<PAGE>
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
September 30, 1996 Commission File Number 2-71865
- ------------------------- ------------------------------
TEXLAND DRILLING PROGRAM-1981
-----------------------------
(Name of Registrant)
TEXAS 75-1791491
- ------------------------ ------------------------------------
(State of Organization) (I.R.S. Employer Identification No.)
500 Throckmorton Street, Suite 3100
Fort Worth, Texas 76102
- ------------------------------------- --------
(Address of Executive Offices) Zip Code
Registrant's Telephone Number (817) 336-2751
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Securities registered pursuant to Section 12(b) of the Act:
Units of Limited Partnership Interest None
- ------------------------------------- --------------
(Title of Class) (Voting Units)
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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This report contains a total of 10 pages.
1
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TEXLAND DRILLING PROGRAM-1981
INDEX TO FINANCIAL STATEMENTS
Reference Page
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Balance Sheets at September 30, 1996 and
December 31, 1995 3
Statements of Operations for the Three Months
Ended September 30, 1996 and 1995 and the Nine
Months Ended September 30, 1996 and 1995. 4
Statement of Partners' Equity at September 30, 1996 5
Statements of Cash Flows for Nine Months Ended
September 30, 1996 and 1995 6
Notes to Financial Statements 7-8
2
<PAGE>
TEXLAND DRILLING PROGRAM - 1981
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
9/30/96 12/31/95
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<S> <C> <C>
CURRENT ASSETS
CASH $ 103,895 $ 70,913
ACCOUNTS RECEIVABLE
TRADE 140,167 165,044
GENERAL PARTNER (NOTE 4) - -
----------- -----------
TOTAL CURRENT ASSETS 244,062 235,957
PROPERTY AND EQUIPMENT, AT COST
(SUCCESSFUL EFFORTS METHOD)
INTANGIBLE DEVELOPMENT COSTS 7,697,928 7,598,675
LEASE AND WELL EQUIPMENT 4,441,287 4,384,516
PRODUCING LEASEHOLDS 372,294 372,066
----------- -----------
12,511,509 12,355,257
LESS ACCUMULATED DEPRECIATION AND DEPLETION 9,344,741 9,077,541
----------- -----------
3,166,768 3,277,716
WELLS-IN-PROGRESS
NONPRODUCING LEASEHOLDS - -
----------- -----------
NET PROPERTY AND EQUIPMENT 3,166,768 3,277,716
ORGANIZATIONAL COSTS (NET OF $1,141,028
AMORTIZATION IN 1991 AND 1,069,798 IN 1990) - -
----------- -----------
$ 3,410,830 $ 3,513,673
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE - TRADE 63,619 64,086
----------- -----------
TOTAL CURRENT LIABILITIES 63,619 64,086
PARTNERS' EQUITY
LIMITED PARTNERS - 2,425 UNITS OUTSTANDING 2,372,118 2,442,101
GENERAL PARTNER 975,093 1,007,486
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TOTAL PARTNERS' EQUITY 3,347,211 3,449,587
----------- -----------
TOTAL LIABILITIES AND PARTNERS' EQUITY 3,410,830 3,513,673
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES
3
<PAGE>
TEXLAND DRILLING PROGRAM - 1981
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER SEPTEMBER
1996 1995 1996 1995
-------- -------- ---------- --------
<S> <C> <C> <C> <C>
REVENUES
OIL AND GAS SALES $441,758 $270,382 $1,168,840 $841,890
INTEREST INCOME 893 695 2,210 1,706
GAIN ON SALE - - - -
-------- -------- ---------- --------
442,652 271,077 1,171,050 843,596
EXPENSES
FEES TO MANAGING GENERAL
PARTNER 16,050 16,050 48,150 48,150
PRODUCTION EXPENSES 112,264 108,537 330,680 323,321
SEVERANCE TAX WITHHOLDING 21,859 12,451 55,305 38,727
DEPRECIATION, DEPLETION
AND AMORTIZATION 89,066 88,830 267,199 266,489
