be equal to his Applicable Percentage of his Average Monthly Compensation.
For purposes of Section 4.04 of the Plan, the survivor annuity with respect to Employee shall be paid for a maximum of fifteen years or, if less, the remaining term of Employee’s Pension.
For purposes of Section 4.05 of the Plan, Employee’s Pension shall be reduced by benefits received by him under the Ocean Energy, Inc. Long Term Disability Plan, and payment of such Pension shall commence as of the first day of the month coinciding with or next following Employee’s Normal Retirement Date.

EXECUTED this 14th day of December 2000.

                                                              OCEAN ENERGY, INC.


                                                              By:      _____________________________
                                                                       Name:    Peggy T. d'Hemecourt
                                                                       Title:   Vice President - Human Resources

                                                              EMPLOYEE


                                                              ___________________________________

EX-10 14 ex10-40_123100.htm EXHIBIT 10.40 Severance Agreement - Thompson

EXHIBIT 10.40

SEVERANCE AGREEMENT

AGREEMENT between OCEAN ENERGY, INC., a Texas corporation (the "Company") and Robert L. Thompson ("Executive"),

W I T N E S S E T H:

WHEREAS, the Company desires to retain certain key employee personnel and wishes to enter into a severance agreement with Executive in order to encourage his continued service to the Company; and

WHEREAS, Executive is prepared to commit such services in return for specific arrangements with respect to severance compensation and other benefits;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the Company and Executive agree as follows:

1. Definitions.

(a) “Average Bonus” shall mean the average of the bonus payments, if any, received by Executive for the two immediately preceding fiscal years of the Company; provided, however, that for purposes of computing such Average Bonus, if Executive was not employed by the Company in either of the two immediately preceding fiscal years of the Company, Executive shall be deemed to have received a bonus payment equal to 35% of Executive’s annual salary at the time he commenced employment with the Company for such fiscal year.

(b) “Change in Duties” shall mean the occurrence, within two years after the date upon which a Change of Control occurs, of any one or more of the following:

(i) A significant reduction in the duties of Executive from those applicable to him immediately prior to the date on which a Change of Control occurs;

(ii) A reduction in Executive’s annual salary or bonus opportunity under any applicable bonus or incentive compensation plan from that provided to him immediately prior to the date on which a Change of Control occurs;

(iii) Receipt of employee benefits (including but not limited to medical, dental, life insurance, accidental death and dismemberment, and long-term disability plans) and perquisites by Executive that are materially inconsistent with the employee benefits and perquisites provided by the Company to executives with comparable duties; or

(iv) A change in the location of Executive’s principal place of employment by the Company by more than 50 miles from the location where he was principally employed immediately prior to the date on which a Change of Control occurs.

(c) "Change of Control" means the occurrence, after the effective date of this Agreement, of one of the following events:

(i) The Company (A) shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Company) or (B) is to be dissolved and liquidated, and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board;

(ii) Any person or entity, including a “group” as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of 20% or more of the outstanding shares of the Company’s voting stock (based upon voting power), and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board; or

(iii) The Company sells all or substantially all of the assets of the Company to any other person or entity (other than a wholly-owned subsidiary of the Company) in a transaction that requires shareholder approval pursuant to the Texas Business Corporation Act.

(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.

(e) "Compensation" shall mean the greater of:

(i) Executive's annual salary plus his Average Bonus immediately prior to the date on which a Change of Control occurs, or

(ii) Executive's annual salary plus his Average Bonus at the time of his Involuntary Termination.

(f) "Involuntary Termination" shall mean any termination of Executive's employment with the Company which:

(i) does not result from a resignation by Executive (other than a resignation pursuant to clause (ii) of this subparagraph (f) or a resignation at the request of the Company); or

(ii) results from a resignation by Executive on or before the date which is sixty days after the date upon which Executive receives notice of a Change in Duties;

provided, however, the term “Involuntary Termination” shall not include a Termination for Cause, a termination of Executive’s employment occurring as a result of or in connection with

the sale or other divestiture by the Company of a division, subsidiary, or other business segment (including, without limitation, a divestiture by sale of shares of stock or of assets) if Executive is offered continued employment on terms that would not constitute a Change in Duties by the acquiror of such business segment immediately upon such sale or divestiture, or any termination as a result of death, disability under circumstances entitling him to benefits under the Company’s long-term disability plan, or Retirement.

(g) “Retirement” shall mean Executive’s voluntary resignation on or after the date he reaches age sixty-five (other than a resignation within sixty days after the date Executive receives notice of a Change in Duties or a resignation at the request of the Company).

(h) "Severance Amount" shall mean an amount equal to 2.00 times Executive's Compensation.

(i) “Termination for Cause” shall mean termination of Executive’s employment by the Company (or its subsidiaries) by reason of Executive’s gross negligence, gross neglect or willful misconduct in the performance of his duties or Executive’s final conviction of a felony or of a misdemeanor involving moral turpitude, excluding misdemeanor convictions relating to the operation of a motor vehicle.

(j) “Welfare Benefit Coverages” shall mean the medical, dental, life insurance and accidental death and dismemberment coverages provided by the Company to its active employees.

2. Services. Executive agrees that he will render services to the Company (as well as any subsidiary thereof or successor thereto) during the period of his employment to the best of his ability and in a prudent and businesslike manner and that he will devote substantially the same time, efforts and dedication to his duties as heretofore devoted.

3. Severance Benefits. If Executive’s employment by the Company or any subsidiary thereof or successor thereto shall be subject to an Involuntary Termination which occurs within two years after the date upon which a Change of Control occurs, then Executive shall be entitled to receive, as additional compensation for services rendered to the Company (including its subsidiaries), the following severance benefits:

(a) A lump sum cash payment in an amount equal to Executive's Severance Amount.

