FORM 10-K405
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997
Commission File Number 0-12261 (1982-1 Program)
0-12262 (1982-2 Program)
DYCO 1982 OIL AND GAS PROGRAMS
(TWO LIMITED PARTNERSHIPS)
(Exact name of registrant as specified in its charter)
41-1438430 (1982-1 Program)
Minnesota 41-1438437 (1982-2 Program)
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Samson Plaza
Two West Second Street
Tulsa, Oklahoma 74103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918) 583-1791
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Units of limited partnership interest
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 the
filing requirements for the past 90 days.
Yes[X] No[ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K405 or any amendment to
this Form 10-K405. [X]
The units of limited partnership are not publicly traded, therefore,
registrant cannot compute the aggregate market value of the voting units held by
non-affiliates of the registrant.
DOCUMENTS INCORPORATED BY REFERENCE: None.
<PAGE>
FORM 10-K405
DYCO 1982 OIL AND GAS PROGRAMS
(Two Minnesota limited partnerships)
TABLE OF CONTENTS
PART I.......................................................................3
ITEM 1. BUSINESS...................................................3
ITEM 2. PROPERTIES.................................................7
ITEM 3. LEGAL PROCEEDINGS.........................................14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS.......15
PART II.....................................................................15
ITEM 5. MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP UNITS
AND RELATED LIMITED PARTNER MATTERS.......................15
ITEM 6. SELECTED FINANCIAL DATA...................................17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.......................19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...............26
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.......................50
PART III....................................................................50
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT........50
ITEM 11. EXECUTIVE COMPENSATION....................................51
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................56
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............56
PART IV.....................................................................58
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K...............................................58
SIGNATURES............................................................61
2
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PART I.
ITEM 1. BUSINESS.
General
The Dyco Oil and Gas Program 1982-1 Limited Partnership (the "1982-1
Program") and Dyco Oil and Gas Program 1982-2 Limited Partnership (the "1982-2
Program") (collectively, the "Programs") are Minnesota limited partnerships
engaged in the production of oil and gas. The 1982-1 Program and 1982-2 Program
commenced operations on June 14, 1982 and March 1, 1983, respectively, with the
primary financial objective of investing their limited partners' subscriptions
in the drilling of oil and gas prospects and then distributing to their limited
partners all available cash flow from the Program's on-going production
operations. Dyco Petroleum Corporation ("Dyco") serves as the General Partner of
the Programs. See "Item 2. Properties" for a description of the Programs'
properties and reserves.
The limited partnership agreements for each of the Programs (the "Program
Agreements") provide that limited partners are allocated 99% of all Program
costs and revenues and Dyco, as General Partner, is allocated 1% of all Program
costs and revenues. Included in such costs is each Program's reimbursement to
Dyco of the Program's proportionate share of Dyco's geological, engineering, and
general and administrative expenses.
Dyco currently serves as General Partner of 32 limited partnerships,
including the Programs. Dyco is a wholly-owned subsidiary of Samson Investment
Company. Samson Investment Company and its various corporate subsidiaries,
including Dyco, (collectively, the "Samson Companies") are primarily engaged in
the production and development of and exploration for oil and gas reserves and
the acquisition and operation of producing properties. At December 31, 1997, the
Samson Companies owned interests in approximately 15,000 oil and gas wells
located in 19 states of the United States and the countries of Canada,
Venezuela, and Russia. At December 31, 1997, the Samson Companies operated
approximately 2,500 oil and gas wells located in 15 states of the United States,
as well as Canada, Venezuela, and Russia.
As limited partnerships, the Programs have no officers, directors, or
employees. They rely instead on the personnel of Dyco and the other Samson
Companies. As of March 1, 1998 the Samson Companies employed approximately 820
persons. No employees are covered by collective bargaining agreements, and
management believes that the Samson Companies provide a sound employee relations
environment. For information regarding the executive officers of Dyco, see "Item
10. Directors and Executive Officers of the Registrant."
3
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Dyco's and the Programs' principal place of business is located at Samson
Plaza, Two West Second Street, Tulsa, Oklahoma 74103, and their telephone number
is (918) 583-1791 or (800) 283-1791.
Funding
Although the Program Agreements permit the Programs to incur borrowings,
each Program's operations and expenses is currently funded out of each Program's
revenues from oil and gas sales. Dyco may, but is not required to, advance funds
to each of the Programs for the same purposes for which Program borrowings are
authorized.
Principal Products Produced and Services Rendered
The Programs' sole business is the development and production of oil and
gas with a concentration on gas. The Programs do not hold any patents,
trademarks, licenses, or concessions and are not a party to any government
contracts. The Programs have no backlog of orders and do not participate in
research and development activities. The Programs are not presently encountering
shortages of oilfield tubular goods, compressors, production material, or other
equipment.
Oil, Gas, and Environmental Control Regulations
Regulation of Production Operations -- The production of oil and gas is
subject to extensive federal and state laws and regulations governing a wide
variety of matters, including the drilling and spacing of wells, allowable rates
of production, prevention of waste and pollution, and protection of the
environment. In addition to the direct costs borne in complying with such
regulations, operations and revenues may be impacted to the extent that certain
regulations limit oil and gas production to below economic levels.
Regulation of Sales and Transportation of Oil and Gas -- Sales of crude
oil and condensate are made by the Programs at market prices and are not subject
to price controls. The sale of gas may be subject to both federal and state laws
and regulations. The provisions of these laws and regulations are complex and
affect all who produce, resell, transport, or purchase gas, including the
Programs. Although virtually all of the Programs' gas production is not subject
to price regulation, other regulations affect the availability of gas
transportation services and the ability of gas consumers to continue to purchase
and use gas at current levels. Accordingly, such regulations may have a material
effect on the Programs' operations and projections of future oil and gas
production and revenues.
4
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Future Legislation -- Legislation affecting the oil and gas industry is
under constant review for amendment or expansion. Because such laws and
regulations are frequently amended or reinterpreted, management is unable to
predict what additional energy legislation may be proposed or enacted or the
future cost and impact of complying with existing or future regulations.
Regulation of the Environment -- The Programs' operations are subject to
numerous laws and regulations governing the discharge of materials into the
environment or otherwise relating to environmental protection. Compliance with
such laws and regulations, together with any penalties resulting from
noncompliance, may increase the cost of the Programs' operations or may affect
the Programs' ability to timely complete existing or future activities.
Management anticipates that various local, state, and federal environmental
control agencies will have an increasing impact on oil and gas operations.
Significant Customers
Purchases of gas by El Paso Energy Marketing Company ("El Paso") accounted
for approximately 89.0% of the 1982-1 Program's oil and gas sales during the
year ended December 31, 1997. With respect to the 1982-2 Program, purchases of
gas by El Paso and Enogex Services Corporation accounted for approximately 83.6%
and 12.5%, respectively, of its oil and gas sales during the year ended December
31, 1997. In the event of interruption of purchases by these significant
customers or the cessation or material change in availability of open-access
transportation by the Programs' pipeline transporters, the Programs may
encounter difficulty in marketing their gas and in maintaining historic sales
levels. Alternative purchasers or transporters may not be readily available.
The Programs' principal customers for crude oil production are refiners
and other companies which have pipeline facilities near the producing properties
of the Programs. In the event pipeline facilities are not conveniently available
to production areas, crude oil is usually trucked by purchasers to storage
facilities.
Competition and Marketing
The domestic oil and gas industry is highly competitive, with a large
number of companies and individuals engaged in the exploration and development
of oil and gas properties. The ability of the Programs to produce and market oil
and gas profitably depends on a number of factors that are beyond the control of
the Programs. These factors include worldwide political instability (especially
in oil-producing regions), United Nations export embargoes, the supply and price
of foreign imports of oil and gas, the level of consumer product demand
5
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(which can be heavily influenced by weather patterns), government regulations
and taxes, the price and availability of alternative fuels, the overall economic
environment, and the availability and capacity of transportation and processing
facilities. The effect of these factors on future oil and gas industry trends
cannot be accurately predicted or anticipated.
The most important variable affecting the Programs' revenues is the prices
received for the sale of oil and gas. Predicting future prices is very
difficult. Concerning past trends, average yearly wellhead gas prices in the
United States have been volatile for a number of years. For the past ten years,
such average prices have generally been in the $1.40 to $2.40 per Mcf range,
significantly below prices received in the early 1980s. Average gas prices in
the latter part of 1996 and parts of 1997, however, were somewhat higher than
those yearly averages. Gas prices are currently in the middle portion of the
10-year average price range described above.
Substantially all of the Programs' gas reserves are being sold on the
"spot market." Prices on the spot market are subject to wide seasonal and
regional pricing fluctuations due to the highly competitive nature of the spot
market. In addition, such spot market sales are generally short-term in nature
and are dependent upon the obtaining of transportation services provided by
pipelines. Spot prices for the Programs' gas decreased from approximately $3.57
per Mcf at December 31, 1996 to approximately $2.32 per Mcf at December 31,
1997. Such prices were on an MMBTU basis and differ from the prices actually
received by the Programs due to transportation and marketing costs, BTU
adjustments, and regional price and quality differences.
For the past ten years, average oil prices have generally been in the
$16.00 to $24.00 per barrel range. Due to global consumption and supply trends
over the last several months, as well as expectations of at least a short-term
slowdown in Asian energy demand, oil prices have recently been in the mid to
lower portions of this pricing range, and in early 1998 dropped to as low as
$12.00 per barrel. It is not known whether this trend will continue. Prices for
the Programs' oil decreased from approximately $23.75 per barrel at December 31,
1996 to approximately $16.25 per barrel at December 31, 1997.
Future prices for both oil and gas will likely be different from (and may
be lower than) the prices in effect on December 31, 1997. Primarily due to
heating season demand, year-end prices in many past years have tended to be
higher, and in some cases significantly higher, than the yearly average price
actually received by the Programs for at least the following year. Management is
unable to predict whether future oil and gas prices will (i) stabilize, (ii)
increase, or (iii) decrease.
6
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Insurance Coverage
The Programs are subject to all of the risks inherent in the exploration
for and production of oil and gas, including blowouts, pollution, fires, and
other casualties. The Programs maintain insurance coverage as is customary for
entities of a similar size engaged in operations similar to that of the
Programs, but losses can occur from uninsurable risks or in amounts in excess of
existing insurance coverage. The occurrence of an event which is not fully
covered by insurance could have a material adverse effect on the Programs'
financial position and results of operations.
ITEM 2. PROPERTIES
Well Statistics
The following table sets forth the numbers of gross and net productive
wells of the Programs as of December 31, 1997.
Well Statistics(1)
As of December 31, 1997
1982-1 1982-2
Program Program
------- -------
Gross productive wells(2):
Oil 2 -
Gas 18 20
-- --
Total 20 20
Net productive wells(3):
Oil .79 -
Gas 1.95 1.95
---- ----
Total 2.74 1.95
- ----------
(1) The designation of a well as an oil well or gas well is made by Dyco based
on the relative amount of oil and gas reserves for the well. Regardless of
a well's oil or gas designation, it may produce oil, gas, or both oil and
gas.
