<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, 1996 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 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 1984-2 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
1996 1995
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 20,559 $ 67,097
Accrued oil and gas sales, including
$66,414 due from related parties
in 1995 (Note 2) 66,875 75,739
-------- --------
Total current assets $ 87,434 $142,836
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 467,216 542,563
DEFERRED CHARGE 27,063 27,063
-------- --------
$581,713 $712,462
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 4,976 $ 4,875
Gas imbalance payable 3,896 3,896
-------- --------
Total current liabilities $ 8,872 $ 8,771
ACCRUED LIABILITY 14,798 14,798
PARTNERS' CAPITAL:
General Partner, issued and
outstanding, 52 units 5,581 6,889
Limited Partners, issued and
outstanding, 5,200 units 552,462 682,004
-------- --------
Total Partners' capital $558,043 $688,893
-------- --------
$581,713 $712,462
======== ========
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, 1996 AND 1995
(Unaudited)
1996 1995
-------- --------
REVENUES:
Oil and gas sales, including
$104,254 of sales to related
parties in 1995 (Note 2) $91,354 $106,984
Interest 1,413 1,098
------- --------
$92,767 $108,082
COST AND EXPENSES:
Oil and gas production $35,098 $ 21,640
Depreciation, depletion, and
amortization of oil and gas
properties 19,463 51,982
Impairment provision (Note 1) - 57,945
General and administrative (Note 2) 15,885 15,527
------- --------
$70,446 $147,094
------- --------
NET INCOME (LOSS) $22,321 ($ 39,012)
======= ========
GENERAL PARTNER (1%) - net
income (loss) $ 223 ($ 390)
======= ========
LIMITED PARTNERS (99%) - net
income (loss) $22,098 ($ 38,622)
======= ========
NET INCOME (LOSS) PER UNIT $ 4.25 ($ 7.43)
======= ========
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, 1996 AND 1995
(Unaudited)
1996 1995
-------- --------
REVENUES:
Oil and gas sales, including
$257,337 of sales to related
parties in 1995 (Note 2) $334,878 $265,431
Interest 2,713 2,743
-------- --------
$337,591 $268,174
COST AND EXPENSES:
Oil and gas production $ 78,850 $ 71,241
Depreciation, depletion, and
amortization of oil and gas
properties 72,301 127,436
Impairment provision (Note 1) - 180,629
General and administrative (Note 2) 54,690 55,369
-------- --------
$205,841 $434,675
-------- --------
NET INCOME (LOSS) $131,750 ($166,501)
======== ========
GENERAL PARTNER (1%) - net
income (loss) $ 1,318 ($ 1,665)
======== ========
LIMITED PARTNERS (99%) - net
income (loss) $130,432 ($164,836)
======== ========
NET INCOME (LOSS) PER UNIT $ 25.09 ($ 31.70)
======== ========
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, 1996 AND 1995
(Unaudited)
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $131,750 ($166,501)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 72,301 127,436
Impairment provision - 180,629
Increase in accounts receivable -
related party - ( 4,830)
Decrease in accrued oil and gas
sales 8,864 23,616
Increase (decrease) in accounts
payable 101 ( 1,115)
-------- --------
Net cash provided by operating
activities $213,016 $159,235
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties ($ 286) ($ 28,990)
Retirements of oil and gas
properties 3,332 4,830
-------- --------
Net cash provided (used) by
investing activities $ 3,046 ($ 24,160)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($262,600) ($131,300)
-------- --------
Net cash used by financing
activities ($262,600) ($131,300)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 46,538) $ 3,775
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 67,097 32,766
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 20,559 $ 36,541
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
-5-
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DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheet as of September 30, 1996, statements of
operations for the three and nine months ended September 30, 1996
and 1995, and statements of cash flows for the nine months ended
September 30, 1996 and 1995 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, 1996, results of
operations for the three and nine months ended September 30, 1996
and 1995 and changes in cash flows for the nine months ended
September 30, 1996 and 1995 have been made.
Information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto
included in the Program's Annual Report on Form 10-K for the year
ended December 31, 1995. The results of operations for the
period ended September 30, 1996 are not necessarily indicative of
the results to be expected for the full year.
