-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qy7L1XSB4VTI8kZIcmPky9nK7Pjd8Cu1/J65jqbiKX+eJhcl+lj8P74RxpCknwWn 60HyoRJAplyrI+KboigK0A== 0000912057-96-005336.txt : 19960402 0000912057-96-005336.hdr.sgml : 19960402 ACCESSION NUMBER: 0000912057-96-005336 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960328 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORYX ENERGY CO CENTRAL INDEX KEY: 0000836442 STANDARD INDUSTRIAL CLASSIFICATION: 1311 IRS NUMBER: 231743284 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-10053 FILM NUMBER: 96539438 BUSINESS ADDRESS: STREET 1: 13155 NOEL RD CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2147154000 FORMER COMPANY: FORMER CONFORMED NAME: SUN EXPLORATION & PRODUCTION CO DATE OF NAME CHANGE: 19890503 10-K 1 FORM 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, 1995 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 8% NOTES DUE OCTOBER 15, 2003 NEW YORK STOCK EXCHANGE 8 1/8% NOTES DUE OCTOBER 15, 2005 NEW YORK STOCK EXCHANGE 7 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE MAY 15, NEW YORK STOCK EXCHANGE 2014
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: MEDIUM TERM NOTES, SERIES A DUE FEBRUARY 1, 1996 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. X 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 March 1, 1996, was approximately $1,333 million. The number of shares of Common Stock, $1 par value, outstanding as of March 1, 1996, was 104,566,704. Selected portions of the Oryx Energy Company Annual Report to Shareholders to the fiscal year ended December 31, 1995 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, 1995, 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, 1995 incorporated by reference in Parts I, II and IV of this Form 10-K, the following terms have specific meanings: m thousand mm million bbl barrel mb thousand barrels mmb million barrels mcf thousand cubic feet mmcf million cubic feet bcf billion cubic feet eb equivalent barrel meb thousand equivalent barrels b/d barrels per day mmeb million equivalent barrels WTI West Texas Intermediate spot price mmcf/d million cubic feet per day ED&A exploration, development and HH Henry Hub spot price acquisition FD&A finding, development and acquisition
Natural gas equivalents are determined under the relative energy content method by using the ratio of 6 mcf of natural gas to 1 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 the whole numbers by the Company's working interest. 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 in the oil and gas exploration and production business. The Company has a strong base of U.S. and international reserves and production in the Gulf of Mexico, the southwestern U.S., the U.K. North Sea, Ecuador and Kazakstan. It also has exploration and development projects in the Gulf of Mexico, the U.K. North Sea, Kazakstan, Australia and Algeria. The Company also had producing assets in Indonesia and Gabon which were sold in 1995. 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 and owns a 98 percent interest. In 1995, the Company implemented a plan which refocused strategic direction, significantly reduced debt, restored profitability and set the Company on a course for sustained long-term growth in cash flow. The Company reoriented its strategic direction by changing the nature of its capital investing program. The Company is emphasizing lower-risk and shorter cycle-time prospects. The U.S. is the centerpiece of the Company's investment strategy for the foreseeable future, supplemented by a measured and focused international program. Investing has been supported by proven technology. Major development programs will be funded and opportunities around existing fields will be exploited. Exploration spending is directed toward areas of proven success, and overall exploration spending has been decreased. The Company emphasizes projects that generate near-term cash flow and de-emphasizes entry into new countries. The primary geographic focus of both exploration and development spending is the Gulf of Mexico. For the five years 1991 through 1995, the Company's average production replacement rate was 92 percent at a cost of $5.04 per eb. In 1995, the Company replaced 67 percent of its production at $5.86 per eb. The Company determines its ED&A investing plans primarily based on the cash flow that it expects to generate. For 1995, the Company invested $300 million for ED&A programs. The Company plans to invest approximately $420 million for ED&A in 1996, with the primary emphasis being near-term volume additions, primarily in the Gulf of Mexico. The Company is basing its 1996 investing plans on oil and gas spot prices averaging $18.00 per barrel (WTI) and $1.80 per mmbtu (H H). The Company's cash flow available for investment will continue to be affected by prevailing oil and gas prices, costs and volumes. In 1995, about 22 percent of the Company's total ED&A investing was on exploration and about 78 percent on development. About 73 percent of total ED&A outlays were made in the U.S., and this will remain at 73 percent in 1996. PROVED RESERVES As of December 31, 1995, the Company's estimated proved reserves were 344 mmb of liquids and 1,323 bcf of natural gas which represents an aggregate of 564 mmeb of reserves. The Company's liquids reserves were located in the United States (60 percent), the United Kingdom (29 percent) and other foreign countries (11 percent). The Company's natural gas reserves were located in the United States (98 percent) and the United Kingdom (2 percent). More information on the estimated quantities of proved oil and gas reserves, proved developed reserves, and the Standardized Measure, are presented in the "Consolidated Financial Statements -- Supplementary Financial and Operating Information" in the Company's 1995 Annual Report to Shareholders. The Company files oil and gas reserve estimates with various governmental regulatory authorities and agencies, the variability of which does not exceed 5 percent. ASSET SALES In July 1995, the Company completed the sale of all of its assets in the Alba field in the U.K. North Sea for cash consideration of $270 million. In November 1995, the Company sold its interest in Block 48/15a in the U.K. North Sea for $120 million. Assets sold included the Company's 33.7 percent 2 interest in the Audrey field; its estimated 10 percent interest in the Galleon field; and its undetermined interest in the Ensign discovery. The sale of these North Sea assets was part of a series of related asset dispositions which the Company entered into in 1995 for the purpose of reducing debt. In addition, the Company completed sales of certain U.S. oil and gas producing assets and all of its assets in Indonesia and Gabon. The sale of U.S. assets occurred primarily during the six months ended June 30, 1995 and generated cash proceeds of $77 million; the sale of the Indonesian assets occurred in May 1995 for cash proceeds of $67 million; and the sale of the Gabonese assets occurred in March 1995 for cash proceeds of $2 million. Asset dispositions, totaling $536 million of gross proceeds, represent 138 million equivalent barrels of proved reserves and 43 thousand average equivalent barrels of production per day. OFFSHORE UNITED STATES The Company emphasizes projects that generate near-term cash flow. The Company has identified the Gulf of Mexico as the cornerstone of its growth strategy. The Company has significant presence in the Gulf of Mexico with an interest in 115 blocks in various stages of exploration, development and production. The Company has an interest in 36 producing platforms, 17 of which it operates. The Company also holds interests in various offshore pipelines and facilities. EXPLORATION As of December 31, 1995, the Company held 275 thousand net undeveloped acres offshore, as compared to 344 thousand as of December 31, 1994. Of the 115 Gulf of Mexico blocks in which the Company owns an interest, 71 are undeveloped. In 1995, the Company spent $5 million to acquire interests in seven blocks. As of December 31, 1995, one exploratory well was being drilled. The Company drilled 6 gross (3 net) exploratory wells offshore in 1995 and 4 gross (3 net) in 1994. Of the wells drilled in 1995, 2 gross (1 net) wells were successful. PRODUCTION AND DEVELOPMENT Average daily production of crude oil and condensate offshore was 16, 10 and 9 mbbls in 1995, 1994 and 1993. Average daily production of natural gas offshore was 180, 203 and 193 mmcf in 1995, 1994 and 1993. The Company owns a 100 percent interest in the High Island A-576 block. In 1994, 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 discoveries at High Island 379 and 385. This development, which has been named the Sherman Project, began production in December 1995. Peak production was 7 meb per day. 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 360 feet. In 1993, the Company announced an oil discovery in High Island 379 which encountered 179 feet of oil pay. 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. This new development, which has been named the Patton Project, began production in January 1995 and in September achieved the expected peak production of 20 meb per day. Late in 1995, the Company confirmed the presence of natural gas reserves in a previously untested area of the High Island 384 Unit. The High Island 385 #3 well encountered 158 feet of net gas pay. Two subsequent delineation wells found the same pay interval in nearby fault blocks. In the second phase of Patton, the Company will install a platform in 360 feet of water and develop the new gas reservoir. First production from phase II is expected by the fourth quarter of 1996 with gross peak production estimated to be 30-40 mmcf per day. 3 In early 1995, the Company confirmed the presence of hydrocarbons in a previously untested fault block on the Garden Banks 260 discovery in the Gulf of Mexico. The Garden Banks (GB) 215 #2 well, which drilled a new fault block about two miles north of the original discovery well on GB 260, encountered approximately 170 feet of net pay. The GB 259 #2 well was then drilled as a side-track, and encountered over 115 feet of new pay in the same reservoir sands. A total of nine successful wells have been drilled in the GB 260 area. The most recent well, GB 216 #2, encountered 150 feet of net pay. This development, which has been named the Baldpate Project, is in federal waters offshore Louisiana in water depths of approximately 1,700 feet. In 1995, the Company entered into a plan of development to install a compliant tower platform and processing facility. The Company expects to begin production in 1998 with gross peak production of 50-60 meb per day. The Company owns a 50 percent interest in a four-block area. In 1995, the Company approved a plan 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 24-30 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. 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 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, 1995, the Company was drilling 12 gross (7 net) offshore development wells. The Company drilled 14 gross (11 net) development wells offshore in 1995 and 16 gross (6 net) in 1994. All of the 14 gross (11 net) development wells drilled in 1995 were successful. ONSHORE UNITED STATES The onshore area continues to be a major contributor of production volumes and cash flow with relatively modest reinvestment needs. The Company has interests in 60 major onshore fields in five states and operates about 75 percent of its production. In addition, the Company has increased its drilling activity to more rapidly exploit its onshore asset portfolio. The Company is applying 3-D technology creating opportunities in new fault blocks and deeper pool horizons which provide new volumes. To optimize cash flow, the Company will continue to exploit its waterflood operations. The U.S. onshore will be managed for maximum cash flow generation. EXPLORATION The Company drilled no exploratory wells onshore in 1995, and at December 31, 1995, none were being drilled. PRODUCTION AND DEVELOPMENT Average daily production of crude oil and condensate onshore was 30, 38 and 47 mb in 1995, 1994 and 1993. The decrease in 1995 crude oil and condensate production compared to 1994 and in 1994 compared to 1993 was due primarily to asset sales and normal declines. Average daily net production of natural gas onshore was 288, 335 and 330 mmcf in 1995, 1994 and 1993. As of December 31, 1995, the Company was drilling or participating in the drilling of 34 gross (29 net) development wells onshore. Of the 132 gross (89 net) development wells drilled onshore during 1995, 121 gross (80 net) were successful. UNITED KINGDOM The U.K. North Sea provides a strong stream of earnings and cash flow with relatively modest reinvestment needs. This is important for the funding of the Company's plans in other strategic areas. In 1995, the Company initiated significant cost-reduction measures at its operated fields. As a result, the Company expects an overall reduction of U.K. production costs in 1996. 4 Drilling activities are concentrated on infield and near-field opportunities near existing infrastructure. In total, the Company has an interest in 29 blocks in the North Sea. EXPLORATION The Company held 212 thousand net undeveloped acres in the North Sea as of December 31, 1995, compared to 266 thousand net undeveloped acres as of December 31, 1994. In 1995, the Company drilled no exploratory wells in the North Sea, and at December 31, 1995, none were being drilled. PRODUCTION AND DEVELOPMENT The Company's producing fields set forth in the table below, are located in the northern sector of the North Sea. As of December 31, 1995, the Company was drilling or participating in the drilling of 4 gross (1 net) development well in the North Sea. All of the 8 gross (2 net) development wells drilled in the U.K. in 1995 were successful. The Company's average daily net production of crude oil and condensate in the United Kingdom was 55, 54 and 35 mb during 1995, 1994 and 1993. 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 50, 62 and 80 mmcf during 1995, 1994 and 1993. The decrease in net daily production of natural gas in 1995 and 1994 was due to reduced takes by British Gas plc and asset sales. The following table sets forth the North Sea producing fields held at December 31, 1995 and their net daily production:
1995 NET DAILY PERCENT PRODUCTION PRODUCING FIELDS OIL/GAS OWNERSHIP (MEB) - - ------------------------------------------------- --------- ------------- --------------- Dunlin........................................... Oil 14.4 5 Hutton........................................... Oil 44.3 10 Murchison........................................ Oil 51.8 9 Ninian........................................... Oil 29.5 17 Lyell............................................ Oil/Gas 66.6 7 Strathspey....................................... Oil/Gas 6.5 3
The Company also receives tariff income on production from several satellite fields that produce through the Ninian facilities. In early 1994, the Company began producing oil from the Alba field. Alba is located on Block 16/26 in the central sector of the North Sea. The Company owned a 15.5 percent interest in the field which it sold in 1995. 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 20 mb 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. In the fourth quarter of 1994, the Company began producing gas from the Galleon field at a net of 19 mmcf per day. Galleon is located in the southern portion of the North Sea. The Company had a 10 percent interest in the field, subject to unitization, which it sold in 1995. 5 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. OTHER FOREIGN In 1995, the Company sold all its interests in Indonesia and Gabon. In 1995, the Company had producing interests in Ecuador where the Gacela field began producing in 1993. Also development of the Jaguar and Mono fields has begun. The Company is conducting geophysical work on Block 21 in Ecuador. During 1994, the Company signed two oil and gas agreements with the Republic of Kazakstan. The agreements involve both the development of a known field as well as the rights to explore a large block in western Kazakstan. A joint venture agreement was signed for development of the Arman Field which was discovered in the 1980's but had not been developed. The Company jointly operates the venture and currently holds a 50 percent interest with two Kazakstani partners. The Arman Field is located in the north Buzachi Peninsula. In 1995, the first 380 thousand net barrels of oil were produced and sold from four wells in the Arman Field. The Company has a production sharing agreement for approximately 3 million acres located east of the Arman Field. In September 1995, the Company farmed-out 50 percent of this exploration venture in exchange for a carry on the initial exploration phase. EXPLORATION As of December 31, 1995, the Company held 3,777 thousand net undeveloped acres in other foreign properties, as compared to 5,749 thousand net undeveloped acres as of December 31, 1994. The decrease of 1,972 thousand net undeveloped acres in 1995 as compared to 1994 is due primarily to the sale of the Company's interests in Indonesia and the relinquishment of a production sharing contract area in Algeria. The Company drilled 1 successful gross exploratory well in 1995 in the Zone of Cooperation between Australia and Indonesia. The Bayu #1 discovery well was drilled on ZOCA 91-13 and encountered 570 gross feet of pay (353 net feet) and flowed at a cumulative rate of 90 mmcf/d of gas and 5250 b/d of condensate from four zones. Since then, three successful appraisal wells have been drilled on the adjacent block with results that indicate a consistent gas-water contact across the field and similar reservoir properties. The field is estimated to be approximately 17 miles long and 6 miles wide. Preliminary estimates for recoverable reserves from the field are 3.5-4 trillion cubic feet of natural gas and 175-200 mmb of hydrocarbon liquids (approximately 750-850 mmeb). The field is located 185 miles off the northern coast of Australia in 240 feet of water. The Company owns 25 percent of ZOCA 91-13. At December 31, 1995, the Company was drilling or participating in the drilling of 1 gross exploratory well. PRODUCTION AND DEVELOPMENT The Company's average daily net production of crude oil and condensate from other foreign areas was 13, 19 and 19 mb in 1995, 1994 and 1993. The average daily production of crude oil and condensate decreased in 1995, compared to 1994, due to the sale of Indonesia, partially offset by increased production in Ecuador. The Company drilled 14 gross (2 net) development wells, all of which were successful in 1995. As of December 31, 1995, the Company was in the process of drilling or participating in the drilling of 1 gross development well. 6 PRODUCTION In 1995, the Company's production was concentrated primarily in the United States and the United Kingdom. In 1995, the Company produced 48 mmeb from its properties in the United States, 23 mmeb from its properties in the United Kingdom, and 5 mmeb from its other foreign properties. The following table sets forth the Company's average daily net production for 1995, 1994 and 1993: AVERAGE DAILY NET PRODUCTION
YEAR ENDED DECEMBER 31 ------------------------------- 1995 1994 1993 --------- --------- --------- Crude & Condensate (mb): United States Onshore.................................................................. 30 38 47 Offshore................................................................. 16 10 9 --- --- --- 46 48 56 --- --- --- U.K........................................................................ 55 54 35 Other foreign.............................................................. 13 19 19 --- --- --- 68 73 54 --- --- --- Processed Natural Gas Liquids (mb): United States.............................................................. 6 6 7 --- --- --- 120 127 117 --- --- --- --- --- --- Natural Gas (mmcf): United States Onshore.................................................................. 288 335 330 Offshore................................................................. 180 203 193 --- --- --- 468 538 523 U.K........................................................................ 50 62 80 --- --- --- 518 600 603 --- --- --- --- --- ---
