<PAGE>
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, 1997
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)
(972) 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 April 30,
1997 was 7,543,100.
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SUN ENERGY PARTNERS, L.P.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of
Income for the Three Months Ended March
31, 1997 and 1996 ........................ 3
Condensed Consolidated Balance Sheets at
March 31, 1997 and December 31, 1996 ..... 4
Condensed Consolidated Statements of
Cash Flows for the Three Months Ended
March 31, 1997 and 1996 ................. 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) 1997 1996
(Unaudited)
Revenues
Oil and gas $ 204 $ 159
Other (4) (1)
----- -----
200 158
----- -----
Costs and Expenses
Operating costs 34 34
Production taxes 11 9
Exploration costs 10 7
Depreciation, depletion and
amortization 52 42
General and administrative
expense 10 11
Interest and debt expense 4 5
Interest capitalized (4) (3)
----- -----
117 105
----- -----
Net Income $ 83 $ 53
===== =====
Net Income Per Unit $.20 $ .13
===== =====
Cash Distributions Paid Per Unit $.15 $ .02
===== =====
Weighted Average Number of Units
Outstanding (in thousands) 421,171 421,171
======= =======
(See Accompanying Notes)
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SUN ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31 December 31
(Millions of Dollars) 1997 1996
(Unaudited)
Assets
Current Assets
Cash and short-term investments $ 3 $ 2
Advances to affiliate 16 -
Accounts receivable and other
current assets 87 136
----- ------
Total Current Assets 106 138
Properties, Plants and Equipment
(Note 2) 1,120 1,074
Investment in Affiliate 88 87
------ ------
Total Assets $1,314 $1,299
Liabilities and Partners' Capital
Current Liabilities
Accounts payable $ 86 $ 91
Accrued liabilities 81 70
Advances from affiliate - 12
Current portion of long-term debt
due affiliate 12 11
Current portion of long-term debt 1 1
------ ------
Total Current Liabilities 180 185
Long-Term Debt due Affiliate 47 51
Long-Term Debt 1 1
Deferred Credits and Other
Liabilities 46 42
Partners' Capital (Note 3)
Limited partnership interests 319 313
General partnership interests 721 707
------ ------
Partners' Capital 1,040 1,020
------ ------
Total Liabilities and Partners'
Capital $1,314 $1,299
====== ======
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
(Millions of Dollars) 1997 1996
Cash and Cash Equivalents From Operating (Unaudited)
Activities
Net income $ 83 $ 53
Adjustments to reconcile net income
to net cash from operating
activities:
Depreciation, depletion and
amortization 52 42
Dry hole costs and leasehold
impairment 2 3
Gain on divestments - (2)
Other 4 1
----- -----
141 97
Changes in working capital:
Accounts receivable and
other current assets 50 (1)
Advances to affiliate (16) -
Accounts payable and accrued
liabilities 6 6
Advances from affiliate (11) (19)
----- -----
Net Cash Flow Provided From Operating
Activities 170 83
----- -----
Cash and Cash Equivalents From Investing
Activities
Capital expenditures (99) (67)
Proceeds from divestments 1 5
Other (5) (7)
----- -----
Net Cash Flow Used For Investing
Activities (103) (69)
----- -----
Cash and Cash Equivalents From Financing
Activities
Repayments of long-term debt (3) (3)
Cash distributions paid to unitholders (63) (8)
----- -----
Net Cash Flow Used For Financing
Activities (66) (11)
----- -----
Changes In Cash and Cash Equivalents 1 3
Cash and Cash Equivalents at Beginning
of Period 2 8
----- -----
Cash and Cash Equivalents at End
of Period $ 3 $11
===== =====
(See Accompanying Notes)
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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, 1997 are not necessarily indicative of the results
for the full year 1997.