(b) Executive shall be entitled to continue the Welfare Benefit Coverages for himself and, where applicable, his eligible dependents following his Involuntary Termination for up to twenty four months (the “Continuation Period”), as long as Executive continues either to pay the premiums paid by active employees of the Company for such coverages or to pay the actual (nonsubsidized) cost of such coverages for which the Company does not subsidize for active employees. Such benefit rights shall apply only to those Welfare Benefit Coverages which the Company has in effect from time to time for active employees, and the applicable payments shall adjust as premiums for active employees of the Company or actual costs, whichever is applicable, change. Welfare Benefit Coverage(s) shall immediately end upon Executive’s obtainment of new employment and eligibility for similar Welfare Benefit

Coverage(s) (with Executive being obligated hereunder to promptly report such eligibility to the Company). Nothing herein shall be deemed to adversely affect in any way the additional rights, after consideration of the Continuation Period, of Executive and his eligible dependents to health care continuation coverage as required pursuant to Part 6 of Title I of the Employee Retirement Income Security Act of 1974, as amended. If, for any reason, Company is unable to continue any of the Welfare Benefit Coverages during a period in which Executive would otherwise be entitled to continue such Welfare Benefit Coverage(s), Company shall pay Executive an amount equal to the economic value of such Welfare Benefit Coverage(s).

(c) Executive shall be entitled to receive out-placement services in connection with obtaining new employment up to a maximum cost of $6,000, or an equivalent cash payment, if Executive either has or is not seeking new employment.

(d) The severance benefits payable under this Agreement shall be paid to Executive on or before the tenth business day after the last day of Executive’s employment with the Company; provided, however, that such severance benefits shall not be paid earlier than the day after expiration of the revocation period for the release required by Paragraph 6(i). Any severance benefits paid pursuant to this Paragraph will be deemed to be a severance payment and not compensation for purposes of determining benefits under the Company’s qualified plans and shall be subject to any required tax withholding.

4. Interest on Late Benefit Payments. If any payment provided for in Paragraph 3(a) or 3(b) hereof is not made when due, the Company shall pay to Executive interest on the amount payable from the date that such payment should have been made under such paragraph until such payment is made, which interest shall be calculated at a rate equal to two percentage points over the prime or base rate of interest announced by Chase Bank of Texas, N.A. (or any successor thereto) at its principal office in Houston, Texas and shall change when and as any such change in such prime or base rate shall be announced by such bank.

5. Certain Additional Payments by the Company. Notwithstanding anything to the contrary in this Agreement, in the event that any payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company shall pay to Executive an additional payment (a “Gross-up Payment”) in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed on any Gross-up Payment, Executive retains an amount of the Gross-up Payment equal to the Excise Tax imposed upon the Payment. The Company and Executive shall make an initial determination as to whether a Gross-up Payment is required and the amount of any such Gross-up Payment. Executive shall notify the Company in writing of any claim by the Internal Revenue Service which, if successful, would require the Company to make a Gross-up Payment (or a Gross-up Payment in excess of that, if any, initially determined by the Company and Executive) within ten days of the receipt of such claim. The Company shall notify Executive in writing at least ten days prior to the due date of any response required with respect to such claim if it plans to contest the claim. If the Company decides to contest such claim, Executive shall cooperate fully with the Company in such action; provided, however, the Company shall bear

and pay directly or indirectly all costs and expenses (including additional interest and penalties) incurred in connection with such action and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of the Company’s action. If, as a result of the Company’s action with respect to a claim, Executive receives a refund of any amount paid by the Company with respect to such claim, Executive shall promptly pay such refund to the Company. If the Company fails to timely notify Executive whether it will contest such claim or the Company determines not to contest such claim, then the Company shall immediately pay to Executive the portion of such claim, if any, which it has not previously paid to Executive.

General.

(a) Term. The effective date of this Agreement is January 16, 2001. The initial term of this Agreement shall be the period beginning on said effective date and ending on the three-year anniversary of said effective date. Within sixty days following the expiration of the initial term of this Agreement and within sixty days after each successive three-year period of time thereafter that this Agreement is in effect, the Company shall have the right to review this Agreement, and in its sole discretion either continue and extend this Agreement, terminate this Agreement, and/or offer Executive a different agreement. The Company will notify Executive of such action before the end of said sixty-day time period mentioned above. This Agreement shall remain in effect until so terminated and/or modified by the Company. Failure of the Company to take any action within said sixty-day time period shall be considered as an extension of this Agreement for an additional three-year period of time. Notwithstanding anything to the contrary contained in this “sunset provision,” it is agreed that if a Change of Control occurs while this Agreement is in effect, then this Agreement shall not be subject to termination or modification under this “sunset provision,” and shall remain in force for a period of two years after such Change of Control, and if within said two years the contingency factors occur which would entitle Executive to the benefits as provided herein, this Agreement shall remain in effect in accordance with its terms. If, within such two years after a Change of Control, the contingency factors that would entitle Executive to said benefits do not occur, thereupon this three-year “sunset provision” shall again be applicable with the sixty-day time period for Company action to thereafter commence at the expiration of said two years after such Change of Control and on each three-year anniversary date thereafter.

(b) Indemnification. If Executive shall obtain any money judgment or otherwise prevail with respect to any litigation brought by Executive or the Company to enforce or interpret any provision contained herein, the Company, to the fullest extent permitted by applicable law, hereby indemnifies Executive for his reasonable attorneys’ fees and disbursements incurred in such litigation and hereby agrees (i) to pay in full all such fees and disbursements and (ii) to pay prejudgment interest on any money judgment obtained by Executive from the earliest date that payment to him should have been made under this Agreement until such judgment shall have been paid in full, which interest shall be calculated at a rate equal to two percentage points over the prime or base rate of interest announced by Chase Bank of Texas, N.A. (or any successor thereto) at its principal office in Houston, Texas, and shall change when and as any such change in such prime or base rate shall be announced by such bank.

(c) Payment Obligations Absolute. The Company’s obligation to pay (or cause one of its subsidiaries to pay) Executive the amounts and to make the arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company (including its subsidiaries) may have against him or anyone else. All amounts payable by the Company (including its subsidiaries hereunder) shall be paid without notice or demand. Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Agreement, and, except as provided in Paragraph 3(b) hereof, the obtaining of any such other employment shall in no event effect any reduction of the Company’s obligations to make (or cause to be made) the payments and arrangements required to be made under this Agreement.

(d) Successors. This Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company, by merger or otherwise. This Agreement shall also be binding upon and inure to the benefit of Executive and his estate. If Executive shall die prior to full payment of amounts due pursuant to this Agreement, such amounts shall be payable pursuant to the terms of this Agreement to his estate.

(e) Severability. Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction by reason of applicable law shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(f) Non-Alienation. Executive shall not have any right to pledge, hypothecate, anticipate or assign this Agreement or the rights hereunder, except by will or the laws of descent and distribution.

