SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended Commission File Number
September 30, 1999 0-12261 (1982-1)
0-12262 (1982-2)
DYCO 1982 OIL AND GAS PROGRAM
(TWO LIMITED PARTNERSHIPS)
(Exact Name of Registrant as specified in its charter)
41-1438430 (1982-1)
Minnesota 41-1438437 (1982-2)
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or Number)
organization)
Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103
- ------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(918) 583-1791
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ------
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DYCO OIL AND GAS PROGRAM 1982-1 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
1999 1998
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 80,369 $108,147
Accrued oil and gas sales 32,156 24,078
-------- --------
Total current assets $112,525 $132,225
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 58,586 67,408
DEFERRED CHARGE 76,951 76,951
-------- --------
$248,062 $276,584
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 4,426 $ 4,751
Gas imbalance payable 4,286 4,286
-------- --------
Total current liabilities $ 8,712 $ 9,037
ACCRUED LIABILITY $ 57,239 $ 57,239
PARTNERS' CAPITAL:
General Partner, 100 general
partner units $ 1,820 $ 2,102
Limited Partners, issued and
outstanding, 10,000 Units 180,291 208,206
-------- --------
Total Partners' capital $182,111 $210,308
-------- --------
$248,062 $276,584
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1982-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
1999 1998
-------- --------
REVENUES:
Oil and gas sales $48,862 $66,187
Interest 966 1,786
------- -------
$49,828 $67,973
COSTS AND EXPENSES:
Oil and gas production $22,394 $30,420
Depreciation, depletion, and
amortization of oil and gas
properties 2,766 12,542
General and administrative
(Note 2) 21,706 21,873
------- -------
$46,866 $64,835
------- -------
NET INCOME $ 2,962 $ 3,138
======= =======
GENERAL PARTNER (1%) - net income $ 30 $ 32
======= =======
LIMITED PARTNERS (99%) - net income $ 2,932 $ 3,106
======= =======
NET INCOME PER UNIT $ .30 $ .31
======= =======
UNITS OUTSTANDING 10,100 10,100
======= =======
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1982-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
1999 1998
--------- ---------
REVENUES:
Oil and gas sales $110,522 $154,056
Interest 3,075 4,778
-------- --------
$113,597 $158,834
COSTS AND EXPENSES:
Oil and gas production $ 53,224 $ 74,157
Depreciation, depletion, and
amortization of oil and gas
properties 9,666 24,588
General and administrative
(Note 2) 78,904 80,114
-------- --------
$141,794 $178,859
-------- --------
NET LOSS ($ 28,197) ($ 20,025)
======== ========
GENERAL PARTNER (1%) - net loss ($ 282) ($ 200)
======== ========
LIMITED PARTNERS (99%) - net loss ($ 27,915) ($ 19,825)
======== ========
NET LOSS PER UNIT ($ 2.79) ($ 1.98)
======== ========
UNITS OUTSTANDING 10,100 10,100
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1982-1 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
1999 1998
---------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($ 28,197) ($ 20,025)
Adjustments to reconcile net loss
to net cash provided (used) by
operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 9,666 24,588
(Increase) decrease in accrued
oil and gas sales ( 8,078) 27,132
Decrease in accounts payable ( 325) ( 5,805)
-------- --------
Net cash provided (used) by
operating activities ($ 26,934) $ 25,890
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of oil
and gas properties $ - $ 259
Additions to oil and gas properties ( 844) -
-------- --------
Net cash provided (used) by
investing activities ($ 844) $ 259
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash used by financing
activities $ - $ -
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 27,778) $ 26,149
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 108,147 120,049
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 80,369 $146,198
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1982-2 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
1999 1998
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 33,798 $110,694
Accrued oil and gas sales 70,464 62,996
-------- --------
Total current assets $104,262 $173,690
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 131,724 140,337
DEFERRED CHARGE 21,746 21,746
-------- --------
$257,732 $335,773
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 5,214 $ 4,780
Gas imbalance payable 1,675 1,675
-------- --------
Total current liabilities $ 6,889 $ 6,455
ACCRUED LIABILITY $106,670 $106,670
PARTNERS' CAPITAL:
General Partner, 80 general
partner units $ 1,441 $ 2,226
Limited Partners, issued and
outstanding, 8,000 Units 142,732 220,422
-------- --------
Total Partners' capital $144,173 $222,648
-------- --------
$257,732 $335,773
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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<PAGE>
DYCO OIL AND GAS PROGRAM 1982-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
1999 1998
--------- --------
REVENUES:
Oil and gas sales $107,287 $81,205
Interest 1,816 2,371
-------- -------
$109,103 $83,576
COSTS AND EXPENSES:
Oil and gas production $ 34,714 $22,814
Depreciation, depletion, and
amortization of oil and gas
properties 6,328 16,520
General and administrative
(Note 2) 17,083 17,216
-------- -------
$ 58,125 $56,550
-------- -------
NET INCOME $ 50,978 $27,026
======== =======
GENERAL PARTNER (1%) - net income $ 510 $ 270
======== =======
LIMITED PARTNERS (99%) - net income $ 50,468 $26,756
======== =======
NET INCOME PER UNIT $ 6.31 $ 3.34
======== =======
UNITS OUTSTANDING 8,080 8,080
======== =======
The accompanying condensed notes are an
integral part of these financial statements.
