-----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, LGxgs3I45HY4jB20Lvz34p8EsjeQ5FwVFXA+Fpd23T0FNGh550OZZse4lTeEV7Aj 5jVUA3HiRQ3W77HSqDeldQ== 0000821189-96-000002.txt : 19960514 0000821189-96-000002.hdr.sgml : 19960514 ACCESSION NUMBER: 0000821189-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENRON OIL & GAS CO CENTRAL INDEX KEY: 0000821189 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 470684736 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09743 FILM NUMBER: 96561524 BUSINESS ADDRESS: STREET 1: 1400 SMITH ST CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7138535482 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 (X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1996 ( )Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 1-9743 ENRON OIL & GAS COMPANY (Exact name of registrant as specified in its charter) Delaware 47-0684736 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1400 Smith Street, P.O. Box 4362 Houston, Texas 77210-4362 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (713)853-6161 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 the number of shares outstanding of each of the issuer's classes of common stock, as of April 30, 1996. Common Stock, $.01 Par Value 159,909,840 shares Class Number of Shares ENRON OIL & GAS COMPANY TABLE OF CONTENTS Page No. PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Statements of Income - Three Months Ended March 31, 1996 and 1995 3 Consolidated Balance Sheets - March 31, 1996 and December 31, 1995 4 Consolidated Statements of Cash Flows - Three Months Ended March 31, 1996 and 1995 5 Notes to Consolidated Financial Statements 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION ITEM 4. Results of Votes of Security Holders 13 ITEM 6. Exhibits and Reports on Form 8-K 13 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ENRON OIL & GAS COMPANY CONSOLIDATED STATEMENTS OF INCOME (In Thousands Except Per Share Amounts) (Unaudited) Three Months Ended March 31, 1996 1995 NET OPERATING REVENUES Natural Gas Associated Companies $ 28,132 $69,597 Trade 90,495 46,602 Crude Oil, Condensate and Natural Gas Liquids Associated Companies 12,626 15,596 Trade 24,224 14,086 Gains on Sales of Reserves and Related Assets 1,860 5,605 Other 1,689 3,876 Total 159,026 155,362 OPERATING EXPENSES Lease and Well 18,756 16,702 Exploration 11,918 11,277 Dry Hole 2,511 1,769 Impairment of Unproved Oil and Gas Properties 4,863 7,079 Depreciation, Depletion and Amortization 63,321 53,118 General and Administrative 14,189 12,773 Taxes Other Than Income 11,471 9,815 Total 127,029 112,533 OPERATING INCOME 31,997 42,829 OTHER EXPENSE, NET (515) (591) INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES 31,482 42,238 INTEREST EXPENSE Incurred Affiliate 586 389 Other 4,931 4,061 Capitalized (1,373) (1,712) Net Interest Expense 4,144 2,738 INCOME BEFORE INCOME TAXES 27,338 39,500 INCOME TAX PROVISION 1,415 9,875 NET INCOME $ 25,923 $ 29,625 EARNINGS PER SHARE OF COMMON STOCK $ .16 $ .19 AVERAGE NUMBER OF COMMON SHARES 159,934 159,972
The accompanying notes are an integral part of these consolidated financial statements. PART I. FINANCIAL INFORMATION - (Continued) ITEM 1. FINANCIAL STATEMENTS - (Continued) ENRON OIL & GAS COMPANY CONSOLIDATED BALANCE SHEETS (In Thousands) March 31, December 31, 1996 1995 (Unaudited) ASSETS CURRENT ASSETS Cash and Cash Equivalents $ 26,525 $ 23,039 Accounts Receivable Associated Companies 73,068 60,777 Trade 107,704 107,737 Inventories 13,676 11,697 Other 8,667 14,582 Total 229,640 217,832 OIL AND GAS PROPERTIES (Successful Efforts Method) 3,390,791 3,380,924 Less:Accumulated Depreciation, Depletion and Amortization (1,509,230) (1,499,379) Net Oil and Gas Properties 1,881,561 1,881,545 OTHER ASSETS 44,928 47,881 TOTAL ASSETS $2,156,129 $2,147,258 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable Associated Companies $ 8,640 $ 12,902 Trade 106,881 120,756 Accrued Taxes Payable 13,666 19,595 Dividends Payable 4,739 4,795 Other 8,715 11,249 Total 142,641 169,297 LONG-TERM DEBT Affiliate 36,017 141,520 Other 282,350 147,559 OTHER LIABILITIES 16,297 11,629 DEFERRED INCOME TAXES 300,671 308,141 DEFERRED REVENUE 202,780 205,453 SHAREHOLDERS' EQUITY Common Stock, $.01 Par, 160,000,000 Shares Authorized and Issued 201,600 201,600 Additional Paid In Capital 393,883 399,379 Unearned Compensation (7,085) - Cumulative Foreign Currency Translation Adjustment (10,357) (10,747) Retained Earnings 597,924 576,740 Common Stock Held in Treasury, 23,160 shares at March 31, 1996 and 150,045 shares at December 31, 1995 (592) (3,313) Total Shareholders' Equity 1,175,373 1,163,659 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,156,129 $2,147,258
