CONFORMED COPY
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
For the period ended September 30, 1998
or
[ ] Transition Report Pursuant to Section 13 of 15(d) of
the Securities and Exchange Act of 1934
For the transition period from to
Commission file number 033-70568
I.R.S. Employer Identification Number 55-0737400
PDC 1994-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
103 East Main Street
Bridgeport, WV 26330
Telephone: (304) 842-6256
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 XX No
<PAGE>
PDC 1994-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Balance Sheets - September 30, 1998 (unaudited)
and December 31, 1997 1
Statements of Operations - Three and
Nine Months Ended September 30, 1998 and 1997
(unaudited) 2
Statement of Partners' Equity -
Nine Months Ended September 30, 1998
(unaudited) 3
Statements of Cash Flows -
Nine Months Ended September 30, 1998 and 1997
(unaudited) 4
Notes to Financial Statements (unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II OTHER INFORMATION
Item 1. Legal Proceedings 7
Item 6. Exhibits and Reports on Form 8-K 7
<PAGE>
PDC 1994-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Balance Sheets
September 30, 1998 and December 31, 1997
<TABLE>
<C> <C> <C>
Assets 1998 1997
(unaudited)
Current assets:
Cash $ 2,055 $ 1,847
Accounts receivable - oil and gas revenues 119,045 166,893
Total current assets 121,100 168,740
Oil and gas properties,
successful efforts method
Oil and gas properties 7,174,936 7,174,936
Less accumulated depreciation, depletion,
and amortization 1,844,794 1,594,356
5,330,142 5,580,580
$5,451,242 $5,749,320
Current Liabilities and Partners' Equity
Current liabilities:
Accrued expenses $ 17,053 $ 39,152
Total current liabilities 17,053 39,152
Partners' equity 5,434,189 5,710,168
$5,451,242 $5,749,320
</TABLE>
See accompanying notes to financial statements.
-1-
<PAGE>
PDC 1994-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statements of Operations
Three Months and Nine Months Ended September 30, 1998 and 1997
(Unaudited)
<TABLE>
<C> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Revenues:
Sales of oil and gas $159,357 $185,389 $506,555 $628,019
Transportation revenue 725 476 1,579 927
Interest income 1,585 406 2,354 2,139
161,667 186,271 510,488 631,085
Expenses:
Lifting cost 48,634 50,989 136,302 138,200
Direct administrative cost 67 47 155 1,863
Depreciation, depletion and
amortization 77,243 113,366 250,438 351,066
125,944 164,402 386,895 491,129
Net income $ 35,723 $ 21,869 $123,593 $ 139,956
Net income per limited and
additional general partner unit $ 78 $ 50 $ 273 $ 309
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE>
PDC 1994-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statement of Partners' Equity
Nine months ended September 30, 1998
(Unaudited)
<TABLE>
<C> <C> <C> <C>
Limited and
additional Managing
general partners general partner Total
Balance, December 31, 1997 $4,567,806 $1,142,362 $5,710,168
Net income 103,031 20,562 123,593
Distribution to partners (324,098) (75,474) (399,572)
Balance, September 30, 1998 $4,346,739 $1,087,450 $5,434,189
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
PDC 1994-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Statements of Cash Flows
Nine Months ended September 30, 1998 and 1997
(Unaudited)
<TABLE>
<C> <C> <C>
1998 1997
Cash flows from operating activities:
Net income $123,593 $139,956
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion, and amortization 250,438 351,066
Changes in operating assets and liabilities:
Decrease in accounts receivable
- oil and gas revenues 47,848 58,595
Decrease in accrued expenses (22,099) (17,554)
Net cash provided from
operating activities 399,780 532,063
Cash flows from financing activities:
Distributions to partners (399,572) (531,788)
Net cash used by
financing activities (399,572) (531,788)
Net increase in cash 208 275
Cash at beginning of period 1,847 920
Cash at end of period $ 2,055 $ 1,195
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE>
PDC 1994-D LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)
Notes to Financial Statements
(Unaudited)
1. Accounting Policies
Reference is hereby made to the Partnership's Annual Report on Form
10-K for 1997, which contains a summary of significant accounting
policies followed by the Partnership in the preparation of its
financial statements. These policies were also followed in preparing
the quarterly report included herein.
2. Basis of Presentation
The Management of the Partnership believes that all adjustments
(consisting of only normal recurring accruals) necessary to a fair
statement of the results of such periods have been made. The results
of operations for the nine months ended September 30, 1998 are not
necessarily indicative of the results to be expected for the full year.
3. Oil and Gas Properties
Oil and Gas Properties are reported on the successful efforts method.
-5-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Partnership was funded on December 30, 1994 with initial
Limited and Additional General Partner contributions of $7,548,761
and the Managing General Partner, Petroleum Development Corporation
(PDC), contributed $1,651,292. Offering, organization and legal
costs of $943,595 were incurred leaving available capital of
$8,256,458 for Partnership activities.
