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, 1996
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.)
7555 East Hampden Avenue - Suite 600,
Denver, Colorado 80231
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 303-695-3600
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange
Title of Each Class Which Registered
None None
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>
FORM 10-Q
C&K 1980 Fund-B, Ltd.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
March 31, 1996 and December 31, 1995
Statements of Operations
Three months ended March 31, 1996 and 1995
Statements of Changes in Partners' Capital
Three months ended March 31, 1996 and 1995
Statements of Cash Flows
Three months ended March 31, 1996 and 1995
Notes to the Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of
Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
<PAGE>
C&K 1980 FUND-B, LTD.
(A Texas Limited Partnership)
BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
<S> <C> <C>
Current Assets:
Cash $ 263,339 $ 261,194
Receivable from General Partner 258,798 210,885
Total Current Assets 522,137 472,079
Oil and gas properties and equipment,
at cost, using the full cost
method of accounting 22,472,019 22,381,049
Less: Accumulated depreciation,
depletion and amortization (18,698,699) (18,562,098)
3,773,320 3,818,951
Total Assets $ 4,295,457 $ 4,291,030
LIABILITIES AND PARTNERS' CAPITAL
Accrued liabilities $ 9,345 $ 16,823
Partners' Capital:
General Partner 985,195 1,000,751
Limited Partners 2,449,829 2,391,556
Combining adjustment 851,088 881,900
Total Partners Capital 4,286,112 4,274,207
Total Liabilities and
Partners' Capital $ 4,295,457 $ 4,291,030
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
<PAGE>
C&K 1980 FUND-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
1996 1995
<S> <C> <C>
Revenues:
Oil and gas sales $439,762 $382,463
Interest income 2,145 2,726
441,907 385,189
Expenses:
Lease operating 64,698 34,928
Production tax 26,269 21,808
Marketing deductions 52,295 56,454
Depreciation, depletion
and amortization 136,601 108,753
General and administrative 45,668 62,609
325,531 284,552
Net income $116,376 $100,637
Net income (loss) allocation:
General Partner $ 88,915 $ 82,155
Limited Partners 58,273 43,921
Combining adjustment (30,812) (25,439)
Net income $116,376 $100,637
Net income per limited
partnership unit
(1,210 outstanding $48.16 $36.30
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
<PAGE>
C&K 1980 FUND-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<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
Three months ended March 31, 1996
Combining
General Limited Adjustment
Partner Partners (Note 3) Total
Balance at
January 1, 1996 $1,000,751 $2,391,556 $881,900 $4,274,207
Contributions 76,150 -- -- 76,150
Distributions (180,621) -- -- (180,621)
Net income (loss) 88,915 58,273 (30,812) 116,376
Balance at
March 31, 1996 $985,195 $2,449,829 $851,088 $4,286,112
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
<PAGE>
C&K 1980 FUND-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 116,376 $ 100,637
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 136,601 108,753
Changes in operating assets and liabilities:
Increase in receivable from General Partner (47,913) (102,055)
(Decrease) increase in accrued liabilities (7,478) 12,300
Net cash provided by operating activities 197,586 119,635
Cash flows from investing activities:
Additions to oil and gas properties
and equipment (90,970) --
Net cash used in investing activities (90,970) --
Cash flows from financing activities:
Distributions to General Partner (180,621) (152,128)
Contributions by General Partner 76,150 40,326
Net cash used in financing activities (104,471) (111,802)
Net increase in cash 2,145 7,833
Cash at beginning of period 261,194 473,041
Cash at end of period $ 263,339 $ 480,874
</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
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
$1,512,500, or 25% of their initial contributions. Of this amount, C&K
paid $157,500 for thirty-two Limited Partners who declined to pay their
share of the additional assessments.
C&K, after several corporate reorganizations beginning in September of
1984 and ending in December of 1991, was acquired by Ultramar Oil and Gas
Limited ("UOGL"), an indirect wholly-owned subsidiary of LASMO plc.
Effective November 18, 1992, UOGL was sold to Williams-Cody Limited
Liability Company, ("WCLLC"), a Wyoming limited liability company 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 WGMan. 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. was changed to CODY ENERGY,
INC. ("CODY"), and the name of Williams-Cody Limited Liability Company was
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.
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.
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.
Net Income (Loss) per Limited Partnership Unit
Net income (loss) per limited partnership unit is computed by obtaining
the Limited Partners net income (loss) (see Statements of Changes in
Partners' Capital) and dividing by the total limited partnership units
outstanding.
Contributions and Distributions
Contributions by the General Partner, as presented in the Statements of
Changes in 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.
Receivable from the General Partner
The receivable from the General Partner consists of the Limited
Partners' share of proceeds from the sales of the Partnership's crude oil
and natural gas, net of related operating and general administrative
expenses. 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.
Revenue Recognition
The Partnership recognizes oil and gas revenues for only its ownership
percentage of total production under the entitlement method. Purchase,
sale and transportation of natural gas crude oil are recognized upon
completion of the sale and when transported volumes are delivered.
Concentration of Credit Risk
Financial instruments which subject the Partnership to concentrations
of credit risk consist principally of trade receivables. The Partnership's
policy is to evaluate, prior to entering agreements, each purchaser's
financial condition. The Partnership sells to purchasers with different
geographic and economic characteristics. Trade receivables, which are
generally uncollateralized, are from oil and gas companies located
throughout the United States.
Use of Estimates
The preparation of the Partnership's financial statements in conformity
with generally accepted accounting principles necessarily requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the balance sheet dates and the reported amounts of revenues
and expenses during the reporting periods. Actual results could differ
from those estimates.
Reclassifications
Certain amounts from prior years have been reclassified to be
consistent with the financial statement presentation for 1996. Such
reclassifications had no effect on net income.
