<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended Commission File Number
June 30, 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 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
----- -----
<PAGE>
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
1996 1995
-------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 99,880 $233,440
Accrued oil and gas sales, including
$52,780 due from related parties
in 1995 (Note 2) 78,641 77,337
-------- --------
Total current assets $178,521 $310,777
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 401,902 451,379
DEFERRED CHARGE 119,653 119,653
-------- --------
$700,076 $881,809
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 36,917 $ 25,804
-------- --------
Total current liabilities $ 36,917 $ 25,804
ACCRUED LIABILITY 36,046 36,046
CONTINGENCIES (Note 3)
PARTNERS' CAPITAL:
General Partner, issued and
outstanding, 55 units 6,271 8,200
Limited Partners, issued and
outstanding 5,500 units 620,842 811,759
-------- --------
Total Partners' capital $627,113 $819,959
-------- --------
$700,076 $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 JUNE 30, 1996 AND 1995
(Unaudited)
1996 1995
-------- --------
REVENUES:
Oil and gas sales, including
$83,109 of sales to related
parties in 1995 (Note 2) $116,235 $93,756
Interest 1,553 2,000
-------- -------
$117,788 $95,756
COST AND EXPENSES:
Oil and gas production $ 21,041 $34,097
Depreciation, depletion, and
amortization of oil and gas
properties 26,559 37,761
General and administrative (Note 2) 19,812 20,746
-------- -------
$ 67,412 $92,604
-------- -------
NET INCOME $ 50,376 $ 3,152
======== =======
GENERAL PARTNER (1%) - net
income $ 504 $ 32
======== =======
LIMITED PARTNERS (99%) - net
income $ 49,872 $ 3,120
======== =======
NET INCOME PER UNIT $ 9 $ 1
======== =======
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 OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
1996 1995
-------- --------
REVENUES:
Oil and gas sales, including
$162,400 of sales to related
parties in 1995 (Note 2) $233,014 $198,144
Interest 3,997 3,880
-------- --------
$237,011 $202,024
COST AND EXPENSES:
Oil and gas production $ 56,665 $101,199
Depreciation, depletion, and
amortization of oil and gas
properties 53,001 75,875
General and administrative (Note 2) 42,441 43,548
-------- --------
$152,107 $220,622
-------- --------
NET INCOME (LOSS) $ 84,904 ($ 18,598)
======== ========
GENERAL PARTNER (1%) - net
income (loss) $ 849 ($ 186)
======== ========
LIMITED PARTNERS (99%) - net
income (loss) $ 84,055 ($ 18,412)
======== ========
NET INCOME (LOSS) PER UNIT $ 15 ($ 3)
======== ========
UNITS OUTSTANDING 5,555 5,555
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
-4-
<PAGE>
<PAGE>
DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
1996 1995
-------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 84,904 ($ 18,598)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 53,001 75,875
(Increase) decrease in accrued oil
and gas sales ( 1,304) 7,800
Increase in accounts payable 11,113 3,602
-------- --------
Net cash provided by operating
activities $147,714 $ 68,679
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties ($ 3,524) ($ 30,683)
Retirements of oil and gas
properties - 3,246
-------- --------
Net cash used by investing
activities ($ 3,524) ($ 27,437)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($277,750) $ -
-------- --------
Net cash used by financing
activities ($277,750) $ -
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($133,560) $ 41,242
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 233,440 133,975
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 99,880 $175,217
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
-5-
<PAGE>
<PAGE>
DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheet as of June 30, 1996, statements of operations
for the three and six months ended June 30, 1996 and 1995, and
statements of cash flows for the six months ended June 30, 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 June 30, 1996, results of operations for the three
and six months ended June 30, 1996 and 1995 and changes in cash
flows for the six months ended June 30, 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 June 30, 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. 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), 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.
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.
-6-
<PAGE>
<PAGE>
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
ended June 30, 1996 and 1995 such expenses totaled $19,812 and
$20,746 respectively, of which $15,654 and $15,654 were paid to
Dyco. During the six months ended June 30, 1996 and 1995 such
expenses totaled $42,441 and $43,548 respectively, of which
$31,308 and $31,308 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 June 30, 1995
these sales totaled $83,109. During the six months ended June
30, 1995 these sales totaled $162,400. 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
-7-
<PAGE>
<PAGE>
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
which was denied on May 14, 1996. The plaintiffs then filed on
July 19, 1996 a writ for certiorari with the Oklahoma Supreme
Court seeking a further appeal of the matter.
