FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
{x} ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-10268
C&K 1981 FUND-A, LTD.
(Exact name of registrant as specified in its charter)
Texas 76-0307703
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7555 E. 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
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Limited Partnership Interests
(Title of Class)
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
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Registration Statement No. 2-70303 are
incorporated by reference into Part IV of this report.
<PAGE>
PART I
ITEM 1 - Business
General
The response to this item is submitted as a separate section in Part
IV of this report under Notes to Financial Statements, Note 1 -
Organization.
Operating Hazards and Uninsured Risks
All of the Partnership's oil and gas activities are subject to the
risks normally associated with exploration for and production of oil and
gas, including blowouts, cratering and fires, each of which could result in
damage to life and property. The General Partner believes that its
operations and facilities are in compliance with applicable environmental
regulations. Nevertheless, the risks of substantive costs and liabilities
are inherent in operations such as the Partnership's, and there can be no
assurance that significant costs and liabilities will not be incurred in
the future. The General Partner does carry insurance against some, but not
all, of these risks. Losses and liabilities arising from such events would
reduce revenues and increase costs to the Partnership to the extent not
covered by insurance. Notwithstanding the foregoing, the General Partner
believes that it has adequate insurance coverage to preclude any material
adverse impact from known claims.
Markets
The availability of a ready market for the Partnership's oil and gas
production and revenues generated from sales of production depends on
numerous factors beyond its control, including the cost and availability of
alternative fuels, the level of consumer demand, the extent of other
domestic production of oil and gas, the extent of importation of foreign
oil and gas, the costs of and proximity of pipelines and other
transportation facilities, regulation by state and federal authorities, and
the costs of complying with applicable environmental regulations. Prices
for oil and gas have proven volatile in recent years. Due to all of the
above stated factors, management is unable to predict future prices.
Regulation
Federal Regulation
Various aspects of the Partnership's natural gas operations are
affected by regulations of the Federal Energy Regulatory Commission
("FERC") under authority of the Natural Gas Act of 1938 ("NGA") and the
Natural Gas Policy Act of 1978 ("NGPA"). The provisions of these acts are
complex. However, pursuant to certain FERC rules and recent legislation,
most gas was deregulated on January 1, 1993. Additionally, the interstate
natural gas pipeline industry is undergoing a substantial restructuring by
the FERC. The impact of price decontrol and the FERC restructuring on the
Partnership is uncertain, but at present would appear not to cause a
material adverse effect on the business of the Partnership.
State Regulation
Most states in which the Partnership owns oil and gas properties have
statutes and regulations governing a number of environmental and
conservation matters, including the unitization or pooling of oil and gas
properties and maximum rates of production from oil and gas wells. Such
statutes and regulations may limit the rate at which oil and gas could
otherwise be produced from the Partnership properties. State regulatory
authorities have also established rules and regulations requiring permits
for drilling operations, drilling bonds and reports concerning operations.
Some states have enacted statutes prescribing ceiling prices for gas sold
within the state.
In 1992, the Texas Railroad Commission ("TRC") adopted a significant
revision to the current system of natural gas production in Texas. The
previous system required each pipeline system to estimate the demand for
gas each month and take from its suppliers on a pro rata basis. The new
rule assigns allowable production of natural gas to wells on an annual
basis rather than a monthly basis. In addition, the determination of
market demand is made by the TRC rather than the pipelines. The impact of
these new regulations on the Partnership has been and is expected to be
minimal.
Environmental Regulation
The Partnership's oil and gas exploration and production operations
are subject to regulation by the United States Environmental Protection
Agency (the "EPA") and the regulatory bodies in each state in which it is
doing business. The Partnership's oil and gas exploration, development and
production operations are subject to numerous environmental programs, some
of which include solid and hazardous waste management, water protection,
air emission controls, and situs controls affecting wetlands, coastal
operations, and antiquities. New programs and changes in existing programs
are anticipated, some of which include naturally occurring radioactive
materials ("NORM"), oil and gas exploration and production waste
management, and underground injection of waste materials. The Partnership
is not a party to any enforcement proceedings at this time.
Federal Income Tax Legislation
The Partnership pays no income taxes. Instead, all items of income
and loss flow through directly to the partners to be included in their
individual returns. Certain limitations on the deductibility of losses
attributable to an investment in the Partnership under the passive loss
rules will apply to the Limited Partners which are individuals, estates,
trusts, closely held corporations and personal service corporations. In
general, losses from activities in which an investor does not materially
participate (characterized as passive activities), such as a Limited
Partner's interest in the Partnership, are only deductible to the extent of
income from such passive activities.
