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, 1998 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
------ ------
1
<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,
1998 1997
----------- ------------
CURRENT ASSETS:
Cash and cash equivalents $148,241 $118,202
Accrued oil and gas sales 74,400 104,600
-------- --------
Total current assets $222,641 $222,802
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 257,736 305,697
DEFERRED CHARGE 83,517 83,517
-------- --------
$563,894 $612,016
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 5,341 $ 6,228
Gas imbalance payable 34,853 34,853
-------- --------
Total current liabilities $ 40,194 $ 41,081
ACCRUED LIABILITY $ 42,709 $ 42,709
PARTNERS' CAPITAL:
General Partner, issued and
outstanding, 55 units $ 4,809 $ 5,282
Limited Partners, issued and
outstanding, 5,500 units 476,182 522,944
-------- --------
Total Partners' capital $480,991 $528,226
-------- --------
$563,894 $612,016
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
2
<PAGE>
DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
1998 1997
--------- --------
REVENUES:
Oil and gas sales $ 91,574 $113,924
Interest 1,271 1,699
-------- --------
$ 92,845 $115,623
COST AND EXPENSES:
Oil and gas production $ 22,316 $ 33,862
Depreciation, depletion, and
amortization of oil and gas
properties 22,244 13,751
General and administrative
(Note 2) 16,601 18,281
-------- --------
$ 61,161 $ 65,894
-------- --------
NET INCOME $ 31,684 $ 49,729
======== ========
GENERAL PARTNER (1%) - net
income $ 316 $ 497
======== ========
LIMITED PARTNERS (99%) - net
income $ 31,368 $ 49,232
======== ========
NET INCOME PER UNIT $ 5.71 $ 8.95
======== ========
UNITS OUTSTANDING 5,555 5,555
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
3
<PAGE>
DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
1998 1997
--------- --------
REVENUES:
Oil and gas sales $225,126 $239,741
Interest 3,060 2,972
-------- --------
$228,186 $242,713
COST AND EXPENSES:
Oil and gas production $ 47,075 $ 59,520
Depreciation, depletion, and
amortization of oil and gas
properties 47,961 40,930
General and administrative
(Note 2) 41,510 44,523
-------- --------
$136,546 $144,973
-------- --------
NET INCOME $ 91,640 $ 97,740
======== ========
GENERAL PARTNER (1%) - net
income $ 916 $ 977
======== ========
LIMITED PARTNERS (99%) - net
income $ 90,724 $ 96,763
======== ========
NET INCOME PER UNIT $ 16.50 $ 17.59
======== ========
UNITS OUTSTANDING 5,555 5,555
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
4
<PAGE>
DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
1998 1997
--------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 91,640 $ 97,740
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 47,961 40,930
Decrease in accrued oil and
sales 30,200 65,563
Increase (decrease) in accounts
payable ( 887) 476
-------- --------
Net cash provided by operating
activities $168,914 $204,709
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of oil and
gas properties $ - $ 1,350
-------- --------
Net cash provided by investing
activities $ - $ 1,350
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($138,875) ($222,200)
-------- --------
Net cash used by financing
activities ($138,875) ($222,200)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 30,039 ($ 16,141)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 118,202 110,217
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $148,241 $ 94,076
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
5
<PAGE>
DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheet as of June 30, 1998, statements of operations for the
three and six months ended June 30, 1998 and 1997, and statements of cash
flows for the six months ended June 30, 1998 and 1997 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, 1998, results of operations for the three and six
months ended June 30, 1998 and 1997, and changes in cash flows for the six
months ended June 30, 1998 and 1997 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, 1997. The results of operations for the period
ended June 30, 1998 are not necessarily indicative of the results to be
expected for the full year.
OIL AND GAS PROPERTIES
----------------------
Oil and gas operations are accounted for using the full cost method of
accounting. All productive and non-productive costs associated with the
acquisition, exploration and development of oil and gas reserves are
capitalized. The 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), the excess is
charged to expense in the period during which such excess occurs. Sales
and abandonments of
6
<PAGE>
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 period by the estimated future gross income from the oil and gas
properties and applying the resulting rate to the net remaining costs of
oil and gas properties that have been capitalized, plus estimated future
development costs.
