FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1995
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-10267
C&K 1980 FUND-B, LTD.
(Exact name of registrant as specified in its charter)
Texas 76-0307698
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16825 Northchase Dr., Suite 1100,
Houston, Texas 77060
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 713-874-0700
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.
X
Yes No
The C&K 1980 Fund-B, Ltd. is a Texas limited partnership.
<PAGE>
INDEX TO FORM 10-Q
C&K 1980 Fund-B, Ltd.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
Balance Sheets
March 31, 1995 and December 31, 1994 . . . . . . . . 3
Statements of Operations
Three months ended March 31, 1995 and 1994. . . . . . 4
Statements of Partners' Capital (Deficit)
Three months ended March 31, 1995 and 1994. . . . . . 5
Statements of Cash Flows
Three months ended March 31, 1995 and 1994. . . . . . 6
Notes to the Financial Statements . . . . . . . . . . 7-11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . 12-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . 14
Item 2. Changes in Securities . . . . . . . . . . . . . . . . 14
Item 3. Defaults upon Senior Securities . . . . . . . . . . . 14
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . 14
Item 5. Other Information . . . . . . . . . . . . . . . . . . 14
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 14
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . 15
<TABLE>
<CAPTION>
C&K 1980 FUND-B, LTD.
(A Texas Limited Partnership)
BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1995 1994
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 480,874 $ 473,041
Trade Receivable 650,438 548,383
Total Current Assets 1,131,312 1,021,424
Oil and gas properties and equipment,
at cost, using the full cost method of
accounting 22,327,931 22,327,931
Less: Accumulated depletion (18,215,222) (18,106,469)
$ 4,112,709 4,221,462
Total Assets $ 5,244,021 $ 5,242,886
<CAPTION>
LIABILITIES AND PARTNERS' DEFICIT
<S> <C> <C>
Current payable to General Partner $ 327,935 $ 315,635
Contingency (Note 7)
Partners' capital 4,916,086 4,927,251
Total Liabilities and Partners' Capital $ 5,244,021 $ 5,242,886
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
C&K 1980 FUND-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended March 31,
1995 1994
<S> <C> <C>
Revenues:
Oil and gas sales $382,463 $535,309
Interest income 2,726 6,112
385,189 541,421
Expenses:
Lease operating expense 34,928 84,339
Production tax expense 21,808 30,056
Marketing deductions 56,454 105,995
Depletion expense 108,753 98,659
General and administrative expenses 62,609 45,344
284,552 364,393
Net income $100,637 $177,028
Net income per limited partnership unit
(1,210 outstanding) $ 36.30 $ 71.32
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
C&K 1980 FUND-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)
Three months ended March 31, 1994
Combining
General Limited Adjustment
Partner Partners (Note 3) Total
<S> <C> <C> <C> <C>
Balance at January 1, 1994 $1,144,261 $3,839,983 $1,024,625 $6,008,869
Contributions 64,864 -- -- 64,864
Distributions (199,690) -- -- (199,690)
Net income (loss) 111,563 86,301 (20,836) 177,028
Balance at March 31, 1994 $1,120,998 $3,926,284 $1,003,789 $6,051,071
<CAPTION>
Three months ended March 31, 1995
Combining
General Limited Adjustment
Partner Partners (Note 3) Total
<S> <C> <C> <C> <C>
Balance at January 1, 1995 $1,123,291 $2,816,513 $ 987,447 $4,927,251
Contributions 40,326 -- -- 40,326
Distributions (152,128) -- -- (152,128)
Net income (loss) 82,155 43,921 (25,439) 100,637
Balance at March 31, 1995 $1,093,644 $2,860,434 $ 962,008 $4,916,086
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
C&K 1980 FUND-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended March 31,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $100,637 $177,028
Adjustments to reconcile net income to
net cash provided by operating activities:
Depletion 108,753 98,659
(Increase) decrease in trade receivables (102,055) 106,663
Net cash provided by operating activities 107,335 382,350
Cash flows from investing activities:
(Additions) retirements to oil and gas
properties and equipment -- (648)
Cash flows from financing activities:
Increase (decrease) in current payable
to General Partner 12,300 --
Distributions to General Partner (152,128) (199,690)
Contributions by General Partner 40,326 64,864
Net cash used in financing activities (99,502) (134,826)
Net increase (decrease) in cash and
cash equivalents 7,833 246,876
Cash and cash equivalents at beginning of period 473,041 865,525
Cash and cash equivalents at end of period $ 480,874 $1,112,401
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
<PAGE>
C&K 1980 FUND-B, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Management Representation
These financial statements should be read in the context of the
financial statements and notes thereto filed with the Securities and
Exchange Commission in the Partnership's 1994 annual report on Form 10-K.
