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 March 31, 2001
Commission File Number: P-7: 0-20265 P-8: 0-20264
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
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(Exact name of Registrant as specified in its Articles)
P-7 73-1367186
Oklahoma P-8 73-1378683
---------------------------- -------------------------------
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or Number)
organization)
Two West Second Street, Tulsa, Oklahoma 74103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(918) 583-1791
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7
BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
2001 2000
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 554,013 $ 633,461
Accounts receivable:
Net Profits 574,583 612,799
---------- ----------
Total current assets $1,128,596 $1,246,260
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 2,391,948 2,325,235
---------- ----------
$3,520,544 $3,571,495
========== ==========
PARTNERS' CAPITAL (DEFICIT)
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 110,924) ($ 104,594)
Limited Partners, issued and
outstanding, 188,702 units 3,631,468 3,676,089
---------- ----------
Total Partners' capital $3,520,544 $3,571,495
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
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GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
2001 2000
---------- --------
REVENUES:
Net Profits $735,804 $669,867
Interest income 7,081 3,876
-------- --------
$742,885 $673,743
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 56,323 $ 71,759
General and administrative
(Note 2) 68,375 67,451
-------- --------
$124,698 $139,210
-------- --------
NET INCOME $618,187 $534,533
======== ========
GENERAL PARTNER - NET INCOME $ 32,808 $ 29,403
======== ========
LIMITED PARTNERS - NET INCOME $585,379 $505,130
======== ========
NET INCOME per unit $ 3.10 $ 2.68
======== ========
UNITS OUTSTANDING 188,702 188,702
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
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GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
2001 2000
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $618,187 $534,533
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depletion of Net Profits
Interests 56,323 71,759
(Increase) decrease in accounts
receivable - Net Profits 38,216 ( 148,340)
-------- --------
Net cash provided by operating
activities $712,726 $457,952
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($123,036) ($ 39,209)
-------- --------
Net cash used by investing activities ($123,036) ($ 39,209)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($669,138) ($376,788)
-------- --------
Net cash used by financing activities ($669,138) ($376,788)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 79,448) $ 41,955
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 633,461 353,416
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $554,013 $395,371
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
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GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
2001 2000
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 468,645 $ 498,373
Accounts receivable:
Net Profits 382,635 405,439
---------- ----------
Total current assets $ 851,280 $ 903,812
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 1,394,088 1,355,008
---------- ----------
$2,245,368 $2,258,820
========== ==========
PARTNERS' CAPITAL (DEFICIT)
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 48,168) ($ 44,319)
Limited Partners, issued and
outstanding, 116,168 units 2,293,536 2,303,139
---------- ----------
Total Partners' capital $2,245,368 $2,258,820
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
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GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
2001 2000
--------- ---------
REVENUES:
Net Profits $534,234 $432,044
Interest income 5,712 3,282
Gain on sale of Net Profits
Interests - 2,292
-------- --------
$539,946 $437,618
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 34,540 $ 41,527
General and administrative
(Note 2) 48,045 41,416
-------- --------
$ 82,585 $ 82,943
-------- --------
NET INCOME $457,361 $354,675
======== ========
GENERAL PARTNER - NET INCOME $ 23,964 $ 19,231
======== ========
LIMITED PARTNERS - NET INCOME $433,397 $335,444
======== ========
NET INCOME per unit $ 3.73 $ 2.89
======== ========
UNITS OUTSTANDING 116,168 116,168
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
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GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
2001 2000
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $457,361 $354,675
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depletion of Net Profits
Interests 35,540 41,527
Gain on sale of Net Profits
Interests - ( 2,292)
(Increase) decrease in accounts
receivable - Net Profits 22,804 ( 97,665)
Increase in accounts receivable -
General Partner - ( 2,292)
-------- --------
Net cash provided by operating
activities $514,705 $293,953
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 73,620) ($ 22,449)
Proceeds from sale of Net Profits
Interests - 2,292
-------- --------
Net cash used by investing activities ($ 73,620) ($ 20,157)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($470,813) ($252,322)
-------- --------
Net cash used by financing activities ($470,813) ($252,322)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 29,728) $ 21,474
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 498,373 291,963
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $468,645 $313,437
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
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GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME PROGRAM II LIMITED PARTNERSHIPS
CONDENSED NOTES TO THE 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
Geodyne Resources, Inc., the General Partner (the "General Partner") of
the Geodyne Institutional/Pension Energy Income Program II Limited
Partnerships (individually, the "P-7 Partnership" or the "P-8
Partnership", as the case may be, or, collectively, the "Partnerships"),
without audit. In the opinion of management the financial statements
referred to above include all necessary adjustments, consisting of normal
recurring adjustments, to present fairly the financial position at March
31, 2001, the results of operations for the three months ended March 31,
2001 and 2000, and the cash flows for the three months ended March 31,
2001 and 2000.
