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, 1996
Commission File Number 033-43206
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transaction period from to
PDC 1992-C LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
West Virginia 55-0718529
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
103 East Main Street, Bridgeport, West Virginia 26330
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (304) 842-3597
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
General and Limited Partnership Interests
(Title of class)
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 and (2) has been subject to such
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 is not contained herein, and will 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. [ ]
<PAGE>
PART I
ITEM 1. BUSINESS.
General
PDC 1992-C Limited Partnership ("the Partnership") is a limited
partnership formed on November 6, 1992 pursuant to the West Virginia Uniform
Limited Partnership Act. Petroleum Development Corporation ("PDC") serves
as Managing General Partner of the Partnership.
Since the commencement of operations on November 6, 1992, the
Partnership has been engaged in onshore, domestic gas exploration
exclusively in West Virginia. A total of 12 limited partners contributed
initial capital of $235,000; a total of 519 additional general partners
contributed initial capital of $6,153,897; and PDC (Managing General
Partner) contributed $603,396 in capital as a participant in accordance with
contribution provisions of the Limited Partnership Agreement (the
Agreement).
Under the terms of the Agreement, the allocation of revenues is as
follows:
Allocation
of Revenues
Additional General and
Limited Partners 80%
Managing General Partner 20%
Operating and direct costs are allocated and charged to the additional
general and limited partners and the Managing General Partner in the same
percentages as revenues are allocated. Leasehold, drilling and completion
costs, and equipment costs are borne 90% by the additional general and
limited partners and 10% by the Managing General Partner.
Employees
The Partnership has no employees, however, PDC has approximately 72
employees which include a staff of geologists, petroleum engineers, landmen
and accounting personnel who administer all of the partnership's operations.
Plan of Operations
The Partnership participated in the drilling of 29 gross wells and will
continue to operate and produce its 26 gross productive wells. The
Partnership does not have unexpended initial capital and no additional
drilling activity is planned.
See Item 2 herein for information concerning the Partnership's gas
wells.
Markets for Oil and Gas
The availability of a market for any oil and gas produced from the
operations of the Partnership will depend upon a number of factors beyond
the control of the Partnership which cannot be accurately predicted. These
factors include the proximity of the Partnership wells to and the capacity
of natural gas pipelines, the availability and price of competitive fuels,
fluctuations in seasonal supply and demand, and government regulation of
supply and demand created by its pricing and allocation restrictions.
Oversupplies of gas can be expected to occur from time to time and may
result in the Partnership's wells being shut-in or curtailed. Increased
imports of oil and natural gas have occurred and are expected to continue.
The effects of such imports could adversely impact the market for domestic
oil and natural gas.
Competition
The Partnership competes in marketing its gas with numerous companies
and individuals, many of which have financial resources, staffs and
facilities substantially greater than those of the Partnership or Petroleum
Development Corporation. <PAGE>
State Regulations
State regulatory authorities have established rules and regulations
requiring permits for well operations, reclamation bonds and reports
concerning operations. States also have statutes and regulations concerning
the spacing of wells, environmental matters, and conservation, and have
established regulations concerning the unitization and pooling of oil and
gas properties and maximum rates of production from oil and gas wells. The
Partnership believes it has complied in all material respects with
applicable state regulations.
Federal Regulations
Regulation of Liquid Hydrocarbons. Liquid hydrocarbons (including crude
oil and natural gas liquids) were subject to federal price and allocation
controls until January 1981 when controls were effectively eliminated by
executive order of the President. As a result, to the extent the
Partnership sells oil produced from its properties it is at unregulated
market prices.
Although it appears unlikely under present circumstances that controls
will be reimposed upon liquid hydrocarbons, it is possible Congress may
enact such legislation at a future date. The impact of such legislation on
the Partnership would be minimal since the partnership expects to sell only
small quantities of liquid hydrocarbons, if any.
Natural Gas Regulation. Sale of natural gas by the Partnership is
subject to regulation of production, transportation and pricing by
governmental regulatory agencies. Generally, the regulatory agency in the
state where a producing well is located regulates production activities and,
in addition, the transportation of gas sold intrastate. The Federal Energy
Regulatory Commission (FERC) regulates the operation and cost of interstate
pipeline operators who transport gas. Currently the price of gas sold by
the Partnership is not regulated by any state or federal agency.
