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, 1997 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
September 30, December 31,
1997 1996
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 30,975 $ 8,796
Accounts receivable - General
Partner (Note 2) 8,328 -
Accrued oil and gas sales 28,238 40,805
-------- --------
Total current assets $ 67,541 $ 49,601
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 86,325 70,461
DEFERRED CHARGE 13,022 13,022
-------- --------
$166,888 $133,084
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 4,423 $ 4,269
Accounts payable - General
Partner (Note 2) - 25,129
-------- --------
Total current liabilities $ 4,423 $ 29,398
ACCRUED LIABILITY 9,142 9,142
PARTNERS' CAPITAL:
General Partner, issued and
outstanding, 21 units 1,532 944
Limited Partners, issued and
outstanding, 2,000 units 151,791 93,600
-------- --------
Total Partners' capital $153,323 $ 94,544
-------- --------
$166,888 $133,084
======== ========
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 SEPTEMBER 30, 1997 AND 1996
(Unaudited)
1997 1996
-------- --------
REVENUES:
Oil and gas sales $45,286 $45,133
Interest 436 160
------- -------
$45,722 $45,293
COST AND EXPENSES:
Oil and gas production $12,002 $15,498
Depreciation, depletion, and
amortization of oil and gas
properties 4,679 5,322
General and administrative (Note 2) 4,949 4,699
------- -------
$21,630 $25,519
------- -------
NET INCOME $24,092 $19,774
======= =======
GENERAL PARTNER (1%) - net
income $ 241 $ 198
======= =======
LIMITED PARTNERS (99%) - net
income $23,851 $19,576
======= =======
NET INCOME PER UNIT $ 11.92 $ 9.78
======= =======
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 OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
1997 1996
-------- --------
REVENUES:
Oil and gas sales $134,382 $136,227
Interest 794 728
-------- --------
$135,176 $136,955
COST AND EXPENSES:
Oil and gas production $ 48,475 $ 46,379
Depreciation, depletion, and
amortization of oil and gas
properties 10,134 16,523
General and administrative (Note 2) 17,788 16,958
-------- --------
$ 76,397 $ 79,860
-------- --------
NET INCOME $ 58,779 $ 57,095
======== ========
GENERAL PARTNER (1%) - net
income $ 588 $ 571
======== ========
LIMITED PARTNERS (99%) - net
income $ 58,191 $ 56,524
======== ========
NET INCOME PER UNIT $ 29.08 $ 28.25
======== ========
UNITS OUTSTANDING 2,021 2,021
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
-4-
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DYCO OIL AND GAS PROGRAM 1986-X LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
1997 1996
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $58,779 $57,095
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 10,134 16,523
Increase in accounts receivable -
General Partner ( 8,328) -
(Increase) decrease in accrued oil
and gas sales 12,567 ( 681)
Increase (decrease) in accounts
payable 154 ( 469)
Decrease in accounts payable -
General Partner ( 25,129) -
------- -------
Net cash provided by operating
activities $48,177 $72,468
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of oil and
gas properties $ 8,829 $ 4,992
Additions to oil and gas properties ( 34,827) -
------- -------
Net cash provided (used) by
investing activities ($25,998) $ 4,992
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions $ - ($50,525)
------- -------
Net cash used by financing
activities $ - ($50,525)
------- -------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $22,179 $26,935
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 8,796 18,661
------- -------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $30,975 $45,596
======= =======
The accompanying condensed notes are an
integral part of these financial statements.
-5-
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<PAGE>
DYCO OIL AND GAS PROGRAM 1986-X LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheet as of September 30, 1997, statements of
operations for the three and nine months ended September 30, 1997
and 1996, and statements of cash flows for the nine months ended
September 30, 1997 and 1996 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 September 30, 1997, results of
operations for the three and nine months ended September 30, 1997
and 1996, and changes in cash flows for the nine months ended
September 30, 1997 and 1996 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, 1996. The results of operations for the
period ended September 30, 1997 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 Program's 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
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 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.
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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 September 30, 1997 and 1996 such expenses totaled $4,949
and $4,699, respectively, of which $4,020 was paid each period to
Dyco and its affiliates. During the nine months ended September
30, 1997 and 1996 such expenses totaled $17,788 and $16,958,
respectively, of which $12,060 was paid each period to Dyco and
its affiliates.
Affiliates of the Program operate certain of the Program's
properties. Their policy is to bill the Program for all
customary charges and cost reimbursements associated with these
activities.
The Program had a payable due to Dyco as General Partner of
$25,129 at December 31, 1996 included in accounts payable. This
payable represented an advance made by the General Partner for
working capital needs. During the first quarter of 1997 the
Program repaid this liability.
