UNIMAR COMPANY
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Earnings
For the Three Months ended
March 31, 1997 and March 31, 1996 . . . . . . 1
Condensed Consolidated Balance Sheets as of
March 31, 1997 and December 31, 1996 . . . . . 2
Condensed Consolidated Statements of
Cash Flows for the Three Months ended
March 31, 1997 and March 31, 1996. . . . . . . 3
Notes to Condensed Consolidated Financial
Statements as of March 31, 1997. . . . . . . . 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . 6
PART II. OTHER INFORMATION
Item 5. Other Information. . . . . . . . . . . . . . . . 8
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 8
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 9
PART I. FINANCIAL INFORMATION
UNIMAR COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Thousands of dollars)
(Unaudited)
Three Months Ended
March 31,
1997 1996
Oil and gas production revenues $ 66,283 $ 68,596
Production costs 5,876 5,873
Depletion, depreciation and amortization 11,620 12,848
Exploration costs including dry holes 248 358
Operating profit 48,539 49,517
General and administrative expenses 239 237
Other income (45) (89)
Earnings before income taxes 48,345 49,369
Income tax expense (benefit)
Current 32,850 33,784
Deferred (1,931) (1,876)
30,919 31,908
Net earnings $ 17,426 $ 17,461
See accompanying Notes to Condensed Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Thousands of dollars)
March 31, December 31,
1997 1996
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 4,230 $ 3,274
Accounts receivable 12,947 13,943
Inventories 7,656 8,177
Other current assets 1,933 2,951
Total current assets 26,766 28,345
Property, plant and equipment, at cost:
Oil and gas properties
(successful efforts method) 1,077,938 1,070,819
Other 2,302 2,287
1,080,240 1,073,106
Less: accumulated depreciation and
depletion 732,660 720,976
Net property, plant and equipment 347,580 352,130
Other assets 2,651 3,002
$ 376,997 $ 383,477
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $ 203 $ 1,043
Advances from joint venture partners 1,132 1,234
Accrued liabilities 17,651 17,892
Income and other taxes 16,448 19,924
Total current liabilities 35,434 40,093
Deferred income taxes 152,156 154,087
Other liabilities 14,634 14,859
Partners' capital 254,773 254,438
Less: demand notes receivable 80,000 80,000
174,773 174,438
$ 376,997 $ 383,477
See accompanying Notes to Condensed Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Thousands of dollars)
(Unaudited)
Three Months Ended
March 31,
1997 1996
Net earnings $ 17,426 $ 17,461
Adjustments to reconcile to net cash
provided by operating activities:
Depletion, depreciation and amortization 11,684 12,923
Deferred income taxes (1,931) (1,876)
Exploratory dry hole costs 18 -
Changes in working capital and other (1,787) 3,229
Net cash provided by operating activities 25,410 31,737
Investment activities:
Capital expenditures (7,152) (5,773)
Net cash used in investing activities (7,152) (5,773)
Financing activities:
Capital contributions 22,200 7,800
Capital distributions (39,400) (31,900)
Net cash used in financing activities (17,200) (24,100)
(Decrease) in advances from joint
venture partners (102) (302)
Net increase in cash and cash equivalents 956 1,562
Cash and cash equivalents at beginning
of period 3,274 4,882
Cash and cash equivalents at end of period $ 4,230 $ 6,444
IPU distributions paid $ 6,898 $ 4,635
Income taxes paid $ 36,326 $ 30,184
See accompanying Notes to Condensed Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 1997
(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 1996 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 make estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent 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
estimates.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
March 31, 1997
(Unaudited)
(3) The table below outlines the calculation of the Indonesian
Participating Unit (IPU) participation payment for the first
quarter of 1997.
1997
First Quarter
(Thousands of dollars)
Positive cash flow:
Gas receipts $ 65,092
Oil and condensate receipts 10,776
Other non-revenue cash receipts
from Joint Venture 1,288
Total positive cash flow 77,156
Less negative cash flow:
Expenditures to Joint Venture 13,379
Indonesian income taxes 33,103
Total negative cash flow 46,482
Net positive cash flow from
23.125% interest in Joint Venture $ 30,674
Net cash flow for benefit of
IPU holders* $ 7,437
Participation Payment per IPU* $ .69
* 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 March 31, 1997,
there were 10,778,590 IPUs issued and outstanding.
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 1996
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 three months ended March 31,
1997 amounted to $25 million as compared to $32 million for the
comparative quarter in 1996. Despite the fact that net earnings
were similar between the quarters, cash flow from operations
decreased by $7 million. This decrease was mainly due to the
timing of Indonesian tax payments and the fourth quarter 1996 IPU
distribution. Capital expenditures and net distributions to the
partners for the first three months of 1997 were $7 million and
$17 million, respectively. For the three months ended March 31,
1996, capital expenditures and net distributions to the partners
were $6 million and $24 million, respectively.
The Company's share of 1997 Indonesian Joint Venture (IJV)
expenditures is expected to be approximately $52 million of which
$32 million is anticipated for exploration and development
activities. During the first three months of 1997, $13 million
was called by the IJV as compared to $14 million for the three
months ended March 31, 1996.
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. 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, LNG and LPG. 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 March 31, 1997
Compared to Quarter Ended March 31, 1996
Net earnings for the first quarter of 1997 were $17 million,
which is level with the first quarter of 1996. Lower revenues were
offset by lower depletion and income taxes as discussed below.
First quarter 1997 revenues were $66 million, a decrease of $3
million as compared to the corresponding 1996 quarter. While LNG
and crude oil sales prices increased 21 percent and 17 percent,
respectively, LNG and crude oil sales volumes decreased 19 percent
and 25 percent, respectively.
