<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
September 30, 1996 33-10346-07 (1979-1)
33-10346-08 (1979-2)
DYCO 1979 OIL AND GAS PROGRAMS
(TWO LIMITED PARTNERSHIPS)
(Exact Name of Registrant as specified in its charter)
41-1358013 (1979-1)
Minnesota 41-1358015 (1979-2)
(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 1979-1 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
1996 1995
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 39,833 $ 32,509
Accrued oil and gas sales, including
$64,832 due from related parties
in 1995 (Note 2) 72,582 74,181
-------- --------
Total current assets $112,415 $106,690
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 239,801 291,717
DEFERRED CHARGE 69,409 69,409
-------- --------
$421,625 $467,816
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 4,800 $ 6,802
Gas imbalance payable 13,323 13,323
-------- --------
Total current liabilities $ 18,123 $ 20,125
ACCRUED LIABILITY 38,124 38,124
PARTNERS' CAPITAL:
General Partner, issued and
outstanding, 32 units 3,654 4,096
Limited Partners, issued and
outstanding, 3,140 units 361,724 405,471
-------- --------
Total Partners' capital $365,378 $409,567
-------- --------
$421,625 $467,816
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
1996 1995
-------- --------
REVENUES:
Oil and gas sales, including
$71,688 of sales to related
parties in 1995 (Note 2) $102,237 $74,304
Interest 662 249
-------- -------
$102,899 $74,553
COST AND EXPENSES:
Oil and gas production $ 21,038 $25,634
Depreciation, depletion, and
amortization of oil and gas
properties 14,235 19,667
General and administrative (Note 2) 12,359 12,114
-------- -------
$ 47,632 $57,415
-------- -------
NET INCOME $ 55,257 $17,138
======== =======
GENERAL PARTNER (1%) - net
income $ 553 $ 171
======== =======
LIMITED PARTNERS (99%) - net
income $ 54,714 $16,967
======== =======
NET INCOME PER UNIT $ 17.42 $ 5.40
======== =======
UNITS OUTSTANDING 3,172 3,172
======== =======
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
1996 1995
-------- --------
REVENUES:
Oil and gas sales, including
$233,107 of sales to related
parties in 1995 (Note 2) $371,360 $291,894
Interest 1,690 2,014
-------- --------
$373,050 $293,908
COST AND EXPENSES:
Oil and gas production $ 70,043 $ 74,190
Depreciation, depletion, and
amortization of oil and gas
properties 51,324 58,387
General and administrative (Note 2) 42,112 42,245
-------- --------
$163,479 $174,822
-------- --------
NET INCOME $209,571 $119,086
======== ========
GENERAL PARTNER (1%) - net
income $ 2,096 $ 1,191
======== ========
LIMITED PARTNERS (99%) - net
income $207,475 $117,895
======== ========
NET INCOME PER UNIT $ 66.06 $ 37.54
======== ========
UNITS OUTSTANDING 3,172 3,172
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $209,571 $119,086
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 51,324 58,387
Decrease in accounts receivable -
related party - 13,447
(Increase) decrease in accrued oil
and gas sales 1,599 ( 2,893)
Increase (decrease) in accounts
payable ( 2,002) 13,094
-------- --------
Net cash provided by operating
activities $260,492 $201,121
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties $ - ($ 75,898)
Retirements of oil and gas
properties 592 2,561
-------- --------
Net cash provided (used) by
investing activities $ 592 ($ 73,337)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($253,760) ($206,180)
-------- --------
Net cash used by financing
activities ($253,760) ($206,180)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 7,324 ($ 78,396)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 32,509 83,662
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 39,833 $ 5,266
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
1996 1995
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $132,926 $105,766
Accrued oil and gas sales, including
$71,862 due from related parties
in 1995 (Note 2) 98,359 91,623
-------- --------
Total current assets $231,285 $197,389
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 354,660 440,361
DEFERRED CHARGE 67,617 67,617
-------- --------
$653,562 $705,367
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 21,673 $ 6,417
Gas imbalance payable 36,359 36,359
-------- --------
Total current liabilities $ 58,032 $ 42,776
CONTINGENCIES (Note 3)
PARTNERS' CAPITAL:
General Partner, issued and
outstanding, 29 units 5,956 6,626
