FORM 10-K405
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
Commission File Number:
I-B: 0-14657 I-C: 0-14658 I-D: 0-15831 I-E: 0-15832
I-F: 0-15833
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-B
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-C
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F
---------------------------------------------
(Exact name of Registrant as specified in its Articles)
I-B 73-1231998
I-C 73-1252536
I-D 73-1265223
I-E 73-1270110
Oklahoma I-F 73-1292669
- --------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two West Second Street, Tulsa, Oklahoma 74103
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918) 583-1791
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Depositary Units in Geodyne Energy Income Limited Partnerships
I-B through I-F
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
----- -----
1
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K405 or any amendment to this Form 10-K405.
X Disclosure is not contained herein.
-----
Disclosure is contained herein.
-----
The Registrants are limited partnerships and there is no public market for
trading in the partnership interests.
DOCUMENTS INCORPORATED BY REFERENCE: None
2
FORM 10-K405
TABLE OF CONTENTS
PART I.......................................................................4
ITEM 1. BUSINESS...................................................4
ITEM 2. PROPERTIES................................................10
ITEM 3. LEGAL PROCEEDINGS.........................................21
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS.......21
PART II.....................................................................21
ITEM 5. MARKET FOR UNITS AND RELATED LIMITED PARTNER MATTERS......21
ITEM 6. SELECTED FINANCIAL DATA...................................25
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.......................31
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.........................................55
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...............55
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.......................55
PART III....................................................................55
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL
PARTNER...................................................55
ITEM 11. EXECUTIVE COMPENSATION....................................56
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................63
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............64
PART IV.....................................................................66
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K...............................................66
SIGNATURES..................................................................70
3
PART I.
ITEM 1. BUSINESS
General
The Geodyne Energy Income Limited Partnership I-B (the "I-B Partnership"),
Geodyne Energy Income Limited Partnership I-C (the "I-C Partnership"), Geodyne
Energy Income Limited Partnership I-D (the "I-D Partnership"), Geodyne Energy
Income Limited Partnership I-E (the "I-E Partnership"), and Geodyne Energy
Income Limited Partnership I-F (the "I-F Partnership") (collectively, the
"Partnerships") are limited partnerships formed under the Oklahoma Revised
Uniform Limited Partnership Act. Each Partnership is composed of public
investors as limited partners (the "Limited Partners") and Geodyne Resources,
Inc. ("Geodyne"), a Delaware corporation, as the general partner. The
Partnerships commenced operations on the dates set forth below:
Date of
Partnership Activation
----------- ------------------
I-B July 12, 1985
I-C December 20, 1985
I-D March 4, 1986
I-E September 10, 1986
I-F December 16, 1986
Immediately following activation, each Partnership invested as a general
partner in a separate Oklahoma general partnership which actually conducts the
Partnerships' production operations. Geodyne serves as managing partner of such
general partnerships. Unless the context indicates otherwise, all references to
any single Partnership or all of the Partnerships in this Annual Report on Form
10-K405 ("Annual Report") are references to the Partnership and its related
general partnership, collectively. In addition, unless the context indicates
otherwise, all references to the "General Partner" in this Annual Report are
references to Geodyne as the general partner of the Partnerships, and as the
managing partner of the related general partnerships.
The General Partner currently serves as general partner of 29 limited
partnerships, including the Partnerships. The General Partner is a wholly-owned
subsidiary of Samson Investment Company. Samson Investment Company and its
various corporate subsidiaries, including the General Partner (collectively
"Samson"), are primarily engaged in the production and development of and
exploration for oil and gas reserves and the acquisition and operation of
producing properties. At January 31, 1999, Samson owned interests in
approximately 10,500 oil and gas wells located in 19 states of the United States
and the countries of Canada, Venezuela, and Russia. At January 31, 1999,
4
Samson operated approximately 2,900 oil and gas wells located in 15 states of
the United States, as well as Canada, Venezuela, and Russia.
The Partnerships are currently engaged in the business of owning interests
in producing oil and gas properties located in the continental United States.
The Partnerships may also engage to a limited extent in development drilling on
producing oil and gas properties as required for the prudent management of the
Partnerships.
As limited partnerships, the Partnerships have no officers, directors, or
employees. They rely instead on the personnel of the General Partner and the
other Samson Companies. As of February 15, 1999, Samson employed approximately
850 persons. No employees are covered by collective bargaining agreements, and
management believes that Samson provides a sound employee relations environment.
For information regarding the executive officers of the General Partner, see
"Item 10. Directors and Executive Officers of the General Partner."
The General Partner's and the Partnerships' principal place of business is
located at Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103, and
their telephone number is (918) 583-1791 or (888) 436-3963 [(888) GEODYNE].
Pursuant to the terms of the partnership agreements for the Partnerships
(the "Partnership Agreements"), the Partnerships will terminate on December 31,
1999. However, the Partnership Agreements provide that the General Partner may
extend the term of each Partnership for up to five periods of two years each. As
of the date of this Annual Report the General Partner currently intends to
extend the term of the I-D, I-E, and I-F Partnerships for the first two year
extension period. With respect to the I-B and I-C Partnerships, it is the
General Partner's current intent to let these Partnerships terminate on December
31, 1999 pursuant to the terms of their Partnership Agreements.
The General Partner will, however, over the next several months evaluate
all of the Partnerships' operations and then make a final determination as to
whether to extend any of their terms. It is anticipated that a final decision
will be made during the fourth quarter of 1999.
In the event any of the Partnerships are terminated pursuant to the
Partnership Agreements, the Partnership's dissolution shall be effective on
December 31, 1999. Pursuant to the terms of the Partnership Agreement, the
dissolved Partnership would then be liquidated. The liquidation procedures under
the Partnership Agreements provide that the General Partner shall sell the
Partnership's properties and, in connection therewith, attempt to obtain the
best price available for such properties. Pending such sales, the General
Partner will continue to manage the Partnership's properties. It is anticipated
that in the
5
event of termination, the Partnership's properties would be sold through an
auction process or negotiated transactions during the first half of 2000.
Gain or loss realized on the sale of a dissolved Partnership's assets will
be credited to (in the case of gain) or charged against (in the case of loss)
each Partner's capital account to the extent allocable under the Partnership
Agreement. In settling the Partners' accounts upon dissolution, the assets of
the Partnership shall be paid out as follows: (i) to third party creditors; (ii)
to the General Partner for any expenses of the Partnership paid by or payable to
it to the extent it is entitled to reimbursement under the Partnership
Agreement; (iii) to all of the Limited Partners in the amount equivalent to the
amount of their positive capital account balances (as adjusted pursuant to the
Partnership Agreement) on the date of distribution; (iv) to the General Partner
in the amount equivalent to the amount of its positive capital account balance
(as adjusted) on the date of distribution; and (v) the balance shall be paid to
the Limited Partners and General Partner in the same percentage interests as
cash distributions are payable under the Partnership Agreement. In addition, in
the event that, following the final distribution, the General Partner has a
deficit balance in its capital account balance, it shall contribute cash to the
Partnership necessary to eliminate the deficit balance, which amount would be
distributed to the other Partners to the extent of their remaining positive
capital account balances.
Funding
Although the Partnership Agreements permit each Partnership to incur
borrowings, operations and expenses are currently funded out of each
Partnership's revenues from oil and gas sales. The General Partner may, but is
not required to, advance funds to a Partnership for the same purposes for which
Partnership borrowings are authorized.
Principal Products Produced and Services Rendered
The Partnerships' sole business is the production of, and related
incidental development of, oil and gas. The Partnerships do not refine or
otherwise process crude oil and condensate. The Partnerships do not hold any
patents, trademarks, licenses, or concessions and are not a party to any
government contracts. The Partnerships have no backlog of orders and do not
participate in research and development activities. The Partnerships are not
presently encountering shortages of oilfield tubular goods, compressors,
production material, or other equipment.
6
Competition and Marketing
The domestic oil and gas industry is highly competitive, with a large
number of companies and individuals engaged in the exploration and development
of oil and gas properties. The ability of the Partnerships to produce and market
oil and gas profitably depends on a number of factors that are beyond the
control of the Partnerships. These factors include worldwide political
instability (especially in oil-producing regions), United Nations export
embargoes, the supply and price of foreign imports of oil and gas, the level of
consumer product demand (which can be heavily influenced by weather patterns),
government regulations and taxes, the price and availability of alternative
fuels, the overall economic environment, and the availability and capacity of
transportation and processing facilities. The effect of these factors on future
oil and gas industry trends cannot be accurately predicted or anticipated.
The most important variable affecting the Partnerships' revenues is the
prices received for the sale of oil and gas. Predicting future prices is not
possible. Concerning past trends, average yearly wellhead gas prices in the
United States have been volatile for a number of years. For the past ten years,
such average prices have generally been in the $1.40 to $2.40 per Mcf range. Gas
prices are currently in the lower half of the 10-year average range described
above.
Substantially all of the Partnerships' gas reserves are being sold on the
"spot market." Prices on the spot market are subject to wide seasonal and
regional pricing fluctuations due to the highly competitive nature of the spot
market. In addition, such spot market sales are generally short-term in nature
and are dependent upon the obtaining of transportation services provided by
pipelines. Spot prices for the Partnerships' gas decreased from approximately
$2.32 per Mcf at December 31, 1997 to approximately $1.93 per Mcf at December
31, 1998. Such prices were on an MMBTU basis and differ from the prices actually
received by the Partnerships due to transportation and marketing costs, BTU
adjustments, and regional price and quality differences. Continued very low oil
prices as discussed below may cause downward pressure on gas prices due to some
users of gas converting to oil as a cheaper fuel alternative.
For the past ten years, average oil prices have generally been in the
$16.00 to $24.00 per barrel range. Due to global consumption and supply trends
over the last year as well as a drop in Asian energy demand, oil prices over the
past year have reached historically low levels, dropping to as low as
approximately $9.25 per barrel. It is not known whether this trend will
continue. Prices for the Partnerships' oil decreased from approximately $16.25
per barrel at December 31, 1997 to approximately $9.50 per barrel at December
31, 1998.
7
Future prices for both oil and gas will likely be different from (and may
be lower than) the prices in effect on December 31, 1998. Management is unable
to predict whether future oil and gas prices will (i) stabilize, (ii) increase,
or (iii) decrease.
Significant Customers
The following customers accounted for ten percent or more of the
Partnerships' oil and gas sales during the year ended December 31, 1998:
Partnership Customer Percentage
----------- -------- ----------
I-B Duke Energy Field Services, Inc. 27.8%
Byrd Operating Company 16.4%
I-C Hallwood Petroleum ("Hallwood") 39.3%
Conoco, Inc. ("Conoco") 28.4%
I-D El Paso Energy Marketing
Company ("El Paso") 41.5%
Hallwood 20.0%
I-E El Paso 55.5%
I-F El Paso 35.6%
In the event of interruption of purchases by one or more of the
Partnerships' significant customers or the cessation or material change in
availability of open access transportation by the Partnerships' pipeline
transporters, the Partnerships may encounter difficulty in marketing their gas
and in maintaining historic sales levels. Management does not expect any of its
open access transporters to seek authorization to terminate their transportation
services. Even if the services were terminated, management believes that
alternatives would be available whereby the Partnerships would be able to
continue to market their gas.
The Partnerships' principal customers for crude oil production are
refiners and other companies which have pipeline facilities near the producing
properties of the Partnerships. In the event pipeline facilities are not
conveniently available to production areas, crude oil is usually trucked by
purchasers to storage facilities.
8
Oil, Gas, and Environmental Control Regulations
Regulation of Production Operations -- The production of oil and gas is
subject to extensive federal and state laws and regulations governing a wide
variety of matters, including the drilling and spacing of wells, allowable rates
of production, prevention of waste and pollution, and protection of the
environment. In addition to the direct costs borne in complying with such
regulations, operations and revenues may be impacted to the extent that certain
regulations limit oil and gas production to below economic levels.
Regulation of Sales and Transportation of Oil and Gas -- Sales of crude
oil and condensate are made by the Partnerships at market prices and are not
subject to price controls. The sale of gas may be subject to both federal and
state laws and regulations. The provisions of these laws and regulations are
complex and affect all who produce, resell, transport, or purchase gas,
including the Partnerships. Although virtually all of the Partnerships' gas
production is not subject to price regulation, other regulations affect the
availability of gas transportation services and the ability of gas consumers to
continue to purchase or use gas at current levels. Accordingly, such regulations
may have a material effect on the Partnerships' operations and projections of
future oil and gas production and revenues.
Future Legislation -- Legislation affecting the oil and gas industry is
under constant review for amendment or expansion. Because such laws and
regulations are frequently amended or reinterpreted, management is unable to
predict what additional energy legislation may be proposed or enacted or the
future cost and impact of complying with existing or future regulations.
Regulation of the Environment -- The Partnerships' operations are subject
to numerous laws and regulations governing the discharge of materials into the
environment or otherwise relating to environmental protection. Compliance with
such laws and regulations, together with any penalties resulting from
noncompliance may increase the cost of the Partnerships' operations or may
affect the Partnerships' ability to timely complete existing or future
activities. Management anticipates that various local, state, and federal
environmental control agencies will have an increasing impact on oil and gas
operations.
9
Insurance Coverage
The Partnerships are subject to all of the risks inherent in the
exploration for and production of oil and gas, including blowouts, pollution,
fires, and other casualties. The Partnerships maintain insurance coverage as is
customary for entities of a similar size engaged in operations similar to that
of the Partnerships, but losses can occur from uninsurable risks or in amounts
in excess of existing insurance coverage. The occurrence of an event which is
not fully covered by insurance could have a material adverse effect on the
Partnerships' financial condition and results of operations.
ITEM 2. PROPERTIES
Well Statistics
The following table sets forth the number of productive wells of the
Partnerships as of December 31, 1998.
Well Statistics(1)
As of December 31, 1998
P/ship Number of Gross Wells(2) Number of Net Wells(3)
- ------ ----------------------------- -------------------------------
Total Oil Gas N/A(4) Total Oil Gas N/A(4)
----- ----- ----- ------ ----- ----- ----- ------
I-B 78 2 75 1 3.06 .05 2.97 .04
I-C 84 8 75 1 5.21 4.07 1.13 .01
I-D 514 403 111 - 3.49 .70 2.79 -
I-E 797 643 153 1 30.01 13.71 16.13 .17
I-F 788 643 144 1 13.18 5.73 7.33 .12
- ----------
(1) The designation of a well as an oil well or gas well is made by the
General Partner based on the relative amount of oil and gas reserves for
the well. Regardless of a well's oil or gas designation, it may produce
oil, gas, or both oil and gas.
(2) As used in this Annual Report, "gross well" refers to a well in which a
working interest is owned, accordingly, the number of gross wells is the
total number of wells in which a working interest is owned.
(3) As used in this Annual Report, "net well" refers to the sum of the
fractional working interests owned in gross wells. For example, a 15%
working interest in a well represents one gross well, but 0.15 net well.
(4) Wells which have not been designated as oil or gas.
10
Drilling Activities
During the year ended December 31, 1998, the Partnerships indirectly
participated in drilling the following wells. The Partnerships do not own
working interests in any of the wells; therefore, they did not incur any costs
associated with the drilling activity:
Revenue
P/ship Well Name County St. Interest Type Status
- ------ --------- ------ --- -------- ---- ------
I-B Hunt 36 No. 6 Sutton TX .0017 Gas Prod.
I-C Hunt 36 No. 6 Sutton TX .0003 Gas Prod.
I-D Graham F No. 3-30 Custer OK .0015 Gas Prod.
Eyster No. 1-20 Custer OK .0087 Gas Prod.
Beulah Switzer
No. 4-18 Blaine OK .0009 Gas Prod.
Melford No.1-7 Grady OK .0004 Gas Unknown
Paul A No. 2-34 Garvin OK .0041 Gas Unknown
I-E Graham F No. 3-30 Custer OK .0047 Gas Prod.
Eyster No. 1-20 Custer OK .0279 Gas Prod.
Beulah Switzer
No. 4-18 Blaine OK .0062 Gas Prod.
Melford No.1-7 Grady OK .0013 Gas Unknown
Paul A No. 2-34 Garvin OK .0132 Gas Unknown
I-F Graham F No. 3-30 Custer OK .0016 Gas Prod.
Eyster No. 1-20 Custer OK .0096 Gas Prod.
Beulah Switzer
No. 4-18 Blaine OK .0029 Gas Prod.
Melford No.1-7 Grady OK .0005 Gas Unknown
Paul A No. 2-34 Garvin OK .0045 Gas Unknown
Oil and Gas Production, Revenue, and Price History
The following tables set forth certain historical information concerning
the oil (including condensates) and gas production, net of all royalties,
overriding royalties, and other third party interests, of the Partnerships,
revenues attributable to such production, and certain price and cost
information. As used in the following tables, direct operating expenses include
lease operating expenses and production taxes. In addition, gas production is
converted to oil equivalents at the rate of six Mcf per barrel, representing the
estimated relative energy content of gas and oil, which rate is not necessarily
indicative of the relationship of oil and gas prices. The respective prices of
oil and gas are affected by market and other factors in addition to relative
energy content.
11
Net Production Data
I-B Partnership
---------------
Year Ended December 31,
--------------------------------
1998 1997 1996
-------- -------- --------
Production:
Oil (Bbls) 1,344 2,277 2,297
Gas (Mcf) 115,502 129,776 150,543
Oil and gas sales:
Oil $ 16,711 $ 43,243 $ 48,565
Gas 224,453 315,039 315,487
------- ------- -------
Total $241,164 $358,282 $364,052
======= ======= =======
Total direct operating
Expenses $120,760 $136,300 $131,335
======= ======= =======
Direct operating expenses
as a percentage of oil
and gas sales 50.1% 38.0% 36.1%
Average sales price:
Per barrel of oil $ 12.43 $18.99 $21.14
Per Mcf of gas 1.94 2.43 2.10
Direct operating expenses
per equivalent Bbl of
oil $ 5.86 $ 5.70 $ 4.80
12
Net Production Data
I-C Partnership
---------------
Year Ended December 31,
--------------------------------------
1998 1997 1996
---------- ---------- ----------
Production:
Oil (Bbls) 14,169 25,122 27,537
Gas (Mcf) 124,746 178,180 226,820
Oil and gas sales:
Oil $170,811 $469,154 $ 554,281
Gas 296,419 482,524 626,815
------- ------- ---------
Total $467,230 $951,678 $1,181,096
======= ======= =========
Total direct operating
Expenses $228,138 $311,741 $ 241,698
======= ======= =========
Direct operating expenses
as a percentage of oil
and gas sales 48.8% 32.8% 20.5%
Average sales price:
Per barrel of oil $12.06 $18.68 $20.13
Per Mcf of gas 2.38 2.71 2.76
Direct operating expenses
per equivalent Bbl of
oil $ 6.53 $ 5.69 $ 3.70
13
Net Production Data
I-D Partnership
---------------
Year Ended December 31,
----------------------------------------
1998 1997 1996
--------- ---------- ----------
Production:
Oil (Bbls) 11,249 18,760 21,291
Gas (Mcf) 456,195 510,113 577,657
Oil and gas sales:
Oil $ 141,203 $ 355,605 $ 429,150
Gas 920,032 1,189,492 1,383,418
--------- --------- ---------
Total $1,061,235 $1,545,097 $1,812,568
========= ========= =========
Total direct operating
Expenses $ 234,481 $ 294,350 $ 290,848
========= ========= =========
Direct operating expenses
as a percentage of oil
and gas sales 22.1% 19.1% 16.0%
Average sales price:
Per barrel of oil $12.55 $18.96 $20.16
Per Mcf of gas 2.02 2.33 2.39
Direct operating expenses
per equivalent Bbl of
oil $ 2.69 $ 2.84 $ 2.47
14
Net Production Data
I-E Partnership
---------------
Year Ended December 31,
--------------------------------------
1998 1997 1996
---------- ---------- ----------
Production:
Oil (Bbls) 64,346 77,648 70,998
Gas (Mcf) 2,016,034 2,139,704 2,206,082
Oil and gas sales:
Oil $ 770,895 $1,462,528 $1,407,716
Gas 3,840,340 4,541,724 4,598,715
--------- --------- ---------
Total $4,611,235 $6,004,252 $6,006,431
========= ========= =========
Total direct operating
Expenses $1,506,844 $1,771,150 $1,706,319
========= ========= =========
Direct operating expenses
as a percentage of oil
and gas sales 32.7% 29.5% 28.4%
Average sales price:
Per barrel of oil $11.98 $18.84 $19.83
Per Mcf of gas 1.90 2.12 2.08
Direct operating expenses
per equivalent Bbl of
oil $ 3.76 $ 4.08 $ 3.89
15
Net Production Data
I-F Partnership
---------------
Year Ended December 31,
------------------------------------------
1998 1997 1996
---------- ---------- ----------
Production:
Oil (Bbls) 30,203 38,725 35,577
Gas (Mcf) 530,040 571,101 652,692
Oil and gas sales:
Oil $ 365,340 $ 730,010 $ 704,023
Gas 1,077,378 1,291,795 1,417,313
--------- --------- ---------
Total $1,442,718 $2,021,805 $2,121,336
========= ========= =========
Total direct operating
Expenses $ 668,016 $ 683,800 $ 758,392
========= ========= =========
Direct operating expenses
as a percentage of oil
and gas sales 46.3% 33.8% 35.8%
Average sales price:
Per barrel of oil $12.10 $18.85 $19.79
Per Mcf of gas 2.03 2.26 2.17
Direct operating expenses
per equivalent Bbl of
oil $ 5.64 $ 5.11 $ 5.25
Proved Reserves and Net Present Value
The following table sets forth each Partnership's estimated proved oil and
gas reserves and net present value therefrom as of December 31, 1998. The
schedule of quantities of proved oil and gas reserves was prepared by the
General Partner in accordance with the rules prescribed by the Securities and
Exchange Commission (the "SEC"). Certain reserve information was reviewed by
Ryder Scott Company Petroleum Engineers ("Ryder Scott"), an independent
petroleum engineering firm. As used throughout this Annual Report, "proved
reserves" refers to those estimated quantities of crude oil, gas, and gas
liquids which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known oil and gas reservoirs
under existing economic and operating conditions.
