<PAGE>   1
 
================================================================================
 
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                                   FORM 10-K
                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
 
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
 
                       COMMISSION FILE NUMBER: 000-20849
 
                        RUTHERFORD-MORAN OIL CORPORATION
             (Exact name of registrant as specified in its charter)
 
<TABLE>
<S>                                            <C>
                   DELAWARE                                      76-0499690
       (State or other jurisdiction of              (I.R.S. Employer Identification No.)
        incorporation or organization)

               5 GREENWAY PLAZA
                  SUITE 220
                HOUSTON, TEXAS                                     77046
   (Address of principal executive offices)                      (Zip Code)
</TABLE>
 
       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 622-5555
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
 
                                      None
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
 
<TABLE>
<CAPTION>
                                                           NAME OF EACH EXCHANGE
             TITLE OF EACH CLASS                            ON WHICH REGISTERED
             -------------------                           ---------------------
<S>                                            <C>
        Common Stock, $0.01 par value                  NASDAQ National Market System
</TABLE>
 
     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.  ___
 
     The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 24, 1997 was $84,964,928 based upon the average bid
and asked price on such date of $20 3/16 per share.
 
     Indicate the number of shares outstanding of each of the registrant's
classes of Common Stock, as of the latest practicable date.
 
<TABLE>
<CAPTION>
                                                        NUMBER OF SHARES OUTSTANDING
             TITLE OF EACH CLASS                             AT MARCH 10, 1997
             -------------------                        ----------------------------
<S>                                            <C>
        Common Stock, $0.01 par value                            25,651,338
</TABLE>
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
Portions of the Registrant's Proxy Statement pertaining to the Registrant's 
1997 Annual Meeting of Stockholders are incorporated by reference into 
Part III hereof.
 
================================================================================
<PAGE>   2
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                                   PAGE
                                                                                   ----
<S>        <C>       <C>                                                           <C>
Part I.    Items 1. and 2.  Business and Properties..............................    1
                     General.....................................................    1
                       History of Block B8/32....................................    2
                       Regional Geology..........................................    2
                       Current Fields and Prospects..............................    3
                       Production Facilities.....................................    3
                       Marketing and Contracts...................................    4
                       Thai Concession Terms.....................................    5
                       Joint Operating Agreement.................................    6
                       Single Customer...........................................    6
                       Oil and Gas Properties....................................    7
                       Reserves..................................................    7
                       Acreage and Productive Wells..............................    8
                       Drilling Activity.........................................    8
                       Thailand Taxes............................................    9
                       Employees.................................................   10
                     Offices.....................................................   10
           Item 3.   Legal Proceedings...........................................   10
           Item 4.   Submission of Matters to a Vote of Security Holders.........   10
Part II.   Item 5.   Market for Registrant's Common Equity and Related
                     Stockholder Matters.........................................   11
           Item 6.   Selected Financial Data.....................................   11
           Item 7.   Management's Discussion and Analysis of Financial Condition
                     and Results of Operations
                     Introduction................................................   12
                       Overview..................................................   12
                       Results of Operations.....................................   13
                       Liquidity and Capital Resources...........................   14
                       Foreign Currency Fluctuations.............................   15
                       Effects of Inflation......................................   15
                       Changing Oil Prices.......................................   15
           Item 8.   Index to Financial Statements...............................   16
           Item 9.   Changes in and Disagreements with Accountants on Accounting
                     and Financial Disclosure....................................   33
Part III.  Item 10.  Directors and Executive Officers of the Registrant..........   33
           Item 11.  Executive Compensation......................................   33
           Item 12.  Security Ownership of Certain Beneficial Owners and
                     Management..................................................   33
           Item 13.  Certain Relationships and Related Transactions..............   33
Part IV.   Item 14.  Exhibits, Financial Statements and Reports on Form 8-K......   34
</TABLE>
<PAGE>   3
 
                                     PART I
 
ITEMS 1. AND 2. BUSINESS AND PROPERTIES
 
GENERAL
 
     Rutherford-Moran Oil Corporation, a Delaware corporation ("RMOC" or the
"Company"), is an independent energy company engaged in the acquisition,
exploration, development and production of oil and gas properties in Southeast
Asia. Currently, the Company's exploration and development activities are
entirely in the Gulf of Thailand and are conducted through its subsidiary, Thai
Romo Limited ("Thai Romo") and its affiliate B8/32 Partners, Ltd. ("B8/32
Partners"), each a company existing under the laws of Thailand.
 
     The Company was a private concern until June 1996 when it completed an
initial public offering (the "Offering"). In April 1996, Rutherford/Moran Oil
Corporation changed its name to Rutherford-Moran Exploration Company ("RMEC").
Effective June 17, 1996, the stockholders of RMEC and the partners of Thai Romo
exchanged their interests for shares of common stock in the Company, which
became the parent company of RMEC and Thai Romo Holdings, Inc. (TRH). RMEC and
TRH collectively own the outstanding shares of Thai Romo except for certain
nominal interests. During June 1996, RMOC sold 16% of its common stock in the
Offering, in conjunction with the consummation of the exchange of RMEC common
stock and Thai Romo interests for common stock of RMOC.
 
     Thai Romo is one of four concessionaires in Block B8/32 (sometimes referred
to as the "Block" or the "Concession"), currently covering approximately 1.3
million acres in the central portion of the Gulf of Thailand. Subsidiaries or
affiliates of Pogo Producing Company ("Pogo") and The Sophonpanich Co. Limited
("Sophonpanich") and B8/32 Partners are currently the other concessionaires
(together with the Company, the "Concessionaires") in the Block.
 
     The Company originally owned a 31.67% interest in the Block. On December
19, 1996, RMOC, through its subsidiary, Thai Romo, exercised its preferential
right to purchase 46.34% of the outstanding shares of Maersk Oil (Thailand),
Limited ("MOTL"), a wholly owned subsidiary of Maersk Olie og Gas As of
Copenhagen, Denmark ("Maersk"), and a co-concessionnaire in the Block owning
31.67% interest in the Block outside of the Tantawan Field (Thai Romo had
previously increased its interest in the Tantawan Field from 31.67% to 46.34% in
1995 through a purchase of MOTL's interest in that Field). On March 3, 1997,
TRH, as Thai Romo's nominee under the Share Sales Agreement with Maersk,
purchased its proportionate share of the outstanding shares of MOTL for
approximately $28.6 million, which included approximately $1.6 million in
satisfaction of outstanding debt. Following the purchase, MOTL is in the process
of changing its name to B8/32 Partners, Ltd. The remaining 53.7% of MOTL stock
was purchased by Pogo Producing Company and Palang Sophon Limited ("Palang") of
Bangkok, Thailand, as successor to Sophonpanich Co. Limited. This acquisition
increased RMOC's interest in the Concession outside of the Tantawan Field from
the original 31.67% to 46.34%.
 
     As of December 31, 1996, the Company had net proved reserves of 273.0 Bcfe,
60.4% of which were in the Tantawan Field. Appraisal wells drilled by the
Concessionaires in the three established areas within the Block (Tantawan,
Benchamas and Pakakrong) have tested at commercial flow rates of hydrocarbons
and established the potential for significant additional reserves in those
areas. The Concessionaires have entered into a 30-year Gas Sales Agreement (the
"GSA") with the Petroleum Authority of Thailand ("PTT") to sell natural gas from
the Tantawan Field and production commenced in February 1997. On November 14,
1996, the Concessionaires signed a Memorandum of Understanding ("MOU") with PTT
to sell crude oil production from the Tantawan Field. Crude oil production also
commenced in February 1997.
 
     The Company's principal executive offices are located at 5 Greenway Plaza,
Suite 220, Houston, Texas 77046 and the Company's telephone number is (713)
622-5555. Unless the context otherwise requires, reference to the business
conducted by the Company or RMOC shall mean the business conducted by the
Company or RMOC through its subsidiaries.
<PAGE>   4
 
HISTORY OF BLOCK B8/32
 
     In August 1991, Thai Romo, Thaipo and MOTL were awarded Petroleum
Concession No. 1/2534/36 for Block B8/32 in the central portion of the Gulf of
Thailand. Subsequent to the award, Sophonpanich became one of the
Concessionaires by acquiring an interest in the Concession as a co-venturer.
MOTL was designated as Operator of the Block pursuant to a Joint Operating
Agreement among the Concessionaires.
 
     In March 1995, Thai Romo, Thaipo and Sophonpanich acquired MOTL's interest
in the Tantawan Field of Block B8/32. Thaipo was designated as operator of the
Tantawan Field. The Ministry of Industry approved the transfer of the interest
and the designation of a separate operator for the Tantawan Field effective
March 1995. Thaipo, Thai Romo and Sophonpanich agreed that the Tantawan Field
would be operated pursuant to the terms of a separate Joint Operating Agreement
with provisions substantially similar to those of the original Joint Operating
Agreement. On March 3, 1997, Pogo, Palang and TRH, as Thai Romo's nominee,
purchased all of the outstanding shares of MOTL, at which time MOTL changed its
name to B8/32 Partners. At the same time, Thaipo Limited was designated as
operator for the remainder of the Block. Current interests in the Tantawan Field
and the remainder of Block B8/32 are as follows:
 
<TABLE>
<CAPTION>
                                                              TANTAWAN FIELD
                                                        ---------------------------
<S>                                                     <C>
Thaipo Limited........................................            46.34%
Thai Romo Limited ....................................            46.34%
Palang Sophon, Limited................................             7.32%
</TABLE>
 
<TABLE>
<CAPTION>
                                                        REMAINDER OF BLOCK B8/32(1)
                                                        ---------------------------
<S>                                                     <C>
Thaipo Limited........................................            46.34%
Thai Romo Limited/Thai Romo Holdings, Inc.............            46.34%
Palang Sophon, Limited................................             7.32%
</TABLE>
 
---------------
 
(1) Ownership interests include ownership of such areas through each entities'
    proportionate ownership in B8/32 Partners.
 
     The designation of the area allowed for production in the Tantawan Field,
covering approximately 68,000 acres, was granted to Thaipo, as operator on
behalf of the Tantawan Concessionaires, by the Thai Petroleum Committee and the
Ministry of Industry on August 23, 1995. The Concessionaries have made formal
application for a production license which includes Benchamas and a portion of
the Pakakrong area.
 
     In accordance with the Thai Petroleum Act, the Concessionaires relinquished
50% of the exploration acreage of the Block on August 1, 1995. Unless the
exploration period under the Concession is extended, the Concessionaires will be
required to relinquish 50% of the remaining exploration acreage on August 1,
1997. Relinquishment will exclude areas for which production approvals have been
applied for or granted. In January 1997, Thai Romo and its partners applied to
the Department of Mineral Resources for an extension of the exploration period.
The Company believes that the Concessionaires will not lose any attractive
exploration acreage as a result of the required relinquishment. There can be no
assurance that such extensions or licenses will be granted.
 
REGIONAL GEOLOGY
 
     Block B8/32 is located on the western side of the Pattani Basin, which is
believed to have developed as a result of the Permo-Triassic collision of the
continents of India and Asia. The collision developed a tectonic regime in
Thailand which formed a conjugate set of major strike-slip faults trending
northwest to southeast and northeast to southwest together with a set of north
to south trending normal faults. The regional strain field accompanying the
shearing had a major component of east-west extension which created the Pattani
Basin and its gas rich structures to the south (e.g., Erawan, Pailin and Satun).
Management believes the Tantawan and Benchamas fields are a northern
continuation of the same trend. The eastern boundary of Block B8/32 is located
near the axis of the Pattani Basin. The Basin extends north-northeast through
the
 
                                        2
<PAGE>   5
 
eastern one-third of Block B8/32 and extends southward through Unocal's
extensive holdings. The basin is bounded to the west by the Ko Kra Ridge, a
dominant paleo high.
 
     Regional structural dip towards the Pattani Basin center is interrupted by
north-south trending normal faults. These fault zones are related to basement
relief features. Oil and natural gas traps in Block B8/32 are typically related
to highly faulted graben systems, structural closure on tilted fault blocks and
anticlinal structures between east-west dipping faults and stratigraphic traps.
The main reservoir sands in Block B8/32 are fluvial channel sands, point bar
sands, alluvial fans and deltas associated with lacustrine depositional
environments.
 
CURRENT FIELDS AND PROSPECTS
 
     From 1992 until December 31, 1996, the Company along with its
co-concessionaires, have drilled 18 development wells and 27 exploratory wells
in Block B8/32. 16 of the development wells and 23 exploratory wells have been
successful and capable of producing oil and gas in commercial quantities.
 
     The Company estimates it will invest during 1997 a total of approximately
$108 million in connection with its capital expenditure programs, of which
approximately $34 million is budgeted for the development of the Tantawan Field,
$36 million is designated for Benchamas and $28 million that was utilized to
purchase its proportionate share of the voting stock of MOTL. The actual
expenditures on each project in the drilling and development program may vary
materially from the Company's estimates as a result of the actual costs incurred
and changes in the drilling and development program, including the acceleration
of the development of certain projects and prospects based on actual drilling
results.
 
PRODUCTION FACILITIES
 
     Under the development plan for the Tantawan Field, two platforms and
production facilities were installed prior to first production, with
installation of additional platforms planned during 1997. The oil and natural
gas will be separated on each platform and processed on a Floating Production,
Storage and Offloading vessel ("FPSO") which was delivered in December 1996. Oil
will be exported via tankers, and gas will be discharged into a 33-mile spur
pipeline owned by PTT. Production of oil and gas commenced in February 1997.
 
     Platforms. The first two production platforms are four-pile, twelve slot
units designed for drilling with either a jack-up or tender assisted rig.
Wellhead fluids will be separated at each production platform into three
streams: high pressure gas, intermediate pressure gas and low pressure oil and
water. As required, natural gas will be drawn off the intermediate pressure
system, compressed, and fed back down the wells to provide gas lift to optimize
oil recovery. Hydrocarbons will be fed into flowlines which will run between
each platform and a Pipeline End Manifold ("PLEM") located at the FPSO.
 
