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 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
------ ------
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DYCO OIL AND GAS PROGRAM 1985-1 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
2000 1999
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 26,341 $ 68,872
Accrued oil and gas sales 82,246 55,595
-------- --------
Total current assets $108,587 $124,467
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 88,521 98,289
DEFERRED CHARGE 9,627 9,627
-------- --------
$206,735 $232,383
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 5,063 $ 5,053
-------- --------
Total current liabilities $ 5,063 $ 5,053
ACCRUED LIABILITY $ 33,938 $ 33,938
PARTNERS' CAPITAL:
General Partner, 41 general
partner units $ 1,677 $ 1,934
Limited Partners, issued and
outstanding, 4,100 Units 166,057 191,458
-------- --------
Total Partners' capital $167,734 $193,392
-------- --------
$206,735 $232,383
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
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<PAGE>
DYCO OIL AND GAS PROGRAM 1985-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
2000 1999
-------- --------
REVENUES:
Oil and gas sales $122,219 $73,768
Interest 1,150 961
-------- -------
$123,369 $74,729
COSTS AND EXPENSES:
Oil and gas production $ 31,792 $21,140
Depreciation, depletion, and
amortization of oil and gas
properties 3,339 2,361
General and administrative
(Note 2) 11,270 11,977
-------- -------
$ 46,401 $35,478
-------- -------
NET INCOME $ 76,968 $39,251
======== =======
GENERAL PARTNER (1%) - net income $ 770 $ 392
======== =======
LIMITED PARTNERS (99%) - net income $ 76,198 $38,859
======== =======
NET INCOME PER UNIT $ 18.58 $ 9.48
======== =======
UNITS OUTSTANDING 4,141 4,141
======== =======
The accompanying condensed notes are an integral part of
these financial statements.
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<PAGE>
DYCO OIL AND GAS PROGRAM 1985-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
2000 1999
-------- ---------
REVENUES:
Oil and gas sales $325,961 $203,160
Interest 2,628 2,046
-------- --------
$328,589 $205,206
COSTS AND EXPENSES:
Oil and gas production $ 78,532 $ 61,511
Depreciation, depletion, and
amortization of oil and gas
properties 9,768 12,587
General and administrative
(Note 2) 38,192 41,505
-------- --------
$126,492 $115,603
-------- --------
NET INCOME $202,097 $ 89,603
======== ========
GENERAL PARTNER (1%) - net income $ 2,021 $ 896
======== ========
LIMITED PARTNERS (99%) - net income $200,076 $ 88,707
======== ========
NET INCOME PER UNIT $ 48.80 $ 21.64
======== ========
UNITS OUTSTANDING 4,141 4,141
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
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DYCO OIL AND GAS PROGRAM 1985-1 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 $202,097 $ 89,603
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 9,768 12,587
Increase in accrued oil and
gas sales ( 26,651) ( 13,142)
Increase (decrease) in accounts
payable 10 ( 1,473)
-------- --------
Net cash provided by operating
activities $185,224 $ 87,575
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by investing
activities $ - $ -
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($227,755) ($103,525)
-------- --------
Net cash used by financing
activities ($227,755) ($103,525)
-------- --------
NET DECREASE IN CASH AND CASH
EQUIVALENTS ($ 42,531) ($ 15,950)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 68,872 31,245
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 26,341 $ 15,295
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
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<PAGE>
DYCO OIL AND GAS PROGRAM 1985-2 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
2000 1999
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 54,135 $ 40,962
Accrued oil and gas sales 32,712 82,496
-------- --------
Total current assets $ 86,847 $123,458
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 27,163 33,173
DEFERRED CHARGE 16,256 16,256
-------- --------
$130,266 $172,887
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 2,160 $ 4,647
-------- --------
Total current liabilities $ 2,160 $ 4,647
ACCRUED LIABILITY $ 3,227 $ 3,227
PARTNERS' CAPITAL:
General Partner, 44 general
partner units $ 1,248 $ 1,650
Limited Partners, issued and
outstanding, 4,330 Units 123,631 163,363
-------- --------
Total Partners' capital $124,879 $165,013
-------- --------
$130,266 $172,887
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
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<PAGE>
DYCO OIL AND GAS PROGRAM 1985-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
2000 1999
-------- -------
REVENUES:
Oil and gas sales $55,288 $41,315
Interest 366 187
------- -------
$55,654 $41,502
COSTS AND EXPENSES:
Oil and gas production $11,095 $14,397
Depreciation, depletion, and
amortization of oil and gas
properties 884 1,162
General and administrative
(Note 2) 7,831 11,406
------- -------
$19,810 $26,965
------- -------
NET INCOME $35,844 $14,537
======= =======
GENERAL PARTNER (1%) - net income $ 358 $ 146
======= =======
LIMITED PARTNERS (99%) - net income $35,486 $14,391
======= =======
NET INCOME PER UNIT $ 8.19 $ 3.32
======= =======
UNITS OUTSTANDING 4,374 4,374
======= =======
The accompanying condensed notes are an integral part of
these financial statements.