The average price received for LNG during the first quarter of
1997 was $3.58 per million BTUs as compared to $2.96 for the same
period in 1996. The average crude oil price in the first quarter
of 1997 increased by $3.20 per barrel over the corresponding 1996
quarter, to $22.00 per barrel.
The IJV's share of LNG sold during the first quarter of 1997 was
91 trillion BTUs (31.0 net equivalent cargoes) as compared to 113
trillion BTUs (38.6 net equivalent cargoes) in the first quarter of
1996. The IJV's share of LNG shipments for 1997 is expected to
decline by approximately 15 percent as compared to 1996, due
primarily to the reduction in deliveries under the IJV's first
contract in which the IJV has a higher participation interest. A
further decline in LNG shipments is expected in 1998.
Crude oil volumes net to the Company decreased by 136 thousand
barrels to 410 thousand barrels, mainly due to the timing of crude
oil liftings.
Depletion, depreciation and amortization charges decreased $1
million to $12 million, due to the lower level of production in the
first quarter of 1997 as compared to the first quarter of 1996.
Indonesian income tax expense in the first quarter of 1997
decreased $1 million to $33 million, due primarily to lower first
quarter revenues and an increase in cost recoverable expenditures.
The effective tax rates for the 1997 and 1996 first quarters were
64 percent and 65 percent, respectively. These rates are the
aggregate of Indonesian source income taxed at a 56 percent rate,
and certain expenses attributable to the Company which are not
deductible in the partnership.
PART II. OTHER INFORMATION
Item 5. Other Information
The Company's Indonesian activities consist primarily of
its 23.125% working interest in an East Kalimantan joint
venture that supplies natural gas to a liquefied natural
gas ("LNG") plant at Bontang Bay owned by Pertamina, the
Indonesian national oil company. In March 1997, a $1,127
million financing was signed for the eighth train (Train
H), an additional LNG storage tank, an additional natural
gas pipeline from the Badak field to the LNG plant, and a
debottlenecking project for Trains A through F. The
financing was provided by a combination of Taiwanese and
Japanese sources and a group of international banks
through arrangements similar to those used to finance the
seventh train (Train G). The financing provides for
initial advances of up to $150 million, with further
advances being conditioned upon the execution and delivery
of the marine transportation agreement associated with the
Badak VI Sales Contract. Construction is expected to begin
in 1997. Revenues from the Badak V Sales Contract with
Korea Gas Corporation and the Badak VI Sales Contract with
Chinese Petroleum Corporation will be the primary sources
of repayment for this financing. Financing for the eighth
train is nonrecourse to both Pertamina and the joint
venture.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10)-1- $1,127,000,000 Bontang VI Loan Agreement, dated
as of March 4, 1997, among Bank of America
National Trust and Savings Association, as
Trustee under the Bontang VI Trustee and Paying
Agent Agreement, as Borrower, Bank of Taiwan New
York Agency as Lead Arrenger, Bontang LNG Train-H
Investment Co., Ltd. as Co-Lead Arranger, The
Chase Manhattan Bank as Agent, Co-Agent and Co-Arranger,
and the Co-Agents, Co-Arrangers and
Lenders named therein (filed as Exhibit 10.3 to the Union
Texas Petroleum Holdings, Inc. Form 10-Q for the quarter
ended March 31, 1997
(Commission File No. 1-9019) and incorporated
herein by reference).
(10)-2- Bontang VI Producers Agreement, dated as of March
4, 1997, by Perusahaan Pertambangan Minyak Dan
Gas Bumi Negara ("Pertamina"), Total Indonesie,
Virginia Indonesia Company, Union Texas Esat
Kalimantan Limited, Lasmo Sanga Sanga Limited,
Virginia International Company, Opicoil Houston,
Inc., Universe Gas & Oil Company, Inc., Indonesia
Petroleum, Ltd., Unocal Indonesia Company
(collectively, the "Producers"), in favor of Bank
of Taiwan New York Agency, as Lead Arranger,
Bontang LNG Train-H Investment Co., Ltd. as Co-Lead
Arranger, The Chase Manhattan Bank as Agent,
Co-Agent and Co-Arranger, and the Co-Agents,
Co-Arrangers and Lenders named therein (filed as
Exhibit 10.4 to the Union Texas Petroleum
Holdings, Inc. Form 10-Q for the quarter ended
March 31, 1997 (Commission File No. 1-9019) and
incorported herein by reference).
(10)-3- Bontang VI Trustee and Paying Agent Agreement,
dated as of March 4, 1997, among the Producers
and Bank of America National Trust and Savings
Association, as Trustee and Paying Agent (filed
as Exhibit 10.5 to the Union Texas Petroleum
Holdings, Inc. Form 10-Q for the quarter ended
March 31, 1997 (Commission File No. 1-9019) and
incorporated herein by reference).
(10)-4- Amendment No. 2 to Bontang III Loan Agreement,
dated as of March 4, 1997 among BankAmerica
International, as Trustee under the Bontang III
Trustee and Paying Agent Agreement, Train-E
Finance Co., Ltd., as Tranche A Lender, and The
Industrial Bank of Japan Trust Company, as agent
on behalf of the Majority Tranche B Lenders
(filed as Exhibit 10.7 to the Union Texas
Petroleum Holdings, Inc. Form 10-Q for the
quarter ended March 31, 1997 (Commission File No.
1-9019) and incorporated herein by reference).
(27)-1- Financial Data Schedule for the three months
ended March 31, 1997.
(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:
George W. Berko
Member of the Management
Board
(principal financial officer
and the officer duly
authorized to sign on behalf
of the registrant.)
DATE: May 7, 1997