-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, R88iy9kl2m11N26m7qEZxn2ZEz6+0WOZJNnOb1Fm0EUzYMmlx0F1wFm/w8lvP1D+ xrkSL72p0zeiENDIqMVpLg== 0000891020-94-000015.txt : 19940215 0000891020-94-000015.hdr.sgml : 19940215 ACCESSION NUMBER: 0000891020-94-000015 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BURLINGTON RESOURCES INC CENTRAL INDEX KEY: 0000833320 STANDARD INDUSTRIAL CLASSIFICATION: 1311 IRS NUMBER: 911413284 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-09971 FILM NUMBER: 94507181 BUSINESS ADDRESS: STREET 1: 5051 WESTHEIMER STREET 2: SUITE 1400 CITY: HOUSTON STATE: TX ZIP: 77056 BUSINESS PHONE: (713) 831-1600 MAIL ADDRESS: STREET 1: 999 THIRD AVENUE CITY: SEATTLE STATE: WA ZIP: 98104-4097 10-K 1 BURLINGTON RESOURCES INC. FORM 10-K 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-9971 BURLINGTON RESOURCES INC. 5051 WESTHEIMER, HOUSTON, TEXAS 77056 TELEPHONE: (713) 831-1600 INCORPORATED IN THE STATE OF DELAWARE EMPLOYER IDENTIFICATION NO. 91-1413284
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: COMMON STOCK, PAR VALUE $.01 PER SHARE PREFERRED STOCK PURCHASE RIGHTS THE ABOVE SECURITIES ARE REGISTERED ON THE NEW YORK STOCK EXCHANGE. SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ State the aggregate market value of the voting stock held by non-affiliates of the registrant: Common Stock aggregate market value as of December 31, 1993: $5,495,337,423. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Class: Common Stock, par value $.01 per share, on December 31, 1993, Shares Outstanding: 129,683,479. DOCUMENTS INCORPORATED BY REFERENCE List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: Burlington Resources Inc. definitive proxy statement, to be filed not later than 120 days after the end of the fiscal year covered by this report, is incorporated by reference into Part III. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 BURLINGTON RESOURCES INC. TABLE OF CONTENTS
PAGE PART I Items One and Two Business and Properties......................................................... 1 Employees....................................................................... 8 Item Three Legal Proceedings............................................................... 8 Item Four Submission of Matters to a Vote of Security Holders............................. 8 Executive Officers of the Registrant............................................ 9 PART II Item Five Market for Registrant's Common Equity and Related Stockholder Matters........... 10 Item Six Selected Financial Data......................................................... 10 Item Seven Management's Discussion and Analysis of Financial Condition and Results of Operations..................................................................... 11 Item Eight Financial Statements and Supplementary Financial Information.................... 14 Item Nine Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........................................................... 30 PART III Items Ten and Eleven Directors and Executive Officers of the Registrant and Executive Compensation... 30 Item Twelve Security Ownership of Certain Beneficial Owners and Management.................. 30 Item Thirteen Certain Relationships and Related Transactions.................................. 30 PART IV Item Fourteen Exhibits, Financial Statement Schedules and Reports on Form 8-K................. 31
3 PART I ITEMS ONE AND TWO BUSINESS AND PROPERTIES Burlington Resources Inc. ("BR") is a holding company engaged, through its principal subsidiary, Meridian Oil Holding Inc. and its subsidiaries (together the "Company"), in the exploration, development and production of oil and gas, and related marketing activities, which include aggregation and resale of third party oil and gas. The Company also owns and operates natural gas gathering systems, intrastate natural gas pipelines and has an interest in a crude oil pipeline. The Company is the largest independent (nonintegrated) oil and gas company in the United States in terms of total domestic proved equivalent reserves which were estimated at 6.2 TCFE at December 31, 1993. BR was formed in 1988 to function as a holding company for Burlington Northern Inc.'s ("BNI") natural resource operations. In July 1988, BR completed an initial public offering of 13 percent of its common stock and on December 31, 1988, BNI distributed its remaining 87 percent interest in the Company's common stock to the holders of BNI common stock. In March 1992, BR's then wholly owned subsidiary, El Paso Natural Gas Company ("EPNG"), completed an initial public offering of approximately 15 percent of its common stock. On June 30, 1992, BR distributed its remaining 85 percent interest in EPNG common stock to its stockholders of record as of June 15, 1992. Since its inception, the Company has been selling its nonstrategic real estate, minerals and forest products assets and reinvesting the net proceeds in domestic oil and gas reserves and in the repurchase of its common stock. The Company has completed the sale of virtually all of its nonstrategic assets as of December 31, 1993. Since 1988, proceeds from such sales total approximately $1.4 billion. For definitions of certain oil and gas terms used herein, see "Certain Definitions" on page 7. GENERAL INFORMATION The Company's strategy is to continue building stockholder value through the growth and development of its asset base. The Company increases production, reserves, earnings and cash flow through opportunistic acquisitions, exploitation of properties with high potential and application of advanced technologies. The Company is engaged in oil and gas operations located principally in the San Juan Basin, the Permian Basin, the Williston Basin, the Gulf Coast Basin, the Anadarko Basin and the Black Warrior Basin. Virtually all of the Company's oil and gas production is from onshore properties located in the United States. Following is a description of the Company's major areas of activity. SAN JUAN BASIN. The San Juan Basin is the Company's most prolific operating area in terms of reserves and production. The San Juan Basin, located in northwest New Mexico and southwest Colorado, encompasses nearly 7,500 square miles, or approximately 4.8 million acres, with the major portion located in the New Mexico counties of Rio Arriba and San Juan. The Company is the largest private holder of productive acreage in this area with over one million net acres under its control, has an interest in approximately 10,800 wells and currently operates approximately 7,000 of these wells. Approximately 4 TCFE, or 64 percent of the Company reserves, are located in this basin. The Company's daily net gas production at year end 1993 in this basin exceeded 600 MMCF per day, representing approximately 65 percent of the Company's total daily gas production at year end 1993. The four significant gas producing horizons in the San Juan Basin, which range in depth from approximately 1,000 feet to 8,500 feet, are the Fruitland Coal, the Pictured Cliffs, the Mesaverde and the Dakota. The Pictured Cliffs, Mesaverde and Dakota are sandstone formations while the Fruitland Coal produces gas which is adsorbed to the surface of coal seams. The Company has been an industry leader in the development of the Fruitland Coal formation which was proven commercial in a pilot program initiated in 1986. The Company participated in 92 coal seam gas wells completed in 1993 at a 1 4 net cost of approximately $17 million. The Company's net coal seam gas production was over 300 MMCF per day at year end 1993. In order to manage production more effectively and improve recovery of reserves, the Company owns and operates the Val Verde plant and gathering system which includes approximately 400 miles of gathering lines, seven compressor stations and a processing plant to gather and process coal seam gas in the San Juan Basin. The Company expended over $27 million for the continued expansion of the Val Verde system during 1993. The 1993 expenditures increased processing capacity at the Val Verde plant by 110 MMCF per day bringing the total processing capacity of coal seam gas to 780 MMCF per day. The Company also owns and operates a fractionation plant located in McKinley County, New Mexico. PERMIAN BASIN. The Company is an active operator in the Permian Basin, which includes essentially all of west Texas and southeast New Mexico and encompasses approximately 68,000 square miles. The Company's reserve base in the Permian Basin has more than doubled since 1988 from internal development projects and through the acquisition of producing properties. The Company has an interest in over 12,000 Permian Basin wells and operates over 3,000 of those wells resulting in a daily net production at year end 1993 of approximately 15 MBbls of oil per day and 128 MMCF of gas per day. The most productive structural feature in the Permian Basin is the Central Basin Platform in which the Company owns over 158,000 net acres of mineral interests. This area is about 170 miles long and 50 miles wide trending northwest from west Texas to southeast New Mexico. Over 20 different formations, ranging in depth from 2,000 feet to over 12,000 feet, produce oil and gas on the Central Basin Platform. The Waddell Ranch, located 40 miles west of Midland, Texas, is the largest consolidated block of acreage in this basin in which the Company has an interest. During 1993, the Company acquired a 59 percent interest in the Permian Basin Royalty Trust. The Company estimates approximately 80 percent of the reserves attributable to the Permian Basin Royalty Trust are located on the Waddell Ranch. The Val Verde Basin is a 7,000 square mile sub basin of the Permian Basin located about 125 miles southeast of Midland, Texas. The Company has utilized advanced reservoir stimulation technology which primarily consists of modern hydraulic fracturing techniques in the Canyon Sand trend of this basin. During 1993, the Company participated in 31 wells at a net cost of approximately $9 million. As of year end, the Company operated over 440 wells in the Canyon Sand trend with net gas production of approximately 40 MMCF per day. Another producing area in the Permian Basin is the Delaware Sand trend located in southeast New Mexico covering approximately 2,300 square miles. The Company owns approximately 63,000 net acres within this trend. Wells in this trend typically produce from multiple horizons and the area is prospective for both oil and gas. Productive zones range in depth from 3,000 feet to 22,000 feet. The Company's 1993 activity focused on the development of oil from the Delaware Sand trend at a depth of approximately 8,500 feet. The Company participated in 15 Delaware Sand wells drilled in 1993 at a net cost of approximately $9 million. The application of three dimensional ("3D") seismic technology has become an effective exploitation tool in the Permian Basin due to the complex geologic nature of this area. The Company foresees continued opportunities in this mature hydrocarbon province and is currently obtaining a considerable volume of new 3D seismic data to help exploit the many oil and gas formations and reservoirs in the Permian Basin. WILLISTON BASIN. The Williston Basin encompasses approximately 225,000 square miles in western North Dakota, northwest South Dakota, northeast Montana and Saskatchewan Province, Canada. The Williston Basin has 18 producing horizons ranging in depth from 4,500 feet to over 15,000 feet. The Company controls over 3.7 million net acres, primarily in the U.S. portion of the basin, through both mineral and leasehold interests. 2 5 The Company's primary area of activity in the Williston Basin over the past several years has been the development of the Bakken Shale trend in North Dakota through horizontal drilling technology. During 1993, the Company participated in the completion of 21 horizontal wells in the Bakken Shale trend at a net cost of approximately $18 million. As of year end 1993, production in the Williston Basin was approximately 11 Mbls per day. Approximately 35 percent of this production is attributable to Bakken Shale wells drilled horizontally. GULF COAST BASIN. The Gulf Coast Basin includes offshore and onshore oil and gas deposits along virtually all of the states bordering the Gulf of Mexico. The area encompasses about 250,000 square miles and is one of the most heavily explored oil and gas basins in the world. The complex geologic conditions and multiple prospective oil and gas formations, encountered as deep as 25,000 feet, make this an attractive area for the application of advanced technologies such as 3D seismic, computerized modeling and horizontal drilling. The Company's activities in the Gulf Coast Basin are primarily onshore and are concentrated in the Luling and Darst Creek Fields and the West Ranch area located in south Texas. The Company has been actively applying horizontal drilling technology in the Edwards formation of the Luling and Darst Creek Fields to enhance production from this mature area. During 1993, 15 horizontal wells were drilled in these fields at a net cost of approximately $6 million. As of year end 1993, the Luling and Darst Creek Fields were producing approximately 3 MBbls per day. Approximately 47 percent of this production is attributable to horizontal wells drilled since these properties were acquired in 1989. ANADARKO BASIN. The Anadarko Basin, located in the western portion of Oklahoma, the Texas panhandle and southwestern Kansas, encompasses over 30,000 square miles and contains some of the deepest producing formations in the world. The basin produces oil and gas from multiple zones ranging in depth from less than 1,000 feet to over 26,000 feet. The Company has over 460,000 net acres in this primarily gas producing basin with the majority located in western Oklahoma. As of year end 1993, the Company operated approximately 820 wells in this basin and total daily net gas production was over 123 MMCF per day. The Company has been concentrating its Anadarko Basin activity in the Elk City Field and the Strong City Field. The primary producing horizons in these fields are the Red Fork, Cherokee and Prue formations. During 1993, the Company participated in the drilling of 45 wells to these formations at a net cost of approximately $15 million. BLACK WARRIOR BASIN. The Black Warrior Basin covers approximately 35,000 square miles extending across northwest Alabama and northeast Mississippi. The basin produces from both conventional and coal seam gas formations. The Company's recent operations are primarily concentrated on developing coal seam gas reserves. The Company has over 180,000 net acres in the coal seam gas play near Tuscaloosa, Alabama and currently has approximately 14,000 net acres developed with 85 wells producing over 10 MMCF per day net at year end 1993. During 1993, the Company participated in 40 coal seam wells in the Black Warrior Basin at a net cost of approximately $21 million. The Company owns and operates approximately 75 miles of gas gathering systems in the Black Warrior Basin. SECTION 29 TAX CREDITS A number of formations located within the Company's producing areas have wells that may qualify for tax credits under Section 29 of the Internal Revenue Code of 1954, as amended ("IRC"). IRC Section 29 provides for a tax credit from non-conventional fuel sources such as oil produced from shale and tar sands and natural gas produced from geopressured brine, Devonian shale, coal seams, or tight sands formations. The Company estimates that the tax credit rate will range from $0.52 to $0.99 per million British Thermal Unit depending on fuel source and generated approximately $75 million of tax credits in 1993. 3 6 CAPITAL EXPENDITURES AND MAJOR PROJECTS The Company's capital expenditures were as follows:
YEAR ENDED DECEMBER 31, ---------------------------------- 1993 1992 1991 -------- -------- -------- (IN THOUSANDS) Oil and Gas Activities........................... $501,191 $253,658 $434,740 Plants and Pipelines............................. 33,327 49,423 55,476 Administrative................................... 18,866 12,366 9,940 -------- -------- -------- Total.................................. $553,384 $315,447 $500,156 -------- -------- -------- -------- -------- --------
Capital expenditures for oil and gas activities in 1993 of $501 million include 54 percent for proved property acquisitions, 40 percent for developmental drilling and 6 percent for exploration. Capital expenditures for oil and gas activities include exploration costs expensed under the successful efforts method of accounting and capitalized interest. Drilling Activity Drilling activity in 1993 was principally in the San Juan, Permian, Williston, Gulf Coast, Anadarko and Black Warrior basins. The following table sets forth the Company's net productive and dry wells.
YEAR ENDED DECEMBER 31, -------------------------------- 1993 1992 1991 ------ ------ ------ Productive wells: Exploratory.............................. 7.2 5.6 11.5 Development.............................. 243.7 107.3 179.5 ------ ------ ------ 250.9 112.9 191.0 ------ ------ ------ Dry wells: Exploratory.............................. 9.0 9.9 4.6 Development.............................. 11.6 8.1 17.9 ------ ------ ------ 20.6 18.0 22.5 ------ ------ ------ Total net wells.................. 271.5 130.9 213.5 ------ ------ ------ ------ ------ ------
As of December 31, 1993, 13 gross wells, representing approximately 9.5 net wells, were being drilled. Acquisitions As a component of its overall growth strategy, the Company continued to make acquisitions of producing properties during 1993. A total of 411 BCFE of oil and gas reserves was acquired by the Company at a cost of approximately $270 million. Approximately 60 percent and 30 percent of the reserves acquired during the year were in the San Juan and Permian basins, respectively. Year end 1993 production associated with the properties acquired was approximately 45 MMCF of gas per day and 4 MBbls of oil per day. The Company focuses its acquisition activity in areas where it has production in order to maximize the efficiencies gained in combining operations or in new areas where the Company can transfer its technological expertise or take advantage of premium markets. In addition, the Company uses a selective acquisition process that emphasizes the purchase of both proved reserves as well as properties having upside potential that can be exploited by the utilization of both conventional and advanced technologies. 4 7 PRODUCTIVE WELLS, DEVELOPED AND UNDEVELOPED ACREAGE Working interests in productive wells, developed acreage and undeveloped leasehold acreage at December 31, 1993 were as follows:
PRODUCTIVE WELLS - -------------------------------------- OIL GAS DEVELOPED ACRES UNDEVELOPED ACRES - ----------------- ----------------- ------------------------ ------------------------ GROSS NET GROSS NET GROSS NET GROSS NET - ------- ------ ------- ------ ---------- ---------- ---------- ---------- 16,614 4,305 15,117 8,453 5,908,000 3,073,000 2,884,000 1,779,000
Included in the productive wells data are 1,121 multiple completions. Excluded from the acreage data are approximately 7 million undeveloped acres of Company-owned oil and gas mineral rights, of which approximately 3 to 4 million acres are considered to have potential for oil and gas exploration. OIL AND GAS PRODUCTION, PRICES AND PRODUCTION COSTS The Company's average daily production, which represents its net ownership after deduction of all royalty interests held by others but includes royalty interests and net profits interests owned by the Company, was as follows:
YEAR ENDED DECEMBER 31, -------------------------------- 1993 1992 1991 ------ ------ ------ Production: Gas (MMCF per day)................................. 920 818 710 Oil (MBbls per day)................................ 41.9 40.6 36.1 Average sales prices: Gas per MCF........................................ $ 1.72 $ 1.49 $ 1.35 Oil per barrel..................................... 16.69 18.82 20.13 Average production costs per MCFE.................... 0.56 0.55 0.57 Depreciation, depletion and amortization rates per MCFE............................................... 0.58 0.58 0.59
In 1993, 1992 and 1991, approximately 69 percent, 70 percent and 62 percent, respectively, of the Company's gas production was transported to direct sale customers through EPNG's pipeline facilities. These transportation arrangements are pursuant to EPNG's approved Federal Energy Regulatory Commission ("FERC") tariffs applicable to all shippers. The Company expects to transport a substantial portion of its future gas production through EPNG's pipeline system. RESERVES The following table sets forth estimates by the Company's petroleum engineers of proved oil and gas reserves at December 31, 1993. These reserves have been reduced for royalty interests owned by others.
GAS OIL TOTAL (BCF) (MMBBLS) (BCFE) ------ -------- ------ Proved Developed Reserves................... 4,381 149.8 5,280 Proved Undeveloped Reserves................. 840 18.4 950 ------ -------- ------ Total Proved Reserves............. 5,221 168.2 6,230 ------ -------- ------ ------ -------- ------
For further information on reserves, including information on future net cash flows and the standardized measure of discounted future net cash flows, see "Financial Statements and Supplementary Financial Information--Supplemental Oil and Gas Disclosures." 5 8 INTRASTATE PIPELINES AND NGL The Company owns and operates two intrastate natural gas pipeline systems in west Texas totaling 426 miles and seven gathering systems in several states. Natural gas is sold from the Company's intrastate systems to industrial customers, electric and gas utilities, and other intrastate pipeline companies.
