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, 1998 33-10346-07 (1979-1)
33-10346-08 (1979-2)
DYCO 1979 OIL AND GAS PROGRAM
(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
------ ------
1
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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,
1998 1997
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 28,746 $ 70,498
Accrued oil and gas sales 40,211 69,687
-------- --------
Total current assets $ 68,957 $140,185
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 116,046 179,341
DEFERRED CHARGE 48,506 48,506
-------- --------
$233,509 $368,032
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 3,266 $ 2,778
Gas imbalance payable 105 105
-------- --------
Total current liabilities $ 3,371 $ 2,883
ACCRUED LIABILITY $ 37,026 $ 37,026
PARTNERS' CAPITAL:
General Partner, issued and
outstanding, 32 units $ 1,932 $ 3,282
Limited Partners, issued and
outstanding, 3,140 units 191,180 324,841
-------- --------
Total Partners' capital $193,112 $328,123
-------- --------
$233,509 $368,032
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
2
<PAGE>
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
-------- ---------
REVENUES:
Oil and gas sales $135,961 $103,310
Interest 702 595
-------- --------
$136,663 $103,905
COSTS AND EXPENSES:
Oil and gas production $ 20,362 $ 19,363
Depreciation, depletion, and
amortization of oil and gas
properties 16,450 7,925
General and administrative
(Note 2) 12,153 12,806
-------- --------
$ 48,965 $ 40,094
-------- --------
NET INCOME $ 87,698 $ 63,811
======== ========
GENERAL PARTNER (1%) - net income $ 877 $ 638
======== ========
LIMITED PARTNERS (99%) - net income $ 86,821 $ 63,173
======== ========
NET INCOME PER UNIT $ 27.65 $ 20.12
======== ========
UNITS OUTSTANDING 3,172 3,172
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
3
<PAGE>
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
-------- --------
REVENUES:
Oil and gas sales $299,857 $341,272
Interest 4,106 2,495
Gain on sale of oil and
gas properties 145,376 -
-------- --------
$449,339 $343,767
COSTS AND EXPENSES:
Oil and gas production $ 51,887 $ 59,843
Depreciation, depletion, and
amortization of oil and gas
properties 31,518 34,878
General and administrative
(Note 2) 41,005 43,753
-------- --------
$124,410 $138,474
-------- --------
NET INCOME $324,929 $205,293
======== ========
GENERAL PARTNER (1%) - net income $ 3,249 $ 2,053
======== ========
LIMITED PARTNERS (99%) - net income $321,680 $203,240
======== ========
NET INCOME PER UNIT $ 102.44 $ 64.72
======== ========
UNITS OUTSTANDING 3,172 3,172
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
4
<PAGE>
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $324,929 $205,293
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 31,518 34,878
Gain on sale of oil and gas
properties ( 145,376) -
Decrease in accrued oil and
gas sales 29,476 35,555
Increase (decrease) in accounts
payable 488 ( 500)
-------- --------
Net cash provided by operating
activities $241,035 $275,226
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties ($ 234) $ -
Proceeds from the sale of oil and
gas properties 177,387 $ 346
-------- --------
Net cash provided by investing
activities $177,153 $ 346
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($459,940) ($301,340)
-------- --------
Net cash used by financing
activities ($459,940) ($301,340)
-------- --------
NET DECREASE IN CASH AND CASH
EQUIVALENTS ($ 41,752) ($ 25,768)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 70,498 59,449
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 28,746 $ 33,681
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
5
<PAGE>
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
1998 1997
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 81,602 $157,539
Accrued oil and gas sales 54,665 81,158
-------- --------
Total current assets $136,267 $238,697
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 222,518 283,007
DEFERRED CHARGE 38,072 38,072
-------- --------
$396,857 $559,776
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 5,075 $ 6,190
Gas imbalance payable 53,853 53,853
-------- --------
Total current liabilities $ 58,928 $ 60,043
ACCRUED LIABILITY $ 557 $ 557
PARTNERS' CAPITAL:
General Partner, issued and
outstanding, 29 units $ 3,374 $ 4,992
Limited Partners, issued and
outstanding, 2,860 units 333,998 494,184
-------- --------
Total Partners' capital $337,372 $499,176
-------- --------
$396,857 $559,776
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
6
<PAGE>
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
-------- --------
REVENUES:
Oil and gas sales $96,933 $215,050
Interest 2,400 2,690
------- --------
$99,333 $217,740
COSTS AND EXPENSES:
Oil and gas production $29,618 $ 32,415
Depreciation, depletion, and
amortization of oil and gas
properties 22,337 26,887
General and administrative
(Note 2) 8,735 9,330
------- --------
$60,690 $ 68,632
------- --------
NET INCOME $38,643 $149,108
======= ========
GENERAL PARTNER (1%) - net income $ 387 $ 1,491
======= ========
LIMITED PARTNERS (99%) - net income $38,256 $147,617
======= ========
NET INCOME PER UNIT $ 13.37 $ 51.61
======= ========
UNITS OUTSTANDING 2,889 2,889
======= ========
The accompanying condensed notes are an integral part of
these financial statements.
