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 June 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
incorporation or organization) 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
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
June 30, December 31,
1997 1996
---------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 715,335 $ 643,415
Accounts receivable:
Net Profits 131,667 364,612
---------- ----------
Total current assets $ 847,002 $1,008,027
NET PROFITS INTERESTS, net,
utilizing the successful
efforts method 5,435,538 7,321,103
---------- ----------
$6,282,540 $8,329,130
========== ==========
PARTNERS' CAPITAL (DEFICIT)
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 118,666) ($ 92,242)
Limited Partners, issued and
outstanding, 188,702 units 6,401,206 8,421,372
---------- ----------
Total Partners' capital $6,282,540 $8,329,130
---------- ----------
$6,282,540 $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 JUNE 30, 1997 AND 1996
(Unaudited)
1997 1996
-------- --------
REVENUES:
Net Profits $468,770 $429,411
Interest income 5,249 2,821
Gain on sale of Net Profits
Interests 102,507 86,293
-------- --------
$576,526 $518,525
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $208,993 $306,687
General and administrative (Note 2) 60,789 56,071
-------- --------
$269,782 $362,758
-------- --------
NET INCOME $306,744 $155,767
======== ========
GENERAL PARTNER - NET INCOME $ 23,434 $ 19,915
======== ========
LIMITED PARTNERS - NET INCOME $283,310 $135,852
======== ========
NET INCOME per unit $ 1.50 $ .72
======== ========
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 SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
1997 1996
---------- ----------
REVENUES:
Net Profits $1,129,889 $1,019,252
Interest income 10,305 4,740
Gain on sale of Net Profits
Interests 102,507 91,064
---------- ----------
$1,242,701 $1,115,056
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 455,449 $ 638,476
Impairment provision 1,474,823 -
General and administrative (Note 2) 122,398 117,529
---------- ----------
$2,052,670 $ 756,005
---------- ----------
NET INCOME (LOSS) ($ 809,969) $ 359,051
========== ==========
GENERAL PARTNER - NET INCOME $ 36,197 $ 43,255
========== ==========
LIMITED PARTNERS - NET INCOME (LOSS) ($ 846,166) $ 315,796
========== ==========
NET INCOME (LOSS) per unit ($ 4.48) $ 1.67
========== ==========
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 SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
1997 1996
------------ ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($ 809,969) $359,051
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depletion of Net Profits
Interests 455,449 638,476
Impairment provision 1,474,823 -
Gain on sale of Net Profits
Interests ( 102,507) ( 91,064)
(Increase) decrease in accounts
receivable 232,945 ( 117,415)
---------- --------
Net cash provided by operating
activities $1,250,741 $789,048
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 150,214) ($129,313)
Proceeds from sale of Net Profits
Interests 208,014 91,064
---------- --------
Net cash provided (used) by
investing activities $ 57,800 ($ 38,249)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($1,236,621) ($657,347)
---------- --------
Net cash used by financing
activities ($1,236,621) ($657,347)
---------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 71,920 $ 93,452
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 643,415 270,118
---------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 715,335 $363,570
========== ========
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
June 30, December 31,
1997 1996
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 505,061 $ 488,063
Accounts receivable:
Net Profits - 88,232
---------- ----------
Total current assets $ 505,061 $ 576,295
NET PROFITS INTERESTS, net,
utilizing the successful
efforts method 2,807,523 4,151,147
---------- ----------
$3,312,584 $4,727,442
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 83,311 $ -
---------- ----------
Total current liabilities $ 83,311 $ -
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 74,100) ($ 54,315)
Limited Partners, issued and
outstanding, 116,168 units 3,303,373 4,781,757
---------- ----------
Total Partners' capital $3,229,273 $4,727,442
---------- ----------
$3,312,584 $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 JUNE 30, 1997 AND 1996
(Unaudited)
1997 1996
-------- --------
REVENUES:
Net Profits $300,445 $291,805
Interest and other income 4,317 1,377
Gain on sale of Net Profits
Interests 53,099 27,697
-------- --------
$357,861 $320,879
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $142,057 $186,322
General and administrative (Note 2) 37,329 34,643
-------- --------
$179,386 $220,965
-------- --------
NET INCOME $178,475 $ 99,914
======== ========
GENERAL PARTNER - NET INCOME $ 14,390 $ 12,380
