<PAGE> 1
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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 MARCH 31, 1999 COMMISSION FILE NO. 0-23784
KELLEY PARTNERS 1994 DEVELOPMENT
DRILLING PROGRAM
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 76-0419001
(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 [ ]
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KELLEY PARTNERS 1994 DEVELOPMENT DRILLING PROGRAM
INDEX
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I. FINANCIAL INFORMATION
Balance Sheets as of December 31, 1998 and March 31, 1999 (unaudited)................................. 2
Statements of Income for the three months ended March 31, 1998 (unaudited) and 1999 (unaudited)....... 3
Statements of Cash Flows for the three months ended March 31, 1998 (unaudited) and 1999 (unaudited)... 4
Notes to Financial Statements (unaudited)............................................................. 5
Management's Discussion and Analysis of Financial Condition and Results of Operations................. 7
PART II. OTHER INFORMATION................................................................................. 10
</TABLE>
1
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KELLEY PARTNERS 1994 DEVELOPMENT DRILLING PROGRAM
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1999
------------ ---------
(UNAUDITED)
<S> <C> <C>
ASSETS:
Cash and cash equivalents ...................................... $ -- $ --
Accounts receivable - trade .................................... 20 17
Accounts receivable - affiliates ............................... 3,076 2,859
-------- --------
Total current assets ........................................... 3,096 2,876
-------- --------
Oil and gas properties, successful efforts method:
Properties subject to amortization ........................... 45,294 45,292
Less: Accumulated depreciation, depletion & amortization .... (32,627) (33,000)
-------- --------
Total oil and gas properties ................................... 12,667 12,292
-------- --------
Total assets ................................................. $ 15,763 $ 15,168
======== ========
LIABILITIES:
Accounts payable and accrued expenses .......................... $ 173 $ 138
-------- --------
Total current liabilities ...................................... 173 138
-------- --------
Total liabilities ............................................ 173 138
-------- --------
PARTNERS' EQUITY:
LP Unitholders' equity ......................................... 857 827
GP Unitholders' equity ......................................... 14,116 13,608
Managing and Special General Partners' equity .................. 617 595
-------- --------
Total partners' equity ......................................... 15,590 15,030
-------- --------
Total liabilities and partners' equity ....................... $ 15,763 $ 15,168
======== ========
</TABLE>
See Notes to Financial Statements (unaudited).
2
<PAGE> 4
KELLEY PARTNERS 1994 DEVELOPMENT DRILLING PROGRAM
STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER UNIT DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1998 1999
-------- --------
<S> <C> <C>
OPERATING REVENUES:
Oil and gas sales .............................................. $ 2,650 $ 1,227
Interest income ................................................ -- --
-------- --------
Total revenues ................................................. 2,650 1,227
-------- --------
COSTS AND EXPENSES:
Lease operating expenses ....................................... 228 173
Severance taxes ................................................ 138 63
Exploration expenses ........................................... -- --
General and administrative expenses ............................ 238 91
Depreciation, depletion and amortization ....................... 861 373
-------- --------
Total expenses ................................................. 1,465 700
-------- --------
Net income ........................................................ $ 1,185 $ 527
======== ========
Net income allocable to LP and GP Unitholders ..................... $ 1,138 $ 506
======== ========
Net income allocable to Managing and
Special General Partners ....................................... $ 47 $ 21
======== ========
Net income per LP and GP unit ..................................... $ .05 $ .02
======== ========
Average LP and GP units outstanding ............................... 20,864 20,864
======== ========
</TABLE>
See Notes to Financial Statements (unaudited).
