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, 1996 and September 30, 1995 . . 1
Condensed Consolidated Balance Sheets as of
September 30, 1996 and December 31, 1995 . . . 2
Condensed Consolidated Statements of
Cash Flows for the Nine Months ended
September 30, 1996 and September 30, 1995. . . 3
Notes to Condensed Consolidated Financial
Statements as of September 30, 1996. . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . 9
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,
1996 1995 1996 1995
Oil and gas production
revenues $62,693 $43,734 $188,904 $157,534
Production costs 5,762 5,884 17,644 18,130
Depletion, depreciation and
amortization 12,180 9,566 35,884 32,274
Exploration costs including
dry holes 1,213 29 1,460 10
Operating profit 43,538 28,255 133,916 107,120
General and administrative
expenses 559 409 1,128 1,064
Other income (70) (112) (225) (333)
Earnings before income taxes 43,049 27,958 133,013 106,389
Income tax expense
Current 32,806 21,040 96,874 76,378
Deferred (1,219) (1,378) (4,971) (3,479)
31,587 19,662 91,903 72,899
Net earnings $11,462 $ 8,296 $ 41,110 $ 33,490
See accompanying Notes to Condensed Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Thousands of dollars)
September 30, December 31,
1996 1995
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 6,309 $ 4,882
Accounts and notes receivable 14,915 7,415
Inventories 8,519 9,839
Other current assets 2,440 3,372
Total current assets 32,183 25,508
Property, plant and equipment, at cost:
Oil and gas properties
(successful efforts method) 1,064,177 1,049,708
Other 2,280 2,264
1,066,457 1,051,972
Less: accumulated depreciation and
depletion 709,640 673,543
Net property, plant and equipment 356,817 378,429
Other assets 3,492 3,277
$ 392,492 $ 407,214
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $ 4,097 $ 2,394
Advances from joint venture partners 791 2,777
Accrued liabilities 14,297 14,595
Income taxes 15,199 11,697
Total current liabilities 34,384 31,463
Deferred income taxes 153,393 158,364
Other liabilities 13,239 12,321
Partners' capital 271,476 285,066
Less: demand notes receivable 80,000 80,000
191,476 205,066
$ 392,492 $ 407,214
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,
1996 1995
Net earnings $ 41,110 $ 33,490
Adjustments to reconcile to net cash
provided by operating activities:
Depletion, depreciation and amortization 36,098 32,519
Deferred income taxes (4,971) (3,479)
Exploratory dry hole costs - (22)
Changes in working capital and other 364 (5,261)
Net cash provided by operating activities 72,601 57,247
Investment activities:
Capital expenditures (14,488) (17,886)
Net cash used in investing activities (14,488) (17,886)
Financing activities:
Capital contributions 17,400 30,400
Capital distributions (72,100) (69,000)
Net cash used in financing activities (54,700) (38,600)
Increase (Decrease) in advances from joint
venture partners (1,986) (136)
Increase (Decrease) in cash and cash equivalents 1,427 625
Cash and cash equivalents
at beginning of period 4,882 3,421
Cash and cash equivalents at end of period $ 6,309 $ 4,046
IPU distributions paid $ 17,354 $ 15,306
Income taxes paid $ 93,372 $ 76,603
See accompanying Notes to Condensed Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 1996
(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 1995 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.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
gent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those est
Notes to Condensed Consolidated Financial Statements, Continued
September 30, 1996
(Unaudited)
(3) The table below outlines the calculation of the Indonesian
Participating Unit (IPU) participation payment for the third
quarter of 1996.
1996
Third Quarter
(Thousands of dollars)
Positive cash flow:
Gas receipts $ 59,738
Oil and condensate receipts 7,368
Other non-revenue cash receipts
from Joint Venture 1,056
Total positive cash flow 68,162
Less negative cash flow:
Expenditures to Joint Venture 11,884
Indonesian income taxes 30,252
Total negative cash flow 42,136
Net positive cash flow from
23.125% interest in Joint Venture $ 26,026
Net cash flow for benefit of
IPU holders* $ 6,359
Participation Payment per IPU* $ .59
* 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, 1996,
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 1995 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, 1996 amounted to $73 million, an increase of $16 million as
compared to the same period in 1995. The increase resulted
primarily from higher sales prices and higher LNG sales volumes.