OTHER EXPENSES (6,947) 11,449 14,378 12,339
-------- -------- ---------- --------
232,292 237,317 715,712 689,026
-------- -------- ---------- --------
NET INCOME (LOSS) $210,359 $ 33,760 $ 455,338 $154,570
-------- -------- ---------- --------
NET INCOME (LOSS) ALLOCATION
LIMITED PARTNERS 105,336 5,553 208,892 54,433
GENERAL PARTNER 105,024 28,207 246,445 100,137
-------- -------- ---------- --------
$210,359 $ 33,760 $ 455,338 $154,570
-------- -------- ---------- --------
NET INCOME (LOSS) PER $5000
LIMITED PARTNER UNIT
(2,425 UNITS O/S) $ 43 $ 2 $ 86 $ 22
-------- -------- ---------- --------
</TABLE>
SEE ACCOMPANYING NOTES
4
<PAGE>
TEXLAND DRILLING PROGRAM - 1981
(A LIMITED PARTNERSHIP)
STATEMENT OF PARTNERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
LIMITED GENERAL
TOTAL PARTNER PARTNER
---------- ---------- ----------
<S> <C> <C> <C>
BALANCE DECEMBER 31, 1995 $3,449,587 $2,442,101 $1,007,486
PARTNERS' CONTRIBUTIONS 55,962 55,962
PARTNERS' DISTRIBUTIONS (613,675) (278,875) (334,800)
NET INCOME / (LOSS) 455,338 208,892 246,445
---------- ---------- ----------
BALANCE SEPTEMBER 30, 1996 $3,347,211 $2,372,118 $ 975,093
========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES
5
<PAGE>
TEXLAND DRILLING PROGRAM - 1981
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME / (LOSS) $ 455,338 $ 154,570
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION, DEPLETION, AND AMORTIZATION 267,200 266,489
ABANDONED LEASEHOLDS
LOSS ON SALE OF ASSETS
CHANGE IN ACCOUNTS RECEIVABLE 24,877 23,693
CHANGE IN ACCOUNTS PAYABLE (467) (11,078)
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TOTAL ADJUSTMENTS 291,610 279,104
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NET CASH PROVIDED BY OPERATING ACTIVITIES 746,947 433,674
CASH FLOWS FROM INVESTING ACTIVITIES:
ACQUISITION OF PROPERTY AND EQUIPMENT (156,252) (56,253)
PROCEEDS FROM SALE OF PROPERTY AND EQUIPMENT -
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (156,252) (56,253)
CASH FLOWS FROM FINANCING ACTIVITIES:
PARTNERS' CONTRIBUTIONS 55,962 31,360
PARTNERS' DISTRIBUTIONS (613,675) (385,850)
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES (557,713) (354,490)
NET INCREASE IN CASH 32,982 22,931
CASH AT BEGINNING OF YEAR 70,913 44,753
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CASH AT END OF QUARTER $ 103,895 $ 67,684
========= =========
</TABLE>
SEE ACCOMPANYING NOTES
6
<PAGE>
TEXLAND DRILLING PROGRAM-1981
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Partnership was organized as a limited partnership on June 20, 1981 for the
purpose of engaging in oil and gas exploration and production. Texland
Properties-1981, a general partnership, and Texland Petroleum, Inc. are the
General Partners. The Managing General Partner is Texland Petroleum, Inc. The
Partnership's accounting policies are summarized below:
BASIS OF ACCOUNTING - The Partnership follows generally accepted accounting
principles applicable to established enterprises in the extractive industries
under a method which is generally known as the successful method of accounting.
PROPERTY AND EQUIPMENT - Costs incurred for the acquisition of producing and
nonproducing leaseholds are capitalized. Costs of intangible development and
lease and well equipment incurred to drill and equip successful exploratory and
development wells are capitalized. Costs to drill and equip unsuccessful
exploratory wells are charged to operations while costs of unsuccessful
development wells remain capitalized. Costs associated with uncompleted wells
are capitalized as wells-in-progress.