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<PAGE>
DYCO OIL AND GAS PROGRAM 1982-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
1999 1998
-------- --------
REVENUES:
Oil and gas sales $230,900 $276,145
Interest 4,854 7,776
Gain on sale of oil and
gas properties - 60,067
-------- --------
$235,754 $343,988
COSTS AND EXPENSES:
Oil and gas production $ 72,534 $ 78,532
Depreciation, depletion, and
amortization of oil and gas
properties 17,556 39,737
General and administrative
(Note 2) 62,539 63,228
-------- --------
$152,629 $181,497
-------- --------
NET INCOME $ 83,125 $162,491
======== ========
GENERAL PARTNER (1%) - net income $ 831 $ 1,625
======== ========
LIMITED PARTNERS (99%) - net income $ 82,294 $160,866
======== ========
NET INCOME PER UNIT $ 10.29 $ 20.11
======== ========
UNITS OUTSTANDING 8,080 8,080
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1982-2 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
1999 1998
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 83,125 $162,491
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 17,556 39,737
Gain on sale of oil and gas
properties - ( 60,067)
(Increase) decrease in accrued
oil and gas sales ( 7,468) 65,619
Increase (decrease) in accounts
payable 434 ( 2,329)
-------- --------
Net cash provided by operating
activities $ 93,647 $205,451
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of oil and
gas properties $ 3,289 $ 68,427
Additions to oil and gas properties ( 12,232) -
-------- --------
Net cash provided (used) by
investing activities ($ 8,943) $ 68,427
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($161,600) ($444,400)
-------- --------
Net cash used by financing
activities ($161,600) ($444,400)
-------- --------
NET DECREASE IN CASH AND CASH
EQUIVALENTS ($ 76,896) ($170,522)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 110,694 234,351
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 33,798 $ 63,829
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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<PAGE>
DYCO OIL AND GAS PROGRAM 1982-1 LIMITED PARTNERSHIP
DYCO OIL AND GAS PROGRAM 1982-2 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheets as of September 30, 1999, statements of operations for
the three and nine months ended September 30, 1999 and 1998, and
statements of cash flows for the nine months ended September 30, 1999 and
1998 have been prepared by Dyco Petroleum Corporation ("Dyco"), the
General Partner of the Dyco Oil and Gas Program 1982-1 and 1982-2 Limited
Partnerships (individually, the "1982-1 Program" or the "1982-2 Program",
as the case may be, or, collectively, the "Programs"), without audit. In
the opinion of management all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position
at September 30, 1999, results of operations for the three and nine months
ended September 30, 1999 and 1998, and changes in cash flows for the nine
months ended September 30, 1999 and 1998 have been made.
Information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
financial statements be read in conjunction with the financial statements
and notes thereto included in the Programs' Annual Report on Form 10-K for
the year ended December 31, 1998. The results of operations for the period
ended September 30, 1999 are not necessarily indicative of the results to
be expected for the full year.
The limited partners' net income or loss per unit is based upon each
$5,000 initial capital contribution.
OIL AND GAS PROPERTIES
----------------------
Oil and gas operations are accounted for using the full cost method of
accounting. All productive and non-productive costs associated with the
acquisition, exploration and development of oil and gas reserves are
capitalized. The Programs' 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
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ceiling (as defined by the Securities and Exchange Commission), the excess
is charged to expense in the period during which such excess occurs. 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. During the first quarter of 1998, the 1982-2
Program sold one well for $62,467 representing approximately 1% of its
total reserves. The proceeds from this sale would have reduced the net
book value of the oil and gas properties by 34%, significantly altering
the capitalized cost/proved reserves relationship. Accordingly,
capitalized costs were reduced by approximately 1% with the remainder
recorded as a gain on sale of oil and gas properties.
