CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission File Number 033-70568
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transaction period from to
PDC 1995-D LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
West Virginia 55-0743002
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
103 East Main Street, Bridgeport, West Virginia 26330
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (304) 842-3597
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
General and Limited Partnership Interests
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
<PAGE>
PART I
ITEM 1. BUSINESS.
General
PDC 1995-D Limited Partnership ("the Partnership") is a limited
partnership formed on December 29, 1995 pursuant to the West Virginia Uniform
Limited Partnership Act. Petroleum Development Corporation ("PDC") serves as
Managing General Partner of the Partnership.
Since the commencement of operations on December 29, 1995, the Partnership
has been engaged in onshore, domestic gas exploration exclusively in the
Northern Appalachian Basin. A total of 6 limited partners contributed
initial capital of $130,000; a total of 484 additional general partners
contributed initial capital of $8,027,071; and PDC (Managing General Partner)
contributed $1,784,359 in capital as a participant in accordance with
contribution provisions of the Limited Partnership Agreement (the Agreement).
Under the terms of the Agreement, the allocation of revenues is as
follows:
Allocation
of Revenues
Additional General and
Limited Partners 80%
Managing General Partner 20%
Operating and direct costs are allocated and charged to the additional
general and limited partners and the Managing General Partner in the same
percentages as revenues are allocated. Leasehold, drilling and completion
costs, and equipment costs are borne 80% by the additional general and
limited partners and 20% by the Managing General Partner.
Employees
The Partnership has no employees, however, PDC has approximately 75
employees which include a staff of geologists, petroleum engineers, landmen and
accounting personnel who administer all of the partnership's operations.
Plan of Operations
The Partnership participated in the drilling of 44 gross wells and will
continue to operate and produce its 42 gross productive wells. The Partnership
does not have unexpended initial capital and no additional drilling activity is
planned.
See Item 2 herein for information concerning the Partnership's gas wells.
Markets for Oil and Gas
The availability of a market for any oil and gas produced from the
operations of the Partnership will depend upon a number of factors beyond the
control of the Partnership which cannot be accurately predicted. These factors
include the proximity of the Partnership wells to and the capacity of natural
gas pipelines, the availability and price of competitive fuels, fluctuations in
seasonal supply and demand, and government regulation of supply and demand
created by its pricing and allocation restrictions. Oversupplies of gas can be
expected to occur from time to time and may result in the Partnership's wells
being shut-in or curtailed. Increased imports of oil and natural gas have
occurred and are expected to continue. The effects of such imports could
adversely impact the market for domestic oil and natural gas.
Competition
The Partnership competes in marketing its gas with numerous companies and
individuals, many of which have financial resources, staffs and facilities
substantially greater than those of the Partnership or Petroleum Development
Corporation.
2
<PAGE>
State Regulations
State regulatory authorities have established rules and regulations
requiring permits for well operations, reclamation bonds and reports concerning
operations. States also have statutes and regulations concerning the spacing of
wells, environmental matters and conservation, and have established regulations
concerning the unitization and pooling of oil and gas properties and maximum
rates of production from oil and gas wells. The Partnership believes it has
complied in all material respects with applicable state regulations.
Federal Regulations
Regulation of Liquid Hydrocarbons. Liquid hydrocarbons (including crude
oil and natural gas liquids) were subject to federal price and allocation
controls until January 1981 when controls were effectively eliminated by
executive order of the President. As a result, to the extent the Partnership
sells oil produced from its properties, those sales are at unregulated market
prices.
Although it appears unlikely under present circumstances that controls
will be reimposed upon liquid hydrocarbons, it is possible Congress may enact
such legislation at a future date. The impact of such legislation on the
Partnership would be minimal since the partnership expects to sell only small
quantities of liquid hydrocarbons, if any.