Limited Partners, issued and
outstanding, 2,860 units 589,574 655,965
-------- --------
Total Partners' capital $595,530 $662,591
-------- --------
$653,562 $705,367
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
1996 1995
-------- --------
REVENUES:
Oil and gas sales, including
$58,272 of sales to related
parties in 1995 (Note 2) $163,074 $62,550
Interest 1,525 1,161
-------- -------
$164,599 $63,711
COST AND EXPENSES:
Oil and gas production $ 28,219 $23,336
Depreciation, depletion, and
amortization of oil and gas
properties 28,573 17,469
General and administrative (Note 2) 8,903 8,736
-------- -------
$ 65,695 $49,541
-------- -------
NET INCOME $ 98,904 $14,170
======== =======
GENERAL PARTNER (1%) - net
income $ 989 $ 142
======== =======
LIMITED PARTNERS (99%) - net
income $ 97,915 $14,028
======== =======
NET INCOME PER UNIT $ 34.23 $ 4.90
======== =======
UNITS OUTSTANDING 2,889 2,889
======== =======
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
1996 1995
-------- --------
REVENUES:
Oil and gas sales, including
$288,101 of sales to related
parties in 1995 (Note 2) $489,802 $360,678
Interest 4,315 5,299
-------- --------
$494,117 $365,977
COST AND EXPENSES:
Oil and gas production $ 82,649 $ 83,098
Depreciation, depletion, and
amortization of oil and gas
properties 85,813 88,655
General and administrative (Note 2) 31,591 31,933
-------- --------
$200,053 $203,686
-------- --------
NET INCOME $294,064 $162,291
======== ========
GENERAL PARTNER (1%) - net
income $ 2,941 $ 1,623
======== ========
LIMITED PARTNERS (99%) - net
income $291,123 $160,668
======== ========
NET INCOME PER UNIT $ 101.79 $ 56.18
======== ========
UNITS OUTSTANDING 2,889 2,889
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
1996 1995
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $294,064 $162,291
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 85,813 88,655
(Increase) decrease in accrued oil
and gas sales ( 6,736) 93,079
Increase in accounts payable 15,256 348
-------- --------
Net cash provided by operating
activities $388,397 $344,373
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties ($ 863) $ -
Retirements of oil and gas
properties 751 -
-------- --------
Net cash used by investing
activities ($ 112) $ -
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($361,125) ($375,570)
-------- --------
Net cash used by financing
activities ($361,125) ($375,570)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 27,160 ($ 31,197)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 105,766 129,666
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $132,926 $ 98,469
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheets as of September 30, 1996, statements of
operations for the three and nine months ended September 30, 1996
and 1995, and statements of cash flows for the nine months ended
September 30, 1996 and 1995 have been prepared by Dyco Petroleum
Corporation ("Dyco"), the General Partner of the Dyco Oil and Gas
Program 1979-1 and 1979-2 Limited Partnerships (individually, the
"1979-1 Program" or the "1979-2 Program", as the case may be, or,
collectively, the "Programs"), 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, 1996, results of operations for the three and
nine months ended September 30, 1996 and 1995 and changes in cash
flows for the nine months ended September 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 Programs' Annual Report on Form 10-K for the year
ended December 31, 1995. The results of operations for the
period ended September 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 each 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, 1996 and 1995 the 1979-1
Program incurred such expenses totaling $12,359 and $12,114,
respectively, of which $11,130 and $11,130 were paid to Dyco.
During the nine months ended September 30, 1996 and 1995 the
1979-1 Program incurred such expenses totaling $42,112 and
$42,245, respectively, of which $33,390 and $33,390 were paid to
Dyco. During the three months ended September 30, 1996 and 1995
the 1979-2 Program incurred such expenses totaling $8,903 and
$8,736, respectively, of which $7,803 and $7,803 were paid to
Dyco. During the nine months ended September 30, 1996 and 1995
the 1979-2 Program incurred such expenses totaling $31,591 and
$31,933, respectively, of which $23,409 and $23,409 were paid to
Dyco.
