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
June 30, 1998 2-92702 (1985-1)
2-92702-01 (1985-2)
DYCO 1985 OIL AND GAS PROGRAM
(TWO LIMITED PARTNERSHIPS)
(Exact Name of Registrant as specified in its charter)
41-1498087 (1985-1)
Minnesota 41-1498086 (1985-2)
(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
------ ------
1
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DYCO OIL AND GAS PROGRAM 1985-1 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
1998 1997
---------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 64,246 $ 43,585
Accrued oil and gas sales 47,939 83,721
-------- --------
Total current assets $112,185 $127,306
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 125,410 141,913
DEFERRED CHARGE 14,434 14,434
-------- --------
$252,029 $283,653
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 6,569 $ 6,485
Gas imbalance payable 13,160 13,160
-------- --------
Total current liabilities $ 19,729 $ 19,645
ACCRUED LIABILITY $ 23,955 $ 23,955
PARTNERS' CAPITAL:
General Partner, issued and
outstanding, 41 units $ 2,083 $ 2,400
Limited Partners, issued and
outstanding, 4,100 units 206,262 237,653
-------- --------
Total Partners' capital $208,345 $240,053
-------- --------
$252,029 $283,653
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
2
<PAGE>
DYCO OIL AND GAS PROGRAM 1985-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
1998 1997
-------- --------
REVENUES:
Oil and gas sales $74,001 $87,389
Interest 328 892
------- -------
$74,329 $88,281
COSTS AND EXPENSES:
Oil and gas production $25,479 $21,278
Depreciation, depletion, and
amortization of oil and gas
properties 8,144 8,079
General and administrative
(Note 2) 11,507 12,922
------- -------
$45,130 $42,279
------- -------
NET INCOME $29,199 $46,002
======= =======
GENERAL PARTNER (1%) - net income $ 292 $ 460
======= =======
LIMITED PARTNERS (99%) - net income $28,907 $45,542
======= =======
NET INCOME PER UNIT $ 7.05 $ 11.11
======= =======
UNITS OUTSTANDING 4,141 4,141
======= =======
The accompanying condensed notes are an integral part of
these financial statements.
3
<PAGE>
DYCO OIL AND GAS PROGRAM 1985-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
1998 1997
-------- --------
REVENUES:
Oil and gas sales $169,022 $237,346
Interest 1,121 1,925
-------- --------
$170,143 $239,271
COSTS AND EXPENSES:
Oil and gas production $ 51,796 $ 38,350
Depreciation, depletion, and
amortization of oil and gas
properties 16,503 29,674
General and administrative
(Note 2) 30,027 32,692
-------- --------
$ 98,326 $100,716
-------- --------
NET INCOME $ 71,817 $138,555
======== ========
GENERAL PARTNER (1%) - net income $ 718 $ 1,386
======== ========
LIMITED PARTNERS (99%) - net income $ 71,099 $137,169
======== ========
NET INCOME PER UNIT $ 17.34 $ 33.46
======== ========
UNITS OUTSTANDING 4,141 4,141
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
4
<PAGE>
DYCO OIL AND GAS PROGRAM 1985-1 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
1998 1997
---------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 71,817 $138,555
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 16,503 29,674
Decrease in accrued oil and
gas sales 35,782 26,209
Increase (decrease) in accounts
payable 84 ( 827)
-------- --------
Net cash provided by operating
activities $124,186 $193,611
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by investing
activities $ - $ -
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($103,525) ($248,460)
-------- --------
Net cash used by financing
activities ($103,525) ($248,460)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 20,661 ($ 54,849)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 43,585 86,724
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 64,246 $ 31,875
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
5
<PAGE>
DYCO OIL AND GAS PROGRAM 1985-2 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
1998 1997
----------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 7,165 $ 68,271
Accrued oil and gas sales 20,046 31,074
-------- --------
Total current assets $ 27,211 $ 99,345
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 43,394 53,942
DEFERRED CHARGE 48,160 48,160
-------- --------
$118,765 $201,447
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 4,718 $ 2,718
-------- --------
Total current liabilities $ 4,718 $ 2,718
ACCRUED LIABILITY $ 7,515 $ 7,515
PARTNERS' CAPITAL:
General Partner, issued and
outstanding, 44 units $ 1,065 $ 1,912
Limited Partners, issued and
outstanding, 4,330 units 105,467 189,302
-------- --------
Total Partners' capital $106,532 $191,214
-------- --------
$118,765 $201,447
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
6
<PAGE>
DYCO OIL AND GAS PROGRAM 1985-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
1998 1997
-------- --------
REVENUES:
Oil and gas sales $34,943 $54,036
Interest 912 89
------- -------
$35,855 $54,125
COSTS AND EXPENSES:
Oil and gas production $16,051 $19,072
Depreciation, depletion, and
amortization of oil and gas
properties 2,566 3,280
General and administrative
(Note 2) 10,910 12,380
------- -------
$29,527 $34,732
------- -------
NET INCOME $ 6,328 $19,393
======= =======
GENERAL PARTNER (1%) - net
income $ 63 $ 194
======= =======
LIMITED PARTNERS (99%) - net
income $ 6,265 $19,199
======= =======
NET INCOME PER UNIT $ 1.45 $ 4.43
======= =======
UNITS OUTSTANDING 4,374 4,374
======= =======
The accompanying condensed notes are an integral part of
these financial statements.
