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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
March 31, 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 organization) Number)
Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(918) 583-1791
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(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
March 31, December 31,
1996 1995
----------- ------------
CURRENT ASSETS:
Cash and cash equivalents . . . . . . $ 34,911 $ 67,097
Accrued oil and gas sales, including
$66,414 due from related parties
in 1995 (Note 2) . . . . . . . . . . 71,154 75,739
-------- --------
Total current assets . . . . . . . $106,065 $142,836
NET OIL AND GAS PROPERTIES, utilizing
the full cost method . . . . . . . . . 518,370 542,563
DEFERRED CHARGE . . . . . . . . . . . . . 27,063 27,063
-------- --------
$651,498 $712,462
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . $ 4,714 $ 4,875
Gas imbalance payable . . . . . . . . 3,896 3,896
-------- --------
Total current liabilities . . . . . $ 8,610 $ 8,771
ACCRUED LIABILITY . . . . . . . . . . . . 14,798 14,798
PARTNERS' CAPITAL:
General Partner, issued and outstanding,
52 units . . . . . . . . . . . . . . 6,281 6,889
Limited Partners, issued and outstanding,
5,200 units . . . . . . . . . . . . 621,809 682,004
-------- --------
Total Partners' capital . . . . . . $628,090 $688,893
-------- --------
$651,498 $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 MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
---------- ----------
REVENUES:
Oil and gas sales, including
$70,640 of sales to related
parties in 1995 (Note 2) . . . . . . $110,642 $ 72,478
Interest . . . . . . . . . . . . . . . 809 668
-------- --------
$111,451 $ 73,146
-------- --------
COSTS AND EXPENSES:
Oil and gas production . . . . . . . . $ 22,398 $ 27,717
Depreciation, depletion, and amortization
of oil and gas properties . . . . . 24,062 33,121
Valuation allowance . . . . . . . . . - 122,684
General and administrative (Note 2) . 20,754 20,893
-------- --------
$ 67,214 $204,415
-------- --------
NET INCOME (LOSS) . . . . . . . . . . . . $ 44,237 ($131,269)
======== ========
GENERAL PARTNER (1%) - net income (loss) $ 442 ($ 1,313)
======== ========
LIMITED PARTNERS (99%) - net income (loss) $ 43,795 ($129,956)
======== ========
NET INCOME (LOSS) PER UNIT . . . . . . . $ 8 ($ 25)
======== ========
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 THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) . . . . . . . . . . $ 44,237 ($131,269)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation, depletion, and amortization
of oil and gas properties . . . . . 24,062 33,121
Valuation allowance . . . . . . . . - 122,684
Decrease in accrued oil and gas sales 4,585 34,372
Increase (decrease) in accounts payable ( 161) 1,220
-------- --------
Net cash provided by operating
activities . . . . . . . . . . . . $ 72,723 $ 60,128
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of oil and gas properties . $ - ($ 259)
Retirements of oil and gas properties 131 -
-------- --------
Net cash provided (used) by investing
activities . . . . . . . . . . . $ 131 ($ 259)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions . . . . . . . . . . ($105,040) $ -
-------- --------
Net cash used by financing
activities . . . . . . . . . . . . ($105,040) $ -
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS . . . . . . . . . . . . . ($ 32,186) $ 59,869
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD . . . . . . . . . . . . . . . . . 67,097 32,766
-------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD . . . . . . . . . . . . . . . . . $ 34,911 $ 92,635
======== ========
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
MARCH 31, 1996
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheet as of March 31, 1996, statements of operations
for the three months ended March 31, 1996 and 1995, and statements
of cash flows for the three months ended March 31, 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
March 31, 1996, results of operations for the three months ended
March 31, 1996 and 1995 and changes in cash flows for the three
months ended March 31, 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 March 31,
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 March 31, 1995 the unamortized cost of oil and gas
properties exceeded the full cost ceiling by $122,684. This excess
was charged to expense during the three months ended March 31,
1995. No such valuation allowance was incurred during the three
months ended March 31, 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 rate to the
net remaining costs of oil and gas properties that have been
capitalized, plus estimated future development costs.
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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
March 31, 1996 and 1995 such expenses totaled $20,754 and $20,893,
respectively, of which $14,118 and $14,118 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 March 31, 1995
these sales totaled $70,640. At December 31, 1995, accrued oil and
gas sales included $66,414 due from Premier.