Affiliates of the Programs are the operators of certain of the
Programs' properties and their policy is to bill the Programs for
all customary charges and cost reimbursements associated with
their activities, together with any compressor rentals,
consulting, or other services provided.
The Programs 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 Programs until
December 6, 1995. During the three months ended September 30,
1995 these sales for the 1979-1 Program totaled $71,688. During
the nine months ended September 30, 1995 these sales for the
1979-1 Program totaled $233,107. At December 31, 1995, accrued
gas sales for the 1979-1 Program included $64,832 due from
Premier. During the three months ended September 30, 1995 these
sales for the 1979-2 Program totaled $58,272. During the nine
months ended September 30, 1995 these sales for the 1979-2
Program totaled $288,101. At December 31, 1995, accrued gas
sales for the 1979-2 Program included $71,862 due from Premier.
3. CONTINGENCIES
-------------
On October 26, 1993, certain royalty owners filed a class action
lawsuit against Dyco and another party in which they alleged
entitlement to a share of the proceeds from a gas contract
involving one of the 1979-2 Program's wells. The plaintiffs are
alleging claims based on breach of contract, breach of fiduciary
obligation, and unjust enrichment and are seeking an accounting
and declaration as a third party beneficiary under the gas
contract. The plaintiffs have not quantified the amount of their
damages, but they are seeking exemplary damages, unpaid
royalties, and interest. Dyco has filed its answer in the matter
in which it denied all of the plaintiffs' allegations and
discovery is proceeding in the matter. On January 18, 1994 the
district court certified the matter as a class action and on
November 29, 1994 the plaintiffs filed a motion for summary
judgment in the matter. Oral arguments were heard on the motion
in January 1995, however, as of the date of these financial
statements, the district court has not ruled on the motion. Dyco
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intends to vigorously defend the lawsuit. On September 10, 1996
the Oklahoma Supreme Court ruled in a separate lawsuit that
owners of royalty interests in Oklahoma oil and gas properties do
not have the right to share in the proceeds of take-or-pay
settlements. Such ruling is not yet final. As of the date of
these financial statements, management cannot determine the
amount of any alleged damages which would be allocable to the
1979-2 Program from this lawsuit; however, it is reasonably
possible that events could change in the future resulting in a
material liability to the 1979-2 Program.
On October 21, 1994 a royalty owner filed a class action lawsuit
against Samson Resources Company and other parties in which he
alleged entitlement to a share of the proceeds from a gas
contract involving one of the 1979-2 Program's wells. The
plaintiffs are alleging claims based on unjust enrichment, breach
of contract and fiduciary obligation, and constructive fraud, and
are seeking an accounting. The plaintiffs have not quantified
the amount of their damages, but they are seeking actual and
punitive damages, interest and costs. On November 17, 1994 the
defendants filed a special appearance and motion to dismiss for
lack of venue. The court then entered an order transferring
venue to Oklahoma County District Court. Discovery is proceeding
and Samson Resources Company intends to vigorously defend the
lawsuit. On September 10, 1996 the Oklahoma Supreme Court ruled
in a separate lawsuit that owners of royalty interests in
Oklahoma oil and gas properties do not have the right to share in
the proceeds of take-or-pay settlements. Such ruling is not yet
final. As of the date of these financial statements, management
cannot determine the amount of any alleged damages which would be
allocable to the 1979-2 Program from this lawsuit; however, it is
reasonably possible that events could change in the future
resulting in a material liability to the Program.
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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 Programs' 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 Programs' reserves which would result in a
positive economic impact. Over the last several years, the
domestic energy industry and the Programs 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 Programs' 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
Programs have no bank debt commitments. Cash for operational
purposes will be provided by current oil and gas production.
