PART I
Item 1. Business
General
Unimar Company (the Company) was organized as a general
partnership in 1984 under the Texas Uniform Partnership Act. The
partners are LASMO (Ustar), Inc. (Ustar), a Delaware corporation
and an indirect, wholly owned subsidiary of LASMO plc (LASMO), a
public limited company organized under the laws of England, and
Unistar, Inc. (Unistar), a Delaware corporation and a direct
subsidiary of Union Texas Petroleum Holdings, Inc. (UTPH), a
publicly-traded Delaware corporation.
The Company's sole business is its ownership of ENSTAR
Corporation (ENSTAR) which, through its wholly-owned subsidiaries,
Virginia International Company (INTERNATIONAL) and Virginia
Indonesia Company (VICO), has a 23.125 percent working interest in,
and is the operator of, a joint venture (the Joint Venture) for the
exploration, development and production of oil and natural gas
(gas) in East Kalimantan, Indonesia, under a production sharing
contract (Production Sharing Contract or PSC) with Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina), the state
petroleum enterprise of the Republic of Indonesia. The majority of
the revenue derived from the Joint Venture results from the sale of
liquefied natural gas (LNG). Currently, the LNG is sold to utility
and industrial companies in Japan, Taiwan and South Korea. See
"The Joint Venture" below.
Effective April 1, 1996, the principal executive offices of
the Company will move to 1221 McKinney, Suite 700, Houston, Texas
77010-2015 and its telephone number will be (713) 754-6650. A
Management Board consisting of six members, three appointed by each
partner, exercises management, budgeting and financial control of
the Company. As of December 31, 1995, VICO, in its capacity as the
Joint Venture operator, had approximately 2,000 employees in the
United States and Indonesia. The Company presently does not have
any other employees. All aspects of the Company's business that
are not associated with the management of the Joint Venture, such
as operations, legal, accounting, tax and other management
functions, are supplied either by VICO or employees of the partners
in accordance with management agreements.
The Company can give no assurance as to the future trend of
its business and earnings, or as to future events and developments
that could affect the Company in particular or the oil industry in
general. These include such matters as environmental quality
control standards, new discoveries of hydrocarbons, and the demand
for petroleum products. Furthermore, the Company's business could
be materially affected by future events including price changes or
controls, payment delays, increased expenditures, legislation and
regulations affecting the Company's business, expropriation of
assets, renegotiation of contracts with foreign governments,
political instability, currency exchange and repatriation losses,
taxes, litigation, the competitive environment, and international
economic and political developments including actions of members of
the Organization of Petroleum Exporting Countries (OPEC). See Item
7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Description of the Company's Indonesian Participating Units
(a) Market information. The Company's Indonesian
Participating Units (IPUs) are listed for trading on the American
Stock Exchange under the symbol "UMR." The following table shows
the reported high and low sales prices of the IPUs on a quarterly
basis:
INDONESIAN PARTICIPATING UNITS' PRICE RANGE
First Qtr. Second Qtr. Third Qtr. Fourth Qtr.
1995
High 9-5/8 10 9-5/8 5-1/4
Low 9 9-1/16 4-7/8 3-5/8
1994
High 9-1/2 10 10 10
Low 8-3/8 8-1/2 9-1/8 9
Source of prices: American Stock Exchange
(b) Holders. As of February 14, 1996, 10,778,590 IPUs were
outstanding and held by approximately 3,650 holders of record.
(c) Payments per Indonesian Participating Unit.
Period Payment Date Payment
First Quarter - 1994 May 31, 1994 0.60
Second Quarter - 1994 August 29, 1994 0.29
Third Quarter - 1994 November 29, 1994 0.45
Fourth Quarter - 1994 March 1, 1995 0.49
First Quarter - 1995 May 30, 1995 0.48
Second Quarter - 1995 August 29, 1995 0.45
Third Quarter - 1995 November 29, 1995 0.40
Fourth Quarter - 1995 February 29, 1996 0.43
Each IPU entitles the holder thereof to receive a payment
(Participation Payment) until September 25, 1999, at which time the
IPUs will expire with no residual value. The Participation Payment
for any quarterly period is equal to the product of (i) a fraction,
the numerator of which is 1 and the denominator of which is equal
to the number of IPUs outstanding on the last business day of such
quarterly period, multiplied by (ii) the amount by which cumulative
Net Cash Flow (as defined below) through the end of such quarterly
period exceeds the aggregate amount of all preceding Participation
Payments in respect of all IPUs. If Net Cash Flow is zero or
negative for any quarterly period, no Participation Payment for
that quarter will be made.
The amount of Net Cash Flow for any quarterly period is equal
to the product of:
(i) a fraction, the numerator of which is equal to the
number of IPUs outstanding on the last business day of
such quarterly period, and the denominator of which is
14,077,747, multiplied by
(ii) 32 percent of
(a) all cash actually received in the United States by
INTERNATIONAL and VICO (for purposes hereof, the
Special Subsidiaries) during such quarterly period
from their aggregate 23.125 percent interest in the
Joint Venture (or actually received by them outside
the United States if they voluntarily elect not to
repatriate such cash) minus
(b) an amount equal to the sum of the aggregate amount
of all accruals or expenditures made by the Special
Subsidiaries during such quarterly period as a
result of their interest in the Joint Venture,
foreign or domestic taxes paid by the Special
Subsidiaries, any award, judgment or settlement and
related legal fees incurred by the Special
Subsidiaries, certain operating expenses incurred
by the Special Subsidiaries, and the amortization
of capitalized advances made by the Special
Subsidiaries for certain major capital
expenditures, together with interest thereon.
Participation Payments for any quarterly period will be paid
60 days in arrears to holders of record on the date 45 days after
the last day of the period. Participation Payments of less than
$0.01 per IPU for any quarterly period will be accumulated and paid
when Participation Payments in any succeeding quarter, together
with previously unpaid amounts, exceed $0.01 per IPU.
<PAGE>
BUSINESS
The Joint Venture
The Joint Venture participants are INTERNATIONAL (15.625%),
VICO (7.5%), LASMO Sanga Sanga Limited (an indirect subsidiary of
LASMO) (26.25%), Union Texas East Kalimantan Limited (an indirect
subsidiary of UTPH) (26.25%), and Universe Gas & Oil Company, Inc.
(a subsidiary of a consortium led by Japan Petroleum Exploration
Co., Ltd.) (4.375%). In addition, Opicoil Houston, Inc. (an
affiliate of the Chinese Petroleum Corporation) holds a 16.67
percent equity interest and a 20 percent voting interest, with the
remaining 3.33 percent non-voting equity interest held by assignees
of Opicoil Houston, Inc. VICO in its capacity as the Joint Venture
operator conducts exploration and development activities within the
PSC area. The cost of such activities is funded by the Joint
Venture participants. The vote of participants holding 66-2/3
percent of the total ownership is generally required for approval
of significant matters pertaining to the Joint Venture.
Terms of Production Sharing Contract
Under a PSC with Pertamina that was amended and extended in
1990 until August 7, 2018, the Joint Venture is authorized to
explore for, develop, and produce petroleum reserves in an
approximate 1.1 million acre area in East Kalimantan (East
Kalimantan Contract Area). In accordance with the requirements of
the PSC, during both 1991 and 1994, the Joint Venture selectively
relinquished approximately 10 percent of the PSC area. The Joint
Venture must relinquish a further 10 percent of the PSC area by
August 7, 1998; 10 percent by December 31, 2000; 15 percent by
December 31, 2002 and 15 percent by December 31, 2004. However,
the Joint Venture is not required to relinquish any of the PSC area
in which oil or gas is held for production. Additionally, pursuant
to the terms of the PSC, the Joint Venture, having produced 185
million barrels of oil, paid Pertamina a $5 million non-cost
recoverable bonus in March 1993.
Under the PSC, the Joint Venture participants are entitled to
recover cumulative operating and certain capital costs out of the
crude oil, condensate and gas produced each year, and to receive a
share of the remaining crude oil and condensate production and a
share of the remaining revenues from the sale of gas on an after-
Indonesian tax basis. The method of recovery of capital costs is
a system of depreciation and amortization that is similar to U.S.
tax accounting methods.
The share of revenues from the sale of gas after cost recovery
through August 7, 1998 will remain at 35 percent to the Joint
Venture after Indonesian income taxes and 65 percent to Pertamina.
The split after August 7, 1998 will be 25 percent to the Joint
Venture after Indonesian income taxes and 75 percent to Pertamina
for gas sales under the 1973 LNG Sales Contract, the 1981 LNG Sales
Contract and extension, Korean carryover quantities and the seven
1986 liquefied petroleum gas (LPG) Sales Contracts to the extent
that the gas to fulfill these contracts is supplied from the Badak
or Nilam fields. For the gas used to fulfill the eleven-year
extension (2000 - 2010) to the 1973 LNG Sales Contract that is
supplied from the Badak or Nilam fields, 41.655 percent of such gas
shall be split 25 percent to the Joint Venture after Indonesian
income taxes and 75 percent to Pertamina with the remaining gas
supplying this extension to be split 30 percent to the Joint
Venture after Indonesian income taxes and 70 percent to Pertamina.
All other LNG sales contract revenues after August 7, 1998 will be
split 30 percent after Indonesian income taxes to the Joint Venture
and 70 percent to Pertamina.
Based on current and projected oil production, the revenue
split from oil sales after cost recovery through August 7, 2018
will remain at 15 percent to the Joint Venture after Indonesian
income taxes and 85 percent to Pertamina. These revenue splits are
based on Indonesian income tax rates of 56 percent through August
7, 1998 and 48 percent thereafter.
In addition, the Joint Venture is required to sell 8.5 percent
(7.2 percent after August 7, 1998) of the total oil and condensate
production from the contract area for Indonesian domestic
consumption. The sales price for the domestic market consumption
is $0.20 per barrel with respect to fields commencing production
prior to February 23, 1989. For fields commencing production after
that date, domestic market consumption is priced at 10 percent of
the weighted average price of crude oil sold from such fields.
However, for the first sixty consecutive months of production from
new fields, domestic market consumption is priced at the official
Indonesian Crude Price (ICP). The participants' remaining oil and
condensate production is generally sold in world markets.
The Joint Venture has no ownership interest in the oil and gas
reserves. The Joint Venture has long-term supply agreements with
Pertamina for the supply of gas and petroleum gas to be liquefied
at a liquefaction plant owned by Pertamina at Bontang Bay (the LNG
Plant) and sold to certain buyers pursuant to sales contracts. The
Joint Venture, other participating production sharing contractors
and Pertamina together market the LNG and the LPG produced at the
LNG Plant and LPG facilities and, as to the amounts allocable to
the PSC, the Joint Venture and Pertamina divide the net proceeds in
accordance with the percentages set out above.
Payment for LNG and LPG is made in U. S. dollars to a U. S.
bank as trustee for Pertamina, the Joint Venture, other
participating production sharing contractors and lenders that have
provided funds to build the LNG Plant and the LPG facilities. The
LNG Plant's processing costs, principal and interest payable on
borrowings from such lenders, transportation costs, and certain
other miscellaneous costs are deducted from the gross LNG and LPG
sales proceeds. The remaining amount represents the net proceeds
for gas delivered to the LNG Plant and is divided among Pertamina,
the Joint Venture, and the other production sharing contractors in
accordance with the terms of their respective agreements.
Exploration and Development
From inception in 1972 up to and including December 31, 1995,
the following wells were drilled in the East Kalimantan Contract
Area:
Total Completed
Field Wells Productive Dry Suspended
Location Drilled Wells Holes Wells
Badak 188 178 7 3
Nilam 167 167 - -
Semberah 59 53 4 2
Mutiara 59 51 7 1
Pamaguan 32 26 6 -
Wailawi 6 6 - -
Other 46 6 31 9
Totals 557 487 55 15
There are four significant fields in the East Kalimantan
Contract Area, namely, Badak, Nilam, Semberah, and Mutiara. The
Badak field is in the northeast portion of the East Kalimantan
Contract Area, and the Nilam field is located immediately south of
the Badak field. Total Indonesie and Indonesia Petroleum, Ltd.
(the Total Group), who are not parties to the Joint Venture but
have interests in the Nilam and Badak fields, are parties to
unitization agreements with the Joint Venture in both fields. All
gas and condensate from the Badak and Nilam fields and all oil from
the Nilam field, as well as all allowable costs incurred in
connection therewith, are deemed attributable to the Joint Venture
and the Total Group in the ratio of their respective participating
interests under the Badak and Nilam unitization agreements. VICO
acts as operator for the Joint Venture and the Total Group in both
fields. The Joint Venture has a full interest in the Semberah and
Mutiara fields, and VICO acts as operator for these fields as well.
See "Business - The Joint Venture." The Joint Venture is also
producing from other fields in the East Kalimantan Contract Area
including Pamaguan, and Wailawi.
The tables below summarize completed exploratory and
development drilling from 1993 through 1995 for the East Kalimantan
Contract Area.
EXPLORATORY DRILLING
Wells Dry
Year Drilled Discoveries Holes
1993 3 - 3
1994 2 1 1
1995 - - -
Totals 5 1 4
DEVELOPMENT OR FIELD EXTENSION DRILLING
Completed
Wells For For For Dual Dry
Year Drilled Gas Oil Oil & Gas Holes
1993 31 25 1 3 2
1994 20 10 1 8 1
1995 16 7 2 7 -
Totals 67 42 4 18 3
Of 487 completed productive wells in the East Kalimantan
Contract Area, approximately 282 contain more than one completion
in the same bore hole.
Two wells were in progress as of December 31, 1995. These
include wells that were drilled but not completed at the end of
1995. None of the suspended or "in-progress" wells are included in
the tables above.
The Company's share of the costs of the above wells ranged
from 18.53 percent to 23.125 percent.
LNG Sales
The following table sets forth total gas liquefied and sold as
LNG, the Company's net share of such production (calculated on a
million cubic feet equivalency basis as described in Note (a)
below), average sales prices (excluding transportation costs) and
production (lifting) costs of such production for the years 1993
through 1995.
Years ended December 31,
1995 1994 1993
Gross LNG Sales(MMCF) (a) 636,339 646,902 561,305
Company's Share of LNG
Sales (MMCF) 80,734 84,497 77,057
Average Sales Price
per MCF (b) $2.96 $2.79 $3.12
Average Production (Lifting)
Cost per MCF $0.20 $0.18 $0.18
(a) Represents the volumes of LNG delivered and sold to purchasers
which is measured by its British Thermal Unit (BTU) content
and, for purposes of this table, has been converted to MMCF
equivalents based on a ratio of approximately 1.107 billion
BTUs per MMCF of gas. The Gas Production for LNG includes
production attributable to UNOCAL Indonesia Company, the Total
Group and Pertamina. The term "MMCF" refers to 1,000,000 cubic
feet of gas measured at 60 degrees Fahrenheit and 14.7 pounds
per square inch of pressure.
(b) The sales price is based on the average sales price (excluding
transportation) per MMBTU of LNG received by Pertamina. The
term "MMBTU" refers to 1,000,000 British Thermal Units. The
sales price per MMBTU has been converted to a price per MCF
based on the conversion ratio referred to in note (a) above.
The term "MCF" refers to 1,000 cubic feet of gas measured at
60 degrees Fahrenheit and 14.7 pounds per square inch of
pressure.
The Company's production costs are small in relation to its
revenues because the Joint Venture's revenues under the LNG
contracts are net of costs associated with transporting and
converting the gas to LNG and shipping the LNG to the purchasers.
Costs incurred to operate and maintain wells and related equipment
and field facilities are considered to be production costs.
During 1995, the Company's share of the Joint Venture's
expenditures was approximately $48 million, including $26 million
of development expenditures. In 1996, the Company's share of the
Joint Venture's expenditures is expected to total $46 million,
including $3 million of exploration expenditures and $23 million of
development expenditures. The 1996 budgeted expenditures primarily
reflect continued development drilling required to maintain
adequate gas deliverability and to maximize cash flow.
Reserves
The Company files no reports which include estimates of oil or
gas reserves with any federal agency other than the Securities and
Exchange Commission.
The estimated proved reserves of gas and of oil and condensate
as of December 31, 1992, 1993, 1994 and 1995 attributable to the
Joint Venture's interest in the PSC in East Kalimantan were
prepared by petroleum engineers employed by LASMO, an affiliate of
Ustar. Gross proved field reserves are as follows:
Crude Oil and
Condensate Gas
Total Proved Reserves (000's barrels) (Dry MMCFs)
Dec. 31, 1992 146,055 7,436,171
Dec. 31, 1993 203,068 7,187,995
Dec. 31, 1994 224,995 7,149,560
Dec. 31, 1995 196,892 6,636,127*
* equivalent to approximately 6,465 trillion BTUs.
The Joint Venture, and thus the Company, has no ownership
interest in oil and gas reserves but rather has the right to
receive production and revenues from the sale of oil, condensate,
gas, LNG and LPG in accordance with the PSC and other agreements.
LNG Plant
Gas produced from the Joint Venture's interest in the PSC
reserves is liquefied at the LNG Plant, which is owned by Pertamina
and operated on a cost-reimbursement basis by a corporation in
which the Joint Venture owns a 20 percent interest. The LNG Plant
currently consists of six processing units (trains) having a
combined input capacity of approximately 2.5 billion cubic feet of
gas per operating day and a peak production capacity of
approximately 639,000 barrels or 101,500 cubic meters of LNG and
28,000 barrels of condensate per day. The five storage tanks at
the LNG Plant have a total capacity of 3.2 million barrels of LNG.
Gas is supplied to the plant through three pipelines (two 36 inch
and one 42 inch) which are connected to the central gas facilities
at the Badak field, 35 miles south of the LNG Plant. The six train
plant is one of the largest LNG processing facilities in the world
and has the capacity to deliver 275 cargoes per year. Since the
first shipment in 1977, the LNG Plant has delivered 2,506 cargoes.
The LNG Plant has been developed in four phases. The original
facility, which consisted of two trains (Trains A and B) and a
dock, was constructed with financing arranged by Pertamina with the
Central Bank of the Republic of Indonesia, a consortium of Japanese
banks and a corporation owned substantially by the Japanese LNG
purchasers, and became fully operational in August 1977. Final
payment on the loans was made in the first quarter of 1990.
Expansion of the LNG Plant from two to four trains (Trains C
and D) was completed in 1983. Funding was arranged by Pertamina
with Japan Indonesia LNG Co., Ltd. (JILCO). Final payment on this
financing arrangement was made in the third quarter of 1993.
A fifth processing train (Train E) was completed in 1989 and
supplies LNG required for the Taiwan LNG Sales Contract with the
Chinese Petroleum Corporation (CPC), the state petroleum enterprise
of the Republic of China (Taiwan). Project financing was arranged
through a trustee borrowing with a consortium of Japanese banks and
is supported by revenues from such sales contract, as well as in
certain limited circumstances by portions of other revenue streams.
The financing contains two tranches, with tranche A totalling
$176.4 million at a fixed interest rate of 11.5 percent, and
tranche B totalling $117.6 million at a floating interest rate
initially of LIBOR plus 1 percent; at December 31, 1995 the
floating interest rate was 7.0625 percent. The financing is
repayable in graduated quarterly payments over ten years that began
in the fourth quarter of 1990.
The sixth processing train (Train F) was completed in November
1993 and supplies the LNG required for the LNG sales contract with
Osaka Gas, Tokyo Gas and Toho Gas for the sale of 2,020 trillion
BTUs over a twenty-year period which commenced in 1994. In August
1991, Pertamina and an international consortium of commercial banks
completed project financing of $750 million of which $699 million
was required to fund the construction of Train F and related
support facilities at an interest rate of LIBOR plus 1.25 percent;
at December 31, 1995 the floating interest rate was 7.1875 percent.
Financial support for the financing is limited to revenues from
such sales contract. The financing is repayable over ten years in
graduated quarterly payments which commenced in December 1994.
As a result of the production performance of Train E,
Pertamina made modifications to Trains A through D known as
"debottlenecking." Trains C and D were modified in 1992 during
regularly scheduled maintenance shutdowns. Likewise, Trains A and
B were modified in 1993 during regularly scheduled maintenance
shutdowns. Capacity tests on all four trains exceeded design rates
such that Trains A through D are each now capable of LNG production
rates comparable to Train F, an increase of 14 percent, or 22
cargoes per year in total. The total cost of the Trains A through
D debottlenecking project amounted to $79 million. These costs
were funded through Package IV revenues. (See description of
Package IV beginning on page 13).
A seventh processing train (Train G) is being constructed at
the LNG plant to produce the LNG required for Package V LNG sales
contracts such as the 1973 Sales Contract Extension, the Korean
Medium Term Sales Contract and the Taiwan Medium Term Sales
Contract. Completion of Train G is expected in late 1997. In July
of 1995, Pertamina completed project financing through Japanese
sources for Train G, a third LNG/LPG dock, an additional LPG
storage tank and other support facilities at the LNG Plant at a
floating interest rate based on LIBOR. Project financing of up to
$969.5 million has been arranged, of which $125.0 million was drawn
down as at December 31, 1995. The financing is repayable over ten
years in graduated quarterly payments commencing in the fourth
quarter of 1998. At December 31, 1995, the overall progress of the
Train G project engineering, procurement and construction was 26.8
percent.
Pertamina, the Joint Venture and other production sharing
contractors are awaiting Indonesian government approval for the
financing and construction of an eighth train (Train H), which
could come on stream early in 2000, to primarily support the
quantities of LNG required by the new Badak V Sales Contract and
Badak VI Sales Contract.
LPG and Marine Facilities
The LPG processing facilities at the LNG Plant were
constructed concurrently with the fifth processing train. The LPG
facilities were completed in 1988, at a cost of approximately $158
million. Financing was made available to Pertamina through a
consortium of Japanese banks. A significant portion of the LPG
sales proceeds is dedicated to the financing, which is repayable
through 1999.
A second dock facility at the LNG Plant is used for both LNG
and LPG deliveries. The portion of the second dock costs
attributable to the LPG trade was financed through the same
consortium of Japanese banks that financed the LPG processing
facilities at the LNG Plant. Financing for the LNG portion of the
second dock was provided by a trustee borrowing from Japanese
banks. Final payment on this financing arrangement was made in the
second quarter of 1995.
Included in the scope of the Train G project is a third dock
to be used for both LNG and LPG deliveries, as well as an
additional LPG storage tank.
The table below sets forth information regarding the status of
the major project financings incurred or arranged by Pertamina to
construct the LNG Plant:
Original
Principal/ Balance at Final Primary
Payment December 31, Payment Source of
Financing Amount 1995 Date Repayment
(000's) (000's)
Trains A & B
and 1st
Loading Dock $771,500 $ - - 1973 LNG Sales
Contract
Trains C & D 995,800 - - 1981 LNG Sales
Contract
Train E 294,000 160,230 2000 Taiwan LNG Sales
Contract
Train F and
Support
Facilities 699,000 635,877 2004 Train F LNG
Sales Contract
Train G and
Support
Facilities 969,500 125,000 (a) 2008 Package V Sales
Contracts (b)
2nd Loading Dock
& Train E
Support
Facilities 135,000 - - 1973 LNG Sales
Contract
LPG Facilities 157,700 56,693 1999 LPG Sales
Contract
(a) Amount borrowed as of December 31, 1995.
(b) Repayment is scheduled to begin in 1998 principally from the
proceeds of the Korea and Taiwan Medium Term Sales Contracts
and, starting in 2000, from the proceeds of the 1973 Sales
Contract Extension.
Marketing and Distribution of LNG
Certain information regarding deliveries of LNG from the LNG
Plant is set forth below:
BTUs Average
Number of LNG in Trillions Price Per
Tanker Liftings (Approximate) MMBTU
1993 216 621 $2.82
1994 247 716 $2.52
1995 240 704 $2.67
As a result of variations in LNG tanker capacity among the
various sales contracts, the measure of a net equivalent cargo has
been established. One net equivalent cargo equates to the quantity
of LNG delivered for the Joint Venture's interest in a 1973 Sales
Contract shipment, or approximately 2,942 BBTUs.
The Joint Venture and other gas producers in Indonesia have
the opportunity to participate in each sales package. The Joint
Venture's equity interest in a sales package is based on its share
of gas reserves available for commitment to the package.
The Joint Venture's allocation in the LNG sales contracts has
declined over time since the initial 1973 Sales Contract, when the
Joint Venture was virtually the only supplier to the LNG Plant, to
the present when there are two other major production sharing
contractors supplying gas to the LNG Plant and sharing in the
allocation of volumes. Absent the discovery of significant
additional gas reserves in the Joint Venture's PSC, the Joint
Venture's participation in future sales packages will continue to
decline.
The following table sets forth information regarding the LNG
Plant share of the LNG Sales Contracts grouped together by the
Joint Venture's participating percentages in the sales contracts
(each such group being referred to as a "package"):<PAGE>
<TABLE>
<CAPTION>
LNG Sales 1995 Remaining Base LNG Price
Volumes Cargoes Cargoes Per MMBTU (a)
Package and Equity TBTUs Gross/Net Gross/Net 12/31/95 2/12/95
Interest (b) (b)
<S> <C> <C> <C> <C> <C>
Package I - 97.9%
1973 Sales Contract
Term: 1977 - 1999 267 61/59 93/89 $2.88 $3.03
Package II - 66.4%
1981 Sales Contract
Term: 1983 -2003 1,238 58/38 425/279 $2.87 $3.02
Package IIIA - 50.0%
Korean Carryover Sales
Contract
Term: 1986 - 2006 158 5/2 55/27 $2.88 $3.03
Package IIIB - 29.6%
Taiwan Sales Contract
Term: 1990 - 2009 1,246 31/10 399/126 $2.83 $2.98
Toho Sales Contract
Term: 1988 - 1997 12 2/- 4/1 $2.88 $3.03
Additional 1981 Sales
Contract cargoes
Term: 1990 - 2003 131 6/2 45/13 $2.87 $3.02
Package IV - 27.2%
Train F Sales Contract
Term: 1994 - 2013 2,151 38/10 731/199 $2.71 $2.85
Korea II Sales Contract
Term: 1994 - 2014 980 13/4 333/91 $2.73 $2.88
1973 Sales Contract Ext.
Term: 1997 - 1999 447 - 156/41 - -
Medium City Gas Company
Sales Contract
Term: 1996 - 2015 179 - 454/17 - -
Other Sales Contracts
Terms: 1990 - 1999 28 13/3 12/3 $2.73 $2.88
Package V - 21.6% (c)
1973 Sales Contract Ext.
Term: 2000 - 2009 4,368 - 1,522/320 - -
Korea Medium Term Sales
Contract
Term: 1995 - 1999 277 13/3 95/20 $2.87 $3.02
Taiwan Medium Term Sales
Contract
Term: 1998 - 1999 46 - 16/4 - -
Package VI (d)
1981 Sales Contract Ext.
Term: 2003 - 2008 942 - 325/(d) - -
Badak V Sales Contract
Term: 1998 - 2017 1,062 - 360/(d) - -
Badak VI Sales Contract
Term: 1998 - 2017 1,756 - 572/(d) - -
Package VII (e)
1973 Sales Contract Ext.
Term: 2010 - 2010 436 - 152/(e) - -
1981 Sales Contract Ext.
Term: 2009 - 2011 565 - 195 (e) - -
/TABLE
<PAGE>
(a) Excludes transportation costs, where applicable.
(b) The gross cargoes represent the LNG Plant's deliveries; the
net equivalent cargoes represent the Joint Venture's equity
based on an average of 2,942 BBTUs per cargo.
(c) Pertamina and the East Kalimantan producers reached final
agreement on Package V revenue sharing percentages in June of
1995. The Joint Venture's interest is 21.6 percent.
(d) The Joint Venture's participation percentage in Package VI
sales, which will be based upon reserves certified as of April
1995, has not yet been determined and is expected in 1996.
The Joint Venture's percentage in Package VI sales is expected
to be less than the Package V percentage.
(e) The Package VII participation percentage for the Joint Venture
is not expected to be determined until 1999. Absent the
discovery of significant additional gas reserves, the Joint
Venture's percentage in Package VII sales is expected to be
less than the Package V rate.
LNG is primarily sold under five long-term sales contracts
between Pertamina and buyers in Japan, Taiwan and Korea. These
contracts are the 1973 Sales Contract, the 1981 Sales Contract, the
Taiwan Sales Contract, the Train F Sales Contract and the Korea II
Sales Contract. The gas processed by the LNG Plant is supplied
from the Joint Venture's contract area as well as other fields in
which the Joint Venture has no interest.
LNG sales contracts and amendments thereto are executed
between Pertamina and the buyers for the sale and delivery of a
fixed quantity of BTUs of LNG at a price that reflects an LNG
element derived from a basket of Indonesian crude oil prices that
is recalculated monthly. A transportation charge is added to the
LNG element under all contracts except for the 1981 Sales Contract
and Extension, the Train F Sales Contract, the Korea II Sales
Contract and the Badak V Sales Contract, where the buyers bear the
risk of loss and the transportation costs. In those instances
where the seller bears the risk of loss during shipment, the
cargoes are insured.
The LNG to be delivered under the sales contracts is supplied
from the LNG Plant and from a separate facility at Arun in Sumatra
(Arun Plant). The Joint Venture does not supply gas to the Arun
Plant or have any interest in revenues from the sale of its
product. The allocation of contract quantities between the LNG
Plant and the Arun Plant is determined by Pertamina. All
deliveries under the 1981 Sales Contract and Extension, the Taiwan
Sales Contract, the Train F Sales Contract, the 1973 Sales Contract
Extension, the Badak V Sales Contract and the Badak VI Sales
Contract are or will be exclusively supplied by the LNG Plant.
In January of 1995, deliveries began under the Korea Medium
Term Sales Contract with Korea Gas Corporation for the sale of 315
trillion BTUs (108 cargoes) over a five-year period ending in 1999.
The Joint Venture's participation percentage for this contract was
finalized at 21.6 percent in June of 1995 after agreement with
Pertamina and the East Kalimantan producers.
In August of 1995, Pertamina executed agreements to extend the
1973 and 1981 Sales Contracts. The 1973 Sales Contract Extension
involves the sale of 4,804 trillion BTUs (1,674 cargoes) over an
eleven-year period commencing January 1, 2000. The 1981 Sales
Contract Extension involves the sale of 1,507 trillion BTUs (520
cargoes) over an eight-year period commencing April 1, 2003. The
Joint Venture's participation percentage in deliveries for the
first ten years under the 1973 Sales Contract Extension was
finalized at 21.6 percent in June of 1995 after agreement with
Pertamina and the East Kalimantan producers; the eleventh year of
the 1973 Sales Contract Extension will be at a Package VII Joint
Venture participation percentage which has not yet been determined
but is expected to be less than the Package V rate. The Joint
Venture's participation percentage for the 1981 Sales Contract
Extension, which is comprised of five years under Package VI and
three years under Package VII, has not yet been determined;
however, it is anticipated that the Package VI and Package VII
percentages will be less than the Package V rate of 21.6 percent.
Also executed in August of 1995 was the Badak V Sales Contract
between Pertamina and Korea Gas Corporation for the sale of 1062
trillion BTUs (360 cargoes) over a twenty-year period commencing in
1998. The Joint Venture's participation percentage for the first
two years of the Badak V Sales Contract will be at the Package V
rate of 21.6 percent. The remaining years of this contract, from
2000 to 2017, will be at a Package VI participation percentage
which has not yet been determined but is expected to be less than
the Package V rate.
In October of 1995, Pertamina executed an agreement with
Chinese Petroleum Corporation, under the Badak VI Sales Contract,
for the sale of 1,756 trillion BTUs (572 cargoes) over a twenty-
year period commencing in 1998. The Joint Venture's participation
percentage for the first two years of the Badak VI Sales Contract
will be at the Package V rate of 21.6 percent. The remaining years
of this contract, from 2000 to 2017, will be at a Package VI
participation percentage which has not yet been established but is
expected to be less than the Package V rate.
The Badak V Sales Contract and the Badak VI Sales Contract,
both shown under Package VI, are contingent upon Pertamina
obtaining Indonesian government approval for the financing and
construction of an eighth train (Train H).
During the years ended 1995 and 1994, sales to Osaka Gas Co.,
Ltd., The Kansai Electric Power Co., Inc., and The Chubu Electric
Power Co., Inc. each individually accounted for more than 10
percent of the Company's total revenues.
Other Gas Sales - The Joint Venture is obligated until 2008 to
supply approximately 74 MMCF of gas per day to three local
fertilizer plants at a price of $1.00 per MMBTU subject to a
pipeline tariff. In addition, the Joint Venture is required to
supply approximately 5 MMCF per day of gas to the Balikpapan
refinery at a price of $1.49 per MMBTU. In 1994, Pertamina
executed a twenty-year contract, commencing in February of 1998,
for the sale of approximately 70 MMCF per day of gas to be supplied
by the Joint Venture to a local methanol plant at a price not less
than $1.25 per MMBTU for the first ten years.
Marketing and Distribution of LPG
Pertamina has individual contracts with seven Japanese utility
companies for the sale and delivery of LPG through the year 1998.
The LPG facility at the LNG Plant supplies approximately 800,000
metric tons per year under these contracts. In 1995, 17 cargoes,
totaling 720,000 metric tons of LPG were shipped from the LNG Plant
to Japan at an average invoice price of $194.22 per metric ton.
The Joint Venture was allocated a Package IIIB sharing percentage
for revenues from the first 350,000 metric tons sold, a Package IV
sharing percentage for revenues from the next 26,000 metric tons
sold, and a Package V sharing percentage for revenues from the
remaining 344,000 metric tons sold during 1995, after deducting
LPG-related operating costs and debt service.
Marketing of Oil and Condensate
Each party to the Joint Venture and Pertamina are entitled to
take their respective shares of oil and condensate in kind and to
market such shares separately. The Company, through affiliates of
Ustar and Unistar, markets its share of oil and condensate f.o.b.
Santan Terminal, in East Kalimantan, independently of Pertamina and
the other Joint Venture participants. The Santan Terminal
(operated by UNOCAL Indonesia Ltd.) is used for storing and loading
oil produced by the Joint Venture.
Prior to July 1, 1993, the price for export sales of crude and
condensate reflected world market conditions at the time of sale.
Since that date, the Company's share of the Joint Venture's oil and
condensate, except for that sold to Pertamina for Indonesian
domestic consumption, has been sold at the applicable ICP for the
grade of oil exported.
Effective August 1, 1994, the Company has marketed for export
two segregated streams of crude oil, Badak Crude and Bontang Mix.
In 1995, approximately 78% of the Company's export sales were
Bontang Mix, the balance of approximately 22% being Badak. These
crudes have individual ICPs. Since the inception of segregated
marketing in 1994, the ICPs have more closely mirrored world market
crude oil prices for each grade of crude oil sold.
The sales price for the domestic market consumption is $0.20
per barrel with respect to fields commencing production prior to
February 23, 1989. For fields commencing production after that
date, domestic market consumption is priced at 10 percent of the
weighted average price of crude oil sold from such fields.
However, for the first sixty consecutive months of production from
new fields, domestic market consumption is priced at ICP.
Substantially all of the oil and condensate currently being
produced by the Joint Venture from the PSC area is being produced
from the Badak, Nilam, Mutiara and Semberah fields. The Company's
average sales prices and production (lifting) costs for 1993
through 1995 are:
<PAGE>
Years ended December 31,
1995 1994 1993
Total Oil & Condensate
Sales (barrels) (a) 21,739,437 22,635,461 20,905,232
Company's Oil & Condensate
Sales (barrels) 1,710,547 1,778,966 1,806,181
Company's Average Sales
Price (per barrel) (b) $17.18 $16.46 $18.31
Average Production (Lifting)
Cost (per barrel) $1.21 $1.05 $1.11
(a) Includes production attributable to other contractors' share
of unitized operations in the Badak and Nilam fields. See
"Exploration and Development".
(b) Excludes domestic consumption sales. Also excluded are
marketing losses incurred on the sale of the Company's share
of oil for the first six months of 1993, which amounted to
$0.32 per barrel. Effective July 1, 1993, the Company is no
longer exposed to marketing fluctuations incurred on the sale
of its share of oil and condensate.
Competition and Risks
Indonesian oil competes in the world market with oil produced
from other nations. Indonesia is a member of OPEC, and any OPEC-
imposed restrictions on oil or LNG exports in which Indonesia
participates could have a material adverse effect on the Company.
In addition to the LNG being sold from the Arun Plant, LNG
plants in the Middle East, Australia, Malaysia, or elsewhere may
provide competition for sales of any additional Joint Venture LNG
to Japanese and other markets, beyond the amount under current
contracts.
The Joint Venture's activities in Indonesia are subject to
risks common to foreign operations in the oil and gas industry,
including political and economic uncertainties, the risks of
cancellation or unilateral modification of contract rights,
operating restrictions, currency repatriation restrictions,
expropriation, export restrictions, increased taxes and other risks
arising out of foreign governmental sovereignty over areas in which
the Joint Venture's operations are conducted. The Company's
foreign operations and investment may also be subject to the laws
and policies of the U. S. affecting foreign trade, investment and
taxation that could affect the conduct and profitability of those
operations.
All of the Company's oil and gas activities are subject to the
risks normally incident to exploration for and production of oil
and gas, including blowouts, cratering, spills and fires, each of
which could result in damage to life and property. Production from
the LNG Plant, which is the source of most of the Company's
revenues, is subject to the risks associated with maintaining and
operating a complex, technologically intensive processing plant,
including the risks of equipment failures, fire and explosion. To
the extent that the seller of the LNG produced by the LNG Plant
bears the risk of loss of cargoes, the seller is subject to the
usual risks of maritime transportation, including adverse incidents
arising from loading and unloading cargoes. In accordance with
customary industry practices, the Company carries insurance against
some, but not all, of these risks. Losses and liabilities arising
from such events would reduce revenues and increase costs of the
Company to the extent not covered by insurance.
Item 2. Properties
See Item 1. Business.
Item 3. Legal Proceedings
The Company has pending litigation arising in the ordinary
course of its business. However, none of the litigation is
expected to have a material adverse effect on the Company's
financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Equity and Shareholder
Matters
Refer to Item 12 for a description of the Registrant's Equity.
Refer to Item 1 for a description of the Indonesian Participating
Units.
Item 6. Selected Financial Data
The following financial data was derived from the audited
consolidated financial statements of the Company and should be read
in conjunction with the consolidated financial statements and
related notes included elsewhere herein.
1995 1994 1993 1992 1991
(millions of dollars)
Operating revenues $202 $198 $201 $206 $208
Earnings from
continuing operations 40 36 30 24 18
Net earnings 40 33 30 24 18
Total assets 407 422 449 472 500
Debt and security subject
to mandatory redemption - - 33 32 31
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
Cash flow from operations amounted to $80.4 million in 1995,
as compared to $85.6 million in 1994. The decrease resulted
primarily from lower volumes partially offset by increased prices.
Capital expenditures of $26.3 million were primarily spent on
continued development drilling in the Badak, Nilam, Mutiara and
Semberah fields as was the case in 1994. Net distributions in 1995
to the partners from the Company were $53.8 million (1994, $18.1
million). The increase in distributions was primarily attributable
to the 1994 redemption of $36.4 million of debt as discussed below.
On January 5, 1994, the Company redeemed its 8-1/4 percent
convertible subordinated guaranteed debentures, originally due in
1995, in the amount of $36.4 million at a loss of $3.1 million.
The redemption was funded through contributions from the partners
of the Company.
During 1994, the Company paid the Internal Revenue Service
$4.0 million to settle its 1984 windfall profit tax dispute. The
Company had fully reserved for this liability. The Company
continues to maintain a reserve and accrue interest for the
potential exposure in a royalty dispute. At December 31, 1995, the
reserve totaled $4.2 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. 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 1996 and future
years for its crude oil and LNG. The Company's financial
condition, operating results and liquidity will be materially
affected by any significant fluctuations in sales prices.
LNG sales are made under five principal long-term contracts
and several short- and medium-term contracts with Japanese, South
Korean and Taiwanese industrial and utility companies. The long-
term contracts contain take-or-pay provisions that generally
require that the purchasers either take the contracted quantities
or pay for such quantities if not taken; such provisions tend to
support the Company's ability to generate cash. During 1995, 131
net equivalent cargoes were shipped, of which 121 were under these
long-term contracts (1994, 138 and 124 respectively). In 1996, the
Company anticipates shipping approximately 142 net equivalent
cargoes.
In January of 1995, deliveries began under the Korea Medium
Term Sales Contract with Korea Gas Corporation for the sale of 315
trillion BTUs or 108 LNG cargoes over a five-year period ending in
1999. The Joint Venture's revenue sharing percentage for this
contract (included in Package V) was finalized at 21.6 percent in
June of 1995 after agreement with Pertamina and the East Kalimantan
producers.
In August of 1995, Pertamina executed agreements to extend the
1973 and 1981 Sales Contracts. The 1973 Sales Contract Extension
involves the sale of 4,804 trillion BTUs (1,674 cargoes) over an
eleven-year period commencing January 1, 2000. The 1981 Sales
Contract Extension involves the sale of 1,507 trillion BTUs (520
cargoes) over an eight-year period commencing April 1, 2003. The
Joint Venture's participation percentage in deliveries for the
first ten years under the 1973 Sales Contract Extension was
finalized at 21.6 percent in June of 1995 after agreement with
Pertamina and the East Kalimantan producers; the eleventh year of
the 1973 Sales Contract Extension will be at a Package VII Joint
Venture participation percentage which has not yet been determined
but is expected to be less than the Package V rate. The Joint
Venture's participation percentage for the 1981 Sales Contract
Extension, which is comprised of five years under Package VI and
three years under Package VII, has not yet been determined;
however, it is anticipated that the Package VI and Package VII
percentages will be less than the Package V rate.
Also executed in August of 1995 was the Badak V LNG Sales
Contract between Pertamina and Korea Gas Corporation for the sale
of 1,062 trillion BTUs or 360 LNG cargoes over a twenty-year period
commencing in 1998. The LNG plant will supply all volumes
delivered under this contract. The Joint Venture's participation
percentage for the first two years of the Badak V LNG Sales
Contract will be at the Package V rate of 21.6 percent. The
remaining years of this contract, from 2000 to 2017, will be at a
Package VI participation percentage which has not yet been
established but is expected to be less than the Package V rate.
In October of 1995, Pertamina executed an agreement with
Chinese Petroleum Corporation, under the Badak VI LNG Sales
Contract, for the sale of 1,756 trillion BTUs or 572 LNG cargoes
over a twenty-year period commencing in 1998. All volumes
delivered under the contract will be supplied by the LNG plant.
The Joint Venture's participation percentage for the first two
years of the Badak VI LNG Sales Contract will be at the Package V
rate of 21.6 percent. The remaining years of this contract, from
2000 to 2017, will be at a Package VI participation percentage
which has not yet been established but is expected to be less than
the Package V rate.
A seventh processing train (Train G) is being constructed at
the LNG plant to produce the LNG required for the LNG sales
contracts in Package V. In July of 1995, Pertamina and an
international consortium of commercial banks completed project
financing for Train G, a third LNG/LPG dock, an additional LPG
storage tank and other support facilities at the LNG Plant.
Project financing was for the amount of $969.5 million, of which
$125.0 million was drawn down as of December 31, 1995. The
financing is repayable over ten years in graduated quarterly
payments commencing in the fourth quarter of 1998. At December 31,
1995, the overall progress of the Train G project engineering,
procurement and construction was 26.8 percent.