The limited partners' net income or loss per unit is based upon
each $5,000 initial capital contribution.
OIL AND GAS PROPERTIES
----------------------
Oil and gas operations are accounted for using the full cost
method of accounting. All productive and non-productive costs
associated with the acquisition, exploration, and development of
oil and gas reserves are capitalized. In the event the
unamortized cost of oil and gas properties being amortized
exceeds the full cost ceiling (as defined by the Securities and
Exchange Commission), the excess is charged to expense in the
period during which such excess occurs. At September 30, 1995
the unamortized cost of oil and gas properties exceeded the full
cost ceiling by $180,629. $122,684 of this excess was charged to
expense during the three months ended March 31, 1995 and $57,945
was charged to expense during the three months ended September
30, 1995. No such impairment provision was incurred during the
three or nine months ended September 30, 1996. Sales and
abandonments of properties are accounted for as adjustments of
capitalized costs with no gain or loss recognized, unless such
adjustments would significantly alter the relationship between
capitalized costs and proved oil and gas reserves.
The provision for depreciation, depletion, and amortization of
oil and gas properties is calculated by dividing the oil and gas
sales dollars during the year by the estimated future gross
income from the oil and gas properties and applying the resulting
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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, 1996 and 1995 such expenses totaled $15,885
and $15,527, respectively, of which $14,118 and $14,118 were paid
to Dyco. During the nine months ended September 30, 1996 and
1995 such expenses totaled $54,690 and $55,369, 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 sold gas at market prices to Premier Gas Company
("Premier") and Premier then resold such gas to third parties at
market prices. Premier was an affiliate of the Program until
December 6, 1995. During the three months ended September 30,
1995 these sales totaled $104,254. During the nine months ended
September 30, 1995 these sales totaled $257,337. At December 31,
1995, accrued gas sales included $66,414 due from Premier.
-7-
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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, 1996 AS COMPARED TO THE THREE
MONTHS ENDED SEPTEMBER 30, 1995.
Three months ended September 30,
--------------------------------
1996 1995
------- --------
Oil and gas sales $91,354 $106,984
Oil and gas production expenses $35,098 $ 21,640
Barrels produced 48 156
Mcf produced 47,231 85,659
Average price/Bbl $ 22.08 $ 17.29
Average price/Mcf $ 1.91 $ 1.22
As shown in the table above, oil and gas sales decreased $15,630
(14.6%) for the three months ended September 30, 1996 as compared
to the three months ended September 30, 1995. Of this decrease,
$75,782 was related to the decrease in the volumes of oil and
natural gas sold, partially offset by a $59,105 increase related
to the increase in the average price of natural gas sold.
Volumes of oil and natural gas sold decreased by 108 barrels and
38,428 Mcf, respectively, for the three months ended September
30, 1996 as compared to the three months ended September 30,
1995. The decrease in volumes of oil sold resulted primarily
from the normal declines in production due to diminished oil
reserves on one well during the three months ended September 30,
1996 as compared to the three months ended September 30, 1995.
The decrease in the volumes of natural gas sold was primarily due
to the normal declines in production due to diminished natural
gas reserves on several wells during the three months ended
September 30, 1996 as compared to the three months ended
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September 30, 1995. Average oil and natural gas prices increased
to $22.08 per barrel and $1.91 per Mcf, respectively, for the
three months ended September 30, 1996 from $17.29 per barrel and
$1.22 per Mcf, respectively, for the three months ended September
30, 1995.
Oil and gas production expenses (including lease operating
expenses and production taxes) increased $13,458 for the three
months ended September 30, 1996 as compared to the three months
ended September 30, 1995. This increase resulted primarily from
workover expenses incurred during the three months ended
September 30, 1996 on one well in order to improve the recovery
of reserves, partially offset by the decreases in the volumes of
oil and natural gas sold during the three months ended September
30, 1996 as compared to the three months ended September 30,
1995. As a percentage of oil and gas sales, these expenses
increased to 38.4% for the three months ended September 30, 1996
from 20.2% for the three months ended September 30, 1995. This
percentage increase was primarily a result of the increase in the
workover expenses discussed above, partially offset by the
increases in the average prices of oil and natural gas sold
during the three months ended September 30, 1996 as compared to
the three months ended September 30, 1995.