The FERC has adopted major changes in certain of its regulations and
continues to make additional changes that will significantly affect future
transportation and marketing of natural gas.
The Partnership is uncertain how the recent or proposed regulations will
affect the marketing of its gas because it is unable to predict how all
interstate pipelines that receive its gas will respond to such rulemakings.
Proposed Regulation. Numerous proposals concerning energy are being
considered by the United States Congress, various state legislatures and
regulatory agencies. The possible outcome and effect of these proposals
cannot be accurately predicted.
Environmental and Safety Regulation. The Partnership believes that it
complies, in all material respects, with all legislation and regulations
affecting its operations in the drilling and production of oil and gas wells
and the discharge of wastes. To date, compliance with such provisions and
regulations has not had a material effect upon the Partnership's
expenditures for capital equipment, its operations or its competitive
position. The cost of such compliance is not anticipated to be material in
the future.
ITEM 2. PROPERTIES.
Drilling Activity
The following table sets forth the results of drilling activity from
November 6, 1992 (date of inception) to March 15, 1997, of the Partnership
which was conducted in the Continental United States.
<TABLE>
<S> <S> <S> <S> <S> <S> <S>
Development Wells
Gross Net
Productive Dry Total Productive Dry Total
Period Ended
March 15, 1997. . . 26 3 29 24.849 2.529 27.378
</TABLE>
<PAGE>
The Partnership has not participated in any exploratory wells. No
additional drilling activity is planned.
Productive Wells
The following table summarizes the Partnership's total gross and net
interests in productive wells at March 15, 1997.
<TABLE>
<S> <S> <S> <S> <S>
Productive Gas Wells
Well Name County State Gross Net
Bord #6 Taylor WV 1 .993
Reynolds #4 Taylor WV 1 .993
Bord #7 Taylor WV 1 .773
Wilson #2 Taylor WV 1 .993
Mayle #3 Taylor WV 1 .993
Reynolds #3 Taylor WV 1 .993
Costello #1 Taylor WV 1 .993
Johnson #1 Doddridge WV 1 .993
Hershman #1 Barbour WV 1 .993
Mayle #2 Taylor WV 1 .993
Poling #1 Barbour WV 1 .993
Mayle #1 Taylor WV 1 .993
Ramsey #1 Harrison WV 1 .993
Shanholtzer #1 Taylor WV 1 .993
Louk #1 Barbour WV 1 .993
Ramsey #2 Harrison WV 1 .993
McMullan #2 Barbour WV 1 .993
Shanholtzer #2 Taylor WV 1 .993
Knotts #2 Taylor WV 1 .993
Skaggs #1 Barbour WV 1 .993
Moats #1 Barbour WV 1 .993
Stemple #1 Barbour WV 1 .993
Knotts #1 Taylor WV 1 .993
Mayle #4 Taylor WV 1 .993
Gull #2 Taylor WV 1 .993
Collins #1 Taylor WV 1 .244
26 24.849
</TABLE>
A "productive well" is a well producing, or capable of producing, oil
and gas in commercial quantities. For purposes of the above table, a "gross
well" is one in which the Partnership has a working interest and a "net
well" is a gross well multiplied by the Partnership's working interest to
which it is entitled under its drilling agreement.
Title to Properties
The Partnership's interests in producing acreage are in the form of
assigned direct interests in leases. Such properties are subject to
customary royalty interests generally contracted for in connection with the
acquisition of properties, and could be subject to liens incident to
operating agreements, liens for current taxes and other burdens. The
Partnership believes that none of these burdens materially interfere with
the use of such properties in the operation of the Partnership's business.
As is customary in the oil and gas industry, little or no investigation
of title is made at the time of acquisition of undeveloped properties (other
than a preliminary review of local mineral records). Investigations are
generally made, including in most cases receiving a title opinion of legal
counsel, before commencement of drilling operations. A thorough examination
of title has been made with respect to all of the Partnership's producing
properties and the Partnership believes that it has generally satisfactory
title to such properties.
ITEM 3. LEGAL PROCEEDINGS.
