SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended Commission File Number
June 30, 1999 0-8881
DYCO OIL AND GAS PROGRAM 1978-1
(A LIMITED PARTNERSHIP)
(Exact Name of Registrant as specified in its charter)
Minnesota 41-1343930
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or Number)
organization)
Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103
- ------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(918) 583-1791
----------------------------------------------------
(Registrant's telephone number, including area code)
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 X No
------ ------
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DYCO OIL AND GAS PROGRAM 1978-1 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
1999 1998
---------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 44,065 $ 24,203
Accrued oil and gas sales 19,544 18,937
-------- --------
Total current assets $ 63,609 $ 43,140
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 99,720 105,692
DEFERRED CHARGE 17,019 17,019
-------- --------
$180,348 $165,851
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 1,579 $ 1,199
-------- --------
Total current liabilities $ 1,579 $ 1,199
ACCRUED LIABILITY $ 31,362 $ 31,362
PARTNERS' CAPITAL:
General Partner, 24 general
partner units $ 1,474 $ 1,333
Limited Partners, issued and
outstanding, 2,400 Units 145,933 131,957
-------- --------
Total Partners' capital $147,407 $133,290
-------- --------
$180,348 $165,851
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1978-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
1999 1998
-------- --------
REVENUES:
Oil and gas sales $23,950 $52,048
Interest 293 249
------- -------
$24,243 $52,297
COSTS AND EXPENSES:
Oil and gas production $ 4,301 $16,468
Depreciation, depletion, and
amortization of oil and gas
properties 1,819 8,731
General and administrative
(Note 2) 6,647 6,686
------- -------
$12,767 $31,885
------- -------
NET INCOME $11,476 $20,412
======= =======
GENERAL PARTNER (1%) - net income $ 115 $ 204
======= =======
LIMITED PARTNERS (99%) - net income $11,361 $20,208
======= =======
NET INCOME PER UNIT $ 4.73 $ 8.42
======= =======
UNITS OUTSTANDING 2,424 2,424
======= =======
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1978-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
1999 1998
-------- --------
REVENUES:
Oil and gas sales $48,677 $93,331
Interest 510 1,827
------- -------
$49,187 $95,158
COSTS AND EXPENSES:
Oil and gas production $11,953 $33,613
Depreciation, depletion, and
amortization of oil and gas
properties 5,972 14,637
General and administrative
(Note 2) 17,145 17,475
------- -------
$35,070 $65,725
------- -------
NET INCOME $14,117 $29,433
======= =======
GENERAL PARTNER (1%) - net income $ 141 $ 294
======= =======
LIMITED PARTNERS (99%) - net income $13,976 $29,139
======= =======
NET INCOME PER UNIT $ 5.82 $ 12.14
======= =======
UNITS OUTSTANDING 2,424 2,424
======= =======
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1978-1 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
1999 1998
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $14,117 $ 29,433
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 5,972 14,637
(Increase) decrease in accrued
oil and gas sales ( 607) 109,936
Increase (decrease) in accounts
payable 380 ( 16,451)
------- --------
Net cash provided by operating
activities $19,862 $137,555
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of oil and
gas properties $ - $ 3,965
------- --------
Net cash provided by investing
activities $ - $ 3,965
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions $ - ($169,680)
------- --------
Net cash used by financing
activities $ - ($169,680)
------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $19,862 ($ 28,160)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 24,203 78,463
------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $44,065 $ 50,303
======= ========
The accompanying condensed notes are an
integral part of these financial statements.
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<PAGE>
DYCO OIL AND GAS PROGRAM 1978-1 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheet as of June 30, 1999, statements of operations for the
three and six months ended June 30, 1999 and 1998, and statements of cash
flows for the six months ended June 30, 1999 and 1998 have been prepared
by Dyco Petroleum Corporation ("Dyco"), the General Partner of the Dyco
Oil and Gas Program 1978-1 Limited Partnership (the "Program"), without
audit. In the opinion of management all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
position at June 30, 1999, results of operations for the three and six
months ended June 30, 1999 and 1998, and changes in cash flows for the six
months ended June 30, 1999 and 1998 have been made.