(2) As used throughout this Annual Report on Form 10-K ("Annual Report"),
"Gross Well" refers to a well in which a working interest is owned. The
number of gross wells is the total number of wells in which a working
interest is owned.
(3) As used throughout this Annual Report, "Net Well" refers to the sum of the
fractional working interests owned in gross wells. For example, a 15%
working interest in a well represents one Gross Well, but 0.15 Net Well.
7
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Drilling Activities
The Programs participated in no drilling activities for the year ended
December 31, 1997.
Oil and Gas Production, Revenue, and Price History
The following table sets forth certain historical information concerning
the oil (including condensates) and gas production, net of all royalties,
overriding royalties, and other third party interests, of the Programs, revenues
attributable to such production, and certain price and cost information.
8
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Net Production Data
Year Ended December 31,
--------------------------------
1997 1996 1995
-------- -------- --------
1982-1 Program:
- --------------
Production:
Oil (Bbls)(1) 1,906 1,868 2,308
Gas (Mcf)(2) 122,008 135,616 170,795
Oil and gas sales:
Oil $ 37,204 $ 38,939 $ 39,156
Gas 285,698 278,328 224,175
------- ------- -------
Total $322,902 $317,267 $263,331
======= ======= =======
Total direct operating expenses(3) $104,415 $109,514 $134,081
======= ======= =======
Direct operating expenses as a
percentage of oil and gas
sales 32.3% 34.5% 50.9%
Average sales price:
Per barrel of oil $19.52 $20.85 $16.97
Per Mcf of gas 2.34 2.05 1.31
Direct operating expenses per
equivalent Mcf of gas(4) $ .78 $ .75 $ .73
9
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Year Ended December 31,
--------------------------------
1997 1996 1995
-------- -------- --------
1982-2 Program:
- --------------
Production:
Oil (Bbls)(1) 102 180 704
Gas (Mcf)(2) 321,119 337,092 437,387
Oil and gas sales:
Oil $ 2,191 $ 3,936 $ 9,554
Gas 722,562 681,503 573,087
------- ------- -------
Total $724,753 $685,439 $582,641
======= ======= =======
Total direct operating expenses(3) $141,971 $161,570 $168,278
======= ======= =======
Direct operating expenses as a
percentage of oil and gas
sales 19.6% 23.6% 28.9%
Average sales price:
Per barrel of oil $21.48 $21.87 $13.57
Per Mcf of gas 2.25 2.02 1.31
Direct operating expenses per
equivalent Mcf of gas(4) $ .44 $ .48 $ .38
10
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- ----------
(1) As used throughout this Annual Report, "Bbls" refers to barrels of 42 U.S.
gallons and represents the basic unit for measuring the production of
crude oil and condensate oil.
(2) As used throughout this Annual Report, "Mcf" refers to volume of 1,000
cubic feet under prescribed conditions of pressure and temperature and
represents the basic unit for measuring the production of gas.
(3) Includes lease operating expenses and production taxes.
(4) Oil production is converted to gas equivalents at the rate of six Mcf
per barrel, representing the estimated relative energy content of gas and
oil, which rate is not necessarily indicative of the relationship of oil
and gas prices. The respective prices of oil and gas are affected by
market and other factors in addition to relative energy content.
Proved Reserves and Net Present Value
The following table sets forth the Programs' estimated proved oil and
gas reserves and net present value therefrom as of December 31, 1997. The
schedule of quantities of proved oil and
11
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gas reserves was prepared by Dyco in accordance with the rules prescribed by the
Securities and Exchange Commission (the "SEC"). As used throughout this Annual
Report, "proved reserves" refers to those estimated quantities of crude oil,
gas, and gas liquids which geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known oil and gas
reservoirs under existing economic and operating conditions.
Net present value represents estimated future gross cash flow from the
production and sale of proved reserves, net of estimated oil and gas production
costs (including production taxes, ad valorem taxes, and operating expenses),
and estimated future development costs, discounted at 10% per annum. Net present
value attributable to the Programs' proved reserves was calculated on the basis
of current costs and prices at December 31, 1997. Such prices were not escalated
except in certain circumstances where escalations were fixed and readily
determinable in accordance with applicable contract provisions. The prices used
by Dyco in calculating the net present value attributable to the Programs'
proved reserves do not necessarily reflect market prices for oil and gas
production subsequent to December 31, 1997. Year-end prices have generally been
higher than prices during the rest of the year. There can be no assurance that
the prices used in calculating the net present value of the Programs' proved
reserves at December 31, 1997 will actually be realized for such production.
The process of estimating oil and gas reserves is complex, requiring
significant subjective decisions in the evaluation of available geological,
engineering, and economic data for each reservoir. The data for a given
reservoir may change substantially over time as a result of, among other things,
additional development activity, production history, and viability of production
under varying economic conditions; consequently, it is reasonably possible that
material revisions to existing reserve estimates may occur in the near future.
Although every reasonable effort has been made to ensure that these reserve
estimates represent the most accurate assessment possible, the significance of
the subjective decisions required and variances in available data for various
reservoirs make these estimates generally less precise than other estimates
presented in connection with financial statement disclosures.
12
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Proved Reserves and
Net Present Values
From Proved Reserves
As of December 31, 1997
1982-1 Program:
--------------
Estimated proved reserves:
Gas (Mcf) 620,640
Oil and liquids (Bbls) 16,270
Net present value
(discounted at 10% per annum) $ 710,174
1982-2 Program:
--------------
Estimated proved reserves:
Gas (Mcf) 1,027,334
Oil and liquids (Bbls) 571
Net present value
(discounted at 10% per annum) $ 996,058
No estimates of the proved reserves of the Programs comparable to those
included herein have been included in reports to any federal agency other than
the SEC. Additional information relating to the Programs' proved reserves is
contained in Note 4 to the Programs' financial statements, included in Item 8 of
this Annual Report.
Significant Properties
1982-1 Program
--------------
As of December 31, 1997, the 1982-1 Program's properties consisted of 20
gross (2.74 net) productive wells. The 1982-1 Program also owned a non-working
interest in an additional 6 wells. Affiliates of the 1982-1 Program operate 14
(54%) of its total wells. As of December 31, 1997, the 1982-1 Program had
estimated total proved reserves of 620,640 Mcf of gas and 16,270 barrels of oil,
with a present value (discounted at 10% per annum) of estimated future net cash
flow of approximately $710,174. Substantially all of the 1982-1 Program's
reserves are located in the Anadarko Basin of western Oklahoma and the Texas
panhandle, which is an established oil and gas producing basin. All of the
1982-1 Program's properties are located onshore in the continental United
States.
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As of December 31, 1997, the 1982-1 Program's properties in the Anadarko
Basin consisted of 19 gross (2.22 net) productive wells. The 1982-1 Program also
owned a non-working interest in an additional 6 wells. Affiliates of the 1982-1
Program operate 13 (52%) of its total Anadarko Basin wells. As of December 31,
1997, the 1982-1 Program had estimated total proved reserves in the Anadarko
Basin of approximately 590,393 Mcf of gas and approximately 16,270 barrels of
crude oil, with a present value (discounted at 10% per annum) of estimated
future net cash flow of approximately $675,598.
1982-2 Program
--------------
As of December 31, 1997, the 1982-2 Program's properties consisted of 20
gross (1.95 net) productive wells. The 1982-2 Program also owned a non-working
interest in an additional 6 wells. Affiliates of the 1982-2 Program operate 12
(46%) of its total wells. As of December 31, 1997, the 1982-2 Program had
estimated total proved reserves of 1,027,334 Mcf of gas and 571 barrels of oil,
with a present value (discounted at 10% per annum) of estimated future net cash
flow of approximately $996,058. All of the 1982-2 Program's reserves are located
in the Anadarko Basin.
Title to Oil and Gas Properties
Management believes that the Programs have satisfactory title to their oil
and gas properties. Record title to substantially all of the Programs'
properties is held by Dyco as nominee.
Title to the Programs' properties is subject to customary royalty,
overriding royalty, carried, working, and other similar interests and
contractual arrangements customary in the oil and gas industry, to liens for
current taxes not yet due, and to other encumbrances. Management believes that
such burdens do not materially detract from the value of such properties or from
the Programs' interest therein or materially interfere with their use in the
operation of the Programs' business.
ITEM 3. LEGAL PROCEEDINGS
To the knowledge of the management of Dyco and the Programs, neither Dyco,
the Programs, nor the Programs' properties are subject to any litigation, the
results of which would have a material effect on the Programs' or Dyco's
financial condition or operations.
14
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS
There were no matters submitted to a vote of the limited partners of
either Program during 1997.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP UNITS AND RELATED
LIMITED PARTNER MATTERS
The Programs do not have an established trading market for their units of
limited partnership interest ("Units"). Pursuant to the terms of the Program
Agreements, Dyco, as General Partner, is obligated to annually issue a
repurchase offer which is based on the estimated future net revenues from the
Programs' reserves and is calculated pursuant to the terms of the Program
Agreements. Such repurchase offer is recalculated monthly in order to reflect
cash distributions made to the limited partners and extraordinary events. The
following table sets forth, for the periods indicated, Dyco's repurchase offer
per Unit and the amount of the Programs' cash distributions per Unit for the
same period. For purposes of this Annual Report, a Unit represents an initial
subscription of $5,000 to a Program.
1982-1 PROGRAM
--------------
Repurchase Cash
Price Distributions
---------- -------------
1996:
First Quarter $54 $ -
Second Quarter 54 -
Third Quarter 65 -
Fourth Quarter 65 -
1997:
First Quarter $65 $ -
Second Quarter 65 -
Third Quarter 44 20
Fourth Quarter 44 -
1998:
First Quarter $44 $ -
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1982-2 PROGRAM
--------------
Repurchase Cash
Price Distributions
---------- -------------
1996:
First Quarter $99 $ -
Second Quarter 69 30
Third Quarter 79 20
Fourth Quarter 79 -
1997:
First Quarter $44 $35
Second Quarter 44 -
Third Quarter 65 25
Fourth Quarter 65 -
1998:
First Quarter $35 $30
The 1982-1 Program has 10,100 Units outstanding and approximately 3,111
limited partners of record. The 1982-2 Program has 8,080 Units outstanding and
approximately 2,437 limited partners of record.
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ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data
The following table presents selected financial data for the Programs. This
data should be read in conjunction with the financial statements of the
Programs, and the respective notes thereto, included elsewhere in this Annual
Report. See "Item 8. Financial Statements and Supplementary Data."
