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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 September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-15527
COASTAL 1986 DRILLING PROGRAM, LTD.
(Exact name of registrant as specified in its charter)
Texas 76-0164393
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 877-1400
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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, 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.
The financial statements of the Coastal 1986 Drilling Program, Ltd., a
Texas limited partnership (the "Program"), are presented herein and are
unaudited, except for balances as of December 31, 1994, and therefore are
subject to year-end adjustments; however, all adjustments which are of a normal
recurring nature and, in the opinion of management, necessary for a fair
statement of the results of operations for the periods covered have been made.
Such results are not necessarily indicative of results to be expected for the
year due to seasonal variations and market conditions affecting gas and oil
sales and corresponding unit prices.
COASTAL 1986 DRILLING PROGRAM, LTD.
BALANCE SHEET
(Thousands of Dollars)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1995 1994
-------- ---------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents .................................................. $ 96 $ 134
Accounts receivable - affiliates ........................................... 53 88
-------- ---------
Total Current Assets .................................................... 149 222
-------- ---------
Gas and Oil Properties - at full-cost ......................................... 15,721 15,682
Less accumulated depreciation and amortization ............................. 15,004 14,708
-------- ---------
717 974
-------- ---------
$ 866 $ 1,196
======== =========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Accounts payable - affiliates .............................................. $ 186 $ 167
Partners' Capital ............................................................. 680 1,029
-------- ---------
$ 866 $ 1,196
======== =========
</TABLE>
See Note to Financial Statements.
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<PAGE>
COASTAL 1986 DRILLING PROGRAM, LTD.
STATEMENT OF PARTNERS' CAPITAL
(Thousands of Dollars)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
(Unaudited)
<S> <C> <C>
General Partner:
Balance, beginning of period ................................................ $ 10 $ 15
Earnings (loss).............................................................. (2) 1
Distributions ............................................................... (1) (4)
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Balance, end of period ................................................... 7 12
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Limited Partners:
Balance, beginning of period ................................................ 1,019 1,511
Earnings (loss).............................................................. (227) 50
Distributions ............................................................... (119) (311)
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Balance, end of period ................................................... 673 1,250
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$ 680 $ 1,262
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</TABLE>
STATEMENT OF OPERATIONS
(Thousands of Dollars, Except per Limited Partnership Unit)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1995 1994 1995 1994
---------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Sale of gas and oil ........................... $ 88 $ 151 $ 330 $ 703
Interest ...................................... - 1 - 7
---------- ----------- ----------- -----------
88 152 330 710
---------- ----------- ----------- -----------
Costs and Expenses:
Lease operating ............................... 64 69 202 281
Administrative fee ............................ 20 20 61 61
Depreciation and amortization ................. 200 70 296 317
---------- ----------- ----------- -----------
284 159 559 659
---------- ----------- ----------- -----------
Net Earnings (Loss) .............................. $ (196) $ (7) $ (229) $ 51
========== =========== =========== ===========
Net Earnings (Loss) Per Limited
Partnership Unit .............................. $ (16.17) $ (.58) $ (18.89) $ 4.21
========== =========== =========== ===========
</TABLE>
See Note to Financial Statements.
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<PAGE>
COASTAL 1986 DRILLING PROGRAM, LTD.
STATEMENT OF CASH FLOWS
(Thousands of Dollars)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
(Unaudited)
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings (loss).......................................................... $ (229) $ 51
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Adjustments to reconcile net earnings (loss)
to net cash provided by operating activities:
Depreciation and amortization.......................................... 296 317
(Increase) decrease in accounts receivable - affiliates................ 35 (6)
Increase (decrease) in accounts payable - affiliates................... 19 (255)
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Total adjustments................................................ 350 56
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Net cash provided by operating activities..................... 121 107
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Cash Flows From Investing Activities:
Capital expenditures......................................................... (40) (13)
Proceeds from the sale of property and equipment............................. 1 1
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Net cash used in investing activities..................................... (39) (12)
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Cash Flows From Financing Activities:
Distributions paid........................................................... (120) (315)
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Net decrease in cash and cash equivalents................................. (38) (220)
Cash and cash equivalents at beginning of the period...................... 134 411
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Cash and cash equivalents at end of the period............................ $ 96 $ 191
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</TABLE>
NOTE TO FINANCIAL STATEMENTS
For additional information relative to operations and financial position,
reference is made to the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994. For purposes of the Statement of Cash Flows, cash
equivalents include time deposits, certificates of deposit and all highly liquid
instruments with original maturities of three months or less.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
A cash distribution of $1.05 per limited partnership unit was made for the
third quarter of 1995, bringing total distributions since the Program began
operations to $952.85 per $1,000 unit. Partnership Payout was achieved in
October 1992.
