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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
September 30, 1997 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,
1997 1996
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 41,826 $ 48,768
Accrued oil and gas sales 58,515 88,047
-------- --------
Total current assets $100,341 $136,815
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 444,658 494,608
DEFERRED CHARGE 30,457 30,457
-------- --------
$575,456 $661,880
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 4,131 $ 5,971
Gas imbalance payable 6,143 6,143
-------- --------
Total current liabilities $ 10,274 $ 12,114
ACCRUED LIABILITY 12,699 12,699
PARTNERS' CAPITAL:
General Partner, issued and
outstanding, 52 units 5,525 6,371
Limited Partners, issued and
outstanding, 5,200 units 546,958 630,696
-------- --------
Total Partners' capital $552,483 $637,067
-------- --------
$575,456 $661,880
======== ========
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, 1997 AND 1996
(Unaudited)
1997 1996
-------- --------
REVENUES:
Oil and gas sales $89,042 $91,354
Interest 1,306 1,413
------- -------
$90,348 $92,767
COST AND EXPENSES:
Oil and gas production $20,890 $35,098
Depreciation, depletion, and
amortization of oil and gas
properties 10,457 19,463
General and administrative (Note 2) 16,530 15,885
------- -------
$47,877 $70,446
------- -------
NET INCOME $42,471 $22,321
======= =======
GENERAL PARTNER (1%) - net
income $ 425 $ 223
======= =======
LIMITED PARTNERS (99%) - net
income $42,046 $22,098
======= =======
NET INCOME PER UNIT $ 8.09 $ 4.25
======= =======
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 OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
1997 1996
-------- --------
REVENUES:
Oil and gas sales $287,114 $334,878
Interest 2,507 2,713
-------- --------
$289,621 $337,591
COST AND EXPENSES:
Oil and gas production $ 61,778 $ 78,850
Depreciation, depletion, and
amortization of oil and gas
properties 45,076 72,301
General and administrative (Note 2) 57,271 54,690
-------- --------
$164,125 $205,841
-------- --------
NET INCOME $125,496 $131,750
======== ========
GENERAL PARTNER (1%) - net
income $ 1,255 $ 1,318
======== ========
LIMITED PARTNERS (99%) - net
income $124,241 $130,432
======== ========
NET INCOME PER UNIT $ 23.89 $ 25.09
======== ========
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, 1997 AND 1996
(Unaudited)
1997 1996
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $125,496 $131,750
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 45,076 72,301
Decrease in accrued oil and
gas sales 29,532 8,864
Increase (decrease) in accounts
payable ( 1,840) 101
-------- --------
Net cash provided by operating
activities $198,264 $213,016
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of oil and
gas properties $ 4,874 $ 3,332
Additions to oil and gas properties - ( 286)
-------- --------
Net cash provided by investing
activities $ 4,874 $ 3,046
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($210,080) ($262,600)
-------- --------
Net cash used by financing
activities ($210,080) ($262,600)
-------- --------
NET DECREASE IN CASH AND CASH
EQUIVALENTS ($ 6,942) ($ 46,538)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 48,768 67,097
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 41,826 $ 20,559
======== ========
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, 1997
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheet as of September 30, 1997, statements of
operations for the three and nine months ended September 30, 1997
and 1996, and statements of cash flows for the nine months ended
September 30, 1997 and 1996 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, 1997, results of
operations for the three and nine months ended September 30, 1997
and 1996 and changes in cash flows for the nine months ended
September 30, 1997 and 1996 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, 1996. The results of operations for the
period ended September 30, 1997 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. 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 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.
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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 September 30, 1997 and 1996 such expenses totaled $16,530
and $15,885, respectively, of which $14,118 was paid each period
to Dyco and its affiliates. During the nine months ended
September 30, 1997 and 1996 such expenses totaled $57,271 and
$54,690, respectively, of which $42,354 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.
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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, or 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.
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
- ----------------------
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
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reserves are being sold in 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. In addition, such spot market sales are generally short-
term in nature and are dependent upon the obtaining of
transportation services provided by pipelines. Management is
unable to predict whether future oil and gas prices will (i)
stabilize, (ii) increase, or (iii) decrease.