(g) Notices. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of Executive, such notices or communications shall be effectively delivered if hand delivered to Executive at his principal place of employment or if sent by registered or certified mail to Executive at the last address he has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail to the Company at its principal executive offices.

(h) Controlling Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas. Further, Executive agrees that any legal proceeding to enforce the provisions of this Agreement shall be brought in Houston, Harris County, Texas, and hereby waives his right to any pleas regarding subject matter or personal jurisdiction and venue.

(i) Release. As a condition to the receipt of any benefit under Paragraph 3 hereof, Executive shall first execute a release, in the form established by the Company, releasing the Company, its affiliates, predecessors, successors, shareholders, partners, officers, directors, employees and agents from any and all claims and from any and all causes of action of any kind or character, including but not limited to all claims or causes of action arising out of Executive’s employment with the Company or the termination of such employment.

(j) Full Settlement. If Executive is entitled to and receives the benefits provided hereunder, performance of the obligations of the Company hereunder will constitute full settlement of all claims that Executive might otherwise assert against the Company on account of his termination of employment.

(k) Unfunded Obligation. The obligation to pay amounts under this Agreement is an unfunded obligation of the Company (including its subsidiaries), and no such obligation shall create a trust or be deemed to be secured by any pledge or encumbrance on any property of the Company (including its subsidiaries).

(l) Not a Contract of Employment. This Agreement shall not be deemed to constitute a contract of employment, nor shall any provision hereof affect (i) the right of the Company (or its subsidiaries) to discharge Executive at will or (ii) the terms and conditions of any signed written agreement hereafter executed by Company and Executive. This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof, and contains all the covenants, promises, representations, warranties and agreements between the parties with respect to any termination of Executive’s employment with the Company. Without limiting the scope of the preceding sentence, all prior understandings and agreements among the parties hereto relating to the subject matter hereof are hereby null and void and of no further force and effect. Any modification of this Agreement will be effective only if it is in writing and signed by the party to be charged.

(m) Number and Gender. Wherever appropriate herein, words used in the singular shall include the plural and the plural shall include the singular. The masculine gender where appearing herein shall be deemed to include the feminine gender.

(n) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the 16^th day of January, 2001.

                                                     "EXECUTIVE"





                                                     Robert L. Thompson

                                                     "COMPANY"

                                                     OCEAN ENERGY, INC.



                                                     By:      ____________________________________
                                                     Name:    Peggy T. d'Hemecourt
                                                     Title:   Vice President, Human Resources

EX-10 15 ex10-44_123100.htm EXHIBIT 10.44 Amendment to Natural Gas Purchase and Sale Agreement

EXHIBIT 10.44
September 28, 2000

Ocean Energy, Inc.
1001 Fannin, Suite 1600
Houston, Texas 77002

Attention: Gas Contract Administration

RE: Amendment to Natural Gas Purchase and Sale Agreement effective October 1, 1999 by and between Duke
Energy Trading and Marketing, L.L.C. ("DETM") and Seagull Energy E&P Inc., SGO Petroleum Inc., Global
Natural Resources Corporation of Nevada, Ocean Energy, Inc. and Ocean Energy Resources, Inc.
(collectively called "Ocean"), as amended, ("Agreement").

Dear Sir or Madam:

Reference is made to the Agreement, which is incorporated herein for all purposes by this reference. DETM and
Ocean wish to amend the Agreement and therefore, for valuable considerations between the parties contained herein
and in the Agreement DETM and Ocean hereby amend the Agreement effective October 1, 2000 to:

(a) change "2000" in line 2 of Article 1 of the Agreement to "2001"; and

(b) delete Appendix "A", as amended, from the Agreement and substitute therefore the Appendix "A" which is
attached hereto as Exhibit "A" and which is made a part hereof and part of the Agreement for all
purposes by this reference.

If this is Ocean's understanding of our amendment to the Agreement, please execute in the space provided below
and return a fully executed copy of this letter to the undersigned at your earliest convenience.

Sincerely,

Jonathan R. Thomas
Vice President

Accepted and Agreed to this 28th day of September 2000.

Seagull Energy E&P Inc., SGO Petroleum Inc., Global Natural Resources Corporation of Nevada, Ocean Energy, Inc.
and Ocean Energy Resources, Inc.

By: ______________________________
Name: William L. Transier
Title: Executive Vice President and Chief Financial Officer

EX-13 16 ex13_123100.htm EXHIBIT 13 MD and A and Financial Statements for 2000

Ocean Energy, Inc.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations

Ocean Energy is one of the largest U.S. independent oil and gas exploration and production companies, formed by the March 30, 1999 merger of Ocean Energy, Inc. and Seagull Energy Corporation (the “Seagull Merger”). The merger was treated for accounting purposes as an acquisition of Seagull by Ocean in a purchase transaction. As such, the financial results presented here are those of Ocean Energy, Inc. on a stand-alone basis for 1998 and the first quarter of 1999 and of the combined company thereafter.

The Company's accompanying Consolidated Financial Statements contain detailed information that should be referred to in conjunction with the following discussion.

Results Of Operations

Buoyed by rising commodity prices, the Company achieved its best financial performance ever in 2000, with operating profit before impairments for 2000 of $477 million, almost three times that of 1999. Ocean was able to take advantage of one of the highest commodity environments for energy in recent years and reduce outstanding debt and fund capital expenditures with cash flow. The debt reduction helped bring about a $31 million decrease in interest expense from 1999's $106 million. Improved commodity prices and lower interest expense combined to produce record net income of $213 million or $1.22 per diluted share for 2000.

With the Seagull merger, the Company gained new operations in Egypt, Russia and Indonesia and expanded its operations in the U.S. and Côte d'Ivoire. These expanded operations combined with the recovery of world crude oil and natural gas prices during 1999 resulted in an increase in total operating profit before impairments of $155 million for the year ended December 31, 1999 as compared to 1998.

