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, 1996
Commission File Number 033-37728
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transaction period from to
PDC 1991-D LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
West Virginia 55-0711661
(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 1991-D Limited Partnership ("the Partnership") is a limited
partnership formed on December 31, 1991 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 December 31, 1991, the Partnership
has been engaged in onshore, domestic gas exploration exclusively in West
Virginia. A total of 6 limited partners contributed initial capital of $37,000;
a total of 426 additional general partners contributed initial capital of
$5,221,528; and PDC (Managing General Partner) contributed $496,639 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 27 gross wells and will
continue to operate and produce its 20 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 those sales are 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
December 31, 1991 (date of inception) to March 15, 1997, 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, 1997. . . 20 7 27 19.41 6.02 25.43
The Partnership has not participated in any exploratory wells. No
additional drilling activity is planned.<PAGE>
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
Kerns #2 Doddridge WV 1 .99
Stout #4 Taylor WV 1 .99
Frum #1 Doddridge WV 1 .99
LTV #3 Barbour WV 1 .99
Kerns #1 Doddridge WV 1 .99
Smith #2 Lewis WV 1 .99
Glaspell #2 Doddridge WV 1 .99
Stout #2 Taylor WV 1 .99
Stout #5 Taylor WV 1 .99
Nestor #1 Taylor WV 1 .99
Ross #1 Taylor WV 1 .99
Frey #1 Taylor WV 1 .99
Stout #1 Taylor WV 1 .99
Powell #1 Harrison WV 1 .99
Gobel #1 Taylor WV 1 .99
Schock #1 Lewis WV 1 .99
Cole #1 Taylor WV 1 .99
Frey #2 Taylor WV 1 .99
Nestor #2 Taylor WV 1 .99
Kopp #1 Barbour WV 1 .60
20 19.41
</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 the
Partnership's operations or financial statements.
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 qualified
independent petroleum engineers" by deleting the word "independent". No other
matters have been submitted to a vote for the period December 31, 1991 (date of
inception) to December 31, 1996.
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND SECURITY HOLDER MATTERS.
At December 31, 1996, PDC 1991-D Limited Partnership had one Managing
General Partner, 6 Limited Partners who fully paid for 1.85 units at $20,000 per
unit of limited partnership interests and a total of 426 Additional General
Partners who fully paid for 261.076 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 . . . . . . . . . . . . . . . . $ 445,669 226,059 299,890
Costs and Expenses . . . . . . . . . . . . . . . 297,585 279,159 907,023
Net Income (loss) . . . . . . . . . . . . . . . . 151,259 (40,505) (583,724)
Allocation of Net Income (Loss):
Managing General Partner. . . . . . . . . . . . 44,171 4,253 (47,669)
Limited and Additional
General Partners . . . . . . . . . . . . . . . 107,088 (44,758) (536,055)
Per Limited and Additional
General Partner Unit . . . . . . . . . . . . . 407 (170) (2,039)
Total Assets. . . . . . . . . . . . . . . . . . . 2,231,067 2,339,652 2,495,578
Distributions:
Managing General Partner. . . . . . . . . . . . 51,244 18,523 37,082
Limited and Additional
General Partners . . . . . . . . . . . . . . . 205,486 93,787 197,085
</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 $5,258,528 and the Managing General Partner
contributed $496,639 in accordance with the Agreement. Offering,
organization and legal costs of $657,316 were incurred leaving available
capital of $5,097,851 for Partnership activities.
The Partnership began exploration and development activities subsequent
to the funding of the Partnership and completed these activities by December
31, 1992. Twenty-seven wells have been drilled, of which twenty have been
completed as producing wells. No additional wells will be drilled.
The Partnership had net working capital at December 31, 1996 of $47,643.
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
1996 Compared with 1995
Oil and gas sales increased 97.1% in 1996 compared to 1995 due to higher
sales prices and higher sales volumes. Cash distributions to the partners
increased from $112,310 in 1995 to $256,730 during 1996 due to the reasons
above.
