<PAGE>
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, 1996
Commission File Number 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 of (I.R.S. Employer
incorporation or organization) Identification Number)
Samson Plaza
Two West Second Street
Tulsa, Oklahoma 74103
(Address of principal (Zip Code)
executive offices)
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. Yes X No (Disclosure is contained herein)
----- -----
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>
<PAGE>
FORM 10-K405
DYCO OIL AND GAS PROGRAM 1984-1
(a Minnesota limited partnership)
TABLE OF CONTENTS
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . 1
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . 6
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF LIMITED
PARTNERS . . . . . . . . . . . . . . . . . . . . . 11
PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ITEM 5. MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP
UNITS AND RELATED LIMITED PARTNER MATTERS . . . . 12
ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . 14
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . 21
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . 33
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT . . . . . . . . . . . . . . . . . . . . 33
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . 34
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT . . . . . . . . . . . . . . . . . . 38
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . 38
PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K . . . . . . . . . . . . . . . 40
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . 42
ii
<PAGE>
<PAGE>
PART I
ITEM 1. BUSINESS
General
The Dyco Oil and Gas Program 1984-1 Limited Partnership (the
"Program") is a Minnesota limited partnership engaged in the
production of oil and gas. The Program commenced operations on July
31, 1984 with the primary financial objective of investing its limited
partners' subscriptions in the drilling of oil and gas prospects and
then distributing to its 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 Program.
See "Item 2. Properties" for a description of the Program's reserves
and properties.
The limited partnership agreement for the Program (the "Program
Agreement") provides 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 the
Program's reimbursement to Dyco of the Program's proportionate share
of Dyco's geological, engineering, and general and administrative
expenses.
Dyco serves as General Partner of 32 limited partnerships,
including the Program. 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 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, 1996, the Samson Companies
owned interests in approximately 16,000 oil and gas wells located in
19 states of the United States and Canada, Venezuela, and Russia. At
December 31, 1996, the Samson Companies operated approximately 2,600
oil and gas wells located in 15 states of the United States and
Canada, Venezuela, and Russia.
As a limited partnership, the Program has no officers, directors,
or employees. It relies instead on the personnel of Dyco and the
other Samson Companies. As of February 1, 1997, the Samson Companies
employed approximately 780 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."
1
<PAGE>
<PAGE>
Dyco's and the Program's 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 Agreement permits the Program to incur
borrowings, the Program's operations and expenses are currently funded
out of the Program's revenues from oil and gas sales. Dyco may, but
is not required to, advance funds to the Program for the same purposes
for which Program borrowings are authorized.
Principal Products Produced and Services Rendered
The Program's sole business is the development and production of
oil and gas with a concentration on gas. The Program does not hold
any patents, trademarks, licenses, or concessions and is not a party
to any government contracts. The Program has no backlog of orders and
does not participate in research and development activities. The
Program is not presently encountering shortages of oil-field 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.
2
<PAGE>
<PAGE>
Regulation of Sales and Transportation of Oil and Gas -- Sales of
crude oil and condensate are made by the Program 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, including, but not
limited to, the Natural Gas Act of 1938 (the "NGA"), the Natural Gas
Policy Act of 1978 (the "NGPA"), and regulations promulgated by the
Federal Energy Regulatory Commission (the "FERC") under the NGA, the
NGPA, and other statutes. The provisions of the NGA and the NGPA, as
well as the regulations thereunder, are complex and affect all who
produce, resell, transport, or purchase gas, including the Program.
Although virtually all of the Program's gas production is not subject
to price regulation, the NGA, NGPA, and FERC regulations affect the
availability of gas transportation services and the ability of gas
consumers to continue to purchase or use gas at current levels.
Accordingly, such regulations may have a material effect on the
Program's operations and projections of future oil and gas production
and revenues.
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 Program's 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 therewith, may increase the
cost of the Program's operations or may affect the Program's ability
to complete, in a timely fashion, 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 76.5% of the Program's oil and gas
revenues during the year ended December 31, 1996. In the event of
interruption of purchases by this significant customer 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.
3
<PAGE>
<PAGE>
The Program's principal customers for crude oil production are
refiners and other companies which have pipeline facilities near the
producing properties of the Program. 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 Program
to produce and market oil and gas profitably depends on a number of
factors that are beyond the control of the Program. 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
(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 Program's 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 relatively volatile
for a number of years. For the past ten years, such prices have
generally been in the $1.40 to $2.00 per Mcf range, significantly
below prices received in the early 1980s. Average gas prices in the
last several months have, however, been somewhat higher than those
yearly averages. It is not known whether this is a short-term trend
or will lead to higher average gas prices on a longer-term basis.
Substantially all of the Program's gas reserves are being sold in
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 Program's gas increased from approximately $2.00 per
Mcf at December 31, 1995 to approximately $3.57 per Mcf at December
31, 1996. Such prices were on an MMBTU basis and differ from the
prices actually received by the Program due to transportation and
marketing costs, BTU adjustments, and regional price and quality
differences.
4
<PAGE>
<PAGE>
Due to global consumption and supply trends over the last several
months, oil prices have recently been higher than the yearly average
prices of the late to mid-1980s and early 1990s. It is not known
whether this trend will continue. Prices for the Program's oil
increased from approximately $18.50 per barrel at December 31, 1995 to
approximately $23.75 per barrel at December 31, 1996.
Future prices for both oil and gas will likely be different from
(and may be lower than) the prices in effect on December 31, 1996.
