<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended Commission File Number
September 30, 1995 0-13578
DYCO OIL AND GAS PROGRAM 1984-2
(A LIMITED PARTNERSHIP)
(Exact Name of Registrant as specified in its charter)
Minnesota 41-1479080
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(918) 583-1791
--------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
---- ----
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
1995 1994
-------------- ------------
CURRENT ASSETS:
Cash and cash equivalents . . . . . . $ 36,541 $ 32,766
Accounts receivable - related party . 4,830 -
Accrued oil and gas sales, including
$51,310 and $75,009 due from
related parties (Note 2) . . . . . . 52,924 76,540
-------- --------
Total current assets . . . . . . . $ 94,295 $109,306
NET OIL AND GAS PROPERTIES, utilizing
the full cost method . . . . . . . . . 648,133 775,763
DEFERRED CHARGE . . . . . . . . . . . . . 43,352 43,352
-------- --------
$785,780 $928,421
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . $ 4,242 $ 5,357
Gas imbalance payable . . . . . . . . 8,943 8,943
-------- --------
Total current liabilities . . . . . $ 13,185 $ 14,300
ACCRUED LIABILITY . . . . . . . . . . . . 17,793 17,793
PARTNERS' CAPITAL:
General Partner, issued and outstanding,
52 units . . . . . . . . . . . . . . 7,548 8,963
Limited Partners, issued and outstanding,
5,200 units . . . . . . . . . . . . 747,254 887,365
-------- --------
Total Partners' capital . . . . . . $754,802 $896,328
-------- --------
$785,780 $928,421
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
1995 1994
---------- ----------
REVENUES:
Oil and gas sales, including
$104,254 and $106,682 of sales
to related parties (Note 2) . . . . $106,984 $108,777
Interest . . . . . . . . . . . . . . . 1,098 659
-------- --------
$108,082 $109,436
-------- --------
COSTS AND EXPENSES:
Oil and gas production . . . . . . . . $ 21,640 $ 23,971
Depreciation, depletion, and amortization
of oil and gas properties . . . . . . . 51,982 32,441
Provision to reduce the carrying value of
oil and gas properties (Note 1) . . 24,354 -
General and administrative (Note 2) . 15,527 16,088
-------- --------
$113,503 $ 72,500
-------- --------
NET (LOSS) INCOME . . . . . . . . . . . . ($ 5,421) $ 36,936
======== ========
GENERAL PARTNER (1%) - net (loss) income ($ 54) $ 369
======== ========
LIMITED PARTNERS (99%) - net (loss) income ($ 5,367) $ 36,567
======== ========
NET (LOSS) INCOME PER UNIT . . . . . . . ($ 1) $ 7
======== ========
UNITS OUTSTANDING . . . . . . . . . . . . 5,252 5,252
======= ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
1995 1994
---------- ----------
REVENUES:
Oil and gas sales, including
$257,337 and $371,553 of sales
to related parties (Note 2) . . . . $265,431 $384,479
Interest . . . . . . . . . . . . . . . 2,743 1,635
-------- --------
$268,174 $386,114
-------- --------
COSTS AND EXPENSES:
Oil and gas production . . . . . . . . $ 71,241 $ 88,275
Depreciation, depletion, and amortization
of oil and gas properties . . . . . . . 127,436 142,128
Provision to reduce carrying value of
oil and gas properties (Note 1) . . 24,354 -
General and administrative (Note 2) . 55,369 51,267
-------- --------
$278,400 $281,670
-------- --------
NET (LOSS) INCOME . . . . . . . . . . . . ($ 10,226) $104,444
======== ========
GENERAL PARTNER (1%) - net (loss) income ($ 102) $ 1,044
======== ========
LIMITED PARTNERS (99%) - net (loss) income ($ 10,124) $103,400
======== ========
NET (LOSS) INCOME PER UNIT . . . . . . . ($ 2) $ 20
======== ========
UNITS OUTSTANDING . . . . . . . . . . . . 5,252 5,252
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
1995 1994
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income . . . . . . . . . . ($ 10,226) $104,444
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Depreciation, depletion, and amortiza-
tion of oil and gas properties . . 127,436 142,128
Provision to reduce carrying value of
oil and gas properties . . . . . . 24,354 -
Increase in accounts receivable -
related party . . . . . . . . . . . ( 4,830) -
Decrease in accrued oil and gas sales 23,616 36,900
Decrease in accounts payable . . . . ( 1,115) ( 235)
-------- --------
Net cash provided by operating
activities $159,235 $283,237
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of oil and gas properties . ($ 28,990) $ -
Retirements of oil and gas properties 4,830 2,028
-------- --------
Net cash (used) provided by investing
activities . . . . . . . . . . . ($ 24,160) $ 2,028
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions . . . . . . . . . . ($131,300) ($210,080)
-------- --------