2. TRANSACTIONS WITH RELATED PARTIES
---------------------------------
Under the terms of 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, 1998 and 1997 the
Program incurred such expenses totaling $16,601 and $18,281, respectively,
of which $15,654 was paid each period to Dyco and its affiliates. During
the six months ended June 30, 1998 and 1997 the Program incurred such
expenses totaling $41,510 and $44,523, respectively, of which $31,308 was
paid each period 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.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
USE OF FORWARD-LOOKING STATEMENTS AND ESTIMATES
- -----------------------------------------------
This Quarterly Report contains certain forward-looking statements. The
words "anticipate", "believe", "expect", "plan", "intend", "estimate",
"project", "could", "may" and similar expressions are intended to identify
forward-looking statements. Such statements reflect management's current
views with respect to future events and financial performance. This
Quarterly Report also includes certain information, which is, or is based
upon, estimates and assumptions. Such estimates and assumptions are
management's efforts to accurately reflect the condition and operation of
the 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, and otherwise indicated.
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.
8
<PAGE>
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 debt
commitments. Cash for operational purposes will be provided by current oil
and gas production.
RESULTS OF OPERATIONS
- ---------------------
GENERAL DISCUSSION
The following general discussion should be read in conjunction with the
analysis of results of operations provided below. The most important
variable affecting the Program's revenues is the prices received for the
sale of oil and gas. Predicting future prices is very difficult.
Substantially all of the Program's gas reserves are being sold on the
"spot market". Prices on the spot market are subject to wide seasonal and
regional pricing fluctuations due to the highly competitive nature of the
spot market. Such spot market sales are generally short-term in nature and
are dependent upon the obtaining of transportation services provided by
pipelines. In addition, crude oil prices are at or near their lowest level
in the past decade due primarily to the global surplus of crude oil.
Management is unable to predict whether future oil and gas prices will (i)
stabilize, (ii) increase, or (iii) decrease.
THREE MONTHS ENDED JUNE 30, 1998 AS COMPARED TO THE THREE MONTHS ENDED
JUNE 30, 1997.
Three Months Ended June 30,
---------------------------
1998 1997
------- --------
Oil and gas sales $91,574 $113,924
Oil and gas production expenses $22,316 $ 33,862
Barrels produced 301 317
Mcf produced 39,372 50,780
Average price/Bbl $ 12.27 $ 20.50
Average price/Mcf $ 2.23 $ 2.12
As shown in the table above, total oil and gas sales decreased $22,350
(19.6%) for the three months ended June 30, 1998 as compared to the three
months ended June 30, 1997. Of this decrease, approximately $24,000 was
related to a decrease in volumes of gas sold and approximately $2,000 was
related to a decrease in the average price of oil sold, which decrease was
partially offset by an increase of approximately $4,000 related to an
increase in the average price of gas sold. Volumes of oil and gas sold
decreased by
9
<PAGE>
16 barrels and 11,408 Mcf, respectively, for the three months ended June
30, 1998 as compared to the three months ended June 30, 1997. The decrease
in the volumes of gas sold resulted primarily from (i) negative prior
period volume adjustments made by purchasers on three wells during the
three months ended June 30, 1998 and (ii) a normal decline in production
due to diminishing reserves on one significant well during the three
months ended June 30, 1998. Average oil prices decreased to $12.27 per
barrel for the three months ended June 30, 1998 from $20.50 per barrel for
the three months ended June 30, 1997, while the average price of gas sold
increased to $2.23 per Mcf for the three months ended June 30, 1998 from
$2.12 per Mcf for the three months ended June 30, 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $11,546 (34.1%) for the three months ended
June 30, 1998 as compared to the three months ended June 30, 1997. This
decrease resulted primarily from workover expenses incurred on one well
during the three months ended June 30, 1997 in order to improve the
recovery of reserves. As a percentage of oil and gas sales, these expenses
decreased to 24.4% for the three months ended June 30, 1998 from 29.7% for
the three months ended June 30, 1997. This percentage decrease was
primarily due to the dollar decrease in oil and gas production expenses
discussed above.
Depreciation, depletion, and amortization of oil and gas properties
increased $8,493 (61.8%) for the three months ended June 30, 1998 as
compared to the three months ended June 30, 1997. This increase resulted
primarily from a decrease in the oil and gas prices used in the valuation
of reserves at June 30, 1998 as compared to March 31, 1998 and an increase
in the gas prices used in the valuation of reserves at June 30, 1997 as
compared to March 31, 1997. As a percentage of oil and gas sales, this
expense increased to 24.3% for the three months ended June 30, 1998
compared to 12.1% for the three months ended June 30, 1997. This
percentage increase was primarily due to the dollar increase in
depreciation, depletion, and amortization discussed above.