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 Program
for at least the following year. In particular, it should be noted
that December 31, 1996 prices were much higher than year-end prices
for the last several years and substantially higher than the average
prices received in each of the last several years. It is not possible
to predict whether the December 1996 pricing level is indicative of a
new trend toward higher energy prices or a short-term deviation from
the recent history of low to moderate prices; therefore, management is
unable to predict whether future oil and gas prices will (i)
stabilize, (ii) increase, or (iii) decrease.
Insurance Coverage
The Program is 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 Program maintains
insurance coverage as is customary for entities of a similar size
engaged in operations similar to that of the Program, 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
Program's financial position and results of operations.
5
<PAGE>
<PAGE>
ITEM 2. PROPERTIES
Well Statistics
The following table sets forth the numbers of gross and net
productive wells of the Program as of December 31, 1996.
Well Statistics(1)
As of December 31, 1996
Gross productive wells(2):
Oil 1
Gas 20
--
Total 21
Net productive wells(3):
Oil .15
Gas 1.49
----
Total 1.64
- ----------
(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
expressed as whole numbers and fractions thereof. For example, a
15% leasehold interest in a well represents one Gross Well, but
0.15 Net Well.
Drilling Activities
The Program participated in no drilling activities for the year
ended December 31, 1996.
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 Program, revenues attributable to such production, and certain
price and cost information.
6
<PAGE>
<PAGE>
Net Production Data
Year Ended December 31,
----------------------------
1996 1995 1994
-------- -------- --------
Production:
Oil (Bbls)(1) 1,688 2,240 2,875
Gas (Mcf)(2) 227,009 314,451 291,018
Oil and gas sales:
Oil $ 34,966 $ 39,141 $ 46,596
Gas 531,606 462,112 470,383
------- ------- -------
Total $566,572 $501,253 $516,979
======= ======= =======
Total direct operating expenses $118,019 $122,339 $136,044
======= ======= =======
Direct operating expenses as a
percentage of oil and gas
sales 20.8% 24.4% 26.3%
Average sales price:
Per barrel of oil $20.71 $17.47 $16.21
Per Mcf of gas 2.34 1.47 1.62
Direct operating expenses per
equivalent Mcf of gas(3) $ .50 $ .37 $ .44
- ----------
(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) 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.
7
<PAGE>
<PAGE>
Proved Reserves and Net Present Value
The following table sets forth the Program's estimated proved oil
and gas reserves and net present value therefrom as of December 31,
1996. The schedule of quantities of proved oil and 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 Program's proved reserves was calculated on the basis of current
costs and prices at December 31, 1996. 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 Program's proved reserves do not necessarily
reflect market prices for oil and gas production subsequent to
December 31, 1996. Furthermore, gas prices at December 31, 1996 were
much higher than the price used for determining the Program's net
present value of proved reserves for the year ended December 31, 1995,
and substantially higher than the average prices received by the
Program in each of the last several years. There can be no assurance
that the prices used in calculating the net present value of the
Program's proved reserves at December 31, 1996 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 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.
8
<PAGE>
<PAGE>
Proved Reserves and
Net Present Value
From Proved Reserves
As of December 31, 1996
Estimated proved reserves:
gas (Mcf) 1,044,277
Oil and liquids (Bbls) 11,213
Net present value
(discounted at 10% per annum) $2,432,873
No estimates of the proved reserves of the Program comparable to
those included herein have been included in reports to any federal
agency other than the SEC. Additional information relating to the
Program's proved reserves is contained in Note 4 to the Program's
financial statements, included in Item 8 of this Annual Report.
Significant Properties
As of December 31, 1996, the Program's properties consisted of 21
gross (1.64 net) productive wells. The Program also owned a non-
working interest in an additional 2 wells. Affiliates of the Program
operate 9 (39%) of the Program's total wells. As of December 31,
1996, the Program had estimated total proved reserves of 1,044,277 Mcf
of gas and 11,213 barrels of oil, with a present value (discounted at
10% per annum) of estimated future net cash flow of $2,432,873. All
of the 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.
Title to Oil and Gas Properties
Management believes that the Program has satisfactory title to
its oil and gas properties. Record title to substantially all of the
Program's properties is held by Dyco as nominee.
Title to the Program's 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 Program's
interest therein or materially interfere with their use in the
operation of the Program's business.
9
<PAGE>
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
On October 15, 1993, certain royalty owners filed a class action
lawsuit against Dyco in which the plaintiffs alleged entitlement to a
share of proceeds of a take-or-pay settlement with a gas purchaser
which involved the Marshall Young No. 2-4 well (Tom Mikles, et al. v.
Dyco Petroleum Corporation, Case No. C-93-190, District Court of
Beckham County, Oklahoma). The Program had an approximate 3.7%
working interest in the Marshall Young No. 2-4 well at the time the
lawsuit was filed. The lawsuit also alleged claims based on unjust
enrichment, breach of contract, and breach of fiduciary obligations
and seeks an accounting and declaration that the plaintiffs are third
party beneficiaries under the gas contract. 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
the matter in which it denied all of the plaintiffs' allegations. The
district court certified the matter as a class action on January 21,
1994 and discovery is proceeding in the matter. Oral arguments were
heard on plaintiffs' motion for summary judgment in January 1995,
however, as of the date of this Annual Report, the district court has
not ruled on the motion. Dyco intends to vigorously defend the
lawsuit. On September 10, 1996, the Oklahoma Supreme Court ruled in a
separate lawsuit that owners of royalty interests in Oklahoma oil and
gas properties do not have the right to share in the proceeds of take-
or-pay settlements. On February 11, 1997 the Oklahoma Supreme Court
denied the plaintiffs' request for a rehearing in this separate
lawsuit; therefore, its holding that Oklahoma royalty owners do not
have the right to share in the proceeds of take-or-pay settlements
should be dispositive of the Tom Mikles matter.
