<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended Commission File Number
March 31, 1996 0-13430
DYCO OIL AND GAS PROGRAM 1984-1
(A LIMITED PARTNERSHIP)
(Exact Name of Registrant as specified in its charter)
Minnesota 41-1465070
State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(918) 583-1791
--------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
----- -----
<PAGE>
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1996 1995
----------- ------------
CURRENT ASSETS:
Cash and cash equivalents . . . . . . $131,954 $233,440
Accrued oil and gas sales, including
$52,780 due from related parties
in 1995 (Note 2) . . . . . . . . . . 75,131 77,337
-------- --------
Total current assets . . . . . . . $207,085 $310,777
NET OIL AND GAS PROPERTIES, utilizing
the full cost method . . . . . . . . . 424,327 451,379
DEFERRED CHARGE . . . . . . . . . . . . . 119,653 119,653
-------- --------
$751,065 $881,809
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . $ 27,182 $ 25,804
-------- --------
Total current liabilities . . . . . $ 27,182 $ 25,804
ACCRUED LIABILITY . . . . . . . . . . . . 36,046 36,046
CONTINGENCIES (NOTE 3)
PARTNERS' CAPITAL:
General Partner, issued and outstanding
55 units . . . . . . . . . . . . . . 6,878 8,200
Limited Partners, issued and outstanding,
5,500 units . . . . . . . . . . . . 680,959 811,759
-------- --------
Total Partners' capital . . . . . . $687,837 $819,959
-------- --------
$751,065 $881,809
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
-2-
<PAGE>
<PAGE>
DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
-------- --------
REVENUES:
Oil and gas sales, including
$79,291 of sales to related
parties in 1995 (Note 2) . . . . . . $116,779 $104,388
Interest . . . . . . . . . . . . . . . 2,444 1,880
-------- --------
$119,223 $106,268
-------- --------
COSTS AND EXPENSES:
Oil and gas production . . . . . . . . $ 35,624 $ 67,102
Depreciation, depletion, and amortization
of oil and gas properties . . . . . 26,442 38,114
General and administrative (Note 2) . 22,629 22,802
-------- --------
$ 84,695 $128,018
-------- --------
NET INCOME (LOSS) . . . . . . . . . . . . $ 34,528 ($ 21,750)
======== ========
GENERAL PARTNER (1%) - net income (loss) $ 345 ($ 218)
======== ========
LIMITED PARTNERS (99%) - net income
(loss) . . . . . . . . . . . . . . . . . $ 34,183 ($ 21,532)
======== ========
NET INCOME (LOSS) PER UNIT . . . . . . . $ 6 ($ 4)
======== ========
UNITS OUTSTANDING . . . . . . . . . . . . 5,555 5,555
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
-3-
<PAGE>
<PAGE>
DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) . . . . . . . . . . $ 34,528 ($ 21,750)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation, depletion, and amortization
of oil and gas properties . . . . 26,442 38,114
Decrease in accrued oil and gas sales. 2,206 9,956
Increase in accounts payable . . . . 1,378 3,665
-------- --------
Net cash provided by operating
activities . . . . . . . . . . . . $ 64,554 $ 29,985
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties . $ - ($ 269)
Retirements of oil and gas properties 610 -
-------- --------
Net cash provided (used) by investing
activities . . . . . . . . . . . $ 610 ($ 269)
-------- --------
NET CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions . . . . . . . . . . ($166,650) $ -
-------- --------
Net cash used by financing
activities . . . . . . . . . . . . ($166,650) $ -
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS . . . . . . . . . . . . . ($101,486) $ 29,716
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD . . . . . . . . . . . . . . . . . 233,440 133,975
-------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD . . . . . . . . . . . . . . . . . $131,954 $163,691
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
-4-
<PAGE>
<PAGE>
DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheet as of March 31, 1996, statements of operations
for the three months ended March 31, 1996 and 1995, and
statements of cash flows for the three months ended March 31,
1996 and 1995 have been prepared by Dyco Petroleum Corporation
("Dyco"), the General Partner of the Dyco Oil and Gas Program
1984-1 Limited Partnership (the "Program") without audit. In the
opinion of management all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial
position at March 31, 1996, results of operations for the three
months ended March 31, 1996 and 1995 and changes in cash flows
for the three months ended March 31, 1996 and 1995 have been
made.
