CONFORMED COPY
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
For the period ended September 30, 1998
or
[ ] Transition Report Pursuant to Section 13 of 15(d) of
the Securities and Exchange Act of 1934
For the transition period from to
Commission file number 033-63635-04
I.R.S. Employer Identification Number 55-0751154
PDC 1996-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
103 East Main Street
Bridgeport, WV 26330
Telephone: (304) 842-6256
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes XX No
<PAGE>
PDC 1996-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Balance Sheets - September 30, 1998 (unaudited)
and December 31, 1997 1
Statements of Operations - Three Months and
Nine Months Ended September 30, 1998 and 1997
(unaudited) 2
Statements of Partners' Equity -
Nine Months Ended September 30, 1998 (unaudited) 3
Statements of Cash Flows-
Nine Months Ended September 30, 1998 and 1997
(unaudited) 4
Notes to Financial Statements (unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II OTHER INFORMATION
Item 1. Legal Proceedings 7
Item 6. Exhibits and Reports on Form 8-K 7
<PAGE>
PDC 1996-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Balance Sheets
September 30, 1998 and December 31, 1997
<TABLE>
<C> <C> <C>
Assets
1998 1997
(Unaudited)
Current assets:
Cash $ 5,194 $ 2,756
Accounts receivable - oil and gas revenues 321,027 450,068
Total current assets 326,221 452,824
Oil and gas properties
successful efforts method
Oil and gas properties 16,620,628 16,620,628
Less accumulated depreciation, depletion,
and amortization 1,737,669 972,229
14,882,959 15,648,399
$15,209,180 $16,101,223
Current Liabilities and Partners' Equity
Current liabilities:
Accrued expenses $ 28,504 $ 41,951
Total current liabilities 28,504 41,951
Partners' Equity 15,180,676 16,059,272
$15,209,180 $16,101,223
</TABLE>
See accompanying notes to financial statements.
-1-
<PAGE>
PDC 1996-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statements of Operations
Three Months and Nine Months ended September 30, 1998 and 1997
(Unaudited)
<TABLE>
<C> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Revenues:
Sales of oil and gas $406,175 $460,218 $1,309,242 $818,714
Interest income 4,219 104 6,223 104
410,394 460,322 1,315,465 818,818
Expenses:
Lifting costs 127,791 91,660 333,107 143,613
Direct administrative cost 36 14 117 1,515
Depreciation, depletion and
amortization 221,974 263,753 765,440 494,343
349,801 355,427 1,098,664 639,471
Net income $ 60,593 $104,895 $ 216,801 $179,347
Net income per limited and
additional general partner unit $ 64 $ 110 $ 227 $ 188
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
PDC 1996-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statement of Partners' Equity
Nine months ended September 30, 1998
(Unaudited)
<TABLE>
<C> <C> <C> <C>
Limited and
additional Managing
general partners general partner Total
Balance, December 31, 1997 $12,847,417 $3,211,855 $16,059,272
Net income 173,443 43,358 216,801
Distributions to partners (876,320) (219,077) (1,095,397)
Balance, September 30, 1998 $12,144,540 $3,036,136 $15,180,676
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
PDC 1996-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statements of Cash Flows
Nine months ended September 30, 1998 and 1997
(Unaudited)
<TABLE>
<C> <C> <C>
1998 1997
Cash flows from operating activities:
Net income $216,801 $179,347
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion,
and amortization 765,440 494,343
Changes in operating assets
and liabilities:
Decrease (increase) in accounts
receivable - oil and gas revenues 129,041 (325,489)
Decrease in accrued expenses (13,447) (17,166)
Net cash provided from
operating activities 1,097,835 331,035
Cash flows from financing activities:
Distributions to partners (1,095,397) (349,611)
Net cash used by
financing activities (1,095,397) (349,611)
Net change in cash 2,438 (18,576)
Cash at beginning of period 2,756 20,000
Cash at end of period $ 5,194 $ 1,424
</TABLE>
See accompanying notes to financial statements.
-4-<PAGE>
PDC 1996-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Notes to Financial Statements
(Unaudited)
1. Accounting Policies
Reference is hereby made to the Partnership's Annual Report on Form
10-K for 1997, which contains a summary of major accounting policies
followed by the Partnership in the preparation of its financial
statements. These policies were also followed in preparing the
quarterly report included herein.
2. Basis of Presentation
The Management of the Partnership believes that all adjustments
(consisting of only normal recurring accruals) necessary to a fair
statement of the results of such periods have been made. The results
of operations for the nine months ended September 30, 1998 are not
necessarily indicative of the results to be expected for the full year.
3. Oil and Gas Properties
Oil and Gas Properties are reported on the successful efforts method.
-5-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Partnership was funded on December 31, 1996 with initial
Limited and Additional General Partner contributions of $15,301,726
and the Managing General Partner, Petroleum Development Corporation
(PDC), contributed $3,328,126 in accordance with the Agreement.