The provision for depreciation, depletion, and amortization of oil and gas
properties is calculated by dividing the oil and gas sales dollars during
the period by the estimated future gross income from the oil and gas
properties and applying the resulting rate to the net remaining costs of
oil and gas properties that have been capitalized, plus estimated future
development costs.
2. TRANSACTIONS WITH RELATED PARTIES
---------------------------------
Under the terms of each of the Program's partnership agreement, Dyco is
entitled to receive a reimbursement for all direct expenses and general
and administrative, geological and engineering expenses it incurs on
behalf of the Program. During the three months ended September 30, 1999
and 1998 the 1982-1 Program incurred such expenses totaling $21,706 and
$21,873, respectively, of which $18,615 was paid each period to Dyco and
its affiliates. During the nine months ended September 30, 1999 and 1998
the 1982-1 Program incurred such expenses totaling $78,904 and $80,114,
respectively, of which $55,845 was paid each period to Dyco and its
affiliates. During the three months ended September 30, 1999 and 1998 the
1982-2 Program incurred such expenses totaling $17,083 and $17,216,
respectively, of which $14,610 was paid each period to Dyco and its
affiliates. During the nine months ended September 30, 1999 and 1998 the
1982-2 Program incurred such expenses totaling $62,539 and $63,228,
respectively, of which $43,830 was paid each period to Dyco and its
affiliates.
Affiliates of the Program operate certain of the Programs' properties.
Their policy is to bill the Programs for all customary charges and cost
reimbursements associated with these activities.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
USE OF FORWARD-LOOKING STATEMENTS AND ESTIMATES
- -----------------------------------------------
This Quarterly 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
Quarterly 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, and otherwise indicated.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net proceeds from the Programs' operations less necessary operating
capital are distributed to investors on a quarterly basis. The net
proceeds from production are not reinvested in productive assets, except
to the extent that producing wells are improved or where methods are
employed to permit more efficient recovery of the Programs' reserves which
would result in a positive economic impact.
The Programs' available capital from subscriptions has been spent on oil
and gas drilling activities. There should be no further material capital
resource commitments in the future. The Programs have no debt commitments.
Cash for operational purposes will be provided by current oil and gas
production.
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<PAGE>
During the nine months ended September 30, 1999, capital expenditures
incurred by the 1982-2 Program totaled $12,232. These expenditures were
primarily due to the purchase of equipment for successful workovers on two
wells in order to improve the recovery of reserves.
RESULTS OF OPERATIONS
- ---------------------
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. Due to the volatility of oil and gas prices,
forecasting future prices is subject to great uncertainty and inaccuracy.
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. Such spot market sales are generally short-term in nature and
are dependent upon the obtaining of transportation services provided by
pipelines. In addition, crude oil prices in 1998 and early 1999 were at or
near their lowest level in the past decade due primarily to the global
surplus of crude oil. Oil prices have since rebounded primarily due to a
decrease in the global oil surplus as a result of production curtailments
by several major oil producing nations. Management is unable to predict
whether future oil and gas prices will (i) stabilize, (ii) increase, or
(iii) decrease.
1982-1 PROGRAM
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1998.
Three Months Ended September 30,
--------------------------------
1999 1998
------- -------
Oil and gas sales $48,862 $66,187
Oil and gas production expenses $22,394 $30,420
Barrels produced 69 154
Mcf produced 20,478 39,638
Average price/Bbl $ 23.00 $ 12.34
Average price/Mcf $ 2.31 $ 1.62
As shown in the table above, total oil and gas sales decreased $17,325
(26.2%) for the three months ended September 30, 1999 as compared to the
three months ended September 30, 1998. Of this decrease, approximately
$31,000 was related to a decrease in volumes of gas sold, which
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decrease was partially offset by an increase of approximately $14,000
related to an increase in the average price of gas sold. Volumes of oil
and gas sold decreased 85 barrels and 19,160 Mcf, respectively, for the
three months ended September 30, 1999 as compared to the three months
ended September 30, 1998. The decrease in volumes of gas sold was
primarily due to a positive prior period volume adjustment made by the
purchaser on one well during the three months ended September 30, 1998.