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, 1995 and 1994: UNDEVELOPED ACREAGE
GROSS NET -------------------- -------------------- 1995 1994 1995 1994 --------- --------- --------- --------- United States Onshore.................................................. 983 1,142 533 572 Offshore................................................. 380 511 275 344 --------- --------- --------- --------- 1,363 1,653 808 916 U.K........................................................ 605 816 212 266 Other Foreign.............................................. 5,479 11,769 3,777 5,749 --------- --------- --------- --------- 7,447 14,238 4,797 6,931 --------- --------- --------- --------- --------- --------- --------- ---------
7 DEVELOPED ACREAGE
GROSS NET -------------------- -------------------- 1995 1994 1995 1994 --------- --------- --------- --------- United States Onshore................................................... 982 1,137 551 631 Offshore.................................................. 231 244 102 97 --------- --------- --------- --------- 1,213 1,381 653 728 U.K......................................................... 72 101 36 47 Other Foreign*.............................................. 58 6,113 29 831 --------- --------- --------- --------- 1,343 7,595 718 1,606 --------- --------- --------- --------- --------- --------- --------- ---------
- - ------------------------ *The decrease in gross developed acreage is due to the sale of Indonesia. The following table sets forth the Company's exploratory and development oil and gas wells drilled during 1995, 1994 and 1993: EXPLORATORY WELLS DRILLED
GROSS NET ------------------------------- ------------------------------- 1995 1994 1993 1995 1994 1993 --------- --------- --------- --------- --------- --------- Oil United States Onshore...................................... -- -- -- -- -- -- Offshore..................................... 1 -- 2 1 -- 1 --- --- --- --- --- --- 1 -- 2 1 -- 1 U.K............................................ -- -- -- -- -- -- Other foreign.................................. -- 3 2 -- -- 1 --- --- --- --- --- --- 1 3 4 1 -- 2 --- --- --- --- --- --- Gas United States Onshore...................................... -- 1 -- -- -- -- Offshore..................................... 1 1 1 -- 1 1 --- --- --- --- --- --- 1 2 1 -- 1 1 U.K............................................ -- -- -- -- -- -- Other Foreign.................................. 1 1 -- -- 1 -- --- --- --- --- --- --- 2 3 1 -- 2 1 --- --- --- --- --- --- Dry United States Onshore...................................... -- -- 2 -- -- 2 Offshore..................................... 4 3 4 2 2 2 --- --- --- --- --- --- 4 3 6 2 2 4 U.K............................................ -- 1 3 -- -- 1 Other foreign.................................. -- 14 11 -- 3 2 --- --- --- --- --- --- 4 18 20 2 5 7 --- --- --- --- --- --- Total...................................... 7 24 25 3 7 10 --- --- --- --- --- --- --- --- --- --- --- ---
8 DEVELOPMENT WELLS DRILLED
GROSS NET ------------------------------- ------------------------------- 1995 1994 1993 1995 1994 1993 --------- --------- --------- --------- --------- --------- Oil United States Onshore...................................... 56 27 44 41 11 29 Offshore..................................... 7 5 4 7 2 2 --- --- --- --- --- --- 63 32 48 48 13 31 U.K............................................ 7 20 5 2 4 1 Other foreign.................................. 14 35 36 2 4 5 --- --- --- --- --- --- 84 87 89 52 21 37 --- --- --- --- --- --- Gas United States Onshore...................................... 65 49 38 39 23 15 Offshore..................................... 7 9 8 4 3 3 --- --- --- --- --- --- 72 58 46 43 26 18 U.K............................................ 1 2 -- -- -- -- --- --- --- --- --- --- 73 60 46 43 26 18 --- --- --- --- --- --- Dry United States Onshore...................................... 11 4 1 9 4 1 Offshore..................................... -- 2 4 -- 1 3 --- --- --- --- --- --- 11 6 5 9 5 4 U.K............................................ -- -- 6 -- -- 1 Other foreign.................................. -- -- 2 -- -- -- --- --- --- --- --- --- 11 6 13 9 5 5 --- --- --- --- --- --- Total...................................... 168 153 148 104 52 60 --- --- --- --- --- --- --- --- --- --- --- ---
The following table sets forth the Company's gross and net producing oil and gas wells at December 31, 1995: PRODUCING OIL AND GAS WELLS
GROSS* NET -------------------- -------------------- OIL GAS OIL GAS --------- --------- --------- --------- United States Onshore........................................................ 3,031 812 1,696 508 Offshore....................................................... 51 110 31 63 --------- --- --------- --- 3,082 922 1,727 571 Foreign: U.K............................................................ 111 3 38 -- Other foreign.................................................. 41 -- 13 -- --------- --- --------- --- Total........................................................ 3,234 925 1,778 571 --------- --- --------- --- --------- --- --------- ---
- - ------------------------ *Gross producing wells include 136 multiple completion wells (more than one formation producing into the same well bore). 9 The following table sets forth the Company's average revenues and production costs per unit of oil and gas production for 1995, 1994 and 1993: AVERAGE PER UNIT REVENUES AND PRODUCTION COSTS
YEAR ENDED DECEMBER 31 ------------------------------- 1995 1994 1993 --------- --------- --------- Revenues: Crude and condensate (per bbl) U.S............................................................ $ 16.44 $ 14.69 $ 15.96 U.K............................................................ $ 16.73 $ 15.44 $ 15.82 Other foreign.................................................. $ 14.51 $ 14.89 $ 16.91 Worldwide...................................................... $ 16.35 $ 15.06 $ 16.08 Natural Gas (per mcf) U.S............................................................ $ 1.73 $ 1.87 $ 1.96 U.K............................................................ $ 2.20 $ 2.15 $ 2.11 Worldwide...................................................... $ 1.77 $ 1.90 $ 1.98 Average production cost per unit of oil and gas production (per eb):* U.S. Operating costs................................................ $ 3.64 $ 3.96 $ 3.67 Production taxes............................................... .72 .89 .99 --------- --------- --------- Total production costs......................................... $ 4.36 $ 4.85 $ 4.66 U.K. Operating costs................................................ $ 6.45 $ 6.13 $ 7.12 Production taxes............................................... 2.12 1.17 .51 --------- --------- --------- Total production costs......................................... $ 8.57 $ 7.30 $ 7.63 Other foreign Operating costs................................................ $ 3.53 $ 4.43 $ 5.33 Production taxes............................................... 4.95 5.71 8.50 --------- --------- --------- Total production costs......................................... $ 8.48 $ 10.14 $ 13.83 Worldwide Operating costs................................................ $ 4.52 $ 4.65 $ 4.61 Production taxes............................................... 1.43 1.39 1.46 --------- --------- --------- Total production costs......................................... $ 5.95 $ 6.04 $ 6.07
- - ------------------------ *Excludes natural gas liquids production. 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. RECOVERY METHODS During 1995, the Company obtained 62, 37 and 1 percent of its U.S. crude production from primary, secondary and tertiary recovery methods. This compares to 55, 38 and 7 percent of its crude oil production in 1994. At December 31, 1995, the Company participated in no major tertiary oil recovery programs. 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. 10 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/ 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. In some instances, the Company owns an interest in these systems. CRUDE AND CONDENSATE During 1995, sales to J. Aron & Company and Chevron totaled approximately 15 and 13 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 1995, the ten largest customers, including J. Aron & Company and Chevron accounted for approximately 59 percent of such sales. Currently, approximately 63 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 nine 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 During 1995 the Company marketed its natural gas production. Sales of natural gas into short-term markets averaged 46 percent of total sales. At year-end over 50 percent of total sales were contracted to end-users of natural gas on a term basis. Contract length of these term sales agreements ranges from three months to ten years. During the fourth quarter of 1995, the Company, Apache Corporation and Parker & Parsley Petroleum Company formed Producers Energy Marketing, LLC (ProEnergy). Upon commencement of full operations, which is expected to occur in the second quarter of 1996, ProEnergy will purchase substantially all of its members' U.S. gas production at index prices. During 1995, the Company sold 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 1995. During 1995, British Gas plc was the only customer who accounted for more than 10 percent of the Company's natural gas sales. The ten largest customers including British Gas plc, accounted for approximately 24 percent of total gas sales during 1995. 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 11 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. 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 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 27 engineers, geoscientists, technicians and support personnel focusing on the technology used in the exploration for, and development and 12 production of, energy resources. The Company's expenditures on technology activities, including employee-related costs, were $8 million, $11 million and $15 million for the years 1995, 1994 and 1993, 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, 1995, the Company had a 98 percent interest in the Partnership. The remaining 2 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, 1995. 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, 1995, the number of full-time active employees of the Company was approximately 1,200. ITEM 3. LEGAL PROCEEDINGS Three federal securities actions, subsequently consolidated into a single action, brought against the Company and certain of its senior officers in 1992, alleging 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 have been dismissed by the U.S. District Court for the Northern District of Texas. 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, 1995. 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. 13 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS On May 4, 1995, the Annual Meeting of Shareholders of Oryx Energy Company was held to vote on proposals as follows: (a) To elect three directors to Class I of the Company's Board of Directors.
ROBERT B. DAVID S. CHARLES H. PISTOR, GILL HOLLINGSWORTH JR. ------------- --------------------- ------------------- Affirmative................................. 78,614,648 78,618,974 78,485,400 Negative.................................... -- -- -- Abstained................................... -- -- -- Withheld.................................... 4,111,225 4,106,899 4,240,473 Broker non-votes............................ -- -- -- Shares without executed proxies and not present for vote........................... 16,303,881 16,303,881 16,303,881 ------------- ----------- ------------------- Shares entitled to vote..................... 99,029,754 99,029,754 99,029,754 ------------- ----------- ------------------- ------------- ----------- -------------------
(b) To approve the appointment of Coopers & Lybrand L.L.P. as independent accountants for the fiscal year 1995. Affirmative........................................................ 80,664,625 Negative........................................................... 1,059,082 Abstained.......................................................... 1,002,166 Withheld........................................................... -- Broker non-votes................................................... -- Shares without executed proxies and not present for vote........... 16,303,881 --------------- Shares entitled to vote............................................ 99,029,754 --------------- ---------------
(c) To approve the stockholders proposal regarding reorganization of the Board of Directors into one class. Affirmative........................................................ 41,222,095 Negative........................................................... 30,447,844 Abstained.......................................................... 1,757,076 Withheld........................................................... -- Broker non-votes................................................... 9,298,858 Shares without executed proxies and not present for vote........... 16,303,881 --------------- Shares entitled to vote............................................ 99,029,754 --------------- ---------------
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, 57 Mr. Box has been in this position since December 7, 1995. Executive Vice President, Chief Operating Officer From December 1994 through November 1995 he served as and Director Executive Vice President, Exploration and Production. From January 1992 through November 1994, he was Senior Vice President, Exploration and Production of the Company. From 1987 to 1991, he was Vice President, Exploration.
14
NAME, AGE AND BUSINESS EXPERIENCE POSITION WITH THE COMPANY DURING PAST FIVE YEARS - - --------------------------------------------------- ------------------------------------------------------------ David F. Chavenson, 43 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, 46 Ms. Durst has been in this position since December 1993. General Auditor From 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. Frances G. Heartwell, 49 Ms. Heartwell assumed this position on December 7, 1995. Vice President, Human Resources From February 1993 to December 1995, she served the Company and Administration as Director, Human Resources. From December 1991 to February 1993, Ms. Heartwell was Director of Employee and Community Relations. Prior to December 1991, she served as Director of Administration. Robert L. Keiser, 53 Mr. Keiser assumed this position in December 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. William C. Lemmer, 51 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, 54 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 through 1991, he was Vice President, Finance and Chief Financial Officer of the Company. Robert L. Thompson, 49 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.
15 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 1995 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 1995 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 13-16 of the Company's 1995 Annual Report to Shareholders. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The following information in the Company's 1995 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 42-45. 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 3-5 of the Company's definitive Proxy Statement dated March 27, 1996. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item is incorporated herein by reference to the section entitled "Executive Compensation" on pages 9-16 of the Company's definitive Proxy Statement dated March 27, 1996. 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 page 2 and "Security Ownership of Management" on page 8 of the Company's definitive Proxy Statement dated March 27, 1996. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS None. 16 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 1995 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 As Amended and Restated September 7, 1995 ++++10.4 Registrant's Non-Employee Directors' Retirement Plan ++++10.5 -- Registrant's Pension Restoration Plan ++10.5a -- Amendment to Registrant's Pension Restoration Plan 10.6 -- Registrant's Executive Retirement Plan As Amended and Restated as of January 1, 1995 10.6a -- Amendment to Registrant's Executive Retirement Plan As Amended and Restated as of January 1, 1995 ++++10.7 -- Registrant's Executive Long-Term Incentive Plan ++++++10.7a -- Amendment to Registrant's Executive Long-Term Incentive Plan, dated February 1, 1989 ++++++10.7b -- Amendment to Registrant's Executive Long-Term Incentive Plan, dated February 6, 1989 ++++++++10.8 -- Registrant's 1992 Long-Term Incentive Plan As Amended Through De- cember 2, 1993 and Restated 10.9 -- Registrant's Savings Restoration Plan As Amended and Restated as of September 6, 1995 10.10 -- Registrant's Executive Deferred Compensation Plan as Amended and Restated as of September 6, 1995 ++++10.11 -- Registrant's Deferred Compensation and Benefits Trust ++++10.12 -- Registrant's Special Employee Severance Plan
17 ++++++++10.13 -- Registrant's Amended and Restated Special Executive Severance Plan m10.14 -- Sale and Purchase Agreements by and between BP Petroleum Develop- ment Limited et al and the Registrant mm10.15 -- Oryx Energy Company $500,000,000 Revolving Credit Agreement Dated as of June 1, 1995 mm10.16 -- Sale and Purchase Agreement by and between Novus Petroleum Limited and the Registrant dated February 17, 1995 mm10.17 -- Sale and Purchase Agreement by and between Union Texas Petroleum Limited and the Registrant dated May 31, 1995 mm10.18 -- Sale and Purchase Agreement by and between Powergen North Sea Limited and the Registrant dated June 14, 1995 12 -- Computation of Consolidated Ratio of Earnings to Fixed Charges and Earnings to Fixed Charges and Preferred Stock Dividend Requirements 13 -- Oryx Energy Company 1995 Annual Report to Shareholders ++++++++16 -- Accountant's Preferability Letter mmm19 -- Distribution Agreement dated August 28, 1991 relating to Medium-Term Notes, Series A ++21 -- Subsidiaries 23 -- Consent of Coopers & Lybrand L.L.P. 24 -- Power of Attorney 27 -- Financial Data Schedule - - ------------------------ * 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 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. ++++++ 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. ++++++++ Incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (File No. 1-10053) filed with the Commission on March 23, 1995.
18 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 June 30, 1995 (File No. 1-10053) filed with the Commission on August 9, 1995. mmm 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: On October 17, 1995, the Company filed Form 8-K to report a series of related asset dispositions which the Company has entered into in 1995. (See Note 3 to the Consolidated Financial Statements). 19 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 27, 1996 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, Chief ------------------------------------------- Operating Officer and Director Jerry W. Box WILLIAM E. BRADFORD* Director March 27, 1996 ------------------------------------------- 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.