Natural Gas Regulation. Sale of natural gas by the Partnership is subject
to regulation of production, transportation and pricing by governmental
regulatory agencies. Generally, the regulatory agency in the state where a
producing well is located regulates production activities and, in addition, the
transportation of gas sold intrastate. The Federal Energy Regulatory Commission
(FERC) regulates the operation and cost of interstate pipeline operators who
transport gas. Currently the price of gas to be sold by the Partnership is not
regulated by any state or federal agency.
The FERC has adopted major changes in certain of its regulations and
continues to make additional changes that will significantly affect future
transportation and marketing of natural gas.
The Partnership is uncertain how the recent or proposed regulations will
affect the marketing of its gas because it is unable to predict how all
interstate pipelines that receive its gas will respond to such rulemakings.
Proposed Regulation. Numerous proposals concerning energy are being
considered by the United States Congress, various state legislatures and
regulatory agencies. The possible outcome and effect of these proposals cannot
be accurately predicted.
Environmental and Safety Regulation. The Partnership believes that it
complies, in all material respects, with all legislation and regulations
affecting its operations in the drilling and production of oil and gas wells and
the discharge of wastes. To date, compliance with such provisions and
regulations has not had a material effect upon the Partnership's expenditures
for capital equipment, its operations or its competitive position. The cost
of such compliance is not anticipated to be material in the future.
ITEM 2. PROPERTIES.
Drilling Activity and Productive Wells.
The following table sets forth the results of drilling activity from December
29, 1995 (date of inception) to March 15, 1998, of the Partnership which was
conducted in the continental United States.
<TABLE>
<S> <S> <S> <S> <S> <S>
Development Wells
Gross Net
Productive Dry Total Productive Dry Total
Period Ended
March 15, 1998. . . 42 2 44 37.5275 1.995 39.5225
</TABLE>
The Partnership has not participated in any exploratory wells. No
additional drilling activity is planned.
3<PAGE>
Productive Wells
The following table summarizes the Partnership's total gross and net
interests in productive wells at March 15, 1998.
<TABLE>
<S> <S> <S> <S> <S>
Productive Gas Wells
Well Name County State Gross Net
Wilson #4, D. Taylor WV 1 .9975
Newlon #2, D. Taylor WV 1 .9975
Sharp #2 Taylor WV 1 .9975
Irvin #271 Clearfield PA 1 .7475
Mayle #7 Taylor WV 1 .9975
Kaufman #295 Clearfield PA 1 .7475
Byler #1 Mercer PA 1 .9975
Frazier Clearfield PA 1 .7475
Krick #4 Clearfield PA 1 .9475
Mayle #6 Taylor WV 1 .9975
McCay #293 Clearfield PA 1 .7475
Green #3 Barbour WV 1 .9975
Mitchell #268 Clearfield PA 1 .7475
Krick #5 Clearfield PA 1 .9475
Shearer #1 Barbour WV 1 .9975
McCay #298 Clearfield PA 1 .7475
McKean #1 Mercer PA 1 .9975
Graham/Johnson #2 Clearfield PA 1 .7475
Krick #7 Clearfield PA 1 .9475
Meyers Point #3 Taylor WV 1 .9975
Krick #6 Clearfield PA 1 .9475
Diem #4 Clearfield PA 1 .7475
Hillard #301 Clearfield PA 1 .7475
Kacir #1 Mercer PA 1 .9975
Graham #240 Clearfield PA 1 .7475
Beatty #300 Clearfield PA 1 .7475
Kemm #1 Mercer PA 1 .9975
Tate #25 Clearfield PA 1 .9475
Tate #24 Clearfield PA 1 .9475
Tate #22 Clearfield PA 1 .9475
Thomson-Stephenson #63 Clearfield PA 1 .9475
Ballard #1 Mercer PA 1 .9975
Byler #2 Mercer PA 1 .9975
Thomson-Blackhills #52 Clearfield PA 1 .9475
Thomson-Stephenson #65 Clearfield PA 1 .9475
Thomson-Stephenson #64 Clearfield PA 1 .9475
Thomson-Blackhills #51 Clearfield PA 1 .9475
Veltri Taylor WV 1 .9975
Krick #8 Clearfield PA 1 .9475
Prushnok #2 Clearfield PA 1 .7975
Krick #10 Clearfield PA 1 .9475
Krick #11 Clearfield PA 1 .2800
42 37.5275
</TABLE>
A "productive well" is a well producing, or capable of producing, oil and gas in
commercial quantities. For purposes of the above table, a "gross well" is
one which the Partnership has a working interest and a "net well" is a gross
well multiplied by the Partnership's working interest to which it is entitled
under its drilling agreement.
