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, 2000 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
------ ------
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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,
2000 1999
--------- ------------
CURRENT ASSETS:
Cash and cash equivalents $148,152 $132,902
Accrued oil and gas sales 112,985 73,343
-------- --------
Total current assets $261,137 $206,245
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 214,977 198,628
DEFERRED CHARGE 60,903 62,543
-------- --------
$537,017 $467,416
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 5,002 $ 4,413
-------- --------
Total current liabilities $ 5,002 $ 4,413
ACCRUED LIABILITY $ 20,566 $ 14,559
PARTNERS' CAPITAL:
General Partner, 55 general
partner units $ 5,114 $ 4,484
Limited Partners, issued and
outstanding, 5,500 Units 506,335 443,960
-------- --------
Total Partners' capital $511,449 $448,444
-------- --------
$537,017 $467,416
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
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DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(Unaudited)
2000 1999
--------- --------
REVENUES:
Oil and gas sales $192,209 $95,769
Interest 767 196
-------- -------
$192,976 $95,965
COSTS AND EXPENSES:
Oil and gas production $ 29,259 $21,014
Depreciation, depletion, and
amortization of oil and gas
properties 6,496 9,868
General and administrative
(Note 2) 13,307 16,365
-------- -------
$ 49,062 $47,247
-------- -------
NET INCOME $143,914 $48,718
======== =======
GENERAL PARTNER (1%) - net
income $ 1,439 $ 487
======== =======
LIMITED PARTNERS (99%) - net
income $142,475 $48,231
======== =======
NET INCOME PER UNIT $ 25.91 $ 8.77
======== =======
UNITS OUTSTANDING 5,555 5,555
======== =======
The accompanying condensed notes are an integral part of
these financial statements.
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DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(Unaudited)
2000 1999
--------- --------
REVENUES:
Oil and gas sales $307,940 $182,195
Interest 2,626 1,709
-------- --------
$310,566 $183,904
COSTS AND EXPENSES:
Oil and gas production $ 56,477 $ 45,100
Depreciation, depletion, and
amortization of oil and gas
properties 18,312 27,584
General and administrative
(Note 2) 33,897 40,982
-------- --------
$108,686 $113,666
-------- --------
NET INCOME $201,880 $ 70,238
======== ========
GENERAL PARTNER (1%) - net
income $ 2,019 $ 702
======== ========
LIMITED PARTNERS (99%) - net
income $199,861 $ 69,536
======== ========
NET INCOME PER UNIT $ 36.34 $ 12.64
======== ========
UNITS OUTSTANDING 5,555 5,555
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
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DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(Unaudited)
2000 1999
--------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $201,880 $ 70,238
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 18,312 27,584
Increase in accrued oil and
gas sales ( 39,642) ( 30,198)
Decrease in deferred charge 1,640 -
Increase in accounts payable 589 1,154
Increase in accrued liability 6,007 -
-------- --------
Net cash provided by operating
activities $188,786 $ 68,778
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of oil and
gas properties $ 16,901 $ 26
Additions to oil and gas properties ( 51,562) -
-------- --------
Net cash provided (used) by
investing activities ($ 34,661) $ 26
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($138,875) ($166,650)
-------- --------
Net cash used by financing
activities ($138,875) ($166,650)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 15,250 ($ 97,846)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 132,902 129,747
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $148,152 $ 31,901
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
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DYCO OIL AND GAS PROGRAM 1984-1 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheet as of June 30, 2000, statements of operations for the
three and six months ended June 30, 2000 and 1999, and statements of cash
flows for the six months ended June 30, 2000 and 1999 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, 2000, results of operations for the three and six
months ended June 30, 2000 and 1999, and changes in cash flows for the six
months ended June 30, 2000 and 1999 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, 1999. The results of operations for the period
ended June 30, 2000 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. During the six months ended June 30, 2000, the Program paid
recompletion costs of approximately $52,000 on the Hubbard No. 1-A well
located in Beckham County, Oklahoma in which the Program owns an interest
of 20.9%. 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 properties are accounted for as
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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, 2000 and 1999 the
Program incurred such expenses totaling $13,307 and $16,365, respectively,
of which $12,006 and $15,654, respectively, were paid each period to Dyco
and its affiliates. During the six months ended June 30, 2000 and 1999 the
Program incurred such expenses totaling $33,897 and $40,982, respectively,
of which $24,012 and $31,308, respectively, were 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
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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
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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. However, during the six months
ended June 30, 2000, the Program paid recompletion costs of approximately
$52,000 on the Hubbard No. 1-A well located in Beckham County, Oklahoma in
which the Program owns an interest of 20.9%. The recompletion was
successful. The Program has no debt commitments. Management believes that
cash for ordinary 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
variables affecting the Program's revenues are the prices received for the
sale of oil and gas and the volumes of oil and gas produced. The Program's
production is mainly natural gas, so such pricing and volumes are the most
significant factors.