20 EX-10.3 2 EXHIBIT 10.3 ORYX ENERGY COMPANY DIRECTORS' DEFERRED COMPENSATION PLAN AMENDED AND RESTATED SEPTEMBER 7, 1995 ARTICLE I DEFINITIONS 1.1 CASH UNIT is the entry in a Deferred Compensation Account of a credit equal to one dollar. 1.2 COMMITTEE means the Compensation Committee of the Board of Directors of the Company. 1.3 COMPANY means Oryx Energy Company. 1.4 COMPENSATION means those fees and retainers earned by a Director in his or her capacity as a Director. 1.5 DEFERRED COMPENSATION ACCOUNT with respect to any Participant means the total amount of the Company's liability for payment of deferred compensation to the Participant under this Plan. 1.6 DIRECTOR means a member of the Board of Directors of the Company. 1.7 INTEREST EQUIVALENT is the entry in a Deferred Compensation Account of an interest credit with respect to a Cash Unit, the interest factor being equal to the quarterly rate of return from the Stable Value Fund of the Oryx Energy Company Capital Accumulation Plan. 1.8 PARTICIPANT means a Director who has elected to defer the receipt of Compensation in accordance with the terms of this Plan. 1.9 PLAN means the Directors' Deferred Compensation Plan set forth herein and as it may be amended from time to time. 1.10 SHARE means a share of the Company's authorized voting common stock and any share or shares of stock of the Company hereafter issued or issuable in substitution or exchange for each such share. 1.11 SHARE UNIT is the entry in a Deferred Compensation Account of a credit equal to one Share. -2- ARTICLE II DEFERRAL OF DIRECTORS' COMPENSATION 2.1 ELECTION TO DEFER - A Director may elect to defer all or a portion of his or her Compensation by filing a written election with the Committee on forms prescribed by the Committee. Such election must include the following: (a) percentage of Compensation to be deferred; (b) a designation of beneficiary as set forth in Article V, and (c) an irrevocable election of a method of payment as set forth in Article IV. Except as noted below in Section 2.3, any such election shall apply only to Compensation to be earned in the calendar year beginning after the effective date of the election (or in the balance of the calendar year following such election in the case of a new Director). 2.2 AMOUNT OF DEFERRAL - The amount of Compensation to be deferred in any year shall be designated by the Participant as a percentage of the Director's Compensation in multiples of 5% but shall not be less than 10%. 2.3 TIME OF ELECTION - Except as otherwise determined by the Committee in its sole discretion, and except as noted below, a separate election to defer must be filed and received by the Committee by the end of the year preceding the year in which the Compensation is earned. A new Director may also elect to defer Compensation prior to the commencement of his or her term in office. Any election by a Participant with respect to Compensation in a given year will not preclude a different action with respect to Compensation in subsequent years. ARTICLE III DEFERRED COMPENSATION ACCOUNTS 3.1 CREATION OF DEFERRED COMPENSATION ACCOUNTS - Compensation deferred hereunder shall be credited to a Deferred Compensation Account established by the Company for each Participant. -3- 3.2 CREDITING CASH UNITS - Cash Units shall be credited to a Participant's Deferred Compensation Account at the time Compensation would otherwise have been paid had no election to defer been made. 3.3 CREDITING INTEREST EQUIVALENTS - As additional deferred compensation for Participants with Cash Units credited to their Deferred Compensation Accounts, the Company shall credit the Participant's Deferred Compensation Account on a quarterly basis with an Interest Equivalent. 3.4 DIRECTOR WITH SHARE UNITS - A Director with Share Units credited to his or her Deferred Compensation Account, as provided by the Plan prior to its amendment on May 1, 1991 to prohibit further deferrals in the form of Share Units, shall retain his or her Share Units and any provisions of the Plan with respect to Share Units prior to the effective date of this restatement of the Plan are incorporated herein by reference and shall continue to apply to the deferral of Share Units as if said provisions were fully stated herein. ARTICLE IV PAYMENT OF DEFERRED COMPENSATION 4.1 TIME OF PAYMENT - All payments of a Participant's Deferred Compensation Account shall be made at, or shall commence on, the first day of the calendar year selected by the Participant in accordance with the terms of this Section and Section 2.1. The date on which payment will commence must be designated by the Director. The Director may elect to defer the receipt of his or her Compensation to (a) the first day of any year which is at least 1 (one) year after the year in which the Compensation is earned; or (b) the first day of the year following (i) the year he or she retires as a Director; (ii) the termination of his or her Board membership; or (iii) the date of his or her death. The benefit commencement date may not be later than the third calendar year following the attainment of mandatory retirement age for Directors. Upon the death of a Director or former Director prior to the final payment of all amounts credited to his or her Account, the balance of the Deferred Compensation Account shall be paid in accordance with Article V commencing on the first day of the calendar year following the year of death. -4- 4.2 METHOD OF PAYMENT - Participant shall have the option of selecting either a one payment schedule or a series of annual installments (not exceeding 10), provided such election is irrevocable and made at the date of deferral. Participant shall receive in cash all deferred compensation credited to such Participant's Deferred Compensation Account. ARTICLE V DESIGNATION OF BENEFICIARIES The Participant shall name a beneficiary to receive any payments due him or her at the time of his or her death, with the right to change such beneficiary at anytime. In case of a failure of designation or the death of the designated beneficiary without a designated successor, distribution shall be made to the person or persons designated as beneficiary in the designation most recently filed under the Oryx Energy Company Directors Group Life Insurance Plan, or if no such designation has been made or the Participant is not participating in such plan, the surviving spouse of a deceased Participant, or, if there is no surviving spouse, the children of the Participant in equal shares (the share of any child who predeceases the Participant to go in equal shares to the issue of such deceased child), or if there is no surviving spouse, children or issue of such children, the estate of the Participant. No designation of beneficiaries shall be valid unless in writing signed by the Participant, dated and filed with the Committee. Upon the Participant's death, any balance in the Participant's Deferred Compensation Account is payable under the method and form elected by the Participant or in such other manner as the Committee may determine in its sole discretion. ARTICLE VI SOURCE OF PAYMENTS All payments of deferred compensation shall be paid in cash from the general funds of the Company and the Company shall be under no obligation to segregate any assets in connection with the maintenance of a Deferred Compensation Account, nor shall anything contained in this Plan nor any action taken pursuant to the Plan create or be construed to create a trust of any kind, -5- or a fiduciary relationship between the Company and Participant. Title to the beneficial ownership of any assets, whether cash or investments, which the Company may designate to pay the amount credited to the Deferred Compensation Account shall at all times remain in the Company and Participant shall not have any property interest whatsoever in any specific assets of the Company. Participant's interest in the Deferred Compensation Account shall be limited to the right to receive payments pursuant to the terms of this Plan and such rights to receive shall be no greater than the right of any other unsecured general creditor of the Company. ARTICLE VII NONALIENATION OF BENEFITS Participant shall not have the right to sell, assign, transfer or otherwise convey or encumber in whole or in part the right to receive any payment under this Plan except in accordance with Article V. ARTICLE VIII ACCEPTANCE OF TERMS The terms and conditions of this Plan shall be binding upon the heirs, beneficiaries, and other successors in interest of Participant to the same extent that said terms and conditions are binding upon the Participant. ARTICLE IX ADMINISTRATION OF THE PLAN The Plan shall be administered by the Committee which may make such rules and regulations and establish such procedures for the administration of this Plan as it deems appropriate. In the event of any dispute or disagreements as to the interpretation of this Plan or of any rule, regulation or -6- procedure or as to any questioned right or obligation arising from or related to this Plan, the decision of the Committee shall be final and binding upon all persons. The Committee may delegate any or all of its powers, duties, or authority under this Plan to any person the Committee deems appropriate. ARTICLE X TERMINATION AND AMENDMENT The Plan may be terminated or amended at anytime by the Board of Directors of Oryx Energy Company provided, however, that no such amendment or termination shall adversely affect the rights of Participants or their beneficiaries with respect to amounts credited to Deferred Compensation Accounts prior to such amendment or termination, without the written consent of the Participant. ARTICLE XI CONSTRUCTION In the case any one or more of the provisions contained in this Plan shall be invalid, illegal or unenforceable in any respect, the remaining provisions shall be construed in order to effectuate the purposes hereof and the validity, legality, and enforceability of the remaining provisions con- tained herein shall not in anyway be affected or impaired thereby. ARTICLE XII GOVERNING LAW This Plan shall be construed in accordance with and governed by the laws of the State of Texas. -7- ARTICLE XIII EFFECTIVE DATE This Plan was originally effective on November 15, 1989. As amended and restated herein, it shall be effective on September 7, 1995. ORYX ENERGY COMPANY By: /s/ FRANCES G. HEARTWELL -------------------------------- -8- EX-10.6 3 EXHIBIT 10.6 ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN AS AMENDED AND RESTATED AS OF JANUARY 1, 1995 (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 8-11 IV Optional Forms of Retirement Income 12-14 V Death Benefits 15-16 VI Termination of Employment or Status as Executive; Reemployment 17-19 VII Disability Benefits 20 VIII Administration of the Plan 21-24 IX General Provisions 25-27
-i- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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, 1995, who died, retired, became disabled, terminated employment or otherwise ceased to be a Participant thereunder prior to January 1, 1995, 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, 1995. 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- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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 -2- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN Plan for Certain Employees of the Company, or any similar or successor plan or plans. 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 at the level of Vice President or above. 1.14 "Executive Service" means "Executive Service" earned by a Transferred Participant under the Predecessor -3- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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. 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 -4- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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 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. -5- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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% 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. 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 the sum of the offsets under Section 3.02(b) above. 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 52nd birthday if he has then completed at least five years of Executive Service. -8- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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) and the offset for Social Security Benefits calculated in Section 3.02(b) and 3.03 will be reduced by 5/12% for each full month by which 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: (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. A Participant who meets the requirements for a benefit under -9- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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 two 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 two years. (iii) ADJUSTED CREDITED SERVICE - Adjusted Credited Service shall be a Participant's actual Credited Service plus two 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 1995 and his actual age is at least 50 and his actual Executive Service equals at least five years. A Participant who meets the requirements for an Enhanced Retirement Benefit shall have his 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 -10- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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 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. -11- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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 -12- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN as long as his designated Beneficiary survives him 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 -13- ORYC ENERGY COMPANY EXECUTIVE RETIREMENT PLAN benefit will be adjusted to provide retirement income on and after such date on the optional form. 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. -14- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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 -15- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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. 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. -16- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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. Any benefits payable to a Participant who has ceased to be an Executive shall not be paid until actual 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 -17- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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. 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. -18- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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. -19- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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. -20- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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. -21- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN (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 -22- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN desirable, provided they do not conflict with 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 -23- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN any duly appointed actuary, insurance company, or by any duly appointed accountant, and upon all opinions given by any duly appointed legal counsel. 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. -24- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN 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 -25- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN and to future payments be terminated absolutely, 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 -26- ORYX ENERGY COMPANY EXECUTIVE RETIREMENT PLAN preferred claim in or to, any investment reserves, 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: FRANCES G. HEARTWELL ------------------------------ Title: Director, Human Resources --------------------------- ATTEST: By: /s/ WILLIAM C. LEMMER -------------------------------- Title: VP, General Counsel and Secretary ----------------------------- -27- EX-10.6(A) 4 EXHIBIT 10.6(A) Amendment No. One to the Oryx Energy Company Executive Retirement Plan As Amended And Restated Effective January 1, 1995 WHEREAS, Oryx Energy Company (the "Company") last amended and restated the Executive Retirement Plan (the "Plan") effective January 1, 1995; and WHEREAS, the Company desires further to amend the Plan; and WHEREAS, the Board of Directors of the Company approved the amendment to the Plan as set forth below. NOW, THEREFORE, pursuant to the powers reserved in Article IX of the Plan, the Plan has been amended, effective January 1, 1996, as follows: I. The first sentence of the first paragraph in Section 3.08(b) is amended by the addition of the words "or 1996" after the phrase "under an outplacement program during 1995". II. Except for the amendments reflected in this instrument, the Plan shall remain in full force and effect. IN WITNESS WHEREOF, the Company has caused this instrument to be executed this 11th day of December, 1995. ORYX ENERGY COMPANY By: FRANCES G. HEARTWELL ---------------------------------- Name: Frances G. Heartwell Title: Vice President, HR&A ------------------------------- ATTEST: By: /s/ WILLIAM C. LEMMER -------------------------------- Title: Secretary ----------------------------- EX-10.9 5 EXHIBIT 10.9 ORYX ENERGY COMPANY SAVINGS RESTORATION PLAN AMENDED AND RESTATED SEPTEMBER 6, 1995 I. STRUCTURE OF THE PLAN The Oryx Energy Company Savings Restoration Plan ("Plan") is established for the purpose of providing for certain employees benefits in excess of the limitations imposed by Section 415 of the Internal Revenue Code of 1986, as amended ("Code"), (without regard to the $150,000 compensation limit under Section 401(a)(17) of the Code) on the contributions and benefits under the Oryx Energy Company Capital Accumulation Plan ("CAP"). This Plan is intended to be an unfunded excess benefit plan within the meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974. II. ADMINISTRATION OF THE PLAN The Plan Administrator of CAP, or its delegate, ("Plan Administrator") shall administer the Plan. The Plan Administrator shall have full authority to determine all questions arising in connection with the Plan. The Plan Administrator shall have powers and duties with respect to this Plan as set forth in CAP, including the power to interpret the Plan, adopt procedural rules, and employ and rely on legal counsel, actuaries, accountants and such agents as it may deem advisable to assist in the administration of the Plan. Decisions of the Plan Administrator shall be conclusive and binding on all persons. III. PARTICIPATION IN THE PLAN 1. GENERAL The Plan Administrator shall select the employees eligible to participate in the Plan for the next succeeding calendar year from among the participants in CAP whose employing organization adopts this Plan (hereinafter referred to as a "participating employer", which term also includes Oryx Energy Company [the "Company"]). The participants in CAP selected for participation in this Plan shall be those CAP participants whose benefits or contributions under CAP the Plan Administrator reasonably expects to exceed the limitations imposed under Section 415 of the Code ("Annual Additions Limit") during the succeeding calendar year, based upon the participant's contributions and benefits under CAP for the preceding year. -2- 2. SPECIAL PARTICIPATING EMPLOYER CREDITS The participants in CAP whose employing organization is a participating employer and who were subject to the Annual Additions Limit during 1987 shall be participants in this Plan for the purpose of the special participating employer credits. 3. After being selected by the Plan Administrator to participate in this Plan, an employee shall, as a condition precedent to participation herein, complete and return to the Plan Administrator an executed participation and deferral agreement, electing to participate herein and defer such amounts as permitted under Article IV herein. By execution of such agreement, a participant shall agree that all amounts deferred thereby shall be irrevocably deferred and that in lieu thereof the participant shall be entitled solely to benefits provided under this Plan. Such agreement shall be returned to the Plan Administrator by December 31 of the year preceding the year to which the agreement relates. A participant may revoke his agreement and shall not participate in this Plan by notifying the Plan Administrator in writing prior to January 1 of the year to which the revocation shall apply. The participant's agreement shall continue in effect for all subsequent years until revoked or modified. 