================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    Form 10-K

(Mark One)
    X         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 1997
                                       OR
            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                          Commission File Number 1-8094

                           Seagull Energy Corporation
             (Exact name of registrant as specified in its charter)

             Texas                                 74-1764876
 (State or other jurisdiction of
 incorporation or organization)        (I.R.S. Employer Identification No.)

   1001 Fannin, Suite 1700
        Houston, Texas                             77002-6714
(Address of principal executive                    (Zip Code)
         offices)

       Registrant's telephone number, including area code: (713) 951-4700

           Securities registered pursuant to Section 12(b) of the Act:
                                                   Name of each exchange on
        Title of each class                             which registered
Common Stock, par value $.10 per share             New York Stock Exchange
   Preferred Stock Purchase Rights                 New York Stock Exchange

           Securities registered pursuant to Section 12(g) of the Act:
                                      None

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing  requirements  for the past 90 days.  YES X NO

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ___

     As of March 9, 1998, the aggregate  market value of the outstanding  shares
of Common  Stock of the  Company  held by  non-affiliates  (based on the closing
price  of  these  shares  on the New  York  Stock  Exchange)  was  approximately
$997,089,000.

     As of March 9, 1998, 63,021,232 shares of Common Stock, par value $0.10 per
share, were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
    Document                                             Part of Form 10-K
 (1) Annual Report to Shareholders for                     PARTS I and II
     year ended December 31, 1997
 (2) Proxy Statement for Annual Meeting                      PART III
of Shareholders to be held on May 13, 1998


================================================================================

<PAGE>
<TABLE>
<CAPTION>



                                      Index

                                                                           Page
                                     Part I
<S>  <C>                                                                   <C>
Item 1.  Business:
     Oil and Gas Operations...............................................   1
     Alaska Transmission and Distribution.................................  13
     Corporate............................................................  16
     Environmental Matters................................................  17
     Employees............................................................  19
     Executive Officers of the Company....................................  20

Item 2.  Properties.......................................................  21
Item 3.  Legal Proceedings................................................  21
Item 4.  Submission of Matters to a Vote of Security Holders..............  22

                                     Part II
Item 5.  Market for Registrant's Common Stock and Related Shareholder
                  Matters.................................................  22
Item 6.  Selected Financial Data..........................................  23
Item 7.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations...............................  23
Item 8.  Financial Statements and Supplementary Data......................  23

Item 9.  Changes in and Disagreements with Accountants on Accounting and
                  Financial Disclosure....................................  23

                                    Part III
Item 10.  Directors and Executive Officers of the Registrant..............  23
Item 11.  Executive Compensation..........................................  24
Item 12.  Security Ownership of Certain Beneficial Owners and Management..  24
Item 13.  Certain Relationships and Related Transactions..................  24

                                     Part IV
Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.  24
Signatures................................................................  29
</TABLE>



<PAGE>

PART I

Item 1.  Business

     Seagull Energy Corporation (the "Company" or "Seagull") is an international
oil and gas company engaged primarily in exploration and development  activities
in the United States,  Egypt, Cote d'Ivoire,  Indonesia and the Russian Republic
of Tatarstan. The Company also transports,  distributes and markets natural gas,
liquids products and  petrochemicals.  Seagull's  long-range goal is to grow its
reserve base and its crude oil and natural gas production capacity.  The Company
seeks a balanced  approach of growing  through  its  internal  drilling  efforts
complemented  by strategic  acquisitions of additional oil and gas assets in its
core  operating  areas.  The  Company's  desire  to grow more  through  internal
drilling  has led it to  broaden  its  exploration  focus  beyond the Gulf Coast
offshore area where Seagull  originally  concentrated  its exploration  efforts.
Seagull  also has  endeavored  to bring more balance to its mix of crude oil and
natural  gas assets,  thereby  lessening  its  dependence  upon  natural gas and
increasing  (i) the percentage of crude oil  represented in the Company's  total
portfolio of proved reserves,  (ii) its capacity to produce those reserves,  and
(iii) the  international  orientation  of its reserve base.  To these ends,  the
Company  completed two business  combinations in 1996 that reflect this shift in
strategy - the purchase of two Egyptian  concessions from Exxon  Corporation and
the merger of Global Natural Resources Inc.

     These  business  combinations  brought a substantial  number of exploratory
prospects  to the  Company,  complementing  its large  portfolio  of  long-lived
domestic natural gas producing  properties and its large,  stable cash flow base
generated from oil and gas sales and non-exploration and production  activities.
These  combinations  have increased the Company's  ability to generate growth in
both its proved reserves and its crude oil and natural gas production capacity.

     For financial  information  relating to industry  segments,  see Note 13 of
Notes to  Consolidated  Financial  Statements of Seagull Energy  Corporation and
Subsidiaries (the "Consolidated Financial Statements") included in the Company's
1997 Annual Report to Shareholders and as part of Exhibit 13 attached hereto.

     Items 1, 3 and 7 of this document include forward-looking statements within
the  meaning of Section  27A of the  Securities  Act of 1933,  as  amended,  and
Section 21E of the Securities Exchange Act of 1934, as amended. Although Seagull
believes  that  such   forward-looking   statements   are  based  on  reasonable
assumptions,  it can give no assurance that its expectations will in fact occur.
Important  factors that could cause  actual  results to differ  materially  from
those  in the  forward-looking  statements  include  political  developments  in
foreign  countries,  federal and state regulatory  developments,  the timing and
extent of  changes  in  commodity  prices,  the  timing and extent of success in
discovering,  developing  and producing or acquiring  oil and gas reserves,  the
availability of skilled  personnel,  materials and equipment,  operating hazards
attendant  to the  industry  and  conditions  of the capital and equity  markets
during the periods covered by the forward-looking statements.

                             OIL AND GAS OPERATIONS

     Revenues from the Oil and Gas Operations ("O&G") segment accounted for 83%,
81% and 76% of the  Company's  consolidated  revenues  for 1997,  1996 and 1995,
respectively.  Production  of gas and liquids for 1997 averaged 357 MMcf per day
("Mcf/d") and 20,711 Bbl per day ("Bbl/d"), respectively, compared to 392 MMcf/d
and 13,409 Bbl/d,  respectively,  in 1996. Oil production in 1997 increased from
the prior  year  primarily  as a result of  increased  production  in Egypt.  In
October 1997, the

                                      -1-
<PAGE>

Company sold all of its Canadian oil and gas operations.  In September 1995, the
Company sold substantially all of its gas gathering and processing assets.  With
the  sale  of  the  gas  gathering  and  processing  assets,   Seagull's  former
Exploration and Production  segment and the Pipeline and Marketing  segment were
reclassified into Oil and Gas Operations.

     Seagull's principal oil and gas producing areas include the following:

<TABLE>
<CAPTION>

                                                               Proved Reserves at December 31, 1997
                                      --------------------------------------------------------------------------------------
                                           Gas (MMcf) (1)                 Oil (Mbbl) (2)                   MBOE (3)
                                      --------------------------    -------------------------     -------------------------
<S>                                   <C>                           <C>                           <C>
UNITED STATES:
  Arkoma Basin..................              169,318                                 1                       28,221
  Arklatex Area.................              306,520                             7,233                       58,320
  Mid-Continent Area............              180,171                             7,329                       37,358
  Offshore Gulf of Mexico.......               84,441                             2,757                       16,830
  Gulf Coast Onshore............               34,234                               722                        6,427
  Other.........................                5,362                               499                        1,393
                                      --------------------------     -------------------------     -------------------------
                                              780,046                            18,541                      148,549
EGYPT:
  East Beni Suef................                    -                             3,368                        3,368
  East Zeit.....................                    -                            15,760                       15,760
  Qarun.........................                1,786                            12,098                       12,396
  South Hurghada................                    -                             2,647                        2,647
  West Abu Gharadig.............                    -                             1,130                        1,130
                                      --------------------------     -------------------------     -------------------------
                                                1,786                            35,003                       35,301
COTE D'IVOIRE...................               24,835                             1,212                        5,351
TATARSTAN.......................                    -                            16,455                       16,455
INDONESIA.......................               61,324                             1,074                       11,294
                                      --------------------------     -------------------------     -------------------------
                                              867,991                            72,285                      216,950
                                      ==========================     =========================     =========================
</TABLE>

(1)  Gas is stated in million cubic feet ("MMcf").  It may also be stated herein
     in billion cubic feet ("Bcf"), or thousand cubic feet ("Mcf").

(2)  Oil,condensate  and natural gas liquids  ("NGL") are stated in thousands of
     barrels ("Mbbl").  It may also be stated herein in barrels ("Bbl"). As used
     in this  Annual  Report on Form 10-K,  liquids  means oil,  condensate  and
     natural gas liquids,  unless otherwise  indicated or the context  otherwise
     suggests.

(3)  MBOE and BOE  represent  one  thousand  barrels of oil  equivalent  and one
     barrel of oil  equivalent,  respectively,  with six Mcf of gas converted to
     one barrel of liquid.

     For additional  information relating to the Company's oil and gas reserves,
based substantially upon reports of DeGolyer and MacNaughton, Netherland, Sewell
& Associates,  Inc. and Ryder Scott  Company,  independent  petroleum  engineers
(collectively the "Engineers"),  see Note 15 of Notes to Consolidated  Financial
Statements  included in the Company's 1997 Annual Report to Shareholders  and as
part of Exhibit 13 attached  hereto.  All information in Note 15 not provided by
the Engineers was supplied by the Company.  The Company's  reserve  estimates in
Indonesia  have  been  obtained  from  a  public  source  which,   although  not
independently  verified,  the Company  believes  to be  reliable.  As  required,
Seagull  also  files  estimates  of  oil  and  gas  reserve  data  with  various
governmental  regulatory  authorities  and agencies.  These  estimates  were not
materially  different from the reserve  estimates  reported in the  Consolidated
Financial Statements.

     The future results of the O&G segment will be affected by the market prices
of oil and natural gas and the Company's  exploration and exploitation  success.
The  availability of a ready market for oil, natural gas and liquids products in
the future will depend on numerous  factors  beyond the control of the  Company,
including  weather,  the Company's ability to hire and retain skilled personnel,
production  of other  crude oil,  natural  gas and  liquids  products,  imports,
marketing of competitive  fuels,  proximity and capacity of oil, gas and liquids
pipelines and other transportation facilities, demand for storage refills,
                                      -2-
<PAGE>
any  oversupply or undersupply of gas and liquids  products,  operating  hazards
attendant to the oil and gas business, the availability and cost of material and
equipment,  the regulatory  environment  and other regional,  international  and
political events, none of which can be predicted with certainty.

United States

     In excess of 65% of the  Company's  proved oil and gas  reserves and annual
production are  contributed  by properties in the United States.  These domestic
properties  are generally  located in three  geographic  areas -- the Mid-South,
Mid-Continent and Gulf Coast regions.  The Company's capital program for 1998 is
designed to maintain  domestic  reserves  and  deliverability  at  approximately
year-end 1997 levels.  In addition,  Seagull will  continue to pursue  strategic
acquisitions  to increase its  domestic  reserves  and  deliverability.  Capital
expenditures,  excluding any acquisitions, for the Company's domestic activities
are expected to be  approximately  $151 million for 1998,  including $47 million
for exploration, $83 million for development and $21 million for leasehold.

     Mid-South -- The CompanY's  Mid-South  properties are situated generally in
the Arkoma Basin of eastern  Oklahoma and western Arkansas and the Arklatex area
of east Texas and  northwest  Louisiana.  The  Company's  interests in Mid-South
provide  production from long-lived assets where ongoing  activities are devoted
principally  to  exploitation.   These  development   activities  in  1997  were
particularly  successful  in the  Arkoma  Basin  of  western  Arkansas  with the
completion of 13 successful  development wells. The Company's 3-D seismic survey
in this area was one of the  earliest 3-D  applications  to be attempted in this
relatively  mature  part  of  the  Arkoma  Basin.  It  has  been  successful  in
identifying  untested reservoirs and new pay intervals.  Capital expenditures in
the  Mid-South  region for 1998 are  expected  to be near 1997's $51 million and
will continue to focus on 3-D seismic surveys and development activities.

     Mid-Continent  --  The  Company's  Mid-Continent  properties  are  situated
generally in the Anadarko Basin of the Texas Panhandle and western Oklahoma. The
Mid-Continent  region also  provides  production  from  long-lived  assets where
ongoing activities are devoted principally to exploitation. Capital expenditures
in this region during 1997, which totaled $19 million, were devoted primarily to
development  activities.  Plans  for 1998  call for a  somewhat  lower  level of
capital  spending but it will again be focused on developing  existing  reserves
through drilling and 3-D seismic surveys.

     Gulf Coast -- The Company's Gulf Coast  properties  are located  onshore in
south  Texas and south  Louisiana  and  offshore  in the Gulf of Mexico  off the
coasts of the same two states. Both exploration and exploitation  activities are
conducted in this region.  In 1997, the Company purchased its first interests in
the Deep  Water  Gulf of Mexico  play  where the  Company  plans to be an active
participant in the future.  Seagull also  completed two  successful  exploratory
wells in the  Frio/Wilcox  play in a tertiary trend in onshore Texas.  These two
exploratory  wells  confirmed  the Lower  Wilcox can be highly  productive.  The
second well,  the Zeidman  Trust #2, tested nearly 22 MMcf/d of natural gas with
very  strong  pressures  from the  bottom  third of a  1,500-foot  Lower  Wilcox
interval.

     The Company has been  evaluating the Zeidman Trust #2 since its completion,
observing  flow rates and pressures and dealing with  mechanical  problems while
formulating  plans for further  drilling in 1998. The Company has a 45% interest
in some 16,000 acres in the immediate vicinity of the discovery.

                                      -3-
<PAGE>

     During 1997, Seagull's capital expenditures totaled some $71 million in the
Gulf Coast region,  primarily  for  exploratory  wells but also for  development
drilling and the  acquisition of offshore  leases.  Plans for 1998 will continue
this focus on  exploratory  drilling  but once again will have some  development
drilling and acquisition of offshore leases.

Egypt

     The  Company's  Egyptian  operations  consist of working  interests  in six
concessions  -- Qarun,  East Beni Suef,  East  Zeit,  South  Hurghada,  West Abu
Gharadig and Darag.  The  interest in West Abu  Gharadig  was  purchased in 1997
while the East Zeit and South  Hurghada  interests  were  purchased in 1996. The
Company's  interests  in Qarun,  East Beni Suef and Darag were  acquired  in the
Global merger. With 1997 production of 3,383 MBOE, the Company's Egyptian assets
contributed approximately 12% of total production. Capital expenditures for 1997
were  approximately  $83 million in Egypt and are  expected to be $94 million in
1998.