Net present value represents estimated future gross cash flow from the
production and sale of proved reserves, net of
16
estimated oil and gas production costs (including production taxes, ad valorem
taxes, and operating expenses) and estimated future development costs,
discounted at 10% per annum. Net present value attributable to the Partnerships'
proved reserves was calculated on the basis of current costs and prices at
December 31, 1998. Such prices were not escalated except in certain
circumstances where escalations were fixed and readily determinable in
accordance with applicable contract provisions. The prices used in calculating
the net present value attributable to the Partnerships' proved reserves do not
necessarily reflect market prices for oil and gas production subsequent to
December 31, 1998. There can be no assurance that the prices used in calculating
the net present value of the Partnerships' proved reserves at December 31, 1998
will actually be realized for such production.
The process of estimating oil and gas reserves is complex, requiring
significant subjective decisions in the evaluation of available geological,
engineering, and economic data for each reservoir. The data for a given
reservoir may change substantially over time as a result of, among other things,
additional development activity, production history, and viability of production
under varying economic conditions; consequently, it is reasonably possible that
material revisions to existing reserve estimates may occur in the near future.
Although every reasonable effort has been made to ensure that these reserve
estimates represent the most accurate assessment possible, the significance of
the subjective decisions required and variances in available data for various
reservoirs make these estimates generally less precise than other estimates
presented in connection with financial statement disclosures.
17
Proved Reserves and
Net Present Values
From Proved Reserves
As of December 31, 1998(1)
I-B Partnership:
- ---------------
Estimated proved reserves:
Gas (Mcf) 1,023,624
Oil and liquids (Bbls) 7,353
Net present value (discounted at 10% per annum) $ 864,782
I-C Partnership:
- ---------------
Estimated proved reserves:
Gas (Mcf) 628,507
Oil and liquids (Bbls) 16,375
Net present value (discounted at 10% per annum) $ 564,072
I-D Partnership:
- ---------------
Estimated proved reserves:
Gas (Mcf) 1,634,897
Oil and liquids (Bbls) 37,776
Net present value (discounted at 10% per annum) $ 1,859,866
I-E Partnership:
- ---------------
Estimated proved reserves:
Gas (Mcf) 9,379,871
Oil and liquids (Bbls) 318,570
Net present value (discounted at 10% per annum) $10,462,577
I-F Partnership:
- ---------------
Estimated proved reserves:
Gas (Mcf) 3,035,177
Oil and liquids (Bbls) 149,517
Net present value (discounted at 10% per annum) $ 3,233,894
- ----------
(1) Includes certain gas balancing adjustments which cause the gas volumes and
net present values to differ from the reserve reports prepared by the
General Partner and reviewed by Ryder Scott.
18
No estimates of the proved reserves of the Partnerships comparable to
those included herein have been included in reports to any federal agency other
than the SEC. Additional information relating to the Partnerships' proved
reserves is contained in Note 4 to the Partnerships' financial statements,
included in Item 8 of this Annual Report.
Significant Properties
The following table sets forth certain well and reserves information as of
December 31, 1998 for the basins in which the Partnerships own a significant
amount of properties. The table contains the following information for each
significant basin: (i) the number of gross and net wells, (ii) the number of
wells in which only a non-working interest is owned, (iii) the Partnership's
total number of wells, (iv) the number and percentage of wells operated by the
Partnership's affiliates, (v) estimated proved oil reserves, (vi) estimated
proved gas reserves, and (vii) the present value (discounted at 10% per annum)
of estimated future net cash flow.
The Anadarko Basin is located in western Oklahoma and the Texas Panhandle,
while the Gulf Coast Basin is located in southern Louisiana and southeast Texas.
The Mid-Gulf Coast Basin is located in southern Alabama and Mississippi, while
the Permian Basin straddles west Texas and southeast New Mexico.
19
Significant Properties as of December 31, 1998
----------------------------------------------
Wells
Operated by
Affiliates Oil Gas
Gross Net Other Total ------------ Reserves Reserves Present
Basin Wells Wells Wells(1) Wells Number % (Bbl) (Mcf) Value
- ------------------ ------ ------- ------- ------ ------ -------- ---------- ---------- -------
I-B Partnership:
Mid-Gulf Coast 8 .19 - 8 - -% 3,275 647,187 $ 560,292
Permian 63 2.43 9 72 2 3% 2,410 312,743 241,534
I-C Partnership:
Anadarko 7 3.60 - 7 6 86% 11,612 387,780 $ 299,748
Gulf Coast 6 .10 3 9 - -% 4,131 60,345 110,558
Mid-Gulf Coast 8 .03 - 8 - -% 610 121,151 107,851
I-D Partnership:
Anadarko 76 2.02 34 110 20 18% 9,971 925,872 $ 930,119
Permian 408 .66 1 409 - -% 21,080 510,530 662,484
I-E Partnership:
Anadarko 92 10.72 35 127 24 19% 51,576 4,209,115 $4,203,863
Permian 419 4.26 1 420 6 1% 101,051 2,978,417 3,818,841
Gulf Coast 236 9.97 - 236 - -% 104,838 1,058,720 1,321,424
I-F Partnership:
Anadarko 92 4.87 35 127 24 19% 22,990 1,837,411 $1,830,707
Gulf Coast 236 3.55 - 236 - -% 37,072 459,762 554,935
- ---------------------
(1) Wells in which only a non-working (e.g. royalty) interest is owned.
20
Title to Oil and Gas Properties
Management believes that the Partnerships have satisfactory title to their
oil and gas properties. Record title to all of the Partnerships' properties is
held by either the Partnerships or Geodyne Nominee Corporation, an affiliate of
the General Partner.
Title to the Partnerships' properties is subject to customary royalty,
overriding royalty, carried, working, and other similar interests and
contractual arrangements customary in the oil and gas industry, to liens for
current taxes not yet due, and to other encumbrances. Management believes that
such burdens do not materially detract from the value of such properties or from
the Partnerships' interest therein or materially interfere with their use in the
operation of the Partnerships' business.
ITEM 3. LEGAL PROCEEDINGS
To the knowledge of the General Partner, neither the General Partner nor
the Partnerships or their properties are subject to any litigation, the results
of which would have a material effect on the Partnerships' or the General
Partner's financial condition or operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS
There were no matters submitted to a vote of the Limited Partners of any
Partnership during 1998.
PART II.
ITEM 5. MARKET FOR UNITS AND RELATED LIMITED PARTNER MATTERS
As of February 1, 1999, the number of Units outstanding and the
approximate number of Limited Partners of record in the Partnerships were as
follows:
Number of
Number of Limited
Partnership Units Partners
----------- --------- ------------
I-B 11,958 791
I-C 8,885 758
I-D 7,195 746
I-E 41,839 2,809
I-F 14,321 903
Units were initially sold for a price of $1,000. The Units are not
traded on any exchange and there is no public trading
21
market for them. The General Partner is aware of certain transfers of Units
between unrelated parties, some of which are facilitated by secondary trading
firms and matching services. In addition, as further described below, the
General Partner is aware of certain "4.9% tender offers" which have been made
for the Units. The General Partner believes that the transfers between unrelated
parties have been limited and sporadic in number and volume. Other than trades
facilitated by certain secondary trading firms and matching services, no
organized trading market for Units exists and none is expected to develop. Due
to the nature of these transactions, the General Partner has no verifiable
information regarding prices at which Units have been transferred. Further, a
transferee may not become a substitute Limited Partner without the consent of
the General Partner.
Pursuant to the terms of the Partnership Agreements, the General Partner
is obligated to annually issue a repurchase offer which is based on the
estimated future net revenues from the Partnerships' reserves and is calculated
pursuant to the terms of the Partnership Agreements. Such repurchase offer is
recalculated monthly in order to reflect cash distributions to the Limited
Partners and extraordinary events. The following table sets forth the General
Partner's repurchase offer per Unit as of the periods indicated. For purpose of
this Annual Report, a Unit represents an initial subscription of $1,000 to a
Partnership.
Repurchase Offer Prices
-----------------------
1997 1998 1999
-------------------------- -------------------------- ----
1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st
P/ship Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.
- ------ ---- ---- ---- ---- ---- ---- ---- ---- ----
I-B $ 50 $ 49 $ 46 $ 44 $ 38 $ 50 $ 48 $ 44 $ 43
I-C 13 94 79 79 63 83 79 74 71
I-D 94 210 177 155 122 193 157 122 104
I-E 141 183 166 151 134 181 157 137 137
I-F 127 180 163 148 133 168 152 135 135
The Partnership Agreements also provide for a right of presentment ("Right
of Presentment") whereby the General Partner is required, upon request, to
purchase up to 10% of a Partnership's outstanding Units at a price calculated
pursuant to the terms of the Partnership Agreements and based on the liquidation
value of the limited partnership interest, with a reduction for 70% of cash
distributions that have been received prior to the transfer of the partnership
interest. The following table sets forth the Right of Presentment price per Unit
as of the periods indicated.
22
Right of Presentment Prices
---------------------------
1997 1998 1999
-------------------------- -------------------------- ----
1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st
P/ship Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.
- ------ ---- ---- ---- ---- ---- ---- ---- ---- ----
I-B $ 55 $ 52 $ 48 $ 46 $ 42 $ 51 $ 49 $ 46 $ 46
I-C 45 120 94 94 83 89 86 83 80
I-D 153 267 206 191 168 208 183 158 145
I-E 173 212 178 168 156 187 170 156 156
I-F 159 209 176 166 155 176 165 153 153
In addition to the repurchase offer and Right of Presentment described
above, the Partnerships have been subject to "4.9% tender offers" from several
third parties during 1997 and 1998. The General Partner does not know the terms
of these offers or the prices received by the Limited Partners who accepted
these offers.
Cash Distributions
Cash distributions are primarily dependent upon a Partnership's cash
receipts from the sale of oil and gas production and cash requirements of the
Partnership. Distributable cash is determined by the General Partner at the end
of each calendar quarter and distributed to the Limited Partners within 45 days
after the end of the quarter. Distributions are restricted to cash on hand less
amounts required to be retained out of such cash as determined in the sole
judgment of the General Partner to pay costs, expenses, or other Partnership
obligations whether accrued or anticipated to accrue. In certain instances, the
General Partner may not distribute the full amount of cash receipts which might
otherwise be available for distribution in an effort to equalize or stabilize
the amounts of quarterly distributions. Any available amounts not distributed
are invested and the interest or income thereon is for the accounts of the
Limited Partners.
The following is a summary of cash distributions paid to the Limited
Partners during 1997 and 1998 and the first quarter of 1999:
23
Cash Distributions
------------------
1997
---------------------------------------------
1st 2nd 3rd 4th
P/ship Qtr.(1) Qtr.(2) Qtr.(1) Qtr.(3)
------ --------- ------- -------- ---------
I-B $ .84 $ 3.60 $ 3.26 $ 1.84
I-C 24.54 22.29 14.29 -
I-D 43.50 54.48 35.52 21.68
I-E 18.71 31.43 17.23 15.32
I-F 20.11 30.10 17.18 14.52
1998 1999
--------------------------------------------- ---------
1st 2nd 3rd 4th 1st
P/ship Qtr.(3) Qtr.(4) Qtr.(4) Qtr. Qtr.
------ -------- -------- --------- --------- ---------
I-B $ 6.10 $ 2.76 $ 2.34 $ 4.10 $ 1.09
I-C 15.87 12.27 4.73 4.28 3.71
I-D 33.22 47.67 35.72 35.44 18.07
I-E 16.92 32.34 24.14 20.58 -
I-F 14.66 37.71 16.41 16.69 -
- --------------------------
(1) Amount of cash distribution for the I-C, I-D, I-E, and I-F Partnerships
includes proceeds from the sale of certain oil and gas properties.
(2) Amount of cash distribution for the I-C Partnership includes proceeds from
the sale of certain oil and gas properties.
(3) Amount of cash distribution includes proceeds from the sale of certain oil
and gas properties.
(4) Amount of cash distribution for the I-D, I-E, and I-F Partnerships
includes proceeds from the sale of certain oil and gas properties.
24
ITEM 6. SELECTED FINANCIAL DATA
The following tables present selected financial data for the
Partnerships. This data should be read in conjunction with the financial
statements of the Partnerships, and the respective notes thereto, included
elsewhere in this Annual Report. See "Item 8. Financial Statements and
Supplementary Data."
25
Selected Financial Data
I-B Partnership
---------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
Oil and Gas Sales $241,164 $358,282 $364,052 $254,050 $ 453,021
Net Income (Loss):
Limited Partners 13,681 81,083 99,324 ( 376,689) ( 53,126)
General Partner 2,834 7,989 7,877 ( 1,776) 9,616
Total 16,515 89,072 107,201 ( 378,465) ( 43,510)
Limited Partners' Net
Income (Loss) per Unit 1.14 6.78 8.31 ( 31.50) ( 4.44)
Limited Partners' Cash
Distributions per
Unit 15.30 9.54 6.53 11.12 20.82
Total Assets 395,801 556,816 609,137 648,040 1,126,318
Partners' Capital
(Deficit):
Limited Partner 456,037 625,356 658,273 636,949 1,146,638
General Partner ( 107,999) ( 103,542) ( 102,526) ( 104,724) ( 95,948)
Number of Units
Outstanding 11,958 11,958 11,958 11,958 11,958
26
Selected Financial Data
I-C Partnership
---------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
Oil and Gas Sales $467,230 $951,678 $1,181,096 $808,435 $1,042,630
Net Income (loss):
Limited Partners ( 7,583) 471,807 699,745 118,612 321,969
General Partner 6,137 27,253 38,944 20,456 27,850
Total ( 1,446) 499,060 738,689 139,068 349,819
Limited Partners' Net
Income (loss) per Unit ( .85) 53.10 78.76 13.35 36.24
Limited Partners' Cash
Distributions per
Unit 37.15 61.12 74.62 48.96 61.34
Total Assets 359,321 717,731 781,470 780,070 1,096,208
Partners' Capital
(Deficit):
Limited Partners 428,913 766,496 837,689 800,944 1,117,332
General Partner ( 96,039) ( 89,189) ( 85,499) ( 66,308) ( 63,764)
Number of Units
Outstanding 8,885 8,885 8,885 8,885 8,885
27
Selected Financial Data
I-D Partnership
---------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
Oil and Gas Sales $1,061,235 $1,545,097 $1,812,568 $1,237,419 $1,738,315
Net Income:
Limited Partners 762,614 845,470 1,114,924 516,300 780,423
General Partner 148,669 173,924 219,180 135,487 193,738
Total 911,283 1,019,394 1,334,104 651,787 974,161
Limited Partners' Net
Income per Unit 105.99 117.51 154.96 71.76 108.47
Limited Partners' Cash
Distributions per
Unit 152.05 155.18 143.86 100.77 139.69
Total Assets 973,693 1,349,059 1,605,063 1,594,441 1,833,702
Partners' Capital
(Deficit):
Limited Partners 959,607 1,290,993 1,540,523 1,460,599 1,669,299
General Partner ( 53,161) ( 27,560) ( 4,248) 17,993 9,506
Number of Units
Outstanding 7,195 7,195 7,195 7,195 7,195
28
Selected Financial Data
I-E Partnership
---------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
Oil and Gas Sales $4,611,235 $6,004,252 $6,006,431 $4,777,881 $ 6,455,258
Net Income:
Limited Partners 1,929,509 2,342,934 2,660,067 316,558 1,400,859
General Partner 548,239 568,504 602,481 368,023 369,587
Total 2,477,748 2,911,438 3,262,548 684,581 1,770,446
Limited Partners' Net
Income per Unit 46.12 56.00 63.58 7.57 33.48
Limited Partners' Cash
Distributions per
Unit 93.98 82.69 68.19 51.15 73.03
Total Assets 5,425,656 7,486,793 8,572,514 8,957,340 11,037,156
Partners' Capital
(Deficit):
Limited Partners 5,180,972 7,183,463 8,300,529 8,493,462 10,316,904
General Partner ( 232,100) ( 228,434) ( 113,140) ( 54,687) ( 115,710)
Number of Units
Outstanding 41,839 41,839 41,839 41,839 41,839
29
Selected Financial Data
I-F Partnership
---------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
Oil and Gas Sales $1,442,718 $2,021,805 $2,121,336 $1,762,969 $2,402,053
Net Income:
Limited Partners 212,910 737,319 883,367 37,379 540,094
General Partner 140,360 183,677 198,724 117,455 138,915
Total 353,270 920,996 1,082,091 154,834 679,009
Limited Partners' Net
Income per Unit 14.87 51.49 61.68 2.61 37.71
Limited Partners' Cash
Distributions per
Unit 85.47 81.91 67.10 55.51 71.91
Total Assets 1,858,973 2,566,820 2,982,983 3,124,394 3,878,707
Partners' Capital
(Deficit):
Limited Partners 1,398,889 2,409,979 2,845,660 2,923,293 3,680,914
General Partner ( 94,547) ( 59,811) ( 59,110) ( 25,679) ( 33,134)
Number of Units
Outstanding 14,321 14,321 14,321 14,321 14,321
30
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Use of Forward-Looking Statements and Estimates
This Annual Report contains certain forward-looking statements. The words
"anticipate," "believe," "expect," "plan," "intend," "estimate," "project,"
"could," "may," and similar expressions are intended to identify forward-looking
statements. Such statements reflect management's current views with respect to
future events and financial performance. This Annual Report also includes
certain information which is, or is based upon, estimates and assumptions. Such
estimates and assumptions are management's efforts to accurately reflect the
condition and operation of the Partnerships.
Use of forward-looking statements and estimates and assumptions involve
risks and uncertainties which include, but are not limited to, the volatility of
oil and gas prices, the uncertainty of reserve information, the operating risk
associated with oil and gas properties (including the risk of personal injury,
death, property damage, damage to the well or producing reservoir, environmental
contamination, and other operating risks), the prospect of changing tax and
regulatory laws, the availability and capacity of processing and transportation
facilities, the general economic climate, the supply and price of foreign
imports of oil and gas, the level of consumer product demand, and the price and
availability of alternative fuels. Should one or more of these risks or
uncertainties occur or should estimates or underlying assumptions prove
incorrect, actual conditions or results may vary materially and adversely from
those stated, anticipated, believed, estimated, or otherwise indicated.
General Discussion
The most important variable affecting the Partnerships' revenues is the
prices received for the sale of oil and gas. Predicting future prices is not
possible. Concerning past trends, average yearly wellhead gas prices in the
United States have been volatile for a number of years. For the past ten years,
such average prices have generally been in the $1.40 to $2.40 per Mcf range. Gas
prices are currently in the lower half of the 10-year average range described
above.