In the opinion of management, the accompanying unaudited financial
statements reflect all adjustments consisting only of normal recurring
items necessary to present fairly the financial position of the C&K 1980
Fund-B, Ltd. at March 31, 1995, the results of operations for the three
months ended March 31, 1995 and 1994, and the partners' capital and cash
flows for the three months ended March 31, 1995 and 1994. The results of
operations for the three months ended March 31, 1995 should not necessarily
be taken as indicative of the results of operations that may be expected
for the entire year 1995.
Organization
The C&K 1980 Fund-B, Ltd. (the "Partnership"), a Texas Limited
Partnership, was organized on January 29, 1980, to acquire, explore,
develop and operate onshore oil and gas properties in the United States and
commenced operations on October 15, 1980. Total initial Limited Partner
contributions were $6,050,000 including $100,000 contributed by C&K
Petroleum, Inc. ("C&K"), the initial General Partner. On August 25, 1981,
C&K requested the Limited Partners to pay an additional assessment of 25%
of their initial contributions. Additional contributions received from
Limited Partners were $1,512,500 with C&K paying the additional assessments
for thirty-two Limited Partners who declined to pay their share of the
additional assessments.
Effective November 18, 1993, Ultramar Oil and Gas Limited ("UOGL"), an
indirect wholly owned subsidiary of LASMO plc, was sold to Williams-Cody
Limited Liability Company, a Wyoming limited liability company ("WCLLC"),
owned by Williams Gas Management Company ("WGman") and Cody Resources, Inc.
("CRI"). On January 1, 1993, UOGL changed its name to Williams-Cody, Inc.
("Williams-Cody").
Effective May 1, 1993, Cody Company, a wholly owned subsidiary of The
Gates Corporation, purchased the units of WCLLC owned by Williams Gas
Management Company. As a result of this acquisition, the unit holders of
WCLLC are Cody Company and its wholly owned subsidiary, Cody Resources,
Inc. Subsequently, effective May 15, 1993, the name of Williams-Cody, Inc.
has been changed to CODY ENERGY, INC. ("CODY"), and the name of Williams-
Cody Limited Liability Company has been changed to Gates-Cody Energy
Company ("GCEC"), a limited liability company. CODY is the surviving
corporation and, pursuant to the authority provided in the Partnership
Agreement manages and controls the Partnership's affairs and is responsible
for the activities of the Partnership.
CODY is currently considering either transferring its limited partner
and general partner interest in the Partnership, or withdrawing as general
partner of the Partnership or taking other actions to reduce its
responsibilities in the Partnership which could lead to the ultimate
dissolution of the Partnership. GCEC intends to, if necessary, advance
funds required by the Partnership in excess of those generated by
operations through CODY.
Basis of Accounting
The accounts of the Partnership are maintained on the accrual basis in
accordance with accounting practices permitted for federal income tax
reporting purposes. In order to present the accompanying financial
statements on the basis of generally accepted accounting principles for
financial reporting purposes, adjustments have been made to account for oil
and gas properties under the full cost method of accounting.
Classification of Cash and Cash Equivalents
Cash is invested in a money market savings account.
Oil and Gas Properties
The Partnership uses the full cost method of accounting for oil and gas
properties in accordance with rules prescribed by the Securities and
Exchange Commission ("SEC"). Under this method, all costs incurred in
connection with the exploration for and development of oil and gas reserves
are capitalized. Such capitalized costs include lease acquisition,
geological and geophysical work, delay rentals, drilling, completing and
equipping oil and gas wells and other related costs together with costs
applicable to CODY's technical personnel directly engaged in evaluating and
maintaining oil and gas prospects and drilling oil and gas wells.
