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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[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
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 0-13546
APACHE OFFSHORE INVESTMENT PARTNERSHIP
- - - - - - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 41-1464066
-------------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
SUITE 100, ONE POST OAK CENTRAL
2000 POST OAK BOULEVARD, HOUSTON, TX 77056-4400
- - - - - - ------------------------------------------- ----------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (713) 296-6000
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 ____.
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PART I -- FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS
APACHE OFFSHORE INVESTMENT PARTNERSHIP
BALANCE SHEET
(Unaudited)
MARCH 31, DECEMBER 31,
1995 1994
------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 104 $ 104
Accrued revenues receivable............................... 1,667,256 2,029,284
Drilling advances......................................... 461,497 --
Prepaid financing costs and other......................... -- 14,583
------------- -------------
2,128,857 2,043,971
------------- -------------
OIL AND GAS PROPERTIES, on the basis of
full cost accounting:
Proved properties......................................... 159,517,364 158,926,380
Less -- accumulated depreciation, depletion and
amortization........................................... (147,554,886) (146,679,259)
------------- -------------
11,962,478 12,247,121
------------- -------------
$ 14,091,335 $ 14,291,092
============= =============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accrued expenses payable.................................. $ 187,506 $ 363,209
Payable to Apache......................................... 1,955,127 318,221
------------- -------------
2,142,633 681,430
------------- -------------
LONG-TERM DEBT.............................................. 8,670,000 9,435,000
------------- -------------
PARTNERS' CAPITAL:
Managing Partner.......................................... 968,542 1,026,159
Investing Partners (1,238.3 units outstanding)............ 2,310,160 3,148,503
------------- -------------
3,278,702 4,174,662
------------- -------------
$ 14,091,335 $ 14,291,092
============= =============
The accompanying notes to financial statements are an integral part of this
statement.
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APACHE OFFSHORE INVESTMENT PARTNERSHIP
STATEMENT OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS
ENDED MARCH 31,
-------------------------
1995 1994
---------- ----------
REVENUES:
Oil and gas sales................................................. $2,804,885 $5,146,660
Interest income................................................... -- 1,946
---------- ----------
2,804,885 5,148,606
---------- ----------
EXPENSES:
Depreciation, depletion and amortization.......................... 875,627 1,349,296
Lease operating................................................... 236,059 145,121
Administrative.................................................... 132,499 130,210
Financing costs:
Interest expense............................................... 146,242 172,142
Amortization of deferred financing costs....................... 14,584 15,000
---------- ----------
1,405,011 1,811,769
---------- ----------
NET INCOME.......................................................... $1,399,874 $3,336,837
========== ==========
Net income allocated to:
Managing Partner.................................................. $ 380,697 $ 793,040
Investing Partners................................................ 1,019,177 2,543,797
---------- ----------
$1,399,874 $3,336,837
========== ==========
NET INCOME PER WEIGHTED AVERAGE INVESTING
PARTNER UNIT...................................................... $ 823 $ 1,967
========== ==========
WEIGHTED AVERAGE INVESTING PARTNER UNITS OUTSTANDING................ 1,238.3 1,293.1
========== ==========
The accompanying notes to financial statements are an integral part of this
statement.
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APACHE OFFSHORE INVESTMENT PARTNERSHIP
STATEMENT OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------------
1995 1994
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................................... $ 1,399,874 $ 3,336,837
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, depletion and amortization..................... 875,627 1,349,296
Amortization of deferred financing costs..................... 14,584 15,000
Changes in operating assets and liabilities:
Increase in prepaid financing costs and other................ -- (6,434)
Decrease in accrued revenues receivable...................... 362,028 95,289
Decrease in accrued operating expenses....................... (13,973) (66,717)
Increase in payable to Apache................................ 1,636,906 248,169
----------- -----------
Net cash provided by operating activities............... 4,275,046 4,971,440
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties............................. (590,984) (198,299)
Non-cash portion of net oil and gas property additions.......... (161,731) (14,548)
Decrease (increase) in drilling advances........................ (461,497) 75,189
----------- -----------
Net cash used by investing activities................... (1,214,212) (137,658)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Investing Partners............................. (1,857,520) (3,879,150)
Distributions to Managing Partner, net.......................... (438,314) (954,632)
Payments of long-term debt...................................... (765,000) --
----------- -----------
Net cash used by financing activities................... (3,060,834) (4,833,782)
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS........................... -- --
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR...................... 104 104
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD.......................... $ 104 $ 104
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest (net of amount
capitalized)................................................. $ 154,242 $ 159,686
=========== ===========
The accompanying notes to financial statements are an integral part of this
statement.