The Managing General partner as driller/operator is not party to any
legal action that would materially affect the Managing General Partner's or
Partnership's operations or financial statements.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
One matter was submitted to a vote of the security holders of the
Partnership during the year 1995. The partners voted to amend the
partnership agreement with regard to the "engineering reports prepared by
the qualified independent petroleum engineer" by deleting the word
"independent." No other matters have been submitted to a vote for the
period November 6, 1992 (date of inception) to December 31, 1996.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND SECURITY HOLDER
MATTERS.
At December 31, 1996, PDC 1992-C Limited Partnership had one Managing
General Partner, 12 Limited Partners who fully paid for 11.75 units at
$20,000 per unit of limited partnership interests and a total of 519
Additional General Partners who fully paid for 307.695 units at $20,000 per
unit of additional general partnership interests. No established public
trading market exists for the interests.
Limited and additional general partnership interests are transferable,
however no assignee of an interest in the Partnership can become a
substituted partner without the written consent of the transferor and the
Managing General Partner.
ITEM 6. SELECTED FINANCIAL DATA.
The selected financial data presented below has been derived from
audited financial statements of the Partnership appearing elsewhere herein.
<TABLE>
<S> <S> <S> <S>
Periods ended
December 31,
1996 1995 1994
Oil and Gas Sales. . . . . . . . . . . . . . .$ 1,137,558 732,252 1,010,439
Costs and Expenses . . . . . . . . . . . . . . 612,301 726,120 817,298
Net Income . . . . . . . . . . . . . . . . . . 540,278 45,611 275,113
Allocation of Net Income (Loss):
Managing General Partner. . . . . . . . . . 122,512 51,416 105,800
Limited and Additional General Partners . . 417,766 (5,805) 169,313
Per Limited and Additional
General Partner Unit . . . . . . . . . . . 1,308 (18) 530
Total Assets . . . . . . . . . . . . . . . . . 4,442,312 4,705,313 5,211,630
Distributions:
Managing General Partner. . . . . . . . . . 141,196 99,756 181,365
Limited and Additional General Partners . . 658,280 444,932 735,725
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS
OF OPERATIONS.
Liquidity and Capital Resources
The Partnership was funded with initial Limited and Additional General
Partner contributions of $6,388,897 and the Managing General Partner
contributed $603,396 in accordance with the Agreement. Offering,
organization and legal costs of $798,612 were incurred leaving available
capital of $6,193,681 for Partnership activities.
The Partnership began exploration and development activities subsequent
to the funding of the Partnership and completed well drilling activities by
December 31, 1993. Twenty-nine wells have been drilled, of which twenty-six
have been completed as producing wells. No additional wells will be
drilled.
The Partnership had net working capital at December 31, 1996 of
$220,808.
Operations are expected to be conducted with available funds and
revenues generated from oil and gas activities. No bank borrowings are
anticipated.
<PAGE>
Results of Operations
1996 Compared to 1995
Oil and gas sales increased 55.4% in 1996 compared to 1995 due to higher
average sales prices offset in part by lower sales volumes. Cash
distributions to the partners increased from $544,688 in 1995 to $799,476
in 1996 due to the above reasons.
1995 Compared to 1994
The Partnership's natural gas sales decreased 27.5% in 1995 compared to
1994 due to decreased sales volumes and lower average sales prices.
The Partnership's revenues from natural gas sales will be affected by
changes in prices. Natural gas prices are subject to general market
conditions which drive the pricing changes.
The principal effects of inflation upon the Partnership relate to the
costs required to drill, complete and operate oil and gas wells. The
Partnership expects these costs to remain somewhat stable over the next
year.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
The response to this Item is set forth herein in a separate section of
this Report, beginning on Page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
NONE.
Part III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
The Partnership has no directors or executive officers. The partnership
is managed by Petroleum Development Corporation (the Managing General
Partner). Petroleum Development Corporation's common stock is traded in the
NASDAQ National Market and Form 10-K for 1996 has been filed with the
Securities and Exchange Commission.
ITEM 11. MANAGEMENT REMUNERATIONS AND TRANSACTIONS.
