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, 1997
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 of (I.R.S. Employer Identification No.)
incorporation or 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 the filing requirements for the past 90
days.
Yes X No
---- ----
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,
1997 1996
------------ -----------
CURRENT ASSETS:
Cash and cash equivalents $ 484,037 $ 643,415
Accounts receivable:
Net Profits 138,963 364,612
---------- ----------
Total current assets $ 623,000 $1,008,027
NET PROFITS INTERESTS, net,
utilizing the successful
efforts method 5,228,890 7,321,103
---------- ----------
$5,851,890 $8,329,130
========== ==========
PARTNERS' CAPITAL (DEFICIT)
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 110,966) ($ 92,242)
Limited Partners, issued and
outstanding, 188,702 units 5,962,856 8,421,372
---------- ----------
Total Partners' capital $5,851,890 $8,329,130
---------- ----------
$5,851,890 $8,329,130
========== ==========
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, 1997 AND 1996
(Unaudited)
1997 1996
-------- --------
REVENUES:
Net Profits $568,622 $551,939
Interest income 5,908 4,556
(Loss) gain on sale of Net Profits
Interests ( 576) 1,432
-------- --------
$573,954 $557,927
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $246,992 $312,572
General and administrative (Note 2) 53,031 53,738
-------- --------
$300,023 $366,310
-------- --------
NET INCOME $273,931 $191,617
======== ========
GENERAL PARTNER - NET INCOME $ 36,044 $ 21,856
======== ========
LIMITED PARTNERS - NET INCOME $237,887 $169,761
======== ========
NET INCOME per unit $ 1.26 $ .90
======== ========
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, 1997 AND 1996
(Unaudited)
1997 1996
---------- ----------
REVENUES:
Net Profits $1,698,511 $1,571,191
Interest income 16,213 9,296
Gain on sale of Net Profits
Interests 101,931 92,496
---------- ----------
$1,816,655 $1,672,983
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 702,441 $ 951,048
Impairment provision 1,474,823 -
General and administrative (Note 2) 175,429 171,267
---------- ----------
$2,352,693 $1,122,315
---------- ----------
NET INCOME (LOSS) ($ 536,038) $ 550,668
========== ==========
GENERAL PARTNER - NET INCOME $ 59,478 $ 65,111
========== ==========
LIMITED PARTNERS - NET INCOME (LOSS) ($ 595,516) $ 485,557
========== ==========
NET INCOME (LOSS) per unit ($ 3.16) $ 2.57
========== ==========
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, 1997 AND 1996
(Unaudited)
1997 1996
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($ 536,038) $ 550,668
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depletion of Net Profits
Interests 702,441 951,048
Impairment provision 1,474,823 -
Gain on sale of Net Profits
Interests ( 101,931) ( 92,496)
(Increase) decrease in accounts
receivable - Net Profits 225,649 ( 122,178)
---------- ----------
Net cash provided by operating
activities $1,764,944 $1,287,042
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 190,610) ($ 165,442)
Proceeds from sale of Net Profits
Interests 207,490 368,790
---------- ----------
Net cash provided by investing
activities $ 16,880 $ 203,348
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($1,941,202) ($1,047,047)
---------- ----------
Net cash used by financing
activities ($1,941,202) ($1,047,047)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 159,378) $ 443,343
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 643,415 270,118
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 484,037 $ 713,461
========== ==========
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,
1997 1996
------------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 354,417 $ 488,063
Accounts receivable:
General Partner (Note 2) 85 -
Net Profits - 88,232
---------- ----------
Total current assets $ 354,502 $ 576,295
NET PROFITS INTERESTS, net,
utilizing the successful
efforts method 2,658,836 4,151,147
---------- ----------
$3,013,338 $4,727,442
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 92,988 $ -
---------- ----------
Total current liabilities $ 92,988 $ -
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 66,343) ($ 54,315)
Limited Partners, issued and
outstanding, 116,168 units 2,986,693 4,781,757
---------- ----------
Total Partners' capital $2,920,350 $4,727,442
---------- ----------
$3,013,338 $4,727,442
========== ==========
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, 1997 AND 1996
(Unaudited)
1997 1996
-------- --------
REVENUES:
Net Profits $339,944 $339,114
Interest and other income 4,417 2,389
Loss on sale of Net Profits
Interests ( 2,960) ( 14,432)
-------- --------
$341,401 $327,071
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $167,892 $194,261
General and administrative (Note 2) 32,651 33,097
-------- --------
$200,543 $227,358
-------- --------
NET INCOME $140,858 $ 99,713
======== ========
GENERAL PARTNER - NET INCOME $ 22,016 $ 12,637
======== ========
LIMITED PARTNERS - NET INCOME $118,842 $ 87,076
======== ========
NET INCOME per unit $ 1.02 $ .75
======== ========
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, 1997 AND 1996
(Unaudited)
1997 1996
---------- --------
REVENUES:
Net Profits $1,093,247 $968,193
Interest and other income 12,675 5,223