     Each concession is governed by a concession  agreement  (collectively,  the
"Egyptian Concession  Agreements") between the working interest partners and the
Egyptian   national  oil  company  ("EGPC").   Under  the  Egyptian   Concession
Agreements,  the working  interest  partners  pay 100% of capital and  operating
costs and  production is split between EGPC and the working  interest  partners.
Working interest  partners recover costs from a percentage,  ranging from 25% to
40% depending upon the concession, of the oil and gas produced and sold from the
applicable concession ("Cost Recovery Petroleum"). Cost Recovery Petroleum forms
a single unified pool for the entire  concession from which costs of all fields,
zones, products and types may be recovered without differentiation,  except that
operating  costs are  recovered  prior to the  recovery  of any  capital  costs.
Capital costs (which include  exploration,  development  and other equipment and
facilities  costs) are  amortized  for  recovery  over four to five years  while
operating  expenses are  recoverable on a current basis.  To the extent that the
costs  eligible for recovery in any quarter  exceed the amount of Cost  Recovery
Petroleum  produced and sold in that quarter,  such costs are  recoverable  from
Cost Recovery Petroleum in future quarters with no limit on the ability to carry
forward such costs.

     The remaining oil and gas produced and sold is divided between EGPC and the
working  interest  partners.  Depending  on  the  concession  and  varying  with
production  levels,  the  working  interest  partners  receive 12% to 30% of the
remaining  oil and up to 29% of the remaining  gas.  Included in EGPC's share of
this remaining oil or gas are all Egyptian  government  royalties as well as the
applicable Egyptian income taxes of the working interest partners.

     Qarun -- The Company has a 25%  non-operated  working interest in the Qarun
Concession  Agreement.  The concession  covers  approximately  1.9 million gross
acres located 45 miles southwest of Cairo,  Egypt.  Initial oil production,  via
trucking,  began in late 1995 while  conventional  production  facilities became
fully  operational in 1997. With the completion of these production  facilities,
Qarun became one of the  Company's  largest  producing  concessions.  While 1998
capital  expenditures  are  expected to decrease  significantly  from 1997's $35
million due to the completion of the  production  facilities,  the  expenditures
will continue to be split between additional exploratory wells, seismic work and
development activities.

     East Beni Suef -- Seagull,  as the operator,  has a 50% working interest in
the East Beni Suef Concession Agreement. The concession covers approximately 6.8
million gross acres lying adjacent and
                                      -4-
<PAGE>

to the south of the Qarun concession. Thefirst exploratory well was successfully
completed in late 1997 and the Company  expects to begin trucking  production in
the first half of 1998.

     East Zeit -- The Company,  as the operator,  has a 100% working interest in
the East Zeit  concession  which is located  offshore  in the Gulf of Suez.  The
Company  acquired  its  interest  primarily  as a  producing  concession  and it
continues to be one of the largest  producing  concessions  among the  Company's
Egyptian interests.  With this emphasis on production,  capital  expenditures of
approximately  $27 million in 1997 were  concentrated  in development  wells and
activities  and capital  expenditures  are expected to be in this same range for
1998.

     South Hurghada -- Seagull, as the operator,  has a 100% working interest in
the  61,000-acre  concession,  located  onshore on the coast of the Gulf of Suez
approximately  250 miles south of Cairo.  After the completion of two successful
exploratory  wells in mid-1997,  oil  production  was trucked to the nearby East
Zeit  production  terminal.  While the 1997 capital  expenditures of $10 million
were concentrated on exploratory drilling, expected 1998 capital expenditures of
about this same amount will reflect the beginning of development activities.

     West  Abu  Gharadig  --  In  October  1997,  the  Company  purchased  a 30%
non-operating working interest in the West Abu Gharadig concession, covering 3.5
million gross acres in upper Egypt. While three exploratory wells were producing
by year-end,  the Company has identified more than 10 exploratory leads. Seagull
expects exploratory drilling will continue in this concession in 1998 or 1999.

     Darag -- The Company has a 50%,  non-operated working interest in the Darag
block,  which is located in the northern portion of the Gulf of Suez, and covers
460,000  gross acres.  Future  plans for this  concession  are  uncertain as the
working  interest  owners  and EGPC have been  unable  to secure  the  necessary
drilling  permits  from  marine  authorities.  At the end of 1997,  Seagull  had
approximately  $5 million in capitalized  costs associated with this concession.
The  working  interest  owners  and EGPC  are  discussing  ways for the  working
interest  owners to  recover  the costs  associated  with the Darag  concession,
however,  there can be no guarantee that these discussions will be successful in
recovering the costs of the working interest owners.

Cote d'Ivoire

     Seagull's  operations  in Cote  d'Ivoire,  West  Africa  consist of working
interests in three blocks- CI-11, CI-12 and CI-104. The CI-11 concession,  where
the Company has a nearly 13% unitized working interest, extends from the western
coast to  approximately  eight miles offshore Cote d'Ivoire.  The Company has an
almost 17% working  interest in CI-12,  which lies adjacent to and west of block
CI-11, and a 100% working  interest in block CI-104,  which lies adjacent to and
west of block CI-12.

     Each block is subject to a production  sharing contract whereby the working
interest  partners pay 100% of capital and operating  costs,  and  production is
split between the Ivorian government and the working interest partners.  Working
interest  partners  recover  costs from a  percentage,  ranging  from 40% to 75%
depending upon the concession, of produced and sold petroleum. The remaining oil
and gas produced and sold,  and any portion of cost recovery not used to recover
costs,  is divided  between the  Ivorian  government  and the  working  interest
partners.  Included in the Ivorian government's share of remaining petroleum are
all Ivorian government  royalties as well as the applicable Ivorian income taxes
for the working interest partners.
                                      -5-
<PAGE>

Tatarstan

     Through  its 90%  owned  subsidiary,  Texneft,  the  Company  has a net 45%
interest in a joint venture in Tatarstan,  a republic in the Russian  Federation
located  west of the Ural  Mountains  and east of the  Volga  River.  The  joint
venture  is with  Tatneft,  a Russian  closed  joint  stock  company.  The joint
venture, Tatex, operates various oil fields in Tatarstan. Under the terms of the
joint  venture and various  supplemental  agreements,  the funding for the joint
venture is supplied by Texneft and Tatneft through various credit agreements.

     The joint venture's activities currently include three projects:  (i) vapor
recovery,  (ii) the development and operation of the Onbysk field, near the city
of Almetyevsk, and (iii) the upcoming development and operation of the Demkinsky
field,  located 110  kilometers  southwest  of  Almetyevsk.  Texneft's  share of
capital spending for 1998 is approximately $8 million, primarily for development
drilling and facilities.

Indonesia

     Seagull has a 1.7% interest in the Indonesia  Joint Venture ("IJV") for the
exploration,  development  and  production  of oil and  gas in East  Kalimantan,
Indonesia,  under  a  production  sharing  contract  with  the  state  petroleum
enterprise of Indonesia ("Pertamina").  The majority of the revenue derived from
the IJV results from the sale of liquefied natural gas ("LNG").  Under the terms
of the PSC with  Pertamina,  the IJV is authorized  to explore for,  develop and
produce  petroleum  reserves in an  approximately  1.1 million acre area in East
Kalimantan.

     The IJV  participants  are  entitled to recover  cumulative  operating  and
certain  capital costs out of the oil and gas produced each year, and to receive
a share of the remaining oil  production  and a share of the remaining  revenues
from the sale of gas on an after Indonesian tax basis.

Oil and Gas Drilling Activities

     Seagull's oil and gas exploratory and developmental drilling activities are
as follows  for the  periods  indicated.  A well is  considered  productive  for
purposes of the following  table if it justifies the  installation  of permanent
equipment  for the  production  of oil or gas. The term "gross  wells" means the
total number of wells in which  Seagull  owns an  interest,  while the term "net
wells" means the sum of the fractional  working  interests Seagull owns in gross
wells.   The  information   should  not  be  considered   indicative  of  future
performance,  nor should it be assumed that there is necessarily any correlation
between the number of productive wells drilled,  quantities of reserves found or
economic value.
                                      -6-
<PAGE>
<TABLE>
<CAPTION>

                                                                      Year Ended December 31,
                                        ------------------------------------------------------------------------------------
                                                1997                           1996                           1995
                                        ----------------------         ----------------------        -----------------------
                                         Gross         Net              Gross          Net             Gross         Net
                                        ---------    ---------         --------     ---------        ----------    ---------
<S>                                     <C>          <C>               <C>          <C>              <C>           <C>
UNITED STATES:
 Exploratory Drilling:
   Productive Wells.................          18          9.5               14           6.2                9         5.7
   Dry Holes........................          12          4.2               15           6.6               14         7.5
 Development Drilling:
   Productive Wells.................         142         73.9              123          54.2               64        29.0
   Dry Holes........................          12          6.3               13           8.2                4         1.1
CANADA:  (*)
 Exploratory Drilling:
   Productive Wells.................           3          1.7                5           0.8                3         1.0
   Dry Holes........................           1          1.0                2           2.0                3         3.0
 Development Drilling:
   Productive Wells.................          57         28.9               17           8.6                7         1.9
   Dry Holes........................           1          0.3                2           1.5                1         0.5
EGYPT:
 Exploratory Drilling:
   Productive Wells.................           4          2.8                2           0.5                2         0.5
   Dry Holes........................          11          3.0                5           1.3                1         0.3
 Development Drilling:
   Productive Wells.................          14          3.5               14           3.5                4         1.0
   Dry Holes........................           -            -                -             -                1         0.3
COTE D'IVOIRE:
 Exploratory Drilling:
   Productive Wells.................           1          0.1                2           0.3                -           -
   Dry Holes........................           2          0.3                1           0.1                -           -
 Development Drilling:
   Productive Wells.................           3          0.4                1           0.1                4         0.6
   Dry Holes........................           -            -                -             -                -           -
TATARSTAN:
 Exploratory Drilling:
   Productive Wells.................           1          0.5                -             -                1         0.5
   Dry Holes........................           -            -                -             -                -           -
 Development Drilling:
   Productive Wells.................          21         10.5               20          10.0               17         8.5
   Dry Holes........................           -            -                -             -                -           -
OTHER INTERNATIONAL:
 Exploratory Drilling:
   Productive Wells.................           -            -                -             -                -           -
   Dry Holes........................           1          0.2                -             -                2         0.4
TOTAL:
 Exploratory Drilling:
   Productive Wells.................          27         14.6               23           7.8               14         7.2
   Dry Holes........................          27          8.7               23          10.0               21        11.7
 Development Drilling:
   Productive Wells.................         237        117.2              175          76.4               96        41.0
   Dry Holes........................          13          6.6               15           9.7                6         1.9
</TABLE>

(*)  All of the Company's  Canadian oil and gas operations  were sold in October
     1997.

     The Company had 14 gross (4.3 net) exploratory wells and 12 gross (5.5 net)
development  wells in progress at December 31,  1997.  Wells  classified  as "in
progress" at year-end represent wells where drilling activity is ongoing,  wells
awaiting  installation of permanent equipment and wells awaiting the drilling of
additional delineation wells.
                                      -7-
<PAGE>

Production

     The following  table  summarizes  the Company's  production,  average sales
prices and operating costs for the periods indicated:

<TABLE>
<CAPTION>

                                                                                  Year Ended December 31,
                                                                ------------------------------------------------------------
                                                                     1997                    1996                 1995
                                                                ----------------       -----------------      --------------
<S>                                                             <C>                    <C>                    <C>
UNITED STATES:
   Net Production:
     Gas (MMcf)................................................     110,595                 116,238               113,482
     Oil, condensate and NGL (Mbbl)............................       1,763                   1,561                 1,403
   Average sales price: (1)
     Gas (per Mcf).............................................  $     2.34                 $  2.17              $   1.62
     Oil, condensate and NGL (per Bbl).........................  $    17.60                 $ 19.03              $  15.84
   Average operating costs (per BOE) (2).......................  $     3.75                 $  3.27              $   3.04
CANADA:(3)
   Net Production:
     Gas (MMcf)................................................      13,510                  21,203                22,057
     Oil, condensate and NGL (Mbbl)............................         243                     361                   399
   Average sales price: (1)
     Gas (per Mcf).............................................  $     1.63                 $  1.32              $   1.07
     Oil, condensate and NGL (per Bbl).........................  $    16.46                 $ 16.77              $  13.01
   Average operating costs (per BOE) (2).......................  $     3.42                 $  3.57              $   3.17
EGYPT:
   Net Oil Production (Mbbl)...................................       3,383                   1,305                    25
   Average Oil Sales Price (per Bbl) (1).......................  $    18.26                 $ 21.56              $  17.97
   Average operating costs (per BOE) (2).......................  $     3.46                 $  4.45              $   2.24
COTE D'IVOIRE:
   Net Production:
     Gas (MMcf)................................................       2,245                   1,445                   203
     Oil (Mbbl)................................................         603                     511                   261
   Average sales price: (1)
     Gas (per Mcf).............................................  $     1.93                 $  1.77              $   1.61
     Oil (per Bbl).............................................  $    19.34                 $ 20.04              $  15.51
   Average operating costs (per BOE) (2).......................  $     3.95                 $  3.56              $   4.75
TATARSTAN:
   Net Oil Production (Mbbl)...................................       1,512                   1,117                 1,062
   Average Oil Sales Price (per Bbl) (1).......................  $    14.26                 $ 13.98              $  15.11
   Average operating costs (per BOE) (2).......................  $     9.25                 $ 10.17              $   8.35
INDONESIA AND OTHER:
   Net Production:
     Gas (MMcf)................................................       3,965                   4,429                 3,933
     Oil (Mbbl)................................................          56                      51                    45
   Average sales price: (1)
     Gas (per Mcf).............................................  $     3.18                 $  3.36              $   2.96
     Oil (per Bbl).............................................  $    19.31                 $ 19.58              $  17.38
   Average operating costs (per BOE ) (2)......................           -                       -                     -
</TABLE>

(1)  Average sales prices are before  deduction of  production,  severance,  and
     other taxes.

(2)  Operating  costs represent costs incurred to operate and maintain wells and
     related equipment and facilities.  These costs include, among other things,
     repairs and maintenance,  workover expenses,  labor,  materials,  supplies,
     property  taxes,  insurance,  severance  taxes,  transportation  costs  and
     general operating expenses.

(3)  All of the Company's  Canadian oil and gas operations  were sold in October
     1997.

                                      -8-
<PAGE>

     The  following  table  sets  forth  information  regarding  the  number  of
productive  wells in which the Company  held a working  interest at December 31,
1997. Productive wells are either producing wells or wells capable of commercial
production  although  currently  shut-in.  One or more  completions  in the same
borehole are counted as one well.