Information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
financial statements be read in conjunction with the financial statements
and notes thereto included in the Program's Annual Report on Form 10-K for
the year ended December 31, 1998. The results of operations for the period
ended June 30, 1999 are not necessarily indicative of the results to be
expected for the full year.
OIL AND GAS PROPERTIES
----------------------
Oil and gas operations are accounted for using the full cost method of
accounting. All productive and non-productive costs associated with the
acquisition, exploration and development of oil and gas reserves are
capitalized. The Program's calculation of depreciation, depletion, and
amortization includes estimated future expenditures to be incurred in
developing proved reserves and estimated dismantlement and abandonment
costs, net of estimated salvage values. In the event the unamortized cost
of oil and gas properties being amortized exceeds the full cost ceiling
(as defined by the Securities and Exchange Commission), the excess is
charged to expense in the period during which such excess occurs. Sales
and abandonments of
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properties are accounted for as adjustments of capitalized costs with no
gain or loss recognized, unless such adjustments would significantly alter
the relationship between capitalized costs and proved oil and gas
reserves.
The provision for depreciation, depletion, and amortization of oil and gas
properties is calculated by dividing the oil and gas sales dollars during
the period by the estimated future gross income from the oil and gas
properties and applying the resulting rate to the net remaining costs of
oil and gas properties that have been capitalized, plus estimated future
development costs.
2. TRANSACTIONS WITH RELATED PARTIES
---------------------------------
Under the terms of the Program's partnership agreement, Dyco is entitled
to receive a reimbursement for all direct expenses and general and
administrative, geological and engineering expenses it incurs on behalf of
the Program. During the three months ended June 30, 1999 and 1998 the
Program incurred such expenses totaling $6,647 and $6,686, respectively,
of which $6,219 was paid each period to Dyco and its affiliates. During
the six months ended June 30, 1999 and 1998 the Program incurred such
expenses totaling $17,145 and $17,475, respectively, of which $12,438 was
paid each period to Dyco and its affiliates.
Affiliates of the Program operate certain of the Program's properties.
Their policy is to bill the Program for all customary charges and cost
reimbursements associated with these activities.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
USE OF FORWARD-LOOKING STATEMENTS AND ESTIMATES
- -----------------------------------------------
This Quarterly Report contains certain forward-looking statements. The
words "anticipate", "believe", "expect", "plan", "intend", "estimate",
"project", "could", "may" and similar expressions are intended to identify
forward-looking statements. Such statements reflect management's current
views with respect to future events and financial performance. This
Quarterly Report also includes certain information, which is, or is based
upon, estimates and assumptions. Such estimates and assumptions are
management's efforts to accurately reflect the condition and operation of
the Program.
Use of forward-looking statements and estimates and assumptions involve
risks and uncertainties which include, but are not limited to, the
volatility of oil and gas prices, the uncertainty of reserve information,
the operating risk associated with oil and gas properties (including the
risk of personal injury, death, property damage, damage to the well or
producing reservoir, environmental contamination, and other operating
risks), the prospect of changing tax and regulatory laws, the availability
and capacity of processing and transportation facilities, the general
economic climate, the supply and price of foreign imports of oil and gas,
the level of consumer product demand, and the price and availability of
alternative fuels. Should one or more of these risks or uncertainties
occur or should estimates or underlying assumptions prove incorrect,
actual conditions or results may vary materially and adversely from those
stated, anticipated, believed, estimated, and otherwise indicated.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net proceeds from the Program's operations less necessary operating
capital are distributed to investors on a quarterly basis. The net
proceeds from production are not reinvested in productive assets, except
to the extent that producing wells are improved or where methods are
employed to permit more efficient recovery of reserves, thereby resulting
in a positive economic impact.
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<PAGE>
The Program's available capital from the limited partners' subscriptions
has been spent on oil and gas drilling activities and there should be no
further material capital resource commitments in the future. The Program
has no debt commitments. Cash for operational purposes will be provided by
current oil and gas production.