Gain on sale of Net Profits
Interests 50,139 15,707
---------- --------
$1,156,061 $989,123
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 484,279 $567,173
Impairment provision 1,052,542 -
General and administrative (Note 2) 107,898 105,546
---------- --------
$1,644,719 $672,719
---------- --------
NET INCOME (LOSS) ($ 488,658) $316,404
========== ========
GENERAL PARTNER - NET INCOME $ 36,406 $ 38,246
========== ========
LIMITED PARTNERS - NET INCOME (LOSS) ($ 525,064) $278,158
========== ========
NET INCOME (LOSS) per unit ($ 4.52) $ 2.39
========== ========
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, 1997 AND 1996
(Unaudited)
1997 1996
------------ ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($ 488,658) $316,404
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depletion of Net Profits
Interests 484,279 567,173
Impairment provision 1,052,542 -
Gain on sale of Net Profits
Interests ( 50,139) ( 15,707)
Increase in accounts receivable -
General Partner ( 85) -
(Increase) decrease in accounts
receivable - Net Profits 88,232 ( 47,568)
Increase in accounts payable 92,988 -
---------- --------
Net cash provided by operating
activities $1,179,159 $820,302
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 112,238) ($ 88,442)
Proceeds from sale of Net Profits
Interests 117,867 189,892
---------- --------
Net cash provided by investing
activities $ 5,629 $101,450
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($1,318,434) ($709,620)
---------- --------
Net cash used by financing
activities ($1,318,434) ($709,620)
---------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 133,646) $212,132
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 488,063 208,319
---------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 354,417 $420,451
========== ========
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, 1997
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheets as of September 30, 1997, statements of
operations for the three and nine months ended September 30,
1997 and 1996 and the statements of cash flows for the nine
months ended September 30, 1997 and 1996 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, 1997,
the results of operations for the three and nine months
ended September 30, 1997 and 1996 and cash flows for the
nine months ended September 30, 1997 and 1996.
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,
1996. The results of operations for the period ended
September 30, 1997 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 the 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.
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
-10-
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 in 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 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.
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 Net Profits
Interests 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
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
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
-11-
on an allocation of actual costs incurred by the General
Partner. During the three months ended September 30, 1997
the following payments were made to the General Partner or
its affiliates by the Partnerships:
Direct General Administrative
Partnership and Administrative Overhead
----------- ------------------ --------------
P-7 $3,372 $49,659
P-8 2,081 30,570
During the nine months ended September 30, 1997 the
following payments were made to the General Partner or its
affiliates by the Partnerships:
Direct General Administrative
Partnership and Administrative Overhead
----------- ------------------ --------------
P-7 $26,452 $148,977
P-8 16,188 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.
The receivable from the General Partner at September 30,
1997 for the P-8 Partnership represents proceeds due to such
Partnership for the sale of Net Profits Interests during the
third quarter of 1997. Subsequent to September 30, 1997
such receivable was collected by the P-8 Partnership.
-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, or 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
Interest. The net proceeds from the oil and gas operations
are distributed to the Limited Partners and General Partner
in accordance with the terms of the Partnerships'
Partnership Agreements.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
-13-
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. The Partnerships have
fully invested their capital contributions.
Net proceeds from the Partnerships' Net Profits Interests
less necessary operating capital are distributed to 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, 1997 and the net revenue generated from future
operations will provide sufficient working capital to meet
current and future obligations of the Partnerships.
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. In addition, such spot market sales are
generally short-term in nature and are dependent upon the
obtaining of transportation services provided by pipelines.
Management is unable to predict whether future oil and gas
prices will (i) stabilize, (ii) increase, or (iii) decrease.
P-7 PARTNERSHIP
THREE MONTHS ENDED SEPTEMBER 30, 1997 AS COMPARED TO THE
THREE MONTHS ENDED SEPTEMBER 30, 1996.
