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 Commission File Number
September 30, 2000 33-10346-07 (1979-1)
33-10346-08 (1979-2)
DYCO 1979 OIL AND GAS PROGRAM
(TWO LIMITED PARTNERSHIPS)
(Exact Name of Registrant as specified in its charter)
41-1358013 (1979-1)
Minnesota 41-1358015 (1979-2)
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or Number)
organization)
Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103
- ------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(918) 583-1791
----------------------------------------------------
(Registrant's telephone number, including area code)
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
------ ------
-1-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
2000 1999
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 50,731 $ 8,884
Accrued oil and gas sales 71,383 43,829
-------- --------
Total current assets $122,114 $ 52,713
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 101,759 107,520
DEFERRED CHARGE 49,064 49,064
-------- --------
$272,937 $209,297
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 2,565 $ 8,231
Gas imbalance payable 3,254 3,254
-------- --------
Total current liabilities $ 5,819 $ 11,485
ACCRUED LIABILITY $ 43,514 $ 43,514
PARTNERS' CAPITAL:
General Partner, 32 general
partner units $ 2,237 $ 1,544
Limited Partners, issued and
outstanding, 3,140 Units 221,367 152,754
-------- --------
Total Partners' capital $223,604 $154,298
-------- --------
$272,937 $209,297
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
-2-
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
2000 1999
-------- --------
REVENUES:
Oil and gas sales $124,624 $91,612
Interest 1,251 683
-------- -------
$125,875 $92,295
COSTS AND EXPENSES:
Oil and gas production $ 16,874 $14,589
Depreciation, depletion, and
amortization of oil and gas
properties 3,144 3,203
General and administrative
(Note 2) 16,615 12,101
-------- -------
$ 36,633 $29,893
-------- -------
NET INCOME $ 89,242 $62,402
======== =======
GENERAL PARTNER (1%) - net income $ 892 $ 624
======== =======
LIMITED PARTNERS (99%) - net income $ 88,350 $61,778
======== =======
NET INCOME PER UNIT $ 28.13 $ 19.68
======== =======
UNITS OUTSTANDING 3,172 3,172
======== =======
The accompanying condensed notes are an integral part of
these financial statements.
-3-
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
2000 1999
-------- ---------
REVENUES:
Oil and gas sales $281,014 $205,117
Interest 2,073 1,597
-------- --------
$283,087 $206,714
COSTS AND EXPENSES:
Oil and gas production $ 40,331 $ 39,646
Depreciation, depletion, and
amortization of oil and gas
properties 7,618 10,984
General and administrative
(Note 2) 54,812 39,997
-------- --------
$102,761 $ 90,627
-------- --------
NET INCOME $180,326 $116,087
======== ========
GENERAL PARTNER (1%) - net income $ 1,803 $ 1,161
======== ========
LIMITED PARTNERS (99%) - net income $178,523 $114,926
======== ========
NET INCOME PER UNIT $ 56.85 $ 36.60
======== ========
UNITS OUTSTANDING 3,172 3,172
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
-4-
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
2000 1999
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $180,326 $116,087
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 7,618 10,984
Increase in accrued oil and gas
sales ( 27,554) ( 18,280)
Decrease in accounts payable ( 5,666) ( 263)
-------- ---------
Net cash provided by operating
activities $154,724 $108,528
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties ($ 2,021) $ -
Proceeds from the sale of oil and
gas properties 164 -
-------- --------
Net cash used by investing
activities ($ 1,857) $ -
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($111,020) ($126,880)
-------- --------
Net cash used by financing
activities ($111,020) ($126,880)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 41,847 ($ 18,352)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 8,884 54,891
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 50,731 $ 36,539
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
-5-
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
2000 1999
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $102,027 $ 97,905
Accrued oil and gas sales 86,960 58,563
-------- --------
Total current assets $188,987 $156,468
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 197,126 209,357
DEFERRED CHARGE 63,096 63,096
-------- --------
$449,209 $428,921
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 4,409 $ 4,845
Gas imbalance payable 64,289 64,289
-------- --------
Total current liabilities $ 68,698 $ 69,134
ACCRUED LIABILITY $ 26,154 $ 26,154
PARTNERS' CAPITAL:
General Partner, 29 general
partner units $ 3,545 $ 3,337
Limited Partners, issued and
outstanding, 2,860 Units 350,812 330,296
-------- --------
Total Partners' capital $354,357 $333,633
-------- --------
$449,209 $428,921
