10-K 1 10-K -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- UNITED STATES 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, 1994 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________ TO ___________
COMMISSION FILE NO. 1-10053 ------------------------ ORYX ENERGY COMPANY (Exact name of Registrant as specified in its charter) DELAWARE 23-1743284 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 13155 NOEL ROAD 75240-5067 DALLAS, TEXAS (Address of principal executive (Zip code) offices)
Registrant's telephone number, including area code: (214) 715-4000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange Title of Each Class on Which Registered -------------------------------------------------------- -------------------------------------------------------- COMMON STOCK, $1 PAR VALUE NEW YORK STOCK EXCHANGE 9 3/4% NOTES DUE SEPTEMBER 15, 1998 NEW YORK STOCK EXCHANGE 10 3/8% DEBENTURES DUE SEPTEMBER 15, 2018 NEW YORK STOCK EXCHANGE 7 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE MAY 15, 2014 NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: MEDIUM TERM NOTES, SERIES A DUE MAY 9, 1995 THROUGH FEBRUARY 1, 2002 9.30% NOTES DUE MAY 1, 1996 10% NOTES DUE JUNE 15, 1999 9 1/2% NOTES DUE NOVEMBER 1, 1999 10% NOTES DUE APRIL 1, 2001 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. / / 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 ____ The aggregate market value of voting stock held by nonaffiliates of the Registrant as of February 17, 1995, was approximately $1,139 million. The number of shares of Common Stock, $1 par value, outstanding as of February 17, 1995, was 99,008,543. Selected portions of the Oryx Energy Company Annual Report to Shareholders to the fiscal year ended December 31, 1994 are incorporated by reference in Parts I, II, and IV of this Form 10-K. Selected portions of the Oryx Energy Company definitive Proxy Statement, which will be filed with the Securities and Exchange Commission within 120 days after December 31, 1994, are incorporated by reference in Part III of this Form 10-K. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- CERTAIN ABBREVIATIONS AND OTHER MATTERS As used herein and with the Oryx Energy Company Annual Report to Shareholders for the Fiscal Year Ended December 31, 1994 incorporated by reference in Parts I, II and IV of this Form 10-K, the following terms have specific meanings: "m" means thousand, "mm" means million, "bbl" means barrel, "mb" means thousands of barrels, "mmb" means millions of barrels, "mcf" means thousand cubic feet, "mmcf" means million cubic feet, "bcf" means billion cubic feet, "eb" means equivalent barrel, "mmeb" means millions of equivalent barrels, "b/d" means barrels per day, "mmcf/d" means million cubic feet per day, "WTI" means West Texas intermediate, "HH" means Henry Hub, "ED&A" means exploration, development and acquisition and "FD&A" means finding, development and acquisition. Natural gas equivalents are determined under the relative energy content method by using the ratio of 6.0 mcf of natural gas to 1.0 bbl of crude oil, condensate or natural gas liquids. With respect to information on the working interest in wells, drilling locations and acreage, "net" oil and gas wells, drilling locations and acres are determined by multiplying "gross" oil and gas wells, drilling locations and acres by Oryx Energy Company's working interest in such wells, drilling locations or acres. PART I ITEMS 1. AND 2. BUSINESS AND PROPERTIES GENERAL Oryx Energy Company (together with its consolidated subsidiaries, unless the context otherwise requires, Company) engages exclusively in the exploration for and development of oil and gas. The Company has a strong base of U.S. and international reserves and exploration and development projects in areas such as the Gulf of Mexico and the U.K. North Sea. The Company also has producing assets in Indonesia and Ecuador. The Company's business in the United States is conducted through Sun Energy Partners, L.P. (Partnership), of which the Company is the Managing General Partner. At December 31, 1994, the Company had a 98 percent ownership interest in the Partnership. The Company has begun the implementation of a plan designed to refocus strategic direction, significantly reduce debt, restore profitability and set the Company on a course for sustained long-term growth in cash flow. The Company is reorienting its strategic direction by changing the nature of its capital spending program. The Company is emphasizing lower-risk and shorter cycle-time prospects. The U.S. will become the centerpiece of the Company's investment strategy for the foreseeable future, supplemented by a measured and focused international program. Capital programs will concentrate spending behind proven technology. Major development programs will be funded and opportunities around existing fields will be exploited. Exploration spending will be directed toward areas of proven success, and overall exploration spending will be decreased. The Company will emphasize projects that generate near-term cash flow and de-emphasize entry into new countries or other projects with long cycle times. The primary geographic focus of both exploration and development spending will be the Gulf of Mexico. Those projects with strong growth potential will be funded internally and those which have lower margins or have limited upside will be sold or otherwise de-emphasized. For the five years 1990 through 1994, the Company's average production replacement rate was 152 percent at a cost of $4.62 per eb. In 1994, the Company replaced 80 percent of its production at $4.76 per eb. The Company determines its ED&A spending plans primarily based on the cash flow that it expects to generate. For 1994, the Company spent $314 million for ED&A programs. The Company plans to spend approximately $340 million for ED&A in 1995, with the primary emphasis being near-term volume additions in the U.S. The Company is basing its 1995 spending plans on oil and gas spot prices averaging $18.50 per barrel (WTI) and $1.80 per mmbtu (H H). The Company's actual spending levels will be governed by its cash flow from operating activities which will continue to be affected by prevailing oil and gas prices, cost levels and production volumes. In 1994, about 30 percent of the Company's total ED&A spending was on exploration and about 70 percent went for development. In 1995, the Company plans to decrease exploration spending to about 20 percent of total ED&A outlays and increase development spending to about 80 percent of the total. In 1994, about 60 percent of total ED&A outlays were made in the U.S. This will increase to about 68 percent in 1995. By concentrating and highgrading its exploration and development projects and successfully applying technology, the Company has been able to substantially reduce its spending levels and achieve solid reserve replacement rates at competitive costs. PROVED RESERVES As of December 31, 1994, the Company's estimated proved reserves were 474 mmbbl of liquids and 1,520 bcf of natural gas which represents an aggregate of 727 mmeb of reserves. The Company's liquids reserves were located in the United States (47 percent), the United Kingdom (37 percent), Indonesia (8 percent) and other foreign countries (8 percent). The Company's natural gas reserves were located in the United States (88 percent) and the United Kingdom (12 percent). More information on the estimated quantities of proved oil and gas reserves and information on proved developed oil and gas reserves, as well as information concerning the Standardized Measure, are presented in the "Consolidated Financial Statements -- Supplementary Financial and Operating Information" in the 2 Company's 1994 Annual Report to Shareholders. The Company files estimates of oil and gas reserve data with various governmental regulatory authorities and agencies. The basis of reporting reserves to these authorities and agencies in some cases may not be comparable. However, the difference in estimates does not exceed five percent. OFFSHORE UNITED STATES The Company has identified the Gulf of Mexico, an area offering proven potential and well developed infrastructure, as a key part of its strategy. EXPLORATION As of December 31, 1994, the Company held 344 thousand net undeveloped acres offshore, as compared to 388 thousand as of December 31, 1993. The Company owns interests in about 150 Gulf of Mexico blocks of which 98 are undeveloped. In 1994, the Company spent $4.3 million to acquire interests in 15 blocks. The Company's offshore exploration program will focus on projects in the Gulf of Mexico and make extensive use of proven technology. The Company will focus on projects with rapid cycle times located near existing infrastructure in water depths less than 1,200 feet. The Company owns a 100 percent interest in the four-block High Island 384 unit. The High Island 384 unit is composed of blocks 378, 379, 384 and 385 and is located approximately 112 miles off the Texas coast in water with an average depth of approximately 360 feet. In 1993, the Company announced an oil discovery in High Island 379. The HI-A-379 #1 discovery well encountered 179 feet of oil pay from three Pleistocene sands between 4,600 and 5,130 feet. In the early part of 1994, the Company announced an oil and gas discovery in High Island 385. The High Island 385 discovery encountered 80 feet of net pay in two Basal Nebraskan sands between 14,300 and 14,410 feet. The combined production from the two discoveries is expected to peak at approximately 20 meb per day. This new development, which has been named the Patton Project, began production in January 1995. The Company also owns a 100 percent interest in the High Island A-576 block. The HI A-576 #1 discovery well encountered 168 feet of net pay from the Lower Pleistocene sands. The well is located 110 miles off the Texas coast in 290 feet of water and is 20 miles southwest of the Company's recent discoveries at High Island 379 and 385. This development, which has been named the Sherman Project, is expected to begin production in early 1996 with peak production of about 6 to 9 meb per day. An appraisal well was drilling at December 31, 1994. As of December 31, 1994, no exploratory wells were being drilled. The Company drilled 4 gross (3 net) exploratory wells offshore in 1994 and 7 gross (4 net) in 1993. Of the wells drilled in 1994, 1 gross (1 net) well was successful. PRODUCTION AND DEVELOPMENT Average daily production of crude oil and condensate offshore was 9.7, 8.6 and 7.2 mbbls in 1994, 1993 and 1992. Average daily production of natural gas offshore was 203, 193 and 181 mmcf in 1994, 1993 and 1992. In the first quarter of 1994, the Company announced the results of an appraisal well on Garden Banks 260 Block. This was the third successful well on the block. The well encountered three zones containing hydrocarbons with a total of 183 feet of pay. This development, which has been named the Baldpate Project, is in federal waters offshore Texas in water depths of approximately 1,700 feet. The Company expects to begin production in 1998 with gross peak production of about 40 meb per day. The Company owns a 50 percent interest in a three-block area. The Company recently announced plans for the development of Viosca Knoll 826 which lies 80 miles off the Alabama coast in water depths of 1,500 to 2,500 feet. This development has been named the Neptune Project. First production is anticipated in 1997 with a gross peak rate of 24 to 30 meb per day. The Company operates the four-block Viosca Knoll unit and owns a 50 percent interest. The project will utilize a new type of floating production facility called a spar which is on the 3 leading edge of today's technology. The spar is a cylindrical-shaped vessel which floats in a vertical position, similar to a buoy. Production risers will be routed through the cylinder to allow the spar to float around them. The field will be developed in multiple phases with the spar being moved from location to location. In the third quarter of 1994, the Company exchanged its interest in an undeveloped block in the Gulf of Mexico for a royalty interest in Viosca Knoll 826. As of December 31, 1994, the Company was drilling 8 gross and 5 net development wells. The Company drilled 16 gross (6 net) development wells offshore in 1994 and 16 gross (8 net) in 1993. Of the 16 gross (6 net) development wells drilled in 1994, 14 gross (5 net) were successful. ONSHORE UNITED STATES The onshore area continues to be a major contributor of production volumes and cash flow. The Company is applying 3-D technology in and around mature fields creating opportunities in new fault blocks and deeper pool horizons which provide primarily new gas volumes. To optimize crude oil volumes and cash flow, the Company will continue to exploit its waterflood operations. Assets are regularly subjected to performance reviews and divestments will continue to be made to upgrade the overall portfolio. The U.S. onshore will be managed for maximum cash flow generation. EXPLORATION The Company drilled 1 gross exploratory well onshore in 1994 which was successful. At December 31, 1994, no exploratory wells were being drilled. PRODUCTION AND DEVELOPMENT Average daily production of crude oil and condensate onshore was 38.2, 47.3 and 56.2 mb in 1994, 1993 and 1992. The decrease in 1994 crude oil and condensate production compared to 1993 and in 1993 compared to 1992 was due primarily to asset sales and normal declines. Average daily net production of natural gas onshore was 335, 330 and 403 mmcf in 1994, 1993 and 1992. The decrease in 1993 natural gas production compared to 1992 was due primarily to divestments. As of December 31, 1994, the Company was drilling or participating in the drilling of 33 gross and 19 net development wells onshore. Of the 80 gross (38 net) development wells drilled onshore during 1994, 76 gross (34 net) were successful. As part of its asset sale program, the Company sold substantially all its gas processing plant business in 1992. The Company's remaining gas plant business at December 31, 1994 consisted of 11 operated gas processing plants and interests in 4 others. UNITED KINGDOM The Company has nine producing fields, two development projects and several exploration prospects in the North Sea. Reserves have grown considerably since the Company acquired its interests in these fields in 1990. After producing 77 mmeb over the past four years, the Company's reserves are estimated to 205 mmeb as of December 31, 1994. EXPLORATION The Company held 266 thousand net undeveloped acres in the North Sea as of December 31, 1994, compared to 259 thousand net undeveloped acres as of December 31, 1993. In 1994, the Company drilled one gross exploratory well in the North Sea, which was not successful. At December 31, 1994, no exploratory wells were drilling. PRODUCTION AND DEVELOPMENT The Company's producing fields set forth in the table below, are located in the northern and central sectors of the North Sea with the exception of the Audrey and Galleon fields, which are located in the southern gas basin. 4 As of December 31, 1994, the Company was drilling or participating in the drilling of 3 gross and 1 net development wells in the North Sea. All of the 22 gross (4 net) development wells drilled in the U.K. in 1994 were successful. The Company's average daily net production of crude oil and condensate in the United Kingdom was 54.4, 35.2 and 35.4 mb during 1994, 1993 and 1992. The increase in production in 1994 was due to the acquisition of additional interest in Ninian, the exchange for additional interests in Hutton, Lyell and Murchison and the results of development drilling. Average daily production of natural gas was 62, 80 and 95 mmcf during 1994, 1993 and 1992. The decrease in net daily production of natural gas in 1994 compared to 1993 was due to reduced takes by British Gas. The following table sets forth the North Sea producing fields and their net daily production:
1994 NET DAILY PERCENT PRODUCTION PRODUCING FIELDS OIL/GAS OWNERSHIP (MEB) ------------------------------------------------- --------- ------------ ------------- Alba............................................. Oil 15.5 6.4 Audrey........................................... Gas 33.6 9.1 Dunlin........................................... Oil 14.4 5.6 Galleon.......................................... Gas 10.0* .4 Hutton........................................... Oil 44.3 7.4 Murchison........................................ Oil 51.8 6.4 Ninian........................................... Oil 29.5 19.6 Lyell............................................ Oil 66.6 7.4 Strathspey....................................... Oil/Gas 6.5 2.4 --- Total........................................ 64.7 --- --- ------------------------ * Estimated; subject to unitization
In December 1993, the Company increased its interest in Ninian to 29.5 percent by acquiring an additional 8.2 percent interest in the Ninian field and related facilities. The Company's net production from the Ninian field increased from approximately 15 mb per day to approximately 20 mb per day. The Company also receives tariff income on production from several satellite fields that produce through the Ninian facilities. In 1993, the Company began production on two North Sea development projects. Lyell, a subsea satellite facility, began producing in 1993 and peaked at 10 mb of oil per day, net. The Company has a 66.6 percent working interest in the Lyell field. The second subsea satellite facility, Strathspey, began production in the last week of 1993. The Company has a 6.5 percent working interest in the Strathspey field. Production from Lyell and Strathspey is transported to the Ninian platforms. In early 1994, the Company began producing oil from its Alba field. Alba is located on Block 16/26 in the central sector of the North Sea. Production from the field is pumped to a floating storage unit three kilometers away, from which point it is transported to shore using a dedicated shuttle tanker. The Company owns a 15.5 percent interest in the field. In the third quarter of 1994, the Company exchanged its interest in the undeveloped Britannia field for additional interests in the Hutton, Lyell and Murchison producing fields and $40.4 million in cash. This transaction increased near-term production volumes and considerably reduced future development capital expenditures. Effective January 9, 1995, the Company took over operatorship of the Hutton, Lyell and Murchison fields. In late 1994, the Company completed a development well for 20mb gross per day in a newly discovered extension to the Hutton field. The well encountered in excess of 150 feet of net pay in the Brent sandstone. 5 In the fourth quarter of 1994, the Company began producing gas from its Galleon field at a net of 19 mmcf per day. Galleon is located in the southern portion of the North Sea. Unmanned production facilities are remotely controlled from onshore. The Company has a 10 percent interest in the field, subject to unitization. The Company also has two North Sea developments where discoveries have been made and confirmation wells drilled. They are located in the northern sector (Columba) and in the central sector (Alba Phase II). In total, the Company has 34 blocks in the North Sea. The following table outlines the North Sea prospective developments, with their expected start-up dates and estimated daily net peak production:
DAILY NET PEAK YEAR OF PERCENT PRODUCTION DEVELOPMENT PROJECTS OIL/GAS START-UP OWNERSHIP (MEB) --------------------------------------- ----------- ----------- ------------- --------------- Columba................................ Oil 1995 28 2 Alba Phase II.......................... Oil 1998 15.5 6-7
In addition, the Company has interests in and receives tariff income from North Sea transportation systems, terminal storage facilities and certain other related income producing assets, including the Brent and Ninian Pipeline Systems and the Sullom Voe Terminal in the Shetland Islands. INDONESIA The Company acquired interests in three production sharing contracts in Indonesia in 1990 as part of the international properties acquisition. Since that time, it has successfully participated in the development of the Intan, Widuri and KF fields within their contract areas. EXPLORATION As of December 31, 1994 and 1993, the Company held 1,126 thousand net undeveloped acres in Indonesia. The Company drilled 11 gross (2 net) exploratory wells, of which 4 gross (1 net) were successful in 1994. As of December 31, 1994, no exploratory wells were being drilled. PRODUCTION AND DEVELOPMENT The Company's average daily net production of crude oil and condensate in Indonesia was 13.5, 15.0 and 18.0 mb during 1994, 1993 and 1992. The decrease in net daily production during 1994 as compared to 1993 was due to normal declines from mature fields. The following table sets forth Indonesian producing areas and their net daily production:
1994 NET DAILY PERCENT PRODUCTION CONTRACT AREA OWNERSHIP (MEB) -------------------------------------------------------------- ------------- ------------- Malacca Strait................................................ 21.5 5.7 Kakap......................................................... 18.8 2.3 Southeast Sumatra............................................. 3.7 5.5 --- Total..................................................... 13.5 --- ---
The Company has made a platform decision on the KRA-KG fields which are within the Kakap contract area. Development drilling commenced in 1994. The fields will be tied into existing production facilities. Production is expected to begin in early 1995 with gross peak daily production of 63 mb per day. As of December 31, 1994, the Company was in the process of drilling or participating in the drilling of 11 gross (1 net) development wells in Indonesia. All of the 21 gross (1 net) development wells drilled in 1994 were successful. 6 OTHER FOREIGN In 1994, the Company had producing interests in Ecuador and Gabon. In Ecuador, the Gacela field began producing in 1993 and a decision to proceed with development of the Jaguar field has been made. The Company plans to conduct geophysical work on its recently acquired Block 21 in Ecuador. During 1994, the Company signed two oil and gas agreements with the Republic of Kazakhstan. The agreements involve both the development of a known field as well as the rights to explore a large block in western Kazakhstan. A joint venture agreement was signed for development of the Arman Field which was discovered in the 1980's but has not yet been developed. The Company will jointly operate the venture and currently holds a 50 percent interest, while the remaining interests will be held by two Kazakhstani partners. The Arman Field is located in the north Buzachi Peninsula. In addition, a production sharing agreement was signed for approximately 3 million acres located east of the Arman Field. The Company will operate and currently owns a 100 percent interest in this exploration venture. EXPLORATION As of December 31, 1994, the Company held 4,623 thousand net undeveloped acres in other foreign properties, as compared to 1,848 thousand net undeveloped acres as of December 31, 1993. The increase of 2,775 thousand net undeveloped acres in 1994 as compared to 1993 is due to the production sharing agreement obtained by the Company in Kazakhstan. The Company drilled 7 gross (2 net) unsuccessful exploratory wells in 1994 in Algeria, Australia and the Zone of Cooperation between Australia and Indonesia. At December 31, 1994, the Company was drilling or participating in the drilling of 1 gross exploratory well in the Zone of Cooperation. PRODUCTION AND DEVELOPMENT The Company's average daily net production of crude oil and condensate from other foreign areas was 5.3, 3.7 and 2.4 mb in 1994, 1993 and 1992. The average daily production of crude oil and condensate increased in 1994, compared to 1993, due to the increased production in Ecuador. In 1994, the Company had a 14.25 percent working interest in the Oguendjo Production Sharing Contract in Gabon. The Company drilled 14 gross (3 net) development wells, all of which were successful in 1994. As of December 31, 1994, the Company was in the process of drilling or participating in the drilling of 1 gross development well. PRODUCTION In 1994, the Company's production was concentrated primarily in the United States, the United Kingdom and Indonesia. In 1994, the Company produced 50.2 mmeb from its properties in the United States, 23.6 mmeb from its properties in the United Kingdom, 4.9 mmeb from its properties in Indonesia and 2 mmeb from its other foreign properties. 7 The following table sets forth the Company's average daily net production for 1994, 1993 and 1992: AVERAGE DAILY NET PRODUCTION
YEAR ENDED DECEMBER 31 ------------------------------- 1994 1993 1992 --------- --------- --------- Crude & Condensate: (Thousands of barrels daily) United States Onshore.......................................................... 38.2 47.3 56.2 Offshore......................................................... 9.7 8.6 7.2 --------- --------- --------- 47.9 55.9 63.4 --------- --------- --------- U.K................................................................ 54.4 35.2 35.4 Indonesia.......................................................... 13.5 15.0 18.0 Other foreign...................................................... 5.3 3.7 2.4 --------- --------- --------- 73.2 53.9 55.8 --------- --------- --------- Processed Natural Gas Liquids:* (Thousands of barrels daily) United States...................................................... 6.4 7.4 19.7 --------- --------- --------- 127.5 117.2 138.9 --------- --------- --------- --------- --------- --------- Natural Gas:** (Millions of cubic feet daily) United States Onshore.......................................................... 335 330 403 Offshore......................................................... 203 193 181 --------- --------- --------- 538 523 584 U.K................................................................ 62 80 95 --------- --------- --------- 600 603 679 --------- --------- --------- --------- --------- --------- ------------------------ *The Company sold substantially all of its United States gas plant business during 1992. (See Note 3 to the Consolidated Financial Statements in the Company's 1994 Annual Report to Shareholders.) **Natural gas production includes unprocessed natural gas liquids.
8 ACREAGE, WELLS AND PER UNIT DATA The following table sets forth the Company's undeveloped and developed oil and gas acreage (in thousands) held at December 31, 1994 and 1993: UNDEVELOPED ACREAGE
GROSS NET -------------------- -------------------- 1994 1993 1994 1993 --------- --------- --------- --------- United States Onshore................................................ 1,142 997 572 433 Offshore............................................... 511 674 344 388 --------- --------- --------- --------- 1,653 1,671 916 821 U.K...................................................... 816 889 266 259 Indonesia................................................ 2,866 2,866 1,126 1,126 Other Foreign............................................ 8,903 6,783 4,623 1,848 --------- --------- --------- --------- 14,238 12,209 6,931 4,054 --------- --------- --------- --------- --------- --------- --------- ---------
DEVELOPED ACREAGE
GROSS NET -------------------- -------------------- 1994 1993 1994 1993 --------- --------- --------- --------- United States Onshore................................................... 1,137 1,599 631 870 Offshore.................................................. 244 253 97 104 --------- --------- --------- --------- 1,381 1,852 728 974 U.K......................................................... 101 174 47 67 Indonesia................................................... 6,061 6,426 806 819 Other Foreign............................................... 52 98 25 80 --------- --------- --------- --------- 7,595 8,550 1,606 1,940 --------- --------- --------- --------- --------- --------- --------- ---------
9 The following table sets forth the Company's net exploratory and development oil and gas wells drilled during 1994, 1993 and 1992: EXPLORATORY WELLS DRILLED
GROSS NET ------------------------------- ------------------------------- 1994 1993 1992 1994 1993 1992 --------- --------- --------- --------- --------- --------- Oil United States Onshore...................................... -- -- 3 -- -- 1 Offshore..................................... -- 2 1 -- 1 1 --- --- --- --- --- --- -- 2 4 -- 1 2 U.K............................................ -- -- 1 -- -- -- Indonesia...................................... 3 -- 6 -- -- 1 Other foreign.................................. -- 2 1 -- 1 1 Gas United States Onshore...................................... 1 -- 2 -- -- 1 Offshore..................................... 1 1 3 1 1 3 --- --- --- --- --- --- 2 1 5 1 1 4 U.K............................................ -- -- 1 -- -- -- Indonesia...................................... 1 -- -- 1 -- -- Dry United States Onshore...................................... -- 2 6 -- 2 3 Offshore..................................... 3 4 1 2 2 -- --- --- --- --- --- --- 3 6 7 2 4 3 U.K............................................ 1 3 3 -- 1 1 Indonesia...................................... 7 9 7 1 1 1 Other foreign.................................. 7 2 1 2 1 -- --- --- --- --- --- --- Total...................................... 24 25 36 7 10 13 --- --- --- --- --- --- --- --- --- --- --- ---
10 DEVELOPMENT WELLS DRILLED
GROSS NET ------------------------------- ------------------------------- 1994 1993 1992 1994 1993 1992 --------- --------- --------- --------- --------- --------- Oil United States Onshore...................................... 27 44 69 11 29 43 Offshore..................................... 5 4 -- 2 2 -- --- --- --- --- --- --- 32 48 69 13 31 43 U.K............................................ 20 5 2 4 1 -- Indonesia...................................... 21 29 26 1 3 3 Other foreign.................................. 14 7 2 3 2 1 Gas United States Onshore...................................... 49 38 26 23 15 11 Offshore..................................... 9 8 7 3 3 2 --- --- --- --- --- --- 58 46 33 26 18 13 U.K............................................ 2 -- -- -- -- -- Dry United States Onshore...................................... 4 1 4 4 1 3 Offshore..................................... 2 4 -- 1 3 -- --- --- --- --- --- --- 6 5 4 5 4 3 U.K............................................ -- 6 -- -- 1 -- Indonesia...................................... -- 1 6 -- -- 1 Other foreign.................................. -- 1 -- -- -- -- --- --- --- --- --- --- Total........................................ 153 148 142 52 60 64 --- --- --- --- --- --- --- --- --- --- --- ---
The following table sets forth the Company's gross and net producing oil and gas wells at December 31, 1994: PRODUCING OIL AND GAS WELLS
GROSS* NET -------------------- -------------------- OIL GAS OIL GAS --------- --------- --------- --------- United States Onshore..................................................... 3,603 897 1,965 540 Offshore.................................................... 66 177 24 70 --------- --------- --------- --- 3,669 1,074 1,989 610 Foreign: U.K......................................................... 157 20 52 6 Indonesia................................................... 409 -- 35 -- Other foreign............................................... 49 -- 11 -- --------- --------- --------- --- Total..................................................... 4,284 1,094 2,087 616 --------- --------- --------- --- --------- --------- --------- --- ------------------------ *Gross producing wells include 197 multiple completion wells (more than one formation producing into the same well bore).
11 The following table sets forth the Company's average revenues and production costs per unit of oil and gas production for 1994, 1993 and 1992: AVERAGE PER UNIT REVENUES AND PRODUCTION COSTS
YEAR ENDED DECEMBER 31 ------------------------------- 1994 1993 1992 --------- --------- --------- Revenues: Crude and condensate (per bbl) U.S.................................................................. $ 14.69 $ 15.96 $ 18.51 U.K.................................................................. $ 15.44 $ 15.82 $ 19.14 Indonesia............................................................ $ 16.05 $ 17.76 $ 19.21 Other foreign........................................................ $ 14.89 $ 16.91 $ 16.95 Worldwide............................................................ $ 15.06 $ 16.08 $ 18.77 Crude, condensate and natural gas liquids (per bbl) U.S.................................................................. $ 13.44 $ 14.08 $ 18.21 Natural Gas (per mcf) U.S.................................................................. $ 1.87 $ 1.96 $ 1.72 U.K.................................................................. $ 2.15 $ 2.11 $ 2.50 Worldwide............................................................ $ 1.90 $ 1.98 $ 1.83 Average production cost per unit of oil and gas production (per eb):* U.S.................................................................. $ 4.55 $ 4.57 $ 4.20 U.K.................................................................. $ 7.25 $ 7.67 $ 8.88 Indonesia............................................................ $ 12.00 $ 12.97 $ 12.37 Other foreign........................................................ $ 5.50 $ 7.19 $ 8.10 Worldwide............................................................ $ 5.79 $ 5.95 $ 6.28 ------------------------ *Average production cost consists of operating cost and production taxes.