2. Properties, Plants and Equipment
March 31 December 31
1997 1996
(Millions of Dollars)
Gross investment ............. $3,810 $3,753
Less accumulated depreciation,
depletion and amortization . 2,690 2,679
------ ------
Net investment $1,120 $1,074
====== ======
3. Partners' Capital
At March 31, 1997, 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,
1997, 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 reviewed the accompanying condensed consolidated balance
sheet of Sun Energy Partners, L.P. and its Subsidiaries as of
March 31, 1997, and the related condensed consolidated statements
of income and cash flows for the three months ended March 31,
1997 and 1996. 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, 1996, 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, 1997, 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, 1996, is fairly
stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
/S/ COOPERS & LYBRAND L.L.P.
Dallas, Texas
May 2, 1997
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
FINANCIAL CONDITION
The Partnership's cash and cash equivalents increased by $1
million over the three months ended March 31, 1997. Cash flows
for the first quarter of 1997 included $170 million provided from
operating activities, $103 million used for investing activities
and $66 million used for financing activities. The $170 million
net cash flow provided from operating activities was comprised of
$141 million net cash flow provided from operating activities
before changes in current assets and liabilities and $29 million
of net cash flow provided from changes in current assets and
liabilities. The $141 million net cash flow provided from
operating activities before changes in current assets and
liabilities was favorably impacted by increased crude oil prices
and increased natural gas volumes and prices, offset in part by
decreased crude oil production. The $29 million net cash flow
provided from changes in current assets and liabilities consisted
of a $50 million decrease in accounts receivable and other
current assets, a $16 million increase in advances to affiliate,
a $6 million increase in accounts payable and accrued liabilities
and an $11 million decrease in advances from affiliate.
The $103 million net cash flow used for investing activities
consisted primarily of $99 million used for capital expenditures.
The $66 million net cash flow used for financing activities
resulted from the scheduled payment of $3 million of long-term
debt and $63 million of cash distributions paid to unitholders.
A cash distribution in the amount of $.15 per unit was paid in
the first quarter of 1997. A cash distribution of $.08 per unit
has been declared by Oryx Energy Company's Board of Directors and
will be paid on June 10, 1997 to unitholders of record on May 16,
1997.
During February 1997, the Financial Accounting Standards Board
issued statement of Financial Accounting Standards No. 128,
"Earnings per Share," effective for fiscal years beginning after
December 15, 1997. The impact of this statement, when adopted,
will not be material.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
RESULTS OF OPERATIONS
Net income for the first quarter of 1997 was $83 million, or $.20
per unit, compared to net income of $53 million, or $.13 per
unit, in the first quarter of 1996. Revenues for the 1997 first
quarter were $200 million versus $158 million for the first
quarter of 1996. In comparing the first quarter of 1997 to the
first quarter of 1996, crude oil production decreased 4 thousand
barrels per day, or 9 percent, and natural gas volumes rose 46
million cubic feet per day, a 10 percent increase. Oil prices
increased by $3.06 per barrel and natural gas rose $.74 per mcf.
Capital expenditures were $99 million, a 48 percent increase over
the same period last year.
Average net production of crude oil and condensate was 41
thousand barrels daily during the first quarter of 1997 compared
to an average net production of 45 thousand barrels daily for the
first quarter of 1996. The average crude oil and condensate
price in the first quarter of 1997 increased to $21.19 per
barrel, as compared to $18.13 per barrel in the same period last
year.
Average net production of natural gas for the first quarter of
1997 was 507 million cubic feet daily compared to average net
production of 461 million cubic feet daily for the same period in
1996. The average natural gas price for the first quarter of
1997 was $2.77 per thousand cubic feet, as compared to $2.03 per
thousand cubic feet in the same period last year.
<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 March 31, 1997.
******************
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/EDWARD W. MONEYPENNY
Edward W. Moneypenny
(Executive Vice President, Finance,
and Chief Financial Officer)
DATE: May 5, 1997
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FIANCIAL STATEMENTS.
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