Capital expenditures of the Joint Venture relate to the
exploration and development of the oil and gas fields. In 1996,
the Company's share of the Joint Venture expenditures is expected
to total $46 million, including $3 million of exploration
expenditures and $23 million of development expenditures. The 1996
budgeted expenditures primarily reflect continued development
drilling required to maintain gas deliverability and to maximize
cash flow.
The Company can give no assurance as to the future trend of
its business and earnings, or as to future events and developments
that could affect the Company in particular or the oil industry in
general. These include such matters as environmental quality
control standards, new discoveries of hydrocarbons and the demand
for petroleum products. Furthermore, the Company's business could
be profoundly affected by future events including price changes or
controls, payment delays, increased expenditures, legislation and
regulations affecting the Company's business, expropriation of
assets, renegotiation of contracts with foreign governments,
political instability, currency exchange and repatriation losses,
taxes, litigation, the competitive environment and international
<PAGE>
economic and political developments including actions of members of
OPEC.
The Company's revenues are predominately based on the market
price of crude oil, which is denominated in U. S. dollars. Certain
operating costs, taxes and capital costs represent commitments
settled in foreign currency. Currency exchange rate fluctuations
on transactions in currencies other than U. S. dollars are
recognized as adjustments to the U. S. dollar cost of the
transaction.
The Company is unaware of any unrecorded environmental claims
as at December 31, 1995 which would have a material impact upon the
Company's financial condition or operations.
The discussion of the Company's business and operations in
this report includes in several instances forward-looking
statements, which are based upon management's good faith
assumptions relating to the financial, market, operating and other
relevant environments that will exist and affect the Company's
business and operations in the future. No assurance can be made
that the assumptions upon which management based its forward-
looking statements will prove to be correct, or that the Company's
business and operations will not be affected in any substantial
manner by other factors not currently foreseeable by management or
beyond the Company's control. All forward-looking statements
involve risks and uncertainty, including those described in this
report, and such statements shall be deemed in the future to be
modified in their entirety by the Company's public pronouncements,
including those contained in all future reports and other documents
filed by the Company with the Securities Exchange Commission.
Results of Operations
1995 Compared to 1994
Net earnings for the year ended December 31, 1995 were $40.1
million as compared to $33.1 million for the year ended December
31, 1994. Included in the 1994 results was an extraordinary loss
of $3.1 million for the redemption of its 8-1/4 percent debentures.
Net earnings for 1995 benefitted from increased oil and gas
revenues, lower depletion and exploration costs, partially offset
by higher production costs. Cash flow from operations for the year
ended December 31, 1995 was $80.4 million as compared to $85.6
million for the year ended December 31, 1994.
Revenues for the year ended December 31, 1995 were $202.0
million compared to $197.9 million in the prior year. The increase
in revenues was attributable to increased average prices received
for LNG and crude oil sales, partially offset by decreased LNG and
crude oil volumes. The Joint Venture's share of LNG volumes in
1995 decreased 18 trillion BTUs to 386 trillion BTUs (131 net
equivalent cargoes) as compared to 404 trillion BTUs (138 net
equivalent cargoes) in 1994. The decrease in LNG volumes was due
to lower contractual commitments during 1995. Crude oil and
condensate volumes net to the Company in 1995 and 1994 were 1.7
million barrels and 1.8 million barrels respectively.
The average price received for LNG in 1995 increased $0.15 to
$2.67 per million BTUs as compared to $2.52 per million BTUs in
1994. The realized crude oil price increased $0.72 per barrel to
$17.18 per barrel in 1995 as compared to $16.46 per barrel in 1994.
The table below summarizes the volumes and average prices for
the Company's sales for the years ended December 31, 1995 and 1994:
1995 1994
Volumes
LNG (TBTUs) 89.3 93.4
Crude (MMBBLS) 1.7 1.8
Prices
LNG ($/MMBTU) 2.67 2.52
Crude Oil ($/BBL) 17.18 16.46
Production costs for 1995 increased $5.1 million to $24.7
million as compared to the prior year, due in part to higher
workover costs and an increased reserve for obsolete inventory.
Depletion, depreciation and amortization for 1995 was $41.7
million, a decrease of $8.9 million, reflecting the lower levels of
production and the year's effect of reserve additions which
occurred during the fourth quarter of last year.
Exploration costs decreased by $2.7 million in 1995 as
compared to the prior year due to lower seismic costs and the
absence of exploratory drilling. During 1995, the Company drilled
no exploration wells, whereas two exploration wells were drilled in
1994, including one discovery.
General and administrative expenses for 1995 were $1.5 million
a $0.4 million decrease from the prior year.
The effective tax rates for both 1995 and 1994 were 70
percent. These rates were 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.
Effective September 30, 1995, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of." This SFAS requires that an impairment loss be
recognized whenever the carrying amount of an asset exceeds the sum
of the estimated future cash flows (undiscounted) of the asset.
Under SFAS No. 121, the Company performed its impairment review of
proved oil and gas properties on a production sharing contract
basis. The adoption of SFAS No. 121 had no impact on the
consolidated financial statements of the Company.
<PAGE>
1994 Compared to 1993
Net earnings for the year ended December 31, 1994 were $33.1
million as compared to $30.5 million for the year ended December
31, 1993. Included in the 1994 results was an extraordinary loss
of $3.1 million for the redemption of its 8-1/4 percent debentures.
Net earnings for 1994 benefitted from decreased interest expense,
depletion, and exploration cost partially offset by lower oil and
gas revenues. Cash flow from operations for the year ended
December 31, 1994 was $85.6 million as compared to $81.5 million
for the year ended December 31, 1993.
Revenues for the year ended December 31, 1994 were $197.9
million compared to $200.6 million in the prior year. The decrease
in revenues was attributable to an 11 percent and 10 percent
decrease in the average price received for LNG and crude oil,
respectively, partially offset by a 9 percent increase in LNG
volumes. The Joint Venture's share of LNG volumes in 1994
increased 35 trillion BTUs to 404 trillion BTUs (138 net equivalent
cargoes) as compared to 369 trillion BTUs (127 net equivalent
cargoes) in 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 contracts with certain Japanese
and South Korean buyers. Crude oil and condensate volumes net to
the Company in both 1994 and 1993 were 1.8 million barrels.
The average price received for LNG in 1994 decreased to $2.52
per million BTUs as compared to $2.82 per million BTUs in 1993.
The realized crude oil price fell $1.85 per barrel to $16.46 per
barrel in 1994 as compared to $18.31 per barrel in the prior year.
Additionally, the 1994 results benefitted from a favorable non-
taxable crude oil revenue final settlement from 1993 reflecting a
reallocation of certain capital expenditures from gas to oil.
The table below summarizes the volumes and average prices for
the Company's sales for the years ended December 31, 1994 and 1993:
1994 1993
Volumes
LNG (TBTUs) 93.4 85.3
Crude (MMBBLS) 1.8 1.8
Prices
LNG ($/MMBTU) 2.52 2.82
Crude Oil ($/BBL) 16.46 18.31
Production costs for 1994 increased $0.9 million to $19.6
million as compared to the prior year. Depletion, depreciation and
amortization for 1994 was $50.6 million, a decrease of $2.2 million
from the prior year, reflecting higher proved reserves partially
offset by higher levels of production. During 1994, proved
reserve additions included approximately 2.7 million barrels of oil
and 96.3 billion cubic feet of gas.
Interest expense for 1994 decreased $4.5 million from the
prior year reflecting the repayment of the Company's 8-1/4 percent
debentures on January 5, 1994. An extraordinary loss of $3.1
million was recognized due to the redemption of the debentures.
Exploration costs decreased in 1994 compared to the prior
period due to lower dry hole and seismic costs. During 1994, the
Company drilled two exploration wells, making one discovery
compared to 1993 when the Company wrote off three dry holes.
General and administrative expenses for 1994 were $1.9 million
a slight increase over the prior year.
The effective tax rates for 1994 and 1993 were 70 percent and
74 percent respectively. These rates were 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 decrease in the effective rate was
principally the result of decreased non-deductible interest
expense.
<PAGE>
Item 8. Financial Statements and Supplementary Data
INDEPENDENT AUDITORS' REPORT
To The Partners of Unimar Company
We have audited the accompanying consolidated balance sheet of
Unimar Company and subsidiaries as of December 31, 1995 and the
related consolidated statements of earnings, cash flows, and
partners' capital for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
As more fully described in the notes to consolidated financial
statements, the Company has material transactions with its partners
and affiliates.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Unimar Company and subsidiaries at December
31, 1995, and the consolidated results of their operations and
their cash flows for the year then ended in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
February 12, 1996
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To The Partners of Unimar Company
We have audited the accompanying consolidated balance sheet of
Unimar Company and subsidiaries as of December 31, 1994 and the
related consolidated statements of earnings, cash flows, and
partners' capital for each of the two years in the period ended
December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
As more fully described in the notes to consolidated financial
statements, the Company has material transactions with its partners
and affiliates.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Unimar Company and subsidiaries at December
31, 1994, and the consolidated results of their operations and
their cash flows for each of the two years in the period ended
December 31, 1994, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Houston, Texas
February 24, 1995
<PAGE>
<TABLE>
<CAPTION>
UNIMAR COMPANY AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1995 and 1994
(Thousands of dollars)
1995 1994
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,882 $ 3,421
Accounts and notes receivable 7,415 5,882
Inventories 9,839 12,467
Other current assets 3,372 2,682
Total current assets 25,508 24,452
Property, plant and equipment, at cost:
Oil and gas properties (successful
efforts method) 1,049,708 1,023,546
Other 2,264 2,113
1,051,972 1,025,659
Less: accumulated depreciation and
depletion 673,543 631,499
Net property,plant and equipment 378,429 394,160
Other assets 3,277 3,567
$ 407,214 $ 422,179
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $ 2,394 $ 2,620
Advances from joint venture partners 2,777 1,629
Accrued liabilities 14,595 14,987
Income and other taxes 11,697 11,326
Total current liabilities 31,463 30,562
Deferred income taxes 158,364 162,966
Other liabilities 12,321 10,403
Commitments and Contingencies
Partners' capital 285,066 298,248
Less: demand notes receivable 80,000 80,000
205,066 218,248
$ 407,214 $ 422,179
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
UNIMAR COMPANY AND SUBSIDIARIES
Consolidated Statement of Earnings
Years ended December 31, 1995, 1994 and 1993
(Thousands of dollars)
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Oil and gas production revenues $202,019 $197,925 $200,588
Production costs 24,749 19,623 18,751
Depletion, depreciation and
amortization 41,717 50,554 52,710
Exploration costs including dry holes 102 2,787 4,947
Operating profit 135,451 124,961 124,180
General and administrative expenses 1,460 1,923 1,778
Interest expense 54 55 4,542
Interest income (313) (274) (309)
Other (income) expense (172) 624 (18)
Earnings before income taxes and 134,422 122,633 118,187
extraordinary item
Income tax expense (benefit)
Current 98,883 90,661 90,876
Deferred (4,602) (4,240) (3,164)
94,281 86,421 87,712
Earnings before extraordinary item 40,141 36,212 30,475
Extraordinary loss on redemption
of debt - 3,108 -
Net earnings $ 40,141 $ 33,104 $ 30,475
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
UNIMAR COMPANY AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Years ended December 31, 1995, 1994 and 1993
(Thousands of dollars)
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Net earnings $ 40,141 $ 33,104 $ 30,475
Adjustments to reconcile to net cash
provided by operating activities:
Loss on extraordinary item - 3,108 -
Depletion, depreciation and
amortization 42,044 50,889 53,087
Deferred income taxes (4,602) (4,240) (3,164)
Exploratory dry hole costs (6) 2,635 3,365
Interest accretion - - 1,473
Loss on sale of assets - 710 -
(Increase) Decrease in operating
receivables (1,533) 5,722 4,327
(Increase) Decrease in inventories 2,628 (1,581) 4,257
Increase (Decrease) in operating
payables and accruals (142) 5,482 (14,526)
Increase (Decrease) in other operating
assets and liabilities 1,890 (10,215) 2,245
Net cash provided by operating
activities 80,420 85,614 81,539
Investment activities:
Capital expenditures (26,307) (34,399) (40,142)
Proceeds from sale of assets - 382 -
Net cash used in investing activities (26,307) (34,017) (40,142)
Financing activities:
Capital contributions 36,200 65,800 27,100
Capital distributions (90,000) (83,900) (68,200)
Debt repaid - (36,400) -
Net cash used in financing activities (53,800) (54,500) (41,100)
Increase (Decrease) in advances from joint
venture partners 1,148 (1,960) 1,526
Net increase (decrease) in cash and
cash equivalents 1,461 (4,863) 1,823
Cash and cash equivalents at beginning
of year 3,421 8,284 6,461
Cash and cash equivalents at end
of year$ 4,882 $ 3,421 $ 8,284
IPU distributions paid $ 19,617 $ 18,539 $ 17,569
Interest paid $ 46 $ 331 $ 3,072
Income taxes paid $ 98,512 $ 94,174 $ 88,787
See accompanying Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<TABLE>
UNIMAR COMPANY AND SUBSIDIARIES
Consolidated Statement of Changes in Partners' Capital
Years ended December 31, 1995, 1994 and 1993
(Thousands of dollars)
<CAPTION>
Ustar Unistar Total
<S> <C> <C> <C>
Balance, January 1, 1993 $141,160 $152,419 $293,579
Contributions 13,550 13,550 27,100
Cash distributions (34,100) (34,100) (68,200)
ENSTAR pension liability
adjustment (64) (64) (128)
Net earnings 15,238 15,238 30,476
Balance, December 31, 1993 135,784 147,043 282,827
Contributions 32,900 32,900 65,800
Cash distributions (41,950) (41,950) (83,900)
ENSTAR pension liability
adjustment 208 209 417
Net earnings 16,552 16,552 33,104
Balance, December 31, 1994 143,494 154,754 298,248
Contributions 18,100 18,100 36,200
Cash distributions (45,000) (45,000) (90,000)
ENSTAR pension liability
adjustment 239 238 477
Net earnings 20,071 20,070 40,141
Balance, December 31, 1995 $136,904 $148,162 $285,066
See accompanying Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(in thousands of dollars unless otherwise indicated)
(1) THE COMPANY
Unimar Company (the Company) is a general partnership
organized under the Texas Uniform Partnership Act, whose
partners are Unistar, Inc. (Unistar), a Delaware corporation
and a direct subsidiary of Union Texas Petroleum Holdings,
Inc. (UTPH), a publicly traded Delaware corporation, and
LASMO (Ustar), Inc. (Ustar), a Delaware corporation and an
indirect wholly-owned subsidiary of LASMO plc (LASMO), 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) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The Company's consolidated financial statements include
the accounts of the Company and its subsidiaries
including its proportionate share of the activities of
an Indonesian joint venture (the Joint Venture). All
significant intercompany accounts and transactions have
been eliminated.
(b) Use of Estimates
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.
(c) Inventories
Inventories primarily consist of materials and supplies
and are generally priced at the lower of cost (moving
average cost method) or net realizable value.
(d) Accounting for Oil and Gas Properties
Oil and gas exploration, development and production
activities are accounted for by the successful efforts
method of accounting. Under this method of accounting,
the cost of acquiring undeveloped oil and gas leasehold
acreage, including lease bonuses, brokers' fees and
other related costs are capitalized. Provisions for
impairment of undeveloped oil and gas leases are
based on periodic
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(d) Accounting for Oil and Gas Properties (continued)
evaluation and exploratory experience. Costs to drill
and equip exploratory wells that find proved reserves
are capitalized while costs associated with
unsuccessful exploratory wells are expensed. Other
exploratory expenditures, including geological and
geophysical costs and annual lease rentals are expensed
as incurred. Costs incurred to drill and equip
productive wells, including development dry holes and
related production facilities are capitalized.
Depreciation, depletion, and amortization of successful
oil and gas exploration wells and all development costs
are determined under the unit-of-production method
based on estimated recoverable proved developed
reserves. Leasehold costs of producing properties are
depleted on the unit-of-production method based on
estimated proved developed and undeveloped reserves.
The Company generally provides for depreciation of
other property, plant and equipment on a straight-line
method over the estimated useful life of the assets.
Effective September 30, 1995, the Company adopted
Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of."
This SFAS requires that an impairment loss be
recognized whenever the carrying amount of an asset
exceeds the sum of the estimated future cash flows
(undiscounted) of the asset. Under SFAS No. 121, the
Company performed its impairment review of proved oil
and gas properties on a production sharing contract
basis. The adoption of SFAS No. 121 had no impact on
the consolidated financial statements of the Company.
(e) LNG Revenue Recognition
The Company recognizes its share of liquefied natural
gas (LNG) revenues net of Pertamina's plant operating
costs, transportation charges and project debt service.
The Company is not a party to any gas balancing
arrangements.
(f) Income and Other Taxes
The Company is a partnership and, therefore, does not
pay income taxes. Since the Company's subsidiaries are
corporations, income taxes included in the accompanying
financial statements represent the domestic and foreign
taxes applicable to such entities.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(f) Income and Other Taxes (continued)
The Company's subsidiary, ENSTAR Corporation (ENSTAR),
and its subsidiaries file a consolidated federal
corporate income tax return.
Certain income and expense items are recorded during
different periods for financial statement and income
tax purposes. Deferred income taxes are provided for
these differences.
The Company follows the Statement of Financial
Accounting Standards No. 109 (Statement 109),
"Accounting for Income Taxes." Under Statement 109,
the liability method is used in accounting for income
taxes. Under this method, deferred tax assets and
liabilities are determined based on differences between
financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax
rates and laws that will be in effect when the
differences are expected to reverse. An impairment
evaluation, with reserves recorded as necessary for any
tax benefit not expected to be realized, is required of
deferred tax assets. A current tax expense or benefit
is recognized for estimated taxes payable or refundable
on tax returns for the current year.
(g) Concentrations of Credit Risk
Financial instruments which may subject the Company to
concentrations of credit risk consist principally of
short-term investments and trade receivables. The
Company's excess cash is invested in time deposits with
major banks. These deposits are purchased at a
maturity of three months or less, and have minimal
risk.
The Company's receivables consist primarily of the
revenues derived from the sale of LNG under long-term
contracts with utility and industrial companies in
Japan, Taiwan and Korea. The buyers of the LNG make
payment in United States dollars to a U.S. bank as
trustee for the Joint Venture and other parties. The
trustee, after deducting plant operating costs,
transportation charges and project debt service from
the gross LNG sales proceeds, distributes the net
proceeds to the Joint Venture participants and other
parties. The Company's trade receivables at December
31, 1995 result principally from sales of LNG and oil
and are considered current and collectible, and
collateral is not required to secure such receivables.
<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(g) Concentrations of Credit Risk (continued)
During the years ended 1995 and 1994, sales to Osaka
Gas Co., Ltd., The Kansai Electric Power Co., Inc., and
The Chubu Electric Power Co., Inc. individually
accounted for more than 10 percent of the Company's
total revenues. During the year ended 1993, sales to
Osaka Gas Co., Ltd., The Kansai Electric Power Co.,
Inc., The Chubu Electric Power Co., Inc., and Kyushu
Electric Power Co., Inc. individually accounted for
more than 10 percent of the Company's total revenues.
(h) Fair Value of Financial Instruments
The Company has various types of financial instruments
consisting of cash and cash equivalents, accounts
receivable, accounts payable, and accrued liabilities.
The carrying amount approximates fair value because of
the short maturity of these instruments.
(i) Foreign Currency
The functional currency for translating the accounts of
foreign subsidiaries is the U. S. dollar. Transaction
gains and losses resulting from the effect of exchange
rate fluctuations on transactions in currencies other
than the functional currency are included in the
determination of net income.
(3) INDONESIAN OIL AND GAS PROPERTIES
The Company, through its subsidiaries, has a 23.125 percent
interest in, and is the operator of, the Joint Venture that
has certain oil and gas exploration and production rights in
Indonesia through a Production Sharing Contract (PSC) which
was amended and extended in 1990 until August 7, 2018 with
Pertamina, the state petroleum enterprise of the Republic of
Indonesia. In addition, other subsidiaries of UTPH and
LASMO each own a 26.25 percent interest in the Joint
Venture.
Virginia Indonesia Company (VICO), a subsidiary of the
Company, is the operator of the Joint Venture and is
responsible for conducting exploration and development
activities within the PSC area. The cost of such activities
is funded by the Joint Venture partners to VICO. In
addition to operating management responsibility, the
operator acts as a custodian of Joint Venture cash received
from its partners until disbursed in payment of operating
and capital expenditures. At December 31, 1995 and 1994,
cash and cash equivalents included $2,777 and $1,629,
respectively, advanced from the other Joint Venture
partners.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(3) INDONESIAN OIL AND GAS PROPERTIES (continued)
The PSC permits the Joint Venture to recover their costs of
exploration, development and production - including general
and administrative expenses - from oil and gas revenues as
follows: capital costs are based on recoverable double-
declining balance depreciation over various useful lives,
which average fourteen years; non-capital costs are
recovered in the year incurred.
The Joint Venture, and thus the Company, has no ownership
interest in oil and gas reserves and related assets, but
rather receives revenues from the sale of oil, condensate,
liquefied petroleum gas (LPG) and LNG in accordance with the
PSC. The Joint Venture is required to sell out of its share
of oil and condensate production 8.5 percent (7.2 percent
after August 7, 1998) of the total oil and condensate
production from the contract area for Indonesian domestic
consumption. Such amounts were purchased for domestic use
in 1995, 1994 and 1993. The sales price for the domestic
market consumption is $0.20 per barrel with respect to
fields commencing production prior to February 23, 1989.
For fields commencing production after that date, domestic
market consumption is priced at 10 percent of the weighted
average price of crude oil sold from such fields. However,
for the first sixty consecutive months of production from
new fields, domestic market consumption is priced at the
official Indonesian Crude Price (ICP). The Semberah field
which commenced production in December 1991 is exempt from
the domestic obligation pricing until December 1996.
The share of revenues from the sale of gas after cost
recovery through August 7, 1998 will remain at 35 percent to
the Joint Venture after Indonesian income taxes and 65
percent to Pertamina. The split after August 7, 1998 will
be 25 percent to the Joint Venture after Indonesian income
taxes and 75 percent to Pertamina for gas sales under the
1973 LNG Sales Contract, the 1981 LNG Sales Contract and
extension, Korean carryover quantities and the seven 1986
liquefied petroleum gas (LPG) Sales Contracts to the extent
that the gas to fulfill these contracts is supplied from the
Badak or Nilam fields. For the gas used to fulfill the
eleven-year extension (2000 - 2010) to the 1973 LNG Sales
Contract that is supplied from the Badak or Nilam fields,
41.655 percent of such gas shall be split 25 percent to the
Joint Venture after Indonesian income taxes and 75 percent
to Pertamina with the remaining gas supplying this extension
to be split 30 percent to the Joint Venture after Indonesian
income taxes and 70 percent to Pertamina. All other LNG
sales contract revenues after August 7, 1998 will be split
30 percent after Indonesian income taxes to the Joint
Venture and 70 percent to Pertamina.<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(3) INDONESIAN OIL AND GAS PROPERTIES (continued)
Based on current and projected oil production, the revenue
split from oil sales after cost recovery through August 7,
2018 will remain at 15 percent to the Joint Venture after
Indonesian income taxes and 85 percent to Pertamina. These
revenue splits are based on Indonesian income taxes of 56
percent through August 7, 1998, and 48 percent thereafter.
Pertamina currently sells LNG to Japanese, Korean and
Taiwanese utility and industrial customers primarily under
five long-term contracts that expire in 1999, 2003, 2009,
2013 and 2014, respectively. Contracted sales of LNG to
these customers approximated 73 percent, 72 percent, and 68
percent of the Company's gross revenues in 1995, 1994 and
1993, respectively.
(4) CASH AND CASH EQUIVALENTS
At December 31, 1995 and 1994, cash and cash equivalents
included short-term deposits and highly liquid debt
instruments, purchased at a maturity with three months or
less, of $4,882 and $3,421, respectively.
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is as follows:
1995 1994
Oil and gas properties $1,049,708 $1,023,546
Less: Accumulated depletion 672,130 630,414
377,578 393,132
Other, net of accumulated
depreciation of $1,413 in
1995 and $1,085 in 1994 851 1,028
$ 378,429 $ 394,160
(6) ACCRUED LIABILITIES
As at December 31, 1995 and 1994, accrued liabilities
consisted of:
1995 1994
Accrued IPU liability $ 5,629 $ 5,792
Indonesian operating accruals 7,937 8,179
Other 1,029 1,016
$14,595 $14,987
<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(7) LEASES
The following is a schedule, by year, of minimum future
rental payments required under operating leases that have
initial or remaining noncancelable lease terms in excess of
one year:
1996 $ 3,087
1997 1,562
1998 472
1999 411
2000 412
2001 and after 34
$ 5,978
The above commitments represent leases on the Joint
Venture's U.S. and Indonesian offices, housing leases, and
contract commitments with various suppliers which cover
drilling services, geological services and office
administrative functions, and are included net of estimated
cost recovery.
The Company charges its proportionate share of the Joint
Venture's rent expense to operations for all operating
leases.
(8) INCOME AND OTHER TAXES
At December 31, 1995, the Company had investment tax credit
carryovers of $3,207 that expire in 1996 through 2001, net
foreign tax credit carryovers of $32,324 for regular tax
purposes and $141,712 for alternative minimum tax purposes
both of which expire in 1996 through 2000.
The Company has a minimum tax credit of $15,628 that carries
forward indefinitely. Deferred tax assets of $32,324 and
$23,493 for foreign tax credit carryforwards and $3,207 and
$3,523 for investment tax credit carryforwards at December
31, 1995 and 1994, respectively, have been offset by a
valuation allowance.
<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(8) INCOME AND OTHER TAXES (continued)
Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Significant
components of the Company's deferred tax liabilities as of
December 31, 1995 and 1994 are as follows:
1995 1994
Deferred tax liabilities:
Oil and gas proven property costs
capitalized for financial purposes
and deducted for foreign taxes $158,364 $162,966
For financial reporting purposes, income before income taxes
includes the following components:
1995 1994 1993
Pretax income:
U. S. $ (1,402) $ (2,423) $ (7,026)
Foreign 135,824 125,056 125,213
$134,422 $122,633 $118,187
Significant components of the provision for income taxes
attributable to continuing operations are as follows:
1995 1994 1993
Current:
Federal $ 3,050 $ 2,884 $ 2,446
Foreign 95,833 87,777 88,430
98,883 90,661 90,876
Deferred:
Foreign (4,602) (4,240) (3,164)
$94,281 $86,421 $87,712
<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(8) INCOME AND OTHER TAXES (continued)
The reconciliation of income tax attributable to continuing
operations computed at the U.S. federal statutory rates to
income tax expense is:
1995 1994 1993
Tax at U.S. Statutory Rate 35.0% 35.0% 35.0%
Foreign statutory tax rate
in excess of federal
statutory tax rate 21.0% 21.0% 21.0%
Expenses not deductible in
calculating Indonesian
taxes 11.2% 11.0% 12.8%
U.S. taxes related to
foreign operations 2.3% 2.4% 2.1%
Other 0.6% 1.1% 3.3%
Total 70.1% 70.5% 74.2%
<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(9) INDONESIAN PARTICIPATING UNITS (IPUs)
The IPUs were issued, with no assigned value, in connection
with the acquisition of ENSTAR in 1984 and represent a general
obligation of the Company to make quarterly participation
payments until September 25, 1999, at which time the IPUs will
expire with no residual value. The amount of each quarterly
participation payment will be measured by a fixed percentage
of Net Cash Flow (as defined below) from the Joint Venture.
While the amount of the Participation Payments, which are
treated as reductions from revenues, will vary quarter to
quarter depending upon the amount of Net Cash Flow, payment of
the amounts due to the IPU holders is an obligation of the
Company, not dependent upon the discretion of the partners of
the Company. The rights of the IPU holders are those of a
general creditor of the Company and thus the IPU holders have
no equity interest in the Company in the nature of a general
or limited partnership interest or otherwise. The IPU holders
derive no economic benefit from the business activities of the
Company other than the Joint Venture.
Each IPU entitles the holder to receive, until September 25,
1999, a quarterly participation payment equal to 1/14,077,747
of 32 percent of net positive cash flow. Net Cash Flow,
attributable to IPU holders, is equal to the product of (i) a
fraction, the numerator of which is equal to the number of
IPUs outstanding on the last business day of such quarterly
period, and the denominator of which is 14,077,747, multiplied
by (ii) 32 percent of specified revenues net of specified
expenditures from the Joint Venture. The above calculation
was the result of negotiations among the parties to the 1984
merger of ENSTAR Corporation into the Company and represents
the amount of future income from the Joint Venture that the
Company has agreed to pay to the former stockholders of ENSTAR
in the form of payments on the IPUs. If Net Cash Flow is
zero or negative for any quarterly period, no Participation
Payments for that quarter will be made. The Company maintains
an irrevocable letter of credit for the benefit of the IPU
holders in an amount equal to 240 percent of the most recent
quarterly distribution. At December 31, 1995 and 1994, there
were 10,778,590 IPUs issued and outstanding. Based on the
closing price on the American Stock Exchange of the IPUs at
December 31, 1995 of $3.875 per unit, the outstanding IPUs had
a total market valuation of $42 million.
<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
Calculation of Net Cash Flow and
Participation Payments
1995 1994
Positive cash flow:
Gas receipts $185,710 $188,211
Oil and condensate receipts 32,386 33,411
Other non-revenue cash receipts from
Joint Venture 6,973 5,370
Total positive cash flow 225,069 226,992
Less negative cash flow:
Expenditures to Joint Venture 52,230 56,150
Indonesian income taxes 95,478 90,264
Total negative cash flow 147,708 146,414
Net positive cash flow from 23.125%
interest in Joint Venture $ 77,361 $ 80,578
Net cash flow for benefit of IPU holders $ 18,970 $ 19,724
Participation Payment per unit $ 1.76 $ 1.83
<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(10) LONG-TERM DEBT
The 8-1/4% convertible subordinated guaranteed debentures, due
in December 1995, were repaid on January 5, 1994 in the
principal amount of $36,400. The debentures had a carrying
value at December 31, 1993 of $33,292 resulting in an
extraordinary loss on redemption of $3,108, which was
recognized in the first quarter of 1994.
(11) BENEFIT PLANS
VICO has a defined contribution retirement plan that covers
its eligible employees. Although VICO expects to provide an
annual contribution based on a percentage of each eligible
employee's salary, the actual contribution is determined at
the end of each year by its Board of Directors and may vary
depending upon circumstances. Defined contribution pension
expense is funded by the Joint Venture participants and the
Company's share of such expense for the years ended December
31, 1995, 1994 and 1993 was $216, $211 and $263, respectively.
VICO provides severance pay to its employees based upon salary
and length of service. Such severance pay is accrued over the
service life of the employees and is funded by the Joint
Venture. The Company has provided approximately $2.0 million,
$1.1 million and $0.2 million for the years ended December 31,
1995, 1994 and 1993 respectively for its share of future
severance payments.
The Company has a defined benefit pension plan established by
ENSTAR that covers ENSTAR's former employees who are
considered terminated and fully vested. ENSTAR's pension
funding policy is to contribute an amount meeting the
requirement of the Employees Retirement Income Security Act.
The estimated reconciliation of the funded status of ENSTAR's
pension plan as at December 31, 1995, 1994 and 1993
respectively was as follows:<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(11) BENEFIT PLANS (continued)
1995 1994 1993
Actuarial present value of:
Vested accumulated benefit
obligation $(18,233) $(16,155) $(17,763)
Projected vested benefit
obligation $(18,233) $(16,155) $(17,763)
Fair value of plan assets 16,287 13,902 14,902
Unfunded projected benefit
obligation (1,946) (2,253) (2,861)
Unrecognized net
loss 767 1,243 1,661
Unrecognized net transition
obligation 803 837 872
Adjustment required to
recognize minimum
liability (1,570) (2,080) (2,533)
Accrued pension cost
recognized in the
Consolidated Balance
Sheet $ (1,946) $ (2,253) $ (2,861)
The minimum liability that must be recognized is equal to the
excess of the accumulated benefit obligation over the fair
value of plan assets. A corresponding amount is recognized as
either an intangible asset or a reduction to Partners'
Capital.
The pension expense for 1995, 1994 and 1993 was composed of
the following:
1995 1994 1993
Interest cost $ 1,318 $ 1,317 $ 1,300
Actual return on plan
assets (3,623) (1,063) (1,107)
Net amortization and deferral 2,595 35 35
$ 290 $ 289 $ 228
<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(11) BENEFIT PLANS (continued)
The assumed discount rate used in determining the projected
benefit obligation was 7.25 percent, 8.5 percent and 7.5
percent for 1995, 1994 and 1993, respectively. The assumed
long-term rate of return on plan assets was 8 percent for
1995, 1994 and 1993. Plan assets are invested in equity and
fixed income securities.
(12) CLAIMS AND LITIGATION
The Company has pending litigation arising in the ordinary
course of its business. However, none of the litigation is
expected to have a material adverse effect on the Company's
financial position or results of operations. The Company also
has a reserve of $4.2 million for potential exposure in a
royalty dispute. The Company believes it may have valid
defenses against such claims.
(13) RELATED PARTY TRANSACTIONS
All aspects of the Company's business that are not associated
with the operating management of the Joint Venture, such as
legal, accounting, tax and other management functions are
supplied by VICO or employees of the partners in accordance
with management agreements negotiated among the parties. For
the years 1995, 1994 and 1993, the charges approximated $500,
$400 and $500, respectively.
The Company holds demand notes in the amount of $40,000 from
or guaranteed by affiliates of each partner. These funds will
be made available to the Company if additional working capital
is required.
In addition to acting as the operator of the Joint Venture,
VICO performs engineering, pipeline maintenance, and human
resource related services for the operator of the LNG Plant,
P.T. Badak Natural Gas Liquefaction Company (P.T. Badak).
During the years ended December 31, 1995 and 1994, VICO billed
P.T. Badak $20.2 million and $21.8 million, respectively, for
services rendered. Accounts receivable from P.T. Badak
approximated $2.3 million and $2.4 million at December 31,
1995 and 1994, respectively.
<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)
The following items are contained in this section:
(a) Indonesian oil and gas operations
(b) Interim financial data
(a) INDONESIAN OIL AND GAS OPERATIONS
The Company's estimated net share of Indonesian oil and gas
reserves is shown in Table 1. The estimated proved reserves
of gas and oil and condensate as of December 31, 1995, 1994,
1993 and 1992 attributable to the Joint Venture's interest in
the production sharing contract in East Kalimantan were
prepared by petroleum engineers employed by LASMO, an
affiliate of Ustar.
Net share estimates are the Company's present best estimates
of the share of proved Indonesian reserves attributable to
revenue the Company would receive, before Indonesian income
taxes, under the terms of the Production Sharing Contract, as
extended through August 7, 2018 based upon assumptions
regarding levels of Joint Venture expenditures over the life
of the project, oil and gas prices, firm contract sales
commitments and potential sales opportunities and upon
numerous other assumptions. The Company has no ownership
interest in the Indonesian reserves in place, but rather
shares in production and revenue from the sale of oil,
condensate, LPG and LNG in accordance with the PSC. The
reserve estimates are subject to revision as prices fluctuate
due to the cost recovery feature for field and other operating
costs under the PSC and for changes in the Indonesian income
tax rate. Because of the number and range of these variables,
no representation can be made that the net share estimates set
forth below are accurate, and any changes in such variables
will impact such estimates and the cash flows the Company may
realize in the future.
Oil and gas reserves are considered proved if economic
producibility is supported by either actual production or
conclusive formation tests. Proved developed reserves are
reserves that can be expected to be recovered through existing
wells with existing equipment and operating methods. Proved
undeveloped reserves are reserves that are expected to be
recovered from new wells on undrilled acreage or from existing
<PAGE>
INDONESIAN OIL AND GAS OPERATIONS (continued)
wells where a relatively significant expenditure is required
to permit production. These estimates do not include reserves
which may be found by extension of proved areas, reserves
which have been estimated considering known geological and
seismic data and previous experience with similar reservoirs,
or reserves recoverable by secondary or tertiary recovery
methods unless these methods are in operation and showing
successful results. These estimates include reserves that are
not currently under contract, but which management expects may
be marketed during the remaining period in which the Company
has the right to produce such reserves, but for which there is
no assurance of sales. Estimates of reserves require
extensive judgments of reservoir engineering data and are
generally less precise than other estimates used in connection
with financial reporting. Actual future revenues from proved
reserves estimates may vary significantly from estimated
future cash flows due to changes in prices of oil and gas, and
in the timing of actual production in future periods. Actual
production and development costs will vary from those
estimated due to inflation and other factors.
<PAGE>
INDONESIAN OIL AND GAS OPERATIONS (continued)
TABLE 1
Quantities of Oil and Gas Reserves
(Oil in Thousands of BBLS; Gas in MMCF)
Oil Gas
Proved Developed and Undeveloped
Reserves:
As of December 31, 1992 11,288 1,026,340
Revisions to previous estimates 4,044 133,820
Production (1,778) (84,920)
As of December 31, 1993 13,554 1,075,240
Revisions to previous estimates 2,724 96,257
Production (1,891) (92,408)
As of December 31, 1994 14,387 1,079,089
Revisions to previous estimates 2,916 (6,943)
Production (1,753) (88,830)
As of December 31, 1995 15,550 983,316
Proved Developed Reserves:
As of December 31, 1992 7,632 733,354
As of December 31, 1993 10,281 727,536
As of December 31, 1994 11,731 877,140
As of December 31, 1995 13,782 779,425
<PAGE>
INDONESIAN OIL AND GAS OPERATIONS (continued)
Table 2 shows costs incurred in oil and gas property acquisition,
exploration and development activities.
TABLE 2
Costs Incurred in Oil and Gas Property Acquisition,
Exploration and Development Activities
Years ended December 31, 1995, 1994 and 1993
(Thousands of dollars)
1995 1994 1993
Exploration costs $ 102 $ 2,545 $ 5,223
Development costs 26,157 31,878 36,328
Table 3 shows results of operations for oil and gas producing
activities.
TABLE 3
Results of Operations for Oil and Gas Producing Activities
Years ended December 31, 1995, 1994, and 1993
(Thousands of dollars)
1995 1994 1993
Revenues $202,019 $197,925 $200,581
Production costs 24,416 19,618 17,836
Exploration costs 102 2,787 4,947
Depreciation, depletion
and amortization 41,717 50,554 52,710
Income tax expense 94,311 86,357 87,640
Results of operations for
producing activities (1) $ 41,473 $ 38,609 $ 37,448
(1) Excludes corporate overhead and interest costs.
<PAGE>
INDONESIAN OIL AND GAS OPERATIONS (continued)
Table 4 shows a standardized measure of discounted future net
cash flows and changes therein relating to proved oil and gas
reserves using an annual discount of 10 percent and the Company's
net share estimates referred to in the preface to Table 1.
Generally, estimated future cash inflows have been computed by
applying year-end prices of oil and gas to estimated future
production of proved oil and gas reserves. Future development and
production costs have been computed by estimating the future
expenditures (based on year-end costs) to be incurred in developing
and producing the proved reserves, assuming continuation of
existing economic conditions. Future income tax expenses have been
calculated by using the year-end statutory tax rate for Indonesia
of 56 percent through August 7, 1998 and 48 percent thereafter.
Indonesian net cash flow estimates are the Company's present best
estimates of the share of future net revenues, after Indonesian
taxes and capital and operating contributions to the Joint Venture,
that the Company would receive if proved reserves are produced
under the terms of the PSC, as extended, based upon assumptions
regarding levels of Joint Venture expenditures over the life of the
project, firm contract sales commitments and potential sales
opportunities and upon numerous other assumptions. Additionally,
the net cash flow estimates include amounts due IPU holders.
Because of the number and range of these variables, no
representation can be made that the net cash flow estimates set
forth below are accurate, and any change in such variables will
impact the cash flows the Company may realize in the future.
<PAGE>
TABLE 4
Standardized Measure of Discounted Future Net Cash Flows and
Changes Therein Relating to Proved Oil and Gas Reserves
At December 31, 1995, 1994 and 1993
(Thousands of dollars)
1995 1994 1993
Future cash inflows $2,421,947 $2,372,316 $2,085,222
Future production and
development costs (489,767) (593,791) (589,163)
Future income tax expenses (948,669) (874,477) (740,808)
Future net cash flows 983,511 904,048 755,251
10% annual discount for
estimated timing of
cash flows (488,307) (442,377) (375,500)
Standardized measure of
discounted future net
cash flows $ 495,204 $ 461,671 $ 379,751
The following are the principal sources of changes in the
standardized measure of discounted future net cash flows for proved
reserves during 1995, 1994 and 1993.
1995 1994 1993
(Thousands of dollars)
Standardized measure of discounted
future net cash flows at
beginning of period $ 461,671 $ 379,751 $ 520,810
Sales and transfers of oil and gas
produced, net of production
costs (180,507) (176,275) (177,720)
Net changes in prices and
production costs 157,100 159,985 (367,050)
Development costs incurred
during the period 26,157 31,878 36,328
Revisions of previous
quantity estimates (26,301) 67,590 104,367
Accretion of discount 86,109 71,775 92,991
Net change in income taxes (29,025) (73,033) 170,025
Standardized measure of discounted
future net cash flows at end
of period $ 495,204 $ 461,671 $ 379,751
Note: The standardized measure of discounted future net cash flows at
December 31, 1995, 1994 and 1993 included $54,805, $59,571 and
$59,629, respectively, in future net cash flows attributable to
IPU holders (See Footnote 9).
<PAGE>
b) INTERIM FINANCIAL DATA (Unaudited)
The following table shows summary quarterly data for 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Year Ended December 31, 1995
Revenues $ 60,539 $ 53,261 $ 43,734 $ 44,485
Operating profit $ 42,594 $ 36,271 $ 28,255 $ 28,331
Net earnings $ 14,172 $ 11,022 $ 8,296 $ 6,651
Year Ended December 31, 1994
Revenues $ 55,151 $ 42,717 $ 51,941 $ 48,116
Operating profit $ 35,384 $ 26,018 $ 31,029 $ 32,530
Earnings before $ 9,818 $ 8,509 $ 10,088 $ 7,797
Extraordinary item
Net earnings $ 6,710 $ 8,509 $ 10,088 $ 7,797
/TABLE
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures.
See Item 14(b).
PART III
Item 10. Directors and Executive Officers of the Registrant.
The management, budgeting and financial control of the
Company's interest in the Indonesian Joint Venture operations are
exercised by a Management Board consisting of six members, three
appointed by each partner. The following persons currently serve
as members of the Company's Management Board:
GEORGE W. BERKO (age 49) was appointed to the Company's
Management Board in May 1992. In January 1996 he was appointed
Controller of VICO. Since May 1992, he has served as the Partners'
representative for Investor Relations, Treasurer and Chief
Financial and Accounting Officer of ENSTAR, ENSTAR Indonesia, Inc.,
INTERNATIONAL, and certain of their subsidiaries, and has been
LASMO America Ltd.'s Vice President - Unimar Accounting. From
October 1990 until April 1992, he was Vice President, Controller of
Ultramar Oil and Gas Limited, and prior to that time, he was a
General Manager of American Ultramar Ltd. from December 1984.
