FORM 10-K405
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission File Number:
III-A: 0-18302; III-B: 0-18636; III-C: 0-18634;
III-D: 0-18936; III-E: 0-19010; III-F: 0-19102;
III-G: 0-19563
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-G
-----------------------------------------------
(Exact name of Registrant as specified in its Articles)
III-A: 73-1352993
III-B: 73-1358666
III-C: 73-1356542
III-D: 73-1357374
III-E: 73-1367188
III-F: 73-1377737
Oklahoma III-G: 73-1377828
- --------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two West Second Street, Tulsa, Oklahoma 74103
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918) 583-1791
Securities registered pursuant to Section 12(b) of the Act: None Securities
registered pursuant to Section 12(g) of the Act:
Depositary Units of Limited Partnership interest
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 the
filing requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K405 or any amendment to this Form 10-K405.
X Disclosure is not contained herein.
-----
Disclosure is contained herein.
-----
The Depositary Units are not publicly traded, therefore, Registrant cannot
compute the aggregate market value of the voting units held by non-affiliates of
the Registrant.
DOCUMENTS INCORPORATED BY REFERENCE: None
FORM 10-K405
TABLE OF CONTENTS
PART I.......................................................................1
ITEM 1. BUSINESS...................................................1
ITEM 2. PROPERTIES.................................................7
ITEM 3. LEGAL PROCEEDINGS.........................................21
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS.......24
PART II.....................................................................24
ITEM 5. MARKET FOR UNITS AND RELATED LIMITED PARTNER
MATTERS...................................................24
ITEM 6. SELECTED FINANCIAL DATA...................................27
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.......................34
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...............59
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.......................59
PART III....................................................................60
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL
PARTNER...................................................60
ITEM 11. EXECUTIVE COMPENSATION....................................61
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT............................................69
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............71
PART IV.....................................................................73
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K.......................................73
SIGNATURES............................................................79
PART I
ITEM 1. BUSINESS
General
The Geodyne Energy Income Limited Partnership III-A (the "III-A
Partnership"), Geodyne Energy Income Limited Partnership III-B (the "III-B
Partnership"), Geodyne Energy Income Limited Partnership III-C (the "III-C
Partnership"), Geodyne Energy Income Limited Partnership III-D (the "III-D
Partnership"), Geodyne Energy Income Limited Partnership III-E (the "III-E
Partnership"), Geodyne Energy Income Limited Partnership III-F (the "III-F
Partnership"), and Geodyne Energy Income Limited Partnership III-G (the "III-G
Partnership") (collectively, the "Partnerships") are limited partnerships formed
under the Oklahoma Revised Uniform Limited Partnership Act. Each Partnership is
composed of Geodyne Resources, Inc., a Delaware corporation, as general partner
("Geodyne" or the "General Partner"), Geodyne Depositary Company, a Delaware
corporation, as the sole initial limited partner, and public investors as
substitute limited partners (the "Limited Partners"). The Partnerships commenced
operations on the dates set forth below:
Date of
Partnership Activation
----------- ------------------
III-A November 21, 1989
III-B January 24, 1990
III-C February 27, 1990
III-D September 5, 1990
III-E December 26, 1990
III-F March 7, 1991
III-G September 20, 1991
The General Partner currently serves as general partner of 29 limited
partnerships and is a wholly-owned subsidiary of Samson Investment Company.
Samson Investment Company and its various corporate subsidiaries, including the
General Partner (collectively, the "Samson Companies"), are primarily engaged in
the production and development of and exploration for oil and gas reserves and
the acquisition and operation of producing properties. At December 31, 1997, the
Samson Companies owned interests in approximately 13,000 oil and gas wells
located in 19 states of the United States and the countries of Canada,
Venezuela, and Russia. At December 31, 1997, the Samson Companies operated
approximately 2,500 oil and gas wells located in 15 states of the United States
as well as Canada, Venezuela, and Russia.
1
The Partnerships are currently engaged in the business of owning interests
in producing oil and gas properties located in the continental United States.
The Partnerships may also engage to a limited extent in development drilling on
producing oil and gas properties as required for the prudent management of the
Partnerships.
As limited partnerships, the Partnerships have no officers, directors, or
employees. They rely instead on the personnel of the General Partner and the
other Samson Companies. As of February 15, 1998, the Samson Companies employed
approximately 820 persons. No employees are covered by collective bargaining
agreements, and management believes that the Samson Companies provide a sound
employee relations environment. For information regarding the executive officers
of the General Partner, see "Item 10. Directors and Executive Officers of the
General Partner."
The General Partner's and the Partnerships' principal place of business is
located at Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103, and
their telephone number is (918) 583-1791 or (800) 283-1791.
Pursuant to the terms of the partnership agreements for the Partnerships
(the "Partnership Agreements") the Partnerships will terminate on the following
dates:
Partnership Termination Date
----------- ------------------
III-A November 28, 1999
III-B January 24, 2000
III-C February 28, 2000
III-D September 5, 2000
III-E December 26, 2000
III-F March 7, 2001
III-G September 20, 2001
However, the Partnership Agreements provide that the General Partner may extend
the term of each Partnership for up to five periods of two years each. As of the
date of this Annual Report on Form 10-K405 ("Annual Report"), the General
Partner has not determined whether to extend the term of any Partnership.
Funding
Although the Partnership Agreements permit the Partnerships to incur
borrowings, operations and expenses are currently funded out of each
Partnership's revenues from oil and gas sales. The General Partner may, but is
not required to, advance funds to a Partnership for the same purposes for which
Partnership borrowings are authorized.
2
Principal Products Produced and Services Rendered
The Partnerships' sole business is the production of, and related
incidental development of, oil and gas. The Partnerships do not refine or
otherwise process crude oil and condensate. The Partnerships do not hold any
patents, trademarks, licenses, or concessions and are not a party to any
government contracts. The Partnerships have no backlog of orders and do not
participate in research and development activities. The Partnerships are not
presently encountering shortages of oilfield tubular goods, compressors,
production material, or other equipment.
Competition and Marketing
The domestic oil and gas industry is highly competitive, with a large
number of companies and individuals engaged in the exploration and development
of oil and gas properties. The ability of the Partnerships to produce and market
oil and gas profitably depends on a number of factors that are beyond the
control of the Partnerships. These factors include worldwide political
instability (especially in oil-producing regions), United Nations export
embargoes, the supply and price of foreign imports of oil and gas, the level of
consumer product demand (which can be heavily influenced by weather patterns),
government regulations and taxes, the price and availability of alternative
fuels, the overall economic environment, and the availability and capacity of
transportation and processing facilities. The effect of these factors on future
oil and gas industry trends cannot be accurately predicted or anticipated.
The most important variable affecting the Partnerships' revenues is the
prices received for the sale of oil and gas. Predicting future prices is very
difficult. Concerning past trends, average yearly wellhead gas prices in the
United States have been volatile for a number of years. For the past ten years,
such average prices have generally been in the $1.40 to $2.40 per Mcf range,
significantly below prices received in the early 1980s. Average gas prices in
the latter part of 1996 and parts of 1997, however, were somewhat higher than
those yearly averages. Gas prices are currently in the higher end of the 10-year
average price range described above.
Substantially all of the Partnerships' 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. In addition, such spot market sales are generally short-term in nature
and are dependent upon the obtaining of transportation services provided by
pipelines. Spot prices for the Partnerships' gas decreased from approximately
$3.57 per Mcf at December 31, 1996 to approximately $2.32 per Mcf at December
31, 1997. Such prices were on an MMBTU basis and differ from the prices actually
3
received by the Partnerships due to transportation and marketing costs, BTU
adjustments, and regional price and quality differences.
For the past ten years, average oil prices have generally been in the
$16.00 to $24.00 per barrel range. Due to global consumption and supply trends
over the last several months as well as expectations of at least a short-term
slowdown in Asian energy demand, oil prices have recently been in the mid to
lower portions of this pricing range, and in early 1998 dropped to as low as
approximately $13.75 per barrel. It is not known whether this trend will
continue. Prices for the Partnerships' oil decreased from approximately $23.75
per barrel at December 31, 1996 to approximately $16.25 per barrel at December
31, 1997.
Future prices for both oil and gas will likely be different from (and may
be lower than) the prices in effect on December 31, 1997. Primarily due to
heating season demand, year-end prices in many past years have tended to be
higher, and in some cases significantly higher, than the yearly average price
actually received by the Partnerships for at least the following year.
Management is unable to predict whether future oil and gas prices will (i)
stabilize, (ii) increase, or (iii) decrease.
Significant Customers
The following customers accounted for ten percent or more of the
Partnerships' oil and gas sales during the year ended December 31, 1997:
4
Partnership Purchaser Percentage
----------- ------------------------ ----------
III-A El Paso Energy Marketing
Company ("El Paso") 47.2%
Valero Industrial Gas L.P.
("Valero") 14.4%
III-B El Paso 37.9%
Sun Refining & Marketing
Company 13.1%
Phibro Energy, Inc. 12.7%
Valero 11.4%
III-C El Paso 49.8%
III-D El Paso 45.6%
Eaglwing Trading, Inc.
("Eaglwing") 18.3%
III-E Eaglwing 33.3%
El Paso 12.4%
III-F El Paso 28.5%
III-G El Paso 23.9%
In the event of interruption of purchases by one or more of the
Partnerships' significant customers or the cessation or material change in
availability of open access transportation by the Partnerships' pipeline
transporters, the Partnerships may encounter difficulty in marketing their gas
and in maintaining historic sales levels. Management does not expect any of its
open access transporters to seek authorization to terminate their transportation
services. Even if the services were terminated, management believes that
alternatives would be available whereby the Partnerships would be able to
continue to market their gas.
The Partnerships' principal customers for crude oil production are
refiners and other companies which have pipeline facilities near the producing
properties of the Partnerships. In the event pipeline facilities are not
conveniently available to production areas, crude oil is usually trucked by
purchasers to storage facilities.
Oil, Gas, and Environmental Control Regulations
Regulation of Production Operations -- The production of oil and gas is
subject to extensive federal and state laws and regulations governing a wide
variety of matters, including the drilling and spacing of wells, allowable rates
5
of production, prevention of waste and pollution, and protection of the
environment. In addition to the direct costs borne in complying with such
regulations, operations and revenues may be impacted to the extent that certain
regulations limit oil and gas production to below economic levels.
Regulation of Sales and Transportation of Oil and Gas -- Sales of crude
oil and condensate are made by the Partnerships at market prices and are not
subject to price controls. The sale of gas may be subject to both federal and
state laws and regulations. The provisions of these laws and regulations are
complex and affect all who produce, resell, transport, or purchase gas,
including the Partnerships. Although virtually all of the Partnerships' gas
production is not subject to price regulation, other regulations affect the
availability of gas transportation services and the ability of gas consumers to
continue to purchase or use gas at current levels. Accordingly, such regulations
may have a material effect on the Partnerships' operations and projections of
future oil and gas production and revenues.
Future Legislation -- Legislation affecting the oil and gas industry is
under constant review for amendment or expansion. Because such laws and
regulations are frequently amended or reinterpreted, management is unable to
predict what additional energy legislation may be proposed or enacted or the
future cost and impact of complying with existing or future regulations.
Regulation of the Environment -- The Partnerships' operations are subject
to numerous laws and regulations governing the discharge of materials into the
environment or otherwise relating to environmental protection. Compliance with
such laws and regulations, together with any penalties resulting from
noncompliance, may increase the cost of the Partnerships' operations or may
affect the Partnerships' ability to timely complete existing or future
activities. Management anticipates that various local, state, and federal
environmental control agencies will have an increasing impact on oil and gas
operations.
Insurance Coverage
The Partnerships are subject to all of the risks inherent in the
exploration for and production of oil and gas including blowouts, pollution,
fires, and other casualties. The Partnerships maintain insurance coverage as is
customary for entities of a similar size engaged in operations similar to that
of the Partnerships, but losses can occur from uninsurable risks or in amounts
in excess of existing insurance coverage. The occurrence of an event which is
not fully covered by insurance could have a material adverse effect on the
Partnerships' financial position and results of operations.
6
ITEM 2. PROPERTIES
Well Statistics
The following table sets forth the number of productive wells of the
Partnerships as of December 31, 1997.
Well Statistics(1)
As of December 31, 1997
Number of Gross Wells(2) Number of Net Wells(3)
------------------------------ --------------------------------
P/ship Total Oil Gas N/A(4) Total Oil Gas N/A(4)
- -------- ----- ----- --- ------ ------ ------ ----- ------
III-A 209 103 105 1 11.35 2.94 8.38 .03
III-B 155 71 83 1 7.58 3.17 4.40 .01
III-C 189 71 116 2 21.75 12.12 9.45 .18
III-D 204 138 63 3 14.57 8.48 5.91 .18
III-E 263 117 143 3 48.60 22.97 25.32 .31
III-F 626 487 138 1 27.07 15.21 11.82 .04
III-G 2,198 1,761 436 1 18.15 11.36 6.77 .02
- ----------
(1) The designation of a well as an oil well or gas well is made by the
General Partner based on the relative amount of oil and gas reserves for
the well. Regardless of a well's oil or gas designation, it may produce
oil, gas, or both oil and gas.
(2) As used in this Annual Report, "gross well" refers to a well in which a
working interest is owned; accordingly, the number of gross wells is the
total number of wells in which a working interest is owned.
(3) As used in this Annual Report, "net well" refers to the sum of the
fractional working interests owned in gross wells. For example, a 15%
working interest in a well represents one gross well, but 0.15 net well.
(4) Wells which have not been designated as oil or gas.
Drilling Activities
The following Partnerships participated in developmental drilling
activities during 1997:
Working
P/ship Name Location Type Interest
- ------ --------------- --------------- ---- --------
III-A Schwarz No. 8 Webb County, TX Dry 9.99%
III-B Schwarz No. 8 Webb County, TX Dry 4.65%
III-C Schwarz No. 8 Webb County, TX Dry 1.94%
III-G Goldsmith Adobe Ector, TX Oil .01%
Unit
III-G Plains Unit Yoakum, TX Oil .04%
7
The III-D, III-E, and III-F Partnerships participated in no drilling activities
during 1997.
Oil and Gas Production, Revenue, and Price History
The following tables set forth certain historical information concerning
the oil (including condensates) and gas production, net of all royalties,
overriding royalties, and other third party interests, of the Partnerships,
revenues attributable to such production, and certain price and cost
information. As used in the following tables, direct operating expenses include
lease operating expenses and production taxes. In addition, gas production is
converted to oil equivalents at the rate of six Mcf per barrel, representing the
estimated relative energy content of gas and oil, which rate is not necessarily
indicative of the relationship of oil and gas prices. The respective prices of
oil and gas are affected by market and other factors in addition to relative
energy content.
8
Net Production Data
III-A Partnership
-----------------
Year Ended December 31,
-----------------------------------
1997 1996 1995
---------- ---------- ----------
Production:
Oil (Bbls) 40,468 46,923 58,590
Gas (Mcf) 1,031,152 1,268,943 1,798,692
Oil and gas sales:
Oil $ 796,356 $ 975,701 $1,026,724
Gas 2,532,278 2,658,303 2,620,883
--------- --------- ---------
Total $3,328,634 $3,634,004 $3,647,607
========= ========= =========
Total direct operating
expenses $ 719,090 $ 899,073 $1,129,096
========= ========= =========
Direct operating expenses
as a percentage of oil
and gas sales 21.6% 24.7% 31.0%
Average sales price:
Per barrel of oil $19.68 $20.79 $17.52
Per Mcf of gas 2.46 2.09 1.46
Direct operating expenses
per equivalent Bbl of
oil $ 3.39 $ 3.48 $ 3.15
9
Net Production Data
III-B Partnership
-----------------
Year Ended December 31,
-----------------------------------
1997 1996 1995
---------- ---------- ----------
Production:
Oil (Bbls) 37,216 37,849 42,818
Gas (Mcf) 518,891 642,152 900,882
Oil and gas sales:
Oil $ 735,310 $ 794,186 $ 752,820
Gas 1,236,812 1,319,321 1,310,287
--------- --------- ---------
Total $1,972,122 $2,113,507 $2,063,107
========= ========= =========
Total direct operating
expenses $ 419,217 $ 497,491 $ 617,474
========= ========= =========
Direct operating expenses
as a percentage of oil
and gas sales 21.3% 23.5% 29.9%
Average sales price:
Per barrel of oil $19.76 $20.98 $17.58
Per Mcf of gas 2.38 2.05 1.45
Direct operating expenses
per equivalent Bbl of
oil $ 3.39 $ 3.43 $ 3.20
10
Net Production Data
III-C Partnership
-----------------
Year Ended December 31,
-------------------------------------
1997 1996 1995
---------- ---------- ----------
Production:
Oil (Bbls) 27,069 27,429 26,926
Gas (Mcf) 1,124,237 1,351,525 1,662,411
Oil and gas sales:
Oil $ 534,386 $ 567,261 $ 466,779
Gas 2,537,465 2,692,354 2,293,709
--------- --------- ---------
Total $3,071,851 $3,259,615 $2,760,488
========= ========= =========
Total direct operating
expenses $ 749,102 $ 781,115 $ 819,583
========= ========= =========
Direct operating expenses
as a percentage of oil
and gas sales 24.4% 24.0% 29.7%
Average sales price:
Per barrel of oil $19.74 $20.68 $17.34
Per Mcf of gas 2.26 1.99 1.38
Direct operating expenses
per equivalent Bbl of
oil $ 3.49 $ 3.09 $ 2.70
11
Net Production Data
III-D Partnership
-----------------
Year Ended December 31,
-------------------------------------
1997 1996 1995
---------- ---------- ----------
Production:
Oil (Bbls) 40,758 41,351 42,166
Gas (Mcf) 708,262 760,593 1,000,561
Oil and gas sales:
Oil $ 778,978 $ 832,109 $ 699,885
Gas 1,556,567 1,504,599 1,387,597
--------- --------- ---------
Total $2,335,545 $2,336,708 $2,087,482
========= ========= =========
Total direct operating
expenses $ 867,060 $ 928,670 $ 743,746
========= ========= =========
Direct operating expenses
as a percentage of oil
and gas sales 37.1% 39.7% 35.6%
Average sales price:
Per barrel of oil $19.11 $20.12 $16.60
Per Mcf of gas 2.20 1.98 1.39
Direct operating expenses
per equivalent Bbl of
oil $ 5.46 $ 5.52 $ 3.56
12
Net Production Data
III-E Partnership
-----------------
Year Ended December 31,
-------------------------------------
1997 1996 1995
---------- ---------- ----------
Production:
Oil (Bbls) 235,152 229,226 256,992
Gas (Mcf) 2,189,619 2,152,599 3,030,077
Oil and gas sales:
Oil $4,460,740 $4,572,097 $4,235,397
Gas 4,581,069 4,458,018 4,440,650
--------- --------- ---------
Total $9,041,809 $9,030,115 $8,676,047
========= ========= =========
Total direct operating
expenses $4,513,216 $4,418,264 $4,755,568
========= ========= =========
Direct operating expenses
as a percentage of oil
and gas sales 49.9% 48.9% 54.8%
Average sales price:
Per barrel of oil $18.97 $19.95 $16.48
Per Mcf of gas 2.09 2.07 1.47
Direct operating expenses
per equivalent Bbl of
oil $ 7.52 $ 7.51 $ 6.24
13
Net Production Data
III-F Partnership
-----------------
Year Ended December 31,
-------------------------------------
1997 1996 1995
---------- ---------- ----------
Production:
Oil (Bbls) 65,787 74,064 78,456
Gas (Mcf) 898,447 924,827 1,107,951
Oil and gas sales:
Oil $1,240,058 $1,494,695 $1,291,617
Gas 1,751,392 1,600,043 1,406,199
--------- --------- ---------
Total $2,991,450 $3,094,738 $2,697,816
========= ========= =========
Total direct operating
expenses $1,332,931 $1,237,607 $1,472,070
========= ========= =========
Direct operating expenses
as a percentage of oil
and gas sales 44.6% 40.0% 54.6%
Average sales price:
Per barrel of oil $18.85 $20.18 $16.46
Per Mcf of gas 1.95 1.73 1.27
Direct operating expenses
per equivalent Bbl of
oil $ 6.18 $ 5.42 $ 5.59
14
Net Production Data
III-G Partnership
-----------------
Year Ended December 31,
-------------------------------------
1997 1996 1995
---------- ---------- ----------
Production:
Oil (Bbls) 47,493 54,083 56,567
Gas (Mcf) 500,966 499,884 596,184
Oil and gas sales:
Oil $ 897,536 $1,091,687 $ 932,457
Gas 947,728 870,868 762,390
--------- --------- ---------
Total $1,845,264 $1,962,555 $1,694,847
========= ========= =========
Total direct operating
expenses $ 854,673 $ 804,410 $ 937,989
========= ========= =========
Direct operating expenses
as a percentage of oil
and gas sales 46.3% 41.0% 55.3%
Average sales price:
Per barrel of oil $18.90 $20.19 $16.48
Per Mcf of gas 1.89 1.74 1.28
Direct operating expenses
per equivalent Bbl of
oil $ 6.52 $ 5.85 $ 6.02
Proved Reserves and Net Present Value
The following table sets forth each Partnership's estimated proved oil and
gas reserves and net present value therefrom as of December 31, 1997. The
schedule of quantities of proved oil and gas reserves was prepared by the
General Partner in accordance with the rules prescribed by the Securities and
Exchange Commission (the "SEC"). Certain reserve information was reviewed by
Ryder Scott Company Petroleum Engineers ("Ryder Scott"), an independent
petroleum engineering firm. As used throughout this Annual Report, "proved
reserves" refers to those estimated quantities of crude oil, gas, and gas
liquids which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known oil and gas reservoirs
under existing economic and operating conditions.
Net present value represents estimated future gross cash flow from the
production and sale of proved reserves, net of estimated oil and gas production
costs (including production taxes, ad valorem taxes, and operating expenses) and
estimated
15
future development costs, discounted at 10% per annum. Net present value
attributable to the Partnerships' proved reserves was calculated on the basis of
current costs and prices at December 31, 1997. Such prices were not escalated
except in certain circumstances where escalations were fixed and readily
determinable in accordance with applicable contract provisions. The prices used
in calculating the net present value attributable to the Partnerships' proved
reserves do not necessarily reflect market prices for oil and gas production
subsequent to December 31, 1997. Year-end prices have generally been higher than
prices during the rest of the year. There can be no assurance that the prices
used in calculating the net present value of the Partnerships' proved reserves
at December 31, 1997 will actually be realized for such production.
The process of estimating oil and gas reserves is complex, requiring
significant subjective decisions in the evaluation of available geological,
engineering, and economic data for each reservoir. The data for a given
reservoir may change substantially over time as a result of, among other things,
additional development activity, production history, and viability of production
under varying economic conditions; consequently, it is reasonably possible that
material revisions to existing reserve estimates may occur in the near future.
Although every reasonable effort has been made to ensure that these reserve
estimates represent the most accurate assessment possible, the significance of
the subjective decisions required and variances in available data for various
reservoirs make these estimates generally less precise than other estimates
presented in connection with financial statement disclosures.
Proved Reserves and
Net Present Values
From Proved Reserves
As of December 31, 1997(1)
III-A Partnership:
- -----------------
Estimated proved reserves:
Gas (Mcf) 5,231,840
Oil and liquids (Bbls) 112,863
Net present value (discounted at
10% per annum) $ 7,515,082
16
III-B Partnership:
- -----------------
Estimated proved reserves:
Gas (Mcf) 2,533,853
Oil and liquids (Bbls) 93,543
Net present value (discounted at
10% per annum) $ 3,944,494
III-C Partnership:
- -----------------
Estimated proved reserves:
Gas (Mcf) 7,179,593
Oil and liquids (Bbls) 153,312
Net present value (discounted at
10% per annum) $ 8,080,660
III-D Partnership:
- -----------------
Estimated proved reserves:
Gas (Mcf) 3,804,550
Oil and liquids (Bbls) 478,395
Net present value (discounted at
10% per annum) $ 5,140,532
III-E Partnership:
- -----------------
Estimated proved reserves:
Gas (Mcf) 10,133,149
Oil and liquids (Bbls) 3,011,540
Net present value (discounted at
10% per annum) $18,082,732
III-F Partnership:
- -----------------
Estimated proved reserves:
Gas (Mcf) 5,603,809
Oil and liquids (Bbls) 399,746
Net present value (discounted at
10% per annum) $ 7,081,731
17
III-G Partnership:
- -----------------
Estimated proved reserves:
Gas (Mcf) 2,996,317
Oil and liquids (Bbls) 302,928
Net present value (discounted at
10% per annum) $ 4,174,021
- ----------
(1) Includes certain gas balancing adjustments which cause the gas volumes and
net present values to differ from the reserve reports which were prepared
by the General Partner and reviewed by Ryder Scott.
No estimates of the proved reserves of the Partnerships comparable to
those included herein have been included in reports to any federal agency other
than the SEC. Additional information relating to the Partnerships' proved
reserves is contained in Note 4 to the Partnerships' financial statements,
included in Item 8 of this Annual Report.
Significant Properties
The following tables set forth certain well and reserves information for
the basins in which the Partnerships own a significant amount of oil and gas
properties. The tables contain the following information for each significant
basin: (i) the number of gross wells and net wells, (ii) the number of wells in
which only a non-working interest is owned, (iii) the Partnership's total number
of wells, (iv) the number of wells operated by the Partnership's affiliates, (v)
estimated proved oil reserves, (vi) estimated proved gas reserves, and (vii) the
present value (discounted at 10% per annum) of estimated future net cash flow.
