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 0-10269
C&K 1981 FUND-B, LTD.
(Exact name of registrant as specified in its charter)
Texas 76-0307699
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7555 East Hampden Ave., 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(g) OF THE ACT:
Name of Each Exchange
Title of Each Class Which Registered
None None
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 48
Texas 1,647 180
Totals 1,967 228
</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 production (derived from
natural gas) has been converted on the basis of 1 bbl of plant product
equals 6 mcf.
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Natural Gas:
Production (mcf) 43,043 47,385 55,672
Average Sales Price per mcf $2.46 $1.57 $1.96
Plant Products:
Production (mcf) 15,054 20,171 9,405
Average Sales Price per mcf $2.08 $1.40 $1.23
Oil:
Production (bbl) 26,203 19,931 23,780
Average Sales Price per bbl $21.19 $16.76 $15.40
Composite Production Cost per BOE $4.78 $5.12 $4.07
</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 (.93 net) productive wells, 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 $283,069 and increased the Partnership reserve base by
4,098 bbls of oil and 4,753 mcf of gas.
The Partnership did not participate in any drilling activity during
1995. During 1994, the Partnership participated in the drilling of the
Mestena E-18 well which cost the Partnership $171,281 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 pending legal proceedings to which the
Partnership is a party nor to which any of its properties are 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
Stockholders 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 592
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 $ 692,163 $ 436,487 $ 486,768
Production Costs
and Taxes 171,525 159,175 141,000
Oil and Gas Sales, Net of
Production Costs and Taxes 520,638 277,312 345,768
Net Loss from
Continuing Operations (130,667) (297,411) (195,065)
Net Income (Loss) per
Consenting Limited
Partnership unit 1 (20) (16)
Net Loss per Nonconsenting
Limited Partnership unit (206) (213) (146)
Total Assets 625,483 486,369 549,929
Short-Term Obligations 14,833 16,823 62,193
Long-Term Obligations 2,435,366 2,075,630 1,806,526
</TABLE>
<PAGE>
ITEM 6 - Selected Financial Data (continued)
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992
<S> <C> <C>
Oil and Gas Sales $ 776,694 $1,107,442
Production Costs
and Taxes 189,844 196,903
Oil and Gas Sales, Net of
Production Costs and Taxes 586,850 910,539
Net Income from
Continuing Operations 70,271 335,320
Net Income per Consenting
Limited Partnership unit 22 58
Net Loss per Nonconsenting
Limited Partnership unit (102) (64)
Total Assets 581,184 767,825
Short-Term Obligations 176,838 252,671
Long-Term Obligations 1,469,477 1,506,860
</TABLE>
ITEM 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
1996 Compared to 1995
The Partnership's net loss for the year ended December 31, 1996 was
$130,667, representing a 56% decrease or $166,744 from the net loss
reported for the same period in 1995. The decrease resulted primarily from
increased oil and gas revenues.
Crude oil and natural gas sales for the year ended December 31, 1996
increased $255,676 or 59% compared to the same period in 1995. During
1996, average crude oil prices increased to $21.19 per bbl, compared with
1995 prices of $16.76. Average natural gas prices for 1996 increased to
$2.46 per mcf, compared with 1995 prices of $1.57 per mcf. Average plant
product prices in 1996 increased to $2.08 per equivalent mcf, compared to
1995 prices of $1.40 per equivalent mcf. During 1996, crude oil production
per day increased to 72 bbls compared to 55 bbls per day in 1995. Natural
gas production decreased to 118 mcf per day in 1996, compared to 130 mcf
per day in 1995. Plant products decreased to 41 equivalent mcf per day in
1996, compared to 55 equivalent mcf per day in 1995.
The overall expenses increased in 1996 compared to 1995. Lease
operating expenses decreased by $20,234 or 18% compared to the same period
in 1995, and production taxes and depreciation, depletion and amortization
increased by $32,584 or 72%, and $76,015 or 114%, respectively. The
decrease in operating expenses is the result of additional safety and
environmental costs and the plugging of one well in 1995 which did not
occur in 1996. Interest expense increased by $11,793 or 6%, in 1996, the
result of increased capital expenditures incurred for the drilling of the
McIlhenny #1-Sidetrack #3 well. The Partnership reported marketing
deductions of $12,150 and $18,067 for 1996 and 1995, respectively, a
decrease of $5,917, or 33%, as a result of the decline in gas available to
market.