3
<PAGE> 5
KELLEY PARTNERS 1994 DEVELOPMENT DRILLING PROGRAM
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1998 1999
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ..................................................... $ 1,185 $ 527
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization ..................... 861 373
Changes in operating assets and liabilities:
Decrease in accounts receivable .............................. 824 220
Decrease in accounts payable and accrued expenses ............ (252) (35)
-------- --------
Net cash provided by operating activities ...................... 2,618 1,085
-------- --------
INVESTING ACTIVITIES:
Capital expenditures ........................................... (228) 2
-------- --------
Net cash (used in) provided by investing activities ............ (228) 2
-------- --------
FINANCING ACTIVITIES:
Distributions to partners ...................................... (2,390) (1,087)
-------- --------
Net cash used in financing activities .......................... (2,390) (1,087)
-------- --------
Decrease in cash and cash equivalents ............................. -- --
Cash and cash equivalents, beginning of period .................... -- --
-------- --------
Cash and cash equivalents, end of period .......................... $ -- $ --
======== ========
</TABLE>
See Notes to Financial Statements (unaudited).
4
<PAGE> 6
KELLEY PARTNERS 1994 DEVELOPMENT DRILLING PROGRAM
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - GENERAL, INDUSTRY CONDITIONS AND LIQUIDITY
General. The accompanying unaudited interim financial statements of
Kelley Partners 1994 Development Drilling Program (the "Partnership") have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission in accordance with generally accepted accounting principles for
interim financial information. These financial statements reflect all
adjustments (consisting of normal recurring adjustments) necessary for a fair
statement of the results for the interim periods presented. The results of
operations for the period ended March 31, 1999 are not necessarily indicative of
results to be expected for the full year. The accounting policies followed by
the Partnership are set forth in Note 2 to the financial statements included in
its Annual Report on Form 10-K for the year ended December 31, 1998. These
unaudited interim financial statements should be read in conjunction with the
audited financial statements and notes thereto included in the Partnership's
1998 Annual Report on Form 10-K.
During 1998 and through the first quarter of 1999, the oil and gas
industry experienced a world-wide excess of supply over demand for oil and
natural gas resulting in sharply reduced prices. As a result, many entities in
the oil and gas industry, including Kelley Oil Corporation, managing general
partner of the Partnership ("Kelley Oil") and a wholly owned subsidiary of
Kelley Oil & Gas Corporation ("KOGC") and the Partnership, experienced reduced
profitability and cash flows which, in turn, created significant liquidity
problems. To address these liquidity issues, KOGC has taken the measures
discussed in the following paragraphs.
In April 1999, KOGC entered into an Exploration and Development
Agreement with Phillips Petroleum Company ("Phillips") relating to certain of
its interests in the Bryceland, West Bryceland and Sailes fields in north
Louisiana. Pursuant to the agreement, KOGC: (1) received an $83 million cash
payment (subject to certain post-closing adjustments), (2) retained a 42 Bcf,
8-year volumetric overriding royalty interest and a 1% override on the excess
production above such royalty interest and (3) retained 25% of its working
interest in the Cotton Valley formation. In addition, Phillips, will at its risk
and expense, operate, develop, exploit and explore the properties thereby
relieving KOGC of significant operating, exploration and development costs in
the future. The effective date of the transaction was May 1, 1999 and it closed
on May 17, 1999.
As part of the Phillips transaction described above, the Partnership
conveyed its interest in the West Bryceland and Sailes fields to Phillips and
received funds of approximately $8.3 million, pending adjustments. The
Partnership's reserve quantities attributable to such fields represent
approximately one-half of the Partnership's total reserve quantities at January
1, 1999 and one-half of its total 1998 production.
In April 1999, KOGC negotiated a private offering of $135 million
principal amount, 14% Senior Secured Notes (the "Notes"). The Notes are secured
by a first lien on substantially all of KOGC's proved oil and natural gas
properties remaining after the sale to Phillips and guaranteed by three entities
wholly-owned by KOGC. With the consummation of the Phillips transaction, KOGC is
obligated to offer to repurchase $35 million principal amount of the Notes at a
repurchase price equal to 104% of the principal amount, plus accrued and unpaid
interest to the date of the repurchase within 30 days of such closing.