The Anadarko Basin is located in western Oklahoma and the Texas panhandle,
while the Arkla Basin is located in southern Arkansas and northern Louisiana.
The Gulf Coast Basin is located in southern Louisiana and southeast Texas, while
the Permian Basin straddles west Texas and southeast New Mexico. Southern
Oklahoma contains the Southern Oklahoma Folded Belt Basin. The Jay-Little
Escambia Creek Field Unit is located in Santa Rosa County, Florida, while the
Green River Basin is located in southern Wyoming and Northwest Colorado.
18
Significant Properties
----------------------
Wells
Operated by
Affiliates Oil Gas
Gross Net Other Total ------------ Reserves Reserves Present
Basin Wells Wells Wells(1) Wells Number % (Bbl) (Mcf) Value
- ------------------ ------ ------- -------- ------ ------ ---- -------- ---------- ----------
III-A Partnership:
Anadarko 56 2.54 9 65 9 14% 14,170 1,514,981 $1,907,001
Arkla 40 1.23 - 40 - -% 10,721 772,846 1,282,485
Gulf Coast 52 3.69 23 75 14 19% 79,341 2,359,512 3,777,051
III-B Partnership:
Gulf Coast 47 1.91 23 70 9 13% 50,059 1,232,306 $ 944,349
Anadarko 39 3.11 4 43 3 7% 33,348 581,492 925,814
Arkla 40 .67 - 40 - -% 5,561 403,496 670,904
III-C Partnership:
Anadarko 56 6.49 77 133 33 25% 42,593 3,485,641 $3,903,830
Southern Okla.
Folded Belt 42 7.95 59 101 23 23% 84,201 2,148,844 2,540,127
Permian 29 6.41 29 58 28 48% 19,065 1,052,884 946,870
III-D Partnership:
Anadarko 33 3.32 77 110 32 29% 6,505 2,570,828 $2,655,728
Jay LEC Field 78 .51 - 78 - -% 393,859 80,306 1,054,242
Permian 29 5.36 29 58 28 48% 15,194 856,543 753,650
- ---------------------
(1) Wells in which only a non-working (e.g. royalty) interest is owned.
19
Significant Properties
----------------------
Wells
Operated by
Affiliates Oil Gas
Gross Net Other Total ------------ Reserves Reserves Present
Basin Wells Wells Wells(1) Wells Number % (Bbl) (Mcf) Value
- ------------------ ------ ------- -------- ------ ------ ---- -------- ---------- ----------
III-E Partnership:
Jay-Lec Field 78 3.65 - 78 - - 2,810,881 839,418 $7,816,418
Green River 54 4.22 5 59 - - 31,904 4,327,879 4,003,393
Gulf Coast 61 24.98 6 67 30 45% 42,821 2,408,683 3,134,368
III-F Partnership:
Green River 63 6.70 5 68 9 13% 73,317 3,634,235 $3,347,977
Anadarko 128 7.28 - 128 27 21% 44,834 908,960 1,059,254
Gulf Coast 50 1.80 1 51 1 2% 11,598 748,997 1,020,342
III-G Partnership:
Green River 63 3.85 5 68 9 13% 44,104 1,817,944 $1,674,150
Anadarko 160 4.38 9 169 47 28% 28,754 556,454 645,317
Gulf Coast 50 .93 1 51 1 2% 6,216 376,182 513,666
- --------------------
(1) Wells in which only a non-working (e.g. royalty) interest is owned.
20
Title to Oil and Gas Properties
Management believes that the Partnerships have satisfactory title to their
oil and gas properties. Record title to all of the Partnerships' properties is
held by either the Partnerships or Geodyne Nominee Corporation, an affiliate of
the General Partner.
Title to the Partnerships' properties is subject to customary royalty,
overriding royalty, carried, working, and other similar interests and
contractual arrangements customary in the oil and gas industry, to liens for
current taxes not yet due, and to other encumbrances. Management believes that
such burdens do not materially detract from the value of such properties or from
the Partnerships' interest therein or materially interfere with their use in the
operation of the Partnerships' business.
ITEM 3. LEGAL PROCEEDINGS
On October 26, 1994 Geodyne and the Partnerships, among other parties,
were named as defendants in a lawsuit alleging causes of action based on fraud,
negligent misrepresentation, breach of fiduciary duty, breach of implied
covenant, and breach of contract in connection with the offer and sale of
limited partnership interests ("Units") in the Partnerships (Sidney Neidick et
al. v. Geodyne Resources, Inc., et al., Case No. 94-052860, District Court of
Harris County, Texas). The plaintiffs' petition alleged that the lawsuit was
being brought as a class action on behalf of investors who purchased Units in
the Partnerships. On June 7, 1995, Geodyne and the Partnerships were dismissed
without prejudice as defendants in the matter. In addition, on June 7, 1995, the
matter was certified as a class action.
On November 23 and 25, 1994, Geodyne, PaineWebber Incorporated
("PaineWebber"), and certain other parties were named as defendants in two
related lawsuits alleging misrepresentations made to induce investments in the
Partnerships and asserting causes of action for common law fraud and deceit and
unjust enrichment (Romine v. PaineWebber, Inc., et al, Case No. 94-CIV-8558, U.
S. District Court, Southern District of New York and Romine v. PaineWebber,
Inc., et al, Case No. 94-132844, Supreme Court of the State of New York, County
of New York). The federal court case was later consolidated with other similar
actions (to which Geodyne is not a party) under the title In Re: PaineWebber
Limited Partnerships' Litigation and was certified as a class action on May 30,
1995 (the "Federal Partnership Class Action"). The Federal Partnership Class
Action also alleges violations of 18 U.S.C. Section 1962(c) and the Securities
Exchange Act of 1934. Compensatory and punitive damages, interest, and costs
have been requested in both matters. The amended complaint in the Federal
Partnership Class Action no longer asserts any claim directly against Geodyne.
21
On January 18, 1996, PaineWebber issued a press release indicating that it
had reached an agreement to settle the pending Federal Partnership Class Action
along with the Neidick matter referred to above (collectively, the "PaineWebber
Partnership Class Actions"), along with a settlement with the SEC and an
agreement to settle with various state securities regulators. On that date,
PaineWebber paid $125 million into an interest bearing account as part of a
memorandum of understanding in connection with the proposed settlement (the
"Settlement Fund"). The Settlement Fund applies to claims related to both the
Partnerships and certain other investment programs sold by PaineWebber. In
addition, PaineWebber agreed to a SEC administrative order creating a capped $40
million fund (the "SEC Claims Fund"), which is to be distributed to eligible
Limited Partners by an independent administrator (the "Claims Administrator"); a
civil penalty of $5 million leveled by the SEC; and payments aggregating $5
million to state securities administrators. Such settlement is not an obligation
of either the Partnerships or Geodyne and, accordingly, would not affect the
financial statements of the Partnerships.
In connection with the PaineWebber Partnership Class Actions, on July 17,
1996 the federal court entered a preliminary order regarding the settlement
proceedings referred to above. Pursuant to that order, plaintiffs' counsel
mailed to class members the Class Settlement Notice (the "Notice") and Proof of
Claim. Eligible class members are generally those who purchased their Units
through PaineWebber on or before December 31, 1992 and who have not (i)
previously opted out of the Class, (ii) previously released PaineWebber, or
(iii) finally adjudicated their claims against PaineWebber.
Plaintiffs' counsel will be responsible for allocating payments from the
$125 million Settlement Fund previously funded by PaineWebber among eligible
Limited Partners and investors in other unrelated PaineWebber partnerships in
accordance with the settlement. The amount and date of any payment will vary
depending upon many factors set forth in the Notice. It is currently expected
that payments from the Settlement Fund will be made some time in 1998.
In addition, eligible Limited Partners in the Partnerships who held their
Units on June 3, 1996 may be entitled to certain additional payments from an
escrow fund to which PaineWebber will make payments through May 30, 2001 if spot
market oil and natural gas prices as reported by the New York Mercantile
Exchange fall below certain thresholds set forth in the Notice (the "Pricing
Guarantee"). The threshold prices used in the Pricing Guarantee are $18.00 per
barrel of oil and $1.80 per Mcf of gas. Under the Notice, PaineWebber payments,
if any, made pursuant to the Pricing Guarantee will be paid to Limited Partners
of record on June 30, 1996 irrespective of whether they subsequently
sell/dispose of their Units to third parties. The Pricing
22
Guarantee does NOT attach to the Units as an attribute of ownership in the
Partnerships and is not an obligation of either Geodyne or the Partnerships.
A look back provision is also included in the settlement which may provide
additional funds as of January 1, 2001 for eligible Limited Partners. Class
members who sold their Units prior to June 30, 1996 will not be eligible for
payments, if any, under the Pricing Guarantee or the look back provision.
Eligible Limited Partners were required to timely execute and return a
proof of claim by January 17, 1997 in order to participate in the settlement.
In connection with the SEC Claims Fund, on April 17, 1996, PaineWebber
mailed a Notice and Claim Form to each Limited Partner who purchased Units in
the Partnerships through PaineWebber from January 1, 1986 to December 31, 1992.
Limited Partners are not eligible to participate in the claims process if they
(i) previously reached a settlement with PaineWebber or (ii) had their direct
investment claim resolved by a court or in arbitration. Participation in the
claims process is optional, and does not prevent a Limited Partner from pursuing
any other remedy against PaineWebber that may be available. Limited Partners had
until October 22, 1996 to complete the claim form and return it to the Claims
Administrator. The determination of whether a Limited Partner is entitled to a
recovery under the SEC Claims Fund will be based on whether or not the Claims
Administrator determines that the Limited Partner's investment in the
Partnerships was suitable for him at the time of purchase. In addition, if the
Limited Partner has opted out of the PaineWebber Partnership Class Action and
has not already settled with PaineWebber or has had a claim resolved by a court
or in arbitration, the Claims Administrator will also consider allegations that
misrepresentations were made in connection with the sale of the Units.
On March 20, 1997 the settlement described above was confirmed by the
Federal District Court. Certain limited partners in partnerships that were not
sponsored by the General Partner appealed the confirmation; however, all such
appeals were denied by the United States Second Circuit Court of Appeals and the
settlement order is now final. The parties are currently awaiting a ruling by
the federal district judge as to the amount of attorneys' fees to be awarded to
the Plaintiffs' attorneys from the Settlement Fund. The General Partner expects
that the Settlement Fund will be distributed to eligible class members within a
few months following the entry of a final order on the attorneys' fees.
23
To the knowledge of the General Partner, neither the General Partner nor
the Partnerships or their properties are subject to any litigation, the results
of which would have a material effect on the Partnerships' or the General
Partner's financial condition or operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS
There were no matters submitted to a vote of the Limited Partners of any
Partnership during 1997.
PART II
ITEM 5. MARKET FOR UNITS AND RELATED LIMITED PARTNER MATTERS
As of January 31, 1998, the number of Units outstanding and the
approximate number of Limited Partners of record in the Partnerships were as
follows:
Number of Number of
Partnership Units Limited Partners
----------- --------- ----------------
III-A 263,976 1,421
III-B 138,336 804
III-C 244,536 1,334
III-D 131,008 722
III-E 418,266 2,312
III-F 221,484 1,192
III-G 121,925 623
Units were initially sold for a price of $100. Units are not traded on any
exchange and there is no public trading market for them. The General Partner is
aware of certain transfers of Units between unrelated parties, some of which are
facilitated by secondary trading firms and matching services. In addition, as
further described below, the General Partner is aware of certain "4.9% Tender
Offers" which have been made for the Units. The General Partner believes that
the transfers between unrelated parties have been limited and sporadic in number
and volume. Other than trades facilitated by certain secondary trading firms and
matching services, no organized trading market for Units exists and none is
expected to develop. Due to the nature of these transactions, the General
Partner has no verifiable information regarding prices at which Units have been
transferred. Further, a transferee may not become a substitute Limited Partner
without the consent of the General Partner.
24
Pursuant to the terms of the Partnership Agreements, the General Partner
is obligated to annually issue a repurchase offer which is based on the
estimated future net revenues from the Partnerships' reserves and is calculated
pursuant to the terms of the Partnership Agreements. Such repurchase offer is
recalculated monthly in order to reflect cash distributions to the Limited
Partners and extraordinary events. The following table sets forth the General
Partner's repurchase offer per Unit as of the periods indicated. For purpose of
this Annual Report, a Unit represents an initial subscription of $100 to a
Partnership.
Repurchase Offer Prices
-----------------------
1996 1997 1998
------------------------- ------------------------- ----
1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st
P/ship Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.
- ------ ---- ---- ---- ---- ---- ---- ---- ---- ----
III-A $15 $12 $18 $14 $12 $16 $12 $10 $ 8
III-B 15 12 18 15 12 16 12 10 8
III-C 16 14 19 16 14 19 17 15 13
III-D 22 20 28 25 23 26 24 22 20
III-E 32 30 36 34 31 32 30 28 26
III-F 24 23 23 21 20 22 20 19 17
III-G 25 24 25 23 22 25 23 22 20
In addition to this repurchase offer, the Partnerships have been subject
to "4.9% tender offers" from several third parties during 1997. The General
Partner does not know the terms of these offers or the prices received by the
Limited Partners who accepted these offers.
Cash Distributions
Cash distributions are primarily dependent upon a Partnership's cash
receipts from the sale of oil and gas production and cash requirements of the
Partnership. Distributable cash is determined by the General Partner at the end
of each calendar quarter and distributed to the Limited Partners within 45 days
after the end of the quarter. Distributions are restricted to cash on hand less
amounts required to be retained out of such cash as determined in the sole
judgment of the General Partner to pay costs, expenses, or other Partnership
obligations whether accrued or anticipated to accrue. In certain instances, the
General Partner may not distribute the full amount of cash receipts which might
otherwise be available for distribution in an effort to equalize or
25
stabilize the amounts of quarterly distributions. Any available amounts not
distributed are invested and the interest or income thereon is for the accounts
of the Limited Partners.
The following is a summary of cash distributions paid to the Limited
Partners during 1996, 1997, and 1998:
Cash Distributions
-----------------
1996
---------------------------------------------
1st 2nd 3rd 4th
P/ship Qtr. Qtr. Qtr. Qtr.(1)
------- ------- ------- ------- -------
III-A $1.97 $2.33 $2.08 $3.09
III-B 2.20 2.65 2.23 3.07
III-C 1.25 1.73 1.93 2.35
III-D 1.45 2.07 2.14 2.67
III-E 1.56 2.48 2.27 2.36
III-F 1.13 1.13 1.21 1.76
III-G 1.23 1.23 1.29 2.17
1997 1998
------------------------------------------ ------
1st 2nd 3rd 4th 1st
P/ship Qtr(1). Qtr. Qtr.(1) Qtr.(1) Qtr.(1)
------ ------ --------- ------- ------- ------
III-A $2.01 $3.24 $4.11 $1.75 $1.83
III-B 2.49 3.57 4.32 1.97 2.15
III-C 2.05 3.26(1) 2.39 1.36 2.09
III-D 2.31 3.68(1) 2.42 1.92 2.27
III-E 2.55 3.59 2.34 1.81 1.70
III-F 1.55 2.98 1.50 1.12 1.68
III-G 1.55 3.20 1.82 1.23 2.18
- -------------------
(1) Amount of cash distributions includes proceeds from the sale of certain oil
and gas properties.
26
ITEM 6. SELECTED FINANCIAL DATA
The following tables present selected financial data for the Partnerships.
This data should be read in conjunction with the financial statements of the
Partnerships and the respective notes thereto, included elsewhere in this Annual
Report. See "Item 8. Financial Statements and Supplementary Data."
Selected Financial Data
III-A Partnership
-----------------
1997 1996 1995 1994 1993
------------- ------------- ------------- ------------- -------------
Oil and Gas Sales $3,328,634 $3,634,004 $3,647,607 $ 5,044,736 $ 5,158,061
Net Income (Loss):
Limited Partners 33,066 1,109,284 ( 1,243,800) ( 86,676) 699,978
General Partner 98,919 104,949 76,804 145,059 160,370
Total 131,985 1,214,233 ( 1,166,996) 58,383 860,348
Limited Partners' Net
Income (Loss) per
Unit .13 4.20 ( 4.71) ( .33) 2.65
Limited Partners' Cash
Distributions per
Unit 11.11 9.47 8.19 15.01 11.75
Total Assets 3,916,891 6,895,159 8,353,918 11,769,144 16,199,765
Partners' Capital
(Deficit):
Limited Partners 3,985,217 6,886,151 8,275,867 11,679,667 15,726,343
General Partner ( 198,271) ( 198,911) ( 143,923) ( 111,727) ( 38,786)
Number of Units
Outstanding 263,976 263,976 263,976 263,976 263,976
27
Selected Financial Data
III-B Partnership
-----------------
1997 1996 1995 1994 1993
------------- ------------- ------------- ------------- -------------
Oil and Gas Sales $1,972,122 $2,113,507 $2,063,107 $2,717,108 $3,211,371
Net Income (Loss):
Limited Partners 223,228 712,800 ( 296,132) ( 47,216) 868,230
General Partner 60,762 63,531 48,956 78,538 104,801
Total 283,990 776,331 ( 247,176) 31,322 973,031
Limited Partners' Net
Income (Loss) per
Unit 1.61 5.15 ( 2.14) ( .34) 6.28
Limited Partners' Cash
Distributions per
Unit 12.35 10.15 8.86 15.72 15.84
Total Assets 2,248,586 3,772,912 4,502,744 6,023,688 8,489,410
Partners' Capital
(Deficit):
Limited Partners 2,291,824 3,776,596 4,466,796 5,987,928 8,210,144
General Partner ( 97,840) ( 97,092) ( 66,996) ( 52,952) ( 16,490)
Number of Units
Outstanding 138,336 138,336 138,336 138,336 138,336
28
Selected Financial Data
III-C Partnership
-----------------
1997 1996 1995 1994 1993
------------- ------------- ------------- ------------- -------------
Oil and Gas Sales $3,071,851 $3,259,615 $2,760,488 $ 3,229,521 $ 4,116,983
Net Income (Loss):
Limited Partners ( 196,027) 1,247,672 ( 1,322,234) ( 2,120,737) ( 205,422)
General Partner 86,436 103,933 53,608 59,036 115,681
Total ( 109,591) 1,351,605 ( 1,268,626) ( 2,061,701) ( 89,741)
Limited Partners' Net
Income (Loss) per
Unit ( .80) 5.10 ( 5.41) ( 8.67) ( .84)
Limited Partners' Cash
Distributions per
Unit 9.06 7.26 5.76 9.50 8.84
Total Assets 4,567,928 7,009,782 7,572,561 10,499,912 15,043,115
Partners' Capital
(Deficit):
Limited Partners 4,512,996 6,924,023 7,451,351 10,183,585 14,629,322
General Partner ( 171,438) ( 143,741) ( 125,913) ( 107,521) ( 41,557)
Number of Units
Outstanding 244,536 244,536 244,536 244,536 244,536
29
Selected Financial Data
III-D Partnership
-----------------
1997 1996 1995 1994 1993
------------- ------------- ------------- ------------- -------------
Oil and Gas Sales $2,335,545 $2,336,708 $2,087,482 $2,017,361 $2,356,267
Net Income (Loss):
Limited Partners 35,530 795,298 ( 234,478) ( 2,563,317) ( 236,144)
General Partner 54,213 59,929 45,966 8,876 54,117
Total 89,743 855,227 ( 188,512) ( 2,554,441) ( 182,027)
Limited Partners' Net
Income (Loss) per
Unit .27 6.07 ( 1.79) ( 19.57) ( 1.80)
Limited Partners' Cash
Distributions per
Unit 10.33 8.33 6.30 8.21 8.14
Total Assets 2,890,862 4,241,190 4,463,897 5,787,787 9,439,368
Partners' Capital
(Deficit):
Limited Partners 2,636,733 3,953,203 4,248,905 5,308,383 8,946,700
General Partner ( 62,091) ( 50,214) ( 36,176) ( 39,142) 10,982
Number of Units
Outstanding 131,008 131,008 131,008 131,008 131,008
30
Selected Financial Data
III-E Partnership
-----------------
1997 1996 1995 1994 1993
------------- ------------- ------------- ------------- -------------
Oil and Gas Sales $ 9,041,809 $ 9,030,115 $ 8,676,047 $ 9,466,013 $10,531,047
Net Income (Loss):
Limited Partners ( 219,259) 2,275,698 ( 338,913) ( 1,853,838) ( 540,695)
General Partner 158,394 191,012 136,202 124,584 221,441
Total ( 60,865) 2,466,710 ( 202,711) ( 1,729,254) ( 319,254)
Limited Partners' Net
Income (Loss) per
Unit ( .52) 5.44 ( .81) ( 4.43) ( 1.29)
Limited Partners' Cash
Distributions per
Unit 10.29 8.67 6.43 10.00 13.27
Total Assets 11,397,387 15,918,358 17,113,266 20,666,337 26,359,002
Partners' Capital
(Deficit):
Limited Partners 10,449,227 14,971,486 16,319,788 19,348,701 25,387,539
General Partner ( 209,050) ( 187,947) ( 127,750) ( 124,952) ( 37,536)
Number of Units
Outstanding 418,266 418,266 418,266 418,266 418,266
31
Selected Financial Data
III-F Partnership
-----------------
1997 1996 1995 1994 1993
------------- ------------- ------------- ------------- -------------
Oil and Gas Sales $2,991,450 $3,094,738 $2,697,816 $ 3,517,877 $ 4,434,480
Net Income (Loss):
Limited Partners ( 2,273,148) 483,478 ( 1,521,469) ( 1,120,925) ( 208,690)
General Partner 32,514 72,299 25,536 41,351 104,438
Total ( 2,240,634) 555,777 ( 1,495,933) ( 1,079,574) ( 104,252)
Limited Partners' Net
Income (Loss)
per Unit ( 10.26) 2.18 ( 6.87) ( 5.06) ( .94)
Limited Partners' Cash
Distributions per
Unit 7.15 5.23 2.05 8.58 9.41
Total Assets 4,752,817 8,632,813 9,438,169 11,599,217 14,357,712
Partners' Capital
(Deficit):
Limited Partners 4,454,142 8,310,290 8,986,812 10,963,281 13,984,206
General Partner ( 146,427) ( 97,523) ( 70,576) ( 72,812) ( 20,163)
Number of Units
Outstanding 221,484 221,484 221,484 221,484 221,484
32
Selected Financial Data
III-G Partnership
-----------------
1997 1996 1995 1994 1993
------------- ------------- ------------- ------------- -------------
Oil and Gas Sales $1,845,264 $1,962,555 $1,694,847 $2,137,843 $2,696,304
Net Income (Loss):
Limited Partners ( 1,136,965) 380,060 ( 1,024,258) ( 572,690) ( 121,349)
General Partner 22,672 47,089 15,638 27,083 60,916
Total ( 1,114,293) 427,149 ( 1,008,620) ( 545,607) ( 60,433)
Limited Partners' Net
Income (Loss)
per Unit ( 9.33) 3.12 ( 8.40) ( 4.70) ( 1.00)
Limited Partners' Cash
Distributions per
Unit 7.80 5.92 2.67 8.37 10.00
Total Assets 2,873,056 4,977,730 5,415,275 6,857,551 8,305,963
Partners' Capital
(Deficit):
Limited Partners 2,707,822 4,795,787 5,136,727 6,485,985 8,078,675
General Partner ( 85,608) ( 58,669) ( 26,964) ( 26,102) ( 5,685)
Number of Units
Outstanding 121,925 121,925 121,925 121,925 121,925
33
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Use of Forward-Looking Statements and Estimates
This Annual 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 Annual 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 Partnerships.
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, or otherwise indicated.
General Discussion
The following general discussion should be read in conjunction with the
analysis of results of operations provided below. The most important variable
affecting the Partnerships' revenues is the prices received for the sale of oil
and gas. Predicting future prices is very difficult. Concerning past trends,
average yearly wellhead gas prices in the United States have been volatile for a
number of years. For the past ten years, such average prices have generally been
in the $1.40 to $2.40 per Mcf range, significantly below prices received in the
early 1980s. Average gas prices in the latter part of 1996 and parts of 1997,
however, were somewhat higher than those yearly averages. Gas prices are
currently in the higher end of the 10-year average price range described above.
34
Substantially all of the Partnerships' gas reserves are being sold in 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. In addition, such spot market sales are generally short-term in nature
and are dependent upon the obtaining of transportation services provided by
pipelines. Spot prices for the Partnerships' gas decreased from approximately
$3.57 per Mcf at December 31, 1996 to approximately $2.32 per Mcf at December
31, 1997. Such prices were on an MMBTU basis and differ from the prices actually
received by the Partnerships due to transportation and marketing costs, BTU
adjustments, and regional price and quality differences.
For the past ten years, average oil prices have generally been in the
$16.00 to $24.00 per barrel range. Due to global consumption and supply trends
over the last several months as well as expectations of at least a short-term
slowdown in Asian energy demand, oil prices have recently been in the mid to
lower portions of this pricing range and in early 1998 dropped to as low as
approximately $13.75 per barrel. It is not known whether this trend will
continue. Prices for the Partnerships' oil decreased from approximately $23.75
per barrel at December 31, 1996 to approximately $16.25 per barrel at December
31, 1997.