======== ========
LIMITED PARTNERS - NET INCOME $164,085 $ 87,534
======== ========
NET INCOME per unit $ 1.41 $ .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 SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
1997 1996
---------- --------
REVENUES:
Net Profits $ 753,303 $629,079
Interest and other income 8,258 2,834
Gain on sale of Net Profits
Interests 53,099 30,139
---------- --------
$ 814,660 $662,052
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 316,387 $372,912
Impairment provision 1,052,542 -
General and administrative (Note 2) 75,247 72,449
---------- --------
$1,444,176 $445,361
---------- --------
NET INCOME (LOSS) ($ 629,516) $216,691
========== ========
GENERAL PARTNER - NET INCOME $ 22,868 $ 25,609
========== ========
LIMITED PARTNERS - NET INCOME (LOSS) ($ 652,384) $191,082
========== ========
NET INCOME (LOSS) per unit ($ 5.62) $ 1.64
========== ========
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 SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
1997 1996
------------ ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($ 629,516) $216,691
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depletion of Net Profits
Interests 316,387 372,912
Impairment provision 1,052,542 -
Gain on sale of Net Profits
Interests ( 53,099) ( 30,139)
(Increase) decrease in accounts
receivable 88,232 ( 66,932)
Increase in accounts payable 83,311 -
---------- --------
Net cash provided by operating
activities $ 857,857 $492,532
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 90,312) ($ 69,864)
Proceeds from sale of Net Profits
Interests 118,106 46,603
---------- --------
Net cash provided (used) by
investing activities $ 27,794 ($ 23,261)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($ 868,653) ($488,114)
---------- --------
Net cash used by financing
activities ($ 868,653) ($488,114)
---------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 16,998 ($ 18,843)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 488,063 208,319
---------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 505,061 $189,476
========== ========
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
JUNE 30, 1997
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheets as of June 30, 1997, statements of operations
for the three and six months ended June 30, 1997 and 1996 and the
statements of cash flows for the six months ended June 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 June 30, 1997, the
results of operations for the three and six months ended June 30,
1997 and 1996 and cash flows for the six months ended June 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 June 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 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
-10-
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' depletion,
depreciation, and amortization 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 six months ended June 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 on an allocation of
actual costs incurred by the General Partner. During the six
months ended June 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 $23,080 $99,318
P-8 14,107 61,140
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
-11-
associated with their activities.
The Partnerships receive Net Profits distributions on a monthly
basis from affiliated partnerships managed by the General
Partner. These distributions are reflected as Revenue, "Net
Profits", in the accompanying statements of operations. The Net
Profits Receivable represents amounts due from these affiliated
partnerships. The accounts payable at June 30, 1997 for the P-8
Partnership represents an amount due to these affiliated
partnerships for operating expenses which have exceeded revenues
as a result of the decrease in the average price of gas sold.
-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
- -------------------------------
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:
-13-
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 June 30, 1997 and the net revenue
generated from future operations will provide sufficient working
capital to meet current and future obligations of the
Partnerships.
The Partnerships' cash flows for the second quarter of 1997
included proceeds from the sale of oil and gas properties during
the three months ended June 30, 1997. These proceeds will be
reflected, as applicable, in the Partnerships' cash distributions
to be paid in mid-August 1997. It is possible that the Partner-
ships' repurchase values and future cash distributions could
decline as a result of he 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 bore a higher ratio of operating expenses as
compared to reserves than the Partnerships' remaining properties.
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 JUNE 30, 1997 AS COMPARED TO THE THREE MONTHS
ENDED JUNE 30, 1996.