RESULTS OF OPERATIONS
- ---------------------
GENERAL DISCUSSION
The following general discussion should be read in conjunction with the
analysis of results of operations provided below. The most important
variable affecting the Program's revenues is the prices received for the
sale of oil and gas. Due to the volatility of oil and gas prices,
forecasting future prices is subject to great uncertainty and inaccuracy.
Substantially all of the Program's gas reserves are being sold on the
"spot market". Prices on the spot market are subject to wide seasonal and
regional pricing fluctuations due to the highly competitive nature of the
spot market. Such spot market sales are generally short-term in nature and
are dependent upon the obtaining of transportation services provided by
pipelines. In addition, crude oil prices were recently at or near their
lowest level in the past decade due primarily to the global surplus of
crude oil. However, oil prices have rebounded during the first half of
1999 primarily due to a decrease in the global oil surplus as a result of
production curtailments by several major oil producing nations. Management
is unable to predict whether future oil and gas prices will (i) stabilize,
(ii) increase, or (iii) decrease.
THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 1998.
Three Months Ended June 30,
---------------------------
1999 1998
------- -------
Oil and gas sales $23,950 $52,048
Oil and gas production expenses $ 4,301 $16,468
Barrels produced 66 114
Mcf produced 12,143 24,772
Average price/Bbl $ 16.48 $ 13.22
Average price/Mcf $ 1.88 $ 2.04
As shown in the table above, total oil and gas sales decreased $28,098
(54.0%) for the three months ended June 30, 1999 as compared to the three
months ended June 30, 1998. Of this decrease, approximately $25,000 was
related to a decrease in volumes of gas sold. Volumes of oil and
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gas sold decreased 48 barrels and 12,629 Mcf, respectively, for the three
months ended June 30, 1999 as compared to the three months ended June 30,
1998. The decrease in volumes of gas sold was primarily due to (i) a
positive prior period volume adjustment made by the operator on one well
during the three months ended June 30, 1998 and (ii) receipt of a reduced
percentage of sales on one well during the three months ended June 30,
1999 due to the Program's overproduced gas balancing position in that
well. Average oil prices increased to $16.48 per barrel for the three
months ended June 30, 1999 from $13.22 per barrel for the three months
ended June 30, 1998. Average gas prices decreased to $1.88 per Mcf for the
three months ended June 30, 1999 from $2.04 per Mcf for the three months
ended June 30, 1998.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $12,167 (73.9%) for the three months ended
June 30, 1999 as compared to the three months ended June 30, 1998. This
decrease was primarily due to (i) workover expenses incurred on one well
during the three months ended June 30, 1998 in order to improve the
recovery of reserves, (ii) a decrease in production taxes associated with
the decrease in oil and gas sales, and (iii) credits received from the
operator on one well during the three months ended June 30, 1999 for prior
year lease operating expenses. As a percentage of oil and gas sales, these
expenses decreased to 18.0% for the three months ended June 30, 1999 from
31.6% for the three months ended June 30, 1998. This percentage decrease
was primarily due to the dollar decrease in oil and gas production
expenses.
Depreciation, depletion, and amortization of oil and gas properties
decreased $6,912 (79.2%) for the three months ended June 30, 1999 as
compared to the three months ended June 30, 1998. This decrease was
primarily due to (i) the decreases in volumes of oil and gas sold, (ii) an
upward revision in the estimate of remaining gas reserves at December 31,
1998, and (iii) an increase in the gas price used in the valuation of
reserves at June 30, 1999 as compared to March 31, 1999. As a percentage
of oil and gas sales, this expense decreased to 7.6% for the three months
ended June 30, 1999 from 16.8% for the three months ended June 30, 1998.
This percentage decrease was primarily due to the dollar decrease in
depreciation, depletion, and amortization.
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General and administrative expenses remained relatively constant for the
three months ended June 30, 1999 as compared to the three months ended
June 30, 1998. As a percentage of oil and gas sales, these expenses
increased to 27.8% for the three months ended June 30, 1999 from 12.8% for
the three months ended June 30, 1998. This percentage increase was
primarily due to the decrease in oil and gas sales.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
1998.
