-----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, IdrLdioCSlXqRmZmgepkch2DMTJYBaJGgE+1YN3ns8qLf7q2jFLTiuYIyDxu5Wm9 EzVuRY2vl/adwOUEZ9Nd8w== 0000950129-97-002081.txt : 19970520 0000950129-97-002081.hdr.sgml : 19970520 ACCESSION NUMBER: 0000950129-97-002081 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENRON OIL & GAS CO CENTRAL INDEX KEY: 0000821189 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] 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: 97608714 BUSINESS ADDRESS: STREET 1: 1400 SMITH ST CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7138535482 10-Q 1 ENRON OIL & GAS CORPORATION - 3/31/97 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ------------ Form 10-Q ------------ 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, 1997 [ ] 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 (I.R.S. Employer of incorporation or organization) Identification No.) 1400 Smith Street, Houston, Texas 77002-7369 (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, 1997. Common Stock, $.01 Par Value 157,511,490 shares - --------------------------------------- ----------------------- Class Number of Shares ================================================================================ 2 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, 1997 and 1996 3 Consolidated Balance Sheets - March 31, 1997 and December 31, 1996 4 Consolidated Statements of Cash Flows - Three Months Ended March 31, 1997 and 1996 5 Notes to Consolidated Financial Statements 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 12 ITEM 4. Submission of Matters to a Vote of Security Holders 12 ITEM 6. Exhibits and Reports on Form 8-K 12
-2- 3 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, - --------------------------------------------------------------------------------------- 1997 1996 - --------------------------------------------------------------------------------------- NET OPERATING REVENUES Natural Gas (Note 3) Associated Companies $ (2,599) $ 28,132 Trade 141,171 90,495 Crude Oil, Condensate and Natural Gas Liquids (Note 3) Associated Companies 9,681 12,626 Trade 31,211 24,224 Gains on Sales of Reserves and Related Assets 206 1,860 Other 981 1,689 -------- -------- TOTAL 180,651 159,026 OPERATING EXPENSES Lease and Well 23,469 18,756 Exploration 15,483 11,918 Dry Hole 984 2,511 Impairment of Unproved Oil and Gas Properties 6,013 4,863 Depreciation, Depletion and Amortization 62,639 63,321 General and Administrative 13,607 14,189 Taxes Other Than Income 17,286 11,471 -------- -------- TOTAL 139,481 127,029 -------- -------- OPERATING INCOME 41,170 31,997 OTHER INCOME (EXPENSE), NET 1,256 (515) -------- -------- INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES 42,426 31,482 INTEREST EXPENSE, NET 5,115 4,144 -------- -------- INCOME BEFORE INCOME TAXES 37,311 27,338 INCOME TAX PROVISION 14,246 1,415 -------- -------- NET INCOME $ 23,065 $ 25,923 ======== ======== EARNINGS PER SHARE OF COMMON STOCK $ .15 $ .16 ===== ===== AVERAGE NUMBER OF COMMON SHARES 158,866 159,934 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. -3- 4 PART I. FINANCIAL INFORMATION - (Continued) ITEM 1. FINANCIAL STATEMENTS - (Continued) ENRON OIL & GAS COMPANY CONSOLIDATED BALANCE SHEETS (In Thousands)
March 31, December 31, - ------------------------------------------------------------------------------------------------------------- 1997 1996 - ------------------------------------------------------------------------------------------------------------- (Unaudited) ASSETS CURRENT ASSETS Cash and Cash Equivalents $ 3,610 $ 7,644 Accounts Receivable Associated Companies 45,455 82,059 Trade 178,727 195,239 Inventories 28,186 20,746 Other 17,879 20,222 ----------- ----------- TOTAL 273,857 325,910 OIL AND GAS PROPERTIES (SUCCESSFUL EFFORTS METHOD) 3,879,686 3,753,199 Less: Accumulated Depreciation, Depletion and Amortization (1,714,706) (1,653,610) ----------- ----------- Net Oil and Gas Properties 2,164,980 2,099,589 OTHER ASSETS 31,600 32,854 ----------- ----------- TOTAL ASSETS $ 2,470,437 $ 2,458,353 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable Associated Companies $ 41,433 $ 77,522 Trade 187,464 200,069 Accrued Taxes Payable 19,488 18,554 Dividends Payable 4,781 4,818 Other 12,710 16,397 ----------- ----------- TOTAL 265,876 317,360 LONG-TERM DEBT 518,145 466,089 OTHER LIABILITIES 38,948 44,483 DEFERRED INCOME TAXES 314,400 308,948 DEFERRED REVENUE 83,029 56,383 SHAREHOLDERS' EQUITY Common Stock, $.01 Par, 320,000,000 Shares Authorized and 160,000,000 Shares Issued 201,600 201,600 Additional Paid In Capital 388,092 388,212 Unearned Compensation (5,469) (5,727) Cumulative Foreign Currency Translation Adjustment (11,179) (10,179) Retained Earnings 715,882 697,564 Common Stock Held in Treasury, 1,781,705 shares at March 31, 1997 and 242,882 shares at December 31, 1996 (38,887) (6,380) ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 1,250,039 1,265,090 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,470,437 $ 2,458,353 