ASSET DISPOSITIONS Assets are managed on a portfolio basis. The Company will continue to buy and sell assets with the intention of upgrading its asset base. Asset sales of $300 million are anticipated in 1995. RECOVERY METHODS During 1994, the Company obtained 55, 38 and 7 percent of its U.S. crude production from primary, secondary and tertiary recovery methods. This compares to 49, 39 and 12 percent of its crude oil production in 1993. At December 31, 1994, the Company operated or participated in 3 major tertiary oil recovery programs that produced approximately 4 thousand net barrels of crude and condensate daily. The terms "secondary recovery" and "tertiary recovery" relate to those methods used to increase the quantity of crude oil and condensate and natural gas that can be recovered in excess of the quantity recoverable using the primary energy found in a reservoir. Secondary recovery methods include pressure maintenance by waterflooding or natural gas injection. Tertiary recovery methods include injection of carbon dioxide, nitrogen, chemicals, steam or a combination of these with natural gas or water. Tertiary and, to a lesser extent, secondary recovery operations generally have higher operating costs compared to those incurred in primary production efforts. MARKETING OF OIL AND GAS DISTRIBUTION In the U.S., crude oil, condensate and natural gas are distributed through pipelines and/or trucks to traders, end users, gatherers and transportation companies and in foreign locations by tankers and/ 12 or pipelines to traders and end users. Worldwide, sufficient distribution systems exist and are readily available in the areas of the Company's production to enable the Company to effectively market its oil and gas, except in Kazakhstan, where the Company currently has no production. In some instances, the Company owns an interest in these systems. CRUDE AND CONDENSATE During 1994, sales to J. Aron & Company totaled approximately 18 percent of the Company's sales of crude oil and condensate. No other customer purchased more than 10 percent of the Company's sales of crude oil and condensate. Since most of the Company's crude and condensate is produced in areas where there are other buyers offering to purchase at market prices, the Company believes that the loss of any major purchaser would not have a material adverse effect on the Company's business. In 1994, the ten largest customers, including J. Aron & Company accounted for approximately 49 percent of such sales. Currently, approximately 53 percent of domestic sales are made pursuant to arrangements that are cancelable upon 30 days' written notice by the Company or the purchaser, with substantially all of the remainder of the domestic production being sold pursuant to contracts of varying terms of up to ten years in length. The Company markets its foreign crude oil production, which is sold under short-term contracts, on a cargo lot basis. NATURAL GAS The Company's natural gas marketing strategies in the U.S. are designed to be effective in the current competitive environment. Sales of natural gas into short-term markets averaged 56 percent of total sales. At year-end over 50 percent of total sales were contracted to end-users of natural gas on a long term basis. The Company's strategy is to sell to end-users that possess firm transportation rights from the producing basin to the city gate on major interstate pipelines. Contract length of these term sales ranges from one to ten years. The Company sells its natural gas production from the North Sea under long-term agreements with British Gas plc, which represented 12 percent of the Company's natural gas sales for 1994. During 1994, British Gas plc was the only customer who accounted for more than 6 percent of the Company's natural gas sales. The ten largest customers accounted for approximately 22 percent of total gas sales during 1994. HEDGING Because of the volatility of oil and gas prices, the Company periodically enters into crude oil and natural gas hedging activities. REGULATION GENERAL The oil and gas industry is subject to regulation by the public policies of national, state and local governments relating to such matters as the award of exploration and production interests, the imposition of specific drilling obligations, environmental protection controls, control over the development and abandonment of a field (including restrictions on production and abandonment of production facilities) and, in some cases, possible nationalization, expropriation, regulatory taking, cancellation or frustration of contract rights. The industry is also subject to the payment of royalties and taxes, which tend to be high compared to those levied on other commercial activities. The Company cannot predict the impact of future regulatory and taxation initiatives. NATURAL GAS The natural gas industry in the United States remains under federal regulation pursuant to the Natural Gas Act and the Natural Gas Policy Act. However, as a result of the Natural Gas Decontrol Act, wellhead regulation of gas prices ended January 1, 1993. 13 ENVIRONMENTAL MATTERS The Company is subject to, and makes every effort to comply with, various environmental quality control regulations of national, state and local governments. Although environmental requirements can have a substantial impact upon the energy industry, generally these requirements do not appear to affect the Company any differently or to any greater or lesser extent than other exploration and production companies. The Company has been named as a potentially responsible party (PRP) at four sites pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended. At two of these sites, the Company has been named as a de minimis party and therefore expects its liability to be small. At a third site, the Company is reviewing its options and anticipates that it will participate in steering committee activities with the Environmental Protection Agency (EPA). At the fourth and largest site, the Operating Industries, Inc. site in California, the Company has participated in a steering committee consisting of 139 companies. The steering committee and other PRP's previously entered into two partial consent decrees with the EPA providing for remedial actions which have been or are to be completed. The steering committee has successfully negotiated a third partial consent decree which provides for the following remedial actions: a clay cover, methane capturing wells, and leachate destruction facilities. The remaining work at the site involves groundwater evaluation and long-term operation and maintenance. Based on the facts outlined above and the Company's ongoing analyses of the actions where it has been identified as a PRP, the Company believes that it has accrued sufficient reserves to absorb the ultimate cost of such actions and that such costs therefore will not have a material impact on the Company's liquidity, capital resources or financial condition. While liability at superfund sites is typically joint and several, the Company has no reason to believe that defaults by other PRPs will result in liability of the Company materially larger than expected. COMPETITION The oil and gas industry is highly competitive. Integrated companies, independent companies and individual producers and operators are active bidders for desirable oil and gas properties, as well as for the equipment and labor required to operate and develop such properties. Although several of these competitors have financial resources substantially greater than those of the Company, management believes that the Company is in a position to compete effectively. The availability of a ready market for the Company's oil and gas production depends on numerous factors beyond its control, including the level of prices and consumer demand, the extent of worldwide oil and gas production, the cost and availability of alternative fuels, the cost and proximity of pipelines and other transportation facilities, regulation by national and local authorities and the cost of compliance with applicable environmental regulations. TECHNOLOGY The Company's exploration, development and production activities depend upon the use of applied technology. In support of this, the Company has 29 engineers, geoscientists, technicians and support personnel focusing on the technology used in the exploration for, and development and production of, energy resources. The Company's expenditures on technology activities, including employee-related costs, were $11 million, $15 million and $15 million for the years 1994, 1993 and 1992, respectively. THE PARTNERSHIP Since December 1, 1985, the Company has functioned as the managing general partner for, and has conducted its business operations in the United States principally through the Partnership, a Delaware limited partnership. As of December 31, 1994, the Company had a 98 percent interest in the Partnership. The remaining two percent partnership interest is a limited partnership interest and is held by public unitholders in the form of depositary units. There were 7,543,100 depositary units outstanding at December 31, 1994. 14 The Partnership operates through Sun Operating Limited Partnership, which is a Delaware limited partnership, and several other operating partnerships. Certain conflicts of interest may arise as a result of the relationships between the Company and the Partnership. The directors and officers of the Company have fiduciary duties to manage the Company in the best interest of its stockholders. The Company, as managing general partner of the Partnership, has a fiduciary duty to manage the Partnership in a manner that is fair to the public unitholders. The duty of the directors of the Company to its stockholders may therefore come into conflict with the duties of the Company to the public unitholders. The Partnership may sell limited partnership units to the Company for the purpose of funding the Partnership's property acquisition, exploration and development cash requirements. The Audit Committee of the Board of Directors of the Company (Audit Committee), none of whose members is affiliated with the Company except as Company directors or stockholders or as holders of units, reviews policies and procedures developed by the Company for dealing with various matters as to which a conflict of interest may arise. The Audit Committee also monitors the application of such policies and procedures. EMPLOYEES At December 31, 1994, the number of full-time active employees of the Company was approximately 1,200. ITEM 3. LEGAL PROCEEDINGS Three federal securities actions were brought against the Company and certain of its senior officers in the United States District Court for the Northern District of Texas in 1992. These actions, now consolidated, purport to be brought on behalf of a class of open market purchasers of the Common Stock during the period October 3, 1991, through June 4, 1992. The plaintiffs allege that the Company made false and misleading statements about its financial prospects and, in particular, about its intentions to continue paying dividends at the same level as in the past. Plaintiffs claim violations of Section 10(b) of the Securities Exchange Act of 1934 and related provisions. The consolidated complaint seeks damages for alleged market losses in an unquantified amount. Management believes that the claims have no merit and will defend against them vigorously. The Company is involved in a number of legal and administrative proceedings arising in the ordinary course of its oil and gas business. Although the ultimate outcome of these proceedings cannot be ascertained at this time, it is reasonably possible that some of the proceedings could be resolved unfavorably to the Company. Management of the Company believes that any liabilities which may arise would not be material in relation to its financial position at December 31, 1994. The Company intends to maintain liability and other insurance of the type customary in the oil and gas business with such coverage limits as the Company deems prudent. 15 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS On May 5, 1994, the Annual Meeting of Shareholders of Oryx Energy Company was held to vote on proposals as follows: (a) To elect three directors to Class III of the Company's Board of Directors.
WILLIAM E. CAROL E. ROBERT P. BRADFORD DINKINS HAUPTFUHRER ------------------ --------------- -------------------- Affirmative................................ 71,427,263 71,325,759 68,203,684 Negative................................... Abstained.................................. Withheld................................... 3,885,449 3,986,953 7,109,028 Broker non-votes........................... Shares without executed proxies and not present for vote.......................... 21,633,357 21,633,357 21,633,357 ------------------ --------------- ----------- Shares entitled to vote.................... 96,946,069 96,946,069 96,946,069 ------------------ --------------- ----------- ------------------ --------------- -----------
(b) To approve the appointment of Coopers & Lybrand L.L.P. as independent accountants for the fiscal year 1994. Affirmative............................................................ 72,790,550 Negative............................................................... 1,845,258 Abstained.............................................................. 676,904 Withheld............................................................... Broker non-votes....................................................... Shares without executed proxies and not present for vote............... 21,633,357 ---------- Shares entitled to vote................................................ 96,946,069 ---------- ----------
EXECUTIVE OFFICERS The following table sets forth information as to the Company's executive officers. All officers of the Company hold their offices at the pleasure of the Board of Directors.
NAME, AGE AND BUSINESS EXPERIENCE POSITION WITH THE COMPANY DURING PAST FIVE YEARS --------------------------------------------------- ------------------------------------------------------------ Jerry W. Box, 56 .................................. Mr. Box has been in this position since December 1, 1994. Executive Vice President, Exploration From January 1992 through November 1994, he was Senior Vice and Production, and Director President, Exploration and Production of the Company. From 1987 to 1991, he was Vice President, Exploration. David F. Chavenson, 42 ............................ Mr. Chavenson assumed this position in October 1993. For the Treasurer five years previous thereto, he was Assistant Treasurer and Manager, Corporate Finance and Credit of the Company. Sherri T. Durst, 45 ............................... Ms. Durst assumed this position in December 1993. From General Auditor February 1990 to December 1993, she served as Manager, Financial Processes. For the six years previous thereto, she held the position of Financial Systems Project Manager.
16
NAME, AGE AND BUSINESS EXPERIENCE POSITION WITH THE COMPANY DURING PAST FIVE YEARS --------------------------------------------------- ------------------------------------------------------------ Robert L. Keiser, 52 .............................. Mr. Keiser assumed this position on December 1, 1994. From Chairman of the Board, Chief January 1992 through November 1994, he was President and Executive Officer, and President Chief Operating Officer of the Company. From January 1990 through December 1991, he was President and Chief Executive Officer of Oryx U.K. Energy Company. He was also Vice President, International Exploration and Production for the Company from January 1990 until August 1990 and from April 1991 through December 1991. From July 1987 to December 1989, he was Vice President, Planning and Development of the Company. William C. Lemmer, 50 ............................. Mr. Lemmer assumed this position on February 2, 1995. From Vice President, General Counsel June 1994 until February 1995, he served as Vice President and Secretary and General Counsel to the Company. For the five previous years, he was Chief Counsel to the Company. Edward W. Moneypenny, 53 .......................... Mr. Moneypenny has been in this position since December 1, Executive Vice President, Finance, 1994. From January 1992 through November 1994, he was Chief Financial Officer, and Director Senior Vice President, Finance and Chief Financial Officer of the Company. From 1988 to 1991, he was Vice President, Finance and Chief Financial Officer of the Company. William P. Stokes, Jr., 53 ........................ Mr. Stokes assumed this position on February 2, 1995. From Vice President, Marketing January 1993 until February 1995, he was Vice President, Corporate Development and Human Relations. From January 1990 until January 1993, he served the Company as Vice President, Planning and Development. For the five years previous thereto, Mr. Stokes held the position of Manager Western Production Region of the Company. Robert L. Thompson, 48 ............................ Mr. Thompson assumed this position on February 2, 1995. From Comptroller and Corporate February 1993 through January 1995, he served the Company Planning Director as Director of Business Planning and Acquisitions. From January 1992 through January 1993, he was Director of Planning and Analysis and for the three previous years he was Director of Financial Analysis.
17 PART II ITEM 5. MARKET FOR ORYX ENERGY COMPANY COMMON STOCK AND RELATED SECURITY HOLDER MATTERS Market for Oryx Energy Company Common Stock and Related Security Holder Matters on page 48 of the Company's 1994 Annual Report to Shareholders is incorporated herein by reference. The market exchange on which the Company's stock is traded is listed on the cover page of this Form 10-K Annual Report. ITEM 6. SELECTED FINANCIAL DATA The information required by this item is incorporated herein by reference to page 17 of the Company's 1994 Annual Report to Shareholders. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by this item is incorporated herein by reference to pages 12-16 of the Company's 1994 Annual Report to Shareholders. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The following information in the Company's 1994 Annual Report to Shareholders is incorporated herein by reference: the Consolidated Financial Statements on pages 18-21; the Notes to Consolidated Financial Statements on pages 22-40; the Report of Independent Accountants on page 41; and the Supplementary Financial and Operating Information (Unaudited) on pages 42-46. 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 The information on directors required by this Item is incorporated herein by reference to the section entitled "Election of Directors" on pages 3-6 of the Company's definitive Proxy Statement dated March 22, 1995. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item is incorporated herein by reference to the section entitled "Executive Compensation" on pages 9-11 of the Company's definitive Proxy Statement dated March 22, 1995. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is incorporated herein by reference to sections entitled "Security Ownership of Certain Beneficial Owners" on pages 2-3 and "Security Ownership of Management" on page 8 of the Company's definitive Proxy Statement dated March 22, 1995. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item is incorporated herein by reference to the section entitled "Certain Transactions and Relationships" on page 16 of the Company's definitive Proxy Statement dated March 22, 1995. 18 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as a part of this report: 1. Consolidated Financial Statements: The information in the Company's 1994 Annual Report to Shareholders as described in Item 8 is incorporated herein by reference. Other schedules and separate financial statements of unconsolidated subsidiaries are omitted because the information is shown elsewhere in this report, is not required or is not applicable. 2. Exhibits: *3.1 -- Restated Certificate of Incorporation of the Registrant, as currently in effect **3.2 -- Amended and Restated Bylaws of the Registrant, as currently in effect ***4.1 -- Form of Common Stock of the Registrant ****4.2 -- Rights Agreement dated as of September 11, 1990, between the Registrant and Manufacturers Hanover Trust Company +4.3 -- Indenture dated as of September 11, 1990, between the Registrant and Manufacturers Hanover Trust Company ++4.4 -- First Supplemental Indenture by and between The Bank of New York and the Registrant +++10.1 -- Second Amended and Restated Agreement of Limited Partnership of Sun Energy Partners, L.P. +++10.2 -- Agreement of Limited Partnership of Sun Operating Limited Partner- ship, as amended ++++10.3 -- Registrant's Directors' Deferred Compensation Plan ++++10.4 -- Registrant's Non-Employee Directors' Retirement Plan ++++10.5 -- Employment Agreement between Robert P. Hauptfuhrer and the Regis- trant ++10.5a -- Amendment to Employment Agreement between Robert P. Hauptfuhrer and the Registrant, dated June 1, 1989 ++++10.5b -- Amendment to Employment Agreement between Robert P. Hauptfuhrer and the Registrant, dated December 3, 1992 ++++10.6 -- Registrant's Pension Restoration Plan ++++++10.6a -- Amendment to Registrant's Pension Restoration Plan 10.7 -- Registrant's Executive Retirement Plan As Amended and Restated as of January 1, 1992 ++++++++10.8 -- Registrant's Executive Long-Term Incentive Plan ++10.8a -- Amendment to Registrant's Executive Long-Term Incentive Plan, dated February 1, 1989 ++10.8b -- Amendment to Registrant's Executive Long-Term Incentive Plan, dated February 6, 1989 10.9 -- Registrant's 1992 Long-Term Incentive Plan As Amended Through De- cember 2, 1993 and Restated ++++10.10 -- Registrant's Savings Restoration Plan ++++++10.10a -- Amendment to Registrant's Savings Restoration Plan
19 ++++10.11 -- Registrant's Amended and Restated Executive Deferred Compensation Plan ++++++10.11a -- Amendment to Registrant's Amended and Restated Executive Deferred Compensation Plan ++++10.12 -- Registrant's Deferred Compensation and Benefits Trust ++++10.13 -- Registrant's Special Employee Severance Plan 10.14 -- Registrant's Amended and Restated Special Executive Severance Plan ****10.15 -- Revolving Credit and Term Loan Agreement among the Registrant and the banks named therein, dated as of September 10, 1990 m10.16 -- Sale and Purchase Agreements by and between BP Petroleum Develop- ment Limited et al and the Registrant ++++10.17 -- Oryx Energy Company Capital Accumulation Plan, As Amended and Restated Generally Effective as of January 1, 1993 10.17a -- Registrant's Amendment to the Oryx Energy Company Capital Accumu- lation Plan ++++10.18 -- Oryx Energy Company $620,000,000 Revolving Credit Agreement Dated as of December 31, 1992 12 -- Computation of Consolidated Ratio of Earnings to Fixed Charges and Earnings to Fixed Charges and Preferred Stock Dividend Requirements 13 -- Oryx Energy Company 1994 Annual Report to Shareholders 16 -- Accountant's Preferability Letter mm19 -- Distribution Agreement dated August 28, 1991 relating to Medium-Term Notes, Series A ++22 -- Subsidiaries 23 -- Consent of Coopers & Lybrand L.L.P. 24 -- Power of Attorney ------------------------ * Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1992 (File No. 1-10053) filed with the Commission on May 15, 1992. ** Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1990 (File No. 1-10053) filed with the Commission on November 14, 1990. *** Incorporated by reference to the Registrant's Form 8-K (File No. 1-10053) filed with the Commission on September 25, 1990. **** Incorporated by reference to the Registrant's Registration Statement on Form 8-A (File No. 1-10053) filed with the Commission on September 19, 1990. + Incorporated by reference to the Registrant's Registration Statement on Form S-1 (File No. 33-24214) filed with the Commission on September 8, 1988. ++ Incorporated by reference to the Registrant's Amendment No. 2 on Form S-3 (File No. 33-33361) filed with the Commission on June 29, 1990. +++ Incorporated by reference to the Form SE of Sun Energy Partners, L.P. filed with the Commission on March 20, 1986. ++++ Incorporated by reference to the Registrant's Registration Statement on Form S-1 (File No. 33-27723) filed with the Commission on March 22, 1989. ++ Incorporated by reference to the Registrant's Registration Statement on Form S-1 (File No. 33-33361) filed with the Commission on February 6, 1990.
20 ++++ Incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1992 (File No. 1-10053) filed with the Commission on March 22, 1993. ++++++ Incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991 (File No. 1-10053) filed with the Commission on March 19, 1992. ++++++++ Incorporated by reference to the Registrant's Registration Statement on Form S-1 (File No. 33-24214) filed with the Commission on September 8, 1988. m Incorporated by reference to the Registrant's Form 8-K (File No. 1-10053) filed with the Commission on December 26, 1989. mm Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1991 (File No. 1-10053) filed with the Commission on November 14, 1991.
(b) Reports on Form 8-K: The Company did not file any reports on Form 8-K during the quarter ended December 31, 1994. 21 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. ORYX ENERGY COMPANY By: /s/ EDWARD W. MONEYPENNY -------------------------------------- EDWARD W. MONEYPENNY EXECUTIVE VICE PRESIDENT, FINANCE, CHIEF FINANCIAL OFFICER, AND DIRECTOR Date: March 22, 1995 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 date indicated.
SIGNATURE TITLE DATE ------------------------------------------------------------ ------------------------------------ ------------------ ROBERT L. KEISER* Chairman of the Board, President, ------------------------------------------- and Chief Executive Officer Robert L. Keiser (principal executive officer) /s/ EDWARD W. MONEYPENNY Executive Vice President, Finance, ------------------------------------------- Chief Financial Officer (principal Edward W. Moneypenny financial officer), and Director ROBERT L. THOMPSON* Comptroller and Corporate Planning ------------------------------------------- Director (principal accounting Robert L. Thompson officer) JERRY W. BOX* Executive Vice President, ------------------------------------------- Exploration and Production, and Jerry W. Box Director WILLIAM E. BRADFORD* Director March 22, 1995 ------------------------------------------- William E. Bradford ROBERT B. GILL* Director ------------------------------------------- Robert B. Gill DAVID S. HOLLINGSWORTH* Director ------------------------------------------- David S. Hollingsworth CHARLES H. PISTOR, JR.* Director ------------------------------------------- Charles H. Pistor, Jr. PAUL R. SEEGERS* Director ------------------------------------------- Paul R. Seegers IAN L. WHITE-THOMSON* Director ------------------------------------------- Ian L. White-Thomson *By: /s/ EDWARD W. MONEYPENNY -------------------------------------- Edward W. Moneypenny ATTORNEY-IN-FACT ------------------------ *A Power of Attorney authorizing Robert L. Keiser and Edward W. Moneypenny, and each of them, to sign this Form 10-K Annual Report on behalf of the directors, constituting a majority of the Board of Directors, and certain officers of Oryx Energy Company, is being filed with the Securities and Exchange Commission.
22 EX-10.7 2 EXHIBIT 10.7 EXHIBIT 10.7 ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN AS AMENDED AND RESTATED AS OF JANUARY 1, 1992 (EXCEPT AS OTHERWISE PROVIDED HEREIN) ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN TABLE OF CONTENTS
ARTICLE PAGE PREAMBLE 1 I Definitions 2-6 II Contributions 7 III Retirement Benefits 8-12 IV Optional Forms of Retirement Income 13-15 V Death Benefits 16-17 VI Termination of Employment or Status as Executive; Reemployment 18-20 VII Disability Benefits 21 VIII Administration of the Plan 22-25 IX General Provisions 26-28
-i- PREAMBLE Oryx Energy Company (the "Company") adopted and established the Oryx Energy Company Executive Retirement Plan (the "Plan"), for the exclusive benefit of certain of its executives and their beneficiaries in November 1988. The Plan superseded the Sun Company, Inc. Executive Retirement Plan (the "Predecessor Plan") with respect to those Executives of the Company who had been participants in the Predecessor Plan. Subsequently, the Plan was amended from time to time. Effective as of January 1, 1995, (except as otherwise provided herein) the Company has, by execution of this document, amended and restated the Plan in its entirety, subject to the terms and conditions hereinafter set forth. Except as otherwise provided herein, any Participant under the Plan prior to January 1, 1992, shall receive any benefits to which he or she is entitled based upon the provisions of the Plan as in effect prior to January 1, 1992; and any Participant who dies, retires, becomes disabled, terminates employment or otherwise ceases to be a Participant thereunder on or after January 1, 1992, but before January 1, 1995 shall receive any benefits to which he or she is entitled based upon the provisions of the Plan. The purpose of the Plan is primarily to provide additional retirement benefits to a select group of highly compensated or management employees of the Company through an unfunded plan. -1- ARTICLE I DEFINITIONS 1.01 "Actuarial Equivalent" means a benefit of equivalent current value to the benefit which would otherwise have been provided to the Participant, determined on the basis of appropriate actuarial assumptions and methods and in accordance with rules established by the Plan Administrator. 1.02 "Affiliated Company" means the Company and: (a) Any other corporation which is included within a "controlled group of corporations" within which the Company is also included, as determined under section 1563 of the 1986 Internal Revenue Code without regard to subsections (a)(4) and (e)(3)(C) of said section 1563; (b) Any other trades or businesses (whether or not incorporated) which, based on principles similar to those defining a controlled group of corporations for purposes of (a) above, are under common control; and (c) Any other organization so designated by the Board Committee. 1.03 "Affiliated Company Benefit" means the monthly amount of benefit (or the Actuarial Equivalent of such benefit) to which a Participant and/or his Spouse is or was entitled under the Base Plan or any other qualified or nonqualified defined contribution or defined benefit plan (including any combination of a qualified plan and a related excess benefit plan) that is or was maintained by an Affiliated Company as the primary source of employer-provided retirement income for participants of such plan; provided, however, that in the case of a defined contribution plan, the value of such Benefit will be determined based on the aggregate contributions made on behalf of the Participant (whether or not subsequently withdrawn by the Participant), accumulated at a rate or rates of interest as determined by the Plan Administrator, which determination will be made in a uniform and consistent manner. 1.04 "Base Plan" means the Oryx Energy Company Retirement Plan and the Oryx Energy Company Pension Restoration Plan for Certain Employees of the Company, or any similar or successor plan or plans. -2- 1.05 "Beneficiary" means the person or persons, other than a contingent annuitant, designated by a Participant or retired Participant pursuant to Article IV. 1.06 "Board of Directors" means the Board of Directors of the Company. 1.07 "Board Committee" means those individual Directors who have been appointed by the Board of Directors with the powers and responsibilities specified in Article VIII and to which has been delegated any authority or responsibility of the Board of Directors with respect to the Plan. 1.08 "Company" means Oryx Energy Company or any corporation which succeeds to the position of Oryx Energy Company as common parent of the controlled group of corporations, within the meaning of regulations issued under the Internal Revenue Code. 1.09 "Credited Service," subject to the limitations hereinafter described, means the actual amount, in completed years and months, of the Participant's Service. Credited Service will not include periods of employment with an Affiliated Company before or after it becomes or ceases to be an Affiliated Company. 1.10 "Earnings" means the "Earnings" of a Transferred Participant under the Predecessor Plan through October 31, 1988, and the total basic compensation paid or payable to a Participant by the Company or an Affiliated Company on and after November 1, 1988. 1.11 "Employee" means the individual who is employed by the Company or an Affiliated Company. 1.12 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. 1.13 "Executive" means any Employee who is employed by the Company as a principal officer, or in a job which, in accordance with the Company's job evaluation program, has been assigned 1400 or more Hay points, and any other Employee who is designated by the Board Committee as being an Executive for purposes of this Plan and whom the Board Committee determines to be a member of a select group of management or highly compensated employees. -3- However, effective December 31, 1994, "Executive" means any Employee employed by the Company at the level of Vice President or above. 1.14 "Executive Service" means "Executive Service" earned by a Transferred Participant under the Predecessor Plan through October 31, 1988, and that part of a Participant's Service which was rendered on and after November 1, 1988, while he was an Executive. 1.15 "Final Average Earnings" means the arithmetic average of the Participant's considered earnings over the 36 consecutive calendar months which are within the last 120 consecutive calendar months prior to the actual retirement that produce the highest average of all such 36-month periods. The Participant's considered earnings during any such 36-month period equal: the Participant's aggregate Earnings; plus, any executive incentive bonuses imputed during that 36-month period, as described in the following sentences. One executive incentive bonus will be imputed each calendar year equal to the Participant's guideline incentive percentage in effect as of the date the Participant's first actual executive incentive bonus payment is made in that calendar year under the Oryx Energy Company Executive Incentive Plan, multiplied by the Participant's annualized base rate of pay in effect as of that same date and will be deemed to be considered earnings for the month in which the first actual executive incentive bonus payment is made for such calendar year. If no such bonus is paid to the Participant, while he is an Employee, in a calendar year, a bonus will be imputed as described using the guideline percentage and rate of pay in effect as of February 1 of that calendar year and will be deemed to be considered earnings for such February (except that if the Participant's termination of employment occurred in January, then his rate of pay as of January 1 will be used and the imputed bonus will be deemed considered earnings for such January). These "imputed executive incentive bonuses" will be used to determine Final Average Earnings under this Plan only, and without regard to the actual executive incentive bonuses received by the Participant under the Oryx Energy Company Executive Incentive Plan. If during any such 36-month consecutive month period a Participant has four of such "imputed executive incentive bonuses," then the imputed bonus amount that is the least of the four amounts will be disregarded. -4- 1.16 "Nonaffiliated Employer Benefit" means the monthly amount of Benefit, (or the Actuarial Equivalent of such Benefit) to which a Participant and/or his Spouse is or was entitled as a result of prior employment with any employer other than the Company or an Affiliated Company under any qualified or nonqualified defined contribution or defined benefit retirement plan that is or was maintained by such employer as the primary source of employer-provided retirement income for participants of such plan; provided, however, that in the case of a defined contribution plan, the value of such Benefit will be determined based on the aggregate contributions made on behalf of the Participant (whether or not subsequently withdrawn by the Participant), accumulated at a rate or rates of interest as determined by the Plan Administrator, which determination will be made in a uniform and consistent manner. 1.17 "Normal Retirement Date" means the first day of the calendar month coincident with or next following the Participant's 65th birthday. 1.18 "Participant" means any Employee who is an Executive, a Transferred Participant or who is designated as a Participant by the Board Committee. Except as provided in Section 6.02, if any Participant ceases to be an Executive, he will thereupon cease to be a Participant (unless otherwise designated by the Board Committee), and will forfeit all rights to benefits under this Plan. 1.19 "Plan" means the Oryx Energy Company Executive Retirement Plan as set forth in this document and as it may from time to time be amended. 1.20 "Plan Administrator" means the individual or entity designated as such by the Board Committee pursuant to Article VIII. 1.21 "Plan Year" means the annual period beginning on January 1 of any year and ending on the following December 31. 