THREE MONTHS ENDED SEPTEMBER 30, 1997 AS COMPARED TO THE THREE
MONTHS ENDED SEPTEMBER 30, 1996.
Three Months Ended September 30,
--------------------------------
1997 1996
------- -------
Oil and gas sales $89,042 $91,354
Oil and gas production expenses $20,890 $35,098
Barrels produced 67 48
Mcf produced 41,441 47,231
Average price/Bbl $ 17.90 $ 22.08
Average price/Mcf $ 2.12 $ 1.91
As shown in the table above, total oil and gas sales decreased
$2,312 (2.5%) for the three months ended September 30, 1997 as
compared to the three months ended September 30, 1996. Of this
decrease, approximately $11,000 was related to a decrease in
volumes of gas sold, partially offset by an increase of
approximately $9,000 related to an increase in the average price
of gas sold. Volumes of oil sold increased 19 barrels while
volumes of gas sold decreased 5,790 Mcf for the three months
ended September 30, 1997 as compared to the three months ended
September 30, 1996. The decrease in volumes of gas sold resulted
primarily from positive prior period volume adjustments made by
the operator on one well during the three months ended September
30, 1996. Average oil prices decreased to $17.90 per barrel for
the three months ended September 30, 1997 from $22.08 per barrel
for the three months ended September 30, 1996. Average gas
prices increased to $2.12 per Mcf for the three months ended
September 30, 1997 from $1.91 per Mcf for the three months ended
September 30, 1996.
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased $14,208 (40.5%) for the
three months ended September 30, 1997 as compared to the three
months ended September 30, 1996. This decrease resulted
primarily from (i) a decrease in volumes of gas sold for the
three months ended September 30, 1997 as compared to the three
months ended September 30, 1996 and (ii) workover expenses
incurred on one well during the three months ended September 30,
1996 in order to improve the recovery of reserves. As a
percentage of oil and gas sales, these expenses decreased to
23.5% for the three months ended September 30, 1997 from 38.4%
for the three months ended September 30, 1996. This percentage
decrease was primarily due to the dollar decrease in oil and gas
production expenses discussed above and the increase in the
average price of gas sold during the three months ended September
30, 1997 as compared to the three months ended September 30,
1996.
Depreciation, depletion, and amortization of oil and gas
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properties decreased $9,006 (46.3%) for the three months ended
September 30, 1997 as compared to the three months ended
September 30, 1996. This decrease resulted primarily from (i)
upward revisions in the estimates of remaining oil and gas
reserves at December 31, 1996 and (ii) the decrease in volumes of
gas sold during the three months ended September 30, 1997 as
compared to the three months ended September 30, 1996. As a
percentage of oil and gas sales, this expense decreased to 11.7%
for the three months ended September 30, 1997 from 21.3% for the
three months ended September 30, 1996. This percentage decrease
was primarily due to the dollar decrease in depreciation,
depletion, and amortization discussed above and the increase in
the average price of gas sold during the three months ended
September 30, 1997 as compared to the three months ended
September 30, 1996.
General and administrative expenses remained relatively constant
for the three months ended September 30, 1997 as compared to the
three months ended September 30, 1996. As a percentage of oil
and gas sales, these expenses increased to 18.6% for the three
months ended September 30, 1997 from 17.4% for the three months
ended September 30, 1996. This percentage increase was primarily
due to the decrease in oil and gas sales discussed above.
NINE MONTHS ENDED SEPTEMBER 30, 1997 AS COMPARED TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1996.
