<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From __________to__________
Commission File Number 1-8791
UNIMAR COMPANY
(Exact name of Registrant as specified in its charter)
TEXAS 76-0108240
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1221 MCKINNEY, SUITE 700, HOUSTON, TEXAS 77010-2015
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 754-6650
SECURITIES REGISTERED PURSUANT TO SECTION 12 (B) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
Indonesian Participating Units American Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO...
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Unimar Company is a general partnership between subsidiaries of Union
Texas Petroleum Holdings, Inc. and LASMO plc.
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<PAGE> 2
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.
The principal executive offices of the Company are at 1221 McKinney, Suite
700, Houston, Texas 77010-2015 and its telephone number is (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, 1996, VICO, in its capacity as the Joint Venture operator, had
approximately 1,900 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 or customers, 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.
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<PAGE> 3
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 UNIT PRICE RANGES
<TABLE>
<CAPTION>
FIRST QTR. SECOND QTR. THIRD QTR. FOURTH QTR.
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
1996
- ----
High 4-11/16 5-3/16 5 5-1/4
Low 3-13/16 3-7/8 4-1/8 4-3/16
1995
- ----
High 9-5/8 10 9-5/8 5-1/4
Low 9 9-1/16 4-7/8 3-5/8
</TABLE>
Source of prices: American Stock Exchange
(b) HOLDERS. As of February 14, 1997, 10,778,590 IPUs were outstanding and
held by approximately 3,562 holders of record.
(c) PAYMENTS PER INDONESIAN PARTICIPATING UNIT.
<TABLE>
<CAPTION>
PERIOD PAYMENT DATE PAYMENT
- ------ ------------ -------
<S> <C> <C>
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
First Quarter - 1996 May 30, 1996 0.65
Second Quarter - 1996 August 29, 1996 0.53
Third Quarter - 1996 November 29, 1996 0.59
Fourth Quarter - 1996 March 3, 1997 0.64
</TABLE>
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
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<PAGE> 4
(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.
Until September 25, 1999, at which time the IPUs will expire with no
residual value, 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.
-3-
<PAGE> 5
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.
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
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<PAGE> 6
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).
Accordingly, domestic market sales from the Semberah field, which commenced
production in December 1991, were priced at ICP until December 1996. 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.
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<PAGE> 7
EXPLORATION AND DEVELOPMENT
From inception in 1972 up to and including December 31, 1996, the following
wells were drilled in the East Kalimantan Contract Area:
<TABLE>
<CAPTION>
TOTAL COMPLETED
FIELD WELLS PRODUCTIVE DRY SUSPENDED
LOCATION DRILLED WELLS HOLES WELLS
-------- ------- ---------- ----- --------
<S> <C> <C> <C> <C>
Badak 188 178 7 3
Nilam 170 170 - -
Semberah 62 56 4 2
Mutiara 59 51 7 1
Pamaguan 32 26 6 -
Wailawi 6 6 - -
Other 46 6 31 9
--- -- -- --
Totals 563 493 55 15
=== === == ==
</TABLE>
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 1994 through 1996 for the East Kalimantan Contract Area.
EXPLORATORY DRILLING
<TABLE>
<CAPTION>
WELLS DRY
YEAR DRILLED DISCOVERIES HOLES
---- ------- ----------- -----
<S> <C> <C> <C>
1994 2 1 1
1995 - - -
1996 - - -
</TABLE>
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<PAGE> 8
DEVELOPMENT OR FIELD EXTENSION DRILLING
<TABLE>
<CAPTION>
COMPLETED
------------------------------
WELLS FOR FOR FORDUAL DRY
YEAR DRILLED GAS OIL OIL&GAS HOLES
---- ------- --- --- ------- -----
<S> <C> <C> <C> <C> <C>
1994 20 10 1 8 1
1995 16 7 2 7 -
1996 6 2 2 2 -
</TABLE>
Of 493 completed productive wells in the East Kalimantan Contract Area,
approximately 285 contain more than one completion in the same bore hole.
There were no wells in progress at December 31, 1996.
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 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 1994 through 1996.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Gross LNG Sales(MMCF) (a) 710,988 636,339 646,902
Company's Share of PSC
LNG Sales (MMCF) 86,254 80,734 84,497
Average Sales Price
per MCF (b) $3.49 $2.96 $2.79
Average Production (Lifting)
Cost per MCF $0.19 $0.20 $0.18
</TABLE>
(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"
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<PAGE> 9
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 1996, the Company's share of the Joint Venture's expenditures was
approximately $42 million, including $1 million of exploration expenditures and
$21 million of development expenditures. In 1997, the Company's share of the
Joint Venture's expenditures is expected to total $52 million, including $6
million of exploration expenditures and $26 million of development
expenditures. The 1997 budgeted expenditures reflect continued development
activities to maintain gas deliverability and a seismic and exploration program
that provides for the drilling of several wells.
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, 1993, 1994, 1995 and 1996 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:
<TABLE>
<CAPTION>
CRUDE OIL AND
CONDENSATE GAS
--------------- -----------
TOTAL PROVED RESERVES (000'S BARRELS) (DRY MMCFS)
- ---------------------------
<S> <C> <C>
Dec. 31, 1993 203,068 7,187,995
Dec. 31, 1994 224,995 7,149,560
Dec. 31, 1995 196,892 6,636,127
Dec. 31, 1996 217,392 6,118,180*
</TABLE>
* equivalent to approximately 5,961 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
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<PAGE> 10
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 LNG cargoes per
year. Since the first shipment in 1977, the LNG Plant has delivered 2,791 LNG
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, an international consortium of commercial lenders 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 totaling
$176.4 million at a fixed interest rate of 11.5 percent, and tranche B totaling
$117.6 million. The financing is repayable in graduated quarterly payments
over ten years beginning 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 and financial institutions completed project
financing of $750 million of which $699 million was required to fund the
construction of Train F and related support facilities. 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 LNG 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
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<PAGE> 11
of Package IV beginning on page 13).
In July 1995, a $969.5 million financing was completed for the seventh
train (Train G), third dock, LPG expansion and other support facilities. The
financing was provided from Japanese sources through arrangements similar to
those used to finance the LNG Plant's fifth and sixth trains. Repayment is
scheduled to begin in 1998 principally from the proceeds of the medium-term LNG
sales contracts with Chinese Petroleum Corporation and Korea Gas Corporation
and, starting in 2000, from proceeds of the 1973 Sales Contract extension. The
construction of the seventh train began in 1995 and is scheduled for completion
in late 1997.
In March 1997, a $1,127 million financing was signed for the eighth train
(Train H), an additional LNG storage tank, an additional natural gas pipeline
from the Badak field to the LNG Plant, and a debottlenecking project for Trains
A through F. The financing provides for initial advances of up to $150
million, with further advances being conditioned upon the execution and
delivery of the marine transportation agreement associated with the Badak VI
Sales Contract. Construction is expected to begin in 1997. Revenues from the
Badak V Sales Contract with Korea Gas Corporation and the Badak VI Sales
Contract with Chinese Petroleum Corporation will be the primary sources of
repayment for this financing.
Financing for the fifth, sixth, seventh and eighth trains are nonrecourse
to both Pertamina and the Joint Venture.
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:
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<PAGE> 12
<TABLE>
<CAPTION>
ORIGINAL
PRINCIPAL/ BALANCE AT FINAL PRIMARY
PAYMENT DECEMBER 31, PAYMENT SOURCE OF
FINANCING AMOUNT 1996 DATE REPAYMENT
--------- ------ ---- ---- ---------
(000'S) (000'S)
<S> <C> <C> <C>
Trains A & B
and 1st
Loading Dock $771,500 $ - - 1973 LNG Sales
Contract
Trains C & D 995,800 - - 1981 LNG Sales
Contract
Train E 294,000 130,830 2000 Taiwan LNG Sales
Contract
Train F and
Support
Facilities 699,000 576,482 2004 Train F LNG
Sales Contract
Train G and
Support
Facilities 969,500 429,000(a) 2008 Package V Sales
Contracts (b)
Train H and
Support
Facilities 1,127,000 -(c) 2010 Badak V and Badak
VI Sales Contracts
2nd Loading Dock
& Train E
Support
Facilities 135,000 - - 1973 LNG Sales
Contract
LPG Facilities 157,700 39,220 1999 LPG Sales
Contract
</TABLE>
(a) Drawdown amount as of December 31, 1996.