Net cash used by financing activities ($131,300) ($210,080)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 3,775 $ 75,185
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 32,766 54,103
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 36,541 $129,288
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheet as of September 30, 1995, statements of
operations for the three and nine months ended September 30, 1995
and 1994, and statements of cash flows for the nine months ended
September 30, 1995 and 1994 have been prepared by Dyco Petroleum
Corporation ("Dyco"), the General Partner of the Dyco Oil and Gas
Program 1984-2 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 September 30, 1995, results of operations for
the three and nine months ended September 30, 1995 and 1994 and
changes in cash flows for the nine months ended September 30, 1995
and 1994 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, 1994. The results of operations for the period ended September
30, 1995 are not necessarily indicative of the results to be
expected for the full year.
The limited partners' net income or loss per unit is based upon
each $5,000 initial capital contribution.
Oil and Gas Properties
----------------------
Oil and gas operations are accounted for using the full cost method
of accounting. All productive and non-productive costs associated
with the acquisition, exploration, and development of oil and gas
reserves are capitalized. In the event the unamortized cost of oil
and gas properties being amortized exceeds the full cost ceiling
(as defined by the Securities and Exchange Commission), the excess
is charged to expense in the period during which such excess
occurs. At September 30, 1995 the unamortized cost of oil and gas
properties exceeded the full cost ceiling by $24,354. This excess
was charged to expense during the three and nine months ended
September 30, 1995. 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.
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The provision for depreciation, depletion, and amortization of oil
and gas properties is calculated by dividing the oil and gas sales
dollars during the year by the estimated future gross income from
the oil and gas properties and applying the resulting rate to the
net remaining costs of oil and gas properties that have been
capitalized, plus estimated future development costs.
2. TRANSACTIONS WITH RELATED PARTIES
---------------------------------
Under the terms of the Program's partnership agreement, Dyco is
entitled to receive a reimbursement for all direct expenses and
general and administrative, geological and engineering expenses it
incurs on behalf of the Program. During the three months ended
September 30, 1995 and 1994 such expenses totaled $15,527 and
$16,088, respectively, of which $14,118 and $14,118 were paid to
Dyco. During the nine months ended September 30, 1995 and 1994
such expenses totaled $55,369 and $51,267, respectively, of which
$42,354 and $42,354 were paid to Dyco.
Affiliates of the Program are the operators of certain of the
Program's properties and their policy is to bill the Program for
all customary charges and cost reimbursements associated with their
activities, together with any compressor rentals, consulting, or
other services provided.
The Program sells gas at market prices to Premier Gas Company
("Premier"), an affiliated company, and Premier may then resell
such gas to third parties at market prices. During the three
months ended September 30, 1995 and 1994 these sales totaled
$104,254 and $106,682, respectively. During the nine months ended
September 30, 1995 and 1994 these sales totaled $257,337 and
$371,553, respectively. At September 30, 1995 accrued oil and gas
sales included $51,310 due from Premier.
-7-
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net proceeds from the Program's operations less necessary
operating capital are distributed to investors on a quarterly
basis. The net proceeds from production are not reinvested in
productive assets, except to the extent that producing wells are
improved or where methods are employed to permit more efficient
recovery of the Program's reserves which would result in a
positive economic impact. Over the last several years, the
domestic energy industry and the Program have contended with
volatile, but generally low, oil and gas prices. Over the past
few years, the oil and gas market appears to have moved from
periods of relative stability in supply and demand to excess
supply or weakened demand. These trends have led to the
volatility in pricing and demand noted over the past years.
