<PAGE>
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, 1996 0-16331
DYCO OIL AND GAS PROGRAM 1986-X
(A LIMITED PARTNERSHIP)
(Exact Name of Registrant as specified in its charter)
Minnesota 41-1565819
(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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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DYCO OIL AND GAS PROGRAM 1986-X LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
1996 1995
-------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 16,673 $ 18,661
Accrued oil and gas sales, including
$23,100 due from related parties
in 1995 (Note 2) 29,414 25,685
-------- --------
Total current assets $ 46,087 $ 44,346
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 67,071 82,402
DEFERRED CHARGE 13,956 13,956
-------- --------
$127,114 $140,704
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 4,236 $ 4,622
-------- --------
Total current liabilities $ 4,236 $ 4,622
ACCRUED LIABILITY 9,719 9,719
PARTNERS' CAPITAL:
General Partner, issued and
outstanding, 21 units 1,131 1,263
Limited Partners, issued and
outstanding 2,000 units 112,028 125,100
-------- --------
Total Partners' capital $113,159 $126,363
-------- --------
$127,114 $140,704
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1986-X LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
1996 1995
------- --------
REVENUES:
Oil and gas sales, including
$31,506 of sales to related
parties in 1995 (Note 2) $44,121 $34,195
Interest 415 239
------- -------
$44,536 $34,434
COST AND EXPENSES:
Oil and gas production $16,562 $16,041
Depreciation, depletion, and
amortization of oil and gas
properties 5,169 6,404
General and administrative (Note 2) 5,543 6,038
------- -------
$27,274 $28,483
------- -------
NET INCOME $17,262 $ 5,951
======= =======
GENERAL PARTNER (1%) - net
income $ 173 $ 60
======= =======
LIMITED PARTNERS (99%) - net
income $17,089 $ 5,891
======= =======
NET INCOME PER UNIT $ 9 $ 3
======= =======
UNITS OUTSTANDING 2,021 2,021
======= =======
The accompanying condensed notes are an
integral part of these financial statements.
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<PAGE>
DYCO OIL AND GAS PROGRAM 1986-X LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
1996 1995
------- --------
REVENUES:
Oil and gas sales, including
$58,613 of sales to related
parties in 1995 (Note 2) $91,094 $67,357
Interest 568 339
------- -------
$91,662 $67,696
COST AND EXPENSES:
Oil and gas production $30,881 $34,331
Depreciation, depletion, and
amortization of oil and gas
properties 11,201 12,532
General and administrative (Note 2) 12,259 12,652
------- -------
$54,341 $59,515
------- -------
NET INCOME $37,321 $ 8,181
======= =======
GENERAL PARTNER (1%) - net
income $ 373 $ 82
======= =======
LIMITED PARTNERS (99%) - net
income $36,948 $ 8,099
======= =======
NET INCOME PER UNIT $ 18 $ 4
======= =======
UNITS OUTSTANDING 2,021 2,021
======= =======
The accompanying condensed notes are an
integral part of these financial statements.
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<PAGE>
DYCO OIL AND GAS PROGRAM 1986-X LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
1996 1995
-------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $37,321 $ 8,181
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 11,201 12,532
(Increase) decrease in accrued
oil and gas sales ( 3,729) 5,201
Increase (decrease) in accounts
payable ( 386) 636
------- -------
Net cash provided by operating
activities $44,407 $26,550
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties $ - ($ 816)
Retirements of oil and gas
properties 4,130 -
------- -------
Net cash provided (used) by
investing activities $ 4,130 ($ 816)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($50,525) $ -
------- -------
Net cash used by financing
activities ($50,525) $ -
------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 1,989) $25,734
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 18,661 10,512
------- -------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $16,673 $36,246
======= =======
The accompanying condensed notes are an
integral part of these financial statements.