     FPSO. The FPSO was used to facilitate a fast track development of the
Tantawan Field and provide cost savings given the lack of an offshore oil
pipeline infrastructure. The FPSO used for the Tantawan development is under the
management of an affiliate of Single Buoy Moorings Inc. ("SBM"), one of the
largest builders and operators of FPSOs. Another affiliate of SBM owns the
vessel and leases it under bareboat charter to another affiliate, Tantawan
Production B.V., who in turn leases it under a Bareboat Charter Agreement (the
"Charter") to Tantawan Services L.L.C. ("TS"), a company currently owned by
Thaipo. All FPSO costs (including the vessel, detailed design engineering and
all equipment purchased for the FPSO) are borne directly by SBM. The final cost
of the installed and commissioned FPSO is being recovered by SBM in the bareboat
charter day rate over the term of the Charter. The initial term of the Charter
is for 10 years, subject to extension, with a commencement date as of February,
1997. In addition, TS has a purchase option on the FPSO throughout the term of
the Charter. TS has also contracted with another company, SBM Marine Services
Thailand Ltd. ("FPSO Operator"), to operate the FPSO on a reimbursable basis
throughout the initial term of the Charter. Performance of both the Charter and
the agreement to operate the FPSO are non-recourse to TS and the Company.
However, TS's performance is secured by a lien on any hydrocarbons stored on the
FPSO and is guaranteed severally by each of the Tantawan Concessionaires. The
Company's guarantee is limited to its percentage interest in the Tantawan Field
(currently 46.34%).
 
                                        3
<PAGE>   6
 
     The FPSO production facilities include process facilities for separation
and treatment of the produced fluids and compressors for gas. This equipment is
very similar to that utilized on conventional fixed platforms, except for
features that allow the equipment to function while subjected to the roll and
pitch of the FPSO. The production system is capable of processing 150 MMcfd
(expandable to 300 MMcfd) of natural gas, 50 Mbpd of crude oil and condensate
and 25 Mbpd of produced water. Oil and condensate will be processed to an export
quality for storage on the FPSO and then offloaded to shuttle tankers. Natural
gas will be dehydrated and compressed for export via a 24 inch 33-mile spur
pipeline. Water will be cleaned to below 20 parts per million of oil in water
and discharged overboard.
 
     The FPSO provides sufficient storage for optimum offloading of oil to
export tankers, as well as provides spare capacity in the event of unscheduled
delays in tanker arrival. The storage capacity is 1,000 MBbl, of which 700 MBbl
comprises saleable crude. 200 MBbl is required to store ballast water to control
hull stresses and 100 MBbl will be used to store oily water which does not meet
the discharge concentration criteria. Oil stored on the FPSO will be offloaded
periodically to export tankers using the tandem system where the tankers are
moored end to end. The Company anticipates that the offtake tankers will be
provided by PTT.
 
     The FPSO Operator is responsible for the operation and maintenance of the
FPSO. Thaipo will provide a limited number of crew members who will handle
platform and well operations. The crew members, along with the FPSO Operator's
personnel, will be housed on the FPSO.
 
     Benchamas Production Facilities. A preliminary plan of development for the
Benchamas field contemplates the installation of satellite wellhead platforms, a
central processing facility platform with a daily capacity of 150 MMcf of
natural gas, 25 MBbl of oil and condensate and 25 MBbl of water and a living
quarters platform. Full wellstream production will flow through a gathering
system to the processing platform where the natural gas, oil and water will be
separated. Concessionaires are currently in the process of making an application
for a production license to develop the Benchamas Field.
 
     The natural gas will be dehydrated, metered and compressed for delivery
through a 16-inch, 32-mile pipeline which will tie directly into PTT's proposed
30-mile spur pipeline. The crude oil and condensate will flow through a 10 inch
32-mile pipeline to the import PLEM at the Tantawan FPSO for additional
processing, storage and sales. Any produced water will be treated to meet
minimum specifications and discharged.
 
MARKETING AND CONTRACTS
 
     Gas Sales Agreement. Under the terms of the Concession, the Kingdom of
Thailand has first priority to purchase oil and natural gas produced from Block
B8/32. PTT is currently the sole purchaser of natural gas in Thailand and buys
all gas at the well-head from private producers. PTT also maintains a monopoly
over natural gas transmission and distribution in the country. The GSA was
signed on November 7, 1995, requiring PTT to purchase a yearly aggregate amount
from the Tantawan Concessionaires of at least 75 MMcfd of natural gas for the
first year of production (which commenced in February 1997) rising to at least
85 MMcfd in the second year (which commences in October 1997) and thereafter
determined by dividing the Field Reserves (as defined in the GSA) by 6,000, and
should such rate exceeds 125 MMcfd, such rates are subject to further
negotiation. The GSA terminates on the earlier of (i) termination of the
petroleum production period, (ii) the date when there are no field reserves
remaining, or (iii) 30 years from the contractual delivery date. Under the GSA,
which is a take or pay agreement, contracted deliveries of gas to PTT are
required to commence at the completion of a 72-hour production test or on March
31, 1997. The Concessionaires successfully completed the production test during
March 1997.
 
     The natural gas price is based on formulae which provide adjustments to the
base price for natural gas on each April 1 and October 1. Adjustments will be
made to reflect changes in (i) wholesale prices in Thailand, (ii) the U.S.
producer price index for oil field machinery and tools, and (iii) medium fuel
oil prices. Adjustment factors for oil field machinery and medium fuel oil
prices may be subsequently adjusted for THB/USD fluctuations. The currency of
payment is Thai Baht. The base price was estimated to be equivalent to $2.02 per
MMbtu at December 31, 1996.
 
                                        4
<PAGE>   7
 
     Oil Sales. The oil and condensate from Tantawan will be purchased by PTT,
which has the right of first refusal on any hydrocarbon liquids produced
domestically. The terms and conditions of a sales agreement are under
negotiation pursuant to a MOU signed on November 14, 1996. If PTT does not wish
to purchase this oil, then the Company believes that it can sell the oil to a
variety of purchasers.
 
THAI CONCESSION TERMS
 
     Term. The Concession provides for an exploration period of 6 years ending
July 31, 1997, which may be renewed upon agreement between the parties for an
additional 3 year term. At the end of the initial exploration term on July 31,
1997, Thai petroleum law permits the government to grant, upon application by
the Concessionaires, an additional three-year exploration term on up to 50% of
the Concession acreage that has not been previously designated as a production
area or relinquished, subject to certain terms and conditions including the
agreement to undertake a work program and the payment of fees and rentals to be
negotiated. In January 1997 the Concessionaires applied for an extension into
the third obligation period.
 
     Before the expiration of the exploration period, the Concessionaires may
pay surface reservation fees to retain acreage subject to forfeiture. Any fees
payable will be at the rate prescribed by the Department of Mineral Resources on
the date of submission of the application for the surface reservation.
 
     If production does not commence within four years of the designation of the
production area, the production period will be deemed expired. The petroleum
production period for producing areas extends 20 years from the date of
termination of the exploration period plus a 10 year extension, subject to
agreement on the terms thereof.
 
     Production Bonuses. Pursuant to the terms of the Concession, the
Concessionaires are required to make the following payments ("Production
Bonuses") to the Ministry of Finance: (i) $2 million upon the first production
of petroleum from the Block; (ii) $3 million when petroleum production from the
Block reaches an average of 50,000 barrels of crude oil equivalent per day in
any one calendar month; and (iii) $7.5 million when the petroleum production
from the Concession area reaches an average of 100,000 barrels of crude oil
equivalent per day in any calendar month. Because production commenced at the
Tantawan Field in February 1997, the Company paid to the Ministry of Finance in
January 1997 the sum of $927,000 representing its 46.34% share of the first
production bonus.
 
     Royalties. The following table summarizes the monthly royalties required to
be paid based on barrels of oil equivalent produced within Block B8/32 (natural
gas is converted to an equivalent under the royalty using a ratio of 10 MMbtu of
natural gas to one barrel of oil):
 
<TABLE>
<CAPTION>
                                                              PERCENT OF VALUE
                                                              OF PRODUCT SOLD
           MONTHLY VOLUME OF PRODUCT (IN BARRELS)               OR DISPOSED
           --------------------------------------             ----------------
<S>                                                           <C>
Not exceeding 60,000........................................        5.00%
Portion exceeding 60,000 but not exceeding 150,000..........        6.25
Portion exceeding 150,000 but not exceeding 300,000.........       10.00
Portion exceeding 300,000 but not exceeding 600,000.........       12.50
Portion exceeding 600,000...................................       15.00
</TABLE>
 
     Special Remuneratory Benefit. The Concessionaires are required to pay a
Special Remuneratory Benefit (the "Benefit") under the Thai Petroleum Act. The
Benefit is calculated annually on a block-by-block basis. No Benefit is payable
if the block has no Annual Petroleum Profit (as defined to be hydrocarbon
revenues net of, among other things, royalties, Production Bonuses, capital
expenses and operating expenses). The Benefit, expressed as a percentage of
Annual Petroleum Profit, varies from zero to 75%, depending on the level of
annual revenue per meter drilled in the Block.
 
     Termination and Revocation. The Concession terminates (i) upon the
termination of the petroleum production period; (ii) when the Effective
Concession Area (as defined in the Concession) ceases to exist by virtue of the
provisions of the Petroleum Act B.E.2514, which governs statutory percentage
relinquishment, or through the voluntary relinquishment made by the
Concessionaires; (iii) upon revocation of the Concession;
 
                                        5
<PAGE>   8
 
or (iv) upon termination of the Concessionaires' status as a juristic person
(i.e., subject to the jurisdiction of Thai courts). Under the Petroleum Act, the
Concession may be revoked by the Ministry of Industry if the Concessionaires (i)
fail to furnish the Production Bonuses or pay the royalties, the Benefits or
income taxes; (ii) become bankrupt; or (iii) fail to comply with good petroleum
industry practice or to conduct petroleum operations with due diligence or
violate certain other provisions of the Concession (including giving special
priority to Thai nationals) or of the Petroleum Act (such as restrictions on
transfer). Also, all production, storage and transportation equipment and
facilities must be turned over to the Thai government at the end of the
production term.
 
     Joint and Several Liability. Under the terms of the Concession, each of the
Concessionaires is jointly and severally liable for the obligations of the
Concessionaires, including payment of income taxes, under the Concession.
 
JOINT OPERATING AGREEMENT
 
     Tantawan. As a result of Maersk's decision not to participate in the
development of the Tantawan Field, the Tantawan Concessionaires entered into a
separate joint operating agreement effective as of March 3, 1995, with regard to
the operation of the Tantawan Field (the "JOA Tantawan"). Thaipo was designated
as Operator. The Operator has the exclusive right and is obligated to conduct
all operations on behalf of the Tantawan Concessionaires relating to the
Tantawan Field, including but not limited to the preparation and implementation
of proposed work programs, budgets and authorizations for expenditure, planning
for obtaining for all requisite services and materials, providing to each of the
Tantawan Concessionaires reports, data and information concerning the operation
in the Tantawan Field, subject to the supervision of the Operating Committee.
The Operating Committee consists of one representative of each Tantawan
Concessionaire with the Operator as the Chairman. Each party has a percentage
vote on the Operating Committee equal to its percentage interest. For
information on the percentage interest of each party, see "Business and
Properties -- History of Block B8/32". All decisions of the Operating Committee
require the affirmative votes of two or more non-affiliated parties having an
aggregate percentage interest of not less than 51%. The approval of the
Operating Committee is required with regard to the general outline of all work
programs, appraisal and development operations and the budgets pertaining to
operations in the Tantawan Field.
 
     Remainder of Block B8/32. Thai Romo, Thaipo, MOTL and Palang are parties to
the Joint Operating Agreement dated August 1, 1991 (the "JOA"). MOTL was
appointed Operator for the Block. Terms and conditions under the JOA relating to
the Operator and the Operating Committee are substantially similar to those in
the Tantawan JOA, except all decisions of the Operating Committee require the
affirmative votes of two or more non-affiliated parties having an aggregate
percentage interest of not less than 60%. In March 1997, MOTL was sold to the
Concessionaires and Thaipo was designated as operator to replace MOTL.
 
SINGLE CUSTOMER
 
     All oil and natural gas produced from the Tantawan Field is being sold to
PTT, which maintains a monopoly over oil and gas transmission and distribution
in Thailand. The Concessionaires are required to give first priority to the Thai
government to purchase the oil and natural gas produced by the Concessionaires.
 
     PTT is an agency of the Kingdom of Thailand, which has an "A" sovereign
debt rating from Moody's and Standard & Poor's, both U.S. rating agencies.
 
                                        6
<PAGE>   9
 
OIL AND GAS PROPERTIES
 
     The table below summarizes the Company's net proved oil (including
condensate and crude oil) and natural gas reserves and discounted net present
value (NPV) by field as of December 31, 1996, as determined by Ryder Scott
Company, the Company's independent petroleum reserve engineers.
 
<TABLE>
<CAPTION>
                                                                                  NPV BEFORE    % OF
                                                OIL      NATURAL GAS    TOTAL     INCOME TAX    TOTAL
                   FIELD                       (MBO)       (MMCF)      (MMCFE)   ($ IN 000'S)    NPV
                   -----                      --------   -----------   -------   ------------   -----
<S>                                           <C>        <C>           <C>       <C>            <C>
Tantawan....................................  10,907.5      99,333     164,778      123,130      70.7
Benchamas...................................  10,424.2      45,665     108,210       51,065      29.3
                                              --------     -------     -------      -------     -----
          Total.............................  21,331.7     144,998     272,988      174,195     100.0
                                              ========     =======     =======      =======     =====
</TABLE>
 
RESERVES
 
     The following table sets forth estimates of the net proved oil (including
condensate and crude oil) and natural gas reserves of the Company at December
31, 1996, as determined by Ryder Scott Company:
 
<TABLE>
<CAPTION>
                                  OIL (MBO)                       NATURAL GAS (MMCF)            NATURAL GAS EQUIVALENTS (MMCFE)
                      ----------------------------------   ---------------------------------   ---------------------------------
                      DEVELOPED   UNDEVELOPED    TOTAL     DEVELOPED   UNDEVELOPED    TOTAL    DEVELOPED   UNDEVELOPED    TOTAL
                      ---------   -----------   --------   ---------   -----------   -------   ---------   -----------   -------
<S>                   <C>         <C>           <C>        <C>         <C>           <C>       <C>         <C>           <C>
Tantawan.............  5,192.0      5,715.5     10,907.5    45,998       53,335       99,333    77,150        87,628     164,778
Benchamas............       --     10,424.2     10,424.2        --       45,665       45,665        --       108,210     108,210
                       -------     --------     --------    ------       ------      -------    ------       -------     -------
  Total Company......  5,192.0     16,139.7     21,331.7    45,998       99,000      144,998    77,150       195,838     272,988
                       =======     ========     ========    ======       ======      =======    ======       =======     =======
</TABLE>
 
     The Company has not filed any different estimates of its December 31, 1996
reserves with any federal agency.
 
