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 March 31, 1998
Commission File Number:
II-A: 0-16388 II-D: 0-16980 II-G: 0-17802
II-B: 0-16405 II-E: 0-17320 II-H: 0-18305
II-C: 0-16981 II-F: 0-17799
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-A
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H
--------------------------------------------------------
(Exact name of Registrant as specified in its Articles)
II-A 73-1295505
II-B 73-1303341
II-C 73-1308986
II-D 73-1329761
II-E 73-1324751
II-F 73-1330632
II-G 73-1336572
Oklahoma II-H 73-1342476
- ---------------------------- -------------------------------
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or Number)
organization)
Two West Second Street, Tulsa, Oklahoma 74103
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(918) 583-1791
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
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-A
GEODYNE PRODUCTION PARTNERSHIP II-A
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1998 1997
----------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 671,340 $ 830,584
Accounts receivable:
Oil and gas sales 686,981 837,560
General Partner (Note 2) 531,748 -
Other - 20,975
---------- ----------
Total current assets $1,890,069 $1,689,119
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 4,659,104 4,894,853
DEFERRED CHARGE 911,041 911,041
---------- ----------
$7,460,214 $7,495,013
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 128,949 $ 233,246
Gas imbalance payable 142,043 142,043
---------- ----------
Total current liabilities $ 270,992 $ 375,289
ACCRUED LIABILITY $ 157,050 $ 157,050
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 370,674) ($ 387,587)
Limited Partners, issued and
outstanding, 484,283 units 7,402,846 7,350,261
---------- ----------
Total Partners' capital $7,032,172 $6,962,674
---------- ----------
$7,460,214 $7,495,013
========== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
2
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-A
GEODYNE PRODUCTION PARTNERSHIP II-A
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
---------- ----------
REVENUES:
Oil and gas sales $1,036,321 $1,515,197
Interest income 8,463 6,953
Gain on sale of oil and
gas properties 446,864 -
---------- ----------
$1,491,648 $1,522,150
COST AND EXPENSES:
Lease operating $ 311,915 $ 295,212
Production tax 58,758 96,360
Depreciation, depletion, and
amortization of oil and gas
properties 160,596 196,682
Impairment provision - 684,276
General and administrative
(Note 2) 169,236 163,586
---------- ----------
$ 700,505 $1,436,116
---------- ----------
NET INCOME $ 791,143 $ 86,034
========== ==========
GENERAL PARTNER - NET INCOME $ 45,558 $ 39,192
========== ==========
LIMITED PARTNERS - NET INCOME $ 745,585 $ 46,842
========== ==========
NET INCOME per unit $ 1.54 $ .10
========== ==========
UNITS OUTSTANDING 484,283 484,283
========== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
3
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-A
GEODYNE PRODUCTION PARTNERSHIP II-A
COMBINED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $791,143 $ 86,034
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 160,596 196,682
Impairment provision - 684,276
Gain on sale of oil and gas
properties ( 446,864) -
Decrease in accounts receivable -
oil and gas sales 150,579 312,860
Increase in accounts receivable -
General Partner ( 531,748) ( 1,051)
Decrease in accounts receivable -
other 20,975 -
Decrease in accounts payable ( 104,297) ( 99,237)
-------- ----------
Net cash provided by operating
activities $ 40,384 $1,179,564
-------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 13,541) ($ 49,793)
Proceeds from sale of oil and
gas properties 535,558 1,103
-------- ----------
Net cash provided (used) by
investing activities $522,017 ($ 48,690)
-------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($721,645) ($ 821,758)
-------- ----------
Net cash used by financing activities ($721,645) ($ 821,758)
-------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($159,244) $ 309,116
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 830,584 875,918
-------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $671,340 $1,185,034
======== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
4
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B
GEODYNE PRODUCTION PARTNERSHIP II-B
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1998 1997
----------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 414,671 $ 644,574
Accounts receivable:
Oil and gas sales 502,587 565,152
General Partner (Note 2) 69,254 -
---------- ----------
Total current assets $ 986,512 $1,209,726
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 2,920,802 3,035,158
DEFERRED CHARGE 169,811 169,811
---------- ----------
$4,077,125 $4,414,695
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 109,776 $ 141,754
Gas imbalance payable 24,671 24,671
---------- ----------
Total current liabilities $ 134,447 $ 166,425
ACCRUED LIABILITY $ 88,519 $ 88,519
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 304,896) ($ 305,223)
Limited Partners, issued and
outstanding, 361,719 units 4,159,055 4,464,974
---------- ----------
Total Partners' capital $3,854,159 $4,159,751
---------- ----------
$4,077,125 $4,414,695
========== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
5
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B
GEODYNE PRODUCTION PARTNERSHIP II-B
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
-------- ----------
REVENUES:
Oil and gas sales $795,456 $1,079,349
Interest income 5,586 4,064
Gain on sale of oil and
gas properties 57,684 -
-------- ----------
$858,726 $1,083,413
COST AND EXPENSES:
Lease operating $251,338 $ 207,958
Production tax 43,312 72,688
Depreciation, depletion, and
amortization of oil and gas
properties 103,622 139,331
Impairment provision - 530,988
General and administrative
(Note 2) 126,826 127,448
-------- ----------
$525,098 $1,078,413
-------- ----------
NET INCOME $333,628 $ 5,000
======== ==========
GENERAL PARTNER - NET INCOME $ 20,547 $ 26,860
======== ==========
LIMITED PARTNERS - NET INCOME (LOSS) $313,081 ($ 21,860)
======== ==========
NET INCOME (LOSS) per unit $ .87 ($ .06)
======== ==========
UNITS OUTSTANDING 361,719 361,719
======== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
6
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B
GEODYNE PRODUCTION PARTNERSHIP II-B
COMBINED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
--------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $333,628 $ 5,000
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 103,622 139,331
Impairment provision - 530,988
Gain on sale of oil and gas
properties ( 57,684) -
Decrease in accounts receivable -
oil and gas sales 62,565 158,104
Increase in accounts receivable -
General Partner ( 69,254) -
Decrease in accounts payable ( 31,978) ( 113,262)
-------- --------
Net cash provided by operating
activities $340,899 $720,161
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 4,500) $ -
Proceeds from sale of oil and
gas properties 72,918 10,455
-------- --------
Net cash provided by investing
activities $ 68,418 $ 10,455
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($639,220) ($567,381)
-------- --------
Net cash used by financing activities ($639,220) ($567,381)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($229,903) $163,235
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 644,574 569,257
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $414,671 $732,492
======== ========
The accompanying condensed notes are an integral part of these
combined financial statements.
7
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C
GEODYNE PRODUCTION PARTNERSHIP II-C
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1998 1997
----------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 263,829 $ 358,095
Accounts receivable:
Oil and gas sales 233,014 273,399
General Partner (Note 2) 276,943 -
Other - 1,931
---------- ----------
Total current assets $ 773,786 $ 633,425
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 1,522,562 1,667,269
DEFERRED CHARGE 139,621 139,621
---------- ----------
$2,435,969 $2,440,315
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 37,075 $ 33,293
Gas imbalance payable 22,563 22,563
---------- ----------
Total current liabilities $ 59,638 $ 55,856
ACCRUED LIABILITY $ 49,647 $ 49,647
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 116,518) ($ 123,277)
Limited Partners, issued and
outstanding, 154,621 units 2,443,202 2,458,089
---------- ----------
Total Partners' capital $2,326,684 $2,334,812
---------- ----------
$2,435,969 $2,440,315
========== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
8
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C
GEODYNE PRODUCTION PARTNERSHIP II-C
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
-------- ---------
REVENUES:
Oil and gas sales $368,535 $514,182
Interest income 3,337 2,616
Gain on sale of oil and
gas properties 193,527 -
-------- --------
$565,399 $516,798
COST AND EXPENSES:
Lease operating $ 89,064 $ 91,938
Production tax 23,238 35,866
Depreciation, depletion, and
amortization of oil and gas
properties 59,593 56,895
Impairment provision - 66,617
General and administrative
(Note 2) 54,209 54,511
-------- --------
$226,104 $305,827
-------- --------
NET INCOME $339,295 $210,971
======== ========
GENERAL PARTNER - NET INCOME $ 19,182 $ 15,358
======== ========
LIMITED PARTNERS - NET INCOME $320,113 $195,613
======== ========
NET INCOME per unit $ 2.07 $ 1.27
======== ========
UNITS OUTSTANDING 154,621 154,621
======== ========
The accompanying condensed notes are an integral part of these
combined financial statements.