1.22 "Predecessor Plan" means the Sun Company, Inc. Executive Retirement Plan as it existed on October 31, 1988. 1.23 "Service" means the completed years and months of "Service" earned by a Transferred Participant under the Predecessor Plan through October 31, 1988, and -5- the completed years and months of an Employee's employment by the Company or an Affiliated Company on and after November 1, 1988, whether or not continuous. 1.24 "Social Security Benefit" means the primary insurance amount to which a Participant becomes entitled at age 65 under Social Security legislation in effect on the earliest of his Normal Retirement Date, early retirement date or Termination Date. 1.25 "Spouse" means the individual who is the legally married husband or wife of a Participant. 1.26 "Statutory Benefit" means the monthly amount of any benefit (or the Actuarial Equivalent of such benefit) from any country other than the United States to which a Participant, upon proper application, is or would be entitled. 1.27 "Termination Date" means the date on which a Participant ceases to be an Employee. 1.28 "Transferred Participant" means a person for whom the Predecessor Plan transferred liability to the Plan effective November 1, 1988. -6- ARTICLE II CONTRIBUTIONS 2.01 EMPLOYER CONTRIBUTIONS. All benefits payable under this Plan will be paid by the Company solely out of its general assets. 2.02 PARTICIPANT CONTRIBUTIONS. No contributions by Participants will be required or permitted under this Plan. 2.03 EXPENSES OF ADMINISTRATION. All expenses of administering this Plan will be paid by the Company. -7- ARTICLE III RETIREMENT BENEFITS 3.01 NORMAL RETIREMENT. Except as provided in Section 3.04, each Participant will be eligible to retire on his Normal Retirement Date. 3.02 NORMAL RETIREMENT INCOME. Subject to the provisions of Section 3.03, a Participant who retires on or after his Normal Retirement Date and after the completion of five years of Executive Service will be entitled to a monthly normal retirement income equal to the excess of (a) over (b), where: (a) equals the sum of: (i) 3% of his Final Average Earnings multiplied by his Credited Service up to a maximum of 10 years, plus (ii) 1-1/2% of his Final Average Earnings multiplied by his Credited Service in excess of 10 years, and (b) equals the sum of: (i) 1-2/3% of his Social Security Benefit multiplied by his Credited Service up to a maximum of 30 years, (ii) 100% of his Affiliated Company Benefit, plus (iii) 100% of his Statutory Benefit. 3.03 MAXIMUM NORMAL RETIREMENT INCOME. (a) The monthly normal retirement income which a Participant would otherwise be entitled to receive under Section 3.02 will not exceed 65% of his Final Average Earnings less 1-2/3% of his Social Security Benefit multiplied by his Service, up to a maximum of 30 years. (b) Section 3.3(a) shall not apply to limit that part of the benefit attributable to incentive compensation under Section 1.15(2) to the extent that the participant made an election to defer incentive compensation pursuant to the Oryx Energy Company Executive Deferred -8- Compensation Plan or a Transferred Participant made an election to defer incentive compensation pursuant to the Sun Company, Inc. Deferred Compensation Plan. 3.04 EARLY RETIREMENT DATE. A Participant will be eligible to retire on an early retirement date which will be the first day of any calendar month coincident with or next following his 55th birthday if he has then completed at least five years of Executive Service. 3.05 EARLY RETIREMENT INCOME. The monthly early retirement income payable to the Participant commencing on his early retirement date will be equal to the monthly normal retirement income that would otherwise be applicable under Sections 3.02 and 3.03, adjusted as follows: (a) The Social Security Benefit referred to in Sections 3.02 and 3.03 will be determined by projecting the Participant's Credited Service to his Normal Retirement Date (but such projected Credited Service shall not exceed 30 years) and assuming constant Earnings, at his last rate in effect, to Normal Retirement Date, and will then be multiplied by a fraction, the numerator of which will be his Credited Service to the date of actual retirement and the denominator of which will be his projected Credited Service to Normal Retirement Date. (b) The amount calculated in Section 3.02(a) will be reduced by 5/12% for each full month by which actual retirement precedes Normal Retirement Date by more than five years, and the offset for Social Security Benefits calculated in Sections 3.02(b) and 3.03 will be reduced by 7/12% for each full month by which actual retirement precedes Normal Retirement Date during the five-year period immediately preceding Normal Retirement Date, and 7/24% for each full month that actual retirement precedes Normal Retirement Date by more than five years. 3.06 NORMAL FORM OF BENEFIT. Except as provided for in Article IV, a Participant's retirement benefits under this Plan will be paid in the form of a lump sum equal to the lump sum present value of the retirement income determined under Sections 3.02, 3.03 and 3.05, whichever is applicable. For purposes of determining such lump-sum present value: -9- (i) the interest rate and mortality assumptions that would apply to such Participant at such time for such purpose under the Oryx Energy Company Retirement Plan shall be used; and (ii) the value of any early retirement and survivor benefits subsidies otherwise included in the determination of benefits under the Plan shall be reflected in such lump-sum amount. 3.07 TIME OF PAYMENT. The payment of a Participant's retirement benefits shall be made or commence no later than the last day of the calendar month in which the Participant retires. 3.08 SPECIAL ENHANCEMENT PROGRAM. (a) SPECIAL ENHANCEMENT PROGRAM. Effective January 1, 1993, a Participant who meets the requirements for a benefit under the Special Enhancement Program, as set forth in Section 3.08(b), shall have the Early Retirement Income under Section 3.05 or the Normal Retirement Income under Section 3.02, whichever is applicable, calculated in accordance with Section 3.08(b) below, subject to 3.08(c) below. For purposes of this Section 3.08, the following definitions shall apply. (i) ADJUSTED AGE - Adjusted Age shall be a Participant's actual age plus three years. For purposes of the benefit under Section 3.08(a), a Participant's Adjusted Age shall not exceed 60. (ii) ADJUSTED SERVICE - Adjusted Service shall be a Participant's actual Service plus three years. (iii) ADJUSTED CREDITED SERVICE - Adjusted Credited Service shall be a Participant's actual Credited Service plus three years. (b) ENHANCED RETIREMENT BENEFIT. A Participant shall be eligible for an Enhanced Retirement Benefit under this Section if his employment with the Employer terminated under an outplacement program during 1993 or 1994 and his Adjusted Age is at least 55 and his Executive Service equals at least five years. A Participant who meets the requirements for an Enhanced Retirement Benefit shall have his -10- benefit determined in accordance with Section 3.02, 3.03 or 3.05, as applicable, provided that: (i) The amounts set forth in Section 3.02(a) and (b)(i) shall be determined using the Participant's Adjusted Credited Service, rather than his actual Credited Service; provided that for purposes of determining the Social Security Benefit offset amount described in Section 3.05(a), a Participant's Adjusted Credited Service shall be used only in the numerator of the fraction included in Section 3.05(a) (except such fraction so determined cannot exceed 1.0). (ii) The reductions described in Section 3.05(b), for commencement of a Participant's benefit that precedes Normal Retirement Date, shall be determined by reference to the number of full months that his Adjusted Age precedes his age at his Normal Retirement Date, rather than the number of full months that his actual retirement precedes his Normal Retirement Date. (iii) To the extent that under the terms of the Plan, a Participant who has met the early retirement eligibility requirements, or the beneficiary of such a Participant, is entitled to select optional payment forms, or to receive death benefits, a Participant who meets such requirements solely as a result of this Section shall be deemed to have met the early retirement eligibility requirements. (c) MINIMUM BENEFIT. If the amount of any Participant's Enhanced Retirement Benefit determined above in this Section 3.08 (which is determined by using an enhanced Affiliated Company Benefit offset from the Oryx Energy Company Retirement and Pension Restoration Plans, in accordance with the Special Enhancement Program thereunder) is less than what such Participant's regular unenhanced Retirement Income would be hereunder if both the Special Enhancement Program described above -11- in this Section 3.08 and the Special Enhancement Program described in the Base Plan were disregarded, then such Participant shall have his Retirement Income determined hereunder by disregarding the Special Enhancement Program under this Plan and disregarding the Special Enhancement Program under the Base Plan. -12- ARTICLE IV OPTIONAL FORMS OF RETIREMENT INCOME 4.01 ELECTION OF STRAIGHT LIFE ANNUITY OR OTHER OPTIONAL FORM OF PAYMENT. Not later than thirty (30) days prior to a Participant's retirement date, a Participant may elect, in lieu of the lump-sum normal form of retirement benefits, a straight life annuity (equal to the monthly normal retirement income determined under Sections 3.02, 3.03 and 3.05, whichever is applicable) or an optional form of retirement income as set forth below. A Participant may not change or revoke an elected option unless such change is made thirty (30) days prior to the Participant's retirement date. Each election, designation and revocation of an option will be made in writing and in conformity with such rules as may be prescribed by the Plan Administrator. Notwithstanding the foregoing, a Spouse may not elect an optional form of receiving any benefit payable under Article V. 4.02 CONTINGENT ANNUITY OPTION. A Participant may elect to receive a reduced retirement income, the amount of which will be determined by application of appropriate Actuarially Equivalent factors adopted by the Plan Administrator for the age and sex of the Participant and the contingent annuitant. The contingent annuity option provides (a) payments to the Participant for his life, and (b) continuation of such payments, or any part of them designated by the Participant, to the contingent annuitant, if surviving, for life. 4.03 TEN-YEAR CERTAIN OPTION. A Participant may elect to receive a retirement income of Actuarially Equivalent value payable for his life, provided that such income will be paid to him or to his Beneficiary for ten years after the Participant's retirement regardless of whether the Participant or his Beneficiary survives such period. At the discretion of the Plan Administrator, any benefit payable hereunder to a Beneficiary may be commuted and paid in one sum. 4.04 OTHER FORMS OF PENSION. A Participant may elect to receive a benefit payable over a period not less than his remaining lifetime and, if he so further elects, thereafter to his designated Beneficiary for as long as his designated Beneficiary survives him -13- in such other form having an Actuarially Equivalent value as may be approved by the Plan Administrator and subject to such conditions as he may prescribe. 4.05 RULES APPLICABLE TO CONTINGENT ANNUITY OPTION. (a) If the Participant should die before the effective date of the contingent annuity option, no benefit will be payable to the contingent annuitant. (b) If the contingent annuitant should die before the effective date of the contingent annuity option, the option will automatically be cancelled and the normal monthly retirement income will be payable to the Participant in a straight life annuity as provided in Section 4.01 as if the contingent annuity option had not been elected. (c) If the contingent annuitant should die before the Participant but after the effective date of the contingent annuity option, benefits will be payable or continue to be paid to the Participant on the reduced basis; provided, however, that if the contingent annuitant should die during the first four years following commencement of the retirement income payments to the Participant, the amount of the reduced retirement income payable to the surviving retired Participant will be increased by restoring a percentage of the reduction amount as follows:
DEATH OF CONTINGENT PERCENTAGE OF ANNUITANT DURING DISCOUNT RESTORED ---------------- ----------------- First Year 80% Second Year 60% Third Year 40% Fourth Year 20% Fifth and Subsequent Years 0%
(d) If the retirement date is earlier than the effective date of the contingent annuity option, retirement benefits commencing at the actual retirement date will be made in the straight life annuity form of retirement income, as provided in Section 4.01. If the Participant and his contingent annuitant are living on such effective date, the retirement benefit will be adjusted to provide retirement income on and after such date on the optional form. -14- 4.06 ACCELERATION OF ANNUITY OPTIONS. Notwithstanding the foregoing, if the Internal Revenue Service makes a determination that the Participant must include any amounts from the Plan in his taxable income in a taxable year prior to the year in which the Participant actually receives those amounts, the Participant shall receive the Actuarial Equivalent of the remainder of his benefit determined under Sections 3.02, 3.03 and 3.05, whichever is applicable. Such distribution shall be made no later than the last day of the calendar year in which the Participant informs the Plan Administrator that the Internal Revenue Service has made such a determination. -15- ARTICLE V DEATH BENEFITS 5.01 PRERETIREMENT SPOUSE'S DEATH BENEFIT. The actual form of payment (monthly annuity or lump-sum) of the death benefit described in this Section shall, notwithstanding anything to the contrary herein, be determined in accordance with Section 5.02 hereof. In the event of the death of a Participant during active employment and after having become eligible to elect an early retirement date, a death benefit in the form of monthly retirement income in the amount hereinafter set forth will be payable to the Participant's Spouse at the time of his death for the lifetime of such Spouse. The amount of each such monthly income payment will be 50% of the monthly early retirement income that would have been payable to the Participant under Section 3.05 had he retired on the date of his death; provided, however, that: (a) the reduction specified in Section 3.02(b)(ii) with respect to the Participant's Affiliated Company Benefit will not be applicable; (b) the early retirement reduction percentage described in Section 3.05(b) will be applied only to the offset for Social Security Benefits; (c) the monthly income payments to the Spouse will be reduced by 1/2% for each month that the Spouse is more than ten years younger than the Participant; and (d) the amount payable to the Spouse will be reduced by any amount of Affiliated Company Benefits that are attributable to Affiliated Company contributions and that are payable to such Spouse. 5.02 ELECTION OF PAYMENT FORM OF PRERETIREMENT SPOUSE'S DEATH BENEFIT. A Participant who is eligible to elect an early retirement date may elect to have the preretirement spouse's death benefit under Section 5.01 paid in an annuity form pursuant to Section 5.01, or in an Actuarially Equivalent lump-sum as soon as practicable after the Participant's death. A Participant may change or revoke an elected option at any time prior to his actual retirement. Each election, designation and revocation of an option -16- will be made in writing and in conformity with such rules as may be prescribed by the Plan Administrator. 5.03 POSTRETIREMENT SPOUSE'S DEATH BENEFIT. In the event a Participant dies after retiring or after attaining his Normal Retirement Date, and provided the Participant's benefit was payable to him in a monthly form under Article IV hereof, the Spouse to whom he is married on his annuity starting date will receive a monthly retirement income payable for the lifetime of such Spouse in an amount equal to 50% of the retirement income being paid or payable to the Participant (before giving effect to any reduction in income required by the election of an contingent annuity or period certain optional form of payment under Article IV); provided, however, that: (a) the reduction specified in Section 3.02(b)(ii) with respect to the Participant's Affiliated Company Benefit will not be applicable; (b) the monthly income payable to the Spouse will be reduced by 1/2% for each month that the Spouse is more than ten years younger than the Participant; and (c) the amount payable to the Spouse will be reduced by any amount of spousal Affiliated Company Benefits that are attributable to Affiliated Company contributions and that are attributable to such Spouse (even though such amounts may not actually be payable to such Spouse, due to a waiver of such amounts and/or election to receive any Affiliated Company Benefits in an optional form not providing a spousal benefit). The Spouse's death benefit payable under this Section will be in addition to any annuity benefits otherwise payable under Article IV. In the event the Participant did not have a Spouse on his annuity starting date, but is survived by a Spouse on the date of his death, the monthly retirement income described above shall be paid to such surviving spouse. -17- ARTICLE VI TERMINATION OF EMPLOYMENT OR STATUS AS EXECUTIVE; REEMPLOYMENT 6.01 TERMINATION OF EMPLOYMENT. A Participant whose employment is terminated for any reason other than death under Article V or retirement under Section 3.01 or 3.04, will not be entitled to benefits under this Plan. 6.02 TERMINATION OF EXECUTIVE STATUS. If a Participant remains employed by the Company or an Affiliated Company but ceases to be an Executive, he will forfeit the right to all benefits under this Plan unless otherwise designated to remain as a Participant by the Board Committee or unless he had attained his 55th birthday and completed at least five years of Executive Service at the time he ceased to be an Executive. If any such Participant is designated by the Board Committee as being eligible to remain a Participant even though no longer an Executive, the Participant will continue as such for all purposes of this Plan. If the Participant is not so designated by the Board Committee but has attained his 55th birthday and has completed at least five years of Executive Service, he will remain a Participant, but will be entitled to benefits based only upon his Service, Credited Service and Final Average Earnings as of the date he ceased to be an Executive. Furthermore, for purposes of the preceding sentence, with respect to any Participant who ceases to be an Executive as of December 31, 1994, by reason of the change in the definition of Executive for Plan Years beginning on and after such date, and who, on December 31, 1994, has attained age 55 and has completed 5 years of Executive Service, such Participant's benefits under the Plan shall be (i) determined as if the Employee had retired hereunder on December 31, 1994, (ii) shall not be affected by an increase thereafter of the Participant's Affiliated Company Benefit due to the Partcipant's subsequent service or compensation, and (iii) any reduction in the Participant's Affiliated Company Benefit for commencement of the benefit under the Plan prior to Normal Retirement Date shall be determined on the basis of the Employee's actual early retirement date. Any benefits payable to a Participant who has ceased to be an Executive shall not be paid until actual -18- retirement or death, in accordance with Articles III and IV above. 6.03 REEMPLOYMENT. (a) If a retired Participant is reemployed by the Company or an Affiliated Company, his benefits will thereupon cease, and upon again becoming such an Employee he will have his prior period of Service, Credited Service and Executive Service restored to him. If he had made an election of an optional form of payment, such election will continue on file with the Plan Administrator, but no payment will be due under such option in the event of his death before he again retires. Upon subsequent retirement his retirement income will be based on his Service and Credited Service which was restored under this Section plus any Service and Credited Service rendered while employed as an Executive after the time of his reemployment. (b) In all other situations where a retired Participant is reemployed, there will be no cessation, interruption or adjustment of his retirement income. 6.04 CHANGE IN CONTROL. Notwithstanding any other provisions of the Plan, all Participants shall become fully vested upon a Change in Control of the Company and, upon termination of service from the Company shall be entitled to benefits calculated as follows: (a) If at the time of termination of service, the Participant has attained his Early Retirement Date, he shall be entitled to a benefit calculated in accordance with Section 3.05. (b) If at the time of termination of service, the Participant has not attained his early retirement date, he shall be entitled to benefits calculated under Section 3.05 with the exception that the benefits so determined shall, in lieu of the reductions provided under Section 3.05(b), be reduced actuarially in accordance with reasonable and appropriate actuarial factors. Such benefits shall commence coincident with or next following the first day of the calendar month in which the Participant attains age 55. -19- As used in the Plan a "Change in Control" shall be deemed to have occurred if (a) individuals who were directors of the Company immediately prior to a Control Transaction shall cease, within two years of such Control Transaction, to constitute a majority of the Board (or of the Board of Directors of any successor to the Company or to all or substantially all of its assets) or (b) any entity, person or Group acquires shares of the Company in a transaction or series of transactions that result in such entity, person or Group directly or indirectly owning beneficially fifty-one percent (51%) or more of the outstanding shares. As used herein, "Control Transaction" shall be (1) any tender offer for or acquisition of capital stock of the Company, (2) any merger, consolidation, or sale of all or substantially all of the assets of the Company which has been approved by the shareholders, (3) any contested election of directors of the Company or (4) any combination of the foregoing which results in a change in voting power sufficient to elect a majority of the Board of Directors. As used herein, "Group" shall mean persons who act in concert as described in Sections 13(d)(3) and/or 14(d)(2) of the Securities Exchange Act of 1934, as amended. -20- ARTICLE VII DISABILITY BENEFITS 7.01 PARTICIPANTS RECEIVING DISABILITY BENEFITS. A Participant receiving disability benefits under the Oryx Energy Company Disability Income Program will remain a Participant. Such a Participant will be entitled to a monthly normal retirement income, to commence at his Normal Retirement Date, computed in accordance with Section 3.02 or 3.03, as applicable, assuming constant Earnings and guideline bonus to Normal Retirement Date, Social Security benefits as calculated under the Social Security Act in effect on the Participant's date of disability, and including as Service, Credited Service and Executive Service, the period during which he qualifies for and receives disability benefits under the Oryx Energy Company Disability Income Program. Such determination will be made as of Normal Retirement Date. The normal form for the payment of retirement income to the Participant will be as set forth in Section 3.069. 7.02 STATUS DURING DISABILITY. A Participant receiving Oryx Energy Company Disability Income Program benefits prior to his Normal Retirement Date will be entitled to benefits under Section 5.01 and, if applicable, Section 5.02. After his Normal Retirement Date, he will be deemed to have retired. Such a Participant, If otherwise eligible, may also elect to retire early under the provision of Section 3.04. -21- ARTICLE VIII ADMINISTRATION OF THE PLAN 8.01 ALLOCATION AND DELEGATION OF ADMINISTRATIVE RESPONSIBILITIES. Administrative responsibilities with respect to the Plan are to be allocated as set forth in this Article VIII. A person will have only those specific powers, duties, responsibilities and obligations as are specifically given him under this Plan. It is intended that each person be responsible for the proper exercise of his own powers, duties, responsibilities and obligations under this Plan, and generally will not be responsible for any act or failure to act of another person. A person may delegate to any person or entity any of its powers or duties under the Plan. 8.02 POWERS AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS. The Board of Directors has the following powers and responsibilities: (a) to authorize amendments to the Plan; (b) to terminate the Plan; and (c) to appoint and remove members of the Board Committee, as set forth in Section 8.03, below. 8.03 BOARD COMMITTEE. (a) The Board Committee will consist of at least three Directors who will be appointed by and serve at the pleasure of the Board of Directors. The Board of Directors will also appoint one member of the Board Committee to act as Chairman of such Committee. Vacancies will be filled in the same manner as appointments. Any member of the Board Committee may resign by delivering a written resignation to the Board of Directors, to become effective upon delivery or at any other date specified therein. (b) The members of the Board Committee will appoint a Secretary who may, but need not be, a member of the Board Committee. The Board Committee may, in writing, delegate some or all of its powers and responsibilities as specified in Section 8.03(d) to any other person or entity. -22- (c) The Board Committee will hold meetings upon such notice, at such time or times, and at such place or places as it may determine. The majority of the members of the Board Committee at the time in office will constitute a quorum for the transaction of business at all meetings and a majority vote of those present at any meeting will be required for action. The Board Committee may also act by written consent of a majority of its members. (d) The Board Committee will have the following powers and responsibilities: (i) to prepare periodic administration reports to the Board of Directors which will show, in reasonable detail, the administrative operations of the Plan; (ii) to appoint and remove the Plan Administrator; (iii) to appoint and remove other administrative personnel; and (iv) to designate, in its discretion, individuals as "Executives" and "Participants" hereunder. Determinations made by the Board Committee shall be final and conclusive for all purposes. 8.04 PLAN ADMINISTRATOR. (a) The Plan Administrator will be appointed by and serve at the pleasure of the Board Committee. The Plan Administrator may resign by delivering a written resignation to the Board Committee, to be effective on delivery or at any other date specified therein. Upon the resignation or removal of the Plan Administrator, a successor Plan Administrator will be appointed by the Board Committee. (b) The Plan Administrator may, in writing, delegate some or all of his powers and responsibilities as set forth in Section 8.04(c) to any other person or entity. (c) The Plan Administrator will adopt such rules for administration of the Plan as he considers desirable, provided they do not conflict with -23- the Plan. Records of administration of the Plan will be kept, and Participants and their Spouses, Beneficiaries and contingent annuitants may examine records pertaining directly to themselves. The Plan Administrator will have the following powers and responsibilities: (i) to select and terminate an actuary for the Plan; (ii) to establish and maintain claims review procedures; (iii) the discretionary power to construe and interpret the Plan, correct defects, supply omissions and reconcile inconsistencies to the extent necessary to administer the Plan, with any instructions or interpretation of the Plan made in good faith by the Plan Administrator to be final and conclusive for all purposes; (iv) to comply with any requirements of ERISA with respect to filing reports with governmental agencies; (v) to provide Employees with any and all information required by ERISA; (vi) to approve any actuarial assumptions; (vii) to coordinate any necessary audit process with respect to reports on administration data; and (viii) to conduct routine Plan administration. 8.05 EMPLOYMENT OF AGENTS. Persons administering the Plan may retain such counsel, actuarial, medical, accounting, clerical and other services as they may require to carry out the provisions and purposes of the Plan. 8.06 RELIANCE ON REPORTS AND CERTIFICATES. Persons administering the Plan and the officers and managers and Employees of the Company and any Affiliated Company will be entitled to rely upon all tables, valuations, certificates and reports furnished by any duly appointed actuary, insurance company, or by any duly appointed accountant, and upon all opinions given by any duly appointed legal counsel. -24- 8.07 COMPENSATION. Persons administering the Plan will not receive any compensation for their services as such. 8.08 ABSTENTION REQUIRED. No one may act, vote or otherwise influence a decision specifically relating to his own participation under the Plan. 8.09 LIABILITY FOR ADMINISTRATION OF THE PLAN. In the administration of the Plan, no person administering the Plan, nor any officer, director or employee of the Company or any Affiliated Company or any of their agents will be liable jointly or severally for any loss due to his or its error or acts of omission or commission, except for his or its own individual misconduct. In the event and to the extent not insured against under any contract of insurance with an insurance company, the Company shall indemnify and hold harmless each "Indemnified Person," as defined below, against any and all claims, demands, suits, proceedings, losses, damages, interest, penalties, expenses (specifically including, but not limited to counsel fees to the extent approved by the Board Committee or otherwise provided by law, court costs and other reasonable expenses of litigation), and liability of every kind, including amounts paid in settlement, with the approval of the Board Committee, arising from any action or cause of action related to the Indemnified Person's act or acts or failure to act. Such indemnity shall apply regardless of whether such claims, demands, suits, proceedings, losses, damages, interest, penalties, expenses, and liability arise in whole or in part from the negligence or other fault of the Indemnified Person, except when the same is judicially determined to be due to gross negligence, fraud, recklessness, willful or intentional misconduct of such Indemnified Person. "Indemnified Person" shall mean each member of the Board, the Board Committee, the Plan Administrator and each other Employee who is allocated any responsibility hereunder. -25- ARTICLE IX GENERAL PROVISIONS 9.01 RIGHT TO AMEND OR TERMINATE. The Company expects and intends to continue the Plan indefinitely, but necessarily reserves the right, by action of the Board of Directors or its delegate, to amend, alter, suspend or terminate the Plan in whole or in part, and at any time. The Plan may be amended retroactively, except that no amendment may reduce or eliminate benefits that have previously become payable under the Plan, nor benefits accrued as of a Change in Control. 9.02 ALIENATION OF BENEFITS. Subject to Sections 9.03 and 9.09 below, no benefits payable under the Plan will be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any action by way of anticipating, alienating, selling, transferring, assigning, pledging, encumbering or charging the same will be void and of no effect nor will any such benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitled to such benefit; provided, however, that benefits may be paid in accordance with a qualified domestic relations order referred to in ERISA Section 514(b)(7). 9.03 PAYMENT TO MINORS AND INCOMPETENTS. If a Participant, Spouse, contingent annuitant or Beneficiary entitled to receive any benefits hereunder is a minor, or is deemed by the Plan Administrator or is adjudged to be legally incapable of giving a valid receipt and discharge for such benefits, they will be paid to the duly appointed guardian or committee of such minor or incompetent, or they may be paid to such person or persons who the Plan Administrator believes is or are caring for or supporting such minors or incompetents. Any such payments, to the extent thereof, will be a complete discharge for the payment of such benefit. 9.04 UNCLAIMED BENEFITS. If any benefit under the Plan had been payable to and unclaimed by any person for a period of four years since the whereabouts or existence of such person was last known to the Plan Administrator, the Plan Administrator may direct that all rights of such person to payments accrued and to future payments be terminated absolutely, -26- provided that if such person subsequently appears and identifies himself to the satisfaction of the Plan Administrator, then the liability will be reinstated. 9.05 PLAN VOLUNTARY. The Plan is purely voluntary on the part of the Company. Neither the establishment of the Plan, nor any amendment thereto, nor the creation of any fund or account, nor the payment of any benefit will be construed as conferring upon any Employee or Participant the right to be retained in the employ of the Company or any Affiliated Company, and all Employees and Participants will remain subject to discharge, discipline or termination to the same extent as if the Plan had never been established. 9.06 GENDER. Whenever used herein, the masculine pronoun will include the feminine and the singular the plural, unless a different meaning is plainly required by the context. 9.07 CONSTRUCTION. The Plan will be construed, enforced and administered according to the laws of the State of Texas, to the extent not preempted by Federal law. In the event any provision of the Plan is held illegal or invalid for any reason, it will not affect the remaining provisions of the Plan, but the Plan will be construed and enforced as if such illegal and invalid provision had not been included therein. 9.08 FUNDING. This Plan is intended to be an unfunded plan within the meaning of ERISA and the Internal Revenue Code. All amounts paid under this Plan shall be paid in cash from the general assets of the Company or such other funding vehicle as the Board of Directors shall provide; provided, however, that all assets paid into any funding vehicle hereunder shall at all times prior to payment to a Participant, Beneficiary or Spouse remain subject to the claims of general unsecured creditors of the Company. The benefits under the Plan shall be reflected on the accounting records of the Company, but absent action by the Board of Directors shall not be construed to create, or require the creation of, a trust, custodial or escrow account, or other fund of any kind. No Participant or any other person shall have any right, title, or interest whatever in or to, or any preferred claim in or to, any investment reserves, -27- accounts, or funds that the Company may purchase, establish, or accumulate to aid in providing the payments described in this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust or a fiduciary relationship of any kind between the Company and a Participant or any other person. Neither a Participant nor a Beneficiary or Spouse shall acquire any interest in any assets of the Company or in any investment reserves, accounts, or funds that the Company may purchase, establish or accumulate for the purposes of paying benefits hereunder. 9.09 TAX WITHHOLDING. The Company may withhold or cause to be withheld from or with respect to any benefit hereunder any federal, state, or local taxes required by law to be withheld with respect to such benefit and such sum as the Company may reasonably estimate as necessary to cover any taxes for which the Company may be liable and which may be assessed with regard to such payment. 9.10 EXECUTION IN COUNTERPARTS. This document may be executed in one or more counterparts, each of which shall be considered an original, and all but one instrument. IN WITNESS WHEREOF, Oryx Energy Company has caused this Plan to be executed by its duly authorized officer this 9th day of February, 1995. By: /s/ Frances G. Heartwell ----------------------------- Title: Director of Human Resources ATTEST: By: /s/ William C. Lemmer --------------------------- Title: Vice President, General Counsel and Secretary -28- EX-10.9 3 EXHIBIT 10.9 EXHIBIT 10.9 ORYX ENERGY COMPANY 1992 LONG-TERM INCENTIVE PLAN AS AMENDED THROUGH DECEMBER 2, 1993 AND RESTATED ARTICLE I PURPOSE 1.1 PURPOSE. The purpose of the Oryx Energy Company 1992 Long-Term Incentive Plan (this "Plan") is to strengthen the ability of Oryx Energy Company (the "Company") to attract, motivate, and retain employees of superior capability and to more closely align the interests of management with those of stockholders of the Company by relating capital accumulation to increases in stockholder value. ARTICLE II GENERAL DEFINITIONS 2.1 "Agreement" - The written instrument evidencing the grant to a Participant of an Incentive Award. Each Participant may be issued one or more Agreements from time to time, containing one or more Incentive Awards, singly, in combination, or in tandem. 