Results of Operations
The Program's results of operations for the comparable three and nine
month periods ended September 30, 1995 and 1994 are as follows:
Revenues from the sale of production in the third quarter of 1995
decreased $63,000 (42%) from the 1994 third quarter. Crude oil, condensate and
natural gas liquids sales decreased $9,000 (14%) as production volumes decreased
to 3,642 barrels in the third quarter of 1995 from 3,910 barrels in the same
quarter of 1994 and the weighted average price, net of severance taxes,
decreased to $14.02 per barrel in the third quarter of 1995 from $15.41 per
barrel in the same quarter of 1994. Natural gas sales decreased $54,000 (62%) as
production volumes decreased to 29 million cubic feet for the third quarter of
1995 from 56 million cubic feet in the same quarter of 1994, and the average
price, net of severance taxes, decreased to $0.90 per thousand cubic feet in the
third quarter of 1995 from $1.26 in the same quarter of 1994.
The decrease in natural gas volumes in the third quarter of 1995 was
primarily attributable to decreased production from the Bitter Creek Field in
Utah due to market conditions in the area. The decrease in crude oil, condensate
and natural gas liquids volumes in the third quarter of 1995 was due primarily
to normal production declines.
Lease operating expense decreased $5,000 (7%) in the third quarter of 1995
primarily due to decreased production taxes. Depreciation and amortization
expense increased $130,000 (186%) in the third quarter of 1995 due primarily to
a non-cash charge of $165,000 being recorded in the third quarter of 1995 in
order that the net investment in gas and oil properties would not exceed the
estimated future net revenues from proved reserves, computed at current prices,
and discounted at 10% as required under the full-cost method of accounting for
gas and oil properties, partially offset by decreased equivalent production
volumes.
Revenues from the sale of production in the first nine months of 1995
decreased $373,000 (53%) from the first nine months of 1994. Natural gas sales
decreased $372,000 (70%) as production volumes decreased to 125 million cubic
feet in the first nine months of 1995 from 287 million cubic feet in the first
nine months of 1994, and the average price, net of severance taxes, decreased to
$1.00 per thousand cubic feet in the first nine months of 1995 from $1.47 in the
first nine months of 1994. Crude oil, condensate and natural gas liquids sales
decreased $1,000 as production volumes decreased to 10,710 barrels in the first
nine months of 1995 from 11,853 barrels in the first nine months of 1994,
partially offset by an increase in the weighted average price, net of severance
taxes, to $14.93 per barrel in the first nine months of 1995 from $13.61 per
barrel in the first nine months of 1994.
The decrease in natural gas volumes in the first nine months of 1995 was
primarily attributable to decreased production from the Bitter Creek Field in
Utah due to market conditions in the area. The reduction in crude oil,
condensate and natural gas liquids volumes was primarily due to normal
production declines.
Lease operating expense decreased $79,000 (28%) in the first nine months
of 1995 primarily due to decreased production taxes. Depreciation and
amortization expense decreased $21,000 (7%) in the same period primarily due to
decreased equivalent production volumes, partially offset by a non-cash charge
of $165,000 being recorded in the third quarter of 1995 in order that the net
investment in gas and oil properties would not exceed the estimated future net
revenues from proved reserves, computed at current prices, and discounted at 10%
as required under the full-cost method of accounting for gas and oil properties.
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<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None
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.
(a) Exhibits.
None.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended September
30, 1995.
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.
COASTAL 1986 DRILLING PROGRAM, LTD.
(Registrant)
By Its General Partner,
Coastal Limited Ventures, Inc.
Date: November 13, 1995 By: COBY C. HESSE
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Coby C. Hesse
Senior Vice President
(As Authorized Officer and
Chief Accounting Officer)
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