9
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C
GEODYNE PRODUCTION PARTNERSHIP II-C
COMBINED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
--------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $339,295 $210,971
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 59,593 56,895
Impairment provision - 66,617
Gain on sale of oil and gas
properties ( 193,527) -
Decrease in accounts receivable -
oil and gas sales 40,385 75,611
Increase in accounts receivable -
General Partner ( 276,943) -
Decrease in accounts receivable -
other 1,931 -
Increase (decrease) in accounts
payable 3,782 ( 36,131)
-------- --------
Net cash provided (used) by operating
activities ($ 25,484) $373,963
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 131) $ -
Proceeds from sale of oil and
gas properties 278,772 3,798
-------- --------
Net cash provided by investing
activities $278,641 $ 3,798
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($347,423) ($386,391)
-------- --------
Net cash used by financing activities ($347,423) ($386,391)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 94,266) ($ 8,630)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 358,095 387,334
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $263,829 $378,704
======== ========
The accompanying condensed notes are an integral part of these
combined financial statements.
10
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D
GEODYNE PRODUCTION PARTNERSHIP II-D
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1998 1997
----------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 591,454 $1,151,142
Accounts receivable:
Oil and gas sales 462,738 646,750
General Partner (Note 2) 615,395 -
Other - 20,267
---------- ----------
Total current assets $1,669,587 $1,818,159
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 3,125,758 3,417,760
DEFERRED CHARGE 544,345 544,345
---------- ----------
$5,339,690 $5,780,264
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 100,542 $ 86,058
Gas imbalance payable 107,004 107,004
---------- ----------
Total current liabilities $ 207,546 $ 193,062
ACCRUED LIABILITY $ 239,083 $ 239,083
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 214,143) ($ 224,003)
Limited Partners, issued and
outstanding, 314,878 units 5,107,204 5,572,122
---------- ----------
Total Partners' capital $4,893,061 $5,348,119
---------- ----------
$5,339,690 $5,780,264
========== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
11
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D
GEODYNE PRODUCTION PARTNERSHIP II-D
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
---------- ----------
REVENUES:
Oil and gas sales $ 711,972 $1,210,897
Interest income 10,569 6,570
Gain on sale of oil and
gas properties 439,105 9,904
---------- ----------
$1,161,646 $1,227,371
COST AND EXPENSES:
Lease operating $ 257,537 $ 236,602
Production tax 64,099 83,743
Depreciation, depletion, and
amortization of oil and gas
properties 113,001 164,483
Impairment provision - 143,957
General and administrative
(Note 2) 110,089 113,236
---------- ----------
$ 544,726 $ 742,021
---------- ----------
NET INCOME $ 616,920 $ 485,350
========== ==========
GENERAL PARTNER - NET INCOME $ 34,838 $ 36,277
========== ==========
LIMITED PARTNERS - NET INCOME $ 582,082 $ 449,073
========== ==========
NET INCOME per unit $ 1.85 $ 1.43
========== ==========
UNITS OUTSTANDING 314,878 314,878
========== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
12
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D
GEODYNE PRODUCTION PARTNERSHIP II-D
COMBINED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 616,920 $485,350
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 113,001 164,483
Impairment provision - 143,957
Gain on sale of oil and gas
properties ( 439,105) ( 9,904)
Decrease in accounts receivable -
oil and gas sales 184,012 151,510
Increase in accounts receivable -
General Partner ( 615,395) ( 9,920)
Decrease in accounts receivable -
other 20,267 -
Increase (decrease) in accounts
payable 14,484 ( 77,742)
---------- --------
Net cash provided (used) by
operating activities ($ 105,816) $847,734
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures $ - ($ 2,795)
Proceeds from sale of oil and
gas properties 618,106 9,920
---------- --------
Net cash provided by investing
activities $ 618,106 $ 7,125
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($1,071,978) ($837,546)
---------- --------
Net cash used by financing activities ($1,071,978) ($837,546)
---------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 559,688) $ 17,313
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,151,142 906,737
---------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 591,454 $924,050
========== ========
The accompanying condensed notes are an integral part of these
combined financial statements.
13
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E
GEODYNE PRODUCTION PARTNERSHIP II-E
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1998 1997
----------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 359,751 $ 670,777
Accounts receivable:
Oil and gas sales 323,853 415,377
General Partner (Note 2) 65,205 -
Other - 110
---------- ----------
Total current assets $ 748,809 $1,086,264
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 2,780,546 2,841,080
DEFERRED CHARGE 330,531 330,531
---------- ----------
$3,859,886 $4,257,875
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 58,411 $ 100,603
Gas imbalance payable 171,089 171,089
---------- ----------
Total current liabilities $ 229,500 $ 271,692
ACCRUED LIABILITY 63,625 63,625
PARTNERS' CAPITAL (DEFICIT):
General Partner ( 173,473) ( 172,017)
Limited Partners, issued and
outstanding, 228,821 units 3,740,234 4,094,575
---------- ----------
Total Partners' capital $3,566,761 $3,922,558
---------- ----------
$3,859,886 $4,257,875
========== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
14
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E
GEODYNE PRODUCTION PARTNERSHIP II-E
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
---------- ----------
REVENUES:
Oil and gas sales $478,325 $ 780,293
Interest income 6,458 4,211
Gain on sale of oil and
gas properties 63,215 -
-------- ----------
$547,998 $ 784,504
COST AND EXPENSES:
Lease operating $132,026 $ 171,907
Production tax 33,698 64,417
Depreciation, depletion, and
amortization of oil and gas
properties 136,571 163,438
Impairment provision - 992,851
General and administrative
(Note 2) 80,651 96,178
-------- ----------
$382,946 $1,488,791
-------- ----------
NET INCOME (LOSS) $165,052 ($ 704,287)
======== ==========
GENERAL PARTNER - NET INCOME $ 13,393 $ 10,827
======== ==========
LIMITED PARTNERS - NET INCOME (LOSS) $151,659 ($ 715,114)
======== ==========
NET INCOME (LOSS) per unit $ .66 ($ 3.13)
======== ==========
UNITS OUTSTANDING 228,821 228,821
======== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
15
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E
GEODYNE PRODUCTION PARTNERSHIP II-E
COMBINED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
--------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $165,052 ($704,287)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 136,571 163,438
Impairment provision - 992,851
Gain on sale of oil and gas
properties ( 63,215) -
Decrease in accounts receivable -
oil and gas sales 91,524 88,470
Increase in accounts receivable -
General Partner ( 65,205) ( 6,106)
Decrease in accounts receivable -
other 110 -
Decrease in accounts payable ( 42,192) ( 77,536)
-------- --------
Net cash provided by operating
activities $222,645 $456,830
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 82,321) ($ 3,464)
Proceeds from sale of oil and
gas properties 69,499 6,106
-------- --------
Net cash provided (used) by
investing activities ($ 12,822) $ 2,642
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($520,849) ($374,650)
-------- --------
Net cash used by financing activities ($520,849) ($374,650)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($311,026) $ 84,822
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 670,777 528,765
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $359,751 $613,587
======== ========
The accompanying condensed notes are an integral part of these
combined financial statements.