Included in these financial statements as of December 31, 1995
and June 30, 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.
-8-
<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 JUNE 30, 1996 AS COMPARED TO THE THREE MONTHS
ENDED JUNE 30, 1995.
Three months ended June 30,
---------------------------
1996 1995
-------- ------
Oil and gas sales $116,235 $93,756
Oil and gas production expenses $ 21,041 $34,097
Barrels produced 450 596
Mcf produced 48,460 53,621
Average price/Bbl $ 19.07 $ 17.86
Average price/Mcf $ 2.22 $ 1.55
As shown in the table, oil and natural gas sales increased
$22,479 (24.0%) for the three months ended June 30, 1996 as
compared to the three months ended June 30, 1995. Of this
increase, $35,926 was related to the increase in the average
price of natural gas sold, partially offset by a $14,241 decrease
related to the decreases in the volumes of oil and natural gas
sold. Volumes of oil and natural sold decreased 146 barrels and
5,161 Mcf, respectively, for the three months ended June 30, 1996
as compared to the three months ended June 30, 1995. The
decrease in the volumes of oil and natural gas sold was primarily
due to normal declines in production from diminished reserves on
two wells during the three months ended June 30, 1996 as compared
to the three months ended June 30, 1995. Average oil and natural
gas prices increased to $19.07 per barrel and $2.22 per Mcf,
respectively, for the three months ended June 30, 1996 from
$17.86 per barrel and $1.55 per Mcf, respectively, for the three
months ended June 30, 1995.
-9-
<PAGE>
<PAGE>
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased $13,056 for the three
months ended June 30, 1996 as compared to the three months ended
June 30, 1995. This decrease resulted primarily from (i)
decreases in the volumes of oil and natural gas sold during the
three months ended June 30, 1996 as compared to the three months
ended June 30, 1995 and (ii) workover expenses incurred on one
well during the three months ended June 30, 1995 which resulted
in its abandonment during the three months ended June 30, 1995.
As a percentage of oil and gas sales, these expenses decreased to
18.1% for the three months ended June 30, 1996 from 36.4% for the
three months ended June 30, 1995. This percentage decrease was
primarily due to the decrease in workover expenses mentioned
above and the increases in the average prices of oil and natural
gas sold during the three months ended June 30, 1996 as compared
to the three months ended June 30, 1995.
Depreciation, depletion, and amortization of oil and gas
properties decreased $11,202 for the three months ended June 30,
1996 as compared to the three months ended June 30, 1995. This
decrease was primarily the result of decreases in the volumes of
oil and natural gas sold during the three months ended June 30,
1996 as compared to the three months ended June 30, 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 22.8% for the three
months ended June 30, 1996 from 40.3% for the three months ended
June 30, 1995. This percentage decrease was primarily due to the
upward revision in the remaining natural gas reserves as
discussed above and the increases in the average prices of oil
and natural gas sold during the three months ended June 30, 1996
as compared to the three months ended June 30, 1995.
General and administrative expenses decreased $934 during the
three months ended June 30, 1996 as compared to the three months
ended June 30, 1995. As a percentage of oil and gas sales, these
expenses decreased to 17.0% for the three months ended June 30,
1996 from 22.1% for the three months ended June 30, 1995. This
percentage decrease was primarily the result of increases in the
average prices of oil and natural gas sold during the three
months ended June 30, 1996 as compared to the three months ended
June 30, 1995.
SIX MONTHS ENDED JUNE 30, 1996 AS COMPARED TO THE SIX MONTHS
ENDED JUNE 30, 1995.