<TABLE>
<CAPTION>
1982-1 Program
--------------
December 31,
----------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Summary of Operations:
Oil and gas sales $322,902 $317,267 $263,331 $310,573 $441,939
Total revenues 329,262 319,923 263,538 314,183 476,838
Lease operating
expenses 80,881 86,759 115,436 73,341 81,958
Production taxes 23,534 22,755 18,645 17,190 33,360
General and administrative
expenses 109,234 102,540 104,106 92,108 91,041
Depreciation, depletion,
and amortization of oil
and gas properties 35,611 21,362 40,413 66,472 93,645
Net income (loss) 80,002 86,507 ( 15,062) 65,072 176,834
per Unit 7.92 8.57 ( 1.49) 6.44 17.50
Cash distributions 202,000 - - 202,000 808,000
per Unit 20 - - 20 80
Summary Balance Sheet Data:
Total assets 319,181 436,000 351,285 390,358 580,402
Partners' capital 253,766 375,764 289,257 304,319 441,247
</TABLE>
17
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<TABLE>
<CAPTION>
1982-2 Program
--------------
December 31,
---------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Summary of Operations:
Oil and gas sales $724,753 $685,439 $582,641 $763,320 $631,384
Total revenues 733,617 693,653 590,407 768,862 634,650
Lease operating
expenses 93,272 110,110 126,949 123,535 141,268
Production taxes 48,699 51,460 41,329 55,286 45,877
General and administrative
expenses 86,233 81,018 83,226 73,694 73,834
Depreciation, depletion,
and amortization of oil
and gas properties 74,318 58,142 107,051 200,824 163,507
Impairment provision - - 14,169 - -
Net income 431,095 392,923 217,683 315,523 210,164
per Unit 53.35 48.63 26.94 39.05 26.01
Cash distributions 484,800 404,000 242,400 606,000 444,400
per Unit 60 50 30 75 55
Summary Balance Sheet Data:
Total assets 545,239 645,642 616,939 666,396 913,469
Partners' capital 448,430 502,135 513,212 537,929 828,406
</TABLE>
18
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Use of Forward-Looking Statements and Estimates
This Annual Report contains certain forward-looking statements. The words
"anticipate," "believe," "expect," "plan," "intend," "estimate," "project,"
"could," "may," and similar expressions are intended to identify forward-looking
statements. Such statements reflect management's current views with respect to
future events and financial performance. This Annual Report also includes
certain information which is, or is based upon, estimates and assumptions. Such
estimates and assumptions are management's efforts to accurately reflect the
condition and operation of the Programs.
Use of forward-looking statements and estimates and assumptions involve
risks and uncertainties which include, but are not limited to, the volatility of
oil and gas prices, the uncertainty of reserve information, the operating risk
associated with oil and gas properties (including the risk of personal injury,
death, property damage, damage to the well or producing reservoir, environmental
contamination, and other operating risks), the prospect of changing tax and
regulatory laws, the availability and capacity of processing and transportation
facilities, the general economic climate, the supply and price of foreign
imports of oil and gas, the level of consumer product demand, and the price and
availability of alternative fuels. Should one or more of these risks or
uncertainties occur or should estimates or underlying assumptions prove
incorrect, actual conditions or results may vary materially and adversely from
those stated, anticipated, believed, estimated, or otherwise indicated.
General Discussion
The following general discussion should be read in conjunction with the
analysis of results of operations provided below. The most important variable
affecting the Programs' revenues is the prices received for the sale of oil and
gas. Predicting future prices is very difficult. Concerning past trends, average
yearly wellhead gas prices in the United States have been volatile for a number
of years. For the past ten years, such average prices have generally been in the
$1.40 to $2.40 per Mcf range, significantly below prices received in the early
1980s. Average gas prices in the latter part of 1996 and parts of 1997 however,
were somewhat higher than those yearly averages. Gas prices are currently in the
middle portion of the 10-year average price range described above.
Substantially all of the Programs' gas reserves are being sold on the
"spot market." Prices on the spot market are subject to wide seasonal and
regional pricing fluctuations due to the
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<PAGE>
highly competitive nature of the spot market. In addition, such spot market
sales are generally short-term in nature and are dependent upon the obtaining of
transportation services provided by pipelines. Spot prices for the Programs' gas
decreased from approximately $3.57 per Mcf at December 31, 1996 to approximately
$2.32 per Mcf at December 31, 1997. Such prices were on an MMBTU basis and
differ from the prices actually received by the Programs due to transportation
and marketing costs, BTU adjustments, and regional price and quality
differences.
For the past ten years, average oil prices have generally been in the
$16.00 to $24.00 per barrel range. Due to global consumption and supply trends
over the last several months as well as expectations of at least a short-term
slowdown in Asian energy demand, oil prices have recently been in the mid to
lower portions of this pricing range, and in early 1998 dropped to as low as
$12.00 per barrel. It is not known whether this trend will continue. Prices for
the Programs' oil decreased from approximately $23.75 per barrel at December 31,
1996 to approximately $16.25 per barrel at December 31, 1997.
Future prices for both oil and gas will likely be different from (and may
be lower than) the prices in effect on December 31, 1997. Primarily due to
heating season demand, year-end prices in many past years have tended to be
higher, and in some cases significantly higher, than the yearly average price
actually received by the Programs for at least the following year. Management is
unable to predict whether future oil and gas prices will (i) stabilize, (ii)
increase, or (iii) decrease.
Results of Operations
1982-1 Program
--------------
Year Ended December 31, 1997 Compared to
Year Ended December 31, 1996
----------------------------------------
Total oil and gas sales increased $5,635 (1.8%) in 1997 as compared to
1996. Of this increase, approximately $35,000 was related to an increase in the
average price of gas sold, which increase was partially offset by decreases of
approximately $28,000 and $3,000, respectively, related to decreases in both
volumes of gas sold and the average price of oil sold. Volumes of oil sold
increased 38 barrels, while volumes of gas sold decreased 13,608 Mcf in 1997 as
compared to 1996. The decrease in volumes of gas sold resulted primarily from
(i) normal declines in production and (ii) the sale of one well in 1996. Average
oil prices decreased to $19.52 per barrel in 1997 from $20.85 per barrel in
1996. Average gas prices increased to $2.34 per Mcf in 1997 from $2.05 per Mcf
in 1996.
20
<PAGE>
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $5,099 (4.7%) in 1997 as compared to 1996. This
decrease resulted primarily from the decrease in volumes of gas sold in 1997. As
a percentage of oil and gas sales these expenses decreased to 32.3% in 1997 from
34.5% in 1996. This percentage decrease was primarily due to the increase in the
average price of gas sold in 1997.
Depreciation, depletion, and amortization of oil and gas properties
increased $14,249 (66.7%) in 1997 as compared to 1996. This increase was due
primarily to downward revisions in the estimates of remaining oil and gas
reserves at December 31, 1997 and a decrease in oil and gas prices used to value
those reserves in 1997 as compared to 1996. As a percentage of oil and gas
sales, this expense increased to 11.0% in 1997 from 6.7% in 1996. This
percentage increase was primarily due to the dollar increase in depreciation,
depletion, and amortization discussed above.
General and administrative expenses increased $6,694 (6.5%) in 1997 as
compared to 1996. As a percentage of oil and gas sales, these expenses remained
relatively constant at 33.8% in 1997 and 32.3% in 1996.
Year Ended December 31, 1996 Compared to
Year Ended December 31, 1995
----------------------------------------
Total oil and gas sales increased $53,936 (20.5%) for 1996 as compared to
1995. Of this increase, approximately $9,000 and $126,000, respectively, were
related to increases in the average prices of oil and gas sold, partially offset
by decreases of approximately $9,000 and $72,000, respectively, related to
decreases in the volumes of oil and gas sold. Volumes of oil and gas sold
decreased 440 barrels and 35,179 Mcf, respectively, for 1996 as compared to
1995. The decrease in volumes of oil sold resulted primarily from (i) a positive
prior period volume adjustment made by the purchaser on one well during 1995 and
(ii) normal declines in production due to diminished reserves on another well.
The decrease in volumes of gas sold resulted primarily from (i) positive prior
period volume adjustments made by the purchaser on several wells during 1995,
(ii) normal declines in production due to diminished gas reserves on several
wells, and (iii) the sale of one gas producing well during 1996, partially
offset by a negative gas balancing adjustment on another well during 1995.
Average oil and gas prices increased to $20.85 per barrel and $2.05 per Mcf,
respectively, for 1996 from $16.97 per barrel and $1.31 per Mcf, respectively,
for 1995.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $24,567 (18.3%) for 1996 as compared to 1995. This
decrease resulted primarily from (i) workover expenses incurred on two wells
during 1995 in order to improve the recovery of reserves, (ii) the sale of one
well
21
<PAGE>
during 1996, (iii) a decrease in general repair and maintenance expenses on two
wells during 1996 as compared to 1995, and (iv) decreases in volumes of oil and
gas sold during 1996 as compared to 1995. As a percentage of oil and gas sales,
these expenses decreased to 34.5% for 1996 from 50.9% for 1995. This percentage
decrease was primarily due to the dollar decrease in production expenses
discussed above and the increases in the average prices of oil and gas sold
during 1996
Depreciation, depletion, and amortization of oil and gas properties
decreased $19,051 (47.1%) for 1996 as compared to 1995. This decrease resulted
primarily from an upward revision in the estimates of remaining oil and gas
reserves at December 31, 1996. As a percentage of oil and gas sales, this
expense decreased to 6.7% for 1996 from 15.3% for 1995. This percentage decrease
was primarily due to the dollar decrease in depreciation, depletion, and
amortization discussed above and the increases in the average prices of oil and
gas sold during 1996.
General and administrative expenses remained relatively constant for 1996
as compared to 1995. As a percentage of oil and gas sales, these expenses
decreased to 32.3% for 1996 from 39.5% for 1995. This percentage decrease was
primarily due to the increase in oil and gas sales during 1996 as compared to
1995 discussed above.
1982-2 Program
-------------
Year Ended December 31, 1997 Compared to
Year Ended December 31, 1996
----------------------------------------
Total oil and gas sales increased $39,314 (5.7%) in 1997 as compared to
1996. Of this increase, approximately $74,000 was related to an increase in the
average price of gas sold, which increase was partially offset by decreases of
approximately $2,000 and $32,000, respectively, related to decreases in volumes
of oil and gas sold. Volumes of oil and gas sold decreased 78 barrels and 15,973
Mcf, respectively, in 1997 as compared to 1996. The decrease in volumes of gas
sold resulted primarily from normal declines in production, which decrease was
partially offset by a positive gas balancing adjustment on one well in 1997.
Average oil prices decreased to $21.48 per barrel in 1997 from $21.87 per barrel
in 1996. Average gas prices increased to $2.25 per Mcf in 1997 from $2.02 per
Mcf in 1996.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $19,599 (12.1%) in 1997 as compared to 1996. This
decrease resulted primarily from the plugging of an abandoned well in 1996. As a
percentage of oil and gas sales these expenses decreased to 19.6% in 1997 from
23.6% in 1996. This percentage decrease was primarily due to the
22
<PAGE>
dollar decrease in oil and gas production expense discussed above and the
increase in the average price of gas sold in 1997.
Depreciation, depletion, and amortization of oil and gas properties
increased $16,176 (27.8%) in 1997 as compared to 1996. This increase was
primarily due to a decrease in oil and gas prices used to value reserves in 1997
as compared to 1996. As a percentage of oil and gas sales, this expense
increased to 10.3% in 1997 from 8.5% in 1996. This percentage increase was
primarily due to the dollar increase in depreciation, depletion, and
amortization discussed above.
General and administrative expenses increased $5,215 (6.4%) in 1997 as
compared to 1996. As a percentage of oil and gas sales, these expenses remained
relatively constant at 11.9% in 1997 and 11.8% in 1996.
