UNIMAR COMPANY
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Earnings
For the Three Months and Six Months ended
June 30, 1995 and June 30, 1994 . . . . . .1
Condensed Consolidated Balance Sheets as of
June 30, 1995 and December 31, 1994 . . . .2
Condensed Consolidated Statements of
Cash Flows for the Six Months ended
June 30, 1995 and June 30, 1994 . . . . . .3
Notes to Condensed Consolidated Financial
Statements as of June 30, 1995. . . . . . .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. . . . . . .10
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,
1995 1994 1995 1994
Oil and gas production revenues $53,261 $42,717 $113,800 $ 97,868
Production costs 6,473 4,954 12,246 9,846
Depletion, depreciation and
amortization 10,517 11,655 22,708 26,514
Exploration costs including
dry holes - 90 (19) 106
Operating profit 36,271 26,018 78,865 61,402
General and administrative
expenses (329) (308) (655) (599)
Other income and expense 116 33 221 80
Earnings before income taxes 36,058 25,743 78,431 60,883
Income tax expense
Current 26,411 18,079 55,338 42,130
Deferred (1,375) (845) (2,101) 426
25,036 17,234 53,237 42,556
Earnings before extraordinary
item 11,022 8,509 25,194 18,327
Extraordinary loss on redemption
debt - - - 3,108
Net earnings $11,022 $ 8,509 $ 25,194 $ 15,219
See accompanying Notes to Condensed Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Thousands of dollars)
June 30, December 31,
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 7,182 $ 3,421
Accounts and notes receivable 11,067 5,882
Inventories 12,476 12,467
Other current assets 5,825 2,682
Total current assets 36,550 24,452
Property, plant and equipment, at cost:
Oil and gas properties
(successful efforts method) 1,034,422 1,023,546
Other 2,134 2,113
1,036,556 1,025,659
Less: accumulated depreciation and
depletion 654,373 631,499
Net property, plant and equipment 382,183 394,160
Other assets 3,793 3,567
$ 422,526 $ 422,179
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $ 2,500 $ 2,620
Advances from joint venture partners 3,080 1,629
Accrued liabilities 14,911 14,987
Income taxes 13,310 11,326
Total current liabilities 33,801 30,562
Deferred income taxes 160,865 162,966
Other liabilities 11,617 10,403
Partners' capital 296,243 298,248
Less: demand notes receivable 80,000 80,000
216,243 218,248
$ 422,526 $ 422,179
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,
1995 1994
Net earnings $ 25,194 $ 15,219
Adjustments to reconcile to net cash
provided by operating activities:
Loss on extraordinary item - 3,108
Depletion, depreciation and amortization 22,874 26,717
Deferred income taxes (2,101) 426
Exploratory dry hole costs (22) 3
Working capital and other (5,560) (9,413)
Net cash provided by operating activities 40,385 36,060
Investment activities:
Capital expenditures (10,875) (13,861)
Net cash used in investing activities (10,875) (13,861)
Financing activities:
Repayment of debt - (36,400)
Capital contributions (distributions)-net (27,200) 13,900
Net cash used in financing activities (27,200) (22,500)
Increase (Decrease) in advances from joint
venture partners 1,451 (1,687)
Increase (Decrease) in cash and cash
equivalents 3,761 (1,988)
Cash and cash equivalents
at beginning of period 3,421 8,284
Cash and cash equivalents at end of period $ 7,182 $ 6,296
IPU distributions paid $ 10,456 $ 10,563
Interest paid $ 0 $ 300
Income taxes paid $ 53,354 $ 47,996
See accompanying Notes to Condensed Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 1995
(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 1994 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.
(3) In March 1995, the Financial Accounting Standards Board
("FASB") released Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of," which set forth
the criteria for impairment of plant, property and equipment
and other long-lived assets. Adoption of the Statement is
required for years beginning after December 15, 1995. The
Company is currently reviewing the Statement; however, the
Company believes that the pronouncement will have no material
impact on the financial statements of the Company.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
June 30, 1995
(Unaudited)
(4) The table below outlines the calculation of the Indonesian
Participating Unit (IPU) participation payment for the second
quarter of 1995.