Information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The accompanying interim
financial statements should be read in conjunction with the Partnerships'
Annual Report on Form 10-K filed for the year ended December 31, 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.
As used in these financial statements, the Partnerships' net profits and
royalty interests in oil and gas sales are referred to as "Net Profits"
and the Partnerships' net profits and royalty interests in oil and gas
properties are referred to as "Net Profits Interests". The working
interests from which Partnerships' Net Profits Interests are carved are
referred to as "Working Interests".
The Limited Partners' net income or loss per unit is based upon each $100
initial capital contribution.
-8-
NET PROFITS INTERESTS
---------------------
The Partnerships follow the successful efforts method of accounting for
their Net Profits Interests. Under the successful efforts method, the
Partnerships capitalize all acquisition costs. Property acquisition costs
include costs incurred by the Partnerships or the General Partner to
acquire a net profits interest or other non-operating interest in
producing properties, including related title insurance or examination
costs, commissions, engineering, legal and accounting fees, and similar
costs directly related to the acquisitions, plus an allocated portion of
the General Partner's property screening costs. The acquisition cost to
the Partnerships of Net Profits Interests acquired by the General Partner
is adjusted to reflect the net cash results of operations, including
interest incurred to finance the acquisition, for the period of time the
properties are held by the General Partner prior to their transfer to the
Partnerships. Impairment of Net Profits Interests is recognized based upon
an individual property assessment.
Depletion of the costs of Net Profits Interests is computed on the
unit-of-production method. The Partnerships' calculation of depletion of
its Net Profits Interests includes estimated dismantlement and abandonment
costs, net of estimated salvage value.
The Partnerships do not directly bear capital costs. However, the
Partnerships indirectly bear certain capital costs incurred by the owners
of the Working Interests to the extent such capital costs are charged
against the applicable oil and gas revenues in calculating the Net Profits
payable to the Partnerships. For financial reporting purposes only, such
capital costs are reported as capital expenditures in the Partnerships'
Statements of Cash Flows.
2. TRANSACTIONS WITH RELATED PARTIES
---------------------------------
The Partnerships' partnership agreements provide for reimbursement to the
General Partner for all direct general and administrative expenses and for
the general and administrative overhead applicable to the Partnerships
based on an allocation of actual costs incurred. During the three months
ended March 31, 2001, the following payments were made to the General
Partner or its affiliates by the Partnerships:
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Direct General Administrative
Partnership and Administrative Overhead
----------- ------------------- ---------------
P-7 $18,716 $49,659
P-8 17,475 30,570
Affiliates of the Partnerships operate certain of the Partnerships'
properties and their policy is to bill the Partnerships for all customary
charges and cost reimbursements associated with their activities.
-10-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
USE OF FORWARD-LOOKING STATEMENTS AND ESTIMATES
- -----------------------------------------------
This Quarterly Report contains certain forward-looking statements. The
words "anticipate", "believe", "expect", "plan", "intend", "estimate",
"project", "could", "may" and similar expressions are intended to identify
forward-looking statements. Such statements reflect management's current
views with respect to future events and financial performance. This
Quarterly Report also includes certain information, which is, or is based
upon, estimates and assumptions. Such estimates and assumptions are
management's efforts to accurately reflect the condition and operation of
the Partnerships.