     The reserve data set forth in this Form 10-K represents only estimates.
Reserve engineering is a subjective process of estimating underground
accumulations of crude oil and natural gas that cannot be measured in an exact
manner. The accuracy of any reserve estimate is a function of the quality of
available data and of engineering and geological interpretation and adjustment.
As a result, estimates of different engineers often vary. In addition, results
of drilling, testing and production subsequent to the date of an estimate may
justify revision of such estimates. Accordingly, reserve estimates often differ
from the quantities of crude oil and natural gas that are ultimately recovered.
Estimates of economically recoverable crude oil and natural gas reserves and of
future net revenues are based upon a number of variables and assumptions, all of
which may vary considerably from actual results. The reliability of such
estimates is highly dependent upon the accuracy of the assumptions upon which
they were based.
 
     The following table sets forth, at December 31, 1996, the discounted net
present value attributable to the Company's estimated net proved reserves at
that date as estimated by Ryder Scott Company, the Company's independent
petroleum reserve engineers:
 
<TABLE>
<CAPTION>
                                                       TANTAWAN   BENCHAMAS     TOTAL
                                                       --------   ---------   ---------
                                                        (IN THOUSANDS OF U.S. DOLLARS)
<S>                                                    <C>        <C>         <C>
Future cash inflows..................................  $459,745   $ 351,494   $ 811,239
                                                       --------   ---------   ---------
Future production costs..............................   193,937      51,461     245,398
Future development costs.............................    70,040     114,713     184,753
                                                       --------   ---------   ---------
Total Future costs...................................   195,768     166,174     430,151
                                                       --------   ---------   ---------
Future net cash inflows..............................   195,768     185,320     381,088
Discount at 10% per annum............................   (72,638)   (134,255)   (206,893)
                                                       --------   ---------   ---------
Standardized measure of discounted future net cash
  flows, before income taxes.........................  $123,130   $  51,065   $ 174,195
                                                       ========   =========   =========
</TABLE>
 
                                        7
<PAGE>   10
 
     In computing this data, assumptions and estimates have been utilized, and
no assurance can be given that such assumptions and estimates will be indicative
of future economic conditions. The future net cash inflows are determined by
using estimated quantities of proved reserves and the periods in which they are
expected to be developed and produced based on December 31, 1996 economic
conditions. The estimated future production is priced at prices the Company
estimated it would have received at December 31, 1996, except where fixed and
determinable price escalations or oil hedges are provided by contract. The
resulting estimated future gross revenues are reduced by estimated future costs
to develop and produce the proved reserves based on December 31, 1996 cost
levels, but not for debt service and general and administrative expenses.
 
ACREAGE AND PRODUCTIVE WELLS
 
     The following table sets forth the Company's developed and undeveloped
acreage position at December 31, 1996:
 
<TABLE>
<CAPTION>
                                            DEVELOPED        UNDEVELOPED
                                             ACREAGE           ACREAGE            TOTAL
                                         ---------------    --------------    --------------
                                         GROSS      NET     GROSS     NET     GROSS     NET
                                         ------     ----    ------    ----    ------    ----
                                         (IN THOUSANDS)     (IN THOUSANDS)    (IN THOUSANDS)
<S>                                      <C>        <C>     <C>       <C>     <C>       <C>
Gulf of Thailand.......................    68        31      1,284     407     1,352     438
</TABLE>
 
     This acreage is subject to relinquishment. See "History of Block B8/32."
 
     At December 31, 1996, the Company owned interests in the following wells
capable of production pending completion and installation of production
facilities:
 
<TABLE>
<CAPTION>
                                                              GROSS    NET
                                                              -----    ---
<S>                                                           <C>      <C>
Oil and Gas Wells...........................................   39      16
</TABLE>
 
DRILLING ACTIVITY
 
     The following table sets forth the number of gross and net productive and
dry development wells and exploratory wells drilled by the Company during the
years indicated:
 
<TABLE>
<CAPTION>
                                            GROSS              GROSS               NET                NET
                                         DEVELOPMENT        EXPLORATORY        DEVELOPMENT        EXPLORATORY
                                            WELLS              WELLS              WELLS              WELLS
                                       ----------------   ----------------   ----------------   ----------------
                YEAR                   SUCCESSFUL   DRY   SUCCESSFUL   DRY   SUCCESSFUL   DRY   SUCCESSFUL   DRY
                ----                   ----------   ---   ----------   ---   ----------   ---   ----------   ---
<S>                                    <C>          <C>   <C>          <C>   <C>          <C>   <C>          <C>
1996.................................      9         2        13       --       4.2       .9         5       --
1995.................................      7        --         3        1       3.2       --        .9       .5
1994.................................     --        --         4        1        --       --       1.3       .3
1993.................................     --        --         2        2        --       --        .6       .6
1992.................................     --        --         1       --        --       --        .3       --
</TABLE>
 
     The Company has identified a number of exploration and development
prospects within Block B8/32 which include Tantawan, Benchamas, Pakakrong, North
Benchamas and Maliwan. Such areas are subject to relinquishment in the event the
exploration period under the Concession is not extended. See "Business and
Properties -- History of Block B8/32."
 
  Tantawan
 
     Through December 31, 1996, the Company has participated in drilling a total
of 18 development and 16 exploration wells in the Tantawan Field, all but 1 of
which have encountered hydrocarbons. Of the 33 wells that encountered
hydrocarbons, 29 are deemed capable of commercial flow rates. All of these
successful wells were drilled in the southern portion of the Tantawan Field and
have encountered an average of 170 feet of net hydrocarbon pay.
 
     In August 1996, the Company set its "A" and "B" 12-slot production
platforms and mobilized two drilling rigs to tie-back and complete a total of 19
wells. To facilitate moving the natural gas and crude oil to
 
                                        8
<PAGE>   11
 
market, the operator participated in a long term lease for an oceangoing tanker,
the T/T Bayern, the only FPSO vessel in the Gulf of Thailand. The vessel,
recommissioned as the Tantawan Explorer, was delivered in December 1996.
 
     During 1996, Thai Romo and its partners began construction of the 9-slot
"C" platform which arrived on-site in February 1997. In October 1996, the
Company signed a contract for the construction of a second 9-slot ("D") platform
which is scheduled to be installed during the third quarter of 1997.
 
  Benchamas
 
     As of year-end 1996 the Company had participated in the drilling of 8
exploratory wells, all of which were hydrocarbon bearing and considered to be
commercially viable. The wells encountered an average of 250' of net hydrocarbon
pay. The Benchamas-9 was successfully drilled in January 1997. Additional
delineation wells are planned to be drilled in 1997.
 
     In the first quarter of 1997, the Concessionaires made formal application
to Thailand's Department of Mineral Resources for a production license to
produce Benchamas and a portion of Pakakrong Field. This plan of development
contemplates the installation of satellite platforms and a central processing
facility platform and will avail itself of the infrastructure in place at the
nearby Tantawan Field. It is anticipated that production from the Benchamas
Field will be sold under similar terms as that from the Tantawan Field.
 
  Pakakrong
 
     In late 1995, a 100 square mile 3-D seismic survey of the Pakakrong
prospect was acquired, processed and interpreted. The prospect is centered 8.5
miles southwest of the Benchamas-1 well. Production tests in the 2 Pakakrong
wells drilled in early 1996 have established potential commercial reservoirs at
depths considerably shallower than found to date elsewhere within the Block. The
production license application currently being prepared for the Benchamas area
will include the Pakakrong area.
 
     Drill stem tests conducted in Pakakrong-1 yielded cumulative flow rates of
25.5 MMcfd of natural gas and 0.7 Mbpd of oil or condensate. Three DSTs were
conducted in the Pakakrong-2 well. Two of the tests conducted across intervals
at 7,400 feet and 7,640 feet produced substantial quantities of CO(2)
approximately 60% and 80%, respectively. The third test, conducted at a depth of
4,200 feet, yielded a flow of 1.6 Mbpd. Based on seismic interpretation, it is
believed that this zone may be the same zone observed but not tested in the
Pakakrong-1 well located one mile northwest.
 
  North Benchamas
 
     This prospect, as with others, will be the subject of further exploration
efforts in 1997. A 120 square-mile 3-D survey of the North Benchamas prospect
was conducted during the fourth quarter of 1996. Following a detailed seismic
interpretation, the Company expects to drill several exploratory wells during
the first quarter of 1997.
 
  Maliwan
 
     Located south of the Benchamas area, this prospect is sizable and has been
part of the recent 3-D seismic programs. An exploration for 1997 program is
planned for this prospect as well.
 
  Thailand Taxes
 
     Under the Petroleum Income Tax Act B.E. 2514 and (No. 4) B.E. 2532, Thai
Romo's and B8/32 Partners' net profits derived from the petroleum business are
subject to Thai income tax at the rate specified by the Royal Decree Prescribing
Petroleum Income Tax Rates B.E. 2514, which must not be lower than 50% and not
be higher than 60% of such net profits. Under the Royal Decree, the Thai income
tax rate to be imposed on Thai Romo's and B8/32 Partners' anticipated net
profits derived from their petroleum business is 50%.
 
                                        9
<PAGE>   12
 
     In computing Thai Romo's and B8/32 Partners' anticipated net profits from
its petroleum business that will be subject to Thai tax, any interest paid on
loans by Thai Romo and B8/32 Partners to any lenders or shareholders, whether or
not resident or doing business in Thailand, is not deductible. Royalties to be
paid by Thai Romo and B8/32 Partners to the Ministry of Industry that are
required under the Concession are deductible in computing Thai Romo's and B8/32
Partners' net profits from their petroleum business.
 
EMPLOYEES
 
     At January 31, 1997, the Company employed approximately 13 people
(excluding Messrs. Rutherford and Moran) in its Houston, Texas location whose
functions are associated with management, engineering, geology, finance and
administration. The Company has no collective bargaining arrangement with
employees and believes its relations with its employees are good.
 
OFFICES
 
     The Company leases its Houston office under a lease covering approximately
9,473 square feet, expiring in February 2002. The monthly rent and expenses are
approximately $10,000.
 
ITEM 3. LEGAL PROCEEDINGS
 
     As of December 31, 1996, the Company is not aware of any current or
potential legal proceeding.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     None during the fourth quarter of 1996.
 
                                       10
<PAGE>   13
 
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
     Since June 21, 1996, the Company's Common Stock, $0.01 par value (the
"Common Stock"), has been traded on the NASDAQ National Market System under the
symbol "RMOC." As of March 10, 1997, there were 25,651,338 shares of Common
Stock outstanding. The Company has never paid dividends on its Common Stock and
does not expect to pay dividends in the near future.
 
     The following table shows the high and low prices, at each quarter, of the
Common Stock on the NASDAQ Stock Exchange since inception:
 
<TABLE>
<CAPTION>
                    QUARTER ENDED, 1996                       HIGH      LOW
                    -------------------                      ------    ------
<S>                                                          <C>       <C>
June 30....................................................  $25.25    $23.00
September 30...............................................  $30.00    $23.87
December 31................................................  $30.75    $25.00
</TABLE>
 
ITEM 6. SELECTED FINANCIAL DATA
 
     The financial data as of and for the years ended December 31, 1992 through
1996 were derived from audited and unaudited consolidated financial statements
of the Company and its predecessors. The data set forth in this table should be
read in connection with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," the more detailed consolidated financial
statements and related notes included elsewhere herein.
 
<TABLE>
<CAPTION>
                                                            YEAR ENDED DECEMBER 31,
                                            -------------------------------------------------------
                                             1996      1995      1994        1993          1992
                                            -------   -------   -------   -----------   -----------
                                                                                        (UNAUDITED)
                                                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                         <C>       <C>       <C>       <C>           <C>
Interest Income...........................  $   170   $     5   $     6     $    24       $    55
Costs and expenses:
  General and administrative..............    2,268       322       290         187           121
  Depreciation, depletion and
     amortization.........................       29         5         2          --            --
  Interest expense........................      806       190       107          76           183
                                            -------   -------   -------     -------       -------
                                              3,103       517       399         263           304
                                            -------   -------   -------     -------       -------
Loss before taxes.........................   (2,933)     (512)     (393)       (239)         (249)
Income tax expense........................    1,391        --        --          --            --
                                            -------   -------   -------     -------       -------
Net loss..................................  $(4,324)  $  (512)  $  (393)    $  (239)      $  (249)
                                            =======   =======   =======     =======       =======
  Loss per share of common stock..........  $ (0.18)  $ (0.02)  $ (0.02)    $ (0.01)      $ (0.01)
                                            =======   =======   =======     =======       =======
Weighted average shares outstanding.......   23,411    21,000(a) 21,000(a)   21,000(a)     21,000(a)
</TABLE>
 
<TABLE>
<CAPTION>
                                           --------------------------------------------------------
                                                               AT DECEMBER 31,
                                           --------------------------------------------------------
                                             1996      1995      1994        1993          1992
                                           --------   -------   -------   -----------   -----------
                                                                          (UNAUDITED)   (UNAUDITED)
                                                                (IN THOUSANDS)
<S>                                        <C>        <C>       <C>       <C>           <C>
Balance Sheet Data (at end of period):
  Oil and gas properties, at cost........  $123,300   $55,951   $18,944     $10,895       $ 4,406
  Total assets...........................   129,825    67,669    19,427      11,034         6,179
  Long-term debt, including current
     maturities..........................    22,842    34,385     1,400          --            --
  Stockholders' equity...................   100,625    23,269(a) 15,484(a)    8,689(a)      4,132(a)
</TABLE>
 
---------------
 
(a) RMOC became a public entity in June 1996. See Notes to Consolidated
    Financial Statements -- Note 2 -- Significant Accounting Policies.
 
                                       11
<PAGE>   14
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
 
INTRODUCTION
 
     The following discussion is intended to assist in understanding the
Company's financial position and results of operations for each year in the
three-year period ended December 31, 1996. The Consolidated Financial Statements
and the notes thereto should be referred to in conjunction with this discussion.
 