The Program's available capital from subscriptions has been spent
on oil and gas drilling activities. There should not be any
further material capital resource commitments in the future. The
Program has no bank debt commitments. Cash for operational
purposes will be provided by current oil and gas production.
RESULTS OF OPERATIONS
- ----------------------
THREE MONTHS ENDED SEPTEMBER 30, 1995 AS COMPARED TO THE THREE
MONTHS ENDED SEPTEMBER 30, 1994.
Three months ended September 30,
--------------------------------
1995 1994
---- ----
Oil and gas sales $106,984 $108,777
Oil and gas production
expenses $ 21,640 $ 23,971
Barrels produced 156 127
Mcf produced 85,659 72,809
Average price/Bbl $ 17.29 $ 16.50
Average price/Mcf $ 1.22 $ 1.47
As shown in the table, oil and natural gas sales decreased 1.6%
for the three months ended September 30, 1995 as compared to the
three months ended September 30, 1994. This decrease resulted
primarily from the decrease in the average price of natural gas
sold, partially offset by the increase in volumes of natural gas
sold during the three months ended September 30, 1995 as compared
to the three months ended September 30, 1994. Volumes of oil and
natural gas sold increased 29 barrels and 12,850 Mcf,
respectively, for the three months ended September 30, 1995 as
compared to the three months ended September 30, 1994. The
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increase in volumes of oil and natural gas sold resulted
primarily from the recompletion of one of the Program's wells
which significantly improved the well's production capabilities
during the three months ended September 30, 1995. Average
natural gas prices decreased to $1.22 per Mcf for the three
months ended September 30, 1995 from $1.47 per Mcf for the three
months ended September 30, 1994, while the average price of oil
sold increased to $17.29 per barrel for the three months ended
September 30, 1995 from $16.50 per barrel for the three months
ended September 30, 1994.
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased $2,331 for the three
months ended September 30, 1995 as compared to the three months
ended September 30, 1994. As a percentage of oil and gas sales,
these expenses decreased slightly to 20.2% for the three months
ended September 30, 1995 from 22.0% for the three months ended
September 30, 1994.
Depreciation, depletion, and amortization of oil and gas
properties increased $19,541 for the three months ended September
30, 1995 as compared to the three months ended September 30,
1994. This increase was primarily a result of the increase in
volumes of oil and natural gas sold during the three months ended
September 30, 1995 as compared to the three months ended
September 30, 1994 and the increase in the oil and gas properties
subject to amortization as a result of recent recompletion
activities on one of the Program's wells. As a percentage of oil
and gas sales, this expense increased to 48.6% for the three
months ended September 30, 1995 from 29.8% for the three months
ended September 30, 1994. This percentage increase was primarily
a result of the decrease in the average price of natural gas sold
during the three months ended September 30, 1995 as compared to
the three months ended September 30, 1994.
As a result of recent declines in natural gas prices, the Program
has recognized a non-cash charge against earnings of $24,354
during the three months ended September 30, 1995. This valuation
allowance for oil and gas properties was necessary due to the
unamortized costs of oil and gas properties exceeding the present
value of the future net revenues from the oil and gas properties.
No similar allowance was necessary during the three months ended
September 30, 1994.
General and administrative expenses decreased slightly by $561
for the three months ended September 30, 1995 as compared to the
three months ended September 30, 1994. As a percentage of oil
and gas sales, these expenses remained relatively constant at
14.5% for the three months ended September 30, 1995 compared to
14.8% for the three months ended September 30, 1994.
-9-
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<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1995 AS COMPARED TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1994.
