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, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO _________
COMMISSION FILE NO. 0-6910
TEL OFFSHORE TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 76-6004064
(STATE OF INCORPORATION (I.R.S. EMPLOYER
OR ORGANIZATION) IDENTIFICATION NO.)
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
CORPORATE TRUST DIVISION
712 MAIN STREET
HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL (ZIP CODE)
EXECUTIVE OFFICES)
(713) 216-5712
(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 [ ]
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
AS OF MAY 5, 1995 -- 4,751,510 UNITS OF BENEFICIAL INTEREST IN TEL OFFSHORE
TRUST.
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TEL OFFSHORE TRUST
STATEMENTS OF DISTRIBUTABLE INCOME
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------
1995 1994
----------- -----------
Royalty income ................................. $ 262,469 $ 1,605,518
Interest income ................................ 6,150 2,638
----------- -----------
268,619 1,608,156
Increase in Expense Reserve .................... (80,564) (66,047)
General and administrative expenses ............ (119,436) (133,953)
----------- -----------
Distributable income ........................... $ 68,619 $ 1,408,156
=========== ===========
Distributions per Unit (4,751,510 Units) ....... $ .014441 $ .296359
=========== ===========
STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
MARCH 31, DECEMBER 31,
1995 1994
---------- ------------
(UNAUDITED)
ASSETS
Cash and short-term investments .................... $ 956,857 $1,069,217
Net overriding royalty interest in producing
oil and gas properties net of accumulated
amortization of $26,963,859 and $26,924,180,
respectively .................................... 1,303,796 1,343,475
---------- ----------
Total assets ....................................... $2,260,653 $2,412,692
========== ==========
LIABILITIES AND TRUST CORPUS
Distribution payable to Unit holders ............... $ 68,619 $ 261,543
Reserve for future Trust expenses .................. 888,238 807,674
Commitments and contingencies (Note 6)
Trust corpus (4,751,510 Units of
beneficial interest authorized and
outstanding) .................................... 1,303,796 1,343,475
---------- ----------
Total liabilities and Trust corpus ................. $2,260,653 $2,412,692
========== ==========
The accompanying notes are an integral part of these financial statements.
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<PAGE>
TEL OFFSHORE TRUST
STATEMENTS OF CHANGES IN TRUST CORPUS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
---------------------------
1995 1994
----------- -----------
Trust corpus, beginning of period ................ $ 1,343,475 $ 2,036,295
Distributable income ............................. 68,619 1,408,156
Distribution payable to Unit holders ............. (68,619) (1,408,156)
Amortization of net overriding royalty interest .. (39,679) (341,134)
----------- -----------
Trust corpus, end of period ...................... $ 1,303,796 $ 1,695,161
=========== ===========
The accompanying notes are an integral part of these financial statements.
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TEL OFFSHORE TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - TRUST ORGANIZATION
Tenneco Offshore Company, Inc. ("Tenneco Offshore") created the TEL
Offshore Trust ("Trust") effective January 1, 1983, pursuant to the Plan of
Dissolution ("Plan") approved by Tenneco Offshore's stockholders on December 22,
1982. In accordance with the Plan, the TEL Offshore Trust Partnership
("Partnership") was formed in which the Trust owns a 99.99% interest and Tenneco
Oil Company ("Tenneco") initially owned a .01% interest. In general, the Plan
was effected by transferring an overriding royalty interest ("Royalty")
equivalent to a 25% net profits interest in the oil and gas properties (the
"Royalty Properties") of Tenneco Exploration, Ltd. ("Exploration I") located
offshore Louisiana to the Partnership and issuing certificates evidencing units
of beneficial interest in the Trust ("Units") in liquidation and cancellation of
Tenneco Offshore's common stock. On October 31, 1986, Exploration I was
dissolved and the oil and gas properties of Exploration I were distributed to
Tenneco subject to the Royalty. Tenneco, who was then serving as the Managing
General Partner of the Partnership, assumed the obligations of Exploration I,
including its obligations under the instrument conveying the Royalty to the
Partnership ("Conveyance"). The dissolution of Exploration I had no impact on
future cash distributions to Unit holders. On November 18, 1988, Chevron U.S.A.