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. -4- 5 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, - ------------------------------------------------------------------------------------------------------------ 1997 1996 - ------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Reconciliation of Net Income to Net Operating Cash Inflows: Net Income $ 23,065 $ 25,923 Items Not Requiring (Providing) Cash Depreciation, Depletion and Amortization 62,639 63,321 Impairment of Unproved Oil and Gas Properties 6,013 4,863 Deferred Income Taxes 5,589 (6,516) Other, Net (122) (600) Exploration Expenses 15,483 11,918 Dry Hole Expenses 984 2,511 Gains on Sales of Reserves and Related Assets (206) (1,860) Other, Net (3,357) (2,763) Changes in Components of Working Capital and Other Liabilities Accounts Receivable 50,523 4,742 Inventories (7,440) (1,979) Accounts Payable (12,271) (18,137) Accrued Taxes Payable 934 (5,929) Other Liabilities 2,760 5,104 Other, Net (1,070) 1,649 Amortization of Deferred Revenue (10,688) (10,807) Changes in Components of Working Capital Associated with Investing and Financing Activities 2,495 15,833 -------- -------- NET OPERATING CASH INFLOWS 135,331 87,273 INVESTING CASH FLOWS Additions to Oil and Gas Properties (136,170) (70,261) Exploration Expenses (15,483) (11,918) Dry Hole Expenses (984) (2,511) Proceeds from Sales of Reserves and Related Assets 2,982 4,868 Changes in Components of Working Capital Associated with Investing Activities (2,495) (15,595) Other, Net (2,404) (3,240) -------- -------- NET INVESTING CASH OUTFLOWS (154,554) (98,657) FINANCING CASH FLOWS Long-Term Debt Affiliate - (105,503) Other 52,600 135,266 Dividends Paid (4,784) (4,795) Treasury Stock Purchased (34,078) (17,044) Proceeds from Sales of Treasury Stock 1,185 7,184 Other, Net 266 (238) -------- -------- NET FINANCING CASH INFLOWS 15,189 14,870 -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (4,034) 3,486 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,644 23,039 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,610 $ 26,525 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. -5- 6 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, 1996. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain reclassifications have been made to prior period financial statements to conform with the current presentation. 2. Income tax provision for the three-month periods ended March 31, 1997 and 1996 includes tax benefits of $3.2 million and $1.3 million, respectively, related to tight gas sand federal income tax credit utilization. Income tax provision for the three-month period ended March 31, 1996 included a reduction of $8.5 million primarily associated with a reassessment of deferred tax requirements and the successful resolution on audit of Canadian income taxes for certain prior years. 3. Associated natural gas revenues for the three-month periods ended March 31, 1997 and 1996, include wellhead revenues of $53.4 million and $56.8 million, respectively and other natural gas marketing revenue reductions of $56.0 million and $28.7 million, respectively. Natural Gas Net Operating Revenues are comprised of the following (in millions): Three Months Ended March 31, - -------------------------------------------------------------------------------- 1997 1996 - -------------------------------------------------------------------------------- Wellhead Natural Gas Revenues Associated Companies (1)(2) $ 53.4 $ 56.8 Trade 128.8 68.6 ------- ------ TOTAL $ 182.2 $125.4 ======= ====== Other Natural Gas Marketing Activities Gross Revenues from: Associated Companies $ 29.9 $ 18.9 Trade (3) 35.9 39.5 ------- ------ TOTAL 65.8 58.4 Associated Costs from: Associated Companies (1)(4) 48.7 33.0 Trade 23.0 17.6 ------- ------ TOTAL 71.7 50.6 ------- ------ Net (5.9) 7.8 Commodity Price Transaction Revenue Reductions Trading (2.0) (1.2) Non-Trading (5) (35.7) (13.4) ------- ------ TOTAL (37.7) (14.6) ------- ------ TOTAL $ (43.6) $ (6.8) ======= ====== - ------------------------------------------------------------------------------- -6- 7 PART I. FINANCIAL INFORMATION - (Continued) ITEM 1. FINANCIAL STATEMENTS - (Concluded) 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, - -------------------------------------------------------------------------------- 1997 1996 - -------------------------------------------------------------------------------- Wellhead Crude Oil, Condensate and Natural Gas Liquids Revenues Associated Companies $ 12.3 $ 13.6 Trade 31.2 24.2 ------ ------ TOTAL $ 43.5 $ 37.8 ====== ====== Other Crude Oil and Condensate Marketing Activities Commodity Price Hedging Revenue Reductions(5) $ (2.6) $ (1.0) ====== ====== - -------------------------------------------------------------------------------- 1) Wellhead Natural Gas Revenues include $37.1 million and $32.8 million for the three-month periods ended March 31, 1997 and 1996, 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 $10.7 million and $4.0 million for the three-month periods ended March 31, 1997 and 1996, 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 $10.7 million and $10.8 million for the three-month periods ended March 31, 1997 and 1996, respectively, associated with the amortization of deferred revenues under the terms of a volumetric production payment agreement effective October 1, 1992, as amended. 