ABANDONED LEASEHOLDS - Costs of nonproducing properties are charged to expense
at such time as they are deemed to be impaired, based upon periodic assessments
of such costs.
DEPLETION - Leasehold costs of producing properties are amortized on the unit of
production method based on proved oil and gas reserves. Intangible development
costs of producing properties are amortized on the unit of production method
based on estimated proved developed oil and gas reserves.
DEPRECIATION - Depreciation of equipment is provided by using the unit of
production method based on estimated proved developed oil and gas reserves.
ORGANIZATION COSTS - These costs are amortized by the straight-line method over
ten years, the life of the Partnership.
FEDERAL INCOME TAX - The Partnership files its federal income tax return on the
accrual basis.
7
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TEXLAND DRILLING PROGRAM-1981
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 1996
(Unaudited)
2. CONTRIBUTIONS BY GENERAL PARTNER (TEXLAND PROPERTIES-1981)
Under terms of the Partnership Agreement, the General Partner is charged for
certain costs related to drilling and production operations which are required
to be capitalized for federal income tax purposes. These costs are treated as
capital contributions by the General Partner. In addition, Texland Properties-
1981 and Texland Petroleum, Inc. have invested in limited partnership units in
the amount of $95,000 and $30,000 respectively.
3. FEES TO MANAGING GENERAL PARTNER (TEXLAND PETROLEUM, INC.)
In consideration of its management services rendered, the Managing General
Partner is entitled to charge management fees to the Partnership. In addition,
for the three months ended September 30, 1996 and September 30, 1995, the
Partnership was charged $35,745 and $45,055 respectively for technical services,
accounting services, and supervisory services performed by the employees of the
Managing General Partner and such charges are included in intangible development
costs, production expenses and fees to Managing General Partner. These charges
are allocated between the General and Limited Partners based upon applicable
revenue and expense sharing rates.
8
<PAGE>
TEXLAND DRILLING PROGRAM-1981
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
September 30, 1996
The Partnership's average price per barrel of oil for the third quarter of 1996
was $18.39 as compared to $13.73 for the third quarter of 1995. The increased
revenue results primarily from this increase in average oil prices and increased
production due to in-fill drilling in 1995 on certain Partnership properties.
Expenses were comparable for the 1996 and 1995 three and nine month periods.
Although sales amounts increased, volume sales were not sufficiently impacted to
materially affect operating expense levels.
The Partnership was formed with cash contributions from the Limited and General
Partners. Management does not intend to incur any substantial indebtedness and
any developmental drilling which is necessary will be processed by farmout to
other parties or by reinvestment of internally generated funds. Management,
therefore, anticipates no liquidity problems during the life of the Partnership.
9
<PAGE>
PART II
Items 1 through 6
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Omitted - Not applicable to Registrant.
SIGNATURE
---------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TEXLAND DRILLING PROGRAM-1981
By /s/ M.E. CHAPMAN
---------------------------------
M. E. Chapman, Vice President
of Texland Petroleum, Inc.,
General Partner - Texland
Properties-1981
Date: November 11, 1996
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT SEPTEMBER 30, 1996 AND DECEMBER 31, 1995 AND THE STATEMENT OF
OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND THE NINE MONTHS
ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 103,895
<SECURITIES> 0
<RECEIVABLES> 140,167
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 244,062
<PP&E> 12,511,509
<DEPRECIATION> 9,344,741
<TOTAL-ASSETS> 3,410,830
<CURRENT-LIABILITIES> 63,619
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,347,211
<TOTAL-LIABILITY-AND-EQUITY> 3,410,830
<SALES> 1,168,840
<TOTAL-REVENUES> 1,171,050
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 715,712
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 455,338
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 455,338
<EPS-PRIMARY> 43.44
<EPS-DILUTED> 43.44
</TABLE>