     From time to time, the Company may elect to make certain statements that
provide the Company's stockholders and the investing public with
"forward-looking" information (as defined in the Private Securities Litigation
Reform Act of 1995). Words such as "anticipate", "estimate", "project" and
similar expressions are intended to identify such forward-looking statements.
Forward-looking statements may be made by management orally or in writing,
including, but not limited to, in press releases, as part the "Business and
Properties" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" sections of this report and as part of other sections of
the Company's filings with the Securities and Exchange Commission under the
Securities Act of 1933 and the Securities Exchange Act of 1934. Such
forward-looking statements may include, but not be limited to, statements
concerning estimates of current and future results of operations, earnings,
reserves, the timing and commencement of wells and the production therefrom,
production estimates based upon drill stem tests and other test data, future
capacity under its credit arrangements, and future capital expenditures and
liquidity requirements.
 
     Such forward-looking statements are subject to certain risks, uncertainties
and assumptions, including without limitation those identified below. Should one
or more of these risks or uncertainties materialize, or should any of the
underlying assumptions prove incorrect, actual results of current and future
operations may vary materially from those anticipated, estimated or projected.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their dates.
 
     Among the factors that have a direct bearing on the Company's results of
operations and the oil and gas exploration industry in which it operates are
uncertainties inherent in estimating reserves and future cash flows; changes in
the price of oil and natural gas; the limited production and exploration
histories in Block B8/32; the status of the Company's existing and future
contractual relationships with the Government of Thailand, including the
Concession, the Gas Sales Agreement and the Oil Sales Agreement; risks
associated with having the Government of Thailand as the sole purchaser of the
Company's oil and gas production, including, political instability and economic
downturns in the Thailand economy and a reduction in demand for oil and natural
gas in Thailand; foreign currency fluctuation risks; the presence of competitors
with greater financial resources and capacity; difficulties, and risks
associated with, delivering the Company's production, including inherent risks
associated with offshore oil and gas exploration and development operations and
risks associated with offshore marine operations such as capsizing, sinking,
grounding, collision and damage from severe weather conditions; and the
Company's successful execution of internal operating plans as well as regulatory
uncertainties in Thailand and legal proceedings.
 
OVERVIEW
 
     RMEC, currently a wholly owned subsidiary of the Company, was formed on
September 21, 1990 (date of inception) for the purpose of holding an interest in
an oil and gas concession in Thailand. RMEC paid all of the expenses of the
concession on behalf of Thai Romo through November 4, 1993.
 
     Effective September 24, 1990, the stockholders of RMEC elected to have it
treated as an S Corporation under the Internal Revenue Code of 1986, as amended.
As such, RMEC did not incur federal income taxes at the corporate level prior to
June 18, 1996, and its taxable income or loss was passed through to its
stockholders based on their interests.
 
     In November 1993, Thai Romo amended its Article of Association so that it
would be treated as a partnership for U.S. income tax purposes and added
additional partners, including the Company's current Chairman of the Board and
current President and Chief Executive Officer. As such, Thai Romo was not
subject to federal income taxes from November 1993 to June 17, 1996. Income and
losses earned by Thai Romo were passed through to the partners on the basis of
their interest in Thai Romo.
 
                                       12
<PAGE>   15
 
     In June 1996, the Company entered into an exchange transaction (the
"Exchange") whereby the partners of Thai Romo (other than RMEC) exchanged their
interests (including outstanding notes payable to them) in Thai Romo for common
stock, $.01 par value ("Common Stock"), of the Company, which interests in Thai
Romo were simultaneously transferred to TRH, a wholly owned subsidiary of the
Company, and the stockholders of RMEC (the Company's current Chairman of the
Board and current President and Chief Executive Officer) exchanged their shares
of RMEC for shares of Common Stock. Immediately following the Exchange, RMEC and
Thai Romo (indirectly) were wholly owned by the Company. The Company's results
of operations and financial positions prior to the Exchange reflect the results
of operations and financial position of RMEC, TRH and Thai Romo as the Company's
predecessors.
 
     Following the Exchange, the Company completed its initial public offering
of the Common Stock, raising net proceeds, after deducting underwriting
commissions and discounts and expenses of the offering, of $84.3 million, which
were utilized to repay outstanding debt to the Company's principal stockholders,
repay bank debt and fund cash outlays.
 
     As of December 31, 1996, the Company's exploration and development
activities have not generated revenues. As a result, the Company's historical
results of operations have been presented as a development stage company and
period-to-period comparisons of such results and certain financial data may not
be meaningful or indicative of future results. In this regard, future results of
the Company will be materially dependent upon the success of the Company's
operations within Block B8/32.
 
     As of December 31, 1996, the Company had not sold any oil and gas. Initial
sales from the Tantawan Field of Block B8/32 began on February 1, 1997. The
natural gas and crude oil production from the two wellhead platforms is being
moved to the FPSO in the field. Natural gas and crude oil revenues are recorded
using the entitlements method, whereby any production volumes received in excess
of the Company's ownership percentage in the property is recorded as a
liability. If less than the Company's entitlement is received, the
underproduction is recorded as a receivable.
 
     The Company uses the full cost method of accounting for its investment in
oil and gas properties. Under the full cost method of accounting, all costs of
acquisition, exploration and development of oil and natural gas reserves are
capitalized into a "full cost pool" as incurred, and properties in the pool are
depleted and charged to operations using the unit-of-production method based on
the ratio of current production to total proved oil and natural gas reserves.
 
RESULTS OF OPERATIONS
 
  Year ended December 31, 1996, compared with the year ended December 31, 1995
 
     The Company's net loss of $4,324,000 for the twelve months ended December
31, 1996 increased from the Company's net loss of $512,000 for the twelve months
ended December 31, 1995 due primarily to increases in deferred income taxes
caused by a one time non-cash charge of $1,921,000 and general and
administrative expenses and less significantly due to increases in interest
expense, and salaries and wages, offset partially by an increase in interest
income.
 
     As RMEC and Thai Romo became part of the Company's consolidated federal tax
return following the Exchange, RMEC and Thai Romo recorded an income tax expense
and a corresponding deferred tax liability expense of $1,921,000 for the
difference between the book basis and tax basis of oil and gas properties on
June 17, 1996. This charge was offset by a benefit of $530,000 recorded in the
third and fourth quarters for the operating loss generated by the Company.
 
     Interest income of $170,000 for the twelve months ended December 31, 1996,
increased compared to $5,000 for the twelve months ended December 31, 1995. This
increase is due to the increase in cash available from the proceeds of the
initial public offering.
 
     Interest expense of $806,000 for the twelve months ended December 31, 1996,
increased compared to $190,000 for the twelve months ended December 31, 1995.
This increase is caused by higher levels of outstanding debt and an increase in
the amortization of deferred financing costs.
 
                                       13
<PAGE>   16
 
     Salaries and wages and general and administrative expenses of $535,000 and
$1,733,000, respectively, for the twelve months ended December 31, 1996,
increased compared to $114,000 and $208,000, respectively, for the twelve months
ended December 31, 1995. These increases are primarily due to the capitalization
of a greater portion of salaries and wages and direct costs related to oil and
gas property development in 1995 compared to 1996 and, to a lesser extent, an
increase in compensation expense.
 
  Year Ended December 31, 1995, compared with year ended December 31, 1994
 
     The Company's net loss of $512,000 in 1995 increased compared to the
Company's net loss of $393,000 in 1994 due to increases in interest expense and
general and administrative expenses.
 
     Noncapitalized interest expense of $190,000 for 1995 increased compared to
$107,000 in 1994. This increase is due to the significant additions of debt
incurred under loans from banks and stockholders. Balances under such loan
facilities were $42.9 million and $2.9 million at December 31, 1995 and 1994,
respectively.
 
     General and administrative expenses of $208,000 for 1995 increased compared
to $181,000 in 1994. This increase is due to increased legal costs incurred for
general corporate purposes.
 
  Year ended December 31, 1994, compared with year ended December 31, 1993
 
     The Company's net loss of $393,000 in 1994 increased compared to the
Company's net loss of $239,000 in 1993 due to increases in interest expense and
general and administrative expenses.
 
     Interest expense of $107,000 for 1994 increased compared to $76,000 in
1993. This increase is due to an increase in variable interest rates from 1993
to 1994.
 
     General and administrative expenses of $181,000 for 1994 increased compared
to $74,000 in 1993. This increase is due to additional rent and additional legal
fees incurred for general corporate purposes.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     During the period from the inception of the Company on September 21, 1990
through December 31, 1996, the Company invested approximately $123 million
primarily for development and exploration activities conducted in Block B8/32
and the acquisitions of interests in or rights to the Concession. During this
period, the Company had negative operating cash flow. Since its inception, the
Company has financed its growth with a combination of equity infusions by its
principal stockholders (primarily Messrs. Rutherford and Moran), bank and
stockholders loans, and the sale of common stock.
 
     In June 1996, RMOC completed the IPO which resulted in RMOC raising net
proceeds of approximately $97 million. The proceeds were used to repay
outstanding bank and stockholder indebtedness, redeem notes and shares of RMEC,
and fund capital expenditures.
 
     On September 20, 1996, the Company entered into a $150,000,000 Revolving
Credit Facility (the "Revolving Credit Facility") with a group of commercial
lenders. The Revolving Credit Facility has a final maturity of September 30,
1999, and a borrowing base limitation at December 31, 1996 of $60,000,000. The
Revolving Credit Facility is secured by the stock of certain subsidiaries of the
Company. The Company currently is in the process of increasing the borrowing
base in its Revolving Credit Facility, which additional capacity will be
utilized to fund budgeted capital expenditures, acquisition financing and for
working capital and other general purposes.
 
     Under the terms of the Revolving Credit Facility, outstanding borrowings
will bear interest at the Base Rate (defined as the greater of the Federal Funds
Rate plus .5% or the agent bank's prime rate) plus .25% or the Eurodollar Rate
(defined as an average of the London Interbank Offered Rate of two banks) plus
1.75%, at the Company's option. Interest is payable quarterly. The Company is
also assessed a commitment fee equal to .5% per annum on the average daily
balance of the unused borrowing base. The Revolving Credit Facility provides for
semi-annual borrowing base redeterminations as well as certain covenants,
including limitations on additional indebtedness, payment of dividends and an
interest coverage ratio.
 
                                       14
<PAGE>   17
 
     At December 31, 1996, $22,842,000 was outstanding under the Revolving
Credit Facility at interest rates ranging from 7.125% to 7.4375% per annum.
 
     To explore and develop Block B8/32, the Company anticipates capital
expenditures of approximately $108 million for 1997, which includes
approximately $28 million for the MOTL acquisition which was consummated on
March 3, 1997. Of such capital expenditures, approximately $34 million is
budgeted for development of the Tantawan Field which has commenced production in
early 1997 and $36 million is budgeted for the Benchamas Field. In addition to
such capital expenditures, the Company expects to incur additional cash expenses
and working capital requirements of approximately $27 million, primarily
relating to cash expenses, including interest.
 
     RMOC financed the purchase of its interest in MOTL by utilizing $20,000,000
from a new credit facility which is to be repaid no later than June 30, 1997.
The credit facility contains terms which are substantially identical to those in
the Company's Revolving Credit Facility. The remainder of the payment was
financed by its Revolving Credit Facility. The Company anticipates that it will
finance remaining expenditures during 1997 and repay the new credit facility
with internally generated cash flow and borrowings under the Revolving Credit
Facility after redetermination of the borrowing base.
 
FOREIGN CURRENCY FLUCTUATIONS
 
     The Company does not currently hold significant amounts of cash, cash
equivalents, long-term financial instruments or investments denominated in
foreign currencies. However, virtually all of its operating revenues will be
denominated in Thai Baht. Although the Thai Baht/U.S. dollar exchange rate has
historically been stable, the Company will consider instruments intended to
mitigate the foreign currency risks associated with such holdings through
currency rate hedging transactions such as options, futures or other derivative
financial instruments.
 
EFFECTS OF INFLATION
 
     Currently annual inflation in terms of the decrease in the general
purchasing power of the dollar is running much below the general annual
inflation rates experienced in the past. While the Company, like other
companies, continues to be affected by fluctuations in the purchasing power of
the dollar, such effect is not currently considered significant.
 
CHANGING OIL PRICES
 
     The Company is dependent on crude oil prices, which have historically been
volatile. The Company has used crude oil price swaps and other similar
arrangements to hedge against potential adverse effects of fluctuations in
future prices for the Company's future oil production. While the swaps are
intended to reduce the Company's exposure to declines in the market price of
crude oil, they may limit the Company's gain from increases in the market price.
At December 31, 1996, crude oil price swap agreements were in place for the
Company's oil production of one million barrels (MMBbl) of aggregate oil volumes
for April through December 1997 at a weighted average price of $15.92 per Bbl
and 1.75 MMBbl of aggregate oil volumes for January through December 1998 at a
weighted average of $15.92 per Bbl. At December 31, 1996, the Company estimates
the cost of unwinding this position to be $8,516,000. Embedded within the crude
oil price swaps, the Company has provided to the affiliate of a lender a swap
option for 1.25 MMBbl of aggregate oil volumes for January through December 1999
at a price of $18.30 per Bbl. The Company has accounted for the swap option
separately as it does not qualify as a hedge. After March 31, 1977 future
changes in value of the swap option will be recorded in the statement of
operations. At December 31, 1996, the Company estimates the value of this
position to be $1,400,000 and has recorded the amount as a liability on the
balance sheet.
 
                                       15
<PAGE>   18
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Independent Auditors' Report................................    17
Consolidated Statements of Operations, for the periods June
  18, 1996 through December 31, 1996 (Company), and January
  1, 1996 through June 17, 1996 and for the years ended
  December 31, 1995 and 1994 (Predecessors) and Inception to
  December 31, 1996.........................................    18
Consolidated Balance Sheets, December 31, 1996 (Company),
  and 1995 (Predecessors)...................................    19
Consolidated Statements of Changes in Stockholder's and
  Predecessors' Equity, for the periods June 18, 1996
  through December 31, 1996 (Company), and January 1, 1996
  through June 17, 1996 and for the years ended December 31,
  1995 and 1994 and Inception to December 31, 1993
  (Predecessors)............................................    20
Consolidated Statements of Cash Flows, for the periods June
  18, 1996 through December 31, 1996 (Company), and January
  1, 1996 through June 17, 1996 and for the years ended
  December 31, 1995 and 1994 (Predecessors) and Inception to
  December 31, 1996.........................................    21
Notes to Consolidated Financial Statements..................    22
</TABLE>
 
                                       16
<PAGE>   19
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Rutherford-Moran Oil Corporation
(A Development Stage Company):
 
We have audited the accompanying consolidated balance sheet of Rutherford-Moran
Oil Corporation as of December 31, 1996 and the related consolidated statements
of operations, changes in stockholders' equity and cash flows for the period
June 18, 1996 through December 31, 1996 and the consolidated balance sheet of
the Company's Predecessors as of December 31, 1995 and the related Predecessors'
consolidated statements of operations, changes in partners' equity and cash
flows for the period January 1, 1996 through June 17, 1996 and for the years
ended December 31, 1995 and 1994. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Rutherford-Moran Oil Corporation and its Predecessors as of December 31, 1996
and 1995, respectively, and the results of its operations and its cash flows and
those of its Predecessors for the period June 18, 1996 through December 31, 1996
and the period January 1, 1996 through June 17, 1996 and for the years ended
December 31, 1995 and 1994, respectively, in conformity with generally accepted
accounting principles.
 