The Revenue Act of 1987 classifies certain "publicly traded"
partnerships as corporations for federal income tax purposes. The General
Partner believes that the Partnership should not be considered a publicly
traded partnership under such provisions, although no assurance of this
result can be given. In the event the Partnership was classified as a
publicly traded partnership under such provisions, it should qualify for an
exemption from corporate classification to the extent that 90% of its gross
income is derived from the exploration, production and development of oil
and natural gas.
Each Limited Partner should consult with his tax advisor as to the
effect of the federal income tax laws on his investment in the Partnership.
Additional Legislation
No prediction can be made as to what additional legislation may be
proposed, if any, affecting the competitive status of an oil and gas
producer, restricting the prices at which a producer may sell its oil and
gas, imposing new taxes on revenues attributable to oil and gas production,
or affecting the market demand for oil and gas; nor can it be predicted
which proposals, including those currently under consideration, if any,
might be enacted or become effective.
Employees
The Partnership has no employees. Management of the Partnership,
including legal, accounting, technical and operational support, is provided
by the General Partner.
ITEM 2 - Properties
General
The Partnership's interests in its properties are in the form of
various ownership interests in oil and gas leases. On certain properties,
the size of interest owned by the Partnership will change after the
investment in the prospect or well is recovered. The Partnership's
properties may be subject to liens, operating agreements, minor
encumbrances, easements and restrictions.
Acreage
As of December 31, 1996, the Partnership held oil and natural gas
leases as follows:
<TABLE>
<CAPTION>
Acreage Developed
Gross Net
<S> <C> <C>
Louisiana 320 160
Texas 1,647 180
Total 1,967 340
</TABLE>
Production
The following table summarizes for the periods indicated the
Partnership's (i) net oil and gas production, (ii) the average sales price
received per barrel ("bbl") of crude oil and per thousand cubic feet
("mcf") of natural gas, and (iii) the composite production cost per
equivalent bbl of oil and gas ("BOE") produced. Gas has been converted on
the basis of 6 mcf equals 1 bbl. Liquid gas plant products (derived from
natural gas) have been converted on the basis of 1 bbl of plant products
equals 6 mcf.
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Natural Gas:
Production (mcf) 74,636 71,575 76,057
Average Sales Price per mcf $ 2.70 $1.65 $1.99
Plant Products:
Production (mcf) 15,054 20,171 9,405
Average Sales Price per mcf $ 2.08 $1.40 $1.23
Oil:
Production (bbl) 85,132 63,582 75,955
Average Sales Price per bbl $21.20 $16.74 $15.40
Composite Production Cost per BOE $ 5.05 $5.50 $4.20
</TABLE>
Estimated Oil and Gas Reserve Quantities (Unaudited)
The response to this item is submitted as a separate section in Part IV
of this report under Notes to Financial Statements, Note 8 - Supplemental
Data of Oil and Gas Operations.
Productive Properties
As of December 31, 1996, the Partnership had working interests in seven
gross (1.63 net) productive wells, located in Louisiana and Texas.
Drilling Activity
In 1996, the Partnership participated in the drilling of the McIlhenny
#1-Sidetrack #3 utilizing the existing wellbore of the McIlhenny #1-D well
which was abandoned. The cost to the Partnership to drill and complete the
well amounted to $943,564 and increased the Partnership reserve base by
13,661 bbls of oil and 15,846 mcf of gas. In 1995, the Partnership did not
participate in any drilling activity. During 1994, the Partnership
participated in the drilling of the Mestena No. E-18 which cost the
Partnership $178,843 and increased the Partnership reserve base by 2,982
bbls of oil and 182,971 mcf of gas and plant products.
ITEM 3 - Legal Proceedings
There were no material legal proceedings to which the Partnership is a
party nor to which any of its properties were subject.
ITEM 4 - Submission of Matters to a Vote of Security Holders
None.
PART II
ITEM 5 - Market for the Registrant's Common Equity and Related
Stockholder Matters
The number of holders of record of equity securities of the Partnership
as of December 31, 1996, was as follows:
Title of Class Number of Record Holders
Limited Partnership Interests 495
The assignment of interest is subject to certain restrictions. Because
of these restrictions and the absence of a public market for the interests,
a Limited Partner may not readily be able to liquidate his investment in
the Partnership. However, Article VII of the Partnership Agreement
provides a procedure whereby a Limited Partner may present his Limited
Partnership interest to the General Partner for purchase. 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. (See Part IV of this report under
Notes to Financial Statements, Notes 4 and 5).
