UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
MARK ONE
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-11313
MAY DRILLING PARTNERSHIP 1983-2
MAY LIMITED PARTNERSHIP 1983-2
(Exact name of registrant as specified in its charter)
75-1915688
TEXAS 75-1915682
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4582 SOUTH ULSTER STREET PARKWAY
SUITE 1700
DENVER, COLORADO 80237
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 850-7373
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
<TABLE>
<CAPTION>
MAY DRILLING PARTNERSHIP 1983-2
BALANCE SHEETS
(Unaudited)
(In thousands)
June 30, December 31,
1996 1995
<S> <C> <C>
ASSETS
Investment in
May Limited Partnership 1983-2 $462 $462
=== ===
PARTNERS' CAPITAL
Partners' Capital $462 $462
=== ===
<F1>
NOTE: The statements of operations and cash flows for May Drilling
Partnership 1983-2 are not presented because such information is
equal to the limited partner's share of such activity as presented in
the May Limited Partnership 1983-2 financial statements. The May
Drilling Partnership carries its investment in May Limited
Partnership 1983-2 on the equity method. The May Limited Partnership
1983-2 financial statements should be read in conjunction with these
balance sheets.
</TABLE>
<TABLE>
<CAPTION>
MAY LIMITED PARTNERSHIP 1983-2
BALANCE SHEETS
(Unaudited)
(In thousands)
June 30, December 31,
1996 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 172 $ 148
Accrued oil and gas sales 146 144
Due from affiliate 70 36
------- -------
Total 388 328
------- -------
OIL AND GAS PROPERTIES, using the
full cost method of accounting 16,585 16,582
Less - Accumulated depletion (16,027) (15,972)
------- -------
Net oil and gas properties 558 610
------- -------
TOTAL ASSETS $ 946 $ 938
======= =======
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 13 $ 27
------- -------
Total 13 27
------- -------
PARTNERS' CAPITAL
General partner 471 449
Limited partner 462 462
------- -------
Total 933 911
------- -------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 946 $ 938
======= =======
</TABLE>
<TABLE>
<CAPTION>
MAY LIMITED PARTNERSHIP 1983-2
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except for unit information)
For the Three Months Ended
June 30,
1996 1995
<S> <C> <C>
REVENUES
Oil revenue $ 29 $ 21
Gas revenue 213 107
Interest income 2 2
------- -------
Total 244 130
------- -------
COSTS AND EXPENSES
Lease operating 26 37
General and administrative 25 24
Depletion 29 25
Professional services and other 3 3
Litigation settlement 2
------- -------
Total 85 89
------- -------
NET INCOME $ 159 $ 41
======= =======
ALLOCATION OF NET INCOME:
General Partner $ 74 $ 22
======= =======
Limited Partner $ 85 $ 19
======= =======
Per initial $1,000 limited
partner investment $ 8.05 $ 1.80
======= =======
Weighted average initial $1,000
limited partner investment units
outstanding 10,557 10,557
======= =======
</TABLE>
<TABLE>
<CAPTION>
MAY LIMITED PARTNERSHIP 1983-2
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except for unit information)
For the Six Months Ended
June 30,
1996 1995
<S> <C> <C>
REVENUES
Oil revenue $ 55 $ 42
Gas revenue 457 221
Interest income 4 4
------- -------
Total 516 267
------- -------
COSTS AND EXPENSES
Lease operating 53 66
General and administrative 50 47
Depletion 55 53
Professional services and other 5 5
Litigation settlement 2
------- -------
Total 165 171
------- -------
NET INCOME $ 351 $ 96
======= =======
ALLOCATION OF NET INCOME:
General Partner $ 159 $ 53
======= =======
Limited Partner $ 192 $ 43
======= =======
Per initial $1,000 limited
partner investment $ 18.19 $ 4.07
======= =======
Weighted average initial $1,000
limited partner investment units
outstanding 10,557 10,557
======= =======
</TABLE>
<TABLE>
<CAPTION>
MAY LIMITED PARTNERSHIP 1983-2
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
For the Six Months Ended
June 30,
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 351 $ 96
Adjustment to reconcile net income to
net cash provided by operating
activities:
Depletion 55 53
------- -------
Cash from operations before
working capital changes 406 149
Changes in assets and liabilities
provided (used) cash:
Accrued oil and gas sales (2) 10
Due from affiliate (34)
Accounts payable and accrued liabilities (14) (15)
------- -------
Net cash provided by operating
activities 356 144
------- -------
INVESTING ACTIVITIES:
Additions to oil and gas properties (3) (32)
------- -------
Net cash used in investing activities (3) (32)
------- -------
FINANCING ACTIVITIES:
Distributions to partners (329) (153)
------- -------
Net cash used in financing activities (329) (153)
------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 24 (41)
CASH AND CASH EQUIVALENTS:
Balance, beginning of period 148 169
------- -------
Balance, end of period $ 172 $ 128
======= =======
<F1>
The accompanying notes are an integral part
of the financial statements.
</TABLE>
MAY LIMITED PARTNERSHIP 1983-2
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - GENERAL
The financial statements presented are those of May Limited Partnership 1983-2
(the "Partnership"). The interim financial data are unaudited; however, in the
opinion of the general partner, the interim data include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results for the interim periods. These financial statements
should be read in conjunction with the financial statements and notes thereto
included in the Partnership's December 31, 1995 Annual Report on Form 10-K.
