SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended Commission File Number
March 31, 2001 0-12261 (1982-1)
0-12262 (1982-2)
DYCO 1982 OIL AND GAS PROGRAM
(TWO LIMITED PARTNERSHIPS)
(Exact Name of Registrant as specified in its charter)
41-1438430 (1982-1)
Minnesota 41-1438437 (1982-2)
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or Number)
organization)
Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103
- ------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(918) 583-1791
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ------
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DYCO OIL AND GAS PROGRAM 1982-1 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
2001 2000
---------- ------------
CURRENT ASSETS:
Cash and cash equivalents $154,033 $ 68,441
Accrued oil and gas sales 68,642 61,238
-------- --------
Total current assets $222,675 $129,679
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 71,979 76,296
DEFERRED CHARGE 36,333 36,333
-------- --------
$330,987 $242,308
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 3,671 $ 3,357
-------- --------
Total current liabilities $ 3,671 $ 3,357
ACCRUED LIABILITY $ 11,231 $ 11,231
PARTNERS' CAPITAL:
General Partner, 100 general
partner units $ 3,161 $ 2,277
Limited Partners, issued and
outstanding, 10,000 Units 312,924 225,443
-------- --------
Total Partners' capital $316,085 $227,720
-------- --------
$330,987 $242,308
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
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DYCO OIL AND GAS PROGRAM 1982-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
2001 2000
-------- --------
REVENUES:
Oil and gas sales $135,716 $51,659
Interest 1,204 290
-------- -------
$136,920 $51,949
COSTS AND EXPENSES:
Oil and gas production $ 21,663 $15,181
Depreciation, depletion, and
amortization of oil and gas
properties 4,701 4,513
General and administrative
(Note 2) 22,191 19,240
-------- -------
$ 48,555 $38,934
-------- -------
NET INCOME $ 88,365 $13,015
======== =======
GENERAL PARTNER (1%) - net income $ 884 $ 130
======== =======
LIMITED PARTNERS (99%) - net income $ 87,481 $12,885
======== =======
NET INCOME PER UNIT $ 8.75 $ 1.29
======== =======
UNITS OUTSTANDING 10,100 10,100
======== =======
The accompanying condensed notes are an integral part of
these financial statements.
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DYCO OIL AND GAS PROGRAM 1982-1 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
2001 2000
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 88,365 $13,015
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 4,701 4,513
(Increase) decrease in accrued oil
and gas sales ( 7,404) 733
Increase (decrease) in accounts
payable 314 ( 443)
Increase in payable to General
Partner - 2,000
-------- -------
Net cash provided by operating
activities $ 85,976 $19,818
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of oil
and gas properties $ 511 $ 111
Additions to oil and gas properties ( 895) -
-------- -------
Net cash provided (used) by investing
activities ($ 384) $ 111
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash used by financing
activities $ - $ -
-------- -------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 85,592 $19,929
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 68,441 23,930
-------- -------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $154,033 $43,859
======== =======
The accompanying condensed notes are an integral part of
these financial statements.
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DYCO OIL AND GAS PROGRAM 1982-2 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
2001 2000
---------- ------------
CURRENT ASSETS:
Cash and cash equivalents $223,761 $ 75,640
Accrued oil and gas sales 114,071 93,620
-------- --------
Total current assets $337,832 $169,260
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 117,933 124,629
DEFERRED CHARGE 17,988 17,988
-------- --------
$473,753 $311,877
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 4,488 $ 5,281
-------- --------
Total current liabilities $ 4,488 $ 5,281
ACCRUED LIABILITY $ 97,327 $ 97,327
PARTNERS' CAPITAL:
General Partner, 80 general
partner units $ 3,719 $ 2,092
Limited Partners, issued and
outstanding, 8,000 Units 368,219 207,177
-------- --------
Total Partners' capital $371,938 $209,269
-------- --------
$473,753 $311,877
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
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DYCO OIL AND GAS PROGRAM 1982-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
2001 2000
-------- --------
REVENUES:
Oil and gas sales $220,621 $109,221
Interest 1,582 1,600
-------- --------
$222,203 $110,821
COSTS AND EXPENSES:
Oil and gas production $ 29,457 $ 24,629
Depreciation, depletion, and
amortization of oil and gas
properties 6,065 7,353
General and administrative
(Note 2) 24,012 21,608
-------- --------
$ 59,534 $ 53,590
-------- --------
NET INCOME $162,669 $ 57,231
======== ========
GENERAL PARTNER (1%) - net income $ 1,627 $ 572