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
-6-
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
2000 1999
-------- --------
REVENUES:
Oil and gas sales $125,321 $100,978
Interest 1,540 1,153
-------- --------
$126,861 $102,131
COSTS AND EXPENSES:
Oil and gas production $ 24,904 $ 16,419
Depreciation, depletion, and
amortization of oil and gas
properties 4,049 4,961
General and administrative
(Note 2) 14,293 8,687
-------- --------
$ 43,246 $ 30,067
-------- --------
NET INCOME $ 83,615 $ 72,064
======== ========
GENERAL PARTNER (1%) - net income $ 837 $ 720
======== ========
LIMITED PARTNERS (99%) - net income $ 82,778 $ 71,344
======== ========
NET INCOME PER UNIT $ 28.94 $ 24.95
======== ========
UNITS OUTSTANDING 2,889 2,889
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
-7-
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
2000 1999
-------- --------
REVENUES:
Oil and gas sales $342,304 $237,004
Interest 4,435 3,409
-------- --------
$346,739 $240,413
COSTS AND EXPENSES:
Oil and gas production $ 63,855 $ 51,259
Depreciation, depletion, and
amortization of oil and gas
properties 12,231 19,184
General and administrative
(Note 2) 47,699 29,142
-------- --------
$123,785 $ 99,585
-------- --------
NET INCOME $222,954 $140,828
======== ========
GENERAL PARTNER (1%) - net income $ 2,230 $ 1,408
======== ========
LIMITED PARTNERS (99%) - net income $220,724 $139,420
======== ========
NET INCOME PER UNIT $ 77.17 $ 48.75
======== ========
UNITS OUTSTANDING 2,889 2,889
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
-8-
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
2000 1999
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $222,954 $140,828
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 12,231 19,184
Increase in accrued oil and
gas sales ( 28,397) ( 15,822)
Decrease in accounts payable ( 436) ( 1,518)
Decrease in payable to General
Partner - ( 11,439)
Decrease in accrued liability - ( 6,828)
-------- --------
Net cash provided by operating
activities $206,352 $124,405
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties $ - ($ 422)
-------- --------
Net cash used by investing
activities $ - ($ 422)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($202,230) ($115,560)
-------- --------
Net cash used by financing
activities ($202,230) ($115,560)
-------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 4,122 $ 8,423
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 97,905 80,537
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $102,027 $ 88,960
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
-9-
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheets as of September 30, 2000, statements of operations for
the three and nine months ended September 30, 2000 and 1999, and
statements of cash flows for the nine months ended September 30, 2000 and
1999 have been prepared by Dyco Petroleum Corporation ("Dyco"), the
General Partner of the Dyco Oil and Gas Program 1979-1 and 1979-2 Limited
Partnerships (individually, the "1979-1 Program" or the "1979-2 Program",
as the case may be, or, collectively, the "Programs"), without audit. In
the opinion of management all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position
at September 30, 2000, results of operations for the three and nine months
ended September 30, 2000 and 1999, and changes in cash flows for the nine
months ended September 30, 2000 and 1999 have been made.
Information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
financial statements be read in conjunction with the financial statements
and notes thereto included in the Programs' Annual Report on Form 10-K for
the year ended December 31, 1999. The results of operations for the period
ended September 30, 2000 are not necessarily indicative of the results to
be expected for the full year.
The limited partners' net income or loss per unit is based upon each
$5,000 initial capital contribution.
OIL AND GAS PROPERTIES
----------------------
Oil and gas operations are accounted for using the full cost method of
accounting. All productive and non-productive costs associated with the
acquisition, exploration and development of oil and gas reserves are
capitalized. The Programs' calculation of depreciation, depletion, and
amortization includes estimated future expenditures to be incurred in
developing proved reserves and estimated dismantlement and abandonment
costs, net of estimated salvage values. In the event the unamortized cost
of oil and gas properties being amortized exceeds the full cost ceiling
(as defined by the Securities and Exchange
-10-
Commission), the excess is charged to expense in the period during which
such excess occurs. Sales and abandonments of properties are accounted for
as adjustments of capitalized costs with no gain or loss recognized,
unless such adjustments would significantly alter the relationship between
capitalized costs and proved oil and gas reserves.