1995 Compared to 1994
The Partnership's net loss for the year ended December 31, 1995 was
$297,411, representing a 52% increase or $102,346 from the net loss
reported for the same period in 1994. The increase resulted primarily from
declines in oil production and gas prices, and an increase in operating
expenses and interest.
Crude oil and natural gas sales for the year ended December 31, 1995
decreased $50,281 or 10% compared to the same period in 1994. During 1995,
average crude oil prices increased to $16.76 per bbl, compared with 1994
prices of $15.40. Average natural gas prices for 1995 decreased to $1.57
per mcf, compared with 1994 prices of $1.96 per mcf. Average plant product
prices in 1995 increased to $1.40 per equivalent mcf, compared to 1994
prices of $1.23 per equivalent mcf. During 1995, crude oil production per
day decreased to 55 bbls compared to 65 bbls per day in 1994. Natural gas
production decreased to 130 mcf per day in 1995, compared to 153 mcf per
day in 1994. Plant products increased to 55 equivalent mcf per day in
1995, compared to 26 equivalent mcf per day in 1994. 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.
The overall expenses increased in 1995 compared to 1994. Lease
operating expenses increased by $17,768 or 19% compared to the same period
in 1994, and production taxes and depreciation, depletion and amortization
increased by $407 or 1%, and $1,798 or 3%, respectively. Included in lease
operating expenses for 1995 are non-recurring workover costs necessary to
maintain production on two wells of approximately $10,400. The increase in
operating expenses is also the result of additional operating requirements
as the properties mature, including environmental and safety costs,
irrespective of production declines. Interest expense increased by $46,436
or 32%, in 1995, the result of increases in the payables and interest
rates. The Partnership reported marketing deductions of $18,067 and
$28,552 for 1995 and 1994, respectively, a decrease of $10,485, or 37%, as
a result of the decline in gas available to market.
Financial Condition and Liquidity
Cash Flow from Operations
Net cash provided by operating activities was $9,831 in 1996, an
increase of $240,746 or 104% when compared to 1995. The increase is
primarily the result of increased oil and gas revenues. Cash flows used in
operating activities in 1995 were $230,915, as compared to cash used in
operations of $113,590 in 1994.
Capital Resources
During 1996, there were expenditures for property additions of
$279,419 as compared with capital expenditures of $666 in 1995 and $171,281
in 1994. The Partnership has made no immediate plans for additional
exploratory or developmental capital programs in 1997, except those
necessary to maintain well productivity.
Financing Activities and Financial Condition
There were no cash proceeds distributed to the Limited Partners during
1996. For the year ended December 31, 1996, the General Partner's
contributions (allocated share of costs and expenses incurred) and
distributions (allocated share of revenue collected) were $213,033 and
$300,998, respectively.
The Consenting Limited Partners' financing requirements for operating
expenses and capital projects are currently provided by revenues from their
share of the Partnership's operations. The Partnership does not consider
long-term financing arrangements on behalf of the Consenting Limited
Partners, from the General Partner or other sources, as necessary at this
time.
As a result of the deficit capital position of the Nonconsenting
Limited Partners, all net cash flows attributable to the Nonconsenting
Limited Partners' share of the Partnership's operations are presently
applied entirely against their indebtedness for past advances by the
General Partner and are not available to fund Partnership needs. Funds
required by the Partnership in excess of those generated by operations
attributable to the different partner interests 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 20,
1995.
PART III
ITEM 10 - Directors and Executive Officers 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 40.6% of all 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. In addition, the General Partner has a further 13% interest
in the Partnership's oil and gas revenues from wells drilled from the
additional contributions the General Partner made on behalf of
Nonconsenting Limited Partners, subject to a ceiling of 300% ($1,841,250).
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
$279,975 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 of the 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-B, Ltd. filed in Texas. (Filed as Exhibit 4.3 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 20, 1995, the Partnership filed a Form 8-K
(Commission No. 0-10269 and Internal Revenue Service
Identification No. 76-0307699), which was received by the
Securities and Exchange Commission on June 21,1995 and
incorporated herein by reference, relating to the change in
the registrant's certified accountants.