YEAR ENDED DECEMBER 31, --------------------------- 1993 1992 1991 ---- ----- ---- (BCF) Annual intrastate natural gas throughput: Sales: Company owned production................ 19 25 21 Third party production.................. 41 45 44 Third party gas transportation and gathering............................... 319 255 196 ---- ----- ---- Total.............................. 379 325 261 ---- ----- ---- ---- ----- ----
The Company is engaged in the fractionation, transportation and marketing of NGL which are sold to a variety of distributors, refiners and petrochemical users. NGL sales were 14.9 MMBbls, 14.5 MMBbls and 15.7 MMBbls, for the years ended December 31, 1993, 1992 and 1991, respectively. OTHER MATTERS Competition. The Company actively competes for reserve acquisitions and exploration leases and sales of natural gas, frequently against companies with substantially larger financial and other resources. In its NGL business, the Company competes with numerous companies for gas purchasing and processing contracts and for gas liquids, natural gas and crude oil at several steps in the distribution chain. Competitive factors in the Company's business include price, contract terms, quality of service, pipeline access, transportation discounts and distribution efficiencies. Regulation of Oil and Gas Production, Sales and Transportation. Numerous departments and agencies, both federal and state, have issued rules and regulations governing the oil and gas industry and its individual members, compliance with which is often difficult and costly and some of which carry substantial noncompliance penalties. State statutes and regulations require permits for drilling operations, drilling bonds and reports concerning operations. Most states in which the Company operates also have statutes and regulations governing conservation matters, including the unitization or pooling of oil and gas properties and the establishment of maximum rates of production from oil and gas wells. Many states also restrict production to the market demand for oil and gas. Such statutes and regulations may limit the rate at which oil and gas could otherwise be produced from the Company's properties. The Company operates a number of intrastate natural gas pipelines, gathering systems and NGL pipelines. The United States Department of Transportation regulates, under various enabling statutes, the safety aspects of the transportation and storage activities of these pipeline facilities by prescribing safety and operating standards. The transportation of natural gas in interstate commerce is regulated by the FERC pursuant to the Natural Gas Act of 1938. All of the Company's sales of natural gas are "deregulated". The FERC has adopted wide-ranging pipeline regulations promulgated under a rulemaking, the Order No. 636 series. These regulations are intended by the FERC to fundamentally restructure the interstate pipeline industry, and, as a result, they will have a significant impact on the transportation, marketing and, consequently, pricing of natural gas. These regulations are currently being implemented on individual pipelines and are subject to many court challenges. Notably, these new regulations implement, on an industry-wide basis, "straight fixed-variable" rate design, thus increasing all pipelines' demand charges for firm transportation service. The straight fixed-variable rate design methodology allows all of a pipeline's fixed costs, including an equity return and related income taxes, to be eligible for demand or reservation charge collection. The regulations permit firm shippers the opportunity to mitigate demand charge impacts by relinquishing to others, on 6 9 either a permanent or temporary basis, their firm transportation entitlements at times when these firm shippers do not need some or all of their capacity for their own use. In addition, these regulations also permit the interstate pipeline companies, or their marketing affiliates, to sell gas in interstate commerce substantially free from regulation, thereby increasing the competition for gas purchasers. These regulations also allow interstate pipeline companies to collect from their customers certain significant transition costs via (i) direct billings or (ii) demand and/or usage surcharges on their transportation rates. The Company currently holds firm and interruptible transportation capacity rights on EPNG's pipeline system, as well as the systems of other interstate and intrastate pipelines including EPNG's wholly owned subsidiary Mojave Pipeline Company. The contracts providing firm transportation services to the Company require the payment of substantial transportation demand charges. These demand charges are paid monthly by the Company regardless of the level of utilization thereunder. The Company paid $48 million of demand charges in 1993 under transportation agreements with terms ranging from 1 to 13 years. While the Company expects higher charges on these pipelines as a result of the implementation of straight fixed-variable rate design, overall, the Company does not expect a materially adverse effect from the Order 636 series of regulations on the consolidated financial position or results of operations of the Company. Environmental Regulation. Various federal, state and local laws and regulations covering the discharge of materials into the environment, or otherwise relating to the protection of the environment, may affect the Company's operations and costs as a result of their effect on oil and gas exploration, development and production operations. The Company believes it is in substantial compliance with applicable environmental laws and regulations. The Company does not anticipate that it will be required under environmental laws and regulations to expend amounts that will have a materially adverse effect on the consolidated financial position or results of operations of the Company. Offshore oil and gas operations are subject to regulations of the U.S. Department of the Interior which currently imposes absolute liability upon the lessee under a federal lease for the cost of pollution cleanup resulting from the lessee's operations, and could subject the lessee to possible liability for pollution damages. In the event of a serious incident of pollution, the U.S. Department of the Interior may require a lessee under a federal lease to suspend or cease operations in the affected area. The Company has no substantial offshore activity. Filings of Reserve Estimates With Other Agencies. During 1993, the Company filed estimates of oil and gas reserves for the year 1992 with the Department of Energy. These estimates were not materially different from the reserve data presented herein. CERTAIN DEFINITIONS Gas volumes are stated at the legal pressure base of the state or area in which the reserves are located and at 60 degrees Fahrenheit. As used in this Form 10-K, "MCF" means thousand cubic feet, "MMCF" means million cubic feet, "BCF" means billion cubic feet, "MBbls" means thousands of barrels, "MMBbls" means millions of barrels, "MCFE" means thousand cubic feet of gas equivalent, "BCFE" means billion cubic feet of gas equivalent and "TCFE" means trillion cubic feet of gas equivalent. Oil is converted into cubic feet of gas equivalent based on 6 MCF of gas to one barrel of oil. "NGL" means natural gas liquids. Proved reserves represent estimated quantities of oil and gas which geological and engineering data demonstrate with reasonable certainty can be recovered in future years from known reservoirs under existing economic and operating conditions. Reservoirs are considered proved if shown to be economically producible by either actual production or conclusive formation tests. Reserves which require the use of improved recovery techniques for production are included in proved reserves if supported by a successful pilot project or the operation of an installed program. Proved developed reserves are the portion of proved reserves which can be expected to be recovered through existing wells with existing equipment and operating methods. Proved undeveloped reserves are the portion of proved reserves which can be expected to be recovered from new wells on undrilled 7 10 proved acreage, or from existing wells where a relatively major expenditure is required for completion. With respect to information on working interests in acreage and wells, "net" acreage and "net" oil and gas wells are obtained by multiplying "gross" acreage and "gross" oil and gas wells by the Company's working interest percentage in the properties. EMPLOYEES The Company had 1,729 and 1,705 employees at December 31, 1993 and 1992, respectively. ITEM THREE LEGAL PROCEEDINGS The Company and its subsidiaries are named defendants in numerous lawsuits and named parties in numerous governmental proceedings arising in the ordinary course of business. While the outcome of lawsuits or other proceedings cannot be predicted with certainty, management expects these matters will not have a materially adverse effect on the consolidated financial position or results of operations of the Company. ITEM FOUR SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the fourth quarter of 1993 no matters were submitted to a vote of security holders. The Company has prepared a report addressing its environmental compliance policies and practices. To secure a copy of the report, write Corporate Secretary, Burlington Resources Inc., 5051 Westheimer, Suite 1400, P.O. Box 4239, Houston, Texas 77056. 8 11 EXECUTIVE OFFICERS OF THE REGISTRANT THOMAS H. O'LEARY, 59 Chairman of the Board, President and Chief Executive Officer Burlington Resources Inc. February 1993 to Present Chairman of the Board and Chief Executive Officer, July 1992 to February 1993; Chairman of the Board, President and Chief Executive Officer, October 1990 to July 1992; President and Chief Executive Officer, January 1989 to October 1990. Mr. O'Leary has been a director of Burlington Resources Inc. since 1988. GEORGE E. HOWISON, 49 Senior Vice President and Chief Financial Officer Burlington Resources Inc. November 1990 to Present President and Chief Executive Officer Meridian Oil Inc. May 1993 to Present Vice President, Planning and Treasurer, Burlington Resources Inc., August 1988 to October 1990. GERALD J. SCHISSLER, 49 Senior Vice President, Law Burlington Resources Inc. December, 1993 to Present Executive Vice President, Law and Corporate Affairs Meridian Oil Inc. July 1993 to Present Consultant, June 1991 to July 1993; Senior Vice President, Law, Meridian Minerals Company, a subsidiary of Burlington Resources Inc., November 1987 to June 1991. JOHN E. HAGALE, 37 Executive Vice President and Chief Financial Officer Meridian Oil Inc. March 1993 to Present Vice President, Finance, Burlington Resources Inc., March 1992 to February 1993; Vice President, Taxes, Burlington Resources Inc., December 1990 to March 1992; Assistant Vice President, Taxes, Burlington Resources Inc., January 1989 to November 1990. HAROLD E. HAUNSCHILD, 43 Vice President, Human Resources Burlington Resources Inc. July 1992 to Present Executive Vice President, Human Resources and Administration Meridian Oil Inc. May 1993 to Present Assistant Vice President, Compensation and Benefits, Burlington Resources Inc., May 1988 to July 1992. L. EDWARD PARKER, 47 Executive Vice President, Marketing Meridian Oil Inc. February 1993 to Present Senior Vice President, Marketing, Meridian Oil Inc., December 1990 to February 1993; Vice President, Marketing, Meridian Oil Inc., August 1988 to November 1990. BOBBY S. SHACKOULS, 43 Executive Vice President and Chief Operating Officer Meridian Oil Inc. June 1993 to Present President and Chief Operating Officer, Torch Energy Advisors, Inc., July 1991 to June 1993; Executive Vice President, Torch Energy Advisors, Inc., September 1988 to June 1991. 9 12 PART II ITEM FIVE MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock is traded on the New York Stock Exchange under the symbol "BR." At December 31, 1993, the number of common stockholders was 26,976. Information on common stock prices and quarterly dividends is shown on page 29. ITEM SIX SELECTED FINANCIAL DATA The selected financial data for the Company set forth below for the five years ended December 31, 1993 should be read in conjunction with the Consolidated Financial Statements.
1993 1992 1991 1990 1989 ------ ------ ------ ------ ------ (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) CONTINUING OPERATIONS FOR THE YEAR ENDED: Revenues.................................... $1,249 $1,141 $1,036 $1,025 $ 797 Operating Income............................ 256 240 177 216 90 Income from Continuing Operations........... 255 190 100 124 77 Earnings per Common Share(a)................ 1.95 1.44 0.75 0.87 0.52 Cash Dividends Declared per Common Share(b)................................. 0.55 0.60 0.70 0.70 0.61 AT YEAR END: Total Assets(c)............................. $4,448 $4,470 $5,480 $5,250 $4,625 Long-term Debt.............................. 819 1,003 1,298 529 87 Stockholders' Equity(c)..................... 2,608 2,406 2,907 3,024 3,223 Common Shares Outstanding................... 129.7 128.9 131.4 137.9 146.0
- ------------ (a) Excluding non-recurring items totaling $0.45, $0.24, and $0.08 per share, Earnings per Common Share from Continuing Operations would have been $1.50, $1.20 and $0.67 in 1993, 1992, and 1991, respectively. (b) On January 13, 1993, the Company increased its quarterly dividend rate to $0.1375 per share. In July 1992, the quarterly dividend rate was reduced to $0.125 per share to reflect the June 30, 1992 spin-off of EPNG to the Company's stockholders. (c) On June 30, 1992, the Company distributed its EPNG common stock to the Company's stockholders of record as of June 15, 1992. The distribution was accounted for as a $575 million non-cash dividend. 10 13 ITEM SEVEN MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION AND LIQUIDITY The Company's total long-term debt to capital (long-term debt and stockholders' equity) ratio at December 31, 1993 and 1992 was 24 and 29 percent, respectively. In April 1993, the Company redeemed all of its outstanding 7% Subordinated Debentures. Virtually all of the debentures, approximately $80 million principal amount plus accrued interest, were surrendered in exchange for 2,520,527 shares of Anadarko Petroleum Corporation ("Anadarko") common stock owned by the Company. The Anadarko stock had a cost of approximately $59 million. The Company had outstanding commercial paper borrowings at December 31, 1993 of $71 million at an average interest rate of 3.53 percent. The Company has a $900 million revolving credit facility that expires in June 1996. As of December 31, 1993, there were no borrowings outstanding under this facility, although borrowing capacity is reduced by outstanding commercial paper. The Company had the capacity to borrow approximately $829 million under the revolving credit facility as of December 31, 1993. The Company also has $500 million of capacity under a shelf registration statement filed with the Securities and Exchange Commission. During 1993, the Company repurchased 1.1 million shares of its common stock for $45 million. Since December 1988, the Company has repurchased 24 million shares under three 10 million share repurchase authorizations. In June 1993, the Company, as sponsor of the Burlington Resources Coal Seam Gas Royalty Trust (the "Trust"), completed the public offering of 8.8 million Trust units priced at $20.50 per unit. The Trust received a net profits interest (the "NPI") in certain of the Company's coal seam gas reserves in exchange for the Trust units. The proved gas reserves attributable to the NPI as of December 31, 1992, were estimated to be 135.5 BCF. The net proceeds were used for general corporate purposes, including acquisition of oil and gas properties, repayment of commercial paper obligations, and other capital expenditures. Net cash provided by continuing operating activities for 1993 was $455 million compared to $433 million and $375 million in 1992 and 1991, respectively. The increase in 1993 compared to 1992 is primarily due to higher operating income and increased current utilization of nonconventional fuel tax credits. The increase in 1992 compared to 1991 is primarily due to increased operating income partially offset by decreased sources of cash from working capital. The Company is involved in certain environmental proceedings and other related matters. Although it is possible that new information or future developments could require the Company to reassess its potential exposure related to these matters, the Company believes, based upon available information, the resolution of these issues will not have a materially adverse effect on the consolidated financial position or results of operations of the Company. The Company has certain commitments and uncertainties related to its normal operations. Management believes that there are no commitments, uncertainties or contingent liabilities that will have a materially adverse effect on the consolidated financial position or results of operations of the Company. CAPITAL EXPENDITURES AND RESOURCES Capital expenditures during 1993 totaled $553 million compared to $315 million and $500 million in 1992 and 1991, respectively. The Company spent $270 million for producing property acquisitions 11 14 during 1993 compared to $122 million in 1992. During 1993, the Company acquired a 59 percent interest in the Permian Basin Royalty Trust for approximately $134 million. The decrease in capital expenditures in 1992 from 1991 was primarily due to lower expenditures for the acquisition of producing properties and developmental drilling. Capital expenditures for 1994, projected to be approximately $470 million, is expected to be primarily for development of oil and gas properties, reserve acquisitions, and processing plant and pipeline expenditures. Capital expenditures will be funded from internal cash flow supplemented, as needed, by external financing. DIVIDENDS On January 12, 1994, the Board of Directors declared a common stock quarterly dividend of $0.1375 per share, payable April 1, 1994. Dividend levels are determined by the Board of Directors based on profitability, capital expenditures, financing and other factors. The Company declared cash dividends on common stock totaling approximately $71 million during 1993. On June 30, 1992, the Company distributed all the shares of EPNG common stock it owned to its stockholders of record as of June 15, 1992. The distribution was accounted for as a $575 million non-cash dividend of the Company's investment in EPNG common stock. RESULTS OF OPERATIONS Year Ended December 31, 1993 Compared With Year Ended December 31, 1992 Income from Continuing Operations in 1993 was $255 million, $1.95 per share, compared to $190 million, $1.44 per share, in 1992. The 1993 results include a total of $0.45 per share from gains on the sale of the Trust units and the exchange of Company debt for Anadarko common stock, and a charge to reflect the increase in the corporate income tax rate. The 1992 results include a $0.24 per share gain on the sale of the Company's interests in Plum Creek Timber Company, L.P. Operating Income increased to $256 million in 1993 compared to $240 million in 1992. The increase was primarily due to higher natural gas sales prices and volumes partially offset by lower oil prices and higher operating expenses. Revenues were $1,249 million in 1993 compared to $1,141 million in 1992. The increase was primarily due to higher natural gas prices and improved natural gas and crude oil sales volumes, partially offset by lower crude oil prices and a decrease in natural gas contract recoveries. Average natural gas sales prices increased 15 percent in 1993 to an average of $1.72 per MCF which increased revenues $77 million. Natural gas sales volumes improved 12 percent to 920 MMCF per day which increased revenues $55 million. Oil sales volumes improved 3 percent to 41.9 MBbls per day which increased revenues $9 million. Natural gas and oil sales volumes increased primarily due to continued development of the Company's oil and gas properties, the impact of producing property acquisitions, and operational efficiencies resulting from reduced gas gathering system pressures in the San Juan Basin. Intrastate natural gas sales, NGL revenues and processing revenues increased $17 million, principally as a result of higher sales prices. These revenue increases were partially offset by lower oil sales prices which declined 11 percent in 1993 to $16.69 per barrel and decreased revenues $33 million. In addition, there were no natural gas contract recoveries in 1993. The revenues for 1992 include $7 million of non-recurring natural gas contract recoveries. Costs and Expenses were $993 million in 1993 compared to $901 million in 1992. The increase was primarily due to higher 1993 production which increased production related expenses $69 million or 13 percent. Intrastate natural gas and NGL product purchases increased $2 million and administrative expenses increased $13 million. The Company anticipates continued increases in natural gas production. The increased availability of natural gas will be a result of the continuing development of the Company's gas reserves and the Company's aggressive producing property acquisition program. The Company expects to market the additional gas production in the Gulf Coast, the Midwest and the East Coast and by increasing its traditional California market share. 12 15 Interest Expense was $73 million in 1993 compared to $79 million in 1992. The decrease was primarily due to the April 1993 conversion of approximately $80 million in Company debt for Anadarko common stock and lower commercial paper borrowings. Other Income -- Net was $124 million income in 1993 compared to $57 million income in 1992. The 1993 amount includes a $108 million gain on the sale of the Trust units and a $19 million gain from the exchange of Company debt for Anadarko common stock. The 1992 amount includes a $50 million gain on the sale of the Company's interests in Plum Creek Timber Company, L.P. Income Taxes -- The effective income tax rate was 17 percent in 1993 compared to 13 percent in 1992. The increase is primarily due to $16 million in additional income tax expense recognized to adjust the cumulative deferred tax liability for the new corporate income tax rate. Year Ended December 31, 1992 Compared With Year Ended December 31, 1991 Income from Continuing Operations in 1992 was $190 million, $1.44 per share, compared to $100 million, $0.75 per share, in 1991. The 1992 results include a $0.24 per share gain on the sale of the Company's interests in Plum Creek Timber Company, L.P. The 1991 results included an $0.08 per share non-recurring gain related to interest on an income tax refund. Operating Income increased to $240 million in 1992 compared to $177 million in 1991. The increase was primarily due to improved natural gas and crude oil sales volumes and higher natural gas prices. Revenues were $1,141 million in 1992 compared to $1,036 million in 1991. The increase was primarily due to improved natural gas and crude oil sales volumes and higher natural gas prices partially offset by lower crude oil prices and a decrease in natural gas contract recoveries. Natural gas sales volumes improved 15 percent to 818 MMCF per day which increased revenues $54 million. Oil sales volumes improved 12 percent to 40.6 MBbls per day which increased revenues $34 million. Gas and oil sales volumes increased primarily due to continued development of the Company's oil and gas properties and producing property acquisitions in the second half of 1991. Average natural gas sales prices increased 10 percent in 1992 to an average of $1.49 per MCF which increased revenues $42 million. The revenue increases were partially offset by lower oil sales prices which declined 7 percent in 1992 to $18.82 per barrel and decreased revenues $19 million. In addition, natural gas contract recoveries decreased $9 million in 1992. Costs and Expenses were $901 million in 1992 compared to $860 million in 1991. The increase was primarily due to a $47 million, or 12 percent, increase in production related expenses due principally to a 15 percent increase in production levels. Interest Expense was $79 million in 1992 compared to $90 million in 1991. The decrease was primarily due to lower borrowings in 1992 and lower interest rates on commercial paper. The Company's 1991 borrowings included amounts borrowed from EPNG. Other Income -- Net was $57 million income in 1992 compared to $17 million income in 1991. The 1992 amount includes a $50 million gain on the sale of the Company's interests in Plum Creek Timber Company, L.P. The 1991 amount includes $18 million of interest income related to a cash refund of prior period income taxes. Income Taxes -- The tax rate was 13 percent in 1992 compared to 3 percent in 1991. The increase was due primarily to 1992 pretax income being higher relative to the nonconventional fuel tax credits generated. OTHER MATTERS The Company encounters competition in its business. See "Business and Properties -- Other Matters" for further discussion of competition. 13 16 ITEM EIGHT FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION BURLINGTON RESOURCES INC. CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, -------------------------------------------- 1993 1992 1991 ---------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Revenues........................................... $1,248,957 $1,141,381 $1,036,295 Costs and Expenses................................. 993,152 901,033 859,646 ---------- ---------- ---------- Operating Income................................... 255,805 240,348 176,649 Interest Expense................................... 72,799 79,196 90,344 Other Income -- Net................................ 124,432 56,887 16,813 ---------- ---------- ---------- Income from Continuing Operations Before Income Taxes..................................... 307,438 218,039 103,118 Provision for Income Taxes......................... 52,264 28,352 2,753 ---------- ---------- ---------- Income from Continuing Operations.................. 255,174 189,687 100,365 Income from Discontinued Operations -- Net of Income Taxes..................................... 1,138 68,141 105,016 ---------- ---------- ---------- Net Income......................................... $ 256,312 $ 257,828 $ 205,381 ---------- ---------- ---------- ---------- ---------- ---------- Earnings per Common Share: Continuing Operations............................ $ 1.95 $ 1.44 $ 0.75 Discontinued Operations.......................... 0.01 0.51 0.79 ---------- ---------- ---------- Total............................................ $ 1.96 $ 1.95 $ 1.54 ---------- ---------- ---------- ---------- ---------- ----------
See accompanying Notes to Consolidated Financial Statements. 14 17 BURLINGTON RESOURCES INC. CONSOLIDATED BALANCE SHEET