<PAGE>
1995 Compared with 1994
The Partnership's natural gas sales decreased 24.6% in 1995 due to
decreased sales volumes and lower average sales prices.
During 1994 the unamortized capital cost of the Partnership's oil and
gas properties was limited to undiscounted future net revenues of its oil
and gas reserves, which was based upon then current prices and costs. The
impairment of oil and gas properties as shown in the Statement of Income was
$550,270 for 1994.
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.
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,
<TABLE>
<S> <S> <S> <S>
1996 1995 1994
Operator's Charges $142,799 $100,306 $121,567
Tax return preparation 3,110 3,110 3,105
Direct administrative cost 1,248 2,399 1,117
<PAGE>
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 1991-D 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 1991-D 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 1991-D 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 1991-D Limited Partnership:
We have audited the financial statements of PDC 1991-D 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 1991-D 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 1991-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Balance Sheets
December 31, 1996 and 1995
Assets
1996 1995
Current assets:
Cash $ 474 471
Accounts receivable - oil and gas revenues 71,018 41,647
Due from operator - 1,700
Total current assets 71,492 43,818
Oil and gas properties, successful efforts method
(notes 3 and 5):
Oil and gas properties 4,939,913 4,939,913
Less accumulated depreciation, depletion,
and amortization 2,780,338 2,648,609
2,159,575 2,291,304
Other assets (net of amortization of $24,732 and
$20,202) - 4,530
$2,231,067 2,339,652
Current Liabilities and Partners' Equity
Current liabilities:
Accrued expenses $ 23,849 26,963
Total current liabilities 23,849 26,963
Partners' equity 2,207,218 2,312,689
$2,231,067 2,339,652
See accompanying notes to financial statements.
F-4<PAGE>
PDC 1991-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statements of Operations
Years Ended December 31, 1996, 1995 and 1994
</TABLE>
<TABLE>
<S> <S> <S> <S>
1996 1995 1994
Revenues:
Sales of oil and gas $ 445,669 226,059 299,890
Transportation revenue 2,321 11,619 22,453
Interest income 854 976 956
448,844 238,654 323,299
Expenses (note 3):
Lifting costs 142,799 100,306 121,567
Independent audit fee 6,314 6,287 6,882
Tax return preparation 3,110 3,110 3,105
Independent engineering fee - - 680
Franchise taxes 7,855 5,565 14,170
Direct administrative costs 1,248 2,399 1,117
Provision for impairment of oil
and gas properties - - 550,270
Depreciation, depletion and
amortization 136,259 161,492 209,232
297,585 279,159 907,023
Net income (loss) $ 151,259 (40,505) (583,724)
Net income (loss) per
limited and additional
general partner unit $ 407 (170) (2,039)
</TABLE>
See accompanying notes to financial statements.
F-5<PAGE>
PDC 1991-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statements of Partners' Equity
Years Ended December 31, 1996 and 1995 and 1994
<TABLE>
<S> <S> <S> <S>
Limited and
additional Managing
general partners General Partner Total
Balance, December 31, 1993 $2,959,751 323,644 3,283,395
Net loss (536,055) (47,699) (583,724)
Distributions to Partners (197,085) (37,082) (234,167)
Balance, December 31, 1994 $2,226,611 238,893 2,465,504
Net income (loss) (44,758) 4,253 (40,505)
Distributions to Partners (93,787) (18,523) (112,310)
Balance, December 31, 1995 $2,088,066 224,623 2,312,689
Net income 107,088 44,171 151,259
Distributions to Partners (205,486) (51,244) (256,730)
Balance, December 31, 1996 $1,989,668 217,550 2,207,218
</TABLE>
See accompanying notes to financial statements.