(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.
(c) Financing was completed in March of 1997.
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<PAGE> 13
MARKETING AND DISTRIBUTION OF LNG
Certain information regarding deliveries of LNG from the LNG Plant is set
forth below:
<TABLE>
<CAPTION>
BTUS AVERAGE
NUMBER OF LNG IN TRILLIONS PRICE PER
TANKER LIFTINGS (APPROXIMATE) MMBTU
--------------- ------------- ---------
<S> <C> <C> <C>
1994 247 716 $2.52
1995 240 704 $2.67
1996 287 787 $3.15
</TABLE>
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.
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's share
of the LNG Sales Contracts grouped together by the Joint Venture PSC's
participating percentages in the sales contracts (each such group being
referred to as a "package"):
-12-
<PAGE> 14
<TABLE>
<CAPTION>
PACKAGE EQUITY SALES CONTRACT TERM REMAINING GROSS NET EQUIVALENT BASE LNG PRICE
- ------- INTEREST -------------- ---- VOLUMES CARGOES (b) PER MMBTU (a)
--------- ------- ------- ---------
TBTUs 1996 REMAINING 12/31/96 01/31/97
---- --------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
I 97.9% 1973 1977-1999 86 61 29 3.62 3.77
II 66.4% 1981 1983-2003 1,062 39 240 3.68 3.84
IIIA 50.0% Korean Carryover 1986-2006 145 3 25 3.62 3.77
IIIB 29.6% Taiwan 1990-2009 1,144 8 115 3.61 3.76
IIIB 29.6% Toho 1988-1997 4 - - 3.62 3.77
IIIB 29.6% 1981 Additional 1990-2003 114 2 11 3.68 3.84
IV 27.2% Train F 1994-2013 2,035 11 188 3.47 3.62
IV 27.2% Korea II 1994-2014 865 7 80 3.50 3.65
IV 27.2% 1973 Extension 1997-1999 446 - 41 3.62 3.77
IV 27.2% Medium City Gas Co. 1996-2015 358 1 33 3.61 3.76
IV 27.2% Toho 1990-1999 13 2 1 3.62 3.77
V 21.6% 1973 Extension 2000-2009 4,361 - 320 -
V 21.6% Korea Medium Term 1995-1999 401 6 29 3.66 3.81
V 21.6% Badak V 1998-1999 106 - 8 - -
V 21.6% Taiwan Medium Term 1998-1999 46 - 3 - -
V 21.6% Badak VI 1998-1999 44 - 3 - -
V 21.6% Aquarius/Aries Extension 1997-1999 48 - 3 - -
VI 16.5%(c) 1981 Extension 2003-2008 942 - 53 - -
VI 16.5%(c) Badak V 1998-2017 956 - 54 - -
VI 16.5%(c) Badak VI 1998-2017 1,686 - 95 - -
VII (d) 1973 Extension 2010-2010 436 - (d) - -
VII (d) 1981 Extension 2009-2011 565 - (d) - -
------ ---
15,863 140
====== ===
</TABLE>
-13-
<PAGE> 15
(a) Excludes transportation costs, where applicable.
(b) Net equivalent cargoes represent the Joint Venture PSC's equity based on
an average of 2,942 BBTUs per cargo.
(c) Pertamina and the East Kalimantan producers reached final agreement on
Package VI revenue sharing percentages in April of 1996. The Joint Venture
PSC's interest is 16.5 percent.
(d) The Joint Venture PSC's participation percentage in Package VII sales has
not yet been determined and is not expected until 1999. Absent the
discovery of significant additional gas reserves, the Joint Venture PSC's
percentage in Package VII sales is expected to be less than the Package VI
percentage.
LNG is primarily sold under six 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, the Korea II Sales Contract and the Medium City Gas Company
Sales Contract. Extensions to certain of these contracts, and several medium
term sales contracts, are supplied by the excess capacity of the LNG plant due
to the expansion of its facilities. 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. The Joint Venture's share in LNG
volumes from the LNG plant is expected to decline in 1997 by about 15 percent
as compared to 1996 due to the phaseout of the original 1973 Sales Contract in
which the Joint Venture has a high participation 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, a portion
of the Korea Medium Term Sales Contract and the Badak V Sales Contract, where
the buyers bear the risk of loss during shipment 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, in some cases, 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 products. 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 April of 1996, Pertamina and the East Kalimantan producers reached
final agreement on the Package VI revenue sharing percentage. The Joint Venture
PSC's interest is 16.5 percent. The 1981 Sales Contract Extension is an
eight-year extension contract, the first five
-14-
<PAGE> 16
years of which will be at the Package VI Joint Venture PSC rate of 16.5
percent. The remaining three years will be at a Package VII rate which has not
yet been determined by Pertamina and is not expected before 1999. It is
expected that this rate will be less than the Package VI rate of 16.5 percent.
The Badak V Sales Contract between Pertamina and Korea Gas Corporation and
the Badak VI Sales Contract between Pertamina and Chinese Petroleum Corporation
were both executed in 1995 and are twenty-year supply contracts. The first two
years of each contract are supplied at the Package V rate of 21.6 percent; the
remaining eighteen years will be supplied at the Package VI rate of 16.5
percent. Revenues from these two sales contracts will be the primary source of
repayment for the Train H financing.
The final year of the 1973 Sales Contract extension will be supplied at a
Package VII rate. This rate has not yet been determined by Pertamina and is not
expected before 1999. It is expected that this rate will be less than the
Package VI rate.
During the years ended 1996, 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 1996, 22 gross cargoes including spot sales, totaling 969,000
metric tons of LPG were shipped from the LNG Plant to Japan at an average
invoice price of $209.77 per metric ton. The Joint Venture was allocated a
Package IIIB sharing percentage for revenues from the first 401,000 metric tons
sold, a Package IV sharing percentage for revenues from the next 90,000 metric
tons sold, and a Package V sharing percentage for revenues from the remaining
478,000 metric tons sold during 1996, 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
-15-
<PAGE> 17
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.
The Company's share of the Joint Venture's oil and condensate, except for
that sold to Pertamina for Indonesian domestic consumption, is 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 1996, 88
percent of the Company's export sales were Bontang Mix, the balance of 12
percent being Badak. These crudes have individual ICPs. Since the inception of
segregated crude oil 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. Domestic market sales
from the Semberah field, which commenced production in December 1991, were
priced at ICP until December 1996.
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. Selected data pertaining to oil and condensate
sales for 1994 through 1996 appear below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Total Oil & Condensate
Sales (barrels) (a) 25,155,246 21,739,437 22,635,461
Company's Oil & Condensate
Sales (barrels) (b) 1,702,788 1,710,547 1,778,966
Company's Average Sales
Price (per barrel) (b) $ 20.04 $ 17.18 $ 16.46
Average Production (Lifting)
Cost (per barrel) $ 1.12 $ 1.21 $ 1.05
</TABLE>
(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.
-16-
<PAGE> 18
COMPETITION AND RISKS
Indonesian oil and LNG competes in the world market with oil and LNG
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.