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<PAGE>
DYCO OIL AND GAS PROGRAM 1985-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
2000 1999
-------- -------
REVENUES:
Oil and gas sales $138,206 $99,371
Interest 1,659 478
Gain on sale of oil and gas
properties 55,856 -
-------- -------
$195,721 $99,849
COSTS AND EXPENSES:
Oil and gas production $ 30,680 $43,727
Depreciation, depletion, and
amortization of oil and gas
properties 2,417 4,663
General and administrative
(Note 2) 27,798 39,742
-------- -------
$ 60,895 $88,132
-------- -------
NET INCOME $134,826 $11,717
======== =======
GENERAL PARTNER (1%) - net income $ 1,348 $ 118
======== =======
LIMITED PARTNERS (99%) - net income $133,478 $11,599
======== =======
NET INCOME PER UNIT $ 30.82 $ 2.68
======== =======
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 NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
2000 1999
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $134,826 $11,717
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 2,417 4,663
Gain on sale of oil and gas
properties ( 55,856) -
(Increase) decrease in accrued oil
and gas sales 49,784 ( 12,921)
Decrease in accounts payable ( 2,487) ( 636)
-------- -------
Net cash provided by operating
activities $128,684 $ 2,823
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of oil and
gas properties $ 59,449 $ -
Additions to oil and gas properties - ( 12)
-------- -------
Net cash provided (used) by
investing activities $ 59,449 ($ 12)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($174,960) $ -
-------- -------
Net cash used by financing
activities ($174,960) $ -
-------- -------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 13,173 $ 2,811
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 40,962 26,412
-------- -------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 54,135 $29,223
======== =======
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
SEPTEMBER 30, 2000
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheets 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 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 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 Programs' 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.
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
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<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 1985-2 Program sold one well during the
nine months ended September 30, 2000 for $59,449 representing
approximately 11% of its total reserves. The proceeds from these sales
would have reduced the net book value of the oil and gas properties by
185%, significantly altering the 1985-2 Program's capitalized cost/proved
reserves relationship. Accordingly, capitalized costs were reduced by
approximately 11% and a gain on sale of oil and gas properties of $55,856
was recognized.
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 September 30, 2000 and 1999 the
1985-1 Program incurred such expenses totaling $11,270 and $11,977,
respectively, of which $8,661 and $10,710, respectively, were paid each
period to Dyco and its affiliates. During the nine months ended September
30, 2000 and 1999 the 1985-1 Program incurred such expenses totaling
$38,192 and $41,505, respectively, of which $25,983 and $32,130,
respectively, were paid each period to Dyco and its affiliates. During the
three months ended September 30, 2000 and 1999 the 1985-2 Program incurred
such expenses totaling $7,831 and $11,406 respectively, of which $5,142
and $10,068, respectively, were paid each period to Dyco and its
affiliates. During the nine months ended September 30, 2000 and 1999 the
1985-2 Program incurred such expenses totaling $27,798 and $39,742,
respectively, of which $15,426 and $30,204, respectively, were paid each
period to Dyco and its affiliates.
-11-
<PAGE>
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.
-12-
<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.
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<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.
Management believes that cash for ordinary operational purposes will be
provided by current oil and gas production.
The 1985-2 Program's Statement of Cash Flows for the nine months ended
September 30, 2000 includes proceeds from the sale of oil and gas
properties during the second quarter of 2000. These proceeds were included
in the Program's cash distributions paid in June 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 Programs' 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
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. 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.
-14-
<PAGE>
1985-1 PROGRAM
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 $122,219 $73,768
Oil and gas production expenses $ 31,792 $21,140
Barrels produced 82 58
Mcf produced 29,942 30,417
Average price/Bbl $ 25.18 $ 21.40
Average price/Mcf $ 4.01 $ 2.38
As shown in the table above, total oil and gas sales increased $48,451
(65.7%) for the three months ended September 30, 2000 as compared to the
three months ended September 30, 1999. This increase was primarily related
to an increase in the average price of gas sold. Volumes of oil sold
increased 24 barrels, while volumes of gas sold decreased 475 Mcf for the
three months ended September 30, 2000 as compared to the three months
ended September 30, 1999. Average oil and gas prices increased to $25.18
per barrel and $4.01 per Mcf, respectively, for the three months ended
September 30, 2000 from $21.40 per barrel and $2.38 per Mcf, respectively,
for the three months ended September 30, 1999.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $10,652 (50.4%) for the three months ended
September 30, 2000 as compared to the three months ended September 30,
1999. This increase was primarily due to (i) an increase in production
taxes associated with the increase in oil and gas sales and (ii)
subsurface repair and maintenance expenses incurred on one well during the
three months ended September 30, 2000. As a percentage of oil and gas
sales, these expenses decreased to 26.0% for the three months ended
September 30, 2000 from 28.7% for the three months ended September 30,
1999.