16
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F
GEODYNE PRODUCTION PARTNERSHIP II-F
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1998 1997
----------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 325,264 $ 741,852
Accounts receivable:
Oil and gas sales 259,404 334,094
General Partner (Note 2) 113,665 -
Other - 43
---------- ----------
Total current assets $ 698,333 $1,075,989
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 2,340,394 2,432,033
DEFERRED CHARGE 56,867 56,867
---------- ----------
$3,095,594 $3,564,889
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 39,255 $ 64,348
Gas imbalance payable 25,184 25,184
---------- ----------
Total current liabilities $ 64,439 $ 89,532
ACCRUED LIABILITY $ 27,907 $ 27,907
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 141,358) ($ 143,355)
Limited Partners, issued and
outstanding, 171,400 units 3,144,606 3,590,805
---------- ----------
Total Partners' capital $3,003,248 $3,447,450
---------- ----------
$3,095,594 $3,564,889
========== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
17
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F
GEODYNE PRODUCTION PARTNERSHIP II-F
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
---------- ----------
REVENUES:
Oil and gas sales $432,069 $ 729,165
Interest income 6,095 3,519
Gain on sale of oil and
gas properties 117,191 -
-------- ----------
$555,355 $ 732,684
COST AND EXPENSES:
Lease operating $ 85,885 $ 105,460
Production tax 28,946 54,170
Depreciation, depletion, and
amortization of oil and gas
properties 93,722 101,899
Impairment provision - 1,377,160
General and administrative
(Note 2) 59,176 54,944
-------- ----------
$267,729 $1,693,633
-------- ----------
NET INCOME (LOSS) $287,626 ($ 960,949)
======== ==========
GENERAL PARTNER - NET INCOME $ 17,825 $ 10,939
======== ==========
LIMITED PARTNERS - NET INCOME (LOSS) $269,801 ($ 971,888)
======== ==========
NET INCOME (LOSS) per unit $ 1.57 ($ 5.67)
======== ==========
UNITS OUTSTANDING 171,400 171,400
======== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
18
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F
GEODYNE PRODUCTION PARTNERSHIP II-F
COMBINED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
--------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $287,626 ($ 960,949)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 93,722 101,899
Impairment provision - 1,377,160
Gain on sale of oil and gas
properties ( 117,191) -
(Increase) decrease in accounts
receivable - oil and gas sales 74,690 ( 20,209)
(Increase) decrease in accounts
receivable - General Partner ( 113,665) 15,285
Decrease in accounts receivable -
other 43 -
Decrease in accounts payable ( 25,093) ( 5,305)
-------- ----------
Net cash provided by operating
activities $200,132 $ 507,881
-------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 12,820) ($ 8,657)
Proceeds from sale of oil and
gas properties 127,928 -
-------- ----------
Net cash provided (used) by
investing activities $115,108 ($ 8,657)
-------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($731,828) ($ 435,060)
-------- ----------
Net cash used by financing activities ($731,828) ($ 435,060)
-------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($416,588) $ 64,164
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 741,852 441,903
-------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $325,264 $ 506,067
======== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
19
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G
GEODYNE PRODUCTION PARTNERSHIP II-G
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1998 1997
----------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 690,692 $1,564,325
Accounts receivable:
Oil and gas sales 549,780 710,336
General Partner (Note 2) 239,299 -
---------- ----------
Total current assets $1,479,771 $2,274,661
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 5,039,979 5,237,082
DEFERRED CHARGE 123,977 123,977
---------- ----------
$6,643,727 $7,635,720
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 83,824 $ 135,761
Gas imbalance payable 57,250 57,250
---------- ----------
Total current liabilities $ 141,074 $ 193,011
ACCRUED LIABILITY $ 64,109 $ 64,109
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 308,476) ($ 312,392)
Limited Partners, issued and
outstanding, 372,189 units 6,747,020 7,690,992
---------- ----------
Total Partners' capital $6,438,544 $7,378,600
---------- ----------
$6,643,727 $7,635,720
========== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
20
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G
GEODYNE PRODUCTION PARTNERSHIP II-G
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
---------- ----------
REVENUES:
Oil and gas sales $ 914,389 $1,536,333
Interest income 12,969 7,432
Gain on sale of oil and
gas properties 245,627 -
---------- ----------
$1,172,985 $1,543,765
COST AND EXPENSES:
Lease operating $ 182,432 $ 228,164
Production tax 61,677 116,094
Depreciation, depletion, and
amortization of oil and gas
properties 200,060 222,726
Impairment provision - 3,101,656
General and administrative
(Note 2) 128,414 119,251
---------- ----------
$ 572,583 $3,787,891
---------- ----------
NET INCOME (LOSS) $ 600,402 ($2,244,126)
========== ==========
GENERAL PARTNER - NET INCOME $ 37,374 $ 20,397
========== ==========
LIMITED PARTNERS - NET INCOME (LOSS) $ 563,028 ($2,264,523)
========== ==========
NET INCOME (LOSS) per unit $ 1.51 ($ 6.08)
========== ==========
UNITS OUTSTANDING 372,189 372,189
========== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
21
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G
GEODYNE PRODUCTION PARTNERSHIP II-G
COMBINED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 600,402 ($2,244,126)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 200,060 222,726
Impairment provision - 3,101,656
Gain on sale of oil and gas
properties ( 245,627) -
(Increase) decrease in accounts
receivable - oil and gas sales 160,556 ( 28,253)
(Increase) decrease in accounts
receivable - General Partner ( 239,299) 34,620
Decrease in accounts payable ( 51,937) ( 13,197)
---------- ----------
Net cash provided by operating
activities $ 424,155 $1,073,426
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 26,822) ($ 18,051)
Proceeds from sale of oil and
gas properties 269,492 -
---------- ----------
Net cash provided (used) by
investing activities $ 242,670 ($ 18,051)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($1,540,458) ($ 912,958)
---------- ----------
Net cash used by financing activities ($1,540,458) ($ 912,958)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 873,633) $ 142,417
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,564,325 932,165
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 690,692 $1,074,582
========== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
22
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H
GEODYNE PRODUCTION PARTNERSHIP II-H
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1998 1997
----------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 162,883 $ 364,502
Accounts receivable:
Oil and gas sales 131,352 168,833
General Partner (Note 2) 56,045 -
---------- ----------
Total current assets $ 350,280 $ 533,335
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 1,179,192 1,225,295
DEFERRED CHARGE 29,519 29,519
---------- ----------
$1,558,991 $1,788,149
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 20,157 $ 31,925
Gas imbalance payable 13,149 13,149
---------- ----------
Total current liabilities $ 33,306 $ 45,074
ACCRUED LIABILITY 14,648 14,648
PARTNERS' CAPITAL (DEFICIT):
General Partner ( 77,898) ( 78,796)
Limited Partners, issued and
outstanding, 91,711 units 1,588,935 1,807,223
---------- ----------
Total Partners' capital $1,511,037 $1,728,427
---------- ----------
$1,558,991 $1,788,149
========== ==========
The accompanying condensed notes are an integral part of these
combined financial statements.
23
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H
GEODYNE PRODUCTION PARTNERSHIP II-H
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
-------- ----------
REVENUES:
Oil and gas sales $217,703 $360,814
Interest income 2,935 1,709
Gain on sale of oil and
gas properties 57,318 -
-------- --------
$277,956 $362,523
COST AND EXPENSES:
Lease operating $ 43,473 $ 56,403
Production tax 14,867 28,031
Depreciation, depletion, and
amortization of oil and gas
properties 46,481 53,395
Impairment provision - 785,220
General and administrative
(Note 2) 31,636 29,381
-------- --------
$136,457 $952,430
-------- --------
NET INCOME (LOSS) $141,499 ($589,907)
======== ========
GENERAL PARTNER - NET INCOME $ 8,787 $ 3,964
======== ========
LIMITED PARTNERS - NET INCOME (LOSS) $132,712 ($593,871)
======== ========
NET INCOME (LOSS) per unit $ 1.45 ($ 6.48)
======== ========
UNITS OUTSTANDING 91,711 91,711
======== ========
The accompanying condensed notes are an integral part of these
combined financial statements.
24
<PAGE>
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H
GEODYNE PRODUCTION PARTNERSHIP II-H
COMBINED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
--------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $141,499 ($589,907)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 46,481 53,395
Impairment provision - 785,220
Gain on sale of oil and gas
properties ( 57,318) -
(Increase) decrease in accounts
receivable - oil and gas sales 37,481 ( 280)
(Increase) decrease in accounts
receivable - General Partner ( 56,045) 9,151
Decrease in accounts payable ( 11,768) ( 3,885)
-------- --------
Net cash provided by operating
activities $100,330 $253,694
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 6,209) ($ 4,153)
Proceeds from sale of oil and
gas properties 63,149 -
-------- --------
Net cash provided (used) by
investing activities $ 56,940 ($ 4,153)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($358,889) ($217,520)
-------- --------
Net cash used by financing activities ($358,889) ($217,520)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($201,619) $ 32,021
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 364,502 221,484
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $162,883 $253,505
======== ========
The accompanying condensed notes are an integral part of these
combined financial statements.
25
<PAGE>
GEODYNE ENERGY INCOME II LIMITED PARTNERSHIPS
CONDENSED NOTES TO THE COMBINED FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The combined balance sheets as of March 31, 1998, combined statements of
operations for the three months ended March 31, 1998 and 1997, and
combined statements of cash flows for the three months ended March 31,
1998 and 1997 have been prepared by Geodyne Resources, Inc., the General
Partner of the limited partnerships, without audit. Each limited
partnership is a general partner in the related Geodyne Production
Partnership in which Geodyne Resources, Inc. serves as the managing
partner. Unless the context indicates otherwise, all references to a
"Partnership" or the "Partnerships" are references to the limited
partnership and its related production partnership, collectively, and all
references to the "General Partner" are references to the general partner
of the limited partnerships and the managing partner of the production
partnerships, collectively. In the opinion of management the financial
statements referred to above include all necessary adjustments, consisting
of normal recurring adjustments, to present fairly the combined financial
position at March 31, 1998, the combined results of operations for the
three months ended March 31, 1998 and 1997, and the combined cash flows
for the three months ended March 31, 1998 and 1997.
Information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The accompanying interim
financial statements should be read in conjunction with the Partnerships'
Annual Report on Form 10-K filed for the year ended December 31, 1997. The
results of operations for the period ended March 31, 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 $100
initial capital contribution.