General and administrative expenses decreased $1,680 (9.2%) for the three
months ended June 30, 1998 as compared to the three months ended June 30,
1997. As a percentage of oil and gas sales, these expenses increased to
18.1% for the three months ended June 30, 1998 from 16.0% for the three
months ended June 30, 1997. This percentage increase was primarily due to
the decrease in oil and gas sales discussed above.
10
<PAGE>
SIX MONTHS ENDED JUNE 30, 1998 AS COMPARED TO THE SIX MONTHS ENDED JUNE
30, 1997.
Six Months Ended June 30,
-------------------------
1998 1997
-------- --------
Oil and gas sales $225,126 $239,741
Oil and gas production expenses $ 47,075 $ 59,520
Barrels produced 620 710
Mcf produced 97,642 90,695
Average price/Bbl $ 14.03 $ 21.43
Average price/Mcf $ 2.22 $ 2.48
As shown in the table above, total oil and gas sales decreased $14,615
(6.1%) for the six months ended June 30, 1998 as compared to the six
months ended June 30, 1997. Of this decrease, approximately $5,000 and
$25,000, respectively, were related to decreases in the average prices of
oil and gas sold and approximately $2,000 was related to a decrease in
volumes of oil sold, which decreases were partially offset by an increase
of approximately $17,000 related to an increase in volumes of gas sold.
Volumes of oil sold decreased 90 barrels, while volumes of gas sold
increased 6,947 Mcf for the six months ended June 30, 1998 as compared to
the six months ended June 30, 1997. Average oil and gas prices decreased
to $14.03 per barrel and $2.22 per Mcf, respectively, for the six months
ended June 30, 1998 from $21.43 per barrel and $2.48 per Mcf,
respectively, for the six months ended June 30, 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $12,445 (20.9%) for the six months ended June
30, 1998 as compared to the six months ended June 30, 1997. This decrease
resulted primarily from workover expenses incurred on one well during the
six months ended June 30, 1997 in order to improve the recovery of
reserves. As a percentage of oil and gas sales, these expenses decreased
to 20.9% for the six months ended June 30, 1998 from 24.8% for the six
months ended June 30, 1997. This percentage decrease was primarily due to
the dollar decrease in oil and gas production expenses discussed above.
11
<PAGE>
Depreciation, depletion, and amortization of oil and gas properties
increased $7,031 (17.2%) for the six months ended June 30, 1998 as
compared to the six months ended June 30, 1997. This increase resulted
primarily from a decrease in the prices used to value oil and gas reserves
at June 30, 1998 as compared to June 30, 1997. As a percentage of oil and
gas sales, this expense increased to 21.3% for the six months ended June
30, 1998 from 17.1% for the six months ended June 30, 1997. This
percentage increase was primarily due to the dollar increase in
depreciation, depletion and amortization discussed above.
General and administrative expenses decreased $3,013 (6.8%) for the six
months ended June 30, 1998 as compared to the six months ended June 30,
1997. As a percentage of oil and gas sales, these expenses remained
relatively constant at 18.4% for the six months ended June 30, 1998 and
18.6% for the six months ended June 30, 1997.
12
<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 Dyco Oil and Gas Program
1984-1 Limited Partnership's financial statements as of
June 30, 1998 and for the six months ended June 30,
1998, filed herewith.
All other exhibits are omitted as inapplicable.
(b) Reports on Form 8-K.
None.
13
<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 4, 1998 By: /s/Dennis R. Neill
-------------------------------
(Signature)
Dennis R. Neill
President
Date: August 4, 1998 By: /s/Patrick M. Hall
-------------------------------
(Signature)
Patrick M. Hall
Chief Financial Officer
14
<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, 1998 and for the
six months ended June 30, 1998, filed herewith.
All other exhibits are omitted as inapplicable.
15
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000725261
<NAME> DYCO OIL & GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 148,241
<SECURITIES> 0
<RECEIVABLES> 74,400
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 222,641
<PP&E> 30,209,864
<DEPRECIATION> 29,952,128
<TOTAL-ASSETS> 563,894
<CURRENT-LIABILITIES> 40,194
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 480,991
<TOTAL-LIABILITY-AND-EQUITY> 563,894
<SALES> 225,126
<TOTAL-REVENUES> 228,186
<CGS> 0
<TOTAL-COSTS> 136,546
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 91,640
<INCOME-TAX> 0
<INCOME-CONTINUING> 91,640
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 91,640
<EPS-PRIMARY> 16.5
<EPS-DILUTED> 0
</TABLE>