Substantially all of the Partnerships' gas reserves are being sold on the
"spot market." Prices on the spot market are subject to wide seasonal and
regional pricing fluctuations due to the highly competitive nature of the spot
market. In addition, such spot market sales are generally short-term in nature
and are dependent upon the obtaining of transportation services provided by
pipelines. Spot prices for the Partnerships' gas decreased from approximately
$2.32 per Mcf at December 31, 1997 to approximately $1.93 per Mcf at December
31, 1998. Such prices
31
were on an MMBTU basis and differ from the prices actually received by the
Partnerships due to transportation and marketing costs, BTU adjustments, and
regional price and quality differences. Continued very low oil prices as
discussed below may cause downward pressure on gas prices due to some users of
gas converting to oil as a cheaper fuel alternative.
For the past ten years, average oil prices have generally been in the
$16.00 to $24.00 per barrel range. Due to global consumption and supply trends
over the last year as well as a drop in Asian energy demand, oil prices over the
past year have reached historically low levels, dropping to as low as
approximately $9.25 per barrel. It is not known whether this trend will
continue. Prices for the Partnerships' oil decreased from approximately $16.25
per barrel at December 31, 1997 to approximately $9.50 per barrel at December
31, 1998.
Future prices for both oil and gas will likely be different from (and may
be lower than) the prices in effect on December 31, 1998. Management is unable
to predict whether future oil and gas prices will (i) stabilize, (ii) increase,
or (iii) decrease.
As discussed in the "Results of Operations" section below, volumes of oil
and gas sold also significantly affect the Partnerships' revenues. Oil and gas
wells generally produce the most oil or gas in the earlier years of their lives
and, as production continues, the rate of production naturally declines. At some
point, production physically ceases or becomes no longer economic. The
Partnerships are not acquiring additional oil and gas properties, and the
existing properties are not experiencing significant additional production
through drilling or other capital projects. Therefore, volumes of oil and gas
produced naturally decline from year to year. While it is difficult for
management to predict future production from these properties, it is likely that
this general trend of declining production will continue.
Despite this general trend of declining production, several factors can
cause the volumes of oil and gas sold to increase or decrease at an even greater
rate over a given period. These factors include, but are not limited to, (i)
geophysical conditions which cause an acceleration of the decline in production,
(ii) the shutting in of wells (or the opening of previously shut-in wells) due
to low oil and gas prices, mechanical difficulties, loss of a market or
transportation, or performance of workovers, recompletions, or other operations
in the well, (iii) prior period volume adjustments (either positive or negative)
made by purchasers of the production, (iv) ownership adjustments in accordance
with agreements governing the operation or ownership of the well (such as
adjustments that occur at payout), and (v) completion of enhanced recovery
projects which increase production for the well. Many of these factors are very
significant as related to a single well or as related to many wells over a short
period of time. However, due to the large
32
number of wells owned by the Partnerships, these factors are generally not
material as compared to the normal decline in production experienced on all
remaining wells.
Results of Operations
An analysis of the change in net oil and gas operations (oil and gas
sales, less lease operating expenses and production taxes) is presented in the
tables following "Results of Operations" under the heading "Average Sales
Prices, Production Volumes, and Average Production Costs." Following is a
discussion of each Partnership's results of operations for the year ended
December 31, 1998 as compared to the year ended December 31, 1997 and for the
year ended December 31, 1997 as compared to the year ended December 31, 1996.
I-B Partnership
---------------
Year Ended December 31, 1998 Compared
to Year Ended December 31, 1997
-------------------------------------
Total oil and gas sales decreased $117,118 (32.7%) in 1998 as compared to
1997. Of this decrease, approximately $18,000 and $34,000, respectively, were
related to decreases in volumes of oil and gas sold and approximately $9,000 and
$56,000, respectively, were related to decreases in the average prices of oil
and gas sold. Volumes of oil and gas sold decreased 933 barrels and 14,274 Mcf,
respectively, in 1998 as compared to 1997. The decrease in volumes of oil sold
resulted primarily from (i) the sale of one significant well in 1997, (ii) prior
period volume adjustments made by the purchaser during 1998 on one significant
well, and (iii) normal declines in production. The decrease in volumes of gas
sold resulted primarily from (i) the sale of two significant wells in 1997, (ii)
normal declines in production, and (iii) the shutting-in of one significant well
during 1998 due to mechanical problems. Average oil and gas prices decreased to
$12.43 per barrel and $1.94 per Mcf, respectively, in 1998 from $18.99 per
barrel and $2.43 per Mcf, respectively, in 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $15,540 (11.4%) in 1998 as compared to 1997. This
decrease resulted primarily from (i) a decrease in lease operating expenses
associated with the decreases in volumes of oil and gas sold and (ii) a decrease
in production taxes associated with the decrease in oil and gas sales. As a
percentage of oil and gas sales, these expenses increased to 50.1% in 1998 from
38.0% in 1997. This percentage increase was primarily due to the decreases in
the average prices of oil and gas sold.
33
Depreciation, depletion, and amortization of oil and gas properties
decreased $17,748 (25.5%) in 1998 as compared to 1997. This decrease resulted
primarily from (i) the decreases in volumes of oil and gas sold and (ii) upward
revisions in the estimates of remaining gas reserves at December 31, 1998. These
decreases were partially offset by (i) downward revisions in the estimates of
remaining oil reserves at December 31, 1998 and (ii) one significant well being
fully depleted in 1998 due to the lack of remaining oil and gas reserves. As a
percentage of oil and gas sales, this expense increased to 21.5% in 1998 from
19.5% in 1997. This percentage increase was primarily due to the decreases in
the average prices of oil and gas sold.
The I-B Partnership recognized a non-cash charge against earnings of
$19,726 in the first quarter of 1997. Of this amount, $17,233 was related to the
decline in oil and gas prices used to determine the recoverability of proved oil
and gas reserves at March 31, 1997 and $2,493 was related to the writing-off of
unproved properties. These unproved properties were written off based on the
General Partner's determination that it was unlikely that such properties would
be developed due to low oil and gas prices and provisions in the I-B
Partnership's Partnership Agreement which limit the level of permissible
drilling activity. No similar charge was necessary in 1998.
General and administrative expenses decreased $9,000 (14.5%) in 1998 as
compared to 1997. This decrease was primarily due to a reduction in general and
administrative overhead charged by the General Partner as limited by the I-B
Partnership's Partnership Agreement. As a percentage of oil and gas sales, these
expenses increased to 22.1% in 1998 from 17.4% in 1997. This percentage increase
was primarily due to the decrease in oil and gas sales, partially offset by the
dollar decrease in general and administrative expenses.
The Limited Partners have received cash distributions through December 31,
1998 totaling $6,727,527 or 56.26% of the Limited Partners' capital
contributions.
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
-------------------------------------
Total oil and gas sales remained relatively constant in 1997 as compared
to 1996. Any decrease in oil and gas sales caused by decreases of approximately
$44,000 and $5,000, respectively, related to decreases in volumes of gas sold
and the average price of oil sold was substantially offset by an increase of
approximately $43,000 related to an increase in the average price of gas sold.
Volumes of oil and gas sold decreased 20 barrels and 20,767 Mcf, respectively,
in 1997 as compared to 1996. Average oil prices decreased to $18.99 per barrel
in 1997 from
34
$21.14 per barrel in 1996. Average gas prices increased to $2.43 per Mcf in
1997 from $2.10 per Mcf in 1996.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $4,965 (3.8%) in 1997 as compared to 1996. This
increase resulted primarily from recompletion expenses incurred on one well
during 1997, partially offset by the decrease in volumes of gas sold in 1997. As
a percentage of oil and gas sales, these expenses increased to 38.0% in 1997
from 36.1% in 1996. This percentage increase was primarily due to the fixed
nature of certain lease operating expenses.
Depreciation, depletion, and amortization of oil and gas properties
increased $6,363 (10.0%) in 1997 as compared to 1996. This increase resulted
primarily from a downward revision in the estimate of remaining gas reserves at
December 31, 1997, partially offset by the decrease in volumes of oil and gas
sold in 1997. As a percentage of oil and gas sales, this expense increased to
19.5% in 1997 from 17.4% in 1996. This percentage increase was primarily due to
the dollar decrease in depreciation, depletion, and amortization discussed
above.
The I-B Partnership recognized a non-cash charge against earnings of
$19,726 in the first quarter of 1997. Of this amount, $17,233 was related to the
decline in oil and gas prices used to determine the recoverability of proved oil
and gas reserves at March 31, 1997 and $2,493 was related to the writing-off of
unproved properties. These unproved properties were written off based on the
General Partner's determination that it is unlikely that such properties would
be developed due to low oil and gas prices and provisions in the I-B
Partnership's Partnership Agreement which limit the level of permissible
drilling activity. No similar charges were necessary in 1996.
General and administrative expenses remained relatively constant in 1997
as compared to 1996. As a percentage of oil and gas sales, these expenses also
remained relatively constant at 17.4% in 1997 and 17.3% in 1996.
I-C Partnership
---------------
Year Ended December 31, 1998 Compared
to Year Ended December 31, 1997
-------------------------------------
Total oil and gas sales decreased $484,448 (50.9%) in 1998 as compared to
1997. Of this decrease, approximately $205,000 and $145,000, respectively, were
related to decreases in volumes of oil and gas sold and approximately $94,000
and $41,000, respectively, were related to decreases in the average prices of
oil and gas sold. Volumes of oil and gas sold decreased 10,953
35
barrels and 53,434 Mcf, respectively, in 1998 as compared to 1997. The decrease
in volumes of oil sold resulted primarily from (i) normal declines in production
and (ii) the sale of one significant well in 1997. The decrease in volumes of
gas sold resulted primarily from normal declines in production. Average oil and
gas prices decreased to $12.06 per barrel and $2.38 per Mcf, respectively, in
1998 from $18.68 per barrel and $2.71 per Mcf, respectively, in 1997.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $83,603 (26.8%) in 1998 as compared to 1997. This
decrease resulted primarily from (i) a decrease in lease operating expenses
associated with the decreases in volumes of oil and gas sold, (ii) a decrease in
production taxes associated with the decrease in oil and gas sales, and (iii)
workover expenses incurred on several wells in 1997 in order to improve the
recovery of reserves. These decreases were partially offset by repair and
maintenance expenses on several wells during 1998. As a percentage of oil and
gas sales, these expenses increased to 48.8% in 1998 from 32.8% in 1997. This
percentage increase was primarily due to the decreases in the average prices of
oil and gas sold and the repair and maintenance expenses in 1998.
Depreciation, depletion, and amortization of oil and gas properties
increased $100,410 (173.0%) in 1998 as compared to 1997. This increase was
primarily due to a downward revision in the estimate of remaining oil and gas
reserves on two significant wells in 1998, which increase was partially offset
by the decreases in volumes of oil and gas sold. As a percentage of oil and gas
sales, this expense increased to 33.9% in 1998 from 6.1% in 1997. This
percentage increase was primarily due to the dollar increase in depreciation,
depletion, and amortization and the decreases in the average prices of oil and
gas sold.
The I-C Partnership recognized a non-cash charge against earnings of
$4,679 in the first quarter of 1997 primarily related to the decline in oil and
gas prices used to determine the recoverability of proved oil and gas reserves
at March 31, 1997. No similar charge was necessary in 1998.
General and administrative expenses decreased $20,515 (19.3%) in 1998 as
compared to 1997. This decrease was primarily due to a reduction in general and
administrative overhead charged by the General Partner as limited by the I-C
Partnership's Partnership Agreement. As a percentage of oil and gas sales, these
expenses increased to 18.4% in 1998 from 11.2% in 1997. This percentage increase
was primarily due to the decrease in oil and gas sales, partially offset by the
dollar decrease in general and administrative expenses.
The Limited Partners have received cash distribution through December 31,
1998 totaling $8,211,300 or 92.42% of the Limited Partners' capital
contributions.
36
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
-------------------------------------
Total oil and gas sales decreased $229,418 (19.4%) in 1997 as compared to
1996. Of this decrease, approximately $49,000 and $134,000, respectively,
related to decreases in volumes of oil and gas sold and approximately $36,000
and $9,000, respectively, related to decreases in the average price of oil and
gas sold. Volumes of oil and gas sold decreased 2,415 barrels and 48,640 Mcf,
respectively, in 1997 as compared to 1996. The decrease in volumes of gas sold
resulted primarily from (i) normal declines in production and (ii) a positive
prior period volume adjustment made by a purchaser on one significant well in
1996. Average prices of oil and gas sold decreased to $18.68 per barrel and
$2.71 per Mcf, respectively, in 1997 from $20.13 per barrel and $2.76 per Mcf,
respectively in 1996.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $70,043 (29.0%) in 1997 as compared to 1996. This
increase resulted primarily from workover expenses incurred on three significant
wells in 1997 in order to improve the recovery of reserves, which increase was
partially offset by (i) the decreases in volumes of oil and gas sold in 1997 and
(ii) a decrease in production taxes associated with the decrease in oil and gas
sales. As a percentage of oil and gas sales, these expenses increased to 32.8%
in 1997 from 20.5% in 1996. This percentage increase was primarily due to the
increase in workover expenses and the decrease in oil and gas sales in 1997.
Depreciation, depletion, and amortization of oil and gas properties
remained relatively constant in 1997 as compared to 1996. As a percentage of oil
and gas sales, this expense increased to 6.1% in 1997 from 4.9% in 1996. This
percentage increase was primarily due to the decrease in the average price of
gas sold in 1997.
Capital expenditures incurred by the I-C Partnership increased $99,534 in
1997 as compared to 1996. This increase resulted primarily from the recompletion
in 1997 of the Ratzlaff No. 2 well located in Major County, Oklahoma. The I-C
Partnership has a 100% well interest in the Ratzlaff No. 2 well.
The I-C Partnership recognized a non-cash charge against earnings of
$4,679 in the first quarter of 1997 primarily related to the decline in oil and
gas prices used to determine the recoverability of proved oil and gas reserves
at March 31, 1997. No similar charge was necessary in 1996.
37
General and administrative expenses remained relatively constant in 1997
as compared to 1996. As a percentage of oil and gas sales, these expenses
increased to 11.2% in 1997 from 9.1% in 1996. This percentage increase resulted
from the decrease in oil and gas sales discussed above.
I-D Partnership
---------------
Year Ended December 31, 1998 Compared
to Year Ended December 31, 1997
-------------------------------------
Total oil and gas sales decreased $483,862 (31.3%) in 1998 as compared to
1997. Of this decrease, approximately $142,000 and $126,000, respectively, were
related to decreases in volumes of oil and gas sold and approximately $72,000
and $144,000, respectively, were related to decreases in the average prices of
oil and gas sold. Volumes of oil and gas sold decreased 7,511 barrels and 53,918
Mcf, respectively, in 1998 as compared to 1997. The decrease in volumes of oil
sold resulted primarily from (i) the sale of several wells during 1997 and 1998
and (ii) normal declines in production. The decrease in volumes of gas sold
resulted primarily from (i) normal declines in production and (ii) positive
prior period volume adjustments made by the purchasers during 1997 on several
wells. Average oil and gas prices decreased to $12.55 per barrel and $2.02 per
Mcf, respectively, in 1998 from $18.96 per barrel and $2.33 per Mcf,
respectively, in 1997.
As discussed in "Liquidity and Capital Resources" below, the I-D
Partnership sold certain oil and gas properties in 1998 and recognized a
$260,624 gain on such sales. Sales of oil and gas properties during 1997
resulted in the I-D Partnership recognizing similar gains totaling $24,113.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $59,869 (20.3%) in 1998 as compared to 1997. This
decrease resulted primarily from (i) workover expenses incurred on two
significant wells during 1997 in order to improve the recovery of reserves and
(ii) a decrease in production taxes associated with the decrease in oil and gas
sales. As a percentage of oil and gas sales, these expenses increased to 22.1%
in 1998 from 19.1% in 1997. This percentage increase was primarily due to the
decreases in the average prices of oil and gas sold, partially offset by the
1997 workover expenses.
Depreciation, depletion, and amortization of oil and gas properties
decreased $14,888 (13.2%) in 1998 as compared to 1997. This decrease resulted
primarily from the decreases in volumes of oil and gas sold. As a percentage
of oil and gas sales, this expense increased to 9.2% in 1998 from 7.3% in 1997.
38
This percentage increase was primarily due to the decreases in the average
prices of oil and gas sold.
The I-D Partnership recognized a non-cash charge against earnings of
$61,790 in the first quarter of 1997. Of this amount, $12,290 was related to the
decline in oil and gas prices used to determine the recoverability of proved oil
and gas reserves at March 31, 1997 and $49,500 was related to the writing off of
unproved properties. These unproved properties were written off based on the
General Partner's determination that it was unlikely that such properties would
be developed due to low oil and gas prices and provisions in the I-D
Partnership's Partnership Agreement which limit the level of permissible
drilling activity. No similar charges were necessary in 1998.
General and administrative expenses decreased $1,650 (1.8%) in 1998 as
compared to 1997. As a percentage of oil and gas sales, these expenses increased
to 8.5% in 1998 from 5.9% in 1997. This percentage increase was primarily due to
the decrease in oil and gas sales.
The Limited Partners have received cash distributions through December 31,
1998 totaling $14,008,175 or 194.70% of the Limited Partners' capital
contributions.
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
-------------------------------------
Total oil and gas sales decreased $267,471 (14.8%) in 1997 as compared to
1996. Of this decrease, approximately $51,000 and $161,000, respectively, were
related to decreases in volumes of oil and gas sold and approximately $23,000
and $31,000, respectively, were related to decreases in the average prices of
oil and gas sold. Volumes of oil and gas sold decreased 2,531 barrels and 67,544
Mcf, respectively, in 1997 as compared to 1996. The decreases in volumes of oil
and gas sold resulted primarily from the shutting-in of two significant wells
due to workovers during 1997. Average oil and gas prices decreased to $18.96 per
barrel and $2.33 per Mcf, respectively, in 1997 from $20.16 per barrel and $2.39
per Mcf, respectively, in 1996.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $3,502 (1.2%) in 1997 as compared to 1996. This
increase resulted primarily from workover expenses incurred on two significant
wells during 1997 in order to improve the recovery of reserves, which increase
was partially offset by (i) the decreases in volumes of oil and gas sold in 1997
and (ii) a decrease in production taxes associated with the decrease in oil and
gas sales. As a percentage of oil and gas sales, these expenses increased to
19.1% in 1997 from 16.0% in
39
1996. This percentage increase was primarily due to the decrease in the average
price of oil and gas sold in 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $35,605 (24.0%) in 1997 as compared to 1996. This decrease resulted
primarily from (i) the decrease in volumes of oil and gas sold in 1997 and (ii)
an upward revision in the estimate of remaining oil reserves at December 31,
1997. As a percentage of oil and gas sales, this expense decreased to 7.3% in
1997 from 8.2% in 1996. This percentage decrease was primarily due to the dollar
decrease in depreciation, depletion, and amortization.
The I-D Partnership recognized a non-cash charge against earnings of
$61,790 in the first quarter of 1997. Of this amount, $12,290 was related to the
decline in oil and gas prices used to determine the recoverability of proved oil
and gas reserves at March 31, 1997 and $49,500 was related to the writing off of
unproved properties. These unproved properties were written off based on the
General Partner's determination that it is unlikely that such properties would
be developed due to low oil and gas prices and provisions in the I-D
Partnership's Partnership Agreement which limit the level of permissible
drilling activity. No similar charges were necessary in 1996.
General and administrative expenses remained relatively constant in 1997
as compared to 1996. As a percentage of oil and gas sales, these expenses
remained relatively constant at 5.9% in 1997 and 5.1% in 1996.
I-E Partnership
---------------
Year Ended December 31, 1998 Compared
to Year Ended December 31, 1997
-------------------------------------
Total oil and gas sales decreased $1,393,017 (23.2%) in 1998 as compared
to 1997. Of this decrease, approximately $251,000 and $262,000, respectively,
were related to decreases in the volumes of oil and gas sold and approximately
$441,000 and $439,000, respectively, were related to decreases in the average
prices of oil and gas sold. Volumes of oil and gas sold decreased 13,302 barrels
and 123,670 Mcf, respectively, in 1998 as compared to 1997. The decrease in
volumes of oil sold resulted primarily from (i) the sale of several wells during
1997 and 1998 and (ii) normal declines in production. Average oil and gas prices
decreased to $11.98 per barrel and $1.90 per Mcf, respectively, in 1998 from
$18.84 per barrel and $2.12 per Mcf, respectively, in 1997.
