<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, 1997 Commission File Number 2-71865
- --------------------- ------------------------------
TEXLAND DRILLING PROGRAM-1981, LTD
----------------------------------
(Name of Registrant)
TEXAS 75-1791491
- ----------------------- ------------------------------------
(State of Organization) (I.R.S. Employer Identification No.)
500 Throckmorton Street, Suite 3100 76102
Fort Worth, Texas --------
- ----------------------------------- Zip Code
(Address of Executive Offices)
Registrant's Telephone Number (817) 336-2751
--------------
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
<PAGE>
TEXLAND DRILLING PROGRAM-1981, LTD
INDEX TO FINANCIAL STATEMENTS
Reference Page
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Balance Sheets at September 30, 1997 and 3
December 31, 1996.
Statements of Operations for the Nine Months 4
Ended September 30, 1997 and 1996.
Statement of Partners' Equity at September 30, 1997. 5
Statements of Cash Flows for Nine Months Ended 6
September 30, 1997 and 1996.
Notes to Financial Statements. 7-8
2
<PAGE>
Texland Drilling Program - 1981, Ltd.
(A Limited Partnership)
Balance Sheets
September 30, 1997 and December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
9/30/97 12/31/96
----------- -----------
<S> <C> <C>
Current Assets
Cash $ 54,100 $ 92,858
Accounts Receivable
Trade 109,540 179,111
General Partner - -
----------- -----------
Total Current Assets 163,640 271,969
Property and Equipment, at Cost
(Successful Efforts Method)
Intangible Development Costs 7,853,741 7,716,701
Lease and Well Equipment 4,549,715 4,456,082
Producing Leaseholds 373,188 372,869
----------- -----------
12,776,644 12,545,651
Less: Accumulated Depreciation, Depletion & Amortization 9,642,099 9,415,355
----------- -----------
3,134,546 3,130,296
Wells-in-Progress
Nonproducing Leaseholds - -
----------- -----------
Net Property, Plant and Equipment 3,134,546 3,130,296
Organizational Costs (net of $1,141,028 amortization in 1991
and $1,069,798 in 1990) - -
----------- -----------
Total Assets $ 3,298,186 $ 3,402,265
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities
Accounts Payable - Trade 82,303 46,594
----------- -----------
Total Current Liabilities 82,303 46,594
Partners' Equity
Limited Partners - 2,425 Units Outstanding 2,219,142 2,380,316
General Partner 926,991 975,355
----------- -----------
Total Partners' Equity 3,215,883 3,355,671
----------- -----------
Total Liabilities and Partners' Equity 3,298,186 3,402,265
=========== ===========
</TABLE>
See Accompanying Notes
3
<PAGE>
Texland Drilling Program - 1981, Ltd.
(A Limited Partnership)
Statement of Operations
September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Oil and Gas Sales $ 364,437 $ 441,758 $ 1,100,677 $ 1,168,840
Interest Income 261 893 1,263 2,210
Gain on Sale - - - -
----------- ----------- ----------- -----------
364,698 442,651 1,101,940 1,171,050
Expenses
Fees to Managing General Partner 26,700 16,050 73,000 48,150
Production Expenses 143,053 112,264 413,503 330,680
Severance Tax Withholding 16,764 21,859 50,631 55,305
Depreciation, Depletion & Amortization Expenses 75,581 89,066 226,743 267,199
Other Expenses 2,552 (6,947) 16,153 14,378
----------- ----------- ----------- -----------
264,650 232,292 780,031 715,712
----------- ----------- ----------- -----------
Net Income (Loss) $ 100,048 $ 210,359 $ 321,909 $ 455,338
----------- ----------- ----------- -----------
Net Income (Loss) Allocation
Limited Partners 39,850 105,336 126,721 208,892
General Partner 60,198 105,024 195,189 246,445
----------- ----------- ----------- -----------
$ 100,048 $ 210,359 $ 321,909 $ 455,338
----------- ----------- ----------- -----------
Net Income (Loss) per $5,000 Limited Partner Unit
(2,425 Units Outstanding) $ 16 $ 43 $ 52 $ 86
----------- ----------- ----------- -----------
</TABLE>
See Accompanying Notes
4
<PAGE>
Texland Drilling Program - 1981, Ltd.
