<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 September 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 November 6,
1997 was 7,543,100.
<PAGE> 2
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, 1997 and 1996 3
Condensed Consolidated Balance Sheets at
September 30, 1997 and December 31, 1996 4
Condensed Consolidated Statements of Cash
Flows for the Nine Months Ended September
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
<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 Nine Months
(Millions of Dollars, Ended September 30 Ended September 30
Except Per Unit Amounts) 1997 1996 1997 1996
(Unaudited)
<S> <C> <C> <C> <C>
Revenues
Oil and gas $ 176 $ 171 $ 548 $ 494
Other (7) (2) (10) (4)
----- ----- ----- -----
169 169 538 490
----- ----- ----- -----
Costs and Expenses
Operating costs 34 35 103 103
Production taxes 9 10 29 28
Exploration costs 11 13 37 32
Depreciation,
depletion and
amortization 53 45 155 130
General and
administrative
expense 11 11 32 33
Interest and debt
expense 4 3 11 12
Interest capitalized (4) (5) (11) (12)
----- ----- ----- -----
118 112 356 326
----- ----- ----- -----
Net Income $ 51 $ 57 $182 $164
===== ===== ===== =====
Net Income Per Unit $ .12 $ .13 $ .43 $ .39
===== ===== ===== =====
Cash Distributions Paid
Per Unit $ .02 $ .06 $ .25 $ .15
===== ===== ===== =====
Weighted Average Number of Units
Outstanding (in thousands) 421,171 421,171 421,171 421,171
======= ======= ======= =======
<FN>
(See Accompanying Notes)
</TABLE>
<PAGE> 4
SUN ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30 December 31
(Millions of Dollars) 1997 1996
(Unaudited)
<S> <C> <C>
Assets
Current Assets
Cash and short-term investments $ 7 $ 2
Accounts receivable and other current
assets 123 136
------ -----
Total Current Assets 130 138
Properties, Plants and Equipment (Note 2) 1,237 1,074
Investment in Affiliate 85 87
------ -----
Total Assets $1,452 $1,299
====== ======
Liabilities and Partners' Capital
Current Liabilities
Accounts payable $ 110 $ 91
Accrued liabilities 97 70
Advances from affiliate 40 12
Current portion of long-term debt due
affiliate 12 11
Current portion of long-term debt 1 1
------ ------
Total Current Liabilities 260 185
Long-Term Debt Due Affiliate 44 51
Long-Term Debt 1 1
Deferred Credits and Other Liabilities 50 42
Partners' Capital (Note 3)
Limited partnership interests 336 313
General partnership interests 761 707
------ ------
Partners' Capital 1,097 1,020
------ ------
Total Liabilities and Partners' Capital $1,452 $1,299
====== ======
<FN>
The successful efforts method of accounting is followed.
(See Accompanying Notes)
</TABLE>
<PAGE> 5
SUN ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30
(Millions of Dollars) 1997 1996
(Unaudited)
<S> <C> <C>
Cash From Operating Activities
Net income $ 182 $ 164
Adjustments to reconcile net income
to net cash from operating activities:
Depreciation, depletion and amortization 155 130
Dry hole costs and leasehold impairment 13 15
Loss on sale of assets 5 -
Other 5 7
------ ------
360 316
------ ------
Changes in working capital:
Accounts receivable and other current assets 13 (16)
Accounts payable and accrued liabilities 46 21
Advances from affiliates 29 (8)
------ ------
Net Cash Flow Provided From Operating Activities 448 313
------ ------
Investing Activities
Capital expenditures (330) (242)
Proceeds from divestments 1 6
Other (3) (11)
------ ------
Net Cash Flow Used For Investing Activities (332) (247)
------ ------
Financing Activities
Repayments of long-term debt (6) (9)
Cash distributions paid to unitholders (105) (63)
------ ------
Net Cash Flow Used For Financing Activities (111) (72)
------ ------
Changes In Cash and Cash Equivalents 5 (6)
Cash and Cash Equivalents at Beginning of Period 2 8
------ ------
Cash and Cash Equivalents at End of Period $ 7 $ 2
====== ======
<FN>
(See Accompanying Notes)
</TABLE>
<PAGE> 6
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, 1997 are not necessarily indicative of the
results for the full year 1997.
2. Properties, Plants and Equipment
<TABLE>
<CAPTION>
September 30December 31
1997 1996
(Millions of Dollars)
<S> <C> <C>
Gross investment ............... $3,874 $3,753
Less accumulated depreciation,
depletion and amortization ... 2,637 2,679
------ ------
Net investment $1,237 $1,074
====== ======
</TABLE>
3. Partners' Capital
At September 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 September 30,
1997, there was a total of 421.2 million units outstanding.
