<PAGE>
- -------------------------------------------------------------------------------
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1996 COMMISSION FILE NO. 0-20998
KELLEY PARTNERS 1992 DEVELOPMENT
DRILLING PROGRAM
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 76-0373428
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
601 JEFFERSON ST.
SUITE 1100
HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 652-5200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
KELLEY PARTNERS 1992 DEVELOPMENT DRILLING PROGRAM
INDEX
PART I. FINANCIAL INFORMATION PAGE
----
Balance Sheets as of June 30, 1996 (unaudited) and December 31, 1995 . 2
Statements of Income (Loss) for the three months ended June 30, 1996
and 1995 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 3
Statements of Income (Loss) for the six months ended June 30, 1996
and 1995 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Cash Flows for the six months ended June 30, 1996
and 1995 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . 6
Management's Discussion and Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . 7
1
<PAGE>
PART I. FINANCIAL INFORMATION
KELLEY PARTNERS 1992 DEVELOPMENT DRILLING PROGRAM
BALANCE SHEETS
($ IN THOUSANDS)
<TABLE>
JUNE 30, DECEMBER 31,
1996 1995
---------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . $ 6 14
Accounts receivable - trade. . . . . . . . . . . . . . . . . . 208 171
Accounts receivable - affiliates . . . . . . . . . . . . . . . 1,003 1,255
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . 31 21
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . . 1,248 1,461
-------- --------
Oil and gas properties, successful efforts method:
Properties subject to amortization . . . . . . . . . . . . . 45,410 45,230
Less: Accumulated depreciation, depletion & amortization. . (39,791) (38,967)
-------- --------
Total oil and gas properties . . . . . . . . . . . . . . . . 5,619 6,263
-------- --------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,867 7,724
-------- --------
-------- --------
LIABILITIES:
Accounts payable and accrued expenses. . . . . . . . . . . . . $ 191 375
Accounts payable - affiliates. . . . . . . . . . . . . . . . . 1,508 2,943
-------- --------
Total current liabilities. . . . . . . . . . . . . . . . . . 1,699 3,318
-------- --------
Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . 6,000 6,000
-------- --------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 7,699 9,318
-------- --------
PARTNERS' DEFICIT:
LP unitholders' deficit. . . . . . . . . . . . . . . . . . . . (108) (183)
GP unitholders' deficit. . . . . . . . . . . . . . . . . . . . (692) (1,349)
Managing and special general partners' deficit . . . . . . . . (32) (62)
-------- --------
TOTAL PARTNERS' DEFICIT. . . . . . . . . . . . . . . . . . . . (832) (1,594)
-------- --------
TOTAL LIABILITIES AND PARTNERS' DEFICIT . . . . . . . . . . . . $ 6,867 7,724
-------- --------
-------- --------
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
KELLEY PARTNERS 1992 DEVELOPMENT DRILLING PROGRAM
STATEMENTS OF INCOME (LOSS)
($ IN THOUSANDS, EXCEPT PER UNIT DATA)
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30,
-------------------------
1996 1995
----------- -----------
REVENUES:
Oil and gas sales . . . . . . . . . . . . . . . $ 1,270 1,290
Interest income . . . . . . . . . . . . . . . . -- --
----------- -----------
Total revenues. . . . . . . . . . . . . . . . 1,270 1,290
----------- -----------
COSTS AND EXPENSES:
Lease operating expenses. . . . . . . . . . . . 136 206
Severance taxes . . . . . . . . . . . . . . . . 54 79
Exploration costs . . . . . . . . . . . . . . . (2) --
General and administrative expenses . . . . . . 82 131
Interest expense. . . . . . . . . . . . . . . . 202 141
Depreciation, depletion and amortization. . . . 359 826
----------- -----------
Total costs and expenses. . . . . . . . . . . 831 1,383
----------- -----------
NET INCOME (LOSS) . . . . . . . . . . . . . . . . $ 439 (93)
----------- -----------
----------- -----------
NET INCOME (LOSS) ALLOCABLE TO LP UNITHOLDERS
AND GP UNITHOLDERS. . . . . . . . . . . . . . . $ 422 (89)
----------- -----------
----------- -----------
NET INCOME (LOSS) ALLOCABLE TO MANAGING AND
INDIVIDUAL GENERAL PARTNERS . . . . . . . . . . $ 17 (4)
----------- -----------
----------- -----------
NET INCOME (LOSS) PER UNIT . . . . . . . . . . . . $ .03 (.01)
----------- -----------
----------- -----------
Average units outstanding. . . . . . . . . . . . . 16,033,009 16,033,009
----------- -----------
----------- -----------
See Notes to Financial Statements.
