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)

50% of the assigned working interest in all three Assigned Properties in
exchange for forgiving 25% in the case of option (i) or 50% in the case of
option (ii) of the then-existing Payout Amount exclusive of the $7.5 million
plus interest added to the Payout Amount in connection with the restructuring
of certain transportation agreements discussed above.  In the event Flextrend
Development elects to reduce the Payout Amount, it will become obligated to
fund any further development costs attributable to Tatham Offshore's portion of
the working interests, such costs to be added to the Payout Amount.  Otherwise,
any further development costs will be funded by Flextrend Development on a
discretionary basis, such costs to be added to the Payout Amount.  Further, in
the event Flextrend Development forgoes its right to permanently retain a
working interest in all or a portion of the Assigned Properties, it will be
entitled to recover from working interest revenues in respect of the Assigned
Properties all future demand charges payable for platform access and
processing, in their inverse order of maturity, prior to any reassignment to
Tatham Offshore.  If however, Tatham Offshore (i) satisfies in full the future
demand charges payable for platform access and processing, (ii) delivers
evidence that it has received a rating of BBB-, or better, from at least two
reputable rating agencies or (iii) delivers evidence that an entity with a
rating of BBB-, or better, has agreed to guarantee, assume or, to the
reasonable satisfaction of the Partnership, otherwise become responsible for
such future demand charges payable, then Tatham Offshore would receive a
reassignment of the Assigned Properties upon satisfaction of the Payout Amount.
In the event the Payout Amount has been satisfied but none of the above
conditions have been met, Tatham Offshore is entitled to receive one-third
(1/3) of the revenues, net of operating expenses and platform access and
processing fees, until such time as one of the above conditions is met.

Note 3 - Construction and Acquisition Activities:

In February 1996, the Partnership and Texaco, Inc. formed Poseidon Oil Pipeline
Company, L.L.C. ("POPCO"), a Delaware limited liability company, which at
inception, was 50% owned by Poseidon Pipeline Company, L.L.C. ("Poseidon LLC"),
a subsidiary of the Partnership, and 50% owned by Texaco Trading and
Transportation Inc. ("Texaco Trading"), a subsidiary of Texaco, Inc. POPCO was
formed to construct, own and operate the Poseidon Oil Pipeline. Pursuant to the
terms of the organizational documents, Poseidon LLC initially contributed
assets, at net book value, related to the construction of the initial phase of
the Poseidon Oil Pipeline as well as certain dedication agreements with
producers and Texaco Trading initially contributed an equivalent amount of cash
as well as its rights under certain agreements.

The Poseidon Oil Pipeline will ultimately consist of approximately 200 miles of
16 to 24 inch diameter pipeline capable of delivering up to 400,000 barrels per
day of sour crude oil production to multiple markets onshore Louisiana.  The
initial 117-mile segment, which extends easterly from Garden Banks Block 72 to
Ship Shoal Block 332, was placed in service in April 1996.  The second phase,
an 83-mile segment, extending in a northerly direction from the Ship Shoal
Block 332 Platform to Calliou Island, Louisiana, is currently under
construction and is scheduled to be completed during the fourth quarter of
1996.

In July 1996, Marathon Oil Company ("Marathon") joined POPCO by contributing
its interest in 58 miles of nearby crude oil pipelines and dedicating its
portion of oil reserves attached to such pipelines to the Poseidon Oil Pipeline
for transportation.  As a result, each of the Partnership and Texaco Trading
now owns a 36% interest in POPCO and Marathon owns the remaining 28% interest.

On July 8, 1996, the Partnership and affiliates of Marathon and Shell Oil
Company ("Shell") announced plans to build and operate an interstate natural
gas pipeline system and a connecting gathering system to serve growing
production areas in the Green Canyon area of the Gulf.  The total cost of the
two systems, including the Manta Ray System, currently owned by the
Partnership, is approximately $270.0 million.  The new jurisdictional
interstate pipeline segment of the project, to be named "Nautilus", will
consist of a 30-inch line





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