10
<PAGE>
<PAGE>
On October 26, 1993, certain royalty owners filed a class action
lawsuit against Dyco in which the plaintiffs alleged entitlement to a
share of proceeds of a take-or-pay settlement with a gas purchaser
which involved the Kinney Warren No. 3-10 well and Fender No. 4-10
well (Gene Mikles, et al. v. Dyco Petroleum Corporation, et al.,
District Court of Beckham County, Oklahoma). The Program had an
approximate 6.8% working interest in each of these wells at the time
the lawsuit was filed. The lawsuit also alleged claims based on
unjust enrichment, breach of contract, and breach of fiduciary
obligations and seeks an accounting and declaration that the
plaintiffs are third party beneficiaries under the gas contract. 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 the matter in which it denied all of the
plaintiffs' allegations. The district court certified the matter as a
class action on January 18, 1994 and discovery is proceeding in the
matter. Oral arguments were heard on plaintiffs' motion for summary
judgment in January 1995, however, as of the date of this Annual
Report, the district court has not ruled on the motion. Dyco intends
to vigorously defend the lawsuit. On September 10, 1996, the Oklahoma
Supreme Court ruled in a separate lawsuit that owners of royalty
interests in Oklahoma oil and gas properties do not have the right to
share in the proceeds of take-or-pay settlements. On February 11,
1997 the Oklahoma Supreme Court denied the plaintiffs' request for a
rehearing in this separate lawsuit; therefore, its holding that
Oklahoma royalty owners do not have the right to share in the proceeds
of take-or-pay settlements should be dispositive of the Gene Mikles
matter.
To the knowledge of the management of Dyco and the Program,
neither Dyco, the Program, nor the Program's properties are subject to
any litigation, the results of which would have a material effect on
the Program's or Dyco's financial condition or operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS
There were no matters submitted to a vote of the limited partners
during 1996.
11
<PAGE>
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP UNITS AND
RELATED LIMITED PARTNER MATTERS
The Program does not have an established trading market for its
units of limited partnership interest ("Units"). Pursuant to the
terms of the Program Agreement, Dyco, as General Partner, is obligated
to annually issue a repurchase offer which is based on the estimated
future net revenues from the Program's reserves and is calculated
pursuant to the terms of the Program Agreement. 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 Program's cash distributions per Unit for
the same period. For purposes of this Annual Report, a Unit
represents an initial subscription of $5,000 to the Program.
Repurchase Cash
Price Distributions
---------- -------------
1995:
First Quarter $158 $ -
Second Quarter 159 -
Third Quarter 134 25
Fourth Quarter 134 -
1996:
First Quarter $104 $30
Second Quarter 84 20
Third Quarter 165 -
Fourth Quarter 130 35
1997:
First Quarter $130 (1)
- ----------
(1) To be declared in March 1997.
The Program has 5,555 Units outstanding and approximately 2,210
limited partners of record.
12
<PAGE>
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Selected Financial Data
The following table presents selected financial data for the Program. This data should be
read in conjunction with the financial statements of the Program, and the respective notes
thereto, included elsewhere in this Annual Report. See "Item 8. Financial Statements and
Supplementary Data."
December 31,
--------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Summary of Operations:
Oil and gas sales $566,572 $501,253 $516,979 $699,820 $ 710,705
Total revenues 574,635 508,551 522,106 704,650 716,257
Lease operating expenses 78,014 86,764 97,316 73,570 53,736
Production taxes 40,005 35,575 38,728 51,277 42,423
General and administrative
expenses 76,691 77,733 72,657 75,611 73,993
Depreciation, depletion, and
amortization of oil and gas
properties 58,945 113,399 186,298 189,709 204,437
Net income 320,980 195,080 127,107 314,483 341,668
per Unit 58 35 23 57 62
Cash distributions 472,175 138,875 333,300 583,275 305,525
per Unit 85 25 60 105 55
Summary Balance Sheet Data:
Total assets 710,366 881,809 812,659 976,637 1,251,403
Partners' capital 668,764 819,959 763,754 969,947 1,238,739
</TABLE>
13
<PAGE>
<PAGE>
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 Program.
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 Program's 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 relatively volatile for a number
of years. For the past ten years, such prices have generally been in
the $1.40 to $2.00 per Mcf range, significantly below prices received
in the early 1980s. Average gas prices in the last several months
have, however, been somewhat higher than those yearly averages. It is
not known whether this is a short-term trend or will lead to higher
average gas prices on a longer-term basis.
14
<PAGE>
<PAGE>
Substantially all of the Program's gas reserves are being sold in
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 Program's gas increased from approximately $2.00 per
Mcf at December 31, 1995 to approximately $3.57 per Mcf at December
31, 1996. Such prices were on an MMBTU basis and differ from the
prices actually received by the Program due to transportation and
marketing costs, BTU adjustments, and regional price and quality
differences.
Due to global consumption and supply trends over the last several
months, oil prices have recently been higher than the yearly average
prices of the late to mid-1980s and early 1990s. It is not known
whether this trend will continue. Prices for the Program's oil
increased from approximately $18.50 per barrel at December 31, 1995 to
approximately $23.75 per barrel at December 31, 1996.
Future prices for both oil and gas will likely be different from
(and may be lower than) the prices in effect on December 31, 1996.
