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, 1996
                                       OR
[   ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                             SECURITIES 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         (I.R.S. Employer Identification No.)
     incorporation or organization)
        1001 Fannin, Suite 1700
             Houston, Texas                               77002-6714
(Address of principal executive offices)                  (Zip Code)

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 20, 1997,  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
$1,145,771,074.

          As of March 20, 1997,  62,931,403  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, 1996
  (2) Proxy Statement for Annual Meeting                           PART III
      of Shareholders to be held on May 13, 1997

<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,  Canada,  Egypt,  Cote  d'Ivoire,
Indonesia and the Russian Republic of Tatarstan. It also transports, distributes
and markets natural gas,  liquids  products and  petrochemicals  in the U.S. and
Canada.  The  Company  was  incorporated  in  Texas  in 1973 as a  wholly  owned
subsidiary of Houston Oil & Minerals  Corporation  ("HO&M").  In March 1981, the
Company became an  independent  entity as a result of the spin-off of its shares
to the  stockholders  of HO&M.  The  growth  in the  Company's  exploration  and
development activities has been achieved primarily through acquisitions: HO&M in
1988,  Houston Oil Trust in 1989,  Wacker Oil Inc. in 1990,  certain oil and gas
assets from Mesa Limited Partnership in 1991, Arkla Exploration in 1992, Novalta
Resources  Inc. in 1994,  and two Egyptian  concessions  purchased from units of
Exxon Corporation in 1996.

         On October 3, 1996,  the  shareholders  of Seagull  and Global  Natural
Resources  Inc.  ("Global")  approved a merger of a wholly owned  subsidiary  of
Seagull into Global (the "Global Merger").  Pursuant to the Global Merger,  each
share of Global  common stock was converted  into 0.88 shares of Seagull  common
stock with  approximately  26.3 million  shares  issued to the  shareholders  of
Global. The Global Merger was accounted for as a pooling of interests. Therefore
all financial  information and statistics  have been restated.  The "Company" or
"Seagull" refers to Seagull and its consolidated subsidiaries,  unless otherwise
indicated or the context otherwise suggests.

         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  of  Seagull  Energy
Corporation and  Subsidiaries  and the Notes related thereto (the  "Consolidated
Financial  Statements")  are  included in the  Company's  1996 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 its expectations are based on reasonable assumptions,  it can give
no assurance that its goals will be achieved. 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 and  conditions of the capital and equity markets
during the periods covered by the forward looking statements.


                             OIL AND GAS OPERATIONS

         Seagull's  Oil and Gas  Operations  ("O&G")  segment  is the  Company's
primary business  segment and is comprised of the following  material direct and
indirect  wholly owned  subsidiaries  of the Company:  Seagull  Energy E&P Inc.;
Global Natural  Resources  Inc.;  Seagull Midcon Inc.;  Seagull  Mid-

                                      -1-

<PAGE>

South Inc.,  Seagull Energy Canada Ltd.  ("Seagull  Canada"),  Seagull East Zeit
Petroleum Ltd. and various other subsidiaries.

         Natural gas is stated  herein in billion  cubic feet  ("Bcf"),  million
cubic feet ("MMcf") or thousand cubic feet ("Mcf").  Oil, condensate and natural
gas liquids ("NGL") are stated in barrels ("Bbl").  MMcfe and Mcfe represent the
equivalent  of  one  million  and  one  thousand  cubic  feet  of  natural  gas,
respectively.  Oil,  condensate  and NGL are  converted to gas at a ratio of one
barrel of liquids per six Mcf of gas, based on relative energy content. 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.
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.

         Revenues  from the O&G segment  accounted  for 81%,  76% and 78% of the
Company's   consolidated  revenues  for  1996,  1995  and  1994,   respectively.
Production  of gas and liquids for 1996 averaged  391.5 MMcf per day  ("MMcf/d")
and 13,409 Bbl per day  ("Bbl/d"),  respectively,  compared to 382.6  MMcf/d and
8,753 Bbl/d,  respectively,  in 1995.  Oil production in 1996 increased from the
prior  year  primarily  as a result of  increased  production  in Egypt and Cote
d'Ivoire.  In September 1995,  the  Company sold  substantially  all  of its gas
gathering  and processing assets.  With  the sale  of  these  assets,  Seagull's
former Exploration and Production segment and the Pipeline and Marketing segment
have been reclassified into Oil and Gas Operations.

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

<TABLE>
<CAPTION>

                                                              Proved Reserves at December 31, 1996
                                      --------------------------------------------------------------------------------------
                                             Gas (MMcf)                     Oil (Mbbl)                       MBOE
                                      --------------------------     -------------------------     -------------------------
<S>                                   <C>                            <C>                           <C>    

UNITED STATES:
  Arkoma Basin..................                 121,896                              -                       20,316
  Arklatex Area.................                 297,719                          7,687                       57,306
  Mid-Continent Area............                 203,692                          7,958                       41,906
  Offshore Gulf of Mexico.......                  82,095                          2,404                       16,087
  Gulf Coast Onshore............                  27,608                          1,166                        5,767
  Other.........................                  82,771                            670                       14,465
                                      --------------------------     -------------------------     -------------------------
                                                 815,781                         19,885                      155,847
CANADA..........................                 233,744                          3,725                       42,682
EGYPT:
  Qarun.........................                   1,447                          9,462                        9,703
  East Zeit.....................                       -                         16,262                       16,262
                                      --------------------------     -------------------------     -------------------------
                                                   1,447                         25,724                       25,965
COTE D'IVOIRE...................                  21,644                          1,525                        5,132
TATARSTAN.......................                       -                         16,338                       16,338
INDONESIA.......................                  65,217                          1,125                       11,993
                                      --------------------------     -------------------------     -------------------------
                                               1,137,833                         68,322                      257,957
                                      ==========================     =========================     =========================

</TABLE>

         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  the
Consolidated  Financial  Statements included in the Company's 1996 Annual Report
to  Shareholders  and as part of  Exhibit  13  attached  hereto.  The  Engineers
provided the  estimates  of "proved  developed  and  undeveloped  reserves"  and
"proved developed  reserves" at the beginning and end of each of the three years
included in Note 15. Under  "Standardized  Measure of Discounted Future Net Cash
Flows" in Note 15, the Engineers  provided all  information  except  "discounted
income taxes" and  "standardized  measure of discounted  future net cash flows."
All  information  in Note 15 not provided by the  Engineers

                                      -2-

<PAGE>

was supplied by the Company.  The Company's  reserve estimates in Indonesia have
been  obtained  by  the  Company  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.  The basis  for  reporting
reserves  to  these  authorities  and  agencies,  in  some  cases,  may  not  be
comparable. However, the difference in estimates does not exceed 5%.

         The  future  results of this  segment  will be  affected  by the market
prices of natural gas and liquids  and the degree of  internal  exploration  and
exploitation  success.  The  availability  of a ready market for gas and liquids
products in the future will depend on numerous factors beyond the control of the
Company,  including  weather,  production  of  other  natural  gas  and  liquids
products, imports, marketing of competitive fuels, proximity and capacity of gas
and liquids pipelines and other  transportation  facilities,  demand for storage
refills,  any  oversupply  or  undersupply  of gas  and  liquids  products,  the
regulatory  environment and other regional,  international and political events,
none of which can be predicted with certainty.

UNITED STATES

          Most  of  the  Company's  proved  oil  and  gas  reserves  and  annual
production are contributed by properties in the United States.  These properties
are generally  located in three  geographic areas -- the Mid-South  region,  the
Mid-Continent  region and the Gulf Coast region.  The Company's  capital program
for  1997  is  designed  to  hold  domestic   reserves  and   deliverability  to
approximately year-end 1996 levels. In addition, Seagull will continue to pursue
small acquisitions to increase its domestic reserves and deliverability. Capital
expenditures,   excluding  small   acquisitions,   for  the  Company's  domestic
activities are expected to be approximately $114 million for 1997, including $50
million  for  exploration,  $57  million  for  development  and $7  million  for
leaseholds.

Mid-South Region

         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.  Combined,  these two areas held proved reserves
totaling  77,622 MBOE at December  31,  1996, 30% of the Company's  total proved
reserves.  These proved reserves are contained in some 80 fields in which  there
are approximately  1,300 producing wells.  Production  from  these  two areas at
December 31, 1996, averaged approximately 28 MBOE per day.

          The Company's  continuing  expenditures  in the  Mid-South  region are
devoted principally to exploitation activities. Such expenditures in 1996, which
totaled $34.0 million, were devoted to 81 development wells. Plans for 1997 call
for 69 development wells and capital spending of about $31 million.  The Company
estimates that it held  approximately 313 development drilling  locations in the
area at the end of 1996.

Mid-Continent Region

         The Company's  Mid-Continent  properties are situated  generally in the
Anadarko  Basin of the Texas  Panhandle  and  western  Oklahoma.  This area held
proved  reserves  totaling  41,906 MBOE at December  31,  1996,  some 16% of the
Company's total proved reserves.  These proved  reserves  are 

                                      -3-

<PAGE>

contained in 20 fields in which there are  approximately  900  producing  wells.
Production from this area at December 31, 1996,  averaged  approximately 16 MBOE
per day.