Three Months Ended June 30,
---------------------------
1997 1996
-------- --------
Net Profits $468,770 $429,411
Barrels produced 28,868 33,354
Mcf produced 126,067 171,619
Average price/Bbl $ 20.10 $ 19.64
Average price/Mcf $ 1.82 $ 1.98
As shown in the table above, Net Profits increased $39,359 (9.2%)
for the three months ended June 30, 1997 as compared to the three
-14-
months ended June 30, 1996. Of this increase, approximately
$13,000 was related to an increase in the average price of oil
sold and approximately $226,000 was related to a decrease in
production expenses incurred by the owners of the Working
Interests, partially offset by decreases of approximately $88,000
and $90,000,respectively, related to decreases in volumes of oil
and gas sold and a decrease of approximately $20,000 related to a
decrease in the average price of gas sold. Volumes of oil and
gas sold decreased 4,486 barrels and 45,552 Mcf, respectively,
for the three months ended June 30, 1997 as compared to the three
months ended June 30, 1996. The decrease in volumes of gas sold
resulted primarily from (i) normal declines in production due to
diminished gas reserves on several wells, (ii) a positive prior
period volume adjustment made by the purchaser on one well during
the three months ended June 30, 1996, and (iii) the shutting-in
of another well during a portion of the three months ended June
30, 1997 in order to improve the recovery of reserves. The
decrease in production expenses resulted primarily from (i)
workover expenses incurred on one well during the three months
ended June 30, 1996 in order to increase production capabilities
and (ii) decreases in volumes of oil and gas sold during the
three months ended June 30, 1997 as compared to the three months
ended June 30, 1996. Average oil prices increased to $20.10 per
barrel for the three months ended June 30, 1997 from $19.64 per
barrel for the three months ended June 30, 1996, while average
gas prices decreased to $1.82 per Mcf for the three months ended
June 30, 1997 from $1.98 per Mcf for the three months ended June
30, 1996.
Depletion of Net Profits Interests decreased $97,694 (31.9%) for
the three months ended June 30, 1997 as compared to the three
months ended June 30, 1996. This decrease resulted primarily
from (i) decreases in volumes of oil and gas sold during the
three months ended June 30, 1997 as compared to the three months
ended June 30, 1996 and (ii) an upward revision in the estimate
of remaining oil reserves at December 31, 1996. As a percentage
of Net Profits, this expense decreased to 44.6% for the three
months ended June 30, 1997 from 71.4% for the three months ended
June 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 oil sold during
the three months ended June 30, 1997 as compared to the three
months ended June 30, 1996.
General and administrative expenses increased $4,718 (8.4%) for
the three months ended June 30, 1997 as compared to the three
months ended June 30, 1996. This increase resulted primarily
from increases in both professional fees and printing and postage
expenses during the three months ended June 30, 1997 as compared
to the three months ended June 30, 1996. As a percentage of Net
Profits, these expenses remained relatively constant at 13.0% for
the three months ended June 30, 1997 and 13.1% for the three
months ended June 30, 1996.
SIX MONTHS ENDED JUNE 30, 1997 AS COMPARED TO THE SIX MONTHS
ENDED JUNE 30, 1996.
Six Months Ended June 30,
-------------------------
1997 1996
---------- ----------
-15-
Net Profits $1,129,889 $1,019,252
Barrels produced 63,515 70,580
Mcf produced 271,104 350,430
Average price/Bbl $ 20.67 $ 18.93
Average price/Mcf $ 2.24 $ 1.90
As shown in the table above, Net Profits increased $110,637
(10.9%) for the six months ended June 30, 1997 as compared to the
six months ended June 30, 1996. Of this increase, approximately
$111,000 and $92,000, respectively, were related to increases in
the average prices of oil and gas sold and approximately $193,000
was related to a decrease in production expenses incurred by the
owners of the Working Interests, partially offset by decreases of
approximately $134,000 and $151,000, respectively, related to
decreases in volumes of oil and gas sold. Volumes of oil and gas
sold decreased 7,065 barrels and 79,326 Mcf, respectively, for
the six months ended June 30, 1997 as compared to the six months
ended June 30, 1996. The decrease in volumes of gas sold
resulted primarily from (i) normal declines in production due to
diminished gas reserves on several wells, (ii) a negative prior
period volume adjustment made by the purchaser on one well during
the six months ended June 30, 1997, and (iii) the shutting-in of
another well during a portion of the six months ended June 30,
1997 in order to improve the recovery of reserves. The decrease
in production expenses resulted primarily from (i) decreases in
volumes of oil and gas sold during the six months ended June 30,
1997 as compared to the six months ended June 30, 1996 and (ii)
workover expenses incurred on one well during the six months
ended June 30, 1996 in order to increase production capabilities,
partially offset by workover expenses incurred on another well
during the six months ended June 30, 1997 in order to increase
production capabilities. Average oil and gas prices increased to
$20.67 per barrel and $2.24 per Mcf, respectively, for the six
months ended June 30, 1997 from $18.93 per barrel and $1.90 per
Mcf, respectively, for the six months ended June 30, 1996.