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 Program
for at least the following year. In particular, it should be noted
that December 31, 1996 prices were much higher than year-end prices
for the last several years and substantially higher than the average
prices received in each of the last several years. It is not possible
to predict whether the December 1996 pricing level is indicative of a
new trend toward higher energy prices or a short-term deviation from
the recent history of low to moderate prices; therefore, management is
unable to predict whether future oil and gas prices will (i)
stabilize, (ii) increase, or (iii) decrease.
15
<PAGE>
<PAGE>
Results of Operations
Year Ended December 31, 1996 Compared
to Year Ended December 31, 1995
-------------------------------------
Total oil and gas sales increased $65,319 (13.0%) for the year
ended December 31, 1996 as compared to the year ended December 31,
1995. Of this increase, approximately $7,000 and $274,000,
respectively, were related to increases in the average prices of oil
and gas sold, partially offset by decreases of approximately $11,000
and $205,000, respectively, related to decreases in volumes of oil and
gas sold. Volumes of oil and gas sold decreased 552 barrels and
87,442 Mcf, respectively, for the year ended December 31, 1996 as
compared to the year ended December 31, 1995. The decrease in volumes
of oil sold resulted primarily from normal declines in production due
to diminished oil reserves on two wells. The decrease in volumes of
gas sold resulted primarily from (i) a positive prior period
adjustment made by the purchaser on one well during the year ended
December 31, 1995 and (ii) a normal decline in production due to
diminished gas reserves on another well. Average oil and gas prices
increased to $20.71 per barrel and $2.34 per Mcf, respectively, for
the year ended December 31, 1996 from $17.47 per barrel and $1.47 per
Mcf, respectively, for the year ended December 31, 1995.
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased $4,320 (3.5%) for the year
ended December 31, 1996 as compared to the year ended December 31,
1995. This decrease resulted primarily from the reversal of a $20,000
accrual during the year ended December 31, 1996 due to the conclusion
of a certain legal contingency in favor of the Program, partially
offset by an increase in production taxes associated with the increase
in oil and gas sales discussed above. As a percentage of oil and gas
sales, these expenses decreased to 20.8% for the year ended December
31, 1996 from 24.4% for the year ended December 31, 1995. This
percentage decrease was primarily due to the increase in oil and gas
sales discussed above.
16
<PAGE>
<PAGE>
Depreciation, depletion, and amortization of oil and gas
properties decreased $54,454 (48.0%) for the year ended December 31,
1996 as compared to the year ended December 31, 1995. This decrease
resulted primarily from (i) the decreases in volumes of oil and gas
sold during the year ended December 31, 1996 as compared to the year
ended December 31, 1995 and (ii) upward revisions 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 10.4% for the year
ended December 31, 1996 from 22.6% for the year ended December 31,
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 the
year ended December 31, 1996 as compared to the year ended December
31, 1995.
General and administrative expenses remained relatively constant
for the year ended December 31, 1996 as compared to the year ended
December 31, 1995. As a percentage of oil and gas sales, these
expenses decreased to 13.5% for the year ended December 31, 1996 from
15.5% for the year ended December 31, 1995. This percentage decrease
was primarily due to the increase in oil and gas sales during the year
ended December 31, 1996 as compared to the year ended December 31,
1995 discussed above.
Year Ended December 31, 1995 Compared
to Year Ended December 31, 1994
-------------------------------------
Total oil and gas sales decreased $15,726 (3.0%) for the year
ended December 31, 1995 as compared to the year ended December 31,
1994. Of this decrease, approximately $11,000 was related to a
decrease in volumes of oil sold and approximately $44,000 was related
to a decrease in the average price of gas sold, partially offset by an
increase of approximately $34,000 related to an increase in volumes of
gas sold and approximately $4,000 related to an increase in the
average price of oil sold. Volumes of oil sold decreased 635 barrels
and volumes of gas sold increased 23,433 Mcf for the year ended
December 31, 1995 as compared to the year ended December 31, 1994.
The decrease in volumes of oil sold was primarily due to (i) positive
prior period volume adjustments made by the purchaser on one
significant well during the year ended December 31, 1994, (ii) the
normal decline in oil production due to the deterioration of the
producing capabilities of the Program's wells, and (iii) the sale of
one significant well during the latter part of 1994. Average oil
prices increased to $17.47 per barrel for the year ended December 31,
1995 from $16.21 per barrel for the year ended December 31, 1994. Gas
prices decreased to an average of $1.47 per Mcf for the year ended
December 31, 1995 from an average of $1.62 per Mcf for the year ended
December 31, 1994.
17
<PAGE>
<PAGE>
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased $13,705 (10.1%) for the year
ended December 31, 1995 as compared to the year ended December 31,
1994. This decrease was primarily due to lower oil production during
the year ended December 31, 1995 and a litigation accrual recognized
during the year ended December 31, 1994, partially offset by workovers
on two wells during the year ended December 31, 1995. As a percentage
of oil and gas sales, these expenses decreased to 24.4% for the year
ended December 31, 1995 from 26.3% for the year ended December 31,
1994 due to the dollar decrease in oil and gas production expenses
discussed above.
Depreciation, depletion, and amortization of oil and gas
properties decreased $72,899 (39.1%) for the year ended December 31,
1995 as compared to the year ended December 31, 1994. This decrease
was primarily a result of a significant increase in the estimate of
remaining gas reserves at December 31, 1995. As a percentage of oil
and gas sales, this expense decreased to 22.6% for the year ended
December 31, 1995 from 36.0% for the year ended December 31, 1994.
This percentage decrease was primarily due to the dollar decrease in
depreciation, depletion, and amortization expense discussed above.