Average oil and gas prices increased to $23.00 per barrel and $2.31 per
Mcf, respectively, for the three months ended September 30, 1999 from
$12.34 per barrel and $1.62 per Mcf, respectively, for the three months
ended September 30, 1998.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $8,026 (26.4%) for the three months ended
September 30, 1999 as compared to the three months ended September 30,
1998. This decrease was primarily due to workover expenses incurred on one
well during the three months ended September 30, 1998 in order to improve
the recovery of reserves. As a percentage of oil and gas sales, these
expenses remained relatively constant at 45.8% for the three months ended
September 30, 1999 and 46.0% for the three months ended September 30,
1998.
Depreciation, depletion, and amortization of oil and gas properties
decreased $9,776 (77.9%) for the three months ended September 30, 1999 as
compared to the three months ended September 30, 1998. This decrease was
primarily due to (i) the decreases in volumes of oil and gas sold, (ii) an
upward revision in the estimate of remaining gas reserves at December 31,
1998, and (iii) an increase in the gas price used in the valuation of
reserves at September 30, 1999 as compared to September 30, 1998. As a
percentage of oil and gas sales, this expense decreased to 5.7% for the
three months ended September 30, 1999 from 18.9% for the three months
ended September 30, 1998. This percentage decrease was primarily due to
the dollar decrease in depreciation, depletion, and amortization.
General and administrative expenses remained relatively constant for the
three months ended September 30, 1999 as compared to the three months
ended September 30, 1998. As a percentage of oil and gas sales, these
expenses increased to 44.4% for the three months ended September 30, 1999
from 33.0% for the three months ended September 30, 1998. This percentage
increase was primarily due to the decrease in oil and gas sales.
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<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1998.
Nine Months Ended September 30,
-------------------------------
1999 1998
-------- --------
Oil and gas sales $110,522 $154,056
Oil and gas production expenses $ 53,224 $ 74,157
Barrels produced 310 497
Mcf produced 56,271 80,846
Average price/Bbl $ 16.59 $ 13.31
Average price/Mcf $ 1.87 $ 1.82
As shown in the table above, total oil and gas sales decreased $43,534
(28.3%) for the nine months ended September 30, 1999 as compared to the
nine months ended September 30, 1998. Of this decrease, approximately
$45,000 was related to a decrease in volumes of gas sold. Volumes of oil
and gas sold decreased 187 barrels and 24,575 Mcf, respectively, for the
nine months ended September 30, 1999 as compared to the nine months ended
September 30, 1998. The decrease in volumes of gas sold was primarily due
to a positive prior period volume adjustment made by the purchaser on one
well during the nine months ended September 30, 1998 and a negative prior
period volume adjustment made by the purchaser on another well during the
nine months ended September 30, 1999. Average oil and gas prices increased
to $16.59 per barrel and $1.87 per Mcf, respectively, for the nine months
ended September 30, 1999 from $13.31 per barrel and $1.82 per Mcf,
respectively, for the nine months ended September 30, 1998.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $20,933 (28.2%) for the nine months ended
September 30, 1999 as compared to the nine months ended September 30,
1998. This decrease was primarily due to workover expenses incurred on two
wells during the nine months ended September 30, 1998 in order to improve
the recovery of reserves. As a percentage of oil and gas sales, these
expenses remained relatively constant at 48.2% for the nine months ended
September 30, 1999 and 48.1% for the nine months ended September 30, 1998.
Depreciation, depletion, and amortization of oil and gas properties
decreased $14,922 (60.7%) for the nine months ended September 30, 1999 as
compared to the nine months ended September 30, 1998. This decrease was
primarily due to (i) the decreases in volumes of oil and gas sold, (ii) an
upward revision in the estimate of remaining gas reserves at December 31,
1998, and (iii) an increase in the gas price used in the valuation of
reserves at September 30, 1999 as compared to September 30, 1998. As a
percentage of oil and
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<PAGE>
gas sales, this expense decreased to 8.7% for the nine months ended
September 30, 1999 from 16.0% for the nine months ended September 30,
1998. This percentage decrease was primarily due to the dollar decrease in
depreciation, depletion, and amortization.
General and administrative expenses decreased $1,210 (1.5%) for the nine
months ended September 30, 1999 as compared to the nine months ended
September 30, 1998. As a percentage of oil and gas sales, these expenses
increased to 71.4% for the nine months ended September 30, 1999 from 52.0%
for the nine months ended September 30, 1998. This percentage increase was
primarily due to the decrease in oil and gas sales.