3
<PAGE>
KELLEY PARTNERS 1992 DEVELOPMENT DRILLING PROGRAM
STATEMENTS OF INCOME (LOSS)
($ IN THOUSANDS, EXCEPT PER UNIT DATA)
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
----------------------
1996 1995
---------- ----------
REVENUES:
Oil and gas sales . . . . . . . . . . . . . . . . . . $2,522 $3,208
Interest income . . . . . . . . . . . . . . . . . . . 3 2
------ ------
Total revenues . . . . . . . . . . . . . . . . . . . 2,525 3,210
------ ------
COSTS AND EXPENSES:
Lease operating expenses. . . . . . . . . . . . . . . 336 404
Severance taxes . . . . . . . . . . . . . . . . . . . 90 190
Exploration costs . . . . . . . . . . . . . . . . . . (2) 6
General and administrative expenses . . . . . . . . . 195 296
Interest expense. . . . . . . . . . . . . . . . . . . 405 267
Depreciation, depletion and amortization. . . . . . . 739 2,139
Impairment of oil and gas properties. . . . . . . . . -- 485
------ ------
Total costs and expenses . . . . . . . . . . . . . . 1,763 3,787
------ ------
NET INCOME (LOSS). . . . . . . . . . . . . . . . . . . $ 762 $ (577)
------ ------
------ ------
NET INCOME (LOSS) ALLOCABLE TO LP UNITHOLDERS
AND GP UNITHOLDERS. . . . . . . . . . . . . . . . . . $ 732 $ (554)
------ ------
------ ------
NET INCOME (LOSS) ALLOCABLE TO MANAGING AND
INDIVIDUAL GENERAL PARTNERS . . . . . . . . . . . . . $ 30 $ (23)
------ ------
------ ------
NET INCOME (LOSS) PER UNIT . . . . . . . . . . . . . . $ .05 $ (.04)
------ ------
------ ------
Average units outstanding. . . . . . . . . . . . . . . 16,033,009 16,033,009
---------- ----------
---------- ----------
See Notes to Financial Statements.
4
<PAGE>
KELLEY PARTNERS 1992 DEVELOPMENT DRILLING PROGRAM
STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
-------------------
1996 1995
------- -------
OPERATING ACTIVITIES:
Net income (loss) . . . . . . . . . . . . . . . . . . . . $ 762 $ (577)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation, depletion and amortization. . . . . . . . 739 2,139
Impairment of oil and gas properties. . . . . . . . . . --- 485
Dry hole costs. . . . . . . . . . . . . . . . . . . . . --- 6
Changes in operating assets and liabilities:
Decrease in accounts receivable. . . . . . . . . . . . 215 678
Increase in prepaid and other current assets . . . . . (10) (14)
Decrease in accounts payable and accrued expenses. . . (1,619) (2,482)
------- -------
Net cash provided by operating activities . . . . . . . . 87 235
------- -------
INVESTING ACTIVITIES:
Purchase of property and equipment. . . . . . . . . . . . (180) (317)
Sale of non-current assets. . . . . . . . . . . . . . . . 85 72
------- -------
Net cash used in investing activities . . . . . . . . . . (95) (245)
------- -------
Decrease in cash and cash equivalents. . . . . . . . . . . (8) (10)
Cash and cash equivalents, beginning of period . . . . . . 14 32
------- -------
Cash and cash equivalents, end of period . . . . . . . . . $ 6 $ 22
------- -------
------- -------
See Notes to Financial Statements.
