SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1998
Commission File Number: P-7: 0-20265 P-8: 0-20264
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
---------------------------------------------------------------------
(Exact name of Registrant as specified in its Articles)
P-7 73-1367186
Oklahoma P-8 73-1378683
---------------------------- -------------------------------
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or Number)
organization)
Two West Second Street, Tulsa, Oklahoma 74103
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(918) 583-1791
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ------
1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
1998 1997
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 185,898 $ 517,144
---------- ----------
Total current assets $ 185,898 $ 517,144
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 4,852,424 5,190,377
---------- ----------
$5,038,322 $5,707,521
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable - Net
Profits $ 99,533 $ 6,697
---------- ----------
Total current liabilities $ 99,533 $ 6,697
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 125,488) ($ 119,241)
Limited Partners, issued and
outstanding, 188,702 units 5,064,277 5,820,065
---------- ----------
Total Partners' capital $4,938,789 $5,700,824
---------- ----------
$5,038,322 $5,707,521
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
2
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
-------- --------
REVENUES:
Net Profits $254,174 $568,622
Interest and other income 2,123 5,908
Gain (loss) on sale of Net
Profits Interests 7,359 ( 576)
-------- --------
$263,656 $573,954
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $154,223 $246,992
General and administrative
(Note 2) 53,954 53,031
-------- --------
$208,177 $300,023
-------- --------
NET INCOME $ 55,479 $273,931
======== ========
GENERAL PARTNER - NET INCOME $ 8,837 $ 36,044
======== ========
LIMITED PARTNERS - NET INCOME $ 46,642 $237,887
======== ========
NET INCOME per unit $ .24 $ 1.26
======== ========
UNITS OUTSTANDING 188,702 188,702
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
3
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
-------- ----------
REVENUES:
Net Profits $777,354 $1,698,511
Interest and other income 9,080 16,213
Gain on sale of Net Profits
Interests 145,741 101,931
-------- ----------
$932,175 $1,816,655
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $485,871 $ 702,441
Impairment provision - 1,474,823
General and administrative
(Note 2) 171,364 175,429
-------- ----------
$657,235 $2,352,693
-------- ----------
NET INCOME (LOSS) $274,940 ($ 536,038)
======== ==========
GENERAL PARTNER - NET INCOME $ 32,728 $ 59,478
======== ==========
LIMITED PARTNERS - NET INCOME (LOSS) $242,212 ($ 595,516)
======== ==========
NET INCOME (LOSS) per unit $ 1.28 ($ 3.16)
======== ==========
UNITS OUTSTANDING 188,702 188,702
======== ==========
The accompanying condensed notes are an integral part of
these financial statements.
4
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 274,940 ($ 536,038)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depletion of Net Profits
Interests 485,871 702,441
Impairment provision - 1,474,823
Gain on sale of Net Profits
Interests ( 145,741) ( 101,931)
Decrease in accounts receivable -
Net Profits - 225,649
Increase in accounts payable -
Net Profits 92,836 -
---------- ----------
Net cash provided by operating
activities $ 707,906 $1,764,944
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 181,194) ($ 190,610)
Proceeds from sale of Net Profits
Interests 179,017 207,490
---------- ----------
Net cash provided (used) by
investing activities ($ 2,177) $ 16,880
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($1,036,975) ($1,941,202)
---------- ----------
Net cash used by financing activities ($1,036,975) ($1,941,202)
---------- ----------
NET DECREASE IN CASH AND CASH
EQUIVALENTS ($ 331,246) ($ 159,378)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 517,144 643,415
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 185,898 $ 484,037
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
5
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
1998 1997
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 172,991 $ 382,448
Accounts receivable:
Net Profits - 57,019
---------- ----------
Total current assets $ 172,991 $ 439,467
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 2,590,560 2,756,057
---------- ----------
$2,763,551 $3,195,524
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable - Net
Profits $ 8,514 $ -
---------- ----------
Total current liabilities $ 8,514 $ -