RESULTS OF OPERATIONS
- ---------------------
1979-1 PROGRAM
THREE MONTHS ENDED SEPTEMBER 30, 1996 AS COMPARED TO THE THREE
MONTHS ENDED SEPTEMBER 30, 1995.
Three months ended September 30,
--------------------------------
1996 1995
-------- -------
Oil and gas sales $102,237 $74,304
Oil and gas production expenses $ 21,038 $25,634
Barrels produced 90 148
Mcf produced 52,417 59,736
Average price/Bbl $ 23.21 $ 17.68
Average price/Mcf $ 1.91 $ 1.20
As shown in the table above, oil and natural gas sales increased
$27,933 (37.6%) for the three months ended September 30, 1996 as
compared to the three months ended September 30, 1995. Of this
increase, $42,413 was related to the increase in the average
price of natural gas sold, partially offset by a $13,979 decrease
related to the decrease in the volumes of natural gas sold.
Volumes of oil and natural gas sold decreased by 58 barrels and
7,319 Mcf, respectively, for the three months ended September 30,
1996 as compared to the three months ended September 30, 1995.
The decrease in the volumes of oil sold was primarily the result
of the normal declines in production on several wells due to
diminished oil reserves during the three months ended September
30, 1996 as compared to the three months ended September 30,
1995. The decrease in the volumes of natural gas sold was
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primarily a result of the normal declines in production on one
well due to diminished natural gas reserves during the three
months ended September 30, 1996 as compared to the three months
ended September 30, 1995 and the 1979-1 Program not making sales
from one natural gas producing well during a portion of the three
months ended September 30, 1996 due to its overproduced status on
the well. Average oil and natural gas prices increased to
$23.21 per barrel and $1.91 per Mcf, respectively, for the three
months ended September 30, 1996 from $17.68 per barrel and $1.20
per Mcf, respectively, for the three months ended September 30,
1995.
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased by $4,596 for the three
months ended September 30, 1996 as compared to the three months
ended September 30, 1995. This decrease resulted primarily from
the decreases in general operating and compression expenses on
two wells during the three months ended September 30, 1996 as
compared to the three months ended September 30, 1995 and a
decrease in workover charges incurred on one well during the
three months ended September 30, 1995 in order to improve the
recovery of reserves. As a percentage of oil and gas sales,
these expenses decreased to 20.6% for the three months ended
September 30, 1996 from 34.5% for the three months ended
September 30, 1995. This percentage decrease resulted primarily
from the increases in the average prices of oil and natural gas
sold during the three months ended September 30, 1996 as compared
to the three months ended September 30, 1995.
Depreciation, depletion, and amortization of oil and gas
properties decreased $5,432 for the three months ended September
30, 1996 as compared to the three months ended September 30,
1995. This decrease resulted primarily from the decreases in the
volumes of oil and natural gas sold during the three months ended
September 30, 1996 as compared to the three months ended
September 30, 1995. As a percentage of oil and gas sales, this
expense decreased to 13.9% for the three months ended September
30, 1996 from 26.5% for the three months ended September 30,
1995. This percentage decrease was primarily a result of the
increases in the average prices of oil and natural gas sold
during the three months ended September 30, 1996 as compared to
the three months ended September 30, 1995.
General and administrative expenses increased $245 for the three
months ended September 30, 1996 as compared to the three months
ended September 30, 1995. This increase resulted primarily from
an increase in professional fees during the three months ended
September 30, 1996 as compared to the three months ended
September 30, 1995. As a percentage of oil and gas sales, these
expenses decreased to 12.1% for the three months ended September
30, 1996 from 16.3% for the three months ended September 30,
1995. This percentage decrease was primarily a result of the
increases in the average prices of oil and natural gas sold
during the three months ended September 30, 1996 as compared to
the three months ended September 30, 1995.
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NINE MONTHS ENDED SEPTEMBER 30, 1996 AS COMPARED TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1995.