In April 1999, KOGC began an offer to purchase ("Offer to Purchase")
the outstanding principal amounts of its 7 7/8% Convertible Subordinated Notes
due December 15, 1999 and its 8 1/2% Convertible Subordinated Debentures due
April 1, 2000 (collectively, the "Securities") at a price equal to $590 per
$1,000 principal amount. On May 17, 1999, KOGC funded the repurchase of $46.1
million of the Securities through the Offer to Purchase and will recognize an
extraordinary gain of approximately $18.9 million in the second quarter of 1999.
5
<PAGE> 7
The net proceeds from the combination of these transactions and cash on
hand were used by KOGC to repay all borrowings outstanding under its Credit
Facility of $115.5 million plus accrued interest, to fund cash collateral for a
$1.5 million letter of credit, and to fund the repurchase of $46.1 million of
Securities under the Offer to Purchase, all at May 17, 1999. The remaining net
proceeds and cash flow from operations will be used to repurchase up to $35
million of Notes at 104% of their principal amount and for general corporate
purposes.
While industry conditions cannot be predicted with certainty and are
dependent upon a number of commodity and economic factors which are beyond
KOGC's control, KOGC believes that the cash on hand subsequent to the
consummation of the above transactions and the recent increase in oil and
natural gas prices, if continued, will sustain its operations over the
short-term. However, KOGC will continue to have significant debt outstanding and
limited ability to incur further indebtedness, which, combined with industry
conditions beyond its control, may adversely affect its financial condition,
results of operations and cash flows.
Comprehensive Income. In June 1998, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("SFAS 130"). SFAS 130 is effective for periods beginning
after December 15, 1998. SFAS 130 establishes standards for reporting and
displaying comprehensive income and its components. The purpose of reporting
comprehensive income is to report a measure of all changes in equity of an
enterprise that results from recognized transactions and other economic events
of the period other than transactions with owners in their capacity as owners.
As of March 31, 1999, there are no adjustments ("Other comprehensive income") to
net income in deriving comprehensive income.
Derivative and Hedge Accounting. In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133").
SFAS 133 establishes accounting and reporting standards for derivative
instruments and hedging activities that require an entity to recognize all
derivatives as an asset or liability measured at its fair value. Depending on
the intended use of the derivatives, changes in its fair value will be reported
in the period of change as either a component of earnings or a component of
other comprehensive income. SFAS 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. Earlier application of SFAS 133 is
encouraged, but not prior to the beginning of any fiscal quarter that begins
after issuance of the Statement. Retroactive application to periods prior to
adoption is not allowed.
6
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL.
In 1994, Kelley Partners 1994 Development Drilling Program (the
"Partnership") issued units of limited and general partner interests ("Units").
The Units represent 96.04% of the total interests in the Partnership. In
addition, the Partnership issued managing and special general partner interests
representing 3.96% of the total interests in the Partnership. Kelley Oil
Corporation, managing general partner of the Partnership ("Kelley Oil") and a
wholly owned subsidiary of Kelley Oil & Gas Corporation ("KOGC") owns 91.85% of
the Units, together with its 3.94% managing general partnership interest.
RECENT DEVELOPMENTS
Drilling Operations. Since inception, the Partnership participated in
drilling 92 gross (29.31 net) wells, of which 88 gross (26.64 net) wells were
found productive and 4 gross (2.67 net) wells were dry. See "Liquidity and
Capital Resources" below.
Hedging Activities. KOGC has periodically used forward sales contracts,
natural gas swap agreements, natural gas basis swap agreements and options to
reduce exposure to downward price fluctuations on its natural gas production.
KOGC's hedging activities also cover the gas production attributable to the
interest in such production of the public unitholders in its subsidiary
partnerships. The credit risk exposure from counterparty nonperformance on
natural gas forward sales contracts and derivative financial instruments is
generally the amount of unrealized gains under the contracts. KOGC has not
experienced counterparty nonperformance on these agreements and does not
anticipate any in future periods.