NON-APPLICABLE.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
NON-APPLICABLE.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Pursuant to the authorization contained in the Limited Partnership
Agreement, PDC receives fees for services rendered and reimbursement of
certain expenses from the Partnership. The following table presents
compensation or reimbursements by the Partnership to PDC or other related
parties during the years ended December 31,:
1996 1995 1994
Operator's charges $243,031 189,637 266,098
Tax return preparation 3,620 3,620 3,630
Direct administrative cost 1,532 2,511 1,439
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) (1) Financial Statements See Index to Financial
Statements on F-2
(2) Financial Statement Schedules
See Index to Financial Statements on page F-2. All
financial statement schedules are omitted because they are
not required, inapplicable, or the information is
included in the Financial Statements or Notes thereto.
SIGNATURES
Pursuant to the requirements of Section 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 authorized.
PDC 1992-C Limited Partnership
By its Managing General
Partner Petroleum Development
Corporation
By/s/ James N. Ryan
James N. Ryan, Chairman
March 26, 1997
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 and on the dates indicated:
Signature Title Date
/s/ James N. Ryan Chairman, Chief Executive
James N. Ryan Officer and Director March 26, 1997
/s/ Steven R. Williams President and Director
Steven R. Williams March 26, 1997
/s/ Dale G. Rettinger Executive Vice President,
Dale G. Rettinger Treasurer and Director March 26, 1997
(principal financial and
accounting officer)
/s/ Roger J. Morgan Secretary and Director
Roger J. Morgan March 26, 1997
<PAGE>
PDC 1992-C LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Financial Statements for Annual Report
on Form 10-K to Securities and Exchange
Commission
Years Ended December 31, 1996, 1995 and 1994
(With Independent Auditors' Report Thereon)
F-1
<PAGE>
PDC 1992-C LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Index to Financial Statements
Independent Auditors' Report F-3
Balance Sheets - December 31, 1996 and 1995 F-4
Statements of Operations - Years Ended
December 31, 1996, 1995 and 1994 F-5
Statements of Partners' Equity - Years Ended
December 31, 1996, 1995 and 1994 F-6
Statements of Cash Flows - Years Ended
December 31, 1996, 1995 and 1994 F-7
Notes to Financial Statements F-8
All financial statement schedules have been omitted because they are not
applicable or not required or for the reason that the required information
is shown in the financial statements or notes thereto.
F-2
<PAGE>
Independent Auditors' Report
To the Partners
PDC 1992-C Limited Partnership:
We have audited the financial statements of PDC 1992-C Limited Partnership
(a West Virginia limited partnership) as listed in the accompanying index.
These financial statements are the responsibility of the Partnership's
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 financial statements referred to above present fairly,
in all material respects, the financial position of PDC 1992-C Limited
Partnership as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the years in the three year period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
KPMG Peat
Marwick LLP
Pittsburgh, Pennsylvania
March 20, 1997
F-3
<PAGE>
PDC 1992-C LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Balance Sheets
December 31, 1996 and 1995
<TABLE>
<S> <S> <S>
Assets 1996 1995
Current assets:
Cash $ 957 1,749
Accounts receivable - oil and gas revenues 249,414 165,296
Total current assets 250,371 167,045
Oil and gas properties, successful efforts method
(Notes 3 and 5):
Oil and gas properties 6,033,071 6,033,071
Less accumulated depreciation, depletion and
amortization 1,846,327 1,506,234
4,186,744 4,526,837
Other assets (net of amortization of $25,971
and $19,737) 5,197 11,431
$4,442,312 4,705,313
Current Liabilities and Partners' Equity
Current liabilities:
Accrued expenses $ 29,563 33,366
Total current liabilities 29,563 33,366
Partners' equity 4,412,749 4,671,947
$4,442,312 4,705,313
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
PDC 1992-C LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statements of Operations
Years ended December 31, 1996, 1995 and 1994
<TABLE>
<S> <S> <S> <S>
1996 1995 1994
Revenues:
Sales of oil and gas $1,137,558 732,252 1,010,439
Transportation income 12,710 36,351 79,122
Interest income 2,311 3,128 2,850
1,152,579 771,731 1,092,411
Expenses (note 3):
Lifting cost 243,031 189,637 266,098
Independent engineering fee - - 1,715
Independent audit fee 6,315 6,288 7,884
Franchise taxes 11,476 12,881 16,562
Tax return preparation 3,620 3,620 3,630
Direct administrative cost 1,532 2,511 1,439