Six Months Ended June 30,
-------------------------
1999 1998
------- -------
Oil and gas sales $48,677 $93,331
Oil and gas production expenses $11,953 $33,613
Barrels produced 177 185
Mcf produced 27,170 44,990
Average price/Bbl $ 12.08 $ 12.50
Average price/Mcf $ 1.71 $ 2.02
As shown in the table above, total oil and gas sales decreased $44,654
(47.8%) for the six months ended June 30, 1999 as compared to the six
months ended June 30, 1998. Of this decrease, approximately $36,000 was
related to a decrease in volumes of gas sold and approximately $8,000 was
related to a decrease in the average price of gas sold. Volumes of oil and
gas sold decreased by 8 barrels and 17,820 Mcf, respectively, for the six
months ended June 30, 1999 as compared to the six months ended June 30,
1998. The decrease in volumes of gas sold was primarily due to (i) a
positive prior period volume adjustment made by the operator on one well
during the six months ended June 30, 1998 and (ii) receipt of a reduced
percentage of sales on one well during the six months ended June 30, 1999
due to the Program's overproduced gas balancing position in that well.
Average oil and gas prices decreased to $12.08 per barrel and $1.71 per
Mcf, respectively, for the six months ended June 30, 1999 from $12.50 per
barrel and $2.02 per Mcf, respectively, for the six months ended June 30,
1998.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $21,660 (64.4%) for the six months ended June
30, 1999 as compared to the six months ended June 30, 1998. This decrease
was primarily due to (i) workover expenses incurred on two wells during
the six months ended June 30, 1998 in order to improve the recovery of
reserves, (ii) a decrease in production taxes associated with the decrease
in oil and gas sales, and (iii) credits received from the operator on one
well during the three months ended June 30, 1999 for prior year lease
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operating expenses. As a percentage of oil and gas sales, these expenses
decreased to 24.6% for the six months ended June 30, 1999 from 36.0% for
the six months ended June 30, 1998. This percentage decrease was primarily
due to the dollar decrease in oil and gas production expenses.
Depreciation, depletion, and amortization of oil and gas properties
decreased $8,665 (59.2%) for the six months ended June 30, 1999 as
compared to the six months ended June 30, 1998. This decrease was
primarily due to (i) the decrease in volumes of gas sold, (ii) an upward
revision in the estimate of remaining gas reserves at December 31, 1998,
and (iii) an increase in the gas price used in the valuation of reserves
at June 30, 1999 as compared to June 30, 1998. As a percentage of oil and
gas sales, this expense decreased to 12.3% for the six months ended June
30, 1999 from 15.7% for the six months ended June 30, 1998. This
percentage decrease was primarily due to the dollar decrease in
depreciation, depletion, and amortization.
General and administrative expenses decreased $330 (1.9%) for the six
months ended June 30, 1999 as compared to the six months ended June 30,
1998. As a percentage of oil and gas sales, these expenses increased to
35.2% for the six months ended June 30, 1999 from 18.7% for the six months
ended June 30, 1998. This percentage increase was primarily due to the
decrease in oil and gas sales.
YEAR 2000 COMPUTER ISSUES
- -------------------------
IN GENERAL
The Year 2000 Issue ("Y2K") refers to the inability of computer and other
information technology systems to properly process date and time
information, stemming from the earlier programming practice of using two
digits rather than four to represent the year in a date. For example,
computer programs and imbedded chips that are date sensitive may recognize
a date using (00) as the year 1900 rather than the year 2000. The
consequence of Y2K is that computer and imbedded processing systems may be
at risk of malfunctioning, particularly during the transition from 1999 to
2000.
The effects of Y2K are exacerbated by the interdependence of computer and
telecommunication systems throughout the world. This interdependence also
exists among the Program, Samson Investment Company and its affiliates
("Samson"), and their vendors, customers, and business partners, as well
as with regulators. The potential risks associated with Y2K for an oil and
gas production company fall into three general areas: (i) financial,
leasehold and administrative computer
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systems, (ii) imbedded systems in field process control units, and (iii)
third party exposures. As discussed below, Dyco does not believe that
these risks will be material to the Program's operations.