Future prices for both oil and gas will likely be different from (and may
be lower than) the prices in effect on December 31, 1997. Primarily due to
heating season demand, year-end prices in many past years have tended to be
higher, and in some cases significantly higher, than the yearly average price
actually received by the Partnerships for at least the following year.
Management is unable to predict whether future oil and gas prices will (i)
stabilize, (ii) increase, or (iii) decrease.
As discussed in the "Results of Operations" section below, volumes of oil
and gas sold also significantly affect the Partnerships' revenues. Oil and gas
wells generally produce the most oil or gas in the earlier years of their lives
and, as production continues, the rate of production naturally declines. At some
point, production physically ceases or becomes no longer economic. The
Partnerships are not acquiring additional oil and gas properties, and the
existing properties are not experiencing significant additional production
through drilling or other capital projects. Therefore, volumes of oil and gas
produced naturally decline from year to year. While it is difficult for
management to predict future production from these properties, it is likely that
this general trend of declining production will continue.
Despite this general trend of declining production, several factors can
cause the volumes of oil and gas sold to increase or decrease at an even greater
rate over a given period. These factors include, but are not limited to, (i)
geophysical
35
conditions which cause an acceleration of the decline in production, (ii) the
shutting in of wells (or the opening of previously shut-in wells) due to low oil
and gas prices, mechanical difficulties, loss of a market or transportation, or
performance of workovers, recompletions, or other operations in the well, (iii)
prior period volume adjustments (either positive or negative) made by purchasers
of the production, (iv) ownership adjustments in accordance with agreements
governing the operation or ownership of the well (such as adjustments that occur
at payout), and (v) completion of enhanced recovery projects which increase
production for the well. Many of these factors are very significant as related
to a single well or as related to many wells over a short period of time.
However, due to the large number of wells owned by the Partnerships, these
factors are generally not material as compared to the normal decline in
production experienced on all remaining wells.
Results of Operations
An analysis of the change in net oil and gas operations (oil and gas
sales, less lease operating expenses and production taxes), is presented in the
tables following "Results of Operations" under the heading "Average Sales
Prices, Production Volumes, and Average Production Costs." Following is a
discussion of each Partnerships' results of operations for the year ended
December 31, 1997 as compared to the year ended December 31, 1996, and for the
year ended December 31, 1996 as compared to the year ended December 31, 1995.
III-A Partnership
-----------------
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
-------------------------------------
Total oil and gas sales decreased $305,370 (8.4%) in 1997 as compared to
1996. Of this decrease, approximately $134,000 and $497,000, respectively, were
related to decreases in volumes of oil and gas sold and $45,000 was related to a
decrease in the average price of oil sold, which decreases were partially offset
by an increase of approximately $382,000 related to an increase in the average
price of gas sold. Volumes of oil and gas sold decreased 6,455 barrels and
237,791 Mcf, respectively, in 1997 as compared to 1996. The decrease in volumes
of oil sold resulted primarily from (i) normal declines in production and (ii) a
negative prior period volume adjustment made by a purchaser on one significant
well in 1997. The decrease in volumes of gas sold resulted primarily from (i)
normal declines in production and (ii) a positive prior period volume adjustment
36
made by a purchaser on one significant well in 1996. Average oil prices
decreased to $19.68 per barrel in 1997 from $20.79 per barrel in 1996. Average
gas prices increased to $2.46 per Mcf in 1997 from $2.09 per Mcf in 1996.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $179,983 (20.0%) in 1997 as compared to 1996. This
decrease resulted primarily from (i) the decreases in volumes of oil and gas
sold in 1997 as compared to 1996, (ii) workover expenses incurred on two
significant wells during 1996 in order to improve the recovery of reserves, and
(iii) a decrease in production taxes associated with the decrease in oil and gas
sales discussed above. As a percentage of oil and gas sales, these expenses
decreased to 21.6% in 1997 from 24.7% in 1996. This percentage decrease was
primarily due to the dollar decrease in oil and gas production expenses
discussed above and the increase in the average price of gas sold in 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $410,230 (36.1%) in 1997 as compared to 1996. This decrease resulted
primarily from (i) a reduction in the depletable base of oil and gas properties
due to the impairment provision recorded in the first quarter of 1997 as
discussed below, (ii) the decreases in volumes of oil and gas sold in 1997, and
(iii) upward revisions in the estimates of remaining oil and gas reserves at
December 31, 1997. As a percentage of oil and gas sales, this expense decreased
to 21.8% in 1997 from 31.3% in 1996. This percentage decrease resulted primarily
from (i) the dollar decrease in depreciation, depletion, and amortization
discussed above and (ii) the increases in the average prices of gas sold in
1997.
The III-A Partnership recognized a non-cash charge against earnings of
$1,617,006 in the first quarter of 1997. Of this amount, $184,644 was related to
the decline in oil and gas prices used to determine the recoverability of proved
oil and gas reserves at March 31, 1997 and $1,432,362 was related to the
writing-off of unproved properties. These unproved properties were written off
based on the General Partner's determination that it is unlikely that such
properties would be developed due to the low oil and gas prices received over
the last several years and provisions in the III-A Partnership's Partnership
Agreement which limit the level of permissible drilling activity. No similar
charges were necessary in 1996.
General and administrative expenses decreased $12,979 (4.0%) in 1997 as
compared to 1996. This decrease resulted primarily from the reversal of a prior
charge which was recorded in error. As a percentage of oil and gas sales, these
expenses remained relatively constant at 9.4% in 1997 and 8.9% in 1996.
The Limited Partners have received cash distributions through December 31,
1997 totaling $23,564,701 or 89.27% of the Limited Partners' capital
contributions.
37
Year Ended December 31, 1996 Compared
to Year Ended December 31, 1995
-------------------------------------
Total oil and gas sales remained relatively constant for 1996 as compared
to 1995. Any decrease related to decreases in volumes of oil and gas sold were
offset by increases related to increases in the average prices of oil and gas
sold. Volumes of oil and gas sold decreased 11,667 barrels and 529,749 Mcf,
respectively, for 1996 as compared to 1995. The decrease in volumes of oil sold
resulted primarily from (i) the shutting-in of one well during 1996 in order to
perform a workover to improve the recovery of reserves and (ii) normal declines
in production due to diminished oil reserves on several wells. The decrease in
volumes of gas sold resulted primarily from (i) normal declines in production
due to diminished gas reserves on several wells during 1996 as compared to 1995,
(ii) a positive prior period volume adjustment made by the purchaser on one well
during 1995, and (iii) the sale of several gas producing wells during 1996.
Average oil and gas prices increased to $20.79 per barrel and $2.09 per Mcf,
respectively, for 1996 from $17.52 per barrel and $1.46 per Mcf, respectively,
for 1995.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $230,023 (20.4%) for 1996 as compared to 1995. This
decrease resulted primarily from the decrease in volumes of oil and gas sold
during 1996. As a percentage of oil and gas sales, these expenses decreased to
24.7% for 1996 from 31.0% for 1995. This percentage decrease was primarily due
to the increases in the average prices of oil and gas sold during 1996 as
compared to 1995.
Depreciation, depletion, and amortization of oil and gas properties
decreased $975,909 (46.2%) for 1996 as compared to 1995. This decrease resulted
primarily from (i) upward revisions in the estimates of remaining oil and gas
reserves at December 31, 1996, (ii) the decreases in volumes of oil and gas sold
during 1996, and (iii) a decrease in capitalized costs due to an impairment
provision recognized in the fourth quarter of 1995. As a percentage of oil and
gas sales, this expense decreased to 31.3% for 1996 from 57.9% for 1995. This
percentage decrease was primarily due to the dollar decrease in depreciation,
depletion, and amortization discussed above and the increases in the average
prices of oil and gas sold during 1996.
The III-A Partnership recognized a non-cash charge against earnings of
$1,267,185 in 1995. This impairment provision was necessary due to the
unamortized costs of proved oil and gas properties exceeding the expected
undiscounted future net revenues from such oil and gas properties. No similar
charge was necessary during 1996.
38
General and administrative expenses increased $15,705 (5.1%) for 1996 as
compared to 1995. This increase was primarily due to an increase in professional
fees and printing and postage expenses during 1996 as compared to 1995. As a
percentage of oil and gas sales, these expenses remained relatively constant at
8.9% for 1996 as compared to 8.5% for 1995.
III-B Partnership
-----------------
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
-------------------------------------
Total oil and gas sales decreased $141,385 (6.7%) in 1997 as compared to
1996. Of this decrease approximately $13,000 and $293,000, respectively, related
to decreases in volumes of oil and gas sold and $46,000 related to a decrease in
the average price of oil sold, which decreases were partially offset by an
increase of approximately $212,000 related to an increase in the average price
of gas sold in 1997. Volumes of oil and gas sold decreased 633 barrels and
123,261 Mcf, respectively, in 1997 as compared to 1996. The decrease in volumes
of gas sold resulted primarily from (i) normal declines in production and (ii) a
positive prior period volume adjustment made by the purchaser on one significant
well in 1996. Average oil prices decreased to $19.76 per barrel in 1997 from
$20.98 per barrel in 1996. Average gas prices increased to $2.38 per Mcf in 1997
from $2.05 per Mcf in 1996.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $78,274 (15.7%) in 1997 as compared to 1996. This
decrease resulted primarily from (i) the decrease in volumes of gas sold in 1997
and (ii) workover expenses incurred on two wells during 1996 in order to improve
the recovery of reserves. As a percentage of oil and gas sales, these expenses
decreased to 21.3% in 1997 from 23.5% in 1996. This percentage decrease was
primarily due to the dollar decrease in oil and gas production expenses
discussed above and the increase in the average price of gas sold in 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $188,404 (29.7%) in 1997 as compared to 1996. This decrease resulted
primarily from (i) a reduction in the depletable base of oil and gas properties
due to the impairment provision recorded in the first quarter of 1997 as
discussed below, (ii) the decreases in volumes of oil and gas sold in 1997, and
(iii) upward revisions in the estimates of remaining oil and gas reserves at
December 31, 1997. As a percentage of oil and gas sales, this expense decreased
to 22.6% in 1997 from 30.0% in 1996. This percentage decrease resulted
39
primarily from (i) the dollar decrease in depreciation, depletion, and
amortization discussed above and (ii) the increases in the average prices of gas
sold in 1997.
The III-B Partnership recognized a non-cash charge against earnings of
$738,122 in the first quarter of 1997. Of this amount, $77,653 was related to
the decline in oil and gas prices used to determine the recoverability of proved
oil and gas reserves at March 31, 1997 and $660,469 was related to the
writing-off of unproved properties. These unproved properties were written off
based on the General Partner's determination that it is unlikely that such
properties would be developed due to the low oil and gas prices received over
the last several years and provisions in the III-B Partnership's Partnership
Agreement which limit the level of permissible drilling activity. No similar
charges were necessary in 1996.
General and administrative expenses decreased $7,728 (4.5%) in 1997 as
compared to 1996. This decrease resulted primarily from the reversal of a prior
charge which was recorded in error. As a percentage of oil and gas sales, these
expenses remained relatively constant at 8.3% in 1997 and 8.1% in 1996.
The Limited Partners have received cash distributions through December 31,
1997 totaling $13,717,353 or 99.16% of the Limited Partners' capital
contributions. During the first quarter of 1998, the Limited Partners have
received cash distributions totalling in excess of their capital contributions.
Therefore, beginning in the first quarter of 1998, operations will be allocated
using after payout percentages. See Note 1 to the financial statements included
in Item 8 of this Annual Report for tables containing before payout and after
payout percentages.
Year Ended December 31, 1996 Compared
to Year Ended December 31, 1995
-------------------------------------
Total oil and gas sales increased $50,400 (2.4%) for 1996 as compared to
1995. Of this increase, approximately $129,000 and $385,000, respectively, were
related to increases in the average prices of oil and gas sold, partially offset
by decreases of approximately $87,000 and $375,000, respectively, related to
decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased
4,969 barrels and 258,730 Mcf, respectively, for 1996 as compared to 1995. The
decrease in volumes of gas sold resulted primarily from (i) normal declines in
production due to diminished gas reserves on several wells and (ii) the sale of
a significant gas producing unitized property during 1996. Average oil and gas
prices increased to $20.98 per barrel and $2.05 per Mcf, respectively, for 1996
from $17.58 per barrel and $1.45 per Mcf, respectively, for 1995.
40
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $119,983 (19.4%) for 1996 as compared 1995. This
decrease resulted primarily from the decrease in volumes of oil and gas sold
during 1996. As a percentage of oil and gas sales, these expenses decreased to
23.5% for 1996 from 29.9% for 1995. This percentage decrease was primarily due
to the increases in the average prices of oil and gas sold during 1996.
Depreciation, depletion, and amortization of oil and gas properties
decreased $418,614 (39.8%) for 1996 as compared to 1995. This decrease resulted
primarily from (i) upward revisions in the estimates of remaining oil and gas
reserves at December 31, 1996, (ii) the decreases in volumes of oil and gas sold
during 1996, and (iii) a decrease in capitalized costs due to an impairment
provision recognized in the fourth quarter of 1995. As a percentage of oil and
gas sales, this expense decreased to 30.0% for 1996 from 51.0% for 1995. This
percentage decrease was primarily due to the dollar decrease in depreciation,
depletion, and amortization discussed above and the increases in the average
prices of oil and gas sold during 1996.
The III-B Partnership recognized a non-cash charge against earnings of
$480,618 in 1995. This impairment provision was necessary due to the unamortized
costs of proved oil and gas properties exceeding the expected undiscounted
future net revenues from such oil and gas properties. No similar charge was
necessary during 1996.
General and administrative expenses increased $10,035 (6.2%) for 1996 as
compared to 1995. This increase was primarily due to an increase in professional
fees and printing and postage expenses during 1996 as compared to 1995. As a
percentage of oil and gas sales, these expenses remained relatively constant at
8.1% for 1996 as compared to 7.8% for 1995.
III-C Partnership
-----------------
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
-------------------------------------
Total oil and gas sales decreased $187,764 (5.8%) in 1997 as compared to
1996. Of this decrease, approximately $452,000 was related to a decrease in
volumes of gas sold and approximately $25,000 was related to a decrease in the
average price of oil sold, which decreases were partially offset by an increase
of approximately $304,000 related to an increase in the average price of gas
sold. Volumes of oil and gas sold decreased by 360 barrels and 227,288 Mcf,
respectively, in 1997 as compared to 1996. The decrease in volumes of gas sold
41
resulted primarily from (i) normal declines in production, (ii) a negative prior
period volume adjustment made by a purchaser on two significant wells in 1997,
and (iii) a positive prior period volume adjustment made by a purchaser on one
significant well in 1996. Average oil prices decreased to $19.74 per barrel in
1997 from $20.68 per barrel in 1996. Average gas prices increased to $2.26 per
Mcf in 1997 from $1.99 per Mcf in 1996.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $32,013 (4.1%) in 1997 as compared to 1996. This
decrease resulted primarily from the decrease in volumes of gas sold in 1997,
which decrease was partially offset by (i) credits issued on one well during
1996 for prior period rental expenses and (ii) workover expenses incurred on
another well during 1997 in order to improve the recovery of reserves. As a
percentage of oil and gas sales, these expenses remained relatively constant at
24.4% in 1997 and 24.0% in 1996.
Depreciation, depletion, and amortization of oil and gas properties
decreased $303,665 (32.7%) in 1997 as compared to 1996. This decrease resulted
primarily from (i) a reduction in the depletable base of oil and gas properties
due to the impairment provision recorded in the first quarter of 1997 as
discussed below, (ii) decreases in volumes of oil and gas sold in 1997, and
(iii) upward revisions in the estimates of remaining oil and gas reserves at
December 31, 1997. As a percentage of oil and gas sales, this expense decreased
to 20.4% in 1997 from 28.5% in 1996. This percentage decrease resulted primarily
from (i) the dollar decrease in depreciation, depletion, and amortization
discussed above and (ii) the increases in the average prices of gas sold in
1997.
The III-C Partnership recognized a non-cash charge against earnings of
$1,696,417 in the first quarter of 1997. Of this amount, $234,271 was related to
the decline in oil and gas prices used to determine the recoverability of proved
oil and gas reserves at March 31, 1997 and $1,462,146 was related to the
writing-off of unproved properties. These unproved properties were written off
based on the General Partner's determination that it is unlikely that such
properties would be developed due to the low oil and gas prices received over
the last several years and provisions in the III-C Partnership's Partnership
Agreement which limit the level of permissible drilling activity. No similar
charges were necessary in 1996.
General and administrative expenses remained relatively constant in 1997
as compared to 1996. As a percentage of oil and gas sales, these expenses
remained relatively constant at 9.5% in 1997 and 9.0% in 1996.
The Limited Partners have received cash distributions through December 31,
1997 totaling $15,143,795 or 61.93% of the Limited Partners' capital
contributions.
42
Year Ended December 31, 1996 Compared
to Year Ended December 31, 1995
-------------------------------------
Total oil and gas sales increased $499,127 (18.1%) for 1996 as compared to
1995. Of this increase, approximately $92,000 and $824,000, respectively, were
related to increases in the average prices of oil and gas sold, partially offset
by a decrease of approximately $429,000 related to a decrease in volumes of gas
sold. Volumes of oil sold increased 503 barrels, while volumes of gas sold
decreased 310,886 Mcf for 1996 as compared to 1995. The decrease in volumes of
gas sold resulted primarily from (i) normal declines in production due to
diminished gas reserves on several wells and (ii) positive prior period volume
adjustments made by the purchaser on two wells during 1995. Average oil and gas
prices increased to $20.68 per barrel and $1.99 per Mcf, respectively, for 1996
from $17.34 per barrel and $1.38 per Mcf, respectively, for 1995.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $38,468 (4.7%) for 1996 as compared to 1995. This
decrease resulted primarily from the decrease in volumes of gas sold during
1996, partially offset by an increase in production taxes associated with the
increase in oil and gas sales discussed above. As a percentage of oil and gas
sales, these expenses decreased to 24.0% for 1996 from 29.7% for 1995. This
percentage decrease was primarily due to the increases in the average prices of
oil and gas sold during 1996.
Depreciation, depletion, and amortization of oil and gas properties
decreased $657,266 (41.4%) for 1996 as compared to 1995. This decrease resulted
primarily from (i) upward revisions in the estimates of remaining oil and gas
reserves at December 31, 1996, (ii) the decrease in volumes of gas sold during
1996, and (iii) a decrease in capitalized costs due to an impairment provision
recognized in the fourth quarter of 1995. As a percentage of oil and gas sales,
this expense decreased to 28.5% for 1996 from 57.5% for 1995. This percentage
decrease was primarily due to the dollar decrease in depreciation, depletion,
and amortization discussed above and the increases in the average prices of oil
and gas sold during 1996.
The III-C Partnership recognized a non-cash charge against earnings of
$1,338,693 in 1995. This impairment provision was necessary due to the
unamortized costs of proved oil and gas properties exceeding the expected
undiscounted future net revenues from such oil and gas properties. No similar
charge was necessary during 1996.
43
General and administrative expenses remained relatively constant for 1996
as compared to 1995. As a percentage of oil and gas sales, these expenses
decreased to 9.0% for 1996 from 10.4% for 1995. This percentage decrease
resulted primarily from the increase in oil and gas sales discussed above.
III-D Partnership
-----------------
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
-------------------------------------
Total oil and gas sales remained relatively constant in 1997 as compared
to 1996. Decreases of approximately $12,000 and $104,000, respectively, related
to decreases in volumes of oil and gas sold and a decrease of approximately
$41,000 related to a decrease in the average price of oil sold were
substantially offset by an increase of approximately $156,000 related to an
increase in the average price of gas sold. Volumes of oil and gas sold decreased
593 barrels and 52,331 Mcf, respectively, in 1997 as compared to 1996. Average
oil prices decreased to $19.11 per barrel in 1997 from $20.12 per barrel in
1996. Average gas prices increased to $2.20 per Mcf in 1997 from $1.98 per Mcf
in 1996.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $61,610 (6.6%) in 1997 as compared to 1996. This
decrease resulted primarily from (i) the decrease in volumes of gas sold during
1997 and (ii) a decrease in general repair and maintenance expenses incurred on
several wells during 1997 as compared to 1996. As a percentage of oil and gas
sales, these expenses decreased to 37.1% in 1997 from 39.7% in 1996. This
percentage decrease was primarily due to the dollar decrease in oil and gas
production expenses and the increase in the average price of gas sold during
1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $115,418 (26.1%) in 1997 as compared to 1996. This decrease resulted
primarily from (i) a reduction in the depletable base of oil and gas properties
due to the impairment provision recorded in the first quarter of 1997 as
discussed below, (ii) the decreases in volumes of oil and gas sold in 1997, and
(iii) upward revisions in the estimates of remaining oil and gas reserves at
December 31, 1997. As a percentage of oil and gas sales, this expense decreased
to 14.0% in 1997 from 18.9% in 1996. This percentage decrease resulted primarily
from (i) the dollar decrease in depreciation, depletion, and amortization
discussed above and (ii) the increases in the average prices of gas sold in
1997.
44
The III-D Partnership recognized a non-cash charge against earnings of
$932,243 in the first quarter of 1997. Of this amount, $485,820 was related to
the decline in oil and gas prices used to determine the recoverability of proved
oil and gas reserves at March 31, 1997 and $446,423 was related to the
writing-off of unproved properties. These unproved properties were written off
based on the General Partner's determination that it is unlikely that such
properties would be developed due to the low oil and gas prices received over
the last several years and provisions in the III-D Partnership's Partnership
Agreement which limit the level of permissible drilling activity. No similar
charges were necessary in 1996.
General and administrative expenses remained relatively constant in 1997
as compared to 1996. As a percentage of oil and gas sales, these expenses
remained relatively constant at 6.8% in 1997 and 6.8% in 1996.
The Limited Partners have received cash distributions through December 31,
1997 totaling $7,495,669 or 57.22% of the Limited Partners' capital
contributions.
Year Ended December 31, 1996 Compared
to Year Ended December 31, 1995
-------------------------------------
Total oil and gas sales increased $249,226 (11.9%) for 1996 as compared to
1995. Of this increase, approximately $146,000 and $449,000, respectively, were
related to increases in the average prices of oil and gas sold, partially offset
by a decrease of approximately $334,000 related to a decrease in volumes of gas
sold. Volumes of oil and gas sold decreased 815 barrels and 239,968 Mcf for 1996
as compared to 1995. The decrease in volumes of gas sold resulted primarily from
(i) normal declines in production due to diminished gas reserves on several
wells and (ii) positive prior period volume adjustments made by the purchaser on
four wells during 1995. Average oil and gas prices increased to $20.12 per
barrel and $1.98 per Mcf, respectively, for 1996 from $16.60 per barrel and
$1.39 per Mcf, respectively, for 1995.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $184,924 (24.9%) for 1996 as compared to 1995. This
increase resulted primarily from (i) lease operating expense adjustments during
1996 associated with changes in estimates by the third party operator of gas
balancing positions on certain wells being greater than similar adjustments
during 1995, (ii) an increase in production taxes associated with the increase
in oil and gas sales discussed above, and (iii) an increase in general repair
and maintenance expenses incurred on several wells during 1996 as compared to
1995. These increases were partially offset by the decrease in volumes of oil
45
and gas sold during 1996 as compared to 1995. As a percentage of oil and gas
sales, these expenses increased to 39.7% for 1996 from 35.6% for 1995. This
percentage increase was primarily due to the dollar increase in production
expenses discussed above.
Depreciation, depletion, and amortization of oil and gas properties
decreased $447,461 (50.3%) for 1996 as compared to 1995. This decrease resulted
primarily from (i) upward revisions in the estimates of remaining oil and gas
reserves at December 31, 1996, (ii) the decreases in volumes of oil and gas sold
during 1996, and (iii) a decrease in capitalized costs due to an impairment
provision recognized in the fourth quarter of 1995. As a percentage of oil and
gas sales, this expense decreased to 18.9% for 1996 from 42.6% for 1995. This
percentage decrease was primarily due to the dollar decrease in depreciation,
depletion, and amortization discussed above and the increases in the average
prices of oil and gas sold during 1996.
The III-D Partnership recognized a non-cash charge against earnings of
$495,810 in 1995. This impairment provision was necessary due to the unamortized
costs of proved oil and gas properties exceeding the expected undiscounted
future net revenues from such oil and gas properties. No similar charge was
necessary during 1996.
General and administrative expenses remained relatively constant for 1996
as compared to 1995. As a percentage of oil and gas sales, these expenses
decreased to 6.8% for 1996 from 7.6% for 1995. This percentage decrease resulted
primarily from the increase in oil and gas sales discussed above.
III-E Partnership
-----------------
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
-------------------------------------
Total oil and gas sales remained relatively constant in 1997 as compared
to 1996. Increases of approximately $118,000 and $77,000, respectively, related
to increases in volumes of oil and gas sold and an increase of approximately
$44,000 related to an increase in and the average price of gas sold were
substantially offset by a decrease of approximately $230,000 related to a
decrease in the average price of oil sold. Volumes of oil and gas sold increased
5,926 barrels and 37,020 Mcf, respectively, in 1997 as compared to 1996. Average
oil prices decreased to $18.97 per barrel in 1997 from $19.95 per barrel in
1996. Average gas prices increased to $2.09 per Mcf in 1997 from $2.07 in 1996.
46
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $94,952 (2.1%) in 1997 as compared to 1996. This
increase resulted primarily from the increases in volumes of oil and gas sold in
1997. As a percentage of oil and gas sales, these expenses remained relatively
constant at 49.9% in 1997 and 48.9% in 1996.