4) Includes $12.7 million and $8.2 million for the three-month periods ended March 31, 1997 and 1996, respectively, for volumes delivered under the terms of a volumetric production payment agreement effective October 1, 1992, as amended, including equivalent wellhead value, any applicable transportation costs and exchange differentials. 5) Represents revenue reductions 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. 4. As reported in the Company's Annual Report on Form 10-K for the year ended December 31, 1996, 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. 5. In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 128 - "Earnings per Share" effective for interim and annual periods after December 15, 1997. This statement replaces primary earnings per share ("EPS") with a newly defined basic EPS and modifies the computation of diluted EPS. The Company does not anticipate that implementation of SFAS 128 will have a material impact on its computation of EPS. 6. In February 1997, the FASB issued SFAS No. 129 - "Disclosures of Information about Capital Structures" which is applicable to all entities that issue securities other than ordinary common stock and is effective for all periods ending after December 15, 1997. There are no additional disclosures required of the Company at this time relating to the issuance of SFAS No. 129. 7. On May 6, 1997, 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 provide for 10 million shares of preferred stock, $.01 par value. -7- 8 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, 1997 and 1996 should be read in conjunction with the consolidated financial statements of the Company and Notes thereto. Results of Operations Three Months Ended March 31, 1997 vs. Three Months Ended March 31, 1996 In the first quarter of 1997, Enron Oil & Gas Company (the "Company") generated net income of $23 million compared to net income of $26 million for the first quarter of 1996. Income before income taxes of $37 million was $10 million higher than the first quarter of 1996. Net operating revenues for the first quarter of 1997 were $181 million as compared to $159 million for the first quarter of 1996. Wellhead volume and price statistics are as follows: - -------------------------------------------------------------------------------- 1997 1996 - -------------------------------------------------------------------------------- Natural Gas Volumes (MMcf/d)(1) North America (2) 738 715 Trinidad 112 133 ---- ---- TOTAL 850 848 ==== ==== Average Natural Gas Prices ($/Mcf)(3) North America (4) $ 2.58 $ 1.74 Trinidad 1.04 1.00 Composite 2.38 1.62 Crude Oil/Condensate Volumes (MBbl/d)(1) North America 13.1 11.3 Trinidad 3.7 7.1 India 2.8 3.0 ---- ---- TOTAL 19.6 21.4 ===== ===== Average Crude Oil/Condensate Prices ($/Bbl)(3) North America $21.55 $18.41 Trinidad 21.56 17.96 India 22.99 17.36 Composite 21.76 18.11 (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, 1997 and 1996 delivered under the terms of a volumetric production payment agreement 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 $2.47/Mcf and $.91/Mcf for the three-month periods ended March 31, 1997 and 1996, respectively, for the volumes described in note (2), net of transportation costs. Wellhead revenues increased 38% to $226 million in the first quarter of 1997 compared to $163 million in the first quarter of 1996. This increase reflects increased North America volumes and increased average wellhead prices for natural gas, crude oil and condensate and natural gas liquids. -8- 9 PART I. FINANCIAL INFORMATION - (Continued) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) ENRON OIL & GAS COMPANY First quarter 1997 average wellhead natural gas prices were up approximately 47% from the comparable period in 1996 increasing net operating revenues by approximately $58 million. This is primarily attributable to a 48% increase in North America wellhead natural gas prices in the first quarter 1997 compared to the first quarter a year ago. Increases in North America wellhead natural gas volumes in the first quarter 1997 were basically offset by a reduction in Trinidad wellhead natural gas volumes. The higher Trinidad natural gas volumes in the first quarter of 1996 reflected higher purchaser nominations to meet market requirements which exceeded base contract levels. A 20% increase in wellhead crude oil and condensate average prices in the first quarter of 1997 as compared to first quarter of 1996 increased net operating revenues by approximately $6 million while an 8% decrease in wellhead crude oil and condensate volumes reduced net operating revenues by approximately $3 million compared to the first quarter of 1996, resulting primarily from