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, 2000 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,
2000 1999
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 41,862 $ 31,242
Accrued oil and gas sales 65,794 39,152
-------- --------
Total current assets $107,656 $ 70,394
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 309,432 325,910
DEFERRED CHARGE 23,319 23,319
-------- --------
$440,407 $419,623
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 2,835 $ 2,839
Gas imbalance payable 3,021 3,021
-------- --------
Total current liabilities $ 5,856 $ 5,860
ACCRUED LIABILITY $ 9,896 $ 9,896
PARTNERS' CAPITAL:
General Partner, 52 general
partner units $ 4,247 $ 4,039
Limited Partners, issued and
outstanding, 5,200 Units 420,408 399,828
-------- --------
Total Partners' capital $424,655 $403,867
-------- --------
$440,407 $419,623
======== ========
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, 2000 AND 1999
(Unaudited)
2000 1999
--------- ---------
REVENUES:
Oil and gas sales $91,429 $61,078
Interest 1,597 6
------- -------
$93,026 $61,084
COSTS AND EXPENSES:
Oil and gas production $15,058 $12,380
Depreciation, depletion, and
amortization of oil and gas
properties 6,326 4,717
General and administrative
(Note 2) 13,221 15,530
------- -------
$34,605 $32,627
------- -------
NET INCOME $58,421 $28,457
======= =======
GENERAL PARTNER (1%) - net income $ 585 $ 285
======= =======
LIMITED PARTNERS (99%) - net income $57,836 $28,172
======= =======
NET INCOME PER UNIT $ 11.13 $ 5.41
======= =======
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, 2000 AND 1999
(Unaudited)
2000 1999
--------- ---------
REVENUES:
Oil and gas sales $257,699 $161,118
Interest 2,962 771
-------- --------
$260,661 $161,889
COSTS AND EXPENSES:
Oil and gas production $ 44,420 $163,460
Depreciation, depletion, and
amortization of oil and gas
properties 20,025 23,260
General and administrative
(Note 2) 44,128 53,032
-------- --------
$108,573 $239,752
-------- --------
NET INCOME (LOSS) $152,088 ($ 77,863)
======== ========
GENERAL PARTNER (1%) - net
income (loss) $ 1,521 ($ 778)
======== ========
LIMITED PARTNERS (99%) - net
income (loss) $150,567 ($ 77,085)
======== ========
NET INCOME (LOSS) PER UNIT $ 28.96 ($ 14.83)
======== ========
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, 2000 AND 1999
(Unaudited)
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $152,088 ($77,863)
Adjustments to reconcile net income
(loss) to net cash provided (used)
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 20,025 23,260
Increase in accrued oil and gas
sales ( 26,642) ( 9,986)
Increase (decrease) in accounts
payable ( 4) 31,631
-------- -------
Net cash provided (used) by
operating activities $145,467 ($32,958)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties ($ 49,926) ($ 3,163)
Proceeds from the sale of oil and
gas properties 46,379 -
-------- -------
Net cash used by investing
activities ($ 3,547) ($ 3,163)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($131,300) $ -
-------- -------
Net cash used by financing
activities ($131,300) $ -
-------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 10,620 ($36,121)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 31,242 41,331
-------- -------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 41,862 $ 5,210
======== =======
The accompanying condensed notes are an integral part of
these financial statements.
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<PAGE>
DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheet as of September 30, 2000, statements of operations for
the three and nine months ended September 30, 2000 and 1999, and
statements of cash flows for the nine months ended September 30, 2000 and
1999 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, 2000, results of
operations for the three and nine months ended September 30, 2000 and
1999, and changes in cash flows for the nine months ended September 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 September 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 nine months ended September 30, 2000 the Program
paid recompletion costs of approximately $50,000 on the Hubbard No. 1-A
well located in Beckham County, Oklahoma in which the Program owns a
working interest of approximately 20.2%. 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
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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.
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, 2000 and 1999 the
Program incurred such expenses totaling $13,221 and $15,530, respectively,
of which $10,569 and $14,118, respectively, were paid each period to Dyco
and its affiliates. During the nine months ended September 30, 2000 and
1999 the Program incurred such expenses totaling $44,128 and $53,032,
respectively, of which $31,707 and $42,354, 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.
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<PAGE>
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.
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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 nine
months ended September 30, 2000 the Program paid approximately $50,000 for
recompletion costs on the Hubbard No. 1-A well located in Beckham County,
Oklahoma in which the Program owns a working interest of approximately
20.2%. 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.
The Program's Statement of Cash Flows for the nine months ended September
30, 2000 includes proceeds from the sale of oil and gas properties. These
proceeds were included in the Program's cash distributions paid September
2000.
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 significantly 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.
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THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1999.