The accompanying notes are an integral part of these consolidated financial statements. PART I. FINANCIAL INFORMATION - (Continued) ITEM 1. FINANCIAL STATEMENTS - (Continued) ENRON OIL & GAS COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Three Months Ended March 31, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES Reconciliation of Net Income to Net Operating Cash Inflows: Net Income $ 25,923 $ 29,625 Items Not Requiring (Providing) Cash Depreciation, Depletion and Amortization 63,321 53,118 Impairment of Unproved Oil and Gas Properties 4,863 7,079 Deferred Income Taxes (6,516) 4,801 Other, Net (600) 322 Exploration Expenses 11,918 11,277 Dry Hole Expenses 2,511 1,769 Gains on Sales of Reserves and Related Assets (1,860) (5,605) Other, Net (2,763) (364) Changes in Components of Working Capital and Other Liabilities Accounts Receivable 4,742 15,975 Inventories (1,979) (323) Accounts Payable (18,137) (20,706) Accrued Taxes Payable (5,929) (557) Other Liabilities 5,104 5,108 Other, Net 1,649 (1,982) Amortization of Deferred Revenue (10,807) (10,687) Changes in Components of Working Capital Associated with Investing and Financing Activities 15,833 (2,973) NET OPERATING CASH INFLOWS 87,273 85,877 INVESTING CASH FLOWS Additions to Oil and Gas Properties (70,261) (93,912) Exploration Expenses (11,918) (11,277) Dry Hole Expenses (2,511) (1,769) Proceeds from Sales of Reserves and Related Assets (Note 5) 4,868 26,504 Changes in Components of Working Capital Associated with Investing Activities (15,595) 7,197 Other, Net (3,240) (502) NET INVESTING CASH OUTFLOWS (98,657) (73,759) FINANCING CASH FLOWS Long-Term Debt Affiliate (105,503) - Other 135,266 8,300 Dividends Paid (4,795) (4,800) Common Stock Repurchases (17,044) (3,726) Proceeds from Sales of Treasury Stock 7,184 1,827 Changes in Components of Working Capital Associated with Financing Activities (238) (4,224) NET FINANCING CASH INFLOWS (OUTFLOWS) 14,870 (2,623) INCREASE IN CASH AND CASH EQUIVALENTS 3,486 9,495 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 23,039 5,810 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 26,525 $ 15,305
The accompanying notes are an integral part of these consolidated financial statements. PART I. FINANCIAL INFORMATION - (Continued) ITEM 1. FINANCIAL STATEMENTS - (Continued) ENRON OIL & GAS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The consolidated financial statements of Enron Oil & Gas Company and subsidiaries (the "Company") included herein have been prepared by management without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial results for the interim periods. Certain information and notes normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, management believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Certain reclassifications have been made to prior period financial statements to conform with the current presentation. 2. Cash and Cash Equivalents at March 31, 1996 includes $13.9 million of funds deposited with an Enron Corp. affiliated company under a revolving credit agreement. 3. Income tax provision for the three-month periods ended March 31, 1996 and 1995 includes tax benefits of $1.3 million and $5.1 million, respectively, related to tight gas sand federal income tax credit utilization. Income tax provision for the three-month period ended March 31, 1996 also includes an $8.5 million tax benefit primarily associated with a reassessment of deferred tax requirements and the successful resolution on audit of Canadian income taxes for certain prior years. 4. Natural Gas and Crude Oil, Condensate and Natural Gas Liquids Net Operating Revenues Natural Gas Net Operating Revenues are comprised of the following (in millions): Three Months Ended March 31, 1996 1995 Wellhead Natural Gas Revenues Associated Companies (1)(2) $ 56.8 $ 44.6 Trade 68.6 35.1 Total $125.4 $ 79.7 Other Natural Gas Marketing Activities Gross Revenues from: Associated Companies $ 18.9 $ 27.3 Trade (3) 39.5 27.6 Total 58.4 54.9 Associated Cost from: Associated Companies (1)(5) 33.0 27.9(4) Trade 17.6 16.4 Total 50.6 44.3 Net 7.8 10.6 Commodity Price Swap Gain(Loss) Trading (6) (1.2) 11.3 Non-Trading (7) (13.4) 14.6 Total (14.6) 25.9 Total $ (6.8) $ 36.5 PART I. FINANCIAL INFORMATION - (Continued) ITEM 1. FINANCIAL STATEMENTS - (Continued) ENRON OIL & GAS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Crude Oil, Condensate and Natural Gas Liquids, Net Operating Revenues are comprised of the following (in millions): Three