Title to Properties
The Partnership's interests in producing acreage are in the form of
assigned direct interests in leases. Such properties are subject to
customary royalty interests generally contracted for in connection with the
acquisition of properties and could be subject to liens incident to operating
agreements, liens for current taxes and other burdens. The Partnership
believes that none of these burdens materially interfere with the use of such
properties in the operation of the Partnership's business.
As is customary in the oil and gas industry, little or no investigation
of title is made at the time of acquisition of undeveloped properties (other
than a preliminary
4<PAGE>
review of local mineral records). Investigations are generally made,
including in most cases receiving a title opinion of legal counsel, before
commencement of drilling operations. A thorough examination of title has
been made with respect to all of the Partnership's producing properties and
the Partnership believes that it has generally satisfactory title to such
properties.
ITEM 3. LEGAL PROCEEDINGS.
The Managing General Partner as driller/operator is not party to any
legal action that would materially affect the Managing General Partner's or
Partnership's operations or financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND SECURITY HOLDER MATTERS.
At December 31, 1997, PDC 1995-D Limited Partnership had one Managing
General Partner, 6 Limited Partners who fully paid for 6.50 units at $20,000
per unit of limited partnership interests and a total of 484 Additional
General Partners who fully paid for 401.35355 units at $20,000 per unit of
additional general partnership interests. No established public trading
market exists for the interests.
Limited and additional general partnership interests are transferable,
however no assignee of an interest in the Partnership can become a
substituted partner without the written consent of the transferor and the
Managing General Partner.
ITEM 6. SELECTED FINANCIAL DATA.
The selected financial data presented below has been derived from audited
financial statements of the Partnership appearing elsewhere herein.
<TABLE>
<S> <S> <S> <S>
Period from
December 29,
1995 (date of
inception) to
Years Ended December 31, December 31,
1997 1996 1995
Oil and Gas Sales . . . . . . . . . . . . . . $1,039,407 821,378 -
Costs and Expenses . . . . . . . . . . . . . 6,048,647 666,829 217,798
Net Income (loss) . . . . . . . . . . . . . . (5,005,440) 154,878 (217,798)
Allocation of Net Income (loss):
Managing General Partner. . . . . . . . (1,003,692) 30,976 (2,774)
Limited and Additional General Partners (4,001,748) 123,902 (215,024)
Per Limited and Additional
General Partner Unit . . . . . . . . (9,812) 304 (527)
Total Assets. . . . . . . . . . . . . . . . . 2,786,806 8,668,326 8,921,796
Distributions:
Managing General Partner. . . . . . . . 173,557 83,808 -
Limited and Additional General Partners 709,200 335,233 -
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Liquidity and Capital Resources
The Partnership was funded with initial Limited and Additional General
Partner contributions of $8,157,071 and the Managing General Partner
contributed $1,784,359 in accordance with the Agreement. Syndication and
management fee costs of $1,019,634 were incurred leaving available capital of
$8,921,796 for Partnership activities.
The Partnership began exploration and development activities subsequent
to the funding of the Partnership and completed well activities by December
31, 1997. Forty-four wells have been drilled, of which forty-two have been
completed as producing wells. No additional wells will be drilled.
5<PAGE>
The Partnership had net working capital at December 31, 1997 of $134,974.
Operations are expected to be conducted with available funds and
revenues generated from oil and gas activities. No bank borrowings are
anticipated.
