<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended Commission File Number
March 31, 1996 2-65186-03 (1980-1)
2-65186-04 (1980-2)
DYCO 1980 OIL AND GAS PROGRAMS
(TWO LIMITED PARTNERSHIPS)
(Exact Name of Registrant as specified in its charter)
41-1378908 (1980-1)
Minnesota 41-1385165 (1980-2)
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
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 1980-1 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1996 1995
--------- ------------
CURRENT ASSETS:
Cash and cash equivalents . . . . . . $ 195,325 $ 106,038
Accrued oil and gas sales, including
$92,090 due from related parties
in 1995 (Note 2) . . . . . . . . . . 124,062 109,691
---------- ----------
Total current assets . . . . . . . $ 319,387 $ 215,729
NET OIL AND GAS PROPERTIES, utilizing
the full cost method . . . . . . . . . 634,468 671,070
DEFERRED CHARGE . . . . . . . . . . . . . 147,056 147,056
---------- ----------
$1,100,911 $1,033,855
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . $ 52,875 $ 49,013
Gas imbalance payable . . . . . . . . 1,434 1,434
---------- ----------
Total current liabilities . . . . . $ 54,309 $ 50,447
ACCRUED LIABILITY . . . . . . . . . . . . 37,096 37,096
CONTINGENCIES (Note 3)
PARTNERS' CAPITAL:
General Partner, issued and outstanding,
40 units . . . . . . . . . . . . . . 10,095 9,463
Limited Partners, issued and outstanding,
4,000 units . . . . . . . . . . . . 999,411 936,849
---------- ----------
Total Partners' capital . . . . . . $1,009,506 $ 946,312
---------- ----------
$1,100,911 $1,033,855
========== ==========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1980-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
--------- ---------
REVENUES:
Oil and gas sales, including
$108,086 of sales to related
parties in 1995 (Note 2) . . . . . . $183,176 $138,506
Interest . . . . . . . . . . . . . . . 1,250 1,198
-------- --------
$184,426 $139,704
-------- --------
COSTS AND EXPENSES:
Oil and gas production . . . . . . . . $ 63,694 $ 66,016
Depreciation, depletion, and amortization of
oil and gas properties . . . . . . . 37,505 38,121
General and administrative (Note 2) . 20,033 20,085
-------- --------
$121,232 $124,222
-------- --------
NET INCOME . . . . . . . . . . . . . . . $ 63,194 $ 15,482
======== ========
GENERAL PARTNER (1%) - net income . . . . $ 632 $ 155
======== ========
LIMITED PARTNERS (99%) - net income . . . $ 62,562 $ 15,327
======== ========
NET INCOME PER UNIT . . . . . . . . . . . $ 16 $ 4
======== ========
UNITS OUTSTANDING . . . . . . . . . . . . 4,040 4,040
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1980-1 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . $ 63,194 $ 15,482
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation, depletion, and amortization
of oil and gas properties . . . . . 37,505 38,121
(Increase) decrease in accrued oil and
gas sales . . . . . . . . . . . . . ( 14,371) 6,774
Increase in accounts payable . . . . 3,862 1,501
-------- --------
Net cash provided by operating
activities . . . . . . . . . . . . $ 90,190 $ 61,878
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties . ($ 2,452) ($ 9,158)
Retirements of oil and gas properties 1,549 -
-------- --------
Net cash used by investing
activities . . . . . . . . . . . ($ 903) ($ 9,158)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions . . . . . . . . . . $ - $ -
-------- --------
Net cash used by financing
activities . . . . . . . . . . . . $ - $ -
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 89,287 $ 52,720
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD . . . . . . . . . . . . . . . . . 106,038 71,555
-------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD . . . . . . . . . . . . . . . . . $195,325 $124,275
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1980-2 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1996 1995
----------- -------------
CURRENT ASSETS:
Cash and cash equivalents . . . . . . $ 259,945 $ 273,193
Accrued oil and gas sales, including
$93,000 due from related parties