Months Ended March 31, 1996 1995 Wellhead Crude Oil, Condensate and Natural Gas Liquid Revenues Associated Companies $ 13.6 $ 15.2 Trade 24.2 14.1 Total $ 37.8 $ 29.3 Other Crude Oil and Condensate Marketing Activities Commodity Price Hedging Gain(Loss) (7) $ (1.0) $ 0.4 (1) Wellhead Natural Gas Revenues include $32.8 million and $18.9 million for the three-month periods ended March 31, 1996 and 1995, respectively, associated with deliveries by Enron Oil & Gas Company to Enron Oil & Gas Marketing, Inc., a wholly-owned subsidiary, reflected as a cost in Other Natural Gas Marketing Activities - Associated Costs. (2) Includes $4.0 million and $3.8 million for the three-month periods ended March 31, 1996 and 1995, respectively, associated with the equivalent wellhead value of volumes delivered under the terms of a volumetric production payment agreement effective October 1, 1992, as amended, net of transportation. (3) Includes $10.8 million and $10.7 million for the three-month periods ended March 31, 1996 and 1995 associated with the amortization of deferred revenues under the terms of volumetric production payment and exchange agreements effective October 1, 1992, as amended. (4) Includes the effect of a price swap agreement with a third party which in effect fixed the price of certain purchases through February 1995. (5) Includes $8.2 million and $6.7 million for the three-month periods ended March 31, 1996 and 1995, respectively, for volumes delivered under the terms of volumetric production payment and exchange agreements effective October 1, 1992, as amended, including equivalent wellhead value, any applicable transportation costs and location differentials. (6) The three-month period ended March 31, 1996 includes a $1.2 million loss associated with certain call option transactions. The comparable period in 1995 includes an $11.3 million gain associated with certain NYMEX-related commodity market transactions designated for trading purposes. Subsequent to March 31, 1996, the Company restructured an option covering notional volumes of 73 trillion British thermal units ("Tbtu") for each of the years 1997 and 1998 into four options each exercisable, in total, at one time by the counterparty on or before December 3117, 1996, 1997, 1998 and 1999, respectively, to purchase natural gas at an average fixed price of $1.98, $1.98, $1.93 and $1.93 per million British thermal unit for the years 1997, 1998, 1999 and 2000, respectively. The options each cover notional volumes of 37 Tbtu for each of the years. (7) Represents gain or loss associated with commodity price swap transactions primarily with Enron Corp. affiliated companies based on NYMEX-related commodity prices in effect on dates of execution, less customary transaction fees. These transactions were originally entered into as price hedges for a portion of wellhead sales. PART I. FINANCIAL INFORMATION - (Continued) ITEM 1. FINANCIAL STATEMENTS - (Concluded) ENRON OIL & GAS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. Gains on sales of certain oil and gas reserves and related assets in the amount of $1.9 million and $5.6 million for the three-month periods ended March 31, 1996 and 1995, respectively, are required by current accounting guidelines to be removed from net income in connection with determining net operating cash inflows while the related proceeds are classified as investing cash flows. The Company believes the proceeds from the sales of reserves and related assets should be considered in analyzing the elements of operating cash flows. The current federal income tax impact of these sales transactions was calculated by the Company to be $0.6 million and $6.0 million for the three-month periods ended March 31, 1996 and 1995, respectively, which entered into the overall calculation of current federal income tax. The Company believes that this current federal income tax impact should also be considered in analyzing the elements of the cash flow statement. 6. In the first quarter of 1996, the Company adopted Statement of Financial Accounting Standards No. 121 - "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" which resulted in a non-cash impairment charge which was immaterial to and is included in depreciation, depletion and amortization. 7. In January 1996, 301,500 shares of common stock of the Company were granted to certain officers and key employees of the Company under the Enron Oil & Gas Company 1992 Stock Plan, as amended, and the Amended and Restated Enron Oil & Gas Company 1994 Stock Plan. Such shares are restricted and vest, subject to continued employment and certain net income performance goals, on the anniversary date of grant which could begin as early as 1998, but in any event no later than January 2003. The fair value of the shares at date of grant has been recorded in shareholders' equity as unearned compensation. 