<TABLE>
<CAPTION>

                                   Gross Wells                                              Net Wells
                  -----------------------------------------------      ----------------------------------------------------
                                                     Multiple                                                  Multiple
                    Gas        Oil       Total      Completions          Gas          Oil       Total        Completions
                  ---------  ---------  ---------  --------------      ----------  --------    ----------   ---------------
<S>               <C>        <C>        <C>        <C>                 <C>         <C>         <C>          <C>
United States....  2,641      1,713      4,354          264            1,074.5       185.4      1,259.9            144.0
Egypt............      -         52         52           11                 -         24.4         24.4              2.8
Cote d'Ivoire....      2         11         13            2                0.3         1.4          1.7              0.3
Tatarstan........      -        196        196           57                 -         98.0         98.0             28.5
                  ---------  ---------  ---------  --------------      ----------  --------    ----------   ---------------
                   2,643      1,972      4,615          334            1,074.8       309.2      1,384.0            175.6
                  =========  =========  =========  ==============      ==========  ========    ==========   ===============
</TABLE>


Developed and Undeveloped Oil and Gas Acreage

     As of  December  31,  1997,  the Company  owned  working  interests  in the
following developed and undeveloped oil and gas acreage:

<TABLE>
<CAPTION>

                                                   Developed                                       Undeveloped
                                     ---------------------------------------          --------------------------------------
                                          Gross                 Net (*)                   Gross                  Net (*)
                                     ----------------        ---------------          ---------------         --------------
<S>                                  <C>                     <C>                      <C>                     <C>
UNITED STATES:
  Onshore:
    Oklahoma.....................         278,753                130,038                    25,215                 12,735
    Texas........................         208,133                101,987                   111,748                 33,851
    Arkansas.....................         210,071                 71,225                    12,645                  8,177
    Louisiana....................          44,663                 21,905                     5,765                  2,809
    Montana......................           1,175                    228                   161,306                147,928
    Other........................          28,397                  9,882                    57,291                 27,686
  Bays and State Waters..........           2,609                    722                     9,618                  6,402
  Federal Offshore:
    Texas........................         156,379                 64,071                   309,402                214,020
    Louisiana....................          59,675                 28,991                   250,426                139,919
EGYPT:
  Darag..........................               -                      -                   459,606                229,803
  East Beni Suef.................               -                      -                 6,819,960              3,409,980
  East Zeit......................           6,672                  6,672                         -                      -
  Qarun..........................         407,213                101,803                 1,080,130                270,033
  South Hurghada.................          26,934                 26,934                    34,627                 34,627
  West Abu Gharadig..............          15,419                  4,626                 4,725,615              1,417,684
COTE D'IVOIRE:
  CI-11..........................          11,860                  1,537                   180,329                 23,443
  CI-12..........................               -                      -                   393,634                 65,618
  CI-104.........................               -                      -                   250,300                250,300
TATARSTAN........................          12,630                  6,315                    12,107                  6,053
INDONESIA........................          97,000                  1,663                 1,156,780                 19,827
OTHER INTERNATIONAL..............               -                      -                 2,790,298                395,615
                                     ----------------        ---------------          ---------------         --------------
                                        1,567,583                578,599                18,846,802              6,716,510
                                     ================        ===============          ===============         ==============
</TABLE>

(*)  When describing acreage on drilling locations, the term "net" refers to the
     total  acres on  drilling  locations  in which  the  Company  has a working
     interest,  multiplied  by the  percentage  working  interest  owned  by the
     Company.

     Additionally,  as of December 31, 1997,  the Company owned  mineral  and/or
     royalty  interests in 591,032  gross  (41,334 net)  developed and 2,846,585
     gross (105,751 net) undeveloped oil and gas acres, located primarily in the
     United States.
                                       -9-
<PAGE>

     For additional  information  relating to oil and gas producing  activities,
see Note 15 of Notes to the Consolidated  Financial  Statements  included in the
Company's 1997 Annual Report to Shareholders  and as part of Exhibit 13 attached
hereto.

Regulation

     The  availability  of a ready  market for oil and  natural  gas  production
depends upon numerous  regulatory  factors beyond the Company's  control.  These
factors include regulation of oil and natural gas production,  federal and state
regulations  governing  environmental  quality and  pollution  control and state
limits on allowable rates of production by a well or proration  unit.  State and
federal  regulations  generally are intended to prevent waste of oil and natural
gas,  protect  rights to produce oil and natural gas between  owners in a common
reservoir,  control  the amount of oil and natural  gas  produced  by  assigning
allowable rates of production and control contamination of the environment.

     Regulation of Oil and Natural Gas Exploration  and Production.  Exploration
and  production  operations  of the  Company  are  subject to  various  types of
regulation at the federal,  state and local  levels.  Such  regulation  includes
requiring permits for the drilling of wells, maintaining bonding requirements in
order to drill or operate  wells,  and  regulating  the  location of wells,  the
method of  drilling  and  casing  wells,  the  surface  use and  restoration  of
properties  upon which wells are drilling and the  plugging and  abandonment  of
wells. The Company's  operations are also subject to various  conservation  laws
and  regulations.  These  include the  regulation  of the size of  drilling  and
spacing  units or proration  units and the density of wells which may be drilled
and  unitization  or pooling of oil and gas  properties.  In this  regard,  some
states  allow  the  forced  pooling  or  integration  of  tracts  to  facilitate
exploration while other states rely on voluntary pooling of lands and leases. In
addition,   state  conservation  laws  establish  maximum  rates  of  production
requirements regarding the ratability of production.

     Natural Gas Marketing and  Transportation.  Although maximum selling prices
of natural gas were formerly  regulated,  the Natural Gas Wellhead Decontrol Act
of 1989  ("Decontrol  Act")  terminated  wellhead price controls on all domestic
natural  gas on January 1, 1993,  and amended the Natural Gas Policy Act of 1978
to remove  completely  by January 1, 1993 price and  nonprice  controls  for all
"first sales" of natural gas, which will include all sales by the Company of its
own production.  Consequently,  sales of the Company's natural gas currently may
be made at  market  prices,  subject  to  applicable  contract  provisions.  The
jurisdiction  of the Federal  Energy  Regulatory  Commission  (the  "FERC") over
natural gas transportation was unaffected by the Decontrol Act.

     The FERC regulates  interstate natural gas transportation rates and service
conditions,  which affect the  marketing of natural gas produced by the Company,
as well as the  revenues  received by the Company for sales of such natural gas.
Since  the  latter  part of 1985,  the FERC has  endeavored  to make  interstate
natural gas transportation  more accessible to gas buyers and sellers on an open
and  nondiscriminatory  basis. The FERC's efforts have significantly altered the
marketing and pricing of natural gas.  Commencing in April 1992, the FERC issued
Order Nos. 636, 636-A and 636-B  (collectively,  "Order No. 636"),  which, among
other  things,   require  interstate   pipelines  to  "restructure"  to  provide
transportation  separate or "unbundled"  from the pipelines' sales of gas. Also,
Order No. 636 requires  pipelines  to provide  open-access  transportation  on a
basis that is equal for all gas supplies.

                                      -10-
<PAGE>

     Additional  proposals  and  proceedings  that might  affect the natural gas
industry  are  considered  from  time to  time  by  Congress,  the  FERC,  state
regulatory bodies and the courts. The Company cannot predict when or if any such
proposals  might become  effective,  or their  effect,  if any, on the Company's
operations.  The  natural  gas  industry  historically  has  been  very  heavily
regulated;  therefore,  there is no assurance that the less stringent regulatory
approach  recently  pursued by the FERC and Congress will continue  indefinitely
into the future.  State regulation of gathering  facilities  generally  includes
various transportation,  safety,  environmental,  and nondiscriminatory purchase
and transport requirements, but does not generally entail rate regulation.

     Offshore  Leasing.  Certain  operations the Company conducts are on federal
oil and gas leases,  which the Mineral Management  Service ("MMS")  administers.
The MMS issues such leases  through  competitive  bidding.  These leases contain
relatively   standardized   terms  and  require  compliance  with  detailed  MMS
regulations  and  orders  pursuant  to the  Outer  Continental  Shelf  Lands Act
("OCSLA")  (which are subject to change by the MMS).  For  offshore  operations,
lessees must obtain MMS  approval  for  exploration  plans and  development  and
production plans prior to the  commencement of such  operations.  In addition to
permits required from other agencies (such as the Coast Guard, the Army Corps of
Engineers and the Environmental Protection Agency), lessees must obtain a permit
from the MMS prior to the  commencement  of  drilling.  The MMS has  promulgated
regulations  requiring  offshore  production  facilities  located  on the  Outer
Continental  Shelf  ("OCS")  to  meet  stringent  engineering  and  construction
specifications,  and has recently proposed additional safety-related regulations
concerning the design and operating  procedures for OCS production platforms and
pipelines. The MMS also has issued regulations to prohibit the flaring of liquid
hydrocarbons  and  oil  without  prior  authorization.  Similarly,  the  MMS has
promulgated  other  regulations  governing the plugging and abandonment of wells
located  offshore  and the removal of all  production  facilities.  To cover the
various  obligations  of lessees on the OCS,  the MMS  generally  requires  that
lessees  post  substantial  bonds  or  other  acceptable  assurances  that  such
obligations will be met.

     The MMS  recently  adopted  a rule  detailing  the  kinds  of  natural  gas
marketing  and  transportation  services  that  should be  considered  part of a
producer's  duty to market.  The rule,  which is  currently  under  appeal,  may
prevent  producers from  deducting from royalties the full cost of  transporting
and marketing natural gas to the marketplace.  The Company cannot predict how it
might be affected by this rule, or the disposition of such rule on appeal.

     In  addition,  the MMS is  conducting  an  inquiry  into  certain  contract
settlement   agreements  from  which  producers  on  MMS  leases  have  received
settlement  proceeds that are royalty  bearing and the extent to which producers
have paid the appropriate royalties on those proceeds.  The restructuring of oil
and gas markets has resulted in a shifting of markets downstream from the wells.
Deregulation has altered the marketplace  such that lessors,  including the MMS,
are challenging the methods of valuation of gas for royalty purposes.

     The MMS has issued a notice of proposed  rulemaking in which it proposes to
amend its  regulations  governing the calculation of royalties and the valuation
of oil and natural gas produced from federal  leases.  The principal  feature in
the amendments,  as proposed,  would establish an alternative market-index based
method  to  calculate  royalties  on  certain  natural  gas  production  sold to
affiliates or pursuant to non-arms'-length sales contracts. The MMS has proposed
this rulemaking to facilitate  royalty  valuation in light of changes in the gas
marketing environment.  The Company cannot predict what action the MMS will take
on these matters, nor can it predict at this stage of the rulemaking proceedings
how the Company might be affected by amendments to the regulations.
                                      -11-
<PAGE>

Pipeline, Marketing and Other

     The Company's O&G segment also includes  pipeline and marketing  operations
involving (i) the  transportation and marketing of Seagull's own and third-party
gas, oil and natural gas liquids;  (ii) gas gathering and processing;  and (iii)
pipeline engineering, design, construction and operation.

     The Company actively provides marketing services geared toward matching gas
supplies  available  in  the  major  producing  areas  with  attractive  markets
available   in   the   Midwest,   Northeast,   Mid-Atlantic,   Appalachian   and
Texas/Louisiana  Gulf Coast  areas.  The  matching  process  includes  arranging
transportation on a network of open-access  pipelines on a firm or interruptible
basis. Seagull contracts to provide oil and natural gas to various customers and
aggregates  supplies  from  various  sources  including  third-party  producers,
marketing  companies,  pipelines,  financial  institutions and the Company's own
production.  Marketing  profit margins are often small due to  competition,  and
results can vary significantly  from period to period.  Large amounts of working
capital are  involved for  relatively  small net  margins,  which makes  working
capital  management  critical.  The Company has policies and procedures in place
that  are  designed  to  minimize  any   potential   risk  of  loss  from  these
transactions.   These   policies  and   procedures   are  reviewed  and  updated
periodically by the Company's management.

     Most of the  Company's  natural gas is  transported  through gas  gathering
systems and gas  pipelines  which are not owned by the  Company.  Transportation
space on such  gathering  systems and pipelines is  occasionally  limited and at
times  unavailable due to repairs or improvements  being made to such facilities
or due to such  space  being  utilized  by  other  gas  shippers  with  priority
transportation  agreements.  While the Company has not experienced any inability
to  market  its  natural  gas,  if  transportation  space  is  restricted  or is
unavailable,  the  Company's  cash flow from the  affected  properties  could be
adversely affected.

     In late 1995,  Seagull initiated a risk management program for a portion of
its own E&P production and  third-party  activities,  utilizing such  derivative
financial  instruments as futures  contracts,  options and swaps. In early 1997,
the Company closed  substantially  all of its derivative  financial  instruments
related to equity production and focused its risk management efforts on reducing
price and basis risk for its third-party marketing activities.  Seagull accounts
for its commodity derivative  contracts as hedging activities and,  accordingly,
the effect is included in revenues when the commodities are produced. See Note 2
of Notes to the  Company's  Consolidated  Financial  Statements  and Oil and Gas
Operations in  Management's  Discussion and Analysis of Financial  Condition and
Results of  Operations,  both of which are included in the Company's 1997 Annual
Report to Shareholders and as part of Exhibit 13 attached hereto.

     Pipeline  Operations and Construction -- Seagull operates certain pipelines
owned by other  companies.  In some cases the operating  agreements  provide for
reimbursement  of expenses  incurred in connection with operations plus a profit
margin. In other cases the Company receives a negotiated annual fee. The Company
also builds  pipelines for other  companies  for which it receives  construction
fees that are fixed,  cost-plus or a combination of both. The Company  currently
has one  ongoing  construction  project for an  existing  customer  and plans to
continue its pursuit of additional operating and construction opportunities.
                                      -12-

<PAGE>

Competition

     The  Company's  competitors  in  oil  and  gas  exploration,   development,
production  and  marketing  include  major oil  companies,  as well as  numerous
independent oil and gas companies,  individuals and drilling  programs.  Some of
these competitors have financial and personnel resources substantially in excess
of those available to the Company and, therefore, the Company may be placed at a
competitive  disadvantage.  The Company's  success in discovering  reserves will
depend on its ability to select  suitable  prospects for future  exploration  in
today's competitive environment.

     The Company's gas marketing  activities  are in  competition  with numerous
other  companies  offering  the same  services.  Some of these  competitors  are
affiliates  of  companies  with  extensive  pipeline  systems  that are used for
transportation from producers to end-users.  The Company believes its ability to
compete depends upon building strong  relationships with producers and end-users
by consistently purchasing and supplying gas at competitive prices.