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 60,353) ($ 56,764)
Limited Partners, issued and
outstanding, 90,094 units 2,815,390 3,252,288
---------- ----------
Total Partners' capital $2,755,037 $3,195,524
---------- ----------
$2,763,551 $3,195,524
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
6
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
---------- ---------
REVENUES:
Net Profits $156,825 $339,944
Interest and other income 1,965 4,417
Gain (loss) on sale of Net
Profits Interests 4,042 ( 2,960)
-------- --------
$162,832 $341,401
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 79,140 $167,892
General and administrative
(Note 2) 33,223 32,651
-------- --------
$112,363 $200,543
-------- --------
NET INCOME $ 50,469 $140,858
======== ========
GENERAL PARTNER - NET INCOME $ 5,591 $ 22,016
======== ========
LIMITED PARTNERS - NET INCOME $ 44,878 $118,842
======== ========
NET INCOME per unit $ .39 $ 1.02
======== ========
UNITS OUTSTANDING 116,168 116,168
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
7
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
---------- ----------
REVENUES:
Net Profits $527,126 $1,093,247
Interest and other income 7,860 12,675
Gain on sale of Net Profits
Interests 100,765 50,139
-------- ----------
$635,751 $1,156,061
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $252,550 $ 484,279
Impairment provision - 1,052,542
General and administrative
(Note 2) 105,505 107,898
-------- ----------
$358,055 $1,644,719
-------- ----------
NET INCOME (LOSS) $277,696 ($ 488,658)
======== ==========
GENERAL PARTNER - NET INCOME $ 23,594 $ 36,406
======== ==========
LIMITED PARTNERS - NET INCOME (LOSS) $254,102 ($ 525,064)
======== ==========
NET INCOME (LOSS) per unit $ 2.19 ($ 4.52)
======== ==========
UNITS OUTSTANDING 116,168 116,168
======== ==========
The accompanying condensed notes are an integral part of
these financial statements.
8
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
-------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $277,696 ($ 488,658)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depletion of Net Profits
Interests 252,550 484,279
Impairment provision - 1,052,542
Gain on sale of Net Profits
Interests ( 100,765) ( 50,139)
Decrease in accounts receivable -
Net Profits 57,019 88,232
Decrease in accounts receivable -
General Partner - ( 85)
Increase in accounts payable -
Net Profits 8,514 92,988
-------- ----------
Net cash provided by operating
activities $495,014 $1,179,159
-------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($104,457) ($ 112,238)
Proceeds from sale of Net Profits
Interests 118,169 117,867
-------- ----------
Net cash provided by investing
activities $ 13,712 $ 5,629
-------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($718,183) ($1,318,434)
-------- ----------
Net cash used by financing activities ($718,183) ($1,318,434)
-------- ----------
NET DECREASE IN CASH AND CASH
EQUIVALENTS ($209,457) ($ 133,646)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 382,448 488,063
-------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $172,991 $ 354,417
======== ==========
The accompanying condensed notes are an integral part of
these financial statements.
9
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME PROGRAM II LIMITED PARTNERSHIPS
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheets as of September 30, 1998, statements of operations for
the three and nine months ended September 30, 1998 and 1997, and
statements of cash flows for the nine months ended September 30, 1998 and
1997 have been prepared by Geodyne Resources, Inc., the General Partner
(the "General Partner") of the Geodyne Institutional/Pension Energy Income
Program II Limited Partnerships (individually, the "P-7 Partnership" or
the "P-8 Partnership", as the case may be, or, collectively, the
"Partnerships"), without audit. In the opinion of management the financial
statements referred to above include all necessary adjustments, consisting
of normal recurring adjustments, to present fairly the financial position
at September 30, 1998, the results of operations for the three and nine
months ended September 30, 1998 and 1997, and the cash flows for the nine
months ended September 30, 1998 and 1997.
Information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The accompanying interim
financial statements should be read in conjunction with the Partnerships'
Annual Report on Form 10-K filed for the year ended December 31, 1997. The
results of operations for the period ended September 30, 1998 are not
necessarily indicative of the results to be expected for the full year.