7
<PAGE>
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
-------- --------
REVENUES:
Oil and gas sales $374,377 $574,303
Interest 6,784 6,570
-------- --------
$381,161 $580,873
COSTS AND EXPENSES:
Oil and gas production $ 77,106 $ 92,493
Depreciation, depletion, and
amortization of oil and gas
properties 59,945 85,426
General and administrative
(Note 2) 30,344 32,931
-------- --------
$167,395 $210,850
-------- --------
NET INCOME $213,766 $370,023
======== ========
GENERAL PARTNER (1%) - net income $ 2,138 $ 3,700
======== ========
LIMITED PARTNERS (99%) - net income $211,628 $366,323
======== ========
NET INCOME PER UNIT $ 73.99 $ 128.08
======== ========
UNITS OUTSTANDING 2,889 2,889
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
8
<PAGE>
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $213,766 $370,023
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 59,945 85,426
Decrease in accrued oil and
gas sales 26,493 49,471
Decrease in accounts payable ( 1,115) ( 5,454)
-------- --------
Net cash provided by operating
activities $299,089 $499,466
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of oil and
gas properties $ 544 $ 1,970
Additions to oil and gas properties - ( 84)
-------- --------
Net cash provided by investing
activities $ 544 $ 1,886
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($375,570) ($447,795)
-------- --------
Net cash used by financing
activities ($375,570) ($447,795)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 75,937) $ 53,557
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 157,539 123,603
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 81,602 $177,160
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
9
<PAGE>
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, 1998
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheet as of September 30, 1998, statements of operations for
the three and nine months ended September 30, 1998 and 1997, and
statements of cash flows for the nine months ended September 30, 1998 and
1997 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, 1998, results of operations for the three and nine months
ended September 30, 1998 and 1997, and changes in cash flows for the nine
months ended September 30, 1998 and 1997 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, 1997. The results of operations for the period
ended September 30, 1998 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 Programs' 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
10
<PAGE>
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. During the three months ended March 31, 1998,
the 1979-1 Program sold several wells for $162,007 representing
approximately 9.3% of its total reserves. These sales significantly
altered the 1979-1 Program's capitalized cost/proved reserves
relationship. Accordingly, capitalized costs were reduced by 9.3% with the
remainder recorded as Gain on Sale of Oil and Gas Properties.
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.
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, 1998
and 1997 the 1979-1 Program incurred such expenses totaling $12,153 and
$12,806, respectively, of which $11,130 was paid each period to Dyco and
its affiliates. During the nine months ended September 30, 1998 and 1997
the 1979-1 Program incurred such expenses totaling $41,005 and $43,753,
respectively, of which $33,390 was paid each period to Dyco and its
affiliates. During the three months ended September 30, 1998 and 1997 the
1979-2 Program incurred such expenses totaling $8,735 and $9,330,
respectively, of which $7,803 was paid each period to Dyco and its
affiliates. During the nine months ended September 30, 1998 and 1997 the
1979-2 Program incurred such expenses totaling $30,344 and $32,931,
respectively, of which $23,409 was paid each period to Dyco and its
affiliates.
