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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 1998
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.)
1000 LOUISIANA, SUITE 1300, HOUSTON, TEXAS 77002
(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 Atlantic
Richfield Company and LASMO plc.
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PART I
ITEM 1. BUSINESS
----------------
GENERAL
Unimar Company (the Company) was organized as a general partnership in 1984
under the Texas Uniform Partnership Act. Its partners are:
- Unistar, Inc. (Unistar), a Delaware corporation and a direct
subsidiary of Union Texas Petroleum Holdings, Inc. (UTPH). On
June 29, 1998, UTPH became a wholly owned subsidiary of Atlantic
Richfield Company (ARCO), also a Delaware corporation, and
- LASMO Oil & Gas, Inc. (LOGI), a Delaware corporation and an indirect
wholly owned subsidiary of LASMO plc (LASMO), a public limited company
organized under the laws of England. LASMO (Ustar), Inc., the previous
LASMO partner, was merged into LOGI on September 14, 1998.
On September 25, 1984, the Company issued Indonesian Participating Units
(IPUs) as part of the acquisition of ENSTAR Corporation (Enstar). The IPUs were
issued with a 15-year life and will expire on September 25, 1999 at no value.
Each IPU entitles the holder to participate in a specified percentage of the
Company's Net Cash Flow on a quarterly basis until September 25, 1999 when the
IPUs will expire. The IPUs are currently traded on the American Stock Exchange
under the symbol UMR and will be delisted in connection with their expiration.
See "The Company's Indonesian Participating Units" below. The Company
anticipates that it will not continue as a reporting company under the
Securities Exchange Act of 1934 after the expiration of the IPUs.
The Company's sole business is its ownership of Enstar. Through Enstar's
wholly owned subsidiaries, Virginia International Company (VIC) and Virginia
Indonesia Company (VICO), the Company has a 23.125 percent working interest in,
and is the operator of, a joint venture (Joint Venture) for the exploration,
development and production of oil and natural gas (gas) in East Kalimantan,
Indonesia, under a Production Sharing Contract (PSC) with Perusahaan
Pertambangan Minyak dan Gas Bumi Negara (PERTAMINA), the state petroleum
enterprise of the Republic of Indonesia. The majority of the revenue from this
Joint Venture is 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 1000 Louisiana,
Suite 1300, Houston, Texas 77002 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, 1998, VICO, in its capacity as the Joint Venture operator, had
approximately 1,600 employees in the United States (U.S.) and Indonesia. The
Company does not have any other employees. All aspects of the Company's
business that are not associated with the operatorship of the Joint Venture
such as legal, accounting, tax, and other management functions are supplied
either by VICO or employees of the partners in accordance with management and
service agreements.
In September 1998, VICO's U.S.-based position of Chief Executive Officer
(CEO) and the Jakarta-based position of President were consolidated into the
position of President and CEO, stationed in Jakarta. With the transfer of
executive management oversight to Jakarta, the VICO Board of Directors has
approved a plan to close the VICO U.S.-based office by September 30, 1999. The
functions currently provided by the 50 employees of VICO's U.S. office will be
transferred to the Jakarta office, to a parent company, outsourced or
eliminated.
The Company can give no assurance to the future trend of its business and
earnings or 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. 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, currency exchange and repatriation losses, taxes,
litigation, the competitive environment, and international economic and
political developments such as the Asian economic crisis and 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".
THE COMPANY'S INDONESIAN PARTICIPATING UNITS
On September 25, 1984, as part of the acquisition of Enstar, the Company
issued one IPU for each outstanding share of Enstar common stock and seven IPUs
for each outstanding share of Enstar Convertible Preferred Stock, Series A. The
IPUs were issued with a 15-year life and will expire on September 25, 1999 at no
value. The Indenture between the Company and Bank of New York (formerly Irving
Trust Company) as trustee dated September 25, 1984 sets forth the terms of the
IPUs and the actions to be taken by the Company and the trustee with respect to
the IPUs. See the discussion below for more information on the effects of the
expiration of the IPUs and the delisting of the IPUs upon their expiration.
Each IPU entitles the holder of record to receive a quarterly payment
(Participation Payment) of a percentage of the Company's Net Cash Flow (as
defined in the Indenture and described below). The Participation Payment for
any quarterly period is equal to the product of:
(a)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 each
quarterly period, multiplied by
(b)the amount by which cumulative Net Cash Flow (as described below) through
the end of each 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:
(a)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 14,077,747, multiplied by
(b)32 percent of
(i)all cash actually received in the U.S. by VIC and VICO (for purposes
hereof, the Special Subsidiaries) during each quarterly period from their
aggregate 23.125 percent interest in the Joint Venture (or actually
received by them outside the U.S. if they voluntarily elect not to
repatriate such cash), minus
(ii) 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.
Due to the expiration of the IPUs on September 25, 1999, there are only
three remaining quarterly periods with respect to which holders of IPUs will be
entitled to Participation Payments on the IPUs. The Indenture provides that the
last quarterly period runs from July 1, 1999 through September 25, 1999, the
expiration date of the IPUs. With respect to the last quarterly period, Net
Cash Flow will be calculated for the month of September 1999 and that amount
will be prorated for the 25 days of September included in the last quarterly
period by multiplying the per day net Cash Flow based on the 30 days in
September by the 25 days in the quarterly period. This method of calculating
Net Cash Flow with respect to the last quarterly period is required by the
Indenture.
As a general rule, the Participation Payments for any quarterly period are
paid 60 days in arrears to holders of record 45 days after the last day of the
quarterly period. However, the Indenture provides that the record date for the
last quarterly period will be the expiration date. Since September 25, 1999 is
a Saturday, the record date for the last quarterly period will be the preceding
business day, Friday, September 24, 1999. The Participation Payment for the
last quarterly period will be paid 60 days following the expiration date, which
is Wednesday, November 24, 1999.
As discussed above, the following dates apply to the last three Participation
Payments:
<TABLE>
<CAPTION>
Quarterly Period Record Date Payment Date
----------------- ----------- ------------
<S> <C> <C>
Jan. 1 - Mar. 31, 1999 May 14, 1999 May 31, 1999
Apr. 1 - Jun. 30, 1999 Aug. 13, 1999 Aug. 30, 1999
Jul. 1 - Sep. 25, 1999 Sep. 24, 1999 Nov. 24, 1999
</TABLE>
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.
Notwithstanding the foregoing, any remaining Participation Payment will be made
with respect to the final quarterly period, whether or not the Participation
Payment is less than $0.01 per IPU.
(A) MARKET INFORMATION
The Company's IPUs are listed for trading on the American Stock Exchange
under the symbol UMR. The IPUs will be delisted by the American Stock Exchange
in connection with their expiration. The reported high and low sales prices of
the IPUs for the last two years on a quarterly basis were:
INDONESIAN PARTICIPATING UNIT PRICE RANGES
(U. S. DOLLARS)
<TABLE>
<CAPTION>
1ST QTR 2ND QTR 3RD QTR 4TH QTR
------- ------- ------- -------
<S> <C> <C> <C>
1998
----
High 2-5/16 2-1/8 1-5/8 1-1/8
Low 1-9/16 1-7/16 5/8 9/16
</TABLE>
<TABLE>
<CAPTION>
1ST QTR 2ND QTR 3RD QTR 4TH QTR
------- ------- ------- -------
<S> <C> <C> <C>
1997
----
High 5-5/16 5-1/4 5-1/8 4-13/16
Low 4-3/8 4-7/16 4-1/2 1-3/4
</TABLE>
Source of prices: American Stock Exchange
(B) HOLDERS
As of February 12, 1999, 10,778,590 IPUs were outstanding and held by 3,157
holders of record.
(C) PAYMENTS PER INDONESIAN PARTICIPATING UNIT
<TABLE>
<CAPTION>
U. S. DOLLAR
1998 PERIOD PAYMENT DATE PAYMENT
---------- ----------- ------
<S> <C> <C>
First Quarter June 1, 1998 0.44
Second Quarter August 31, 1998 0.19
Third Quarter November 30, 1998 0.32
Fourth Quarter March 1, 1999 0.29
</TABLE>
<TABLE>
<CAPTION>
U. S. Dollar
1997 Period Payment Date Payment
----------- ----------- ------
<S> <C> <C>
First Quarter May 30, 1997 0.69
Second Quarter August 29, 1997 0.49
Third Quarter December 1, 1997 0.32
Fourth Quarter March 2, 1998 0.41
</TABLE>
BUSINESS
THE JOINT VENTURE
The Joint Venture participants are VIC (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 ARCO) (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 one million acre area in East
Kalimantan (East Kalimantan Contract Area). In accordance with the requirements
of the PSC, in each of the years 1991, 1994 and 1998, 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 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 being produced.
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, excluding cost recovery,
through August 7, 1998 was 35 percent to the Joint Venture after Indonesian
income taxes and 65 percent to PERTAMINA. The split after August 7, 1998 is 25
percent to the Joint Venture after Indonesian income taxes and 75 percent to
PERTAMINA for gas sales under the 1981 LNG Sales Contract and extensions, Korean
carryover quantities and the 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 a portion of the three year extension
(August 8, 1998 - 1999) and 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 and LPG
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, excluding cost recovery, through August 7, 2018 will be 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 one-fourth of its equity
share of 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 (bbl) 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) for that field. In 1997,
the Joint Venture received new field incentive status for its Beras field
following the completion of a pipeline between the Mutiara and Nilam fields.
These incentives included a sixty-month domestic obligation holiday beginning in
1998 for the production from Beras in excess of 9,000 barrels of oil per day
from the total production of the Mutiara, Pamaguan and Beras fields. The
participants' remaining oil and condensate production is generally sold in
world markets.
THE JOINT VENTURE HAS NO OWNERSHIP INTEREST IN THE OIL AND GAS RESERVES.
The Joint Venture has long-term supply agreements with PERTAMINA for the supply
of gas and petroleum gas to be liquefied at a liquefaction plant owned by
PERTAMINA at Bontang Bay (the LNG Plant) and sold to certain buyers pursuant to
sales contracts. The Joint Venture, other participating production sharing
contractors and PERTAMINA together market the LNG and the LPG produced at the
LNG Plant and LPG facilities and, as to the amounts allocable to the PSC, the
Joint Venture and PERTAMINA divide the net proceeds in accordance with the
percentages set out above.
Payment for LNG and LPG is made in U.S. Dollars to a U.S. bank as trustee
for PERTAMINA, the Joint Venture, other participating production sharing
contractors and lenders that have provided funds to build the LNG Plant and the
LPG facilities. The LNG Plant's processing costs, principal and interest
payable on borrowings from such lenders, transportation costs, and certain other
miscellaneous costs are deducted from the gross LNG and LPG sales proceeds. The
remaining amount represents the net proceeds for gas delivered to the LNG Plant
and is divided among PERTAMINA, the Joint Venture, and the other production
sharing contractors in accordance with the terms of their respective agreements.
EXPLORATION AND DEVELOPMENT
From inception in 1972 up to and including December 31, 1998, 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 189 179 7 3
Nilam 180 180 - -
Semberah 63 57 4 2
Mutiara 61 53 7 1
Beras 2 2 - -
Pamaguan 32 26 6 -
Wailawi 6 6 - -
Other 47 6 32 9
--- ----- -- --
Totals 580 509 56 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 100 percent working interest in the Semberah and Mutiara fields,
and VICO acts as operator for these fields as well. The Joint Venture is also
producing from other fields in the East Kalimantan Contract Area including
Beras, Pamaguan, and Wailawi. The Beras field, which is located within the
southern area of the Mutiara field, was granted new field designation as an oil
field in early 1997.
The following table summarizes completed development drilling for the last
three years in the East Kalimantan Contract Area.
DEVELOPMENT OR FIELD EXTENSION DRILLING
<TABLE>
<CAPTION>
COMPLETED
WELLS FOR FOR FOR DUAL
YEAR DRILLED GAS OIL OIL & GAS
---- ------- --- --- ---------
<S> <C> <C> <C> <C>
1996 6 2 2 2
1997 7 - 2 5
1998 9 4 3 2
</TABLE>
Of 509 completed wells in the East Kalimantan Contract Area, approximately
292 contain more than one completion in the same borehole. There were no wells
in progress at December 31, 1998 nor were there any exploratory wells drilled
during the year.
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 last three years.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
<S> <C> <C>
1998 1997 1996
---- ---- ----
Gross LNG Sales (mmcf) (a) 776,426 716,734 710,988
Company's Share of PSC LNG Sales
(mmcf) 62,134 70,540 86,254
Company 's Sales Price per mcf
(b) $2.51 $3.45 $3.49
Company's Share of PSC
Production Cost per mcf $0.13 $0.18 $0.14
</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 (bbtus) per 1 mmcf of gas. Gross LNG Sales
includes production attributable to UNOCAL Indonesia Company, the Total
Group and PERTAMINA. The term "mmcf" refers to 1,000,000 cubic feet of gas
measured at 60 degrees Fahrenheit and 14.7 pounds per square inch of
pressure.
(b)The sales price is based on the average sales price (excluding
transportation) per mmbtu of LNG received by PERTAMINA. The term "mmbtu"
refers to 1,000,000 British Thermal Units. The sales price per mmbtu has
been converted to a price per mcf based on the conversion ratio referred to
in note (a) above. The term "mcf" refers to 1,000 cubic feet of gas
measured at 60 degrees Fahrenheit and 14.7 pounds per square inch of
pressure.
The Company's production costs are small in relation to its revenues
because the Joint Venture's revenues under the LNG contracts are net of costs
associated with transporting and converting the gas to LNG and shipping the LNG
to the purchasers. Costs incurred to operate and maintain wells and related
equipment and field facilities are considered to be production costs.
During 1998, the Company's share of the Joint Venture's expenditures was
approximately $46 million, comprised of $27 million of development expenditures,
$16 million of operating costs, $1 million of exploration expenditures, and $2
million of working capital. In 1999, the Company's share of the Joint Venture's
expenditures is expected to total $60 million. The 1999 budgeted expenditures
reflect continued development activities in all fields to maintain gas
deliverability and to continue the 3-D seismic program primarily in the Badak
field.