                                          KMPG Peat Marwick LLP
 
March 25, 1997
Houston, Texas
 
                                       17
<PAGE>   20
 
                        RUTHERFORD-MORAN OIL CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                                                    SEPTEMBER 21,
                                   JUNE 18,       JANUARY 1,                                        1990 (DATE OF
                                   THROUGH         THROUGH           YEAR ENDED DECEMBER 31,        INCEPTION) TO
                                 DECEMBER 31,      JUNE 17,      -------------------------------    DECEMBER 31,
                                     1996            1996             1995             1994             1996
                                 ------------   --------------   --------------   --------------   ---------------
                                  (COMPANY)     (PREDECESSORS)   (PREDECESSORS)   (PREDECESSORS)
<S>                              <C>            <C>              <C>              <C>              <C>
Interest Income................    $   170         $    --          $     5          $     6           $   337
Expenses
  Interest Expense.............        411             395              190              107             1,362
  Depreciation Expense.........         25               4                5                2                37
  Salaries and wages...........        427             108              114              109               882
  General and administrative...      1,553             180              208              181             2,403
                                   -------         -------          -------          -------           -------
  Total expenses...............      2,416             687              517              399             4,684
                                   -------         -------          -------          -------           -------
          Net loss before
            taxes..............     (2,246)           (687)            (512)            (393)           (4,347)
Income tax expense (benefit)...       (530)          1,921               --               --             1,391
                                   -------         -------          -------          -------           -------
Net loss.......................    $(1,716)        $(2,608)         $  (512)         $  (393)          $(5,738)
                                   =======         =======          =======          =======           =======
Net loss per common share......    $ (0.07)        $ (0.12)         $ (0.02)         $ (0.02)          $ (0.27)
                                   =======         =======          =======          =======           =======
Weighted average number of
  common shares outstanding....     25,514          21,000           21,000           21,000            21,384
                                   =======         =======          =======          =======           =======
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       18
<PAGE>   21
 
                        RUTHERFORD-MORAN OIL CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
 
                          CONSOLIDATED BALANCE SHEETS
                  (IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                              ---------------------------
                                                                1996            1995
                                                              ---------    --------------
                                                              (COMPANY)    (PREDECESSORS)
<S>                                                           <C>          <C>
Current assets:
  Cash and cash equivalents.................................  $    444        $ 9,831
  Value added tax refund receivable.........................     2,806            631
  Joint interest receivables................................       150          1,002
  Prepaid expenses and other................................        17             35
                                                              --------        -------
          Total current assets..............................     3,417         11,499
Property and equipment, at cost:
  Oil and gas (full cost method)............................   123,300         55,951
  Office furniture and fixtures.............................       197             58
  Accumulated depreciation, depletion and amortization......       (37)            (7)
                                                              --------        -------
                                                               123,460         56,002
Other assets:
  Loan acquisition costs....................................     1,948            399
  Accumulated amortization..................................      (400)          (231)
                                                              --------        -------
     Loan acquisition costs, net of amortization............     1,548            168
  Deferred costs............................................     1,400             --
                                                              --------        -------
          Total assets......................................  $129,825        $67,669
                                                              ========        =======
                  LIABILITIES & STOCKHOLDERS' AND PREDECESSORS' EQUITY
Current liabilities:
  Accounts payable and accrued liabilities..................  $    852        $   370
  Loans from stockholders...................................        --          8,490
  Note payable to bank......................................        --         34,385
  Joint interest payable....................................     2,715            977
  Accrued interest on loans from stockholders...............        --            178
                                                              --------        -------
          Total current liabilities.........................     3,567         44,400
Note payable to bank........................................    22,842             --
Deferred taxes..............................................     1,391             --
Premium on written option...................................     1,400             --
Stockholders' and Predecessors' equity:
  Predecessors' equity......................................        --         24,450
  Preferred stock, $0.01 par value, 10,000,000 shares
     authorized, no shares issued and outstanding...........        --             --
  Common stock, $0.01 par value, 40,000,000 shares
     authorized, 25,651,338 shares issued and outstanding at
     December 31, 1996......................................       256             --
  Additional paid-in capital................................   103,143             --
  Deficit accumulated during the development stage..........    (1,716)        (1,181)
  Deferred compensation.....................................    (1,058)            --
                                                              --------        -------
          Total stockholders' and predecessors' equity......   100,625         23,269
                                                              --------        -------
Commitments and contingencies...............................        --             --
                                                              --------        -------
          Total liabilities and stockholders' and
            predecessors' equity............................  $129,825        $67,669
                                                              ========        =======
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       19
<PAGE>   22
 
                        RUTHERFORD-MORAN OIL CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
 
  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' AND PREDECESSORS' EQUITY
                  (IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)
 
<TABLE>
<CAPTION>
                                                                                      DEFICIT                        TOTAL
                                                    COMMON STOCK                    ACCUMULATED                  STOCKHOLDERS'
                                                --------------------   ADDITIONAL   DURING THE                        AND
                                PREDECESSORS'     SHARES                PAID-IN     DEVELOPMENT     UNEARNED     PREDECESSORS'
                                   EQUITY       OUTSTANDING   AMOUNT    CAPITAL        STAGE      COMPENSATION      EQUITY
                                -------------   -----------   ------   ----------   -----------   ------------   -------------
<S>                             <C>             <C>           <C>      <C>          <C>           <C>            <C>
Balance at September 21, 1990
  (Date of Inception).........    $     --              --     $ --     $     --      $    --       $    --        $     --
Capital contributions.........      11,294              --       --           --           --            --          11,294
Capital distributions.........      (2,205)             --       --           --           --            --          (2,205)
Net loss......................         (58)             --       --           --         (451)           --            (509)
                                  --------      ----------     ----     --------      -------       -------        --------
Balance at December 31,
  1993........................       9,031              --       --           --         (451)           --           8,580
Capital contributions.........       7,296              --       --           --           --            --           7,296
Net loss......................         (44)             --       --           --         (348)           --            (392)
                                  --------      ----------     ----     --------      -------       -------        --------
Balance at December 31,
  1994........................      16,283              --       --           --         (799)           --          15,484
Capital contributions.........       8,297              --       --           --           --            --           8,297
Net loss......................        (130)             --       --           --         (382)           --            (512)
                                  --------      ----------     ----     --------      -------       -------        --------
Balance at December 31,
  1995........................      24,450              --       --           --       (1,181)           --          23,269
Net loss from January 1, 1996
  to June 17, 1996............          --              --       --           --       (2,608)           --          (2,608)
Transfer of interests and
  issuance of common stock in
  initial public offering.....     (24,450)     25,000,000      250      104,620        3,789            --          84,209
Redemption of Rutherford-Moran
  Exploration Company stock by
  majority shareholders.......          --              --       --      (12,360)          --            --         (12,360)
Exercise of call option on
  Thai Romo Limited stock.....          --              --       --       (3,130)          --            --          (3,130)
Issuance of common stock for
  initial public offering
  over-allotment..............          --         600,000        6       12,828           --            --          12,834
Grant of restricted stock
  awards......................                      51,338       --        1,185           --        (1,185)             --
Amortization of restricted
  stock awards................          --              --       --           --           --           127             127
Net loss from June 18, 1996 to
  December 31, 1996...........          --              --       --           --       (1,716)           --          (1,716)
                                  --------      ----------     ----     --------      -------       -------        --------
Balance at December 31,
  1996........................    $     --      25,651,338     $256     $103,143      $(1,716)      $(1,058)       $100,625
                                  ========      ==========     ====     ========      =======       =======        ========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       20
<PAGE>   23
 
                        RUTHERFORD-MORAN OIL CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                                                    SEPTEMBER 21,
                                                   JUNE 18,        JANUARY 1,                                       1990 (DATE OF
                                                    THROUGH         THROUGH                                         INCEPTION) TO
                                                 DECEMBER 31,       JUNE 17,       DECEMBER 31,     DECEMBER 31,    DECEMBER 31,
                                                     1996             1996             1995             1994            1996
                                                 -------------   --------------   --------------   --------------   -------------
                                                   (COMPANY)     (PREDECESSORS)   (PREDECESSORS)   (PREDECESSORS)
<S>                                              <C>             <C>              <C>              <C>              <C>
Cash flows from operating activities:
  Net loss.....................................    $ (1,716)        $ (2,608)        $   (512)        $  (393)        $  (5,737)
  Adjustments to reconcile net loss to cash
    provided by (used in) operating activities:
    Depreciation and amortization..............          25                4                5               2                37
    Amortization of deferred financing costs...         141               --               --              --               141
    Amortization of unearned compensation......         127               --               --              --               127
    Deferred income taxes......................        (530)           1,921               --              --             1,391
    Changes in assets and liabilities:
      Accounts Receivable......................        (764)            (559)          (1,628)             (5)           (2,956)
      Accounts Payable.........................      (4,116)           6,336              479             198             3,745
      Other current assets & liabilities.......          13             (172)             (25)              2              (195)
                                                   --------         --------         --------         -------         ---------
        Cash provided by (used in) operating
          activities...........................      (6,820)           4,922           (1,681)           (196)           (3,447)
                                                   --------         --------         --------         -------         ---------
Cash flows from investing activities:
  Investment in oil and gas properties.........     (36,804)         (30,377)         (36,776)         (8,159)         (122,901)
  Other capital expenditures...................        (101)             (38)             (12)            (19)             (197)
                                                   --------         --------         --------         -------         ---------
        Cash used in investing activities......     (36,905)         (30,415)         (36,788)         (8,178)         (123,098)
                                                   --------         --------         --------         -------         ---------
Cash flows financing activities:
  Deferred financing costs.....................      (1,689)              --               --              --            (1,689)
  Exercise of call option on Thai Romo Limited
    stock......................................      (3,130)              --               --              --            (3,130)
  Capital contributions........................          --               --            7,898           7,296            26,488
  Proceeds from initial public offering........      97,043               --               --              --            97,043
  Redemption of Rutherford-Moran Exploration
    Company stock by majority stockholders.....     (12,360)              --               --              --           (12,360)
  Proceeds from loans from stockholders........          --           15,654            6,993              --            24,994
  Payments on loans from stockholders..........     (24,144)              --               --              --           (24,994)
  Capital distributions........................          --               --               --              --            (2,205)
  Borrowings under bank notes..................      22,842           29,164           32,985           1,400            86,391
  Repayments of bank notes.....................     (49,664)         (13,885)              --              --           (63,549)
                                                   --------         --------         --------         -------         ---------
        Cash provided by financing
          activities...........................      28,898           30,933           47,876           8,696           126,989
                                                   --------         --------         --------         -------         ---------
        Net increase (decrease) in cash and
          cash equivalents.....................     (14,827)           5,440            9,407             322               444
Cash and cash equivalents, beginning of
  period.......................................      15,271            9,831              424             102                --
                                                   --------         --------         --------         -------         ---------
Cash and cash equivalents, end of period.......    $    444         $ 15,271         $  9,831         $   424         $     444
                                                   ========         ========         ========         =======         =========
Supplemental disclosures of cash flow
  information: Cash paid during the period for
  interest.....................................    $  1,139         $    767         $    211         $   220         $   1,279
                                                   ========         ========         ========         =======         =========
  Cash paid during the period for income tax...    $     --         $     --         $     --         $    --         $      --
                                                   ========         ========         ========         =======         =========
Supplemental disclosure of noncash investing
  and financing activities:
  Issuance of partnership interest in Thai Romo
    Limited for loan acquisition costs.........    $     --         $     --         $    400         $    --         $     400
                                                   ========         ========         ========         =======         =========
  Capitalization of amortized loan acquisition
    costs......................................    $     --         $    168         $    231         $    --         $     399
                                                   ========         ========         ========         =======         =========
  Interests in Thai Romo Limited and
    Rutherford-Moran Exploration Company
    contributed for common stock...............    $     --         $ 24,450         $     --         $    --         $  24,450
                                                   ========         ========         ========         =======         =========
  Predecessor retained earnings reclassified to
    additional paid-in capital.................    $  3,789         $     --         $     --         $    --         $   3,789
                                                   ========         ========         ========         =======         =========
  Premium deferred and premium on written
    option.....................................    $    843         $    557         $     --         $    --         $   1,400
                                                   ========         ========         ========         =======         =========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       21
<PAGE>   24
 
                        RUTHERFORD-MORAN OIL CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1  ORGANIZATION
 
     The accompanying consolidated financial statements of Rutherford-Moran Oil
Corporation ("RMOC" or Company), a Delaware corporation, have been prepared
pursuant to the rules and regulation of the Securities and Exchange Commission
("SEC").
 
     The Company is an independent energy company engaged in the acquisition,
exploration, development and production of oil and gas properties in Southeast
Asia. As of December 31, 1996, the Company's exploration activities are entirely
in the Gulf of Thailand and are conducted through its subsidiary, Thai Romo,
Limited ("Thai Romo").
 
     The financial statements reflect all adjustments that, in the opinion of
management, are necessary for a fair presentation.
 