General and administrative expenses increased $5,076 (7.0%) for
the year ended December 31, 1995 as compared to the year ended
December 31, 1994. This dollar increase resulted primarily from an
increase in both professional fees and printing and postage expenses
during the year ended December 31, 1995 as compared to the similar
period in 1994. As a percentage of oil and gas sales, this expense
remained relatively constant at 15.5% for the year ended December 31,
1995 as compared to 14.1% for the year ended December 31, 1994.
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 the year ended
December 31, 1996, the Program's proved reserve quantities at December
31, 1996 would have a life of approximately 4.6 years for gas reserves
and 6.6 years for oil reserves. However, since the Program's reserve
estimates are based on oil and gas prices at December 31, 1996, it is
possible that a significant decrease in oil and gas prices from
December 31, 1996 levels will reduce such reserves and their
corresponding life-span.
18
<PAGE>
<PAGE>
The Program's 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. The Program has no debt commitments. Cash for
operational purposes will be provided by current oil and gas
production.
The Samson Companies are currently in the process of evaluating
certain oil and gas properties owned by the Program and other entities
of the Samson Companies. As a result of such evaluation, it is
expected that certain of these properties will be placed in bid
packages and offered for sale during the first half of 1997. It is
likely that the Program will have an interest in some of the
properties being sold. It is currently estimated that the value of
such sales, as a percentage of total proved reserves of the Program,
will range from 1% to 10%.
The decision to accept any offer for the purchase of a Program
property will be made by Dyco after giving due consideration to the
offer price and Dyco's estimate of both the property's remaining
proved reserves and future operating costs. Net proceeds from the
sale of any such properties will be distributed to the Program and
will be included in the calculation of the Program's cash
distributions for the quarter immediately following the Program's
receipt of the proceeds.
Following completion of any sale, the Program's quantity of
proved reserves will be reduced. It is also possible that the
Program's repurchase values and future cash distributions could
decline as a result of a reduction of the Program's reserve base. On
the other hand, Dyco believes there will be beneficial operating
efficiencies related to the Program's remaining properties. This is
primarily due to the fact that the properties being considered for
sale are more likely to bear a higher ratio of operating expenses as
compared to reserves than the properties not being considered for
sale. The net effect of such property sales is difficult to predict
as of the date of this Annual Report.
19
<PAGE>
<PAGE>
There can be no assurance as to the amount of the Program's
future cash distributions. The Program's ability to make cash
distributions depends primarily upon the level of available cash flow
generated by the Program's operating activities, which will be
affected (either positively or negatively) by many factors beyond the
control of the Program, 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 Program is not replacing production
through acquisitions of producing properties and drilling. If the
Program sells any of its properties as discussed above, the Program's
quantity of proved reserves will be reduced; therefore, it is possible
that the Program's future cash distributions could decline as a result
of a reduction of the Program's reserve base.
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 Program in 1996. 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."
20
<PAGE>
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
We have audited the financial statements of the Dyco Oil and Gas
Program 1984-1 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 dis-
closures 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 1984-1 Limited Partnership at December
31, 1996 and 1995, and the results of its operations and cash flows
for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
February 10, 1997
21
<PAGE>
<PAGE>
DYCO OIL AND GAS PROGRAM
1984-1 LIMITED PARTNERSHIP
Balance Sheets
December 31, 1996 and 1995
ASSETS
------
1996 1995
-------- --------
CURRENT ASSETS:
Cash and cash equivalents $110,217 $233,440
Accrued oil and gas sales, including
$52,780 due from related
parties at 1995 (Note 2) 136,951 77,337
------- -------
Total current assets $247,168 $310,777
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 392,256 451,379
DEFERRED CHARGE 70,942 119,653
------- -------
$710,366 $881,809
======= =======
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
CURRENT LIABILITIES:
Accounts payable $ 6,130 $ 25,804
------- -------
Total current liabilities $ 6,130 $ 25,804
ACCRUED LIABILITY 35,472 36,046
PARTNERS' CAPITAL:
General Partner, issued and
outstanding, 55 Units 6,688 8,200
Limited Partners, issued and
outstanding, 5,500 Units 662,076 811,759
------- -------
Total Partners' capital $668,764 $819,959
------- -------
$710,366 $881,809
======= =======
The accompanying notes are an integral
part of these financial statements.
22
<PAGE>
<PAGE>
DYCO OIL AND GAS PROGRAM
1984-1 LIMITED PARTNERSHIP
Statements of Operations
For the Years Ended December 31, 1996, 1995, and 1994
1996 1995 1994
-------- -------- --------
REVENUES:
Oil and gas sales, including
$411,397 and $431,620 of
sales to related parties
in 1995 and 1994 (Note 2) $566,572 $501,253 $516,979
Interest 8,063 7,298 5,127
------- ------- -------
$574,635 $508,551 $522,106
COSTS AND EXPENSES:
Lease operating $ 78,014 $ 86,764 $ 97,316
Production taxes 40,005 35,575 38,728
Depreciation, depletion, and
amortization of oil and gas
properties 58,945 113,399 186,298
General and administrative 76,691 77,733 72,657
------- ------- -------
$253,655 $313,471 $394,999
------- ------- -------
NET INCOME $320,980 $195,080 $127,107
======= ======= =======
GENERAL PARTNER (1%) - NET INCOME $ 3,210 $ 1,951 $ 1,271
======= ======= =======
LIMITED PARTNERS (99%) - NET INCOME $317,770 $193,129 $125,836
======= ======= =======
NET INCOME per Unit $ 58 $ 35 $ 23
======= ======= =======
UNITS OUTSTANDING 5,555 5,555 5,555
======= ======= =======
The accompanying notes are an integral
part of these financial statements.