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 for the last four years attributable to the Joint Venture's interest
in the PSC in the East Kalimantan Contract Area were prepared by petroleum
engineers employed by LASMO, an affiliate of LOGI. Gross proved field reserves
were:
<TABLE>
<CAPTION>
CRUDE OIL AND
CONDENSATE GAS
(000's bbls) (Dry mmcfs)
------------ -----------
<S> <C>
December 31, 1995 196,892 6,636,127
December 31, 1996 217,392 6,118,180
December 31, 1997 228,342 5,818,935
December 31, 1998 211,017 5,488,140*
</TABLE>
* equivalent to approximately 6,075 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 PSC 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 seven processing units (trains) having a combined
input capacity of approximately 3.15 billion cubic feet of gas per operating
day. The peak daily production capacity consists of 742,200 barrels or 118,000
cubic meters of LNG, 32,000 barrels of LPG and 30,000 barrels of condensate.
The five LNG storage tanks at the LNG Plant have a total capacity of 3.3 million
barrels.
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 seven-train plant is one of the largest
LNG manufacturing facilities in the world and has the capacity to deliver 324
LNG cargoes per year. Since the first shipment in 1977, the LNG Plant has
delivered 3,395 LNG cargoes. During 1999, the fourth gas-supply pipeline and
the eighth processing train will be commissioned. These new facilities will
increase the overall plant capacity to approximately 383 LNG cargoes per year.
The LNG Plant has been developed in five phases. The original facility,
which consisted of two trains (Trains A and B) and a dock, became fully
operational in August 1977. This facility 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. 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.
The fifth processing train (Train E) was completed in 1989 and supplies LNG
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 is made up of two tranches. Tranche A totals $176.4 million at a
fixed interest rate of 11.5 percent, and Tranche B totals $117.6 million at an
interest rate of LIBOR (London Interbank Offered Rate) plus 1 percent. The
financing is repayable in graduated quarterly payments over ten years and began
in the fourth quarter of 1990.
The sixth processing train (Train F) was completed in 1993 and supplies the
LNG for the Train F 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 for the construction of Train F and related
support facilities. Financial support for the financing is limited to revenues
from the Train F sales contract. The financing is repayable over ten years in
graduated quarterly payments and began 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.
The seventh processing train (Train G) was completed in November 1997 and
supplies the LNG for the Korea and Taiwan Medium-Term LNG Sales Contracts and
the eleven-year extension (2000-2010) to the 1973 LNG Sales Contract. In July
1995, a $969.5 million financing was completed for Train G, a 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
Trains E and F. The interest rate is LIBOR plus 1.125 percent through 1999 and
LIBOR plus 0.875 percent from 2000 to 2008. Repayment began in the fourth
quarter of 1998 and will be principally from the 1998 and 1999 proceeds of the
medium-term LNG sales contracts with CPC and Korea Gas Corporation (KGC) and,
starting in 2000, from proceeds of the eleven-year extension to the 1973 LNG
Sales Contract.
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, another debottlenecking project for
Trains A through F, and other support facilities. The financing was provided
primarily by Taiwanese and Japanese sources through arrangements similar to
those used to finance the LNG Plant's Trains E, F and G. An amount of $702
million has been borrowed against this facility through December 31, 1998.
Repayment is to begin the earlier of (a) either (i) the date nine months after
completion or (ii) September 19, 2000, at the option of the Borrower, or (b)
January 19, 2001. Construction commenced in mid-1997 with completion
anticipated by November of 1999. Revenues from the Badak V Sales Contract with
KGC and the Badak VI Sales Contract with CPC will be the primary sources of
repayment for this financing.
Financings for Trains E through H are non-recourse to both PERTAMINA and
the Joint Venture.
The LPG processing facilities on Trains A through D at the LNG Plant were
constructed concurrently with Train E. 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 the
first quarter of 1999. LPG processing facilities on Trains E through H were
included in the scope of such trains' financings.
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 for Trains A through D at the LNG Plant. A trustee
borrowing from Japanese banks provided financing for the LNG portion of the
second dock. Final payment on this financing arrangement was made in the second
quarter of 1995.
The following table sets forth the status of the major project financings
incurred or arranged by PERTAMINA to construct the LNG Plant:
<TABLE>
<CAPTION>
ORIGINAL BALANCE AT FINAL
PRINCIPAL DECEMBER 31, PAYMENT PRIMARY SOURCE
FINANCING AMOUNT 1998 DATE OF REPAYMENT
- --------- (000's) (000's) -------- --------------
--------- -----------
<S> <C> <C> <C> <C>
Trains A & B,
1st Loading Dock $771,500 $ - - 1973 LNG Sales Contract
Trains C & D 995,800 - - 1981 LNG Sales Contract
Train E 294,000 61,740 2000 Taiwan LNG Sales Contract
Train F & Support
Facilities 699,000 436,729 2004 Train F LNG Sales Contract
Train G, 3rd Loading
Dock & Support
Facilities 969,500 961,744 2008 Package V Sales Contracts,
Package VII Second Amended
and Restated 1973 Sales
Contract (b)
Train H & Support Badak V & Badak VI
Facilities 1,127,000 702,000 (a) 2010 Sales Contracts (c)
2nd Loading Dock
& Train E Support
Facilities 135,000 - - 1973 LNG Sales Contract
LPG Facilities 157,700 4,274 1999 LPG Sales Contract
</TABLE>
(a) Amount borrowed against the financing as of December 31, 1998.
(b) Repayment commenced in the fourth quarter of 1998 principally from the
proceeds of the Korea and Taiwan Medium-Term Sales Contracts and, starting
in 2000, from the proceeds of the eleven-year extension to the 1973 LNG
Sales Contract.
(c) Repayment is scheduled to begin the earlier of (a) either (i) the date nine
months after completion or (ii) September 19, 2000, at the option of the
Borrower, or (b) January 19, 2001.
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>
1996 287 787 $3.15
1997 291 793 $3.12
1998 313 860 $2.27
</TABLE>
The Joint Venture PSC and other gas producers in Indonesia have the opportunity
to participate in each sales package. The Joint Venture PSC's equity interest
in a sales package is based on its share of gas reserves available for
commitment to the package.
The Joint Venture PSC's allocation in the LNG sales contracts has declined
over time since the original 1973 Sales Contract, when the Joint Venture PSC was
virtually the only supplier to the LNG Plant. At present, 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 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"):
<TABLE>
<CAPTION>
PACKAGE EQUITY SALES CONTRACT TERM REMAINING
- ------- INTEREST -------------- ---- GROSS VOLUMES
-------- TRILLION BTUS
-------------
<S> <C> <C> <C> <C>
I 97.9% 1973 1977-1999 -
II 66.4% 1981 1983-2003 726
IIIA 50.0% Korean Carryover 1986-2006 116
IIIB 29.6% Taiwan 1990-2009 952
IIIB 29.6% 1981 Additonal 1990-2003 77
IV 27.2% Train F 1994-2013 1,799
IV 27.2% Korea II 1994-2014 771
IV 27.2% 1973 Extension 1997-1999 180
IV 27.2% Medium City Gas Co. 1996-2015 337
IV 27.2% Toho 1990-1999 9
V 21.6% 1973 Extension 2000-2009 4,356
V 21.6% Korea Medium Term 1995-1999 161
V 21.6% Badak V 1998-1999 54
V 21.6% Taiwan Medium Term 1998-1999 38
V 21.6% Badak VI 1998-1999 35
V 21.6% Aquarius/Aries 1997-1999 17
Extension
VI 16.5% 1981 Extension 2003-2008 942
VI 16.5% Badak V 1998-2017 956
VI 16.5% Badak VI 1998-2017 1,686
VII (c) 1973 Extension 2010-2010 436
VII (c) 1981 Extension 2009-2011 565
--------
14,213
</TABLE>
<TABLE>
<CAPTION>
PACKAGE NET BASE LNG PRICE
- ------- EQUIVALENT PER MMBTU (A)
CARGOES (B) AS AT
1998 REMAINING 12/31/98 02/28/99
-------------- -----------------
<S> <C> <C> <C> <C>
I 1 - 2.00 1.81
II 39 164 1.87 1.66
IIIA 3 20 2.00 1.81
IIIB 9 96 1.89 1.69
IIIB 2 8 1.87 1.66
IV 11 166 1.78 1.59
IV 3 71 1.79 1.59
IV 15 17 2.00 1.81
IV 1 30 1.89 1.69
IV 1 1 2.00 1.81
V - 320 - 1.81
V 14 12 1.91 1.70
V 1 4 2.20 2.01
V - 3 - -
V - 2 - -
V 1 1 2.00 1.81
VI - 53 - -
VI - 54 - -
VI - 95 - -
VII - (c) - -
VII - (c) - -
-----
101
</TABLE>
(a) Excludes transportation costs, where applicable. The February 28, 1999
prices were based on an LNG crude oil basket price of $10.82 per barrel.
(b) As a result of variations in LNG tanker capacity among the various sales
contracts, the measure of a net equivalent cargo was established. A net
equivalent cargo represents the Joint Venture PSC's equity based on an
average of 2,942 bbtus per cargo.
(c) The Joint Venture PSC's participation percentage in Package VII sales has
not yet been determined and is not expected until the third quarter of
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.
During 1998, LNG was sold under various contracts between PERTAMINA and
buyers in Japan, Taiwan and South Korea, including five long-term sales
contracts. These long-term sales contracts are 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. These contracts, extensions to
contracts, and several medium-term sales contracts are supplied by the LNG plant
facilities. The gas processed by the LNG Plant is supplied from East Kalimantan
Contract Area as well as other fields in which the Joint Venture has no
interest.
The Joint Venture's share of LNG shipments for 1998 was 18 percent below
the 1997 levels. The primary reasons for this decline were the phase-out of the
original 1973 LNG Sales Contract in which the Joint Venture had a high
participation interest, a reduction in the Joint Venture's share of gas under
the amended and extended PSC which began on August 8, 1998, and revisions to the
annual LNG program. In 1998, 73 percent of the Joint Venture PSC's share of LNG
was sold by PERTAMINA to Japanese customers, 18 percent was sold to Korea Gas
Corporation (KGC) of South Korea and 9 percent was sold to CPC of Taiwan.
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. However, the effects of the Asian economic crisis
have impacted the ability of certain customers to take (or pay for) their
contracted commitments. In 1998, KGC, the Buyer under the Korea II, Korea
Medium-Term and Badak V LNG Sales Contracts, experienced difficulties in taking
some of its contractual volumes. In early 1998, KGC exercised its contract
provision for downward flexibility and also agreed with PERTAMINA that five
other 1998 cargoes would be deferred and replaced during the year 2000 with nine
cargoes at a small premium price. Subsequently, KGC requested a further cargo
reduction and did not take delivery of certain cargoes. In continuing
negotiations between KGC and PERTAMINA, a tentative settlement has been reached
which would include the purchase of additional cargoes at a small premium price.
Overall, deferred deliveries will be made and compensation will be received for
the 1998 cargoes not taken between the years 2000 and 2014. The total effect of
the cargoes not taken in 1998 by KGC did not have a significant impact on the
Company's earnings.
An estimated 106 net equivalent cargoes will be shipped during 1999, as
compared to 101 net equivalent cargoes in 1998. While this represents a 5
percent increase in PSC volumes, the Joint Venture's share of LNG shipments in
1999 is expected to decline by approximately 8 percent as compared to 1998.
This decline is due to the reduced equity terms under the amended and extended
PSC, as well as lower cost-recoverable expenditures which reduce the volumes to
the Joint Venture that are taken in kind. The 1999 LNG program anticipates that
68 percent of LNG sales will be sold to Japanese customers, 19 percent will be
sold to KGC of South Korea and 13 percent will be sold to CPC of Taiwan.
In the latter part of 1998, CPC, the Buyer under the Taiwan, Taiwan Medium-
Term and Badak VI Sales Contracts, advised the LNG Joint Management Group that
it would be unable to take delivery of some of its contractual 1999 volumes.
While part of this reduction will be through exercise of its contractual
provision for downward flexibility, the remaining volumes not taken, if any,
will be subject to negotiations between PERTAMINA and CPC. It is not
anticipated that these cargo reductions by CPC, if taken, would have a
significant impact on the Company's earnings.
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 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 Badak V Sales Contract and the Badak
VI Sales Contract are exclusively supplied by the LNG Plant.
The Badak V Sales Contract with KGC and the Badak VI Sales Contract with
CPC are twenty-year sales contracts for the years 1998 to 2017. The Badak V
Sales Contract is for the sale of 1,062 million bbtus of LNG from the Bontang
Plant and the Buyer is responsible for transportation. The Badak VI Sales
Contract is for the sale of 1,729 million btus of LNG from the Bontang Plant and
the Seller is responsible for transportation. 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 Second Amended and Restated 1981 LNG Sales Contract is an eight-year
contract with Chubu Electric Power Co., Kansai Electric Power Co., Osaka Gas Co.
and Toho Gas Co. The contract is for the sale of 1,507 million bbtus of LNG
from the Bontang Plant from 2003 to 2011 and the Buyer is responsible for
transportation. The first five years of this contract will be at the Package VI
rate of 16.5 percent; the remaining three years will be at the Package VII rate
which has not yet been determined by PERTAMINA and is not expected before the
third quarter of 1999. It is anticipated that this rate will be less than the
Package VI rate of 16.5 percent.
The Second Amended and Restated 1973 Sales Contract is an eleven-year
contract with Chubu Electric Power Co., Kansai Electric Power Co., Kyushu
Electric Power Co., Nippon Steel Corporation, Osaka Gas Co., and Toho Gas Co.
The contract is for the sale of 4,792 million bbtus of LNG from 2000 to 2010
with the Seller responsible for transportation. The first ten years of this
contract are at the Package V rate of 21.6 percent; the final year of the
contract will be at the Package VII rate. This rate has not yet been determined
by PERTAMINA and is not expected before the third quarter of 1999. It is
anticipated that this rate will be less than the Package VI rate. Revenues from
this sales contract will be used to repay the Train G financing.