26
<PAGE>
OIL AND GAS PROPERTIES
----------------------
The Partnerships follow the successful efforts method of accounting for
their oil and gas properties. Under the successful efforts method, the
Partnerships capitalize all property acquisition costs and development
costs incurred in connection with the further development of oil and gas
reserves. Property acquisition costs include costs incurred by the
Partnerships or the General Partner to acquire producing properties,
including related title insurance or examination costs, commissions,
engineering, legal and accounting fees, and similar costs directly related
to the acquisitions, plus an allocated portion, of the General Partner's
property screening costs. The acquisition cost to the Partnerships of
properties acquired by the General Partner is adjusted to reflect the net
cash results of operations, including interest incurred to finance the
acquisition, for the period of time the properties are held by the General
Partner prior to their transfer to the Partnerships. During the three
months ended March 31, 1998 capital expenditures incurred by the II-A
Partnership totaled $13,541. These expenditures resulted primarily from a
recompletion attempt on the White Farms A No. 4 well located in Canadian
County, Oklahoma. The II-A Partnership has a 12.0% interest in the White
Farms A No. 4 well. During the three months ended March 31, 1998 capital
expenditures incurred by the II-E Partnership totaled $82,321. These
expenditures resulted primarily from the recompletion of four wells within
the Richie unit located in Acadia Parish, Louisiana. The II-E Partnership
has a 5.8% working interest in the Richie unit. Leasehold impairment is
recognized based upon an individual property assessment and exploratory
experience. Upon discovery of commercial reserves, leasehold costs are
transferred to producing properties.
Depletion of the costs of producing oil and gas properties, amortization
of related intangible drilling and development costs, and depreciation of
tangible lease and well equipment are computed on the unit-of-production
method. The Partnerships' depletion, depreciation, and amortization
includes estimated dismantlement and abandonment costs, net of estimated
salvage value.
When complete units of depreciable property are retired or sold, the asset
cost and related accumulated depreciation are eliminated with any gain or
loss reflected in income. When less than complete units of depreciable
property are retired or sold, the difference between asset cost and
salvage value is charged to accumulated depreciation.
27
<PAGE>
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long Lived Assets and Assets Held for Disposal",
requires successful efforts companies, like the Partnerships, to evaluate
the recoverability of the carrying costs of their proved oil and gas
properties at the lowest level for which there are identifiable cash flows
that are largely independent of the cash flows of other groups of oil and
gas properties. With respect to the Partnerships' oil and gas properties,
this evaluation was performed for each field. SFAS No. 121, provides that
if the unamortized costs of oil and gas properties for each field exceed
the expected undiscounted future cash flows from such properties, the cost
of the properties is written down to fair value, which is determined by
using the discounted future cash flows from the properties. The
Partnerships recorded a non-cash charge against earnings (impairment
provision) during the three months ended March 31, 1997 pursuant to SFAS
No. 121 as follows:
Partnership Amount
----------- -----------
II-A $ 684,276
II-B 530,988
II-C 66,617
II-D 143,957
II-E 992,851
II-F 1,377,160
II-G 3,101,656
II-H 785,220
No such charge was recorded during the three months ended March 31, 1998.
The risk that the Partnerships will be required to record such impairment
provisions in the future increases when oil and gas prices are depressed.
2. TRANSACTIONS WITH RELATED PARTIES
---------------------------------
The Partnerships' Partnership Agreements provide for reimbursement to the
General Partner for all direct general and administrative expenses and for
the general and administrative overhead applicable to the Partnerships
based on an allocation of actual costs incurred. During the three months
ended March 31, 1998 the following payments were made to the General
Partner or its affiliates by the Partnerships:
28
<PAGE>
Direct General Administrative
Partnership and Administrative Overhead
----------- ------------------- ---------------
II-A $41,793 $127,443
II-B 31,636 95,190
II-C 13,520 40,689
II-D 27,226 82,863
II-E 20,435 60,216
II-F 14,071 45,105
II-G 30,470 97,944
II-H 7,501 24,135
Affiliates of the Partnerships operate certain of the Partnerships'
properties and their policy is to bill the Partnerships for all customary
charges and cost reimbursements associated with their activities.
The receivable from the General Partner at March 31, 1998 for the
Partnerships represents proceeds due to the Partnerships from the sale of
oil and gas properties to third parties during the first quarter of 1998.
Subsequent to March 31, 1998, this receivable was collected by the
Partnerships.
29
<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 Program.
Use of forward-looking statements and estimates and assumptions involve
risks and uncertainties which include, but are not limited to, the
volatility of oil and gas prices, the uncertainty of reserve information,
the operating risk associated with oil and gas properties (including the
risk of personal injury, death, property damage, damage to the well or
producing reservoir, environmental contamination, and other operating
risks), the prospect of changing tax and regulatory laws, the availability
and capacity of processing and transportation facilities, the general
economic climate, the supply and price of foreign imports of oil and gas,
the level of consumer product demand, and the price and availability of
alternative fuels. Should one or more of these risks or uncertainties
occur or should estimates or underlying assumptions prove incorrect,
actual conditions or results may vary materially and adversely from those
stated, anticipated, believed, estimated, and otherwise indicated.
GENERAL
- -------
The Partnerships are engaged in the business of acquiring and operating
producing oil and gas properties located in the continental United States.
In general, a Partnership acquired producing properties and did not engage
in development drilling or enhanced recovery projects, except as an
incidental part of the management of the producing properties acquired.
Therefore, the economic life of each Partnership, and its related
Production Partnership, is limited to the period of time required to fully
produce its acquired oil and gas reserves. The net proceeds from the oil
and gas operations are distributed to the Limited Partners and the General
Partner in accordance with the terms of the Partnerships' partnership
agreements.
30
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnerships began operations and investors were assigned their rights
as Limited Partners, having made capital contributions in the amounts and
on the dates set forth below:
Limited
Date of Partner Capital
Partnership Activation Contributions
----------- ------------------ ---------------
II-A July 22, 1987 $48,428,300
II-B October 14, 1987 36,171,900
II-C January 14, 1988 15,462,100
II-D May 10, 1988 31,487,800
II-E September 27, 1988 22,882,100
II-F September 27, 1988 22,882,100
II-G April 10, 1989 37,218,900
II-H May 17, 1989 9,171,100
In general, the amount of funds available for acquisition of producing
properties was equal to the capital contributions of the Limited Partners,
less 15% for sales commissions and organization and management fees. All
of the Partnerships have fully invested their capital contributions.
Net proceeds from the operations less necessary operating capital are
distributed to the Limited Partners on a quarterly basis. Revenues and net
proceeds of a Partnership are largely dependent upon the volumes of oil
and gas sold and the prices received for such oil and gas. While the
General Partner cannot predict future pricing trends, it believes the
working capital available as of March 31, 1998 and the net revenue
generated from future operations will provide sufficient working capital
to meet current and future obligations.
The Partnerships' Statements of Cash Flows for the first quarter of 1998
include proceeds from the sale of oil and gas properties during the three
months ended March 31, 1998. These proceeds will be reflected, as
applicable, in the Partnerships' cash distributions, if any, to be paid in
May 1998. It is possible that the Partnerships' 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 Partnerships'
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 Partnerships' remaining properties.
31
<PAGE>
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 Partnerships' revenues is the prices received for
the sale of oil and gas. Predicting future prices is very difficult.
Substantially all of the Partnerships' gas reserves are being sold in the
"spot market". Prices on the spot market are subject to wide seasonal and
regional pricing fluctuations due to the highly competitive nature of the
spot market. In addition, such spot market sales are generally short-term
in nature and are dependent upon the obtaining of transportation services
provided by pipelines. Management is unable to predict whether future oil
and gas prices will (i) stabilize, (ii) increase, or (iii) decrease.
II-A PARTNERSHIP
THREE MONTHS ENDED MARCH 31, 1998 AS COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1997.