NOTE 2 - GAS CONTRACT
Since June 1, 1993, Williams Gas Marketing has purchased all of the
Partnership's natural gas production under an agreement that calls for
market responsive prices which are tied to a published index. 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
The depreciation, depletion and amortization 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 depreciation,
depletion and amortization provision has been increased by the amount that
his share of unamortized costs exceeded the capitalization ceiling. During
1996 and 1995, no additional provision was necessary for the Partnership
attributable to a ceiling test failure.
The combining adjustment included in the partners' capital of $851,088
and $962,008 at March 31, 1996 and 1995, respectively, represents the
difference resulting from computing the full cost ceiling test in prior
years on the total partnership basis, which is used for financial reporting
purposes, and the limited partners and general partner basis. The
adjustment is an allocation of partners' capital and does not affect net
income.
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 discounted at 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.
In addition to the 20 units purchased by the General Partner for their
initial capital contribution, a total of 733.66 units had been purchased
from Limited Partners as of December 31, 1995. At January 1, 1996, the
General Partner calculated a purchase price of $1,552.25 per unit for
Limited Partners who paid the additional assessment ("assessed Limited
Partners") and $1,241.80 per unit for Limited Partners who had not paid the
additional assessment ("nonassessed Limited Partners"). The Limited
Partners have until June 30, 1996 to tender units for repurchase. At March
31, 1996, the General Partner owned 687.66 assessed Limited Partnership
units and 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 and were $45,375 for each three month period ended
March 31, 1996 and 1995.
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, 1996 and 1995. During
the first three months of 1996 and 1995, the Partnership distributed
$180,621 and $152,128, respectively, to the General Partner for their
allocated share of net revenues, and the General Partner contributed
$76,150 and $40,326, respectively, for the their allocated share of costs
and expenses.
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 tax returns, 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.
NOTE 7 - CONTINGENCIES
The General Partner is currently considering either transferring its
limited partner and general partnership interests in the Partnership,
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.
<PAGE>
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 for the three months ended
March 31, 1996 was $197,586, compared to $119,635 for the corresponding
period in 1995. This increase resulted primarily from increased oil and
gas revenues.
Capital expenditures during the first three months of 1996 were $90,970,
attributable mainly to the drilling of the C. Montalvo well. There were no
capital expenditures during the first three months of 1995. The
Partnership has no immediate plans for additional exploratory or
developmental capital programs, with the exception of the C. Montalvo well
and those necessary to maintain well productivity for 1996.
During the first three months of 1996 and 1995, the Partnership
distributed $180,621 and $152,128, respectively, to the General Partner for
their share of net revenues. During these same periods, the General
Partner's contribution (allocated share of costs and expenses incurred) was
$76,150 and $40,326, respectively. There were no distributions to Limited
Partners during these periods.
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 cannot predict with any degree of certainty the prices
it will receive in the remainder of 1996 or in future years for its crude
oil and natural gas. The Partnership's financial condition, operating
results and liquidity 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.
RESULTS OF OPERATIONS
Net income for the first quarter ended March 31, 1996 was $116,376, an
increase of $15,739 or 16% from net income of $100,637 reported for the
same period in 1995. This increase resulted primarily from an increase in
oil and gas revenues, offset by increases in operating expenses and
depreciation, depletion and amortization.
Crude oil and natural gas sales for the three months ended March 31,
1996 of $439,762 increased $57,299 or 15% compared to the same period in
1995. Crude oil production remained at 58 barrels per day, natural gas
production declined to 1,214 mcf per day, and plant products increased to
680 equivalent mcf per day during this period, compared to the 1995 level
of 58 barrels, 1,555 mcf, and 495 equivalent mcf, respectively, per day.
In the first quarter of 1996, the average sales prices increased for crude
oil to $18.13 per barrel and for natural gas to $2.20 per mcf, compared to
$17.33 per barrel and $1.37 per mcf, respectively, in 1995. Prices for
plant products decreased to $1.62 per equivalent mcf for the first quarter
of 1996, compared to $2.25 per equivalent mcf for the first quarter of
1995. Interest income decreased $581 or 21% in 1996 due to a reduction in
cash available for investment subsequent to a third quarter 1995 cash
distribution to Limited Partners.
Lease operating and production tax expenses for the three months ended
March 31, 1996 increased $29,770 or 85% and $4,461 or 20%, respectively,
compared to the same period in 1995. The increase in lease operating
expense is primarily due to additional ad valorem taxes accrued at March
31, 1996, while production taxes increased relative to the increase in
crude oil and natural gas sales. Marketing deductions were $52,295 for the
three months ended March 31, 1996, a decrease of $4,159 or 7% compared to
the same period in 1995, as a result of the decline in natural gas
production in 1996. Depreciation, depletion and amortization expense
increased by $27,848 or 26% in 1996 compared to 1995 as a result of a
downward revision in reserves assigned to the properties by independent
reserve engineers, effective January 1, 1996. General and administrative
expenses for the three months ended March 31, 1996 decreased by $16,941 or
27% compared to the same period in 1995.
<PAGE>
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
None.
<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 15, 1996
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 263,339
<SECURITIES> 0
<RECEIVABLES> 258,798
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 522,137
<PP&E> 22,472,019
<DEPRECIATION> 18,698,699
<TOTAL-ASSETS> 4,295,457
<CURRENT-LIABILITIES> 9,345
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,286,112
<TOTAL-LIABILITY-AND-EQUITY> 4,295,457
<SALES> 439,762
<TOTAL-REVENUES> 441,907
<CGS> 0
<TOTAL-COSTS> 325,531
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 116,376
<INCOME-TAX> 0
<INCOME-CONTINUING> 116,376
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 116,376
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