1982-2 PROGRAM
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1998.
Three Months Ended September 30,
--------------------------------
1999 1998
-------- -------
Oil and gas sales $107,287 $81,205
Oil and gas production expenses $ 34,714 $22,814
Barrels produced 11 8
Mcf produced 45,766 47,398
Average price/Bbl $ 22.18 $ 12.13
Average price/Mcf $ 2.34 $ 1.71
As shown in the table above, total oil and gas sales increased $26,082
(32.1%) for the three months ended September 30, 1999 as compared to the
three months ended September 30, 1998. Of this increase, approximately
$29,000 was related to an increase in the average price of gas sold, which
increase was partially offset by a decrease of approximately $3,000
related to a decrease in volumes of gas sold. Volumes of oil sold
increased 3 barrels, while volumes of gas sold decreased 1,632 Mcf for the
three months ended September 30, 1999 as compared to the three months
ended September 30, 1998. The decrease in volumes of gas sold was
primarily due to (i) the shutting-in of one well to perform a workover
during the three months ended September 30, 1999, (ii) the receipt of a
reduced percentage of sales during the three months ended September 30,
1999 on one well due to the 1982-2 Program's overproduced gas balancing
position in that well, and (iii) normal declines in production. These
decreases were partially offset by a negative prior period volume
adjustment made by the purchaser on one well during the three months ended
September 30, 1998. Average oil and gas prices increased to $22.18 per
barrel and $2.34 per Mcf, respectively, for the three months ended
September 30, 1999 from $12.13 per barrel
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<PAGE>
and $1.71 per Mcf, respectively, for the three months ended September 30,
1998.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $11,900 (52.2%) for the three months ended
September 30, 1999 as compared to the three months ended September 30,
1998. This increase was primarily due to (i) workover expenses incurred on
two wells during the three months ended September 30, 1999 in order to
improve the recovery of reserves and (ii) an increase in production taxes
associated with the increase in oil and gas sales. As a percentage of oil
and gas sales, these expenses increased to 32.4% for the three months
ended September 30, 1999 from 28.1% for the three months ended September
30, 1998. This percentage increase was primarily due to the 1999 workover
expenses.
Depreciation, depletion, and amortization of oil and gas properties
decreased $10,192 (61.7%) for the three months ended September 30, 1999 as
compared to the three months ended September 30, 1998. This decrease was
primarily due to (i) the decrease in volumes of gas sold, (ii) an upward
revision in the estimate of remaining gas reserves at December 31, 1998,
and (iii) an increase in the gas price used in the valuation of reserves
at September 30, 1999 as compared to September 30, 1998. As a percentage
of oil and gas sales, this expense decreased to 5.9% for the three months
ended September 30, 1999 from 20.3% for the three months ended September
30, 1998. This percentage decrease was primarily due to the dollar
decrease in depreciation, depletion, and amortization.
General and administrative expenses remained relatively constant for the
three months ended September 30, 1999 as compared to the three months
ended September 30, 1998. As a percentage of oil and gas sales, these
expenses decreased to 15.9% for the three months ended September 30, 1999
from 21.2% for the three months ended September 30, 1998. This percentage
decrease was primarily due to the increase in oil and gas sales.
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<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1998.
Nine Months Ended September 30,
-------------------------------
1999 1998
-------- --------
Oil and gas sales $230,900 $276,145
Oil and gas production expenses $ 72,534 $ 78,532
Barrels produced 27 41
Mcf produced 121,523 144,968
Average price/Bbl $ 17.33 $ 13.68
Average price/Mcf $ 1.90 $ 1.90
As shown in the table above, total oil and gas sales decreased $45,245
(16.4%) for the nine months ended September 30, 1999 as compared to the
nine months ended September 30, 1998. Of this decrease, approximately
$45,000 was related to a decrease in volumes of gas sold. Volumes of oil
and gas sold decreased 14 barrels and 23,445 Mcf, respectively, for the
nine months ended September 30, 1999 as compared to the nine months ended
September 30, 1998. The decrease in volumes of gas sold was primarily due
to (i) a negative prior period volume adjustment made by the purchaser on
one well during the nine months ended September 30, 1999, (ii) the
shutting-in of one well to perform a workover during the nine months ended
September 30, 1999, and (iii) normal declines in production. These
decreases were partially offset by a negative prior period volume
adjustment made by the purchaser on one well during the nine months ended
September 30, 1998. Average oil prices increased to $17.33 per barrel for
the nine months ended September 30, 1999 from $13.68 per barrel for the
nine months ended September 30, 1998. Average gas prices remained constant
at $1.90 per Mcf for the nine months ended September 30, 1999 and 1998.