Three Months Ended September 30,
--------------------------------
2000 1999
------- -------
Oil and gas sales $91,429 $61,078
Oil and gas production expenses $15,058 $12,380
Barrels produced 74 56
Mcf produced 21,178 24,888
Average price/Bbl $ 28.31 $ 19.16
Average price/Mcf $ 4.22 $ 2.41
As shown in the table above, total oil and gas sales increased $30,351
(49.7%) for the three months ended September 30, 2000 as compared to the
three months ended September 30, 1999. Of this increase, approximately
$38,000 was related to an increase in the average price of gas sold, which
increase was partially offset by a decrease of approximately $9,000
related to a decrease in volumes of gas sold. Volumes of oil sold
increased 18 barrels, while volumes of gas sold decreased 3,710 Mcf for
the three months ended September 30, 2000 as compared to the three months
ended September 30, 1999. The decrease in volumes of gas sold was
primarily due to (i) normal declines in production and (ii) a decrease in
production on two wells due to downhole mechanical problems. Average oil
and gas prices increased to $28.31 per barrel and $4.22 per Mcf,
respectively, for the three months ended September 30, 2000 from $19.16
per barrel and $2.41 per Mcf, respectively, for the three months ended
September 30, 1999.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $2,678 (21.6%) for the three months ended
September 30, 2000 as compared to the three months ended September 30,
1999. This increase was primarily due to an increase in production taxes
associated with the increase in oil and gas sales. As a percentage of oil
and gas sales, these expenses decreased to 16.5% for the three months
ended September 30, 2000 from 20.3% for the three months ended September
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
increased $1,609 (34.1%) for the three months ended September 30, 2000 as
compared to the three months ended September 30, 1999. This increase was
primarily due to the decreased dollar amount of depreciation, depletion,
and amortization charged during the third quarter of 1999 which resulted
from a significant increase in the gas price used in the valuation of
reserves at September 30, 1999 as
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compared to June 30, 1999. This increase was partially offset by a
decrease in volumes of gas sold. As a percentage of oil and gas sales,
this expense decreased to 6.9% for the three months ended September 30,
2000 from 7.7% for the three months ended September 30, 1999. This
percentage decrease was primarily due to the increases in the average
prices of oil and gas sold.
General and administrative expenses decreased $2,309 (14.9%) for the three
months ended September 30, 2000 as compared to the three months ended
September 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.
This decrease was partially offset by accounting review fees incurred
during the three months ended September 30, 2000 as a result of new
ongoing requirements imposed by the Securities and Exchange Commission. As
a percentage of oil and gas sales, these expenses decreased to 14.5% for
the three months ended September 30, 2000 from 25.4% for the three months
ended September 30, 1999. This percentage decrease was primarily due to
the increase in oil and gas sales.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1999.
Nine Months Ended September 30,
-------------------------------
2000 1999
-------- --------
Oil and gas sales $257,699 $161,118
Oil and gas production expenses $ 44,420 $163,460
Barrels produced 283 180
Mcf produced 78,501 79,573
Average price/Bbl $ 28.12 $ 15.33
Average price/Mcf $ 3.18 $ 1.99
As shown in the table above, total oil and gas sales increased $96,581
(59.9%) for the nine months ended September 30, 2000 as compared to the
nine months ended September 30, 1999. Of this increase, approximately
$94,000 was related to an increase in the average price of gas sold.
Volumes of oil sold increased 103 barrels, while volumes of gas sold
decreased 1,072 Mcf for the nine months ended September 30, 2000 as
compared to the nine months ended September 30, 1999. Average oil and gas
prices increased to $28.12 per barrel and $3.18 per Mcf, respectively, for
the nine months ended September 30, 2000 from $15.33 per barrel and $1.99
per Mcf, respectively, for the nine months ended September 30, 1999.
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Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $119,040 (72.8%) for the nine months ended
September 30, 2000 as compared to the nine months ended September 30,
1999. This decrease was primarily due to workover expenses incurred on one
well during the nine months ended September 30, 1999 in order to improve
the recovery of reserves. As a percentage of oil and gas sales, these
expenses decreased to 17.2% for the nine months ended September 30, 2000
from 101.5% for the nine months ended September 30, 1999. This percentage
decrease was primarily due to the dollar decrease in oil and gas
production expenses.
Depreciation, depletion, and amortization of oil and gas properties
decreased $3,235 (13.9%) for the nine months ended September 30, 2000 as
compared to the nine months ended September 30, 1999. This decrease was
primarily due to the increase in the gas price used in the valuation of
remaining reserves at September 30, 2000 as compared to September 30,
1999. As a percentage of oil and gas sales, this expense decreased to 7.8%
for the nine months ended September 30, 2000 from 14.4% for the nine
months ended September 30, 1999. This percentage decrease was primarily
due to the increases in the average prices of oil and gas sold.
General and administrative expenses decreased $8,904 (16.8%) for the nine
months ended September 30, 2000 as compared to the nine months ended
September 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 17.1% for
the nine months ended September 30, 2000 from 32.9% for the nine months
ended September 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.
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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
1984-2 Limited Partnership's financial statements as of
September 30, 2000 and for the nine months ended
September 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 1984-2 LIMITED
PARTNERSHIP
(Registrant)
BY: DYCO PETROLEUM CORPORATION
General Partner
Date: November 8, 2000 By: /s/Dennis R. Neill
-------------------------------
(Signature)
Dennis R. Neill
President
Date: November 8, 2000 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, 2000 and for
the nine months ended September 30, 2000, filed herewith.
All other exhibits are omitted as inapplicable.
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