IAN D. BROWN (age 46) was appointed to the Company's
Management Board in February 1993. He is also Director and
Chairman of ENSTAR and certain of its affiliates. Since October
1995 he has been Director of Pakistan LNG Development for LASMO.
From January 1994 to September 1995 he served as President and
General Manager of LASMO Companies in Indonesia. In January 1993,
he was appointed Director, Indonesian Joint Venture for LASMO plc
and a member of the VICO Board. Since May 1986, he served as
Commercial Manager for LASMO plc, and from February 1987, Managing
Director, LASMO Trading Limited, the marketing, trading and
transportation affiliates of the parent company.
LARRY D. KALMBACH (age 44) was appointed to the Company's
Management Board in February 1993. He is also a Director of ENSTAR
and certain of its affiliates. Since February 1995 he has been
Vice President and Chief Financial Officer of UTPH. Prior to that
he held several executive and management positions with UTPH
including Vice President - Finance from 1993 to 1995 and Vice
President and Controller from 1986 to 1993.
<PAGE>
WILLIAM M. KRIPS (age 56) was appointed to the Company's
Management Board in January 1987 and in May 1994 was appointed
Chairman of the Management Board. He is also a Director of ENSTAR
and certain of its affiliates. Since 1994, he has been Senior Vice
President of UTPH. Prior to that time, he has served as Senior
Vice President - Exploration & Production, Senior Vice President
and General Manager - U. S. Exploration and Production, Senior Vice
President and General Manager - Hydrocarbon Products Group and Vice
President and General Manager - International Operations.
ARTHUR W. PEABODY, JR. (age 52) was appointed to the Company's
Management Board in February 1992. He is also a Director of
ENSTAR, ENSTAR Indonesia, Inc., International and VICO. Since May
1994, he has served as Senior Vice President of UTPH and has held
several executive positions with UTPH including Senior Vice
President - Exploration and Production, Senior Vice President and
General Manager - Hydrocarbon Products Group, Vice President -
Planning and Administration and Vice President - Acquisitions and
Planning.
RICHARD L. SMERNOFF (age 54) was appointed to the Company's
Management Board in July 1995. He is also a Director of ENSTAR,
ENSTAR Indonesia, Inc., INTERNATIONAL and VICO. Since March 1,
1994 he has served as Finance Director of LASMO. He has spent some
fourteen years in senior finance positions in the oil and gas
industry, most recently as Senior Vice President with Amerada Hess
Corporation in the United States. Prior to joining the Company he
was Chief Financial Officer of Datascope Corp.
As set forth above, control of the Company's operations is
exercised by the Management Board. The Company, a Texas general
partnership, does not have any Executive Officers.
Item 11. Executive Compensation.
The Company has no executive officers, and no members of the
Management Board are paid directly by the Company. All members of
the Management Board are full-time employees of UTPH or LASMO, or
their respective subsidiaries, and do not receive from the Company
any remuneration for their services to the Company. Moreover, the
Company has no employees who are compensated for their services to
the Company. VICO and its subsidiaries, have employees who are
responsible for the daily operating activities of the Joint Venture
and are compensated by the Joint Venture. See Item 13 below for
information concerning the Company's reimbursement to LASMO for
services rendered to the Company by one of LASMO's designees on the
Management Board.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The Company is a Texas general partnership and as such has no
voting securities apart from the general partnership interests
owned by the partners. The table below reflects the beneficial
ownership of 100 percent of the partnership interests in the
Company as of March 15, 1996:<PAGE>
Name and Address of Amount Beneficially
Title of Class Beneficial Owner Owned
General Partnership LASMO plc 50%
Interest 100 Liverpool Street
London EC2M 2BB
England
Name and Address of Amount Beneficially
Title of Class Beneficial Owner Owned
General Partnership Union Texas Petroleum 50%
Interest Holdings, Inc.
1330 Post Oak Boulevard
Houston, Texas 77252
Item 13. Certain Relationships and Related Transactions.
The partners of the Company provide management expertise,
office space, and administrative, legal and professional services.
For such services, a management fee of approximately $455 and $434
was charged in 1995 and 1994, respectively, including $147 ($109 in
1994) paid in respect of Mr. Berko's services.
The Company holds demand notes in the amount of $40 million
from or generated by affiliates of each partner. These funds will
be made available to the Company if additional working capital is
required.
As operator of the Joint Venture, VICO conducts exploration
and development activities within the PSC area. The cost of such
activities is funded by the Joint Venture participants to VICO. In
addition, VICO performs engineering, pipeline maintenance and human
resource related services for the operator of the LNG Plant, P.T.
Badak Natural Gas Liquefaction Company (P.T. Badak). For the year
ended December 31, 1995 and 1994 VICO billed P.T. Badak $20.2
million and $21.8 million respectively for services rendered.
Accounts receivable from P.T. Badak approximated $2.3 million at
December 31, 1995 ($2.4 million at December 31, 1994).<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.
(a)(1) Financial Statements listed below are included as
Part II, Item 8 hereof on the pages indicated:
Independent Auditors' Report 26
Report of Independent Auditors 27
Consolidated Balance Sheet,
December 31, 1995 and 1994 28
Consolidated Statement of Earnings,
Years ended December 31, 1995,
1994 and 1993 29
Consolidated Statement of Cash Flows,
Years ended December 31, 1995,
1994 and 1993 30
Consolidated Statement of Changes in
Partners' Capital, Years ended
December 31, 1995, 1994 and 1993 31
Notes to Consolidated Financial
Statements 32-45
Supplemental Financial Information
(unaudited) 46-52
All schedules are omitted as they are not applicable.<PAGE>
(a)(3) The following documents are included as Exhibits to
this Report. Unless it has been indicated that a
document listed below is incorporated by reference
herein, copies of the document have been filed
herewith.
(2)-1- Merger Agreement, dated May 22, 1984, and Amendment
Agreements thereto, dated June 8, 1984 and June 12,
1984 (incorporated by reference to Annex A to the
Prospectus/Proxy Statement included in the Company's
Registration Statement on Form S-14 (No. 2-93037)).*
(2)-2- Agreement of Merger, dated as of August 28, 1984
(incorporated by reference to Annex B to the
Prospectus/Proxy Statement included in the Company's
Registration Statement on Form S-14 (No. 2-93037)).*
(2)-3- Divestiture Agreement, dated June 20, 1984 (filed as
Exhibit 2.3 to the Company's Registration Statement
on Form S-14 (No. 2-93037)).*
(3)-1- Amended and Restated Agreement of General
Partnership of Unimar Company dated September 11,
1990 between Unistar, Inc. and Ultrastar, Inc.
(filed as Exhibit (3)-4- to the Company's 1990 Form
10-K (No. 18791)).*
(4)-1- Form of Indenture between Unimar and Irving Trust
Company, as Trustee (filed as Exhibit 4 to the
Company's Registration Statement on Form S-14 (No.
2-93037)).*
(4)-2- First Supplemental Indenture, dated as of October
31, 1986, to the Indenture between Unimar and Irving
Trust Co., as Trustee (Exhibit (4)-1 above) (filed
as Exhibit 10.114 to Union Texas Petroleum Holdings,
Inc.'s Registration Statement on Form S-1 (No. 33-
16267)).*
(10)-1- Joint Venture Agreement, dated August 8, 1968, among
Roy M. Huffington, Inc., Virginia International
Company, Austral Petroleum Gas Corporation, Golden
Eagle Indonesia, Limited, and Union Texas Far East
Corporation, as amended (filed as Exhibit 6.6 to
Registration Statement No. 2-58834 of Alaska
Interstate Company).*
(10)-2- Agreement dated as of October 1, 1979, among the
parties to the Joint Venture Agreement referred to
in Exhibit (10)-1- above (filed as Exhibit 5.2 to
Registration Statement No. 2-66661 of Alaska
Interstate Company).*
* Incorporated herein by reference.<PAGE>
(10)-3- Amendment to the Operating Agreement dated April 1,
1990, between Roy M. Huffington, Inc., a Delaware
corporation, Ultramar Indonesia Limited, a Bermuda
corporation, Virginia Indonesia Company, a Delaware
corporation, Virginia International Company, a
Delaware corporation, Union Texas East Kalimantan
Limited, a Bahamian corporation, and Universe Gas &
Oil Company, Inc., a Liberian corporation. (filed as
Exhibit (10)-3- to the Company's 1993 Form 10-K (No.
1-8791)).*
(10)-4- Amended and Restated Production Sharing Contract
dated April 23, 1990 (effective August 8, 1968 -
August 7, 1998) by and between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina)
and Roy M. Huffington, Inc., Virginia International
Company, Virginia Indonesia Company, Ultramar
Indonesia Limited, Union Texas East Kalimantan
Limited, Universe Gas & Oil Company, Inc. and
Huffington Corporation. (filed as Exhibit (10)-4- to
the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-5- Production Sharing Contract dated April 23, 1990
(effective August 8, 1998 - August 7, 2018) between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara
(Pertamina) and Roy M. Huffington, Inc., Virginia
International Company, Virginia Indonesia Company,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Gas & Oil Company, Inc.
and Huffington Corporation. (filed as Exhibit (10)-
5- to the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-6- Nilam Unit Agreement, effective as of January 1,
1980, to establish the manner in which the Joint
Venture and Total will cooperate to develop the
unitized area of the Nilam Field.
(10)-7- Fourth Amended and Restated Implementation
Procedures for Crude Oil Liftings, effective as of
July 1, 1993, among Virginia Indonesia Company,
LASMO Sanga Sanga Limited, Opicoil Houston, Inc.,
Union Texas East Kalimantan Limited, Universe Gas &
Oil Company, Inc. and Virginia International
Company. (filed as Exhibit (10)-7- to the Company's
1994 Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.<PAGE>
(10)-8- Amended and Restated 1973 LNG Sales Contract, dated
as of the 1st day of January 1990, by and between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
as Seller, and Chubu Electric Power Co., Inc., The
Kansai Electric Power Co., Inc., Kyushu Electric
Power Co., Inc., Nippon Steel Corporation, Osaka Gas
Co., Ltd. and Toho Gas Co., Ltd., as Buyers. (filed
as Exhibit (10)-8- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-9- Amendment to the 1973 LNG Sales Contract dated as of
the 3rd day of December, 1973, amended by Amendment
No. 1 dated as of the 31st day of August, 1976, and
amended and restated as of the 1st day of January,
1990 ("1973 LNG Sales Contract"), is entered into as
of the 1st day of June, 1992, by and between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
a state enterprise of the Republic of Indonesia
(Seller), on the one hand, and Kyushu Electric Power
Co., Inc. (Kyushu Electric), Nippon Steel
Corporation (Nippon Steel), and Toho Gas Co., Ltd.
(Toho Gas), all corporations organized and existing
under the laws of Japan, on the other hand. (filed
as Exhibit (10)-9- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-10- Amended and Restated Supply Agreement (In Support of
the Amended and Restated 1973 LNG Sales Contract)
between Pertamina and Virginia Indonesia Company,
LASMO Sanga Sanga Limited, Opicoil Houston, Inc.,
Union Texas East Kalimantan Limited, Universe Gas &
Oil Company, Inc., and Virginia International
Company dated September 22, 1993, effective December
3, 1973. (filed as Exhibit (10)-10- to the Company's
1993 Form 10-K (No. 1-8791)).*
(10)-11- Amended and Restated Badak LNG Sales Contract, dated
as of the 1st day of January, 1990, by and between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
as Seller, and Chubu Electric Power Co., Inc., The
Kansai Electric Power Co., Inc., Osaka Gas Co., Ltd.
and Toho Gas Co., Ltd., as Buyers. (filed as Exhibit
(10)-11- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-12- Supply Agreement, dated as of April 14, 1981 between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara
(Pertamina) and the parties to the Joint Venture
Agreement, including the Company. (filed as Exhibit
(10)-12- to the Company's 1993 Form 10-K (No. 1-
8791)).*
* Incorporated herein by reference.<PAGE>
(10)-13- Seventh Supply Agreement for Excess Sales
(Additional Fixed Quantities under Badak LNG Sales
Contract as a Result of Contract Amendment and
Restatement) between Perusahaan Pertambangan Minyak
Dan Gas Bumi Negara and Virginia Indonesia Company,
Opicoil Houston, Inc., Ultramar Indonesia Limited,
Union Texas East Kalimantan Limited, Universe Gas &
Oil Company, Inc. and Virginia International
Company, dated September 28, 1992, but effective as
of January 1, 1990. (filed as Exhibit (10)-13- to
the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-14- Bontang II Trustee and Paying Agent Agreement
Amended and Restated as of July 15, 1991 among
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
Virginia Indonesia Company, Virginia International
Company, Union Texas East Kalimantan Limited,
Ultramar Indonesia Limited, Opicoil Houston, Inc.,
Universe Gas & Oil Company, Inc., Total Indonesie,
Unocal Indonesia, Ltd., Indonesia Petroleum, Ltd.
and Continental Bank International. (filed as
Exhibit (10)-14- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-15- Producers Agreement No. 2 dated as of June 9, 1987
by Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara (Pertamina), Roy M. Huffington, Inc.,
Virginia International Company, Ultramar Indonesia
Limited, Virginia Indonesia Company, Union Texas
East Kalimantan Limited, Universe Tankships, Inc.,
Huffington Corporation in favor of The Industrial
Bank of Japan Trust Company as Agent (filed as
Exhibit (10)-30- to the Company's 1987 Form 10-K
(No. 1-8791)).*
(10)-16- Badak III LNG Sales Contract between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina)
as Seller and Chinese Petroleum Corporation as Buyer
signed on March 19, 1987. (filed as Exhibit (10)-
16- to the Company's 1994 Form 10-K (No. 1-8791)).*
(10)-17- Badak III LNG Sales Contract Supply Agreement, dated
October 19, 1987 among Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara (Pertamina) and the
parties to the Joint Venture Agreement. (filed as
Exhibit (10)-17- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-18- LNG Sales and Purchase Contract (Korea II) effective
May 7, 1991 between Perusahaan Pertambangan Minyak
Dan Gas Bumi Negara and Korea Gas Corporation.
(filed as Exhibit (10)-18- to the Company's 1993
Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.<PAGE>
(10)-19- Schedule A to the LNG Sales and Purchase Contract
(Korea II FOB) between Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara and Korea Gas
Corporation. (filed as Exhibit (10)-19- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-20- Bontang III Producers Agreement, dated February 9,
1988, among Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara (Pertamina) and the parties to the Joint
Venture Agreement. (filed as Exhibit (10)-20- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-21- Amendment No. 1 to Bontang III Producers Agreement
dated as of May 31, 1988 among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara, Roy M.
Huffington, Inc., Huffington Corporation, Virginia
International Company, Virginia Indonesia Company,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Tankships, Inc., Total
Indonesie, Unocal Indonesia, Ltd., Indonesia
Petroleum, Ltd. and Train-E Finance Co., Ltd., as
Tranche A Lender, The Industrial Bank of Japan Trust
Company, as Agent and The Industrial Bank of Japan
Trust Company on behalf of the Tranche B Lenders.
(filed as Exhibit (10)-21- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-22- $316,000,000 Bontang III Loan Agreement dated
February 9, 1988 among Continental Bank
International as Trustee, Train-E Finance Co., Ltd.
as Tranche A Lender and The Industrial Bank of Japan
Trust Company as Agent. (filed as Exhibit (10)-23-
to the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-23- Bontang III Trustee and Paying Agent Agreement,
dated February 9, 1988, among Pertamina, Roy M.
Huffington, Inc., Huffington Corporation, Virginia
International Company, VICO, Ultrastar Indonesia
Limited, Union Texas East Kalimantan Limited,
Universe Tankships, Inc., Total Indonesia, Unocal
Indonesia, Ltd., Indonesia Petroleum, Ltd. and
Continental Bank International (filed as Exhibit
10.42 to the Union Texas Petroleum Holdings, Inc.'s
1991 Form 10-K (Commission File No. 1-9019)).*
* Incorporated herein by reference.<PAGE>
(10)-24- Amendment No. 1 to Bontang III Trustee and Paying
Agent Agreement, dated as of December 11, 1992,
among Pertamina, VICO, Virginia International
Company, Ultramar Indonesia Limited, Union Texas
East Kalimantan Limited, Opicoil Houston, Inc.,
Universe Gas & Oil Company, Inc., Total Indonesia,
Unocal Indonesia Ltd., Indonesia Petroleum, Ltd. and
Continental Bank International, as Bontang III
Trustee (filed as Exhibit 10.83 to the Union Texas
Petroleum Holdings, Inc.'s 1992 Form 10-K
(Commission File No. 1-9019)).*
(10)-25- Amended and Restated Debt Service Allocation
Agreement dated February 9, 1988 among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara and Roy M.
Huffington, Inc., Virginia International Company,
Ultramar Indonesia Limited, Virginia Indonesia
Company, Union Texas East Kalimantan Limited,
Universe Tankships, Inc., Huffington Corporation,
Total Indonesie, Unocal Indonesia, Ltd. and
Indonesia Petroleum, Ltd. (filed as Exhibit (10)-
26- to the Company's 1994 Form 10-K (No. 1-8791)).*
(10)-26- Letter agreement between Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara and Chinese Petroleum
Corporation, dated December 1, 1989. (filed as
Exhibit (10)-27- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-27- Badak IV LNG Sales Contract dated October 23, 1990
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara (Pertamina), as Seller and Osaka Gas Co.,
Ltd., Tokyo Gas Co., Ltd. and Toho Gas Co., Ltd., as
Buyers. (filed as Exhibit (10)-29- to the Company's
1993 Form 10-K (No. 1-8791)).*
(10)-28- LNG Sales Contract dated as of October 13, 1992
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, as Seller and Hiroshima Gas Co., Ltd. and
Nippon Gas Co., Ltd., as Buyers. (filed as Exhibit
(10)-30- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-29- LNG Sales Contract dated as of October 13, 1992
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, as Seller and Osaka Gas Co., Ltd., as Buyer.
(filed as Exhibit (10)-31- to the Company's 1993
Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.<PAGE>
(10)-30- Supply Agreement for Natural Gas to Badak IV LNG
Sales Contract dated August 12, 1991 between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
Virginia Indonesia Company, Opicoil Houston, Inc.,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Gas & Oil Company, Inc.
and Virginia International Company. (filed as
Exhibit (10)-32- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-31- Second Supply Agreement for Package IV Excess Sales
(Osaka Gas Contract - Package IV Quantities) between
Pertamina and Virginia Indonesia Company, LASMO
Sanga Sanga Limited, Opicoil Houston, Inc., Union
Texas East Kalimantan Limited, Universe Gas & Oil
Company, Inc., and Virginia International Company
dated September 22, 1993, effective January 1, 1991.
(filed as Exhibit (10)-33- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-32- Third Supply Agreement for Package IV Excess Sales
(Toho Gas Contract - Package IV Quantities) between
Pertamina and Virginia Indonesia Company, LASMO
Sanga Sanga Limited, Opicoil Houston, Inc., Union
Texas East Kalimantan Limited, Universe Gas & Oil
Company, Inc., and Virginia International Company
dated September 28, effective January 1, 1991.
(filed as Exhibit (10)-34- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-33- Eleventh Supply Agreement for Package IV Excess
Sales (1973 Contract Build-Down Quantities) between
Pertamina and Virginia Indonesia Company, LASMO
Sanga Sanga Limited, Opicoil Houston, Inc., Union
Texas East Kalimantan Limited, Universe Gas & Oil
Company, Inc., and Virginia International Company
dated September 22, 1993, effective January 1, 1990.
(filed as Exhibit (10)-35- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-34- Bontang IV Producers Agreement dated August 26, 1991
by Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, Virginia Indonesia Company, Opicoil Houston,
Inc., Virginia International Company, Ultramar
Indonesia Limited, Union Texas East Kalimantan
Limited, Universe Gas & Oil Company, Inc., Total
Indonesie, Unocal Indonesia, Ltd. and Indonesia
Petroleum, Ltd., in favor of The Chase Manhattan
Bank, N.A. as Agent for the Lenders. (filed as
Exhibit (10)-36- to the Company's 1993 Form 10-K
(No. 1-8791)).*
* Incorporated herein by reference.<PAGE>
(10)-35- $750,000,000 Bontang IV Loan Agreement dated August
26, 1991 among Continental Bank International as
Trustee under the Bontang IV Trustee and Paying
Agent Agreement as Borrower, Chase Manhattan Asia
Limited and The Mitsubishi Bank, Limited as
Coordinators, the other banks and financial
institutions named herein as Arrangers, Co-
Arrangers, Lead Managers, Managers, Co-Managers and
Lenders, The Chase Manhattan Bank, N.A. and the
Mitsubishi Bank, Limited as Co-Agents and The Chase
Manhattan Bank, N.A. as Agent. (filed as Exhibit
(10)-37- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-36- Bontang IV Trustee and Paying Agent Agreement dated
August 26, 1991 among Perusahaan Pertambangan Minyak
Dan Gas Bumi Negara, Virginia Indonesia Company,
Opicoil Houston, Inc., Virginia International
Company, Ultramar Indonesia Limited, Union Texas
East Kalimantan Limited, Universe Gas & Oil Company,
Inc., Total Indonesie, Unocal Indonesia, Ltd.,
Indonesia Petroleum, Ltd. and Continental Bank
International. (filed as Exhibit (10)-38- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-37- Amended and Restated Bontang Processing Agreement
dated February 9, 1988 among Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara and Roy M. Huffington,
Inc., Huffington Corporation, Virginia International
Company, Virginia Indonesia Company, Ultramar
Indonesia Limited, Union Texas East Kalimantan
Limited, Universe Tankships, Inc., Total Indonesie,
Unocal Indonesia, Ltd., Indonesia Petroleum, Ltd.
and P.T. Badak Natural Gas Liquefaction Company
(filed as Exhibit (10)-39- to the Company's 1988
Form 10-K (No. 1-8791)).*
(10)-38- Bontang LPG Sales and Purchase Contract between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
as Seller, and National Federation of Agricultural
Co-Operative Associations (Zen-Noh), as Buyer, dated
February 21, 1992. (filed as Exhibit (10)-42- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-39- Bontang LPG Sales and Purchase Contract between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
as Seller, and Japan Indonesia Oil Co., Ltd., as
Buyer, dated February 20, 1992. (filed as Exhibit
(10)-43- to the Company's 1993 Form 10-K (No. 1-
8791)).*
* Incorporated herein by reference.<PAGE>
(10)-40- Arun and Bontang LPG Sales and Purchase Contract
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara (Pertamina) as Seller and Mitsubishi
Corporation, Cosmo Oil Co., Ltd., Nippon Petroleum
Gas Co., Ltd., Showa Shell Sekiyu K.K., Kyodo Oil
Co., Ltd., Idemitsu Kosan Co., Ltd. and Mitsui
Liquefied Gas Co., Ltd. as Buyers dated July 15,
1986. (filed as Exhibit (10)-42- to the Company's
1994 Form 10-K (No. 1-8791)).*
(10)-41- Amendments to Arun and Bontang LPG Sales and
Purchase Contract, dated October 5, 1994, between
Pertamina, as Seller, and Mitsubishi Corporation,
Cosmo Oil Co., Ltd., Nippon Petroleum Gas Co., Ltd.,
Showa Shell Sekiyu K.K., Japan Energy Corporation,
Idemitsu Kosan Co., Ltd., and Mitsui Oil & Gas Co.,
Ltd., as Buyers. (filed as Exhibit 10.88 to the
Union Texas Petroleum Holdings, Inc.'s 1994 Form 10-
K (Commission File No. 1-9019)).*
(10)-42- Bontang LPG Supply Agreement, dated November 17,
1987, between Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara (Pertamina) and the parties to the Joint
Venture Agreement. (filed as Exhibit (10)-45- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-43- Advance Payment Agreement between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina)
and Arun Bontang Project Finance Co., Ltd., dated
February 16, 1987 (filed as Exhibit (4)-15- to the
Company's 1986 Form 10-K (No. 1-8791)).*
(10)-44- Agreement and Plan of Reorganization of ENSTAR
Corporation, dated December 22, 1989, by and among
Unimar Company, Ultrastar, Inc., Unistar, Inc.,
ENSTAR Corporation, Newstar Inc., Union Texas
Development Corporation, Union Texas Petroleum
Corporation and Ultramar America Limited. (filed as
Exhibit (10)-47- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-45- Amendment to Agreement and Plan of Reorganization of
ENSTAR Corporation, dated May 1, 1990, by and among
Unimar Company, Ultrastar, Inc., Unistar, Inc.,
ENSTAR Corporation, Ultramar Production Company,
Union Texas Development Corporation, Union Texas
Petroleum Corporation and Ultramar America Limited.
(filed as Exhibit (10)-48- to the Company's 1993
Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.<PAGE>
(10)-46- Addendum to Badak IV LNG Sales Contract Supply
Agreement (effective October 23, 1990), dated
January 31, 1994, by and between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara
("Pertamina") and Virginia Indonesia Company
("VICO"), LASMO Sanga Sanga Limited, Opicoil
Houston, Inc., Union Texas East Kalimantan Limited,
Universe Gas & Oil Company, Inc., and Virginia
International Company. (filed as Exhibit (10)-48-
to the Company's 1994 Form 10-K (No. 1-8791)).*
(10)-47- Memorandum of Agreement for Purchase and Sale of LNG
During 1995 - 1999 between Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara ("Pertamina") ("Seller")
and Korea Gas Corporation ("KGC") ("Buyer") for the
sale and purchase of certain quantities of LNG.
(filed as Exhibit (10)-49- to the Company's 1994
Form 10-K (No. 1-8791)).*
(10)-48- Second Amended and Restated 1973 LNG Sales Contract,
dated as of August 3, 1995 between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara
("Pertamina"), as Seller, and Chubu Electric Power
Co., Inc., The Kansai Electric Power Co., Inc/.
Kyushu Electric Power Co., Inc., Nippon Steel
Corporation, Osaka Gas Co., Ltd. and Toho Gas Co.,
Ltd., as the Buyers, with related letter agreement,
dated August 3, 1995, between Seller and Buyers
(filed as Exhibit 10.7 to the Union Texas Petroleum
Holdings, Inc. Form 10-Q for quarter ended September
30, 1995 (Commission File No. 1-9019)).*
(10)-49- Second Amended and Restated 1981 Badak LNG Sales
Contract, dated as of August 3, 1995, between
Pertamina, as Seller, and Chubu Electric Power Co.,
Inc., The Kansai Electric Power Co., Inc., Osaka Gas
Co., Ltd. and Toho Gas Co., Ltd., as Buyers with
related letter agreement, dated August 3, 1995,
between Seller and Buyers. (filed as Exhibit 10.106
to the Union Texas Petroleum Holdings, Inc.'s 1995
Form 10-K (Commission File No. 1-9019)).*
(10)-50- LNG Sales and Purchase Contract (Badak V) dated
August 12, 1995, between Pertamina and Korea Gas
Corporation. (filed as Exhibit 10.107 to the Union
Texas Petroleum Holdings, Inc.'s 1995 Form 10-K
(Commission File No. 1-9019)).*
(10)-51- LNG Sales and Purchase Contract (Badak VI), dated
October 25, 1995, between Pertamina and Chinese
Petroleum Corporation. (filed as Exhibit 10.108 to
the Union Texas Petroleum Holdings, Inc.'s 1995 Form
10-K (Commission File No. 1-9019)).*
* Incorporated herein by reference.<PAGE>
(10)-52- Allocation of Supply Entitlements between the Arun
and Bontang Plants for LNG Sales (effective January
1, 1995).
(10)-53- Memorandum of Understanding re: Supply Agreements
and Package VI Sales dated and effective as of the
27th day of October, 1995, by and among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara
("Pertamina"); TOTAL Indonesie and Indonesia
Petroleum, Ltd., (collectively referred to as the
"TOTAL Group"); Virginia Indonesia Company, LASMO
Sanga Sanga Limited, OPICOIL Houston, Inc., Union
Texas East Kalimantan Limited, Universe Gas & Oil
Company, Inc., and Virginia International Company
(collectively referred to as the "VICO Group");
Indonesia Petroleum, Ltd., in respect of its
interest in a certain portion of the Attaka Unit
(referred to as "INPEX Attaka"); and Unocal
Indonesia Company (referred to as "UNOCAL") (the
TOTAL Group, the VICO Group, INPEX Attaka, and
UNOCAL each referred to as an "East Kalimantan
Contractor Group" and collectively called the "East
Kalimantan Contractors").
(10)-54- Package V Supply Agreement for Natural Gas in
Support of the 1973 LNG Sales Contract Extension,
dated June 16, 1995, effective October 6, 1994,
between Pertamina and Virginia Indonesia Company,
LASMO Sanga Sanga Limited, OPICOIL Houston, Inc.,
Union Texas East Kalimantan Limited, Universe Gas
and Oil Company, Inc. and Virginia International
Company (filed as Exhibit 10.8 to the Union Texas
Petroleum Holdings, Inc. Form 10-Q for the quarter
ended September 30, 1995 (Commission File No. 1-
9010)).*
(10)-55- Package V Supply Agreement (1995 - 1999 LNG Sales to
Korea Gas Corp.) dated June 16, 1995, between
Pertamina and Virginia Indonesia Company, LASMO
Sanga Sanga Limited, Opicoil Houston, Inc., Union
Texas East Kalimantan Limited, Universe Gas & Oil
Company, Inc. and Virginia International Company.
(10)-56- Package V Supply Agreement (1998 - 1999 LNG Sales to
Chinese Petroleum Corporation), dated as of June 16,
1995, between Pertamina and Virginia Indonesia
Company, LASMO Sanga Sanga Limited, Opicoil Houston,
Inc., Union Texas East Kalimantan Limited, Universe
Gas & Oil Company, Inc. and Virginia International
Company.
* Incorporated herein by reference.<PAGE>
(10)-57- Tripartite Agreement Regarding Producer
Contributions to Dwiputrai Costs, dated as of
January 1, 1995, by and among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara
("Pertamina"); Mobil Oil Indonesia Inc. ("Mobil");
and Virginia Indonesia Company, Total Indonesie, and
Unocal Indonesia Company, acting on behalf of
themselves and all other LNG producers in the East
Kalimantan Production Sharing Contracts
(collectively, the "East Kalimantan Producers").
(10)-58- Amendment No. 1 to Amended and Restated Badak
Trustee and Paying Agent Agreement, dated as of July
1, 1995, among Continental Bank International, as
Trustee, and the Producers (filed as Exhibit 10.4 to
the Union Texas Petroleum Holdings, Inc. Form 10-Q
for the quarter ended September 30, 1995 (Commission
File No. 1-9019)).*
(10)-59- Amendment No. 1 to Bontang III Loan Agreement, dated
as of July 1, 1995, among Continental Bank
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
10.6 to the Union Texas Petroleum Holdings., Inc.
Form 10-Q for the quarter ended September 30, 1995
(Commission File No. 1-9019)).*
(10)-60- Amendment No. 1 to Amended and Restated Bontang
Excess Sales Trustee and Paying Agent Agreement,
dated as of July 1, 1995, among Continental Bank
International, as Trustee, and the Producers (filed
as Exhibit 10.5 to the Union Texas Petroleum
Holdings, Inc. Form 10-Q for the quarter ended
September 30, 1995 (Commission File No. 1-9019)).*
(10)-61- Bontang V Loan Agreement, dated as of July 1, 1995,
among BankAmerica International, as Trustee under
the Bontang V Trustee and Paying Agent Agreement, as
Borrower, Bontang Train-G Project Finance Co., Ltd.
("Tranche A Lender"), the banks named therein as
Tranche B Lenders, The Long-Term Credit Bank of
Japan, Limited, New York Branch ("Facility Agent"),
The Fuji Bank, Limited ("Intercreditor Agent"),
Credit Lyonnais ("Technical Agent"), and Credit
Lyonnais, The Fuji Bank, Limited and The Long-Term
Credit Bank of Japan, Limited (collectively, the
"Arrangers") (filed as Exhibit 10.1 to the Union
Texas Petroleum Holdings, Inc. Form 10-Q for the
quarter ended September 30, 1995 (Commission File
No. 1-9019)).*
* Incorporated herein by reference.<PAGE>
(10)-62- Bontang V Producers Agreement, dated as of July 1,
1995, by Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, Virginia Indonesia Company, OPICOIL Houston,
Inc., Virginia International Company, LASMO Sanga
Sanga Limited, Union Texas East Kalimantan Limited,
Universe Gas & Oil Company, Inc., Total Indonesie,
Unocal Indonesia Company and Indonesia Petroleum,
Ltd. (collectively, the "Producers"), in favor of
the Tranche A Lender, Facility Agent, Intercreditor
Agent, Technical agent and Arrangers (filed as
Exhibit 10.2 to the Union Texas Petroleum Holdings,
Inc. Form 10-Q for the quarter ended September 30,
1995 (Commission File No. 1-9019)).*
(10)-63- Bontang V Trustee and Paying Agent Agreement, dated
as of July 1, 1995, among the Producers and
BankAmerica International, as Trustee and Paying
Agent (filed as Exhibit 10.3 to the Union Texas
Petroleum Holdings, Inc. Form 10-Q for the quarter
ended September 30, 1995 (Commission File No. 1-
9019)).*
(10)-64- Bontang V Disbursement Trustee and Paying Agent
Agreement dated as of July 1, 1995, by and among
BankAmerica International, not in its individual
capacity but solely as trustee and paying agent (in
such capacity, the "Bontang V Trustee") under the
Bontang V Trustee and Paying Agent Agreement dated
as of July 1, 1995, as the same may be amended from
time to time (the "Bontang V Trust Agreement"); and
BankAmerica International, not in its individual
capacity but solely as disbursement trustee and
paying agent under this Agreement.
(21)-1- List of Subsidiaries of the Company.
(23)-1- Consent of KPMG Peat Marwick LLP.
(23)-2- Consent of Ernst & Young LLP.
(27)-1- Financial Data Schedule for the twelve months ended
December 31, 1995.
(b) Reports on Form 8-K
The Company filed a Form 8-K dated November 15, 1995
as required by SS 299.304 of Regulation S-K,
disclosing changes in Registrant's Certifying
Accountant.
* Incorporated herein by reference.<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
March 19, 1996 By /S/ WILLIAM M. KRIPS
William M. Krips
Chairman of the
Management Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities indicated as of March
19, 1996.
By /S/ GEORGE W. BERKO By /S/ LARRY D. KALMBACH
George W. Berko Larry D. Kalmbach
Management Board Management Board
(LASMO Representative) (UTPH Representative)
By /S/ IAN D. BROWN By /S/ WILLIAM M. KRIPS
Ian D. Brown William M. Krips
Management Board Chairman of the
(LASMO Representative) Management Board
(UTPH Representative)
By /S/ RICHARD L. SMERNOFF By /S/ ARTHUR W. PEABODY, JR.
Richard L. Smernoff Arthur W. Peabody, Jr.
Management Board Management Board
(LASMO Representative) (UTPH Representative)
<PAGE>
INDEX TO EXHIBITS
Sequential
Numbered
Exhibit Number Page
The following documents are included as Exhibits to this Report.
Unless it has been indicated that a document listed below is
incorporated by reference herein, copies of the document have been
filed herewith.
(2)-1- Merger Agreement, dated May 22, 1984, and Amendment
Agreements thereto, dated June 8, 1984 and June 12,
1984 (incorporated by reference to Annex A to the
Prospectus/Proxy Statement included in the
Company's Registration Statement on Form S-14 (No.
2-93037)).*
(2)-2- Agreement of Merger, dated as of August 28, 1984
(incorporated by reference to Annex B to the
Prospectus/Proxy Statement included in the
Company's Registration Statement on Form S-14 (No.
2-93037)).*
(2)-3- Divestiture Agreement, dated June 20, 1984 (filed
as Exhibit 2.3 to the Company's Registration
Statement on Form S-14 (No. 2-93037)).*
(3)-1- Amended and Restated Agreement of General
Partnership of Unimar Company dated September 11,
1990 between Unistar, Inc. and Ultrastar, Inc.
(filed as Exhibit (3)-4- to the Company's 1990 Form
10-K (No. 18791)).*
(4)-1- Form of Indenture between Unimar and Irving Trust
Company, as Trustee (filed as Exhibit 4 to the
Company's Registration Statement on Form S-14 (No.
2-93037)).*
(4)-2- First Supplemental Indenture, dated as of October
31, 1986, to the Indenture between Unimar and
Irving Trust Co., as Trustee (Exhibit (4)-1 above)
(filed as Exhibit 10.114 to Union Texas Petroleum
Holdings, Inc.'s Registration Statement on Form S-1
(No. 33-16267)).*
(10)-1- Joint Venture Agreement, dated August 8, 1968,
among Roy M. Huffington, Inc., Virginia
International Company, Austral Petroleum Gas
Corporation, Golden Eagle Indonesia, Limited, and
Union Texas Far East Corporation, as amended (filed
as Exhibit 6.6 to Registration Statement No. 2-
58834 of Alaska Interstate Company).*
* Incorporated herein by reference.<PAGE>
(10)-2- Agreement dated as of October 1, 1979, among the
parties to the Joint Venture Agreement referred to
in Exhibit (10)-1- above (filed as Exhibit 5.2 to
Registration Statement No. 2-66661 of Alaska
Interstate Company).*
(10)-3- Amendment to the Operating Agreement dated April 1,
1990, between Roy M. Huffington, Inc., a Delaware
corporation, Ultramar Indonesia Limited, a Bermuda
corporation, Virginia Indonesia Company, a Delaware
corporation, Virginia International Company, a
Delaware corporation, Union Texas East Kalimantan
Limited, a Bahamian corporation, and Universe Gas &
Oil Company, Inc., a Liberian corporation. (filed
as Exhibit (10)-3- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-4- Amended and Restated Production Sharing Contract
dated April 23, 1990 (effective August 8, 1968 -
August 7, 1998) by and between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina)
and Roy M. Huffington, Inc., Virginia International
Company, Virginia Indonesia Company, Ultramar
Indonesia Limited, Union Texas East Kalimantan
Limited, Universe Gas & Oil Company, Inc. and
Huffington Corporation. (filed as Exhibit (10)-4-
to the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-5- Production Sharing Contract dated April 23, 1990
(effective August 8, 1998 - August 7, 2018) between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara
(Pertamina) and Roy M. Huffington, Inc., Virginia
International Company, Virginia Indonesia Company,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Gas & Oil Company,
Inc. and Huffington Corporation. (filed as Exhibit
(10)-5- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-6- Nilam Unit Agreement, effective as of January 1,
1980, to establish the manner in which the Joint
Venture and Total will cooperate to develop the
unitized area of the Nilam Field.
(10)-7- Fourth Amended and Restated Implementation
Procedures for Crude Oil Liftings, effective as of
July 1, 1993, among Virginia Indonesia Company,
LASMO Sanga Sanga Limited, Opicoil Houston, Inc.,
Union Texas East Kalimantan Limited, Universe Gas &
Oil Company, Inc. and Virginia International
Company. (filed as Exhibit (10)-7- to the
Company's 1994 Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.<PAGE>
(10)-8- Amended and Restated 1973 LNG Sales Contract, dated
as of the 1st day of January 1990, by and between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
as Seller, and Chubu Electric Power Co., Inc., The
Kansai Electric Power Co., Inc., Kyushu Electric
Power Co., Inc., Nippon Steel Corporation, Osaka
Gas Co., Ltd. and Toho Gas Co., Ltd., as Buyers.
(filed as Exhibit (10)-8- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-9- Amendment to the 1973 LNG Sales Contract dated as
of the 3rd day of December, 1973, amended by
Amendment No. 1 dated as of the 31st day of August,
1976, and amended and restated as of the 1st day of
January, 1990 ("1973 LNG Sales Contract"), is
entered into as of the 1st day of June, 1992, by
and between Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara, a state enterprise of the Republic of
Indonesia (Seller), on the one hand, and Kyushu
Electric Power Co., Inc. (Kyushu Electric), Nippon
Steel Corporation (Nippon Steel), and Toho Gas Co.,
Ltd. (Toho Gas), all corporations organized and
existing under the laws of Japan, on the other
hand. (filed as Exhibit (10)-9- to the Company's
1993 Form 10-K (No. 1-8791)).*
(10)-10- Amended and Restated Supply Agreement (In Support
of the Amended and Restated 1973 LNG Sales
Contract) between Pertamina and Virginia Indonesia
Company, LASMO Sanga Sanga Limited, Opicoil
Houston, Inc., Union Texas East Kalimantan Limited,
Universe Gas & Oil Company, Inc., and Virginia
International Company dated September 22, 1993,
effective December 3, 1973. (filed as Exhibit (10)-
10- to the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-11- Amended and Restated Badak LNG Sales Contract,
dated as of the 1st day of January, 1990, by and
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, as Seller, and Chubu Electric Power Co.,
Inc., The Kansai Electric Power Co., Inc., Osaka
Gas Co., Ltd. and Toho Gas Co., Ltd., as Buyers.
(filed as Exhibit (10)-11- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-12- Supply Agreement, dated as of April 14, 1981
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara (Pertamina) and the parties to the Joint
Venture Agreement, including the Company. (filed as
Exhibit (10)-12- to the Company's 1993 Form 10-K
(No. 1-8791)).*
* Incorporated herein by reference.<PAGE>
(10)-13- Seventh Supply Agreement for Excess Sales
(Additional Fixed Quantities under Badak LNG Sales
Contract as a Result of Contract Amendment and
Restatement) between Perusahaan Pertambangan Minyak
Dan Gas Bumi Negara and Virginia Indonesia Company,
Opicoil Houston, Inc., Ultramar Indonesia Limited,
Union Texas East Kalimantan Limited, Universe Gas &
Oil Company, Inc. and Virginia International
Company, dated September 28, 1992, but effective as
of January 1, 1990. (filed as Exhibit (10)-13- to
the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-14- Bontang II Trustee and Paying Agent Agreement
Amended and Restated as of July 15, 1991 among
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
Virginia Indonesia Company, Virginia International
Company, Union Texas East Kalimantan Limited,
Ultramar Indonesia Limited, Opicoil Houston, Inc.,
Universe Gas & Oil Company, Inc., Total Indonesie,
Unocal Indonesia, Ltd., Indonesia Petroleum, Ltd.
and Continental Bank International. (filed as
Exhibit (10)-14- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-15- Producers Agreement No. 2 dated as of June 9, 1987
by Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara (Pertamina), Roy M. Huffington, Inc.,
Virginia International Company, Ultramar Indonesia
Limited, Virginia Indonesia Company, Union Texas
East Kalimantan Limited, Universe Tankships, Inc.,
Huffington Corporation in favor of The Industrial
Bank of Japan Trust Company as Agent (filed as
Exhibit (10)-30- to the Company's 1987 Form 10-K
(No. 1-8791)).*
(10)-16- Badak III LNG Sales Contract between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina)
as Seller and Chinese Petroleum Corporation as
Buyer signed on March 19, 1987. (filed as Exhibit
(10)-16- to the Company's 1994 Form 10-K (No. 1-
8791)).*
(10)-17- Badak III LNG Sales Contract Supply Agreement,
dated October 19, 1987 among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina)
and the parties to the Joint Venture Agreement.
