FORM 10-K405
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission File Number: P-1: 0-17800; P-2: 0-17801;
P-3: 0-18306; P-4: 0-18308; P-5: 0-18637; P-6: 0-18937
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-2 LIMITED PARTNERSHIP
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-6
-------------------------------------------------------------------
(Exact name of Registrant as specified in its Articles)
P-1: 73-1330245
P-2: 73-1330625
P-1 and P-2: P-3: 73-1336573
Texas P-4: 73-1341929
P-3 through P-6: P-5: 73-1353774
Oklahoma P-6: 73-1357375
- --------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two West Second Street, Tulsa, Oklahoma 74103
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918) 583-1791
Securities registered pursuant to Section 12(b) of the Act: None Securities
registered pursuant to Section 12(g) of the Act:
Depositary Units of Limited Partnership interest
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 the
filing requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
X Disclosure is not contained herein
-----
Disclosure is contained herein
-----
The Depositary Units are not publicly traded, therefore, Registrant cannot
compute the aggregate market value of the voting units held by non-affiliates of
the Registrant.
DOCUMENTS INCORPORATED BY REFERENCE: None
<PAGE>
FORM 10-K405
TABLE OF CONTENTS
PART I.......................................................................1
ITEM 1. BUSINESS...................................................1
ITEM 2. PROPERTIES.................................................7
ITEM 3. LEGAL PROCEEDINGS.........................................15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS.......18
PART II.....................................................................18
ITEM 5. MARKET FOR UNITS AND RELATED LIMITED PARTNER MATTERS......18
ITEM 6. SELECTED FINANCIAL DATA...................................21
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.......................24
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...............42
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.......................42
PART III....................................................................42
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL
PARTNER...................................................42
ITEM 11. EXECUTIVE COMPENSATION....................................43
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................50
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............52
PART IV.....................................................................55
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K...............................................55
SIGNATURES..............................................................61
<PAGE>
PART I.
ITEM 1. BUSINESS
General
The Geodyne Institutional/Pension Energy Income P-1 Limited Partnership
(the "P-1 Partnership") and Geodyne Institutional/Pension Energy Income P-2
Limited Partnership (the "P-2 Partnership") are limited partnerships formed
under the Texas Revised Limited Partnership Act and the Geodyne
Institutional/Pension Energy Income Limited Partnership P-3 (the "P-3
Partnership"), Geodyne Institutional/Pension Energy Income Limited Partnership
P-4 (the "P-4 Partnership"), Geodyne Institutional/Pension Energy Income Limited
Partnership P-5 (the "P-5 Partnership"), and Geodyne Institutional/Pension
Energy Income Limited Partnership P-6 (the "P-6 Partnership") are limited
partnerships formed under the Oklahoma Revised Uniform Limited Partnership Act
(collectively, the "Partnerships"). Each Partnership is composed of Geodyne
Resources, Inc. ("Geodyne"), a Delaware corporation, as the general partner,
Geodyne Institutional Depository Company, a Delaware corporation, as the sole
initial limited partner, and public investors as substitute limited partners
(the "Limited Partners"). The Partnerships commenced operations on the dates set
forth below:
Date of
Partnership Activation
----------- -----------------
P-1 October 25, 1988
P-2 February 9, 1989
P-3 May 10, 1989
P-4 November 21, 1989
P-5 February 27, 1990
P-6 September 5, 1990
Immediately following activation, each Partnership invested as a general
partner in a separate Oklahoma general partnership which actually conducts the
Partnerships' operations. Geodyne serves as managing partner of such general
partnerships. Unless the context indicates otherwise, all references to any
single Partnership or all of the Partnerships in this Annual Report on Form
10-K405 ("Annual Report") are references to the Partnership and its related
general partnership, collectively. In addition, unless the context indicates
otherwise, all references to the "General Partner" in this Annual Report are
references to Geodyne as the general partner of the Partnerships, and as the
managing partner of the related general partnerships.
1
<PAGE>
The General Partner currently serves as general partner of 29 limited
partnerships, including the Partnerships. The General Partner is a wholly-owned
subsidiary of Samson Investment Company. Samson Investment Company and its
various corporate subsidiaries, including the General Partner (collectively, the
"Samson Companies"), are primarily engaged in the production and development of
and exploration for oil and gas reserves and the acquisition and operation of
producing properties. At December 31, 1997, the Samson Companies owned interests
in approximately 13,000 oil and gas wells located in 19 states of the United
States and the countries of Canada, Venezuela, and Russia. At December 31, 1997,
the Samson Companies operated approximately 2,500 oil and gas wells located in
15 states of the United States, as well as Canada, Venezuela, and Russia.
The Partnerships are currently engaged in the business of owning net
profits and royalty interests in oil and gas properties located in the
continental United States. Most of the net profits interests acquired by the
Partnerships have been carved out of working interests in producing properties
("Working Interests") which were acquired by affiliated oil and gas investment
programs (the "Affiliated Programs"). Net profits interests entitle the
Partnerships to a share of net revenues from producing properties measured by a
specific percentage of the net profits realized by such Affiliated Programs.
Except where otherwise noted, references to certain operational activities of
the Partnerships are actually the activities of the Affiliated Programs. As the
holder of a net profits interest, a Partnership is not liable to pay any amount
by which oil and gas operating costs and expenses exceed revenues for any
period, although any deficit, together with interest, is applied to reduce the
amounts payable to the Partnership in subsequent periods. As used throughout
this Annual Report, the Partnerships' net profits and royalty interests in oil
and gas sales will be referred to as "Net Profits" and the Partnerships' net
profits and royalty interests in oil and gas properties will be collectively
referred to as "Net Profits Interests."
In order to prudently manage the properties which are burdened by the
Partnerships' Net Profits Interests, it may be appropriate for drilling
operations to be conducted on such properties. Since the Partnerships' Net
Profits are calculated after considering such costs, the Partnerships also
indirectly engage in development drilling.
As limited partnerships, the Partnerships have no officers, directors, or
employees. They rely instead on the personnel of the General Partner and the
other Samson Companies. As of February 1, 1998, the Samson Companies employed
approximately 820 persons. No employees are covered by collective bargaining
agreements, and management believes that the Samson Companies provide a sound
employee relations environment. For information regarding the executive officers
2
<PAGE>
of the General Partner, see "Item 10. Directors and Executive Officers of the
General Partner."
The General Partner's and the Partnerships' principal place of business is
located at Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103, and
their telephone number is (918) 583-1791 or (800) 283-1791.
Funding
Although the partnership agreement for each Partnership (the "Partnership
Agreement") permits each Partnership to incur borrowings, operations and
expenses are currently funded out of revenues from each Partnership's Net
Profits Interests. The General Partner may, but is not required to, advance
funds to a Partnership for the same purposes for which Partnership borrowings
are authorized.
Principal Products Produced and Services Rendered
The Partnerships' sole business is the holding of certain Net Profits
Interests. The Partnerships do not refine or otherwise process crude oil and
condensate. The Partnerships do not hold any patents, trademarks, licenses, or
concessions and are not a party to any government contracts. The Partnerships
have no backlog of orders and do not participate in research and development
activities. The Partnerships are not presently encountering shortages of
oilfield tubular goods, compressors, production material, or other equipment.
Competition and Marketing
The domestic oil and gas industry is highly competitive, with a large
number of companies and individuals engaged in the exploration and development
of oil and gas properties. The ability of the Partnerships to produce and market
oil and gas profitably depends on a number of factors that are beyond the
control of the Partnerships. These factors include worldwide political
instability (especially in oil-producing regions), United Nations export
embargoes, the supply and price of foreign imports of oil and gas, the level of
consumer product demand (which can be heavily influenced by weather patterns),
government regulations and taxes, the price and availability of alternative
fuels, the overall economic environment, and the availability and capacity of
transportation and processing facilities. The effect of these factors on future
oil and gas industry trends cannot be accurately predicted or anticipated.
3
<PAGE>
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. Concerning past trends, average yearly wellhead gas prices in the
United States have been volatile for a number of years. For the past ten years,
such average prices have generally been in the $1.40 to $2.40 per Mcf range,
significantly below prices received in the early 1980s. Average gas prices in
the latter part of 1996 and parts of 1997, however, were somewhat higher than
those yearly averages. Gas prices are currently in the higher end of the 10-year
average price range described above.
Substantially all of the Partnerships' gas reserves are being sold on the
"spot market." Prices on the spot market are subject to wide seasonal and
regional pricing fluctuations due to the highly competitive nature of the spot
market. In addition, such spot market sales are generally short-term in nature
and are dependent upon the obtaining of transportation services provided by
pipelines. Spot prices for the Partnerships' gas decreased from approximately
$3.57 per Mcf at December 31, 1996 to approximately $2.32 per Mcf at December
31, 1997. Such prices were on an MMBTU basis and differ from the prices actually
received by the Partnerships due to transportation and marketing costs, BTU
adjustments, and regional price and quality differences.
For the past ten years, average oil prices have generally been in the
$16.00 to $24.00 per barrel range. Due to global consumption and supply trends
over the last several months as well as expectations of at least a short-term
slowdown in Asian energy demand, oil prices have recently been in the mid to
lower portions of this pricing range, and in early 1998 dropped to as low as
approximately $13.75 per barrel. It is not known whether this trend will
continue. Prices for the Partnerships' oil decreased from approximately $23.75
per barrel at December 31, 1996 to approximately $16.25 per barrel at December
31, 1997.
Future prices for both oil and gas will likely be different from (and may
be lower than) the prices in effect on December 31, 1997. Primarily due to
heating season demand, year-end prices in many past years have tended to be
higher, and in some cases significantly higher, than the yearly average price
actually received by the Partnerships for at least the following year.
Management is unable to predict whether future oil and gas prices will (i)
stabilize, (ii) increase, or (iii) decrease.
Significant Customers
The following customers accounted for ten percent or more of the oil and
gas sales attributable to the Partnerships' Net Profits Interests during the
year ended December 31, 1997:
4
<PAGE>
Partnership Customer Percentage
----------- ------------------------ ----------
P-1 El Paso Energy Marketing
Company ("El Paso") 25.19%
Chevron U.S.A., Inc. 10.82%
P-2 El Paso 24.39%
Texaco Exploration and
Production, Inc.
("Texaco") 11.11%
P-3 El Paso 24.23%
Texaco 11.18%
P-4 El Paso 49.10%
Valero Industrial Gas LP 13.56%
Phibro Energy, Inc. 10.70%
P-5 El Paso 64.98%
P-6 El Paso 28.16%
HPL Resources Company 19.85%
Tejas Gas Marketing
Company 14.13%
In the event of interruption of purchases by one or more of these
significant customers or the cessation or material change in availability of
open access transportation by pipeline transporters, the Partnerships may
encounter difficulty in marketing gas and in maintaining historic sales levels.
Management does not expect any of its open access transporters to seek
authorization to terminate their transportation services. Even if the services
were terminated, management believes that alternatives would be available
whereby the Partnerships would be able to continue to market their gas.
The Partnerships' principal customers for crude oil production are
refiners and other companies which have pipeline facilities near the producing
properties in which the Partnerships own Net Profits Interests. In the event
pipeline facilities are not conveniently available to production areas, crude
oil is usually trucked by purchasers to storage facilities.
Oil, Gas, and Environmental Control Regulations
Regulation of Production Operations -- The production of oil and gas is
subject to extensive federal and state laws and regulations governing a wide
variety of matters, including the drilling and spacing of wells, allowable rates
of production, prevention of waste and pollution, and protection of the
environment. In addition to the direct costs borne in complying with such
5
<PAGE>
regulations, operations and revenues may be impacted to the extent that certain
regulations limit oil and gas production to below economic levels.
Regulation of Sales and Transportation of Oil and Gas -- Sales of crude
oil and condensate are made at market prices and are not subject to price
controls. The sale of gas may be subject to both federal and state laws and
regulations. The provisions of these laws and regulations are complex and affect
all who produce, resell, transport, or purchase gas. Although virtually all of
the natural gas production affecting the Partnerships is not subject to price
regulation, other regulations affect the availability of gas transportation
services and the ability of gas consumers to continue to purchase or use gas at
current levels. Accordingly, such regulations may have a material effect on the
Partnerships' Net Profits and projections of future Net Profits.
Future Legislation -- Legislation affecting the oil and gas industry is
under constant review for amendment or expansion. Because such laws and
regulations are frequently amended or reinterpreted, management is unable to
predict what additional energy legislation may be proposed or enacted or the
future cost and impact of complying with existing or future regulations.
Regulation of the Environment - Oil and gas operations are subject to
numerous laws and regulations governing the discharge of materials into the
environment or otherwise relating to environmental protection. Compliance with
such laws and regulations, together with any penalties resulting from
noncompliance, may decrease the Partnerships' Net Profits. Management
anticipates that various local, state, and federal environmental control
agencies will have an increasing impact on oil and gas operations.
Insurance Coverage
Exploration for and production of oil and gas are subject to many inherent
risks, including blowouts, pollution, fires, and other casualties. The
Partnerships maintain insurance coverage as is customary for entities of a
similar size engaged in similar operations, but losses can occur from
uninsurable risks or in amounts in excess of existing insurance coverage. The
occurrence of an event which is not fully covered by insurance could have a
material adverse effect on the Partnerships' financial position and results of
operations in that it could negatively impact the cash flow received from the
Net Profits Interests.
6
<PAGE>
ITEM 2. PROPERTIES
Well Statistics
The following table sets forth the number of productive wells in which the
Partnerships had a Net Profits Interest as of December 31, 1997.
P/ship Number of Wells(1)
------ ------------------------------------
Total Oil Gas N/A(2)
----- ----- ----- ------
P-1 956 730 197 29
P-2 1,009 757 223 29
P-3 1,009 757 223 29
P-4 209 103 105 1
P-5 74 22 51 1
P-6 126 36 89 1
- ---------------
(1) The designation of a well as an oil well or gas well is made by the
General Partner based on the relative amount of oil and gas reserves for
the well. Regardless of a well's oil or gas designation, it may produce
oil, gas, or both oil and gas.
(2) Wells which have not been designated as oil or gas.
Drilling Activities
The P-4 Partnership indirectly participated in the drilling of the Schwarz
No. 8 well located in Webb County, Texas which was drilled as a development well
in August 1997. The well was not capable of commercial production and has been
plugged and abandoned. No other Partnerships were involved in drilling
activities.
Oil and Gas Production, Revenue, and Price History
The following tables set forth certain historical information concerning
the oil (including condensates) and gas production attributable to the
Partnerships' Net Profits Interests, revenues attributable to such production,
and certain price information.
7
<PAGE>
Net Production Data
P-1 Partnership
---------------
Year Ended December 31,
----------------------------------------
1997 1996 1995
---------- ---------- ----------
Production:
Oil (Bbls) 32,044 33,798 39,075
Gas (Mcf) 357,516 468,446 524,079
Oil and gas sales:
Oil $ 598,856 $ 670,897 $ 629,419
Gas 813,010 911,723 704,485
--------- --------- ---------
Total $1,411,866 $1,582,620 $1,333,904
========= ========= =========
Average sales price:
Per barrel of oil $18.69 $19.85 $16.11
Per Mcf of gas 2.27 1.95 1.34
Net Production Data
P-2 Partnership
---------------
Year Ended December 31,
----------------------------------------
1997 1996 1995
---------- ---------- ----------
Production:
Oil (Bbls) $ 22,873 24,049 28,040
Gas (Mcf) 301,132 390,047 443,985
Oil and gas sales:
Oil $ 428,036 $ 478,550 $ 453,329
Gas 697,928 764,204 604,448
-------- --------- ---------
Total $1,125,964 $1,242,754 $1,057,777
========= ========= =========
Average sales price:
Per barrel of oil $18.71 $19.90 $16.17
Per Mcf of gas 2.32 1.96 1.36
8
<PAGE>
Net Production Data
P-3 Partnership
---------------
Year Ended December 31,
----------------------------------------
1997 1996 1995
---------- ---------- ----------
Production:
Oil (Bbls) 42,259 44,496 51,963
Gas (Mcf) 565,052 737,600 840,970
Oil and gas sales:
Oil $ 791,047 $ 885,630 $ 840,314
Gas 1,312,229 1,441,296 1,143,030
--------- --------- ---------
Total $2,103,276 $2,326,926 $1,983,344
========= ========= =========
Average sales price:
Per barrel of oil $18.72 $19.90 $16.17
Per Mcf of gas 2.32 1.95 1.36
Net Production Data
P-4 Partnership
---------------
Year Ended December 31,
----------------------------------------
1997 1996 1995
---------- ---------- ----------
Production:
Oil (Bbls) 19,686 22,949 28,847
Gas (Mcf) 513,815 630,841 885,642
Oil and gas sales:
Oil $ 387,375 $ 477,130 $ 505,129
Gas 1,267,510 1,332,412 1,299,908
--------- --------- ---------
Total $1,654,885 $1,809,542 $1,805,037
========= ========= =========
Average sales price:
Per barrel of oil $19.68 $20.79 $17.51
Per Mcf of gas 2.47 2.11 1.47
9
<PAGE>
Net Production Data
P-5 Partnership
---------------
Year Ended December 31,
----------------------------------------
1997 1996 1995
---------- ---------- ----------
Production:
Oil (Bbls) 7,972 10,757 10,842
Gas (Mcf) 516,756 627,998 784,863
Oil and gas sales:
Oil $ 158,471 $ 214,553 $ 185,791
Gas 1,148,588 1,229,170 1,061,514
--------- --------- ---------
Total $1,307,059 $1,443,723 $1,247,305
========= ========= =========
Average sales price:
Per barrel of oil $19.88 $19.95 $17.14
Per Mcf of gas 2.22 1.96 1.35
Net Production Data
P-6 Partnership
---------------
Year Ended December 31,
----------------------------------------
1997 1996 1995
---------- ---------- ----------
Production:
Oil (Bbls) 18,461 21,377 19,149
Gas (Mcf) 984,971 1,162,652 1,380,123
Oil and gas sales:
Oil $ 354,536 $ 437,360 $ 318,880
Gas 2,231,611 2,359,218 1,819,370
--------- --------- ---------
Total $2,586,147 $2,796,578 $2,138,250
========= ========= =========
Average sales price:
Per barrel of oil $19.20 $20.46 $16.65
Per Mcf of gas 2.27 2.03 1.32
10
<PAGE>
Proved Reserves and Net Present Value
The following table sets forth each Partnership's estimated proved oil and
gas reserves and net present value therefrom as of December 31, 1997 which were
attributable to the Partnerships' Net Profits Interests. (Throughout this Annual
Report, such interests will be referred to as the Partnerships' "proved
reserves.") The schedule of quantities of proved oil and gas reserves was
prepared by the General Partner in accordance with the rules prescribed by the
Securities and Exchange Commission (the "SEC"). Certain reserve information was
reviewed by Ryder Scott Company Petroleum Engineers ("Ryder Scott"), an
independent petroleum engineering firm. As used throughout this Annual Report,
"proved reserves" refers to those estimated quantities of crude oil, gas, and
gas liquids which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known oil and gas reservoirs
under existing economic and operating conditions.
Net present value represents estimated future gross cash flow from the
production and sale of proved reserves, net of estimated oil and gas production
costs (including production taxes, ad valorem taxes, and operating expenses) and
estimated future development costs, discounted at 10% per annum. Net present
value of the proved reserves was calculated on the basis of current costs and
prices at December 31, 1997. Such prices were not escalated except in certain
circumstances where escalations were fixed and readily determinable in
accordance with applicable contract provisions. The prices used in calculating
the net present value of the proved reserves do not necessarily reflect market
prices for oil and gas production subsequent to December 31, 1997. Year-end
prices have generally been higher than prices during the rest of the year. There
can be no assurance that the prices used in calculating the net present value at
December 31, 1997 will actually be realized for such production.
The process of estimating oil and gas reserves is complex, requiring
significant subjective decisions in the evaluation of available geological,
engineering, and economic data for each reservoir. The data for a given
reservoir may change substantially over time as a result of, among other things,
additional development activity, production history, and viability of production
under varying economic conditions; consequently, it is reasonably possible that
material revisions to existing reserve estimates may occur in the near future.
Although every reasonable effort has been made to ensure that these reserve
estimates represent the most accurate assessment possible, the significance of
the subjective decisions required and variances in available data for various
reservoirs make these estimates generally less precise than other estimates
presented in connection with financial statement disclosures.
11
<PAGE>
Proved Reserves and
Net Present Values
From Proved Reserves
As of December 31, 1997(1)
P-1 Partnership:
- ---------------
Estimated proved reserves:
Gas (Mcf) 2,283,493
Oil and liquids (Bbls) 216,666
Net present value (discounted at 10% per annum) $4,222,872
P-2 Partnership:
- ---------------
Estimated proved reserves:
Gas (Mcf) 2,042,600
Oil and liquids (Bbls) 160,322
Net present value (discounted at 10% per annum) $3,430,173
P-3 Partnership:
- ---------------
Estimated proved reserves:
Gas (Mcf) 3,838,854
Oil and liquids (Bbls) 297,256
Net present value (discounted at 10% per annum) $6,404,345
P-4 Partnership:
- ---------------
Estimated proved reserves:
Gas (Mcf) 2,659,848
Oil and liquids (Bbls) 55,834
Net present value (discounted at 10% per annum) $3,808,632
P-5 Partnership:
- ---------------
Estimated proved reserves:
Gas (Mcf) 3,029,466
Oil and liquids (Bbls) 51,228
Net present value (discounted at 10% per annum) $3,375,677
12
<PAGE>
P-6 Partnership:
- ---------------
Estimated proved reserves:
Gas (Mcf) 4,963,503
Oil and liquids (Bbls) 123,737
Net present value (discounted at 10% per annum) $5,658,742
- ---------
(1) Includes certain gas balancing adjustments which cause the gas volumes and
net present values to differ from the reserve reports which were prepared
by the General Partner and reviewed by Ryder Scott.
No estimates of the proved reserves of the Partnerships comparable to
those included herein have been included in reports to any federal agency other
than the SEC. Additional information relating to the Partnership's proved
reserves is contained in Note 4 to the Partnerships' financial statements,
included in Item 8 of this Annual Report.
Significant Properties
The following table sets forth certain well and reserve information for
the basins in which the Partnerships own a significant amount of Net Profits
Interests. The table contains the following information for each significant
basin: (i) the number of wells in which a Net Profits Interest is owned, (ii)
the number and percentage of wells operated by the Partnership's affiliates,
(iii) estimated proved oil reserves, (iv) estimated proved gas reserves, and (v)
the present value (discounted at 10% per annum) of estimated future net cash
flow.
The Anadarko Basin is located in western Oklahoma and the Texas panhandle,
while the Gulf Coast Basin is located in southern Louisiana and southeast Texas.
The Southern Oklahoma Folded Belt Basin is located in southern Oklahoma, while
the Permian Basin is located in west Texas and southeast New Mexico. Southern
Arkansas and northern Louisiana contain the Arkla Basin. The San Juan Basin is
located in northwest New Mexico and southwest Colorado.
