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 SEPTEMBER 30, 1995
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
SUN ENERGY PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 75-2070723
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
13155 NOEL ROAD, DALLAS, TEXAS 75240-5067
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(214) 715-4000
(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 November 6,
1995 was 7,543,100.
<PAGE>
SUN ENERGY PARTNERS, L.P.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income for the
Three and Nine Months Ended September 30, 1995
and 1994 3
Condensed Consolidated Balance Sheets at September 30,
1995 and December 31, 1994 4
Condensed Consolidated Statements of Cash Flows for
the Nine Months Ended September 30, 1995 and 1994 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
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
SUN ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months For the Nine Months
(Millions of Dollars, Except Ended September 30 Ended September 30
Per Unit Amounts) 1995 1994 1995 1994
(Unaudited)
REVENUES
Oil and gas $ 131 $ 150 $ 424 $ 470
Other (12) - (8) (4)
------- ------- ------- -------
119 150 416 466
------- ------- ------- -------
COSTS AND EXPENSES
Operating costs 39 51 125 149
Production taxes 8 11 24 33
Exploration costs 11 5 29 40
Depreciation, depletion and
amortization 41 40 122 126
General and administrative
expense 13 11 41 41
Interest and debt expense 3 4 10 13
Interest capitalized (3) (1) (7) (3)
------- ------- ------- -------
112 121 344 399
------- ------- ------- -------
Income Before Cumulative Effect
of Accounting Change 7 29 72 67
Cumulative Effect of Accounting
Change (Note 2) - - - (577)
------- ------- ------- -------
Net Income (Loss) $ 7 $ 29 $ 72 $ (510)
======= ======= ======= =======
Net Income (Loss) Per Unit:
Before cumulative effect of
accounting change $ .02 $ .07 $ .17 $ .16
Cumulative effect of
accounting change - - - (1.37)
------- ------- ------- -------
Net Income (Loss) $ .02 $ .07 $ .17 $(1.21)
======= ======= ======= =======
Cash Distributions Paid
to Unitholders $ 67 $ 29 $ 185 $ 92
======= ======= ======= =======
Cash Distributions Per Unit $ .16 $ .07 $ .44 $ .22
======= ======= ======= =======
Weighted Average Number of Units
Outstanding (in thousands) 421,171 421,171 421,171 421,171
======= ======= ======= =======
(See Accompanying Notes)
<PAGE>
SUN ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30 December 31
(Millions of Dollars) 1995 1994
(Unaudited)
ASSETS
Current Assets
Cash and short-term investments $ 4 $ 11
Advances to affiliate - 9
Accounts and notes receivable and other
current assets 74 88
-------- --------
Total Current Assets 78 108
Properties, Plants and Equipment (Note 3) 933 993
Investment in Affiliate 80 80
-------- --------
Total Assets $ 1,091 $ 1,181
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
Advances from affiliate $ 40 $ -
Accounts payable 57 62
Accrued liabilities 68 72
Current portion of long-term debt
due affiliate 10 10
Current portion of long-term debt 2 2
-------- --------
Total Current Liabilities 177 146
Long-Term Debt Due Affiliate 65 72
Long-Term Debt - 2
Deferred Credits and Other Liabilities 28 27
COMMITMENTS AND CONTINGENT LIABILITIES
Partners' Capital (Note 4)
Limited partnership interests 252 286
General partnership interests 569 648
-------- --------
Partners' Capital 821 934
-------- --------
Total Liabilities and Partners' Capital $ 1,091 $ 1,181
======== ========
The successful efforts method of accounting is followed.
(See Accompanying Notes)
<PAGE>
SUN ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months
Ended September 30
(Millions of Dollars) 1995 1994
(Unaudited)
CASH FROM OPERATING ACTIVITIES
Net income (loss) $ 72 $ (510)
Adjustments to reconcile net income (loss)
to net cash from operating activities:
Depreciation,
depletion and amortization 122 126
Dry hole costs and leasehold
impairment 14 23
Cumulative effect of
accounting change - 577
Other 2 1
------ -------
210 217
Changes in working capital:
Accounts and notes receivable and
other current assets 9 14
Accounts payable and accrued liabilities
and advances from affiliates 31 (1)
------ -------
Net Cash Flow Provided From
Operating Activities 250 230
------ -------
INVESTING ACTIVITIES
Capital expenditures (138) (115)
Proceeds from divestments 76 3
Other (10) (7)
------ -------
Net Cash Flow Used For
Investing Activities (72) (119)
------ -------
FINANCING ACTIVITIES
Repayments of long-term debt (9) (11)
Cash distributions paid
to unitholders (185) (92)
------ -------
Net Cash Flow Used For
Financing Activities (194) (103)
------ -------
CHANGES IN CASH AND CASH EQUIVALENTS (16) 8
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 20 4
------ -------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 4 $ 12
====== =======
(See Accompanying Notes)
<PAGE>
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 nine months ended
September 30, 1995 are not necessarily indicative of the
results for the full year 1995.
