<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
March 31, 1996 33-9203
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 organization) Number)
Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103
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(Address of principal executive offices) (Zip Code)
(918) 583-1791
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(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
March 31, December 31,
1996 1995
----------- ------------
CURRENT ASSETS:
Cash and cash equivalents . . . . . . $ 43,319 $ 18,661
Accrued oil and gas sales, including
$23,100 due from related parties
in 1995 (Note 2) . . . . . . . . . . 27,404 25,685
-------- --------
Total current assets . . . . . . . $ 70,723 $ 44,346
NET OIL AND GAS PROPERTIES, utilizing
the full cost method . . . . . . . . . 75,355 82,402
DEFERRED CHARGE . . . . . . . . . . . . . 13,956 13,956
-------- --------
$160,034 $140,704
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . $ 3,893 $ 4,622
-------- --------
Total current liabilities . . . . . $ 3,893 $ 4,622
ACCRUED LIABILITY . . . . . . . . . . . . $ 9,719 $ 9,719
PARTNERS' CAPITAL:
General Partner, issued and outstanding,
21 units . . . . . . . . . . . . . . $ 1,464 $ 1,263
Limited Partners, issued and outstanding,
2,000 units . . . . . . . . . . . . 144,958 125,100
-------- --------
Total Partners' capital . . . . . . $146,422 $126,363
-------- --------
$160,034 $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 MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
--------- ---------
REVENUES:
Oil and gas sales, including
$27,107 of sales to related
parties in 1995 (Note 2) . . . . . . $46,973 $33,162
Interest . . . . . . . . . . . . . . . 153 100
------- -------
$47,126 $33,262
------- -------
COSTS AND EXPENSES:
Oil and gas production . . . . . . . . $14,319 $18,290
Depreciation, depletion, and amortization of
oil and gas properties . . . . . . . 6,032 6,128
General and administrative (Note 2) . 6,716 6,614
------- -------
$27,067 $31,032
------- -------
NET INCOME . . . . . . . . . . . . . . . $20,059 $ 2,230
======= =======
GENERAL PARTNER (1%) - net income . . . . $ 201 $ 22
======= =======
LIMITED PARTNERS (99%) - net income . . . $19,858 $ 2,208
======= =======
NET INCOME PER UNIT . . . . . . . . . . . $ 10 $ 1
======= =======
UNITS OUTSTANDING . . . . . . . . . . . . 2,021 2,021
======= =======
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 CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . $20,059 $ 2,230
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation, depletion, and amortization
of oil and gas properties . . . . . . 6,032 6,128
(Increase) decrease in accrued oil and
gas sales . . . . . . . . . . . . . ( 1,719) 8,633
Increase (decrease) in accounts payable ( 729) 390
------- -------
Net cash provided by operating
activities . . . . . . . . . . . . $23,643 $17,381
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties . $ - ($ 816)
Retirements of oil and gas properties 1,015 -
------- -------
Net cash provided (used) by investing
activities . . . . . . . . . . . . $ 1,015 ($ 816)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash used by financing activities $ - $ -
------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS $24,658 $16,565
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD . . . . . . . . . . . . . . . . . 18,661 10,512
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $43,319 $27,077
======= =======
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
CONDENSED NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheet as of March 31, 1996, statements of operations
for the three months ended March 31, 1996 and 1995, and statements
of cash flows for the three months ended March 31, 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
March 31, 1996, results of operations for the three months ended
March 31, 1996 and 1995, and changes in cash flows for the three
months ended March 31, 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 March 31,
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
March 31, 1996 and 1995 such expenses totaled $6,716 and $6,614,
respectively, of which $4,020 and $4,020 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 March 31, 1995
these sales totaled $27,107. At December 31, 1995, accrued oil and
gas sales included $23,100 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. 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 MARCH 31, 1996 AS COMPARED TO THE THREE MONTHS
ENDED MARCH 31, 1995.
Three months ended March 31,
--------------------------------
1996 1995
---- ----
Oil and gas sales $46,973 $33,162
Oil and gas production
expenses $14,319 $18,290
Barrels produced 168 120
Mcf produced 24,185 24,432
Average price/Bbl $ 17.82 $ 16.18
Average price/Mcf $ 1.82 $ 1.28
As shown in the table above, oil and gas sales increased 41.6%
for the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995. This increase was primarily
due to an increase in the average price of natural gas sold
during the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995. Volumes of oil sold increased
by 48 barrels, while the volumes of natural gas sold remained
relatively constant for the three months ended March 31, 1996 as
compared to the three months ended March 31, 1995. Average oil
and natural gas prices increased to $17.82 per barrel and $1.82
per Mcf for the three months ended March 31, 1996 from $16.18 per
barrel and $1.28 per Mcf for the three months ended March 31,
1995.
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<PAGE>
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased $3,971 for the three
months ended March 31, 1996 as compared to the three months ended
March 31, 1995. This decrease was primarily due to workover
charges on a well during the three months ended March 31, 1995.
As a percentage of oil and gas sales, these expenses decreased to
30.5% for the three months ended March 31, 1996 from 55.2% for
the three months ended March 31, 1995. This percentage decrease
was primarily due to the workover charges discussed above and the
increase in the average price of natural gas sold during the
three months ended March 31, 1996 as compared to the three months
ended March 31, 1995.
Depreciation, depletion, and amortization of oil and gas
properties remained relatively constant for the three months
ended March 31, 1996 as compared to the three months ended March
31, 1995. As a percentage of oil and gas sales, this expense
decreased to 12.8% for the three months ended March 31, 1996 from
18.5% for the three months ended March 31, 1995. This percentage
decrease was primarily due to the increase in the average price
of natural gas sold during the three months ended March 31, 1996
as compared to the three months ended March 31, 1995.
General and administrative expenses remained relatively constant
for the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995. As a percentage of oil and
gas sales, these expenses decreased to 14.3% for the three months
ended March 31, 1996 from 19.9% for the three months ended March
31, 1995. This percentage decrease was primarily due to the
increase in oil and gas sales during the three months ended March
31, 1996 as compared to the three months ended March 31, 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 March 31, 1996 and for
the three months ended March 31, 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: May 9, 1996 By: /s/Dennis R. Neill
------------------------
(Signature)
Dennis R. Neill
Senior Vice President
Date: May 9, 1996 By: /s/Patrick M. Hall
---------------------------
(Signature)
Patrick M. Hall
Senior Vice President - Controller
Principal Accounting 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
March 31, 1996 and for the three months ended March 31,
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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 43,319
<SECURITIES> 0
<RECEIVABLES> 27,404
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 70,723
<PP&E> 9,192,163
<DEPRECIATION> 9,116,808
<TOTAL-ASSETS> 160,034
<CURRENT-LIABILITIES> 3,893
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 146,422
<TOTAL-LIABILITY-AND-EQUITY> 160,034
<SALES> 46,973
<TOTAL-REVENUES> 47,126
<CGS> 0
<TOTAL-COSTS> 27,067
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 20,059
<INCOME-TAX> 0
<INCOME-CONTINUING> 20,059
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,059
<EPS-PRIMARY> 10.00
<EPS-DILUTED> 0
</TABLE>
