Enterprise Products Partners L.P.

SEC Filings

GULFTERRA ENERGY PARTNERS L P filed this Form 10-Q on 11/12/1996
Entire Document
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Note 1 - Organization and Basis of Presentation:

Leviathan Gas Pipeline Partners, L.P. (the "Partnership"), a publicly held
Delaware limited partnership formed in December 1992, is primarily engaged in
the gathering and transportation of natural gas and crude oil through its
pipeline systems located in the Gulf of Mexico (the "Gulf").  The Partnership's
assets include interests in (i) eight natural gas pipeline systems, (ii) a
crude oil pipeline system, (iii) five strategically located multi-purpose
platforms, (iv) three producing oil and gas properties, (v) an overriding
royalty interest and (vi) a dehydration facility.  The Partnership's operating
activities are conducted through thirteen subsidiaries.

Leviathan Gas Pipeline Company ("Leviathan"), a Delaware corporation and
wholly-owned subsidiary of Leviathan Holdings Company ("Leviathan Holdings"),
an 85%-owned subsidiary of DeepTech International Inc. ("DeepTech"), was formed
in February 1989 to purchase, operate and expand offshore pipeline systems.
The remaining 15% of Leviathan Holdings is principally owned by members of the
management of DeepTech.  DeepTech also owns and controls several other
operating subsidiaries which are engaged in various oil and gas related
activities.  Leviathan is general partner of the Partnership.

The accompanying consolidated financial statements have been prepared without
audit pursuant to the rules and regulations of the Securities and Exchange
Commission.  Accordingly, the statements reflect all normal recurring
adjustments which are, in the opinion of management, necessary for a fair
statement of the results of operations for the period covered by such
statements. These interim financial statements should be read in conjunction
with the audited consolidated financial statements and notes thereto contained
in the Partnership's Annual Report on Form 10-K for the year ended December 31,

Note 2 - Oil and Gas Properties:

On June 30, 1995, Flextrend Development Company, L.L.C., ("Flextrend
Development"), a subsidiary of the Partnership, entered into a purchase and
sale agreement (the "Purchase and Sale Agreement") with Tatham Offshore, Inc.
("Tatham Offshore"), an approximately 38%-owned affiliate of DeepTech.
Pursuant to the Purchase and Sale Agreement, Flextrend Development acquired,
subject to certain reversionary rights, 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 (the "Assigned Properties") from Tatham
Offshore for $30.0 million.  All of the Assigned Properties are located
offshore in the Gulf.  Flextrend Development is entitled to retain all of the
revenues attributable to the Assigned Properties until it has received net
revenues equal to the Payout Amount (as defined below), whereupon Tatham
Offshore is entitled to receive a reassignment of the Assigned Properties,
subject to reduction and conditions as discussed below. "Payout Amount" is
defined as an amount equal to all costs incurred by Flextrend Development with
respect to the Assigned Properties (including the $30.0 million acquisition
cost paid to Tatham Offshore) plus interest thereon at a rate of 15% per annum.
Effective February 1, 1996, the Partnership entered into an agreement with
Tatham Offshore regarding certain transportation agreements that increases the
amount recoverable from the Payout Amount by $7.5 million plus interest (Note
6).  As of September 30, 1996, the Payout Amount was $90.4 million, comprised
of (a) the sum of (i) initial acquisition and transaction costs of $32.1
million, (ii) development and operating costs of $70.8 million, (iii) prepaid
demand charges of $7.5 million and (iv) interest of $10.1 million, reduced by
(b) net revenue of $30.1 million. At any time prior to December 10, 1996,
Flextrend Development may exercise either of the following options: (i) to
permanently retain 50% of the assigned working interest in either the Viosca
Knoll Block 817 property or the Garden Banks Block 72/Garden Banks Block 117
properties or (ii) to permanently retain