Depletion of Net Profits Interests decreased $183,027 (28.7%) for
the six months ended June 30, 1997 as compared to the six months
ended June 30, 1996. This decrease resulted primarily from (i)
decreases in volumes of oil and gas sold during the six months
ended June 30, 1997 as compared to the six months ended June 30,
1996 and (ii) an upward revision in the estimate of remaining oil
reserves at December 31, 1996. As a percentage of Net Profits,
this expense decreased to 40.3% for the six months ended June 30,
1997 from 62.6% for the six months ended June 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
six months ended June 30, 1997 as compared to the six months
ended June 30, 1996.
The P-7 Partnership recognized a non-cash charge against earnings
of $1,474,823 during the six months ended June 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.
-16-
General and administrative expenses remained relatively constant
for the six months ended June 30, 1997 as compared to the six
months ended June 30, 1996. As a percentage of Net Profits,
these expenses remained relatively constant at 10.8% for the six
months ended June 30, 1997 and 11.5% for the six months ended
June 30, 1996.
Cumulative cash distributions to the Limited Partners through
June 30, 1997 were $8,526,916 or 45.19% of Limited Partners'
capital contributions.
P-8 PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 1997 AS COMPARED TO THE THREE MONTHS
ENDED JUNE 30, 1996.
Three Months Ended June 30,
---------------------------
1997 1996
-------- --------
Net Profits $300,445 $291,805
Barrels produced 17,004 20,149
Mcf produced 88,232 112,009
Average price/Bbl $ 20.11 $ 19.66
Average price/Mcf $ 1.89 $ 2.10
As shown in the table above, Net Profits increased $8,640 (3.0%)
for the three months ended June 30, 1997 as compared to the three
months ended June 30, 1996. Of this increase, approximately
$8,000 was related to the increase in the average price of oil
sold and approximately $132,000 was related to the decrease in
production expenses incurred by the owners of the Working
Interests, partially offset by decreases of approximately $62,000
and $50,000, respectively, related to decreases in volumes of oil
and gas sold and a decrease of approximately $19,000 related to a
decrease in the average price of gas sold. Volumes of oil and
gas sold decreased 3,145 barrels and 23,777 Mcf, respectively,
for the three months ended June 30, 1997 as compared to the three
months ended June 30, 1996. The decrease in volumes of oil sold
resulted primarily from (i) normal declines in production due to
diminished oil reserves on several wells and (ii) a negative
prior period volume adjustment made by the purchaser on one well
during the three months ended June 30, 1997. The decrease in
volumes of gas sold resulted primarily from (i) normal declines
in production due to diminished gas reserves on several wells,
(ii) a negative prior period volume adjustment made by the
purchaser on one well during the three months ended June 30,
1997, and (iii) the shutting-in of another well during a portion
of the three months ended June 30, 1997 in order to improve the
recovery of reserves. The decrease in production expenses
resulted primarily from (i) workover expenses incurred on one
well during the three months ended June 30, 1996 in order to
increase production capabilities and (ii) decreases in volumes of
oil and gas sold during the three months ended June 30, 1997 as
compared to the three months ended June 30, 1996. Average oil
prices increased to $20.11 per barrel for the three months ended
June 30, 1997 from $19.66 per barrel for the three months ended
June 30, 1996, while average gas prices decreased to $1.89 per
Mcf for the three months ended June 30, 1997 from $2.10 per Mcf
for the three months ended June 30, 1996.
-17-
Depletion of Net Profits Interests decreased $44,265 (23.8%) for
the three months ended June 30, 1997 as compared to the three
months ended June 30, 1996. This decrease resulted primarily
from (i) decreases in volumes of oil and gas sold during the
three months ended June 30, 1997 as compared to the three months
ended June 30, 1996 and (ii) an upward revision in the estimate
of remaining oil reserves at December 31, 1996. As a percentage
of Net Profits, this expense decreased to 47.3% for the three
months ended June 30, 1997 from 63.9% for the three months ended
June 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 oil sold during
the three months ended June 30, 1997 as compared to the three
months ended June 30, 1996.
General and administrative expenses increased $2,686 (7.8%) for
the three months ended June 30, 1997 as compared to the three
months ended June 30, 1996. This increase resulted primarily
from increases in both professional fees and printing and postage
expenses during the three months ended June 30, 1997 as compared
to the three months ended June 30, 1996. As a percentage of Net
Profits, these expenses remained relatively constant at 12.4% for
the three months ended June 30, 1997 and 11.9% for the three
months ended June 30, 1996.