As discussed in "Liquidity and Capital Resources" below, the I-E
Partnership sold certain oil and gas properties in 1998 and
40
recognized a $1,154,155 gain on such sales. Sales of oil and gas properties
during 1997 resulted in the I-E Partnership recognizing similar gains totaling
$120,840.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $264,306 (14.9%) in 1998 as compared to 1997. This
decrease resulted primarily from (i) a decrease in lease operating expenses
associated with the decreases in volumes of oil and gas sold, (ii) a decrease in
production taxes associated with the decrease in oil and gas sales, and (iii)
workover expenses incurred on several wells during 1997 in order to improve the
recovery of reserves. As a percentage of oil and gas sales, these expenses
increased to 32.7% in 1998 from 29.5% in 1997. This percentage increase was
primarily due to the decreases in the average prices of oil and gas sold.
Depreciation, depletion, and amortization of oil and gas properties
increased $27,597 (3.8%) in 1998 as compared to 1997. This increase resulted
primarily from downward revisions in the estimates of remaining oil and gas
reserves at December 31, 1998 on several significant wells, which increase was
partially offset by the decreases in volumes of oil and gas sold. As a
percentage of oil and gas sales, this expense increased to 16.4% in 1998 from
12.1% in 1997. This percentage increase was primarily due to the decreases in
the average prices of oil and gas sold.
The I-E Partnership recognized a non-cash charge against earnings of
$547,048 in the fourth quarter of 1998. This charge was necessary due to the
unamortized costs of one field exceeding the expected future cash flows from
that field. During the first quarter of 1997, a non-cash charge of $291,690 was
also recognized. Of this amount, $59,728 was related to the decline in oil and
gas prices used to determine the recoverability of proved oil and gas reserves
at March 31, 1997 and $231,962 was related to the writing-off of unproved
properties. These unproved properties were written off based on the General
Partner's determination that it was unlikely that such properties would be
developed due to low oil and gas prices and provisions in the I-E Partnership's
Partnership Agreement which limit the level of permissible drilling activity.
General and administrative expenses decreased $9,384 (1.8%) in 1998 as
compared to 1997. As a percentage of oil and gas sales, these expenses increased
to 11.2% in 1998 from 8.8% in 1997. This percentage increase was primarily due
to the decrease in oil and gas sales.
The Limited Partners have received cash distributions through December 31,
1998 totaling $53,668,552 or 128.27% of the Limited Partners' capital
contributions.
41
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
-------------------------------------
Total oil and gas sales remained relatively constant in 1997 as compared
to 1996. Decreases of approximately $138,000 and $77,000, respectively, related
to decreases in volumes of gas sold and the average price of oil sold were
substantially offset by increases of approximately $132,000 and $86,000,
respectively, related to increases in volumes of oil sold and the average price
of gas sold. Volumes of oil sold increased 6,650 barrels while volumes of gas
sold decreased 66,378 Mcf in 1997 as compared to 1996. Average oil prices
decreased to $18.84 per barrel in 1997 from $19.83 per barrel in 1996. Average
gas prices increased to $2.12 per Mcf in 1997 from $2.08 per Mcf in 1996.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $64,831 (3.8%) in 1997 as compared to 1996. This
increase resulted primarily from workover or recompletion expenses incurred on
four significant wells during 1997 in order to improve the recovery of reserves.
As a percentage of oil and gas sales, these expenses increased to 29.5% in 1997
from 28.4% in 1996. This percentage increase was primarily due to the dollar
increase in oil and gas production expenses and the decrease in the average
price of oil sold in 1997.
Depreciation, depletion, and amortization of oil and gas properties
decreased $112,826 (13.4%) in 1997 as compared to 1996. This decrease resulted
primarily from upward revisions in the estimates of remaining gas reserves at
December 31, 1997. As a percentage of oil and gas sales, this expense decreased
to 12.1% in 1997 from 14.0% in 1996. This percentage decrease was primarily due
to the dollar decrease in depreciation, depletion, and amortization and the
increase in the average price gas sold in 1997.
The I-E Partnership recognized a non-cash charge against earnings of
$291,690 in the first quarter of 1997. Of this amount, $59,728 was related to
the decline in oil and gas prices used to determine the recoverability of proved
oil and gas reserves at March 31, 1997 and $231,962 was related to the
writing-off of unproved properties. These unproved properties were written off
based on the General Partner's determination that it is unlikely that such
properties would be developed due to low oil and gas prices and provisions in
the I-E Partnership's Partnership Agreement which limit the level of permissible
drilling activity. No similar charges were necessary in 1996.
General and administrative expenses remained relatively constant in 1997
as compared to 1996. As a percentage of oil and gas sales, these expenses
remained relatively constant at 8.8% in both 1997 and 1996.
42
I-F Partnership
---------------
Year Ended December 31, 1998 Compared
to Year Ended December 31, 1997
-------------------------------------
Total oil and gas sales decreased $579,087 (28.6%) in 1998 as compared to
1997. Of this decrease, approximately $161,000 and $93,000, respectively, were
related to decreases in volumes of oil and gas sold and approximately $204,000
and $122,000, respectively, were related to decreases in the average prices of
oil and gas sold. Volumes of oil and gas sold decreased 8,522 barrels and 41,061
Mcf, respectively, in 1998 as compared to 1997. The decrease in volumes of oil
sold resulted primarily from (i) normal declines in production, (ii) the sale of
several wells during 1997 and 1998, and (iii) the shutting-in of one significant
well during 1998 for repairs. Average oil and gas prices decreased to $12.10 per
barrel and $2.03 per Mcf, respectively, in 1998 from $18.85 per barrel and $2.26
per Mcf, respectively, in 1997.
As discussed in "Liquidity and Capital Resources" below, the I-F
Partnership sold certain oil and gas properties in 1998 and recognized a
$380,920 gain on such sales. Sales of oil and gas properties during 1997
resulted in the I-F Partnership recognizing similar gains totaling $76,108.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $15,784 (2.3%) in 1998 as compared to 1997. This
decrease resulted primarily from (i) a decrease in lease operating expenses
associated with the decreases in volumes of oil and gas sold and (ii) a decrease
in production taxes associated with the decrease in oil and gas sales, which
decreases were partially offset by workover expenses incurred on several wells
during 1998 in order to improve the recovery of reserves. As a percentage of oil
and gas sales, these expenses increased to 46.3% in 1998 from 33.8% in 1997.
This percentage increase was primarily due to the decreases in the average
prices of oil and gas sold.
Depreciation, depletion, and amortization of oil and gas properties
decreased $3,146 (1.2%) in 1998 as compared to 1997. This decrease resulted
primarily from the decreases in volumes of oil and gas sold, which decrease was
partially offset by downward revisions in the estimates of remaining oil and gas
reserves at December 31, 1998 on several significant wells. As a percentage of
oil and gas sales, this expense increased to 17.7% in 1998 from 12.8% in 1997.
This percentage increase was primarily due to the decreases in the average
prices of oil and gas sold.
The I-F Partnership recognized a non-cash charge against earnings of
$382,925 in the fourth quarter of 1998. This charge
43
was necessary due to the unamortized costs of one field exceeding the expected
future cash flows from that field. During the first quarter of 1997, a non-cash
charge of $114,631 was also recognized. Of this amount, $20,908 was related to
the decline in oil and gas prices used to determine the recoverability of proved
oil and gas reserves at March 31, 1997 and $93,723 was related to the writing
off of unproved properties. These unproved properties were written off based on
the General Partner's determination that it was unlikely that such properties
would be developed due to low oil and gas prices and provisions in the I-F
Partnership's Partnership Agreement which limit the level of permissible
drilling activity.
General and administrative expenses decreased $3,477 (1.9%) in 1998 as
compared to 1997. As a percentage of oil and gas sales, these expenses increased
to 12.3% in 1998 from 8.9% in 1997. This percentage increase was primarily due
to the decrease in oil and gas sales.
The Limited Partners have received cash distributions through December 31,
1998 totaling $17,986,664 or 125.60% of the Limited Partners' capital
contributions.
Year Ended December 31, 1997 Compared
to Year Ended December 31, 1996
-------------------------------------
Total oil and gas sales decreased $99,531 (4.7%) in 1997 as compared to
1996. Of this decrease, approximately $177,000 was related to a decrease in
volumes of gas sold and $36,000 was related to a decrease in the average price
of oil sold, which decreases were partially offset by increases of approximately
$62,000 related to an increase in volumes of oil sold and $51,000 related to an
increase in the average price of gas sold. Volumes of oil sold increased 3,148
barrels in 1997 as compared to 1996 while volumes of gas sold decreased 81,591
Mcf in 1997 as compared to 1996. Average oil prices decreased to $18.85 per
barrel in 1997 from $19.79 per barrel in 1996. Average gas prices increased to
$2.26 per Mcf in 1997 from $2.17 per Mcf in 1996.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $74,592 (9.8%) in 1997 as compared to 1996. This
decrease resulted primarily from (i) the decrease in volumes of gas sold in 1997
and (ii) a decrease in production taxes associated with the decrease in oil and
gas sales. As a percentage of oil and gas sales, these expenses decreased to
33.8% in 1997 from 35.8% in 1996. This percentage decrease was primarily due to
the decrease in oil and gas production expenses and the increase in the average
price of gas sold in 1997.
44
Depreciation, depletion, and amortization of oil and gas properties
decreased $13,158 (4.9%) in 1997 as compared to 1996. This decrease resulted
primarily from (i) the decrease in volumes of gas sold in 1997 and (ii) upward
revisions in the estimates of remaining gas reserves at December 31, 1997. As a
percentage of oil and gas sales, this expense remained constant in 1997 as
compared to 1996.
The I-F Partnership recognized a non-cash charge against earnings of
$114,631 in the first quarter of 1997. Of this amount, $20,908 was related to
the decline in oil and gas prices used to determine the recoverability of proved
oil and gas reserves at March 31, 1997 and $93,723 was related to the writing
off of unproved properties. These unproved properties were written off based on
the General Partner's determination that it is unlikely that such properties
would be developed due to low oil and gas prices and provisions in the I-F
Partnership's Partnership Agreement which limit the level of permissible
drilling activity. No similar charges were necessary in 1996.
General and administrative expenses remained relatively constant in 1997
as compared to 1996. As a percentage of oil and gas sales, these expenses
remained relatively constant at 8.9% in 1997 and 8.6% in 1996.
Average Sales Prices, Production Volumes and Average Production Costs
The following tables are comparisons of the annual average oil and gas
sales prices, production volumes, and average production costs (lease operating
expenses and production taxes) per equivalent unit (one barrel of oil or six Mcf
of gas) for 1998, 1997, and 1996. These factors comprise the change in net oil
and gas operations discussed in the "Results of Operations" section above.
45
1998 Compared to 1997
---------------------
Average Sales Prices
- ---------------------------------------------------------------------------
P/ship 1998 1997 % Change
- ------ ------------------ ------------------ -----------
Oil Gas Oil Gas
($/Bbl) ($/Mcf) ($/Bbl) ($/Mcf) Oil Gas
------- ------- ------- ------- --- -----
I-B $12.43 $ 1.94 $18.99 $2.43 (35%) (20%)
I-C 12.06 2.38 18.68 2.71 (35%) (12%)
I-D 12.55 2.02 18.96 2.33 (34%) (13%)
I-E 11.98 1.90 18.84 2.12 (36%) (10%)
I-F 12.10 2.03 18.85 2.26 (36%) (10%)
Production Volumes
- ----------------------------------------------------------------------------
P/ship 1998 1997 % Change
- -------- -------------------- --------------------- ---------------
Oil Gas Oil Gas Oil Gas
(Bbls) (Mcf) (Bbls) (Mcf) (Bbls) (Mcf)
------- --------- ------- --------- ------ -----
I-B 1,344 115,502 2,277 129,776 (41%) (11%)
I-C 14,169 124,746 25,122 178,180 (44%) (30%)
I-D 11,249 456,195 18,760 510,113 (40%) (11%)
I-E 64,346 2,016,034 77,648 2,139,704 (17%) ( 6%)
I-F 30,203 530,040 38,725 571,101 (22%) ( 7%)
Average Production Costs per
Equivalent Barrel of Oil
--------------------------------------
P/ship 1998 1997 % Change
------ ----- ----- --------
I-B $5.86 $5.70 3%
I-C 6.53 5.69 15%
I-D 2.69 2.84 ( 5%)
I-E 3.76 4.08 ( 8%)
I-F 5.64 5.11 10%
46
1997 Compared to 1996
---------------------
Average Sales Prices
- ----------------------------------------------------------------------------
P/ship 1997 1996 % Change
- ------ ------------------ ------------------ ------------
Oil Gas Oil Gas
($/Bbl) ($/Mcf) ($/Bbl) ($/Mcf) Oil Gas
------- ------- ------- ------- --- ------
I-B $18.99 $2.43 $21.14 $2.10 (10%) 16%
I-C 18.68 2.71 20.13 2.76 ( 7%) ( 2%)
I-D 18.96 2.33 20.16 2.39 ( 6%) ( 3%)
I-E 18.84 2.12 19.83 2.08 ( 5%) 2%
I-F 18.85 2.26 19.79 2.17 ( 5%) 4%
Production Volumes
- ----------------------------------------------------------------------------
P/ship 1997 1996 % Change
- -------- -------------------- --------------------- ---------------
Oil Gas Oil Gas Oil Gas
(Bbls) (Mcf) (Bbls) (Mcf) (Bbls) (Mcf)
------- --------- ------- --------- ------ -----
I-B 2,277 129,776 2,297 150,543 ( 1%) (14%)
I-C 25,122 178,180 27,537 226,820 ( 9%) (21%)
I-D 18,760 510,113 21,291 577,657 (12%) (12%)
I-E 77,648 2,139,704 70,998 2,206,082 9% ( 3%)
I-F 38,725 571,101 35,577 652,692 9% (13%)
Average Production Costs per
Equivalent Barrel of Oil
--------------------------------------
P/ship 1997 1996 % Change
------ ----- ----- --------
I-B $5.70 $4.80 19%
I-C 5.69 3.70 54%
I-D 2.84 2.47 15%
I-E 4.08 3.89 5%
I-F 5.11 5.25 ( 3%)
47
Liquidity and Capital Resources
Net proceeds from operations less necessary operating capital are
distributed to the Limited Partners on a quarterly basis. See "Item 5. Market
for Units and Related Limited Partner Matters." The net proceeds from production
are not reinvested in productive assets, except to the extent that producing
wells are improved, or where methods are employed to permit more efficient
recovery of reserves, thereby resulting in a positive economic impact. Assuming
1998 production levels for future years, the Partnerships' proved reserve
quantities at December 31, 1998 would have the following remaining lives:
Partnership Gas-Years Oil-Years
----------- --------- ---------
I-B 8.9 5.5
I-C 5.0 1.2
I-D 3.6 3.4
I-E 4.7 5.0
I-F 5.7 5.0
The Partnerships' available capital from the Limited Partners'
subscriptions has been spent on oil and gas properties. The I-C Partnership
incurred capital expenditures of $100,573 in 1997 primarily related to the
recompletion of the Ratzlaff No. 2 well located in Major County, Oklahoma. The
I-C Partnership has a 100% working interest in the Ratzlaff No. 2 well. During
1998, the third party operator of the State Lease 8191 No. 4 well in St. Bernard
Parish, Louisiana charged the I-E and I-F Partnerships for capital expenditures
of $768,063 and $537,644, respectively. These costs were allegedly incurred by
the operator in drilling this well for the purpose of relieving pressure in
another well which suffered a blowout during a workover attempt. This new well
was completed as a producing gas well. For financial reporting purposes, these
charges have been recorded as capital costs.
There should be no further material capital resource commitments for any
of the Partnerships in the future. Occasional expenditures by the Partnerships
for new wells or well completions or workovers, however, may reduce or eliminate
cash available for a particular quarterly cash distribution. The Partnerships
have no debt commitments. Cash for operational purposes will be provided by
current oil and gas production.
The Partnerships sold certain oil and gas properties during 1997 and 1998.
The sale of the Partnerships' properties was made by the General Partner after
giving due consideration to both the offer price and the General Partner's
estimate of the property's remaining proved reserves and future operating costs.
Net proceeds from the sale of any such properties were included in
48
the calculation of the Partnerships' cash distributions for the quarter
immediately following the Partnerships' receipt of the proceeds. The amount of
such proceeds from the sale of oil and gas properties during 1998 and 1997 were
as follows:
Partnership 1998 1997
----------- ---------- --------
I-B $ - $ 21,848
I-C 1,732 45,422
I-D 272,824 25,350
I-E 1,265,357 156,744
I-F 438,200 97,288
The General Partner believes that the sale of these properties will be
beneficial to the Partnerships in the long-term since the properties sold
generally had a higher ratio of future operating expenses as compared to
reserves than the properties not sold.
There can be no assurance as to the amount of the Partnerships' future
cash distributions. The Partnerships' ability to make cash distributions depends
primarily upon the level of available cash flow generated by the Partnerships'
operating activities, which will be affected (either positively or negatively)
by many factors beyond the control of the Partnerships, including the price of
and demand for oil and gas and other market and economic conditions. Even if
prices and costs remain stable, the amount of cash available for distributions
will decline over time (as the volume of production from producing properties
declines) since the Partnerships are not replacing production through
acquisitions of producing properties and drilling. The Partnerships' quantity of
proved reserves has been reduced by the sale of oil and gas properties as
described above; therefore, it is possible that the Partnerships' future cash
distributions will decline as a result of a reduction of the Partnerships'
reserve base.
Pursuant to the terms of the Partnership Agreements, the Partnerships will
terminate on December 31, 1999. However, the Partnership Agreements provide that
the General Partner may extend the term of each Partnership for up to five
periods of two years each. As of the date of this Annual Report the General
Partner currently intends to extend the term of the I-D, I-E, and I-F
Partnerships for the first two year extension period. With respect to the I-B
and I-C Partnerships, it is the General Partner's current intent to let these
Partnerships terminate on December 31, 1999 pursuant to the terms of their
Partnership Agreements.
The General Partner will, however, over the next several months evaluate
all of the Partnerships' operations and then make a final determination as to
whether to extend any of their terms.
49
It is anticipated that a final decision will be made during the fourth quarter
of 1999.
In the event any of the Partnerships are terminated pursuant to the
Partnership Agreements, the Partnership's dissolution shall be effective on
December 31, 1999. Pursuant to the terms of the Partnership Agreement, the
dissolved Partnership would then be liquidated. The liquidation procedures under
the Partnership Agreements provide that the General Partner shall sell the
Partnership's properties and, in connection therewith, attempt to obtain the
best price available for such properties. Pending such sales, the General
Partner will continue to manage the Partnership's properties. It is anticipated
that in the event of termination, the Partnership's properties would be sold
through an auction process or negotiated transactions during the first half of
2000.
Gain or loss realized on the sale of a dissolved Partnership's assets will
be credited to (in the case of gain) or charged against (in the case of loss)
each Partner's capital account to the extent allocable under the Partnership
Agreement. In settling the Partners' accounts upon dissolution, the assets of
the Partnership shall be paid out as follows: (i) to third party creditors; (ii)
to the General Partner for any expenses of the Partnership paid by or payable to
it to the extent it is entitled to reimbursement under the Partnership
Agreement; (iii) to all of the Limited Partners in the amount equivalent to the
amount of their positive capital account balances (as adjusted pursuant to the
Partnership Agreement) on the date of distribution; (iv) to the General Partner
in the amount equivalent to the amount of its positive capital account balance
(as adjusted) on the date of distribution; and (v) the balance shall be paid to
the Limited Partners and General Partner in the same percentage interests as
cash distributions are payable under the Partnership Agreement. In addition, in
the event that, following the final distribution, the General Partner has a
deficit balance in its capital account balance, it shall contribute cash to the
Partnership necessary to eliminate the deficit balance, which amount would be
distributed to the other Partners to the extent of their remaining positive
capital account balances.
Inflation and Changing Prices
Prices obtained for oil and gas production depend upon numerous factors,
including the extent of domestic and foreign production, foreign imports of oil,
market demand, domestic and foreign economic conditions in general, and
governmental regulations and tax laws. The general level of inflation in the
economy did not have a material effect on the operations of the Partnerships in
1998. Oil and gas prices have fluctuated during recent years and generally have
not followed the same pattern as
50
inflation. See "Item 2. Properties - Oil and Gas Production, Revenue, and
Price History."