Year Ended December 31, 1996 Compared to
Year Ended December 31, 1995
----------------------------------------
Total oil and gas sales increased $102,798 (17.6%) for 1996 as compared to
1995. Of this increase, approximately $311,000 was related to an increase in the
average price of gas sold, partially offset by decreases of approximately
$11,000 and $203,000, respectively, related to decreases in volumes of oil and
gas sold. Volumes of oil and gas sold decreased 524 barrels and 100,295 Mcf,
respectively, for 1996 as compared to 1995. The decrease in volumes of oil sold
resulted primarily from the sale of one well during 1995. The decrease in
volumes of gas sold resulted primarily from (i) the shutting-in of one well
during a portion of 1996 due to a state imposed allowable restriction, (ii) a
positive gas balancing adjustment on the same well during 1995, and (iii) normal
declines in production due to diminished gas reserves on two wells 1996 as
compared to 1995. Average oil and gas prices increased to $21.87 per barrel and
$2.02 per Mcf, respectively, for 1996 from $13.57 per barrel and $1.31 per Mcf,
respectively, 1995.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $6,708 (4.0%) 1996 as compared to 1995. This
decrease resulted primarily from the reversal of a $20,000 accrual during 1996
due to the conclusion of a certain legal contingency in favor of the 1982-2
Program, partially offset by an increase in production taxes associated with the
increase in oil and gas sales as discussed above 1996 as compared to 1995. As a
percentage of oil and gas sales, these expenses decreased to 23.6% for 1996 from
28.9% for 1995. This percentage decrease was primarily due to the increases in
the average prices of oil and gas sold 1996.
Depreciation, depletion, and amortization of oil and gas properties
decreased $48,909 (45.7%) for
1996 as compared to
23
<PAGE>
1995. This decrease resulted primarily from (i) the decrease in volumes of oil
and gas sold 1996 as compared to 1995 and (ii) an upward revision in the
estimate of remaining gas reserves at December 31, 1996. As a percentage of oil
and gas sales, this expense decreased to 8.5% for 1996 from 18.4% for 1995. This
percentage decrease was primarily due to the dollar decrease in depreciation,
depletion, and amortization discussed above and the increases in the average
prices of oil and gas sold 1996.
As a result of a decline in gas prices during the first part of 1995, the
1982-2 Program recognized a non-cash charge against earnings of $14,169 in 1995.
This impairment provision for oil and gas properties at December 31, 1995 was
necessary due to the unamortized costs of oil and gas properties exceeding the
present value of the estimated future net revenues from such oil and gas
properties. No similar charge was necessary during 1996.
General and administrative expenses remained relatively constant for 1996
as compared to 1995. As a percentage of oil and gas sales, these expenses
decreased to 11.8% for 1996 from 14.3% for 1995. This percentage decrease was
primarily due to the increase in oil and gas sales during 1996.
Liquidity and Capital Resources
Net proceeds from operations less necessary operating capital are
distributed to the limited partners on a quarterly basis. See "Item 5. Market
for the Registrant's Limited Partnership Units and Related Limited Partner
Matters." 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 reserves, thereby resulting in
a positive economic impact. Assuming production levels for 1997, the 1982-1
Program's proved oil and gas reserve quantities at December 31, 1997 would have
remaining lives of approximately 8.5 and 5.1 years, respectively, and the 1982-2
Program's proved oil and gas reserves at December 31, 1997 would have remaining
lives of approximately 5.6 and 3.2 years, respectively. However, since the
Programs' reserve estimates are based on oil and gas prices at December 31,
1997, it is possible that a significant decrease in oil and gas prices from
December 31, 1997 levels will reduce such reserves and their corresponding
life-span.
The Programs' available capital from the limited partners' subscriptions
has been spent on oil and gas drilling activities and there should be no further
material capital resource commitments in the future. Occasional expenditures by
the Programs for well completions or workovers, however, may reduce or eliminate
cash available for a particular quarterly cash distribution. The Programs have
no debt commitments. Cash for operational purposes will be provided by current
oil and gas production.
24
<PAGE>
There can be no assurance as to the amount of the Programs' future cash
distributions. The Programs' ability to make cash distributions depends
primarily upon the level of available cash flow generated by the Programs'
operating activities, which will be affected (either positively or negatively)
by many factors beyond the control of the Programs, including the price of and
demand for oil and gas and other market and economic conditions. Even if prices
and costs remain stable, the amount of cash available for distributions will
decline over time (as the volume of production from producing properties
declines) since the Programs are not replacing production through acquisitions
of producing properties and drilling.
Inflation and Changing Prices
Prices obtained for oil and gas production depend upon numerous factors,
including the extent of domestic and foreign production, foreign imports of oil,
market demand, domestic and foreign economic conditions in general, and
governmental regulations and tax laws. The general level of inflation in the
economy did not have a material effect on the operations of the Programs in
1997. Oil and gas prices have fluctuated during recent years and generally have
not followed the same pattern as inflation. See "Item 2. Properties - Oil and
Gas Production, Revenue, and Price History."
Year 2000 Computer Issues
Dyco has reviewed its computer systems and hardware to locate potential
operational problems associated with the year 2000. Such review will continue
until all potential problems are located and resolved. Dyco believes that all
year-2000 problems in its computer system have been or will be resolved in a
timely manner and have not caused and will not cause either (i) disruption of
the Programs' operations or (ii) a material effect on the Programs' financial
condition or results of operations. However, it is possible that the Programs'
cash flows could be disrupted by year-2000 problems experienced by operators of
the Programs' wells, buyers of the Programs' oil and gas, financial institutions
or other persons. Dyco is unable to quantify the effect, if any, on the Programs
of year-2000 computer problems which may be experienced by these third parties.
ITEM 1.
25
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
DYCO OIL AND GAS PROGRAM 1982-1 LIMITED PARTNERSHIP
We have audited the financial statements of the Dyco Oil and Gas Program
1982-1 Limited Partnership (a Minnesota limited partnership) as listed in Item
14(a) of this Annual Report. These financial statements are the responsibility
of the Program'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 the Dyco Oil and Gas Program
1982-1 Limited Partnership at December 31, 1997 and 1996, and the results of its
operations and cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand, L.L.P.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
March 18, 1998
26
<PAGE>
DYCO OIL AND GAS PROGRAM
1982-1 LIMITED PARTNERSHIP
Balance Sheets
December 31, 1997 and 1996
ASSETS
------
1997 1996
-------- --------
CURRENT ASSETS:
Cash and cash equivalents $120,049 $135,676
Accrued oil and gas sales 49,405 64,236
------- -------
Total current assets $169,454 $199,912
NET OIL AND GAS PROPERTIES,
utilizing the full cost method 90,100 176,741
DEFERRED CHARGE 59,627 59,347
------- -------
$319,181 $436,000
======= =======
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
CURRENT LIABILITIES:
Accounts payable $ 12,181 $ 7,000
------- -------
Total current liabilities $ 12,181 $ 7,000
ACCRUED LIABILITY 53,234 53,236
PARTNERS CAPITAL:
General Partner, issued and
outstanding, 100 Units 2,537 3,757
Limited Partners, issued and
outstanding, 10,000 Units 251,229 372,007
------- -------
Total Partners' Capital $253,766 $375,764
------- -------
$319,181 $436,000
======= =======
The accompanying notes are an integral part of these
financial statements.
27
<PAGE>
DYCO OIL AND GAS PROGRAM
1982-1 LIMITED PARTNERSHIP
Statements of Operations
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
---------- --------- --------
REVENUES:
Oil and gas sales, including
$195,118 of sales to
related parties in 1995
(Note 2) $322,902 $317,267 $263,331
Interest 6,360 2,656 207
------- ------- --------
$329,262 $319,923 $263,538
COSTS AND EXPENSES:
Lease operating $ 80,881 $ 86,759 $115,436
Production taxes 23,534 22,755 18,645
Depreciation, depletion and
amortization of oil and
gas properties 35,611 21,362 40,413
General and administrative 109,234 102,540 104,106
------- ------- --------
$249,260 $233,416 $278,600
------- ------- --------
NET INCOME (LOSS) $ 80,002 $ 86,507 ($ 15,062)
======= ======= ========
GENERAL PARTNER (1%) - NET
INCOME (LOSS) $ 800 $ 865 ($ 151)
======= ======= ========
LIMITED PARTNERS (99%) - NET
INCOME (LOSS) $ 79,202 $ 85,642 ($ 14,911)
======= ======= ========
NET INCOME (LOSS) per Unit $ 7.92 $ 8.57 ($ 1.49)
======= ======= ========
UNITS OUTSTANDING 10,100 10,100 10,100
======= ======= ========
The accompanying notes are an integral part of these
financial statements.
28
<PAGE>
DYCO OIL AND GAS PROGRAM
1982-1 LIMITED PARTNERSHIP
Statements of Partners' Capital
For the Years Ended December 31, 1997, 1996, and 1995
General Limited
Partner Partners Total
--------- ---------- ---------
Balances at Dec. 31, 1994 $3,043 $301,276 $304,319
Net loss ( 151) ( 14,911) ( 15,062)
----- ------- -------
Balances at Dec. 31, 1995 $2,892 $286,365 $289,257
Net income 865 85,642 86,507
----- ------- -------
Balances at Dec. 31, 1996 $3,757 $372,007 $375,764
Cash distributions ( 2,020) ( 199,980) ( 202,000)
Net income 800 79,202 80,002
----- ------- -------
Balances at Dec. 31, 1997 $2,537 $251,229 $253,766
===== ======= =======
The accompanying notes are an integral part of these
financial statements.
29
<PAGE>
<TABLE>
<CAPTION>
DYCO OIL AND GAS PROGRAM
1982-1 LIMITED PARTNERSHIP
Statements of Cash Flows
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
--------- --------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 80,002 $ 86,507 ($15,062)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation, depletion, and amorti-
zation of oil and gas properties 35,611 21,362 40,413
(Increase) decrease in accrued
oil and gas sales 14,831 ( 18,085) ( 31,280)
(Increase) decrease in deferred
charge ( 280) 623 42,299
Increase (decrease) in accounts
payable 5,181 352 ( 489)
Decrease in accrued liability ( 2) ( 2,144) ( 23,522)
------- ------- ------
Net cash provided by operating
activities $135,343 $ 88,615 $12,359
------- ------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of oil and
gas properties $ 51,030 $ 20,005 $ 26
Additions to oil and gas properties - ( 2,031) ( 88)
------- ------- ------
Net cash provided (used) by investing
activities $ 51,030 $ 17,974 ($ 62)
------- ------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($202,000) $ - $ -
------- ------- ------
Net cash used by financing
activities ($202,000) $ - $ -
------- ------- ------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 15,627) $106,589 $12,297
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 135,676 29,087 16,790
------- ------- ------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $120,049 $135,676 $29,087
======= ======= ======
</TABLE>
The accompanying notes are an integral part of these
financial statements.