NOTE 2  SIGNIFICANT ACCOUNTING POLICIES
 
PRINCIPLES OF CONSOLIDATION
 
     In April 1996, Rutherford/Moran Oil Corporation changed its name to
Rutherford-Moran Exploration Company ("RMEC"). RMEC was formed on September 21,
1990 (date of inception), for the purpose of holding an interest in an oil and
gas concession in Thailand through its subsidiary, Thai Romo, which was
organized as a foreign corporation under the laws of the Kingdom of Thailand.
Thai Romo was formed as a wholly owned subsidiary of RMEC. Thai Romo is one of
the concessionaires under the Petroleum Concession No. 1/2534/36 (the
"Concession") awarded by the Ministry of Industry of the Kingdom of Thailand for
the development and production of oil and gas reserves in offshore Block B8/32
in the central portion of the Gulf of Thailand. The Concession was awarded on
August 1, 1991, to Thai Romo, Thaipo, a wholly owned subsidiary of Pogo
Producing Company, and Maersk Oil (Thailand), Limited ("MOTL"), a wholly-owned
subsidiary of Maersk Olie og Gas As. Subsequent to the award, the Sophonpanich
Co., Limited ("Sophonpanich") elected to participate in the Concession as a
co-venturer. Thaipo has been the operator of the Tantawan Field within the
Concession, and until March 1997 the remainder of the Concession was operated by
Maersk Oil (Thailand) Ltd. Subsequent to March 1997, Thaipo operated the
remainder of the concession, as the shares of Maersk Oil (Thailand) Limited were
sold to the concessionaires. Effective June 17, 1996, the stockholders of RMEC
and the partners of Thai Romo exchanged their interests for shares of common
stock of a newly formed entity, RMOC. RMOC is the parent company of RMEC and
Thai Romo Holdings, Inc. RMEC and Thai Romo Holdings, Inc. collectively own the
outstanding shares of Thai Romo. During June 1996, RMOC sold 16% of its common
stock in an initial public offering (the "Offering") in conjunction with the
consummation of the exchange of RMEC common stock and Thai Romo interests for
common stock of RMOC. In conjunction with the Offering, RMEC redeemed for $12.4
million approximately 56,000 shares of its common stock from Patrick R.
Rutherford and John A. Moran, majority stockholders of RMEC (the "Redemption"),
exercised RMEC's call option on 3% of the partners' interest in Thai Romo held
by Red Oak Holdings, Inc. for $3.1 million and repaid outstanding debt of $62
million owed stockholders and banks. On June 18, 1996, the stockholder's equity
accounts were adjusted to reflect the deficit accumulated during the development
stage to additional paid-in capital upon RMEC and Thai Romo becoming subject to
federal income taxes. During July 1996, an additional 2.4% of RMOC's common
stock was sold when the underwriters exercised their over-allotment option.
 
     The consolidated financial statements for the period from June 18, 1996 to
December 31, 1996 include the accounts of RMOC and its wholly owned
subsidiaries, RMEC, Thai Romo and Thai Romo Holdings, Inc. All material
intercompany accounts and transactions have been eliminated in consolidation.
 
     The financial statements for each of the years in the two-year period ended
December 31, 1995, and the period from January 1, 1996 to June 17, 1996 include
the accounts of RMEC, Thai Romo and Thai Romo
 
                                       22
<PAGE>   25
 
Holdings, Inc. (the "Predecessors") (combined). All material intercompany
accounts and transactions have been eliminated in the combination. The combined
financial statements are presented due to the commonality of the stockholders
and partners of RMEC and Thai Romo.
 
     The Company's planned principal operations have commenced, but revenue from
production did not begin until February 1997. As a result, the Company is
considered a development stage company.
 
CASH AND CASH EQUIVALENTS
 
     The Company considers all currency and any liquid investments with a
maturity of three months or less to be cash equivalents.
 
OIL AND GAS PROPERTIES
 
     The Company and its subsidiaries follow the full cost method of accounting
for its investment in oil and gas properties. Under this method of accounting,
all costs of acquisition, exploration and development of oil and gas reserves
(including such costs as leasehold acquisition costs, geological expenditures,
dry hole costs and tangible and intangible development costs and directly
associated internal costs) are capitalized into a "full cost pool" as incurred.
Oil and gas properties, the estimated future expenditures to develop proved
reserves, and estimated future abandonment, environmental and dismantlement
costs are depleted and charged to operations using the unit-of-production method
based on the ratio of current production to proved oil and gas reserves as
estimated by engineering consultants. The Concession, a major development
project, has had no production of reserves, and accordingly, no depreciation,
depletion, or amortization of oil and gas properties has been provided since
inception. Production began in February 1997 at which time depletion will begin.
Disposition of oil and gas properties are recorded as adjustments to capitalized
costs, with no gain or loss recognized unless such adjustments would
significantly alter the relationship between capitalized costs and proved
reserves of oil and gas. To the extent that capitalized costs of oil and gas
properties, net of accumulated depletion and amortization, exceed the
tax-effected discounted future net revenues of proved oil and gas reserves, such
excess capitalized costs would be charged to operations. No such write-down in
book value was required during the years ending December 31, 1994, 1995, and
1996.
 
OTHER PROPERTY AND EQUIPMENT
 
     Other property consists primarily of furniture, office equipment, leasehold
improvements and computers. The majority of these assets are depreciated on a
straight-line basis with useful lives of seven years.
 
HEDGING
 
     During the first quarter of 1996, the Company entered into crude oil price
swaps with an affiliate of its lender. While the swaps serve as hedges intended
to reduce the Company's exposure to declines in the market price of crude oil,
they may limit the Company's gain from increases in the market price. At
December 31, 1996, the crude oil price swap agreements incorporated one million
barrels ("MMBbl") of oil volumes from April through December 1997 at a weighted
average price of $15.92 per Bbl and 1.75 MMBbl of oil volumes from January
through December 1998 at a weighted average price of $15.92 per Bbl. At December
31, 1996, the Company estimates the cost of liquidating this position to be
approximately $8.5 million.
 
     Also, the Company sold to an affiliate of its bank lender an option to
purchase 1.25 MMBbl of aggregate oil volumes from January through December 1999
at a price of $18.30 per Bbl. The Company has accounted for the swap option
separately as it does not qualify as a hedge. At December 31, 1996, the Company
estimates the fair market value of this position to be $1.4 million and has
recorded the amount as a liability on the consolidated balance sheet.
 
                                       23
<PAGE>   26
 
REVENUE RECOGNITION
 
     The Company records revenues using the entitlements method, whereby
production volumes received in excess of the Company's ownership percentage in
the property is recorded as a liability. If less than the Company's entitlement
is received, the underproduction is recorded as a receivable.
 
GEOGRAPHICAL CONCENTRATION
 
     The Concession is located in the Gulf of Thailand. Consequently,
substantially all of Thai Romo's assets are subject to regulation by the
government of Thailand. Political changes, such as increases in tax rates or
nationalization of strategic or other assets by the government of Thailand,
could adversely affect the Company.
 
USE OF ESTIMATES
 
     Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities, the reporting of quantities
of proved oil and gas reserves, and the disclosure of contingent assets and
liabilities to prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
 
VALUE ADDED TAX REFUND RECEIVABLE
 
     Expenditures on certain concession joint operations are assessed a value
added tax by the government of Thailand. Because the concession operators have
obtained an exemption from value added taxes, all value added taxes are
refundable. Accordingly, a refund due is recorded when value added taxes are
paid by the operator.
 
STOCK-BASED COMPENSATION
 
     During 1996, the Company adopted Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation ("SFAS No. 123").
SFAS No. 123 allows a company to adopt a fair value based method of accounting
for a stock-based employee compensation plan or to continue to use the intrinsic
value based method of accounting prescribed by Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees ("APB No. 25"). The
Company has chosen to continue to account for stock-based compensation under APB
No. 25. Under this method, the Company has not recorded any compensation expense
related to stock options granted. The disclosures required by SFAS No. 123,
however, have been included in Note 8.
 
NOTE 3  INCOME TAXES
 
     Deferred taxes are accounted for under the asset and liability method of
accounting for income taxes. Under this method deferred income taxes are
recognized for the tax consequences of "temporary differences" by applying
enacted statutory tax rates applicable to future years to differences between
the financial statement carrying amounts and the tax basis of existing assets
and liabilities. The effect on deferred taxes of a change in tax rates is
recognized in income in the period the change occurs.
 
     The Predecessors were a limited partnership and an S Corporation under the
Internal Revenue Code of 1986, as amended. As such, they did not incur federal
income taxes; the taxable income or loss was passed through to the partners or
stockholders. As a result of the initial public offering in June 1996, the
Company became a taxable entity and recorded a one-time charge of $1,921,000,
representing the difference between the financial statement and income tax basis
of its foreign oil and gas properties. Income tax expense for the period June
18, 1996, through December 31, 1996, was a benefit of $530,000, which represents
a deferred foreign income tax benefit.
 
                                       24
<PAGE>   27
 
     Total income tax benefit for the period June 18, 1996, through December 31,
1996, differs from the amount computed by applying the Federal income tax rate
to the loss before income taxes. The reasons for this difference follows
(amounts in thousands):
 
<TABLE>
<S>                                                           <C>
Expected federal income tax benefit.........................  $764
Foreign income tax rate difference..........................   359
Nondeductible general and administrative costs for foreign
  income tax purposes.......................................  (388)
Nondeductible interest for foreign income tax purposes......  (205)
                                                              ----
                                                              $530
                                                              ====
</TABLE>
 
     The tax effects of temporary differences that result in a significant
portion of the deferred income tax assets and liabilities and a description of
the financial statement items creating these differences are as follows on
December 31, 1996 (amounts in thousands):
 
<TABLE>
<S>                                                           <C>
Net Operating loss carryforwards............................  $(6,425)
                                                              -------
          Total deferred income tax assets..................   (6,425)
                                                              -------
Property and equipment......................................  $ 7,816
                                                              -------
          Total deferred income tax liabilities.............    7,816
                                                              -------
Net deferred income tax liability...........................  $ 1,391
                                                              =======
</TABLE>
 
     At December 31, 1996, the Company had a net operating loss carryforward of
$12.4 million for Thailand, tax purposes, which does not expire. No valuation
allowance has been recorded as of December 31, 1996, as the Company believes it
is more likely than not that the deferred tax asset is realizable.
 
NOTE 4  ACQUISITIONS
 
     On December 19, 1996, Rutherford-Moran Oil Corporation, through its wholly
owned subsidiary, Thai Romo, exercised its preferential right to purchase 46.34%
of the outstanding shares of Maersk Oil (Thailand), Limited ("MOTL"), a wholly
owned subsidiary of Maersk Olie og Gas As of Copenhagen, Denmark ("Maersk").
MOTL is a former co-concessionaire in Block B8/32 located offshore Thailand
owning a 31.67% interest. The purchase was consummated on March 3, 1997, with
Thai Romo Holdings, Inc., a wholly owned subsidiary of the Company and Thai
Romo's nominee under the Share Sales Agreement with Maersk, purchasing the
shares for $28,617,000, which included $1,554,000 in satisfaction of outstanding
debt. After the closing, MOTL is in the process of being renamed B8/32 Partners.
 
     The purchase price was established in a Share Sale Agreement dated November
2, 1996, between Maersk and BG Egypt S.A. Pursuant to the Joint Operating
Agreement among the co-concessionaires, Thai Romo and the remaining
co-concessionaires jointly had a preferential right to purchase the stock of
MOTL on the terms and conditions agreed between Maersk and BG Egypt S.A.
 
     The remaining 53.66% of MOTL's stock was purchased by Pogo Producing
Company, and by Palang Sophon Limited of Bangkok, Thailand. Thaipo Limited and
Palang Sophon Limited and MOTL were co-concessionaires with Thai Romo Limited
prior to the sale of MOTL. As a result, RMOC's interest in the entire Block
B8/32 has now effectively increased from 31.67% to 46.34%.
 
     The Company financed the purchase of MOTL by utilizing $20,000,000 from a
new credit facility entered into with Chase Manhattan Bank ("Chase") which term
expires on June 30, 1997. The remainder of the payment was financed with
borrowings under the Company's existing revolving credit facility with Chase.
The credit facility contains terms which are substantially identical to those in
the Company's Revolving Credit Facility. The Company expects to repay the new
credit facility with proceeds from the redetermined borrowing base in its
Revolving Credit Facility.
 
                                       25
<PAGE>   28
 
NOTE 5  DEBT
 
CREDIT FACILITY
 
     On September 20, 1996, the Company entered into a $150,000,000 Revolving
Credit Facility with a group of commercial lenders. The Revolving Credit
Facility has a final maturity of September 30, 1999 and a borrowing base
limitation at December 31, 1996, of $60,000,000. The Revolving Credit Facility
is secured by the stock of certain subsidiaries of the Company.
 
     Under the terms of the Revolving Credit Facility, outstanding borrowings
will bear interest at the Base Rate (defined as the greater of the Federal Funds
Rate plus .5% or the agent bank's prime rate) plus .25% or the Eurodollar Rate
(defined as an average of the London Interbank Offered Rate (LIBOR) of two
banks) plus 1.75%, at the Company's option. Interest is payable quarterly. The
Company is also assessed a commitment fee equal to .5% per annum on the average
daily balance of the unused borrowing base. The Revolving Credit Facility
provides for semi-annual borrowing base redeterminations as well as certain
covenants, including restrictions on additional indebtedness, payment of
dividends and an interest coverage ratio.
 
     At December 31, 1996, $22,842,000 was outstanding under the Credit Facility
at interest rates ranging from 7.125% to 7.4375% per annum. Such facility is
payable in 1999.
 
NOTES PAYABLE
 
     In November 1994, Thai Romo executed a Loan Facility Agreement with a
commercial lender under which Thai Romo could borrow up to $5,000,000 at any
time during the period from November 1994 to the final maturity date in April
1995. In December 1994, Thai Romo borrowed $1,400,000 under this Loan Facility
Agreement. The annual interest rate on amounts borrowed under the Loan Facility
Agreement was the LIBOR rate plus 4%. During July 1995, December 1995, and April
1996, Thai Romo amended the Loan Facility Agreement to allow it to borrow up to
$44,000,000 with a maturity date of June 28, 1996. At December 31, 1995 the
amount outstanding under the Loan Facility Agreement was $21,000,000.
 
     In September 1995, RMEC obtained a Line of Credit from the same commercial
lender to borrow up to $5,000,000. This amount was increased in November 1995 to
$15,000,000 with a maturity date of June 28, 1996. The annual interest rates on
amounts borrowed under the Line of Credit ranged from prime plus  1/2% to prime
plus 1% and from LIBOR plus 2 1/4% to LIBOR plus 2 3/4%, at the Company's
option. At December 31, 1995, the amount outstanding under the Line of Credit
was $13,385,000.
 