Depreciation, depletion, and amortization of oil and gas
properties decreased $32,519 for the three months ended September
30, 1996 as compared to the three months ended September 30,
1995. This decrease was primarily the result of the decreases in
the volumes of oil and natural gas sold during the three months
ended September 30, 1996 as compared to the three months ended
September 30, 1995. As a percentage of oil and gas sales, this
expense decreased to 21.3% for the three months ended September
30, 1996 from 48.6% for the three months ended September 30,
1995. This percentage decrease resulted primarily from the
increases in the average prices of oil and natural gas sold
during the three months ended September 30, 1996 as compared to
the three months ended September 30, 1995.
As a result of declines in natural gas prices during the three
months ended September 30, 1995, the Program recognized a non-
cash charge against earnings of $57,945 during the three months
ended September 30, 1995. This impairment provision for oil and
gas properties at September 30, 1995 was necessary due to the
unamortized costs of oil and gas properties exceeding the present
value of the estimated future net revenues from the oil and gas
properties. No similar charge was necessary during the three
months ended September 30, 1996.
General and administrative expenses increased $358 for the three
months ended September 30, 1996 as compared to the three months
ended September 30, 1995. This increase was primarily due to an
increase in professional fees during the three months ended
September 30, 1996 as compared to the three months ended
September 30, 1995. As a percentage of oil and gas sales, these
expenses increased to 17.4% for the three months ended September
30, 1996 from 14.5% for the three months ended September 30,
1995. This percentage increase resulted primarily from the
decreases in the volumes of oil and natural gas sold during the
three months ended September 30, 1996 as compared to the three
months ended September 30, 1995.
-9-
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NINE MONTHS ENDED SEPTEMBER 30, 1996 AS COMPARED TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1995.
Nine months ended September 30,
-------------------------------
1996 1995
-------- --------
Oil and gas sales $334,878 $265,431
Oil and gas production expenses $ 78,850 $ 71,241
Barrels produced 285 370
Mcf produced 170,702 204,961
Average price/Bbl $ 19.71 $ 17.24
Average price/Mcf $ 1.93 $ 1.26
As shown in the table above, oil and gas sales increased $69,447
(26.2%) for the nine months ended September 30, 1996 as compared
to the nine months ended September 30, 1995. Of this increase,
$137,324 was related to the increase in the average price of
natural gas sold, partially offset by a $66,120 decrease related
to the decrease in the volumes of natural gas sold. Volumes of
oil and natural gas sold decreased by 85 barrels and 34,259 Mcf,
respectively, for the nine months ended September 30, 1996 as
compared to the nine months ended September 30, 1995. The
decrease in volumes of oil sold resulted primarily from the
normal declines in production due to diminished oil reserves on
one well during the nine months ended September 30, 1996 as
compared to the nine months ended September 30, 1995. The
decrease in the volumes of natural gas sold was primarily due to
(i) the normal declines in production due to diminished natural
gas reserves on several wells during the nine months ended
September 30, 1996 as compared to the nine months ended September
30, 1995 and (ii) negative prior period adjustments made by the
purchaser related to one well due to the sale of the property
during the nine months ended September 30, 1996. Average oil and
natural gas prices increased to $19.71 per barrel and $1.93 per
Mcf, respectively, for the nine months ended September 30, 1996
from $17.24 per barrel and $1.26 per Mcf, respectively, for the
nine months ended September 30, 1995.
Oil and gas production expenses (including lease operating
expenses and production taxes) increased $7,609 for the nine
months ended September 30, 1996 as compared to the nine months
ended September 30, 1995. This increase resulted primarily from
an increase in severance taxes resulting from the increase in the
average price of natural gas sold during the nine months ended
September 30, 1996 as compared to the nine months ended September
30, 1995. As a percentage of oil and gas sales, these expenses
decreased to 23.5% for the nine months ended September 30, 1996
from 26.8% for the nine months ended September 30, 1995. This
percentage decrease was primarily a result of the increases in
the average prices of oil and natural gas sold during the nine
months ended September 30, 1996 as compared to the nine months
ended September 30, 1995.