-17-
<PAGE> 19
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.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(millions of dollars)
<S> <C> <C> <C> <C> <C>
Operating revenues $253 $202 $198 $201 $206
Earnings before
extraordinary item 51 40 36 30 24
Net earnings 51 40 33 30 24
Total assets 383 407 422 449 472
Debt and security subject
to mandatory redemption -- -- -- 33 32
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operations amounted to $104 million in 1996, as compared to
$80 million in 1995. The increase resulted primarily from higher oil prices
combined with increased LNG volumes. Capital expenditures of $21 million were
primarily spent on continued development activities in the Badak, Nilam,
Mutiara and Semberah fields as was the case in 1995. Net distributions in 1996
to the partners from the Company were $83 million, $29 million greater than in
1995.
In December of 1996, the VICO Board of Directors approved a plan to
consolidate the Balikpapan office into the Jakarta office and Badak field
office as a result of an ongoing business process reengineering effort. The
closing of the Balikpapan office will result in the elimination of a number of
positions and an anticipated reduction in the number of employees. A voluntary
early retirement program has been offered to all qualifying national employees.
The Company has included an accrual of approximately $1 million, net of cost
recovery, for its share of this plan. The Company also continues to maintain a
reserve and accrue interest for the potential exposure in a royalty dispute. At
December 31, 1996, the reserve approximated $7 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
-18-
<PAGE> 20
sales of crude oil and LPG. 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 1997 and future years 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 sales prices.
LNG sales are made under six 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 1996, 140 net
equivalent cargoes were shipped, of which 127 were under these long-term
contracts (1995, 131 and 121 respectively).
Through the culmination of its supply agreements with Pertamina, 1996 was
a peak gas demand year for the Joint Venture. The Joint Venture's equity
interest in sales agreements is based on its share of gas reserves available
for commitment. This equity interest has declined over time due to the
increased participation of other production sharing contractors in the more
recent supply agreements. Absent the discovery of significant additional gas
reserves in the Joint Venture PSC area, the Joint Venture's participation in
future sales will continue to decline.
The Joint Venture's share of LNG shipments in 1997 is expected to decline
by approximately 15 percent as compared to 1996, due to the phase-out of the
original 1973 Sales Contract in which the Joint Venture has a higher revenue
sharing interest. A further decline in the Joint Venture's share of LNG
shipments is expected in 1998. In 1997, the Company anticipates the shipping of
approximately 117 net equivalent cargoes.
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
addition to the processing train, a third LNG/LPG dock, an additional LPG
storage tank and other support facilities are being constructed at the LNG
Plant. Project financing was for the amount of $970 million, of which $429
million was drawn down as of December 31, 1996. The financing is repayable over
ten years in graduated quarterly payments commencing in the fourth quarter of
1998. At December 31, 1996, the overall progress of the Train G project
engineering, procurement and construction was 81.5 percent. Completion of the
project is scheduled for late 1997. Financing for Train G is nonrecourse to
both Pertamina and the Joint Venture.
In March 1997, a $1,127 million financing was signed for the eighth train
(Train H), an additional LNG storage tank, an additional natural gas pipeline
from the Badak field to the LNG Plant, and a debottlenecking project for Trains
A through F. The financing provides for initial advances of up to $150 million,
with further advances being conditioned upon the execution and delivery of the
marine transportation
-19-
<PAGE> 21
agreement associated with the Badak VI Sales Contract. Construction is expected
to begin in 1997. Revenues from the Badak V Sales Contract with Korea Gas
Corporation and the Badak VI Sales Contract with Chinese Petroleum Corporation
will be the primary sources of repayment for this financing.
Capital expenditures of the Joint Venture relate to the exploration and
development of the oil and gas fields. In 1997, the Company's share of the
Joint Venture expenditures is expected to total $52 million, including $6
million of exploration expenditures and $26 million of development
expenditures. The 1997 budgeted expenditures reflect continued development
activities to maintain gas deliverability and a seismic and exploration program
that provides for the drilling of several wells.
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 or customers, political
instability, currency exchange and repatriation losses, taxes, litigation, the
competitive environment and international 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, 1996 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.
-20-
<PAGE> 22
RESULTS OF OPERATIONS
1996 COMPARED TO 1995
Net earnings for the year ended December 31, 1996 were $51 million as
compared to $40 million for the year ended December 31, 1995. Net earnings for
1996 benefitted from increased oil and gas revenues, partially offset by higher
depletion and exploration costs. Cash flow from operations for the year ended
December 31, 1996 was $104 million as compared to $80 million for the year
ended December 31, 1995.
Revenues for the year ended December 31, 1996 were $253 million compared
to $202 million in the prior year. The increase in revenues was attributable to
increased prices received for LNG and crude oil sales in addition to increased
LNG volumes. The Joint Venture PSC's share of LNG volumes in 1996 increased 27
trillion BTUs to 413 trillion BTUs (140 net equivalent cargoes) as compared to
386 trillion BTUs (131 net equivalent cargoes) in 1995. The increase in LNG
volumes was due to higher contractual commitments during 1996. Crude oil and
condensate volumes (excluding domestic consumption) net to the Company in both
1996 and 1995 were 1.7 million barrels.
The average price received for LNG in 1996 increased $0.48 per million
BTUs to $3.15 per million BTUs as compared to $2.67 per million BTUs in 1995.
The average price received for crude oil increased $2.86 per barrel to $20.04
per barrel in 1996 as compared to $17.18 per barrel in 1995.
The table below summarizes the volumes and average prices for the
Company's share of PSC LNG sales as well as the Company's crude oil sales
(excluding domestic consumption) for the years ended December 31, 1996 and
1995:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Volumes
LNG (tbtus) 95.5 89.3
Oil & Condensate (mmbbls) 1.7 1.7
Prices
LNG ($/mmbtu) 3.15 2.67
Oil ($/bbl) 20.04 17.18
</TABLE>
Production costs of $24 million for 1996 decreased slightly as compared to
the prior year. Depletion, depreciation and amortization for 1996 was $47
million, an increase of $5 million, reflecting the record level of production
attained in 1996.
Exploration costs increased by $1 million in 1996 as compared to the prior
year due to an expanded seismic program. During 1996, the Company drilled no
exploration wells.
General and administrative expenses for 1996 decreased slightly from the
prior year.
The effective tax rates for 1996 and 1995 were 71 percent and 70 percent,
respectively. These rates were the aggregate of Indonesian source income taxed
at a 56 percent rate, and certain expenses
-21-
<PAGE> 23
attributable to the Company's activities which are not deductible in the
partnership for Indonesian tax purposes.
RESULTS OF OPERATIONS
1995 COMPARED TO 1994
Net earnings for the year ended December 31, 1995 were $40 million as
compared to $33 million for the year ended December 31, 1994. Included in the
1994 results was an extraordinary loss of $3 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 million as compared to $86 million for the year ended December
31, 1994.
Revenues for the year ended December 31, 1995 were $202 million compared
to $198 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 PSC'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 (excluding domestic
consumption) 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 $16.46 per barrel in 1994.
The table below summarizes the volumes and average prices for the
Company's share of PSC LNG sales as well as the Company's crude oil sales
(excluding domestic consumption) for the years ended December 31, 1995 and
1994:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Volumes
LNG (tbtus) 89.3 93.4
Oil and Condensate (mmbbls) 1.7 1.8
Prices
LNG ($/mmbtu) 2.67 2.52
Oil ($/bbl) 17.18 16.46
</TABLE>
Production costs for 1995 increased $5 million to $25 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 $42 million, a decrease of $9 million, reflecting the
lower levels of production and the year's effect of reserve additions which
occurred during the fourth quarter of 1994.
Exploration costs decreased by $3 million in 1995 as compared to the
prior year due to lower seismic costs and the absence of exploratory
-22-
<PAGE> 24
drilling. During 1995, the Company drilled no exploration wells, whereas two
exploration wells were drilled in 1994, including one discovery.
General and administrative expenses decreased slightly 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 the Company's activities which are
not deductible in the partnership for Indonesian tax purposes.