5
<PAGE>
KELLEY PARTNERS 1992 DEVELOPMENT DRILLING PROGRAM
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements of Kelley Partners 1992
Development Drilling Program (the "Partnership") have been prepared in
accordance with generally accepted accounting principles and, in the opinion
of management, reflect all adjustments (consisting of normal recurring
adjustments) necessary for a fair statement in all material respects of the
results for the interim periods presented. The accounting policies followed
by the Partnership are set forth in Note 1 to the financial statements
included in its Annual Report on Form 10-K for the year ended December 31,
1995.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Partnership commenced operations in November 1992 upon completing a
public offering of 16,033,009 units of limited and general partner interests
("Units") at a purchase price of $3.00 per Unit. Kelley Oil Corporation, the
managing general partner of the Partnership ("Kelley Oil"), owns 83.72% of
the Units, together with a 3.94% general partner interest in the Partnership.
RECENT DEVELOPMENTS
DRILLING OPERATIONS. Since inception, the Partnership participated in
drilling 39 wells, of which 30 gross (11.07 net) wells were found productive
and 9 gross (4.16 net) wells were dry. All of the Partnership's productive
wells were on line by the end of 1994. During 1995, two Partnership wells
were plugged when production declined to noncommercial levels, and one of the
Partnership's wells was included in a divestiture of nonstrategic properties
by Kelley Oil & Gas Corporation ("KOGC"), the parent company of Kelley Oil.
In addition, recompletion and workover operations were conducted on several
wells during 1995, and limited workover activities continued during the first
half of 1996. See "Liquidity and Capital Resources" below.
PRODUCTION PERFORMANCE. During 1995, required remedial work for
several significant wells and normal depletion of other wells contributed to
production declines from peak levels reached in the second half of 1994.
Those declines continued in the first half of 1996. Production levels in the
second half of 1995 and the first half of 1996 were further reduced by the
sale of one Partnership well included in a divestiture of nonstrategic
properties completed by KOGC in July 1995. The impact of lower production on
operating results was partially offset by a 25.7% increase in natural gas
prices for the first half of 1996 compared to average prices in the
corresponding period last year.
HEDGING ACTIVITIES. KOGC periodically uses forward sales contracts,
natural gas swap agreements and options to reduce exposure to downward price
fluctuations on natural gas production of KOGC and its subsidiaries,
including the Partnership (collectively, the "Kelley Group"). The swap
agreements generally provide for the Kelley Group to receive or make
counterparty payments on the differential between a fixed price and a
variable indexed price for natural gas. Gains and losses realized by the
Partnership from hedging activities are included in oil and gas revenues.
Through a combination of natural gas swap agreements and forward sales
contracts, 44.3% of the Kelley Group's natural gas production for the second
quarter of 1996 was affected by hedging transactions at an average Nymex
quoted price of $2.13 per MMBtu, before transaction costs and transportation
costs on gas delivered under forward sales contracts. As of July 31, 1996,
approximately 41.5% of the Kelley Group's anticipated natural gas production
for the balance of 1996 has been hedged by forward sales contracts and
natural gas swap agreements at an average Nymex quoted price of $2.22 per
MMBtu, before transaction and transportation costs. Additionally, the Kelley
Group has secured a price floor on 21.1% of estimated production for the
remainder of the year at an average price of $1.99 per MMBtu, after
transaction costs.
CONTOUR TRANSACTION. In February 1996, KOGC completed an equity
private placement with Contour Production Company L.L.C. ("Contour") for $48
million of common stock, providing Contour with 49.8% of KOGC's voting power
(the "Contour Transaction"). As part of the Contour Transaction, John F.
Bookout, President of Contour, and other executives named by him assumed
senior management positions with KOGC and Kelley Oil, and designees of
Contour obtained a majority of the seats on KOGC's board of directors.
RESULTS OF OPERATIONS
QUARTERS ENDED JUNE 30, 1996 AND 1995. Oil and gas revenues of
$1,270,000 for the second quarter of 1996 decreased 1.6% compared to
$1,290,000 in the corresponding quarter of 1995. During the current quarter,
production
7
<PAGE>
of natural gas decreased 29.2% from 675,000 Mcf in the second
quarter of 1995 to 478,000 Mcf, while the average price of natural gas
increased 38.6% from $1.66 per Mcf in the second quarter of 1995 to $2.30 per
Mcf in the current quarter. Production of crude oil in the current quarter
totaled 6,771 barrels, with an average sales price of $25.77 per barrel
compared to 8,321 barrels at $18.36 per barrel in the same quarter last year,
representing a volume decrease of 18.6% and a price increase of 40.4%.