lower condensate volumes from the Kiskadee field associated with lower natural gas deliveries and a decline in crude oil production from the Ibis field offshore Trinidad. Other marketing activities associated with sales and purchases of natural gas, natural gas and crude oil price hedging and trading transactions and margins related to the volumetric production payment reduced net operating revenue by $46 million during the first quarter of 1997, compared to an $8 million reduction in the first quarter of 1996. A $36 million revenue reduction related to natural gas commodity price hedging activities utilizing NYMEX-related commodity market transactions in the first quarter of 1997 compares to a $13 million reduction associated with similar transactions a year ago. A decrease in margins associated with sales and purchases of natural gas and the volumetric production payment reduced net operating revenues by approximately $6 million as compared to an $8 million addition in the first quarter of 1996, as a result of the higher costs of natural gas delivered in 1997. Deferred revenue reductions of approximately $26 million related to the closing of 1997 natural gas price hedging transactions will be recognized during the remainder of 1997. During the first quarter of 1997, operating expenses of $139 million were approximately $12 million higher than in the first quarter of 1996. Lease and well expenses increased $5 million primarily due to increased production activities at higher costs in North America to realize the higher product prices available in the first quarter of 1997 and higher costs associated with start up operations for the Tapti field offshore India . Worldwide increases in exploration activities in the first quarter of 1997 over the first quarter of 1996 increased exploration expenses by approximately $4 million. First quarter 1997 taxes other than income increased approximately $6 million over the comparable period in 1996 primarily reflecting increased wellhead revenues in North America. The per unit operating costs of the Company for lease and well, DD&A, general and administrative, interest expense, and taxes other than income averaged $1.37 per thousand cubic feet equivalent ("Mcfe") during the first quarter of 1997 compared to $1.24 per Mcfe during the first quarter of 1996. This increase is primarily due to the increases in lease and well expenses and taxes other than income discussed above. However, full year unit rates for 1997 are expected to be in line with the prior year. Income tax provision increased $13 million for the first quarter of 1997 as compared to the first quarter of 1996 primarily due to a $9 million benefit recognized in the first quarter of 1996 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. -9- 10 PART I. FINANCIAL INFORMATION - (Continued) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) ENRON OIL & GAS COMPANY Capital Resources and Liquidity The Company's primary sources of cash during the three months ended March 31, 1997 included funds generated from operations and proceeds from new borrowings. Primary cash outflows included funds used in operations, exploration and development expenditures, common stock repurchases, dividends paid to Company shareholders and the repayment of debt. 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 $113 million during the first three months of 1997 compared to $102 million generated for the comparable period in 1996 primarily reflecting higher net operating revenues net of higher related cash operating expenses. Net operating cash flows of $135 million for the first three months of 1997 increased approximately $48 million as compared to the first three months of 1996 primarily reflecting the same factors addressed above with regard to discretionary cash flow along with reduced working capital requirements. Based upon existing economic and market conditions, management believes net operating cash flow and available financing alternatives in 1997 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 three months of 1997 and 1996 are as follows (in millions): - -------------------------------------------------------------------------------- 1997 1996 - -------------------------------------------------------------------------------- North America $ 115 $ 71 Outside North America India 26 9 Other 12 5 ----- ----- TOTAL $ 153 $ 85 ===== ===== - -------------------------------------------------------------------------------- Exploration and development expenditures for the first three months of 1997 were higher than expenditures in the first three months of 1996 primarily due to increased lease acquisitions in North America and increased developmental drilling activities in North America and India. 