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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 MARCH 31, 1996 AS COMPARED TO THE THREE MONTHS
ENDED MARCH 31, 1995.
Three months ended March 31,
--------------------------------
1996 1995
---- ----
Oil and gas sales $110,642 $72,478
Oil and gas production
expenses $ 22,398 $27,717
Barrels produced 126 110
Mcf produced 58,912 57,592
Average price/Bbl $ 17.99 $ 16.71
Average price/Mcf $ 1.84 $ 1.23
As shown in the table, oil and natural gas sales increased 52.7%
for the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995. This increase was primarily
due to an increase in the average prices of oil and natural gas
sold during the three months ended March 31, 1996 as compared to
the three months ended March 31, 1995. Volumes of oil and
natural sold increased by 16 barrels and 1,320 Mcf, respectively,
for the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995. Average oil and natural gas
prices increased to $17.99 per barrel and $1.84 per Mcf for the
three months ended March 31, 1996 from $16.71 per barrel and
$1.23 per Mcf for the three months ended March 31, 1995.
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased $5,319 for the three
months ended March 31, 1996 as compared to the three months ended
March 31, 1995. This decrease was primarily due to (i) a
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decrease in litigation expenses directly related to one well
during the three months ending March 31, 1996 and (ii) a decrease
in expenses related to special surveys and testing on the same
well during the three months ending March 31, 1996. As a
percentage of oil and gas sales, these expenses decreased to
20.2% for the three months ended March 31, 1996 from 38.2% for
the three months ended March 31, 1995. This percentage decrease
was primarily a result of the increase in the average prices of
oil and natural gas sold during the three months ended March 31,
1996 as compared to the three months ended March 31, 1995.
Depreciation, depletion, and amortization of oil and gas
properties decreased $9,059 for the three months ended March 31,
1996 as compared to the three months ended March 31, 1995. This
decrease was primarily the result of an upward revision in the
estimate of the Program's remaining natural gas reserves at
December 31, 1995. As a percentage of oil and gas sales, this
expense decreased to 21.7% for the three months ended March 31,
1996 from 45.7% for the three months ended March 31, 1995. This
percentage decrease was primarily due to the upward revision in
the estimate of remaining reserves as discussed above and the
increase in the average prices of oil and natural gas sold during
the three months ended March 31, 1996 as compared to the three
months ended March 31, 1995.
As a result of declines in natural gas prices during the first
quarter of 1995, the Program recognized a non-cash charge against
earnings of $122,684 during the three months ended March 31,
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 March 31, 1996.
General and administrative expenses remained relatively constant
during the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995. As a percentage of oil and
gas sales, these expenses decreased to 18.8% for the three months
ended March 31, 1996 from 28.8% for the three months ended March
31, 1995. This percentage decrease was primarily the result of
the increase in the average prices of oil and natural gas sold
during the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995.
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PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON 77FORM 8-K
(a) Exhibits:
27.1 Financial Data Schedule containing summary
financial information extracted from the Program's
financial statements as of March 31, 1996 and for
the three months ended March 31, 1996, filed
herewith.
(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 1984-2 LIMITED
PARTNERSHIP
(Registrant)
By: DYCO PETROLEUM CORPORATION
General Partner
Date: May 9, 1996 By: /s/Dennis R. Neill
---------------------------
(Signature)
Dennis R. Neill
Senior Vice President
Date: May 9, 1996 By: /s/Patrick M. Hall
--------------------------
(Signature)
Patrick M. Hall
Senior Vice President - Controller
Principal Accounting 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
March 31, 1996 and for the three months ended March 31,
1996, filed herewith.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000725262
<NAME> DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 34,911
<SECURITIES> 0
<RECEIVABLES> 71,154
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 106,065
<PP&E> 23,996,225
<DEPRECIATION> 23,477,855
<TOTAL-ASSETS> 651,498
<CURRENT-LIABILITIES> 8,610
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 628,090
<TOTAL-LIABILITY-AND-EQUITY> 651,498
<SALES> 110,642
<TOTAL-REVENUES> 111,451
<CGS> 0
<TOTAL-COSTS> 67,214
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 44,237
<INCOME-TAX> 0
<INCOME-CONTINUING> 44,237
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,237
<EPS-PRIMARY> 8.00
<EPS-DILUTED> 0
</TABLE>