30
<PAGE>
DYCO OIL AND GAS PROGRAM 1982-1 LIMITED PARTNERSHIP
Notes to Financial Statements
For the Years Ended December 31, 1997, 1996, and 1995
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations
The Dyco Oil and Gas Program 1982-1 Limited Partnership (the
"Program"), a Minnesota limited partnership, commenced operations on June
14, 1982. Dyco Petroleum Corporation ("Dyco") is the general partner of
the Program. Affiliates of Dyco owned 4,429 (43.9%) of the Program's Units
at December 31, 1997.
The Program's sole business is the development and production of oil
and gas with a concentration on gas. Substantially all of the Program's
gas reserves are being sold regionally in the "spot market." Due to the
highly competitive nature of the spot market, prices on the spot market
are subject to wide seasonal and regional pricing fluctuations. In
addition, such spot market sales are generally short-term in nature and
are dependent upon the obtaining of transportation services provided by
pipelines.
Cash and Cash Equivalents
The Program considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents. Cash
equivalents are not insured, which cause the Program to be subject to
risk.
Credit Risk
Accrued oil and gas sales which are due from a variety of oil and
gas purchasers subject the Program to a concentration of credit risk. Some
of these purchasers are discussed in Note 3 - Major Customers. Subsequent
to year-end, all oil and gas sales accrued as of December 31, 1997 have
been collected.
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. Capitalized costs are depleted on the gross revenue method
using estimates of proved reserves. The full cost amortization rates per
equivalent Mcf of gas produced
31
<PAGE>
during the years ended December 31, 1997, 1996, and 1995 were $0.27,
$0.15, and $0.22, respectively. The Program's calculation of depreciation,
depletion, and amortization includes estimated future expenditures to be
incurred in developing proved reserves and estimated dismantlement and
abandonment costs, net of estimated salvage values. In the event the
unamortized cost of oil and gas properties being amortized exceeds the
full cost ceiling (as defined by the Securities and Exchange
Commission("SEC")) the excess is charged to expense in the year during
which such excess occurs. In addition, SEC rules provide that if prices
decline subsequent to year end, any excess that results from these
declines may also be charged to expense during the current year. 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.
Deferred Charge
The Deferred Charge at December 31, 1997 and 1996 represents costs
deferred for lease operating expenses incurred in connection with the
Program's underproduced gas imbalance positions. The rate used in
calculating the deferred charge is the average of the annual production
costs per Mcf. At December 31, 1997, cumulative total gas sales volumes
for underproduced wells were less than the Program's pro-rata share of
total gas production from these wells by 101,927 Mcf, resulting in prepaid
lease operating expenses of $59,627. At December 31, 1996, cumulative
total gas sales volumes for underproduced wells were less than the
Program's pro-rata share of total gas production from these wells by
103,392 Mcf, resulting in prepaid lease operating expenses of $59,347.
Accrued Liability
The Accrued Liability at December 31, 1997 and 1996 represents
charges accrued for lease operating expenses incurred in connection with
the Program's overproduced gas imbalance positions. The rate used in
calculating the accrued liability is the average of the annual production
costs per Mcf. At December 31, 1997, cumulative total gas sales volumes
for overproduced wells exceeded the Program's pro-rata share of total gas
production from these wells by 90,998 Mcf, resulting in accrued lease
operating expenses of $53,234. At December 31, 1996, cumulative total gas
sales volumes for overproduced wells exceeded the Program's pro-rata share
of total gas production from these wells by 92,745 Mcf, resulting in
accrued lease operating expenses of $53,236.
32
<PAGE>
Oil and Gas Sales
The Program's oil and condensate production is sold, title passed,
and revenue recognized at or near the Program's wells under short-term
purchase contracts at prevailing prices in accordance with arrangements
which are customary in the oil industry. Sales of gas applicable to the
Program's interest in producing oil and gas leases are recorded as income
when the gas is metered and title transferred pursuant to the gas sales
contracts covering the Program's interest in gas reserves. During such
times as the Program's sales of gas exceed its pro rata ownership in a
well, such sales are recorded as income unless total sales from the well
have exceeded the Program's share of estimated total gas reserves
underlying the property at which time such excess is recorded as a
liability. At December 31, 1997 and 1996 no such liability was recorded.
Use of Estimates in Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles 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 date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates. Further, the deferred charge and the accrued liability involve
estimates which could materially differ from the actual amounts ultimately
realized or incurred in the near term. Oil and gas reserves (see Note 4)
also involve significant estimates which could materially differ from the
actual amounts ultimately realized.
Income Taxes
Income or loss for income tax purposes is includable in the income
tax returns of the partners. Accordingly, no recognition has been given to
income taxes in the accompanying financial statements.
2. TRANSACTIONS WITH RELATED PARTIES
Under the terms of the Program 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 years ended December 31, 1997, 1996, and 1995,
such expenses
33
<PAGE>
totaled $109,234, $102,540, and $104,106, respectively, of which $74,460
was paid each year to Dyco and its affiliates.
Affiliates of the Program operate certain of the Program's
properties. Their policy is to bill the Program for all customary charges
and cost reimbursements associated with these activities, together with
any compressor rentals, consulting, or other services provided. Such
charges are comparable to third party charges in the area where the wells
are located and are the same as charged to other working interest owners
in the wells.
During 1995 the Program sold gas at market prices to El Paso Energy
Marketing Company, formerly known as Premier Gas Company ("El Paso"). El
Paso, like other similar gas marketing firms, then resold such gas to
third parties at market prices. El Paso was an affiliate of the Program
until December 6, 1995. During 1995, these sales totaled $195,118.
3. MAJOR CUSTOMERS
The following purchasers individually accounted for 10% or more of
the combined oil and gas sales of the Program for the years ended December
31, 1997, 1996, and 1995:
Purchaser 1997 1996 1995
--------- ----- ----- -----
El Paso 89.0% 86.0% 74.1%
National
Cooperative
Refinery - % - % 20.4%
In the event of interruption of purchases by these significant
customers or the cessation or material change in availability of
open-access transportation by the Program's pipeline transporters, the
Program may encounter difficulty in marketing its gas and in maintaining
historic sales levels.
Alternative purchasers or transporters may not be readily available.
4. SUPPLEMENTAL OIL AND GAS INFORMATION
The following supplemental information regarding the oil and gas
activities of the Program is presented pursuant to the disclosure
requirements promulgated by the SEC.
34
<PAGE>
Capitalized Costs
The Program's capitalized costs and accumulated depreciation,
depletion, amortization, and valuation allowance at December 31, 1997 and
1996 were as follows:
December 31,
-------------------------------
1997 1996
------------- -------------
Proved properties $52,499,881 $52,550,911
Unproved properties, not
subject to depreciation,
depletion, and amortization - -
---------- ----------
$52,499,881 $52,550,911
Less accumulated depreciation,
depletion, amortization, and
valuation allowance ( 52,409,781) ( 52,374,170)
---------- ----------
Net oil and gas properties $ 90,100 $ 176,741
========== ==========
Costs Incurred
The Program incurred no oil and gas property acquisition or
exploration costs during 1997, 1996, and 1995. Costs incurred by the
Program in connection with its oil and gas property development activities
during 1997, 1996, and 1995 were as follows:
December 31,
-----------------------------
1997 1996 1995
------ ------ ----
Development costs $ - $2,031 $ 88
===== ===== ====
35
<PAGE>
Quantities of Proved Oil and Gas Reserves - Unaudited
Set forth below is a summary of the changes in the net quantities of the
Program's proved crude oil and gas reserves for the years ended December 31,
1997, 1996, and 1995. Proved reserves were estimated by petroleum engineers
employed by affiliates of Dyco. All of the Program's reserves are located in the
United States. The following information includes certain gas balancing
adjustments which cause the gas volumes to differ from the reserve information
prepared by Dyco.
<TABLE>
<CAPTION>
1997 1996 1995
--------------------- --------------------- ---------------------
Oil Gas Oil Gas Oil Gas
(Bbls) (Mcf) (Bbls) (Mcf) (Bbls) (Mcf)
-------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Proved reserves,
beginning of year 20,761 832,137 9,674 633,507 9,615 683,841
Revisions of previous
estimates 4,463 ( 82,235) 12,955 338,350 2,367 120,461
Sales of reserves ( 7,048) ( 7,254) - ( 4,104) - -
Production ( 1,906) (122,008) ( 1,868) (135,616) (2,308) (170,795)
------ ------- ------ ------- ------ -------
Proved reserves,
end of year 16,270 620,640 20,761 832,137 9,674 633,507
====== ======= ====== ======= ===== =======
Proved developed reserves:
Beginning of year 20,761 832,137 9,674 633,507 9,615 683,841
------ ------- ------ ------- ----- -------
End of year 16,270 620,640 20,761 832,137 9,674 633,507
====== ======= ====== ======= ===== =======
</TABLE>
36
<PAGE>
The process of estimating oil and gas reserves is complex, requiring
significant subjective decisions in the evaluation of available
geological, engineering, and economic data for each reservoir. The data
for a given reservoir may change substantially over time as a result of,
among other things, additional development activity, production history,
and viability of production under varying economic conditions;
consequently, it is reasonably possible that material revisions to
existing reserve estimates may occur in the near future. Although every
reasonable effort has been made to ensure that the reserve estimates
reported herein represent the most accurate assessment possible, the
significance of the subjective decisions required and variances in
available data for various reservoirs make these estimates generally less
precise than other estimates presented in connection with financial
statement disclosures. The Program's reserves were determined at December
31, 1997 using oil and gas prices of $16.25 per barrel and $2.32 per Mcf,
respectively.
37
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
DYCO OIL AND GAS PROGRAM 1982-2 LIMITED PARTNERSHIP
We have audited the financial statements of the Dyco Oil and Gas Program
1982-2 Limited Partnership (a Minnesota limited partnership) as listed in Item
14(a) of this Annual Report. These financial statements are the responsibility
of the Program'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 the Dyco Oil and Gas Program
1982-2 Limited Partnership at December 31, 1997 and 1996, and the results of its
operations and cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand, L.L.P.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
March 18, 1998
38
<PAGE>
DYCO OIL AND GAS PROGRAM
1982-2 LIMITED PARTNERSHIP
Balance Sheets
December 31, 1997 and 1996
ASSETS
------
1997 1996
-------- --------
CURRENT ASSETS:
Cash and cash equivalents $234,351 $208,342
Accrued oil and gas sales 110,673 154,243
------- -------
Total current assets $345,024 $362,585
NET OIL AND GAS PROPERTIES,
utilizing the full cost method 182,488 258,490
DEFERRED CHARGE 17,727 24,567
------- -------
$545,239 $645,642
======= =======
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
CURRENT LIABILITIES:
Accounts payable $ 8,568 $ 7,947
Gas imbalance payable 5,322 48,915
------- -------
Total current liabilities $ 13,890 $ 56,862
ACCRUED LIABILITY 82,919 86,645
PARTNERS' CAPITAL:
General Partner, issued and
outstanding, 80 Units 4,484 5,021
Limited Partners, issued and
outstanding, 8,000 Units 443,946 497,114
------- -------
Total Partners' Capital $448,430 $502,135
------- -------
$545,239 $645,642
======= =======
The accompanying notes are an integral part of these
financial statements.