Depreciation, depletion, and amortization of oil and gas properties
increased $978 (41.4%) 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 oil and gas prices used in the
valuation of remaining reserves at September 30, 1999 as compared to June
30, 1999. As a percentage of oil and gas sales, this expense decreased to
2.7% for the three months ended September 30, 2000 from 3.2%
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<PAGE>
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 $707 (5.9%) for the three
months ended September 30, 2000 as compared to the three months ended
September 30, 1999. As a percentage of oil and gas sales, these expenses
decreased to 9.2% for the three months ended September 30, 2000 from 16.2%
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 $325,961 $203,160
Oil and gas production expenses $ 78,532 $ 61,511
Barrels produced 168 257
Mcf produced 101,960 102,719
Average price/Bbl $ 26.56 $ 14.20
Average price/Mcf $ 3.15 $ 1.94
As shown in the table above, total oil and gas sales increased $122,801
(60.4%) for the nine months ended September 30, 2000 as compared to the
nine months ended September 30, 1999. This increase was primarily related
to an increase in the average price of gas sold. Volumes of oil and gas
sold decreased 89 barrels and 759 Mcf, respectively, 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 $26.56 per barrel and
$3.15 per Mcf, respectively, for the nine months ended September 30, 2000
from $14.20 per barrel and $1.94 per Mcf, respectively, for the nine
months ended September 30, 1999.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $17,021 (27.7%) for the nine months ended
September 30, 2000 as compared to the nine months ended September 30,
1999. This increase was primarily due to (i) an increase in production
taxes associated with the increase in oil and gas sales and (ii)
subsurface repair and maintenance expenses incurred on one well during the
nine months ended September 30, 2000. As a percentage of oil and gas
sales, these expenses decreased to 24.1% for the nine months ended
September 30, 2000 from 30.3% 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.
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<PAGE>
Depreciation, depletion, and amortization of oil and gas properties
decreased $2,819 (22.4%) for the nine months ended September 30, 2000 as
compared to the nine months ended September 30, 1999. This decrease was
primarily due to (i) an upward revision in the estimate of remaining gas
reserves at December 31, 1999 and (ii) increases in the oil and gas prices
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 3.0% for the nine months ended September 30, 2000
from 6.2% 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 and the dollar decrease in depreciation, depletion, and
amortization.
General and administrative expenses decreased $3,313 (8.0%) for the nine
months ended September 30, 2000 as compared to the nine months ended
September 30, 1999. As a percentage of oil and gas sales, these expenses
decreased to 11.7% for the nine months ended September 30, 2000 from 20.4%
for the nine months ended September 30, 1999. This percentage decrease was
primarily due to the increase in oil and gas sales.
1985-2 PROGRAM
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 $55,288 $41,315
Oil and gas production expenses $11,095 $14,397
Barrels produced 325 666
Mcf produced 11,146 10,803
Average price/Bbl $ 30.84 $ 20.95
Average price/Mcf $ 4.06 $ 2.53
As shown in the table above, total oil and gas sales increased $13,973
(33.8%) for the three months ended September 30, 2000 as compared to the
three months ended September 30, 1999. Of this increase, approximately
$3,000 and $17,000, respectively, were related to increases in the average
prices of oil and gas sold. These increases were partially offset by a
decrease of approximately $7,000 related to a decrease in volumes of oil
sold. Volumes of oil sold decreased 341 barrels, while volumes of gas sold
increased 343 Mcf for the three months ended September 30, 2000 as
compared to the three months ended September 30, 1999. The decrease in
volumes of oil sold was primarily due to the sale of one significant well
during early 2000.
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<PAGE>
Average oil and gas prices increased to $30.84 per barrel and $4.06 per
Mcf, respectively, for the three months ended September 30, 2000 from
$20.95 per barrel and $2.53 per Mcf, respectively, for the three months
ended September 30, 1999.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $3,302 (22.9%) for the three months ended
September 30, 2000 as compared to the three months ended September 30,
1999. This decrease was primarily due to the sale of one significant well
during early 2000. As a percentage of oil and gas sales, these expenses
decreased to 20.1% for the three months ended September 30, 2000 from
34.8% 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 and the dollar decrease in oil and gas production expenses.