                                          Oil and Gas Operations
                                          (Amounts in Thousands)
                                                               Year Ended
                                                              December 31,
                                               ---------------------------------------------
                                                    2000            1999            1998
                                               -------------   -------------   -------------
Oil and gas operations:
   Revenues:
     Natural gas............................    $  526,417      $  343,788     $   234,936
     Oil and NGLs...........................       547,137         413,777         300,935
                                               -------------   -------------   -------------
                                                 1,073,554         757,565         535,871
                                               -------------   -------------   -------------

   Operating expenses.......................       256,882         239,028         198,797
   Depreciation, depletion and amortization.       304,976         309,699         288,164
   Impairment of oil and gas properties.....        20,066          46,403         539,915
                                               -------------   -------------   -------------
   Operating profit (loss)..................       491,630         162,435        (491,005)
Corporate...................................       (35,070)        (29,689)        (24,950)
                                               -------------   -------------   -------------
   Total operating profit (loss)............    $  456,560      $  132,746      $ (515,955)
                                               =============   =============   =============

Revenues – Ocean operates in highly competitive markets where energy prices fluctuate significantly. As oil and gas prices fluctuate, so do the Company’s revenues, results of operations and cash flows. Oil prices declined steadily throughout 1998 and the first quarter of 1999, with oil prices reaching multi-year lows in some markets. Natural gas prices, despite temporary increases, also decreased over this time frame. Beginning in the second quarter of 1999 and continuing through 2000, oil and gas prices have increased dramatically.

Ocean Energy, Inc.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations

Natural gas revenues increased $182 million, or 53%, to $526 million for the year ended December 31, 2000, from $344 million for the year ended December 31, 1999. This increase is due to continued high average natural gas prices. The average realized price for natural gas before hedging activities increased 74% to $3.85 per Mcf for 2000 as compared to $2.21 for 1999. Daily natural gas production for 2000 was 407 MMcf, a decrease of 4% from 1999 volumes due primarily to property sales.

Natural gas revenues increased $109 million, or 46%, to $344 million for the year ended December 31, 1999, from $235 million for the year ended December 31, 1998. This increase is primarily due to production from properties acquired in the Seagull Merger and to higher average gas prices realized during the period. Daily natural gas production for 1999 was 423 MMcf, an increase of 32% over 1998 volumes due primarily to the acquisition of producing properties in the Seagull Merger, partially offset by the sale of the Canadian subsidiary. The average realized price for natural gas before hedging activities increased 11% to $2.21 per Mcf for 1999 as compared to $2.00 for 1998.

Oil revenues increased $133 million, or 32%, to $547 million for the year ended December 31, 2000, from $414 million for 1999. This increase is the result of higher crude oil prices. The average realized price for oil before hedging activities increased 47% to $25.51 during 2000 compared to $17.38 for 1999. Daily oil production decreased 9% to 67,627 Bbl in 2000 as compared to 73,933 Bbl for 1999 primarily due to property sales.

Oil revenues increased $113 million, or 38%, to $414 million for the year ended December 31, 1999, from $301 million for 1998. This increase is the result of production from properties acquired in the Seagull Merger and an increase in the average realized oil price during 1999. The average realized price for oil before hedging activities increased 43% to $17.38 for 1999 compared to $12.16 for 1998. Daily oil production increased 19% to 73,933 Bbl in 1999 as compared to 62,269 Bbl for 1998.

                                                          Operating Data (1)

                                                     Year Ended December 31,
                                                  -----------------------------
                                                    2000      1999       1998
                                                  --------  --------  ---------
Net Daily Natural Gas Production (MMcf):
   Domestic ...................................       374       376       272
   Côte d'Ivoire ..............................        23        30        21
   Other International ........................        10        17        28
                                                  --------  --------  --------
   Total.......................................       407       423       321
                                                  ========  ========  ========

Average Natural Gas Prices ($ per Mcf):
   Domestic....................................   $  3.95   $  2.26   $  2.09
   Côte d'Ivoire ..............................   $  2.28   $  1.68   $  1.64
   Other International ........................   $  3.86   $  1.89   $  1.37
   Weighted Average............................   $  3.85   $  2.21   $  2.00
Average Natural Gas Prices Including Hedging
   Activities ($ per Mcf)......................   $  3.54   $  2.23   $  2.00

Net Daily Oil and NGL Production (Bbl):
   Domestic ...................................    27,254    37,076    40,165
   Equatorial Guinea...........................    22,798    20,062    17,910
   Côte d'Ivoire ..............................     3,849     4,835     2,960
   Egypt ......................................     8,820     8,217         -
   Other International.........................     4,906     3,743     1,234
                                                  --------  --------  --------
   Total.......................................    67,627    73,933    62,269
                                                  ========  ========  ========

Average Oil and NGL Prices ($ per Bbl) :
   Domestic ...................................   $ 25.85   $ 17.06   $ 12.51
   Equatorial Guinea...........................   $ 26.06   $ 17.91   $ 11.35
   Côte d'Ivoire ..............................   $ 24.15   $ 18.24   $ 12.56
   Egypt.......................................   $ 26.61   $ 19.32   $     -
   Other International.........................   $ 20.14   $ 12.32   $ 11.78
   Weighted Average............................   $ 25.51   $ 17.38   $ 12.16
Average Oil and NGL Prices Including
   Hedging Activities ($ per Bbl)..............   $ 22.11   $ 15.33   $ 13.24

⁽¹⁾ All price information excludes the results of hedging activities, unless otherwise stated.

Total production for 2000 was 50 MMBOE. Average daily production for the full year was 407 MMcf of gas and 67,627 Bbls of oil, or 135,388 BOE per day. Average daily production has been increasing for the past two quarters with average daily production for the fourth quarter of 2000 reaching 418 MMcf of gas and 69,830 Bbl of oil, or 139,439 BOE per day.

Ocean Energy, Inc.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations

During 1999 and the first quarter of 2000, the Company sold various non-core oil and gas assets as part of its debt reduction program as follows:

                                                                   Net Daily Production
                                                               Year Ended December 31, 1999
                                                         ----------------------------------------
                    Asset                Date of Sale     Oil and NGL (Bbl)          Gas (Mcf)
- -------------------------------------   --------------   -------------------   ------------------
Canadian subsidiary..................     April 1999                  351               10,455
Arkoma Basin assets (acquired
    primarily in Seagull Merger).....     August 1999                   -               33,730
Gulf of Mexico assets................     August 1999               1,751                4,550
East Bay assets......................     March 2000                7,954               20,366
                                                         -------------------   ------------------
Total reduction in daily production
   associated with property sales....                              10,056               69,101
                                                         ===================   ==================

Reclassification of Transportation Expense – The Company has reclassified all periods to reflect transportation expenses incurred as operating expenses, instead of as a deduction from revenues as previously recorded. While this reclassification had no effect on net income, it did increase revenues and operating expenses by $24 million, $22 million, and $14 million for the years ended December 31, 2000, 1999 and 1998, respectively.

