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, 1995
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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
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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,
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 Six Months Ended June 30, 1995 and 1994...... 3
Condensed Consolidated Balance Sheets at June 30, 1995
and December 31, 1994.................................. 4
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 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 Six Months
(Millions of Dollars, Ended June 30 Ended June 30
Except Per Unit Amounts)1995 1994 1995 1994
---- ---- ---- ----
(Unaudited)
REVENUES
Oil and gas $ 146 $ 158 $ 293 $ 320
Other 7 (3) 4 (4)
------- ------- ------- -------
153 155 297 316
------- ------- ------- -------
COSTS AND EXPENSES
Operating costs 37 49 86 98
Production taxes 8 11 16 22
Exploration costs 9 19 18 35
Depreciation, depletion
and amortization 41 40 81 86
General and administrative
expense 14 15 28 30
Interest and debt expense 4 6 7 9
Interest capitalized (2) (2) (4) (2)
------- ------- ------- -------
111 138 232 278
------- ------- ------- -------
Income Before Cumulative
Effect of Accounting
Change 42 17 65 38
Cumulative Effect of
Accounting Change
(Note 2) - - - (577)
------- ------- ------- -------
Net Income (Loss) $ 42 $ 17 $ 65 $ (539)
======= ======= ======= =======
Net Income (Loss)
Per Unit:
Before cumulative
effect of accounting
change $ .10 $ .04 $ .15 $ .09
Cumulative effect of
accounting change - - - (1.37)
------- ------- ------- -------
Net income (loss) $ .10 $ .04 $ .15 $(1.28)
======= ======= ======= =======
Cash Distributions Paid
to Unitholders $ 59 $ 29 $ 118 $ 63
======= ======= ======= =======
Cash Distributions Per
Unit $ .14 $ .07 $ .28 $ .15
======= ======= ======= =======
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
June 30 December 31
(Millions of Dollars) 1995 1994
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(Unaudited)
ASSETS
Current Assets
Cash and short-term investments $ 11 $ 11
Advances to affiliate 16 9
Accounts and notes receivable and
other current assets 76 88
-------- --------
Total Current Assets 103 108
Properties, Plants and Equipment
(Note 3) 931 993
Deferred Charges and Other Assets 80 80
-------- --------
Total Assets $ 1,114 $ 1,181
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
Accounts payable $ 59 $ 62
Accrued liabilities 62 72
Current portion of long-term debt
due affiliate 10 10
Current portion of long-term debt 2 2
-------- --------
Total Current Liabilities 133 146
Long-Term Debt due Affiliate 68 72
Long-Term Debt 1 2
Deferred Credits and Other Liabilities 30 27
Partners' Capital (Note 4)
Limited partnership interests 270 286
General partnership interests 612 648
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Partners' Capital 882 934
-------- --------
Total Liabilities and Partners' Capital $ 1,114 $ 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 Six Months
Ended June 30
(Millions of Dollars) 1995 1994
---- ----
(Unaudited)
CASH FROM OPERATING ACTIVITIES
Net income (loss) $ 65 $ (539)
Adjustments to reconcile net income
(loss) to net cash from operating
activities:
Depreciation, depletion and amortization 81 86
Dry hole costs and leasehold impairment 8 22
Gain on divestments (7) -
Cumulative effect of accounting change - 577
Other 2 1
------- ------
149 147
Changes in working capital:
Accounts and notes receivable and
other current assets 8 (23)
Accounts payable, accrued liabilities (12) 17
------- ------
Net Cash Flow Provided From Operating
Activities 145 141
------- ------
INVESTING ACTIVITIES
Capital expenditures (89) (69)
Proceeds from divestments 76 3
Other (2) (4)
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Net Cash Flow Used For Investing Activities (15) (70)
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FINANCING ACTIVITIES
Repayments of long-term debt (5) (9)
Cash distributions paid to unitholders (118) (63)
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Net Cash Flow Used For Financing Activities (123) (72)
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CHANGES IN CASH AND CASH EQUIVALENTS 7 (1)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 20 4
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 27 $ 3
======= ======
(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 six months ended June
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:
Six Months Ended June 30
1995 1994
------ ------
(Millions of Dollars)
Interest paid (net of capitalized
amounts) $ - $ 7
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 six
months ended June 30, 1994, as follows:
For the Three Months For the Six Months
Ended June 30, 1994 Ended June 30, 1994
-------------------- -------------------
(Millions of Dollars, Except Per Unit Amounts)
As Reported:
Net loss $ - $ (82)
======= ========
Net loss per unit $ - $ (.19)
======= ========
As Restated:
Net income (loss) $ 17 $ (539)
======= ========
Net income (loss) per unit $ .04 $ (1.28)
======= ========
<PAGE>
SUN ENERGY PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (cont.)