Six months ended June 30,
---------------------------
1996 1995
-------- ------
Oil and gas sales $233,014 $198,144
Oil and gas production expenses $ 56,665 $101,199
Barrels produced 952 1,207
Mcf produced 103,014 126,081
Average price/Bbl $ 18.87 $ 17.45
Average price/Mcf $ 2.09 $ 1.40
As shown in the table, oil and natural gas sales increased
$34,870 (17.6%) for the six months ended June 30, 1996 as
compared to the six months ended June 30, 1995. Of this
increase, $86,996 was related to the increase in the average
price of natural gas sold, partially offset by a $53,022 decrease
-10-
<PAGE>
<PAGE>
related to the decreases in the volumes of oil and natural gas
sold. Volumes of oil and natural gas sold decreased 255 barrels
and 23,067 Mcf, respectively, for the six months ended June 30,
1996 as compared to the six months ended June 30, 1995. The
decrease in the volumes of oil and natural gas sold was primarily
due to normal declines in production from diminished reserves on
two wells during the six months ended June 30, 1996 as compared
to the six months ended June 30, 1995. Average oil and natural
gas prices increased to $18.87 per barrel and $2.09 per Mcf,
respectively, for the six months ended June 30, 1996 from $17.45
per barrel and $1.40 per Mcf, respectively, for the six months
ended June 30, 1995.
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased $44,534 for the six
months ended June 30, 1996 as compared to the six months ended
June 30, 1995. This decrease resulted primarily from (i)
decreases in the volumes of oil and natural gas sold during the
six months ended June 30, 1996 as compared to the six months
ended June 30, 1995, (ii) workover expenses incurred on one well
during the six months ended June 30, 1995 which resulted in its
abandonment during the six months ended June 30, 1995, and (iii)
a decrease in compression expenses on one well during the six
months ended June 30, 1996 as compared to the six months ended
June 30, 1995. As a percentage of oil and gas sales, these
expenses decreased to 24.3% for the six months ended June 30,
1996 from 51.1% for the six months ended June 30, 1995. This
percentage decrease was primarily due to the decrease in workover
and compression expenses mentioned above and the increases in the
average prices of oil and natural gas sold during the six months
ended June 30, 1996 as compared to the six months ended June 30,
1995.
Depreciation, depletion, and amortization of oil and gas
properties decreased $22,874 for the six months ended June 30,
1996 as compared to the six months ended June 30, 1995. This
decrease was primarily the result of decreases in the volumes of
oil and natural gas sold during the six months ended June 30,
1996 as compared to the six months ended June 30, 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 22.7% for the six
months ended June 30, 1996 from 38.3% for the six months ended
June 30, 1995. This percentage decrease was primarily due to the
upward revision in the remaining natural gas reserves as
discussed above and the increases in the average prices of oil
and natural gas sold during the six months ended June 30, 1996 as
compared to the six months ended June 30, 1995.
General and administrative expenses decreased $1,107 during the
six months ended June 30, 1996 as compared to the six months
ended June 30, 1995. This decrease resulted primarily from a
decrease in printing and postage expenses during the six months
ended June 30, 1996 as compared to the six months ended June 30,
1995. As a percentage of oil and gas sales, these expenses
decreased to 18.2% for the six months ended June 30, 1996 from
22.0% for the six months ended June 30, 1995. This percentage
decrease was primarily the result of increases in the average
prices of oil and natural gas sold during the six months ended
June 30, 1996 as compared to the six months ended June 30, 1995.
-11-
<PAGE>
<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 Program's
financial statements as of June 30, 1996 and for
the six months ended June 30, 1996, filed
herewith.
(b) Reports on Form 8-K
None
-12-
<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: August 6, 1996 By: /s/Dennis R. Neill
-----------------------------------
(Signature)
Dennis R. Neill
President
Date: August 6, 1996 By: /s/Drew S. Phillips
-----------------------------------
(Signature)
Drew S. Phillips
Chief Financial Officer
-13-
<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 June
30, 1996 and for the six months ended June 30, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 99,880
<SECURITIES> 0
<RECEIVABLES> 78,641
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 178,521
<PP&E> 30,211,222
<DEPRECIATION> 29,809,320
<TOTAL-ASSETS> 700,076
<CURRENT-LIABILITIES> 36,917
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 627,113
<TOTAL-LIABILITY-AND-EQUITY> 700,076
<SALES> 233,014
<TOTAL-REVENUES> 237,011
<CGS> 0
<TOTAL-COSTS> 152,107
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 84,904
<INCOME-TAX> 0
<INCOME-CONTINUING> 84,904
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 84,904
<EPS-PRIMARY> 15.00
<EPS-DILUTED> 0
</TABLE>