(A Limited Partnership)
Statement of Partners' Equity
Nine Months Ended September 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Limited General
Total Partner Partner
----------- ----------- -----------
<S> <C> <C> <C>
Balance December 31, 1996 $ 3,355,671 $ 2,380,421 $ 975,250
Partners' Contributions 93,953 93,953
Partners' Distributions (555,650) (218,250) (337,400)
Net Income (Loss) 321,909 126,721 195,189
----------- ----------- -----------
Balance September 30, 1997 $ 3,215,883 $ 2,288,892 $ 926,991
=========== =========== ===========
</TABLE>
See Accompanying Notes
5
<PAGE>
Texland Drilling Program - 1981, Ltd.
(A Limited Partnership)
Statements of Cash Flow
Nine Months Ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income (Loss) $ 321,909 $ 455,338
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
Depreciation, Depletion and Amortization Expenses 226,743 267,200
Abandoned Leaseholds
Loss on Sale of Assets
Change in Accounts Receivable 69,571 24,877
Change in Accounts Payable 35,709 (467)
--------- ---------
Total Adjustments 332,024 291,610
--------- ---------
Net Cash Provided by Operating Activities 653,933 746,947
Cash Flows from Investing Activities
Acquisition of Property and Equipment (230,993) (156,252)
Proceeds from Sale of Property and Equipment -
--------- ---------
Net Cash Used by Investing Activities (230,993) (156,252)
Cash Flows from Financing Activities
Partners' Contributions 93,953 55,962
Partners' Distributions (555,650) (613,675)
--------- ---------
Net Cash Used by Financing Activities (461,697) (557,713)
Net Increase in Cash (38,758) 32,982
Cash at Beginning of Year 92,858 70,913
--------- ---------
Cash at End of Quarter $ 54,100 $ 103,895
========= =========
</TABLE>
See Accompanying Notes
6
<PAGE>
TEXLAND DRILLING PROGRAM-1981, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(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
<PAGE>
TEXLAND DRILLING PROGRAM-1981, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 1997
(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 nine months ended September 30, 1997 and September 30, 1996, the
Partnership was charged $110,436 and $107,235 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, LTD.
(A LIMITED PARTNERSHIP)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
September 30, 1997
The Partnership's average price per barrel of oil for the third quarter of 1997
was $14.74 as compared to $18.39 for the third quarter of 1996. The decreased
revenue results primarily from the decrease in average oil prices.
Production expenses for 1997 increased from the comparable period in 1996, due
to an increase in the number of remedial workovers and due to an increase in the
costs of oil field services.
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
- -----------------
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, Ltd.
By /s/ M.E. Chapman
-----------------------------
M. E. Chapman, Vice President
of Texland Petroleum, Inc.,
General Partner - Texland
Properties-1981
Date: November 14, 1997
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT SEPTEMBER 30, 1997 AND DECEMBER 31, 1996 AND THE STATEMENT OF
OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 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-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 54,100
<SECURITIES> 0
<RECEIVABLES> 109,540
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 163,640
<PP&E> 12,776,644
<DEPRECIATION> 9,642,099
<TOTAL-ASSETS> 3,134,546
<CURRENT-LIABILITIES> 82,303
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,215,883
<TOTAL-LIABILITY-AND-EQUITY> 3,298,186
<SALES> 1,100,677
<TOTAL-REVENUES> 1,101,940
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 780,031
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 321,909
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 321,909
<EPS-PRIMARY> 52.26
<EPS-DILUTED> 52.26
</TABLE>
