UNIMAR COMPANY
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Earnings for
the Quarters and Six Months Ended June 30, 1994
and 1993 . . . . . . . . . . . . . . . . . . 1
Condensed Consolidated Balance Sheets as of
June 30, 1994 and December 31, 1993 . . . . . . 2
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1994
and 1993. . . . . . . . . . . . . . . . . . . 3
Notes to Condensed Consolidated Financial
Statements as of June 30, 1994. . . . . . . . . 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . 6
PART II. OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . . . . 9
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . 9
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . 10
PART I. FINANCIAL INFORMATION
UNIMAR COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Thousands of dollars)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
Oil and gas production revenues $42,717 $38,834 $ 97,868 $ 97,132
Production costs 4,954 4,532 9,846 9,409
Depletion, depreciation and
amortization 11,655 10,550 26,514 25,209
Exploration costs including
dry holes 90 2,653 106 3,463
Operating profit 26,018 21,099 61,402 59,051
General and administrative
expenses (308) (547) (599) (1,141)
Interest expense (10) (1,080) (28) (2,255)
Interest and other income 43 137 108 315
Earnings before income taxes 25,743 19,609 60,883 55,970
Income tax expense
Current 18,079 17,487 42,130 43,439
Deferred (845) (1,496) 426 (1,891)
17,234 15,991 42,556 41,548
Earnings before extraordinary
item 8,509 3,618 18,327 14,422
Extraordinary loss on redemption
of debt - - 3,108 -
Net earnings $ 8,509 $ 3,618 $ 15,219 $ 14,422
See accompanying Notes to Condensed Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Thousands of dollars)
June 30, December 31,
1994 1993
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 6,296 $ 8,284
Accounts and notes receivable 9,251 11,604
Inventories 13,796 10,886
Other current assets 4,154 2,381
Total current assets 33,497 33,155
Property, plant and equipment, at cost:
Oil and gas properties
(successful efforts method) 1,005,720 991,901
Other 3,245 3,283
1,008,965 995,184
Less: accumulated depreciation and
depletion 607,447 580,807
Net property, plant and equipment 401,518 414,377
Other assets 1,256 1,252
$ 436,271 $ 448,784
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current maturities of long
term debt $ - $ 33,292
Accounts payable 2,991 3,229
Advances from joint venture
partners 1,902 3,589
Accrued liabilities 8,279 9,314
Income taxes 13,563 19,280
Total current liabilities 26,735 68,704
Long-term debt - -
Deferred income taxes 167,632 167,206
Other liabilities 9,958 10,048
Partners' capital 311,946 282,826
Less: demand notes receivable 80,000 80,000
231,946 202,826
$ 436,271 $ 448,784
See accompanying Notes to Condensed Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Thousands of dollars)
(Unaudited)
Six Months Ended
June 30,
1994 1993
Net earnings $ 15,219 $ 14,422
Adjustments to reconcile to net cash
provided by operating activities:
Extraordinary loss on redemption of debt 3,108 -
Depletion, depreciation and amortization 26,717 25,387
Deferred income taxes 426 (1,891)
Exploratory dry hole costs 3 2,076
Interest accretion - 712
Working capital and other (9,413) (3,650)
Net cash provided by operating activities 36,060 37,056
Investment activities:
Capital expenditures (13,861) (17,930)
Financing activities:
Repayment of debt (36,400) -
Capital contributions (distributions) - net 13,900 (15,600)
Net cash used in financing activities (22,500) (15,600)
(Decrease) increase in advances from
joint venture partners (1,687) 4,405
Net (decrease) increase in cash and cash
equivalents (1,988) 7,931
Cash and cash equivalents at beginning of year 8,284 6,461
Cash and cash equivalents at end of period $ 6,296 $ 14,392
IPU distributions paid $ 10,563 $ 9,701
Income taxes paid $ 47,996 $ 46,109
See accompanying Notes to Condensed Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 1994
(Unaudited)
(1) Unimar Company (the Company) is a general partnership
organized under the Texas Uniform Partnership Act, whose
partners are Unistar, Inc., a Delaware corporation and a
direct subsidiary of Union Texas Petroleum Holdings, Inc., a
Delaware corporation, and LASMO (Ustar) Inc., a Delaware
corporation and an indirect wholly-owned subsidiary of LASMO
plc, a public limited company organized under the laws of
England. Each partner shares equally in the Company's net
earnings, distributions and capital contributions.
(2) These condensed consolidated financial statements should be
read in the context of the consolidated financial statements
and notes thereto included in the Company's 1993 annual report
on Form 10-K. In the opinion of management, the accompanying
financial statements contain all adjustments of a normal
recurring nature necessary for a fair presentation. Interim
results are not necessarily indicative of results on an
annualized basis.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
June 30, 1994
(Unaudited)
(3) The table below outlines the calculation of the Indonesian
Participating Unit (IPU) participation payment for the second
quarter of 1994.