<PAGE>
Report of Independent Auditors
The Partners of C&K 1981 Fund-B, Ltd.:
We have audited the balance sheets of C&K 1981 Fund-B, 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-B, 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-B, 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 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-B, Ltd.
We have audited the accompanying balance sheet of C&K 1981 Fund-B, 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-B, 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-B, 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-B, LTD.
(A Texas Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
December 31,
1996 1995
<S> <C> <C>
Current Assets:
Cash $ 71,783 $ 69,600
Total Current Assets 71,783 69,600
Oil and gas properties and equipment,
at cost, using the full cost
method of accounting 22,969,498 22,690,079
Less: Accumulated depreciation,
depletion and amortization (22,415,798) (22,273,310)
553,700 416,769
Total Assets $ 625,483 $ 486,369
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Accrued liabilities $ 14,833 $ 16,823
Current payable to
General Partner -- --
Long-term payable to
General Partner 2,435,366 2,075,630
Total Liabilities 2,450,199 2,092,453
Contingency (Note 7)
Partners' Capital (Deficit):
General Partner 160,388 178,807
Consenting Limited Partners 210,434 206,681
Nonconsenting Limited Partners (2,195,062) (1,992,702)
Combining adjustment (476) 1,130
Total Partners' Capital (Deficit) (1,824,716) (1,606,084)
Total Liabilities and
Partners' Capital (Deficit) $ 625,483 $ 486,369
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
<PAGE>
C&K 1981 FUND-B, 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 $ 692,163 $ 436,487 $ 486,768
Interest income 2,183 2,247 4,420
694,346 438,734 491,188
Expenses:
Lease operating 93,465 113,699 95,931
Production tax 78,060 45,476 45,069
Marketing deductions 12,150 18,067 28,552
Depreciation, depletion and
amortization 142,488 66,473 64,675
General and administrative 295,851 301,224 307,256
Interest - Affiliated 202,999 191,206 144,770
825,013 736,145 686,253
Net loss $(130,667) $(297,411) $(195,065)
Net income (loss) allocation:
General Partner 69,546 $ (35,269) $ (7,315)
Consenting Limited Partners 3,753 (53,930) (44,776)
Nonconsenting Limited Partners (202,360) (209,480) (143,611)
Combining adjustment (1,606) 1,268 637
Net loss $(130,667) $(297,411) $(195,065)
Net income (loss) per
consenting limited
partnership unit
(2,751 outstanding) $ 1.36 $ (19.60) $ (16.28)
Net loss per nonconsenting
limited partnership unit
(982 outstanding) $ (206.07) $ (213.32) $ (146.24)
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
<PAGE>
C&K 1981 FUND-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
Non-
Consenting Consenting Combining
General Limited Limited Adjustment
Partner Partners Partners (Note 3) Total
<S> <C> <C> <C> <C> <C>
Balance at
Jan. 1, 1994 $ 199,868 $375,387 $(1,639,611) $(775) $(1,065,131)
Contributions 218,025 -- -- -- 218,025
Distributions (206,619) (70,000) -- -- (276,619)
Net income
(loss) (7,315) (44,776) (143,611) 637 (195,065)
Balance at
Dec. 31, 1994 $ 203,959 $ 260,611 $(1,783,222) $(138) $(1,318,790)
Contributions 196,608 -- -- -- 196,608
Distributions (186,491) -- -- -- (186,491)
Net income
(loss) (35,269) (53,930) (209,480) 1,268 (297,411)
Balance at
Dec. 31, 1995 $ 178,807 $ 206,681 $(1,992,702) $1,130 $(1,606,084)
Contributions 213,033 -- -- -- 213,033
Distributions (300,998) -- -- -- (300,998)
Net income
(loss) 69,546 3,753 (202,360) (1,606) (130,667)
Balance at
Dec. 31, 1996 $ 160,388 $ 210,434 $(2,195,062) $ (476) $(1,824,716)
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
<PAGE>
C&K 1981 FUND-B, 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 loss $(130,667) $(297,411) $(195,065)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation, depletion and
amortization 142,488 66,473 64,675
Changes in operating assets
and liabilities:
(Decrease) Increase in
accrued liabilities (1,990) 23 16,800
Net cash provided by (used in)
operating activities 9,831 (230,915) (113,590)
Cash flows from investing activities:
Additions to oil and gas
properties and equipment (279,419) (666) (171,281)
Net cash used in investing
activities (279,419) (666) (171,281)
Cash flows from financing activities:
Increase in payable to
General Partner 359,736 223,711 205,604
Decrease in distribution
payable to Limited Partners -- -- --
Distributions to
Limited Partners -- -- (70,000)