13
<PAGE>
Significant Properties
----------------------
Wells
Operated by
Affiliates Oil Gas
Total ----------- Reserves Reserves Present
Basin Wells Number % (Bbl) (Mcf) Value
- ----------- ----- ------ --- -------- --------- ---------
P-1 P/ship:
Permian 3,353 4 -% 202,788 1,115,469 $2,894,958
Anadarko 90 17 19% 2,690 1,076,389 1,210,410
P-2 P/ship:
Permian 3,353 4 -% 138,619 764,968 $1,992,747
Anadarko 90 17 19% 2,596 832,915 940,803
South. Ok.
Folded Belt 29 23 79% 10,150 334,056 381,106
P-3 P/ship:
Permian 3,353 4 -% 255,626 1,413,384 $3,679,254
Anadarko 90 17 19% 4,869 1,547,715 2,084,444
South. Ok.
Folded Belt 29 23 79% 19,970 657,561 750,217
P-4 P/ship:
Gulf Coast 75 14 19% 36,821 1,076,649 $1,799,708
Anadarko 65 9 14% 4,964 818,029 1,016,358
Arkla 40 - -% 5,620 408,926 718,252
P-5 P/ship:
Anadarko 109 32 29% 7,750 1,903,947 $2,035,653
South. Ok.
Folded Belt 72 - -% 29,078 464,107 638,267
Permian 58 28 48% 10,311 551,659 496,318
P-6 P/ship:
Anadarko 109 32 29% 5,309 1,834,007 $1,916,976
Permian 61 30 49% 14,387 1,758,401 1,793,195
South. Ok.
Folded Belt 88 14 16% 89,328 319,551 852,543
Gulf Coast 12 1 8% 5,703 630,817 727,101
14
<PAGE>
Title to Oil and Gas Properties
Management believes that the Partnerships have satisfactory title to their
Net Profits Interests. Record title to all of the properties subject to the
Partnerships' Net Profits Interests is held by either the Partnerships or
Geodyne Nominee Corporation, an affiliate of the General Partner.
Title to the Partnerships' Net Profits Interests is subject to customary
royalty, overriding royalty, carried, working, and other similar interests and
contractual arrangements customary in the oil and gas industry, to liens for
current taxes not yet due, and to other encumbrances. Management believes that
such burdens do not materially detract from the value of such properties or from
the Partnerships' Net Profits Interests therein or materially interfere with
their use in the operation of the Partnerships' business.
ITEM 3. LEGAL PROCEEDINGS
On December 6, 1994, the Partnerships, among other parties, were named as
defendants in a lawsuit alleging causes of action based on fraud, negligent
misrepresentation, breach of fiduciary duty, breach of implied covenant, and
breach of contract in connection with the offer and sale of units in the
Partnerships ("Units") (Marion Wolfe v. Geodyne Resources, Inc., et al. Case No.
94-059799, District Court of Harris County, Texas). The plaintiff's petition
alleged that the lawsuit was being brought as a class action on behalf of the
investors who purchased Units. The lawsuit has been consolidated with another
lawsuit which is also pending in Harris County, Texas, Sidney Neidick, et al. v.
Geodyne Resources, Inc., et al, Case No. 94-052860, District Court of Harris
County, Texas. On June 7, 1995, Geodyne and the Partnerships were dismissed
without prejudice as defendants in the matter. In addition, on June 7, 1995, the
matter was certified as a class action.
On November 23 and 25, 1994, Geodyne, PaineWebber Incorporated
("PaineWebber"), and certain other parties were named as defendants in two
related lawsuits alleging misrepresentations made to induce investments in the
Partnerships and asserting causes of action for common law fraud and deceit and
unjust enrichment (Romine v. PaineWebber, Inc. et al, Case No. 94-CIV-8558, U.S.
District Court, Southern District of New York and Romine v. PaineWebber, Inc.,
et al, Case No. 94-132844, Supreme Court of the State of New York, County of New
York). The federal court case was later consolidated with other similar actions
(to which Geodyne is not a party) under the title In Re: PaineWebber Limited
Partnerships' Litigation (the "Federal Partnership Class Action") and was
certified as a class action on May 30, 1995. The Federal Partnership Class
Action also alleges violations of 18 U.S.C. Section 1962(c) and the Securities
15
<PAGE>
Exchange Act of 1934. Compensatory and punitive damages, interest, and costs
have been requested in both matters. The amended complaint in the Federal
Partnership Class Action no longer asserts any claim directly against Geodyne.
On January 18, 1996, PaineWebber issued a press release indicating that it
had reached an agreement to settle the pending Federal Partnership Class Action
along with the consolidated Neidick matter referred to above (collectively, the
"PaineWebber Partnership Class Actions"), along with a settlement with the SEC
and an agreement to settle with various state securities regulators. On that
date, PaineWebber paid $125 million into an interest bearing account as part of
a memorandum of understanding in connection with the proposed settlement (the
"Settlement Fund"). The Settlement Fund applies to claims related to both the
Partnerships and certain other investment programs sold by PaineWebber. In
addition, PaineWebber agreed to a SEC administrative order creating a capped $40
million fund (the "SEC Claims Fund"), which is to be distributed to eligible
Limited Partners by an independent administrator (the "Claims Administrator"); a
civil penalty of $5 million leveled by the SEC; and payments aggregating $5
million to state securities administrators. Such settlement is not an obligation
of either the Partnerships or Geodyne and, accordingly, would not affect the
financial statements of the Partnerships.
In connection with the PaineWebber Partnership Class Actions, on July 17,
1996 the federal court entered a preliminary order regarding the settlement
proceedings referred to above. Pursuant to that order, plaintiffs' counsel
mailed to class members the Class Settlement Notice (the "Notice") and Proof of
Claim. Eligible class members are generally those who purchased their Units
through PaineWebber on or before December 31, 1992 and who have not (i)
previously opted out of the Class, (ii) previously released PaineWebber, or
(iii) finally adjudicated their claims against PaineWebber.
Plaintiffs' counsel will be responsible for allocating payments from the
$125 million Settlement Fund previously funded by PaineWebber among eligible
Limited Partners and investors in other unrelated PaineWebber partnerships in
accordance with the settlement. The amount and date of any payment will vary
depending upon many factors set forth in the Notice. It is currently expected
that payments from the Settlement Fund will be made some time in 1998.
In addition, eligible Limited Partners in the Partnerships who held their
Units on June 3, 1996 may be entitled to certain additional payments from an
escrow fund to which PaineWebber will make payments through May 30, 2001 if spot
market oil and natural gas prices as reported by the New York Mercantile
Exchange fall below certain thresholds set forth in the Notice (the "Pricing
Guarantee"). The threshold prices used in the Pricing Guarantee are $18.00 per
barrel of oil and $1.80 per Mcf of gas. Under the Notice, PaineWebber payments,
16
<PAGE>
if any, made pursuant to the Pricing Guarantee will be paid to Limited Partners
of record on June 30, 1996 irrespective of whether they subsequently
sell/dispose of their Units to third parties. The Pricing Guarantee does NOT
attach to the Units as an attribute of ownership in the Partnerships and is not
an obligation of either Geodyne or the Partnerships.
A look back provision is also included in the settlement which may provide
additional funds as of January 1, 2001 for eligible Limited Partners. Class
members who sold their Units prior to June 30, 1996 will not be eligible for
payments, if any, under the Pricing Guarantee or the look back provision.
Eligible Limited Partners were required to timely execute and return a
proof of claim by January 17, 1997 in order to participate in the settlement.
In connection with the SEC Claims Fund, on April 17, 1996, PaineWebber
mailed a Notice and Claim Form to each Limited Partner who purchased Units in
the Partnerships through PaineWebber from January 1, 1986 to December 31, 1992.
Limited Partners are not eligible to participate in the claims process if they
(i) previously reached a settlement with PaineWebber or (ii) had their direct
investment claim resolved by a court or in arbitration. Participation in the
claims process is optional, and does not prevent a Limited Partner from pursuing
any other remedy against PaineWebber that may be available. Limited Partners had
until October 22, 1996 to complete the claim form and return it to the Claims
Administrator. The determination of whether a Limited Partner is entitled to a
recovery under the SEC Claims Fund will be based on whether or not the Claims
Administrator determines that the Limited Partner's investment in the
Partnerships was suitable for him at the time of purchase. In addition, if the
Limited Partner has opted out of the PaineWebber Partnership Class Action and
has not already settled with PaineWebber or has had a claim resolved by a court
or in arbitration, the Claims Administrator will also consider allegations that
misrepresentations were made in connection with the sale of the Units.
On March 20, 1997 the settlement described above was confirmed by the
federal court. Certain limited partners in partnerships that were not sponsored
by the General Partner appealed the confirmation; however, all such appeals were
denied by the United States Second Circuit Court of Appeals and the settlement
order is now final. The parties are currently awaiting a ruling by the federal
district judge as to the amount of attorneys' fees to be awarded to the
plaintiffs' attorneys from the Settlement Fund. The General Partner expects that
the Settlement Fund will be distributed to eligible class members within a few
months following the entry of a final order on the attorneys' fees.
17
<PAGE>
To the knowledge of the General Partner, neither the General Partner nor
the Partnerships or their properties are subject to any litigation, the results
of which would have a material effect on the Partnerships' or the General
Partner's financial condition or operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS
There were no matters submitted to a vote of the Limited Partners of any
Partnership during 1997.
PART II.
ITEM 5. MARKET FOR UNITS AND RELATED LIMITED PARTNER MATTERS
As of January 31, 1998, the number of Units outstanding and the
approximate number of Limited Partners of record in the Partnerships were as
follows:
Number of Limited
Partnership Units Partners
----------- --------- --------
P-1 108,074 868
P-2 90,094 655
P-3 169,637 1,466
P-4 126,306 996
P-5 118,449 1,061
P-6 143,041 811
Units were initially sold for a price of $100. The Units are not traded on
any exchange and there is no public trading market for them. The General Partner
is aware of certain transfers of Units between unrelated parties, some of which
are facilitated by secondary trading firms and matching services. In addition,
as further described below, the General Partner is aware of certain "4.9% tender
offers" which have been made for the Units. The General Partner believes that
the transfers between unrelated parties have been limited and sporadic in number
and volume. Other than trades facilitated by certain secondary trading firms and
matching services, no organized trading market for Units exists and none is
expected to develop. Due to the nature of these transactions, the General
Partner has no verifiable information regarding prices at which Units have been
transferred. Further, a transferee may not become a substitute Limited Partner
without the consent of the General Partner.
18
<PAGE>
Pursuant to the terms of the Partnership Agreements, the General Partner
is obligated to annually issue a repurchase offer based on the estimated future
net revenues from the Partnerships' reserves and is calculated pursuant to the
terms of the Partnership Agreements. Such repurchase offer is recalculated
monthly in order to reflect cash distributions to the Limited Partners and
extraordinary events. The following table sets forth the General Partner's
repurchase offer per Unit as of the periods indicated. For purposes of this
Annual Report, a Unit represents an initial subscription of $100 to a
Partnership.
Repurchase Offer Prices
-----------------------
1996 1997 1998
---------------------- ------------------------ ----
1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st
P/ship Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.
- ------ ---- ---- ---- ---- ---- ---- ---- ---- ----
P-1 $19 $17 $25 $22 $20 $26 $22 $20 $16
P-2 19 17 24 21 19 25 21 20 16
P-3 19 17 24 21 19 26 22 20 16
P-4 15 12 18 15 13 17 13 11 9
P-5 13 12 16 14 12 16 14 13 11
P-6 27 25 26 22 20 22 19 17 14
In addition to this repurchase offer, the Partnerships have been subject
to "4.9% tender offers" from several third parties during 1997. The General
Partner does not know the terms of these offers or the prices received by the
Limited Partners who accepted these offers.
Cash Distributions
Cash distributions are primarily dependent upon a Partnership's cash
receipts from its Net Profits Interests and cash requirements of the
Partnership. Distributable cash is determined by the General Partner at the end
of each calendar quarter and distributed to the Limited Partners within 45 days
after the end of the quarter. Distributions are restricted to cash on hand less
amounts required to be retained out of such cash as determined in the sole
judgment of the General Partner to pay costs, expenses, or other Partnership
obligations whether accrued or anticipated to accrue. In certain instances, the
General Partner may not distribute the full amount of cash receipts which might
otherwise be available for distribution in an effort to equalize or stabilize
the amounts of quarterly distributions. Any available amounts not distributed
are invested and the interest or income thereon is for the accounts of the
Limited Partners.
19
<PAGE>
The following is a summary of cash distributions paid to the Limited
Partners during 1996 and 1997 and the first quarter of 1998:
Cash Distributions
------------------
1996
------------------------------------------------
1st 2nd 3rd 4th
P/ship Quarter Quarter Quarter Quarter(1)
------ --------- ------- --------- ----------
P-1 $1.98 $2.00 $2.45 $2.98
P-2 1.64 1.70 2.31 2.77
P-3 1.69 1.70 2.06 2.76
P-4 2.09 2.41 2.19 2.93
P-5 1.40 1.61 1.85 2.01
P-6 1.61 2.20 2.22 4.04
1997 1998
-------------------------------------------------- ----------
1st 2nd 3rd 4th 1st
P/ship Quarter(1) Quarter Quarter(1) Quarter(1) Quarter(1)
------ ---------- ------- ---------- ----------- ----------
P-1 $2.61 $2.73 $3.90 $2.19 $4.52
P-2 2.36 2.66(1) 4.00 1.84 3.95
P-3 2.33 2.64(1) 4.02 1.82 3.90
P-4 2.54 3.42 4.04 1.84 1.75
P-5 2.00 2.90 2.16 1.39 1.74
P-6 2.09 4.63(1) 2.47 2.43 2.49
- -----------------------
(1) Amount of cash distribution includes proceeds from the sale of certain Net
Profits Interests.
20
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following tables present selected financial data for the Partnerships. This
data should be read in conjunction with the financial statements of the
Partnerships, and the respective notes thereto, included elsewhere in this
Annual Report. See "Item 8. Financial Statements and Supplementary Data."
<TABLE>
<CAPTION>
Selected Financial Data
P-1 Partnership
---------------
1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Net Profits $1,064,105 $1,191,311 $ 935,026 $1,089,659 $1,216,344
Net Income (Loss):
Limited Partners 106,676 773,173 6,098 ( 82,364) 84,309
General Partner 54,016 53,849 33,359 38,499 45,008
Total 160,692 827,022 39,457 ( 43,865) 129,317
Limited Partners' Net
Income (Loss) per
Unit .99 7.15 .06 ( .76) .78
Limited Partners' Cash
Distributions per Unit 11.43 9.41 6.99 8.60 8.92
Total Assets 2,076,686 3,230,759 3,488,930 4,243,473 5,268,338
Partners' Capital (Deficit)
Limited Partners 2,164,101 3,293,425 3,537,252 4,286,154 5,298,518
General Partner ( 87,415) ( 62,666) ( 48,322) ( 42,681) ( 30,180)
Number of Units
Outstanding 108,074 108,074 108,074 108,074 108,074
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Selected Financial Data
P-2 Partnership
---------------
1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Net Profits $ 836,494 $ 911,429 $ 715,608 $ 786,768 $ 962,561
Net Income (Loss):
Limited Partners 45,213 551,248 ( 182,851) ( 99,086) ( 54,217)
General Partner 41,244 40,232 23,562 26,363 34,851
Total 86,457 591,480 ( 159,289) ( 72,723) ( 19,366)
Limited Partners' Net
Income (Loss) per Unit .50 6.12 ( 2.03) ( 1.10) ( .60)
Limited Partners' Cash
Distributions per Unit 10.86 8.42 6.04 8.66 8.45
Total Assets 1,686,752 2,635,549 2,854,539 3,586,328 4,483,051
Partners' Capital (Deficit)
Limited Partners 1,759,190 2,692,977 2,900,729 3,628,580 4,507,666
General Partner ( 72,438) ( 57,428) ( 46,190) ( 42,252) ( 24,615)
Number of Units
Outstanding 90,094 90,094 90,094 90,094 90,094
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Selected Financial Data
P-3 Partnership
---------------
1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Net Profits $1,559,975 $1,706,259 $1,327,052 $1,472,407 $1,798,809
Net Income (Loss):
Limited Partners 30,632 1,024,694 ( 413,819) ( 183,184) ( 161,726)
General Partner 76,414 75,192 42,468 49,058 64,658
Total 107,046 1,099,886 ( 371,351) ( 134,126) ( 97,068)
Limited Partners' Net
Income (Loss) per
Unit .18 6.04 ( 2.44) ( 1.08) ( .95)
Limited Partners' Cash
Distributions per
Unit 10.81 8.21 6.21 8.60 8.22
Total Assets 3,136,542 4,968,083 5,355,843 6,836,194 8,508,320
Partners' Capital
(Deficit)
Limited Partners 3,273,800 5,075,168 5,442,474 6,911,293 8,554,477
General Partner ( 137,258) ( 107,085) ( 86,631) ( 75,099) ( 46,157)
Number of Units
Outstanding 169,637 169,637 169,637 169,637 169,637
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Selected Financial Data
P-4 Partnership
---------------
1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Net Profits $1,290,780 $1,373,635 $1,251,153 $1,779,306 $2,136,768
Net Income (Loss):
Limited Partners 52,241 584,825 ( 496,777) ( 152,785) 339,911
General Partner 49,097 52,931 40,039 64,877 84,873
Total 101,338 637,756 ( 456,738) ( 87,908) 424,784
Limited Partners' Net
Income (Loss) per Unit .41 4.63 ( 3.93) ( 1.21) 2.69
Limited Partners' Cash
Distributions per Unit 11.84 9.62 8.36 15.11 10.87
Total Assets 1,827,292 3,283,477 3,940,479 5,506,217 7,607,125
Partners' Capital (Deficit)
Limited Partners 1,922,091 3,364,850 3,995,025 5,546,802 7,609,587
General Partner ( 94,799) ( 81,373) ( 54,546) ( 40,585) ( 2,462)
Number of Units
Outstanding 126,306 126,306 126,306 126,306 126,306
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Selected Financial Data
P-5 Partnership
---------------
1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Net Profits $1,000,125 $1,112,631 $ 938,957 $1,180,970 $1,228,404
Net Income (Loss):
Limited Partners ( 355,086) 593,334 ( 201,341) ( 1,811,683) ( 755,849)
General Partner 34,199 46,364 30,697 24,070 37,195
Total ( 320,887) 639,698 ( 170,644) ( 1,787,613) ( 718,654)
Limited Partners' Net
Income (Loss) per Unit ( 3.00) 5.01 ( 1.70) ( 15.30) ( 6.38)
Limited Partners' Cash
Distributions per Unit 8.45 6.87 5.79 8.99 4.80
Total Assets 1,621,507 2,993,188 3,225,517 4,115,661 7,050,262
Partners' Capital (Deficit)
Limited Partners 1,696,190 3,053,276 3,273,942 4,160,283 7,036,966
General Partner ( 74,683) ( 60,088) ( 48,425) ( 44,622) ( 9,192)
Number of Units
Outstanding 118,449 118,449 118,449 118,449 118,449
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Selected Financial Data
P-6 Partnership
---------------
1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Net Profits $1,793,685 $2,002,957 $1,284,185 $1,487,321 $1,638,647
Net Income (Loss):
Limited Partners 97,934 996,385 ( 907,347) ( 346,636) ( 221,515)
General Partner 67,889 84,925 36,393 50,124 58,274
Total 165,823 1,081,310 ( 870,954) ( 296,512) ( 163,241)
Limited Partners' Net
Income (Loss) per Unit .68 6.97 ( 6.34) ( 2.42) ( 1.54)
Limited Partners' Cash
Distributions per Unit 11.62 10.07 5.73 9.52 6.46
Total Assets 3,112,118 4,714,677 5,170,032 6,903,486 8,676,186
Partners' Capital (Deficit)
Limited Partners 3,208,632 4,773,698 5,217,313 6,944,660 8,651,296
General Partner ( 96,514) ( 59,021) ( 47,281) ( 41,174) ( 21,298)
Number of Units
Outstanding 143,041 143,041 143,041 143,041 143,041
</TABLE>
23
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Use of Forward-Looking Statements and Estimates
This Annual 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 Annual 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 Partnerships.
Use of forward-looking statements and estimates and assumptions involve
risks and uncertainties which include, but are not limited to, the volatility of
oil and gas prices, the uncertainty of reserve information, the operating risk
associated with oil and gas properties (including the risk of personal injury,
death, property damage, damage to the well or producing reservoir, environmental
contamination, and other operating risks), the prospect of changing tax and
regulatory laws, the availability and capacity of processing and transportation
facilities, the general economic climate, the supply and price of foreign
imports of oil and gas, the level of consumer product demand, and the price and
availability of alternative fuels. Should one or more of these risks or
uncertainties occur or should estimates or underlying assumptions prove
incorrect, actual conditions or results may vary materially and adversely from
those stated, anticipated, believed, estimated, or otherwise indicated.
General Discussion
The following general discussion should be read in conjunction with the
analysis of results of operations provided below. As previously noted, the
Partnerships own net profits and royalty interests in oil and gas properties.
The Partnerships' net profits interests were carved out of Working Interests
which were acquired by the Affiliated Programs. Net profits interests entitle
the Partnerships to a share of net revenues from producing properties measured
by a specific percentage of the net profits realized by such Affiliated
Programs. Except where otherwise noted, references to certain operational
activities of the Partnerships are actually the activities of the Affiliated
Programs. As the holder of a net profits interest, a Partnership is not liable
to pay any amount by which oil and gas operating costs and expenses exceed
revenues for any period, although any deficit, together with interest, is
24
<PAGE>
applied to reduce the amounts payable to the Partnership in subsequent periods.
As used throughout this Management's Discussion and Analysis of Financial
Condition and Results of Operations, the Partnerships' net profits and royalty
interests in oil and gas sales will be referred to as "Net Profits" and the
Partnerships' net profits and royalty interests in oil and gas properties will
be collectively referred to as "Net Profits Interests."
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. Concerning past trends, average yearly wellhead gas prices in the
United States have been volatile for a number of years. For the past ten years,
such average prices have generally been in the $1.40 to $2.40 per Mcf range,
significantly below prices received in the early 1980s. Average gas prices in
the latter part of 1996 and parts of 1997, however, were somewhat higher than
those yearly averages. Gas prices are currently in the higher end of the 10-year
average price range described above.
Substantially all of the Partnerships' gas reserves are being sold on the
"spot market." Prices on the spot market are subject to wide seasonal and
regional pricing fluctuations due to the highly competitive nature of the spot
market. In addition, such spot market sales are generally short-term in nature
and are dependent upon the obtaining of transportation services provided by
pipelines. Spot prices for the Partnerships' gas decreased from approximately
$3.57 per Mcf at December 31, 1996 to approximately $2.32 per Mcf at December
31, 1997. Such prices were on an MMBTU basis and differ from the prices actually
received by the Partnerships due to transportation and marketing costs, BTU
adjustments, and regional price and quality differences.