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APACHE OFFSHORE INVESTMENT PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(UNAUDITED)
MANAGING INVESTING
PARTNER PARTNERS TOTAL
---------- ----------- -----------
BALANCE, DECEMBER 31, 1993........................... $1,284,426 $ 2,049,932 $ 3,334,358
Distributions, net................................... (954,632) (3,879,150) (4,833,782)
Net income........................................... 793,040 2,543,797 3,336,837
---------- ----------- -----------
BALANCE, MARCH 31, 1994.............................. $1,122,834 $ 714,579 $ 1,837,413
========== =========== ===========
BALANCE, DECEMBER 31, 1994........................... $1,026,159 $ 3,148,503 $ 4,174,662
Distributions, net................................... (438,314) (1,857,520) (2,295,834)
Net income........................................... 380,697 1,019,177 1,399,874
---------- ----------- -----------
BALANCE, MARCH 31, 1995.............................. $ 968,542 $ 2,310,160 $ 3,278,702
========== =========== ===========
The accompanying notes to financial statements are an integral part of this
statement.
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APACHE OFFSHORE INVESTMENT PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. The financial statements included herein have been prepared by the Apache
Offshore Investment Partnership (Partnership), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission, and reflect
all adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods, on a basis consistent with
the annual audited statements. All such adjustments are of a normal,
recurring nature. Certain information, accounting policies, and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted pursuant to
such rules and regulations, although the Partnership believes that the
disclosures are adequate to make the information presented not misleading.
These financial statements should be read in conjunction with the financial
statements and the summary of significant accounting policies and notes
thereto included in the Partnership's latest annual report on Form 10-K.
2. Accrued expenses payable at March 31, 1995, primarily represented operating
expense accrued in February and March that will be paid in April.
3. The payable to/receivable from Apache Corporation (Apache) represents the net
result of the investing partners revenue and expenditure transactions in the
current month. Cash in this amount will normally be transferred to/from
Apache in the following month after the Partnership's transactions are
processed and the net results of operations are determined.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Oil and gas sales of $2,805,000 in the first quarter of 1995 decreased by
$2,342,000, or 46 percent, when compared to the first quarter of 1994. This
decrease was the result of lower production ($1,288,000 from gas and $226,000
from oil), and a lower realized gas price ($999,000) partially offset by an
increase in realized oil price ($171,000). The properties particularly affected
by the decreases were Matagorda Island 681/682 ($1,021,000), South Pass 83
($440,000), Ship Shoal 258/259 ($383,000), North Padre Island 969/976 ($239,000)
and West Cameron 368 ($134,000). On an energy equivalent basis, using one barrel
of oil as the equivalent of 6,000 cubic feet of natural gas (6 Mcf), oil
production represented 16 percent of production for the first quarter of 1995
and 1994.
The average oil and natural gas prices received during the first quarter of
1995 were $16.86 per barrel and $1.41 per Mcf, respectively. This represents a
33-percent increase in oil prices and 28-percent decrease in natural gas prices
when compared to the first quarter of 1994. As a result of the price
fluctuations, oil and condensate accounted for 28 percent of 1995 oil and gas
sales, compared to 16 percent in 1994. The Partnership is not in a position to
predict future oil and gas prices.
The average oil and natural gas production during 1995 was 516 barrels per
day and 15,943 Mcf per day, respectively. This represented a 27-percent decrease
in oil production and a 30-percent decrease in gas production when compared to
the first quarter of 1994. The decreases were the result of natural depletion,
primarily at Matagorda Island 681/682 and production being shut-in while
performing a recompletion at North Padre Island 969. In addition, 1994
production from Ship Shoal 259 was boosted by the Partnership making-up gas
imbalances from joint owners.
Depreciation, depletion and amortization (DD&A) expense decreased 35
percent from a year ago. The Partnership's DD&A rate, expressed as a percentage
of sales, increased to 31 percent for the first quarter of 1995 from 26 percent
of sales for the first quarter of 1994. The year to year increase in the DD&A
rate is primarily a result of lower gas prices.
First quarter 1995 lease operating expense of $236,000 increased by
$91,000, or 63 percent from last year. Workover costs on South Timbalier 295 and
High Island A-6 in the first quarter of 1995 boosted this year's operating
expense.
Administrative expense in the first quarter of 1995 increased by $2,000, or
two percent, as compared to the first quarter of 1994 due to a slight increase
in legal expenses.