(filed as Exhibit (10)-17- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-18- LNG Sales and Purchase Contract (Korea II)
effective May 7, 1991 between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara and Korea
Gas Corporation. (filed as Exhibit (10)-18- to the
Company's 1993 Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.<PAGE>
(10)-19- Schedule A to the LNG Sales and Purchase Contract
(Korea II FOB) between Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara and Korea Gas
Corporation. (filed as Exhibit (10)-19- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-20- Bontang III Producers Agreement, dated February 9,
1988, among Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara (Pertamina) and the parties to the
Joint Venture Agreement. (filed as Exhibit (10)-20-
to the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-21- Amendment No. 1 to Bontang III Producers Agreement
dated as of May 31, 1988 among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara, Roy M.
Huffington, Inc., Huffington Corporation, Virginia
International Company, Virginia Indonesia Company,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Tankships, Inc., Total
Indonesie, Unocal Indonesia, Ltd., Indonesia
Petroleum, Ltd. and Train-E Finance Co., Ltd., as
Tranche A Lender, The Industrial Bank of Japan
Trust Company, as Agent and The Industrial Bank of
Japan Trust Company on behalf of the Tranche B
Lenders. (filed as Exhibit (10)-21- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-22- $316,000,000 Bontang III Loan Agreement dated
February 9, 1988 among Continental Bank
International as Trustee, Train-E Finance Co., Ltd.
as Tranche A Lender and The Industrial Bank of
Japan Trust Company as Agent. (filed as Exhibit
(10)-23- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-23- Bontang III Trustee and Paying Agent Agreement,
dated February 9, 1988, among Pertamina, Roy M.
Huffington, Inc., Huffington Corporation, Virginia
International Company, VICO, Ultrastar Indonesia
Limited, Union Texas East Kalimantan Limited,
Universe Tankships, Inc., Total Indonesia, Unocal
Indonesia, Ltd., Indonesia Petroleum, Ltd. and
Continental Bank International (filed as Exhibit
10.42 to the Union Texas Petroleum Holdings, Inc.'s
1991 Form 10-K (Commission File No. 1-9019)).*
* Incorporated herein by reference.<PAGE>
(10)-24- Amendment No. 1 to Bontang III Trustee and Paying
Agent Agreement, dated as of December 11, 1992,
among Pertamina, VICO, Virginia International
Company, Ultramar Indonesia Limited, Union Texas
East Kalimantan Limited, Opicoil Houston, Inc.,
Universe Gas & Oil Company, Inc., Total Indonesia,
Unocal Indonesia Ltd., Indonesia Petroleum, Ltd.
and Continental Bank International, as Bontang III
Trustee (filed as Exhibit 10.83 to the Union Texas
Petroleum Holdings, Inc.'s 1992 Form 10-K
(Commission File No. 1-9019)).*
(10)-25- Amended and Restated Debt Service Allocation
Agreement dated February 9, 1988 among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara and Roy M.
Huffington, Inc., Virginia International Company,
Ultramar Indonesia Limited, Virginia Indonesia
Company, Union Texas East Kalimantan Limited,
Universe Tankships, Inc., Huffington Corporation,
Total Indonesie, Unocal Indonesia, Ltd. and
Indonesia Petroleum, Ltd. (filed as Exhibit (10)-
26- to the Company's 1994 Form 10-K (No. 1-8791)).*
(10)-26- Letter agreement between Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara and Chinese Petroleum
Corporation, dated December 1, 1989. (filed as
Exhibit (10)-27- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-27- Badak IV LNG Sales Contract dated October 23, 1990
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara (Pertamina), as Seller and Osaka Gas Co.,
Ltd., Tokyo Gas Co., Ltd. and Toho Gas Co., Ltd.,
as Buyers. (filed as Exhibit (10)-29- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-28- LNG Sales Contract dated as of October 13, 1992
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, as Seller and Hiroshima Gas Co., Ltd. and
Nippon Gas Co., Ltd., as Buyers. (filed as Exhibit
(10)-30- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-29- LNG Sales Contract dated as of October 13, 1992
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, as Seller and Osaka Gas Co., Ltd., as
Buyer. (filed as Exhibit (10)-31- to the Company's
1993 Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.<PAGE>
(10)-30- Supply Agreement for Natural Gas to Badak IV LNG
Sales Contract dated August 12, 1991 between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
Virginia Indonesia Company, Opicoil Houston, Inc.,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Gas & Oil Company,
Inc. and Virginia International Company. (filed as
Exhibit (10)-32- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-31- Second Supply Agreement for Package IV Excess Sales
(Osaka Gas Contract - Package IV Quantities)
between Pertamina and Virginia Indonesia Company,
LASMO Sanga Sanga Limited, Opicoil Houston, Inc.,
Union Texas East Kalimantan Limited, Universe Gas &
Oil Company, Inc., and Virginia International
Company dated September 22, 1993, effective January
1, 1991. (filed as Exhibit (10)-33- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-32- Third Supply Agreement for Package IV Excess Sales
(Toho Gas Contract - Package IV Quantities) between
Pertamina and Virginia Indonesia Company, LASMO
Sanga Sanga Limited, Opicoil Houston, Inc., Union
Texas East Kalimantan Limited, Universe Gas & Oil
Company, Inc., and Virginia International Company
dated September 28, effective January 1, 1991.
(filed as Exhibit (10)-34- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-33- Eleventh Supply Agreement for Package IV Excess
Sales (1973 Contract Build-Down Quantities) between
Pertamina and Virginia Indonesia Company, LASMO
Sanga Sanga Limited, Opicoil Houston, Inc., Union
Texas East Kalimantan Limited, Universe Gas & Oil
Company, Inc., and Virginia International Company
dated September 22, 1993, effective January 1,
1990. (filed as Exhibit (10)-35- to the Company's
1993 Form 10-K (No. 1-8791)).*
(10)-34- Bontang IV Producers Agreement dated August 26,
1991 by Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, Virginia Indonesia Company, Opicoil
Houston, Inc., Virginia International Company,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Gas & Oil Company,
Inc., Total Indonesie, Unocal Indonesia, Ltd. and
Indonesia Petroleum, Ltd., in favor of The Chase
Manhattan Bank, N.A. as Agent for the Lenders.
(filed as Exhibit (10)-36- to the Company's 1993
Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.<PAGE>
(10)-35- $750,000,000 Bontang IV Loan Agreement dated August
26, 1991 among Continental Bank International as
Trustee under the Bontang IV Trustee and Paying
Agent Agreement as Borrower, Chase Manhattan Asia
Limited and The Mitsubishi Bank, Limited as
Coordinators, the other banks and financial
institutions named herein as Arrangers, Co-
Arrangers, Lead Managers, Managers, Co-Managers and
Lenders, The Chase Manhattan Bank, N.A. and the
Mitsubishi Bank, Limited as Co-Agents and The Chase
Manhattan Bank, N.A. as Agent. (filed as Exhibit
(10)-37- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-36- Bontang IV Trustee and Paying Agent Agreement dated
August 26, 1991 among Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara, Virginia Indonesia
Company, Opicoil Houston, Inc., Virginia
International Company, Ultramar Indonesia Limited,
Union Texas East Kalimantan Limited, Universe Gas &
Oil Company, Inc., Total Indonesie, Unocal
Indonesia, Ltd., Indonesia Petroleum, Ltd. and
Continental Bank International. (filed as Exhibit
(10)-38- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-37- Amended and Restated Bontang Processing Agreement
dated February 9, 1988 among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara and Roy M.
Huffington, Inc., Huffington Corporation, Virginia
International Company, Virginia Indonesia Company,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Tankships, Inc., Total
Indonesie, Unocal Indonesia, Ltd., Indonesia
Petroleum, Ltd. and P.T. Badak Natural Gas
Liquefaction Company (filed as Exhibit (10)-39- to
the Company's 1988 Form 10-K (No. 1-8791)).*
(10)-38- Bontang LPG Sales and Purchase Contract between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
as Seller, and National Federation of Agricultural
Co-Operative Associations (Zen-Noh), as Buyer,
dated February 21, 1992. (filed as Exhibit (10)-42-
to the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-39- Bontang LPG Sales and Purchase Contract between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
as Seller, and Japan Indonesia Oil Co., Ltd., as
Buyer, dated February 20, 1992. (filed as Exhibit
(10)-43- to the Company's 1993 Form 10-K (No. 1-
8791)).*
* Incorporated herein by reference.<PAGE>
(10)-40- Arun and Bontang LPG Sales and Purchase Contract
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara (Pertamina) as Seller and Mitsubishi
Corporation, Cosmo Oil Co., Ltd., Nippon Petroleum
Gas Co., Ltd., Showa Shell Sekiyu K.K., Kyodo Oil
Co., Ltd., Idemitsu Kosan Co., Ltd. and Mitsui
Liquefied Gas Co., Ltd. as Buyers dated July 15,
1986. (filed as Exhibit (10)-42- to the Company's
1994 Form 10-K (No. 1-8791)).*
(10)-41- Amendments to Arun and Bontang LPG Sales and
Purchase Contract, dated October 5, 1994, between
Pertamina, as Seller, and Mitsubishi Corporation,
Cosmo Oil Co., Ltd., Nippon Petroleum Gas Co.,
Ltd., Showa Shell Sekiyu K.K., Japan Energy
Corporation, Idemitsu Kosan Co., Ltd., and Mitsui
Oil & Gas Co., Ltd., as Buyers. (filed as Exhibit
10.88 to the Union Texas Petroleum Holdings, Inc.'s
1994 Form 10-K (Commission File No. 1-9019)).*
(10)-42- Bontang LPG Supply Agreement, dated November 17,
1987, between Perusahaan Pertambangan Minyak Dan
Gas Bumi Negara (Pertamina) and the parties to the
Joint Venture Agreement. (filed as Exhibit (10)-45-
to the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-43- Advance Payment Agreement between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina)
and Arun Bontang Project Finance Co., Ltd., dated
February 16, 1987 (filed as Exhibit (4)-15- to the
Company's 1986 Form 10-K (No. 1-8791)).*
(10)-44- Agreement and Plan of Reorganization of ENSTAR
Corporation, dated December 22, 1989, by and among
Unimar Company, Ultrastar, Inc., Unistar, Inc.,
ENSTAR Corporation, Newstar Inc., Union Texas
Development Corporation, Union Texas Petroleum
Corporation and Ultramar America Limited. (filed as
Exhibit (10)-47- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-45- Amendment to Agreement and Plan of Reorganization
of ENSTAR Corporation, dated May 1, 1990, by and
among Unimar Company, Ultrastar, Inc., Unistar,
Inc., ENSTAR Corporation, Ultramar Production
Company, Union Texas Development Corporation, Union
Texas Petroleum Corporation and Ultramar America
Limited. (filed as Exhibit (10)-48- to the
Company's 1993 Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.<PAGE>
(10)-46- Addendum to Badak IV LNG Sales Contract Supply
Agreement (effective October 23, 1990), dated
January 31, 1994, by and between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara
("Pertamina") and Virginia Indonesia Company
("VICO"), LASMO Sanga Sanga Limited, Opicoil
Houston, Inc., Union Texas East Kalimantan Limited,
Universe Gas & Oil Company, Inc., and Virginia
International Company. (filed as Exhibit (10)-48-
to the Company's 1994 Form 10-K (No. 1-8791)).*
(10)-47- Memorandum of Agreement for Purchase and Sale of
LNG During 1995 - 1999 between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara
("Pertamina") ("Seller") and Korea Gas Corporation
("KGC") ("Buyer") for the sale and purchase of
certain quantities of LNG. (filed as Exhibit (10)-
49- to the Company's 1994 Form 10-K (No. 1-8791)).*
(10)-48- Second Amended and Restated 1973 LNG Sales
Contract, dated as of August 3, 1995 between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara
("Pertamina"), as Seller, and Chubu Electric Power
Co., Inc., The Kansai Electric Power Co., Inc/.
Kyushu Electric Power Co., Inc., Nippon Steel
Corporation, Osaka Gas Co., Ltd. and Toho Gas Co.,
Ltd., as the Buyers, with related letter agreement,
dated August 3, 1995, between Seller and Buyers
(filed as Exhibit 10.7 to the Union Texas Petroleum
Holdings, Inc. Form 10-Q for quarter ended
September 30, 1995 (Commission File No. 1-9019)).*
(10)-49- Second Amended and Restated 1981 Badak LNG Sales
Contract, dated as of August 3, 1995, between
Pertamina, as Seller, and Chubu Electric Power Co.,
Inc., The Kansai Electric Power Co., Inc., Osaka
Gas Co., Ltd. and Toho Gas Co., Ltd., as Buyers
with related letter agreement, dated August 3,
1995, between Seller and Buyers. (filed as Exhibit
10.106 to the Union Texas Petroleum Holdings,
Inc.'s 1995 Form 10-K (Commission File No. 1-
9019)).*
(10)-50- LNG Sales and Purchase Contract (Badak V) dated
August 12, 1995, between Pertamina and Korea Gas
Corporation. (filed as Exhibit 10.107 to the Union
Texas Petroleum Holdings, Inc.'s 1995 Form 10-K
(Commission File No. 1-9019)).*
(10)-51- LNG Sales and Purchase Contract (Badak VI), dated
October 25, 1995, between Pertamina and Chinese
Petroleum Corporation. (filed as Exhibit 10.108 to
the Union Texas Petroleum Holdings, Inc.'s 1995
Form 10-K (Commission File No. 1-9019)).*
* Incorporated herein by reference.<PAGE>
(10)-52- Allocation of Supply Entitlements between the Arun
and Bontang Plants for LNG Sales (effective January
1, 1995).
(10)-53- Memorandum of Understanding re: Supply Agreements
and Package VI Sales dated and effective as of the
27th day of October, 1995, by and among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara
("Pertamina"); TOTAL Indonesie and Indonesia
Petroleum, Ltd., (collectively referred to as the
"TOTAL Group"); Virginia Indonesia Company, LASMO
Sanga Sanga Limited, OPICOIL Houston, Inc., Union
Texas East Kalimantan Limited, Universe Gas & Oil
Company, Inc., and Virginia International Company
(collectively referred to as the "VICO Group");
Indonesia Petroleum, Ltd., in respect of its
interest in a certain portion of the Attaka Unit
(referred to as "INPEX Attaka"); and Unocal
Indonesia Company (referred to as "UNOCAL") (the
TOTAL Group, the VICO Group, INPEX Attaka, and
UNOCAL each referred to as an "East Kalimantan
Contractor Group" and collectively called the "East
Kalimantan Contractors").
(10)-54- Package V Supply Agreement for Natural Gas in
Support of the 1973 LNG Sales Contract Extension,
dated June 16, 1995, effective October 6, 1994,
between Pertamina and Virginia Indonesia Company,
LASMO Sanga Sanga Limited, OPICOIL Houston, Inc.,
Union Texas East Kalimantan Limited, Universe Gas
and Oil Company, Inc. and Virginia International
Company (filed as Exhibit 10.8 to the Union Texas
Petroleum Holdings, Inc. Form 10-Q for the quarter
ended September 30, 1995 (Commission File No. 1-
9010)).*
(10)-55- Package V Supply Agreement (1995 - 1999 LNG Sales
to Korea Gas Corp.) dated June 16, 1995, between
Pertamina and Virginia Indonesia Company, LASMO
Sanga Sanga Limited, Opicoil Houston, Inc., Union
Texas East Kalimantan Limited, Universe Gas & Oil
Company, Inc. and Virginia International Company.
(10)-56- Package V Supply Agreement (1998 - 1999 LNG Sales
to Chinese Petroleum Corporation), dated as of June
16, 1995, between Pertamina and Virginia Indonesia
Company, LASMO Sanga Sanga Limited, Opicoil
Houston, Inc., Union Texas East Kalimantan Limited,
Universe Gas & Oil Company, Inc. and Virginia
International Company.
* Incorporated herein by reference.<PAGE>
(10)-57- Tripartite Agreement Regarding Producer
Contributions to Dwiputrai Costs, dated as of
January 1, 1995, by and among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara
("Pertamina"); Mobil Oil Indonesia Inc. ("Mobil");
and Virginia Indonesia Company, Total Indonesie,
and Unocal Indonesia Company, acting on behalf of
themselves and all other LNG producers in the East
Kalimantan Production Sharing Contracts
(collectively, the "East Kalimantan Producers").
(10)-58- Amendment No. 1 to Amended and Restated Badak
Trustee and Paying Agent Agreement, dated as of
July 1, 1995, among Continental Bank International,
as Trustee, and the Producers (filed as Exhibit
10.4 to the Union Texas Petroleum Holdings, Inc.
Form 10-Q for the quarter ended September 30, 1995
(Commission File No. 1-9019)).*
(10)-59- Amendment No. 1 to Bontang III Loan Agreement,
dated as of July 1, 1995, among Continental Bank
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
10.6 to the Union Texas Petroleum Holdings., Inc.
Form 10-Q for the quarter ended September 30, 1995
(Commission File No. 1-9019)).*
(10)-60- Amendment No. 1 to Amended and Restated Bontang
Excess Sales Trustee and Paying Agent Agreement,
dated as of July 1, 1995, among Continental Bank
International, as Trustee, and the Producers (filed
as Exhibit 10.5 to the Union Texas Petroleum
Holdings, Inc. Form 10-Q for the quarter ended
September 30, 1995 (Commission File No. 1-9019)).*
(10)-61- Bontang V Loan Agreement, dated as of July 1, 1995,
among BankAmerica International, as Trustee under
the Bontang V Trustee and Paying Agent Agreement,
as Borrower, Bontang Train-G Project Finance Co.,
Ltd. ("Tranche A Lender"), the banks named therein
as Tranche B Lenders, The Long-Term Credit Bank of
Japan, Limited, New York Branch ("Facility Agent"),
The Fuji Bank, Limited ("Intercreditor Agent"),
Credit Lyonnais ("Technical Agent"), and Credit
Lyonnais, The Fuji Bank, Limited and The Long-Term
Credit Bank of Japan, Limited (collectively, the
"Arrangers") (filed as Exhibit 10.1 to the Union
Texas Petroleum Holdings, Inc. Form 10-Q for the
quarter ended September 30, 1995 (Commission File
No. 1-9019)).*
* Incorporated herein by reference.<PAGE>
(10)-62- Bontang V Producers Agreement, dated as of July 1,
1995, by Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara, Virginia Indonesia Company, OPICOIL
Houston, Inc., Virginia International Company,
LASMO Sanga Sanga Limited, Union Texas East
Kalimantan Limited, Universe Gas & Oil Company,
Inc., Total Indonesie, Unocal Indonesia Company and
Indonesia Petroleum, Ltd. (collectively, the
"Producers"), in favor of the Tranche A Lender,
Facility Agent, Intercreditor Agent, Technical
agent and Arrangers (filed as Exhibit 10.2 to the
Union Texas Petroleum Holdings, Inc. Form 10-Q for
the quarter ended September 30, 1995 (Commission
File No. 1-9019)).*
(10)-63- Bontang V Trustee and Paying Agent Agreement, dated
as of July 1, 1995, among the Producers and
BankAmerica International, as Trustee and Paying
Agent (filed as Exhibit 10.3 to the Union Texas
Petroleum Holdings, Inc. Form 10-Q for the quarter
ended September 30, 1995 (Commission File No. 1-
9019)).*
(10)-64- Bontang V Disbursement Trustee and Paying Agent
Agreement dated as of July 1, 1995, by and among
BankAmerica International, not in its individual
capacity but solely as trustee and paying agent (in
such capacity, the "Bontang V Trustee") under the
Bontang V Trustee and Paying Agent Agreement dated
as of July 1, 1995, as the same may be amended from
time to time (the "Bontang V Trust Agreement"); and
BankAmerica International, not in its individual
capacity but solely as disbursement trustee and
paying agent under this Agreement.
(21)-1- List of Subsidiaries of the Company.
(23)-1- Consent of KPMG Peat Marwick LLP.
(23)-2- Consent of Ernst & Young LLP.
(27)-1- Financial Data Schedule for the twelve months ended
December 31, 1995.
(b) Reports on Form 8-K
The Company filed a Form 8-K dated November 15,
1995 as required by SS 299.304 of Regulation S-K,
disclosing changes in Registrant's Certifying
Accountant.
* Incorporated herein by reference.
NILAM UNIT AGREEMENT
EAST KALIMANTAN
ROY M. HUFFINGTON, INC., ET AL. - TOTAL INDONESIE, ET AL.
THIS AGREEMENT IS SUBJECT TO ARBITRATION UNDER THE TEXAS GENERAL
ARBITRATION ACT ART. 224 (VERNON'S ANNOTATED TEXAS STATUTES)
<PAGE>
THIS AGREEMENT, by and among ROY M. HUFFINGTON, INC., a
Delaware corporation ("Huffco"), VIRGINIA INTERNATIONAL COMPANY, a
Virginia corporation ("Virginia"), THE SUPERIOR OIL COMPANY, a
Nevada corporation, GOLDEN EAGLE INDONESIA LIMITED, a Bermuda
corporation, UNION TEXAS FAR EAST CORPORATION, a Delaware
corporation, and UNIVERSE TANKSHIPS, INC., a Liberian corporation
(herein collectively referred to as the "Huffington Venturers");
and TOTAL INDONESIA ("Total"), a French corporation, and INDONESIA
PETROLEUM, Ltd. ("Inpex"), a Japanese corporation (herein
collectively referred to as the "Total Venturers"), subject in all
respects to the concurrence of PERUSAHAAN PERTAMBANGAN MINYAK DAN
GAS BUMI NEGARA ("Pertamina"),
WITNESSETH:
RECITALS:
1. On the 8th day of August, 1968, Virginia and Huffco, on
the one hand, and P. N. PERTAMBANGAN MINJAK NASIONAL (predecessor
to Pertamina), on the other, entered into a Production Sharing
Contract covering certain specified areas in the Republic of
Indonesia. This contract, as the same has from time to time been
amended since August 8, 1968, is hereafter for convenience referred
to as the Huffco Contract and the area covered thereby as the
Huffco Area.
2. Those of the Huffington Venturers other than Huffco and
Virginia have succeeded to undivided interests in the Huffco
Contract, and the Huffington Venturers are the owners of the rights
accorded to Huffco and Virginia thereunder. Huffco acts as
contract operator for the Huffington Venturers in respect of
petroleum operations under the Huffco Contract on the Huffco Area
under and pursuant to; an Operating Agreement dated August 8, 1968,
by and among the Huffington Venturers, or their predecessors in
interest. Said Operating Agreement is hereafter for convenience
referred to as the Huffco Operating Agreement.
3. On the 6th day of October, 1966, Japan Petroleum
Exploration Company, Ltd. (predecessor to Inpex in interest)
entered into a Production Sharing Contract with P. N. PERTAMBANGAN
MINJAK NASIONAL (predecessor to Pertamina) covering certain
specified areas in Indonesia. This contract, as the same has from
time to time been amended since October 6, 1966, is hereafter for
convenience referred to as the Inpex Contract and the area covered
thereby as the Total-Inpex Area.
4. Total has succeeded to an undivided interest in the
Inpex Contract and the Total Venturers are the owners of the rights
accorded to Japan Petroleum Exploration Company, Ltd. thereunder.
Total acts as contract operator for the Total Venturers in respect
to petroleum operations under the Inpex Contract on the Total-Inpex
Area under and pursuant to an Operating Agreement dated April 8,
1971, by and among the Total Venturers, or their predecessors in
interest. Said Operating Agreement is hereafter for convenience
referred to as the Total-Inpex Operating Agreement.
5. The Huffington Venturers and the Total Venturers have
heretofore conducted certain petroleum exploration activities on
their respective areas, which areas have a common boundary. The
results of such exploration indicate the presence of a geological
structure straddling the common boundary. Within the geological
structure hydrocarbons are contained on both sides of the common
boundary. This geological structure has been designated the Nilam
Structure.
6. It is a requirement of the Government of the Republic of
Indonesia, through its State Enterprise Pertamina, for the Total
Venturers and the Huffington Venturers to cooperate mutually in the
exploration, development and production of hydrocarbons from the
Nilam Structure in accordance with the terms and conditions of the
respective Production Sharing Contracts, the laws, rules and
regulations applicable thereto AND SUBJECT ALWAYS to the
concurrence and approval of Pertamina as provided in the Decision
of Director General Oil and Natural Gas No. 402/D.D./Migas/1967
dated 20 December 1967.
THE AGREEMENT
In consideration of the aforementioned recitals and upon the
mutual promises, covenants and conditions herein contained, the
Total Venturers and the Huffington Venturers hereby agree as
follows, to wit:
ARTICLE 1
Definitions
For the purposes only of this Agreement the following terms
shall have the definitions hereinafter set out. It is specifically
agreed that such definitions shall not have the effect of modifying
any of the defined terms under the Huffco Contract or the Inpex
Contract.
1.1 "Affiliate" means, with respect to any Party, a company
or other entity that directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common
control with such Party; and such control shall be deemed to exist
only in the event the controlling company or entity owns shares of
stock ownership which represent 50% or more of the total voting
rights.
1.2 "Budget" means a work program and budget for operations
to be conducted under this Agreement on or in connection with the
Unit Area for a calendar year. A Budget shall contain a properly
itemized estimate of the cost to the items provided for in the
related work program and a properly itemized estimate of all other
expenditures to be made for the Oil Joint Account and/or the Gas
Joint Account of the Parties during the calendar year to which it
relates.
1.3 "Combination Well" means a well with two or more
completions, at least one of which is an Oil Well and at least one
of which is a Gas Well, both of which are productive at the same
time.
1.4 "Gas" means hydrocarbons which exist in a gaseous state
under original reservoir conditions, and hydrocarbons produced in
a gaseous state from Oil Wells.
1.5 "Gas Joint Account" means the account maintained by
Operator covering expenditures for operations under the Gas Unit to
be shared by the Parties in accordance with their respective
Participating Interests in the Gas Unit.
1.6 "Gas Unit" means the unit formed hereby insofar as it
relates to Gas and Natural Gas Liquids.
1.7 "Gas Well" means any completion within the Unit Area
producing or capable of producing Gas and no Oil.
1.8 "Joint Operations" means all operations conducted by the
Operator on behalf of the Parties under the terms of this
Agreement.
1.9 "Natural Gas Liquids" means liquid hydrocarbons obtained
from Gas by condensation or extraction, including condensate,
distillate, gasoline, propanes, butanes and other lighter
hydrocarbons.
1.10 "Non-Operators" means the Parties other than the
Operator.
1.11 "Non-Unitized Substances" means all substances which the
Huffington Venturers and the Total Venturers have the right to
explore for and produce under the Huffco Contract and the Inpex
Contract, respectively, other than Unitized Substances.
1.12 "Oil" means hydrocarbons which exist in a liquid state
under original reservoir conditions, excluding, however, any part
thereof constituting Gas as defined above.
1.13 "Unit Area" is defined to be (a) as to areal extent,
that area outlined on the map, attached hereto as Exhibit "A" and
hereby made a part hereof, which area is more particularly
described in Exhibit "B", attached hereto and hereby made a part
hereof and (b) as to subsurface extent, that interval extending
from the surface of the ground down to and including, but not
below, the point appearing in the Huffco No. 20 Nilam Well at the
electric log depth of 13,657 feet, being 100 feet below the base of
the G-61 sand, or the stratigraphic equivalent of such point
throughout the area described in Exhibit "B". The Parties agree
that the description of the Unit Area contained in Exhibit "B"
shall be sufficient for the purposes hereof but agree to cause an
on the ground survey to be made of such area which shall be
executed by the Parties for identification with this Agreement, and
such survey shall govern in the event of any dispute concerning the
Unit Area.
1.21 "Unit Operating Committee" means the committee provided
for in Section 8.1.
1.22 "Unitized Substances" means all Oil, Gas and Natural Gas
Liquids produced, saved and sold from the Unit Area.
ARTICLE 2
Participating Interests
2.1 The Participating Interests of the Parties in Oil and in
the Oil Unit, until adjusted as provided for in Section 2.2, shall
be as follows:
Huffington Venturers: 70.0%
Total Venturer: 30.0%
The Participating Interest of any Party comprised in the
Huffington Venturers shall be that percentage share of the
Participating Interest established above for the Huffington
Venturers as all of the Parties comprised in the Huffington
Venturers shall at any time and from time to time notify the Total
Venturers in writing.
The Participating Interest of any Party comprised in the Total
Venturers shall be that percentage share of the Participating
Interest established above for the Total Venturers as all of the
Parties comprised in the Total Venturers shall at any time and from
time to time notify the Huffington Venturers in writing.
2.2 The Participating Interests set forth in Section 2.1 for
the Oil Unit and the Gas Unit are based on preliminary estimates of
initial proved Oil in place and Gas in place (excluding in
connection with the estimate of Gas in place, any Gas in solution
with Oil under original reservoir conditions), respectively,
underlying the respective portions of the Huffco Area and the
Total-Inpex Area included within the Unit Area. The Parties
recognize that the data on which such estimates are based are
incomplete, and therefore, such Participating Interests will be
adjusted periodically in accordance with the following:
(a) An interim redetermination of such Oil and Gas in place
shall be made not later than September 1, 1981 based on data
available on June 30, 1981.
(b) A final redetermination shall be made not later than
September 1, 1982 based on data available on June 30, 1982.
Each such redetermination shall be made in accordance with the
procedures set forth in Exhibit "D" hereto. In the event the
Huffington Venturers and the Total Venturers are unable to agree
within a reasonable time on any technical points of contention
pertaining to the redetermination, such technical points shall be
resolved by a mutually acceptable expert who shall be a competent
petroleum engineering consultant or firm of petroleum engineering
consultants agreed to by them. In the event that they do not agree
upon an expert within thirty (30) days following notice by one to
the other of the existence of such point of contention then either
may request Pertamina to nominate an expert or firm of experts. At
the time of making such request the Huffington Venturers and the
Total Venturers shall each have the option of naming two persons or
firms who should not be nominated. All costs relating to the
expert's award shall be borne equally by the Huffington Venturers
and the Total Venturers.
The Participating Interests of the Huffington Venturers and
the Total Venturers in Oil and in the Oil Unit will be adjusted so
as to be in the same ratio as the redetermined initial proved Oil
in place underlying, respectively, those portions of the Huffco
Area and the Total-Inpex Area in the Unit Area, and the
Participating Interests of the Huffington Venturers and the Total
Venturers in Gas and Natural Gas Liquids and in the Gas Unit will
be adjusted so as to be in the same ratio as the redetermined
initial proved Gas in place (excluding in connection with the
redetermination of Gas in place any Gas in solution with Oil under
original reservoir conditions) underlying, respectively, those
portions of the Huffco Area and the Total Inpex Area in the Unit
Area. Each such adjustment of Participating Interests shall be
made on the first day of the month following the redetermination
and will be effective as of the effective date of this Agreement as
though the revised Participating Interests had been originally set
forth in Section 2.1.
The Parties recognize that each adjustment of Participating
Interests pursuant to this Section 2.2 will require Pertamina's
approval before being used for purposes of the Huffco Contract and
the Inpex Contract. Pertamina has agreed that in granting or
withholding such approval it will apply the allocation principle
set forth in this Section 2.2 and the methodology for
redetermination of reserves set forth in Exhibit "D" hereto and
that, pending such approval, the adjusted Participating Interests
may be used on a provisional basis for Production Sharing Contract
purposes.
Subject to the provisions of Article 11 costs previously
charged to the Oil Joint Account and the Gas Joint Account will be
reallocated among the Parties, in a manner acceptable to Pertamina,
so as to be consistent with the adjusted Participating Interests
for the Oil Unit and the Gas Unit, respectively, and as soon as
practicable after each adjustment the Operator will prepare the
necessary invoices or credits due from or to the Non-Operators so
as to give effect to such reallocations. On the first day of the
first calendar month following receipt of the approvals referred to
in Article 18 and on the date of each such adjustment of
Participating Interests the historical gross production of Unitized
Substances, including production taken by Pertamina, will be
adjusted so as to allocate to the Huffco Area that portion of such
production equal to the Participating Interests of the Huffington
Venturers and to the Total-Inpex Area that portion of such
production equal to the Participating Interests of the Total
Venturers; and the gross revenues realized by the Parties and by
Pertamina from the disposition of such production, calculate din
accordance with Section 10.2, will be similarly adjusted and
allocated. As soon as practicable after such adjustments Operator
will prepare a statement showing the amounts by which the Parties
have received more or less than their Participating Interest shares
of such revenues, and those Parties who have received more than
their Participating Interest share will make appropriate payments
to the other Parties. For purposes of the foregoing sentence
revenues from Unitized Substances realized by Pertamina under the
Huffco Contract will be deemed realized by the Huffington
Venturers, and revenues from Unitized Substances realized by
Pertamina under the Inpex Contract will be deemed realized by the
Total Venturers. It is recognized that such adjustments will
require further adjustment between the Parties and Pertamina in
accordance with the terms of the Huffco Contract and the Inpex
Contract, and these adjustments will be made in due course.
2.3 All costs incurred under and pursuant to this Agreement
in connection with the exploration, development and operation of
the Unit Area for the production of Unitized Substances shall be
deemed to have been incurred from the Huffco Area under the Huffco
Contract and the Total-Inpex Area under the Inpex Contract in the
ratio of the applicable respective Participating Interests of the
Huffington Venturers and the Total Venturers. All Unitized
Substances produced, saved, and sold shall be deemed to have been
produced from the Huffco Area under the Huffco Contract and the
Total-Inpex Area under the Inpex Contract in the ratio of their
applicable respective Participating Interests.
ARTICLE 3
Interim Operations and Non-Unitized Operations
3.1 Notwithstanding anything to the contrary herein
contained, in particular the effective date of this Agreement, each
of the Huffington Venturers and the Total Venturers, acting through
its respective contract operator, reserves the right, at its sole
cost, risk and expense, to drill for Unitized Substances within
that part of the Unit Area covered by its Production Sharing
Contract, provided that actual drilling on any such well commences
on or prior to June 30, 1981. Drilling operations for any well
which are incomplete on July 1, 1981 will, at the option of the
drilling Party, either be abandoned or continuously prosecuted to
completion or abandonment, as provided below. The Party conducting
such drilling operations shall (a) act as a reasonably prudent
operator, (b) accord the other Parties all rights which Operator is
obligated hereunder to accord to the Parties, (c) keep Operator
fully informed with respect to all aspects of such operations and
(d) exercises reasonable precautions to prevent interference with
Joint Operations.
When any well drilled under the preceding paragraph has
reached its total depth and has been logged and tested to the
satisfaction of the drilling Party, notice shall be given to
Operator, together with a recommendation as to which course of
action specified in (a), (b) and (c) below should be followed.
Operator shall immediately notify the members of the Unit Operating
Committee, including its own recommendations with respect to such
well, and within forty-eight (48) hours of such latter notification
each member of the Unit Operating Committee shall inform Operator
of its vote and Operator shall tally the votes of the members of
the Unit Operating Committee and inform the drilling Party whether
such well should be (a) completed for the production of Unitized
Substances and, if such be the case, in which zone or zones such
completion should be made, (b) temporarily abandoned or (c) plugged
and abandoned. Any Party failing to notify Operator of its vote
within such forty-eight (48) hour period shall be deemed to have
voted in favor of Operator's recommendation. The drilling Party
shall within a reasonable time after being informed of the decision
of the Unit Operating Committee complete operations on such well in
accordance with such decision; provided, that in carrying out such
operations the drilling Party shall adhere to the same standards
prescribed and be liable to the same extent as provided in Section
7.2.6.
If the decision of the Unit Operating Committee is that such
well be completed for the production of Unitized Substances, the
completion costs (consisting of all costs incurred after the
decision to complete is given to the drilling Party, except
demobilization costs) shall be reimbursed to the Party conducting
the operations upon receipt of an invoice for same and shall be
charged to the Oil Joint Account or the Gas Joint Account as
provided in Section 11.4. The costs of drilling the well (being
all costs except completion costs) shall be reimbursed to the
drilling Party and charged to the Oil Joint Account or the Gas
Joint Account at the time of the final adjustment of Participating
Interests as provided in Section 2.2 or at the time such well is
actually placed on production, whichever first occurs.
If the decision of the Unit Operating Committee is to abandon
temporarily or plug and abandon such well and such well did not
prove, in accordance with the standards set forth in Exhibit "D"
hereto, the presence of two billion standard cubic feet of Gas
(excluding Gas in solution with Oil under original reservoir
conditions) in place, the costs of drilling (and of temporarily
abandoning or plugging and abandoning) such well shall not be
reimbursed to the drilling Party and charged to the Oil Joint
Account or the Gas Joint Account unless and until, pursuant to ta
decision of the Unit Operating Committee, the well shall be
utilized for Oil Unit or Gas Unit purposes.
3.2 Each of the Huffington Venturers and the Total
Venturers, acting under the terms of its respective Operating
Agreement, reserves the right, at its sole cost, risk and expense,
to drill for and produce Non-Unitized Substances within the areal
extent of that part of the Unit Area covered by its respective
Production Sharing Contract at depths below the Unit Area. In
exercising this right, the drilling party shall exercise reasonable
precaution to prevent interference with Joint Operations. The
costs applicable to any such well incurred from and after the point
at which the well has reached total depth and before the well is
completed or abandoned shall be borne as follows:
3.2.1 If the well is completed as a producer of
Non-Unitized Substances or abandoned, such cost shall be
borne by the drilling party.
3.2.2 If, although projected as a well to be
drilled in search of Non-Unitized Substances, the
drilling Party recommends, and the Unit Operating
Committee approves, that the well be completed for
Unitized Substances, the approved completion operations
will be accomplished by the drilling Party as specified
by the Unit Operating Committee and the drilling and
completion costs thereof applicable to the Oil Unit
and/or the Gas Unit, determined as provided in Section
11.4, shall be reimbursed to the drilling Party and
charged to the Oil Joint Account or the Gas Joint
Account, as may be appropriate; provided, that if such
well was commenced prior to July 1, 1981, the provisions
of Section 3.1 shall apply.
3.3 If a well is approved by the Unit Operating Committee
and drilled in search of Unitized Substances, the well may be, with
approval of the Unit Operating Committee, drilled beyond the Unit
Area and completed to produce Non-Unitized Substances. In such
instance the portion of drilling and completion costs of such well
applicable to Non-Unitized Substances, determined as provided in
Section 11.4, shall be borne by the Huffington Venturers, if the
well is located on the Huffco Area, or by the Total Venturers, if
the well is located on the Total-Inpex Area.
ARTICLE 4
Ownership of Property
All property, whether real or personal, acquired by Operator
at the cost of the Parties for use in Joint Operations shall be
owned in accordance with the Production Sharing Contract covering
the area upon which such operations were conducted. Any right of
use or other interest in such property which under the applicable
Production Sharing Contract is granted to "Contractor" shall be
owned by the Huffington Venturers and the Total Venturers in
accordance with their applicable respective Participating
Interests. Such interest of the Huffington Venturers shall be
owned by each of them in proportion to their respective ownership
of interest in the Huffco Contract, subject to the provisions of
that certain Joint Venture Agreement, dated August 8, 1968, by and
among the Huffington Venturers, or their predecessors in interest
and the Huffco Operating Agreement. Such interest of the Total
Venturers shall be owned by each of them in proportion to their
respective ownership of interest in the Inpex Contract, subject to
the provisions of the Total-Inpex Operating Agreement.
ARTICLE 5
The Venture
5.1 The Parties hereto agree in accordance with and subject
to the provisions of this Agreement and of the respective
Production Sharing Contracts to carry out a program of exploration
for and development of Unitized Substances in the Unit Area, such
exploration and development to include the installation and
operation of all necessary and desirable facilities in or outside
the Unit Area.
5.2 It is understood and agreed that this Agreement shall
not affect the rights, duties and obligations of the Huffington
Venturers, inter se, under the Joint Venture Agreement dated August
8, 1968 by and among the Huffington Venturers, or their
predecessors in interest, or the Huffco Operating Agreement, nor
will it affect the rights, duties and obligations of the Total
Venturers, inter se, under the Total-Inpex Operating Agreement;
provided, that the voting procedures set forth herein will control
with respect to the conduct of Joint Operations.
ARTICLE 6
Obligations of the Parties
It is not the purpose of this Agreement to amend or modify in
any way the terms and provisions of the Huffco Contract or the
Inpex Contract. The Huffington Venturers and the Total Venturers
understand and agree that each is solely responsible to Pertamina
with respect to its respective Production Sharing Contract with the
effect that the obligations and rights of the Parties vis-a-vis
Pertamina with respect to their respective Production Sharing
Contracts remain unaltered by the terms of this Agreement. Without
prejudice to the aforementioned understanding Unitized Substances
produced, saved and sold and costs incurred in connection with
exploration, development and operation of the Unit Area for the
production of Unitized Substances are deemed allocated to the Inpex
Contract and the Huffco Contract as herein provided. Any action
which may be sanctioned by the Unit Operating Committee shall be
subject to final approval by Pertamina, in accordance with the
terms and conditions stipulated in the Inpex Contract and the
Huffco Contract.
ARTICLE 7
Operator
7.1 Subject to the terms and conditions hereof Huffco (or
any successor Operator for the Huffington Venturers in respect of
petroleum operations under the Huffco Contract chosen under the
Huffco Operating Agreement) is hereby designated and agrees to
serve as Operator for the Huffington Venturers and the Total
Venturers in connection with operations on or in connection with
the exploration, development and operation of the Unit Area for the
production of Unitized Substances.
7.2 Subject to the provisions of Article 3, Operator, under
the terms and conditions set forth herein and in the Production
Sharing Contracts, shall carry out and perform all operations on or
in connection with the exploration, development and operation of
the Unit Area for the production of Unitized Substances. Operator
shall exercise all of the rights, powers and privileges with
respect to such operations as provided herein, subject only to such
restrictions as shall be placed upon Operator by this Agreement and
the Unit Operating Committee. Specifically, Operator shall,
subject to the provisions of this Agreement, the Huffco Contract
and the Inpex Contract:
7.2.1 Have exclusive control of all operations
hereunder and employ all personnel reasonably required
therefor;
7.2.2 Acquire all assets, including any
equipment, materials and supplies, necessary or desirable
for carrying on all operations conducted hereunder;
7.2.3 Represent the Parties with respect to
such operations, including but not limited to filing such
reports with Pertamina as may be required or as directed
by the Unit Operating Committee;
7.2.4 Prepare and submit to the Unit Operating
Committee proposed programs and Budgets at the time and
in the manner set forth in Article 9 hereof;
7.2.5 Make from time to time such
recommendations for the more efficient carrying out of
the said operations hereunder as it may consider
feasible;
7.2.6 Carry out all of the said operations
hereunder in a workmanlike manner, in accordance with
sound oil field and engineering practices, in compliance
with the terms of the Inpex Contract and the Huffco
Contract and in full compliance with all applicable laws
and regulations; provided Operator shall not be liable to
the other Parties except for gross negligence or willful
misconduct;
7.2.7 Enter into such contracts as may be
required in connection with operations hereunder;
7.2.8 Promptly pay and discharge all costs and
expenses incurred in connection with operations
hereunder;
7.2.9 Deliver in kind to each of the Parties at
the respective field terminals their respective
Participating Interest share of all Unitized Substances.
ARTICLE 8
Unit Operating Committee
8.1 There shall be established a Unit Operating Committee
consisting of one representative appointed by each of the Parties.
Each Party shall designate its respective representative by written
notice of the other Parties as soon as reasonably practicable after
the effective date hereof, and each by like notice may designate
one or more alternate representatives, any one of whom shall be
authorized to represent such Party in the absence of its
representative. Operator's representative will be Chairman of the
Unit Operating Committee. Each Party may by notice to the other
Parties substitute its representative or any alternate at any time
and from time to time, and such substitute shall have the same
powers and duties as the person for whom he is substituting. Each
representative may have such advisors as he deems necessary at any
meeting of the Unit Operating Committee.
