SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-9589
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APACHE PETROLEUM LIMITED PARTNERSHIP 1980-I
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-6254238
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Suite 100, One Post Oak Central
2000 Post Oak Boulevard, Houston, TX 77056-4400
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (713) 296-6000
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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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(page)
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
APACHE PETROLEUM LIMITED PARTNERSHIP 1980-I
BALANCE SHEET
<TABLE>
June 30, December 31,
1996 1995
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
<S> <C> > <C>
Cash and cash equivalents $ 113,964 $ 66,040
Oil and gas receivables 157,403 102,652
Receivable from Apache Corporation 87,052 102,396
------------ ------------
358,419 271,088
------------ ------------
OIL AND GAS PROPERTIES; on the basis
of full cost accounting:
Proved properties 24,179,077 24,098,861
Less - accumulated depreciation,
depletion and amortization (21,239,609) (21,140,558)
------------ ------------
2,939,468 2,958,303
------------ ------------
$ 3,297,887 $ 3,229,391
============ ============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accrued expenses payable 40,751 64,157
------------ ------------
DEFERRED CREDITS 1,026,097 1,026,097
------------ ------------
PARTNERS' CAPITAL:
General partner 1,479,197 1,469,091
Limited partners (343 equivalent units outstanding) 751,842 670,046
------------ ------------
2,231,039 2,139,137
------------ ------------
$ 3,297,887 $ 3,229,391
============ ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of this statement.
1
(page)
APACHE PETROLEUM LIMITED PARTNERSHIP 1980-I
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
For the Quarter For the Six Months
Ended June 30, Ended June 30,
------------------------ -------------------------
1996 1995 1996 1995
--------- ---------- ---------- -----------
REVENUES:
<S> <C> <C> <C> <C>
Oil and gas sales $ 310,959 $ 290,346 $ 588,518 $ 521,312
Interest and other income 1,145 2,134 7,923 2,134
---------- ---------- ---------- ----------
312,104 292,480 596,441 523,446
---------- ---------- ---------- ----------
EXPENSES:
Depreciation, depletion
and amortization -
Recurring 50,452 71,626 99,051 137,942
Additional -- -- -- 637,106
Lease operating 43,976 117,292 81,611 225,105
Production taxes 21,806 26,361 38,099 40,297
Administrative 45,100 44,738 89,900 90,028
---------- ---------- ---------- ----------
161,334 260,017 308,661 1,130,478
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 150,770 $ 32,463 $ 287,780 $ (607,032)
========== ========== ========== ==========
Allocated to:
General partner $ 110,441 $ 24,601 $ 205,984 $ (439,018)
Limited partners 40,329 7,862 81,796 (168,014)
---------- ---------- ---------- ----------
$ 150,770 $ 32,463 $ 287,780 $ (607,032)
========== ========== ========== ==========
NET INCOME (LOSS) PER WEIGHTED
AVERAGE EQUIVALENT LIMITED
PARTNER UNIT $ 118 $ 23 $ 238 $ (490)
========== ========== ========== ==========
WEIGHTED AVERAGE EQUIVALENT
LIMITED PARTNER
UNITS OUTSTANDING 343 343 343 343
========== ========== ========== ==========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of this statement.
2
(page)
APACHE PETROLEUM LIMITED PARTNERSHIP 1980-I
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
For the Six Months Ended June 30,
---------------------------------
1996 1995
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss) $ 287,780 $ (607,032)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 99,051 775,048
Changes in operating assets and liabilities:
(Increase) decrease in oil and gas receivables (54,751) 2,245
Decrease in receivable from Apache Corporation 15,344 65,028
Decrease in accrued expenses (23,406) (249,532)
---------- ----------
Net cash provided (used) by operating activities 324,018 (14,243)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil & gas properties (80,216) (98,147)
---------- ----------
Net cash used by investing activities (80,216) (98,147)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Distributions) contributions, net -
General partner (195,878) 130,480
Limited partners -- (34,396)
---------- ----------
Net cash provided (used) by financing activities (195,878) 96,084
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 47,924 (16,306)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 66,040 86,274
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 113,964 $ 69,968
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of this statement.
3
(page)
APACHE PETROLEUM LIMITED PARTNERSHIP 1980-I
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The financial statements included herein have been prepared by Apache
Petroleum Limited Partnership 1980-I (the Partnership), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC), and reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the interim
periods, on a basis consistent with the annual audited statements. All
such adjustments are of a normal, recurring nature. Certain information,
accounting policies, and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and
regulations, although the Partnership believes that the disclosures are
adequate to make the information presented not misleading. These financial
statements should be read in conjunction with the financial statements and
the summary of significant accounting policies and notes thereto included
in the Partnership's latest annual report on Form 10-K.