4. Notwithstanding anything in this Plan to the contrary, if the benefits or contributions of otherwise eligible employees participating in CAP first become limited by Code Section 415 during a calendar year when the employees have not otherwise been made eligible to participate in this Plan, then such employees may be selected by the Plan Administrator for immediate participation hereunder and their deferral agreements for the remainder of such year may be executed and furnished to the Plan Administrator accordingly. IV. BENEFITS PROVIDED UNDER THE PLAN 1. PARTICIPANT DEFERRALS If, as to a participant in this Plan, any limitations on contributions imposed under the terms of CAP by reason of the Annual Additions Limit have prevented the participant -3- from making the maximum Basic Contributions and Additional Contributions (as these terms are defined in CAP) allowed under CAP, the participant may elect, before the beginning of the calendar year during which the participant's Annual Additions Limit will be reached, to defer a portion of his compensation which shall not exceed five percent (5%) of his Compensation (as defined in CAP) for each pay period subsequent to the pay period during which the participant's Annual Additions Limit is reached. Such election shall be made at the time and in the manner provided in Article III hereof. In calculating when the Annual Additions Limit is reached, no change in a participant's Basic Contributions, or Additional Contributions (as these terms are defined in CAP) during a calendar year for purposes of CAP shall be effective with respect to this Plan until the calendar year following the calendar year in which the change is made. Notwithstanding the foregoing, an election made by a participant under this Plan will be void if made after the beginning of the calendar year to which the election relates or the participant reduces his Basic Contributions, or Additional Contributions (as these terms are defined in CAP) during the calendar year to which the election relates. The amount of salary deferrals under the Plan shall be and remain solely the property of the participant's employer and a participant shall have no right to such amounts. The amount deferred hereunder shall be credited to a book account as deferrals are made and shall remain part of the employer's general assets. Notwithstanding anything above in this paragraph to the contrary, commencement of participation in this Plan and an employee's initial deferral election may occur after the beginning of a calendar year if in accordance with Paragraph 4. of Article III. 2. PARTICIPATING EMPLOYER CREDITS A participant's participating employer shall maintain, or cause to be maintained, a book account for such participant to which the participating employer shall credit an amount equal to the Basic Matching Contributions (as this term is defined in CAP) that the participating employer would have made on the participant's behalf to CAP had the participant's Basic Contributions continued to be made to CAP, instead of by salary deferral under this Plan. -4- 3. SPECIAL PARTICIPATING EMPLOYER CREDIT The participating employer of a participant eligible to receive a special participating employer credit shall credit to the book account maintained for the participant an amount equal to the difference between (1) the Matching Employer Contributions (as this term is defined in CAP) that the participating employer would have made on the participant's behalf to CAP had the participant made the maximum Pretax Contributions and Additional Post-Tax Contributions permitted under CAP and without regard to the Annual Additions Limit and (2) the Matching Employer Contributions actually made on behalf of the participant during the 1987 year. 4. NONFORFEITABILITY OF AND EARNINGS ON BOOK ACCOUNTS a. NONFORFEITABILITY All amounts credited to book accounts on behalf of participants shall be non-forfeitable. b. EARNINGS Participant, participating employer and special participating employer contributions will be credited to book accounts as of the date such contributions would have been made to CAP. All amounts credited to book accounts shall be credited with interest based on the performance of the CAP Stable Value Fund and such book accounts shall be revalued monthly. V. DISTRIBUTIONS Each participating employer shall distribute to each participant in the Plan for whom it maintains book accounts or his beneficiary under CAP an amount in cash equal to 100% of the value of his book account(s) upon the termination of employment of such participant under circumstances entitling him or his beneficiary to a distribution of the participant's interest in CAP whether or not a distribution is made at that time from CAP. -5- VI. GENERAL PROVISIONS 1. RIGHT TO TERMINATE This Plan may be terminated at any time by the Company. The Company or any participating employer may terminate this Plan with respect to its employees participating in CAP. If a participating employer shall terminate CAP with respect to its employees the amounts to their credit in their book accounts established under this Plan shall be payable out of the general assets of the employer to such participants in a single sum in accordance with the provisions of CAP applicable in the event of termination of CAP or the complete discontinuance of contributions thereto. 2. RIGHT TO AMEND This Plan may be amended at any time by the Board of Directors of the Company, except that no such amendment shall reduce for any participant the amount then credited to his book account established under this Plan. 3. NONALIENATION OF BENEFITS No right to payment or any other interest under this Plan shall be assignable or subject to attachment, execution, or levy of any kind. 4. EMPLOYMENT RELATIONSHIPS Nothing in this Plan shall be construed as giving any employee the right to be retained in the employ of any participating employer. Each participating employer in the Plan expressly reserves the right to dismiss any employee at any time without regard to the effect which such dismissal might have upon him under the Plan. -6- 5. PLAN NOT FUNDED Benefits payable under this Plan shall not be funded and shall be made out of the general funds of the participating employer. 6. CONSTRUCTION This Plan shall be construed, administered and enforced according to the laws of the State of Texas. VII. EFFECTIVE DATE This Plan was originally effective on November 1, 1988. As amended and restated herein, it shall be effective on September 6, 1995. ORYX ENERGY COMPANY By: /s/ FRANCES G. HEARTWELL ------------------------------- -7- EX-10.10 6 EXHIBIT 10.10 ORYX ENERGY COMPANY EXECUTIVE DEFERRED COMPENSATION PLAN AMENDED AND RESTATED SEPTEMBER 6, 1995 ORYX ENERGY COMPANY EXECUTIVE DEFERRED COMPENSATION PLAN TABLE OF CONTENTS ARTICLE DESCRIPTION PAGE - - --------------------------------------------------------------------------- Introduction 1 I Definitions 2-3 II Deferral of Compensation 3 III Deferred Compensation Accounts 3-5 IV Payment of Deferred Compensation 5-6 V Designation of Beneficiaries 6 VI Source of Payments 7 VII Nonalienation of Benefits 7 VIII Acceptance of Terms 7 IX Administration of the Plan 8 X Termination and Amendment 8 XI Construction 8 XII Governing Law 9 XIII Effective Date 9 ORYX ENERGY COMPANY EXECUTIVE DEFERRED COMPENSATION PLAN INTRODUCTION A. All individuals who are Career Band E employees of Oryx Energy Company (hereinafter called the "Company") participating in the Variable Incentive Plan (hereinafter called the "VIP") of the Company, constitute a select group of management or highly compensated employees. B. The VIP provides that the Company may pay bonuses annually as additional compensation to employees who have principally contributed to the success of the Company. C. The Company has established this Executive Deferred Compensation Plan to provide Career Band E participants in the VIP with the option to irrevocably defer the receipt of all or a portion of the compensation to which such participants would otherwise be entitled, subject to the terms and conditions hereinafter set forth. D. The Company has also established this Executive Deferred Compensation Plan to provide for the continued deferral and ultimate payment of amounts deferred by certain Company employees under the predecessor Deferred Compensation Plan, subject to the terms and conditions hereinafter set forth. -1- ARTICLE I DEFINITIONS 1.1 CASH UNIT is the entry in a Deferred Compensation Account at a credit equal to one dollar. 1.2 COMMITTEE means the Compensation Committee of the Board of Directors of Oryx Energy Company. 1.3 DEFERRED COMPENSATION ACCOUNT with respect to any Participant means the total amount of the Company's liability to pay a Participant the deferred amount of Shares or cash in his account, in addition to any interest or dividend accumulation. The Deferred Compensation Account shall include the amount transferred from the predecessor Deferred Compensation Plan to this Plan as of November 1, 1988, plus any interest accumulation. 1.4 DIVIDEND EQUIVALENT is the entry in a Deferred Compensation Account of a dividend credit with respect to a Share Unit, each Dividend Equivalent being equal to the dividend paid from time to time on a Share. 1.5 INTEREST EQUIVALENT is the entry in a Deferred Compensation Account of an interest credit with respect to a Cash Unit, the interest factor being equal to the quarterly rate of return from the Stable Value Fund of the Oryx Energy Company Capital Accumulation Plan. 1.6 PARTICIPANT means any individual in Career Band E who meets the eligibility requirements of the VIP and who is participating in this Plan. Participant also means any person for whom an amount was transferred from the predecessor Deferred Compensation Plan to this Plan. 1.7 PERMANENT AND TOTAL DISABILITY. A Participant shall be deemed to be permanently and totally disabled if he is eligible to receive benefits under the Company's long-term disability plan. 1.8 PLAN means the Executive Deferred Compensation Plan set forth herein and as it may be amended from time to time. 1.9 RETIREMENT means the date on which a Participant is retired in accordance with his employer's retirement plan, program, or policy. 1.10 SHARE means a Share of the Company's authorized voting common stock and any Share or Shares of stock of the Company hereafter issued or issuable in substitution or exchange for each such Share. -2- 1.11 SHARE UNIT is the entry in a Deferred Compensation Account of a credit equal to one Share. 1.12 SUBSIDIARIES means corporations in which the Company, directly or indirectly owns fifty percent or more of the outstanding voting stock. ARTICLE II DEFERRAL OF COMPENSATION 2.1 ELECTION TO DEFER. A Participant may elect to defer all or a portion of his compensation to be awarded under the VIP by filing a written election with the Committee on forms to be prescribed by the Committee. Such election must include a designation of beneficiary and an irrevocable election of a method of payment as described in Articles IV and V. Any such election shall apply to compensation to be earned in years beginning after the effective date of the election. Any election made by a Participant under the predecessor Deferred Compensation Plan shall continue in effect under this Plan. 2.2 AMOUNT OF DEFERRAL. The amount of compensation to be deferred in any year shall be designated by the Participant as a percentage of his compensation in multiples of 5% but shall not be less than 10%. 2.3 TIME OF ELECTION. A separate election to defer must be filed for each year and must be received by the end of the year preceding the year in which the compensation is earned. Any election by a Participant with respect to a compensation in a given year will not preclude a different action with respect to compensation in subsequent years. ARTICLE III DEFERRED COMPENSATION ACCOUNTS 3.1 CREATION OF DEFERRED COMPENSATION ACCOUNT. The Company shall establish a Deferred Compensation Account for each Participant. The account will be the account the Company shall use to record any deferred compensation and any amount transferred from the predecessor Deferred Compensation Plan to this Plan as of November 1, 1988. The account shall be credited at the time Participant would have otherwise been entitled to such compensation. -3- 3.2 CREDITING SHARE UNITS. Share Units shall be credited to a Participant's Deferred Compensation Account at the time the compensation would otherwise have been paid had no election to defer been made. The number of Share Units to be credited to the Deferred Compensation Account shall be determined by dividing the compensation by the closing price for Shares as reported on the New York Stock Exchange ("NYSE")-Composite Transactions on the day on which the compensation would otherwise have been paid. Any fractional Share Units shall also be credited to a Participant's Deferred Compensation Account. The number of Share Units in a Deferred Compensation Account shall be appropriately adjusted by the Committee in the event of changes in the Company's outstanding common stock by reason of stock dividends, stock splits, recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in capitalization, and such adjustments shall be conclusive. Share Units shall not entitle any person to the rights of a stockholder. 3.3 CREDITING CASH UNITS. Cash units shall be credited to a Participant's Deferred Compensation Account at the time the compensation would otherwise have been paid had no election to defer been made. 3.4 CREDITING DIVIDEND EQUIVALENTS. As additional deferred compensation for Participants with Share Units credited to their Deferred Compensation Accounts, the Company shall credit the Participant's Deferred Compensation Account with Dividend Equivalents being equal to the dividends declared on the Company's common stock. The crediting shall occur when said dividends are paid. The number of Share Units to be credited to the Deferred Compensation Account shall be determined by dividing the Dividend Equivalents by the closing price for Shares as reported on the NYSE-Composite Transactions on the date the dividends are paid on the Company's Shares. Any fractional Share Units shall also be credited to a Participant's Deferred Compensation Account. During the seven months immediately before a date selected for withdrawal from the Share Unit account (other than the date of death, disability, termination, or retirement), dividend equivalents on share units shall be paid only in Cash Units. 3.5 CREDITING INTEREST EQUIVALENTS. As additional deferred compensation for Participants with Cash Units credited to their Deferred Compensation Accounts, the Company shall credit the Participant's Deferred Compensation Account on a quarterly basis with an Interest Equivalent. -4- 3.6 REDIRECTING DEFERRED UNITS. A Participant may direct from time to time, but not more than once in any 12-month period, that all or any part of the balance in the Participant's Deferred Compensation Account be changed from Cash Units to Share Units, based upon the closing price of Shares as reported on the NYSE-Composite Transactions on the date written instructions, with respect to the change, are received by the Company, provided that during the seven months immediately before a date selected for withdrawal from the Share Unit account (other than the date of death, disability, termination, or retirement) no transfer may be made from Cash Units to Share Units. For purposes of converting Cash Units into Share Units, there shall be taken into account interest accrued since the last quarterly valuation. ARTICLE IV PAYMENT OF DEFERRED COMPENSATION 4.1 TIME OF PAYMENT. All payments of a Participant's Deferred Compensation Account shall be made at, or shall commence on, the earliest of the following dates: (a) Separation from employment, (b) Retirement, (c) Permanent and Total Disability, and (d) Death of a participant, in which case, payment will be made to the heir, beneficiary, or successor designated by the employee under Article V, provided, however, that the Participant may irrevocably designate such other date on which payment will commence, so long as the latest date shall not be more than three years following retirement or separation from employment. 4.2 METHOD OF PAYMENT. Participant shall have the option of selecting either a lump sum payment or a series of annual installments (not exceeding 10), provided such election is irrevocable and made at the date of deferral. Participant shall receive in cash all deferred compensation credited to such Participant's Deferred Compensation Account. Share Units credited to the Participant's Deferred Compensation Account shall be valued at the closing price for Shares as reported on the NYSE-Composite Transactions on the day of payment. -5- 4.3 HARDSHIP DISTRIBUTION. Participant may request a modification in the payment terms hereunder only in the event of severe financial hardship and only to the extent reasonably necessary to eliminate the hardship. Such request shall specify in detail the grounds for the requested modification and shall be referred to the Committee. A qualifying severe financial hardship must be caused by accident, illness, or event beyond the control of the Participant. The decision of the Committee with respect to the requested modification shall be solely at the discretion of the Committee and in accordance with its evaluation of the exigencies of the situation. Such decision shall be binding on the Company and Participant. ARTICLE V DESIGNATION OF BENEFICIARIES The Participant shall name a beneficiary to receive any payments due him at the time of his death, with the right to change such beneficiary at anytime. The beneficiary named by a Participant under the predecessor Deferred Compensation Plan shall remain the Participant's beneficiary until changed by a Participant under this Plan. In case of a failure of designation or the death of the designated beneficiary without a designated successor, distribution shall be made to the person or persons designated as beneficiary in the designation most recently filed under the Oryx Energy Company Capital Accumulation Plan, or if no such designation has been made or the Participant is not participating in such programs, the surviving spouse of a deceased Participant, or, if there is no surviving spouse, the children of the Participant in equal shares (the share of any child who predeceases the Participant to go in equal shares to the issue of such deceased child), or if there is no surviving spouse, child, or issue of such children, the estate of the Participant. No designation of beneficiaries shall be valid unless in writing signed by the Participant, dated and filed with the Committee. Upon the Participant's death, any balance in the Participant's Deferred Compensation Account is payable under the method elected by the Participant or in such other manner as the Committee may determine in its sole discretion. -6- ARTICLE VI SOURCE OF PAYMENTS All payments of deferred compensation shall be paid in cash from the general funds of the Company and the Company shall be under no obligation to segregate any assets in connection with the maintenance of the Deferred Compensation Account, nor shall anything contained in this Plan or any action taken pursuant to the Plan create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and Participant. Title to the beneficial ownership of any assets, whether cash or investments, which the Company may designate to pay the amount credited to the Deferred Compensation Account shall at all times remain in the Company and Participant shall not have any property interest whatsoever in any specific assets of the Company. Participant's interest in the Deferred Compensation Account shall be limited to the right to receive payments pursuant to terms of this Plan and such rights to receive shall be no greater than the right of any other unsecured general creditor of the Company. ARTICLE VII NONALIENATION OF BENEFITS Participant shall not have the right to sell, assign, transfer or otherwise convey or encumber in whole or in part the right to receive any payment under this plan except in accordance with Article V. ARTICLE VIII ACCEPTANCE OF TERMS The terms and conditions of this Plan shall be binding upon the heirs, beneficiaries, and other successors in interest of Participant to the same extent that said terms and conditions are binding upon the Participant. This Plan shall not be construed in any way as an employment contract requiring the Company or Participant to continue the employment relation. -7- ARTICLE IX ADMINISTRATION OF THE PLAN The Plan shall be administered by the Committee which shall have full authority and power to interpret, amend and administer the Plan and shall make such rules and regulations and establish such procedures for the administration of this Plan in its sole discretion as it deems appropriate. In the event of any dispute or disagreements as to the interpretation of this Plan or of any rules, regulation, or procedure or as to any questioned right or obligation arising from or related to this Plan, the decision of the Committee shall be final and binding upon all persons. The Committee may delegate any or all of its powers, duties or authority under this Plan to any person the Committee deems appropriate. ARTICLE X TERMINATION AND AMENDMENT The Plan may be terminated at any time without notice or cause by the Compensation Committee in its sole discretion, and may be suspended or amended at any time without notice or cause by the Committee in its sole discretion provided, however, that no such amendment or termination shall adversely affect the rights of Participants or their beneficiaries with respect to amounts credited to Deferred Compensation Accounts prior to such amendment or termination, without the written consent of the Participant. ARTICLE XI CONSTRUCTION In the case of any one or more of the provisions contained in this Plan shall be invalid, illegal, or unenforceable in any respect the remaining provisions shall be construed in order to effectuate the purposes hereof and the validity, legality, and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. -8- ARTICLE XII GOVERNING LAW This Plan shall be governed by the laws of the State of Texas. ARTICLE XIII EFFECTIVE DATE This Plan was originally effective on November 1, 1988. As amended and restated herein, it shall be effective on September 6, 1995. ORYX ENERGY COMPANY By: /s/ FRANCES G. HEARTWELL -------------------------------- -9- EX-12 7 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 ----------------------------------------------------- 1995 1994 1993 1992 1991 --------- --------- --------- --------- --------- RATIO OF EARNINGS TO FIXED CHARGES: Fixed Charges: Consolidated interest cost and debt expense......................... $ 144 $ 162 $ 163 $ 187 $ 217 Interest allocable to rental expense (b)............................ 14 13 11 11 13 --------- --------- --------- --------- --------- Total............................................................. $ 158 $ 175 $ 174 $ 198 $ 230 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Earnings: Consolidated income (loss) before provision (credit) for income taxes.............................................................. $ 136 $ (100) $ (108) $ (4) $ (52) Fixed charges....................................................... 158 175 174 198 230 Interest capitalized................................................ (10) (11) (46) (43) (26) Amortization of previously capitalized interest..................... 5 14 7 3 3 --------- --------- --------- --------- --------- Total............................................................. $ 289 $ 78 $ 27 $ 154 $ 155 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Ratio of Earnings to Fixed Charges (c).............................. 1.83 .45 .16 .78 .67 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS: Fixed Charges: Consolidated interest cost and debt expense......................... $ 144 $ 162 $ 163 $ 187 $ 217 Preferred stock dividend requirements............................... -- 2 8 14 20 Interest allocable to rental expense (b)............................ 14 13 11 11 13 --------- --------- --------- --------- --------- Total............................................................. $ 158 $ 177 $ 182 $ 212 $ 250 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Earnings: Consolidated income (loss) before provision (credit) for income taxes.............................................................. $ 136 $ (100) $ (108) $ (4) $ (52) Fixed charges....................................................... 158 177 182 212 250 Interest capitalized................................................ (10) (11) (46) (43) (26) Amortization of previously capitalized interest..................... 5 14 7 3 3 --------- --------- --------- --------- --------- Total............................................................. $ 289 $ 80 $ 35 $ 168 $ 175 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Ratio of Earnings to Fixed Charges (c)................................ 1.83 .45 .19 .79 .70 --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