Use of forward-looking statements and estimates and assumptions involve
risks and uncertainties which include, but are not limited to, the
volatility of oil and gas prices, the uncertainty of reserve information,
the operating risk associated with oil and gas properties (including the
risk of personal injury, death, property damage, damage to the well or
producing reservoir, environmental contamination, and other operating
risks), the prospect of changing tax and regulatory laws, the availability
and capacity of processing and transportation facilities, the general
economic climate, the supply and price of foreign imports of oil and gas,
the level of consumer product demand, and the price and availability of
alternative fuels. Should one or more of these risks or uncertainties
occur or should estimates or underlying assumptions prove incorrect,
actual conditions or results may vary materially and adversely from those
stated, anticipated, believed, estimated, and otherwise indicated.
GENERAL
- -------
The Partnerships were formed for the purpose of acquiring Net Profits
Interests located in the continental United States. In general, each
Partnership acquired passive interests in producing properties and does
not directly engage in development drilling or enhanced recovery projects.
Therefore, the economic life of each Partnership is limited to the period
of time required to fully produce its acquired oil and gas reserves. A Net
Profits Interest entitles the Partnerships to a portion of the oil and gas
sales less operating and production expenses and development costs
generated by the owner of the underlying Working Interests. The net
proceeds from the oil and gas operations
-11-
are distributed to the Limited Partners and General Partner in accordance
with the terms of the Partnerships' Partnership Agreements.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnerships began operations and investors were assigned their rights
as Limited Partners, having made capital contributions in the amounts and
on the dates set forth below:
Limited
Date of Partner Capital
Partnership Activation Contributions
----------- ------------------ ---------------
P-7 February 28, 1992 $18,870,200
P-8 February 28, 1992 $11,616,800
In general, the amount of funds available for acquisition of producing
properties was equal to the capital contributions of the Limited Partners,
less 15% for sales commissions and organization and management fees. All
of the Partnerships have fully invested their capital contributions.
Net proceeds from the Partnerships' Net Profits Interests less necessary
operating capital are distributed to the Limited Partners on a quarterly
basis. Revenues and net proceeds of a Partnership are largely dependent
upon the volumes of oil and gas sold and the prices received for such oil
and gas. While the General Partner cannot predict future pricing trends,
it believes the working capital available as of March 31, 2001 and the net
revenue generated from future operations will provide sufficient working
capital to meet current and future obligations.
Occasional expenditures for new wells or well recompletions or workovers,
however, may reduce or eliminate cash available for particular quarterly
cash distribution. During the three months ended March 31, 2001, capital
expenditures for the P-7 and P-8 Partnerships totaled $123,036 and
$73,620, respectively. These expenditures were primarily due to drilling
and recompletion activities on two large unitized properties, the North
Riley Unit in Gaines County, Texas, in which the P-7 and P-8 Partnerships
own interests of 2.0% and 1.2%, respectively, and the Robertson North Unit
in Gaines County, Texas, in which the P-7 and P-8 Partnerships own
interests of 2.7% and 1.7%, respectively.
-12-
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 Partnerships' revenues are the prices received for
the sale of oil and gas and the volumes of oil and gas produced. The
Partnerships' 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
Partnerships' gas reserves are being sold in the "spot market". Prices on
the spot market are subject to wide seasonal and regional pricing
fluctuations due to the highly competitive nature of the spot market. Such
spot market sales are generally short-term in nature and are dependent
upon the obtaining of transportation services provided by pipelines.
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 Partnerships' 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 2000.
P-7 PARTNERSHIP
THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE THREE MONTHS ENDED MARCH
31, 2000.