Three Months Ended March 31,
----------------------------
1998 1997
---------- ----------
Oil and gas sales $1,036,321 $1,515,197
Oil and gas production expenses $ 370,673 $ 391,572
Barrels produced 22,046 24,515
Mcf produced 313,823 396,730
Average price/Bbl $ 15.86 $ 21.75
Average price/Mcf $ 2.19 $ 2.48
As shown in the table above, total oil and gas sales decreased $478,876
(31.6%) for the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997. Of this decrease, approximately $54,000 and
$206,000, respectively, were related to decreases in volumes of oil and
gas sold and approximately $130,000 and $91,000, respectively, were
related to decreases in the average prices of oil and gas sold. Volumes of
oil and gas sold decreased 2,469 barrels and 82,907 Mcf, respectively, for
the three months ended March 31, 1998 as compared to the three months
ended March 31, 1997. The decrease in volumes of oil sold resulted
primarily from (i) normal declines in production due to diminished
reserves on several wells during the three months ended March 31, 1998 and
(ii) positive prior period volume adjustments made by the purchaser on two
significant wells during the three months ended March 31, 1997. The
decrease in volumes of gas sold resulted primarily from (i) positive prior
period volume
32
<PAGE>
adjustments made by the purchaser on one significant well during the three
months ended March 31, 1997, (ii) normal declines in production due to
diminished reserves during the three months ended March 31, 1998, and
(iii) the shutting-in of one significant well during the three months
ended March 31, 1998 in order to increase production capabilities. Average
oil and gas prices decreased to $15.86 per barrel and $2.19 per Mcf,
respectively, for the three months ended March 31, 1998 from $21.75 per
barrel and $2.48 per Mcf, respectively, for the three months ended March
31, 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $20,899 (5.3%) for the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997. Any
decrease which resulted primarily from (i) decreases in production taxes
associated with the decrease in oil and gas sales discussed above and (ii)
the decreases in volumes of oil and gas sold during the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997 was
substantially offset by (i) workover expenses incurred on three
significant wells during the three months ended March 31, 1998 in order to
improve the recovery of reserves and (ii) higher general repair and
maintenance expenses incurred on three significant wells during the three
months ended March 31, 1998. As a percentage of oil and gas sales, these
expenses increased to 35.8% for the three months ended March 31, 1998 from
25.8% for the three months ended March 31, 1997. This percentage increase
was primarily due to the decreases in the average prices of oil and gas
sold during the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $36,086 (18.3%) for the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997. This decrease resulted
primarily from (i)decreases in volumes of oil and gas sold during the
three months ended March 31, 1998 as compared to the three months ended
March 31, 1997 and (ii) upward revisions in the estimate of remaining gas
reserves at December 31, 1997. As a percentage of oil and gas sales, this
expense increased to 15.5% for the three months ended March 31, 1998 from
13.0% for the three months ended March 31, 1997. This percentage increase
was primarily due to the decreases in the average prices of oil and gas
sold during the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997.
33
<PAGE>
The II-A Partnership recognized a non-cash charge against earnings of
$684,267 during the three months ended March 31, 1997. Of this amount,
$223,943 was related to a decline in oil and gas prices used to determine
the recoverability of proved oil and gas reserves at March 31, 1997 and
$460,333 was related to the writing-off of unproved properties. These
unproved properties were written off based on the General Partner's
determination that it was unlikely that such properties would be developed
due to the low oil and gas prices received over the prior several years
and provisions in the II-A Partnership's partnership agreement which limit
the level of permissible drilling activity. No similar charges were
necessary during the three months ended March 31, 1998.
General and administrative expenses increased $5,650 (3.5%) for the three
months ended March 31, 1998 as compared to the three months ended March
31, 1997. As a percentage of oil and gas sales, these expenses increased
to 16.3% for the three months ended March 31, 1998 from 10.8% for the
three months ended March 31, 1997. This percentage increase was primarily
due to the decrease in oil and gas sales discussed above.
The Limited Partners have received cash distributions through March 31,
1998 totaling $42,684,357 or 88.14% of the Limited Partners' capital
contributions.
II-B PARTNERSHIP
THREE MONTHS ENDED MARCH 31, 1998 AS COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1997.
Three Months Ended March 31,
----------------------------
1998 1997
-------- ----------
Oil and gas sales $795,456 $1,079,349
Oil and gas production expenses $294,650 $ 280,646
Barrels produced 15,911 15,431
Mcf produced 237,012 292,664
Average price/Bbl $ 16.11 $ 21.89
Average price/Mcf $ 2.27 $ 2.53
As shown in the table above, total oil and gas sales decreased $283,893
(26.3%) for the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997. Of this decrease, approximately $141,000 was
related to a decrease in volumes of gas sold and approximately $92,000 and
$62,000, respectively, were related to decreases in the average prices of
oil and gas sold. Volumes of oil sold increased 480 barrels, while volumes
of gas sold decreased 55,652 Mcf for the three months ended March 31, 1998
as compared to the three months ended March 31, 1997.
34
<PAGE>
The decrease in volumes of gas sold resulted primarily from (i) normal
declines in production due to diminished reserves during the three months
ended March 31, 1998 and (ii) negative prior period volume adjustments
made by the purchaser on one significant well during the three months
ended March 31, 1998. Average oil and gas prices decreased to $16.11 per
barrel and $2.27 per Mcf, respectively, for the three months ended March
31, 1998 from $21.89 per barrel and $2.53 per Mcf, respectively, for the
three months ended March 31, 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $14,004 (5.0%) for the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997. This
increase resulted primarily from (i) workover expenses incurred on several
wells during the three months ended March 31, 1998 in order to improve the
recovery of reserves and (ii) higher general repair and maintenance
expenses incurred on two significant wells during the three months ended
March 31, 1998. This increase was substantially offset by (i) a decrease
in production taxes associated with the decrease in oil and gas sales
discussed above and (ii) the decrease in volumes of gas sold during the
three months ended March 31, 1998 as compared to the three months ended
March 31, 1997. As a percentage of oil and gas sales, these expenses
increased to 37.0% for the three months ended March 31, 1998 from 26.0%
for the three months ended March 31, 1997. This percentage increase was
primarily due to the decreases in the average prices of oil and gas sold
during the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $35,709 (25.6%) for the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997. This decrease resulted
primarily from (i) the decrease in volumes of gas sold during the three
months ended March 31, 1998 as compared to the three months ended March
31, 1997 and (ii) an upward revision in the estimate of remaining gas
reserves at December 31, 1997. As a percentage of oil and gas sales, this
expense remained relatively constant at 13.0% for the three months ended
March 31, 1998 and 12.9% for the three months ended March 31, 1997.
The II-B Partnership recognized a non-cash charge against earnings of
$530,988 during the three months ended March 31, 1997. Of this amount,
$134,003 was related to a decline in oil and gas prices used to determine
the recoverability of proved oil and gas reserves at March 31, 1997 and
$396,985 was related to the writing-off of unproved properties. These
unproved properties were written off based on the General Partner's
determination that it was unlikely that
35
<PAGE>
such properties would be developed due to the low oil and gas prices
received over the prior several years and provisions in the II-B
Partnership's partnership agreement which limit the level of permissible
drilling activity. No similar charges were necessary during the three
months ended March 31, 1998.
General and administrative expenses remained relatively constant for the
three months ended March 31, 1998 as compared to the three months ended
March 31, 1997. As a percentage of oil and gas sales, these expenses
increased to 15.9% for the three months ended March 31, 1998 from 11.8%
for the three months ended March 31, 1997. This percentage increase was
primarily due to the decrease in oil and gas sales discussed above.
The Limited Partners have received cash distributions through March 31,
1998 totaling $30,435,916 or 84.14% of the Limited Partners' capital
contributions.
II-C PARTNERSHIP
THREE MONTHS ENDED MARCH 31, 1998 AS COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1997.
Three Months Ended March 31,
----------------------------
1998 1997
-------- ----------
Oil and gas sales $368,535 $514,182
Oil and gas production expenses $112,302 $127,804
Barrels produced 5,004 5,073
Mcf produced 137,055 160,273
Average price/Bbl $ 15.08 $ 22.45
Average price/Mcf $ 2.14 $ 2.50
As shown in the table above, total oil and gas sales decreased $145,647
(28.3%) for the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997. Of this decrease, approximately $58,000 was
related to a decrease in volumes of gas sold and approximately $37,000 and
$49,000, respectively, were related to decreases in the average prices of
oil and gas sold. Volumes of oil and gas sold decreased 69 barrels and
23,218 Mcf, respectively, for the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997. The decrease in volumes
of gas sold resulted primarily from normal declines in production due to
diminished reserves during the three months ended March 31, 1998. Average
oil and gas prices decreased to $15.08 per barrel and $2.14 per Mcf,
respectively, for the three months ended March 31, 1998 from $22.45 per
barrel and $2.50 per Mcf, respectively, for the three months ended March
31, 1997.
36
<PAGE>
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $15,502 (12.1%) for the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997. This
decrease resulted primarily from (i) a decrease in production taxes
associated with the decrease in oil and gas sales discussed above and (ii)
the decreases in volumes of oil and gas sold during the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997, which
decrease was partially offset by workover expenses incurred on two
significant wells during the three months ended March 31, 1998 in order to
improve the recovery of reserves. As a percentage of oil and gas sales,
these expenses increased to 30.5% for the three months ended March 31,
1998 from 24.9% for the three months ended March 31, 1997. This percentage
increase was primarily due to the decreases in the average prices of oil
and gas sold during the three months ended March 31, 1998 as compared to
the three months ended March 31, 1997.
Depreciation, depletion, and amortization of oil and gas properties
increased $2,698 (4.7%) for the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997. As a percentage of oil
and gas sales, this expense increased to 16.2% for the three months ended
March 31, 1998 from 11.1% for the three months ended March 31, 1997. This
percentage increase was primarily due to the decreases in the average
prices of oil and gas sold during the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997.