During 1998, sales to Chubu Electric Power Co. Inc. and KGC individually
accounted for more than 10 percent of the Company's total revenues. During
1997 and 1996, sales to Kansai Electric Power Co. Inc. and Chubu Electric Power
Co. (and Osaka Gas Co. in 1996) accounted for more than 10 percent of the total
Company revenues.
Other Gas Sales - The Joint Venture PSC is obligated until 2008 to supply
approximately 74 mmcfs 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 PSC is required to supply approximately 5 mmcfs per day of gas to the
Balikpapan refinery at a price of $1.70 per mmbtu. In 1994, PERTAMINA executed
a twenty-year contract, commencing in February of 1998, for the sale of
approximately 70 mmcfs per day of gas to be supplied by the Joint Venture PSC 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
The seven 1986 LPG contracts between PERTAMINA and seven Japanese utility
companies expired at the end of 1998. During the year, 25 gross cargoes,
totaling 975,000 metric tons of LPG were shipped from the LNG Plant to Japan at
an average invoice price of $155.85 per metric ton. The Joint Venture PSC
received a Package IIIB sharing percentage for revenues from the first 386,000
metric tons sold and a Package V sharing percentage for revenues from the
remaining 589,000 metric tons, after deducting LPG-related operating costs and
debt service. In February of 1999, the seven LPG contracts were extended for
the years 1999 to 2001 whereby the Joint Venture PSC will supply 1 million
metric tons of LPG per year.
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 LOGI and Unistar, markets its
share of oil and condensate f.o.b. Santan Terminal, in East Kalimantan,
independently of PERTAMINA and the other Joint Venture participants. The Santan
Terminal (operated by UNOCAL Indonesia Company) is used for storing and loading
oil produced by the Joint Venture PSC.
The Company markets two segregated streams of crude oil and condensate for
export, namely Badak crude oil and Bontang Return Condensate. Beginning in
1998, Bontang Return Condensate was segregated for separate sale and replaced
Bontang Mix as a product. Prior to 1998, the Company had marketed Badak crude
oil and Bontang Mix. The Company's export sales during 1998 were made up of 79
percent from Badak crude oil and 21 percent from Bontang Return Condensate. The
Company's share of 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. 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 for that field. In 1997,
the Joint Venture received new field incentive status for its Beras field
following the completion of a pipeline between the Mutiara and Nilam fields.
These incentives included a sixty-month domestic obligation holiday beginning
in 1998 for the production from Beras in excess of 9,000 barrels of oil per day
from the total production of the Mutiara, Pamaguan, and Beras fields.
Substantially all of the oil and condensate currently being produced by
the Joint Venture PSC is being produced from the Badak, Nilam, Mutiara,
Semberah, and Beras fields. Selected data pertaining to oil and condensate
sales for the last three years are:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
<S> <C> <C>
1998 1997 1996
---- ---- ----
Total Oil & Condensate Sales (bbls) (a) 20,826,086 24,085,777 25,155,246
Company's Oil & Condensate Sales (bbls) (b) 2,339,224 1,757,383 1,702,788
Company's Average Sales Price (per bbl) (b) $12.82 $19.59 $20.04
Company's Share of PSC Production Cost (per bbl) $0.76 $1.06 $0.84
</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.
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 PSC LNG to Japanese and other markets, beyond
the amount under current contracts.
LNG sales are made under five principal long-term contracts and several
short- and medium-term contracts with Japanese, South Korean and Taiwanese
industrial and utility companies. The long-term contracts contain take-or-pay
provisions that generally require that the purchasers either take the contracted
quantities or pay for such quantities if not taken; such provisions tend to
support the Company's ability to generate cash. However, the economic
uncertainties in Southeast Asia have impacted the ability of certain customers
to take (or pay for) their contracted commitments. PERTAMINA, as the Seller
party under all LNG Sales Contracts, has been in negotiations with KGC because
of difficulties experienced in taking some of their 1998 contractual quantities.
Also, CPC has advised PERTAMINA that they expect similar difficulties in taking
some of their 1999 contractual quantities.
The Joint Venture's activities in Indonesia are subject to other risks
common to foreign operations in the oil and gas industry, including political
and economic uncertainties, such as the Asian economic crisis, 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. The sale of LNG is also
dependent upon the availability of shipping without interruption and upon the
continued operation or timely construction of the buyers' receiving terminals.
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 Joint Venture
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.
The Company also has a reserve of $8 million for potential exposure in a royalty
dispute. The Company believes it has valid defenses against such claim.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -----------------------------------------------------------
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED 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, including the
effects of their expiration on September 25, 1999. The IPUs do not represent an
equity position in the Company, but instead entitle the holders thereof to
participate in a percentage of the Company's Net Cash Flow (as defined in the
Indenture for the IPUs and described in Item 1) for a 15 year term which began
on September 25, 1984. The IPUs will expire on September 25, 1999 at no value.
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>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
(millions of dollars)
<S> <C> <C> <C> <C>
Operating revenues 139 217 253 202 198
Earnings before extraordinary
item 50 47 51 40 36
Net earnings 50 47 51 40 33
Total assets 351 363 383 407 422
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- -------------------------------------------------------------------------------
OF OPERATIONS
- -------------
LIQUIDITY AND CAPITAL RESOURCES
The original Production Sharing Contract (PSC) between the Joint Venture
and PERTAMINA expired on August 7, 1998 after a 30-year period. The amended and
extended PSC became effective on August 8, 1998 for an additional 20-year
period. Under terms of the amended and extended PSC, the Joint Venture's after-
tax share of gas, excluding cost recovery, has been reduced from 35 percent to
30 percent (or 25 percent for certain contracts), while the Joint Venture's
after-tax share of oil, excluding cost recovery, remains unchanged at 15
percent. The applicable Indonesian tax rate for gas and oil has been reduced
from 56 percent to 48 percent.
The economic and political events in Southeast Asia since the middle of
1997 have not significantly affected the Company, and the Joint Venture
production operations have continued without interruption. The Company, through
VICO as operator of the Joint Venture, continues to monitor the situation both
in Indonesia and throughout the Asia Pacific region to measure the effect of
these events on its operating and financial condition. Liquefied natural gas
(LNG) sales are made under five principal long-term contracts and several short-
and medium-term contracts with Japanese, South Korean and Taiwanese industrial
and utility companies. The long-term contracts contain take-or-pay provisions
that generally require that the purchasers either take the contracted quantities
or pay for such quantities if not taken; such provisions tend to support the
Company's ability to generate cash. However, the economic uncertainties in
Southeast Asia have impacted the ability of certain customers to take (or pay
for) their contracted commitments. PERTAMINA, as the Seller party under all LNG
Sales Contracts, has been in negotiations with Korea Gas Corporation of South
Korea because of difficulties experienced in taking some of their 1998
contractual quantities. Also, the Chinese Petroleum Corporation has advised
PERTAMINA that they expect similar difficulties in taking some of their 1999
contractual quantities.
An estimated 106 net equivalent cargoes will be shipped during 1999, as
compared to 101 net equivalent cargoes in 1998. While this represents a 5
percent increase in PSC volumes, the Joint Venture's share of LNG shipments in
1999 is expected to decline by approximately 8 percent as compared to 1998.
This decline is due to the reduced equity terms under the amended and extended
PSC, as well as lower cost-recoverable expenditures, which reduce the volumes to
the Joint Venture that are taken in kind. The 1999 LNG program anticipates 68
percent of LNG sales to be sold to Japanese customers, 19 percent will be sold
to Korea Gas Corporation (KGC) of South Korea and 13 percent will be sold to
CPC of Taiwan.
In March 1997, a $1,127 million financing was signed for Train H, an
additional LNG storage tank, an additional natural gas pipeline from the Badak
field to the LNG Plant, another debottlenecking project for Trains A through F,
and other support facilities. Construction commenced in mid-1997 with
completion anticipated by November of 1999. Repayment is to begin the earlier
of (a) either (i) the date nine months after completion or (ii) September 19,
2000, at the option of the Borrower, or (b) January 19, 2001. Revenues from the
Badak V Sales Contract with KGC and the Badak VI Sales Contract with CPC will be
the primary sources of repayment for this financing. Financing for Train H,
consistent with all previous LNG plant financing, is non-recourse to both
PERTAMINA and the Joint Venture and is repaid through sales proceeds from the
above-mentioned sales contracts prior to the allocation of net LNG proceeds to
the Joint Venture, PERTAMINA and others.
Capital expenditures of the Joint Venture relate to the exploration and
development of the oil and gas fields. In 1999, the Company's share of the
Joint Venture expenditures is expected to total $60 million. The 1999 budgeted
expenditures reflect continued development activities in all fields to maintain
gas deliverability and to continue the 3-D seismic program primarily in the
Badak field.
In September 1998, VICO's U.S.-based position of Chief Executive Officer
(CEO) and the Jakarta-based position of President were consolidated into the
position of President and CEO, stationed in Jakarta. With the transfer of
executive management oversight to Jakarta, the VICO Board of Directors has
approved a plan to close the U.S. Houston-based office by September 30, 1999.
The functions currently provided by the 50 employees of VICO's U.S. office will
be transferred to the Jakarta office, to a parent company, outsourced or
eliminated.
Cash flow from operations to the Company was $59 million in 1998, as
compared to $81 million in 1997. The decrease of $22 million resulted from
lower realized sales prices and lower LNG volumes. Capital expenditures during
the year of $28 million were spent on continued development activities in the
Badak, Nilam, Semberah and Mutiara fields. Net capital distributions in 1998 to
the partners from the Company were $29 million, or $25 million lower than 1997.
The Company's ability to generate cash is primarily dependent on the prices
it receives for the sale of LNG and, to a lesser extent, the sale of crude oil
and liquefied petroleum gas (LPG). LNG is primarily sold under long-term
contracts whose prices are derived from a basket of Indonesian crudes, which are
denominated in U. S. Dollars. The majority of operating costs, taxes and
capital costs represent commitments settled in U. S. Dollars. For those
commitments settled in foreign currencies, exchange rate fluctuations are
recognized as adjustments to the U.S. Dollar cost of the transaction.
In the event cash generated from operations is not sufficient to meet
capital investment and other requirements, the partners will fund any shortfall
through additional cash contributions. The Company cannot predict with any
degree of certainty the prices it will receive in future periods for its crude
oil, LNG and LPG. The Company's financial condition, operating results and
liquidity will be materially affected by any significant fluctuations in its
sales prices.
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, renegotiations 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
the Asian economic crisis and actions of members of OPEC.
The Company is unaware of any unrecorded environmental claims as at
December 31, 1998 that would have a material adverse effect upon the Company's
financial condition or operations. The Company continues to maintain a reserve
and accrue interest for potential exposure in a royalty dispute. At December 31,
1998, the reserve approximated $8 million.
The discussion of the Company's business and operations in this report
includes in several instances forward-looking statements, including the
number of cargoes to be shipped, 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 and
Exchange Commission.
RESULTS OF OPERATIONS - 1998 COMPARED TO 1997
Net earnings for the year ended December 31, 1998 were $50 million as compared
to $47 million for the year ended December 31, 1997. Cash flow from operations
was $59 million for the year, a decrease of $22 million as compared to 1997.
The $3 million increase in net earnings consisted of:
- a $79 million decrease in revenues,
- a $65 million decrease in income taxes,
- a $15 million decrease in cost of sales,
- a $1 million decrease in general and administrative expenses, and
- a $1 million increase in other income.
Revenues for the year were $139 million as compared to $217 million in
1997. Of the overall decrease, approximately 67 percent resulted from lower
realized prices and the remaining 33 percent resulted primarily from lower LNG
sales volumes. The weighted average crude oil basket price used to determine LNG
prices was $13.29 per barrel for 1998, or $6.45 per barrel lower than for 1997.
As a result, the average price received for LNG during 1998 decreased $0.85 per
mmbtu to $2.27 per mmbtu. The average realized price for crude oil and
condensate sales in 1998 was $12.82 per barrel, as compared to $19.59 per barrel
for 1997. The prices received by the Company for its products reflected the
declining trend in worldwide crude oil prices during 1998.
The Joint Venture's, and therefore the Company's, net share of LNG volumes
in 1998 decreased by approximately 18 percent as compared to 1997. The decrease
in LNG volumes was primarily the result of the phase-out of the original 1973
Sales Contract and the reduction in the Joint Venture's share of gas under the
amended and extended PSC. Crude oil and condensate volumes net to the Company
in 1998 and 1997 were 2.3 million barrels and 1.8 million barrels respectively.
Because of lower oil prices, the Joint Venture's share of oil volumes increased
in 1998 to enable cost recovery of qualifying expenditures.
The following table summarizes the volumes and average prices for the
Company's share of PSC LNG sales, as well as the Company's crude oil and
condensate sales (excluding domestic consumption) for the last two years:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C>
VOLUMES
LNG (tbtus) 68.8 78.1
Oil & Condensate (mmbbls) 2.3 1.8
PRICES
LNG ($/mmbtu) 2.27 3.12
Oil ($/bbl) 12.82 19.59
</TABLE>
Production costs of $15 million for 1998 decreased by $11 million as
compared to 1997. Lower costs primarily resulted from lower operating costs due
to the devaluation of the Indonesian Rupiah ($6 million), a reduction in the
Rupiah-denominated employee severance liability ($5 million), and nonrecurring
prior year costs associated with VICO's business process reengineering plan ($4
million). Offsetting these cost savings were $3 million of hedging losses on
forward exchange contracts and costs associated with inventory and evacuation of
personnel in Indonesia.
Depletion charges for 1998 were $39 million, which were lower than last
year by $3 million. The lower level of production during the year was the
primary reason for the reduced non-cash charges. Exploration costs decreased by
$1 million in 1998 as compared to the prior year due to the absence of
exploration drilling and reduced seismic activity. During the year, the Company
realized a gain of $1 million, shown in Other Income, from the sale of an
interest in certain Alaskan mining claims owned by Enstar.