The provision for depreciation, depletion, and amortization of oil and gas
properties is calculated by dividing the oil and gas sales dollars during
the period by the estimated future gross income from the oil and gas
properties and applying the resulting rate to the net remaining costs of
oil and gas properties that have been capitalized, plus estimated future
development costs.
2. TRANSACTIONS WITH RELATED PARTIES
---------------------------------
Under the terms of each of the Program's partnership agreement, Dyco is
entitled to receive a reimbursement for all direct expenses and general
and administrative, geological and engineering expenses it incurs on
behalf of the Program. During the three months ended September 30, 2000
and 1999 the 1979-1 Program incurred such expenses totaling $16,615 and
$12,101, respectively, of which $14,490 and $11,130, respectively, were
paid each period to Dyco and its affiliates. During the nine months ended
September 30, 2000 and 1999 the 1979-1 Program incurred such expenses
totaling $54,812 and $39,997, respectively, of which $43,470 and $33,390,
respectively, were paid each period to Dyco and its affiliates. During the
three months ended September 30, 2000 and 1999 the 1979-2 Program incurred
such expenses totaling $14,293 and $8,687, respectively, of which $12,144
and $7,803, respectively, were paid each period to Dyco and its
affiliates. During the nine months ended September 30, 2000 and 1999 the
1979-2 Program incurred such expenses totaling $47,699 and $29,142,
respectively, of which $36,432 and $23,409, respectively, were paid each
period to Dyco and its affiliates.
Affiliates of the Programs operate certain of the Programs' properties.
Their policy is to bill the Programs for all customary charges and cost
reimbursements associated with these activities.
-11-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
USE OF FORWARD-LOOKING STATEMENTS AND ESTIMATES
- -----------------------------------------------
This Quarterly Report contains certain forward-looking statements. The
words "anticipate", "believe", "expect", "plan", "intend", "estimate",
"project", "could", "may" and similar expressions are intended to identify
forward-looking statements. Such statements reflect management's current
views with respect to future events and financial performance. This
Quarterly Report also includes certain information, which is, or is based
upon, estimates and assumptions. Such estimates and assumptions are
management's efforts to accurately reflect the condition and operation of
the Programs.
Use of forward-looking statements and estimates and assumptions involve
risks and uncertainties which include, but are not limited to, the
volatility of oil and gas prices, the uncertainty of reserve information,
the operating risk associated with oil and gas properties (including the
risk of personal injury, death, property damage, damage to the well or
producing reservoir, environmental contamination, and other operating
risks), the prospect of changing tax and regulatory laws, the availability
and capacity of processing and transportation facilities, the general
economic climate, the supply and price of foreign imports of oil and gas,
the level of consumer product demand, and the price and availability of
alternative fuels. Should one or more of these risks or uncertainties
occur or should estimates or underlying assumptions prove incorrect,
actual conditions or results may vary materially and adversely from those
stated, anticipated, believed, estimated, and otherwise indicated.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net proceeds from the Programs' operations less necessary operating
capital are distributed to investors on a quarterly basis. The net
proceeds from production are not reinvested in productive assets, except
to the extent that producing wells are improved or where methods are
employed to permit more efficient recovery of the Programs' reserves which
would result in a positive economic impact.
-12-
The Programs' available capital from subscriptions has been spent on oil
and gas drilling activities. There should be no further material capital
resource commitments in the future. The Programs have no debt commitments.
Management believes that cash for ordinary operational purposes will be
provided by current oil and gas production.
RESULTS OF OPERATIONS
- ---------------------
GENERAL DISCUSSION
The following general discussion should be read in conjunction with the
analysis of results of operations provided below. The most important
variables affecting the Programs' revenues are the prices received for the
sale of oil and gas and the volumes of oil and gas produced. The Program's
production is mainly natural gas, so such pricing and volumes are the most
significant factors.
Due to the volatility of oil and gas prices, forecasting future prices is
subject to great uncertainty and inaccuracy. Substantially all of the
Programs' gas reserves are being sold on the "spot market". Prices on the
spot market are subject to wide seasonal and regional pricing fluctuations
due to the highly competitive nature of the spot market. Such spot market
sales are generally short-term in nature and are dependent upon the
obtaining of transportation services provided by pipelines. It is likewise
difficult to predict production volumes. However, oil and gas are
depleting assets, so it can be expected that production levels will
decline over time. Recent gas prices have been significantly higher than
the Program's historical average. This is attributable to the higher
prices for crude oil, a substitute fuel in some markets, and reduced
production due to lower capital investments in 1998 and 1999.