ITEM 6 - Selected Financial Data
Selected financial data for each of the five years in the period ended
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Oil and Gas Sales $2,038,016 $1,210,563 $1,332,719
Production Costs
& Taxes 505,853 433,329 378,476
Oil & Gas Sales, Net of
Production Costs and Taxes 1,532,163 777,234 954,243
Net Income from
Continuing Operations 780,808 251,210 400,767
Net Income per Limited
Partnership unit 68 14 38
Total Assets 1,249,145 670,943 809,525
Short-Term Obligations 410,991 145,274 508,040
Long-Term Obligations 811,381 734,599 505,558
</TABLE>
<PAGE>
ITEM 6 - Selected Financial Data (continued)
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992
<S> <C> <C>
Oil and Gas Sales $2,223,181 $3,357,202
Production Costs
& Taxes 533,494 589,144
Oil & Gas Sales, Net of
Production Costs and Taxes 1,689,687 2,768,058
Net Income from
Continuing Operations 1,049,869 1,742,100
Net Income per Limited
Partnership unit 134 215
Total Assets 799,795 1,055,154
Short-Term Obligations 658,547 1,042,870
Long-Term Obligations 444,641 655,413
</TABLE>
ITEM 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
1996 Compared to 1995
The Partnership's net income for the year ended December 31, 1996, was
$780,808, representing a 211% increase from net income of $251,210 reported
for the same period in 1995. The increase resulted primarily from higher
oil, natural gas and plant products sales prices and higher sales volumes
for oil and natural gas.
Crude oil and natural gas sales for the year ended December 31, 1996
increased $827,453 or 68% when compared to the same period in 1995. This
increase resulted from higher sales prices and volumes. During 1996, crude
oil production per day increased to 233 bbls, compared with 1995 daily
production of 174 bbls. Natural gas production increased to 204 mcf per
day in 1996, compared with 196 mcf per day in 1995. Plant products
decreased to 41 equivalent mcf per day in 1996, compared with 1995 daily
production of 55 equivalent mcf. Average crude oil, natural gas, and plant
product prices in 1996 were $21.20 per bbl, $2.70 per mcf, and $2.08 per
equivalent mcf, respectively, compared to $16.74 per bbl, $1.65 per mcf and
$1.40 per equivalent mcf, respectively, for the same period in 1995.
Lease operating expense of $262,395 decreased by 11% compared to the
same period in 1995. This decrease of $33,461 is the result of additional
safety and environmental costs and the plugging of one well in 1995 which
did not occur in 1996. Depreciation, depletion and amortization expense
increased by 160% or $222,158 due to increased oil and gas sales in 1996 as
compared to the same period in 1995. Production tax expense of $243,458
increased by 77% from 1995, due to increased oil and gas sales in 1996 as
compared to the same period in 1995. Interest expense of $113,702
increased by 6% due to increased capital expenditures as a result of the
drilling of the McIlhenny #1-Sidetrack #3 well. The Partnership reported
marketing deductions of $12,150 for 1996, a decrease of $5,916 or 33% as
compared to marketing deductions of $18,066 for 1995.
1995 Compared to 1994
The Partnership's net income for the year ended December 31, 1995, was
$251,210, representing a 37% decrease from net income of $400,767 reported
for the same period in 1994. The decrease resulted primarily from lower
oil production and an increase in lease operating expenses in 1995.
Crude oil and natural gas sales for the year ended December 31, 1995
decreased $122,156 or 9% when compared to the same period in 1994. This
decrease resulted from declines in oil and gas production of 12,373 bbls
and 4,482 mcf, respectively, and a drop of $0.34 in the average gas price
per mcf. These declines were partially offset by an increased price per
barrel for oil and an increase in plant product sales. During 1995, crude
oil production per day decreased to 174 bbls, compared with 1994 daily
production of 208 bbls. Natural gas production decreased to 196 mcf per
day in 1995, compared with 208 mcf per day in 1994. Plant products
increased to 55 equivalent mcf per day in 1995, compared with 1994 daily
production of 26 equivalent mcf. During the first half of 1994, gas was
sold at the wellhead rather than processed for economic reasons, which
resulted in the increase for 1995. Average crude oil, natural gas, and
plant product prices in 1995 were $16.74 per bbl, $1.65 per mcf, and $1.40
per equivalent mcf, respectively, compared to $15.40 per bbl, $1.99 per mcf
and $1.23 per equivalent mcf, respectively, for the same period in 1994.
Lease operating expense of $295,856 increased by 23% compared to the
same period in 1994. This increase of $56,261 is the result of additional
operating requirements as the properties mature, including environmental
and safety costs, irrespective of production declines. Depreciation,
depletion and amortization expense decreased by 18% or $29,865 due to
decreased oil and gas sales in 1995 as compared to the same period in
1994. Production tax expense of $137,473 decreased by 1% from 1994, again
due to decreased oil and gas sales in 1995. Interest expense of $107,158
increased by 24% due to rising interest rates in 1995. The Partnership
reported marketing deductions of $18,066 for 1995, a decrease of $10,486 or
37% as compared to marketing deductions of $28,552 for 1994.