- - ------------------------ (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 changes, or fixed charges and preferred stock dividend requirements, by $44 million. Earnings for 1991 were inadequate to cover fixed changes, or fixed charges and preferred stock dividend requirements, by $75 million. EX-13 8 EXHIBIT 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS Management's discussion and analysis of the Company's financial position and results of operations which follows should be read in conjunction with the Consolidated Financial Statements and Selected Financial Data included in this report. BUSINESS CLIMATE The Company's realized oil price in 1995 increased by $1.29 to $16.35 per barrel, or 9 percent more than the 1994 price. The increase in 1995 followed a 6 percent decline in 1994 compared to 1993. The fundamentals in worldwide oil markets continue to reflect an excess of supply over demand. Concerns regarding the reentry of Iraq into world crude markets depress prices. The Company's realized U.S. gas price in 1995 fell by $.14 to $1.73 per mcf or 7 percent lower than the 1994 price. The U.S. experienced mild weather in early 1995 which resulted in low prices. Extremely cold winter weather caused record high prices in late 1995 and early 1996. The Company produced 73 mmeb in 1995, 57 percent crude and 43 percent natural gas. In January 1995, the Company announced its new corporate direction which included 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. In 1995, debt was reduced by $508 million and costs, excluding restructuring provisions, were $112 million or 10 percent lower than 1994. LIQUIDITY AND CAPITAL RESOURCES ED&A outlays differ from capital expenditures in that they exclude capitalized interest but include cash exploration costs. ED&A outlays were $300 million in 1995, compared to $314 million in 1994 and $451 million in 1993. In 1995, 22 percent of the Company's total ED&A investment was on exploration and 78 percent on development. In 1996, total ED&A outlays are expected to be $420 million of which about 80 percent is targeted for development and acquisition and 20 percent for exploration, primarily in the U.S. FD&A costs per eb were $5.86 in 1995. The average FD&A cost for the five years 1991 through 1995 was $5.04 per eb and the average production replacement rate was 92 percent. In 1995, the Company replaced 67 percent of its production. The Company's cash flow available for investment will continue to be affected by prevailing oil and gas prices, costs and volumes. The Company is basing its 1996 investment plans on oil and gas spot prices averaging $18.00 per barrel and $1.80 per mmbtu. These assumptions are subject to change, along with the associated investment levels. The Company emphasizes projects that generate near-term cash flow and de-emphasizes entry into new countries. The Gulf of Mexico is the cornerstone of the Company's growth strategy. In July 1995, the Company completed the sale of all of its assets in the Alba field in the U.K. North Sea for cash consideration of $270 million. The sale of the Company's assets in Alba was part of a series of related asset dispositions which the Company entered into in 1995 for the purpose of reducing debt. In November 1995, the Company completed the sale of its interest in Block 48/15a in the U.K. North Sea for $120 million. Assets sold included the Company's interest in the Audrey field; its interest in the Galleon field; and the Ensign discovery. In addition, the Company completed sales of certain U.S. assets and all of its assets in Indonesia and Gabon. The sale of U.S. assets occurred primarily during the six months ended June 30, 1995 and generated cash proceeds of $77 million; the sale of the Indonesian assets occurred in May 1995, for cash proceeds of $67 million; and the sale of the Gabonese assets occurred in March 1995 for cash proceeds of $2 million. In 1995, the Company generated net proceeds from divestments of $517 million, as compared to $78 million in 1994 and $46 million in 1993. 1 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. Effective June 1, 1995, the Company replaced its $620 million revolving credit facility with a $500 million revolving credit facility (Revolver) which matures on June 30, 1998. The terms of the $500 million Revolver incorporate restrictive covenants, including limitations on total debt, minimum cash flow interest coverage and certain dividend limitations. In August 1995, as a result of the sale of the Company's interest in the Alba field, the Company was required by the holder to repay the 7.2% $100 million note. In connection with the aforementioned, the Company recognized a non-cash extraordinary loss of $15 million (net of $8 million of income tax). The $15 million extraordinary loss is comprised of $14 million from the write-off of debt issuance costs deferred under the $620 million revolving credit facility and a prepayment penalty of $1 million on the 7.2% $100 million note. In August 1995, a swap option, in the notional amount of $250 million sold by the Company in 1993 for $14 million, was exercised by the counterparties, thereby obligating the Company, commencing September 15, 1995 and continuing through September 15, 1998, to pay an annual rate of 9.75 percent while receiving LIBOR (5.875 percent at September 15, 1995, to be reset at six-month intervals). The $14 million of proceeds previously received is being amortized and netted against the interest expense associated with the exercise of the swap option. The Company called for redemption on October 30, 1995 its $138 million 10 3/8% Debentures at 106.471 percent of par plus accrued interest, which resulted in an $8 million extraordinary loss (net of $3 million of income tax) in the fourth quarter. The redemption was funded with proceeds from divestments. On October 20, 1995, the Company issued $100 million 8% Notes Due October 15, 2003 and $150 million 8.125% Notes Due October 15, 2005. The net proceeds of $245 million were applied to the redemption of the Company's $250 million 9.75% Notes Due September 15, 1998 on November 30, 1995 at par plus accrued interest. The Company's total debt was $1,203 million at December 31, 1995, compared to $1,711 million at December 31, 1994. Cash was $20 million at the end of 1995 and $10 million at the end of 1994. 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. In December 1995, the Company adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." Adoption did not impact results of operations. 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. 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 were repaid in 1995. During 1995, holders of the Company's Series B Junior Cumulative Convertible Preference Stock (Series B Preference) converted the remaining shares of Series B Preference into common stock on a share-for-share basis. 2 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 dividend. 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. 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. FINANCIAL PERFORMANCE Net income in 1995 was $135 million which included net gains of $137 million from the sale of assets, a $23 million extraordinary item related to early extinguishment of debt (see Note 11 to the Consolidated Financial Statements) and a $16 million net restructuring charge. Production volumes decreased by 8 mmeb or 10 percent as a direct result of the sale of producing assets. Total costs and expenses decreased $112 million or 10 percent to $968 million in 1995 from $1,080 in 1994, excluding the restructuring provision. 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 retirement of debt (see Note 11 to the Consolidated Financial Statements) and a $59 million restructuring charge (net of $33 million of income tax). Production volumes increased by 4 mmeb 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 certain 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 restructuring provision. 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. RESTRUCTURING CHARGES The Company incurred provisions for restructuring of $25 million in 1995 and $92 million in 1994. 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 business. The net result of these actions has been a reduction of approximately 600 positions which, along with other actions taken, should lead to an additional $91 million cost reduction for 1996. 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 12 percent of its estimated 1996 crude oil production with an average price of $18.48 per barrel. Approximately 41 percent of its estimated 1996 U.S. gas production is under swap agreements with an average price of $1.83 per mmbtu. (See Note 2 to the Consolidated Financial Statements.) 3 MARKETING During the fourth quarter of 1995, the Company, Apache Corporation and Parker & Parsley Petroleum Company formed Producers Energy Marketing, LLC (ProEnergy). Upon commencement of full operations, which is expected to occur in the second quarter of 1996, ProEnergy will purchase substantially all of its members' U.S. gas production at index prices. 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 was a benefit of $5 million in 1993, a charge of $2 million in 1994 and no effect in 1995. 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. 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 curtailments in 1994 and 1995, is being amortized over a 20-year period. The increase in annual expense for providing these benefits was $3 million after taxes. However, cash outflows were 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.) 4 Appendix Graph of Natural Gas Price 1991-1995 Graph of Natural Gas Production (split between U.S. and Foreign) 1991-1995 Graph of Crude and Condensate Production (split between U.S. and Foreign) 1991-1995 Graph of Crude and Condensate Price 1991-1995 ORYX ENERGY COMPANY SELECTED FINANCIAL DATA
YEAR ENDED DECEMBER 31 ----------------------------------------------------- 1995 1994 1993 1992 1991 --------- --------- --------- --------- --------- (MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) FOR THE PERIOD Revenues..................................................... $ 1,129 $ 1,072 $ 1,054 $ 1,392 $ 1,598 Income (loss) before extraordinary item and cumulative effect of accounting change (1).................................... $ 158 $ (65) $ (93) $ 73 $ 19 Net income (loss) (1)........................................ $ 135 $ (1,025) $ (100) $ 14 $ 19 Income (loss) per share of common stock before extraordinary item and cumulative effect of accounting change (1)......... $ 1.54 $ (.68) $ (1.01) $ .74 $ .08 Net income (loss) per share of common stock (1).............. $ 1.32 $ (10.53) $ (1.08) $ .06 $ .08 Cash dividends per share of common stock (2)................. $ -- $ -- $ .40 $ .80 $ 1.20 Cash dividends per share of preferred stock (3).............. $ .05 $ .175 $ .725 $ 1.25 $ 1.80 ED&A outlays (4)............................................. $ 300 $ 314 $ 451 $ 390 $ 569 AT END OF PERIOD Total assets (1)............................................. $ 1,666 $ 2,118 $ 3,624 $ 3,738 $ 4,257 Long-term debt............................................... $ 1,051 $ 1,546 $ 1,741 $ 1,489 $ 2,341 Shareholders' equity (deficit)(5)............................ $ (209) $ (347) $ 676 $ 817 $ 534
- - -------------------------- (1) Net income for 1995 includes $137 million after-tax gains on asset disposals, $16 million after-tax charge for costs associated with the Company's restructuring and a $23 million extraordinary loss net of taxes from debt costs. (See Notes 5 and 11 to the Consolidated Financial Statements.) 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 the 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. 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. In 1995, the remaining 5,259,394 shares of Series B Preference Stock were converted into Common Stock. (4) Exploration, development and acquisition outlays (ED&A outlays) exclude capitalized interest of $10 million, $11 million, $46 million, $43 million and $26 million for 1995, 1994, 1993, 1992 and 1991. (5) Shareholders' equity (deficit) at December 31, 1995 and 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, 1995, 1994, 1993 and 1992 includes the effects of the sale of 17,250,000 shares of Common Stock in August 1992. 5 ORYX ENERGY COMPANY CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31 ------------------------------- 1995 1994 1993 --------- --------- --------- (MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) REVENUES Oil and gas....................................................................... $ 1,014 $ 1,082 $ 1,080 Other-net (Note 3)................................................................ 115 (10) (26) --------- --------- --------- 1,129 1,072 1,054 --------- --------- --------- COSTS AND EXPENSES Operating costs................................................................... 330 374 353 Production taxes (Note 4)......................................................... 105 112 112 Exploration costs................................................................. 59 104 100 Depreciation, depletion and amortization.......................................... 276 271 395 General and administrative expense................................................ 64 68 85 Interest and debt expense......................................................... 144 162 163 Interest capitalized.............................................................. (10) (11) (46) Provision for restructuring (Note 5).............................................. 25 92 -- --------- --------- --------- 993 1,172 1,162 --------- --------- --------- Income (loss) before extraordinary item, cumulative effect of accounting change and benefit for income taxes..................................................... 136 (100) (108) Benefit for income taxes (Note 6)................................................. (22) (37) (10) Remeasurement of foreign deferred tax (Notes 1 and 6)............................. -- 2 (5) --------- --------- --------- Income (loss) before extraordinary item and cumulative effect of accounting change........................................................................... 158 (65) (93) Extraordinary item (Note 11)...................................................... (23) (12) (7) Cumulative effect of accounting change (Note 7)................................... -- (948) -- --------- --------- --------- NET INCOME (LOSS)................................................................. 135 (1,025) (100) Less preferred stock dividends.................................................... -- 1 5 --------- --------- --------- NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK.................................... $ 135 $ (1,026) $ (105) --------- --------- --------- --------- --------- --------- NET INCOME (LOSS) PER SHARE OF COMMON STOCK (NOTE 8): Before extraordinary item and cumulative effect of accounting change............ $ 1.54 $ (.68) $ (1.01) Extraordinary item.............................................................. (.22) (.12) (.07) Cumulative effect of accounting change.......................................... -- (9.73) -- --------- --------- --------- Net income (loss)............................................................... $ 1.32 $ (10.53) $ (1.08) --------- --------- --------- --------- --------- --------- Cash dividends per share of common stock.......................................... $ -- $ -- $ .40 --------- --------- --------- --------- --------- --------- Weighted average number of common and common equivalent shares outstanding (millions of shares) (Note 8).................................................... 102.4 97.4 97.1 --------- --------- --------- --------- --------- ---------
(See Accompanying Notes) 6 ORYX ENERGY COMPANY CONSOLIDATED BALANCE SHEETS
DECEMBER 31 -------------------- 1995 1994 --------- --------- (MILLIONS OF DOLLARS) ASSETS Current Assets Cash and cash equivalents................................................................. $ 20 $ 10 Accounts receivable and other current assets.............................................. 161 185 --------- --------- Total Current Assets........................................................................ 181 195 Properties, Plants and Equipment (Note 9)................................................... 1,426 1,851 Deferred Charges and Other Assets........................................................... 59 72 --------- --------- Total Assets................................................................................ $ 1,666 $ 2,118 --------- --------- --------- --------- LIABILITIES AND SHAREHOLDERS' DEFICIT Current Liabilities Accounts payable.......................................................................... $ 106 $ 105 Accrued liabilities (Note 10)............................................................. 196 262 Current portion of long-term debt (Note 11)............................................... 152 165 --------- --------- Total Current Liabilities................................................................... 454 532 Long-Term Debt (Note 11).................................................................... 1,051 1,546 Deferred Income Taxes (Note 6).............................................................. 207 232 Deferred Credits and Other Liabilities (Note 18)............................................ 163 155 Commitments and Contingent Liabilities (Note 12) Shareholders' Deficit (Note 13) Preferred stock, $1 par value; 22,740,606 shares authorized; 5,259,394 shares of Series B Junior Cumulative Convertible Preference Stock issued and outstanding in 1994............ -- 5 Common stock, $1 par value; 250,000,000 shares authorized; 126,703,550 shares issued in 1995 and 1994, 104,454,562 and 98,946,066 shares outstanding in 1995 and 1994............ 124 124 Additional paid-in capital................................................................ 1,821 2,098 Accumulated deficit....................................................................... (1,051) (1,181) --------- --------- 894 1,046 Less common stock in treasury, at cost; 19,247,112 and 24,755,608 shares in 1995 and 1994..................................................................................... (1,004) (1,294) Less loan to ESOP......................................................................... (99) (99) --------- --------- Shareholders' Deficit....................................................................... (209) (347) --------- --------- Total Liabilities and Shareholders' Deficit................................................. $ 1,666 $ 2,118 --------- --------- --------- ---------
The successful efforts method of accounting is followed. (See Accompanying Notes) 7 ORYX ENERGY COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31 ------------------------------- 1995 1994 1993 --------- --------- --------- (MILLIONS OF DOLLARS) CASH AND CASH EQUIVALENTS FROM OPERATING ACTIVITIES Net Income (Loss)................................................................... $ 135 $ (1,025) $ (100) Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation, depletion and amortization........................................ 276 271 395 Dry hole costs and leasehold impairment......................................... 21 57 45 Deferred income taxes........................................................... 33 10 15 (Gain) loss on sale of assets, net of taxes..................................... (137) -- 5 Provision for restructuring, net of taxes....................................... 16 59 -- Extraordinary item.............................................................. 23 12 7 Cumulative effect of accounting change.......................................... -- 948 -- Proceeds from interest rate hedging activities.................................. -- -- 28 Other........................................................................... 10 5 30 --------- --------- --------- 377 337 425 Changes in working capital: Accounts receivable and other current assets.................................... 9 14 37 Accounts payable................................................................ -- (14) (32) Accrued liabilities............................................................. (61) (41) (51) --------- --------- --------- NET CASH FLOW PROVIDED FROM OPERATING ACTIVITIES.................................... 325 296 379 --------- --------- --------- CASH AND CASH EQUIVALENTS FROM INVESTING ACTIVITIES Capital expenditures.............................................................. (273) (281) (453) Proceeds from divestments, net of current taxes................................... 517 78 46 Other............................................................................. (25) (30) 20 --------- --------- --------- NET CASH FLOW PROVIDED FROM (USED FOR) INVESTING ACTIVITIES......................... 219 (233) (387) --------- --------- --------- CASH AND CASH EQUIVALENTS FROM FINANCING ACTIVITIES Proceeds from borrowings.......................................................... 259 123 359 Repayments of long-term debt...................................................... (793) (185) (307) Cash dividends paid on common and preferred stock................................. -- (1) (44) --------- --------- --------- NET CASH FLOW PROVIDED FROM (USED FOR) FINANCING ACTIVITIES......................... (534) (63) 8 --------- --------- --------- CHANGES IN CASH AND CASH EQUIVALENTS................................................ 10 -- -- CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR...................................... 10 10 10 --------- --------- --------- CASH AND CASH EQUIVALENTS AT END OF YEAR............................................ $ 20 $ 10 $ 10 --------- --------- --------- --------- --------- ---------
