<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 June 30, 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 July 31,
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 and Six Months Ended June 30,
1997 and 1996 .............................. 3
Condensed Consolidated Balance Sheets at
June 30, 1997 and December 31, 1996 ........ 4
Condensed Consolidated Statements of Cash
Flows for the Six Months Ended June 30,
1997 and 1996 ............................. 5
Notes to Condensed Consolidated Financial
Statements ................................ 6
Report of Independent Accountants ......... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ................................ 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .......... 10
SIGNATURE ............................................ 11
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<PAGE> 3
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
SUN ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Three Months For the Six Months
(Millions of Dollars, Except Ended June 30 Ended June 30
Per Unit Amounts) 1997 1996 1997 1996
(Unaudited)
<S> <C> <C> <C> <C>
Revenues
Oil and gas $ 168 $ 164 $ 372 $ 323
Other 1 (1) (3) (2)
----- ----- ----- -----
169 163 369 321
===== ===== ===== =====
Costs and Expenses
Operating costs 35 34 69 68
Production taxes 9 9 20 18
Exploration costs 16 12 26 19
Depreciation, depletion
and amortization 50 43 102 85
General and administrative
expense 11 11 21 22
Interest and debt expense 3 4 7 9
Interest capitalized (3) (4) (7) (7)
----- ----- ----- -----
121 109 238 214
----- ----- ----- -----
Net Income $ 48 $ 54 $131 $107
===== ===== ===== =====
Net Income Per Unit $.11 $.13 $.31 $.26
===== ===== ===== =====
Cash Distributions Paid Per Unit $.08 $.07 $.23 $.09
===== ===== ===== =====
Weighted Average Number
of Units Outstanding
(in thousands) 421,171 421,171 421,171 421,171
======= ======= ======= =======
</TABLE>
(See Accompanying Notes)
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SUN ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31
(Millions of Dollars) 1997 1996
(Unaudited)
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 9 $ 2
Accounts receivable and other current assets 107 136
------ -----
Total Current Assets 116 138
Properties, Plants and Equipment (Note 2) 1,158 1,074
Investment in Affiliate 87 87
------ -----
Total Assets $1,361 $1,299
====== ======
Liabilities and Partners' Capital
Current Liabilities
Accounts payable $ 87 $ 91
Accrued liabilities 81 70
Advances from affiliate 37 12
Current portion of long-term debt due
affiliate 12 11
Current portion of long-term debt 1 1
------ -----
Total Current Liabilities 218 185
Long-Term Debt due Affiliate 44 51
Long-Term Debt 1 1
Deferred Credits and Other Liabilities 44 42
Partners' Capital (Note 3)
Limited partnership interests 323 313
General partnership interests 731 707
------ -----
Partners' Capital 1,054 1,020
------ -----
Total Liabilities and Partners' Capital $ 1,361 $ 1,299
====== =====
</TABLE>
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
<TABLE>
<CAPTION>
For the Six Months
Ended June 30
(Millions of Dollars) 1997 1996
(Unaudited)
<S> <C> <C>
Cash From Operating Activities
Net income $131 $ 107
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation, depletion and amortization 102 85
Dry hole costs and leasehold impairment 10 11
Gain on divestments (1) -
Other 4 1
----- -----
246 204
Changes in working capital:
Accounts receivable and other current assets 29 3
Accounts payable and accrued liabilities 8 1
Advances from affiliate 25 (12)
----- -----
Net Cash Flow Provided From Operating Activities 308 196
----- -----
Investing Activities
Capital expenditures (193) (146)
Proceeds from divestments 1 6
Other (6) (9)
----- -----
Net Cash Flow Used For Investing Activities (198) (149)
----- -----
Financing Activities
Repayments of long-term debt (6) (6)
Cash distributions paid to unitholders (97) (38)
----- -----
Net Cash Flow Used For Financing Activities (103) (44)
----- -----
Changes In Cash and Cash Equivalents 7 3
Cash and Cash Equivalents at Beginning of Period 2 8
----- -----
Cash and Cash Equivalents at End of Period $ 9 $ 11
===== =====
</TABLE>
(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, 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, 1997 are
not necessarily indicative of the results for the full year
1997.