Maintenance and repairs are charged against income when incurred. Renewals
and betterments which extend the useful life of properties are capitalized.
The capitalized costs of all oil and gas properties are depleted on a
composite units-of-revenue method computed on a future gross revenue
basis. An additional depletion provision is made if the total capitalized
costs of oil and gas properties exceed the "capitalization ceiling" which
is calculated as the present value of future net revenues for estimated
production of the Partnership's proved oil and gas reserves as furnished by
independent petroleum engineers.
Future gross revenues have been estimated using rules prescribed by the
SEC. Under these rules, year-end prices are utilized in determining future
gross revenues.
The capitalization ceiling is computed for the first three quarters of a
year by (i) adjusting the previous year-end present value of future net
revenues for the accretion of the discount, production, and revisions to
reserve estimates, if any, and (ii) revising the resultant valuation of
future net revenues to incorporate prices and volumes at the financial
statement date.
Net Income per Limited Partnership Unit
Net income per Limited Partnership unit is computed by obtaining the
Limited Partners net income (see Statement of Partners' Capital) and
dividing by the total Limited Partnership units outstanding.
Contributions and Distributions
Contributions by the General Partner, as presented in the Statement of
Partners' Capital, represent amounts paid by the General Partner for its
allocated share of the Partnership's costs and expenses. Distributions to
the General Partner represent amounts collected by the General Partner for
its allocated share of the Partnership's revenues. Distributions to
Limited Partners represent periodic payments of available cash, as
determined in accordance with the terms of the Partnership Agreement.
Distributions Payable
There were no Limited Partner Distributions payable during the first
three months of 1995.
Trade Receivables
The Partnership's trade receivable consists of the Limited Partners'
share of proceeds from the sales of the Partnership's crude oil and natural
gas. The General Partner acts as the collection agent for the
Partnership's receivables and remits sales revenues collected in the period
received. The Partnership has no recourse against the General Partner for
amounts deemed uncollectible. Accrued amounts receivable for oil and gas
sales are reduced by accrued amounts payable to the General Partner and the
resulting net balance is classified as a receivable or as a payable, as
appropriate.
NOTE 2 - GAS CONTRACT
Effective January 1, 1993, under a gas purchase agreement ("agreement"),
WGMan began purchasing all of the Partnership's natural gas production.
The agreement is for five years and calls for a market responsive price
which is tied to a published index. WGMan is paid an administrative fee of
$.04 per MMBtu of gas purchased as compensation for administration and
marketing of gas. WGMan also is responsible for administration of third
party gas contracts as outlined in the agreement; however, the
Partnership remains responsible for all costs related to production,
gathering, processing or severance of the gas prior to Delivery Point.
These costs have been recorded as marketing deductions in the financial
statements.
NOTE 3 - ALLOCATION OF PARTNERSHIP REVENUES, COSTS AND EXPENSES
The Partnership Agreement provides that revenues, costs and expenses
shall be allocated to the partners as follows:
<TABLE>
<CAPTION>
Limited General
Partners Partner
<S> <C> <C>
REVENUES
Sale of Production . . . . . . . . . . . . . . 50% 50%
Sale of Equipment . . . . . . . . . . . . . . . 50 50
Interest Income . . . . . . . . . . . . . . . . 99 1
COSTS AND EXPENSES
Organization and Offering Expenses Other than
Sales Commissions . . . . . . . . . . . . . . 0 100
Leasehold Acquisition Costs . . . . . . . . . . 0 100
Subsequent Leasehold Acquisition Costs . . . . 50 50
Intangible Drilling Costs . . . . . . . . . . . 99 1
Tangible Drilling and Completion Costs Relating
to Commercially Productive Wells . . . . . . . 0 100
Post-Completion Costs . . . . . . . . . . . . . 50 50
Operating Costs . . . . . . . . . . . . . . . . 50 50
Special Costs . . . . . . . . . . . . . . . . . 99 1
General and Administrative Expenses . . . . . . 50 50
</TABLE>
The depletion provision is calculated based on discrete calculations
utilizing the Partnership's and the partners' share of the related capital
costs and estimated future net revenues. For financial statement purposes,
each partner's depletion provision has been increased by the amount that
its share of unamortized costs exceeded its capitalization ceiling. The
difference between depletion applicable to the partners and the total
applicable to the Partnership is shown as a combining adjustment in the
Statement of Partners' Capital for the three months ended March 31, 1995
and 1994. During the three months ended March 31, 1995 and 1994 the net
capitalized costs of the Partnership's oil and gas properties did not
exceed the capitalized ceiling.