in 1995 (Note 2) . . . . . . . . . . 134,673 117,898
---------- ----------
Total current assets . . . . . . . $ 394,618 $ 391,091
NET OIL AND GAS PROPERTIES, utilizing
the full cost method . . . . . . . . . 458,807 488,926
DEFERRED CHARGE . . . . . . . . . . . . . 190,675 190,675
---------- ----------
$1,044,100 $1,070,692
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . $ 54,377 $ 52,007
Gas imbalance payable . . . . . . . . 39,263 39,263
---------- ----------
Total current liabilities . . . . . $ 93,640 $ 91,270
ACCRUED LIABILITY . . . . . . . . . . . . 154,526 154,526
CONTINGENCIES (Note 3)
PARTNERS' CAPITAL:
General Partner, issued and outstanding,
59 units . . . . . . . . . . . . . . 7,959 8,249
Limited Partners, issued and outstanding,
5,000 units . . . . . . . . . . . . 787,975 816,647
---------- ----------
Total Partners' capital . . . . . . $ 795,934 $ 824,896
---------- ----------
$1,044,100 $1,070,692
========== ==========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1980-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
--------- ---------
REVENUES:
Oil and gas sales, including
$132,495 of sales to related
parties in 1995 (Note 2) . . . . . . $191,669 $165,093
Interest . . . . . . . . . . . . . . . 2,899 1,654
-------- --------
$194,568 $166,747
-------- --------
COSTS AND EXPENSES:
Oil and gas production . . . . . . . . $ 63,019 $ 75,646
Depreciation, depletion, and amortization
of oil and gas properties . . . . . 30,658 43,902
General and administrative (Note 2) . 28,673 28,956
-------- --------
$122,350 $148,504
-------- --------
NET INCOME . . . . . . . . . . . . . . . $ 72,218 $ 18,243
======== ========
GENERAL PARTNER (1%) - net income . . . . $ 722 $ 182
======== ========
LIMITED PARTNERS (99%) - net income . . . $ 71,496 $ 18,061
======== ========
NET INCOME PER UNIT . . . . . . . . . . . $ 14 $ 4
======== ========
UNITS OUTSTANDING . . . . . . . . . . . . 5,059 5,059
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1980-2 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . $ 72,218 $ 18,243
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion, and amortization
of oil and gas properties . . . . . 30,658 43,902
(Increase) decrease in accrued oil and
gas sales . . . . . . . . . . . . . ( 16,755) 6,976
Increase in accounts payable . . . . 2,370 1,665
-------- --------
Net cash provided by operating
activities . . . . . . . . . . . . $ 88,471 $ 70,786
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties . ($ 2,553) ($ 9,579)
Retirements of oil and gas properties 2,014 -
-------- --------
Net cash used by investing
activities . . . . . . . . . . . . ($ 539) ($ 9,579)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions . . . . . . . . . . ($101,180) $ -
-------- --------
Net cash used by financing
activities . . . . . . . . . . . . ($101,180) $ -
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS . . . . . . . . . . . . . ($ 13,248) $ 61,207
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD . . . . . . . . . . . . . . . . . 273,193 105,287
-------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD . . . . . . . . . . . . . . . . . $259,945 $166,494
======== ========
The accompanying condensed notes are an
integral part of these financial statements.
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DYCO OIL AND GAS PROGRAM 1980-1 LIMITED PARTNERSHIP
DYCO OIL AND GAS PROGRAM 1980-2 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheets as of March 31, 1996, statements of operations
for the three months ended March 31, 1996 and 1995, and statements
of cash flows for the three months ended March 31, 1996 and 1995
have been prepared by Dyco Petroleum Corporation ("Dyco"), the
General Partner of the Dyco Oil and Gas Program 1980-1 and 1980-2
Limited Partnerships (individually, the "1980-1 Program" or the
"1980-2 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 March 31,
1996, results of operations for the three months ended March 31,
1996 and 1995, and changes in cash flows for the three months ended
March 31, 1996 and 1995 have been made.