======== ========
LIMITED PARTNERS (99%) - net income $161,042 $ 56,659
======== ========
NET INCOME PER UNIT $ 20.13 $ 7.08
======== ========
UNITS OUTSTANDING 8,080 8,080
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
-6-
DYCO OIL AND GAS PROGRAM 1982-2 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
2001 2000
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $162,669 $ 57,231
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 6,065 7,353
Increase in accrued oil and
gas sales ( 20,451) ( 4,651)
Decrease in accounts payable ( 793) ( 5,205)
Increase in payable to General
Partner - 2,000
-------- --------
Net cash provided by operating
activities $147,490 $ 56,728
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of oil and
gas properties $ 631 $ -
Additions to oil and gas properties - ( 213)
-------- --------
Net cash provided (used) by
investing activities $ 631 ($ 213)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash used by financing
activities $ - $ -
-------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $148,121 $ 56,515
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 75,640 102,242
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $223,761 $158,757
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
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DYCO OIL AND GAS PROGRAM 1982-1 LIMITED PARTNERSHIP
DYCO OIL AND GAS PROGRAM 1982-2 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2001
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheets as of March 31, 2001, statements of operations for the
three months ended March 31, 2001 and 2000, and statements of cash flows
for the three months ended March 31, 2001 and 2000 have been prepared by
Dyco Petroleum Corporation ("Dyco"), the General Partner of the Dyco Oil
and Gas Program 1982-1 and 1982-2 Limited Partnerships (individually, the
"1982-1 Program" or the "1982-2 Program", as the case may be, or,
collectively, the "Programs"), without audit. In the opinion of management
all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position at March 31, 2001,
results of operations for the three months ended March 31, 2001 and 2000,
and changes in cash flows for the three months ended March 31, 2001 and
2000 have been made.
Information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
financial statements be read in conjunction with the financial statements
and notes thereto included in the Programs' Annual Report on Form 10-K for
the year ended December 31, 2000. The results of operations for the period
ended March 31, 2001 are not necessarily indicative of the results to be
expected for the full year.
The limited partners' net income or loss per unit is based upon each
$5,000 initial capital contribution.
OIL AND GAS PROPERTIES
----------------------
Oil and gas operations are accounted for using the full cost method of
accounting. All productive and non-productive costs associated with the
acquisition, exploration and development of oil and gas reserves are
capitalized. The Programs' calculation of depreciation, depletion, and
amortization includes estimated future expenditures to be incurred in
developing proved reserves and estimated dismantlement and abandonment
costs, net of estimated salvage values. In the event the unamortized cost
of oil and gas properties being amortized exceeds the full cost
-8-
ceiling (as defined by the Securities and Exchange Commission), the excess
is charged to expense in the period during which such excess occurs. Sales
and abandonments of properties are accounted for as adjustments of
capitalized costs with no gain or loss recognized, unless such adjustments
would significantly alter the relationship between capitalized costs and
proved oil and gas reserves.
The provision for depreciation, depletion, and amortization of oil and gas
properties is calculated by dividing the oil and gas sales dollars during
the period by the estimated future gross income from the oil and gas
properties and applying the resulting rate to the net remaining costs of
oil and gas properties that have been capitalized, plus estimated future
development costs.
2. TRANSACTIONS WITH RELATED PARTIES
---------------------------------
Under the terms of each of the Program's partnership agreement, Dyco is
entitled to receive a reimbursement for all direct expenses and general
and administrative, geological and engineering expenses it incurs on
behalf of the Program. During the three months ended March 31, 2001 and
2000 the 1982-1 Program incurred such expenses totaling $22,191 and
$19,240, respectively, of which $9,240 was paid each period to Dyco and
its affiliates. During the three months ended March 31, 2001 and 2000 the
1982-2 Program incurred such expenses totaling $24,012 and $21,608,
respectively, of which $12,156 was paid each period to Dyco and its
affiliates.
Affiliates of the Program operate certain of the Programs' properties.
Their policy is to bill the Programs for all customary charges and cost
reimbursements associated with these activities.