Nine months ended September 30,
-------------------------------
1996 1995
-------- --------
Oil and gas sales $371,360 $291,894
Oil and gas production expenses $ 70,043 $ 74,190
Barrels produced 273 739
Mcf produced 191,979 211,566
Average price/Bbl $ 20.57 $ 18.15
Average price/Mcf $ 1.91 $ 1.32
As shown in the table above, oil and natural gas sales increased
$79,466 (27.2%) for the nine months ended September 30, 1996 as
compared to the nine months ended September 30, 1995. Of this
increase, $124,824 was related to the increase in the average
price of natural gas sold, partially offset by a $46,997 decrease
related to the decreases in the volumes of oil and natural gas
sold. Volumes of oil and natural gas sold decreased by 466
barrels and 19,587 Mcf, respectively, for the nine months ended
September 30, 1996 as compared to the nine months ended September
30, 1995. The decrease in the volumes of oil sold resulted
primarily from positive prior period adjustments made by a
purchaser on one well during the nine months ended September 30,
1995. Average oil and natural gas prices increased to $20.57 per
barrel and $1.91 per Mcf, respectively, for the nine months ended
September 30, 1996 from $18.15 per barrel and $1.32 per Mcf,
respectively, for the nine months ended September 30, 1995.
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased by $4,147 for the nine
months ended September 30, 1996 as compared to the nine months
ended September 30, 1995. This decrease primarily resulted from
the decreases in general operating and compression expenses on
two wells during the nine months ended September 30, 1996 as
compared to the nine months ended September 30, 1995. As a
percentage of oil and gas sales, these expenses decreased to
18.9% for the nine months ended September 30, 1996 from 25.4% for
the nine months ended September 30, 1995. This percentage
decrease was primarily a result of the increases in the average
prices of oil and natural gas sold during the nine months ended
September 30, 1996 as compared to the nine months ended September
30, 1995.
Depreciation, depletion, and amortization of oil and gas
properties decreased $7,063 for the nine months ended September
30, 1996 as compared to the nine months ended September 30, 1995.
This decrease resulted primarily from the decreases in volumes of
oil and natural gas sold during the nine months ended September
30, 1996 as compared to the nine months ended September 30, 1995.
As a percentage of oil and gas sales, this expense decreased to
13.8% for the nine months ended September 30, 1996 from 20.0%
for the nine months ended September 30, 1995. This percentage
decrease was primarily a result of the increases in the average
prices of oil and natural gas sold during the nine months ended
September 30, 1996 as compared to the nine months ended September
30, 1995.
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General and administrative expenses remained relatively constant
for the nine months ended September 30, 1996 as compared to the
nine months ended September 30, 1995. As a percentage of oil and
gas sales, these expenses decreased to 11.3% for the nine months
ended September 30, 1996 from 14.5% for the nine months ended
September 30, 1995. This percentage decrease was primarily due
to the increases in the average prices of oil and natural gas
sold during the nine months ended September 30, 1996 as compared
to the nine months ended September 30, 1995.
1979-2 PROGRAM
THREE MONTHS ENDED SEPTEMBER 30, 1996 AS COMPARED TO THE THREE
MONTHS ENDED SEPTEMBER 30, 1995.
Three months ended September 30,
--------------------------------
1996 1995
-------- -------
Oil and gas sales $163,074 $62,550
Oil and gas production expenses $ 28,219 $23,336
Barrels produced 369 224
Mcf produced 75,405 44,924
Average price/Bbl $ 22.39 $ 19.10
Average price/Mcf $ 2.05 $ 1.30
As shown in the table above, oil and natural gas sales increased
by $100,524 (160.7%) for the three months ended September 30,
1996 as compared to the three months ended September 30, 1995.
Of this increase, $62,486 was related to the increase in the
volumes of natural gas sold and $33,693 was related to the
increase in the average price of natural gas sold. Volumes of
oil and natural gas sold increased by 145 barrels and 30,481 Mcf,
respectively, for the three months ended September 30, 1996 as
compared to the three months ended September 30, 1995. The
increase in the volumes of natural gas sold resulted primarily
from a prior period adjustment made by the operator on one well
during the three months ended September 30, 1996 due to the
acquisition of an increased ownership percentage. Average oil
and natural gas prices increased to $22.39 per barrel and $2.05
per Mcf, respectively, for the three months ended September 30,
1996 from $19.10 per barrel and $1.30 per Mcf, respectively, for
the three months ended September 30, 1995.