Nine Months Ended September 30,
-------------------------------
1997 1996
-------- --------
Oil and gas sales $287,114 $334,878
Oil and gas production expenses $ 61,778 $ 78,850
Barrels produced 215 285
Mcf produced 127,130 170,702
Average price/Bbl $ 19.58 $ 19.71
Average price/Mcf $ 2.23 $ 1.93
As shown in the table above, total oil and gas sales decreased
$47,764 (14.3%) for the nine months ended September 30, 1997 as
compared to the nine months ended September 30, 1996. Of this
decrease, approximately $84,000 was related to a decrease in
volumes of gas sold, which amount was partially offset by an
increase of approximately $38,000 related to the increase in the
average price of gas sold. Volumes of oil and gas sold decreased
70 barrels and 43,572 Mcf, respectively, for the nine months
ended September 30, 1997 as compared to the nine months ended
September 30, 1996. The decrease in volumes of oil sold resulted
primarily from (i) the normal decline in production due to
diminished oil reserves on one well and (ii) positive prior
period volume adjustments made by the purchaser on another well
during the nine months ended September 30, 1996. The decrease in
volumes of gas sold resulted primarily from the normal decline in
production due to diminished gas reserves on one well. Average
oil prices decreased to $19.58 per barrel for the nine months
ended September 30, 1997 from $19.71 per barrel for the nine
months ended September 30, 1996. Average gas prices increased to
$2.23 per Mcf for the nine months ended September 30, 1997 from
$1.93 per Mcf for the nine months ended September 30, 1996.
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Oil and gas production expenses (including lease operating
expenses and production taxes) decreased $17,072 (21.7%) for the
nine months ended September 30, 1997 as compared to the nine
months ended September 30, 1996. This decrease resulted
primarily from (i) decreases in volumes of oil and gas sold
during the nine months ended September 30, 1997 as compared to
the nine months ended September 30, 1996 and (ii) a decrease in
production taxes associated with the decrease in oil and gas
sales discussed above. As a percentage of oil and gas sales,
these expenses decreased to 21.5% for the nine months ended
September 30, 1997 from 23.5% for the nine months ended September
30, 1996. This percentage decrease was primarily due to the
dollar decrease in oil and gas production expenses discussed
above and the increase in the average price of gas sold during
the nine months ended September 30, 1997 as compared to the nine
months ended September 30, 1996.
Depreciation, depletion, and amortization of oil and gas
properties decreased $27,225 (37.7%) for the nine months ended
September 30, 1997 as compared to the nine months ended September
30, 1996. This decrease resulted primarily from (i) decreases in
volumes of oil and gas sold during the nine months ended
September 30, 1997 as compared to the nine months ended September
30, 1996 and (ii) upward revisions in the estimates of remaining
oil and gas reserves at December 31, 1996. As a percentage of
oil and gas sales, this expense decreased to 15.7% for the nine
months ended September 30, 1997 from 21.6% for the nine months
ended September 30, 1996. This percentage decrease was primarily
due to the dollar decrease in depreciation, depletion, and
amortization discussed above and the increase in the average
price of gas sold during the nine months ended September 30, 1997
as compared to the nine months ended September 30, 1996.
General and administrative expenses remained relatively constant
for the nine months ended September 30, 1997 as compared to the
nine months ended September 30, 1996. As a percentage of oil and
gas sales, these expenses increased to 19.9% for the nine months
ended September 30, 1997 from 16.3% for the nine months ended
September 30, 1996. This percentage increase was primarily due
to the decrease in oil and gas sales discussed above.
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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 Program's
financial statements as of September 30, 1997 and
for the nine months ended September 30, 1997,
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 1984-2 LIMITED
PARTNERSHIP
(Registrant)
By: DYCO PETROLEUM CORPORATION
General Partner
Date: November 3, 1997 By: /s/Dennis R. Neill
-------------------------------
(Signature)
Dennis R. Neill
President
Date: November 3, 1997 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, 1997 and for the nine months ended September
30, 1997, 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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 41,826
<SECURITIES> 0
<RECEIVABLES> 58,515
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 100,341
<PP&E> 23,988,435
<DEPRECIATION> 23,543,777
<TOTAL-ASSETS> 575,456
<CURRENT-LIABILITIES> 10,274
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 552,483
<TOTAL-LIABILITY-AND-EQUITY> 575,456
<SALES> 287,114
<TOTAL-REVENUES> 289,621
<CGS> 0
<TOTAL-COSTS> 164,125
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 125,496
<INCOME-TAX> 0
<INCOME-CONTINUING> 125,496
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 125,496
<EPS-PRIMARY> 23.89
<EPS-DILUTED> 0
</TABLE>