Information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is
suggested that these financial statements be read in conjunction
with the financial statements and notes thereto included in the
Programs' Annual Report on Form 10-K for the year ended December
31, 1995. The results of operations for the period ended March 31,
1996 are not necessarily indicative of the results to be expected
for the full year.
The limited partners' net income or loss per unit is based upon
each $5,000 initial capital contribution.
OIL AND GAS PROPERTIES
----------------------
Oil and gas operations are accounted for using the full cost method
of accounting. All productive and non-productive costs associated
with the acquisition, exploration and development of oil and gas
reserves are capitalized. 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
March 31, 1996 and 1995 the 1980-1 Program incurred such expenses
totaling $20,033 and $20,085, respectively, of which $14,022 and
$14,022 were paid to Dyco. During the three months ended March 31,
1996 and 1995 the 1980-2 Program incurred such expenses totaling
$28,673 and $28,956, respectively, of which $21,405 and $21,405
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 March 31, 1995
these sales for the 1980-1 Program totaled $108,086. At December
31, 1995, accrued oil and gas sales for the 1980-1 Program included
$92,090 due from Premier. During the three months ended March 31,
1995 these sales for the 1980-2 Program totaled $132,495. At
December 31, 1995, accrued oil and gas sales for the 1980-2 Program
included $93,000 due from Premier.
3. CONTINGENCIES
-------------
On November 12, 1992, certain adjacent landowners filed a lawsuit
against Dyco and others in which the plaintiffs alleged damages to
their land as a result of remediation operations conducted on one
of the Programs' wells. The lawsuit alleged claims based on
negligence, private nuisance, public nuisance, trespass, unjust
enrichment, constructive fraud, and permanent injunctive relief,
all in amounts to be determined at trial. A trial was conducted in
the matter on February 22, 1994 in which the jury entered a verdict
in favor of the plaintiffs in the amount of approximately
$5.5 million, consisting of approximately $2.75 million in actual
damages and approximately $2.75 million in punitive damages. Dyco
appealed the district court's verdict and on March 5, 1996 the
Oklahoma Court of Appeals reversed the district court's verdict and
ordered a new trial. Both Dyco and the plaintiffs have filed
petitions for certiorari with the Supreme Court of Oklahoma seeking
a further review of the Court of Appeals' opinion.
On March 18, 1993, a royalty owner filed a lawsuit against Dyco in
which the plaintiff alleged entitlement to a share of the proceeds
of a take-or-pay settlement with a gas purchaser which involved one
of the 1980-1 Program's wells. Plaintiff is seeking a full
accounting, unpaid royalties, and his share of benefits from the
gas purchase contract as a third party beneficiary. The plaintiff
has not quantified the amount of his alleged damages. Dyco has
filed its answer in the matter in which it denied all of the
plaintiff's allegations. Discovery is proceeding in the matter.
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The plaintiffs filed a motion for summary judgment on November 29,
1994 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. As of the date of these
financial statements, management cannot determine the amount of any
alleged damages which would be allocable to the 1980-1 Program from
this lawsuit; however, it is reasonably possible that events could
change in the future resulting in a material liability to the
Program.
On October 15, 1993, certain royalty owners filed a class action
lawsuit against Dyco in which the plaintiffs alleged entitlement to
a share of the proceeds of a take-or-pay settlement with a gas
purchaser which involved three of the Programs' wells. The lawsuit
also alleges claims based on unjust enrichment, breach of contract,
and breach of fiduciary obligations and seeks an accounting and
declaration that the plaintiffs are third party beneficiaries 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. The
district court certified the matter as a class action on
January 21, 1994 and discovery is proceeding in the matter. 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. As of the date of these
financial statements, management cannot determine the amount of any
alleged damages which would be allocable to the Programs from this
lawsuit; however it is reasonably possible that events could change
in the future resulting in a material liability to the Programs.