Through natural gas price swap agreements, approximately 66% of the
Partnership's natural gas production for the first quarter of 1999 was affected
by hedging transactions at an average NYMEX quoted price of $2.31 per Mmbtu
before transaction and transportation costs. Hedging activities increased
Partnership revenues by approximately $243,000 in the first quarter of 1999 as
compared to estimated revenues had no hedging activities been conducted. As of
March 31, 1999, approximately 24% of the Partnership's anticipated natural gas
production for the remainder of 1999 had been hedged by natural gas price swap
agreements at an average NYMEX quoted price of $2.03 per Mmbtu before
transaction and transportation costs. In addition, as of March 31, 1999,
outstanding natural gas basis swap agreements hedged approximately 46% of the
Partnership's anticipated natural gas production for April 1999 through
September 1999.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1999 and 1998. Oil and gas revenues of
$1,227,000 for the first quarter of 1999 decreased 54% compared to $2,650,000 in
the corresponding quarter of 1998 primarily as a result of lower gas production
volume and prices. Production of natural gas decreased 47% from 1,251,000 Mcf in
the first quarter of 1998 to 668,000 Mcf in the same period of 1999. Natural gas
prices of $2.05 per Mcf in the first quarter of 1998 decreased 13% to $1.78 in
the corresponding quarter of 1999. Natural gas production decreased due to
natural depletion.
Lease operating expenses and severance taxes were $236,000 in the
current quarter versus $366,000 in the first quarter of 1998. This 36% decrease
was due to lower severance taxes and reductions in other operating expenses due
to lower production. On a unit of production basis, these expenses increased
from $0.29 per Mcfe in the first quarter of 1998 to $0.34 per Mcfe in the same
quarter of 1999, primarily due to the decline in production volumes partially
offset by the reduction in lease operating expenses.
The Partnership did not incur exploration expenses in the first quarter
of either 1999 or 1998 reflecting the cessation of exploratory activities.
General and administrative expenses of $91,000 in the current quarter
decreased 62% from $238,000 in the first quarter of 1998, reflecting the
Partnership's share of administration costs associated with operations of KOGC.
On a unit of production basis, these expenses decreased from $0.19 per Mcfe in
the first quarter of 1998 to $0.14 per Mcfe in the current quarter.
7
<PAGE> 9
Depreciation, depletion and amortization ("DD&A") expense decreased 57%
from $861,000 in the first quarter of 1998 to $373,000 in the current quarter,
as a result of decreased production and lower depletion rates.
The Partnership recognized net income of $527,000 or $0.02 per Unit for
the first quarter of 1999 compared to first quarter 1998 net income of
$1,185,000 or $0.05 per Unit. The reasons for the variance between the first
quarter of 1999 and the first quarter of 1998 are described in the foregoing
discussion.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity. Net cash provided by the Partnership's operating activities
during the first three months of 1999, as reflected on its statement of cash
flows, totaled $1,085,000. During the period, funds provided by investing
activities were $2,000. For the first three months of 1999, cash distributions
to partners totaled $1,087,000. As a result of these activities, the
Partnership's cash and cash equivalents remained unchanged from December 31,
1998.
During 1998 and through the first quarter of 1999, the oil and gas
industry experienced a world-wide excess of supply over demand for oil and
natural gas resulting in sharply reduced prices. As a result, many entities in
the oil and gas industry, including Kelley Oil Corporation, managing general
partner of the Partnership ("Kelley Oil") and a wholly owned subsidiary of
Kelley Oil & Gas Corporation ("KOGC") and the Partnership, experienced reduced
profitability and cash flows which, in turn, created significant liquidity
problems. To address these liquidity issues, KOGC has taken the measures
discussed in the following paragraphs.