Depreciation, depletion, and amortization of oil and gas properties
decreased $539,246 (31.0%) in 1997 as compared to 1996. This decrease resulted
primarily from (i) a reduction in the depletable base of oil and gas properties
due to the impairment provision recorded in the first quarter of 1997 as
discussed below and (ii) upward revisions in the estimates of remaining gas
reserves at December 31, 1997. As a percentage of oil and gas sales, this
expense decreased to 13.3% in 1997 from 19.2% in 1996. This percentage decrease
resulted primarily from the dollar decrease in depreciation, depletion, and
amortization discussed above.
The III-E Partnership recognized a non-cash charge against earnings of
$2,893,438 in the first quarter of 1997. Of this amount, $2,042,775 was related
to the decline in oil and gas prices used to determine the recoverability of
proved oil and gas reserves at March 31, 1997 and $850,663 was related to the
writing-off of unproved properties. These unproved properties were written off
based on the General Partner's determination that it is unlikely that such
properties would be developed due to the low oil and gas prices received over
the last several years and provisions in the III-E Partnership's Partnership
Agreement which limit the level of permissible drilling activity. No similar
charges were necessary in 1996.
General and administrative expenses remained relatively constant in 1997
as compared to 1996. As a percentage of oil and gas sales, these expenses
remained relatively constant at 5.6% in 1997 and 5.6% in 1996.
The Limited Partners have received cash distributions through December 31,
1997 totaling $27,150,016 or 64.91% of the Limited Partners' capital
contributions.
Year Ended December 31, 1996 Compared
to Year Ended December 31, 1995
-------------------------------------
Total oil and gas sales increased $354,068 (4.1%) for 1996 as compared to
1995. Of this increase, approximately $795,000 and $1,292,000, respectively,
were related to increases in the average prices of oil and gas sold, partially
offset by decreases of approximately $458,000 and $1,290,000, respectively,
related to decreases in volumes of oil and gas sold. Volumes of oil and gas sold
decreased 27,766 barrels and 877,478 Mcf, respectively, for 1996 as compared to
47
1995. The decrease in volumes of gas sold resulted primarily from (i) normal
declines in production due to diminished gas reserves on several wells, (ii)
positive prior period volume adjustments made by the purchaser on three wells
during 1995, and (iii) the curtailment of gas sales from one well during 1996
due to the III-E Partnership's overproduced position in the well. Average oil
and gas prices increased to $19.95 per barrel and $2.07 per Mcf, respectively,
for 1996 from $16.48 per barrel and $1.47 per Mcf, respectively, for 1995.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $337,304 (7.1%) for 1996 as compared to 1995. This
decrease resulted primarily from the decrease in volumes of oil and gas sold
during 1996 as compared to 1995, partially offset by an increase in production
facility and zone treatment expenses related to one well during 1996. As a
percentage of oil and gas sales, these expenses decreased to 48.9% for 1996 from
54.8% for 1995. This percentage decrease was primarily due to the increases in
the average prices of oil and gas sold during 1996, partially offset by the
increase in production facility and zone treatment expenses discussed above.
Depreciation, depletion, and amortization of oil and gas properties
decreased $1,710,452 (49.6%) for 1996 as compared to 1995. Approximately
one-half of this decrease was related to four significant wells which were fully
depleted in 1995 due to a lack of remaining reserves and the other one-half of
this decrease resulted from upward revisions in the estimates of remaining oil
reserves at December 31, 1996 and the decreases in volumes of oil and gas sold
during 1996. As a percentage of oil and gas sales, this expense decreased to
19.2% for 1996 from 39.7% for 1995. This percentage decrease was primarily due
to the dollar decrease in depreciation, depletion, and amortization discussed
above and the increases in the average prices of oil and gas sold during 1996.
The III-E Partnership recognized a non-cash charge against earnings of
$210,152 in 1995. This impairment provision was necessary due to the unamortized
costs of proved oil and gas properties exceeding the expected undiscounted
future net revenues from such oil and gas properties. No similar charge was
necessary during 1996.
General and administrative expenses remained relatively constant for 1996
as compared to 1995. As a percentage of oil and gas sales, these expenses
remained relatively constant at 5.6% for 1996 and 5.9% for 1995.
48
III-F Partnership
-----------------
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
-------------------------------------
Total oil and gas sales decreased $103,288 (3.3%) in 1997 as compared to
1996. Of this decrease, approximately $167,000 and $46,000, respectively,
related to decreases in volumes of oil and gas sold and approximately $87,000
related to a decrease in the average price of oil sold, which decreases were
partially offset by an increase of approximately $198,000 related to an increase
in the average price of gas sold. Volumes of oil and gas sold decreased by 8,277
barrels and 26,380 Mcf, respectively, in 1997 as compared to 1996. The decrease
in volumes of oil sold resulted primarily from (i) normal declines in production
and (ii) the sale of two significant wells in mid-1996. Average oil prices
decreased to $18.85 per barrel in 1997 from $20.18 per barrel in 1996. Average
gas prices increased to $1.95 per Mcf in 1997 from $1.73 per Mcf in 1996.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $95,324 (7.7%) in 1997 as compared to 1996. This
increase resulted primarily from (i) workover expenses incurred on three wells
during 1997 in order to improve the recovery of reserves and (ii) credits issued
on one well during 1996 for prior period rental expenses, which increases were
partially offset by the decreases in volumes of oil and gas sold during 1997. As
a percentage of oil and gas sales, these expenses increased to 44.6% in 1997
from 40.0% in 1996. This percentage increase was primarily due to the dollar
increase in oil and gas production expenses discussed above and the decrease in
the average price of oil sold during 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $374,649 (33.1%) in 1997 as compared to 1996. This decrease resulted
primarily from (i) a reduction in the depletable base of oil and gas properties
due to the impairment provision recorded in the first quarter of 1997 as
discussed below, (ii) the decreases in volumes of oil and gas sold in 1997, and
(iii) upward revisions in the estimates of remaining gas reserves at December
31, 1997. As a percentage of oil and gas sales, this expense decreased to 25.3%
in 1997 from 36.5% in 1996. This percentage decrease resulted primarily from (i)
the dollar decrease in depreciation, depletion, and amortization discussed above
and (ii) the increases in the average prices of gas sold in 1997.
The III-F Partnership recognized a non-cash charge against earnings of
$2,884,405 in the first quarter of 1997. Of this amount, $2,078,019 was related
to the decline in oil and gas prices used to determine the recoverability of
49
proved oil and gas reserves at March 31, 1997 and $806,386 was related to the
writing-off of unproved properties. These unproved properties were written off
based on the General Partner's determination that it is unlikely that such
properties would be developed due to the low oil and gas prices received over
the last several years and provisions in the III-F Partnership's Partnership
Agreement which limit the level of permissible drilling activity. No similar
charges were necessary in 1996.
General and administrative expenses remained relatively constant in 1997
as compared to 1996. As a percentage of oil and gas sales, these expenses
remained relatively constant at 8.9% in 1997 and 8.6% in 1996.
The Limited Partners have received cash distributions through December 31,
1997 totaling $9,949,904 or 44.92% of the Limited Partners' capital
contributions.
Year Ended December 31, 1996 Compared
to Year Ended December 31, 1995
-------------------------------------
Total oil and gas sales increased $396,922 (14.7%) for 1996 as compared to
1995. Of this increase, approximately $276,000 and $425,000, respectively, were
related to increases in the average prices of oil and gas sold, partially offset
by decreases of approximately $72,000 and $233,000, respectively, related to
decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased
4,392 barrels and 183,124 Mcf, respectively, for 1996 as compared to 1995. The
decrease in volumes of gas sold resulted primarily from (i) normal declines in
production due to diminished gas reserves on several wells, (ii) the shutting-in
of one well during 1996 due to mechanical difficulties, and (iii) the
curtailment of gas sales from one well during 1996 due to the III-F
Partnership's overproduced position in the well. Average oil and gas prices
increased to $20.18 per barrel and $1.73 per Mcf, respectively, for 1996 from
$16.46 per barrel and $1.27 per Mcf, respectively, for 1995.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $234,463 (15.9%) for 1996 as compared to 1995. This
decrease resulted primarily from the decrease in volumes of oil and gas sold
during 1996. As a percentage of oil and gas sales, these expenses decreased to
40.0% for 1996 from 54.6% for 1995. This percentage decrease was primarily due
to the increases in the average prices of oil and gas sold during 1996.
Depreciation, depletion, and amortization of oil and gas properties
decreased $379,063 (25.1%) for 1996 as compared to 1995. This decrease resulted
primarily from (i) an upward revision in the estimate of remaining oil reserves
50
at December 31, 1996, (ii) the decreases in volumes of oil and gas sold during
1996, and (iii) a decrease in capitalized costs due to an impairment provision
recognized in the fourth quarter of 1995. As a percentage of oil and gas sales,
this expense decreased to 36.5% for 1996 from 56.0% for 1995. This percentage
decrease was primarily due to the dollar decrease in depreciation, depletion,
and amortization discussed above and the increases in the average prices of oil
and gas sold during 1996.
The III-F Partnership recognized a non-cash charge against earnings of
$998,811 in 1995. This impairment provision was necessary due to the unamortized
costs of proved oil and gas properties exceeding the expected undiscounted
future net revenues from such oil and gas properties. No similar charge was
necessary during 1996.
General and administrative expenses remained relatively constant for 1996
as compared to 1995. As a percentage of oil and gas sales, these expenses
decreased to 8.6% for 1996 from 9.8% for 1995. This decrease resulted primarily
from the increase in oil and gas sales discussed above.
III-G Partnership
-----------------
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
-------------------------------------
Total oil and gas sales decreased $117,291 (6.0%) in 1997 as compared to
1996. Of this decrease, approximately $133,000 related to a decrease in volumes
of oil sold and approximately $61,000 related to a decrease in the average price
of oil sold, which decreases were partially offset by an increase of
approximately $75,000 related to an increase in the average price of gas sold.
Volumes of oil sold decreased 6,590 barrels in 1997 as compared to 1996. Volumes
of gas sold increased 1,082 Mcf in 1997 as compared to 1996. The decrease in
volumes of oil sold resulted primarily from (i) a normal decline in production
and (ii) the sale of several wells in 1996. Average oil prices decreased to
$18.90 per barrel in 1997 from $20.19 per barrel in 1996. Average gas prices
increased to $1.89 per Mcf in 1997 from $1.74 per Mcf in 1996.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $50,263 (6.2%) in 1997 as compared to 1996. This
increase resulted primarily from (i) workover expenses incurred on three wells
during 1997 in order to improve the recovery of reserves and (ii) an increase in
general repair and maintenance expenses incurred on one well during 1997 as
compared to 1996, which increase was partially offset by the decrease in volumes
of oil sold during 1997. As a percentage of oil and gas sales, these expenses
51
increased to 46.3% in 1997 from 41.0% in 1996. This percentage increase was
primarily due to the dollar increase in oil and gas production expenses
discussed above and the decrease in the average price of oil sold during 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $227,810 (34.9%) in 1997 as compared to 1996. This decrease resulted
primarily from (i) a reduction in the depletable base of oil and gas properties
due to the impairment provision recorded in the first quarter of 1997 as
discussed below, (ii) the decreases in volumes of oil sold in 1997, and (iii)
upward revisions in the estimates of remaining gas reserves at December 31,
1997. As a percentage of oil and gas sales, this expense decreased to 23.1% in
1997 from 33.3% in 1996. This percentage decrease resulted primarily from (i)
the dollar decrease in depreciation, depletion, and amortization discussed above
and (ii) the increases in the average prices of gas sold in 1997.
The III-G Partnership recognized a non-cash charge against earnings of
$1,449,404 in the first quarter of 1997 and $102,376 in the fourth quarter of
1997. Of the first quarter charge, $1,010,738 was related to the decline in oil
and gas prices used to determine the recoverability of proved oil and gas
reserves at March 31, 1997 and $438,666 was related to the writing-off of
unproved properties. These unproved properties were written off based on the
General Partner's determination that it is unlikely that such properties would
be developed due to the low oil and gas prices received over the last several
years and provisions in the III-G Partnership's Partnership Agreement which
limit the level of permissible drilling activity. The fourth quarter charge of
$102,376 was primarily related to the decline in oil prices used to determine
the recoverability of proved oil and gas reserves at December 31, 1997. No
similar charges were necessary in 1996.
General and administrative expenses remained relatively constant in 1997
as compared to 1996. As a percentage of oil and gas sales, these expenses
remained relatively constant at 7.9% in 1997 and 7.5% in 1996.
The Limited Partners have received cash distributions through December 31,
1997 totaling $5,120,287 or 42.00% of the Limited Partners' capital
contributions.
Year Ended December 31, 1996 Compared
to Year Ended December 31, 1995
-------------------------------------
Total oil and gas sales increased $267,708 (15.8%) for 1996 as compared to
1995. Of this increase, approximately $201,000 and $230,000, respectively, were
related to increases in the average prices of oil and gas sold, partially offset
52
by decreases of approximately $41,000 and $123,000, respectively, related to
decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased
2,484 barrels and 96,300 Mcf, respectively, for 1996 as compared to 1995. The
decrease in volumes of gas sold resulted primarily from (i) normal declines in
production due to diminished gas reserves on several wells, (ii) the shutting-in
of one well during 1996 due to mechanical difficulties, and (iii) the
curtailment of gas sales from one well during 1996 due to the III-G
Partnership's overproduced position in the well. Average oil and gas prices
increased to $20.19 per barrel and $1.74 per Mcf, respectively, for 1996 from
$16.48 per barrel and $1.28 per Mcf, respectively, for 1995.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $133,579 (14.2%) for 1996 as compared to 1995. This
decrease resulted primarily from the decrease in volumes of oil and gas sold
during 1996. As a percentage of oil and gas sales, these expenses decreased to
41.0% for 1996 from 55.3% for 1995. This percentage decrease was primarily due
to the increases in the average prices of oil and gas sold during 1996.
Depreciation, depletion, and amortization of oil and gas properties
decreased $321,266 (33.0%) for 1996 as compared to 1995. This decrease resulted
primarily from (i) an upward revision in the estimate of remaining oil reserves
at December 31, 1996, (ii) the decreases in volumes of oil and gas sold during
1996, and (iii) a decrease in capitalized costs due to an impairment provision
recognized during the fourth quarter of 1995, partially offset by a downward
revision in the estimate of remaining gas reserves at December 31, 1996. As a
percentage of oil and gas sales, this expense decreased to 33.3% for 1996 from
57.5% for 1995. This percentage decrease was primarily due to the dollar
decrease in depreciation, depletion, and amortization discussed above and the
increases in the average prices of oil and gas sold during 1996.
The III-G Partnership recognized a non-cash charge against earnings of
$677,010 in 1995. This impairment provision was necessary due to the unamortized
costs of proved oil and gas properties exceeding the expected undiscounted
future net revenues from such oil and gas properties. No similar charge was
necessary during 1996.
General and administrative expenses remained relatively constant for 1996
as compared to 1995. As a percentage of oil and gas sales, these expenses
decreased to 7.5% for 1996 from 8.6% for 1995. This decrease resulted primarily
from the increase in oil and gas sales discussed above.
53
Average Sale Prices, Production Volumes, and Average Production Costs
The following tables are comparisons of annual average oil and gas sales
prices, production volumes, and average production costs (lease operating
expenses and production taxes) per equivalent unit (one barrel or 6 Mcf of gas)
for 1997, 1996, and 1995. These factors comprise the change in net oil and gas
operations discussed in the "Results of Operations" section above.
54
1997 Compared to 1996
---------------------
Average Sales Prices
----------------------------------------------------------------
P/ship 1997 1996 % Change
- ------ ---------------- ---------------- ------------
Oil Gas Oil Gas
($/Bbl) ($/Mcf) ($/Bbl) ($/Mcf) Oil Gas
------- ------- ------- ------- ----- ----
III-A $19.68 $2.46 $20.79 $2.09 (5%) 18%
III-B 19.76 2.38 20.98 2.05 (6%) 16%
III-C 19.74 2.26 20.68 1.99 (5%) 14%
III-D 19.11 2.20 20.12 1.98 (5%) 11%
III-E 18.97 2.09 19.95 2.07 (5%) 1%
III-F 18.85 1.95 20.18 1.73 (7%) 13%
III-G 18.90 1.89 20.19 1.74 (6%) 9%
Production Volumes
-----------------------------------------------------------------
P/ship 1997 1996 % Change
- ------ --------------------- ------------------- --------------
Oil Gas Oil Gas Oil Gas
(Bbls) (Mcf) (Bbls) (Mcf) (Bbls) (Mcf)
------- --------- ------- --------- ------ -----
III-A 40,468 1,031,152 46,923 1,268,943 (14%) (19%)
III-B 37,216 518,891 37,849 642,152 ( 2%) (19%)
III-C 27,069 1,124,237 27,429 1,351,525 ( 1%) (17%)
III-D 40,758 708,262 41,351 760,593 ( 1%) ( 7%)
III-E 235,152 2,189,619 229,226 2,152,599 3% 2%
III-F 65,787 898,447 74,064 924,827 (11%) ( 3%)
III-G 47,493 500,966 54,083 499,884 (12%) -%
Average Production Costs
per Equivalent Barrel of Oil
-----------------------------------
P/ship 1997 1996 % Change
------ ----- ----- --------
III-A $3.39 $3.48 ( 3%)
III-B 3.39 3.43 ( 1%)
III-C 3.49 3.09 13%
III-D 5.46 5.52 ( 1%)
III-E 7.52 7.51 -%
III-F 6.18 5.42 14%
III-G 6.52 5.85 11%
55
1996 Compared to 1995
---------------------
Average Sales Prices
-----------------------------------------------------------------
P/ship 1996 1995 % Change
- ------ ------------------- ---------------- ------------
Oil Gas Oil Gas
($/Bbl) ($/Mcf) ($/Bbl) ($/Mcf) Oil Gas
------- ------- ------- ------- ----- -----
III-A $20.79 $2.09 $17.52 $1.46 19% 43%
III-B 20.98 2.05 17.58 1.45 19% 41%
III-C 20.68 1.99 17.34 1.38 19% 44%
III-D 20.12 1.98 16.60 1.39 21% 42%
III-E 19.95 2.07 16.48 1.47 21% 41%
III-F 20.18 1.73 16.46 1.27 23% 36%
III-G 20.19 1.74 16.48 1.28 23% 36%
Production Volumes
-----------------------------------------------------------------
P/ship 1996 1995 % Change
- ------ --------------------- ------------------- --------------
Oil Gas Oil Gas Oil Gas
(Bbls) (Mcf) (Bbls) (Mcf) (Bbls) (Mcf)
------- --------- ------- --------- ------ -----
III-A 46,923 1,268,943 58,590 1,798,692 (20%) (29%)
III-B 37,849 642,152 42,818 900,882 (12%) (29%)
III-C 27,429 1,351,525 26,926 1,662,411 2% (19%)
III-D 41,351 760,593 42,166 1,000,561 ( 2%) (24%)
III-E 229,226 2,152,599 256,992 3,030,077 (11%) (29%)
III-F 74,064 924,827 78,456 1,107,951 ( 6%) (17%)
III-G 54,083 499,884 56,567 596,184 ( 4%) (16%)
Average Production Costs
per Equivalent Barrel of Oil
-----------------------------------
P/ship 1996 1995 % Change
------ ----- ----- --------
III-A $3.48 $3.15 10%
III-B 3.43 3.20 7%
III-C 3.09 2.70 14%
III-D 5.52 3.56 55%
III-E 7.51 6.24 20%
III-F 5.42 5.59 ( 3%)
III-G 5.85 6.02 ( 3%)
56
Liquidity and Capital Resources
Net proceeds from operations less necessary operating capital are
distributed to the Limited Partners on a quarterly basis. See "Item 5. Market
for Units and Related Limited Partner Matters." 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 reserves, thereby resulting in a positive economic impact. Assuming
production levels for 1997, the Partnerships' proved reserve quantities at
December 31, 1997 would have the following remaining lives:
Partnership Gas-Years Oil-Years
----------- --------- ---------
III-A 5.1 2.8
III-B 4.9 2.5
III-C 6.4 5.7
III-D 5.4 11.7
III-E 4.6 12.8
III-F 6.2 6.1
III-G 6.0 6.4
The Partnerships' available capital from the Limited Partners'
subscriptions has been spent on oil and gas properties and there should be no
further material capital resource commitments in the future. Occasional
expenditures by the Partnerships for new wells or well completions or workovers,
however, may reduce or eliminate cash available for a particular quarterly cash
distribution. The Partnerships have no debt commitments. Cash for operational
purposes will be provided by current oil and gas production.
The Partnerships sold certain oil and gas properties during 1997. The sale
of a property owned by one or more Partnerships was made by the General Partner
after giving due consideration to the offer price and the General Partner's
estimate of both the property's remaining proved reserves and future operating
costs. Net proceeds from the sale of such properties were included in the
calculation of the Partnerships' cash distributions for the quarter immediately
following the Partnerships' receipt of the proceeds. The amount of such proceeds
from the sale of oil and gas properties during 1997 were as follows:
57
Partnership Amount
----------- --------
III-A $572,237
III-B 278,513
III-C 231,004
III-D 26,912
III-E 38,925
III-F 83,156
III-G 65,190
The sale of these properties reduced the quantity of the Partnerships'
proved reserves. It is also possible that the Partnerships' repurchase values
and future cash distributions could decline as a result of a reduction of the
Partnerships' reserve base. The General Partner believes that the sale of these
properties will be beneficial to the Partnerships since the properties sold
generally had a higher ratio of future operating expenses as compared to
reserves than the properties not sold.
There can be no assurance as to the amount of the Partnerships' future
cash distributions. The Partnerships' ability to make cash distributions depends
primarily upon the level of available cash flow generated by the Partnerships'
operating activities, which will be affected (either positively or negatively)
by many factors beyond the control of the Partnerships, including the price of
and demand for oil and gas and other market and economic conditions. Even if
prices and costs remain stable, the amount of cash available for distributions
will decline over time (as the volume of production from producing properties
declines) since the Partnerships are not replacing production through
acquisitions of producing properties and drilling. The Partnerships' quantity of
proved reserves has been reduced by the sale of oil and gas properties as
described above; therefore, it is possible that the Partnerships' future cash
distributions could decline as a result of a reduction of the Partnerships'
reserve base.
The Partnerships will terminate on the following dates in accordance with
the Partnership Agreements:
Partnership Termination Date
----------- -----------------
III-A November 28, 1999
III-B January 24, 2000
III-C February 28, 2000
III-D September 5, 2000
III-E December 26, 2000
III-F March 7, 2001
III-G September 20, 2001
58
However, the Partnership Agreements provide that the General Partner may extend
the term of each Partnership for five periods of two years each. As of the date
of this Annual Report, the General Partner has not determined whether to extend
the term of any Partnership.
Inflation and Changing Prices
Prices obtained for oil and gas production depend upon numerous factors,
including the extent of domestic and foreign production, foreign imports of oil,
market demand, domestic and foreign economic conditions in general, and
governmental regulations and tax laws. The general level of inflation in the
economy did not have a material effect on the operations of the Partnerships in
1997. Oil and gas prices have fluctuated during recent years and generally have
not followed the same pattern as inflation. See "Item 2. Properties - Oil and
Gas Production, Revenue, and Price History."
Year 2000 Computer Issues
The General Partner has reviewed its computer systems and hardware to
locate potential operational problems associated with the year 2000. Such review
will continue until all potential problems are located and resolved. The General
Partner believes that all year-2000 problems in its computer system have been or
will be resolved in a timely manner and have not caused and will not cause
disruption of the Partnerships' operations or a material affect on the
Partnerships' financial condition or results of operations. However, it is
possible that the Partnerships' cash flows could be disrupted by year 2000
problems experienced by operators of the Partnerships' wells, buyers of the
Partnerships' oil and gas, financial institutions, or other persons. The General
Partner is unable to quantify the effect, if any, on the Partnerships of
year-2000 computer problems experienced by these third parties.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data are indexed in Item 14
hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
59
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER
The Partnerships have no directors or executive officers. The following
individuals are directors and executive officers of the General Partner. The
business address of such director and executive officers is Two West Second
Street, Tulsa, Oklahoma 74103.
Name Age Position with Geodyne
---------------- --- --------------------------------
Dennis R. Neill 45 President and Director
Judy K. Fox 46 Secretary
The director will hold office until the next annual meeting of shareholders of
Geodyne and until his successor has been duly elected and qualified. All
executive officers serve at the discretion of the Board of Directors.
Dennis R. Neill joined the Samson Companies in 1981, was named Senior Vice
President and Director of Geodyne on March 3, 1993, and was named President of
Geodyne and its subsidiaries on June 30, 1996. Prior to joining the Samson
Companies, he was associated with a Tulsa law firm, Conner and Winters, where
his principal practice was in the securities area. He received a Bachelor of
Arts degree in political science from Oklahoma State University and a Juris
Doctorate degree from the University of Texas. Mr. Neill also serves as Senior
Vice President of Samson Investment Company and as President and Director of
Samson Properties Incorporated, Samson Hydrocarbons Company, Dyco Petroleum
Corporation, Berry Gas Company, Circle L Drilling Company, and Compression, Inc.