8.2 The Unit Operating Committee shall meet if the
representative of any Party shall request a meeting by giving not
less than fifteen (15) days' notice to the other designated
representatives, which notice shall specify the matter or matters
to be considered at such meeting; provided, that if any shorter
notice period is specified herein with respect to any meeting or
voting requirement the latter shall prevail. The Unit Operating
Committee shall meet at least twice in each year as provided in
Sections 9.1 and 9.2 for the purpose of considering and deciding
upon the Budget for the ensuing year.
8.3 There shall also be established the Nilam Unit
Technical Subcommittee, which shall act only in an advisory
capacity and shall be composed of representatives of each
Party. Its chairman shall be one of Operator's represent-
atives. The Nilam Unit Technical Subcommittee shall have,
inter alia, the following functions:
(a) to keep the Parties regularly informed of the
execution of operations in the Unit Area;
(b) to cooperate in the preparation of work programs;
(c) to follow the progress of operations; and
(d) to prepare information and proposals for Unit
Operating Committee meetings.
Normally each meeting of the Unit Operating Committee
shall be preceded by a meeting of the Nilam Unit Technical
Subcommittee.
8.4 The Unit Operating Committee shall appoint such
other subcommittees as it may desire for the purpose of
advising it in connection with operations in the Unit Area.
Such subcommittees shall be comprised of representatives of
the Parties and shall meet at such time and carry out such charges
as may be directed by the Unit Operating Committee.
Operator shall at all time fully cooperate with the subcom-
mittees in performing their charges.
8.5 No decision on any matter shall be taken at any
meeting of the Unit Operating Committee unless either prior
notice as provided in Section 8.2 shall have been given or
the representatives agree that a matter of which no prior
notice has been given shall be dealt with at the meeting in
question.
8.6 Each of the Huffington Venturers will be entitled
to vote that part of the Participating Interests of the Huffington
Venturers as it is entitled to vote under the Huffco Operating
Agreement; and each of the Total Venturers will be entitled to vote
that part of the Participating Interests of the Total Venturers as
it is entitled to vote under the Total-Inpex Operating Agreement.
Notice shall be given by the Huffington Venturers to the Total
Venturers respecting the entitlement to vote Participating
Interests of any Party comprised in the Total Venturers, and
any change therein. Except for those matters provided for in
Section 9.2 below all decisions of the Unit Operating Committee
shall require the affirmative vote of Parties voting Participating
Interests in the Gas Unit aggregating sixty-six and two-thirds
percent (66 2/3%) at the time of the vote.
8.7 All meetings of the Unit Operating Committee shall
be held in Jakarta, Indonesia, or at such other place as may
be agreed upon from time to time by the Parties.
8.8 Any matter may be submitted to the Unit Operating
Committee for consideration and vote without holding a
meeting, provided that such matter is submitted in writing
or by telegraph or telex or by telephone confirmed by tele-
graph or telex to the other representatives. In such even
each representative shall vote by giving written, telegraphed or
telexed notice of such vote to Operator, and any decision so
reached shall be binding on all the Parties hereto. Operator shall
keep a written record of each such vote and the outcome of such
voting.
ARTICLE 9
Operating Programs and Budgets
9.1 By not later than July 1 of each calendar year
Operator shall submit to the Unit Operating Committee a
proposed work program for the following calendar year. Each
Party will furnish to Operator any comments or suggestions
which it may have respecting such proposal as soon after
receipt of same as may be reasonably practicable, and
Operator shall furnish to each Party the comments and
suggestions received. At a meeting of the Unit Operating
Committee of be held during the third quarter (but not later
than August 15) of such calendar year the proposed work
program will be discussed, and Operator will respond to the
comments and suggestions which it has received.
9.2 By not later than September 1 of each calendar
year Operator shall submit to the Unit Operating Committee a
recommended Budget for the following calendar year. Such
recommended Budget shall be based upon the proposed work
program referred to in Section 9.1, incorporating therein
such suggestions and recommendations as may have been approved by
a consensus of the Unit Operating Committee, but also
taking into account changes in conditions which may have
occurred in the intervening period. At a meeting of the
Unit Operating Committee to be held in September following
the submission of such recommended Budget the same shall
be voted on for approval under the following procedure. The
Huffington Venturers shall have one (1) vote and the Total
Venturers shall have one (1) vote, and approval of the
Budget shall require the unanimous vote of the two.
9.3 In the event a Budget is not approved under the
procedure described in Section 9.2 above the Huffington
Venturers and the Total Venturers shall, by not later than
September 20, submit through Operator to Pertamina the
Budgets which they respectively favor and will attempt to
arrange a joint meeting with the appropriate representatives
Pertamina to discuss the differences in the two Budgets.
The Budget which is approved by Pertamina shall be deemed
the Budget approved by the Unit Operating Committee for the
next calendar year.
9.4 Subject to the foregoing provisions of this
Article 9, the Parties agree to cause their respective
representatives on the Unit Operating Committee to adopt
such Budgets as will comply with the requirements of the
Huffco Contract and the Inpex Contract. Further, the
Huffington Venturers and the Total Venturers shall include
their proportionate part of Budgets adopted under this
Article 9 in the work programs and budgets submitted to
Pertamina under their respective Production Sharing
Contracts. In this regard Operator shall serve as liaison
with Pertamina in seeking its approval of Budgets adopted
under this Agreement.
ARTICLE 10
Distribution of Production
10.1 Subject to the terms of the pertinent Production
Sharing Contract, each of the Total Venturers and each of
the Huffington Venturers may at all times take in kind or
separately dispose of its respective Participating Interest
share of each Unitized Substance. In accordance with the
terms of the Inpex Contract and the Huffco Contract, Operator
shall have the right to use in conducting operations under
this Agreement so much of the Oil, Gas and Natural Gas Liquids so
used shall not be considered saved and sold for purposes of
this Agreement.
10.2 During such period as one or more Parties are not
taking their Participating Interest share of Unitized Substances
in kind or separately disposing of the same, the other
Parties shall, with respect to Gas, and may, but shall not
be obligated to, with respect to Oil and Natural Gas Liquids,
take in kind or separately dispose of such share. In such
event the Parties taking or separately disposing of such
share shall, subject to the further provisions hereof, pay
or cause to be paid to the non-taking Parties for such share
on the basis of the fair market value thereof at the field
terminal; provided, however, that such obligation to pay or
cause to be paid shall be subject to whatever conditions are
applicable to the Parties taking in kind or selling such
Unitized Substances under the arrangements by which they are
sold or taken in kind.
Subject to the succeeding paragraph of this Section 10.2,
such market value shall be determined on the basis of the
price received for such Unitized Substances reduced by all
costs incurred downstream from the field, including without
limitation transportation, processing, insurance, capital
and interest costs, and selling costs, including without
limitation, any brokerage, commissions, discounts or rebates,
but excluding, however, all cost of Joint Operations charged
to the Oil Joint Account or the Gas Joint Account under the
provisions of this Agreement. Upon request, the non-taking
Parties shall be furnished reasonable documentation relative
to the determination of such fair market value. The obligation
to pay or cause to be paid provided for in this Section 10.2
is expressly limited to the non-taking Parties' Participating
Interest share of funds in fact received by the taking
Parties as proceeds from the sale of Unitized Substances,
and any payment by taking Parties to non-taking Parties
shall be made promptly on receipt of funds.
The fair market value of Gas which is processed and
manufactured into liquefied natural gas ("LNG"), for purposes
of accounting hereunder shall in no event exceed that portion
of the net proceeds for such LNG received by Parties after
deducting all project and marketing costs incurred in pro-
cessing and selling of such gas. For purposes of accounting
hereunder the fair market value of Oil and of Natural Gas
Liquids which are mixed in storage with Oil and are sold as
a part of such Oil shall be equal to the applicable price
used for the recovery of "Operating Costs" under the Huffco
Contract and the Inpex Contract.
The Parties agree to enter into such arrangements as
may be necessary to insure the effectiveness of this Section
10.2. The provisions of this Section 10.2 shall not, however,
prevent Pertamina from exercising any of its rights and
options on this subject as provided in the Huffco Contract
and the Inpex Contract.
ARTICLE 11
Costs and Expenses
11.1 All costs and expenses of whatsoever kind and
nature incurred by Operator in performance of Joint Opera-
tions shall be charged to the Oil Joint Account or the Gas
Joint Account in accordance with the provisions of this
Agreement and shall be borne and paid by the Parties as
provided in Sections 11.3 and 11.4. Any significant departure
from an agreed Budget shall be approved by the Unit Operating
Committee before being put into execution. If any such
departure from an agreed Budget requires approval of Pertamina
under the Huffco Contract or the Inpex Contract, then Operator
shall promptly furnish to Pertamina information concerning
such Budget departure. Operator shall not make expenditures
nor incur liabilities on behalf of the Parties for non-budgeted
items without prior approval of the Unit Operating Committee
unless such expenditures or liabilities are within:
11.1.1 The equivalent of U. S. $100,000.00
(Operator shall promptly report such non-budgeted items
and approval by the Unit Operating Committee thereof
shall constitute Operator's authority to again make
non-budgeted liabilities not in excess of the U. S.
$100,000.00 limitation); or
11.1.2 10% excess of the amount specified for
an individual category of an agreed program.
This limitation shall not apply, and Operator is expressly
authorized to make expenditures and incur liabilities without
prior authorization or approval, when necessary or advisable,
in Operator's judgment, to deal with unforeseen emergencies,
including, but not limited to, well blowouts and fires.
Operator shall promptly report to the other Parties the
nature of any such emergency and the estimated related
expenditures.
11.2 It is understood that Operator may from time to
time use for the benefit of all Parties in accordance with
approved Budgets the services of other persons, firms and
corporations, including purchasing, engineering, legal,
geophysical, geological, treasury, insurance, auditing,
re-export, payroll and accounting and other miscellaneous
services and advise, the cost of which shall be charged to
the Oil Joint Account or the Gas Joint Account, as may be
applicable.
11.3 The following procedures will be followed so that
costs and investments made by the Parties respecting exploration
development and operations of the Unit Area for the production
of Unitized Substances will be in the ratio of their applicable
respective Participating Interests for the Oil Unit and the
Gas Unit.
11.3.1 All charges to the Oil Joint Account
shall be borne by the Parties in the ratio of their
respective Participating interests in the Oil Unit, and
all charges to the Gas Joint Account shall be borne by
the Parties in the ratio of their respective
Participating Interests in the Gas Unit, subject, in
each case, to adjustment as provided in Section 2.2.
11.3.2 All costs and expenses incurred by Operator
after the date of execution hereof for Joint Operations
under this Agreement shall be charged to the Oil Joint
Account or the Gas Joint Account as provided in Section
11.4
11.3.3 In the execution of work programs prior to
the date of execution hereof Huffco, acting as Contract
Operator for the Huffington Venturers, and Total,
acting as Contract Operator for the Total Venturers,
have performed seismic operations, drilled wells and
otherwise incurred costs and made investments related
to the exploration, development and operation of the
Unit Area for the production of Unitized Substances.
The Parties estimate that, subject to verification upon
audit on or before the expiration of one (1) year from
the date of execution hereof, as of such date such
costs and investments are as follows:
(a) The Huffington Venturers' portion of
such costs and investments applicable to the Oil
Unit are U. S. $66,380.54 and of such costs and
investments applicable to the Gas Unit are U. S.
$154.162,126.
(b) The Total Venturers' portion of such
costs and investments applicable to the Oil Unit
are U. S. $32,756,015 and of such costs and invest-
ments applicable to the Gas Unit are U. S.
$62,109,354.
11.3.4 The costs and investments applicable to
The Oil Unit estimated to have been incurred as of the
date of execution hereof shall be charged to the Oil
Joint Account and reimbursed to the Parties by whom
initially incurred on the first day of the first
calendar month following receipt of the approvals
referred to in Article 18. If the audit of such costs
and investments mentioned above discloses any dis-
crepancies with respect thereto, appropriate adjustments
will be made.
11.3.5 With respect to costs and investments
applicable to the Gas Unit estimated to have been
incurred as of the date of execution hereof the
following shall apply:
(a) All of such costs and investments, other
than drilling and completion costs, shall be
charged to the Gas Joint Account and reimbursed to
the Parties by whom initially incurred on the
first day of the first calendar month following
receipt of the approvals referred to in Article
18.
(b) Drilling and completion costs will be
subject to the following:
(i) If pursuant to a decision of the
Unit Operating Committee a Gas well which has
been drilled on the date of execution hereof
should be placed on production prior to the
final adjustment of Participating Interests
as provided in Section 2.2, the costs of
drilling and, if applicable, completing such
well incurred prior to the date of execution
hereof will be charged to the Gas Joint
Account and reimbursed to the Parties by whom
initially incurred at the time such well is
actually placed on production.
(ii) The remainder of such drilling and
completion costs will be charged to the Gas
Joint Account and reimbursed to the Parties
by whom initially incurred at the time of the
final adjustment of Participating Interests
as provided in Section 2.2.
If the audit of such costs and investments men-
tioned above discloses any discrepancies with respect
to any of such costs and investments previously charged
to the Gas Joint Account, appropriate adjustments will
be made.
11.4 Certain wells and facilities are or will be
capable of utilization, and may be so utilized, at one time
or another and from time to time in connection with the Oil
Unit, the Gas Unit and/or Non-Unitized Substances. Costs
allocable to such wells and facilities will be allocated as
provided below.
11.4.1 During any period in which a well is
utilized solely for the Oil Unit and risk and expense
of operating the same will be wholly for the Oil Joint
Account. Conversely, during any period in which a well
is utilized solely for the Gas Unit such risk and
expense will be wholly for the Gas Joint Account, and
during any period in which a well is utilized solely
for Non-Unitized Substances such risk and expense will
be wholly for the account of those parties on whose
Production Sharing Contract Area the well is located.
11.4.2 During any period in which a well is
operated as a Combination Well or a combination of an
Oil Well and/or Gas Well and a well producing Non-Unitized
Substances the portion of risk and expense of operating
such well to be allocated to the Oil Joint Account will
be in the ratio that the number of completions producing
Oil in such well bears to al producing completions in
such well, and the portion of risk and expense of
operating such well to be allocated to the Gas Joint
Account will be in the ratio that the number of completions
producing Gas in such well bears to all producing
completions in such well. The remainder of such risk
and expenses will be allocated to those Parties on
whose Production Sharing Contract area the well is
located. Downhole repair and workover costs of such
wells will be for the Oil Joint Account, if an Oil Well
is repaired or worked over, for the Gas Joint Account,
if a Gas Well is repaired or worked over, and for the
account of those Parties on whose Production Sharing
Contract area the well is located, if a well producing
Non-Unitized Substances is repaired or worked over.
11.4.3 All costs of reworking, recompleting or
converting a well into an Oil Well will be for the Oil
Joint Account. Conversely, such costs respecting a
Gas Well will be for the Gas Joint Account, and
such costs respecting a well to produce Non-Unitized
Substances will be for the account of the Parties on
whose Production Sharing Contract the well is located.
11.4.4 While it is recognized that both Oil and
Gas will be produced from Oil Wells, for purposes of
this Agreement Oil Wells will be considered to be wells
utilized solely for the Oil Unit, and the risk and
expense of operating such wells will be borne as pro-
vided above; provided, however, that the costs of
treating and storing (included but not limited to
compression, dehydration and reinjection) Gas produced
and saved from Oil Wells will be charged to the Gas
Joint Account.
11.4.5 Subject to the provisions of Section
11.4.6 below, at the time a well is initially completed
the investment costs of such well allocable to Unitized
Substances will be charged to the Oil Joint Account, if
the well is to be utilized initially for the Oil Unit,
or to the Gas Joint Account, if the well is to be
utilized initially for the Gas Unit. If a well is
initially completed as a Combination Well, such investment
costs will be allocated between the Oil Joint Account
and the Gas Joint Account in the Proportions that the
number of Oil Well completions and Gas Well completions,
respectively, in such well bears to the total number of
completions in such well within the Unit Area.
11.4.6 If the Unit Operating Committee should
approve the drilling of a well to the G-61 sand, the
Parties on whose Production Sharing Contract area the
well is located may, not later than (30) days
before actual drilling operations on such well are
commenced, request Operator to drill such well to test
an objective below the base of the Unit Area; and
Operator will carry out such requested operations below
the base of the Unit Area for the benefit of and subject
to the instructions of the Parties making the request.
In such event the Parties making such request shall
bear the costs of such well below the base of the Unit
Area in accordance with the following:
(a) The portion of intangible drilling costs
incurred in drilling the well to be allocated to
operations below the base of the Unit Area will be
determined by multiplying (a) total intangible
drilling costs for the well, minus (b) the costs
which are allocable solely to specific zones as
provided in Section 11.4.7, by a faction, the
numerator of which is the number of days elapsed
from the time the drilling bit passes through the
base of the Unit Area until total depth in the
well is reached and the denominator of which is
the total number of days elapsed from the time
actual drilling operations on the well are commenced
until total depth in the well is reached, and
adding to the product obtained costs which are
allocable solely to zones below the base of the
Unit Area as provided in Section 11.4.7.
(b) The portion of tangible drilling costs
including but not limited to the wellhead, wellhead
equipment and tubulars, to be allocated to operations
below the base of the Unit Area will be in the
proportion that the number of initial completions
in the well below the base of the Unit Area bears
to total initial completions in the well; pro-
vided, however, that in the event no initial
completion is made in the well below the base
of the Unit Area there shall be allocated to
operations below the base of the Unit Area the
extra costs, if any, incurred in modifying the
well program for tangibles from that historically
used in drilling and equipping a well drilled to
the base of the Unit Area.
11.4.7 The Parties recognize that in the course
of drilling a well certain operations and procedures
will be conducted which are property allocable solely
to the zone on which they are performed. Such operations
and procedures include, but are not limited to, testing,
shooting, acidizing, perforating and performing squeeze
jobs. If a well is being drilled below the base of the
Unit Area pursuant to Section 11.4.6, it is agreed that
each such cost will be allocated to the zone to which
it relates for purposes of determining the portion of
intangible drilling costs allocable to the Oil Joint
Account and/or the Gas Joint Account, on the one hand,
and to the Non-Unitized Substances, on the other hand.
11.4.8 It is recognized that while certain faci-
lities will serve only the Unit Area (the costs of
which will be allocated between the Oil Unit and the
Gas Unit in the manner provided below in this Section
11.4.8), other facilities will serve both the Unit Area
and other areas. The portion of investment costs of
facilities serving more than one area will be allocated
among the areas served on the basis of the following:
(a) Investment costs of facilities placed in
service or to be placed in service solely in
connection with the production of Oil will be
allocated between the Oil Unit and other areas
served on the basis of relative BTU content of Oil
in the place in each such area.
(b) Investment costs of facilities placed in
service or to be placed in service solely in
connection with the production of Gas and/or
Natural Gas Liquids will be allocated between the
Gas Unit and other areas served on the basis of
relative BTU content of Gas in place in each such
area.
(c) Investment costs of facilities placed in
service or to be placed in service in connection
with the production of Oil, Gas and Natural Gas
Liquids will be allocated between the Unit Area
and other areas served on the basis of relative
BTU content of Oil and Gas in place in each such
area.
The foregoing allocations are subject to the
following:
(d) Facilities placed in service or to be
placed in service in connection only with the
production or handling of Oil and Natural Gas
Liquids will be deemed placed in service solely
for Oil in the proportion that estimated total Oil
throughput bears to estimated total throughput of
Oil and Natural Gas Liquids over the life of the
facilities, and the remainder of such facilities
will be deemed placed in service solely for Natural
Gas Liquids.
(e) Investment costs of facilities heretofore
placed in service or approved by the Parties
before January 1, 1983 will, on the first day of
the first calendar month following receipt of the
approvals referred to in Article 18 or when
incurred, whichever is later, be allocated among
the areas served on the basis of relative BTU
content of the applicable type of hydrocarbons
initially in place in each such area. Such allocation
will be adjusted on January 1, 1983 based upon
such redetermination of relative BTU content of
hydrocarbons initially in place which may have
been made at that date.
(f) Investment costs of facilities approved
by the Parties in any year after 1982 will be
allocated among the areas served on the basis of
relative BTU content of the applicable type of
hydrocarbons remaining in place in each such area
as of January 1 of the year in which such facilities
are approved by the Parties.
(g) There will be no adjustment of the allo-
cation of investment costs among areas except as
provided in (e) above unless the Huffington Venturers
and the Total Venturers agree to such, using the
voting procedure specified in Section 9.2.
At the time investment costs are allocated to the
Unit Area they will be further allocated between the
Oil Unit and the Gas Unit on the basis of the following:
(h) Investment costs of facilities serving
only the Oil Unit will be charged to the Oil Joint
Account, and investment costs of facilities serving
only the Gas Unit will be charged to the Gas Joint
Account.
(i) Investment costs of facilities serving
the Oil Unit and the Gas Unit will be allocated
between the two as follows:
(i) Costs of facilities placed in
service or approved by the Parties prior to
January 1, 1983 will be allocated ten percent
(10%) to the Oil Unit and ninety percent
(90%) to the Gas Unit. Such allocations will
be adjusted as of January 1, 1983 to be in
the ratio of the relative BTU content of oil,
on the one hand, and Gas, on the other hand,
initially in place in the Unit Area as determined
by the Parties pursuant to the redetermination
of Oil and Gas in place provided for in
Section 2.2 (b).
(ii) Costs of facilities approved by
the Parties in any year after 1982 will be
allocated on the basis of relative BTU content
of Oil, on the one hand, and Gas, on the
other hand, remaining in place in the Unit
Area as of January 1 of the year in which
such facilities are approved by the Parties.
The portion of investment costs allocated to the
Oil Unit under the foregoing will be charged to
the Oil Joint Account, and the portion of such
costs allocated to the Gas Unit will be charged to
the Gas Joint Account.
For purposes of this Section 11.4.8, a barrel of Oil
will be deemed to contain 5.6 million BTU's, and a
standard MCF of Gas will be deemed to contain 1.1
million BTU's. Further, in the case of computation of
BTU content of Gas there shall be excluded from the
computations provided for above the BTU content of Gas
in solution with Oil under original reservoir conditions.
11.4.9 The costs of operating facilities serving
the Unit Area will be allocated between the Oil Unit
and the Gas Unit as provided in the Unit Accounting
Procedure.
11.5 In the event a well is drilled below the base of
the Unit Area in accordance with the terms hereof the Huffington
Venturers and/or the Total Venturers, as owners of Production
Sharing Contract rights below the base of the Unit Area,
agree to bear and pay the portion of the operating costs and
investments applicable to below the base of the Unit Area
and to Non-Unitized Substances determined as provided above.
11.6 Upon request of Operator, each Party shall advance
to Operator from time to time, its proportionate part of any
agreed Budget on a monthly basis. At least fifteen (15)
business days before the end of each month, Operator shall
deliver to each Party a written request that such Party
advance its share of Budget funds estimated to be paid out
during the ensuing month. To the extent that payments
exceed advances or advances exceed payments during the
preceding month, Operator shall adjust its next ensuing
request for advance by an amount equal to such deficiency or
excess. Each such request shall specify the various currencies
required, the total amount thereof and the names and addresses
of the banking institutions where such currencies are to be
credited to Operator's account. Each Party shall furnish
its respective share of advances in the required currencies
no later than the last day of the month during which such
request was delivered by Operator. In addition to its
regular monthly requests for funds, Operator may from time
to time make special written requests to cover any unforeseen
requirements, which special written request shall contain
the information required in Operator's monthly request.
Thereafter, the Parties shall provide the additional funds
in the specified currencies within the period specified in
Article 1.4 of the Unit Accounting Procedure.
Operator shall account for all sums advanced and shall
furnish each Party monthly statements accurately reflecting
the disposition of such advances and report all charges and
credits to the Oil Joint Account and the Gas Joint Account
in accordance with the Unit Accounting Procedure. Statements
covering each month shall be sent by Operator to the Parties
not later than forty-five (45) days after the end of such
month. If any over or under expenditures of advanced funds
are not adjusted by ensuing requests for advance of Budget
funds as provided by this Article 11.6, each Party shall pay
to Operator or Operator shall pay to each Party within
fifteen (15) days after receipt of such statement the amount
shown thereon to be due from such Party or from Operator.
If any payments as provided in this Article 11 are not made
within the time specified herein, such unpaid amounts shall
bear interest at the rate of one and one-half percent (1.5%)
per month until paid. Further, Operator shall have the
right to apply pro tanto all sums payable by Operator to
such delinquent Party to the payment of the amounts due and
unpaid by such Party.
11.7 Each such statement for any period during any
calendar year shall be subject to correction by the Operator
or objection by each Party, provided that such correction or
objection is made in writing within two (2) years after the
end of such year, with adequate specification of the item or
items corrected or objected to, and the reason for the
correction or objection. Each statement that is not so
corrected or objected to before the end of said period of
two (2) years shall thereafter be final and conclusive.
11.8 Operator shall assist Pertamina in its endeavor
to keep books and accounts in accordance with the terms of
the Inpex Contract and the Huffco Contract and at the direc-
tion of the Unit Operating Committee may cause audits to be
made of such books and accounts.
11.9 Operator shall keep in accordance with generally
accepted accounting practices accurate and itemized accounts
and records of costs and expenditures arising out of the
operations hereunder reflecting the status of the Oil Joint
Account and the Gas Joint Account.
11.10 All costs, expenses, credits, related matters
and methods of handling the accounting with respect thereto
shall be in accordance with the provisions of the Unit
Accounting Procedure.
ARTICLE 12
Insurance
12.1 Operator shall take out and keep in force all
insurance required by law or decided upon by the Unit Operating
Committee, provided, however that any Party may to the
extent its own insurance (including self insurance) satis-
fies the requirement of such law elect not to participate
therein and provided further that it shall be a condition of
such non-participation that the Party concerned:
(a) give notice of its non-participation to the
other parties;
(b) obtain and maintain adequate insurance of its
Participating Interest share of the risks covered or
provide to the other Parties adequate evidence of its
financial responsibility; and
(c) do nothing which may interfere with the
Operator's placing of such insurance for the other
Parties.
All insurance placed by any Party for its own account shall
contain a waiver of rights of subrogation in favor of all
the other Parties and of Operator and in favor of any con-
tractor or sub-contractor with respect to which Operator
shall have waived its rights of recourse in its capacity as
Operator. Operator shall, upon request, furnish to Non-
Operators all pertinent details relating to such insurance.
Operator shall also furnish promptly to Non-Operators copies
of reports or claims made under such insurance respecting
accidental damage to wells or facilities located within the
Unit Area.
Article 13
Rights, Access to Premises, Logs, Records and Confidentiality
13.1 Total, as Contract Operator for the Total
Venturers, shall at all times have the right to participate
with Operator in the settlement of any claims or disputes
arising out of operations hereunder, and shall have the
right to participate through its counsel, at the expense of
the Total Venturers, in any litigation or arbitration
arising out of operations under this Agreement. Operator
shall, when any such activities are contemplated, give the
other Parties reasonable notice thereof to enable them to
have a representative present if they elect to do so.
13.2 Operator shall keep accurate logs, date and
records of all information acquired in conducting the opera-
tions contemplated hereby and shall furnish the other Parties
copies of same upon request. Likewise, samples of cores and
cuttings of formation encountered in drilling wells will be
furnished at Operator's local office in accordance with
instructions of the Parties. Operator shall also furnish to
Pertamina covering operations conducted pursuant hereto.
Authorized representatives of the Huffington Venturers and
the Total Venturers shall at all reasonable times and at
their own risk have access to the premises where any opera-
tion is being carried on by Operator and to all information
and records of Operator pertaining to operations hereunder.
13.3 Information gained by the Parties as a result of
operations under this Agreement which has not been made
public prior to the effective date of this Agreement or
which is not made public under the terms hereof shall be
treated as confidential between the Parties, including their
respective Affiliates, and shall not be revealed to outside
parties without prior written approval of all Parties which
consent shall not be unreasonably withheld, consideration
being given to reporting requirements of governmental agencies,
stock exchanges, accounting practices and lending institutions.
Any branch of the provisions of this Section 13.3 by a
Party's Affiliate shall constitute a breach of this article
by such Party. Nothing contained in this Section 13.3 shall
prevent the Operator from furnishing data and information to
representatives of the Government of the Republic of Indonesia
or Pertamina.
ARTICLE 14
Force Majeure
The obligations of each Party under this Agreement,
other than the obligation to make money payments, shall be
suspended while such Party is prevented or hindered from
complying therewith, in whole or in part, by force majeure.
As used herein, force majeure shall mean causes beyond the
control of such Party and shall include but not be limited
to strikes; lockouts; labor disturbances; acts of God;
unavoidable accidents; acts of war (declared or undeclared)
or conditions arising out of or attributable to war; shortage
of necessary equipment, materials or labor, or restrictions
thereof or limitations upon the use thereof; and delays in
transportation. Any Party subject to force majeure shall
take all reasonable actions necessary to remedy such a
situation at the earliest possible date. Any Party proclaiming
force majeure shall give prompt notice of same to the other
Parties, including sufficient information as to the cause
and anticipated date of removal.
ARTICLE 15
Rules and Regulations, Applicable Law and Arbitration
15.1 This Agreement is subject to all the provisions
of the Huffco Contract and the Inpex Contract, as amended,
to all valid and applicable laws, rules, regulations and
orders of the Republic of Indonesia; and all operations
shall be conducted in accordance with the provisions of the
Huffco Contract and the Inpex Contract, as amended, and such
laws, rules, regulations and orders.
15.2 In the event of any dispute between the Parties
as to the interpretation of the terms hereof this Agreement
shall be construed in accordance with the laws of the State
of Texas.
15.3 Any dispute relating to the interpretation or
performance of this Agreement shall be finally settled by
arbitration in accordance with the Rules of Conciliation and
Arbitration of the International Chamber of Commerce, effec-
tive at the time. Any such dispute shall be heard and
determined by a single arbitrator, appointed in accordance
with such rules, provided that any such dispute shall be
heard and determined by three (3) arbitrators so appointed,
upon written request of any Party to such effect made
within two (2) weeks after commencement of any such arbitra-
tion proceeding. This covenant to arbitrate shall be enforce-
able and judgment from any award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof.
Any such arbitration shall be held in Toronto, Ontario,
Canada, or at such other place as the Parties may mutually
agree upon.
ARTICLE 16
Notices
All notices required or permitted hereunder shall be in
writing and shall be deemed to have been properly given and
delivered to a Party when delivered in person to an authorized
representative of that Party, or when sent by telex (confirmed
by air mail) or by telephone (confirmed by telex) to that
Party at its address hereinafter specified:
Huffco Indonesia,
A Division of
Roy M. Huffington, Inc.
P. O. Box 2828
19th Floor, Skyline Building
Jalan Thamrin No 9
Jakarta, Indonesia
Attention: President
Telex Address: 79644421
With Copy to:
Roy Huffington, Inc.
36th Floor, The 1100 Milam Building
Houston, Texas 77002
Attention: Vice President Production
Telex Address: 762-020
Golden Eagle Indonesia Limited
c/o Ultramar Company Limited
90 South Bedford Road
Mt. Kisco, New York 10549
Telex Address: 137302
Union Texas Far East Corporation
P. O. Box 2120
Houston, Texas 77001
Attn: Vice President and General Manager
International Producing Operations
Telex Address: 775255
Universe Tankships, Inc.
512 Gulf Building
P. O. Box 1166
Pittsburgh, Pennsylvania 15230
Attn: Mr. E. D. Loughney - "Personal"
Virginia International Company
3900 Capital Bank Plaza
P. O. Box 4576
Houston, Texas 77210
Attn: Mr. J. D. Taylor, President
Total Indonesia
Tromolpos 10/JKT
Jakarta Pusat
Cable: TOTALINDO JAKARTA
Telex: 796-44108
Attn: General Manager
c.c. Total Indonesia
39/43 Quai Andre Citroen
75739 Paris, CEDEX15
Attn: Director General
Telex Address: 270587 TOTALEX PARIS
Indonesia Petroleum, Ltd.
10th Floor, Toranomon 37 Mori Building
NO. 5-1, Toranomon 3 - chome
Minato-Ku, Tokyo 105, Japan
Attn: T. Kusuoka
Telex Address: 242-4210 JAIPEX J
ARTICLE 17
Relationship of Parties and Tax Provisions
17.1 The rights, duties, obligations and liabilities
of the Parties under this Agreement shall be several and not
joint or collective, and each Party shall be responsible
only for its obligations as set out herein. It is not the
purpose or intention of this Agreement to create any part-
nership, mining partnership or association, and neither this
Agreement nor the operations hereunder shall be construed as
creating any such relationship.
17.2 Each Party elects to be excluded from the appli-
cation of all of the provisions of Subchapter K of the
United States Internal Revenue Code of 1954 as authorized by
regulations promulgated by the Secretary or his delegate
under Section 761 (a) thereof, insofar as such Subchapter or
any portion or portions thereof may be applicable to such
Party. The Parties agree to execute or join in such instru-
ments as are necessary to make such election effective and
hereby authorize and direct Operator to take such action
with the proper administrative office or agency as may be
necessary or convenient to effectuate such purpose.
ARTICLE 18
Effective Date and Term of this Agreement
This Agreement shall become effective as of January 1,
1980 upon its being approved by the Government of the Republic
of Indonesia and by Pertamina and approval being given by
the Japanese Government to Inpex. Upon such approvals this
Agreement shall remain in effect for so long as either one
of the Huffco Contract and the Inpex Contract, and any
extensions, renewals or renegotiations thereof, remains in
effect.
ARTICLE 19
General Provisions
19.1 This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of the Parties
hereto. If during the term hereof one or both of the Production
Sharing Contracts terminate with respect to one or more of
the Unitized Substances, Pertamina shall at that time succeed
to the rights and obligations so affected of the Huffington
Venturers or the Total Venturers, as the case may be, in
this Agreement. No assignment or other transfer of this
Agreement shall be effective until such approval by Pertamina
as may be required by the Production Sharing Contracts shall
have been obtained. An assignment shall not relieve the
assigning Party of its obligations hereunder without the
express written consent of the non-assigning Parties.
19.2 Article headings herein are for convenience only and
shall not be considered in the interpretation or con-
struction of this Agreement.
19.3 None of the requirements or provisions of this
Agreement shall be deemed to be waived by any Party by any
failure to enforce any remedy or take advantage of any
default and each Party hereto shall at all times have the
right to require strict compliance with this Agreement by
the other Parties.
19.4 Unless otherwise clearly specified in this Agree-
ment all sums of money set forth in this Agreement are
expressed in United States Dollars.
IN WITNESS WHEREOF, the Parties have caused these
presents to be duly executed by their duly authorized officers
on this the 3rd day of December, 1982, effective
as of January 1, 1980.
TOTAL INDONESIE
By: /S/
ROY M. HUFFINGTON, INC.
By: /S/
INDONESIA PETROLEUM, LTD.
By: /S/
VIRGINIA INTERNATIONAL COMPANY
By: /S/
THE SUPERIOR OIL COMPANY
By: /S/
GOLDEN EAGLE INDONESIA LIMITED
By: /S/
UNION TEXAS FAR EAST CORPORATION
By: /S/
UNIVERSE TANKSHIPS, INC.
By: /S/
EXHIBIT B
Attached to Nilam Unit Agreement,
effective as of January 1, 1980
DESCRIPTION OF UNIT AREA
From the southwest corner of the Badak Unit,
being that unit created by instrument dated June 25, 1977
but effective as of January 1, 1976 by and among the
Huffington Venturers and the Total Venturers, or their
predecessors in interest, go directly west 1500 meters to
a point whose coordinates are 117 degrees 22' 30.0" E and 0
degrees 23' 48.0" S; then go due south approximately 21 kms. to a
point 300 meters south of the vegetation line marking the
southerly side of the Mahakam River as of the effective
date of the Nilam Unit Agreement and defined by coordinates
117 degrees 22' 30.0" E and 0 degrees 35' 10.0" S. From
this point east, the unit boundary is 300 meters south of
and parallel to such vegetation line marking the southerly
side of the Mahakam River to a point defined by coordinates 117
degrees 28' 47.0" E and 0 degrees 23' 48.0" S; then go due west
to the southwest corner of the Badak Unit. 0
EXHIBIT "C"
Attached to Nilam Unit Agreement, effective as of
January 1, 1980.
UNIT ACCOUNTING PROCEDURE
I. GENERAL PROVISIONS
1. DEFINITIONS
"Joint Property" shall mean the real and personal
property subject to the Agreement to which this
"Unit Accounting Procedure" is attached.
"Material" shall mean personal property, equipment or
supplies acquired or held for use on the Joint Property.
"Controllable Material" shall mean Material which at
the time is so classified in the Material Classification
Manual as most recently recommended by the Council of
Petroleum Accountants Societies of North America.
Terms used in this Unit Accounting Procedure which are
defined in the Agreement shall have the meaning attributed
to them in the Agreement.
2. PURPOSE - CONFLICT WITH AGREEMENT
The purpose of this Unit Accounting Procedure is to
establish equitable methods for determining charges and
credits, with no duplication thereof, applicable to
operations under the Agreement. In the event any of such
methods prove unfair or inequitable, to Operator or Non-
Operators, the Parties will meet and in good faith negotiate
with respect to changes in methods necessary to correct any
unfairness or inequity. In the event of a conflict between
the provisions of this Unit Accounting Procedure and of the
Agreement to which this Unit Accounting Procedure is attached,
the provisions of the Agreement shall control.
3. STATEMENTS AND BILLINGS
Operator shall furnish Non-Operators, on or before forty-
five (45) calendar days following the last day of each month,
a statement showing their proportionate shares of all expenditures
and receipts, as recorded during such month. Such statements will
reflect all charges and credits to the Oil Joint Account and the
Gas Joint Account, summarized by appropriate classifications
indicating the nature thereof, detailed to permit application
of costs and expenses to wells, fields, or other appropriate
designations as may be specified by the Unit Operating Committee.
Items of Controllable Material and unusual charges and credits
shall also be detailed.
4. PAYMENTS AND ADVANCES BY NON-OPERATORS
Each of the Parties hereto shall advance its proportionate
part of budget funds as provided by the terms of the Nilam Unit
Agreement to which this Unit Accounting Procedure is attached.
Should the Operator be required, on short notice, to pay any
large sums of money on behalf of either Joint Account, the
payment of which sums were unforeseen at the time of the
written request for monthly requirements, Operator may make
calls on the Non-Operator for additional interim advances
covering their respective shares of such payments. Each
Non-Operator shall pay its due proportion of all such bills
or calls for additional advances within fifteen (15) days
after receipt thereof. If payment is not made within such
time, the defaulting Party shall be subject to the remedies
provided for in the Nilam Unit Agreement to which this Unit
Accounting Procedure is attached.
5. ADJUSTMENTS AND SETTLEMENTS
On the monthly statement, as required by Sec 3 above,
Operator shall indicate the aggregate amounts actually
expended on Joint Operations for the Oil Unit and the Gas
Unit during such month as well as the aggregate amounts
actually advanced by Non-Operators. Such statements shall
not prejudice the right of any Non-Operators to protest or
questions the correctness thereof; provided, however, all
statements rendered to the Non-Operators by Operator during any
calendar year shall conclusively be presumed to be true and
correct after twenty-four (24) months following the end of
any such calendar year, unless within the said twenty-four
(24) month period of Non-Operator takes written exception
thereto and makes claim on Operator for adjustment. No
adjustment favorable to Operator shall be made unless it is
made within the same prescribed period. The provisions of
this paragraph shall not prevent adjustments resulting from
a physical inventory of the Joint Property as provided for
in Section VII.
6. AUDITS
A Non-Operator, upon at least thirty (30) days advance
written notice in writing to Operator and all other Non-
Operators, shall have the right at its sold expense to
audit Operator's accounts and records relating to the
accounting hereunder for any calendar year within the
twenty-four (24) month period following the end of such
calendar year; provided however, the making of an audit
shall not extend the time for the taking of written exception
to and the adjustment of accounts as provided for in
Paragraph 5 of this Section I. Non-Operators shall make
every reasonable effort to conduct joint or simultaneous
audits in a manner which will result in a minimum of incon-
venience to the Operator.
7. ACCOUNTING OF OPERATING COSTS
Operating costs shall be recorded by Operator in cost
centers identified as specific and non-specific to Joint
Operations. Such cost centers shall be consistent with and
in relation to categories in current Budgets. The allocation
of operating costs to such cost centers shall be made as
specified in Sections II and III of this Unit Accounting
Procedure and shall be applied consistently.
8. ACCOUNTING OF INVESTMENT COSTS
Investment costs shall be recorded by Operator in AFE
accounts in a manner consistent with and in relation to
categories in current Budgets.
II. DIRECT UNIT OPERATING EXPENSES
Subject to limitation hereinafter prescribed, Operator
shall charge the Oil Joint Account and/or the Gas Joint
Account with the following items:
1. RENTALS AND ROYALTIES
Rentals and royalties attributable to the Unit Area or
production therefrom when such rentals and royalties are
paid by Operator for the account of the Parties.
2. LABOR
A. Salaries and wages of Operator's employees
directly engaged in the Joint Operations, and salaries
or wages of employees (whenever located) who are tempo-
rarily assigned to, and directly engaged in the Joint
Operations, whether in Indonesia or elsewhere.
B. Operator's cost of holiday, vacation, sickness
compensatory rest time, overseas differential, re-
location allowances, allowances for housing and living
disability benefits and other customary allowances paid
to the employees whose salaries and wages are chargeable
to the Oil Joint Account and/or the Gas Joint Account
under Paragraph 2A of this Section II.
C. Expenditures of contributions made pursuant to
assessments imposed by governmental authority which are
applicable to Operator's labor cost of salaries and
wages chargeable under Paragraphs 2A and 2B of this
Section II.
D. Reasonable personal expenses of those employees
whose salaries and wages are chargeable under Paragraph
2A of this Section II and for which expenses of the employees
are reimbursed under Operator's usual practice.
3. EMPLOYEE BENEFITS
Operator's cost of plans for employee's group life insurance,
hospitalization, pension, retirement, stock purchase, thrift,
bonus and other benefit plans of a like nature which are
applicable to costs chargeable under Paragraph 2 hereof.
4. MATERIAL
Material purchased or furnished by Operator for use on the
Joint Property.
5. TRANSPORTATION AND TRAVELING EXPENSES
Actual cost of the following when necessary for the exploration,
development, maintenance, and operation of the Joint Property.
A. Transportation cost of material, equipment,
and supplies.
B. Transportation cost of employees assigned to
the Joint Operations, their families, and their personal
and household effects, to and from the Unit Area or
other location where they reside or work, also trans-
portation costs of employees and their families for
annual vacation or periodic leave.
C. Transportation costs and traveling expenses,
outside of Houston, Texas, of employees of Operator and
its Affiliates when temporarily assigned to perform work
for the sole benefit of the Joint Operation.
6. SERVICES
A. The cost of contract services and utilities
from outside sources.
B. Actual cost of technical services, such as
laboratory analysis, geophysical and geological inter-
pretation, drafting, etc., performed outside of the
Unit Area by independent contractors for the benefit of
the Joint Operations.