-13-
1979-1 PROGRAM
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1999.
Three Months Ended September 30,
--------------------------------
2000 1999
-------- -------
Oil and gas sales $124,624 $91,612
Oil and gas production expenses $ 16,874 $14,589
Barrels produced 90 33
Mcf produced 32,695 38,631
Average price/Bbl $ 25.20 $ 22.58
Average price/Mcf $ 3.74 $ 2.35
As shown in the table above, total oil and gas sales increased $33,012
(36.0%) for the three months ended September 30, 2000 as compared to the
three months ended September 30, 1999. Of this increase, approximately
$45,000 was related to an increase in the average price of gas sold, which
increase was partially offset by a decrease of approximately $14,000
related to a decrease in volumes of gas sold. Volumes of oil sold
increased 57 barrels, while volumes of gas sold decreased 5,936 Mcf for
the three months ended September 30, 2000 as compared to the three months
ended September 30, 1999. The decrease in volumes of gas sold was
primarily due to (i) a negative prior period volume adjustment made by the
purchaser on one well during the three months ended September 30, 2000 and
(ii) normal declines in production. Average oil and gas prices increased
to $25.20 per barrel and $3.74 per Mcf, respectively, for the three months
ended September 30, 2000 from $22.58 per barrel and $2.35 per Mcf,
respectively, for the three months ended September 30, 1999.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $2,285 (15.7%) for the three months ended
September 30, 2000 as compared to the three months ended September 30,
1999. This increase was primarily due to an increase in production taxes
associated with the increase in oil and gas sales. As a percentage of oil
and gas sales, these expenses decreased to 13.5% for the three months
ended September 30, 2000 from 15.9% for the three months ended September
30, 1999. This percentage decrease was primarily due to the increases in
the average prices of oil and gas sold.
Depreciation, depletion, and amortization of oil and gas properties
decreased $59 (1.8%) for the three months ended September 30, 2000 as
compared to the three months ended September 30, 1999. As a percentage of
oil and gas sales, this expense decreased to 2.5% for the three months
ended
-14-
September 30, 2000 from 3.5% for the three months ended September 30,
1999. This percentage decrease was primarily due to the increases in the
average prices of oil and gas sold.
General and administrative expenses increased $4,514 (37.3%) for the three
months ended September 30, 2000 as compared to the three months ended
September 30, 1999. This increase was primarily due to a change in
allocation among the 1979-1 Program and other affiliated programs of
indirect general and administrative expenses reimbursed to the General
Partner. As a percentage of oil and gas sales, these expenses increased to
13.3% for the three months ended September 30, 2000 from 13.2% for the
three months ended September 30, 1999.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1999.
Nine Months Ended September 30,
-------------------------------
2000 1999
-------- --------
Oil and gas sales $281,014 $205,117
Oil and gas production expenses $ 40,331 $ 39,646
Barrels produced 187 183
Mcf produced 89,108 106,510
Average price/Bbl $ 26.09 $ 15.31
Average price/Mcf $ 3.10 $ 1.90
As shown in the table above, total oil and gas sales increased $75,897
(37.0%) for the nine months ended September 30, 2000 as compared to the
nine months ended September 30, 1999. Of this increase, approximately
$107,000 was related to an increase in the average price of gas sold,
which increase was partially offset by a decrease of approximately $33,000
related to a decrease in volumes of gas sold. Volumes of oil sold
increased 4 barrels, while volumes of gas sold decreased 17,402 Mcf for
the nine months ended September 30, 2000 as compared to the nine months
ended September 30, 1999. The decrease in volumes of gas sold was
primarily due to (i) a positive prior period volume adjustment made by the
purchaser on one well during the nine months ended September 30, 1999 and
(ii) normal declines in production. Average oil and gas prices increased
to $26.09 per barrel and $3.10 per Mcf, respectively, for the nine months
ended September 30, 2000 from $15.31 per barrel and $1.90 per Mcf,
respectively, for the nine months ended September 30, 1999.
-15-
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $685 (1.7%) for the nine months ended
September 30, 2000 as compared to the nine months ended September 30,
1999. As a percentage of oil and gas sales, these expenses decreased to
14.4% for the nine months ended September 30, 2000 from 19.3% for the nine
months ended September 30, 1999. This percentage decrease was primarily
due to the increases in the average prices of oil and gas sold.