For the past ten years, average oil prices have generally been in the
$16.00 to $24.00 per barrel range. Due to global consumption and supply trends
over the last several months as well as expectations of at least a short-term
slowdown in Asian energy demand, oil prices have recently been in the mid to
lower portions of this pricing range and in early 1998 dropped to as low as
approximately $13.75 per barrel. It is not known whether this trend will
continue. Prices for the Partnerships' oil decreased from approximately $23.75
per barrel at December 31, 1996 to approximately $16.25 per barrel at December
31, 1997.
Future prices for both oil and gas will likely be different from (and may
be lower than) the prices in effect on December 31, 1997. Primarily due to
heating season demand, year-end prices in many past years have tended to be
higher, and in some cases significantly higher, than the yearly average price
actually received by the Partnerships for at least the following year.
Management is unable to predict whether future oil and gas prices will (i)
stabilize, (ii) increase, or (iii) decrease.
25
<PAGE>
As discussed in the "Results of Operations" section below, volumes of oil
and gas sold also significantly affect the Partnerships' revenues. Oil and gas
wells generally produce the most oil or gas in the earlier years of their lives
and, as production continues, the rate of production naturally declines. At some
point, production physically ceases or becomes no longer economic. The
Partnerships are not acquiring additional Net Profits Interests, and the
existing Net Profits Interests are not experiencing significant additional
production through drilling or other capital projects. Therefore, volumes of oil
and gas produced from the properties underlying the Partnerships' Net Profits
Interests naturally decline from year to year. Over the past three years, this
decline in production of oil and gas generally ranged form 12 to 19 percent per
year. While it is difficult for management to predict future production from
these properties, it is likely that this general trend of declining production
will continue.
Despite this general trend of declining production, several factors can
cause the volumes of oil and gas sold to increase or decrease at an even greater
rate over a given period. These factors include, but are not limited to, (i)
geophysical conditions which cause an acceleration of the decline in production,
(ii) the shutting in of wells (or the opening of previously shut-in wells) due
to low oil and gas prices, mechanical difficulties, loss of a market or
transportation, or performance of workovers, recompletions, or other operations
in the well, (iii) prior period volume adjustments (either positive or negative)
made by purchasers of the production, (iv) ownership adjustments in accordance
with agreements governing the operation or ownership of the well (such as
adjustments that occur at payout), and (v) completion of enhanced recovery
projects which increase production for the well. Many of these factors are very
significant as related to a single well or as related to many wells over a short
period of time. However, due to the large number of Net Profits Interests owned
by the Partnerships, these factors are generally not material as compared to the
normal decline in production experienced on all remaining wells in which a Net
Profits Interest is owned.
Results of Operations
An analysis of the change in net oil and gas operations (oil and gas
sales, less lease operating expenses and production taxes), is presented in the
tables following "Results of Operations" under the heading "Average Proceeds and
Units of Production." Following is a discussion of each Partnerships results of
operations for the year ended December 31, 1997 as compared to the year ended
December 31, 1996 and for the year ended December 31, 1996 as compared to the
year ended December 31, 1995.
26
<PAGE>
P-1 Partnership
---------------
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
--------------------------------------
Total Net Profits decreased $127,206 (10.7%) in 1997 as compared to 1996.
Of this decrease, approximately $35,000 and $216,000, respectively, were related
to decreases in volumes of oil and gas sold and approximately $37,000 was
related to a decrease in the average price of oil sold, which decreases were
partially offset by an increase of approximately $114,000 related to the
increase in the average price of gas sold. In addition, the decrease in Net
Profits was partially offset by an increase of approximately $44,000 related to
decreases in production expenses incurred by the owners of the Working
Interests. Volumes of oil and gas sold decreased 1,754 barrels and 110,930 Mcf,
respectively, in 1997 as compared to 1996. The decrease in volumes of gas sold
resulted primarily from (i) a negative prior period volume adjustment made by a
purchaser on two significant wells in 1997, (ii) a positive prior period volume
adjustment made by a purchaser on several wells in 1996, and (iii) the sale of
several wells in early 1997. The decrease in production expenses resulted
primarily from the decrease in volumes of oil and gas sold in 1997 which was
partially offset by increases in operating expenses as a result of (i) workover
expenses on two significant wells in 1997 and (ii) subsurface repairs on one
significant well in 1997. Average oil prices decreased to $18.69 per barrel in
1997 from $19.85 per barrel in 1996. Average gas prices increased to $2.27 per
Mcf in 1997 from $1.95 per Mcf in 1996.
Depletion of Net Profits Interests decreased $60,815 (18.7%) in 1997 as
compared to 1996. This decrease resulted primarily from decreases in volumes of
oil and gas sold in 1997 and upward revisions in the estimates of remaining oil
and gas reserves at December 31, 1997. As a percentage of Net Profits, this
expense decreased to 24.8% in 1997 from 27.2% in 1996. This percentage decrease
was primarily due to the increases in the average prices of gas sold in 1997 as
compared to 1996.
The P-1 Partnership recognized a non-cash charge against earnings of
$902,042 in the first quarter of 1997. Of this amount, $113,945 was related to
the decline in oil and gas prices used to determine future cash flows from the
P-1 Partnership's Net Profits Interests in proved oil and gas reserves at March
31, 1997 and $788,097 was related to the writing-off of Net Profits Interests in
unproved properties. The General Partner determined that it was unlikely that
these unproved properties would be developed due to the low oil and gas prices
received over the last several years and Partnership Agreement provisions which
27
<PAGE>
limit the P-1 Partnership's level of permissible indirect drilling activity
through its Affiliated Programs. No similar charges were necessary in 1996.
General and administrative expenses remained relatively constant in 1997
as compared to 1996. As a percentage of Net Profits, these expenses increased to
12.1% in 1997 from 10.9% in 1996. This percentage increase was primarily due to
the decrease in Net Profits discussed above.
Cumulative cash distributions to the Limited Partners through December 31,
1997 were $10,013,558 or 92.65% of the Limited Partners' capital contributions.
Year Ended December 31, 1996 Compared
to Year Ended December 31, 1995
--------------------------------------
Total Net Profits increased $256,285 (27.4%) in 1996 as compared to 1995.
Of this increase, approximately $126,000 and $286,000, respectively, were
related to increases in the average prices of oil and gas sold, partially offset
by decreases of approximately $85,000 and $75,000, respectively, related to
decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased
5,277 barrels and 55,633 Mcf, respectively, in 1996 as compared to 1995. Average
oil and gas prices increased to $19.85 per barrel and $1.95 per Mcf,
respectively, for the year ended December 31, 1996 from $16.11 per barrel and
$1.34 per Mcf, respectively, for the year ended December 31, 1995.
Depletion of Net Profits Interests decreased $373,874 (53.5%) in 1996 as
compared to 1995. This decrease was primarily due to (i) a decrease in
capitalized costs due to an impairment provision recognized during the fourth
quarter of 1995, (ii) upward revisions in the estimates of remaining oil and gas
reserves at December 31, 1996, and (iii) the decrease in equivalent units of
production sold during 1996. As a percentage of Net Profits, this expense
decreased to 27.2% in 1996 from 74.7% in 1995. This decrease was primarily due
to the dollar decrease in depletion of Net Profits Interests and the increases
in the average prices of oil and gas sold in 1996.
The P-1 Partnership recognized a non-cash charge against earnings of
$86,264 in 1995. This impairment provision was necessary due to the unamortized
costs of Net Profits Interests exceeding the undiscounted future net revenues
from such Net Profits Interests. No similar charge was necessary during 1996.
General and administrative expenses remained relatively constant in 1996
as compared to 1995. As a percentage of Net Profits, these expenses decreased to
10.9% in 1996 from 13.5% in 1995. This percentage decrease was primarily due to
the increase in Net Profits discussed above.
28
<PAGE>
P-2 Partnership
---------------
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
--------------------------------------
Total Net Profits decreased $74,935 (8.2%) in 1997 as compared to 1996. Of
this decrease, approximately $23,000 and $174,000, respectively, were related to
decreases in oil and gas volumes sold, and approximately $27,000 was related to
a decrease in the average price of oil sold, which decreases were partially
offset by an increase of approximately $108,000 related to the increase in the
average price of gas sold. In addition, the decrease in Net Profits was
partially offset by an increase of approximately $42,000 related to decreases in
production expenses incurred by the owners of the Working Interests. Volumes of
oil and gas sold decreased 1,176 barrels and 88,915 Mcf, respectively, in 1997
as compared to 1996. The decrease in volumes of gas sold resulted primarily from
(i) a negative prior period volume adjustment made by a purchaser on two
significant wells in 1997, (ii) a positive prior period volume adjustment made
by a purchaser on several wells in 1996, (iii) the sale of several wells in
early 1997, and (iv) normal declines in production. The decrease in production
expenses resulted primarily from the decrease in volumes of oil and gas sold in
1997. Average oil prices decreased to $18.71 per barrel in 1997 from $19.90 per
barrel in 1996. Average gas prices increased to $2.32 per Mcf in 1997 from $1.96
per Mcf in 1996.
Depletion of Net Profits Interests decreased $68,085 (24.7%) in 1997 as
compared to 1996. This decrease resulted primarily from (i) the decreases in
volumes of oil and gas sold in 1997 and (ii) upward revisions in the estimates
of remaining oil and gas reserves at December 31, 1997. As a percentage of Net
Profits, this expense decreased to 24.8% in 1997 from 30.2% in 1996. This
percentage decrease was primarily due to the increase in the average price of
gas sold in 1997.
The P-2 Partnership recognized a non-cash charge against earnings of
$727,893 in the first quarter of 1997. Of this amount, $113,005 was related to
the decline in oil and gas prices used to determine future cash flows from the
P-2 Partnership's Net Profits Interests in proved oil and gas reserves at March
31, 1997 and $614,888 was related to the writing-off of Net Profits Interests in
unproved properties. The General Partner determined that it was unlikely that
these unproved properties would be developed due to the low oil and gas prices
received over the last several years and Partnership Agreement provisions which
limit the P-2 Partnership's level of permissible indirect drilling activity
through its Affiliated Programs. No similar charges were necessary in 1996.
29
<PAGE>
General and administrative expenses decreased $1,205 (1.1%) in 1997 as
compared to 1996. As a percentage of Net Profits, these expenses remained
relatively constant at 12.9% in 1997 and 11.9% in 1996.
Cumulative cash distributions to the Limited Partners through December 31,
1997 were $7,662,561 or 85.05% of the Limited Partners' capital contributions.
Year Ended December 31, 1996 Compared
to Year Ended December 31, 1995
-------------------------------------
Total Net Profits increased $195,821 (27.4%)in 1996 as compared to 1995.
Of this increase, approximately $90,000 and $234,000, respectively, were related
to increases in the average prices of oil and gas sold, partially offset by
decreases of approximately $65,000 and $73,000, respectively, related to
decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased
3,991 barrels and 53,938 Mcf, respectively, in 1996 as compared to 1995. Average
oil and gas prices increased to $19.90 per barrel and $1.96 per Mcf,
respectively, in 1996 from $16.17 per barrel and $1.36 per Mcf, respectively, in
1995.
Depletion of Net Profits Interests decreased $329,737 (54.5%) in 1996 as
compared to 1995. This decrease was primarily due to (i) a decrease in
capitalized costs due to an impairment provision recognized during the fourth
quarter of 1995, (ii) upward revisions in the estimates of remaining oil and gas
reserves at December 31, 1996, and (iii) the decrease in equivalent units of
production sold during 1996. As a percentage of Net Profits, this expense
decreased to 30.2% in 1996 from 84.6% in 1995. This decrease was primarily due
to the dollar decrease in depletion of Net Profits Interests and the increases
in the average prices of oil and gas sold in 1996.
The P-2 Partnership recognized a non-cash charge against earnings of
$182,970 in 1995. This impairment provision was necessary due to the unamortized
costs of Net Profits Interests exceeding the undiscounted future net revenues
from such Net Profits Interests. No similar charge was necessary during 1996.
General and administrative expenses remained relatively constant in 1996
as compared to 1995. As a percentage of Net Profits, these expenses decreased to
11.9% for the year ended December 31, 1996 from 14.7% for the year ended
December 31, 1995. This percentage decrease was primarily due to the increase in
Net Profits discussed above.
30
<PAGE>
P-3 Partnership
---------------
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
--------------------------------------
Total Net Profits decreased $146,284 (8.6%) in 1997 as compared to 1996.
Of this decrease, approximately $45,000 and $336,000, respectively, were related
to decreases in volumes of oil and gas sold and approximately $50,000 was
related to the decrease in the average price of oil sold, which decreases were
partially offset by an increase of approximately $209,000 related to an increase
in the average price of gas sold. In addition, the decrease in Net Profits was
partially offset by an increase of approximately $77,000 related to decreases in
production expenses incurred by the owners of the Working Interests. Volumes of
oil and gas sold decreased 2,237 barrels and 172,548 Mcf, respectively, in 1997
as compared to 1996. The decrease in volumes of gas sold resulted primarily from
(i) a negative prior period volume adjustment made by a purchaser on two
significant wells in 1997, (ii) a positive prior period volume adjustment made
by a purchaser on several wells in 1996, (iii) the sale of several wells in
early 1997, and (iv) normal declines in production. The decrease in production
expenses resulted primarily from the decrease in volumes of oil and gas sold in
1997. Average oil prices decreased to $18.72 per barrel in 1997 from $19.90 per
barrel in 1996. Average gas prices increased to $2.32 per Mcf in 1997 from $1.95
per Mcf in 1996.
Depletion of Net Profits Interests decreased $135,229 (25.9%) in 1997 as
compared to 1996. This decrease resulted primarily from (i) decreases in volumes
of oil and gas sold in 1997 and (ii) upward revisions in the estimates of
remaining oil and gas reserves at December 31, 1997. As a percentage of Net
Profits, this expense decreased to 24.7% in 1997 from 30.5% in 1996. This
percentage decrease was primarily due to (i) the increases in the average prices
of gas sold in 1997 and (ii) the dollar decrease in depletion of Net Profits.
The P-3 Partnership recognized a non-cash charge against earnings of
$1,413,917 in the first quarter of 1997. Of this amount, $220,449 was related to
the decline in oil and gas prices used to determine future cash flows from the
P-3 Partnership's Net Profits Interests in proved oil and gas reserves at March
31, 1997 and $1,193,468 was related to the writing-off of Net Profits Interests
in unproved properties. The General Partner determined that it was unlikely that
these unproved properties would be developed due to the low oil and gas prices
received over the last several years and Partnership Agreement provisions which
limit the P-3 Partnership's level of permissible indirect drilling activity
through its Affiliated Programs. No similar charges were necessary in 1996.
31
<PAGE>
General and administrative expenses remained relatively constant in 1997
as compared to 1996. As a percentage of Net Profits, these expenses remained
relatively constant at 13.0% in 1997 and 12.0% in 1996.
Cumulative cash distributions to the Limited Partners through December 31,
1997 were $13,792,401 or 81.31% of the Limited Partners' capital contributions.
Year Ended December 31, 1996 Compared
to Year Ended December 31, 1995
-------------------------------------
Total Net Profits increased $379,207 (28.6%) in 1996 as compared to 1995.
Of this increase, approximately $166,000 and $435,000, respectively, were
related to increases in the average prices of oil and gas sold and approximately
$36,000 was related to a decrease in production expenses incurred by the owners
of the Working Interests, which amounts were partially offset by decreases of
approximately $121,000 and $141,000, respectively, related to decreases in
volumes of oil and gas sold. Volumes of oil and gas sold decreased 7,467 barrels
and 103,370 Mcf, respectively, in 1996 as compared to 1995. The decrease in
lease operating expenses resulted primarily from the decreases in volumes of oil
and gas sold in 1996, partially offset by an increase in production taxes
associated with the increase in Net Profits discussed above. Average oil and gas
prices increased to $19.90 per barrel and $1.95 per Mcf, respectively, in 1996
from $16.17 per barrel and $1.36 per Mcf, respectively, in 1995.
Depletion of Net Profits Interests decreased $626,740 (54.6%)in 1996 as
compared to 1995. This decrease was primarily due to (i) a decrease in
capitalized costs due to an impairment provision recognized during the fourth
quarter of 1995, (ii) upward revisions in the estimates of remaining oil and gas
reserves at December 31, 1996, and (iii) the decrease in equivalent units of
production sold in 1996. As a percentage of Net Profits, this expense decreased
to 30.5% in 1996 from 86.5% in 1995. This decrease was primarily due to the
dollar decrease in depletion of Net Profits Interests discussed above and the
increases in the average prices of oil and gas sold in 1996.
The P-3 Partnership recognized a non-cash charge against earnings of
$377,983 in 1995. This impairment provision was necessary due to the unamortized
costs of Net Profits Interests exceeding the undiscounted future net revenues
from such Net Profits Interests. No similar charge was necessary during 1996.
General and administrative expenses remained relatively constant in 1996
as compared to 1995. As a percentage of Net Profits, these expenses decreased to
12.0% in 1996 from 15.0% in 1995. This percentage decrease was primarily due to
the increase in Net Profits discussed above.
32
<PAGE>
P-4 Partnership
---------------
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
--------------------------------------
Total Net Profits decreased $82,855 (6.0%) in 1997 as compared to 1996. Of
this decrease, approximately $68,000 and $247,000, respectively, were related to
decreases in volumes of oil and gas sold and approximately $22,000 was related
to the decrease in the average price of oil sold, which decreases were partially
offset by an increase of approximately $185,000 related to the increase in the
average price of gas sold. In addition, the decrease in Net Profits was
partially offset by an increase of approximately $72,000 related to decreases in
production expenses incurred by the owners of the Working Interests. Volumes of
oil and gas sold decreased 3,263 barrels and 117,026 Mcf, respectively, in 1997
as compared to 1996. The decrease in volumes of oil and gas sold resulted
primarily from normal declines in production. The decrease in production
expenses resulted primarily from decreases in volumes of oil and gas sold in
1997. Average oil prices decreased to $19.68 per barrel in 1997 from $20.79 per
barrel in 1996. Average gas prices increased to $2.47 per Mcf in 1997 from $2.11
per Mcf in 1996.
Depletion of Net Profits Interests decreased $176,082 (32.6%) in 1997 as
compared to 1996. This decrease resulted primarily from (i) decreases in volumes
of oil and gas sold in 1997 and (ii) upward revisions in the estimates of
remaining oil and gas reserves at December 31, 1997. As a percentage of Net
Profits, this expense decreased to 28.3% in 1997 from 39.4% in 1996. This
percentage decrease was primarily due to (i) the increase in the average price
of gas sold in 1997 and (ii) the dollar decrease in depletion of Net Profits
discussed above.
The P-4 Partnership recognized a non-cash charge against earnings of
$752,388 in the first quarter of 1997. Of this amount, $84,059 was related to
the decline in oil and gas prices used to determine of future cash flows from
the P-4 Partnership's Net Profits Interests in proved oil and gas reserves at
March 31, 1997 and $668,329 was related to the writing-off of Net Profits
Interests in unproved properties. The General Partner determined that it was
unlikely that these unproved properties would be developed due to the low oil
and gas prices received over the last several years and Partnership Agreement
provisions which limit the P-4 Partnership's level of permissible indirect
drilling activity through its Affiliated Programs. No similar charges were
necessary in 1996.
33
<PAGE>
General and administrative expenses decreased $5,846 (3.8%) in 1997 as
compared to 1996. This decrease resulted primarily from a prior year charge
which was refunded in 1997. As a percentage of Net Profits, these expenses
remained relatively constant at 11.5% in 1997 and 11.2% in 1996.
Cumulative cash distributions to the Limited Partners through December 31,
1997 were $11,405,945 or 90.3% of the Limited Partners' capital contributions.
Year Ended December 31, 1996 Compared
to Year Ended December 31, 1995
-------------------------------------
Total Net Profits increased $122,482 (9.8%) in 1996 as compared to 1995.
Of this increase, approximately $75,000 and $404,000, respectively, were related
to increases in the average prices of oil and gas sold and approximately
$118,000 was related to a decrease in production expenses attributable to the
Working Interests, partially offset by decreases of approximately $103,000 and
$375,000, respectively, related to decreases in volumes of oil and gas sold.
Volumes of oil and gas sold decreased 5,898 barrels and 254,801 Mcf,
respectively, in 1996 as compared to 1995. The decrease in volumes of oil sold
was primarily due to normal declines in production due to diminished oil
reserves on several wells. The decrease in volumes of gas sold was primarily due
to (i) the sale of several gas producing wells during 1996, (ii) the normal
declines in production on several wells due to diminished gas reserves, and
(iii) a positive prior period volume adjustment made by the purchaser on one
well in 1995. The decrease in production expenses resulted primarily from the
decreases in volumes of oil and gas sold in 1996. Average oil and gas prices
increased to $20.79 per barrel and $2.11 per Mcf, respectively, for 1996 from
$17.51 per barrel and $1.47 per Mcf, respectively, for 1995.
Depletion of Net Profits Interests decreased $450,079 (45.4%) in 1996 as
compared to 1995. This decrease was primarily due to (i) a decrease in
capitalized costs due to an impairment provision recognized during the fourth
quarter of 1995, (ii) upward revisions in the estimates of remaining oil and gas
reserves at December 31, 1996, and (iii) the decrease in equivalent units of
production sold in 1996. As a percentage of Net Profits, this expense decreased
to 39.4% in 1996 from 79.2% in 1995. This decrease was primarily due to the
dollar decrease in depletion of Net Profits Interests and the increases in the
average prices of oil and gas sold in 1996.
The P-4 Partnership recognized a non-cash charge against earnings of
$581,036 in 1995. This impairment provision was necessary due to the unamortized
costs of Net Profits Interests exceeding the undiscounted future net revenues
from such Net Profits Interests. No similar charge was necessary during 1996.
34
<PAGE>
General and administrative expenses remained relatively constant in 1996
as compared to 1995. As a percentage of Net Profits, these expenses remained
relatively constant at 11.2% for 1996 as compared to 11.8% for 1995.
P-5 Partnership
---------------
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
--------------------------------------
Total Net Profits decreased $112,506 (10.1%) in 1997 as compared to 1996.
Of this decrease, approximately $56,000 and $218,000, respectively, were related
to decreases in volumes of oil and gas sold, which decreases were partially
offset by an increase of approximately $134,000 related to the increase in the
average price of gas sold. In addition, the decrease in Net Profits was
partially offset by an increase of approximately $24,000 related to decreases in
production expenses incurred by the owners of the Working Interests. Volumes of
oil and gas sold decreased 2,785 barrels and 111,242 Mcf, respectively, in 1997
as compared to 1996. The decrease in volumes of oil sold resulted primarily from
normal declines in production and positive prior period volume adjustments by
purchasers on two significant wells in 1996. The decrease in volumes of gas sold
resulted primarily from normal declines in production. Average oil prices
remained relatively constant at $19.88 per barrel in 1997 and $19.95 per barrel
in 1996. Average gas prices increased to $2.22 per Mcf in 1997 from $1.96 per
Mcf in 1996.