As used in these financial statements, the Partnerships' net profits and
royalty interests in oil and gas sales are referred to as "Net Profits"
and the Partnerships' net profits and royalty interests in oil and gas
properties are referred to as "Net Profits Interests". The working
interests from which Partnerships' Net Profits Interests are carved are
referred to as "Working Interests".
The Limited Partners' net income or loss per unit is based upon each $100
initial capital contribution.
10
NET PROFITS INTERESTS
---------------------
The Partnerships follow the successful efforts method of accounting for
their Net Profits Interests. Under the successful efforts method, the
Partnerships capitalize all acquisition costs. Property acquisition costs
include costs incurred by the Partnerships or the General Partner to
acquire a net profits interest or other non-operating interest in
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 Net Profits Interests 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 prior to their transfer to the
Partnerships. Impairment of Net Profits Interests is recognized based upon
an individual property assessment.
Depletion of the costs of Net Profits Interests is computed on the
unit-of-production method. The Partnerships' calculation of depletion of
its Net Profits Interests includes estimated dismantlement and abandonment
costs, net of estimated salvage value.
The Partnerships do not directly bear capital costs. However, the
Partnerships indirectly bear certain capital costs incurred by the owners
of the Working Interests to the extent such capital costs are charged
against the applicable oil and gas revenues in calculating the net profits
payable to the Partnerships. For financial reporting purposes only, such
capital costs are reported as capital expenditures in the Partnerships'
Statements of Cash Flows.
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long Lived Assets and Assets Held for Disposal",
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 for each field exceed
the expected undiscounted future cash flows from such properties, the cost
of the properties is written down to fair value, which is
11
determined by using the discounted future cash flows from the properties.
The Partnerships recorded a non-cash charge against earnings (impairment
provision) during the nine months ended September 30, 1997 pursuant to
SFAS No. 121 as follows:
Partnership Amount
----------- -----------
P-7 $1,474,823
P-8 1,052,542
No such charge was recorded in the nine months ended September 30, 1998.
The risk that the Partnerships will be required to record such impairment
provisions in the future increases when oil and gas prices are depressed.
2. TRANSACTIONS WITH RELATED PARTIES
---------------------------------
The Partnerships' partnership agreements provide for reimbursement to the
General Partner for all direct general and administrative expenses and for
the general and administrative overhead applicable to the Partnerships
based on an allocation of actual costs incurred. During the three months
ended September 30, 1998 the following payments were made to the General
Partner or its affiliates by the Partnerships:
Direct General Administrative
Partnership and Administrative Overhead
----------- ------------------- ---------------
P-7 $4,295 $49,659
P-8 2,653 30,570
During the nine months ended September 30, 1998 the following payments
were made to the General Partner or its affiliates by the Partnerships:
Direct General Administrative
Partnership and Administrative Overhead
----------- ------------------- ---------------
P-7 $22,387 $148,977
P-8 13,795 91,710
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 their activities.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
USE OF FORWARD-LOOKING STATEMENTS AND ESTIMATES
- -----------------------------------------------
This Quarterly Report contains certain forward-looking statements. The
words "anticipate", "believe", "expect", "plan", "intend", "estimate",
"project", "could", "may" and similar expressions are intended to identify
forward-looking statements. Such statements reflect management's current
views with respect to future events and financial performance. This
Quarterly Report also includes certain information, which is, or is based
upon, estimates and assumptions. Such estimates and assumptions are
management's efforts to accurately reflect the condition and operation of
the 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, and otherwise indicated.
GENERAL
- -------
The Partnerships were formed for the purpose of acquiring Net Profits
Interests located in the continental United States. In general, each
Partnership acquired passive interests in producing properties and does
not directly engage in development drilling or enhanced recovery projects.