NOTE 4 - PURCHASE OF LIMITED PARTNERS' INTERESTS
The Limited Partners may require the General Partner to purchase up to
ten percent of their interests annually. The purchase price is based on
the Limited Partners' proportionate share of the sum of (i) two-thirds of
the present worth of estimated future net revenues using a discount rate
equal to the prime rate in effect on the applicable valuation date plus one
percent, (ii) the present value of the estimated salvage value of all
production facilities and tangible assets, and (iii) the net book value of
all other assets and liabilities.
At January 1, 1995, the General Partner calculated a purchase price of
$2,034.46 per assessed Limited Partner unit and $1,627.57 per nonassessed
Limited Partner unit. The ceiling limitation for units tendered for
repurchase is $756,250. Limited Partners have until June 30, 1995 to
tender units for repurchase. At March 31, 1995, the General Partner owned
634 assessed Limited Partnership units and 59.66 nonassessed Limited
Partnership units.
NOTE 5 - SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
The General Partner is reimbursed for administrative and overhead costs
incurred in conducting the business of the Partnership. Such
reimbursements have been the maximum allowed under the terms of the
Partnership Agreement during the three months ended March 31, 1995 and
1994.
The Partnership distributes to each Limited Partner their proportionate
share of cash funds credited to their capital account which was in excess
of the amounts necessary to meet such partners share of existing or future
obligations of the Partnership. No distributions were made to the Limited
Partners for the three month period ended March 31, 1995 and 1994. During
the first three months of 1995 and 1994, the Partnership distributed to the
General Partner $152,128 and $199,690, respectively. These distributions
represented the General Partner's share of net revenues for the first three
months of 1995 and 1994.
NOTE 6 - INCOME TAXES
Income taxes are not levied at the Partnership level, but rather on the
individual partners; therefore, no provision for liability for federal and
state income taxes has been reflected in the accompanying financial
statements. The qualification of the Partnership as a partnership for tax
purposes, and the amount of the Partnership's income or loss is subject to
examination by federal and state tax authorities. If such examinations
result in changes with respect to the Partnership's qualifications or in
changes in the Partnership's income or loss, the tax liability of the
partners could be changed accordingly.
Income tax deductions are allocated according to the manner in which the
related costs were allocated. The Tax Reform Act of 1976 provides that
income tax deductions for depletion must be computed by each partner rather
than by the Partnership. Accordingly, the income tax returns of the
Partnership will not include deductions for depletion since such amounts
are not Partnership deductions.
Under the passive loss rules of the Tax Reform Act of 1986 certain
limitations on the deductibility of losses attributable to an investment in
the Partnership apply to the Limited Partners which are individuals,
estates, trusts, closely held corporations and any personal service
corporations. In general, losses from activities in which an investor does
not materially participate (characterized as passive activities), such as a
Limited Partner's interest in the Partnership, are only deductible to the
extent of income from such passive activities.
NOTE 7 - CONTINGENCIES
The General Partner is currently considering either transferring its
limited partnership and general partnership interests in the Partnership,
or withdrawing as general partner of the Partnership or taking other
actions to reduce its responsibilities in the Partnership, which could lead
to the ultimate dissolution of the Partnership. This condition raises
substantial doubt about the Partnership's ability to continue as a going
concern. As long as CODY remains the General Partner of the Partnership,
GCEC intends to, if necessary, advance the funds required by the
Partnership in excess of those generated by operations through CODY. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
NOTE 8 - RECLASSIFICATION
Certain amounts from previous years have been reclassified to be
consistent with the financial statement presentation for 1995. Such
reclassification had no effect on net income.
