UNIMAR COMPANY
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Earnings
For the Three Months and Nine Months ended
September 30, 1997 and September 30, 1996 . . 1
Condensed Consolidated Balance Sheets as of
September 30, 1997 and December 31, 1996 . . . 2
Condensed Consolidated Statements of
Cash Flows for the Nine Months ended
September 30, 1997 and September 30, 1996. . . 3
Notes to Condensed Consolidated Financial
Statements as of September 30, 1997. . . . . . 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . 6
PART II. OTHER INFORMATION
Item 5. Other Information. . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
PART I. FINANCIAL INFORMATION
UNIMAR COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Thousands of dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Oil and gas production revenues $48,810 $62,693 $165,135 $188,904
Production costs 6,932 5,762 19,332 17,644
Depletion, depreciation and
amortization 10,521 12,180 32,034 35,884
Exploration costs including dry
holes 854 1,213 1,166 1,460
Operating profit 30,503 43,538 112,603 133,916
General and administrative
expenses 248 559 792 1,128
Other income (64) (70) (267) (225)
Earnings before income taxes 30,319 43,049 112,078 133,013
Income tax expense
Current 23,232 32,806 80,074 96,874
Deferred (1,931) (1,219) (5,794) (4,971)
21,301 31,587 74,280 91,903
Net earnings $ 9,018 $11,462 $ 37,798 $ 41,110
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Thousands of dollars)
September 30, December 31,
1997 1996
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 5,755 $ 3,274
Accounts receivable 8,946 13,943
Inventories 7,830 8,177
Other current assets 4,222 2,951
Total current assets 26,753 28,345
Property, plant and equipment, at cost:
Oil and gas properties
(successful efforts method) 1,089,909 1,070,819
Other 2,307 2,287
1,092,216 1,073,106
Less: accumulated depreciation and
depletion 753,190 720,976
Net property, plant and equipment 339,026 352,130
Other assets 2,418 3,002
$ 368,197 $ 383,477
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $ 625 $ 1,043
Advances from joint venture partners 2,103 1,234
Accrued liabilities 13,954 17,892
Income and other taxes 12,481 19,924
Total current liabilities 29,163 40,093
Deferred income taxes 148,293 154,087
Other liabilities 14,796 14,859
Partners' capital 255,945 254,438
Less: demand notes receivable 80,000 80,000
175,945 174,438
$ 368,197 $ 383,477
See accompanying Notes to Condensed Consolidated Financial Statements.<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Thousands of dollars)
(Unaudited)
Nine Months Ended
September 30,
1997 1996
Net earnings $ 37,798 $ 41,110
Adjustments to reconcile to net cash
provided by operating activities:
Depletion, depreciation and amortization 32,214 36,098
Deferred income taxes (5,794) (4,971)
Exploratory dry hole costs 383 -
Changes in working capital and other (7,096) 364
Net cash provided by operating activities 57,505 72,601
Investment activities:
Capital expenditures (19,493) (14,488)
Net cash used in investing activities (19,493) (14,488)
Financing activities:
Capital contributions 17,600 17,400
Capital distributions (54,000) (72,100)
Net cash used in financing activities (36,400) (54,700)
Increase (decrease) in advances from joint
venture partners 869 (1,986)
Net increase in cash and cash 2,481 1,427
equivalents
Cash and cash equivalents at beginning
of period 3,274 4,882
Cash and cash equivalents at end of period $ 5,755 $ 6,309
IPU distributions paid $ 19,617 $ 17,354
Income taxes paid $ 87,516 $ 93,372
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 1997
(Unaudited)
(1) Unimar Company (the Company) is a general partnership
organized under the Texas Uniform Partnership Act, whose
partners are Unistar, Inc., a Delaware corporation and a
direct subsidiary of Union Texas Petroleum Holdings, Inc., a
Delaware corporation, and LASMO (Ustar) Inc., a Delaware
corporation and an indirect wholly-owned subsidiary of LASMO
plc, a public limited company organized under the laws of
England. Each partner shares equally in the Company's net
earnings, distributions and capital contributions.