Depletion of Net Profits Interests decreased $119,919 (32.5%) in 1997 as
compared to 1996. This decrease resulted primarily from (i) decreases in volumes
of oil and gas sold in 1997 and (ii) upward revisions in the estimates of
remaining oil and gas reserves at December 31, 1997. As a percentage of Net
Profits, this expense decreased to 24.9% in 1997 from 33.2% in 1996. This
percentage decrease was primarily due to the increases in the average prices of
gas sold in 1997 and the dollar decrease in Depletion of Net Profits discussed
above.
The P-5 Partnership recognized a non-cash charge against earnings of
$1,018,068 in the first quarter of 1997. Of this amount, $122,458 was related to
the decline in oil and gas prices used to determine future cash flows from the
P-5 Partnership's Net Profits Interest in proved oil and gas reserves at March
31, 1997 and $895,610 was related to the writing-off of Net Profits Interests in
unproved properties. The General Partner determined that it was unlikely that
these unproved properties would be developed due to the low oil and gas prices
received over the last several years and Partnership Agreement provisions which
limit the P-5 Partnership's level of permissible indirect drilling activity
through its Affiliated Programs. No similar charges were necessary in 1996.
35
<PAGE>
General and administrative expenses remained relatively constant in 1997
as compared to 1996. As a percentage of Net Profits, these expenses increased to
14.2% in 1997 from 12.8% in 1996. This increase resulted from the decrease in
Net Profits discussed above.
Cumulative cash distributions to the Limited Partners through December 31,
1997 were $6,355,759 of 53.66% or the Limited Partners' capital contributions.
Year Ended December 31, 1996 Compared
to Year Ended December 31, 1995
---------------------------------------
Total Net Profits increased $173,674 (18.5%) in 1996 as compared to 1995.
Of this increase, approximately $30,000 and $383,000, respectively, were related
to increases in the average prices of oil and gas sold, partially offset by
decreases of approximately $212,000 and $19,000, respectively, related to a
decrease in volumes of gas sold and an increase in production taxes paid by the
owners of the Working Interests. Volumes of oil and gas sold decreased 85
barrels and 156,865 Mcf, respectively, in 1996 as compared to 1995. The decrease
in the volumes of gas sold was primarily due to (i) normal declines in
production on several wells due to diminished gas reserves and (ii) positive
prior period volume adjustments made by the purchaser on two wells during 1995.
Average oil and gas prices increased to $19.95 per barrel and $1.96 per Mcf,
respectively, for 1996 from $17.14 per barrel and $1.35 per Mcf, respectively,
for 1995.
Depletion of Net Profits Interests decreased $416,821 (53.0%) in 1996 as
compared to 1995. This decrease was primarily due to (i) a decrease in
capitalized costs due to an impairment provision recognized during the fourth
quarter of 1995, (ii) upward revisions in the estimates of remaining oil and gas
reserves at December 31, 1996, and (iii) the decrease in equivalent units of
production sold during 1996. As a percentage of Net Profits, this expense
decreased to 33.2% for 1996 from 83.7% for 1995. This decrease was primarily due
to the dollar decrease in depletion of Net Profits Interests and the increases
in the average prices of oil and gas sold in 1996.
The P-5 Partnership recognized a non-cash charge against earnings of
$194,933 in 1995. This impairment provision was necessary due to the unamortized
costs of Net Profits Interests exceeding the undiscounted future net revenues
from such Net Profits Interests. No similar charge was necessary during 1996.
General and administrative expenses remained relatively constant in 1996
as compared to 1995. As a percentage of Net Profits, these expenses decreased to
12.8% for 1996 from 14.8% for 1995. This percentage decrease was primarily due
to the increase in Net Profits discussed above.
36
<PAGE>
P-6 Partnership
---------------
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
--------------------------------------
Total Net Profits decreased $209,272 (10.4%) in 1997 as compared to 1996.
Of this decrease, approximately $60,000 and $361,000, respectively, were related
to decreases in volumes of oil and gas sold and approximately $23,000 was
related to the decrease in the average price of oil sold, which decreases were
partially offset by an increase of approximately $236,000 related to the
increase in the average price of gas sold. Volumes of oil and gas sold decreased
2,916 barrels and 177,681 Mcf, respectively, in 1997 as compared to 1996. The
decrease in volumes of oil and gas sold resulted primarily from normal declines
in production. Production expenses incurred by the owners of the Working
Interests remained relatively constant. Any decrease in production expenses
which resulted from decreases in volumes of oil and gas sold was substantially
offset by increases in operating expenses as a result of (i) workovers on three
wells in 1997 and (ii) an increase in ad valorem taxes on three wells in 1997.
Average oil prices decreased to $19.20 per barrel in 1997 from $20.46 per barrel
in 1996. Average gas prices increased to $2.27 per Mcf in 1997 from $2.03 per
Mcf in 1996.
Depletion of Net Profits Interests decreased $177,604 (22.5%) in 1997 as
compared to 1996. This decrease resulted primarily from (i) decreases in volumes
of oil and gas sold in 1997 and (ii) upward revisions in the estimates of
remaining oil and gas reserves at December 31, 1997. As a percentage of Net
Profits, this expense decreased to 34.0% in 1997 from 39.4% in 1996. This
percentage decrease was primarily due to the increases in the average price of
gas sold in 1997 and the dollar decrease in depletion of Net Profits discussed
above.
The P-6 Partnership recognized a non-cash charge against earnings of
$898,584 in the first quarter of 1997. Of this amount, $444,990 was related to
the decline in oil and gas prices used to determine future cash flows from the
P-6 Partnership's Net Profit Interest in proved oil and gas reserves at March
31, 1997 and $453,594 was related to the writing-off of Net Profits Interests in
unproved properties. The General Partner determined that it was unlikely that
these unproved properties would be developed due to the low oil and gas prices
received over the last several years and Partnership Agreement provisions which
limit the P-6 Partnership's level of permissible indirect drilling activity
through its Affiliated Programs. No similar charges were necessary in 1996.
37
<PAGE>
General and administrative expenses remained relatively constant in 1997
as compared to 1996. As a percentage of Net Profits, these expenses remained
relatively constant at 9.6% in 1997 and 8.6% in 1996.
Cumulative cash distributions to the Limited Partners through December 31,
1997 were $8,448,248 or 59.06% of the Limited Partners' capital contributions.
Year Ended December 31, 1996 Compared
to Year Ended December 31, 1995
--------------------------------------
Total Net Profits increased $718,772 (56.0%) in 1996 as compared to 1995.
Of this increase, approximately $81,000 and $825,000, respectively, were related
to increases in the average prices of oil and gas sold and approximately $60,000
was related to a decrease in production expenses attributable to the Working
Interests, partially offset by a decrease of approximately $287,000 related to a
decrease in volumes of gas sold. Volumes of oil sold increased 2,228 barrels,
while volumes of gas sold decreased 217,471 Mcf in 1996 as compared to 1995. The
decrease in volumes of gas sold was primarily due to (i) the normal declines in
production on several wells due to diminished gas reserves and (ii) positive
prior period volume adjustments made by the purchaser on several wells during
the year ended December 31, 1995. The decrease in production expenses resulted
primarily from the decreases in volumes of oil and gas sold in 1996, partially
offset by an increase in production taxes associated with the increase in Net
Profits discussed above. Average oil and gas prices increased to $20.46 per
barrel and $2.03 per Mcf, respectively, for 1996 from $16.65 per barrel and
$1.32 per Mcf, respectively, for 1995.
Depletion of Net Profits Interests decreased $732,087 (48.2%) in 1996 as
compared to 1995. This decrease was primarily due to (i) a decrease in
capitalized costs due to an impairment provision recognized during the fourth
quarter of 1995, (ii) upward revisions in the estimates of remaining oil and gas
reserves at December 31, 1996, and (iii) the decrease in volumes of gas sold in
1996. As a percentage of Net Profits, this expense decreased to 39.4% for 1996
from 118.4% for 1995. This decrease was primarily due to the dollar decrease in
depletion of Net Profits Interests and the increases in the average prices of
oil and gas sold in 1996.
The P-6 Partnership recognized a non-cash charge against earnings of
$478,168 in 1995. This impairment provision was necessary due to the unamortized
costs of Net Profits Interests exceeding the undiscounted future net revenues
from such Net Profits Interests. No similar charge was necessary during 1996.
38
<PAGE>
General and administrative expenses remained relatively constant for 1996
as compared to 1995. As a percentage of Net Profits, these expenses decreased to
8.6% for 1996 from 13.5% for 1995. This percentage decrease was primarily due to
the increase in Net Profits discussed above.
Average Proceeds and Units of Production
The following tables are comparisons of the annual equivalent units of
production (one barrel of oil or six Mcf of gas) and the average proceeds
received per equivalent unit of production for the oil and gas sales
attributable to the Partnerships' Net Profits for the years ended December 31,
1997, 1996, and 1995. These factors comprise the change in oil and gas sales
discussed in the "Results of Operations" section above.
1997 Compared to 1996
---------------------
Equivalent Units Average Proceeds
of Production per Equivalent Unit
----------------------------- --------------------------
P/ship 1997 1996 % Change 1997 1996 % Change
------ ------- ------- -------- ----- ----- --------
P-1 91,630 111,872 (18%) $11.61 $10.65 10%
P-2 73,062 89,057 (18%) 11.45 10.23 13%
P-3 136,434 167,429 (19%) 11.43 10.19 13%
P-4 105,322 128,089 (18%) 12.26 10.72 14%
P-5 94,098 115,423 (18%) 10.63 9.64 10%
P-6 182,623 215,152 (15%) 9.82 9.31 5%
1996 Compared to 1995
---------------------
Equivalent Units Average Proceeds
of Production per Equivalent Unit
----------------------------- --------------------------
P/ship 1996 1995 % Change 1996 1995 % Change
------ ------- ------- -------- ----- ----- --------
P-1 111,872 126,422 (12%) $10.65 $7.40 44%
P-2 89,057 102,038 (13%) 10.23 7.01 46%
P-3 167,429 192,125 (13%) 10.19 6.91 47%
P-4 128,089 176,454 (27%) 10.72 7.09 51%
P-5 115,423 141,653 (19%) 9.64 6.63 45%
P-6 215,152 249,170 (14%) 9.31 5.15 81%
39
<PAGE>
Liquidity and Capital Resources
Net proceeds from operations less necessary operating capital are
distributed to the Limited Partners on a quarterly basis. See "Item 5. Market
for Units and Related Limited Partner Matters." The net proceeds from the Net
Profits Interests are not reinvested in productive assets. Assuming production
levels for 1997, the Partnerships' proved reserve quantities at December 31,
1997 would have the following remaining lives:
Partnership Gas-Years Oil-Years
----------- --------- ---------
P-1 6.4 6.8
P-2 6.8 7.0
P-3 6.8 7.0
P-4 5.2 2.8
P-5 5.9 6.4
P-6 5.0 6.7
The Partnerships' available capital from the Limited Partners'
subscriptions has been spent on Net Profits Interests and there should be no
further material capital resource commitments in the future. The Partnerships
have no debt commitments.
The Partnerships sold certain Net Profits Interests during 1997. The sale
of a Net Profits Interest was made by the General Partner after giving due
consideration to the offer price and the General Partner's estimate of both the
underlying property's remaining proved reserves and future operating costs. Net
proceeds from the sale of any such Net Profits Interests were distributed to the
Partnerships and included in the calculation of the Partnerships' cash
distributions for the quarter immediately following the Partnerships' receipt of
the proceeds. The amount of such proceeds from the sale of Net Profits Interest
during 1997 were as follows:
Partnership Amount
----------- ------
P-1 $507,599
P-2 402,870
P-3 759,639
P-4 266,265
P-5 91,840
P-6 43,605
The sale of these Net Profits Interests reduced the quantity of the
Partnerships proved reserves. It is also possible that the Partnerships'
repurchase values and future cash distributions could decline as a result of a
reduction of the Partnerships' reserve base. The General Partner believes that
40
<PAGE>
the sale of these Net Profits Interests will be beneficial to the Partnerships
since the properties underlying the Net Profits Interests sold generally had a
higher ratio of future operating expenses as compared to reserves than the
properties not sold.
There can be no assurance as to the amount of the Partnerships' future
cash distributions. The Partnerships' ability to make cash distributions depends
primarily upon the level of available cash flow generated by the Partnerships'
Net Profits Interests, which will be affected (either positively or negatively)
by many factors beyond the control of the Partnerships, including the price of
and demand for oil and gas and other market and economic conditions. Even if
prices and costs remain stable, the amount of cash available for distributions
will decline over time (as the volume of production from producing properties
declines) since the Partnerships are not replacing production through
acquisitions of Net Profits Interests in other producing properties and
drilling. The Partnerships' quantity of proved reserves has been reduced by the
sale of Net Profits Interests as described above; therefore, it is possible that
the Partnerships' future cash distributions could decline as a result of a
reduction of the Partnerships' reserve base.
Inflation and Changing Prices
Prices obtained for oil and gas production depend upon numerous factors,
including the extent of domestic and foreign production, foreign imports of oil,
market demand, domestic and foreign economic conditions in general, and
governmental regulations and tax laws. The general level of inflation in the
economy did not have a material effect on the operations of the Partnerships in
1997. Oil and gas prices have fluctuated during recent years and generally have
not followed the same pattern as inflation. See "Item 2. Properties - Oil and
Gas Production, Revenue, and Price History."
Year 2000 Computer Issues
The General Partner has reviewed its computer systems and hardware to
locate potential operational problems associated with the year 2000. Such review
will continue until all potential problems are located and resolved. The General
Partner believes that all year-2000 problems in its computer system have been or
will be resolved in a timely manner and have not caused and will not cause
disruption of the Partnerships' operations or a material affect on the
Partnerships' financial condition or results of operations. However, it is
possible that the Partnerships' cash flows could be disrupted by year-2000
problems experienced by operators of the Partnerships' wells, buyers of the
Partnerships' oil and gas, financial institutions, or other persons. The General
Partner is unable to quantify the effect, if any, on the Partnerships of
year-2000 computer problems experienced by these third parties.
41
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data are indexed in Item 14
hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER
The Partnerships have no directors or executive officers. The following
individuals are directors and executive officers of the General Partner. The
business address of such director and executive officers is Two West Second
Street, Tulsa, Oklahoma 74103.
Name Age Position with General Partner
---------------- --- --------------------------------
Dennis R. Neill 45 President and Director
Judy K. Fox 46 Secretary
The director will hold office until the next annual meeting of shareholders of
Geodyne and until his successor has been duly elected and qualified. All
executive officers serve at the discretion of the Board of Directors.
Dennis R. Neill joined the Samson Companies in 1981, was named Senior Vice
President and Director of Geodyne on March 3, 1993, and was named President of
Geodyne and its subsidiaries on June 30, 1996. Prior to joining the Samson
Companies, he was associated with a Tulsa law firm, Conner and Winters, where
his principal practice was in the securities area. He received a Bachelor of
Arts degree in political science from Oklahoma State University and a Juris
Doctorate degree from the University of Texas. Mr. Neill also serves as Senior
Vice President of Samson Investment Company and as President and Director of
Samson Properties Incorporated, Samson Hydrocarbons Company, Dyco Petroleum
Corporation, Berry Gas Company, Circle L Drilling Company, and Compression, Inc.
Judy K. Fox joined the Samson Companies in 1990 and was named Secretary of
Geodyne and its subsidiaries on June 30, 1996. Prior to joining the Samson
Companies, she served as Gas Contract Manager for Ely Energy Company. Ms. Fox is
42
<PAGE>
also Secretary of Berry Gas Company, Circle L Drilling Company, Compression,
Inc., Dyco Petroleum Corporation, Samson Hydrocarbons Company, and Samson
Properties Incorporated.
Section 16(a) Beneficial Ownership Reporting Compliance
To the best knowledge of the Partnerships and the General Partner, there
were no officers, directors, or ten percent owners who were delinquent filers of
reports required under Section 16 of the Securities Exchange Act of 1934 during
1997.
ITEM 11. EXECUTIVE COMPENSATION
The General Partner and its affiliates are reimbursed for actual general
and administrative costs and operating costs incurred and attributable to the
conduct of the business affairs and operations of the Partnerships, computed on
a cost basis, determined in accordance with generally accepted accounting
principles. Such reimbursed costs and expenses allocated to the Partnerships
include office rent, secretarial, employee compensation and benefits, travel and
communication costs, fees for professional services, and other items generally
classified as general or administrative expense. The amount of general and
administrative expense allocated to the General Partner and its affiliates and
charged to each Partnership during 1997, 1996, and 1995 is set forth in the
table below. Although the actual costs incurred by the General Partner and its
affiliates have fluctuated during the three years presented, the amounts charged
to the Partnerships have not fluctuated due to expense limitations imposed by
the Partnership Agreements.
Partnership 1997 1996 1995
----------- -------- -------- --------
P-1 $113,760 $113,760 $113,760
P-2 94,836 94,836 94,836
P-3 178,560 178,560 178,560
P-4 132,960 132,960 132,960
P-5 124,680 124,680 124,680
P-6 150,564 150,564 150,564
None of the officers or directors of the General Partner receive
compensation directly from the Partnerships. The Partnerships reimburse the
General Partner or its affiliates for that portion of such officers' and
directors' salaries and expenses attributable to time devoted by such
individuals to the Partnerships' activities. The following tables indicate the
approximate amount of general and administrative expense reimbursement
attributable to the salaries of the directors, officers, and employees of the
General Partner and its affiliates during 1997, 1996, and 1995:
43
<PAGE>
<TABLE>
<CAPTION>
Salary Reimbursements
P-1 Partnership
---------------
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------- ----------------------- -------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1995 $62,113 - - - - - -
1996 $66,550 - - - - - -
1997 $67,960 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until
July 1, 1996.
(2) The general and administrative expenses paid by the P-1 Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the P-1 Partnership and no individual's salary or other
compensation reimbursement from the P-1 Partnership equals or exceeds
$100,000 per annum.
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
Salary Reimbursements
P-2 Partnership
---------------
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------- ----------------------- -------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1995 $51,780 - - - - - -
1996 $55,479 - - - - - -
1997 $56,655 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until
July 1, 1996.
(2) The general and administrative expenses paid by the P-2 Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the P-2 Partnership and no individual's salary or other
compensation reimbursement from the P-2 Partnership equals or exceeds
$100,000 per annum.
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
Salary Reimbursements
P-3 Partnership
---------------
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------- ----------------------- -------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1995 $ 97,494 - - - - - -
1996 $104,458 - - - - - -
1997 $106,672 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until
July 1, 1996.
(2) The general and administrative expenses paid by the P-3 Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the P-3 Partnership and no individual's salary or other
compensation reimbursement from the P-3 Partnership equals or exceeds
$100,000 per annum.
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
Salary Reimbursements
P-4 Partnership
---------------
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------- ----------------------- -------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1995 $72,596 - - - - - -
1996 $77,782 - - - - - -
1997 $79,430 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until
July 1, 1996.
(2) The general and administrative expenses paid by the P-4 Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the P-4 Partnership and no individual's salary or other
compensation reimbursement from the P-4 Partnership equals or exceeds
$100,000 per annum.
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
Salary Reimbursements
P-5 Partnership
---------------
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------- ----------------------- -------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1995 $68,075 - - - - - -
1996 $72,938 - - - - - -
1997 $74,484 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until
July 1, 1996.
(2) The general and administrative expenses paid by the P-5 Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the P-5 Partnership and no individual's salary or other
compensation reimbursement from the P-5 Partnership equals or exceeds
$100,000 per annum.
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
Salary Reimbursements
P-6 Partnership
---------------
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------- ----------------------- -------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1995 $82,208 - - - - - -
1996 $88,080 - - - - - -
1997 $89,947 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until
July 1, 1996.
(2) The general and administrative expenses paid by the P-6 Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the P-6 Partnership and no individual's salary or other
compensation reimbursement from the P-6 Partnership equals or exceeds
$100,000 per annum.
</TABLE>
49
<PAGE>
During 1995 El Paso Energy Marketing Company, formerly known as Premier
Gas Company ("El Paso"), an affiliate of the Partnerships until December 6,
1995, purchased a portion of the gas attributable to the Partnerships' Net
Profits Interests at market prices and resold such gas directly to end-users and
local distribution companies.
Affiliates of the Partnerships serve as operator of some of the wells in
which the Partnerships own a Net Profits Interest. The owners of the working
interests in these wells contract with such affiliates for services as operator
of the wells. As operator, such affiliates are compensated at rates provided in
the operating agreements in effect and charged to all parties to such agreement.
Such compensation may occur both prior and subsequent to the commencement of
commercial marketing of production of oil or gas. The dollar amount of such
compensation which burdens the Partnerships' Net Profits Interests is impossible
to quantify as of the date of this Annual Report.
In addition to the compensation/reimbursements noted above, during the
three years ended December 31, 1997, the Samson Companies were in the business
of supplying field and drilling equipment and services to affiliated and
unaffiliated parties in the industry. These companies may have provided
equipment and services for wells in which the Partnerships have a Net Profits
Interest. These equipment and services were provided at prices or rates equal to
or less than those normally charged in the same or comparable geographic area by
unaffiliated persons or companies dealing at arm's length.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information as to the beneficial ownership of
the Units as of January 31, 1998, by (i) each beneficial owner of more than five
percent of the issued and outstanding Units, (ii) the director and officers of
the General Partner, and (iii) the General Partner and its affiliates. The
address of the General Partner, its officers and director, and Samson Resources
Company is Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103.
50
<PAGE>
Number of Units
Beneficially
Owned (Percent
Beneficial Owner of Outstanding)
- -------------------------------------------- ---------------
P-1 Partnership:
- ---------------
Samson Resources Company 13,134 (12.2%)
All affiliates, directors, and officers of
the General Partner as a group and the
General Partner (4 persons) 13,134 (12.2%)
P-2 Partnership:
- ---------------
Samson Resources Company 7,110 ( 7.9%)
Masco Master Investment Account
21001 Van Born Road
Taylor, MI 48180 10,600 (11.8%)
Loma Linda University
Medical Center
P. O. Box 2000
Loma Linda, CA 92354 5,000 ( 5.5%)
All affiliates, directors, and officers
of the General Partner as a group and
the General Partner (4 persons) 7,110 ( 7.9%)
P-3 Partnership:
- ---------------
Samson Resources Company 39,924 (23.5%)
Merced County Retirement Association
Pension Trust
2222 M. Street
Merced, CA 95340 10,000 ( 5.9%)
All affiliates, directors, and officers
of the General Partner as a group and
the General Partner (4 persons) 39,924 (23.5%)
51
<PAGE>
P-4 Partnership:
- ---------------
Samson Resources Company 9,738 ( 7.7%)
Masco Master Investment Account
21001 Van Born Road
Taylor, MI 48180 10,600 ( 8.4%)
All affiliates, directors, and officers
of the General Partner as a group and
the General Partner (4 persons) 9,738 ( 7.7%)
P-5 Partnership:
- ---------------
Samson Resources Company 14,777 (12.5%)
All affiliates, directors, and officers
of the General Partner as a group and
the General Partner (4 persons) 14,777 (12.5%)
P-6 Partnership:
- ---------------
Samson Resources Company 10,843 ( 7.6%)
ATL, Inc.