Nine months ended September 30,
-------------------------------
1995 1994
---- ----
Oil and gas sales $265,431 $384,479
Oil and gas production
expenses $ 71,241 $ 88,275
Barrels produced 370 502
Mcf produced 204,961 223,405
Average price/Bbl $ 17.24 $ 16.54
Average price/Mcf $ 1.26 $ 1.68
As shown in the table, oil and natural gas sales decreased 31.0%
for the nine months ended September 30, 1995 as compared to the
nine months ended September 30, 1994. This decrease resulted
primarily from the decreases in the volumes of oil and natural
gas sold and the decrease in the average price of natural gas
sold during the nine months ended September 30, 1995 as compared
to the nine months ended September 30, 1994. Volumes of oil and
natural gas sold decreased 132 barrels and 18,444 Mcf,
respectively, for the nine months ended September 30, 1995 as
compared to the nine months ended September 30, 1994. The
decrease in volumes of natural gas sold was primarily a result of
a change in the ownership interest for one of the Program's wells
after the well reached payout subsequent to the nine months ended
September 30, 1994. Average natural gas prices decreased to
$1.26 per Mcf for the nine months ended September 30, 1995 from
$1.68 per Mcf for the nine months ended September 30, 1994, while
the average price of oil sold increased to $17.24 per barrel for
the nine months ended September 30, 1995 from $16.54 per barrel
for the nine months ended September 30, 1994.
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased $17,034 for the nine
months ended September 30, 1995 as compared to the nine months
ended September 30, 1994. This decrease was primarily due to
workover costs on one of the Program's wells during the nine
months ended September 30, 1994 and the decreases in the volumes
of oil and natural gas sold during the nine months ended
September 30, 1995 as compared to the nine months ended September
30, 1994. As a percentage of oil and gas sales, these expenses
-10-
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increased to 26.8% for the nine months ended September 30, 1995
from 23.0% for the nine months ended September 30, 1994. This
percentage increase was primarily a result of the decrease in the
average price of natural gas sold during the nine months ended
September 30, 1995 as compared to the nine months ended September
30, 1994.
Depreciation, depletion, and amortization of oil and gas
properties decreased $14,692 for the nine months ended September
30, 1995 as compared to the nine months ended September 30, 1994.
This dollar decrease was primarily a result of the decrease in
the volumes of oil and natural gas sold during the nine months
ended September 30, 1995 as compared to the nine months ended
September 30, 1994. As a percentage of oil and gas sales, this
expense increased to 48.0% for the nine months ended September
30, 1995 from 37.0% for the nine months ended September 30, 1994.
This percentage increase was primarily a result of the decrease
in the average price of natural gas sold during the nine months
ended September 30, 1995 as compared to the nine months ended
September 30, 1994.
As a result of recent declines in natural gas prices, the Program
has recognized a non-cash charge against earnings of $24,354
during the nine months ended September 30, 1995. This valuation
allowance for oil and gas properties was necessary due to the
unamortized costs of oil and gas properties exceeding the present
value of the future net revenues from the oil and gas properties.
No similar allowance was necessary during the nine months ended
September 30, 1994.
General and administrative expenses increased $4,102 for the nine
months ended September 30, 1995 as compared to the nine months
ended September 30, 1994. This increase resulted primarily from
an increase in the Program's professional fees during the nine
months ended September 30, 1995 as compared to the nine months
ended September 30, 1994. As a percentage of oil and gas sales,
these expenses increased to 20.9% for the nine months ended
September 30, 1995 from 13.3% for the nine months ended September
30, 1994. This percentage increase was primarily a result of the
decrease in the volumes and average price of natural gas sold
during the nine months ended September 30, 1995 as compared to
the nine months ended September 30, 1994.
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PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
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<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 1984-2 LIMITED
PARTNERSHIP
(Registrant)
By: DYCO PETROLEUM CORPORATION
General Partner
Date: November 13, 1995 By: /s/Dennis R. Neill
----------------------------
(Signature)
Dennis R. Neill
Senior Vice President
Date: November 13, 1995 By: /s/Patrick M. Hall
----------------------------
(Signature)
Patrick M. Hall
Senior Vice President - Controller
Principal Accounting Officer
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000725262
<NAME> DYCO OIL AND GAS PROGRAM 1984-2
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 36,541
<SECURITIES> 0
<RECEIVABLES> 52,924
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 94,295
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 785,780
<CURRENT-LIABILITIES> 13,185
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 754,802
<TOTAL-LIABILITY-AND-EQUITY> 785,780
<SALES> 265,431
<TOTAL-REVENUES> 268,174
<CGS> 0
<TOTAL-COSTS> 278,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,226)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,226)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,226)
<EPS-PRIMARY> (2.00)
<EPS-DILUTED> 0
</TABLE>