On October 26, 1993, certain royalty owners filed a class action
lawsuit against Dyco in which the plaintiffs alleged entitlement to
a share of the proceeds of a take-or-pay settlement with a gas
purchaser which involved four of the Programs' wells. The lawsuit
also alleges claims based on unjust enrichment, breach of contract,
and breach of fiduciary obligations and seeks an accounting and
declaration that the plaintiffs are third party beneficiaries 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. The
district court certified the matter as a class action on January
18, 1994 and discovery is proceeding in the matter. 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. As of the date of these financial statements,
management cannot determine the amount of any alleged damages which
would be allocable to the Programs from this lawsuit; however it is
reasonably possible that events could change in the future
resulting in a material liability to the Programs.
On December 18, 1992, a royalty owner filed a quiet title action
alleging that the operator of certain wells in which the Programs
have an interest failed to exercise due diligence in locating the
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owner while in the process of force pooling the drilling and
spacing unit. Plaintiff claimed a right to revenues attributable
to production from said wells in an amount in excess of $500,000
and further alleged conversion and claimed a right to "interest" on
the proceeds from production on the four wells pursuant to 52
O.S. Section 540. The defendants filed a counterclaim for quiet
title and asserted various defenses. A trial was held in the
matter on March 3 and 4, 1994 in which the district court ruled
against all defendants and specifically found that the operator,
Apache Corporation, did not exercise due diligence in the pooling
proceedings. Judgment was entered on June 15, 1994 in the amount
of $550,000 plus interest. The defendants appealed the district
court's verdict and on March 12, 1996 the Oklahoma Court of Appeals
reversed the district court's verdict. Plaintiff has filed a
petition for rehearing with the Oklahoma Court of Appeals.
On June 14, 1995, a royalty owner filed a class action lawsuit
against Dyco in which the plaintiff alleged entitlement to a share
of the proceeds of a take-or-pay settlement with a gas purchaser
which involved one of the Program's wells. The lawsuit also
alleges claims based on unjust enrichment, breach of contract and
fiduciary obligation, and constructive fraud. The plaintiff is
seeking an accounting as a third party beneficiary and a temporary
restraining order, along with actual and punitive damages,
interest, and costs. Dyco intends to vigorously defend the
lawsuit. As of the date of these financial statements, management
cannot determine the amount of any alleged damages which would be
allocable to the 1980-1 Program from this lawsuit; however, it is
reasonably possible that events could change in the future
resulting in a material liability to the 1980-1 Program.
Included in these financial statements as of December 31, 1995 and
March 31, 1996 is an accrual by the General Partner of $40,000
representing each Program's share of estimated ultimate damages
resulting from the quiet title action and the lawsuit filed on
November 12, 1992. No accruals have been established for the take-
or-pay lawsuits.
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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
- ---------------------
1980-1 PROGRAM
THREE MONTHS ENDED MARCH 31, 1996 AS COMPARED TO THE THREE MONTHS
ENDED MARCH 31, 1995.
Three months ended March 31,
--------------------------------
1996 1995
---- ----
Oil and gas sales $183,176 $138,506
Oil and gas production
expenses $ 63,694 $ 66,016
Barrels produced 538 671
Mcf produced 89,858 98,533
Average price/Bbl $ 18.48 $ 16.73
Average price/Mcf $ 1.93 $ 1.29
As shown in the table, oil and natural gas sales increased 32.3%
for the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995. This increase resulted
primarily from the increases in the average prices of oil and
natural gas sold during the three months ended March 31, 1996 as
compared to the three months ended March 31, 1995, partially
offset by the decreases in the volumes of oil and natural gas
sold during the three months ended March 31, 1996 as compared to
the three months ended March 31, 1995. Volumes of oil and
natural gas sold decreased 133 barrels and 8,675 Mcf,
respectively, during the three months ended March 31, 1996 as
compared to the three months ended March 31, 1995. The decrease
in the volumes of natural gas sold was primarily the result of
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the normal decline in production from diminished reserves on
several wells. Average oil and natural gas prices increased to
$18.48 per barrel and $1.93 per Mcf for the three months ended
March 31, 1996 from averages of $16.73 per barrel and $1.29 per
Mcf for the three months ended March 31, 1995.