Current income taxes were $53 million for 1998 as compared to $105 million
for 1997. The decrease of $52 million was directly the result of lower profit
sales and the reduction in the Indonesian tax rate from 56 percent to 48 percent
in the amended and extended PSC that began on August 8, 1998. The change in the
Indonesian tax rate also resulted in a $13 million increase in deferred tax
benefits. The decrease in the Company's deferred Indonesian tax liability
reflects the fact that the remaining temporary tax differences on the Company's
books will reverse in future periods at the lower Indonesian tax rate. As a
result of this change in income tax rate, the Company recorded a reduction in
its Indonesian income tax liability of $24 million, a reduction in property,
plant & equipment of $5 million, and a deferred income tax benefit of $19
million.
RESULTS OF OPERATIONS - 1997 COMPARED TO 1996
Net earnings for the year ended December 31, 1997 were $47 million as
compared to $51 million for the year ended December 31, 1996. Net earnings for
1997 decreased mainly as a result of lower oil and gas revenues, which were
partially offset by lower depletion and Indonesian taxes. Cash flow from
operations for the year ended December 31, 1997 was $81 million as compared to
$104 million for the year ended December 31, 1996.
Revenues for the year ended December 31, 1997 were $217 million compared to
$253 million in the prior year. The decrease in revenues was mainly
attributable to lower LNG volumes. The Joint Venture PSC's share of LNG volumes
in 1997 decreased 75 trillion btus to 338 trillion btus (115 net equivalent
cargoes) as compared to 413 trillion btus (140 net equivalent cargoes) in 1996.
The decrease in LNG volumes was mainly due to the phase-out of the original 1973
Sales Contract in which the Joint Venture PSC had a higher revenue sharing
interest. Crude oil and condensate volumes (excluding domestic consumption) net
to the Company in 1997 and 1996 were 1.8 million barrels and 1.7 million barrels
respectively.
The average price received for LNG in 1997 decreased $0.03 per million btus
to $3.12 per million btus as compared to $3.15 per million btus in 1996. The
average price received for crude oil decreased $0.45 per barrel to $19.59 per
barrel in 1997 as compared to $20.04 per barrel in 1996.
The following table summarizes the volumes and average prices for the
Company's share of PSC LNG sales as well as the Company's crude oil sales
(excluding domestic consumption) for the last two years:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C>
VOLUMES
LNG (tbtus) 78.1 95.5
Oil & Condensate (mmbbls) 1.8 1.7
PRICES
LNG ($/mmbtu) 3.12 3.15
Oil ($/bbl) 19.59 20.04
</TABLE>
Production costs of $26 million for 1997 increased by $2 million as
compared to the prior year, due mainly to recoverable costs associated with the
Joint Venture's ongoing business process reengineering plan, which were
partially offset by lower costs associated with inventory.
Depletion, depreciation and amortization for 1997 was $42 million, a
decrease of $5 million as compared to 1996, reflecting the lower level of
production in 1997. Exploration costs increased by $1 million in 1997 as
compared to the prior year due to an expanded seismic program. During 1997, the
Company drilled one exploration well that was deemed a dry hole.
The effective tax rates for 1997 and 1996 were 68 percent and 71 percent,
respectively. 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.
YEAR 2000
The year 2000 issue (Y2K) relates to computer programs and embedded
computer chips having two digits rather than four to define the applicable year.
Computer programs or equipment having date-sensitive software may recognize a
date using "00" as the year 1900 instead of 2000. The Company's most
significant Y2K risk is through its subsidiary VICO, as operator of the Joint
Venture. VICO has a comprehensive Y2K Program that was initiated in May of 1997
and has appointed a special task force (the Y2K Team) to identify, assess and
develop remediation plans for both internal and external Y2K problems. The Y2K
Team reports regularly to VICO's Board of Directors and has the authority and
resources to carry out its directive.
The Y2K Team completed its evaluation of all internal date-sensitive
systems and equipment critical to the organization in December 1998. The
assessment phase of the Program included ranking those items considered to be of
low, medium and high importance according to their individual impact on the
Joint Venture's business, safety, and the environment. Both information
technology and embedded processors (East Kalimantan field control facilities,
etc.) were analyzed. Special emphasis was given to control systems at the East
Kalimantan field facilities. For all those items identified with Y2K problems,
remedial action plans have been developed. The remedial planning phase of the
Project was also completed in December 1998.
With the assistance of an outside consulting firm, VICO has nearly
completed the conversion of its finance and accounting systems to a year 2000
compliant system. The conversion is divided into 4 "go live" phases. The
first two phases have been successfully accomplished. Discussions with vendors
of pre-packaged software critical to payroll, human resources and seismic
applications have resulted in written assurances from most vendors that year
2000 compliant replacement software will be provided, if necessary, before the
end of June 1999. The Y2K Team will monitor each of these situations.
The Y2K Team is assessing third-party risk to VICO (and the Joint Venture)
and preparing the appropriate remediation plans. This phase is approximately 40
percent complete. Third-party risk can be segregated into two areas - the
Production Chain and Other Services. The Production Chain includes the Bontang
LNG plant, the Santan oil terminal (operated by UNOCAL Indonesia Company), the
vessels taking deliveries of oil and gas, and the buyers' receiving terminals.
VICO has assisted in two reviews of the Y2K program at the Bontang LNG plant and
has provided additional instrumentation experts to the plant to assist in its
remediation plans. PERTAMINA is assisting VICO and other PSCs in verifying the
Y2K compliance of all vessels and receiving terminals. Other Services include
various third-party service providers and suppliers. The Y2K Team has currently
completed a list that identifies all other critical third parties related to the
Jakarta office and has begun this process for the East Kalimantan Field
locations.
The Y2K Team will begin to prepare a detailed contingency plan in March of
1999. This plan will be continually updated throughout 1999 and will include
the following:
- Pre-year 2000 actions to mitigate the impact of Y2K problems,
should they appear;
- Daily plans for critical Y2K dates;
- Detailed business recovery plans for various Y2K failure
scenarios; and
- Staff and other resources required for Y2K.
The costs to address Y2K are estimated to be approximately $7 million and
are funded out of Joint Venture operating cash flows. The Joint Venture is
entitled to cost recover these expenditures as incurred.
The Y2K Program is expected to significantly reduce the level of
uncertainties about the Year 2000 problems to the Company and the Joint Venture.
The Company believes the possibility of significant interruptions in normal
operations should be reduced with the implementation of new business systems and
the timely completion of the Y2K program. However, if any material Year 2000
problems are not properly corrected, particularly any for which the Company has
no control, there can be no assurance that this will not have a material impact
on the results of operation, liquidity and financial condition of the Company
and on the interests held by other partners in the Joint Venture.
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, 1998 and 1997, and the related
consolidated statements of earnings, cash flows, and changes in partners'
capital and comprehensive income for each of the years in the three-year
period ended December 31, 1998. 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, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1998, in conformity with
generally accepted accounting principles.
KPMG LLP
Houston, Texas
March 5, 1999
UNIMAR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $9,122 $4,454
Accounts receivable 7,887 8,670
Inventories 9,239 8,275
Other current assets 2,810 1,999
------ ------
Total current assets 29,058 23,398
Property, plant and equipment, at cost:
Oil and gas properties (successful efforts
method) 1,120,150 1,097,568
Other 1,965 2,348
------ ------
1,122,115 1,099,916
Less: accumulated depreciation and depletion 801,984 763,151
------- -------
Net property, plant and equipment 320,131 336,765
Other assets 2,227 3,191
------ ------
$351,416 $363,354
======== ========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Current liabilities:
Accounts payable $ 929 $ 752
Advances from joint venture partners 4,556 2,637
Accrued liabilities 11,712 14,138
Income and other taxes 8,866 14,035
------ ------
Total current liabilities 26,063 31,562
Deferred income taxes 124,259 148,135
Other liabilities 12,692 16,107
Partners' capital 269,728 248,065
Less: Accumulated other comprehensive income 1,326 515
------ ------
268,402 247,550
Less: Demand notes receivable 80,000 80,000
------ ------
188,402 167,550
------- -------
Commitments and Contingencies
$351,416 $363,354
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C>
Gas revenues $116,990 $201,287 $242,165
Oil and condensate revenues 34,361 36,122 37,213
Less: IPU Cost (12,679) (20,067) (26,725)
------- ------- -------
Total revenues 138,672 217,342 252,653
------- ------- -------
Production costs 14,542 26,072 24,404
Depletion, depreciation and amortization 39,296 41,940 47,156
Exploration costs including dry holes 990 2,122 1,045
------ ------ ------
Total cost of sales 54,828 70,134 72,605
------ ------ ------
Operating profit 83,844 147,208 180,048
General and administrative expense 691 1,457 1,361
Interest expense 44 58 76
Interest income (239) (318) (305)
Other income (911) (74) (213)
------ ------ ------
Earnings before income taxes 84,259 146,085 179,129
Income tax expense (benefit)
Current 52,861 104,920 131,992
Deferred (19,064) (5,953) (4,277)
------- ------ ------
Total income tax expense 33,797 98,967 127,715
------ ------ -------
Net earnings $50,462 $47,118 $51,414
======= ======= =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <S> <S>
Net earnings $50,462 $47,118 $51,414
Adjustments to reconcile to net cash
provided by operating activities:
Depletion, depreciation and
amortization 39,748 42,176 47,434
Deferred income taxes (19,064) (5,953) (4,277)
Exploratory dry hole costs 13 503 -
(Gain) Loss on sale of assets (885) - 2
Decrease (Increase) in operating
receivables 783 5,273 (6,528)
(Increase) Decrease in inventories (964) (98) 1,662
(Decrease) Increase in operating
payables and accruals (3,060) (4,451) 2,604
(Decrease) Increase in other operating
assets and liabilities (8,430) (3,878) 11,461
------ ------ ------
Net cash provided by operating
activities 58,603 80,690 103,772
------ ------ -------
Investment activities:
Capital expenditures (27,949) (27,313) (21,138)
Proceeds from sale of assets 895 - 1
------- ------- -------
Net cash used in investing activities (27,054) (27,313) (21,137)
------- ------- -------
Financing activities:
Capital contributions 11,600 20,400 22,200
Capital distributions (40,400) (74,000) (104,900)
------- ------- --------
Net cash used in financing activities (28,800) (53,600) (82,700)
------- ------- -------
Increase (Decrease) in advances from
joint venture partners 1,919 1,403 (1,543)
----- ------ ------
Net Increase (Decrease) in cash and
cash equivalents 4,668 1,180 (1,608)
Cash and cash equivalents at beginning
of year 4,454 3,274 4,882
----- ------ -----
Cash and cash equivalents at end of year $9,122 $4,454 $3,274
====== ====== ======
SUPPLEMENTAL CASH FLOW DISCLOSURE:
IPU distributions paid $14,659 $23,066 $23,713
======= ======= =======
Income taxes paid $58,029 $110,809 $123,764
======= ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
UNIMAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
LOGI UNISTAR TOTAL
<S> <C> <C>
Balance, January 1, 1996 $136,904 $148,162 $285,066
Capital Contributions 11,100 11,100 22,200
Capital Distributions (52,450) (52,450) (104,900)
Comprehensive Income:
Net Earnings 25,707 25,707 51,414
Other comprehensive income
Minimum pension liability
adjustment 329 329 658
------ ------ ------
Total comprehensive income 26,036 26,036 52,072
------- ------- -------
Balance, December 31, 1996 121,590 132,848 254,438
Capital Contributions 10,200 10,200 20,400
Capital Distributions (37,000) (37,000) (74,000)
Comprehensive Income:
Net Earnings 23,559 23,559 47,118
Other comprehensive income
Minimum pension liability
adjustment (203) (203) (406)
------ ------ ------
Total comprehensive income 23,356 23,356 46,712
------ ------ ------
Balance, December 31, 1997 118,146 129,404 247,550
Capital Contributions 5,800 5,800 11,600
Capital Distributions (20,200) (20,200) (40,400)
Comprehensive Income:
Net Earnings 25,231 25,231 50,462
Other comprehensive income
Minimum pension liability
adjustment (405) (405) (810)
------ ------ ------
Total comprehensive income 24,826 24,826 49,652
------ ------ ------
Balance, December 31, 1998 $128,572 $139,830 $268,402
======== ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
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 in 1984
under the Texas Uniform Partnership Act. The Company's partners are:
- Unistar, Inc. (Unistar), a Delaware corporation and a direct
subsidiary of Union Texas Petroleum Holdings, Inc. (UTPH).
On June 29, 1998, UTPH became a wholly owned subsidiary of Atlantic
Richfield Company (ARCO), also a Delaware corporation, and
- LASMO Oil & Gas, Inc. (LOGI), a Delaware corporation and an
indirect wholly owned subsidiary of LASMO plc (LASMO), a public
limited company organized under the laws of England. LASMO
(Ustar), Inc., the previous LASMO partner, was merged into LOGI on
September 14, 1998.
Each partner shares equally in the Company's net earnings, capital
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 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.
UNIMAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS UNLESS OTHERWISE INDICATED)
(d) Accounting for Oil and Gas Properties (continued)
-------------------------------------
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.
The Company performs an impairment review of proved oil and gas
properties on a production sharing contract basis and recognizes an
impairment loss when the carrying amount of the assets exceeds the sum
of the undiscounted estimated future cash flows of the assets. Future
cash flows are based upon the net share estimates of proved Indonesian
reserves that the Company would receive in revenues, before Indonesian
income taxes, under terms of the Production Sharing Contract (PSC), as
amended and extended through August 7, 2018 using assumptions
regarding levels of expenditures over the life of the PSC, year-end
oil and gas prices, firm contract sales commitments, potential sales
opportunities and other assumptions.
(e) LNG Revenue Recognition
-----------------------
The Company recognizes its share of liquefied natural gas (LNG)
revenues net of LNG plant operating costs, transportation charges,
project debt service and other miscellaneous costs. The Company is
not a party to any gas balancing arrangements.
(f) Income and Other Taxes
----------------------
The Company is a partnership and 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.
The Company's subsidiary, Enstar Corporation (Enstar) and its
subsidiaries file a consolidated federal corporate income tax return.
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.
UNIMAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS UNLESS OTHERWISE INDICATED)
(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, extensions to these
long-term contracts, and medium-term contracts with utility and
industrial companies in Japan, Taiwan and South Korea.