-9-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
USE OF FORWARD-LOOKING STATEMENTS AND ESTIMATES
- -----------------------------------------------
This Quarterly Report contains certain forward-looking statements. The
words "anticipate", "believe", "expect", "plan", "intend", "estimate",
"project", "could", "may" and similar expressions are intended to identify
forward-looking statements. Such statements reflect management's current
views with respect to future events and financial performance. This
Quarterly Report also includes certain information, which is, or is based
upon, estimates and assumptions. Such estimates and assumptions are
management's efforts to accurately reflect the condition and operation of
the Programs.
Use of forward-looking statements and estimates and assumptions involve
risks and uncertainties which include, but are not limited to, the
volatility of oil and gas prices, the uncertainty of reserve information,
the operating risk associated with oil and gas properties (including the
risk of personal injury, death, property damage, damage to the well or
producing reservoir, environmental contamination, and other operating
risks), the prospect of changing tax and regulatory laws, the availability
and capacity of processing and transportation facilities, the general
economic climate, the supply and price of foreign imports of oil and gas,
the level of consumer product demand, and the price and availability of
alternative fuels. Should one or more of these risks or uncertainties
occur or should estimates or underlying assumptions prove incorrect,
actual conditions or results may vary materially and adversely from those
stated, anticipated, believed, estimated, and otherwise indicated.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net proceeds from the Programs' operations less necessary operating
capital are distributed to investors on a quarterly basis. 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 the Programs' reserves which
would result in a positive economic impact.
The Programs' available capital from subscriptions has been spent on oil
and gas drilling activities. There should be no further material capital
resource commitments in the future. The Programs have no debt commitments.
Management believes that cash for ordinary operational purposes will be
provided by current oil and gas production.
-10-
RESULTS OF OPERATIONS
- ---------------------
GENERAL DISCUSSION
The following general discussion should be read in conjunction with the
analysis of results of operations provided below. The most important
variables affecting the Programs' revenues are the prices received for the
sale of oil and gas and the volumes of oil and gas produced. The Program's
production is mainly natural gas, so such pricing and volumes are the most
significant factors.
Due to the volatility of oil and gas prices, forecasting future prices is
subject to great uncertainty and inaccuracy. Substantially all of the
Programs' 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. Such spot market
sales are generally short-term in nature and are dependent upon the
obtaining of transportation services provided by pipelines. It is likewise
difficult to predict production volumes. However, oil and gas are
depleting assets, so it can be expected that production levels will
decline over time. Recent gas prices have been significantly higher than
the Program's historical average. This is attributable to the higher
prices for crude oil, a substitute fuel in some markets, and reduced
production due to lower capital investments in 1998 and 1999.
1982-1 PROGRAM
THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE THREE MONTHS ENDED MARCH
31, 2000.
Three Months Ended March 31,
----------------------------
2001 2000
-------- -------
Oil and gas sales $135,716 $51,659
Oil and gas production expenses $ 21,663 $15,181
Barrels produced 16 141
Mcf produced 20,147 21,668
Average price/Bbl $ 28.94 $ 27.44
Average price/Mcf $ 6.71 $ 2.21
As shown in the table above, total oil and gas sales increased $84,057
(162.7%) for the three months ended March 31, 2001 as compared to the
three months ended March 31, 2000. Of this increase, approximately $91,000
was related to an increase in the average price of gas sold. Volumes of
oil and gas sold decreased 125 barrels and 1,521 Mcf,
-11-
respectively, for the three months ended March 31, 2001 as compared to the
three months ended March 31, 2000. The decrease in volumes of oil sold was
primarily due to the sale of one well during 2000. Average oil and gas
prices increased to $28.94 per barrel and $6.71 per Mcf, respectively, for
the three months ended March 31, 2001 from $27.44 per barrel and $2.21 per
Mcf, respectively, for the three months ended March 31, 2000.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $6,482 (42.7%) for the three months ended
March 31, 2001 as compared to the three months ended March 31, 2000. This
increase was primarily due to an increase in production taxes associated
with the increase in oil and gas sales. As a percentage of oil and gas
sales, these expenses decreased to 16.0% for the three months ended March
31, 2001 from 29.4% for the three months ended March 31, 2000. This
percentage decrease was primarily due to the increase in the average price
of gas sold.
Depreciation, depletion, and amortization of oil and gas properties
increased $188 (4.2%) for the three months ended March 31, 2001 as
compared to the three months ended March 31, 2000. This increase was
primarily due to an increase in the average price of gas sold. This
increase was partially offset by a decrease in depreciation, depletion,
and amortization due to an increase in the gas price used in the valuation
of reserves at March 31, 2001 as compared to March 31, 2000. As a
percentage of oil and gas sales, this expense decreased to 3.5% for the
three months ended March 31, 2001 from 8.7% for the three months ended
March 31, 2000. This percentage decrease was primarily due to the increase
in the gas price used in the valuation of reserves.