DECEMBER 31, ----------------------- 1993 1992 ---------- ---------- (IN THOUSANDS) ASSETS Current Assets: Cash and Short-term Investments..................................... $ 19,784 $ 31,729 Accounts Receivable................................................. 218,361 235,655 Inventories......................................................... 23,954 19,014 Other Current Assets................................................ 14,572 83,737 ---------- ---------- 276,671 370,135 ---------- ---------- Oil and Gas Properties (Successful Efforts Method).................... 5,027,312 4,594,242 Other Properties...................................................... 540,342 566,769 ---------- ---------- 5,567,654 5,161,011 Accumulated Depreciation, Depletion and Amortization................ 1,631,941 1,416,731 ---------- ---------- Properties -- Net................................................ 3,935,713 3,744,280 ---------- ---------- Other Assets.......................................................... 235,336 355,328 ---------- ---------- Total Assets................................................ $4,447,720 $4,469,743 ---------- ---------- ---------- ---------- LIABILITIES Current Liabilities: Accounts Payable.................................................... $ 202,565 $ 231,763 Taxes Payable....................................................... 58,372 60,133 Other Current Liabilities........................................... 38,680 57,742 ---------- ---------- 299,617 349,638 ---------- ---------- Long-term Debt........................................................ 819,071 1,002,506 ---------- ---------- Deferred Income Taxes................................................. 566,758 565,619 ---------- ---------- Other Liabilities and Deferred Credits................................ 154,216 146,190 ---------- ---------- Commitments and Contingent Liabilities STOCKHOLDERS' EQUITY Common Stock, Par Value $.01 Per Share (Authorized 325,000,000 Shares; Issued 150,000,000 Shares).......................................... 1,500 1,500 Paid-in Capital....................................................... 2,936,934 2,950,722 Retained Earnings..................................................... 467,667 282,610 ---------- ---------- 3,406,101 3,234,832 Cost of Treasury Stock (1993, 20,316,521 Shares; 1992, 21,118,718 Shares)............................................................. 798,043 829,042 ---------- ---------- Common Stockholders' Equity........................................... 2,608,058 2,405,790 ---------- ---------- Total Liabilities and Common Stockholders' Equity........... $4,447,720 $4,469,743 ---------- ---------- ---------- ----------
See accompanying Notes to Consolidated Financial Statements. 15 18 BURLINGTON RESOURCES INC. CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, -------------------------------------- 1993 1992 1991 ---------- ---------- ---------- (IN THOUSANDS) Cash Flows From Continuing Operating Activities: Income from Continuing Operations.................. $ 255,174 $ 189,687 $ 100,365 Adjustments to Reconcile Income to Net Cash Provided By Continuing Operating Activities: Depreciation, Depletion and Amortization........ 285,258 256,003 223,974 Deferred Income Taxes........................... 2,438 19,041 32,159 Exploration Costs............................... 28,173 19,501 30,752 Working Capital Changes: Accounts Receivable........................... 17,294 4,788 40,324 Inventories................................... (4,940) 12,800 12,504 Other Current Assets.......................... 69,165 (66,339) (5,145) Accounts Payable.............................. (29,198) (69,300) (23,382) Taxes Payable................................. (1,761) 46,197 (52,574) Other Current Liabilities..................... (19,062) (11,038) 2,603 Gain on Sales and Other......................... (147,130) 31,227 13,669 --------- --------- --------- Net Cash Provided By Continuing Operating Activities..................... 455,411 432,567 375,249 --------- --------- --------- Cash Flows From Continuing Investing Activities: Additions to Properties............................ (553,384) (315,447) (500,156) Proceeds from Sales and Property Dispositions...... 173,305 23,386 16,681 Other.............................................. (4,462) (62,224) (661) --------- --------- --------- Net Cash Used In Continuing Investing Activities............................... (384,541) (354,285) (484,136) --------- --------- --------- Cash Flows From Continuing Financing Activities: Proceeds from Long-term Financing.................. -- 150,000 970,247 Reduction in Long-term Debt........................ (183,610) (645,225) -- Dividends Paid..................................... (69,711) (85,489) (94,137) Treasury Stock Transactions -- Net................. 30,999 (100,285) (229,428) Financing Activities with EPNG -- Net.............. -- 525,361 (650,864) Other.............................................. 85,794 (20,032) (4,550) --------- --------- --------- Net Cash Used In Continuing Financing Activities..................... (136,528) (175,670) (8,732) --------- --------- --------- Decrease in Cash and Short-term Investments from Continuing Operations......................... (65,658) (97,388) (117,619) Cash Provided By Discontinued Operations............. 53,713 93,618 110,828 Cash and Short-term Investments: Beginning of Year.................................. 31,729 35,499 42,290 --------- --------- --------- End of Year........................................ $ 19,784 $ 31,729 $ 35,499 --------- --------- --------- --------- --------- ---------
See accompanying Notes to Consolidated Financial Statements. 16 19 BURLINGTON RESOURCES INC. CONSOLIDATED STATEMENT OF COMMON STOCKHOLDERS' EQUITY
COST OF COMMON COMMON PAID-IN RETAINED TREASURY STOCKHOLDERS' STOCK CAPITAL EARNINGS STOCK EQUITY ------ --------- -------- --------- ------------- (IN THOUSANDS) Balance, January 1, 1991............ $1,500 $2,956,594 $565,519 $(499,329) $3,024,284 Net Income........................ 205,381 205,381 Cash Dividends ($.70 per share)... (92,851) (92,851) Stock Purchases (6,743,300 shares)........................ (238,561) (238,561) Stock Option Activity and Other... (871) 9,133 8,262 ------ ---------- -------- --------- ---------- Balance, December 31, 1991.......... 1,500 2,955,723 678,049 (728,757) 2,906,515 Net Income........................ 257,828 257,828 Cash Dividends ($.60 per share)... (78,657) (78,657) Distribution of EPNG Stock........ (574,610) (574,610) Stock Purchases (3,484,200 shares)........................ (136,379) (136,379) Stock Option Activity and Other... (5,001) 36,094 31,093 ------ ---------- -------- --------- ---------- Balance, December 31, 1992.......... 1,500 2,950,722 282,610 (829,042) 2,405,790 Net Income........................ 256,312 256,312 Cash Dividends ($.55 per share)... (71,255) (71,255) Stock Purchases (1,139,900 shares)........................ (45,280) (45,280) Stock Option Activity and Other... (13,788) 76,279 62,491 ------ ---------- -------- --------- ---------- Balance, December 31, 1993.......... $1,500 $2,936,934 $467,667 $(798,043) $2,608,058 ------ ---------- -------- --------- ---------- ------ ---------- -------- --------- ----------
See accompanying Notes to Consolidated Financial Statements. 17 20 BURLINGTON RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Burlington Resources Inc. and its majority owned subsidiaries (the "Company"). All significant intercompany transactions have been eliminated in consolidation. The financial statements for previous periods include certain reclassifications that were made to conform to current presentation. Such reclassifications have no impact on previously reported net income or stockholders' equity. Cash and Short-term Investments All short-term investments purchased with a maturity of three months or less are considered cash equivalents. Cash equivalents are stated at cost, which approximates market value. Inventories Inventories of materials, supplies and products are valued at the lower of average cost or market. Properties Oil and gas properties are accounted for using the successful efforts method. Under this method, all development costs and acquisition costs of proved properties are capitalized and amortized on a units-of-production basis over the remaining life of proved developed reserves and proved reserves, respectively. Costs of drilling exploratory wells are initially capitalized, but charged to expense if and when a well is determined to be unsuccessful. In addition, the Company limits the total amount of unamortized capitalized costs to the value of future net revenues, based on current prices and costs. Costs of retired, sold or abandoned properties that constitute a part of an amortization base are charged or credited, net of proceeds, to accumulated depreciation, depletion and amortization. Gains or losses from the disposal of other properties are recognized currently. Expenditures for maintenance, repairs and minor renewals necessary to maintain properties in operating condition are expensed as incurred. Major replacements and renewals are capitalized. All properties are stated at cost. Revenue Recognition Gas revenues from field production are recorded on the entitlement method. Under the entitlement method, revenue is recorded based on the Company's net working interest in field production. The Company's marketing activities include the purchase and resale of crude oil and natural gas, in addition to the marketing of its own oil and gas production. The costs and expenses of third party product marketing consist primarily of the cost of product purchased and transportation costs. These costs are netted against the related marketing revenues for financial reporting purposes. The Consolidated Statement of Income includes net revenues related to the marketing of third party oil and natural gas of $9 million, $17 million and $18 million for 1993, 1992 and 1991, respectively. The volumes of third party oil and gas marketed in those years are as follows:
1993 1992 1991 ---- ---- ---- Oil (MBbls per day)..................................... 405 274 182 Gas (MMCF per day)...................................... 526 448 518
18 21 Income Taxes In January 1993, the Company implemented Statement of Financial Accounting Standard No. 109, Accounting for Income Taxes which did not have a material impact on the Company's consolidated financial position or results of operations. Income taxes are provided based on earnings reported for tax return purposes in addition to a provision for deferred income taxes. Deferred income taxes are provided in order to reflect the tax consequences in future years of differences between the financial statement and tax basis of assets and liabilities at each year end. Tax credits are accounted for under the "flow-through" method, which reduces the provision for income taxes in the year the tax credits first become available. Earnings per Common Share Earnings per common share is based on the weighted average number of common shares outstanding during the year. The weighted average number of common shares outstanding was 131 million, 132 million, and 134 million for the years 1993, 1992, and 1991, respectively. 2. RESTRUCTURING Since its inception, the Company has been monetizing its nonstrategic assets and reinvesting the net proceeds in domestic oil and gas reserves and in the repurchase of its common stock. In March 1992, the Company's wholly owned subsidiary, El Paso Natural Gas Company ("EPNG"), completed an initial public offering of approximately 15 percent of its common stock and on May 13, 1992, the Company's Board of Directors approved the June 30, 1992 distribution of the EPNG common stock owned by the Company to its stockholders of record as of June 15, 1992. The distribution was accounted for as a $575 million non-cash dividend of the Company's investment in EPNG common stock. In October 1989, the Company announced plans to sell the real estate assets held by its subsidiary, Glacier Park Company. Proceeds from sales of real estate assets through December 31, 1993 totaled approximately $429 million. In October 1992, the Company sold substantially all of its coal properties for $80 million. In December 1993, the Company sold its majority interest in Burlington Environmental Inc. for $28 million. The Company has disposed of virtually all of its nonstrategic assets as of December 31, 1993. Discontinued Operations Discontinued operations revenues for the years ended December 31, 1992 and 1991 totaled $362 million and $735 million, respectively. There were no revenues from discontinued operations in 1993. Proceeds from dispositions for the years ended December 31, 1993, 1992 and 1991 totaled $62 million, $144 million and $165 million, respectively. The Company realized $1 million, $68 million, and $105 million of after-tax income net of $4 million, $49 million, and $66 million of income taxes, from the discontinued operations and sales during 1993, 1992, and 1991, respectively. The effective tax rates for the discontinued operations differ from federal statutory rates primarily due to the effects of state and foreign income taxes and adjustments to prior year estimates. 19 22 3. INCOME TAXES The provision (benefit) for income taxes is as follows:
YEAR ENDED DECEMBER 31, ---------------------------------------- 1993 1992 1991 -------- -------- -------- (IN THOUSANDS) Current: Federal............................................. $ 39,424 $ (1,985) $(32,938) State............................................... 10,402 11,296 3,532 -------- -------- -------- 49,826 9,311 (29,406) -------- -------- -------- Deferred: Federal............................................. (14,934) 12,375 19,591 Enacted federal tax rate change..................... 15,558 - - State............................................... 1,814 6,666 12,568 -------- -------- -------- 2,438 19,041 32,159 -------- -------- -------- Total....................................... $ 52,264 $ 28,352 $ 2,753 -------- -------- -------- -------- -------- --------
Reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:
YEAR ENDED DECEMBER 31, ------------------------------------- 1993 1992 1991 ----- ----- ----- Statutory rate.......................................... 35.0% 34.0% 34.0% State income taxes net of federal tax benefit........... 2.6 5.4 10.3 Tax credits............................................. (25.0) (26.2) (44.9) Enacted federal tax rate change......................... 5.1 -- -- Other................................................... (0.7) (0.2) 3.3 ----- ----- ---- Effective rate................................ 17.0% 13.0% 2.7% ----- ----- ---- ----- ----- ----
Deferred tax liabilities (assets) consist of the following:
YEAR ENDED DECEMBER 31, --------------------------- 1993 1992 --------- ---------- (IN THOUSANDS) Deferred liabilities: Excess of book over tax basis of properties.................... $ 696,351 $ 660,657 Deferred gains................................................. -- 17,085 Other.......................................................... 25,862 10,107 --------- ---------- 722,213 687,849 --------- ---------- Deferred assets: AMT credits carryover.......................................... (110,117) (59,280) Financial accruals and provisions.............................. (29,057) (48,798) Other.......................................................... (16,281) (14,152) --------- ---------- (155,455) (122,230) --------- ---------- Total.................................................. $ 566,758 $ 565,619 --------- ---------- --------- ----------
The above net deferred tax liabilities as of December 31, 1993 and 1992, include deferred state income tax liabilities of approximately $78 million for each of the years. As of December 31, 1993, the Alternative Minimum Tax ("AMT") credits carryover of approximately $110 million, related primarily to nonconventional fuel tax credits, is available to offset future regular tax liabilities. The AMT credits carryover has no expiration date. The benefit of the tax credits is recognized in continuing operations for accounting purposes. The benefit is reflected in the current tax provision to the extent the Company is able to utilize the credits for tax return purposes. 20 23 4. LONG-TERM DEBT Long-term Debt outstanding is as follows:
DECEMBER 31, ------------------------ 1993 1992 -------- ---------- (IN THOUSANDS) Commercial Paper.................................................... $ 70,994 $ 174,632 Notes, 6 7/8%, due 1999............................................. 150,000 150,000 Notes, 8 1/2%, due 2001............................................. 150,000 150,000 Debentures, 9 1/8%, due 2021........................................ 150,000 150,000 Notes, 9 5/8%, due 2000............................................. 150,000 150,000 Debentures, 9 7/8%, due 2010........................................ 150,000 150,000 Subordinated Debentures, 7%, due 2004............................... - 79,973 Other, including discounts -- net................................... (1,923) (2,099) -------- ---------- Total..................................................... $819,071 $1,002,506 -------- ---------- -------- ----------
Excluding commercial paper, the Company has no debt maturities through 1998. The Company's commercial paper borrowings at December 31, 1993 had an average interest rate of 3.53 percent. In April 1993, the Subordinated Debentures were exchanged for shares of Anadarko Petroleum Corporation common stock owned by the Company. The Company and a group of banks have a $900 million Revolving Credit Facility which expires in June 1996. Annual fees are 0.1875 percent of the unused portion of the commitment. At the Company's option, interest on borrowings is based on prime rates, domestic money market rates or Eurodollar rates. The unused commitment under this agreement is available to cover certain debt due within one year; therefore, commercial paper is classified as long-term debt. Under the covenants of this agreement, debt cannot exceed 52.5 percent of the sum of debt and tangible net worth (as defined in the agreement). Additionally, tangible net worth cannot be less than $1.3 billion. As of December 31, 1993, there were no borrowings outstanding under this facility although borrowing capacity is reduced by outstanding commercial paper. The Company had the capacity to borrow approximately $829 million under such credit facility as of December 31, 1993. In addition, the Company has $500 million of capacity under a shelf registration statement filed with the Securities and Exchange Commission. Lease Obligations Lease rental expense was $13 million, $10 million and $13 million for the years ended December 31, 1993, 1992 and 1991, respectively. Minimum annual rental commitments are less than $15 million in any year and total approximately $154 million at December 31, 1993. 5. ARRANGEMENTS WITH EPNG Transportation In 1993, 1992 and 1991, approximately 69 percent, 70 percent and 62 percent, respectively, of the Company's gas production was transported to direct sale customers through EPNG's pipeline facilities. These transportation arrangements are pursuant to EPNG's approved Federal Energy Regulatory Commission tariffs applicable to all shippers. The Company expects to transport a substantial portion of its future gas production through EPNG's pipeline system. Demand Charges Contracts providing firm transportation services to the Company require the payment of transportation demand charges. The Company paid $48 million of demand charges in 1993 under transportation agreements with terms ranging from 1 to 13 years. Of these demand charges, approximately $40 million was paid to EPNG. 21 24 Other Transactions Prior to the separation from EPNG in 1992, the Company maintained a Commitment Agreement and Loan Agreements with EPNG. EPNG also participated in an intercorporate cash management arrangement with the Company. Balances under these facilities accrued interest at rates approximating short-term market rates. Interest income on borrowings has been netted against interest expense on excess cash advanced to the Company; the net amounts are included in Interest Expense and totaled $169,000 and $37 million for the years 1992 and 1991, respectively. 6. CAPITAL STOCK On December 8, 1993, the Board of Directors approved the Company's 1993 Stock Incentive Plan (the "1993 Plan") and approved its submission to the stockholders for their approval. The 1993 Plan succeeds the Company's 1988 Stock Option Plan (the "1988 Plan"), which expired by its terms in May 1993, but remains in effect for options granted prior to May 1993. The 1993 Plan provides for the grant of stock options and stock appreciation rights or limited stock appreciation rights (together "SARs"). Under the 1993 Plan and the 1988 Plan, options may be granted to officers and key employees at fair market value at the date of grant, exercisable in whole or part by the optionee after completion of one to three years of continuous employment from the grant date. Activity in the Company's stock option plans was as follows:
EXERCISE OPTIONS PRICE PER SHARE ---------- Balance, December 31, 1991........................... 5,842,971 $ 12.92 to $48.31 Granted............................................ 325,600 35.88 to 38.00 Exercised.......................................... (934,182) 10.91 to 37.19 Cancelled.......................................... (330,481) 21.23 to 44.75 Adjusted for EPNG Disposition...................... 484,631 10.91 to 34.68 Converted to EPNG Options.......................... (754,710) 25.50 to 44.75 ---------- Balance, December 31, 1992........................... 4,633,829 10.91 to 38.00 Granted............................................ 489,000 44.00 to 47.56 Exercised.......................................... (1,984,383) 10.91 to 34.68 Cancelled.......................................... (205,273) 31.83 to 46.44 ---------- Balance, December 31, 1993........................... 2,933,173 $ 16.14 to $47.56 ---------- ----------
At December 31, 1993, 2,108,192 options were exercisable at prices of $16.14 to $47.56 per share. At December 31, 1993, 9,597,600 shares are available for additional grant under the 1993 Plan. Stock Appreciation Rights The Company has granted SARS in connection with certain outstanding options. SARs are subject to the same terms and conditions as the related options. A SAR entitles an option holder, in lieu of exercise of an option, to receive a cash payment equal to the difference between the option price and the fair market value of the Company's common stock based upon the plan provisions. To the extent the SAR is exercised, the related option is cancelled and to the extent the option is exercised the related SAR is cancelled. The outstanding SARs are exercisable only under certain circumstances related to significant changes in the ownership of the Company or its holdings, or certain changes in the constitution of its Board of Directors. At December 31, 1993, there were 687,662 SARs outstanding related to stock options with exercise prices ranging from $21.54 to $34.68 per share. Preferred Stock and Preferred Stock Purchase Rights The Company is authorized to issue 75,000,000 shares of preferred stock, par value $.01 per share, and as of December 31, 1993 there were no shares issued. On December 15, 1988, the Company's Board of Directors designated 3,250,000 of the authorized preferred shares as Series A Preferred Stock. Upon issuance each one-hundredth of a share of Series A Preferred Stock will have dividend and voting rights approximately equal to those of one share of Common Stock of the Company. In addition, on 22 25 December 15, 1988, the Board of Directors declared a dividend distribution of one Right for each outstanding share of Common Stock of the Company. The Rights were amended on February 23, 1989. The Rights become exercisable if, without the Company's prior consent, a person or group acquires securities having 15 percent or more of the voting power of all of the Company's voting securities (an "Acquiring Person") or ten days following the announcement of a tender offer which would result in such ownership. Each Right, when exercisable, entitles the registered holder to purchase from the Company one-hundredth of a share of Series A Preferred Stock at a price of $95 per one-hundredth of a share, subject to adjustment. If, after the Rights become exercisable, the Company were to be involved in a merger or other business combination in which its Common Stock was exchanged or changed or 50% or more of the Company's assets or earning power were sold, each Right would permit the holder to purchase, for the exercise price, stock of the acquiring company having a value of twice the exercise price (the "Merger Right"). In addition, except for certain permitted offers, if any person or group becomes an Acquiring Person, each Right would permit the purchase, for the exercise price, of Common Stock of the Company having a value of twice the exercise price (the "Subscription Right"). Rights owned by an Acquiring Person are void as they relate to the Subscription Right or the Merger Right. The Rights may be redeemed by the Company under certain circumstances until their expiration date for $0.05 per Right. 7. PENSION PLANS The Company's pension plans are non-contributory defined benefit plans covering substantially all employees. The benefits are based on years of credited service and highest five-year average compensation levels. Contributions to the plans are based upon the Projected Unit Credit actuarial funding method and are limited to amounts that are currently deductible for tax purposes. Contributions are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future.
DECEMBER 31, ----------------------- 1993 1992 -------- -------- (IN THOUSANDS) Actuarial present value of benefit obligations: Accumulated benefit obligation, including vested benefits of $89,524 and $84,694................................ $ 91,349 $ 86,179 -------- -------- -------- -------- Projected benefit obligation for service to date.................. $127,403 $104,869 Plan assets, primarily marketable equity and debt securities, at fair value......................................... (91,467) (87,867) -------- -------- Funded status of projected benefit obligation....................... 35,936 17,002 Unrecognized net loss............................................... (47,006) (40,121) Unamortized net transition obligation............................... (4,621) (7,730) -------- -------- Net prepaid pension asset........................................... $(15,691) $(30,849) -------- -------- -------- --------
The following information relates to the consolidated Company plans and includes amounts related to EPNG for the first six months of 1992 and the full year of 1991.