Due to the volatility of oil and gas prices, forecasting future prices is
subject to great uncertainty and inaccuracy. 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. It is likewise
difficult to predict production volumes. However, oil and gas are
depleting assets, so it can be expected that production levels will
decline over time. Recent gas prices have been higher than the Program's
historical average. This is attributable to the higher prices for crude
oil, a substitute fuel in some markets, and reduced production due to
lower capital investments in 1998 and 1999.
9
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THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 1999.
Three Months Ended June 30,
---------------------------
2000 1999
-------- -------
Oil and gas sales $192,209 $95,769
Oil and gas production expenses $ 29,259 $21,014
Barrels produced 355 358
Mcf produced 53,682 43,065
Average price/Bbl $ 28.01 $ 14.72
Average price/Mcf $ 3.40 $ 2.10
As shown in the table above, total oil and gas sales increased $96,440
(100.7%) for the three months ended June 30, 2000 as compared to the three
months ended June 30, 1999. Of this increase, approximately $69,000 was
related to an increase in the average price of gas sold and approximately
$22,000 was related to an increase in volumes of gas sold. Volumes of oil
sold decreased 3 barrels, while volumes of gas sold increased 10,617 Mcf
for the three months ended June 30, 2000 as compared to the three months
ended June 30, 1999. The increase in volumes of gas sold was primarily due
to the successful recompletion of one well during the first quarter of
2000. Average oil and gas prices increased to $28.01 per barrel and $3.40
per Mcf, respectively, for the three months ended June 30, 2000 from
$14.72 per barrel and $2.10 per Mcf, respectively, for the three months
ended June 30, 1999.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $8,245 (39.2%) for the three months ended June
30, 2000 as compared to the three months ended June 30, 1999. This
increase was primarily due to (i) an increase in production taxes
associated with the increase in oil and gas sales and (ii) workover
expenses incurred on one well during the three months ended June 30, 2000
in order to improve the recovery of reserves. As a percentage of oil and
gas sales, these expenses decreased to 15.2% for the three months ended
June 30, 2000 from 21.9% for the three months ended June 30, 1999. This
percentage decrease was primarily due to the increases in the average
prices of oil and gas sold.
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Depreciation, depletion, and amortization of oil and gas properties
decreased $3,372 (34.2%) for the three months ended June 30, 2000 as
compared to the three months ended June 30, 1999. This decrease was
primarily due to (i) an increase in the gas price used in the valuation of
remaining reserves at June 30, 2000 as compared to June 30, 1999 and (ii)
an upward revision in the estimate of remaining gas reserves at December
31, 1999. As a percentage of oil and gas sales, this expense decreased to
3.4% for the three months ended June 30, 2000 from 10.3% for the three
months ended June 30, 1999. This percentage decrease was primarily due to
the increases in the average prices of oil and gas sold and the dollar
decrease in depreciation, depletion, and amortization.