Operating Expenses – Operating expenses per BOE increased 14% to $5.18 per BOE for the year ended December 31, 2000, compared to $4.54 per BOE in 1999. Total operating expenses increased $18 million, or 8%, to $257 million for the year ended December 31, 2000 from $239 million for 1999. Substantially all of the increase per BOE is attributable to increases in production taxes resulting from higher realized oil and gas prices.

Operating expenses per BOE decreased 3% to $4.54 per BOE for the year ended December 31, 1999, compared to $4.70 per BOE in 1998. Total operating expenses increased $40 million, or 20%, to $239 million for the year ended December 31, 1999 from $199 million for 1998. This increase primarily resulted from a 25% increase in production volumes from the acquisition of additional producing properties in the Seagull Merger and from increased production from existing properties.

Depreciation, Depletion and Amortization Expense – Total depreciation, depletion and amortization (“DD&A”) expense for oil and gas operations decreased $5 million to $305 million for the year ended December 31, 2000 from $310 million for 1999 primarily due to decreased production. DD&A expense per BOE related to oil and gas operations rose 5% to $6.15 per BOE for the year ended December 31, 2000 from $5.88 per BOE for 1999 primarily due to the effects of property sales, the mix of production, and increasing estimated future development costs.

Total DD&A for oil and gas operations increased 8% to $310 million for the year ended December 31, 1999 compared to $288 million for 1998 primarily due to the increase in production. DD&A expense per BOE related to oil and gas operations decreased $0.94, or 14%, to $5.88 per BOE for the year ended December 31, 1999, from $6.82 per BOE for 1998. This variance is primarily attributable to the effect of the impairments of oil and gas properties recognized by the Company in 1998.

Impairment of Oil and Gas Properties – During the fourth quarter of 2000 the Company recognized an impairment in the amount of $20 million ($13 million, after tax) related to the discontinuance of operations in the Republic of Yemen. During 1999, the Company recorded impairments of oil and gas properties of $46 million related primarily to the sale of the Canadian subsidiary and to the discontinuance of operations in Bangladesh and other international locations. During 1998, the Company recognized impairments of oil and gas properties in the amount of $540 million pursuant to the ceiling limitation required by the full cost method of accounting for oil and gas properties. The 1998 impairments were the result of the precipitous decline in world crude oil prices experienced during the second and fourth quarters of 1998. The Company had no such ceiling limitations in 2000 or 1999.

Corporate

Corporate expenditures are comprised of general and administrative expenses and DD&A expense for non-oil and gas assets.

General and Administrative Expenses – General and administrative expenses increased $7 million or 32% to $29 million for the year ended December 31, 2000 compared to $22 million for 1999. This increase is due primarily to an increase in expense relating to compensation plans that are tied directly to the market price of the Company’s common stock.

General and administrative expenses increased $3 million or 16% to $22 million for the year ended December 31, 1999 compared to $19 million for 1998. This increase

Ocean Energy, Inc.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations

is due to the Seagull Merger partially offset by cost savings related to personnel reduction, office consolidations and reduced combined expenses.

DD&A expense for non-oil and gas assets was approximately $6 million, $8 million and $6 million for the years 2000, 1999, and 1998, respectively.

Other

Interest Expense – Interest expense decreased $31 million, or 29%, to $75 million for the year ended December 31, 2000 from $106 million in 1999. This decrease is the result of the Company’s debt reduction program undertaken subsequent to the Seagull Merger in 1999 and to the increase in the amount of interest capitalized during 2000 ($44 million in 2000 as opposed to $41 million in 1999) due to the increase in the level of capital expenditures.

Interest expense increased $43 million, or 68%, to $106 million for the year ended December 31, 1999 from $63 million in 1998. This increase is primarily the result of an increase in debt levels in 1999 resulting from the assumption of debt in the Seagull Merger and the higher capital spending program in place throughout 1998, which was funded by borrowings.

Merger and Integration Costs – Merger and integration costs of $3 million associated with the merger of Ocean and Seagull were recorded in the first quarter of 2000 and related primarily to severance costs. Merger and integration costs of $50 million were recorded for the year ended December 31, 1999, and consisted primarily of severance costs, the write-off of certain costs relating to information technology system and compensation expense related to the vesting of restricted stock. Merger expenses of $39 million associated with the March 1998 merger between Ocean and UMC were recorded in the first quarter of 1998.

Income Tax Expense (Benefit) – Income tax expense of $165 million was recognized for the year ended December 31, 2000, compared to a benefit of $0.1 million for the year ended December 31, 1999. The change in the income tax provision is primarily the result of three factors: (i) significant improvement in operating results; (ii) changes in the nature of deferred tax assets and liabilities due to the Seagull Merger and subsequent asset sales; and (iii) the relative significance of international operating results and taxes to the Company’s total results of operations.

Liquidity And Capital Resources

Liquidity – As a result of the Seagull Merger, the Company had nearly $2 billion in long-term debt as of March 31, 1999 and a debt to total capitalization ratio of 68%. One of management’s goals has been the reduction of these debt levels, with a target debt to total capitalization ratio of 54% by the end of 2000. With cash flows attributable to asset sales, prepaid oil and gas sales, higher commodity prices and disciplined capital spending, the Company reduced long-term debt to $1 billion at December 31, 2000, surpassed its debt to capitalization target by reaching a 47% debt to capitalization ratio at December 31, 2000, and achieved investment grade status from Standard and Poor’s and Moody’s Investor Services. The improvement in the debt levels will cut projected annual interest expense in 2001 to nearly half of 1999 levels.

On December 18, 2000 the Company’s Board of Directors declared the Company’s first quarterly common stock dividend. A dividend of four cents per share was payable on January 19, 2001, to stockholders of record at the close of business on January 5, 2001. The amount of future dividends for OEI common stock will be determined on a quarterly basis and will depend on earnings, financial condition, capital requirements and other factors.

As of December 31, 2000, the “Credit Facility” consisted of a $500 million revolving facility. The Credit Facility bears interest, at the Company’s option, at LIBOR or prime rates plus applicable margins ranging from zero to 1.7% or at a competitive bid. As of December 31, 2000, borrowings outstanding against the Credit Facility had been completely repaid. Letters of Credit totaled $45 million, leaving $455 million of available credit.