2.2 "Board" - The Board of Directors of the Company. 2.3 "Code" - The Internal Revenue Code of 1986, as amended. 2.4 "Committee" - The Committee that the Board appoints to administer this Plan. 2.5 "Common Stock" - The common stock of the Company as described in the Company's Certificate of Incorporation, or such other stock as shall be substituted therefor. 2.6 "Company" - Oryx Energy Company, or any successor to the Company. 2.7 "Contingent Stock Option" - A Stock Option granted under the provisions of Section 7.6. 2.8 "Date of Grant" - The date on which the granting of an Incentive Award is authorized by the Committee, unless another date is specified by the Committee or by a provision in this Plan applicable to the Incentive Award. 2.9 "Deferred Compensation Stock Option" - A Stock Option granted under the provisions of Section 7.5 and designated as such. 2.10 "Disposition" - Any sale, transfer, encumbrance, gift, donation, assignment, pledge, hypothecation, or other disposition, whether similar or dissimilar to those previously enumerated, whether voluntary or involuntary, and whether during the Participant's lifetime or upon or after his or her death, including, but not limited to, any disposition by operation of law, by court order, by judicial process, or by foreclosure, levy, or attachment. 2.11 "Dividend Equivalent" - The additional amount of Common Stock or cash credited at the discretion of the Committee in connection with an Incentive Award, which shall be equal to the cash or Fair Market Value of stock dividends that would have been paid on the shares of Common Stock covered by such Incentive Award had such covered Common Stock been issued and outstanding on the dividend record date, as described in Article XI. 2.12 "Employee" - Any employee (including officers) of the Company or a Subsidiary. 1 2.13 "Exchange Act" - The Securities Exchange Act of 1934, as amended. 2.14 "Fair Market Value" - The average of the reported high and low sales price of the Common Stock (rounded up to the nearest one-eighth of a dollar) on the date on which Fair Market Value is to be determined (or if there was no reported sale on such date, the next preceding date on which any reported sale occurred) on the principal exchange or in such other principal market on which the Common Stock is trading. 2.15 "Incentive Award" - Any award granted under this Plan. 2.16 "Incentive Stock Option" - A Stock Option intended to satisfy the requirements of Section 422(b) of the Code. 2.17 "Nonqualified Stock Option" - A Stock Option other than an Incentive Stock Option, a Deferred Compensation Stock Option, or a Contingent Stock Option. 2.18 "Participant" - A key Employee selected by the Committee to receive an Incentive Award. 2.19 "Performance Period" - A period of one or more fiscal years of the Company, beginning with the fiscal year in which Performance Units, Performance Shares or other performance-based long-term awards are granted, over which performance is measured, for the purpose of determining the payment value of any such Incentive Award. 2.20 "Performance Unit" or "Performance Share" - An Incentive Award representing a contingent right to receive cash or shares of Common Stock (which may be Restricted Stock) at the end of a Performance Period and which, in the case of Performance Shares, is denominated in Common Stock, and, in the case of Performance Units, is denominated in cash values. 2.21 "Restricted Stock" - Shares of Common Stock issued or transferred pursuant to Article IX. 2.22 "Retirement" - Employment separation on account of early, normal, or late retirement, as described in the Oryx Energy Company Retirement Plan or any successor plan thereto. 2.23 "Rule 16b-3" - Rule 16b-3 shall have the meaning assigned in Section 4.1 2.24 "Securities Act" - The Securities Act of 1933, as amended. 2.25 "Stock Appreciation Right" - The rights specified in Article VIII. 2.26 "Stock Option" - An award of a right or contingent right to purchase Common Stock pursuant to Article VII. 2.27 "Subsidiary" - A "subsidiary corporation" as defined in Section 424(f) of the Code that is a subsidiary of the Company. 2 ARTICLE III SHARES OF COMMON STOCK SUBJECT TO THE PLAN 3.1 COMMON STOCK AUTHORIZED. Subject to the provisions of this Article and Article XIII, the total aggregate number of shares of Common Stock that may be issued, transferred, or exercised pursuant to Incentive Awards shall not exceed 3,000,000 shares. 3.2 LIMITATION OF SHARES. For purposes of the limitations specified in Section 3.1, the following principles apply: (a) a decrease in the number of shares that thereafter may be issued or transferred for purpose of Section 3.1 shall result from (i) the delivery of shares of Common Stock upon exercise of a Stock Option or Stock Appreciation Right in any manner and (ii) upon the award of Restricted Stock and (iii) the delivery of shares of Common Stock in settlement of Dividend Equivalents or Performance Units or Performance Shares; (b) shares of Common Stock with respect to which Stock Options and Stock Appreciation Rights expire, are cancelled without being exercised, or are otherwise terminated may be regranted under this Plan; and (c) if any shares of Common Stock related to an Incentive Award are not issued or, for any reason, cease to be issuable or are forfeited such shares of Common Stock shall no longer be charged against the limitation provided for in Section 3.1 and shall be available again for the grant of Incentive Awards. 3.3 SHARES AVAILABLE. At the discretion of the Board or the Committee, the shares of Common Stock to be delivered under this Plan shall be made available either from authorized and unissued shares of Common Stock or shares of Common Stock held in the treasury of the Company, or both. 3.4 INCENTIVE AWARD ADJUSTMENTS. Subject to the limitations set forth in Article XV, the Committee may make any adjustment in the exercise price or the number of shares subject to, or the terms of, a Nonqualified Stock Option, Deferred Compensation Stock Option, Contingent Stock Option, Stock Appreciation Right, or other stock-based grant pursuant to Section 6.1. Such adjustment shall be made by amending, substituting or cancelling and regranting an outstanding Nonqualified Stock Option, Deferred Compensation Stock Option, Contingent Stock Option, Stock Appreciation Right, or other stock-based grant pursuant to Section 6.1 with the inclusion of terms and conditions that may differ from the terms and conditions of the original Nonqualified Stock Option, Deferred Compensation Stock Option, Contingent Stock Option, Stock Appreciation Right, or other stock-based grant pursuant to Section 6.1. If such action is effected by amendment, the effective date of such amendment shall be the date of the original grant. ARTICLE IV ADMINISTRATION OF THE PLAN 4.1 COMMITTEE. This Plan shall be administered by the Committee, which shall consist of three or more directors of the Company, all of whom are "disinterested persons," as such term is defined under the rules and regulations adopted, from time to time, by the Securities and Exchange Commission pursuant to Section 16(b) of the Exchange Act, including specifically but without limitation, Rule 16b-3 or any successor rule thereto. The Committee may, in its discretion, delegate its duties under this Plan to such agents as it may appoint from time to time, provided that the Committee may not delegate its duties with respect to making Incentive Awards to Participants subject to Section 16(b) of the Exchange Act. The members of the Committee shall serve at the pleasure of the Board, which shall have the power, at any time and from time to time, to remove members from the Committee or to add members thereto. Vacancies on the Committee, however caused, shall be filled by action of the Board. 3 4.2 POWERS. The Committee has discretionary authority to determine the key Employees to whom, and the time or times at which, Incentive Awards shall be granted. The Committee also has authority to determine the amount of shares of Common Stock that shall be subject to each Incentive Award, and the terms, conditions, and limitations of each Incentive Award, subject to the express provisions of this Plan. The Committee shall have the discretion to interpret this Plan and to make all other determinations necessary for Plan administration. The Committee has authority to prescribe, amend, and rescind any rules and regulations relating to this Plan, subject to the express provisions of this Plan. All Committee interpretations, determinations, and actions shall be in the sole discretion of the Committee and shall be binding on all parties. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Agreement in the manner and to the extent it shall deem expedient to carry it into effect, and it shall be the sole and final judge of such expediency. 4.3 INCENTIVE AWARD TERMS. Incentive Awards shall be evidenced by an Agreement and may include any terms and conditions consistent with this Plan, as the Committee may determine. 4.4 NO LIABILITY. No member of the Board or the Committee shall be liable for any action or determination made in good faith by the Board or the Committee with respect to this Plan or any Incentive Award under this Plan. ARTICLE V ELIGIBILITY 5.1 PARTICIPATION. Participants shall be selected from the key Employees of the Company and its Subsidiaries. Such designation may be by individual or by class. 5.2 INCENTIVE STOCK OPTION ELIGIBILITY. No person shall be eligible for the grant of an Incentive Stock Option who owns (within the meaning of Section 422(b) of the Code), or would own immediately before the grant of such Incentive Stock Option, directly or indirectly, stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or any Subsidiary. This restriction shall not apply if at the time such Incentive Stock Option is granted, the Incentive Stock Option exercise price is at least 110 percent of Fair Market Value and the Incentive Stock Option is not, by its terms, exercisable after the expiration of five years from the Date of Grant. 5.3 NO BOARD PARTICIPATION. In no event may any member of the Board who is not an officer or other Employee of the Company or a Subsidiary be granted an Incentive Award under this Plan. ARTICLE VI FORMS OF INCENTIVE AWARDS 6.1 INCENTIVE AWARD ELIGIBILITY. The forms of Incentive Awards under this Plan are Stock Options as described in Article VII, Stock Appreciation Rights as described in Article VIII, Restricted Stock as described in Article IX, Performance Units or Performance Shares as described in Article X, Dividend Equivalents as described in Article XI, and other stock-based grants as described in this Article VI. The Committee may, in its discretion, permit holders of Incentive Awards under this Plan to surrender outstanding Incentive Awards in order to exercise or realize the rights under other Incentive Awards, or in exchange for the grant of new Incentive Awards or require holders of Incentive Awards to surrender outstanding Incentive Awards as a condition precedent to the grant of new Incentive Awards. The Committee may grant, from time to time, to any eligible Employee other stock-based grants. Such other 4 stock-based grants will either be issued (i) for no consideration other than services actually rendered (in the case of authorized and unissued shares) or to be rendered, (ii) for consideration equal to the amount (such as the par value of such shares) required by applicable law to be received by the Company in order to assure compliance with applicable state law, or (iii) for consideration (other than services rendered or to be rendered) equal to or greater than one-half of the Fair Market Value of the Common Stock covered by such grant on the Date of Grant. The Committee may specify such criteria or periods or goals for payment to the Participant as it shall determine, and the extent to which such criteria or periods or goals have been met shall be conclusively determined by the Committee. Other stock-based grants may be paid in shares of Common Stock or other consideration related to such shares or in a single payment or in installments as specified by the grant and may be payable on such dates as determined by the Committee and specified by the grant. The other terms and conditions of other stock-based grants shall be determined by the Committee. ARTICLE VII STOCK OPTIONS 7.1 EXERCISE PRICE. The exercise price of Common Stock under each Stock Option shall be determined by the Committee at the time of grant; provided that, the exercise price of Common Stock under a Stock Option other than a Deferred Compensation Stock Option or a Contingent Stock Option shall be at least equal to 100 percent of the Fair Market Value of the Common Stock on the Date of Grant, provided further that the exercise price of Common Stock under a Deferred Compensation Stock Option and a Contingent Stock Option shall be determined as set forth in Section 6.1 with respect to other stock-based grants. 7.2 TERM. Stock Options may be exercised as determined by the Committee, provided that Incentive Stock Options may in no event be exercised later than 10 years from the Date of Grant or granted later than 10 years from the date of adoption of this Plan. During the Participant's lifetime, only the Participant may exercise an Incentive Stock Option. The Committee may amend the terms of an Incentive Stock Option at any time to include provisions that have the effect of changing such Incentive Stock Option to a Nonqualified Stock Option, or vice-versa (to the extent any such change is permitted by applicable law). 7.3 METHOD OF EXERCISE. Upon the exercise of a Stock Option, the exercise price shall be payable in full in cash or an equivalent acceptable to the Committee. No fractional shares shall be issued pursuant to the exercise of a Stock Option, and no payment shall be made in lieu of fractional shares. At the discretion of the Committee and provided such payment can be effected without causing the Participant to incur liability under Section 16(b) of the Exchange Act, the exercise price may be paid by assigning and delivering to the Company shares of Common Stock or a combination of cash and such shares equal in value to the exercise price. Any shares so assigned and delivered to the Company in payment or partial payment of the exercise price shall be valued at Fair Market Value on the exercise date. In addition, at the request of the Participant and to the extent permitted by applicable law, the Company in its discretion may selectively approve arrangements with a brokerage firm under which such brokerage firm, on behalf of the Participant, shall pay to the Company the exercise price of the Stock Options being exercised, and the Company, pursuant to an irrevocable notice from the Participant, shall promptly deliver the shares being purchased to such firm. 5 At the discretion of the Committee, the Participant may be granted by Agreement, Stock Options to purchase an additional number of shares equal to the number of shares used by the Participant to pay all or a portion of the exercise price of other Stock Options or the tax required to be withheld pursuant to the exercise of such Stock Options, or such additional shares of Common Stock as shall be authorized by the Committee. 7.4 LIMITATION ON INCENTIVE STOCK OPTIONS. With respect to Incentive Stock Options, the aggregate Fair Market Value (determined at the Date of Grant) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under all stock option plans of the Company and its Subsidiaries) shall not exceed $100,000, or such other amount as may be prescribed under the Code or applicable regulations or rulings from time to time. 7.5 DEFERRED COMPENSATION STOCK OPTIONS. A Deferred Compensation Stock Option is intended to provide a means by which compensation payments can be deferred to future dates. The Committee shall determine the amount of any compensation payments to be deferred. The number of shares of Common Stock subject to a Deferred Compensation Stock Option shall be determined by the Committee, in accordance with the following formula: Amount of Compensation to be Deferred ------------------------------------- Fair Market Value on Date of Grant = Number of Shares minus Exercise Price of Options Amounts of compensation so deferred may include amounts earned under Incentive Awards or under any other compensation plan, program, or arrangement of the Company, as determined by the Committee. A Deferred Compensation Stock Option shall be granted only if the Committee has reasonably determined that the recipient of such Deferred Compensation Stock Option will not be deemed at the Date of Grant to be in receipt of the amount of income being deferred for purposes of the Code. The shares of Common Stock purchasable under an Agreement evidencing the grant of a Deferred Compensation Stock Option shall be in lieu of the compensation so deferred unless otherwise specified by the Committee. 7.6 CONTINGENT STOCK OPTIONS. In connection with the grant of an Incentive Award, the exercise of which is dependent upon satisfaction of performance criteria, the Committee may award a Contingent Stock Option that is to be exercisable only if the conditions under which such related Incentive Award becomes payable are not achieved. The number of Contingent Stock Options granted may be more than or less than or equal to the number of shares subject to such related Incentive Award. The Contingent Stock Options shall remain in effect as long as the related Incentive Award remains in effect and shall be subject to the same provisions for termination or acceleration. If the conditions for paying the Incentive Awards are not achieved, the Incentive Award shall be cancelled and the Contingent Stock Options shall be exercisable in accordance with the terms prescribed by the Committee. 6 ARTICLE VIII STOCK APPRECIATION RIGHTS 8.1 GRANT. The grant of Stock Appreciation Rights under this Plan shall be subject to the terms and conditions of this Article VIII and shall contain such additional terms and conditions, not inconsistent with the express provisions of this Plan, as the Committee shall deem desirable. A Stock Appreciation Right is an Incentive Award entitling a Participant to receive an amount equal to (or if the Committee shall determine at the time of grant, less than) the excess of the Fair Market Value of a share of Common Stock on the date of exercise of the Stock Appreciation Right over the Fair Market Value of a share of Common Stock on the Date of Grant of such Stock Appreciation Right, or such other price as set by the Committee, multiplied by the number of shares of Common Stock with respect to which the Stock Appreciation Right shall have been exercised. A Stock Appreciation Right may be granted to a Participant in connection with a Stock Option, whether in tandem or not, and either at the time of grant or at any time during the term of the Stock Option, or without relation to a Stock Option. 8.2 ALTERNATE APPRECIATION RIGHTS. An Alternate Appreciation Right is a Stock Appreciation Right granted in tandem with a Stock Option that requires the Participant, upon exercise, to surrender such Stock Option with respect to the number of shares as to which such Stock Appreciation Right is exercised, and shall entitle the Participant to receive payment of an amount computed pursuant to Section 8.1. Such Stock Option shall then cease to be exercisable to the extent surrendered. 8.3 LIMITATION ON EXERCISE. Subject to Article XIII, a Stock Appreciation Right granted in connection with a Stock Option shall be exercisable at such time or times and only to the extent that the related Stock Option is exercisable, and shall not be transferable except to the extent that such related Stock Option is transferable. The Committee may also provide that a Stock Appreciation Right shall be automatically exercised on one or more specified dates. 8.4 PAYMENT. Payment of the amount determined under Section 8.1 may, in the discretion of the Committee, be made solely in whole shares of Common Stock valued at Fair Market Value on the date of exercise of the Stock Appreciation Right or, alternatively, solely in cash or a combination of cash and Common Stock, or deferred through the grant of a Deferred Compensation Stock Option. Exercise of a Stock Appreciation Right for cash shall be made only during such periods as may be permissible without causing the Participant to incur liability under Section 16(b) of the Exchange Act. If the Committee decides to make full payment in shares of Common Stock and the amount payable results in a fractional share, payment for the fractional share shall be made in cash. 8.5 LIMITED RIGHTS. A Limited Right is a Stock Appreciation Right that is effective only upon a Change in Control (as defined in Section 13.2) and is payable only in cash. The amount of payment to which any grantee of such a Limited Right shall be entitled upon exercise shall be equal to the difference between the exercise price per share of any Common Stock covered by a Stock Option in connection with, whether or not in tandem, such Limited Right and the "market price" of a share of Common Stock. For purposes of this Section 8.5, the term "market price" shall mean the greater of (i) the highest price per share of Common Stock paid in connection with the Change in Control and (ii) the highest price per share of Common Stock reflected in the NYSE Transactions Report during the sixty-day period prior to the Change in Control. If the Limited Rights are exercised, the tandem Stock Options and any tandem Stock Appreciation Rights other than under this Section 8.5 shall cease to be exercisable to the extent of the Common Stock with respect to which such Limited Rights are exercised. 7 ARTICLE IX RESTRICTED STOCK 9.1 GRANT. Shares of Restricted Stock may be awarded under this Plan on such terms and conditions and with such restrictions as the Committee may from time to time approve. If a person is awarded shares of Restricted Stock, the person shall be the record owner of such shares and shall have all the rights of a stockholder with respect to such shares (unless the escrow agreement, if any, referred to in Section 9.2 provides otherwise), including the right to vote and to receive dividends or other distributions with respect thereto. Such Restricted Stock shall be awarded for no cash or such cash as the Committee shall determine; provided, however, that unless the shares awarded as Restricted Stock are shares that have been reacquired by the Company as treasury shares, Restricted Stock shall be awarded only for services actually rendered, as determined by the Committee. Restricted Stock awards may be granted alone, in addition to, or in tandem with, other Incentive Awards. Subject to the terms of this Plan, the Committee shall determine the number of shares of Restricted Stock to be awarded to a Participant. 9.2 RESTRICTION CONDITIONS. All shares of Restricted Stock awarded pursuant to this Plan shall be subject to the following conditions: (a) The shares may not be the subject of any Disposition (other than by will or the laws of descent and distribution) until the restrictions are removed or expire. Any attempted Disposition in violation of this provision shall be void and ineffective for all purposes. (b) Each Participant receiving a Restricted Stock award shall be issued a stock certificate in respect of such shares of Common Stock. Such certificate shall be registered in the name of such Participant, and each such certificate shall bear a legend making appropriate reference to the restrictions imposed. (c) The Committee may require, as a condition to any award of Restricted Stock, one or more of the following: that the Company retain physical custody of the certificate or certificates representing Restricted Stock during the restriction period; and that the Participant enter into an escrow agreement providing that the certificate or certificates representing Restricted Stock shall remain in the physical custody of an escrow holder until all restrictions are removed or expire, and/or that the Participant deliver a stock power duly endorsed in blank relating to the Restricted Stock. The Company may issue shares of Restricted Stock subject to stop transfer restrictions or may issue such shares subject only to the restrictive legend described in this Section. (d) If for any reason, the restrictions imposed by the Committee upon Restricted Stock are not satisfied at the end of the restriction period, for any reason, any Restricted Stock remaining subject to such restrictions shall thereupon be forfeited by the Participant and transferred to and reacquired by the Company at no cost to the Company. (e) The Committee may impose other conditions on any shares of Restricted Stock awarded pursuant to this Plan as it may deem advisable, including, without limitation, restrictions deemed necessary or advisable by the Committee to ensure compliance with the Securities Act, the requirements of any securities exchange upon which such shares or shares of the same class are then listed, and any state securities law applicable to such shares. 8 9.3 LAPSE. The restrictions imposed by the Committee pursuant to this Article IX upon Restricted Stock awards shall lapse as determined by the Committee, subject to the provisions of Articles XII and XIII. Each Restricted Stock award may have a different restriction period, in the discretion of the Committee. The Committee may, in its discretion, prospectively change the restriction period applicable to a particular Restricted Stock award. ARTICLE X PERFORMANCE UNITS OR PERFORMANCE SHARES 10.1 GRANTS. The Committee may grant Performance Units or Performance Shares on the basis of either Company performance criteria or continued employment with the Company by a Participant. The Performance Periods for separate grants may run concurrently. For each Performance Period the Committee shall establish the number of Performance Units or Performance Shares and the contingent value of any Performance Unit or Performance Shares relating thereto. 10.2 COMPANY PERFORMANCE. At the beginning of each Performance Period for grants based on Company performance, the Committee shall: (i) establish for such Performance Period specific financial or other performance objectives which may be absolute or relative to performance, the industry or a group of peer companies as the Committee believes are relevant to the Company's overall business objectives; (ii) determine the value of a Performance Unit or the number of Performance Shares relative to performance objectives; and (iii) notify each Participant in writing of the terms and conditions of the grant. If the Committee determines in its sole discretion that the established performance measures or objectives are no longer suitable to Company objectives because of a change in the Company's business, operations, corporate structure, capital structure, or other conditions the Committee deems to be appropriate, the Committee may modify the performance measures and objectives as considered appropriate. If minimum performance is not achieved or exceeded for a Performance Period, no payment shall be made and all contingent rights shall cease. If minimum performance is achieved or exceeded, the value of a Performance Unit or Performance Share shall be based on the degree to which actual performance exceeded the preestablished minimum performance standards, as determined by the Committee hereunder. The amount of payment shall be determined by multiplying the number of Performance Units or Performance Shares granted at the beginning of the Performance Period times the final Performance Unit or Performance Share value. 10.3 CONTINUED EMPLOYMENT. At the beginning of each Performance Period for grants based on continued employment with the Company, the Committee shall: (i) establish the duration of the Performance Period, which shall be the period of time during which the Participant must remain employed by the Company in order to receive payment; (ii) determine the value of a Performance Unit or the number of Performance Shares relative to such continued employment; and (iii) notify each Participant in writing of the terms and conditions of the grant. Subject to Articles XII and XIII hereof, the rights of a Participant under an employment-based grant of Performance Units or Performance Shares shall automatically terminate upon termination of the Participant's employment with the Company prior to the end of the applicable Performance Period, and in that event the Participant shall not be entitled to receive any payment in respect thereof. 9 10.4 PAYMENTS. In the discretion of the Committee, payments shall be made in cash or Common Stock or a combination thereof following the close of the applicable Performance Period, in such manner as may be permissible without causing the Participant to incur liability under Section 16(b) of the Exchange Act. ARTICLE XI DIVIDEND EQUIVALENTS 11.1 GRANT. A recipient of an Incentive Award (other than Restricted Stock) may also be granted at no additional cost Dividend Equivalents based on the dividends declared on the Common Stock on record dates during the period between the Date of Grant and the date of exercise or payment, as applicable. Such Dividend Equivalents shall be converted to additional shares of Common Stock as follows: (Number of shares or units under the Number of Dividend = Incentive Award) X (Dividend per share) Equivalent Shares ------------------------------------------- Fair Market Value per share of Common Stock at corresponding dividend record date The Dividend Equivalents earned with respect to an Incentive Award shall be distributed to the Participant (or his successor in interest) in the form of shares of Common Stock or units denominated in Common Stock, or an equivalent amount of cash, as the Committee shall determine, and at such time or times as the Committee shall determine. Dividend Equivalents shall be computed, as of each dividend record date, both with respect to the number of shares or units under the Incentive Award and with respect to the number of Dividend Equivalent shares or Dividend Equivalent units previously earned by the Participant (or his successor in interest) and not issued during the period prior to the dividend record date. ARTICLE XII FORFEITURE AND EXPIRATION OF INCENTIVE AWARDS 12.1 TERMINATION. Subject to the express provisions of this Plan and the terms of any applicable Agreement, the Committee, in its discretion, may provide for the forfeiture or continuation of any Incentive Award for such period and upon such terms and conditions as are determined by the Committee in the event that a Participant ceases to be an employee. In the absence of Committee action or contrary provisions in an Agreement, the following rules shall apply: (a) if an Employee ceases to be an Employee for any reason, the Dividend Equivalents and/or other stock-based grants pursuant to Section 6.1 held by such Participant shall terminate and be forfeited as of the date of employment separation; (b) if a holder of Restricted Stock or Performance Shares or Performance Units ceases to be an Employee because of Retirement, death, or permanent and total disability, such holder shall be entitled to receive his Restricted Stock free of restriction or shares of Common Stock or cash subject to such Performance Shares or Performance Units upon the satisfaction of the applicable criteria, after adjusting the Restricted Stock, Performance Shares or Performance Units by multiplying the number of shares subject to the Restricted Stock, Performance Shares or Performance Units by a fraction, the numerator of which shall be the number of full and partial calendar months between the date of the Restricted Stock, Performance Share or Performance Unit award and the date of employment separation, and the denominator of which shall be the 10 number of full and partial calendar months from the date of such award to the end of the applicable restriction period; in the event of separation of employment for any other reason, the grant of Performance Shares or Performance Units shall terminate and be forfeited and the Restricted Stock shall be forfeited by such person and transferred to, and reacquired by, the Company or a Subsidiary at no cost to the Company or the Subsidiary; (c) with respect to Stock Options, in the event of Retirement or permanent and total disability, Stock Options will become fully vested, but no Stock Options may be exercised after 36 months (12 months in the case of Incentive Stock Options) following the date of Retirement or permanent and total disability; in the event of death, Stock Options exercisable at the time of death by the Participant may be exercised by the estate or beneficiary of such Participant until the expiration of the earlier of the remaining term of such Stock Options or one year from the date of death; and, in the event of separation of employment for any other reason, the Stock Options shall continue to vest according to the original schedule, but shall terminate and be forfeited after six months from the date of separation of employment; and (d) with respect to Stock Appreciation Rights, in the event of Retirement or permanent and total disability, the Stock Appreciation Rights shall continue in effect for six months following separation of employment, and such Stock Appreciation Rights may be exercised during such six-month period; in the event of death or separation of employment for any other reason, the Stock Appreciation Rights shall terminate; provided that, Limited Rights pursuant to Section 8.5 may be exercised in accordance with their terms by the holder thereof who separated from employment following a Change in Control, without respect to the separation of employment of such holder. 12.2 LEAVE OF ABSENCE. With respect to an Incentive Award, the Committee may, in its sole discretion, determine that any Participant who is on leave of absence for any reason shall be considered to still be in the employ of the Company, provided that rights to such Incentive Award during a leave of absence shall be limited to the extent to which such rights were earned or vested when such leave of absence began. ARTICLE XIII ADJUSTMENT PROVISIONS 13.1 SHARE ADJUSTMENTS. If the number of outstanding shares of Common Stock are increased, decreased, or exchanged for a different number or kind of shares or other securities, or if additional, new, or different shares or other securities are distributed with respect to such shares of Common Stock or other securities through merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other distribution with respect to such shares of Common Stock or other securities, an appropriate adjustment in order to preserve the benefits or potential benefits intended to be made available to the Participants may be made, in the discretion of the Committee, in all or any of the following: (i) the maximum number and kind of shares provided in Section 3.1; (ii) the number and kind of shares or other securities subject to then outstanding Incentive Awards; and (iii) the price for each share or other unit of any other securities subject to then outstanding Incentive Awards. The Committee may also make any other adjustments, or take such action, as the Committee, in its discretion, deems appropriate in order to preserve the benefits or potential benefits intended to be made available to the Participants. Any fractional share resulting from such adjustment may be eliminated. 