General and administrative expenses decreased $3,058 (18.7%) for the three
months ended June 30, 2000 as compared to the three months ended June 30,
1999. This decrease was primarily due to a change in allocation among the
Program and other affiliated programs of indirect general and
administrative expenses reimbursed to the General Partner. As a percentage
of oil and gas sales, these expenses decreased to 6.9% for the three
months ended June 30, 2000 from 17.1% for the three months ended June 30,
1999. This decrease was primarily due to the increase in oil and gas
sales.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
1999.
Six Months Ended June 30,
-------------------------
2000 1999
-------- --------
Oil and gas sales $307,940 $182,195
Oil and gas production expenses $ 56,477 $ 45,100
Barrels produced 565 648
Mcf produced 98,129 93,120
Average price/Bbl $ 27.60 $ 13.17
Average price/Mcf $ 2.98 $ 1.86
As shown in the table above, total oil and gas sales increased $125,745
(69.0%) for the six months ended June 30, 2000 as compared to the six
months ended June 30, 1999. Of this increase, approximately $109,000 was
related to an increase in the average price of gas sold. Volumes of oil
sold decreased 83 barrels, while volumes of gas sold increased 5,009 Mcf
for the six months ended June 30, 2000 as compared to the six months ended
June 30, 1999. Average oil and gas prices increased to $27.60 per barrel
and $2.98 per Mcf, respectively, for the six months ended June 30, 2000
from $13.17 per barrel and $1.86 per Mcf, respectively, for the six months
ended June 30, 1999.
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Oil and gas production expenses (including lease operating expenses and
production taxes) increased $11,377 (25.2%) for the six months ended June
30, 2000 as compared to the six months ended June 30, 1999. This increase
was primarily due to (i) an increase in production taxes associated with
the increase of oil and gas sales and (ii) workover expenses incurred on
one well during the six months ended June 30, 2000 in order to improve the
recovery of reserves. As a percentage of oil and gas sales, these expenses
decreased to 18.3% for the six months ended June 30, 2000 from 24.8% for
the six months ended June 30, 1999. This percentage decrease was primarily
due to the increases in the average prices of oil and gas sold.
Depreciation, depletion, and amortization of oil and gas properties
decreased $9,272 (33.6%) for the six months ended June 30, 2000 as
compared to the six months ended June 30, 1999. This decrease was
primarily due to (i) an increase in the gas price used in the valuation of
remaining reserves at June 30, 2000 as compared to June 30, 1999 and (ii)
an upward revision in the estimate of remaining gas reserves at December
31, 1999. As a percentage of oil and gas sales, this expense decreased to
5.9% for the six months ended June 30, 2000 from 15.1% for the six months
ended June 30, 1999. This percentage decrease was primarily due to the
increases in the average prices of oil and gas sold and the dollar
decrease in depreciation, depletion, and amortization.
General and administrative expenses decreased $7,085 (17.3%) for the six
months ended June 30, 2000 as compared to the six months ended June 30,
1999. This decrease was primarily due to a change in allocation among the
Program and other affiliated programs of indirect general and
administrative expenses reimbursed to the General Partner. As a percentage
of oil and gas sales, these expenses decreased to 11.0% for the six months
ended June 30, 2000 from 22.5% for the six months ended June 30, 1999.
This percentage decrease was primarily due to the increase in oil and gas
sales.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
The Program does not hold any market risk sensitive instruments.
13
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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, 2000 and for the six months ended June 30,
2000, filed herewith.
All other exhibits are omitted as inapplicable.
(b) Reports on Form 8-K.
None.
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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 2, 2000 By: /s/Dennis R. Neill
-------------------------------
(Signature)
Dennis R. Neill
President
Date: August 2, 2000 By: /s/Patrick M. Hall
-------------------------------
(Signature)
Patrick M. Hall
Chief Financial Officer
15
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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, 2000 and for the
six months ended June 30, 2000, filed herewith.
All other exhibits are omitted as inapplicable.