YEAR ENDED DECEMBER 31, ---------------------------------- 1993 1992 1991 -------- -------- -------- (IN THOUSANDS) Pension cost for the plans includes the following components: Service cost--benefits earned during the period......... $ 5,503 $ 9,817 $ 11,618 Interest cost on projected benefit obligation........... 8,926 28,757 47,393 Actual (return)/loss on plan assets..................... (7,857) 7,397 (85,958) Net amortization and deferred amounts................... 3,851 (33,225) 45,029 -------- -------- -------- Net pension cost........................................ $ 10,423 $ 12,746 $ 18,082 -------- -------- -------- -------- -------- --------
The projected benefit obligation was determined using a weighted average discount rate of 7.5 percent in 1993 and 8.5 percent in 1992, and a rate of increase in future compensation levels of 23 26 5 percent. The expected long-term rate of return on plan assets was 9 percent in 1993 and 10 percent in 1992. The Company's continuing operations pension expense was $10 million, $7 million, and $7 million in 1993, 1992 and 1991, respectively. 8. COMMITMENTS AND CONTINGENT LIABILITIES The Company has certain commitments and uncertainties related to its normal operations. Management believes that there are no commitments, uncertainties or contingent liabilities that will have a materially adverse effect on the consolidated financial position or results of operations of the Company. 9. OTHER INFORMATION Other Income -- Net A summary of significant items included in Other Income -- Net is as follows:
YEAR ENDED DECEMBER 31, -------------------------------- 1993 1992 1991 -------- ------- ------- (IN THOUSANDS) Gain on sale of Trust units.................. $107,800 $ - $ - Sale of Plum Creek interests................. - 50,500 - Gain on conversion of debt................... 19,108 - - Interest on tax refund....................... - - 18,203 Other -- net................................. (2,476) 6,387 (1,390) -------- ------- ------- $124,432 $56,887 $16,813 -------- ------- ------- -------- ------- -------
Other Current Assets The December 31, 1992 balance of Other Current Assets includes $70 million of notes receivable related to the December 1992 sale of the Company's interests in Plum Creek Timber Company, L.P. The notes were collected in January 1993. Supplemental Cash Flow Information The following is additional information concerning supplemental disclosures of cash flow activities:
YEAR ENDED DECEMBER 31, -------------------------------- 1993 1992 1991 -------- ------- ------- (IN THOUSANDS) Interest Paid................................ $ 77,351 $73,702 $84,847 Income Taxes Paid (Received)--Net............ 39,948 (44,931) 28,560
In April 1993, holders of the Subordinated Debentures exchanged their Debentures with a carrying value of approximately $80 million for shares of Anadarko Petroleum Corporation common stock owned by the Company. This non-cash exchange is reflected as such in the Statement of Cash Flows. 24 27 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Burlington Resources Inc. We have audited the accompanying consolidated balance sheets of Burlington Resources Inc. as of December 31, 1993 and 1992, and the related consolidated statements of income, cash flows and common stockholders' equity for each of the three years in the period ended December 31, 1993. 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 Burlington Resources Inc. at December 31, 1993 and 1992, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. COOPERS & LYBRAND Houston, Texas January 12, 1994 25 28 BURLINGTON RESOURCES INC. SUPPLEMENTARY FINANCIAL INFORMATION SUPPLEMENTAL OIL AND GAS DISCLOSURES--UNAUDITED The supplemental data presented herein reflects information for all of the Company's oil and gas producing activities. Capitalized costs for oil and gas producing activities consist of the following:
DECEMBER 31, ---------------------------- 1993 1992 ---------- ---------- (IN THOUSANDS) Proved properties............................................... $4,985,501 $4,525,440 Unproved properties............................................. 41,811 68,802 ---------- ---------- 5,027,312 4,594,242 Accumulated depreciation, depletion and amortization............ 1,455,910 1,241,910 ---------- ---------- Net capitalized costs................................. $3,571,402 $3,352,332 ---------- ---------- ---------- ----------
Costs incurred for oil and gas property acquisition, exploration and development activities are as follows:
YEAR ENDED DECEMBER 31, ----------------------------------- 1993 1992 1991 --------- --------- --------- (IN THOUSANDS) Property acquisition: Unproved................................................. $ 10,816 $ 10,266 $ 13,148 Proved................................................... 270,235 121,949 214,110 Exploration................................................ 17,159 11,872 25,563 Development................................................ 202,981 109,571 181,919 --------- --------- --------- Total costs incurred............................. $ 501,191 $ 253,658 $ 434,740 --------- --------- --------- --------- --------- ---------
Due to the completion of the Company's restructuring, all corporate overhead is now allocated to operations. The results of operations for prior years have been restated to conform to the current presentation of overhead allocation. The restatements have no effect on consolidated results of operations. Results of operations for oil and gas producing activities are as follows:
YEAR ENDED DECEMBER 31, ---------------------------------- 1993 1992 1991 -------- -------- -------- (IN THOUSANDS) Net revenues............................................... $846,172 $756,005 $644,766 -------- -------- -------- Production costs........................................... 240,220 214,816 193,623 Exploration and impairment costs........................... 28,173 19,501 30,752 Operating expenses......................................... 119,603 104,549 97,975 Depreciation, depletion and amortization................... 248,505 223,495 197,899 -------- -------- -------- 636,501 562,361 520,249 -------- -------- -------- Operating income........................................... 209,671 193,644 124,517 Income tax provision....................................... 12,858 14,622 (545) -------- -------- -------- Results of operations for oil and gas producing activities............................................... $196,813 $179,022 $125,062 -------- -------- -------- -------- -------- --------
26 29 The following table reflects estimated quantities of proved oil and gas reserves. These reserves have been reduced for royalty interests owned by others. These reserves, virtually all located in the United States, have been estimated by the Company's petroleum engineers. The Company considers such estimates to be reasonable, however due to inherent uncertainties estimates of underground reserves are imprecise and subject to change over time as additional information becomes available.
OIL GAS (MMBBLS) (BCF) -------- ----- PROVED DEVELOPED AND UNDEVELOPED RESERVES January 1, 1991......................................................... 109.6 4,703 Revision of previous estimates....................................... 2.2 (51) Extensions, discoveries and other additions.......................... 17.9 322 Production........................................................... (13.2) (259) Purchases of reserves in place(a).................................... 25.7 351 Sales of reserves in place........................................... (1.1) (179) -------- ----- December 31, 1991....................................................... 141.1 4,887 Revision of previous estimates....................................... 0.5 (24) Extensions, discoveries and other additions.......................... 11.4 344 Production........................................................... (14.8) (299) Purchases of reserves in place....................................... 17.7 165 Sales of reserves in place........................................... (0.4) (2) -------- ----- December 31, 1992....................................................... 155.5 5,071 Revision of previous estimates....................................... (0.9) (30) Extensions, discoveries and other additions.......................... 12.0 361 Production........................................................... (15.3) (336) Purchases of reserves in place(b).................................... 17.5 306 Sales of reserves in place(c)........................................ (0.6) (151) -------- ----- December 31, 1993....................................................... 168.2 5,221 -------- ----- -------- ----- PROVED DEVELOPED RESERVES January 1, 1991......................................................... 101.5 3,558 December 31, 1991....................................................... 128.1 3,951 December 31, 1992....................................................... 141.8 4,204 December 31, 1993....................................................... 149.8 4,381
- ------------ (a) Includes 1.3 MMBbls and 185 BCF related to production properties transferred to the Company from EPNG. These were cost-of-service properties and the transfer was authorized by FERC in August 1991. (b) Includes the reserves attributable to the purchase of 59 percent of the Permian Basin Royalty Trust. (c) Primarily the Burlington Resources Coal Seam Gas Royalty Trust transaction. 27 30 A summary of the standardized measure of discounted future net cash flows relating to proved oil and gas reserves is shown below. Future net cash flows are computed using year-end sales prices, costs and statutory tax rates (adjusted for tax credits and other items) that relate to the Company's existing proved oil and gas reserves.
YEAR ENDED DECEMBER 31, -------------------------- 1993 1992 ----------- ----------- (IN THOUSANDS) Future cash inflows.......................................... $11,788,000 $11,714,000 Less related future: Production costs........................................ 3,380,000 3,207,000 Development costs....................................... 377,000 455,000 Income taxes............................................ 1,403,000 1,494,000 ----------- ----------- Future net cash flows.............................. 6,628,000 6,558,000 10% annual discount for estimated timing of cash flows..... 3,504,000 3,420,000 ----------- ----------- Standardized measure of discounted future net cash flows................................................. $ 3,124,000 $ 3,138,000 ----------- ----------- ----------- -----------
A summary of the changes in the standardized measure of discounted future net cash flows applicable to proved oil and gas reserves is as follows:
1993 1992 1991 ---------- ---------- ---------- (IN THOUSANDS) January 1.............................................. $3,138,000 $2,616,000 $2,777,000 ---------- ---------- ---------- Revisions of previous estimates: Changes in prices and costs.......................... (208,000) 265,000 (604,000) Changes in quantities................................ 9,000 (8,000) (9,000) Changes in rate of production........................ (105,000) 104,000 (15,000) Additions to proved reserves resulting from extensions, discoveries and improved recovery, less related costs................................................ 180,000 186,000 188,000 Purchases of reserves in place......................... 260,000 183,000 278,000 Sales of reserves in place............................. (107,000) (4,000) (109,000) Accretion of discount.................................. 375,000 323,000 357,000 Sales of oil and gas, net of production costs.......... (578,000) (522,000) (422,000) Net change in income taxes............................. 91,000 (55,000) 184,000 Other.................................................. 69,000 50,000 (9,000) ---------- ---------- ---------- Net change............................................. (14,000) 522,000 (161,000) ---------- ---------- ---------- December 31............................................ $3,124,000 $3,138,000 $2,616,000 ---------- ---------- ---------- ---------- ---------- ----------
28 31 BURLINGTON RESOURCES INC. QUARTERLY FINANCIAL DATA--UNAUDITED
1993 1992 ----------------------------------------- ------------------------------------ 4TH 3RD 2ND 1ST 4TH 3RD 2ND 1ST -------- -------- ------- -------- ------- ------- ------ ------- (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Revenues......................... $ 312 $ 309 $ 312 $ 316 $ 337 $ 284 $ 250 $ 270 Operating Income................. $ 64 $ 57 $ 69 $ 66 $ 90 $ 57 $ 40 $ 53 Income from Continuing Operations(a).................. $ 52 $ 24 $ 134 $ 45 $ 96 $ 33 $ 31 $ 30 Discontinued Operations.......... -- -- -- 1 17 4 13 34 -------- -------- ------- -------- ------- ------- ------ ------- Net Income....................... $ 52 $ 24 $ 134 $ 46 $ 113 $ 37 $ 44 $ 64 -------- -------- ------- -------- ------- ------- ------ ------- -------- -------- ------- -------- ------- ------- ------ ------- Earnings per Common Share: Continuing Operations.......... $ 0.40 $ 0.18 $ 1.02 $ 0.35 $ 0.73 $ 0.25 $ 0.23 $ 0.23 Discontinued Operations........ -- -- 0.01 -- 0.13 0.03 0.10 0.25 -------- -------- ------- -------- ------- ------- ------ ------- Earnings per Common Share........ $ 0.40 $ 0.18 $ 1.03 $ 0.35 $ 0.86 $ 0.28 $ 0.33 $ 0.48 -------- -------- ------- -------- ------- ------- ------ ------- -------- -------- ------- -------- ------- ------- ------ ------- Dividends Declared per Common Share.......................... $ 0.1375 $ 0.1375 $0.1375 $ 0.1375 $ 0.125 $ 0.125 $0.175 $ 0.175 -------- -------- ------- -------- ------- ------- ------ ------- -------- -------- ------- -------- ------- ------- ------ ------- Common Stock Price Range(b): High........................... 52 3/8 53 7/8 51 5/8 47 1/4 43 1/8 43 5/8 42 7/8 37 5/8 Low............................ 40 1/4 46 45 36 1/2 37 1/4 34 35 7/8 33
- --------------- (a) The effective tax rate for the fourth quarter of 1993 generated an income tax benefit primarily due to adjustments of prior year estimates. In addition, the second and third quarter effective tax rates were higher than the fourth quarter rate primarily due to income taxes recorded at a 39% combined Federal and State marginal rate on non-recurring second quarter gains and the effect of the third quarter enactment of a Federal income tax rate increase. (b) Common stock prices subsequent to the second quarter of 1992 reflect the June 30, 1992 distribution of EPNG's common stock to the Company's stockholders. 29 32 ITEM NINE CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None PART III ITEMS TEN AND ELEVEN DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AND EXECUTIVE COMPENSATION A definitive proxy statement to the 1994 Annual Meeting of Stockholders of Burlington Resources Inc. will be filed no later than 120 days after the end of the fiscal year with the Securities and Exchange Commission. The information set forth therein under "Election of Directors" and "Executive Compensation" is incorporated herein by reference. Executive Officers of the Company are listed on page 9 of this Form 10-K. ITEM TWELVE SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information required is set forth under the caption "Election of Directors" in the Proxy Statement for the 1994 Annual Meeting of Stockholders and is incorporated herein by reference. ITEM THIRTEEN CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information required is set forth under the caption "Election of Directors" in the Proxy Statement for the 1994 Annual Meeting of Stockholders and is incorporated herein by reference. 30 33 PART IV ITEM FOURTEEN EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
PAGE ----- FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION Consolidated Statement of Income................................................. 14 Consolidated Balance Sheet....................................................... 15 Consolidated Statement of Cash Flows............................................. 16 Consolidated Statement of Common Stockholders' Equity............................ 17 Notes to Consolidated Financial Statements....................................... 18 Report of Independent Accountants................................................ 25 Supplemental Oil and Gas Disclosures............................................. 26 Quarterly Financial Data......................................................... 29
FINANCIAL STATEMENT SCHEDULES Report of Independent Accountants............................................. A-1 V Property, Plant and Equipment................................................. A-2 VI Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment..................................................................... A-3 X Supplementary Income Statement Information.................................... A-4 AMENDED EXHIBIT INDEX................................................................. A-6
REPORTS ON FORM 8-K The Company filed no reports on Form 8-K in the fourth quarter. 31 34 SIGNATURES REQUIRED FOR FORM 10-K Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Burlington Resources Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BURLINGTON RESOURCES INC. By THOMAS H. O'LEARY --------------------------------- Thomas H. O'Leary Chairman of the Board, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Burlington Resources Inc. and in the capacities and on the dates indicated. By THOMAS H. O'LEARY Chairman of the Board, January 12, 1994 ------------------------------ President and Chief Thomas H. O'Leary Executive Officer GEORGE E. HOWISON Senior Vice President and January 12, 1994 ------------------------------ Chief Financial Officer George E. Howison HAYS R. WARDEN Vice President, Controller January 12, 1994 ------------------------------ and Chief Accounting Hays R. Warden Officer JOHN V. BYRNE Director January 12, 1994 ------------------------------ John V. Byrne JOHN C. CUSHMAN, III Director January 12, 1994 ------------------------------ John C. Cushman, III S. PARKER GILBERT Director January 12, 1994 ------------------------------ S. Parker Gilbert JAMES F. McDONALD Director January 12, 1994 ------------------------------ James F. McDonald DONALD M. ROBERTS Director January 12, 1994 ------------------------------ Donald M. Roberts WALTER SCOTT, JR. Director January 12, 1994 ------------------------------ Walter Scott, Jr. WILLIAM E. WALL Director January 12, 1994 ------------------------------ William E. Wall
32 35 REPORT OF MANAGEMENT To the Stockholders and Directors of Burlington Resources Inc.: The accompanying financial statements have been prepared by management in conformity with generally accepted accounting principles. The fairness and integrity of these financial statements, including any judgments, estimates and selection of appropriate generally accepted accounting principles, are the responsibility of management, as is all other information presented in this Annual Report. In the opinion of management, the financial statements are fairly stated, and, to that end, the Company maintains a system of internal control which: provides reasonable assurance that transactions are recorded properly for the preparation of financial statements; safeguards assets against loss or unauthorized use; maintains accountability for assets; and requires proper authorization and accounting for all transactions. Management is responsible for the effectiveness of internal control. This is accomplished through established codes of conduct, accounting and other control systems, policies and procedures, employee selection and training, appropriate delegation of authority and segregation of responsibilities. To further ensure compliance with established standards and related control procedures, the Company conducts a substantial corporate audit program. Our independent certified public accountants provide an objective independent review by their audit of the Company's financial statements. Their audit is conducted in accordance with generally accepted auditing standards and includes a review of internal accounting control to the extent deemed necessary for the purposes of their audit. The Audit Committee of the Board of Directors meets regularly with the independent certified public accountants, management, and corporate audit to review the work of each and to ensure that each is properly discharging its financial reporting and internal control responsibilities. To ensure complete independence, the certified public accountants and corporate audit have full and free access to the Audit Committee to discuss the results of their audits, the adequacy of internal accounting controls and the quality of financial reporting. January 12, 1994 George E. Howison Senior Vice President and Chief Financial Officer Hays R. Warden Vice President, Controller and Chief Accounting Officer 33 36 DIRECTORS OF BURLINGTON RESOURCES INC. John V. Byrne(1) James F. McDonald(1) Walter Scott, Jr.(2) President President and Chief Chairman and President Oregon State University Executive Officer Peter Kiewit Sons', Inc. Scientific-Atlanta, Inc. William E. Wall(2) John C. Cushman, III(1) Thomas H. O'Leary Of Counsel, Siderius Lonergan President and Chief Chairman of the Board, Executive Officer President and (1) Audit Committee Cushman Realty Corporation Chief Executive Officer (2) Compensation and Burlington Resources Inc. Nominating Committee S. Parker Gilbert(2) Retired Chairman and Donald M. Roberts(1) Managing Director Vice Chairman and Treasurer Morgan Stanley Group Inc. United States Trust Company of New York and U.S. Trust Corporation CORPORATE INFORMATION PRINCIPAL CORPORATE OFFICE STOCK EXCHANGE LISTINGS Additional copies of this Annual Report Burlington Resources Inc. New York Stock Exchange are available, without charge, by 5051 Westheimer, Suite 1400 Symbol: BR writing or calling: P.O. Box 4239 Houston, Texas 77056 ANNUAL MEETING Corporate Secretary (713) 831-1600 The Annual Meeting of Burlington Resources Inc. Stockholders will be in 5051 Westheimer, Suite 1400 STOCK TRANSFER AGENT AND REGISTRAR Seattle, Washington, P.O. Box 4239 The First National Bank on March 17, 1994. Houston, Texas 77056 of Boston Formal notice of the (713) 831-1600 Shareholder Services meeting will be mailed Mail Stop: 45-02-09 in advance. P.O. Box 644 Boston, Massachusetts 02102 (617) 575-2900
34 37 REPORT OF INDEPENDENT ACCOUNTANTS To the Stockholders and Directors of Burlington Resources Inc. Our report on the consolidated financial statements of Burlington Resources Inc. as of December 31, 1993 and 1992, and for each of the three years in the period ended December 31, 1993, is included on page 25 of this 1993 Annual Report on Form 10-K. In connection with our audits of such financial statements, we have also audited the related financial statement schedules listed on Page 31 of this Annual Report on Form 10-K. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND Houston, Texas January 12, 1994 A-1 38 SCHEDULE V BURLINGTON RESOURCES INC. PROPERTY, PLANT AND EQUIPMENT FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991 (IN THOUSANDS)
OTHER BALANCE AT CHANGES BALANCE BEGINNING ADDITIONS ADD AT END CLASSIFICATION OF PERIOD AT COST RETIREMENTS (DEDUCT) OF PERIOD - --------------------------- ----------- --------- ----------- --------- ---------- 1993: Oil and Gas Properties... $ 4,594,242 $ 501,191 $ 93,085 $ (14,343)(1) $5,027,312 39,307(2) Plants and Pipelines..... 408,437 33,327 536 (39,307)(2) 401,921 Other.................... 158,332 18,866 38,777 138,421 ----------- --------- ----------- --------- ---------- Total............ $ 5,161,011 $ 553,384 $ 132,398 $ (14,343) $5,567,654 ----------- --------- ----------- --------- ---------- ----------- --------- ----------- --------- ---------- 1992: Oil and Gas Properties... $ 4,416,155 $ 253,658 $ 75,902 $ (8,509)(1) $4,594,242 8,840 Plants and Pipelines..... 380,876 49,423 21,862 408,437 Other.................... 145,757 12,366 3,788 3,997 158,332 ----------- --------- ----------- --------- ---------- Total............ $ 4,942,788 $ 315,447 $ 101,552 $ 4,328 $5,161,011 ----------- --------- ----------- --------- ---------- ----------- --------- ----------- --------- ---------- 1991: Oil and Gas Properties... $ 3,650,571 $ 434,740 $ 59,118 $ (12,452)(1) $4,416,155 402,414(3) Plants and Pipelines..... 335,525 55,476 3,449 (6,676) 380,876 Other.................... 550,776 9,940 71,982 6,455 145,757 (349,432)(3) ----------- --------- ----------- --------- ---------- Total............ $ 4,536,872 $ 500,156 $ 134,549 $ 40,309 $4,942,788 ----------- --------- ----------- --------- ---------- ----------- --------- ----------- --------- ----------
- --------------- (1) Exploration costs. (2) Transfers. (3) Primarily transfers from El Paso Natural Gas Company. See accompanying Notes to Consolidated Financial Statements A-2 39 SCHEDULE VI BURLINGTON RESOURCES INC. ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991 (IN THOUSANDS)
ADDITIONS OTHER BALANCE AT CHARGED TO CHANGES BALANCE BEGINNING COSTS AND ADD AT END CLASSIFICATION OF PERIOD EXPENSES RETIREMENTS (DEDUCT) OF PERIOD - ---------------------------- ----------- ------------ ------------- --------- ----------- 1993: Oil and Gas Properties.... $ 1,241,910 $248,505 $63,150 $13,830(1) $ 1,455,910 14,815(2) Plants and Pipelines...... 102,483 19,488 617 (14,815)(2) 106,539 Other..................... 72,338 17,265 20,111 69,492 ----------- ------------ ------------- --------- ----------- Total............. $ 1,416,731 $285,258 $83,878 $13,830 $ 1,631,941 ----------- ------------ ------------- --------- ----------- ----------- ------------ ------------- --------- ----------- 1992: Oil and Gas Properties.... $ 1,066,695 $223,495 $65,500 $10,992(1) $ 1,241,910 6,228 Plants and Pipelines...... 105,101 15,772 18,024 (366) 102,483 Other..................... 59,365 16,736 3,726 (37) 72,338 ----------- ------------ ------------- --------- ----------- Total............. $ 1,231,161 $256,003 $87,250 $16,817 $ 1,416,731 ----------- ------------ ------------- --------- ----------- ----------- ------------ ------------- --------- ----------- 1991: Oil and Gas Properties.... $ 840,154 $197,899 $43,502 $18,300(1) $ 1,066,695 53,844(3) Plants and Pipelines...... 94,111 13,471 2,481 105,101 Other..................... 120,590 12,604 22,127 (51,702)(3) 59,365 ----------- ------------ ------------- --------- ----------- Total............. $ 1,054,855 $223,974 $68,110 $20,442 $ 1,231,161 ----------- ------------ ------------- --------- ----------- ----------- ------------ ------------- --------- -----------
- --------------- (1) Exploration costs. (2) Transfers. (3) Primarily transfers from El Paso Natural Gas Company. See accompanying Notes to Consolidated Financial Statements A-3 40 SCHEDULE X BURLINGTON RESOURCES INC. SUPPLEMENTARY INCOME STATEMENT INFORMATION FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 (IN THOUSANDS)
CHARGED TO COSTS AND ITEM EXPENSES - ---------------------------------------------------------------------------------- ---------- 1993 Maintenance and repairs......................................................... $ 6,168 Taxes, other than payroll and income taxes: Property..................................................................... 19,438 Production and other......................................................... 58,872 1992 Maintenance and repairs......................................................... $ 5,265 Taxes, other than payroll and income taxes: Property..................................................................... 18,463 Production and other......................................................... 51,895 1991 Maintenance and repairs......................................................... $ 4,120 Taxes, other than payroll and income taxes: Property..................................................................... 15,192 Production and other......................................................... 39,816
- --------------- Note: Items omitted are either less than 1 percent of consolidated revenues or disclosed in the Consolidated Financial Statements or notes thereto. A-4 41 UNDERTAKINGS For the purposes of complying with the amendments to the rules governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the registrant hereby undertakes as follows, which undertaking shall be incorporated by reference into the registrant's Registration Statements on Form S-8, Nos. 33-22493 (filed June 15, 1988), 33-25807 (filed December 1, 1988), 33-26024 (filed December 12, 1988), 2-97533 (filed December 29, 1989), 33-33626 (filed March 1, 1990), and 33-46518 (filed March 19, 1992): Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. A-5 42 BURLINGTON RESOURCES INC. AMENDED EXHIBIT INDEX The following exhibits are filed as part of this report.