11 13.2 CORPORATE CHANGES. Subject to Article XV, upon (i) the dissolution or liquidation of the Company; (ii) a reorganization, merger, or consolidation (other than a merger or consolidation effecting a reincorporation of the Company in another state or any other merger or consolidation in which the shareholders of the surviving corporation and their proportionate interests therein immediately after the merger or consolidation are substantially identical to the shareholders of the Company and their proportionate interests therein immediately prior to the merger or consolidation) of the Company with one or more corporations, following which the Company is not the surviving corporation (or survives only as a subsidiary of another corporation in a transaction in which the shareholders of the parent of the Company and their proportionate interests therein immediately after the transaction are not substantially identical to the shareholders of the Company and their proportionate interests therein immediately prior to the transaction); (iii) the sale of all or substantially all of the assets of the Company; or (iv) the occurrence of a Change in Control, subject to the terms of any applicable Agreement, the Committee serving prior to the date of the applicable event may, to the extent permitted in Section 3.1 of this Plan, in its discretion, without obtaining shareholder approval, take any one or more of the following actions with respect to any Participant: (a) Accelerate the exercise dates of any or all outstanding Incentive Awards; (b) Accelerate the restriction lapse period of any Restricted Stock subject to restrictions; (c) Grant Stock Appreciation Rights to holders of outstanding Stock Options; (d) Pay cash to any or all holders of Stock Options in exchange for the cancellation of their outstanding Stock Options; (e) Make payment for any outstanding Performance Units or Performance Shares based on such amounts as the Committee may determine; (f) Grant new Incentive Awards to any Participants; (g) Grant additional Dividend Equivalents; or (h) Make any other adjustments or amendments to outstanding Incentive Awards or determine that there shall be substitution of new Incentive Awards by such successor employer corporation or a parent or subsidiary company thereof, with appropriate adjustments as to the number and kind of shares or units subject to such awards and prices. A "Change in Control" shall be deemed to have occurred for purposes of this Plan, if (a) individuals who were directors of the Company immediately prior to a "Control Transaction" shall cease, within one year of such Control Transaction, to constitute a majority of the Board of Directors of any successor to the Company or to a company which has acquired all or substantially all of its assets or (b) any entity, person, or "Group" acquires shares of the Company in a transaction or series of transactions that result in such entity, person, or Group directly or indirectly owning beneficially 50 percent or more of the outstanding shares of Common Stock of the Company. As used in this Section 13.2, the term "Control Transaction" shall mean (a) any tender offer for or acquisition of capital stock of the Company, (b) any merger, consolidation, or sale of all or substantially all of the assets of the Company, (c) any contested election of directors of the Company, or (d) any combination of the foregoing that results in a change in voting power sufficient to elect a majority of the Board. As used in this Section 13.2, the term "Group" shall mean persons who act "in concert" as described in Sections 13(d)(3) and/or 14(d)(2) of the Exchange Act. 12 13.3 BINDING DETERMINATION. Adjustments under Sections 13.1 and 13.2 shall be made by the Committee, and its determination as to what adjustments shall be made and the extent thereof shall be final, binding, and conclusive. ARTICLE XIV GENERAL PROVISIONS 14.1 NO RIGHT TO EMPLOYMENT. Nothing in this Plan or in any instrument executed pursuant to this Plan shall confer upon any Participant any right to continue in the employ of the Company or a Subsidiary or affect the Company's or a Subsidiary's right to terminate the employment of any Participant at any time with or without cause. 14.2 SECURITIES REQUIREMENTS. No shares of Common Stock shall be issued or transferred pursuant to an Incentive Award unless all applicable requirements imposed by federal and state laws, regulatory agencies, and securities exchanges upon which the Common Stock may be listed have been fully complied with. As a condition precedent to the issuance of shares pursuant to the grant or exercise of an Incentive Award, the Company may require the Participant to take any reasonable action to meet such requirements. 14.3 NO RIGHT TO STOCK. No Participant and no beneficiary or other person claiming under or through such Participant shall have any right, title, or interest in any shares of Common Stock allocated or reserved under this Plan or subject to any Incentive Award except as to such shares of Common Stock, if any, that have been issued or transferred to such Participant. 14.4 WITHHOLDING. The Company or a Subsidiary, as appropriate, shall have the right to deduct from all Incentive Awards paid in cash any federal, state, or local taxes as required by law to be withheld with respect to such cash payments. In the case of Incentive Awards paid in Common Stock, the Participant or other person receiving such Common Stock may be required to pay to the Company or a Subsidiary, as appropriate, the amount of any such taxes which the Company or Subsidiary is required to withhold with respect to such Common Stock. Also, at the discretion of the Committee and provided such withholding can be effected without causing the participant to incur liability under Section 16(b) of the Exchange Act, the Participant may (i) direct the Company or Subsidiary to withhold from the shares of Common Stock to be issued or transferred to the Participant the number of shares necessary to satisfy the Company's or Subsidiary's obligation to withhold taxes, such determination to be based on the shares' Fair Market Value as of the date on which tax withholding is to be made, (ii) deliver sufficient shares of Common Stock (based upon the Fair Market Value at the date of withholding) to satisfy the withholding obligations, or (iii) deliver sufficient cash to satisfy the withholding obligations. Participants who elect to use such a stock withholding feature must make the election at the time and in the manner prescribed by the Committee. 14.5 NO DISPOSITION. No Incentive Award and no right under this Plan, contingent or otherwise, may be the subject of any Disposition (excluding shares of Common Stock with respect to which all restrictions have lapsed), other than by will or the laws of descent or distribution or pursuant to a qualified domestic relations order as defined by the Code or Title T of the Employee Retirement Income Security Act, or the rules thereunder. Any attempted Disposition in violation of this provision shall be void and ineffective for all purposes. 13 14.6 SEVERABILITY; CONSTRUCTION. If any provision of this Plan is held to be illegal or invalid for any reason, then the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and this Plan shall be construed and enforced as if the illegal or invalid provision had never been included herein. Headings and subheadings are for convenience only and not to be conclusive with respect to construction of this Plan. 14.7 GOVERNING LAW. All questions arising with respect to the provisions of this Plan shall be determined by application of the laws of the State of Delaware, except as may be required by applicable federal law. 14.8 OTHER DEFERRALS. The Committee may permit selected Participants to elect to defer payment of Incentive Awards other than Deferred Compensation Stock Options in accordance with procedures established by the Committee including, without limitation, procedures intended to defer taxation on such deferrals until receipt (including procedures designed to avoid incurrence of liability under Section 16(b) of the Exchange Act). Any deferred payment, whether elected by the Participant or specified by an Agreement or by the Committee may require forfeiture in accordance with stated events, as determined by the Committee. The Committee may also establish rules and procedures for crediting interest on deferred cash payments and Dividend Equivalents for deferred payments denominated in Common Stock or units based on Common Stock values. ARTICLE XV AMENDMENT AND TERMINATION 15.1 AMENDMENTS; SUSPENSION; TERMINATION. The Board may at any time amend, suspend (and if suspended, may reinstate) or terminate this Plan; provided, however, that after the stockholders have approved this Plan in accordance with Section 16.1, the Board may not, without approval of the stockholders of the Company, amend this Plan so as to (a) increase the number of shares of Common Stock subject to this Plan except as permitted in Article XIII, (b) reduce the option price for shares of Common Stock covered by Stock Options granted hereunder below the applicable price specified in Section 5.2 or Article VI or VII of this Plan or (c) accelerate the date when Incentive Awards can first be granted under this Plan as provided in Section 16.2; and provided further, that the Board may not modify, impair or cancel any outstanding Incentive Award without the consent of the affected Participant. ARTICLE XVI DATE OF PLAN ADOPTION AND EFFECTIVE DATE FOR INCENTIVE AWARDS 16.1 DATE OF PLAN ADOPTION. This Plan has been adopted by the Board on February 7, 1991, subject to stockholder approval. If the requisite stockholder approval is not obtained, then the Plan shall become null and void and of no further force or effect. This Plan shall continue in effect with respect to Incentive Awards granted before termination of this Plan and until such Incentive Awards have been settled, terminated or forfeited. 16.2 EFFECTIVE DATE FOR INCENTIVE AWARDS. Notwithstanding anything contained in this Plan to the contrary, no Incentive Award shall be granted under this Plan prior to January 1, 1992. 14 EX-10.14 4 EXHIBIT 10.14 EXHIBIT 10.14 ORYX ENERGY COMPANY AMENDED AND RESTATED SPECIAL EXECUTIVE SEVERANCE PLAN September 1, 1994 ORYX ENERGY COMPANY SPECIAL EXECUTIVE SEVERANCE PLAN This Special Executive Severance Plan (the "Plan") provides severance benefits to designated executive officers in the event of termination of their employment after certain corporate changes defined herein ("Corporate Changes") to Oryx Energy Company (the "Company"). The purpose of the Plan is to protect the Company and its shareholders by relieving these executives of the personal concern over financial security that often develops as a result of Corporate Changes. Thus, the Plan is intended to minimize distractions from operating responsibilities, lessen defections to other companies, create a more positive business environment, and permit the executives to act in the best interests of the Company and its shareholders and with impartiality. The Compensation Committee of the Board of Directors (the "Compensation Committee") hereby grants to the Chief Executive Officer the authority to designate those officers who will participate in the Plan, provided, however, that the Chief Executive Officer may not designate himself as a participant in the Plan. Benefits under the Plan will be provided to the designated officers through individual Executive Severance Agreements ("Agreements"). The Compensation Committee hereby delegates to the Chief Executive Officer the authority to approve on behalf of the -1- Corporation Agreements containing the following terms, and thereafter to extend or terminate such Agreements. 1. TYPE OF AGREEMENT: The agreement shall provide for the benefits specified herein to be paid or made available to the officer upon termination of employment with the Company within 2 years of a Corporate Change. The officer shall not be entitled to benefits under the Plan if such termination is due to the officer's death, disability or discharge by the Company for JUST CAUSE. However, if termination is due to the officer's death or disability, the officer shall be entitled to all benefits under the provisions of the Company's employee and executive benefit and compensation plans in which the officer is a participant just prior to the Corporate Change or of those programs in existence at the time of death or disability, whichever is more favorable to the officer. The officer shall be entitled to the benefits under the Plan upon the officer's voluntary termination of employment (including the officer's election to take early retirement under the Oryx Energy Company Retirement Plan) if such termination is the result of a determination by the officer that, as a result of the Corporate Change, the -2- officer is unable to effectively discharge the officer's present duties or the duties of the position which the officer occupied just prior to the Corporate Change. 2. TERM OF AGREEMENT: The initial term of the Agreements shall be for a period of 2 years from the date thereof. Such term shall automatically be extended for successive 2-year periods unless written notice of termination of the Agreement is provided to the officer by the Company one year prior to the expiration of any 2-year period. 3. CORPORATE CHANGE: A "Corporate Change" shall be deemed to have occurred for the purposes of this Plan upon (i) the dissolution or liquidation of the Company; (ii) a reorganization, merger, or consolidation of the Company with one or more corporations (other than a merger or consolidation effecting a reincorporation of the Company in another state or any other merger or consolidation in which the shareholders of the surviving corporation and their proportionate interests therein immediately after the merger or consolidation are substantially identical to the shareholders of the Company and their proportionate interests therein immediately prior to the merger or consolidation); (iii) the sale of all or -3- substantially all of the assets of the Company; or (iv) the occurrence of a Change in Control. A "Change in Control" shall be deemed to have occurred for purposes of this Plan if (a) individuals who were directors of the Company immediately prior to a "Control Transaction" shall cease, within two years of such Control Transaction, to constitute a majority of the Board of Directors of the Company (or of the Board of Directors of any successor to the Company or to a company which has acquired all or substantially all of its assets) or (b) any entity, person or "Group" acquires shares of the Company in a transaction or series of transactions that result in such entity, person or Group directly or indirectly owning beneficially 50% or more of the outstanding shares of Common Stock of the Company. As used herein, "Control Transaction" shall be (a) any tender offer for or acquisition of capital stock of the Company, (b) any merger, consolidation, or sale of all or substantially all of the assets of the Company, (c) any contested election of directors of the Company, or (d) any combination of the foregoing, any one of which results in a change in voting power sufficient to elect a majority of the Board of Directors of the Company. -4- As used herein, "Group" shall mean persons who act "in concert" as described in Sections 13(d)(3) and/or 14(d)(2) of the Securities Exchange Act of 1934, as amended. 4. BENEFITS: (a) SEVERANCE COMPENSATION: The officer shall be entitled to severance compensation in an amount equal to the officer's Final Annual Compensation multiplied by the lesser of 3 years or the number of full and fractional years remaining until the officer reaches age 65. "Final Annual Compensation" shall be the sum of (1) the final annualized base salary of the officer, and (2) the product of such base salary multiplied by the guideline target incentive (bonus) percentage, all as applicable to the officer in the salary administration program in effect either just prior to the Corporate Change or at the time of termination of employment, whichever is more favorable to the officer. The severance compensation paid hereunder shall not be reduced to the extent of any other compensation which the officer receives or is entitled to receive from any other employment. The severance compensation shall be payable in cash from the general assets of the Company and the Company shall be -5- under no obligation to segregate any assets in connection with the payment of any such amounts. (b) EMPLOYEE AND EXECUTIVE BENEFITS: The officer shall be entitled to all benefits under the provisions either of the Company's employee and executive benefit plans in which the officer is a participant just prior to the Corporate Change, including but not limited to the Executive Retirement Plan and the Pension Restoration Plan, or of those plans in existence at the time of termination of employment, whichever are more favorable to the officer, in accordance with the terms and conditions of said plans and said benefits shall be paid under said plans and not under this Plan. In addition, for officers who are less than retirement age on the date of termination of employment with the Company, the Company will continue for six months after the date of such termination, at the Company's expense, long-term disability benefits, medical and dental insurance, and group term life insurance as is then in effect under the Company's employee and executive benefit plans. -6- (c) MISCELLANEOUS BENEFITS: Employment assistance will be made available to the officer if the officer so desires. (d) APPLICATION OF SECTION 280G OF THE INTERNAL REVENUE CODE: (1) Any other provision of this Plan to the contrary notwithstanding, if the present value (as defined herein) of the total amount of payments and benefits to be paid or provided to the officer under the Plan which are considered to be "parachute payments" within the meaning of Section 280G(b) of the Internal Revenue Code of 1986, as amended (the "Code"), when added to any other such "parachute payments" received by the officer from the Company upon or after a Corporate Change, whether or not under this Plan, is in excess of the amount the officer can receive without causing the officer to be subject to an excise tax with respect to such amount on account of Code Section 4999, the Company shall pay to the officer an additional amount (hereinafter referred to as the "Excise Tax Premium"). The Excise Tax Premium shall be equal to the excise tax determined under Code Sections 280G and 4999 attributable to the total amount of payments and benefits to be -7- paid or provided to the officer under this Plan and any other "parachute payments" received by the officer from the Company upon or after a Corporate Change. The excise Tax Premium shall include any amount attributable to excise tax on the Excise Tax Premium. The Company shall also pay to the officer an additional amount hereinafter referred to as the "Income Tax Premium" equal to all Federal, State and local income taxes incurred because of the Excise Tax Premiums. The officer shall be deemed to pay income taxes on the date of termination of employment at the highest marginal rate of income taxation in effect in the officer's taxing jurisdiction. The Income Tax Premium shall include any amount attributable to income tax on the Income Tax Premium. (2) Not later than 30 days following the officer's termination of employment as provided herein, the independent public accountants acting as auditors for the Company on the date of the Corporate Change (or another accounting firm designated by the Company) shall determine whether the sum of the present value of any "parachute payments" payable -8- under the Plan and the present value of any other "parachute payments" received by the officer from the Company upon or after a Corporate Change in excess of the amount the officer can receive without causing the officer to be subject to an excise tax with respect to such amount on account of Code Section 4999, and shall determine the amount of any Excise Tax Premium and Income Tax Premium payable to the officer. The Excise Tax Premium and Income Tax Premium shall be paid to the officer as soon as practicable but in no event later than 35 days following the officer's termination of employment and shall be net of any amounts required to be withheld for taxes. (3) For purposes of this Section (d), "present value" means the value determined in accordance with the principles of Section 127(b)(2) of the Code under the rules provided in Treasury Regulations under Section 280G of the Code. (4) References to Code Section 280G herein are specific references to Section 280G as added to the Code by the Tax Reform Act of 1984 and as amended by the -9- Tax Reform Act of 1986. To the extent Code Section 280G is again amended prior to the termination of the Plan or the expiration or termination of the Executive Severance Agreement, or is replaced by a successor statute, the provisions of this Section (d) shall be deemed modified without further action of the parties in a manner consistent with such amendments or successor statutes, as the case may be. In the event that Code Section 280G or any successor statute is repealed, this Section (d) shall cease to be effective on the effective date of such repeal. The parties recognize that Treasury Regulations under Code Sections 280G and 4999 may affect the amount that may be paid hereunder and agree that, upon the issuance of any such regulations, this Plan and the Executive Severance Agreement may be modified as in good faith may be deemed necessary in light of the provisions of such regulations to achieve the purposes hereof, and that consent to such modifications shall not be unreasonably withheld. -10- 5. FORM OF PAYMENT OF SEVERANCE COMPENSATION. (a) The severance compensation will be payable in the form of 36 consecutive monthly payments, commencing the first day of the month following the month during which termination of the officer's employment occurred. (b) If the officer has not yet reached retirement age on the date of termination, he may use a portion of the severance compensation to purchase life insurance in an amount equal to his final annualized base salary. The costs of such insurance to the officer will be one percent of his final annualized base salary multiplied by the full and fractional years remaining until retirement age. After the officer has reached retirement age, the cost of providing such insurance will be paid by the Company. 6. CLAIMS: Any claims for benefits hereunder shall be made in writing to the Compensation Committee. -11- 7. LEGAL FEES: The Company shall pay all legal fees and expenses which the officer may incur as a result of the Company's contesting the validity or enforceability of the Agreement. -12- EX-10.17A 5 EXHIBIT 10.17A EXHIBIT 10.17a SIXTH AMENDMENT TO THE ORYX ENERGY COMPANY CAPITAL ACCUMULATION PLAN WHEREAS, the Oryx Energy Company Capital Accumulation Plan (the "Plan") was amended and restated to be generally effective as of January 1, 1993; and WHEREAS, the sponsor of the Plan, Oryx Energy Company (the "Company"), desires to further amend certain provisions of the Plan. NOW, THEREFORE, pursuant to the powers reserved to the sponsor, the Company, in Article XV of the Plan, the Plan is hereby amended, generally effective as of January 1, 1995 (except as otherwise provided below), as follows: I. Article IV of the Plan is hereby amended as follows: Section 4.01 of the Plan is hereby amended as follows, effective January 1, 1995: 4.01 COMPANY CONTRIBUTIONS. Each Plan Year, each Employer shall make a contribution (the "Company Contribution") to the Trust. Subject to Sections 4.07, 5.02 and 5.05 below, each Employer's Company Contribution shall consist of (i) the Basic Matching Contributions attributable to its Employees, (ii) any amount the company contributes pursuant to Section 4.06(6) or 4.07(6) below, and (iii) any additional Matching Contribution designated by the Compensation Committee, in its discretion. All Company Contributions are conditioned on their deductibility under Code Section 404(a), unless the Compensation Committee specifically provides otherwise. Company Contributions may be made in cash or in the form of shares of Company Stock. Company Contributions shall be deemed made to enable the Plan to meet its obligations under Exempt Loans only if so designated by the Compensation Committee." II. Article V of the Plan is hereby amended as follows: Section 5.01 of the Plan is hereby amended by adding the following new sentence after the second sentence of Section 5.01: "Any additional, discretionary Matching Contributions made pursuant to clause (iii) of Section 4.01 shall be allocated on a matching basis as a uniform percentage of each Participant's Basic Contributions hereunder, subject to Sections 4.06, 4.07, 5.03 and 5.04 hereof." III. Article VII of the Plan is hereby amended by revising Section 7.03 to read as follows, effective August 1, 1995: "7.03 DIVERSIFICATION OF PARTICIPANT'S ACCOUNT. This Section shall apply to the extent a Participant's interest in Company Contributions made on or after August 1, 1989 has been credited to the Oryx Energy Company Stock Fund ("Eligible Assets"). At any time during a Plan Year, a Participant may elect to direct the investment of twenty-five percent (25%) of the Eligible Assets in his Account (measured in shares of Company Stock as of the first day of such Plan Year). To the extent a Participant makes an election under this Section, the portion of the Eligible Assets in the Participant's Account that is subject to the election shall be reinvested in accordance with the Participant's directions pursuant to Section 6.05 above." Section 7.05 of the Plan is hereby amended effective August 1, 1995 to read as follows: "7.05 SPECIAL ESOP GUARANTY. This Section applies solely to the extent the portion of a Participant's Company Contribution Account attributable to Company Contributions made on or after August 1, 1989, and before January 1, 1995 is either (i) distributed on or before July 31, 1995, or (ii) transferred on or before July 31, 1995, to another Fund following the Participant's retirement, death, Disability or other Termination of Employment (either type of occurrence is hereinafter referred to as a "Guaranteed Distribution"). If the value of the Guaranteed Distribution payable to a Participant from the Trust Fund is less than the Participant's Cumulative Match, the Participant's Employer shall pay the Participant, as of the date of distribution or transfer of his interest in the Company Stock Fund, a single cash payment equal to (a) the Participant's Cumulative Match, less (b) the amount actually distributable to the Participant from the Company Stock Fund attributable to Company Contributions made on or after August 1, 1989, and prior to January 1, 1995. "Cumulative Match" means the sum of the cash Basic Matching Contributions allocated to the Participant with respect to the period from August 1, 1989, through December 31, 1994 without any adjustment for earnings, gain, loss, depreciation or appreciation." IV. The Fourth Amendment to the Oryx Energy Company Capital Accumulation Plan, executed on July 5, 1994, is hereby amended by rescinding certain provisions which were to have taken effect upon the extinguishment of the Plan's existing exempt loan, so that the Preamble and Articles I-IX of the Fourth Amendment shall read as follows: "FOURTH AMENDMENT TO THE ORYX ENERGY COMPANY CAPITAL ACCUMULATION PLAN WHEREAS, ORYX ENERGY COMPANY (THE "COMPANY") ESTABLISHED THE ORYX ENERGY COMPANY CAPITAL ACCUMULATION PLAN, EFFECTIVE AS OF NOVEMBER 1, 1988 (THE "PLAN"), AND LAST AMENDED AND RESTATED SUCH PLAN EFFECTIVE AS OF JANUARY 1, 1993; AND THE PLAN WAS FURTHER AMENDED BY FIRST, SECOND AND THIRD AMENDMENTS; AND WHEREAS, THE COMPANY DESIRES TO FURTHER AMEND THE PLAN; ON JUNE 29, 1993, AND AUGUST 31, 1993, THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF THE COMPANY, ACTING PURSUANT TO AUTHORITY DELEGATED BY THE BOARD, APPROVED CERTAIN AMENDMENTS TO THE PLAN. NOW, THEREFORE, PURSUANT TO THE POWERS RESERVED IN ARTICLE XV OF THE PLAN, THE COMPANY HEREBY AMENDS THE PLAN, EFFECTIVE AS OF JANUARY 1, 1994 (EXCEPT AS OTHERWISE PROVIDED BELOW), AS FOLLOWS. NO AMENDMENT DIRECTLY AFFECTING THE PAYSOP SUBACCOUNTS (AS DEFINED IN THE PLAN), INCLUDING THEIR QUALIFICATION UNDER IRC SECTION 409(a), SHALL TAKE EFFECT UNTIL THE LATER OF: (i) JANUARY 1, 1994 (WHICH IS 84 MONTHS AFTER THE EFFECTIVE DATE OF THE LAST ALLOCATION OF EMPLOYER SECURITIES TO THE PAYSOP SUBACCOUNTS), OR (ii) AS SOON AS PRACTICABLE AFTER ISSUANCE OF A FAVORABLE IRS DETERMINATION LETTER WITH RESPECT TO THIS AMENDMENT. I. ARTICLE I OF THE PLAN IS HEREBY AMENDED BY ADDING THE FOLLOWING NEW LANGUAGE AT THE END OF SECTION 1.02: PROVIDED, HOWEVER, THAT EFFECTIVE JANUARY 1, 1994, OR, IF LATER, AS SOON AS PRACTICABLE AFTER RECEIPT OF A FAVORABLE DETERMINATION LETTER FROM THE INTERNAL REVENUE SERVICE WITH RESPECT TO THIS AMENDMENT, THE PAYSOP SUBACCOUNTS PORTION OF THE PLAN SHALL NO LONGER BE INTENDED TO QUALIFY UNDER CODE SECTION 409 AND THE PAYSOP SUBACCOUNTS SHALL EITHER BE DISTRIBUTED TO PARTICIPANTS, AT THEIR OPTION, OR REMAIN IN THE PLAN UNDER THE SAME TERMS AND CONDITIONS APPLICABLE TO OTHER COMPANY CONTRIBUTIONS MADE PRIOR TO AUGUST 1, 1989. II. ARTICLE II OF THE PLAN IS AMENDED AS FOLLOWS: SECTION 2.22 OF THE PLAN IS HEREBY AMENDED TO READ AS FOLLOWS: 2.22 "FUNDS" MEANS THE FUNDS IN WHICH PARTICIPANTS' ACCOUNTS ARE INVESTED HEREUNDER, CONSISTING OF THE COMPANY STOCK FUND AND THE OTHER FUNDS PROVIDED FOR IN SUBSECTION 6.05(1). SECTIONS 2.25 AND 2.42 OF THE PLAN ARE DELETED IN THEIR ENTIRETY AND THE REMAINING SECTIONS OF THE PLAN ARE RENUMBERED ACCORDINGLY. SECTION 2.50 OF THE PLAN IS HEREBY AMENDED BY DELETING THE FOLLOWING DEFINED TERMS: "FUND A", "FUND B", AND "FUND C" SUBSECTION 6.05(1)(a) "FUND ESOP" SUBSECTION 6.05(1)(c) "FUND L" SUBSECTION 6.05(1)(d) "SUPPLEMENTAL CONTRIBUTION" SECTION 4.01 SECTION 2.27 OF THE PLAN IS HEREBY AMENDED TO READ AS FOLLOWS, EFFECTIVE AS OF THE LATER OF JANUARY 1, 1994 OR THE DATE OF A FAVORABLE INTERNAL REVENUE SERVICE DETERMINATION LETTER WITH RESPECT TO THIS AMENDMENT: "2.27 "PAYSOP SUBACCOUNT" MEANS THE PORTION OF A PARTICIPANT'S COMPANY CONTRIBUTION ACCOUNT ATTRIBUTABLE TO PAYROLL STOCK OWNERSHIP PLAN CONTRIBUTIONS UNDER THE PREDECESSOR PLAN." III. ARTICLE IV OF THE PLAN IS HEREBY AMENDED AS FOLLOWS: SECTION 4.02 IS AMENDED BY DELETING THE SECOND SENTENCE THEREFROM AND REVISING THE THIRD SENTENCE THEREOF TO READ AS FOLLOWS: SUCH BASIC MATCHING CONTRIBUTIONS SHALL BE ALLOCATED TO THE COMPANY CONTRIBUTION ACCOUNT OF EACH PARTICIPANT WHOSE BASIC CONTRIBUTIONS WERE SO MATCHED. SECTION 4.07 OF THE PLAN IS HEREBY AMENDED BY REVISING THE SECOND SENTENCE THEREOF TO READ AS FOLLOWS: THE LIMITATIONS OF CODE SECTION 401(m) SHALL BE APPLIED SEPARATELY TO THE EMPLOYEE STOCK OWNERSHIP ("ESOP") PORTION OF THE PLAN (CONSISTING OF ALL COMPANY CONTRIBUTIONS MADE AFTER AUGUST 1, 1989, OTHER THAN CONTRIBUTIONS PURSUANT TO SECTIONS 4.06(6) OR 4.07(6) [UNLESS SPECIFICALLY DESIGNATED AS ESOP CONTRIBUTIONS]). IV. ARTICLE V OF THE PLAN IS HEREBY AMENDED, EFFECTIVE JANUARY 2, 1995, AS FOLLOWS: THE FIRST SENTENCE OF SECTION 5.01 IS AMENDED BY INSERTING THE WORD "BASIC" BEFORE THE WORDS "MATCHING CONTRIBUTION." THE THIRD AND FOURTH SENTENCES OF SECTION 5.01 ARE DELETED. THE FIFTH SENTENCE OF SECTION 5.01 IS REVISED BY CHANGING THE TERM "FUND L" TO "THE ORYX ENERGY COMPANY STOCK FUND." V. ARTICLE VI OF THE PLAN IS HEREBY AMENDED AS FOLLOWS, EFFECTIVE JANUARY 1, 1994, OR, IF LATER, UPON ISSUANCE OF A FAVORABLE IRS DETERMINATION LETTER WITH RESPECT TO THIS AMENDMENT (EXCEPT AS OTHERWISE PROVIDED BELOW): THE FOURTH SENTENCE OF SECTION 6.01 IS HEREBY AMENDED BY DELETING THE WORDS "PAYSOP SUBACCOUNT" AND SUBSTITUTING THEREFOR THE WORDS: "COMPANY CONTRIBUTIONS MADE PRIOR TO AUGUST 1, 1989." SUBSECTION 6.04(2)(a) OF THE PLAN IS HEREBY AMENDED TO READ AS FOLLOWS: "(a) DIVIDENDS RECEIVED ON ANY SHARES OF COMPANY STOCK THAT ARE CREDITED TO A PARTICIPANT'S ACCOUNT SHALL BE ALLOCATED TO SUCH ACCOUNT AND SHALL BE REINVESTED, TO THE EXTENT PRACTICABLE, IN ADDITIONAL SHARES OF COMPANY STOCK." SUBSECTION 6.05(1) IS HEREBY AMENDED BY DELETING SUBPARAGRAPHS (b), (c) AND (d) AND SUBSTITUTING THE FOLLOWING THEREFOR: "(b) "THE ORYX ENERGY COMPANY STOCK FUND" IS INVESTED TO THE EXTENT PRACTICABLE IN SHARES OF COMPANY STOCK." VI. ARTICLE VIII OF THE PLAN IS HEREBY AMENDED, EFFECTIVE JANUARY 1, 1994, OR, IF LATER, UPON RECEIPT OF A FAVORABLE IRS DETERMINATION LETTER WITH RESPECT TO THIS AMENDMENT, AS FOLLOWS: SECTION 8.01 IS HEREBY AMENDED BY DELETING FROM THE END OF THE FIRST SENTENCE THE PHRASE: "EXCLUDING HIS PAYSOP SUBACCOUNT"; DELETING THE SECOND SENTENCE THEREFROM; AND BY DELETING FROM THE THIRD SENTENCE THEREOF THE PHRASE", IN SECTION 6.04(2)(a) (REGARDING DIVIDEND DISTRIBUTIONS)." SECTION 8.02 IS HEREBY AMENDED BY DELETING FROM THE SECOND SENTENCE THEREOF THE PHRASE "FUND D AND FUND ESOP" AND SUBSTITUTING THE PHRASE "THE ORYX ENERGY COMPANY STOCK FUND", AND BY CHANGING THE REFERENCE TO "FUND D" IN THE PARENTHETICAL PHRASE TO "THE ORYX ENERGY COMPANY STOCK FUND." VII. ARTICLE XI OF THE PLAN IS HEREBY AMENDED AS FOLLOWS: SUBSECTION 11.02(9) IS HEREBY AMENDED TO READ AS FOLLOWS: 11.02(9) IN THE EVENT A PARTICIPANT ELECTS A DEFERRED DISTRIBUTION, HE MAY DIRECT THE INVESTMENT OF HIS INTEREST IN COMPANY CONTRIBUTIONS MADE ON OR AFTER AUGUST 1, 1989, AMONG THE FUNDS PURSUANT TO SUBSECTION 6.05(3). SECTION 11.05 IS HEREBY AMENDED BY DELETING SUBSECTION (f) THEREFROM, AND BY ADDING THE FOLLOWING LANGUAGE AT THE END OF SECTION 11.05: NOTWITHSTANDING THE FOREGOING, EFFECTIVE JANUARY 1, 1994 (WHICH IS MORE THAN 84 MONTHS LATER THAN THE LAST DATE OF ANY ALLOCATION OF COMPANY STOCK TO ANY PARTICIPANT'S PAYSOP SUBACCOUNT), OR, IF LATER, UPON ISSUANCE OF A FAVORABLE DETERMINATION LETTER BY THE INTERNAL REVENUE SERVICE WITH RESPECT TO THIS AMENDMENT, EACH PARTICIPANT SHALL HAVE AN OPTION TO WITHDRAW HIS PAYSOP SUBACCOUNT. ANY PARTICIPANT'S PAYSOP SUBACCOUNT THAT IS NOT SO WITHDRAWN SHALL BE REALLOCATED AND REINVESTED AMONG THE FUNDS AT THE PARTICIPANT'S DIRECTION, AND SHALL REMAIN FULLY VESTED. VIII. ARTICLE XIII OF THE PLAN IS HEREBY AMENDED AS FOLLOWS: THE THIRD SENTENCE OF SECTION 13.16 IS REVISED TO READ AS FOLLOWS: THE ORYX ENERGY COMPANY STOCK FUND IS DESIGNED TO INVEST PRIMARILY IN COMPANY STOCK, WHICH IS A QUALIFYING EMPLOYER SECURITY WITHIN THE MEANING OF ERISA SECTION 407(d)(5). A PORTION OF THE ORYX ENERGY COMPANY STOCK FUND MAY BE MAINTAINED IN CASH OR SHORT-TERM INVESTMENTS TO MEET LIQUIDITY NEEDS OR FOR OTHER REASONS, AS THE BENEFIT PLANS INVESTMENT COMMITTEE DIRECTS. V. Except as amended by this instrument, the Plan, as previously amended, shall remain in full force and effect. IN WITNESS WHEREOF, the Company has caused this instrument to be executed this 8th day of December, 1994. ORYX ENERGY COMPANY BY: /s/ William P. Stokes, Jr. ----------------------------- William P. Stokes, Jr. Vice President, Corporate Development and Human Relations ATTEST: By: /s/ Frank B. Sweeney ----------------------- Title: Corporate Secretary EX-12 6 EXHIBIT 12 EXHIBIT 12 ORYX ENERGY COMPANY COMPUTATIONS OF CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS -- UNAUDITED (A) (MILLIONS OF DOLLARS)
YEAR ENDED DECEMBER 31 ----------------------------------------------------- 1994 1993 1992 1991 1990 --------- --------- --------- --------- --------- RATIO OF EARNINGS TO FIXED CHARGES: Fixed Charges: Consolidated interest cost and debt expense........................ $ 162 $ 163 $ 187 $ 217 $ 241 Interest allocable to rental expense (b)........................... 13 11 11 13 10 --------- --------- --------- --------- --------- Total............................................................ $ 175 $ 174 $ 198 $ 230 $ 251 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Earnings: Consolidated income (loss) before provision (credit) for income taxes............................................................. $ (100) $ (108) $ (4) $ (52) $ 327 Fixed charges...................................................... 175 174 198 230 251 Interest capitalized............................................... (11) (46) (43) (26) (13) Amortization of previously capitalized interest.................... 14 7 3 3 3 --------- --------- --------- --------- --------- Total............................................................ $ 78 $ 27 $ 154 $ 155 $ 568 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Ratio of Earnings to Fixed Charges (c)............................... .45 .16 .78 .67 2.26 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS: Fixed Charges: Consolidated interest cost and debt expense........................ $ 162 $ 163 $ 187 $ 217 $ 241 Preferred stock dividend requirements (d).......................... 2 8 14 20 10 Interest allocable to rental expense (b)........................... 13 11 11 13 10 --------- --------- --------- --------- --------- Total............................................................ $ 177 $ 182 $ 212 $ 250 $ 261 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Earnings: Consolidated income (loss) before provision (credit) for income taxes............................................................. $ (100) $ (108) $ (4) $ (52) $ 327 Fixed charges...................................................... 177 182 212 250 261 Interest capitalized............................................... (11) (46) (43) (26) (13) Amortization of previously capitalized interest.................... 14 7 3 3 3 --------- --------- --------- --------- --------- Total............................................................ $ 80 $ 35 $ 168 $ 175 $ 578 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Ratio of Earnings to Fixed Charges (c)............................... .45 .19 .79 .70 2.21 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ------------------------ (a) The consolidated financial statements of Oryx Energy Company include the accounts of all subsidiaries (more than 50 percent owned and/or controlled). (b) Represents one-third of total operating lease rental expense which is that portion deemed to be interest. (c) Earnings for 1994 were inadequate to cover fixed charges, or fixed charges and preferred stock dividend requirements by $97 million. Earnings for 1993 were inadequate to cover fixed charges, or fixed charges and preferred stock dividend requirements by $147 million. Earnings for 1992 were inadequate to cover fixed charges, or fixed charges and preferred stock dividend requirements by $44 million.