The II-C Partnership recognized a non-cash charge against earnings of
$66,617 during the three months ended March 31, 1997. Of this amount,
$36,163 was related to a decline in oil and gas prices used to determine
the recoverability of proved oil and gas reserves at March 31, 1997 and
$30,454 was related to the writing-off of unproved properties. These
unproved properties were written off based on the General Partner's
determination that it was unlikely that such properties would be developed
due to the low oil and gas prices received over the prior several years
and provisions in the II-C Partnership's partnership agreement which limit
the level of permissible drilling activity. No similar charges were
necessary during the three months ended March 31, 1998.
General and administrative expenses remained relatively constant for the
three months ended March 31, 1998 as compared to the three months ended
March 31, 1997. As a percentage of oil and gas sales, these expenses
increased to 14.7% for the three months ended March 31, 1998 from 10.6%
for the three months ended March 31, 1997. This percentage increase was
primarily due to the decrease in oil and gas sales discussed above.
37
<PAGE>
The Limited Partners have received cash distributions through March 31,
1998 totaling $13,560,686 or 87.7% of the Limited Partners' capital
contributions.
II-D PARTNERSHIP
THREE MONTHS ENDED MARCH 31, 1998 AS COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1997.
Three Months Ended March 31,
----------------------------
1998 1997
-------- ----------
Oil and gas sales $711,972 $1,210,897
Oil and gas production expenses $321,636 $ 320,345
Barrels produced 11,829 12,702
Mcf produced 258,157 409,945
Average price/Bbl $ 15.10 $ 23.67
Average price/Mcf $ 2.07 $ 2.22
As shown in the table above, total oil and gas sales decreased $498,925
(41.2%) for the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997. Of this decrease, approximately $337,000 was
related to a decrease in volumes of gas sold and approximately $101,000
and $39,000, respectively, were related to decreases in the average price
of oil and gas sold. Volumes of oil and gas sold decreased 873 barrels and
151,788 Mcf, respectively, for the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997. The decrease in volumes
of gas sold resulted primarily from (i) normal declines in production due
to diminished reserves during the three months ended March 31, 1998, (ii)
positive prior period volume adjustments made by the purchaser on several
wells during the three months ended March 31, 1997, (iii) the sale of
several wells during 1997, and (iv) negative prior period volume
adjustments made by the purchaser on one significant well during the three
months ended March 31, 1998. Average oil and gas prices decreased to
$15.10 per barrel and $2.07 per Mcf, respectively, for the three months
ended March 31, 1998 from $23.67 per barrel and $2.22 per Mcf,
respectively, for the three months ended March 31, 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) remained relatively constant for the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997. An
increase in production expenses resulted primarily from (i) workover
expenses incurred on one significant well during the three months ended
March 31, 1998 in order to improve the recovery of reserves, (ii) prior
period adjustments in production expenses by the operator on one
significant well during the three months ended March 31, 1998, and (iii)
higher general
38
<PAGE>
repair and maintenance expenses incurred on two significant wells during
the three months ended March 31, 1998. However, this increase in
production expenses was substantially offset by (i) a decrease in
production taxes associated with the decrease in oil and gas sales
discussed above and (ii) the decreases in volumes of oil and gas sold
during the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997. As a percentage of oil and gas sales, these
expenses increased to 45.2% for the three months ended March 31, 1998 from
26.5% for the three months ended March 31, 1997. This percentage increase
was primarily due to the decreases in the average prices of oil and gas
sold during the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $51,482 (31.3%) for the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997. This decrease resulted
primarily from (i) the decreases in volumes of oil and gas sold during the
three months ended March 31, 1998 as compared to the three months ended
March 31, 1997 and (ii) an upward revision in the estimate of remaining
gas reserves at December 31, 1997. As a percentage of oil and gas sales,
this expense increased to 15.9% for the three months ended March 31, 1998
from 13.6% for the three months ended March 31, 1997. This percentage
increase was primarily due to the decreases in the average prices of oil
and gas sold during the three months ended March 31, 1998 as compared to
the three months ended March 31, 1997.
The II-D Partnership recognized a non-cash charge against earnings of
$143,957 during the three months ended March 31, 1997. This impairment
provision was necessary due to a decline in oil and gas prices used to
determine the recoverability of proved oil and gas reserves at March 31,
1997. No similar charge was necessary during the three months ended March
31, 1998.
General and administrative expenses decreased $3,147 (2.8%) for the three
months ended March 31, 1998 as compared to the three months ended March
31, 1997. As a percentage of oil and gas sales, these expenses increased
to 15.5% for the three months ended March 31, 1998 from 9.4% for the three
months ended March 31, 1997. This percentage increase was primarily due to
the decrease in oil and gas sales discussed above.
The Limited Partners have received cash distributions through March 31,
1998 totaling $26,636,903 or $84.59% of the Limited Partners' capital
contributions.
39
<PAGE>
II-E PARTNERSHIP
THREE MONTHS ENDED MARCH 31, 1998 AS COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1997.
Three Months Ended March 31,
----------------------------
1998 1997
-------- ----------
Oil and gas sales $478,325 $780,293
Oil and gas production expenses $165,724 $236,324
Barrels produced 8,400 12,061
Mcf produced 177,849 204,651
Average price/Bbl $ 14.45 $ 21.22
Average price/Mcf $ 2.01 $ 2.56
As shown in the table above, total oil and gas sales decreased $301,968
(38.7%) for the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997. Of this decrease, approximately $78,000 and
$69,000, respectively, were related to decreases in volumes of oil and gas
sold and approximately $57,000 and $98,000, respectively, were related to
decreases in the average prices of oil and gas sold. Volumes of oil and
gas sold decreased 3,661 barrels and 26,802 Mcf, respectively, for the
three months ended March 31, 1998 as compared to the three months ended
March 31, 1997. The decrease in volumes of oil sold resulted primarily
from (i) normal declines in production due to diminished reserves during
the three months ended March 31, 1998, (ii) the shutting-in of four
significant wells during the three months ended March 31, 1998 in order to
increase production capabilities, and (iii) positive prior period volume
adjustments made by the purchaser on three significant wells during the
three months ended March 31, 1997. The decrease in volumes of gas sold
resulted primarily from (i) the receipt in 1998 of a reduced percentage of
sales due to the II-E Partnership's overproduced position on one
significant well, (ii) the decline in production due to diminished
reserves on two significant wells during the three months ended March 31,
1998, and (iii) negative prior period volume adjustments made by the
purchaser on one significant well during the three months ended March 31,
1998. Average oil and gas prices decreased to $14.45 per barrel and $2.01
per Mcf, respectively, for the three months ended March 31, 1998 from
$21.22 per barrel and $2.56 per Mcf, respectively, for the three months
ended March 31, 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $70,600 (29.9%) for the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997. This
decrease resulted primarily from (i) a decrease in production taxes
associated with the decrease in oil and gas sales discussed above and (ii)
the decreases in volumes of oil and gas sold during the
40
<PAGE>
three months ended March 31, 1998 as compared to the three months ended
March 31, 1997. As a percentage of oil and gas sales, these expenses
increased to 34.6% for the three months ended March 31, 1998 from 30.3%
for the three months ended March 31, 1997. This percentage increase was
primarily due to the decreases in the average prices of oil and gas sold
during the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $26,867 (16.4%) for the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997. This decrease resulted
primarily from (i) the decreases in volumes of oil and gas sold during the
three months ended March 31, 1998 as compared to the three months ended
March 31, 1997 and (ii) an upward revision in the estimate of remaining
gas reserves at December 31, 1997. As a percentage of oil and gas sales,
this expense increased to 28.6% for the three months ended March 31, 1998
from 20.9% for the three months ended March 31, 1997. This percentage
increase was primarily due to the decreases in the average prices of oil
and gas sold during the three months ended March 31, 1998 as compared to
the three months ended March 31, 1997.
The II-E Partnership recognized a non-cash charge against earnings of
$992,851 during the three months ended March 31, 1997. Of this amount,
$317,979 was related to a decline in oil and gas prices used to determine
the recoverability of proved oil and gas reserves at March 31, 1997 and
$674,872 was related to the writing-off of unproved properties. These
unproved properties were written off based on the General Partner's
determination that it was unlikely that such properties would be developed
due to the low oil and gas prices received over the prior several years
and provisions in the II-E Partnership's partnership agreement which limit
the level of permissible drilling activity. No similar charge was
necessary during the three months ended March 31, 1998.