Depreciation, depletion, and amortization of oil and gas
properties decreased $55,135 for the nine months ended September
30, 1996 as compared to the nine months ended September 30, 1995.
This decrease was primarily the result of (i) the decreases in
the volumes of oil and natural gas sold during the nine months
ended September 30, 1996 as compared to the nine months ended
September 30, 1995 and (ii) an upward revision in the estimate of
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the Program's remaining natural gas reserves at December 31,
1995. As a percentage of oil and gas sales, this expense
decreased to 21.6% for the nine months ended September 30, 1996
from 48.0% for the nine months ended September 30, 1995. This
percentage decrease resulted primarily from the upward reserve
revisions discussed above and the increases in the average prices
of oil and natural gas sold during the nine months ended
September 30, 1996 as compared to the nine months ended September
30, 1995.
As a result of declines in natural gas prices during the nine
months ended September 30, 1995, the Program recognized a non-
cash charge against earnings of $180,629 during the nine months
ended September 30, 1995. This impairment provision for oil and
gas properties at September 30, 1995 was necessary due to the
unamortized costs of oil and gas properties exceeding the present
value of the estimated future net revenues from the oil and gas
properties. No similar charge was necessary during the nine
months ended September 30, 1996.
General and administrative expenses remained relatively constant
for the nine months ended September 30, 1996 as compared to the
nine months ended September 30, 1995. As a percentage of oil and
gas sales, these expenses decreased to 16.3% for the nine months
ended September 30, 1996 from 20.9% for the nine months ended
September 30, 1995. This percentage decrease resulted primarily
from the increases in the average prices of oil and natural gas
sold during the nine months ended September 30, 1996 as compared
to the nine months ended September 30, 1995.
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PART II: OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On October 1, 1996, Drew Phillips resigned as Chief Financial
Officer of Dyco. Mr. Phillips continues to serve as an
accounting officer of affiliates of Dyco.
On October 1, 1996, Patrick M. Hall was elected Chief Financial
Officer of Dyco. Mr. Hall joined affiliates of Dyco
(collectively, the "Samson Companies") in 1983. 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 is also Senior Vice President -
Controller of Samson Investment Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27.1 Financial Data Schedule containing summary
financial information extracted from the Program's
financial statements as of September 30, 1996 and
for the nine months ended September 30, 1996,
filed herewith.
All other exhibits are omitted as inapplicable.
(b) Reports on Form 8-K
Current Report on Form 8-K filed during third quarter of
1996:
Date of event: July 1, 1996
Date filed with SEC: July 8, 1996
Item Included:
Item 5 - Other Events
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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 1984-2 LIMITED
PARTNERSHIP
(Registrant)
By: DYCO PETROLEUM CORPORATION
General Partner
Date: October 31, 1996 By: /s/Dennis R. Neill
-------------------------------
(Signature)
Dennis R. Neill
President
Date: October 31, 1996 By: /s/Patrick M. Hall
-------------------------------
(Signature)
Patrick M. Hall
Chief Financial Officer
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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
1984-2 Limited Partnership's financial statements as of
September 30, 1996 and for the nine months ended September
30, 1996, filed herewith.
All other exhibits are omitted as inapplicable.
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<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000725262
<NAME> DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 20,559
<SECURITIES> 0
<RECEIVABLES> 66,875
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 87,434
<PP&E> 23,993,310
<DEPRECIATION> 23,526,094
<TOTAL-ASSETS> 581,713
<CURRENT-LIABILITIES> 8,872
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 558,043
<TOTAL-LIABILITY-AND-EQUITY> 581,713
<SALES> 334,878
<TOTAL-REVENUES> 337,591
<CGS> 0
<TOTAL-COSTS> 205,841
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 131,750
<INCOME-TAX> 0
<INCOME-CONTINUING> 131,750
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 131,750
<EPS-PRIMARY> 25.09
<EPS-DILUTED> 0
</TABLE>