         The Company's  continuing  expenditures in the Mid-Continent region are
devoted principally to exploitation activities. Such expenditures in 1996, which
totaled $19.3 million, were devoted primarily to 39 development wells. Plans for
1997 call for 66  development  wells and capital  spending of about $21 million.
The  Company  estimates  that it held  314  approximately  development  drilling
locations in the area at the end of 1996.

Gulf Coast Region

         The Company's Gulf Coast region 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. As of December 31, 1996, the Company's holdings in the Gulf
Coast  region  totaled  21,854  MBOE of proved  reserves, representing 8% of the
Company's total such reserves.

         The  Company  at  December  31,  1996,  had  68  undrilled  exploratory
prospects  in its Gulf Coast  region,  some 60 of which were  located  offshore.
Further,  the  Company  estimates  that it  held  approximately  20  development
drilling locations at year-end 1996.

         Both  exploration  and  exploitation  activities  are conducted in this
region.  In 1996 such activity  consisted  of 28 exploratory  and  5 development
wells and cumulative  capital spending of $86.4 million.  The Company's  capital
budget but also for development drilling and the acquisition of offshore  leases
for 1997 anticipates spending of $62 million, primarily for 24 exploratory wells
but also for development drilling and the acquisition of offshore leases in  the
Gulf Coast region.

CANADA

          The  Company's  operations  in Canada  consist of interests in a small
number of fields  located in Alberta,  Canada.  As of  December  31,  1996,  the
Company's  holdings  in  Canada  totaled  42,682  MBOE  representing  17% of the
Company's  reserves. Seagull's 1997 capital program includes  approximately  $15
million  in  exploratory  and  development  capital  expenditures  for  Canadian
operations.

EGYPT

         The Company's  Egyptian  operations consist of working interests in two
producing (Qarun and East Zeit) and three exploratory (East Beni Suef, Darag and
South  Hurghada)  concessions.  As  discussed  below,  the East  Zeit and  South
Hurghada  concessions  were purchased in 1996. The Company's interests in Qarun,
East Beni Suef and Darag were owned by Global prior to the Global Merger.

         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

                                      -4-

<PAGE>

operating  costs and  production is split between EGPC and the working  interest
partners.  Working  interest  partners  recover costs from a  percentage,  which
varies by  concession,  of the oil and gas produced and sold from the applicable
concession ("cost recovery  petroleum").  See the discussions of each concession
below for the applicable cost recovery percentage. 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  ("remaining  oil" or
"remaining gas") is divided between EGPC and the working interest partners.  See
the discussions of each concession below for the applicable remaining oil or gas
percentage.  From  EGPC's  share  of this  remaining  oil or gas,  all  Egyptian
government  royalties  as well as the  applicable  Egyptian  income taxes of the
working interest partners are paid.

Qarun

         The  Company  has a 25%  non-operated  working  interest  in the  Qarun
Concession  Agreement ("QCA").  The concession covers  approximately 1.9 million
gross acres located 45 miles  southwest of Cairo,  Egypt.  Exploratory  drilling
activities  began in mid 1994.  Initial oil production,  via trucking,  began in
late 1995 while conventional development facilities were completed in late 1996.
These development facilities are expected to be fully operational in early 1997.
As  required  by the QCA,  the Qarun  Production  Company  was formed in 1995 to
operate the Qarun block and is jointly owned by the QCA partners and EGPC. Under
the QCA,  cost  recovery  petroleum may be up to 40% of the oil and gas produced
and sold. Any portion of cost recovery  petroleum not used to recover costs goes
to EGPC.  The working  interest  partners  receive  20%-30% of the remaining oil
depending  upon  production  levels  and  22% of  the  remaining  gas.  Up to 16
exploratory  wells, as well as ongoing development activities, are  scheduled on
the Qarun  concession  during 1997.  Plans  for 1997  include  approximately $30
million in capital  expenditures net to the Company's 25% working interest.

East Zeit

          On  September  10,  1996,  Seagull  purchased  the East Zeit and South
Hurghada   concessions   from  units  of  Exxon   Corporation  (the  "Esso  Suez
Acquisition") for a net purchase price of $74 million. The Company, as operator,
has a 100%  working  interest  in the East  Zeit  concession  which  is  located
offshore in the Gulf of Suez.  Under  terms of the  concession  agreement,  cost
recovery petroleum may be up to 25% of the oil produced and sold. Any portion of
cost  recovery  petroleum not used to recover costs goes to EGPC. As the working
interest partner, the Company receives 15% of remaining oil (11.25% of total oil
production).  However,  the Company  receives no allocation of gas production as
all such production is taken by EGPC. Plans for 1997 include  approximately  $30
million in capital  expenditures,  primarily for development  activities and one
exploratory well.

                                      -5-

<PAGE>

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 to the south of the Qarun  concession.  The  working
interest  partners have committed to drill one  exploratory  well in the initial
three year  exploratory  period.  The exploration  rights may be extended for an
additional six years by the assumption of additional drilling obligations. Up to
40% of the  oil  and gas  produced  and  sold  is  available  as  cost  recovery
petroleum.  The working  interest  partners receive 15%-30% of the remaining oil
depending  upon  production  levels and 25% of the remaining gas. Any portion of
cost  recovery  petroleum  not used to recover costs is shared among the working
interest  partners  and EGPC in the same  manner  as  remaining  petroleum.  The
Company has budgeted just over $3 million for 1997 capital  expenditures  in the
block, including its share of the first two exploratory wells.

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. Up to 40% of the oil and gas produced and sold is available as cost
recovery  petroleum.  Any portion of cost recovery petroleum not used to recover
costs is shared among the working interest  partners and EGPC in the same manner
as remaining  petroleum.  The working  interest  partners receive 13%-30% of the
remaining oil based on the level of production and 25% of the remaining gas. The
Company's  1997 capital  budget is just over $5 million,  including its share of
two exploratory wells.

South Hurghada

         As discussed above, the South Hurghada Concession  Agreement,  covering
over 61,000  million  acres,  was  acquired  on  September 10, 1996. Seagull, as
operator, has a 100% working  interest in the concession  located onshore on the
coast of the  Gulf  of Suez  approximately  250 miles south of Cairo.  Up to 40%
of the oil and  gas produced and sold is available as cost  recovery  petroleum.
Any portion of cost  recovery petroleum  not used to recover costs goes to EGPC.
The Company  receives  12%-20%  of  the remaining  oil depending upon production
levels and  20% of the remaining  gas.  While there are  currently  no producing
activities at South Hurghada, there are two existing oil discoveries.  Projected
1997  capital  spending in the block  approximates  $11 million,  primarily  for
geophysical  data  acquisition  and  evaluation,   two  exploratory   wells  and
installation of production facilities.

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.  Each block is subject to a
Production  Sharing  Contract ("PSC") with similar terms for each of the blocks.
Under the terms of the PSCs, 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,  which  varies by  concession,  of the oil and gas produced and sold
from  the  applicable  contract  area  ("cost  recovery  petroleum").   See  the
discussions  of  each   concession   below  for  the  applicable  cost  recovery
percentage.  Cost recovery  petroleum forms a single unified pool for the entire
PSC from which costs of all fields,  zones,  products and types may be recovered
without differentiation, except that operating and financing costs are recovered
prior to the recovery of any capital costs.  Capital costs include  exploration,
development and

                                      -6-

<PAGE>

other equipment and facilities  costs. To the extent that the costs eligible for
recovery  in any  calendar  year  exceed the amount of cost  recovery  petroleum
produced and sold in that quarter, such costs are recoverable from cost recovery
petroleum  in future  years with no limit on the ability to carry  forward  such
costs. Any portion of cost recovery  petroleum not used to recover costs will be
split between the Ivorian  government and the working  interest  partners in the
same manner as remaining petroleum.

         The  remaining  oil and gas  produced  and sold is divided  between the
Ivorian  government and the working  interest  partners.  See the discussions of
each concession below for the applicable remaining oil and gas percentage.  From
the Ivorian  government's share of remaining  petroleum,  all Ivorian government
royalties  as  well as the  applicable  Ivorian  income  taxes  for the  working
interest partners are paid.

CI-11

         Pursuant to the CI-11 PSC,  the Company  has  a  13.2% unitized working
interest in the area  located from onshore to approximately eight miles offshore
Cote d'Ivoire.  Under  this  PSC,  40%  of the oil and  gas produced and sold is
available as cost recovery petroleum.  The  working  interest  partners  receive
10%-50% of the  remaining  petroleum  based on the level of production  and  the
water  depth  location  of  the  specific  wellhead.  The  Company  has budgeted
approximately  $16 million as its share  of  1997  capital  spending,  primarily
for  development  drilling  and facilities.