39
<PAGE>
DYCO OIL AND GAS PROGRAM
1982-2 LIMITED PARTNERSHIP
Statements of Operations
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
-------- -------- --------
REVENUES:
Oil and gas sales, including
$471,392 of sales to related
parties in 1995 (Note 2) $724,753 $685,439 $582,641
Interest 8,864 8,214 7,766
------- ------- -------
$733,617 $693,653 $590,407
COSTS AND EXPENSES:
Lease operating $ 93,272 $110,110 $126,949
Production taxes 48,699 51,460 41,329
Depreciation, depletion and
amortization of oil and
gas properties 74,318 58,142 107,051
Impairment provision - - 14,169
General and administrative 86,233 81,018 83,226
------- ------- -------
$302,522 $300,730 $372,724
------- ------- -------
NET INCOME $431,095 $392,923 $217,683
======= ======= =======
GENERAL PARTNER (1%) - NET INCOME $ 4,311 $ 3,929 $ 2,177
======= ======= =======
LIMITED PARTNERS (99%) - NET INCOME $426,784 $388,994 $215,506
======= ======= =======
NET INCOME per Unit $ 53.35 $ 48.63 $ 26.94
======= ======= =======
UNITS OUTSTANDING 8,080 8,080 8,080
======= ======= =======
The accompanying notes are an integral part of these
financial statements.
40
<PAGE>
DYCO OIL AND GAS PROGRAM
1982-2 LIMITED PARTNERSHIP
Statements of Partners' Capital
For the Years Ended December 31, 1997, 1996, and 1995
General Limited
Partner Partners Total
------- -------- -------
Balances at Dec. 31, 1994 $5,379 $532,550 $537,929
Cash distributions ( 2,424) ( 239,976) ( 242,400)
Net income 2,177 215,506 217,683
----- ------- -------
Balances at Dec. 31, 1995 $5,132 $508,080 $513,212
Cash distributions ( 4,040) ( 399,960) ( 404,000)
Net income 3,929 388,994 392,923
----- ------- -------
Balances at Dec. 31, 1996 $5,021 $497,114 $502,135
Cash distributions ( 4,848) ( 479,952) ( 484,800)
Net income 4,311 426,784 431,095
----- ------- -------
Balances at Dec. 31, 1997 $4,484 $443,946 $448,430
===== ======= =======
The accompanying notes are an integral part of these
financial statements.
41
<PAGE>
DYCO OIL AND GAS PROGRAM
1982-2 LIMITED PARTNERSHIP
Statements of Cash Flows
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
---------- ---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $431,095 $392,923 $217,683
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation, depletion, and amorti-
zation of oil and gas properties 74,318 58,142 107,051
Impairment provision - - 14,169
(Increase) decrease in accrued oil
and gas sales 43,570 ( 63,324) 18,684
Decrease in deferred charge 6,840 253 11,090
Increase (decrease) in accounts
payable 621 ( 19,108) ( 241)
Increase (decrease) in gas
imbalance payable ( 43,593) 40,093 ( 32,033)
Increase (decrease) in accrued
liability ( 3,726) 18,795 7,534
------- ------- -------
Net cash provided by operating
activities $509,125 $427,774 $343,937
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of oil and
gas properties $ 1,684 $ 24,081 $ 2,402
Additions to oil and gas properties - ( 60) ( 3,273)
------- ------- -------
Net cash provided (used) by investing
activities $ 1,684 $ 24,021 ($ 871)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($484,800) ($404,000) ($242,400)
------- ------- -------
Net cash used by financing
activities ($484,800) ($404,000) ($242,400)
------- ------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 26,009 $ 47,795 $100,666
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 208,342 160,547 59,881
------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $234,351 $208,342 $160,547
======= ======= =======
The accompanying notes are an integral part of these
financial statements.
42
<PAGE>
DYCO OIL AND GAS PROGRAM 1982-2 LIMITED PARTNERSHIP
Notes to Financial Statements
For the Years Ended December 31, 1997, 1996, and 1995
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations
The Dyco Oil and Gas Program 1982-2 Limited Partnership (the
"Program "), a Minnesota limited partnership, commenced operations on
March 1, 1983. Dyco Petroleum Corporation ("Dyco") is the general partner
of the Program. Affiliates of Dyco owned 3,261 (40.4%) of the Program's
Units at December 31, 1996.
The Program's sole business is the development and production of oil
and gas with a concentration on gas. Substantially all of the Program's
gas reserves are being sold regionally in the "spot market." Due to the
highly competitive nature of the spot market, prices on the spot market
are subject to wide seasonal and regional pricing fluctuations. In
addition, such spot market sales are generally short-term in nature and
are dependent upon the obtaining of transportation services provided by
pipelines.
Cash and Cash Equivalents
The Program considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents. Cash
equivalents are not insured, which cause the Program to be subject to
risk.
Credit Risk
Accrued oil and gas sales which are due from a variety of oil and
gas purchasers subject the Program to a concentration of credit risk. Some
of these purchasers are discussed in Note 3 - Major Customers. Subsequent
to year-end, all oil and gas sales accrued as of December 31, 1997 have
been collected.
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. Capitalized costs are depleted on the gross revenue method
using estimates of proved reserves. The full cost amortization rates per
equivalent Mcf of gas produced
43
<PAGE>
during the years ended December 31, 1997, 1996, and 1995 were $0.23,
$0.17, and $0.24, respectively. The Program's calculation of depreciation,
depletion, and amortization includes estimated future expenditures to be
incurred in developing proved reserves and estimated dismantlement and
abandonment costs, net of estimated salvage values. In the event the
unamortized cost of oil and gas properties being amortized exceeds the
full cost ceiling (as defined by the Securities and Exchange
Commission("SEC")) the excess is charged to expense in the year during
which such excess occurs. In addition, SEC rules provide that if prices
decline subsequent to year end, any excess that results from these
declines may also be charged to expense during the current year. During
1995, the Program charged to expense an impairment provision of $14,169
which represents the amount of unamortized oil and gas properties which
exceeded the full cost ceiling. No such provision was incurred in 1996 or
1997. 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.
Deferred Charge
The Deferred Charge at December 31, 1997 and 1996 represents costs
deferred for lease operating expenses incurred in connection with the
Program's underproduced gas imbalance positions. The rate used in
calculating the deferred charge is the average of the annual production
costs per Mcf. At December 31, 1997, cumulative total gas sales volumes
for underproduced wells were less than the Program's pro-rata share of
total gas production from these wells by 65,654 Mcf, resulting in prepaid
lease operating expenses of $17,727. At December 31, 1996, cumulative
total gas sales volumes for underproduced wells were less than the
Program's pro-rata share of total gas production from these wells by
76,013 Mcf, resulting in prepaid lease operating expenses of $24,567.
Accrued Liability
The Accrued Liability at December 31, 1997 and 1996 represents
charges accrued for lease operating expenses incurred in connection with
the Program's overproduced gas imbalance positions. The rate used in
calculating the accrued liability is the average of the annual production
costs per Mcf. At December 31, 1997, cumulative total gas sales volumes
for overproduced wells exceeded the Program's pro-rata share of total gas
production from these wells by 307,108 Mcf, resulting in future lease
operating expenses of $82,919. At December 31, 1996, cumulative total gas
sales
44
<PAGE>
volumes for overproduced wells exceeded the Program's pro-rata share of
total gas production from these wells by 268,085 Mcf, resulting in accrued
lease operating expenses of $86,645.
Oil and Gas Sales and Gas Imbalance Payable
The Program's oil and condensate production is sold, title passed,
and revenue recognized at or near the Program's wells under short-term
purchase contracts at prevailing prices in accordance with arrangements
which are customary in the oil industry. Sales of gas applicable to the
Program's interest in producing oil and gas leases are recorded as income
when the gas is metered and title transferred pursuant to the gas sales
contracts covering the Program's interest in gas reserves. During such
times as the Program's sales of gas exceed its pro rata ownership in a
well, such sales are recorded as income unless total sales from the well
have exceeded the Program's share of estimated total gas reserves
underlying the property at which time such excess is recorded as a
liability. The rates per Mcf used to calculate this liability are based on
the average gas prices received for the volumes at the time the
overproduction occurred. At December 31, 1997, total sales exceeded the
Program's share of estimated total gas reserves on two wells by $5,322
(3,548 Mcf). At December 31, 1996, total sales exceeded the Program's
share of estimated total gas reserves on one well by $48,915 (32,610 Mcf).
These amounts were recorded as gas imbalance payables at December 31, 1997
and 1996 in accordance with the sales method.
Use of Estimates in Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles 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 date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates. Further, the deferred charge, the gas imbalance payable, and
the accrued liability all involve estimates which could materially differ
from the actual amounts ultimately realized or incurred in the near term.
Oil and gas reserves (see Note 4) also involve significant estimates which
could materially differ from the actual amounts ultimately realized.
45
<PAGE>
Income Taxes
Income or loss for income tax purposes is includable in the income
tax returns of the partners. Accordingly, no recognition has been given to
income taxes in the accompanying financial statements.
2. TRANSACTIONS WITH RELATED PARTIES
Under the terms of the Program 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 years ended December 31, 1997, 1996, and 1995,
such expenses totaled $86,233, $81,018, and $83,226, respectively, of
which $58,440 was paid each year to Dyco and its affiliates.
Affiliates of the Program operate certain of the Program's
properties. Their policy is to bill the Program for all customary charges
and cost reimbursements associated with these activities, together with
any compressor rentals, consulting, or other services provided. Such
charges are comparable to third party charges in the area where the wells
are located and are the same as charged to other working interest owners
in the wells.
During 1994 the Program sold gas at market prices to El Paso Energy
Marketing Company, formerly known as Premier Gas Company ("El Paso"). El
Paso, like other similar gas marketing firms, then resold such gas to
third parties at market prices. El Paso was an affiliate of the Program
until December 6, 1995. During 1995, these sales totaled $471,392.
3. MAJOR CUSTOMERS
The following purchasers individually accounted for 10% or more of
the combined oil and gas sales (excluding the gas imbalance adjustment) of
the Program for the years ended December 31, 1997, 1996, and 1995:
Purchaser 1997 1996 1995
--------- ----- ------ -----
El Paso 83.6% 94.7% 80.9%
Enogex Services Corporation 12.5% - % - %
In the event of interruption of purchases by these significant
customers or the cessation or material change in availability of
open-access transportation by the Program's pipeline transporters, the
Program may encounter difficulty
46
<PAGE>
in marketing its gas and in maintaining historic sales levels. Alternative
purchasers or transporters may not be readily available.
4. SUPPLEMENTAL OIL AND GAS INFORMATION
The following supplemental information regarding the oil and gas
activities of the Program is presented pursuant to the disclosure
requirements promulgated by the SEC.