1200 Harbor Boulevard, 5th Floor
Weehawken, NJ 07087 54,887 (38.4%)
All affiliates, directors, and officers
of the General Partner as a group and
the General Partner (4 persons) 10,843 ( 7.6%)
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner and certain of its affiliates engage in oil and gas
activities independently of the Partnerships which result in conflicts of
interest that cannot be totally eliminated. The allocation of acquisition
opportunities and the nature of the compensation arrangements between the
Partnerships and the General Partner also create potential conflicts of
interest. An affiliate of the Partnerships owns some of the Partnerships' Units
and therefore has an identity of interest with other Limited Partners with
respect to the operations of the Partnerships.
52
<PAGE>
In order to attempt to assure limited liability for the Limited Partners
as well as an orderly conduct of business, management of the Partnerships is
exercised solely by the General Partner. The Partnership Agreements grant the
General Partner broad discretionary authority with respect to the Partnerships'
expenditure and control of funds, including borrowings. These provisions are
similar to those contained in prospectuses and partnership agreements for other
public oil and gas partnerships. Broad discretion as to general management of
the Partnerships involves circumstances where the General Partner has conflicts
of interest and where it must allocate costs and expenses, or opportunities,
among the Partnerships and other competing interests.
The General Partner does not devote all of its time, efforts, and
personnel exclusively to the Partnerships. Furthermore, the Partnerships do not
have any employees, but instead rely on the personnel of the Samson Companies.
The Partnerships thus compete with the Samson Companies (including other
currently sponsored oil and gas partnerships) for the time and resources of such
personnel. The Samson Companies devote such time and personnel to the management
of the Partnerships as are indicated by the circumstances and as are consistent
with the General Partner's fiduciary duties.
Affiliates of the Partnerships operate certain wells in which the
Partnerships have a net profits interest and are compensated for such services
at rates comparable to charges of unaffiliated third parties for services in the
same geographic area. These costs are charged to the owners of the working
interest of such wells and are considered when calculating the Net Profits
payable to the Partnerships. These costs are thus indirectly borne by the
Partnership.
As a result of Samson Investment Company's ("Samson") acquisition of the
General Partner and its affiliates, Samson, PaineWebber (the dealer manager of
the original offering of Units), and the General Partner entered into an
advisory agreement which relates primarily to the Partnerships. The Advisory
Agreement will expire on March 3, 1998. The Advisory Agreement provides, among
other things, that: (i) Samson will review periodically with PaineWebber the
general operations and performance of the Partnerships and the terms of any
material transaction involving a Partnership; (ii) Samson will allow PaineWebber
to advise Samson and to comment on any General Partner-initiated amendment to a
Partnership Agreement which requires a vote of the Limited Partners and any
proposal initiated by the General Partner that would involve a reorganization,
merger, or consolidation of a Partnership, a sale of all or substantially all of
the assets of a Partnership the liquidation or dissolution of a Partnership, or
the exchange of cash, securities, or other assets for all or any outstanding
Units; (iii) the General partner will maintain an "800" investor services
telephone number; and (iv) if Samson proposes a
53
<PAGE>
consolidation, merger, or exchange offer involving any limited partnership
managed by Samson, it will propose to include all of the Partnerships in such
transaction or provide a statement to PaineWebber as to the reasons why some or
all of the Partnerships are not included in such transaction.
Affiliates of the Partnerships are solely responsible for the negotiation,
administration, and enforcement of oil and gas sales agreements covering the
leasehold interests in which the Partnerships hold Net Profits Interests.
Because affiliates of the Partnerships who provide services to the owners of the
Working Interests have fiduciary or other duties to other members of the Samson
Companies, contract amendments and negotiating positions taken by them in their
effort to enforce contracts with purchasers may not necessarily represent the
positions that the owners of such Working Interests would take if they were to
administer their own contracts without involvement with other members of the
Samson Companies. On the other hand, management believes that the negotiating
strength and contractual positions of the owners of such Working Interests have
been enhanced by virtue of their affiliation with the Samson Companies. For a
description of certain of the relationships and related transactions see "Item
11. Executive Compensation."
54
<PAGE>
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements, Financial Statement Schedules,
and Exhibits.
(1) Financial Statements: The following financial statements for
the
Geodyne Institutional/Pension Energy Income
P-1 Limited Partnership
Geodyne Institutional/Pension Energy Income
P-2 Limited Partnership
Geodyne Institutional/Pension Energy Income
Limited Partnership P-3
Geodyne Institutional/Pension Energy Income
Limited Partnership P-4
Geodyne Institutional/Pension Energy Income
Limited Partnership P-5
Geodyne Institutional/Pension Energy Income
Limited Partnership P-6
as of December 31, 1997 and 1996 and for each of
the three years in the period ended December 31, 1997
are filed as part of this report:
Report of Independent Accountants
Combined Balance Sheets
Combined Statements of Operations
Combined Statements of Changes in
Partners' Capital (Deficit)
Combined Statements of Cash Flows
Notes to Combined Financial Statements
(2) Financial Statement Schedules:
None.
(3) Exhibits:
4.1 The Certificate and Agreements of Limited Partnership
for the following Partnerships have been previously
filed with the SEC as Exhibit 2.1 to Form 8-A filed by
each Partnership on the dates shown below and are
hereby incorporated by reference.
55
<PAGE>
Partnership Filing Date File No.
----------- ----------- --------
P-1 June 5, 1989 0-17800
P-2 June 5, 1989 0-17800
P-3 February 20, 1990 0-18306
P-4 February 20, 1990 0-18306
P-5 November 13, 1990 0-18637
P-6 November 30, 1990 0-18937
4.2 The Agreements of Partnership for the following NPI
Partnerships have been previously filed with the SEC as
Exhibit 2.2 to Form 8-A filed by the related
Partnerships on the dates shown below and are hereby
incorporated by reference.
Form 8-A
Partnership Filing Date
----------- -----------------
P-1 June 5, 1989
P-2 June 5, 1989
P-3 February 20, 1990
P-4 February 20, 1990
P-5 June 11, 1990
P-6 December 10, 1990
4.3 Advisory Agreement dated as of November 24, 1992
between Samson, PaineWebber, Geodyne Resources, Geodyne
Properties, Inc., Geodyne Production Company, and
Geodyne Energy Company filed as Exhibit 28.3 to
Registrants' Current Report on Form 8-K filed with the
SEC on December 24, 1992 and is hereby incorporated by
reference.
4.4 Second Amendment to Agreement of Limited Partnership of
Geodyne Institutional/Pension Energy Income P-1 Limited
Partnership, filed as Exhibit 4.1 to Registrants'
Current Report on Form 8-K dated August 2, 1993 filed
with the SEC on August 10, 1993 and is hereby
incorporated by reference.
4.5 Second Amendment to Agreement of Limited Partnership of
Geodyne Institutional/Pension Energy Income P-2 Limited
Partnership, filed as Exhibit 4.2 to Registrants'
Current Report on Form 8-K dated August 2, 1993 filed
with the SEC on August 10, 1993 and is hereby
incorporated by reference.
56
<PAGE>
4.6 Second Amendment to Agreement of Limited Partnership of
Geodyne Institutional/Pension Energy Income Limited
Partnership P-3, filed as Exhibit 4.3 to Registrants'
Current Report on Form 8-K dated August 2, 1993 filed
with the SEC on August 10, 1993 and is hereby
incorporated by reference.
4.7 Second Amendment to Agreement of Limited Partnership of
Geodyne Institutional/Pension Energy Income Limited
Partnership P-4, filed as Exhibit 4.4 to Registrants'
Current Report on Form 8-K dated August 2, 1993 filed
with the SEC on August 10, 1993 and is hereby
incorporated by reference.
4.8 Second Amendment to Agreement of Limited Partnership of
Geodyne Institutional/Pension Energy Income Limited
Partnership P-5, filed as Exhibit 4.5 to Registrants'
Current Report on Form 8-K dated August 2, 1993 filed
with the SEC on August 10, 1993 and is hereby
incorporated by reference.
4.9 Second Amendment to Agreement of Limited Partnership of
Geodyne Institutional/Pension Energy Income Limited
Partnership P-6, filed as Exhibit 4.6 to Registrants'
Current Report on Form 8-K dated August 2, 1993 filed
with the SEC on August 10, 1993 and is hereby
incorporated by reference.
4.10 Third Amendment to Agreement of Limited Partnership of
Geodyne Institutional/Pension Energy Income P-1 Limited
Partnership, filed as Exhibit 4.10 to Registrant's
Annual Report on Form 10-K for the year ended December
31, 1995 filed with the SEC April 1, 1996 and is hereby
incorporated by reference.
4.11 Third Amendment to Agreement of Limited Partnership of
Geodyne Institutional/Pension Energy Income P-2 Limited
Partnership, filed as Exhibit 4.11 to Registrant's
Annual Report on Form 10-K for the year ended December
31, 1995 filed with the SEC on April 1, 1996 and is
hereby incorporated by reference.
57
<PAGE>
4.12 Third Amendment to Agreement of Limited Partnership of
Geodyne Institutional/Pension Energy Income Limited
Partnership P-3, filed as Exhibit 4.12 to Registrant's
Annual Report on Form 10-K for the year ended December
31, 1995 filed with the SEC on April 1, 1996 and is
hereby incorporated by reference.
4.13 Third Amendment to Agreement of Limited Partnership of
Geodyne Institutional/Pension Energy Income Limited
Partnership P-4, filed as Exhibit 4.13 to Registrant's
Annual Report on Form 10-K for the year ended December
31, 1995 filed with the SEC on April 1, 1996 and is
hereby incorporated by reference.
4.14 Third Amendment to Agreement of Limited Partnership of
Geodyne Institutional/Pension Energy Income Limited
Partnership P-5, filed as Exhibit 4.14 to Registrant's
Annual Report on Form 10-K for the year ended December
31, 1995 filed with the SEC on April 1, 1996 and is
hereby incorporated by reference.
4.15 Third Amendment to Agreement of Limited Partnership of
Geodyne Institutional/Pension Energy Income Limited
Partnership P-6, filed as Exhibit 4.15 to Registrant's
Annual Report on Form 10-K for the year ended December
31, 1995 filed with the SEC on April 1, 1996 and is
hereby incorporated by reference.
*23.1 Consent of Ryder Scott Company, Petroleum Engineers for
the Geodyne Institutional/ Pension Energy Income P-1
Limited Partnership.
*23.2 Consent of Ryder Scott Company, Petroleum Engineers for
the Geodyne Institutional/ Pension Energy Income P-2
Limited Partnership.
*23.3 Consent of Ryder Scott Company, Petroleum Engineers for
the Geodyne Institutional/ Pension Energy Income
Limited Partnership P-3.
*23.4 Consent of Ryder Scott Company, Petroleum Engineers for
the Geodyne Institutional/ Pension Energy Income
Limited Partnership P-4.
58
<PAGE>
*23.5 Consent of Ryder Scott Company, Petroleum Engineers for
the Geodyne Institutional/ Pension Energy Income
Limited Partnership P-5.
*23.6 Consent of Ryder Scott Company, Petroleum Engineers for
the Geodyne Institutional/ Pension Energy Income
Limited Partnership P-6.
*27.1 Financial Data Schedule containing summary financial
information extracted from the Geodyne
Institutional/Pension Energy Income P-1 Limited
Partnership's financial statements as of December 31,
1997 and for the year ended December 31, 1997.
*27.2 Financial Data Schedule containing summary financial
information extracted from the Geodyne
Institutional/Pension Energy Income P-2 Limited
Partnership's financial statements as of December 31,
1997 and for the year ended December 31, 1997.
*27.3 Financial Data Schedule containing summary financial
information extracted from the Geodyne
Institutional/Pension Energy Income Limited Partnership
P-3's financial statements as of December 31, 1997 and
for the year ended December 31, 1997.
*27.4 Financial Data Schedule containing summary financial
information extracted from the Geodyne
Institutional/Pension Energy Income Limited Partnership
P-4's financial statements as of December 31, 1997 and
for the year ended December 31, 1997.
*27.5 Financial Data Schedule containing summary financial
information extracted from the Geodyne
Institutional/Pension Energy Income Limited Partnership
P-5's financial statements as of December 31, 1997 and
for the year ended December 31, 1997.
*27.6 Financial Data Schedule containing summary financial
information extracted from the Geodyne
Institutional/Pension Energy Income Limited Partnership
P-6's financial statements as of December 31, 1997 and
for the year ended December 31, 1997.
59
<PAGE>
All other Exhibits are omitted as inapplicable.
----------
*Filed herewith.
b) Reports on Form 8-K filed during the fourth quarter of 1997
None.
60
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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 organized.
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME P-1 LIMITED PARTNERSHIP
By: GEODYNE RESOURCES, INC.
General Partner
February 17, 1998
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and February 17, 1998
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall (Principal February 17, 1998
------------------- Financial and
Patrick M. Hall Accounting Officer)
/s/Judy K. Fox Secretary February 17, 1998
-------------------
Judy K. Fox
61
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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 organized.
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME P-2 LIMITED PARTNERSHIP
By: GEODYNE RESOURCES, INC.
General Partner
February 17, 1998
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and February 17, 1998
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall (Principal February 17, 1998
------------------- Financial and
Patrick M. Hall Accounting Officer)
/s/Judy K. Fox Secretary February 17, 1998
-------------------
Judy K. Fox
62
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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 organized.
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME LIMITED PARTNERSHIP P-3
By: GEODYNE RESOURCES, INC.
General Partner
February 17, 1998
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and February 17, 1998
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall (Principal February 17, 1998
------------------- Financial and
Patrick M. Hall Accounting Officer)
/s/Judy K. Fox Secretary February 17, 1998
-------------------
Judy K. Fox
63
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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 organized.
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME LIMITED PARTNERSHIP P-4
By: GEODYNE RESOURCES, INC.
General Partner
February 17, 1998
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and February 17, 1998
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall (Principal February 17, 1998
------------------- Financial and
Patrick M. Hall Accounting Officer)
/s/Judy K. Fox Secretary February 17, 1998
-------------------
Judy K. Fox
64
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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 organized.
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME LIMITED PARTNERSHIP P-5
By: GEODYNE RESOURCES, INC.
General Partner
February , 1998
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and February 17, 1998
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall (Principal February 17, 1998
------------------- Financial and
Patrick M. Hall Accounting Officer)
/s/Judy K. Fox Secretary February 17, 1998
-------------------
Judy K. Fox
65
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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 organized.
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME LIMITED PARTNERSHIP P-6
By: GEODYNE RESOURCES, INC.
General Partner
February 17, 1998
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and February 17, 1998
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall (Principal February 17, 1998
------------------- Financial and
Patrick M. Hall Accounting Officer)
/s/Judy K. Fox Secretary February 17, 1998
-------------------
Judy K. Fox
66
<PAGE>
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP
AND GEODYNE NPI PARTNERSHIP P-1
We have audited the combined balance sheets of the Geodyne
Institutional/Pension Energy Income P-1 Limited Partnership, a Texas limited
partnership, and Geodyne NPI Partnership P-1, an Oklahoma general partnership,
as of December 31, 1997 and 1996 and the related combined statements of
operations, changes in partners' capital (deficit), and cash flows for the years
ended December 31, 1997, 1996, and 1995. These financial statements are the
responsibility of the Partnerships' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position of the
Geodyne Institutional/Pension Energy Income P-1 Limited Partnership and Geodyne
NPI Partnership P-1 at December 31, 1997 and 1996 and the combined results of
their operations and cash flows for the years ended December 31, 1997, 1996, and
1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
February 6, 1998
F-1
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP
GEODYNE NPI PARTNERSHIP P-1
Combined Balance Sheets
December 31, 1997 and 1996
ASSETS
------
1997 1996
------------ -----------
CURRENT ASSETS:
Cash and cash equivalents $ 503,622 $ 293,296
Accounts receivable:
Net Profits 164,644 257,458
--------- ---------
Total current assets $ 668,266 $ 550,754
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 1,408,420 2,680,005
--------- ---------
$2,076,686 $3,230,759
========= =========
PARTNERS' CAPITAL (DEFICIT)
---------------------------
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 87,415) ($ 62,666)
Limited Partners, issued and
outstanding, 108,074 Units 2,164,101 3,293,425
--------- ---------
Total Partners' capital $2,076,686 $3,230,759
========= =========
The accompanying notes are an integral
part of these combined financial statements.
F-2
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP
GEODYNE NPI PARTNERSHIP P-1
Combined Statements of Operations
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ----------
REVENUES:
Net Profits $1,064,105 $1,191,311 $935,026
Interest income 11,117 9,643 8,151
Gain on sale of
Net Profits
Interests 380,408 80,721 7,144
--------- --------- -------
$1,455,630 $1,281,675 $950,321
COSTS AND EXPENSES:
Depletion of
Net Profits
Interests $ 263,691 $ 324,506 $698,380
Impairment Provision 902,042 - 86,264
General and
administrative 129,205 130,147 126,220
--------- --------- -------
$1,294,938 $ 454,653 $910,864
--------- --------- -------
NET INCOME $ 160,692 $ 827,022 $ 39,457
========= ========= =======
GENERAL PARTNER -
NET INCOME $ 54,016 $ 53,849 $ 33,359
========= ========= =======
LIMITED PARTNERS - NET
INCOME $ 106,676 $ 773,173 $ 6,098
========= ========= =======
NET INCOME
per Unit $ .99 $ 7.15 $ .06
========= ========= =======
UNITS OUTSTANDING 108,074 108,074 108,074
========= ========= =======
The accompanying notes are an integral
part of these combined financial statements.
F-3
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP
GEODYNE NPI PARTNERSHIP P-1
Combined Statements of Changes in Partners' Capital (Deficit)
For the Years Ended December 31, 1997, 1996, and 1995
Limited General
Partners Partner Combined
------------ --------- ------------
Balance, December 31, 1994 $4,286,154 ($42,681) $4,243,473
Net income 6,098 33,359 39,457
Cash distributions ( 755,000) ( 39,000) ( 794,000)
--------- ------ ---------
Balance, December 31, 1995 $3,537,252 ($48,322) $3,488,930
Net income 773,173 53,849 827,022
Cash distributions ( 1,017,000) ( 68,193) ( 1,085,193)
--------- ------ ---------
Balance, December 31, 1996 $3,293,425 ($62,666) $3,230,759
Net income 106,676 54,016 160,692
Cash distributions ( 1,236,000) ( 78,765) ( 1,314,765)
--------- ------ ---------
Balance, December 31, 1997 $2,164,101 ($87,415) $2,076,686
========= ====== =========
The accompanying notes are an integral
part of these combined financial statements.
F-4
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP
GEODYNE NPI PARTNERSHIP P-1
Combined Statements of Cash Flows
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ----------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 160,692 $ 827,022 $ 39,457
Adjustments to reconcile
net income to
net cash provided by
operating activities:
Depletion of Net
Profits Interests 263,691 324,506 698,380
Impairment Provision 902,042 - 86,264
Gain on sale of
Net Profits Interests ( 380,408) ( 80,721) ( 7,144)
(Increase)decrease in
accounts receivable 92,814 ( 36,311) ( 34,097)
--------- --------- -------
Net cash provided by
operating activities $1,038,831 $1,034,496 $782,860
--------- --------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ($ 21,339) ($ 12,540) ($ 4,566)
Proceeds from sale of
Net Profits Interests 507,599 115,009 30,046
--------- --------- -------
Net cash provided by
investing activities $ 486,260 $ 102,469 $ 25,480
--------- --------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($1,314,765) ($1,085,193) ($794,000)
--------- --------- -------
Net cash used by financing
activities ($1,314,765) ($1,085,193) ($794,000)
--------- --------- -------
NET INCREASE IN CASH
AND CASH EQUIVALENTS $ 210,326 $ 51,772 $ 14,340
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 293,296 241,524 227,184
--------- --------- -------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 503,622 $ 293,296 $241,524
========= ========= =======
The accompanying notes are an integral
part of these combined financial statements.
F-5
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-2 LIMITED PARTNERSHIP
AND GEODYNE NPI PARTNERSHIP P-2
We have audited the combined balance sheets of the Geodyne
Institutional/Pension Energy Income P-2 Limited Partnership, a Texas limited
partnership, and Geodyne NPI Partnership P-2, an Oklahoma general partnership,
as of December 31, 1997 and 1996 and the related combined statements of
operations, changes in partners' capital (deficit), and cash flows for the years
ended December 31, 1997, 1996, and 1995. These financial statements are the
responsibility of the Partnerships' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position of the
Geodyne Institutional/Pension Energy Income P-2 Limited Partnership and Geodyne
NPI Partnership P-2 at December 31, 1997 and 1996 and the combined results of
their operations and cash flows for the years ended December 31, 1997, 1996, and
1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
February 6, 1998
F-6
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-2 LIMITED PARTNERSHIP
GEODYNE NPI PARTNERSHIP P-2
Combined Balance Sheets
December 31, 1997 and 1996
ASSETS
------
1997 1996
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 369,191 $ 222,506
Accounts receivable:
Net Profits 135,331 203,287
General Partner - 8,376
--------- ---------
Total current assets $ 504,522 $ 434,169
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 1,182,230 2,201,380
--------- ---------
$1,686,752 $2,635,549
========= =========
PARTNERS' CAPITAL (DEFICIT)
---------------------------
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 72,438) ($ 57,428)
Limited Partners, issued and
outstanding, 90,094 Units 1,759,190 2,692,977
--------- ---------
Total Partners' capital $1,686,752 $2,635,549
========= =========
The accompanying notes are an integral
part of these combined financial statements.
F-7
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-2 LIMITED PARTNERSHIP
GEODYNE NPI PARTNERSHIP P-2
Combined Statements of Operations
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
---------- ---------- ----------
REVENUES:
Net Profits $ 836,494 $911,429 $715,608
Interest income 8,532 7,216 5,184
Gain on sale of
Net Profits Interests 284,247 57,048 13,376
--------- ------- -------
$1,129,273 $975,693 $734,168
COSTS AND EXPENSES:
Depletion of Net
Profits Interests $ 207,379 $275,464 $605,201
Impairment provision 727,893 - 182,970
General and
administrative 107,544 108,749 105,286
--------- ------- -------
$1,042,816 $384,213 $893,457
--------- ------- -------
NET INCOME (LOSS) $ 86,457 $591,480 ($159,289)
========= ======= =======
GENERAL PARTNER -
NET INCOME $ 41,244 $ 40,232 $ 23,562
========= ======= =======
LIMITED PARTNERS - NET
INCOME (LOSS) $ 45,213 $551,248 ($182,851)
========= ======= =======
NET INCOME (LOSS)
per Unit $ .50 $ 6.12 ($ 2.03)
========= ======= =======
UNITS OUTSTANDING 90,094 90,094 90,094
========= ======= =======
The accompanying notes are an integral
part of these combined financial statements.