Results of Operations
1997 Compared to 1996
Oil and gas sales increased 26.5% in 1997 compared to 1996 due to
increased sales volumes (1996 was not a full production year, see 1996
compared to 1995 below). The net loss of $5,005,440 in 1997 was primarily
due to the impairment charge for oil and gas properties. This impairment
resulted from net capitalized costs exceeding estimated undiscounted future
net cash flow. The impairment was based on estimated fair value which
considered future discounted cash flows. This charge did not affect cash
distributions to the partners which increased from $419,041 in 1996 to
$882,757 in 1997.
1996 Compared to 1995
The Partnership's wells were drilled and completed during the first
quarter of 1996 with production starting in the second quarter. Total
natural gas sales for this year were $821,378 with cash distributions to the
partners of $419,041. During 1995, in accordance with the partnership
agreement, a one time management fee of $203,927 was paid to the Managing
General Partner.
The Partnership's revenues from natural gas sales will be affected by
changes in prices. Natural gas prices are subject to general market
conditions which drive the pricing changes.
The principal effects of inflation upon the Partnership relate to the
costs required to drill, complete and operate oil and gas wells. The
Partnership expects these costs to remain somewhat stable over the next year.
Year 2000 Issue
PDC, who administers all aspects of the Partnership, has assessed the
extent of Year 2000 Issues affecting PDC and the Partnership. PDC believes
that the new computer system, including operating software currently being
installed along with modifications being made by PDC's computer technicians
will address the dating system flaw inherent in most operating systems. PDC
expects to be fully Year 2000 Compliant by the end of 1998. PDC expects to
be fully Year 2000 Compliant by the end of 1998. PDC does not currently
expect to charge the Partnership for any portion of PDC's cost to become Year
2000 Compliant.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
The response to this Item is set forth herein in a separate section of
this Report, beginning on Page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
NONE.
Part III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
The Partnership has no directors or executive officers. The
Partnership is managed by Petroleum Development Corporation (the Managing
General Partner). Petroleum Development Corporation's common stock is traded
in the NASDAQ National Market and Form 10-K for 1997 has been filed with the
Securities and Exchange Commission.
ITEM 11. MANAGEMENT REMUNERATIONS AND TRANSACTIONS.
NON-APPLICABLE.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
NON-APPLICABLE.
6<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Pursuant to the authorization contained in the Limited Partnership
Agreement, PDC receives fees for services rendered and reimbursement of
certain expenses from the Partnership. The following table presents
compensation or reimbursements by the Partnership to PDC or other related
parties during the periods listed below:
<TABLE>
<S> <S> <S> <S>
Period from
December 29,
1995 (date of
inception) to
Years Ended December 31, December 31,
1997 1996 1995
Footage Drilling Contracts, Services,
Chemicals, Supplies, and Equipment - - $8,901,796
Syndication and management fee - - 1,019,634
Operator's charges $248,884 $134,618 -
Tax return preparation 5,870 3,425 4,245
Direct administrative cost 753 1,344 1,500
</TABLE>
7
<PAGE>
CONFORMED COPY
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) (1) Financial Statements
See Index to Financial Statements on F-2
(2) Financial Statement Schedules
See Index to Financial Statements on page F-2. All financial
statement schedules are omitted because they are not required,
inapplicable, or the information is included in the Financial
Statements or Notes thereto.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PDC 1995-D Limited Partnership
By its Managing General Partner
Petroleum Development
Corporation
By /s/ James N. Ryan
James N. Ryan, Chairman
March 23, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ James N. Ryan Chairman, Chief Executive
James N. Ryan Officer and Director March 23, 1998
/s/ Steven R. Williams President and Director
Steven R. Williams March 23, 1998
/s/ Dale G. Rettinger Executive Vice President,
Dale G. Rettinger Treasurer and Director March 23, 1998
(principal financial and
accounting officer)
/s/ Roger J. Morgan Secretary and Director
Roger J. Morgan March 23, 1998
8
<PAGE>
PDC 1995-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Financial Statements for Annual Report
on Form 10-K to Securities and Exchange
Commission
Years Ended December 31, 1997 and 1996
and Period from December 29, 1995
(Date of Inception)
to December 31, 1995
(With Independent Auditors' Report Thereon)
F-1<PAGE>
PDC 1995-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Index to Financial Statements
Independent Auditors' Report F-3
Balance Sheets - December 31, 1997 and 1996 F-4
Statements of Operations - Years Ended December 31, 1997
and 1996 and Period from December 29, 1995 (Date of Inception)
to December 31, 1995 F-5
Statements of Partners' Equity - Years Ended December 31, 1997
and 1996 and Period from December 29, 1995 (Date of Inception)
to December 31, 1995 F-6
Statements of Cash Flows - Years Ended December 31, 1997
and 1996 and Period from December 29, 1995 (Date of Inception)
to December 31, 1995 F-7
Notes to Financial Statements F-8
All financial statement schedules have been omitted because they are not
applicable or not required or for the reason that the required information is
shown in the financial statements or notes thereto.