The Program's business is producing oil and gas. The day-to-day production
of the Program's oil and gas is not dependent on computers or equipment
with imbedded chips. As further discussed below, management anticipates
that the Program's daily business activities will not be materially
affected by Y2K.
The Program relies on Samson to provide all of its operational and
administrative services on either a direct or indirect basis. Samson is
addressing each of the three Y2K areas discussed above through a readiness
process that seeks to:
1. increase the awareness of the issue among key employees;
2. identify areas of potential risk;
3. assess the relative impact of these risks and Samson's ability to
manage them; and
4. remediate these risks on a priority basis wherever possible.
One of Samson Investment Company's Executive Vice Presidents is
responsible for communicating to its Board of Directors Y2K actions and
for the ultimate implementation of its Y2K plan. He has delegated to
Samson Investment Company's Senior Vice President-Technology and
Administrative Services principal responsibility for ensuring Y2K
compliance within Samson.
Samson has been planning for the impact of Y2K on its information
technology systems since 1993. As of July 15, 1999, Samson is in the final
stages of implementation of a Y2K plan, as summarized below:
FINANCIAL AND ADMINISTRATIVE SYSTEMS
1. Awareness. Samson has alerted its officers, managers and supervisors of
Y2K issues and asked them to have their employees participate in the
identification of potential Y2K risks which might otherwise go unnoticed
by higher level employees and officers. As a result, awareness of the
issue is considered high.
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<PAGE>
2. Risk Identification. Samson's most significant financial and
administrative systems exposure is the Y2K status of the accounting and
land administration system used to collect and manage data for internal
management decision making and for external revenue and accounts payable
purposes. Other concerns include network hardware and software, desktop
computing hardware and software, telecommunications, and office space
readiness.
3. Risk Assessment. The failure to identify and correct a material Y2K
problem could result in inaccurate or untimely financial information for
management decision-making or cash flow and payment purposes, including
maintaining oil and gas leases.
4. Remediation. Since 1993, Samson has been upgrading its accounting and
land administration software. Substantially all of the Y2K upgrades have
been completed, with the remainder scheduled to be completed during the
3rd quarter of 1999. In addition, in 1997 and 1998 Samson replaced or
applied software patches to substantially all of its network and desktop
software applications and believes them to be generally Y2K compliant.
Additional patches or software upgrades will be applied no later than
September 30, 1999 to complete this process. The costs of all such risk
assessments and remediation are not expected to be material to the
Program.
5. Contingency Planning. Notwithstanding the foregoing, should there be
significant unanticipated disruptions in Samson's financial and
administrative systems, all of the accounting processes that are currently
automated will need to be performed manually. Samson has communicated to
its management team the importance of having adequate staff available to
manually perform necessary functions to minimize disruptions.
IMBEDDED SYSTEMS
1. Awareness. Samson's Y2K program has involved all levels of field
personnel from production foremen and higher. Employees at all levels of
the organization have been asked to participate in the identification of
potential Y2K risks, which might otherwise go unnoticed by higher level
employees and officers of Samson, and as a result, awareness of the issue
is considered high.
2. Risk Identification. Samson has inventoried all possible exposures to
imbedded chips and systems. Such exposures can be classified as either (i)
oil and gas production and processing equipment or (ii) office machines
such as faxes, copiers, phones, etc.
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<PAGE>
With respect to oil and gas production and processing equipment, neither
Samson nor the Program operate offshore wells, significant processing
plants, or wells with older electronic monitoring systems. As a result,
Samson's inventory identified less than 10 applications using imbedded
chips. All of these have been tested by the respective vendors and found
to be Y2K compliant or have been upgraded or replaced.
Office machines have been tested by Samson and vendors and are believed to
be compliant.
