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 June 30, 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 July 31,
1994 was 7,543,100.
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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 and Six Months Ended June 30, 1994 and 1993 3
Condensed Consolidated Balance Sheets at June 30,
1994 and December 31, 1993 4
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 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 For the Six Months
(Millions of Dollars, Ended June 30 Ended June 30
Except Per Unit Amounts)1994 1993 1994 1993
---- ---- ---- ----
(Unaudited)
REVENUES
Oil and gas $ 158 $ 186 $ 325 $ 354
Other (4) - (12) -
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154 186 313 354
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COSTS AND EXPENSES
Operating costs 49 47 98 100
Production taxes 11 15 22 27
Exploration costs 19 11 35 19
Depreciation, depletion
and amortization 56 61 119 125
General and administrative
expense 15 15 30 38
Interest and debt
expense 4 4 7 6
Provision for
restructuring (Note 2) - - 84 -
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154 153 395 315
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Net Income (Loss) $ - $ 33 $ (82) $ 39
======= ======= ======= =======
Net Income (Loss) Per
Unit $ - $ .08 $ (.19) $ .09
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Cash Distributions Paid
to Unitholders $ 29 $ 66 $ 63 $ 169
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Cash Distributions Per
Unit $ .07 $ .16 $ .15 $ .41
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Weighted Average Number
of Units Outstanding
(in thousands) 421,171 412,455 421,171 412,455
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(See Accompanying Notes)
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SUN ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30 December 31
(Millions of Dollars) 1994 1993
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(Unaudited)
Assets
Current Assets
Cash and short-term investments $ 3 $ 4
Accounts and notes receivable and
other current assets 135 113
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Total Current Assets 138 117
Properties, Plants and Equipment
(Note 3) 1,466 1,625
Deferred Charges and Other Assets 81 80
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Total Assets $ 1,685 $ 1,822
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LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
Advances from affiliate $ 42 $ 22
Accounts payable 77 92
Accrued liabilities 68 58
Current portion of long-term debt
due affiliate 9 9
Current portion of long-term debt 1 5
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Total Current Liabilities 197 186
Long-Term Debt due Affiliate 78 82
Long-Term Debt 3 4
Deferred Credits and Other Liabilities 27 25
Partners' Capital (Note 4)
Limited partnership interests 423 468
General partnership interests 957 1,057
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Partners' Capital 1,380 1,525
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Total Liabilities and Partners'
Capital $ 1,685 $ 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 Six Months
Ended June 30
(Millions of Dollars) 1994 1993
---- ----
(Unaudited)
CASH FROM OPERATING ACTIVITIES
Net income (loss) $ (82) $ 39
Adjustments to reconcile net income
(loss) to net cash from operating
activities:
Depreciation, depletion and
amortization 119 125
Dry hole costs and leasehold impairment 22 3
Loss on divestments 3 -
Provision for restructuring 84 -
Other 1 -
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147 167
Changes in working capital:
Accounts and notes receivable and
other current assets (23) 18
Accounts payable and accrued
liabilities and advances from
affiliates 17 21
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Net Cash Flow Provided From Operating
Activities 141 206
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INVESTING ACTIVITIES
Capital expenditures (69) (67)
Proceeds from divestments 3 20
Other (4) (4)
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Net Cash Flow Used For Investing
Activities (70) (51)
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FINANCING ACTIVITIES
Repayments of long-term debt (9) (7)
Cash distributions paid to unitholders (63) (169)
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Net Cash Flow Used For Financing Activities (72) (176)
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CHANGES IN CASH AND CASH EQUIVALENTS (1) (21)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 4 27
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3 $ 6
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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 six months ended June
30, 1994 are not necessarily indicative of the results for the
full year 1994.
Statements of Cash Flows
Amounts paid for interest were as follows:
Six Months Ended June 30
1994 1993
---- ----
(Millions of Dollars)
Interest paid (net of capitalized
amounts) $ 7 $ 6
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 an $84 million charge in
the first quarter of 1994. Management of the Company expects the
Partnership to realize about $60 million of cost reductions in
1995 resulting from a combination of asset disposals and reduced
management fees as a result of the Company's major cost reduction
program.
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.