Inc. ("Chevron") acquired most of the Gulf of Mexico offshore oil and gas
properties of Tenneco, including all the Royalty Properties. As a result of the
acquisition, Chevron replaced Tenneco as the Working Interest Owner and Managing
General Partner of the Partnership. Chevron also assumed Tenneco's obligations
under the Conveyance. On October 30, 1992, Pennzoil Company ("Pennzoil")
acquired certain oil and gas producing properties from Chevron, including four
of the Royalty Properties. The four Royalty Properties acquired by Pennzoil are
East Cameron 354, Eugene Island 348, Eugene Island 367 and Eugene Island 208. As
a result of such acquisition, Pennzoil replaced Chevron as the Working Interest
Owner of such properties on October 30, 1992. Pennzoil also assumed Chevron's
obligations under the Conveyance with respect to such properties. On December 1,
1994, Texaco Exploration and Production Inc. ("Texaco") acquired one of the
Royalty Properties from Chevron. The Royalty Property acquired by Texaco was
West Cameron 643. As a result of such acquisition, Texaco replaced Chevron as
the Working Interest Owner of such property on December 1, 1994. Texaco also
assumed Chevron's obligations under the Conveyance with respect to such
property. All of the Royalty Properties continue to be subject to the Royalty,
and the Trust and the Partnership continue to operate, in general, as if the
above-described sales of the Royalty Properties had not occurred. Unless the
context in which such terms are used indicates otherwise, in these Notes the
terms "Working Interest Owner" and "Working Interest Owners" generally refer to
the owner or owners of the Royalty Properties (Exploration I through October 31,
1986; Tenneco for periods from October 31, 1986 until November 18, 1988; Chevron
with respect to all Royalty Properties for periods from November 18, 1988 until
October 30, 1992 and with respect to all Royalty Properties except East Cameron
354, Eugene Island 348, Eugene Island 367 and Eugene Island 208 for periods from
October 30, 1992 until December 1, 1994 and with respect to the same properties
except West Cameron 643 thereafter; Pennzoil with respect to East Cameron
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354, Eugene Island 348, Eugene Island 367 and Eugene Island 208 for periods
beginning on or after October 30, 1992; and Texaco with respect to West Cameron
643 for periods beginning on or after December 1, 1994).
NOTE 2 - BASIS OF ACCOUNTING
The accompanying unaudited financial information has been prepared by Texas
Commerce Bank National Association ("Corporate Trustee") in accordance with the
instructions to Form 10-Q and does not include all of the information required
by generally accepted accounting principles for complete financial statements,
although the Corporate Trustee and the individual trustees (collectively, "the
Trustees") believe that the disclosures are adequate to make the information
presented not misleading. The information furnished reflects all adjustments
which are, in the opinion of the Trustees, necessary for a fair presentation of
the results for the interim periods presented. The financial information should
be read in conjunction with the financial statements and notes thereto included
in the Trust's Annual Report on Form 10-K for the year ended December 31, 1994.
The financial statements of the Trust are prepared on the following
basis:
(a) Royalty income is recorded when received by the Corporate Trustee
on the last business day of each calendar quarter; and
(b) Trust general and administrative expenses are recorded when paid,
except for the cash reserve for future general and administrative
expenses discussed below in Note 5.
This manner of reporting income and expenses is considered to be the most
meaningful because the quarterly distributions to Unit holders are based on net
cash receipts received from the Working Interest Owners. The financial
statements of the Trust differ from financial statements prepared in accordance
with generally accepted accounting principles, because, under such principles,
Royalty income and Trust general and administrative expenses for a quarter would
be recognized on an accrual basis. In addition, amortization of the overriding
royalty interest, calculated on a unit-of-production basis, is charged directly
to Trust corpus since such amount does not affect distributable income.
NOTE 3 - OVERRIDING ROYALTY INTEREST
The Royalty entitles the Trust to its share (99.99%) of 25% of the net
proceeds attributable to the Royalty Properties. The Conveyance provides that
the Working Interest Owners will calculate, for each period of three months
commencing the first day of February, May, August and November, an amount equal
to 25% of the Net Proceeds from their oil and gas properties for the period.