F-6<PAGE>
PDC 1991-D 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 (loss) $ 151,259 (40,505) (583,724)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation, depletion
and amortization 136,259 161,492 209,232
Provision for impairment of
oil and gas properties - - 550,270
Changes in operating assets
and liabilities:
(Increase) decrease in accounts
receivable -
oil and gas revenues (29,371) (4,027) 53,948
Decrease (increase) in due from operator 1,700 (1,700) -
(Decrease) increase in accrued expenses (3,114) (3,111) 3,635
Net cash provided from
operating activities 256,733 112,149 233,361
Cash flows from financing activities:
Distributions to partners (256,730) (112,310) (234,167)
Net cash used by
financing activities (256,730) (112,310) (234,167)
Net increase (decrease) in cash 3 (161) (806)
Cash at beginning of period 471 632 1,438
Cash at end of period $ 474 471 632
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE>
PDC 1991-D 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
1991-D 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 1991-D 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 ofthe asset and its eventual disposition. If the sum of the
expected future cash flows (undiscounted and without 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 the asset.
The adoption of this accounting standard did not have any impact on
the 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 December 31,
1991 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 1.85
units of limited partner interests and 261.076 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 1991-D 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,
1996 1995 1994
Lifting costs $142,799 100,306 121,567
Tax return preparation 3,110 3,110 3,105
Direct administrative cost 1,248 2,399 1,117
</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 (1) 99% 1%
Management fee (2) 99% 1%
Undeveloped lease costs 90% 10%
Drilling and completion costs 90% 10%
Intangible drilling and development
costs (3) 99% 1%
Operating costs (4) 80% 20%
Direct costs (5) 80% 20%
Administrative costs (5) 0% 100%
Interest expense (6) (6)
Partnership revenues
Sale of oil and gas production (7) 80% 20%
Sale of productive properties (8) 80% 20%
Sale of undeveloped leases (8) 90% 10%
Interest income (9) 80% 20%
</TABLE>
(1) Costs are allocated and charged 99% to the Investor Partners
and 1% to the Managing General Partner. Any such costs in
excess of 12-1/2% of subscriptions shall be allocated and
charged 100% to the Managing General Partner.
(2) The Managing General Partner will receive a one-time
nonrecurring management fee equal to 2-1/2% of the
subscriptions. The fee is allocated and charged 99% to the
Investor Partners and 1% to the Managing General Partner.
(3) Intangible drilling costs and recapture of any intangible
drilling costs will be allocated 99% to the Investor Partners
and 1% to the Managing General Partner.
(4) Represents operating costs incurred after the completion of
productive wells, including monthly per-well charges paid to
the Managing General Partner.
(Continued)
F-10
<PAGE>
PDC 1991-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Notes to Financial Statements, Continued
(5) 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. The Managing General Partner
will bear all administrative expenses.
(6) 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.
(7) 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.
(8) 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
received, 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.
(9) Interest earned on the deposit of operating revenues and revenues
from any other sources will be credited to the Investor Partners and
the Managing General Partner in the same percentages as oil and gas
revenues are being 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 $ 60,522 60,522
Intangible development costs 3,551,792 3,551,792
Well equipment 1,327,599 1,327,599
$4,939,913 4,939,913
F-11<PAGE>
PDC 1991-D 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 approximately $341,846 and
$454,376, 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 2,225,259
Revision of previous estimates 239,725
Production (156,607)
Proved developed reserves as of
December 31, 1994 2,308,377
Revision of previous estimates (2,507)
Production (127,378)
Proved developed reserves as of
December 31, 1995 2,178,492
Revision of previous estimates 531,420
Production (141,289)
Proved developed reserves as of
December 31, 1996 2,568,623
F-12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 474
<SECURITIES> 0
<RECEIVABLES> 71,018
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 71,492
<PP&E> 4,939,913
<DEPRECIATION> 2,780,338
<TOTAL-ASSETS> 2,231,067
<CURRENT-LIABILITIES> 23,849
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,231,067
<SALES> 445,669
<TOTAL-REVENUES> 448,844
<CGS> 142,799
<TOTAL-COSTS> 297,585
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 151,259
<INCOME-TAX> 0
<INCOME-CONTINUING> 151,259
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 151,259
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
