UNIMAR COMPANY
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Earnings
for the Quarters and Nine Months Ended
September 30, 1994 and 1993 . . . . . . .1
Condensed Consolidated Balance Sheets as of
September 30, 1994 and December 31, 1993. .2
Condensed Consolidated Statements of Cash
Flows for the Nine Months Ended
September 30, 1994 and 1993 . . . . . . .3
Notes to Condensed Consolidated Financial
Statements as of September 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 Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
Oil and gas production revenues $51,941 $47,840 $149,809 $144,972
Production costs 4,922 4,608 14,768 14,017
Depletion, depreciation and amortization 13,453 13,287 39,967 38,496
Exploration costs including dry holes 2,537 1,614 2,643 5,077
Operating profit 31,029 28,331 92,431 87,382
General and administrative expenses 343 340 942 1,481
Interest expense 13 1,163 41 3,418
Other (income) and expense (60) 32 (168) (283)
Earnings before income taxes 30,733 26,796 91,616 82,766
Income tax expense
Current 24,728 21,585 66,858 65,024
Deferred (4,083) (139) (3,657) (2,030)
20,645 21,446 63,201 62,994
Earnings before extraordinary item 10,088 5,350 28,415 19,772
Extraordinary loss on redemption debt - - 3,108 -
Net earnings $10,088 $ 5,350 $ 25,307 $ 19,772
See accompanying Notes to Condensed Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Thousands of dollars)
September 30, December 31,
1994 1993
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 4,184 $ 8,284
Accounts and notes receivable 9,715 11,604
Inventories 13,531 10,886
Other current assets 4,563 2,381
Total current assets 31,993 33,155
Property, plant and equipment, at cost:
Oil and gas properties
(successful efforts method) 1,010,689 991,901
Other 3,208 3,283
1,013,897 995,184
Less: accumulated depreciation and
depletion 620,830 580,807
Net property, plant and equipment 393,067 414,377
Other assets 4,172 1,252
$ 429,232 $ 448,784
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current maturities of long
term debt $ - $ 33,292
Accounts payable 2,028 3,229
Advances from joint venture
partners 1,885 3,589
Accrued liabilities 11,772 9,314
Income taxes 11,566 19,280
Total current liabilities 27,251 68,704
Deferred income taxes 163,549 167,206
Other liabilities 10,398 10,048
Partners' capital 308,034 282,826
Less: demand notes receivable 80,000 80,000
228,034 202,826
$ 429,232 $ 448,784
See accompanying Notes to Condensed Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Thousands of dollars)
(Unaudited)
Nine Months Ended
September 30,
1994 1993
Net earnings $ 25,307 $ 19,772
Adjustments to reconcile to net cssh
provided by operating activities:
Loss on extraordinary item 3,108 -
Depletion, depreciation and
amortization 40,265 38,781
Deferred income taxes (3,657) (2,030)
Exploratory dry hole costs 2,503 3,433
Interest accretion - 1,089
Working capital and other (11,963) 553
Net cash provided by operating activities 55,563 61,598
Investment activities:
Capital expenditures (21,459) (30,511)
Financing activities:
Repayment of debt (36,400) -
Capital distributions - net (100) (30,700)
Net cash used in financing activities (36,500) (30,700)
(Decrease) increase in advances from
joint venture partners (1,704) (1,288)
Net (decrease) increase in cash and cash
equivalents (4,100) (901)
Cash and cash equivalents at beginning
of period 8,284 6,461
Cash and cash equivalents at end of period $ 4,184 $ 5,560
IPU distributions paid $ 13,689 $ 12,719
Income taxes paid $ 70,941 $ 67,330
See accompanying Notes to Condensed Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 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
September 30, 1994
(Unaudited)
(3) The table below outlines the calculation of the Indonesian
Participating Unit (IPU) participation payment for the third
quarter of 1994.
1994
Third Quarter
(Thousands of dollars)
Positive cash flow:
Gas receipts $ 47,949
Oil and condensate receipts 7,379
Other non-revenue cash receipts
from Joint Venture 1,198
Total positive cash flow 56,526
Less negative cash flow:
Expenditures to Joint Venture 13,920
Indonesian income taxes 22,779
Total negative cash flow 36,699
Net positive cash flow from
23.125% interest in Joint Venture $ 19,827
Net cash flow for benefit of
IPU holders* $ 4,850
Participation Payment per IPU* $ .45
* Each IPU is entitled to 1/14,077,747 of 32% of net
positive cash flow. As of September 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 nine months ended September
30, 1994 amounted to $55.6 million as compared to $61.6 million for
the same period in 1993. Capital expenditures and partners'
distributions to the Company for the nine months ended September
30, 1994 were $21.5 million and $0.1 million, respectively. For
the nine months ended September 30, 1993, capital expenditures and
Company distributions to the partners were $30.5 million and $30.7
million, respectively.
The Company's share of the 1994 Indonesian Joint Venture
expenditures is expected to be approximately $56 million of which
$38 million is anticipated for capital items. During the first
nine months of 1994, approximately $44 million was called by the
Joint Venture as compared to $49 million for the nine months ended
September 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 September 30, 1994
Compared to Quarter Ended September 30, 1993
Net income for the third quarter of 1994 increased $4.7
million to $10.1 million, compared to $5.4 million in the same
quarter of 1993. The increase was primarily due to higher
revenues, lower interest costs and lower net income taxes partially
offset by higher exploration costs.