Generally, "Net Proceeds" means the amounts received by the Working Interest
Owners from sales of minerals from the Royalty Properties less operating and
capital costs incurred, management fees and expense reimbursements owing the
managing general partner of the Partnership, applicable taxes other than income
taxes, and cash escrows for the
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future costs to be incurred to plug and abandon wells and dismantle and remove
platforms, pipelines and other production facilities and for the estimated
amount of future capital expenditures on the Royalty Properties. Net Proceeds do
not include amounts received by the Working Interest Owners as advance gas
payments, "take-or-pay" payments or similar payments unless and until such
payments are extinguished or repaid through the future delivery of gas.
NOTE 4 - DISTRIBUTIONS TO UNIT HOLDERS
Under the terms of the Trust Agreement, the Trust must distribute to the
Unit holders all cash receipts applicable to the Royalty, after paying
liabilities and providing cash reserves as determined necessary by the Trustees.
The amounts distributed are determined on a quarterly basis and are payable to
Unit holders of record as of the last business day of each calendar quarter.
However, cash distributions are made in January, April, July and October and
include interest earned from the quarterly record date to the date of
distribution.
NOTE 5 - EXPENSE RESERVE
At December 31, 1991, a cash reserve of $120,000 had been established for
future Trust administrative expenses. During 1992 and 1993, in anticipation of
future periods when the cash received from the Royalty may not be sufficient for
payment of Trust expenses, the reserve for future Trust administrative expenses
was increased each quarter by an amount equal to the difference between $150,000
and the amount of the Trust's general and administrative expenses for such
quarter. In March 1994, the Trust determined, in accordance with the Trust
Agreement, to begin further increasing the Trust's cash reserve each quarter by
an amount equal to the difference between $200,000 and the amount of the Trust's
general and administrative expenses for such quarter.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
During 1994, Pennzoil, the Working Interest Owner on the Eugene Island 348
property, settled a gas imbalance on that property for approximately $2,696,000.
The Trust's share of this settlement amount was approximately $674,000, of which
approximately $16,700 has been recovered from the Trust by the Working Interest
Owner through the first quarter of 1995, and the remainder will be subject to
recovery from the Trust in future periods, in accordance with the Conveyance.
The Working Interest Owner has advised the Trust that future Royalty income
attributable to all of the Royalty Properties owned by Pennzoil will be used to
offset the Trust's share of such settlement amounts. Based on current
production, prices and expenses for the Royalty Properties owned by Pennzoil, it
is estimated that Royalty income attributable to such properties will be
retained by Pennzoil for the remaining life of the Trust. The Trust does not
anticipate that retention of such Royalty income by Pennzoil will have a
material effect on the Trust's Royalty income as a whole.
The Working Interest Owners have advised the Trust that, although they
believe that they are in general compliance with applicable health, safety and
environmental laws and
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regulations that have taken effect at the federal, state and local levels, costs
may be incurred to comply with current and proposed environmental legislation
which could result in increased operating expenses on the Royalty Properties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL REVIEW
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
Distributions to Unit holders for the three months ended March 31, 1995
amounted to $68,619 or $.014441 per Unit as compared to $1,408,156 or $.296359
per Unit for the corresponding period in 1994. The decrease in distributable
income for the first quarter of 1995 was due primarily to a net deposit of funds
into the Special Cost Escrow Account (discussed below) in the first quarter of
1995 compared to the release of funds from the Special Cost Escrow Account in
the first quarter of 1994. Gas revenues decreased approximately 11% in the first
quarter of 1995 as compared to the first quarter of 1994 primarily due to a
decrease in the average price received for natural gas from $2.38 per Mcf in the
first quarter of 1994 to $1.81 per Mcf in the first quarter of 1995. This
decrease in the average price was partially offset by a 12% increase in gas
volumes, which was primarily attributable to a revised volume allocation on the
Eugene Island 339 property in the first quarter of 1995. Crude oil revenues
decreased approximately 15% in the first quarter of 1995 in comparison to the
same period in 1994 due primarily to a 28% decrease in crude oil and condensate
volumes from the 1994 first quarter to the 1995 first quarter. This decrease in
volumes was primarily attributable to a continued natural production decline as
the properties approach the end of their productive lives. The decrease in crude
oil and condensate volumes was partially offset by an increase in the average
price received from $13.03 per barrel in the first quarter of 1994 to $15.50 per
barrel in the first quarter of 1995. The Trust's share of operating expenses
decreased by approximately $95,000 in the first quarter of 1995 as compared to
the same period in 1994 due primarily to expenses incurred in the first quarter
of 1994 in connection with a workover performed on the Eugene Island 339 B-13
well. The Trust's share of capital expenditures increased by approximately
$71,000 in the first quarter of 1995 in comparison to the first quarter of 1994
primarily due to expenses incurred in the first quarter of 1995 in connection
with the installation of a Supervisory Control and Data Acquisition system on
the West Cameron 643 property.