CI-12

         In April  1995,  the  Company  signed a PSC for block  CI-12 which lies
adjacent  to the west of block  CI-11.  The  Company  acquired a 16.67%  working
interest in the PSC which covers approximately  525,000 gross acres. The working
interest  partners have committed to drill one  exploratory  well in the initial
two year period.  The exploration  rights may be extended for an additional four
years by the  assumption  of  additional  drilling  obligations.  The  terms and
conditions  of the CI-12 PSC are  similar to those of CI-11, except that  50% of
the oil and gas produced is available to  recover costs. The  Company's  capital
budget for 1997 includes just over $2 million for CI-12, primarily for its share
of two exploratory wells.

CI-104

         In 1996, the Company  received a 100% working interest in block CI-104,
which lies adjacent to the west of block CI-12 and covers approximately  250,000
gross  acres.  The Company has  committed to drill one  exploratory  well in the
initial  two  year  period.  The  exploration  rights  may  be  extended  for an
additional  four years by the  assumption  of additional  drilling  obligations.
While the terms and  conditions of the CI-104 PSC are similar to those of CI-11,
75% of the oil and gas  produced  is  available  to recover  costs.  The Company
receives  30%-50% of the remaining  petroleum  depending upon  production levels
and the water depth location of the specific wellhead. Seismic work is scheduled
to begin in 1997 with initial drilling beginning in 1998.

                                      -7-

<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 open 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 and (iii)
the upcoming  development  and  operation  of the  Suncheleevsky  and  Demkinsky
fields.  Texneft's  share  of  capital  spending  for  1997 is some $6  million,
primarily for development drilling and facilities.


INDONESIA

         Seagull  has  a  1.714%  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  Perusahaan
Pertambangan  Minyak Dan Gas Bumi  Negara,  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.
In accordance with the requirements of the PSC, which expires on August 7, 2018,
the IJV must  relinquish  10% of the PSC area by August 7, 1998, 10% by December
31, 2000; 15% by each December 31, 2001, 2002 and 2004.  However, the IJV is not
required  to  relinquish  any  of  the  PSC  area in  which  oil or  gas is held
for production.

         Under the PSC, 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.
Through  August 7, 1998,  the share of revenues  from the sale of gas after cost
recovery  will remain at 35% to the IJV and 65% to  Pertamina.  After  August 7,
1998,  the split will be (i) 25 % to the IJV and 75% to Pertamina  for gas sales
under  various  LNG sales  contracts  specified  in the PSC to the  extent  that
production  is committed  from the Badak or Nilam fields and (ii) 30% to the IJV
and 70% to Pertamina for all LNG revenues  from other  fields.  Based on current
and  projected  oil  production,  the  revenue  split from oil sales  after cost
recovery  through  August  7,  2018  will  remain  at 15% to the  IJV and 85% to
Pertamina.  These revenue splits are based on Indonesian income tax rates of 56%
through August 7, 1998 and 48% thereafter.


OTHER INTERNATIONAL

         The Company's other  international  operations consist of activities in
the United  Kingdom and  Malaysia.  In the United  Kingdom,  Seagull has several
production  licenses  awarded to two exploration  groups which include  Seagull.
Although  the  Company  currently  has no  producing  properties  in the

                                      -8-

<PAGE>

United  Kingdom,  a well designed to delineate a 1994 discovery is scheduled for
late 1997.  While Seagull  currently  has several  minor  interests in Malaysia,
exploratory  efforts  in 1993 and 1994 did not  find  commercial  quantities  of
hydrocarbons.  The Company and its joint venture  partners do not currently have
any additional plans for activities in Malaysia.


OIL AND GAS DRILLING ACTIVITIES

         Seagull's oil and gas exploratory and developmental drilling activities
are as follows for the periods indicated.  Totals shown in each category include
wells completed as productive  wells and wells abandoned as dry holes. 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. A well is
deemed  to be a dry  hole if it is  determined  to be  incapable  of  commercial
production.  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 number of wells
drilled  refers to the  number  of wells  completed  during  the  fiscal  years,
regardless of when drilling was initiated.  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.

<TABLE>
<CAPTION>


                                                                      Year Ended December 31,
                                        ------------------------------------------------------------------------------------
                                                1996                          1995                            1994
                                         Gross         Net              Gross          Net             Gross         Net
                                        ---------    ---------         --------     ---------        ----------    ---------
<S>                                     <C>          <C>               <C>          <C>              <C>           <C>


UNITED STATES:
 Exploratory Drilling:
   Productive Wells.................      14           6.2                 9           5.7               14           5.9
   Dry Holes........................      15           6.6                14           7.5               19          10.3
 Development Drilling:
   Productive Wells.................     123          54.2                64          29.0              137          71.5
   Dry Holes........................      13           8.2                 4           1.1               11           5.1
CANADA:
 Exploratory Drilling:
   Productive Wells.................       5           0.8                 3           1.0                5           1.7
   Dry Holes .......................       2           2.0                 3           3.0                1           0.3
 Development Drilling:
   Productive Wells.................      17           8.6                 7           1.9              110          55.0
   Dry Holes .......................       2           1.5                 1           0.5                1           0.5
COTE D'IVOIRE:
 Exploratory Drilling:
   Productive Wells.................       2           0.3                 -             -                1           0.1
   Dry Holes .......................       1           0.1                 -             -                -             -
 Development Drilling:
   Productive Wells.................       1           0.1                 4           0.6                1           0.1
EGYPT:
 Exploratory Drilling:
   Productive Wells.................       2           0.5                 2           0.5                2           0.5
   Dry Holes .......................       5           1.3                 1           0.3                -             -
 Development Drilling:
   Productive Wells.................      14           3.5                 4           1.0                -             -
   Dry Holes .......................       -             -                 1           0.3                -             -
TATARSTAN:
 Exploratory Drilling:
    Dry Holes.......................       -             -                 1           0.5                -             -
 Development Drilling:
    Productive Wells................      20          10.0                17           8.5               19           9.5
OTHER INTERNATIONAL:
 Exploratory Drilling:
   Dry Holes .......................       -             -                 2           0.4                2           0.5
TOTALS:
 Exploratory Drilling:
    Productive Wells................      23           7.8                14           7.2               22           8.2
    Dry Holes.......................      23          10.0                21          11.7               22          11.1  
 Development Drilling:
    Productive Wells................     175          76.4                96          41.0              267         136.1
    Dry Holes.......................      15           9.7                 6           1.9               12           5.6

</TABLE>

                                      -9-

<PAGE>

         The Company had 15 gross (8.3 net) exploratory wells and 34 gross (21.3
net) development  wells in progress at December 31, 1996. The exploratory  wells
in progress at year-end added 15.7 Bcfe to Seagull's proved reserves at December
31, 1996.  The  Company's  capital  expenditures  for 1996 included $8.4 million
related to these wells.

PRODUCTION

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

<TABLE>
<CAPTION>

                                                                                  Year Ended December 31,
                                                                ------------------------------------------------------------
                                                                     1996                    1995                 1994
                                                                ----------------       -----------------      --------------
<S>                                                             <C>                    <C>                    <C>                 

UNITED STATES:
 Net Production:
   Gas (MMcf)....................................................   116,238                113,482               118,804
   Oil, condensate and NGL (MBbl)................................     1,561                  1,403                 1,650
 Average sales price (1):
   Gas (per Mcf).................................................    $.2.17                 $ 1.62                $ 1.88
   Oil, condensate and NGL (per Bbl).............................    $19.03                 $15.84                $15.08
 Average direct operating costs (per Mcfe) (2)...................    $ 0.49                 $ 0.44                $ 0.43

CANADA(5):
 Net Production:
   Gas (MMcf)....................................................    21,203                 22,057                19,755
   Oil, condensate and NGL (MBbl)................................       361                    399                   427
 Average sales price:
   Gas (per Mcf).................................................    $.1.27                 $ 1.02                $ 1.55
   Oil, condensate and NGL (per Bbl).............................    $16.77                 $13.01                $11.57
 Average direct operating costs (per Mcfe).......................    $.0.51                 $ 0.45                $ 0.51
EGYPT:
 Net Production:
   Oil (MBbl)....................................................     1,305                     25                     -
 Average Sales Price:
   Oil (per Bbl).................................................    $21.56                 $17.97                     -
 Average direct operating costs (per Mcfe).......................    $.0.49                 $ 0.38                     -
COTE D'IVOIRE:
 Net Production:
   Gas (MMcf)....................................................     1,445                    203                     -
   Oil (MBbl)....................................................       511                    261                     -
 Average sales price:
   Gas (per Mcf).................................................    $ 1.77                 $ 1.61                     -
   Oil (per Bbl).................................................    $20.04                 $15.51                     -
 Average direct operating costs (per Mcfe).......................    $ 0.54                 $ 0.57                     -
TATARSTAN:
 Net Production:
   Oil (MBbl).....................................................    1,117                  1,062                   842
 Average Sales Price:
   Oil (per Bbl)..................................................   $13.98                 $15.11                $14.21
 Average direct operating costs (per Mcfe)........................   $ 1.18                 $ 0.97                $ 1.55
INDONESIA:
 Net Production:
   Gas (MMcf).....................................................    4,429                  3,933                 4,473
   Oil (MBbl).....................................................       51                     45                    47
 Average sales price:
   Gas (per Mcf)..................................................   $ 3.36                 $ 2.96                $ 2.45
   Oil (per Bbl)..................................................   $19.58                 $17.38                $16.58
 Average direct operating costs (per Mcfe)........................        -                      -                     -

</TABLE>

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

         The  following  table sets forth  information  regarding  the number of
productive  wells in which the Company  held a working  interest at December 31,
1996. 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.