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased slightly by $2,322 for
the three months ended March 31, 1996 as compared to the three
months ended March 31, 1995. The decrease resulted primarily
from the decrease in the volumes of oil and natural gas sold
during the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995. As a percentage of oil and
gas sales, these expenses decreased to 34.8% for the three months
ended March 31, 1996 from 47.7% for the three months ended March
31, 1995. This percentage decrease resulted primarily from the
increases in the average prices of oil and natural gas sold
during the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995.
Depreciation, depletion, and amortization of oil and gas
properties decreased slightly by $616 for the three months ended
March 31, 1996 as compared to the three months ended March 31,
1995. This decrease resulted primarily from the decrease in the
volumes of oil and natural gas sold during the three months ended
March 31, 1996 as compared to the three months ended March 31,
1995. As a percentage of oil and gas sales, this expense
decreased to 20.5% for the three months ended March 31, 1996
compared to 27.5% for the three months ended March 31, 1995.
This percentage decrease resulted primarily from the increases in
the average prices of oil and natural gas sold during the three
months ended March 31, 1996 as compared to the three months ended
March 31, 1995.
General and administrative expenses remained relatively constant
for the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995. As a percentage of oil and
gas sales, these expenses decreased to 10.9% for the three months
ended March 31, 1996 from 14.5% for the three months ended March
31, 1995. This percentage decrease was primarily due to the
increases in the average prices of oil and natural gas sold
during the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995.
1980-2 PROGRAM
THREE MONTHS ENDED MARCH 31, 1996 AS COMPARED TO THE THREE MONTHS
ENDED MARCH 31, 1995.
Three months ended March 31,
--------------------------------
1996 1995
---- -----
Oil and gas sales $191,669 $165,093
Oil and gas production
expenses $ 63,019 $ 75,646
Barrels produced 515 561
Mcf produced 95,695 135,861
Average price/Bbl $ 18.42 $ 17.46
Average price/Mcf $ 1.90 $ 1.14
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As shown in the table, oil and natural gas sales increased 16.1%
for the three the months ended March 31, 1996 as compared to the
three months ended March 31, 1995. This increase resulted from
the increases in the average prices of oil and natural gas sold,
partially offset by the decrease in the volumes of natural gas
sold during the three months ended March 31, 1996 as compared to
the three months ended March 31, 1995. Volumes of oil and
natural gas sold decreased 46 barrels and 40,166 Mcf,
respectively, for the three months ended March 31, 1996 as
compared to the three months ended March 31, 1995. The decrease
in the volumes of natural gas sold resulted primarily from
positive prior period adjustments during the three months ended
March 31, 1995 and the normal decline in production from
diminished reserves on several wells during the three months
ended March 31, 1996 as compared to the three months ended March
31, 1995. The average prices of oil and natural gas sold
increased to $18.42 per barrel and $1.90 per Mcf for the three
months ended March 31, 1996 from averages of $17.46 per barrel
and $1.14 per Mcf for the three months ended March 31, 1995.
Oil and gas production expenses (including lease operating
expenses and production taxes) decreased $12,627 for the three
months ended March 31, 1996 as compared to the three months ended
March 31, 1995. This decrease resulted primarily from additional
workover charges incurred on one well during the three months
ended March 31, 1995 in order to improve the recovery of reserves
and the decrease in the volumes of natural gas sold during the
three months ended March 31, 1996 as compared to the three months
ended March 31, 1995. As a percentage of oil and gas sales,
these expenses decreased to 32.9% for the three months ended
March 31, 1996 from 45.8% for the three months ended March 31,
1995. This percentage decrease resulted primarily from the
dollar decrease in production expenses related to the workover
charges as discussed above and the increases in the average
prices of oil and natural gas sold during the three months ended
March 31, 1996 as compared to the three months ended March 31,
1995.