General and administrative expenses increased $2,951 (15.3%) for the three
months ended March 31, 2001 as compared to the three months ended March
31, 2000. This increase was primarily due to increases in printing and
postage expenses and reserve study fees. As a percentage of oil and gas
sales, these expenses decreased to 16.4% for the three months ended March
31, 2001 from 37.2% for the three months ended March 31, 2000. This
percentage decrease was primarily due to the increase in oil and gas
sales.
-12-
1982-2 PROGRAM
THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE THREE MONTHS ENDED MARCH
31, 2000.
Three Months Ended March 31,
----------------------------
2001 2000
-------- --------
Oil and gas sales $220,621 $109,221
Oil and gas production expenses $ 29,457 $ 24,629
Barrels produced - 38
Mcf produced 32,885 48,048
Average price/Bbl $ - $ 27.34
Average price/Mcf $ 6.71 $ 2.25
As shown in the table above, total oil and gas sales increased $111,400
(102.0%) for the three months ended March 31, 2001 as compared to the
three months ended March 31, 2000. Of this increase, approximately
$147,000 was related to an increase in the average price of gas sold. This
increase was partially offset by a decrease of approximately $34,000
related to a decrease in volumes of gas sold. Volumes of oil and gas sold
decreased 38 barrels and 15,163 Mcf, respectively, for the three months
ended March 31, 2001 as compared to the three months ended March 31, 2000.
The decrease in volumes of gas sold was primarily due to (i) the
shutting-in of one well in order to perform repairs during the three
months ended March 31, 2001 and (ii) the receipt of a reduced percentage
of sales during the three months ended March 31, 2001 on another well due
to gas balancing. The average oil price was $27.34 per barrel for the
three months ended March 31, 2000. Average gas prices increased to $6.71
per Mcf for the three months ended March 31, 2001 from $2.25 per Mcf for
the three months ended March 31, 2000.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $4,828 (19.6%) for the three months ended
March 31, 2001 as compared to the three months ended March 31, 2000. This
increase was primarily due to an increase in production taxes associated
with the increase in gas sales. This increase was partially offset by
workover expenses incurred on one well during the three months ended March
31, 2000 in order to improve the recovery of reserves. As a percentage of
oil and gas sales, these expenses decreased to 13.4% for the three months
ended March 31, 2001 from 22.5% for the three months ended March 31, 2000.
This percentage decrease was primarily due to the increase in the average
price of gas sold.
-13-
Depreciation, depletion, and amortization of oil and gas properties
decreased $1,288 (17.5%) for the three months ended March 31, 2001 as
compared to the three months ended March 31, 2000. This decrease was
primarily due to an increase in the gas price used in the valuation of
reserves at March 31, 2001 as compared to March 31, 2000. This decrease
was partially offset by an increase in depreciation, depletion, and
amortization due to an increase in the average price of gas sold. As a
percentage of oil and gas sales, this expense decreased to 2.7% for the
three months ended March 31, 2001 from 6.7% for the three months ended
March 31, 2000. This percentage decrease was primarily due to the increase
in the gas price used in the valuation of reserves.
General and administrative expenses increased $2,404 (11.1%) for the three
months ended March 31, 2001 as compared to the three months ended March
31, 2000. This increase was primarily due to increases in printing and
postage expenses and reserve study fees. As a percentage of oil and gas
sales, these expenses decreased to 10.9% for the three months ended March
31, 2001 from 19.8% for the three months ended March 31, 2000. This
percentage decrease was primarily due to the increase in gas sales.
-14-
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
The Programs do not hold any market risk sensitive instruments.
-15-
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K.
None.
-16-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DYCO OIL AND GAS PROGRAM 1982-1 LIMITED
PARTNERSHIP
DYCO OIL AND GAS PROGRAM 1982-2 LIMITED
PARTNERSHIP
(Registrant)
BY: DYCO PETROLEUM CORPORATION
General Partner
Date: May 7, 2001 By: /s/Dennis R. Neill
-------------------------------
(Signature)
Dennis R. Neill
President
Date: May 7, 2001 By: /s/Patrick M. Hall
-------------------------------
(Signature)
Patrick M. Hall
Chief Financial Officer
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