Financial Condition and Liquidity
Cash Flow from Operations
Net cash provided by operating activities was $1,143,232 in 1996, an
increase of $752,801 or 193% when compared to 1995. The increase was
primarily the result of higher oil and gas revenues. Cash flow provided
from operating activities in 1995 decreased 33% or $189,449 when compared
to 1994, the result of lower oil and gas revenues.
Capital Resources
There were capital expenditures for property additions of $939,608 in
1996 as compared with capital expenditures of $666 and $178,843 in 1995 and
1994, respectively. The Partnership has made no immediate plans for
additional exploratory or developmental capital programs, except those
necessary to maintain well productivity.
Financing Activities and Financial Condition
There were no cash proceeds distributed to the Limited Partners during
1996. The General Partner's contribution (allocated share of costs and
expenses incurred) and distributions (allocated share of revenues
collected) were $346,099 and $891,204, respectively.
As a result of the deficit capital position of the Limited Partners'
interests, all net cash flows attributable to the Limited Partners' share
of the Partnership's operations are presently applied entirely against its
indebtedness for past funds advanced by the General Partner and are not
available to fund Partnership needs. Funds required by the Partnership in
excess of those generated by operations will be advanced by the General
Partner.
The Partnership's financial condition and operating results will be
materially affected by any significant fluctuations in sales prices for oil
and gas production. The Limited Partners' ability to reimburse funds
advanced by the General Partner will be similarly affected. The
Partnership cannot predict the prices it will receive in 1997 and future
years for its crude oil and natural gas.
ITEM 8 - Financial Statements and Supplementary Data
The response to this item is submitted as a separate section in Part IV
of this report.
ITEM 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
On June 20, 1995, the General Partner's Board of Directors approved a
change in the Registrant's certified independent accountants from Hein +
Associates LLP to Ernst & Young LLP as reported on Form 8-K dated June 21,
1995.
PART III
ITEM 10 - Directors and Executive Officer of the Registrant
The Partnership has no officers or directors. The management of the
General Partner is vested in a Board of Directors consisting of four
members. The following persons currently serve as members of the Board of
Directors and/or principal executive officers:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Charles C. Gates 75 Chairman of the Board
Robert L. Kubik 52 President & Chief Executive Officer
(Resigned effective February 28, 1997)
Diane Gates Wallach 42 Director & Secretary
Brown W. Cannon, Jr. 52 Director
Brad Fisher 35 Senior Vice President, Operations
Dan R. Taylor 40 Vice President, Accounting & Finance
</TABLE>
Charles C. Gates is Chairman of the Board of CODY ENERGY, INC. He
also served as Chairman of the Board and Chief Executive Officer of The
Gates Corporation, the parent company to CODY ENERGY, INC., until July,
1996. Mr. Gates attended Massachusetts Institute of Technology and
Stanford University where he obtained a Bachelor of Science degree in
Engineering. He also received an Honorary Doctorate of Engineering from
the Colorado School of Mines and Michigan Technological University.
Robert L. Kubik is a Director and President of CODY ENERGY, INC. Mr.
Kubik joined the Gates Corporation in 1986 as Assistant General Counsel and
Director of Corporate Real Estate. Qualified as a lawyer, he has over 19
years of oil industry experience with Amerada Hess, Energy Management and
Mobil Oil. Mr. Kubik received a Bachelor of Science degree from Ball State
University and a Juris Doctorate Degree from Indiana University School of
Law. He is also a member of IPAMS, Denver and Colorado Bar Associations,
and the American Corporate Counsel Association.
Diane Gates Wallach was appointed Director of CODY ENERGY, INC. in
May, 1996. She was also a Director of The Gates Corporation from August,
1992 to July, 1996 and is a Trustee of The Gates Foundation and Colorado
Outward Bound. Ms. Wallach received a Masters of Business Administration
and a Bachelor of Science degree from Stanford University.
Brown W. Cannon, Jr. was appointed Director of CODY ENERGY, INC. in
May, 1996 and also served as a Director of The Gates Corporation from
August, 1992 until July, 1996. He is also a Trustee of the Denver Museum
of Natural History, a director of the National Western Stock Show and a
former chairman of Colorado Outward Bound. Mr. Cannon is a graduate of the
University of Arizona.
Brad Fisher is Senior Vice President of Operations for CODY ENERGY,
INC. in 1994. Prior to his association with CODY ENERGY, INC., he was with
Ultramar Oil and Gas, Limited, last holding the position of Vice President
of Exploration and Production. Mr. Fisher received a Bachelor of Science
degree in Petroleum Engineering from Texas A&M University in 1983.