SIX MONTHS ENDED JUNE 30, 1997 AS COMPARED TO THE SIX MONTHS
ENDED JUNE 30, 1996.
Six Months Ended June 30,
-------------------------
1997 1996
-------- --------
Net Profits $753,303 $629,079
Barrels produced 37,169 41,858
Mcf produced 200,719 214,994
Average price/Bbl $ 20.67 $ 18.93
Average price/Mcf $ 2.33 $ 2.04
As shown in the table above, Net Profits increased $124,224
(19.8%) for the six months ended June 30, 1997 as compared to the
six months ended June 30, 1996. Of this increase, approximately
$65,000 and $58,000, respectively, were related to increases in
the average prices of oil and gas sold and approximately $121,000
was related to a decrease in production expenses incurred by the
owners of the Working Interests, partially offset by decreases of
approximately $89,000 and $29,000, respectively, related to
decreases in volumes of oil and gas sold. Volumes of oil and gas
sold decreased 4,689 barrels and 14,275 Mcf, respectively, for
the six months ended June 30, 1997 as compared to the six months
ended June 30, 1996. The decrease in production expenses resulted
primarily from (i) decreases in volumes of oil and gas sold
during the six months ended June 30, 1997 as compared to the six
months ended June 30, 1996 and (ii) workover expenses incurred on
one well during the six months ended June 30, 1996 in order to
increase production capabilities, partially offset by workover
expenses incurred on another well during the six months ended
June 30, 1997 in order to increase production capabilities.
Average oil and gas prices increased to $20.67 per barrel and
$2.33 per Mcf, respectively, for the six months ended June 30,
1997 from $18.93 per barrel and $2.04 per Mcf, respectively, for
the six months ended June 30, 1996.
-18-
Depletion of Net Profits Interests decreased $56,525 (15.2%) for
the six months ended June 30, 1997 as compared to the six months
ended June 30, 1996. This decrease resulted primarily from (i)
decreases in volumes of oil and gas sold during the six months
ended June 30, 1997 as compared to the six months ended June 30,
1996 and (ii) an upward revision in the estimate of remaining oil
reserves at December 31, 1996. As a percentage of Net Profits,
this expense decreased to 42.0% for the six months ended June 30,
1997 from 59.3% for the six months ended June 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
six months ended June 30, 1997 as compared to the six months
ended June 30, 1996.
The P-8 Partnership recognized a non-cash charge against earnings
of $1,052,542 during the six months ended June 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,
$650,465 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 six months ended June 30, 1997 as compared to the six
months ended June 30, 1996. As a percentage of Net Profits,
these expenses decreased to 10.0% for the six months ended June
30, 1997 from 11.5% for the six months ended June 30, 1996. This
percentage decrease was primarily due to the increase in oil and
gas sales discussed above.
Cumulative cash distributions to the Limited Partners through
June 30, 1997 were $5,221,583 or 44.95% of Limited Partners'
capital contributions.
-19-
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As further described in the Partnerships' Annual Report on
Form 10-K for the year ended December 31, 1996 (the "Form 10-K")
the Partnerships are included in the subject matter of a class
action lawsuit entitled "In Re: PaineWebber Limited Partnerships'
Litigation", Case No. 94-CIV-8558, U.S. District Court, Southern
District of New York. On July 30, 1997, the United States Court
of Appeals for the Second Circuit issued an opinion affirming the
terms of the federal district court's order confirming the
settlement of this lawsuit. The terms of said settlement are
described in the Form 10-K.
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 June 30,
1997 and for the six months ended June 30, 1997,
filed herewith.
27.2 Financial Data Schedule containing summary
financial information extracted from the P-8
Partnership's financial statements as of June 30,
1997 and for the six months ended June 30, 1997,
filed herewith.
All other exhibits are omitted as inapplicable.
(b) Reports on Form 8-K:
None.
-20-
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: August 12, 1997 By: /s/Dennis R. Neill
-------------------------------
(Signature)
Dennis R. Neill
President
Date: August 12, 1997 By: /s/Patrick M. Hall
-------------------------------
(Signature)
Patrick M. Hall
Principal Accounting Officer
-21-
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 June 30, 1997 and for the six months ended June 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 June 30, 1997 and for the six months ended June 30,
1997, filed herewith.
All other exhibits are omitted as inapplicable.