1994
Second Quarter
(Thousands of dollars)
Positive cash flow:
Gas receipts $ 35,976
Oil and condensate receipts 8,212
Other non-revenue cash receipts
from Joint Venture 1,638
Total positive cash flow 45,826
Less negative cash flow:
Expenditures to Joint Venture 16,194
Indonesian income taxes 17,177
Total negative cash flow 33,371
Net positive cash flow from
23.125% interest in Joint Venture $ 12,455
Net cash flow for benefit of
IPU holders* $ 3,126
Participation Payment per IPU* $ .29
* Each IPU is entitled to 1/14,077,747 of 32% of net positive
cash flow. As of June 30, 1994 there were 10,778,590 IPUs
issued and outstanding.
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion should be read in conjunction with
the business section, consolidated financial statements, notes, and
management's discussion contained in the Company's 1993 annual
report on Form 10-K, and condensed consolidated financial
statements and notes contained in this report.
Liquidity and Capital Resources
Cash flow from operations for the six months ended June 30,
1994 amounted to $36.1 million as compared to $37.1 million for the
same period in 1993. Capital expenditures and partners'
contributions to the Company for the six months ended June 30, 1994
were each $13.9 million. For the six months ended June 30, 1993,
capital expenditures and Company distributions to the partners were
$17.9 million and $15.6 million, respectively.
The Company's share of the 1994 Indonesian Joint Venture
expenditures is expected to approximate $56 million of which $38
million is anticipated for capital items. During the first six
months of 1994, approximately $30 million was called by the Joint
Venture as compared to $35 million for the six months ended June
30, 1993.
The Company's ability to generate cash is primarily dependent
on the prices it receives for the sale of LNG, and to a lesser
extent, the sale of crude oil and LPG. In the event cash generated
from operations is not sufficient to meet capital investment and
other requirements, any shortfall will be funded through additional
cash contributions by the partners. The Company cannot predict
with any degree of certainty the prices it will receive in future
periods for its crude oil and LNG. The Company's financial
condition, operating results and liquidity will be materially
affected by any significant fluctuations in its sales prices.
Results of Operations
Quarter Ended June 30, 1994
Compared to Quarter Ended June 30, 1993
Net income for the second quarter of 1994 increased $4.9
million to $8.5 million, compared to $3.6 million in the same
quarter of 1993. The increase was primarily due to higher
revenues, lower dry hole costs, lower interest costs, and a lower
effective income tax rate, all partially offset by higher depletion
costs.
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations, Continued
Revenues for the second quarter of 1994 were $42.7 million,
compared to $38.8 million in 1993's second quarter. The higher
level of revenue was attributable to an 18 percent increase in LNG
sales volumes and a 38 percent increase in crude oil volumes over
the same period in 1993. The Joint Venture's share of the LNG
delivered from the Bontang plant in the second quarter of 1994
increased to 78 trillion BTUs (26.6 net equivalent cargoes) as
compared to 66 trillion BTUs (22.6 net equivalent cargoes) in the
second quarter of 1993. The increase in LNG volumes was made
possible by the completion of the plant expansion in late 1993 and
the commencement of a new twenty year sales contract with certain
Japanese buyers. Crude oil and condensate volumes net to the
Company during the second quarter of 1994 increased to 658
thousand barrels as compared to 477 thousand barrels for the same
period in 1993. The increased liquid production was a result of
higher gas production to meet increased gas demand for LNG
manufacturing.
The prices received for LNG and crude oil in the second
quarter of 1994 decreased 17 percent and 14 percent, respectively,
over the second quarter of 1993. The average price received per
million BTUs of LNG for the second quarter of 1994 decreased to
$2.38 per million BTUs as compared to $2.86 per million BTUs for
the same period in 1993. The average realized crude oil price fell
$2.62 per barrel to $16.58 per barrel in the second quarter of 1994
from $19.20 per barrel in the second quarter of 1993. The prices
realized by the Company for its products reflected the decrease in
world wide crude oil prices which occurred from the second quarter
of 1993 to the second quarter of 1994.
Depletion, depreciation, and amortization increased $1.1
million primarily due to the higher gas production volumes
discussed above. The increase was partially offset by lower
depletion rates resulting from reserve additions since the second
quarter of 1993.
Exploration costs in the second quarter of 1994 decreased $2.6
million to $0.1 million, as compared to the second quarter of 1993.
Exploratory drilling and testing of two wells were in progress at
the end of the second quarter of 1994.