Depreciation, depletion, and amortization of oil and gas properties
decreased $3,366 (30.6%) for the nine months ended September 30, 2000 as
compared to the nine months ended September 30, 1999. This decrease was
primarily due to (i) the decrease in volumes of gas sold and (ii) an
increase in the oil and gas prices used in the valuation of remaining
reserves at September 30, 2000 as compared to September 30, 1999. As a
percentage of oil and gas sales, this expense decreased to 2.7% for the
nine months ended September 30, 2000 from 5.4% for the nine months ended
September 30, 1999. This percentage decrease was primarily due to the
increases in the average prices of oil and gas sold and the dollar
decrease in depreciation, depletion, and amortization.
General and administrative expenses increased $14,815 (37.0%) for the nine
months ended September 30, 2000 as compared to the nine months ended
September 30, 1999. This increase was primarily due to a change in
allocation among the 1979-1 Program and other affiliated programs of audit
fees and indirect general and administrative expenses reimbursed to the
General Partner. As a percentage of oil and gas sales, these expenses
remained constant at 19.5% for the nine months ended September 30, 2000
and for the nine months ended September 30, 1999.
1979-2 PROGRAM
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1999.
Three Months Ended September 30,
--------------------------------
2000 1999
-------- --------
Oil and gas sales $125,321 $100,978
Oil and gas production expenses $ 24,904 $ 16,419
Barrels produced 23 318
Mcf produced 29,953 33,331
Average price/Bbl $ 21.78 $ 20.53
Average price/Mcf $ 4.17 $ 2.83
-16-
As shown in the table above, total oil and gas sales increased $24,343
(24.1%) for the three months ended September 30, 2000 as compared to the
three months ended September 30, 1999. Of this increase, approximately
$40,000 was related to an increase in the average price of gas sold. This
increase was partially offset by decreases of approximately $6,000 and
$10,000, respectively, related to decreases in volumes of oil and gas
sold. Volumes of oil and gas sold decreased 295 barrels and 3,378 Mcf,
respectively, for the three months ended September 30, 2000 as compared to
the three months ended September 30, 1999. The decrease in volumes of gas
sold was primarily due to normal declines in production. Average oil and
gas prices increased to $21.78 per barrel and $4.17 per Mcf, respectively,
for the three months ended September 30, 2000 from $20.53 per barrel and
$2.83 per Mcf, respectively, for the three months ended September 30,
1999.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $8,485 (51.7%) for the three months ended
September 30, 2000 as compared to the three months ended September 30,
1999. This increase was primarily due to (i) an increase in production
taxes associated with the increase in oil and gas sales, (ii) new
compression expenses incurred on one well during the three months ended
September 30, 2000, and (iii) an increase in repair and maintenance
expenses on three wells during the three months ended September 30, 2000
as compared to the three months ended September 30, 1999. As a percentage
of oil and gas sales, these expenses increased to 19.9% for the three
months ended September 30, 2000 from 16.3% for the three months ended
September 30, 1999. This percentage increase was primarily due to the
dollar increase in oil and gas production expenses.
Depreciation, depletion, and amortization of oil and gas properties
decreased $912 (18.4%) for the three months ended September 30, 2000 as
compared to the three months ended September 30, 1999. This decrease was
primarily due to (i) an increase in the oil and gas prices used in the
valuation of remaining reserves at September 30, 2000 as compared to
September 30, 1999 and (ii) upward revisions in the estimates of remaining
oil and gas reserves at December 31, 1999. As a percentage of oil and gas
sales, this expense decreased to 3.2% for the three months ended September
30, 2000 from 4.9% for the three months ended September 30, 1999. This
percentage decrease was primarily due to the increases in the average
prices of oil and gas sold.
-17-
General and administrative expenses increased $5,606 (64.5%) for the three
months ended September 30, 2000 as compared to the three months ended
September 30, 1999. This increase was primarily due to a change in
allocation among the 1979-2 Program and other affiliated programs of
indirect general and administrative expenses reimbursed to the General
Partner. As a percentage of oil and gas sales, these expenses increased to
11.4% for the three months ended September 30, 2000 from 8.6% for the
three months ended September 30, 1999. This percentage increase was
primarily due to the dollar increase in general and administrative
expenses.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1999.