F-8
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-2 LIMITED PARTNERSHIP
GEODYNE NPI PARTNERSHIP P-2
Combined Statements of Changes in Partners' Capital (Deficit)
For the Years Ended December 31, 1997, 1996, and 1995
Limited General
Partners Partner Combined
------------ --------- ------------
Balance, December 31, 1994 $3,628,580 ($42,252) $3,586,328
Net income (loss) ( 182,851) 23,562 ( 159,289)
Cash distributions ( 545,000) ( 27,500) ( 572,500)
--------- ------ ---------
Balance, December 31, 1995 $2,900,729 ($46,190) $2,854,539
Net income 551,248 40,232 591,480
Cash distributions ( 759,000) ( 51,470) ( 810,470)
--------- ------ ---------
Balance, December 31, 1996 $2,692,977 ($57,428) $2,635,549
Net income 45,213 41,244 86,457
Cash distributions ( 979,000) ( 56,254) ( 1,035,254)
--------- ------ ---------
Balance, December 31, 1997 $1,759,190 ($72,438) $1,686,752
========= ====== =========
The accompanying notes are an integral
part of these combined financial statements.
F-9
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-2 LIMITED PARTNERSHIP
GEODYNE NPI PARTNERSHIP P-2
Combined Statements of Cash Flows
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ 86,457 $591,480 ($159,289)
Adjustments to reconcile
net income (loss) to
net cash provided by
operating activities:
Depletion of Net
Profits Interests 207,379 275,464 605,201
Impairment provision 727,893 - 182,970
Gain on sale of
Net Profits Interests ( 284,247) ( 57,048) ( 13,376)
(Increase) decrease in
accounts receivable
- Net Profits 67,956 ( 27,246) ( 39,805)
(Increase) decrease in
accounts receivable
-General Partner 8,376 ( 8,376) -
--------- ------- -------
Net cash provided by
operating activities $ 813,814 $774,274 $575,701
--------- ------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ($ 34,745) ($ 6,613) ($ 9,877)
Proceeds from sale of
Net Profits Interests 402,870 97,524 36,381
--------- ------- -------
Net cash provided
by investing activities $ 368,125 $ 90,911 $ 26,504
--------- ------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($1,035,254) ($810,470) ($572,500)
--------- ------- -------
Net cash used by financing
activities ($1,035,254) ($810,470) ($572,500)
--------- ------- -------
NET INCREASE IN CASH
AND CASH EQUIVALENTS $ 146,685 $ 54,715 $ 29,705
F-10
<PAGE>
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 222,506 167,791 138,086
--------- ------- -------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 369,191 $222,506 $167,791
========= ======= =======
The accompanying notes are an integral
part of these combined financial statements.
F-11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3
AND GEODYNE NPI PARTNERSHIP P-3
We have audited the combined balance sheets of the Geodyne
Institutional/Pension Energy Income Limited Partnership P-3, an Oklahoma limited
partnership, and Geodyne NPI Partnership P-3, an Oklahoma general partnership,
as of December 31, 1997 and 1996 and the related combined statements of
operations, changes in partners' capital (deficit), and cash flows for the years
ended December 31, 1997, 1996, and 1995. These financial statements are the
responsibility of the Partnerships' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position of the
Geodyne Institutional/Pension Energy Income Limited Partnership P-3 and Geodyne
NPI Partnership P-3 at December 31, 1997 and 1996 and the combined results of
their operations and cash flows for the years ended December 31, 1997, 1996, and
1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
February 6, 1998
F-12
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3
GEODYNE NPI PARTNERSHIP P-3
Combined Balance Sheets
December 31, 1997 and 1996
ASSETS
------
1997 1996
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 685,628 $ 415,354
Accounts receivable:
Net Profits 254,470 379,725
General Partner - 16,473
--------- ---------
Total current assets $ 940,098 $ 811,552
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 2,196,444 4,156,531
--------- ---------
$3,136,542 $4,968,083
========= =========
PARTNERS' CAPITAL (DEFICIT)
---------------------------
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 137,258) ($ 107,085)
Limited Partners, issued and
outstanding, 169,637 Units 3,273,800 5,075,168
--------- ---------
Total Partners' capital $3,136,542 $4,968,083
========= =========
The accompanying notes are an integral
part of these combined financial statements.
F-13
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3
GEODYNE NPI PARTNERSHIP P-3
Combined Statements of Operations
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
REVENUES:
Net Profits $1,559,975 $1,706,259 $1,327,052
Interest income 16,329 12,976 10,368
Gain on sale of
Net Profits Interests 532,904 105,977 16,231
--------- --------- ---------
$2,109,208 $1,825,212 $1,353,651
COSTS AND EXPENSES:
Depletion of Net
Profits Interests $ 385,937 $ 521,166 $1,147,906
Impairment provision 1,413,917 - 377,983
General and
administrative 202,308 204,160 199,113
--------- --------- ---------
$2,002,162 $ 725,326 $1,725,002
--------- --------- ---------
NET INCOME (LOSS) $ 107,046 $1,099,886 ($ 371,351)
========= ========= =========
GENERAL PARTNER -
NET INCOME $ 76,414 $ 75,192 $ 42,468
========= ========= =========
LIMITED PARTNERS - NET
INCOME (LOSS) $ 30,632 $1,024,694 ($ 413,819)
========= ========= =========
NET INCOME (LOSS)
per Unit $ .18 $ 6.04 ($ 2.44)
========= ========= =========
UNITS OUTSTANDING 169,637 169,637 169,637
========= ========= =========
The accompanying notes are an integral
part of these combined financial statements.
F-14
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3
GEODYNE NPI PARTNERSHIP P-3
Combined Statements of Changes in Partners' Capital (Deficit)
For the Years Ended December 31, 1997, 1996, and 1995
Limited General
Partners Partner Combined
------------- ---------- ------------
Balance, Dec. 31, 1994 $ 6,911,293 ($ 75,099) $6,836,194
Net income (loss) ( 413,819) 42,468 ( 371,351)
Cash distributions ( 1,055,000) ( 54,000) ( 1,109,000)
---------- ------- ---------
Balance, Dec. 31, 1995 $ 5,442,474 ($ 86,631) $5,355,843
Net income 1,024,694 75,192 1,099,886
Cash distributions ( 1,392,000) ( 95,646) ( 1,487,646)
---------- ------- ---------
Balance, Dec. 31, 1996 $ 5,075,168 ($107,085) $4,968,083
Net income 30,632 76,414 107,046
Cash distributions ( 1,832,000) ( 106,587) ( 1,938,587)
---------- ------- ---------
Balance, Dec. 31, 1997 $ 3,273,800 ($137,258) $3,136,542
========== ======= =========
The accompanying notes are an integral
part of these combined financial statements.
F-15
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3
GEODYNE NPI PARTNERSHIP P-3
Combined Statements of Cash Flows
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ 107,046 $1,099,886 ($ 371,351)
Adjustments to reconcile
net income (loss) to
net cash provided by
operating activities:
Depletion of Net
Profits Interests 385,937 521,166 1,147,906
Impairment provision 1,413,917 - 377,983
Gain on sale of
Net Profits Interests ( 532,904) ( 105,977) ( 16,231)
(Increase) decrease in
accounts receivable
- Net Profits 125,255 ( 61,150) ( 67,313)
(Increase) decrease in
accounts receivable
-General Partner 16,473 ( 16,473) -
--------- --------- ---------
Net cash provided by
operating activities $1,515,724 $1,437,452 $1,070,994
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ($ 66,502) ($ 12,220) ( 19,116)
Proceeds from sale of
Net Profits Interests 759,639 181,139 68,171
--------- --------- ---------
Net cash provided
by investing activities $ 693,137 $ 168,919 $ 49,055
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($1,938,587) ($1,487,646) ($1,109,000)
--------- --------- ---------
Net cash used by financing
activities ($1,938,587) ($1,487,646) ($1,109,000)
--------- --------- ---------
NET INCREASE IN CASH
AND CASH EQUIVALENTS $ 270,274 $ 118,725 $ 11,049
F-16
<PAGE>
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 415,354 296,629 285,580
--------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 685,628 $ 415,354 $ 296,629
========= ========= =========
The accompanying notes are an integral
part of these combined financial statements.
F-17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4
AND GEODYNE NPI PARTNERSHIP P-4
We have audited the combined balance sheets of the Geodyne
Institutional/Pension Energy Income Limited Partnership P-4, an Oklahoma limited
partnership, and Geodyne NPI Partnership P-4, an Oklahoma general partnership,
as of December 31, 1997 and 1996 and the related combined statements of
operations, changes in partners' capital (deficit), and cash flows for the years
ended December 31, 1997, 1996, and 1995. These financial statements are the
responsibility of the Partnerships' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position of the
Geodyne Institutional/Pension Energy Income Limited Partnership P-4 and Geodyne
NPI Partnership P-4 at December 31, 1997 and 1996 and the combined results of
their operations and cash flows for the years ended December 31, 1997, 1996, and
1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
February 6, 1998
F-18
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4
GEODYNE NPI PARTNERSHIP P-4
Combined Balance Sheets
December 31, 1997 and 1996
ASSETS
------
1997 1996
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 243,903 $ 345,876
Accounts receivable:
Net Profits 301,060 369,940
--------- ---------
Total current assets $ 544,963 $ 715,816
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 1,282,329 2,567,661
--------- ---------
$1,827,292 $3,283,477
========= =========
PARTNERS' CAPITAL (DEFICIT)
- ---------------------------
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 94,799) ($ 81,373)
Limited Partners, issued and
outstanding, 126,306 Units 1,922,091 3,364,850
--------- ---------
Total Partners' capital $1,827,292 $3,283,477
========= =========
The accompanying notes are an integral
part of these combined financial statements.
F-19
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4
GEODYNE NPI PARTNERSHIP P-4
Combined Statements of Operations
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
REVENUES:
Net Profits $1,290,780 $1,373,635 $1,251,153
Interest income 13,072 11,768 12,458
Gain (Loss) on sale of
Net Profits Interests 63,002 ( 52,591) ( 508)
--------- --------- ---------
$1,366,854 $1,332,812 $1,263,103
COSTS AND EXPENSES:
Depletion of Net
Profits Interests $ 364,709 $ 540,791 $ 990,870
Impairment provision 752,388 - 581,036
General and
administrative 148,419 154,265 147,935
--------- --------- ---------
$1,265,516 $ 695,056 $1,719,841
--------- --------- ---------
NET INCOME (LOSS) $ 101,338 $ 637,756 ($ 456,738)
========= ========= =========
GENERAL PARTNER -
NET INCOME $ 49,097 $ 52,931 $ 40,039
========= ========= =========
LIMITED PARTNERS - NET
INCOME (LOSS) $ 52,241 $ 584,825 ($ 496,777)
========= ========= =========
NET INCOME (LOSS)
per Unit $ .41 $ 4.63 ($ 3.93)
========= ========= =========
UNITS OUTSTANDING 126,306 126,306 126,306
========= ========= =========
The accompanying notes are an integral
part of these combined financial statements.
F-20
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4
GEODYNE NPI PARTNERSHIP P-4
Combined Statements of Changes in Partners' Capital (Deficit)
For the Years Ended December 31, 1997, 1996, and 1995
Limited General
Partners Partner Combined
------------ ---------- ------------
Balance, Dec. 31, 1994 $5,546,802 ($ 40,585) $5,506,217
Net income (loss) ( 496,777) 40,039 ( 456,738)
Cash distributions ( 1,055,000) ( 54,000) ( 1,109,000)
--------- ------- ---------
Balance, Dec. 31, 1995 $3,995,025 ($ 54,546) $3,940,479
Net income 584,825 52,931 637,756
Cash distributions ( 1,215,000) ( 79,758) ( 1,294,758)
--------- ------- ---------
Balance, Dec. 31, 1996 $3,364,850 ($ 81,373) $3,283,477
Net income 52,241 49,097 101,338
Cash distributions ( 1,495,000) ( 62,523) ( 1,557,523)
--------- ------- ---------
Balance, Dec. 31, 1997 $1,922,091 ($ 94,799) $1,827,292
========= ======= =========
The accompanying notes are an integral
part of these combined financial statements.
F-21
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4
GEODYNE NPI PARTNERSHIP P-4
Combined Statements of Cash Flows
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ 101,338 $ 637,756 ($ 456,738)
Adjustments to reconcile
net income (loss) to
net cash provided by
operating activities:
Depletion of Net
Profits Interests 364,709 540,791 990,870
Impairment provision 752,388 - 581,036
(Gain) loss on sale of
Net Profits Interests ( 63,002) 52,591 508
(Increase) decrease in
accounts receivable 68,880 ( 17,033) ( 139,959)
--------- --------- --------
Net cash provided by
operating activities $1,224,313 $1,214,105 $ 975,717
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ($ 35,028) ($ 804) ( 19,172)
Proceeds from sale of
Net Profits Interests 266,265 139,216 9,907
--------- --------- ---------
Net cash provided (used)
by investing activities $ 231,237 $ 138,412 ($ 9,265)
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($1,557,523) ($1,294,758) ($1,109,000)
--------- --------- ---------
Net cash used by financing
activities ($1,557,523) ($1,294,758) ($1,109,000)
--------- --------- ---------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS ($ 101,973) $ 57,759 ($ 142,548)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 345,876 288,117 430,665
--------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 243,903 $ 345,876 $ 288,117
========= ========= =========
The accompanying notes are an integral
part of these combined financial statements.
F-22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5
AND GEODYNE NPI PARTNERSHIP P-5
We have audited the combined balance sheets of the Geodyne
Institutional/Pension Energy Income Limited Partnership P-5, an Oklahoma limited
partnership, and Geodyne NPI Partnership P-5, an Oklahoma general partnership,
as of December 31, 1997 and 1996 and the related combined statements of
operations, changes in partners' capital (deficit), and cash flows for the years
ended December 31, 1997, 1996, and 1995. These financial statements are the
responsibility of the Partnerships' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position of the
Geodyne Institutional/Pension Energy Income Limited Partnership P-5 and Geodyne
NPI Partnership P-5 at December 31, 1997 and 1996 and the combined results of
their operations and cash flows for the years ended December 31, 1997, 1996, and
1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
February 6, 1998
F-23
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5
GEODYNE NPI PARTNERSHIP P-5
Combined Balance Sheets
December 31, 1997 and 1996
ASSETS
------
1997 1996
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 228,750 $ 247,540
Accounts receivable:
Net Profits 134,968 209,058
--------- ---------
Total current assets $ 363,718 $ 456,598
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 1,257,789 2,536,590
--------- ---------
$1,621,507 $2,993,188
========= =========
PARTNERS' CAPITAL (DEFICIT)
---------------------------
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 74,683) ($ 60,088)
Limited Partners, issued and
outstanding, 118,449 Units 1,696,190 3,053,276
--------- ---------
Total Partners' capital $1,621,507 $2,993,188
========= =========
The accompanying notes are an integral
part of these combined financial statements.
F-24
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5
GEODYNE NPI PARTNERSHIP P-5
Combined Statements of Operations
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
REVENUES:
Net Profits $1,000,125 $1,112,631 $ 938,957
Interest income 8,836 7,595 8,722
Gain on sale of
Net Profits Interests 79,182 30,479 1,364
--------- --------- ---------
$1,088,143 $1,150,705 $ 949,043
COSTS AND EXPENSES:
Depletion of Net
Profits Interests $ 249,055 $ 368,974 $ 785,795
Impairment provision 1,018,068 - 194,933
General and
administrative 141,907 142,033 138,959
--------- --------- ---------
$1,409,030 $ 511,007 $1,119,687
--------- --------- ---------
NET INCOME (LOSS) ($ 320,887) $ 639,698 ($ 170,644)
========= ========= =========
GENERAL PARTNER -
NET INCOME $ 34,199 $ 46,364 $ 30,697
========= ========= =========
LIMITED PARTNERS - NET
INCOME (LOSS) ($ 355,086) $ 593,334 ($ 201,341)
========= ========= =========
NET INCOME (LOSS)
per Unit ($ 3.00) $ 5.01 ($ 1.70)
========= ========= =========
UNITS OUTSTANDING 118,449 118,449 118,449
========= ========= =========
The accompanying notes are an integral
part of these combined financial statements.
F-25
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5
GEODYNE NPI PARTNERSHIP P-5
Combined Statements of Changes in Partners' Capital (Deficit)
For the Years Ended December 31, 1997, 1996, and 1995
Limited General
Partners Partner Combined
------------ ---------- ------------
Balance, Dec. 31, 1994 $4,160,283 ($44,622) $4,115,661
Net income (loss) ( 201,341) 30,697 ( 170,644)
Cash distributions ( 685,000) ( 34,500) ( 719,500)
--------- ------ ---------
Balance, Dec. 31, 1995 $3,273,942 ($48,425) $3,225,517
Net income 593,334 46,364 639,698
Cash distributions ( 814,000) ( 58,027) ( 872,027)
--------- ------ ---------
Balance, Dec. 31, 1996 $3,053,276 ($60,088) $2,993,188
Net income (loss) ( 355,086) 34,199 ( 320,887)
Cash distributions ( 1,002,000) ( 48,794) ( 1,050,794)
--------- ------ ---------
Balance, Dec. 31, 1997 $1,696,190 ($74,683) $1,621,507
========= ====== =========
The accompanying notes are an integral
part of these combined financial statements.
F-26
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5
GEODYNE NPI PARTNERSHIP P-5
Combined Statements of Cash Flows
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) ($ 320,887) $639,698 ($170,644)
Adjustments to reconcile
net income (loss) to
net cash provided by
operating activities:
Depletion of Net
Profits Interests 249,055 368,974 785,795
Impairment provision 1,018,068 - 194,933
Gain on sale of
Net Profits Interests ( 79,182) ( 30,479) ( 1,364)
(Increase) decrease in
accounts receivable 74,090 ( 58,851) ( 34,700)
--------- ------- -------
Net cash provided by
operating activities $ 941,144 $919,342 $774,020
--------- ------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ($ 980) ($ 2,807) ($ 29,603)
Proceeds from sale of
Net Profits Interests 91,840 35,956 1,557
--------- -------- -------
Net cash provided (used)
by investing activities $ 90,860 $ 33,149 ($ 28,046)
--------- ------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($1,050,794) ($872,027) ($719,500)
--------- ------- --------
Net cash used by financing
activities ($1,050,794) ($872,027) ($719,500)
--------- ------- --------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS ($ 18,790) $ 80,464 $ 26,474
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 247,540 167,076 140,602
--------- ------- -------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 228,750 $247,540 $167,076
========= ======= =======
The accompanying notes are an integral
part of these combined financial statements.
F-27
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-6
AND GEODYNE NPI PARTNERSHIP P-6
We have audited the combined balance sheets of the Geodyne
Institutional/Pension Energy Income Limited Partnership P-6, an Oklahoma limited
partnership, and Geodyne NPI Partnership P-6, an Oklahoma general partnership,
as of December 31, 1997 and 1996 and the related combined statements of
operations, changes in partners' capital (deficit), and cash flows for the years
ended December 31, 1997, 1996, and 1995. These financial statements are the
responsibility of the Partnerships' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position of the
Geodyne Institutional/Pension Energy Income Limited Partnership P-6 and Geodyne
NPI Partnership P-6 at December 31, 1997 and 1996 and the combined results of
their operations and cash flows for the years ended December 31, 1997, 1996, and
1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
February 6, 1998
F-28
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-6
GEODYNE NPI PARTNERSHIP P-6
Combined Balance Sheets
December 31, 1997 and 1996
ASSETS
------
1997 1996
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 362,957 $ 319,699
Accounts receivable:
Net Profits 291,352 428,072
--------- ---------
Total current assets $ 654,309 $ 747,771
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 2,457,809 3,966,906
--------- ---------
$3,112,118 $4,714,677
========= =========
PARTNERS' CAPITAL (DEFICIT)
---------------------------
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 96,514) ($ 59,021)
Limited Partners, issued and
outstanding, 143,041 Units 3,208,632 4,773,698
--------- ---------
Total Partners' capital $3,112,118 $4,714,677
========= =========
The accompanying notes are an integral
part of these combined financial statements.
F-29
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME
LIMITED PARTNERSHIP P-6
GEODYNE NPI PARTNERSHIP P-6
Combined Statements of Operations
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
---------- ------------ ----------
REVENUES:
Net Profits $1,793,685 $2,002,957 $1,284,185
Interest income 15,425 13,419 10,768
Gain on sale
of Net Profits
Interests 37,698 24,815 6,045
--------- -------- ---------
$1,846,808 $2,041,191 $1,300,998
COSTS AND EXPENSES:
Depletion of Net
Profits Interests $ 610,647 $ 788,251 $1,520,338
Impairment provision 898,584 - 478,168
General and
administrative 171,754 171,630 173,446
--------- --------- ---------
$1,680,985 $ 959,881 $2,171,952
--------- --------- ---------
NET INCOME(LOSS) $ 165,823 $1,081,310 ($ 870,954)
========= ========= =========
GENERAL PARTNER -
NET INCOME $ 67,889 $ 84,925 $ 36,393
========= ========= =========
LIMITED PARTNERS - NET
INCOME (LOSS) $ 97,934 $ 996,385 ($ 907,347)
========= ========= =========
NET INCOME (LOSS)
per Unit $ .68 $ 6.97 ($ 6.34)
========= ========= =========
UNITS OUTSTANDING 143,041 143,041 143,041
========= ========= =========
The accompanying notes are an integral part of these
combined financial statements.
F-30
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME
LIMITED PARTNERSHIP P-6
GEODYNE NPI PARTNERSHIP P-6
Combined Statements of Changes in Partners' Capital (Deficit)
For the Years Ended December 31, 1997, 1996 and 1995
Limited General
Partners Partner Combined
------------ ---------- -----------
Balance, Dec. 31, 1994 $6,944,660 ($ 41,174) $6,903,486
Net income (loss) ( 907,347) 36,393 ( 870,954)
Cash distributions ( 820,000) ( 42,500) ( 862,500)
--------- ------- ---------
Balance, Dec. 31, 1995 $5,217,313 ($ 47,281) $5,170,032
Net income 996,385 84,925 1,081,310
Cash distributions ( 1,440,000) ( 96,665) (1,536,665)
---------- ------ ---------
Balance, Dec. 31, 1996 $4,773,698 ($ 59,021) $4,714,677
Net income 97,934 67,889 165,823
Cash distributions ( 1,663,000) ( 105,382) (1,768,382)
--------- ------ ---------
Balance, Dec. 31, 1997 $3,208,632 ($ 96,514) $3,112,118
========= ======= =========
The accompanying notes are an integral
part of these combined financial statements.