Year 2000
In General
The Year 2000 Issue ("Y2K") refers to the inability of computer and other
information technology systems to properly process date and time information,
stemming from the earlier programming practice of using two digits rather than
four to represent the year in a date. For example, computer programs and
imbedded chips that are date sensitive may recognize a date using (00) as the
year 1900 rather than the year 2000. The consequence of Y2K is that computer and
imbedded processing systems may be at risk of malfunctioning, particularly
during the transition from 1999 to 2000.
The effects of Y2K are exacerbated by the interdependence of computer and
telecommunication systems throughout the world. This interdependence also exists
among the Partnerships, Samson, and their vendors, customers, and business
partners, as well as with regulators. The potential risks associated with Y2K
for an oil and gas production company fall into three general areas: (i)
financial, leasehold and administrative computer systems, (ii) imbedded systems
in field process control units, and (iii) third party exposures. As discussed
below, the General Partner does not believe that these risks will be material to
the Partnerships' operations.
The Partnerships' business is producing oil and gas. The day-to-day
production of the Partnerships' oil and gas is not dependent on computers or
equipment with imbedded chips. As further discussed below, management
anticipates that the Partnerships' daily business activities will not be
materially affected by Y2K.
The Partnerships rely on Samson to provide all of its operational and
administrative services on either a direct or indirect basis. Samson is
addressing each of the three Y2K areas discussed above through a readiness
process that seeks to:
1. increase the awareness of the issue among key employees;
2. identify areas of potential risk;
3. assess the relative impact of these risks and Samson's ability to
manage them; and
4. remediate these risks on a priority basis wherever possible.
Samson Investment Company's Chief Financial Officer is responsible for
communicating to its Board of Directors Y2K actions and for the ultimate
implementation of its Y2K plan. He
51
has delegated to Samson Investment Company's Senior Vice President-Technology
and Administrative Services principal responsibility for ensuring Y2K compliance
within Samson.
Samson has been planning for the impact of Y2K on its information
technology systems since 1993. As of February 1, 1999, Samson is in the final
stages of implementation of a Y2K plan, as summarized below:
Financial and Administrative Systems
1. Awareness. Samson has alerted its officers, managers and supervisors of
Y2K issues and asked them to have their employees participate in the
identification of potential Y2K risks which might otherwise go unnoticed by
higher level employees and officers. As a result, awareness of the issue is
considered high.
2. Risk Identification. Samson's most significant financial and
administrative systems exposure is the Y2K status of the accounting and land
administration system used to collect and manage data for internal management
decision making and for external revenue and accounts payable purposes. Other
concerns include network hardware and software, desktop computing hardware and
software, telecommunications, and office space readiness.
3. Risk Assessment. The failure to identify and correct a material Y2K
problem could result in inaccurate or untimely financial information for
management decision-making or cash flow and payment purposes, including
maintaining oil and gas leases.
4. Remediation. Since 1993, Samson has been upgrading its accounting and
land administration software. Substantially all of the Y2K upgrades have been
completed, with the remainder scheduled to be completed during the 1st quarter
of 1999. In addition, in 1997 and 1998 Samson replaced or applied software
patches to substantially all of its network and desktop software applications
and believes them to be generally Y2K compliant. Additional patches or software
upgrades will be applied no later than March 31, 1999 to complete this process.
The costs of all such risk assessments and remediation are not expected to be
material to the Partnerships.
5. Contingency Planning. Notwithstanding the foregoing, should there be
significant unanticipated disruptions in Samson's financial and administrative
systems, all of the accounting processes that are currently automated will need
to be performed manually. Samson will consider in the second half of 1999 its
options with respect to contingency arrangements for temporary staffing to
accommodate such situations.
52
Imbedded Systems
1. Awareness. Samson's Y2K program has involved all levels of field
personnel from production foremen and higher. Employees at all levels of the
organization have been asked to participate in the identification of potential
Y2K risks, which might otherwise go unnoticed by higher level employees and
officers of Samson, and as a result, awareness of the issue is considered high.
2. Risk Identification. Samson has inventoried all possible exposures to
imbedded chips and systems. Such exposures can be classified as either (i) oil
and gas production and processing equipment or (ii) office machines such as
faxes, copiers, phones, etc.
With respect to oil and gas production and processing equipment, neither
Samson nor the Partnerships operate offshore wells, significant processing
plants, or wells with older electronic monitoring systems. As a result, Samson's
inventory identified less than 10 applications using imbedded chips. All of
these are in the process of being tested by the respective vendors and are
expected to be Y2K compliant or replaced no later than May 30, 1999. Oil and gas
production related to such equipment is very minor with respect to the entire
Samson group, and, in fact, the Partnerships' production may not use such
equipment at all.
Office machines are currently being tested by Samson and vendors. It is
expected that such machines will be made compliant or replaced no later than
March 31, 1999.
3. Risk Assessment and Remediation. The failure to identify and correct a
material Y2K problem in an imbedded system could result in outcomes ranging from
errors in data reporting to curtailments or shutdowns in production. As noted
above, Samson has identified less than 10 imbedded system applications that may
have a Y2K problem. None of these applications are believed to be material to
Samson or the Partnerships. Once identified, assessed and prioritized, Samson
intends to test and upgrade imbedded components and systems in field process
control units deemed to pose the greatest risk of significant non-compliance and
capable of testing. Samson believes that sufficient manual processes are
available to minimize any such field level risk and that there will be no
material impact on the Partnerships with respect to these applications.
4. Contingency Planning. Should material production disruptions occur as a
result of Y2K failures in field operations, Samson will utilize its existing
field personnel in an attempt to avoid any material impact on operating cash
flow. Samson is not able to quantify any potential exposure in the event of
systems failure or inadequate manual alternatives.
53
Third Party Exposures
1. Awareness. Samson has advised management to consider Y2K implications
with its outside vendors, customers, and business partners. Management has been
asked to participate in the identification of potential third party Y2K risks
and, as a result, awareness of the issue is considered high.
2. Risk Identification. Samson's most significant third party Y2K exposure
is its dependence on third parties for the receipt of revenues from oil and gas
sales. However, virtually all of these purchasers are very large and
sophisticated companies. Other Y2K concerns include the availability of electric
power to Samson's field operations, the integrity of telecommunication systems,
and the readiness of commercial banks to execute electronic fund transfers.
3. Risk Assessment. Because of the high awareness of the Y2K problem in
the U.S., Samson has not undertaken and does not plan to undertake a formal
company wide plan to make inquiries of third parties on the subject of Y2K
readiness. If it did so, Samson has no ability to require responses to such
inquiries or to independently verify their accuracy. Samson has, however,
received oral assurances from its significant oil and gas purchasers of Y2K
compliance. If significant disruptions from major purchasers were to occur,
however, there could be a material and adverse impact on the Partnerships'
results of operations, liquidity, and financial conditions.
It is important to note that third party oil and gas purchasers have
significant incentives to avoid disruptions arising from a Y2K failure. For
example, most of these parties are under contractual obligations to purchase oil
and gas or disperse revenues to Samson. The failure to do so will result in
contractual and statutory penalties. Therefore, the General Partner believes
that it is unlikely that there will be material third party non-compliance with
purchase and remittance obligations as a result of Y2K issues.
4. Remediation. Where Samson perceives significant risk of Y2K
non-compliance that may have a material impact on it, and where the relationship
between Samson and a vendor, customer, or business partner permits, joint
testing may be undertaken during 1999 to further identify these risks.
5. Contingency Planning. In the unlikely event that material production
disruptions occur as a result of Y2K failures of third parties, the
Partnerships' operating cash flow could be impacted. This contingency will be
factored into deliberations on the level of quarterly cash distributions paid
out during any such period of cash flow disruption.
54
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Partnerships do not hold any market risk sensitive instruments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data are indexed in Item 14
hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER
The Partnerships have no directors or executive officers. The following
individuals are directors and executive officers of the General Partner. The
business address of such director and executive officers is Two West Second
Street, Tulsa, Oklahoma 74103.
Name Age Position with Geodyne
---------------- --- --------------------------------
Dennis R. Neill 46 President and Director
Judy K. Fox 47 Secretary
The director will hold office until the next annual meeting of shareholders of
Geodyne and until his successor has been duly elected and qualified. All
executive officers serve at the discretion of the Board of Directors.
Dennis R. Neill joined Samson in 1981, was named Senior Vice President and
Director of Geodyne on March 3, 1993, and was named President of Geodyne and its
subsidiaries on June 30, 1996. Prior to joining Samson, he was associated with a
Tulsa law firm, Conner and Winters, where his principal practice was in the
securities area. He received a Bachelor of Arts degree in political science from
Oklahoma State University and a Juris Doctorate degree from the University of
Texas. Mr. Neill also serves as Senior Vice President of Samson Investment
Company and as President and Director of Samson Properties Incorporated, Samson
Hydrocarbons Company, Dyco Petroleum Corporation, Berry Gas Company, Circle L
Drilling Company, Snyder Exploration Company, and Compression, Inc.
55
Judy K. Fox joined Samson in 1990 and was named Secretary of Geodyne and
its subsidiaries on June 30, 1996. Prior to joining Samson, she served as Gas
Contract Manager for Ely Energy Company. Ms. Fox is also Secretary of Berry Gas
Company, Circle L Drilling Company, Compression, Inc., Dyco Petroleum
Corporation, Samson Hydrocarbons Company, Snyder Exploration Company, and Samson
Properties Incorporated.
Section 16(a) Beneficial Ownership Reporting Compliance
To the knowledge of the Partnerships and the General Partner, there were
no officers, directors, or ten percent owners who were delinquent filers during
1998 of reports required under Section 16 of the Securities Exchange Act of
1934.
ITEM 11. EXECUTIVE COMPENSATION
The General Partner and its affiliates are reimbursed for actual general
and administrative costs and operating costs incurred and attributable to the
conduct of the business affairs and operations of the Partnerships, computed on
a cost basis, determined in accordance with generally accepted accounting
principles. Such reimbursed costs and expenses allocated to the Partnerships
include office rent, secretarial, employee compensation and benefits, travel and
communication costs, fees for professional services, and other items generally
classified as general or administrative expense. The amount of general and
administrative expense allocated to the General Partner and its affiliates which
was charged to each Partnership for 1998, 1997, and 1996 is set forth in the
table below. Although the actual costs incurred by the General Partner and its
affiliates have fluctuated during the three years presented, the amount charged
to the Partnerships have not fluctuated every year due to expense limitations
imposed by the Partnership Agreements.
Partnership 1998 1997 1996
----------- -------- -------- --------
I-B $ 38,438 $ 45,252 $ 45,252
I-C 74,761 93,058 93,550
I-D 79,944 79,944 79,944
I-E 464,880 464,880 464,880
I-F 159,120 159,120 159,120
None of the officers or directors of the General Partner receive
compensation directly from the Partnerships. The Partnerships reimburse the
General Partner or its affiliates for that portion of such officers' and
directors' salaries and expenses attributable to time devoted by such
individuals to the Partnerships' activities. The following tables indicate the
approximate amount of general and administrative expense reimbursement
attributable to the salaries of the directors,
56
officers, and employees of the General Partner and its affiliates during
1998, 1997, and 1996:
57
Salary Reimbursement
I-B Partnership
---------------
Three Years Ended December 31, 1998
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
---------------------------- ----------------------- ----------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- --------- -------- -------
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
1998 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1996 $26,472 - - - - - -
1997 $27,034 - - - - - -
1998 $26,780 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne
until July 1, 1996.
(2) The general and administrative expenses paid by the I-B Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the I-B Partnership and no individual's salary or other
compensation reimbursement from the I-B Partnership equals or exceeds
$100,000 per annum.
58
Salary Reimbursement
I-C Partnership
---------------
Three Years Ended December 31, 1998
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
---------------------------- ----------------------- ----------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- --------- -------- -------
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
1998 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1996 $54,727 - - - - - -
1997 $55,593 - - - - - -
1998 $55,350 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne
until July 1, 1996.
(2) The general and administrative expenses paid by the I-C Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the I-C Partnership and no individual's salary or other
compensation reimbursement from the I-C Partnership equals or exceeds
$100,000 per annum.
59
Salary Reimbursement
I-D Partnership
---------------
Three Years Ended December 31, 1998
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
---------------------------- ----------------------- ----------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- --------- -------- -------
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
1998 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1996 $46,767 - - - - - -
1997 $47,759 - - - - - -
1998 $47,311 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne
until July 1, 1996.
(2) The general and administrative expenses paid by the I-D Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the I-D Partnership and no individual's salary or other
compensation reimbursement from the I-D Partnership equals or exceeds
$100,000 per annum.
60
Salary Reimbursement
I-E Partnership
---------------
Three Years Ended December 31, 1998
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
---------------------------- ----------------------- ----------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- --------- -------- ------
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
1998 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1996 $271,955 - - - - - -
1997 $277,719 - - - - - -
1998 $275,116 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne
until July 1, 1996.
(2) The general and administrative expenses paid by the I-E Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the I-E Partnership and no individual's salary or other
compensation reimbursement from the I-E Partnership equals or exceeds
$100,000 per annum.
61
Salary Reimbursement
I-F Partnership
---------------
Three Years Ended December 31, 1998
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
---------------------------- ----------------------- ----------
Securi-
Other ties All
Name Annual Restricted Under- Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------------- ---- ------- ------- ------- ---------- --------- -------- ------
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2) 1996 - - - - - - -
Dennis R. Neill,
President(2)(3) 1996 - - - - - - -
1997 - - - - - - -
1998 - - - - - - -
All Executive
Officers,
Directors,
and Employees
as a group(4) 1996 $93,085 - - - - - -
1997 $95,058 - - - - - -
1998 $94,167 - - - - - -
- ----------
(1) Mr. Tholen served as President and Chief Executive Officer of Geodyne
until July 1, 1996.
(2) The general and administrative expenses paid by the I-F Partnership and
attributable to salary reimbursements do not include any salary or other
compensation attributable to Mr. Tholen or Mr. Neill.
(3) Mr. Neill became President of Geodyne on July 1, 1996.
(4) No officer or director of Geodyne or its affiliates provides full-time
services to the I-F Partnership and no individual's salary or other
compensation reimbursement from the I-F Partnership equals or exceeds
$100,000 per annum.
62
Affiliates of the Partnerships serve as operator of some of the
Partnerships' wells. The General Partner contracts with such affiliates for
services as operator of the wells. As operator, such affiliates are compensated
at rates provided in the operating agreements in effect and charged to all
parties to such agreement. Such compensation may occur both prior and subsequent
to the commencement of commercial marketing of production of oil or gas. The
dollar amount of such compensation paid by the Partnerships to the affiliates is
impossible to quantify as of the date of this Annual Report.
Samson maintains necessary inventories of new and used field equipment.
Samson may have provided some of this equipment for wells in which the
Partnerships have an interest. This equipment was provided at prices or rates
equal to or less than those normally charged in the same or comparable
geographic area by unaffiliated persons or companies dealing at arm's length.
The operators of these wells billed the Partnerships for a portion of such costs
based upon the Partnerships' interest in the well.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information as to the beneficial ownership of
the Units as of February 1, 1999 by (i) each beneficial owner of more than five
percent of the issued and outstanding Units, (ii) the directors and officers of
the General Partner, and (iii) the General Partner and its affiliates. The
address of each of such persons is Samson Plaza, Two West Second Street, Tulsa,
Oklahoma 74103.
Number of Units
Beneficially
Owned (Percent
Beneficial Owner of Outstanding)
- ------------------------------------ ------------------
I-B Partnership:
- ---------------
Samson Resources Company 3,064 (25.6%)
All affiliates, directors,
and officers of the General
Partner as a group and
the General Partner (4 persons) 3,064 (25.6%)
63
I-C Partnership:
- ---------------
Samson Resources Company 1,038 (11.7%)
All affiliates, directors,
and officers of the General
Partner as a group and
the General Partner (4 persons) 1,038 (11.7%)
I-D Partnership:
- ---------------
Samson Resources Company 843 (11.7%)
All affiliates, directors,
and officers of the General
Partner as a group and
the General Partner (4 persons) 843 (11.7%)
I-E Partnership:
- ---------------
Samson Resources Company 6,604 (15.8%)
All affiliates, directors,
and officers of the General
Partner as a group and
the General Partner (4 persons) 6,604 (15.8%)
I-F Partnership:
- ---------------
Samson Resources Company 2,549 (17.8%)
All affiliates, directors,
and officers of the General
Partner as a group and
the General Partner (4 persons) 2,549 (17.8%)
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner and certain of its affiliates engage in oil and gas
activities independently of the Partnerships which result in conflicts of
interest that cannot be totally eliminated. The allocation of acquisition and
drilling opportunities and the nature of the compensation arrangements between
the Partnerships and the General Partner also create potential conflicts of
interest. An affiliate of the Partnerships owns some of the Partnerships' Units
and therefore has an identity of interest with other Limited Partners with
respect to the operations of the Partnerships.
In order to attempt to assure limited liability for Limited Partners as
well as an orderly conduct of business, management of
64
the Partnerships is exercised solely by the General Partner. The Partnership
Agreements grant the General Partner broad discretionary authority with respect
to the Partnerships' participation in drilling prospects and expenditure and
control of funds, including borrowings. These provisions are similar to those
contained in prospectuses and partnership agreements for other public oil and
gas partnerships. Broad discretion as to general management of the Partnerships
involves circumstances where the General Partner has conflicts of interest and
where it must allocate costs and expenses, or opportunities, among the
Partnerships and other competing interests.
The General Partner does not devote all of its time, efforts, and
personnel exclusively to the Partnerships. Furthermore, the Partnerships do not
have any employees, but instead rely on the personnel of Samson. The
Partnerships thus compete with Samson (including other oil and gas partnerships)
for the time and resources of such personnel. Samson devotes such time and
personnel to the management of the Partnerships as are indicated by the
circumstances and as are consistent with the General Partner's fiduciary duties.
Affiliates of the Partnerships are solely responsible for the negotiation,
administration, and enforcement of oil and gas sales agreements covering the
Partnerships' leasehold interests. Because affiliates of the Partnerships who
provide services to the Partnerships have fiduciary or other duties to other
members of Samson, contract amendments and negotiating positions taken by them
in their effort to enforce contracts with purchasers may not necessarily
represent the positions that the Partnerships would take if they were to
administer their own contracts without involvement with other members of Samson.
On the other hand, management believes that the Partnerships' negotiating
strength and contractual positions have been enhanced by virtue of their
affiliation with Samson.
65
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements, Financial Statement Schedules, and
Exhibits.
(1) Financial Statements: The following financial statements
for the
Geodyne Energy Income Limited Partnership I-B
Geodyne Energy Income Limited Partnership I-C
Geodyne Energy Income Limited Partnership I-D
Geodyne Energy Income Limited Partnership I-E
Geodyne Energy Income Limited Partnership I-F
as of December 31, 1998 and 1997 and for each of the three
years in the period ended December 31, 1998 are filed as part
of this report:
Report of Independent Accountants
Combined Balance Sheets
Combined Statements of Operations
Combined Statements of Changes in
Partners' Capital (Deficit)
Combined Statements of Cash Flows
Notes to Combined Financial Statements
(2) Financial Statement Schedules:
None.
(3) Exhibits:
4.1 The Certificate and Agreements of Limited Partnership
for the following Partnerships have been previously
filed with the SEC as Exhibit 2.1 to Form 8-A filed by
each Partnership on the dates shown below and are hereby
incorporated by reference.
Partnership Filing Date File No.
----------- ------------ --------
I-B May 23, 1986 0-14657
I-C May 23, 1986 0-14658
I-D May 5, 1987 0-15831
I-E May 5, 1987 0-15832
I-F May 5, 1987 0-15833
66
4.2 Second Amendment to Amended and Restated Agreement and
Certificate of Limited Partnership of Geodyne Energy
Income Limited Partnership I-B, filed as Exhibit 4.1 to
Registrant's Current Report on Form 8-K dated August 2,
1993 filed with the SEC on August 10, 1993 and is hereby
incorporated by reference.
4.3 Second Amendment to Amended and Restated Agreement and
Certificate of Limited Partnership of Geodyne Energy
Income Limited Partnership I-C, filed as Exhibit 4.2 to
Registrant's Current Report on Form 8-K dated August 2,
1993 filed with the SEC on August 10, 1993 and is hereby
incorporated by reference.