                                      -10-

<PAGE>

<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....  2,385      1,574      3,959          269              957.3       160.9      1,118.2           133.0
Canada...........    748          9        757          515              399.4         1.8        401.2           281.9
Cote d'Ivoire....      2          9         11            -                0.3         1.2          1.5               -
Egypt............      -         31         31            -                  -        15.3         15.3               -
Indonesia........    317        195        512          388                5.4         3.4          8.8             4.8
Tatarstan........      -        174        174           35                  -        87.0         87.0            17.5
                  ---------  ---------  ---------  --------------      ----------  --------    ----------   ---------------
                   3,452      1,992      5,444        1,207            1,362.4       269.6      1,632.0           437.2
                  =========  =========  =========  ==============      ==========  ========    ==========   ===============

</TABLE>

         For   additional   information   relating  to  oil  and  gas  producing
activities, see Note 15 of the Consolidated Financial Statements included in the
Company's 1996 Annual Report to Shareholders  and as part of Exhibit 13 attached
hereto.


DEVELOPED AND UNDEVELOPED OIL AND GAS ACREAGE

         As of December 31, 1996,  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.......................       278,885                132,285                   42,948                  24,959
    Texas..........................       220,131                 97,386                   79,277                  24,767
    Arkansas.......................       214,156                 71,971                    5,282                   2,447
    Louisiana......................        43,581                 22,049                    4,772                   2,937
    Montana........................         1,159                     68                  174,922                 160,937
    Other..........................        26,888                  8,977                   56,155                  26,913
  Bays and State Waters............         8,975                  2,810                   16,472                  10,047
  Federal Offshore:
    Texas..........................       127,864                 65,898                  297,483                 235,611
    Louisiana......................        66,284                 33,352                  221,915                 115,081
ARCTIC ISLANDS.....................             -                      -                  752,293                  33,364
CANADA.............................       375,753                196,166                  409,548                 258,739
COTE D'IVOIRE:
  CI-11............................        11,860                  1,542                  180,329                  23,443
  CI-12............................             -                                         525,000                  87,517
  CI-104...........................             -                      -                  250,300                 250,300
EGYPT:
  Qarun............................        46,447                 11,612                1,853,553                 463,388
  East Zeit........................         6,672                  6,672                        -                       -
  East Beni Suef...................             -                      -                6,819,960               3,409,980
  Darag............................             -                      -                  459,606                 229,803
  South Hurghada...................             -                      -                   61,561                  61,561
INDONESIA..........................        97,000                  1,663                1,156,780                  19,827
MALAYSIA...........................             -                      -                1,556,100                 233,415
TATARSTAN..........................        12,630                  6,315                   12,107                   6,053
UNITED KINGDOM.....................             -                      -                  637,479                 126,450
                                     ----------------        ---------------          ---------------         -------------- 
                                        1,538,285                658,766               15,573,842               5,807,539
                                     ================        ===============          ===============         ==============
</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, 1996, the Company owned mineral and/or
royalty  interests in 584,430 gross (43,154 net)  developed and 2,834,359  gross
(105,889 net)  undeveloped  oil and gas acres,  located  primarily in the United
States.

                                      -11-

<PAGE>

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  FERC's  jurisdiction  over  natural  gas  transportation  was
unaffected by the Decontrol Act.

         The  Federal  Energy  Regulatory   Commission  (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.

         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

                                      -12-

<PAGE>

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  Minerals  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.

          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 recently 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.

         In Canada,  exploration,  production  and  development  activities  are
governed by federal and  provincial  laws which  subject  operators to extensive
controls and regulations.  Exports of oil and gas across interprovincial borders
or on pipelines  which  connect to United  States  pipelines are governed by the
National  Energy  Board  and  each  province  has its  own  laws  governing  the
operations of producers and protection of the environment.

                                      -13-

<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 month to month.  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 1995, the Company  initiated an active risk  management  program for
both  its  own  E&P  production  and  third  party  activities,  utilizing  such
derivative  financial  instruments as futures contracts,  options and swaps. The
primary  objective of the risk  management  program is as a hedging  strategy to
manage  commodity  prices  associated  with oil and gas production  sales and to
reduce the impact of price  fluctuations.  The Company's  policy is to leave the
majority of its own E&P production  either unhedged or protected only from price
decreases.  The Company  accounts  for its  commodity  derivative  contracts  as
hedging  activities and,  accordingly,  income or costs are included in revenues
when the  commodities  are  produced.  The risk  management  program  is also an
important  part of the Company's  third party  marketing  efforts,  allowing the
Company to convert a customer's  requested  price to a price  structure  that is
consistent  with  the  Company's  overall  pricing  strategy.  See Note 2 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  1996 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

                                      -14-

<PAGE>

combination of both. The Company currently has one ongoing  construction project
and continues to pursue additional  operating and construction  opportunities as
they arise.


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  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.

         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.


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  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
maintaining   political  risk  insurance  and  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.

                                      -15-

<PAGE>

                      ALASKA TRANSMISSION AND DISTRIBUTION

         The  Company  operates  in Alaska  through  ENSTAR  Natural Gas Company
("ENG"),  a division of the Company,  and Alaska Pipeline  Company  ("APC"),  an
Alaska corporation and a wholly owned subsidiary of the Company. ENG and APC are
currently  operated  as a  single  business  unit  ("ENSTAR  Alaska"),  and  are
regulated as a single operating unit by the Alaska Public  Utilities  Commission
(the  "APUC").  APC  engages in the  intrastate  transmission  of natural gas in
South-Central  Alaska.  ENG  engages  in  the  distribution  of  natural  gas in
Anchorage  and other nearby  communities  in Alaska and is APC's only  customer.
Revenues from the natural gas transmission and  distribution  segment  accounted
for 19%, 24% and 22% of the Company's  consolidated  revenues for 1996, 1995 and
1994, respectively.

         ENSTAR  Alaska's  predecessor  was formed in 1959 and began serving the
Anchorage  area  with  natural  gas in 1961.  Five  years  later,  in 1966,  the
predecessor  became one of the original  entities that formed Alaska  Interstate
Company, a newly organized public company the shares of which were traded on the
New York Stock Exchange.  Alaska  Interstate  Company changed its name to ENSTAR
Corporation in 1982.

         In 1985,  the Company  purchased  ENSTAR Alaska for $55 million in cash
plus $10 million in the form of a seven-year  unsecured,  10% subordinated note.
At the time of the acquisition,  APC had outstanding  debt of approximately  $65
million. The transaction received the final approval of the APUC in June 1985.


GAS TRANSMISSION SYSTEM

         APC 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 72 miles of smaller diameter  pipeline.  The system's present
design delivery capacity is approximately 410 MMcf/d.  The average throughput of
the system in 1996, 1995 and 1994 was 131, 122 and 121 MMcf/d, respectively.

         In  September  1995,  APC entered  into a 33-year  agreement to lease a
60-mile,  8-inch  diameter  pipeline  between  Anchorage,  Alaska and  Whittier,
Alaska. Conversion of the pipeline to natural gas was completed in 1996. The new
pipeline is expected to account for nearly 1,000 new customers over the next two
to three years.


GAS DISTRIBUTION SYSTEM

         ENG distributes  natural gas through  approximately  2,051 miles of gas
mains to approximately 94,100 residential,  commercial,  industrial and electric
power generation  customers  within the cities and environs of Anchorage,  Eagle
River,  Palmer,  Wasilla,  Soldotna,  Kenai  and the  Nikiski  area of the Kenai
Peninsula,   Alaska.  During  the  year  ended  December  31,  1996,  ENG  added
approximately  56 miles  of new gas  distribution  mains,  installed  2,500  new
service  lines and added  approximately  2,000 net  customers.  ENG  anticipates
relatively  modest  growth in its  residential  customer  base and will  install
additional main and service lines to accommodate this growth.

                                      -16-

<PAGE>

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

         In 1996,  purchase/resale  volumes  represented 56% of ENG's throughput
and 82% of ENG's  operating  margin.  The remaining  volumes are transported for
power, industrial and large commercial customers for a transportation fee.

         ENG's five largest  customers are the  Municipality of Anchorage;  ARCO
Alaska,  Inc.;  Aurora Gas, Inc.; the State of Alaska;  and Unocal  Corporation.
Together,  they  account  for about $10 million in annual  operating  margin and
about 18.8 Bcf per year in volumes,  which represent  approximately 18% and 39%,
respectively, of ENG totals.