The Partnership began exploration and development activities
subsequent to the funding of the Partnership and completed well
drilling activities by March 31, 1995. Forty-two wells have been
drilled, of which thirty-eight have been completed as producing wells.
Operations will be conducted with available funds and revenues
generated from oil and gas activities. No bank borrowings are
anticipated.
The Partnership had net working capital at September 30, 1998
of $104,047.
The Partnership's revenues from oil and gas will be affected by
changes in prices. As a result of changes in federal regulations,
gas prices are highly dependent on the balance between supply and
demand. The Partnership's gas sales prices are subject to increase
and decrease based on various market sensitive indices.
Results of Operations
Three Months Ended September 30, 1998 Compared with 1997
Natural gas sales decreased approximately 14.0% during the third
quarter of 1998 compared with the same period in 1997 due to lower
sales volumes of natural gas offset in part by higher average sales
prices. While the Partnership experienced a modest net income,
depreciation, depletion and amortization is a non-cash expense and
therefore the Partnership distributed $106,195 to the partners during
the third quarter of 1998.
Nine Months Ended September 30, 1998 Compared with 1997
Natural gas sales decreased approximately 19.34% during the first
nine months of 1998 compared with the same period in 1997 primarily
due to lower sales volumes of natural gas offset in part by higher
average sales prices. While the Partnership experienced a modest net
income, depreciation, depletion and amortization is a non-cash
expense and therefore the Partnership distributed $399,572 to the
partners during the first nine months of 1998.
Year 2000 Issue
State of Readiness
The Year 2000 Issue is the risk that computer programs using
two-digit data fields will fail to properly recognize the year 2000,
with the result being business interruption due to computer system
failures by PDC's software or hardware or that of government
entities, service providers and vendors. PDC, who administers all
aspects of the Partnership, has assessed the extent of the Year 2000
Issues affecting PDC and the Partnership. PDC believes that the new
computer system including operating software currently being
installed along with modifications being made by PDC's computer
technicians will address the dating system flaw inherent in most
operating systems. PDC expects to be fully Year 2000 Compliant by
the end of 1998.
-6-
<PAGE>
PDC has initiated formal communications with its significant
suppliers and service providers to determine the extent to which PDC
may be vulnerable to their failure to correct their own Year 2000
issues. It is expected that full identification will be completed by
March 31, 1999. To the extent that responses to Year 2000 readiness
are unsatisfactory, PDC intends to take appropriate action,
including identifying alternative suppliers and service providers who
have demonstrated Year 2000 readiness.
Cost of Readiness
PDC does not currently expect to charge the Partnership for any
portion of PDC's cost to become Year 2000 Complaint.
Risks of Year 2000 Issues
PDC presently believes that upon remediation of its business
software and hardware applications, the Year 2000 Issue will not
present a materially adverse risk to PDC's or the Partnership's
future consolidated results of operations, liquidity, and capital
resources. However, if such remediation is not completed in a timely
manner or the level of the timely compliance by key suppliers or
service providers is not sufficient, the Year 2000 Issue could have a
material impact on PDC's or the Partnership's operations including,
but not limited to, increased operating costs, loss of customers or
suppliers, loss of accounting functions, including well revenue
distributions, or other significant disruptions to PDC's or the
Partnership's business.
Contingency Plan
PDC has a contingency plan, and will implement it on any system
that remains non-complaint at December 31, 1998, if any, by early 1999.
New Accounting Standards
Statement of Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities (SFAS No. 133), was
issued by the Financial Accounting Standards Board in June, 1998.
Statement 133 standardizes the accounting for derivative instruments,
including certain derivative instruments embedded in other contracts.
The Partnership must adopt SFAS No. 133 by January 1, 2000; however,
early adoption is permitted. On adoption, the provisions of SFAS No.
133 must be applied prospectively. At the present time, the
Partnership cannot determine the impact that SFAS No. 133 will have
on its financial statements upon adoption, as such impact will be
based on the extent of derivative instruments, such as natural gas
futures contracts, outstanding at the date of adoption.
-7-
<PAGE>
CONFORMED COPY
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 6. Exhibits and Reports on Form 8-K
(a) None.
(b) No reports on Form 8-K have been filed during the quarter ended
September 30, 1998.
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.
PDC 1994-D Limited Partnership
(Registrant)
By its Managing General Partner
Petroleum Development Corporation
Date: November 6, 1998 /s/ Steven R. Williams
Steven R. Williams
President
Date: November 6, 1998 /s/ Dale G. Rettinger
Dale G. Rettinger
Executive Vice President
and Treasurer
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,055
<SECURITIES> 0
<RECEIVABLES> 119,045
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 121,100
<PP&E> 7,115,383
<DEPRECIATION> 1,844,794
<TOTAL-ASSETS> 5,330,142
<CURRENT-LIABILITIES> 17,053
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,330,142
<SALES> 506,555
<TOTAL-REVENUES> 510,488
<CGS> 136,302
<TOTAL-COSTS> 386,895
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 123,593
<INCOME-TAX> 0
<INCOME-CONTINUING> 123,593
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 123,593
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