Information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto
included in the Program's Annual Report on Form 10-K for the year
ended December 31, 1995. The results of operations for the
period ended March 31, 1996 are not necessarily indicative of the
results to be expected for the full year.
The limited partners' net income or loss per unit is based upon
each $5,000 initial capital contribution.
OIL AND GAS PROPERTIES
----------------------
Oil and gas operations are accounted for using the full cost
method of accounting. All productive and non-productive costs
associated with the acquisition, exploration and development of
oil and gas reserves are capitalized. Sales and abandonments of
properties are accounted for as adjustments of capitalized costs
with no gain or loss recognized, unless such adjustments would
significantly alter the relationship between capitalized costs
and proved oil and gas reserves.
The provision for depreciation, depletion, and amortization of
oil and gas properties is calculated by dividing the oil and gas
sales dollars during the year by the estimated future gross
income from the oil and gas properties and applying the resulting
rate to the net remaining costs of oil and gas properties that
have been capitalized, plus estimated future development costs.
2. TRANSACTIONS WITH RELATED PARTIES
---------------------------------
Under the terms of the Program's partnership agreement, Dyco is
entitled to receive a reimbursement for all direct expenses and
general and administrative, geological and engineering expenses
it incurs on behalf of the Program. During the three months
-5-
<PAGE>
<PAGE>
ended March 31, 1996 and 1995 such expenses totaled $22,629 and
$22,802 respectively, of which $15,654 and $15,654 were paid to
Dyco.
Affiliates of the Program are the operators of certain of the
Program's properties and their policy is to bill the Program for
all customary charges and cost reimbursements associated with
their activities, together with any compressor rentals,
consulting, or other services provided.
The Program sold gas at market prices to Premier Gas Company
("Premier") and Premier then resold such gas to third parties at
market prices. Premier was an affiliate of the Program until
December 6, 1995. During the three months ended March 31, 1995
these sales totaled $79,291. At December 31, 1995, accrued oil
and gas sales included $52,780 due from Premier.
3. CONTINGENCIES
-------------
On October 15, 1993 and October 26, 1993, certain royalty owners
filed two class action lawsuits against Dyco in which the
plaintiffs alleged entitlement to a share of proceeds of a take-
or-pay settlement with specified gas purchasers. The lawsuits
allege claims based on unjust enrichment, breach of contract, and
breach of fiduciary obligations and seek an accounting and
declaration that the plaintiffs are third party beneficiaries.
The plaintiffs have not quantified the amount of their damages,
but they are seeking exemplary damages, unpaid royalties, and
interest. Dyco has filed its answer in both matters in which it
denied all of the plaintiffs' allegations. The district court
certified the matters as class actions on January 21, 1994 and
January 18, 1994, respectively, and discovery is proceeding in
both matters. On November 29, 1994, the plaintiffs filed a
motion for summary judgment in both matters. Dyco intends to
vigorously defend the lawsuits. As of the date of these
financial statements, Management cannot determine the amount of
the alleged damages which would be allocable to the Program from
these lawsuits.
On December 18, 1992, a royalty owner filed a quiet title action
alleging that the operator of certain wells in which the Program
has an interest failed to exercise due diligence in locating the
owner while in the process of force pooling the drilling and
spacing unit. Plaintiff claimed a right to revenues attributable
to production from said wells in an amount in excess of $500,000
and further alleged conversion and claimed a right to "interest"
on the proceeds from production on the well pursuant to 52 O.S.