Depreciation, depletion and amortization 346,327 511,183 519,970
612,301 726,120 817,298
Net income $ 540,278 45,611 275,113
Net income (loss) per limited
and additional general partner unit$ 1,308 (18) 530
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
PDC 1992-C LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statements of Partners' Equity
Years ended December 31, 1996, 1995 and 1994
<TABLE>
<S> <S> <S> <S>
Limited
and additional Managing
general partners general partner Total
Balance, December 31, 1993 $5,219,169 593,832 5,813,001
Distributions to partners (735,725) (181,365) (917,090)
Net income 169,313 105,800 275,113
Balance, December 31, 1994 4,652,757 518,267 5,171,024
Distributions to partners (444,932) (99,756) (544,688)
Net income (loss) (5,805) 51,416 45,611
Balance, December 31, 1995 4,202,020 469,927 4,671,947
Distributions to partners (658,280) (141,196) (799,476)
Net income 417,766 122,512 540,278
Balance, December 31, 1996 $3,961,506 451,243 4,412,749
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
PDC 1992-C LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statements of Cash Flows
Years ended December 31, 1996, 1995 and 1994
<TABLE>
<S> <S> <S> <S>
1996 1995 1994
Cash flows from operating activities:
Net income $ 540,278 45,611 275,113
Adjustments to reconcile net
income to net cash
provided by operating activities:
Depreciation, depletion and
amortization 346,327 511,183 519,970
Changes in operating assets and
liabilities:
Accounts receivable -
oil & gas revenues (84,118) (5,544) 112,503
Accrued expenses (3,803) (7,240) (8,034)
Net cash provided from
operating activities 798,684 544,010 899,552
Cash flows from investing activities:
Refund of (expenditures for)
oil and gas properties - - 3,388
Net cash provided from
investing activities - - 3,388
Cash flows from financing activities:
Distributions to partners (799,476) (544,688) (917,090)
Net cash used by
financing activities (799,476) (544,688) (917,090)
Net decrease in cash (792) (678) (14,150)
Cash at beginning of period 1,749 2,427 16,577
Cash at end of period $ 957 1,749 2,427
See accompanying notes to financial statements.
F-7
<PAGE>
PDC 1992-C LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Notes to Financial Statements
Years Ended December 31, 1996, 1995 and 1994
(1) Summary of Significant Accounting Policies
Partnership Financial Statement Presentation Basis
The financial statements include only those assets, liabilities and
results of operations of the partners which relate to the business of
PDC 1992-C Limited Partnership (the Partnership). The statements do
not include any assets, liabilities, revenues or expenses attributable
to any of the partners' other activities.
Oil and Gas Properties
The Partnership follows the successful efforts method of accounting for
the cost of exploring for and developing oil and gas reserves. Under this
method, costs of development wells, including equipment and intangible
drilling costs related to both producing wells and developmental dry
holes, and successful exploratory wells are capitalized and amortized
on an annual basis to operations by the units-of-production method
using estimated proved developed reserves determined at December 31,
1996 and 1995 by the Managing General Partner's petroleum engineers
and at December 31, 1994 by an independent petroleum engineer, Wright
& Company, Inc. If a determination is made that an exploratory well
has not discovered economically producible reserves, then its costs
are expensed as dry hole costs.
The Partnership assesses impairment of capitalized costs of proved oil
and gas properties by comparing net capitalized costs to undiscounted
future cash flows on a field-by-field basis using expected prices.
Prices utilized for measurement purposes and expected costs are held
constant. If net capitalized costs exceed undiscounted future net
cash flow, the measurement of impairment is based on estimated fair
value which would consider future discounted cash flows.
Based on the Managing General Partner's experience, management believes
site restoration, dismantlement and abandonment costs, net of salvage
to be immaterial in relation to operating costs. These costs are
being expensed when incurred.
Other Assets
Other assets consist of costs incurred to organize the entity as a
limited partnership. Other assets are being amortized over five years
for both tax and financial reporting purposes.
Income Taxes
Since the taxable income or loss of the Partnership is reported in
the separate tax returns of the partners, no provision has been made
for income taxes on the Partnership's books.
Under federal income tax laws, regulations and administrative rulings,
certain types of transactions may be accorded varying interpretations.