4.4 Second Amendment to Amended and Restated Agreement and
Certificate of Limited Partnership of Geodyne Energy
Income Limited Partnership I-D, filed as Exhibit 4.3 to
Registrant's Current Report on Form 8-K dated August 2,
1993 filed with the SEC on August 10, 1993 and is hereby
incorporated by reference.
4.5 Second Amendment to Amended and Restated Agreement and
Certificate of Limited Partnership of Geodyne Energy
Income Limited Partnership I-E, filed as Exhibit 4.4 to
Registrant's Current Report on Form 8-K dated August 2,
1993 filed with the SEC on August 10, 1993 and is hereby
incorporated by reference.
4.6 Second Amendment to Amended and Restated Agreement and
Certificate of Limited Partnership of Geodyne Energy
Income Limited Partnership I-F, filed as Exhibit 4.5 to
Registrant's Current Report on Form 8-K dated August 2,
1993 filed with the SEC on August 10, 1993 and is hereby
incorporated by reference.
* 23.1 Consent of Ryder Scott Company Petroleum Engineers
for Geodyne Energy Income Limited Partnership I-B.
* 23.2 Consent of Ryder Scott Company Petroleum Engineers
for Geodyne Energy Income Limited Partnership I-C.
67
* 23.3 Consent of Ryder Scott Company Petroleum Engineers
for Geodyne Energy Income Limited Partnership I-D.
* 23.4 Consent of Ryder Scott Company Petroleum Engineers
for Geodyne Energy Income Limited Partnership I-E.
* 23.5 Consent of Ryder Scott Company Petroleum Engineers
for Geodyne Energy Income Limited Partnership I-F.
* 27.1 Financial Data Schedule containing summary financial
information extracted from the Geodyne Energy Income
Limited Partnership I-B's financial statements as of
December 31, 1998 and for the year ended December 31,
1998.
* 27.2 Financial Data Schedule containing summary financial
information extracted from the Geodyne Energy Income
Limited Partnership I-C's financial statements as of
December 31, 1998 and for the year ended December 31,
1998.
* 27.3 Financial Data Schedule containing summary financial
information extracted from the Geodyne Energy Income
Limited Partnership I-D's financial statements as of
December 31, 1998 and for the year ended December 31,
1998.
* 27.4 Financial Data Schedule containing summary financial
information extracted from the Geodyne Energy Income
Limited Partnership I-E's financial statements as of
December 31, 1998 and for the year ended December 31,
1998.
* 27.5 Financial Data Schedule ontaining summary financial
information extracted from the Geodyne Energy Income
Limited Partnership I-F's financial statements as of
December 31, 1998 and for the year ended December 31,
1998.
All other Exhibits are omitted as inapplicable.
----------------------
*Filed herewith.
68
(b) Reports on Form 8-K filed during the fourth quarter of 1998:
None.
69
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly organized.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-B
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-C
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F
By: GEODYNE RESOURCES, INC.
General Partner
February 25, 1999
By: /s/Dennis R. Neill
------------------------------
Dennis R. Neill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
By: /s/Dennis R. Neill President and February 25, 1999
------------------- Director (Principal
Dennis R. Neill Executive Officer)
/s/Patrick M. Hall (Principal February 25, 1999
------------------- Financial and
Patrick M. Hall Accounting Officer)
/s/Judy K. Fox Secretary February 25, 1999
-------------------
Judy K. Fox
70
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-B
GEODYNE PRODUCTION PARTNERSHIP I-B
In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, changes in partners' capital (deficit) and
cash flows present fairly, in all material respects, the combined financial
position of the Geodyne Energy Income Limited Partnership I-B, an Oklahoma
limited partnership, and Geodyne Production Partnership I-B, an Oklahoma general
partnership, at December 31, 1998 and 1997, and the combined results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Partnerships'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma
February 12, 1999
F-1
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-B
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-B
Combined Balance Sheets
December 31, 1998 and 1997
ASSETS
------
1998 1997
------------ ---------
CURRENT ASSETS:
Cash and cash equivalents $ 20,930 $ 77,028
Accounts receivable:
Oil and gas sales 18,364 53,389
Accounts receviable -
General Partner (Note 1) 6,814 -
------- -------
Total current assets $ 46,108 $130,417
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 275,445 327,137
DEFERRED CHARGE 74,248 99,262
------- -------
$395,801 $556,816
======= =======
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 24,273 $ 9,366
Gas imbalance payable - 3,116
------- -------
Total current liabilities $ 24,273 $ 12,482
ACCRUED LIABILITY $ 23,490 $ 22,520
PARTNERS' CAPITAL (DEFICIT):
General Partner ($107,999) ($103,542)
Limited Partners, issued and
outstanding, 11,958 Units 456,037 625,356
------- -------
Total Partners' capital $348,038 $521,814
------- -------
$395,801 $556,816
======= =======
The accompanying notes are an integral part of these
combined financial statements.
F-2
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-B
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-B
Combined Statements of Operations
For the Years Ended December 31, 1998, 1997, and 1996
1998 1997 1996
---------- ---------- ----------
REVENUES:
Oil and gas sales $241,164 $358,282 $364,052
Interest income 1,389 824 327
Gain (loss) on sale of oil
and gas properties ( 106) 17,912 598
------- ------- -------
$242,447 $377,018 $364,977
COSTS AND EXPENSES:
Lease operating $106,462 $111,961 $112,778
Production tax 14,298 24,339 18,557
Depreciation, depletion,
and amortization of oil
and gas properties 51,948 69,696 63,333
Impairment provision - 19,726 -
General and administrative 53,224 62,224 63,108
------- ------- -------
$225,932 $287,946 $257,776
------- ------- -------
NET INCOME $ 16,515 $ 89,072 $107,201
======= ======= =======
GENERAL PARTNER -
NET INCOME $ 2,834 $ 7,989 $ 7,877
======= ======= =======
LIMITED PARTNERS - NET
INCOME $ 13,681 $ 81,083 $ 99,324
======= ======= =======
NET INCOME per Unit $ 1.14 $ 6.78 $ 8.31
======= ======= =======
UNITS OUTSTANDING 11,958 11,958 11,958
======= ======= =======
The accompanying notes are an integral part of these
combined financial statements.
F-3
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-B
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-B
Combined Statements of Changes in Partners' Capital (Deficit)
For the Years Ended December 31, 1998, 1997, and 1996
Limited General
Partners Partner Total
------------ --------- ---------
Balance, Dec. 31, 1995 $636,949 ($104,724) $532,225
Net income 99,324 7,877 107,201
Cash distributions ( 78,000) ( 5,679) ( 83,679)
-------- ------- -------
Balance, Dec. 31, 1996 $658,273 ($102,526) $555,747
Net income 81,083 7,989 89,072
Cash distributions ( 114,000) ( 9,005) ( 123,005)
------- ------- -------
Balance, Dec. 31, 1997 $625,356 ($103,542) $521,814
Net income 13,681 2,834 16,515
Cash distributions ( 183,000) ( 7,291) ( 190,291)
------- ------- -------
Balance, Dec. 31, 1998 $456,037 ($107,999) $348,038
======= ======= =======
The accompanying notes are an integral part of these
combined financial statements.
F-4
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-B
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-B
Combined Statements of Cash Flows
For the Years Ended December 31, 1998, 1997, and 1996
1998 1997 1996
---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 16,515 $ 89,072 $107,201
Adjustments to reconcile net
income to net cash
provided by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 51,948 69,696 63,333
Impairment provision - 19,726 -
(Gain) loss on sale of oil
and gas properties 106 ( 17,912) ( 598)
(Increase) decrease in
accounts receivable
- oil and gas sales 35,025 1,247 ( 16,183)
(Increase) decrease in
accounts receivable
-General Partner ( 6,814) - 4,074
(Increase) decrease in
deferred charge 25,014 22,088 ( 23,072)
Increase (decrease) in
accounts payable 14,907 ( 7,932) 9,639
Decrease in gas
imbalance payable ( 3,116) ( 1,866) ( 69,001)
Increase (decrease) in
accrued Liability 970 ( 8,590) ( 3,063)
------- ------- -------
Net cash provided by operating
activities $134,555 $165,529 $ 72,330
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 362) ($ 1,149) ($ 445)
Proceeds from sale of oil and
gas properties - 21,848 598
------- ------- -------
Net cash provided (used) by
investing activities ($ 362) $ 20,699 $ 153
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($190,291) ($123,005) ($ 83,679)
------- ------- -------
Net cash used by financing
activities ($190,291) ($123,005) ($ 83,679)
------- ------- -------
F-5
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ($ 56,098) $ 63,223 ($ 11,196)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 77,028 13,805 25,001
------- ------- -------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 20,930 $ 77,028 $ 13,805
======= ======= =======
The accompanying notes are an integral part of these
combined financial statements.
F-6
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-C
GEODYNE PRODUCTION PARTNERSHIP I-C
In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, changes in partners' capital (deficit) and
cash flows present fairly, in all material respects, the combined financial
position of the Geodyne Energy Income Limited Partnership I-C, an Oklahoma
limited partnership, and Geodyne Production Partnership I-C, an Oklahoma general
partnership, at December 31, 1998 and 1997, and the combined results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Partnerships'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma
February 12, 1999
F-7
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-C
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-C
Combined Balance Sheets
December 31, 1998 and 1997
ASSETS
------
1998 1997
--------- ---------
CURRENT ASSETS:
Cash and cash equivalents $ 33,065 $141,699
Accounts receivable:
Oil and gas sales 51,790 130,355
General Partner (Note 1) 18,767 -
------- -------
Total current assets $103,622 $272,054
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 175,640 334,734
DEFERRED CHARGE 80,059 110,943
------- -------
$359,321 $717,731
======= =======
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 13,520 $ 22,321
ACCRUED LIABILITY $ 12,927 $ 18,103
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 96,039) ($ 89,189)
Limited Partners, issued and
outstanding, 8,885 Units 428,913 766,496
------- -------
Total Partners' capital $332,874 $677,307
------- -------
$359,321 $717,731
======= =======
The accompanying notes are an integral part of these
combined financial statements.
F-8
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-C
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-C
Combined Statements of Operations
For the Years Ended December 31, 1998, 1997, and 1996
1998 1997 1996
-------- -------- ---------
REVENUES:
Oil and gas sales $467,230 $951,678 $1,181,096
Interest income 2,583 3,737 6,501
Gain (loss)on sale of
oil and gas properties 1,096 24,387 ( 41,696)
------- ------- ---------
$470,909 $979,802 $1,145,901
COSTS AND EXPENSES:
Lease operating $198,900 $249,590 $ 172,009
Production tax 29,238 62,151 69,689
Depreciation, depletion,
and amortization of oil
and gas properties 158,458 58,048 58,370
Impairment provision - 4,679 -
General and administrative 85,759 106,274 107,144
------- ------- ----------
$472,355 $480,742 $ 407,212
------- ------- ---------
NET INCOME (LOSS) ($ 1,446) $499,060 $ 738,689
======= ======= =========
GENERAL PARTNER - NET INCOME $ 6,137 $ 27,253 $ 38,944
======= ======= =========
LIMITED PARTNERS - NET INCOME
(LOSS) ($ 7,583) $471,807 $ 699,745
======= ======= =========
NET INCOME (LOSS) per Unit ($ .85) $ 53.10 $ 78.76
======= ======= =========
UNITS OUTSTANDING 8,885 8,885 8,885
======= ======= =========
The accompanying notes are an integral part of these
combined financial statements.
F-9
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-C
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-C
Combined Statements of Changes in Partners' Capital (Deficit)
For the Years Ended December 31, 1998, 1997, and 1996
Limited General
Partners Partner Total
------------ --------- ------------
Balance, Dec. 31, 1995 $800,944 ($66,308) $734,636
Net income 699,745 38,944 738,689
Cash distributions ( 663,000) ( 58,135) ( 721,135)
------- ------ -------
Balance, Dec. 31, 1996 $837,689 ($85,499) $752,190
Net income 471,807 27,253 499,060
Cash distributions ( 543,000) ( 30,943) ( 573,943)
------- ------ -------
Balance, Dec. 31, 1997 $766,496 ($89,189) $677,307
Net income (loss) ( 7,583) 6,137 ( 1,446)
Cash distributions ( 330,000) ( 12,987) ( 342,987)
------- ------ -------
Balance, Dec. 31, 1998 $428,913 ($96,039) $332,874
======= ====== =======
The accompanying notes are an integral part of these
combined financial statements.
F-10
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-C
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-C
Combined Statements of Cash Flows
For the Years Ended December 31, 1998, 1997, and 1996
1998 1997 1996
---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($ 1,446) $499,060 $738,689
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 158,458 58,048 58,370
Impairment provision - 4,679 -
(Gain) loss on sale of oil
and gas properties ( 1,096) ( 24,387) 41,696
(Increase) decrease in
accounts receivable
- oil and gas sales 78,565 32,951 ( 1,734)
(Increase) decrease in
accounts receivable
- General Partner ( 18,767) 14,922 3,182
(Increase) decrease in
deferred charge 30,884 ( 44,061) ( 27,425)
Increase (decrease) in
accounts payable ( 8,801) 5,427 113
Decrease in gas
imbalance payable - - ( 13,021)
Increase (decrease) in
accrued liability ( 5,176) 5,717 ( 3,246)
------- ------- -------
Net cash provided by operating
activities $232,621 $552,356 $796,624
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures $ - ($100,573) ($ 1,039)
Proceeds from sale of oil and
gas properties 1,732 45,422 28,172
------- ------- -------
Net cash provided (used) by
investing activities $ 1,732 ($ 55,151) $ 27,133
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($342,987) ($573,943) ($721,135)
------- ------- -------
Net cash used by financing
activities ($342,987) ($573,943) ($721,135)
------- ------- -------
F-11
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ($108,634) ($ 76,738) $102,622
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 141,699 218,437 115,815
------- ------- -------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 33,065 $141,699 $218,437
======= ======= =======
The accompanying notes are an integral part of these
combined financial statements.
F-12
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D
GEODYNE PRODUCTION PARTNERSHIP I-D
In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, changes in partners' capital (deficit) and
cash flows present fairly, in all material respects, the combined financial
position of the Geodyne Energy Income Limited Partnership I-D, an Oklahoma
limited partnership, and Geodyne Production Partnership I-D, an Oklahoma general
partnership, at December 31, 1998 and 1997, and the combined results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Partnerships'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma
February 12, 1999
F-13
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-D
Combined Balance Sheets
December 31, 1998 and 1997
ASSETS
------
1998 1997
----------- ----------
CURRENT ASSETS:
Cash and cash equivalents $167,361 $ 274,109
Accounts receivable:
Oil and gas sales 134,477 256,001
------- ---------
Total current assets $301,838 $ 530,110
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 605,793 714,156
DEFERRED CHARGE 66,062 104,793
------- ---------
$973,693 $1,349,059
======= =========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
CURRENT LIABILITIES:
Accounts payable $ 9,270 $ 31,310
Gas imbalance payable 43,521 39,971
------- ---------
Total current liabilities $ 52,791 $ 71,281
ACCRUED LIABILITY $ 14,456 $ 14,345
PARTNERS' CAPITAL:
General Partner ($ 53,161) ($ 27,560)
Limited Partners, issued and
outstanding, 7,195 Units 959,607 1,290,993
------- ---------
Total Partners' capital $906,446 $1,263,433
------- ---------
$973,693 $1,349,059
======= =========
The accompanying notes are an integral part of these
combined financial statements.
F-14
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-D
Combined Statements of Operations
For the Years Ended December 31, 1998, 1997, and 1996
1998 1997 1996
----------- ----------- ----------
REVENUES:
Oil and gas sales $1,061,235 $1,545,097 $1,812,568
Interest income 11,601 10,558 11,473
Gain on sale of oil and
gas properties 260,624 24,113 41,516
--------- --------- ---------
$1,333,460 $1,579,768 $1,865,557
COSTS AND EXPENSES:
Lease operating $ 162,006 $ 183,675 $ 175,311
Production tax 72,475 110,675 115,537
Depreciation, depletion,
and amortization of oil
and gas properties 97,974 112,862 148,467
Impairment provision - 61,790 -
General and administrative 89,722 91,372 92,138
--------- ---------- ---------
$ 422,177 $ 560,374 $ 531,453
--------- --------- ---------
NET INCOME $ 911,283 $1,019,394 $1,334,104
========= ========= =========
GENERAL PARTNER -
NET INCOME $ 148,669 $ 173,924 $ 219,180
========= ========= =========
LIMITED PARTNERS - NET INCOME $ 762,614 $ 845,470 $1,114,924
========= ========= =========
NET INCOME per Unit $ 105.99 $ 117.51 $ 154.96
========= ========= =========
UNITS OUTSTANDING 7,195 7,195 7,195
========= ========= =========
The accompanying notes are an integral part of these
combined financial statements.
F-15
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-D
Combined Statements of Changes in Partners' Capital (Deficit)
For the Years Ended December 31, 1998, 1997, and 1996
Limited General
Partners Partner Total
------------ ---------- ------------
Balance, Dec. 31, 1995 $1,460,599 $ 17,993 $1,478,592
Net income 1,114,924 219,180 1,334,104
Cash distributions ( 1,035,000) ( 241,421) ( 1,276,421)
--------- ------- ---------
Balance, Dec. 31, 1996 $1,540,523 ($ 4,248) $1,536,275
Net income 845,470 173,924 1,019,394
Cash distributions ( 1,095,000) ( 197,236) ( 1,292,236)
--------- ------- ---------
Balance, Dec. 31, 1997 $1,290,993 ($ 27,560) $1,263,433
Net income 762,614 148,669 911,283
Cash distributions ( 1,094,000) ( 174,270) ( 1,268,270)
--------- ------- ---------
Balance, Dec. 31, 1998 $ 959,607 ($ 53,161) $ 906,446
========= ======= =========
The accompanying notes are an integral part of these
combined financial statements.
F-16
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-D
Combined Statements of Cash Flows
For the Years Ended December 31, 1998, 1997, and 1996
1998 1997 1996
----------- ---------- ----------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 911,283 $1,019,394 $1,334,104
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation, depletion,
and amortization of oil
and gas properties 97,974 112,862 148,467
Impairment provision - 61,790 -
Gain on sale of oil and
gas properties ( 260,624) ( 24,113) ( 41,516)
(Increase) decrease in
accounts receivable -
oil and gas sales 121,524 50,856 ( 82,001)
(Increase) decrease in
deferred charge 38,731 ( 6,778) 15,475
Increase (decrease) in
accounts payable ( 22,040) 16,025 ( 15,464)
Increase (decrease) in gas
imbalance payable 3,550 3,284 ( 30,443)
Increase (decrease) in accrued
liability 111 ( 2,471) ( 1,154)
--------- --------- ---------
Net cash provided by
operating activities $ 890,509 $1,230,849 $1,327,468
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ($ 1,811) ($ 34,805) ($ 10,930)
Proceeds from sale of
oil and gas properties 272,824 25,350 59,168
--------- --------- ---------
Net cash provided (used)
by investing activities $ 271,013 ($ 9,455) $ 48,238
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($1,268,270) ($1,292,236) ($1,276,421)
--------- --------- ---------
Net cash used by financing
activities ($1,268,270) ($1,292,236) ($1,276,421)
--------- --------- ---------
F-17
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS ($ 106,748) ($ 70,842) $ 99,285
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 274,109 344,951 245,666
--------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 167,361 $ 274,109 $ 344,951
========= ========= =========
The accompanying notes are an integral part of these
combined financial statements.
F-18
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E
GEODYNE PRODUCTION PARTNERSHIP I-E
In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, changes in partners' capital (deficit) and
cash flows present fairly, in all material respects, the combined financial
position of the Geodyne Energy Income Limited Partnership I-E, an Oklahoma
limited partnership, and Geodyne Production Partnership I-E, an Oklahoma general
partnership, at December 31, 1998 and 1997, and the combined results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Partnerships'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma
February 12, 1999
F-19
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-E
Combined Balance Sheets
December 31, 1998 and 1997
ASSETS
------
1998 1997
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 12,003 $ 827,775
Accounts receivable:
Oil and gas sales 651,445 994,354
Other - 69,917
--------- ---------
Total current assets $ 663,448 $1,892,046
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 4,191,663 4,844,378
DEFERRED CHARGE 570,545 750,369
--------- ---------
$5,425,656 $7,486,793
========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 209,486 $ 257,524
Gas imbalance payable 115,808 135,884
--------- ---------
Total current liabilities $ 325,294 $ 393,408
ACCRUED LIABILITY $ 151,490 $ 138,356
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 232,100) ($ 228,434)
Limited Partners, issued and
outstanding, 41,839 Units 5,180,972 7,183,463
--------- ---------
Total Partners' capital $4,948,872 $6,955,029
--------- ---------
$5,425,656 $7,486,793
========= =========
The accompanying notes are an integral part of these
combined financial statements.