F-31
<PAGE>
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME
LIMITED PARTNERSHIP P-6
GEODYNE NPI PARTNERSHIP P-6
Combined Statements of Cash Flows
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ -----------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ 165,823 $1,081,310 ($ 870,954)
Adjustments to reconcile
net income (loss)
to net cash provided by
operating activities:
Depletion of Net
Profits Interests 610,647 788,251 1,520,338
Impairment provision 898,584 - 478,168
Gain on sale of
Net Profits Interests ( 37,698) ( 24,815) (6,045)
(Increase) decrease in
accounts receivable 136,720 ( 196,497) (177,962)
--------- ---------- ---------
Net cash provided by
operating activities $1,774,076 $1,648,249 $ 943,545
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ($ 6,041) ($ 73,296) ($ 50,621)
Proceeds from sale of
Net Profits Interests 43,605 27,231 10,790
--------- --------- ---------
Net cash provided (used)
by investing activities $ 37,564 ($ 46,065) ($ 39,831)
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($1,768,382) ($1,536,665) ($ 862,500)
--------- --------- ---------
Net cash used by financing
activities ($1,768,382) ($1,536,665) ($ 862,500)
--------- --------- ---------
F-32
<PAGE>
NET INCREASE IN CASH
AND CASH EQUIVALENTS $ 43,258 $ 65,519 $ 41,214
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 319,699 254,180 212,966
--------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 362,957 $ 319,699 $ 254,180
========= ========= =========
The accompanying notes are an integral
part of these combined financial statements.
F-33
<PAGE>
GEODYNE INSTITUTIONAL/PENSION PROGRAM
Notes to the Combined Financial Statements For the Periods
Ended December 31, 1997, 1996, and 1995
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations
The Geodyne Institutional/Pension Energy Income Limited Partnerships (the
"Partnerships") were formed pursuant to a public offering of depositary units
("Units"). Upon formation, investors became limited partners (the "Limited
Partners") and held Units issued by each Partnership. Geodyne Resources, Inc.
("Geodyne") is the general partner of each of the Partnerships. Each Partnership
is a general partner in the related Geodyne NPI Partnership (the "NPI
Partnerships") in which Geodyne serves as the managing partner. Limited
Partners' capital contributions were contributed to the related NPI Partnerships
for investment in net profits interests, royalty interests, and other
nonoperating interests in producing oil and gas properties. Most of the net
profits interests acquired by the Partnerships have been carved out of working
interests in producing properties, located in the continental United States,
which were acquired by affiliated oil and gas investment programs (the
"Affiliated Programs").
Net profits interests entitle the Partnerships to a share of net revenues
from producing properties measured by a specific percentage of the net profits
realized by such Affiliated Programs as owners of the working interests in the
producing properties. Except where otherwise noted, references to certain
operational activities of the Partnerships are actually the activities of the
Affiliated Programs. As the holder of a net profits interest, a Partnership is
not liable to pay any amount by which oil and gas operating costs and expenses
exceed revenues for any period, although any deficit, together with interest, is
applied to reduce the amounts payable to the Partnership in subsequent periods.
As used in these financial statements, the Partnerships' net profits and royalty
interests in oil and gas sales are referred to as "Net Profits" and the
Partnerships' net profits and royalty interests in oil and gas properties are
referred to as "Net Profits Interests." The Partnerships do not directly bear
capital costs. However, the Partnerships indirectly bear certain capital costs
incurred by the Affiliated Programs to the extent such capital costs are charged
against the applicable oil and gas revenues in calculating the net profits
payable to the Partnerships. For financial reporting purposes only, such capital
costs are reported as capital expenditures in the Partnerships' Statements of
Cash Flows.
F-34
<PAGE>
The Partnerships were activated on the following dates with the following
Limited Partner capital contributions:
Limited Partner
Date of Capital
Partnership Activation Contributions
----------- ----------------- ---------------
P-1 October 25, 1988 $10,807,400
P-2 February 9, 1989 9,009,400
P-3 May 10, 1989 16,963,700
P-4 November 21, 1989 12,630,600
P-5 February 27, 1990 11,844,900
P-6 September 5, 1990 14,304,100
For purposes of these financial statements, the Partnerships and NPI
Partnerships are collectively referred to as the "Partnerships" and the general
partner and managing partner are collectively referred to as the "General
Partner". An affiliate of the General Partner owned the following Units at
December 31, 1997:
Percent of
Number of Outstanding
Partnership Units Owned Units
----------- ----------- -----------
P-1 13,134 12.2%
P-2 7,110 7.9%
P-3 39,924 23.5%
P-4 9,738 7.7%
P-5 14,777 12.5%
P-6 10,843 7.6%
The Partnerships' sole business is owning Net Profits Interests.
Substantially all of the gas reserves attributable to the Partnerships' Net
Profits Interests are being sold regionally on the "spot market." Due to the
highly competitive nature of the spot market, prices on the spot market are
subject to wide seasonal and regional pricing fluctuations. In addition, such
spot market sales are generally short term in nature and are dependent upon the
obtaining of transportation services provided by pipelines.
Allocation of Costs and Revenues
The combination of the allocation provisions in each Partnerships' limited
partnership agreement and NPI Partnerships' partnership agreement (collectively,
the "Partnership Agreement") results in allocations of costs and income between
the Limited Partners and General Partner as follows:
F-35
<PAGE>
Before Payout(1) After Payout(1)
-------------------- --------------------
General Limited General Limited
Partner Partners Partner Partners
------- -------- ------- --------
Costs(2)
- -------------------------
Sales commissions, payment
for organization and
offering costs and
acquisition fee 1% 99% - -
Property Acquisition
Costs 1% 99% 1% 99%
General and administrative
costs and direct
administrative costs(3) 5% 95% 15% 85%
Income(2)
- -------------------------
Temporary investments of
Limited Partners'
Subscriptions 1% 99% 1% 99%
Income from oil and
gas production(3) 5% 95% 15% 85%
Gain on sale of
Net Profits Interests(3) 5% 95% 15% 85%
All other income(3) 5% 95% 15% 85%
- ----------
(1) Payout occurs when total distributions to Limited Partners equal total
original Limited Partner subscriptions.
(2) The allocations in the table result generally from the combined effect of
the allocation provisions in the Partnership Agreements. For example,
direct administrative costs of the NPI Partnership are allocated 95.9596%
to the Partnership and 4.0404% to the managing partner. The 95.9596%
portion of these costs allocated to the limited partnership, when passed
through the limited partnership, is further allocated 99% to the Limited
Partners and 1% to the general partner. In this manner the Limited
Partners are allocated 95% of such costs and the General Partner is
allocated 5% of such costs.
F-36
<PAGE>
(3) If, at payout, the total distributions received by the Limited Partners
from the commencement of the property investment period have averaged on
an annualized basis an amount that is less than 12% of the Limited
Partners' subscriptions, the percentage of income, and costs which are
shared in the same proportions as income, allocated to the General Partner
will increase to only 10% and the Limited Partners will be allocated 90%
thereof until such time, if ever, that the distributions to the Limited
Partners from the commencement of the property investment period reaches a
yearly average equal to at least 12% of the Limited Partners'
subscriptions. Thereafter, income, and costs shared in the same
proportions as income, will be allocated 15% to the General Partner and
85% to the Limited Partners.
Basis of Presentation
These financial statements reflect the combined accounts of each
Partnership after the elimination of all inter-partnership transactions and
balances.
Cash and Cash Equivalents
The Partnerships consider all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. Cash equivalents are
not insured, which cause the Partnerships to be subject to risk.
Credit Risk
Accrued oil and gas sales, which are included in the Partnerships'
Accounts Receivable - Net Profits, are due from a variety of oil and gas
purchasers and, therefore, indirectly subject the Partnerships to a
concentration of credit risk. Some of these purchasers are discussed in Note 4 -
Major Customers.
Receivable from General Partner
The receivable from the General Partner at December 31, 1996 for the P-2
and P-3 Partnerships represents proceeds due to the Partnerships for the sale of
Net Profits Interests. Such receivable was collected by the P-2 and P-3
Partnerships in the first quarter of 1997.
F-37
<PAGE>
Net Profits Interests
The Partnerships follow the successful efforts method of accounting for
their Net Profits Interests. Under the successful efforts method, the
Partnerships capitalize all acquisition costs. Such acquisition costs include
costs incurred by the Partnerships or the General Partner to acquire a Net
Profits Interest, 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 net acquisition cost to the Partnerships of the
Net Profits Interests in properties acquired by the General Partner consists of
the cost of acquiring the underlying properties, adjusted for the net cash
results of operations, including interest incurred to finance the net
acquisition, for the period of time the properties are held by the General
Partner. Impairment of Net Profits Interests in unproved oil and gas properties
is recognized based upon an individual property assessment. Upon discovery of
commercial reserves, Net Profits Interests in unproved properties are
transferred to producing properties.
Depletion of the cost of Net Profits Interests is computed on the
units-of-production method. The Partnerships' calculation of depletion of its
Net Profits Interests includes estimated dismantlement and abandonment costs,
net of estimated salvage values. The depletion rate per equivalent barrel of oil
produced during the years ended December 31, 1997, 1996, and 1995 were as
follows:
Partnership 1997 1996 1995
----------- ---- ---- ----
P-1 2.88 2.90 5.52
P-2 2.84 3.09 5.93
P-3 2.83 3.11 5.97
P-4 3.46 4.22 5.62
P-5 2.65 3.20 5.55
P-6 3.34 3.66 6.10
The Partnerships follow the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long
Lived Assets and Assets Held for Disposal," which is intended to establish more
consistent accounting standards for measuring the recoverability of long-lived
assets. SFAS No. 121 requires successful efforts companies, like the
Partnerships, to evaluate the recoverability of the carrying costs of their Net
Profits Interests in 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 assets. With respect to the Partnerships' Net Profits
Interests, this evaluation was performed for each field. SFAS No. 121 provides
that if the unamortized costs of a Net Profits Interest exceeds the expected
F-38
<PAGE>
undiscounted future cash flows from such Net Profits Interest, the cost of the
Net Profits Interest is written down to fair value, which is determined by using
the discounted future cash flows from the Net Profits Interest. During 1995,
1996, and 1997, the Partnerships recorded the following non-cash charges against
earnings (impairment provisions) pursuant to SFAS No. 121:
Partnership 1997 1996 1995
----------- ---- ---- ----
P-1 $ 113,945 $ - $ 86,264
P-2 113,005 - 182,970
P-3 220,449 - 377,983
P-4 84,059 - 581,036
P-5 122,458 - 194,933
P-6 444,990 - 478,168
In addition, during 1997 the General Partner determined that the
Partnerships' Net Profits Interests in unproved properties would be uneconomic
to develop and, therefore, of little or no value. This determination was based
on an evaluation by the General Partner that it is unlikely that these unproved
properties will be developed due to the low oil and gas prices received over the
last several years and limitations on the level of permissible indirect drilling
activity through its Affiliated Programs. As a result of this determination, the
Partnerships recorded the following non-cash charges against earnings at March
31, 1997 in order to reflect the writing-off of the Partnerships' Net Profits
Interests in unproved properties:
Partnership Amount
----------- -----------
P-1 $ 788,097
P-2 614,888
P-3 1,193,468
P-4 668,329
P-5 895,610
P-6 453,594
Revenues from a Net Profits Interest consist of a share of the oil and gas
sales of the property, less operating and production expenses.
Accounts Receivable (Accounts Payable) - Net Profits
The Partnerships accrue for oil and gas revenues less expenses from its
Net Profits Interests. Sales of gas applicable to the Partnerships' Net Profits
Interests in producing oil and gas leases are recorded as revenue when the gas
is metered and title transferred pursuant to the gas sales contracts. During
such times as sales of gas exceed a Partnership's pro rata Net Profits Interest
F-39
<PAGE>
in a well, such sales are recorded as revenue unless total sales from the well
have exceeded the Partnership's share of estimated total gas reserves
attributable to the underlying property, at which time such excess is recorded
as a liability. The rates per Mcf used to calculate the liability are based on
the average gas price received for the volumes at the time the overproduction
occurred. This also reflects the price for which the Partnerships are currently
settling this liability. This liability is recorded as a reduction of accounts
receivable. At December 31, 1997 and 1996 total sales exceeded the Partnerships'
Net Profits Interests in estimated total gas reserves as follows:
1997 1996
---------------------- ----------------------
Partnership Mcf Amount Mcf Amount
----------- -------- ---------- -------- ----------
P-1 ( 9,119) ($13,679) (11,242) ($16,863)
P-2 ( 8,717) ( 13,076) (10,944) ( 16,416)
P-3 (16,342) ( 24,513) (20,540) ( 30,810)
P-4 (15,352) ( 23,028) (26,973) ( 40,460)
P-5 (15,537) ( 23,306) (12,159) ( 18,239)
P-6 ( 3,938) ( 5,907) ( 3,483) ( 5,225)
Also included in accounts receivable from (accounts payable to) Net
Profits are amounts which represent costs deferred or accrued for Net Profits
relating to lease operating expenses incurred in connection with the net
underproduced or overproduced gas imbalance positions. The rate used in
calculating the deferred charge or accrued liability is the average of the
annual production costs per Mcf. At December 31, 1997 and 1996, cumulative total
gas sales volumes were less than (more than) the Partnerships' Net Profits
Interests in gas production by the following amounts:
1997 1996
---------------------- -----------------------
Partnership Mcf Amount Mcf Amount
----------- --------- --------- --------- -----------
P-1 23,239 $13,632 41,624 $23,626
P-2 24,087 14,226 40,121 23,254
P-3 49,119 29,113 77,659 44,934
P-4 192,349 81,710 204,628 98,630
P-5 ( 66,455) ( 26,110) ( 71,197) ( 25,190)
P-6 (124,204) ( 73,740) (107,990) ( 55,259)
General and Administrative Overhead
The General Partner and its affiliates are reimbursed for actual general
and administrative costs incurred and attributable to the conduct of the
business affairs and operations of the Partnerships.
F-40
<PAGE>
Use of Estimates in Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Further,
accounts receivable (payable) - Net Profits includes accrued liabilities,
accrued lease operating expenses, and deferred lease operating expenses related
to gas balancing which involve estimates that could materially differ from the
actual amounts ultimately realized or incurred in the near term. Oil and gas
reserves (see Note 4) also involve significant estimates which could materially
differ from the actual amounts ultimately realized.
Income Taxes
Income or loss for income tax purposes is includable in the income tax
returns of the partners. Accordingly, no recognition has been given to income
taxes in these financial statements.
2. TRANSACTIONS WITH RELATED PARTIES
The Partnerships reimburse the General Partner for the general and
administrative overhead applicable to the Partnerships, based on an allocation
of actual costs incurred by the General Partner. When costs incurred benefit
other Partnerships and affiliates, the allocation of costs is based on the
relationship of the Partnerships' reserves to the total reserves in all
Partnerships and affiliates. The General Partner believes this allocation method
is reasonable. Although the actual costs incurred by the General Partner and its
affiliates have fluctuated during the three years presented, the amounts charged
to the Partnerships have not fluctuated due to expense limitations imposed by
the Partnership Agreement. The following is a summary of payments made to the
General Partner or its affiliates by the Partnerships for general and
administrative overhead costs for the years ended December 31, 1997, 1996, and
1995:
Partnership 1997 1996 1995
----------- -------- -------- --------
P-1 $113,760 $113,760 $113,760
P-2 94,836 94,836 94,836
P-3 178,560 178,560 178,560
P-4 132,960 132,960 132,960
P-5 124,680 124,680 124,680
P-6 150,564 150,564 150,564
F-41
<PAGE>
Affiliates of the Partnerships operate certain of the properties in which
the Partnerships own a Net Profits Interest and their policy is to bill the
owners of the working interests of such properties for all customary charges and
cost reimbursements associated with these activities, together with any
compressor rentals, consulting, or other services provided. Such charges are
comparable to third party charges in the area where the wells are located and
are the same as charged to other working interest owners in the wells.
During 1995, gas production from some of the properties in which the
Partnerships owned a Net Profits Interest was sold to El Paso Energy Marketing
Company, formerly known as Premier Gas Company ("El Paso"). El Paso, like other
similar gas marketing firms, then resold such gas to third parties at market
prices. El Paso was an affiliate of the Partnerships until December 6, 1995.
3. MAJOR CUSTOMERS
The following table sets forth purchasers who individually accounted for
ten percent or more of combined oil and gas sales attributable to the
Partnerships' Net Profits Interest during the years ended December 31, 1997,
1996, and 1995:
Percentage
-----------------------
Partnership Purchaser 1997 1996 1995
- ----------- ------------------------ ----- ----- -----
P-1 El Paso 25.19% 23.0% 18.4%
Chevron U.S.A., Inc. 10.82% 10.1% - %
Texaco Exploration and
Production, Inc.
("Texaco") - 10.4% 13.0%
P-2 El Paso 24.39% 22.4% 17.7%
Texaco 11.11% 12.6% 13.7%
P-3 El Paso 24.23% 22.3% 17.7%
Texaco 11.18% 12.7% 13.6%
P-4 El Paso 49.10% 60.2% 49.9%
Valero Industrial
Gas LP 13.56% - % - %
Phibro Energy, Inc. 10.70% - % - %
Mesa Pipeline Co. - 18.2% 18.6%
P-5 El Paso 64.98% 62.0% 55.6%
Apache Corporation - - % 12.4%
P-6 El Paso 28.16% 27.0% 42.5%
HPL Resources Company 19.85% 19.1% - %
Tejas Gas Marketing
Company 14.13% 13.7% - %
F-42
<PAGE>
In the event of interruption of purchases by one or more of these
significant customers or the cessation or material change in availability of
open access transportation by pipeline transporters, the Partnerships may
encounter difficulty in marketing their gas and in maintaining historic sales
levels. Alternative purchasers or transporters may not be readily available.
4. SUPPLEMENTAL OIL AND GAS INFORMATION
The following supplemental information regarding the Net Profits Interest
activities of the Partnerships is presented pursuant to the disclosure
requirements promulgated by the SEC.
Capitalized Costs
Capitalized costs and accumulated depletion at December 31, 1997 and
1996 were as follows:
P-1 Partnership
---------------
1997 1996
------------ ------------
Net Profits Interests in proved
oil and gas properties $7,407,587 $7,343,643
Net Profits Interests in unproved
oil and gas properties not
subject to depletion - 788,097
--------- ---------
$7,407,587 $8,131,740
Less accumulated depletion
and valuation allowance ( 5,999,167) ( 5,451,735)
--------- ---------
Net Profits Interests, net $1,408,420 $2,680,005
========= =========
F-43
<PAGE>
P-2 Partnership
---------------
1997 1996
--------- ---------
Net Profits Interests in proved
oil and gas properties $5,927,378 $6,049,274
Net Profits Interests in unproved
oil and gas properties not
subject to depletion - 614,888
--------- ---------
5,927,378 $6,664,162
Less accumulated depletion
and valuation allowance ( 4,745,148) ( 4,462,782)
--------- ---------
Net Profits Interests, net $1,182,230 $2,201,380
========= =========
P-3 Partnership
---------------
1997 1996
------------- -------------
Net Profits Interests in proved
oil and gas properties $11,134,440 $11,377,680
Net Profits Interests in unproved
oil and gas properties not
subject to depletion - 1,193,468
---------- ----------
$11,134,440 $12,571,148
Less accumulated depletion
and valuation allowance ( 8,937,996) ( 8,414,617)
---------- ----------
Net Profits Interests, net $2,196,444 $ 4,156,531
========== ==========
F-44
<PAGE>
P-4 Partnership
---------------
1997 1996
----------- -----------
Net Profits Interests in proved
oil and gas properties $8,245,177 $ 8,753,695
Net Profits Interests in unproved
oil and gas properties not
subject to depletion - 735,371
--------- ----------
$8,245,177 $ 9,489,066
Less accumulated depletion
and valuation allowance ( 6,962,848) ( 6,921,405)
--------- ----------
Net Profits Interests, net $1,282,329 $ 2,567,661
========= ==========
P-5 Partnership
---------------
1997 1996
---------- -----------
Net Profits Interests in proved
oil and gas properties $10,112,131 $ 9,461,206
Net Profits Interests in unproved
oil and gas properties not
subject to depletion - 897,564
---------- ----------
$10,112,131 $10,358,770
Less accumulated depletion
and valuation allowance ( 8,854,342) ( 7,822,180)
---------- ----------
Net Profits Interest, net $ 1,257,789 $ 2,536,590
========== ==========
F-45
<PAGE>
P-6 Partnership
---------------
1997 1996
------------- -------------
Net Profits Interests in proved
oil and gas properties $12,112,498 $12,204,492
Net Profits Interests in unproved
oil and gas properties not
subject to depletion - 454,263
---------- ----------
$12,112,498 $12,658,755
Less accumulated depletion
and valuation allowance ( 9,654,689) ( 8,691,849)
---------- ----------
Net Profits Interests, net $ 2,457,809 $ 3,966,906
========== ==========
Costs Incurred
The following tables set forth the portion of the acquisition and/or
development of acreage costs related to the working interests which are burdened
by the Partnerships' Net Profits Interests during the years ended December 31,
1997, 1996, and 1995. Since these acquisition and development costs were charged
against the Net Profits payable to the Partnerships, such costs were indirectly
borne by the Partnerships. No exploration costs were incurred during the same
periods.
P-1 Partnership
---------------
1997 1996 1995
------- ------- -------
Acquisition of Net Profits Interests $ - $ - $ -
Development costs of Net Profits
Interests 21,339 12,540 4,566
------- ------- -------
$21,339 $12,540 $ 4,566
======= ======= =======
F-46
<PAGE>
P-2 Partnership
---------------
1997 1996 1995
------- ------- -------
Acquisition of Net Profits Interests $ - $ - $ -
Development costs of Net Profits
Interests 34,745 6,613 9,877
------- ------- -------
$34,745 $ 6,613 $ 9,877
======= ======= =======
P-3 Partnership
---------------
1997 1996 1995
------ ------- -------
Acquisition of Net Profits Interests $ - $ - $ -
Development costs of Net Profits
Interests 66,502 12,220 19,116
------ ------- -------
$66,502 $12,220 $19,116
====== ======= =======
P-4 Partnership
---------------
1997 1996 1995
------- ------- -------
Acquisition of Net Profits Interests $16,495 $ - $ -
Development costs of Net Profits
Interests 18,533 804 19,172
------- ------- -------
$35,028 $ 804 $19,172
======= ======= =======
F-47
<PAGE>
P-5 Partnership
---------------
1997 1996 1995
------- ------- -------
Acquisition of Net Profits Interests $ - $ - $ -
Development costs of Net Profits
Interests 980 2,807 29,603
------- ------- -------
$ 980 $ 2,807 $29,603
======= ======= =======
P-6 Partnership
---------------
1997 1996 1995
----- ------- -------
Acquisition of Net Profits Interests $ - $ - $ -
Development costs of Net Profits
Interests 6,041 73,296 50,621
----- ------- -------
$ 6,041 $73,296 $50,621
===== ======= =======
Quantities of Proved Oil and Gas Reserves - Unaudited
The following tables summarize changes in net quantities of proved
reserves attributable to the Partnerships' Net Profits Interests, all of which
are located in the United States, for the periods indicated. The proved reserves
were estimated by petroleum engineers employed by affiliates of the
Partnerships. Certain reserve information was reviewed by Ryder Scott Company
Petroleum Engineers, an independent petroleum engineering firm. The following
information includes certain gas balancing adjustments which cause the gas
volumes to differ from the reserve reports prepared by the General Partner and
reviewed by Ryder Scott.