Lease operating expenses and severance taxes were $190,000 in the
current quarter versus $285,000 in the second quarter of 1995, a decrease of
33.3%, reflecting lower production levels and reduced workover costs. On a
unit of production basis, these expenses decreased to $.37 per Mcfe in the
second quarter of 1996 from $.39 per Mcfe in the year-earlier quarter.
In the second quarter of 1996, the Partnership recovered previously
expensed exploration costs of $2,000, while no exploration costs were expensed
in the same quarter of 1995.
General and administrative expenses of $82,000 in the current quarter
decreased 37.4% from $131,000 in the second quarter of 1995, reflecting the
Partnership's share of administration costs associated with development
operations of the Kelley Group. On a unit of production basis, these expenses
decreased from $.18 per Mcfe in the second quarter of 1995 to $.16 per Mcfe in
the current quarter.
In the second quarters of 1996 and 1995, the Partnership incurred
interest expenses of $202,000 and $141,000, respectively, on a loan advanced
in August 1994 to fund part of its drilling expenses in excess of contributed
capital. The increase in interest expense for the second quarter of 1996
resulted from a higher interest rate compared to the second quarter of 1995.
See "Liquidity and Capital Resources" below.
Depreciation, depletion and amortization ("DD&A") decreased 56.5% from
$826,000 in the second quarter of 1995 to $359,000 in the current quarter,
primarily as a result of lower depletion rates following noncash impairment
charges aggregating $8.7 million recognized in the fourth quarter of 1995
against the carrying value of the Partnership's oil and gas properties under
the Financial Accounting Standards Board's Statement No. 121, Accounting for
the Impairment of Long-Lived Assets ("FAS 121"). On a unit of production
basis, DD&A decreased to $.69 per Mcfe in the second quarter of 1996 from
$1.14 per Mcfe in the same quarter last year.
The Partnership recognized net income of $439,000 or $.03 per Unit for
the second quarter of 1996, reflecting the foregoing developments. For the
second quarter of 1995, the Partnership recognized a net loss of $93,000 or
$.01 per Unit, primarily reflecting higher production costs and DD&A. Net
available cash from Partnership operations, representing its net income (loss)
plus exploration costs, noncash charges for DD&A and impairment of oil and gas
properties, aggregated $796,000 or $.05 per Unit in the current quarter
compared to $733,000 or $.04 per Unit in the second quarter of 1995.
SIX MONTH ENDED JUNE 30, 1996 AND 1995. Oil and gas revenues of
$2,522,000 for the first half of 1996 decreased 21.4% compared to $3,208,000
in the corresponding period of 1995. During the current period, production of
natural gas decreased 36.2% from 1,535,000 Mcf in the first half of 1995 to
980,000 Mcf, while the average price of natural gas increased 25.7% from $1.79
per Mcf in the first half of 1995 to $2.25 Mcf in the current period.
Production of crude oil in the current period totaled 14,549 barrels, with an
average sales price of $21.30 per barrel compared to 21,664 barrels at $17.80
per barrel in the same period last year, representing a volume decrease of
32.8% and a price increase of 19.7%.
Lease operating expenses and severance taxes were $426,000 in the
current period versus $594,000 in the first half of 1995, a decrease of 28.3%,
reflecting lower production levels and reduced workover costs. On a unit of
production basis, these expenses increased to $.40 per Mcfe in the first half
of 1996 from $.36 per Mcfe in the year-earlier period.
8
<PAGE>
In the first half of 1996, the Partnership recovered previously
expensed exploration costs of $2,000, while $6,000 of exploration costs were
expensed in the same period of 1995.
General and administrative expenses of $195,000 in the current period
decreased 34.1% from $296,000 in the first half of 1995, reflecting the
Partnership's share of administration costs associated with development
operations of the Kelley Group. On a unit of production basis, these expenses
remained constant at $.18 per Mcfe in the first half of both 1996 and 1995.