Distributions to
General Partner (300,998) (186,491) (206,619)
Contributions by
General Partner 213,033 196,608 218,025
Net cash provided by
financing activities 271,771 233,828 147,010
Net increase (decrease) in cash 2,183 2,247 (137,861)
Cash at beginning of period 69,600 67,353 205,214
Cash at end of period $ 71,783 $69,600 $ 67,353
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
<PAGE>
C&K 1981 FUND-B, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The C&K 1981 Fund-B, 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 June 1, 1981. Total initial Limited Partner
contributions were $9,332,500 including $100,000 contributed by C&K
Petroleum, Inc. ("C&K"), the initial General Partner. On September 15,
1982, C&K requested the Limited Partners to pay an additional assessment of
$2,333,125, or 25%, of their initial contributions. Of this amount, C&K
paid $613,750 for 209 Limited Partners who declined to pay their share of
the additional assessment ("Nonconsenting Limited Partners").
Nonconsenting Limited Partners are subject to a penalty in an amount equal
to 300% of the additional assessment paid by the 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, Cody Resources, Inc. 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.
Net Income (Loss) per Limited Partnership Unit
Net income (loss) per limited partnership unit is computed by
obtaining the Limited Partners net income (loss) (see Statements of Changes
in Partners' Capital (Deficit)) and dividing by the total limited
partnership units outstanding.
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. Distributions to Limited Partners represent periodic payments of
available cash, as determined in accordance with the terms of the
Partnership Agreement.
Payable to the General Partner
The long-term payable to the General Partner is the Nonconsenting
Limited Partners' obligation to the General Partner for their share of
costs, arising from Partnership operations, which are funded entirely by
the General Partner. The current portion of the liability includes the
amount estimated to be collectible from the Nonconsenting Limited Partners'
net operating revenues over the current operating cycle (one year) and
certain other amounts due from the Consenting Limited Partners.
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.
n
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>
Purchasers 1996 1995 1994
Sales % Sales % Sales %
<S> <C> <C> <C> <C> <C> <C>
Enron Capital and
Trading $214,149 31 $ -- -- $ -- --
Texaco Trading and
Transportation 329,095 48 312,958 72 277,630 57
Williams Gas
Marketing 105,689 15 74,178 17 93,742 19
</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>
As discussed in Note 1, the General Partner paid $613,750 of the
additional assessment for 209 Limited Partners (the Nonconsenting Limited
Partners) who declined to pay their share of the additional assessment.
Each such Nonconsenting Limited Partner's interest in the costs and
revenues of the Assessment Operations was suspended and accrues to the
benefit of the General Partner until Partnership revenues, less expenses,
related to the production of such revenues attributable to the Assessment
Operations, in an amount equal to 300% ($1,841,250) of the additional
assessment have been credited to the General Partner. As of December 31,
1996, $1,006,002 of revenue in excess of expenses has been allocated to the
General Partner.
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 provision 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 $(476) and
$1,130 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 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 1,359.50 units had been purchased from Limited Partners as of
December 31, 1995.
At January 1, 1996, the General Partner calculated a purchase price of
$124.58 per unit for those Limited Partners who paid the additional
assessment ("Consenting Limited Partners"). One hundred sixteen Consenting
Limited Partner units were purchased for a total of $14,451.28 in 1996 from
forty-one Consenting Limited Partners. The purchase price calculations for
the Nonconsenting Limited Partners have not resulted in positive amounts
and, therefore, the General Partner has not offered to purchase such units
during 1996. At December 31, 1996, the General Partner owned a total of
1,515.50 Consenting Limited Partnership 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 $279,975 in 1996, 1995 and 1994.