In the first quarter of 1995, there was a net deposit of funds into the
Special Cost Escrow Account. The Trust's share of the funds deposited was
approximately $59,300. During the first quarter of 1994, there was a release of
funds from the Special Cost Escrow Account, the Trust's share of which was
$1,182,000. The Special Cost Escrow is set aside for estimated abandonment costs
and future capital expenditures as provided for in the Conveyance. (For
additional information relating to the Special Cost Escrow see page 9 of this
Form 10-Q.)
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RESERVE FOR FUTURE TRUST EXPENSES
In accordance with the provisions of the Trust Agreement, generally all Net
Proceeds received by the Trust, net of Trust general and administrative expenses
and any cash reserves established for the payment of contingent or future
obligations of the Trust, are distributed currently to the Unit holders. During
1992 and 1993, in anticipation of future periods when the cash received from the
Royalty may not be sufficient for payment of Trust expenses, the reserve for
future Trust administrative expenses was increased each quarter by an amount
equal to the difference between $150,000 and the amount of the Trust's general
and administrative expenses for such quarter. In March 1994, the Trust
determined, in accordance with the Trust Agreement, to begin further increasing
the Trust's cash reserve each quarter by an amount equal to the difference
between $200,000 and the amount of the Trust's general and administrative
expenses for such quarter. General and administrative expenses of the Trust were
approximately $119,500 in the first quarter of 1995. Accordingly, the Trust's
cash reserve was increased by approximately $80,500 in such quarter, bringing
the total amount of the Trust's cash reserve at March 31, 1995 to $888,238.
OTHER
The amount of cash distributed by the Trust is dependent on, among other
things, the sales prices and quantities of oil and gas produced from the Royalty
Properties. It should be noted that substantial uncertainties exist with regard
to future oil and gas prices, which are subject to material fluctuations due to
changes in production levels and pricing and other actions taken by major
petroleum producing nations, as well as the regional supply and demand for oil
and gas, weather, industrial growth, conservation measures, competition and
other variables.
OPERATIONAL REVIEW
THREE MONTHS ENDED MARCH 31, 1995 and 1994
VOLUMES AND DOLLAR AMOUNTS DISCUSSED BELOW REPRESENT AMOUNTS RECORDED BY
THE WORKING INTEREST OWNERS UNLESS OTHERWISE SPECIFIED.
Ship Shoal 182/183 gas revenues decreased from $501,447 in the first
quarter of 1994 to $201,889 in the first quarter of 1995, primarily due to a
significant decrease in gas volumes. Gas volumes decreased from 217,782 Mcf in
the first quarter of 1994 to 114,806 Mcf in the first quarter of 1995 due
primarily to a continued natural decline in the productive capacity of the
property. In addition, there was a decrease in the average natural gas sales
price for Ship Shoal 182/183 from $2.33 per Mcf in the first quarter of 1994 to
$1.74 per Mcf in the same period of 1995. The majority of the gas from this
property is being purchased by Tennessee Gas Pipeline Company ("Tennessee Gas")
at a calculated monthly price based on the spot market rate. Crude oil revenues
decreased from $1,156,346 in the first quarter of 1994 to $1,120,193 in the
first quarter of 1995 due primarily to a 20% decrease in crude oil production.
Crude oil production decreased from 88,714 barrels in the first quarter of 1994
to 70,740 barrels in the first quarter of 1995 primarily due to a continued
natural production decline. This decrease in production was partially offset by
an increase in the average crude oil prices from $13.03 per barrel in the first
quarter of 1994 to $15.84 per barrel for the same period in 1995. In addition,
the Working Interest Owner has advised the
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Trust that approximately 60,000 Mcf have been overtaken by the Working Interest
Owner from this property. The Trust's share of this overtake position is
approximately 15,000 Mcf. Accordingly, gas revenues from this property may be
reduced in future periods while underproduced parties recover their share of the
gas imbalance.