Oil and gas production expenses (including lease operating
expenses and production taxes) increased by $4,883 for the three
months ended September 30, 1996 as compared to the three months
ended September 30, 1995. This increase resulted primarily from
the increases in the volumes of oil and natural gas sold during
the three months ended September 30, 1996 as compared to the
three months ended September 30, 1995. As a percentage of oil
and gas sales, these expenses decreased to 17.3% for the three
months ended September 30, 1996 from 37.3% for the three months
ended September 30, 1995. This percentage decrease was primarily
a result of the increases in the average prices of oil and
natural gas sold during the three months ended September 30, 1996
as compared to the three months ended September 30, 1995.
Depreciation, depletion, and amortization of oil and gas
properties increased $11,104 for the three months ended September
30, 1996 as compared to the three months ended September 30,
-16-
<PAGE>
<PAGE>
1995. This increase resulted primarily from the increases in the
volumes of oil and natural gas sold during the three months ended
September 30, 1996 as compared to the three months ended
September 30, 1995. As a percentage of oil and gas sales, this
expense decreased to 17.8% for the three months ended September
30, 1996 from 27.9% for the three months ended September 30,
1995. This percentage decrease was primarily a result of the
increases in the average prices of oil and natural gas sold
during the three months ended September 30, 1996 as compared to
the three months ended September 30, 1995.
General and administrative expenses remained relatively constant
for the three months ended September 30, 1996 as compared to the
three months ended September 30, 1995. As a percentage of oil
and gas sales, these expenses decreased to 5.5% for the three
months ended September 30, 1996 from 14.0% for the three months
ended September 30, 1995. This percentage decrease was primarily
a result of the increase in oil and natural gas sales during the
three months ended September 30, 1996 as compared to the three
months ended September 30, 1995.
NINE MONTHS ENDED SEPTEMBER 30, 1996 AS COMPARED TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1995.
Nine months ended September 30,
-------------------------------
1996 1995
-------- --------
Oil and gas sales $489,802 $360,678
Oil and gas production expenses $ 82,649 $ 83,098
Barrels produced 1,034 1,001
Mcf produced 224,443 242,208
Average price/Bbl $ 20.27 $ 16.99
Average price/Mcf $ 2.09 $ 1.42
As shown in the table above, oil and natural gas sales increased
by $129,124 (35.8%) for the nine months ended September 30, 1996
as compared to the nine months ended September 30, 1995. Of this
increase, $162,279 was related to the increase in the average
price of natural gas sold, partially offset by a decrease of
$37,129 related to the decrease in the volumes of natural gas
sold. Volumes of oil sold increased by 33 barrels, while volumes
of natural gas sold decreased by 17,765 Mcf for the nine months
ended September 30, 1996 as compared to the nine months ended
September 30, 1995. Average oil and natural gas prices increased
to $20.27 per barrel and $2.09 per Mcf, respectively, for the
nine months ended September 30, 1996 from $16.99 per barrel and
$1.42 per Mcf, respectively, for the nine months ended September
30, 1995.
Oil and gas production expenses (including lease operating
expenses and production taxes) remained relatively constant for
the nine months ended September 30, 1996 as compared to the nine
months ended September 30, 1995. As a percentage of oil and gas
sales, these expenses decreased to 16.9% for the nine months
ended September 30, 1996 from 23.0% for the nine months ended
September 30, 1995. This percentage decrease was primarily a
result of the increases in the average prices of oil and natural
gas sold during the nine months ended September 30, 1996 as
compared to the nine months ended September 30, 1995.