Judy K. Fox joined the Samson Companies in 1990 and was named Secretary of
Geodyne and its subsidiaries on June 30, 1996. Prior to joining the Samson
Companies, she served as Gas Contract Manager for Ely Energy Company. Ms. Fox is
also Secretary of Berry Gas Company, Circle L Drilling Company, Compression,
Inc., Dyco Petroleum Corporation, Samson Hydrocarbons Company, and Samson
Properties Incorporated.
Section 16(a) Beneficial Ownership Reporting Compliance
To the best knowledge of the Partnerships and the General Partner, there
were no officers, directors, or ten percent owners who were delinquent filers of
reports required under Section 16 of the Securities Exchange Act of 1934 during
1997.
60
ITEM 11. EXECUTIVE COMPENSATION
The General Partner and its affiliates are reimbursed for actual general
and administrative costs and operating costs incurred and attributable to the
conduct of the business affairs and operations of the Partnerships, computed on
a cost basis, determined in accordance with generally accepted accounting
principles. Such reimbursed costs and expenses allocated to the Partnerships
include office rent, secretarial, employee compensation and benefits, travel and
communication costs, fees for professional services, and other items generally
classified as general or administrative expense. The amount of general and
administrative expense allocated to the General Partner and its affiliates which
was charged to each Partnership during 1997, 1996, and 1995 is set forth in the
table below. Although the actual costs incurred by the General Partner and its
affiliates have fluctuated during the three years presented, the amounts charged
to the Partnerships have not fluctuated due to expense limitations imposed by
the Partnership Agreements.
Partnership 1997 1996 1995
----------- -------- -------- --------
III-A $277,872 $277,872 $277,872
III-B 145,620 145,620 145,620
III-C 257,412 257,412 257,412
III-D 137,904 137,904 137,904
III-E 440,280 440,280 440,280
III-F 233,136 233,136 233,136
III-G 128,340 128,340 128,340
None of the officers or directors of the General Partner receive
compensation directly from the Partnerships. The Partnerships reimburse the
General Partner or its affiliates for that portion of such officers' and
directors' salaries and expenses attributable to time devoted by such
individuals to the Partnerships' activities. The following tables indicate the
approximate amount of general and administrative expense reimbursement
attributable to the salaries of the directors, officers, and employees of the
General Partner and its affiliates during 1997, 1996, and 1995:
61
Salary Reimbursements
III-A Partnership
-----------------
Three Years Ended December 31, 1997
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------- --------------------- -------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- -------- ------- -------
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1995 $151,718 - - - - - -
1996 $162,555 - - - - - -
1997 $166,001 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until
July 1, 1996.
(2) The general and administrative expenses paid by the III-A Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the III-A Partnership and no individual's salary or other
compensation reimbursement from the III-A Partnership equals or exceeds
$100,000 per annum.
62
Salary Reimbursements
III-B Partnership
-----------------
Three Years Ended December 31, 1997
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------- --------------------- -------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- -------- ------- -------
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1995 $79,509 - - - - - -
1996 $85,188 - - - - - -
1997 $86,993 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until
July 1, 1996.
(2) The general and administrative expenses paid by the III-B Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the III-B Partnership and no individual's salary or other
compensation reimbursement from the III-B Partnership equals or exceeds
$100,000 per annum.
63
Salary Reimbursements
III-C Partnership
-----------------
Three Years Ended December 31, 1997
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------- --------------------- -------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- -------- ------- -------
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1995 $140,547 - - - - - -
1996 $150,586 - - - - - -
1997 $153,778 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until
July 1, 1996.
(2) The general and administrative expenses paid by the III-C Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the III-C Partnership and no individual's salary or other
compensation reimbursement from the III-C Partnership equals or exceeds
$100,000 per annum.
64
Salary Reimbursements
III-D Partnership
-----------------
Three Years Ended December 31, 1997
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------- --------------------- -------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- -------- ------- -------
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1995 $75,296 - - - - - -
1996 $80,674 - - - - - -
1997 $82,384 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until
July 1, 1996.
(2) The general and administrative expenses paid by the III-D Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the III-D Partnership and no individual's salary or other
compensation reimbursement from the III-D Partnership equals or exceeds
$100,000 per annum.
65
Salary Reimbursements
III-E Partnership
-----------------
Three Years Ended December 31, 1997
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------- --------------------- -------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- -------- ------- -------
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1995 $240,393 - - - - - -
1996 $257,564 - - - - - -
1997 $263,023 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until
July 1, 1996.
(2) The general and administrative expenses paid by the III-E Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the III-E Partnership and no individual's salary or other
compensation reimbursement from the III-E Partnership equals or exceeds
$100,000 per annum.
66
Salary Reimbursements
III-F Partnership
-----------------
Three Years Ended December 31, 1997
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------- --------------------- -------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- -------- ------- -------
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1995 $127,292 - - - - - -
1996 $136,385 - - - - - -
1997 $139,275 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until
July 1, 1996.
(2) The general and administrative expenses paid by the III-F Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the III-F Partnership and no individual's salary or other
compensation reimbursement from the III-F Partnership equals or exceeds
$100,000 per annum.
67
Salary Reimbursements
III-G Partnership
-----------------
Three Years Ended December 31, 1997
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------- --------------------- -------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- -------- ------- -------
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1995 - - - - - - -
1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1995 $70,074 - - - - - -
1996 $75,079 - - - - - -
1997 $76,670 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until
July 1, 1996.
(2) The general and administrative expenses paid by the III-G Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the III-G Partnership and no individual's salary or other
compensation reimbursement from the III-G Partnership equals or exceeds
$100,000 per annum.
68
During 1995 El Paso Energy Marketing Company, formerly known as Premier
Gas Company ("El Paso"), an affiliate of the Partnerships until December 6,
1995, purchased a portion of the Partnerships' gas at market prices and resold
such gas at market prices directly to end-users and local distribution
companies. The table below summarizes the dollar amount of gas sold by the
Partnerships to El Paso during 1995.
Partnership 1995
----------- ----------
III-A $1,811,755
III-B 863,111
III-C 1,325,188
III-D 849,298
III-E 2,128,723
III-F 847,849
III-G 446,378
After December 6, 1995 the Partnerships' gas was marketed by the General Partner
and its affiliates, who were reimbursed for such activities as general and
administrative expenses. See "Item 13. Certain Relationships and Related
Transactions."
Affiliates of the Partnerships serve as operator of some of the
Partnerships' wells. The General Partner contracts with such affiliates for
services as operator of the wells. As operator, such affiliates are compensated
at rates provided in the operating agreements in effect and charged to all
parties to such agreement. Such compensation may occur both prior and subsequent
to the commencement of commercial marketing of production of oil or gas. The
dollar amount of such compensation paid by the Partnerships to the affiliates is
impossible to quantify as of the date of this Annual Report.
In addition to the compensation/reimbursements noted above, during the
three years ended December 31, 1997, the Samson Companies were in the business
of supplying field and drilling equipment and services to affiliated and
unaffiliated parties in the industry. These companies may have provided
equipment and services for wells in which the Partnerships have an interest.
These equipment and services were provided at prices or rates equal to or less
than those normally charged in the same or comparable geographic area by
unaffiliated persons or companies dealing at arm's length. The operators of
these wells billed the Partnerships for a portion of such costs based upon the
Partnerships' interest in the well.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information as to the beneficial ownership of
the Units as of January 31, 1998 (i) each beneficial owner of more than five
69
percent of the issued and outstanding Units, (ii) the directors and officers of
the General Partner, and (iii) the General Partner and its affiliates. The
address of each of such persons is Samson Plaza, Two West Second Street, Tulsa,
Oklahoma 74103.
Number of Units
Beneficially
Owned (Percent
Beneficial Owner of Outstanding)
- ------------------------------------ ------------------
III-A Partnership:
- -----------------
Samson Resources Company 27,010 (10.2%)
All affiliates, directors,
and officers of the General
Partner as a group and
the General Partner (4 persons) 27,010 (10.2%)
III-B Partnership:
- -----------------
Samson Resources Company 15,206 (11.0%)
All affiliates, directors,
and officers of the General
Partner as a group and
the General Partner (4 persons) 15,206 (11.0%)
III-C Partnership:
- -----------------
Samson Resources Company 30,371 (12.4%)
All affiliates, directors,
and officers of the General
Partner as a group and
the General Partner (4 persons) 30,371 (12.4%)
III-D Partnership:
- -----------------
Samson Resources Company 19,505 (14.9%)
All affiliates, directors,
and officers of the General
Partner as a group and
the General Partner (4 persons) 19,505 (14.9%)
70
III-E Partnership:
- -----------------
Samson Resources Company 53,068 (12.7%)
All affiliates, directors,
and officers of the General
Partner as a group and
the General Partner (4 persons) 53,068 (12.7%)
III-F Partnership:
- -----------------
Samson Resources Company 29,898 (13.5%)
All affiliates, directors,
and officers of the General
Partner as a group and
the General Partner (4 persons) 29,898 (13.5%)
III-G Partnership:
- -----------------
Samson Resources Company 15,898 (13.0%)
All affiliates, directors,
and officers of the General
Partner as a group and
the General Partner (4 persons) 15,898 (13.0%)
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner and certain of its affiliates engage in oil and gas
activities independently of the Partnerships which result in conflicts of
interest that cannot be totally eliminated. The allocation of acquisition and
drilling opportunities and the nature of the compensation arrangements between
the Partnerships and the General Partner also create potential conflicts of
interest. An affiliate of the Partnerships owns some of the Partnerships' Units
and therefore has an identity of interest with other Limited Partners with
respect to the operations of the Partnerships.
In order to attempt to assure limited liability for Limited Partners as
well as an orderly conduct of business, management of the Partnerships is
exercised solely by the General Partner. The Partnership Agreements grant the
General Partner broad discretionary authority with respect to the Partnerships'
participation in drilling prospects and expenditure and control of funds,
including borrowings. These provisions are similar to those contained in
prospectuses and partnership agreements for other public oil and gas
partnerships. Broad discretion as to general management of the Partnerships
involves circumstances where the General Partner has conflicts of interest and
where it must allocate costs and expenses, or opportunities, among the
Partnerships and other competing interests.
71
The General Partner does not devote all of its time, efforts, and
personnel exclusively to the Partnerships. Furthermore, the Partnerships do not
have any employees, but instead rely on the personnel of the Samson Companies.
The Partnerships thus compete with the Samson Companies (including other
currently sponsored oil and gas partnerships) for the time and resources of such
personnel. The Samson Companies devote such time and personnel to the management
of the Partnerships as are indicated by the circumstances and as are consistent
with the General Partner's fiduciary duties.
As a result of Samson Investment Company's ("Samson") acquisition of the
General Partner and its affiliates, Samson, PaineWebber (the dealer manager of
the original offering of Units) and the General Partner entered into an advisory
agreement which relates primarily to the Partnerships. The Advisory Agreement
will expire on March 3, 1998. The Advisory Agreement provides, among other
things, that: (i) Samson will review periodically with PaineWebber the general
operations and performance of the Partnerships and the terms of any material
transaction involving a Partnership; (ii) Samson will allow PaineWebber to
advise Samson and to comment on any General Partner-initiated amendment to a
Partnership Agreement which requires a vote of the Limited Partners and any
proposal initiated by the General Partner that would involve a reorganization,
merger, or consolidation of a Partnership, a sale of all or substantially all of
the assets of a Partnership, the liquidation or dissolution of a Partnership, or
the exchange of cash, securities, or other assets for all or any outstanding
Units; (iii) Samson will maintain an "800" investor services telephone number;
and (iv) if Samson proposes a consolidation, merger, or exchange offer involving
any limited partnership managed by Samson, it will propose to include all of the
Partnerships in such transaction or provide a statement to PaineWebber as to the
reasons why some or all of the Partnerships are not included in such
transaction.
Affiliates of the Partnerships are solely responsible for the negotiation,
administration, and enforcement of oil and gas sales agreements covering the
Partnerships' leasehold interests. Because affiliates of the Partnerships who
provide services to the Partnerships have fiduciary or other duties to other
members of the Samson Companies, contract amendments and negotiating positions
taken by them in their effort to enforce contracts with purchasers may not
necessarily represent the positions that the Partnerships would take if they
were to administer their own contracts without involvement with other members of
the Samson Companies. On the other hand, management believes that the
Partnerships' negotiating strength and contractual positions have been enhanced
by virtue of their affiliation with the Samson Companies. For a description of
certain other relationships and related transactions see "Item 11. Executive
Compensation."
72
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) Financial Statements, Financial Statement Schedules, and Exhibits.
(1) Financial Statements: The following financial statements for the
Geodyne Energy Income Limited Partnership III-A
Geodyne Energy Income Limited Partnership III-B
Geodyne Energy Income Limited Partnership III-C
Geodyne Energy Income Limited Partnership III-D
Geodyne Energy Income Limited Partnership III-E
Geodyne Energy Income Limited Partnership III-F
Geodyne Energy Income Limited Partnership III-G
as of December 31, 1997 and 1996 and for each of the three years
in the period ended December 31, 1997 are filed as part of this
report:
Report of Independent Accountants
Balance Sheets
Statements of Operations
Statements of Changes in Partners' Capital (Deficit)
Statements of Cash Flows
Notes to Financial Statements
(2) Financial Statement Schedules:
None.
(3) Exhibits:
4.1 The Certificate and Agreements of Limited Partnership for
the following Partnerships have been previously filed with
the Securities and Exchange Commission as Exhibit 2.1 to
Form 8-A filed by each Partnership on the dates shown below
and are hereby incorporated by reference.
73
Partnership Filing Date File No.
----------- ----------- --------
III-A February 20, 1990 0-18302
III-B March 30, 1990 0-18636
III-C March 30, 1990 0-18634
III-D November 14, 1990 0-18936
III-E January 22, 1991 0-19010
III-F March 25, 1991 0-19102
III-G September 30, 1991 0-19563
4.2 Advisory Agreement dated as of November 24, 1992 between
Samson, PaineWebber, Geodyne Resources, Geodyne Properties,
Inc., Geodyne Production Company, and Geodyne Energy Company
filed as Exhibit 28.3 to Registrant's Current Report on Form
8-K on December 24, 1992 and is hereby incorporated by
reference.
4.3 Second Amendment to Agreement of Limited Partnership of
Geodyne Energy Income Limited Partnership III-A, filed as
Exhibit 4.1 to Registrant's Current Report on Form 8-K dated
August 2, 1993 filed with the SEC on August 10, 1993 and is
hereby incorporated by reference.
4.4 Second Amendment to Agreement of Limited Partnership of
Geodyne Energy Income Limited Partnership III-B, filed as
Exhibit 4.2 to Registrant's Current Report on Form 8-K dated
August 2, 1993 filed with the SEC on August 10, 1993 and is
hereby incorporated by reference.
4.5 Second Amendment to Agreement of Limited Partnership of
Geodyne Energy Income Limited Partnership III-C, filed as
Exhibit 4.3 to Registrant's Current Report on Form 8-K dated
August 2, 1993 filed with the SEC on August 10, 1993 and is
hereby incorporated by reference.
4.6 Second Amendment to Agreement of Limited Partnership of
Geodyne Energy Income Limited Partnership III-D, filed as
Exhibit 4.4 to Registrant's Current Report on Form 8-K dated
August 2, 1993 filed with the SEC on August 10, 1993 and is
hereby incorporated by reference.
74
4.7 Second Amendment to Agreement of Limited Partnership of
Geodyne Energy Income Limited Partnership III-E, filed as
Exhibit 4.5 to Registrant's Current Report on Form 8-K dated
August 2, 1993 filed with the SEC on August 10, 1993 and is
hereby incorporated by reference.
4.8 Second Amendment to Agreement of Limited Partnership of
Geodyne Energy Income Limited Partnership III-F, filed as
Exhibit 4.6 to Registrant's Current Report on Form 8-K dated
August 2, 1993 filed with the SEC on August 10, 1993 and is
hereby incorporated by reference.
4.9 Second Amendment to Agreement of Limited Partnership of
Geodyne Energy Income Limited Partnership III-G, filed as
Exhibit 4.7 to Registrant's Current Report on Form 8-K dated
August 2, 1993 filed with the SEC on August 10, 1993 and is
hereby incorporated by reference.
4.10 Third Amendment to Agreement of Limited Partnership of
Geodyne Energy Income Limited Partnership III-A, filed as
Exhibit 4.10 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995 filed with the SEC on April
1, 1996 and is hereby incorporated by reference.
4.11 Third Amendment to Agreement of Limited Partnership of
Geodyne Energy Income Limited Partnership III-B, filed as
Exhibit 4.11 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995 filed with the SEC on April
1, 1996 and is hereby incorporated by reference.
4.12 Third Amendment to Agreement of Limited Partnership of
Geodyne Energy Income Limited Partnership III-C, filed as
Exhibit 4.12 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995 filed with the SEC on April
1, 1996 and is hereby incorporated by reference.
75
4.13 Third Amendment to Agreement of Limited Partnership of
Geodyne Energy Income Limited Partnership III-D, filed as
Exhibit 4.13 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995 filed with the SEC on April
1, 1996 and is hereby incorporated by reference.
4.14 Third Amendment to Agreement of Limited Partnership of
Geodyne Energy Income Limited Partnership III-E, filed as
Exhibit 4.14 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995 filed with the SEC on April
1, 1996 and is hereby incorporated by reference.
4.15 Third Amendment to Agreement of Limited Partnership of
Geodyne Energy Income Limited Partnership III-F, filed as
Exhibit 4.15 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995 filed with the SEC on April
1, 1996 and is hereby incorporated by reference.
4.16 Third Amendment to Agreement of Limited Partnership of
Geodyne Energy Income Limited Partnership III-G, filed as
Exhibit 4.16 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995 filed with the SEC on April
1, 1996 and is hereby incorporated by reference.
*23.1 Consent of Ryder Scott Company, Petroleum Engineers for
Geodyne Energy Income Limited Partnership III-A.
*23.2 Consent of Ryder Scott Company, Petroleum Engineers for
Geodyne Energy Income Limited Partnership III-B.
*23.3 Consent of Ryder Scott Company, Petroleum Engineers for
Geodyne Energy Income Limited Partnership III-C.
*23.4 Consent of Ryder Scott Company, Petroleum Engineers for
Geodyne Energy Income Limited Partnership III-D.
*23.5 Consent of Ryder Scott Company, Petroleum Engineers for
Geodyne Energy Income Limited Partnership III-E.
76
*23.6 Consent of Ryder Scott Company, Petroleum Engineers for
Geodyne Energy Income Limited Partnership III-F.
*23.7 Consent of Ryder Scott Company, Petroleum Engineers for
Geodyne Energy Income Limited Partnership III-G.
*27.1 Financial Data Schedule containing summary financial
information extracted from the Geodyne Energy Income Limited
Partnership III-A's financial statements as of December 31,
1997 and for the year ended December 31, 1997.
*27.2 Financial Data Schedule containing summary financial
information extracted from the Geodyne Energy Income Limited
Partnership III-B's financial statements as of December 31,
1997 and for the year ended December 31, 1997.
*27.3 Financial Data Schedule containing summary financial
information extracted from the Geodyne Energy Income Limited
Partnership III-C's financial statements as of December 31,
1997 and for the year ended December 31, 1997.
*27.4 Financial Data Schedule containing summary financial
information extracted from the Geodyne Energy Income Limited
Partnership III-D's financial statements as of December 31,
1997 and for the year ended December 31, 1997.
*27.5 Financial Data Schedule containing summary financial
information extracted from the Geodyne Energy Income Limited
Partnership III-E's financial statements as of December 31,
1997 and for the year ended December 31, 1997.
*27.6 Financial Data Schedule containing summary financial
information extracted from the Geodyne Energy Income Limited
Partnership III-F's financial statements as of December 31,
1997 and for the year ended December 31, 1997.
77
*27.7 Financial Data Schedule containing summary financial
information extracted from the Geodyne Energy Income Limited
Partnership III-G's financial statements as of December 31,
1997 and for the year ended December 31, 1997.
All other Exhibits are omitted as inapplicable.
----------
*Filed herewith.
(b) Reports on Form 8-K filed during the fourth quarter of 1997:
None.
78
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly organized.
GEODYNE ENERGY INCOME LIMITED
PARTNERSHIP III-A
By: GEODYNE RESOURCES, INC.
General Partner
February 20, 1998
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and February 20, 1998
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall (Principal February 20, 1998
------------------- Financial and
Patrick M. Hall Accounting Officer)
/s/Judy K. Fox Secretary February 20, 1998
-------------------
Judy K. Fox
79
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly organized.
GEODYNE ENERGY INCOME LIMITED
PARTNERSHIP III-B
By: GEODYNE RESOURCES, INC.
General Partner
February 20, 1998
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and February 20, 1998
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall (Principal February 20, 1998
------------------- Financial and
Patrick M. Hall Accounting Officer)
/s/Judy K. Fox Secretary February 20, 1998
-------------------
Judy K. Fox
80
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly organized.
GEODYNE ENERGY INCOME LIMITED
PARTNERSHIP III-C
By: GEODYNE RESOURCES, INC.
General Partner
February 20, 1998
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and February 20, 1998
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall (Principal February 20, 1998
------------------- Financial and
Patrick M. Hall Accounting Officer)
/s/Judy K. Fox Secretary February 20, 1998
-------------------
Judy K. Fox
81
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly organized.
GEODYNE ENERGY INCOME LIMITED
PARTNERSHIP III-D
By: GEODYNE RESOURCES, INC.
General Partner
February 20, 1998
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and February 20, 1998
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall (Principal February 20, 1998
------------------- Financial and
Patrick M. Hall Accounting Officer)
/s/Judy K. Fox Secretary February 20, 1998
-------------------
Judy K. Fox
82
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly organized.
GEODYNE ENERGY INCOME LIMITED
PARTNERSHIP III-E
By: GEODYNE RESOURCES, INC.
General Partner
February 20, 1998
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and February 20, 1998
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall (Principal February 20, 1998
------------------- Financial and
Patrick M. Hall Accounting Officer)
/s/Judy K. Fox Secretary February 20, 1998
-------------------
Judy K. Fox
83
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly organized.
GEODYNE ENERGY INCOME LIMITED
PARTNERSHIP III-F
By: GEODYNE RESOURCES, INC.
General Partner
February 20, 1998
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and February 20, 1998
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall (Principal February 20, 1998
------------------- Financial and
Patrick M. Hall Accounting Officer)
/s/Judy K. Fox Secretary February 20, 1998
-------------------
Judy K. Fox
84
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly organized.
GEODYNE ENERGY INCOME LIMITED
PARTNERSHIP III-G
By: GEODYNE RESOURCES, INC.
General Partner
February 20, 1998
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and February 20, 1998
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall (Principal February 20, 1998
------------------- Financial and
Patrick M. Hall Accounting Officer)
/s/Judy K. Fox Secretary February 20, 1998
-------------------
Judy K. Fox
85
Item 8: Financial Statements and Supplementary Data
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
We have audited the balance sheets of the Geodyne Energy Income Limited
Partnership III-A, an Oklahoma limited partnership, as of December 31, 1997 and
1996 and the related statements of operations, changes in partners' capital
(deficit), and cash flows for the years ended December 31, 1997, 1996, and 1995.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Geodyne Energy Income
Limited Partnership III-A at December 31, 1997 and 1996 and the results of its
operations and cash flows for the years ended December 31, 1997, 1996, and 1995,
in conformity with generally accepted accounting principles.
//s// Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
February 13, 1998
F-1
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
Balance Sheets
December 31, 1997 and 1996
ASSETS
------
1997 1996
------------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 522,371 $ 610,116
Accounts receivable:
Oil and gas sales 524,541 680,167
Other 308 -
--------- ---------
Total current assets $1,047,220 $1,290,283
NET OIL AND GAS PROPERTIES,
utilizing the successful
efforts method 2,669,949 5,360,656
DEFERRED CHARGE 199,722 244,220
--------- ---------
$3,916,891 $6,895,159
========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 39,622 $ 50,726
Gas imbalance payable 38,418 76,797
--------- ---------
Total current liabilities $ 78,040 $ 127,523
ACCRUED LIABILITY $ 51,905 $ 80,396
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 198,271) ($ 198,911)
Limited Partners, issued and
outstanding, 263,976 Units 3,985,217 6,886,151
--------- ---------
Total Partners' capital $3,786,946 $6,687,240
--------- ---------
$3,916,891 $6,895,159
========= =========
The accompanying notes are an integral part of these
financial statements.
F-2
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
Statements of Operations
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ----------
REVENUES:
Oil and gas sales,
including $1,811,755
of sales to related
parties in 1995 $3,328,634 $3,634,004 $3,647,607
Interest and other
income 27,613 23,840 24,119
Gain (loss) on sale of
oil and gas properties 148,602 ( 84,561) ( 22,260)
--------- --------- ---------
$3,504,849 $3,573,283 $3,649,466
COSTS AND EXPENSES:
Lease operating $ 463,734 $ 644,998 $ 846,401
Production tax 255,356 254,075 282,695
Depreciation, deple-
tion, and amorti-
zation of oil and
gas properties 725,515 1,135,745 2,111,654
Impairment provision 1,617,006 - 1,267,185
General and
administrative 311,253 324,232 308,527
--------- --------- ---------
$3,372,864 $2,359,050 $4,816,462
--------- --------- ---------
NET INCOME (LOSS) $ 131,985 $1,214,233 ($1,166,996)
========= ========= =========
GENERAL PARTNER - NET
INCOME $ 98,919 $ 104,949 $ 76,804
========= ========= =========
LIMITED PARTNERS - NET
INCOME (LOSS) $ 33,066 $1,109,284 ($1,243,800)
========= ========= =========
NET INCOME (LOSS) per
Unit $ .13 $ 4.20 ($ 4.71)
========= ========= =========
UNITS OUTSTANDING 263,976 263,976 263,976
========= ========= =========
The accompanying notes are an integral part of these
financial statements.