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.
-23-
<PAGE> 25
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
To The Partners of Unimar Company
We have audited the accompanying consolidated balance sheets of Unimar Company
and subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of earnings, cash flows, and partners' capital for the two years
ended December 31, 1996. 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, 1996 and 1995, and the consolidated
results of their operations and their cash flows for the two years ended
December 31, 1996, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
February 26, 1997
-24-
<PAGE> 26
REPORT OF INDEPENDENT AUDITORS
To The Partners of Unimar Company
We have audited the 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 the year then ended. The
consolidated balance sheet as of December 31, 1994 is not presented separately
herein. 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, 1994, and the consolidated results of
their operations and their cash flows for the year then ended, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Houston, Texas
February 24, 1995
-25-
<PAGE> 27
UNIMAR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,274 $ 4,882
Accounts receivable 13,943 7,415
Inventories 8,177 9,839
Other current assets 2,951 3,372
---------- ----------
Total current assets 28,345 25,508
Property, plant and equipment, at cost:
Oil and gas properties (successful efforts method) 1,070,819 1,049,708
Other 2,287 2,264
---------- ----------
1,073,106 1,051,972
Less: accumulated depreciation and depletion 720,976 673,543
---------- ----------
Net property, plant and equipment 352,130 378,429
Other assets 3,002 3,277
---------- ----------
$ 383,477 $ 407,214
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $ 1,043 $ 2,394
Advances from joint venture partners 1,234 2,777
Accrued liabilities 17,892 14,595
Income and other taxes 19,924 11,697
---------- ----------
Total current liabilities 40,093 31,463
Deferred income taxes 154,087 158,364
Other liabilitie 14,859 12,321
Partners' capital 254,438 285,066
Less: demand notes receivable 80,000 80,000
---------- ----------
174,438 205,066
---------- ----------
Commitments and Contingencies
$ 383,477 $ 407,214
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-26-
<PAGE> 28
UNIMAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Oil and gas production revenues $ 252,653 $ 202,019 $ 197,925
Production costs 24,404 24,749 19,623
Depletion, depreciation and amortization 47,156 41,717 50,554
Exploration costs including dry holes 1,045 102 2,787
--------- --------- ---------
Operating profit 180,048 135,451 124,961
General and administrative expenses 1,361 1,460 1,923
Interest expense 76 54 55
Interest income (305) (313) (274)
Other (income) expense (213) (172) 624
--------- --------- ---------
Earnings before income taxes and
extraordinary item 179,129 134,422 122,633
Income tax expense (benefit)
Current 131,992 98,883 90,661
Deferred (4,277) (4,602) (4,240)
--------- --------- ---------
127,715 94,281 86,421
--------- --------- ---------
Earnings before extraordinary item 51,414 40,141 36,212
Extraordinary loss on redemption of debt -- -- 3,108
--------- --------- ---------
Net earnings $ 51,414 $ 40,141 $ 33,104
========= ========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-27-
<PAGE> 29
UNIMAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net earnings $ 51,414 $ 40,141 $ 33,104
Adjustments to reconcile to net cash provided by operating activities:
Loss on extraordinary item -- -- 3,108
Depletion, depreciation and amortization 47,434 42,044 50,889
Deferred income taxes (4,277) (4,602) (4,240)
Exploratory dry hole costs -- (6) 2,635
Loss on sale of assets 2 -- 710
(Increase) Decrease in operating
receivables (6,528) (1,533) 5,722
(Increase) Decrease in inventories 1,662 2,628 (1,581)
Increase (Decrease) in operating payables
and accruals 2,604 (142) 5,482
Increase (Decrease) in other operating
assets and liabilities 11,461 1,890 (10,215)
--------- --------- ---------
Net cash provided by operating activities 103,772 80,420 85,614
--------- --------- ---------
Investment activities:
Capital expenditures (21,138) (26,307) (34,399)
Proceeds from sale of assets 1 -- 382
--------- --------- ---------
Net cash used in investing activities (21,137) (26,307) (34,017)
--------- --------- ---------
Financing activities:
Capital contributions 22,200 36,200 65,800
Capital distributions (104,900) (90,000) (83,900)
Debt repaid -- -- (36,400)
--------- --------- ---------
Net cash used in financing activities (82,700) (53,800) (54,500)
--------- --------- ---------
Increase (Decrease) in advances from joint
venture partners (1,543) 1,148 (1,960)
--------- --------- ---------
Net increase (decrease) in cash and
cash equivalents (1,608) 1,461 (4,863)
Cash and cash equivalents at beginning
of year 4,882 3,421 8,284
--------- --------- ---------
Cash and cash equivalents at end of year $ 3,274 $ 4,882 $ 3,421
========= ========= =========
Supplemental cash flow disclosure:
IPU distributions paid $ 23,713 $ 19,617 $ 18,539
========= ========= =========
Interest paid $ 70 $ 46 $ 331
========= ========= =========
Income taxes paid $ 123,764 $ 98,512 $ 94,174
========= ========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-28-
<PAGE> 30
UNIMAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
USTAR UNISTAR TOTAL
<S> <C> <C> <C>
Balance, January 1, 1994 $ 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
Contributions 11,100 11,100 22,200
Cash Distributions (52,450) (52,450) (104,900)
ENSTAR pension liability adjustment 329 329 658
Net earnings 25,707 25,707 51,414
--------- --------- ---------
Balance, December 31, 1996 $ 121,590 $ 132,848 $ 254,438
========= ========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-29-
<PAGE> 31
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 under 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
evaluation and exploratory experience. Costs to drill and
equip wells that
-30-
<PAGE> 32
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)
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.
-31-
<PAGE> 33
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 applies the asset and liability method 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. The effect on
deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the
enactment date.
(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, 1996 result principally
from sales of LNG, LPG and oil and are considered current and
collectible, and collateral is not required to secure such
receivables.
-32-
<PAGE> 34
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 1996, 1995 and 1994, LNG 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.
(h) Fair Value of Financial Instruments
The Company has various types of financial instruments
consisting of cash and cash equivalents, accounts receivable,
other current assets, accounts payable, advances from joint
venture partners 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
earnings.
(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, 1996 and 1995, cash and cash equivalents included $1,234
and $2,777, respectively, advanced from the other Joint Venture
partners.
-33-
<PAGE> 35
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
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 1996,
1995 and 1994. 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
was 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.
-34-
<PAGE> 36
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 six long-term
contracts that expire in 1999, 2003, 2009, 2013, 2014 and 2015,
respectively. Contracted sales of LNG to these customers approximated
75 percent, 73 percent, and 72 percent of the Company's gross revenues
in 1996, 1995 and 1994, respectively.
The Joint Venture's share in LNG volumes from the LNG plant is
expected to decline in 1997 by about 15 percent as compared to 1996
due to the phaseout of the original 1973 Sales Contract in which the
Joint Venture has a high participation interest.
(4) CASH AND CASH EQUIVALENTS
At December 31, 1996 and 1995, cash and cash equivalents included
short-term deposits and highly liquid debt instruments, purchased at a
maturity with three months or less, of $3,274 and $4,882,
respectively.
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Oil and gas properties $1,070,819 $1,049,708
Less: Accumulated depletion 719,285 672,130
---------- ----------
351,534 377,578
Other, net of accumulated
depreciation of $1,691 in
1996 and $1,413 in 1995 596 851
---------- ----------
$ 352,130 $ 378,429
========== ==========
</TABLE>
-35-
<PAGE> 37
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(6) ACCRUED LIABILITIES
As at December 31, 1996 and 1995, accrued liabilities consisted of:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Accrued IPU liability $ 8,641 $ 5,629
Indonesian operating accruals 8,976 7,937
Other 275 1,029
------- -------
$17,892 $14,595
======= =======
</TABLE>
(7) LEASES
The Operator's minimum future rental payments required by year under
operating leases that have initial or remaining noncancelable lease
terms in excess of one year are:
<TABLE>
<S> <C>
1997 $ 6,427
1998 4,355
1999 289
2000 261
Later years 22
-------
Total minimum payments required $11,354
=======
</TABLE>
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.