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<PAGE>
DYCO OIL AND GAS PROGRAM 1986-X LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheet as of June 30, 1996, statements of operations
for the three and six months ended June 30, 1996 and 1995, and
statements of cash flows for the six months ended June 30, 1996
and 1995 have been prepared by Dyco Petroleum Corporation
("Dyco"), the General Partner of the Dyco Oil and Gas Program
1986-X 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 June 30, 1996, results of operations for
the three and six months ended June 30, 1996 and 1995, and
changes in cash flows for the six months ended June 30, 1996 and
1995 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, 1995. The results of operations for the
period ended June 30, 1996 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. In the event the
unamortized cost of oil and gas properties being amortized
exceeds the full cost 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 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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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 June 30, 1996 and 1995 such expenses totaled $5,543 and
$6,038, respectively, of which $4,020 and $4,020 were paid to
Dyco. During the six months ended June 30, 1996 and 1995 such
expenses totaled $12,259 and $12,652, respectively, of which
$8,040 and $8,040 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 sold gas at market prices to Premier Gas Company
("Premier") and Premier then resold such gas to third parties at
market prices. Premier was an affiliate of the Program until
December 6, 1995. During the three months ended June 30, 1995
these sales totaled $31,506. During the six months ended June
30, 1995 these sales totaled $58,613. At December 31, 1995,
accrued oil and gas sales included $23,100 due from Premier.
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<PAGE>
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. Over the last several years, the
domestic energy industry and the Program have contended with
volatile, but generally low, oil and gas prices. Over the past
few years, the oil and gas market appears to have moved from
periods of relative stability in supply and demand to excess
supply or weakened demand. These trends have led to the
volatility in pricing and demand noted over the past years.
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 JUNE 30, 1996 AS COMPARED TO THE THREE MONTHS
ENDED JUNE 30, 1995.
Three months ended June 30,
---------------------------
1996 1995
------- -------
Oil and gas sales $44,121 $34,195
Oil and gas production expenses $16,562 $16,041
Barrels produced 22 125
Mcf produced 20,996 23,502
Average price/Bbl $ 17.32 $ 17.05
Average price/Mcf $ 2.08 $ 1.36
As shown in the table above, oil and gas sales increased $9,926
(29.0%) for the three months ended June 30, 1996 as compared to
the three months ended June 30, 1995. Of this increase, $16,921
was related to the increase in the average price of natural gas
sold, partially offset by a $6,996 decrease related to the
decreases in the volumes of oil and natural gas sold. Volumes of
oil and natural gas sold decreased by 103 barrels and 2,506 Mcf,
respectively, for the three months ended June 30, 1996 as
compared to the three months ended June 30, 1995. The decrease
in natural gas and oil production was primarily the result of a
normal decline in production from diminished reserves. Average
oil prices increased to an average of $17.32 per barrel for the
three months ended June 30, 1996 from $17.05 per barrel for the
three months ended June 30, 1995, while the average price of
natural gas sold increased to $2.08 per Mcf for the three months
ended June 30, 1996 from $1.36 per Mcf for the three months ended
June 30, 1995.
-8-
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Oil and gas production expenses (including lease operating
expenses and production taxes) remained relatively constant for
the three months ended June 30, 1996 as compared to the three
months ended June 30, 1995. As a percentage of oil and gas
sales, these expenses decreased to 37.5% for the three months
ended June 30, 1996 from 46.9% for the three months ended June
30, 1995. This percentage decrease was primarily the result of
the increase in the average price of natural gas sold during the
three months ended June 30, 1996 as compared to the three months
ended June 30, 1995.
Depreciation, depletion, and amortization of oil and gas
properties decreased $1,235 for the three months ended June 30,
1996 as compared to the three months ended June 30, 1995. This
decrease was primarily a result of decreases in the volumes of
oil and natural gas sold. As a percentage of oil and gas sales,
this expense decreased to 11.7% for the three months ended June
30, 1996 from 18.7% for the three months ended June 30, 1995.
This percentage decrease was primarily the result of the increase
in the average price of natural gas sold during the three months
ended June 30, 1996 as compared to the three months ended June
30, 1995.
General and administrative expenses decreased $495 for the three
months ended June 30, 1996 as compared to the three months ended
June 30, 1995. This decrease was primarily due to a decrease in
printing and postage expenses during the three months ended June
30, 1996 as compared to the three months ended June 30, 1995. As
a percentage of oil and gas sales, these expenses decreased to
12.6% for the three months ended June 30, 1996 from 17.7% for the
three months ended June 30, 1995. This percentage decrease was
primarily the result of the increase in the average price of
natural gas sold during the three months ended June 30, 1996 as
compared to the three months ended June 30, 1995.
SIX MONTHS ENDED JUNE 30, 1996 AS COMPARED TO THE SIX MONTHS
ENDED JUNE 30, 1995.