Section 540. The defendants filed a counterclaim for quiet title
and asserted various defenses. A trial was held in the matter on
March 3 and 4, 1994 in which the district court ruled against all
defendants and specifically found that the operator, Apache
Corporation, did not exercise due diligence in the pooling
proceedings. Judgement was entered on June 15, 1994 in the
amount of $500,000 plus interest. The defendants appealed the
district court's verdict and on March 12, 1996 the Oklahoma Court
of Appeals reversed the district court's verdict. Plaintiff has
filed a petition for rehearing with the Oklahoma Court of
Appeals.
-6-
<PAGE>
<PAGE>
Included in these financial statements as of December 31, 1995
and March 31, 1996 is an accrual by the General Partner in the
amount of $20,000 representing the Program's share of estimated
ultimate damages resulting from the quiet title action. No
accrual has been established for the take-or-pay lawsuit.
-7-
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net proceeds from the Program's operations less necessary
operating capital are distributed to investors on a quarterly
basis. The net proceeds from production are not reinvested in
productive assets, except to the extent that producing wells are
improved, or where methods are employed to permit more efficient
recovery of the Program's reserves which would result in a
positive economic impact. Over the last several years, the
domestic energy industry and the Program have contended with
volatile, but generally low, oil and gas prices. Over the past
few years, the oil and gas market appears to have moved from
periods of relative stability in supply and demand to excess
supply or weakened demand. These trends have led to the
volatility in pricing and demand noted over the past years.
The Program's available capital from subscriptions has been spent
on oil and gas drilling activities. There should not be any
further material capital resource commitments in the future. The
Program has no bank debt commitments. Cash for operational
purposes will be provided by current oil and gas production.
RESULTS OF OPERATIONS
- ---------------------
THREE MONTHS ENDED MARCH 31, 1996 AS COMPARED TO THE THREE MONTHS
ENDED MARCH 31, 1995.
Three months ended March 31,
--------------------------------
1996 1995
---- ----
Oil and gas sales $116,779 $104,338
Oil and gas production
expenses $ 35,624 $ 67,102
Barrels produced 502 611
Mcf produced 54,554 72,460
Average price/Bbl $ 18.70 $ 17.05
Average price/Mcf $ 1.97 $ 1.30
As shown in the table, oil and natural gas sales increased 11.9%
for the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995. This increase was primarily
due to an increase in the average prices of oil and natural gas
sold, partially offset by the decrease in the volumes of oil and
natural sold during the three months ended March 31, 1996 as
compared to the three months ended March 31, 1995. Volumes of
oil and natural gas sold decreased by 109 barrels and 17,906 Mcf,
respectively, for the three months ended March 31, 1996 as
compared to the three months ended March 31, 1995. Volumes of
oil and natural gas sold decreased primarily due to a natural
deterioration in producing capabilities on several significant
wells during the three months ending March 31, 1996. Average oil
and natural gas prices increased to $18.70 per barrel and $1.97
per Mcf for the three months ended March 31, 1996 from $17.05 per
barrel and $1.30 per Mcf for the three months ended March 31,
1995.
-8-
<PAGE>
<PAGE>
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased $31,478 for the three
months ended March 31, 1996 as compared to the three months ended
March 31, 1995. This decrease was primarily due to (i) a
decrease in oil and natural gas production during the three
months ended March 31, 1996 as compared to the three months ended
March 31, 1995 and (ii) a decrease in litigation expenses
directly related to one well during the three months ended March
31, 1996. As a percentage of oil and gas sales, these expenses
decreased to 30.5% for the three months ended March 31, 1996 from
64.3% for the three months ended March 31, 1995. This percentage
decrease was primarily a result of the increase in the average
prices of oil and natural gas sold during the three months ended
March 31, 1996 as compared to the three months ended March 31,
1995.