3. Properties, Plants and Equipment
June 30 December 31
1995 1994
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(Millions of Dollars)
Gross investment $3,644 $4,015
Less accumulated depreciation,
depletion and amortization 2,713 3,022
------- -------
Net investment $ 931 $ 993
======= =======
4. Partners' Capital
At June 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 June 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
June 30, 1995, and the related condensed consolidated statements
of income for the three and six months ended June 30, 1995 and
1994, and the related condensed consolidated statements of cash
flows for the six months ended June 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
August 11, 1995
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
FINANCIAL CONDITION
The Partnership's cash and cash equivalents increased $7 million
over the six months ended June 30, 1995. The $7 million increase
was comprised of $145 million provided from operating activities,
$15 million used for investing activities and $123 million used
for financing activities. The $145 million net cash flow
provided from operating activities was comprised of $149 million
net cash flow provided from operating activities before changes
in current assets and liabilities and $4 million net cash flow
used for changes in current assets and liabilities. The $145
million net cash flow provided from operating activities before
changes in current assets and liabilities was favorably impacted
by increases in crude oil prices partially offset by a decrease
in natural gas volumes and prices. The $4 million net cash flow
used for changes in current assets and liabilities consisted of
an $8 million decrease in accounts and notes receivable and other
current assets, partially offset by a $12 million decrease in
accounts payable and accrued liabilities.
The $15 million net cash flow used for investing activities
consisted primarily of $89 million used for capital expenditures,
partially offset by $76 million of proceeds from divestments.
The $123 million net cash flow used for financing activities
resulted from the scheduled payment of $5 million of long-term
debt and $118 million 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 second quarter cash distribution of $.14 per unit was paid on
June 9, 1995. A third quarter cash distribution of $.16 per unit
has been declared by Oryx Energy Company's Board of Directors and
will be paid on September 11, 1995 to unitholders of record on
August 18, 1995. The cash distribution includes $.08 per unit
from divestment proceeds.
RESULTS OF OPERATIONS - SIX MONTHS
Net income for the first six months of 1995 was $65 million, or
$.15 per unit, compared to net income before the cumulative
effect of accounting change of $38 million, or $.09 per unit, in
the first six months of 1994. Revenues for the six months were
$297 million in 1995 versus $316 million in 1994.
Production of crude oil and condensate was 47 thousand barrels
daily during the first six months of 1995 compared to production
of 49 thousand barrels daily for the first six months of 1994.
The crude oil and condensate price in the first six months of
1995 increased to $16.68 per barrel, as compared to $13.99 per
barrel in the same period last year.
Production of natural gas for the first six months of 1995 was
490 million cubic feet daily compared to production of 531
million cubic feet daily for the same period in 1994. The
natural gas price for the first six months of 1995 was $1.69 per
thousand cubic feet, as compared to $2.03 per thousand cubic
feet in the same period last year.
RESULTS OF OPERATIONS - THREE MONTHS
The Partnership reported net income of $42 million, or $.10 per
unit, for the second quarter of 1995, compared to net income of
$17 million, or $.04 per unit, for the same quarter last year,
which was restated for a change in accounting principle.
Revenues for the 1995 quarter were $153 million versus $155
million for the 1994 quarter.
Production of crude oil and condensate for the second quarter of
1995 was 47 thousand barrels daily compared to production for the
second quarter of 1994 of 48 thousand barrels daily. The average
crude oil and condensate price in the second quarter of 1995
increased $1.82 to $17.10 per barrel, as compared to $15.28 per
barrel in the same period in 1994.
Production of natural gas for the second quarter of 1995 was 480
million cubic feet daily compared to production of 515 million
cubic feet daily for the second quarter of 1994. The average
natural gas price in the second quarter of 1995 fell by $.22 to
$1.70 per thousand cubic feet, as compared to $1.92 per thousand
cubic feet in the same period in 1994.
Total costs and expenses decreased $27 million, or 20 percent, as
a result of reductions in almost all categories.
<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 June 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: August 11, 1995
<TABLE> <S> <C>
<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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<MULTIPLIER> 1000000
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
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<OTHER-SE> 882
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