(See Accompanying Notes) 8 ORYX ENERGY COMPANY CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
COMMON STOCK COMMON STOCK PREFERRED STOCK HELD IN ------------------------ ------------------------ ADDITIONAL TREASURY NUMBER PAR NUMBER PAR PAID-IN ACCUMULATED --------- OF SHARES VALUE OF SHARES VALUE CAPITAL DEFICIT SHARES ----------- ----- ----------- ----- ----------- ------------- --------- (MILLIONS OF DOLLARS, THOUSANDS OF SHARES) AT DECEMBER 31, 1992............... 123,702 $ 124 7,259 $ 7 $ 2,205 $ (11) (26,784) Net loss......................... (100) Issuance from treasury........... (1) 15 Cash dividends declared: Common - $.40 per share........ (39) Preferred - $.725 per share.... (5) Repayment of loan to ESOP........ ----------- ----- ----------- --- ----------- ------------- --------- AT DECEMBER 31, 1993............... 123,702 124 7,259 7 2,204 (155) (26,769) Net loss......................... (1,025) Issuance from treasury........... (1) 13 Preferred stock conversion....... (2,000) (2) (105) 2,000 Cash dividends declared: Preferred - $.175 per share.... (1) Repayment of loan to ESOP........ ----------- ----- ----------- --- ----------- ------------- --------- AT DECEMBER 31, 1994............... 123,702 124 5,259 5 2,098 (1,181) (24,756) Net income....................... 135 Issuance from treasury........... (5) 250 Preferred stock conversion....... (5,259) (5) (277) 5,259 Cash dividends declared: Preferred - $.05 per share..... -- ----------- ----- ----------- --- ----------- ------------- --------- AT DECEMBER 31, 1995............... 123,702 $ 124 -- $ -- $ 1,821 $ (1,051) (19,247) ----------- ----- ----------- --- ----------- ------------- --------- ----------- ----- ----------- --- ----------- ------------- --------- LOAN TO COST ESOP ----------- ----------- AT DECEMBER 31, 1992............... $ (1,403) $ (105) Net loss......................... Issuance from treasury........... 1 Cash dividends declared: Common - $.40 per share........ Preferred - $.725 per share.... Repayment of loan to ESOP........ 3 ----------- ----------- AT DECEMBER 31, 1993............... (1,402) (102) Net loss......................... Issuance from treasury........... 1 Preferred stock conversion....... 107 Cash dividends declared: Preferred - $.175 per share.... Repayment of loan to ESOP........ 3 ----------- ----------- AT DECEMBER 31, 1994............... (1,294) (99) Net income....................... Issuance from treasury........... 7 Preferred stock conversion....... 283 Cash dividends declared: Preferred - $.05 per share..... ----------- ----------- AT DECEMBER 31, 1995............... $ (1,004) $ (99) ----------- ----------- ----------- -----------
(See Accompanying Notes) 9 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 (the 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 for and development and production 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 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 -- Effective January 1, 1994, the Company changed its policy for performing ceiling test comparisons to an individual field basis. Prior to 1994, the Company performed its ceiling test comparisons on a worldwide basis. Prior to December 1995, the Company impaired the net book value of its proved properties to the extent that they exceeded the estimated undiscounted future pre-tax cash flows calculated by using current realized prices and costs held constant. In December 1995, the Company adopted the provisions of Statement of Financial Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." Under SFAS No. 121, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable, the Company reviews for impairment by comparing estimated future cash flows expected to result from the use of an asset and its eventual disposition to the carrying amount of the asset (Note 7). 10 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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 SFAS No. 109, "Accounting for Income Taxes" in 1992. The remeasurement provisions of SFAS No. 109 have affected the reported earnings of the Company for 1994 and 1993. Earnings for 1994 and 1993 were increased (decreased) by $(2) million and $5 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 distorted 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 $3 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. 11 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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). 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 The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain items in years prior to 1995 have been reclassified to conform to the 1995 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 12 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (2) FINANCIAL INSTRUMENTS (CONTINUED) does business. At December 31, 1995 and 1994, the Company had forward and option contracts outstanding with various expiration dates to purchase 52 million and 53 million net British pounds at various prices. At December 31, 1995 and 1994, 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, 1995, the Company recognized a net transaction loss of $1 million and net gains of $2 million from foreign exchange contracts. For the years ended December 31, 1994 and 1993, the Company recognized net transaction gains of nil and $2 million, and net gains (losses) from foreign exchange contracts of $1 million and $(6) million. The Company also participates in various interest rate hedging arrangements to manage the floating rate portion of its debt. At December 31, 1995 and 1994, the Company was a party to interest rate hedging agreements having notional amounts of $600 million, of which $350 million represented interest rate caps (Caps) with maturities in 1997 and 1998. The remaining $250 million represented interest rate swaps (Swaps) expiring in 1998 that had been under option at December 31, 1994 and were subsequently exercised on August 15, 1995. The terms of the Caps expose the Company to interest rate risk when LIBOR (5.5 percent at December 31, 1995) exceeds 5 percent per year. Under the terms of the Caps, the Company received advance proceeds of $19 million from the counterparties and must pay the excess by which LIBOR exceeds 5 percent on the notional amounts. Under the terms of the Swaps, the Company received advance proceeds of $14 million from the counterparties and must pay an annual rate of 9.75 percent while receiving LIBOR (5.875 percent at September 15, 1995, to be reset at six-month intervals). The terms of the Swaps decrease the exposure of the Company to increases in LIBOR. At December 31, 1995 and 1994, the aggregate carrying values of the gains deferred from the Company's interest rate futures agreements were $25 million and $32 million, and their estimated fair market values, based on market quotes, were $37 million and $41 million. At December 31, 1995, the Company was a party to crude oil and natural gas hedging contracts to hedge about 8 percent of its estimated 1996 crude oil production at an average price of $18.34 per barrel. Approximately 40 percent of its estimated 1996 U.S. natural gas production was hedged at $1.81 per mmbtu. 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 1995 U.S. natural gas production at $1.95 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, 1995 and 1994 were $5 million and nil, and the aggregate fair values, subject to daily fluctuation, based on quotes from brokers, were approximately $(21) million and $13 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 institutions. The Company believes that losses from nonperformance are unlikely to occur. OTHER FINANCIAL INSTRUMENTS At December 31, 1995 and 1994, the carrying values of the Company's long-term debt, including amounts due within one year, were $1,203 million and $1,711 million (Note 11). At December 31, 1995 and 1994, the aggregate fair values of the Company's long-term debt were approximately $1,233 million and $1,671 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. 13 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (3) OTHER REVENUES -- NET The components of other revenues were as follows:
1995 1994 1993 --------- --------- --------- (MILLIONS OF DOLLARS) Interest income................................................... $ 8 $ 2 $ 1 Gain (loss) on sale of assets*.................................... 124 -- (7) Miscellaneous..................................................... (17) (12) (20) --------- --- --- $ 115 $ (10) $ (26) --------- --- --- --------- --- ---
- - ------------------------ * Revenue generated substantially from gains on the sale of the Company's interest in the following properties. In July 1995, the Company completed the sale of all of its assets in the Alba field in the U.K. North Sea for cash consideration of $270 million. In November 1995, the Company sold its interest in Block 48/15a in the U.K. North Sea for $120 million. Assets sold included the Company's 33.7 percent interest in the Audrey field; its estimated 10 percent interest in the Galleon field; and its undetermined interest in the Ensign discovery. The sale of these North Sea assets was part of a series of related asset dispositions which the Company has entered into in 1995 for the purpose of using the associated net proceeds to reduce debt. In addition to the sale of the North Sea assets, the Company has completed sales of certain U.S. oil and gas producing assets and all its assets in Indonesia and Gabon. The sale of U.S. assets occurred primarily during the six-month period which ended on June 30, 1995 and generated cash proceeds of $77 million; the sale of the Indonesian assets occurred in May 1995, for cash proceeds of $67 million; and the sale of the Gabonese assets occurred in March 1995 for cash proceeds of $2 million. Asset dispositions, totaling $536 million of gross proceeds, represent 138 million equivalent barrels of proved reserves and 43 thousand average equivalent barrels of production per day. (4) PRODUCTION TAXES Production taxes consisted of the following:
1995 1994 1993 --------- --------- --------- (MILLIONS OF DOLLARS) International royalties.......................................... $ 46 $ 54 $ 60 U.S. severance taxes............................................. 22 28 35 U.S. property taxes.............................................. 11 15 17 U.K. petroleum revenue taxes..................................... 26 15 -- --------- --------- --------- $ 105 $ 112 $ 112 --------- --------- --------- --------- --------- ---------
(5) CHANGES IN BUSINESS In the fourth quarter of 1995, the Company recognized a net $25 million ($16 million after-tax) charge for restructuring. The charge is comprised of a $4 million adjustment to the 1994 restructuring provision (see below) and a $29 million restructuring provision for a plan to achieve further costs reductions. 14 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (5) CHANGES IN BUSINESS (CONTINUED) An analysis of the 1995 provision for restructuring follows:
ACTIVITY INITIAL THROUGH BALANCE AT PROVISION 12/31/95 12/31/95 ------------- ----------- ----------- (MILLIONS OF DOLLARS) Termination and associated costs*........................................ $ 10 $ 1 $ 9 SFAS No. 88 and SFAS No. 106 (retirement and postretirement costs)**..... 5 5 -- Office lease obligation***............................................... 14 -- 14 --- --- --- Total.................................................................. $ 29 $ 6 $ 23 --- --- --- --- --- ---
- - ------------------------ * Termination and associated cash costs are primarily comprised of severance pay and associated employee benefit costs for 250 operational and administrative employees. Management expects to complete such payments by the end of 1997. ** 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. *** Represents contractual obligation existing prior to the commitment date that will continue with no economic benefit to the Company. In 1994, the Company 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 1994 provision for restructuring follows:
ACTIVITY ACTIVITY INITIAL THROUGH BALANCE AT THROUGH BALANCE AT PROVISION 12/31/94 12/31/94 12/31/95* 12/31/95 ----------- ----------- ----------- ----------- ----------- (MILLIONS OF DOLLARS) Termination and associated costs**.................. $ 33 $ 21 $ 12 $ 11 $ 1 Proceeds from divested assets....................... (40) (40) -- -- -- SFAS No. 88 and SFAS No. 106 (retirement and postretirement costs)***........................... 33 21 12 12 -- Book value of assets to be divested and lease obligation****..................................... 151 129 22 22 -- ----- ----- --- --- --- Total............................................. $ 177 $ 131 $ 46 $ 45 $ 1 ----- ----- --- --- --- ----- ----- --- --- ---
- - ------------------------ *Since the costs of the restructuring were substantially complete in 1995, the reserve was adjusted downward by $4 million in the fourth quarter. **Termination and associated cash costs are primarily comprised of severance pay and associated employee benefit costs for 345 operational and administrative employees. Management expects to complete such payments in 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. 15 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (5) CHANGES IN BUSINESS (CONTINUED) ****Book value of assets to be divested are a result of the Company's program to consolidate its U.S. onshore position. Under the terms of an operating lease which expired in September 1995, the Company was obligated to pay the lessor the amount by which the fair market value of the asset was less than $37 million, but in no event would the payment exceed $31 million. The Company paid the obligation in full in 1995. (6) INCOME TAXES Income (loss) before extraordinary item, cumulative effect of accounting change and benefit for income taxes consisted of the following:
1995 1994 1993 --------- --------- --------- (MILLIONS OF DOLLARS) Before interest expense United States income (loss)........................................... $ 48 $ (2) $ 30 Foreign income (loss)................................................. 222 53 (21) Interest expense........................................................ (134) (151) (117) --------- --------- --------- $ 136 $ (100) $ (108) --------- --------- --------- --------- --------- ---------
The benefit for income taxes for each of the years 1995, 1994 and 1993 is applicable to continuing operations. The components of the benefit for income taxes on income (loss) before extraordinary item and accounting change were as follows:
1995 1994 1993 --------- --------- --------- (MILLIONS OF DOLLARS) Federal Current tax benefit................................................... $ (18) $ (14) $ (18) Deferred tax provision (benefit)...................................... (9) (16) 4* State tax provision (benefit)........................................... 1 (6) 1 Foreign Current tax provision................................................. 3 9 8 Deferred tax provision (benefit)...................................... 1 (10) (5) --------- --------- --------- $ (22) $ (37) $ (10) --------- --------- --------- --------- --------- ---------
- - ------------------------ *Includes a $17 million deferred tax provision associated with a U.S. tax rate increase. 16 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (6) INCOME TAXES (CONTINUED) 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, 1995 and 1994 are as follows:
1995 1994 --------- --------- (MILLIONS OF DOLLARS) Deferred Tax Assets AMT credit carryforward....................................................... $ 64 $ 50 Dismantlement, restoration and abandonment.................................... 38 36 Loss on controlled foreign corporations....................................... 12 25 Geological and geophysical expenditures....................................... 11 11 Contingency accruals.......................................................... 17 12 Employee benefit accruals..................................................... 38 42 Other......................................................................... 9 2 --------- --------- 189 178 --------- --------- Deferred Tax Liabilities Items associated with capitalized costs and write-offs........................ 352 379 Miscellaneous accrued liabilities............................................. 44 31 --------- --------- 396 410 --------- --------- Net Deferred Tax Liability...................................................... $ 207 $ 232 --------- --------- --------- ---------
No valuation allowance was provided at December 31, 1995 or 1994 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 provision (benefit) calculated at the U.S. statutory tax rate to the Company's actual tax benefit on income (loss) before extraordinary item and accounting change:
1995 1994 1993 --------- --------- --------- (MILLIONS OF DOLLARS) U.S. statutory rate calculation............................................................ $ 48 $ (35) $ (38) Increase (reduction) in taxes resulting from: Benefit of additional tax basis on assets sold........................................... (58) -- -- Deferred impact of tax rate changes...................................................... -- -- 17 Other.................................................................................... (12) (2) 11 --- --- --- Benefit for income taxes before remeasurement of foreign deferred tax...................... (22) (37) (10) Remeasurement of foreign deferred tax as required by SFAS No. 109.......................... -- 2 (5) --- --- --- Benefit for income taxes................................................................... $ (22) $ (35) $ (15) --- --- --- --- --- ---
(7) ACCOUNTING CHANGE In December 1995, the Company adopted SFAS No. 121, resulting in no material impact. 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 17 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (7) ACCOUNTING CHANGE (CONTINUED) 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 would have been a net loss of $699 million ($7.18 per share before extraordinary item and $7.25 per share after extraordinary item) if this accounting change had been enacted prior to 1993. (8) INCOME PER SHARE The 5,259,394 and 7,259,394 shares of Series B Preference Stock in 1994 and 1993 were common stock equivalents. During 1995, the remaining 5,259,394 shares were converted to Common Stock on a share-for-share basis. Conversion of the Series B Preference Stock in 1994 or 1993 would have been anti-dilutive to the Company's 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 1995, 1994 and 1993 income (loss) per share. (9) PROPERTIES, PLANTS AND EQUIPMENT At December 31, the Company's properties, plants and equipment and accumulated depreciation, depletion and amortization were as follows:
1995 1994 --------- ----------- (MILLIONS OF DOLLARS) Gross investment Proved properties.............................................................. $ 4,945 $ 6,112 Unproved properties............................................................ 126 143 Other.......................................................................... 62 65 --------- ----------- 5,133 6,320 --------- ----------- Less accumulated depreciation, depletion and amortization Proved properties*............................................................. 3,650 4,413** Other.......................................................................... 57 56 --------- ----------- 3,707 4,469 --------- ----------- Net investment................................................................... $ 1,426 $ 1,851 --------- ----------- --------- -----------
- - ------------------------ *Includes $116 million and $106 million for dismantlement, restoration and abandonment at December 31, 1995 and 1994. **Includes $1,355 million of impairment of proved oil and gas properties in 1994 (Note 7). 18 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (10) ACCRUED LIABILITIES At December 31, the Company's accrued liabilities were comprised of the following:
1995 1994 --------- --------- (MILLIONS OF DOLLARS) Drilling and operating costs...................................................... $ 78 $ 73 Restructuring reserve (Note 5).................................................... 24 46 Interest payable.................................................................. 25 64 Employee related costs and benefits............................................... 33 28 Royalties payable................................................................. 10 8 Taxes payable..................................................................... 1 22 Other............................................................................. 25 21 --------- --------- $ 196 $ 262 --------- --------- --------- ---------
(11) LONG-TERM DEBT At December 31, long-term debt consisted of the following:
1995 1994 --------- --------- (MILLIONS OF DOLLARS) 8% Notes Due 2003........................................................................... $ 100 $ -- 8.125% Notes Due 2005....................................................................... 150 -- 9.75% Notes Due 1998........................................................................ -- 250 10.375% Debentures payable $7 annually 1999 -- 2018......................................... -- 138 10% Notes Due 1999 and 2001 payable $100 in 1999 and $150 in 2001........................... 250 249 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 6.05% to 9.50% at December 31, 1995 due during 1996 -- 2002........................................................... 75 230 9.30% Notes Due 1996........................................................................ 100 100 7.2% Note payable semiannually 1995 -- 2006................................................. -- 100 9.50% Notes Due 1999........................................................................ 100 100 8.35% to 8.70% Senior ESOP Notes payable quarterly 1995 -- 2009............................. -- 60 Commercial Paper, variable interest rate; 6.75% at December 31, 1995*....................... 50 50 Variable interest rate (ranging from 6.69% to 8.875% at December 31, 1995) revolving credit facility................................................................................... 132 208 Capitalized lease obligations and other long-term debt due 1996 -- 2002..................... 46 26 --------- --------- 1,203 1,711 Less current portion........................................................................ 152 165 --------- --------- $ 1,051 $ 1,546 --------- --------- --------- ---------