In April 1999, KOGC entered into an Exploration and Development
Agreement with Phillips Petroleum Company ("Phillips") relating to certain of
its interests in the Bryceland, West Bryceland and Sailes fields in north
Louisiana. Pursuant to the agreement, KOGC: (1) received an $83 million cash
payment (subject to certain post-closing adjustments), (2) retained a 42 Bcf,
8-year volumetric overriding royalty interest and a 1% override on the excess
production above such royalty interest and (3) retained 25% of its working
interest in the Cotton Valley formation. In addition, Phillips, will at its risk
and expense, operate, develop, exploit and explore the properties thereby
relieving KOGC of significant operating, exploration and development costs in
the future. The effective date of the transaction was May 1, 1999 and it closed
on May 17, 1999.
As part of the Phillips transaction described above, the Partnership
conveyed its interest in the West Bryceland and Sailes fields to Phillips and
received funds of approximately $8.3 million, pending adjustments. The
Partnership's reserve quantities attributable to such fields represent
approximately one-half of the Partnership's total reserve quantities at January
1, 1999 and one-half of its total 1998 production.
In April 1999, KOGC negotiated a private offering of $135 million
principal amount, 14% Senior Secured Notes (the "Notes"). The Notes are secured
by a first lien on substantially all of KOGC's proved oil and natural gas
properties remaining after the sale to Phillips and guaranteed by three entities
wholly-owned by KOGC. With the consummation of the Phillips transaction, KOGC is
obligated to offer to repurchase $35 million principal amount of the Notes at a
repurchase price equal to 104% of the principal amount, plus accrued and unpaid
interest to the date of the repurchase within 30 days of such closing.
In April 1999, KOGC began an offer to purchase ("Offer to Purchase")
the outstanding principal amounts of its 7 7/8% Convertible Subordinated Notes
due December 15, 1999 and its 8 1/2% Convertible Subordinated Debentures due
April 1, 2000 (collectively, the "Securities") at a price equal to $590 per
$1,000 principal amount. On May 17, 1999, KOGC funded the repurchase of $46.1
million of the Securities through the Offer to Purchase and will recognize an
extraordinary gain of approximately $18.9 million in the second quarter of 1999.
The net proceeds from the combination of these transactions and cash on
hand were used by KOGC to repay all borrowings outstanding under its Credit
Facility of $115.5 million plus accrued interest, to fund cash collateral for a
$1.5 million letter of credit, and to fund the repurchase of $46.1 million of
Securities under the Offer to Purchase, all at May 17, 1999. The remaining net
proceeds and cash flow from operations will be used to repurchase up to $35
million of Notes at 104% of their principal amount and for general corporate
purposes.
8
<PAGE> 10
While industry conditions cannot be predicted with certainty and are
dependent upon a number of commodity and economic factors which are beyond
KOGC's control, KOGC believes that the cash on hand subsequent to the
consummation of the above transactions and the recent increase in oil and
natural gas prices, if continued, will sustain its operations over the
short-term. However, KOGC will continue to have significant debt outstanding and
limited ability to incur further indebtedness, which, combined with industry
conditions beyond its control, may adversely affect its financial condition,
results of operations and cash flows.
Capital Resources. The capitalization of the partnership was completed
in 1998. Cash flows from operations are expected to be adequate to meet the
Partnership's capital expenditures and working capital needs.
Distribution Policy. The Partnership maintains a policy of distributing
cash which is not required for the conduct of Partnership business to
Unitholders on a quarterly basis. In February 1999, the Partnership made a
quarterly distribution of $0.05 per Unit (aggregating $1,087,000) as compared to
a distribution of $0.11 per Unit (aggregating $2,390,000) in the first quarter
of 1998. The Partnership intends to continue making quarterly distributions
consistent with its cash distribution policy.
Year 2000. KOGC, on behalf of the Partnership, has instigated reviews
and evaluations in response to Year 2000 issues. These issues involve the
potential disruption to systems, processes, and business practices that may
occur if system hardware and software utilized by KOGC, its vendors, and
customers are unable to process year 2000 data. The planning phase is completed
and KOGC is nearing completion of internal corrective measures.