GAS SUPPLY

         In May 1988,  APC entered into a gas purchase  contract (the  "Marathon
Contract") with Marathon Oil Company ("Marathon")  providing for the delivery of
approximately  450  Bcf of gas in the  aggregate.  The  Marathon  Contract  is a
"requirements"  contract  with  no  specified  daily  deliverability  or  annual
take-or-pay  quantities.  APC has agreed to purchase  and Marathon has agreed to
deliver all of APC'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 of $1.55 per Mcf plus
reimbursements  for any  severance  taxes and other  charges.  The base price is
subject to annual adjustment based on changes in the price of certain traded oil
futures  contracts.  During 1996,  the cost of gas purchased  under the Marathon
Contract averaged $1.64 per Mcf,  including  reimbursements for severance taxes.
The Marathon Contract, as amended in 1991, has been approved by the APUC.

         APC also has a gas  purchase  contract  with Shell Oil Company and ARCO
Alaska,  Inc. (the "Shell  Contract")  which  provides for the delivery of up to
approximately  220 Bcf of gas through the year 2009. The Shell Contract provides
a base price of $1.97 per Mcf plus reimbursements for any severance taxes and an
annual  adjustment  based on changes in the price of certain  traded oil futures
contracts  from the relevant base price.  The Shell  Contract also provides that
certain portions of the gas purchased under the amendments may be priced under a
pricing term similar to the  Marathon  Contract.  The 1996 price under the Shell
Contract, after application of contractual adjustments,  averaged $1.63 per Mcf,
including  reimbursements  for severance taxes. The Shell Contract,  as amended,
has been approved by the APUC.

         Combined,  the Marathon and Shell  Contracts  will supply all of ENSTAR
Alaska's gas supply requirements through the year 2001. After that time supplies
will still be available under the contracts in accordance with their terms,  but
the annual limitations contained in the Marathon Contract will take effect. As a
result,  after  2001,  at least a portion of ENSTAR  Alaska's  requirements  are
expected to be  satisfied  outside the terms of the  contracts,  as currently in
effect.

                                      -17-

<PAGE>

         Based on gas  purchases  during the twelve  months  ended  December 31,
1996,  which are not necessarily  indicative of the volume of future  purchases,
gas reserves  committed to APC under the Marathon and Shell Contracts would have
a current reserve life index of approximately 14 years.

         ENSTAR  Alaska's  average  cost of gas sold in 1996,  1995 and 1994 was
$1.59, $1.75 and $1.74 per Mcf, respectively.  ENSTAR Alaska's average gas sales
price in 1996, 1995 and 1994 was $3.29, $3.41 and $3.23 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 eight  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.

         ENSTAR Alaska  supplies  natural gas to its customers at prices that at
the present time economically  preclude substitution of alternative fuels. Since
the Shell 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  or by changes in the
price of oil or refined products.


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

                                      -18-

<PAGE>

permit the recovery of the cost of providing  service,  including  purchased gas
costs,  and a return on  investment  in plant.  APC and ENG are regulated by the
APUC on a combined  basis as though they were a single  entity.  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  in good  faith  with  the SEC an
application 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 has
fallen below 5% of the outstanding voting stock of the Company.

         In  December  1993,  Seagull  filed  in  good  faith  with  the  SEC an
additional  application  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

                                      -19-

<PAGE>

Equitable Entities,  the Equitable Entities'  beneficial shares owned has fallen
below 5% of the outstanding voting stock of the Company.

         On  October 3, 1996,  the  Company  filed in good faith with the SEC an
application 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
6,546,741 shares (10.4%)  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  5,573,061  shares and shared  voting  and  dispositive  power as to
946,680 shares.

         As a result  of the  Company's  good  faith  filing  of the  Prudential
Application,  it  currently  would 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 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

                                      -20-

<PAGE>

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  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

                                      -21-

<PAGE>

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,  1997,  the  Company  had 724 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,  effective from April 1, 1992 through April
1, 1996, is in the process of being  renegotiated.  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.

                                      -22-

<PAGE>

                        EXECUTIVE OFFICERS OF THE COMPANY

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

<TABLE>
<CAPTION>

Name                     Age   Present Position and Prior Business Experience
<S>                      <C>   <C>    

Barry J. Galt.........   63    Chairman of the Board and Chief Executive Officer
                               since December  1983; President  of  the  Company
                               from December 1983 to October 1996

Robert F. Vagt........   50    President  and  Chief  Operating  Officer   since
                               October  1996;  President  and  Chief   Executive
                               Officer  of  Global  from  May  1992  to  October
                               1996; Chairman  of  the  Board  of  Global  since
                               December  1994;  Director,  President  and  Chief
                               Operating Officer of  Adobe Resources Corporation
                               (Director from May 1986 to May 1992 and President
                               and Chief Operating Officer from November 1990 to
                               May 1992)

John W. Elias.........   56    Executive  Vice President since April 1993; Chief
                               Operating Officer  of  the Company  from  January
                               1995  through  October  1996; For the previous 30
                               years, he  served  in  a variety of positions for
                               Amoco Production Company  and  its  parent, Amoco
                               Corporation,   most   recently   as   Group  Vice
                               President  of  Worldwide  Natural  Gas  for Amoco
                               Production Company

Richard F. Barnes.....   53    President  of  ENSTAR  Natural  Gas  Company   (a
                               division of  the  Company)  and  Alaska  Pipeline
                               Company  (a  subsidiary  of  the  Company)  since
                               September 1987

Gerald R. Colley......   46    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...   48    Senior Vice President,  Pipelines  and  Marketing
                               since May 1993;  President  of  Seagull  Pipeline
                               Company since March 1990

John A. Howard........   50    Senior  Vice President,  Canadian Exploration and
                               Production  since  November  1996;  President  of
                               Seagull  Energy  Canada  Ltd.,  a  wholly   owned
                               subsidiary of the  Company,  since  January 1994;
                               President and  Chief Executive Officer of Novalta
                               Resources Inc. from 1987 to January 1994

William L. Transier...   42    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

Janice K. Hartrick....   44    Chief  Counsel and  Vice President, Environmental
                               Affairs since December 1992; Chief Counsel of the
                               Company since 1989

Gordon L. McConnell...   50    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.........   55    Vice President, Investor Relations since November
                               1996; Director, Investor  Relations from December
                               1984 to November 1996

Jack M. Robertson.....   53    Vice  President,  Human Resources  since November
                               1996;  Director,  Human Resources  from  November
                               1990 to November 1996

Stephen A. Thorington.   41    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

Carl E. Volke.........   53    Vice  President,  Administration  since  November
                               1996; Director, Administration from November 1986
                               to November 1996

Lee Van Winkle........   44    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
</TABLE>

                                      -23-

<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 of the manner in which 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 has been sued in Anne K. Barnaby, et al.
v. Seagull MidSouth, Inc. This case is pending in state court of Latimer County,
Oklahoma.  In this case, the plaintiffs seek additional royalties based upon the
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
royalty  to  the  extent  that  sales  were  made  to  Seagull's  gas  marketing
subsidiary.

         NorAm  Litigation.  Seagull  Mid-South  has  been  sued  in  NorAm  Gas
Transmission Co., et al. v. Seagull Mid-South Inc. 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 Filed in Arkansas  for $0.16 per Mcf.
NorAm Gas Transmission  ("NorAm) has sought a declaratory  judgment that the gas
contract remains in effect with respect to these wells. 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 has reasonable grounds for terminating the
gas  contract.  The NorAm case is currently  scheduled  for trial in mid-1997 in
District Court in Harris County,  Texas.  Seagull  intends to vigorously  defend
this case and does not  believe  that this  case  will have a  material  adverse
effect on its financial condition or results of operations.

         NorAm has 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  were
successful  with the Additional  Well Claim,  Seagull's  operations in the Aetna
Field  would be  materially  affected  in an adverse  manner.  However,  Seagull
believes that there is little basis for this claim by NorAm and believes that it
will not be required to pay any amounts in connection  with the Additional  Well
Claim.

         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  subsidiaries 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 potentially  responsible
parties 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.

         Caddo  Natural  Gas  Company  Site.  The  Company  was  notified by the
Louisiana Department of Environmental Quality on March 20, 1996, that one of the
Company's wholly owned  subsidiaries is a PRP in a state Superfund site known as
the Caddo  Natural Gas Company  Site.  This site is reported to be  contaminated
with low levels of PCB, an additive used in lubricating oils prior to the 1980s.
Subsequent  to  year-end,  the Company  signed a  settlement  agreement  whereby
Seagull  would pay a portion  of the  cleanup  costs for the Caddo  Natural  Gas
Company  Site.  Seagull's  share  of the  cleanup  costs is not  expected  to be
material to its financial condition, results of operations or cash flows.

         Other.  The  Company  is a party to  ongoing  litigation  in the normal
course of  business  or other  litigation  with  respect to which the Company is
indemnified  pursuant  to  various  purchase  agreements  or  other  contractual
arrangements.   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 or cash flows, if
any, will not be material.

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

         None.