1. RESERVE VALUE CEILING TEST
Oil and gas producers that conduct their financial reporting under the
full cost accounting rules are subject to SEC rules that require quarterly
"ceiling test" calculations. This test requires a write-down when the
capitalized cost of oil and gas properties exceeds the present value of
proved reserves, plus the lower of cost or market value for unproved
properties. The test is applied at the end of each fiscal quarter and
requires a write-down if the "ceiling" is exceeded, even if prices decline
only for a short period of time. During the first six months of 1995, the
Partnership incurred a write-down of $637,100. No write-down was required
during the first six months of 1996.
2. RECEIVABLE FROM APACHE
The receivable from Apache represents the net result of the limited
partners' revenue, expenditure and capital transactions in the current
month. Cash in this amount will generally be transferred in the following
month after the Partnership's transactions are processed and the net
results from operations are determined. The balances in the account are
non-interest bearing and unsecured.
3. DEFERRED CREDITS
Based on reserve estimates, the Partnership has identified certain
properties on which remaining gas reserves may not be sufficient to
permit existing gas imbalances to be made up with production from such
properties. The deferred liability will be reduced when the settlement
of imbalances requires cash payments to underdelivered owners in these
properties or volumes are otherwise recouped by underproduced owners from
other partnership wells.
4
(page)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
DISSOLUTION CONSIDERATIONS
Apache, as General Partner, is considering the liquidation and
dissolution of the Partnership. This consideration is in view of the
Partnership's diminishing net reserves, the related reduction in net cash
provided by operating activities, and the disproportionately high
administrative costs necessary to maintain the Partnership. Any
liquidation of Partnership assets and dissolution of the Partnership will
be in accordance with the provisions of the partnership agreement.
The Partnership has received an indication of interest from a third
party interested in purchasing assets of the Partnership. No binding
agreement has been reached, and no assurance can be given that any
binding agreement will be entered into. Should the Partnership sell its
properties, any purchaser thereof would take into account gas imbalances,
including overproduction to be settled in cash (which may be greater or
less than the amount of the deferred liability), and overproduction to be
settled in volumes of gas produced, both of which would reduce the
purchase price paid for the properties (see Deferred Credits Note 3).
The Partnership is in an overproduced situation with respect to prior gas
deliveries, and the reduction to the purchase price on any sale could be
anticipated to be significant.
Due to recent amendments to the federal securities laws, the
Partnership is no longer required to maintain its registration under the
Securities Exchange Act of 1934. The Partnership intends to file the
appropriate forms to effect such deregistration in the near future.
RESULTS OF OPERATIONS
The Partnership reported net income of $150,800 in the second quarter
of 1996 compared to $32,500 for the same period last year. Current year
second quarter earnings were favorably impacted by increases in both
crude oil and natural gas prices as well as lower operating costs,
partially offset by a decline in production on a barrel of oil equivalent
(Boe) basis.
Earnings for the first six months of 1996 totaled $287,800 compared to
a net loss of $607,000 during the first half of 1995. Prior year
earnings were negatively impacted by a write-down of oil and gas property
of $637,100 in the first quarter of 1995. No write down was required
during the first six months of 1996. The increase over the prior period
was also attributable to higher product prices and lower operating
expenses partially offset by lower production on a Boe basis.
REVENUES
Revenues increased seven percent, from $292,500 in the second quarter
of 1995 to $312,100 for the same period in 1996. A 20-percent increase
in realized natural gas prices and a 22-percent increase in realized
crude oil prices contributed $42,800 and $8,200, respectively, to the
increase in total revenue for the second quarter. Negatively impacting
the increase in total revenue was a decline in oil and gas production of
464 Boe, or two percent, which reduced revenues by $29,300.
For the first six months of 1996, revenues increased 14 percent to
$596,400 compared to $523,400 during the same period in 1995. Improved
natural gas and crude oil prices contributed $158,900 to the increase
over the prior period, while oil and gas production for the first half of
1996 declined eight percent on a Boe basis, negatively impacting total
revenue by approximately $90,000.