The buyers of the LNG make payment in U.S. 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, 1998 result principally
from sales of LNG, liquefied petroleum gas (LPG), and oil and are
considered current and collectible, and collateral is not required to
secure such receivables.
During 1998, sales to Chubu Electric Power Co. Inc. and Korea Gas
Corporation individually accounted for more than 10 percent of the
Company's total revenues. During 1997 and 1996, sales to Kansai
Electric Power Co. Inc. and Chubu Electric Power Co., Inc. (and Osaka
Gas Co. in 1996) accounted for more than 10 percent of the total
Company's 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, income and
other taxes payable, and accrued liabilities. The carrying amount
approximates fair value because of the short maturity of these
instruments.
(i) Foreign Currency and Forward Exchange Contracts
-----------------------------------------------
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.
A portion of the Joint Venture costs and expenditures are denominated
in the Indonesian currency (the Rupiah). The Joint Venture may enter
into forward exchange contracts to hedge some of these identifiable
commitments denominated in the foreign currency. Any gain or loss on
contracts designated as hedges of identifiable foreign currency
commitments would be deferred and included in the measurement of the
related foreign currency transaction. In the event of an early
termination of a firm commitment, any deferred gain or loss would be
immediately recognized. The Company does not hold or issue financial
instruments for trading purposes.
(j) Pensions and Other Postretirement Benefits
------------------------------------------
Effective December 31, 1998, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 132 and restated all
previously reported benefit plan disclosures to conform with the new
disclosure requirements, the effects of which are more fully described
in Note 11, Benefit Plans. SFAS No. 132 standardized the disclosure
requirements for pension and other postretirement benefits to the
extent practicable, requiring additional information on changes in the
benefit obligations and fair value of plan assets that will facilitate
financial analysis and eliminate certain disclosures. SFAS No. 132
did not change the measurement of recognition of those benefit plans.
(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
UNIMAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS UNLESS OTHERWISE INDICATED)
(3) INDONESIAN OIL AND GAS PROPERTIES (continued)
of ARCO 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, VICO acts as a custodian of Joint
Venture cash received from its partners until disbursed in payment of
operating and capital expenditures. At December 31, 1998 and 1997, cash
and cash equivalents advanced from the other Joint Venture partners were
$4,556 and $2,637 respectively.
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 one-fourth
of its equity share of total oil and condensate production from the East
Kalimantan 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) for that field. In 1997, the Joint Venture
received new field incentive status for its Beras field following the
completion of a pipeline between the Mutiara and Nilam fields. These
incentives included a sixty-month domestic obligation holiday beginning in
1998 for the production from Beras in excess of 9,000 barrels of oil per
day from the total production of the Mutiara, Pamaguan and Beras fields.
The share of revenues from the sale of gas, excluding cost recovery,
through August 7, 1998 was 35 percent to the Joint Venture after Indonesian
income taxes and 65 percent to PERTAMINA. The split after August 7, 1998
is 25 percent to the Joint Venture after Indonesian income taxes and 75
percent to PERTAMINA for gas sales under the 1981 LNG Sales Contract and
extensions, Korean carryover quantities, and the 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 a portion of the three-
year extension (August 8, 1998 - 1999) and 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 and LPG 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, excluding 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.
LNG sales are made under five principal long-term contracts and several
short- and medium-term contracts with Japanese, South Korean and Taiwanese
industrial and utility companies. The long-term contracts contain take-or-
pay provisions that generally require that the purchasers either take the
contracted quantities or pay for such quantities if not taken; such
provisions tend to support the
UNIMAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS UNLESS OTHERWISE INDICATED)
(3) INDONESIAN OIL AND GAS PROPERTIES (continued)
Company's ability to generate cash. However, the economic uncertainties in
Southeast Asia have impacted the ability of certain customers to take (or
pay for) their contracted commitments. PERTAMINA, as the Seller party
under all LNG Sales Contracts, has been in negotiations with Korea Gas
Corporation (KGC) of South Korea because of difficulties experienced in
taking some of their 1998 contractual quantities. Also, the Chinese
Petroleum Corporation (CPC) has advised PERTAMINA that they expect similar
difficulties in taking some of their 1999 contractual quantities.
In 1998, approximately 73 percent of the Joint Venture PSC's share of LNG
was sold by PERTAMINA to Japanese customers. Of the remaining 27 percent,
18 percent was sold to KGC and 9 percent was sold to CPC of Taiwan. The
1999 LNG program anticipates that 68 percent of LNG sales will be sold to
Japanese customers, 19 percent will be sold to KGC and 13 percent will be
sold to CPC.
(4) CASH AND CASH EQUIVALENTS
At December 31, 1998 and 1997, cash and cash equivalents included short-
term deposits and highly liquid debt instruments, with a maturity of three
months or less, of $9,122 and $4,454, respectively.
(5) FORWARD EXCHANGE CONTRACTS
VICO, as operator of the Joint Venture, entered into two forward exchange
contracts in December of 1997 and one in January of 1998 in an effort to
lock in a portion of the Rupiah-denominated costs of the Joint Venture.
All forward exchange contracts were completed by the end of 1998 and
resulted in hedging losses of approximately $2,533 net to the Company. At
December 31, 1998, neither VICO nor the Company had any open forward
exchange contracts.
(6) PROPERTY, PLANT AND EQUIPMENT
As at December 31, 1998 and 1997, property, plant and equipment was as
follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C>
Oil and gas properties $1,120,150 $1,097,568
Less: Accumulated depletion 800,520 761,226
------- -------
319,630 336,342
Other, net of accumulated depreciation
of $1,464 in 1998 and $1,925 i n 1997 501 423
------- -------
$320,131 $336,765
======= =======
(7) ACCRUED LIABILITIES
As at December 31, 1998 and 1997, accrued liabilities consisted of:
1998 1997
---- ----
Accrued IPU liability $3,662 $5,642
Indonesian operating accruals 7,758 8,046
Other 292 450
----- -----
$11,712 $14,138
======= =======
</TABLE>
UNIMAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS UNLESS OTHERWISE INDICATED)
(8) LEASES
The Joint Venture's minimum future rental payments required by year under
operating leases that have initial or remaining non-cancelable lease terms
in excess of one year are:
<TABLE>
<CAPTION>
<S> <C>
1999 $ 4,658
2000 3,589
2001 144
2002 145
2003 and thereafter -
-------
Total $ 8,536
=======
</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 $2,095, $2,270 and $3,123 for the
last three years, respectively. The Company charges its proportionate
share of the Joint Venture's rent expense to operations for all operating
leases.
(9) INCOME AND OTHER TAXES
At December 31, 1998, the Company had investment tax credit carryforwards
of $884, net foreign tax credit carryovers of $37,860 for regular tax
purposes, and $151,843 for alternative minimum tax purposes, all of which
expire in 1999 through 2004.
At December 31, 1998 and 1997, the Company had minimum tax credits of
$25,833 and $24,213 that carry forward indefinitely. Deferred tax assets
of $37,860 and $40,254 for foreign tax credit carryforwards, investment tax
credit carryforwards of $884 and $1,331, and minimum tax credits of $25,833
and $24,213 at December 31, 1998 and 1997, 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, 1998 and 1997 were:
<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C>
Deferred tax liabilities:
Oil and gas proven property costs
capitalized for financial purposes
and deducted for foreign tax $124,259 $148,135
======== ========
</TABLE>
For financial reporting purposes, earnings before income taxes included the
following components:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C>
Pretax Income (Loss):
U.S. $(525) $(1,936) $(1,403)
Foreign 84,784 148,021 180,532
------ ------- -------
$84,259 $146,085 $179,129
======= ======== ========
</TABLE>
UNIMAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS UNLESS OTHERWISE INDICATED)
(9) INCOME AND OTHER TAXES (continued)
Significant components of the provision for income taxes were:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C>
Current:
Federal $1,650 $2,770 $3,686
Foreign 51,211 102,150 128,306
------ ------- -------
52,861 104,920 131,992
------ ------- -------
Deferred:
Foreign (19,064) (5,953) (4,277)
------- ------ ------
$33,797 $98,967 $127,715
======= ====== ========
</TABLE>
The following reconciliation shows income tax attributable to earnings
computed at the U.S. federal statutory rates based on income tax expense:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <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 17.8 % 21.0 % 21.0%
Expenses not deductible in
calculating Indonesian taxes 7.6 % 11.2 % 12.8%
U.S. taxes related to foreign
operations 2.0 % 1.9 % 2.1%
Cumulative decrease in foreign
tax rate (18.7) % 0.0 % 0.0 %
Other (3.6) % (1.3)% 0.4%
-------- ------- -----
Total 40.1 % 67.8 % 71.3%
====== ====== =====
</TABLE>
(10) 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.
The method of calculating an IPU payment was the result of negotiations
among the parties to the 1984 merger of Enstar 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. The Indenture between the Company and Bank of
New York (formerly Irving Trust Company) as trustee dated September 25,
1984 sets forth the terms of the IPUs and the actions to be taken by the
Company and the trustee with respect to the IPUs. As required by the
Indenture, 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.
UNIMAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS UNLESS OTHERWISE INDICATED)
(10)INDONESIAN PARTICIPATING UNITS (IPUs) (continued)
While the amount of the participation payments, which are treated as
reductions from revenues, will vary from quarter to quarter depending
upon the level of Net Cash Flow, payment of the amounts 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 a quarterly participation payment
equal to 1/14,077,747 of 32 percent of net positive cash flow until
September 25, 1999, at which time the IPUs will expire with no
residual value. Due to the expiration of the IPUs on September 25, 1999,
there are only three remaining quarterly periods with respect to which
holders of IPUs will be entitled to Participation Payments on the
IPUs. The Indenture provides that the last quarterly period runs from July
1, 1999 through September 25, 1999, the expiration date of the IPUs.
With respect to the last quarterly period (July 1, 1999 through September
25, 1999), Net Cash Flow will be calculated for the month of September 1999
and that amount will be prorated for the 25 days of September included in
the last quarterly period by multiplying the per day net Cash Flow based on
the 30 days in September by the 25 days in the quarterly period. This
method of Net Cash Flow, particularly with respect to the last quarterly
period, is required by the Indenture.
Net Cash Flow attributable to IPU holders is equal to the product of (i) a
fraction, the numerator which is equal to the number of IPUs outstanding on
the last business day of such quarterly period, and the denominator which
is 14,077,747, multiplied by (ii) 32 percent of specified revenues, net of
specified expenditures, from the Joint Venture.
At December 31, 1998 and 1997, 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, 1998 of $0.69 per unit, the outstanding IPUs had a
market value of approximately $7,437. The IPUs will be delisted by the
American Stock Exchange in connection with their expiration.
IPU CALCULATION OF NET CASH FLOW AND
PARTICIPATION PAYMENTS
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C>
Positive cash flow:
Gas receipts $117,386 $205,102
Oil and condensate receipts 35,079 37,054
Other non-revenue cash receipts
from Joint Venture 6,158 5,867
------ ------
Total positive cash flow 158,623 248,023
------- -------
Negative cash flow:
Expenditures to Joint Venture 55,249 59,805
Indonesian income taxes 48,886 104,187
------ -------
Total negative cash flow 104,135 163,992
------- -------
Net positive cash flow from 23.125%
interest in Joint Venture $54,488 $84,031
======= =======
Net cash flow for benefit of IPU holders $13,396 $20,587
======= =======
Participation Payment per unit $ 1.24 $ 1.91
======= =======
</TABLE>
UNIMAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS UNLESS OTHERWISE INDICATED)
(11) BENEFIT PLANS
VICO has a defined contribution retirement plan for its U.S. Houston-based
employees. This plan will terminate at the end of September 1999 following
the closure of the Houston office. The plan provides for an annual
contribution based on a percentage of each eligible employee's base salary
as approved by VICO's Board of Directors. Beginning in 1997, a portion of
VICO?s contribution to the plan was in the form of LASMO and UTPH shares
purchased at market value on the date of contribution. After the merger of
UTPH into ARCO in June of 1998, the UTPH shares in the plan were converted
to cash and that portion of VICO's subsequent contributions is now made in
LASMO shares. The Joint Venture participants fund defined contribution
pension expense and the Company's share of such expense for the last three
years was $163, $175, and $191, respectively.
VICO provides severance pay to all of its employees based upon salary and
length of service. Such severance pay is earned over the service life of
each employee, is funded by the Joint Venture and is deemed cost
recoverable. In December 1998, the VICO Board of Directors approved a plan
to close the VICO U.S. Houston-based office by September 30, 1999. The
functions currently provided by the 50 employees of VICO's U.S. office will
be transferred to the Jakarta office, to a parent company, outsourced or
eliminated. Severance pay will be provided to all of VICO's U.S. employees
in accordance with established VICO policy guidelines.