Syndication and management fee costs of $1,989,224 were incurred
leaving available capital of $16,640,628 for Partnership activities.
The Partnership began exploration and development activities
subsequent to the funding of the Partnership and completed well
drilling activities by March 31, 1997. Eighty-four wells have been
drilled, of which seventy-nine have been completed as producing wells.
Operations will be conducted with available funds and revenues
generated from oil and gas activities. No bank borrowings are
anticipated.
The Partnership had net working capital at September 30, 1998
of $297,717.
The Partnership's revenues from oil and gas will be affected by
changes in prices. As a result of changes in federal regulations,
gas prices are highly dependent on the balance between supply and
demand. The Partnership's gas sales prices are subject to increase
and decrease based on various market sensitive indices.
Results of Operations
Three Months Ended September 30, 1998 Compared with 1997
Revenue and expense during the third quarter of 1998 includes
natural gas sales and related expenses for most of the Partnership's
wells. During the same period in 1997 a larger number of the wells
were not yet turned into the line or produced only a portion of the
quarter, however the gas sold at higher average sales prices. While
the Partnership experienced a modest net income, depreciation,
depletion and amortization is non-cash expense and therefore the
partnership distributed $256,894 to the partners during the third
quarter of 1998.
Nine Months Ended September 30, 1998 Compare with 1997
Revenue and expenses during the first nine months of 1998
includes natural gas sales and related expenses for most of the
Partnership's wells. During the same period in 1997 a large portion
of the wells were not turned into line or produced only a portion of
the period. While the Partnership experienced a modest net income,
depreciation, depletion, and amortization is non-cash expense and
therefore the Partnership distributed $1,095,397 to the partners
during the first nine months of 1998.
Year 2000 Issue
State of Readiness
The Year 2000 Issue is the risk that computer programs using
two-digit data fields will fail to properly recognize the year 2000,
with the result being business interruption due to computer system
failures by PDC's software or hardware or that of government
entities, service providers and vendors. PDC, who administers all
aspects of the Partnership, has assessed the extent of the 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.
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<PAGE>
PDC has initiated formal communications with its significant
suppliers and service providers to determine the extent to which PDC
may be vulnerable to their failure to correct their own Year 2000
issues. It is expected that full identification will be completed by
March 31, 1999. To the extent that responses to Year 2000 readiness
are unsatisfactory, PDC intends to take appropriate action, including
identifying alternative suppliers and service providers who have
demonstrated Year 2000 readiness.
Cost of Readiness
PDC does not currently expect to charge the Partnership for any
portion of PDC's cost to become Year 2000 Complaint.
Risks of Year 2000 Issues
PDC presently believes that upon remediation of its business
software and hardware applications, the Year 2000 Issue will not
present a materially adverse risk to PDC's or the Partnership's
future consolidated results of operations, liquidity, and capital
resources. However, if such remediation is not completed in a timely
manner or the level of the timely compliance by key suppliers or
service providers is not sufficient, the Year 2000 Issue could have a
material impact on PDC's or the Partnership's operations including,
but not limited to, increased operating costs, loss of customers or
suppliers, loss of accounting functions, including well revenue
distributions, or other significant disruptions to PDC's or the
Partnership's business.
Contingency Plan
PDC has a contingency plan, and will implement it on any system
that remains non-complaint at December 31, 1998, if any, by early 1999.
New Accounting Standards
Statement of Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities (SFAS No. 133), was
issued by the Financial Accounting Standards Board in June, 1998.
Statement 133 standardizes the accounting for derivative instruments,
including certain derivative instruments embedded in other contracts.
The Partnership must adopt SFAS No. 133 by January 1, 2000; however,
early adoption is permitted. On adoption, the provisions of SFAS No.
133 must be applied prospectively. At the present time, the
Partnership cannot determine the impact that SFAS No. 133 will have
on its financial statements upon adoption, as such impact will be
based on the extent of derivative instruments, such as natural gas
futures contracts, outstanding at the date of adoption.
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<PAGE>
CONFORMED COPY
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 6. Exhibits and Reports on Form 8-K
(a) None.
(b) No reports on Form 8-K have been filed during the quarter ended
September 30, 1998.
SIGNATURES
Pursuant to the requirements 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 1996-D Limited Partnership
(Registrant)
By its Managing General Partner
Petroleum Development Corporation
Date: November 6, 1998 /s/ Steven R. Williams
Steven R. Williams
President
Date: November 6, 1998 /s/ Dale G. Rettinger
Dale G. Rettinger
Executive Vice President
and Treasurer
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 5,194
<SECURITIES> 0
<RECEIVABLES> 321,027
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 326,221
<PP&E> 16,620,628
<DEPRECIATION> 1,737,669
<TOTAL-ASSETS> 15,209,180
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,209,180
<SALES> 1,309,242
<TOTAL-REVENUES> 1,315,465
<CGS> 333,107
<TOTAL-COSTS> 1,098,664
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 216,801
<INCOME-TAX> 0
<INCOME-CONTINUING> 216,801
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 216,801
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