No cash distributions were made during 1996 or 1995. In 1994, the
Partnership made a cash distribution of $70,000 to the Consenting Limited
Partners for their proportionate share of cash funds credited to their
capital accounts which was in excess of the amounts necessary to meet such
Partners' share of the existing or future obligations of the Partnership.
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 loss for financial
reporting purposes $(130,667) $(297,411) $(195,065)
Increase (decrease) in taxable net
income resulting from:
Depreciation, depletion and
amortization for financial
reporting purposes not deductible
for income tax purposes 142,488 66,473 64,675
Depreciation of oil and gas
properties for income tax
purposes not included as expenses
for financial reporting purposes (8,453) (8,680) (7,328)
Oil and gas exploration and
development costs capitalized for
financial reporting purposes but
deducted for income tax purposes (256,172) (666) (142,360)
Net gain on sale of equipment -- -- 499
Net loss as reported for federal
income tax purposes $(252,804) $(240,284) $(279,579)
Net income (loss) as reported for
federal income tax purposes
applicable to the General Partner $ 110,816 $ (14,585) $ (24,425)
Net loss as reported for federal
income tax purposes applicable
to Consenting Limited Partners $(112,702) $ (22,953) $(104,286)
Net loss as reported for federal
income tax purposes applicable
to Nonconsenting Limited Partners $(250,918) $(202,746) $(150,868)
</TABLE>
NOTE 7 - CONTINGENCY
The Partnership has a net capital deficiency. As a result of the
deficit capital position of the Nonconsenting Limited Partners, all net
cash flows attributable to the Nonconsenting Limited Partners' share of the
Partnership's operations are presently applied entirely against their
indebtedness for past advances by the General Partner and are not available
to fund Partnership needs. Funds required by the Partnership in excess of
those generated by the operations attributable to different 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,
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 1996 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 279,419 666 171,281
Total costs $279,419 $ 666 $ 171,281
Results of Operations from Oil and Gas Producing Activities
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Revenues $692,163 $ 436,487 $ 486,768
Production (lifting) costs (171,525) (159,175) (141,000)
Depreciation, depletion and
amortization (142,488) (66,473) (64,675)
Results of operations from oil
and gas producing activities 378,150 $ 210,839 $ 281,093
Depreciation, depletion and
amortization per dollar of
gross revenues $ 0.21 $ 0.15 $ 0.13
</TABLE>
Capitalized Costs Relating to Oil and Gas Producing Properties
<TABLE>
<CAPTION>
December 31,
1996 1995 1994
<S> <C> <C> <C>
Proved properties $22,969,498 $ 22,690,079 $ 22,689,413
Accumulated depreciation,
depletion and amortization (22,415,798) (22,273,310) (22,206,837)
Net capitalized costs $ 553,700 $ 416,769 $ 482,576
</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.
<TABLE>
<CAPTION>
Total Proved Reserves
Oil Gas
(In BBLS) (In MCF)
<S> <C> <C>
As of December 31, 1993 120,473 1,027,980
Revisions of previous estimates 17,461 (192,266)
Extensions, discoveries & purchases 2,982 182,971
Production (23,780) (65,077)
As of December 31, 1994 117,136 953,608
Revisions of previous estimates 20,000 (416,965)
Production (19,931) (67,556)
As of December 31, 1995 117,205 469,087
Extensions, Discoveries and Purchases 4,098 4,753
Revisions of previous estimates (11,609) (39,452)
Production (26,203) (58,097)
As of December 31, 1996 83,491 376,291
</TABLE>
The natural gas volumes (mcf) of 376,291 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-B, 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
<PAGE>
<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> 71,783
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 71,783
<PP&E> 22,969,498
<DEPRECIATION> 22,415,798
<TOTAL-ASSETS> 625,483
<CURRENT-LIABILITIES> 14,833
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (1,824,716)
<TOTAL-LIABILITY-AND-EQUITY> 625,483
<SALES> 692,163
<TOTAL-REVENUES> 694,346
<CGS> 0
<TOTAL-COSTS> 825,013
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 130,667
<INTEREST-EXPENSE> 202,999
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