     All debt pertaining to the Loan Facility Agreement and the Line of Credit
was retired on June 28, 1996, with proceeds from the initial public offering.
 
LOANS FROM STOCKHOLDERS
 
     RMEC had loans from stockholders at December 31, 1995 as follows (amounts
in thousands):
 
<TABLE>
<CAPTION>
                                                          PAYMENT    INTEREST
                      STOCKHOLDER                          TERMS       RATE      1995
                      -----------                        ---------   --------   ------
<S>                                                      <C>         <C>        <C>
Patrick R. Rutherford..................................  On demand    Prime     $4,254
John A. Moran..........................................  On demand    Prime      4,036
Sidney F. Jones, Jr....................................  On demand    Prime        200
                                                                                ------
                                                                                $8,490
                                                                                ======
</TABLE>
 
     The loans from stockholders were retired on June 28, 1996 with proceeds
from the initial public offering.
 
     Interest of $368,000, $190,000 and $107,000 was expensed by RMEC under the
above loans during January 1, 1996 through June 17, 1996 and the years ended
December 31, 1995 and 1994, respectively, and $924,000 was expensed during the
period September 21, 1990 (date of inception), to June 17, 1996.
 
                                       26
<PAGE>   29
 
NOTE 6  CAPITAL STOCK
 
COMMON AND PREFERRED STOCK
 
     The Certificate of Incorporation of the Company authorizes the issuance of
up to 40,000,000 shares of common stock and 10,000,000 shares of preferred
stock, the terms, preferences, rights and restrictions of which will be
established by the Board of Directors of the Company. All shares of common stock
have equal voting rights of one vote per share on all matters to be voted upon
by stockholders. Cumulative voting for the election of directors is not
permitted.
 
     On June 17, 1996, the Company sold 4,000,000 shares of its common stock in
an initial public offering at $23 per share. During July 1996, the Company sold
an additional 600,000 shares at $23 per share when the underwriters exercised
their over-allotment option.
 
NOTE 7  RELATED PARTY TRANSACTIONS
 
     Historically, Rutherford Oil Corporation ("Rutherford Oil"), which is
controlled by Patrick R. Rutherford, obtained certain oil and gas related and
medical insurance on behalf of the Company and performed certain payroll related
services for the Company. The Company has reimbursed Rutherford Oil for its out
of pocket expenses relating to such insurance and services, which aggregated
$133,000, $731,000, $366,000 and $1,723,000 during period January 1, 1996 to
June 17, 1996 and the years ended December 31, 1995 and 1994 and the period from
September 21, 1990 (date of inception) to December 31, 1996. Subsequent to June
1996 Rutherford Oil has no longer obtained such insurance or performs any such
services on behalf of the Company.
 
NOTE 8  EMPLOYEE BENEFIT PLANS
 
KEY EMPLOYEE STOCK PLAN
 
     During 1996, the Company established its 1996 Key Employee Stock Plan (the
"Stock Plan"). Under the Stock Plan, an aggregate of 500,000 shares will be
available for the granting of either stock options or restricted stock awards.
The Compensation Committee of the Board of Directors administers this plan.
 
     Stock options issued under the Stock Plan may not exceed a term of more
than ten years and the stock option price may not be less than the fair market
value of the shares at the time the option is granted. The options are
exercisable ratably over a five year period. At December 31, 1996, a total of
105,750 stock options were granted under the Stock Plan, none of which are
currently exercisable. The exercise price of all options granted is $23.
 
     The Compensation Committee may award shares of restricted stock to
employees for no payment by the employee or for a payment below the fair market
value on the date of grant. Issuance of the stock may be subject to certain
restrictions, but in no case can the conditions continue for more than ten years
from the date of the award. As the shares vest, each employee receiving such
restricted stock has all of the rights of a stockholder, including without
limitation, the right to vote such shares. At December 31, 1996, restricted
stock awards for 51,338 shares had been granted, at no cost to the employees.
Deferred compensation is recorded at the date of the restricted stock award and
is amortized into compensation expense over the vesting period. At December 31,
1996, deferred compensation of $1,185,000 was recorded and related compensation
expense of $127,000 was recognized during the period June 18, 1996 to December
31, 1996. Substantially all restricted stock awards outstanding at December 31,
1996, vest ratably over a five year period.
 
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
 
     During 1996, the Company established its 1996 Non-Employee Director Stock
Option Plan (the "Director Plan"). Under the Director Plan, an aggregate of
50,000 shares of common stock will be available for the granting of stock
options. The exercise price of a stock option granted pursuant to the Director
Plan may not be less than the fair market value of the common stock on the date
of grant and the stock option term may not exceed ten years. Stock options
granted under the Director Plan are exercisable in full after the first
anniversary of grant. The Director Plan provides for an initial grant of stock
options to each non-employee
 
                                       27
<PAGE>   30
 
director to purchase 2,500 shares of common stock contemporaneously with the
initial public offering and the annual grant of stock options to acquire 1,000
shares of stock to each non-employee director serving on the board of directors
following each annual meeting of the stockholders. As of December 31, 1996,
non-employee directors have been granted stock options to acquire 10,000 shares
of common stock, none of which are exercisable. The exercise price of all
options granted to date is $23.
 
ACCOUNTING FOR STOCK-BASED COMPENSATION
 
     The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees", and related interpretations in accounting for
its Stock Plan and Director Plan. Accordingly, no compensation has been
recognized for stock-based compensation other than for restricted stock awards.
Had compensation cost for the stock options issued under the Stock Plan and
Director Plan been determined based upon the fair value at the grant date for
awards under these plans consistent with the methodology prescribed under the
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation", the Company's net loss and net loss per share would have been
increased by approximately $1,812,000, or $0.07 per share. The fair value of the
stock options granted during the twelve-month period ended December 31, 1996, is
estimated as $16.32 on the date of grant using the Black-Scholes option pricing
model with the following assumptions: dividend yield of 0%, volatility of 23%,
risk-free interest rate of 6.42%, assumed forfeiture rate of 0%, and an expected
life of 9.5 years.
 
     At December 31, 1996, 342,912 and 40,000 shares of common stock were
reserved for issuance pursuant to the Stock Plan and the Director Plan,
respectively. The remaining weighted average life of the 115,750 options
outstanding at December 31, 1996, is 9.5 years.
 
NOTE 9  COMMITMENTS AND CONTINGENCIES
 
GUARANTY AND INDEMNITY AGREEMENT
 
     On February 9, 1996, Thai Romo Limited entered into a Guaranty and
Indemnity Agreement associated with a Bareboat Charter agreement between
Tantawan Services, LLC, as charterer, and Tantawan Production B.V., as lessor,
for the leasing and operation of a Floating Production Storage and Offloading
system (FPSO) known as the Tantawan Explorer. The initial duration of the
Bareboat Charter Agreement is 10 years commencing upon delivery of crude oil to
the FPSO. The hire rate under the Bareboat Charter is $55,000 per day. Thai Romo
has guaranteed payment of 46.3% of these costs or approximately $25,448 per day.
The guaranty terminates upon the expiration of the Bareboat Charter Agreement,
notwithstanding the lawful termination or cancellation of the Bareboat Charter
Agreement. Should the initial term of the agreement be extended or the FPSO
purchased, Thai Romo would remain obligated for 46.3% of any subsequent
obligations incurred by Tantawan Services.
 
LEASE COMMITMENTS
 
     RMEC is subject to an office lease which expires in February 2002. The
commitment under this lease is as follows (amounts in thousands):
 
<TABLE>
<CAPTION>
                            YEAR
------------------------------------------------------------
<S>                                                           <C>
1997........................................................  $117
1998........................................................   118
1999........................................................   126
2000........................................................   142
Thereafter..................................................   166
                                                              ----
                                                              $669
                                                              ====
</TABLE>
 
     Rental expense paid during the periods June 18, 1996 to December 31, 1996
and January 1, 1996 to June 17, 1996 and the years ended December 31, 1995 and
1994 and the period from September 21, 1990
 
                                       28
<PAGE>   31
 
(date of inception), to December 31, 1996, was $45,000, $52,000, $67,000,
$77,000 and $285,000, respectively.
 
NOTE 10  LITIGATION
 
     As of December 31, 1996, the Company is not aware of any current or
potential legal proceeding.
 
NOTE 11  SINGLE CUSTOMER
 
     All oil and natural gas produced from the Tantawan Field will be sold to
PTT, which maintains a monopoly over oil and gas transmission and distribution
in Thailand. The Concessionaires are required to give first priority to the Thai
government to purchase the oil and natural gas produced by the Concessionaires.
 
     A gas sales agreement (GSA) with PTT was signed on November 7, 1995. Under
the GSA, which is a take or pay agreement, contracted deliveries of gas to PTT
are required to commence at the conclusion of a 72-hour production test, which
was completed in March 1997. The natural gas price is based on a formula which
provides adjustments to the base price for natural gas on each April 1 and
October 1. Adjustments will be made to reflect changes in (i) wholesale prices
in Thailand, (ii) the U.S. producer price index for oil field machinery and
tools, and (iii) medium fuel oil prices. Adjustment factors for oil field
machinery and medium fuel oil prices may be subsequently adjusted for Thai
Baht/U.S. Dollar fluctuations, since payments from PTT will be in Thai Baht. The
base price was estimated to be equivalent to $2.12 per thousand cubic feet (Mcf)
at January 1, 1997.
 
     The oil and condensate will be purchased by PTT, which has the right of
first refusal on any hydrocarbon liquids produced domestically. The terms and
conditions of a sales agreement are under negotiation pursuant to a Memorandum
of Understanding signed on November 14, 1996. If PTT does not wish to purchase
this oil, then the Company believes that it can sell the oil to a variety of
purchasers.
 
NOTE 12  SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)
 
     At December 31, 1996, and 1995 the Concession accounted for 100% of the
Company's future net cash flow from proved reserves.
 
     Included herein is information with respect to oil and gas acquisition,
exploration, development and production activities, which is based on estimates
of year-end oil and gas reserve quantities and estimates of future development
costs and production schedules. The prices used in the reserve estimates are
prices the Company estimated it would have received at the respective date had
the Tantawan and Benchamas fields had been producing at such time, except where
fixed and determinable price escalations or oil hedges are provided by contract.
Reserve quantities and future production are based primarily upon reserve
reports prepared by the independent petroleum engineering firm of Ryder Scott
Company. These estimates are inherently imprecise and subject to substantial
revision.
 
     All reserve estimates presented herein were prepared by Ryder Scott
Company, independent petroleum engineers. The Company cautions that there are
many uncertainties inherent in estimating proved reserve quantities, and in
projecting future production rates and the timing of future development
expenditures, including many factors beyond the control of the producer.
Accordingly, these estimates are subject to change as additional information
becomes available. Reservoir engineering is a subjective process of estimating
underground accumulations of oil and gas that cannot be measured in an exact
way, and the accuracy of any reserve estimate is a function of the quality of
available data and of engineering and geological interpretation and judgment.
Results of drilling, testing and production subsequent to the date of an
estimate may justify revision of the estimate. Accordingly, reserve estimates
are often different from the quantities of oil and gas that are ultimately
recovered.
 
     Estimates of future net cash flows from proved reserves of oil and gas were
made in accordance with Statement of Financial Accounting Standards No. 69,
Disclosures about Oil and Gas Producing Activities. The estimates are based on
prices the Company estimated it would have received at the respective date had
the Tantawan and Benchamas fields been producing at such time. Estimated future
cash inflows are reduced
 
                                       29
<PAGE>   32
 
by estimated future development and production costs based on year-end cost
levels, assuming continuation of existing economic conditions, and by estimated
future revenue tax expense. Tax expense is calculated by applying the existing
U.S. and Thailand statutory tax rates, including any known future changes. The
results of these disclosures should not be construed to represent the fair
market value of the Company's oil and gas properties. A market value
determination would include many additional factors including: (i) anticipated
future increases and decreases in oil and gas prices and production and
development costs; (ii) an allowance for return on investment; (iii) the value
of additional reserves not considered proved at the present, which may be
recovered as a result of further exploration and development activities; and
(iv) other business risks.
 
     In computing the present value of the estimated future net cash flows, a
discount factor of 10% was used pursuant to SEC regulations to reflect the
timing of those net cash flows. Present value, regardless of the discount rate,
used is materially affected by assumptions about timing of future production,
which may prove to have been inaccurate. The following reserve value data
represent estimates only, which are subject to uncertainty given the current
energy markets.
 
  Capitalized Costs of Oil and Gas Producing Activities
 
     The following table sets forth the aggregate amounts of capitalized costs
relating to the Company's oil and gas producing activities and the aggregate
amount of related accumulated depreciation and amortization as of the dates
indicated (amounts in thousands).
 
<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                              --------------------
                                                                1996        1995
                                                              --------     -------
<S>                                                           <C>          <C>
Productive and nonproductive properties being amortized.....  $123,300     $55,951
Less accumulated depreciation and amortization..............        --          --
                                                              --------     -------
Net capitalized costs.......................................  $123,300     $55,951
                                                              ========     =======
</TABLE>
 
  Costs Incurred in Oil and Gas Producing Activities
 
     The following table reflects the costs incurred in oil and gas property
acquisition, exploration and development activities during the periods indicated
(amounts in thousands).
 