Affiliates of the Programs operate certain of the Programs' properties.
Their policy is to bill the Programs for all customary charges and cost
reimbursements associated with these activities.
11
<PAGE>
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 Programs.
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, and otherwise indicated.
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.
12
<PAGE>
The Programs' available capital from subscriptions has been spent on oil
and gas drilling activities. There should be no further material capital
resource commitments in the future. The Programs have no debt commitments.
Cash for operational purposes will be provided by current oil and gas
production.
The 1979-1 Program's Statement of Cash Flows for the nine months ended
September 30, 1998 includes proceeds from the sale of oil and gas
properties during the first quarter of 1998. These proceeds were included
in the 1979-1 Program's cash distributions paid in June 1998. It is
possible that the 1979-1 Program's repurchase values and future cash
distributions could decline as a result of the disposition of these
properties. On the other hand, the General Partner believes there will be
beneficial operating efficiencies related to the 1979-1 Program's
remaining properties. This is primarily due to the fact that the
properties sold generally bore a higher ratio of operating expenses as
compared to reserves than the 1979-1 Program's remaining properties.
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 Programs' revenues is the prices received for the
sale of oil and gas. Predicting future prices is very difficult.
Substantially all of the Programs' gas reserves are being sold on 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. Such spot market sales are generally short-term in nature and
are dependent upon the obtaining of transportation services provided by
pipelines. In addition, crude oil prices are at or near their lowest level
in the past decade due primarily to the global surplus of crude oil.
Management is unable to predict whether future oil and gas prices will (i)
stabilize, (ii) increase, or (iii) decrease.
13
<PAGE>
1979-1 PROGRAM
THREE MONTHS ENDED SEPTEMBER 30, 1998 AS COMPARED TO THE THREE MONTHS
ENDED SEPTEMBER 30, 1997.
Three Months Ended September 30,
--------------------------------
1998 1997
-------- --------
Oil and gas sales $135,961 $103,310
Oil and gas production expenses $ 20,362 $ 19,363
Barrels produced 75 9
Mcf produced 79,991 50,334
Average price/Bbl $ 18.56 $ 19.11
Average price/Mcf $ 1.68 $ 2.05
As shown in the table above, total oil and gas sales increased $32,651
(31.6%) for the three months ended September 30, 1998 as compared to the
three months ended September 30, 1997. Of this increase, approximately
$61,000 was related to an increase in volumes of gas sold, which increase
was partially offset by a decrease of approximately $29,000 related to a
decrease in the average price of gas sold. Volumes of oil and gas sold
increased 66 barrels and 29,657 Mcf, respectively, for the three months
ended September 30, 1998 as compared to the three months ended September
30, 1997. The increase in volumes of oil and gas sold resulted primarily
from positive prior period volume adjustments on one significant well
during the three months ended September 30, 1998. Average oil and gas
prices decreased to $18.56 per barrel and $1.68 per Mcf, respectively, for
the three months ended September 30, 1998 from $19.11 per barrel and $2.05
per Mcf, respectively, for the three months ended September 30, 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $999 (5.2%) for the three months ended
September 30, 1998 as compared to the three months ended September 30,
1997. This increase resulted primarily from an increase in production
taxes associated with the increase in oil and gas sales, which increase
was partially offset by a decrease in lease operating expenses associated
with several wells sold during 1997 and 1998. As a percentage of oil and
gas sales, these expenses decreased to 15.0% for the three months ended
September 30, 1998 from 18.7% for the three months ended September 30,
1997. This percentage decrease was primarily due to the positive prior
period volume adjustments discussed above.