VICO, and the Company, maintain provisions for severance benefits payable
to Indonesian national employees and Jakarta-based expatriates. In 1998,
the provision maintained by the Company for Indonesian national employees
was reduced by $5,041 due to the effect of year-end exchange rates on the
obligation, which is denominated in Indonesian currency. In 1997, the
Company made no provision because of the voluntary early retirement program
in 1997, which was exercised by 325 employees at a cost of $3,947 to the
Company. In 1996, the Company provided $1,300 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. During
1997, as part of an effort to terminate the plan, lump sum distributions of
approximately $5,500 were made from plan assets. A reconciliation of the
benefit obligation, plan assets, and funded status of Enstar's pension plan
as at December 31 for the last two years appears below:
<TABLE>
<CAPTION>
1998 1997
---- ----
CHANGE IN BENEFIT OBLIGATION
<S> <C>
Benefit obligation at beginning of year $ 13,277 $17,562
Interest cost 909 1,249
Actuarial loss 640 1,269
Settlements - (5,395)
Benefits paid (1,367) (1,408)
------ ------
Net benefit obligation at end of year 13,459 13,277
------ ------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning
of year 12,024 17,476
Actual return on plan assets 738 1,266
Employer contributions - 85
Settlements - (5,395)
Benefits paid (1,367) (1,408)
------ ------
Fair value of plan assets at end of year 11,395 12,024
------ ------
</TABLE>
UNIMAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS UNLESS OTHERWISE INDICATED)
<TABLE>
<CAPTION>
(11) BENEFIT PLANS (continued)
1998 1997
---- ----
<S> <C>
FUNDED STATUS (2,064) (1,253)
Unrecognized net actuarial loss 1,326 515
Unrecognized net transition obligation 699 734
----- ------
Net amount recognized $(39) $ (4)
===== =====
</TABLE>
<TABLE>
<CAPTION>
1997 1998
---- ----
AMOUNTS RECORDED IN THE BALANCE SHEET
<S> <C>
Accrued benefit cost $ (39) $ (4)
Additional minimum liability (2,025) (1,249)
Intangible asset 699 734
Accumulated other comprehensive income 1,326 515
----- ------
Net amount recognized $ (39) $ (4)
====== ======
</TABLE>
The net periodic benefit cost for Enstar's pension plan for the last three
years was composed of the following:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C>
COMPONENTS OF NET PERIODIC BENEFIT COST
Interest cost $ 909 $1,249 $1,234
Expected return on assets (909) (1,352) (1,284)
Amortization of transition
obligation 35 35 35
Settlement loss -- 182 --
---- ---- -----
Net periodic benefit cost (income)$ 35 $ 114 $ (15)
==== ===== =====
COMPREHENSIVE (LOSS) INCOME resulting
from change in additional minimum
liability $(810) $(406) $ 658
===== ===== =====
</TABLE>
The assumed discount rate used in determining the projected benefit
obligation was 6.75 percent, 7.00 percent and 7.25 percent for 1998, 1997
and 1996 respectively. The assumed long-term rate of return on plan assets
was 8 percent for the last three years. At December 31, 1998, plan assets
were invested in fixed income securities.
(12) COMMITMENTS AND CONTINGENCIES
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 $7,976 for potential
exposure in a royalty dispute. The Company believes it has valid defenses
against such claim.
UNIMAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS UNLESS OTHERWISE INDICATED)
(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 and service agreements negotiated
among the parties. For the last three years, these charges were $405,
$430, and $402, respectively.
The Company holds demand notes in the amount of $40,000 from or guaranteed
by affiliates of each partner. These funds will be made available to the
Company if additional working capital is required.
In addition to acting as the operator of the Joint Venture, VICO performs
engineering, pipeline maintenance, and human-resource related services for
the operator of the LNG Plant, P. T. Badak Natural Gas Liquefaction Company
(P. T. Badak). During the years ended December 31, 1998 and 1997, VICO
billed P. T. Badak $28,977 and $28,862, respectively, for services
rendered. Accounts receivable from P. T. Badak were $2,490 and $1,717 at
December 31, 1998 and 1997, respectively.
(14) ECONOMIC ENVIRONMENT
The effects of the adverse economic conditions in Indonesia and other
countries in the Asia Pacific region, which began in 1997, continued into
1998. During 1998, approximately 73 percent of the Joint Venture PSC's
share of LNG was sold by PERTAMINA to Japanese customers. Of the remaining
27 percent, 18 percent was sold to Korea Gas Corporation (KGC) of South
Korea and 9 percent was sold to the Chinese Petroleum Corporation (CPC) of
Taiwan. The 1999 LNG program anticipates that 68 percent of LNG sales will
be sold to Japanese customers, 19 percent will be sold to KGC of South
Korea and 13 percent will be sold to CPC of Taiwan.
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. However, the effects of the Asian
economic crisis have impacted the ability of certain customers to take (or
pay for) their contracted commitments. In 1998, KGC, the Buyer under the
Korea II, Korea Medium-Term and Badak V LNG Sales Contracts, experienced
difficulties in taking some of its contractual volumes. In early 1998, KGC
exercised its contract provision for downward flexibility and also agreed
with PERTAMINA that five other 1998 cargoes would be deferred and replaced
during the year 2000 with nine cargoes at a small premium price.
Subsequently, KGC requested an additional cargo reduction and did not take
delivery of certain cargoes. In continuing negotiations between KGC and
PERTAMINA, a tentative settlement has been reached which would include the
purchase of additional cargoes at a small premium price. Overall, deferred
deliveries will be made and compensation will be received for the 1998
cargoes not taken between the years 2000 and 2014. The total effect of the
cargoes not taken by KGC in 1998 did not have a significant impact on the
Company's earnings.
In the latter part of 1998, CPC, the Buyer under the Taiwan, Taiwan Medium-
Term and Badak VI Sales Contracts, advised the LNG Joint Management
Group that it would be unable to take delivery of some of its
contractual 1999 volumes. While part of this reduction will be through
exercise of its contractual provision for downward flexibility, the
remaining volumes not taken, if any, will be subject to negotiations
between PERTAMINA and CPC. It is not anticipated that these cargo
reductions by CPC, if taken, would have a significant impact on the
Company's earnings.
The Company, through VICO as operator of the Joint Venture, is closely
monitoring the situation both in Indonesia and throughout the Asia Pacific
region to measure the effects of these economic conditions on its
operations and financial condition.
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 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 LOGI.
Net share estimates are the Company's present best estimates of the share
of proved Indonesian reserves the Company would receive in revenue, before
Indonesian income taxes, under the terms of the Production Sharing
Contract, as amended and extended through August 7, 2018 based upon
assumptions regarding levels of Joint Venture expenditures over the life of
the project, year-end oil and gas prices, firm contract sales commitments,
potential sales opportunities, and 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, gas, 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 rates. 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 either actual production or
conclusive formation tests support economic producibility. 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 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.
(a)
INDONESIAN OIL AND GAS OPERATIONS (continued)
Table 1 shows the Company's estimated net share of Indonesian oil and gas
reserves.
TABLE 1
QUANTITIES OF OIL AND GAS RESERVES
(OIL IN THOUSANDS OF BBLS; GAS IN MMCFS)
(UNAUDITED)
<TABLE>
<CAPTION>
OIL GAS
<S> <C>
PROVED DEVELOPED AND UNDEVELOPED RESERVES:
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
Revisions to previous estimates 2,009 39,607
Production (1,838) (79,518)
------ -------
As of December 31, 1997 15,341 839,874
Revisions to previous estimates 4,234 68,152
Production (2,300) (71,364)
------ -------
As of December 31, 1998 17,275 836,662
====== =======
PROVED DEVELOPED RESERVES:
As of December 31, 1995 13,782 779,425
====== =======
As of December 31, 1996 12,628 695,466
====== =======
As of December 31, 1997 13,293 678,854
====== =======
As of December 31, 1998 14,185 622,912
====== =======
</TABLE>
(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, 1998, 1997 AND 1996
(THOUSANDS OF DOLLARS) (UNAUDITED)
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C>
Exploration costs $ 990 $2,122 $1,045
Development costs 27,411 26,749 21,114
</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, 1998, 1997, AND 1996
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C>
Revenues $138,672 $217,342 $252,653
Production costs (13,785) (25,329) (23,928)
Exploration costs (990) (2,122) (1,045)
Depreciation, depletion and
amortization (39,296) (41,940) (47,156)
Income tax expense (32,147) (96,197) (124,210)
------- ------- --------
Results of operations for
producing activities (1) $52,454 $51,754 $56,314
====== ====== ======
</TABLE>
(1) Excludes corporate overhead and interest costs.
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
1998, 1997 and 1996 on a per barrel basis were $12.12, $17.50, and $23.12,
respectively. The LNG crude oil basket price from February 28, 1999 for
one month's sales was $10.82 per barrel. 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 48 percent. Indonesian net cash flow estimates
are the Company's 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 amended and extended PSC based upon assumptions
regarding levels of Joint Venture expenditures over the life of the
project, firm contract sales commitments and potential sales opportunities
and other assumptions. Additionally, the net cash flow estimates include
amounts due to the IPU holders until September 25, 1999, the expiration
date of the IPUs.
(a) INDONESIAN OIL AND GAS OPERAITONS (continued)
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.
TABLE 4
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS AND
CHANGES THEREIN RELATING TO PROVED OIL AND GAS RESERVES
AT DECEMBER 31, 1998, 1997 AND 1996
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C>
Future cash inflows $1,604,701 $2,285,150 $3,095,956
Future production and development
Costs (580,171) (542,951) (561,737)
Future income tax expenses (474,847) (824,670) (1,226,268)
------- -------- -----------
Future net cash flows 549,683 917,529 1,307,951
10% annual discount for estimated
timing of cash flows (294,322) (472,164) (668,376)
-------- -------- --------
Standardized measure of discounted
future net cash flows $255,361 $445,365 $639,575
======== ======== ========
</TABLE>
The following were the principal sources of changes in the standardized
measure of discounted future net cash flows for proved reserves during the
last three years:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C>
(THOUSANDS OF DOLLARS)
(UNAUDITED)
Standardized measure of discounted future
net cash flows at beginning of period
$445,365 $639,575 $495,204
Sales and transfers of oil and gas
produced, net of production costs (120,183) (188,066) (230,591)
Net changes in prices and production
costs (359,595) (371,590) 247,938
Development costs incurred during
the period 27,411 26,749 21,114
Revisions of previous quantity
estimates (657) 8,785 130,797
Accretion of discount 78,617 115,004 90,528
Change in income taxes, net of 10%
discount 184,403 214,908 (115,415)
------- ------- --------
Standardized measure of discounted
future net cash flows at end of
period $255,361 $445,365 $639,575
======== ======== ========
</TABLE>
Note: The standardized measure of discounted future net cash flows at
December 31, 1998, 1997, and 1996 included $3,771, $22,264, and $52,060,
respectively, in future net cash flows attributable to IPU holders until
September 25, 1999, the expiration date of the IPUs. (See Footnote 10.)
(b) INTERIM FINANCIAL DATA (UNAUDITED)
The following table shows summary quarterly data for the last three years.
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1998
- ----------------------------
Revenues $43,284 $31,298 $31,587 $32,503
Operating profit $27,309 $17,381 $16,278 $22,876
Net earnings $9,219 $6,287 $24,699(a) $10,257
YEAR ENDED DECEMBER 31, 1997
- ----------------------------
Revenues $66,283 $50,042 $48,810 $52,207
Operating profit $48,539 $33,561 $30,503 $34,605
Net earnings $17,426 $11,354 $9,018 $9,320
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
</TABLE>
(a)The third quarter 1998 results included a deferred income tax benefit of $19
million as a result of the change in the Indonesian income tax rate from 56
percent to 48 percent under the amended and extended PSC.
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. As of March 19,
1999, the following individuals serve as members of the Company's Management
Board:
LINDA A. KUBECKA (age 42) was appointed to the Company's Management Board
as a LASMO representative on March 1, 1999. She has served as Partners'
Representative for Investor Relations of the Company since September 1997 and is
a Vice President of LASMO America Limited. She was also appointed Chief
Financial and Accounting Officer for Enstar and VIC in September 1997. Ms.
Kubecka has worked on behalf of the Company in various other functions from May
1992 through August 1997.
PAUL MURRAY (age 37) was appointed to the Company's Management Board as a
LASMO representative on March 1, 1999. He is also a Director of Enstar and VIC.
He joined LASMO plc in 1989 following the acquisition of Thomson North Sea. He
was appointed to the LASMO plc Board of Directors on January 1, 1998 as
Corporate Development Director and was appointed Group Finance Director on
January 1, 1999.
JAMES D. ROBERTSON (age 50) was appointed to the Company's Management Board
as an ARCO representative on August 31, 1998. He is also a Director of Enstar
and VIC. Mr. Robertson served as Vice President of Exploration for ARCO
International Oil and Gas Company from 1994 through 1998 and currently serves as
Vice President of New Exploration Ventures for ARCO.
JAMES K. THOMPSON (age 47) was appointed to the Company's Management Board
as an ARCO representative on August 31, 1998. Mr. Thompson was also appointed
Chairman of the Company on August 31, 1998. He is also a Director of Enstar,
VIC and VICO. Mr. Thompson was appointed Executive Vice President of ARCO in
January 1998. He was President of ARCO Alaska from June 1994 through January
1998 and President of ARCO Exploration and Production Technology from June 1993
through June 1994.
RONALD R. WILLIAMS (age 50) was appointed to the Company's Management Board
as an ARCO representative on August 31, 1998. He is also a Director of Enstar
and VIC. Mr. Williams has served as Associate General Tax Officer for ARCO
since 1992.
CHRIS WRIGHT (age 51) was appointed to the Company's Management Board as a
LASMO representative on March 1, 1999. He is also a Director of Enstar, VIC and
VICO. He was appointed to the LASMO Board of Directors in July 1997 as
Director, New Business and was appointed Group Management Director on January 1,
1999. Mr. Wright spent 20 years in the U.K. and the U.S. for British Petroleum
in various senior positions, most recently as Chief Executive of Frontier and
International. On leaving British Petroleum in 1995, he joined Mobil Oil where
he was President of New Business Development, Asia Pacific and Middle East.
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 ARCO or LASMO, or their respective subsidiaries, and do
not receive any remuneration for their services from the Company. The Company
has no employees who are compensated for their services. 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 LASMO representatives 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, 1999:
<TABLE>
<CAPTION>
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL AMOUNT BENEFICIALLY
- -------------- OWNER OWNED
------------------------------ -------------------
<S> <C> <C>
General Partnership Interest
LASMO plc 50%
101 Bishopsgate
London EC2M 3XH
England, U.K.
General Partnership Interest
Atlantic Richfield Company 50%
515 South Flowers Street
Los Angeles, CA 90071
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
All aspects of the Company's business that are not associated with the
operatorship of the Joint Venture such as legal, accounting, tax, and other
management functions are supplied either by VICO or employees of the partners in
accordance with management and service agreements. A management fee of $405
thousand and $430 thousand was charged by VICO in 1998 and 1997, respectively,
including $21 in 1997 for services performed by a LASMO representative to the
Management Board.
The Company holds demand notes in the amount of $40,000 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
years ended December 31, 1998 and 1997, VICO billed P.T. Badak $28,977 and
$28,862, respectively, for services rendered. Accounts receivable from P.T.
Badak were $2,490 at December 31, 1998 ($1,717 at December 31, 1997).
