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 March 31, 1999
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 333-41977-04
I.R.S. Employer Identification Number 55-0757539
PDC 1998-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 1998-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Balance Sheets - March 31, 1999 and December 31, 1998 1
Statement of Operations -
Three Months Ended March 31, 1999 2
Statement of Partners' Equity -
Three Months Ended March 31, 1999 3
Statement of Cash Flows-
Three Months Ended March 31, 1999 4
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 6. Exhibits and Reports on Form 8-K 8
<PAGE>
PDC 1998-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Balance Sheets
March 31, 1999 and December 31, 1998
<TABLE>
<C> <C> <C>
Assets
1999 1998
(Unaudited)
Current assets:
Cash $ 13,640 20,000
Accounts receivable - oil and gas revenues 7,976 -
Total current assets 21,616 20,000
Oil and gas properties, successful
efforts method 21,744,969 22,301,221
Less accumulated depreciation, depletion,
and amortization 14,232 -
21,730,737 22,301,221
$21,752,353 $22,321,221
Current Liabilities and Partners' Equity
Current liabilities:
Accrued expenses $ 11,630 17,990
Total current liabilities 11,630 17,990
Partners' Equity 21,740,723 22,303,231
$21,752,353 22,321,221
</TABLE>
See accompanying notes to financial statements.
-1-
<PAGE>
PDC 1998-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statement of Operations
Three months ended March 31, 1999
(Unaudited)
<TABLE>
<C> <C>
Revenues:
Sales of oil and gas $ 14,236
14,236
Expenses:
Exploratory dry hole costs 556,252
Lifting cost 6,260
Depreciation, depletion, and amortization 14,232
576,744
Net loss $(562,508)
Net loss per limited and additional
general partner unit $ (438)
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE>
PDC 1998-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statement of Partners' Equity
Three months ended March 31, 1999
(Unaudited)
<TABLE>
<C> <C> <C> <C>
Limited and
additional Managing
general partners general partner Total
Balance, December 31, 1998 $17,842,585 4,460,646 22,303,231
Net loss (450,006) (112,502) (562,508)
Balance, March 31, 1999 $17,392,579 $4,348,144 $21,740,723
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
PDC 1998-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statement of Cash Flows
Three months ended March 31, 1999
(Unaudited)
<TABLE>
<C> <C>
Cash flows from operating activities:
Net loss $ (562,508)
Adjustments to reconcile net income to net cash
used by operating activities:
Exploratory dry hole costs 556,252
Depreciation, depletion, and amortization 14,232
Changes in operating assets and liabilities:
Increase in accounts receivable - oil and gas revenues (7,976)
Decrease in accrued expenses (6,360)
Net cash used by operating activities (6,360)
Net change in cash (6,360)
Cash at beginning of period 20,000
Cash at end of period $13,640
</TABLE>
See accompanying notes to financial statements.
-4-<PAGE>
PDC 1998-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 1998, which contains a summary of significant 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
three months ended March 31, 1999 are not necessarily indicative of the
results to be expected for the full year.
3. 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 which will be determined at year end by an
independent petroleum engineer. If a determination is made that an
exploratory well has not discovered economically producible reserves, then
its costs are expensed as dry hole costs.
-5-
<PAGE>
Item 2. 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 $20,525,261 and the Managing General Partner
contributed $4,464,244 in accordance with the Agreement. Syndication and
management fee costs of $2,668,284 were incurred leaving available capital
of $22,321,221 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, 1999. Nintey-seven wells have been drilled, of
which ninety 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 March 31, 1999 of $9,986.
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
The Partnership had natural gas sales during the first quarter of 1999
from twelve of the Partnership's producing wells. As of May 10, 1999,
thirty-one of the Partnership's ninety productive wells were producing
natural gas. The remaining fifty-nine wells are scheduled to go into
production during the remainder of the second quarter of 1999. During the
first quarter of 1999, the Partnership expensed $556,252 of exploratory dry
hole costs related to one well. Cash distributions to the partners are
scheduled to commence during the second quarter of 1999.
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
installed during 1998 along with modifications made by PDC's computer
technicians have addressed the dating system flaw inherent in most
operating systems. PDC has completed a remediation plan and believes it is
currently fully Year 2000 compliant.
-6-<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 June 30, 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 compliant.
Risks of Year 2000 Issues
PDC presently believes the Year 2000 Issue will not present a
materially adverse risk to PDC's or the Partnership's future results of
operations, liquidity, and capital resources. However, if 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-compliant at December 31, 1999, if any.
-7-
<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
March 31, 1999.
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 1998-D Limited Partnership
(Registrant)
By its Managing General Partner
Petroleum Development Corporation
Date: May 12, 1999 /s/ Steven R. Williams
Steven R. Williams
President
Date: May 12, 1999 /s/ Dale G. Rettinger
Dale G. Rettinger
Executive Vice President
and Treasurer
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 13,640
<SECURITIES> 0
<RECEIVABLES> 7,976
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,616
<PP&E> 21,744,969
<DEPRECIATION> 14,232
<TOTAL-ASSETS> 21,752,353
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 21,752,353
<SALES> 14,236
<TOTAL-REVENUES> 14,236
<CGS> 6,260
<TOTAL-COSTS> 576,744
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (562,508)
<INCOME-TAX> 0
<INCOME-CONTINUING> (562,508)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (562,508)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