Therefore, the economic life of each Partnership is limited to the period
of time required to fully produce its acquired oil and gas reserves. A Net
Profits Interest entitles the Partnerships to a portion of the oil and gas
sales less operating and production expenses and development costs
generated by the owner of the underlying Working Interests. The net
proceeds from the oil and gas operations
13
are distributed to the Limited Partners and General Partner in accordance
with the terms of the Partnerships' Partnership Agreements.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnerships began operations and investors were assigned their rights
as Limited Partners, having made capital contributions in the amounts and
on the dates set forth below:
Limited Date of Partner Capital
Partnership Activation Contributions
----------- ------------------ ---------------
P-7 February 28, 1992 $18,870,200
P-8 February 28, 1992 $11,616,800
In general, the amount of funds available for acquisition of producing
properties was equal to the capital contributions of the Limited Partners,
less 15% for sales commissions and organization and management fees. All
of the Partnerships have fully invested their capital contributions.
Net proceeds from the Partnerships' Net Profits Interests less necessary
operating capital are distributed to the Limited Partners on a quarterly
basis. Revenues and net proceeds of a Partnership are largely dependent
upon the volumes of oil and gas sold and the prices received for such oil
and gas. While the General Partner cannot predict future pricing trends,
it believes the working capital available as of September 30, 1998 and the
net revenue generated from future operations will provide sufficient
working capital to meet current and future obligations.
The Partnerships' Statements of Cash Flows for the nine months ended
September 30, 1998 include proceeds from the sale of Net Profits
Interests. The proceeds received during the first quarter of 1998 were
included in the Partnerships' cash distributions paid during May 1998, the
proceeds received during the second quarter of 1998 were included in the
Partnerships' cash distributions paid during August 1998, and the proceeds
received during the third quarter of 1998 will be included in the
Partnerships' cash distributions to be paid in November 1998. It is
possible that the Partnerships' repurchase values and future cash
distributions could decline as a result of the disposition of these
properties. On the other hand, the General Partner believes there will be
beneficial operating efficiencies related to the Partnerships' remaining
properties. This is primarily due to the fact that the properties sold
generally
14
bore a higher ratio of operating expenses as compared to reserves than the
Partnerships' remaining properties.
During the nine months ended September 30, 1998 capital expenditures
indirectly incurred by the P-7 and P-8 Partnerships totaled $181,194 and
$104,457, respectively. These expenditures resulted primarily from
indirect participation in (i) an infill drilling operation, which was
cancelled after 22 wells were drilled in the large unitized property of
the Goldsmith Adobe Unit located in Ector County, Texas attributable to
the P-7 and P-8 Partnerships' Net Profits Interests and (ii) the
successful recompletion of two wells in the Pecos Valley Unit located in
Pecos County, Texas attributable to the P-7 and P-8 Partnerships' Net
Profits Interests. These drilling and recompletion activities were
conducted in order to improve the recovery of reserves.
RESULTS OF OPERATIONS
- ---------------------
GENERAL DISCUSSION
The following general discussion should be read in conjunction with the
analysis of results of operations provided below. The most important
variable affecting the Partnerships' revenues is the prices received for
the sale of oil and gas. Predicting future prices is very difficult.
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. Such spot market sales are generally short-term in nature and
are dependent upon the obtaining of transportation services provided by
pipelines. In addition, crude oil prices are at or near their lowest level
in the past decade due primarily to the global surplus of crude oil.
Management is unable to predict whether future oil and gas prices will (i)
stabilize, (ii) increase, or (iii) decrease.
15
P-7 PARTNERSHIP
THREE MONTHS ENDED SEPTEMBER 30, 1998 AS COMPARED TO THE THREE MONTHS
ENDED SEPTEMBER 30, 1997.