     The  Company  actively  competes  with  numerous  other  companies  for the
construction and operation of short and medium length  pipelines.  The Company's
competitors  include  oil  companies,  other  pipeline  companies,  natural  gas
gatherers  and  petrochemical   transporters,   many  of  which  have  financial
resources, staffs and facilities substantially larger than those of the Company.
In addition,  many of the  Company's  gas  purchasers  are also  competitors  or
potential  competitors in the sense that they have  extensive  pipeline-building
capabilities  and  experience and generally  operate large  pipeline  systems of
their own. Seagull believes that its ability to compete will depend primarily on
its ability to complete pipeline  projects quickly and cost effectively,  and to
operate pipelines efficiently.

International Operations

     Seagull's  interests in countries  outside the United States are subject to
the various risks inherent in foreign operations. These risks may include, among
other things,  currency  restrictions  and exchange rate  fluctuations,  loss of
revenue,  property and equipment as a result of expropriation,  nationalization,
war,  insurrection  and other political  risks,  risks of increases in taxes and
governmental  royalties,  renegotiation of contracts with governmental entities,
changes in laws and policies  governing  operations of foreign-based  companies,
restrictions on drilling permits (such as those facing the Darag concession) and
other  uncertainties  arising  out of foreign  government  sovereignty  over the
Company's international  operations.  The Company's international operations may
also be adversely  affected by laws and policies of the United States  affecting
foreign trade,  taxation and investment.  In addition, in the event of a dispute
arising from  foreign  operations,  the Company may be subject to the  exclusive
jurisdiction  of foreign  courts or may not be successful in subjecting  foreign
persons to the  jurisdiction  of the courts of the United  States.  The  Company
seeks  to  manage  these  risks  by  among  other  things,   concentrating   its
international  exploration  efforts in areas where the Company believes that the
existing  government  is stable and  favorably  disposed  towards  United States
exploration and production companies.

                      ALASKA TRANSMISSION AND DISTRIBUTION

     The Company  operates in Alaska as a single  business unit,  ENSTAR Alaska,
which is regulated  by the Alaska  Public  Utilities  Commission  (the  "APUC").
ENSTAR  Alaska  engages  in  the  intrastate  transmission  of  natural  gas  in
South-Central Alaska and the distribution of natural gas in Anchorage and
                                      -13-
<PAGE>

other nearby  communities in Alaska.  Revenues from ENSTAR Alaska  accounted for
17%, 19% and 24% of the Company's consolidated revenues for 1997, 1996 and 1995,
respectively.

Gas Transmission System

     ENSTAR Alaska owns and operates the only natural gas transmission  lines in
its  service  area  that  are  operated  for  utility  purposes.   The  pipeline
transmission  system is  composed  of  approximately  277 miles of 12 to 20-inch
diameter pipeline and approximately 74 miles of smaller diameter  pipeline.  The
system's  present design  delivery  capacity is  approximately  410 MMcf/d.  The
average  throughput  of the system in 1997,  1996 and 1995 was 124,  131 and 122
MMcf/d, respectively.

Gas Distribution System

     ENSTAR Alaska distributes natural gas through  approximately 2,114 miles of
gas  mains to  approximately  96,800  residential,  commercial,  industrial  and
electric power generation customers within the cities and environs of Anchorage,
Eagle  River,  Palmer,  Wasilla,  Girdwood,  Whittier,  Soldotna,  Kenai and the
Nikiski area of the Kenai Peninsula,  Alaska. During the year ended December 31,
1997, ENSTAR Alaska added  approximately 63 miles of new gas distribution mains,
installed 2,500 new service lines and added  approximately  2,700 net customers.
ENSTAR Alaska anticipates  relatively modest growth in its residential  customer
base and will install  additional  main and service  lines to  accommodate  this
growth.

     ENSTAR Alaska  distributes gas to its customers under tariffs and contracts
which  provide for varying  delivery  priorities.  ENSTAR  Alaska's  business is
seasonal  with  approximately  65-70%  of its  revenues  earned in the first and
fourth quarters of each year.

     In  1997,  purchase/resale  volumes  represented  51%  of  ENSTAR  Alaska's
throughput and 78% of ENSTAR Alaska's  operating  margin.  The remaining volumes
are  transported  for power,  industrial  and large  commercial  customers for a
transportation  fee.  Under  tariffs  approved  by  the  APUC,  ENSTAR  Alaska's
transportation fees approximate ENSTAR Alaska's purchase/resale margin.

Gas Supply

     ENSTAR Alaska has an  APUC-approved  gas purchase  contract (the  "Marathon
Contract")  with  Marathon  Oil Company  ("Marathon")  that is a  "requirements"
contract  with  no  specified  daily   deliverability   or  annual   take-or-pay
quantities.  ENSTAR  Alaska has agreed to purchase  and  Marathon  has agreed to
deliver all of ENSTAR Alaska's gas  requirements in excess of those provided for
in other presently existing gas supply contracts, subject to certain exceptions,
until the commitment  has been exhausted and without limit as to time;  however,
Marathon's  delivery   obligations  are  subject  to  certain  specified  annual
limitations  after  2001.  The  contract  has a base  price,  subject  to annual
adjustment  based  on  changes  in the  price  of  certain  traded  oil  futures
contracts,  of $1.55 per Mcf plus  reimbursements  for any  severance  taxes and
other  charges.  During  1997,  the cost of gas  purchased  under  the  Marathon
Contract averaged $1.89 per Mcf, including reimbursements for severance taxes.

     ENSTAR  Alaska also has an  APUC-approved  gas purchase  contract  with the
Municipality  of  Anchorage,  Chevron  U.S.A.,  Inc. and ARCO Alaska,  Inc. (the
"Beluga  Contract") which provides for the delivery of up to  approximately  220
Bcf of gas through the year 2009. The pricing  mechanism in the

                                      -14-
<PAGE>

Beluga Contract is similar to that contained in the Marathon Contract.  The 1997
price under the Beluga Contract,  after application of contractual  adjustments,
averaged $1.93 per Mcf, including reimbursements for severance taxes.

     Based on gas purchases  during the twelve  months ended  December 31, 1997,
which are not  necessarily  indicative  of the volume of future  purchases,  gas
reserves  committed to ENSTAR Alaska under the Marathon and Beluga Contracts are
sufficient  to supply all of ENSTAR  Alaska's  expected gas supply  requirements
through the year 2001.  After that time supplies  will still be available  under
the Marathon and Beluga contracts in accordance with their terms, but at least a
portion of ENSTAR Alaska's requirements are expected to be satisfied outside the
terms of these contracts, as currently in effect.

     Currently,  ENSTAR Alaska's supply source,  primarily  through the Marathon
and Beluga  Contracts,  is confined to the Cook Inlet area with no direct access
to other natural gas pipelines.  During 1997, two of the Cook Inlet area's major
suppliers filed for regulatory  approval to export certain  quantities of gas to
overseas  LNG  markets.  ENSTAR  Alaska  has  filed  as an  intervenor  in these
proceedings and is actively  working with regulatory  authorities to insure that
the supply needs of its customers are met.

     ENSTAR Alaska's  average cost of gas sold in 1997, 1996 and 1995 was $1.89,
$1.59 and $1.75 per Mcf,  respectively.  ENSTAR Alaska's average gas sales price
in 1997, 1996 and 1995 was $3.65, $3.29 and $3.41 per Mcf, respectively.

     As stated  above,  ENSTAR  Alaska  purchases  all of its  natural gas under
long-term  contracts  in which the price is  indexed  to changes in the price of
crude oil futures contracts.  However,  because ENSTAR Alaska's sales prices are
adjusted to include the projected cost of its natural gas, there has been and is
expected to be little or no impact on margins  derived from ENSTAR  Alaska's gas
sales as a result of  fluctuations  in oil  prices  due to  worldwide  political
events and changing market conditions.

Competition

     ENSTAR Alaska competes  primarily with municipal and  cooperative  electric
power  distributors  and with various  suppliers of fuel oil and propane for the
available  energy market.  There are also  extensive coal reserves  proximate to
ENSTAR Alaska's operating area;  however,  such reserves are not presently being
produced.

     During the last nine years,  ENSTAR Alaska's natural gas volumes  delivered
on a  purchase/resale  basis have  declined.  Beginning in 1989,  several of its
major  customers  began  purchasing  gas  directly  from  gas  producers  or gas
marketers.  However,  the APUC has approved  tariffs  allowing  ENSTAR Alaska to
transport these volumes for a  transportation  fee that  approximates the margin
that would have been earned had the customer  remained a sales  customer  rather
than becoming a transportation customer. Consequently, ENSTAR Alaska anticipates
no adverse economic impact to result from these transportation arrangements.

     If any other  existing  large customer of ENSTAR Alaska chooses to purchase
gas directly  from  producers,  ENSTAR  Alaska would expect to collect a fee for
transporting that gas equivalent to the margin earned on sales volumes for those
customers because the large distance of remaining user facilities from producing
fields would preclude the by-pass of ENSTAR Alaska's pipelines.
                                      -15-
<PAGE>
     ENSTAR Alaska  supplies  natural gas to its customers at prices that at the
present time economically  preclude substitution of alternative fuels. Since the
Beluga Contract and the Marathon Contract include prices that fluctuate based on
oil indices,  a competitive  margin favoring  natural gas over oil-based  energy
sources  is  expected  to  continue.  However,  there is no  assurance  that the
competitive  advantage  over  other  alternative  fuels  will not be  reduced or
eliminated by the development of new energy technology,  by changes in the price
of oil or refined products or by decreased gas supply if additional  exports are
allowed out of the Cook Inlet area.

Regulation

     The  APUC  has  jurisdiction  as  to  rates  and  charges  for  gas  sales,
construction  of new  facilities,  extensions  and  abandonments  of service and
certain other  matters.  Rates are generally  designed to permit the recovery of
the cost of providing  service,  including  purchased gas costs, and a return on
investment in plant.  Because ENSTAR Alaska's  operations are wholly intrastate,
ENSTAR  Alaska is not subject to or affected by Order 636 or any other  economic
regulation by the FERC.

     As a result of a proceeding filed in 1984, which was concluded in May 1986,
the APUC  granted  ENSTAR  Alaska an  aggregate  rate  increase  of  20.27%  and
authorized a regulatory rate of return on common equity of 15.65%. ENSTAR Alaska
has no  significant  regulatory  issues  pending  before  the  APUC.  Since  its
inception  in 1961,  ENSTAR  Alaska has  participated  in only three formal rate
proceedings.

                                    CORPORATE

Regulation

     The Company is a "public utility  company" within the meaning of the Public
Utility Holding  Company Act of 1935, as amended (the "1935 Act").  Accordingly,
if any  "company"  (as  defined  for  purposes  of the  1935  Act and  therefore
including so-called  "organized groups") becomes the owner of 10% or more of the
Company's  outstanding  voting stock, that company would be required to register
as a "holding company" under the 1935 Act, in the absence of an exemption of the
type described  below.  Section  9(a)(2) also requires a person  (including both
individuals  and  "companies")  to obtain prior approval from the Securities and
Exchange Commission (the "SEC") in connection with the acquisition of 5% or more
of the  outstanding  voting stock of a public utility if that person is also the
owner of 5% or more of the outstanding voting stock of another public utility.

     In March 1991,  the Company filed an application in good faith with the SEC
pursuant  to  Section  2(a)(8)  of the 1935 Act,  seeking a  determination  that
Seagull was not subject to  regulation  as a  "subsidiary  company" of FMR Corp.
(the  "FMR  Application"),   which  was  then  the  owner  of  2,805,624  shares
(approximately 12.5% at such time) (shares adjusted for a 2-for-1 stock split of
all the  issued  shares of the  Company's  common  stock (the  "Common  Stock"),
effected June 4, 1993) of the  outstanding  Common Stock.  Under the 1935 Act, a
company  is a  "subsidiary  company"  of a  "holding  company"  if the  "holding
company" owns 10% or more of the total voting power of the "subsidiary company",
unless the SEC  determines  otherwise.  Based upon the most  recent  information
furnished to the Company by FMR Corp., FMR Corp.'s  beneficial shares owned have
fallen below 5% of the outstanding voting stock of the Company.

                                      -16-
<PAGE>

     In December  1993,  Seagull filed an additional  application  in good faith
with  the  SEC  pursuant  to  Section  2(a)(8)  of  the  1935  Act,   seeking  a
determination  that the Company was not subject to  regulation  as a "subsidiary
company" of AXA  Assurances I. A. R. D.  Mutuelle,  AXA Assurances Vie Mutuelle,
Alpha Assurances I. A. R. D. Mutuelle, Alpha Assurances Vie Mutuelle, Uni Europe
Assurance Mutuelle and AXA (collectively, the "Mutuelles AXA") and The Equitable
Companies   Incorporated   ("Equitable")   and   their   respective   affiliates
(collectively, the "Equitable Entities"), (the "Equitable Application"). At such
time, the Equitable Entities  beneficially owned 4,495,600 shares (approximately
12.5%) of Common Stock. Based upon the most recent information  furnished to the
Company by the Equitable  Entities,  the Equitable  Entities'  beneficial shares
owned have fallen below 5% of the outstanding voting stock of the Company.

     On October 3, 1996, the Company filed an application in good faith with the
SEC pursuant to Section 2(a)(8) of the 1935 Act,  seeking a  determination  that
Seagull  was  not  subject  to  regulation  as a  "subsidiary  company"  of  The
Prudential  Insurance  Company  of  America  ("Prudential"),   (the  "Prudential
Application"),  which was then the owner of 5,573,061 shares (approximately 8.9%
at such time of the outstanding Common Stock). According to information provided
by Prudential,  in its capacity as investment  adviser,  is beneficial  owner of
5,883,861  shares  (9.3%)  of the  Common  Stock  which  are  owned by  numerous
investment counseling clients, none of which is known to have such interest with
respect to more than 5% of the class. Prudential has sole voting and dispositive
power as to  5,561,361  shares and shared  voting  and  dispositive  power as to
322,500 shares.

     As  a  result  of  the  Company's  good  faith  filing  of  the  Prudential
Application,  the  Company  will  not be  subject  to any  obligation,  duty  or
liability  imposed  by the 1935 Act,  unless  and until the SEC  enters an order
denying or otherwise adversely disposing of the Prudential Application. To date,
no such  order  has been  issued.  The  Company  believes  that  the  Prudential
Application ultimately should be granted.

                              ENVIRONMENTAL MATTERS

     Seagull's  operations  are  subject  to  federal,  state and local laws and
regulation  governing  the  discharge  of  materials  into  the  environment  or
otherwise   relating  to   environmental   protection.   Numerous   governmental
departments issue rules and regulations to implement and enforce such laws which
are  often  difficult  and  costly to comply  with and which  carry  substantial
penalties  for  failure to comply.  These laws and  regulations  may require the
acquisition  of  a  permit  before  drilling  commences,   restrict  the  types,
quantities and concentration of various substances that can be released into the
environment  in connection  with drilling and  production  activities,  limit or
prohibit drilling activities on certain lands lying within wilderness,  wetlands
and other  protected  areas,  and impose  substantial  liabilities for pollution
resulting  from the Company's  operations.  In addition,  these laws,  rules and
regulations  may restrict the rate of oil and natural gas  production  below the
rate that would otherwise exist.  State laws often require some form of remedial
action to prevent  pollution  from  former  operations,  such as pit closure and
plugging abandoned wells.

