<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended Commission File Number
June 30, 1995 0-10478
DYCO OIL AND GAS PROGRAM 1981-2
(A LIMITED PARTNERSHIP)
(Exact Name of Registrant as specified in its charter)
Minnesota 41-1411952
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(918) 583-1791
---------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
---- ----
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DYCO OIL AND GAS PROGRAM 1981-2 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
1995 1994
----------- ------------
CURRENT ASSETS:
Cash and cash equivalents . . . . . . $208,685 $163,279
Accrued oil and gas sales, including
$34,001 and $49,800 due from
related parties (Note 2) . . . . . . 42,543 51,195
-------- --------
Total current assets . . . . . . . $251,228 $214,474
NET OIL AND GAS PROPERTIES, utilizing
the full cost method . . . . . . . . . 152,062 173,279
DEFERRED CHARGE . . . . . . . . . . . . . 60,571 60,571
-------- --------
$463,861 $448,324
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . $ 27,967 $ 27,536
Gas imbalance payable . . . . . . . . 9,730 9,730
-------- --------
Total current liabilities . . . . . $ 37,697 $ 37,266
ACCRUED LIABILITY . . . . . . . . . . . . 120,306 120,306
CONTINGENCY (Note 3)
PARTNERS' CAPITAL:
General Partner, issued and outstanding,
74 units . . . . . . . . . . . . . . 3,058 2,907
Limited Partners, issued and outstanding,
6,000 units . . . . . . . . . . . . 302,800 287,845
-------- --------
Total Partners' capital . . . . . . $305,858 $290,752
-------- --------
$463,861 $448,324
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1981-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
1995 1994
--------- ---------
REVENUES:
Oil and gas sales, including
$54,449 and $59,673 of sales
to related parties (Note 2) . . . . $58,828 $67,009
Interest . . . . . . . . . . . . . . . 2,587 617
------- -------
$61,415 $67,626
------- -------
COSTS AND EXPENSES:
Oil and gas production . . . . . . . . $26,049 $28,445
Depreciation, depletion, and amortization
of oil and gas properties . . . . . . . 13,681 12,838
General and administrative (Note 2) . 18,307 13,279
------- -------
$58,037 $54,562
------- -------
NET INCOME . . . . . . . . . . . . . . . $ 3,378 $13,064
======= =======
GENERAL PARTNER (1%) - net income . . . . $ 34 $ 131
======= =======
LIMITED PARTNERS (99%) - net income . . . $ 3,344 $12,933
======= =======
NET INCOME PER UNIT . . . . . . . . . . . $ 1 $ 2
======= =======
UNITS OUTSTANDING . . . . . . . . . . . . 6,074 6,074
======= =======
The accompanying condensed notes are an
integral part of these financial statements.
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<PAGE>
DYCO OIL AND GAS PROGRAM 1981-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
1995 1994
--------- ---------
REVENUES:
Oil and gas sales, including
$117,030 and $120,103 of sales
to related parties (Note 2) . . . . $140,988 $138,216
Interest . . . . . . . . . . . . . . . 4,835 1,066
-------- --------
$145,823 $139,282
-------- --------
COSTS AND EXPENSES:
Oil and gas production . . . . . . . . $ 59,400 $ 80,435
Depreciation, depletion, and amortization
of oil and gas properties . . . . . 32,594 23,500
General and administrative (Note 2) . 38,723 32,387
-------- --------
$130,717 $136,322
-------- --------
NET INCOME . . . . . . . . . . . . . . . $ 15,106 $ 2,960
======== ========
GENERAL PARTNER (1%) - net income . . . . $ 151 $ 30
======== ========
LIMITED PARTNERS (99%) - net income . . . $ 14,955 $ 2,930
======== ========
NET INCOME PER UNIT . . . . . . . . . . . $ 2 $ -
======== ========
UNITS OUTSTANDING . . . . . . . . . . . . 6,074 6,074
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
-4-
<PAGE>
<PAGE>
DYCO OIL AND GAS PROGRAM 1981-2 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
1995 1994
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . $ 15,106 $ 2,960
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation, depletion, and amortiza-
tion of oil and gas properties . . . . 32,594 23,500
Decrease in accrued oil and gas sales 8,652 2,620
Increase in accounts payable . . . . 431 20,619
Decrease in payable to General Partner - ( 11,000)
-------- --------
Net cash provided by operating
activities . . . . . . . . . . . $ 56,783 $ 38,699
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties . ($ 11,377) ($ 11,793)
-------- --------
Net cash used by investing
activities . . . . . . . . . . . . ($ 11,377) ($ 11,793)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash used by financing
activities . . . . . . . . . . . $ - $ -
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 45,406 $ 26,906
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD . . . . . . . . . . . . . . . . . 163,279 78,042
-------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD . . . . . . . . . . . . . . . . . $208,685 $104,948