- - ------------------------ * Commercial paper maturity at December 31, 1995 was 29 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. Long-term debt maturities are $152 million, $3 million, $3 million, $230 million and $15 million for each of the years 1996 through 2000. The maturing amount for 1998 excludes $207 million under the revolving credit facility which management intends to replace no later than June 30, 1998. During the fourth quarter of 1995, the Company repurchased its 10.375 percent debentures at a total cost of $149 million resulting in an after-tax extraordinary loss of $8 million. 19 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (11) LONG-TERM DEBT (CONTINUED) In the third quarter of 1995, as a result of the sale of the Company's interest in the U.K. Alba field, the Company was required by the holder to repay the 7.2 percent $100 million note, resulting in an after-tax extraordinary loss of $1 million. In the second quarter of 1995, the Company replaced its $620 million revolving credit facility with a $500 million revolving credit facility which is scheduled to mature on June 30, 1998, resulting in an after-tax extraordinary loss of $14 million. The Company pays a fee ranging from .375 percent to .5 percent of the unused portion of its $500 million revolving credit facility. At year end 1995, the Company had the capacity to borrow $270 million under such facility; however, the amount can change daily. The commitments are subject to withdrawal if there were to be an event of default. The Company's long-term debt contains restrictive covenants, including a limitation on total indebtedness; restriction on the payment of common stock dividends and minimum cash flow interest coverage. At December 31, 1995, the Company was in compliance with all of its debt covenants. 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 were paid in full subsequent to year-end 1994. 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. (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 1995, 1994 and 1993 was $41 million, $37 million and $32 million. Under contracts existing as of December 31, 1995, 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: 1996............................................................... $ 32 1997............................................................... 13 1998............................................................... 11 1999............................................................... 10 2000............................................................... 9 Later years........................................................ 62 --------- Total minimum payments required.................................... $ 137 --------- ---------
Minimum rentals to be received under non-cancelable subleases are $3 million, $3 million, $3 million, $2 million and $2 million for the years 1996 through 2000 and $2 million for later years. 20 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (12) COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED) 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' DEFICIT 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 and 1996, repayments were and continue to be deferred pending a favorable ruling from the Internal Revenue Service concerning the leveraged ESOP portion of the CAP. The Company has 272,740,606 authorized shares of stock, consisting of (i) 250,000,000 shares of Common Stock having a par value of $1.00 per share, (ii) 7,740,606 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, 1995, there were 104,454,562 shares of Common Stock outstanding. There are two series of Preference Stock designated, of which there were no 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, 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, 1995 the Company had reserved for issuance 5,111,438 shares of Common Stock on conversion of the outstanding 7 1/2% Convertible Debentures and 2,722,374 shares of Common Stock upon the exercise of outstanding management options. 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 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. 21 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (13) SHAREHOLDERS' DEFICIT (CONTINUED) 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. During 1995, the holders of Series B Preference Stock converted the remaining shares of Series B Preference Stock into Common Stock on a share-for-share basis. 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 Rights 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. (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:
1995 1994 1993 --------- --------- --------- (MILLIONS OF DOLLARS) Service cost (cost of benefits earned during the year)........................... $ (6) $ (5) $ (6) Interest cost on projected benefit obligation.................................... (36) (36) (38) Actual return on plan assets..................................................... 85 (4) 59 Net amortization and deferral*................................................... (47) 47 (17) --- --- --- Net periodic pension benefit (cost)**.......................................... $ (4) $ 2 $ (2) --- --- --- --- --- ---
22 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (14) EMPLOYEE AND RETIREE BENEFIT PLANS (CONTINUED) - - ------------------------ *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 and $1 million curtailment loss and $4 million and $13 million cost of special termination benefits due to the reduction in workforce in 1995 and 1994. The following table sets forth the funded status and amounts recognized in the Company's Consolidated Balance Sheets at December 31:
1995 1994 ------------------------------ ------------------------------ PLANS IN PLANS IN WHICH ASSETS PLANS IN WHICH WHICH ASSETS PLANS IN WHICH EXCEED ACCUMULATED EXCEED ACCUMULATED ACCUMULATED BENEFITS EXCEED ACCUMULATED BENEFITS EXCEED BENEFITS ASSETS BENEFITS ASSETS ------------- --------------- ------------- --------------- (MILLIONS OF DOLLARS) Actuarial present value of benefit obligation: Vested....................................... $ (406) $ (86) $ (360) $ (81) Nonvested.................................... (13) -- (15) (2) ------ --- ------ --- Accumulated benefit obligation................. (419) (86) (375) (83) Effect of projected future salary increases.... (23) (3) (22) (3) ------ --- ------ --- Projected benefit obligation................... (442) (89) (397) (86) Less plan assets at fair value*................ 443 -- 390 -- ------ --- ------ --- Projected benefit obligation less than (in excess of) plan assets........................ 1 (89) (7) (86) Unrecognized net transition obligation (asset)....................................... (26) 12 (32) 14 Unrecognized prior service cost (benefit)...... 2 (2) -- (2) Unrecognized net loss.......................... 50 30 61 22 Additional minimum liability................... -- (37) -- (31) ------ --- ------ --- Accrued pension asset (liability)**............ $ 27 $ (86) $ 22 $ (83) ------ --- ------ --- ------ --- ------ ---
- - ------------------------ *Plan assets consist principally of commingled trust funds, marketable equity securities, corporate and government debt securities and real estate. At December 31, 1995, less than 1 percent of plan assets was invested in Common Stock of the Company. **Accrued pension liability is included in "Accrued Liabilities" and "Deferred Credits and Other Liabilities" in the Consolidated Balance Sheets. As of December 31, 1995 and 1994, the projected benefit obligations were determined using weighted average assumed discount rates of 6.75 and 8 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 1995 and 1994. All of these rates are subject to change in the future as economic conditions change. 23 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (14) EMPLOYEE AND RETIREE BENEFIT PLANS (CONTINUED) 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, 1995, the principal defined contribution plan is CAP, which is a combined stock bonus and leveraged ESOP 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. In 1995, stock allocations to employees from the leveraged ESOP were suspended pending a ruling requested from the IRS; therefore, there was no debt service in the form of Company matching contributions made to the ESOP. Instead, Company matching contributions were made using Treasury Stock. Benefit expense recognized for defined contribution plans amounted to $3 million, $11 million and $10 million for 1995, 1994 and 1993. Additional information with respect to the leveraged ESOP portion of CAP is as follows:
1995 1994 1993 --------- --------- --------- (MILLIONS OF DOLLARS) Interest cost on ESOP debt....................................................... $ -- $ 8 $ 9 Company cash contributions to the ESOP........................................... $ -- $ 13 $ 10 ESOP dividends used for debt service............................................. $ -- $ -- $ 1
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 $15 million, $19 million and $20 million, of which $11 million, $14 million and $12 million was for retirees in 1995, 1994 and 1993. 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. 24 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (14) EMPLOYEE AND RETIREE BENEFIT PLANS (CONTINUED) 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:
1995 1994 1993 --------- --------- --------- (MILLIONS OF DOLLARS) Service cost (cost of benefits earned during the year)............................. $ 1 $ 1 $ 1 Interest cost on the accumulated postretirement benefit obligation................. 7 8 7 Amortization of transition obligation.............................................. 3 4 4 Net amortization of other components............................................... -- 1 -- --- --- --- Net periodic postretirement benefit cost*........................................ $ 11 $ 14 $ 12 --- --- --- --- --- ---
- - ------------------------ *Does not include $10 million and $13 million curtailment loss due to the reduction in workforce in 1995 and 1994. The following table sets forth the funded status and amounts reported in the Company's Consolidated Balance Sheets at December 31:
1995 1994 --------- --------- (MILLIONS OF DOLLARS) Accumulated postretirement benefit obligation: Retirees........................................................................ $ (87) $ (81) Active employees eligible to retire............................................. (3) (4) Active employees not yet eligible to retire..................................... (9) (10) --------- --------- Total accumulated postretirement benefit obligation............................... (99) (95) Less plan assets at fair value.................................................... -- -- --------- --------- Accumulated obligation in excess of plan assets................................... (99) (95) Unrecognized net loss............................................................. 9 5 Unrecognized prior service benefit................................................ -- (5) Unrecognized transition obligation................................................ 51 70 --------- --------- Accrued postretirement benefit liability*....................................... $ (39) $ (25) --------- --------- --------- ---------
- - ------------------------ * Accrued postretirement benefit liability is included in "Accrued Liabilities" and "Deferred Credits and Other Liabilities" in the Consolidated Balance Sheets. The assumed health care cost trend rate used to measure the expected cost of benefits covered by the plan 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 significant 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 7 and 8 percent in 1995 and 1994. For the life insurance plan, an assumed rate of increase of compensation of 4 percent was used to measure the accumulated postretirement benefit obligation. (15) MANAGEMENT INCENTIVE PLANS 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 25 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (15) MANAGEMENT INCENTIVE PLANS (CONTINUED) 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, 1995, 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:
1995 1994 1993 ------------------------ ------------------------ ------------------------ SHARES SHARES SHARES UNDER OPTION PRICE UNDER OPTION PRICE UNDER OPTION PRICE OPTION PER SHARE OPTION PER SHARE OPTION PER SHARE --------- ------------- --------- ------------- --------- ------------- Outstanding, January 1.......... 2,456,103 $17.44-$44.13 1,914,832 $19.63-$44.13 1,491,116 $20.36-$44.13 Granted*........................ 407,350 $11.81 643,900 $17.44 470,690 $19.63 Exercised**..................... -- -- -- -- -- -- Canceled........................ (141,079) $11.81-$44.13 (102,629) $17.44-$44.13 (46,974) $20.36-$44.13 --------- --------- --------- Outstanding, December 31........ 2,722,374 $11.81-$44.13 2,456,103 $17.44-$44.13 1,914,832 $19.63-$44.13 --------- --------- --------- --------- --------- --------- Exercisable, December 31**...... 1,713,446 $11.81-$44.13 1,278,033 $17.44-$44.13 773,256 $24.16-$44.13 --------- --------- --------- --------- --------- --------- Available for grant, December 31***.......................... 978,663 1,262,086 1,835,440 --------- --------- --------- --------- --------- ---------
- - ------------------------ * Includes 209,300 stock options granted in 1993 in tandem with performance shares which become exercisable only upon cancellation of the related performance shares. ** Excludes outstanding stock options granted in 1993 in tandem with performance shares which become exercisable (subject to the option vesting schedule) only upon cancellation of the related performance shares. In January 1996, 171,849 such stock options granted in 1993 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. SFAS No. 123, "Accounting for Stock-Based Compensation" which was issued in 1995 is not effective for the Company until 1996. The statement defines a fair value based method of accounting (i.e., using an option pricing model such as Black-Scholes) for employee stock option or similar equity instrument plans but also allows an entity to continue to measure compensation costs for those plans using the intrinsic value (the amount by which the market price of the underlying stock exceeds the exercise price of an option) based method of accounting as prescribed by APB Opinion No. 25. The Company plans to continue to use the intrinsic value based method. (16) GEOGRAPHIC SEGMENT INFORMATION During 1995, sales of oil to the Company's top purchaser totaled approximately 15 percent of oil revenue. 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 26 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (16) GEOGRAPHIC SEGMENT INFORMATION (CONTINUED) 12 and 10 percent of oil revenues. Sales of gas to the Company's top purchaser in 1995 and 1994 totaled approximately 12 percent of gas revenue and for 1993 totaled 14 percent. 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, 1995, 1994 and 1993 are summarized as follows:
UNITED UNITED OTHER STATES KINGDOM FOREIGN TOTAL ----------- ----------- ----------- --------- (MILLIONS OF DOLLARS) DECEMBER 31, 1995 Revenues Oil and gas............................................. $ 571 $ 377 $ 66 $ 1,014 Gain (loss) on sale of assets........................... (15) 122 17 124 Other................................................... (15) 5 1 (9) ----------- ----- --- --------- Total Revenues............................................ 541 504 84 1,129 ----------- ----- --- --------- Expenses Operating costs......................................... 164 150 16 330 Production taxes........................................ 33 49 23 105 Exploration costs....................................... 44 8 7 59 Depr., depl. and amort.................................. 166 96 14 276 Miscellaneous........................................... 1 5 2 8 ----------- ----- --- --------- Total Operating Expenses.................................. 408 308 62 778 ----------- ----- --- --------- Operating Profit*......................................... $ 133 $ 196 $ 22 $ 351 ----------- ----- --- ----------- ----- --- General and administrative expense...................... (64) Interest, net........................................... (126) Provision for restructuring............................. (25) Benefit for income taxes................................ 22 Extraordinary item...................................... (23) --------- Net Income................................................ $ 135 --------- --------- Capital Expenditures...................................... $ 208** $ 37 $ 28 $ 273 ----------- ----- --- --------- ----------- ----- --- --------- Identifiable Assets....................................... $ 1,221 $ 410 $ 35 $ 1,666 ----------- ----- --- --------- ----------- ----- --- ---------
- - ------------------------ * Provision for income taxes on 1995 operating profits, calculated at statutory rates, are $48 million, $65 million and $12 million for the United States, United Kingdom and Other Foreign. ** Includes capitalized interest of $10 million. 27 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (16) GEOGRAPHIC SEGMENT INFORMATION (CONTINUED)
UNITED UNITED OTHER STATES KINGDOM FOREIGN TOTAL ----------- ------------ ----------- --------- (MILLIONS OF DOLLARS) DECEMBER 31, 1994 Revenues Oil and gas..................................................... $ 624 $ 355 $ 103 $ 1,082 Other........................................................... (10) -- -- (10) ----------- ----- ----- --------- Total Revenues.................................................... 614 355 103 1,072 ----------- ----- ----- --------- Expenses Operating costs................................................. 197 146 31 374 Production taxes................................................ 44 28 40 112 Exploration costs............................................... 54 12 38 104 Depr., depl. and amort.......................................... 167 86 18 271 Miscellaneous................................................... -- 1 -- 1 ----------- ----- ----- --------- Total Operating Expenses.......................................... 462 273 127 862 ----------- ----- ----- --------- Operating Profit (Loss)*.......................................... $ 152 $ 82 $ (24) $ 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*** $ 48 $ 281 ----------- ----- ----- --------- ----------- ----- ----- --------- Identifiable Assets............................................... $ 1,508 $ 470 $ 140 $ 2,118 ----------- ----- ----- --------- ----------- ----- ----- ---------
- - ------------------------ * 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 Other Foreign. ** Includes capitalized interest of $5 million. *** Includes capitalized interest of $6 million. 28 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (16) GEOGRAPHIC SEGMENT INFORMATION (CONTINUED)
UNITED UNITED OTHER STATES KINGDOM FOREIGN TOTAL --------- ----------- ----------- --------- (MILLIONS OF DOLLARS) DECEMBER 31, 1993 Revenues Oil and gas........................................................ $ 700 $ 265 $ 115 $ 1,080 Loss on sale of assets............................................. (7) -- -- (7) Other.............................................................. (19) -- -- (19) --------- ----------- ----- --------- Total Revenues....................................................... 674 265 115 1,054 --------- ----------- ----- --------- Expenses Operating costs.................................................... 194 127 32 353 Production taxes................................................... 52 9 51 112 Exploration costs.................................................. 57 19 24 100 Depr., depl. and amort............................................. 261 111 23 395 Miscellaneous...................................................... 1 -- -- 1 --------- ----------- ----- --------- Total Operating Expenses............................................. 565 266 130 961 --------- ----------- ----- --------- Operating Profit (Loss)*............................................. $ 109 $ (1) $ (15) $ 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** $ 19 $ 453 --------- ----------- ----- --------- --------- ----------- ----- --------- Identifiable Assets.................................................. $ 1,861 $ 1,589 $ 174 $ 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 Other Foreign. ** Includes capitalized interest of $46 million. (17) STATEMENT OF CASH FLOWS Amounts paid for interest and income taxes were as follows:
1995 1994 1993 --------- --------- --------- (MILLIONS OF DOLLARS) Interest paid (net of capitalized interest).................................... $ 144 $ 128 $ 119 Income taxes paid (refunded)................................................... $ (15) $ (11) $ 14
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. 29 ORYX ENERGY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (18) DEFERRED CREDITS AND OTHER LIABILITIES At December 31, the Company's deferred credits and other liabilities were comprised of the following:
1995 1994 --------- --------- (MILLIONS OF DOLLARS) Employee benefit obligations....................................................... $ 92 $ 80 Deferred gains on interest rate hedges............................................. 25 32 Minority interest in consolidated subsidiaries..................................... 14 17 Accrued environmental cleanup costs................................................ 20 21 Other.............................................................................. 12 5 --------- --------- $ 163 $ 155 --------- --------- --------- ---------