F-2<PAGE>
Independent Auditors' Report
To the Partners
PDC 1995-D Limited Partnership:
We have audited the financial statements of PDC 1995-D Limited Partnership (a
West Virginia limited partnership) as listed in the accompanying index.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PDC 1995-D Limited
Partnership as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years ended December 31, 1997 and 1996
and the period from December 29, 1995 (date of inception) to December 31,
1995, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
March 19, 1998
F-3<PAGE>
PDC 1995-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Balance Sheets
December 31, 1997 and 1996
<TABLE>
<S> <S> <S>
Assets 1997 1996
Current assets:
Cash $ 2,761 7,125
Accounts receivable - oil and gas revenues 163,454 267,719
Total current assets 166,215 274,844
Oil and gas properties,
successful efforts method (Notes 3 and 5): 4,075,258 8,901,796
Less accumulated depreciation, depletion,
and amortization 1,454,667 508,314
2,620,591 8,393,482
$2,786,806 8,668,326
Current Liabilities and Partners' Equity
Current liabilities:
Accrued expenses $ 31,241 24,564
Total current liabilities 31,241 24,564
Partners' equity 2,755,565 8,643,762
$2,786,806 8,668,326
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
PDC 1995-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statements of Operations
Years Ended December 31, 1997 and 1996 and the
Period from December 29, 1995 (Date of Inception) to December 31, 1995
<TABLE>
<S> <S> <S> <S>
1997 1996 1995
Revenues:
Sales of oil and gas $ 1,039,407 821,378 -
Interest income 3,800 329 -
1,043,207 821,707 -
Expenses (note 3):
Lifting cost 248,884 134,618 -
Management fee - - 203,927
Independent audit fee 8,500 7,491 7,268
Franchise taxes 5,703 4,637 858
Tax return preparation 5,870 3,425 4,245
Direct administrative cost 753 1,344 1,500
Independent engineering cost 6,046 7,000 -
Depreciation, depletion
and amortization 946,353 508,314 -
Loss on impairment of oil and gas
properties 4,826,538 - -
6,048,647 666,829 217,798
Net income (loss) $(5,005,440) 154,878 (217,798)
Net income (loss) per
limited and additional
general partner unit $ (9,812) 304 (527)
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
PDC 1995-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statements of Partners' Equity
Years Ended December 31, 1997 and 1996 and Period from December 29, 1995
(Date of Inception) to December 31, 1995
<TABLE>
<S> <S> <S> <S>
Limited and Managing
additional general
general partners partner Total
Partners' initial capital
contributions $8,157,071 1,784,359 9,941,430
Syndication costs (815,707) - (815,707)
Net loss (215,024) (2,774) (217,798)
Balance, December 31, 1995 $7,126,340 1,781,585 8,907,925
Net income 123,902 30,976 154,878
Distributions to partners (335,233) (83,808) (419,041)
Balance, December 31, 1996 $6,915,009 1,728,753 8,643,762
Net loss (4,001,748) (1,003,692) (5,005,440)
Distributions to partners (709,200) (173,557) (882,757)
Balance, December 31, 1997 $ 2,204,061 551,504 2,755,565
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
PDC 1995-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statements of Cash Flows
Years Ended December 31, 1997 and 1996 and the
Period from December 29, 1995 (Date of Inception) to December 31, 1995
<TABLE>
<S> <S> <S> <S>
1997 1996 1995
Cash flows from operating activities:
Net income (loss) $(5,005,440) 154,878 (217,798)
Adjustments to reconcile
net income (loss) to net cash
provided from (used by)
operating activities:
Depreciation, depletion
and amortization 946,353 508,314 -
Loss on impairment of
oil and gas properties 4,826,538 - -