EXHIBIT PAGE NUMBER DESCRIPTION NUMBER - ------- -------------------------------------------------------------------------- ------ 3.1 Certificate of Incorporation of Burlington Resources Inc., as amended (Exhibit 3.1 to Form 8, filed March 1990)................................. * 3.2 By-Laws of Burlington Resources Inc. as amended (Exhibit 3.2 to Form 8, filed March 1993)......................................................... * 4.1 Form of Rights Agreement dated as of December 16, 1988, between Burlington Resources Inc. and The First National Bank of Boston which includes, as Exhibit A thereto, the form of Certificate of Designation specifying terms of the Series A Preferred Stock and, as Exhibit B thereto, the form of Rights Certificate (Exhibit 1 to Form 8-A, filed December 1988)........... * Amendment No. 1 to Form of Rights Agreement (Exhibit 2 to Form 8-K, filed March 1989)............................................................... * 4.2 Indenture, dated as of June 15, 1990, between the registrant and Citibank, N.A., including Form of Debt Securities (Exhibit 4.2 to Form 8, filed February 1992)............................................................ * 4.3 Indenture, dated as of October 1, 1991, between the registrant and Citibank, N.A., including Form of Debt Securities (Exhibit 4.3 to Form 8, filed February 1992)...................................................... * 4.4 Indenture, dated as of April 1, 1992, between the registrant and Citibank, N.A., including Form of Debt Securities (Exhibit 4.4 to Form 8, filed March 1993)............................................................... * 10.1 Tax Sharing Agreement between the registrant and BNI, dated as of May 26, 1988 (Exhibit 10.1 to Form S-1, No. 33-22267, filed June 1988)............ * 10.2 The 1988 Burlington Resources Inc. Stock Option Incentive Plan as amended (Exhibit 10.4 to Form 8, filed March 1993)................................ * 10.3 Burlington Resources Inc. Incentive Compensation Plan as amended (Exhibit 10.5 to Form 8, filed March 1993)......................................... * 10.4 Burlington Resources Inc. Senior Executive Survivor Benefit Plan dated as of January 1, 1989 (Exhibit 10.11 to Form 8, filed February 1989)......... * 10.5 Burlington Resources Inc. Deferred Compensation Plan dated as of January 1, 1989 (Exhibit 10.12 to Form 8, filed February 1989).................... * Amendment No. 1 to Burlington Resources Inc. Deferred Compensation Plan (Exhibit 10.12 to Form 8, filed February 1991)............................ * 10.6 Burlington Resources Inc. Supplemental Benefits Plan as amended and restated January 1, 1990 (Exhibit 10.14 to Form 8, filed February 1992)... * 10.7 Employment Contracts between Burlington Resources Inc. and Richard M. Bressler, Thomas H. O'Leary, Travis H. Petty and Donald W. Clayton (Exhibit 10.14 to Form 8, filed February 1989)............................ * Amendments to Employment Contracts between Burlington Resources Inc. and Thomas H. O'Leary and Travis H. Petty (Exhibit 10.14 to Form 8, filed March 1990)............................................................... * Amendments to Employment Contracts between Burlington Resources Inc. and Thomas H. O'Leary and Donald W. Clayton (Exhibit 10.15 to Form 8, filed February 1992)............................................................ * 10.8 Employment Contracts between Meridian Oil Inc. and George E. Howison and Bobby S. Shackouls........................................................ Amendment to Employment Contract between Burlington Resources Inc. and Thomas H. O'Leary.........................................................
A-6 43
EXHIBIT PAGE NUMBER DESCRIPTION NUMBER - ------- ------ 10.9 Burlington Resources Inc. Compensation Plan for Non-Employee Directors (Exhibit 10.18 to Form S-8, No. 33-33626, filed March 1990)............... * Amendment No. 1 to Burlington Resources Inc. Compensation Plan for Non- Employee Directors (Exhibit 10.19 to Form 8, filed February 1992)......... * 10.10 Burlington Resources Inc. Key Executive Severance Protection Plan as amended June 8, 1989 (Exhibit 10.20 to Form 8, filed February 1992)....... * 10.11 Burlington Resources Inc. Retirement Savings Plan (Exhibit Amendment No. 1 to Form S-8, No. 2-97533, filed December 1989)............................ * Amendment No. 1 to Burlington Resources Inc. Retirement Savings Plan (Ex- hibit 10.15 to Form 8, filed March 1993).................................. * Amendment No. 2 to Burlington Resources Inc. Retirement Savings Plan (Ex- hibit 10.21 to Form 8, filed February 1992)............................... * Amendment No. 3 to Burlington Resources Inc. Retirement Savings Plan (Ex- hibit 10.15 to Form 8, filed March 1993).................................. * 10.12 Burlington Resources Inc. Retirement Income Plan for Directors (Exhibit 10.21 to Form 8, filed February 1991)..................................... * 10.13 Burlington Resources Inc. 1991 Director Charitable Award Plan, dated as of January 16, 1991 (Exhibit 10.22 to Form 8, filed February 1991)........... * 10.14 Master Separation Agreement and documents related thereto dated January 15, 1992 by and among Burlington Resources Inc., El Paso Natural Gas Company and Meridian Oil Holding Inc., including exhibits (Exhibit 10.24 to Form 8, filed February 1992)........................................... * 10.15 Burlington Resources Inc. 1992 Stock Option Plan for Non-employee Directors (Exhibit 28.1 of Form S-8, No. 33-46518, filed March 1992)...... * 10.16 Burlington Resources Inc. Key Executive Retention Plan and Amendments No. 1 and 2 (Exhibit 10.20 to Form 8, filed March 1993)....................... * 10.17 Amendments No. 3 and 4 to the Burlington Resources Inc. Key Executive Retention Plan............................................................ 10.18 Burlington Resources Inc. 1992 Performance Share Unit Plan (Exhibit 10.21 to Form 8, filed March 1993).............................................. * 10.19 Burlington Resources Inc. Severance Plan and Amendments No. 1 and 2 (Ex- hibit 10.22 to Form 8, filed March 1993).................................. * 10.20 Amendments No. 3, 4 and 5 to the Burlington Resources Inc. Severance Plan...................................................................... 10.21 $900 million Revolving Credit Agreement, dated as of April 21, 1992, between Burlington Resources Inc. and Citibank, N.A., as agent (Exhibit 10.23 to Form 8, filed March 1993)........................................ * 10.22 Burlington Resources Inc. 1993 Stock Incentive Plan....................... 11.1 Earnings Per Share Computation............................................ 12.1 Ratio of Earnings to Fixed Charges........................................ 21.1 Subsidiaries of Registrant................................................ 23.1 Consent of Coopers & Lybrand..............................................
- --------------- *Exhibit incorporated by reference as indicated. A-7 EX-10.8 2 BURLINGTON RESOURCES INC. EXHIBIT 10.8 1 EXHIBIT 10.8 April 30, 1993 Mr. George E. Howison 5223 153rd Court SE Bellevue WA 98006 Dear Mr. Howison: This letter will confirm the agreement for your employment with Meridian Oil Inc. ("Company"). 1. Position and Term. The Company agrees to employ you and you agree to act as its President and Chief Executive Officer during the period commencing on May 1, 1993 and ending on April 30, 1998. 2. Base Salary. Your minimum salary will be $450,000 per annum or such higher rate as may be fixed from time to time by the Compensation and Nominating Committee of the Board of Directors ("Compensation Committee") of Burlington Resources Inc. ("BR"). 3. Incentive Compensation, Long-Term Incentives and Other Benefits. You will participate with other senior executives of the Company in compensation and benefit plans in effect from time to time including the Incentive Compensation Plan, the Stock Option Incentive Plan, the Performance Share Unit Plan, the Deferred Compensation Plan, the Supplemental Benefits Plan, the Senior Executive Survivor Benefit Plan, the Key Executive Severance Protection Plan and any other plan or perquisites available to other executives at your level of responsibility in the Company, including a company automobile and company-provided country and luncheon club memberships. You will also participate in health, retirement, survivor and disability plans available to all employees of the Company. You understand that these plans may be amended, modified or terminated at any time. All plans referenced in this agreement are BR plans. Your maximum bonus opportunity under the Incentive Compensation Plan will be 100% of base salary. Annual bonuses are determined by the Compensation Committee based on Company and individual performance. At the next meeting of the Compensation Committee, currently scheduled in July, management will recommend an additional grant under the Performance Share Unit Plan of 55,600 units for the performance period ending in 1996. Under the current long-term incentive program, you are eligible for an annual grant of 22,500 stock options. At the December meeting of the Compensation Committee, management will recommend such grant. 2 Mr. G.E. Howison April 30, 1993 Page 2 4. Supplemental Pension Benefit. You are a participant under the qualified Pension Plan and non-qualified Supplemental Benefits Plan. If you are still employed by the Company at age 55, you will receive upon your retirement a supplemental pension benefit equal to the difference between the benefit calculated using your actual service and the benefit calculated assuming you started employment at age 30. This supplemental pension benefit will be calculated using the provisions of the qualified Pension Plan and the non-qualified Supplemental Benefits Plan in effect at the time of your retirement. This benefit is a non-qualified, unfunded deferred compensation arrangement. If your employment is terminated by the Company for any reason before age 55, other than as a result of your death, permanent disability or for Cause, or is terminated by you for Good Reason, you will receive a supplemental pension benefit calculated using the formula in the Key Executive Retention Plan. This benefit will be calculated assuming you started employment at age 30. The terms Cause and Good Reason are defined in the Key Executive Severance Protection Plan. 5. Severance Benefit. If your employment is terminated by the Company for any reason before April 30, 1998, other than as a result of your death, permanent disability or for Cause, or is initiated by you for Good Reason, the Company will pay you within 10 days after the date of termination an amount equal to the product of the number of whole and partial months remaining from the date of your termination until April 30, 1998, times your then current monthly base salary. 6. Coordination With Other Plans. If your termination entitles you to benefits under the (i) Key Executive Severance Protection Plan, or (ii) the Severance and Key Executive Retention Plans, you may elect to receive the greater of the benefits payable under this agreement or the benefits payable under items (i) or (ii) above. Regardless of the benefit elections from above, you will be eligible to receive the benefits related to the gross-up payment for excise taxes under the Key Executive Severance Protection Plan. 7. Non-Competition. If you initiate the termination of your employment with the Company other than for Good Reason during the term of this agreement, you agree that you will not for a period of two years after your termination be employed by, consult with, provide advice or information to, otherwise perform services for, own, manage, operate, join, control or participate in the ownership of more than 5% of the voting power of equity securities of, management, operation or control of any Competitor (as defined in this agreement) unless released by the Company from such obligation in writing with respect to a specific situation. A Competitor is defined as any entity that is engaged in any aspect of the oil and gas exploration, production or marketing business in the mainland United States and whose assets associated with such oil and gas business exceed $50 million. 8. Non-Disclosure. You agree that all reports, maps, data, interpretations, plans and other information furnished to you or obtained or developed by you while employed by the Company are and shall remain confidential, and that you will not divulge, communicate or otherwise disclose such reports, maps, data, interpretations, plans and other information furnished to you or obtained or developed by you while employed by the Company to any person, firm, corporation or entity other than to an authorized representative of the Company. You agree that if your employment with the Company is terminated, you will not discuss the Company's business, operations, plans, strategies, personnel or business relationships or agreements with the press or with any of the 3 Mr. G.E. Howison April 30, 1993 Page 3 Company's current or prospective customers or suppliers or with any other person with which the Company has business relationships. 9. Non-Interference. For a period ending on the later of April 30, 1998 or two years after you terminate employment with the Company, you agree not to in any way, either directly or indirectly, solicit any officer or employee of the Company to leave and work for any other employer. During this same period, you agree not to suggest to others that they approach or solicit any officers or employees of the Company with respect to potential employment elsewhere. 10. Severability and Enforcement. It is the desire of the parties hereto that this agreement be enforced to the maximum extent permitted by law, and should any provision contained herein be held unenforceable, the parties hereby agree and consent that such provision will be reformed to make it a valid and enforceable provision to the maximum extent permitted by law. Any provision hereof not capable of such reformation and determined to be prohibited by or unenforceable under applicable law of any jurisdiction will as to such jurisdiction be deemed ineffective and deleted from this agreement without affecting any other provision of this agreement. In the event of a breach by you of any of the provisions of Sections 7, 8 or 9, you understand and agree that the Company may, in addition to any other rights or remedies existing in its favor, apply to any court of law or equity of competent jurisdiction for specific performance and injunctive or other relief in order to enforce or prevent any violations of such provisions. In the event that either party to this agreement is reasonably required to bring suit to enforce the terms of this agreement, the party determined to be in breach or default shall pay the reasonable attorney's fees and costs of the prevailing party. You understand and agree that this Agreement is being executed by BR on behalf of itself, the Company and each of their affiliates, and that all rights of BR under this Agreement and all of your obligations and duties under this Agreement will inure to the benefit of and may be enforced by the Company, BR or any of their affiliates. If the above correctly set forth our agreement, please sign the original and return it to me. Please retain a copy for your records. Very truly yours, BURLINGTON RESOURCES INC. By: Thomas H. O'Leary ------------------------- Its: Chairman, President & CEO Agreed to and accepted this 10th day of May, 1993 George E. Howison 4 April 30, 1993 Mr. Bobby S. Shackouls 2101 Sunshine Point Drive Kingwood TX 77345 Dear Mr. Shackouls: This letter will confirm the agreement for your employment with Meridian Oil Inc. ("Company"). 1. Position and Term. The Company agrees to employ you and you agree to act as its Executive Vice President and Chief Operating Officer during the period commencing on June 1, 1993 and ending on April 30, 1998. 2. Base Salary. Your minimum salary will be $350,000 per annum or such higher rate as may be fixed from time to time by the Compensation and Nominating Committee of the Board of Directors ("Compensation Committee") of Burlington Resources Inc. ("BR"). 3. Incentive Compensation, Long-Term Incentives and Other Benefits. You will participate with other senior executives of the Company in compensation and benefit plans in effect from time to time including the Incentive Compensation Plan, the Stock Option Incentive Plan, the Performance Share Unit Plan, the Deferred Compensation Plan, the Supplemental Benefits Plan, the Senior Executive Survivor Benefit Plan, the Key Executive Severance Protection Plan and any other plan or perquisites available to other executives at your level of responsibility in the Company, including a company automobile and company-provided country and luncheon club memberships. You will also participate in health, retirement, survivor and disability plans available to all employees of the Company. You understand that the Company may amend, modify or terminate these plans at any time. All plans referenced in this agreement are BR plans. Your maximum bonus opportunity under the Incentive Compensation Plan will be 100% of base salary. Annual bonuses are determined by the Compensation Committee based on Company and individual performance. At the next meeting of the Compensation Committee, currently scheduled in July, management will recommend a grant under the Performance Share Unit Plan of 48,000 units for the performance period ending in 1996. Under the current long-term incentive program, you are eligible for an annual grant of 12,000 stock options. At the December meeting of the Compensation Committee, management will recommend such grant. 5 Mr. B. S. Shackouls April 30, 1993 Page 2 In consideration of the accrued unvested compensation and benefits that you are forfeiting in terminating employment with your current employer, the Company will establish a deferred compensation memorandum account under the Supplemental Benefits Plan. This account will be credited with $350,000 as of June 1, 1993 and will be further credited with interest as specified by the Supplemental Benefits Plan (currently the Moody's average corporate bond rate). This arrangement is an unfunded deferred compensation arrangement which will be paid to you in a lump-sum upon your termination of employment with the Company. 4. Supplemental Pension Benefit. You are a participant under the qualified Pension Plan and non-qualified Supplemental Benefits Plan. If you are still employed by the Company at age 55, you will receive upon your retirement a supplemental pension benefit equal to the difference between the benefit calculated using your actual service and the benefit calculated assuming you started employment at age 30. This supplemental pension benefit will be calculated using the provisions of the qualified Pension Plan and the non-qualified Supplemental Benefits Plan in effect at the time of your retirement. This benefit is a non-qualified, unfunded deferred compensation arrangement. 5. Severance Benefit. If your employment is terminated by the Company for any reason before April 30, 1998, other than as a result of your death, permanent disability or for Cause, or is initiated by you for Good Reason, the Company will pay you within 10 days after the date of termination an amount equal to the product of the number of whole and partial months remaining from the date of your termination until April 30, 1998, times your then current monthly base salary. The terms Cause and Good Reason are defined in the Key Executive Severance Protection Plan. 6. Coordination With Other Plans. If your termination entitles you to benefits under the Key Executive Severance Protection Plan, you may elect to receive the benefits payable under this agreement in lieu of those benefits. If you elect to receive the benefits under this agreement, you will nevertheless be eligible to receive the additional benefits related to the gross-up payment for excise taxes under Article 6 of that plan. 7. Non-Competition. If you initiate the termination of your employment with the Company other than for Good Reason during the term of this agreement, you agree that you will not for a period of two years after your termination be employed by, consult with, provide advice or information to, otherwise perform services for, own, manage, operate, join, control or participate in the ownership of more than 5% of the voting power of equity securities of, management, operation or control of any Competitor (as defined in this agreement) unless released by the Company from such obligation in writing with respect to a specific situation. A Competitor is defined as any entity that is engaged in any aspect of the oil and gas exploration, production or marketing business in the mainland United States and whose assets associated with such oil and gas business exceed $50 million. 8. Non-Disclosure. You agree that all reports, maps, data, interpretations, plans and other information furnished to you or obtained or developed by you while employed by the Company are and shall remain confidential, and that you will not divulge, communicate or otherwise disclose such reports, maps, data, interpretations, plans and other information furnished to you or obtained or developed by you while employed by the Company to any person, firm, corporation or entity other than to an authorized 6 Mr. B. S. Shackouls April 30, 1993 Page 3 representative of the Company. You agree that if your employment with the Company is terminated, you will not discuss the Company's business, operations, plans, strategies, personnel or business relationships or agreements with the press or with any of the Company's current or prospective customers or suppliers or with any other person with which the Company has business relationships. 9. Non-Interference. For a period ending on the later of April 30, 1998 or two years after you terminate employment with the Company, you agree not to in any way, either directly or indirectly, solicit any officer or employee of the Company to leave and work for any other employer. During this same period, you agree not to suggest to others that they approach or solicit any officers or employees of the Company with respect to potential employment elsewhere. 10. Severability and Enforcement. It is the desire of the parties hereto that this agreement be enforced to the maximum extent permitted by law, and should any provision contained herein be held unenforceable, the parties hereby agree and consent that such provision will be reformed to make it a valid and enforceable provision to the maximum extent permitted by law. Any provision hereof not capable of such reformation and determined to be prohibited by or unenforceable under applicable law of any jurisdiction will as to such jurisdiction be deemed ineffective and deleted from this agreement without affecting any other provision of this agreement. In the event of a breach by you of any of the provisions of Sections 7, 8 or 9, you understand and agree that the Company may, in addition to any other rights or remedies existing in its favor, apply to any court of law or equity of competent jurisdiction for specific performance and injunctive or other relief in order to enforce or prevent any violations of such provisions. You understand and agree that this Agreement is being executed by BR on behalf of itself, the Company and each of their affiliates, and that all rights of BR under this Agreement and all of your obligations and duties under this Agreement will inure to the benefit of and may be enforced by the Company, BR or any of their affiliates. If the above correctly set forth our agreement, please sign the original and return it to me. Please retain a copy for your records. Very truly yours, BURLINGTON RESOURCES INC. By: Thomas H. O'Leary ------------------------- Its: Chairman, President & CEO Agreed to and accepted this 3rd day of May, 1993 Bobby S. Shackouls - ------------------------- 7 AMENDMENT OF EMPLOYMENT AGREEMENT Recommend Adoption of the Following Resolutions: RESOLVED, that the Board of Directors of the Company deems it advisable and in the best interests of the Company and its stockholders to amend the Employment Agreement between Thomas H. O'Leary and the Company, dated October 20, 1988, as amended, to provide that the supplemental pension benefits described in Section 4 of the Agreement will vest as of the date hereof. RESOLVED, that the proper officers of the Company be, and they hereby are, authorized on behalf of the Company to execute an amendment to said Employment Agreement and to take any other actions such officers deem necessary or appropriate to carry out the intent of the foregoing resolutions. Meeting of the Compensation and Nominating Committee of the Board Directors Burlington Resources Inc. December 8, 1993 EX-10.17 3 BURLINGTON RESOURCES INC. EXHIBIT 10.17 1 EXHIBIT 10.17 THIRD AMENDMENT TO THE BURLINGTON RESOURCES INC. KEY EXECUTIVE RETENTION PLAN The Burlington Resources Inc. Key Executive Retention Plan ("Plan"), as adopted effective March 1, 1992, is amended as follows pursuant to Section 8.1 of the Plan, effective June 1, 1993. 1. Section 3.1(d) shall be amended by replacing the chart in its entirety with the following: Amount of Benefit Payable to: -----------------------------
Termination from: Senior Vice President Vice President and Controller - ------------------- --------------------- ----------------------------- 3/1/92 - 6/30/92 $ 675,000 $360,000 7/1/92 - 12/30/92 1,195,000 635,000 12/31/92 - 12/30/93 1,375,000 665,000 12/31/93 - 12/30/94 925,000 495,000 12/31/94 or later 600,000 320,000