2. Properties, Plants and Equipment
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
(Millions of Dollars)
<S> <C> <C>
Gross investment $3,811 $3,753
Less accumulated depreciation,
depletion and amortization 2,653 2,679
------ ------
Net investment $1,158 $1,074
====== ======
</TABLE>
3. Partners' Capital
At June 30, 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 June 30,
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
June 30, 1997 and the related condensed consolidated statements
of income for the three and six months ended June 30, 1997 and
1996 and the related condensed consolidated statements of cash
flows for the six months ended June 30, 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 of Sun Energy
Partners, L.P. and its Subsidiaries 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
August 5, 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 $7 million
over the six months ended June 30, 1997. The $7 million increase
was comprised of $308 million provided from operating activities,
$198 million used for investing activities and $103 million used
for financing activities. The $308 million net cash flow
provided from operating activities was comprised of $246 million
net cash flow provided from operating activities before changes
in current assets and liabilities and $62 million net cash flow
provided from changes in current assets and liabilities. The
$246 million net cash flow provided from operating activities
before changes in current assets and liabilities was favorably
impacted by increases in natural gas volumes and prices offset in
part, by a decrease in crude oil prices. The $62 million net
cash flow provided from changes in current assets and liabilities
consisted of a $29 million decrease in accounts receivable and
other current assets, an $8 million increase in accounts payable
and accrued liabilities and a $25 million increase in advances
from affiliate.
The $198 million net cash flow used for investing activities
consisted primarily of $193 million used for capital
expenditures. The $103 million net cash flow used for financing
activities resulted from the scheduled payment of $6 million of
long-term debt and $97 million cash distributions paid to
unitholders.
A cash distribution in the amount of $.08 per unit was paid on
June 10, 1997. A cash distribution of $.02 per unit has been
declared by Oryx Energy Company's Board of Directors and will be
paid on September 10, 1997 to unitholders of record on August 15,
1997.
During February 1997, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standard (SFAS)
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. In June 1997, the FASB
issued SFAS No. 130, "Reporting Comprehensive Income," and SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related
Information," effective for fiscal years beginning after December
15, 1997. The impact of these statements when adopted, will not
be material.
<PAGE>
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - continued
RESULTS OF OPERATIONS - SIX MONTHS
Net income for the first six months of 1997 was $131 million, or
$.31 per unit, compared to net income of $107 million, or $.26
per unit, in the first six months of 1996. Revenues for the six
months were $369 million in 1997 versus $321 million in 1996.
Average net production of crude oil was 43 thousand barrels daily
during the first six months of 1997 compared to production of 44
thousand barrels daily for the first six months of 1996. The
crude oil and condensate price in the first six months of 1997
increased to $19.61 per barrel, as compared to $19.44 per barrel
in the same period last year.
Average net production of natural gas for the first six months of
1997 was 504 million cubic feet daily compared to production of
466 million cubic feet daily for the same period in 1996. The
natural gas price for the first six months of 1997 was $2.41 per
thousand cubic feet, as compared to $1.99 per thousand cubic feet
in the same period last year.
RESULTS OF OPERATIONS - THREE MONTHS
The Partnership reported net income of $48 million, or $.11 per
unit, for the second quarter of 1997, compared to net income of
$54 million, or $.13 per unit, for the same quarter last year.
Revenues for the 1997 quarter were $169 million versus $163
million for the 1996 quarter. Compared to the same quarter last
year, crude oil production increased 2 thousand barrels per day,
or 5 percent, and natural gas volumes rose 29 million cubic feet
per day, a 6 percent increase. Capital expenditures were $94
million, a 19 percent increase over the same period last year.
Average net production of crude oil and condensate for the second
quarter of 1997 was 45 thousand barrels daily compared to
production for the second quarter of 1996 of 43 thousand barrels
daily. The average crude oil and condensate price in the second
quarter of 1997 decreased by $2.61 to $18.20 per barrel, as
compared to $20.81 per barrel in the same period in 1996.
Average net production of natural gas for the second quarter of
1997 was 500 million cubic feet daily compared to production of
471 million cubic feet daily for the second quarter of 1996. The
average natural gas price in the second quarter of 1997 increased
by $.10 to $2.05 per thousand cubic feet, as compared to $1.95
per thousand cubic feet in the same period in 1996.
<PAGE>
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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, 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/ E. W. Moneypenny
E. W. Moneypenny
(Executive Vice President, Finance,
and Chief Financial Officer)
DATE: August 5, 1997
<PAGE>
<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>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 9
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<RECEIVABLES> 90
<ALLOWANCES> 0
<INVENTORY> 3
<CURRENT-ASSETS> 116
<PP&E> 3811
<DEPRECIATION> (2653)
<TOTAL-ASSETS> 1361
<CURRENT-LIABILITIES> 218
<BONDS> 44
0
0
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<TOTAL-LIABILITY-AND-EQUITY> 1361
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<CGS> 191
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</TABLE>