In the six months ended June 30, 1996 and 1995, the Partnership incurred
interest expenses of $405,000 and $267,000, respectively, on a loan advanced
in August 1994 to fund part of its drilling expenses in excess of contributed
capital. The increase in interest expense for the first half of 1996 resulted
from a higher interest rate compared to the first half of 1995. See
"Liquidity and Capital Resources" below.
DD&A decreased 65.5% from $2,139,000 in the first half of 1995 to
$739,000 in the current period, primarily as a result of lower depletion rates
following noncash impairment charges aggregating $8.7 million recognized in
the fourth quarter of 1995 against the carrying value of the Partnership's oil
and gas properties under FAS 121. On a unit of production basis, DD&A
decreased to $.69 per Mcfe in the first half of 1996 from $1.28 per Mcfe in
the same period last year.
The Partnership recognized net income of $762,000 or $.05 per Unit for
the first half of 1996, reflecting the foregoing developments. For the
corresponding period of 1995, the Partnership recognized a net loss of
$577,000 or $.04 per Unit, primarily reflecting a successful efforts
impairment charge of $485,000 at March 31, 1995 along with higher DD&A. Net
available cash from Partnership operations, representing its net loss plus
exploration costs and noncash charges for DD&A and impairment of oil and gas
properties, aggregated $1,499,000 or $.09 per Unit in the current period
compared to $2,053,000 or $.12 per Unit in the first half of 1995.
The results of operations for the quarter and six months ended June 30,
1996 are not necessarily indicative of the Partnership's operating results to
be expected for the full year.
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY. Net cash provided by the Partnership's operating activities
during the first six months of 1996, as reflected on its statement of cash
flows, totaled $87,000. During the period, funds were used in investing and
financing activities comprised primarily of property and equipment
expenditures of $180,000 for development of the Partnership's oil and gas
properties which was, partially offset by $85,000 from the sale of non-current
assets. As a result of these activities, the Partnership's cash and cash
equivalents decreased to $6,000 at June 30, 1996 from $14,000 at
December 31, 1995.
CAPITAL RESOURCES. Under the deferred payment option applicable to
investments in the Partnership exceeding $10,000, deferred subscriptions for
Units and the general partners' contributions were payable upon call through
August 1993. Kelley Oil's subscription for 13,422,310 Units and its 3.94%
general partner interest representing a total investment commitment of
$42,240,172 was paid timely except for a portion of the final capital call,
which was paid in installments through January 31, 1994, together with
interest at a market rate, as funds were required for the Partnership's
drilling operations. As of June 30, 1996, the Partnership was fully
capitalized with contributions aggregating $50,082,285.
The Partnership incurred drilling and recompletion expenses aggregating
$15.3 million in excess of its contributed capital (the "Drilling
Overexpenditures"), including $2.3 million of geological and geophysical
expenses payable to Kelley Oil (the "G&G Reimbursement Obligation"). In
August 1994, one of the credit facilities maintained by Kelley Oil was
modified to add the Partnership as a borrower, and $6 million was advanced to
the Partnership to fund part of its Drilling Overexpenditures. The
Partnership's bank debt was subsequently replaced by a $6 million loan from
Kelley Oil (the "Initial Loan") funded with borrowings by Kelley Oil under a
credit facility obtained in
9
<PAGE>
February 1995 (the "Prior Credit Facility"). The Partnership has paid
interest on the Initial Loan at the same rate charged to Kelley Oil under the
Prior Credit Facility and, following the repayment of borrowings under that
facility with proceeds from the issuance of KOGC's 13 1/2% Senior Notes in
June 1995, at the same rate payable under the Senior Notes, resulting in an
effective interest rate of 11.2% on the Initial Loan in 1995 and 13.5% in the
first half of 1996.
In February 1996, KOGC replaced the Prior Credit Facility with a $35
million revolving credit facility from a new bank group (the "Credit
Facility"). The agreement for the Credit Facility requires the payment of
interest only until March 15, 1999, when all borrowings will be repayable.