EX-13 7 ANNUAL REPORT RESULTS OF OPERATIONS Management's discussion and analysis of the Company's financial position and results of operations follows. This discussion should be read in conjunction with the charts, graphs, Consolidated Financial Statements and Selected Financial Data included in this report. BUSINESS CLIMATE The fundamentals in worldwide oil markets continue to reflect an excess of supply over demand. The Company's realized oil price in 1994 fell by $1.02 to $15.06 per barrel, or 6 percent less than the 1993 price. The decline in 1994 followed a 14 percent decline in 1993 compared to 1992. Prices in early 1995 approximate the levels realized in the fourth quarter of 1994. As a result of unseasonable weather, U.S. natural gas supplies have exceeded demand, causing higher storage levels and depressed prices. The Company's realized U.S. gas price in 1994 fell by $.09 to $1.87 per mcf or 5 percent lower than the 1993 price. Natural gas prices remain depressed in early 1995. The Company produced 81 mmeb in 1994, 55 percent crude and 45 percent natural gas. The company expects to produce 75 mmeb in 1995, depending on the timing of asset sales. In January 1995, the Company announced its new corporate direction which includes a plan to refocus its strategic direction, reduce debt by approximately $400 million by the end of 1995, reposition assets to a base level where growth is more reasonably assured and restore profitability through the lowering of costs at all levels. LIQUIDITY AND CAPITAL RESOURCES ED&A OUTLAYS Total ED&A outlays differ from capital expenditures in that they exclude capitalized interest but include cash exploration costs. ED&A outlays were $314 million in 1994, compared to $451 million in 1993 and $390 million in 1992. In 1994, about 30 percent of the Company's total ED&A spending was on exploration and about 70 percent went for development. In 1995, 12 total ED&A outlays are expected to be $340 million of which about 80 percent is targeted for development and 20 percent for exploration, primarily in the U.S. Finding, development and acquisition costs per eb were $4.76 in 1994. The average FD&A cost for the five years 1990 through 1994 was $4.62 per eb. In 1994, the Company replaced 80 percent of its production. For the five years 1990 through 1994, the Company's average production replacement rate was 152 percent. The Company's spending levels will be governed by its cash flow from operating activities, which will continue to be affected by prevailing oil and gas prices, cost levels and production volumes. The Company is basing its 1995 spending plans on oil and gas spot prices averaging $18.50 per barrel (WTI) and $1.80 per mmbtu (HH). These assumptions are subject to change, along with the associated spending levels. The Gulf of Mexico will become the centerpiece of the Company's investment strategy, supplemented by a measured and focused international program. In 1994, the Company exchanged its interest in the undeveloped U.K. Britannia field for a doubling of its interests in the U.K. Hutton, Lyell and Murchison producing fields and $40.4 million in cash. This transaction increased near-term production volumes and considerably reduced future development expenditures. Effective January 9, 1995, the Company took over operatorship of the Hutton, Lyell and Murchison fields. Capital expenditures in 1993 included $33 million to acquire an additional interest in the U.K. Ninian field. CASH FLOW In 1994, the Company generated net proceeds from divestments of $78 million, as compared to $46 million in 1993 and $272 million in 1992. In the fourth quarter of 1993, the Company's $200 million of 9.85 percent notes matured and were refinanced with medium term notes. In addition, the Company repurchased in the open market approximately $78 million principal amount of its 10 3/8 percent debentures and incurred a $7 million extraordinary loss. The Company's total debt was $1,711 million at December 31, 1994, compared to $1,769 million at December 31, 1993. GENERAL Cash was $10 million at the end of 1994 and 1993. The Company has a revolving credit facility (Revolver) of $620 million. The Company's current borrowing capacity is more than adequate to meet its needs under existing economic conditions. Moreover, the Revolver is available to support the outstanding commercial paper program, potential refinancing needs and general liquidity. The Company plans in 1995 to further reduce its debt by $400 million. The debt reduction will be achieved from discretionary cash flow and from the sale of certain assets. The actual level of debt reduction will depend in part on the amount and timing of proceeds from asset sales. During 1994, Standard & Poor's downgraded the Company's senior unsecured debt from BBB- to BB, subordinated debt from BB+ to B+ and commercial paper from A-3 to B. 13 Subsequently, the holders of the Company's senior ESOP notes (approximately $100 million principal outstanding) exercised their right to require the Company to repay the notes in full plus a makewhole premium (see Note 11 to the Consolidated Financial Statements). The Company recognized a $12 million extraordinary loss associated with the notes, which have been repaid in full subsequent to year-end. Any shortfall in expected cash flow from operating activities may require adjustment of business plans. Among its options, the Company can defer discretionary ED&A outlays, draw against the unused portion of the Revolver, seek additional bank borrowings or seek access to capital markets. The Company is in compliance with all the covenants in its Revolver and expects to remain in compliance under existing conditions. Management intends to replace the Revolver prior to its expiration in September 1995. The ability to incur additional indebtedness as well as the long-term cash generation capability is ultimately tied to the value of the Company's proved reserve base. In 1992, the amount of the quarterly dividend on common stock was reduced from $.30 per share to $.10 per share. In 1994, the Board of Directors suspended the remaining dividend. FINANCIAL PERFORMANCE The net loss for 1994 was $1,025 million, which included a $948 million cumulative effect of an accounting change (see Note 7 to the Consolidated Financial Statements), $12 million extraordinary item related to early extinguishment of debt (see Note 11 to the Consolidated Financial Statements) and a $59 million restructuring charge. Production volumes increased by 4 million equivalent barrels or 5 percent primarily from the U.K. North Sea. Depreciation, depletion and amortization expense declined by $124 million or 31 percent because of the accounting change which decreased the Company's producing property balance by $1,355 million. (See Note 9 to the Consolidated Financial Statements.) General and administrative expense decreased by 20 percent primarily because of fewer employees and capitalized interest decreased by 76 percent because of the completion of North Sea development projects. Total costs and expenses decreased $82 million or 7 percent to $1,080 million in 1994 from $1,162 million in 1993, excluding the provision for restructuring. The net loss for 1993 was $100 million which included tax-related charges of $16 million including the recognition of a higher U.S. corporate tax rate, $5 million of losses on asset disposals and a $7 million extraordinary loss related to early debt retirement. Production volumes fell by 10 percent due primarily to asset sales and normal declines. Total costs and expenses decreased $157 million or 12 percent to $1,162 million in 1993 from $1,319 million in 1992, excluding the provisions for restructuring and relinquishment of non-producing properties. 14 Net income for 1992 was $14 million, including $19 million from asset disposals and a restructuring charge of $9 million. Excluding special charges, total costs and expenses fell by $263 million, or 17 percent. However, this was largely offset by the impacts of lower production volumes and oil prices. Relative to 1991, volumes fell by about 10 percent due to asset sales and normal declines. Oil prices were more than $2.00 per barrel lower than 1991 levels, while U.S. natural gas prices were higher by $.17 per mcf. The sale of substantially all of the Company's gas processing business in 1992 negatively affected subsequent plant margins. In 1992, the Company also recorded a $9 million net restructuring charge for the estimated cost of workforce reductions. PRE-TAX RESTRUCTURING CHARGES The Company incurred provisions for restructuring of $92 million in 1994 and $14 million in 1992 (see Note 5 to the Consolidated Financial Statements). The 1994 provision consisted of a charge of $161 million provided in the first quarter, revised to $76 million because of the accounting change, and $16 million provided in the fourth quarter. The restructuring program involves some consolidation of the Company's U.S. business. The net result of these actions has been a reduction of approximately 345 jobs, which should lead to a $70 million cost reduction for 1995. For analyses of the restructuring provisions, see Note 5 to the Consolidated Financial Statements. HEDGING ARRANGEMENTS The Company, from time to time, enters into hedging arrangements for foreign currencies, interest rates and oil and gas prices. The Company has entered into swap agreements for approximately 26 percent of its estimated 1995 crude oil production with an average price of $18.24 per barrel. An additional 13 percent is under call option agreements at an average price ceiling of $18.56 per barrel. Approximately 44 percent of its estimated 1995 U.S. gas production is under swap agreements with an average price of $1.88 per mmbtu. (See Note 2 to the Consolidated Financial Statements.) INCOME TAXES Oryx Energy adopted SFAS No. 109, "Accounting for Income Taxes," effective January 1, 1992. The overall effect for remeasurement of foreign deferred tax for 1992 was zero, a benefit of $5 million in 1993 and a charge of $2 million in 1994. As a result of applying the provisions of SFAS No. 109, a non-cash charge or credit is included in business results based on the change in foreign exchange rates and the corresponding impact on the deferred tax liability. The Company believes these items tend to distort current period business results and should be disregarded in analyzing its current business. 15 POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS Oryx Energy adopted SFAS No. 106, "Accounting for Postretirement Benefits," effective January 1, 1993, and began accruing the cost of postretirement benefits other than pensions. The after-tax impact of $59 million, reduced by $8 million due to a curtailment in 1994, is being amortized over a 20-year period. The increase in annual expense for providing these benefits was $4 million after taxes. However, cash outflows are unaffected. Oryx Energy also adopted SFAS No. 112, "Employer's Accounting for Postemployment Benefits," effective January 1, 1993, and began accruing the cost of postemployment benefits. Since the Company has previously recognized certain costs as required by this standard, the effect of adoption was insignificant. ENVIRONMENTAL The Company's oil and gas operations are subject to stringent environmental regulations. The Company is dedicated to the preservation of the environment and has committed significant resources to comply with such regulations. Although it has been named as a potentially responsible party at sites related to past operations, the Company believes it is in general compliance with applicable governmental regulations and that the potential costs to it, in the aggregate, are not material to its financial condition. However, risks of substantial costs and liabilities are inherent to the oil and gas business. Should other developments occur, such as increasingly strict environmental laws, regulations and enforcement policies or claims for damages resulting from the Company's operations, they could result in additional costs and liabilities in the future. (See Note 18 to the Consolidated Financial Statements.) 16 Appendix Graph of Proved Reserves 1990 thru 1994 Graph of Daily Production 1990 thru 1994 Graph of 1994 ED&A Outlays Graph of 1995 ED&A Outlays Graph of Crude And Condensate Price ($/bbl) 1990 thru 1994 Graph of Crude and Condensate Production (mb/d), 1990 thru 1994 Graph of Natural Gas Price ($mcf), 1990 thru 1994 Graph of Natural Gas Production (mmcf/d), 1990 thru 1994 ORYX ENERGY COMPANY SELECTED FINANCIAL DATA YEAR ENDED DECEMBER 31
1994 1993 1992 1991 1990 ------ ------ ------ ------ ------ (Millions of Dollars, Except Per Share Amounts) FOR THE PERIOD Revenues $ 1,072 $1,054 $1,392 $1,598 $2,121 Income (loss) before extraordinary item and cumulative effect of accounting change (1) $ (65) $ (93) $ 73 $ 19 $ 225 Net income (loss) (1) $(1,025) $ (100) $ 14 $ 19 $ 225 Income (loss) per share of common stock before extraordinary item and cumulative effect of accounting change (1) $ (.68) $(1.01) $ .74 $ .08 $ 2.26 Net income (loss) per share of common stock (1) $(10.53) $(1.08) $ .06 $ .08 $ 2.26 Cash dividends per share of common stock (2) $ - $ .40 $ .80 $ 1.20 $ 1.20 Cash dividends per share of preferred stock (3) $ .175 $ .725 $ 1.25 $ 1.80 $ .95 ED&A outlays (4) $ 314 $ 451 $ 390 $ 569 $1,666 AT END OF PERIOD Total assets (1) $ 2,107 $3,624 $3,738 $4,257 $5,129 Long-term debt $ 1,546 $1,741 $1,489 $2,341 $2,267 Shareholders' equity (deficit) (5) $ (347) $ 676 $ 817 $ 534 $ 622 (1) Effective January 1, 1994, the Company adopted a new policy for determining the ceiling test for its oil and gas properties. A one-time non-cash charge of $948 million after-tax for the cumulative effect of the change was recognized in earnings for 1994 (see Note 7 to the Consolidated Financial Statements). Additionally, net loss for 1994 includes a $59 million after-tax charge for costs associated with the Company's restructuring program, a $12 million extraordinary loss net of taxes from debt costs and a $2 million charge for the remeasurement of foreign deferred taxes (see Notes 5 and 11 to the Consolidated Financial Statements). Net loss for 1993 includes $5 million of after-tax losses on asset disposals, a $7 million extraordinary loss net of taxes from the repurchase of indebtedness and a $5 million benefit for remeasurement of foreign deferred taxes (see Note 11 to the Consolidated Financial Statements). Net income for 1992 includes $19 million of after-tax gains on asset disposals, a $9 million after-tax charge for costs associated with the Company's restructuring program and a $59 million benefit for remeasurement of foreign deferred taxes (see Note 5 to the Consolidated Financial Statements). Net income for 1991 includes $39 million of after-tax gains on asset disposals, a $35 million after-tax charge for costs associated with the Company's restructuring program and a $25 million deferred tax benefit associated with a U.K. tax rate reduction. (2) In June 1992, the Company announced the reduction of the quarterly cash dividend on its $1.00 par value common stock (Common Stock) from $.30 to $.10 per share. In January 1994, the Company announced the suspension of its quarterly cash dividend of $.10 per share. (3) On September 11, 1990, the Company issued 7,259,394 shares of Series B Junior Cumulative Convertible Preference Stock (Series B Preference Stock). In November 1994, 2 million shares of Series B Preference Stock were converted into Common Stock. (4) Exploration, development and acquisition outlays (ED&A outlays) exclude capitalized interest of $11 million, $46 million, $43 million, $26 million and $13 million for 1994, 1993, 1992, 1991 and 1990. ED&A outlays for 1990 include the costs associated with the Company's January 1, 1990 foreign properties acquisition. (5) Shareholders' equity (deficit) at December 31, 1994 includes the $948 million charge for the cumulative effect of the change in the Company's policy for determining the ceiling test for its oil and gas properties (see Note 7 to the Consolidated Financial Statements). Shareholders' equity (deficit) at December 31, 1994, 1993 and 1992 includes the effects of the sale of 17,250,000 shares of Common Stock in August 1992.
17 ORYX ENERGY COMPANY CONSOLIDATED STATEMENTS OF INCOME YEAR ENDED DECEMBER 31
1994 1993 1992 ------ ------ ------ (MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) REVENUES Oil and gas $ 1,082 $1,080 $1,275 Other-net (Note 3) (10) (26) 117 _______ ______ ______ 1,072 1,054 1,392 _______ ______ ______ COSTS AND EXPENSES Operating costs 374 353 397 Production taxes (Note 4) 112 112 137 Exploration costs 104 100 112 Depreciation, depletion and amortization 271 395 409 General and administrative expense 68 85 120 Interest and debt expense 162 163 187 Interest capitalized (11) (46) (43) Provision for restructuring (Note 5) 92 - 14 Provision for relinquishment of non-producing properties (Note 5) - - 63 _______ ______ ______ 1,172 1,162 1,396 _______ ______ ______ Loss before extraordinary item, cumulative effect of accounting change and benefit for income taxes (100) (108) (4) Benefit for income taxes (Note 6) (37) (10) (18) Remeasurement of foreign deferred tax (Notes 1 and 6) 2 (5) (59) _______ ______ ______ Income (loss) before extraordinary item and cumulative effect of accounting change (65) (93) 73 Extraordinary item (Note 11) (12) (7) - Cumulative effect of accounting change (Note 7) (948) - (59) _______ ______ ______ NET INCOME (Loss) (1,025) (100) 14 Less Preferred Stock Dividends 1 5 9 _______ ______ ______ NET INCOME (Loss) ATTRIBUTABLE TO COMMON STOCK $(1,026) $ (105) $ 5 ======= ====== ====== Net Income (Loss) Per Share of Common Stock (Note 8): Before extraordinary item and cumulative effect of accounting change $ (.68) $(1.01) $ .74 Extraordinary item (.12) (.07) - Cumulative effect of accounting change (9.73) - (.68) _______ ______ ______ Net income (loss) $(10.53) $(1.08) $ .06 ======= ====== ====== Cash Dividends Per Share of Common Stock $ - $ .40 $ .80 ======= ====== ====== Weighted Average Number of Common and Common Equivalent Shares Outstanding (Millions of Shares) (Note 8) 97.4 97.1 86.4 ======= ======= ====== (See Accompanying Notes)
18 ORYX ENERGY COMPANY CONSOLIDATED BALANCE SHEETS DECEMBER 31
1994 1993 _______ ______ (MILLIONS OF DOLLARS) ASSETS Current Assets Cash and cash equivalents $ 10 $ 10 Accounts and notes receivable and other current assets 185 195 _______ _______ Total Current Assets 195 205 Properties, Plants and Equipment (Note 9) 1,840 3,333 Deferred Charges and Other Assets 72 86 _______ _______ Total Assets $ 2,107 $ 3,624 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY (Deficit) Current Liabilities Accounts payable $ 105 $ 119 Accrued liabilities (Note 10) 262 177 Current portion of long-term debt (Note 11) 165 28 _______ _______ Total Current Liabilities 532 324 Long-Term Debt (Note 11) 1,546 1,741 Deferred Income Taxes (Note 6) 221 682 Deferred Credits and Other Liabilities (Note 18) 155 201 Commitments and Contingent Liabilities (Note 12) Shareholders' Equity (Deficit) (Note 13) Preferred stock, $1 par value; 30,000,000 shares authorized; 5,259,394 and 7,259,394 shares of Series B Junior Cumulative Convertible Preference Stock issued and outstanding in 1994 and 1993 5 7 Common stock, $1 par value; 250,000,000 shares authorized; 126,703,553 shares issued in 1994 and 1993, 98,946,066 and 96,932,277 shares outstanding in 1994 and 1993 124 124 Additional paid-in capital 2,098 2,204 Accumulated deficit (1,181) (155) _______ _______ 1,046 2,180 Less common stock in treasury, at cost; 24,755,608 and 26,769,400 shares in 1994 and 1993 (1,294) (1,402) Less loan to ESOP (99) (102) _______ _______ Shareholders' Equity (Deficit) (347) 676 _______ _______ Total Liabilities and Shareholders' Equity (Deficit) $ 2,107 $ 3,624 ======= ======= The successful efforts method of accounting is followed. (See Accompanying Notes)
19 ORYX ENERGY COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS YEAR ENDED DECEMBER 31
1994 1993 1992 ------- ----- ----- (MILLIONS OF DOLLARS) CASH AND CASH EQUIVALENTS FROM OPERATING ACTIVITIES Net Income (Loss) $(1,025) $(100) $ 14 Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation, depletion and amortization 271 395 409 Dry hole costs and leasehold impairment 57 45 56 Deferred income taxes 10 15 10 (Gain) loss on sale of assets, net of taxes - 5 (59) Provision for restructuring, net of taxes 59 - 9 Extraordinary loss on debt 12 7 - Cumulative effect of accounting change 948 - - Provision for relinquishment of non-producing properties - - 63 Proceeds from interest rate hedging activities - 28 9 Other 5 30 29 ------- ----- ----- 337 425 540 Changes in working capital: Accounts and notes receivable and other current assets 14 37 104 Accounts payable (14) (32) (55) Accrued liabilities (41) (51) (67) ------- ----- ----- NET CASH FLOW PROVIDED FROM OPERATING ACTIVITIES 296 379 522 ------- ----- ----- CASH AND CASH EQUIVALENTS FROM INVESTING ACTIVITIES Capital expenditures (281) (453) (372) Proceeds from divestments, net of current taxes 78 46 272 Other (30) 20 (34) ------- ----- ----- NET CASH FLOW USED FOR INVESTING ACTIVITIES (233) (387) (134) ------- ----- ----- CASH AND CASH EQUIVALENTS FROM FINANCING ACTIVITIES Proceeds from borrowings 123 359 205 Repayments of long-term debt (185) (307) (860) Issuance of common stock - - 344 Cash dividends paid on common and preferred stock (1) (44) (77) ------- ----- ----- NET CASH FLOW PROVIDED FROM (USED FOR) FINANCING ACTIVITIES (63) 8 (388) ------- ----- ----- CHANGES IN CASH AND CASH EQUIVALENTS - - - CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 10 10 10 ------- ----- ----- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 10 $ 10 $ 10 ======= ===== =====
(See Accompanying Notes) 20 ORYX ENERGY COMPANY CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
COMMON STOCK PREFERRED STOCK COMMON STOCK --------------- --------------- ADDITIONAL RETAINED HELD IN TREASURY LOAN NUMBER PAR NUMBER PAR PAID-IN EARNINGS ---------------- TO OF SHARES VALUE OF SHARES VALUE CAPITAL (DEFICIT) SHARES COST ESOP --------- ----- --------- ----- ---------- --------- ------- ------- ----- (MILLIONS OF DOLLARS, THOUSANDS OF SHARES) AT DECEMBER 31, 1991 106,452 $106 7,259 $ 7 $1,879 $ 52 (26,785) $(1,403) $(107) Net income 14 Issuance of common stock 17,250 18 326 Issuance from treasury - 1 - Cash dividends declared: Common - $.80 per share (68) Preferred - $1.25 per share (9) Repayment of loan to ESOP 2 ------- ---- ------ --- ------ ------- ------- ------- ----- AT DECEMBER 31, 1992 123,702 124 7,259 7 2,205 (11) (26,784) (1,403) (105) Net loss (100) Issuance from treasury (1) 15 1 Cash dividends declared: Common - $.40 per share (39) Preferred - $.725 per share (5) Repayment of loan to ESOP 3 ------- ---- ------ --- ------ ------- ------- ------- ----- AT DECEMBER 31, 1993 123,702 124 7,259 7 2,204 (155) (26,769) (1,402) (102) Net loss (1,025) Issuance from treasury (1) 13 1 Preferred stock conversion (2,000) (2) (105) 2,000 107 Cash dividends declared: Preferred - $.175 per share (1) Repayment of loan to ESOP 3 ------- ---- ------ --- ------ ------- ------- ------- ----- AT DECEMBER 31, 1994 123,702 $124 5,259 $ 5 $2,098 $(1,181) (24,756) $(1,294) $ (99) ======= ==== ====== === ====== ======= ======= ======= =====
(See Accompanying Notes) 21 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION Oryx Energy Company (together with its consolidated subsidiaries, unless the context otherwise requires, Company) was incorporated in Delaware in 1971 and became a publicly traded company on November 1, 1988. The Company's business operations consist of the exploration and development of oil and natural gas reserves. Since December 1, 1985, the Company has functioned as the managing general partner for and has conducted its United States operations through Sun Energy Partners, L.P. The majority of the Company's operations located outside of the United States were acquired effective January 1, 1990 and are identified herein by the separate geographic areas of the United Kingdom, Indonesia and Other Foreign. The consolidated financial statements contain the accounts of the Company after elimination of intercompany balances and transactions. The Company's interests in Sun Energy Partners, L.P. and its related operating partnerships (Partnership) are fully consolidated. CASH AND CASH EQUIVALENTS The Company considers highly liquid investments with original maturities of less than three months to be cash equivalents. Cash equivalents are stated at cost which approximates market value. PROPERTIES, PLANTS AND EQUIPMENT The successful efforts method of accounting is followed for costs incurred in oil and gas operations. Capitalization Policy - Acquisition costs are capitalized when incurred. Costs of unproved properties are transferred to proved properties when proved reserves are added. Exploration costs, including geological and geophysical costs and costs of carrying unproved properties, are charged against income as incurred. Exploratory drilling costs are capitalized initially; however, if it is determined that an exploratory well did not find proved reserves, such capitalized costs are charged to expense, as dry hole costs, at that time. Development costs are capitalized. Costs incurred to operate and maintain wells and equipment are expensed. Leasehold Impairment and Depreciation, Depletion and Amortization - Periodic valuation provisions for impairment of capitalized costs of unproved properties are expensed. The acquisition costs of proved properties are depleted by the unit-of-production method based on proved reserves by field. Capitalized exploratory drilling costs which result in the addition of proved reserves and development costs are amortized by the unit-of-production method based on proved developed reserves by field. Ceiling Test - The Company periodically compares the estimated undiscounted future pre-tax cash flows of its proved reserves to their net book values, using current realized prices and costs held constant. Effective January 1, 1994, the Company changed its policy for performing ceiling test comparisons to an individual field basis (Note 7). Prior to 1994, the Company performed its ceiling test comparisons on a worldwide basis. The Company impairs the net book value of its proved properties to the extent that net book values exceed the estimated undiscounted future pre-tax cash flows. Dismantlement, Restoration and Abandonment Costs - Estimated costs of future dismantlement, restoration and abandonment are accrued as a component of depreciation, depletion and amortization expense; actual costs are charged to the accrual. Retirements - Gains and losses on the disposals of fixed assets are generally reflected in income. For certain property groups, the cost less salvage value of property sold or abandoned is charged to accumulated depreciation, depletion and amortization except that gains and losses for these groups are taken into income for unusual retirements or retirements involving an entire property group. 22 CAPITALIZED INTEREST The Company capitalizes interest costs incurred as a result of the acquisition and installation of significant assets. INCOME TAXES The Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes" in 1992. The effect to the Company of adopting SFAS No. 109 was to increase deferred foreign income tax liabilities, which resulted in a $59 million ($.68 per share) cumulative charge to 1992 earnings. This increase in the Company's deferred foreign income tax liabilities results from the remeasurement of the Company's foreign currency denominated deferred tax liabilities at current exchange rates. The remeasurement provisions of SFAS No. 109 have also affected the reported earnings of the Company for 1994, 1993 and 1992. Earnings for 1994, 1993 and 1992 were increased (decreased) by $(2) million, $5 million and $59 million from remeasuring the Company's foreign deferred tax liabilities. Management believes that such non-cash remeasurements distort current period economic results and should be disregarded in analyzing the Company's current business. Future economic results may also be distroted because payment of the deferred tax liability is not expected to occur in the near-term and it is likely that exchange rates will fluctuate prior to the eventual settlement of the liability. PENSION AND OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS The Company has established noncontributory defined benefit plans and defined contribution plans to provide retirement benefits for most of its employees. Pension benefits are charged against earnings over the periods in which they are earned by the employees (Note 14). In addition to providing pension benefits, the Company provides certain health care and life insurance benefits for retired employees and certain insurance and other postemployment benefits for individuals whose employment is terminated by the Company prior to their normal retirement. Substantially all of the Company's employees may become eligible for postretirement benefits if they reach normal retirement age while working for the Company. Historically, the cost of retiree health care and life insurance benefits and certain postemployment benefits have been recognized as expenses as such claims or costs were paid. In December 1990, SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," was issued and it requires companies to recognize the costs of postretirement benefits other than pensions on an accrual basis. The Company adopted SFAS No. 106 in 1993, and began accruing the cost of postretirement benefits other than pensions. The related transition obligation of $59 million after-tax is being amortized over a twenty year period. The increase in annual expense for providing these benefits was $4 million after-tax. However, cash outflows are unaffected by the adoption of SFAS No. 106. In November 1992, SFAS No. 112, "Employers' Accounting for Postemployment Benefits" was issued. It requires companies to recognize the costs of postemployment benefits on an accrual basis. The Company adopted SFAS No. 112 in 1993, and began accruing the cost of postemployment benefits. Since the Company had previously recognized certain costs as required by this standard, the effect of adoption was insignificant. SALES OF OIL AND GAS Sales of oil and gas are recorded on the entitlement method. Differences between actual production and entitlements result in amounts due when underproduction occurs and amounts owed when overproduction occurs. FOREIGN CURRENCY TRANSLATION The U.S. dollar is the functional currency for the Company's consolidated foreign operations. For those operations, all transaction gains or losses from currency fluctuations are included in income currently. FOREIGN EXCHANGE HEDGING CONTRACTS The Company, from time to time, enters into foreign currency hedging arrangements to hedge the impact of changes in exchange rates on its receivables and payables denominated in British pounds. Gains and losses realized from such arrangements offset transaction gains and losses which are included in the measurement of the related foreign currency transactions (Note 2). 23 1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) INTEREST RATE HEDGING AGREEMENTS The Company enters into interest rate hedging agreements to alter the floating rate portion of its underlying debt portfolio. Advance proceeds received under such agreements are included in deferred credits and other liabilities and are amortized as offsets to interest and debt expense over the relevant periods. The differentials paid or received during the terms of such agreements are accrued as interest rates change and are recorded as adjustments to interest and debt expense (Note 2). OIL AND GAS PRICE HEDGING ACTIVITY The Company, from time to time, enters into arrangements to hedge the impact of price fluctuations on anticipated crude oil and natural gas sales. Advance payments under such contracts are deferred and charged to oil and gas revenue during the anticipated sales periods. The differentials paid or received during the terms of such agreements are accrued as oil and gas prices change and are charged or credited to oil and gas sales (Note 2). ENVIRONMENTAL COSTS The Company establishes reserves for environmental liabilities as such liabilities are incurred (Note 18). STATEMENT PRESENTATION Certain items in years prior to 1994 have been reclassified to conform to the 1994 presentation. 2) FINANCIAL INSTRUMENTS DERIVATIVES As discussed in Note 1, the Company enters into hedging arrangements for foreign exchange, interest rates and crude oil and natural gas prices with major financial institutions. The Company does not enter into derivative transactions for trading purposes. The Company is active in the foreign exchange market to hedge its economic exposures to the British pound. In addition, the Company has exposures to other currencies in countries in which it does business. At December 31, 1994 and 1993, the Company had forward contracts outstanding with various expiration dates to purchase 53 million and 27 million net British pounds at various prices. At December 31, 1994 and 1993, the fair values of the Company's outstanding foreign exchange contracts, based on quoted market prices, were nil, which approximated their associated carrying values. For the year ended December 31, 1994, the Company had no net transaction gains or losses and recognized net gains of $1 million from foreign exchange contracts. For the years ended December 31, 1993 and 1992, the Company recognized net transaction gains or (losses) of $2 million and $(3) million, and net losses from foreign exchange contracts of $6 million and $2 million. The Company also participates in various interest rate hedging arrangements to manage the floating rate portion of its debt. At December 31, 1994 and 1993, the Company was a party to interest rate hedging agreements having notional amounts of $600 million, of which $350 million represented interest rate caps with maturities in 1997 and 1998, and $250 million represented options sold to counterparties to exercise interest rate swaps on August 15, 1995. At December 31, 1994 and 1993, the aggregate carrying values of the gains deferred from the Company's interest rate futures agreements were $32 million and $37 million, and their estimated fair values, based on quotes from brokers, were $41 million and $35 million. The terms of the caps expose the Company to interest rate risk when LIBOR (6.5 percent at December 31, 1994) exceeds five percent per year. Under the terms of the caps, the Company received advance proceeds from the counterparties and must pay the excess by which LIBOR exceeds five percent on the notional amounts. Under the terms of the swaps exercisable on August 15, 1995, the Company received advance proceeds from the counterparties, which amounts are being deferred until the exercise date. The swap option, if exercised on August 15, 1995, obligates the Company to pay an annual rate of 9.75 percent while receiving LIBOR on the notional amount. The terms of the swap option decrease the exposure of the Company to increases in LIBOR. 24 At December 31, 1994, the Company was a party to crude oil and natural gas hedging contracts to hedge about 10 percent of its estimated 1995 crude oil production at $17.80 per barrel and 40 percent of its estimated 1995 U.S. natural gas production at $1.95 per mmbtu. At December 31, 1993, the Company was a party to natural gas hedging contracts to hedge about 30 percent of its 1994 U.S. natural gas production at an average floor of $2.04 per mmbtu and an average ceiling of $2.28 per mmbtu. These arrangements serve to reduce the volatility associated with prices of crude oil and natural gas. The aggregate carrying values of these assets at December 31, 1994 and 1993 were nil, and the aggregate fair values, based on quotes from brokers, were approximately $13 million and $4 million. All of the above mentioned derivative contracts expose the Company to credit risks. The Company has established controls to manage this risk and closely monitors the creditworthiness of its counterparties, which are major financial institutions. The Company believes that losses from nonperformance are unlikely to occur. OTHER FINANCIAL INSTRUMENTS At December 31, 1994 and 1993, the carrying values of the Company's long-term debt, including amounts due within one year, were $1,711 million and $1,769 million (Note 11). At December 31, 1994 and 1993, the aggregate fair values of the Company's long-term debt were approximately $1,671 million and $1,779 million, estimated primarily based on quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. 3) OTHER REVENUES-NET The components of other revenues were as follows:
1994 1993 1992 ---- ---- ---- (MILLIONS OF DOLLARS) Interest income $ 2 $ 1 $ 5 Gas plant margins* 3 6 34 Gain (loss) on sale of assets - (7) 94 Miscellaneous (15) (26) (16) ---- ---- ---- $(10) $(26) $117 ==== ==== ==== * The Company sold substantially all of its gas plant business in 1992 and 1991. After-tax cash flows from the Company's gas plant business amounted to $2 million, $4 million and $22 million in 1994, 1993 and 1992 (Note 5).