C. Use and service of equipment and facilities
furnished by Operator as provided in Paragraph 5 of
Section IV hereof.
7. DAMAGES AND LOSSES TO JOINT PROPERTY
All costs or expenses necessary for the repair or replace-
ment of Joint Property made necessary because of damages or
losses incurred by fire, flood, storm, theft, accident, or
any other cause to the extent not compensated by insurance.
Operator shall furnish Non-Operator written notice of damages
or losses incurred as soon as practicable after a report
thereof has been received by Operator.
8. LITIGATION AND DAMAGES
Expenditures for the Joint Operations in connection with
actual or threatened litigation (including investigation and
securing of evidence), discharge of liens, judgements and
liquidated claims, and in compromise of claims, accident
compensation, death settlements and burial expenses paid in
accordance with labor law or union contracts to the extent
that any of the foregoing is not recovered from an insurance
underwriter; provided no charge shall be made for services
rendered to Operator by Operator's in-house legal staff,
resident outside Indonesia (such charges to be considered
Administrative Overhead under Section III hereof) except
upon agreement between Operator and Non-Operators.
9. TAXES
All taxes, custom duties, fees and governmental assessments
of every kind and nature assessed or levied upon or in
connection with the Joint Property, the operation thereof,
or the production therefrom, and which have been paid by the
Operator for the benefit of the Parties.
10. INSURANCE
A. Premiums paid for insurance carried for the
benefit of the operations hereunder, together with all
expenditures incurred and paid in settlement of any and
all losses, claims, judgments and other expenses,
including legal services, not recovered from insurance
carrier.
B. If no insurance is carried as to a particular
loss, the actual expenditures incurred and paid by the
Operator in settlement of any and all losses, claims,
damages, judgments and any other expenses, including
outside legal services.
11. OFFICES AND CAMPS
All offices and camp expenses (excluding those expenses
covered under Section III below), including but limited
to, housing, employee hospital and medical expenses,
recreation and athletic expenses, schools for employees and
their children, safety and other relevant activities
applicable to employees and their families shall be charged
to the applicable Joint Account. If such offices or camps
are used in operation of the Oil Unit and the Gas Unit, or
of one or both of such Units and of properties not covered
by this Agreement, such costs shall be allocated between such
Unit(s) and/or properties serviced in the same proportions
as the aggregate of other direct charges applicable to such
Unit(s) and/or properties.
12. OTHER EXPENDITURES
Any other expenditure not covered or dealt with in the
foregoing provisions of this Section II, or in Section III,
and which is incurred by the Operator for the necessary and
proper conduct of the Joint Operations.
13. FOREIGN EXCHANGE
The Oil Joint Account and the Gas Joint Account shall bear
losses and credits sustained on foreign exchange incurred by
Operator in the performance of operations under the Agreement
to which this Unit Accounting Procedure is attached.
14. ALLOCATION RULE
Common direct Nilam Unit operating expenses incurred dur-
ing a year for the benefit of the Oil Unit and the Gas Unit
will be allocated to the Oil Joint Account and the Gas Joint
Account, respectively, in the ratio of direct expenditures
for the Oil Unit and the Gas Unit during such year.
III. INDIRECT OPERATING EXPENSES
Operator may charge the Oil Joint Account and/or the Gas
Joint Account for indirect costs by use of an allocation of
area expense as follows:
The indirect costs charged by Operator to East Kalimantan
operations in a year will be the amount of indirect charges
allocated to such area in such year under the provisions of
the Huffco Operating Agreement, as the same may be amended
from time to time. Operator shall allocate to the Unit Area
a portion of such indirect costs of its East Kalimantan
operations based upon the relative direct expenditures in
each of the areas in East Kalimantan in which it operates.
Operator will furnish statements by its outside auditors
justifying the allocation of such costs among the areas in
which it operates in East Kalimantan and certifying that the
portion of such costs not allocated to the Unit Area has
been allocated by Operator to the other areas in which it
operates in East Kalimantan and paid to Operator by the
parties on behalf of which it operates. The portion of
indirect East Kalimantan expenses in a year allocated to the
Unit Area will be further allocated to the Oil Joint Account
and the Gas Joint Account, respectively, in the ratio of
total direct expenditures for the Oil Unit and the Gas Unit
during such year.
IV. BASIS OF CHARGES TO THE
OIL JOINT ACCOUNT AND THE GAS JOINT ACCOUNT
Subject to the further provisions of this Section Iv,
Operator will procure all Material and services for the
Joint Property. At the Operator's option, Non-Operators
may supply Material or services for the Joint Property.
1. PURCHASES
Material purchased and service procured shall be charged at
the price paid by Operator.
A. Imported Materials, equipment and supplies at
the manufacturer's or suppliers' net invoice price
(after all trade and cash discounts), reasonable fees
or costs paid to third parties for purchasing and
shipping, insurance costs, transportation costs to
shipping point, crating and handling costs, transpor-
tation costs to point of entry, customs and like
importation costs, any applicable duties or taxes,
handling from shipside to customs warehouse and trans-
portation and handling from customs warehouse.
B. Local purchased Materials, equipment and
supplies, at the vendor's net invoice price (after all
trade and cash discounts) plus transportation and other
related costs from place of purchase.
2. MATERIALS FURNISHED FROM OPERATOR'S WAREHOUSE OR
OTHER PROPERTIES
A. New Material (Condition "A")
(1) All such Condition "A" Material supplied from
Operator's warehouse or other properties shall be
on the same cost basis as (but not in excess of)
that for purchases in this Section IV, Item 1.
(2) If Material is moved to the property from
the Operator's warehouse or other properties, no
charge shall be made for a distance greater than
the distance from the nearest entry point normally
used, or for warehousing costs, except by agreement
with the Non-Operators.
B. Used Material (Condition "B" and "C")
(1) Material in sound and serviceable condition
and suitable for reuse without reconditioning,
shall be classified as Condition "B" and priced at
seventy-five percent (75%) of current and new
price.
(2) Material which cannot be classified as
Condition "B" but which,
(a) After reconditioning will be further
serviceable for original function as good
secondhand Material (Condition "B"), or
(b) Is serviceable for original function but
substantially not suitable for reconditioning,
shall be classified as Condition "C" and priced at
fifty percent (50%) of current new price.
(3) PREMIUM PRICES
Whenever Material is not readily obtainable at prices speci-
fied in Paragraph 1 and 2 of this Section IV because of
national emergencies, strikes or other unusual causes over
which the Operator has no control, the Operator may charge
the Oil Joint Account and/or Gas Joint Account, as
applicable, for the required Material at the
Operator's actual cost incurred in procuring such
Material, in making it suitable for use, and in moving it to
the Joint Property, provided, that notice in writing is
furnished to Non-Operators of the proposed charge prior to
billing Non-Operators for such Material.
4. WARRANTY OF MATERIAL FURNISHED BY OPERATOR
Operator does not warrant the Material furnished. In case
of defective Material, credit shall not be passed to the Oil
Joint Account or the Gas Joint Account until adjustment has
been received by Operator from the manufacturers or their
agents.
5. EQUIPMENT AND FACILITIES FURNISHED BY OPERATOR
Operator will charge the Oil Joint Account and/or Gas
Joint Account, as applicable, for the cost of all
equipment and facilities used directly or indirectly
in Oil Unit or Gas Unit operations. Cost is deemed
to include all freight and handling cost, taxes of
whatever nature, and any and all other costs associated
with the acquisition of such equipment and facilities.
V. DISPOSAL OF MATERIAL
The Operator may purchase, but shall be under no obligation
to purchase, interest of Non-Operators in surplus condition
"A" or "B" Material. The disposition of surplus Controllable
Material, not purchased by Operator, shall be subject to
agreement between Operator and Non-Operators, provided
Operator shall dispose of normal accumulations of junk and
scrap Material either by transfer or sale from the Joint
Property.
1. MATERIAL PURCHASED BY THE OPERATOR OR NON-OPERATORS
Material purchased by either the Operator or Non-Operator
shall be credited by the Operator to the Oil Joint Account
and/or Gas Joint Account, as applicable, for the month in
which the Material is removed by the purchaser.
2. DIVISION IN KIND
Division of Material in kind, if made between Operator and
Non-Operators, shall be in proportion to the respective
interests in such Material. The Parties will thereupon be
charged individually with the value of the Material received
or receivable. Proper credits shall be made by the Operator
in the monthly statement of operations.
3. TRANSFERS TO OUTSIDERS
Transfers to outsiders of Material from the Joint Property
shall be credited by Operator to the Oil Joint Account and/or
Gas Joint Account, as applicable, at the net amount collected
by Operator from transferee. Any claim by transferee related
to such transfer shall be charged back to the Oil Joint Account
and/or the Gas Joint Account if and when paid by Operator.
VI. BASIS OR PRICING MATERIAL TRANSFERRED FROM
JOINT ACCOUNT
Material purchased by either Operator or Non-Operator or
divided in kind, unless otherwise agreed to between Operator
and Non-Operator shall be priced on the following basis:
1. NEW PRICE DEFINED
New price as used in this Section VI shall be the price
specified for New Material in Section IV.
2. NEW MATERIAL
New Material (Condition "A"), being new Material procured
for the Joint Property but never used, at one hundred percent
(100%) of current new price (plus sales tax, if any).
3. GOOD USED MATERIAL
Good used Material (Condition "B"), being used Material in
sound and serviceable condition, suitable for reuse without
reconditioning, at seventy-five percent (75%) of current new
price.
4. OTHER USED MATERIAL
Used Material (Condition "C) at fifty percent (50%) of
current new price, being used Material which:
A. Is not in sound and serviceable condition but
suitable for reuse after reconditioning, or
B. Is serviceable for original function but not
suitable for reconditioning.
5. BAD-ORDER MATERIAL
Material (Condition "D") no longer suitable for its original
purpose without excessive repair cost but usable for some
other purpose, at a price comparable with that of items
normally used for such other purposes.
6. JUNK MATERIAL
Junk Material (Condition "E"), being obsolete and scrap
material, at prevailing prices.
7. TEMPORARILY USED MATERIAL
When the use of Material is temporary and its service to the
Joint Property does not justify the reduction in price as
provided for in Paragraph 3 of this Section VI, such material
shall be priced on a basis that will leave a net charge to
the Oil Joint Account and/or Gas Joint Account, as applicable,
consistent with the value of the service rendered.
VII. INVENTORIES
The Operator shall maintain detailed records of controllable
material.
1. PERIODIC INVENTORIES NOTICE AND REPRESENTATION
At reasonable intervals, inventories shall be taken by
Operator of Material in the Oil Joint Account and the Gas
Joint Account. Written notice of intention to take inventory
shall be given by Operator at least thirty (30) days before
any inventory is to begin so that Non-Operators may be
represented when any inventory is taken. Failure of
Non-Operators to be represented at an inventory shall bind
Non-Operators to accept the inventory taken by Operator, who
shall in that event furnish Non-Operators with a copy thereof.
2. RECONCILIATION AND ADJUSTMENTS OF INVENTORY
Reconciliation of inventory which has been charged to the
Oil Joint Account or the Gas Joint Account by the Operator
and a list of overages and shortages shall be jointly deter-
mined by Operator and Non-Operators. Inventory adjustment
shall be made by Operator with the Oil Joint Account and/or
Gas Joint Account, as applicable, for overages and short-
ages but Operator shall be held accountable to
Non-Operators only for shortages due to gross negligence
or willful misconduct.
EXHIBIT D
ATTACHED TO NILAM UNIT AGREEMENT
EFFECTIVE AS OF JANUARY 1, 1980
METHODOLOGY
FOR CALCULATING NILAM RESERVES
In the following, it is assumed that Participating Interests will
be adjusted to be in accordance with the volumes of proven hy-
drocarbons in-place at standard conditions (60 degrees F, 14.696
psia) from the volumetric equations generally accepted by the
Petroleum Industry. The method for the determination of petro-
physical parameters and for mapping each reservoir is described
below, and the basic principles on which an agreement may be
reached are put forward.
1. PETROPHYSICAL PARAMETERS
1.1 Net Sand and Net Pay
For each reservoir, the net sand will be taken as the
cumulative reservoir thickness, with a clay content
(Vol) equal to or less than 35% and a useful porosity
(ou) equal to or more than 10%.
In the event of the successful RFT, FIT, DST or Pt, (as
defined in paragraphs 3.2 and 3.3) in an interval
where the Volay is greater than 35% or useful porosity
less than 10%, the Volay or useful porosity limits
for that reservoir in that well, will be extended as
agreed by the NUTC.
The thickness will be read from the Gamma-Ray curve of
the FDC-CNL log adjusted for hole deviation and ex-
pressed in feet. (Figures will be rounded to the
nearest feet). In non-vertical wellbores the true
thickness of the sand will be calculated using the best
available deviation data.
Net pay is defined as the hydrocarbon bearing portion of
the net sand (see Section 3 : Criteria for proven re-
serves).
- 2 -
1.2 Clay Content = (Vcl)
The clay content will be calculated from the Gamma-Ray
reading, using the formula:
GR - GR min
Vcl = ________________
GR clay - GR min
Where = GR min = GR reading in the clean sands
GR clay = GR reading in the adjacent shales,
except organic shales
The calculations shall be made on a well-by-well basis.
1.3 Useful porosity - (ou)
Whenever possible, the useful porosity will be
calculated from the FDC-CHL every 2 foot interval,
after corrections for lithology, clay content and light
hydrocarbons have been made. These corrections shall
be made as follows:
a. Correction for lithology and clay content:
2 (2.7l - pma)
oNc = On + __________________ - (Vcl x oNcl)
3
oDc = Od - (Vcl x oDCl)
pma - pb
Od = __________
pma - pmf
<PAGE>
pma - pcl
Odcl = _________
pma - pmf
- 3 -
pma = matrix density
pcl = FDC reading in the shales
pmf = mud filtrate density
Oncl = CNL reading in the shales
pmf values :
- water base mud : pmf = l + (.73 x ppm
10-6)
- oil base mud : pmf = .85
b. Correction for light hydrocarbons :
7 ODC = 2 Onc
______________
b.1 Compute o1 = 9
b.2 Compute Sw from Indonesia formula:
1
Sw n/2 = _____________________________
Vcl
(1 - ___ )
2
Vcl olm/2
Rt _____ + ______
Rcl a.Rw
(where m = w, n = 2, a = .81)
Where Rcl = shale resistivity
Rw - formation water resistivity
(see 1.4)
- 4 -
b.3 Compute Sxo
1
Sxo = ________________________________
Vcl
(1 - _____)
Rxo 2
Vcl o1
________ + _______
Rcl a.Rmf
Where a = .81 and Rmd = mud filtrate resistivity.
If no reliable Rxo log is available, Sxo - Sw1/5
b.4 Compute residual hydrocarbon saturation:
Srh = 1 Sxo
No hydrocarbon correction will be made if
Srh < 0.02.
b.5 Compute hydrocarbon density :
8 - 1 + Srh (1.17 + .72 o)
ph = __________________________
Srh (1.67 + .75 o)
Where o = 1 3o1 - m2.15 Odc
_____ x ___________________
Odc 0.85
- 5 -
b.6 Hydrocarbon correction:
1.07 o1 Srh [pmf (1.11 - .15 ppm .10-6) -1.15ph]
______________________________________________ +oDc
oDc = pmf - pma
o1 Srh x (0 - 1.67 ph + .17)
oNc = ____________________________
J + oNc
Where J = (1 - ppm -6 )
b.7 Compute new o1 where o1 = 7 oDC + 2 oNC
_____________
9
b.7 Go back to step b.2 (iterate 3 times)
b.9 ou= o1 (after 3 iterations)
c. For caved intervals: as the FDC-CNL is not reliable,
useful porosity will be calculated from the sonic log
corrected for clay content and compaction.
1 t zone - t ma t cl - t ma
ou = __ -------------- - Vcl x ------------
Cp t mf - t ma t mf - t ma
- 6 -
Where Cp, comparison factor = 1
t ma = matrix transit time
t cl = sonic reading in shales
t mf = mud filtrate transit time
For water base muds, t mf = 189 microsecs/ft.
for oil base muds, t mf = 210 microsecs/ft.
d. For detrital coals within a sand, porosity will be
taken from average porosity values in the adjacent
intervals within the sand.
1.4 Water Resistivity : (Rw)
A table of Rw values, reservoir by reservoir wig be
established by the Nilam Unit Technical Committee.
This table will be updated as new information is
gathered.
1.5 Water Saturation : (Sw)
Water Saturation shall be calculated every 2 feet using
the Schlumberger Sw formula for Indonesia :
1
Swn/2 = ______________________________________
(1 - Vcl)
___
2
Rt Vcl + ou m/2
______________ ____________
Rcl aRw
Where : a = .81, m = 2, n = 2
- 7 -
Rt is the uncorrected value of the deep Resistivity curve
from the Induction logs (except for wells Nilam 4, 5, 8, 40
and 43 where the uncorrected reading of the Dual Laterolog
will be taken from average values in the adjacent intervals
within the sane.
1.6 Clay and Matrix Parameters
(Rcl, tcl, Oncl, pcl tma, pma cp)
All these parameters will be deduced from the
appropriate standard cross-plots. Whenever possible
these cross-plots will be made for each zone (i.e. D, E,
F, G), in order to take into account the changes of
these parameters with depth. The chosen values will
be, whenever possible, kept constant all over the
NILAM Unit.
2. VOLUME COMPUTATION:
2.1 Net-pay Maps
In addition to the usual considerations of fluids and
pressure incompatibilities, which lead to the de-
finition of separated reservoirs the following
principles will be applied:
The contour interval will be 10 feet unless the
thickest net sand in a reservoir is 15 feet, or
less, in which case the contour interval will be
5 feet.
- 8 -
2.1.1 Maximum thickness = The maximum thickness of one
reservoir will be equal to the thickest net sand en-
countered by a well, adjusted for hole deviation,
rounded to the next higher 5 feet (e.g. well bore sand
= 18'; max. thickness = 20'; wellbore sand =
25' ; max thickness = 25').
2.1.2 Zero contours = The zero contour will be extra-
polated from sand values in a reservoir (linear extra-
polation), except in cases where a zero sand well
would fall within the extrapolated zone. In such cases,
the zero contour will be drawn through the zero sand
well, and other contours linearly interpolated between
0 and the nearest sand.
2.1.3 Single well reservoirs = If a reservoir in a
well is further than 2 km from the nearest other well in
the same reservoir it will be considered as a single
well reservoir. No mapping shall be attempted for
single well reservoirs. The corresponding reserves
will be computed by acreage assignment.
2.1.4 Acreage assignment = For a reservoir which cannot
be mapped (see 2.1.3), volumes will be calculated by
assigning to each well an area over which the wellbore
net pay will be considered as constant.
- 9 -
The acreage thus assigned will be a circle around the
well containing 320 acres for a gas reservoir, and a
circle around the well containing 80 acres for an oil
reservoir.
2.1.5 The subsurface trace of the wellbore will be calculated
from available deviation data. Mapping of sands will
be carried out using the true subsurface position and
true vertical thickness.
2.1.6 Net pay maps = Will be constructed from net sand maps
prepared as above, taking hydrocarbon contacts into
consideration. (Net pay defined in 1.1.1)
2.1.7 No mapping will be attempted between wells in any given
reservoir greater than two kilometers apart, or more
than two kilometers beyond well control.
2.2 Hydrocarbon Volumes
2.2.1 Volumes of hydrocarbons at standard conditions
will be defined as :
Vsc - VRC / FVF
where VRC is the reservoir rock volume as
calculated by planimetry from an agreed
net pay map of the reservoir in question,
multiplied by oavg x (1-Sw avg.) and FVF
is the formation volume factor.
- 10 -
(h x ou)
with oavg = ______________
h
Sw avg = (h x ou x Sw)
_____________
(h x ou)
and h, is the true vertical thickness of the pay
interval (normally 2 feet) corresponding to each
value of ou, Sw.
All the values of ou and Sw from all the wells in
a given reservoir will be considered and given
equal weight.
2.2.2 Datum level = The datum level will be chosen for
each reservoir to be the midpoint between the
highest proven oil or gas and the lowest proven
oil or gas in that reservoir.
2.2.3 Formation volume factor = gas (BG)
The formation volume factor for gas will be defined
as :
Psc Tz
Bg = ____________ cuft/SCF
Tsc P
where Psc = 14.696 Psia; Tsc = 520.0 Or
- 11 -
Values of P and T should be average reservoir
pressure and temperature determined from DST and/or
BHP surveys when available and reliable. Actual gas
analysis data will be used for the calculation of '2'
when available and reliable.
In lieu of the above data, the following empirical
formulas should be used:
Zone D, z = 0.8899
Zone E, z = 0.9328
Zone F, z = 1.0052
Zone G, z = 1.0589
The value of P, T will be taken from the following
formulae:
T (Or) = 0.0206d = 464.0
P (Psia = 0.4820d = 397.0
where d = depth sub-sea, in feet, of the reservoir's
datum level where d is deeper than 7,000 feet.
2.2.4 Formation volume factor = oil (Bo)
For the purpose of the unitization, the Parties agree
to use the average oil formation volume factor available
from FLASH analysis, at normal operating conditions,
of recombined samples of the reservoir oil, zone by
zone (D, E, F, G). In the case where no PVT flash
data are available for the zone in question, the Bo
value of the nearest zone where it has been measured
will be used.
3. CRITERIA FOR PROVEN RESERVES
3.1 Correlations and Maps
3.1.1 Gas zones: Gas reserves are considered proven in a
well when all of the following conditions are met,:
- the zones has Vclay less than or equal to 35%
and ou equal to or greater than 10%, subject to
paragraph 1.1.
- the zone is logically correlated to a proven area
of the reservoir (regardless of structural position)
- the sand can be logically extended (i.e. mapped
within the limitation of paragraph 2.1.3)
- the calculated Sw in the cleanest part of the zone
is below the following cut-off (otherwise one of
the following tests is required : DST,m RFT, FIT or
Pt)
Vcl < 10% Sw < 50%
10% < Vcl < 20% Sw < 55%
20% < Vcl < 30% Sw < 60%
30% < Vcl < 35% Sw < 65%
If Vcl > 30%, regardless of the Sw value, and the sand
is below the LPG one of the following tests is required
to prove gas reserves : RFT, FIT, DST OR PT.
- 13 -
3.1.2 Oil zones : Oil reserves are proven in a well
when all of the following conditions are ful-
filled :
- the zone has Vclay less than or equal to 35%
and ou equal to or greater than 10%, subject
to Paragraph 1.1.
- the zone is logically correlated to a proven
area of the reservoir
- the sane can be logically extended, and the
well is less than 1 km from the nearest
proven oil well in the reservoir.
- if the zone is below the LPO, the calculated
Sw is less than the following cut-off
otherwise, one of the following tests is
required : DST, RFT, FIT, or Pt)
Vcl < 10 % Sw < 40%
10% < Vcl < 20 % Sw < 45%
20% < Vcl < 30 % Sw < 50%
(If Vcl > 30%, one of the following tests is
required to prove reserves : RFT,DST,FIT,PT).
If the zone is above the HPO, one of the
following tests is required to determine if
the hydrocarbon is oil : DST, FIT, RFT, PT,
otherwise it is proved gas.
- 14 -
3.2 RFT and FIT tests
A RFT or a FIT showing a minimum recovery of 2 SCF
of gas, will be considered as proving gas reserves,
or 1 liter of oil (with a maximum GOR of 3000
SCF/STB) will be considered as proving oil reserves.
3.3 DST and PT
Recovery of a minimum of 200,000 SCF/D of gas,
will be considered as proving gas reserves.
The recovery of a minimum of 10 BOPD, with a GOR
or less than 3000 SCF/STB will be considered as
proving oil reserves.
3.4 In cases where a DST or PT and either a RFT or a FIT
have been carried out on the same zone (and are both
mechanically successful), only the DST or PT result
will be used.
- 15 -
DEFINITIONS OF TERMS AND ABBREVIATIONS
Page 2
Vcl = clay content expressed in percent
FDC = Formation Density Compensated
CNL = Compensated Neutron Log
GR = Gamma Ray
GR min = minimum Gamma Ray reading in API units
GR max = maximum Gamma Ray reading
Onc = porosity from neutron log corrected for clay
oDc = porosity from density log corrected for clay
oN = porosity from neutron log
pma = matrix density in gm/cc
oNcl = neutron porosity of clay
oD = porosity calculated from density log
pcl = clay density
pmf = density of mud filtrate
oDcl = porosity from density log of clay
Page 3
o1 = porosity corrected for light hydrocarbon
effects
Sw = water saturation
Rt = resistivity from log
Rw = formation water resistivity
Rcl = resistivity of clay
- 16 -
Page 4
Sxo = flushed zone water saturation
Rxo = resistivity of flushed zone
Rmf = resistivity of mud filtrate
Srh = residual hydrocarbon saturation
ph = hydrocarbon density
Page 5
oNC = porosity from neutron log corrected for
clay and light hydrocarbon
oDC = porosity from density log corrected for
clay and light hydrocarbons
ppm = mud filtrate salinity expressed in ppm
Cp = compaction factor
tma = interval transit time of the matrix
tcl = interval transit time of the clay
tmf = interval transit time of the mud filtrate
t zone = interval transit time of the zone
Page 9
Bg = Formation Volume Factor for gas
Pst = Pressure at Standard Conditions
T = Reservoir Temperature (oR)
z = Supercompressibility Factor
Tsc = Temperature at Standard Conditions
P = Reservoir Pressure (psia)
oR = Degrees Rankin
SCF = Standard Cubic Feet
Psia = Pounds per square inch absolute
cu ft = Cubic Foot
- 17 -
Page 11
Bo = Formation Volume Factor for oil
PVT = Pressure Volume Temperature
Page 12
DST = Drill Stem Test
PT = Production Test
LPG = Low Proven Gas - The lowest structural
occurrence of proven gas as
defined in Section 3.1.1
Page 13
LPO = Low Proven Oil - The lowest structural
occurrence of proven oil
as defined in Section 3.1.2
HPO = High Proven Oil - The highest structural
occurrence of proven oil
as defined in Section
3.1.2
Page 14
SCF/D = Standard Cubic Feet/Day
STB = Stock Tank Barrel
BOPD = Barrels Oil Per Day
GOR = Gas Oil Ratio
<PAGE>
Jakarta
December 6, 1982
PERTAMINA
Bacan Koordinator Kontraktor Asing
Annex Building, 5th Fl.
Jln. Merdeka Timur 1-A
Jakarta
Attn: Mr. D. Zahar
Head of BKKA
Dear Sir:
Re: Nilam Unit Agreement
Section 2.2 of the Nilam Unit Agreement provides for a final
redetermination of Participating Interests in the Nilam Oil Unit
and Nilam Gas Unit based on data available on June 30, 1982.
Such adjustment of Participating Interests requires
Pertamina's approval before being used for purposes of the Huffco
Contract and the Inpex Contract, as those terms are defined in the
Nilam Unit Agreement.
The parties have now reviewed the data available on June 30,
1982, and are in agreement that:
The Participating Interests of the parties in Oil and the Oil
Unit shall be as follows:
Huffington Venturers: 78.84%
Total Venturers: 21.16%
The Participating Interests of the parties in Gas and Natural
Gas Liquids and in the Gas Unit shall be as follows:
Huffington Venturers: 81.43%
Total Venturers: 18.57%
In accordance with the terms of the Nilam Unit Agreement,
Huffco and Total request that Pertamina approve the revised
Participating Interests as above stated.
It is our understanding that the Nilam Unit Agreement has been
approved in principle by the Government, subject only to their
approval of the final Participating Interests. We request
therefore, that when confirming your approval pursuant to Section
2.2, you confirm the Government's approval of the Nilam Unit
Agreement and the final Participating Interests as set out above.
Very truly yours,
For and on behalf of For and on behalf of
HUFFCO VENTURERS: TOTAL VENTURERS:
/S/ /S/
J.R. Weyler J. M. Demanche
President, Huffco Indonesia General Manager, Total
Indonesie
[MOBIL OIL INDONESIA INC. LETTERHEAD]
14 February, 1995
Mr. J.M. Hosanski
Vice President LNG
TOTAL Indonesie
Mr. S.G. Leson
Vice President LNG & Operations
UNOCAL
Mr. C.L. Harris
Vice President LNG
VICO
Gentlemen,
The purpose of this letter is to confirm our understanding
regarding the allocation of supply entitlements between the Arun
Plant and Bontang Plant for LNG sales made by PERTAMINA. The
agreement of supply allocation will support PERTAMINA's LNG
marketing objectives and facilitate effective planning and
implementation of PERTAMINA's LNG sales contracts.
Effective 1 January 1995, all contracts for additional LNG
sales entered into (or in a form which has been substantially
agreed to) before 1 January 1996 will be allocated 100% to the
Bontang Plant. It is acknowledged the supply allocation for the
extensions of the 1973 and 1981 Japanese Western Buyers contracts
(10 and 5 years, respectively), the medium term sale to Korea Gas
Corporation (MOA dated 30 September 1994), the medium term sale to
Chinese Petroleum Corporation (MOA dated 6 December 1994), the long
term sales to Korea Gas Corporation and Chinese Petroleum
Corporation (Badak V and Badak VI, respectively), the two year
extension of the Chubu Yokkaichi Sales Contract, and the sale to
Korea Gas Corporation for two additional cargoes in February 1995
are allocated 100% to the Bontang Plant.
The parties also acknowledge that because (1) the Arun Plant
has sufficient inventory and was ready and able to deliver its
entitlement to the last 1973 Sales Contract cargo transported on
the LNG tanker Libra in 1994, but (2) that at Pertamina's direction
such cargo was transferred to and loaded at Bontang on December 22,
1994, in order to provide sufficient inventory at both Plants for
the delivery of the two additional cargoes to Korea Gas Corporation
in February 1995, Arun's 1994 entitlement to such cargo was carried
forward to 1995. The parties further acknowledge that the 1973
Sales Contract cargo transported on the LNG tanker Libra originally
scheduled to be lifted from the Bontang Plant on January 11, 1995,
was transferred to and loaded at the Arun Plant on January 11,
1995, in full satisfaction of Arun's 1994 carry-forward
entitlement.
Representatives from MOBIL, TOTAL, UNOCAL and VICO will
consult with each other with a view to agreeing before the end of
1995 to the allocation of supply entitlements for additional LNG
sales entered into 1 January 1996 and after.
If this letter reflects our agreement on the allocation of
supply entitlements please sign four original copies attached.
Very truly yours,
/S/
J.B. King
Vice President Gas Product
TOTAL Indonesie UNOCAL Indonesia Company VICO
Indonesia
By: /S/ By: /S/ By: /S/
PACKAGE V SUPPLY AGREEMENT
(1995-1999 LNG SALES TO KOREA GAS CORPORATION)
between
PERTAMINA
and
VIRGINIA INDONESIA COMPANY
LASMO SANGA SANGA LIMITED
OPICOIL HOUSTON, INC.
UNION TEXAS EAST KALIMANTAN LIMITED
UNIVERSE GAS & OIL COMPANY, INC.
and
VIRGINIA INTERNATIONAL COMPANY
Dated: June 16, 1995
Effective: September 30, 1994
<PAGE>
PACKAGE V SUPPLY AGREEMENT
(1995-1999 LNG SALES TO KOREA GAS CORPORATION)
THIS SUPPLY AGREEMENT, made and entered into in Jakarta on
June 16, 1995, by and between PERUSAHAAN PERTAMBANGAN MINYAK DAN
GAS BUMI NEGARA ("PERTAMINA"), on the one hand, and VIRGINIA
INDONESIA COMPANY ("VICO"), LASMO SANGA SANGA LIMITED, OPICOIL
HOUSTON, INC., UNION TEXAS EAST KALIMANTAN LIMITED, UNIVERSE GAS &
OIL COMPANY, INC., and VIRGINIA INTERNATIONAL COMPANY (herein
referred to collectively as "Contractors" and individually as
"Contractor"), on the other hand,
WITNESSETH:
A. WHEREAS, Contractors individually own or control all
of the interest of "Contractors" in that certain Amended and
Restated Production Sharing Contract, dated April 23, 1990, but
effective as of August 8, 1968 (such contract as hereafter amended
is herein referred to as the "Amended and Restated Production
Sharing Contract") and that certain Production Sharing Contract
dated April 23, 1990, but effective as of August 8, 1998 (such
contract as hereafter amended is herein referred to as the
"Renewed Production Sharing Contract"). The Amended and Restated
Production Sharing Contract and the Renewed Production Sharing
Contract are herein referred to collectively as the "Production
Sharing Contracts" and the area covered thereby is herein referred
to as the "VICO Contract Area"; and
B. WHEREAS, pursuant to the Production Sharing Contracts,
each of PERTAMINA and Contractors is entitled to take and receive,
sell and freely export its respective share of the Natural Gas
produced and saved from the VICO Contract Area (the percentage
share of such Natural Gas to which each of PERTAMINA and
Contractors is entitled, as determined under the Production Sharing
Contracts, is herein referred to as the "Production Sharing
Percentage" of such party); and
C. WHEREAS, the reserves of Natural Gas in the VICO
Contract Area exceed the reserves of Natural Gas committed to be
produced, supplied and delivered by PERTAMINA and Contractors to
meet a portion of PERTAMINA's existing obligations under LNG sales
contracts, LPG sales contracts, and domestic gas sales contracts;
and
D. WHEREAS, PERTAMINA, with assistance from Contractors,
has constructed and expanded and is further expanding the Natural
Gas liquefaction and related facilities located at Bontang Bay, on
the east coast of Kalimantan, Indonesia (herein referred to as the
"Bontang Plant"); and
E. WHEREAS, funds for the expansion of the liquefaction
plant will be provided to PERTAMINA through financing of the cost
of such expansion on terms, mutually agreeable to PERTAMINA and
Contractors, which provide for the repayment of funds provided
pursuant to such financing and the cost of such funds (repayment of
funds and the cost of such funds are hereinafter referred to as
"Financing Costs"); and
F. WHEREAS, PERTAMINA and Contractors are parties to the
Amended and Restated Bontang Processing Agreement dated as of
February 9, 1988 (as from time to time amended, the "Processing
Agreement"), which provides for the operation of the Bontang Plant
and the payment of the costs of such operation (such costs as
determined in accordance with the Processing Agreement are herein
referred to as "Plant Operating Costs"); and
G. WHEREAS, PERTAMINA and Contractors have agreed to use
the Bontang Plant in part for the liquefaction of the VICO Contract
Gas (as defined in Section 2.2 hereof) and the Other Contract Gas
(as defined in Section 2.3 hereof); and
H. WHEREAS, PERTAMINA, in collaboration with Contractors
and its production sharing contractors in other contract areas in
East Kalimantan (herein referred to as the "Other Contract Areas"),
has entered into a Memorandum of Agreement dated September 30,
1994, ("MOA", and unless otherwise so stated, any terms defined in
the MOA shall have the same meanings when used herein) with Korea
Gas Corporation ("Buyer") pursuant to which PERTAMINA is obligated
to sell to Buyer certain quantities of LNG on an ex-ship basis and
certain quantities of LNG on an FOB basis; and
I. WHEREAS, the MOA provides that the Natural Gas to be
processed into LNG and sold by PERTAMINA under the MOA is to be
produced from the areas in East Kalimantan covered by production
sharing contracts between PERTAMINA and its suppliers, which
consists of the VICO Contract Area and the Other Contract Areas;
and
J. WHEREAS, arrangements for the transportation of the
ex-ship quantities pursuant to the MOA and for the payment of costs
respecting such transportation will be made on terms mutually
agreeable to PERTAMINA and Contractors (herein referred to as
"Transportation Costs"); and
K. WHEREAS, PERTAMINA and each Contractor desire to
supply and deliver Natural Gas from the VICO Contract Area in
support of the performance by PERTAMINA of an agreed portion of its
obligations under the MOA; and
L. WHEREAS, each Contractor desires to dispose of its
Production Sharing Percentage of the VICO Contract Gas (as herein
defined) in accordance with the terms of this Supply Agreement,
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
EFFECTIVE DATE AND DURATION
This Supply Agreement shall be effective as of September 30,
1994, and shall terminate on the date when all rights and
obligations of Contractors hereunder have been satisfied.
ARTICLE 2
SUPPLY COMMITMENT AND QUANTITY
2.1 Net Gas Requirement. The total quantity of net
Natural Gas required to be supplied and delivered out of proved
recoverable reserves of Natural Gas in East Kalimantan for
liquefaction and sale as LNG under the MOA is estimated to be .3243
trillion standard cubic feet ("t.s.c.f."). Such quantity is herein
referred to as the "MOA Net Gas Requirement". The MOA Net Gas
Requirement is based on the Fixed Quantities which Buyer has
committed to purchase pursuant to the terms of the MOA.
2.2 VICO Contract Gas. PERTAMINA and Contractors hereby
commit and agree to supply and deliver from proved economically
recoverable reserves of Natural Gas in specific fields within the
VICO Contract Area sufficient Natural Gas (and LNG resulting from
the liquefaction thereof) to meet a portion of the MOA Net Gas
Requirement over the term of this Supply Agreement consisting of
0.0700 t.s.c.f., or 21.5956% thereof. Such quantities of net
Natural Gas committed to be supplied pursuant to this Supply
Agreement are herein referred to as the "VICO Contract Gas", and
the above-stated percentage is herein referred to as the
"Producers' Percentage". The specific fields from which the VICO
Contract Gas will be committed are identified in the supplemental
memorandum entered into among PERTAMINA, Contractors and the
production sharing contractors in the Other Contract Areas pursuant
to the Memorandum of Understanding Re: Supply Agreements and
Package V Sales dated October 5, 1994 (the "Package V Supplemental
Memorandum"). The VICO participating fields and the quantities in
each field comprising the VICO Contract Gas are as follows:
Participating Fields Quantity of Gas (t.s.c.f.)
Badak 0.0232
Lampake 0.0020
Mutiara 0.0093
Nilam 0.0245
Pamaguan 0.0003
Semberah 0.0107
The quantities committed from each field are subject to revision
from time to time, as the reserves from the fields may be updated
and as additional data, from deliverability studies and otherwise,
become available.
2.3 Other Contract Gas. To meet the balance of the MOA
Net Gas Requirement, constituting 0.2543 t.s.c.f., or 78.4044%
thereof, sufficient Natural Gas (and LNG resulting from the
liquefaction thereof) will be committed for supply and delivery by
PERTAMINA and its production sharing contractors from proved
economically recoverable reserves of Natural Gas in the Other
Contract Areas by separate supply agreements, similar hereto and
compatible herewith, executed and delivered concurrently herewith
(such amounts are herein collectively referred to as the "Other
Contract Gas"). The specific fields from which the Other Contract
Gas will be committed are also identified in the Package V
Supplemental Memorandum.
2.4 DeGolyer and MacNaughton Certification. The amounts
of net Natural Gas constituting the VICO Contract Gas and the Other
Contract Gas are part of the estimates of proved recoverable
reserves of Natural Gas as certified by the independent consultant
firm of DeGolyer and MacNaughton in written statements based on
data available on May 31, 1994.
The quantities for the VICO Contract Gas and the Other
Contract Gas set forth in Sections 2.2 and 2.3 hereof and the
Producers' Percentage were established by PERTAMINA at a meeting on
May 29, 1995 of the East Kalimantan Gas Reserves Management
Committee.
ARTICLE 3
COORDINATION OF GAS SUPPLY
The VICO Contract Gas and the Other Contract Gas may be
produced from participating fields at times and production rates
which may change from time to time during the term hereof so as to
secure the optimal ultimate recovery of Natural Gas. The supply of
Natural Gas from the VICO Contract Area and the Other Contract
Areas will be coordinated by PERTAMINA so as to conserve and permit
full utilization of such Natural Gas. The sources of supply,
producing rates, quality of gas, metering and related matters shall
be matters for study by the East Kalimantan Gas Reserves Management
Committee, consisting of representatives from PERTAMINA, VICO,
TOTAL Indonesie and Unocal Indonesia Company.
ARTICLE 4
ADMINISTRATION, INSURANCE AND CONSULTATION
4.1 MOA. PERTAMINA shall be responsible for the due and
prompt administration of the MOA for the benefit of PERTAMINA and
Contractors. All matters which affect the MOA or the sale,
transportation and delivery of LNG thereunder will be administered
by a representative to be appointed by PERTAMINA and the
representative appointed by Contractors under Article 9 hereof. It
is understood, however, that it will be necessary from time to time
for PERTAMINA, as seller under the MOA, to take certain
administrative and operational actions without prior consultation
where immediate action is required. Contractors will be promptly
advised of any such action.
4.2 Insurance. PERTAMINA shall ensure that the interests
of it and each Contractor in respect of each ex-ship cargo of LNG
transported by PERTAMINA from the Bontang Plant to Buyer shall be
adequately insured pursuant to arrangements mutually agreed to by
PERTAMINA and each Contractor. PERTAMINA and each Contractor shall
be entitled to receive its Production Sharing Percentage of the
Producers' Percentage of any proceeds paid under a marine insurance
policy covering an ex-ship cargo of LNG being transported from the
Bontang Plant. Such proceeds shall be remitted by the insurer
directly to the bank designated as Trustee pursuant to Article 6
hereof.
4.3 Consultation. PERTAMINA and Contractors agree to
consult with each other freely on all matters relating to the MOA.
PERTAMINA and Contractors shall confer and agree as to any
amendment to the MOA or to any permitted action or election
thereunder which constitutes a material adjustment in the
quantities of LNG to be sold and delivered thereunder or a change
in the terms thereof. At the request of any party hereto, a
memorandum evidencing any such agreement shall be prepared as soon
as feasible and signed by each party hereto.
ARTICLE 5
TITLE, DELIVERY AND INVOICING
5.1 Title. PERTAMINA will cause the LNG resulting from
the liquefaction of the VICO Contract Gas and the Other Contract
Gas to be delivered to Buyer at the "Delivery Point" as that term
is defined in the MOA. Title to each Contractor's share of the LNG
resulting from the liquefaction of the VICO Contract Gas shall pass
to PERTAMINA at the same time as the passage of title from
PERTAMINA to Buyer pursuant to the MOA.
5.2 Delivery and Invoicing. At the time of delivery of
each cargo of LNG to Buyer at the relevant "Delivery Point",
PERTAMINA will furnish Contractors with appropriate documentation
to evidence the quantity and quality of LNG delivered, together
with copies of the invoices to Buyer in respect of the sale of LNG
in question. PERTAMINA will also furnish Contractors with a copy
of each invoice or billing delivered to Buyer on account of
interest or other payment obligation of Buyer pursuant to the MOA
concurrently with its being furnished to Buyer. Calculation of the
Contract Sales Price as provided for in the MOA, the amount of
sales invoices and other billings to Buyer, and any adjustments,
shall be reviewed and approved by PERTAMINA and Contractors prior
to presentation to Buyer.
ARTICLE 6
ENTITLEMENT AND PAYMENT
6.1 Contractor Entitlement. The amounts to be paid to
each Contractor for its share of the LNG resulting from the
liquefaction of Natural Gas to be supplied under this Supply
Agreement shall be its Production Sharing Percentage of the
Producers' Percentage of the sum of:
(a) all amounts to be paid by Buyer to PERTAMINA for LNG
sold and delivered under the MOA;
(b) all other amounts which Buyer shall become obligated
to pay pursuant to the MOA with regard to deliveries of LNG
thereunder including, but not limited to, any interest accruing on
overdue invoice payments;
(c) amounts payable by insurers in respect of LNG
resulting from the liquefaction of the VICO Contract Gas and the
Other Contract Gas; and
(d) interest earned on any of the amounts referred to in
this Section 6.1.