3. Risk Assessment and Remediation. The failure to identify and correct a
material Y2K problem in an imbedded system could result in outcomes
ranging from errors in data reporting to curtailments or shutdowns in
production. As noted above, Samson has identified less than 10 imbedded
system applications all of which have been made compliant or replaced.
None of these applications are believed to be material to Samson or the
Program. Samson believes that sufficient manual processes are available to
minimize any field level risk and that there will be no material impact on
the Program with respect to these applications.
4. Contingency Planning. Should material production disruptions occur as a
result of Y2K failures in field operations, Samson will utilize its
existing field personnel in an attempt to avoid any material impact on
operating cash flow. Samson is not able to quantify any potential exposure
in the event of systems failure or inadequate manual alternatives.
THIRD PARTY EXPOSURES
1. Awareness. Samson has advised management to consider Y2K implications
with its outside vendors, customers, and business partners. Management has
been asked to participate in the identification of potential third party
Y2K risks and, as a result, awareness of the issue is considered high.
2. Risk Identification. Samson's most significant third party Y2K exposure
is its dependence on third parties for the receipt of revenues from oil
and gas sales. However, virtually all of these purchasers are very large
and sophisticated companies. Other Y2K concerns include the availability
of electric power to Samson's field operations, the integrity of
telecommunication systems, and the readiness of commercial banks to
execute electronic fund transfers.
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<PAGE>
3. Risk Assessment. Because of the high awareness of the Y2K problem in
the U.S., Samson has not undertaken and does not plan to undertake a
formal company wide plan to make inquiries of third parties on the subject
of Y2K readiness. If it did so, Samson has no ability to require responses
to such inquiries or to independently verify their accuracy. Samson has,
however, received oral assurances from its significant oil and gas
purchasers of Y2K compliance. If significant disruptions from major
purchasers were to occur, however, there could be a material and adverse
impact on the Program's results of operations, liquidity, and financial
conditions.
It is important to note that third party oil and gas purchasers have
significant incentives to avoid disruptions arising from a Y2K failure.
For example, most of these parties are under contractual obligations to
purchase oil and gas or disperse revenues to Samson. The failure to do so
will result in contractual and statutory penalties. Therefore, Samson
believes that it is unlikely that there will be material third party
non-compliance with purchase and remittance obligations as a result of Y2K
issues.
4. Remediation. Where Samson perceives significant risk of Y2K
non-compliance that may have a material impact on it, and where the
relationship between Samson and a vendor, customer, or business partner
permits, joint testing may be undertaken during the remainder of 1999 to
further identify these risks.
5. Contingency Planning. In the unlikely event that material production
disruptions occur as a result of Y2K failures of third parties, the
Program's operating cash flow could be impacted. This contingency will be
factored into deliberations on the level of quarterly cash distributions
paid out during any such period of cash flow disruption.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
The Program does not hold any market risk sensitive instruments.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule containing summary financial information extracted
from the Dyco Oil and Gas Program 1978-1 Limited Partnership's financial
statements as of June 30, 1999 and for the six months ended June 30, 1999,
filed herewith.
All other exhibits are omitted as inapplicable.
(b) Reports on Form 8-K.
None.
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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.
DYCO OIL AND GAS PROGRAM 1978-1 LIMITED
PARTNERSHIP
(Registrant)
BY: DYCO PETROLEUM CORPORATION
General Partner
Date: August 2, 1999 By: /s/Dennis R. Neill
-------------------------------
(Signature)
Dennis R. Neill
President
Date: August 2, 1999 By: /s/Patrick M. Hall
-------------------------------
(Signature)
Patrick M. Hall
Chief Financial Officer
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INDEX TO EXHIBITS
NUMBER DESCRIPTION
- ------ -----------
27.1 Financial Data Schedule containing summary financial information
extracted from the Dyco Oil and Gas Program 1978-1 Limited
Partnership's financial statements as of June 30, 1999 and for the
six months ended June 30, 1999, filed herewith.
All other exhibits are omitted as inapplicable.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000215718
<NAME> DYCO OIL & GAS PROGRAM 1978-1 LTD PSHIP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
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0
0
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