Eugene Island 339 gas revenues increased from $186,715 in the first quarter
of 1994 to $410,751 in the first quarter of 1995 due to an increase in gas
volumes from 85,661 Mcf in the first quarter of 1994 to 206,750 Mcf for the same
period in 1995. The increase in gas volumes was due primarily to a revised
volume allocation between purchasers of approximately 45,300 Mcf (11,325 Mcf net
to the Trust) on this property in the first quarter of 1995 and a meter
statement downward adjustment of approximately 42,000 Mcf (10,500 Mcf net to the
Trust) on this property in the first quarter of 1994. The increase in volumes
was offset partially by a decrease in the average price received for natural gas
from $2.41 per Mcf in the first quarter of 1994 to $1.93 per Mcf in the first
quarter of 1995. The Working Interest Owner has advised the Trust that there is
an overtake imbalance position of approximately 496,000 Mcf on this property.
The Trust's share of this overtake position is approximately 124,000 Mcf.
Accordingly, gas revenues from this property may be reduced in future periods
while underproduced parties recoup their share of the gas imbalance. The gas
from this property is currently committed to Tennessee Gas pursuant to an
agreement providing for gas to be purchased at a calculated monthly price based
on the spot market rate. Crude oil revenues decreased from $713,104 in the first
quarter of 1994 to $473,754 in the first quarter of 1995 due to a 42% decrease
in volumes from 55,084 barrels in the first quarter of 1994 to 32,057 barrels in
the first quarter of 1995. This decrease in volumes was primarily attributable
to the wells being temporarily shut in on this property in connection with rig
mobilizing and demobilizing associated with drilling activities of the Operator
on non-trust properties. The volume decrease was partially offset by an increase
in the average price received for crude oil and condensate from $12.95 per
barrel in the first quarter of 1994 to $14.78 per barrel in the first quarter of
1995. Operating expenses decreased from $633,581 in the first quarter of 1994 to
$433,362 for the same period in 1995 due primarily to expenses incurred in the
first quarter of 1994 in connection with a workover performed on the B-13 well
in the fourth quarter of 1993. The Working Interest Owner has advised the Trust
that it intends to plug back the B-18 well on this property in late 1995 or
early 1996 at an estimated cost of $21,235 net to the Trust. The Working
Interest Owner has also advised the Trust that it has purchased a three
dimensional seismic survey of this property. The survey is currently being
evaluated by the Working Interest Owner.
West Cameron 643 gas volumes increased from 122,210 Mcf in the first
quarter of 1994 to 142,591 Mcf in the same period of 1995 due to increased takes
by the Working Interest Owner to make up an undertake imbalance position on this
property. The Working Interest Owner has advised the Trust that there is an
undertake imbalance position of approximately 7,700 Mcf (1,900 Mcf net to the
Trust) on this property. The increase in takes was partially offset by a
decrease in the average price received for natural gas from $2.49 per Mcf in the
first quarter of 1994 to $1.78 per Mcf in the first quarter of 1995. Capital
expenditures increased from $1,340 in the first quarter of 1994 to $241,691 for
the same period in 1995 due primarily to a Supervisory Control and Data
Acquisition system installation on the property.
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FUTURE NET REVENUES AND TERMINATION OF THE TRUST
Based on information provided to the Trust by DeGolyer and MacNaughton,
independent petroleum engineers, it was estimated that as of October 31, 1994
approximately 66% of the future net revenues from the Royalty Properties are
expected to be received by the Trust during the next 3 years. In addition,
because the Trust will terminate in the event estimated future net revenues fall
below $2 million, it would be possible for the Trust to terminate even though
some or all of the Royalty Properties continued to have remaining productive
lives. Upon termination of the Trust, the Trustees will sell for cash all of the
assets held in the Trust estate and make a final distribution to Unit holders of
any funds remaining after all Trust liabilities have been satisfied. The
estimate discussed above is subject to large variances from year to year and
should not be construed as exact. There are numerous uncertainties present in
estimating future net revenues for the Royalty Properties. The estimate may vary
depending on changes in market prices for crude oil and natural gas, the
recoverable reserves, annual production and costs assumed by DeGolyer and
MacNaughton. In addition, future economic and operating conditions as well as
results of future drilling plans may cause significant changes in such estimate.