<PAGE> 7
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, 1997, and the related condensed consolidated
statements of income for the three and nine months ended
September 30, 1997 and 1996, and the related condensed
consolidated statements of cash flows for the nine months ended
September 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
November 6, 1997
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
FINANCIAL CONDITION
At September 30, 1997, cash and cash equivalents were $7 million
compared to $2 million at December 31, 1996. The $5 million
increase in cash and cash equivalents was comprised of $448
million provided from operating activities, $332 million used for
investing activities and $111 million used for financing
activities. The $448 million net cash flow provided from
operating activities was comprised of $360 million net cash flow
provided from operating activities before changes in current
assets and liabilities and $88 million net cash flow provided
from changes in current assets and liabilities. The $360 million
net cash flow provided from operating activities before changes
in current assets and liabilities was primarily impacted by
increased crude oil and natural gas production and natural gas
prices, offset in part by a decrease in crude oil prices.
The $88 million net cash flow provided from changes in current
assets and liabilities consisted of a $13 million decrease in
accounts receivable and other current assets, a $46 million
increase in accounts payable and accrued liabilities and a $29
million increase in advances from affiliates.
The $332 million net cash flow used for investing activities
consisted primarily of $330 million used for capital
expenditures. The $111 million net cash flow used for financing
activities resulted from the scheduled payment of $6 million of
long-term debt and $105 million of cash distributions paid to
unitholders.
A third quarter cash distribution of $.02 per unit was paid on
September 10, 1997. There will be no cash distribution in the
fourth quarter of 1997. Although more cash was generated in the
current quarter than in the same quarter last year, the
significant increase in exploration and development expenditures
more than offset the amount otherwise available. Distributions
will fluctuate due to oil and gas prices, production volumes,
operating costs and the timing and amount of capital expenditures
and divestment proceeds.
During February 1997, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (SFAS)
No. 128, "Earnings per Share" and SFAS No. 129, "Disclosure of
Information about Capital Structure," effective for fiscal years
beginning after December 15, 1997. The impact of these
statements 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> 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - continued
RESULTS OF OPERATIONS - NINE MONTHS
Net income for the first nine months of 1997 was $182 million, or
$.43 per unit, compared to net income of $164 million, or $.39
per unit, in the first nine months of 1996. Revenues for the nine
months were $538 million in 1997 versus $490 million in 1996.
Average net production of crude oil and condensate was 45
thousand barrels daily during the first nine months of 1997
compared to average net production of 43 thousand barrels daily
for the first nine months of 1996. The crude oil and condensate
price in the first nine months of 1997 decreased to $18.95 per
barrel, as compared to $19.81 per barrel in the same period last
year.
Average net production of natural gas for the first nine months
of 1997 was 492 million cubic feet daily compared to average net
production of 474 million cubic feet daily for the same period in
1996. The natural gas price for the first nine months of 1997 was
$2.35 per thousand cubic feet, as compared to $2.01 per thousand
cubic feet in the same period last year.
RESULTS OF OPERATIONS - THREE MONTHS
The Partnership reported net income of $51 million, or $.12 per
unit, for the quarter ended September 30, 1997, compared to net
income of $57 million, or $.13 per unit, for the same quarter
last year. Revenues for the third quarter were $169 million in
both years.
Average net production of crude oil and condensate for the third
quarter of 1997 was 49 thousand barrels daily compared to average
net production for the third quarter of 1996 of 42 thousand
barrels daily. The average crude oil and condensate price in the
third quarter of 1997 decreased to $17.81 per barrel, as compared
to $20.59 per barrel in the same period in 1996.
Average net production of natural gas for the third quarter of
1997 was 470 million cubic feet daily compared to average net
production of 489 million cubic feet daily for the third quarter
of 1996. The average natural gas price in the third quarter of
1997 was $2.22 per thousand cubic feet, as compared to $2.05 per
thousand cubic feet in the same period in 1996.
<PAGE> 10
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, 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
<PAGE> 11
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 6, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC
Form 10-Q and is qulaified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 7
<SECURITIES> 0
<RECEIVABLES> 107
<ALLOWANCES> 0
<INVENTORY> 3
<CURRENT-ASSETS> 130
<PP&E> 3874
<DEPRECIATION> (2637)
<TOTAL-ASSETS> 1452
<CURRENT-LIABILITIES> 260
<BONDS> 45
0
0
<COMMON> 0
<OTHER-SE> 1097
<TOTAL-LIABILITY-AND-EQUITY> 1452
<SALES> 548
<TOTAL-REVENUES> 538
<CGS> 287
<TOTAL-COSTS> 287
<OTHER-EXPENSES> 69
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 182
<INCOME-TAX> 0
<INCOME-CONTINUING> 182
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 182
<EPS-PRIMARY> .43
<EPS-DILUTED> .43
</TABLE>