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 21
Consolidated Balance Sheets,
December 31, 1998 and 1997 22
Consolidated Statements of Earnings,
Years ended December 31, 1998, 1997 and 1996 23
Consolidated Statements of Cash Flows,
Years ended December 31, 1998, 1997 and 1996 24
Consolidated Statements of Changes in Partners'
Capital and Comprehensive Income
Years ended December 31, 1998, 1997 and 1996 25
Notes to Consolidated Financial Statements 26-36
Supplemental Financial Information (unaudited) 37-41
All schedules are omitted, as they are not applicable.
(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).*
(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
*Incorporated herein by reference.
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)-6- to the Company's 1995 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)).*
(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)).*
(10)-14- Bontang II Trustee and Paying Agent Agreement Amended and Restated
as of July 15, 1991
*Incorporated herein by reference.
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)).*
(10)-21- Amendment No. 1 to Bontang III Producers Agreement dated as of May
31, 1988 among Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
Roy M. Huffington, Inc., Huffington Corporation, Virginia
International Company, Virginia Indonesia Company, Ultramar Indonesia
Limited, Union Texas East Kalimantan Limited, Universe Tankships,
Inc., Total Indonesie, Unocal Indonesia, Ltd., Indonesia Petroleum,
Ltd. and Train-E Finance Co., Ltd., as Tranche A Lender, The
Industrial Bank of Japan Trust Company, as Agent and The Industrial
Bank of Japan Trust Company on behalf of the Tranche B Lenders.
(filed as Exhibit (10)-21- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-22- $316,000,000 Bontang III Loan Agreement dated February 9, 1988
among Continental Bank International as Trustee, Train-E Finance Co.,
Ltd. as Tranche A Lender and The Industrial Bank of Japan Trust
Company as Agent. (filed as Exhibit (10)-23- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-23- Bontang III Trustee and Paying Agent Agreement, dated February 9,
1988, among PERTAMINA, Roy M. Huffington, Inc., Huffington
Corporation, Virginia International Company, VICO, Ultrastar
Indonesia Limited, Union Texas East Kalimantan Limited, Universe
Tankships, Inc., Total Indonesia, Unocal Indonesia, Ltd., Indonesia
Petroleum, Ltd. and Continental Bank International (filed as Exhibit
10.42 to the Union Texas Petroleum Holdings, Inc.'s 1991 Form 10-K
(Commission File No. 1-9019)).*
*Incorporated herein by reference.
(10)-24- Amendment No. 1 to Bontang III Trustee and Paying Agent Agreement,
dated as of December 11, 1992, among PERTAMINA, VICO, Virginia
International Company, Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Opicoil Houston, Inc., Universe Gas & Oil
Company, Inc., Total Indonesia, Unocal Indonesia Ltd., Indonesia
Petroleum, Ltd. and Continental Bank International, as Bontang III
Trustee (filed as Exhibit 10.83 to the Union Texas Petroleum
Holdings, Inc.'s 1992 Form 10-K (Commission File No. 1-9019)).*
(10)-25- Amended and Restated Debt Service Allocation Agreement dated
February 9, 1988 among Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara and Roy M. Huffington, Inc., Virginia International Company,
Ultramar Indonesia Limited, Virginia Indonesia Company, Union Texas
East Kalimantan Limited, Universe Tankships, Inc., Huffington
Corporation, Total Indonesie, Unocal Indonesia, Ltd. and Indonesia
Petroleum, Ltd. (filed as Exhibit (10)-26- to the Company's 1994
Form 10-K (No. 1-8791)).*
(10)-26- Letter agreement between Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara and Chinese Petroleum Corporation, dated December 1,
1989. (filed as Exhibit (10)-27- to the Company's 1993 Form 10-K (No.
1-8791)).*
(10)-27- Badak IV LNG Sales Contract dated October 23, 1990 between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (PERTAMINA), as
Seller and Osaka Gas Co., Ltd., Tokyo Gas Co., Ltd. and Toho Gas Co.,
Ltd., as Buyers. (filed as Exhibit (10)-29- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-28- LNG Sales Contract dated as of October 13, 1992 between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara, as Seller and Hiroshima Gas
Co., Ltd. and Nippon Gas Co., Ltd., as Buyers. (filed as Exhibit
(10)-30- to the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-29- LNG Sales Contract dated as of October 13, 1992 between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara, as Seller and Osaka Gas Co.,
Ltd., as Buyer. (filed as Exhibit (10)-31- to the Company's 1993 Form
10-K (No. 1-8791)).*
(10)-30- Supply Agreement for Natural Gas to Badak IV LNG Sales Contract
dated August 12, 1991 between Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara, Virginia Indonesia Company, Opicoil Houston, Inc.,
Ultramar Indonesia Limited, Union Texas East Kalimantan Limited,
Universe Gas & Oil Company, Inc. and Virginia International Company.
(filed as Exhibit (10)-32- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-31- Second Supply Agreement for Package IV Excess Sales (Osaka Gas
Contract - Package IV Quantities) between PERTAMINA and Virginia
Indonesia Company, LASMO Sanga Sanga Limited, Opicoil Houston, Inc.,
Union Texas East Kalimantan Limited, Universe Gas & Oil Company,
Inc., and Virginia International Company dated September 22, 1993,
effective January 1, 1991. (filed as Exhibit (10)-33- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-32- Third Supply Agreement for Package IV Excess Sales (Toho Gas
Contract - Package IV Quantities) between PERTAMINA and Virginia
Indonesia Company, LASMO Sanga Sanga Limited, Opicoil Houston, Inc.,
Union Texas East Kalimantan Limited, Universe Gas & Oil Company,
Inc., and Virginia International Company dated September 28,
effective January 1, 1991. (filed as Exhibit (10)-34- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-33- Eleventh Supply Agreement for Package IV Excess Sales (1973
Contract Build-Down Quantities) between PERTAMINA and Virginia
Indonesia Company, LASMO Sanga Sanga Limited, Opicoil Houston, Inc.,
Union Texas East Kalimantan Limited, Universe Gas & Oil Company,
Inc., and Virginia International Company dated September 22, 1993,
effective
*Incorporated herein by reference.
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)).*
(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)).*
*Incorporated herein by reference.
(10)-42- Bontang LPG Supply Agreement, dated November 17, 1987, between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (PERTAMINA) and
the parties to the Joint Venture Agreement. (filed as Exhibit
(10)-45- to the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-43- Advance Payment Agreement between Perusahaan Pertambangan Minyak
Dan Gas Bumi Negara (PERTAMINA) and Arun Bontang Project Finance Co.,
Ltd., dated February 16, 1987 (filed as Exhibit (4)-15- to the
Company's 1986 Form 10-K (No. 1-8791)).*
(10)-44- Agreement and Plan of Reorganization of ENSTAR Corporation, dated
December 22, 1989, by and among Unimar Company, Ultrastar, Inc.,
Unistar, Inc., ENSTAR Corporation, Newstar Inc., Union Texas
Development Corporation, Union Texas Petroleum Corporation and
Ultramar America Limited. (filed as Exhibit (10)-47- to the Company's
1993 Form 10-K (No. 1-8791)).*
(10)-45- Amendment to Agreement and Plan of Reorganization of ENSTAR
Corporation, dated May 1, 1990, by and among Unimar Company,
Ultrastar, Inc., Unistar, Inc., ENSTAR Corporation, Ultramar
Production Company, Union Texas Development Corporation, Union Texas
Petroleum Corporation and Ultramar America Limited. (filed as Exhibit
(10)-48- to the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-46- Addendum to Badak IV LNG Sales Contract Supply Agreement
(effective October 23, 1990), dated January 31, 1994, by and between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara ("PERTAMINA") and
Virginia Indonesia Company ("VICO"), LASMO Sanga Sanga Limited,
Opicoil Houston, Inc., Union Texas East Kalimantan Limited, Universe
Gas & Oil Company, Inc., and Virginia International Company. (filed
as Exhibit (10)-48- to the Company's 1994 Form 10-K (No. 1-8791)).*
(10)-47- Memorandum of Agreement for Purchase and Sale of LNG During 1995 -
1999 between Perusahaan Pertambangan Minyak Dan Gas Bumi Negara
("PERTAMINA") ("Seller") and Korea Gas Corporation ("KGC") ("Buyer")
for the sale and purchase of certain quantities of LNG. (filed as
Exhibit (10)-49- to the Company's 1994 Form 10-K (No. 1-8791)).*
(10)-48- Second Amended and Restated 1973 LNG Sales Contract, dated as of
August 3, 1995 between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara ("PERTAMINA"), as Seller, and Chubu Electric Power Co., Inc.,
The Kansai Electric Power Co., Inc., Kyushu Electric Power Co., Inc.,
Nippon Steel Corporation, Osaka Gas Co., Ltd. and Toho Gas Co., Ltd.,
as the Buyers, with related letter agreement, dated August 3, 1995,
between Seller and Buyers (filed as Exhibit 10.7 to the Union Texas
Petroleum Holdings, Inc. Form 10-Q for quarter ended September 30,
1995 (Commission File No. 1-9019)).*
(10)-49- Second Amended and Restated 1981 Badak LNG Sales Contract, dated
as of August 3, 1995, between PERTAMINA, as Seller, and Chubu
Electric Power Co., Inc., The Kansai Electric Power Co., Inc., Osaka
Gas Co., Ltd. and Toho Gas Co., Ltd., as Buyers with related letter
agreement, dated August 3, 1995, between Seller and Buyers. (filed
as Exhibit 10.104 to the Union Texas Petroleum Holdings, Inc. 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
10.105 to the Union Texas Petroleum Holdings, Inc. 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 10.106 to the Union Texas Petroleum Holdings, Inc. 1995 Form
10-K (Commission File No. 1-9019)).*
*Incorporated herein by reference.
(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)).*
(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, but effective as of September 30, 1994,
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, but effective as
of December 6, 1994, 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 Dwiputra
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)).*
(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)).*
*Incorporated herein by reference.
(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)).*
(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
*Incorporated herein by reference.
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)).*
(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
(filed as Exhibit (10)-70- to the Company's 1996 Form 10-K (No. 1-
8791)).*
(10)-71- $1,127,000,000 Bontang VI Loan Agreement, dated as of March 4,
1997, among Bank of America National Trust and Savings Association,
as Trustee under the Bontang VI Trustee and Paying Agent Agreement,
as borrower, Bank of Taiwan New York Agency as Lead Arranger, Bontang
LNG Train-H Investment Co., Ltd. as Co-Lead Arranger, The Chase
Manhattan Bank as Agent, Co-Agent and Co-Arranger, and the Co-Agents,
Co-Arrangers and Lenders named therein (filed as Exhibit 10.3 to the
Union Texas Petroleum Holdings, Inc. form 10-Q for the quarter ended
March 31, 1997 (Commission File No. 1-9019)).*
(10)-72- Bontang VI Producers Agreement, dated as of March 4, 1997, by
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara ("Pertamina"),
Total Indonesie, Virginia Indonesia Company, Union Texas East
Kalimantan Limited, LASMO Sanga Sanga Limited, Virginia International
Company, Opicoil Houston, Inc., Universe Gas & Oil Company, Inc.,
Indonesia Petroleum, Ltd., Unocal Indonesia Company (collectively,
the "Producers"), in favor of Bank of Taiwan New York Agency, as Lead
Arranger, Bontang LNG Train-H Investment Co., Ltd. as Co-Lead
Arranger, The Chase Manhattan Bank as Agent, Co-Agent and Co-
Arranger, and the Co-Agents, Co-Arrangers and Lenders named therein
(filed as Exhibit 10.4 to the Union Texas Petroleum Holdings, Inc.
Form 10-Q for the quarter ended March 31, 1997 (Commission File No.
1- 9019)).*
(10)-73- Bontang VI Trustee and Paying Agent Agreement, dated as of March
4, 1997, among the Producers and Bank of America National Trust and
Savings Association, as Trustee and Paying Agent (filed as Exhibit
10.5 to the Union Texas Petroleum Holdings, Inc. Form 10-Q for the
quarter ended March 31, 1997 (Commission File No. 1-9019)).*
(10)-74- Amendment No. 2 to Bontang III Loan Agreement, dated as of March
4, 1997 among BankAmerica International, as Trustee under the Bontang
III Trustee and Paying Agent Agreement, Train-E Finance Co., Ltd., as
Tranche A Lender, and The Industrial Bank of Japan Trust Company, as
agent on behalf of the Majority Tranche B Lenders (filed as Exhibit
10.7 to the Union Texas Petroleum Holdings, Inc. Form 10-Q for the
quarter ended March 31, 1997 (Commission File No. 1-9019)).*
*Incorporated herein by reference.
(10)-75- Amendment No. 2 to Amended and Restated Bontang Excess Sales
Trustee and Paying Agent Agreement, dated as of March 4, 1997, among
BankAmerica International, as Trustee, and the Producers (filed as
Exhibit (10)-1- to the Company's Form 10-Q for the quarter ended June
30, 1997 (No. 1-8791)).*
(10)-76- Bontang VI Disbursement Trustee and Paying Agent Agreement dated
as of March 19, 1997, between Bank of America National Trust and
Savings Association, as Bontang VI Trustee, and Bank of America
National Trust and Savings Association, as Disbursement Trustee
(filed as Exhibit (10)-2- to the Company's Form 10-Q for the quarter
ended June 30, 1997 (No. 1-8791)).*
(10)-77- Addendum to Badak IV LNG Sales Contract Supply Agreement, dated
January 31, 1994, but effective as of October 23, 1990, by and
between Pertamina, on the one hand, and 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 10.112 to the Union Texas Petroleum Holdings, Inc.
1997 Form 10-K (Commission File No. 1-9019)).*
(10)-78- Memorandum of Agreement, effective as of December 6, 1994, between
Pertamina and Chinese Petroleum Corporation for sale and purchase of
LNG during 1998 and 1999 (files as Exhibit 10.115 to the Union Texas
Petroleum Holdings, Inc. 1997 Form 10-K (Commission File No. 1-
9019)).*
(10)-79- Supplemental Memorandum, dated as of August 24, 1983, by and
between Pertamina and Roy M. Huffington, Inc., Virginia International
Company, Ultramar Indonesia Limited, Indonesian Superior Oil Company,
Union Texas Far East Corporation and Universe Tankships, Inc (filed
as Exhibit 10.118 to the Union Texas Petroleum Holdings, Inc. 1997
Form 10-K (Commission File No. 1-9019)).*
(21)-1- List of Subsidiaries of the Company.