2. The following new Section 2.3 shall be inserted immediately following Section 2.2 Termination of Participation: 2.3 Waiver of Participation Each Eligible Employee may elect to waive the right to be a Participant in the Plan. Any such waiver must be made in writing and will contain such terms and conditions as the Eligible Employee and the Company may agree upon, including without limitation the right to waive participation retroactive to the date participation began and the right to rescind the waiver in certain circumstances. 3. Section 3.1(a)(6) shall be amended by replacing "January 1, 1992" with "January 1 of the year in which the Participant's Termination Date occurs". BY BURLINGTON RESOURCES INC. By: Harold E. Haunschild ------------------------------- M.A. Salin - -------------------- Its: V.P., Human Resources Witness ------------------------------- (CORPORATE SEAL) 2 FOURTH AMENDMENT TO THE BURLINGTON RESOURCES INC. KEY EXECUTIVE RETENTION PLAN The Burlington Resources Inc. Key Executive Retention Plan ("Plan"), as adopted effective March 1, 1992, is amended as follows pursuant to Section 8.1, Amendment or Termination, of the Plan, effective November 1, 1993: 1. Section 1.18, Termination Date, shall be amended by adding the following new sentence at the end thereof: Notwithstanding the foregoing, with respect to those Participants whose vesting is accelerated as of November 1, 1993, in accordance with Section 5.1, Vesting, Termination Date means March 31, 1994, and with respect to the Participant whose vesting is accelerated as of January 1, 1994, in accordance with Section 5.1, Vesting, Termination Date means June 30, 1994. 2. Section 3.1(a)(6), Employer Discretionary Contributions, shall be amended in its entirety to read as follows: Determine the present value of the benefits determined in (3) through (5) above based on the UP84 mortality table and the greater of 4.25 percent or the immediate PBGC interest rate in effect during the month in which the distribution occurs. 3. That portion of Section 3.1(d) preceding the payment matrix is amended to read as follows: The amount determined under the following chart for a Senior Vice President or the Vice President and Controller, depending on Termination Date: 4. Section 4.1, Eligibility for Benefits, is amended by adding the following sentence after the first sentence thereof: Notwithstanding the foregoing, a Participant whose vesting is accelerated as of November 1, 1993, in accordance with Section 5.1, Vesting, shall be eligible to receive a distribution of that portion of his vested Account balance attributable to Employer contributions pursuant to Sections 3.01(a), (c) and (d) above as of December 1, 1993 and that portion of his vested Account balance attributable to Employer contributions pursuant to Section 3.01(b) above as of the date he actually terminates from employment with the Employer. Also notwithstanding the foregoing, the Participant whose vesting is accelerated as of January 1, 1994, in accordance with Section 5.1, Vesting, shall be eligible to receive a distribution of that portion of his vested Account balance attributable to Employer contributions pursuant to Sections 3.01(a), (c) and (d) above as of January 2, 1994 and of that portion of his vested Account balance attributable to Employer contributions pursuant to Section 3.01(b) above as of the date he actually terminates from employment with the Employer. 5. Section 4.2, Time of Benefit Commencement, shall be amended by adding the following sentence at the end thereof: Notwithstanding the foregoing, with respect to a Participant whose vesting is accelerated as of November 1, 1993, in accordance with Section 5.1, Vesting, payment of that portion of such Participant's vested Account balance attributable to Employer contributions pursuant to Sections 3.01(a), (c) and (d) above shall be completed within a reasonable period of time after December 1, 1993, but in no event later than December 31, 1993, and payment of that portion of the Participant's vested Account balance attributable to Employer contributions pursuant to Section 3.01(b) above shall be made on the date he actually terminates from employment with the Employer, or as soon as administratively practicable thereafter. Also notwithstanding the foregoing, with respect to the Participant whose vesting is accelerated as of January 1, 1994, in accordance with Section 5.1, Vesting, payment of that portion of such Participant's vested Account balance attributable to Employer contributions pursuant to Sections 3.01(a), (c) and (d) above shall be completed within a reasonable period of time after January 2, 1994, and payment of that portion of his vested Account balance attributable to Employer contributions pursuant to Section 3.01(b) above shall be made on the date he actually terminates from employment with the Employer, or as soon as administratively practicable thereafter. 6. Section 5.1, Vesting, is amended by adding the following new sentence at the end thereof: Notwithstanding the foregoing, all Eligible Employees who are Participants in the Plan on November 1, 1993, except for the Senior Vice President, shall become fully vested on such date. The Senior Vice President shall become fully vested on January 1, 1994. 7. Appendix I to the Plan is updated to reflect the effects of the foregoing amendments. IN WITNESS WHEREOF, Burlington Resources Inc. has caused this Fourth Amendment to be duly executed on this 16th day of December, 1993. FOR BURLINGTON RESOURCES INC. By: Harold E. Haunschild ---------------------------- Title: V. P. Human Resources ------------------------- Margaret A. Salin - --------------------- Witness (Corporate Seal) EX-10.20 4 BURLINGTON RESOURCES INC. EXHIBIT 10.20 1 EXHIBIT 10.20 THIRD AMENDMENT TO THE BURLINGTON RESOURCES INC. SEVERANCE PLAN The Burlington Resources Inc. Severance Plan ("Plan"), as adopted effective March 1, 1992, is amended as follows pursuant to Section 6.1 of the Plan, effective June 1, 1993. 1. The following new Section 2.3 shall be inserted immediately following Section 2.2 Termination of Participation: 2.3 Waiver of Participation Each Eligible Employee may elect to waive the right to be a Participant in the Plan. Any such waiver must be made in writing and will contain such terms and conditions as the Eligible Employee and the Company may agree upon, including without limitation the right to waive participation retroactive to the date participation began and the right to rescind the waiver in certain circumstances. BY BURLINGTON RESOURCES INC. By: Harold E. Haunschild -------------------------------- M.A. Salin Its: V.P. Human Resources - ------------------ -------------------------------- Witness (CORPORATE SEAL) 2 FOURTH AMENDMENT TO THE BURLINGTON RESOURCES INC. SEVERANCE PLAN The Burlington Resources Inc. Severance Plan ("Plan"), as adopted effective March 1, 1992, is amended as follows pursuant to Section 6.1 of the Plan, effective December 1, 1993. 1. Section 3.1 Amount of Benefit shall be amended by inserting the following new paragraph after the last paragraph: Notwithstanding the foregoing, each Participant whose scheduled termination of employment date is in 1994 shall be entitled to receive the benefit described in this Section 3.1 on December 15, 1993, in lieu of receiving it upon the occurrence of any of the events described in clauses (i) through (iv) in the first paragraph above. Benefits shall be distributed to such Participants within a reasonable time after December 15, 1993, provided that the Participant has entered into a Severance Agreement and Release with the Company, and that all applicable waiting periods have expired. By BURLINGTON RESOURCES INC. By: Harold E. Haunschild -------------------------------- Margaret A. Salin Title: V.P. Human Resources - --------------------- ----------------------------- Witness (Corporate Seal) 3 FIFTH AMENDMENT TO THE BURLINGTON RESOURCES INC. SEVERANCE PLAN The Burlington Resources Inc. Severance Plan ("Plan"), as adopted effective March 1, 1992, is amended as follows pursuant to Section 6.1 of the Plan, effective January 1, 1994. 1. Section 3.1 Amount of Benefit shall be amended by inserting the following new paragraph after the last paragraph: For purposes of this section, the Senior Vice President of the Employer, provided he has not waived participation pursuant to Section 2.3, who is scheduled to terminate employment on June 30, 1994 shall be considered to have involuntarily terminated employment on January 1, 1994. However, for benefit calculation purposes only, such Participant shall be deemed to involuntarily terminate employment on June 30, 1994. This acceleration of payment provision will result in early payment of amounts which would otherwise have been paid following June 30, 1994. The Participant who receives an accelerated payment under this provision is not entitled to receive any further payment under the Plan upon actual termination of employment, whether such termination occurs on June 30, 1994 or some other date. IN WITNESS WHEREOF, Burlington Resources Inc. has caused this Fifth Amendment to be duly executed on this 1st day of January, 1994. FOR BURLINGTON RESOURCES INC. By: Harold E. Haunschild ------------------------------- Margaret A. Salin Title: V.P. Human Resources - ---------------------- -------------------------------- Witness (Corporate Seal) EX-10.22 5 BURLINGTON RESOURCES INC. EXHIBIT 10.22 1 EXHIBIT 10.22 1993 BURLINGTON RESOURCES INC. STOCK INCENTIVE PLAN SECTION 1. PURPOSE The purpose of the 1993 Burlington Resources Inc. Stock Incentive Plan (the "Plan") is to promote the interests of Burlington Resources Inc. (the "Company") and its stockholders by strengthening the Company's ability to attract and retain officers and key employees in the employ of the Company and its subsidiaries by furnishing suitable recognition of their ability and industry which contributed materially to the success of the Company and to align the interests and efforts of the Company's officers and key employees to the long term interests of the Company's stockholders. The Plan provides for the grant of stock options, stock appreciation rights, limited stock appreciation rights, restricted stock and stock purchase rights in accordance with the terms and conditions set forth below. SECTION 2. DEFINITIONS Unless otherwise required by the context, the following terms when used in the Plan shall have the meanings set forth in this Section 2: 2.1 BENEFICIARY The person or persons designated by the Participant pursuant to Section 6.4(f) to whom payments are to be paid pursuant to the terms of the Plan in the event of the Participant's death. 2.2 BOARD OF DIRECTORS The Board of Directors of the Company. 2.3 BONUS The annual incentive award paid by the Company or any Subsidiary under its Incentive Compensation Plan or any successor or similar plans during any calendar year to any employee thereof, including officers and directors of the Company who are full-time, salaried employees, in recognition of performance of services to the Company or its Subsidiaries. 2.4 CAUSE The Company may terminate the Participant's employment for Cause. A termination for Cause is a termination evidenced by a resolution adopted in good faith by two-thirds (2/3) of the Board of Directors that the Participant (a) willfully and continually failed to substantially perform the Participant's duties with the Company (other than a failure resulting from the Participant's incapacity due to physical or mental illness), which failure continued for a period of at least thirty (30) days after a written notice of demand for substantial performance was delivered to the Participant specifying the manner in which the Participant failed to substantially perform or (b) willfully engaged in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise; provided, however, that no termination of the Participant's employment shall be for Cause as set forth in clause (b) above until (i) there shall have been delivered to the Participant a copy of a written notice setting forth that the Participant was guilty of the conduct set forth in clause (b) above and specifying the particulars thereof in detail and (ii) the Participant shall have been provided an opportunity to be heard by the Board of Directors (with the assistance of the Participant's counsel if the Participant so desires). No act, or failure to act, on the Participant's part shall be considered "willful" unless the Participant has acted, or failed to act, with an absence of good faith and without a reasonable belief that the Participant's action or failure to act was in the best interest of the Company. Notwithstanding A-1 2 anything contained in the Plan to the contrary, no failure to perform by the Participant after notice of termination is given by the Participant shall constitute Cause. 2.5 CHANGE IN CONTROL As used in the Plan, a Change in Control shall be deemed to occur (a) if any person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then-outstanding securities, (b) upon the first purchase of the Common Stock pursuant to a tender or exchange offer (other than a tender or exchange offer made by the Company), (c) upon the approval by the Company's stockholders of a merger or consolidation, a sale or disposition of all or substantially all the Company's assets or a plan of liquidation or dissolution of the Company, or (d) if, during any period of two (2) consecutive years, individuals who at the beginning of such period constitute the Board of Directors cease for any reason to constitute at least a majority thereof, unless the election or nomination for the election by the Company's stockholders of each new director was approved by a vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of the period. 2.6 CODE The Internal Revenue Code of 1986, as amended and in effect from time to time, and the temporary or final regulations of the Secretary of the U.S. Treasury adopted pursuant thereto. 2.7 COMMON STOCK The Common Stock of the Company, $.01 par value per share, or such other class of shares or other securities as may be applicable pursuant to the provisions of Section 5. 2.8 EXCHANGE ACT The Securities Exchange Act of 1934, as amended. 2.9 FAIR MARKET VALUE As applied to a specific date, the mean between the highest and lowest quoted selling prices at which Common Stock was sold on such date as reported in the NYSE-Composite Transactions by The Wall Street Journal on such date or, if no Common Stock was traded on such date, on the next preceding day on which Common Stock was so traded. Notwithstanding the foregoing, upon the exercise, (a) during the thirty (30) day period following a Change in Control, of a stock appreciation right or of a limited stock appreciation right granted in connection with a Nonqualified Option more than six (6) months prior to a Change in Control or (b) during the seven (7) month period following a Change in Control, of a stock appreciation right or of a limited stock appreciation right granted in connection with a Nonqualified Option to an Insider Participant less than six (6) months prior to a Change in Control, Fair Market Value on the date of exercise shall be deemed to be the greater of (i) the highest price per share of Common Stock as reported in the NYSE-Composite Transactions by The Wall Street Journal during the sixty (60) day period ending on the day preceding the date of exercise of the stock appreciation right or the limited stock appreciation right, as the case may be, and (ii) if the Change in Control is one described in clause (b) or (c) of Section 2.5, the highest price per share paid for Common Stock in connection with such Change in Control. A-2 3 2.10 GOOD REASON The occurrence of any of the following events or conditions: (a) a change in the Participant's status, title, position or responsibilities (including reporting responsibilities) which, in the Participant's reasonable judgment, represents a substantial reduction of the status, title, position or responsibilities as in effect immediately prior thereto; the assignment to the Participant of any duties or responsibilities which, in the Participant's reasonable judgment, are inconsistent with such status, title, position or responsibilities; or any removal of the Participant from or failure to reappoint or reelect the Participant to any of such positions, except in connection with the termination of the Participant's employment for Cause, for Permanent Disability or as a result of his or her death, or by the Participant other than for Good Reason; (b) a reduction in the Participant's annual base salary; (c) the Company's requiring the Participant (without the consent of the Participant) to be based at any place outside a thirty-five (35) mile radius of his or her place of employment prior to a Change in Control, except for reasonably required travel on the Company's business which is not materially greater than such travel requirements prior to the Change in Control; (d) the failure by the Company to (i) continue in effect any material compensation or benefit plan in which the Participant was participating at the time of the Change in Control, including, but not limited to, the Plan, the Burlington Resources Inc. Pension Plan, the Burlington Resources Inc. Supplemental Benefits Plan, the Burlington Resources Inc. Incentive Compensation Plan, the Burlington Resources Inc. Deferred Compensation Plan, and the Burlington Resources Inc. Retirement Savings Plan, or (ii) provide the Participant with compensation and benefits at least equal (in terms of benefit levels and/or reward opportunities) to those provided for under each employee benefit plan, program and practice as in effect immediately prior to the Change in Control (or as in effect following the Change in Control, if greater); (e) any material breach by the Company of any provision of the Plan; or (f) any purported termination of the Participant's employment for Cause by the Company which does not otherwise comply with the terms of the Plan. 2.11 INCENTIVE STOCK OPTION An option intended to meet the requirements of an Incentive Stock Option as defined in Section 422 of the Code, as in effect at the time of grant of such option, or any statutory provision that may hereafter replace such Section. 2.12 INSIDER PARTICIPANT Any person who is selected by the Plan Administrator to receive options, stock appreciation rights, limited stock appreciation rights, Restricted Stock and/or Stock Purchase Rights hereunder and who is subject to the requirements of Section 16 of the Exchange Act, and the rules and regulations issued thereunder. 2.13 MAXIMUM ANNUAL EMPLOYEE GRANT The Maximum Annual Employee Grant set forth in Section 6.1. 2.14 NONQUALIFIED OPTION An option not intended to meet the requirements of an Incentive Stock Option. 2.15 OPTION PRICE The price per share of Common Stock at which each option is exercisable. A-3 4 2.16 PARTICIPANT An eligible employee to whom an option, stock appreciation right, limited stock appreciation right, Restricted Stock or Stock Purchase Right is granted under the Plan as set forth in Section 4. 2.17 PERFORMANCE SHARE UNIT A Performance Share Unit awarded under the Performance Unit Plan, which has become payable under the Performance Unit Plan. 2.18 PERFORMANCE UNIT PLAN The Company's 1992 Performance Share Unit Plan or any successor or similar plans. 2.19 PERMANENT DISABILITY A Participant shall be deemed to have a Permanent Disability for purposes of the Plan if the Chief Executive Officer of the Company shall find upon the basis of medical evidence satisfactory to the Chief Executive Officer that the Participant is totally disabled, whether due to a physical or mental condition, so as to be prevented from engaging in further employment by the Company or any Subsidiary, and that such disability will be permanent and continuous during the remainder of the Participant's life; provided, however, that for officers and directors of the Company who are subject to Section 16 of the Exchange Act, such determination shall be made by the Plan Administrator. 2.20 PLAN ADMINISTRATOR The Board of Directors or the committee appointed and/or authorized pursuant to Section 3 to administer the Plan. 2.21 PURCHASE DATE For any Stock Purchase Right, a date within thirty (30) days after the date any Bonus is paid or any Performance Share Unit becomes payable, which date shall be the only date on which such Stock Purchase Right may be exercised. 2.22 RESTRICTED STOCK Common Stock granted under the Plan that is subject to the requirements of Section 9 and such other restrictions as the Plan Administrator deems appropriate. 2.23 RULE 16B-3 Rule 16b-3 of the General Rules and Regulations under the Exchange Act. 2.24 STOCK PURCHASE PRICE The price per share of Common Stock acquired upon exercise of a Stock Purchase Right as determined by the Plan Administrator, which price shall not be less than seventy-five percent (75%) of the Fair Market Value of a share of Common Stock on the Purchase Date. 2.25 STOCK PURCHASE RIGHT A right to purchase Common Stock granted under the Plan. 2.26 SUBSIDIARY An entity that is designated by the Plan Administrator as a subsidiary for purposes of the Plan and that is a corporation (or other form of business association that is treated as a corporation for tax purposes) of which A-4 5 shares (or other ownership interests) having more than fifty percent (50%) of the voting power are owned or controlled, directly or indirectly, by the Company so as to qualify as a "subsidiary corporation" (within the meaning of Section 424(f) of the Code). SECTION 3. ADMINISTRATION 3.1 The Plan shall be administered by the Board of Directors or, in the event the Board of Directors shall appoint and/or authorize a committee or committees to administer the Plan, by such committee or committees. The administrator of the Plan shall hereinafter be referred to as the "Plan Administrator." In the event a member of the Board of Directors (or the committee) may be eligible, subject to the restrictions set forth in Section 4, to participate in or receive or hold options, stock appreciation rights, limited stock appreciation rights, Restricted Stock and/or Stock Purchase Rights under the Plan, no member of the Board of Directors or the committee shall vote with respect to the granting of options, stock appreciation rights, limited stock appreciation rights, Restricted Stock and/or Stock Purchase Rights hereunder to himself or herself, as the case may be, and, if state corporate law does not permit a committee to grant options, stock appreciation rights, limited stock appreciation rights, Restricted Stock and Stock Purchase Rights to directors, then any option, stock appreciation right, limited stock appreciation right, Restricted Stock or Stock Purchase Right granted under the Plan to a director for his or her services as such shall be approved by the full Board of Directors. The members of any committee serving as Plan Administrator shall be appointed by the Board of Directors for such term as the Board of Directors may determine. The Board of Directors may from time to time remove members from, or add members to, the committee. Vacancies on the committee, however caused, may be filled by the Board of Directors. With respect to grants made under the Plan to officers and directors of the Company who are subject to Section 16 of the Exchange Act, the Plan Administrator shall be constituted at all times so as to meet the requirements of Rule 16b-3 so long as any of the Company's equity securities are registered pursuant to Section 12(b) or 12(g) of the Exchange Act. 3.2 Except for the terms and conditions explicitly set forth in the Plan, the Plan Administrator shall have full authority to construe and interpret the Plan, to establish, amend and rescind rules and regulations relating to the Plan, to select persons eligible to participate in the Plan, to grant options, stock appreciation rights, limited stock appreciation rights, Restricted Stock and Stock Purchase Rights thereunder, to administer the Plan, to make recommendations to the Board of Directors, to take all such steps and make all such determinations in connection with the Plan and the options, stock appreciation rights, limited stock appreciation rights, Restricted Stock and Stock Purchase Rights granted thereunder as it may deem necessary or advisable, which determination shall be final and binding upon all Participants, so long as such interpretation and construction with respect to Incentive Stock Options correspond to the requirements of Section 422 of the Code. The Plan Administrator shall cause the Company at its expense to take any action related to the Plan which may be required or necessary to comply with the provisions of any federal or state law or any regulations issued thereunder. 3.3 Each member of any committee acting as Plan Administrator, while serving as such, shall be considered to be acting in his or her capacity as a director of the Company. Members of the Board of Directors and members of any committee acting under the Plan shall be fully protected in relying in good faith upon the advice of counsel and shall incur no liability except for gross negligence or willful misconduct in the performance of their duties. 