-17-
<PAGE>
<PAGE>
Depreciation, depletion, and amortization of oil and gas
properties decreased $2,842 for the nine months ended September
30, 1996 as compared to the nine months ended September 30, 1995.
This decrease resulted primarily from the decrease in the volumes
of natural gas sold during the nine months ended September 30,
1996 as compared to the nine months ended September 30, 1995. As
a percentage of oil and gas sales, this expense decreased to
17.5% for the nine months ended September 30, 1996 from 24.6%
for the nine months ended September 30, 1995. This percentage
decrease was primarily a result of the increases in the average
prices of oil and natural gas sold during the nine months ended
September 30, 1996 as compared to the nine months ended September
30, 1995.
General and administrative expenses remained relatively constant
for the nine months ended September 30, 1996 as compared to the
nine months ended September 30, 1995. As a percentage of oil and
gas sales, these expenses decreased to 6.4% for the nine months
ended September 30, 1996 from 8.9% for the nine months ended
September 30, 1995. This percentage decrease was primarily a
result of the increases in the average prices of oil and natural
gas sold during the nine months ended September 30, 1996 as
compared to the nine months ended September 30, 1995.
-18-
<PAGE>
<PAGE>
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On October 26, 1993, certain royalty owners filed a class action
lawsuit against Dyco and another party in which they alleged
entitlement to a share of the proceeds from a gas contract
involving one of the 1979-2 Program's wells, the Johnson No. 1-
22. (Randy Beutler, et al. v. Dyco, et al., Case No. CJ-93-311,
District Court of Custer County, Oklahoma). The 1979-2 Program
has an approximate 2.6% working interest in the Johnson No. 1-22
well. The plaintiffs are alleging claims based on breach of
contract, breach of fiduciary obligation, and unjust enrichment
and are seeking an accounting and declaration as a third party
beneficiary under the gas contract. The plaintiffs have not
quantified the amount of their damages, but they are seeking
exemplary damages, unpaid royalties, and interest. Dyco has
filed its answer in the matter in which it denied all of the
plaintiffs' allegations and discovery is proceeding in the
matter. On January 18, 1994 the district court certified the
matter as a class action and on November 29, 1994 the plaintiffs
filed a motion for summary judgment in the matter. Oral
arguments were heard on the motion in January 1995, however, as
of the date of these financial statements, the district court has
not ruled on the motion. Dyco intends to vigorously defend the
lawsuit. On September 10, 1996 the Oklahoma Supreme Court ruled
in a separate lawsuit that owners of royalty interests in
Oklahoma oil and gas properties do not have the right to share in
the proceeds of take-or-pay settlements. Such ruling is not yet
final. As of the date of these financial statements, management
cannot determine the amount of any alleged damages which would be
allocable to the 1979-2 Program from this lawsuit.
On October 21, 1994 a royalty owner filed a class action lawsuit
against Samson Resources Company and other parties in which the
royalty owner alleged entitlement to a share of the proceeds from
a gas contract involving one of the 1979-2 Program's wells, the
Guenzel No. 1 (T.W. Walbert v. Samson Resources Company, et al.,
Case No. CJ-94-74, District Court of Dewey County, Oklahoma).
The 1979-2 Program has a 1.08% working interest in the Guenzel
No. 1 well. The plaintiffs are alleging claims based on unjust
enrichment, breach of contract and fiduciary obligation, and
constructive fraud, and are seeking an accounting. The
plaintiffs have not quantified the amount of their damages, but
they are seeking actual and punitive damages, interest and costs.
On November 17, 1994 the defendants filed a special appearance
and motion to dismiss for lack of venue. The court then entered
an order transferring venue to Oklahoma County District Court.
Discovery is proceeding and Samson Resources Company intends to
vigorously defend the lawsuit. On September 10, 1996 the
Oklahoma Supreme Court ruled in a separate lawsuit that owners of
royalty interests in Oklahoma oil and gas properties do not have
the right to share in the proceeds of take-or-pay settlements.
Such ruling is not yet final. As of the date of these financial
statements, management cannot determine the amount of any alleged
damages which would be allocable to the 1979-2 Program from this
lawsuit.