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3. Properties, Plants and Equipment
June 30 December 31
1994 1993
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(Millions of Dollars)
Gross investment ............... $4,172 $4,247
Less accumulated depreciation,
depletion and amortization ... 2,706 2,622
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Net investment $1,466 $1,625
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4. Partners' Capital
At June 30, 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 June 30, 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 June 30,
1994, the related condensed consolidated statements of income for
the three and six months ended June 30, 1994 and 1993 and the
related condensed consolidated statements of cash flows for the
six months ended June 30, 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 L.L.P.
Dallas, Texas
August 11, 1994
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
FINANCIAL CONDITION
At June 30, 1994, cash and cash equivalents were $3 million
compared to $4 million at December 31, 1993. The $1 million
decrease in cash and cash equivalents was comprised of $141
million provided from operating activities, $70 million used for
investing activities and $72 million used for financing
activities. The $141 million net cash flow provided from
operating activities was comprised of $147 million net cash flow
provided from operating activities before changes in current
assets and liabilities and $6 million net cash flow used for
changes in current assets and liabilities. The $147 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 $6 million net
cash flow used for changes in current assets and liabilities
consisted of a $23 million increase in accounts and notes
receivable and other current assets, partially offset by a $17
million increase in accounts payable and accrued liabilities.
The $70 million net cash flow used for investing activities
consisted primarily of $69 million used for capital expenditures,
partially offset by $3 million of proceeds from divestments. The
$72 million net cash flow used for financing activities resulted
from the scheduled payment of $9 million of long-term debt and
$63 million 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 an $84 million charge in the first quarter
of 1994. Management of Oryx Energy Company expects the
Partnership to realize about $60 million of cost reductions in
1995 resulting from a combination of asset disposals and reduced
management fees as a result of Oryx Energy Company's major cost
reduction program.
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 second quarter cash distribution of $.07 per unit was paid on
June 10, 1994. A third quarter cash distribution of $.07 per
unit has been declared by Oryx Energy Company's Board of
Directors and will be paid on September 9, 1994 to unitholders of
record on August 19, 1994.<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - continued
RESULTS OF OPERATIONS - SIX MONTHS
The net loss for the first six months of 1994 was $82 million,
compared to net income of $39 million in the first six months of
1993. Revenues for the six months were $313 million in 1994
versus $354 million in 1993. Year-to-date 1994 results include a
special $84 million restructuring charge and $3 million of losses
on asset sales.
Production of crude oil and condensate was 49 thousand barrels
daily during the first six months of 1994 compared to production
of 55 thousand barrels daily for the first six months of 1993.
The crude oil and condensate price in the first six months of
1994 decreased to $13.99 per barrel, as compared to $17.37 per
barrel in the same period last year.
Production of natural gas for the first six months of 1994 was
531 million cubic feet daily compared to production of 519
million cubic feet daily for the same period in 1993. The
natural gas price for the first six months of 1994 was $2.03 per
thousand cubic feet, as compared to $1.92 per thousand cubic feet
in the same period last year.
RESULTS OF OPERATIONS - THREE MONTHS
The Partnership reported break-even results for the second
quarter of 1994, compared to net income of $33 million, or $.08
per unit, in the second quarter of 1993. Revenues for the 1994
quarter were $154 million versus $186 million for the 1993
quarter.
In the quarter-to-quarter comparison, oil production decreased 7
thousand barrels per day and gas production decreased 13 million
cubic feet per day. Comparing prices for the second quarter of
1994 versus 1993, oil fell by $2.16 per barrel and natural gas
fell by $.14 per mcf.
Production of crude oil and condensate for the second quarter of
1994 was 48 thousand barrels daily compared to production for the
second quarter of 1993 of 55 thousand barrels daily. The average
crude oil and condensate price in the second quarter of 1994
decreased to $15.28 per barrel, as compared to $17.44 per barrel
in the same period in 1993.
Production of natural gas for the second quarter of 1994 was 515
million cubic feet daily compared to production of 528 million
cubic feet daily for the second quarter of 1993. The average
natural gas price in the second quarter of 1994 was $1.92 per
thousand cubic feet, as compared to $2.06 per thousand cubic feet
in the same period in 1993.<PAGE>
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PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K:
The Partnership did not file any reports on Form 8-K
during the quarter ended June 30, 1994.
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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: August 11, 1994