5
(page)
Volume and price information concerning the Partnership's 1996 and
1995 second quarter and first six months oil and gas production is
summarized in the following table:
<TABLE>
For the Quarter For the Six Months
Ended June 30, Ended June 30,
------------------------ ----------------------
Increase Increase
1996 1995 (Decrease) 1996 1995 (Decrease)
----- ----- --------- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Gas Volume - Mcf per day 1,265 1,060 19% 1,151 1,012 14%
Average Gas Price - per Mcf $ 2.21 $ 1.84 20% $ 2.35 $ 1.65 42%
Oil Volume - Barrels per day 24 63 (62%) 20 64 (69%)
Average Oil Price - Per barrel $21.60 $17.77 22% $20.37 $16.89 21%
</TABLE>
Second Quarter 1996 Compared to Second Quarter 1995
Natural gas sales for the second quarter of 1996 totaled $254,100, 44
percent higher than those recorded in the same period of 1995, and
accounted for 82 percent of the Partnership's total oil and gas
production revenue. Average natural gas prices were $2.21 per thousand
cubic feet (Mcf) during the second quarter of 1996 compared to $1.84 in
the same period of 1995, a 20-percent increase which favorably impacted
revenues by $42,800. Natural gas production for the quarter totaled
approximately 1,265 Mcf per day (Mcf/d), up 19 percent from the prior
year second quarter, increasing revenue, when compared to last year, by
approximately $34,200. Second quarter production increased from prior
year due primarily to the recompletion of the Kirk 4-9 in late March of
1996.
The Partnership's crude oil sales for the second quarter of 1996 were
$46,200, 54 percent lower than the second quarter of 1995. Production
declined 39 barrels of oil per day (B/d), or 62 percent, from 63 B/d in
the second quarter of 1995 to 24 B/d in the same period of 1996,
negatively impacting revenues $63,500. This decline in production is
primarily attributable to the sale of producing properties in late 1995.
Realized prices for the sales of crude oil in the second quarter of 1996
increased 22 percent to $21.60 per barrel compared to $17.77 per barrel
in the second quarter of 1995, favorably impacting revenues $8,200.
The remainder of the Partnership's oil and gas production revenue
comes from the sale of natural gas liquids. Such amounts totaled
approximately $10,600 for the second quarter of 1996, as compared to
$11,800 for the same period in 1995.
Year-to-Date 1996 Compared to Year-to-Date 1995
Gas sales for the first six months of 1996 were $492,300, an increase
of 63 percent compared to the same period in 1995 due to favorable
natural gas prices as well as production increases. Average gas prices
increased to $2.35 per Mcf for the first half of 1996 compared to $1.65
per Mcf for the comparable period in 1995, contributing $146,200 to the
increase in revenues. Increased production in the first half of 1996
compared to the same period in 1995 favorably impacted revenues $43,300.
Natural gas production rose from 1,012 Mcf/d in the first half of 1995
to 1,151 Mcf/d in 1996, due primarily to new production on the Damron 5-8
beginning in the second half of 1995 and the recompletion of the Kirk 4-9
in the first quarter of 1996.
6
(page)
Oil sales declined 62 percent in the first half of 1996 to $74,200
compared to $194,800 in 1995. Oil revenues were negatively impacted by a
69 percent decline in production from 64 B/d in the first half of 1995 to
20 B/d in the same period of 1996, resulting in a decrease in revenues of
approximately $133,300. This decline was attributable to the sale of the
Partnership's interest in 30 producing properties in the Rocky Mountain
region during the second half of 1995. Average realized oil prices
increased 21 percent to $20.37 per barrel in the first half of 1996
compared to $16.89 in 1995, contributing $12,700 to the increase in
revenues.
For the first half of 1996, natural gas liquid revenues decreased six
percent to $22,000, compared to $23,500 in the first six months of 1995.
OPERATING COSTS AND EXPENSES
Recurring depreciation, depletion and amortization expense for the
second quarter and first six months of 1996 decreased $21,200 and
$38,900, respectively, compared to the same periods in 1996, due to a
ceiling test write-down in 1995 which reduced the carrying value of the
amortizable property base, thereby reducing the amortization rate.
Lease operating costs totaled $44,000 and $81,600 in the second
quarter and first six months of 1996 as compared to $117,300 and $225,100
for the same periods in 1995. Using one barrel of oil as the equivalent
of six Mcf of natural gas, operating costs per Boe declined 60 percent
from $5.35 per Boe in the first six months of 1995 to $2.12 per Boe for
the same period in 1996. Operating costs were higher in 1995 due to
increased workover costs and higher operating costs on primarily oil
producing properties which were sold in the third quarter of 1995.
Administrative expenses in the second quarter and first six months of
1996 remained relatively constant to comparable periods in 1995.