14
<PAGE>
Depreciation, depletion, and amortization of oil and gas properties
increased $8,525 (107.6%) for the three months ended September 30, 1998 as
compared with the three months ended September 30, 1997. This increase
resulted primarily from a decrease in the oil and gas prices used in the
valuation of reserves at September 30, 1998 as compared to September 30,
1997. As a percentage of oil and gas sales, this expense increased to
12.1% for the three months ended September 30, 1998 from 7.7% for the
three months ended September 30, 1997. This percentage increase was
primarily due to the dollar increase in depreciation, depletion, and
amortization.
General and administrative expenses decreased $653 (5.1%) for the three
months ended September 30, 1998 as compared to the three months ended
September 30, 1997. As a percentage of oil and gas sales, these expenses
decreased to 8.9% for the three months ended September 30, 1998 from 12.4%
for the three months ended September 30, 1997. This percentage decrease
was primarily due to the increase in oil and gas sales.
NINE MONTHS ENDED SEPTEMBER 30, 1998 AS COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1997.
Nine Months Ended September 30,
-------------------------------
1998 1997
-------- --------
Oil and gas sales $299,857 $341,272
Oil and gas production expenses $ 51,887 $ 59,843
Barrels produced 224 181
Mcf produced 164,277 155,711
Average price/Bbl $ 15.63 $ 20.63
Average price/Mcf $ 1.80 $ 2.17
As shown in the table above, total oil and gas sales decreased $41,415
(12.1%) for the nine months ended September 30, 1998 as compared to the
nine months ended September 30, 1997. Of this decrease, approximately
$60,000 was related to a decrease in the average price of gas sold, which
decrease was partially offset by an increase of approximately $19,000
related to an increase in volumes of gas sold. Volumes of oil and gas sold
increased 43 barrels and 8,566 Mcf, respectively, for the nine months
ended September 30, 1998 as compared to the nine months ended September
30, 1997. Average oil and gas prices decreased to $15.63 per barrel and
$1.80 per Mcf, respectively, for the nine months ended September 30, 1998
from $20.63 per barrel and $2.17 per Mcf, respectively, for the nine
months ended September 30, 1997.
15
<PAGE>
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $7,956 (13.3%) for the nine months ended
September 30, 1998 as compared to the nine months ended September 30,
1997. This decrease resulted primarily from a decrease in production taxes
associated with the decrease in oil and gas sales and a decrease in lease
operating expenses associated with the sale of several wells during 1997
and 1998. As a percentage of oil and gas sales, these expenses remained
relatively constant at 17.3% for the nine months ended September 30, 1998
and 17.5% for the nine months ended September 30, 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $3,360 (9.6%) for the nine months ended September 30, 1998 as
compared to the nine months ended September 30, 1997. As a percentage of
oil and gas sales, these expenses remained relatively constant at 10.5%
for the nine months ended September 30, 1998 and 10.2% for the nine months
ended September 30, 1997.
General and administrative expenses decreased $2,748 (6.3%) for the nine
months ended September 30, 1998 as compared to the nine months ended
September 30, 1997. As a percentage of oil and gas sales, these expenses
remained relatively constant at 13.7% for the nine months ended September
30, 1998 and 12.8% for the nine months ended September 30, 1997.
1979-2 PROGRAM
THREE MONTHS ENDED SEPTEMBER 30, 1998 AS COMPARED TO THE THREE MONTHS
ENDED SEPTEMBER 30, 1997.