C&K 1980 FUND-B, LTD.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $7,833, a decrease of
$239,043 when compared to the corresponding period in 1994. This decrease
resulted primarily from a decrease in revenues during the first three
months of 1995 somewhat offset by a decrease in overall expenses.
During the first three months of 1995, the Partnership distributed to
the General Partner and Limited Partners cash proceeds of $152,128 and $ -
0-, respectively. (See Notes 1 and 5 to the Financial Statements). During
the three months ended March 31, 1995, the General Partner's contribution
(allocated share of costs and expenses incurred) was $40,326.
The Partnership's financing requirements for operating expenses and
development capital are currently provided by revenues from its producing
operations. The Partnership does not consider long-term financing
arrangements, either with the General Partner, or other sources, as
necessary at this time.
The Partnership's financial condition and operating results have been
affected by the unsettled energy markets and will continue to be materially
affected by any significant fluctuations in sales prices. The
Partnership's ability to internally generate funds for capital expenditures
will be similarly affected. The Partnership cannot predict the prices it
will receive in the remainder of 1995 or in future years for its crude oil
and natural gas.
The General Partner is currently considering either transferring its
limited partner and general partner interests in the Partnership, or
withdrawing as general partner or taking other actions to reduce its
responsibilities in the Partnership, which could lead to the ultimate
dissolution of the Partnership. As long as CODY remains the general
partner of the Partnership, GCEC intends to, if necessary, advance funds
required by the Partnership in excess of those generated by operations
through CODY.
There were no significant capital expenditures for the three months
ended March 31, 1995 or 1994. The Partnership has made no immediate plans
for additional exploratory or developmental capital programs except those
necessary to maintain well productivity for 1995.
RESULTS OF OPERATIONS
Net income for the first quarter ended March 31, 1995 was $100,637, a
decrease of $76,391 or 43% from net income of $177,028 reported for the
same period in 1994. This decrease resulted from overall decreases in
production volumes and prices.
Crude oil and natural gas sales for the three months ended March 31,
1995 were $382,463, a decrease of $152,846 or 29% compared to the same
period in 1994. Crude oil and natural gas production per day declined to
58 barrels and 2,051 thousand cubic feet ("mcf") per day, respectively, as
compared to the 1994 level of 68 barrels and 2,255 mcf, respectively.
In the first quarter of 1995, average sales prices increased for crude oil
to $17.33 per barrel, and decreased for natural gas to $1.57 per mcf,
respectively, as compared to $13.38 per barrel and $2.40 per mcf,
respectively, in 1994.
Lease operating expense for the three months ended March 31, 1995
decreased by $49,411 or 59% compared to the same period in 1994.
Production tax expense for the first quarter of 1995 decreased by $8,248 or
27% compared to the same period in 1994. The decrease in production taxes
is due to the decline in overall production volumes and prices. Marketing
deductions were $56,454 for the three months ending March 31, 1995.
Depletion increased by $10,094 or 10% compared to the same period in 1994.
General and administrative expenses increased by $17,265 or 38% compared
to the same period in 1994. This increase reflects audit and tax fee
accruals which were not reflected in the March 31, 1995 general and
administrative expenses.
PART II - OTHER INFORMATION
C&K 1980 FUND-B, LTD.
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
No reports were filed on Form 8-K for the period ending March
31, 1995.
<PAGE>
SIGNATURE
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.
C&K 1980 Fund-B, Ltd.
(Registrant)
By: /s/ Dan R. Taylor
Dan R. Taylor
Vice President and Controller
CODY ENERGY, INC.
Successor General Partner
DATE: May 11, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> MAR-31-1995
<CASH> 480,874
<SECURITIES> 0
<RECEIVABLES> 650,438
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 22,327,931
<DEPRECIATION> (18,215,222)
<TOTAL-ASSETS> 5,244,021
<CURRENT-LIABILITIES> 327,935
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 4,916,086
<TOTAL-LIABILITY-AND-EQUITY> 5,244,021
<SALES> 382,463
<TOTAL-REVENUES> 385,189
<CGS> 0
<TOTAL-COSTS> 221,943
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 100,637
<INCOME-TAX> 0
<INCOME-CONTINUING> 100,637
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 100,637
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
