CONFORMED COPY
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 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 75
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.
2
<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, 1998, of the Partnership
which was conducted in the Continental United States.
Development Wells
Gross Net
Productive Dry Total Productive Dry Total
Period Ended
March 15, 1998. . . 26 3 29 24.849 2.529 27.378
3
<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, 1998.
<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.
4
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND SECURITY HOLDER MATTERS.
At December 31, 1997, 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,
1997 1996 1995
Oil and Gas Sales. . . . . . . . . . . . . . .$1,084,229 1,137,558 732,252
Costs and Expenses . . . . . . . . . . . . . . 598,610 612,301 726,120
Net Income . . . . . . . . . . . . . . . . . . 489,129 540,278 45,611
Allocation of Net Income (Loss):
Managing General Partner. . . . . . . . . . 130,596 122,512 51,416
Limited and Additional General Partners . . 358,533 417,766 (5,805)
Per Limited and Additional
General Partner Unit . . . . . . . . . . . 1,122 1,308 (18)
Total Assets . . . . . . . . . . . . . . . . . 4,059,513 4,442,312 4,705,313
Distributions:
Managing General Partner. . . . . . . . . . 173,357 141,196 99,756
Limited and Additional General Partners . . 697,656 658,280 444,932
</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, 1997 of $169,911.
Operations are expected to be conducted with available funds and revenues
generated from oil and gas activities. No bank borrowings are anticipated.
Results of Operations
1997 Compared to 1996
Oil and gas sales decreased 4.7% in 1997 compared to 1996 due to lower
average sales prices offset in part by higher sales volumes. Cash distributions
to the partners increased from $799,476 in 1996 to $871,013 in 1997.
5
<PAGE>
1996 Compared to 1995
The Partnership's natural gas sales increased 55.4% in 1996 compared to
1995 due to higher average sales prices offset in part by lower sales volumes.
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.
Year 2000 Issue
PDC, who administers all aspects of the Partnership, has assessed the
extent of Year 2000 Issues affecting PDC and the Partnership. PDC believes that
the new computer system, including operating software currently being installed
along with modifications being made by PDC's computer technicians will address
the dating system flaw inherent in most operating systems. PDC expects to be
fully Year 2000 Compliant by the end of 1998. PDC management believes that the
cost to become Year 2000 Compliant is not material to PDC's or the Partnership's
financial position or results of operation.
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 1997 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.
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,:
1997 1996 1995
Operator's charges $244,265 243,031 189,637
Tax return preparation 3,620 3,620 3,620
Direct administrative cost 1,921 1,532 2,511
6
<PAGE>
CONFORMED COPY
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 23, 1998
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 23, 1998
/s/ Steven R. Williams President and Director
Steven R. Williams March 23, 1998
/s/ Dale G. Rettinger Executive Vice President,
Dale G. Rettinger Treasurer and Director March 23, 1998
(principal financial and
accounting officer)
/s/ Roger J. Morgan Secretary and Director
Roger J. Morgan March 23, 1998
7
<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, 1997, 1996 and 1995
(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, 1997 and 1996 F-4
Statements of Operations - Years Ended
December 31, 1997, 1996 and 1995 F-5
Statements of Partners' Equity - Years Ended
December 31, 1997, 1996 and 1995 F-6
Statements of Cash Flows - Years Ended
December 31, 1997, 1996 and 1995 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, 1997 and 1996, and the results of its
operations and its cash flows for each of the years in the three year period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
March 19, 1998
F-3
<PAGE>
PDC 1992-C LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Balance Sheets
December 31, 1997 and 1996
<TABLE>
<S> <S> <S>
Assets 1997 1996
Current assets:
Cash $ 2,264 957
Accounts receivable - oil and gas revenues 196,295 249,414
Total current assets 198,559 250,371
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 2,172,117 1,846,327
3,860,954 4,186,744
Other assets (net of amortization of $31,168
and $25,971) - 5,197
$4,059,513 4,442,312
Current Liabilities and Partners' Equity