(23)-1- Consent of KPMG LLP.
(27)-1- Financial Data Schedule for the twelve months ended December 31,
1998.
(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, 1998.
*Incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
UNIMAR COMPANY
March 19, 1999 By /S/ JAMES K. THOMPSON
---------------------------
James K. Thompson
Chairman of the Management Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated as of March 19, 1999.
By /S/ LINDA A. KUBECKA By /S/ JAMES D. ROBERTSON
-------------------------------------- -----------------------
Linda A. Kubecka James D. Robertson
Management Board Management Board
(LASMO Representative) (ARCO Representative)
By /S/ PAUL MURRAY By /S/ JAMES K. THOMPSON
--------------------------------------- -----------------------
Paul Murray James K. Thompson
Management Board Chairman of the Management
(LASMO Representative) Board
(ARCO Representative)
By /S/ CHRIS WRIGHT By /S/ RONALD R. WILLIAMS
--------------------------------------- ------------------------
Chris Wright Ronald R. Williams
Management Board Management Board
(LASMO Representative) (ARCO Representative)
INDEX TO EXHIBITS
SEQUENTIAL
NUMBERED
EXHIBIT NUMBER PAGE
- -------------- ----------
The following documents are included as Exhibits to this Report. Unless it
has been indicated that a document listed below is incorporated by
reference herein, copies of the document have been filed herewith.
(2)-1- Merger Agreement, dated May 22, 1984, and Amendment
Agreements thereto, dated June 8, 1984 and June 12, 1984
(incorporated by reference to Annex A to the
Prospectus/Proxy Statement included in the Company's
Registration Statement on Form S-14 (No. 2-93037)).*
(2)-2- Agreement of Merger, dated as of August 28, 1984
(incorporated by reference to Annex B to the
Prospectus/Proxy Statement included in the Company's
Registration Statement on Form S-14 (No. 2-93037)).*
(2)-3- Divestiture Agreement, dated June 20, 1984 (filed as Exhibit
2.3 to the Company's Registration Statement on Form S-14
(No. 2-93037)).*
(3)-1- Amended and Restated Agreement of General Partnership of
Unimar Company dated September 11, 1990 between Unistar,
Inc. and Ultrastar, Inc. (filed as Exhibit (3)-4- to the
Company's 1990 Form 10-K (No. 18791)).*
(4)-1- Form of Indenture between Unimar and Irving Trust Company,
as Trustee (filed as Exhibit 4 to the Company's Registration
Statement on Form S-14 (No. 2-93037)).*
(4)-2- First Supplemental Indenture, dated as of October 31, 1986,
to the Indenture between Unimar and Irving Trust Co., as
Trustee (Exhibit (4)-1 above) (filed as Exhibit 10.114 to
Union Texas Petroleum Holdings, Inc.'s Registration
Statement on Form S-1 (No. 33-16267)).*
(10)-1- Joint Venture Agreement, dated August 8, 1968, among Roy M.
Huffington, Inc., Virginia International Company, Austral
Petroleum Gas Corporation, Golden Eagle Indonesia, Limited,
and Union Texas Far East Corporation, as amended (filed as
Exhibit 6.6 to Registration Statement No. 2-58834 of Alaska
Interstate Company).*
(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
*Incorporated herein by reference.
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)-6- to the Company's 1995 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)).*
(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)).*
*Incorporated herein by reference.
(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)).*
(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.
(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)).*
(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)).*
*Incorporated herein by reference.
(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)).*
(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
*Incorporated herein by reference.
Limited, Union Texas East Kalimantan Limited, Universe Gas &
Oil Company, Inc., Total Indonesie, Unocal Indonesia, Ltd.,
Indonesia Petroleum, Ltd. and Continental Bank
International. (filed as Exhibit (10)-38- to the Company's
1993 Form 10-K (No. 1-8791)).*
(10)-37- Amended and Restated Bontang Processing Agreement dated
February 9, 1988 among Perusahaan Pertambangan Minyak Dan
Gas Bumi Negara and Roy M. Huffington, Inc., Huffington
Corporation, Virginia International Company, Virginia
Indonesia Company, Ultramar Indonesia Limited, Union Texas
East Kalimantan Limited, Universe Tankships, Inc., Total
Indonesie, Unocal Indonesia, Ltd., Indonesia Petroleum, Ltd.
and P.T. Badak Natural Gas Liquefaction Company (filed as
Exhibit (10)-39- to the Company's 1988 Form 10-K (No. 1-
8791)).*
(10)-38- Bontang LPG Sales and Purchase Contract between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara, as Seller, and
National Federation of Agricultural Co-Operative
Associations (Zen-Noh), as Buyer, dated February 21, 1992.
(filed as Exhibit (10)-42- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-39- Bontang LPG Sales and Purchase Contract between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara, as Seller, and
Japan Indonesia Oil Co., Ltd., as Buyer, dated February 20,
1992. (filed as Exhibit (10)-43- to the Company's 1993 Form
10-K (No. 1-8791)).*
(10)-40- Arun and Bontang LPG Sales and Purchase Contract between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara
(PERTAMINA) as Seller and Mitsubishi Corporation, Cosmo Oil
Co., Ltd., Nippon Petroleum Gas Co., Ltd., Showa Shell
Sekiyu K.K., Kyodo Oil Co., Ltd., Idemitsu Kosan Co., Ltd.
and Mitsui Liquefied Gas Co., Ltd. as Buyers dated July 15,
1986. (filed as Exhibit (10)-42- to the Company's 1994 Form
10-K (No. 1-8791)).*
(10)-41- Amendments to Arun and Bontang LPG Sales and Purchase
Contract, dated October 5, 1994, between PERTAMINA, as
Seller, and Mitsubishi Corporation, Cosmo Oil Co., Ltd.,
Nippon Petroleum Gas Co., Ltd., Showa Shell Sekiyu K.K.,
Japan Energy Corporation, Idemitsu Kosan Co., Ltd., and
Mitsui Oil & Gas Co., Ltd., as Buyers. (filed as Exhibit
10.88 to the Union Texas Petroleum Holdings, Inc.'s 1994
Form 10-K (Commission File No. 1-9019)).*
(10)-42- Bontang LPG Supply Agreement, dated November 17, 1987,
between Perusahaan Pertambangan Minyak Dan Gas Bumi Negara
(PERTAMINA) and the parties to the Joint Venture Agreement.
(filed as Exhibit (10)-45- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-43- Advance Payment Agreement between Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara (PERTAMINA) and Arun Bontang
Project Finance Co., Ltd., dated February 16, 1987 (filed as
Exhibit (4)-15- to the Company's 1986 Form 10-K (No. 1-
8791)).*
(10)-44- Agreement and Plan of Reorganization of ENSTAR Corporation,
dated December 22, 1989, by and among Unimar Company,
Ultrastar, Inc., Unistar, Inc., ENSTAR Corporation, Newstar
Inc., Union Texas Development Corporation, Union Texas
Petroleum Corporation and Ultramar America Limited. (filed
as Exhibit (10)-47- to the Company's 1993 Form 10-K (No. 1-
8791)).*
*Incorporated herein by reference.
(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)).*
(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 10.104
to the Union Texas Petroleum Holdings, Inc. 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 10.105 to the Union Texas Petroleum Holdings,
Inc. 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 10.106 to the Union Texas
Petroleum Holdings, Inc. 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");
*Incorporated herein by reference.
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)).*
(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, but effective as of
September 30, 1994, 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, but
effective as of December 6, 1994, 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
Dwiputra 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)).*
(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)).*
*Incorporated herein by reference.
(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)).*
(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
*Incorporated herein by reference.
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)).*
(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 (filed as Exhibit (10)-70- to the
Company's 1996 Form 10-K (No. 1-8791)).*
(10)-71- $1,127,000,000 Bontang VI Loan Agreement, dated as of March
4, 1997, among Bank of America National Trust and Savings
Association, as Trustee under the Bontang VI Trustee and
Paying Agent Agreement, as borrower, Bank of Taiwan New York
Agency as Lead Arranger, Bontang LNG Train-H Investment Co.,
Ltd. as Co-Lead Arranger, The Chase Manhattan Bank as Agent,
Co-Agent and Co-Arranger, and the Co-Agents, Co-Arrangers
and Lenders named therein (filed as Exhibit 10.3 to the
Union Texas Petroleum Holdings, Inc. form 10-Q for the
quarter ended March 31, 1997 (Commission File No. 1-9019)).*
(10)-72- Bontang VI Producers Agreement, dated as of March 4, 1997,
by Perusahaan Pertambangan Minyak Dan Gas Bumi Negara
(?Pertamina?), Total Indonesie, Virginia Indonesia Company,
Union Texas East Kalimantan Limited, LASMO Sanga Sanga
Limited, Virginia International Company, Opicoil Houston,
Inc., Universe Gas & Oil Company, Inc., Indonesia Petroleum,
Ltd., Unocal Indonesia Company (collectively, the
?Producers?), in favor of Bank of Taiwan New York Agency, as
Lead Arranger, Bontang LNG Train-H Investment Co., Ltd. as
Co-Lead Arranger, The Chase Manhattan Bank as Agent, Co-
Agent and Co-Arranger, and the Co-Agents, Co-Arrangers and
Lenders named therein (filed as Exhibit 10.4 to the Union
Texas Petroleum Holdings, Inc. Form 10-Q for the quarter
ended March 31, 1997
*Incorporated herein by reference.
(Commission File No. 1-9019)).*
(10)-73- Bontang VI Trustee and Paying Agent Agreement, dated as of
March 4, 1997, among the Producers and Bank of America
National Trust and Savings Association, as Trustee and
Paying Agent (filed as Exhibit 10.5 to the Union Texas
Petroleum Holdings, Inc. Form 10-Q for the quarter ended
March 31, 1997 (Commission File No. 1-9019)).*
(10)-74- Amendment No. 2 to Bontang III Loan Agreement, dated as of
March 4, 1997 among BankAmerica International, as Trustee
under the Bontang III Trustee and Paying Agent Agreement,
Train-E Finance Co., Ltd., as Tranche A Lender, and The
Industrial Bank of Japan Trust Company, as agent on behalf
of the Majority Tranche B Lenders (filed as Exhibit 10.7 to
the Union Texas Petroleum Holdings, Inc. Form 10-Q for the
quarter ended March 31, 1997 (Commission File No. 1-9019)).*
(10)-75- Amendment No. 2 to Amended and Restated Bontang Excess Sales
Trustee and Paying Agent Agreement, dated as of March 4,
1997, among BankAmerica International, as Trustee, and the
Producers (filed as Exhibit (10)-1- to the Company's Form 10-
Q for the quarter ended June 30, 1997 (No. 1-8791)).*
(10)-76- Bontang VI Disbursement Trustee and Paying Agent Agreement
dated as of March 19, 1997, between Bank of America National
Trust and Savings Association, as Bontang VI Trustee, and
Bank of America National Trust and Savings Association, as
Disbursement Trustee (filed as Exhibit (10)-2- to the
Company's Form 10-Q for the quarter ended June 30, 1997 (No.
1-8791)).*
(10)-77- Addendum to Badak IV LNG Sales Contract Supply Agreement,
dated January 31, 1994, but effective as of October 23,
1990, by and between Pertamina, on the one hand, and 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
10.112 to the Union Texas Petroleum Holdings, Inc. 1997 Form
10-K (Commission File No. 1-9019)).*
(10)-78- Memorandum of Agreement, effective as of December 6, 1994,
between Pertamina and Chinese Petroleum Corporation for sale
and purchase of LNG during 1998 and 1999 (files as Exhibit
10.115 to the Union Texas Petroleum Holdings, Inc. 1997 Form
10-K (Commission File No. 1-9019)).*
(10)-79- Supplemental Memorandum, dated as of August 24, 1983, by and
between Pertamina and Roy M. Huffington, Inc., Virginia
International Company, Ultramar Indonesia Limited,
Indonesian Superior Oil Company, Union Texas Far East
Corporation and Universe Tankships, Inc (filed as Exhibit
10.118 to the Union Texas Petroleum Holdings, Inc. 1997 Form
10-K (Commission File No. 1-9019)).*
(21)-1- List of Subsidiaries of the Company.
(23)-1- Consent of KPMG LLP.
(27)-1- Financial Data Schedule for the twelve months ended December
31, 1998.
*Incorporated herein by reference.
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
ENSTAR Indonesia, Inc. Delaware
Virginia International Company Delaware
ENSTAR Petroleum Ltd. Canada
</TABLE>
EXHIBIT (23)-1-
CONSENT OF INDEPENDENT AUDITORS
To the partners of Unimar Company
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 March 5,
1999, relating to the consolidated balance sheets of Unimar
Company and subsidiaries as of December 31, 1998 and 1997 and the
related consolidated statements of earnings, cash flows and
changes in partners' capital and comprehensive income for each of
the years in the three-year period ended December 31, 1998, which
report appears in the December 31, 1998 annual report on Form 10-
K of Unimar Company.
KPMG LLP
Houston, Texas
March 19, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 9,122
<SECURITIES> 0
<RECEIVABLES> 7,887
<ALLOWANCES> 0
<INVENTORY> 9,239
<CURRENT-ASSETS> 29,058
<PP&E> 1,122,115
<DEPRECIATION> 801,984
<TOTAL-ASSETS> 351,416
<CURRENT-LIABILITIES> 26,063
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 351,416
<SALES> 138,672
<TOTAL-REVENUES> 138,672
<CGS> 53,838
<TOTAL-COSTS> 54,828
<OTHER-EXPENSES> 691
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44
<INCOME-PRETAX> 84,259
<INCOME-TAX> 33,797
<INCOME-CONTINUING> 50,462
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,462
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