1995
Second Quarter
(Thousands of dollars)
Positive cash flow:
Gas receipts $ 47,678
Oil and condensate receipts 8,234
Other non-revenue cash receipts
from Joint Venture 1,411
Total positive cash flow 57,323
Less negative cash flow:
Expenditures to Joint Venture 12,911
Indonesian income taxes 24,477
Total negative cash flow 37,388
Net positive cash flow from
23.125% interest in Joint Venture $ 19,935
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 until September 25, 1999 at which time the Units
will expire with no residual value. As of June 30, 1995,
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 1994 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,
1995 amounted to $40 million (1994 six months, $36 million). For
the first six months of 1995, capital expenditures to the Joint
Venture were $11 million and distributions by the Company to its
partners were $27 million (1994 six months, capital expenditures -
$14 million and partners' contributions - $14 million). The
Company's share of expenditures for the Joint Venture decreased in
the first half of 1995 as compared to the same period in 1994 due
primarily to planned reductions in exploration and development
activities in the current year.
The Company's share of the 1995 Indonesian Joint Venture
expenditures is expected to be approximately $49 million, of which
$29 million is anticipated for development expenditures. During
the first six months of 1995, $28 million was called by the Joint
Venture (1994 six months - $30 million).
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. LNG and LPG are primarily
sold under long term contracts whose prices are indexed by a basket
of Indonesian crudes. 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, 1995
Compared to Quarter Ended June 30, 1994
Net earnings for the second quarter of 1995 were $11 million,
or $2 million higher than 1994's second quarter earnings. The main
contributing factor to this increase in earnings was higher
revenues from gas sales as discussed below.
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
For the second quarter of 1995, revenues were $53 million, an
increase of $10 million over the 1994 corresponding quarter. These
higher revenues were primarily the result of a 19 percent increase
in the average price received for LNG and an 8 percent increase in
the Company's average realized crude oil price. The LNG sales
price during the second quarter of 1995 averaged $2.84 per million
btus as compared to $2.38 for the 1994 second quarter, a 46 cent
improvement. The Company's average realized crude oil price during
the 1995's second quarter of $17.93 per barrel increased by $1.35
from the 1994 second quarter price of $16.58. The prices received
by the Company for its products reflect the increase in worldwide
crude oil prices which have occurred during the past twelve months.
Gross LNG sales increased by 10 cargoes to 57 cargoes in the
second quarter of 1995. The Joint Venture's share of the LNG sold
increased to 94 trillion btus (or 31.8 net equivalent cargoes) from
78 trillion btus (or 26.6 net equivalent cargoes). This increase
was seen across all Packages and also included the commencement in
1995 of sales under Package V's Korean medium term sales contract.
Gross crude oil and condensate volumes of 4.6 million barrels for
the second quarter of 1995 were consistent with last year's second
quarter volumes. However, crude oil and condensate volumes net to
the Company of 404 thousand barrels decreased by 254 thousand
barrels, primarily due to a reduction in expenditures which are
cost recoverable.
Production costs of $6.5 million were about $1.5 million above
last year's second quarter costs. Reasons for this increase
included workover costs on development wells and higher operating
expenses.
Depletion, depreciation and amortization charges decreased $1
million due to the continued effect of the fourth quarter 1994
reserve additions offset in part by an 8 percent increase in second
quarter oil and gas production over last year's second quarter.
Income taxes in the second quarter of 1995 increased $8
million to $25 million. The increase in current tax expense during
the 1995 second quarter results primarily from the increased LNG
revenues discussed above. The effective tax rates for the 1995 and
1994 second quarters were 69 percent and 67 percent respectively.
These rates are the aggregate of Indonesian source income taxed at
a 56 percent rate, and certain expenses attributable to Unimar
activities which are not deductible in the partnership.