Rent expense, net of cost recovery, was $3,123, $2,269 and $4,553 in
1996, 1995 and 1994 respectively. The Company charges its
proportionate share of the Joint Venture's rent expense to operations
for all operating leases.
The above minimum future rental payments have not been reduced by
future minimum sublease rentals of $1,244 due under non-cancelable
subleases.
(8) INCOME AND OTHER TAXES
At December 31, 1996, the Company had investment tax credit carryovers
of $2,066 that expire in 1997 through 2001, net foreign tax credit
carryovers of $26,085 for regular tax purposes and $144,897 for
alternative minimum tax purposes both of which expire in 1997 through
2001.
-36-
<PAGE> 38
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(8) INCOME AND OTHER TAXES (continued)
The Company has a minimum tax credit of $21,800 that carries forward
indefinitely. Deferred tax assets of $26,085 and $32,324 for foreign
tax credit carryforwards and $2,066 and $3,207 for investment tax
credit carryforwards at December 31, 1996 and 1995, respectively, have
been offset by a valuation allowance.
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, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Deferred tax liabilities:
Oil and gas proven property costs
capitalized for financial purposes
and deducted for foreign tax purposes $154,087 $158,364
======== ========
</TABLE>
For financial reporting purposes, income before income taxes
includes the following components:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Pretax income/(loss):
U. S $ (1,403) $ (1,402) $ (2,423)
Foreign 180,532 135,824 125,056
--------- --------- ---------
$ 179,129 $ 134,422 $ 122,633
========= ========= =========
</TABLE>
Significant components of the provision for income taxes
attributable to continuing operations are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Current:
Federal $ 3,686 $ 3,050 $ 2,884
Foreign 128,306 95,833 87,777
--------- --------- ---------
131,992 98,883 90,661
--------- --------- ---------
Deferred:
Foreign (4,277) (4,602) (4,240)
--------- --------- ---------
$ 127,715 $ 94,281 $ 86,421
========= ========= =========
</TABLE>
-37-
<PAGE> 39
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 earnings before
extraordinary item computed at the U.S. federal statutory rates to
income tax expense is:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
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 12.8% 11.2% 11.0%
U.S. taxes related to
foreign operations 2.1% 2.3% 2.4%
Other 0.4% 0.6% 1.1%
------ ------ ------
Total 71.3% 70.1% 70.5%
====== ====== ======
</TABLE>
-38-
<PAGE> 40
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, 1996 and
1995, 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, 1996 of $4.50 per unit, the outstanding IPUs had a
total market valuation of $49 million.
-39-
<PAGE> 41
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
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Positive cash flow:
Gas receipts $236,472 $185,710
Oil and condensate receipts 36,406 32,386
Other non-revenue cash receipts from
Joint Venture 6,270 6,973
-------- --------
Total positive cash flow 279,148 225,069
-------- --------
Less negative cash flow:
Expenditures to Joint Venture 47,719 52,230
Indonesian income taxes 125,405 95,478
-------- --------
Total negative cash flow 173,124 147,708
-------- --------
Net positive cash flow from 23.125%
interest in Joint Venture $106,024 $ 77,361
======== ========
Net cash flow for benefit of IPU holders $ 25,976 $ 18,970
======== ========
Participation Payment per unit $ 2.41 $ 1.76
======== ========
</TABLE>
-40-
<PAGE> 42
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
In December of 1996, the VICO Board of Directors approved a plan to
consolidate the Balikpapan office into the Jakarta office and Badak
field office as a result of an ongoing business process reengineering
effort. The closing of the Balikpapan office will result in the
elimination of a number of positions and an anticipated reduction in
the number of employees. A voluntary early retirement program has been
offered to all qualifying national employees. The Company has included
an accrual of approximately $1 million, net of cost recovery, for its
share of this plan.
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, 1996, 1995 and 1994 was $191, $216 and $211,
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 $1.3 million, $2.0 million and $1.1 million for
the years ended December 31, 1996, 1995 and 1994 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, 1996, 1995 and 1994
respectively was as follows:
-41-
<PAGE> 43
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(11) BENEFIT PLANS (continued)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Actuarial present value of:
Vested accumulated benefit
obligation $(17,562) $(18,233) $(16,155)
======== ======== ========
Projected vested benefit
obligation $(17,562) $(18,233) $(16,155)
Fair value of plan assets 17,476 16,287 13,902
-------- -------- --------
Unfunded projected benefit
obligation (86) (1,946) (2,253)
Unrecognized net
(gain)loss (657) 767 1,243
Unrecognized net transition
obligation 768 803 837
Adjustment required to
recognize minimum
liability (111) (1,570) (2,080)
-------- -------- --------
Accrued pension cost
recognized in the
Consolidated Balance
Sheet $ (86) $ (1,946) $ (2,253)
======== ======== ========
</TABLE>
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 (income) expense for 1996, 1995 and 1994 was composed of
the following:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Interest cost $ 1,234 $ 1,318 $ 1,317
Actual return on plan assets (1,964) (3,623) (1,063)
Net amortization and deferral 715 2,595 35
------- ------- -------
$ (15) $ 290 $ 289
======= ======= =======
</TABLE>
-42-
<PAGE> 44
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, 7.25 percent and 8.5 percent for 1996,
1995 and 1994, respectively. The assumed long-term rate of return on
plan assets was 8 percent for 1996, 1995 and 1994. 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 $6.5 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 1996, 1995 and 1994, these charges
were $402, $455 and $434, respectively.
The Company holds demand notes in the amount of $40 million 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, 1996 and 1995, VICO billed P. T. Badak $25.1
million and $20.2 million respectively for services rendered.
Accounts receivable from P. T. Badak approximated $2.6 million and
$2.3 million at December 31, 1996 and 1995, respectively.
-43-
<PAGE> 45
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, 1996, 1995, 1994 and 1993 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 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
-44-
<PAGE> 46
(a) INDONESIAN OIL AND GAS OPERATIONS (continued)
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.
-45-
<PAGE> 47
(a) INDONESIAN OIL AND GAS OPERATIONS (continued)
TABLE 1
QUANTITIES OF OIL AND GAS RESERVES
(OIL IN THOUSANDS OF BBLS; GAS IN MMCF)
(UNAUDITED)
<TABLE>
<CAPTION>
OIL GAS
<S> <C> <C>
PROVED DEVELOPED AND UNDEVELOPED
RESERVES:
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
Revisions to previous estimates 1,425 (7,573)
Production (1,805) (95,958)
------ ---------
As of December 31, 1996 15,170 879,785
====== =========
PROVED DEVELOPED RESERVES:
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
====== =========
As of December 31, 1996 12,628 695,466
====== =========
</TABLE>
-46-
<PAGE> 48
(a) 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, 1996, 1995 AND 1994
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Exploration costs $ 1,045 $ 102 $ 2,545
Development costs 21,114 26,157 31,878
</TABLE>
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, 1996, 1995, AND 1994
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Revenues $252,653 $202,019 $197,925
Production costs 23,928 24,416 19,618
Exploration costs 1,045 102 2,787
Depreciation, depletion
and amortization 47,156 41,717 50,554
Income tax expense 124,210 94,311 86,357
-------- -------- --------
Results of operations for
producing activities (1) $ 56,314 $ 41,473 $ 38,609
======== ======== ========
</TABLE>
(1) Excludes corporate overhead and interest costs.
-47-
<PAGE> 49
(a) 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. The LNG crude oil basket prices used in Table 4 for 1996,
1995 and 1994 on a per barrel basis were $23.12, $18.16 and $16.17,
respectively. 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.