7
<PAGE>
DYCO OIL AND GAS PROGRAM 1985-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
1998 1997
-------- --------
REVENUES:
Oil and gas sales $70,927 $93,632
Interest 1,754 940
------- -------
$72,681 $94,572
COSTS AND EXPENSES:
Oil and gas production $35,770 $22,500
Depreciation, depletion, and
amortization of oil and gas
properties 4,887 6,351
General and administrative
(Note 2) 29,226 32,018
------- -------
$69,883 $60,869
------- -------
NET INCOME $ 2,798 $33,703
======= =======
GENERAL PARTNER (1%) - net
income $ 28 $ 337
======= =======
LIMITED PARTNERS (99%) - net
income $ 2,770 $33,366
======= =======
NET INCOME PER UNIT $ .64 $ 7.71
======= =======
UNITS OUTSTANDING 4,374 4,374
======= =======
The accompanying condensed notes are an integral part of
these financial statements.
8
<PAGE>
DYCO OIL AND GAS PROGRAM 1985-2 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
1998 1997
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,798 $ 33,703
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 4,887 6,351
Decrease in accrued oil and
gas sales 11,028 14,917
Increase (decrease) in accounts
payable 2,000 ( 1,761)
------- --------
Net cash provided by operating
activities $20,713 $ 53,210
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of oil and
gas properties $ 5,661 $ 1,110
------- --------
Net cash provided by investing
activities $ 5,661 $ 1,110
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($87,480) ($109,350)
------- --------
Net cash used by financing
activities ($87,480) ($109,350)
------- --------
NET DECREASE IN CASH AND CASH
EQUIVALENTS ($61,106) ($ 55,030)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 68,271 86,273
------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 7,165 $ 31,243
======= ========
The accompanying condensed notes are an integral part of
these financial statements.
9
<PAGE>
DYCO OIL AND GAS PROGRAM 1985-1 LIMITED PARTNERSHIP
DYCO OIL AND GAS PROGRAM 1985-2 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheets as of June 30, 1998, statements of operations for the
three and six months ended June 30, 1998 and 1997, and statements of cash
flows for the six months ended June 30, 1998 and 1997 have been prepared
by Dyco Petroleum Corporation ("Dyco"), the General Partner of the Dyco
Oil and Gas Program 1985-1 and 1985-2 Limited Partnerships (individually,
the "1985-1 Program" or the "1985-2 Program", as the case may be, or,
collectively, the "Programs"), without audit. In the opinion of management
all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position at June 30, 1998,
results of operations for the three and six months ended June 30, 1998 and
1997, and changes in cash flows for the six months ended June 30, 1998 and
1997 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 Programs' Annual Report on Form 10-K for
the year ended December 31, 1997. The results of operations for the period
ended June 30, 1998 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 Programs' 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
10
<PAGE>
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.
2. TRANSACTIONS WITH RELATED PARTIES
---------------------------------
Under the terms of each 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 June 30, 1998 and 1997 the
1985-1 Program incurred such expenses totaling $11,507 and $12,922,
respectively, of which $10,710 was paid each period to Dyco and its
affiliates. During the six months ended June 30, 1998 and 1997 the 1985-1
Program incurred such expenses totaling $30,027 and $32,692, respectively,
of which $21,420 was paid each period to Dyco and its affiliates. During
the three months ended June 30, 1998 and 1997 the 1985-2 Program incurred
such expenses totaling $10,910 and $12,380, respectively, of which $10,068
was paid each period to Dyco and its affiliates. During the six months
ended June 30, 1998 and 1997 the 1985-2 Program incurred such expenses
totaling $29,226 and $32,018, respectively, of which $20,136 was paid each
period to Dyco and its affiliates.