23
<PAGE>
<PAGE>
DYCO OIL AND GAS PROGRAM
1984-1 LIMITED PARTNERSHIP
Statements of Partners' Capital
For the Years Ended December 31, 1996, 1995, and 1994
General Limited
Partner Partners Total
--------- ------------ ----------
Balances at Dec. 31, 1993 $ 9,699 $960,248 $969,947
Cash distributions ( 3,333) ( 329,967) ( 333,300)
Net income 1,271 125,836 127,107
------ ------- -------
Balances at Dec. 31, 1994 $ 7,637 $756,117 $763,754
Cash distributions ( 1,388) ( 137,487) ( 138,875)
Net income 1,951 193,129 195,080
------ ------- -------
Balances at Dec. 31, 1995 $ 8,200 $811,759 $819,959
Cash distributions ( 4,722) ( 467,453) ( 472,175)
Net income 3,210 317,770 320,980
------ ------- -------
Balances at Dec. 31, 1996 $ 6,688 $662,076 $668,764
====== ======= =======
The accompanying notes are an integral
part of these financial statements.
24
<PAGE>
<PAGE>
DYCO OIL AND GAS PROGRAM
1984-1 LIMITED PARTNERSHIP
Statements of Cash Flows
For the Years Ended December 31, 1996, 1995, and 1994
1996 1995 1994
---------- ---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $320,980 $195,080 $127,107
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and amorti-
zation of oil and gas properties 58,945 113,399 186,298
(Increase) decrease in accrued oil
and gas sales ( 59,614) ( 4,548) 36,556
(Increase) decrease in
deferred charge 48,711 ( 52,122) ( 7,453)
Increase (decrease) in
accounts payable ( 19,674) 1,121 17,993
Increase (decrease) in gas
imbalance payable - ( 3,751) 3,751
Increase (decrease) in accrued
liability ( 574) 15,575 20,471
-------- ------- -------
Net cash provided by operating
activities $348,774 $264,754 $384,723
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of oil
and gas properties $ 4,526 $ 6,062 $ 871
Additions to oil and gas
properties ( 4,348) ( 32,476) ( 22,217)
------- ------- -------
Net cash provided (used) by investing
activities $ 178 ($ 26,414) ($ 21,346)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash Distributions ($472,175) ($138,875) ($333,300)
------- ------- -------
Net cash used by financing
activities ($472,175) ($138,875) ($333,300)
------- ------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($123,223) $ 99,465 $ 30,077
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 233,440 133,975 103,898
------- ------- -------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $110,217 $233,440 $133,975
======= ======= =======
The accompanying notes are an integral
part of these financial statements.
25
<PAGE>
<PAGE>
DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
Notes to Financial Statements
For the Years Ended December 31, 1996, 1995, and 1994
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization Nature of Operations
The Dyco Oil and Gas Program 1984-1 Limited Partnership (the
"Program"), a Minnesota limited partnership, commenced operations
on July 31, 1984. Dyco Petroleum Corporation ("Dyco") is the
General Partner of the Program. Affiliates of Dyco owned
1,884.26 (33.9%) 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.
26
<PAGE>
<PAGE>
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 during the years ended December 31, 1996, 1995, and
1994 were $0.25, $0.35, and $0.60, 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, 1996 and 1995 represents
costs deferred for lease operating expenses incurred in
connection with the Program's underproduced gas imbalance
position. 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 233,210
Mcf, resulting in prepaid lease operating expenses of $70,942.
At December 31, 1995, 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 325,585 Mcf,
resulting in prepaid operating expenses of $119,653.
27
<PAGE>
<PAGE>
Accrued Liability
The Accrued Liability at December 31, 1996 and 1995 represents
charges accrued for lease operating expenses incurred in
connection with the Program's overproduced gas imbalance
position. 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 116,609 Mcf,
resulting in accrued lease operating expenses of $35,472. At
December 31, 1995, cumulative total gas sales volumes for
overproduced wells exceeded the Program's pro-rata share of total
gas production from these wells by 98,083 Mcf, resulting in
accrued lease operating expenses of $36,046.
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, 1996 and 1995, no such liability was recorded.
28
<PAGE>
<PAGE>
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, accrued oil and gas sales, the deferred charge, and the
accrued liability all involve estimates which could materially
differ from the actual amounts ultimately realized or incurred in
the near term. The litigation, for which a contingent liability
was accrued in a prior period in the amount of $20,000, resulted
in no liability to the Program and the accrual was reversed
during the year ended December 31, 1996. Oil and gas reserves
(see Note 4) also involve significant estimates which could
materially differ from the actual amounts ultimately realized.
During the year ended December 31, 1996, the Program received a
credit for lease operating expenses in the amount of $24,432
which should have been recognized during the second quarter of
1996 and reflected in the Program's Quarterly Report on Form 10-Q
for the three months ended June 30, 1996.
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, 1996,
1995, and 1994, such expenses totaled $76,691, $77,733, and
$72,657, respectively, of which $62,616 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.
29
<PAGE>
<PAGE>
During 1994 and 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 and 1994, these sales totaled $411,397 and $431,620,
respectively. At December 31, 1995, accrued oil and gas sales
included $52,780 due from El Paso.
3. MAJOR CUSTOMERS
The following purchaser individually accounted for more than 10%
of the combined oil and gas revenues (excluding the gas imbalance
adjustment) of the Program for the years ended December 31, 1996,
1995, and 1994:
Purchaser 1996 1995 1994
--------- ----- ----- -----
El Paso 76.5% 82.1% 83.5%
In the event of interruption of purchases by this significant
customer 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.