The Partnership and its operating joint venture (the "Joint Venture") are
guarantors under the Credit Facility. Although the Credit Facility is secured
by all the oil and gas assets of Kelley Oil, Kelley Operating Company, Ltd.
and the various guarantors, the lenders' recourse to Partnership and Joint
Venture assets upon any default is limited after Partnership debt repayment
to Kelley Oil's interest in the remaining assets.
To meet its financial obligations for the Drilling Overexpenditures, the
Partnership suspended distributions commencing in October 1994 and reinstated
a quarterly distribution for only one quarter in 1995. During 1995, the
Partnership's operating cash flow in excess of distributions was applied to
pay interest on the Initial Loan and to reduce unfunded payables for third
party Drilling Overexpenditures. Although the $6 million Initial Loan remains
outstanding, the balance of the Drilling Overexpenditures had been reduced
from Partnership cash flow to $1.3 million as of June 30, 1996, including a
$1.9 million reduction of the G&G Reimbursement Obligation. By continuing to
reduce its debt from operating cash flow, the Partnership expects to retire
substantially all the G&G Reimbursement Obligation during 1996 and begin
repayment of the Initial Loan in 1997.
DISTRIBUTION POLICY. The Partnership maintains a policy of distributing
the maximum amount of its net available cash to Unitholders on a quarterly
basis. For these purposes, net available cash generally represents the net
operating cash flow of the Partnership after deducting working capital
requirements. Between October 1993 and July 1994, the Partnership paid four
quarterly distributions of aggregating $.25 per Unit or a total $4,008,252,
together with $165,272 to the general partners for their general partner
interests. Distributions were suspended in October 1994 to enable the
Partnership to fund part of its drilling expenditures in excess of contributed
capital and borrowings. See "Capital Resources" above.
Cash distributions were temporarily resumed in July 1995 at a reduced
rate of $.02 per Unit (aggregating $320,660), together with $13,222 to the
general partners for their general partner interests. The balance of the
Partnership's net available cash from second quarter 1995 operations and all
of its net available cash from operations in the other three quarters of 1995
was used to reduce its Drilling Overexpenditures. The Partnership plans to
continue its suspension of distributions and apply all of its net available
cash in future periods to pay the balance of its unfunded Drilling
Overexpenditures, including the G&G Reimbursement Obligation, and begin
repayment of the Initial Loan. Any resumption of distributions prior to the
Partnership's retirement of these obligations will be dependent on future
production and price levels.
Net available cash per Unit from operations for the six months ended
June 30, 1996 and 1995 was determined as follows:
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
------------------
1996 1995
----- -----
Net income per Unit. . . . . . . . . . . . . . . . . . . $ .05 $(.04)
Depreciation, depletion and amortization charges
per Unit. . . . . . . . . . . . . . . . . . . . . . . . .04 .13
Exploration costs per Unit . . . . . . . . . . . . . . . -- .03
----- -----
Net available cash per Unit . . . . . . . . . . . . . . $ .09 $ .12
----- -----
----- -----
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
KELLEY PARTNERS 1992
DEVELOPMENT DRILLING PROGRAM
By: KELLEY OIL CORPORATION
Managing General Partner
Date: August 14, 1996 By: /s/ WILLIAM C. RANKIN
------------------------------
William C. Rankin,
Senior Vice President and
Chief Financial Officer
(Duly Authorized Officer)
(Principal Financial Officer)
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 6
<SECURITIES> 0
<RECEIVABLES> 1,211
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,248
<PP&E> 45,410
<DEPRECIATION> 39,791
<TOTAL-ASSETS> 6,867
<CURRENT-LIABILITIES> 1,699
<BONDS> 6,000
0
0
<COMMON> 0
<OTHER-SE> (832)
<TOTAL-LIABILITY-AND-EQUITY> 6,867
<SALES> 2,522
<TOTAL-REVENUES> 2,525
<CGS> 0
<TOTAL-COSTS> 424
<OTHER-EXPENSES> 934
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 405
<INCOME-PRETAX> 762
<INCOME-TAX> 0
<INCOME-CONTINUING> 762
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 762
<EPS-PRIMARY> .05
<EPS-DILUTED> 0.00
</TABLE>