Affiliates of the Programs operate certain of the Programs' properties.
Their policy is to bill the Programs for all customary charges and cost
reimbursements associated with these activities.
11
<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 Programs.
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 Programs' 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 Programs' reserves which
would result in a positive economic impact.
12
<PAGE>
The Programs' available capital from subscriptions has been spent on oil
and gas drilling activities. There should be no further material capital
resource commitments in the future. The Programs have no debt commitments.
Cash for operational purposes will be provided by current oil and gas
production.
The 1985-2 Program's Statement of Cash Flows for the six months ended June
30, 1998 includes proceeds from the sale of oil and gas properties during
the first quarter of 1998. These proceeds were included in the 1985-2
Program's cash distributions paid in June 1998. It is possible that the
1985-2 Program's repurchase values and future cash distributions could
decline as a result of the disposition of these properties. On the other
hand, the General Partner believes there will be beneficial operating
efficiencies related to the 1985-2 Program's remaining properties. This is
primarily due to the fact that the properties sold generally bore a higher
ratio of operating expenses as compared to reserves than the 1985-2
Program's remaining properties.
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 Programs' revenues is the prices received for the
sale of oil and gas. Predicting future prices is very difficult.
Substantially all of the Programs' 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. In addition, crude oil prices are at or near their lowest level
in the past decade due primarily to the global surplus of crude oil.
Management is unable to predict whether future oil and gas prices will (i)
stabilize, (ii) increase, or (iii) decrease.
13
<PAGE>
1985-1 PROGRAM
THREE MONTHS ENDED JUNE 30, 1998 AS COMPARED TO THE THREE MONTHS ENDED
JUNE 30, 1997.
Three Months Ended June 30,
---------------------------
1998 1997
------- ------
Oil and gas sales $74,001 $87,389
Oil and gas production expenses $25,479 $21,278
Barrels produced 78 338
Mcf produced 41,890 48,895
Average price/Bbl $ 12.47 $ 17.62
Average price/Mcf $ 1.74 $ 2.33
As shown in the table above, total oil and gas sales decreased $13,388
(15.3%) for the three months ended June 30, 1998 as compared to the three
months ended June 30, 1997. Of this decrease, approximately $5,000 and
$16,000, respectively, were related to decreases in volumes of oil and gas
sold and approximately $24,000 was related to a decrease in the average
price of gas sold, which decreases were partially offset by an increase of
approximately $32,000 related to a refund of prior oil sales the 1985-1
Program paid during 1997. Volumes of oil and gas sold decreased 260
barrels and 7,005 Mcf, respectively, for the three months ended June 30,
1998 as compared to the three months ended June 30, 1997. The decrease in
the volumes of gas sold was primarily due to normal declines in production
from diminished gas reserves on four significant wells. Average oil and
gas prices decreased to $12.47 per barrel and $1.74 per Mcf, respectively,
for the three months ended June 30, 1998 from $17.62 per barrel and $2.33
per Mcf, respectively, for the three months ended June 30, 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $4,201 (19.7%) for the three months ended June
30, 1998 as compared to the three months ended June 30, 1997. This
increase was primarily due to increased maintenance and repair expenses on
two wells during the three months ended June 30, 1998 and a refund
received during the three months ended June 30, 1997 from the operator on
one well related to prior period expenses. This increase was partially
offset by the decrease in production taxes due to decreased oil and gas
sales during the three months ended June 30, 1998 compared to the three
months ended June 30, 1997. As a percentage of oil and gas sales, these
expenses increased to 34.4% for the three months ended June 30, 1998 from
24.3% for the three months ended June 30, 1997. This percentage increase
was primarily due to the decrease in the average price of gas sold during
the three months ended June 30, 1998 as
14
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compared to the three months ended June 30, 1997 and the dollar increase
in oil and gas production expenses discussed above.
Depreciation, depletion, and amortization of oil and gas properties
increased $65 (0.8%) for the three months ended June 30, 1998 as compared
to the three months ended June 30, 1997. This increase was primarily due
to a decrease in the gas prices used in the valuation of reserves at June
30, 1998 as compared to March 31, 1998 and an increase in the gas prices
used in the valuation of reserves at June 30, 1997 as compared to March
31, 1997. This increase was partially offset by (i) the decrease in
volumes of oil and gas sold and (ii) significant upward revisions in the
estimates of remaining oil and gas reserves at December 31, 1997. As a
percentage of oil and gas sales, this expense increased to 11.0% for the
three months ended June 30, 1998 from 9.2% for the three months ended June
30, 1997.