F-3
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
Statements of Partners' Capital (Deficit)
For the Years Ended December 31, 1997, 1996, and 1995
Limited General
Partners Partner Total
------------- ---------- -------------
Balance, Dec. 31, 1994 $11,679,667 ($111,727) $11,567,940
Net income (loss) ( 1,243,800) 76,804 ( 1,166,996)
Cash distributions ( 2,160,000) ( 109,000) ( 2,269,000)
---------- ------- ----------
Balance, Dec. 31, 1995 $ 8,275,867 ($143,923) $ 8,131,944
Net income 1,109,284 104,949 1,214,233
Cash distributions ( 2,499,000) ( 159,937) ( 2,658,937)
---------- ------- ----------
Balance, Dec. 31, 1996 $ 6,886,151 ($198,911) $ 6,687,240
Net income (loss) 33,066 98,919 131,985
Cash distributions ( 2,934,000) ( 98,279) ( 3,032,279)
---------- ------- ----------
Balance, Dec. 31, 1997 $ 3,985,217 ($198,271) $ 3,786,946
========== ======= ==========
The accompanying notes are an integral part of these
financial statements.
F-4
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
Statements of Cash Flows
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ 131,985 $1,214,233 ($1,166,996)
Adjustments to reconcile
net income (loss) to
net cash provided by
operating activities:
Depreciation, deple-
tion, and amortiza-
tion of oil and gas
properties 725,515 1,135,745 2,111,654
Impairment provision 1,617,006 - 1,267,185
(Gain) loss on sale of
oil and gas properties ( 148,602) 84,561 22,260
(Increase) decrease in
accounts receivable -
oil and gas sales 155,626 ( 40,380) ( 77,267)
Increase in accounts
receivable - other ( 308) - -
(Increase) decrease in
deferred charge 44,498 34,609 ( 47,355)
Increase (decrease) in
accounts payable ( 11,104) ( 39,770) 10,063
Increase (decrease) in
gas imbalance payable ( 38,379) 32,943 ( 14,727)
Increase (decrease) in
accrued liability ( 28,491) ( 7,228) 25,434
--------- --------- ---------
Net cash provided by
operating activities $2,447,746 $2,414,713 $2,130,251
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ($ 75,449) ($ 4,548) ($ 36,695)
Proceeds from sale of oil
and gas properties 572,237 297,982 21,300
--------- --------- ---------
Net cash provided (used)
by investing activities $ 496,788 $ 293,434 ($ 15,395)
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($3,032,279) ($2,658,937) ($2,269,000)
--------- --------- ---------
F-5
Net cash used by
financing activities ($3,032,279) ($2,658,937) ($2,269,000)
--------- --------- ---------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS ($ 87,745) $ 49,210 ($ 154,144)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 610,116 560,906 715,050
--------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 522,371 $ 610,116 $ 560,906
========= ========= =========
The accompanying notes are an integral part of these
financial statements.
F-6
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
We have audited the balance sheets of the Geodyne Energy Income Limited
Partnership III-B, an Oklahoma limited partnership, as of December 31, 1997 and
1996 and the related statements of operations, changes in partners' capital
(deficit), and cash flows for the years ended December 31, 1997, 1996, and 1995.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Geodyne Energy Income
Limited Partnership III-B at December 31, 1997 and 1996 and the results of its
operations and cash flows for the years ended December 31, 1997, 1996, and 1995,
in conformity with generally accepted accounting principles.
//s// Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
February 13, 1998
F-7
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
Balance Sheets
December 31, 1997 and 1996
ASSETS
------
1997 1996
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 305,288 $ 376,603
Accounts receivable:
Oil and gas sales 307,724 396,970
Other 130 -
--------- ---------
Total current assets $ 613,142 $ 773,573
NET OIL AND GAS PROPERTIES,
utilizing the successful
efforts method 1,499,148 2,854,520
DEFERRED CHARGE 136,296 144,819
--------- ---------
$2,248,586 $3,772,912
========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 19,432 $ 27,983
Gas imbalance payable 6,676 26,735
--------- ---------
Total current liabilities $ 26,108 $ 54,718
ACCRUED LIABILITY $ 28,494 $ 38,690
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 97,840) ($ 97,092)
Limited Partners, issued and
outstanding, 138,336 Units 2,291,824 3,776,596
--------- ---------
Total Partners' capital $2,193,984 $3,679,504
--------- ---------
$2,248,586 $3,772,912
========= =========
The accompanying notes are an integral part of these
financial statements.
F-8
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
Statements of Operations
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ----------
REVENUES:
Oil and gas sales,
including $863,111
of sales to related
parties in 1995 $1,972,122 $2,113,507 $2,063,107
Interest and other
income 15,422 12,611 12,778
(Gain) loss on sale of
oil and gas properties 62,748 ( 47,201) ( 11,295)
--------- --------- ---------
$2,050,292 $2,078,917 $2,064,590
COSTS AND EXPENSES:
Lease operating $ 268,642 $ 345,352 $ 457,146
Production tax 150,575 152,139 160,328
Depreciation, deple-
tion, and amorti-
zation of oil and
gas properties 445,224 633,628 1,052,242
Impairment provision 738,122 - 480,618
General and
administrative 163,739 171,467 161,432
--------- --------- ---------
$1,766,302 $1,302,586 $2,311,766
--------- --------- ---------
NET INCOME (LOSS) $ 283,990 $ 776,331 ($ 247,176)
========= ========= =========
GENERAL PARTNER - NET
INCOME $ 60,762 $ 63,531 $ 48,956
========= ========= =========
LIMITED PARTNERS - NET
INCOME (LOSS) $ 223,228 $ 712,800 ($ 296,132)
========= ========= =========
NET INCOME (LOSS) per
Unit $ 1.61 $ 5.15 ($ 2.14)
========= ========= =========
UNITS OUTSTANDING 138,336 138,336 138,336
========= ========= =========
The accompanying notes are an integral
part of these financial statements.
F-9
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
Statements of Partners' Capital (Deficit)
For the Years Ended December 31, 1997, 1996, and 1995
Limited General
Partners Partner Total
------------ ---------- -------------
Balance, Dec. 31, 1994 $5,987,928 ($52,952) $5,934,976
Net income (loss) ( 296,132) 48,956 ( 247,176)
Cash distributions ( 1,225,000) ( 63,000) ( 1,288,000)
--------- ------ ---------
Balance, Dec. 31, 1995 $4,466,796 ($66,996) $4,399,800
Net income 712,800 63,531 776,331
Cash distributions ( 1,403,000) ( 93,627) ( 1,496,627)
--------- ------ ---------
Balance, Dec. 31, 1996 $3,776,596 ($97,092) $3,679,504
Net income (loss) 223,228 60,762 283,990
Cash distributions ( 1,708,000) ( 61,510) ( 1,769,510)
--------- ------ ---------
Balance, Dec. 31, 1997 $2,291,824 ($97,840) $2,193,984
========= ====== =========
The accompanying notes are an integral part of these
financial statements.
F-10
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
Statements of Cash Flows
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ 283,990 $ 776,331 ($ 247,176)
Adjustments to reconcile
net income (loss) to
net cash provided by
operating activities:
Depreciation, deple-
tion, and amortiza-
tion of oil and gas
properties 445,224 633,628 1,052,242
Impairment provision 738,122 - 480,618
(Gain) loss on sale of
oil and gas properties ( 62,748) 47,201 11,295
(Increase) decrease in
accounts receivable -
oil and gas sales 89,246 ( 23,294) ( 67,977)
Increase in accounts
receivable - other ( 130) - -
(Increase) decrease in
deferred charge 8,523 24,270 ( 8,674)
Increase (decrease) in
accounts payable ( 8,551) ( 21,399) 4,622
Increase (decrease) in
gas imbalance payable ( 20,059) 20,533 ( 6,643)
Increase (decrease) in
accrued liability ( 10,196) ( 8,670) 16,253
--------- --------- ---------
Net cash provided by
operating activities $1,463,421 $1,448,600 $1,234,560
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ($ 43,739) ($ 21,881) ($ 48,179)
Proceeds from sale of oil
and gas properties 278,513 134,926 8,949
--------- --------- ---------
Net cash provided (used)
by investing activities $ 234,774 $ 113,045 ($ 39,230)
--------- --------- ---------
F-11
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($1,769,510 ($1,496,627) ($1,288,000)
--------- --------- ---------
Net cash used by
financing activities ($1,769,510) ($1,496,627) ($1,288,000)
--------- --------- ---------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS ($ 71,315) $ 65,018 ($ 92,670)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 376,603 311,585 404,255
--------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 305,288 $ 376,603 $ 311,585
========= ========= =========
The accompanying notes are an integral
part of these financial statements.
F-12
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
We have audited the balance sheets of the Geodyne Energy Income Limited
Partnership III-C, an Oklahoma limited partnership, as of December 31, 1997 and
1996 and the related statements of operations, changes in partners' capital
(deficit), and cash flows for the years ended December 31, 1997, 1996, and 1995.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Geodyne Energy Income
Limited Partnership III-C at December 31, 1997 and 1996 and the results of its
operations and cash flows for the years ended December 31, 1997, 1996, and 1995,
in conformity with generally accepted accounting principles.
//s// Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
February 13, 1998
F-13
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
Balance Sheets
December 31, 1997 and 1996
ASSETS
------
1997 1996
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 540,911 $ 537,233
Accounts receivable:
Oil and gas sales 497,683 627,697
General partner - 40,940
Other 54 -
--------- ---------
Total current assets $1,038,648 $1,205,870
NET OIL AND GAS PROPERTIES,
utilizing the successful
efforts method $3,442,631 $5,727,898
DEFERRED CHARGE 86,649 76,014
--------- ---------
$4,567,928 $7,009,782
========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 53,049 $ 57,357
Gas imbalance payable 30,493 30,749
--------- ---------
Total current liabilities $ 83,542 $ 88,106
ACCRUED LIABILITY $ 142,828 $ 141,394
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 171,438) ($ 143,741)
Limited Partners, issued and
outstanding, 244,536 Units 4,512,996 6,924,023
--------- ---------
Total Partners' capital $4,341,558 $6,780,282
--------- ---------
$4,567,928 $7,009,782
========= =========
The accompanying notes are an integral part of these
financial statements.
F-14
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
Statements of Operations
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
REVENUES:
Oil and gas sales,
including $1,325,188
of sales to related
parties in 1995 $3,071,851 $3,259,615 $2,760,488
Interest and other
income 19,900 16,964 15,965
Gain (loss) on sale of
oil and gas properties 163,836 79,865 ( 11,907)
--------- --------- ---------
$3,255,587 $3,356,444 $2,764,546
COSTS AND EXPENSES:
Lease operating $ 520,672 $ 544,593 $ 626,774
Production tax 228,430 236,522 192,809
Depreciation, deple-
tion, and amorti-
zation of oil and
gas properties 626,350 930,015 1,587,281
Impairment provision 1,696,417 - 1,338,693
General and
administrative 293,309 293,709 287,615
--------- --------- ---------
$3,365,178 $2,004,839 $4,033,172
--------- --------- ---------
NET INCOME (LOSS) ($ 109,591) $1,351,605 ($1,268,626)
========= ========= =========
GENERAL PARTNER - NET
INCOME $ 86,436 $ 103,933 $ 53,608
========= ========= =========
LIMITED PARTNERS - NET
INCOME (LOSS) ($ 196,027) $1,247,672 ($1,322,234)
========= ========= =========
NET INCOME (LOSS)
per Unit ($ .80) $ 5.10 ($ 5.41)
========= ========= =========
UNITS OUTSTANDING 244,536 244,536 244,536
========= ========= =========
The accompanying notes are an integral part of these
financial statements.
F-15
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
Statements of Partners' Capital (Deficit)
For the Years Ended December 31, 1997, 1996, and 1995
Limited General
Partners Partner Total
------------- ---------- -------------
Balance, Dec. 31, 1994 $10,183,585 ($107,521) $10,076,064
Net income (loss) ( 1,322,234) 53,608 ( 1,268,626)
Cash distributions ( 1,410,000) ( 72,000) ( 1,482,000)
---------- ------- ----------
Balance, Dec. 31, 1995 $ 7,451,351 ($125,913) $ 7,325,438
Net income 1,247,672 103,933 1,351,605
Cash distributions ( 1,775,000) ( 121,761) ( 1,896,761)
---------- ------- ----------
Balance, Dec. 31, 1996 $ 6,924,023 ($143,741) $ 6,780,282
Net income (loss) ( 196,027) 86,436 ( 109,591)
Cash distributions ( 2,215,000) ( 114,133) ( 2,329,133)
---------- ------- ----------
Balance, Dec. 31, 1997 $ 4,512,996 ($171,438) $ 4,341,558
========== ======= ==========
The accompanying notes are an integral part of these
financial statements.
F-16
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
Statements of Cash Flows
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) ($ 109,591) $1,351,605 ($1,268,626)
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities:
Depreciation, deple-
tion, and amortiza-
tion of oil and gas
properties 626,350 930,015 1,587,281
Impairment provision 1,696,417 - 1,338,693
(Gain) loss on sale of
oil and gas properties ( 163,836) ( 79,865) 11,907
(Increase) decrease in
accounts receivable -
oil and gas sales 130,014 ( 166,004) 184,610
(Increase) decrease in
accounts receivable
- General Partner 40,940 ( 40,940) -
Increase in accounts
receivable - other ( 54) - -
Increase in deferred
charge ( 10,635) ( 8,168) ( 1,057)
Increase (decrease) in
accounts payable ( 4,308) ( 27,403) 11,239
Increase (decrease) in
gas imbalance payable ( 256) 8,195 ( 152,960)
Increase (decrease) in
accrued liability 1,434 1,585 ( 35,004)
--------- --------- ---------
Net cash provided by
operating activities $2,206,475 $1,969,020 $1,676,083
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ($ 104,670) ($ 24,068) ($ 98,870)
Proceeds from sale of oil
and gas properties 231,004 169,312 7,952
--------- --------- ---------
Net cash provided (used)
by investing activities $ 126,336 $ 145,244 ($ 90,918)
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($2,329,133) ($1,896,761) ($1,482,000)
--------- --------- ---------
Net cash used by
financing activities ($2,329,133) ($1,896,761) ($1,482,000)
--------- --------- ---------
NET INCREASE IN CASH
AND CASH EQUIVALENTS $ 3,678 $ 217,503 $ 103,165
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 537,233 319,730 216,565
--------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 540,911 $ 537,233 $ 319,730
========= ========= =========
The accompanying notes are an integral part of these
financial statements.
F-17
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
We have audited the balance sheets of the Geodyne Energy Income Limited
Partnership III-D, an Oklahoma limited partnership, as of December 31, 1997 and
1996 and the related statements of operations, changes in partners' capital
(deficit), and cash flows for the years ended December 31, 1997, 1996, and 1995.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Geodyne Energy Income
Limited Partnership III-D at December 31, 1997 and 1996 and the results of its
operations and cash flows for the years ended December 31, 1997, 1996, and 1995,
in conformity with generally accepted accounting principles.
//s// Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
February 13, 1998
F-18
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
Balance Sheets
December 31, 1997 and 1996
ASSETS
------
1997 1996
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 298,964 $ 319,245
Accounts receivable:
Oil and gas sales 361,775 425,312
--------- ---------
Total current assets $ 660,739 $ 744,557
NET OIL AND GAS PROPERTIES,
utilizing the successful
efforts method $2,211,248 3,470,494
DEFERRED CHARGE 18,875 26,139
--------- ---------
$2,890,862 $4,241,190
========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 114,286 $ 112,221
Gas imbalance payable - 5,694
--------- ---------
Total current liabilities $ 114,286 $ 117,915
ACCRUED LIABILITY $ 201,934 $ 220,286
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 62,091) ($ 50,214)
Limited Partners, issued and
outstanding, 131,008 Units 2,636,733 3,953,203
--------- ---------
Total Partners' capital $2,574,642 $3,902,989
--------- ---------
$2,890,862 $4,241,190
========= =========
The accompanying notes are an integral part of these
financial statements.
F-19
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
Statements of Operations
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
REVENUES:
Oil and gas sales,
including $849,298
of sales to related
parties in 1995 $2,335,545 $2,336,708 $2,087,482
Interest and other
income 12,154 9,848 9,501
Gain on sale of
oil and gas properties 25,425 37,737 1,582
--------- --------- ---------
$2,373,124 $2,384,293 $2,098,565
COSTS AND EXPENSES:
Lease operating $ 699,449 $ 763,477 $ 604,541
Production tax 167,611 165,193 139,205
Depreciation, deple-
tion, and amorti-
zation of oil and
gas properties 326,095 441,513 888,974
Impairment provision 932,243 - 495,810
General and
administrative 157,983 158,883 158,547
--------- --------- ---------
$2,283,381 $1,529,066 $2,287,077
--------- --------- ---------
NET INCOME (LOSS) $ 89,743 $ 855,227 ($ 188,512)
========= ========= =========
GENERAL PARTNER - NET
INCOME $ 54,213 $ 59,929 $ 45,966
========= ========= =========
LIMITED PARTNERS - NET
INCOME (LOSS) $ 35,530 $ 795,298 ($ 234,478)
========= ========= =========
NET INCOME (LOSS)
per Unit $ .27 $ 6.07 ($ 1.79)
========= ========= =========
UNITS OUTSTANDING 131,008 131,008 131,008
========= ========= =========
The accompanying notes are an integral
part of these financial statements.
F-20
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
Statements of Partners' Capital (Deficit)
For the Years Ended December 31, 1997, 1996, and 1995
Limited General
Partners Partner Total
------------ --------- ------------
Balance, Dec. 31, 1994 $5,308,383 ($39,142) $5,269,241
Net income (loss) ( 234,478) 45,966 ( 188,512)
Cash distributions ( 825,000) ( 43,000) ( 868,000)
--------- ------ ---------
Balance, Dec. 31, 1995 $4,248,905 ($36,176) $4,212,729
Net income 795,298 59,929 855,227
Cash distributions ( 1,091,000) ( 73,967) ( 1,164,967)
--------- ------ ---------
Balance, Dec. 31, 1996 $3,953,203 ($50,214) $3,902,989
Net income 35,530 54,213 89,743
Cash distributions ( 1,352,000) ( 66,090) ( 1,418,090)
---------- ------ ---------
Balance, Dec. 31, 1997 $2,636,733 ($62,091) $2,574,642
========= ====== =========
The accompanying notes are an integral part of these
financial statements.
F-21
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
Statements of Cash Flows
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ 89,743 $ 855,227 ($ 188,512)
Adjustments to reconcile
net income (loss) to net
cash provided by
operating activities:
Depreciation, deple-
tion, and amortiza-
tion of oil and gas
properties 326,095 441,513 888,974
Impairment provision 932,243 - 495,810
Gain on sale of oil
and gas properties ( 25,425) ( 37,737) ( 1,582)
(Increase) decrease in
accounts receivable -
oil and gas sales 63,537 ( 60,304) ( 69,652)
(Increase) decrease in
deferred charge 7,264 15,439 ( 11,483)
Increase (decrease) in
accounts payable 2,065 45,023 ( 28,434)
Decrease in gas imbalance
payable ( 5,694) ( 3,743) ( 116,398)
Increase (decrease) in
accrued liability ( 18,352) 45,753 ( 122,546)
--------- --------- ---------
Net cash provided by
operating activities $1,371,476 $1,301,171 $ 846,177
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ($ 579) ($ 24,953) ($ 26,512)
Proceeds from sale of oil
and gas properties 26,912 38,599 1,831
--------- --------- ---------
Net cash provided (used)
by investing activities $ 26,333 $ 13,646 ($ 24,681)
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($1,418,090) ($1,164,967) ($ 868,000)
--------- --------- ---------
Net cash used by
financing activities ($1,418,090) ($1,164,967) ($ 868,000)
--------- --------- ---------
F-22
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS ($ 20,281) $ 149,850 ($ 46,504)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 319,245 169,395 215,899
--------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 298,964 $ 319,245 $ 169,395
========= ========= =========
The accompanying notes are an integral
part of these financial statements.
F-23
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
We have audited the balance sheets of the Geodyne Energy Income Limited
Partnership III-E, an Oklahoma limited partnership, as of December 31, 1997 and
1996 and the related statements of operations, changes in partners' capital
(deficit), and cash flows for the years ended December 31, 1997, 1996, and 1995.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Geodyne Energy Income
Limited Partnership III-E at December 31, 1997 and 1996 and the results of its
operations and cash flows for the years ended December 31, 1997, 1996, and 1995,
in conformity with generally accepted accounting principles.
//s// Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
February 13, 1998
F-24
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
Balance Sheets
December 31, 1997 and 1996
ASSETS
------
1997 1996
------------- -------------
CURRENT ASSETS:
Cash and cash equivalents $ 1,114,574 $ 1,243,143
Accounts receivable:
Oil and gas sales 1,361,797 1,554,748
---------- ----------
Total current assets $ 2,476,371 $ 2,797,891
NET OIL AND GAS PROPERTIES,
utilizing the successful
efforts method $ 8,716,929 12,822,109
DEFERRED CHARGE 204,087 298,358
---------- ----------
$11,397,387 $15,918,358
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 693,518 $ 623,087
Gas imbalance payable 142,749 156,497
---------- ----------
Total current liabilities $ 836,267 $ 779,584
ACCRUED LIABILITY $ 320,943 $ 355,235
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 209,050) ($ 187,947)
Limited Partners, issued and
outstanding, 418,266 Units 10,449,227 14,971,486
---------- ----------
Total Partners' capital $10,240,177 $14,783,539
---------- ----------
$11,397,387 $15,918,358
========== ==========
The accompanying notes are an integral part of these
financial statements.
F-25
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
Statements of Operations
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------- -------------
REVENUES:
Oil and gas sales,
including $2,128,723
of sales to related
parties in 1995 $9,041,809 $9,030,115 $8,676,047
Interest and other
income 44,879 36,750 23,852
Gain (loss) on sale of
oil and gas
properties ( 39,835) 58,579 24,387
--------- --------- ---------
$9,046,853 $9,125,444 $8,724,286
COSTS AND EXPENSES:
Lease operating $3,867,517 $3,785,813 $4,141,427
Production tax 645,699 632,451 614,141
Depreciation, deple-
tion, and amorti-
zation of oil and
gas properties 1,198,598 1,737,844 3,448,296
Impairment provision 2,893,438 - 210,152
General and
administrative 502,466 502,626 512,981
--------- --------- ---------
$9,107,718 $6,658,734 $8,926,997
--------- --------- ---------
NET INCOME (LOSS) ($ 60,865) $2,466,710 ($ 202,711)
========= ========= =========
GENERAL PARTNER - NET
INCOME $ 158,394 $ 191,012 $ 136,202
========= ========= =========
LIMITED PARTNERS - NET
INCOME (LOSS) ($ 219,259) $2,275,698 ($ 338,913)
========= ========= =========
NET INCOME (LOSS)
per Unit ($ .52) $ 5.44 ($ .81)
========= ========= =========
UNITS OUTSTANDING 418,266 418,266 418,266
========= ========= =========
The accompanying notes are an integral
part of these financial statements.
F-26
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
Statements of Partners' Capital (Deficit)
For the Years Ended December 31, 1997, 1996, and 1995
Limited General
Partners Partner Total
------------- ---------- -------------
Balance, Dec. 31, 1994 $19,348,701 ($124,952) $19,223,749
Net income (loss) ( 338,913) 136,202 ( 202,711)
Cash distributions ( 2,690,000) ( 139,000) ( 2,829,000)
---------- ------- ----------
Balance, Dec. 31, 1995 $16,319,788 ($127,750) $16,192,038
Net income 2,275,698 191,012 2,466,710
Cash distributions ( 3,624,000) ( 251,209) ( 3,875,209)
---------- ------- -----------
Balance, Dec. 31, 1996 $14,971,486 ($187,947) $14,783,539
Net income (loss) ( 219,259) 158,394 ( 60,865)
Cash distributions ( 4,303,000) ( 179,497) ( 4,482,497)
---------- ------- ----------
Balance, Dec. 31, 1997 $10,449,227 ($209,050) $10,240,177
========== ======= ==========
The accompanying notes are an integral part of these
financial statements.
F-27
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
Statements of Cash Flows
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) ($ 60,865) $2,466,710 ($ 202,711)
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities:
Depreciation, deple-
tion, and amortiza-
tion of oil and gas
properties 1,198,598 1,737,844 3,448,296
Impairment provision 2,893,438 - 210,152
(Gain) loss on sale of
oil and gas proper-
ties 39,835 ( 58,579) ( 24,387)
(Increase) decrease in
accounts receivable -
oil and gas sales 192,951 19,717 ( 303,759)
Decrease in deferred charge 94,271 53,411 21,045
Increase (decrease) in
accounts payable 70,431 234,315 ( 469,229)
Increase (decrease) in
gas imbalance payable ( 13,748) 36,225 25,001
Decrease in accrued
liability ( 34,292) ( 56,949) ( 77,132)
--------- --------- ---------
Net cash provided by
operating activities $4,380,619 $4,432,694 $2,627,276
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ( 65,616) ($ 37,987) ($ 339,148)
Proceeds from sale of oil
and gas properties 38,925 58,595 41,433
--------- --------- ---------
Net cash provided (used)
by investing activities ($ 26,691) $ 20,608 ($ 297,715)
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($4,482,497) ($3,875,209) ($2,829,000)
--------- --------- ---------
Net cash used by
financing activities ($4,482,497) ($3,875,209) ($2,829,000)
--------- --------- ---------
F-28
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS ($ 128,569) $ 578,093 ($ 499,439)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 1,243,143 665,050 1,164,489
--------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $1,114,574 $1,243,143 $ 665,050
========= ========= =========
The accompanying notes are an integral
part of these financial statements.