Three Months Ended September 30,
--------------------------------
1998 1997
------- --------
Oil and gas sales $96,933 $215,050
Oil and gas production expenses $29,618 $ 32,415
Barrels produced 286 395
Mcf produced 45,012 90,213
Average price/Bbl $ 13.10 $ 19.26
Average price/Mcf $ 2.07 $ 2.30
As shown in the table above, total oil and gas sales decreased $118,117
(54.9%) for the three months ended September 30, 1998 as compared to the
three months ended September 30, 1997. Of this decrease, approximately
$104,000 was related to a decrease in the volumes of gas sold. Volumes of
oil and gas sold decreased 109 barrels and 45,201 Mcf, respectively, for
the three months ended September 30, 1998 as compared to the three months
ended September 30, 1997. The decrease in volumes of gas sold resulted
primarily from the 1979-2 Program receiving a reduced percentage of sales
on one significant well during
16
<PAGE>
the three months ended September 30, 1998 due to its overproduced position
in that well. Average oil and gas prices decreased to $13.10 per barrel
and $2.07 per Mcf, respectively, for the three months ended September 30,
1998 from $19.26 per barrel and $2.30 per Mcf, respectively, for the three
months ended September 30, 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $2,797 (8.6%) for the three months ended
September 30, 1998 as compared to the three months ended September 30,
1997. As a percentage of oil and gas sales, these expenses increased to
30.6% for the three months ended September 30, 1998 from 15.1% for the
three months ended September 30, 1997. This percentage increase was
primarily due to the decreases in the average prices of oil and gas sold
during the three months ended September 30, 1998 as compared to the three
months ended September 30, 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $4,550 (16.9%) for the three months ended September 30, 1998 as
compared to the three months ended September 30, 1997. This decrease
resulted primarily from (i) the decreases in volumes of oil and gas sold
and (ii) significant upward revisions in the estimates of remaining gas
reserves at December 31, 1997. These decreases were partially offset by an
increase in depreciation, depletion, and amortization primarily due to a
decrease in the oil and gas prices used in the valuation of reserves at
September 30, 1998 as compared to September 30, 1997. As a percentage of
oil and gas sales, this expense increased to 23.0% for the three months
ended September 30, 1998 from 12.5% for the three months ended September
30, 1997. This percentage increase was primarily due to the dollar
increase in depreciation, depletion, and amortization.
General and administrative expenses decreased $595 (6.4%) for the three
months ended September 30, 1998 as compared to the three months ended
September 30, 1997. As a percentage of oil and gas sales, these expenses
increased to 9.0% for the three months ended September 30, 1998 from 4.3%
for the three months ended September 30, 1997. This percentage increase
was primarily due to the decrease in oil and gas sales.
17
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1998 AS COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1997.
Nine Months Ended September 30,
-------------------------------
1998 1997
-------- --------
Oil and gas sales $374,377 $574,303
Oil and gas production expenses $ 77,106 $ 92,493
Barrels produced 879 957
Mcf produced 164,681 232,829
Average price/Bbl $ 13.88 $ 20.75
Average price/Mcf $ 2.20 $ 2.38
As shown in the table above, total oil and gas sales decreased $199,926
(34.8%) for the nine months ended September 30, 1998 as compared to the
nine months ended September 30, 1997. Of this decrease, approximately
$162,000 was related to a decrease in the volumes of gas sold and
approximately $30,000 was related to a decrease in the average price of
gas sold. Volumes of oil and gas sold decreased 78 barrels and 68,148 Mcf,
respectively, for the nine months ended September 30, 1998 as compared to
the nine months ended September 30, 1997. The decrease in volumes of gas
sold resulted primarily from (i) the 1979-2 Program receiving a reduced
percentage of sales on one significant well during the nine months ended
September 30, 1998 due to its overproduced position in that well and (ii)
the 1979-2 Program receiving an increased percentage of sales on another
well during the nine months ended September 30, 1997 due to its
underproduced position in that well. Average oil and gas prices decreased
to $13.88 per barrel and $2.20 per Mcf, respectively, for the nine months
ended September 30, 1998 from $20.75 per barrel and $2.38 per Mcf,
respectively, for the nine months ended September 30, 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $15,387 (16.6%) for the nine months ended
September 30, 1998 as compared to the nine months ended September 30,
1997. This decrease resulted primarily from (i) a decrease in production
taxes associated with the decrease in oil and gas sales and (ii) repair
and maintenance expenses incurred on two wells during the nine months
ended September 30, 1997. These decreases were partially offset by legal
expenses related to operations on one well during the nine months ended
September 30, 1998. As a percentage of oil and gas sales, these expenses
increased to 20.6% for the nine months ended September 30, 1998 from 16.1%
for the nine months ended September 30, 1997. This percentage increase was
primarily due to the legal expenses discussed above and the decreases in
the average prices of oil and gas sold during the nine
18
<PAGE>
months ended September 30, 1998 as compared to the nine months ended
September 30, 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $25,481 (29.8%) for the nine months ended September 30, 1998 as
compared to the nine months ended September 30, 1997. This decrease
resulted primarily from (i) the decreases in volumes of oil and gas sold
during the nine months ended September 30, 1998 as compared to the nine
months ended September 30, 1997 and (ii) significant upward revisions in
the estimates of remaining gas reserves at December 31, 1997. As a
percentage of oil and gas sales, these expenses increased to 16.0% for the
nine months ended September 30, 1998 from 14.9% at the nine months ended
September 30, 1997. This percentage increase was primarily due to the
decreases in the average prices of oil and gas sold during the nine months
ended September 30, 1998 as compared to the nine months ended September
30, 1997.