     The Comprehensive  Environmental  Response,  Compensation and Liability Act
("CERCLA"), also known as the "Superfund" law, imposes liability, without regard
to fault or the legality of the original conduct,  on certain classes of persons
who are considered to be responsible for the release of a "hazardous  substance"
into the  environment.  These  persons  include  the  owner or  operator  of the
disposal site or sites where the release occurred and companies that disposed or
arranged for the disposal of the

                                      -17-
<PAGE>


hazardous  substances.  Under  CERCLA,  such persons may be subject to joint and
several  liability  for the costs of cleaning up the hazardous  substances  that
have been released into the  environment,  for damages to natural  resources and
for the costs of certain  health  studies.  It is not uncommon  for  neighboring
landowners  and other  third  parties  to file  claims for  personal  injury and
property damage  allegedly  caused by hazardous  substances or other  pollutants
released into the environment.

     Stricter  standards in environmental  legislation may be imposed on the oil
and gas industry in the future.  For instance,  legislation has been proposed in
Congress  from time to time that would  reclassify  certain  oil and natural gas
exploration   and  production   wastes  as  "hazardous   wastes"  and  make  the
reclassified  wastes subject to more stringent  handling,  disposal and clean-up
requirements.  If  such  legislation  were  to  be  enacted,  it  could  have  a
significant impact on the operating costs of the Company, as well as the oil and
gas industry in general.  Furthermore,  although petroleum,  including crude oil
and natural gas, is exempt from CERCLA,  at least two courts have recently ruled
that  certain  wastes  associated  with  the  production  of  crude  oil  may be
classified  as  "hazardous  substances"  under  CERCLA and thus such  wastes may
become subject to liability and  regulation  under CERCLA,  as described  above.
State initiatives to further regulate the disposal of oil and natural gas wastes
are also pending in certain states,  and these various  initiatives could have a
similar  impact  on the  Company.  Compliance  with  environmental  requirements
generally  could have a material  adverse effect upon the capital  expenditures,
earnings or  competitive  position of the Company.  Although the Company has not
experienced  any material  adverse  effect from  compliance  with  environmental
requirements, there is no assurance that this will continue in the future.

     The Oil Pollution Act of 1990 ("OPA") and regulations  promulgated pursuant
thereto impose a variety of requirements on "responsible Parties" related to the
prevention of oil spills and liability for damages  resulting  from such spills.
Few defenses exist to the liability  imposed by the OPA and such liability could
be  substantial.  A failure to comply with ongoing  requirements  or  inadequate
cooperation  in a spill  event  could  subject a  responsible  party to civil or
criminal enforcement action.

     On October 19, 1996,  legislative  amendments  to OPA were  enacted.  These
amendments  reduced the  requirement  of  obtaining a  certificate  of financial
responsibility  to $35  million  in the  event of a spill,  instead  of the $150
million  originally  called  for under  OPA.  In  addition,  the Texas  Railroad
Commission  proposed  an  amendment  to its  regulations  in line with OPA.  The
proposed amendment  requires  operators of hazardous liquid pipeline  facilities
inland of the Gulf coast to prepare  facility  response  plans within 60 days of
the  effective  date of the rule or  simultaneously  with the filing of the plan
with federal authorities.

     In  addition,  the OCSLA  authorizes  regulations  relating  to safety  and
environmental  protection  applicable to lessees and permittees operating in the
OCS.  Specific  design and operation  standards may apply to OCS vessels,  rigs,
platforms,   vehicles  and  structures.   Violations  of  lease   conditions  or
regulations  issued  pursuant  to OCSLA  can  result  in  substantial  civil and
criminal penalties, as well as potential court injunctions curtailing operations
and the  cancellation of leases.  Such  enforcement  liabilities can result from
either governmental or private prosecution.

     The Federal Water Pollution Control Act ("FWPCA") imposes  restrictions and
strict  controls  regarding  the  discharge of  pollutants  to state and federal
waters. The FWPCA provides for civil, criminal and administrative  penalties for
any unauthorized  discharges of oil and other hazardous substances in reportable
quantities and, along with the OPA, imposes substantial  potential liability for
the costs of removal,  remediation  and  damages.  State laws for the control of
water pollution also provide varying
                                      -18-
<PAGE>

civil,  criminal and  administrative  penalties and liabilities in the case of a
discharge of petroleum or its derivatives into state waters. Within the next few
years,  both state  water  discharge  regulations  and the  federal  permits are
expected to prohibit the  discharge of produced  water and sand,  and some other
substances related to the oil and gas industry, to coastal waters.  Although the
costs to comply with zero  discharge  mandates under federal or state law may be
significant,  the entire industry will experience  similar costs and the Company
believes  that  these  costs  will not have a  material  adverse  impact  on the
Company's financial  condition and operations.  Some oil and gas exploration and
production  facilities  are  required  to obtain  permits  for their storm water
discharges.  Costs may be associated  with treatment of wastewater or developing
storm water pollution prevention plans. Further, the Coastal Zone Management Act
authorizes  state  implementation  and  development  of programs  of  management
measures for non-point source pollution to restore and protect coastal waters.

     Many states in which the Company  operates have recently  begun to regulate
naturally  occurring  radioactive  materials  ("NORM")  and NORM wastes that are
generated in connection with oil and gas exploration and production  activities.
NORM wastes  typically  consist of very low-level  radioactive  substances  that
become concentrated in pipe scale and in production equipment. State regulations
may require the testing of pipes and  production  equipment  for the presence of
NORM, the licensing of NORM-contaminated facilities and the careful handling and
disposal of NORM wastes.  The Company  believes  that the growing  regulation of
NORM will have a minimal effect on the Company's  operations because the Company
generates only a very small quantity of NORM on an annual basis.

                                    EMPLOYEES

     As of March 1, 1998, the Company had 877 full time  employees.  In addition
to the services of its full time employees,  the Company employs, as needed, the
services of consulting geologists,  engineers, regulatory consultants,  contract
pumpers and certain other temporary employees.

     ENSTAR Alaska operates under collective bargaining agreements with separate
bargaining  units for operating and clerical  employees.  These units  represent
approximately 80% of ENSTAR Alaska's work force.  Contracts have been negotiated
that  set  wages  and  work  relationships  for the  two  units.  The  operating
bargaining  unit contract is effective from April 1, 1996 through April 1, 2000.
The clerical  bargaining  unit contract is effective  from April 1, 1995 through
April 1, 2000.  The  Company is not a party to any other  collective  bargaining
agreements. The Company has never had a work stoppage.

     The Company considers its relations with its employees to be satisfactory.

                                      -19-
<PAGE>

                        EXECUTIVE OFFICERS OF THE COMPANY

     The  executive  officers of the  Company,  each of whom has been elected to
serve until his successor is elected and qualified, are as follows:
<TABLE>
<CAPTION>

           Name               Age                       Present Position and Prior Business Experience

<S>                            <C>   <C>
Barry J. Galt..............    64    Chairman of the Board and Chief  Executive  Officer since  December 1983 and President
                                     of the  Company  from April  1997;  President  of the Company  from  December  1983 to
                                     October 1996.

John W. Elias..............    57    Executive Vice President  since April 1993; For the previous 30 years,  he served in a
                                     variety of positions for Amoco Production Company and its parent, Amoco Corporation.

Richard F. Barnes..........    54    President of ENSTAR Alaska since September 1987.

Gerald R. Colley...........    47    Senior Vice President,  International  Exploration and Production since November 1996;
                                     Senior Vice  President -  International  Exploration  of Global from  December 1994 to
                                     November 1996; Vice President - International  Exploration of Global from July 1993 to
                                     December 1994; Vice President - International  Exploration of Global Natural Resources
                                     Corporation of Nevada  ("GNRC"),  a wholly owned  subsidiary of Global,  since October
                                     1992; Vice President and Exploration  Director of Hadson Europe, Inc. from August 1986
                                     to October 1992.

John N. Goodpasture........    49    Senior Vice President,  Pipelines and Marketing  since May 1993;  President of Seagull
                                     Pipeline Company since March 1990.

William L. Transier........    43    Senior Vice President and Chief Financial  Officer since May 1996; For the previous 20
                                     years,  he held a variety of  positions  at KPMG Peat  Marwick LLP and was promoted to
                                     partner in July 1986.

Carl B. King...............    55    Senior Vice President and General  Counsel since February 1998;  Senior Vice President
                                     and General  Counsel of PanEnergy  Corp from 1991 to February  1998;  For the previous
                                     16 years,  he served in a variety of  positions  with Cooper  Industries/Cameron  Iron
                                     Works.

Gordon L. McConnell........    51    Vice  President and Controller  since  November  1996;  Vice President - Accounting of
                                     Global from  January  1996 to November  1996;  Controller  of Global from July 1993 to
                                     January 1996;  Controller of GNRC since  October  1991;  Assistant  Controller of GNRC
                                     from July 1991 to October 1991.

H. Alan Payne..............    56    Vice President,  Investor Relations since November 1996; Director,  Investor Relations
                                     from December 1984 to November 1996.

Jack M. Robertson..........    54    Vice President,  Human Resources since November 1996;  Director,  Human Resources from
                                     November 1990 to November 1996.

Stephen A. Thorington......    42    Vice  President,  Finance and  Treasurer  since May 1996;  Managing  Director of Chase
                                     Securities  Inc.  from  January  1992 to May  1996;  Managing  Director  for The Chase
             Manhattan Bank, N.A. from June 1991 through April 1994.

M. Lee Van Winkle..........    45    Vice  President,  Corporate  Planning since November 1996;  Vice President - Corporate
                                     Planning  of Global  from July 1993 to  November  1996;  Vice  President  -  Corporate
                                     Planning of GNRC since August 1992;  Corporate Manager - Planning and Budget for Adobe
                                     Resources Corporation for more than five years prior to August 1992.

Carl E. Volke..............    54    Vice President,  Administration  since November 1996;  Director,  Administration  from
                                     November 1986 to November 1996.
</TABLE>

                                      -20-
<PAGE>

Item 2. Properties

     Incorporated  herein by reference  to Item 1 of this Annual  Report on Form
10-K.

Item 3. Legal Proceedings

     Royalty Litigation -- Increasingly, royalty owners under oil and gas leases
are challenging  valuation  methodology and  post-production  deductions used by
producers. These cases have arisen because oil and gas producers such as Seagull
have  begun  to  provide  services  that had  previously  been  provided  by the
interstate gas pipelines prior to the "unbundling" of gas services. For example,
in 1996,  Seagull was sued in Anne K. Barnaby,  et al. v. Seagull Mid-South Inc.
This case is pending in state court of Latimer County,  Oklahoma.  In this case,
the plaintiffs  seek additional  royalties based upon the alledged  deduction by
Seagull  of   post-production   costs,  such  as  those  related  to  gathering,
compression,   dehydration  and  treating.  In  addition,  the  plaintiffs  have
questioned the sales price used by Seagull as a basis for calculating  royalties
to the extent that sales were made to Seagull's gas marketing subsidiary.  While
Seagull  intends to vigorously  defend this case, the Company cannot predict the
outcome of these matters.

     NorAm Litigation -- Seagull also was sued in NorAm Gas Transmission Co., et
al. v. Seagull  Mid-South  Inc.  (the "NorAm  Litigation").  The case relates to
Seagull's  termination of a 1956 gas contract which provided for the sale of gas
by Seagull from certain  wells in the Aetna Field in Arkansas for  approximately
$0.16 per Mcf. NorAm Gas  Transmission  Co.  ("NorAm") and Arkansas  Western Gas
Company ("AWG") have sought a declaratory judgment that the gas contract remains
in effect with  respect to these wells or, in the  alternative,  money  damages.
Since the  termination by Seagull of the gas contract,  Seagull has been selling
the gas in question on the spot market.  Seagull believes that it had reasonable
grounds  for  terminating  the gas  contract.  NorAm and AWG have also  sought a
declaratory  judgment to the effect that certain  additional  wells in the Aetna
Field (including any new wells) would be subject to the $0.16 per Mcf price (the
"Additional  Well Claim").  If NorAm and AWG were successful with the Additional
Well Claim, Seagull's operations in the Aetna Field would be materially affected
in an adverse  manner.  By mid-1997,  the plaintiffs had alleged losses in these
matters of approximately $90 million plus attorney's fees.

     In November 1997, the Company,  NorAm and AWG signed a Settlement  Proposal
that  ultimately  could lead to a final  settlement  and resolution of the NorAm
Litigation  discussed above. The Settlement Proposal calls for Seagull to make a
cash payment and deliver gas under a five-year gas sales  contract.  As a result
of this  Settlement  Proposal,  the  Company  recorded  in the fourth  quarter a
one-time pre-tax charge of approximately  $4.5 million,  included in general and
administrative expense.

     Gulf Coast  Vacuum Site -- In 1993,  the  Environmental  Protection  Agency
("EPA")  notified the Company that a subsidiary  was a  potentially  responsible
party ("PRP") at the Gulf Coast Vacuum Services  Superfund Site (the "GCV Site")
in Vermilion Parish,  Louisiana.  Based upon the Company's investigation of this
claim, the Company believes that the basis for its alleged liability is a series
of  transactions  between the Company's  subsidiary  and the operator of the GCV
Site that occurred  during 1979 and 1980.  While the EPA's cleanup cost estimate
of the GCV Site is in the range of $17 million,  the Company  believes  that its
liability  is unlikely to be material  to its  financial  condition,  results of
operations or cash flows because of the large number of PRPs at the GCV Site and
the relative amount of  contamination,  if any, that may have been caused at the
GCV Site by the disposal of wastes by the Company during 1979 and 1980.
                                      -21-
<PAGE>

     Comstock Mill Site -- On February 21, 1996, the United States Department of
Interior  Bureau  of Land  Management  ("BLM")  sent a letter to  Houston  Oil &
Minerals Corporation ("HO&M"), a wholly owned subsidiary of Seagull,  requesting
HO&M to prepare and submit a plan for sampling and  analyzing  groundwater  at a
former mining operation  located near Virginia City,  Nevada (the "Comstock Mill
Site").  The  basis for the  BLM's  request  was the  alleged  operation  of the
Comstock  Mill Site by HO&M  between  1978 and 1982.  Pursuant  to an  indemnity
provision in the stock purchase agreement by which Seagull acquired HO&M in 1988
(the "HO&M Purchase  Agreement"),  Seagull  tendered the BLM's letter to Tenneco
Inc.  ("Tenneco")  with a demand for indemnity and notified the BLM that Tenneco
would  respond to the BLM letter on behalf of HO&M.  The BLM has also  indicated
that  Tenneco  and HO&M might be required to address  cyanide  contamination  of
groundwater at the Comstock Mill Site by separate  action of the Nevada Division
of Environmental Protection. Seagull believes that any liability associated with
the Comstock  Mill Site is the  responsibility  of Tenneco or its  successors in
liability pursuant to the HO&M Purchase Agreement.