General and administrative expenses decreased $15,527 (16.1%) for the
three months ended March 31, 1998 as compared to the three months ended
March 31, 1997. This decrease resulted primarily from decreases in
professional fees during the three months ended March 31, 1998 as compared
to the three months ended March 31, 1997. As a percentage of oil and gas
sales, these expenses increased to 16.9% for the three months ended March
31, 1998 from 12.3% for the three months ended March 31, 1997. This
percentage increase was primarily due to the decrease in oil and gas sales
discussed above.
The Limited Partners have received cash distributions through March 31,
1998 totaling $15,606,574 or 68.20% of the Limited Partners' capital
contributions.
41
<PAGE>
II-F PARTNERSHIP
THREE MONTHS ENDED MARCH 31, 1998 AS COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1997.
Three Months Ended March 31,
----------------------------
1998 1997
-------- ----------
Oil and gas sales $432,069 $729,165
Oil and gas production expenses $114,831 $159,630
Barrels produced 9,805 12,012
Mcf produced 143,447 143,209
Average price/Bbl $ 14.07 $ 20.89
Average price/Mcf $ 2.05 $ 3.34
As shown in the table above, total oil and gas sales decreased $297,096
(40.7%) for the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997. Of this decrease, approximately $46,000 was
related to a decrease in volumes of oil sold and approximately $67,000 and
$185,000, respectively, were related to decreases in the average prices of
oil and gas sold. Volumes of oil sold decreased 2,207 barrels, while
volumes of gas sold increased 238 Mcf for the three months ended March 31,
1998 as compared to the three months ended March 31, 1997. The decrease in
volumes of oil sold resulted primarily from (i) positive prior period
volume adjustments made by the purchaser on three significant wells during
the three months ended March 31, 1997, (ii) the sale of several wells
during 1997, and (iii) normal declines in production due to diminished
reserves during the three months ended March 31, 1998. Any increase in the
volumes of gas sold caused by a negative prior period volume adjustment
made by the purchaser during the three months ended March 31, 1997 was
substantially offset by normal declines in production due to diminished
reserves on several wells during the three months ended March 31, 1998.
Average oil and gas prices decreased to $14.07 per barrel and $2.05 per
Mcf, respectively, for the three months ended March 31, 1998 from $20.89
per barrel and $3.34 per Mcf, respectively, for the three months ended
March 31, 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $44,799 (28.1%) for the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997. This
decrease resulted primarily from (i) a decrease in production taxes
associated with the decrease in oil and gas sales discussed above, (ii)
the decrease in volumes of oil sold during the three months ended March
31, 1998 as compared to the three months ended March 31, 1997, and (iii)
workover expenses incurred on two significant wells during the three
months ended March 31, 1997. As a percentage of oil and gas sales, these
expenses increased to 26.6% for the three months ended March 31, 1998
42
<PAGE>
from 21.9% for the three months ended March 31, 1997. This percentage
increase was primarily due to the decreases in the average prices of oil
and gas sold during the three months ended March 31, 1998 as compared to
the three months ended March 31, 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $8,177 (8.0%) for the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997. As a percentage of oil
and gas sales, this expense increased to 21.7% for the three months ended
March 31, 1998 from 14.0% for the three months ended March 31, 1997. This
percentage increase was primarily due to the decreases in the average
prices of oil and gas sold during the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997.
The II-F Partnership recognized a non-cash charge against earnings of
$1,377,160 during the three months ended March 31, 1997. Of this amount,
$208,255 was related to a decline in oil and gas prices used to determine
a recoverability of proved oil and gas reserves at March 31, 1997 and
$1,168,905 was related to the writing-off of unproved properties. These
unproved properties were written off based on the General Partner's
determination that it was unlikely that such properties would be developed
due to the low oil and gas prices received over the prior several years
and provisions in the II-F Partnership's partnership agreement which limit
the level of permissible drilling activity. No similar charge was
necessary during the three months ended March 31, 1998.
General and administrative expenses increased $4,232 (7.7%) for the three
months ended March 31, 1998 as compared to the three months ended March
31, 1997. As a percentage of oil and gas sales, these expenses increased
to 13.7% for the three months ended March 31, 1998 from 7.5% for the three
months ended March 31, 1997. This percentage increase was primarily due to
the decrease in oil and gas sales discussed above.
The Limited Partners have received cash distributions through March 31,
1998 totaling $15,630,051 or 91.19% of the Limited Partners' capital
contributions.
43
<PAGE>
II-G PARTNERSHIP
THREE MONTHS ENDED MARCH 31, 1998 AS COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1997.
Three Months Ended March 31,
----------------------------
1998 1997
-------- ----------
Oil and gas sales $914,389 $1,536,333
Oil and gas production expenses $244,109 $ 344,258
Barrels produced 20,593 25,247
Mcf produced 305,144 307,748
Average price/Bbl $ 14.07 $ 20.89
Average price/Mcf $ 2.05 $ 3.28
As shown in the table above, total oil and gas sales decreased $621,944
(40.5%) for the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997. Of this decrease, approximately $97,000 was
related to a decrease in volumes of oil sold and approximately $140,000
and $375,000, respectively, were related to decreases in the average
prices of oil and gas sold. Volumes of oil and gas sold decreased 4,654
barrels and 2,604 Mcf, respectively, for the three months ended March 31,
1998 as compared to the three months ended March 31, 1997. The decrease in
volumes of oil sold resulted primarily from (i) positive prior period
volume adjustments made by the purchaser on three significant wells during
the three months ended March 31, 1997, (ii) the sale of several wells
during 1997, and (iii) normal declines in production due to diminished
reserves during the three months ended March 31, 1998. Any decrease in
volumes of gas sold (which resulted primarily from normal declines in
production due to diminished reserves on several wells during the three
months ended March 31, 1998) was substantially offset by negative prior
period volume adjustments made by the purchaser on one significant well
during the three months ended March 31, 1997. Average oil and gas prices
decreased to $14.07 per barrel and $2.05 per Mcf, respectively, for the
three months ended March 31, 1998 from $20.89 per barrel and $3.28 per
Mcf, respectively, for the three months ended March 31, 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $100,149 (29.1%) for the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997. This
decrease resulted primarily from (i) a decrease in production taxes
associated with the decrease in oil and gas sales discussed above, (ii)
the decreases in volumes of oil and gas sold during the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997, and
(iii) workover expenses incurred on two significant wells during the three
months ended March 31, 1997. As a percentage of oil and gas sales, these
expenses
44
<PAGE>
increased to 26.7% for the three months ended March 31, 1998 from 22.4%
for the three months ended March 31, 1997. This percentage increase was
primarily due to the decreases in the average prices of oil and gas sold
during the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $22,666 (10.2%) for the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997. This decrease resulted
primarily from (i) the decreases in volumes of oil and gas sold during the
three months ended March 31, 1998 as compared to the three months ended
March 31, 1997 and (ii) an upward revision in the estimate of remaining
gas reserves at December 31, 1997. As a percentage of oil and gas sales,
this expense increased to 21.9% for the three months ended March 31, 1998
from 14.5% for the three months ended March 31, 1997. This percentage
increase was primarily due to the decreases in the average prices of oil
and gas sold during the three months ended March 31, 1998 as compared to
the three months ended March 31, 1997.
The II-G Partnership recognized a non-cash charge against earnings of
$3,101,656 during the three months ended March 31, 1997. Of this amount,
$489,672 was related to a decline in oil and gas prices used to determine
the recoverability of proved oil and gas reserves at March 31, 1997 and
$2,611,984 was related to the writing-off of unproved properties. These
unproved properties were written off based on the General Partner's
determination that it was unlikely that such properties would be developed
due to the low oil and gas prices received over the prior several years
and provisions in the II-G Partnership's partnership agreement which limit
the level of permissible drilling activity. No similar charge was
necessary during the three months ended March 31, 1998.
General and administrative expenses increased $9,163 (7.7%) for the three
months ended March 31, 1998 as compared to the three months ended March
31, 1997. As a percentage of oil and gas sales, these expenses increased
to 14.0% for the three months ended March 31, 1998 from 7.8% for the three
months ended March 31, 1997. This percentage increase was primarily due to
the decrease in oil and gas sales discussed above.
The Limited Partners have received cash distributions through March 31,
1998 totaling $32,167,371 or 86.43% of the Limited Partners' capital
contributions.
45
<PAGE>
II-H PARTNERSHIP
THREE MONTHS ENDED MARCH 31, 1998 AS COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1997.