Income taxes in the second quarter of 1994 increased $1.2
million to $17.2 million, as compared to $16.0 million in the same
period of 1993. The increased income taxes were primarily due to
higher revenues discussed above. The effective tax rates for the
three months ended June 30, 1994 and 1993 were 67 percent and 82
percent, respectively. The decrease in the effective tax rate was
primarily attributable to the elimination of non-Indonesian tax
deductible interest expense on the Company's 8-1/4%
debentures
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations, Continued
which were redeemed in early January 1994 and the reduction in
exploration costs expensed in the 1994 period.
Six Months Ended June 30, 1994
Compared to Six Months Ended June 30, 1993
Earnings before extraordinary item for the first six months of
1994 increased $3.9 million to $18.3 million, compared to $14.4
million in the same period in 1993. The increase was primarily due
to lower dry hole costs and lower interest expense.
Revenues for the six months ended June 30, 1994 were $97.9
million compared to $97.1 million in the first half of 1993. The
higher level of revenue was attributable to a 14 percent increase
in LNG volumes and a 16 percent increase in crude oil volumes
offset by decreased sales prices. The Joint Venture's share of LNG
volumes in the first half of 1994 increased to 198 trillion BTUs
(67.4 net equivalent cargoes) as compared to 174 trillion BTUs
(59.2 net equivalent cargoes) in the first half of 1993. Crude oil
and condensate volumes net to the Company for the six months ended
June 30, 1994, increased 150 thousand barrels to 1.1 million
barrels as compared to the same period in 1993.
The prices received for LNG and crude oil in the first six
months of 1994 decreased 17 percent and 14 percent, respectively,
as compared to the same period in 1993. The average price
received per million BTUs of LNG for the first six months of 1994
decreased $0.48 to $2.40 per million BTUs as compared to $2.88 per
million BTUs for the same period in 1993. The average realized
crude oil price fell $2.57 per barrel to $16.21 per barrel for the
six months ended June 30, 1994 as compared to $18.78 per barrel for
the first half of 1993. Additionally, the first half of 1994
benefitted from a favorable non-taxable crude oil revenue final
settlement from 1993 reflecting a reallocation of certain capital
expenditures from gas to oil.
Depletion, depreciation, and amortization increased $1.3
million primarily due to the higher gas production volumes
discussed above. The increase was partially offset by lower
depletion rates resulting from reserve additions since June 30,
1993.
Exploration costs in the first half of 1994 decreased $3.4
million to $0.1 million, as compared to $3.5 million in the same
period in 1993. Exploratory drilling and testing of two wells were
in progress at the end of the second quarter of 1994.
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations, Continued
Interest expense for the six months ended June 30, 1994
decreased $2.2 million reflecting the redemption of the Company's
8-1/4% debentures on January 5, 1994, discussed below.
Income taxes for the six months ended June 30, 1994 increased
$1.1 million to $42.6 million, as compared to the same period in
1993. Current income taxes in the first six months of 1994
decreased $1.3 million to $42.1 million, as compared to the same
period in 1993. The decrease in current income taxes was a result
of a favorable Indonesian tax final settlement from 1993 recognized
in the first quarter of 1994 as compared to an unfavorable
Indonesian tax final settlement from 1992 recognized in the first
quarter of 1993. Deferred income taxes increased $2.3 million in
the first half of 1994, as compared to the same period in 1993.
The increase in deferred taxes was due to higher non-taxable crude
oil revenues resulting from the 1993 crude oil revenue final
settlements discussed above. The effective tax rates for the six
months ended June 30, 1994 and 1993 were 70 percent and 74
percent, respectively. The decrease in the effective tax rate was
primarily attributable to the elimination of non-Indonesian tax
deductible interest expense on the Company's 8-1/4% debentures
which were redeemed in early January 1994 and the reduction in
exploration costs expensed in the 1994 period.
The extraordinary loss on redemption of debt in 1994 was a
$3.1 million loss on the early redemption of the Company's 8-1/4%
convertible subordinated guaranteed debentures, due originally in
December 1995. These debentures were repaid on January 5, 1994 in
the principal amount of $36.4 million.
PART II. OTHER INFORMATION
Item 5. Other Information
Management, budgeting and financial control of Unimar is
exercised by a Management Board consisting of six members, three
appointed by each of Unistar, Inc. and LASMO (Ustar), Inc. On
April 28, 1994, Enterprise Oil plc ("Enterprise"), an oil
exploration and production public limited company organized under
the laws of England, announced a proposed takeover bid for LASMO
plc, the ultimate parent of LASMO (Ustar), Inc. which is one of the
two general partners of Unimar. On July 1, 1994 LASMO plc's
shareholders rejected Enterprise's offer.
Item 6. Exhibits and Reports on Form 8-K
None.
UNIMAR COMPANY
SIGNATURES
Pursuant to the requirements 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.
UNIMAR COMPANY
By: /S/ GEORGE W. BERKO
George W. Berko
Member of the Management Board
(principal financial officer)
DATE: August 12, 1994