(2) These condensed consolidated financial statements should be
read in the context of the consolidated financial statements
and notes thereto included in the Company's 1996 annual report
on Form 10-K. In the opinion of management, the accompanying
financial statements contain all adjustments of a normal
recurring nature necessary for a fair presentation. Interim
results are not necessarily indicative of results on an
annualized basis.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
September 30, 1997
(Unaudited)
(3) The table below outlines the calculation of the Indonesian
Participating Unit (IPU) participation payment for the third
quarter of 1997.
1997
Third Quarter
(Thousands of dollars)
Positive cash flow:
Gas receipts $ 42,398
Oil and condensate receipts 8,272
Other non-revenue cash receipts
from Joint Venture 1,634
Total positive cash flow 52,304
Less negative cash flow:
Expenditures to Joint Venture 16,705
Indonesian income taxes 21,505
Total negative cash flow 38,210
Net positive cash flow from
23.125% interest in Joint Venture $ 14,094
Net cash flow for benefit of
IPU holders* $ 3,449
Participation Payment per IPU* $ .32
* Each IPU is entitled to 1/14,077,747 of 32% of net positive
cash flow until September 25, 1999 at which time the Units
will expire with no residual value. As of September 30, 1997,
there were 10,778,590 IPUs issued and outstanding.
<PAGE>
The following discussion should be read in conjunction with the
business section, consolidated financial statements, notes, and
management's discussion contained in the Company's 1996 annual
report on Form 10-K, and condensed consolidated financial
statements and notes contained in this report.
Liquidity and Capital Resources
Cash flow from operations for the nine months ended September 30,
1997 amounted to $58 million, a decrease of $15 million as compared
to the same period in 1996. The decrease resulted primarily from
lower sales volumes which were partially offset by higher LNG
prices. Capital expenditures and net distributions to the partners
for the first nine months of 1997 were $19 million and $36 million,
respectively. For the nine months ended September 30, 1996,
capital expenditures and net distributions to the partners were $14
million and $55 million, respectively.
The Company's share of 1997 Indonesian Joint Venture (IJV)
expenditures is currently expected to approximate $55 million, a $3
million increase from the amount forecasted at year-end 1996. The
increase includes a $6 million increase in operating expenditures
associated primarily with the Operator's business process
reengineering plan, offset by a $3 million decrease in exploration
expenditures as a result of reductions in planned exploratory
seismic and drilling activity for 1997. During the first nine
months of 1997, $44 million was called by the IJV as compared to
$33 million for the nine months ended September 30, 1996.
The Company's ability to generate cash is primarily dependent on
the prices it receives for the sale of liquefied natural gas (LNG),
and to a lesser extent, the sale of crude oil and liquefied
petroleum gas (LPG). LNG and LPG are primarily sold under long
term contracts whose prices are derived from a basket of Indonesian
crudes. In the event cash generated from operations is not
sufficient to meet capital investment and other requirements, any
shortfall will be funded through additional cash contributions by
the partners. The Company cannot predict with any degree of
certainty the prices it will receive in future periods for its
crude oil, LNG and LPG. The Company's financial condition,
operating results and liquidity will be materially affected by any
significant fluctuations in its sales prices.
<PAGE>
Results of Operations
Quarter Ended September 30, 1997
Compared to Quarter Ended September 30, 1996
Net earnings for the third quarter of 1997 were $9 million, as
compared to $11 million in the prior year's quarter. The decrease
in earnings was mainly due to lower revenues as discussed below.
Third quarter 1997 revenues were $49 million, a decrease of $14
million as compared to the corresponding 1996 quarter. The
decrease was mainly due to a 21 percent decrease in LNG sales
volumes and a 7 percent decrease in LNG sales prices. Crude oil
sales volumes and prices decreased by 5 percent and 10 percent,
respectively.
The IJV's share of LNG sold during the third quarter of 1997 was
83 trillion BTUs (28.3 net equivalent cargoes) as compared to 105
trillion BTUs (35.7 net equivalent cargoes) in the third quarter of
1996. The IJV's share of LNG shipments for 1997 is expected to
decline by approximately 15 percent as compared to 1996, due
primarily to the reduction in deliveries under the IJV's first
contract in which the IJV has a higher participation interest. A
further decline in LNG shipments is expected in 1998.
Crude oil volumes net to the Company decreased by 27 thousand
barrels to 473 thousand barrels, mainly due to the timing of crude
oil liftings.