Accordingly, the Partnership's tax return and, consequently,
individual tax returns of the partners may be changed to conform to
the tax treatment resulting from a review by the Internal Revenue
Service.
(Continued)
F-8
<PAGE>
PDC 1992-C LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Notes to Financial Statements, Continued
New Pronouncement
The Partnership adopted Statement of Financial Accounting Standard No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of", effective January 1, 1996. This
statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not
be recoverable. In performing the review for recoverability, the
entity should estimate the future cash flows expected to result from
the use of the asset and its eventual disposition. If the sum of the
expected future cash flows(undiscounted and with out interest charges)
is less than the carrying amount of the asset, an impairment loss is
recognized. Measurement of an impairment loss for long-lived assets
and identifiable tangibles is based on the fair value of an asset.
The adoption of this accounting standard did not have any impact on
the Partnership's financial statements.
Use of Estimates
Management of the Partnership has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
revenues and expenses, and the disclosure of contingent assets and
liabilities to prepare these financial statements in conformity with
generally accepted accounting principles. Actual results could differ
from those estimates. Estimates which are particularly significant
to the financial statements include estimates of oil and gas reserves
and future cash flows from oil and gas properties.
(2) Organization
The Partnership was organized as a limited partnership on November 6,
1992, in accordance with the laws of the State of West Virginia for
the purpose of engaging in the drilling, completion and operation of
oil and gas development and exploratory wells in West Virginia.
Purchasers of partnership units subscribed to and fully paid for 11.75
units of limited partner interests and 307.695 units of additional
general partner interests at $20,000 per unit (Collectively, Investor
Partners). Petroleum Development Corporation has been designated the
Managing General Partner of the Partnership. Although costs, revenues
and cash distributions allocable to the limited and additional general
partners are shared pro rata based upon the amount of their
subscriptions, including the Managing General Partner to the extent
of its 10% capital contributions, there are significant differences
in the federal income tax effects and liability associated with these
different types of units in the Partnership.
Upon written notice to the Managing General Partner, additional general
partners have the right to convert their units into units of limited
partner interests at any time after one year and thereafter become
limited partners of the Partnership. Limited partners do not have any
rights to convert their units into units of additional general partner
interests in the Partnership.
In accordance with the terms of the Partnership Agreement (the
Agreement), the Managing General Partner manages all activities of the
Partnership and acts as the intermediary for substantially all
Partnership transactions.
(Continued)
F-9
<PAGE>
PDC 1992-C LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Notes to Financial Statements, Continued
(3) Transactions with Managing General Partner and Affiliates
The Partnership's transactions with the Managing General Partner include
charges for the following:
Years ended December 31,
1996 1995 1994
Lifing costs $243,031 189,637 266,098
Tax return preparation 3,620 3,620 3,630
Direct administration cost 1,532 2,511 1,439
(4) Allocation
The table below summarizes the participation of the Managing General
Partner and the Investor Partners, taking account of the Managing
General Partner's capital contribution equal to 10% of the Initial
Operating Capital, in the costs and revenues of the Partnership.
Managing General
Partnership costs Investor Partners Partner
Organization and offering costs 99% 1%
Management fee 99% 1%
Undeveloped lease costs 90% 10%
Drilling and completion costs 90% 10%
Intangible drilling and development
costs 99% 1%
Operating costs (1) 80% 20%
Direct costs (2) 80% 20%
Administrative costs 0% 100%
Interest expense (3) (3)
Partnership revenues
Sale of oil and gas production (4) 80% 20%
Sale of productive properties (5) 80% 20%
Sale of undeveloped leases 90% 10%
Interest income 80% 20%
(1) Represents operating costs incurred after the completion
of productive wells, including monthly per-well charges paid to
the Managing General Partner.
(2) Direct costs will be allocated 90% to the Investor Partners and
10% to the Managing General Partner during drilling. After
drilling, allocations will be made in accordance with the table
above. The Managing General Partner will receive monthly
reimbursement from the Partnership for direct costs incurred by
the Managing General Partner on behalf of the Partnership.