Capitalized Costs
The Program's capitalized costs and accumulated depreciation,
depletion, amortization, and valuation allowance at December 31, 1997 and
1996 were as follows:
December 31,
----------------------------
1997 1996
------------- -------------
Proved properties $38,307,074 $38,308,758
Unproved properties, not
subject to depreciation,
depletion, and amortiza-
tion - -
---------- ----------
$38,307,074 $38,308,758
Less accumulated depreciation,
depletion, amortization, and
valuation allowance ( 38,124,586) ( 38,050,268)
---------- ----------
Net oil and gas properties $ 182,488 $ 258,490
========== ==========
47
<PAGE>
Costs Incurred
The Program incurred no oil and gas property acquisition or
exploration costs during 1997, 1996, and 1995. Costs incurred by the
Program in connection with its oil and gas property development activities
during 1997, 1996, and 1995 were as follows:
December 31,
--------------------------
1997 1996 1995
----- ----- ------
Development costs $ - $ 60 $3,273
===== ==== ======
48
<PAGE>
Quantities of Proved Oil and Gas Reserves - Unaudited
Set forth below is a summary of the changes in the net quantities of the
Program's proved crude oil and gas reserves for the years ended December 31,
1997, 1996, and 1995. Proved reserves were estimated by petroleum engineers
employed by affiliates of Dyco. All of the Program's reserves are located in the
United States. The following information includes certain gas balancing
adjustments which cause the gas volumes to differ from the reserve information
prepared by Dyco.
<TABLE>
<CAPTION>
1997 1996 1995
-------------------- ----------------------- --------------------
Oil Gas Oil Gas Oil Gas
(Bbls) (Mcf) (Bbls) (Mcf) (Bbls) (Mcf)
------ ----------- ------- ----------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Proved reserves,
beginning of year 608 1,026,533 707 973,504 5,072 1,136,576
Revisions of previous
estimates 65 322,547 150 397,810 ( 240) 274,362
Sales of reserves - ( 627) ( 69) ( 7,689) (3,421) ( 47)
Production (102) ( 321,119) ( 180) ( 337,092) ( 704) ( 437,387)
--- --------- ----- --------- ----- ---------
Proved reserves,
end of year 571 1,027,334 608 1,026,533 707 973,504
=== ========= ===== ========= ===== =========
Proved developed reserves:
Beginning of year 608 1,026,533 707 973,504 5,072 1,136,576
--- --------- ----- --------- ----- ---------
End of year 571 1,027,334 608 1,026,533 707 973,504
=== ========= ===== ========= ===== =========
</TABLE>
49
<PAGE>
The process of estimating oil and gas reserves is complex, requiring
significant subjective decisions in the evaluation of available
geological, engineering, and economic data for each reservoir. The data
for a given reservoir may change substantially over time as a result of,
among other things, additional development activity, production history,
and viability of production under varying economic conditions;
consequently, it is reasonably possible that material revisions to
existing reserve estimates may occur in the near future. Although every
reasonable effort has been made to ensure that the reserve estimates
reported herein represent the most accurate assessment possible, the
significance of the subjective decisions required and variances in
available data for various reservoirs make these estimates generally less
precise than other estimates presented in connection with financial
statement disclosures. The Program's reserves were determined at December
31, 1997 using oil and gas prices of $16.25 per barrel and $2.32 per Mcf,
respectively.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Programs are limited partnerships and have no directors or executive
officers. The following individuals are directors and executive officers of
Dyco, General Partner. The business address of such directors and executive
officers is Two West Second Street, Tulsa, Oklahoma 74103.
NAME AGE POSITION WITH DYCO
---------------- --- --------------------------------
Dennis R. Neill 46 President and Director
Patrick M. Hall 39 Chief Financial Officer
Judy K. Fox 47 Secretary
The director will hold office until the next annual meeting of
shareholders of Dyco and until his successor has been duly elected and
qualified. All executive officers serve at the discretion of the Board of
Directors.
Dennis R. Neill joined the Samson Companies in 1981, was named Senior Vice
President and Director of Dyco on June 18, 1991, and was named President of Dyco
on June 30, 1996. Prior to joining the Samson Companies, he was associated with
a Tulsa law
50
<PAGE>
firm, Conner and Winters, where his principal practice was in the securities
area. He received a Bachelor of Arts degree in political science from Oklahoma
State University and a Juris Doctorate degree from the University of Texas. Mr.
Neill also serves as Senior Vice President of Samson Investment Company and as
President and Director of Samson Properties Incorporated, Samson Hydrocarbons
Company, Berry Gas Company, Circle L Drilling Company, Compression, Inc., and
Geodyne Resources, Inc. and its subsidiaries.
Patrick M. Hall joined the Samson Companies in 1983, was named a Vice
President of Dyco on June 18, 1991, and was named Chief Financial Officer of
Dyco on June 30, 1996. Prior to joining the Samson Companies he was a senior
accountant with Peat Marwick Main & Co. in Tulsa. He holds a Bachelor of Science
degree in accounting from Oklahoma State University and is a Certified Public
Accountant. Mr. Hall also serves as Senior Vice President - Controller of Samson
Investment Company.
Judy K. Fox joined the Samson Companies in 1990 and was named Secretary of
Dyco on June 30, 1996. Prior to joining the Samson Companies, she served as Gas
Contract Manager for Ely Energy Company. Ms. Fox is also Secretary of Berry Gas
Company, Circle L Drilling Company, Compression, Inc., Samson Hydrocarbons
Company, Samson Properties Incorporated, and Geodyne Resources, Inc. and its
subsidiaries.
Section 16(a) Beneficial Ownership Reporting Compliance
To the best knowledge of the Programs and Dyco, there were no officers,
directors, or ten percent owners who were delinquent filers during 1997 of
reports required under Section 16(a) of the Securities and Exchange Act of 1934.
ITEM 11. EXECUTIVE COMPENSATION
The Programs are limited partnerships and, therefore, have no officers or
directors. The following table summarizes the amounts paid by the Programs as
compensation and reimbursements to Dyco and its affiliates for the three years
ended December 31, 1997:
51
<PAGE>
Compensation/Reimbursement to Dyco and its affiliates
Three Years Ended December 31, 1997
Type of Compensation/Reimbursement(1) Expense
- ------------------------------------- ----------------------------
1997 1996 1995
------- ------- -----
1982-1 Program
- --------------
Compensation:
Operations (2) (2) (2)
Gas Marketing (3) (3) (3)
Reimbursements:
General and Administrative,
Geological, and Engineering
Expenses and Direct Expenses(4) $74,460 $74,460 $74,460
1982-2 Program
- --------------
Compensation:
Operations (2) (2) (2)
Gas Marketing (3) (3) (3)
Reimbursements:
General and Administrative,
Geological, and Engineering
Expenses and Direct Expenses(4) $58,440 $58,440 $58,440
- ----------
(1) The authority for all of such compensation and reimbursement is the
Program Agreements. With respect to the Operations activities noted in the
table, management believes that such compensation is equal to or less than
that charged by unaffiliated persons in the same geographic areas and
under the same conditions.
(2) Affiliates of the Programs serve as operator of a significant portion of
the Programs' wells. Dyco, as General Partner, contracts with such
affiliates for services as operator of the wells. As operator, such
affiliates are compensated at rates provided in the operating agreements
in effect and charged to all parties to such agreement. The dollar amount
of such compensation paid by the Programs to such affiliates is impossible
to quantify as of the date of this Annual Report.
(3) During 1995 El Paso, an affiliate of the Programs until December 6, 1995,
purchased a portion of the Programs' gas at market prices and resold such
gas at market prices directly to end-users and local distribution
companies. During 1995, the 1982-1 and 1982-2 Programs sold $195,118 and
52
<PAGE>
$471,392, respectively, of gas to El Paso. After December 6, 1995, the
Programs' gas was marketed by Dyco and its affiliates, who were reimbursed
for such activities as general and administrative expenses.
(4) The Programs reimburse Dyco and its affiliates for reasonable and
necessary general and administrative, geological, and engineering expenses
and direct expenses incurred in connection with their management and
operation of the Programs. The directors, officers, and employees of Dyco
and its affiliates receive no direct remuneration from the Programs for
their services to the Programs. See "Salary Reimbursement Table" below.
The allocable general and administrative, geological, and engineering
expenses are apportioned on a reasonable basis between the Programs'
business and all other oil and gas activities of Dyco and its affiliates,
including Dyco's management and operation of affiliated oil and gas
limited partnerships. The allocation to the Programs of these costs is
made by Dyco as General Partner.
As noted in the Compensation/Reimbursement Table above, the directors,
officers, and employees of Dyco and their affiliates receive no direct
remuneration from the Programs for their services. However, to the extent such
services represent direct involvement with the Programs, as opposed to general
corporate functions, such persons' salaries are allocated to and reimbursed by
the Programs. Such allocation to the Programs' general and administrative,
geological, and engineering expenses of the salaries of directors, officers, and
employees of Dyco and its affiliates is based on internal records maintained by
Dyco and its affiliates, and represents investor relations, legal, accounting,
data processing, management, gas marketing, and other functions directly
attributable to the Programs' operations. The following tables indicate the
approximate amount of general and administrative expense reimbursement
attributable to the salaries of the directors, officers, and employees of Dyco
and its affiliates for the three years ended December 31, 1997:
53
<PAGE>
<TABLE>
<CAPTION>
1982-1 Program
--------------
Salary Reimbursement
Three Years Ended December 31, 1997
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
------------------------- --------------------- -------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1995 $40,655 - - - - - -
1996 $43,559 - - - - - -
1997 $44,482 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Dyco until
June 30, 1996.
(2) The general and administrative expenses paid by the Program and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Dyco on June 30, 1996.
(4) No officer or director of Dyco or its affiliates provides full-time
services to the Program and no individual's salary or other compensation
reimbursement from the Program equals or exceeds $100,000 per annum.
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
1982-2 Program
--------------
Salary Reimbursement
Three Years Ended December 31, 1997
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
------------------------- --------------------- -------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1995 $31,908 - - - - - -
1996 $34,187 - - - - - -
1997 $34,912 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Dyco until
June 30, 1996.
(2) The general and administrative expenses paid by the Program and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Dyco on June 30, 1996.
(4) No officer or director of Dyco or its affiliates provides full-time
services to the Program and no individual's salary or other compensation
reimbursement from the Program equals or exceeds $100,000 per annum.
</TABLE>
55
<PAGE>
In addition to the compensation/reimbursements noted above, during the
three years ended December 31, 1997, the Samson Companies were in the business
of supplying field and drilling equipment and services to affiliated and
unaffiliated parties in the industry. Such companies may have provided equipment
and services for wells in which the Programs have an interest. These equipment
and services were provided at prices or rates equal to or less than those
normally charged in the same or comparable geographic area by unaffiliated
persons or companies dealing at arm's length. The operators of these wells bill
the Programs for a portion of such costs based upon the Programs' interest in
the well.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information as to the beneficial ownership of
the Programs' Units as of February 28, 1998 by each beneficial owner of more
than 5% of the issued and outstanding Units and by the directors, officers, and
affiliates of Dyco. The address of each of such persons is Samson Plaza, Two
West Second Street, Tulsa, Oklahoma 74103.