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Six Months Ended June 30, 1995
Compared to Six Months Ended June 30, 1994
Net earnings for the first six months of 1995 were $25
million, or $7 million higher than 1994's six month earnings
(before extraordinary item). The primary reason for the increase
in earnings was due to higher gas revenues as discussed below.
Revenues for the first six months of 1995 were $114 million,
or $16 million higher than the 1994 corresponding revenues. Higher
oil and gas realized sales prices and increased gas volumes were
the main factors contributing to this favorable variance, offset in
part by lower crude oil volumes net to the Company during the 1995
period. The average LNG sales price for the six month 1995 period
was $2.76 per million btus, a 15 percent increase over the 1994 six
month value of $2.40. The Company's realized crude oil sales price
averaged $17.70 per barrel, a 9 percent increase over the 1994 six
month value of $16.21.
Gross LNG sales increased by 15 cargoes to 131 cargoes in the
first half of 1995. The Joint Venture's share of LNG volumes in
the first half of 1995 increased to 208 trillion btus (or 70.6 net
equivalent cargoes) from 198 trillion btus (or 67.4 net equivalent
cargoes) for the first six months of 1994. The majority of this
increased volume came from the commencement in 1995 of sales under
Package V's Korean medium term sales contract. However, the Joint
Venture expects to deliver 134 net equivalent cargoes during 1995,
which is fewer than the 138 that were delivered in 1994. Gross
crude oil and condensate volumes for the first six months of 1995
were 9.1 million barrels, slightly above the comparative period in
1994. However, crude oil volumes net to the Company of 873
thousand barrels were lower than last year by about 20 percent,
mainly due to lower expenditures which are cost recoverable. Also,
oil final settlement recorded in 1995 was about $1 million less
than the comparative figure recorded in 1994.
Production costs for the first six months of 1995 amounted to
$12 million, an increase of about $2 million over last year's
comparative period. Higher operating expenses and workover costs
accounted for this increase.
Depletion, depreciation and amortization charges decreased $4
million due to the effect of the fourth quarter 1994 reserve
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
additions and consistent net oil and gas production; these factors
contributed to a 34 cent per net equivalent barrel lower depletion
charge in the first half of this year.
Income taxes in the first half of 1995 increased $10 million
to $53 million. The increase in current tax expense during the
1995 six month period results primarily from the increased LNG
revenues discussed above. The effective tax rates for the 1995 and
1994 six months were 68 percent and 70 percent respectively. These
rates are the aggregate of Indonesian source income taxed at a 56
percent rate, and certain expenses attributable to Unimar
activities which are not deductible in the partnership.
The extraordinary loss on redemption of debt in the first six
months of 1994 was a $3 million loss on the early redemption of the
Company's 8-1/4% convertible subordinated guaranteed debentures,
due originally in December of 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
In July 1995, financing was completed in the amount of
$969.5 million for the construction of Train G, a dock and other
support facilities at the Bontang plant. (The Bontang plant is
owned by Pertamina, the Indonesian national oil company, and
operated on a cost-reimbursement basis by a corporation owned in
part by the Indonesian Joint Venture.) The financing is provided
from Japanese sources through an arrangement similar to that used
in the financing of Train E and Train F, under which debt service
is paid by a trustee and paying agent to lenders primarily from the
proceeds of designated LNG Sales to the Chinese Petroleum
Corporation, Korean Gas Corporation and a group of Japanese
industrial and utility customers. The financing is non-recourse to
the Joint Venture, the other production sharing contractors and
Pertamina. Bontang plant processing fees, debt service with
respect to plant financings, transportation (as required) and other
costs are deducted from LNG sales proceeds, and the balance is then
distributed to Pertamina, the Joint Venture and other production
sharing contractors. Construction of Train G has commenced and is
expected to be completed in late 1997. Repayment of debt
outstanding under the financing is expected to begin in 1998.
PART II. OTHER INFORMATION (continued)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27)-1- Financial Data Schedule for the six months
ended June 30, 1995.
(b) 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
and the officer duly
authorized to sign on behalf
of the registrant.)
DATE: August 11, 1995