Depreciation, depletion, and amortization of oil and gas
properties decreased $13,244 for the three months ended March 31,
1996 as compared to the three months ended March 31, 1995. This
decrease was primarily a result of the decrease in the volumes of
natural gas sold during the three months ended March 31, 1996 as
compared to the three months ended March 31, 1995 and an upward
revision in the estimate of the 1980-2 Program's remaining
natural gas reserves at December 31, 1995. As a percentage of
oil and gas sales, this expense decreased to 16.0% for the three
months ended March 31, 1996 as compared to 26.6% for the three
months ended March 31, 1995. This percentage decrease was
primarily due to the upward revision in the estimate of remaining
reserves discussed above and the increases in the average prices
of oil and natural gas sold during the three months ended March
31, 1996 as compared to the three months ended March 31, 1995.
General and administrative expenses remained relatively constant
during the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995. As a percentage of oil and
gas sales, these expenses decreased to 15.0% for the three months
-14-
<PAGE>
<PAGE>
ended March 31, 1996 from 17.5% for the three months ended March
31, 1995. This percentage decrease resulted primarily from the
increases in the average prices of oil and natural gas sold
during the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995.
-15-
<PAGE>
<PAGE>
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On November 12, 1992 Larry and Leona Beck filed a lawsuit against
Dyco Petroleum Corporation ("Dyco") and others in which the plaintiffs
alleged damages to their land as a result of remediation operations
conducted on the Paul King No. 1-7 well (Beck v. Trigg Drilling
Company, Inc., et al., C-92-227, District Court of Beckham County,
Oklahoma). The 1980-1 Program had an approximate 4.6% working
interest in the Paul King No. 1-7 well at the time the lawsuit was
filed and the 1980-2 Program had an approximate 4.7% working interest
in the Paul King No. 1-7 well at the time the lawsuit was filed. The
lawsuit alleged claims based on negligence, private nuisance, public
nuisance, trespass, unjust enrichment, constructive fraud, and
permanent injunctive relief, all in amounts to be determined at trial.
A trial was conducted in the matter on February 22, 1994 in which the
jury entered a verdict in favor of the plaintiffs in the amount of
approximately $5.5 million, consisting of approximately $2.75 million
in actual damages and approximately $2.75 million in punitive damages.
Dyco appealed the district court's verdict and on March 5, 1996 the
Oklahoma Court of Appeals reversed the district court's verdict and
ordered a new trial. Both Dyco and the plaintiffs have filed
petitions for certiorari with the Supreme Court of Oklahoma seeking a
further review of the Court of Appeals' opinion.
On December 18, 1992, a royalty owner filed a quiet title action
alleging that the operator of certain wells in which Programs have an
interest failed to exercise due diligence in locating the owner while
in the process of force pooling the drilling and spacing unit (Merle
McCollum, as Personal Representative of the Estate of Jack McCollum,
Deceased v. Apache Corporation, et al., District Court of Beckham
County, Oklahoma). The wells in question included the Kinney-Warren
No. 3-10, Fender No. 4-10, Mikles No. 1-10, and Damron No. 1-10. The
1980-1 Program has an approximate 2.3% working interest in the Kinney-
Warren No. 3-10 and Fender No. 4-10 wells and an approximate 5.7%
working interest in the Mikles No. 1-10 and Damron No. 1-10 wells,
while the 1980-2 Program has an approximate 2.4% working interest in
the Kinney-Warren No. 3-10 and Fender No. 4-10 wells and an
approximate 5.9% working interest in the Mikles No. 1-10 and Damron
No. 1-10 wells. Plaintiff claimed a right to revenues attributable to
production from said wells in an amount in excess of $500,000 and
further alleged conversion and claimed a right to "interest" on the
proceeds from production on the four wells pursuant to 52 O.S. Section
540. The defendants filed a counterclaim for quiet title and asserted
various defenses. A trial was held in the matter on March 3 and 4,
1994 in which the district court ruled against all defendants and
specifically found that the operator, Apache Corporation, did not
exercise due diligence in the pooling proceedings. Judgment was
entered on June 15, 1994 in the amount of $550,000 plus interest. The
defendants appealed the district court's verdict and on March 12, 1996
the Oklahoma Court of Appeals reversed the district court's verdict.