Changes in operating
assets and liabilities:
Decrease (increase) in accounts
receivable - oil
and gas revenues 104,265 (267,719) -
Increase in
accrued expenses 6,677 10,693 13,871
Net cash provided from
(used by) operating activities 878,393 406,166 (203,927)
Cash flows from investing activities:
Expenditures for unevaluated
oil and gas properties - - (8,901,796)
Net cash used
by investing activities - - (8,901,796)
Cash flows from financing activities:
Limited and additional general
partner contributions - - 8,157,071
Managing General Partner contribution - - 1,784,359
Syndication cost paid - - (815,707)
Distributions to partners (882,757) (419,041) -
Net cash (used by) provided
from financing activities (882,757) (419,041) 9,125,723
Net (decrease) increase in cash (4,364) (12,875) 20,000
Cash at beginning of period 7,125 20,000 -
Cash at end of period $ 2,761 7,125 20,000
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE>
PDC 1995-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Notes to Financial Statements
Years Ended December 31, 1997 and 1996 and the Period
from December 29, 1995 (date of inception) to December 31, 1995
(1) Summary of Significant Accounting Policies
Partnership Financial Statement Presentation Basis
The financial statements include only those assets, liabilities and
results of operations of the partners which relate to the business
of PDC 1995-D Limited Partnership (the Partnership). The
statements do not include any assets, liabilities, revenues or
expenses attributable to any of the partners' other activities.
Oil and Gas Properties
The Partnership follows the successful efforts method of accounting
for the cost of exploring for and developing oil and gas reserves.
Under this method, costs of development wells, including equipment
and intangible drilling costs related to both producing wells and
developmental dry holes, and successful exploratory wells are
capitalized and amortized on an annual basis to operations by the
units-of-production method using estimated proved developed
reserves determined at year end by an independent petroleum
engineer, Wright & Company, Inc. If a determination is made that
an exploratory well has not discovered economically producible
reserves, then its costs are expensed as dry hole costs.
The Partnership assesses impairment of capitalized costs of proved
oil and gas properties by comparing net capitalized costs to
undiscounted future cash flows on a field-by-field basis using
expected prices. Prices utilized for measurement purposes and
expected costs are held constant. If net capitalized costs exceed
undiscounted future net cash flow, the measurement of impairment is
based on estimated fair value which would consider future
discounted cash flows. During 1997 the loss on impairment
of oil and gas properties as reflected in the Statements of Operations
amounted to $4,826,538.
Based on the Managing General Partner's experience, management
believes site restoration, dismantlement and abandonment costs, net
of salvage to be immaterial in relation to operating costs. These
costs are being expensed when incurred.
Income Taxes
Since the taxable income or loss of the Partnership is reported in the
separate tax returns of the partners, no provision has been made for
income taxes on the Partnership's books.
Under federal income tax laws, regulations and administrative rulings,
certain types of transactions may be accorded varying
interpretations. Accordingly, the Partnership's tax return and,
consequently, individual tax returns of the partners may be changed
to conform to the tax treatment resulting from a review by the
Internal Revenue Service.