30
<PAGE>
<PAGE>
Capitalized Costs
The Program's capitalized costs and accumulated depreciation,
depletion, amortization, and valuation allowance were as follows:
December 31,
----------------------------
1996 1995
------------- -------------
Proved properties $30,207,520 $30,207,698
Unproved properties, not
subject to depre-
ciation, depletion, and
amortization - -
---------- ----------
$30,207,520 $30,207,698
Less accumulated depre-
ciation, depletion,
amortization, and
valuation allowance ( 29,815,264) ( 29,756,319)
---------- ----------
Net oil and gas
properties $ 392,256 $ 451,379
========== ==========
Costs Incurred
Costs incurred by the Program in connection with its oil and gas
property acquisition, exploration, and development activities
were as follows:
December 31,
-------------------------
1996 1995 1994
------- ------- -------
Acquisition of properties $ - $ - $ -
Exploration costs - - -
Development costs 4,348 32,476 22,217
----- ------ ------
Total costs incurred $4,348 $32,476 $22,217
===== ====== ======
31
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
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, 1996, 1995, and 1994. Proved
reserves were estimated by petroleum engineers employed affiliates of Dyco. All of the
Program's reserves are located in the United States.
1996 1995 1994
------------------- ----------------- --------------------
Oil Gas Oil Gas Oil Gas
(Bbls) (Mcf) (Bbls) (Mcf) (Bbls) (Mcf)
------- ---------- ------ -------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Proved reserves,
beginning of year 5,686 960,735 5,537 929,541 6,461 1,126,222
Revisions of previous
estimates 7,215 310,551 2,389 345,645 1,951 94,337
Sales of reserves - - - - - -
Extensions and
discoveries - - - - - -
Production ( 1,688) ( 227,009) (2,240) (314,451) (2,875) ( 291,018)
------ --------- ----- ------- ----- ---------
Proved reserves,
end of year 11,213 1,044,277 5,686 960,735 5,537 929,541
====== ========= ===== ======= ===== =========
Proved developed
reserves:
Beginning of year 5,686 960,735 5,537 929,541 6,461 1,126,222
------ --------- ----- ------- ----- ---------
End of year 11,213 1,044,277 5,686 960,735 5,537 929,541
====== ========= ===== ======= ===== =========
</TABLE>
32
<PAGE>
<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; con-
sequently, 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.
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 Program is a limited partnership and has 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 44 President and Director
Patrick M. Hall 38 Chief Financial Officer
Judy K. Fox 45 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.
33
<PAGE>
<PAGE>
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 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; President and Director of Samson Properties
Incorporated, Samson Hydrocarbons Company, Geodyne Resources, Inc. and
its subsidiaries, Berry Gas Company, Circle L Drilling Company, and
Compression, Inc.; and President and Chairman of the Board of
Directors of Samson Securities Company.
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., Geodyne Resources, Inc. and its
subsidiaries, Samson Hydrocarbons Company, and Samson Properties
Incorporated.
ITEM 11. EXECUTIVE COMPENSATION
The Program is a limited partnership and, therefore, has no
officers or directors. The following table summarizes the amounts
paid by the Program as compensation and reimbursements to Dyco and its
affiliates for the three years ended December 31, 1996:
34
<PAGE>
<PAGE>
Compensation/Reimbursement to Dyco and its affiliates
Three Years Ended December 31, 1996
Type of Compensation/Reimbursement(1) Expense
- ------------------------------------- -------------------------
1996 1995 1994
------- ------- -------
Compensation:
Operations $ (2) $ (2) $ (2)
Gas Marketing $ (3) $ (3) $ (3)
Reimbursements:
General and Administrative,
Geological, and Engineering
Expenses and Direct
Expenses(4) $62,616 $62,616 $62,616
- ----------
(1) The authority for all of such compensation and reimbursement is
the Program Agreement. 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 Program serve as operator of a significant
portion of the Program's 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 compen-
sation paid by the Program to such affiliates is impossible to
quantify as of the date of this Annual Report.
(3) During 1994 and 1995 El Paso, an affiliate of the Program until
December 6, 1995, purchased a portion of the Program's gas at
market prices and resold such gas at market prices directly to
end-users and local distribution companies. For the year ended
December 31, 1995 and 1994, the Program sold $411,397 and
$431,620, respectively, of gas to El Paso. After December 6,
1995 the Program's gas was marketed by Dyco and its affiliates,
who were reimbursed for such activities as general and
administrative expenses.
35
<PAGE>
<PAGE>
(4) The Program reimburses 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 Program. The directors,
officers, and employees of Dyco and its affiliates receive no
direct remuneration from the Program for their services to the
Program. See "Salary Reimbursement Table" below. The allocable
general and administrative, geological, and engineering expenses
are apportioned on a reasonable basis between the Program's
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 Program 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 Program for their services.