Capital expenditures and net distributions to the partners for the
first nine months of 1996 were $14 million and $55 million,
respectively. For the nine months ended September 30, 1995,
capital expenditures and net distributions to the partners were $18
million and $39 million, respectively.
The Company's share of the 1996 Indonesian Joint Venture (IJV)
expenditures is now expected to be approximately $42 million of
which $22 million is anticipated for exploration and development
activities. During the first nine months of 1996, $33 million was
called by the IJV as compared to $36 million for the nine months
ended September 30, 1995.
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.
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Quarter Ended September 30, 1996
Compared to Quarter Ended September 30, 1995
Net earnings for the third quarter of 1996 were $11 million,
as compared to $8 million in the prior year's third quarter. The
increase in earnings was mainly due to higher revenues as discussed
below.
Third quarter 1996 revenues were $63 million, an increase of
$19 million over the corresponding 1995 quarter. LNG and crude oil
sales prices increased 21 percent and 24 percent, respectively,
while LNG and crude oil sales volumes increased 17 percent and 18
percent, respectively.
The average price received for LNG during the third quarter of
1996 was $3.09 per million BTUs as compared to $2.55 for the same
period in 1995. The average crude oil price in the third quarter
of 1996 increased by $3.88 per barrel over the corresponding 1995
quarter, to $20.25 per barrel.
Gross LNG sales volumes increased 22 percent to 187 trillion
BTUs in the third quarter of 1996, as compared to 153 trillion BTUs
in the third quarter of 1995. The IJV's share of the LNG sold
increased 17 percent to 105 trillion BTUs (35.7 net equivalent
cargoes) from 90 trillion BTUs (30.6 net equivalent cargoes). The
IJV's share of volumes increased by a smaller percentage than the
gross volumes because more sales were under those contracts in
which the IJV has a lower net revenue sharing interest.
Crude oil volumes net to the Company increased by 76 thousand
barrels to 500 thousand barrels, due primarily to the timing of
crude oil liftings.
Depletion, depreciation and amortization charges increased $2
million to $12 million, mainly due to the increased level of
production in the third quarter of 1996 as compared to the third
quarter of 1995.
Exploration costs of $1 million during the third quarter of
1996 were due to planned seismic activities.
Indonesian income tax expense in the third quarter of 1996
increased $12 million to $32 million. The increase in current
income tax expense during the 1996 third quarter was primarily due
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
to higher third quarter revenues. The effective tax rates for the
1996 and 1995 third quarters were 73 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.
Nine Months Ended September 30, 1996
Compared to Nine Months Ended September 30, 1995
Net earnings for the first nine months of 1996 were $41
million, an increase of $8 million over the same period in 1995.
The increase in earnings was mainly the result of higher revenues
as discussed below.
Revenues for the first nine months of 1996 were $189 million,
or $31 million higher than the first nine months of 1995. LNG and
crude oil sales prices increased 11 percent and 12 percent,
respectively, while LNG and crude oil sales volumes increased 7
percent and 5 percent, respectively.
The average price received for LNG was $3.01 per million BTUs,
as compared to $2.70 for the first nine months of 1995. The price
received for crude oil sales averaged $19.36 per barrel, an
increase of $2.10 per barrel from the 1995 nine month average. The
prices received by the Company for its products reflected higher
worldwide crude oil prices during the first nine months of 1996 as
compared to the first nine months of 1995.
Gross LNG sales volumes increased 9 percent to 582 trillion
BTUs in the first nine months of 1996, as compared to 536 trillion
BTUs in the first nine months of 1995. The IJV's share of the LNG
sold increased 7 percent to 318 trillion BTUs (108.1 net equivalent
cargoes) from 298 trillion BTUs (101.2 net equivalent cargoes).
The IJV's share of volumes increased by a smaller percentage than
the gross volumes because more sales were under those contracts in
which the IJV has a lower net revenue sharing interest.
Crude oil volumes net to the Company increased by 71 thousand
barrels to 1,369 thousand barrels for the nine months of 1996.
Exploration costs were $1 million, reflecting planned seismic
activities in the current year.
Depletion, depreciation and amortization charges increased $4
UNIMAR COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
million to $36 million, mainly due to the increased level of
production in the first nine months of 1996.
Income taxes in the first nine months of 1996 increased $19
million to $92 million. The increase in current tax expense during
the first nine months of 1996 was primarily due to higher revenues.
The effective tax rate for both the 1996 and 1995 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.
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, 1996.
(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 11, 1996