Three Months Ended September 30,
--------------------------------
1997 1996
-14-
-------- --------
Net Profits $568,622 $551,939
Barrels produced 28,323 29,406
Mcf produced 183,750 202,442
Average price/Bbl $ 17.74 $ 21.38
Average price/Mcf $ 2.09 $ 1.68
As shown in the table above, Net Profits increased $16,683
(3.0%) for the three months ended September 30, 1997 as
compared to the three months ended September 30, 1996. Of
this increase, approximately $75,000 was related to an
increase in the average price of gas sold and approximately
$99,000 was related to a decrease in production expenses
incurred by the owners of the Working Interests, which
increase was partially offset by decreases of approximately
$23,000 and $31,000, respectively, related to decreases in
volumes of oil and gas sold and a decrease of approximately
$103,000 related to a decrease in the average price of oil
sold. Volumes of oil and gas sold decreased 1,083 barrels
and 18,692 Mcf, respectively, for the three months ended
September 30, 1997 as compared to the three months ended
September 30, 1996. The decrease in production expenses
resulted primarily from (i) a decrease in general repair and
maintenance expenses incurred on one well during the three
months ended September 30, 1997 as compared to the three
months ended September 30, 1996 and (ii) decreases in
volumes of oil and gas sold during the three months ended
September 30, 1997 as compared to the three months ended
September 30, 1996. Average oil prices decreased to $17.74
per barrel for the three months ended September 30, 1997
from $21.38 per barrel for the three months ended September
30, 1996. Average gas prices increased to $2.09 per Mcf for
the three months ended September 30, 1997 from $1.68 per Mcf
for the three months ended September 30, 1996.
Depletion of Net Profits Interests decreased $65,580 (21.0%)
for the three months ended September 30, 1997 as compared to
the three months ended September 30, 1996. This decrease
resulted primarily from (i) an upward revision in the
estimate of remaining oil reserves at December 31, 1996 and
(ii) decreases in the volumes of oil and gas sold during the
three months ended September 30, 1997 as compared to the
three months ended September 30, 1996. As a percentage of
Net Profits, this expense decreased to 43.4% for the three
months ended September 30, 1997 from 56.6% for the three
months ended September 30, 1996. This percentage decrease
was primarily due to the dollar decrease in Depletion of Net
Profits Interests discussed above and the increase in the
average price of gas sold during the three months ended
September 30, 1997 as compared to the three months ended
September 30, 1996.
General and administrative expenses remained relatively
constant for the three months ended September 30, 1997 as
compared to the three months ended September 30, 1996. As a
percentage of Net Profits, these expenses remained
relatively constant at 9.3% for the three months ended
September 30, 1997 and 9.7% for the three months ended
September 30, 1996.
-15-
NINE MONTHS ENDED SEPTEMBER 30, 1997 AS COMPARED TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1996.
Nine Months Ended September 30,
-------------------------------
1997 1996
---------- ----------
Net Profits $1,698,511 $1,571,191
Barrels produced 91,838 99,986
Mcf produced 454,854 552,872
Average price/Bbl $ 19.77 $ 19.65
Average price/Mcf $ 2.18 $ 1.82
As shown in the table above, Net Profits increased $127,320
(8.1%) for the nine months ended September 30, 1997 as
compared to the nine months ended September 30, 1996. Of
this increase, approximately $9,000 and $164,000,
respectively, were related to increases in the average
prices of oil and gas sold and approximately $292,000 was
related to a decrease in production expenses incurred by the
owners of the Working Interests, which increase was
partially offset by decreases of approximately $160,000 and
$178,000, respectively, related to decreases in volumes of
oil and gas sold. Volumes of oil and gas sold decreased
8,148 barrels and 98,018 Mcf, respectively, for the nine
months ended September 30, 1997 as compared to the nine
months ended September 30, 1996. The decrease in volumes of
gas sold resulted primarily from (i) normal declines in
production due to diminished gas reserves on two wells, (ii)
negative prior period volume adjustments made by the
operator on one well during the nine months ended September
30, 1997, (iii) positive prior period volume adjustments
made by the operator on one well during the nine months
ended September 30, 1996 and (iv) the shutting-in of one
well during a portion of the nine months ended September 30,
1997 in order to improve the recovery of reserves. The
decrease in production expenses resulted primarily from (i)
a decrease in general repair and maintenance expenses
incurred on one well during the nine months ended September
30, 1997 as compared to the nine months ended September 30,
1996 and (ii) decreases in volumes of oil and gas sold
during the nine months ended September 30, 1997 as compared
to the nine months ended September 30, 1996. Average oil
and gas prices increased to $19.77 per barrel and $2.18 per
Mcf, respectively, for the nine months ended September 30,
1997 from $19.65 per barrel and $1.82 per Mcf, respectively,
for the nine months ended September 30, 1996.