(Continued)
F-8<PAGE>
PDC 1995-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Notes to Financial Statements, Continued
Use of Estimates
Management of the Partnership has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
revenues and expenses and the disclosure of contingent assets and
liabilities to prepare these financial statements in conformity
with generally accepted accounting principles. Actual results
could differ from those estimates. Estimates which are
particularly significant to the financial statements include
estimates of oil and gas reserves and future cash flows from oil
and gas properties.
(2) Organization
The Partnership was organized as a limited partnership on December 29,
1995 in accordance with the laws of the State of West Virginia for
the purpose of engaging in the drilling, completion and operation
of oil and gas development and exploratory wells in the Northern
Appalachian Basin.
Purchasers of partnership units subscribed to and fully paid for 6.5
units of limited partner interests and 401.35355 units of
additional general partner interests at $20,000 per unit
(collectively, Investor Partners). Petroleum Development
Corporation has been designated the Managing General
Partner of the Partnership. Although costs, revenues and cash
distributions allocable to the limited and additional general
partners are shared pro rata based upon the amount of their
subscriptions, including the Managing General Partner to the extent
of its 20% capital contributions, there are significant differences
in the federal income tax effects and liability associated with
these different types of units in the Partnership.
Upon completion of the drilling phase of the Partnership's wells, all
additional general partners units are converted into units of limited
partner interests and thereafter become limited partners of the
Partnership. Limited partners do not have any rights to convert their
units into units of additional general partner interests in the
Partnership.
In accordance with the terms of the Partnership Agreement (the
Agreement), the Managing General Partner manages all activities of
the Partnership and acts as the intermediary for substantially all
Partnership transactions.
(3) Transactions with Managing General Partner and Affiliates
The Partnership's transactions with the Managing General Partner include
charges for the following:
<TABLE>
<S> <S> <S> <S>
Period from
December 29,
1995 (date of
Years Ended inception) to
December 31, December 31,
1997 1996 1995
Drilling, completion
and lease costs - - $8,901,796
Offering and organization costs
(includes reimbursements of
commissions, and management fee) - - 1,019,634
Lifting costs $248,884 $134,618 -
Tax return preparation 5,870 3,425 4,245
Direct administrative cost 753 1,344 1,500
</TABLE>
F-9
<PAGE>
PDC 1995-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Notes to Financial Statements, Continued
(4) Allocation
The following table summarizes the participation of the Managing General
Partner and the Investor Partners, taking account of the Managing
General Partner's capital contribution equal to 20% of the Initial
Operating Capital, in the costs and revenues of the Partnership.
<TABLE><S> <S> <S>
Managing
Investor General
Partners Partner
Partnership Costs
Broker-dealer Commissions and Expenses(1). . 100% 0%
Management Fee . . . . . . . . . . . . . . . 100% 0%
Undeveloped Lease Costs. . . . . . . . . . . 0% 100%
Drilling and Completion Costs. . . . . . . . 80% 20%
Tangible Equipment . . . . . . . . . . . . . 0% 100%
Intangible Drilling and Development Costs. . 100% 0%
Operating Costs(2) . . . . . . . . . . . . . 80% 20%
Direct Costs(3). . . . . . . . . . . . . . . 80% 20%
Administrative Costs . . . . . . . . . . . . 0% 100%
Partnership Revenues
Sale of Oil and Gas Production(4). . . . . . 80% 20%
Sale of Productive Properties(5) . . . . . . 80% 20%
Sale of Undeveloped Leases . . . . . . . . . 80% 20%
Interest Income. . . . . . . . . . . . . . . 80% 20%
</TABLE>
____________________
[FN]
(1) Organization and Offering Costs, net of the Dealer Manager
commissions, discounts, and due diligence expenses, of the
Partnerships were paid by the Managing General Partner and not from
Partnership funds. In addition, Organization and Offering Costs in
excess of 10% of Subscriptions were paid by the Managing General
Partner, without recourse to the Partnership.
(2) Represents Operating costs incurred after the completion of
productive wells, including monthly per-well charges paid to the
Managing General Partner.
(3) The Managing General Partner receives monthly reimbursement from the
Partnership for the direct costs incurred by the Managing General
Partner on behalf of the Partnership.