The receivable from the General Partner at September 30, 1997
represents proceeds due to the Program for the sale of oil and
gas properties. The receivable was collected subsequent to
September 30, 1997.
-7-
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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 Program.
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, or otherwise indicated.
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 proceeds may be used
to attempt to either (i) improve producing wells or (ii) employ
methods to permit more efficient recovery of the Program's
reserves. In both of these instances, it is the intent of the
General Partner that the use of proceeds may result in a positive
economic impact on the Program. During the nine months ended
September 30, 1997, the Program invested approximately $28,000 in
a recompletion on one well in order to improve the recovery of
reserves. The recompletion was unsuccessful. Subsequently, the
well was sold for salvage value of approximately $8,300. The
unsuccessful recompletion expenses incurred by the Program
adversely impacted the Program's cash flows during the third
quarter of 1997. Management is currently unaware of any pending
similar expenditures which, if unsuccessful, would materially
impact the Program's cash flow.
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.
-8-
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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 variable affecting the Program's revenues is the
prices received for the sale of oil and gas. Predicting future
prices is very difficult. Substantially all of the Program's gas
reserves are being sold in 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. In addition, such spot market sales are generally short-
term in nature and are dependent upon the obtaining of
transportation services provided by pipelines. Management is
unable to predict whether future oil and gas prices will (i)
stabilize, (ii) increase, or (iii) decrease.
THREE MONTHS ENDED SEPTEMBER 30, 1997 AS COMPARED TO THE THREE
MONTHS ENDED SEPTEMBER 30, 1996.
Three Months Ended September 30,
--------------------------------
1997 1996
------- -------
Oil and gas sales $45,286 $45,133
Oil and gas production expenses $12,002 $15,498
Barrels produced 56 88
Mcf produced 22,214 21,445
Average price/Bbl $ 17.79 $ 23.19
Average price/Mcf $ 1.99 $ 2.01
As shown in the table above, total oil and gas sales remained
relatively constant for the three months ended September 30, 1997
as compared to the three months ended September 30, 1996. While
the volumes of gas sold increased during the three months ended
September 30, 1997 as compared to the three months ended
September 30, 1996, any resulting increase in oil and gas sales
was offset by a decrease in the volumes of oil sold and decreases
in the average prices of oil and gas sold. Volumes of oil sold
decreased 32 barrels, while volumes of gas sold increased 769 Mcf
for the three months ended September 30, 1997 as compared to the
three months ended September 30, 1996. Average oil and gas
prices decreased to $17.79 per barrel and $1.99 per Mcf,
respectively, for the three months ended September 30, 1997 from
$23.19 per barrel and $2.01 per Mcf for the three months ended
September 30, 1996.
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased $3,496 (22.6%) for the
three months ended September 30, 1997 as compared to the three
months ended September 30, 1996. This decrease resulted
primarily from (i) a decrease in general repairs and maintenance
expenses incurred on one well during the three months ended
September 30, 1997 as compared to the three months ended
September 30, 1996 and (ii) the sale of another well during the
three months ended September 30, 1997. As a percentage of oil
and gas sales, these expenses decreased to 26.5% for the three
months ended September 30, 1997 from 34.3% for the three months
ended September 30, 1996. This percentage decrease was primarily
-9-
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<PAGE>
due to the dollar decrease in production expenses discussed
above.
Depreciation, depletion, and amortization of oil and gas
properties decreased $643 (12.1%) for the three months ended
September 30, 1997 as compared to the three months ended
September 30, 1996. This decrease resulted primarily from upward
revisions of previous oil and gas reserve estimates at December
31, 1996. As a percentage of oil and gas sales, this expense
decreased to 10.3% for the three months ended September 30, 1997
from 11.8% for the three months ended September 30, 1996. This
percentage decrease was primarily due to the dollar decrease in
depreciation, depletion, and amortization discussed above.
General and administrative expenses increased $250 (5.3%) for the
three months ended September 30, 1997 as compared to the three
months ended September 30, 1996. This increase resulted
primarily from increases in both computer consulting fees and
computer upgrade expenses, which increases were partially offset
by decreases in both legal and postage expense during the three
months ended September 30, 1997 as compared to the three months
ended September 30, 1996. As a percentage of oil and gas sales,
these expenses remained relatively constant at 10.9% for the
three months ended September 30, 1997 and 10.4% for the three
months ended September 30, 1996.
NINE MONTHS ENDED SEPTEMBER 30, 1997 AS COMPARED TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1996.