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
-5-
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<PAGE>
DYCO OIL AND GAS PROGRAM 1981-2 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheets as of June 30, 1995, statements of operations
for the three and six months ended June 30, 1995 and 1994, and
statements of cash flows for the six months ended June 30, 1995
and 1994 have been prepared by Dyco Petroleum Corporation
("Dyco"), the General Partner of the Dyco Oil and Gas Program
1981-2 Limited Partnership (the "Program"), without audit. In
the opinion of management all adjustments (which include only
normal recurring adjustments) necessary to present fairly the
financial position at June 30, 1995, results of operations for
the three and six months ended June 30, 1995 and 1994 and
changes in cash flows for the six months ended June 30, 1995 and
1994 have been made.
Information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto
included in the Program's Annual Report on Form 10-K for the
year ended December 31, 1994. The results of operations for the
period ended June 30, 1995 are not necessarily indicative of the
results to be expected for the full year.
The limited partners' net income or loss per unit is based upon
each $5,000 initial capital contribution.
OIL AND GAS PROPERTIES
----------------------
Oil and gas operations are accounted for using the full cost
method of accounting. All productive and non-productive costs
associated with the acquisition, exploration and development of
oil and gas reserves are capitalized. Sales and abandonments of
properties are accounted for as adjustments of capitalized costs
with no gain or loss recognized, unless such adjustments would
significantly alter the relationship between capitalized costs
and proved oil and gas reserves.
The provision for depreciation, depletion, and amortization of
oil and gas properties is calculated by dividing the oil and gas
sales dollars during the year by the estimated future gross
income from the oil and gas properties and applying the
resulting rate to the net remaining costs of oil and gas
properties that have been capitalized, plus estimated future
development costs.
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2. TRANSACTIONS WITH RELATED PARTIES
---------------------------------
Under the terms of the Program's partnership agreement, Dyco is
entitled to receive a reimbursement for all direct expenses and
general and administrative, geological and engineering expenses
it incurs on behalf of the Program. During the six months ended
June 30, 1995 and 1994 such expenses totaled $38,723 and
$32,387, respectively, of which $23,976 and $23,976 were paid to
Dyco.
Affiliates of the Program are the operators of certain of the
Program's properties, and their policy is to bill the Program
for all customary charges and cost reimbursements associated
with their activities, together with any compressor rentals,
consulting, or other services provided.
The Program sells gas at market prices to Premier Gas Company
("Premier"), an affiliated company, and Premier may then resell
such gas to third parties at market prices. During the six
months ended June 30, 1995 and 1994 these sales totaled $117,030
and $120,103, respectively. At June 30, 1995 accrued oil and
gas sales included $34,001 due from Premier.
3. CONTINGENCY
-----------
On November 12, 1992, two individuals filed a lawsuit against
Dyco and others in which the plaintiffs alleged damages to their
land as a result of remediation operations conducted on one of
the Program's wells located on an adjoining property. The
lawsuit alleged claims based on negligence, private nuisance,
public nuisance, trespass, unjust enrichment, constructive
fraud, and permanent injunctive relief, all in amounts to be
determined at trial. A trial was conducted in the matter on
February 22, 1994 in which the jury entered a verdict in favor
of the plaintiffs in the amount of approximately $5.5 million,
consisting of approximately $2.7 million in actual damages and
approximately $2.7 million in punitive damages. The Program's
share of such verdict is approximately $155,000 in actual
damages and approximately $31,000 in punitive damages. Dyco is
presently appealing the matter. Included in these financial
statements as of June 30, 1995 is an accrual by the General
Partner in the amount of $20,000 representing the Program's
share of estimated ultimate damages resulting from this
contingency.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Net proceeds from the Program's operations less necessary
operating capital are distributed to investors on a
quarterly basis. The net proceeds from production are not
reinvested in productive assets, except to the extent that
producing wells are improved or where methods are employed
to permit more efficient recovery of the Program's reserves
which would result in a positive economic impact.