Three Months Ended March 31,
----------------------------
1998 1997
-------- ----------
Oil and gas sales $217,703 $360,814
Oil and gas production expenses $ 58,340 $ 84,434
Barrels produced 4,789 5,881
Mcf produced 72,675 75,183
Average price/Bbl $ 14.06 $ 20.90
Average price/Mcf $ 2.07 $ 3.16
As shown in the table above, total oil and gas sales decreased $143,111
(39.7%) for the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997. Of this decrease, approximately $23,000 was
related to a decrease in volumes of oil sold and approximately $33,000 and
$79,000, respectively, were related to decreases in the average prices of
oil and gas sold. Volumes of oil and gas sold decreased 1,092 barrels and
2,508 Mcf, respectively, for the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997. The decrease in volumes
of oil sold resulted primarily from (i) positive prior period volume
adjustments made by the purchaser on three significant wells during the
three months ended March 31, 1997 and (ii) the sale of several wells
during 1997. Any decrease in volumes of gas sold (which resulted primarily
from normal declines in production due to diminished reserves on several
wells during the three months ended March 31, 1998 and the sale of several
wells during 1997) was substantially offset by a negative prior period
volume adjustment made by the purchaser on one significant well during the
three months ended March 31, 1997. Average oil and gas prices decreased to
$14.06 per barrel and $2.07 per Mcf, respectively, for the three months
ended March 31, 1998 from $20.90 per barrel and $3.16 per Mcf,
respectively, for the three months ended March 31, 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $26,094 (30.9%) for the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997. This
decrease resulted primarily from (i) a decrease in production taxes
associated with the decrease in oil and gas sales discussed above, (ii)
the decreases in volumes of oil and gas sold during the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997, and
(iii) workover expenses incurred on three significant wells during the
three months ended March 31, 1997. As a percentage of oil and gas sales,
these expenses increased to 26.8% for the three months ended March
46
<PAGE>
31, 1998 from 23.4% for the three months ended March 31, 1997. This
percentage increase was primarily due to the decreases in the average
prices of oil and gas sold during the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $6,914 (12.9%) for the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997. This decrease resulted
primarily from (i) the decreases in volumes of oil and gas sold during the
three months ended March 31, 1998 as compared to the three months ended
March 31, 1997 and (ii) an upward revision in the estimate of remaining
gas reserves at December 31, 1997. As a percentage of oil and gas sales,
this expense increased to 21.4% for the three months ended March 31, 1998
from 14.8% for the three months ended March 31, 1997. This percentage
increase was primarily due to the decreases in the average prices of oil
and gas sold during the three months ended March 31, 1998 as compared to
the three months ended March 31, 1997.
The II-H Partnership recognized a non-cash charge against earnings of
$785,220 during the three months ended March 31, 1997. Of this amount,
$125,223 was related to a decline in oil and gas prices used to determine
the recoverability of proved oil and gas reserves at March 31, 1997 and
$659,997 was related to the writing-off of unproved properties. These
unproved properties were written off based on the General Partner's
determination that it was unlikely that such properties would be developed
due to the low oil and gas prices received over the prior several years
and provisions in the II-H Partnership's partnership agreement which limit
the level of permissible drilling activity. No similar charge was
necessary during the three months ended March 31, 1998.
General and administrative expenses increased $2,255 (7.7%) for the three
months ended March 31, 1998 as compared to the three months ended March
31, 1997. As a percentage of oil and gas sales, these expenses increased
to 14.5% for the three months ended March 31, 1998 from 8.1% for the three
months ended March 31, 1997. This percentage increase was primarily due to
the decrease in oil and gas sales discussed above.
The Limited Partners have received cash distributions through March 31,
1998 totaling $7,490,364 or 81.67% of the Limited Partners' capital
contributions.
47
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As further described in the Partnerships' Annual Report on Form 10-K for
the year ended December 31, 1997 (the "Form 10-K"), the Partnerships are
included in the subject matter of a class action lawsuit entitled "In Re:
PaineWebber Limited Partnerships' Litigation," Case No. 94-CIV-8558, U.S.
District Court, Southern District of New York.
In early 1996 PaineWebber Incorporated ("PaineWebber") reached settlements
with the class action plaintiffs and the Securities and Exchange
Commission (the "SEC") that resolved the above referenced litigation. As
part of the class settlement, PaineWebber paid $125 million (the "Class
Action Fund"), plus certain additional consideration to the class.
PaineWebber also paid $40 million to a capped claims fund to be
independently administered on behalf of the SEC (the "SEC Fund"). Both
settlement funds (in the case of the Class Action Fund, net of court
approved class counsel attorney's fees and disbursements) were to be
allocated among eligible limited partners whose claims were approved by
the respective Claims Administrators.
In late March 1998, the Court awarded attorney's fees and disbursements to
class counsel. On or about May 8, 1998, the Claims Administrator for the
Class Action Fund mailed to eligible class members the cash component of
their settlement benefits from the Class Action Fund. The General Partner
has been advised that in late May 1998 the SEC Claims Administrator
expects to mail to each eligible class member his or her claim
determination with the preliminary settlement amount, if any, from the SEC
Fund.
A further description of the settlement is included within the Form 10-K
referred to above.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule containing summary financial
information extracted from the II-A Partnership's
financial statements as of March 31, 1998 and for the
three months ended March 31, 1998, filed herewith.
48
<PAGE>
27.2 Financial Data Schedule containing summary financial
information extracted from the II-B Partnership's
financial statements as of March 31, 1998 and for the
three months ended March 31, 1998, filed herewith.
27.3 Financial Data Schedule containing summary financial
information extracted from the II-C Partnership's
financial statements as of March 31, 1998 and for the
three months ended March 31, 1998, filed herewith.
27.4 Financial Data Schedule containing summary financial
information extracted from the II-D Partnership's
financial statements as of March 31, 1998 and for the
three months ended March 31, 1998, filed herewith.
27.5 Financial Data Schedule containing summary financial
information extracted from the II-E Partnership's
financial statements as of March 31, 1998 and for the
three months ended March 31, 1998, filed herewith.
27.6 Financial Data Schedule containing summary financial
information extracted from the II-F Partnership's
financial statements as of March 31, 1998 and for the
three months ended March 31, 1998, filed herewith.
27.7 Financial Data Schedule containing summary financial
information extracted from the II-G Partnership's
financial statements as of March 31, 1998 and for the
three months ended March 31, 1998, filed herewith.
27.8 Financial Data Schedule containing summary financial
information extracted from the II-H Partnership's
financial statements as of March 31, 1998 and for the
three months ended March 31, 1998, filed herewith.
All other exhibits are omitted as inapplicable.
49
<PAGE>
(b) Reports on Form 8-K.
Current report on Form 8-K filed during the first quarter of 1998:
Date of event: January 29, 1998
Date filed with SEC: January 30, 1998
Items included
Item 5 - Other Events
Item 7 - Exhibits
50
<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.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-A
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H
(Registrant)
BY: GEODYNE RESOURCES, INC.
General Partner
Date: May 13, 1998 By: /s/Dennis R. Neill
--------------------------------
(Signature)
Dennis R. Neill
President
Date: May 13, 1998 By: /s/Patrick M. Hall
--------------------------------
(Signature)
Patrick M. Hall
Principal Accounting Officer
51
<PAGE>
INDEX TO EXHIBITS
NUMBER DESCRIPTION
- ------ -----------
27.1 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership II-A's
financial statements as of March 31, 1998 and for the three months
ended March 31, 1998, filed herewith.
27.2 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership II-B's
financial statements as of March 31, 1998 and for the three months
ended March 31, 1998, filed herewith.
27.3 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership II-C's
financial statements as of March 31, 1998 and for the three months
ended March 31, 1998, filed herewith.
27.4 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership II-D's
financial statements as of March 31, 1998 and for the three months
ended March 31, 1998, filed herewith.
27.5 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership II-E's
financial statements as of March 31, 1998 and for the three months
ended March 31, 1998, filed herewith.
27.6 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership II-F's
financial statements as of March 31, 1998 and for the three months
ended March 31, 1998, filed herewith.
27.7 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership II-G's
financial statements as of March 31, 1998 and for the three months
ended March 31, 1998, filed herewith.
27.8 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership II-H's
financial statements as of March 31, 1998 and for the three months
ended March 31, 1998, filed herewith.
All other exhibits are omitted as inapplicable.
52
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<CURRENT-ASSETS> 773,786
<PP&E> 9,289,140
<DEPRECIATION> 7,766,578
<TOTAL-ASSETS> 2,435,969
<CURRENT-LIABILITIES> 59,638
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0
0
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<OTHER-SE> 2,326,684
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<TOTAL-REVENUES> 565,399
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<PERIOD-START> JAN-01-1998
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<CURRENT-ASSETS> 1,669,587
<PP&E> 17,069,078
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<TOTAL-ASSETS> 5,339,690
<CURRENT-LIABILITIES> 207,546
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0
0
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<EPS-PRIMARY> 0.66
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<EPS-PRIMARY> 1.57
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<PERIOD-START> JAN-01-1998
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<EPS-PRIMARY> 1.51
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<PERIOD-START> JAN-01-1998
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0
0
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