F-20
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-E
Combined Statements of Operations
For the Years Ended December 31, 1998, 1997, and 1996
1998 1997 1996
---------- ---------- ---------
REVENUES:
Oil and gas sales $4,611,235 $6,004,252 $6,006,431
Interest income 39,917 34,723 35,005
Gain on sale of oil and
gas properties 1,154,155 120,840 296,937
Other income - 69,917 -
--------- --------- ---------
$5,805,307 $6,229,732 $6,338,373
COSTS AND EXPENSES:
Lease operating $1,182,851 $1,337,863 $1,303,281
Production tax 323,993 433,287 403,038
Depreciation, depletion,
and amortization of oil
and gas properties 756,985 729,388 842,214
Impairment provision 547,048 291,690 -
General and administrative 516,682 526,066 527,292
--------- --------- ---------
$3,327,559 $3,318,294 $3,075,825
--------- --------- ---------
NET INCOME $2,477,748 $2,911,438 $3,262,548
========= ========= =========
GENERAL PARTNER -
NET INCOME $ 548,239 $ 568,504 $ 602,481
========= ========= =========
LIMITED PARTNERS - NET INCOME $1,929,509 $2,342,934 $2,660,067
========= ========= =========
NET INCOME per Unit $ 46.12 $ 56.00 $ 63.58
========= ========= =========
UNITS OUTSTANDING 41,839 41,839 41,839
========= ========= =========
The accompanying notes are an integral part of these
combined financial statements.
F-21
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-E
Combined Statements of Changes in Partners' Capital (Deficit)
For the Years Ended December 31, 1998, 1997, and 1996
Limited General
Partners Partner Total
------------ ---------- -------------
Balance, Dec. 31, 1995 $8,493,462 ($ 54,687) $8,438,775
Net Income 2,660,067 602,481 3,262,548
Cash distributions ( 2,853,000) ( 660,934) ( 3,513,934)
--------- ------- ---------
Balance, Dec. 31, 1996 $8,300,529 ($113,140) $8,187,389
Net income 2,342,934 568,504 2,911,438
Cash distributions ( 3,460,000) ( 683,798) ( 4,143,798)
--------- ------- ---------
Balance, Dec. 31, 1997 $7,183,463 ($228,434) $6,955,029
Net income 1,929,509 548,239 2,477,748
Cash distributions ( 3,932,000) ( 551,905) ( 4,483,905)
--------- ------- ---------
Balance, Dec. 31, 1998 $5,180,972 ($232,100) $4,948,872
========= ======= =========
The accompanying notes are an integral part of these
combined financial statements.
F-22
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-E
Combined Statements of Cash Flows
For the Years Ended December 31, 1998, 1997, and 1996
1998 1997 1996
------------ ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $2,477,748 $2,911,438 $3,262,548
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation, depletion,
and amortization of oil
and gas properties 756,985 729,388 842,214
Impairment provision 547,048 291,690 -
Gain on sale of oil and
gas properties ( 1,154,155) ( 120,840) ( 296,937)
(Increase) decrease in
accounts receivable -
oil and gas sales 342,909 238,720 ( 457,303)
(Increase) decrease in
accounts receivable
- other 69,917 ( 69,917) -
Decrease in deferred
charge 179,824 72,455 119,923
Increase (decrease) in
accounts payable ( 48,038) 139,262 ( 54,626)
Increase (decrease) in gas
imbalance payable ( 20,076) 11,684 ( 86,031)
Increase (decrease) in
accrued liability 13,134 ( 4,307) 7,217
--------- --------- ---------
Net cash provided by
operating activities $3,165,296 $4,199,573 $3,337,005
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ($ 762,520) ($ 279,631) ($ 55,490)
Proceeds from sale of
oil and gas properties 1,265,357 156,744 392,990
--------- --------- ---------
Net cash provided (used)
by investing activities $ 502,837 ($ 122,887) $ 337,500
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($4,483,905) ($4,143,798) ($3,513,934)
--------- --------- ---------
F-23
Net cash used by financing
activities ($4,483,905) ($4,143,798) ($3,513,934)
--------- --------- ---------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS ($ 815,772) ($ 67,112) $ 160,571
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 827,775 894,887 734,316
--------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 12,003 $ 827,775 $ 894,887
========= ========= =========
The accompanying notes are an integral part of these
combined financial statements.
F-24
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F
GEODYNE PRODUCTION PARTNERSHIP I-F
In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, changes in partners' capital (deficit) and
cash flows present fairly, in all material respects, the combined financial
position of the Geodyne Energy Income Limited Partnership I-F, an Oklahoma
limited partnership, and Geodyne Production Partnership I-F, an Oklahoma general
partnership, at December 31, 1998 and 1997, and the combined results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Partnerships'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma
February 12, 1999
F-25
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-F
Combined Balance Sheets
December 31, 1998 and 1997
ASSETS
------
1998 1997
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 5,457 $ 251,220
Accounts receivable:
Oil and gas sales 195,444 307,734
Other - 48,942
--------- ---------
Total current assets $ 200,901 $ 607,896
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 1,311,368 1,457,908
DEFERRED CHARGE 346,704 501,016
--------- ---------
$1,858,973 $2,566,820
========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 406,740 $ 53,205
Gas imbalance payable 38,738 47,046
--------- ---------
Total current liabilities $ 445,478 $ 100,251
ACCRUED LIABILITY $ 109,153 $ 116,401
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 94,547) ($ 59,811)
Limited Partners, issued and
outstanding, 14,321 Units 1,398,889 2,409,979
--------- ---------
Total Partners' capital $1,304,342 $2,350,168
--------- ---------
$1,858,973 $2,566,820
========= =========
The accompanying notes are an integral part of these
combined financial statements.
F-26
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-F
Combined Statements of Operations
For the Years Ended December 31, 1998, 1997, and 1996
1998 1997 1996
---------- ---------- ----------
REVENUES:
Oil and gas sales $1,442,718 $2,021,805 $2,121,336
Interest income 12,630 11,252 12,228
Gain on sale of oil and
gas properties 380,920 76,108 160,187
Other income - 48,942 -
--------- --------- ---------
$1,836,268 $2,158,107 $2,293,751
COSTS AND EXPENSES:
Lease operating $ 571,401 $ 540,388 $ 622,452
Production tax 96,615 143,412 135,940
Depreciation, depletion,
and amortization of oil
and gas properties 254,674 257,820 270,978
Impairment provision 382,925 114,631 -
General and administrative 177,383 180,860 182,290
--------- --------- ---------
$1,482,998 $1,237,111 $1,211,660
--------- --------- ---------
NET INCOME $ 353,270 $ 920,996 $1,082,091
========= ========= =========
GENERAL PARTNER -
NET INCOME $ 140,360 $ 183,677 $ 198,724
========= ========= =========
LIMITED PARTNERS - NET INCOME $ 212,910 $ 737,319 $ 883,367
========= ========= =========
NET INCOME per Unit $ 14.87 $ 51.49 $ 61.68
========= ========= =========
UNITS OUTSTANDING 14,321 14,321 14,321
========= ========= =========
The accompanying notes are an integral part of these
combined financial statements.
F-27
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-F
Combined Statements of Changes in Partners' Capital (Deficit)
For the Years Ended December 31, 1998, 1997, and 1996
Limited General
Partners Partner Total
------------ ---------- ------------
Balance, Dec. 31, 1995 $2,923,293 ($ 25,679) $2,897,614
Net income 883,367 198,724 1,082,091
Cash distributions ( 961,000) ( 232,155) ( 1,193,155)
--------- ------- ---------
Balance, Dec. 31, 1996 $2,845,660 ($ 59,110) $2,786,550
Net income 737,319 183,677 920,996
Cash distributions ( 1,173,000) ( 184,378) ( 1,357,378)
--------- ------- ---------
Balance, Dec. 31, 1997 $2,409,979 ($ 59,811) $2,350,168
Net income 212,910 140,360 353,270
Cash distributions ( 1,224,000) ( 175,096) ( 1,399,096)
--------- ------- ---------
Balance, Dec. 31, 1998 $1,398,889 ($ 94,547) $1,304,342
========= ======= =========
The accompanying notes are an integral part of these
combined financial statements.
F-28
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-F
Combined Statements of Cash Flows
For the Years Ended December 31, 1998, 1997, and 1996
1998 1997 1996
------------ ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 353,270 $ 920,996 $1,082,091
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation, depletion,
and amortization of oil
and gas properties 254,674 257,820 270,978
Impairment provision 382,925 114,631 -
Gain on sale of oil
and gas properties ( 380,920) ( 76,108) (160,187)
(Increase) decrease in
accounts receivable -
oil and gas sales 112,290 124,154 (157,539)
(Increase) decrease in
accounts receivable
- other 48,942 ( 48,942) -
(Increase) decrease in
deferred charge 154,312 ( 35,815) 73,657
Increase (decrease) in
accounts payable 353,535 5,841 ( 16,778)
Increase (decrease) in gas
imbalance payable ( 8,308) 1,767 ( 37,924)
Increase (decrease) in
accrued liability ( 7,248) 12,611 24,355
--------- --------- ---------
Net cash provided by
operating activities $1,263,472 $1,276,955 $1,078,653
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ($ 548,339) ($ 104,709) ($ 27,863)
Proceeds from sale of
oil and gas properties 438,200 97,288 208,776
--------- --------- ---------
Net cash provided (used)
by investing activities ($ 110,139) ($ 7,421) $180,913
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions ($1,399,096) ($1,357,378) ($1,193,155)
--------- --------- ---------
F-29
Net cash used by financing
activities ($1,399,096) ($1,357,378) ($1,193,155)
--------- --------- ---------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS ($ 245,763) ($ 87,844) $ 66,411
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 251,220 339,064 272,653
--------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 5,457 $ 251,220 $339,064
========= ========= =========
The accompanying notes are an integral part of these
combined financial statements.
F-30
GEODYNE ENERGY INCOME PROGRAM I LIMITED PARTNERSHIPS
Notes to the Combined Financial Statements For the Years Ended
December 31, 1998, 1997, and 1996
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations
The Geodyne Energy Income Limited Partnerships (the "Partnerships") were
formed pursuant to a public offering of depositary units ("Units"). Upon
formation, investors became limited partners (the "Limited Partners") and held
Units issued by each Partnership. Geodyne Resources, Inc. is the general partner
of the Partnerships. Each Partnership is a general partner in the related
Geodyne Energy Income Production Partnership (collectively, the "Production
Partnership") in which Geodyne Resources, Inc. serves as the managing partner.
Limited Partner capital contributions were contributed to the related Production
Partnerships for investment in producing oil and gas properties. The
Partnerships were activated on the following dates with the following Limited
Partner capital contributions:
Limited
Partner
Date of Capital
Partnership Activation Contributions
----------- ------------------ --------------
I-B July 12, 1985 $11,957,700
I-C December 20, 1985 8,884,900
I-D March 4, 1986 7,194,700
I-E September 10, 1986 41,839,400
I-F December 16, 1986 14,320,900
The Partnerships will terminate on December 31, 1999. However, the General
Partner may extend the term of each Partnership for up to five periods of two
years each. As of the date of these financial statements, the General Partner
currently intends to extend the term of the I-D, I-E, and I-F Partnerships for
the first two year extension period. With respect to the I-B and I-C
Partnerships, it is the General Partner's current intent to let these
Partnerships terminate on December 31, 1999 pursuant to the terms of their
Partnership Agreements. The General Partner will, however, over the next several
months evaluate all of the Partnerships' operations and then make a final
determination as to whether to extend any of their terms. It is anticipated that
a final decision will be made during the fourth quarter of 1999.
For purposes of these financial statements, the Partnerships and
Production Partnerships are collectively referred to as the "Partnerships" and
the general partner and managing partner are collectively referred to as the
"General Partner."
F-31
An affiliate of the General Partner owned the following Units at December
31, 1998:
Number of Percent of
Partnership Units Owned Outstanding Units
----------- ----------- -----------------
I-B 3,060 25.6%
I-C 1,038 11.7%
I-D 843 11.7%
I-E 6,604 15.8%
I-F 2,549 17.8%
The Partnerships' sole business is the development and production of oil
and gas. Substantially all of the Partnerships' gas reserves are being sold
regionally on the "spot market." Due to the highly competitive nature of the
spot market, prices on the spot market are subject to wide seasonal and regional
pricing fluctuations. In addition, such spot market sales are generally
short-term in nature and are dependent upon the obtaining of transportation
services provided by pipelines. The Partnerships' oil is sold at or near the
Partnerships' wells under short-term purchase contracts at prevailing
arrangements which are customary in the oil industry. The prices received for
the Partnerships' oil and gas are subject to influences such as global
consumption and supply trends. In 1998, the price of oil decreased to
historically low levels. If the price of oil remains low, or if it decreases
further, there may be a significant impact on the Partnerships' near-term
results of operations and cash flows.
Allocation of Costs and Revenues
The combination of the allocation provisions in each Partnership's limited
partnership agreement and each Production Partnership's partnership agreement
(collectively, the "Partnership Agreement") results in allocations of costs and
income between the Limited Partners and General Partner as follows:
Before Payout(1) After Payout(1)
-------------------- --------------------
General Limited General Limited
Partner Partners Partner Partners
-------- -------- -------- --------
Costs(2)
- ------------------------
Sales commissions, pay-
ment for organization
and offering costs
and management fee 1% 99% - -
Property acquisition
costs 1% 99% 1% 99%
Identified development
F-32
drilling 1% 99% 1% 99%
Development drilling 10% 90% 15% 85%
General and administra-
tive costs, direct
administrative costs
and operating costs(3) 10% 90% 15% 85%
Income(2)
- ------------------------
Temporary investments of
Limited Partners'
capital contributions 1% 99% 1% 99%
Income from oil and gas
production(3) 10% 90% 15% 85%
Sale of producing pro-
perties (3) 10% 90% 15% 85%
All other income 10% 90% 15% 85%
- ----------
(1) Payout occurs when total distributions to Limited Partners equal total
original Limited Partner subscriptions.
(2) The allocations in the table result generally from the combined effect of
the allocation provisions in the Partnership Agreements. For example, the
costs incurred in development drilling are allocated 90.9091% to the
limited partnership and 9.0909% to the managing partner. The 90.9091%
portion of these costs allocated to the limited partnership, when passed
through the limited partnership, is further allocated 99% to the limited
partners and 1% to the general partner. In this manner the Limited
Partners are allocated 90% of such costs and the General Partner is
allocated 10% of such costs.
(3) Distributions of cash and the above allocation of income and costs of the
General Partner are subject to subordination during the first two
twelve-month "allocation periods". The first twelve-month "allocation
period" commenced on the last day of the first full fiscal quarter after
the earlier of (i) the date on which 90% of a limited partnership's
capital contribution to a Production Partnership has been expended or (ii)
two years after activation of a Production Partnership. The second
twelve-month "allocation period" commenced at the end of the first
allocation period. To the extent that the amount of cash distributed in
the allocation periods is insufficient to permit the Limited Partners to
receive a 15% cumulative (but not compounded) twelve-month return on their
capital contributions, up to one-half of the managing partners' share of
distributable cash after each such allocation period, and a corresponding
amount of their allocable share of income and costs, shall thereafter be
allocated to permit the Limited Partners to receive, to the extent
available, the aggregate amount of such deficiency. After the allocation
periods, the managing partner may recoup amounts previously allocated to
the Limited Partners pursuant to this subordination provision to the
extent
F-33
income is otherwise sufficient to permit Limited Partners to receive at
least a 15% cumulative (but not compounded) twelve-month return since the
commencement of the allocation periods.
Currently, the I-B and I-C Partnerships are subject to subordination as
discussed above, as the Limited Partners did not receive a 15% cumulative cash
distribution; therefore, one-half of the General Partner's income and costs for
those Partnerships are being allocated to the Limited Partners.
The I-D Partnership achieved payout late in 1991. Beginning with 1992,
operations for the I-D Partnership were allocated using the after payout
percentages set forth in the table. The I-E and I-F Partnerships achieved payout
during the second quarter of 1995. Beginning with the second quarter of 1995,
operations for the I-E and I-F Partnerships were allocated using the after
payout percentages.
Basis of Presentation
These financial statements reflect the combined accounts of each
Partnership after the elimination of all inter-partnership transactions and
balances.
Cash and Cash Equivalents
The Partnerships consider all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. Cash equivalents are
not insured, which cause the Partnerships to be subject to risk.
Credit Risk
Accrued oil and gas sales which are due from a variety of oil and gas
purchasers subject the Partnerships to a concentration of credit risk. Some of
these purchasers are discussed in Note 3 - Major Customers.
Accounts Receivable-General Partner
The accounts receivable-general partner at December 31, 1998 for the I-B
and I-C Partnerships represent refunds due for indirect general and
administrative expenses as a result of expense limitations imposed by the
Partnership Agreements. This receivable was collected during the first quarter
of 1999.
Oil and Gas Properties
The Partnerships follow the successful efforts method of accounting for
their oil and gas properties. Under the
F-34
successful efforts method, the Partnerships capitalize all property acquisition
costs and development costs incurred in connection with the further development
of oil and gas reserves. Property acquisition costs include costs incurred by
the Partnerships or the General Partner to acquire producing properties,
including related title insurance or examination costs, commissions,
engineering, legal and accounting fees, and similar costs directly related to
the acquisitions, plus an allocated portion of the General Partner's property
screening costs. The acquisition cost to the Partnerships of properties acquired
by the General Partner is adjusted to reflect the net cash results of
operations, including interest incurred to finance the acquisition, for the
period of time the properties are held by the General Partner. Leasehold
impairment of unproved properties is recognized based upon an individual
property assessment and exploratory experience. Upon discovery of commercial
reserves, leasehold costs are transferred to producing properties.
Depletion of the cost of producing oil and gas properties, amortization of
related intangible drilling and development costs, and depreciation of tangible
lease and well equipment are computed on the units-of-production method. The
Partnerships' depletion, depreciation, and amortization includes dismantlement
and abandonment costs, net of estimated salvage value. The depreciation,
depletion, and amortization rates per equivalent barrel of oil produced during
the years ended December 31, 1998, 1997, and 1996 were as follows:
Partnership 1998 1997 1996
----------- ------ ------ ------
I-B $2.52 $2.92 $2.31
I-C 4.53 1.06 .89
I-D 1.12 1.09 1.26
I-E 1.89 1.68 1.92
I-F 2.15 1.93 1.88
When complete units of depreciable property are retired or sold, the asset
cost and related accumulated depreciation are eliminated with any gain or loss
reflected in income. When less than complete units of depreciable property are
retired or sold, the proceeds are credited to oil and gas properties.
The Partnerships evaluate the recoverability of the carrying costs of
their proved oil and gas properties at the field level. If the unamortized costs
of oil and gas properties within a 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. During 1998, 1997, and 1996, the Partnerships recorded the
following non-cash charges against earnings (impairment provisions):
F-35
Partnership 1998 1997 1996
----------- --------- ------- ---------
I-B $ - $17,233 $ -
I-C - 4,679 -
I-D - 12,290 -
I-E 547,048 59,728 -
I-F 382,925 20,908 -
The risk that the Partnerships will be required to record similar impairment
provisions in the future increases as oil and gas prices decrease.
