UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
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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 1-9033
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SUN ENERGY PARTNERS, L.P.
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(Exact name of registrant as specified in its charter)
DELAWARE 75-2070723
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
13155 NOEL ROAD, DALLAS, TEXAS 75240-5067
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(Address of principal executive offices) (Zip code)
(214) 715-4000
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(Registrant's telephone number, including area code)
Indicate by check mark whether the 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
---
The number of depositary units outstanding as of April 30,
1994 was 7,543,100.<PAGE>
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SUN ENERGY PARTNERS, L.P.
INDEX
Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income for the
Three Months Ended March 31, 1994 and 1993 3
Condensed Consolidated Balance Sheets at March 31,
1994 and December 31, 1993 4
Condensed Consolidated Statements of Cash Flows for
the Three Months Ended March 31, 1994 and 1993 5
Notes to Condensed Consolidated Financial Statements 6
Report of Independent Accountants 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURE 12
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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
SUN ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months
(Millions of Dollars, Except Ended March 31
Per Unit Amounts) --------------------
1994 1993
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(Unaudited)
REVENUES
Oil and gas $ 162 $ 168
Other (3) -
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159 168
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COSTS AND EXPENSES
Operating costs 48 51
Production taxes 11 12
Exploration costs 14 7
Depreciation, depletion and amortization 63 64
General and administrative expense 18 26
Interest and debt expense 3 2
Provision for restructuring (Note 2) 84 -
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241 162
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Net Income (Loss) $ (82) $ 6
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Net Income (Loss) Per Unit $ (.19) $ .01
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Cash Distributions Paid to Unitholders $ 34 $ 103
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Cash Distributions Per Unit $ .08 $ .25
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Weighted Average Number of Units
Outstanding (in thousands) 421,171 412,455
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(See Accompanying Notes)
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SUN ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31 December 31
(Millions of Dollars) 1994 1993
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(Unaudited)
ASSETS
Current Assets
Cash and short-term investments $ 4 $ 4
Accounts and notes receivable and
other current assets 105 113
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Total Current Assets 109 117
Properties, Plants and Equipment
(Note 3) 1,510 1,625
Deferred Charges and Other Assets 81 80
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Total Assets $ 1,700 $ 1,822
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LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
Advances from affiliate $ 48 $ 22
Accounts payable 68 92
Accrued liabilities 55 58
Current portion of long-term debt
due affiliate 9 9
Current portion of long-term debt 3 5
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Total Current Liabilities 183 186
Long-Term Debt due Affiliate 80 82
Long-Term Debt 4 4
Deferred Credits and Other Liabilities 24 25
Partners' Capital (Note 4)
Limited partnership interests 432 468
General partnership interests 977 1,057
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Partners' Capital 1,409 1,525
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Total Liabilities and Partners' Capital $ 1,700 $ 1,822
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The successful efforts method of accounting is followed.
(See Accompanying Notes)
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SUN ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months
Ended March 31
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(Millions of Dollars) 1994 1993
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(Unaudited)
CASH FROM OPERATING ACTIVITIES
Net income (loss) $ (82) $ 6
Adjustments to reconcile net income
(loss) to net cash from operating
activities:
Depreciation, depletion and amortization 63 64
Dry hole costs and leasehold impairment 8 -
Loss on divestments 2 1
Provision for restructuring 84 -
Other (1) 1
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74 72
Changes in working capital:
Accounts and notes receivable and
other current assets 7 50
Accounts payable, accrued liabilities
and advances from affiliates - (28)
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Net Cash Flow Provided From Operating
Activities 81 94
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CASH AND CASH EQUIVALENTS FROM INVESTING ACTIVITIES
Capital expenditures (39) (22)
Proceeds from divestments - 13
Other (4) (2)
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Net Cash Flow Used For Investing Activities (43) (11)
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CASH AND CASH EQUIVALENTS FROM FINANCING ACTIVITIES
Repayments of long-term debt (4) (3)
Cash distributions paid to unitholders (34) (103)
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Net Cash Flow Used For Financing Activities (38) (106)
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Changes In Cash and Cash Equivalents - (23)
Cash and Cash Equivalents at Beginning of Period 4 27
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Cash and Cash Equivalents at End of Period $ 4 $ 4
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(See Accompanying Notes)<PAGE>
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SUN ENERGY PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying condensed consolidated financial statements and
related notes of Sun Energy Partners, L.P. and its subsidiaries
(hereinafter, unless the context otherwise requires, being
referred to as the Partnership) are presented in accordance with
the requirements of Form 10-Q and do not include all disclosures
normally required by generally accepted accounting principles or
those normally made in annual reports on Form 10-K. In
management's opinion, all adjustments necessary for a fair
presentation of the results of operations for the periods shown
have been made and are of a normal recurring nature. The results
of operations of the Partnership for the three months ended March
31, 1994 are not necessarily indicative of the results for the
full year 1994.
Statements of Cash Flows
Amounts paid for interest were as follows:
Three Months Ended March 31
1994 1993
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(Millions of Dollars)
Interest paid (net of capitalized
amounts) $ 2 $ 2
In accordance with Statement of Financial Accounting Standards
No. 95, "Statement of Cash Flows," non-cash transactions are not
reflected within the accompanying Condensed Consolidated
Statements of Cash Flows.
2. Provision for Restructuring
In March 1994, Oryx Energy Company (Company) adopted plans
designed to achieve significant future cost reductions for the
Partnership by disposing of certain assets. Associated
therewith, the Partnership recognized a $84 million charge in the
first quarter of 1994. Management of the Company expects the
Partnership to realize about $35 million annual cost reductions
in 1995.
