UNIMAR COMPANY
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Earnings
For the Three Months and Nine Months ended
September 30, 1995 and September 30, 1994 .1
Condensed Consolidated Balance Sheets as of
September 30, 1995 and December 31, 1994. .2
Condensed Consolidated Statements of
Cash Flows for the Nine Months ended
September 30, 1995 and September 30, 1994 .3
Notes to Condensed Consolidated Financial
Statements as of September 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. . . . . . .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,
1995 1994 1995 1994
Oil and gas production
revenues $43,734 $51,941 $157,534 $149,809
Production costs 5,884 4,922 18,130 14,768
Depletion, depreciation and
amortization 9,566 13,453 32,274 39,967
Exploration costs including
dry holes 29 2,537 10 2,643
Operating profit 28,255 31,029 107,120 92,431
General and administrative
expenses 409 343 1,064 942
Other income and expense (112) (47) (333) (127)
Earnings before income taxes 27,958 30,733 106,389 91,616
Income tax expense
Current 21,040 24,728 76,378 66,858
Deferred (1,378) (4,083) (3,479) (3,657)
19,662 20,645 72,899 63,201
Earnings before extraordinary
item 8,296 10,088 33,490 28,415
Extraordinary loss on redemption
of debt - - - 3,108
Net earnings $ 8,296 $10,088 $ 33,490 $ 25,307
See accompanying Notes to Condensed Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Thousands of dollars)
September 30, December 31,
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 4,046 $ 3,421
Accounts and notes receivable 8,589 5,882
Inventories 12,063 12,467
Other current assets 5,921 2,682
Total current assets 30,619 24,452
Property, plant and equipment, at cost:
Oil and gas properties
(successful efforts method) 1,041,323 1,023,546
Other 2,244 2,113
1,043,567 1,025,659
Less: accumulated depreciation and
depletion 664,018 631,499
Net property, plant and equipment 379,549 394,160
Other assets 3,862 3,567
$ 414,030 $ 422,179
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $ 2,278 $ 2,620
Advances from joint venture partners 1,493 1,629
Accrued liabilities 14,307 14,987
Income taxes 11,101 11,326
Total current liabilities 29,179 30,562
Deferred income taxes 159,487 162,966
Other liabilities 12,225 10,403
Partners' capital 293,139 298,248
Less: demand notes receivable 80,000 80,000
213,139 218,248
$ 414,030 $ 422,179
See accompanying Notes to Condensed Consolidated Financial Statements.
/TABLE
UNIMAR COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Thousands of dollars)
(Unaudited)
Nine Months Ended
September 30,
1995 1994
Net earnings $ 33,490 $ 25,307
Adjustments to reconcile to net cash
provided by operating activities:
Loss on extraordinary item - 3,108
Depletion, depreciation and amortization 32,519 40,265
Deferred income taxes (3,479) (3,657)
Exploratory dry hole costs (22) 2,503
Working capital and other (5,261) (11,963)
Net cash provided by operating activities 57,247 55,563
Investment activities:
Capital expenditures (17,886) (21,459)
Net cash used in investing activities (17,886) (21,459)
Financing activities:
Repayment of debt - (36,400)
Capital (distributions)-net (38,600) (100)
Net cash used in financing activities (38,600) (36,500)
(Decrease) in advances from joint
venture partners (136) (1,704)
Increase (Decrease) in cash and cash equivalents 625 (4,100)
Cash and cash equivalents at beginning of period 3,421 8,284
Cash and cash equivalents at end of period $ 4,046 $ 4,184
IPU distributions paid $ 15,306 $ 13,689
Interest paid $ 0 $ 0
Income taxes paid $ 76,603 $ 70,941
See accompanying Notes to Condensed Consolidated Financial Statements.
/TABLE
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 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 has determined that the pronouncement should have no
material impact on the financial statements of the Company.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
September 30, 1995
(Unaudited)
(4) The table below outlines the calculation of the Indonesian
Participating Unit (IPU) participation payment for the third
quarter of 1995.
1995
Third Quarter
(Thousands of dollars)
Positive cash flow:
Gas receipts $ 42,092
Oil and condensate receipts 7,701
Other non-revenue cash receipts
from Joint Venture 2,177
Total positive cash flow 51,970
Less negative cash flow:
Expenditures to Joint Venture 12,803
Indonesian income taxes 21,469
Total negative cash flow 34,272
Net positive cash flow from
23.125% interest in Joint Venture $ 17,698
Net cash flow for benefit of
IPU holders* $ 4,311
Participation Payment per IPU* $ .40
* 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 September 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 nine months ended September
30, 1995 was $57 million (1994 nine months, $56 million). Capital
expenditures for the Joint Venture's operations were $18 million,
or $4 million lower than the comparative 1994 period. The decrease
in expenditures thus far in 1995 has been primarily due to planned
reductions in exploration and development activities.
Distributions by the Company to its partners totaled $39 million
(1994 nine months, $0.1 million). During 1994, $36 million was
utilized to repay outstanding debt, thereby reducing partner
distributions. Total distributions paid to the IPU unitholders
during the nine months of 1995 totaled $15 million, or $1.42 per
unit, as compared to $14 million, or $1.27 per unit, for the 1994
period.
For the year 1995, the Company's share of Joint Venture
expenditures is expected to approximate $49 million, of which $29
million is targeted towards development activities. During the
nine months of 1995, $41 million was called by the Joint Venture
(1994 nine months, $44 million).