8. As reported in the Company's Annual Form 10-K for the year ended December 31, 1995, the Company has been named as a potentially responsible party in certain Comprehensive Environmental Response Compensation and Liability Act proceedings. However, management does not believe that any potential assessments resulting from such proceedings will individually or in the aggregate have a materially adverse effect on the financial condition or results of operations of the Company. 9. In April 1996, the Company sold certain oil and gas reserves and related assets for approximately $51 million with a resulting pretax gain of approximately $13 million. 10. On May 7, 1996, the shareholders of the Company approved a resolution submitted by the Board of Directors to amend the Restated Certificate of Incorporation of the Company to increase the total number of authorized shares of the common stock of the Company from 160 million to 320 million shares. PART I. FINANCIAL INFORMATION - (Continued) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ENRON OIL & GAS COMPANY The following review of operations for the three-month periods ended March 31, 1996 and 1995 should be read in conjunction with the consolidated financial statements of the Company and Notes thereto. Results of Operations Three Months Ended March 31, 1996 vs. Three Months Ended March 31, 1995 In the first quarter of 1996, Enron Oil & Gas Company (the "Company") realized net income of $25.9 million compared to net income of $29.6 million for the first quarter of 1995. Net operating revenues for the first quarter of 1996 were $159.0 million as compared to $155.4 million for the first quarter of 1995. Wellhead volume and price statistics are as follows: 1996 1995 Natural Gas Volumes (MMcf/d)(1) North America (2) 715 621 Trinidad 133 95 Total 848 716 Average Natural Gas Prices ($/Mcf)(3) North America (4) $1.74 $ 1.28 Trinidad 1.00 0.96 Composite 1.62 1.24 Crude Oil/Condensate Volumes (MBbl/d)(1) North America 11.3 11.7 Trinidad 7.1 3.6 India 3.0 2.8 Total 21.4 18.1 Average Crude Oil/Condensate Prices ($/Bbl)(3) North America $18.41 $16.62 Trinidad 17.96 15.48 India 17.36 16.65 Composite 18.11 16.40 (1) Million cubic feet per day or thousand barrels per day, as applicable. (2) Includes 48 MMcf per day for the three-month periods ended March 31, 1996 and 1995 delivered under the terms of volumetric production payment and exchange agreements effective October 1, 1992, as amended. (3) Dollars per thousand cubic feet or per barrel, as applicable. (4) Includes an average equivalent wellhead value of $.91/Mcf and $.87/Mcf for the three-month periods ended March 31, 1996 and 1995, respectively, for the volumes described in note (2), net of transportation costs. First quarter 1996 average wellhead natural gas prices were up approximately 31% from the comparable period in 1995 increasing net operating revenues by approximately $30 million. An increase of 18% in wellhead natural gas volumes from the first quarter of 1995 increased net operating revenues by approximately $16 million. The first quarter 1996 North America increase in wellhead natural gas volumes was primarily the result of acquisitions net of dispositions made during 1995 and eliminating voluntary curtailments in the first quarter of 1996 due to the significant increases realized in average wellhead natural gas prices over the prices realized during the comparable period in 1995. Offshore Trinidad natural gas volumes were 40% higher primarily as a result of increased daily takes under the existing contract. First quarter 1996 wellhead crude oil and condensate average prices were up 10% increasing net operating revenues approximately $3 million from the first quarter of 1995. Wellhead crude oil and condensate volumes increased 18% adding approximately $5 million to net operating revenues compared to the first quarter of 1995. This increase reflects the impact on condensate volumes of the higher natural gas takes in Trinidad noted above and successful well completions in the latter half of 1995. PART I. FINANCIAL INFORMATION - (Continued) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) ENRON OIL & GAS COMPANY Other marketing activities associated with sales and purchases of natural gas, NYMEX-related natural gas and crude oil price swap transactions and margins