In September 2000, the Company entered into a market-sensitive prepaid natural gas sales contract to deliver approximately 53,500 Mcf of natural gas per day beginning in January 2002 through December 2003. In exchange for the natural gas to be provided, the Company received an advance payment of approximately $75 million. In 1999, the Company entered into a prepaid crude oil sales contract to deliver approximately 5,600 barrels of crude oil per day beginning in February 2000 through May 2003. In exchange for the crude oil to be provided, the Company received an advance payment of approximately $100 million. The obligations associated with the

Ocean Energy, Inc.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations

future delivery of the natural gas and crude oil have been recorded as deferred revenue. The contracts are amortized into revenue as scheduled deliveries of natural gas and crude oil are made.

In September 2000, the Company conveyed certain Internal Revenue Code Section 29 Tax Credit-bearing properties to a trust for approximately $70 million which was recorded in other noncurrent liabilities.

In the fourth quarter of 1999, the Company repurchased $150 million of its outstanding 10 3/8% Senior Subordinated Notes due 2005 and $158 million of its outstanding 9¾% Senior Subordinated Notes due 2006. The repurchase of these Notes was funded with available cash balances and borrowings under the Credit Facility. In connection with this repurchase, the Company recorded an after-tax extraordinary loss of $23 million, or ($0.16) per basic and diluted share. The extraordinary item is net of a current tax benefit of approximately $13 million.

Capital Expenditures And Acquisitions

(Amounts in Thousands)

                                          Year Ended December 31,
                                 -----------------------------------------
                                     2000          1999           1998
                                 -----------    -----------    -----------
Oil and Gas Operations:
  Leasehold acquisitions.....     $  62,350      $  34,043      $ 156,947
  Exploration costs..........       202,860        148,033        395,827
  Development costs..........       300,247        159,831        395,351
                                 -----------    -----------    -----------
                                    565,457        341,907        948,125
Corporate....................        12,061         20,177         13,854
                                 -----------    -----------    -----------
Total Continuing Operations..       577,518        362,084        961,979
Discontinued Operations......             -          6,942              -
                                 -----------    -----------    -----------
Total Capital Expenditures...     $ 577,518      $ 369,026      $ 961,979
                                 ===========    ===========    ===========

Acquisitions.................     $   5,598      $ 991,409      $       -
                                 ===========    ===========    ===========

Capital expenditures from oil and gas operations in 2000 totaled $565 million, an increase of 65% as compared to $342 million spent in 1999. Domestic spending in 2000 totaled $387 million, of which $149 million was for exploration, $191 million was for development and $47 million was for leasehold acquisitions. International spending in 2000 totaled $178 million, of which $54 million was for exploration, $109 million was for development and $15 million was for leasehold acquisitions. The Company completed a total of 287 wells, with an 80% success rate. Of that number, 52 were exploratory wells and 235 were development wells. Thirty-one exploratory wells were in progress at year-end.

The Company’s capital expenditure budget for the year 2001 is approximately $700 million (excluding proved property acquisitions). Approximately 45-55% will be exploratory spending. Actual capital spending may vary from the capital expenditure budget. The Company will evaluate its level of capital spending throughout the year based upon drilling results, commodity prices, cash flows from operations and property acquisitions. In general, the Company’s strategy is to maintain capital spending, excluding acquisitions, at levels below discretionary cash flows.

During 2000, the Company entered into agreements in which the lessors have agreed to fund up to $189 million for the construction of certain offshore platforms that will be completed during 2001 and 2002. Lease payments begin upon completion of construction and annual rental expense will total approximately $3 million. The Company intends to arrange for long-term operating leases to replace these leases at the end of the construction periods for the platforms.

Primarily through extensions and discoveries, the Company experienced a 269% reserve replacement of 2000 production. The Company’s proved oil and gas reserves increased by 11% or 45 MMBOE to 460 MMBOE at December 31, 2000 from 415 MMBOE at December 31, 1999. The Company’s finding and development (“F&D”) cost per BOE for the year ended December 31, 2000, was $4.28.

The standardized measure of discounted future net cash flows before taxes for the Company’s proved oil and gas reserves, calculated based on Securities and Exchange Commission (“SEC”) criteria, increased to $8.5 billion at December 31, 2000 compared with $3.0 billion at the end of 1999. This increase was primarily due to discoveries of new reserves and the increase in oil and gas prices, offset by property sales. Year-end calculations were made using weighted average prices of $8.81 and $2.04 per Mcf for gas and $22.97 and $23.33 per Bbl for oil for 2000 and 1999, respectively. The Company’s average realized prices for the year ended December 31, 2000, excluding the effects of hedging, were $3.85 per Mcf for gas and $25.51 per Bbl for oil. The Company’s average realized prices for the month ended January 31, 2001, excluding the effects of hedging, were $9.93 per Mcf for gas and $22.69 per Bbl for oil. Because the disclosure requirements for discounted future net cash flows are standardized by the SEC, significant changes can occur in these estimates based upon

Ocean Energy, Inc.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations

oil and gas prices in effect at year-end. The above estimates should not be viewed as an estimate of fair market value. See Note 18 to the Company’s Consolidated Financial Statements.

The Company makes, and will continue to make, substantial capital expenditures for the acquisition, exploration, development, and production of its oil and gas reserves. The Company has historically funded its expenditures from cash flow from operating activities, bank borrowings, sales of equity and debt securities, sales of non-strategic oil and gas properties, sales of partial interests in exploration concessions and project finance borrowings. The Company intends to finance capital expenditures for the year 2001 primarily with cash flow provided by operations.

The ability of the Company to satisfy its obligations and fund planned capital expenditures will be dependent upon its future performance. Such future performance is subject to many conditions that are beyond the Company’s control, particularly oil and gas prices, and the Company’s ability to obtain additional debt and equity financing, if necessary. The Company currently expects that its cash flow from operations and availability under the Credit Facility will be adequate to execute its business plan for the year 2001. No assurance can be given that the Company will not experience liquidity problems from time to time or on a long-term basis. If the Company’s cash flow from operations and availability under the Credit Facility is not sufficient to satisfy its cash requirements, there can be no assurance that additional debt or equity financing will be available to meet its requirements.