The 1982-2 Program sold one well during the nine months ended September
30, 1998 for $62,467 representing approximately 1% of its total reserves.
The proceeds from this sale would have reduced the net book value of the
1982-2 Program's oil and gas properties by 34%, significantly altering its
capitalized cost/proved reserves relationship. Accordingly, capitalized
costs were reduced by approximately 1% and a gain on sale of oil and gas
properties of $60,067 was recognized. Similar sales during the nine months
ended September 30, 1999 did not significantly alter the 1982-2 Program's
capitalized cost/proved reserves relationship.
-18-
<PAGE>
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $5,998 (7.6%) for the nine months ended
September 30, 1999 as compared to the nine months ended September 30,
1998. This decrease was primarily due to (i) a decrease in lease operating
expenses associated with the decrease in volumes of oil and gas sold and
(ii) a decrease in production taxes associated with the decrease in oil
and gas sales, which decreases were partially offset by workover expenses
incurred on two wells during the nine months ended September 30, 1999 in
order to improve the recovery of reserves. As a percentage of oil and gas
sales, these expenses increased to 31.4% for the nine months ended
September 30, 1999 from 28.4% for the nine months ended September 30,
1998. This percentage increase was primarily due to the 1999 workover
expenses.
Depreciation, depletion, and amortization of oil and gas properties
decreased $22,181 (55.8%) for the nine months ended September 30, 1999 as
compared to the nine months ended September 30, 1998. This decrease was
primarily due to (i) the decreases in volumes of oil and gas sold, (ii) an
upward revision in the estimate of remaining gas reserves at December 31,
1998, and (iii) an increase in the gas price used in the valuation of
reserves at September 30, 1999 as compared to September 30, 1998. As a
percentage of oil and gas sales, this expense decreased to 7.6% for the
nine months ended September 30, 1999 from 14.4% for the nine months ended
September 30, 1998. This percentage decrease was primarily due to the
dollar decrease in depreciation, depletion, and amortization.
General and administrative expenses decreased $689 (1.1%) for the nine
months ended September 30, 1999 as compared to the nine months ended
September 30, 1998. As a percentage of oil and gas sales, these expenses
increased to 27.1% for the nine months ended September 30, 1999 from 22.9%
for the nine months ended September 30, 1998. This percentage increase was
primarily due to the decrease in oil and gas sales.
YEAR 2000 COMPUTER ISSUES
- -------------------------
IN GENERAL
The Year 2000 Issue ("Y2K") refers to the inability of computer and other
information technology systems to properly process date and time
information, stemming from the earlier programming practice of using two
digits rather than four to represent the year in a date. For example,
computer programs and imbedded chips that are date sensitive may recognize
a date using (00) as the year 1900 rather than
-19-
<PAGE>
the year 2000. The consequence of Y2K is that computer and imbedded
processing systems may be at risk of malfunctioning, particularly during
the transition from 1999 to 2000.
The effects of Y2K are exacerbated by the interdependence of computer and
telecommunication systems throughout the world. This interdependence also
exists among the Programs, Samson Investment Company and its affiliates
("Samson"), and their vendors, customers, and business partners, as well
as with regulators. The potential risks associated with Y2K for an oil and
gas production company fall into three general areas: (i) financial,
leasehold and administrative computer systems, (ii) imbedded systems in
field process control units, and (iii) third party exposures. As discussed
below, Dyco does not believe that these risks will be material to the
Programs' operations.
The Programs' business is producing oil and gas. The day-to-day production
of the Programs' oil and gas is not dependent on computers or equipment
with imbedded chips. As further discussed below, management anticipates
that the Programs' daily business activities will not be materially
affected by Y2K.
The Programs rely on Samson to provide all of its operational and
administrative services on either a direct or indirect basis. Samson has
addressed each of the three Y2K areas discussed above through a readiness
process that:
1. increased the awareness of the issue among key employees;
2. identified areas of potential risk;
3. assessed the relative impact of these risks and Samson's ability
to manage them; and
4. remediated the risks on a priority basis wherever possible.