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. -10- 11 PART I. FINANCIAL INFORMATION - (Concluded) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Concluded) ENRON OIL & GAS COMPANY Subsequent Event As previously announced, initial natural gas production from Tapti field offshore India, being developed by a consortium of the Company, Reliance Industries Limited and Oil and Natural Gas Corporation, Ltd., began flowing to production facilities on March 31, 1997. By April 10, the consortium facilities were fully pressured and ready to commence deliveries of the Tapti natural gas. However, as of the date of this filing, the natural gas is temporarily shut-in pending achieving agreement to allow the introduction of these volumes into the transmission system owned by an affiliate of the government. The Company is actively pursuing early resolution of such agreement. 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 expectations will be achieved. 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 timing and extent of changes in commodity prices for crude oil, natural gas and related products and interest rates, the extent of the Company's success in discovering, developing and producing reserves and in acquiring oil and gas properties, political developments around the world and conditions of the capital and equity markets during the periods covered by the forward looking statements. -11- 12 PART II. OTHER INFORMATION ENRON OIL & GAS COMPANY ITEM 1. Legal Proceedings See Part I, Item 1, Note 4 to Consolidated Financial Statements which is incorporated herein by reference. ITEM 4. Submission of Matters to a Vote of Security Holders The Annual Meeting of Shareholders of Enron Oil & Gas Company was held on May 6, 1997 in Houston, Texas, for the purpose of electing a board of directors, ratifying the appointment of auditors and approving an amendment to the Restated Certificate of Incorporation of the Company to provide for a new class of 10 million shares of preferred stock. 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 votes as follows: Shares Shares Nominee For Withheld ------- ----- -------- Fred C. Ackman 140,846,256 614,955 Forrest E. Hoglund 140,730,756 730,455 Kenneth L. Lay 140,727,856 733,355 Edward Randall, III 140,820,656 640,555 Edmund P. Segner, III 140,728,624 732,587 (b) The appointment of Arthur Andersen LLP, independent public accountants, as auditors for the year ending December 31, 1997 was approved by the following vote: 141,312,443 shares for; 108,522 shares against; and 40,246 shares abstaining. (c) An amendment of the Restated Certificate of Incorporation of the Company to provide for 10 million shares of preferred stock, $.01 par value, was ratified by the following vote: 118,760,066 shares for; 11,545,560 shares against; and 482,328 shares abstaining. ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges b) Reports on Form 8-K - There were no reports on Form 8-K filed for the quarterly period ended March 31, 1997. -12- 13 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 15, 1997 By /S/ W. C. WILSON ----------------------- W. C. Wilson Senior Vice President and Chief Financial Officer (Principal Financial Officer) Date: May 15, 1997 By /S/ BEN B. BOYD ------------------------- Ben B. Boyd Vice President and Controller (Principal Accounting Officer) -13- 14 EXHIBIT INDEX Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges Exhibit 27 - Financial Data Schedule EX-12 2 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES 1 Exhibit 12 Enron Oil & Gas Company Computation of Ratio of Earnings to Fixed Charges (In Thousands) (Unaudited)
Three Months Ended Year Ended December 31 - -------------------------------------------------------------------------------------------------------------------- 3/31/97 1996 1995 1994 1993 1992 - -------------------------------------------------------------------------------------------------------------------- EARNINGS AVAILABLE FOR FIXED CHARGES: Net Income $ 23,065 $140,008 $142,118 $147,998 $138,025 $ 97,580 Less: Capitalized Interest Expense (3,232) (9,136) (6,490) (6,124) (5,457) (3,580) Add: Fixed Charges 8,347 21,997 18,414 14,613 15,378 25,869 Income Tax Provision(Benefit) 14,246 50,954 41,936 5,937 (25,752) (17,736) -------- -------- -------- -------- -------- -------- EARNINGS AVAILABLE $ 42,426 $203,823 $195,978 $162,424 $122,194 $102,133 ======== ======== ======== ======== ======== ======== FIXED CHARGES: Interest Expense 5,013 12,370 11,310 8,135 9,921 22,289 Capitalized Interest 3,232 9,136 6,490 6,124 5,457 3,580 Rental Expense Representative of Interest Factor 102 491 614 354 - - -------- -------- -------- -------- -------- -------- TOTAL FIXED CHARGES $ 8,347 $ 21,997 $ 18,414 $ 14,613 $ 15,378 $ 25,869 ======== ========= ======== ======== ======== ======== RATIO OF EARNINGS TO FIXED CHARGES 5.08 9.27 10.64 11.12 7.95 3.95 - --------------------------------------------------------------------------------------------------------------------
EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1997 MAR-31-1997 3,610 0 224,182 0 28,186 273,857 3,879,686 (1,714,706) 2,470,437 265,876 0 201,600 0 0 1,048,439 2,470,437 179,464 180,651 0 139,481 (1,256) 0 5,115 37,311 14,246 23,065 0 0 0 23,065 0 0
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