Enterprise Products Partners L.P.

SEC Filings

10-Q
GULFTERRA ENERGY PARTNERS L P filed this Form 10-Q on 05/15/1996
Entire Document
 
<PAGE>   13





I
TEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Partnership's
consolidated financial statements and notes thereto included in Part I of this
quarterly report.  Unless the context otherwise requires, all references herein
to the Partnership with respect to the operations and ownership of the
Partnership's assets are also references to its subsidiaries, the Operating
Companies and Leviathan's nonmanaging interest in certain of the Partnership's
subsidiaries.

OVERVIEW

The Partnership's assets include interests in (i) nine operating natural gas
pipeline systems (the "Pipelines"), (ii) a crude oil pipeline system (the
"Poseidon Oil Pipeline"), (iii) five strategically located multi-purpose
platforms, (iv) three oil and gas properties, which contain proved reserves,
(v) an overriding royalty interest and (vi) a dehydration facility.

The Pipelines include 981 miles of natural gas pipelines with an approximate
capacity of 5.6 billion cubic feet ("Bcf") of gas per day, strategically
located to serve five distinct producing areas offshore Louisiana and eastern
Texas in the Gulf.  The Partnership's interest in the Pipelines is owned
through a 100% interest in each of Ewing Bank Gathering Company, L.L.C., a
Delaware limited liability company ("Ewing Bank"), Louisiana Offshore Gathering
Systems, L.L.C., a Delaware limited liability company ("LOGS"), Green Canyon
Pipe Line Company, L.L.C., a Delaware limited liability company ("Green
Canyon"), Tarpon Transmission Company, a Texas corporation ("Tarpon") and,
indirectly through LOGS and Manta Ray Pipeline Holding Company, L.L.C. ("Manta
Ray"), the Manta Ray System; a 50% partnership interest in each of Stingray
Pipeline Company, a Louisiana general partnership ("Stingray") and Viosca Knoll
Gathering Company, a Delaware general partnership ("Viosca Knoll"); a 40%
partnership interest in High Island Offshore System, a Delaware general
partnership ("HIOS"); and a 33 1/3% partnership interest in U-T Offshore
System, a Delaware general partnership ("UTOS").

The Partnership also owns a 100% interest in Poseidon LLC, which owns a 50%
interest in POPCO.  POPCO was formed to construct, own and operate the Poseidon
Oil Pipeline.  As designed, the Poseidon Oil Pipeline will consist of
approximately 200 miles of pipeline with a maximum capacity of 400,000 barrels
per day of sour crude oil.  Phase I of the system consists of approximately 117
miles of pipeline which extends from a platform in Garden Banks Block 72 in an
easterly direction to a platform in Ship Shoal Block 332.  Phase I of the
system was placed in service in April 1996 with a maximum hydrolic capacity of
200,000 barrels of oil per day.  Phase II of the pipeline, which is scheduled
to be constructed later this year, will consist of approximately 83 miles of
pipeline extending from the platform in Ship Shoal Block 332 in a northerly
direction to a terminus located in southern Louisiana.

The Partnership owns interests in five strategically located multi-purpose
platforms in the Gulf that have processing capabilities which complement the
Partnership's pipeline operations.  The multi-purpose platforms serve as
junctions in the pipeline grid and enable the Partnership to perform
maintenance functions on its pipelines. In addition, the multi- purpose
platforms serve as landing sites for deeper water production and as sites for
the location of gas compression facilities and drilling operations.

The Partnership owns a 100% interest in Flextrend Development.  On June 30,
1995, Flextrend Development acquired a 75% working interest in Viosca Knoll
Block 817, a 50% working interest in Garden Banks Block 72 and a 50% working
interest in Garden Banks Block 117, subject to certain reversionary rights,
from Tatham Offshore, Inc. ("Tatham Offshore"), an affiliate of the
Partnership.  Each of the above leases is operated by Flextrend Development
which, in the aggregate contain a total of 3.8





                                      13