However, to the extent such services represent direct involvement with
the Program, as opposed to general corporate functions, such persons'
salaries are allocated to and reimbursed by the Program. Such
allocation to the Program's 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 Program's
operations. The following table indicates the approximate amount of
general and administrative expense reimbursement attributable to the
salaries of the directors and, officers, and employees of Dyco and its
affiliates for the three years ended December 31, 1996:
36
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Salary Reimbursement
Three Years Ended December 31, 1996
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) 1994 - - - - - - -
1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1994 $34,126 - - - - - -
1995 $34,188 - - - - - -
1996 $36,630 - - - - - -
- ----------
(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>
37
<PAGE>
<PAGE>
In addition to the compensation/reimbursements noted above,
during the three years ended December 31, 1996, 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 Program has 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 Program for a portion of such costs based upon the
Program's 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 Program's Units as of January 31, 1997 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)
------------------------------- -----------------
Samson Resources Company 1,887.26 (34.0%)
All directors, officers, and
affiliates of Dyco as a group
and Dyco (5 persons) 1,887.26 (34.0%)
To the best knowledge of the Program and Dyco, there were no
officers, directors, or 5% owners who were delinquent filers of
reports required under section 16 of the Securities Exchange Act of
1934.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain affiliates of Dyco engage in oil and gas activities
independently of the Program which result in conflicts of interest
that cannot be totally eliminated. The allocation of acquisition and
drilling opportunities and the nature of the compensation arrangements
between the Program and such affiliates also create potential
conflicts of interest. An affiliate owns a significant amount of the
Program's Units and therefore has an identity of interest with other
limited partners with respect to the operations of the Program.
38
<PAGE>
<PAGE>
In order to attempt to assure limited liability for limited
partners as well as an orderly conduct of business, management of the
Program is exercised solely by Dyco. The Program Agreement grants
Dyco broad discretionary authority with respect to the Program's
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 Program involves circumstances where Dyco has conflicts of
interest and where it must allocate costs and expenses, or
opportunities, among the Program and other competing interests.
Dyco does not devote all of its time, efforts, and personnel
exclusively to the Program. Furthermore, the Program does not have
any employees, but instead relies on the personnel of the Samson
Companies. The Program thus competes 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 Program as are
indicated by the circumstances and as are consistent with Dyco's
fiduciary duties.
Affiliates of the Program are solely responsible for the negotia-
tion, administration, and enforcement of oil and gas sales agreements
covering the Program's leasehold interests. Because affiliates of the
Program who provide services to the Program 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 the 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 Program's 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."
39
<PAGE>
<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 Program as of December 31, 1996 and
1995 and for the years ended December 31, 1996, 1995,
and 1994 are filed as part of this report:
Report 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 March 16, 1984 for Dyco
Drilling Program 1984-1 by and between Dyco Oil
and Gas Program 1984-1, 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 8, 1992 and is hereby
incorporated by reference.
4.2 Form of Program Agreement for Dyco Oil and Gas
Program 1984-1 by and between Dyco Petroleum
Corporation and the Participants filed as Exhibit
4.2 to Annual Report on Form 10-K for the year
ended December 31, 1991 on April 8, 1992 and is
hereby incorporated by reference.
4.3 Amendment to Program Agreement for Dyco Oil and
Gas Program 1984-1 dated February 9, 1989 filed as
Exhibit 4.3 to Annual Report on Form 10-K for the
year ended December 31, 1991 on April 8, 1992 and
is hereby incorporated by reference.
40
<PAGE>
<PAGE>
4.4 Certificate of Limited Partnership, as amended,
for Dyco Oil and Gas Program 1984-1 Limited
Partnership filed as Exhibit 4.4 to Annual Report
on Form 10-K for the year ended December 31, 1991
on April 8, 1992 and is hereby incorporated by
reference.
*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 December 31, 1996 and
for the year ended December 31, 1996.
All other Exhibits are omitted as inapplicable.
------------------
* Filed herewith.
(b) Reports on Form 8-K for the fourth quarter of 1996.
None.
41
<PAGE>
<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 1984-1
LIMITED PARTNERSHIP
By: DYCO PETROLEUM CORPORATION
General Partner
February 20, 1997
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 Feb. 20, 1997
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall Chief Financial Feb. 20, 1997
------------------- Officer (Principal
Patrick M. Hall Financial and
Accounting Officer)
/s/Judy K. Fox Secretary Feb. 20, 1997
-------------------
Judy K. Fox
42
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
4.1 Drilling Agreement dated March 16, 1984 for Dyco Drilling
Program 1984-1 by and between Dyco Oil and Gas Program
1984-1, 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 8, 1992 and is hereby
incorporated by reference.
4.2 Form of Program Agreement for Dyco Oil and Gas Program
1984-1 by and between Dyco Petroleum Corporation and the
Participants filed as Exhibit 4.2 to Annual Report on Form
10-K for the year ended December 31, 1991 on April 8, 1992
and is hereby incorporated by reference.
4.3 Amendment to Program Agreement for Dyco Oil and Gas Program
1984-1 dated February 9, 1989 filed as Exhibit 4.3 to Annual
Report on Form 10-K for the year ended December 31, 1991 on
April 8, 1992 and is hereby incorporated by reference.
4.4 Certificate of Limited Partnership, as amended, for Dyco Oil
and Gas Program 1984-1 Limited Partnership filed as Exhibit
4.4 to Annual Report on Form 10-K for the year ended Decem-
ber 31, 1991 on April 8, 1992 and is hereby incorporated by
reference.
*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
December 31, 1996 and for the year ended December 31, 1996.
- ------------------
* Filed herewith.
43
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000725261
<NAME> DYCO OIL & GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 110,217
<SECURITIES> 0
<RECEIVABLES> 136,951
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 247,168
<PP&E> 30,207,520
<DEPRECIATION> 29,815,264
<TOTAL-ASSETS> 710,366
<CURRENT-LIABILITIES> 6,130
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 668,764
<TOTAL-LIABILITY-AND-EQUITY> 710,366
<SALES> 566,572
<TOTAL-REVENUES> 574,635
<CGS> 0
<TOTAL-COSTS> 253,655
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 320,980
<INCOME-TAX> 0
<INCOME-CONTINUING> 320,980
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 320,980
<EPS-PRIMARY> 58
<EPS-DILUTED> 0
</TABLE>