Dan R. Taylor is Vice President of Finance and Accounting for CODY
ENERGY, INC. He is a Certified Public Accountant with over ten years of
professional accounting experience, primarily in the oil and gas industry.
Mr. Taylor received his Bachelor of Business Administration degree in
Accounting and Information Systems from the University of Texas in 1984 and
his Bachelor of Science degree in Natural Resource Planning from the
University of Southern Mississippi in 1978.
ITEM 11 - Executive Compensation
The Partnership has no officers or directors.
ITEM 12 - Security Ownership of Certain Beneficial Owners and Management
At December 31, 1996, the General Partner owned 46.2% of the Limited
Partner interests. No Limited Partner owned, of record or beneficially,
more than 5% of the Limited Partnership interests.
The General Partner has a 50% interest in all of the Partnership's oil
and gas revenues and, upon liquidation, a 50% interest in the Partnership's
properties as provided under the terms of the Articles of Limited
Partnership.
As of March 1997, officers and directors of the General Partner owned
none of the Limited Partnership interests in the Partnership.
ITEM 13 - Certain Relationships and Related Transactions
In accordance with the provisions of the Articles of Limited
Partnership, the Partnership annually reimbursed the General Partner
$247,650 in 1996, 1995, and 1994 for indirect administrative and overhead
expenses attributable to the operations of the Partnership. Excluding
special costs (reserve report preparation, tax reporting-related costs,
audit costs and printing costs attendant to Limited Partner reports), which
are allocated 99% to the Limited Partners and 1% to the General Partner,
general and administrative expenses are allocated 50% to the Limited
Partners and 50% to the General Partner.
The General Partner acts as operator for all seven Partnership wells.
PART IV
ITEM 14 - Financial Statements, Schedules, Exhibits Filed and
Reports on Form 8-K
A. Documents Filed
1. Financial Statements
Independent Auditors' Reports
Balance Sheets - December 31, 1996 and 1995
Statements of Operations for the Years Ended December 31, 1996, 1995
and 1994
Statements of Changes in Partners' Capital (Deficit) for the Years
Ended December 31, 1996, 1995 and 1994
Statements of Cash Flows for the Years Ended December 31, 1996, 1995
and 1994
Notes to Financial Statements
2. Exhibits Filed
The following documents are included as exhibits to the Annual Report
on Form 10-K. Those exhibits listed below which are incorporated by
reference herein are indicated as such by the information supplied in
the parenthetical reference thereafter.
4.1- Restated Limited Partnership Agreement. (Filed as Exhibit 4.1
to Registration Statement No. 2-70303 and incorporated herein
by reference.)
4.2- Restated Certificate of Limited Partnership for C&K 1981 Fund-
A, Ltd. filed in Texas. (Filed as Exhibit 4.2 to Registration
Statement No. 2-70303 and incorporated herein by reference.)
4.3- Form of Subscription Agreement. (Filed as Exhibit 4.4 to
Registration Statement No. 2-70303 and incorporated herein by
reference.)
B. Reports on Form 8-K
On June 21, 1995, the Partnership filed a Form 8-K (Commission
No. 0-10268 and Internal Revenue Service Identification No. 76-
0307703), which was received by the Securities and Exchange
Commission on June 21, 1995 and incorporated herein by
reference, in which it reported a change in the Registrant's
certified independent accountants.
<PAGE>
Report of Independent Auditors
The Partners of C&K 1981 Fund-A, Ltd.:
We have audited the balance sheets of C&K 1981 Fund-A, Ltd. as of December
31, 1996 and 1995, and the related statements of operations, partners'
capital (deficit) and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of C&K 1981 Fund-A, Ltd.
at December 31, 1996 and 1995, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that C&K
1981 Fund-A, Ltd. will continue as a going concern. As discussed in Note 7
to the financial statements, the Partnership has a working capital
deficiency and funds required by the Partnership in excess of those
generated by operations attributable to certain partner interests will be
advanced by the General Partner. The General Partner is currently
considering either transferring its limited partner and general partner
interests in the Partnership, or 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. These conditions raise substantial doubt about the
Partnership's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Ernst & Young LLP
Ernst & Young LLP
Denver, Colorado
March 8, 1997
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Partners of
C&K 1981 Fund-A, Ltd.:
We have audited the accompanying balance sheet of C&K 1981 Fund-A, Ltd. (a
Texas Limited partnership) as of December 31, 1994 and the related
statements of operations, partners' capital (deficit) and cash flows for
each of the two years in the period ended December 31, 1994. These
financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of C&K 1981 Fund-A, Ltd.,
as of December 31, 1994 and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that C&K
1981 Fund-A, Ltd. will continue as a going concern. As discussed in Note 7
to the financial statements, the Partnership has a net capital deficiency
and funds required by the Partnership in excess of those generated by
operations attributable to certain partner interests will be advanced by
the General Partner. The General Partner is currently considering either
transferring its limited partner and general partner interests in the
Partnership, or 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. These
conditions raise substantial doubt about the Partnership's ability to
continue as a going concern. The accompanying financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
Hein + Associates LLP
Houston, Texas
March 13, 1995
<PAGE>
C&K 1981 FUND-A, LTD.
