<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
June 30, 1997 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
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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 June 30, 1997 and 3
December 31, 1996.
Statements of Operations for the Six Months 4
Ended June 30, 1997 and 1996.
Statement of Partners' Equity at June 30, 1997. 5
Statements of Cash Flows for Six Months Ended 6
June 30, 1997 and 1996.
Notes to Financial Statements. 7-8
2
<PAGE>
TEXLAND DRILLING PROGRAM - 1981
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
6/30/97 12/31/96
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<S> <C> <C>
CURRENT ASSETS
CASH $ 25,478 $ 92,858
ACCOUNTS RECEIVABLE
TRADE 105,148 179,111
GENERAL PARTNER (NOTE 4) - -
----------- -----------
TOTAL CURRENT ASSETS 130,626 271,969
PROPERTY AND EQUIPMENT, AT COST
(SUCCESSFUL EFFORTS METHOD)
INTANGIBLE DEVELOPMENT COSTS 7,820,159 7,716,701
LEASE AND WELL EQUIPMENT 4,530,116 4,456,082
PRODUCING LEASEHOLDS 373,188 372,869
----------- -----------
12,723,463 12,545,651
LESS ACCUMULATED DEPRECIATION AND DEPLETION 9,566,517 9,415,355
----------- -----------
3,156,945 3,130,296
WELLS-IN-PROGRESS
NONPRODUCING LEASEHOLDS - -
----------- -----------
NET PROPERTY AND EQUIPMENT 3,156,945 3,130,296
ORGANIZATIONAL COSTS (NET OF $1,141,028
AMORTIZATION IN 1991 AND $1,069,798 IN 1990) - -
----------- -----------
$ 3,287,571 $ 3,402,265
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE - TRADE 73,086 46,594
----------- -----------
TOTAL CURRENT LIABILITIES 73,086 46,594
PARTNERS' EQUITY
LIMITED PARTNERS - 2,425 UNITS OUTSTANDING 2,273,292 2,380,316
GENERAL PARTNER 941,193 975,355
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TOTAL PARTNERS' EQUITY 3,214,485 3,355,671
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TOTAL LIABILITIES AND PARTNERS' EQUITY 3,287,571 3,402,265
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES
3
<PAGE>
TEXLAND DRILLING PROGRAM - 1981
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, June 30,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
REVENUES
OIL AND GAS SALES $ 331,620 $ 400,982 $ 736,240 $ 727,081
INTEREST INCOME 379 725 1,002 1,317
GAIN ON SALE - - - -
---------- ---------- ----------- -----------
331,999 401,707 737,242 728,398
EXPENSES
FEES TO MANAGING GENERAL PARTNER 26,700 16,050 46,300 32,100
PRODUCTION EXPENSES 134,999 106,322 270,450 218,416
SEVERANCE TAX WITHHOLDING 15,255 18,445 33,867 33,446
DEPRECIATION, DEPLETION AND AMORT. 75,581 89,066 151,162 178,133
OTHER EXPENSES 12,370 10,525 13,601 21,325
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264,904 240,408 515,380 483,420
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NET INCOME (LOSS) $ 67,095 $ 161,299 $ 221,861 $ 244,978
---------- ---------- ----------- -----------
NET INCOME (LOSS) ALLOCATION
LIMITED PARTNERS 18,290 71,671 86,871 103,556
GENERAL PARTNER 48,804 89,628 134,990 141,422
---------- ---------- ----------- -----------
$ 67,095 $ 161,299 $ 221,861 $ 244,978
---------- ---------- ----------- -----------
NET INCOME (LOSS) PER $5000 LIMITED
PARTNER UNIT (2,425 UNITS O/S) $ 8 $ 30 $ 36 $ 43
---------- ---------- ----------- -----------
</TABLE>
SEE ACCOMPANYING NOTES
4
<PAGE>
TEXLAND DRILLING PROGRAM - 1981
(A LIMITED PARTNERSHIP)
STATEMENT OF PARTNERS' EQUITY
SIX MONTHS ENDED JUNE 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 74,353 74,353
PARTNERS' DISTRIBUTIONS (437,400) (194,000) (243,400)
NET INCOME / (LOSS) 221,861 86,871 134,990
----------- ----------- ---------
BALANCE JUNE 30, 1997 $ 3,214,485 $ 2,273,292 $ 941,193
=========== =========== =========
</TABLE>
SEE ACCOMPANYING NOTES
5
<PAGE>
TEXLAND DRILLING PROGRAM - 1981
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME / (LOSS) $ 221,861 $ 244,978
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION, DEPLETION, AND AMORTIZATION 151,162 178,133
ABANDONED LEASEHOLDS
LOSS ON SALE OF ASSETS
CHANGE IN ACCOUNTS RECEIVABLE 73,963 53,347
CHANGE IN ACCOUNTS PAYABLE 26,492 (13,580)
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TOTAL ADJUSTMENTS 251,617 217,900
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NET CASH PROVIDED BY OPERATING ACTIVITIES 473,479 462,878
CASH FLOWS FROM INVESTING ACTIVITIES:
ACQUISITION OF PROPERTY AND EQUIPMENT (177,811) (77,760)
PROCEEDS FROM SALE OF PROPERTY AND EQUIPMENT -
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (177,811) (77,760)
CASH FLOWS FROM FINANCING ACTIVITIES:
PARTNERS' CONTRIBUTIONS 74,353 31,788
PARTNERS' DISTRIBUTIONS (437,400) (360,325)
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NET CASH USED BY FINANCING ACTIVITIES (363,047) (328,537)
NET INCREASE IN CASH (67,380) 56,581
CASH AT BEGINING OF YEAR 92,858 70,913
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CASH AT END OF QUARTER $ 25,478 $ 127,494
========= =========
</TABLE>
SEE ACCOMPANYING NOTES
6
<PAGE>
TEXLAND DRILLING PROGRAM-1981
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 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
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TEXLAND DRILLING PROGRAM-1981
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
June 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 six months ended June 30, 1997 and June 30, 1996, the Partnership was
charged $73,624 and $71,490 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
June 30, 1997
The Partnership's average price per barrel of oil for the second quarter of 1997
was $15.19 as compared to $17.65 for the second 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
primarily to the 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
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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
-----------------------------------------
M. E. Chapman, Vice President
of Texland Petroleum, Inc.,
General Partner - Texland
Properties-1981
Date: August 14, 1997
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT JUNE 30, 1997 AND DECEMBER 31, 1996 AND THE STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 25,478
<SECURITIES> 0
<RECEIVABLES> 105,148
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 130,626
<PP&E> 12,723,463
<DEPRECIATION> 9,566,517
<TOTAL-ASSETS> 3,156,945
<CURRENT-LIABILITIES> 73,086
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,214,485
<TOTAL-LIABILITY-AND-EQUITY> 3,287,571
<SALES> 736,240
<TOTAL-REVENUES> 737,242
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 515,380
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 221,861
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 221,861
<EPS-PRIMARY> 35.82
<EPS-DILUTED> 35.82
</TABLE>