-19-
<PAGE>
<PAGE>
ITEM 5. OTHER INFORMATION
On October 1, 1996, Drew Phillips resigned as Chief Financial
Officer of Dyco. Mr. Phillips continues to serve as an
accounting officer of affiliates of Dyco.
On October 1, 1996, Patrick M. Hall was elected Chief Financial
Officer of Dyco. Mr. Hall joined affiliates of Dyco
(collectively, the "Samson Companies") in 1983. Prior to joining
the Samson Companies he was a senior accountant with Peat Marwick
Main & Co. in Tulsa. He holds a Bachelor of Science degree in
accounting from Oklahoma State University and is a Certified
Public Accountant. Mr. Hall is also Senior Vice President -
Controller of Samson Investment Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule containing summary
financial information extracted from the Dyco Oil
and Gas Program 1979-1 Limited Partnership's
financial statements as of September 30, 1996 and
for the nine months ended September 30, 1996,
filed herewith.
27.2 Financial Data Schedule containing summary
financial information extracted from the Dyco Oil
and Gas Program 1979-2 Limited Partnership's
financial statements as of September 30, 1996 and
for the nine months ended September 30, 1996,
filed herewith.
All other exhibits are omitted as inapplicable.
(b) Reports on Form 8-K
Current Reports on Form 8-K filed during third quarter of
1996:
Date of event: July 1, 1996
Date filed with SEC: July 8, 1996
Item Included:
Item 5 - Other Events
-20-
<PAGE>
<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 1979-1 LIMITED
PARTNERSHIP
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED
PARTNERSHIP
(Registrant)
By: DYCO PETROLEUM CORPORATION
General Partner
Date: November 1, 1996 By: /s/Dennis R. Neill
-------------------------------
(Signature)
Dennis R. Neill
President
Date: November 1, 1996 By: /s/Patrick M. Hall
-------------------------------
(Signature)
Patrick M. Hall
Chief Financial Officer
-21-
<PAGE>
<PAGE>
INDEX TO EXHIBITS
NUMBER DESCRIPTION
- ------ -----------
27.1 Financial Data Schedule containing summary financial
information extracted from the Dyco Oil and Gas Program
1979-1 Limited Partnership's financial statements as of
September 30, 1996 and for the nine months ended September
30, 1996, filed herewith.
27.2 Financial Data Schedule containing summary financial
information extracted from the Dyco Oil and Gas Program
1979-2 Limited Partnership's financial statements as of
September 30, 1996 and for the nine months ended September
30, 1996, filed herewith.
All other exhibits are omitted as inapplicable.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000806573
<NAME> DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 39,833
<SECURITIES> 0
<RECEIVABLES> 72,582
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 112,415
<PP&E> 20,451,692
<DEPRECIATION> 20,211,891
<TOTAL-ASSETS> 421,625
<CURRENT-LIABILITIES> 18,123
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 365,378
<TOTAL-LIABILITY-AND-EQUITY> 421,625
<SALES> 371,360
<TOTAL-REVENUES> 373,050
<CGS> 0
<TOTAL-COSTS> 163,479
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 209,571
<INCOME-TAX> 0
<INCOME-CONTINUING> 209,571
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 209,571
<EPS-PRIMARY> 66.06
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000806574
<NAME> DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 132,926
<SECURITIES> 0
<RECEIVABLES> 98,359
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 231,285
<PP&E> 18,562,656
<DEPRECIATION> 18,207,996
<TOTAL-ASSETS> 653,562
<CURRENT-LIABILITIES> 58,032
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 595,530
<TOTAL-LIABILITY-AND-EQUITY> 653,562
<SALES> 489,802
<TOTAL-REVENUES> 494,117
<CGS> 0
<TOTAL-COSTS> 200,053
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 294,064
<INCOME-TAX> 0
<INCOME-CONTINUING> 294,064
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 294,064
<EPS-PRIMARY> 101.79
<EPS-DILUTED> 0
</TABLE>