The Company's ability to generate cash is primarily dependent
on the prices it receives for the sale of liquefied natural gas
(LNG) and, to a lesser extent, the sale of crude oil and liquefied
petroleum gas (LPG). LNG and LPG are primarily sold under long-
term contracts whose prices are indexed by a basket of Indonesian
crudes. The Company cannot predict with any degree of certainty
the prices it will receive in future periods for its LNG and crude
oil. The Company's financial condition, operating results and
liquidity will be materially affected by any significant
fluctuations in its sales prices. In the event that cash generated
from operations is not sufficient to meet capital investment and
other requirements, any shortfall will be funded through cash
contributions by the partners.
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Quarter Ended September 30, 1995
Compared to Quarter Ended September 30, 1994
Net earnings for the third quarter of 1995 were $8 million, or
$2 million lower than 1994's third quarter earnings. The decrease
in earnings was primarily due to lower LNG sales volumes and
prices.
For the third quarter of 1995, revenues were $44 million, a
decrease of $8 million from the 1994 corresponding quarter. These
lower revenues were the result of a 6 percent decrease in the
average price received for LNG and crude oil in addition to a 17
percent decrease in LNG sales volumes. The LNG sales price during
the third quarter of 1995 averaged $2.55 per million btus (1994
third quarter, $2.70 per mmbtu). The Company's average realized
crude oil price during the 1995 third quarter was $16.37 per barrel
(1994 third quarter, $17.37 per barrel). The lower sales prices
affected revenues adversely by about $3 million.
Gross LNG sales decreased by 15 cargoes to 52 cargoes during
the third quarter of 1995. On a net equivalent cargo basis, the
Joint Venture sold 30.6 net equivalent cargoes (1994 third quarter,
37.0 net equivalent cargoes). The lower LNG volumes impacted
revenues adversely by about $7 million. Gross crude oil and
condensate volumes were 4.1 million barrels for the 1995 third
quarter, or 7 percent lower than the corresponding 1994 quarter.
Conversely, crude oil and condensate volumes net to the Company of
424 thousand barrels were 42 percent higher (1994 third quarter,
299 thousand barrels). The higher Company oil volumes affected
revenues favorably by about $2 million.
Production costs of $6 million were about $1 million above
last year's third quarter costs due to higher operating expenses
and workover costs on development wells. Depletion charges
decreased $4 million because of lower third quarter net oil and gas
production and the continued effect of the fourth quarter 1994
reserve additions.
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Income taxes in the third quarter of 1995 were $20 million.
The decrease in current tax expense during the third quarter of
1995 was primarily from the decrease in LNG revenues. The
effective tax rates for the 1995 and 1994 third quarters were 70
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.
Nine Months Ended September 30, 1995
Compared to Nine Months Ended September 30, 1994
Net earnings for the nine months of 1995 were $33 million, or
$5 million higher than 1994's nine month earnings (before
extraordinary item). The increase in earnings was primarily due to
higher LNG revenues and lower non-cash charges.
Revenues for the nine months of 1995 were $158 million, or $8
million above 1994's corresponding revenues. Higher LNG and oil
realized sales prices were the main factors contributing to this
favorable variance offset in part by lower LNG and oil sales
volumes. The average LNG sales price for the nine month 1995
period was $2.70 per million btus, an 8 percent increase over the
1994 nine month price of $2.51. The Company's realized crude oil
sales price averaged $17.26 per barrel, a 5 percent increase over
the 1994 corresponding price of $16.46. The increase in sales
prices impacted revenues favorably by about $16 million.
Gross LNG sales were 183 cargoes in the nine months of 1995
and 1994. On a net equivalent cargo basis, the Joint Venture sold
101.2 net equivalent cargoes during the nine months of 1995 (1994
nine months, 104.4 net equivalent cargoes); the lower cargo figure
in the current year reflected a greater percentage of cargoes sold
under contracts in which the Company has lower equity interests.
The 1995 results included the commencement of sales under Package
V's Korean medium term sales contract. For the year 1995, the
Joint Venture expects to deliver fewer net equivalent cargoes than
the net equivalent cargoes delivered in 1994. Gross crude oil and
condensate volumes for the nine months of 1995 were 13.3 million
barrels, slightly below the comparative period in 1994. Crude oil
sales volumes net to the Company of 1.3 million barrels were also
lower than last year's volumes by about 6 percent, mainly due to
lower expenditures which are cost recoverable. The decreased sales
volumes affected revenues adversely by about $6 million. Other
items, including IPU accruals and final settlement, impacted
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
revenues adversely by about $2 million during the nine months of
1995 as compared to the same period in 1994.
Production costs for the nine months of 1995 amounted to $18
million, an increase of $3 million over last year's comparative
period. Higher operating expenses and workover costs accounted for
the majority of this increase.
Depletion charges decreased $8 million due to lower net oil
and gas production and the effect of the fourth quarter 1994
reserve additions; these factors contributed to a 35 cent per net
equivalent barrel lower depletion charge in the 1995 nine months as
compared to the comparative 1994 period.
Income taxes in the nine months of 1995 increased $10 million
to $73 million. The increase in current tax expense during the
1995 nine month period resulted primarily from the increased
revenues. The effective tax rate for both the 1995 and 1994
periods was 69 percent. This rate is 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 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
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27)-1- Financial Data Schedule for the nine months
ended September 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: November 13, 1995