Three Months Ended September 30,
--------------------------------
1998 1997
-------- --------
Net Profits $254,174 $568,622
Barrels produced 22,089 28,323
Mcf produced 125,220 183,750
Average price/Bbl $ 12.00 $ 17.74
Average price/Mcf $ 1.56 $ 2.09
As shown in the table above, Net Profits decreased $314,448 (55.3%) for
the three months ended September 30, 1998 as compared to the three months
ended September 30, 1997. Of this decrease, approximately $111,000 and
$122,000, respectively, were related to decreases in the volumes of oil
and gas sold and approximately $127,000 and $67,000, respectively, were
related to decreases in the average prices of oil and gas sold. These
decreases were partially offset by an increase of approximately $112,000
related to decreases in production expenses incurred by the owners of the
Working Interests. Volumes of oil and gas sold decreased 6,234 barrels and
58,530 Mcf, respectively, for the three months ended September 30, 1998 as
compared to the three months ended September 30, 1997. The decrease in
volumes of oil sold resulted primarily from negative prior period volume
adjustments made by the purchasers on two significant wells during the
three months ended September 30, 1998. The decrease in the volumes of gas
sold resulted primarily from (i) normal declines in production on two
significant wells due to diminishing reserves, (ii) a negative prior
period volume adjustment made by a purchaser on one significant well
during the three months ended September 30, 1998, and (iii) a positive
prior period volume adjustment made by a purchaser on another significant
well during the three months ended September 30, 1997. The decrease in
production expenses resulted primarily from (i) a decrease in production
taxes associated with the decrease in Net Profits, (ii) workover expenses
incurred on one significant well during the three months ended September
30, 1997, and (iii) decreased general repair and maintenance expenses on
two significant wells during the three months ended September 30, 1998.
Average oil and gas prices decreased to $12.00 per barrel and $1.56 per
Mcf, respectively, for the three months ended September 30, 1998 from
$17.74 per barrel and $2.09 per Mcf, respectively, for the three months
ended September 30, 1997.
16
As discussed in the Liquidity and Capital Resources section above, the P-7
Partnership sold certain Net Profits Interests during the three months
ended September 30, 1998 and recognized a $7,359 gain on such sales.
Similar sales during the three months ended September 30, 1997 resulted in
the P-7 Partnership recognizing losses totaling $576.
Depletion of Net Profits Interests decreased $92,769 (37.6%) for the three
months ended September 30, 1998 as compared to the three months ended
September 30, 1997. This decrease resulted primarily from (i) the
decreases in volumes of oil and gas sold during the three months ended
September 30, 1998 as compared to the three months ended September 30,
1997 and (ii) upward revisions in the estimates of remaining gas reserves
at December 31, 1997. As a percentage of Net Profits, this expense
increased to 60.7% for the three months ended September 30, 1998 from
43.4% for the three months ended September 30, 1997. This percentage
increase was primarily due to the decreases in the average prices of oil
and gas sold during the three months ended September 30, 1998 as compared
to the three months ended September 30, 1997.
General and administrative expenses increased $923 (1.7%) for the three
months ended September 30, 1998 as compared to the three months ended
September 30, 1997. As a percentage of Net Profits, this expense increased
to 21.2% for the three months ended September 30, 1998 from 9.3% for the
three months ended September 30, 1997. This percentage increase was
primarily due to the decrease in Net Profits.
NINE MONTHS ENDED SEPTEMBER 30, 1998 AS COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1997.
Nine Months Ended September 30,
-------------------------------
1998 1997
-------- ----------
Net Profits $777,354 $1,698,511
Barrels produced 71,092 91,838
Mcf produced 385,490 454,854
Average price/Bbl $ 13.09 $ 19.77
Average price/Mcf $ 1.82 $ 2.18
As shown in the table above, Net Profits decreased $921,157 (54.2%) for
the nine months ended September 30, 1998 as compared to the nine months
ended September 30, 1997. Of this decrease, approximately $410,000 and
$151,000, respectively, were related to decreases in volumes of oil and
gas sold and approximately $475,000 and $137,000, respectively, were
related to decreases in the average prices of oil and gas sold. These
decreases were partially offset by an increase of approximately $252,000
related to
17
decreases in production expenses incurred by the owners of the Working
Interests. Volumes of oil and gas sold decreased 20,746 barrels and 69,364
Mcf, respectively, for the nine months ended September 30, 1998 as compared
to the nine months ended September 30, 1997. The decrease in volumes of oil
sold resulted primarily from (i) negative prior period volume adjustments
made by the purchasers on two significant wells during the nine months
ended September 30, 1998 and (ii) a positive prior period volume adjustment
made by a purchaser on another significant well during the nine months
ended September 30, 1997. The decrease in the volumes of gas sold resulted
primarily from (i) normal declines in production on three significant wells
due to diminishing reserves and (ii) the sale of two significant wells in
1998. The decrease in production expenses resulted primarily from (i)
workover expenses incurred on three significant wells during the nine
months ended September 30, 1997, (ii) a decrease in production taxes
associated with the decrease in Net Profits, and (iii) the sale of one
significant well during 1997. Average oil and gas prices decreased to
$13.09 per barrel and $1.82 per Mcf, respectively, for the nine months
ended September 30, 1998 from $19.77 per barrel and $2.18 per Mcf,
respectively, for the nine months ended September 30, 1997.
