Enterprise Products Partners L.P.

SEC Filings

10-Q
GULFTERRA ENERGY PARTNERS L P filed this Form 10-Q on 08/13/1996
Entire Document
 
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               LEVIATHAN PIPELINE PARTNERS, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
                                  (unaudited)

additional taxable income allocated to Leviathan.  The management agreement has
an initial term expiring on June 30, 1997, and may thereafter be terminated on
90 days' notice by either party.

Transportation and platform access agreements.  Tatham Offshore was obligated
to make demand charge payments to the Partnership pursuant to certain
transportation agreements.  Under these agreements, the Partnership was
entitled to receive demand charges of $8.1 million in 1996, $6.0 million in
1997, $3.0 million in 1998 and $0.7 million in 1999.  In addition to the demand
charges, Tatham Offshore is obligated to pay commodity charges, based on the
volume of oil and gas transported or processed, under these agreements.  Also,
for the year ending December 31, 1996, Tatham Offshore is obligated to pay $1.6
million in platform access fees.  

Production problems at Ship Shoal Block 331 and reduced oil production from the
Ewing Bank 914 #2 well have affected Tatham Offshore's ability to pay the demand
charge obligations under these agreements. Effective February 1, 1996, the
Partnership agreed to release Tatham Offshore from all remaining demand charge
payments under the transportation agreements, a total of $17.8 million.  Tatham
Offshore remains obligated to pay the commodity charges under these agreements
as well as all platform access and processing fees associated with the Viosca
Knoll Block 817 lease.  In exchange, the Partnership received 7,500 shares of
Tatham Offshore senior preferred stock (the "Senior Preferred Stock"), which is
presented on the accompanying consolidated balance sheet at June 30, 1996 as
investment in affiliate.  Each share of the Senior Preferred Stock has a
liquidation preference of $1,000 per share, is senior in liquidation preference
to all other classes of Tatham Offshore stock and has a 9% cumulative dividend,
payable quarterly.  Commencing on October 1, 1998 and for a period of 90 days
thereafter, the Partnership has the option to exchange the remaining liquidation
preference amount and accrued but unpaid dividends for shares of Tatham
Offshore's Series A Convertible Exchangeable Preferred Stock (the "Convertible
Exchangeable Preferred Stock") with an equivalent market value.  Further, the
Partnership has made an irrevocable offer to Tatham Offshore to sell all or any
portion of the Senior Preferred Stock to Tatham Offshore or its designee at a
price equal to $1,000 per share, plus interest thereon at 9% per annum less the
sum of any dividends paid thereon.  The Convertible Exchangeable Preferred Stock
is convertible into Tatham Offshore common stock based on a fraction, the
numerator of which is the liquidation preference value plus all accrued but
unpaid dividends and the denominator of $0.653 per share which was based on the
lowest average of consecutive five day closing prices for Tatham Offshore's
common stock between December 26, 1995 and July 1, 1996.  In addition, the sum
of $7.5 million was added to the Payout Amount under the Purchase and Sale
Agreement. By adding $7.5 million to the Payout Amount, the Partnership is
entitled to an additional $7.5 million plus interest at the rate of 15% per
annum from revenue attributable to the Assigned Properties prior to reconveying
any interest in the Assigned Properties to Tatham Offshore. Tatham Offshore
waived its remaining option to prepay the then-existing Payout Amount and
receive a reassignment of its working interests.  Tatham Offshore and the
Partnership also agreed that in the event Tatham Offshore furnishes the
Partnership with a financing commitment from a lender with a credit rating of
BBB- or better covering 100% of the then outstanding Payout Amount, the interest
rate utilized to compute the Payout Amount shall be adjusted from and after the
date of such commitment to the interest rate specified in such commitment,
whether utilized or not.  Tatham Offshore also agreed to grant the Partnership
the right to utilize the Ship Shoal Block 331 platform and related facilities at
a rental rate of $1.00 per annum for such period as the platform is owned by
Tatham Offshore and located on Ship Shoal Block 331, provided such use, at the
time proposed, does not interfere with lease operations or other activities of
Tatham Offshore.  In addition, Tatham Offshore granted the Partnership a right
of first refusal relative to a sale of the platform.

Oil and gas sales.  The Partnership has agreed to sell all of its oil and gas
production to Offshore Gas Marketing, Inc.  ("Offshore Marketing"), an
affiliate of the Partnership, on a month to month basis.  The agreement with
Offshore Marketing provides for marketing fees equal to 2% of the sales value
of crude oil





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