General and administrative expenses decreased $1,415 (11.0%) for the three
months ended June 30, 1998 as compared to the three months ended June 30,
1997. This decrease resulted primarily from a decrease in professional
fees during the three months ended June 30, 1998 as compared to the three
months ended June 30, 1997. As a percentage of oil and gas sales, these
expenses remained relatively constant at 15.5% for the three months ended
June 30, 1998 and 14.8% for the three months ended June 30, 1997.
SIX MONTHS ENDED JUNE 30, 1998 AS COMPARED TO THE SIX MONTHS ENDED JUNE
30, 1997.
Six Months Ended June 30,
-------------------------
1998 1997
-------- --------
Oil and gas sales $169,022 $237,346
Oil and gas production expenses $ 51,796 $ 38,350
Barrels produced 152 338
Mcf produced 85,773 119,520
Average price/Bbl $ 13.90 $ 17.62
Average price/Mcf $ 1.95 $ 2.21
As shown in the table above, total oil and gas sales decreased $68,324
(28.8%) for the six months ended June 30, 1998 as compared to the six
months ended June 30, 1997. Of this decrease, approximately $74,000 was
related to a decrease in volumes of gas sold and approximately $22,000 was
related to a decrease in the average price of gas sold, which decreases
were partially offset by an increase of approximately $32,000 related to a
refund of prior oil sales the 1985-1 Program paid during 1997. Volumes of
oil and gas sold decreased 186 barrels and 33,747 Mcf, respectively, for
the six months ended June 30, 1998 as compared to the six
15
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months ended June 30, 1997. The decrease in the volumes of gas sold was
primarily due to positive prior period volume adjustments made by
purchasers on several wells during the six months ended June 30, 1997 and
normal declines in production from diminished gas reserves on one
significant well during the six months ended June 30, 1998. Average oil
and gas prices decreased to $13.90 per barrel and $1.95 per Mcf,
respectively, for the six months ended June 30, 1998 from $17.62 per
barrel and $2.21 per Mcf, respectively, for the six months ended June 30,
1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $13,446 (35.1%) for the six months ended June
30, 1998 as compared to the six months ended June 30, 1997. This increase
resulted primarily from credits received from the operators on two sold
wells during the six months ended June 30, 1997 for prior period lease
operating expenses. As a percentage of oil and gas sales, these expenses
increased to 30.6% for the six months ended June 30, 1998 from 16.2% for
the six months ended June 30, 1997. This percentage increase was primarily
due to the decrease in the average price of gas sold during the six months
ended June 30, 1998 as compared to the six months ended June 30, 1997 and
the dollar increase in the oil and gas production expenses discussed
above.
Depreciation, depletion, and amortization of oil and gas properties
decreased $13,171 (44.4%) for the six months ended June 30, 1998 as
compared to the six months ended June 30, 1997. This decrease resulted
primarily from decreases in volumes of gas sold during the six months
ended June 30, 1998 as compared to the six months ended June 30, 1997 and
significant upward revisions in the estimates of remaining oil and gas
reserves at December 31, 1997. As a percentage of oil and gas sales, these
expenses decreased to 9.8% for the six months ended June 30, 1998 from
12.5% for the six months ended June 30, 1997. This percentage decrease was
primarily due to the upward revisions in the estimates of remaining oil
and gas reserves discussed above.
General and administrative expenses decreased $2,665 (8.2%) for the six
months ended June 30, 1998 as compared to the six months ended June 30,
1997. As a percentage of oil and gas sales, these expenses increased to
17.8% for the six months ended June 30, 1998 from 13.8% for the six months
ended June 30, 1997. This percentage increase was primarily due to the
decrease in oil and gas sales discussed above.
16
<PAGE>
1985-2 PROGRAM
THREE MONTHS ENDED JUNE 30, 1998 AS COMPARED TO THE THREE MONTHS ENDED
JUNE 30, 1997.