<TABLE>
<CAPTION>
                                                                          SEPTEMBER 1990
                                                                             (DATE OF
                                              YEAR ENDED DECEMBER 31,     INCEPTION) TO
                                             --------------------------    DECEMBER 31,
                                              1996      1995      1994         1996
                                             -------   -------   ------   --------------
<S>                                          <C>       <C>       <C>      <C>
Property acquisition Costs -- proved
  properties...............................  $    --   $ 4,224   $   --      $  4,224
Exploration costs..........................    7,460    26,601    8,159        53,004
Development cost...........................   59,890     6,182       --        66,072
                                             -------   -------   ------      --------
                                             $67,350   $37,007   $8,159      $123,300
                                             =======   =======   ======      ========
</TABLE>
 
                                       30
<PAGE>   33
 
     The following table sets forth the Company's interest in estimated total
proved oil and gas reserves for the years ended December 31, 1996, 1995, and
1994:
 
<TABLE>
<CAPTION>
                                                                 OIL        GAS
                                                               (BBLS)      (MMCF)
                                                              ---------    ------
<S>                                                           <C>          <C>
Total proved reserves at December 31, 1993..................  5,424,813    33,474
New discoveries and extensions..............................  2,249,559    23,265
                                                             ----------    ------
Total proved reserves at December 31, 1994..................  7,674,372    56,739
New discoveries and extensions..............................  7,634,009    43,376
Revisions of previous estimates.............................    133,636     5,208
Purchase of reserves........................................  3,554,975    26,284
                                                             ----------    ------
Total proved reserves at December 31, 1995.................. 18,996,992   131,607
New discoveries and extensions..............................  6,209,030    46,447
Revisions of previous estimates............................. (3,874,242)  (33,056)
                                                             ----------    ------
Total proved reserves at December 31, 1996.................. 21,331,780   144,998
                                                             ==========    ======
Proved developed reserves:
  December 31, 1994.........................................         --        --
  December 31, 1995.........................................         --        --
  December 31, 1996.........................................  5,191,993    45,998
                                                             ==========    ======
</TABLE>
 
     Proved reserves are estimated quantities of natural gas, crude oil, and
condensate which geological and engineering data demonstrate, with reasonable
certainty, to be recoverable in future years from known reservoirs under
existing economic and operating conditions. Proved developed reserves are proved
reserves that can be expected to be recovered through existing wells with
existing equipment and operating methods. Total reserves do not include reserves
acquired in the MOTL purchase on March 3, 1997.
 
  Standardized Measure of Discounted Future Net Cash Flows
 
     The following table reflects the Standardized Measure of Discounted Future
Net Cash Flows relating to the Company's interest in proved oil and gas reserves
as of December 31, 1996, 1995 and 1994 (amounts in thousands):
 
<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                     --------------------------------
                                                       1996        1995        1994
                                                     ---------   ---------   --------
<S>                                                  <C>         <C>         <C>
Future cash inflows................................  $ 811,239   $ 621,742   $265,802
Future development costs...........................   (184,753)   (127,198)   (94,155)
Future production costs............................   (245,398)   (207,352)   (60,306)
                                                     ---------   ---------   --------
Future net cash inflows before income taxes........    381,088     287,192    111,341
Future income taxes................................   (134,276)   (137,204)   (48,948)
                                                     ---------   ---------   --------
Future net cash flows..............................    246,812     149,988     62,393
10% discount.......................................   (103,446)    (74,669)   (28,429)
                                                     ---------   ---------   --------
Standardized measure of discounted future net cash
  inflows..........................................  $ 143,366   $  75,319   $ 33,964
                                                     =========   =========   ========
</TABLE>
 
                                       31
<PAGE>   34
 
     Principal changes in the "Standardized Measure of Discounted Futures Net
Cash Flows" attributable to the Company's proved oil and gas reserves for the
periods indicated are as follows (amounts in thousands):
 
<TABLE>
<CAPTION>
                                                                           SEPTEMBER 21,
                                                                                1990
                                                                              (DATE OF
                                             YEAR ENDED DECEMBER 31,       INCEPTION) TO
                                          ------------------------------    DECEMBER 31,
                                            1996       1995       1994          1996
                                          --------   --------   --------   --------------
<S>                                       <C>        <C>        <C>        <C>
New discoveries and extensions..........  $101,776   $ 52,372   $ 17,235      $195,971
Revisions of quantity estimates.........   (51,043)     6,027         --       (45,016)
Purchases of reserves in place..........        --     27,182         --        27,182
Net changes in sales and transfer
  prices, net of production costs.......     5,647     (2,712)     8,521         4,816
Accretion of discount...................    13,163      5,211      1,717        21,512
Net Change in income taxes..............     2,405    (38,163)   (14,159)      (53,907)
Change in production rates (timing) and
  other.................................    (3,901)    (8,561)     7,472        (7,192)
                                          --------   --------   --------      --------
Net Change..............................  $ 68,047   $ 41,356   $ 20,786      $143,366
                                          ========   ========   ========      ========
</TABLE>
 
NOTE 13  FINANCIAL INSTRUMENTS
 
  Determination of Fair Values of Financial Instruments
 
     Fair value for cash and cash equivalents, short-term investments,
receivables and payables at December 31, 1996, and December 31, 1995,
approximates carrying value.
 
     The carrying amount of cash equivalents and value added tax refund
receivable approximates fair value because of the short maturity of these
instruments. The carrying amount of joint interest receivables and payables and
accounts payable and accrued expenses approximates fair value because they are
generally paid or earned within sixty days. The carrying amount of note payable
to bank and loans from stockholders approximates fair value because the interest
rate is reset at periodic intervals. See Note 2 for discussion of the fair value
of hedging and swap options.
 
                                       32
<PAGE>   35
 
ITEM 9. CHANGES IN DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
 
     None.
 
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
ITEM 11. EXECUTIVE COMPENSATION
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION
 
     For the information called for by Items 10, 11, 12 and 13, reference is
made to the Company's definitive proxy statement for its 1996 Annual Meeting of
Stockholders, which will be filed with the Securities and Exchange Commission
within 120 days after December 31, 1996, and portions of which are incorporated
herein by reference.
 
                                       33
<PAGE>   36
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL SCHEDULES AND REPORTS ON FORM 8-K
 
     (a)1. Financial Statements
 
     The following financial statements and the Reports of Independent Public
Accountants are filed as a part of this report:
 
     Independent Auditors' Report
 
     Consolidated Statements of Operations, for the periods June 18, 1996
        through December 31, 1996 (Company), and January 1, 1996 through June
        17, 1996 and for the years ended December 31, 1995 and 1994
        (Predecessors) and Inception to December 31, 1996
 
     Consolidated Balance Sheets, December 31, 1996 (Company), and 1995
        (Predecessors)
 
     Consolidated Statements of Changes in Stockholder's and Predecessors'
        Equity, for the periods June 18, 1996 through December 31, 1996
        (Company), and January 1, 1996 through June 17, 1996 and for the years
        ended December 31, 1995 and 1994 and Inception to December 31, 1993
        (Predecessors)
 
     Consolidated Statements of Cash Flows, for the periods June 18, 1996
        through December 31, 1996 (Company), and January 1, 1996 through June
        17, 1996 and for the years ended December 31, 1995 and 1994
        (Predecessors) and Inception to December 31, 1996
 
     Notes to Consolidated Financial Statements
 
          2. Financial Statements Schedules
 
     Financial statement schedules have been omitted because they are not
applicable for the information required therein or are included elsewhere in the
financial statements or notes thereto.
 
          3. Exhibits
 
<TABLE>
<S>                      <C>
           *3.1          -- Restated Certificate of Incorporation of the Company.
           *3.2          -- Bylaws of the Company dated April 1, 1996.
          *10.1          -- Ministry of Industry Petroleum Concession dated August 1,
                            1991, awarded to Thai Romo, Thiapo and Maersk Oil.
          *10.2          -- Ministry of Industry Supplementary Petroleum Concession
                            (No. 1) to Petroleum Concession No. 1/2534/36 dated March
                            6, 1992, awarded to Maersk Oil (Thailand) Ltd. and Thaipo
                            Limited and Thai Romo Limited.
          *10.3          -- Ministry of Industry Supplementary Petroleum Concession
                            (No. 2) to Petroleum Concession No. 1/2535/36 dated
                            September 4, 1995, awarded to Thaipo Limited and Thai
                            Romo Limited.
          *10.4          -- Joint Operating Agreement to be effective as of March 3,
                            1995 among Thai Romo, Thaipo and Sophonpanich.
          *10.5          -- Joint Operating Agreement dated August 1, 1991 among Thai
                            Romo, Thaipo, Maersk Oil and Sophonpanich.
          *10.6          -- Gas Sales Agreement dated November 7, 1995 between
                            Petroleum Authority of Thailand, Thai Romo, Thaipo, and
                            Sophonpanich.
          *10.7          -- Bareboat Charter Agreement dated February 9, 1996 between
                            Tantawan Production B.V. and Tantawan Services, L.L.C.
          *10.8          -- Operating Agreement between SBM Marine Services Thailand
                            Ltd. and Tantawan Services, L.L.C. dated February 9,
                            1996.
          *10.9          -- Guaranty and Indemnity Agreement dated February 9, 1996,
                            by Thai Romo to Tantawan Production B.V.
          *10.10         -- Guaranty and Indemnity Agreement dated February 9, 1996,
                            by Thai Romo to SBM Marine Services Thailand Ltd.
</TABLE>
 
                                       34
<PAGE>   37
 
<TABLE>
<C>                      <S>
          *10.11         -- 1996 Key Employee Stock Plan (and form of option and
                            stock agreements).
          *10.12         -- 1996 Non-Employee Director Stock Option Plan (and form of
                            option agreement).
          *10.13         -- Letter Agreement dated March 28, 1996 with David
                            Chavenson.
        ***10.14         -- $150,000,000 Revolving Credit Agreement with The Chase
                            Manhattan Bank as Lender and Agent.
         **10.15         -- $20,000,000 Credit Agreement with The Chase Manhattan
                            Bank as Lender.
          *10.16         -- Registration Rights Agreement.
       ****21.1          -- Subsidiaries of the Company.
       ****27.1          -- Financial Data Schedule.
</TABLE>
 
---------------
 
   * Incorporated by reference from the Company's Registration Statement on Form
     S-1, as amended (File No. 333-4122).
 
  ** Incorporated by reference from the Company's Form 8-K dated March 3, 1997.
 
 *** Incorporated by reference from the Company's Quarterly Report on Form 10-Q
     for the period ended September 30, 1996.
 
**** Filed with this Report on Form 10-K.
 
     (b) Reports on Form 8-K
 
        No reports on Form 8-K were filed by the Registrant during the fourth
        quarter of the year ended December 31, 1996.
 
                                       35
<PAGE>   38
 
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
 
                                          RUTHERFORD-MORAN OIL CORPORATION
 
                                          BY:    /s/ PATRICK R. RUTHERFORD
                                            ------------------------------------
                                                   Patrick R. Rutherford
                                                  Chief Executive Officer
                                               (Principal Executive Officer)
 
Date: March 20, 1997
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
                      SIGNATURE                                        TITLE                        DATE
                      ---------                                        -----                        ----
<C>                                                      <S>                                <C>
 
            BY: /s/ PATRICK R. RUTHERFORD                President and Chief Executive         March 27, 1997
  -------------------------------------------------        Officer (Principal Executive
                Patrick R. Rutherford                      Officer and Director)
 
                BY: /s/ JOHN A. MORAN                    Director and Chairman of the Board    March 27, 1997
  -------------------------------------------------
                    John A. Moran
 
             BY: /s/ DAVID F. CHAVENSON                  Vice President and Chief Financial    March 27, 1997
  -------------------------------------------------        Officer (Chief Financial and
                 David F. Chavenson                        Accounting Officer)
 
                BY: /s/ JOHN I. HART                     Controller                            March 27, 1997
  -------------------------------------------------
                    John I. Hart
 
              BY: /s/ MICHAEL D. MCCOY                   Chief Operating Officer and           March 27, 1997
  -------------------------------------------------        Director
                  Michael D. McCoy
 
                         BY:                             Director                              March 27, 1997
  -------------------------------------------------
                    Howard Gittis
 
                BY: /s/ HARRY C. LEE                     Director                              March 27, 1997
  -------------------------------------------------
                    Harry C. Lee
 
                         BY:                             Director                              March 27, 1997
  -------------------------------------------------
                   Jere L. McKenny
 
                         BY:                             Director                              March 27, 1997
  -------------------------------------------------
                 Chote Sophonpanich
</TABLE>
 
                                       36
<PAGE>   39
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
           *3.1          -- Restated Certificate of Incorporation of the Company.
           *3.2          -- Bylaws of the Company dated April 1, 1996.
          *10.1          -- Ministry of Industry Petroleum Concession dated August 1,
                            1991, awarded to Thai Romo, Thiapo and Maersk Oil.
          *10.2          -- Ministry of Industry Supplementary Petroleum Concession
                            (No. 1) to Petroleum Concession No. 1/2534/36 dated March
                            6, 1992, awarded to Maersk Oil (Thailand) Ltd. and Thaipo
                            Limited and Thai Romo Limited.
          *10.3          -- Ministry of Industry Supplementary Petroleum Concession
                            (No. 2) to Petroleum Concession No. 1/2535/36 dated
                            September 4, 1995, awarded to Thaipo Limited and Thai
                            Romo Limited.
          *10.4          -- Joint Operating Agreement to be effective as of March 3,
                            1995 among Thai Romo, Thaipo and Sophonpanich.
          *10.5          -- Joint Operating Agreement dated August 1, 1991 among Thai
                            Romo, Thaipo, Maersk Oil and Sophonpanich.
          *10.6          -- Gas Sales Agreement dated November 7, 1995 between
                            Petroleum Authority of Thailand, Thai Romo, Thaipo, and
                            Sophonpanich.
          *10.7          -- Bareboat Charter Agreement dated February 9, 1996 between
                            Tantawan Production B.V. and Tantawan Services, L.L.C.
          *10.8          -- Operating Agreement between SBM Marine Services Thailand
                            Ltd. and Tantawan Services, L.L.C. dated February 9,
                            1996.
          *10.9          -- Guaranty and Indemnity Agreement dated February 9, 1996,
                            by Thai Romo to Tantawan Production B.V.
          *10.10         -- Guaranty and Indemnity Agreement dated February 9, 1996,
                            by Thai Romo to SBM Marine Services Thailand Ltd.
          *10.11         -- 1996 Key Employee Stock Plan (and form of option and
                            stock agreements).
          *10.12         -- 1996 Non-Employee Director Stock Option Plan (and form of
                            option agreement).
          *10.13         -- Letter Agreement dated March 28, 1996 with David
                            Chavenson.
        ***10.14         -- $150,000,000 Revolving Credit Agreement with The Chase
                            Manhattan Bank as Lender and Agent.
         **10.15         -- $20,000,000 Credit Agreement with The Chase Manhattan
                            Bank as Lender.
          *10.16         -- Registration Rights Agreement.
       ****21.1          -- Subsidiaries of the Company.
       ****27.1          -- Financial Data Schedule.
</TABLE>
 
---------------
 
   * Incorporated by reference from the Company's Registration Statement on Form
     S-1, as amended (File No. 333-4122).
 
  ** Incorporated by reference from the Company's Form 8-K dated March 3, 1997.
 
 *** Incorporated by reference from the Company's Quarterly Report on Form 10-Q
     for the period ended September 30, 1996.
 
**** Filed with this Report on Form 10-K.
 
                                       37