<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
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
March 31, 1995 0-16488 (1986-2)
DYCO OIL AND GAS PROGRAM 1986-2
(A LIMITED PARTNERSHIP)
(Exact Name of Registrant as specified in its charter)
Minnesota 41-1529976
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
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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DYCO OIL AND GAS PROGRAM 1986-2 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1995 1994
--------- ------------
CURRENT ASSETS:
Cash and cash equivalents . . . . . . $ 24,311 $ 21,615
Accrued oil and gas sales, including
$28,560 and $30,011 due from
related parties (Note 2) . . . . . . 35,424 41,509
-------- --------
Total current assets . . . . . . . $ 59,735 $ 63,124
NET OIL AND GAS PROPERTIES, utilizing
the full cost method . . . . . . . . . 252,805 268,130
DEFERRED CHARGE . . . . . . . . . . . . . 40,024 40,024
-------- --------
$352,564 $371,278
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . $ 6,759 $ 5,577
Gas imbalance payable . . . . . . . . 1,060 1,060
-------- --------
Total current liabilities . . . . . $ 7,819 $ 6,637
PARTNERS' CAPITAL:
General Partner, issued and outstanding
21 units . . . . . . . . . . . . . . 3,448 3,647
Limited Partners, issued and outstanding,
2,020 units . . . . . . . . . . . . 341,297 360,994
-------- --------
Total Partners' capital . . . . . . $344,745 $364,641
-------- --------
$352,564 $371,278
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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<PAGE>
DYCO OIL AND GAS PROGRAM 1986-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Unaudited)
1995 1994
--------- ---------
REVENUES:
Oil and gas sales, including
$54,525 and $78,104 of sales
to related parties (Note 2) . . . . $82,394 $112,575
Interest . . . . . . . . . . . . . . . 265 161
------- --------
$82,659 $112,736
------- --------
COSTS AND EXPENSES:
Oil and gas production . . . . . . . . $34,955 $ 28,192
Depreciation, depletion, and amortization
of oil and gas properties . . . . . 16,780 31,481
General and administrative (Note 2) . 10,000 9,685
------- --------
$61,735 $ 69,358
------- --------
NET INCOME . . . . . . . . . . . . . . . $20,924 $ 43,378
======= ========
GENERAL PARTNER (1%) - net income . . . . $ 209 $ 434
======= ========
LIMITED PARTNERS (99%) - net income . . $20,715 $ 42,944
======= ========
NET INCOME PER UNIT . . . . . . . . . . . $ 10 $ 21
======= ========
UNITS OUTSTANDING . . . . . . . . . . . . 2,041 2,041
======= ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1986-2 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Unaudited)
1995 1994
--------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . $20,924 $ 43,378
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion, and amortization
of oil and gas properties . . . . . 16,780 31,481
Increase in accounts receivable . . - ( 10,257)
Decrease in accrued oil and gas sales 6,085 1,963
Increase (decrease) in accounts payable 1,182 ( 461)
------- --------
Net cash provided by operating
activities $44,971 $ 66,104
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties . ($ 1,455) $ -
Retirements of oil and gas properties - 17,633
------- --------
Net cash (used) provided by investing
activities . . . . . . . . . . . ($ 1,455) $ 17,633
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions . . . . . . . . . . ($40,820) ($ 40,820)
------- --------
Net cash used by financing activities ($40,820) ($ 40,820)
------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 2,696 $ 42,917
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 21,615 14,757
------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $24,311 $ 57,674
======= ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1986-2 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheets as of March 31, 1995, statements of
operations for the three months ended March 31, 1995 and 1994,
and statements of cash flows for the three months ended March
31, 1995 and 1994 have been prepared by Dyco Petroleum
Corporation ("Dyco"), the General Partner of the Dyco Oil and
Gas Program 1986-2 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 March 31, 1995, and results of
operations and changes in cash flows for the three months ended
March 31, 1995 and 1994 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, 1994. The results of operations for the
period ended March 31, 1995 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. 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 year by the estimated future gross
income from the oil and gas properties and applying the
resulting rate to the net remaining costs of oil and gas
properties that have been capitalized, plus estimated future
development costs.
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<PAGE>
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 March 31, 1995 and 1994 such expenses totaled $10,000 and
$9,685, respectively, of which $7,341 and $7,341 were paid to
Dyco.
Affiliates of the Program are the operators of certain of the
Program's properties and their policy is to bill the Program for
all customary charges and cost reimbursements associated with
their activities, together with any compressor rentals,
consulting, or other services provided.
The Program sells gas at market prices to Premier Gas Company
("Premier"), a Division of Samson Natural Gas Company, and
Premier may then resell such gas to third parties at market
prices. During the three months ended March 31, 1995 and 1994
these sales totaled $54,525 and $78,104, respectively. At March
31, 1995 accrued oil and gas sales included $28,560 due from
Premier.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Net proceeds from the Program's operations less necessary
operating capital are distributed to investors on a
quarterly basis. The net proceeds from production are not
reinvested in productive assets, except to the extent that
producing wells are improved or where methods are employed
to permit more efficient recovery of the Program's reserves
which would result in a positive economic impact.
