FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1997
OR
{ } 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 Avenue, Suite 600,
Denver, Colorado 80231
(Address of principal executive offices) (Zip Code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Name of Each Exchange
Title of Each Class Which Registered
None None
Registrant's telephone number, including area code: 303-695-3600
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
The C&K 1981 Fund-B, Ltd. is a Texas limited partnership.
<PAGE>
INDEX TO FORM 10-Q
C&K 1981 Fund-B, Ltd.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
June 30, 1997 and December 31, 1996
Statements of Operations
Three months and six months ended June 30, 1997 and 1996
Statements of Changes in Partners' Capital (Deficit)
Six months ended June 30, 1997 and 1996
Statements of Cash Flows
Six months ended June 30, 1997 and 1996
Notes to the Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
<PAGE>
C&K 1981 FUND-B, LTD.
(A Texas Limited Partnership)
BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
<S> <C> <C>
Current Assets:
Cash $ 72,679 $ 71,783
Total Current Assets 72,679 71,783
Oil and gas properties and equipment,
at cost, using the full cost
method of accounting 22,973,621 22,969,498
Less: Accumulated depreciation,
depletion and amortization (22,480,796) (22,415,798)
492,825 553,700
Total Assets $ 565,504 $ 625,483
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Accrued liabilities $ 9,816 $ 14,833
Long-term payable to General Partner 2,497,332 2,435,366
Total Liabilities 2,507,148 2,450,199
Partners' Capital (Deficit):
General Partner 144,565 160,388
Consenting Limited Partners 220,149 210,434
Nonconsenting Limited Partners (2,306,707) (2,195,062)
Combining adjustment 349 (476)
Total Partners' Capital (Deficit) (1,941,644) (1,824,716)
Total Liabilities and
Partners' Capital (Deficit) $ 565,504 $ 625,483
</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
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales $162,107 $154,671 $381,319 $290,271
Interest income 451 569 895 1,141
162,558 155,240 382,214 291,412
Expenses:
Lease operating 38,183 37,422 75,103 53,324
Production tax 13,422 16,379 37,827 33,824
Marketing deductions 2,275 2,730 2,954 6,351
Depreciation, depletion and
amortization 28,706 34,224 64,998 52,668
General and administrative 74,194 73,884 148,257 144,136
Interest - Affiliated 55,421 49,409 107,672 97,739
212,201 214,048 436,811 388,042
Net loss $(49,643) $(58,808) $(54,597) $(96,630)
Net income (loss) allocation:
General Partner $ 11,623 $ 1,786 $ 46,508 $ 8,305
Consenting Limited Partners (2,320) (9,315) 9,715 (6,183)
Nonconsenting
Limited Partners (59,393) (50,810) (111,645) (98,175)
Combining adjustment 447 (469) 825 (577)
Net loss $(49,643) $(58,808) $(54,597) $(96,630)
Net income (loss) per consenting
limited partnership unit
(2,751 outstanding) $ (0.84) $ (3.39) $ 3.53 $ (2.25)
Net loss per nonconsenting
limited partnership unit
(982 outstanding) $ (60.48) $ (51.74) $(113.69) $ (99.97)
</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)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30, 1996
Non-
Consenting Consenting Combining
General Limited Limited Adjustment
Partner Partners Partners (Note 3) Total
<S> <C> <C> <C> <C> <C>
Balance at
January 1, 1996 $178,807 $206,681 $(1,992,702) $1,130 $(1,606,084)
Contributions 122,364 -- -- -- 122,364
Distributions (125,059) -- -- -- (125,059)
Net income (loss) 8,305 (6,183) (98,175) (577) (96,630)
Balance at
June 30, 1996 $184,417 $200,498 $(2,090,877) $ 553 $(1,705,409)
Six months ended June 30, 1997
Non-
Consenting Consenting Combining
General Limited Limited Adjustment
Partner Partners Partners (Note 3) Total
Balance at
January 1, 1997 $160,388 $210,434 $(2,195,062) $ (476) $(1,824,716)
Contributions 107,947 -- -- -- 107,947
Distributions (170,278) -- -- -- (170,278)
Net income (loss) 46,508 9,715 (111,645) 825 (54,597)
Balance at
June 30, 1997 $144,565 $220,149 $(2,306,707) $ 349 $(1,941,644)
</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
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net loss $(54,597) $(96,630)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation, depletion
and amortization 64,998 52,668
Changes in operating assets
and liabilities:
Increase in payable to General Partner 61,966 332,590
Decrease in accrued liabilities (5,017) (11,817)
Net cash provided by operating activities 67,350 276,811
Cash flows from investing activities:
Additions to oil and gas properties
and equipment (4,123) (272,975)
Net cash used in investing activities (4,123) (272,975)
Cash flows from financing activities:
Distributions to General Partner (170,278) (125,059)
Contributions by General Partner 107,947 122,364
Net cash used in financing activities (62,331) (2,695)
Net increase in cash 896 1,141
Cash at beginning of period 71,783 69,600
Cash at end of period $ 72,679 $ 70,741
</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
(Unaudited)
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 ("WCLLC"), a Wyoming limited liability company owned by
Williams Gas Management Company ("WGMan") and Cody Resources, Inc.