related to the volumetric production payment reduced net operating revenue by $8 million during the first quarter of 1996, a decrease of approximately $45 million from the comparable period in 1995. During December 1995 and the first quarter of 1996, the Company closed all 1996 natural gas price swap transactions originally entered into as hedges to facilitate participation in anticipated wellhead natural gas price upside. Included in the first quarter of 1996 is a $21 million reduction related to the closing of first quarter 1996 natural gas price swap transactions. This reduction is partially offset by the recognition of an $8 million gain in the first quarter of 1996 related to natural gas price swap agreements with an Enron Corp. affiliated company received in 1995 in exchange for certain fuel supply and purchase contracts and related price swap agreements associated with a cogeneration facility in 1995. This $13 million net loss compares to a $15 million gain on similar transactions in the first quarter of 1995. In the first quarter of 1996, the Company also incurred a $1 million loss related to call option transactions compared to an $11 million gain in the first quarter of 1995 related to certain natural gas price swap transactions with an Enron Corp. affiliated company designated for trading purposes and with an Enron Corp. affiliated company. Deferred gains of approximately $17 million related to the closing of the remainder of the 1996 NYMEX-related natural gas price swap transactions will be recognized during the remainder of the year partially offsetting the $21 million reduction in the first quarter noted above. Gains on sales of oil and gas reserves and related assets during the first quarter of 1996 decreased approximately $4 million when compared to the corresponding period in 1995. In April 1996, the Company sold certain reserves and related assets for approximately $51 million with a resulting pretax gain of approximately $13 million. During the first quarter of 1996, operating expenses were approximately $14 million higher than in the first quarter of 1995. Lease and well expenses increased approximately $2 million primarily due to continually expanding operations. Depreciation, depletion and amortization ("DD&A") expense increased approximately $10 million to $63 million primarily reflecting an increase in production volumes. The average DD&A rate in both the first quarter of both 1996 and 1995 was $.70 per thousand cubic feet equivalent ("Mcfe"). The per unit operating costs of the Company for lease and well, DD&A, general and administrative and interest expense, and taxes other than income averaged $1.24 per Mcfe during the first quarter of 1996 compared to $1.26 per Mcfe during the first quarter of 1995. The reduction primarily reflects a decrease in per unit lease and well expense. PART I. FINANCIAL INFORMATION - (Continued) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) ENRON OIL & GAS COMPANY Income tax provision decreased approximately $8 million for the first quarter of 1996 as compared to the same period in 1995 primarily resulting from tax benefits associated with a reassessment of deferred tax requirements and the successful resolution on audit of Canadian income taxes for certain prior years. Federal income taxes accrued in interim periods are calculated using the estimated annual effective income tax rate method. Capital Resources and Liquidity The Company's primary sources of cash during the first three months ended March 31, 1996 included funds generated from operations and the issuance of new debt. Primary cash outflows included funds used in operations, exploration and development expenditures, repayment of debt, common stock repurchases, and dividends paid to the Company shareholders. Discretionary cash flow, a frequently used measure of performance for exploration and production companies, is derived by adjusting net income to eliminate the effects of depreciation, depletion and amortization, impairment of unproved oil and gas properties, deferred income taxes, gains on sales of reserves and related assets, certain other miscellaneous non-cash amounts, except for amortization of deferred revenue, and exploration and dry hole expenses and to include proceeds from sales of reserves and related assets. The Company generated discretionary cash flow of $102 million during the first quarter of 1996, a 21% decrease from the $129 million generated for the comparable period in 1995, primarily reflecting lower proceeds from the sales of selected reserves and related assets during the first quarter of 