6.2 PERTAMINA Assignment of Contractor Percentage Share.
In order to arrange for the receipt by each Contractor of the
payments to which such Contractor is entitled under Section 6.1
hereof, PERTAMINA hereby assigns to each Contractor that
Contractor's Production Sharing Percentage of the Producers'
Percentage of all amounts referred to in Section 6.1 hereof.
6.3 Method of Payment. Throughout the term of this Supply
Agreement, all those payments referred to in Section 6.1 hereof
shall be paid in U.S. Dollars, directly to BankAmerica
International in New York City (or such other leading bank in the
United States as shall be selected by PERTAMINA and approved by
Contractors) pursuant to a Trustee and Paying Agent Agreement, the
parties to which shall be PERTAMINA, Contractors, the production
sharing contractors in the Other Contract Areas and the Trustee
thereunder. Amounts so received by the Trustee shall be used
for payment of (i) Financing Costs; (ii) an agreed portionof
Plant Operating Costs; (iii) Transportation Costs in respect of the
ex-ship cargoes; and (iv) other costs approved by PERTAMINA and
Contractors. Amounts received by the Trustee, to the extentthat
they are not used for payment of the costs referred to in the
preceding sentence, shall, insofar as they are applicable to the
VICO Contract Gas, be disbursed to PERTAMINA and each Contractor
in accordance with its Production Sharing Percentage at a bank or
banks of its choice.
6.4 Contractors' Right to Payment. The right of
Contractors to the payments provided for in this Article 6 shall
extend throughout the term of this Supply Agreement and shall not
be affected by the production rates or sources of Natural Gas
supplied from the VICO Contract Gas or the Other Contract Gas from
time to time during the term hereof.
ARTICLE 7
DELIVERABILITY
7.1 Oversupply of VICO Contract Gas. If the quantities
of net Natural Gas produced from the participating fields within
the VICO Contract Area and delivered pursuant to this Supply
Agreement exceed in the aggregate the quantity of the VICO Contract
Gas, the Producers' Percentage (and the percentage of the revenues
to be paid to PERTAMINA and Contractors hereunder) will not be
increased, and Contractors, together with PERTAMINA, will be
credited with and have the right to receive revenue from future
marketing opportunities in respect of a quantity of net Natural Gas
from reserves in the Other Contract Areas equal to such excess
quantities.
7.2 Shortfall of VICO Contract Gas. If the quantities of
net Natural Gas produced from the participating fields within the
VICO Contract Area and delivered pursuant to this Supply Agreement
are in the aggregate less than the quantity of the VICO Contract
Gas, the Producers' Percentage (and the percentage of the revenues
to be paid to PERTAMINA and Contractors hereunder) will not be
reduced, and the production sharing contractors in the Other
Contract Areas and any new contract area, together with PERTAMINA,
will be credited with and have the right to receive revenue from
future marketing opportunities in respect of a quantity of net
Natural Gas from reserves in the VICO Contract Area equal to excess
quantities delivered from sources within the Gas Supply Area.
ARTICLE 8
ARBITRATION AND GOVERNING LAW
8.1 Arbitration. All disputes arising in connection with
this Supply Agreement shall be finally settled by arbitration
conducted in the English language in Paris, France, by three
arbitrators under the Rules of Arbitration of the International
Chamber of Commerce. Judgment upon the award rendered may be
entered in any court having jurisdiction, or application may be
made to such court for a juridical acceptance of the award and an
order of enforcement, as the case may be.
8.2 Governing Law. This Supply Agreement shall be
governed by and interpreted in accordance with the laws of the
State of New York, United States of America.
ARTICLE 9
CONTRACTORS' REPRESENTATIVE
VICO is designated representative by Contractors for
performance on behalf of Contractors of their obligation under
Section 4.1 hereof and for the giving of notices, responses or
other communications to and from Contractors under this Supply
Agreement. Such representative may be changed by written notice to
such effect from Contractors to PERTAMINA.
ARTICLE 10
NOTICES
Any notices to the parties shall be in writing and sent by
mail, cable, telex or facsimile to the following addresses:
To PERTAMINA:
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
(PERTAMINA)
Jalan Medan Merdeka Timur 1 A
Jakarta, Indonesia
Attention: Head of BPPKA
Cable: PERTAMINA, Jakarta, Indonesia
Telex: PERTAMINA, 44134 Jakarta
Facsimile: 3846932
To Contractors:
VIRGINIA INDONESIA COMPANY (VICO)
6th Floor, Kuningan Plaza
South Tower
Jl. H.R. Rasuna Said Kav. C11-14
P.O. Box 2828
Jakarta Selatan, Indonesia
Attention: President - VICO Indonesia
Cable: VICO
Telex: 62458 or 62468
Facsimile: 523-6100
cc: VIRGINIA INDONESIA COMPANY
One Houston Center
1221 McKinney
Suite 700
P.O. Box 1551
Houston, Texas 77251-1551
U.S.A.
Attention: Chairman
Telex: 166-100
Facsimile: (713) 754-6698
A party may change its address by written notice to the other
parties.
ARTICLE 11
MISCELLANEOUS
11.1 Amendment. This Supply Agreement shall not be amended
or modified except by written agreement signed by the parties
hereto.
11.2 Successors and Assigns. This Supply Agreement shall
inure to the benefit of, and be binding upon, PERTAMINA and each
Contractor, their respective successors and assigns, provided that
this Supply Agreement shall be assignable by a Contractor only if
such Contractor concurrently assigns to the same assignee an equal
interest in the Production Sharing Contracts.
11.3 Exclusivity. The parties to this Supply Agreement shall
be the only persons or entities entitled to enforce the obligations
hereunder of the other parties hereto, and no persons or entities
not parties to this Supply Agreement shall have the right to
enforce any of the obligations hereunder of any of the parties
hereto.
11.4 Headings and Subheadings. The Article headings and
subheadings used herein are for convenience of reference only.
IN WITNESS WHEREOF, PERTAMINA and Contractors have caused
their duly authorized representatives to execute this Supply
Agreement as of the day and year first written above.
PERUSAHAAN PERTAMBANGAN MINYAK CONTRACTORS:
DAN GAS BUMI NEGARA (PERTAMINA)
VIRGINIA INDONESIA COMPANY
BY /S/ BY /S/
LASMO SANGA SANGA LIMITED
BY /S/
OPICOIL HOUSTON, INC.
BY /S/
UNION TEXAS EAST KALIMANTAN
LIMITED
BY /S/
UNIVERSE GAS & OIL COMPANY, INC.
BY /S/
VIRGINIA INTERNATIONAL COMPANY
BY /S/
PACKAGE V SUPPLY AGREEMENT
(1998-1999 LNG SALES TO CHINESE PETROLEUM CORPORATION)
between
PERTAMINA
and
VIRGINIA INDONESIA COMPANY
LASMO SANGA SANGA LIMITED
OPICOIL HOUSTON, INC.
UNION TEXAS EAST KALIMANTAN LIMITED
UNIVERSE GAS & OIL COMPANY, INC.
and
VIRGINIA INTERNATIONAL COMPANY
Dated: June 16, 1995
Effective: December 6, 1994
<PAGE>
PACKAGE V SUPPLY AGREEMENT
(1998-1999 LNG SALES TO CHINESE PETROLEUM CORPORATION)
THIS SUPPLY AGREEMENT, made and entered into in Jakarta on
June 16, 1995, by and between PERUSAHAAN PERTAMBANGAN MINYAK DAN
GAS BUMI NEGARA ("PERTAMINA"), on the one hand, and VIRGINIA
INDONESIA COMPANY ("VICO"), LASMO SANGA SANGA LIMITED, OPICOIL
HOUSTON, INC., UNION TEXAS EAST KALIMANTAN LIMITED, UNIVERSE GAS &
OIL COMPANY, INC., and VIRGINIA INTERNATIONAL COMPANY (herein
referred to collectively as "Contractors" and individually as
"Contractor"), on the other hand,
WITNESSETH:
A. WHEREAS, Contractors individually own or control all
of the interest of "Contractors" in that certain Amended and
Restated Production Sharing Contract, dated April 23, 1990, but
effective as of August 8, 1968 (such contract as hereafter amended
is herein referred to as the "Amended and Restated Production
Sharing Contract") and that certain Production Sharing Contract
dated April 23, 1990, but effective as of August 8, 1998 (such
contract as hereafter amended is herein referred to as the
"Renewed Production Sharing Contract"). The Amended and Restated
Production Sharing Contract and the Renewed Production Sharing
Contract are herein referred to collectively as the "Production
Sharing Contracts" and the area covered thereby is herein referred
to as the "VICO Contract Area"; and
B. WHEREAS, pursuant to the Production Sharing Contracts,
each of PERTAMINA and Contractors is entitled to take and receive,
sell and freely export its respective share of the Natural Gas
produced and saved from the VICO Contract Area (the percentage
share of such Natural Gas to which each of PERTAMINA and
Contractors is entitled, as determined under the Production Sharing
Contracts, is herein referred to as the "Production Sharing
Percentage" of such party); and
C. WHEREAS, the reserves of Natural Gas in the VICO
Contract Area exceed the reserves of Natural Gas committed to be
produced, supplied and delivered by PERTAMINA and Contractors to
meet a portion of PERTAMINA's existing obligations under LNG sales
contracts, LPG sales contracts, and domestic gas sales contracts;
and
D. WHEREAS, PERTAMINA, with assistance from Contractors,
has constructed and expanded and is further expanding the Natural
Gas liquefaction and related facilities located at Bontang Bay, on
the east coast of Kalimantan, Indonesia (herein referred to as the
"Bontang Plant"); and
E. WHEREAS, funds for the expansion of the liquefaction
plant will be provided to PERTAMINA through financing of the cost
of such expansion on terms, mutually agreeable to PERTAMINA and
Contractors, which provide for the repayment of funds provided
pursuant to such financing and the cost of such funds (repayment of
funds and the cost of such funds are hereinafter referred to as
"Financing Costs"); and
F. WHEREAS, PERTAMINA and Contractors are parties to the
Amended and Restated Bontang Processing Agreement dated as of
February 9, 1988 (as from time to time amended, the "Processing
Agreement"), which provides for the operation of the Bontang Plant
and the payment of the costs of such operation (such costs as
determined in accordance with the Processing Agreement are herein
referred to as "Plant Operating Costs"); and
G. WHEREAS, PERTAMINA and Contractors have agreed to use
the Bontang Plant in part for the liquefaction of the VICO Contract
Gas (as defined in Section 2.2 hereof) and the Other Contract Gas
(as defined in Section 2.3 hereof); and
H. WHEREAS, PERTAMINA, in collaboration with Contractors
and its production sharing contractors in other contract areas in
East Kalimantan (herein referred to as the "Other Contract Areas"),
has entered into a Memorandum of Agreement dated December 6, 1994
("MOA", and unless otherwise so stated, any terms defined in the
MOA shall have the same meanings when used herein) with Chinese
Petroleum Corporation ("Buyer") pursuant to which PERTAMINA is
obligated to sell to Buyer certain quantities of LNG on an ex ship
basis; and
I. WHEREAS, the MOA provides that the Natural Gas to be
processed into LNG and sold by PERTAMINA under the MOA is to be
produced from the areas in East Kalimantan covered by production
sharing contracts between PERTAMINA and its suppliers, which
consists of the VICO Contract Area and the Other Contract Areas;
and
J. WHEREAS, arrangements for the transportation of the ex
ship quantities pursuant to the MOA and for the payment of costs
respecting such transportation will be made on terms mutually
agreeable to PERTAMINA and Contractors (herein referred to as
"Transportation Costs"); and
K. WHEREAS, PERTAMINA and each Contractor desire to
supply and deliver Natural Gas from the VICO Contract Area in
support of the performance by PERTAMINA of an agreed portion of its
obligations under the MOA; and
L. WHEREAS, each Contractor desires to dispose of its
Production Sharing Percentage of the VICO Contract Gas (as herein
defined) in accordance with the terms of this Supply Agreement,
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
EFFECTIVE DATE AND DURATION
This Supply Agreement shall be effective as of December 6,
1994, and shall terminate on the date when all rights and
obligations of Contractors hereunder have been satisfied.
ARTICLE 2
SUPPLY COMMITMENT AND QUANTITY
2.1 Net Gas Requirement. The total quantity of net
Natural Gas required to be supplied and delivered out of proved
recoverable reserves of Natural Gas in East Kalimantan for
liquefaction and sale as LNG under the MOA is estimated to be
0.0482 trillion standard cubic feet ("t.s.c.f."). Such quantity is
herein referred to as the "MOA Net Gas Requirement". The MOA Net
Gas Requirement is based on the Fixed Quantities which Buyer has
committed to purchase pursuant to the terms of the MOA.
2.2 VICO Contract Gas. PERTAMINA and Contractors hereby
commit and agree to supply and deliver from proved economically
recoverable reserves of Natural Gas in specific fields within the
VICO Contract Area sufficient Natural Gas (and LNG resulting from
the liquefaction thereof) to meet a portion of the MOA Net Gas
Requirement over the term of this Supply Agreement consisting of
0.0104 t.s.c.f., or 21.5956% thereof. Such quantities of net
Natural Gas committed to be supplied pursuant to this Supply
Agreement are herein referred to as the "VICO Contract Gas", and
the above-stated percentage is herein referred to as the
"Producers' Percentage". The specific fields from which the VICO
Contract Gas will be committed are identified in the supplemental
memorandum entered into among PERTAMINA, Contractors and the
production sharing contractors in the Other Contract Areas pursuant
to the Memorandum of Understanding Re: Supply Agreements and
Package V Sales dated October5, 1994 (the "Package V Supplemental
Memorandum"). The VICO participating fields and the quantities in
each field comprising the VICO Contract Gas are as follows:
Participating Fields Quantity of Gas (t.s.c.f.)
Badak 0.0034
Lampake 0.0003
Mutiara 0.0014
Nilam 0.0036
Pamaguan 0.0000
Semberah 0.0016
The quantities committed from each field are subject to revision
from time to time, as the reserves from the fields may be updated
and as additional data, from deliverability studies and otherwise,
become available.
2.3 Other Contract Gas. To meet the balance of the MOA
Net Gas Requirement, constituting 0.0378 t.s.c.f., or 78.4044%
thereof, sufficient Natural Gas (and LNG resulting from the
liquefaction thereof) will be committed for supply and delivery by
PERTAMINA and its production sharing contractors from proved
economically recoverable reserves of Natural Gas in the Other
Contract Areas by separate supply agreements, similar hereto and
compatible herewith, executed and delivered concurrently herewith
(such amounts are herein collectively referred to as the "Other
Contract Gas"). The specific fields from which the Other Contract
Gas will be committed are also identified in the Package V
Supplemental Memorandum.
2.4 DeGolyer and MacNaughton Certification. The amounts
of net Natural Gas constituting the VICO Contract Gas and the Other
Contract Gas are part of the estimates of proved recoverable
reserves of Natural Gas as certified by the independent consultant
firm of DeGolyer and MacNaughton in written statements based on
data available on May 31, 1994.
The quantities for the VICO Contract Gas and the Other
Contract Gas set forth in Sections 2.2 and 2.3 hereof and the
Producers' Percentage were established by PERTAMINA at a meeting on
May 29, 1995 of the East Kalimantan Gas Reserves Management
Committee.
ARTICLE 3
COORDINATION OF GAS SUPPLY
The VICO Contract Gas and the Other Contract Gas may be
produced from participating fields at times and production rates
which may change from time to time during the term hereof so as to
secure the optimal ultimate recovery of Natural Gas. The supply of
Natural Gas from the VICO Contract Area and the Other Contract
Areas will be coordinated by PERTAMINA so as to conserve and permit
full utilization of such Natural Gas. The sources of supply,
producing rates, quality of gas, metering and related matters shall
be matters for study by the East Kalimantan Gas Reserves Management
Committee, consisting of representatives from PERTAMINA, VICO,
TOTAL Indonesie and Unocal Indonesia Company.
ARTICLE 4
ADMINISTRATION, INSURANCE AND CONSULTATION
4.1 MOA. PERTAMINA shall be responsible for the due and
prompt administration of the MOA for the benefit of PERTAMINA and
Contractors. All matters which affect the MOA or the sale,
transportation and delivery of LNG thereunder will be administered
by a representative to be appointed by PERTAMINA and the
representative appointed by Contractors under Article 9 hereof. It
is understood, however, that it will be necessary from time to time
for PERTAMINA, as seller under the MOA, to take certain
administrative and operational actions without prior consultation
where immediate action is required. Contractors will be promptly
advised of any such action.
4.2 Insurance. PERTAMINA shall ensure that the interests
of it and each Contractor in respect of each cargo of LNG
transported by PERTAMINA from the Bontang Plant to Buyer shall be
adequately insured pursuant to arrangements mutually agreed to by
PERTAMINA and each Contractor. PERTAMINA and each Contractor shall
be entitled to receive its Production Sharing Percentage of the
Producers' Percentage of any proceeds paid under a marine insurance
policy covering a cargo of LNG being transported from the Bontang
Plant. Such proceeds shall be remitted by the insurer directly to
the bank designated as Trustee pursuant to Article 6 hereof.
4.3 Consultation. PERTAMINA and Contractors agree to
consult with each other freely on all matters relating to the MOA.
PERTAMINA and Contractors shall confer and agree as to any
amendment to the MOA or to any permitted action or election
thereunder which constitutes a material adjustment in the
quantities of LNG to be sold and delivered thereunder or a change
in the terms thereof. At the request of any party hereto, a
memorandum evidencing any such agreement shall be prepared as soon
as feasible and signed by each party hereto.
ARTICLE 5
TITLE, DELIVERY AND INVOICING
5.1 Title. PERTAMINA will cause the LNG resulting from
the liquefaction of the VICO Contract Gas and the Other Contract
Gas to be delivered to Buyer at the "Delivery Point" as that term
is defined in the MOA. Title to each Contractor's share of the LNG
resulting from the liquefaction of the VICO Contract Gas shall pass
to PERTAMINA at the same time as the passage of title from
PERTAMINA to Buyer pursuant to the MOA.
5.2 Delivery and Invoicing. At the time of delivery of
each cargo of LNG to Buyer at the relevant "Delivery Point",
PERTAMINA will furnish Contractors with appropriate documentation
to evidence the quantity and quality of LNG delivered, together
with copies of the invoices to Buyer in respect of the sale of LNG
in question. PERTAMINA will also furnish Contractors with a copy
of each invoice or billing delivered to Buyer on account of
interest or other payment obligation of Buyer pursuant to the MOA
concurrently with its being furnished to Buyer. Calculation of the
Contract Sales Price as provided for in the MOA, the amount of
sales invoices and other billings to Buyer, and any adjustments,
shall be reviewed and approved by PERTAMINA and Contractors prior
to presentation to Buyer.
ARTICLE 6
ENTITLEMENT AND PAYMENT
6.1 Contractor Entitlement. The amounts to be paid to
each Contractor for its share of the LNG resulting from the
liquefaction of Natural Gas to be supplied under this Supply
Agreement shall be its Production Sharing Percentage of the
Producers' Percentage of the sum of:
(a) all amounts to be paid by Buyer to PERTAMINA for LNG
sold and delivered under the MOA;
(b) all other amounts which Buyer shall become obligated
to pay pursuant to the MOA with regard to deliveries of LNG
thereunder including, but not limited to any interest accruing on
overdue invoice payments;
(c) amounts payable by insurers in respect of LNG
resulting from the liquefaction of the VICO Contract Gas and the
Other Contract Gas; and
(d) interest earned on any of the amounts referred to in
this Section 6.1.
6.2 PERTAMINA Assignment of Contractor Percentage Share.
In order to arrange for the receipt by each Contractor of the
payments to which such Contractor is entitled under Section 6.1
hereof, PERTAMINA hereby assigns to each Contractor that
Contractor's Production Sharing Percentage of the Producers'
Percentage of all amounts referred to in Section 6.1 hereof.
6.3 Method of Payment. Throughout the term of this Supply
Agreement, all those payments referred to in Section 6.1 hereof
shall be paid in U.S. Dollars, directly to BankAmerica
International in New York City (or such other leading bank in the
United States as shall be selected by PERTAMINA and approved by
Contractors) pursuant to a Trustee and Paying Agent Agreement, the
parties to which shall be PERTAMINA, Contractors, the production
sharing contractors in the Other Contract Areas and the Trustee
thereunder. Amounts so received by the Trustee shall be used for
payment of (i) Financing Costs; (ii) an agreed portion of Plant
Operating Costs; (iii) Transportation Costs; and (iv) other costs
approved by PERTAMINA and Contractors. Amounts received by the
Trustee, to the extent that they are not used for payment of the
costs referred to in the preceding sentence, shall, insofar as
they are applicable to the VICO Contract Gas, be disbursed to
PERTAMINA and each Contractor in accordance with its Production
Sharing Percentage at a bank or banks of its choice.
6.4 Contractors' Right to Payment. The right of
Contractors to the payments provided for in this Article6 shall
extend throughout the term of this Supply Agreement and shall not
be affected by the production rates or sources of Natural Gas
supplied from the VICO Contract Gas or the Other Contract Gas from
time to time during the term hereof.
ARTICLE 7
DELIVERABILITY
7.1 Oversupply of VICO Contract Gas. If the quantities
of net Natural Gas produced from the participating fields within
the VICO Contract Area and delivered pursuant to this Supply
Agreement exceed in the aggregate the quantity of the VICO Contract
Gas, the Producers' Percentage (and the percentage of the revenues
to be paid to PERTAMINA and Contractors hereunder) will not be
increased, and Contractors, together with PERTAMINA, will be
credited with and have the right to receive revenue from future
marketing opportunities in respect of a quantity of net Natural Gas
from reserves in the Other Contract Areas equal to such excess
quantities.
7.2Shortfall of VICO Contract Gas. If the quantities of net
Natural Gas produced from the participating fields within the VICO
Contract Area and delivered pursuant to this Supply Agreement are
in the aggregate less than the quantity of the VICO Contract Gas,
the Producers' Percentage (and the percentage of the revenues to be
paid to PERTAMINA and Contractors hereunder) will not be reduced,
and the production sharing contractors in the Other Contract Areas
and any new contract area, together with PERTAMINA, will be
credited with and have the right to receive revenue from future
marketing opportunities in respect of a quantity of net Natural Gas
from reserves in the VICO Contract Area equal to excess quantities
delivered from sources within the Gas Supply Area.
ARTICLE 8
ARBITRATION AND GOVERNING LAW
8.1 Arbitration. All disputes arising in connection with
this Supply Agreement shall be finally settled by arbitration
conducted in the English language in Paris, France, by three
arbitrators under the Rules of Arbitration of the International
Chamber of Commerce. Judgment upon the award rendered may be
entered in any court having jurisdiction, or application may be
made to such court for a juridical acceptance of the award and an
order of enforcement, as the case may be.
8.2 Governing Law. This Supply Agreement shall be
governed by and interpreted in accordance with the laws of the
State of New York, United States of America.
ARTICLE 9
CONTRACTORS' REPRESENTATIVE
VICO is designated representative by Contractors for
performance on behalf of Contractors of their obligation under
Section 4.1 hereof and for the giving of notices, responses or
other communications to and from Contractors under this Supply
Agreement. Such representative may be changed by written notice to
such effect from Contractors to PERTAMINA.
ARTICLE 10
NOTICES
Any notices to the parties shall be in writing and sent by
mail, cable, telex or facsimile to the following addresses:
To PERTAMINA:
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
(PERTAMINA)
Jalan Medan Merdeka Timur 1 A
Jakarta, Indonesia
Attention: Head of BPPKA
Cable: PERTAMINA, Jakarta, Indonesia
Telex: PERTAMINA, 44134 Jakarta
Facsimile: 3846932
To Contractors:
VIRGINIA INDONESIA COMPANY (VICO)
6th Floor, Kuningan Plaza
South Tower
Jl. H.R. Rasuna Said Kav. C11-14
P.O. Box 2828
Jakarta Selatan, Indonesia
Attention: President - VICO Indonesia
Cable: VICO
Telex: 62458 or 62468
Facsimile: 523-6100
cc: VIRGINIA INDONESIA COMPANY
One Houston Center
1221 McKinney
Suite 700
P.O. Box 1551
Houston, Texas 77251-1551
U.S.A.
Attention: Chairman
Telex: 166-100
Facsimile: (713) 754-6698
A party may change its address by written notice to the other
parties.
ARTICLE 11
MISCELLANEOUS
11.1 Amendment. This Supply Agreement shall not be amended
or modified except by written agreement signed by the parties
hereto.
11.2 Successors and Assigns. This Supply Agreement shall
inure to the benefit of, and be binding upon, PERTAMINA and each
Contractor, their respective successors and assigns, provided that
this Supply Agreement shall be assignable by a Contractor only if
such Contractor concurrently assigns to the same assignee an equal
interest in the Production Sharing Contracts.
11.3 Exclusivity. The parties to this Supply Agreement shall
be the only persons or entities entitled to enforce the obligations
hereunder of the other parties hereto, and no persons or entities
not parties to this Supply Agreement shall have the right to
enforce any of the obligations hereunder of any of the parties
hereto.
11.4 Headings and Subheadings. The Article headings and
subheadings used herein are for convenience of reference only.
IN WITNESS WHEREOF, PERTAMINA and Contractors have caused
their duly authorized representatives to execute this Supply
Agreement as of the day and year first written above.
PERUSAHAAN PERTAMBANGAN MINYAK CONTRACTORS:
DAN GAS BUMI NEGARA (PERTAMINA)
VIRGINIA INDONESIA COMPANY
BY /S/ BY /S/
LASMO SANGA SANGA LIMITED
BY /S/
OPICOIL HOUSTON, INC.
BY /S/
UNION TEXAS EAST KALIMANTAN
LIMITED
BY /S/
UNIVERSE GAS & OIL COMPANY, INC.
BY /S/
VIRGINIA INTERNATIONAL COMPANY
BY /S/
TRIPARTITE AGREEMENT
REGARDING
PRODUCER CONTRIBUTIONS TO DWIPUTRA COSTS
THIS AGREEMENT is made and entered effective as of 1 January, 1995
(the "Effective Date"), by and among PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA (PERTAMINA) ("PERTAMINA"); MOBIL OIL INDONESIA
INC. ("MOBIL"); and VIRGINIA INDONESIA COMPANY, TOTAL INDONESIE,
and UNOCAL INDONESIA COMPANY, acting on behalf of themselves and
all other LNG producers in the East Kalimantan Production Sharing
Contracts (collectively, the "EAST KALIMANTAN PRODUCERS").
WHEREAS PERTAMINA has entered into a charter party dated 2 June
1994 with Pacific LNG Transport Limited for the vessel "DwiPutra"
(the "Dwiputra"), in connection with which PERTAMINA is obligated
to pay charter hire payments to Pacific LNG Transport Limited and
the costs of bunker fuel and diesel, liquid nitrogen and utilities
to others; and
WHEREAS MOBIL and the EAST KALIMANTAN PRODUCERS have reached
agreement on a procedure for contributing to the payment of the
costs of the Dwiputra.
NOW THEREFORE, for and in consideration of the foregoing and the
mutual covenants and agreements herein contained, it is hereby
agreed as follows:
1. The provisions of this Agreement will apply as if this
Agreement were entered into on the Effective Date. Unless
otherwise agreed by the parties hereto, this Agreement will
continue in force until the expiry or other termination of the
charter party for the Dwiputra, notwithstanding any amendment,
revision, extension or renewal of such charter party.
2. The provisions of this Agreement will apply to all voyages of
the Dwiputra commencing on or after the Effective Date. A
voyage will be deemed to commence with the commencement of
loading of a cargo in respect of that voyage.
3. The EAST KALIMANTAN PRODUCERS shall enter into a Disbursement
Trustee and Paying Agent Agreement with Continental Bank
International or other international bank as may be agreed
between the parties hereto (the "Trustee") to establish the
Trustee as the Disbursement Trustee for a new Disbursement
Trust Account related to the Dwiputra (the "Dwiputra Trust").
It is the intention of the parties hereto that the respective
balances in the existing Bonny Disbursement Trustee and Paying
Agent Agreement dated 8 December 1990, as amended, (the "Bonny
Trust") due to MOBIL and the EAST KALIMANTAN PRODUCERS shall
be determined and distributed to the respective parties, and
that the Bonny Trust shall thereupon be terminated in its
entirety as soon as possible but no later than 30 June 1995.
It is the further intention of the parties that Tripartite
Agreement: Bonny and SS Lake Charles shall be terminated in
its entirety at the same time the Bonny Trust is terminated.
It is acknowledged that implementation and administration of
the Dwiputra Trust and all agreements related thereto will be
the sole responsibility of the EAST KALIMANTAN PRODUCERS.
4. The parties hereto agree that for the eight Dwiputra cargoes
scheduled to be loaded at the Arun plant in the 1995 Annual
Program, PERTAMINA and MOBIL will instruct the trustee under
the respective trustee and paying agent agreement for the
relevant sales agreement for the applicable Dwiputra cargo to
make payments from the cargo proceeds to the Dwiputra Trust
equivalent to US$0.7766 per MMBTU delivered under the relevant
sales agreement, provided that pending finalization of the
Dwiputra Trust, PERTAMINA and MOBIL will instruct the trustee
to make such payments to the Bonny Trust instead, and such
payments shall be treated hereunder as if they had been made
to the Dwiputra Trust. Such payments will be due and payable
to the Dwiputra Trust immediately upon receipt of payment from
the buyer under the relevant sales contract. As long as the
number and cargo designation of Dwiputra cargoes delivered
from Arun in the 1995 Annual Program does not change, such
payments represent full and final settlement in respect of
MOBIL's contribution to the costs of the Dwiputra, no
interplant accounting or other financial adjustments will be
required or be made in respect of payments due from MOBIL for
the Dwiputra, and the EAST KALIMANTAN PRODUCERS will bear full
responsibility for all costs and/or other liabilities related
to the Dwiputra. The parties hereto shall endeavor to ensure
that the Dwiputra cargoes scheduled from Arun in the 1995
Annual Program do not change with respect to the number or
cargo designation. If the number of Dwiputra voyages from
Arun or the cargo designation of such voyages is different
from that specified in the 1995 Annual Program, the parties
hereto shall meet and discuss whether the foregoing payment
procedures should be revised.
5. If in any subsequent years there are to be additional Dwiputra
cargoes delivered from Arun other than those cargoes subject
to paragraph 4 above, the parties shall meet and discuss the
terms and conditions to be applicable to such additional
cargoes.
6. This Agreement will be governed and construed in accordance
with the laws of the State of New York, United States of
America.
7. This Agreement may be executed in multiple counterparts, each
of which will be an original and all of which will constitute
one and the same agreement, and will be effective as to all
parties when each party has executed and delivered at least
one counterpart, regardless of whether all parties execute the
same counterpart.
IN WITNESS HEREOF the parties have cause the execution of this
Agreement through the signature of their authorized representatives
set forth below.
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA (PERTAMINA)
By: /S/
Name: SOEGIANTO
Title: Sr. V.P. Director Finance Corporate
MOBIL OIL INDONESIA INC.
By: /S/
Name: S.R. Hemmeline
Title: Vice President Gas Products
THE "EAST KALIMANTAN PRODUCERS":
VIRGINIA INDONESIA COMPANY
By: /S/
Name: C.L. Harris
Title: Vice President LNG
TOTAL INDONESIE
By: /S/
Name: J.M. Hosanski
Title: Vice President LNG
UNOCAL INDONESIA COMPANY
By: /S/
Name: S.G. Leson
Title: Vice President LNG Operations
EXHIBIT (21)-1-
COMPANIES OWNED BY UNIMAR COMPANY
The following is a list of companies owned, directly and
indirectly, by Unimar Company, together with their respective
jurisdictions of incorporation. In each case, all of the
outstanding voting securities of each company listed are owned by
the company indicated by indentation as its parent, except as
otherwise noted.
State of
Incorporation
Unimar Company (a General Partnership under The
Texas Uniform Partnership Act)
Unimar Financing Corporation Delaware
ENSTAR Corporation. Delaware
VICO 7.5, Inc. Delaware
Virginia Indonesia Company Delaware
Virginia Services, Inc. Delaware
Virginia Services, Ltd. Delaware
Purchasing Services, Inc. Delaware
ENSTAR Indonesia, Inc. Delaware
Virginia International Company Delaware
VICO Trading, Inc. Delaware
ENSTAR Petroleum Ltd. Canada
EXHIBIT (23)-1-
CONSENT OF INDEPENDENT AUDITORS
We consent to incorporation by reference in the registration
statement (Post-effective amendment No. 2 on Form S-3 to Form S-14
(No. 2-93037)) of Unimar Company of our report dated February 12,
1996, relating to the consolidated balance sheet of Unimar Company
and subsidiaries as of December 31, 1995 and the related
consolidated statement of earnings, cash flows and changes in
partners' capital for the year ended December 31, 1995 and all
related schedules, which report appears in the December 31, 1995
annual report on Form 10-K of Unimar Company.
KPMG Peat Marwick LLP
Houston, Texas
March 19, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE UNIMAR COMPANY FINANCIAL STATEMENTS FILED WITH FORM 10-K FILED ON
MARCH 19, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 4,882
<SECURITIES> 0
<RECEIVABLES> 7,415
<ALLOWANCES> 0
<INVENTORY> 9,839
<CURRENT-ASSETS> 25,508
<PP&E> 1,051,972
<DEPRECIATION> 673,543
<TOTAL-ASSETS> 407,214
<CURRENT-LIABILITIES> 31,463
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 407,214
<SALES> 202,019
<TOTAL-REVENUES> 202,019
<CGS> 66,466
<TOTAL-COSTS> 66,568
<OTHER-EXPENSES> 1,460
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54
<INCOME-PRETAX> 134,422
<INCOME-TAX> 94,281
<INCOME-CONTINUING> 40,141
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,141
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
DISBURSEMENT TRUSTEE AND
PAYING AGENT AGREEMENT
(Series 95-1)
THIS AGREEMENT, made and entered into as of this 1st day of
July, 1995, by and among BankAmerica International, not in its
individual capacity but solely as trustee and paying agent (in such
capacity, the "Bontang V Trustee") under the Bontang V Trustee and
Paying Agent Agreement dated as of July 1, 1995, as the same may be
amended from time to time (the "Bontang V Trust Agreement"); and
BankAmerica International, not in its individual capacity but
solely as disbursement trustee and paying agent under this
Agreement:
WITNESSETH:
WHEREAS, the Bontang V Trustee has entered into a Loan
Agreement dated as of July 1, 1995, among the Bontang V Trustee, as
Borrower; Bontang Train-G Project Finance Co., Ltd., as Tranche A
Lender; the Tranche B Lenders and Arrangers named therein; The
Long-Term Credit Bank of Japan, Limited, New York Branch, as
facility Agent; The Fuji Bank, Limited, as Intercreditor Agent; and
Credit Lyonnais, as Technical Agent (as amended or modified from
time to time, the "Bontang V Loan Agreement"); and
WHEREAS, as a matter of convenience, certain loan proceeds to
be received by the Bontang V Trustee under the Bontang V Loan
Agreement may be maintained in a disbursement trust fund until such
time as they are to be disbursed in accordance with the terms
hereof and of the Bontang V Trust Agreement;
NOW, THEREFORE, in consideration of the above premises and the
mutual promises hereinafter contained and other good and valuable
consideration, the parties hereto hereby agree as follows:
Article 1
Definitions
When used herein, the following terms shall have the meanings
set forth below:
"Bontang V Loan Agreement" shall have the meaning given such
term heretofore in this Agreement.
"Bontang V Trust Agreement" shall have the meaning given such
term heretofore in this Agreement.
"Bontang V Trustee" shall have the meaning given such term
heretofore in this Agreement.
"Capital Project Creditors" shall mean those persons to whom
payments are to be made hereunder as specified in payment
instructions duly given in accordance with the terms hereof.
"Depositary" shall mean the United States headquarters or a
United States branch of the following institutions appointed
pursuant to Section 3.1 as a depositary of funds, properties and
rights in the Disbursement Trust Fund:
(a) any branch or affiliate of BankAmerica International with
the power to act as a Depositary, or
(b) any other bank, trust company or financial institution
(in each case with trust powers) which (i) has a net worth in
excess of $100,000,000.00 or (ii) has outstanding debt securities
rated A or better by Standard and Poor's Rating Group or its
equivalent by Moody's Investors Service or another nationally
recognized rating agency in the United States and, in either case,
has been approved in writing by the Bontang V Trustee.
"Disbursement Trust Account" shall mean the records of account
established and maintained by the Trustee pursuant to Section 2.4
hereof with respect to the Disbursement Trust Fund, which shall be
designated by the Trustee and referred to by the parties hereto as
the "Series 95-1 Disbursement Trust Account."
"Disbursement Trust Fund" shall mean the disbursement trust
fund established pursuant to Article 2 hereof, which shall be
designated as the "Series 95-1 Disbursement Trust Fund."
"Escrow Agent" shall have the meaning given such term in
Section 3.4 hereof.
"Lenders" shall mean the lenders advancing funds to the
Bontang V Trustee under the Bontang V Loan Agreement.
"Loan Proceeds" means the funds advanced to the Bontang V
Trustee under the Bontang V Loan Agreement, and any Transferred
Amounts (as defined in Section 3.5(a) of the Bontang V Trust
Agreement).
"Producers" shall have the meaning given such term in the
Bontang V Trust Agreement.
"Trustee" shall mean BankAmerica International, acting not in
its individual capacity but solely as disbursement trustee and
paying agent under this Agreement, and its successors.
Any capitalized terms used herein that are not defined herein
shall have the meanings ascribed to them in the Bontang V Trust
Agreement.
Article 2
Appointment and Status of Trustee
2.1 Appointment. The Bontang V Trustee hereby appoints
BankAmerica International, and BankAmerica International hereby
accepts appointment as, and agrees to act as, the Trustee
hereunder, subject to the terms and conditions hereof. The
appointment of the Trustee is made hereunder pursuant to and for
the implementation of Section 3.5 of the Bontang V Trust Agreement.
The appointment hereunder may be changed only by the agreement in
writing of the Bontang V Trustee; provided, however, that the
resignation of or the appointment of a successor to the Bontang V
Trustee in accordance with the Bontang V Trust Agreement shall be
deemed also to be a resignation or, as the case may be, an
appointment of a successor to the Trustee hereunder.
2.2 Receipt of Loan proceeds. The Trustee shall receive and
hold, or cause to be held as part of the Disbursement Trust Fund,
all disbursements of Loan Proceeds received by it from the Lenders
under the Bontang V Loan Agreement.
2.3 Disbursement Trust Fund. All such amounts received
hereunder, including and together with any security or securities
acquired or other investments made for or with such amounts, all
appreciation and interest or dividends thereon and other income or
property received therefrom, shall constitute and be part of the
Disbursement Trust Fund to be held in trust for the benefit of
those having a right, to the extent provided herein, to
disbursements hereunder.
2.4 Disbursement Trust Account. The Trustee shall establish
and maintain at the Trustee's office records of account in which
necessary entries shall be made with respect to all receipts into
and payments out of the Disbursement Trust Account, which shall be
consistent with the treatment of Bontang V Trust Funds under
Section 9.3 (excluding the first sentence thereof) of the Bontang
V Trust Agreement.
2.5 Recording of Entries. In the records of account of the
Disbursement Trust Account, the Trustee shall, after receipt of
payment instructions pursuant to Article 4 hereof, record and make
entries for each of the Capital Project Creditors and the Bontang
V Trustee to reflect clearly the interest of each party in the
assets of the Disbursement Trust Fund that arise pursuant to such
instructions for payment to each respective party and the receipts
and payments therefrom.
2.6 Currencies. The Trustee shall hold or cause to be held
in the Disbursement Trust Fund all sums of money in the same
currencies as shall have been paid into it, unless otherwise
directed by the Bontang V Trustee for effecting necessary payments,
and the Trustee may establish and maintain bank accounts in such
currencies as shall be necessary for the foregoing.
2.7 Reports. The Trustee shall furnish to the Bontang V
Trustee:
(a) within 20 days after the close of each calendar quarter,
a statement prepared by the Trustee setting forth the amount and
source (by category) of funds received and disbursed pursuant to
this Agreement during such preceding calendar quarter, and a
statement of the cash and investments held under this Agreement as
of the end of such period; and
(b) within 45 days after the close of each calendar year, a
statement prepared by the Trustee setting forth the amount and
source (by category) of funds received and disbursed pursuant to
this Agreement during the previous calendar year and the income
earned on funds held in the Disbursement Trust Fund during the
previous calendar year, and a statement of the cash and investments
held under this Agreement as of the end of such period.
Article 3
Depositary and Escrow Agent
3.1 Appointment. The Trustee may, upon the consent of the
Bontang V Trustee, appoint and remove any Depositary for the
purposes of safekeeping, investment or disbursement of funds,
properties and rights in the Disbursement Trust Fund, and may
entrust the Depositary with the exclusive custody and possession of
such funds, properties and rights in the Disbursement Trust Fund.
3.2 Notification. If the Trustee shall have appointed a
Depositary, it shall notify the Bontang V Trustee of the
appointment as soon as practicable.
3.3 Responsibilities of Trustee. If the Trustee shall have
appointed a Depositary, the Trustee's responsibilities with respect
to the funds, properties and rights held by the Depositary shall
only be to maintain and administer the accounting of the
Disbursement Trust Account, and the Depositary shall have the
exclusive custody, responsibility for and possession of the funds,
properties and rights held by it.
3.4 Escrow Agent. The Trustee may, upon the consent of the
Bontang V Trustee, appoint and remove any bank, trust company or
financial institution that conforms to the definition of
"Depositary" as an escrow agent ("Escrow Agent"), and with respect
thereto, the provisions of Sections 3.2 and 3.3 above shall apply
mutatis mutandis.
3.5 Conditions of Appointment. It shall be a condition to
the appointment of any Depositary or Escrow Agent hereunder that
the bank, trust company or financial institution so appointed shall
agree to hold the funds, properties and rights held by it in trust
on the same basis, and subject to the same rights and obligations,
as are set forth in this Agreement with respect to the Trustee, and
upon such agreement, such rights and obligations shall be enjoyed
by and binding upon such Depositary or Escrow Agent. The terms of
appointment of any Depositary or Escrow Agent shall not be
inconsistent with the provisions of this Agreement, the Bontang V
Trust Agreement or the Bontang V Loan Agreement.
3.6 Required Consent. Without the consent of the Bontang V
Trustee, no funds, properties or rights shall be transferred from
the custody and possession of the Trustee to the custody and
possession of a Depositary or Escrow Agent, nor shall any such
funds, properties or rights be transferred from a Depositary or
Escrow Agent to the Trustee without such consent, unless such
transfer shall be required for effecting necessary payments
hereunder.
Article 4
Payment Instructions and Interest
4.1 No Interest. Except as otherwise provided in Article 6
below, no party shall have any interest or any right of whatever
kind or nature in the Disbursement Trust Fund until payment
instructions shall have been duly provided pursuant hereto. Upon
receipt by the Trustee of payment instructions provided in
accordance with and meeting the requirements of Section 4.2 below,
the payee (including any Capital Project Creditor) named therein
shall acquire an interest in the funds and assets of the
Disbursement Trust Fund only to the extent set forth in said
payment instructions.