     Other -- The Company is a party to other  ongoing  litigation in the normal
course of business.  Management  regularly analyzes current  information and, as
necessary,   provides   accruals  for  probable   liabilities  on  the  eventual
disposition of these matters. While the outcome of lawsuits or other proceedings
against the Company cannot be predicted with certainty, management believes that
the effect on its financial condition,  results of operations and cash flows, if
any, will not be material.

Item 4. Submission of Matters to a Vote of Security Holders

     None.

                                     PART II

Item 5. Market for Registrant's Common Stock and Related Shareholder Matters

     A. The  Company's  Common Stock (the  "Common  Stock") is traded on the New
York Stock Exchange under the ticker symbol "SGO." The high and low sales prices
on the New York Stock Exchange  Composite Tape for each quarterly  period during
the last two fiscal years were as follows:

<TABLE>
<CAPTION>

                                                   1997                                            1996
                                  ---------------------------------------          --------------------------------------
                                        High                  Low                       High                   Low
                                  -----------------     -----------------          ----------------      ----------------
<S>                               <C>                   <C>                        <C>                   <C>
First Quarter                           24 1/8                17 7/8                     22 7/8                17 1/8
Second Quarter                          19 1/4                16 1/2                     25 1/2                21
Third Quarter                           25 7/8                17 3/4                     26                    17 1/2
Fourth Quarter                          27 5/8                19 1/16                    24 3/8                20 5/8
</TABLE>

     B. As of March 9, 1998, there were approximately 4,370 holders of record of
Common Stock.

     C. Seagull has not declared any cash dividends on its Common Stock since it
became a public  entity in 1981.  The decision to pay Common Stock  dividends in
the future will depend upon the Company's  earnings and financial  condition and
such other  factors as the  Company's  Board of Directors  deems  relevant.  The
Company's revolving credit agreement (the "Revolving Credit Facility") restricts
                                      -22-
<PAGE>

the Company's  declaration or payment of dividends on and  repurchases of Common
Stock unless each of the following  tests have been met: (i) the Company's Total
Debt/Capitalization  Ratio  cannot be more than 60% and (ii) no Default or Event
of Default shall have occurred and be  continuing.  The  capitalized  terms used
herein to describe the  restrictions  contained in the Revolving Credit Facility
have the meanings  assigned to them in the Revolving Credit Facility.  Under the
most  restrictive of these tests,  as of December 31, 1997,  approximately  $344
million was available for payment of dividends or repurchase of Common Stock. In
addition,  certain debt  instruments  of ENSTAR  Alaska  restrict the ability of
ENSTAR  Alaska to transfer  funds to the Company in the form of cash  dividends,
loans or advances. For a description of such restrictions,  reference is made to
Note 6 of the Consolidated  Financial  Statements included in the Company's 1997
Annual Report to Shareholders and as part of Exhibit 13 attached hereto.

Item 6.  Selected Financial Data

     Incorporated herein by reference to the Selected Financial Data included in
the  Company's  1997  Annual  Report to  Shareholders  and as part of Exhibit 13
attached hereto.

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

     Incorporated herein by reference to Management's Discussion and Analysis of
Financial  Condition  and Results of Operations  included in the Company's  1997
Annual Report to Shareholders and as part of Exhibit 13 attached hereto.

Item 7a.  Quantitative and Qualitative Disclosures About Market Risk

     Based  on  the  Company's  market  capitalization,   the  quantitative  and
qualitative  disclosures required by Rule 305 of the Securities and Exchange Act
of 1934 are required  for  Seagull's  Form 10-K for the year ended  December 31,
1998 and, if material, will be so included.

Item 8. Financial Statements and Supplementary Data

     Incorporated herein by reference to the Consolidated  Financial  Statements
and  Supplementary  Data  included  in  the  Company's  1997  Annual  Report  to
Shareholders and as part of Exhibit 13 attached hereto.

Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

     None.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

     Incorporated herein by reference to "Election of Directors" included in the
Proxy  Statement for the Company's  Annual Meeting of Shareholders to be held on
May 13,  1998 (the  "Proxy  Statement").  See also  "Executive  Officers  of the
Company"  included  in Part I of this  Annual  Report  on Form  10-K,  which  is
incorporated by reference herein.

                                      -23-
<PAGE>

Item 11. Executive Compensation

     Incorporated  herein  by  reference  to  "Executive   Compensation--Summary
Compensation  Table,"  "--Compensation  Arrangements,"  "--Option  Exercises and
Fiscal Year-End Values," "--Option Grants," "--Executive Supplemental Retirement
Plan," "--ENSTAR Natural Gas Company Supplemental Executive Retirement Plan" and
"--ENSTAR   Natural   Gas   Company   Retirement   Plan";   and   "Election   of
Directors--Compensation   of  Directors"   included  in  the  Proxy   Statement.
Notwithstanding  any  provision  in  this  Annual  Report  on  Form  10-K to the
contrary,  under no circumstances are the "Compensation Committee Report" or the
information  under the heading  "Shareholder  Return  Performance  Presentation"
incorporated herein for any purpose.

Item 12. Security Ownership of Certain Beneficial Owners and Management

     Incorporated herein by reference to "Principal  Shareholders" and "Election
of  Directors--Security  Ownership of Directors and Management"  included in the
Proxy Statement.

Item 13. Certain Relationships and Related Transactions

     Incorporated  herein  by  reference  to  "Election  of   Directors--Certain
Transactions" included in the Proxy Statement.

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)  1. Financial Statements:

     The  Consolidated  Financial  Statements,  Notes to Consolidated  Financial
Statements  and  Independent  Auditors'  Report  thereon  are  included  in  the
Company's 1997 Annual Report to Shareholders  and as part of Exhibit 13 attached
hereto, and are incorporated herein by reference:

     2.   Schedules:

     All  schedules  have been  omitted  because  the  required  information  is
insignificant or not applicable.

     3.   Exhibits:

     3.1  Articles  of  Incorporation  of the  Company,  as  amended,  including
          Articles of Amendment filed  May 12, 1988,  May 21, 1991,  and May 21,
          1993 with the  Secretary of State of the State of Texas,  that certain
          Statement  of  Relative   Rights  and   Preferences   related  to  the
          designation   and  issuance  of  the   Company's   $2.25   Convertible
          Exchangeable  Preferred Stock, Series A, filed August 6, 1986 with the
          Secretary of State of the State of Texas and that certain Statement of
          Resolution   Establishing   Series   of  Shares  of  Series  B  Junior
          Participating  Preferred  Stock of Seagull  Energy  Corporation  filed
          March 21, 1989  with the  Secretary  of  State  of the  State of Texas
          (incorporated  by reference to Exhibit 3.1 to Quarterly Report on Form
          10-Q for the quarter ended June 30, 1993).

     3.2  Bylaws of the Company,  as amended through March 7, 1997 (incorporated
          by reference to Exhibit 4.9 to Form S-3 filed with the  Securities and
          Exchange Commission on September 18, 1997).
                                      -24-

<PAGE>

     *4.1 $500,000,000  Revolving  Credit and  Competitive  Bid  Facility  among
          Seagull Energy Corporation,  The Chase Manhattan Bank, Morgan Guaranty
          Trust Company of New York,  NationsBank of Texas,  N.A., and The Other
          Banks Signatory Thereto, dated December 27, 1997.

     4.2  Senior  Indenture dated as of July 15, 1993 by and between the Company
          and The Bank of New York,  as Trustee  (incorporated  by  reference to
          Exhibit  4.1 to  Current  Report  on Form 8-K dated  August  4,  1993;
          Specimen of 7 7/8% Senior Note due 2003 and resolutions adopted by the
          Chairman of the Board of  Directors  is  incorporated  by reference to
          Exhibit 4.3 to Current Report on Form 8-K dated August 4, 1993).

     4.3  Senior Subordinated Indenture dated as of July 15, 1993 by and between
          the  Company  and The Bank of New York,  as Trustee  (incorporated  by
          reference to Exhibit 4.2 to Current Report on Form 8-K dated August 4,
          1993;  Specimen  of 8 5/8%  Senior  Subordinated  Note  due  2005  and
          resolutions  adopted  by the  Chairman  of the Board of  Directors  is
          incorporated by reference to Exhibit 4.4 to Current Report on Form 8-K
          dated August 4, 1993).

    *4.4  Senior  Indenture  among  the  Company  and The Bank of New  York,  as
          Trustee, and Specimen of 7 1/2% Senior Notes due September 15, 2027.

     4.5  Terms Agreement and the resolutions of adoption by the Chairman of the
          Board of Directors  related to Exhibit 4.4  (incorporated by reference
          to Exhibit 2.3 to Current Report on Form 8-K filed with the Securities
          and Exchange Commission on October 17, 1997).

     *4.6 Note  Agreement  dated  June 17,  1985 by and  among  Alaska  Pipeline
          Company  and The  Travelers  Insurance  Company,  The  Travelers  Life
          Insurance  Company,  and the Equitable Life  Assurance  Society of the
          United States  (collectively,  the "Insurance  Companies")  (including
          forms of notes and other exhibits thereto) and Inducement Agreement of
          even date  therewith by and among Seagull and the Insurance  Companies
          (the  Note  Agreement  including  exhibits  thereto   incorporated  by
          reference  to Exhibit  4.1 to Annual  Report on Form 10-K for the year
          ended December 31, 1995; the Form of Consent and Agreement dated April
          15,  1991 by and  among  Alaska  Pipeline  Company  and the  Insurance
          Companies (including exhibits thereto) is filed herewith).

     4.7  Note Agreement dated May 14, 1992 by and among Alaska Pipeline Company
          and each of the purchasers thereto (including forms of notes and other
          exhibits  thereto) and Inducement  Agreement of even date therewith by
          and among Seagull and Aid  Association  for  Lutherans,  The Equitable
          Life Assurance Society of the United States,  Equitable  Variable Life
          Insurance  Company,  Provident Life & Accident  Insurance  Company and
          Teachers  Insurance  &  Annuity   Association  of  America  (including
          exhibits  thereto)  (incorporated  by  reference  to  Exhibit  4.1  to
          Quarterly  Report on Form 10-Q for the  quarter  ended  September  30,
          1997).

     4.8  Trust  Agreement  dated as of September 1, 1995 for the Seagull Series
          1995  Trust (the Trust  Agreement  is  incorporated  by  reference  to
          Exhibit  10.1 to Quarterly  Report on Form 10-Q for the quarter  ended
          September  30, 1995;  the Guaranty by Seagull  Energy  Corporation  in
          favor of the Seagull Series 1995 Trust is incorporated by reference to
          Exhibit  10.2 to Quarterly  Report on Form 10-Q for the quarter  ended
          September 30, 1995).

     4.9  Amended and Restated Rights Agreement dated March 17, 1989, as amended
          effective  June 13, 1992,  and amended and restated as of December 12,
          1997,  between the Company and BankBoston,  N.A. (as successor to NCNB
          Texas  National  Bank),  including  Form of  Statement  of  Resolution
          Establishing  the Series B Junior  Participating  Preferred Stock, the
          Form of Right  Certificate  and Form of Summary of Rights to  Purchase
          Preferred  Shares  (incorporated  by reference to Exhibit 2 to Current
          Report on Form 8-K dated December 15, 1997).

    #10.1 Seagull Energy Corporation 1995 Executive Incentive  Plan(incorporated
          by reference to Exhibit 10.2 to Quarterly  Report on Form 10-Q for the
          quarter ended June 30, 1995).

    #10.2 Seagull Energy Corporation 1996 Executive Incentive  Plan(incorporated
          by  reference  to Exhibit  10.3 to Annual  Report on Form 10-K for the
          year ended December 31, 1996).

                                      -25-
<PAGE>

    #10.3 Seagull   Energy    Corporation   1997   Executive    Incentive   Plan
          (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form
          10-Q for the quarter ended June 30, 1997).

    #10.4 Seagull  Energy   Corporation   1981  Stock  Option  Plan  (Restated),
          including  forms of  agreements,  as amended (the amended and restated
          plan is incorporated by reference to Exhibit 10.6 to Quarterly  Report
          on Form 10-Q for the quarter ended June 30, 1993; Form of Amendment to
          Stock  Option  Agreement(s)  for the  Seagull  Energy  Corporation  is
          incorporated  by reference to Exhibit 10.5 to the Quarterly  Report on
          Form 10-Q for the quarter  ended June 30,  1995;  Form of Amendment to
          Stock Option Agreement(s) is incorporated by reference to Exhibit 10.4
          to Annual Report on Form 10-K for the year ended December 31, 1996).

    #10.5 Seagull  Energy   Corporation   1983  Stock  Option  Plan  (Restated),
          including  forms of  agreements,  as amended (the amended and restated
          plan is incorporated by reference to Exhibit 10.7 to Quarterly  Report
          on Form 10-Q for the quarter ended June 30, 1993;  the amended form of
          Nonstatutory  Stock Option  Agreement is  incorporated by reference to
          Exhibit  10.15 to  Annual  Report  on Form  10-K  for the  year  ended
          December 31, 1993; Form of Amendment to Stock Option  Agreement(s) for
          the Seagull Energy Corporation is incorporated by reference to Exhibit
          10.5 to the  Quarterly  Report on Form 10-Q for the quarter ended June
          30,  1995;   Form  of  Amendment  to  Stock  Option   Agreement(s)  is
          incorporated  by reference  to Exhibit  10.5 to Annual  Report on Form
          10-K for the year ended December 31, 1996).

    #10.6 Seagull  Energy   Corporation   1986  Stock  Option  Plan  (Restated),
          including  forms of  agreements,  as amended (the amended and restated
          plan is incorporated by reference to Exhibit 10.8 to Quarterly  Report
          on Form 10-Q for the quarter ended June 30, 1993;  the amended form of
          Nonstatutory  Stock Option  Agreement is  incorporated by reference to
          Exhibit  10.16 to  Annual  Report  on Form  10-K  for the  year  ended
          December 31, 1993; Form of Amendment to Stock Option  Agreement(s) for
          the Seagull Energy Corporation is incorporated by reference to Exhibit
          10.5 to the  Quarterly  Report on Form 10-Q for the quarter ended June
          30,  1995;   Form  of  Amendment  to  Stock  Option   Agreement(s)  is
          incorporated  by reference  to Exhibit  10.6 to Annual  Report on Form
          10-K for the year ended December 31, 1996).