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 was the surviving corporation and, pursuant to the
authority provided in the Partnership Agreement, managed and controlled
the Partnership's affairs and was responsible for the activities of the
Partnership.
On January 1, 1997, CODY created two new subsidiary companies to
hold its Texas assets. To the first company, CODY TEXAS, L.P., a Texas
limited partnership ("CODY TEXAS"), CODY transferred its interest in the
Partnership, with CODY TEXAS becoming the successor general partner of
the Partnership. The second company, Cody Oil and Gas, Inc., a wholly
owned subsidiary of CODY, serves as the general partner of CODY TEXAS.
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 Partnership 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.
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, 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.
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.
Reclassification
Certain amounts from prior years have been reclassified to be
consistent with the financial statement presentation for 1997. Such
reclassifications had no effect on net income.
NOTE 2 - GAS CONTRACT
Since June 1, 1993, Williams Gas Marketing has 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:
Limited General
Partners Partner
REVENUES
Sale 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
As discussed in Note 1, the General Partner paid $613,750 of the
additional assessment for the 209 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, attributable
to the Assessment Operations reaches an amount equal to 300% ($1,841,250)
of the additional assessment. As of June 30, 1997, $1,009,535 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 1997 and 1996, 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 $349 and
$553 at June 30, 1997 and 1996, 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. 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.
In addition to the 40 units purchased by the General Partner for its
initial capital contribution, a total of 1,475.50 units had been purchased
from Limited Partners as of December 31, 1996. At January 1, 1997, the
General Partner calculated a purchase price of $134.03 per unit for those
Limited Partners who paid the additional assessment (Consenting Limited
Partners). The purchase price calculations for the Nonconsenting Limited
Partners did not result in a positive amount per unit and, therefore, the
General Partner did not offer to purchase such units during 1997. The
General Partner did offer, however, to accept assignment of all
nonconsenting units that those partners wished to transfer to the General
Partner. Within the prescribed tender period, which ended June 30, 1997,
55 Consenting Limited Partners tendered 188.50 assessed units for a total
repurchase price of $25,264.66, and the General Partner accepted
assignment of 210.30 nonassessed units from 50 Nonconsenting Limited
Partners. Effective with these transactions, the General Partner will
own 1,704.00 consenting units and 210.30 nonconsenting 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 ($69,993.75 per quarter) have been the maximum allowed
under the terms of the Partnership Agreement.
During the first half of 1997 and 1996, the Partnership distributed
$170,278 and $125,059, respectively, to the General Partner for
its allocated share of net revenues, and the General Partner contributed
$107,947 and $122,364, respectively, for its share of costs and expenses.
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 9.4% during both six month periods ended June 30,
1997 and 1996. 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 for 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.
NOTE 7 - CONTINGENCIES
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 TEXAS 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
TEXAS. The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
C&K 1981 FUND-B, LTD.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the six months ended
June 30, 1997 was $67,350, compared to $276,811 for the corresponding
period in 1996. This decrease was primarily the result of a comparative
reduction from 1996 to 1997 of the increase in the payable to the General
Partner for well costs.
The Partnership has made no immediate plans for additional exploratory
or developmental capital programs in 1997, except those necessary for
maintaining well productivity.
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 cannot predict with any degree of certainty the prices
it will receive in the remainder of 1997 and future years for its crude
oil and natural gas. The Partnership's financial condition, operating
results and liquidity will continue to be materially affected by any
significant fluctuations in sales prices. The Partnership's ability to
internally generate funds for capital expenditures and the Nonconsenting
Partners' ability to reimburse funds advanced by the General Partner will
be similarly affected.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1997 vs. Three Months Ended June 30, 1996
The Partnership reported a net loss of $49,643 for the three months
ended June 30, 1997, compared to a net loss of $58,808 reported for the
same period in 1996. This positive variance was primarily attributable
to increased oil and gas revenues.
Crude oil and natural gas sales for the three months ended June 30,
1997 were $162,107, an increase of $7,436, or 5%, compared to the same
period in 1996. Crude oil production increased to 84 barrels per day
while natural gas and plant products decreased to 90 thousand cubic feet
("mcf") and 37 equivalent mcf per day, respectively, during the second
quarter of 1997, compared to the 1996 level of 63 barrels, 126 mcf, and
50 equivalent mcf, respectively. During the second quarter of 1997,
average sales prices were $18.67 per barrel for crude oil, $1.96 per mcf
for natural gas, and $1.04 per equivalent mcf for plant products,
compared to $20.69 per barrel, $2.31 per mcf, and $2.09 per equivalent
mcf, respectively, for the same period in 1996.