3.4 The fact that a member of the Board of Directors is, or shall theretofore have been or thereafter may be, a person who has received or is eligible to receive an option, stock appreciation right, limited stock appreciation right, Restricted Stock and/or Stock Purchase Right shall not disqualify him or her from taking part in and voting at any time as a member of the Board of Directors in favor of or against any amendment or repeal of the Plan. A-5 6 SECTION 4. ELIGIBILITY To be eligible for selection by the Plan Administrator to receive a grant of an option, stock appreciation right, limited stock appreciation right, Restricted Stock or Stock Purchase Right under the Plan, an individual must be an officer or a key employee of the Company, or of any Subsidiary, as of the date on which the Plan Administrator grants to such individual such option, stock appreciation right, limited stock appreciation right, Restricted Stock or Stock Purchase Right and a person who, in the judgment of the Plan Administrator, holds a position of responsibility and is able to contribute substantially to the Company's continued success. SECTION 5. SHARES AVAILABLE FOR THE PLAN 5.1 Subject to Section 5.3, the maximum number of shares for which options, stock appreciation rights, limited stock appreciation rights, Restricted Stock and Stock Purchase Rights may at any time be granted under the Plan is ten million (10,000,000) shares of Common Stock, all such shares to be held in the Company's treasury or out of the authorized but unissued shares of the Company, or partly out of each, as shall be determined by the Board of Directors. Upon (a) the expiration or termination in whole or in part of unexercised options, stock appreciation rights, limited stock appreciation rights and Stock Purchase Rights or the surrender of an option, or portion thereof, upon exercise of a related stock appreciation right for cash or of a limited stock appreciation right or (b) to the extent permissible under Rule 16b-3, the forfeiture of Restricted Stock, shares of Common Stock which were subject thereto shall again be available for grants of options, stock appreciation rights, limited stock appreciation rights, Restricted Stock and Stock Purchase Rights under the Plan. 5.2 Notwithstanding the foregoing, and subject to Section 5.3, the number of shares for which Restricted Stock may be granted pursuant to Section 9 of the Plan may not exceed one million (1,000,000) shares of Common Stock and the number of shares which may issued upon exercise of Stock Purchase Rights granted under Section 10 of the Plan may not exceed two million (2,000,000) shares of Common Stock. 5.3 In the event of a recapitalization, stock split, stock dividend, exchange of shares, merger, reorganization, change in corporate structure or shares of the Company or similar event, the Board of Directors, upon the recommendation of the Plan Administrator, may make appropriate adjustments in the number of shares authorized for the Plan, the Maximum Annual Employee Grant and, with respect to outstanding options, stock appreciation rights, limited stock appreciation rights, Restricted Stock and Stock Purchase Rights, the Plan Administrator may make appropriate adjustments in the number of shares and the Option Price or Stock Purchase Price. SECTION 6. STOCK OPTIONS 6.1 Options may be granted to eligible employees in such number and at such times during the term of the Plan as the Plan Administrator shall determine, the Plan Administrator taking into account the duties of the respective employees, their present and potential contributions to the success of the Company, and such other factors as the Plan Administrator shall deem relevant in accomplishing the purposes of the Plan; provided, that the maximum number of shares with respect to which an option or options may be granted to any eligible employee in any one year will not exceed five hundred thousand (500,000) shares (the "Maximum Annual Employee Grant"). The granting of an option shall take place when the Plan Administrator by resolution, written consent or other appropriate action determines to grant such an option to a particular Participant at a particular price. Each option shall be evidenced by a written instrument delivered by or on behalf of the Company containing provisions not inconsistent with the Plan. 6.2 An option granted under the Plan may be either an Incentive Stock Option or a Nonqualified Option. 6.3 Each provision of the Plan and each Incentive Stock Option granted thereunder shall be construed so that each such option shall qualify as an Incentive Stock Option, and any provision thereof that cannot be so construed shall be disregarded, unless the Participant agrees otherwise. The total number of shares which A-6 7 may be purchased upon the exercise of Incentive Stock Options granted under the Plan shall not exceed the total specified in Section 5.1. Incentive Stock Options, in addition to complying with the other provisions of the Plan relating to options generally, shall be subject to the following conditions: (a) A Participant must not, immediately before an Incentive Stock Option is granted, own stock representing more than ten percent (10%) of the voting power or value of all classes of stock of the Company or a Subsidiary. This requirement is waived if (i) the Option Price of the Incentive Stock Option to be granted is at least one hundred ten percent (110%) of the Fair Market Value of the stock subject to the option, determined at the time the option is granted, and (ii) the option is not exercisable more than five (5) years from the date the option is granted. (b) To the extent that the aggregate Fair Market Value (determined at the time of the grant of the option) of the stock with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year exceeds One Hundred Thousand Dollars ($100,000), such options shall be treated as Nonqualified Options. (c) Any other terms and conditions which the Plan Administrator determines, upon advice of counsel, must be imposed for the option to be an Incentive Stock Option. 6.4 Except as otherwise provided in Section 6.3, all Incentive Stock Options and Nonqualified Options under the Plan shall be granted subject to the following terms and conditions: (a) OPTION PRICE The Option Price shall be determined by the Plan Administrator at the time of grant, but shall not be less than one hundred percent (100%) of the Fair Market Value of the Common Stock on the date the option is granted. (b) DURATION OF OPTIONS Options shall be exercisable at such time and under such conditions as set forth in the option grant, but in no event shall any Incentive Stock Option be exercisable subsequent to the day before the tenth anniversary of the date on which the option is granted, nor shall any other option be exercisable later than the tenth anniversary of the date of its grant. (c) EXERCISE OF OPTIONS Subject to Section 6.4(j), an optionee may not exercise an option until he or she has completed one (1) year of continuous employment with the Company or one of its Subsidiaries from and including the date on which the option is granted, or such longer period as the Plan Administrator may determine in a particular case. This requirement is waived in the event of death or Permanent Disability of an optionee before such period of continuous employment is completed. Thereafter, shares of Common Stock covered by an option may be purchased at one time or in such installments during the option period as may be provided in the option grant. Any shares not purchased on the applicable installment date may be purchased at one time or in such installments over the balance of the option period as may be provided in the option grant. To the extent that the right to purchase shares has accrued thereunder, options may be exercised from time to time by written notice to the Company setting the number of shares with respect to which the option is being exercised. (d) PAYMENT The purchase price of shares purchased under options shall be paid in full to the Company upon the exercise of the option by delivery of consideration equal to the product of the Option Price and the number of shares purchased. Such consideration may be either (i) in cash or (ii) at the discretion of the Plan Administrator, in Common Stock already owned by the Participant for at least six (6) months, or any combination of cash and Common Stock. The Fair Market Value of such Common Stock as delivered shall be valued as of the day prior to delivery. The Plan Administrator can determine at the time the option is granted that additional forms of payment will be permitted. To the extent permitted by the Plan Administrator and applicable laws and regulations (including, but not limited to, federal tax and securities laws and regulations A-7 8 and state corporate law), an option may also be exercised by delivery of a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company the amount of sale or loan proceeds to pay the purchase price of shares purchased under the option. If specifically authorized in the option grant, shares of Common Stock with a Fair Market Value equal to all or a portion of the purchase price of shares purchased under options may be withheld from the shares issuable to the Participant upon the exercise of the option. The Fair Market Value of such Common Stock as is withheld shall be valued as of the day prior to exercise of the option. In the event an option grant to an Insider Participant provides that the purchase price of shares purchased under options may be paid in whole or in part by having shares with a Fair Market Value equal to all or a portion of the purchase price withheld from the shares issuable to the optionee upon the exercise of the option, the following restrictions shall apply. To the extent required for compliance with Rule 16b-3, the withholding of shares issuable upon the exercise of an option to pay the purchase price of shares acquired upon exercise of an option by an Insider Participant must be approved by the Plan Administrator and must be made (x) pursuant to an irrevocable election made six (6) months in advance of the transaction, (y) during the period beginning on the third business day following the date of release for publication of the quarterly or annual summary statements of sales and earnings of the Company and ending on the twelfth business day following such date, or (z) otherwise in accordance with Rule 16b-3 and interpretations thereunder. (e) RESTRICTIONS The Plan Administrator shall determine and reflect in the option grant, with respect to each option, the nature and extent of the restrictions, if any, to be imposed on the shares of Common Stock which may be purchased thereunder, including, but not limited to, restrictions on the transferability of such shares acquired through the exercise of such options for such periods as the Plan Administrator may determine and, further, that in the event a Participant's employment by the Company or a Subsidiary terminates during the period in which such shares are nontransferable, the Participant shall be required to sell such shares back to the Company at such prices as the Plan Administrator may specify in the option. (f) NONTRANSFERABILITY OF OPTIONS During a Participant's lifetime, an option may be exercisable only by the Participant and options granted under the Plan and the rights and privileges conferred thereby shall not be subject to execution, attachment or similar process and may not be transferred, assigned, pledged or hypothecated in any manner (whether by operation of law or otherwise) other than by will or by the applicable laws of descent and distribution. Notwithstanding the foregoing, to the extent permitted by applicable law and Rule 16b-3, the Plan Administrator may permit a recipient of a Nonqualified Option to (i) designate in writing during the Participant's lifetime a Beneficiary to receive and exercise the Participant's Nonqualified Options in the event of such Participant's death (as provided in Section 6.4(i)) or (ii) transfer a Nonqualified Option. Any other attempt to transfer, assign, pledge, hypothecate or otherwise dispose of any option under the Plan or of any right or privilege conferred thereby, contrary to the provisions of the Plan, or the sale or levy or any attachment or similar process upon the rights and privileges conferred hereby, shall be null and void. (g) PURCHASE FOR INVESTMENT The Plan Administrator shall have the right to require that each Participant or other person who shall exercise an option under the Plan, and each person into whose name shares of Common Stock shall be issued pursuant to the exercise of an option, represent and agree that any and all shares of Common Stock purchased pursuant to such option are being purchased for investment only and not with a view to the distribution or resale thereof and that such shares will not be sold except in accordance with such restrictions or limitations as may be set forth in the option. This Section 6.4(g) shall be inoperative during any period of time when the Company has obtained all necessary or advisable approvals from governmental agencies and has completed all necessary or advisable registrations or other qualifications of shares of Common Stock as to which options may from time to time be granted as contemplated in Section 11. A-8 9 (h) TERMINATION OF EMPLOYMENT Upon the termination of a Participant's employment for any reason other than death, the Participant's option shall be exercisable only to the extent that it was then exercisable and, unless the term of the option expires sooner, such option shall expire according to the following schedule; provided, however, that the Plan Administrator may at any time determine in a particular case that specific limitations and restrictions under the Plan shall not apply: (i) Retirement The option shall expire, unless exercised, thirty-six (36) months after the Participant's retirement from the Company or any Subsidiary. (ii) Disability The option shall expire, unless exercised, thirty-six (36) months after the Participant's Permanent Disability. (iii) Termination With Approval The option shall expire, unless exercised, thirty-six (36) months after a Participant resigns or is terminated as an employee of the Company or any Subsidiary, unless the Chief Executive Officer of the Company shall have determined in a specific case that the option should terminate when the Participant's employment status ceases; provided, however, that for officers and directors who are subject to Section 16 of the Exchange Act, such determination shall be made by the Plan Administrator. (iv) Termination Following a Change in Control The option shall expire, unless exercised, within thirty-six (36) months of a Participant's termination of employment (other than a termination by the Company for Cause or a voluntary termination by the Participant other than for Good Reason) following a Change in Control, provided that said termination of employment occurs within two (2) years following a Change in Control. (v) All Other Terminations Except as provided in subparagraphs (iii) and (iv) above, the option shall expire upon termination of employment. Leaves of absence for such period and purposes conforming to the personnel policy of the Company or of its Subsidiaries, as applicable, shall not be deemed terminations or interruptions of employment. (i) DEATH OF PARTICIPANT Upon the death of a Participant, whether during the Participant's period of employment or during the thirty-six (36) month period referred to in Section 6.4(h)(i), (ii) and (iii), the option shall expire, unless the term of the option expires sooner, twelve (12) months after the date of the Participant's death, unless the option is exercised within such twelve (12) month period by the Participant's Beneficiary, legal representatives, estate or the person or persons to whom the Participant's option rights shall have passed by will or the laws of descent and distribution; provided, however, that the Plan Administrator may determine in a particular case that specific limitations and restrictions under the Plan shall not apply. Notwithstanding other Plan provisions pertaining to the times at which options may be exercised, no option shall continue to be exercisable, pursuant to Section 6.4(h) or this Section 6.4(i), at a time that would violate the maximum duration of Section 6.4(b). (j) CHANGE IN CONTROL Notwithstanding other Plan provisions pertaining to the times at which options may be exercised, all outstanding options, to the extent not then currently exercisable, shall become exercisable in full upon the occurrence of a Change in Control; provided, that the Plan Administrator may determine that such acceleration will not occur if it would render unavailable "pooling of interest" accounting treatment for any reorganization, merger or consolidation of the Company. In no event, however, shall any intended Incentive A-9 10 Stock Option first become exercisable, pursuant to Section 6.4(c) or this Section 6.4(j), without the consent of the Participant, if the result would be to cause such option, when granted, not to be treated as an Incentive Stock Option (whether by reason of the possible future violation of the annual limitation of Section 6.3(b) or otherwise). (k) RIGHTS AS STOCKHOLDER A Participant shall have none of the rights of a stockholder until the shares of Common Stock are issued to the Participant. SECTION 7. STOCK APPRECIATION RIGHTS 7.1 The Plan Administrator may grant stock appreciation rights to eligible employees in connection with any option granted under the Plan, either at the time of the grant of such option or at any time thereafter during the term of the option. Such stock appreciation rights shall cover the same shares covered by the options (or such lesser number of shares of Common Stock as the Plan Administrator may determine) and shall, except as provided in Section 7.3, be subject to the same terms and conditions as the related options and such further terms and conditions not inconsistent with the Plan as shall from time to time be determined by the Plan Administrator. 7.2 Each stock appreciation right shall entitle the holder of the related option to surrender to the Company unexercised the related option, or any portion thereof, and to receive from the Company in exchange therefor an amount equal to the excess of the Fair Market Value of one (1) share of Common Stock on the date the right is exercised over the Option Price per share times the number of shares covered by the option, or portion thereof, which is surrendered. Payment shall be made in shares of Common Stock valued at Fair Market Value as of the date the right is exercised, or in cash, or partly in shares and partly in cash, at the discretion of the Plan Administrator; provided, however, that payment shall be made solely in cash with respect to a stock appreciation right which is exercised within seven (7) months following a Change in Control. Notwithstanding the foregoing and to the extent required for compliance with Rule 16b-3, a payment, in whole or in part, of cash upon exercise of a stock appreciation right held by an Insider Participant may be made only if the Plan Administrator approves such election to receive cash and the right is exercised (a) during the period beginning on the third business day following the date of release for publication of the quarterly or annual summary statements of sales and earnings of the Company and ending on the twelfth business day following such date or (b) otherwise in accordance with the provisions of Rule 16b-3 and interpretations thereunder. Stock appreciation rights may be exercised from time to time upon actual receipt by the Company of written notice stating the number of shares of Common Stock with respect to which the stock appreciation right is being exercised. The value of any fractional shares shall be paid in cash. 7.3 Stock appreciation rights are subject to the following restrictions: (a) Each stock appreciation right shall be exercisable at such time or times that the option to which it relates shall be exercisable or at such other times as the Plan Administrator may determine; provided, however, that stock appreciation rights granted to Insider Participants shall not be exercisable until the Participant shall have completed a six (6) month period of continuous employment with the Company or any Subsidiary immediately following the date on which the stock appreciation right is granted. In the event of death or Permanent Disability of a Participant during employment but before the Participant has completed such period of continuous employment, such stock appreciation right shall be exercisable only within the period specified in the related option. In the event of a Change in Control, the requirement that a Participant shall have completed a six (6) month period of continuous employment is waived with respect to a Participant who is employed by the Company at the time of the Change in Control but who, within the six (6) month period, voluntarily terminates employment for Good Reason or is terminated by the Company other than for Cause; provided, that the Plan Administrator may determine that such waiver will not occur if it would render unavailable "pooling of interest" accounting treatment for any reorganization, merger or consolidation of the Company. Notwithstanding the A-10 11 foregoing, a stock appreciation right may not be exercised for cash by an Insider Participant under any circumstances until the expiration of the six (6) month period following the date of grant. (b) Except in the event of a Change in Control, the Plan Administrator in its sole discretion may approve or deny in whole or in part a request to exercise a stock appreciation right. Denial or approval of such request shall not require a subsequent request to be similarly treated by the Plan Administrator. (c) The right of a Participant to exercise a stock appreciation right shall be canceled if and to the extent the related option is exercised. To the extent that a stock appreciation right is exercised, the related option shall be deemed to have been surrendered, unexercised and canceled. (d) A holder of stock appreciation rights shall have none of the rights of a stockholder until shares of Common Stock, if any, are issued to such holder pursuant to such holder's exercise of such rights. (e) The acquisition of Common Stock pursuant to the exercise of a stock appreciation right shall be subject to the same terms and conditions as would apply to the acquisition of Common Stock acquired upon acquisition of the related option, as set forth in Section 6.4. SECTION 8. LIMITED STOCK APPRECIATION RIGHTS 8.1 The Plan Administrator may grant limited stock appreciation rights to eligible employees in connection with any options granted under the Plan, either at the time of the grant of such option or at any time thereafter during the term of the option. Such limited stock appreciation rights shall cover the same shares covered by the options (or such lesser number of shares of Common Stock as the Plan Administrator may determine) and shall, except as provided in Section 8.3, be subject to the same terms and conditions as the related options and such further terms and conditions not inconsistent with the Plan as shall from time to time be determined by the Plan Administrator. 8.2 Each limited stock appreciation right shall entitle the holder of the related option to surrender to the Company the unexercised portion of the related option and to receive from the Company in exchange therefor an amount in cash equal to the excess of the Fair Market Value of one (1) share of Common Stock on the date the right is exercised over the Option Price per share times the number of shares covered by the option, or portion thereof, which is surrendered. 8.3 Limited stock appreciation rights are subject to the following restrictions: (a) Each limited stock appreciation right shall be exercisable in full for a period of seven (7) months following the date of a Change in Control regardless of whether the holder is employed by the Company or any of its Subsidiaries on the date the right is exercised; provided, however, that limited stock appreciation rights may not be exercised under any circumstances by Insider Participants until the expiration of the six (6) month period following the date of grant. Limited stock appreciation rights shall be exercisable only to the same extent and subject to the same conditions as the options related thereto are exercisable, as provided in Section 6.4(j). (b) The right of a Participant to exercise a limited stock appreciation right shall be canceled if and to the extent the related option is exercised. To the extent that a limited stock appreciation right is exercised, the related option shall be deemed to have been surrendered, unexercised and canceled. (c) Limited stock appreciation rights shall not be exercisable if the event constituting the Change in Control is an event in which the consideration to be paid to the Company's stockholders consists solely of equity securities registered under Section 12 of the Exchange Act. SECTION 9. RESTRICTED STOCK 9.1 Restricted Stock may be granted to eligible employees in such number and at such times during the term of the Plan as the Plan Administrator shall determine, the Plan Administrator taking into account the duties of the respective Participants, their present and potential contributions to the success of the Company, A-11 12 and such other factors as the Plan Administrator shall deem relevant in accomplishing the purposes of the Plan. The granting of Restricted Stock shall take place when the Plan Administrator by resolution, written consent or other appropriate action determines to grant such Restricted Stock to a particular Participant. Each grant shall be evidenced by a written instrument delivered by or on behalf of the Company containing provisions not inconsistent with the Plan. The Participant receiving a grant of Restricted Stock shall be recorded as a stockholder of the Company and, subject to the provisions hereof, shall have all the rights of a stockholder with respect to such shares, including the right to vote the shares and receive all dividends or other distributions made or paid with respect to such shares; provided, however, that the shares themselves, and any new, additional or different shares or securities which the Participant may be entitled to receive with respect to such shares by virtue of a stock split or stock dividend or any other change in the corporate or capital structure of the Company, shall be subject to the restrictions hereinafter described. 