-48-
<PAGE> 50
(a) INDONESIAN OIL AND GAS OPERATIONS (continued)
TABLE 4
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS AND
CHANGES THEREIN RELATING TO PROVED OIL AND GAS RESERVES
AT DECEMBER 31, 1996, 1995 AND 1994
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Future cash inflows $ 3,095,956 $ 2,421,947 $ 2,372,316
Future production and
development costs (561,737) (489,767) (593,791)
Future income tax expenses (1,226,268) (948,669) (874,477)
----------- ----------- -----------
Future net cash flows 1,307,951 983,511 904,048
10% annual discount for estimated
timing of cash flows (668,376) (488,307) (442,377)
----------- ----------- -----------
Standardized measure of discounted
future net cash flows $ 639,575 $ 495,204 $ 461,671
=========== =========== ===========
</TABLE>
The following are the principal sources of changes in the standardized measure
of discounted future net cash flows for proved reserves during 1996, 1995 and
1994.
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<S> <C> <C> <C>
Standardized measure of discounted
future net cash flows at
beginning of period $ 495,204 $ 461,671 $ 379,751
Sales and transfers of oil and gas
produced, net of production costs (230,591) (180,507) (176,275)
Net changes in prices and
production costs 247,938 157,100 159,985
Development costs incurred
during the period 21,114 26,157 31,878
Revisions of previous
quantity estimates 130,797 (26,301) 67,590
Accretion of discount 90,528 86,109 71,775
Net change in income taxes (115,415) (29,025) (73,033)
--------- --------- ---------
Standardized measure of discounted
future net cAsh flows at end
of period $ 639,575 $ 495,204 $ 461,671
========= ========= =========
</TABLE>
Note: The standardized measure of discounted future net cash flows at December
31, 1996, 1995 and 1994 included $52,060, $54,805 and $59,571, respectively, in
future net cash flows attributable to IPU holders (See Footnote 9).
-49-
<PAGE> 51
(b) INTERIM FINANCIAL DATA (Unaudited)
The following table shows summary quarterly data for 1996, 1995 and
1994:
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
- ----------------------------------------------------------------------------------------
Revenues $68,596 $57,615 $62,693 $63,749
Operating profit $49,517 $40,861 $43,538 $46,132
Net earnings $17,461 $12,187 $11,462 $10,304
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
extraordinary item $ 9,818 $ 8,509 $10,088 $ 7,797
Net earnings $ 6,710 $ 8,509 $10,088 $ 7,797
</TABLE>
-50-
<PAGE> 52
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES.
None.
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 50) 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. beginning in December 1984.
JOHN A. HOGAN (age 43) was appointed to the Company's Management Board
in March 1996. Since February 1993, he has been Chief Operating Officer for
LASMO. In 1989, he was appointed Managing Director of LASMO North Sea. From
1981 to 1989, he served as Executive Vice President of US operations for LASMO.
LARRY D. KALMBACH (age 45) 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 time, 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.
WILLIAM M. KRIPS (age 57) was appointed to the Company's Management
Board in January 1987 and was appointed Chairman of the Management Board in May
1994. 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.
-51-
<PAGE> 53
ARTHUR W. PEABODY, JR. (age 53) was appointed to the Company's
Management Board in February 1992. He is also a Director of ENSTAR and certain
of its affiliates. 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 55) 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 following table reflects the beneficial ownership of 100 percent of the
partnership interests in the Company as of March 15, 1997:
-52-
<PAGE> 54
<TABLE>
<CAPTION>
Name and Address of Amount Beneficially
Title of Class Beneficial Owner Owned
- -------------- ------------------- -----
<S> <C> <C>
General Partnership LASMO plc 50%
Interest 100 Liverpool Street
London EC2M 2BB
England
<CAPTION>
Name and Address of Amount Beneficially
Title of Class Beneficial Owner Owned
- -------------- ---------------- -----
<S> <C> <C>
General Partnership Union Texas Petroleum 50%
Interest Holdings, Inc.
1330 Post Oak Boulevard
Houston, Texas 77252
</TABLE>
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 $402 and $455 was charged in 1996 and 1995, respectively,
including $56 ($147 in 1995) 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, 1996 and 1995, VICO billed P.T. Badak
$25.1 million and $20.2 million respectively for services rendered. Accounts
receivable from P.T. Badak approximated $2.6 million at December 31, 1996 ($2.3
million at December 31, 1995).
-53-
<PAGE> 55
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K.
(a) Financial Statements listed below are included as Part II, Item 8
hereof on the pages indicated:
Independent Auditors' Report 24
Report of Independent Auditors 25
Consolidated Balance Sheets,
December 31, 1996 and 1995 26
Consolidated Statements of Earnings,
Years ended December 31, 1996,
1995 and 1994 27
Consolidated Statements of Cash Flows,
Years ended December 31, 1996,
1995 and 1994 28
Consolidated Statements of Changes in
Partners' Capital, Years ended
December 31, 1996, 1995 and 1994 29
Notes to Consolidated Financial
Statements 30-43
Supplemental Financial Information
(unaudited) 44-50
All schedules are omitted as they are not applicable.
-54-
<PAGE> 56
(b) 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.
-55-
<PAGE> 57
(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. (filed as Exhibit (10)-58- to the
Company's 1991 Form 10-K (No. 1-8791)).*
(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)).*
(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)).*
* Incorporated herein by reference.
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<PAGE> 58
(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)).*
(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)).*
* Incorporated herein by reference.
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(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)).*
(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)).*
* Incorporated herein by reference.
-58-
<PAGE> 60
(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))*
(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)).*
* Incorporated herein by reference.
-59-
<PAGE> 61
(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)).*
(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)).*
* Incorporated herein by reference.
-60-
<PAGE> 62
(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)).*
(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)).*
* Incorporated herein by reference.
-61-
<PAGE> 63
(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)).*
(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)).*
* Incorporated herein by reference.
-62-
<PAGE> 64
(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)).*
(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)).*
* Incorporated herein by reference.
-63-
<PAGE> 65
(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)).*
(10)-52- Allocation of Supply Entitlements between the Arun and
Bontang Plants for LNG Sales (effective January 1, 1995).
(filed as Exhibit (10)-52- to the Company's 1995 Form 10-K
(No. 1-8791)).*
(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"). (filed as Exhibit
(10)-53- to the Company's 1995 Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.
-64-
<PAGE> 66
(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. (filed as Exhibit
(10)-55- to the Company's 1995 Form 10-K (No. 1-8791)).*
(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.
(filed as Exhibit (10)-56- to the Company's 1995 Form
10-K (No. 1-8791)).*
(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").
(filed as Exhibit(10)-57- to the Company's 1995 Form
10-K (No. 1-8791)).*
(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)).*
* Incorporated herein by reference.
-65-
<PAGE> 67
(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)).*
(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)).*
* Incorporated herein by reference.
-66-
<PAGE> 68
(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. (filed as Exhibit (10)-64-
to the Company's 1995 Form 10-K (No. 1-8791)).*
(10)-65- First Supply Agreement for Package V Excess Sales
(1998-1999 LNG Sales to Korea Gas Corporation under
Badak V), dated as of May 1, 1996, 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. (filed as Exhibit
10.2 to the Union Texas Petroleum Holdings, Inc. Form
10-Q for the quarter ended June 30, 1996 (Commission
File No. 1-9019)).*
(10)-66- Second Supply Agreement for Package V Excess Sales
(1998-1999 LNG Sales to Chinese Petroleum Corporation
under Badak VI), dated as of May 1, 1996, 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 (filed as Exhibit
10.3 to the Union Texas Petroleum Holdings, Inc. Form
10-Q for the quarter ended June 30, 1996 (Commission
File No. 1-9019)).*
(10)-67- Package VI Supply Agreement for Natural Gas in Support
of 2000-2017 LNG Sales to Korea Gas Corporation under
Badak V, dated as of May 1, 1996, between Pertamina and
Virginia Indonesia Company, Lasmo Sanga Sanga Limited,
Opicoil Houston, Inc., Union Texas Est Kalimantan
Limited, Universe Gas & Oil Company, Inc. and Virginia
International Company (filed as Exhibit 10.4 to the
Union Texas Petroleum Holdings, Inc. Form 10-Q for the
quarter ended June 30, 1996 (Commission File No. 1-9019)).*
* Incorporated herein by reference.