4.2 Payment Instructions. With respect to any particular
payment, payment instructions hereunder will be honored only upon
the receipt of the Trustee of payment instructions from the Bontang
V Trustee. Each payment instruction from the Bontang V Trustee
hereunder shall include the following information:
(i) the designation of this Agreement as that under which
payment is to be made;
(ii) the name of payee and the place and manner of payment;
(iii) the amount of such payment and the currency to be
used; and
(iv) a brief description of the purpose of such payment,
together with the relevant invoice number or designation
of other relevant payment documentation.
4.3 Incompleteness. If any payment instruction does not
include all of the information required by Section 4.2 above, the
Trustee shall promptly notify the Bontang V Trustee by telex or
telecopier transmission (with a copy to the Producers) and shall
not comply with such incomplete instructions.
4.4 Entitled to Rely. The Trustee and any Depositary or
Escrow Agent shall be entitled to rely upon payment instructions
provided in accordance with this Article 4 in making payments out
of the funds in the Disbursement Trust Fund.
4.5 Making of Payments. Each of the Trustee and any
Depositary or Escrow Agent shall honor each payment instruction
submitted to it in accordance with this Article 4 by making the
payments specified therein only to the extent and out of amounts
then held in the Disbursement Trust Fund. In honoring such payment
instruction, neither the Trustee nor any Depositary or Escrow Agent
shall have any responsibility for determining whether or not the
payment being disbursed is being made in accordance with the
Bontang V Loan Agreement, the Bontang V Trust Agreement or any
other agreements or understandings, it being understood that the
Trustee's and any Depositary's or Escrow Agent's sole
responsibility with regard to any payment instructions shall be to
make disbursements in accordance therewith.
4.6 Sufficient Funds Required. Neither the Trustee nor any
Depositary or Escrow Agent shall be obligated to make a payment
unless and until it holds sufficient funds in the Disbursement
Trust Fund to make all payments referred to in the related payment
instruction, unless a partial payment is directed by the Bontang V
Trustee, but the Trustee or Depositary or Escrow Agent shall honor
any subsequent payment instruction if there shall be sufficient
funds to do so in the Disbursement Trust Fund.
4.7 Currencies of Payments. All payments made by the Trustee
or any Depositary or Escrow Agent in currencies other than those
held in the Disbursement Trust Fund shall be effected by such
exchange transactions pursuant to procedures directed by the
Producers and advised to the Trustee or such Depositary or Escrow
Agent, and the honoring of a payment instruction may be delayed for
any period necessary to effect such transactions. Expenses and
risk of exchange shall be borne by the Disbursement Trust Fund.
4.8 Distribution of Annual Income. The Trustee shall invest
monies in the Disbursement Trust Account in the same type of
investments and in the same manner as provided for in Sections 10.1
and 10.2 of the Bontang V Trust Agreement. Upon receipt of payment
instructions from the Bontang V Trustee on or after February 15 of
each year, which payment instructions shall include notification
from the Accountants regarding the amount of investment income
earned during such previous calendar year, the Trustee shall
promptly pay to the Bontang V Trustee the amount of such investment
income.
Article 5
Concerning the Trustee
5.1 Duties. In connection with its duties, rights and powers
under this Agreement (including in relation to transactions it may
enter into pursuant thereto), the Trustee shall be subject to the
following:
(a) The Trustee shall be entitled to act upon any notice,
certificate, request, direction, waiver, receipt or other document
that it in good faith believes to be genuine; and it shall be
entitled to rely upon the due execution, validity and
effectiveness, and the truth and acceptability of any provisions
contained therein.
(b) The Trustee shall not be liable for any error of judgment
or for any act done or omitted by it in good faith or for any
mistake of fact or law, or for anything which it may do or refrain
from doing, except for its own gross negligence or willful
misconduct, nor shall the Trustee be liable for special, indirect
or consequential loss or damage of any kind, including, without
limitation, lost profits, except such losses or damages resulting
from its willful misconduct.
(c) Neither the Trustee nor any Depositary or Escrow Agent
shall be required to furnish any bond or other security for the
faithful performance of its duties as such, in any jurisdiction.
(d) The Trustee may consult with, and obtain advice from,
accounting and legal advisers, and it shall incur no liability or
loss and shall be fully protected in acting in good faith in
accordance with the opinion and advice of such advisers.
(e) The Trustee shall have no duties other than those
specifically set forth or provided for in this Agreement. The
Trustee shall have no obligation to familiarize itself with and
shall have no responsibility with respect to any agreement to which
it is not a party relating to the transactions contemplated by this
Agreement nor any obligation to inquire whether any notice,
instruction, statement or calculation is in conformity with the
terms of any such agreement, except for those irregularities,
errors or mistakes apparent on the face of such document or to the
knowledge of the Trustee. If, however, any remittance or
communication received by the Trustee appears erroneous or
irregular on its face, the Trustee shall be under a duty to make
prompt inquiry to the person or party originating such remittance
or communication in order to determine whether a clerical error or
inadvertent mistake has occurred.
5.2 Compensation. The Trustee shall be entitled to
reasonable compensation to be agreed upon from time to time among
the parties for the services to be performed by it hereunder and to
be reimbursed for all reasonable out-of-pocket expenses incurred by
the Trustee in connection therewith. The Trustee may charge such
agreed compensation and expenses to the Disbursement Trust Fund,
providing the Bontang V Trustee with such evidence as to the nature
and amount of such expenses as the Bontang V Trustee may reasonably
require. If the balance in the Disbursement Trust Fund is
insufficient therefor, then the Bontang V Trustee shall pay such
compensation and expenses to the Trustee.
Article 6
Termination
This Agreement and the Disbursement Trust Fund shall continue
until the Trustee shall have received instructions from the Bontang
V Trustee to terminate the Disbursement Trust Fund. Upon receipt
of such instructions, the Trustee shall forthwith convert to cash
any investments then held by it and promptly pay over to the
parties specified in such instructions such cash proceeds plus any
other amounts then held in the Disbursement Trust Fund, less any
amounts payable to the Trustee under Sections 5.2 and 7.3 hereof.
Article 7
General Provisions
7.1 Amendment. This Agreement may not be revoked, amended,
modified, varied or supplemented except by a written instrument
duly executed by the Trustee and the Bontang V Trustee.
7.2 Enforcement. Enforcement of any provision of this
Agreement shall not be affected by any previous waiver or course of
dealing.
7.3 Indemnification. The Bontang V Trustee shall indemnify
the Trustee and all Depositaries and Escrow Agents for, and hold
each of them harmless against, any loss, liability, claim,
judgment, settlement, compromise or reasonable expense incurred or
suffered without gross negligence or willful misconduct on the part
of the Trustee or any Depositary or Escrow Agent, arising out of or
in connection with its entering into this Agreement and carrying
out its duties or exercising its rights hereunder.
7.4 Claims against Trustee. If any person shall claim
compensation for any damage sustained by reason of the failure to
perform, or the breach of, any provision of this Agreement, such
person shall, within 30 days after sustaining such damage or
acquiring knowledge of such event or failure or breach of
performance, make a written statement to the breaching person of
the nature of the damage sustained and the details and amount
thereof. Should such person fail to make the statements required
hereunder within the 30-day period, its claim for such compensation
shall be deemed to be forfeited and waived and upon expiration of
the 30-day period such claim for damages shall be invalidated.
7.5 Incumbency Certificates. The Bontang V Trustee shall
furnish the Trustee and all Depositaries and Escrow Agents from
time to time with duly executed incumbency certificates showing the
names, titles and specimen signatures of the persons authorized on
behalf of the Bontang V Trustee to take the actions and give the
notifications, approvals and instructions required by this
Agreement.
7.6 Notices. All notices, approvals, instructions, and other
communications for purposes of this Agreement shall be in writing,
which shall include transmission by telex or telecopier. All
communications given by telex or telecopier shall be directed as
set forth below, provided that if any communication is received by
the Trustee from a telex or telecopy number other than those set
forth below, its responses thereto may be directed to the number
from which such communication was received:
A. To the Bontang V Trustee at the following mail,
telex and telecopier addresses:
BankAmerica International
1 World Trade Center, 9th Floor
New York, New York 10048
Attn: Vice President-Manager, ITB
Telex: 62-944
Answerback: BOA UW
Telecopier No.: (212) 390-2249
B. To the Trustee at the following mail, telex and
telecopier addresses:
BankAmerica International
1 World Trade Center, 9th Floor
New York, New York 10048
Attn: Vice President-Manager, ITB
Telex: 62-944
Answerback: BOA UW
Telecopier No.: (212) 390-2249
Any party hereto may designate additional addresses for
particular communications as required from time to time, and may
change any address, by notice given 10 days in advance of such
additions or changes. Immediately upon receiving communications by
telex or telecopier, a party may request a repeat transmittal of
the entire communication or confirmation of particular matters.
7.7 DISPUTES. ALL DISPUTES ARISING BETWEEN THE PARTIES
RELATING TO THIS AGREEMENT OR THE INTERPRETATION OR PERFORMANCE
HEREOF, SHALL BE FINALLY SETTLED BY ARBITRATION CONDUCTED IN THE
ENGLISH LANGUAGE IN PARIS, FRANCE, BY THREE ARBITRATORS UNDER THE
RULES OF ARBITRATION OF THE INTERNATIONAL CHAMBER OF COMMERCE.
JUDGMENT UPON THE AWARD RENDERED MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION, OR APPLICATION MAY BE MADE TO SUCH COURT FOR A
JUDICIAL ACCEPTANCE OF THE AWARD AND AN ORDER OF ENFORCEMENT, AS
THE CASE MAY BE. ANY AWARD MADE UNDER THIS SECTION 7.7 SHALL BE
BINDING UPON ALL PARTIES CONCERNED.
7.8 Governing Law. This agreement shall be governed by and
construed in accordance with the law of the State of New york,
United States of America, applicable to agreements made and to be
performed entirely within such state.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized signatories as of
the date first above written.
BANKAMERICA INTERNATIONAL,
as Trustee and Paying Agent the Bontang V
Trustee and Paying Agent Agreement dated
as of July 1, 1995
By: /S/
Name: Vincent Chorney
Title: Attorney-in-Fact
BANKAMERICA INTERNATIONAL,
as Disbursement Trustee and Paying Agent
hereunder
By: /S/
Name: Vincent Chorney
Title: Attorney-in-Fact
EXHIBIT (23)-2-
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the
Registration Statement (Post-effective amendment No. 2 on Form S-3
to Form S-14 (No. 2-93037)) of Unimar Company and in the related
Prospectus of our report dated February 24, 1995, with respect to
the consolidated financial statements of Unimar Company and
subsidiaries included in this Annual Report on Form 10-K for the
year ended December 31, 1995.
ERNST & YOUNG LLP
Houston, Texas
March 19, 1996
MEMORANDUM OF UNDERSTANDING
RE: SUPPLY AGREEMENTS AND PACKAGE VI SALES
This Memorandum of Understanding is dated and effective as of the
27th day of October, 1995, by and among PERUSAHAAN PERTAMBANGAN
MINYAK DAN GAS BUMI NEGARA ("PERTAMINA"); TOTAL Indonesie and
Indonesia Petroleum, Ltd., (collectively referred to as the "TOTAL
Group"); Virginia Indonesia Company, LASMO Sanga Sanga Limited,
OPICOIL Houston, Inc., Union Texas East Kalimantan Limited,
Universe Gas & Oil Company, Inc., and Virginia International
Company (collectively referred to as the "VICO Group"); Indonesia
Petroleum, Ltd., in respect of its interest in a certain portion of
the Attaka Unit (referred to as "INPEX Attaka"); and Unocal
Indonesia Company (referred to as "UNOCAL") (the TOTAL Group, the
VICO Group, INPEX Attaka, and UNOCAL each referred to as an "East
Kalimantan Contractor Group" and collectively called the "East
Kalimantan Contractors").
WITNESSETH
WHEREAS, the parties desire to confirm their mutual intention under
supply agreements entered into heretofore and hereafter ("Supply
Agreements"), to assist the East Kalimantan Gas Reserves Management
Committee ("EKGRMC") in its task of coordinating the exploitation
of East Kalimantan gas reserves so as to achieve optimum production
rates and ultimate recovery of such gas reserves and to assist each
party in planning investment in and development of the various
fields so as to assure the most favorable economic results;
WHEREAS, PERTAMINA and the East Kalimantan Contractors desire to
agree that certain sales of natural gas are to be grouped together
for the purposes of Package VI;
WHEREAS, each East Kalimantan Contractor Group is entering into
and/or will enter into supply agreements for the supply and
delivery of natural gas from such group's respective contract area
in support of the performance by PERTAMINA of its obligations under
each Package VI sales contract (hereinafter collectively called
"Package VI Supply Agreements") which provide or will provide for
the allocation as between East Kalimantan Contractor Groups of
their rights and obligations thereunder in "Producers'
Percentages";
WHEREAS, the parties have agreed to Provisional Producers'
Percentages (as hereinafter defined) provisionally applicable under
the Package VI Supply Agreements in respect of natural gas supplied
thereunder prior to determination of the Producers' Percentages
hereunder;
WHEREAS, in determining the Producers' Percentages for the Package
VI Supply Agreements, the parties are complying with PERTAMINA'S
Gas Utilization Policy; and
WHEREAS, without prejudice to PERTAMINA's future decisions with
respect to the prioritization of associated gas in the calculation
of producers' percentages for packages subsequent to Package VI,
the parties have agreed that the Producers' Percentages shall
reflect the proportions between uncommitted net gas reserves in the
East Kalimantan Contractors' respective contract areas determined
(i) based on a new estimate by the independent petroleum consultant
firm of DeGolyer and MacNaughton (hereinafter called "D&M") of the
proved recoverable reserves of natural gas in each participating
field in each such contract area as certified by D&M (hereinafter
called the "1995 D&M Certificate"), such estimate to be based on
data available on or before April 30, 1995 (hereinafter called the
"Data Cut-Off Date"), (ii) after adjustment to take into account
updated data in respect of the various supply sources in regard to
field and Lex shrinkages, fuel and flare, CO2 and inerts, Bontang
C5+, and such other items as set forth in PART TWO Section 2(b)
below, (iii) after adjustment to take into account the fuel
reallocation as set forth in PART TWO Section 2(c) below, and (iv)
after deduction of prior commitments of natural gas.
NOW, IT IS HEREBY AGREED AS FOLLOWS:
PART ONE
1. The provisions of PART ONE shall apply to all Supply
Agreements under which natural gas from fields in East
Kalimantan are committed by an East Kalimantan Contractor
Group in support of PERTAMINA's obligations under natural gas
sales contracts. So that in the implementation of this PART
ONE all of the rights and abilities conveyed to one field and
one PSC area shall also be conveyed to all fields and to all
PSC areas on the same or otherwise compatible basis, the
collective terms "Attaka Contract Gas" and "Attaka Field" as
they appear in any Supply Agreement shall hereafter be
substituted by or otherwise mean, respectively, "INPEX
Contract GAS and UNOCAL Contract Gas" and "INPEX Contract Area
and UNOCAL Contract Area", individually or collectively as
such terms apply.
2. In order to optimize the economic recovery of natural gas,
each East Kalimantan Contractor Group may, subject to
PERTAMINA's approval, deliver natural gas ("Substitute Gas")
from any participating field(s) under the Supply Agreements
(the "Supplying Field") in substitution for deliveries from
another participating field(s) (the "Substituted Field");
however, if Substitute Gas can be delivered more economically
from field(s) other than the participating field(s), then
PERTAMINA will decide accordingly. The details regarding any
plans for deliverability substitution (including the period of
time, quantity of gas and fields involved) shall be reviewed
and studied by the EKGRMC in accordance with PERTAMINA's
guidelines so as to optimize, on an economic basis, the
recovery of natural gas reserves from the East Kalimantan gas
supply area ("Gas Supply Area"). Any such substitution shall
not affect the aggregate rates of production to be maintained
in respect of such PSC as provided in the annual plan
determined by the EKGRMC.
3. Deliverability substitution under this Memorandum of
Understanding shall not affect the requirement to supply the
aggregate quantities of net natural gas that a field has
contributed towards the "Contract Gas" committed under each
Supply Agreement. Substitute Gas shall for the purposes of
the Supply Agreements be treated as if it had been produced
from the Substituted Field. The Substitute Gas shall be
deemed to be stored in the Substituted Field on behalf of the
Supplying Field (hereinafter referred to as "Stored Gas").
4. In accordance with PERTAMINA's policy of production priority
for associated gas, associated gas produced and delivered from
a field may be treated as if such gas had been produced from
a field or fields within the Gas Supply Area; in such event,
the quantity of associated gas produced is deemed to be stored
in the other field(s). No substitution under this Memorandum
of Understanding shall have the effect of limiting the
production priority of associated gas as a substitute for non-
associated gas.
5. Stored Gas resulting from deliverability substitution and
associated gas deemed stored as a result of production
priority shall be available for future delivery in support of
PERTAMINA's obligations.
6. Notwithstanding the above, in order to optimize the economic
recovery of natural gas, INPEX Attaka may, subject to
PERTAMINA's approval, deliver natural gas ("INPEX Substitute
Gas") from any participating field(s) under the Supply
Agreements in the UNOCAL PSC area (the "UNOCAL Supplying
Field") in substitution for deliveries from an INPEX
participating field (the "INPEX Substituted Field"). The
details regarding any plans for deliverability substitution
with INPEX Substitute Gas shall be reviewed and studied by the
EKGRMC in accordance with PERTAMINA's guidelines so as to
optimize, on an economic basis, the recovery of natural gas
reserves from the Gas Supply Area. Any substitution with
INPEX Substitute Gas shall not affect the sum of the aggregate
rates of production to be maintained in respect of the INPEX
Attaka PSC and UNOCAL PSC, as such rates are provided in the
annual plan determined by the EKGRMC. INPEX Substitute Gas
shall for the purposes of the Supply Agreements be treated as
if it had been produced from the INPEX Substituted Field. The
INPEX Substitute Gas shall be deemed to be stored in the INPEX
Substituted Field on behalf of the UNOCAL Supplying Field
(hereinafter referred to as "INPEX Stored Gas"). INPEX Stored
Gas shall be available for future delivery in support of
PERTAMINA's obligations.
PART TWO
1. Provisional Producers' Percentages
The Provisional Producers' Percentages (and the provisional
allocation of supply commitments as between the East
Kalimantan Contractors under the Package VI Supply Agreements)
are:
- INPEX Attaka Producers' Percentage: 1.6% (one decimal six
percent)
- TOTAL Group Producers' Percentage: 72.2% (seventy-two
decimal two percent)
- UNOCAL Producers Percentage: 4.6% (four decimal six
percent)
- VICO Group Producers' Percentage: 21.6% (twenty-one
decimal six percent)
The use of the Provisional Producers Percentages is
provisional pending determination hereunder of the Producers'
Percentages, and the Producers' Percentages shall apply and be
deemed to have applied with retroactive effect from the
effective date of each Package VI Supply Agreement.
Accordingly, for the purposes of any Package VI Supply
Agreement under which natural gas has been supplied before the
determination of the Producers' Percentages, (i) the volumes
of natural gas required to have been delivered shall be
accordingly adjusted, and (ii) arrangements will be made for
the parties which have been overpaid as a result of the
interim use of the Provisional Producers Percentages to
compensate (but such compensation shall not include interest)
any parties which have been underpaid as a result thereof,
such compensation to be made by cash settlement no later than
thirty (30) calendar days after the execution of the
Supplemental Memorandum referred to in Section 6 below.
2. Determination of Producers' Percentages
The Producers' Percentages and the allocation of supply
commitments as between the East Kalimantan Contractors under
each of the Package VI Supply Agreements shall be determined
on the basis of the principles and procedures set forth in
this Section 2. Table 1 attached and hereby incorporated
herewith represents the proper method of calculation of
Initial Adjusted Net Gas Reserves of each participating field.
In the event of any conflict between any provision contained
in the text of this Memorandum of Understanding and anything
contained in Table 1, the provision contained in the text
shall prevail. References to specific sections or paragraphs
shall be interpreted as referring to specific sections or
paragraphs of this PART TWO.
(a) D&M Reserves
The estimate of each fields proved initial recoverable
wet-gas reserves expressed in billions of standard cubic
feet ("BSCF") of wet-gas, as certified in the 1995 D&M
Certificate (the "D&M Reserves"), shall serve as the
basis for determination of the Producers' Percentages.
The field's D&M Reserves, minus its total wet-gas
production (i.e. wellhead gas plus field condensate) as
of December 31, 1994 ("Past Field Production"), shall be
hereinafter referred to as its "Remaining D&M Reserves
After Production".
(b) Determination of Net Gas
The D&M Reserves for each field shall be adjusted by
deducting the following amounts (expressed in BSCF) to
determine the amount of net natural gas deemed available
to each field ("Initial Net Gas Reserves").
(1) PAST FIELD CONDENSATE SHRINKAGE shall be the
actual/measured amount of condensate shrinkage for
the field during the period up to and including
December 31, 1994, but not including any Lex
shrinkage; the amount shall also be expressed as a
percentage of Past Field Production.
(2) FUTURE FIELD CONDENSATE SHRINKAGE shall be
calculated by determining the average annual amount
of condensate shrinkage (excluding Lex shrinkage)
over the shorter of (a) the period since production
began; or (b) the last five Years, expressed as a
percentage of wet-gas production, and applying such
percentage to the field's Remaining D&M Reserves
After Production; provided, however, that if data
for at least one Year is unavailable due to
insufficient production history of the field, or if
based on a production plan of the remaining D&M
Reserves the quantities of field condensate
shrinkage would be modified, then evidence shall be
produced to substantiate the expected condensate
shrinkage, and calculated values, after
substantiation, shall be deemed representative of
the Future Field Condensate Shrinkage. In
particular, for the fields named in the LEMIGAS
letter dated April 27, 1995, the calculation
methodology described in such letter shall be
followed.
(3) PAST FIELD FLARE shall be the actual/measured
amount (or if the actual/measured amount is
unavailable, the calculated amount) of gas flared
by the field during the period up to and including
December 31, 1994, but not including any Lex flare;
the amount shall also be expressed as a percentage
of Past Field Production.
(4) FUTURE FIELD FLARE shall be calculated by
determining the lowest amount of gas flared
(excluding Lex flare) in any one Year of the last
five years, expressed as a percentage of wet-gas
production, and applying that percentage to the
field's Remaining D&M Reserves After Production;
provided, however, that if data for at least five
Years is unavailable due to insufficient production
history of the field or if a Development Project is
anticipated which would modify the quantities of
gas flared, then evidence shall be produced to
substantiate the expected field flare, and
calculated values, after substantiation, shall be
deemed representative of the Future Field Flare.
(5) PAST FIELD FUEL shall be the actual/measured amount
of fuel consumed by the field during th period up
to and including December 31, 1994, but not
including any Lex fuel; the amount shall also be
expressed as a percentage of Past Field Production.
(6) FUTURE FIELD FUEL shall be calculated by
determining the total amount of fuel gas (excluding
Lex fuel) required to produce the field's Remaining
D&M Reserves After Production. Such calculation
shall take account of the anticipated annual fuel
requirements based on the field facilities required
to produce the field's Remaining D&M Reserves After
Production and shall be consistent with the field
abandonment pressure utilized by D&M in the 1995
D&M Certificate. Unless otherwise justified by
standard petroleum engineering practices or by the
limited amount of remaining D&M Reserves in a given
participating field, as approved by PERTAMINA after
consultation at the EKGRMC or its reserves sub-
committee, such field's future fuel gas
requirements shall be calculated on the assumption
that such field will be maintained in production
until the end of the Production Sharing Contract
covering the field. The amount shall also be
expressed as a percentage of Remaining D&M Reserves
After Production. The calculated values after
substantiation shall be deemed representative of
Future Field Fuel.
Wet-gas field shrinkage, flare and fuel is referred to as
"Gas to Lex". The numbers resulting after subtraction
respectively of (1), (3) and (5) above from the field's
Past Field Production, and of (2), (4) and (6) above from
the field's Remaining D&M Reserves After Production,
shall hereinafter be referred to respectively as the
field's "Past Gas to Lex" and the field's "Future Gas to
Lex".
(7) PAST LEX SHRINKAGE shall be the actual/measured
amount (or if the actual/measured amount is
unavailable, the calculated amount) of shrinkage at
the Lex plant during the period up to and including
December 31, 1994; the amount shall also be
expressed as a percentage of Past Gas to Lex.
(8) FUTURE LEX SHRINKAGE shall be calculated by
determining the average annual amount of Lex
shrinkage over the shorter of (a) the period since
production began; or (b) the last five Years,
expressed as a percentage of Gas to Lex, and
applying such percentage to the field's Future Gas
to Lex; provided, however, that if a Development
Project is anticipated which would modify the
quantities of Lex shrinkage, then evidence shall be
produced to substantiate the expected Lex
shrinkage, and calculated values, after
substantiation, shall be deemed representative of
the Future Lex Shrinkage.
(9) PAST LEX FUEL shall be the actual/measured amount
of Lex fuel gas during the period up to and
including December 31, 1994; the amount shall also
be expressed as a percentage of Past Gas to Lex.
(10) FUTURE LEX FUEL shall be calculated by determining
the average annual amount of Lex fuel gas over the
shorter of (a) the period since production began;
or (b) the last five Years, expressed as a
percentage of Gas to Lex, and applying that
percentage to the field's Future Gas to Lex;
provided, however, that if a Development Project is
anticipated which would modify the quantities of
Lex fuel gas, then evidence shall be produced to
substantiate the expected Lex fuel gas, and
calculated values, after substantiation, shall be
deemed representative of the Future Lex Fuel.
(11) PAST LEX FLARE shall be the actual/measured amount
(or if the actual/measured amount is unavailable,
the calculated amount) of Lex flared gas during the
period up to and including December 31, 1994; the
amount shall also be expressed as a percentage of
Past Gas to Lex.
(12) FUTURE LEX FLARE shall be calculated by determining
the lowest amount of Lex flared gas in any one Year
of the last five Years, expressed as a percentage
of Gas to Lex, and applying that percentage to the
field's Future Gas to Lex; provided, however, that
if a Development Project is anticipated which would
modify the quantities of Lex flared gas, then
evidence shall be produced to substantiate the
expected Lex flared gas, and calculated values,
after substantiation, shall be deemed
representative of the Future Lex Flare.
Gas to Lex less Lex shrinkage, fuel and flare is referred
to as "Inlet Gas". The numbers resulting after
subtraction respectively of (7), (9) and (11) above from
the field's Past Gas to Lex, and of (8), (10) and (12)
above from the field's Future Gas to Lex, shall
hereinafter be referred to respectively as the field's
"Past Inlet Gas" and the field's "Future Inlet Gas".
(13) PAST CO2 AND INERTS shall be the actual/measured
amount of CO2 and inerts contained in the Inlet Gas
(determined by Inlet Gas analysis) during the
period up to and including December 31, 1994; the
amount shall also be expressed as a percentage of
Past Inlet Gas.
(14) FUTURE CO2 AND INERTS shall be calculated by
determining the average annual amount of CO2 and
inerts over the shorter of (a) the period since
production began; or (b) the last five Years,
expressed as a percentage of Inlet Gas, and
applying such percentage to the field's Future
Inlet Gas; provided, however, that if data for at
least one Year is unavailable due to insufficient
production history of the field or if based on a
production plan of the remaining D&M Reserves the
quantities of CO2 and inerts would be modified
considering the initial CO2 and inerts estimated to
be contained in such field, then evidence shall be
produced to substantiate the expected CO2 and
inerts, and calculated values, after
substantiation, shall be deemed representative of
the Future CO2 and Inerts.
(15) PAST BONTANG C5+ shall be the actual/measured
amount of Bontang C5+ contained in the Inlet Gas
(determined by Inlet Gas analysis) during the
period up to and including December 31, 1994; the
amount shall also be expressed as a percentage of
Past Inlet Gas.
(16) FUTURE BONTANG C5+ shall be calculated by
determining the average annual amount of Bontang
C5+ contained in the Inlet Gas (determined by Inlet
Gas analysis) over the shorter of (a) the period
since production began; or (b) the last five Years,
expressed as a percentage of Inlet Gas, and
applying such percentage to the field's Future
Inlet Gas; provided, however, that if data for at
least one Year is unavailable due to insufficient
production history of the field or if a Development
Project is anticipated which would modify the
quantities of C5+, then evidence shall be produced
to substantiate the expected C5+, and calculated
values, after substantiation, shall be deemed
representative of the Future Bontang C5+.
For the purposes of (1) to (16) above:
(i) A "Year" is a calendar year during all or
substantially all of which the field was in
production; references to the last five Years are
to the five Years ending December 31, 1994.
(ii) A "Development Project" shall be based on the 1995
D&M Certificate and shall include the following
projects:
(1) Tambora/Tunu Fields Development Project;
(2) Peciko Field Development Project;
(3) Sisi Field Development Project;
(4) Pamaguan Field Development Project;
(5) Mutiara Field Additional Compression Project;
(6) Santan Field Development Project;
(7) Melahin/Kerindingan Fields Development
Projects;
(8) Serang Field Development Project;
(9) Nubi Field Development Project;
(10) Lampake Field Development Project; and
(11) Any other project for which a project proposal
has been approved by PERTAMINA no later than
October 31, 1995.
(iii) For any particular field, where future
deductions are to be based on a period of time
shorter than five Years or are to be based in
substantiated expected values, such deductions
shall be made on a consistent basis using,
where appropriate, comparable periods of time,
and shall exclude any unreliable data (i.e.
data which is outside the range of normal
technical practice or which cannot be
demonstrated to be reproduced regularly in the
future). In particular, Future Field Flare
and Future Lex Flare will be calculated on the
basis of the same Year.
(iv) In the calculation of Future Lex Shrinkage, Fuel
and Flare, PERTAMINA's decision (ref:
4081/LOD30/93-S1) dated September 9, 1993 set out
in Section A shall apply with the exception of the
last sentence referring to "actual data" and in
lieu thereof, the most up-to-date relevant data
shall be utilized. The calculation shall recognize
that Lex comprises: the Santan Terminal Lex Plant
("STLP"), the Santan Compressor Station ("SCS") and
the Santan Terminal Oil Processing Facilities
("STOPF"). Further, gas may only bypass the STLP
if the maximum processing capacity of the STLP is
utilized ("Bypass Gas"); STLP shrinkage shall only
apply to gas that is processed in the STLP;
shrinkage in respect of Bypass Gas shall be
accounted for in the SCS and the STOPF (if
applicable) only; and all future fuel and flare
amounts (excluding future field fuel and flare
already accounted for) which are expected to be
utilized to produce the Future Gas to Lex,
including the gas to be processed through the Lex
and Bypass Gas, are to be accounted for in the
Future Lex Fuel and the Future Lex Flare.
Wet-gas less (when applicable): field shrinkage, flare
and fuel; Lex shrinkage, flare and fuel; CO2 and inerts;
and Bontang C5+ is referred to as "Net Gas". The number
resulting after subtraction of (1) to (16) from the
field's D&M Reserves shall be the field's Initial Net
Gas Reserves".
(c) Santan/Bontang Fuel
(1) The field's Initial Net Gas Reserves shall be
adjusted for past and future Santan fuel gas. Past
and future Santan fuel gas attributable to the
operations in respect of the hydrocarbons received
from Badak Central and handled at the Santan
Terminal shall be allocated to the VICO Group
fields and Total Group fields in the same amounts
as determined in Package IV for Santan fuel gas
reallocation.
(2) In recognition that the EKGRMC has determined that
it is not appropriate from a technical standpoint
to adjust the field's reserves for past and future
gas consumed at the Bontang Plant, for the removal
of the CO2 component and for the removal, handling
and transportation to Badak Central of the C5+
components, no such adjustment shall be made to the
field's Initial Net Gas Reserves in determining the
Producers' Percentages hereunder.
For each field, the number resulting after adjustment for
Santan fuel gas reallocation under Section 2(c)(1) shall
be the field's "Initial Adjusted Net Gas Reserves".
(d) Determination of Net Gas Requirement for Prior Sales
Commitments
The Net Gas requirement (expressed in BSCF) for the sales
commitment of each "Package" (groupings of gas sales
supply commitments, i.e., Packages I, II, III, KCO, IV
and V) shall be comprised of the following:
(1) the LNG and LPG component;
(2) the KFP component; and
(3) the KMI component.
The amount of the LNG and LPG component for each Package
shall be determined on the basis of the calculated Net
Gas Bontang Plant efficiency (for LNG and LPG sales),
considering the average hydrocarbon heating value ("HHV")
of the Net Gas at the Bontang Plant. The commitments for
each Package will be further adjusted based on an
estimated HHV of the corresponding Net Gas of each
Package. The applicable Bontang Plant efficiency shall
be (i) for each year up to and including December 31,
1994, the actual observed efficiency based on gas
delivered from the fields and BTU's of LNG and LPG
produced by the Bontang Plant for that year, and (ii)
from January 1, 1995 onwards, the average of the Bontang
Plant efficiencies for the five years to December 31,
1994 as determined under (i).
The amount of the KFP component shall be determined by
adding (i) the gas received and paid for at KFP adjusted
for past fuel and flare at the SKG Compressor Station up
to December 31, 1994, and (ii) the remaining contractual
amounts from January 1, 1995 to the end of each contract
adjusted for future fuel and flare at the SKG Compressor
Station. The future fuel and flare at the SKG Compressor
Station will be determined using the average of the last
five years of the past fuel and flare.
The amount of the KMI component shall be determined on
the basis of the contractual amounts of gas to be
supplied to KMI.
(e) Deduction of Prior Commitments
Each field's Initial Adjusted Net Gas Reserves shall
serve as the basis for determining the amount of natural
gas remaining unallocated and thus available to be
allocated to meet the supply commitments of the east
Kalimantan Contractors under the Package VI Supply
Agreements.
The following supply contributions shall be calculated
for each field:
(1) NET GAS ALLOCABLE TO PACKAGE I
(2) NET GAS ALLOCABLE TO PACKAGE II
(3) NET GAS ALLOCABLE TO PACKAGE III
(4) NET GAS ALLOCABLE TO KCO
(5) NET GAS ALLOCABLE TO PACKAGE IV
(6) NET GAS ALLOCABLE TO PACKAGE V
using the percentages as set forth in Table 2 attached
and hereby incorporated herewith. Such contributions
shall be hereinafter referred to as the "Prior Net Gas
Commitment" for each East Kalimantan Contractor Group's
fields.
For each East Kalimantan Contractor Group's fields, the
figures resulting after deducting its Prior Net Gas
Commitment from its Initial Adjusted Net Gas Reserves
shall be deemed its "Uncommitted Net Gas Reserves".
(f) Package VI Sales
It is agreed that the following are to be grouped
together (hereinafter called "Package VI Sales"):
1. All quantities of LNG sold pursuant to the
Memorandum of Agreement dated October 6, 1994 Re:
1981 LNG Sales Contract Extension in respect of the
period April 1, 2003 to March 31, 2008;
2. All quantities of LNG sold pursuant to the
Memorandum of Mutual Intent with Korea Gas
Corporation dated July 22, 1994 for Purchase and
Sale of LNG, in respect of the period 2000 to 2017;
3. All quantities of LNG sold pursuant to the
Memorandum of Understanding with CPC dated December
6, 1994 for Purchase and Sale of LNG, in respect of
the period 2000 to 2017;
4. Any natural gas quantities sold under new domestic
sales contracts entered into before January 1,
2000, provided that the first delivery of Natural
Gas pursuant to such contract is scheduled to
commence, at the time such contract is entered
into, before January 1, 2000 (but not including:
a. any Bontang LPG sales; and
b. any quantities sold under sales contracts not
supported by the reserves from each PSC area
as certified by the 1995 D&M Certificate).
Notwithstanding the above, in no event shall Package VI
Sales include any quantities allocated to prior gas
commitments (i.e. Packages I, II, III, KCO, IV and V).
For the avoidance of doubt: Package IV prior gas supply
commitments shall be those quantities defined as Package
IV Sales under section 2(f) of the Memorandum of
Understanding Re: Supply Agreements and Package IV Sales
dated August 12, 1991 ("Package IV MOU"); and Package V
prior gas supply commitments shall be those quantities
defined as Package V Sales under section 2(f) of the
Memorandum of Understanding Re: Supply Agreements and
Package V Sales dated October 5, 1994 ("Package V MOU")
which quantities shall represent the best estimate, as of
October 31, 1995, of Package IV Sales and Package V
Sales.
It is agreed that the Producers' Percentages as
determined herein shall apply to Package VI Sales.
(g) Determination of Producers' Percentages
Each East Kalimantan Contractor Group s Producers
Percentage shall be equal to the ratio that the volume of
the Uncommitted Net Gas Reserves of such group's fields
bears to the aggregate volume of the Uncommitted Net Gas
Reserves from all fields. The aggregate Net Gas
requirement for Package VI Sales shall be supplied by
each East Kalimantan Contractor Group in proportion to
such group's Producers' Percentage.
3. Participating Fields
For the purposes of PART TWO of this Memorandum of
Understanding, a participating field shall mean a field within
the Gas Supply Area which is included in the 1995 D&M
Certificate and either:
(a) is a participating field pursuant to the Package V MOU as
supplemented on May 31, 1995; or
(b) has received an approval in principle from PERTAMINA for
a Plan Of Development no later than October 31, 1995.
4. Lemigas Mass Balance Study
Unless otherwise agreed between the East Kalimantan
Contractors, the data to be utilized for the purposes of
Section 2 above shall be based on the data included in a new
Lemigas study of Mass Balance for East Kalimantan
participating fields (hereinafter called the "Lemigas Mass
Balance Study Package VI"). Therefore, each of TOTAL
Indonesie, Virginia Indonesia Company, and UNOCAL (in its
capacity as operator of its respective group) shall use its
best efforts to assist Lemigas to prepare the Lemigas Mass
Balance Study Package VI based on accurate production data up
to December 31, 1994. In this regard, TOTAL Indonesie,
Virginia Indonesia Company, and UNOCAL shall promptly furnish
Lemigas with all information needed by Lemigas to prepare the
Lemigas Mass Balance Study Package VI. Each operator shall
use its best efforts to ensure that the lemigas Mass Balance
Study Package VI includes accurate data up to December 31,
1994 on its production sharing contract area and to ensure
that the Lemigas Mass Balance Study Package VI is available
for use by the parties as soon as possible.
5. EKGRMC
To ensure a timely and accurate determination of Producers'
Percentages, the parties hereto instruct the EKGRMC to monitor
and, when considered prudent, to verify the accuracy of any
and all data supporting the calculation of Producers
Percentages.
6. Supplemental Memorandum
The determination of Producers' Percentages shall be completed
as soon as practicable and the parties hereto shall thereupon
execute a memorandum supplemental ("Supplemental Memorandum")
to this Memorandum of Understanding confirming the
participating fields and the Producers' Percentages. Such
Supplemental Memorandum shall be executed no later that twelve
(12) months after the Data Cut-Off Date.
IN WITNESS WHEREOF, the parties have caused this Memorandum of
Understanding to be executed by their duly authorized
representatives as of the date first above written.
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA
(PERTAMINA)
By /S/ <PAGE>
VIRGINIA INDONESIA COMPANY
By /S/ <PAGE>
TOTAL INDONESIE
By /S/ <PAGE>
UNOCAL INDONESIA COMPANY
By /S/ <PAGE>
OPICOIL HOUSTON INC.
By /S/ <PAGE>
INDONESIA PETROLEUM, LTD.
By /S/ <PAGE>
VIRGINIA INTERNATIONAL COMPANY
By /S/ <PAGE>
LASMO SANGA SANGA LIMITED
By /S/ <PAGE>
UNION TEXAS EAST KALIMANTAN
LIMITED
By /S/ <PAGE>
UNIVERSE GAS & OIL COMPANY,
INC.
By /S/
<PAGE>
<PAGE>
<TABLE>TABLE 1
UNCOMMITTED NET GAS RESERV ES
_______________ FIELD (BSC F)
<CAPTION> Status as at 31/12/94 Future
Percent Amount Percent Amount
(%) BSCF (%) BSCF
<S> <C> <C> <C> <C>
1. D&M Initial Reserves* (BSCF)
2. Past Field Production (BSCF)
3. Remaining Reserves (BSCF)
4. Field Shrinkage (% of 2 or 3, BSCF)
5. Field Flare (% of 2 or 3, BSCF)
6. Field Fuel (% of 2 or 3, BSCF)
7. Gas to LEX (BSCF)
8. LEX Shrinkage (% of 7, BSCF)
9. LEX Fuel (% of 7, BSCF)
10. LEX to Flare (% of 7, BSCF)
11. Inlet Gas Available (BSCF)
11.a CO2 + Inerts (% of 11, BSCF)
11.b Bontang Condensate C5+ (% of 11, BSCF)
12. Net Gas Produced (BSCF)
13. Net Gas Remaining (BSCF)
14. Initial Net Gas Reserves (BSCF) ______
15. Santan Fuel Gas Reallocation (BSCF) ______ _____
16. Initial Adjusted Net Gas Reserves (BSCF) ______
17. Prior Net Gas Commitments (BSCF) ______
18. Uncommitted Net Gas Reserves (BSCF) ______
* Reserves from 1995 D&M Certificate.
/TABLE
<PAGE>
<TABLE>
TABLE 2
FIELD'S CONTRIBUTION PERCENTAGES
<CAPTION>
FIELD PACKAGE I PACKAGE II PACKAGE III KCO PACKAGE IV PACKAGE V
<S> <C> <C> <C> <C> <C> <C>
Badak 100.0000% 30.2840% 2.3594% 3.0500% 6.7978% 7.2911%
Nilam - 45.1713% 20.1902% 29.9933% 13.2347% 9.2893%
Mutiara - - 5.6098% 12.0394% 3.8824% 2.8781%
Semberah - - 5.2399% 10.5511% 5.6929% 3.3058%
Pamaguan - - - - 0.1990% 0.0990%
Lampake - - - - - 0.6105%
HDL/BKP - 20.1619% 22.9595% 13.5315% 0.4194% 0.9260%
Tambora - - 9.9829% 8.2966% 8.9426% 4.1118%
Tunu - - 8.8424% 7.5381% 27.7561% 34.8886%
Sisi - - - - 6.7013% 2.9807%
Nubi - - - - - 2.4223%
Peciko - - - - 14.2948% 25.0499%
Attaka - 4.3828% 24.8159% 15.0000% 9.0326% 3.1320%
Melahin - - - - 0.4455% 0.0426%
Kerindingan - - - - 0.2033% 0.1004%
Serang - - - - 1.4621% 2.3612%
Santan - - - - 0.9355% 0.5107%
SUM 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000%
</TABLE>
<TABLE>
<CAPTION>
PSC GROUP PACKAGE I PACKAGE II PACKAGE III KCO PACKAGE IV PACKAGE V
<S> <C> <C> <C> <C> <C> <C>
VICO 97.9000% 66.4310% 29.6004% 50.0000% 27.2064% 21.5956%
TOTAL 2.1000% 29.1862% 45.5837% 35.0000% 60.7146% 72.2575%
UNOCAL 0.0000% 2.1914% 12.4048% 7.5000% 7.5627% 4.5809%
INPEX ATTAKA 0.0000% 2.1914% 12.4080% 7.5000% 4.5163% 1.5660%
SUM 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000%
</TABLE>