(A Texas Limited Partnership)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31,
1996 1995
<S> <C> <C>
Oil and gas properties and equipment,
at cost, using the full cost
method of accounting $ 21,881,166 $ 20,941,558
Less: Accumulated depreciation,
depletion and amortization (20,632,021) (20,270,615)
1,249,145 670,943
Total Assets $ 1,249,145 $ 670,943
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
<S> <C> <C>
Accrued liabilities $ 10,991 $ 9,973
Current payable to General Partner 400,000 135,301
Long-term payable to General Partner 811,381 734,599
Total Liabilities 1,222,372 879,873
Contingency (Note 7)
Partners' Capital (Deficit):
General Partner 211,117 184,921
Limited Partners (229,536) (453,932)
Combining adjustment 45,192 60,081
Total Partners' Capital (Deficit) 26,773 (208,930)
Total Liabilities and Partners'
Capital (Deficit) $ 1,249,145 $ 670,943
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
<PAGE>
C&K 1981 FUND-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Revenues:
Oil and gas sales $2,038,016 $1,210,563 $1,332,719
Expenses:
Lease operating 262,395 295,856 239,595
Production tax 243,458 137,473 138,881
Marketing deductions 12,150 18,066 28,552
Depreciation, depletion and
amortization 361,406 139,248 169,113
General and administrative 264,097 261,552 269,200
Interest - Affiliated 113,702 107,158 86,611
1,257,208 959,353 931,952
Net income $ 780,808 $ 251,210 $ 400,767
Net income (loss) allocation:
General Partner $ 571,301 $ 217,068 $ 290,757
Limited Partners 224,396 46,605 123,970
Combining adjustment (14,889) (12,463) (13,960)
Net income $ 780,808 $ 251,210 $ 400,767
Net income per limited
partnership unit
(3,302 outstanding) $ 67.96 $ 14.11 $ 37.54
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
<PAGE>
C&K 1981 FUND-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
Combining
General Limited Adjustment
Partner Partners (Note 3) Total
<S> <C> <C> <C> <C>
Balance at
January 1, 1994 $ 234,610 $(624,507) $ 86,504 $(303,393)
Contributions 281,196 -- -- 281,196
Distributions (582,643) -- -- (582,643)
Net income (loss) 290,757 123,970 (13,960) 400,767
Balance at
December 31, 1994 $ 223,920 $(500,537) $ 72,544 $(204,073)
Contributions 271,444 -- -- 271,444
Distributions (527,511) -- -- (527,511)
Net income (loss) 217,068 46,605 (12,463) 251,210
Balance at
December 31, 1995 $ 184,921 $(453,932) $ 60,081 $(208,930)
Contributions 346,099 -- -- 346,099
Distributions (891,204) -- -- (891,204)
Net income (loss) 571,301 224,396 (14,889) 780,808
Balance at
December 31, 1996 $ 211,117 $(229,536) $ 45,192 $ 26,773
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
<PAGE>
C&K 1981 FUND-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Cash flows from
operating activities:
Net income $ 780,808 $ 251,210 $400,767
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation, depletion and
amortization 361,406 139,248 169,113
Changes in operating assets
and liabilities:
(Decrease) increase in accrued
liabilities 1,018 (27) 10,000
Net cash provided by
operating activities: 1,143,232 390,431 579,880
Cash flows from investing activities:
Additions to oil and gas
properties and equipment (939,608) (666) (178,843)
Net cash used in
investing activities: (939,608) (666) (178,843)
Cash flows from financing activities:
Increase (Decrease) in payable to
General Partner 341,481 (133,698) (99,590)
Distributions to General Partner (891,204) (527,511) (582,643)
Contributions by General Partner 346,099 271,444 281,196
Net cash used in
financing activities (203,624) (389,765) (401,037)
Net increase (decrease) in cash -- -- --
Cash at beginning of year -- -- --
Cash at end of year -- -- --
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
<PAGE>
C&K 1981 FUND-A, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The C&K 1981 Fund-A, Ltd. (the "Partnership"), a Texas Limited
Partnership, was organized on December 16, 1980, to acquire, explore,
develop and operate onshore oil and gas properties in the United States and
commenced operations on May 12, 1981. Total initial Limited Partner
contributions were $8,255,000 including $100,000 contributed by C&K
Petroleum, Inc. ("C&K"), the initial General Partner.