-67-
<PAGE> 69
(10)-68- Package VI Supply Agreement for Natural Gas in Support
of 2000-2017 LNG Sales to Chinese Petroleum Corporation
under Badak VI, dated as of May 1, 1996, 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 (filed as Exhibit
10.5 to the Union Texas Petroleum Holdings, Inc. Form
10-Q for the quarter ended June 30, 1996 (Commission
File No. 1-9019)).*
(10)-69- First Supply Agreement for Package VI Excess Sales
(2003-2008 LNG Sales under the Second Amended and
Restated 1981 Badak Sales Contract), dated as of May 1,
1996, 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 (filed
as Exhibit 10.6 to the Union Texas Petroleum Holdings,
Inc. Form 10-Q for the quarter ended June 30, 1996
(Commission File No. 1-9019)).*
(10)-70- Memorandum of Agreement for Purchase and Sale of LNG
During 1996 - 1999 between Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara ("Pertamina") ("Seller")
and Korea Gas Corporation ("Kogas") ("Buyer") for the
sale and purchase of certain quantities of LNG.
(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, 1996.
(c) Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of the
fiscal year ended December 31, 1996.
* Incorporated herein by reference.
-68-
<PAGE> 70
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 21, 1997 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 21, 1997.
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/ JOHN A. HOGAN By /S/ WILLIAM M. KRIPS
-------------------------- --------------------
John A. Hogan 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)
-69-
<PAGE> 71
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
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.
<S> <C> <C>
(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).*
</TABLE>
* Incorporated herein by reference.
-70-
<PAGE> 72
(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. (filed as Exhibit (10)-58- to the
Company's 1991 Form 10-K (No. 1-8791)).*
(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.
-71-
<PAGE> 73
(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.
-72-
<PAGE> 74
(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.
-73-
<PAGE> 75
(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)).*
(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)).*
* Incorporated herein by reference.
-74-
<PAGE> 76
(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)).*
(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)).*
* Incorporated herein by reference.
-75-
<PAGE> 77
(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)).*
(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)).*
* Incorporated herein by reference.
-76-
<PAGE> 78
(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)).*
(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)).*
* Incorporated herein by reference.
-77-
<PAGE> 79
(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)).*
(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)).*
* Incorporated herein by reference.
-78-
<PAGE> 80
(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)).*
(10)-52- Allocation of Supply Entitlements between the Arun and
Bontang Plants for LNG Sales (effective January 1,
1995). (filed as Exhibit (10)-52- to the Company's
1995 Form 10-K (No. 1-8791)).*
(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"). (filed as Exhibit
(10)-53- to the Company's 1995 Form 10-K (No. 1-
8791)).*
* Incorporated herein by reference.
-79-
<PAGE> 81
(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. (filed as Exhibit
(10)-55- to the Company's 1995 Form 10-K (No. 1-
8791)).*
(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.
(filed as Exhibit (10)-56- to the Company's 1995 Form
10-K (No. 1-8791)).*
(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").
(filed as Exhibit(10)-57- to the Company's 1995 Form
10-K (No. 1-8791)).*
(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)).*
* Incorporated herein by reference.
-80-
<PAGE> 82
(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)).*
(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)).*
* Incorporated herein by reference.
-81-
<PAGE> 83
(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. (filed
as Exhibit (10)-64- to the Company's 1995 Form 10-K (No. 1-8791)).*
(10)-65- First Supply Agreement for Package V Excess Sales (1998-1999 LNG Sales
to Korea Gas Corporation under Badak V), dated as of May 1, 1996,
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.
(filed as Exhibit 10.2 to the Union Texas Petroleum Holdings, Inc.
Form 10-Q for the quarter ended June 30, 1996 (Commission File No.
1-9019)).*
(10)-66- Second Supply Agreement for Package V Excess Sales (1998-1999 LNG
Sales to Chinese Petroleum Corporation under Badak VI), dated as of
May 1, 1996, 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 (filed as Exhibit 10.3 to the Union Texas
Petroleum Holdings, Inc. Form 10-Q for the quarter ended June 30, 1996
(Commission File No. 1-9019)).*
(10)-67- Package VI Supply Agreement for Natural Gas in Support of 2000-2017
LNG Sales to Korea Gas Corporation under Badak V, dated as of May 1,
1996, between Pertamina and Virginia Indonesia Company, Lasmo Sanga
Sanga Limited, Opicoil Houston, Inc., Union Texas Est Kalimantan
Limited, Universe Gas & Oil Company, Inc. and Virginia International
Company (filed as Exhibit 10.4 to the Union Texas Petroleum Holdings,
Inc. Form 10-Q for the quarter ended June 30, 1996 (Commission File
No. 1- 9019)).*
* Incorporated herein by reference.
-82-
<PAGE> 84
(10)-68- Package VI Supply Agreement for Natural Gas in Support of 2000-2017
LNG Sales to Chinese Petroleum Corporation under Badak VI, dated as of
May 1, 1996, 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 (filed as Exhibit 10.5 to the Union Texas
Petroleum Holdings, Inc. Form 10-Q for the quarter ended June 30, 1996
(Commission File No. 1-9019)).*
(10)-69- First Supply Agreement for Package VI Excess Sales (2003-2008 LNG
Sales under the Second Amended and Restated 1981 Badak Sales
Contract), dated as of May 1, 1996, between Pertamina and Virginia
Indonesia Company, Lasmo Sangga Sanga Limited, Opicoil Houston, Inc.,
Union Texas East Kalimantan Limited, Universe Gas & Oil Company, Inc.
and Virginia International Company (filed as Exhibit 10.6 to the Union
Texas Petroleum Holdings, Inc. Form 10-Q for the quarter ended June
30, 1996 (Commission File No. 1-9019)).*
(10)-70- Memorandum of Agreement for Purchase and Sale of LNG During 1996 -
1999 between Perusahaan Pertambangan Minyak Dan Gas Bumi Negara
("Pertamina") ("Seller") and Korea Gas Corporation ("Kogas") ("Buyer")
for the sale and purchase of certain quantities of LNG.
(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, 1996.
* Incorporated herein by reference.
-83-
<PAGE> 1
EXHIBIT (10)-70-
MEMORANDUM OF AGREEMENT
BETWEEN
PERTAMINA
AND
KOREA GAS CORPORATION
FOR
THE PURCHASE AND SALE OF LNG
DURING 1996 - 1999
MEMORANDUM OF AGREEMENT
FOR
THE PURCHASE AND SALE OF LNG DURING 1996 - 1999
This Memorandum of Agreement ("Agreement") dated July 19, 1996 is made by and
between PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA ("PERTAMINA")
("Seller") and Korea Gas Corporation ("KOGAS") ("Buyer"), for the sale and
purchase of certain quantities of LNG as described below. Seller and Buyer are
collectively referred to herein as the "Parties".
WHEREAS, Seller and Buyer are parties to an Amended and Restated LNG Sales and
Purchase Contract, effective as of January 1, 1991 ("Arun III Contract") which
is in full force and effect and which is unaffected by this Agreement;
<PAGE> 2
WHEREAS, Seller and Buyer are parties to the LNG Sales and Purchase Contract
effective as of May 7, 1991 ("Korea II Contract") which is in full force and
effect and which is unaffected by this Agreement; and
WHEREAS, Seller desire to sell and Buyer desires to purchase certain quantities
of LNG during the period 1996 to 1999 inclusive.