Nine Months Ended September 30,
-------------------------------
2000 1999
-------- --------
Oil and gas sales $342,304 $237,004
Oil and gas production expenses $ 63,855 $ 51,259
Barrels produced 425 933
Mcf produced 95,375 94,930
Average price/Bbl $ 26.80 $ 15.78
Average price/Mcf $ 3.47 $ 2.34
As shown in the table above, total oil and gas sales increased $105,300
(44.4%) for the nine months ended September 30, 2000 as compared to the
nine months ended September 30, 1999. Of this increase, approximately
$108,000 was related to an increase in the average price of gas sold.
Volumes of oil sold decreased 508 barrels, while volumes of gas sold
increased 445 Mcf for the nine months ended September 30, 2000 as compared
to the nine months ended September 30, 1999. Average oil and gas prices
increased to $26.80 per barrel and $3.47 per Mcf, respectively, for the
nine months ended September 30, 2000 from $15.78 per barrel and $2.34 per
Mcf, respectively, for the nine months ended September 30, 1999.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $12,596 (24.6%) for the nine months ended
September 30, 2000 as compared to the nine months ended September 30,
1999. This increase was primarily due to (i) an increase in production
taxes associated with the increase in oil and gas sales, (ii) new
compression expenses incurred on two wells during the nine months ended
September 30, 2000, and (iii) an increase in repair and maintenance
expenses on two wells during the nine months ended September 30, 2000 as
compared to the nine months ended September 30, 1999. As a percentage of
oil and gas sales, these expenses decreased to 18.7% for the nine
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months ended September 30, 2000 from 21.6% for the nine months ended
September 30, 1999. This percentage decrease was primarily due to the
increases in the average prices of oil and gas sold.
Depreciation, depletion, and amortization of oil and gas properties
decreased $6,953 (36.2%) for the nine months ended September 30, 2000 as
compared to the nine months ended September 30, 1999. This decrease was
primarily due to (i) an increase in the oil and gas prices used in the
valuation of remaining reserves at September 30, 2000 as compared to
September 30, 1999 and (ii) upward revisions in the estimates of remaining
oil and gas reserves at December 31, 1999. As a percentage of oil and gas
sales, this expense decreased to 3.6% for the nine months ended September
30, 2000 from 8.1% for the nine months ended September 30, 1999. This
percentage decrease was primarily due to the dollar decrease in
depreciation, depletion, and amortization and the increases in the average
prices of oil and gas sold.
General and administrative expenses increased $18,557 (63.7%) for the nine
months ended September 30, 2000 as compared to the nine months ended
September 30, 1999. This increase was primarily due to a change in
allocation among the 1979-2 Program and other affiliated programs of audit
fees and indirect general and administrative expenses reimbursed to the
General Partner. As a percentage of oil and gas sales, these expenses
increased to 13.9% for the nine months ended September 30, 2000 from 12.3%
for the nine months ended September 30, 1999. This percentage increase was
primarily due to the dollar increase in general and administrative
expenses.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
The Programs do not hold any market risk sensitive instruments.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule containing summary financial
information extracted from the 1979-1 Program's
financial statements as of September 30, 2000 and for
the nine months ended September 30, 2000, filed
herewith.
27.2 Financial Data Schedule containing summary financial
information extracted from the 1979-2 Program's
financial statements as of September 30, 2000 and for
the nine months ended September 30, 2000, filed
herewith.
All other exhibits are omitted as inapplicable.
(b) Reports on Form 8-K.
None.
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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.
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED
PARTNERSHIP
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED
PARTNERSHIP
(Registrant)
BY: DYCO PETROLEUM CORPORATION
General Partner
Date: November 8, 2000 By: /s/Dennis R. Neill
-------------------------------
(Signature)
Dennis R. Neill
President
Date: November 8, 2000 By: /s/Patrick M. Hall
-------------------------------
(Signature)
Patrick M. Hall
Chief Financial Officer
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INDEX TO EXHIBITS
NUMBER DESCRIPTION
- ------ -----------
27.1 Financial Data Schedule containing summary financial information
extracted from the Dyco Oil and Gas Program 1979-1 Limited
Partnership's financial statements as of September 30, 2000 and for
the nine months ended September 30, 2000, filed herewith.
27.2 Financial Data Schedule containing summary financial information
extracted from the Dyco Oil and Gas Program 1979-2 Limited
Partnership's financial statements as of September 30, 2000 and for
the nine months ended September 30, 2000, filed herewith.
All other exhibits are omitted as inapplicable.
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