Three Months Ended June 30,
---------------------------
1998 1997
------- -------
Oil and gas sales $34,943 $54,036
Oil and gas production expenses $16,051 $19,072
Barrels produced 734 1,556
Mcf produced 13,310 15,417
Average price/Bbl $ 12.81 $ 19.29
Average price/Mcf $ 1.92 $ 2.34
As shown in the table above, total oil and gas sales decreased $19,093
(35.3%) for the three months ended June 30, 1998 as compared to the three
months ended June 30, 1997. Of this decrease, approximately $15,000 and
$5,000, respectively, were related to decreases in volumes of oil and gas
sold and approximately $5,000 and $5,000, respectively, were related to
decreases in the average prices of oil and gas sold, which decreases were
partially offset by an increase of approximately $11,000 related to a
refund of prior oil sales the 1985-2 Program paid during 1997. Volumes of
oil and gas sold decreased 822 barrels and 2,107 Mcf, respectively, for
the three months ended June 30, 1998 as compared to the three months ended
June 30, 1997. The decrease in the volumes of oil sold resulted primarily
from positive prior period volume adjustments made by a purchaser on one
well during the three months ended June 30, 1997. The decrease in volumes
of gas sold was primarily due to positive prior period volume adjustments
made by a purchaser on one well for the three months ended June 30, 1997.
Average oil and gas prices decreased to $12.81 per barrel and $1.92 per
Mcf, respectively, for the three months ended June 30, 1998 from $19.29
per barrel and $2.34 per Mcf, respectively, for the three months ended
June 30, 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $3,021 (15.8%) for the three months ended June
30, 1998 as compared to the three months ended June 30, 1997. This
decrease resulted primarily from the decrease in volumes of oil and gas
sold and the decrease in production taxes due to the decrease in oil and
gas sales for the three months ended June 30, 1998 as compared to the
three months ended June 30, 1997. As a percentage of oil and gas sales,
these expenses increased to 45.9% for the three months ended June 30, 1998
from 35.3% for the three months ended June 30, 1997. This percentage
increase was primarily due to the decreases in the average prices of oil
and gas sold during the three months ended
17
<PAGE>
June 30, 1998 as compared to the three months ended June 30, 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $714 (21.8%) for the three months ended June 30, 1998 as
compared to the three months ended June 30, 1997. This decrease resulted
primarily from the decrease in volumes of oil and gas sold during the
three months ended June 30, 1998 as compared with the three months ended
June 30, 1997. This decrease was partially offset by a decrease in the gas
prices used in the valuation of reserves at June 30, 1998 as compared to
March 31, 1998 and an increase in the gas prices used in the valuation of
reserves at June 30, 1997 as compared to March 31, 1997. As a percentage
of oil and gas sales, this expense increased to 7.3% for the three months
ended June 30, 1998 from 6.1% for the three months ended June 30, 1997.
General and administrative expenses decreased $1,470 (11.9%) for the three
months ended June 30, 1998 as compared to the three months ended June 30,
1997. This decrease resulted primarily from a decrease in professional
fees during the three months ended June 30, 1998 as compared to the three
months ended June 30, 1997. As a percentage of oil and gas sales, these
expenses increased to 31.2% for the three months ended June 30, 1998 from
22.9% for the three months ended June 30, 1997. This percentage increase
was primarily due to the decrease in oil and gas sales discussed above.
SIX MONTHS ENDED JUNE 30, 1998 AS COMPARED TO THE SIX MONTHS ENDED JUNE
30, 1997.
Six Months Ended June 30,
-------------------------
1998 1997
------- -------
Oil and gas sales $70,927 $93,632
Oil and gas production expenses $35,770 $22,500
Barrels produced 1,419 1,697
Mcf produced 26,373 32,617
Average price/Bbl $ 13.38 $ 19.31
Average price/Mcf $ 1.97 $ 2.23
As shown in the table above, total oil and gas sales decreased $22,705
(24.2%) for the six months ended June 30, 1998 as compared to the six
months ended June 30, 1997. Of this decrease, approximately $5,000 and
$14,000, respectively, were related to decreases in volumes of oil and gas
sold and approximately $8,000 and $7,000, respectively, were related to
decreases in the average prices of oil and gas sold, which decreases were
partially offset by an increase of approximately $11,000 related to a
refund of prior oil sales the 1985-2 Program paid during 1997. Volumes of
oil and gas sold decreased 278 barrels and
18
<PAGE>
6,244 Mcf, respectively, for the six months ended June 30, 1998 as
compared to the six months ended June 30, 1997. The decrease in volumes of
gas sold resulted primarily from positive prior period volume adjustments
made by purchasers on several wells for the six months ended June 30,
1997. Average oil and gas prices decreased to $13.38 per barrel and $1.97
per Mcf, respectively, for the six months ended June 30, 1998 from $19.31
per barrel and $2.23 per Mcf, respectively, for the six months ended June
30, 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $13,270 (59.0%) for the six months ended June
30, 1998 as compared to the six months ended June 30, 1997. This increase
resulted primarily from credits received from the operator on one well
during the six months ended June 30, 1997 for prior period lease operating
expenses. As a percentage of oil and gas sales, these expenses increased
to 50.4% for the six months ended June 30, 1998 from 24.0% for the six
months ended June 30, 1997. This percentage increase was primarily due to
the dollar increase in oil and gas production expenses and the decrease in
the average prices of oil and gas sold during the six months ended June
30, 1998 as compared to the six months ended June 30, 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $1,464 (23.1%) for the six months ended June 30, 1998 as
compared to the six months ended June 30, 1997. This decrease resulted
primarily from the decrease in volumes of oil and gas sold during the six
months ended June 30, 1998 as compared to the six months ended June 30,
1997 and decreases in the oil and gas prices used in the valuation of
reserves at June 30, 1998 as compared to June 30, 1997. As a percentage of
oil and gas sales, this expense remained relatively constant at 6.9% for
the six months ended June 30, 1998 and 6.8% for the six months ended June
30, 1997.