As discussed in the Liquidity and Capital Resources section above, the P-7
Partnership sold certain Net Profits Interests during the nine months
ended September 30, 1998 and recognized a $145,741 gain on such sales.
Similar sales during the nine months ended September 30, 1997 resulted in
the P-7 Partnership recognizing similar gains totaling $101,931.
Depletion of Net Profits Interests decreased $216,570 (30.8%) for the nine
months ended September 30, 1998 as compared to the nine months ended
September 30, 1997. This decrease resulted primarily from (i) the
decreases in volumes of oil and gas sold during the nine months ended
September 30, 1998 as compared to the nine months ended September 30, 1997
and (ii) upward revisions in the estimates of remaining gas reserves at
December 31, 1997. As a percentage of Net Profits, this expense increased
to 62.5% for the nine months ended September 30, 1998 from 41.4% for the
nine months ended September 30, 1997. This percentage increase was
primarily due to the decreases in the average prices of oil and gas sold
during the nine months ended September 30, 1998 as compared to the nine
months ended September 30, 1997.
18
The P-7 Partnership recognized a non-cash charge against earnings of
$1,474,823 during the nine months ended September 30, 1997. Of this
amount, $686,260 was related to the decline in oil and gas prices used to
determine future cash flows from the P-7 Partnership's Net Profits
Interests in proved oil and gas reserves at March 31, 1997 and $788,563
was related to the writing-off of Net Profits Interests in unproved
properties. The General Partner determined that it was unlikely that these
unproved properties would be developed due to the low oil and gas prices
received over the prior several years and Partnership Agreement provisions
which limited the P-7 Partnership's level of permissible indirect drilling
activity through its Affiliated Programs. No similar charges were
necessary during the nine months ended September 30, 1998.
General and administrative expenses decreased $4,065 (2.3%) for the nine
months ended September 30, 1998 as compared to the nine months ended
September 30, 1997. As a percentage of Net Profits, this expense increased
to 22.0% for the nine months ended September 30, 1998 from 10.3% for the
nine months ended September 30, 1997. This percentage increase was
primarily due to the decrease in Net Profits discussed above.
Cumulative cash distributions to the Limited Partners through September
30, 1998 were $10,660,916 or 56.50% of the Limited Partners' capital
contributions.
P-8 PARTNERSHIP
THREE MONTHS ENDED SEPTEMBER 30, 1998 AS COMPARED TO THE THREE MONTHS
ENDED SEPTEMBER 30, 1997.