Current liabilities:
Accrued expenses $ 28,648 29,563
Total current liabilities 28,648 29,563
Partners' equity 4,030,865 4,412,749
$4,059,513 4,442,312
</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, 1997, 1996 and 1995
<TABLE>
<S> <S> <S> <S>
1997 1996 1995
Revenues:
Sales of oil and gas $1,084,229 1,137,558 732,252
Transportation income - 12,710 36,351
Interest income 3,510 2,311 3,128
1,087,739 1,152,579 771,731
Expenses (note 3):
Lifting cost 244,265 243,031 189,637
Independent audit fee 6,675 6,315 6,288
Franchise taxes 11,142 11,476 12,881
Tax return preparation 3,620 3,620 3,620
Direct administrative cost 1,921 1,532 2,511
Depreciation, depletion and amortization 330,987 346,327 511,183
598,610 612,301 726,120
Net income $ 489,129 540,278 45,611
Net income (loss) per limited
and additional general partner unit $ 1,122 1,308 (18)
</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, 1997, 1996 and 1995
<TABLE>
<S> <S> <S> <S>
Limited
and additional Managing
general partners general partner Total
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
Distributions to partners (697,656) (173,357) (871,013)
Net income 358,533 130,596 489,129
Balance, December 31, 1997 $3,622,383 408,482 4,030,865
</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, 1997, 1996 and 1995
<TABLE>
<S> <S> <S> <S>
1997 1996 1995
Cash flows from operating activities:
Net income $ 489,129 540,278 45,611
Adjustments to reconcile net
income to net cash
provided by operating activities:
Depreciation, depletion and
amortization 330,987 346,327 511,183
Changes in operating assets and
liabilities:
Decrease (increase) in accounts
receivable - oil & gas revenues 53,119 (84,118) (5,544)
Decrease in accrued expenses (915) (3,803) (7,240)
Net cash provided from
operating activities 872,320 798,684 544,010
Cash flows from financing activities:
Distributions to partners (871,013) (799,476) (544,688)
Net cash used by
financing activities (871,013) (799,476) (544,688)
Net increase (decrease) in cash 1,307 (792) (678)
Cash at beginning of period 957 1,749 2,427
Cash at end of period $ 2,264 957 1,749
</TABLE>
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, 1997, 1996 and 1995
(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, 1997, 1996 and 1995 by the
Managing General Partner's petroleum engineers. 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
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:
<TABLE>
<S> <S> <S> <S>
Years ended December 31,
1997 1996 1995
Lifing costs $244,265 243,031 189,637
Tax return preparation 3,620 3,620 3,620
Direct administration cost 1,921 1,532 2,511
</TABLE>
(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.
<TABLE>
<S> <S> <S>
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%
</TABLE>
[FN]
(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 were allocated 90% to the Investor Partners and 10%
to the Managing General Partner during drilling. After drilling,
allocations are made in accordance with the table above. The
Managing General Partner receives 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 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. No such sales have
occurred.
</FN>
(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,
1997 1996
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
(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, 1997 and 1996, the income tax basis of
the partnership's oil and gas properties was $389,384 and $534,781,
respectively.
(7) Supplemental Reserve Information (Unaudited)
Proved oil and gas reserves of the Partnership have been estimated at
December 31, 1997, 1996 and 1995 by the Managing General Partner's
petroleum engineers. These reserves have been prepared in compliance
with the Securities and Exchange Commission rules based on year end
prices. 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, 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
Revisions of previous estimates 500,504
Production (405,888)
Proved developed reserves
as of December 31, 1997 5,290,200
F-12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,264
<SECURITIES> 0
<RECEIVABLES> 196,295
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 198,559
<PP&E> 6,033,071
<DEPRECIATION> 2,172,117
<TOTAL-ASSETS> 4,059,513
<CURRENT-LIABILITIES> 28,648
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,059,513
<SALES> 1,084,229
<TOTAL-REVENUES> 1,087,739
<CGS> 244,265
<TOTAL-COSTS> 598,610
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 489,129
<INCOME-TAX> 0
<INCOME-CONTINUING> 489,129
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 489,129
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