In addition, during 1997 the General Partner determined that the
Partnerships' unproved properties would be uneconomic to develop and, therefore,
of little or no value. This determination was based on an evaluation by the
General Partner that it was unlikely that these unproved properties would be
developed due to low oil and gas prices and provisions in the Partnership
Agreements which limit the level of permissible drilling activity. As a result
of this determination, the Partnerships recorded the following non-cash charges
against earnings at March 31, 1997 in order to reflect the writing-off of the
Partnerships' unproved properties:
Partnership Amount
----------- --------
I-B $ 2,493
I-C -
I-D 49,500
I-E 231,962
I-F 93,723
Deferred Charge
The Deferred Charge represents costs deferred for lease operating expenses
incurred in connection with the Partnerships' underproduced gas imbalance
positions. The rate used in calculating the deferred charge is the average of
the annual production costs per Mcf. At December 31, 1998 and 1997, cumulative
total gas sales volumes for underproduced wells were less than the Partnerships'
pro-rata share of total gas production from these wells by the following
amounts:
F-36
1998 1997
---------------------- ----------------------
Partnership Mcf Amount Mcf Amount
----------- --------- -------- --------- --------
I-B 106,556 $ 74,248 132,544 $ 99,262
I-C 57,663 80,059 68,009 110,943
I-D 244,675 66,062 308,124 104,793
I-E 1,162,007 570,545 1,430,637 750,369
I-F 433,055 346,704 519,564 501,016
Accrued Liability
The Accrued Liability represents charges accrued for lease operating
expenses incurred in connection with the Partnerships' overproduced gas
imbalance positions. The rate used in calculating the accrued liability is the
average of the annual production costs per Mcf. At December 31, 1998 and 1997,
cumulative total gas sales volumes for overproduced wells exceeded the
Partnerships' pro-rata share of total gas production from these wells by the
following amounts:
1998 1997
---------------------- --------------------
Partnership Mcf Amount Mcf Amount
----------- ------- -------- ------- --------
I-B 33,711 $ 23,490 30,071 $ 22,520
I-C 9,311 12,927 11,097 18,103
I-D 53,542 14,456 42,180 14,345
I-E 308,534 151,490 263,786 138,356
I-F 136,339 109,153 120,710 116,401
Oil and Gas Sales and Gas Imbalance Payable
The Partnerships' oil and condensate production is sold, title passed, and
revenue recognized at or near the Partnerships' wells under short-term purchase
contracts at prevailing prices in accordance with arrangements which are
customary in the oil industry. Sales of gas applicable to the Partnerships'
interest in producing oil and gas leases are recorded as revenue when the gas is
metered and title transferred pursuant to the gas sales contracts covering the
Partnerships' interest in gas reserves. During such times as a Partnership's
sales of gas exceed its pro rata ownership in a well, such sales are recorded as
revenue unless total sales from the well have exceeded the Partnership's share
of estimated total gas reserves underlying the property, at which time such
excess is recorded as a liability. The rates per Mcf used to calculate this
liability are based on the average gas prices received for the volumes at the
time the overproduction occurred. This also approximates the price for which the
Partnerships are currently settling this liability. At December
F-37
31, 1998 and 1997 total sales exceeded the Partnerships' share of estimated
total gas reserves as follows:
1998 1997
------------------- -------------------
Partnership Mcf Amount Mcf Amount
----------- ------- ------- ------- --------
I-B - $ - 2,077 $ 3,116
I-C - - - -
I-D 29,014 43,521 26,647 39,971
I-E 77,205 115,808 90,589 135,884
I-F 25,825 38,738 31,364 47,046
These amounts were recorded as gas imbalance payables in accordance with the
sales method. These gas imbalance payables will be settled by either gas
production by the underproduced party in excess of current estimates of total
gas reserves for the well or by a negotiated or contractual payment to the
underproduced party.
General and Administrative Overhead
The General Partner and its affiliates are reimbursed for actual general
and administrative costs incurred and attributable to the conduct of the
business affairs and operations of the Partnerships.
Use of Estimates in Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Further, the
deferred charge, the gas imbalance payable, and the accrued liability all
involve estimates which could materially differ from the actual amounts
ultimately realized or incurred in the near term. Oil and gas reserves (see Note
4) also involve significant estimates which could materially differ from the
actual amounts ultimately realized.
Income Taxes
Income or loss for income tax purposes is includable in the income tax
returns of the partners. Accordingly, no recognition has been given to income
taxes in these financial statements.
F-38
2. TRANSACTIONS WITH RELATED PARTIES
The Partnerships reimburse the General Partner for the general and
administrative overhead applicable to the Partnerships, based on an allocation
of actual costs incurred by the General Partner. When actual costs incurred
benefit other Partnerships and affiliates, the allocation of costs is based on
the relationship of the Partnerships' reserves to the total reserves owned by
all Partnerships and affiliates. The General Partner believes this allocation
method is reasonable. Although the actual costs incurred by the General Partner
and its affiliates have fluctuated during the three years presented, the amounts
charged to the Partnerships have not fluctuated every year due to expense
limitations imposed by the Partnership Agreements. The following is a summary of
payments made to the General Partner or its affiliates by the Partnerships for
general and administrative overhead costs for the years ended December 31, 1998,
1997, and 1996:
Partnership 1998 1997 1996
----------- -------- -------- --------
I-B $ 38,438 $ 45,252 $ 45,252
I-C 74,761 93,058 93,550
I-D 79,944 79,944 79,944
I-E 464,880 464,880 464,880
I-F 159,120 159,120 159,120
Affiliates of the Partnerships operate certain of the Partnerships'
properties and their policy is to bill the Partnerships for all customary
charges and cost reimbursements associated with these activities, together with
any compressor rentals, consulting, or other services provided. Such charges are
comparable to third party charges in the area where the wells are located and
are the same as charged to other working interest owners in the wells.
3. MAJOR CUSTOMERS
The following table sets forth purchasers who individually accounted for
ten percent or more of each Partnership's combined oil and gas sales for the
years ended December 31, 1998, 1997, and 1996:
F-39
Partnership Purchaser Percentage
- ----------- --------------------- --------------------------
1998 1997 1996
----- ----- -----
I-B Duke Energy Field
Services Inc. 27.8% - -
Byrd Operating Company 16.4% 18.7% 11.6%
Williams Energy
Services Co. - 24.4% -
El Paso Energy Marketing
Company ("El Paso") - 12.6% 10.0%
Parker & Parsley
Development Company - - 22.7%
I-C Hallwood Petroleum
("Hallwood") 39.3% 36.2% 42.8%
Conoco, Inc. ("Conoco") 28.4% 30.3% 25.2%
Koch Oil Company - 12.8% 18.3%
I-D El Paso 41.5% 35.5% 27.9%
Hallwood 20.0% 24.9% 31.8%
Conoco - 19.6% 23.1%
I-E El Paso 55.5% 51.3% 49.4%
I-F El Paso 35.6% 33.9% 31.9%
In the event of interruption of purchases by one or more of these
significant customers or the cessation or material change in availability of
open-access transportation by the Partnerships' pipeline transporters, the
Partnerships may encounter difficulty in marketing their gas and in maintaining
historic sales levels. Alternative purchasers or transporters may not be readily
available.
4. SUPPLEMENTAL OIL AND GAS INFORMATION
The following supplemental information regarding the oil and gas
activities of the Partnerships is presented pursuant to the disclosure
requirements promulgated by the SEC.
Capitalized Costs
Capitalized costs and accumulated depreciation, depletion, amortization,
and valuation allowance at December 31, 1998 and 1997 were as follows:
F-40
I-B Partnership
---------------
1998 1997
------------ -----------
Proved properties $6,510,128 $6,509,872
Less accumulated
depreciation,
depletion, amorti-
zation, and valua-
tion allowance ( 6,234,683) ( 6,182,735)
--------- ---------
Net oil and gas
Properties $ 275,445 $ 327,137
========= =========
I-C Partnership
---------------
1998 1997
------------ -----------
Proved properties $3,639,734 $3,641,486
Less accumulated
depreciation,
depletion, amorti-
zation, and valua-
tion allowance ( 3,464,094) ( 3,306,752)
--------- ---------
Net oil and gas
Properties $ 175,640 $ 334,734
========= =========
F-41
I-D Partnership
---------------
1998 1997
------------ ------------
Proved properties $4,604,726 $4,869,810
Less accumulated
depreciation,
depletion, amorti-
zation, and valua-
tion allowance ( 3,998,933) ( 4,155,654)
--------- ---------
Net oil and gas
Properties $ 605,793 $ 714,156
========= =========
I-E Partnership
---------------
1998 1997
------------ ------------
Proved properties $26,655,665 $27,408,834
Less accumulated
depreciation,
depletion, amorti-
zation, and valua-
tion allowance ( 22,464,002) ( 22,564,456)
---------- ----------
Net oil and gas
Properties $ 4,191,663 $ 4,844,378
========== ==========
F-42
I-F Partnership
---------------
1998 1997
------------ -----------
Proved properties $8,022,333 $ 8,021,051
Less accumulated
depreciation,
depletion, amorti-
zation, and valua-
tion allowance ( 6,710,965) ( 6,563,143)
--------- ----------
Net oil and gas
Properties $1,311,368 $ 1,457,908
========= ==========
Costs Incurred
The Partnerships incurred no costs in connection with oil and gas
acquisition or exploration activities during 1998, 1997, and 1996. Costs
incurred by the Partnerships in connection with oil and gas property development
activities during 1998, 1997, and 1996 were as follows:
Partnership 1998 1997 1996
----------- -------- -------- -------
I-B $ 362 $ 1,149 $ 445
I-C - 100,573 1,039
I-D 1,811 34,805 10,930
I-E 762,520 279,631 55,490
I-F 548,339 104,709 27,863
Quantities of Proved Oil and Gas Reserves - Unaudited
The following tables summarize changes in net quantities of the
Partnerships' proved reserves, all of which are located in the United States,
for the periods indicated. The proved reserves at December 31, 1998, 1997, and
1996 were estimated by petroleum engineers employed by affiliates of the
Partnerships. Certain reserve information was reviewed by Ryder Scott Company
Petroleum Engineers, an independent petroleum engineering firm. The following
information includes certain gas balancing adjustments which cause the gas
volume to differ from the reserve reports prepared by the General Partner and
reviewed by Ryder Scott.
F-43
I-B Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 1995 19,963 902,220
Production ( 2,297) ( 150,543)
Revisions of previous
estimates ( 4,763) 158,168
------ ---------
Proved reserves, Dec. 31, 1996 12,903 909,845
Production ( 2,277) ( 129,776)
Sales of minerals in place ( 765) ( 21,278)
Revisions of previous
estimates 785 ( 46,749)
------ ---------
Proved reserves, Dec. 31, 1997 10,646 712,042
Production ( 1,344) ( 115,502)
Revisions of previous
estimates ( 1,949) 427,084
------ ---------
Proved reserves, Dec. 31, 1998 7,353 1,023,624
====== =========
PROVED DEVELOPED RESERVES:
December 31, 1996 12,903 909,845
====== =========
December 31, 1997 10,646 712,042
====== =========
December 31, 1998 7,353 1,023,624
====== =========
F-44
I-C Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- ---------
Proved reserves, Dec. 31, 1995 108,795 740,060
Production ( 27,537) (226,820)
Sales of minerals in place ( 4,934) ( 51,035)
Revisions of previous
estimates 44,909 340,705
------- -------
Proved reserves, Dec. 31, 1996 121,233 802,910
Production ( 25,122) (178,180)
Sales of minerals in place ( 23,710) ( 4,023)
Extensions and discoveries 9,718 138,053
Revisions of previous
estimates ( 21,212) 35,059
------- -------
Proved reserves, Dec. 31, 1997 60,907 793,819
Production ( 14,169) (124,746)
Revisions of previous
estimates ( 30,363) ( 40,566)
------- -------
Proved reserves, Dec.31, 1998 16,375 628,507
======= =======
PROVED DEVELOPED RESERVES:
December 31, 1996 121,233 802,910
======= =======
December 31, 1997 60,907 793,819
======= =======
December 31, 1998 16,375 628,507
======= =======
F-45
I-D Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 1995 52,974 2,399,840
Production (21,291) ( 577,657)
Sales of minerals in place ( 4,935) ( 29,621)
Extensions and discoveries 123 5,646
Revisions of previous
estimates 28,706 499,715
------ ---------
Proved reserves, Dec. 31, 1996 55,577 2,297,923
Production (18,760) ( 510,113)
Sales of minerals in place ( 168) ( 5,510)
Revisions of previous
estimates 4,349 156,947
------ ---------
Proved reserves, Dec. 31, 1997 40,998 1,939,247
Production (11,249) ( 456,195)
Sales of minerals in place ( 1,568) ( 134,605)
Extensions and discoveries 7,889 76,181
Revisions of previous
estimates 1,706 210,269
------ ---------
Proved reserves, Dec. 31, 1998 37,776 1,634,897
====== =========
PROVED DEVELOPED RESERVES:
December 31, 1996 55,219 2,276,438
====== =========
December 31, 1997 40,875 1,925,548
====== =========
December 31, 1998 37,776 1,634,897
====== =========
F-46
I-E Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- ------------
Proved reserves, Dec. 31, 1995 492,808 12,681,330
Production ( 70,998) ( 2,206,082)
Sales of minerals in place ( 24,754) ( 278,884)
Extensions and discoveries 778 73,593
Revisions of previous
estimates 123,001 1,483,030
------- ----------
Proved reserves, Dec. 31, 1996 520,835 11,752,987
Production ( 77,648) ( 2,139,704)
Sales of minerals in place ( 14,619) ( 66,444)
Extensions and discoveries 29,604 18,612
Revisions of previous
estimates ( 58,499) 985,558
------- ----------
Proved reserves, Dec. 31, 1997 399,673 10,551,009
Production ( 64,346) ( 2,016,034)
Sales of minerals in place ( 6,928) ( 687,223)
Extensions and discoveries 35,494 491,481
Revisions of previous ( 45,323) 1,040,638
estimates
------- ----------
Proved reserves, Dec. 31, 1998 318,570 9,379,871
======= ==========
PROVED DEVELOPED RESERVES:
December 31, 1996 519,687 11,683,935
======= ==========
December 31, 1997 399,277 10,506,977
======= ==========
December 31, 1998 318,570 9,379,871
======= ==========
F-47
I-F Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 1995 246,551 3,833,591
Production ( 35,577) ( 652,692)
Sales of minerals in place ( 12,337) ( 132,134)
Extensions and discoveries 399 26,335
Revisions of previous
estimates 70,126 481,185
------- ---------
Proved reserves, Dec. 31, 1996 269,162 3,556,285
Production ( 38,725) ( 571,101)
Sales of minerals in place ( 8,673) ( 38,629)
Extensions and discoveries 10,361 6,514
Revisions of previous
estimates ( 34,694) 377,552
------- ---------
Proved reserves, Dec. 31, 1997 197,431 3,330,621
Production ( 30,203) ( 530,040)
Sales of minerals in place ( 2,473) ( 248,611)
Extensions and discoveries 16,858 262,256
Revisions of previous
estimates ( 32,096) 220,951
------- ---------
Proved reserves, Dec. 31,1998 149,517 3,035,177
======= =========
PROVED DEVELOPED RESERVES:
December 31, 1996 268,768 3,532,534
======= =========
December 31, 1997 197,297 3,315,478
======= =========
December 31, 1998 149,517 3,035,177
======= =========
Standardized Measure of Discounted Future Net Cash Flows of Proved Oil
and Gas Reserves - Unaudited
The following tables set forth each of the Partnerships' estimated future
net cash flows as of December 31, 1998 relating to proved oil and gas reserves
based on the standardized measure as prescribed in SFAS No. 69:
F-48
Partnership
----------------------------------
I-B I-C
------------ -------------
Future cash inflows $2,316,593 $ 1,549,892
Future production and
development costs ( 599,525) ( 598,303)
------------ -------------
Future net cash
flows $1,717,068 $ 951,589
10% discount to
reflect timing of
cash flows ( 852,286) ( 387,517)
------------ -------------
Standardized measure
of discounted
future net cash
flows $ 864,782 $ 564,072
========== ===========
Partnership
----------------------------------
I-D I-E
------------ -------------
Future cash inflows $3,677,661 $21,815,917
Future production and
development costs ( 1,021,454) ( 6,941,211)
------------ -------------
Future net cash
flows $2,656,207 $14,874,706
10% discount to
reflect timing of
cash flows ( 796,341) ( 4,412,129)
------------ -------------
Standardized measure
of discounted
future net cash
flows $1,859,866 $10,462,577
============= =============
F-49
I-F Partnership
---------------
Future cash inflows $7,782,825
Future production and
development costs ( 2,947,061)
---------
Future net cash
flows $4,835,764
10% discount to
reflect timing of
cash flows ( 1,601,870)
---------
Standardized measure
of discounted
future net cash
flows $3,233,894
=========
The process of estimating oil and gas reserves is complex, requiring significant
subjective decisions in the evaluation of available geological, engineering, and
economic data for each reservoir. The data for a given reservoir may change
substantially over time as a result of, among other things, additional
development activity, production history, and viability of production under
varying economic conditions; consequently, it is reasonably possible that
material revisions to existing reserve estimates may occur in the near future.
Although every reasonable effort has been made to ensure that the reserve
estimates reported herein represent the most accurate assessment possible, the
significance of the subjective decisions required and variances in available
data for various reservoirs make these estimates generally less precise than
other estimates presented in connection with financial statement disclosures.
The Partnerships' reserves were determined at December 31, 1998 using oil and
gas prices of approximately $9.50 per barrel and $2.03 per Mcf, respectively.
F-50
INDEX TO EXHIBITS
-----------------
Number Description
- ------ -----------
4.1 The Certificate and Agreements of Limited Partnership for the
following Geodyne Energy Income Limited Partnerships have been
previously filed with the SEC as Exhibit 2.1 to Form 8-A filed by
each Limited Partnership on the dates shown below and are hereby
incorporated by reference.
Partnership Filing Date File No.
----------- ------------ --------
I-B May 23, 1986 0-14657
I-C May 23, 1986 0-14658
I-D May 5, 1987 0-15831
I-E May 5, 1987 0-15832
I-F May 5, 1987 0-15833
4.2 Second Amendment to Amended and Restated Agreement and Certificate
of Limited Partnership of Geodyne Energy Income Limited Partnership
I-B, filed as Exhibit 4.1 to Registrant's Current Report on Form 8-K
dated August 2, 1993 filed with the SEC on August 10, 1993 and is
hereby incorporated by reference.
4.3 Second Amendment to Amended and Restated Agreement and Certificate
of Limited Partnership of Geodyne Energy Income Limited Partnership
I-C, filed as Exhibit 4.2 to Registrant's Current Report on Form 8-K
dated August 2, 1993 filed with the SEC on August 10, 1993 and is
hereby incorporated by reference.
4.4 Second Amendment to Amended and Restated Agreement and Certificate
of Limited Partnership of Geodyne Energy Income Limited Partnership
I-D, filed as Exhibit 4.3 to Registrant's Current Report on Form 8-K
dated August 2, 1993 filed with the SEC on August 10, 1993 and is
hereby incorporated by reference.
4.5 Second Amendment to Amended and Restated Agreement and Certificate
of Limited Partnership of Geodyne Energy Income Limited Partnership
I-E, filed as Exhibit 4.4 to Registrant's Current Report on Form 8-K
dated August 2, 1993 filed with the SEC on August 10, 1993 and is
hereby incorporated by reference.
4.6 Second Amendment to Amended and Restated Agreement and
Certificate of Limited Partnership of Geodyne Energy Income
Limited Partnership I-F, filed as Exhibit 4.5 to
F-51
Registrant's Current Report on Form 8-K dated August 2, 1993 filed
with the SEC on August 10, 1993 and is hereby incorporated by
reference.
*23.1 Consent of Ryder Scott Company Petroleum Engineers for Geodyne
Energy Income Limited Partnership I-B.
*23.2 Consent of Ryder Scott Company Petroleum Engineers for Geodyne
Energy Income Limited Partnership I-C.
*23.3 Consent of Ryder Scott Company Petroleum Engineers for Geodyne
Energy Income Limited Partnership I-D.
*23.4 Consent of Ryder Scott Company Petroleum Engineers for Geodyne
Energy Income Limited Partnership I-E.
*23.5 Consent of Ryder Scott Company Petroleum Engineers for Geodyne
Energy Income Limited Partnership I-F.
*27.1 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership I-B's
financial statements as of December 31, 1998 and for the year ended
December 31, 1998.
*27.2 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership I-C's
financial statements as of December 31, 1998 and for the year ended
December 31, 1998.
*27.3 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership I-D's
financial statements as of December 31, 1998 and for the year ended
December 31, 1998.
*27.4 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership I-E's
financial statements as of December 31, 1998 and for the year ended
December 31, 1998.
*27.5 Financial Data Schedule containing summary financial information
extracted from the Geodyne Energy Income Limited Partnership I-F's
financial statements as of December 31, 1998 and for the year ended
December 31, 1998.
All other Exhibits are omitted as inapplicable.
----------
* Filed herewith.
F-52