    #10.7 Seagull Energy Corporation 1990 Stock Option Plan,  including forms of
          agreements,  as amended (incorporated by reference to Exhibit 10.22 to
          Annual Report on Form 10-K for the year ended December 31, 1995;  Form
          of Amendment to Stock Option Agreement(s) is incorporated by reference
          to  Exhibit  10.7 to Annual  Report  on Form  10-K for the year  ended
          December 31, 1996).

    #10.8 Global  Natural  Resources  Inc. 1989 Key Employees  Stock Option Plan
          (the Plan is  incorporated by reference to Exhibit 4.1 to Registration
          Statement No.  33-31537 of Global Natural  Resources Inc.; the Form of
          Stock Option  Agreement is incorporated by reference to Exhibit 4.2 to
          Registration  Statement No. 33-31537 of Global Natural Resources Inc.;
          Form of Amendment  to Stock Option  Agreement(s)  is  incorporated  by
          reference to Exhibit  10.8 to Annual  Report on Form 10-K for the year
          ended December 31, 1996).

    #10.9 Global  Natural  Resources  Inc.  1992 Stock  Option Plan (the Plan is
          incorporated by reference to Exhibit 10.47 to the Quarterly  Report on
          Form  10-Q for the  quarter  ended  June 30,  1992 of  Global  Natural
          Resources Inc.  (Registration  No.  1-8674);  the Form of Stock Option
          Agreement  is  incorporated  by  reference  to  Exhibit  10.48  to the
          Quarterly  Report on Form 10-Q for the quarter  ended June 30, 1992 of
          Global  Natural  Resources Inc.  (Registration  No.  1-8674);  Form of
          Amendment to Stock Option Agreement(s) is incorporated by reference to
          Exhibit 10.9 to Annual Report on Form 10-K for the year ended December
          31, 1996).

   #10.10 Seagull Energy  Corporation 1993  Nonemployee  Directors' Stock Option
          Plan,  including  forms of  agreements,  as amended  (incorporated  by
          reference  to Exhibit  10.1 to  Quarterly  Report on Form 10-Q for the
          quarter ended September 30, 1997).

   #10.11 Seagull  Energy   Corporation  1993  Stock  Option  Plan,  as  amended
          (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form
          10-Q for the quarter ended September 30, 1997).

   #10.12 1995  Omnibus  Stock Plan (the Plan is  incorporated  by  reference to
          Exhibit  10.3 to Quarterly  Report on Form 10-Q for the quarter  ended
          June 30, 1995; Form of Amendment to Stock Option Agreement(s) is
                                      -26-
<PAGE>

          incorporated  by reference to Exhibit  10.12 to Annual  Report on Form
          10-K for the year ended December 31, 1996).

   #10.13 Seagull  Energy  Corporation  Management  Stability  Plan (the Plan is
          incorporated  by reference to Exhibit  10.35 to Annual  Report on Form
          10-K for the year ended  December  31,  1994;  the First  Amendment is
          incorporated  by reference to Exhibit  10.13 to Annual  Report on Form
          10-K for the year ended December 31, 1996).

   #10.14 Outside  Directors  Deferred Fee Plan of the  Company,  as amended and
          restated  (incorporated  by  reference  to Exhibit  10.2 to  Quarterly
          Report on Form 10-Q for the quarter ended June 30, 1996).

   #10.15 Employment  Agreement  dated  December  30,  1983 by and  between  the
          Company and Barry J. Galt, Chairman of the Board,  President and Chief
          Executive  Officer of the Company (the  Agreement is  incorporated  by
          reference  to Exhibit  10.1 to  Quarterly  Report on Form 10-Q for the
          quarter  ended June 30,  1993;  Amendment to  Employment  Agreement is
          incorporated  by reference to Exhibit  10.15 to Annual  Report on Form
          10-K for the year ended December 31, 1996).

   #10.16 Executive  Supplemental  Retirement Plan Membership  Agreement between
          the Company and Barry J. Galt dated as of February 3, 1986, as amended
          (incorporated by reference to Exhibit 10.2 to Quarterly Report on Form
          10-Q for the quarter ended September 31, 1996).

   #10.17 Restricted  Stock Agreement made and entered into as of March 17, 1995
          between Seagull Energy  Corporation and Barry J. Galt (incorporated by
          reference to Exhibit 10.32 to Annual Report on Form
          10-K for the year ended December 31, 1994).

   #10.18 Severance  Agreement  between Seagull Energy  Corporation and Barry J.
          Galt (incorporated by reference to Exhibit 10.3 to Quarterly Report on
          Form 10-Q for the quarter ended September 30, 1995).

   #10.19 Seagull Energy Corporation Executive Supplemental  Retirement Plan, as
          amended  (incorporated by reference to Exhibit 1.1 to Quarterly Report
          on Form 10-Q for the quarter ended September 30, 1996).

   #10.20 Seagull  Energy  Corporation  Supplemental  Benefit  Plan, as amended,
          including the First Amendment  thereto  (incorporated  by reference to
          Exhibit  10.11 to  Annual  Report  on Form  10-K  for the  year  ended
          December 31, 1995).

   #10.21 Form of Restricted  Stock  Agreement made and entered into as of March
          17, 1995 between Seagull Energy Corporation and, individually, Richard
          F. Barnes (granted 2,000 shares of restricted  Common Stock),  John W.
          Elias (granted 3,000 shares of restricted Common Stock) and William L.
          Transier   (granted   3,000  shares  of   restricted   Common   Stock)
          (incorporated  by reference to Exhibit  10.33 to Annual Report on Form
          10-K for the year ended December 31, 1994).

   #10.22 Form of Severance  Agreement between Seagull Energy  Corporation and
          Richard F. Barnes, John W. Elias and William L. Transier (incorporated
          by  reference to Exhibit  10.34 to Annual  Report on Form 10-K for the
          year ended December 31, 1994).

  #10.23  Consulting   Agreement   between   Robert  Vagt  and  Seagull   Energy
          Corporation  (incorporated  by  reference to Exhibit 10.9 to Quarterly
          Report on Form 10-Q for the quarter ended September 30, 1997).

    10.24 Royalty  Incentive  Plan,  as amended  (incorporated  by  reference to
          Exhibit  1.4 to the  Annual  Report  on Form  20-F for the year  ended
          December 31, 1981 of the U.K. Company).

    10.25 Purchase and Sale Agreement by and among Seagull  Energy  Corporation,
          Amoco Gas Company,  Houston Pipe Line  Company,  Enron Gas  Processing
          Company  and  Mantaray  Pipeline  Company,   as  sellers  and  Seahawk
          Gathering & Liquids  Company as buyer and Tejas Power  Corporation  as
          Guarantor  dated July 28, 1995  (incorporated  by reference to Exhibit
          10.6 to Quarterly  Report on Form 10-Q for the quarter  ended June 30,
          1995).
                                      -27-
<PAGE>

    10.26 Stock Purchase  Agreement Between Seagull Energy Corporation and Exxon
          Corporation  relating to all of the Outstanding  Capital Stock of Esso
          Suez  Inc.,   as  executed   in  Houston,   Texas  on  July  22,  1996
          (incorporated  by  reference  to Exhibit 2.1 to the Current  Report on
          Form 8-K filed on August 28, 1996).

    10.27 Purchase and Sale  Agreement  Between  Esso Egypt  Limited and Seagull
          Energy  Corporation dated July 22, 1996  (incorporated by reference to
          Exhibit  2.2 to the  Current  Report on Form 8-K  filed on August  28,
          1996).

    10.28 Agreement  and Plan of Merger  dated as of July 22,  1996 by and among
          Seagull Energy Corporation,  GNR Merger Corporation and Global Natural
          Resources   Inc.   (incorporated   by  reference  to  Exhibit  2.1  to
          Registration  Statement  No.  333-09845 on Form S-4 of Seagull  Energy
          Corporation).

    10.29 Share Sale  Agreement,  dated as of September 11, 1997, by and between
          Seagull Energy Canada Holding Company,  Seagull Energy Corporation and
          Rio Alto Exploration Ltd. (incorporated by reference to Exhibit 2.1 to
          Current Report on Form 8-K dated September 11, 1997).

     *13  Portions of the Seagull Energy  Corporation  and  Subsidiaries  Annual
          Report to Shareholders  for the year ended December 31, 1996 which are
          incorporated by reference herein to this Annual Report on Form 10-K of
          Seagull  Energy  Corporation  and  Subsidiaries  for  the  year  ended
          December 31,1997.

     *21  Subsidiaries of Seagull Energy Corporation.

    *23.1 Consent of KPMG Peat Marwick LLP.

    *23.2 Consent of Ryder Scott Company, independent petroleum engineers.

    *23.3 Consent of DeGolyer and MacNaughton, independent petroleum engineers.

    *23.4 Consent  of  Netherland,  Sewell  and  Associates,  Inc.,  independent
          petroleum engineers.

    *27.1 Financial Data Schedule.


         ----------------------------
*    Filed herewith.
#    Identifies management contracts and compensatory plans or arrangements.

(b) Reports on Form 8-K

     The Company filed a current  report on Form 8-K,  dated  December 15, 1997,
with  respect  to  certain  amendments  to the Rights  Agreement  governing  its
Preferred Share Purchase Rights.

                                      -28-
<PAGE>


                                   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.

<TABLE>
<CAPTION>

SEAGULL ENERGY CORPORATION

<S>        <C>                                                 <C>
Date:      March 17, 1998                                      By:        /s/ Barry J. Galt
                                                                          Barry J. Galt, Chairman of the Board and
                                                                          Chief Executive Officer
</TABLE>

     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>

<S>        <C>                                                 <C>         <C>
By:        /s/ Barry J. Galt                                    By:        /s/ Peter J. Fluor
           Barry J. Galt, Chairman of the Board, President                 Peter J. Fluor, Director
           and Chief Executive Officer and Director             Date       March 17, 1998
           (Principal Executive Officer)                        By:        /s/ William R. Grant
Date:      March 17, 1998                                                  William R. Grant, Director
By:        /s/ John W. Elias                                    Date:      March 17, 1998
           John W. Elias, Executive Vice President              By:        /s/ Dean P. Guerin
           and Director                                                    Dean P. Guerin, Director
Date:      March 17, 1998                                       Date:      March 17, 1998
By:        /s/ William L. Transier                              By:        /s/ Richard M. Morrow
           William L. Transier, Senior Vice President                      Richard M. Morrow, Director
           and Chief Financial Officer                          Date:      March 17, 1998
           (Principal Financial Officer)                        By:        /s/ Dee S. Osborne
Date:      March 17, 1998                                       Date:      Dee S. Osborne, Director
By:        /s/ Gordon L. McConnell                                         March 17, 1998
           Gordon L. McConnell, Vice President and              By:        /s/ Sidney R. Petersen
           Controller (Principal Accounting Officer)                       Sidney R. Petersen, Director
Date:      March 17, 1998                                       Date:      March 17, 1998
By:        /s/ J. Evans Attwell                                 By:        /s/ Sam F. Segnar
           J. Evans Attwell, Director                                      Sam F. Segnar, Director
Date:      March 17, 1998                                       Date:      March 17, 1998
By:        /s/ Richard J. Burgess                               By:        
           Richard J. Burgess, Director                                    Robert F. Vagt, Director
Date:      March 17, 1998                                       Date:      March 17, 1998
By:        /s/ Milton Carroll                                   By:        /s/ R. A. Walker
           Milton Carroll, Director                                        R. A. Walker, Director
Date:      March 17, 1998                                       Date:      March 17, 1998
By:        /s/ Thomas H. Cruikshank
           Thomas H. Cruikshank, Director
Date:      March 17, 1998

</TABLE>
                                      -29-
<PAGE>


                                  EXHIBIT INDEX


EXHIBITS:

          3.1  Articles of Incorporation of the Company,  as amended,  including
               Articles of Amendment filed May 12, 1988,  May 21, 1991,  and May
               21, 1993 with the Secretary of State of the State of Texas,  that
               certain  Statement of Relative Rights and Preferences  related to
               the designation  and issuance of the Company's $2.25  Convertible
               Exchangeable Preferred Stock, Series A, filed August 6, 1986 with
               the  Secretary  of State of the State of Texas  and that  certain
               Statement of Resolution Establishing Series of Shares of Series B
               Junior   Participating   Preferred   Stock  of   Seagull   Energy
               Corporation filed  March 21, 1989  with the Secretary of State of
               the State of Texas  (incorporated  by reference to Exhibi  3.1 to
               Quarterly  Report on Form  10-Q for the  quarter  ended  June 30,
               1993).

          3.2  Bylaws  of  the  Company,   as  amended  through  March  7,  1997
               (incorporated  by reference to Exhibit 4.9 to Form S-3 filed with
               the Securities and Exchange Commission on September 18, 1997).

          *4.1 $500,000,000  Revolving Credit and Competitive Bid Facility among
               Seagull Energy  Corporation,  The Chase  Manhattan  Bank,  Morgan
               Guaranty Trust Company of New York,  NationsBank of Texas,  N.A.,
               and The Other Banks Signatory Thereto, dated December 27, 1997.

          4.2  Senior  Indenture  dated as of July 15,  1993 by and  between the
               Company  and The Bank of New York,  as Trustee  (incorporated  by
               reference  to  Exhibit  4.1 to  Current  Report on Form 8-K dated
               August  4,  1993;  Specimen  of 7 7/8%  Senior  Note due 2003 and
               resolutions  adopted by the Chairman of the Board of Directors is
               incorporated  by  reference  to Exhibit 4.3 to Current  Report on
               Form 8-K dated August 4, 1993).

          4.3  Senior  Subordinated  Indenture dated as of  July 15, 1993 by and
               between  the  Company  and  The  Bank  of New  York,  as  Trustee
               (incorporated  by reference  to Exhibit 4.2 to Current  Report on
               Form 8-K  dated  August  4,  1993;  Specimen  of  8  5/8%  Senior
               Subordinated  Note  due  2005  and  resolutions  adopted  by  the
               Chairman of the Board of Directors is  incorporated  by reference
               to   Exhibit 4.4   to   Current   Report   on  Form   8-K   dated
               August 4, 1993).

          *4.4 Senior  Indenture  among the Company and The Bank of New York, as
               Trustee,  and  Specimen of 7 1/2 Senior Notes due  September  15,
               2027.

          4.5  Terms  Agreement and the  resolutions of adoption by the Chairman
               of the Board of Directors related to Exhibit 4.4 (incorporated by
               reference to Exhibit 2.3 to Current Report on Form 8-K filed with
               the Securities and Exchange Commission on October 17, 1997).