1996. As noted earlier, in April 1996 the Company closed the sale of certain reserves and related assets generating proceeds of approximately $51 million. (See "Results of Operations"). Based upon existing economic and market conditions, management believes net operating cash flow and available financing alternatives in 1996 will be sufficient to fund net investing and other cash requirements of the Company for the remainder of the year. Exploration and development expenditures for the first quarter of 1996 and 1995 are as follows (in millions): 1996 1995 North America $ 71 $ 95 Outside North America Trinidad - 22 India 9 5 Other 5 4 Total $ 85 $ 126 Exploration and development expenditures for the first quarter of 1996 were lower than expenditures in the first quarter of 1995 primarily due to a large developmental drilling program in Trinidad completed in 1995 and a $19 million acquisition in North America in 1995 with no significant acquisitions completed in 1996. PART I. FINANCIAL INFORMATION - (Concluded) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Concluded) ENRON OIL & GAS COMPANY The level of exploration and development expenditures will vary in future periods depending on energy market conditions and other related economic factors. The Company has significant flexibility with respect to financing alternatives and the ability to adjust its exploration and development expenditure budget as circumstances warrant. There are no material continuing commitments associated with expenditure plans. Information Regarding Forward Looking Statements This Quarterly Report on Form 10-Q includes 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. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that such assumptions will materialize. Important factors that could cause actual results to differ materially from those in the forward looking statements herein include, but are not limited to, the extent of the Company's success in acquiring oil and gas properties and in discovering, developing and producing reserves, the timing and extent of changes in commodity prices for natural gas, crude oil and condensate and natural gas liquids, political developments affecting areas where operations of the Company exist and conditions in the capital markets and equity markets during the periods covered by the forward looking statements. PART II. OTHER INFORMATION ENRON OIL & GAS COMPANY ITEM 4. Submission of Matters to a Vote of Security Holders The Annual Meeting of ShareholdersStockholders of Enron Oil & Gas Company was held on May 7, 1996, in Houston, Texas, for the purpose of electing a board of directors, approving the appointment of auditors, and voting on the proposal described below. Proxies for the meeting were solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934 and there was no solicitation in opposition to management's solicitations. (a) Each of the directors nominated by the Board and listed in the proxy statement was elected with the votes as follows: Shares Shares Nominee For Withheld Fred C. Ackman 147,321,430 292,137 Forrest E. Hoglund 146,808,043 805,524 Richard D. Kinder 146,799,142 814,425 Kenneth L. Lay 146,798,781 814,786 Edward Randall, III 147,321,230 292,337 (b) The appointment of Arthur Andersen LLP, independent public accountants, as auditors for the year ending December 31, 1996 was approved by the following vote: 147,552,484 shares for; 36,541 shares against; and 24,542 shares abstaining. (c) An amendment of the Restated Certificate of Incorporation of the Company to increase the total number of authorized shares of common stock of the Company from 160 million to 320 million shares was approved by the following vote: 144,228,317 shares for; 2,903,502 shares against; and 481,748 shares abstaining. ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits - None (b) Reports on Form 8-K - There were no reports on Form 8-K filed for the quarterly period ended March 31, 1996. SIGNATURES Pursuant to the requirements 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. ENRON OIL & GAS COMPANY (Registrant) Date: May 10, 1996 By /S/ W. C. WILSON W. C.Wilson Senior Vice President and Chief Financial Officer (Principal Financial Officer) Date: May 10, 1996 By /S/ BEN B. BOYD Ben B. Boyd Vice President and Controller (Principal Accounting Officer) EX-27 2
5 3-MOS DEC-31-1996 MAR-31-1996 26,525 0 180,772 0 13,676 229,640 3,390,791 (1,509,230) 2,156,129 142,641 0 201,600 0 0 973,773 2,156,129 155,477 159,026 0 127,029 515 0 4,144 27,338 1,415 25,923 0 0 0 25,923 .16 .00
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