Depreciation, depletion, and amortization of oil and gas
properties decreased $11,672 for the three months ended March 31,
1996 as compared to the three months ended March 31, 1995. This
decrease was primarily the result of a decrease in the volumes of
oil and natural gas sold during the three months ended March 31,
1996 as compared to the three months ended March 31, 1995 and an
upward revision in the estimate of the Program's remaining
natural gas reserves at December 31, 1995. As a percentage of
oil and gas sales, this expense decreased to 22.6% for the three
months ended March 31, 1996 from 36.5% for the three months ended
March 31, 1995. This percentage decrease was primarily due to
the upward revision in the remaining natural gas reserves as
discussed above and the increase in the average prices of oil and
natural gas sold during the three months ended March 31, 1996 as
compared to the three months ended March 31, 1995.
General and administrative expenses remained relatively constant
during the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995. As a percentage of oil and
gas sales, these expenses decreased to 19.4% for the three months
ended March 31, 1996 from 21.8% for the three months ended March
31, 1995. This percentage decrease was primarily the result of
the increase in the average prices of oil and natural gas sold
during the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995.
-9-
<PAGE>
<PAGE>
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On December 18, 1992, a royalty owner filed a quiet title action
alleging that the operator of certain wells in which the Program has
an interest failed to exercise due diligence in locating the owner
while in the process of force pooling the drilling and spacing unit
(Merle McCollum, as Personal Representative of the Estate of Jack
McCollum, Deceased v. Apache Corporation, et al., District Court of
Beckham County, Oklahoma). The wells in question in which the Program
owns a working interest included the Kinney-Warren No. 3-10 and Fender
No. 4-10. The Program had an approximate 6.8% working interest in
these wells at the time the lawsuit was filed. Plaintiff claimed a
right to revenues attributable to production from said wells in an
amount in excess of $500,000 and further alleged conversion and
claimed a right to "interest" on the proceeds from production on the
four wells pursuant to 52 O.S. Section 540. The defendants filed a
counterclaim for quiet title and asserted various defenses. A trial
was held in the matter on March 3 and 4, 1994 in which the district
court ruled against all defendants and specifically found that the
operator, Apache Corporation, did not exercise due diligence in the
pooling proceedings. Judgment was entered on June 15, 1994 in the
amount of $550,000 plus interest. The defendants appealed the
district court's verdict and on March 12, 1996 the Oklahoma Court of
Appeals reversed the district court's verdict. Plaintiff has filed a
petition for rehearing with the Oklahoma Court of Appeals.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27.1 Financial Data Schedule containing summary
financial information extracted from the Program's
financial statements as of March 31, 1996 and for
the three months ended March 31, 1996, filed
herewith.
(b) Reports on Form 8-K
None
-10-
<PAGE>
<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 1984-1 LIMITED
PARTNERSHIP
(Registrant)
By: DYCO PETROLEUM CORPORATION
General Partner
Date: May 9, 1996 By: /s/Dennis R. Neill
----------------------------
(Signature)
Dennis R. Neill
Senior Vice President
Date: May 9, 1996 By: /s/Patrick M. Hall
---------------------------
(Signature)
Patrick M. Hall
Senior Vice President - Controller
Principal Accounting Officer
-11-
<PAGE>
<PAGE>
INDEX TO EXHIBITS
-----------------
NUMBER DESCRIPTION
- ------ -----------
27.1 Financial Data Schedule containing summary financial
information extracted from the Dyco Oil and Gas Program
1984-1 Limited Partnership's financial statements as of
March 31, 1996 and for the three months ended March 31,
1996, filed herewith.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000725261
<NAME> DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 131,954
<SECURITIES> 0
<RECEIVABLES> 75,131
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 207,085
<PP&E> 30,207,088
<DEPRECIATION> 29,782,761
<TOTAL-ASSETS> 751,065
<CURRENT-LIABILITIES> 27,182
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 687,837
<TOTAL-LIABILITY-AND-EQUITY> 751,065
<SALES> 116,779
<TOTAL-REVENUES> 119,223
<CGS> 0
<TOTAL-COSTS> 84,695
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 34,528
<INCOME-TAX> 0
<INCOME-CONTINUING> 34,528
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,528
<EPS-PRIMARY> 6.00
<EPS-DILUTED> 0
</TABLE>