General and administrative expenses decreased $2,587 (7.9%) for the nine
months ended September 30, 1998 as compared to the nine months ended
September 30, 1997. As a percentage of oil and gas sales, these expenses
increased to 8.1% for the nine months ended September 30, 1998 from 5.7%
for the nine months ended September 30, 1997. This percentage increase was
primarily due to the decrease in oil and gas sales.
19
<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 1979-1 Program's
financial statements as of September 30, 1998 and for
the nine months ended September 30, 1998, filed
herewith.
27.2 Financial Data Schedule containing summary financial
information extracted from the 1979-2 Program's
financial statements as of September 30, 1998 and for
the nine months ended September 30, 1998, filed
herewith.
All other exhibits are omitted as inapplicable.
(b) Reports on Form 8-K.
None.
20
<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 12, 1998 By: /s/Dennis R. Neill
-------------------------------
(Signature)
Dennis R. Neill
President
Date: November 12, 1998 By: /s/Patrick M. Hall
-------------------------------
(Signature)
Patrick M. Hall
Chief Financial Officer
21
<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, 1998 and for
the nine months ended September 30, 1998, 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, 1998 and for
the nine months ended September 30, 1998, filed herewith.
All other exhibits are omitted as inapplicable.
22
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000806573
<NAME> Dyco Oil & Gas Program 1979-1 Limited Pshp
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 28,746
<SECURITIES> 0
<RECEIVABLES> 40,211
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 68,957
<PP&E> 20,381,111
<DEPRECIATION> 20,265,065
<TOTAL-ASSETS> 233,509
<CURRENT-LIABILITIES> 3,371
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 193,112
<TOTAL-LIABILITY-AND-EQUITY> 233,509
<SALES> 299,857
<TOTAL-REVENUES> 449,339
<CGS> 0
<TOTAL-COSTS> 124,410
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 324,929
<INCOME-TAX> 0
<INCOME-CONTINUING> 324,929
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 324,929
<EPS-PRIMARY> 102.44
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000806574
<NAME> Dyco Oil & Gas Program 1979-2 Limited Pshp
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 81,602
<SECURITIES> 0
<RECEIVABLES> 54,665
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 136,267
<PP&E> 18,553,948
<DEPRECIATION> 18,331,430
<TOTAL-ASSETS> 396,857
<CURRENT-LIABILITIES> 58,928
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 337,372
<TOTAL-LIABILITY-AND-EQUITY> 396,857
<SALES> 374,377
<TOTAL-REVENUES> 381,161
<CGS> 0
<TOTAL-COSTS> 167,395
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 213,766
<INCOME-TAX> 0
<INCOME-CONTINUING> 213,766
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 213,766
<EPS-PRIMARY> 73.99
<EPS-DILUTED> 0
</TABLE>