The average price received for LNG during the third quarter of
1997 was $2.87 per million BTUs, a $0.22 per million BTU decrease
as compared to the same period in 1996. The average crude oil
price in the third quarter of 1997 was $18.24 per barrel, a $2.01
per barrel decrease as compared to the corresponding 1996 quarter.
Production costs for the third quarter of 1997 increased $1
million as compared to the same quarter in 1996 due primarily to
recoverable costs associated with the Operator's ongoing business
process reengineering plan.
Depletion, depreciation and amortization charges decreased $2
million to $11 million, due to the lower overall level of
production in the third quarter of 1997 as compared to the third
quarter of 1996.
Income tax expense in the third quarter of 1997 decreased $11
million to $21 million, due primarily to lower third quarter
revenues. The effective tax rates for the 1997 and 1996 third
quarters were 70 percent and 73 percent, respectively. These rates
are the aggregate of Indonesian source income taxed at a 56 percent
rate, and certain expenses attributable to the Company which are
not deductible in the partnership.
Nine Months Ended September 30, 1997
Compared to Nine Months Ended September 30, 1996
Net earnings for the first nine months of 1997 were $38 million,
a decrease of $3 million as compared to the same period in 1996.
The decrease in earnings was mainly the result of lower revenues as
discussed below.
Revenues for the first nine months of 1997 were $165 million, or
$24 million lower than the first nine months of 1996. The decrease
was mainly due to a 19 percent decrease in LNG sales volumes which
was partially offset by a 6 percent increase in LNG sales prices.
Crude oil sales volumes decreased by 5 percent while crude oil
sales prices increased by 1 percent.
The average price received for LNG was $3.18 per million BTUs,
a $0.17 per million BTU increase as compared to the first nine
months of 1996. The price received for crude oil sales averaged
$19.64 per barrel, an increase of $0.28 per barrel as compared to
the 1996 nine month average.
The IJV's share of LNG sold during the first nine months of 1997
was 257 trillion BTUs (87.4 net equivalent cargoes) as compared to
318 trillion BTUs (108.1 net equivalent cargoes) in the first nine
months of 1996. The IJV's share of LNG shipments for 1997 is
expected to decline by approximately 15 percent as compared to
1996, due primarily to the reduction in deliveries under the IJV's
first contract in which the IJV has a higher participation
interest. A further decline in LNG shipments is expected in 1998.
Crude oil volumes net to the Company decreased by 75 thousand
barrels to 1.3 million barrels, mainly due to the timing of crude
oil liftings.
Production costs for the first nine months of 1997 increased by
$2 million as compared to the same period in 1996 due primarily to
recoverable costs associated with the Operator's ongoing business
process reengineering plan.
Depletion, depreciation and amortization charges decreased $4
million to $32 million, mainly due to the lower overall level of
production in the first nine months of 1997.
Income taxes in the first nine months of 1997 decreased $18
million to $74 million. The decrease in current tax expense during
the first nine months of 1997 was primarily due to lower revenues
and an increase in cost recoverable expenditures. The effective
tax rates for the first nine months of 1997 and 1996 were 66
percent and 69 percent, respectively. These rates are the
aggregate of Indonesian source income taxed at a 56 percent rate,
and certain expenses attributable to Unimar activities which are
not deductible in the partnership.<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27)-1- Financial Data Schedule for the nine months ended
September 30, 1997.
(b) Reports on Form 8-K
None.
<PAGE>
UNIMAR COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
UNIMAR COMPANY
By: /S/ Linda A. Kubecka
Linda A. Kubecka
(principal financial officer
and the officer duly authorized
to sign on behalf
of the registrant.)
DATE: November 12, 1997
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 5,755
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<RECEIVABLES> 8,946
<ALLOWANCES> 0
<INVENTORY> 7,830
<CURRENT-ASSETS> 26,753
<PP&E> 1,092,216
<DEPRECIATION> 753,190
<TOTAL-ASSETS> 368,197
<CURRENT-LIABILITIES> 29,163
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0
0
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<SALES> 165,135
<TOTAL-REVENUES> 165,135
<CGS> 51,366
<TOTAL-COSTS> 52,532
<OTHER-EXPENSES> 792
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46
<INCOME-PRETAX> 112,078
<INCOME-TAX> 74,280
<INCOME-CONTINUING> 37,798
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<CHANGES> 0
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