(4) The revenues and expenses allocated to the partners are subject to
a special provision in the partnership agreement, whereby the
allocable share of revenues and expenses of the Investor Partners in
each producing well may be increased and the interest of the
Managing General Partner in each well may be decreased if such well
fails to meet certain production levels. The shifting of the
allocable share of revenues and expenses to the Investor Partners in
the event that certain prescribed production levels are not attained
may also serve to shift an increased amount of cash distributions to
the Investor Partners and a decreased amount of cash distributions
to the Managing General Partner.
F-10
<PAGE>
PDC 1995-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Notes to Financial Statements, Continued
(5) In the event of the sale or other disposition of a productive well,
a lease upon which such well is situated, or any equipment related
to any such lease or well, the proceeds from such sale or
disposition shall be allocated and credited to the Partners as oil
and gas revenues are allocated. The term "proceeds" above does not
include revenues from a royalty, overriding royalty, lease interest
reserved, or other promotional consideration received by the
Partnership in connection with any sale or disposition, which
revenues shall be allocated to the Investor Partners and the
Managing General Partner in the same percentages that oil and gas
revenues are allocated. No such sales have occurred.
</FN>
(5) Costs Relating to Oil and Gas Activities
The Partnership is engaged solely in oil and gas activities, all of which
are located in the continental United States. Information regarding
aggregate capitalized costs and results of operations for these
activities is located in the basic financial statements. Costs
capitalized for these activities are as follows:
<TABLE>
<S> <S> <S>
December 31,
1997 1996
Lease acquisition costs $ 197,790 197,790
Intangible development costs 7,179,022 7,179,022
Well equipment 1,524,984 1,524,984
Impairment Charge (4,826,538) -
</TABLE>
$ 4,075,258 8,901,796
The following costs were incurred for the Partnership's oil and gas
activities:
<TABLE>
<S> <S> <S> <S>
Period from
December 29,
1995 (date of
inception) to
Years Ended December 31, December 31,
1997 1996 1995
Costs capitalized:
Unevaluated oil
and gas properties $ - - 8,901,796
$ - - 8,901,796
</TABLE>
(6) Income Taxes
As a result of the differences in the treatment of certain items for
income tax purposes as opposed to financial reporting purposes,
primarily depreciation, depletion and amortization of oil and gas
properties and the recognition of intangible drilling costs as an
expense or capital item, the income tax basis of oil and gas properties
differs from the basis used for financial reporting purposes. At
December 31, 1997 and 1996, the income tax basis of the partnership's
oil and gas properties was $1,545,767 and $1,654,694, respectively.
F-11
<PAGE>
PDC 1995-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Notes to Financial Statements, Continued
(7) Supplemental Reserve Information (Unaudited)
Proved oil and gas reserves of the Partnership have been estimated by an
independent petroleum engineer, Wright & Company, Inc. These reserves
have been prepared in compliance with the Securities and Exchange
Commission rules based on year end prices. A copy of the reserve report
has been made available to all partners. All of the partnership's
reserves are proved developed. An analysis of the change in estimated
quantities of proved developed oil and gas reserves is shown below:
Natural gas
(mcf)
Proved developed reserves as of
December 29, 1995 (date of inception) -
Extensions, discoveries and other additions 5,312,516
Production (299,266)
Proved developed reserves as of
December 31, 1996 5,013,250
Revision of previous estimates (1,635,182)
Production (377,019)
Proved developed reserves as of
December 31, 1997 3,001,049
F-12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,761
<SECURITIES> 0
<RECEIVABLES> 163,454
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 166,215
<PP&E> 4,075,258
<DEPRECIATION> 1,454,667
<TOTAL-ASSETS> 2,786,806
<CURRENT-LIABILITIES> 31,241
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,786,806
<SALES> 1,039,407
<TOTAL-REVENUES> 1,043,207
<CGS> 248,884
<TOTAL-COSTS> 6,048,647
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,005,440)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,005,440)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,005,440)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