                                      -24-

<PAGE>

                                     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>

                                                   1996                                            1995
                                  ---------------------------------------          --------------------------------------
                                        High                  Low                       High                   Low
                                  -----------------     -----------------          ----------------      ----------------
<S>                               <C>                   <C>                        <C>                   <C>

First Quarter                           22 7/8                17 1/8                     20                    15 1/4

Second Quarter                          25 1/2                21                         19 7/8                16 1/2

Third Quarter                           26                    17 1/2                     22 1/2                16

Fourth Quarter                          24 3/8                20 5/8                     22 1/4                16 5/8

</TABLE>


         B. As of March 3,  1997,  there  were  approximately  4,764  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 agreements (the "Credit  Facilities")
restrict 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 aggregate
amount of outstanding loans under the Credit Agreement,  together with all other
senior  indebtedness  of  Seagull  and its  subsidiaries  (excluding  APC)  then
outstanding,  must not exceed the Borrowing Base, (ii) Tangible Net Worth cannot
be less than $465 million  plus 50% of the  Company's  net income,  if positive,
beginning  with the fiscal year ended  December  31, 1997,  (iii) the  Company's
Debt/Capitalization  Ratio  cannot be more than 65% and (iv) no Default or Event
of Default shall have occurred and be  continuing.  The  capitalized  terms used
herein to describe the restrictions  contained in the Credit Facilities have the
meanings assigned to them in the Credit  Facilities.  Under the most restrictive
of these  tests,  as of  December  31,  1996,  approximately  $133  million  was
available for payment of dividends or  repurchase of Common Stock.  In addition,
certain debt instruments of APC restrict the ability of APC 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 1996 Annual Report to Shareholders  and as
part of Exhibit 13 attached hereto.

                                      -25-

<PAGE>


Item 6.  Selected Financial Data

         Incorporated  herein  by  reference  to  the  Selected  Financial  Data
included in the  Company's  1996 Annual  Report to  Shareholders  and as part of
Exhibit 13 attached hereto.


                        SELECTED QUARTERLY FINANCIAL DATA

         Summarized  quarterly  financial  data (stated in thousands  except per
share amounts) is as follows:

<TABLE>
<CAPTION>

                                                                           Quarter Ended
                                         -----------------------------------------------------------------------------------
                                              March 31              June 30           September 30          December 31
                                         -------------------- -------------------- -------------------- --------------------
<S>                                      <C>                  <C>                  <C>                  <C>

1996:
Revenues:
   Previously Reported................          $110,647             $ 85,788            $ 85,205                    NA
   Global (1).........................            26,193               26,649              25,581                    NA
                                         -------------------- -------------------- -------------------- --------------------
     As Restated......................          $136,840             $112,437            $110,786              $158,515
                                         ==================== ==================== ==================== ====================
Operating Profit:
   Previously Reported................          $ 30,609             $  7,262            $ 12,643                    NA
   Global (1).........................             7,092                6,564               7,473                    NA
                                         -------------------- -------------------- -------------------- --------------------
     As Restated......................          $ 37,701             $ 13,826            $ 20,116              $ 33,412
                                         ==================== ==================== ==================== ====================
Net Income (Loss):
   Previously Reported................          $ 14,846             $ (5,907)           $  1,633                    NA
   Global (1).........................             3,466                2,973               5,825                    NA
                                         -------------------- -------------------- -------------------- --------------------
     As Restated......................          $ 18,312             $ (2,934)           $  7,458              $  6,125 (6)
                                         ==================== ==================== ==================== ====================
Earnings (Loss) per Share (2):
   Previously Reported................          $   0.40             $  (0.16)           $   0.04                    NA
   As Restated........................          $   0.29             $  (0.05)           $   0.12              $   0.10
                                         ==================== ==================== ==================== ====================
1995:
Revenues:
   Previously Reported................          $ 94,850             $ 81,487            $ 68,087              $ 91,849
   Global (1).........................            17,577               17,108              17,294                20,174
                                         -------------------- -------------------- -------------------- --------------------
     As Restated......................          $112,427             $ 98,595            $ 85,381              $112,023
                                         ==================== ==================== ==================== ====================
Operating Profit (Loss):
   Previously Reported................          $(44,366)            $     (7)           $ (2,421)             $ 12,677
   Global (1).........................            (3,103)              (2,107)                946                 4,003
                                         -------------------- -------------------- -------------------- --------------------
     As Restated......................          $(47,469) (3)        $ (2,114)           $ (1,475)             $ 16,680
                                         ==================== ==================== ==================== ====================
Net Income (Loss):
   Previously Reported................          $(38,550)            $ (7,125)           $ 41,550              $  4,757
   Global (1).........................            (4,216)              (2,938)              2,142                 2,642
                                         -------------------- -------------------- -------------------- --------------------
     As Restated......................          $(42,766) (3)        $(10,063) (4)       $ 43,692 (5)          $  7,399
                                         ==================== ==================== ==================== ====================
Earnings (Loss) per Share (2):
   Previously Reported................          $  (1.07)            $  (0.20)           $   1.13              $   0.13
   As Restated........................          $  (0.69)            $  (0.16)           $   0.70              $   0.12
                                         ==================== ==================== ==================== ====================

</TABLE>

(1)      Certain  adjustments were made  to conform the  accounting policies and
         presentation of Seagull and Global.

(2)      Quarterly  earnings  (loss) per common  share may not total to the full
         year per  share  amount,  as the  weighted  average  number  of  shares
         outstanding  for each  quarter  fluctuated  as a result of the  assumed
         exercise of stock options.

(3)      Includes  $48.8 million non-cash  charge relating  to the impairment of
         long-lived assets.

(4)      Includes one-time pre-tax  charges of $8 million for  expenses involved
         in the workforce reduction and consolidation.

(5)      Includes $82 million pre-tax gain on the sale of the Pipeline Assets .

(6)      Includes $10 million pre-tax  merger  expenses relating  to  the Global
         Merger.

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 1996 Annual Report to Shareholders  and as part of Exhibit 13 attached
hereto.

                                      -26-

<PAGE>

Item 8. Financial Statements and Supplementary Data

         Incorporated   herein  by  reference  to  the  Consolidated   Financial
Statements and  Supplementary  Data included in the Company's 1996 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, 1997 (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.

Item 11. Executive Compensation

         Incorporated herein by reference to "Election of Directors  --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.

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.

                                      -27-

<PAGE>

                                     PART IV

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

(a)      1.          Financial Statements:

         The  following   Consolidated   Financial  Statements  and  Independent
Auditors'  Report  thereon are included in the  Company's  1996 Annual Report to
Shareholders  and as part of Exhibit 13 attached  hereto,  and are  incorporated
herein by reference:

         Independent Auditors' Report

         Consolidated Financial Statements

         Notes to Consolidated Financial Statements


         2.          Schedules:

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

         3.          Exhibits:
<TABLE>
<S>                  <C>

         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  17,  1995
                     (incorporated  by  reference  to  Exhibit 3.1  to Quarterly
                     Report on Form 10-Q for the quarter ended March 31, 1995).

         *4.1        $650 Million  Reducing  Revolving  Credit  and  Competitive
                     Bid  Facility among Seagull  Energy Corporation,  The Chase
                     Manhattan Bank and The Other Banks Signatory Thereto, dated
                     December 23, 1996.

         *4.2        U.S. $100 Million Reducing Revolving Credit  Facility among
                     Seagull Energy Canada Ltd. and The Chase Manhattan  Bank of
                     Canada,  The  Bank of Nova Scotia,  Canadian  Imperial Bank
                     of Commerce,  and  The Other  Banks Signatory Hereto, dated
                     December 23, 1996.

         4.3         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).

         4.4         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
</TABLE>

                                      -28-

<PAGE>

<TABLE>
<S>                  <C>
                      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).

         4.5         Note  Agreement  dated  June 17, 1985  by and among APC 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
                     APC  and  the   Insurance   Companies  (including  exhibits
                     thereto)  is  incorporated  by  reference  to  Exhibit  4.2
                     to Annual Report on Form 10-K for the  year  ended December
                     31, 1992).

         4.6         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  4.7 to
                     Quarterly  Report on  Form   10-Q  for  the  quarter  ended
                     June 30, 1992).

         4.7         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).

         4.8         Rights  Agreement  dated as of  March 17, 1989  between the
                     Company  and  NCNB Texas National Bank,  as  Rights  Agent,
                     which includes the form of Statement of Resolution  setting
                     forth the  terms  of  the  Series  B  Junior  Participating
                     Preferred  Stock,  par  value  $1.00  per share, as Exhibit
                     A,  the  form  of  Right  Certificate as  Exhibit B and the
                     Summary of Rights to Purchase  Preferred  Shares as Exhibit
                     C  (the Rights  Agreement is  incorporated  by reference to
                     Exhibit 4.8  to  Quarterly  Report  on  Form  10-Q  for the
                     quarter ended June 30,  1993;  the First Amendment dated as
                     of June 18, 1992 is incorporated  by  reference to  Exhibit
                     3.4   to  Registration   Statement   on  Form S-3 (File No.
                     33-55426)).