Nine Months Ended September 30,
-------------------------------
1997 1996
-------- --------
Oil and gas sales $134,382 $136,277
Oil and gas production expenses $ 48,475 $ 46,379
Barrels produced 210 278
Mcf produced 59,899 66,626
Average price/Bbl $ 20.59 $ 19.48
Average price/Mcf $ 2.17 $ 1.96
As shown in the table above, total oil and gas sales decreased
$1,845 (1.4%) for the nine months ended September 30, 1997 as
compared to the nine months ended September 30, 1996. Of this
decrease, approximately $1,000 and $13,000, respectively, were
related to decreases in the volumes of oil and gas sold,
partially offset by an increase of approximately $13,000 related
to an increase in the average price of gas sold. Volumes of oil
and gas sold decreased 68 barrels and 6,727 Mcf, respectively,
for the nine months ended September 30, 1997 as compared to the
nine months ended September 30, 1996. The decrease in the
volumes of gas sold resulted primarily from normal declines in
production due to diminished gas reserves on one well during the
nine months ended September 30, 1997 as compared to the nine
months ended September 30, 1996. Average oil and gas prices
increased to $20.59 per barrel and $2.17 per Mcf, respectively,
for the nine months ended September 30, 1997 from $19.48 per
barrel and $1.96 per Mcf, respectively, for the nine months ended
September 30, 1996.
-10-
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<PAGE>
Oil and gas production expenses (including lease operating
expenses and production taxes) increased $2,096 (4.5%) for the
nine months ended September 30, 1997 as compared to the nine
months ended September 30, 1996. This increase resulted
primarily from workover expenses incurred on one well during the
nine months ended September 30, 1997 in order to improve the
recovery of reserves, partially offset by decreases in volumes of
oil and gas sold during the nine months ended September 30, 1997
as compared to the nine months ended September 30, 1996. As a
percentage of oil and gas sales, these expenses increased to
36.1% for the nine months ended September 30, 1997 from 34.0% for
the nine months ended September 30, 1996. This percentage
increase was primarily due to the workover expenses discussed
above.
Depreciation, depletion, and amortization of oil and gas
properties decreased $6,389 (38.7%) for the nine months ended
September 30, 1997 as compared to the nine months ended September
30, 1996. This decreased resulted primarily from (i) upward
revisions of previous oil and gas reserve estimates at December
31, 1996 and (ii) the decrease in volumes of oil and gas sold
during the nine months ended September 30, 1997 as compared to
the nine months ended September 30, 1996. As a percentage of oil
and gas sales, this expense decreased to 7.5% for the nine months
ended September 30, 1997 from 12.1% for the nine months ended
September 30, 1996. This percentage decrease was primarily due
to the increases in the average prices of oil and gas sold during
the nine months ended September 30, 1997 as compared to the nine
months ended September 30, 1996.
General and administrative expenses remained relatively constant
for the nine months ended September 30, 1997 as compared to the
nine months ended September 30, 1996. As a percentage of oil and
gas sales, these expenses increased to 13.2% for the nine months
ended September 30, 1997 from 12.4% for the nine months ended
September 30, 1996. This percentage increase was primarily due
to the decrease in oil and gas sales discussed above.
-11-
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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 Program's
financial statements as of September 30, 1997 and
for the nine months ended September 30, 1997,
filed herewith.
All other exhibits are omitted as inapplicable.
(b) Reports on Form 8-K
None.
-12-
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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 1986-X LIMITED
PARTNERSHIP
(Registrant)
By: DYCO PETROLEUM CORPORATION
General Partner
Date: November 13, 1997 By: /s/Dennis R. Neill
--------------------------------
(Signature)
Dennis R. Neill
President
Date: November 13, 1997 By: /s/Patrick M. Hall
--------------------------------
(Signature)
Patrick M. Hall
Chief Financial Officer
-13-
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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
1986-X Limited Partnership's financial statements as of
September 30, 1997 and for the nine months ended September
30, 1997, filed herewith.
All other exhibits are omitted as inapplicable.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000803095
<NAME> DYCO OIL AND GAS PROGRAM 1986-X LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 30,975
<SECURITIES> 0
<RECEIVABLES> 36,566
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 67,541
<PP&E> 9,214,185
<DEPRECIATION> 9,127,860
<TOTAL-ASSETS> 166,888
<CURRENT-LIABILITIES> 4,423
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 153,323
<TOTAL-LIABILITY-AND-EQUITY> 166,888
<SALES> 134,382
<TOTAL-REVENUES> 135,176
<CGS> 0
<TOTAL-COSTS> 76,397
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 58,779
<INCOME-TAX> 0
<INCOME-CONTINUING> 58,779
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,779
<EPS-PRIMARY> 29.08
<EPS-DILUTED> 0
</TABLE>