          *4.6 Note Agreement  dated June 17, 1985 by and among Alaska  Pipeline
               Company and The Travelers  Insurance Company,  The Travelers Life
               Insurance  Company,  and the Equitable Life Assurance  Society of
               the  United  States  (collectively,  the  "Insurance  Companies")
               (including  forms  of  notes  and  other  exhibits  thereto)  and
               Inducement  Agreement of even date therewith by and among Seagull
               and  the  Insurance   Companies  (the  Note  Agreement  including
               exhibits  thereto  incorporated  by  reference  to Exhibit 4.1 to
               Annual Report on Form 10-K for the year ended  December 31, 1995;
               the Form of Consent  and  Agreement  dated  April 15, 1991 by and
               among  Alaska  Pipeline  Company  and  the  Insurance   Companies
               (including exhibits thereto) is filed herewith).

<PAGE>


          4.7  Note  Agreement  dated May 14, 1992 by and among Alaska  Pipeline
               Company and each of the purchasers  thereto  (including  forms of
               notes and other  exhibits  thereto) and  Inducement  Agreement of
               even date therewith by and among Seagull and Aid  Association for
               Lutherans,  The Equitable  Life  Assurance  Society of the United
               States, Equitable Variable Life Insurance Company, Provident Life
               & Accident  Insurance  Company and  Teachers  Insurance & Annuity
               Association of America (including exhibits thereto) (incorporated
               by reference to Exhibit 4.1 to Quarterly  Report on Form 10-Q for
               the quarter ended September 30, 1997).

          4.8  Trust  Agreement  dated as of  September  1, 1995 for the Seagull
               Series  1995  Trust  (the  Trust  Agreement  is  incorporated  by
               reference to Exhibit  10.1 to  Quarterly  Report on Form 10-Q for
               the quarter  ended  September  30, 1995;  the Guaranty by Seagull
               Energy  Corporation  in favor of the Seagull Series 1995 Trust is
               incorporated by reference to Exhibit 10.2 to Quarterly  Report on
               Form 10-Q for the quarter ended September 30, 1995).

          4.9  Amended and Restated Rights  Agreement dated  March 17, 1989,  as
               amended  effective  June 13, 1992, and amended and restated as of
               December 12, 1997,  between the Company and BankBoston,  N.A. (as
               successor  to  NCNB  Texas  National  Bank),  including  Form  of
               Statement  of  Resolution   Establishing   the  Series  B  Junior
               Participating  Preferred Stock, the Form of Right Certificate and
               Form  of  Summary  of  Rights  to   Purchase   Preferred   Shares
               (incorporated by reference to Exhibit 2 to Current Report on Form
               8-K dated December 15, 1997).

         #10.1 Seagull  Energy   Corporation   1995  Executive   Incentive  Plan
               (incorporated by reference to Exhibit 10.2 to Quarterly Report on
               Form 10-Q for the quarter ended June 30, 1995).

         #10.2 Seagull  Energy   Corporation   1996  Executive   Incentive  Plan
               (incorporated  by reference  to Exhibit 10.3 to Annual  Report on
               Form 10-K for the year ended December 31, 1996).

         #10.3 Seagull  Energy   Corporation   1997  Executive   Incentive  Plan
               (incorporated by reference to Exhibit 10.1 to Quarterly Report on
               Form 10-Q for the quarter ended June 30, 1997).

         #10.4 Seagull  Energy  Corporation  1981 Stock Option Plan  (Restated),
               including  forms of  agreements,  as  amended  (the  amended  and
               restated  plan is  incorporated  by  reference to Exhibit 10.6 to
               Quarterly  Report on Form  10-Q for the  quarter  ended  June 30,
               1993;  Form of  Amendment to Stock  Option  Agreement(s)  for the
               Seagull  Energy  Corporation  is  incorporated  by  reference  to
               Exhibit 10.5 to the Quarterly Report on Form 10-Q for the quarter
               ended  June  30,   1995;   Form  of  Amendment  to  Stock  Option
               Agreement(s)  is  incorporated  by  reference  to Exhibit 10.4 to
               Annual Report on Form 10-K for the year ended December 31, 1996).

         #10.5 Seagull  Energy  Corporation  1983 Stock Option Plan  (Restated),
               including  forms of  agreements,  as  amended  (the  amended  and
               restated  plan is  incorporated  by  reference to Exhibit 10.7 to
               Quarterly  Report on Form  10-Q for the  quarter  ended  June 30,
               1993; the amended form of Nonstatutory  Stock Option Agreement is
               incorporated  by reference to Exhibit  10.15 to Annual  Report on
               Form 10-K for the year ended December 31, 1993; Form of Amendment
               to Stock Option  Agreement(s) for the Seagull Energy  Corporation
               is  incorporated  by reference  to Exhibit 10.5 to the  Quarterly
               Report on Form 10-Q for the quarter ended June 30, 1995;  Form of
               Amendment  to  Stock  Option   Agreement(s)  is  incorporated  by
               reference to Exhibit  10.5 to Annual  Report on Form 10-K for the
               year ended December 31, 1996).

         #10.6 Seagull  Energy  Corporation  1986 Stock Option Plan  (Restated),
               including  forms of  agreements,  as  amended  (the  amended  and
               restated plan is incorporated by reference to Exhibit 10.8 to

<PAGE>

               Quarterly  Report on Form  10-Q for the  quarter  ended  June 30,
               1993; the amended form of Nonstatutory  Stock Option Agreement is
               incorporated  by reference to Exhibit  10.16 to Annual  Report on
               Form 10-K for the year ended December 31, 1993; Form of Amendment
               to Stock Option  Agreement(s) for the Seagull Energy  Corporation
               is  incorporated  by reference  to Exhibit 10.5 to the  Quarterly
               Report on Form 10-Q for the quarter ended June 30, 1995;  Form of
               Amendment  to  Stock  Option   Agreement(s)  is  incorporated  by
               reference to Exhibit  10.6 to Annual  Report on Form 10-K for the
               year ended December 31, 1996).

         #10.7 Seagull  Energy  Corporation  1990 Stock Option  Plan,  including
               forms of  agreements,  as amended  (incorporated  by reference to
               Exhibit  10.22 to Annual  Report on Form 10-K for the year  ended
               December 31, 1995; Form of Amendment to Stock Option Agreement(s)
               is  incorporated by reference to Exhibit 10.7 to Annual Report on
               Form 10-K for the year ended December 31, 1996).

         #10.8 Global  Natural  Resources  Inc. 1989 Key Employees  Stock Option
               Plan (the Plan is  incorporated  by  reference  to Exhibit 4.1 to
               Registration  Statement No. 33-31537 of Global Natural  Resources
               Inc.;  the Form of Stock  Option  Agreement  is  incorporated  by
               reference to Exhibit 4.2 to  Registration  Statement No. 33-31537
               of Global  Natural  Resources  Inc.;  Form of  Amendment to Stock
               Option  Agreement(s) is incorporated by reference to Exhibit 10.8
               to Annual  Report on Form 10-K for the year  ended  December  31,
               1996).

         #10.9 Global Natural  Resources  Inc. 1992 Stock Option Plan (the Plan
               is  incorporated  by reference to Exhibit  10.47 to the Quarterly
               Report on Form 10-Q for the quarter ended June 30, 1992 of Global
               Natural  Resources Inc.  (Registration  No. 1-8674);  the Form of
               Stock Option  Agreement is  incorporated  by reference to Exhibit
               10.48 to the Quarterly  Report on Form 10-Q for the quarter ended
               June 30, 1992 of Global Natural Resources Inc.  (Registration No.
               1-8674);  Form of  Amendment  to  Stock  Option  Agreement(s)  is
               incorporated  by reference  to Exhibit  10.9 to Annual  Report on
               Form 10-K for the year ended December 31, 1996).

        #10.10 Seagull Energy  Corporation  1993  Nonemployee  Directors'  Stock
               Option  Plan,   including   forms  of   agreements,   as  amended
               (incorporated by reference to Exhibit 10.1 to Quarterly Report on
               Form 10-Q for the quarter ended September 30, 1997).

        #10.11 Seagull  Energy  Corporation  1993 Stock Option Plan,  as amended
               (incorporated by reference to Exhibit 10.3 to Quarterly Report on
               Form 10-Q for the quarter ended September 30, 1997).

        #10.12 1995 Omnibus Stock Plan (the Plan is incorporated by reference to
               Exhibit  10.3 to  Quarterly  Report on Form 10-Q for the  quarter
               ended  June  30,   1995;   Form  of  Amendment  to  Stock  Option
               Agreement(s)  is  incorporated  by reference to Exhibit  10.12 to
               Annual Report on Form 10-K for the year ended December 31, 1996).

        #10.13 Seagull Energy Corporation Management Stability Plan (the Plan is
               incorporated  by reference to Exhibit  10.35 to Annual  Report on
               Form  10-K  for the year  ended  December  31,  1994;  the  First
               Amendment is incorporated by reference to Exhibit 10.13 to Annual
               Report on Form 10-K for the year ended December 31, 1996).

        #10.14 Outside  Directors  Deferred Fee Plan of the Company,  as amended
               and  restated  (incorporated  by  reference  to  Exhibit  10.2 to
               Quarterly  Report on Form  10-Q for the  quarter  ended  June 30,
               1996).

        #10.15 Employment  Agreement  dated December 30, 1983 by and between the
               Company and Barry J. Galt,  Chairman of the Board,  President and
               Chief  Executive   Officer  of  the  Company  (the  Agreement  is
               incorporated by reference to Exhibit 10.1 to Quarterly  Report on
               Form 10-Q for the  quarter  ended  June 30,  1993;  Amendment  to
               Employment  Agreement  is  incorporated  by  reference to Exhibit
               10.15 to Annual  Report on Form 10-K for the year ended  December
               31, 1996).
<PAGE>

        #10.16 Executive  Supplemental   Retirement  Plan  Membership  Agreement
               between  the  Company  and Barry J. Galt dated as of  February 3,
               1986,  as amended  (incorporated  by reference to Exhibit 10.2 to
               Quarterly Report on Form 10-Q for the quarter ended September 31,
               1996).

        #10.17 Restricted  Stock Agreement made and entered into as of March 17,
               1995  between  Seagull  Energy  Corporation  and  Barry  J.  Galt
               (incorporated  by reference to Exhibit  10.32 to Annual Report on
               Form 10-K for the year ended December 31, 1994).

        #10.18 Severance  Agreement between Seagull Energy Corporation and Barry
               J. Galt  (incorporated  by reference to Exhibit 10.3 to Quarterly
               Report on Form 10-Q for the quarter ended September 30, 1995).

        #10.19 Seagull  Energy  Corporation  Executive  Supplemental  Retirement
               Plan,  as amended  (incorporated  by  reference to Exhibit 1.1 to
               Quarterly Report on Form 10-Q for the quarter ended September 30,
               1996).

       #10.20  Seagull Energy Corporation Supplemental Benefit Plan, as amended,
               including the First Amendment thereto  (incorporated by reference
               to Exhibit 10.11 to Annual Report on Form 10-K for the year ended
               December 31, 1995).

        #10.21 Form of Restricted  Stock  Agreement  made and entered into as of
               March  17,  1995  between   Seagull   Energy   Corporation   and,
               individually,   Richard  F.  Barnes   (granted  2,000  shares  of
               restricted Common Stock),  John W. Elias (granted 3,000 shares of
               restricted  Common Stock) and William L. Transier  (granted 3,000
               shares of restricted Common Stock)  (incorporated by reference to
               Exhibit  10.33 to Annual  Report on Form 10-K for the year  ended
               December 31, 1994).

        #10.22 Form of Severance  Agreement between Seagull Energy Corporation
               and  Richard F.  Barnes,  John W. Elias and  William L.  Transier
               (incorporated  by reference to Exhibit  10.34 to Annual Report on
               Form 10-K for the year ended December 31, 1994).

        #10.23 Consulting  Agreement  between  Robert  Vagt and  Seagull  Energy
               Corporation   (incorporated  by  reference  to  Exhibit  10.9  to
               Quarterly Report on Form 10-Q for the quarter ended September 30,
               1997).

         10.24 Royalty Incentive Plan, as amended (incorporated by reference to
               Exhibit 1.4 to the Annual  Report on Form 20-F for the year ended
               December 31, 1981 of the U.K. Company).

         10.25 Purchase  and  Sale   Agreement  by  and  among  Seagull   Energy
               Corporation,  Amoco Gas Company, Houston Pipe Line Company, Enron
               Gas Processing Company and Mantaray Pipeline Company,  as sellers
               and Seahawk  Gathering & Liquids Company as buyer and Tejas Power
               Corporation  as Guarantor  dated July 28, 1995  (incorporated  by
               reference to Exhibit  10.6 to  Quarterly  Report on Form 10-Q for
               the quarter ended June 30, 1995).

        10.26  Stock Purchase  Agreement Between Seagull Energy  Corporation and
               Exxon  Corporation  relating  to all of the  Outstanding  Capital
               Stock of Esso Suez Inc.,  as executed  in Houston,  Texas on July
               22, 1996 (incorporated by reference to Exhibit 2.1 to the Current
               Report on Form 8-K filed on August 28, 1996).

        10.27  Purchase  and Sale  Agreement  Between  Esso  Egypt  Limited  and
               Seagull Energy  Corporation dated July 22, 1996  (incorporated by
               reference to Exhibit 2.2 to the Current  Report on Form 8-K filed
               on August 28, 1996).

<PAGE>


        10.28  Agreement and Plan of  Merger dated as of July 22,  1996 by and
               among Seagull  Energy  Corporation,  GNR Merger  Corporation  and
               Global  Natural  Resources  Inc.  (incorporated  by  reference to
               Exhibit 2.1 to Registration  Statement No.  333-09845 on Form S-4
               of Seagull Energy Corporation).

        10.29  Share Sale  Agreement,  dated as of September  11,  1997,  by and
               between  Seagull  Energy Canada Holding  Company,  Seagull Energy
               Corporation  and  Rio  Alto  Exploration  Ltd.  (incorporated  by
               reference  to  Exhibit  2.1 to  Current  Report on Form 8-K dated
               September 11, 1997).

          *13  Portions  of the  Seagull  Energy  Corporation  and  Subsidiaries
               Annual  Report to  Shareholders  for the year ended  December 31,
               1996 which are  incorporated  by reference  herein to this Annual
               Report  on  Form  10-K  of   Seagull   Energy   Corporation   and
               Subsidiaries for the year ended December 31, 1997.

          *21  Subsidiaries of Seagull Energy Corporation.

         *23.1 Consent of KPMG Peat Marwick LLP.

         *23.2 Consent of Ryder Scott Company, independent petroleum engineers.

         *23.3 Consent  of  DeGolyer  and  MacNaughton,   independent  petroleum
               engineers.

         *23.4 Consent of Netherland,  Sewell and Associates,  Inc., independent
               petroleum engineers.

         *27.1 Financial Data Schedule.

--------------------
*   Filed herewith.
#   Identifies management contracts and compensatory plans or arrangements.