         #10.1       Seagull  Energy  Corporation 1994 Executive  Incentive Plan
                     (incorporated  by  reference  to  Exhibit 10.1 to Quarterly
                     Report  on Form 10-Q  for  the quarter  ended September 30,
                     1994).

         #10.2       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).

         *#10.3      Seagull Energy Corporation 1996 Executive Incentive Plan.

         *#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 Amendement
                      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 filed herewith).

         *#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 Amendement
                      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 filed herewith).
</TABLE>

                                      -29-

<PAGE>

<TABLE>
<S>                  <C>
         *#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 filed herewith).

          *#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 filed herewith).

          *#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 filed herewith).

          *#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 filed herewith).

          #10.10      Seagull  Energy  Corporation  1993  Nonemployee  Directors
                      Stock Option Plan, including forms of agreements (the Plan
                      is  incorporated  by reference to Exhibit  10.37 to Annual
                      Report on Form 10-K for the year ended  December 31, 1992;
                      the amended form of Nonstatutory Stock Option Agreement is
                      incorporated  by  reference  to  Exhibit  10.29 to  Annual
                      Report on Form 10-K for the year ended  December 31, 1993;
                      the  Amendment  to  Nonemployee  Directors'  Stock  Option
                      Agreements is incorporated by reference to Exhibit 10.1 to
                      Quarterly  Report on Form 10-Q for the quarter  ended June
                      30, 1996).

          *#10.11     Seagull  Energy   Corporation   1993  Stock  Option  Plan,
                      including forms of agreements (the Plan is incorporated by
                      reference to Exhibit  10.38 to Annual  Report on Form 10-K
                      for the year ended  December 31, 1992; the amended form of
                      Nonstatutory  Stock Option  Agreement is  incorporated  by
                      reference to Exhibit  10.30 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  Quarterly  Report on Form 10-Q for the  quarter  ended
                      June  30,   1995;   Form  of  Amendment  to  Stock  Option
                      Agreement(s) is filed herewith).

          *#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 filed herewith).

          *#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 filed herewith).

          #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  Employment  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 filed herewith).
</TABLE>

                                      -30-

<PAGE>

<TABLE>
<S>                  <C>
          #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 Thomas P. McConn
                      (granted   2,000  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
                      Thomas P. McConn  (incorporated  by  reference  to Exhibit
                      10.34 to Annual  Report  on Form  10-K for the year  ended
                      December 31, 1994).

          10.23       Joint  Venture  Agreement  dated  August 8, 1968,  between
                      Huffington,   Virginia  International   Company,   Austral
                      Petroleum Gas Corporation, Golden Eagle Indonesia, Limited
                      and  Union   Texas  Far  East   Corporation,   as  amended
                      (incorporated  by reference to Exhibit 6.6 to Registration
                      Statement No. 2-58834 of Global Natural Resources Inc.).

         10.24       Agreement dated as  of October 1, 1979 among the parties to
                     the Joint Venture  Agreement  referred  to in Exhibit 10.21
                     above  (incorporated   by  reference   to  Exhibit  5.2  to
                     Registration   Statement   No.  2-66661  of  Global Natural
                     Resources Inc.).

         10.25       Production Sharing Contract,  dated August 8, 1968, between
                     Pertamina, Huffington, and Virginia International  Company,
                     as  amended  (incorporated  by reference  to Exhibit 6.5 to
                     Registration  Statement  No.  2-58834  of  Global   Natural
                     Resources  Inc.;  Amendment  dated  as  of  January 1, 1978
                     incorporated by reference  to  Exhibit 5.4 to  Registration
                     Statement  No.  2-66661 of Global Natural Resources Inc.).

          10.26      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).

          10.27       Acquisition Agreement dated May 17, 1993 between UMIC Cote
                      d'Ivoire Corporation and G.N.R. (Cote d'Ivoire) Ltd. Ivory
                      Coast   Production   Sharing   Contract   -  Block   CI-11
                      (incorporated  by reference to Exhibit 10.40 to the Annual
                      Report on Form 10-K for the year ended  December  31, 1994
                      of  Global  Natural   Resources  Inc.   (Registration  No.
                      1-8674)).

          10.28       Farmout  Agreement dated July 25, 1994 between GNR (Egypt)
                      Ltd. and Apache Oil Egypt,  Inc.  Qarun  Concession  Egypt
                      (incorporated  by reference to Exhibit 10.41 to the Annual
                      Report on Form 10-K for the year ended  December  31, 1994
                      of  Global  Natural   Resources  Inc.   (Registration  No.
                      1-8674)).

          10.29       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
</TABLE>

                                      -31-

<PAGE>

<TABLE>
<S>                  <C>
                      28, 1995  (incorporated  by  reference  to Exhibit 10.6 to
                      Quarterly  Report on Form 10-Q for the quarter  ended June
                      30, 1995).

          10.30       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).

          10.31       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).

          10.32       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).

          10.33       Voting  Agreement  dated as of July 22, 1996 among Seagull
                      Energy  Corporation  and  The  Prudential  Life  Insurance
                      Company of America  (incorporated  by reference to Exhibit
                      2.2 to  Registration  Statement  333-09845  on Form S-4 of
                      Seagull Energy Corporation).

         *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, 1996.

         *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.
</TABLE>


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


<PAGE>


(b) Reports on Form 8-K

         On October 18,  1996,  the Company  filed a current  report on Form 8-K
dated  October 3, 1996 with respect to Seagull's  merger with Global.  The items
reported in such current  report were Item 2  (Acquisition  and  Disposition  of
Assets) and Item 7 (Financial Statements and Exhibits).  The following financial
statements were included in that report:

           (a)    Financial statements of businesses acquired.

                  The consolidated  financial statements of Global for the years
                  ended  December  31,  1995,  1994  and 1993  (incorporated  by
                  reference to Global's  Annual Report on Form 10-K for the year
                  ended December 31, 1995; Registration No. 1-8674).

                                      -32-

<PAGE>

                  The unaudited  consolidated financial statements of Global for
                  the six months ended June 30, 1996 and 1995  (incorporated  by
                  reference  to Global's  Quarterly  Report on Form 10-Q for the
                  quarter ended June 30, 1996; Registration No. 1-8674).

           (b)    Pro forma financial information.

                  The pro forma financial  information  giving effect to (i) the
                  merger of Seagull  and Global  using the  pooling of  interest
                  method of accounting  for business  combinations  and (ii) the
                  Esso  Suez  Acquisition  financed  under  Seagull's  revolving
                  credit facilities and using the purchase method of accounting.

         On October 18, 1996,  the Company filed an amendment to current  report
on Form 8-K dated  September 10, 1996 with respect to Seagull's  acquisition  of
all the  outstanding  common stock of Esso Suez Inc. and certain  assets of Esso
Egypt  Limited.  The item reported in such current  report was Item 7 (Financial
Statements and Exhibits).  The following  financial  statements were included in
that report:

                  The pro forma financial  information  giving effect to (i) the
                  merger of Seagull  and Global  using the  pooling of  interest
                  method of accounting  for business  combinations  and (ii) the
                  Esso  Suez  Acquisition  financed  under  Seagull's  revolving
                  credit  facilities and using the purchase method of accounting
                  (incorporated  by reference  to Exhibit 99.1 of the  Company's
                  Current  Report  on Form 8-K  filed  with the  Securities  and
                  Exchange Commission on October 18, 1996).

         On November 13, 1996,  the Company filed an amendment to current report
on Form 8-K dated October 3, 1996 with respect to Seagull's  merger with Global.
The item reported in such current  report was Item 7 (Financial  Statements  and
Exhibits). The following financial statements were included in that report:

                  Supplemental  consolidated  statements  of  earnings  and cash
                  flows of Seagull  and Global for each of the  quarters  in the
                  three  quarters  ended  September  30, 1996 and four  quarters
                  ended  December  31,  1995 and the  supplemental  consolidated
                  balance  sheets of Seagull and Global as of September 30, June
                  30, and March 31, 1996 and December 31, 1995.

                                      -33-

<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.

SEAGULL ENERGY CORPORATION

Date:    March 27, 1997                    By:    /s/ Barry J.Galt
                                                   Barry  J. Galt,  Chairman  of
                                                   the Board and Chief Executive
                                                   Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.