Subsequent Event – In January 2001, the Company announced that it had signed an agreement to acquire all outstanding shares of stock of Texoil, Inc. at a price of $8.25 per share for common stock and $18.04 per share for Series A convertible preferred stock for a total purchase price of approximately $130 million including assumed bank debt of approximately $15 million plus certain liabilities. The transaction is expected to be completed during the first quarter of 2001. Texoil, Inc. is an independent oil and gas company engaged in the acquisition of oil and gas reserves through a program, which includes purchases of reserves, reengineering, development and exploration activities in Texas and Louisiana.

Change in Accounting Method Subsequent to Year-end

Environmental

Compliance with applicable environmental and safety regulations by the Company has not required any significant capital expenditures or materially affected its business or earnings. The Company believes it is in substantial compliance with environmental and safety regulations and foresees no material expenditures in the future; however, the Company is unable to predict the impact that compliance with future regulations may have on its capital expenditures, earnings and competitive position.

Forward-Looking Statements May Prove Inaccurate

This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and information that is based on management’s belief and assumptions made by management based on currently available information. All statements other than statements of historical fact included in this document are forward-looking statements. When used in this document, words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “project” and similar expressions serve to identify forward-looking statements. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we can give no assurance that these expectations will prove correct. Our forward-looking statements are subject to risks, uncertainties and assumptions. Should one of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results may vary materially from

Ocean Energy, Inc.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations

those expected. Among the key factors that may have a direct bearing on our results of operations and financial condition are:

competitive practices in the oil and gas industry;
operational and systems risk incident to the drilling and operation of oil and gas wells;
volatility of energy commodity prices, generally, and fluctuations in the commodity prices for crude oil and natural gas that have not been properly hedged or that are inconsistent with our marketing activities, in particular;
general economic and capital markets conditions, including fluctuations in interest rates;
the impact of current and future laws and governmental regulations, particularly environmental regulations, affecting the energy industry in general, and our oil and gas operations, in particular;
environmental liabilities that are not covered by insurance or indemnity;
the political and economic climate in the foreign jurisdictions in which we conduct oil and gas operations; and
the effect on our results of operations and financial condition associated with implementing various accounting rules and regulations.

Defined Terms

Selected Quarterly Financial Data

Summarized quarterly financial data is as follows (amounts in thousands except per share data):

                                                                     Quarter Ended
                                     -------------------------------------------------------------------------------
                                         March 31            June 30           September 30         December 31
                                     ------------------ ------------------  --------------------  ------------------
2000:
  Revenues (1).....................      $   251,408        $   241,873         $    267,837         $   312,436
  Operating Profit (2).............      $   100,046        $    99,637         $    120,642         $   136,235
  Net Income (2)...................      $    42,978        $    45,493         $     57,869         $    66,864
  Earnings per Share:
    Basic (3)......................      $      0.25        $      0.27         $       0.34         $      0.39
    Diluted (3)....................      $      0.25        $      0.26         $       0.33         $      0.38

1999:
  Revenues (1).....................      $   109,625        $   201,747         $    220,440         $   225,753
  Operating Profit (Loss) (4)......      $   (31,150)       $    32,744         $     69,151         $    62,001
  Income (Loss) Before
     Extraordinary Item (4)........      $   (81,051)       $     2,136         $     28,805         $    29,685
  Earnings (Loss) per Share
    Before Extraordinary Item:
    Basic (3)......................      $     (0.79)       $      0.01         $       0.17         $      0.17
    Diluted (3)....................      $     (0.79)       $      0.01         $       0.16         $      0.17
  Net Income (Loss) (4)............      $   (81,051)       $     2,136         $     28,805         $     6,272
  Earnings (Loss) per Share:
    Basic (3)......................      $     (0.79)       $      0.01         $       0.17         $      0.03
    Diluted (3)....................      $     (0.79)       $      0.01         $       0.16         $      0.03

⁽¹⁾ Revenues have been reclassified to reflect transportation expenses as operating expenses instead of as a reduction from revenues as previously recorded.

⁽²⁾ Includes pre-tax impairment of oil and gas assets of $20 million in the fourth quarter of 2000 and merger and integration costs of $3 million in the first quarter of 2000.

⁽³⁾ Quarterly earnings (loss) per common share may not total to the full year per share amount, as the weighted average number of shares outstanding for each quarter fluctuated as a result of the assumed exercise of stock options.

⁽⁴⁾ Includes pre-tax impairments of oil and gas assets of $29 million and $17 million in the first and fourth quarters of 1999, respectively, and merger and integration costs of $41 million, $3 million, and $6 million in the first, third and fourth quarters of 1999, respectively.

Ocean Energy, Inc.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations

Market Risk Disclosures

The Company experiences market risk primarily in the area of commodity prices. To mitigate a portion of its exposure to fluctuations in energy prices, the Company has in place put options covering portions of its 2001 oil and gas production. The put options place an annual floor price of $25.00 per Bbl on 20,000 Bbl of oil per day and annual floor prices of $4.00 and $5.00 per Mcf each on 100,000 Mcf of gas per day. In addition, oil swaps covering 15,000 Bbl of oil per day at an average price of $21.53 per Bbl will continue through June 2001. A related trust has a swap agreement covering 14,500 Mcf of gas per day at a price of $4.77 for 2001 and covering additional quantities through 2005. To calculate the potential effect of the derivative financial instruments on future revenues, the Company applied the average NYMEX oil and gas strip prices as of the end of 2000 to the quantity of the oil and gas production covered by derivative financial instruments at December 31, 2000. The following table shows the estimated potential effects of the derivative financial instruments on revenues (in millions):

                                      Estimated             Estimated Decrease in      Estimated Decrease in
                                 Decrease in Revenues         Revenues with 10%          Revenues with 10%
          Instrument              at Current Prices          Decrease in Prices         Increase in Prices
- ---------------------------    ------------------------    ------------------------   ------------------------

Oil and gas puts.........            $         (18)            $           -              $         (18)

Oil swaps................                      (12)                       (5)                       (19)

Gas swap of related trust                      (13)                       (3)                       (22)

At December 31, 1999, the Company had in place derivative financial instruments covering approximately 10 MMBbl and 18 Bcf of its 2000 oil and gas production. At that time, the estimated potential effects of the derivative financial instruments were calculated as increases (decreases) in future revenues of $(4) million at current prices, $15 million with a 10% decrease in prices, and $(18) million with a 10% increase in prices.