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations, Continued
Revenues for the third quarter of 1994 were $51.9 million,
compared to $47.8 million in 1993's third quarter. The higher
level of revenue was caused by a 21 percent increase in LNG sales
volumes and partially offset by a 39 percent decrease in crude oil
volumes over the corresponding 1993 quarter. The Joint Venture's
share of the LNG delivered from the Bontang plant in the third
quarter of 1994 increased to 109 trillion BTUs (37.0 net equivalent
cargoes) as compared to 90 trillion BTUs (30.8 net equivalent
cargoes) in the third quarter of 1993. The increase in LNG volumes
was made possible by the completion of the plant expansion in late
1993 allowing for the commencement of two twenty-year sales
contracts with certain Japanese and Korean buyers, and additional
LNG volumes sold due to an interruption at another LNG facility.
Crude oil and condensate sales volumes net to the Company during
the third quarter of 1994 decreased to 299 thousand barrels as
compared to 494 thousand barrels for the same period in 1993. The
Company reduced its crude oil nominations in the third quarter of
1994 as a result of overlifting its proportionate share of barrels
in the first six months of 1994.
The average price received per million BTUs of LNG for the
third quarter of 1994 decreased 4 percent to $2.70 per million BTUs
as compared to the same period in 1993. The average realized crude
oil price fell 3 percent to $17.37 per barrel in the third quarter
of 1994 as compared to the corresponding 1993 quarter.
Depletion, depreciation, and amortization increased $0.2
million primarily due to the higher gas production volumes
discussed above. The increase was offset by lower depletion rates
resulting from reserve additions since the third quarter of 1993.
Exploration costs for the three months ended September 30,
1994 included the write-off of an exploration well drilled earlier
in the year.
Income taxes in the third quarter of 1994 were $20.6 million,
a decrease of $0.8 million as compared to the same period in 1993.
Current income taxes in the third quarter of 1994 increased $3.1
million primarily due to higher LNG revenues as compared to the
corresponding 1993 quarter. The effective income tax rates for the
quarter ended September 30, 1994 and September 30, 1993 were 67
percent and 80 percent, respectively. The lower effective tax rate
was primarily attributable to a decrease in non-Indonesian tax
deductible expenses including interest expense on the Company's 8-
1/4% debentures which were redeemed in January of this year.
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations, Continued
Nine Months Ended September 30, 1994
Compared to Nine Months Ended September 30, 1993
Earnings before extraordinary item for the first nine months
of 1994 increased $8.6 million to $28.4 million as compared to the
same period in 1993. The increase was primarily due to higher
revenues, lower dry hole costs and lower interest expense.
Revenues for the nine months ended September 30, 1994 were
$149.8 million compared to $145.0 million in the corresponding 1993
period. The higher level of revenue was caused by a 16 percent
increase in LNG volumes and offset by an 11 percent decrease in
sales prices for both LNG and crude oil. The Joint Venture's share
of LNG volumes in the first nine months of 1994 increased to 307
trillion BTUs (104.4 net equivalent cargoes) as compared to 264
trillion BTUs (90.0 net equivalent cargoes) in the first nine
months of 1993. The increase in LNG volumes was made possible by
the completion of the plant expansion in late 1993 allowing for the
commencement of two twenty-year sales contracts with certain
Japanese and Korean buyers, and additional LNG volumes sold due to
an interruption at another LNG facility. Crude oil and condensate
volumes net to the Company for the nine months ended September 30,
1994 decreased 3 percent to 1.4 million barrels as compared to the
same period in 1993.
The prices received for both LNG and crude oil in the first
nine months of 1994 decreased 11 percent, as compared to the same
period in 1993. The average price received per million BTUs of
LNG for the first nine months of 1994 decreased $0.34 to $2.51 per
million BTUs as compared to $2.85 per million BTUs for the
corresponding 1993 period. The average realized crude oil price
fell $2.03 per barrel to $16.46 per barrel for the nine months
ended September 30, 1994 as compared to $18.49 per barrel in the
first nine months of 1993. Additionally, the 1994 results
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 $1.5
million primarily due to the higher gas production volumes
discussed above. The increase was offset by lower depletion rates
resulting from reserve additions since September 30, 1993.
Exploration costs in the first nine months of 1994 decreased
$2.5 million to $2.6 million, as compared to the same period in
1993. The 1994 period included one dry hole as compared to two dry
holes and seismic expenses included in 1993.
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations, Continued
Interest expense for the nine months ended September 30, 1994
decreased $3.4 million reflecting the redemption of the Company's
8-1/4% debentures on January 5, 1994 discussed below.
Income taxes for the nine months ended September 30, 1994 were
$63.2 million, an increase of $0.2 million as compared to the same
period in 1993. Current income taxes in the first nine months of
1994 increased $1.9 million to $66.9 million, as compared to the
corresponding 1993 period. The increase in current income taxes
was a result of the higher LNG revenues experienced in the nine
months ended September 30, 1994 as discussed above. The effective
income tax rates for the nine months ended September 30, 1994 and
September 30, 1993 were 69 percent and 76 percent, respectively.
The lower effective income tax rate was primarily attributable to
a decrease in non-Indonesian tax deductible expenses including
interest expense on the Company's 8-1/4% debentures which were
redeemed in January of this year.
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
None.
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: November 11, 1994