The discussion set forth above is qualified in its entirety by reference to the
Trust's 1994 Annual Report on Form 10-K. The Form 10-K is available upon request
from the Corporate Trustee.
SPECIAL COST ESCROW
The Conveyance provides for reserving funds for estimated future "Special
Costs" of plugging and abandoning wells, dismantling platforms and other costs
of abandoning the leases, as well as for the estimated amount of future drilling
projects and other capital expenditures on the leases. As provided by the
Conveyance, the amount of funds to be reserved is determined based on factors
including estimates of aggregate future production costs, aggregate future
Special Costs, aggregate future net revenues and actual current net proceeds.
Deposits into this account reduce current distributions and are placed in an
escrow account and invested in short-term certificates of deposit. Such account
is herein referred to as the "Special Cost Escrow Account." Interest generated
from the Special Cost Escrow Account serves to reduce the Partnership's share of
allocated production costs. Special Cost Escrow funds will generally be utilized
to pay Special Costs to the extent there are not adequate current net proceeds
to pay such costs. Special Costs that have been paid are no longer included in
the Special Cost Escrow calculation. Deposits to the Special Cost Escrow Account
will generally be made when the balance in the Special Cost Escrow Account is
less than 125% of future Special Costs and there is a Net Revenues Shortfall (a
calculation of the excess of estimated future costs over estimated future
revenues pursuant to a formula contained in the Conveyance). When there is not a
Net Revenues Shortfall, amounts in the Special Cost Escrow Account will
generally be released, to the extent that Special Costs have been paid. Amounts
in the Special Cost Escrow Account generally will also be released when the
balance in such account exceeds 125% of future Special Costs. The Trust released
$1,182,000 from the Special Cost Escrow Account in the first quarter of 1994
primarily as a result of a decrease in future estimated Special Costs of the
Royalty Properties. This decrease was due in part to a decrease in estimated
abandonment costs as a result of technological improvements in abandonment
procedures utilized by the Working Interest Owners. In the first quarter of
1995, a net deposit of approximately $59,300 was made into the Special Cost
Escrow Account. The deposit was primarily a result of an increase in the current
estimate of projected capital expenditures on the Royalty Properties. As of
March 31, 1995, approximately $2,423,000 remained in the Special
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<PAGE>
Cost Escrow Account. Additional deposits to the Special Cost Escrow Account may
be required in future periods in connection with other production costs, other
abandonment costs, other capital expenditures and changes in the estimates and
factors described above. Such deposits could result in a significant reduction
in Royalty income in the periods in which such deposits are made.
OVERVIEW OF PRODUCTION, PRICES AND NET PROCEEDS
The following schedule provides a summary of the volumes and weighted
average prices for crude oil and condensate and natural gas recorded by the
Working Interest Owners, as well as the Working Interest Owners' calculations of
the Net Proceeds and the Royalties paid to the Trust during the periods
indicated. Net Proceeds due to the Trust are calculated for each three month
period commencing on the first day of February, May, August and November.
ROYALTY PROPERTIES
THREE MONTHS ENDED
MARCH 31, (1)
-------------------------
1995 1994
----------- -----------
Crude oil and condensate (bbls) .................... 104,918 146,465
Natural gas and gas products (Mcf) ................. 508,750 454,639
Crude oil and condensate average price, per bbl .... $ 15.50 $ 13.03
Natural gas average price, per Mcf (excluding
gas products) .................................... $ 1.81 $ 2.38
Crude oil and condensate revenues .................. $ 1,626,664 $ 1,908,680
Natural gas and gas products revenues .............. 936,177 1,056,619
Production expenses ................................ (969,461) (1,248,347)
Capital expenditures ............................... (306,268) (22,241)
(Provision for) Refund of escrowed special costs ... (237,132) 4,728,000
----------- -----------
NET PROCEEDS ....................................... 1,049,980 6,422,711
Royalty interest ................................... X 25% X 25%
----------- -----------
Partnership share .................................. 262,495 1,605,678
Trust interest ..................................... X 99.99% X 99.99%
----------- -----------
Trust share ........................................ $ 262,469 $ 1,605,518
=========== ===========
- - ------------
(1) The amounts for the three months ended March 31, 1995 and 1994 represent
actual production for the periods November 1994 through January 1995 and
November 1993 through January 1994, respectively.