Number of Units
Beneficially
Owned (Percent
Beneficial Owner of Outstanding)
--------------------------------- -----------------
1982-1 Program:
--------------
Samson Resources Company 4,431 (43.9%)
All directors, officers, and
affiliates of Dyco as a group
and Dyco (5 persons) 4,431 (43.9%)
1982-2 Program:
--------------
Samson Resources Company 3,264 (40.4%)
All directors, officers, and
affiliates of Dyco as a group
and Dyco (5 persons) 3,264 (40.4%)
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain affiliates of Dyco engage in oil and gas activities independently
of the Programs which result in conflicts of interest that cannot be totally
eliminated. The allocation of
56
<PAGE>
acquisition and drilling opportunities and the nature of the compensation
arrangements between the Programs and such affiliates also create potential
conflicts of interest. An affiliate of the Program owns a significant amount of
the Programs' Units and therefore has an identity of interest with other limited
partners with respect to the operations of the Programs.
In order to attempt to assure limited liability for limited partners as
well as an orderly conduct of business, management of the Programs is exercised
solely by Dyco. The Program Agreements grant Dyco broad discretionary authority
with respect to the Programs' participation in drilling prospects and
expenditure and control of funds, including borrowings. These provisions are
similar to those contained in prospectuses and partnership agreements for other
public oil and gas partnerships. Broad discretion as to general management of
the Programs involves circumstances where Dyco has conflicts of interest and
where it must allocate costs and expenses, or opportunities, among the Programs
and other competing interests.
Dyco does not devote all of its time, efforts, and personnel exclusively
to the Programs. Furthermore, the Programs do not have any employees, but
instead rely on the personnel of the Samson Companies. The Programs thus compete
with the Samson Companies (including other currently sponsored oil and gas
programs) for the time and resources of such personnel. The Samson Companies
devote such time and personnel to the management of the Programs as are
indicated by the circumstances and as are consistent with Dyco's fiduciary
duties.
Affiliates of the Programs are solely responsible for the negotiation,
administration, and enforcement of oil and gas sales agreements covering the
Programs' leasehold interests. Because affiliates of the Programs who provide
services to the Programs have fiduciary or other duties to other members of the
Samson Companies, contract amendments and negotiating positions taken by them in
their effort to enforce contracts with purchasers may not necessarily represent
the positions that a Program would take if it were to administer its own
contracts without involvement with other members of the Samson Companies. On the
other hand, management believes that the Programs' negotiating strength and
contractual positions have been enhanced by virtue of its affiliation with the
Samson Companies.
For a description of certain other relationships and related transactions
see "Item 11. Executive Compensation".
57
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements, Financial Statement Schedules, and Exhibits.
(1) Financial Statements: The following financial statements for
the Programs as of December 31, 1997 and 1996 and for the
years ended December 31, 1997, 1996, and 1995 are filed as
part of this report:
Reports of Independent Accountants
Balance Sheets
Statements of Operations
Statements of Partners' Capital
Statements of Cash Flows
Notes to Financial Statements
(2) Financial Statement Schedules:
None.
(3) Exhibits:
4.1 Drilling Agreement dated February 16, 1982 for Dyco
Drilling Program 1982-1 by and between Dyco Oil and Gas
Program 1982-1, Dyco Petroleum Corporation, and Jaye F.
Dyer filed as Exhibit 4.1 to Annual Report on Form 10-K
for the year ended December 31, 1991 on April 13, 1992
and is hereby incorporated by reference.
4.2 Program Agreement dated February 16, 1992 for Dyco Oil
and Gas Program 1982-1 by and between Dyco Petroleum
Corporation and Participants filed as Exhibit 4.2 to
Annual Report on Form 10-K for the year ended December
31, 1991 on April 13, 1992 and is hereby incorporated
by reference.
4.3 Amendment to Program Agreement for Dyco Oil and Gas
Program 1982-1 dated February 9, 1991 filed as Exhibit
4.3 to Annual Report on Form 10-K for the year ended
December 31, 1991 on April 13, 1992 and is hereby
incorporated by reference.
4.4 Certificate of Limited Partnership, as amended, for
Dyco Oil and Gas Program 1982-1 Limited Partnership
filed as Exhibit 4.3 to
58
<PAGE>
Annual Report on Form 10-K for the year ended December
31, 1991 on April 13, 1992 and is hereby incorporated
by reference.
4.5 Drilling Agreement dated June 14, 1982 for Dyco
Drilling Program 1982-2 by and between Dyco Oil and Gas
Program 1982-2, Dyco Petroleum Corporation, and Jaye F.
Dyer filed as Exhibit 4.4 to Annual Report on Form 10-K
for the year ended December 31, 1991 on April 13, 1992
and is hereby incorporated by reference.
4.6 Form of Program Agreement for Dyco Oil and Gas Program
1982-2 by and between Dyco Petroleum Corporation and
the Participants filed as Exhibit 4.6 to Annual Report
on Form 10-K for the year ended December 31, 1991 on
April 13, 1992 and is hereby incorporated by reference.
4.7 Amendment to Program Agreement for Dyco Oil and Gas
Program 1982-2 dated February 9, 1989 filed as Exhibit
4.7 to Annual Report on Form 10-K for the year ended
December 31, 1991 on April 13, 1992 and is hereby
incorporated by reference.
4.8 Certificate of Limited Partnership, as amended, for
Dyco Oil and Gas Program 1982-2 Limited Partnership
filed as Exhibit 4.8 to Annual Report on Form 10-K for
the year ended December 31, 1991 on April 13, 1992 and
is hereby incorporated by reference.
*27.1 Financial Data Schedule containing summary financial
information extracted from the Dyco Oil and Gas Program
1982-1 Limited Partnership's financial statements as of
December 31, 1997 and for the year ended December 31,
1997.
*27.2 Financial Data Schedule containing summary financial
information extracted from the Dyco Oil and Gas Program
1982-2 Limited Partnership's financial statements as of
December 31, 1997 and for the year ended December 31,
1997.
All other Exhibits are omitted as inapplicable.
------------------
* Filed herewith.
59
<PAGE>
(b) Reports on Form 8-K filed during the fourth quarter of 1997:
None.
60
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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 organized.
DYCO OIL AND GAS PROGRAM 1982-1
LIMITED PARTNERSHIP
By: DYCO PETROLEUM CORPORATION
General Partner
March 24, 1998
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and March 24, 1998
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall Chief Financial March 24, 1998
------------------- Officer (Principal
Patrick M. Hall Financial and
Accounting Officer)
/s/Judy K. Fox Secretary March 24, 1998
-------------------
Judy K. Fox
61
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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 organized.
DYCO OIL AND GAS PROGRAM 1982-2
LIMITED PARTNERSHIP
By: DYCO PETROLEUM CORPORATION
General Partner
March 24, 1998
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and March 24, 1998
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall Chief Financial March 24, 1998
------------------- Officer (Principal
Patrick M. Hall Financial and
Accounting Officer)
/s/Judy K. Fox Secretary March 24, 1998
-------------------
Judy K. Fox
62
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
4.1 Drilling Agreement dated February 16, 1982 for Dyco Drilling Program
1982-1 by and between Dyco Oil and Gas Program 1982-1, Dyco
Petroleum Corporation, and Jaye F. Dyer filed as Exhibit 4.1 to
Annual Report on Form 10-K for the year ended December 31, 1991 on
April 13, 1992 and is hereby incorporated by reference.
4.2 Program Agreement dated February 16, 1992 for Dyco Oil and Gas
Program 1982-1 by and between Dyco Petroleum Corporation and
Participants filed as Exhibit 4.2 to Annual Report on Form 10-K for
the year ended December 31, 1991 on April 13, 1992 and is hereby
incorporated by reference.
4.3 Amendment to Program Agreement for Dyco Oil and Gas Program 1982-1
dated February 9, 1991 filed as Exhibit 4.3 to Annual Report on Form
10-K for the year ended December 31, 1991 on April 13, 1992 and is
hereby incorporated by reference.
4.4 Certificate of Limited Partnership, as amended, for Dyco Oil and Gas
Program 1982-1 Limited Partnership filed as Exhibit 4.3 to Annual
Report on Form 10-K for the year ended December 31, 1991 on April
13, 1992 and is hereby incorporated by reference.
4.5 Drilling Agreement dated June 14, 1982 for Dyco Drilling Program
1982-2 by and between Dyco Oil and Gas Program 1982-2, Dyco
Petroleum Corporation, and Jaye F. Dyer filed as Exhibit 4.4 to
Annual Report on Form 10-K for the year ended December 31, 1991 on
April 13, 1992 and is hereby incorporated by reference.
4.6 Form of Program Agreement for Dyco Oil and Gas Program 1982-2 by and
between Dyco Petroleum Corporation and the Participants filed as
Exhibit 4.6 to Annual Report on Form 10-K for the year ended
December 31, 1991 on April 13, 1992 and is hereby incorporated by
reference.
4.7 Amendment to Program Agreement for Dyco Oil and Gas Program 1982-2
dated February 9, 1989 filed as Exhibit 4.7 to Annual Report on Form
10-K for the year ended December 31, 1991 on April 13, 1992 and is
hereby incorporated by reference.
4.8 Certificate of Limited Partnership, as amended, for Dyco Oil and Gas
Program 1982-2 Limited Partnership
63
<PAGE>
filed as Exhibit 4.8 to Annual Report on Form 10-K for the year
ended December 31, 1991 on April 13, 1992 and is hereby incorporated
by reference.
*27.1 Financial Data Schedule containing summary financial information
extracted from the Dyco Oil and Gas Program 1982-1 Limited
Partnership's financial statements as of December 31, 1997 and for
the year ended December 31, 1997.
*27.2 Financial Data Schedule containing summary financial information
extracted from the Dyco Oil and Gas Program 1982-2 Limited
Partnership's financial statements as of December 31, 1997 and for
the year ended December 31, 1997.
- ------------------
* Filed herewith.
64
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000718943
<NAME> DYCO OIL & GAS PROGRAM 1982-1 LTD PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 120,049
<SECURITIES> 0
<RECEIVABLES> 49,405
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 169,454
<PP&E> 52,499,881
<DEPRECIATION> 52,409,781
<TOTAL-ASSETS> 319,181
<CURRENT-LIABILITIES> 12,181
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 253,766
<TOTAL-LIABILITY-AND-EQUITY> 319,181
<SALES> 322,902
<TOTAL-REVENUES> 329,262
<CGS> 0
<TOTAL-COSTS> 249,260
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 80,002
<INCOME-TAX> 0
<INCOME-CONTINUING> 80,002
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 80,002
<EPS-PRIMARY> 7.92
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000718944
<NAME> DYCO OIL & GAS PROGRAM 1982-2 LTD PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 234,351
<SECURITIES> 0
<RECEIVABLES> 110,673
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 345,024
<PP&E> 38,307,074
<DEPRECIATION> 38,124,586
<TOTAL-ASSETS> 545,239
<CURRENT-LIABILITIES> 13,890
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 448,430
<TOTAL-LIABILITY-AND-EQUITY> 545,239
<SALES> 724,753
<TOTAL-REVENUES> 733,617
<CGS> 0
<TOTAL-COSTS> 302,522
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 431,095
<INCOME-TAX> 0
<INCOME-CONTINUING> 431,095
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 431,095
<EPS-PRIMARY> 53.35
<EPS-DILUTED> 0
</TABLE>