4) PRODUCTION TAXES Production taxes consisted of the following:
1994 1993 1992 ---- ---- ---- (MILLIONS OF DOLLARS) International royalties $ 54 $ 60 $ 75 U.S. severance taxes 28 35 43 U.S. property taxes 15 17 19 U.K. petroleum revenue taxes 15 - - ---- ---- ---- $112 $112 $137 ==== ==== ====
25 5) CHANGES IN BUSINESS In 1994, the Company adopted plans to achieve further cost reductions and, associated therewith, recognized a $92 million ($59 million after-tax) provision for restructuring. The 1994 provision consisted of a charge of $161 million provided in the first quarter, revised to $76 million because of the accounting change (Note 7), and $16 million provided in the fourth quarter. An analysis of the first quarter 1994 provision for restructuring follows:
ACTIVITY BALANCE INITIAL THROUGH AT PROVISION 12/31/94 12/31/94 --------- -------- -------- (MILLIONS OF DOLLARS) Termination and Associated Costs* $ 27 $ 21 $ 6 Proceeds from Divestment of Assets** (40) (40) - FAS 88 and FAS 106 (Retirement and Postretirement Costs)*** 23 21 2 Book Value of Assets to be Divested and Lease Obligations** 151 129 22 ---- ---- --- Total Provision $161 $131 $30 ==== ==== === * Termination and associated cash costs are primarily comprised of severance pay, associated employee benefit costs and moving costs for 300 employees. Management expects to complete such payments by the end of 1995. ** Proceeds from the divestment of assets and the book value of such assets are a result of the Company's program to consolidate its U.S. onshore position into 6 primary states. The asset disposals were completed during the fourth quarter of 1994. In addition, under the terms of an operating lease which expires in June 1995, the Company is obligated to pay the lessor at the expiration of the lease the amount by which the fair market value of the asset is less than $37 million, not to exceed $31 million. *** Costs primarily represent non-cash adjustments due to special termination benefits and the acceleration of a portion of the transition obligation as a result of a reduction in the remaining expected future years of service of active employees.
An analysis of the fourth quarter 1994 provision for restructuring follows (in millions of dollars):
INITIAL PROVISION* ---------- Termination and Associated Costs** $ 6 FAS 88 and FAS 106 (Retirement and Postretirement Costs)*** 10 --- $16 === * Reflects the balance at December 31, 1994. ** Termination and associated cash costs are primarily comprised of severance pay and associated employee benefit costs for 45 employees. Management expects to complete such payments by the end of 1996. *** Costs primarily represent non-cash adjustments due to special termination benefits and the acceleration of a portion of the transition obligation as a result of a reduction in the remaining expected future years of service of active employees.
In 1991, the Company commenced a restructuring program designed to accelerate the implementation of its key operating strategies and reduce its debt and cost structure. The program outlined a plan to reduce debt by selling substantially all of the Company's gas plant business and certain producing oil and gas properties located primarily in the onshore United States. In 1992, associated with this restructuring, the Company recognized a $14 million pretax ($9 million after-tax) provision for restructuring together with a $63 million pretax ($41 million after-tax) provision for the early relinquishment of certain U.S. non-producing properties. At December 31, 1994, this program was complete. 26 6) INCOME TAXES Loss before extraordinary item, cumulative effect of accounting change and benefit for income taxes consisted of the following:
1994 1993 1992 ----- ----- ----- (MILLIONS OF DOLLARS) Before interest expense United States income (loss) $ (2) $ 30 $ 112 Foreign income (loss) 53 (21) 28 Interest expense (151) (117) (144) ----- ----- ----- $(100) $(108) $ (4) ===== ===== =====
The benefit for income taxes for each of the years 1994, 1993 and 1992 is applicable to continuing operations. The components of the benefit for income taxes on loss before extraordinary item and accounting change were as follows:
1994 1993 1992** ---- ---- ------ (MILLIONS OF DOLLARS) Federal Current tax provision (benefit) $(14) $(18) $ 37 Deferred tax provision (benefit) (16) 4* (55) State (6) 1 3 Foreign Current tax provision 9 8 18 Deferred tax benefit (10) (5) (21) ---- ---- ---- $(37) $(10) $(18) ==== ==== ==== * Includes a $17 million deferred tax provision associated with a U.S. tax rate increase. ** Effective January 1, 1992, the Company adopted SFAS No. 109.
Deferred taxes are provided for the impact of differences between the tax basis of assets and liabilities and their reported amounts. Significant components of the Company's deferred income tax assets and liabilities at December 31, 1994 and 1993 were as follows:
1994 1993 ---- ---- (MILLIONS OF DOLLARS) Deferred Tax Assets AMT credit carryforward $ 50 $ 30 Dismantlement, restoration and abandonment 36 31 Loss on controlled foreign corporations 25 14 Geological and geophysical expenditures 11 14 Contingency accruals 12 11 Employee benefit accruals 42 7 Other 2 - ---- ---- Deferred Tax Liabilities 178 107 ---- ---- Items associated with capitalized costs and write-offs 368 705 Miscellaneous accrued liabilities 31 84 ---- ---- 399 789 ---- ---- Net Deferred Tax Liability $221 $682 ==== ====
27 6) INCOME TAXES (CONTINUED) No valuation allowance was provided at December 31, 1994 or 1993 because the Company anticipates that results of operations in future years are more likely than not to generate taxable income sufficient to allow utilization of existing deferred tax assets. Following is the reconciliation of the tax benefit calculated at the U.S. statutory tax rate to the Company's actual tax benefit on loss before extraordinary item and accounting change:
1994 1993 1992 ---- ---- ---- (MILLIONS OF DOLLARS) U.S. statutory rate calculation $(35) $(38) $ (1) Increase (reduction) in taxes resulting from: Interest allocation adjustment 2 5 (8) AMT credit - - (8) Deferred impact of tax rate changes - 17 - State taxes (6) 1 3 Other 2 5 (4) ---- ---- ---- Benefit for income taxes before remeasurement of foreign deferred tax (37) (10) (18) Remeasurement of foreign deferred tax as required by SFAS No. 109 2 (5) (59) ---- ---- ---- Benefit for income taxes $(35) $(15) $(77) ==== ==== ====
7) ACCOUNTING CHANGE Effective January 1, 1994, the Company changed its accounting policy for calculating the oil and gas asset ceiling test from a total company basis to an individual field basis. The Company believes the field basis is preferable because it is the way the Company manages its business. The basis underlying the calculation of the cumulative effect of this change is a comparison of the undiscounted pre-tax cash flows of each field's then existing proved reserves to its net book value at each quarter-end during the life of the asset. This subjects the ceiling test valuation to the lowest quarter-end price experienced over the asset's life. Prior to this change, the Company compared its worldwide undiscounted standardized measure of future net cash flows from estimated production of proved oil and gas reserves before income taxes to its net proved property, plant and equipment. As a result of this change, the Company recognized a non-cash cumulative effect charge of $948 million ($1,355 million pre-tax) to 1994 results. Excluding the cumulative charge, the Company's net loss for 1994 was $77 million ($.68 per share before extraordinary item and $.80 per share after extraordinary item). On a pro forma basis, the Company's reported net earnings for 1993 and 1992 would have been a net loss of $699 million ($7.18 per share before extraordinary item and $7.25 per share after extraordinary item) and a net loss of $145 million ($1.78 per share) if this accounting change had been enacted prior to 1992. 8) INCOME PER SHARE The 5,259,394 shares of Series B Preference Stock (7,259,394 shares in 1993 and 1992) are common stock equivalents. Conversion of the Series B Preference Stock in 1994, 1993 or 1992 would have been anti-dilutive to the Company's income (loss) per share. The Company has reserved 5,111,438 shares of Common Stock for issuance to the owners of its 7 1/2% Convertible Subordinated Debentures Due 2014 (Debentures). The Debentures are convertible into the Company's Common Stock at any time prior to maturity at $39.125 per share of Common Stock. The Debentures are not common stock equivalents. If conversion of the Debentures were assumed to have occurred, the result would have been anti-dilutive to 1994, 1993 and 1992 income (loss) per share. 28 9) PROPERTIES, PLANTS AND EQUIPMENT At December 31, the Company's properties, plants and equipment and accumulated depreciation, depletion and amortization were as follows:
1994 1993 ------ ------ (MILLIONS OF DOLLARS) Gross investment Proved properties $6,112 $6,184 Unproved properties 143 257 Other 65 82 ------ ------ 6,320 6,523 ------ ------ Less accumulated depreciation, depletion and amortization Proved properties* 4,424** 3,138 Other 56 52 ------ ------ 4,480 3,190 ------ ------ Net investment $1,840 $3,333 ====== ====== * Includes $106 million and $91 million for dismantlement, restoration and abandonment at December 31, 1994 and 1993. ** Includes $1,355 million of impairment of proved oil and gas properties in 1994 (Note 7).
10) ACCRUED LIABILITIES At December 31, the Company's accrued liabilities were comprised of the following:
1994 1993 ------ ------ (MILLIONS OF DOLLARS) Drilling and operating costs $ 73 $ 89 Restructuring reserve (Note 5) 46 7 Interest payable 64 28 Employee related costs and benefits 28 17 Royalties payable 8 4 Taxes payable 22 6 Other 21 26 ---- ---- $262 $177 ==== ====
29 11) LONG-TERM DEBT At December 31, long-term debt consisted of the following:
1994 1993 ------ ------ (MILLIONS OF DOLLARS) 9.75% Notes Due 1998 $ 250 $ 250 10.375% Debentures payable $7 annually 1999 - 2018 138 171 10% Notes Due 1999 and 2001 payable $100 in 1999 and $149 in 2001 249 249 7.50% Convertible Subordinated Debentures payable $10 annually 1999 - 2013 and $50 in 2014 200 200 Medium Term Notes, variable and fixed interest rates ranging from 5.51% to 9.50% at December 31, 1994 due during 1995 - 2002 230 180 9.30% Notes Due 1996 100 100 7.20% Note (to be reset in 1998) payable semi-annually 1995 - 2006* 100 100 9.50% Notes Due 1999 100 100 8.35% to 8.70% Senior ESOP Notes payable quarterly 1995 - 2009 60 102 Commercial Paper, variable interest rates ranging from 6.62% to 7.00% at December 31, 1994** 50 100 Variable interest rate (ranging from 7.10% to 8.13% at December 31, 1994) revolving credit facility payable semi-annually 1996 - 1997*** 208 150 Capitalized lease obligations and other long-term debt due 1995 - 2002 26 67 ------ ------ 1,711 1,769 Less current portion 165 28 ------ ------ $1,546 $1,741 ====== ====== * A group of banks has guaranteed the performance of one of the Company's subsidiary's financial obligations by issuing a letter of credit in favor of the obligee for the outstanding loan balance plus interest and compensatory damages. At December 31, 1994, the balance on the letter of credit was $109 million. ** Commercial paper matures from 4 to 17 days. Such debt is classified as long-term due to management's intention to continue to use it as a financing vehicle and the availability of credit under the Company's revolving credit facility. *** At December 31, 1994 and 1993, $18 million and $25 million of variable interest rate revolving credit facility debt was recognized as extinguished by the Company as a result of having funded an irrevocable trust with U.S. Treasury obligations. The debt matured in January 1995 and 1994.
Long-term debt maturities are $165 million, $317 million, $168 million, $260 million and $242 million for each of the years 1995 through 1999. Each of the maturing amounts for 1996 and 1997 include $159 million under the revolving credit facility which management intends to replace no later than September 1995. The Company's long-term debt contains restrictive covenants, including a limitation on total indebtedness; restriction on the payment of common stock dividends in excess of $1.20 annually and minimum cash flow interest coverage. At December 31, 1994, the Company was in compliance with all of its debt covenants and continues to be in compliance with such debt covenants. The Company pays a fee ranging from .375 percent to .5 percent of the unused portion of its $620 million revolving credit facility. The Company has the capacity to borrow $280 million under such facility; however, the amount can change daily. The commitments are subject to withdrawal if the Company were to be in default. During 1994, Standard & Poor's downgraded the Company's senior unsecured debt from BBB- to BB, subordinated debt from BB+ to B+ and commercial paper to B from A-3. Subsequently, the holders of the Company's senior ESOP notes (approximately $100 million principal amount outstanding) exercised their right to require the Company to repay the notes in full at par plus a makewhole premium tied to prevailing rates of interest on U.S. Treasury obligations. As a result of the downgrade, the Company recognized a $12 million (net of $5 million of tax) extraordinary loss associated with the notes which have been paid in full subsequent to year end. During 1994 and 1993, the Company repurchased $33 million and $78 million of its 10.375 percent debentures at a total cost of $33 million and $88 million resulting in a loss of $7 million (net of $3 million of tax) in 1993 which is reflected as an extraordinary item in the Consolidated Statements of Income. 30 12) COMMITMENTS AND CONTINGENT LIABILITIES The Company has operating leases for office space and other property and equipment. Total rental expense for such leases for the years 1994, 1993 and 1992 was $37 million, $32 million and $33 million. Under contracts existing as of December 31, 1994, future minimum annual rental payments applicable to non-cancelable operating leases that have initial or remaining lease terms in excess of one year, less minimum rentals to be received under non-cancelable subleases, were as follows (in millions of dollars): Year ending December 31: 1995 $ 34 1996 17 1997 12 1998 13 1999 12 Later years 75 --- Total minimum payments required $163 ====
Minimum rentals to be received under non-cancelable subleases are $3 million, $2 million, $2 million, $1 million and $1 million for the years 1995 through 1999 and $1 million for later years. Under the term of an operating lease which expires in June 1995, the Company is obligated to pay the lessor at the expiration of the lease the amount by which the fair market value of the assets is less than $37 million, not to exceed $31 million. Several legal and administrative proceedings are pending against the Company. Although the ultimate outcome of these proceedings cannot be ascertained at this time, and it is reasonably possible that some of them could be resolved unfavorably to the Company, management believes that any liabilities which may arise would not be material. 13) SHAREHOLDERS' EQUITY Effective in October 1988, 3,001,876 shares of Common Stock of the Company were issued to an operating partnership of the Partnership in exchange for certain assets, which shares have been deducted from the number of shares shown in the Consolidated Balance Sheets as outstanding. Such shares are not entitled to be voted at the annual meeting of shareholders. All other shares of Common Stock are entitled to one vote per share. On August 1, 1989, the Company privately placed $110 million of notes (ESOP Notes) pursuant to the provisions of the Oryx Energy Company Capital Accumulation Plan (CAP). The Company loaned the proceeds to the CAP which used the funds to purchase Common Stock of the Company. Prior to 1995, the CAP made scheduled loan payments using Company contributions to the CAP. In 1995, repayments are being deferred pending a favorable ruling from the Internal Revenue Service to terminate the leveraged ESOP portion of the CAP. The Company has 280,000,000 authorized shares of stock, consisting of (i) 250,000,000 shares of Common Stock having a par value of $1.00 per share, (ii) 15,000,000 shares of Cumulative Preference Stock (Preference Stock) having a par value of $1.00 and a liquidation preference of $.001 per share, and (iii) 15,000,000 shares of Preferred Stock (Preferred Stock) having a par value of $1.00 per share. As of December 31, 1994, there were 98,946,066 shares of Common Stock outstanding. There are two series of Preference Stock designated, of which there were 5,259,394 shares of Series B Preference Stock outstanding and 120,000 shares of Series A Preference Stock designated and reserved for issuance upon exercise of the Stock Purchase Rights (Rights), of which none were outstanding. The Preferred Stock was authorized by vote of the shareholders on May 5, 1992 and there are currently no shares of Preferred Stock designated or outstanding. In addition, on December 31, 1994 the Company had reserved for issuance 5,259,394 shares of Common Stock on conversion of the outstanding Series B Preference Stock, 5,111,438 shares of Common Stock on conversion of the outstanding 7 1/2% Convertible Debentures and 2,456,103 shares of Common Stock upon the exercise of outstanding management options. 31 13) SHAREHOLDERS' EQUITY (CONTINUED) COMMON STOCK Each share of Common Stock entitles its record owner to one vote on all matters submitted to the stockholders for action. The stockholders are not entitled to cumulative voting rights in the election of directors. Subject to the rights of holders of any class of Preference Stock or Preferred Stock, the holders of Common Stock are entitled to share ratably in dividends in such amount as may be declared by the Company's Board of Directors (Board) from time to time out of funds legally available therefor. The payment of dividends on the Common Stock is restricted under the Credit Agreement to no more than $1.20 per share annually, and is prohibited in the event of a default. PREFERENCE STOCK The Board is authorized by the Certificate to issue Preference Stock in one or more series and to fix for each such series such qualifications, privileges, limitations, options, conversion rights, and other special rights as are stated and adopted by the Board and as are permitted by the Certificate and the Delaware General Corporation Law, including the designation and number of shares issuable, the dividend rate, voting rights, conversion rights, redemption and sinking fund provisions, and liquidation values of each such series. Holders of Preference Stock are entitled to receive, when and as declared by the Board out of assets legally available for that purpose, annual cumulative dividends payable in quarterly installments. Unless full cumulative dividends on the Preference Stock have been paid, no dividend may be declared or paid on, or other distributions made upon, Preferred Stock or Common Stock, nor may any Preferred Stock or Common Stock be redeemed or purchased by the Company. Subject to certain conditions, the Company may redeem all or any part of the Preference Stock then outstanding. The Company had 5,259,394 shares of Series B Preference Stock outstanding at December 31, 1994. Any such shares held by the original holder shall be entitled to a dividend in excess of the dividend payable on Common Stock. Any periodic dividend declared subsequent to 1994 will be increased by a dividend preference equal to $.025 per share with respect to the first and second succeeding quarters. In 1994, the Board of Directors of the Company voted to suspend the dividend on Common Stock. Such suspension will not affect the dividend preference on the Series B Preference Stock. Series B Preference Stock is non-voting, except in certain cases specified in the Certificate or by law, and it is convertible into Common Stock on a share-for-share basis by the holder thereof subject to certain restrictions. After September 10, 1995, if the original holder of the Series B Preference Stock still owns it, those shares may be converted into Common Stock on a share-for-share basis by the holder thereof without the restrictions that applied on or before that date. PREFERRED STOCK The Board is authorized by the Certificate to issue Preferred Stock in one or more series and to fix for each such series such qualifications, privileges, limitations, options, conversion rights, and other special rights as are stated and adopted by the Board and as are permitted by the Certificate and the Delaware General Corporation Law, including the designation and number of shares issuable, the dividend rate, voting rights, conversion rights, redemption and sinking fund provisions, and liquidation values of each such series. Subject to the rights of holders of any class of Preference Stock, if any, the holders of Preferred Stock are entitled to receive dividends, when and as declared by the Board out of funds legally available for that purpose. As to dividends and rights upon liquidation, dissolution or winding up, the Preferred Stock will rank junior and subordinate to any series of Preference Stock, and prior to the Common Stock. RIGHTS On September 11, 1990, the Board declared a dividend distribution of one Stock Purchase Right on each outstanding share of Common Stock, payable September 28, 1990, to holders of record of the Common Stock on that date. The Rights are also issuable upon the issuance of additional shares of Common Stock prior to the time the Right are redeemed or expire. Initially, the Rights are represented by the certificates for the Common Stock and will trade only with the Common Stock. The Rights will expire September 11, 2000 unless earlier redeemed by the Company. 32 14) EMPLOYEE AND RETIREE BENEFIT PLANS DEFINED BENEFIT PENSION PLANS The Company has noncontributory defined benefit plans which provide retirement benefits for most of its employees. Plan benefits are generally based on years of service, age at retirement and the employee's compensation. It is the Company's policy to fund defined benefit pension contributions, at a minimum, in accordance with the requirements of the Internal Revenue Code. The cost of the Company's primary defined benefit pension plans consisted of the following:
1994 1993 1992 ---- ---- ---- (MILLIONS OF DOLLARS) Service cost (cost of benefits earned during the year) $ 5 $ 6 $ 8 Interest cost on projected benefit obligation 36 38 39 Actual return on plan assets 4 (59) (18) Net amortization and deferral* (47) 17 (28) ---- ---- ---- Net periodic pension cost** $ (2) $ 2 $ 1 ==== ==== ==== * Estimated returns on assets are used in determining net periodic pension cost. Differences between estimated and actual returns are included in net amortization and deferral. ** Does not include $1 million curtailment loss and $13 million cost of special termination benefits due to the reduction in workforce in 1994.
The following table sets forth the funded status and amounts recognized in the Company's Consolidated Balance Sheets at December 31:
1994 1993 ------------------------- ------------------------ PLANS IN PLANS IN PLANS IN WHICH PLANS IN WHICH WHICH ASSETS ACCUMULATED WHICH ASSETS ACCUMULATED EXCEED BENEFITS EXCEED BENEFITS ACCUMULATED EXCEED ACCUMULATED EXCEED BENEFITS ASSETS BENEFITS ASSETS ------------------------- ------------------------ (MILLIONS OF DOLLARS) Actuarial present value of benefit obligation: Vested $360 $ 81 $392 $82 Nonvested 15 2 16 3 ---- ---- ---- --- Accumulated benefit obligation 375 83 408 85 Effect of projected future salary increases 22 3 31 2 ---- ---- ---- --- Projected benefit obligation 397 86 439 87 Less plan assets at fair value* 390 - 457 - ---- ---- ---- --- Projected benefit obligation in excess of (less than) plan assets 7 86 (18) 87 Unrecognized net transition asset (obligation) 32 (14) 38 (17) Unrecognized prior service benefit (cost) - 2 (4) 3 Unrecognized net gain (loss) (61) (22) (37) (27) Additional minimum liability - 31 - 39 ---- ---- ---- --- Accrued pension liability (asset)** $(22) $ 83 $(21) $85 ==== ==== ==== === * Plan assets consist principally of commingled trust funds, marketable equity securities, corporate and government debt securities and real estate. At December 31, 1994, less than one percent of plan assets was invested in Common Stock of the Company. ** Accrued pension liability is included in "Deferred Credits and Other Liabilities" in the Consolidated Balance Sheets.
33 14) EMPLOYEE AND RETIREE BENEFIT PLANS (CONTINUED) As of December 31, 1994 and 1993, the projected benefit obligations were determined using weighted average assumed discount rates of 8 and 7 percent and a rate of compensation increase of 4 percent. The weighted average expected long-term rate of return on plan assets was 9.5 percent in 1994 and 1993. All of these rates are subject to change in the future as economic conditions change. DEFINED CONTRIBUTION PENSION PLANS Defined contribution plans, which are designed to provide retirement benefits, are available to substantially all employees. Contributions, which are principally based on employees' compensation, are expensed as incurred. At December 31, 1994, the principal defined contribution plan is CAP which is a combined stock bonus and leveraged ESOP and is available to substantially all U.S. employees. The first 5 percent of employee contributions are matched by the Company at 110 percent up to the first $50,000 of employee base salary and at 100 percent thereafter. In 1994, the Company's contributions to CAP were used to repay the debt issued to fund the purchase of Common Stock held by the leveraged ESOP. Costs recognized for defined contribution plans amounted to $11 million, $10 million and $9 million for 1994, 1993 and 1992. Additional information with respect to the leveraged ESOP portion of CAP is as follows:
1994 1993 1992 ---- ---- ---- (MILLIONS OF DOLLARS) Interest cost on ESOP debt $ 8 $ 9 $ 9 Company cash contributions to the ESOP $13 $10 $ 8 ESOP dividends used for debt service $ - $ 1 $ 3
HEALTH CARE AND LIFE INSURANCE BENEFITS The Company sponsors unfunded defined benefit health care and life insurance benefit plans to substantially all employees and retirees. Benefits under the health care plan are provided on a self-insured basis or through a Health Maintenance Organization. The health care plan provides comprehensive major medical coverage which integrates with Medicare and contains provisions for cost sharing with participants through contributions, coinsurance, deductibles and caps on employer costs. Benefits under the life insurance plan are provided through an insurance contract. The life insurance plan contains provisions for retiree cost sharing through contributions and provides benefits based on preretirement compensation with a scheduled reduction in benefits commencing at age 66 and termination of all benefits at age 70 for substantially all participants. The cost of health care and life insurance benefit plans was $19 million, $20 million and $16 million, of which $14 million, $12 million and $7 million was for retirees in 1994, 1993 and 1992. The Company adopted SFAS No. 106 on January 1, 1993, and in accordance with its provisions has changed to the accrual accounting method in computing postretirement health care and life insurance benefit plan expense. The Company formerly accounted for these costs using the pay-as-you-go (cash) method. 34 The cost, net of retiree contributions, of the postretirement health care and life insurance benefit plans calculated in accordance with the provisions of SFAS No. 106 is as follows:
1994 1993 ---- ---- (MILLIONS OF DOLLARS) Service cost (cost of benefits earned during the year) $ 1 $ 1 Interest cost on the accumulated postretirement benefit obligation 8 7 Actual return on plan assets - - Amortization of transition obligation 4 4 Net amortization of other components 1 - --- --- Net periodic postretirement benefit cost* $14 $12 === === * Does not include $13 million curtailment loss due to the reduction in workforce in 1994.
The following table sets forth the funded status and amounts reported in the Company's Consolidated Balance Sheets at December 31:
1994 1993 ---- ---- (MILLIONS OF DOLLARS) Accumulated postretirement benefit obligation: Retirees $ 81 $ 83 Active employees eligible to retire 4 4 Active employees not yet eligible to retire 10 17 ---- ---- Total accumulated postretirement benefit obligation 95 104 Less plan assets at fair value - - ---- ---- Accumulated obligation in excess of plan assets 95 104 Unrecognized net loss (5) (12) Unrecognized prior service benefit 5 - Unrecognized transition obligation (70) (86) ---- ---- Accrued postretirement benefit liability* $ 25 $ 6 ==== ==== * Accrued postretirement benefit liability is included in "Deferred Credits and Other Liabilities" in the Consolidated Balance Sheet.