During 1993, the Properties included in the divestment plan
accounted for about four percent of the Partnership's oil and gas
production and at December 31, 1993, they accounted for about
eight percent of the Partnership's net investment in properties,
plants and equipment. Management of the Company expects to
complete the asset disposals during 1994.
3. Properties, Plants and Equipment
March 31 December 31
1994 1993
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(Millions of Dollars)
Gross investment ............... $4,267 $4,247
Less accumulated depreciation,
depletion and amortization ... 2,757 2,622
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Net investment $1,510 $1,625
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4. Partners' Capital
At March 31, 1994, the ownership of the Partnership was comprised
of a 69 percent general partnership interest and a 31 percent
limited partnership interest. Oryx Energy Company holds a 98
percent interest in the Partnership. A two percent limited
partnership interest in the form of depositary units is held by
the public. As of March 31, 1994, there was a total of 421.2
million units outstanding.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of Sun Energy Partners, L.P. and
the Board of Directors of Oryx Energy Company:
We have made a review of the condensed consolidated balance sheet
of Sun Energy Partners, L.P. and its Subsidiaries as of March 31,
1994, and the related condensed consolidated statements of income
and cash flows for the three months ended March 31, 1994 and
1993, in accordance with standards established by the American
Institute of Certified Public Accountants.
A review of interim financial information consists principally of
obtaining an understanding of the system for the preparation of
interim financial information, applying analytical review
procedures to financial data, and making inquiries of persons
responsible for financial and accounting matters. It is
substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such
an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the condensed consolidated
financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of December
31, 1993, and the related consolidated statements of income and
cash flows for the year then ended (not presented herein); and in
our report dated February 19, 1994, we expressed an unqualified
opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1993 is fairly
stated in all material respects in relation to the consolidated
balance sheet from which it has been derived.
COOPERS & LYBRAND
Dallas, Texas
May 9, 1994
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
FINANCIAL CONDITION
At March 31, 1994 and December 31, 1993, the Partnership's cash
and cash equivalents were $4 million. Cash flows for the first
quarter of 1993 included $81 million provided from operating
activities, $43 million used for investing activities and $38
million used for financing activities. The $81 million net cash
flow provided from operating activities was comprised of $74
million net cash flow provided from operating activities before
changes in current assets and liabilities and $7 million of net
cash flow provided from changes in current assets and
liabilities. The $74 million net cash flow provided from
operating activities before changes in current assets and
liabilities was unfavorably impacted by declines in crude oil
prices and volumes partially offset by an increase in natural gas
volumes and prices. The $7 million net cash flow provided from
changes in current assets and liabilities consisted of a $7
million decrease in accounts and notes receivable and other
current assets.
The $43 million net cash flow used for investing activities
primarily consisted of $39 million used for capital expenditures.
The $38 million net cash flow used for financing activities
resulted from the scheduled payment of $4 million of long-term
debt and $34 million of cash distributions paid to unitholders.
In March 1994, Oryx Energy Company adopted plans designed to
achieve significant future cost reductions for the Partnership by
disposing of certain assets. Associated therewith, the
Partnership recognized a $84 million charge in the first quarter
of 1994. Management of Oryx Energy Company expects the
Partnership to realize about $35 million of cost reductions in
1995 resulting from the asset disposals.
During 1993, the properties included in the divestment plan
accounted for about four percent of the Partnership's oil and gas
production and at December 31, 1993, they accounted for about
eight percent of the Partnership's net investment in properties,
plants and equipment. Management of Oryx Energy Company expects
to complete the asset disposals during 1994.
A first quarter cash distribution in the amount of $.08 per unit
was paid on March 10, 1994. A second quarter cash distribution
of $.07 per unit has been declared by Oryx Energy Company's Board
of Directors and will be paid on June 10, 1994 to unitholders of
record on May 20, 1994.
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - (continued)
RESULTS OF OPERATIONS
The net loss for the first quarter of 1994 was $82 million,
compared to net income of $6 million in the first quarter of
1993. The first quarter 1994 net loss includes a special $84
million charge for costs associated with the Partnership's
planned onshore divestments and $2 million in losses related to
asset sales. By comparison, the 1993 first quarter includes a $1
million loss on assets sales. Excluding these items, the
Partnership generated $4 million of operating income this quarter
versus $7 million of operating income in the same quarter last
year. Excluding the restructuring provision, total costs and
expenses decreased $5 million as a result of reductions in
production costs and general and administrative expenses,
partially offset by increased dry hole costs.
Average net production of crude oil and condensate was 50
thousand barrels daily during the first quarter of 1994 compared
to an average net production of 56 thousand barrels daily for the
first quarter of 1993. The average crude oil and condensate
price in the first quarter of 1994 decreased to $12.72 per
barrel, as compared to $17.31 per barrel in the same period last
year.
Average net production of natural gas for the first quarter of
1994 was 548 million cubic feet daily or eight percent higher
than average net production of 509 million cubic feet daily for
the same period in 1993. The average natural gas price for the
first quarter of 1994 was $2.12 per thousand cubic feet, as
compared to $1.78 per thousand cubic feet in the same period last
year.<PAGE>
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K:
On March 17, 1994, the Partnership filed a Form 8-K to
report a plan for disposing of certain assets. See Note 2 to
the Condensed Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Financial Condition.
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We are pleased to furnish this report to unitholders who
request it by writing to:
Sun Energy Partners, L.P. Unitholder Relations
c/o Oryx Energy Company
Managing General Partner
P.O. Box 60
Dallas, Texas 75221-0060
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SUN ENERGY PARTNERS, L.P.
BY ORYX ENERGY COMPANY
(Managing General Partner)
BY /s/ E. W. Moneypenny
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E. W. Moneypenny
(Senior Vice President, Finance, and Chief Financial
Officer)
DATE: May 12, 1994