CASH FLOW, LIQUIDITY AND CAPITAL RESOURCES
The Partnership's liquidity is solely dependent upon its net cash
flows from operating activities. During the past three years, the
Partnership has not had any debt service obligations or any other
significant demands on its net cash flows except for recompletion and
workovers conducted to enhance production or correct mechanical problems.
Accordingly, the Partnership's net cash flows have been used primarily
to make cash distributions to the partners and fund limited developmental
drilling activity. Net cash provided by operating activities during the
first six months of 1996 increased to $324,000 compared to a deficit of
$14,200 for the same period last year. Activity in 1995 reflected a
reduction of accrued liabilities, totaling $249,500. Before considering
changes to other asset and liability accounts, cash provided increased to
$386,800 compared to $168,000 a year ago, reflecting the impact of higher
product prices and lower lease operating costs as discussed above.
There were no distributions to the limited partners in the first six
months of 1996 and future distributions will be dependent on actual and
expected production levels, realized and expected product prices and
financial obligations. Although the general partner received
distributions in the first six months of 1995 totaling $195,900, Apache
may be required to contribute funds as necessary to meet future tangible
drilling and completion costs, production costs, gas imbalance
obligations and payments attributable to other short-term and long-term
commitments.
7
(page)
The Partnership's capital expenditures for the first six months of
1996 were $80,200. Capital expenditures for recompletions and any other
future developmental drilling activity will be funded by a portion of the
cash generated by operations of producing properties, or through farmout
arrangements at no cost to the Partnership. The Partnership's capital
expenditures for the remainder of 1996 are not expected to be
significantly different than those incurred in 1995.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995 ("PSLRA")
The foregoing discussion and analysis contains certain
"forward-looking statements" as defined by the PSLRA including, without
limitation, discussions as to expectations, beliefs, plans, objectives and
future financial performance, and assumptions underlying or concerning matters
discussed reflecting management's current expectations of the manner in
which the various factors discussed therein may affect the Partnership's
business in the future. Any matters that are not historical facts are
forward-looking and, accordingly, involve estimates, assumptions and
uncertainties which could cause actual results or outcomes to differ
materially from those expressed in the forward-looking statements. There is
no assurance that the Partnership's expectations will be realized or that
unexpected events will not have an adverse impact on the Partnership's
business.
8
(page)
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information set forth in Note 4 to the Consolidated
Financial Statements contained in the registrant's 1995 annual
report on Form 10-K, for the year ended December 31, 1995, filed
March 28, 1996, is incorporated herein by reference.
In the matter of Merle L. McCollum, et al. v. Apache
Corporation, et al., the plaintiff's request for a rehearing was
denied and, on July 19, 1996, the Oklahoma Supreme Court denied
plaintiff's writ of certiorari. In the matter of James J. Duke,
et al. v. Apache Corporation, Apache had appealed the issue of
class certification, but the Oklahoma Court of Appeals affirmed
the plaintiff's class certification on July 30, 1996. Apache has
requested a rehearing.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits.
27.1 Financial Data Table.
b. Reports filed on Form 8-K - None.
9
(page)
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 thereto duly authorized.
APACHE PETROLEUM LIMITED PARTNERSHIP 1980-I
By: Apache Corporation, General Partner
Dated: August 14, 1996 /s/ Mark A. Jackson
-----------------------------------------
Mark A. Jackson
Vice President and Chief Financial Officer
Dated: August 14, 1996 /s/ Thomas L. Mitchell
------------------------------------------
Thomas L. Mitchell
Controller and Chief Accounting Officer
(page)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000318681
<NAME> ART.5 FOR SECOND QUARTER 10-Q
<MULTIPLIER> 1
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-31-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1,000
<CASH> 113,964
<SECURITIES> 0
<RECEIVABLES> 244,455
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 358,419
<PP&E> 24,179,077
<DEPRECIATION> 21,239,609
<TOTAL-ASSETS> 3,297,887
<CURRENT-LIABILITIES> 40,751
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,231,039
<TOTAL-LIABILITY-AND-EQUITY> 3,297,887
<SALES> 588,518
<TOTAL-REVENUES> 596,441
<CGS> 218,761
<TOTAL-COSTS> 218,761
<OTHER-EXPENSES> 89,900
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 287,780
<INCOME-TAX> 0
<INCOME-CONTINUING> 287,780
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 287,780
<EPS-PRIMARY> 238
<EPS-DILUTED> 238
</TABLE>