Because substantially all the Company's debt obligations at December 31, 2000 were at fixed interest rates, changes in market interest rates would not have a material effect on the Company's results of operations. In addition, as the U.S. dollar is the functional currency for all of the Company's existing foreign operations, with predominantly all transactions being denominated in U.S. dollars, the Company has little risk from foreign currency translation.

Ocean Energy, Inc.
Report of Management to Shareholders

The management of Ocean Energy, Inc. is responsible for the preparation and integrity of financial statements and related data in this Annual Report, whether audited or unaudited. The financial statements were prepared in conformity with generally accepted accounting principles and include certain estimates and judgments which management believes are reasonable under the circumstances.

Management is also responsible for and maintains a system of internal accounting controls that is sufficient to provide reasonable assurance that assets are safeguarded against loss or unauthorized use and that financial records are reliable for preparing financial statements, as well as to prevent and detect fraudulent financial reporting. The internal control system is supported by written policies and procedures and the employment of trained, qualified personnel. The Company has an internal audit function which reviews the adequacy of the internal accounting controls and compliance with them. Management has considered the recommendations of internal audit and KPMG LLP, independent certified public accountants, concerning the Company’s system of internal controls and has responded appropriately to those recommendations.

The accompanying consolidated financial statements of Ocean Energy, Inc. as of December 31, 2000 have been audited by KPMG LLP, independent certified public accountants, and their report is included herein. Their audit was made in accordance with generally accepted auditing standards and included a review of the system of internal controls to the extent considered necessary to determine the audit procedures required to support their opinion on the consolidated financial statements.

The Board of Directors, through its Audit Committee composed exclusively of outside directors, meets periodically with representatives of management, internal audit and the independent auditors to ensure the existence of effective internal accounting controls and to ensure that financial information is reported accurately and timely with all appropriate disclosures included. The independent auditors and internal audit have full and free access to, and meet with, the Audit Committee, with and without management present.

/s/James T. Hackett /s/William L. Transier /s/Robert L. Thompson

Chairman of the Board, Executive Vice President Vice President and
President and Chief and Chief Financial Officer Controller
Executive Officer

January 25, 2001

Ocean Energy, Inc.
Independent Auditors’ Report

The Board of Directors and Shareholders
Ocean Energy, Inc.:

We have audited the accompanying consolidated balance sheets of Ocean Energy, Inc. and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of operations, shareholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ocean Energy, Inc. and subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/KPMG LLP

Houston, Texas
January 25, 2001

Ocean Energy, Inc.
Report of Independent Public Accountants

The Board of Directors and Shareholders
Ocean Energy, Inc.:

We have audited the accompanying consolidated statements of operations, shareholders’ equity and cash flows of Ocean Energy, Inc. and subsidiaries for the year ended December 31, 1998. 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 audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States. 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 financial statements referred to above present fairly, in all material respects, the results of operations and the cash flows of Ocean Energy, Inc. and subsidiaries for the year ended December 31, 1998, in conformity with accounting principles generally accepted in the United States.

/s/ARTHUR ANDERSEN LLP

Houston, Texas
February 15, 1999

Ocean Energy, Inc.
Consolidated Statements of Operations

(Amounts in Thousands Except Per Share Data)

                                                                           Year Ended December 31,
                                                             ----------------------------------------------------
                                                                   2000                1999             1998
                                                             ----------------    ---------------   --------------
Revenues.................................................       $1,073,554         $  757,565        $  535,871

Costs of Operations:
   Operating expenses....................................          256,882            239,028           198,797
   Depreciation, depletion and amortization..............          311,383            317,487           293,905
   Impairment of oil and gas properties..................           20,066             46,403           539,915
   General and administrative............................           28,663             21,901            19,209
                                                             ----------------    ---------------   --------------
                                                                   616,994            624,819         1,051,826
                                                             ----------------    ---------------   --------------

Operating Profit (Loss)..................................          456,560            132,746          (515,955)
Other (Income) Expense:
   Interest expense......................................           75,065            106,081            62,852
   Merger and integration costs..........................            3,273             49,603            39,000
   Interest income and other.............................              132             (1,314)           (1,229)
                                                             ----------------    ---------------   --------------

Income (Loss) Before Income Taxes........................          378,090            (21,624)         (616,578)
Income Tax Expense (Benefit).............................          164,887                (72)         (209,699)
                                                             ----------------    ---------------   --------------

Income (Loss) From Continuing Operations.................          213,203            (21,552)         (406,879)
Income From Discontinued Operations, Net of Income Taxes.                -              1,127                 -
                                                             ----------------    ---------------   --------------

Income (Loss) Before Extraordinary Loss..................          213,203            (20,425)         (406,879)
Extraordinary Loss, Net of Income Taxes..................                -            (23,413)                -
                                                             ----------------    ---------------   --------------

Net Income (Loss)........................................          213,203            (43,838)         (406,879)
Preferred Stock Dividends................................            3,250              3,264               454
                                                             ----------------    ---------------   --------------

Net Income (Loss) Available to Common Shareholders.......      $   209,953       $    (47,102)     $   (407,333)
                                                             ================    ===============   ==============

Basic Earnings (Loss) Per Common Share:
   Income (Loss) From Continuing Operations..............      $      1.26         $    (0.16)       $    (4.04)
   Income From Discontinued Operations, Net of
     Income Taxes........................................             -                  0.01                 -
   Extraordinary Loss, Net of Income Taxes...............             -                 (0.16)                -
                                                             ----------------    ---------------   --------------
   Net Income (Loss) to Common Shareholders..............      $      1.26         $    (0.31)       $    (4.04)
                                                             ================    ===============   ==============

Diluted Earnings (Loss) Per Common Share:
   Income (Loss) From Continuing Operations..............      $      1.22         $    (0.16)       $    (4.04)
   Income From Discontinued Operations, Net of
     Income Taxes........................................             -                  0.01                 -
   Extraordinary Loss, Net of Income Taxes...............             -                 (0.16)                -
                                                             ----------------    ---------------   --------------
   Net Income (Loss).....................................      $      1.22         $    (0.31)       $    (4.04)
                                                             ================    ===============   ==============

Weighted Average Number of Common Shares Outstanding:
   Basic.................................................          167,144            151,022           100,705
                                                             ================    ===============   ==============
   Diluted...............................................          174,749            151,022           100,705
                                                             ================    ===============   ==============