One of Samson Investment Company's Executive Vice Presidents is
responsible for communicating to its Board of Directors Y2K actions and
for the ultimate implementation of its Y2K plan. He has delegated to
Samson Investment Company's Senior Vice President-Technology and
Administrative Services principal responsibility
for ensuring Y2K compliance within Samson.
Samson has been planning for the impact of Y2K on its information
technology systems since 1993. As of November 1, 1999, Samson is in the
final stages of implementation of a Y2K plan, as summarized below:
-20-
<PAGE>
FINANCIAL AND ADMINISTRATIVE SYSTEMS
1. Awareness. Samson has alerted its officers, managers and supervisors of
Y2K issues and asked them to have their employees participate in the
identification of potential Y2K risks which might otherwise go unnoticed
by higher level employees and officers. As a result, awareness of the
issue is considered high.
2. Risk Identification. Samson's most significant financial and
administrative systems exposure is the Y2K status of the accounting and
land administration system used to collect and manage data for internal
management decision making and for external revenue and accounts payable
purposes. Other concerns include network hardware and software, desktop
computing hardware and software, telecommunications, and office space
readiness.
3. Risk Assessment. The failure to identify and correct a material Y2K
problem could result in inaccurate or untimely financial information for
management decision-making or cash flow and payment purposes, including
maintaining oil and gas leases.
4. Remediation. Since 1993, Samson has been upgrading its accounting and
land administration software. All of the Y2K upgrades have been completed.
In addition, in 1997 and 1998 Samson replaced or applied software patches
to substantially all of its network and desktop software applications and
believes them to be currently Y2K compliant. The costs of all such risk
assessments and remediation were not material to the Programs.
5. Contingency Planning. Notwithstanding the foregoing, should there be
significant unanticipated disruptions in Samson's financial and
administrative systems, all of the accounting processes that are currently
automated will need to be performed manually. Samson has communicated to
its management team the importance of having adequate staff available to
manually perform necessary functions to minimize disruptions.
IMBEDDED SYSTEMS
1. Awareness. Samson's Y2K program has involved all levels of field
personnel from production foremen and higher. Employees at all levels of
the organization have been asked to participate in the identification of
potential Y2K risks, which might otherwise go unnoticed by higher level
employees and officers of Samson, and as a result, awareness of the issue
is considered high.
-21-
<PAGE>
2. Risk Identification. Samson has inventoried all possible exposures to
imbedded chips and systems. Such exposures can be classified as either (i)
oil and gas production and processing equipment or (ii) office machines
such as faxes, copiers, phones, etc.
With respect to oil and gas production and processing equipment, neither
Samson nor the Programs operate offshore wells, significant processing
plants, or wells with older electronic monitoring systems. As a result,
Samson's inventory identified less than 10 applications using imbedded
chips. All of these have been tested by the respective vendors and have
been found to be Y2K compliant or have been upgraded or replaced.
Office machines have been tested by Samson and vendors and are believed to
be compliant.
3. Risk Assessment and Remediation. The failure to identify and correct a
material Y2K problem in an imbedded system could result in outcomes
ranging from errors in data reporting to curtailments or shutdowns in
production. As noted above, Samson has identified less than 10 imbedded
system applications all of which have been made compliant or replaced.
None of these applications are believed to be material to Samson or the
Programs. Samson believes that sufficient manual processes are available
to minimize any field level risk and that there will be no material impact
on the Programs with respect to these applications.
4. Contingency Planning. Should material production disruptions occur as a
result of Y2K failures in field operations, Samson will utilize its
existing field personnel in an attempt to avoid any material impact on
operating cash flow. Samson is not able to quantify any potential exposure
in the event of systems failure or inadequate manual alternatives.
THIRD PARTY EXPOSURES
1. Awareness. Samson has advised management to consider Y2K implications
with its outside vendors, customers, and business partners. Management has
been asked to participate in the identification of potential third party
Y2K risks and, as a result, awareness of the issue is considered high.
2. Risk Identification. Samson's most significant third party Y2K exposure
is its dependence on third parties for the receipt of revenues from oil
and gas sales. However, virtually all of these purchasers are very large
and sophisticated companies. Other Y2K concerns include the availability
of electric power to Samson's field operations, the integrity of
telecommunication systems, and the
-22-
<PAGE>
readiness of commercial banks to execute electronic fund transfers.