Interest expense in the first quarter of 1995 declined $26,000, or 15
percent, when compared to the same period in 1994, as a result of reduced levels
of debt. The Partnership's outstanding debt decreased to $8,670,000 at March 31,
1995, from $14,790,000 at March 31, 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary capital resources are net cash provided by
operating activities and proceeds from financing activities.
Net cash generated from operating activities for the first quarter of 1995
decreased $696,000, or 14 percent, from a year ago to $4,275,000. The decline
was the result of lower oil and gas sales coupled with higher levels of
operating costs. The balance of the decrease related to changes in operating
asset and liability accounts during the periods covered. Future cash flows will
be influenced by product prices and production constraints and are not presently
ascertainable.
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At March 31, 1995, the available commitment under the Partnership's
reducing revolving credit facility was $15,300,000, of which $8,670,000 was
outstanding. The commitment reduces by $1,275,000 per quarter beginning in
October 1995, with the outstanding balance to be fully repaid by July 1998. The
Partnership must comply with certain cash flow and oil and gas reserve tests
under the terms of the credit facility, and failure to comply will result in
mandatory principal payments in amounts sufficient to meet the tests. The
Partnership has met the tests each year since the inception of the credit
facility in 1992. Based on current pricing and its reserve base, the Partnership
anticipates meeting future tests and does not expect to have an acceleration of
principal payments. The Partnership is not subject to any financial ratio
requirements. Apache is contingently liable for obligations of the Partnership
under the credit facility and is subject to certain requirements under the terms
of the credit facility. Apache was in compliance with such covenants at March
31, 1995. The credit facility had an average rate of interest of 6.88 percent
during the first quarter of 1995 which compares to an average rate of 4.38
percent a year ago. The Partnership will attempt to maintain availability under
its credit facility as cushion for unforeseen expenditures and contingencies.
It is expected that cash available under the Partnership's credit facility,
Managing Partner contributions, and net cash flows from operating activities
will be sufficient to meet the Partnership's liquidity needs through the end of
1996. However, in the event short-term operating cash requirements are greater
than the Partnership's financial resources, the Partnership will seek short-term
interest-bearing advances from the Managing Partner.
The Partnership's primary needs for cash are for operating expenses,
repayment of principal and interest on outstanding debt, drilling and
recompletion expenditures, distributions to Investing Partners and the purchase
of Units offered by Investing Partners under the right of presentment.
During 1995, the Partnership's oil and gas property additions totaled
$591,000. Additions largely related to drilling activities at the now completed
East Cameron 60 # A-5 well. Based on recent information provided by the
operators of the properties in which the Partnership has an interest, the
Partnership anticipates oil and gas property additions of approximately $2
million in 1995. Such estimates may change based on realized prices, drilling
results or changes to the plans by the operators.
The Partnership made a $1,500 per-unit distribution during March 1995, and
intends to make another distribution in the second half of 1995. The amount of
future distributions will be dependent on actual and expected production levels,
realized and expected oil and gas prices, debt service requirements, as well as,
drilling and recompletion expenditures.
An amendment to the Partnership Agreement adopted in February 1994, created
a right of presentment under which all Investing Partners now have a limited and
voluntary right to offer their Units to the Partnership twice each year to be
repurchased for cash. As a result of the two 1994 presentment periods, the
Partnership acquired approximately 55 Units for a total of $738,000 in cash. The
first right of presentment offer for 1995 of $10,770 per Unit was made to the
Investing Partners on April 28, 1995. The actual payment will increase by
interest calculated from April 28 to the date of payment. The Partnership is not
in a position to predict how many Units will be presented for repurchase during
1995 and cannot, at this time, determine if the partnership will have sufficient
funds available for the purpose of repurchasing Units.
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PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -- None.
b. Reports filed on Form 8-K -- None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereto duly authorized.
APACHE OFFSHORE INVESTMENT
PARTNERSHIP
By: Apache Corporation, General
Partner
Dated: May 12, 1995 /s/ MARK A. JACKSON
-----------------------------------------------
Mark A. Jackson
Vice President, Finance
Dated: May 12, 1995 /s/ R. KENT SAMUEL
-----------------------------------------------
R. Kent Samuel
Controller and Chief Accounting Officer
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3-MOS
DEC-31-1995
JAN-01-1995
MAR-31-1995
104
0
1,667,256
0
0
2,128,857
159,517,364
(147,554,886)
14,091,335
2,142,633
8,670,000
0
0
0
3,278,702
14,091,335
2,804,885
2,804,885
1,111,686
1,111,686
0
0
160,826
1,399,874
0
1,399,874
0
0
0
1,399,874
823
823