Statements of Cash Flows
Amounts paid for interest were as follows:
Nine Months Ended September 30
1995 1994
------ ------
(Millions of Dollars)
Interest paid
(net of capitalized amounts) $ - $ 10
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. Accounting Change
Effective January 1, 1994, the Partnership changed its
accounting policy for calculating the oil and gas asset
ceiling test from a total Partnership basis to an individual
field basis. As a result of this change, the Partnership
recognized a one time non-cash cumulative charge to 1994
earnings of $577 million. Consequently, earnings have been
restated for the three and nine months ended September 30,
1994, as follows:
<PAGE>
SUN ENERGY PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
2. Accounting Change (continued)
For the Three Months For the Nine Months
Ended September 30, 1994 Ended September 30, 1994
-------------------------------------------------
(Millions of Dollars, Except Per Unit Amounts)
As Reported:
Net income (loss) $ 11 $ (71)
====== =======
Net income (loss) per unit $ .03 $ (.17)
====== =======
As Restated:
Net income (loss) $ 29 $ (510)
====== =======
Net income (loss) per unit $ .07 $(1.21)
====== =======
3. Properties, Plants and Equipment
September 30 December 31
1995 1994
------------ -----------
(Millions of Dollars)
Gross investment $3,651 $4,015
Less accumulated depreciation,
depletion and amortization 2,718 3,022
------- -------
Net investment $ 933 $ 993
======= =======
4. Partners' Capital
At September 30, 1995, 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 September 30,
1995, there was a total of 421.2 million units outstanding.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of Sun Energy Partners, L.P., and the Board of
Directors of Oryx Energy Company:
We have reviewed the accompanying condensed consolidated balance
sheet of Sun Energy Partners, L.P. and its Subsidiaries as of
September 30, 1995, and the related condensed consolidated
statements of income for the three and nine months ended
September 30, 1995 and 1994, and the related condensed
consolidated statements of cash flows for the nine months ended
September 30, 1995 and 1994. These financial statements are the
responsibility of Oryx Energy Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
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 conducted 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 accompanying condensed
consolidated financial statements 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, 1994, 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, 1995, which included an explanatory
paragraph describing the change in accounting for calculating the
oil and gas asset ceiling test in 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, 1994, 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
November 6, 1995
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
FINANCIAL CONDITION
At September 30, 1995, cash and cash equivalents were $4 million
compared to $20 million at December 31, 1994. The $16 million
decrease in cash and cash equivalents was comprised of $250
million provided from operating activities, $72 million used for
investing activities and $194 million used for financing
activities. The $250 million net cash flow provided from
operating activities was comprised of $210 million net cash flow
provided from operating activities before changes in current
assets and liabilities and $40 million net cash flow provided
from changes in current assets and liabilities. The $210 million
net cash flow provided from operating activities before changes
in current assets and liabilities was favorably impacted by an
increase in crude oil prices partially offset by decreases in
natural gas volumes and prices. The $40 million net cash flow
provided from changes in current assets and liabilities consisted
of a $9 million decrease in accounts and notes receivable and
other current assets, and a $31 million increase in accounts
payable, accrued liabilities, and advances from affiliates.
The $72 million net cash flow used for investing activities
consisted primarily of $138 million used for capital
expenditures, partially offset by $76 million in divestment
proceeds. The $194 million net cash flow used for financing
activities resulted from the scheduled payment of $9 million of
long-term debt and $185 million of cash distributions paid to
unitholders.
During March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of", effective for fiscal years
beginning after December 15, 1995. When adopted, the impact of
this statement is expected to be immaterial.
A third quarter cash distribution of $.16 per unit was paid on
September 11, 1995. A fourth quarter cash distribution of $.02
per unit has been declared by Oryx Energy Company's Board of
Directors and will be paid on December 11, 1995 to unitholders of
record on November 17, 1995.
RESULTS OF OPERATIONS - NINE MONTHS
Net income for the first nine months of 1995 was $72 million, or
$.17 per unit, compared to net income before the cumulative
effect of accounting change of $67 million, or $.16 per unit, in
the first nine months of 1994. Revenues for the nine months were
$416 million in 1995 versus $466 million in 1994.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - continued
RESULTS OF OPERATIONS - NINE MONTHS (continued)
Average net production of crude oil and condensate was 46
thousand barrels daily during the first nine months of 1995
compared to average net production of 49 thousand barrels daily
for the first nine months of 1994. The crude oil and condensate
price in the first nine months of 1995 increased to $16.53 per
barrel, as compared to $14.43 per barrel in the same period last
year.
Average net production of natural gas for the first nine months
of 1995 was 473 million cubic feet daily compared to average net
production of 533 million cubic feet daily for the same period in
1994. The natural gas price for the first nine months of 1995
was $1.66 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 net income of $7 million, or $.02 per
unit, for the quarter ended September 30, 1995, compared to net
income of $29 million, or $.07 per unit, for the same quarter
last year. Revenues for the 1995 third quarter were $119 million
versus $150 million for the 1994 third quarter.
Average net production of crude oil and condensate for the third
quarter of 1995 was 44 thousand barrels daily compared to average
net production for the third quarter of 1994 of 47 thousand
barrels daily. The average crude oil and condensate price in the
third quarter of 1995 increased to $16.20 per barrel, as compared
to $15.34 per barrel in the same period in 1994.
Average net production of natural gas for the third quarter of
1995 was 439 million cubic feet daily compared to average net
production of 536 million cubic feet daily for the third quarter
of 1994. The average natural gas price in the third quarter of
1995 was $1.61 per thousand cubic feet, as compared to $1.71 per
thousand cubic feet in the same period in 1994.
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
The Partnership did not file any reports on Form 8-
K during the quarter ended September 30, 1995.
******************
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
<PAGE>
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
---------------------
E. W. Moneypenny
(Executive Vice President,
Finance, and Chief Financial Officer)
DATE: November 7, 1995
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
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<PERIOD-END> SEP-30-1995
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