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 PRPs 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 $13 million. 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. 30 ORYX ENERGY COMPANY REPORT OF INDEPENDENT ACCOUNTANTS 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, 1995 and 1994 and the related consolidated statements of income, cash flows and changes in shareholders' deficit for each of the three years in the period ended December 31, 1995. 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, 1995 and 1994 and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1995 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 and its methods of accounting for postretirement benefits other than pensions and postemployment benefits in 1993. COOPERS & LYBRAND L.L.P. Dallas, Texas February 19, 1996 31 ORYX ENERGY COMPANY SUPPLEMENTARY FINANCIAL AND OPERATING INFORMATION (UNAUDITED) OIL AND GAS DATA CAPITALIZED COSTS
UNITED UNITED OTHER STATES KINGDOM FOREIGN TOTAL --------- ----------- ----------- --------- (MILLIONS OF DOLLARS) DECEMBER 31, 1995 Proved properties...................................................... $ 3,671 $ 1,184 $ 90 $ 4,945 Unproved properties.................................................... 38 84 4 126 --------- ----------- ----- --------- Total capitalized costs................................................ 3,709 1,268 94 5,071 Less accum. depr., depl. and amort..................................... 2,743 877 30 3,650 --------- ----------- ----- --------- Net capitalized costs.................................................. $ 966 $ 391 $ 64 $ 1,421 --------- ----------- ----- --------- --------- ----------- ----- --------- DECEMBER 31, 1994 Proved properties...................................................... $ 3,975 $ 1,863 $ 274 $ 6,112 Unproved properties.................................................... 42 87 14 143 --------- ----------- ----- --------- Total capitalized costs................................................ 4,017 1,950 288 6,255 Less accum. depr., depl. and amort..................................... 3,011 1,243 159 4,413 --------- ----------- ----- --------- Net capitalized costs (Note 7)......................................... $ 1,006 $ 707 $ 129 $ 1,842 --------- ----------- ----- --------- --------- ----------- ----- ---------
COSTS INCURRED IN OIL AND GAS PRODUCING ACTIVITIES
UNITED UNITED OTHER STATES KINGDOM FOREIGN TOTAL --------- ----------- ----------- --------- (MILLIONS OF DOLLARS) 1995 Property acquisition costs: Proved............................................................... $ 6 $ -- $ -- $ 6 Unproved............................................................. 6 -- -- 6 Exploration costs...................................................... 41 8 10 59 Development costs...................................................... 167* 37 25 229 --------- ----------- ----- --------- Total.............................................................. $ 220 $ 45 $ 35 $ 300 --------- ----------- ----- --------- --------- ----------- ----- --------- 1994 Property acquisition costs: Unproved............................................................. $ 4 $ -- $ -- $ 4 Exploration costs...................................................... 41 11 39 91 Development costs...................................................... 144* 56** 19 219 --------- ----------- ----- --------- Total.............................................................. $ 189 $ 67 $ 58 $ 314 --------- ----------- ----- --------- --------- ----------- ----- --------- 1993 Property acquisition costs: Proved............................................................... $ 11 $ 33 $ -- $ 44 Unproved............................................................. 8 -- -- 8 Exploration costs...................................................... 62 15 26 103 Development costs...................................................... 147 147** 2 296 --------- ----------- ----- --------- Total.............................................................. $ 228 $ 195 $ 28 $ 451 --------- ----------- ----- --------- --------- ----------- ----- ---------
- - ------------------------ * Excludes capitalized interest of $10 million and $5 million for 1995 and 1994. ** Excludes capitalized interest of $6 million and $46 million for 1994 and 1993. 32 EXPLORATION COSTS
UNITED UNITED OTHER STATES KINGDOM FOREIGN TOTAL --------- ----------- ----------- --------- (MILLIONS OF DOLLARS) 1995 Dry hole costs......................................................... $ 12 $ -- $ -- $ 12 Leasehold impairment................................................... 9 -- -- 9 Geological and geophysical............................................. 22 8 6 36 Other.................................................................. 1 -- 1 2 --------- ----------- ----- --------- $ 44 $ 8 $ 7 $ 59 --------- ----------- ----- --------- --------- ----------- ----- --------- 1994 Dry hole costs......................................................... $ 10 $ 4 $ 25 $ 39 Leasehold impairment................................................... 18 -- -- 18 Geological and geophysical............................................. 25 7 13 45 Other.................................................................. 1 1 -- 2 --------- ----------- ----- --------- $ 54 $ 12 $ 38 $ 104 --------- ----------- ----- --------- --------- ----------- ----- --------- 1993 Dry hole costs......................................................... $ 21 $ 5 $ 11 $ 37 Leasehold impairment................................................... 3 4 1 8 Geological and geophysical............................................. 31 9 12 52 Other.................................................................. 2 1 -- 3 --------- ----------- ----- --------- $ 57 $ 19 $ 24 $ 100 --------- ----------- ----- --------- --------- ----------- ----- ---------
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, 1995. 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. 33 PROVED RESERVES
RECOVERABLE NATURAL GAS LIQUIDS CRUDE OIL AND CONDENSATE (MILLIONS OF (MILLIONS OF BARRELS) BARRELS) -------------------------------------------------------- ----------------- U.S. U.K. OTHER FOREIGN TOTAL U.S. ----------- ----------- ----------------- ----- ----------------- BALANCE AT DECEMBER 31, 1992................. 255 189 53 497 25 Revisions of previous estimates............ (4) (3) 6 (1) (1) Improved recovery.......................... 1 -- -- 1 -- Purchases of minerals in place............. -- 13 -- 13 -- Sales of minerals in place................. (12) -- -- (12) (2) Extensions and discoveries................. 19 2 8 29 2 Production................................. (21) (13) (6) (40) (3) -- --- --- --- --- BALANCE AT DECEMBER 31, 1993................. 238 188 61 487 21 Revisions of previous estimates............ (2) 1 (1) (2) 3 Improved recovery.......................... -- -- -- -- -- Purchases of minerals in place............. -- 24** -- 24 -- Sales of minerals in place................. (22) (19) -- (41) -- Extensions and discoveries................. 6 -- 23 29 -- Production................................. (17) (20) (7) (44) (3) -- --- --- --- --- BALANCE AT DECEMBER 31, 1994................. 203 174 76 453 21 Revisions of previous estimates............ (6) 1 (1) (6) 3 Improved recovery.......................... 5 -- -- 5 -- Purchases of minerals in place............. 1 -- -- 1 -- Sales of minerals in place................. (10) (54) (36) (100) (4) Extensions and discoveries................. 12 -- 3 15 -- Production................................. (17) (20) (5) (42) (2) -- --- --- --- --- BALANCE AT DECEMBER 31, 1995................. 188 101 37 326 18 -- -- --- --- --- --- --- --- --- --- PROVED DEVELOPED RESERVES AT DECEMBER 31 1992....................................... 175 76 30 281 20 1993....................................... 156 85 31 272 16 1994....................................... 130 112 31 273 16 1995....................................... 116 80 13 209 13 NATURAL GAS (BILLIONS OF CUBIC FEET) ----------------------------------- U.S.* U.K. TOTAL ----------- ----------- --------- BALANCE AT DECEMBER 31, 1992................. 1,510 427 1,937 Revisions of previous estimates............ 5 52 57 Improved recovery.......................... 1 -- 1 Purchases of minerals in place............. 4 -- 4 Sales of minerals in place................. (66) -- (66) Extensions and discoveries................. 168 -- 168 Production................................. (191) (29) (220) ----- --- --------- BALANCE AT DECEMBER 31, 1993................. 1,431 450 1,881 Revisions of previous estimates............ 23 4 27 Improved recovery.......................... -- -- -- Purchases of minerals in place............. 2 4** 6 Sales of minerals in place................. (115) (248) (363) Extensions and discoveries................. 188 -- 188 Production................................. (196) (23) (219) ----- --- --------- BALANCE AT DECEMBER 31, 1994................. 1,333 187 1,520 Revisions of previous estimates............ 62 5 67 Improved recovery.......................... 1 -- 1 Purchases of minerals in place............. 4 -- 4 Sales of minerals in place................. (56) (149) (205) Extensions and discoveries................. 125 -- 125 Production................................. (171) (18) (189) ----- --- --------- BALANCE AT DECEMBER 31, 1995................. 1,298 25 1,323 ----- --- --------- ----- --- --------- PROVED DEVELOPED RESERVES AT DECEMBER 31 1992....................................... 1,069 121 1,190 1993....................................... 1,010 95 1,105 1994....................................... 907 143 1,050 1995....................................... 881 15 896
- - ------------------------ *Natural gas reserve volumes include liquefiable hydrocarbons approximating 5 percent of total gas reserves which are recoverable downstream. 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). 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." 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, 34 year-end statutory tax rates adjusted for future tax rates already legislated and a 10 percent annual discount rate. The year-end realized prices were $17.95, $15.31 and $11.75 per barrel of oil and $2.27, $1.82 and $2.03 per mcf of gas for 1995, 1994 and 1993.
UNITED UNITED OTHER STATES KINGDOM FOREIGN TOTAL --------- --------- --------- --------- (MILLIONS OF DOLLARS) 1995 Future cash inflows............................................... $ 6,558 $ 2,237 $ 548 $ 9,343 Future production and development costs........................... (2,618) (1,661) (353) (4,632) Future income tax expenses........................................ (1,289) (129) (47) (1,465) --------- --------- --------- --------- Future net cash flows............................................. 2,651 447 148 3,246 Discount at 10 percent............................................ (1,060) (61) (68) (1,189) --------- --------- --------- --------- Standardized measure.............................................. $ 1,591 $ 386 $ 80 $ 2,057 --------- --------- --------- --------- --------- --------- --------- --------- 1994 Future cash inflows............................................... $ 5,729 $ 3,631 $ 1,140 $ 10,500 Future production and development costs........................... (2,950) (2,627) (894) (6,471) Future income tax expenses........................................ (847) (80) (70) (997) --------- --------- --------- --------- Future net cash flows............................................. 1,932 924 176 3,032 Discount at 10 percent............................................ (689) (240) (73) (1,002) --------- --------- --------- --------- Standardized measure.............................................. $ 1,243 $ 684 $ 103 $ 2,030 --------- --------- --------- --------- --------- --------- --------- ---------
SUMMARY OF CHANGES IN THE STANDARDIZED MEASURE
1995 1994 1993 --------- --------- --------- (MILLIONS OF DOLLARS) Balance, beginning of year.................................................... $ 2,030 $ 1,428 $ 2,408 Increase (decrease) in discounted future net cash flows: Sales of oil and gas production, net of related costs....................... (579) (596) (606) Revisions to estimates of proved reserves: Prices.................................................................... 671 1,040 (1,389) Development costs......................................................... 20 390 3 Production costs.......................................................... 67 (865) 99 Quantities................................................................ 71 14 -- Other..................................................................... (140) 292 (89) Extensions, discoveries and improved recovery, less related costs........... 345 233 111 Development costs incurred during the period................................ 229 219 321 Purchases of reserves in place.............................................. 12 89 53 Sales of reserves in place.................................................. (536) (83) (59) Accretion of discount....................................................... 219 177 298 Income taxes................................................................ (352) (308) 278 --------- --------- --------- Balance, end of year.......................................................... $ 2,057 $ 2,030 $ 1,428 --------- --------- --------- --------- --------- ---------
35 QUARTERLY FINANCIAL INFORMATION
QUARTER ENDED -------------------------------------------------------- MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 TOTAL ----------- ----------- --------------- ------------- --------- (MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) Revenue: 1995...................................................... $ 293 $ 285 $ 345 $ 206 $ 1,129 ----------- ----- ----- ----- --------- ----------- ----- ----- ----- --------- 1994 As reported............................................. $ 260 $ 255 $ 271 Restatement of other revenues for accounting change..... -- -- 2 ----------- ----- ----- As restated............................................. $ 260 $ 255 $ 273 $ 284 $ 1,072 ----------- ----- ----- ----- --------- ----------- ----- ----- ----- --------- Gross profit:* 1995...................................................... $ 84 $ 68 $ 45 $ 50 $ 247 ----------- ----- ----- ----- --------- ----------- ----- ----- ----- --------- 1994...................................................... $ 50 $ 53 $ 45 $ 76 $ 224 ----------- ----- ----- ----- --------- ----------- ----- ----- ----- --------- Net income (loss): 1995 Before extraordinary item............................... $ 13 $ 25 $ 108 $ 12 $ 158 Extraordinary item...................................... -- (14) (1) (8) (23) ----------- ----- ----- ----- --------- $ 13 $ 11 $ 107 $ 4 $ 135 ----------- ----- ----- ----- --------- ----------- ----- ----- ----- --------- 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) ----------- ----- ----- ----- --------- ----------- ----- ----- ----- ---------
36 QUARTERLY FINANCIAL INFORMATION
QUARTER ENDED --------------------------------------------------------------- MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 TOTAL --------- ----------- ------------- ------------- --------- (MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) Net income (loss) per share of common stock: 1995 Before extraordinary item....................... $ .13 $ .25 $ 1.04 $ .12 $ 1.54 Extraordinary item.............................. -- (.14) (.01) (.08) (.22) --------- ----- ------ ----- --------- $ .13 $ .11 $ 1.03 $ .04 $ 1.32 --------- ----- ------ ----- --------- --------- ----- ------ ----- --------- 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) --------- ----- ------ ----- --------- --------- ----- ------ ----- ---------
- - ------------------------ * 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. 37 ORYX ENERGY COMPANY DIRECTORS OF ORYX ENERGY COMPANY Jerry W. Box Executive Vice President and Chief Operating Officer William E. Bradford Dresser Industries, Inc. President and Chief Executive Officer Robert B. Gill J.C. Penney Company, Inc. Retired Vice Chairman of the Board David S. Hollingsworth Hercules Incorporated Retired Chairman of the Board and Chief Executive Officer Robert L. Keiser Chairman of the Board, Chief Executive Officer, and President Edward W. Moneypenny Executive Vice President, Finance, and Chief Financial Officer Charles H. Pistor, Jr. Southern Methodist University Retired Vice Chair Paul R. Seegers Seegers Enterprises President Centex Corporation Retired Chairman of the Board and Chief Executive Officer Ian L. White-Thomson U.S. Borax Inc. President and Chief Executive Officer COMMITTEES OF THE BOARD AUDIT COMMITTEE Paul R. Seegers, Chairman William E. Bradford Robert B. Gill Ian L. White-Thomson BOARD POLICY AND NOMINATING COMMITTEE Charles H. Pistor, Jr., Chairman William E. Bradford Paul R. Seegers COMPENSATION COMMITTEE David S. Hollingsworth, Chairman Robert B. Gill Ian L. White-Thomson EXECUTIVE COMMITTEE Robert L. Keiser, Chairman Jerry W. Box Edward W. Moneypenny Charles H. Pistor, Jr. MLP COMMITTEE Jerry W. Box Robert L. Keiser Edward W. Moneypenny PRINCIPAL OFFICERS OF ORYX ENERGY COMPANY Jerry W. Box Executive Vice President and Chief Operating Officer David F. Chavenson Treasurer Sherri T. Durst General Auditor Frances G. Heartwell Vice President, Human Resources and Administration Robert L. Keiser Chairman of the Board, Chief Executive Officer, and President William C. Lemmer Vice President, General Counsel and Secretary Edward W. Moneypenny Executive Vice President, Finance, and Chief Financial Officer Robert L. Thompson Comptroller and Corporate Planning Director 38 ORYX ENERGY COMPANY OF INTEREST TO ORYX ENERGY COMPANY SHAREHOLDERS PRINCIPAL OFFICE TRANSFER AGENT AND REGISTRAR ANNUAL MEETING 13155 Noel Road Chemical Mellon Shareholder Services, LLC Thursday, May 2, 1996 Dallas, Texas 75240 Shareholder Relations Department 9:00 a.m. P.O. Box 3068 Cityplace Conference Center New York, N.Y. 10116-3068 2711 North Haskell 1-800-648-8393 Dallas, Texas 75204
For further information about the meeting, please contact the Company's Secretary at our principal office. PUBLICATIONS AVAILABLE TO SHAREHOLDERS We will be pleased to furnish the following reports to shareholders who write to Shareholders Relations at our principal office, or call 1-800-846-ORYX: Quarterly Report -- a review of new developments and quarterly financial and operating results, published for quarters ending in March, June and September Form 10-K -- Annual Report for 1995 filed with the SEC (excluding exhibits) Exhibits are available upon request at a reasonable charge. INTERNET ADDRESS Oryx Annual and Quarterly Reports can be viewed at the following address: http://www.oryx.com NOTICE OF ANNUAL MEETING AND PROXY STATEMENT The Company's notice of annual meeting, proxy statement and proxy card are mailed about one month before the annual meeting. 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 ------- ------- ----------- 1995: First quarter............................................................. $13 1/4 $ 9 7/8 $ -- Second quarter............................................................ $14 3/4 $12 $ -- Third quarter............................................................. $14 3/4 $12 5/8 $ -- Fourth quarter............................................................ $14 $10 3/4 $ -- 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 $ --
The Company had 32,438 holders of record of Common Stock as of February 26, 1996. 39 EX-23 9 EXHIBIT 23 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, 1996, on our audit of the consolidated financial statements of Oryx Energy Company and its Subsidiaries as of December 31, 1995 and 1994 and for each of the three years in the period ended December 31, 1995, which report is incorporated by reference in this Form 10-K from page 41 of the Oryx Energy Company 1995 Annual Report to Shareholders. COOPERS & LYBRAND L.L.P. Dallas, Texas March 27, 1996 EX-24 10 EXHIBIT 24 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 true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his 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, 1995 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 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 - - ------------------------------------------------------ ------------------------------------ ------------------- Chairman of the Board, Chief /s/ ROBERT L. KEISER Executive Officer, President, and ------------------------------------------- Director (principal executive March 7, 1996 (Robert L. Keiser) officer) /s/ JERRY W. BOX ------------------------------------------- Executive Vice President, Chief March 7, 1996 (Jerry W. Box) Operating Officer and Director Executive Vice President, Finance, /s/ EDWARD W. MONEYPENNY Chief Financial Officer, and ------------------------------------------- Director (principal financial March 7, 1996 (Edward W. Moneypenny) officer) /s/ ROBERT L. THOMPSON Comptroller and Corporate Planning ------------------------------------------- Director (principal accounting March 7, 1996 Robert L. Thompson officer) /s/ WILLIAM E. BRADFORD ------------------------------------------- Director March 7, 1996 (William E. Bradford) /s/ ROBERT B. GILL ------------------------------------------- Director March 7, 1996 (Robert B. Gill) /s/ DAVID S. HOLLINGSWORTH ------------------------------------------- Director March 7, 1996 (David S. Hollingsworth) /s/ CHARLES H. PISTOR, JR. ------------------------------------------- Director March 7, 1996 (Charles H. Pistor, Jr.) /s/ PAUL R. SEEGERS ------------------------------------------- Director March 7, 1996 (Paul R. Seegers) /s/ IAN L. WHITE-THOMSON ------------------------------------------- Director March 7, 1996 (Ian L. White-Thomson)
EX-27 11 FDS EXH. 27
5 This schedule contains Summary Financial information extracted from the Consolidated Financial Statements included in the 1995 Oryx Energy Company Annual Report and is qualified in its entirety by reference to such Financial Statements. 1,000 12-MOS DEC-31-1995 JAN-01-1995 DEC-31-1995 20 0 154 0 7 181 5,133 3,707 1,666 454 1,051 0 0 124 (333) 1,666 1,014 1,129 711 711 148 0 134 136 (22) 158 0 (23) 0 135 1.32 1.32
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