The Program's available capital from subscriptions has been
spent on oil and gas drilling activities. There should not
be any further material capital resource commitments in the
future. The Program has no bank debt commitments. Cash for
operations purposes will be provided by current oil and gas
production.
RESULTS OF OPERATIONS
---------------------
THREE MONTHS ENDED JUNE 30, 1995 AS COMPARED TO THE THREE
MONTHS ENDED JUNE 30, 1994.
Three months ended June 30,
---------------------------
1995 1994
---- ----
Oil and gas sales $58,828 $67,009
Oil and gas production expenses $26,049 $28,445
Barrels produced 267 437
Mcf produced 41,568 38,498
Average price/Bbl $ 16.40 $ 14.20
Average price/Mcf $ 1.31 $ 1.58
As shown in the table, oil and natural gas sales decreased
12.2% for the three months ended June 30, 1995 as compared
to the three months ended June 30, 1994. This decrease was
due to decreases in the volume of oil sold and the average
price of natural gas sold, partially offset by increases in
the volume of natural gas sold and the average price of oil
sold during the three months ended June 30, 1995 as compared
to the three months ended June 30, 1994. Volumes of natural
gas sold increased slightly by 3,070 Mcf for the three
months ended June 30, 1995 as compared to the three months
ended June 30, 1994, while volumes of oil sold decreased by
170 barrels for the three months ended June 30, 1995
compared to the three months ended June 30, 1994. The
increase in volumes of natural gas sold resulted primarily
from a recompletion on one of the Program's wells which
significantly improved the well's production capabilities
-8-
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during the three months ended June 30, 1995. Average
natural gas prices decreased to $1.31 per Mcf for the three
months ended June 30, 1995 from an average of $1.58 per Mcf
for the three months ended June 30, 1994, while the average
price of oil sold increased to $16.40 per barrel for the
three months ended June 30, 1995 from an average of $14.20
per barrel for the three months ended June 30, 1994.
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased slightly by $2,396
for the three months ended June 30, 1995 as compared to the
three months ended June 30, 1994. As a percentage of oil
and gas sales, these expenses increased slightly to 44.3%
for the three months ended June 30, 1995 from 42.4% for the
three months ended June 30, 1994. The percentage increase
resulted primarily from the decrease in the average price of
natural gas sold during the three months ended June 30, 1995
as compared to the three months ended June 30, 1994.
Depreciation, depletion, and amortization of oil and gas
properties increased slightly by $843 for the three months
ended June 30, 1995 as compared to the three months ended
June 30, 1994. As a percentage of oil and gas sales, this
expense increased to 23.3% for the three months ended June
30, 1995 from 19.2% for the three months ended June 30,
1994. This percentage increase was primarily a result of
the decrease in the average price of natural gas sold during
the three months ended June 30, 1995 as compared to the
three months ended June 30, 1994.
General and administrative expenses increased $5,028 for the
three months ended June 30, 1995 as compared to the three
months ended June 30, 1994. This increase resulted from an
increase in the Program's professional fees during the three
months ended June 30, 1995 as compared to the three months
ended June 30, 1994. As a percentage of oil and gas sales,
these expenses increased to 31.1% for the three months ended
June 30, 1995 as compared to 19.8% for the three months
ended June 30, 1994. This percentage increase was primarily
a result of the dollar increase as discussed above and the
decrease in the average price of natural gas sold during the
three months ended June 30, 1995 as compared to the three
months ended June 30, 1994.
-9-
<PAGE>
<PAGE>
SIX MONTHS ENDED JUNE 30, 1995 AS COMPARED TO THE SIX MONTHS
ENDED JUNE 30, 1994.