Depletion of Net Profits Interests decreased $248,607
(26.1%) for the nine months ended September 30, 1997 as
compared to the nine months ended September 30, 1996. This
decrease resulted primarily from (i) an upward revision in
the estimate of remaining oil reserves at December 31, 1996
and (ii) decreases in volumes of oil and gas sold during the
nine months ended September 30, 1997 as compared to the nine
months ended September 30, 1996. As a percentage of Net
Profits, this expense decreased to 41.4% for the nine months
ended September 30, 1997 from 60.5% for the nine months
-16-
ended September 30, 1996. This percentage decrease was
primarily due to the dollar decrease in Depletion of Net
Profits Interests discussed above and the increases in the
average prices of oil and gas sold during the nine months
ended September 30, 1997 as compared to the nine months
ended September 30, 1996.
The P-7 Partnership recognized a non-cash charge against
earnings of $1,474,823 during the nine months ended
September 30, 1997. This impairment provision was necessary
due to the unamortized costs of Net Profits Interests
exceeding the undiscounted future net revenues from such Net
Profits Interests, in accordance with the P-7 Partnership s
adoption of SFAS No. 121. Of this amount, $686,260 was
related to the decline in oil and gas prices used to
determine the recoverability of oil and gas reserves at
March 31, 1997 and $788,563 was related to impairment of
unproved properties. No similar charge was necessary during
1996.
General and administrative expenses remained relatively
constant for the nine months ended September 30, 1997 as
compared to the nine months ended September 30, 1996. As a
percentage of Net Profits, these expenses remained
relatively constant at 10.3% for the nine months ended
September 30, 1997 and 10.9% for the nine months ended
September 30, 1996.
Cumulative cash distributions to the Limited Partners
through September 30, 1997 were $9,215,916 or 48.84% of
Limited Partners' capital contributions.
P-8 PARTNERSHIP
THREE MONTHS ENDED SEPTEMBER 30, 1997 AS COMPARED TO THE
THREE MONTHS ENDED SEPTEMBER 30, 1996.
Three Months Ended September 30,
--------------------------------
1997 1996
-------- --------
Net Profits $339,944 $339,114
Barrels produced 17,097 16,657
Mcf produced 122,272 142,883
Average price/Bbl $ 17.48 $ 21.35
Average price/Mcf $ 2.03 $ 1.67
As shown in the table above, Net Profits remained relatively
constant for the three months ended September 30, 1997 as
compared to the three months ended September 30, 1996.
While the average price of gas and volumes of oil sold
increased and production expenses incurred by the owners of
the Working Interests decreased for the three months ended
September 30, 1997 as compared to the three months ended
-17-
September 30, 1996, any resulting increase in oil and gas
sales was offset by decreases in the average price of oil
and volumes of gas sold during the same period. Volumes of
oil sold increased 440 barrels, while volumes of gas sold
decreased 20,611 Mcf for the three months ended September
30, 1997 as compared to the three months ended September 30,
1996. The decrease in production expenses resulted
primarily from (i) a decrease in general repair and
maintenance expenses incurred on one well during the three
months ended September 30, 1997 as compared to the three
months ended September 30, 1996 and (ii) a decrease in
volumes of gas sold during the three months ended September
30, 1997 as compared to the three months ended September 30,
1996. Average oil prices decreased to $17.48 per barrel for
the three months ended September 30, 1997 from $21.35 per
barrel for the three months ended September 30, 1996.
Average gas prices increased to $2.03 per Mcf for the three
months ended September 30, 1997 from $1.67 per Mcf for the
three months ended September 30, 1996.
Depletion of Net Profits Interests decreased $26,369 (13.6%)
for the three months ended September 30, 1997 as compared to
the three months ended September 30, 1996. This decrease
resulted primarily from (i) an upward revision in the
estimate of remaining oil reserves at December 31, 1996 and
(ii) decreases in the volumes of gas sold during the three
months ended September 30, 1997 as compared to the three
months ended September 30, 1996. As a percentage of Net
Profits, this expense decreased to 49.4% for the three
months ended September 30, 1997 from 57.3% for the three
months ended September 30, 1996. This percentage decrease
was primarily due to the dollar decrease in Depletion of Net
Profits Interests discussed above and the increase in the
average price of gas sold during the three months ended
September 30, 1997 as compared to the three months ended
September 30, 1996.