KOGC is working closely with its information systems and technology
vendors to install updated software, where appropriate, that will be Year 2000
compliant. Currently, more than 90% of the critical Year 2000 internal systems
issues have been tested and corrected. The remainder are expected to be
installed and tested by the end of the third quarter of 1999.
KOGC has identified those vendors and others that it believes provide
material services or are vital to its business. Discussions with these companies
to determine their Year 2000 readiness are expected to be completed in the
second quarter of 1999. By mid-year 1999 KOGC plans to have completed its Year
2000 review and implemented necessary corrective measures.
The cost of reviewing and implementing corrective measures for Year
2000 issues to date has not been material to KOGC or the Partnership and has
been limited to use of Company and vendor personnel for review and
implementation of corrective measures. KOGC expects the remainder of the Year
2000 review and corrective measures to not involve significant costs.
Based on assessments to date and compliance plans in progress,
management is of the opinion that Year 2000 issues, including the cost of
implementing corrective measures, will not have a material impact on the
business or operations of KOGC or the Partnership. Nevertheless, as indicated
above, achieving Year 2000 readiness is subject to risk and uncertainties,
especially regarding third parties, and there can be no assurance KOGC or the
Partnership will not be adversely affected by Year 2000 issues.
The foregoing statements are intended to be and are hereby designated
"Year 2000 Readiness Disclosures" within the meaning of the Year 2000
Information and Readiness Act.
Inflation and Changing Prices. Oil and natural gas prices, as with most
commodities, are highly volatile, have fluctuated during recent years and
generally have not followed the same pattern as inflation.
9
<PAGE> 11
FORWARD-LOOKING STATEMENTS
Statements contained in this Report and other materials filed or to be
filed by the Partnership with the Securities and Exchange Commission (as well as
information included in oral or other written statements made or to be made by
the Partnership or its representatives) that are forward-looking in nature are
intended to be "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, relating to matters such as anticipated
operating and financial performance, business prospects, developments and
results of the Partnership. Actual performance, prospects, developments and
results may differ materially from any or all anticipated results due to
economic conditions and other risks, uncertainties and circumstances partly or
totally outside the control of the Partnership, including rates of inflation,
oil and natural gas prices, uncertainty of reserve estimates, rates and timing
of future production of oil and natural gas, exploratory and development
activities, acquisition risks, changes in the level and timing of future costs
and expenses related to drilling and operating activities and those risk factors
described on pages 9 and 10 of the Partnership's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998.
Words such as "anticipated," "expect," "estimate," "project" and
similar expressions are intended to identify forward-looking statements.
Forward-looking statements include the risk factors described in the
Partnership's Form 10-K mentioned above.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER: EXHIBIT
------- -------
<S> <C>
27 Financial Data Schedule (included only in the
electronic filing of this document).
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during the
first quarter of 1999.
10
<PAGE> 12
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 1994
DEVELOPMENT DRILLING PROGRAM
By: KELLEY OIL CORPORATION
Managing General Partner
Date: May 20, 1999 By: /s/ Rick G. Lester
--------------------------------
Rick G. Lester
Senior Vice President and
Chief Financial Officer
(Duly Authorized Officer)
(Principal Financial Officer)
11
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER: EXHIBIT
------- -------
<S> <C>
27 Financial Data Schedule (included only in the
electronic filing of this document).
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 2,876
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,876
<PP&E> 45,292
<DEPRECIATION> 33,000
<TOTAL-ASSETS> 15,168
<CURRENT-LIABILITIES> 138
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 15,030
<TOTAL-LIABILITY-AND-EQUITY> 15,168
<SALES> 1,227
<TOTAL-REVENUES> 1,227
<CGS> 0
<TOTAL-COSTS> 236
<OTHER-EXPENSES> 464
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 527
<INCOME-TAX> 0
<INCOME-CONTINUING> 527
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 527
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