3. Risk Assessment. Because of the high awareness of the Y2K problem in
the U.S., Samson has not undertaken and does not plan to undertake a
formal company wide plan to make inquiries of third parties on the subject
of Y2K readiness. If it did so, Samson has no ability to require responses
to such inquiries or to independently verify their accuracy. Samson has,
however, received oral assurances from its significant oil and gas
purchasers of Y2K compliance. If significant disruptions from major
purchasers were to occur, however, there could be a material and adverse
impact on the Programs' results of operations, liquidity, and financial
conditions.
It is important to note that third party oil and gas purchasers have
significant incentives to avoid disruptions arising from a Y2K failure.
For example, most of these parties are under contractual obligations to
purchase oil and gas or disperse revenues to Samson. The failure to do so
will result in contractual and statutory penalties. Therefore, Samson
believes that it is unlikely that there will be material third party
non-compliance with purchase and remittance obligations as a result of Y2K
issues.
4. Remediation. Where Samson perceived a significant risk of Y2K
non-compliance by banks and other significant vendors that would have had
a material impact on Samson's business, Samson undertook joint testing
during 1999, and any identified problems have been resolved.
5. Contingency Planning. In the unlikely event that material production
disruptions occur as a result of Y2K failures of third parties, the
Programs' operating cash flow could be impacted. This contingency will be
factored into deliberations on the level of quarterly cash distributions
paid out during any such period of cash flow disruption.
-23-
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
The Programs do not hold any market risk sensitive instruments.
-24-
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule containing summary financial information extracted
from the 1982-1 Program's financial statements as of September 30, 1999
and for the nine months ended September 30, 1999, filed herewith.
27.2 Financial Data Schedule containing summary financial information extracted
from the 1982-2 Program's financial statements as of September 30, 1999
and for the nine months ended September 30, 1999, filed herewith.
All other exhibits are omitted as inapplicable.
(b) Reports on Form 8-K.
None.
-25-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DYCO OIL AND GAS PROGRAM 1982-1 LIMITED
PARTNERSHIP
DYCO OIL AND GAS PROGRAM 1982-2 LIMITED
PARTNERSHIP
(Registrant)
BY: DYCO PETROLEUM CORPORATION
General Partner
Date: November 03, 1999 By: /s/Dennis R. Neill
-------------------------------
(Signature)
Dennis R. Neill
President
Date: November 03, 1999 By: /s/Patrick M. Hall
-------------------------------
(Signature)
Patrick M. Hall
Chief Financial Officer
-26-
<PAGE>
INDEX TO EXHIBITS
NUMBER DESCRIPTION
- ------ -----------
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 September 30, 1999 and for
the nine months ended September 30, 1999, filed herewith.
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 September 30, 1999 and for
the nine months ended September 30, 1999, filed herewith.
All other exhibits are omitted as inapplicable.
-27-
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<ARTICLE> 5
<CIK> 0000718943
<NAME> DYCO OIL & GAS PROGRAM 1982-1 LTD PSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 80,369
<SECURITIES> 0
<RECEIVABLES> 32,156
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 112,525
<PP&E> 52,500,032
<DEPRECIATION> 52,441,446
<TOTAL-ASSETS> 248,062
<CURRENT-LIABILITIES> 8,712
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 182,111
<TOTAL-LIABILITY-AND-EQUITY> 248,062
<SALES> 110,522
<TOTAL-REVENUES> 113,597
<CGS> 0
<TOTAL-COSTS> 141,794
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (28,197)
<INCOME-TAX> 0
<INCOME-CONTINUING> (28,197)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (28,197)
<EPS-BASIC> (2.79)
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000718944
<NAME> DYCO OIL & GAS PROGRAM 1982-2 LTD PSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 33,798
<SECURITIES> 0
<RECEIVABLES> 70,464
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 104,262
<PP&E> 38,310,223
<DEPRECIATION> 38,178,499
<TOTAL-ASSETS> 257,732
<CURRENT-LIABILITIES> 6,889
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 144,173
<TOTAL-LIABILITY-AND-EQUITY> 257,732
<SALES> 230,900
<TOTAL-REVENUES> 235,754
<CGS> 0
<TOTAL-COSTS> 152,629
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 83,125
<INCOME-TAX> 0
<INCOME-CONTINUING> 83,125
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 83,125
<EPS-BASIC> 10.29
<EPS-DILUTED> 0
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