The Program's available capital from subscriptions has been
spent on oil and gas drilling activities. There should not
be any further material capital resource commitments in the
future. The Program has no bank debt commitments. Cash for
operational purposes will be provided by current oil and gas
production.
RESULTS OF OPERATIONS
---------------------
THREE MONTHS ENDED MARCH 31, 1995 AS COMPARED TO THE THREE
MONTHS ENDED MARCH 31, 1994.
Three Months ended March 31,
----------------------------
1995 1994
---- ----
Oil and gas sales $82,394 $112,575
Oil and gas production expenses $34,955 $ 28,192
Barrels produced 1,783 2,133
Mcf produced 39,970 39,910
Average price/Bbl $ 18.48 $ 16.84
Average price/Mcf $ 1.24 $ 1.92
As shown in the table, oil and natural gas sales decreased
26.8% for the three months ended March 31, 1995 as compared
to the three months ended March 31, 1994. This decrease was
due primarily to a decrease in the average price of natural
gas sold and a decrease in the volume of oil sold, partially
offset by an increase in the average price of oil sold.
Volumes of oil sold decreased by 350 barrels for the three
months ended March 31, 1995 as compared to the three months
ended March 31, 1994, while volumes of natural gas sold
remained relatively constant for the similar periods of
comparison. Average natural gas prices decreased to $1.24
per Mcf for the three months ended March 31, 1995 from $1.92
per Mcf for the three months ended March 31, 1994, while
average oil prices increased to $18.48 per barrel for the
three months ended March 31, 1995 from $16.84 per barrel for
the three months ended March 31, 1994.
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<PAGE>
Oil and gas production expenses (including lease operating
expenses and production taxes) increased $6,763 for the
three months ended March 31, 1995 as compared to the three
months ended March 31, 1994. This increase was primarily
due to workover charges on a well during the three months
ended March 31, 1995 to improve the recovery of reserves.
As a percentage of oil and gas sales, these expenses
increased to 42.4% for the three months ended March 31, 1995
from 25.0% for the three months ended March 31, 1994. This
percentage increase was primarily due to the dollar increase
in production expenses as discussed above and the decrease
in the average price of natural gas sold, partially offset
by an increase in the average price of oil sold during the
three months ended March 31, 1995 as compared to the three
months ended March 31, 1994.
Depreciation, depletion, and amortization of oil and gas
properties decreased $14,701 for the three months ended
March 31, 1995 as compared to the three months ended March
31, 1994. This decrease was primarily a result of a
significant upward revision in the estimate of the Program's
remaining oil and natural gas reserves. As a percentage of
oil and gas sales, this expense decreased to 20.4% for the
three months ended March 31, 1995 from 28.0% for the three
months ended March 31, 1994. This percentage decrease was
primarily a result of the dollar decrease in depreciation,
depletion, and amortization expense as discussed above and
an increase in the average price of oil sold, partially
offset by the decrease in the average price of natural gas
sold during the three months ended March 31, 1995 as
compared to the three months ended March 31, 1994.
General and administrative expenses remained relatively
constant for the three months ended March 31, 1995 as
compared to the three months ended March 31, 1994. As a
percentage of oil and gas sales, these expenses increased to
12.1% for the three months ended March 31, 1995 as compared
to 8.6% for the three months ended March 31, 1994. This
percentage increase was primarily due to the decrease in the
average price of natural gas sold, partially offset by the
increase in the average price of oil sold during the three
months ended March 31, 1995 as compared to the three months
ended March 31, 1994.
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<PAGE>
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(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 1986-2 LIMITED
PARTNERSHIP
(Registrant)
By: DYCO PETROLEUM CORPORATION
General Partner
Date: August 28, 1995 By: /s/Dennis R. Neill
-------------------------
(Signature)
Dennis R. Neill
Senior Vice President
Date: August 28, 1995 By: /s/Patrick M. Hall
------------------------------
(Signature)
Patrick M. Hall
Senior Vice President -
Controller
Principal Accounting Officer
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<PAGE>
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<ARTICLE> 5
<CIK> 0000778961
<NAME> DYCO OIL AND GAS PROGRAM 1986-2 LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 24,311
<SECURITIES> 0
<RECEIVABLES> 35,424
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 59,735
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 352,564
<CURRENT-LIABILITIES> 7,819
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 344,745
<TOTAL-LIABILITY-AND-EQUITY> 352,564
<SALES> 82,394
<TOTAL-REVENUES> 82,659
<CGS> 0
<TOTAL-COSTS> 61,735
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 20,924
<INCOME-TAX> 0
<INCOME-CONTINUING> 20,924
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,924
<EPS-PRIMARY> 10.00
<EPS-DILUTED> 0
</TABLE>