General and administrative expenses remained relatively
constant for the three months ended September 30, 1997 as
compared to the three months ended September 30, 1996. As a
percentage of Net Profits, these expenses remained
relatively constant at 9.6% for the three months ended
September 30, 1997 and 9.8% for the three months ended
September 30, 1996.
NINE MONTHS ENDED SEPTEMBER 30, 1997 AS COMPARED TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1996.
Nine Months Ended September 30,
-------------------------------
1997 1996
---------- --------
Net Profits $1,093,247 $968,193
Barrels produced 54,266 58,515
Mcf produced 322,991 357,877
Average price/Bbl $ 19.67 $ 19.62
Average price/Mcf $ 2.22 $ 1.90
As shown in the table above, Net Profits increased $125,054
(12.9%) for the nine months ended September 30, 1997 as
-18-
compared to the nine months ended September 30, 1996. Of
this increase, approximately $103,000 was related to an
increase in the average price of gas sold and approximately
$169,000 was related to a decrease in production expenses
incurred by the owners of the Working Interests, which
increase was partially offset by decreases of approximately
$83,000 and $66,000, respectively, related to decreases in
volumes of oil and gas sold. Volumes of oil and gas sold
decreased 4,249 barrels and 34,886 Mcf, respectively, for
the nine months ended September 30, 1997 as compared to the
nine months ended September 30, 1996. The decrease in
production expenses resulted primarily from (i) a decrease
in general repair and maintenance expenses incurred on one
well during the nine months ended September 30, 1997 as
compared to the nine months ended September 30, 1996 and
(ii) decreases in volumes of oil and gas sold during the
nine months ended September 30, 1997 as compared to the nine
months ended September 30, 1996. Average oil and gas prices
increased to $19.67 per barrel and $2.22 per Mcf,
respectively, for the nine months ended September 30, 1997
from $19.62 per barrel and $1.90 per Mcf, respectively, for
the nine months ended September 30, 1996.
Depletion of Net Profits Interests decreased $82,894 (14.6%)
for the nine months ended September 30, 1997 as compared to
the nine months ended September 30, 1996. This decrease
resulted primarily from (i) an upward revision in the
estimate of remaining oil reserves at December 31, 1996 and
(ii) decreases in volumes of oil and gas sold during the
nine months ended September 30, 1997 as compared to the nine
months ended September 30, 1996. As a percentage of Net
Profits, this expense decreased to 44.3% for the nine months
ended September 30, 1997 from 58.6% for the nine months
ended September 30, 1996. This percentage decrease was
primarily due to the dollar decrease in Depletion of Net
Profits Interests discussed above and the increases in the
average prices of oil and gas sold during the nine months
ended September 30, 1997 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. This impairment provision was necessary
due to the unamortized costs of Net Profits Interests
exceeding the undiscounted future net revenues from such Net
Profits Interests, in accordance with the P-8 Partnership's
adoption of SFAS No. 121. Of this amount, $650,456 was
related to the decline in oil and gas prices used to
determine the recoverability of oil and gas reserves at
March 31, 1997 and $402,077 was related to impairment of
unproved properties. No similar charge was necessary during
1996.
General and administrative expenses remained relatively
constant for the nine months ended September 30, 1997 as
compared to the nine months ended September 30, 1996. As a
percentage of Net Profits, these expenses remained
relatively constant at 9.9% for the nine months ended
September 30, 1997 and 10.9% for the nine months ended
September 30, 1996.
-19-
Cumulative cash distributions to the Limited Partners
through September 30, 1997 were $5,665,583 or 48.77% of
Limited Partners' capital contributions.
-20-
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, 1997 and for the nine months
ended September 30, 1997, filed herewith.
27.2 Financial Data Schedule containing summary
financial information extracted from the P-8
Partnership's financial statements as of
September 30, 1997 and for the nine months
ended September 30, 1997, filed herewith.
All other exhibits are omitted as
inapplicable.
(b) Reports on Form 8-K:
None.
-21-
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 13, 1997 By: /s/Dennis R. Neill
-------------------------------
(Signature)
Dennis R. Neill
President
Date: November 13, 1997 By: /s/Patrick M. Hall
-------------------------------
(Signature)
Patrick M. Hall
Principal Accounting Officer
-22-
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, 1997 and
for the nine months ended September 30, 1997, 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, 1997 and
for the nine months ended September 30, 1997, filed
herewith.
All other exhibits are omitted as inapplicable.