The assumed health care cost trend rate used to measure the expected cost of benefits covered by the plan for 1995 is approximately 7 percent. Health care cost trend rates for future years are assumed to gradually trend downward over a six year period to meet and thereafter parallel the projected rate of general inflation of 4.5 percent. A 1 percent increase in the assumed health care cost trend rates for future years would result in no increase in annual cost but an increase of $6 million in the accumulated postretirement benefit obligation for the Company's health care plan. The weighted average assumed discount rates used to measure the accumulated postretirement benefit obligation are 8 and 7 percent in 1994 and 1993. For the life insurance plan, an assumed rate of increase of compensation of 4 percent was used to measure the accumulated postretirement benefit obligation. 35 15) MANAGEMENT INCENTIVE PLANS The Company provides management incentive plans to certain employees in the management of the Company. There was no charge against income for these plans in 1994 compared to charges of $2 million and $4 million for 1993 and 1992. The principal management incentive plans are the 1992 Long-Term Incentive Plan (1992 LTIP), the Long- Term Incentive Plan (LTIP) and the Executive Long-Term Incentive Plan (ELTIP). The ELTIP provides that no awards may be granted after November 1, 1988 and was replaced by the LTIP which provides that no awards may be granted after December 31, 1991. All previous awards granted under both the ELTIP and LTIP remain in effect in accordance with their terms. As of December 31, 1994, there were no outstanding awards granted under the ELTIP. The 1992 LTIP replaced the LTIP and became effective January 1, 1992. A maximum of 3,000,000 shares of Common Stock were authorized for issuance under the 1992 LTIP. Under the provisions of these plans, stock options, stock appreciation rights and limited rights were granted in various tandem combinations so that the exercise of any one of them will reduce, on a one-for-one basis, the tandem options or rights. In addition, certain stock options were granted which become exercisable (subject to the option vesting schedule) only upon the cancellation of the related performance shares for non- attainment of performance targets. The following table summarizes information with respect to Common Stock options awarded under the 1992 LTIP, the LTIP and the ELTIP:
1994 1993 1992 ------------------------- ----------------------- ------------------------- SHARES SHARES SHARES UNDER OPTION PRICE UNDER OPTION PRICE UNDER OPTION PRICE OPTION PER SHARE OPTION PER SHARE OPTION PER SHARE --------- -------------- --------- ------------ --------- ------------- Outstanding, January 1 1,914,832 $19.63-$44.13 1,491,116 $20.36-$44.13 1,076,265 $20.36-$44.13 Granted* 643,900 $17.44 470,690 $19.63 449,900 $26.00 Exercised** - - - - (944) $20.36 Cancelled (102,629) $17.44-$44.13 (46,974) $20.36-$44.13 (34,105) $24.16-$44.13 --------- --------- --------- Outstanding, December 31 2,456,103 $17.44-$44.13 1,914,832 $19.63-$44.13 1,491,116 $20.36-$44.13 ========= ========= ========= Exercisable, December 31** 1,278,033 $17.44-$44.13 773,256 $24.16-$44.13 571,390 $20.36-$44.13 ========= ========= ========= Available for grant, December 31*** 1,262,086 1,835,440 2,411,653 ========= ========= ========= * Includes 209,300 and 196,340 stock options granted in 1993 and 1992 in tandem with performance shares which become exercisable only upon cancellation of the related performance shares. ** Excludes outstanding stock options granted in 1993 and 1992 in tandem with performance shares which become exercisable (subject to the option vesting schedule) only upon cancellation of the related performance shares. In January 1995, 148,435 such stock options granted in 1992 became exercisable due to the cancellation of the related performance shares. *** Shares available for grant is net of the number of performance shares outstanding which were granted under the provisions of these plans.
36 16) GEOGRAPHIC SEGMENT INFORMATION During 1994, sales of oil to the Company's top purchaser totaled approximately 18 percent of oil revenue. During 1993, sales of oil to the Company's top two purchasers totaled approximately 12 and 10 percent of oil revenue. Sales of gas to the Company's top purchaser in 1994 totaled approximately 12 percent and in 1993 totaled approximately 14 percent of gas revenue. The Company believes that the loss of any major purchaser would not have a material adverse effect on the Company's business. Financial information by segment for the years ended December 31, 1994, 1993 and 1992 are summarized as follows:
UNITED UNITED OTHER STATES KINGDOM INDONESIA FOREIGN TOTAL ------ ------- --------- ------- ------ (MILLIONS OF DOLLARS) DECEMBER 31, 1994 Revenues Oil and gas $ 624 $355 $ 79 $ 24 $ 1,082 Other (10) - - - (10) ------ ---- ---- ---- ------- Total Revenues 614 355 79 24 1,072 ------ ---- ---- ---- ------- Expenses Operating costs 197 146 24 7 374 Production taxes 44 28 36 4 112 Exploration costs 54 12 17 21 104 Depr., depl. and amort. 167 86 7 11 271 Miscellaneous - 1 - - 1 ------ ---- ---- ---- ------- Total Operating Expenses 462 273 84 43 862 ------ ---- ---- ---- ------- Operating Profit (Loss)* $ 152 $ 82 $ (5) $(19) 210 ====== ==== ==== ==== General and administrative expense (68) Interest, net (150) Provision for restructuring (92) Benefit for income taxes 37 Remeasurement of foreign deferred tax (2) Extraordinary item (12) Cumulative effect of accounting change (948) ------- Net Loss $(1,025) ======= Capital Expenditures $ 168** $ 65*** $ 28 $ 20 $ 281 ====== ==== ==== ==== ======= Identifiable Assets $1,508 $459 $126 $ 14 $ 2,107 ====== ==== ==== ==== ======= * Provision (benefit) for income taxes on 1994 operating profits, calculated at statutory rates, are $55 million, $27 million and $(3) million for the United States, United Kingdom and Indonesia. No statutory tax benefit results from the Other Foreign operating loss of $19 million. ** Includes capitalized interest of $5 million. *** Includes capitalized interest of $6 million.
37 16) GEOGRAPHIC SEGMENT INFORMATION (CONTINUED)
UNITED UNITED OTHER STATES KINGDOM INDONESIA FOREIGN TOTAL ------ ------- --------- ------- ------ (MILLIONS OF DOLLARS) DECEMBER 31, 1993 Revenues Oil and gas $ 700 $ 265 $ 97 $ 18 $1,080 Other (26) - - - (26) ------ ------ ---- ---- ------ Total Revenues 674 265 97 18 1,054 ------ ------ ---- ---- ------ Expenses Operating costs 194 127 29 3 353 Production taxes 52 9 44 7 112 Exploration costs 57 19 13 11 100 Depr., depl. and amort. 261 111 14 9 395 Miscellaneous 1 - - - 1 ------ ------ ---- ---- ------ Total Operating Expenses 565 266 100 30 961 ------ ------ ---- ---- ------ Operating Profit (Loss)* $ 109 $ (1) $ (3) $(12) 93 ====== ====== ==== ==== General and administrative expense (85) Interest, net (116) Benefit for income taxes 10 Remeasurement of foreign deferred tax 5 Extraordinary item (7) ------ Net Loss $ (100) ====== Capital Expenditures $ 202 $ 232** $ 13 $ 6 $ 453** ====== ====== ==== ==== ====== Identifiable Assets $1,861 $1,589 $103 $ 71 $3,624 ====== ====== ==== ==== ====== * Provision (benefit) for income taxes on 1993 operating profits, calculated at statutory rates, are $44 million and $(2) million for the United States and Indonesia ** Includes capitalized interest of $46 million.
38
UNITED UNITED OTHER STATES KINGDOM INDONESIA FOREIGN TOTAL ------ ------- --------- ------- ------ (MILLIONS OF DOLLARS) DECEMBER 31, 1992 Revenues Oil and gas $ 799 $ 335 $127 $14 $1,275 Other 119 (2) - - 117 ------ ------ ---- --- ------ Total Revenues 918 333 127 14 1,392 ------ ------ ---- --- ------ Expenses Operating costs 215 149 26 7 397 Production taxes 62 17 58 - 137 Exploration costs 67 24 13 8 112 Depr., depl. and amort. 276 108 21 4 409 Miscellaneous 1 4 - - 5 Provision for relinquishment of non-producing properties 63 - - - 63 ------ ------ ---- --- ------ Total Operating Expenses 684 302 118 19 1,123 ------ ------ ---- --- ------ Operating Profit* $ 234 $ 31 $ 9 $(5) 269 ====== ====== ==== === General and administrative expense (120) Interest, net (139) Provision for restructuring (14) Benefit for income taxes 18 Remeasurement of foreign deferred tax 59 Cumulative effect of accounting change (59) ------ Net Income $ 14 ====== Capital Expenditures $ 101 $ 249** $ 12 $10 $ 372** ====== ====== ==== === ====== Identifiable Assets $2,086 $1,461 $113 $78 $3,738 ====== ====== ==== === ====== * Provisions for income taxes on 1992 operating profits, calculated at statutory rates, are $82 million, $8 million and $5 million for the United States, United Kingdom and Indonesia. No statutory tax benefit results from the Other Foreign operating profit of $5 million. ** Includes capitalized interest of $43 million.
17) STATEMENT OF CASH FLOWS Amounts paid for interest and income taxes were as follows:
1994 1993 1992 ---- ---- ---- (MILLIONS OF DOLLARS) Interest paid (net of capitalized interest) $128 $119 $133 Income taxes paid (refunded) $(11) $ 14 $ 39
During 1994, the Company exchanged its interests in the undeveloped U.K. North Sea Britannia field and certain other undeveloped domestic properties, for Conoco's interests in the developed U.K. North Sea Hutton, Lyell and Murchison fields and certain undeveloped interests. This transaction was accounted for by the Company as a non-cash property exchange, except for $40 million of associated divestment proceeds received by the Company. During 1993, the Company recognized deferred tax liabilities of $3 million associated with international properties acquisitions. In accordance with Statement of Financial Accounting Standards No. 95, "Statement of Cash Flows," non-cash transactions are not reflected within the accompanying Consolidated Statements of Cash Flows. 39 18) DEFERRED CREDITS AND OTHER LIABILITIES At December 31, the Company's deferred credits and other liabilities were comprised of the following:
1994 1993 ---- ---- (MILLIONS OF DOLLARS) Employee benefit obligations $ 80 $ 75 Deferred gains on interest rate hedges 32 37 Accrued acquisition financing - 33 Minority interest in consolidated subsidiaries 17 27 Accrued environmental cleanup costs 21 20 Other 5 9 ---- ---- $155 $201 ==== ====
Environmental cleanup costs have been accrued in response to the identification of several sites that require cleanup based on environmental pollution, some of which have been designated as superfund sites by the Environmental Protection Agency (EPA). The Company has been named as a potentially responsible party (PRP) at four sites pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended. At two of these sites, the Company has been named as a de minimis party and therefore expects its liability to be small. At a third site, the Company is reviewing its options and anticipates that it will participate in steering committee activities with the EPA. At the fourth and largest site, the Operating Industries, Inc. site in California, the Company has participated in a steering committee consisting of 139 companies. The steering committee and other PRP's previously entered into two partial consent decrees with the EPA providing for remedial actions which have been or are to be completed. The steering committee has successfully negotiated a third partial consent decree which provides for the following remedial actions: a clay cover, methane capturing wells, and leachate destruction facilities. The remaining work at the site involves groundwater evaluation and long-term operation and maintenance. The Company is a member of the group that is responsible for carrying out the first phase of the work, which is expected to take 5 to 8 years. Completion of all phases is estimated to take up to 30 years. The maximum liability of the group, which is joint and several for each member of the group, is expected to range from approximately $450 million to $600 million, of which the Company's share is expected to be approximately $10 million (net of $3 million in recoveries from third parties). Cleanup costs are payable over the period that the work is completed. Based on the facts outlined above and the Company's ongoing analyses of the actions where it has been identified as a PRP, the Company believes that it has accrued sufficient reserves to absorb the ultimate cost of such actions and that such costs therefore will not have a material impact on the Company's liquidity, capital resources or financial condition. While liability at superfund sites is typically joint and several, the Company has no reason to believe that defaults by other PRPs will result in liability of the Company materially larger than expected. 40 REPORT OF INDEPENDENT ACCOUNANTS To the Shareholders and Board of Directors, Oryx Energy Company: We have audited the accompanying consolidated balance sheets of Oryx Energy Company and its Subsidiaries as of December 31, 1994 and 1993 and the related consolidated statements of income, cash flows and changes in shareholders' equity (deficit) for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Oryx Energy Company and its Subsidiaries as of December 31, 1994 and 1993 and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1994 in conformity with generally accepted accounting principles. As discussed in Notes 1 and 7 to the Consolidated Financial Statements, the Company changed its accounting policy for calculating the oil and gas asset ceiling test in 1994, its methods of accounting for postretirement benefits other than pensions and postemployment benefits in 1993 and its method of computing deferred income taxes in 1992. COOPERS & LYBRAND L.L.P. Dallas, Texas February 19, 1995 41 ORYX ENERGY COMPANY SUPPLEMENTARY FINANCIAL AND OPERATING INFORMATION (UNAUDITED) OIL AND GAS DATA CAPITALIZED COSTS
UNITED UNITED OTHER STATES KINGDOM INDONESIA FOREIGN TOTAL ------ ------- --------- ------- ----- (MILLIONS OF DOLLARS) DECEMBER 31, 1994 Proved properties $3,975 $1,863 $196 $78 $6,112 Unproved properties 42 87 10 4 143 ------ ------ ---- --- ------ Total capitalized costs 4,017 1,950 206 82 6,255 Less accum. depr., depl. and amort. 3,011 1,254 131 28 4,424 ------ ------ ---- --- ------ Net capitalized costs (Note 7) $1,006 $ 696 $ 75 $54 $1,831 ====== ====== ==== === ====== DECEMBER 31, 1993 Proved properties $4,193 $1,741 $185 $65 $6,184 Unproved properties 60 185 6 6 257 ------ ------ ---- --- ------ Total capitalized costs 4,253 1,926 191 71 6,441 Less accum. depr., depl. and amort. 2,605 417 98 18 3,138 ------ ------ ---- --- ------ Net capitalized costs $1,648 $1,509 $ 93 $53 $3,303 ====== ====== ==== === ======
COSTS INCURRED IN OIL AND GAS PRODUCING ACTIVITIES
UNITED UNITED OTHER STATES KINGDOM INDONESIA FOREIGN TOTAL ------ ------- --------- ------- ----- (MILLIONS OF DOLLARS) 1994 Property acquisition costs: Proved $ - $ - $ - $ - $ - Unproved 4 - - - 4 Exploration costs 41 11 16 23 91 Development costs 144* 56** 17 2 219 ---- --- --- --- --- Total $189 $67 $33 $25 $314 ==== ==== === === ==== 1993 Property acquisition costs: Proved $ 11 $ 33 $ - $ - $ 44 Unproved 8 - - - 8 Exploration costs 62 15 15 11 103 Development costs 147 147** 2 - 296 ---- ---- --- --- ---- Total $228 $195 $17 $11 $451 ==== ==== === === ==== 1992 Property acquisition costs: Proved $ - $ - $ - $ - $ - Unproved - - - - - Exploration costs 51 25 13 12 101 Development costs 85 194** 8 2 289 ---- ---- --- --- ---- Total $136 $219 $21 $14 $390 ==== ==== === === ==== * Excludes capitalized interest of $5 million for 1994. ** Excludes capitalized interest of $6 million, $46 million and $43 million for 1994, 1993 and 1992.
42 EXPLORATION COSTS
UNITED UNITED OTHER STATES KINGDOM INDONESIA FOREIGN TOTAL ------ ------- --------- ------- ----- (MILLIONS OF DOLLARS) 1994 Dry hole costs $10 $ 4 $12 $13 $39 Leasehold impairment 18 - - - 18 Geological and geophysical 25 7 5 8 45 Other 1 1 - - 2 --- --- --- --- --- $54 $12 $17 $21 $104 === === === === ==== 1993 Dry hole costs $21 $ 5 $ 8 $ 3 $ 37 Leasehold impairment 3 4 - 1 8 Geological and geophysical 31 9 5 7 52 Other 2 1 - - 3 --- --- --- --- --- $57 $19 $13 $11 $100 === === === === ==== 1992 Dry hole costs $12 $ 4 $ 3 $ 2 $ 21 Leasehold impairment 26 8 1 - 35 Geological and geophysical 28 11 9 5 53 Other 2 1 - - 3 --- --- --- --- --- $68 $24 $13 $ 7 $112 === === === === ====
ESTIMATED NET QUANTITIES OF PROVED OIL AND GAS RESERVES Proved reserve quantities were based on estimates prepared by Company engineers in accordance with guidelines established by the Securities and Exchange Commission and were reviewed by Gaffney, Cline & Associates, Inc., independent petroleum engineers. The Company considers such estimates to be reasonable; however, due to inherent uncertainties and the limited nature of reservoir data, estimates of underground reserves are imprecise and subject to change over time as additional information becomes available. There has been no major discovery or other favorable or adverse event that has caused a significant change in estimated proved reserves since December 31, 1994. The Company has no long-term supply agreements or contracts with governments or authorities in which it acts as producer nor does it have any interest in oil and gas operations accounted for by the equity method. 43 PROVED RESERVES
RECOVERABLE CRUDE OIL AND CONDENSATE NATURAL GAS LIQUIDS NATURAL GAS (MILLIONS OF BARRELS) (MILLIONS OF BARRELS) (BILLIONS OF CUBIC FEET) --------------------------------- --------------------- ------------------------ OTHER U.S. U.K. INDONESIA FOREIGN TOTAL U.S. U.S.* U.K. TOTAL ---- ---- --------- ------- ----- ---- ----- ---- ----- BALANCE AT DECEMBER 31, 1991 294 190 31 26 541 66 1,775 266 2,041 Revisions of previous estimates (14) - 5 - (9) - (31) - (31) Improved recovery 4 - - - 4 - 1 - 1 Purchases of minerals in place - - - - - - - - - Sales of minerals in place (21) - - (15) (36) (34) (198) - (198) Extensions and discoveries 15 12 8 5 40 - 177 196 373 Production (23) (13) (6) (1) (43) (7) (214) (35) (249) --- --- -- --- --- --- ----- --- ----- BALANCE AT DECEMBER 31, 1992 255 189 38 15 497 25 1,510 427 1,937 Revisions of previous estimates (4) (3) 4 2 (1) (1) 5 52 57 Improved recovery 1 - - - 1 - 1 - 1 Purchases of minerals in place - 13 - - 13 - 4 - 4 Sales of minerals in place (12) - - - (12) (2) (66) - (66) Extensions and discoveries 19 2 - 8 29 2 168 - 168 Production (21) (13) (5) (1) (40) (3) (191) (29) (220) --- --- -- --- --- --- ----- --- ----- BALANCE AT DECEMBER 31, 1993 238 188 37 24 487 21 1,431 450 1,881 Revisions of previous estimates (2) 1 1 (2) (2) 3 23 4 27 Improved recovery - - - - - - - - - Purchases of minerals in place - 24** - - 24 - 2 4** 6 Sales of minerals in place (22) (19) - - (41) - (115) (248) (363) Extensions and discoveries 6 - 4 19 29 - 188 - 188 Production (17) (20) (5) (2) (44) (3) (196) (23) (219) --- --- -- --- --- --- ----- --- ----- BALANCE AT DECEMBER 31, 1994 203 174 37 39 453 21 1,333 187 1,520 === === == === === === ===== === ===== PROVED DEVELOPED RESERVES AT DECEMBER 31 1991 212 89 27 6 334 57 1,351 155 1,506 1992 175 76 27 3 281 20 1,069 121 1,190 1993 156 85 26 5 272 16 1,010 95 1,105 1994 130 112 24 7 273 16 907 143 1,050 * Natural gas reserve volumes include liquefiable hydrocarbons approximating 5 percent of total gas reserves which are recoverable at natural gas processing plants downstream from the lease or field separation facilities. Such recoverable liquids also have been included in natural gas liquids reserve volumes. ** Represents reserves received in the asset exchange. These amounts have been excluded in calculating FD&A and reserve replacement (see Note 17).
44 STANDARDIZED MEASURE The standardized measure of discounted future net cash flows from estimated production of proved oil and gas reserves after income taxes is presented in accordance with the provisions of SFAS No. 69, "Disclosures about Oil and Gas Producing Activities" (SFAS No. 69). In computing this data, assumptions other than those mandated by SFAS No. 69 could produce substantially different results. The Company cautions against viewing this information as a forecast of future economic conditions or revenues. The standardized measure has been prepared assuming year-end selling prices adjusted for future fixed and determinable contractual price changes, year-end development and production costs, year-end statutory tax rates adjusted for future tax rates already legislated and a ten percent annual discount rate. The year end realized prices were $15.31, $11.75 and $17.13 per barrel of oil and $1.82, $2.03 and $1.99 per mcf of gas for 1994, 1993 and 1992.
UNITED UNITED OTHER STATES KINGDOM INDONESIA FOREIGN TOTAL ------ ------- --------- ------- ----- (MILLIONS OF DOLLARS) 1994 Future cash inflows $ 5,729 $ 3,631 $ 609 $ 531 $10,500 Future production and development costs (2,950) (2,627) (502) (392) (6,471) Future income tax expenses (847) (80) (44) (26) (997) ------- ------- ----- ----- ------- Future net cash flows 1,932 924 63 113 3,032 Discount at 10 percent (689) (240) (13) (60) (1,002) ------- ------- ----- ----- ------- Standardized measure $ 1,243 $ 684 $ 50 $ 53 $ 2,030 ======= ======= ===== ===== ======= 1993 Future cash inflows $ 5,802 $ 3,755 $ 461 $ 259 $10,277 Future production and development costs (3,652) (2,885) (403) (190) (7,130) Future income tax expenses (579) (116) (27) (10) (732) ------- ------- ----- ----- ------- Future net cash flows 1,571 754 31 59 2,415 Discount at 10 percent (642) (307) (11) (27) (987) ------- ------- ----- ----- ------- Standardized measure $ 929 $ 447 $ 20 $ 32 $ 1,428 ======= ======= ===== ===== =======
SUMMARY OF CHANGES IN THE STANDARDIZED MEASURE
1994 1993 1992 ------ ------- ------- (MILLIONS OF DOLLARS) Balance, beginning of year $1,428 $ 2,408 $ 2,875 Increase (decrease) in discounted future net cash flows: Sales of oil and gas production, net of related costs (596) (606) (746) Revisions to estimates of proved reserves: Prices 1,040 (1,389) (245) Development costs 390 3 (267) Production costs (865) 99 534 Quantities 14 - (66) Other 292 (89) (467) Extensions, discoveries and improved recovery, less related costs 233 111 282 Development costs incurred during the period 219 321 303 Purchases of reserves in place 89 53 - Sales of reserves in place (83) (59) (430) Accretion of discount 177 298 371 Income taxes (308) 278 264 ------ ------- ------- Balance, end of year $2,030 $ 1,428 $ 2,408 ====== ======= =======
45 ORYX ENERGY COMPANY QUARTERLY FINANCIAL INFORMATION
QUARTER ENDED ----------------------------------------------------- MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 TOTAL -------- ------- ------------ ----------- ----- (MILLIONS OF DOLLARS EXCEPT, PER SHARE AMOUNTS) Revenue: 1994 As reported $ 260 $ 255 $271 Restatement of other revenues for accounting change - - 2 ------- ----- ---- As restated $ 260 $ 255 $273 $284 $ 1,072 ======= ===== ==== ==== ======= 1993 $ 283 $ 278 $264 $229 $ 1,054 ======= ===== ==== ==== ======= Gross profit:* 1994 $ 50 $ 53 $ 45 $ 76 $ 224 ======= ===== ==== ==== ======= 1993 $ 45 $ 64 $ 31 $ (1) $ 139 ======= ===== ==== ==== ======= Net income (loss):** 1994 As reported Before extraordinary item $ (140) $ (41) $(44) Extraordinary item - - (12) ------- ----- ---- $ (140) $ (41) $(56) ======= ===== ==== As restated Before extraordinary item and cumulative effect of accounting change $ (60) $ (7) $ (12) $ 14 $ (65) Extraordinary item - - (12) - (12) Cumulative effect of accounting change (948) - - - (948) ------- ----- ----- ---- ------- $(1,008) $ (7) $ (24) $ 14 $(1,025) ======= ===== ===== ==== ======= 1993 Before extraordinary item $ (7) $ 4 $ (45) $(45) $ (93) Extraordinary item - - - (7) (7) ------- ----- ----- ---- ------- Net income (loss) $ (7) $ 4 $ (45) $(52) $ (100) ======= ===== ===== ==== ======= Net income (loss) per share of common stock:** 1994 As reported Before extraordinary item $ (1.44) $(.43) $(.45) Extraordinary item - - (.12) ------- ----- ----- $ (1.44) $(.43) $(.57) ======= ===== ===== As restated Before extraordinary item and cumulative effect of accounting change $ (.62) $(.08) $(.13) $ .14 $ (.68) Extraordinary item - - (.12) - (.12) Cumulative effect of accounting change (9.77) - - - (9.73) ------- ----- ----- ----- ------- $(10.39) $(.08) $(.25) $ .14 $(10.53) ======= ===== ===== ===== ======= 1993 Before extraordinary item $ (.08) $ .03 $(.48) $(.48) $ (1.01) Extraordinary item - - - (.07) (.07) ------- ---- ----- ----- ------- Net income (loss) $ (.08) $ .03 $(.48) $(.55) $ (1.08) ======= ===== ===== ===== ======= * Gross profit equals oil and gas revenues plus gas plant margins less production cost, exploration cost and depreciation, depletion and amortization. ** See Notes 1 and 7.
46 MARKET FOR ORYX ENERGY COMMON STOCK AND RELATED SECURITY MATTERS The common stock, $1 par value, of the Company trades on the New York Stock Exchange under the symbol "ORX". The following table sets forth the high and low sales prices, as reported on the New York Stock Exchange Composite Transactions quotations, and the dividends paid for the periods indicated:
HIGH LOW DIVIDENDS ------- ------- --------- 1994: First quarter $20 $15 7/8 $ - Second quarter $18 1/4 $14 3/8 $ - Third quarter $16 $13 7/8 $ - Fourth quarter $15 1/8 $10 5/8 $ - 1993: First quarter $24 $17 1/4 $.10 Second quarter $24 7/8 $20 $.10 Third quarter $24 3/4 $19 3/8 $.10 Fourth quarter $26 1/4 $16 1/4 $.10
The Company had 36,811 holders of record of Common Stock as of February 17, 1995. 48 EX-16 8 C&L LTR. EXHIBIT 16 To the Board of Directors, Oryx Energy Company: We are providing this letter to you for inclusion as an exhibit to your Form 10-K filing pursuant to Item 601 of Regulation S-K. We have read management's justification for the change in accounting method for assessing the impairment of proved oil and gas properties from a world-wide basis to a field-by-field basis contained in the Company's Form 10-K for the year ended December 31, 1994. Based on our reading of the data and discussions with Company officials of the business judgment and business planning factors relating to the change, we believe management's justification to be reasonable. Accordingly, in reliance on management's determination as regards elements of business judgment and business planning, we concur that the newly adopted accounting principle described above is preferable in the Company's circumstances to the method previously applied. Coopers & Lybrand L.L.P. February 19, 1995 Dallas, Texas EX-23 9 CONSENT EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Form S-8 registration statements of the Oryx Energy Company Long-Term Incentive Plan (File No. 33-25032), the Oryx Energy Company Capital Accumulation Plan (File No. 33-24918), the Oryx Energy Company 1992 Long-Term Incentive Plan (File No. 33-42695) and the Form S-3 registration statements of Oryx Energy Company (File No.'s 33-33361, 33-36799 and 33-45611), of our report dated February 19, 1995, on our audit of the consolidated financial statements of Oryx Energy Company and its Subsidiaries as of December 31, 1994 and 1993 and for each of the three years in the period ended December 31, 1994, which report is incorporated by reference in this Form 10-K from page 41 of the Oryx Energy Company 1994 Annual Report to Shareholders. COOPERS & LYBRAND L.L.P. Dallas, Texas March 22, 1995 EX-24 10 POWER OF ATTORNEY EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert L. Keiser and Edward W. Moneypenny, and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities to sign the Annual Report of Oryx Energy Company for the fiscal year ended December 31, 1994 on Form 10-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 and any or all amendments to the Annual Report and to file the same, with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof. SIGNATURE TITLE DATE ----------------------------------- ------------------------ ---------------- /S/ ROBERT L. KEISER Chairman of the Board, March 2, 1995 ----------------------------------- Chief Executive (Robert L. Keiser) Officer, President, and Director (principal executive officer) /s/ EDWARD W. MONEYPENNY Executive Vice March 2, 1995 ----------------------------------- President, Finance, (Edward W. Moneypenny) Chief Financial Officer, and Director (principal financial officer) /s/ JERRY W. BOX Executive Vice March 2, 1995 ----------------------------------- President, Exploration (Jerry W. Box) and Production and Director /s/ ROBERT L. THOMPSON Comptroller and March 2, 1995 ----------------------------------- Corporate Planning (Robert L. Thompson) Director (principal accounting officer) /s/ WILLIAM E. BRADFORD Director March 2, 1995 ----------------------------------- (William E. Bradford) /s/ CAROL E. DINKINS Director March 2, 1995 ----------------------------------- (Carol E. Dinkins) /s/ ROBERT B. GILL Director March 2, 1995 ----------------------------------- (Robert B. Gill) SIGNATURE TITLE DATE ----------------------------------- ------------------------ ---------------- /s/ DAVID S. HOLLINGSWORTH Director March 2, 1995 ----------------------------------- (David S. Hollingsworth) /s/ CHARLES H. PISTOR, JR. Director March 2, 1995 ----------------------------------- (Charles H. Pistor, Jr.) /s/ PAUL R. SEEGERS Director March 2, 1995 ----------------------------------- (Paul R. Seegers) /s/ IAN L. WHITE-THOMSON Director March 2, 1995 ----------------------------------- (Ian L. White-Thomson)