General and administrative expenses decreased $2,792 (8.7%) for the six
months ended June 30, 1998 as compared to the six months ended June 30,
1997. As a percentage of oil and gas sales, these expenses increased to
41.2% for the six months ended June 30, 1998 from 34.2% for the six months
ended June 30, 1997. This percentage increase was primarily due to the
decrease in oil and gas sales discussed above.
19
<PAGE>
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 1985-1 Program's
financial statements as of June 30, 1998 and for the six
months ended June 30, 1998, filed herewith.
27.2 Financial Data Schedule containing summary financial
information extracted from the 1985-2 Program's
financial statements as of June 30, 1998 and for the six
months ended June 30, 1998, filed herewith.
All other exhibits are omitted as inapplicable.
(b) Reports on Form 8-K.
None.
20
<PAGE>
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 1985-1 LIMITED
PARTNERSHIP
DYCO OIL AND GAS PROGRAM 1985-2 LIMITED
PARTNERSHIP
(Registrant)
BY: DYCO PETROLEUM CORPORATION
General Partner
Date: August 11, 1998 By: /s/Dennis R. Neill
-------------------------------
(Signature)
Dennis R. Neill
President
Date: August 11, 1998 By: /s/Patrick M. Hall
-------------------------------
(Signature)
Patrick M. Hall
Chief Financial Officer
21
<PAGE>
INDEX TO EXHIBITS
NUMBER DESCRIPTION
- ------ -----------
27.1 Financial Data Schedule containing summary financial information
extracted from the Dyco Oil and Gas Program 1985-1 Limited
Partnership's financial statements as of June 30, 1998 and for the
six months ended June 30, 1998, filed herewith.
27.2 Financial Data Schedule containing summary financial information
extracted from the Dyco Oil and Gas Program 1985-2 Limited
Partnership's financial statements as of June 30, 1998 and for the
six months ended June 30, 1998, filed herewith.
All other exhibits are omitted as inapplicable.
22
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000751255
<NAME> DYCO OIL & GAS PROGRAM 1985-1 LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 64,246
<SECURITIES> 0
<RECEIVABLES> 47,939
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 112,185
<PP&E> 20,980,422
<DEPRECIATION> 20,855,012
<TOTAL-ASSETS> 252,029
<CURRENT-LIABILITIES> 19,729
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 208,345
<TOTAL-LIABILITY-AND-EQUITY> 252,029
<SALES> 169,022
<TOTAL-REVENUES> 170,143
<CGS> 0
<TOTAL-COSTS> 98,326
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 71,817
<INCOME-TAX> 0
<INCOME-CONTINUING> 71,817
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71,817
<EPS-PRIMARY> 17.34
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000751256
<NAME> DYCO OIL & GAS PROGRAM 1985-2 LIMITED PARTNERHIP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 7,165
<SECURITIES> 0
<RECEIVABLES> 20,046
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,211
<PP&E> 22,431,130
<DEPRECIATION> 22,387,736
<TOTAL-ASSETS> 118,765
<CURRENT-LIABILITIES> 4,718
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 106,532
<TOTAL-LIABILITY-AND-EQUITY> 118,765
<SALES> 70,927
<TOTAL-REVENUES> 72,681
<CGS> 0
<TOTAL-COSTS> 69,883
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,798
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,798
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,798
<EPS-PRIMARY> 0.64
<EPS-DILUTED> 0
</TABLE>