Lease operating expense for the three months ended June 30, 1997
increased $761, or 2%, compared to the corresponding period in 1996, which
relates to the increase in revenues. Production tax expense for the
second quarter of 1997 decreased $2,957, or 18%, compared to the same
period in 1996. The state of Louisiana recently granted exempt status to
the McIlhenny #1-Sidetrack #3 well, and a refund of prior period
severance taxes for that well was recorded during this quarter, which
offset the tax increase applicable to the increased oil production.
Marketing deductions were $2,275 for the three months ended June 30, 1997
compared to $2,730 for the three months ended June 30, 1996, a decrease
of $455. The decline in gas production and plant products was mainly
responsible for this decrease.
Depreciation, depletion and amortization expense increased $5,518,
or 16%, compared to the corresponding period in 1996. This decrease
is the result of a natural decline in the depletion base of the
properties offset slightly by the additional oil and gas revenues.
General and administrative expenses for the second quarter of 1997
increased $310 compared to the second quarter of 1996. Interest expense
increased $6,012, or 12%, compared to the corresponding period in 1996,
resulting from an increase in the payable to the General Partner since
the first quarter of 1996.
Six Months Ended June 30, 1997 vs. Six Months Ended June 30, 1996
The Partnership reported a net loss of $54,597 for the six months
ended June 30, 1997, compared to a net loss of $96,630 reported for the
same period in 1996. This positive variance was primarily attributable
to increased oil and gas revenues.
Crude oil and natural gas sales for the six months ended June 30,
1997 were $381,319, an increase of $91,048, or 31%, compared to the same
period in 1996. Crude oil production increased to 86 barrels per day
while natural gas and plant products decreased to 100 mcf and 34
equivalent mcf per day, respectively, during the first half of 1997,
compared to the 1996 level of 63 barrels, 120 mcf, and 44 equivalent mcf,
respectively. During the first half of 1997, average sales prices were
$20.83 per barrel for crude oil, $2.46 per mcf for natural gas, and $1.98
per equivalent mcf for plant products, compared to $19.61 per barrel,
$2.31 per mcf, and $1.89 per equivalent mcf, respectively, for the same
period in 1996.
Lease operating expense for the six months ended June 30, 1997
increased $21,779, or 41%, compared to the corresponding period in 1996.
The increase in lease operating expenses is due primarily to the addition
of normal operations for the McIlhenny #1-Sidetrack #3 well, commencing
with the second quarter of 1996 and includes approximately $5,100 expended
in 1997 for a workover to enhance production on this well. Production
tax expense for the first half of 1997 increased $4,003, or 12%, compared
to the same period in 1996, which relates to the increase in crude oil
production in 1997 offset by the decline in natural gas production and
plant products from the Texas wells. Marketing deductions were $2,954
for the six months ended June 30, 1997 compared to $6,351 for the six
months ended June 30, 1996, a decrease of $3,397, or 53%. This decrease
is a result of lower gathering and transportation rates provided by a new
transporter effective February 1, 1996, and the decline of available gas
volumes to transport.
Depreciation, depletion and amortization expense increased $12,330, or
23%, for the first half of 1997 compared to the same period in 1996.
This increase is primarily the result of the increase in oil and gas
revenues. General and administrative expenses for the first six months
of 1997 increased $4,121, or 3%, compared to the same period in 1996.
Interest expense increased $9,933, or 10%, in 1997, attributable to the
additional funds advanced by the General Partner for capital expenditures
incurred in the completion of the McIlhenny #1-Sidetrack #3 well.
<PAGE>
PART II - OTHER INFORMATION
C&K 1981 FUND-B, LTD.
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
C&K 1981 Fund-B, LTD.
(Registrant)
By: /s/ Dan R. Taylor
Dan R. Taylor
Vice President, Finance & Accounting
CODY TEXAS, L.P.
Successor General Partner
Date: August 13, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> APR-01-1997 JAN-01-1997
<PERIOD-END> JUN-30-1997 JUN-30-1997
<CASH> 72,679 72,679
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 72,679 72,679
<PP&E> 22,973,621 22,973,621
<DEPRECIATION> 22,480,796 22,480,796
<TOTAL-ASSETS> 565,504 565,504
<CURRENT-LIABILITIES> 9,816 9,816
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> (1,941,644) (1,941,644)
<TOTAL-LIABILITY-AND-EQUITY> 565,504 565,504
<SALES> 162,107 381,319
<TOTAL-REVENUES> 162,558 382,214
<CGS> 0 0
<TOTAL-COSTS> 212,201 436,811
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 55,421 107,672
<INCOME-PRETAX> (49,643) (54,597)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (49,643) (54,597)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (49,643) (54,597)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