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, a Wyoming limited liability company ("WCLLC"), 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, CRI. 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
from 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.
New Accounting Standard
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" (SFAS No. 121), which requires impairment losses to be recorded on
long-lived assets used in operations when indications of impairment are
present. The Company adopted SFAS No. 121 during 1996, with no impact on
its financial statements.
Contributions and Distributions
Contributions by the General Partner, as presented in the Statements
of Changes in Partners' Capital (Deficit), 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.
Net Income per Limited Partnership Unit
Net income per limited partnership unit is computed by obtaining the
Limited Partner net income (see Statements of Changes in Partners' Capital
(Deficit)) and dividing by the total limited partnership units outstanding.
Payable to the General Partner
The Partnership's payable to the General Partner is the Limited
Partners' obligation for their share of costs, arising from Partnership
operations, which are funded entirely by the General Partner. The current
portion of the liability is the amount estimated to be collectible from the
Limited Partners' net operating revenues over the current operating cycle
(one year).
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 and 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.
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 - SALES TO MAJOR CUSTOMERS
Sales to major customers are summarized in the table below:
<TABLE>
<CAPTION>
1996 1995 1994
Purchasers Sales % Sales % Sales %
<S> <C> <C> <C>
Enron Capital and
Trade $ 695,978 34 $ -- -- $ -- --
Texaco Trading and
Transportation 1,096,983 54 1,043,197 86 1,150,702 86
Williams Gas
Marketing 201,825 10 118,014 10 151,715 11
</TABLE>
Since June 1, 1993, Williams Gas Marketing 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
REVENUES
<S> <C> <C>
Sales 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
</TABLE>
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 has been increased by the amount that his share
of unamortized costs exceeded the capitalization ceiling. During 1996,
1995 and 1994, the net capitalized costs of the Partnership's oil and gas
properties did not exceed the capitalization ceiling.
The combining adjustment included in partners' capital of $45,192 and
$60,081 at December 31, 1996 and 1995, respectively, represents the
difference resulting from computing the full cost ceiling test 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. In addition to the 40 units
purchased by the General Partner for their initial capital contribution, a
total of 1,229.50 units have been purchased from Limited Partners as of
December 31, 1995. At January 1, 1996, the General Partner calculated a
purchase price of $78.11 per limited partner unit. During the Presentment
period, ninety-five Limited Partners tendered 296.25 units, for which the
General Partner expended $23,140.09 for the purchase of those units. At
December 31, 1996, the General Partner owned a total of 1,525.75 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 $247,650 in 1996, 1995, and 1994.
After such time as total contributions from the Limited Partners have
been expended, the General Partner may advance funds to the Limited
Partners for their share of costs and expenses for continuing operations.
Interest was charged to the Limited Partners on such advances at a rate
which approximated 9%, 10%, and 8% in 1996, 1995 and 1994, respectively.
The General Partner is reimbursed for funds advanced to the Limited
Partners from revenues otherwise allocable to the Limited Partners.
NOTE 6 - INCOME TAXES
Income taxes are not levied at the Partnership level, but rather on the
individual partners; therefore, no provision or 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.
Set forth below is a reconciliation between net income for financial
and federal income tax reporting purposes for the years ended December 31,
1996, 1995 and 1994.
<TABLE>
<CAPTION>
Year ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Net income for financial
reporting purposes $ 780,808 $251,210 $ 400,767
Increase (decrease) in taxable
net income resulting from:
Depreciation, depletion and
amortization of oil and gas
properties for financial
reporting purposes not deductible
for income tax purposes 361,406 139,248 169,113
Depreciation of oil and gas
properties for income tax
purposes not included as
expenses for financial
reporting purposes (20,854) (52,624) (89,410)
Oil and gas exploration and
development costs capitalized
for financial reporting purposes
but deducted for income
tax purposes (857,022) (666) (149,919)
Other revenues recognized for
income tax purposes
amortized for financial
reporting purposes -- -- 499
Net income as reported for federal
income tax purposes $ 264,338 $337,168 $ 331,050
Net income as reported for federal
income tax purposes applicable
to the General Partner $ 608,962 $216,027 $ 258,361
Net income (loss) as reported for
federal income tax purposes
applicable to Limited Partners $(344,624) $121,141 $ 72,689
</TABLE>
NOTE 7 - CONTINGENCY
The Partnership has a working capital deficiency. As a result of the
working capital deficiency of the Limited Partners' interests, all net cash
flows attributable to the Limited Partners' share of the Partnership's
operations are presently applied entirely against their indebtedness for
past funds advanced by the General Partner and are not available to fund
Partnership needs. Funds required by the Partnership in excess of those
generated by operations will be advanced by the General Partner.