Three Months Ended September 30,
--------------------------------
1998 1997
-------- --------
Net Profits $156,825 $339,944
Barrels produced 13,118 17,097
Mcf produced 88,489 122,272
Average price/Bbl $ 11.97 $ 17.48
Average price/Mcf $ 1.52 $ 2.03
As shown in the table above, Net Profits decreased $183,119 (53.9%) for
the three months ended September 30, 1998 as compared to the three months
ended September 30, 1997. Of this decrease, approximately $70,000 and
$69,000, respectively, were related to decreases in the volumes of oil and
gas sold and approximately $72,000 and $45,000, respectively, were related
to decreases in the average prices of oil and gas sold. These decreases
were partially offset by an increase of approximately $73,000 related to
decreases in production expenses incurred by the owners of the Working
Interests. Volumes of oil and gas sold decreased 3,979 barrels and 33,783
Mcf, respectively, for the three months ended September 30, 1998 as
compared to the three months ended September 30, 1997. The decrease in
volumes of oil sold resulted primarily from negative prior period volume
adjustments made by the purchasers on two significant wells during the
three months ended September 30, 1998. The decrease in volumes of gas sold
resulted primarily from (i) normal declines in production on two
significant wells due to diminishing reserves, (ii) the sale of one
significant well in 1998, and (iii) the curtailment of sales during the
three months ended September 30, 1998 on one significant well due to the
P-8 Partnership's overproduced position in that well. The decrease in
production expenses resulted primarily from (i) a decrease in production
taxes associated with the decrease in Net Profits, (ii) workover expenses
incurred on several wells during the three months ended September 30,
1997, and (iii) the abandonment of one significant well in 1997 because it
was uneconomical to produce. Average oil and gas prices decreased to
$11.97 per barrel and $1.52 per Mcf, respectively, for the three months
ended September 30, 1998 from $17.48 per barrel and $2.03 per Mcf,
respectively, for the three months ended September 30, 1997.
Depletion of Net Profits Interests decreased $88,752 (52.9%) for the three
months ended September 30, 1998 as compared to the three months ended
September 30, 1997. This decrease resulted primarily from (i) the
decreases in volumes of oil and gas sold during the three months ended
September 30, 1998 as compared to the three months ended September 30,
1997 and (ii) upward revisions in the estimates of remaining gas reserves
at December 31, 1997. As a percentage of Net Profits, this expense
increased to 50.5% for the three months ended September 30, 1998 from
49.4% for the three months ended September 30, 1997.
General and administrative expenses increased $572 (1.8%) for the three
months ended September 30, 1998 as compared to the three months ended
September 30, 1997. As a percentage of Net Profits, this expense increased
to 21.2% for the three months ended September 30, 1998 from 9.6% for the
three months ended September 30, 1997. This percentage increase was
primarily due to the decrease in Net Profits.
19
NINE MONTHS ENDED SEPTEMBER 30, 1998 AS COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1997.
Nine Months Ended September 30,
-------------------------------
1998 1997
-------- ----------
Net Profits $527,126 $1,093,247
Barrels produced 42,444 54,266
Mcf produced 278,894 322,991
Average price/Bbl $ 13.01 $ 19.67
Average price/Mcf $ 1.81 $ 2.22
As shown in the table above, Net Profits decreased $566,121 (51.8%) for
the nine months ended September 30, 1998 as compared to the nine months
ended September 30, 1997. Of this decrease, approximately $233,000 and
$98,000, respectively, were related to decreases in the volumes of oil and
gas sold and approximately $282,000 and $112,000, respectively, were
related to decreases in the average prices of oil and gas sold. These
decreases were partially offset by an increase of approximately $159,000
related to decreases in production expenses incurred by the owners of the
Working Interests. Volumes of oil and gas sold decreased 11,822 barrels
and 44,097 Mcf, respectively, for the nine months ended September 30, 1998
as compared to the nine months ended September 30, 1997. The decrease in
volumes of oil sold resulted primarily from (i) a negative prior period
volume adjustment made by a purchaser on one significant well during the
nine months ended September 30, 1998, (ii) a positive prior period volume
adjustment made by a purchaser on another significant well during the nine
months ended September 30, 1997, and (iii) the normal decline in
production on one significant well due to diminishing reserves. The
decrease in the volumes of gas sold resulted primarily from (i) the
curtailment of sales during the nine months ended September 30, 1998 on
one significant well due to the P-8 Partnership's overproduced position in
that well, (ii) the normal decline in production on one significant well
due to diminishing reserves, and (iii) the sale of one significant well in
1998. The decrease in production expenses resulted primarily from (i)
workover expenses incurred on three significant wells during the nine
months ended September 30, 1997, (ii) a decrease in production taxes
associated with the decrease in Net Profits discussed above, and (iii) the
sale of two significant wells during 1997 and 1998. Average oil and gas
prices decreased to $13.01 per barrel and $1.81 per Mcf, respectively, for
the nine months ended September 30, 1998 from $19.67 per barrel and $2.22
per Mcf, respectively, for the nine months ended September 30, 1997.