F-48
<PAGE>
P-1 Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, December 31, 1994 248,024 2,656,373
Production ( 39,075) ( 524,079)
Sales of minerals in place ( 3,823) ( 27,794)
Extensions and discoveries - 79,261
Revisions of previous estimates 45,514 512,461
------- ---------
Proved reserves, December 31, 1995 250,640 2,696,222
Production ( 33,798) ( 468,446)
Sales of minerals in place ( 5,578) ( 78,601)
Extensions and discoveries 2,158 29,265
Revisions of previous estimates 37,840 522,920
------- ---------
Proved reserves, December 31, 1996 251,262 2,701,360
Production ( 32,044) ( 357,516)
Sales of minerals in place ( 22,747) ( 234,580)
Extensions and discoveries 2,126 55,362
Revisions of previous estimates 18,069 118,867
------- ---------
Proved reserves, December 31, 1997 216,666 2,283,493
======= =========
PROVED DEVELOPED RESERVES:
December 31, 1995 250,640 2,696,222
======= =========
December 31, 1996 249,094 2,674,248
======= =========
December 31, 1997 214,498 2,256,381
======= =========
F-49
<PAGE>
P-2 Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, December 31, 1994 179,870 2,474,566
Production ( 28,040) ( 443,985)
Sales of minerals in place ( 2,746) ( 26,060)
Extensions and discoveries - 54,118
Revisions of previous estimates 31,208 431,237
------- ---------
Proved reserves, December 31, 1995 180,292 2,489,876
Production ( 24,049) ( 390,047)
Sales of minerals in place ( 3,888) ( 79,207)
Extensions and discoveries 1,469 19,983
Revisions of previous estimates 31,869 407,527
------- ---------
Proved reserves, December 31, 1996 185,693 2,448,132
Production ( 22,873) ( 301,132)
Sales of minerals in place ( 16,062) ( 231,921)
Extensions and discoveries 1,549 37,807
Revisions of previous estimates 12,015 89,714
------- ---------
Proved reserves, December 31, 1997 160,322 2,042,600
======= =========
PROVED DEVELOPED RESERVES:
December 31, 1995 180,292 2,489,876
======= =========
December 31, 1996 183,318 2,418,444
======= =========
December 31, 1997 157,947 2,012,912
======= =========
F-50
<PAGE>
P-3 Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, December 31, 1994 333,255 4,702,187
Production ( 51,963) ( 840,970)
Sales of minerals in place ( 5,045) ( 49,808)
Extensions and discoveries - 99,853
Revisions of previous estimates 57,775 797,901
------- ---------
Proved reserves, December 31, 1995 334,022 4,709,163
Production ( 44,496) ( 737,600)
Sales of minerals in place ( 7,247) ( 152,220)
Extensions and discoveries 2,720 36,867
Revisions of previous estimates 59,454 765,991
------- ---------
Proved reserves, December 31, 1996 344,453 4,622,201
Production ( 42,259) ( 565,052)
Sales of minerals in place ( 30,066) ( 457,133)
Extensions and discoveries 2,854 69,751
Revisions of previous estimates 22,274 169,087
------- =========
Proved reserves, December 31, 1997 297,256 3,838,854
======= =========
PROVED DEVELOPED RESERVES:
December 31, 1995 334,022 4,709,163
======= =========
December 31, 1996 339,979 4,566,276
======= =========
December 31, 1997 292,782 3,782,929
======= =========
F-51
<PAGE>
P-4 Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, December 31, 1994 94,634 3,805,226
Production ( 28,847) ( 885,642)
Sales of minerals in place ( 74) ( 23,687)
Revisions of previous estimates 18,681 576,462
------- ---------
Proves reserves, December 31, 1995 84,394 3,472,359
Production ( 22,949) ( 630,841)
Sales of minerals in place ( 661) ( 198,487)
Revisions of previous estimates 15,013 480,088
------- ---------
Proved reserves, December 31, 1996 75,797 3,123,119
Production ( 19,686) ( 513,815)
Sales of minerals in place ( 2,175) ( 315,220)
Revisions of previous estimates 1,898 365,764
------- ---------
Proved reserves, December 31, 1997 55,834 2,659,848
======= =========
PROVED DEVELOPED RESERVES:
December 31, 1995 84,394 3,472,359
======= =========
December 31, 1996 69,266 3,022,629
======= =========
December 31, 1997 49,163 2,549,052
======= =========
F-52
<PAGE>
P-5 Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, December 31, 1994 35,676 3,752,615
Production (10,842) ( 784,863)
Sales of minerals in place ( 107) ( 601)
Extensions and discoveries 12,096 143,318
Revisions of previous estimates ( 725) 120,437
------ ---------
Proved reserves, December 31, 1995 36,098 3,230,906
Production (10,757) ( 627,998)
Sales of minerals in place ( 664) ( 23,621)
Extensions and discoveries 8,865 45,915
Revisions of previous estimates 17,989 636,220
------ ---------
Proved reserves, December 31, 1996 51,531 3,261,422
Production ( 7,972) ( 516,756)
Sales of minerals in place ( 3,066) ( 61,493)
Revisions of previous estimates 10,735 346,293
------ ---------
Proved reserves, December 31, 1997 51,228 3,029,466
====== =========
PROVED DEVELOPED RESERVES:
December 31, 1995 36,017 3,180,500
====== =========
December 31, 1996 51,388 3,232,004
====== =========
December 31, 1997 51,175 3,024,146
====== =========
F-53
<PAGE>
P-6 Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- ------------
Proved reserves, December 31, 1994 157,152 7,474,320
Production ( 19,149) (1,380,123)
Sales of minerals in place ( 336) ( 8,470)
Extensions and discoveries 4,273 34,927
Revisions of previous estimates 7,331 ( 175,080)
------- ---------
Proved reserves, December 31, 1995 149,271 5,945,574
Production ( 21,377) (1,162,652)
Sales of minerals in place ( 20,978) ( 54,473)
Extensions and discoveries 3,053 59,267
Revisions of previous estimates 30,411 695,404
------- ---------
Proved reserves, December 31, 1996 140,380 5,483,120
Production ( 18,461) ( 984,971)
Sales of minerals in place ( 2,459) ( 75,335)
Extensions and discoveries 189 235
Revisions of previous estimates 4,088 540,454
------- ---------
Proved reserves, December 31, 1997 123,737 4,963,503
======= =========
PROVED DEVELOPED RESERVES:
December 31, 1995 149,244 5,927,504
======= =========
December 31, 1996 140,330 5,473,020
======= =========
December 31, 1997 123,718 4,961,677
======= =========
F-54
<PAGE>
Standardized Measure of Discounted Future Net Cash Flows of Proved Oil
and Gas Reserves - Unaudited
The following tables set forth the estimated future net cash flows as of
December 31, 1997 relating to the Partnerships' proved reserves attributable to
the Partnerships' Net Profits Interests based on the standardized measure as
prescribed in SFAS No. 69:
Partnership
-----------------------------------------------
P-1 P-2 P-3
------------ ------------ ------------
Future cash inflows $8,972,099 $7,533,880 $14,097,270
Future production and
development costs ( 1,968,812) ( 1,798,697) ( 3,385,457)
--------- --------- ----------
Future net cash flows $7,003,287 $5,735,183 $10,711,813
10% discount to
reflect timing
of cash flows ( 2,780,415) ( 2,305,010) ( 4,307,468)
--------- --------- ----------
Standardized measure
of discounted future
net cash flows $4,222,872 $3,430,173 $ 6,404,345
========= ========= ==========
Partnership
------------------------------------------------
P-4 P-5 P-6
------------ ------------ -------------
Future cash inflows $7,472,138 $7,490,427 $13,327,295
Future production and
development costs ( 1,943,911) ( 2,226,360) ( 4,846,552)
--------- --------- ----------
Future net cash flows $5,528,227 $5,264,067 $ 8,480,743
10% discount to
reflect timing
of cash flows ( 1,719,595) ( 1,888,390) ( 2,822,001)
--------- --------- ----------
Standardized measure
of discounted future
net cash flows $3,808,632 $3,375,677 $ 5,658,742
========= ========= ==========
The process of estimating oil and gas reserves is complex, requiring significant
subjective decisions in the evaluation of available geological, engineering, and
economic data for each reservoir. The data for a given reservoir may change
substantially over time as a result of, among other things, additional
development activity, production history, and viability of production under
varying economic conditions; consequently, it is reasonably possible that
material revisions to existing reserve estimates may occur in the near future.
F-55
<PAGE>
Although every reasonable effort has been made to ensure that the reserve
estimates reported herein represent the most accurate assessment possible, the
significance of the subjective decisions required and variances in available
data for various reservoirs make these estimates generally less precise than
other estimates presented in connection with financial statement disclosures.
The Partnerships' reserves were determined at December 31, 1997 using oil and
gas prices of approximately $16.25 per barrel and $2.32 per Mcf, respectively.
F-56
<PAGE>
INDEX TO EXHIBITS
-----------------
Number Description
- ------ -----------
4.1 The Certificate and Agreements of Limited Partnership for the
following Partnerships have been previously filed with the SEC as
Exhibit 2.1 to Form 8-A filed by each Partnership on the dates shown
below and are hereby incorporated by reference.
Partnership Filing Date File No.
----------- ----------------- --------
P-1 June 5, 1989 0-17800
P-2 June 5, 1989 0-17800
P-3 February 20, 1990 0-18306
P-4 February 20, 1990 0-18306
P-5 November 13, 1990 0-18637
P-6 November 30, 1990 0-18937
4.2 The Agreements of Partnership for the following NPI Partnerships
have been previously filed with the SEC as Exhibit 2.2 to Form 8A
filed by the related Partnerships on the dates shown below and are
hereby incorporated by reference.
Form 8-A
Partnership Filing Date
----------- -----------------
P-1 June 5, 1989
P-2 June 5, 1989
P-3 February 20, 1990
P-4 February 20, 1990
P-5 June 11, 1990
P-6 December 10, 1990
4.3 Advisory Agreement dated as of November 24, 1992 between Samson,
PaineWebber, Geodyne Resources, Geodyne Properties, Inc., Geodyne
Production Company, and Geodyne Energy Company filed as Exhibit 28.3
to Registrants' Current Report on Form 8-K filed with the SEC on
December 24, 1992 and is hereby incorporated by reference.
F-57
<PAGE>
4.4 Second Amendment to Agreement of Limited Partnership of Geodyne
Institutional/Pension Energy Income P-1 Limited Partnership, filed
as Exhibit 4.1 to Registrants' Current Report on Form 8-K dated
August 2, 1993 filed with the SEC on August 10, 1993 and is hereby
incorporated by reference.
4.5 Second Amendment to Agreement of Limited Partnership of Geodyne
Institutional/Pension Energy Income P-2 Limited Partnership, filed
as Exhibit 4.2 to Registrants' Current Report on Form 8-K dated
August 2, 1993 filed with the SEC on August 10, 1993 and is hereby
incorporated by reference.
4.6 Second Amendment to Agreement of Limited Partnership of Geodyne
Institutional/Pension Energy Income Limited Partnership P-3, filed
as Exhibit 4.3 to Registrants' Current Report on Form 8-K dated
August 2, 1993 filed with the SEC on August 10, 1993 and is hereby
incorporated by reference.
4.7 Second Amendment to Agreement of Limited Partnership of Geodyne
Institutional/Pension Energy Income Limited Partnership P-4, filed
as Exhibit 4.4 to Registrants' Current Report on Form 8-K dated
August 2, 1993 filed with the SEC on August 10, 1993 and is hereby
incorporated by reference.
4.8 Second Amendment to Agreement of Limited Partnership of Geodyne
Institutional/Pension Energy Income Limited Partnership P-5, filed
as Exhibit 4.5 to Registrants' Current Report on Form 8-K dated
August 2, 1993 filed with the SEC on August 10, 1993 and is hereby
incorporated by reference.
4.9 Second Amendment to Agreement of Limited Partnership of Geodyne
Institutional/Pension Energy Income Limited Partnership P-6, filed
as Exhibit 4.6 to Registrants' Current Report on Form 8-K dated
August 2, 1993 filed with the SEC on August 10, 1993 and is hereby
incorporated by reference.
4.10 Third Amendment to Agreement of Limited Partnership of Geodyne
Institutional/Pension Energy Income P-1 Limited Partnership, filed
as Exhibit 4.10 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 filed with the SEC on April 1, 1996 and
is hereby incorporated by reference.
F-58
<PAGE>
4.11 Third Amendment to Agreement of Limited Partnership of Geodyne
Institutional/Pension Energy Income P-2 Limited Partnership, filed
as Exhibit 4.11 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 filed with the SEC on April 1, 1996 and
is hereby incorporated by reference.
4.12 Third Amendment to Agreement of Limited Partnership of Geodyne
Institutional/Pension Energy Income Limited Partnership P-3, filed
as Exhibit 4.12 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 filed with the SEC on April 1, 1996 and
is hereby incorporated by reference.
4.13 Third Amendment to Agreement of Limited Partnership of Geodyne
Institutional/Pension Energy Income Limited Partnership P-4, filed
as Exhibit 4.13 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 filed with the SEC on April 1, 1996 and
is hereby incorporated by reference.
4.14 Third Amendment to Agreement of Limited Partnership of Geodyne
Institutional/Pension Energy Income Limited Partnership P-5, filed
as Exhibit 4.14 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 filed with the SEC on April 1, 1996 and
is hereby incorporated by reference.
4.15 Third Amendment to Agreement of Limited Partnership of Geodyne
Institutional/Pension Energy Income Limited Partnership P-6, filed
as Exhibit 4.15 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 filed with the SEC on April 1, 1996 and
is hereby incorporated by reference.
*23.1 Consent of Ryder Scott Company, Petroleum Engineers for the
Geodyne Institutional/Pension Energy Income P-1 Limited
Partnership.
*23.2 Consent of Ryder Scott Company, Petroleum Engineers for the
Geodyne Institutional/Pension Energy Income P-2 Limited
Partnership.
*23.3 Consent of Ryder Scott Company, Petroleum Engineers for the
Geodyne Institutional/Pension Energy Income Limited Partnership
P-3.
*23.4 Consent of Ryder Scott Company, Petroleum Engineers for the
Geodyne Institutional/Pension Energy Income Limited Partner-ship
P-4.
*23.5 Consent of Ryder Scott Company, Petroleum Engineers for the
Geodyne Institutional/Pension Energy Income Limited Partnership
P-5.
F-59
<PAGE>
*23.6 Consent of Ryder Scott Company, Petroleum Engineers for the
Geodyne Institutional/Pension Energy Income Limited Partnership
P-6.
*27.1 Financial Data Schedule containing summary financial information
extracted from the Geodyne Institutional/Pension Energy Income P-1
Limited Partnership's financial statements as of December 31, 1997
and for the year ended December 31, 1997.
*27.2 Financial Data Schedule containing summary financial information
extracted from the Geodyne Institutional/Pension Energy Income P-2
Limited Partnership's financial statements as of December 31, 1997
and for the year ended December 31, 1997.
*27.3 Financial Data Schedule containing summary financial information
extracted from the Geodyne Institutional/Pension Energy Income
Limited Partnership P-3's financial statements as of December 31,
1997 and for the year ended December 31, 1997.
*27.4 Financial Data Schedule containing summary financial information
extracted from the Geodyne Institutional/Pension Energy Income
Limited Partnership P-4's financial statements as of December 31,
1997 and for the year ended December 31, 1997.
*27.5 Financial Data Schedule containing summary financial information
extracted from the Geodyne Institutional/Pension Energy Income
Limited Partnership P-5's financial statements as of December 31,
1997 and for the year ended December 31, 1997.
*27.6 Financial Data Schedule containing summary financial information
extracted from the Geodyne Institutional/Pension Energy Income
Limited Partnership P-6's financial statements as of December 31,
1997 and for the year ended December 31, 1997.
All other Exhibits are omitted as inapplicable.
----------
* Filed herewith.
F-60
RYDER SCOTT COMPANY Fax (713) 651-0849
PETROLEUM ENGINEERS
1100 Louisiana Suite 3800 Houston, Texas 77002-5218 Telephone (713) 651-9191
CONSENT OF PETROLEUM ENGINEERING FIRM
We consent to the reference to our name included in this Annual Report on
Form 10-K for the year ended December 31, 1997 for Geodyne Institutional/Pension
Energy Income P-1 Limited Partnership.
//s// Ryder Scott Company
Petroleum Engineers
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
Houston, Texas
January 13, 1998
RYDER SCOTT COMPANY Fax (713) 651-0849
PETROLEUM ENGINEERS
1100 Louisiana Suite 3800 Houston, Texas 77002-5218 Telephone (713) 651-9191
CONSENT OF PETROLEUM ENGINEERING FIRM
We consent to the reference to our name included in this Annual Report on
Form 10-K for the year ended December 31, 1997 for Geodyne Institutional/Pension
Energy Income P-2 Limited Partnership.
//s// Ryder Scott Company
Petroleum Engineers
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
Houston, Texas
January 13, 1998
RYDER SCOTT COMPANY Fax (713) 651-0849
PETROLEUM ENGINEERS
1100 Louisiana Suite 3800 Houston, Texas 77002-5218 Telephone (713) 651-9191
CONSENT OF PETROLEUM ENGINEERING FIRM
We consent to the reference to our name included in this Annual Report on
Form 10-K for the year ended December 31, 1997 for Geodyne Institutional/Pension
Energy Income Limited Partnership P-3.
//s// Ryder Scott Company
Petroleum Engineers
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
Houston, Texas
January 13, 1998
RYDER SCOTT COMPANY Fax (713) 651-0849
PETROLEUM ENGINEERS
1100 Louisiana Suite 3800 Houston, Texas 77002-5218 Telephone (713) 651-9191
CONSENT OF PETROLEUM ENGINEERING FIRM
We consent to the reference to our name included in this Annual Report on
Form 10-K for the year ended December 31, 1997 for Geodyne Institutional/Pension
Energy Income Limited Partnership P-4.
//s// Ryder Scott Company
Petroleum Engineers
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
Houston, Texas
January 13, 1998
RYDER SCOTT COMPANY Fax (713) 651-0849
PETROLEUM ENGINEERS
1100 Louisiana Suite 3800 Houston, Texas 77002-5218 Telephone (713) 651-9191
CONSENT OF PETROLEUM ENGINEERING FIRM
We consent to the reference to our name included in this Annual Report on
Form 10-K for the year ended December 31, 1997 for Geodyne Institutional/Pension
Energy Income Limited Partnership P-5.
//s// Ryder Scott Company
Petroleum Engineers
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
Houston, Texas
January 13, 1998
RYDER SCOTT COMPANY Fax (713) 651-0849
PETROLEUM ENGINEERS
1100 Louisiana Suite 3800 Houston, Texas 77002-5218 Telephone (713) 651-9191
CONSENT OF PETROLEUM ENGINEERING FIRM
We consent to the reference to our name included in this Annual Report on
Form 10-K for the year ended December 31, 1997 for Geodyne Institutional/Pension
Energy Income Limited Partnership P-6.
//s// Ryder Scott Company
Petroleum Engineers
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
Houston, Texas
January 13, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000850427
<NAME> GEODYNE INST/PENSION ENERGY INCOME P-1 LTD PSHP
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 503,622
<SECURITIES> 0
<RECEIVABLES> 164,644
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 668,266
<PP&E> 7,407,587
<DEPRECIATION> 5,999,167
<TOTAL-ASSETS> 2,076,686
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,076,686
<TOTAL-LIABILITY-AND-EQUITY> 2,076,686
<SALES> 1,064,105
<TOTAL-REVENUES> 1,455,630
<CGS> 0
<TOTAL-COSTS> 1,294,938
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 160,692
<INCOME-TAX> 0
<INCOME-CONTINUING> 160,692
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 160,692
<EPS-PRIMARY> 0.99
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000850428
<NAME> GEODYNE INST/PENSION ENERGY INCOME P-2 LTD PSHP
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 369,191
<SECURITIES> 0
<RECEIVABLES> 135,331
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 504,522
<PP&E> 5,927,378
<DEPRECIATION> 4,745,148
<TOTAL-ASSETS> 1,686,752
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,686,752
<TOTAL-LIABILITY-AND-EQUITY> 1,686,752
<SALES> 836,494
<TOTAL-REVENUES> 1,129,273
<CGS> 0
<TOTAL-COSTS> 1,042,816
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 86,457
<INCOME-TAX> 0
<INCOME-CONTINUING> 86,457
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 86,457
<EPS-PRIMARY> 0.50
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000854066
<NAME> GEODYNE INST/PENSION ENERGY INCOME LTD PSHP P-3
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 685,628
<SECURITIES> 0
<RECEIVABLES> 254,470
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 940,098
<PP&E> 11,134,440
<DEPRECIATION> 8,937,996
<TOTAL-ASSETS> 3,136,542
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,136,542
<TOTAL-LIABILITY-AND-EQUITY> 3,136,542
<SALES> 1,559,975
<TOTAL-REVENUES> 2,109,208
<CGS> 0
<TOTAL-COSTS> 2,002,162
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 107,046
<INCOME-TAX> 0
<INCOME-CONTINUING> 107,046
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 107,046
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000860744
<NAME> GEODYNE INST/PENSION ENERGY INCOME LTD PSHP P-4
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 243,903
<SECURITIES> 0
<RECEIVABLES> 301,060
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 544,963
<PP&E> 8,245,177
<DEPRECIATION> 6,962,848
<TOTAL-ASSETS> 1,827,292
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,827,292
<TOTAL-LIABILITY-AND-EQUITY> 1,827,292
<SALES> 1,290,780
<TOTAL-REVENUES> 1,366,854
<CGS> 0
<TOTAL-COSTS> 1,265,516
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 101,338
<INCOME-TAX> 0
<INCOME-CONTINUING> 101,338
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 101,338
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000863832
<NAME> GEODYNE INST/PENSION ENERGY INCOME LTD PSHP P-5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 228,750
<SECURITIES> 0
<RECEIVABLES> 134,968
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 363,718
<PP&E> 10,112,131
<DEPRECIATION> (8,854,342)
<TOTAL-ASSETS> 1,621,507
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,621,507
<TOTAL-LIABILITY-AND-EQUITY> 1,621,507
<SALES> 1,000,125
<TOTAL-REVENUES> 1,088,143
<CGS> 0
<TOTAL-COSTS> 1,409,030
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (320,887)
<INCOME-TAX> 0
<INCOME-CONTINUING> (320,887)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (320,887)
<EPS-PRIMARY> (3.00)
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000869801
<NAME> GEODYNE INST/PENSION ENERGY INCOME LTD PSHP P-6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 362,957
<SECURITIES> 0
<RECEIVABLES> 291,352
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 654,309
<PP&E> 12,112,498
<DEPRECIATION> (9,654,689)
<TOTAL-ASSETS> 3,112,118
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,112,118
<TOTAL-LIABILITY-AND-EQUITY> 3,112,118
<SALES> 1,793,685
<TOTAL-REVENUES> 1,846,808
<CGS> 0
<TOTAL-COSTS> 1,680,985
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 165,823
<INCOME-TAX> 0
<INCOME-CONTINUING> 165,823
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 165,823
<EPS-PRIMARY> 0.68
<EPS-DILUTED> 0
</TABLE>