(3) Although borrowings by the Partnership are not anticipated,
interest, associated expenses of borrowings, and deductions
attributable to such borrowings if any, will be allocated and
charged to the Investor Partners and the Managing General Partner
according to the partners' shares of "economic risk of loss" in
the loans, or, if no partner bears the economic risk of loss, in
accordance with the partnership agreement.
(Continued)
F-10
<PAGE>
PDC 1992-C LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Notes to Financial Statements, Continued
(4) The revenues and expenses to be allocated to the partners are
subject to a special provision in the partnership agreement,
whereby the allocable share of revenues and expenses of the
Investor Partners in each producing well may be increased and the
interest of the Managing General Partner in each well may be
decreased if such well fails to meet certain production levels.
The shifting of the allocable share of revenues and expenses to
the Investor Partners in the event that certain prescribed
production levels are not attained may also serve to shift an
increased amount of cash distributions to the Investor Partners
and a decreased amount of cash distributions to the Managing
General Partner.
(5) In the event of the sale or other disposition of a productive
well, a lease upon which such well is situated, or any equipment
related to any such lease or well, the proceeds from such sale or
disposition shall be allocated and credited to the partners as
oil and gas revenues are allocated. The term "proceeds" above
does not include revenues from a royalty, overriding royalty,
lease interest reserved, or other promotional consideration
received by the Partnership in connection with any sale or
disposition, which revenues shall be allocated to the Investor
Partners and the Managing General Partner in the same percentages
that oil and gas revenues are allocated.
(5) Costs Relating to Oil and Gas Activities
The Partnership is engaged solely in oil and gas activities, all
of which are located in the continental United States. Information
regarding aggregate capitalized costs and results of operations for
these activities is located in the basic financial statements.
Costs capitalized for these activities are presented below:
December 31,
1996 1995
Lease acquisition costs $ 80,414 80,414
Intangible development costs 4,298,264 4,298,264
Well equipment 1,654,393 1,654,393
$6,033,071 6,033,071
The following costs were incurred for the Partnership's oil and gas
activities:
Period Ended December 31,
1996 1995 1994
Costs (refunded) capitalized:
Property acquisition costs $ - - (3,388)
$ - - (3,338)
(Continued)
F-11
<PAGE>
PDC 1992-C LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Notes to Financial Statements, Continued
(6) Income Taxes
As a result of the differences in the treatment of certain items for
income tax purposes as opposed to financial reporting purposes,
primarily depreciation, depletion and amortization of oil and gas
properties and the recognition of intangible drilling costs as an
expense or capital item, the income tax basis of oil and gas
properties differs from the basis used for financial reporting
purposes. At December 31, 1996 and 1995, the income tax basis of
the partnership's oil and gas properties was $534,781 and $716,528,
respectively.
(7) Supplemental Reserve Information (Unaudited)
Proved oil and gas reserves of the Partnership have been estimated at
December 31, 1996 and 1995 by the Managing General Partner's
petroleum engineers and at December 31, 1994 by an independent
petroleum engineer, Wright & Company, Inc. These reserves have been
prepared in compliance with the Securities and Exchange Commission
rules based on year end prices. Since December 31, 1996 prices have
declined to seasonal levels. A copy of the reserve report has been
made available to all partners. All of the partnership's reserves
are proved developed. An analysis of the change in estimated
quantities of proved developed oil and gas reserves is shown below:
Natural gas
(mcf)
Proved developed reserves
as of December 31, 1993 4,560,004
Revisions of previous estimates 911,522
Production (504,816)
Proved developed reserves
as of December 31, 1994 4,966,710
Revisions of previous estimates (500,366)
Production (424,186)
Proved developed reserves
as of December 31, 1995 4,042,158
Revisions of previous estimates 1,525,710
Production (372,284)
Proved developed reserves
as of December 31, 1996 5,195,584
F-12
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 957
<SECURITIES> 0
<RECEIVABLES> 249,414
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 250,371
<PP&E> 6,033,071
<DEPRECIATION> 1,846,327
<TOTAL-ASSETS> 4,442,312
<CURRENT-LIABILITIES> 29,563
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,442,312
<SALES> 1,137,558
<TOTAL-REVENUES> 1,152,579
<CGS> 243,031
<TOTAL-COSTS> 612,301
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 540,278
<INCOME-TAX> 0
<INCOME-CONTINUING> 540,278
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 540,278
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