Plaintiff has filed a petition for rehearing with the Oklahoma Court
of Appeals.
-16-
<PAGE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27.1 Financial Data Schedule containing summary
financial information extracted from the 1980-1
Program's financial statements as of March 31,
1996 and for the three months ended March 31,
1996, filed herewith.
27.2 Financial Data Schedule containing summary
financial information extracted from the 1980-2
Program's financial statements as of March 31,
1996 and for the three months ended March 31,
1996, filed herewith.
(b) Reports on Form 8-K
None
-17-
<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 1980-1 LIMITED
PARTNERSHIP
DYCO OIL AND GAS PROGRAM 1980-2 LIMITED
PARTNERSHIP
(Registrant)
By: DYCO PETROLEUM CORPORATION
General Partner
Date: May 9, 1996 By: /s/Dennis R. Neill
-------------------------
(Signature)
Dennis R. Neill
Senior Vice President
Date: May 9, 1996 By: /s/Patrick M. Hall
----------------------------
(Signature)
Patrick M. Hall
Senior Vice President - Controller
Principal Accounting Officer
-18-
<PAGE>
<PAGE>
INDEX TO EXHIBITS
-----------------
NUMBER DESCRIPTION
- ------ -----------
27.1 Financial Data Schedule containing summary financial
information extracted from the Dyco Oil and Gas Program
1980-1 Limited Partnership's financial statements as of
March 31, 1996 and for the three months ended March 31,
1996, filed herewith.
27.2 Financial Data Schedule containing summary financial
information extracted from the Dyco Oil and Gas Program
1980-2 Limited Partnership's financial statements as of
March 31, 1996 and for the three months ended March 31,
1996, filed herewith.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000806576
<NAME> DYCO OIL AND GAS PROGRAM 1980-1 LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 195,325
<SECURITIES> 0
<RECEIVABLES> 124,062
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 319,387
<PP&E> 29,755,589
<DEPRECIATION> 29,121,121
<TOTAL-ASSETS> 1,100,911
<CURRENT-LIABILITIES> 54,309
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,009,506
<TOTAL-LIABILITY-AND-EQUITY> 1,100,911
<SALES> 183,176
<TOTAL-REVENUES> 184,426
<CGS> 0
<TOTAL-COSTS> 121,232
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 63,194
<INCOME-TAX> 0
<INCOME-CONTINUING> 63,194
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,194
<EPS-PRIMARY> 16.00
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000806577
<NAME> DYCO OIL AND GAS PROGRAM 1980-2 LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 259,945
<SECURITIES> 0
<RECEIVABLES> 134,673
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 394,618
<PP&E> 35,426,526
<DEPRECIATION> 34,967,719
<TOTAL-ASSETS> 1,044,100
<CURRENT-LIABILITIES> 93,640
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 795,934
<TOTAL-LIABILITY-AND-EQUITY> 1,044,100
<SALES> 191,669
<TOTAL-REVENUES> 194,568
<CGS> 0
<TOTAL-COSTS> 122,350
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 72,218
<INCOME-TAX> 0
<INCOME-CONTINUING> 72,218
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,218
<EPS-PRIMARY> 14.00
<EPS-DILUTED> 0
</TABLE>