20
As discussed in the Liquidity and Capital Resources section above, the P-8
Partnership sold certain Net Profits Interests during the nine months
ended September 30, 1998 and recognized a $100,765 gain on such sales.
Similar sales during the nine months ended September 30, 1997 resulted in
the P-8 Partnership recognizing similar gains totaling $50,139.
Depletion of Net Profits Interests decreased $231,729 (47.9%) for the nine
months ended September 30, 1998 as compared to the nine months ended
September 30, 1997. This decrease resulted primarily from (i) the
decreases in volumes of oil and gas sold during the nine months ended
September 30, 1998 as compared to the nine months ended September 30, 1997
and (ii) upward revisions in the estimates of remaining gas reserves at
December 31, 1997. As a percentage of Net Profits, this expense increased
to 47.9% for the nine months ended September 30, 1998 from 44.3% for the
nine months ended September 30, 1997. This percentage increase was
primarily due to the decrease in the average prices of oil and gas sold
during the nine months ended September 30, 1998 as compared to the nine
months ended September 30, 1997.
The P-8 Partnership recognized a non-cash charge against earnings of
$1,052,542 during the nine months ended September 30, 1997. Of this
amount, $650,465 was related to the decline in oil and gas prices used to
determine future cash flows from the P-8 Partnership's Net Profits
Interests in proved oil and gas reserves at March 31, 1997 and $402,077
was related to the writing-off of Net Profits Interests in unproved
properties. The General Partner determined that it was unlikely that these
unproved properties would be developed due to the low oil and gas prices
received over the prior several years and Partnership Agreement provisions
which limited the P-8 Partnership's level of permissible indirect drilling
activity through its Affiliated Programs. No similar charges were
necessary during the nine months ended September 30, 1998.
General and administrative expenses decreased $2,393 (2.2%) for the nine
months ended September 30, 1998 as compared to the nine months ended
September 30, 1997. As a percentage of Net Profits, this expense increased
to 20.0% for the nine months ended September 30, 1998 from 9.9% for the
nine months ended September 30, 1997. This percentage increase was
primarily due to the decrease in Net Profits discussed above.
21
Cumulative cash distributions to the Limited Partners through September
30, 1998 were $6,639,583 or 57.16% of the Limited Partners' capital
contributions.
22
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule containing summary financial
information extracted from the P-7 Partnership's
financial statements as of September 30, 1998 and for
the nine months ended September 30, 1998, filed
herewith.
27.2 Financial Data Schedule containing summary financial
information extracted from the P-8 Partnership's
financial statements as of September 30, 1998 and for
the nine months ended September 30, 1998, filed
herewith.
All other exhibits are omitted as inapplicable.
(b) Reports on Form 8-K.
None.
23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME LIMITED PARTNERSHIP P-7
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME LIMITED PARTNERSHIP P-8
(Registrant)
BY: GEODYNE RESOURCES, INC.
General Partner
Date: November 9, 1998 By: /s/Dennis R. Neill
--------------------------------
(Signature)
Dennis R. Neill
President
Date: November 9, 1998 By: /s/Patrick M. Hall
--------------------------------
(Signature)
Patrick M. Hall
Principal Accounting Officer
24
INDEX TO EXHIBITS
NUMBER DESCRIPTION
- ------ -----------
27.1 Financial Data Schedule containing summary financial information
extracted from the Geodyne Institutional/Pension Energy Income
Limited Partnership P-7's financial statements as of September 30,
1998 and for the nine months ended September 30, 1998, filed
herewith.
27.2 Financial Data Schedule containing summary financial information
extracted from the Geodyne Institutional/Pension Energy Income
Limited Partnership P-8's financial statements as of September 30,
1998 and for the nine months ended September 30, 1998, filed
herewith.
All other exhibits are omitted as inapplicable.
25