The General Partner is currently considering either transferring its
limited partner and general partner 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. These conditions raise
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 continue advancing 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.
NOTE 8 - SUPPLEMENTAL DATA OF OIL AND GAS OPERATIONS
Costs Incurred in Oil and Gas Property Acquisition, Exploration and
Development Activities
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Property Acquisition Costs $ -- $ -- $ --
Exploration Costs -- -- --
Development Costs 939,608 666 178,843
Total Costs $ 939,608 $ 666 $ 178,843
</TABLE>
Results of Operations from Oil and Gas Producing Activities
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Revenues $ 2,038,016 $1,210,563 $ 1,332,719
Production (lifting) costs (505,853) (433,329) (378,476)
Depreciation, depletion and
amortization expense (361,406) (139,248) (169,113)
Results of operations from oil
and gas producing activities $ 1,170,757 $ 637,986 $ 785,130
Depreciation, depletion and
amortization per dollar of
gross revenues $ 0.18 $ 0.12 $ 0.13
</TABLE>
Capitalized Costs Relating to Oil and Gas Producing Properties
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Proved properties $ 21,881,166 $ 20,941,558 $ 20,940,892
Accumulated depreciation,
depletion and amortization (20,632,021) (20,270,615) (20,131,367)
Net capitalized costs $ 1,249,145 $ 670,943 $ 809,525
</TABLE>
Estimated Oil and Gas Reserve Quantities (Unaudited)
The following is an analysis of the Partnership's interest in net
quantities of proved oil and gas reserves which are all located in onshore
areas of the United States. Quantities are based on estimates of proved
reserves furnished by Netherland, Sewell and Associates, Inc., independent
petroleum engineers, pursuant to rules set by the Securities and Exchange
Commission. Estimates of proved reserves are inherently imprecise and are
even more imprecise for newly discovered reserves than for reserves with
long production histories. As a result, subsequent development and
production of the Partnership's reserves may result in revisions of such
estimates.
Certain information related to the standardized measure of oil and gas
reserves has not been included in the supplemental data on oil and gas
operations. The General Partner has elected the exclusion available to
limited partnerships when such reserve information is provided annually to
the Limited Partners. The supplemental reserve information is provided to
the Limited Partners on an annual basis.
Total Proved Reserves
<TABLE>
<CAPTION>
Oil Gas
(In BBLS) (In MCF)
<S> <C> <C>
As of December 31, 1993 363,865 1,171,880
Revisions of previous estimates 63,575 (256,781)
Extensions, discoveries and purchases 2,982 182,971
Production (75,955) (85,462)
As of December 31, 1994 354,467 1,012,608
Revisions of previous estimates 79,922 (335,759)
Production (63,582) (91,746)
As of December 31, 1995 370,807 585,103
Revisions of previous estimates (39,903) (59,780)
Extensions, discoveries and purchases 13,661 15,846
Production (85,132) (89,690)
As of December 31, 1996 259,433 451,479
</TABLE>
The natural gas volumes (mcf) of 451,479 as of December 31, 1996,
disclosed above, include 113,190 equivalent mcf related to plant products.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: March 26, 1997 C&K 1981 Fund-A, Ltd.
(Registrant)
By:/s/ Charles C. Gates
Charles C. Gates
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons, which include
the Chief Executive Officer, the Chief Financial Officer, the Chief
Accounting Officer and a majority of the Board of Directors, on behalf of
the Registrant and in the capacities and on the date above indicated:
/s/ Diane Gates Wallach /s/ Brown W. Cannon, Jr.
Diane Gates Wallach Brown W. Cannon, Jr.
Director & Secretary Director
/s/ Brad Fisher /s/ Dan R. Taylor
Brad Fisher Dan R. Taylor
Senior Vice President, Operations Vice President, Accounting & Finance
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 21,881,166
<DEPRECIATION> 20,632,021
<TOTAL-ASSETS> 1,249,145
<CURRENT-LIABILITIES> 410,991
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 26,773
<TOTAL-LIABILITY-AND-EQUITY> 1,249,145
<SALES> 2,038,016
<TOTAL-REVENUES> 2,038,016
<CGS> 0
<TOTAL-COSTS> 1,257,208
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 113,702
<INCOME-PRETAX> 780,808
<INCOME-TAX> 0
<INCOME-CONTINUING> 780,808
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 780,808
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