F-29
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
We have audited the balance sheets of the Geodyne Energy Income Limited
Partnership III-F, an Oklahoma limited partnership, as of December 31, 1997 and
1996 and the related statements of operations, changes in partners' capital
(deficit), and cash flows for the years ended December 31, 1997, 1996, and 1995.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Geodyne Energy Income
Limited Partnership III-F at December 31, 1997 and 1996 and the results of its
operations and cash flows for the years ended December 31, 1997, 1996, and 1995,
in conformity with generally accepted accounting principles.
//s// Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
February 13, 1998
F-30
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
Balance Sheets
December 31, 1997 and 1996
ASSETS
------
1997 1996
------------ -------------
CURRENT ASSETS:
Cash and cash equivalents $ 541,382 $ 504,658
Accounts receivable:
Oil and gas sales 472,746 661,215
Other 9,631 -
--------- ---------
Total current assets $1,023,759 $1,165,873
NET OIL AND GAS PROPERTIES,
utilizing the successful
efforts method $3,604,665 $7,307,487
DEFERRED CHARGE 124,393 159,453
--------- ---------
$4,752,817 $8,632,813
========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 165,963 $ 168,316
Gas imbalance payable 119,864 109,044
--------- ---------
Total current liabilities $ 285,827 $ 277,360
ACCRUED LIABILITY $ 159,275 $ 142,686
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 146,427) ($ 97,523)
Limited Partners, issued and
outstanding, 221,484 Units 4,454,142 8,310,290
--------- ---------
Total Partners' capital $4,307,715 $8,212,767
--------- ---------
$4,752,817 $8,632,813
========= =========
The accompanying notes are an integral part of these
financial statements.
F-31
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
Statements of Operations
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------- -------------
REVENUES:
Oil and gas sales,
including $847,849
of sales to related
parties in 1995 $2,991,450 $3,094,738 $2,697,816
Interest and other
income 21,251 14,160 5,456
Gain (loss) on sale of
oil and gas
properties ( 14,411) 81,481 45,550
--------- --------- ---------
$2,998,290 $3,190,379 $2,748,822
COSTS AND EXPENSES:
Lease operating $1,166,776 $1,075,305 $1,315,378
Production tax 166,155 162,302 156,692
Depreciation, deple-
tion, and amorti-
zation of oil and
gas properties 755,802 1,130,451 1,509,514
Impairment provision 2,884,405 - 998,811
General and
administrative 265,786 266,544 264,360
--------- --------- ---------
$5,238,924 $2,634,602 $4,244,755
--------- --------- ---------
NET INCOME (LOSS) ($2,240,634) $ 555,777 ($1,495,933)
========= ========= =========
GENERAL PARTNER - NET
INCOME $ 32,514 $ 72,299 $ 25,536
========= ========= =========
LIMITED PARTNERS - NET
INCOME (LOSS) ($2,273,148) $ 483,478 ($1,521,469)
========= ========= =========
NET INCOME (LOSS)
per Unit ($ 10.26) $ 2.18 ($ 6.87)
========= ========= =========
UNITS OUTSTANDING 221,484 221,484 221,484
========= ========= =========
The accompanying notes are an integral
part of these financial statements.
F-32
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
Statements of Partners' Capital (Deficit)
For the Years Ended December 31, 1997, 1996, and 1995
Limited General
Partners Partner Total
------------- ---------- -------------
Balance, Dec. 31, 1994 $10,963,281 ($ 72,812) $10,890,469
Net income (loss) ( 1,521,469) 25,536 ( 1,495,933)
Cash distributions ( 455,000) ( 23,300) ( 478,300)
---------- ------- ----------
Balance, Dec. 31, 1995 $ 8,986,812 ($ 70,576) $ 8,916,236
Net income 483,478 72,299 555,777
Cash distributions ( 1,160,000) ( 99,246) ( 1,259,246)
---------- ------- ----------
Balance, Dec. 31, 1996 $ 8,310,290 ($ 97,523) $ 8,212,767
Net income (loss) ( 2,273,148) 32,514 ( 2,240,634)
Cash distributions ( 1,583,000) ( 81,418) ( 1,664,418)
---------- ------- ----------
Balance, Dec. 31, 1997 $ 4,454,142 ($146,427) $ 4,307,715
========== ======= ==========
The accompanying notes are an integral part of these
financial statements.
F-33
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
Statements of Cash Flows
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) ($2,240,634) $ 555,777 ($1,495,933)
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities:
Depreciation, deple-
tion, and amortiza-
tion of oil and gas
properties 755,802 1,130,451 1,509,514
Impairment provision 2,884,405 - 998,811
(Gain) loss on sale of
oil and gas properties 14,411 ( 81,481) ( 45,550)
(Increase) decrease in
accounts receivable -
oil and gas sales 188,469 ( 247,966) 47,205
Increase in accounts
receivable - other ( 9,631) - -
(Increase) decrease in
deferred charge 35,060 77,816 ( 22,173)
Increase (decrease) in
accounts payable ( 2,353) 5,027 ( 182,836)
Increase in gas imbalance
payable 10,820 11,811 22,377
Increase (decrease) in
accrued liability 16,589 ( 118,725) ( 26,356)
--------- --------- ---------
Net cash provided by
operating activities $1,652,938 $1,332,710 $ 805,059
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ($ 34,952) ($ 12,107) ($ 363,847)
Proceeds from sale of oil
and gas properties 83,156 118,685 59,533
--------- --------- ---------
Net cash provided (used)
by investing activities $ 48,204 $ 106,578 ($ 304,314)
--------- --------- ---------
F-34
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($1,664,418) ($1,259,246) ($ 478,300)
--------- --------- ---------
Net cash used by
financing activities ($1,664,418) ($1,259,246) ($ 478,300)
--------- --------- ---------
NET INCREASE IN CASH
AND CASH EQUIVALENTS $ 36,724 $ 180,042 $ 22,445
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 504,658 324,616 302,171
--------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 541,382 $ 504,658 $ 324,616
========= ========= =========
The accompanying notes are an integral
part of these financial statements.
F-35
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-G
We have audited the balance sheets of the Geodyne Energy Income Limited
Partnership III-G, an Oklahoma limited partnership, as of December 31, 1997 and
1996 and the related statements of operations, changes in partners' capital
(deficit), and cash flows for the years ended December 31, 1997, 1996, and 1995.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Geodyne Energy Income
Limited Partnership III-G at December 31, 1997 and 1996 and the results of its
operations and cash flows for the years ended December 31, 1997, 1996, and 1995,
in conformity with generally accepted accounting principles.
//s// Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
February 13, 1998
F-36
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-G
Balance Sheets
December 31, 1997 and 1996
ASSETS
------
1997 1996
------------ -------------
CURRENT ASSETS:
Cash and cash equivalents $ 351,163 $ 315,955
Accounts receivable:
Oil and gas sales 285,689 408,115
General Partner 13,140 -
Other 6,369 -
--------- ---------
Total current assets $ 656,361 $ 724,070
NET OIL AND GAS PROPERTIES,
utilizing the successful
efforts method $2,141,289 4,150,885
DEFERRED CHARGE 75,406 102,775
--------- ---------
$2,873,056 $4,977,730
========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 101,925 $ 99,540
Gas imbalance payable 59,607 54,219
--------- ---------
Total current liabilities $ 161,532 $ 153,759
ACCRUED LIABILITY $ 89,310 $ 86,853
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 85,608) ($ 58,669)
Limited Partners, issued and
outstanding, 121,925 Units 2,707,822 4,795,787
--------- ---------
Total Partners' capital $2,622,214 $4,737,118
--------- ---------
$2,873,056 $4,977,730
========= =========
The accompanying notes are an integral part of these
financial statements.
F-37
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-G
Statements of Operations
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ------------ ------------
REVENUES:
Oil and gas sales,
including $446,378
of sales to related
parties in 1995 $1,845,264 $1,962,555 $1,694,847
Interest and other
income 14,201 8,144 3,666
Gain on sale of oil
and gas properties 4,685 61,146 29,096
--------- --------- ---------
$1,864,150 $2,031,845 $1,727,609
COSTS AND EXPENSES:
Lease operating $ 755,242 $ 703,303 $ 843,215
Production tax 99,431 101,107 94,774
Depreciation, deple-
tion, and amorti-
zation of oil and
gas properties 425,649 653,459 974,725
Impairment provision 1,551,780 - 677,010
General and
administrative 146,341 146,827 146,505
--------- --------- ---------
$2,978,443 $1,604,696 $2,736,229
--------- --------- ---------
NET INCOME (LOSS) ($1,114,293) $ 427,149 ($1,008,620)
========= ========= =========
GENERAL PARTNER - NET
INCOME $ 22,672 $ 47,089 $ 15,638
========= ========= =========
LIMITED PARTNERS - NET
INCOME (LOSS) ($1,136,965) $ 380,060 ($1,024,258)
========= ========= =========
NET INCOME (LOSS)
per Unit ($ 9.33) $ 3.12 ($ 8.40)
========= ========= =========
UNITS OUTSTANDING 121,925 121,925 121,925
========= ========= =========
The accompanying notes are an integral
part of these financial statements.
F-38
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-G
Statements of Partners' Capital (Deficit)
For the Years Ended December 31, 1997, 1996, and 1995
Limited General
Partners Partner Total
------------- ---------- ------------
Balance, Dec. 31, 1994 $6,485,985 ($26,102) $6,459,883
Net income (loss) ( 1,024,258) 15,638 ( 1,008,620)
Cash distributions ( 325,000) ( 16,500) ( 341,500)
--------- ------ ---------
Balance, Dec. 31, 1995 $5,136,727 ($26,964) $5,109,763
Net income 380,060 47,089 427,149
Cash distributions ( 721,000) ( 78,794) ( 799,794)
--------- ------ ---------
Balance, Dec. 31, 1996 $4,795,787 ($58,669) $4,737,118
Net income (loss) ( 1,136,965) 22,672 ( 1,114,293)
Cash distributions ( 951,000) ( 49,611) ( 1,000,611)
--------- ------ ---------
Balance, Dec. 31, 1997 $2,707,822 ($85,608) $2,622,214
========= ====== =========
The accompanying notes are an integral part of these
financial statements.
F-39
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-G
Statements of Cash Flows
For the Years Ended December 31, 1997, 1996, and 1995
1997 1996 1995
------------ ---------- ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) ($1,114,293) $427,149 ($1,008,620)
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities:
Depreciation, deple-
tion, and amortiza-
tion of oil and gas
properties 425,649 653,459 974,725
Impairment provision 1,551,780 - 677,010
Gain on sale of oil and
gas properties ( 4,685) ( 61,146) ( 29,096)
(Increase) decrease in
accounts receivable -
oil and gas sales 122,426 ( 149,791) 37,429
Increase in accounts
receivable - General
Partner ( 13,140) - -
Increase in accounts
receivable - other ( 6,369) - -
(Increase) decrease in
deferred charge 27,369 45,459 ( 21,476)
Increase (decrease) in
accounts payable 2,385 ( 38) ( 96,281)
Increase in gas imbalance
payable 5,388 5,619 11,132
Increase (decrease) in
accrued liability 2,457 ( 70,481) ( 7,007)
--------- ------- ---------
Net cash provided by
operating activities $ 998,967 $850,230 $ 537,816
--------- ------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ($ 28,338) ($ 19,668) ($ 203,544)
Proceeds from sale of oil
and gas properties 65,190 96,713 37,861
--------- ------- ---------
Net cash provided (used)
by investing activities $ 36,852 $ 77,045 ($ 165,683)
--------- ------- ---------
F-40
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($1,000,611) ($799,794) ($ 341,500)
--------- ------- ---------
Net cash used by
financing activities ($1,000,611) ($799,794) ($ 341,500)
--------- ------- ---------
NET INCREASE IN CASH
AND CASH EQUIVALENTS $ 35,208 $127,481 $ 30,633
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 315,955 188,474 157,841
--------- ------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 351,163 $315,955 $ 188,474
========= ======= =========
The accompanying notes are an integral
part of these financial statements.
F-41
GEODYNE ENERGY INCOME PROGRAM III LIMITED PARTNERSHIPS
Notes to Financial Statements
For the Years Ended December 31, 1997, 1996, and 1995
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations
The Geodyne Energy Income Limited Partnerships (the "Partnerships") were
formed pursuant to a public offering of depositary units ("Units"). Upon
formation, investors became limited partners (the "Limited Partners") and held
Units issued by each Partnership. Geodyne Resources, Inc. (the "General
Partner") is the general partner of each Partnership. Limited Partner capital
contributions were invested in producing oil and gas properties. The
Partnerships were activated on the following dates with the following Limited
Partner capital contributions.
Limited Partner
Date of Capital
Partnership Activation Contributions
----------- ------------------ ---------------
III-A November 21, 1989 $26,397,600
III-B January 24, 1990 13,833,600
III-C February 27, 1990 24,453,600
III-D September 5, 1990 13,100,800
III-E December 26, 1990 41,826,600
III-F March 7, 1991 22,148,400
III-G September 20, 1991 12,192,500
Pursuant to the terms of the partnership agreements for the Partnerships,
the Partnerships will terminate on the following dates:
Partnerships Termination Date
------------ -----------------
III-A November 28, 1999
III-B January 24, 2000
III-C February 28, 2000
III-D September 5, 2000
III-E December 26, 2000
III-F March 7, 2001
III-G September 20, 2001
However, the General Partner may extend the term of each Partnership for up to
five periods of two years each. As of the date of these financial statements,
the General Partner has not determined whether to extend the term of any
Partnership.
F-42
An affiliate of the General Partner owned the following Units at December
31, 1997:
Number of Percent of
Partnership Units Owned Outstanding
----------- ----------- -----------
III-A 27,010 10.2%
III-B 15,206 11.0%
III-C 30,371 12.4%
III-D 19,505 14.9%
III-E 53,068 12.7%
III-F 29,898 13.5%
III-G 15,898 13.0%
The Partnerships' sole business is the development and production of oil
and gas. Substantially all of the Partnerships' gas reserves are being sold
regionally on the "spot market." Due to the highly competitive nature of the
spot market, prices on the spot market are subject to wide seasonal and regional
pricing fluctuations. In addition, such spot market sales are generally short
term in nature and are dependent upon the obtaining of transportation services
provided by pipelines.
Allocation of Costs and Revenues
The terms of each Partnership's Limited Partnership Agreement (the
"Partnership Agreement") allocate costs and income between the Limited Partners
and the General Partner as follows:
Before Payout (1) After Payout(1)
------------------ ------------------
General Limited General Limited
Partner Partners Partner Partners
-------- -------- -------- --------
Costs(2)
- ------------------------
Sales commissions, pay-
ment for organization
and offering costs
and management fee 1% 99% - -
Property acquisition
costs 1% 99% 1% 99%
Identified development
drilling 1% 99% 1% 99%
Development drilling(2) 5% 95% 15% 85%
General and administra-
tive costs, direct
administrative costs
and operating costs(2) 5% 95% 15% 85%
F-43
Income(2)
- ------------------------
Temporary investments of
Limited Partners'
subscriptions 1% 99% 1% 99%
Income from oil and gas
production(2) 5% 95% 15% 85%
Gain on sale of
producing properties(2) 5% 95% 15% 85%
All other income(2) 5% 95% 15% 85%
- ----------
(1) Payout occurs when total distributions to Limited Partners equal total
original Limited Partner subscriptions.
(2) If, at payout, the Limited Partners have received distributions at an
annual rate less than 12% of their subscriptions, the percentage of income
and costs allocated to the General Partner will increase to only 10% and
the Limited Partners will be allocated 90%. Thereafter, if the
distribution to Limited Partners reaches an average annual rate of 12% the
allocation will change to 15% to the General Partner and 85% to the
Limited Partners.
The III-B Partnership achieved payout during the first quarter of 1998.
Beginning with the first quarter of 1998, operations for the III-B Partnership
will be allocated using after payout percentages.
Cash and Cash Equivalents
The Partnerships consider all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. Cash equivalents are
not insured, which cause the Partnerships to be subject to risk.
Credit Risks
Accrued oil and gas sales which are due from a variety of oil and gas
purchasers subject the Partnerships to a concentration of credit risk. Some of
these purchasers are discussed in Note 3 - Major Customers.
Receivable from General Partner
The receivable from the General Partner at December 31, 1996 for the III-C
Partnership represents proceeds due to the III-C Partnership for the sale of oil
and gas properties in the fourth quarter of 1996. Such receivable was collected
by the III-C Partnership in the first quarter of 1997. The receivable from the
General Partner at December 31, 1997 for the III-G Partnership represents
F-44
proceeds due to the III-G Partnership for the sale of oil and gas properties in
the fourth quarter of 1997. Such receivable was collected by the III-G
Partnership in the first quarter of 1998.
Oil and Gas Properties
The Partnerships follow the successful efforts method of accounting for
their oil and gas properties. Under the successful efforts method, the
Partnerships capitalize all property acquisition costs and development costs
incurred in connection with the further development of oil and gas reserves.
Property acquisition costs include costs incurred by the Partnerships or the
General Partner to acquire producing properties, including related title
insurance or examination costs, commissions, engineering, legal and accounting
fees, and similar costs directly related to the acquisitions, plus an allocated
portion of the General Partner's property screening costs. The acquisition cost
to the Partnerships of properties acquired by the General Partner is adjusted to
reflect the net cash results of operations, including interest incurred to
finance the acquisition, for the period of time the properties are held by the
General Partner. Leasehold impairment of unproved properties is recognized based
upon an individual property assessment and exploratory experience. Upon
discovery of commercial reserves, leasehold costs are transferred to producing
properties.
Depletion of the costs of producing oil and gas properties, amortization
of related intangible drilling and development costs, and depreciation of
tangible lease and well equipment are computed on the units-of-production
method. The Partnerships' calculation of depreciation, depletion, and
amortization includes estimated dismantlement and abandonment costs, net of
estimated salvage values. The depreciation, depletion, and amortization rates
per equivalent barrel of oil produced during the years ended December 31, 1997,
1996, and 1995 were as follows:
Partnership 1997 1996 1995
----------- ----- ----- -----
III-A $3.42 $4.40 $5.89
III-B 3.60 4.37 5.45
III-C 2.92 3.68 5.22
III-D 2.05 2.63 4.25
III-E 2.00 2.96 4.53
III-F 3.51 4.95 5.74
III-G 3.25 4.76 6.25
F-45
When complete units of depreciable property are retired or sold, the asset
cost and related accumulated depreciation are eliminated with any gain or loss
reflected in income. When less than complete units of depreciable property are
retired or sold, the difference between asset cost and salvage value is charged
or credited to accumulated depreciation.
The Partnerships follow the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long
Lived Assets and Assets Held for Disposal," which is intended to establish more
consistent accounting standards for measuring the recoverability of long-lived
assets. SFAS No. 121 requires successful efforts companies, like the
Partnerships, to evaluate the recoverability of the carrying costs of their
proved oil and gas properties at the lowest level for which there are
identifiable cash flows that are largely independent of the cash flows of other
groups of oil and gas properties. With respect to the Partnerships' oil and gas
properties, this evaluation was performed for each field. SFAS No. 121 provides
that if the unamortized costs of oil and gas properties exceed the expected
undiscounted future cash flows from such properties, the cost of the properties
is written down to fair value, which is determined by using the discounted
future cash flows from the properties. During 1997, 1996,and 1995, the
Partnerships recorded the following non-cash charges against earnings
(impairment provisions) pursuant to SFAS No. 121:
Partnership 1997 1996 1995
----------- ---------- ---- ----------
III-A $ 184,644 $ - $1,267,185
III-B 77,653 - 480,618
III-C 234,271 - 1,338,693
III-D 485,820 - 495,810
III-E 2,042,775 - 210,152
III-F 2,078,019 - 998,811
III-G 1,113,114 - 677,010
In addition, during 1997 the General Partner determined that the
Partnerships' unproved properties would be uneconomic to develop and, therefore,
of little or no value. This determination was based on an evaluation by the
General Partner that it is unlikely that these unproved properties will be
developed due to the low oil and gas prices received over the last several years
and provisions in the Partnership Agreements which limit the level of
permissible drilling activity. As a result of this determination, the
Partnership recorded the following noncash charges against earnings at March 31,
1997 in order to reflect the writing-off of the Partnerships' unproved
properties:
F-46
Partnerships Amount
----------- ----------
III-A $1,432,362
III-B 660,469
III-C 1,462,146
III-D 446,423
III-E 850,663
III-F 806,386
III-G 438,666
Deferred Charge
Deferred Charge represents costs deferred for lease operating expenses
incurred in connection with the Partnerships' underproduced gas imbalance
positions. The rate used in calculating the deferred charge is the average of
the annual production costs per Mcf. At December 31, 1997 and 1996, cumulative
total gas sales volumes for underproduced wells were less than the Partnerships'
pro-rata share of total gas production from these wells by the following
amounts:
1997 1996
-------------------- --------------------
Partnership Mcf Amount Mcf Amount
----------- ------- -------- ------- --------
III-A 469,603 $199,722 501,788 $244,220
III-B 261,654 136,296 282,024 144,819
III-C 188,244 86,649 186,401 76,014
III-D 20,653 18,875 28,310 26,139
III-E 129,793 204,087 169,483 298,358
III-F 101,297 124,393 132,118 159,453
III-G 53,170 75,406 70,539 102,775
Accrued Liability
Accrued liability represents charges accrued for lease operating expenses
incurred in connection with the Partnerships' overproduced gas imbalance
positions. The rate used in calculating the accrued liability is the average of
the annual production costs per Mcf. At December 31, 1997 and 1996, cumulative
total gas sales volumes for overproduced wells exceeded the Partnerships'
pro-rata share of total gas production from these wells by the following
amounts:
F-47
1997 1996
-------------------- --------------------
Partnership Mcf Amount Mcf Amount
----------- ------- -------- ------- --------
III-A 122,044 $ 51,905 165,186 $ 80,396
III-B 54,702 28,494 75,346 38,690
III-C 310,293 142,828 346,723 141,394
III-D 220,959 201,934 238,585 220,286
III-E 204,110 320,943 201,792 355,235
III-F 129,703 159,275 118,225 142,686
III-G 62,974 89,310 59,611 86,853
Oil and Gas Sales and Gas Imbalance Payable
The Partnerships' oil and condensate production is sold, title passed, and
revenue recognized at or near the Partnerships' wells under short-term purchase
contracts at prevailing prices in accordance with arrangements which are
customary in the oil and gas industry. Sales of gas applicable to the
Partnerships' interest in producing oil and gas leases are recorded as revenue
when the gas is metered and title transferred pursuant to the gas sales
contracts covering the Partnerships' interest in gas reserves. During such times
as a Partnership's sales of gas exceed its pro rata ownership in a well, such
sales are recorded as revenue unless total sales from the well have exceeded the
Partnership's share of estimated total gas reserves underlying the property, at
which time such excess is recorded as a liability. The rates per Mcf used to
calculate this liability are based on the average gas prices received for the
volumes at the time the overproduction occurred. This also reflects the price
for which the Partnerships are currently settling this liability. At December
31, 1997 and 1996 total sales exceeded the Partnerships' share of estimated
total gas reserves as follows:
1997 1996
-------------------- --------------------
Partnership Mcf Amount Mcf Amount
----------- ------- -------- ------- --------
III-A 25,612 $ 38,418 51,198 $ 76,797
III-B 4,451 6,676 17,823 26,735
III-C 20,329 30,493 20,499 30,749
III-D - - 3,796 5,694
III-E 95,166 142,749 104,331 156,497
III-F 79,909 119,864 72,696 109,044
III-G 39,738 59,607 36,146 54,219
These amounts were recorded as gas imbalance payables in accordance with the
sales method. These gas imbalance payables will be settled by either gas
F-48
production by the underproduced party in excess of the current estimates of
total gas reserves for the well or by a negotiated or contractual payment to the
underproduced party.
General and Administrative Overhead
The General Partner and its affiliates are reimbursed for actual general
and administrative costs incurred and attributable to the conduct of the
business affairs and operations of the Partnerships.
Use of Estimates in Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Further, the
deferred charge, the gas imbalance payable, and the accrued liability all
involve estimates which could materially differ from the actual amounts
ultimately realized or incurred in the near term. Oil and gas reserves (see Note
4) also involve significant estimates which could materially differ from the
actual amounts ultimately realized.
Income Taxes
Income or loss for income tax purposes is includable in the income tax
returns of the partners. Accordingly, no recognition has been given to income
taxes in these financial statements.