Six months ended June 30,
-------------------------
1995 1994
---- ----
Oil and gas sales $140,988 $138,216
Oil and gas production expenses $ 59,400 $ 80,435
Barrels produced 511 766
Mcf produced 104,753 74,528
Average price/Bbl $ 15.74 $ 13.81
Average price/Mcf $ 1.27 $ 1.71
As shown in the table, oil and natural gas sales increased
2.0% for the six months ended June 30, 1995 as compared to
the six months ended June 30, 1994. This increase was
primarily the result of the increase in the volume of
natural gas sold and the increase in the average price of
oil sold during the six months ended June 30, 1995 as
compared to the six months ended June 30, 1994, partially
offset by the decrease in the average price of natural gas
sold during the six months ended June 30, 1995 as compared
to the six months ended June 30, 1994. Volumes of natural
gas sold increased 30,225 Mcf while volumes of oil sold
decreased 255 barrels for the six months ended June 30, 1995
as compared to the six months ended June 30, 1994. The
increase in volumes of natural gas sold resulted primarily
from (i) the shutting in of one of the Program's wells
during the six months ended June 30, 1994 which resulted in
increased pressure on the well which improved the well's
production capabilities and (ii) a recompletion on another
well which significantly improved the well's production
capabilities during the six months ended June 30, 1995.
Average natural gas prices decreased to $1.27 per Mcf for
the six months ended June 30, 1995 from an average of $1.71
per Mcf for the six months ended June 30, 1994, while the
average price of oil sold increased to $15.74 per barrel for
the six months ended June 30, 1995 from an average of $13.81
per barrel for the six months ended June 30, 1994.
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased $21,035 for the six
months ended June 30, 1995 as compared to the six months
ended June 30, 1994. This decrease primarily resulted from
an accrual for certain legal contingencies in the amount of
$20,000 during the six months ended June 30, 1994. As a
percentage of oil and gas sales, these expenses decreased to
42.1% for the six months ended June 30, 1995 from 58.2% for
the six months ended June 30, 1994. This percentage
decrease resulted primarily from the dollar decrease in oil
and gas production expenses during the six months ended June
30, 1995 as compared to the six months ended June 30, 1994
as discussed above.
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<PAGE>
Depreciation, depletion, and amortization of oil and gas
properties increased $9,094 for the six months ended June
30, 1995 as compared to the six months ended June 30, 1994.
This dollar increase was primarily due to the increase in
volumes of natural gas sold during the six months ended June
30, 1995 as compared to the six months ended June 30, 1994.
As a percentage of oil and gas sales, this expense increased
to 23.1% for the six months ended June 30, 1995 from 17.0%
for the six months ended June 30, 1994. This percentage
increase was primarily a result of the decrease in the
average price of natural gas sold during the six months
ended June 30, 1995 as compared to the six months ended June
30, 1994.
General and administrative expenses increased $6,336 for the
six months ended June 30, 1995 as compared to the six months
ended June 30, 1994. This increase resulted from an
increase in the Program's professional fees during the six
months ended June 30, 1995 as compared to the six months
ended June 30, 1994. As a percentage of oil and gas sales,
these expenses increased to 27.5% for the six months ended
June 30, 1995 compared to 23.4% for the six months ended
June 30, 1994. This percentage increase was primarily a
result of the dollar increase as discussed above and the
decrease in the average price of natural gas sold during the
six months ended June 30, 1995 as compared to the six months
ended June 30, 1994.
-11-
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<PAGE>
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
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<PAGE>
SIGNATURES
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.
DYCO OIL AND GAS PROGRAM 1981-2 LIMITED PARTNERSHIP
(Registrant)
By: DYCO PETROLEUM CORPORATION
General Partner
Date: August 10, 1995 By: /s/Dennis R. Neill
----------------------
(Signature)
Dennis R. Neill
Senior Vice President
Date: August 10, 1995 By: /s/Patrick M. Hall
-----------------------
(Signature)
Patrick M. Hall
Senior Vice President -
Controller
Principal Accounting
Officer
-13-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000702403
<NAME> DYCO OIL AND GAS PROGRAM 1981-2 LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 208,685
<SECURITIES> 0
<RECEIVABLES> 42,543
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 251,228
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 463,861
<CURRENT-LIABILITIES> 37,697
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 305,858
<TOTAL-LIABILITY-AND-EQUITY> 463,861
<SALES> 140,988
<TOTAL-REVENUES> 145,823
<CGS> 0
<TOTAL-COSTS> 130,717
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 15,106
<INCOME-TAX> 0
<INCOME-CONTINUING> 15,106
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,106
<EPS-PRIMARY> 2.00
<EPS-DILUTED> 0
</TABLE>