Six months ended June 30,
---------------------------
1996 1995
------- -------
Oil and gas sales $91,094 $67,357
Oil and gas production expenses $30,881 $34,331
Barrels produced 190 245
Mcf produced 45,181 47,934
Average price/Bbl $ 17.76 $ 16.63
Average price/Mcf $ 1.94 $ 1.32
As shown in the table above, oil and gas sales increased $23,737
(35.4%) for the six months ended June 30, 1996 as compared to the
six months ended June 30, 1995. Of this increase, $29,719 was
related to the increase in the average price of natural gas sold,
partially offset by a $5,341 decrease related to the decrease in
the volumes of natural gas sold. Volumes of oil and natural gas
sold decreased by 55 barrels and 2,753 Mcf, respectively, for the
six months ended June 30, 1996 as compared to the six months
ended June 30, 1995. Average oil and natural gas prices
increased to $17.76 per barrel and $1.94 per Mcf, respectively,
for the six months ended June 30, 1996 from $16.63 per barrel and
$1.32 per Mcf, respectively, for the six months ended June 30,
1996.
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<PAGE>
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased $3,450 for the six
months ended June 30, 1996 as compared to the six months ended
June 30, 1995. This decrease was primarily due to workover
expenses incurred on one well during the six months ended June
30, 1995 in order to improve the recovery of reserves. As a
percentage of oil and gas sales, these expenses decreased to
33.9% for the six months ended June 30, 1996 from 51.0% for the
six months ended June 30, 1995. This percentage decrease was
primarily the result of the increases in the average prices of
oil and natural gas sold for the six months ended June 30, 1996
as compared to the six months ended June 30, 1995.
Depreciation, depletion, and amortization of oil and gas
properties decreased $1,331 for the six months ended June 30,
1996 as compared to the six months ended June 30, 1995. This
decrease was primarily a result of decreases in volumes of oil
and natural gas sold. As a percentage of oil and gas sales, this
expense decreased to 12.3% for the six months ended June 30, 1996
from 18.6% for the six months ended June 30, 1995. This
percentage decrease was primarily the result of the increases in
the average prices of oil and natural gas sold for the six months
ended June 30, 1996 as compared to the six months ended June 30,
1995.
General and administrative expenses remained relatively constant
for the six months ended June 30, 1996 as compared to the six
months ended June 30, 1995. As a percentage of oil and gas
sales, these expenses decreased to 13.5% for the six months ended
June 30, 1996 from 18.8% for the six months ended June 30, 1995.
This percentage decrease was primarily the result of increases in
the average prices of oil and natural gas sold for the six months
ended June 30, 1996 as compared to the six months ended June 30,
1995.
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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 Program's
financial statements as of June 30, 1996 and for
the six months ended June 30, 1996, filed
herewith.
(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-X LIMITED
PARTNERSHIP
(Registrant)
By: DYCO PETROLEUM CORPORATION
General Partner
Date: August 6, 1996 By: /s/Dennis R. Neill
------------------------------
(Signature)
Dennis R. Neill
President
Date: August 6, 1996 By: /s/Drew S. Phillips
------------------------------
(Signature)
Drew S. Phillips
Chief Financial Officer
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INDEX TO EXHIBITS
-----------------
NUMBER DESCRIPTION
- ------ -----------
27.1 Financial Data Schedule containing summary financial
information extracted from the Dyco Oil and Gas Program
1986-X Limited Partnership's financial statements as of June
30, 1996 and for the six months ended June 30, 1996, filed
herewith.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000803095
<NAME> DYCO OIL AND GAS PROGRAM 1986-X LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 16,673
<SECURITIES> 0
<RECEIVABLES> 29,414
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 46,087
<PP&E> 9,189,048
<DEPRECIATION> 9,121,977
<TOTAL-ASSETS> 127,114
<CURRENT-LIABILITIES> 4,236
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 113,159
<TOTAL-LIABILITY-AND-EQUITY> 127,114
<SALES> 91,094
<TOTAL-REVENUES> 91,662
<CGS> 0
<TOTAL-COSTS> 54,341
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 37,321
<INCOME-TAX> 0
<INCOME-CONTINUING> 37,321
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,321
<EPS-PRIMARY> 18
<EPS-DILUTED> 0
</TABLE>