Depreciation, depletion, and amortization of oil and gas properties
decreased $278 (23.9%) for the three months ended September 30, 2000 as
compared to the three months ended September 30, 1999. This decrease was
primarily due to upward revisions in the estimates of remaining oil and
gas reserves at December 31, 1999, which decrease was partially offset by
an increase 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 oil and gas prices used in the
valuation of remaining reserves at September 30, 1999 as compared to June
30, 1999. As a percentage of oil and gas sales, this expense decreased to
1.6% for the three months ended September 30, 2000 from 2.8% 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 and the
dollar decrease in depreciation, depletion, and amortization.
General and administrative expenses decreased $3,575 (31.3%) 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 1985-2 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
14.2% for the three months ended September 30, 2000 from 27.6% 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
and the dollar decrease in general and administrative expenses.
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<PAGE>
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 $138,206 $99,371
Oil and gas production expenses $ 30,680 $43,727
Barrels produced 1,302 2,223
Mcf produced 31,073 32,060
Average price/Bbl $ 29.00 $ 15.36
Average price/Mcf $ 3.23 $ 2.03
As shown in the table above, total oil and gas sales increased $38,835
(39.1%) for the nine months ended September 30, 2000 as compared to the
nine months ended September 30, 1999. Of this increase, approximately
$18,000 and $37,000, respectively, were related to increases in the
average prices of oil and gas sold. These increases were partially offset
by a decrease of approximately $14,000 related to a decrease in volumes of
oil sold. Volumes of oil and gas sold decreased 921 barrels and 987 Mcf,
respectively, for the nine months ended September 30, 2000 as compared to
the nine months ended September 30, 1999. The decrease in volumes of oil
sold was primarily due to (i) the sale of one significant well during
early 2000 and (ii) the release of stored production on one well during
early 1999 due to increased oil prices. Average oil and gas prices
increased to $29.00 per barrel and $3.23 per Mcf, respectively, for the
nine months ended September 30, 2000 from $15.36 per barrel and $2.03 per
Mcf, respectively, for the nine months ended September 30, 1999.
The 1985-2 Program sold one well during the nine months ended September
30, 2000 for $59,449 representing approximately 11% of its total reserves.
The proceeds from this sale would have reduced the net book value of the
1985-2 Program's oil and gas properties by 185%, significantly altering
the 1985-2 Program's capitalized cost/proved reserves relationship.
Accordingly, capitalized costs were reduced by approximately 11% and a
gain on sale of oil and gas properties of $55,856 was recognized. No such
sales occurred during 1999.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $13,047 (29.8%) for the nine months ended
September 30, 2000 as compared to the nine months ended September 30,
1999. This decrease was primarily due to (i) a decrease in repair and
maintenance expenses and compression expenses incurred on one well during
the nine months ended September 30, 2000 as compared to the nine months
ended September 30, 1999 and (ii) the
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<PAGE>
sale of one significant well during the nine months ended September 30,
2000. As a percentage of oil and gas sales, these expenses decreased to
22.2% for the nine months ended September 30, 2000 from 44.0% for the nine
months ended September 30, 1999. This percentage decrease was primarily
due to the increase in the average prices of oil and gas sold and the
dollar decrease in oil and gas production expenses.
Depreciation, depletion, and amortization of oil and gas properties
decreased $2,246 (48.2%) for the nine months ended September 30, 2000 as
compared to the nine months ended September 30, 1999. This decrease was
primarily due to (i) upward revisions in the estimates of remaining oil
and gas reserves at December 31, 1999 and (ii) increases in the oil and
gas prices 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 1.7% for the nine months ended September
30, 2000 from 4.7% 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 and the dollar decrease in depreciation,
depletion, and amortization.
General and administrative expenses decreased $11,944 (30.1%) 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 1985-2 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
20.1% for the nine months ended September 30, 2000 from 40.0% for the nine
months ended September 30, 1999. This percentage decrease was primarily
due to the increase in oil and gas sales and the dollar decrease in
general and administrative expenses.
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<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
The Programs do not hold any market risk sensitive instruments.
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<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 September 30, 2000 and for
the nine months ended September 30, 2000, filed
herewith.
27.2 Financial Data Schedule containing summary financial
information extracted from the 1985-2 Program'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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<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: 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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<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 September 30, 2000 and for
the nine months ended September 30, 2000, 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 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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