<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
March 31, 1997 Commission File Number 2-71865
- --------------------- ------------------------------
TEXLAND DRILLING PROGRAM-1981
-----------------------------
(Name of Registrant)
TEXAS 75-1791491
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(State of Organization) (I.R.S. Employer Identification No.)
500 Throckmorton Street, Suite 3100
Fort Worth, Texas 76102
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(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 March 31, 1997 and
December 31, 1996. 3
Statements of Operations for the Three Months
Ended March 31, 1997 and 1996. 4
Statement of Partners' Equity at March 31, 1997. 5
Statements of Cash Flows for Three Months Ended
March 31, 1997 and 1996. 6
Notes to Financial Statements. 7-8
2
<PAGE>
TEXLAND DRILLING PROGRAM - 1981
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
3/31/97 12/31/96
----------- -----------
<S> <C> <C>
CURRENT ASSETS
CASH $ 64,324 $ 92,858
ACCOUNTS RECEIVABLE
TRADE 120,347 179,111
GENERAL PARTNER (NOTE 4) - -
----------- -----------
TOTAL CURRENT ASSETS 184,671 271,969
PROPERTY AND EQUIPMENT, AT COST
(SUCCESSFUL EFFORTS METHOD)
INTANGIBLE DEVELOPMENT COSTS 7,774,189 7,716,701
LEASE AND WELL EQUIPMENT 4,497,411 4,456,082
PRODUCING LEASEHOLDS 373,169 372,869
----------- -----------
12,644,769 12,545,651
LESS ACCUMULATED DEPRECIATION AND DEPLETION 9,490,936 9,415,355
----------- -----------
3,153,832 3,130,296
WELLS-IN-PROGRESS
NONPRODUCING LEASEHOLDS - -
----------- -----------
NET PROPERTY AND EQUIPMENT 3,153,832 3,130,296
ORGANIZATIONAL COSTS (NET OF $1,141,028
AMORTIZATION IN 1991 AND $1,069,798 IN 1990) - -
----------- -----------
$ 3,338,504 $ 3,402,265
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE - TRADE 59,062 46,594
----------- -----------
TOTAL CURRENT LIABILITIES 59,062 46,594
PARTNERS' EQUITY
LIMITED PARTNERS - 2,425 UNITS OUTSTANDING 2,339,877 2,380,316
GENERAL PARTNER 939,565 975,355
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TOTAL PARTNERS' EQUITY 3,279,442 3,355,671
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TOTAL LIABILITIES AND PARTNERS' EQUITY 3,338,504 3,402,265
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</TABLE>
SEE ACCOMPANYING NOTES
3
<PAGE>
TEXLAND DRILLING PROGRAM - 1981
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH
1997 1996
-------- --------
<S> <C> <C>
REVENUES
OIL AND GAS SALES $404,620 $326,100
INTEREST INCOME 623 592
GAIN ON SALE - -
-------- --------
405,243 326,692
EXPENSES
FEES TO MANAGING GENERAL PARTNER 19,600 16,050
PRODUCTION EXPENSES 135,451 112,095
SEVERANCE TAX WITHHOLDING 18,613 15,001
DEPRECIATION, DEPLETION AND AMORT 75,581 89,066
OTHER EXPENSES - 10,800
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249,245 243,012
NET INCOME (LOSS) $155,998 $ 83,680
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NET INCOME (LOSS) ALLOCATION
LIMITED PARTNERS 68,581 31,886
GENERAL PARTNER 86,186 51,794
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$154,767 $ 83,680
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NET INCOME (LOSS) PER $5000 LIMITED
PARTNER UNIT (2,425 UNITS O/S) $ 28 $ 13
-------- --------
</TABLE>
SEE ACCOMPANYING NOTES
4
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TEXLAND DRILLING PROGRAM - 1981
(A LIMITED PARTNERSHIP)
STATEMENT OF PARTNERS' EQUITY
THREE MONTHS ENDED MARCH 31, 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 41,629 0 41,629
PARTNERS' DISTRIBUTIONS (272,625) (109,125) (163,500)
NET INCOME / (LOSS) 154,767 68,581 86,186
----------- ----------- -----------
BALANCE MARCH 31, 1997 $ 3,279,442 $ 2,339,877 $ 939,565
=========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES
5
<PAGE>
TEXLAND DRILLING PROGRAM - 1981
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME / (LOSS) $ 154,767 $ 83,680
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION, DEPLETION, AND AMORTIZATION 75,581 89,067
ABANDONED LEASEHOLDS
LOSS ON SALE OF ASSETS
CHANGE IN ACCOUNTS RECEIVABLE 58,764 49,981
CHANGE IN ACCOUNTS PAYABLE 12,468 (2,497)
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TOTAL ADJUSTMENTS 146,813 136,551
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NET CASH PROVIDED BY OPERATING ACTIVITIES 301,580 220,231
CASH FLOWS FROM INVESTING ACTIVITIES:
ACQUISITION OF PROPERTY AND EQUIPMENT (99,118) (34,080)
PROCEEDS FROM SALE OF PROPERTY AND EQUIPMENT -
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NET CASH USED BY INVESTING ACTIVITIES (99,118) (34,080)
CASH FLOWS FROM FINANCING ACTIVITIES:
PARTNERS' CONTRIBUTIONS 41,629 14,197
PARTNERS' DISTRIBUTIONS (272,625) (173,925)
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NET CASH USED BY FINANCING ACTIVITIES (230,996) (159,728)
NET INCREASE IN CASH (28,534) 26,423
CASH AT BEGINING OF YEAR 92,858 70,913
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CASH AT END OF QUARTER $ 64,324 $ 97,336
========= =========
</TABLE>
SEE ACCOMPANYING NOTES
6
<PAGE>
TEXLAND DRILLING PROGRAM-1981
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 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
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TEXLAND DRILLING PROGRAM-1981
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
March 31, 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 three months ended March 31, 1997 and March 31, 1996, the Partnership
was charged $36,812 and $35,745 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
March 31, 1997
The Partnership's average price per barrel of oil for the first quarter of 1997
was $18.44 as compared to $15.65 for the first quarter of 1996. The increased
revenue results primarily from the increase in average oil prices and increased
production due to in-fill drilling in 1996 on certain Partnership properties.
Expenses were comparable for the 1997 and 1996 three month period. 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
- -----------------
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: August 1, 1997
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT MARCH 31, 1997 AND DECEMBER 31, 1996 AND THE STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 64,324
<SECURITIES> 0
<RECEIVABLES> 120,347
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 184,671
<PP&E> 12,644,769
<DEPRECIATION> 9,490,936
<TOTAL-ASSETS> 3,338,504
<CURRENT-LIABILITIES> 59,062
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,279,442
<TOTAL-LIABILITY-AND-EQUITY> 3,338,504
<SALES> 404,620
<TOTAL-REVENUES> 405,243
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 249,245
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 155,998
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 155,998
<EPS-PRIMARY> 28.28
<EPS-DILUTED> 28.28
</TABLE>