NOTE 2 - LEGAL
In June 1996, the Limited Partnership and the other parties to the lawsuits
styled Lamson Petroleum Corporation v. Hallwood Petroleum, Inc. et al. settled
the lawsuits. The plaintiffs in the lawsuits claimed they had valid leases
covering streets and roads in the units of the A. L. Boudreaux #1 well, G. S.
Boudreaux #1 well, Paul Castille #1 well, Evangeline Shrine Club #1 well and
Duhon #1 well, which represented approximately 3% to 4% of the Limited
Partnership s interest in these properties, and they were entitled to a portion
of the production from the wells dating from February 1990. In the settlement,
the Limited Partnership and the plaintiffs agreed to cross-convey interests in
certain leases to one another, and the Limited Partnership agreed to pay the
plaintiffs $67,000. The Limited Partnership has not recognized revenue
attributable to the contested leases since January 1993. These revenues,
totaling $65,000, had been placed in escrow pending the resolution of the
lawsuits. The excess of the cash paid over the escrowed amounts, is reflected
as litigation settlement expense in the accompanying financial statements. The
cross-conveyance of the interests in the leases will result in a decrease in the
Limited Partnership s reserves of $40,000 in future net revenues, discounted at
10%.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
The Partnership generated $356,000 of cash flow from operating activities during
the six months ended June 30, 1996 and made distributions of $329,000. A
distribution payable to partners of record as of June 30, 1996 was declared in
July 1996. The distribution amount is $144,000, payable $84,000 to May Drilling
Partnership 1983-2 partners and $60,000 to the general partner. Future
distributions are dependent on future prices for the Partnership's production
and the production level of the Partnership's remaining oil and gas reserves.
RESULTS OF OPERATIONS
SECOND QUARTER 1996 COMPARED TO SECOND QUARTER 1995
OIL REVENUE
Oil revenue increased $8,000 in the second quarter of 1996 as compared to the
corresponding period in 1995 as the result of an increase in production combined
with an increase in the average oil price. Oil production increased 23%
primarily due to an increase in state allowable production limits. The average
oil price increased from $18.52 per barrel in 1995 to $20.84 per barrel in 1996.
GAS REVENUE
Gas revenue increased $106,000 during the second quarter of 1996 as compared to
the corresponding period in 1995 as the result of an increase in production
combined with an increase in price. Gas production increased 40% primarily due
to an increase in state allowable production limits. The average gas price
increased from $1.81 per mcf in 1995 to $2.58 per mcf in 1996.
LEASE OPERATING
Lease operating expense decreased $11,000 for the second quarter of 1996 as
compared to the corresponding period in 1995 primarily due to a decrease in
operating expenses resulting from cost savings measures implemented during 1995.
GENERAL AND ADMINISTRATIVE
General and administrative expense increased $1,000 during the second quarter of
1996 as compared to the second quarter of 1995 due to an increase in the
allocation of overhead from the general partner.
DEPLETION
Depletion expense increased $4,000 during the second quarter of 1996 as compared
with the second quarter of 1995 as a result of a higher depletion rate caused by
the increase in production discussed above.
LITIGATION SETTLEMENT
Litigation settlement expense represents the settlement of the Lamson lawsuit
which is further discussed in Item 1 - Note 2 of the Form 10-Q.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1995
The comparisons for the six months ended June 30, 1996 and the six months ended
June 30, 1995 are consistent with those discussed in the second quarter 1996
compared to the second quarter 1995 except for the following:
OIL REVENUE
Oil revenue increased $13,000 during the first six months of 1996 as compared to
the corresponding period in 1995. The increase is comprised of a 19% increase
in production combined with an increase in oil prices from $18.07 per barrel in
1995 to $20.14 per barrel in 1996. The increase in production is due to
increased state allowable production limits.
GAS REVENUE
Gas revenue increased $236,0000 during the first six months of 1996 as compared
with the same period during 1995. The increase is comprised of a 24% increase
in gas production combined with an increase in gas prices from $1.72 per mcf in
1995 to $2.88 per mcf in 1996. The increase in production is due to increased
state allowable production limits.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Reference is made to Item 8 - Note 3 of Form 10-K for the year ended
December 31, 1995 and Item 1 - Note 2 of this Form 10-Q.
ITEM 2 - CHANGES IN SECURITIES
None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 - OTHER INFORMATION
None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
None.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnerships have duly caused this report to be signed on their behalf by the
undersigned, thereunto duly authorized.
MAY DRILLING PARTNERSHIP 1983-2
MAY LIMITED PARTNERSHIP 1983-2
BY: EDP OPERATING, LTD.,
GENERAL PARTNER
BY: HALLWOOD G. P., INC.,
GENERAL PARTNER
Date: August 1, 1996 By: /s/Robert S. Pfeiffer
Robert S. Pfeiffer, Vice President
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-Q
for the quarter ended June 30, 1996 for May Limited Partnership 1983-2 and is
qualified in its entirety by reference to such Form 10-Q.
</LEGEND>
<CIK> 0000735552
<NAME> MAY LIMITED PARTNERSHIP 1983-2
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 172
<SECURITIES> 0
<RECEIVABLES> 216
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 388
<PP&E> 16,585
<DEPRECIATION> 16,027
<TOTAL-ASSETS> 946
<CURRENT-LIABILITIES> 13
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 933
<TOTAL-LIABILITY-AND-EQUITY> 946
<SALES> 512
<TOTAL-REVENUES> 516
<CGS> 0
<TOTAL-COSTS> 165
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 351
<INCOME-TAX> 0
<INCOME-CONTINUING> 351
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 351
<EPS-PRIMARY> 18.19
<EPS-DILUTED> 18.19
</TABLE>