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<PAGE>
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
(Asterisk indicates exhibit previously filed with the Securities and Exchange
Commission and incorporated herein by reference.)
SEC FILE OR
REGISTRATION EXHIBIT
NUMBER NUMBER
------------ -------
4(a)* Trust Agreement dated as of January 1, 1983, among
Tenneco Offshore Company, Inc., Texas Commerce Bank
National Association, as corporate trustee, and
Horace C. Bailey, Joseph C. Broadus and F. Arnold
Daum, as individual trustees (Exhibit 4(a) to Form
10-K for the year ended December 31, 1992 of TEL
Offshore Trust).................................... 0-6910 4(a)
4(b)* Agreement of General Partnership of TEL Offshore
Trust Partnership between Tenneco Oil Company and
the TEL Offshore Trust, dated January 1, 1983
(Exhibit 4(b) to Form 10-K for year ended December
31, 1992 of TEL Offshore Trust).................... 0-6910 4(b)
4(c)* Conveyance of Overriding Royalty Interests from
Exploration I to the Partnership (Exhibit 4(c) to
Form 10-K for year ended December 31, 1992 of TEL
Offshore Trust).................................... 0-6910 4(c)
4(d)* Amendments to TEL Offshore Trust Trust Agreement,
dated December 7, 1984 (Exhibit 4(d) to Form 10-K
for year ended December 31, 1992 of TEL Offshore
Trust)............................................. 0-6910 4(d)
4(e)* Amendment to the Agreement of General Partnership of
TEL Offshore Trust Partnership, effective as of
January 1, 1983 (Exhibit 4(e) to Form 10-K for year
ended December 31, 1992 of TEL Offshore Trust)..... 0-6910 4(e)
10(a)* Purchase Agreement, dated as of December 7, 1984 by
and between Tenneco Oil Company and Tenneco Offshore
II Company (Exhibit 10(a) to Form 10-K for year
ended December 31, 1992, of TEL Offshore Trust).... 0-6910 10(a)
10(b)* Consent Agreement, dated November 16, 1988, between
TEL Offshore Trust and Tenneco Oil Company (Exhibit
10(b) to Form 10-K for year ended December 31, 1988
of TEL Offshore Trust)............................. 0-6910 10(b)
10(c)* Assignment and Assumption Agreement, dated November
17, 1988, between Tenneco Oil Company and TOC-Gulf
of Mexico Inc. (Exhibit 10(c) to Form 10-K for year
ended December 31, 1988 of TEL Offshore Trust)..... 0-6910 10(c)
-11-
10(d)* Gas Purchase and Sales Agreement Effective September
1, 1993 between Tennessee Gas Pipeline Company and
Chevron U.S.A. Production Company (Exhibit 10(d) to
Form 10-K for year ended December 31, 1993 of TEL
Offshore Trust).................................... 0-6910 10(d)
27(a) Financial Data Schedule
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed with the Securities and Exchange
Commission during the first quarter of 1995.
-12-
<PAGE>
SIGNATURES
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.
TEL OFFSHORE TRUST
By /s/ TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
--------------------------
Corporate Trustee
By /s/ MIKE ULRICH
--------------------------
Mike Ulrich
Vice President
and Trust Officer
Date: May 11, 1995
The Registrant, TEL Offshore Trust, has no principal executive officer,
principal financial officer, board of directors or persons performing similar
functions. Accordingly, no additional signatures are available and none have
been provided.
-13-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF ASSETS, LIABILITIES AND TRUST CORPUS AS OF MAR-31-1995 AND THE
STATEMENT OF DISTRIBUTABLE INCOME FOR THE THREE MONTHS ENDED MAR-31-1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 956,857
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 956,857
<PP&E> 28,267,655
<DEPRECIATION> 26,963,859
<TOTAL-ASSETS> 2,260,653
<CURRENT-LIABILITIES> 68,619
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,303,796
<TOTAL-LIABILITY-AND-EQUITY> 2,260,653
<SALES> 0
<TOTAL-REVENUES> 268,619
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 200,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 68,619
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,619
<EPS-PRIMARY> .014
<EPS-DILUTED> .014
<PAGE>
</TABLE>
