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Previous: VOICESTREAM WIRELESS CORP, 10-Q, 1999-08-09 |
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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 June 30, 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
PDC 1998-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Balance Sheets - June 30, 1999 and December 31, 1998 1
Statements of Operations -
Three and Six Months Ended June 30, 1999 2
Statement of Partners' Equity -
Six Months Ended June 30, 1999 3
Statement of Cash Flows-
Six Months Ended June 30, 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
PDC 1998-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Balance Sheets
June 30, 1999 and December 31, 1998
Assets
1999 1998
(Unaudited)
Current assets:
Cash $ 7,116 $ 20,000
Accounts receivable - oil and gas revenues 143,539 -
Total current assets 150,655 20,000
Oil and gas properties, successful
efforts method 20,944,167 22,301,221
Less accumulated depreciation, depletion,
and amortization 195,275 -
20,748,892 22,301,221
$20,899,547 $22,321,221
Current Liabilities and Partners' Equity
Current liabilities:
Accrued expenses $ 5,131 $ 17,990
Total current liabilities 5,131 17,990
Partners' Equity 20,894,416 22,303,231
$20,899,547 $22,321,221
See accompanying notes to financial statements.
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PDC 1998-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statements of Operations
Three months and Six months ended June 30, 1999
(Unaudited)
Three Months Six Months
Ended Ended
June 30, 1999 June30, 1999
Revenues:
Sales of oil and gas $ 189,470 $ 203,706
189,470 203,706
Expenses:
Exploratory dry hole costs 800,802 1,357,054
Lifting cost 53,907 60,167
Direct administrative cost 25 25
Depreciation, depletion, and amortization 181,043 195,275
1,035,777 1,612,521
Net loss $ (846,307) $(1,408,815)
Net loss per limited and additional
general partner unit $ (660) $ (1,098)
See accompanying notes to financial statements.
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PDC 1998-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statement of Partners' Equity
Six months ended June 30, 1999
(Unaudited)
Limited and
additional Managing
general partners general partner Total
Balance, December 31, 1998 $17,842,585 4,460,646 $22,303,231
Net loss (1,127,052) (281,763) (1,408,815)
Balance, June 30, 1999 $16,715,533 $4,178,883 $20,894,416
See accompanying notes to financial statements.
-3-
PDC 1998-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statement of Cash Flows
Six months ended June 30, 1999
(Unaudited)
Cash flows from operating activities:
Net loss $(1,408,815)
Adjustments to reconcile net loss to net cash
used by operating activities:
Exploratory dry hole costs 1,357,054
Depreciation, depletion, and amortization 195,275
Changes in operating assets and liabilities:
Increase in accounts receivable - oil and gas revenues (143,539)
Decrease in accrued expenses (12,859)
Net cash used by operating activities (12,884)
Net change in cash (12,884)
Cash at beginning of period 20,000
Cash at end of period $ 7,116
See accompanying notes to financial statements.
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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 six months ended June 30, 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.
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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 eighty-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 June 30, 1999 of $145,524.
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 June 30, 1999
The Partnership turned an additional 26 wells into line during the second quarter of 1999 to add to the 12 wells turned into line during the first quarter of 1999. The remaining 51 wells are scheduled to go into line during the third quarter of 1999.
Six Months Ended June 30, 1999
During the first quarter of 1999 the partnership drilled 97 wells of which 89 are productive. Two of the eight dry holes were exploratory wells, therefore the partnership expensed $556,252 as exploratory dry hole cost. As of August 2, 1999, the partnership has 64 wells in production with the remaining 25 wells scheduled to be put into production during the third quarter of 1999. The first cash distribution to the Partnership occurred on July 26, 1999.
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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.
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 September 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.
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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
June 30, 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: August 9, 1999 /s/ Steven R. Williams
Steven R. Williams
President
Date: August 9, 1999 /s/ Dale G. Rettinger
Dale G. Rettinger
Executive Vice President
and Treasurer
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