2. TRANSACTIONS WITH RELATED PARTIES
The Partnerships reimburse the General Partner for the general and
administrative overhead applicable to the Partnerships, based on an allocation
of actual costs incurred by the General Partner. When actual costs incurred
benefit other Partnerships and affiliates, the allocation of costs is based on
the relationship of the Partnerships' reserves to the total reserves in all
Partnerships and affiliates. The General Partner believes this allocation method
is reasonable. Although the actual costs incurred by the General Partner and its
affiliates have fluctuated during the three years presented, the amounts charged
to the Partnerships have not fluctuated due to the expense limitations imposed
by the Partnership Agreement. The following is a summary of payments made to the
F-49
General Partner or its affiliates by the Partnerships for general and
administrative overhead costs for the years ended December 31, 1997, 1996, and
1995:
Partnership 1997 1996 1995
----------- -------- -------- --------
III-A $277,872 $277,872 $277,872
III-B 145,620 145,620 145,620
III-C 257,412 257,412 257,412
III-D 137,904 137,904 137,904
III-E 440,280 440,280 440,280
III-F 233,136 233,136 233,136
III-G 128,340 128,340 128,340
Affiliates of the Partnerships operate certain of the Partnerships'
properties and their policy is to bill the Partnerships for all customary
charges and cost reimbursements associated with these activities, together with
any compressor rentals, consulting, or other services provided. Such charges are
comparable to third party charges in the area where the wells are located and
are the same as charged to other working interest owners in the wells.
During 1995 the Partnerships sold gas to El Paso Energy Marketing Company,
formerly known as Premier Gas Company ("El Paso"). El Paso, like other similar
gas marketing firms, resold such gas to third parties at market prices. El Paso
was an affiliate of the Partnerships until December 6, 1995. The following table
summarizes the total amount of the Partnerships' sales to El Paso during 1995:
Partnership 1995
----------- ----------
III-A $1,811,755
III-B 863,111
III-C 1,325,188
III-D 849,298
III-E 2,128,723
III-F 847,849
III-G 446,378
There were no sales made by the Partnerships to affiliates or related parties
during 1997 or 1996.
3. MAJOR CUSTOMERS
The following table sets forth purchasers who individually accounted for
ten percent or more of the Partnerships' combined oil and gas sales during 1997,
1996, and 1995:
F-50
Partnership Purchaser Percentage
----------- ------------------------ --------------------------
1997 1996 1995
----- ----- -----
III-A El Paso 47.2% 59.2% 49.7%
Valero Industrial Gas
L.P. ("Valero") 14.4% - % - %
Mesa Operating Ltd.
Partnership ("Mesa") - % 19.4% 19.7%
Snyder Oil Corp. - % - % - %
III-B El Paso 37.9% 47.9% 41.8%
Sun Refining & Marketing
Company 13.1% 10.3% - %
Phibro Energy, Inc. 12.7% - % - %
Valero 11.4% - % - %
Mesa - % 22.0% 23.0%
III-C El Paso 49.8% 51.2% 48.0%
III-D El Paso 45.6% 44.4% 40.7%
Eaglwing Trading, Inc.
("Eaglwing") 18.3% - % - %
Oryx Energy Company
("Oryx") - % 19.9% 20.8%
III-E Eaglwing 33.3% - % - %
El Paso 12.4% 12.3% 24.5%
Oryx - 36.5% 33.9%
Hunt Energy Corp. - % 10.0% - %
III-F El Paso 28.5% 25.9% 31.4%
Amoco Production
Company ("Amoco") - % 10.4% - %
III-G El Paso 23.9% 21.6% 26.3%
Amoco - % 10.9% - %
In the event of interruption of purchases by one or more of these
significant customers or the cessation or material change in availability of
open access transportation by the Partnerships' pipeline transporters, the
Partnerships may encounter difficulty in marketing their gas and in maintaining
historic sales levels. Alternative purchasers or transporters may not be readily
available.
4. SUPPLEMENTAL OIL AND GAS INFORMATION
The following supplemental information regarding the oil and gas
activities of the Partnerships is presented pursuant to the disclosure
requirements promulgated by the SEC.
F-51
Capitalized Costs
Capitalized costs and accumulated depreciation, depletion, amortization,
and valuation allowance at December 31, 1997 and 1996 were as follows:
III-A Partnership
-----------------
1997 1996
------------- -------------
Proved properties $15,907,665 $18,399,090
Unproved properties,
not subject to
depreciation,
depletion, and
amortization - 1,575,589
---------- ----------
$15,907,665 $19,974,679
Less accumulated
depreciation,
depletion, amorti-
zation, and valua-
tion allowance ( 13,237,716) ( 14,614,023)
---------- ----------
Net oil and gas
properties $ 2,669,949 $ 5,360,656
========== ==========
F-52
III-B Partnership
-----------------
1997 1996
------------ -------------
Proved properties $9,402,262 $10,461,319
Unproved properties,
not subject to
depreciation,
depletion, and
amortization - 754,938
--------- ----------
$9,402,262 $11,216,257
Less accumulated
depreciation,
depletion, amorti-
zation, and valua-
tion allowance ( 7,903,114) ( 8,361,737)
--------- ----------
Net oil and gas
properties $1,499,148 $ 2,854,520
========= ==========
III-C Partnership
-----------------
1997 1996
------------- -------------
Proved properties $19,627,883 $20,126,262
Unproved properties,
not subject to
depreciation,
depletion, and
amortization - 1,464,473
---------- ----------
$19,627,883 $21,590,735
Less accumulated
depreciation,
depletion, amorti-
zation, and valua-
tion allowance ( 16,185,252) ( 15,862,837)
---------- ----------
Net oil and gas
properties $ 3,442,631 $ 5,727,898
========== ==========
F-53
III-D Partnership
-----------------
1997 1996
------------- -------------
Proved properties $12,187,201 $12,203,296
Unproved properties,
not subject to
depreciation,
depletion, and
amortization - 446,756
---------- ----------
$12,187,201 $12,650,052
Less accumulated
depreciation,
depletion, amorti-
zation, and valua-
tion allowance ( 9,975,953) ( 9,179,558)
---------- ----------
Net oil and gas
properties $ 2,211,248 $ 3,470,494
========== ==========
III-E Partnership
-----------------
1997 1996
------------- -------------
Proved properties $34,159,634 $35,818,810
Unproved properties,
not subject to
depreciation,
depletion, and
amortization - 850,663
---------- ----------
$34,159,634 $36,669,473
Less accumulated
depreciation,
depletion, amorti-
zation, and valua-
tion allowance ( 25,442,705) ( 23,847,364)
---------- ----------
Net oil and gas
properties $ 8,716,929 $12,822,109
========== ==========
F-54
III-F Partnership
-----------------
1997 1996
------------- -------------
Proved properties $16,673,217 $17,692,891
Unproved properties,
not subject to
depreciation,
depletion, and
amortization - 806,386
----------- ----------
$16,673,217 $18,499,277
Less accumulated
depreciation,
depletion, amorti-
zation, and valua-
tion allowance ( 13,068,552) ( 11,191,790)
---------- ----------
Net oil and gas
properties $ 3,604,665 $ 7,307,487
========== ==========
III-G Partnership
-----------------
1997 1996
------------ -------------
Proved properties $9,602,310 $10,155,073
Unproved properties,
not subject to
depreciation,
depletion, and
amortization - 438,666
--------- ----------
$9,602,310 $10,593,739
Less accumulated
depreciation,
depletion, amorti-
zation, and valua-
tion allowance ( 7,461,021) ( 6,442,854)
--------- ----------
Net oil and gas
properties $2,141,289 $ 4,150,885
========= ==========
F-55
Costs Incurred
The III-A and III-B Partnerships incurred $35,246 and $23,248,
respectively, in acquisition costs for additional acreage underlying the Lebleu
No. 4 well. The Partnerships incurred no other costs in connection with oil and
gas acquisition or exploration activities during the years ended December 31,
1997, 1996, and 1995. Costs incurred by the Partnerships in connection with oil
and gas property development activities for the years ended December 31, 1997,
1996, and 1995 were as follows:
Partnership 1997 1996 1995
----------- -------- -------- --------
III-A $ 40,203 $ 4,548 $ 36,695
III-B 20,491 21,881 48,179
III-C 104,670 24,068 98,870
III-D 579 24,953 26,512
III-E 65,616 37,987 339,148
III-F 34,952 12,107 363,847
III-G 28,338 19,668 203,544
Quantities of Proved Oil and Gas Reserves - Unaudited
The following tables summarize changes in net quantities of the
Partnerships' proved reserves, all of which are located in the United States,
for the periods indicated. The proved reserves at December 31, 1997, 1996 and
1995 were estimated by petroleum engineers employed by affiliates of the
Partnerships. Certain reserve information was reviewed by Ryder Scott Company
Petroleum Engineers, an independent petroleum engineering firm. The following
information includes certain gas balancing adjustments which caused the gas
volumes to differ from the reserve reports prepared by the General Partner and
reviewed by Ryder Scott.
F-56
III-A Partnership
-----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 1994 193,207 7,824,458
Production ( 58,590) (1,798,692)
Sale of minerals in
place ( 169) ( 50,765)
Revision of previous
estimates 38,553 1,021,351
------- ---------
Proved reserves, Dec. 31, 1995 173,001 6,996,352
Production ( 46,923) (1,268,943)
Sale of minerals in
place ( 1,434) ( 417,113)
Revision of previous
estimates 29,255 871,973
------- ---------
Proved reserves, Dec. 31, 1996 153,899 6,182,269
Production ( 40,468) (1,031,152)
Sale of minerals in
place ( 4,695) ( 661,004)
Extensions and discoveries 6 915
Revision of previous
estimates 4,121 740,812
------- ---------
Proved reserves, Dec. 31, 1997 112,863 5,231,840
======= =========
PROVED DEVELOPED RESERVES:
December 31, 1995 173,001 6,996,352
======= =========
December 31, 1996 142,520 5,999,778
======= =========
December 31, 1997 101,190 5,027,338
======= =========
F-57
III-B Partnership
-----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- ------------
Proved reserves, Dec. 31, 1994 127,059 3,885,285
Production ( 42,818) ( 900,882)
Sale of minerals in
place ( 67) ( 21,437)
Extensions and discoveries 78 87,619
Revision of previous
estimates 38,664 414,386
------- ---------
Proved reserves, Dec. 31, 1995 122,916 3,464,971
Production ( 37,849) ( 642,152)
Sale of minerals in
place ( 624) ( 186,418)
Revision of previous
estimates 36,520 331,501
------- ---------
Proved reserves, Dec. 31, 1996 120,963 2,967,902
Production ( 37,216) ( 518,891)
Sale of minerals in
place ( 2,009) ( 285,841)
Revision of previous
estimates 11,805 370,683
------- ---------
Proved reserves, Dec. 31, 1997 93,543 2,533,853
======= =========
PROVED DEVELOPED RESERVES:
December 31, 1995 122,916 3,464,971
======= =========
December 31, 1996 117,345 2,906,514
======= =========
December 31, 1997 89,784 2,462,219
======= =========
F-58
III-C Partnership
-----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- ------------
Proved reserves, Dec. 31, 1994 113,208 8,872,750
Production ( 26,926) (1,662,411)
Sale of minerals in
place ( 720) ( 14,529)
Extensions and discoveries 14,324 248,512
Revision of previous
estimates 8,582 457,888
------- ---------
Proved reserves, Dec. 31, 1995 108,468 7,902,210
Production ( 27,429) (1,351,525)
Sale of minerals in
place ( 1,266) ( 132,327)
Extensions and discoveries 10,541 157,345
Revision of previous
estimates 72,173 1,144,100
------- ---------
Proved reserves, Dec. 31, 1996 162,487 7,719,803
Production ( 27,069) (1,124,237)
Sale of minerals in
place ( 4,753) ( 197,339)
Extensions and discoveries 447 -
Revision of previous
estimates 22,200 781,366
------- ---------
Proved reserves, Dec. 31, 1997 153,312 7,179,593
======= =========
PROVED DEVELOPED RESERVES:
December 31, 1995 108,372 7,856,044
======= =========
December 31, 1996 162,235 7,673,323
======= =========
December 31, 1997 153,112 7,157,512
======= =========
F-59
III-D Partnership
-----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- ------------
Proved reserves, Dec. 31, 1994 486,861 4,252,277
Production ( 42,166) (1,000,561)
Sale of minerals in
place ( 171) ( 102)
Extensions and discoveries 1,829 25,326
Revision of previous
estimates ( 24,439) 693,067
------- ---------
Proved reserves, Dec. 31, 1995 421,914 3,970,007
Production ( 41,351) ( 760,593)
Sale of minerals in
place ( 427) ( 25,031)
Extensions and discoveries 1,509 27,059
Revision of previous
estimates 48,985 558,104
------- ---------
Proved reserves, Dec. 31, 1996 430,630 3,769,546
Production ( 40,758) ( 708,262)
Sale of minerals in
place ( 396) ( 18,762)
Extensions and discoveries 94 1,797
Revision of previous
estimates 88,825 760,231
------- ---------
Proved reserves, Dec. 31, 1997 478,395 3,804,550
======= =========
PROVED DEVELOPED RESERVES:
December 31, 1995 421,900 3,963,409
======= =========
December 31, 1996 430,606 3,764,539
======= =========
December 31, 1997 478,386 3,803,645
======= =========
F-60
III-E Partnership
-----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
----------- ------------
Proved reserves, Dec. 31, 1994 2,960,656 14,764,483
Production ( 256,992) ( 3,030,077)
Sale of minerals in
place ( 260) ( 9,472)
Extensions and discoveries 18,780 178,518
Revision of previous
estimates ( 134,705) 917,407
--------- ----------
Proved reserves, Dec. 31, 1995 2,587,479 12,820,859
Production ( 229,226) ( 2,152,599)
Sale of minerals in
place ( 3,259) ( 190)
Extensions and discoveries 4,252 30,349
Revision of previous
estimates 258,393 ( 922,682)
--------- ----------
Proved reserves, Dec. 31, 1996 2,617,639 9,775,737
Production ( 235,152) ( 2,189,619)
Sale of minerals in
place ( 2,156) ( 245,398)
Extensions and discoveries - 11,997
Revision of previous
estimates 631,209 2,780,432
--------- ----------
Proved reserves, Dec. 31, 1997 3,011,540 10,133,149
========= ==========
PROVED DEVELOPED RESERVES:
December 31, 1995 2,587,479 12,820,859
========= ==========
December 31, 1996 2,617,639 9,775,737
========= ==========
December 31, 1997 3,011,540 10,133,149
========= ==========
F-61
III-F Partnership
-----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- ------------
Proved reserves, Dec. 31, 1994 388,579 8,526,534
Production ( 78,456) (1,107,951)
Sale of minerals in
place ( 5,270) ( 12,450)
Extensions and discoveries - 153,983
Revision of previous
estimates 162,213 ( 505,430)
------- ---------
Proved reserves, Dec. 31, 1995 467,066 7,054,686
Production ( 74,064) ( 924,827)
Sale of minerals in
place ( 14,255) ( 8,294)
Extensions and discoveries 3,560 -
Revision of previous
estimates 109,006 ( 454,833)
------- ---------
Proved reserves, Dec. 31, 1996 491,313 5,666,732
Production ( 65,787) ( 898,447)
Sale of minerals in
place ( 5,981) ( 169,022)
Extensions and discoveries 10,573 99,305
Revision of previous
estimates ( 30,372) 905,241
------- ---------
Proved reserves, Dec. 31, 1997 399,746 5,603,809
======= =========
PROVED DEVELOPED RESERVES:
December 31, 1995 467,066 7,054,686
======= =========
December 31, 1996 491,313 5,666,732
======= =========
December 31, 1997 399,746 5,603,809
======= =========
F-62
III-G Partnership
-----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- ------------
Proved reserves, Dec. 31, 1994 298,062 4,629,792
Production ( 56,567) ( 596,184)
Sale of minerals in
place ( 3,487) ( 8,770)
Extensions and discoveries - 84,220
Revision of previous
estimates 114,302 ( 243,507)
------- ----------
Proved reserves, Dec. 31, 1995 352,310 3,865,551
Production ( 54,083) ( 499,884)
Sale of minerals in
place ( 11,160) ( 10,142)
Extensions and discoveries 5,358 3,275
Revision of previous
estimates 77,164 ( 321,474)
------- ---------
Proved reserves, Dec. 31, 1996 369,589 3,037,326
Production ( 47,493) ( 500,966)
Sale of minerals in
place ( 6,363) ( 92,435)
Extensions and discoveries 7,164 66,081
Revision of previous
estimates ( 19,969) 486,311
------- ---------
Proved reserves, Dec. 31, 1997 302,928 2,996,317
======= =========
PROVED DEVELOPED RESERVES:
December 31, 1995 345,896 3,761,653
======= =========
December 31, 1996 369,589 3,037,326
======= =========
December 31, 1997 302,928 2,996,317
======= =========
Standardized Measure of Discounted Future Net Cash Flows of Proved Oil and
Gas Reserves - Unaudited
F-63
The following tables set forth each of the Partnerships' estimated future
net cash flows as of December 31, 1997 relating to proved oil and gas reserves
based on the standardized measure as prescribed in SFAS No. 69:
Partnership
--------------------------------
III-A III-B
------------- ------------
Future cash inflows $14,758,282 $7,759,358
Future production and
development costs ( 3,849,642) ( 2,108,776)
---------- ---------
Future net cash
flows $10,908,640 $5,650,582
10% discount to
reflect timing of
cash flows ( 3,393,558) ( 1,706,088 )
---------- ---------
Standardized measure
of discounted
future net cash
flows $ 7,515,082 $3,944,494
========== =========
Partnership
---------------------------------
III-C III-D
------------- -------------
Future cash inflows $18,813,246 $16,760,891
Future production and
development costs ( 5,920,122) ( 8,626,380)
---------- ----------
Future net cash
flows $12,893,124 $ 8,134,511
10% discount to
reflect timing of
cash flows ( 4,812,464) ( 2,993,979)
---------- ----------
Standardized measure
of discounted
future net cash
flows $ 8,080,660 $ 5,140,532
========== ==========
F-64
Partnership
---------------------------------
III-E III-F
------------- -------------
Future cash inflows $77,924,350 $19,572,116
Future production and
development costs ( 47,654,328) ( 8,141,497)
---------- ----------
Future net cash
flows $30,270,022 $11,430,619
10% discount to
reflect timing of
cash flows ( 12,187,290) ( 4,348,888)
---------- ----------
Standardized measure
of discounted
future net cash
flows $18,082,732 $ 7,081,731
========== ==========
Partnership
-------------
III-G
-------------
Future cash inflows $11,951,351
Future production and
development costs ( 5,206,140)
----------
Future net cash
flows $ 6,745,211
10% discount to
reflect timing of
cash flows ( 2,571,190)
----------
Standardized measure
of discounted
future net cash
flows $ 4,174,021
==========
The process of estimating oil and gas reserves is complex, requiring significant
subjective decisions in the evaluation of available geological, engineering, and
economic data for each reservoir. The data for a given reservoir may change
substantially over time as a result of, among other things, additional
development activity, production history, and
F-65
viability of production under varying economic conditions; consequently, it is
reasonably possible that material revisions to existing reserve estimates may
occur in the near future. Although every reasonable effort has been made to
ensure that the reserve estimates reported herein represent the most accurate
assessment possible, the significance of the subjective decisions required and
variances in available data for various reservoirs make these estimates
generally less precise than other estimates presented in connection with
financial statement disclosures. The Partnerships' reserves were determined at
December 31, 1997 using oil and gas prices of $16.25 per barrel and $2.32 per
Mcf, respectively.
F-66
INDEX TO EXHIBITS
-----------------
Number Description
- ------ -----------
4.1 The Certificate and Agreements of Limited Partnership for the
following Partnerships have been previously filed with the
Securities and Exchange Commission as Exhibit 2.1 to Form 8-A filed
by each Partnership on the dates shown below and are hereby
incorporated by reference.
Partnership Filing Date File No.
----------- ----------- --------
III-A February 20, 1990 0-18302
III-B March 30, 1990 0-18636
III-C March 30, 1990 0-18634
III-D November 14, 1990 0-18936
III-E January 22, 1991 0-19010
III-F March 25, 1991 0-19102
III-G September 30, 1991 0-19563
4.2 Advisory Agreement dated as of November 24, 1992 between Samson,
PaineWebber, Geodyne Resources, Geodyne Properties, Inc., Geodyne
Production Company, and Geodyne Energy Company filed as Exhibit 28.3
to Registrant's Current Report on Form 8-K on December 24, 1992 and
is hereby incorporated by reference.
4.3 Second Amendment to Agreement of Limited Partnership of Geodyne
Energy Income Limited Partnership III-A, filed as Exhibit 4.1 to
Registrant's Current Report on Form 8-K dated August 2, 1993 filed
with the SEC on August 10, 1993 and is hereby incorporated by
reference.
4.4 Second Amendment to Agreement of Limited Partnership of Geodyne
Energy Income Limited Partnership III-B, filed as Exhibit 4.2 to
Registrant's Current Report on Form 8-K dated August 2, 1993 filed
with the SEC on August 10, 1993 and is hereby incorporated by
reference.
4.5 Second Amendment to Agreement of Limited Partnership of Geodyne
Energy Income Limited Partnership III-C, filed as Exhibit 4.3 to
Registrant's Current Report on Form 8-K dated August 2, 1993 filed
with the SEC on August 10, 1993 and is hereby incorporated by
reference.
F-67
4.6 Second Amendment to Agreement of Limited Partnership of Geodyne
Energy Income Limited Partnership III-D, filed as Exhibit 4.4 to
Registrant's Current Report on Form 8-K dated August 2, 1993 filed
with the SEC on August 10, 1993 and is hereby incorporated by
reference.
4.7 Second Amendment to Agreement of Limited Partnership of Geodyne
Energy Income Limited Partnership III-E, filed as Exhibit 4.5 to
Registrant's Current Report on Form 8-K dated August 2, 1993 filed
with the SEC on August 10, 1993 and is hereby incorporated by
reference.
4.8 Second Amendment to Agreement of Limited Partnership of Geodyne
Energy Income Limited Partnership III-F, filed as Exhibit 4.6 to
Registrant's Current Report on Form 8-K dated August 2, 1993 filed
with the SEC on August 10, 1993 and is hereby incorporated by
reference.
4.9 Second Amendment to Agreement of Limited Partnership of Geodyne
Energy Income Limited Partnership III-G, filed as Exhibit 4.7 to
Registrant's Current Report on Form 8-K dated August 2, 1993 filed
with the SEC on August 10, 1993 and is hereby incorporated by
reference.
4.10 Third Amendment to Agreement of Limited Partnership of Geodyne
Energy Income Limited Partnership III-A, filed as Exhibit 4.10 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1995 filed with the SEC on April 1, 1996 and is hereby
incorporated by reference.
4.11 Third Amendment to Agreement of Limited Partnership of Geodyne
Energy Income Limited Partnership III-B, filed as Exhibit 4.11 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1995 filed with the SEC on April 1, 1996 and is hereby
incorporated by reference.
4.12 Third Amendment to Agreement of Limited Partnership of Geodyne
Energy Income Limited Partnership III-C, filed as Exhibit 4.12 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1995 filed with the SEC on April 1, 1996 and is hereby
incorporated by reference.
4.13 Third Amendment to Agreement of Limited Partnership of Geodyne
Energy Income Limited Partnership III-D, filed as Exhibit 4.13 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1995 filed with the SEC on April 1, 1996 and is hereby
incorporated by reference.
F-68
4.14 Third Amendment to Agreement of Limited Partnership of Geodyne
Energy Income Limited Partnership III-E, filed as Exhibit 4.14 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1995 filed with the SEC on April 1, 1996 and is hereby
incorporated by reference.
4.15 Third Amendment to Agreement of Limited Partnership of Geodyne
Energy Income Limited Partnership III-F, filed as Exhibit 4.15 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1995 filed with the SEC on April 1, 1996 and is hereby
incorporated by reference.
4.16 Third Amendment to Agreement of Limited Partnership of Geodyne
Energy Income Limited Partnership III-G, filed as Exhibit 4.16 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1995 filed with the SEC on April 1, 1996 and is hereby
incorporated by reference.
*23.1 Consent of Ryder Scott Company, Petroleum Engineers for Geodyne
Energy Income Limited Partnership III-A.
*23.2 Consent of Ryder Scott Company, Petroleum Engineers for Geodyne
Energy Income Limited Partnership III-B.
*23.3 Consent of Ryder Scott Company, Petroleum Engineers for Geodyne
Energy Income Limited Partnership III-C.
*23.4 Consent of Ryder Scott Company, Petroleum Engineers for Geodyne
Energy Income Limited Partnership III-D.
*23.5 Consent of Ryder Scott Company, Petroleum Engineers for Geodyne
Energy Income Limited Partnership III-E.
*23.6 Consent of Ryder Scott Company, Petroleum Engineers for Geodyne
Energy Income Limited Partnership III-F.
*23.7 Consent of Ryder Scott Company, Petroleum Engineers for Geodyne
Energy Income Limited Partnership III-G.
*27.1 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership III-A's
financial statements as of December 31, 1997 and for the year ended
December 31, 1997.
*27.2 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership III-B's
financial statements as of December 31, 1997 and for the year ended
December 31, 1997.
F-69
*27.3 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership III-C's
financial statements as of December 31, 1997 and for the year ended
December 31, 1997.
*27.4 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership III-D's
financial statements as of December 31, 1997 and for the year ended
December 31, 1997.
*27.5 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership III-E's
financial statements as of December 31, 1997 and for the year ended
December 31, 1997.
*27.6 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership III-F's
financial statements as of December 31, 1997 and for the year ended
December 31, 1997.
*27.7 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership III-G's
financial statements as of December 31, 1997 and for the year ended
December 31, 1997.
All other Exhibits are omitted as inapplicable.
----------
* Filed herewith.