NOW THEREFORE, in consideration of the mutual promises contained herein, the
Parties agree as follows:
ARTICLE I - TERM
The effectiveness of this Agreement shall be as of the date hereof and the term
of this Agreement shall commence on September 1, 1996 and shall terminate when
the respective rights and obligations of the parties hereunder have been
extinguished.
ARTICLE II - FIXED QUANTITIES
During each calendar year specified below ("Fixed Quantity Period"), Seller
shall sell and deliver to Buyer and Buyer shall purchase, receive and pay for
at the applicable Contract Sales Price, the quantity of LNG specified for such
Fixed Quantity Period (each such quantity being called a "Fixed Quantities") as
follows:
<TABLE>
<CAPTION>
Fixed Quantity Period Fixed Quantities (Number of Cargoes)
- --------------------- ------------------------------------
Ex-ship FOB TOTAL
------- --- -----
<S> <C> <C> <C>
1996 - 3 3
1997 2 20 22
1998 2 20 22
1999 3 20 23
</TABLE>
One Ex-Ship cargo is equivalent to 2,900 Billion BTUs.
One FOB cargo is equivalent to 2,940 Billion BTUs.
<PAGE> 3
ARTICLE III - TRANSPORTATION
(a) Seller shall be responsible for providing transportation for the Ex-ship
Fixed Quantities, and Buyer shall be responsible for providing
transportation for the FOB Fixed Quantities, specified in Article II
above.
(b) In providing transportation hereunder, the Parties shall use LNG Tankers
which are compatible with the Loading Port and the Receiving Facility
and which have the required port clearances, authorizations and
approvals. The Parties shall use their respective best efforts to
obtain such clearances, authorizations and approvals.
ARTICLE IV - CONTRACT SALES PRICES
(a) Ex-Ship Fixed Quantities
The Contract Sales Price for the Ex-Ship Fixed Quantities shall be the
sum of an LNG related portion ("LNG Related Portion") and a transport
related portion ("Transport Related Portion").
The LNG Related Portion shall be 0.159 REP, where REP is the arithmetic
average of the realized export prices, in U.S. Dollars per barrel,
F.O.B. Indonesia, of all field classifications of Indonesian crude oils
(including condensate) then being sold and exported, except premiums and
except such prices for spot sales.
The Transport Related Portion shall be U.S.$0.62/MMBTU as at January 1,
1994, escalating 2.5% per annum thereafter.
(b) F.O.B. Fixed Quantities
The Contract Sales Price for the F.O.B. Fixed Quantities shall be equal
to the LNG Related Portion for the Ex-Ship Quantities referred to in (a)
above, multiplied by a boil-off adjustment factor of 0.9870.
<PAGE> 4
ARTICLE V - SOURCE OF SUPPLY
The Natural Gas to be processed into LNG and sold and delivered hereunder is to
be produced from the areas in East Kalimantan covered by production sharing
contracts between PERTAMINA and its relevant suppliers, and loaded at
PERTAMINA's facility at Bontang, East Kalimantan and Gas Supply Area shall be
construed accordingly.
ARTICLE VI - GENERAL TERMS AND CONDITIONS
(a) Ex-ship Fixed Quantities
All of the terms and conditions of the Arun III Contract shall apply to
the Ex-ship Fixed Quantities and shall be incorporated in this Agreement
(mutatis mutandis) except for terms which are specifically excluded
below, or which conflict with the terms herein. Capitalized terms used
herein in connection with the Ex-ship Fixed Quantities shall have the
same meaning as set forth in the Arun III Contract unless otherwise
specifically defined or construed herein.
The following Articles of the Arun III Contract are hereby expressly
excluded from this Agreement:
7.1 Fixed Quantity (save that each of the calendar years 1996 - 1999
shall be referred to as a "Fixed Quantity Period" and the
quantity of LNG set out for delivery hereunder in each such
calendar year shall be referred to as the "Fixed Quantity" for
such Fixed Quantity Period);
7.3 Buyer's Obligation to Take-or-Pay;
7.4 Allocation of Deliveries of Fixed Quantities Between Buyer and
Other Purchasers;
7.6 Make-Up LNG;
7.7 Allocation for Make-Good LNG, Make-Up LNG and Restoration
Quantities; and
7.8 Priority Order.
<PAGE> 5
(b) F.O.B. Fixed Quantities
All of the terms and conditions of Korea II Contract shall apply to the
FOB Fixed Quantity and shall be incorporated in this Agreement (mutatis
mutandis) except for terms which are specifically excluded below, or
which conflict with the terms herein. Capitalized terms used herein in
connection with the FOB Fixed Quantity shall have the same meaning as
set forth in Korea II Contract unless otherwise specifically defined or
construed herein.
The following Articles of Korea II Contract are hereby expressly
excluded from this Agreement.
7.1 Fixed Quantity (save that each of the calendar years 1996-1999
shall be referred to as a "Fixed Quantity Period" and the
quantity of LNG set out for delivery hereunder in each such
calendar year shall be referred to as the "Fixed Quantity" for
such Fixed Quantity Period);
7.3 Buyer's Obligation to Take-or-Pay;
7.4 Allocation of Deliveries of Fixed Quantities between Buyer and
Other Purchasers;
7.5 Make-Up LNG;
7.7 Allocation for Make-Up LNG and Restoration Quantities; and 7.8
Priority Order.
ARTICLE VII - DELIVERIES
The Parties refer to their common understanding regarding deliveries of the
Fixed Quantities hereunder as set out in paragraph 1 of the Minutes of Meeting
between them dated 22-23 May, 1996. The Parties shall have their respective
representatives regularly consult to seek to apply this understanding in
practice.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed by its duly authorized officer as of the day and year first above
written.
<PAGE> 6
<TABLE>
<S> <C>
BUYER: SELLER :
- ------ --------
KOREA GAS CORPORATION PERUSAHAAN PERTAMBANGAN MINYAK
(KOGAS) DAN GAS BUMI NEGARA (PERTAMINA)
/s/ /s/
- ---------------------------- ------------------------------------
By:Han, Kap-Soo By:F. Abda'oe
Title:President Title:President Director
& C.E.O. & C.E.O.
</TABLE>
<PAGE> 1
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.
<TABLE>
<CAPTION>
State of
Incorporation
-------------
<S> <C>
Unimar Company (a General Partnership under The
Texas Uniform Partnership Act)
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
ENSTAR Petroleum Ltd. Canada
</TABLE>
<PAGE> 1
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 26, 1997, relating to the
consolidated balance sheets of Unimar Company and subsidiaries as of December
31, 1996 and 1995 and the related consolidated statements of earnings, cash
flows and changes in partners' capital for each of the years in the two year
period ended December 31, 1996 and 1995, which report appears in the December
31, 1996 annual report on Form 10-K of Unimar Company.
KPMG Peat Marwick LLP
Houston, Texas
March 21, 1997
<PAGE> 1
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, 1996.
ERNST & YOUNG LLP
Houston, Texas
March 21, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,274
<SECURITIES> 0
<RECEIVABLES> 13,943
<ALLOWANCES> 0
<INVENTORY> 8,177
<CURRENT-ASSETS> 28,345
<PP&E> 1,073,106
<DEPRECIATION> 720,976
<TOTAL-ASSETS> 383,477
<CURRENT-LIABILITIES> 40,093
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 383,477
<SALES> 252,653
<TOTAL-REVENUES> 252,653
<CGS> 71,560
<TOTAL-COSTS> 72,605
<OTHER-EXPENSES> 1,361
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 76
<INCOME-PRETAX> 179,129
<INCOME-TAX> 127,715
<INCOME-CONTINUING> 51,414
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 51,414
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