9.2 A grant of Restricted Stock shall entitle a Participant to receive, on the date or dates designated by the Plan Administrator, upon payment to the Company of consideration determined by the Plan Administrator, which consideration shall be at least equal to the par value of the Common Stock, in a manner determined by the Plan Administrator, the number of shares of Common Stock selected by the Plan Administrator. The Plan Administrator may require, under such terms and conditions as it deems appropriate or desirable, that the certificates for Restricted Stock delivered under the Plan may be held in custody by a bank or other institution, or that the Company may itself hold such shares in custody until the Restriction Period (as defined in Section 9.3) expires or until restrictions thereon otherwise lapse, and may require, as a condition of any receipt of Restricted Stock, that the Participant shall have delivered a stock power endorsed in blank relating to the shares of Restricted Stock. 9.3 During a period of years following the date of grant, as determined by the Plan Administrator, which shall in no event be less than one (1) year (the "Restriction Period"), the Restricted Stock may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed of by the recipient, except in the event of death or Permanent Disability, the Plan Administrator's waiver or modification of such restrictions in the agreement evidencing the grant of Restricted Stock or by resolution of the Plan Administrator adopted at any time. 9.4 Except as provided in Section 9.5 or 9.6, if a Participant terminates employment with the Company for any reason before the expiration of the Restriction Period, all shares of Restricted Stock still subject to restriction shall be forfeited by the Participant to the Company. In addition, in the event of any attempt by the Participant to sell, exchange, transfer, pledge or otherwise dispose of shares of Restricted Stock in violation of the terms of the Plan, such shares shall be forfeited to the Company. 9.5 The Restriction Period for any Participant shall be deemed to end and all restrictions on shares of Restricted Stock shall lapse upon the Participant's death or Permanent Disability or any termination of employment determined by the Plan Administrator to end the Restriction Period. 9.6 The Restriction Period for any Participant shall be deemed to end and all restrictions on shares of Restricted Stock shall terminate immediately upon a Change in Control. 9.7 When the restrictions imposed by Section 9.3 expire or otherwise lapse with respect to one (1) or more shares of Restricted Stock, the Company shall deliver to the Participant (or the Participant's legal representative, Beneficiary or heir) one (1) share of Common Stock for each share of Restricted Stock. At that time, the written instrument referred to in Section 9.1, as it relates to such shares, shall be terminated. 9.8 Subject to Section 9.2, each Participant entitled to receive Restricted Stock under the Plan shall be issued a certificate for such shares. Such certificate shall be registered in the name of the Participant. SECTION 10. STOCK PURCHASE RIGHTS 10.1 The Plan Administrator may grant to any Participant Stock Purchase Rights that entitle a Participant to purchase, on the Purchase Date, up to the maximum number of shares of Common Stock authorized by Section 10.2 at the Stock Purchase Price; provided, however, that the Plan Administrator may A-12 13 provide that a Participant automatically and without any act on the Participant's part will be deemed to have exercised the Participant's Stock Purchase Right on the Purchase Date. 10.2 The maximum number of shares of Common Stock subject to a Stock Purchase Right granted to any Participant in any Plan Year shall equal the number of shares that can be purchased on the Purchase Date at the Stock Purchase Price with the Participant's Bonus and/or the amount payable in respect of the Participant's Performance Share Units. A Stock Purchase Right granted to any Participant may cover a number of shares that is less than the maximum number permitted by this Section 10.2. 10.3 All Stock Purchase Rights shall be granted in writing and shall express an offer by the Company to sell a number of shares of Common Stock, not to exceed the maximum number provided in Section 10.2, on the Purchase Date at the Stock Purchase Price. 10.4 With respect to each Stock Purchase Right, the Plan Administrator shall determine and reflect in the grant of the Stock Purchase Right the nature and extent of the restrictions, if any, to be imposed in connection with the purchase of shares of Common Stock thereunder, including but not limited to, restrictions on the transferability of shares acquired through the exercise of such Stock Purchase Rights. Unless the written grant of a Stock Purchase Right provides otherwise, shares acquired upon exercise of a Stock Purchase Right for a Stock Purchase Price of less than one hundred percent (100%) of the Fair Market Value of Common Stock on the Purchase Date shall be issued as "SPR Restricted Stock" that shall be subject to a minimum Restriction Period of three years and such other conditions as the Plan Administrator may provide in the grant of such Stock Purchase Rights and shall otherwise be subject to the terms and conditions of Section 9. Notwithstanding the foregoing, the Restriction Period for any Participant shall be deemed to end and all restrictions on shares of SPR Restricted Stock shall lapse upon (i) a Participant's retirement, (ii) a determination by the Plan Administrator that the Participant has incurred a severe and unexpected financial hardship, (iii) a Change of Control or (iv) a Participant's termination of employment with the Company or a subsidiary. 10.5 Common Stock shall be purchased by the exercise of Stock Purchase Rights granted hereunder. Stock Purchase Rights granted to any Participant shall be exercisable only on the Purchase Date for such Stock Purchase Right. 10.6 A Stock Purchase Right may be exercised in whole or in part. To the extent a Participant does not purchase the maximum number of shares covered by a Stock Purchase Right on the Purchase Date, the Stock Purchase Right shall terminate. 10.7 A Participant shall exercise a Stock Purchase Right by providing written notice to the Company on or before the Purchase Date on a form provided by the Company for such purpose. Notice to the Company of the exercise of a Stock Purchase Right shall be irrevocable and shall specify the number of shares, subject to the maximum specified in the grant of the Stock Purchase Right, to be purchased by the Participant on the Purchase Date. The Company shall treat such notice by a Participant as a binding commitment to deliver to the Company as soon as practicable following the Purchase Date the Stock Purchase Price for the number of shares specified in the notice. The Stock Purchase Price shall be paid in full to the Company solely in cash. 10.8 Except as provided in this Section 10.8, as soon as administratively feasible after the Purchase Date, certificates representing the shares of Common Stock purchased by the Participant shall be issued in the Participant's name and sent to the Participant unless such shares are issued as SPR Restricted Stock. 10.9 Except as provided in Section 10.10, a Participant shall be ineligible to exercise a Stock Purchase Right unless the Participant is an employee of the Company or a Subsidiary on the Purchase Date for such Stock Purchase Right. 10.10 A Participant (or the Participant's legal representative in the case of his or her death) who has received a Bonus or who holds a Performance Share Unit but who retires, dies, or suffers a Permanent Disability after December 31st of the year for which the Bonus was granted or after the Performance Share Unit became payable but before the Purchase Date, shall be entitled to exercise his or her Stock Purchase Rights in respect of such Bonus or Performance Share Unit on the Purchase Date. A-13 14 SECTION 11. REGULATORY APPROVALS AND LISTING 11.1 The Company shall not be required to issue any certificate for shares of Common Stock upon the exercise of an option, stock appreciation right or Stock Purchase Right granted under the Plan prior to: (a) the obtaining of any approval or ruling from the Securities and Exchange Commission, the Internal Revenue Service or any other governmental agency which the Company, in its sole discretion, shall determine to be necessary or advisable; (b) the listing of such shares on any stock exchange on which the Common Stock may then be listed; or (c) the completion of any registration or other qualification of such shares under any federal or state laws, rulings or regulations of any governmental body which the Company, in its sole discretion, shall determine to be necessary or advisable. 11.2 All certificates for shares delivered pursuant to Section 9.8 in respect of Restricted Stock awards or pursuant to Section 10.8 in respect of the exercise of Stock Purchase Rights shall be subject to such stop-transfer orders and other restrictions as the Plan Administrator may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which Common Stock is then listed and any applicable federal or state securities laws, and the Plan Administrator may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions. The foregoing provisions of this Section 11.2 shall not be effective if and to the extent that the shares of Common Stock delivered under the Plan are covered by an effective and current registration statement under the Securities Act of 1933, as amended, or if and so long as the Plan Administrator determines that application of such provisions is no longer required or desirable. In making such determination, the Plan Administrator may rely upon an opinion of counsel for the Company. SECTION 12. EFFECTIVE DATE AND TERM OF THE PLAN The Plan shall be dated as of December 8, 1993 and shall be effective upon adoption by the Board of Directors, but the Plan shall be void unless it is approved by the Company's stockholders within the earlier of the date of the Company's next annual meeting of stockholders and twelve (12) months after the date the Plan is adopted by the Board of Directors. Subject to the foregoing condition, options, stock appreciation rights, limited stock appreciation rights, Restricted Stock and Stock Purchase Rights may be granted pursuant to the Plan from time to time within the period commencing upon adoption of the Plan by the Board of Directors and ending ten (10) years after the earlier of such adoption and the approval of the Plan by the stockholders. Options, stock appreciation rights, limited stock appreciation rights, Restricted Stock and Stock Purchase Rights theretofore granted may extend beyond that date, and the terms and conditions of the Plan shall continue to apply thereto and to shares of Common Stock acquired thereunder. To the extent required for compliance with Rule 16b-3, shares of Common Stock underlying options, stock appreciation rights or Stock Purchase Rights and shares of Restricted Stock granted subject to subsequent stockholder approval of the Plan to Insider Participants may not be sold until a date at least six (6) months after the date such stockholder approval is obtained, and stock appreciation rights that are granted subject to stockholder approval of the Plan to Insider Participants may not be exercised for cash until a date at least six (6) months after the date such stockholder approval is obtained. SECTION 13. GENERAL PROVISIONS 13.1 Nothing contained in the Plan, or in any option, stock appreciation right, limited stock appreciation right, Restricted Stock or Stock Purchase Right granted pursuant to the Plan, shall confer upon any employee any right with respect to continuance of employment by the Company or a Subsidiary, or interfere in any way with the right of the Company or a Subsidiary to terminate the employment of such employee at any time with or without assigning any reason therefor. A-14 15 13.2 Grants, vesting or payment of options, stock appreciation rights, limited stock appreciation rights, Restricted Stock or Stock Purchase Rights shall not be considered as part of a Participant's salary or used for the calculation of any other pay, allowance, pension or other benefit unless otherwise permitted by other benefit plans provided by the Company or a Subsidiary, or required by law or by contractual obligations of the Company or a Subsidiary. 13.3 The right of a Participant or Beneficiary to the payment of any compensation under the Plan may not be assigned, transferred, pledged or encumbered, nor shall such right or other interests be subject to attachment, garnishment, execution or other legal process. 13.4 Leaves of absence for such periods and purposes conforming to the personnel policy of the Company or a Subsidiary, as applicable, shall not be deemed terminations or interruptions of employment. The foregoing notwithstanding, with respect to Incentive Stock Options, employment shall not be deemed to continue beyond the first ninety (90) days of such leave unless the Participant's reemployment rights are guaranteed by statute or contract. 13.5 Subject to Section 6.4(h) in the event a Participant is transferred from the Company to a Subsidiary, or vice versa, or is promoted or given different responsibilities, the options, stock appreciation rights, limited stock appreciation rights, Restricted Stock and/or Stock Purchase Rights granted to the Participant prior to such date shall not be affected. 13.6 The Plan shall be construed and governed in accordance with the laws of the State of Washington, except that it shall be construed and governed in accordance with applicable federal law in the event that such federal law preempts state law. 13.7 Appropriate provision shall be made for all taxes required to be withheld in connection with the exercise, grant or other taxable event with respect to options, stock appreciation rights, limited stock appreciation rights, Restricted Stock and Stock Purchase Rights under the applicable laws or regulations of any governmental authority, whether federal, state or local and whether domestic or foreign. Unless otherwise provided in the option grant, a Participant is permitted to deliver shares of Common Stock (including shares acquired pursuant to the exercise of an option or Stock Purchase Right other than the option or Stock Purchase Right currently being exercised, to the extent permitted by applicable regulations) for payment of withholding taxes on the exercise of an option, stock appreciation right or Stock Purchase Right or upon the vesting of the Restricted Stock. The Fair Market Value of such Common Stock as delivered shall be valued as of the day prior to delivery. At the election of the Plan Administrator or, subject to approval of the Plan Administrator at its sole discretion, at the election of a Participant, shares of Common Stock may be withheld from the shares issuable to the optionee upon exercise of an option, stock appreciation right or Stock Purchase Right or upon the vesting of the Restricted Stock to satisfy tax withholding obligations. The Fair Market Value of such Common Stock as is withheld shall be valued as of the day prior to exercise of the option, stock appreciation right or Stock Purchase Right or the vesting of the Restricted Stock. The withholding of shares to pay tax obligations in connection with the exercise of an option, stock appreciation right or Stock Purchase Right or the vesting of the Restricted Stock by an Insider Participant must be approved by the Plan Administrator and must occur (i) pursuant to an irrevocable election made six (6) months in advance of the transaction, (ii) during the period beginning on the third business day following the date of release for publication of the quarterly or annual summary statements of sales and earnings of the Company and ending on the twelfth business day following such date, or (iii) otherwise in accordance with the provisions of Rule 16b-3 and interpretations thereunder. In the event Rule 16b-3 is amended or interpreted to permit shares to be withheld to pay tax withholding obligations outside of the periods described in clause (i) or (ii) of the preceding sentence, or without Plan Administrator approval, the Plan Administrator may determine that such provisions shall no longer apply to Insider Participants. Tax advice should be obtained by the Participant prior to the Participant's (a) entering into any transaction under or with respect to the Plan, (b) designating or choosing the time of distributions under the Plan, or (c) disposing of any shares of Common Stock issued under the Plan. A-15 16 SECTION 14. AMENDMENT, TERMINATION OR DISCONTINUANCE OF THE PLAN 14.1 Subject to the Board of Directors and Section 14.2, the Plan Administrator may from time to time make such amendments to the Plan as it may deem proper and in the best interest of the Company without further approval of the stockholders of the Company, including, but not limited to, any amendment necessary to ensure that the Company may obtain any regulatory approval referred to in Section 11; provided, however, that no change in any option, stock appreciation right, limited stock appreciation right, Restricted Stock or Stock Purchase Right therefore granted may be made without the consent of the Participant which would impair the right of the Participant to acquire or retain Common Stock or cash that the Participant may have acquired as a result of the Plan. 14.2 To the extent required for compliance with applicable law or regulation, including Rule 16b-3, the Plan Administrator and the Board of Directors may not amend the Plan without the approval of the stockholders of the Company, including any amendment which would (a) materially increase the number of securities that may be issued under the Plan to Insider Participants; (b) materially modify the requirements as to eligibility for participation in the Plan to add a class of Insider Participants; or (c) otherwise materially increase the benefits accruing under the Plan to Insider Participants; provided, however, that any increase in the number of shares available under the Plan for grant as Incentive Stock Options and any change in the designation of the group of employees eligible to receive Incentive Stock Options under the Plan shall be subject to stockholder approval in accordance with Section 422 of the Code. 14.3 The Board of Directors may at any time suspend the operation of or terminate the Plan with respect to any shares of Common Stock or rights not at the time subject to any option, stock appreciation right, limited stock appreciation right, Stock Purchase Right or grant of Restricted Stock. SECTION 15. SALES BY INSIDER PARTICIPANTS Except in the case of sales by an executor or administrator of the estate of a deceased Participant, if an Insider Participant disposes of shares of Common Stock acquired by such Participant upon exercise of an option, stock appreciation right, Stock Purchase Right or the grant of Restricted Stock within six (6) months after the date the option, stock appreciation right, Restricted Stock or Stock Purchase Right was granted, the grant of such option, stock appreciation right, Restricted Stock or Stock Purchase Right will be deemed a nonexempt matchable purchase for purposes of Section 16(b) as of the date of grant. SECTION 16. COMPLIANCE WITH RULE 16B-3 It is the intention of the Company that, so long as any of the Company's equity securities are registered pursuant to Section 12(b) or 12(g) of the Exchange Act, the Plan shall comply in all respects with Rule 16b-3 and, if any Plan provision is later found not to be in compliance with such Section, that provision shall be deemed null and void, and in all events the Plan shall be construed in favor of its meeting the requirements of Rule 16b-3. Notwithstanding anything in the Plan to the contrary, the Board of Directors, in its absolute discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any provision of the Plan to Insider Participants without so restricting, limiting or conditioning the Plan with respect to other Participants. A-16 EX-11.1 6 BURLINGTON RESOURCES INC. EXHIBIT 11.1 1 EXHIBIT 11.1 BURLINGTON RESOURCES INC. EARNINGS PER SHARE COMPUTATION
YEAR ENDED DECEMBER 31, ------------------------------------------------------------ 1993 1992 1991 ------------------ ------------------ ------------------ EARNINGS SHARES EARNINGS SHARES EARNINGS SHARES -------- ------- -------- ------- -------- ------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Primary earnings per common share: Net earnings available for common stock and weighted average common shares outstanding.................. $256,312 129,746 $257,828 130,757 $205,381 133,050 Stock options assumed exercised- net.......................... -- 1,036 -- 1,126 -- 683 -------- ------- -------- ------- -------- ------- Total net earnings and primary common shares................ $256,312 130,782 $257,828 131,883 $205,381 133,733 -------- ------- -------- ------- -------- ------- -------- ------- -------- ------- -------- ------- Primary earnings per common share........................ $ 1.96 $ 1.95 $ 1.54 -------- -------- -------- -------- -------- -------- Fully diluted earnings per common share: Net earnings available for common stock and weighted average common shares outstanding.................. $256,312 129,746 $257,828 130,757 $205,381 133,050 Stock options assumed exercised- net.......................... -- 1,036 -- 1,126 -- 683 -------- ------- -------- ------- -------- ------- Total net earnings and fully diluted common shares........ $256,312 130,782 $257,828 131,883 $205,381 133,733 -------- ------- -------- ------- -------- ------- -------- ------- -------- ------- -------- ------- Fully diluted earnings per common share................. $ 1.96 $ 1.95 $ 1.54 -------- -------- -------- -------- -------- --------
EX-12.1 7 BURLINGTON RESOURCES INC. EXHIBIT 12.1 1 EXHIBIT 12.1 BURLINGTON RESOURCES INC. RATIO OF EARNINGS TO FIXED CHARGES
YEAR ENDED DECEMBER 31, ---------------------------------------------------- 1993 1992 1991 1990 1989 -------- -------- -------- -------- -------- (IN THOUSANDS, EXCEPT RATIO AMOUNTS) Earnings: Income from Continuing Operations Before Income Taxes.................... $307,438 $218,039 $103,118 $149,992 $ 86,144 Add: Interest and fixed charges............. 72,799 79,196 90,344 60,390 24,917 Portion of rent under long-term operating leases representative of an interest factor...................... 4,688 4,205 5,903 5,873 6,506 -------- -------- -------- -------- -------- Total Earnings Available for Fixed Charges................................ $384,925 $301,440 $199,365 $216,255 $117,567 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Fixed Charges: Interest and fixed charges................ $ 72,799 $ 79,196 $ 90,344 $ 60,390 $ 24,917 Portion of rent under long-term operating leases representative of an interest factor................................. 4,688 4,205 5,903 5,873 6,506 Capitalized interest...................... 2,829 3,094 6,137 6,600 4,559 -------- -------- -------- -------- -------- Total Fixed Charges....................... $ 80,316 $ 86,495 $102,384 $ 72,863 $ 35,982 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Ratio of Earnings to Fixed Charges.......... 4.79x 3.49x 1.95x 2.97x 3.27x
EX-21.1 8 BURLINGTON RESOURCES INC. EXHIBIT 21.1 1 EXHIBIT 21.1 BURLINGTON RESOURCES INC. SUBSIDIARIES OF THE REGISTRANT The following is a list of the significant subsidiaries of Burlington Resources Inc. showing the place of incorporation and the percentage of voting securities owned.
PERCENTAGE OF VOTING SECURITIES OWNED JURISDICTION DIRECTLY OR OF INDIRECTLY BY NAME OF COMPANY INCORPORATION IMMEDIATE PARENT - ------------------------------------------------------------ -------------- ---------------- El Paso Production Company.................................. Delaware 100% Glacier Park Company........................................ Delaware 100% Meridian Minerals Company................................... Montana 100% Meridian Oil Holding Inc.................................... Delaware 100% Meridian Oil Hydrocarbons Inc............................... Delaware 100% Meridian Oil Inc............................................ Delaware 100% Meridian Oil Production Inc................................. Delaware 100% Meridian Oil Trading Inc.................................... Delaware 100% PCTC, Inc................................................... Delaware 100% Southland Royalty Company................................... Delaware 100%
The names of certain subsidiaries are omitted as such subsidiaries, considered as a single subsidiary, would not constitute a significant subsidiary. EX-23.1 9 BURLINGTON RESOURCES INC. EXHIBIT 23.1 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of Burlington Resources Inc. on Form S-8 (Registration Nos. 33-22493, 33-25807, 33-26024 (as amended in Registration No. 2-97533), 33-33626 and 33-46518) and on Form S-3 (Registration Nos. 33-47154 and 33-50077) of our reports dated January 12, 1994, on our audits of the consolidated financial statements and financial statement schedules of Burlington Resources Inc. as of December 31, 1993 and 1992, and for each of the three years in the period ended December 31, 1993, which reports are included in this 1993 Annual Report on Form 10-K. COOPERS & LYBRAND Houston, Texas February 10, 1994 -----END PRIVACY-ENHANCED MESSAGE-----