Enterprise Products Partners L.P.

SEC Filings

10-Q
GULFTERRA ENERGY PARTNERS L P filed this Form 10-Q on 11/12/1996
Entire Document
 
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             LEVIATHAN GAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES

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

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 agreements relative to these properties.  As a
result, 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 September 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 which is $0.653 per share, 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 granted 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 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 Offshore Marketing fees equal to 2% of the sales value of
crude oil and condensate and $0.015 per dekatherm of natural gas for selling
the Partnership's production. During the nine months ended September 30, 1996,
substantially all of the Partnership's oil and gas sales were derived from
sales to Offshore Marketing.

Other.  POPCO has entered into certain additional agreements with a subsidiary
of the Partnership to provide for use by POPCO of certain pipelines and
platforms owned by the subsidiary for fees which consist





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