By:    /s/ Barry J. Galt                    By:   /s/ Thomas H. Cruikshank
       Barry J. Galt, Chairman of the             Thomas H. Cruikshank, Director
       Board and Chief Executive Officer    Date: March 27, 1997      
       and Director (Principal Executive             
       Officer)                             By:   /s/ Peter J. Fluor
Date:  March 27, 1997                            Peter J. Fluor, Director 
                                            Date: March 27, 1997
By:    /s/ Robert F. Vagt                                  
       Robert F. Vagt, President and        By:   /s/ William R. Grant
       Chief Operating Officer and                William R. Grant, Director
       Director                             Date: March 27, 1997
Date:  March 27, 1997                                     
                                            By:   /s/ Dean P. Guerin
By:    /s/ John W. Elias                          Dean P. Guerin, Director  
       John W. Elias, Executive Vice        Date: March 27, 1997               
       President and Director                                        
Date:  March 27, 1997                      By:   /s/ Richard M. Morrow
                                                  Richard M. Morrow, Director
By:    /s/ William L. Transier              Date: March 27, 1997  
       William L. Transier, Senior Vice           
       President and Chief Financial        By:   /s/ Dee S. Osborne    
       Officer (Principal Financial               Dee S. Osborne, Director
       Officer)                             Date: March 27, 1997
Date:  March 27, 1997
                                            By:   /s/ Sidney R. Petersen
By:    /s/ Gordon L. McConnell                    Sidney R. Petersen, Director
       Gordon L. McConnell, Vice            Date: March 27, 1997            
       President and Controller           
       (Principal Accounting Officer)       By:   /s/ Sam F. Segnar
Date:  March 27, 1997                            Sam F. Segnar, Director
                                            Date: March 27, 1997       
By:    /s/ J. Evans Attwell                                         
       J. Evans Attwell, Director           By:   /s/ R. A. Walker              
Date:  March 27, 1997                            R. A. Walker, Director        
                                            Date: March 27, 1997              
By:    /s/ Richard J. Burgess                                         
       Richard J. Burgess, Director                        
Date:  March 27, 1997

By:    /s/ Milton Carroll
       Milton Carroll, Director
Date:  March 27, 1997

                                      -34-

<PAGE>


                                  EXHIBIT INDEX


EXHIBITS:

<TABLE>
<S>                  <C>
         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  17,  1995
                     (incorporated  by  reference  to  Exhibit 3.1  to Quarterly
                     Report on Form 10-Q for the quarter ended March 31, 1995).

         *4.1        $650 Million  Reducing  Revolving  Credit  and  Competitive
                     Bid  Facility among Seagull  Energy Corporation,  The Chase
                     Manhattan Bank and The Other Banks Signatory Thereto, dated
                     December 23, 1996.

         *4.2        U.S. $100 Million Reducing Revolving Credit  Facility among
                     Seagull Energy Canada Ltd. and The Chase Manhattan  Bank of
                     Canada,  The  Bank of Nova Scotia,  Canadian  Imperial Bank
                     of Commerce,  and  The Other  Banks Signatory Hereto, dated
                     December 23, 1996.

         4.3         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).

         4.4         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).

         4.5         Note  Agreement  dated  June 17, 1985  by and among APC 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
                     APC  and  the   Insurance   Companies  (including  exhibits
                     thereto)  is  incorporated  by  reference  to  Exhibit  4.2
                     to Annual Report on Form 10-K for the  year  ended December
                     31, 1992).
</TABLE>
<PAGE>

<TABLE>
<S>                  <C>
         4.6         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  4.7 to
                     Quarterly  Report on  Form   10-Q  for  the  quarter  ended
                     June 30, 1992).

         4.7         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).

         4.8         Rights  Agreement  dated as of  March 17, 1989  between the
                     Company  and  NCNB Texas National Bank,  as  Rights  Agent,
                     which includes the form of Statement of Resolution  setting
                     forth the  terms  of  the  Series  B  Junior  Participating
                     Preferred  Stock,  par  value  $1.00  per share, as Exhibit
                     A,  the  form  of  Right  Certificate as  Exhibit B and the
                     Summary of Rights to Purchase  Preferred  Shares as Exhibit
                     C  (the Rights  Agreement is  incorporated  by reference to
                     Exhibit 4.8  to  Quarterly  Report  on  Form  10-Q  for the
                     quarter ended June 30,  1993;  the First Amendment dated as
                     of June 18, 1992 is incorporated  by  reference to  Exhibit
                     3.4   to  Registration   Statement   on  Form S-3 (File No.
                     33-55426)).

         #10.1       Seagull  Energy  Corporation 1994 Executive  Incentive Plan
                     (incorporated  by  reference  to  Exhibit 10.1 to Quarterly
                     Report  on Form 10-Q  for  the quarter  ended September 30,
                     1994).

         #10.2       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).

         *#10.3      Seagull Energy Corporation 1996 Executive Incentive Plan.

         *#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 Amendement
                     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 filed herewith).

         *#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  Amendement
                     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 filed herewith).

</TABLE>



<PAGE>

<TABLE>
<S>                  <C>

                      quarter  ended June 30,  1995;  Form of Amendment to Stock
                      Option Agreement(s) is filed herewith).

         *#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 filed herewith).

          *#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 filed herewith).

          *#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 filed herewith).

          *#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 filed herewith).

          #10.10      Seagull  Energy  Corporation  1993  Nonemployee  Directors
                      Stock Option Plan, including forms of agreements (the Plan
                      is  incorporated  by reference to Exhibit  10.37 to Annual
                      Report on Form 10-K for the year ended  December 31, 1992;
                      the amended form of Nonstatutory Stock Option Agreement is
                      incorporated  by  reference  to  Exhibit  10.29 to  Annual
                      Report on Form 10-K for the year ended  December 31, 1993;
                      the  Amendment  to  Nonemployee  Directors'  Stock  Option
                      Agreements is incorporated by reference to Exhibit 10.1 to
                      Quarterly  Report on Form 10-Q for the quarter  ended June
                      30, 1996).

          *#10.11     Seagull  Energy   Corporation   1993  Stock  Option  Plan,
                      including forms of agreements (the Plan is incorporated by
                      reference to Exhibit  10.38 to Annual  Report on Form 10-K
                      for the year ended  December 31, 1992; the amended form of
                      Nonstatutory  Stock Option  Agreement is  incorporated  by
                      reference to Exhibit  10.30 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  Quarterly  Report on Form 10-Q for the  quarter  ended
                      June  30,   1995;   Form  of  Amendment  to  Stock  Option
                      Agreement(s) is filed herewith).

          *#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 filed herewith).

</TABLE>



<PAGE>

<TABLE>
<S>                  <C>
          *#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 filed herewith).

          #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  Employment  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 filed herewith).

          #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 Thomas P. McConn
                      (granted   2,000  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
                      Thomas P. McConn  (incorporated  by  reference  to Exhibit
                      10.34 to Annual  Report  on Form  10-K for the year  ended
                      December 31, 1994).

          10.23       Joint  Venture  Agreement  dated  August 8, 1968,  between
                      Huffington,   Virginia  International   Company,   Austral
                      Petroleum Gas Corporation, Golden Eagle Indonesia, Limited
                      and  Union   Texas  Far  East   Corporation,   as  amended
                      (incorporated  by reference to Exhibit 6.6 to Registration
                      Statement No. 2-58834 of Global Natural Resources Inc.).

          10.24       Agreement dated as  of October 1, 1979 among the parties to
                      the Joint Venture  Agreement  referred  to

</TABLE>



<PAGE>

<TABLE>
<S>                  <C>
                     in Exhibit  10.21  above  (incorporated  by  reference  to
                     Exhibit  5.2 to  Registration  Statement  No.  2-66661  of
                     Global Natural Resources Inc.).

         10.25       Production Sharing Contract,  dated August 8, 1968, between
                     Pertamina, Huffington, and Virginia International  Company,
                     as  amended  (incorporated  by reference  to Exhibit 6.5 to
                     Registration  Statement  No.  2-58834  of  Global   Natural
                     Resources  Inc.;  Amendment  dated  as  of  January 1, 1978
                     incorporated by reference  to  Exhibit 5.4 to  Registration
                     Statement  No.  2-66661 of Global Natural Resources Inc.).

          10.26      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).

          10.27       Acquisition Agreement dated May 17, 1993 between UMIC Cote
                      d'Ivoire Corporation and G.N.R. (Cote d'Ivoire) Ltd. Ivory
                      Coast   Production   Sharing   Contract   -  Block   CI-11
                      (incorporated  by reference to Exhibit 10.40 to the Annual
                      Report on Form 10-K for the year ended  December  31, 1994
                      of  Global  Natural   Resources  Inc.   (Registration  No.
                      1-8674)).

          10.28       Farmout  Agreement dated July 25, 1994 between GNR (Egypt)
                      Ltd. and Apache Oil Egypt,  Inc.  Qarun  Concession  Egypt
                      (incorporated  by reference to Exhibit 10.41 to the Annual
                      Report on Form 10-K for the year ended  December  31, 1994
                      of  Global  Natural   Resources  Inc.   (Registration  No.
                      1-8674)).

          10.29       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).

          10.30       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).

          10.31       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).

          10.32       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).

          10.33       Voting  Agreement  dated as of July 22, 1996 among Seagull
                      Energy  Corporation  and  The  Prudential  Life  Insurance
                      Company of America  (incorporated  by reference to Exhibit
                      2.2 to  Registration  Statement  333-09845  on Form S-4 of
                      Seagull Energy Corporation).

         *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, 1996.

         *21         Subsidiaries of Seagull Energy Corporation.
</TABLE>



<PAGE>

<TABLE>
<S>                  <C>

         *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.
</TABLE>
--------------------
*   Filed herewith.
#   Identifies management contracts and compensatory plans or arrangements.