Three Months Ended March 31,
----------------------------
2001 2000
-------- --------
Net Profits $735,804 $669,867
Barrels produced 16,926 26,147
Mcf produced 108,344 124,524
Average price/Bbl $ 27.64 $ 27.51
Average price/Mcf $ 5.33 $ 2.56
As shown in the table above, total Net Profits increased $65,937 (9.8%)
for the three months ended March 31, 2001 as compared to the three months
ended March 31, 2000. Of this increase, approximately $300,000 was related
to an increase in the average price of gas sold and approximately $58,000
was related to a decrease in production expenses. These increases were
partially offset by decreases of approximately $254,000 and $41,000,
respectively, related to decreases in volumes of oil and gas sold. Volumes
of oil
-13-
and gas sold decreased 9,221 barrels and 16,180 Mcf, respectively, during
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 (i) the sale of several wells during 2000 and (ii) normal declines
in production. The decrease in volumes of gas sold was primarily due to
(i) normal declines in production and (ii) the sale of one significant
well during 2000. The decrease in production expenses was primarily due
(i) the sale of several wells during 2000 and (ii) workover expenses
incurred on one significant well during the three months ended March 31,
2000 in order to improve the recovery of reserves. Average oil and gas
prices increased to $27.64 per barrel and $5.33 per Mcf, respectively, for
the three months ended March 31, 2001 from $27.51 per barrel and $2.56 per
Mcf, respectively, for the three months ended March 31, 2000.
Depletion of Net Profits Interests decreased $15,436 (21.5%) for the three
months ended March 31, 2001 as compared to the three months ended March
31, 2000. This decrease was primarily due to the decreases in volumes of
oil and gas sold. As a percentage of Net Profits, this expense decreased
to 7.7% for the three months ended March 31, 2001 from 10.7% for the three
months ended March 31, 2000. This percentage decrease was primarily due
the increases in the average prices of oil and gas sold.
General and administrative expenses increased $924 (1.4%) for the three
months ended March 31, 2001 as compared to the three months ended March
31, 2000. As a percentage of Net Profits, these expenses decreased to 9.3%
for the three months ended March 31, 2001 from 10.1% for the three months
ended March 31, 2000.
Cumulative cash distributions to the Limited Partners through March 31,
2001 were $14,404,916 or 76.34% of the Limited Partner's capital
contributions.
-14-
P-8 PARTNERSHIP
THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE THREE MONTHS ENDED MARCH
31, 2000.
Three Months Ended March 31,
----------------------------
2001 2000
-------- --------
Net Profits $534,234 $432,044
Barrels produced 10,490 15,573
Mcf produced 79,985 88,432
Average price/Bbl $ 27.55 $ 27.48
Average price/Mcf $ 5.59 $ 2.59
As shown in the table above, total Net Profits increased $102,190 (23.7%)
for the three months ended March 31, 2001 as compared to the three months
ended March 31, 2000. Of this increase, approximately $240,000 was related
to an increase in the average price of gas sold and approximately $23,000
was related to a decrease in production expenses. These increases were
partially offset by decreases of approximately $140,000 and $22,000,
respectively, related to decreases in volumes of oil and gas sold. Volumes
of oil and gas sold decreased 5,083 barrels and 8,447 Mcf, respectively,
during 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 (i) the sale of several wells during 2000 and (ii) normal
declines in production. The decrease in production expenses was primarily
due (i) the sale of several wells during 2000 and (ii) workover expenses
incurred on one significant well during the three months ended March 31,
2000 in order to improve the recovery of reserves. Average oil and gas
prices increased to $27.55 per barrel and $5.59 per Mcf, respectively, for
the three months ended March 31, 2001 from $27.48 per barrel and $2.59 per
Mcf, respectively, for the three months ended March 31, 2000.
Depletion of Net Profits Interests decreased $6,987 (16.8%) for the three
months ended March 31, 2001 as compared to the three months ended March
31, 2000. This decrease was primarily due to the decreases in volumes of
oil and gas sold. As a percentage of Net Profits, this expense decreased
to 6.5% for the three months ended March 31, 2001 from 9.6% for the three
months ended March 31, 2000. This percentage decrease was primarily due
the increases in the average prices of oil and gas sold.
-15-
General and administrative expenses increased $6,629 (16.0%) for the three
months ended March 31, 2001 as compared to the three months ended March
31, 2000. This increase was primarily due to a change in allocation of
audit fees among the P-8 Partnership and other affiliated partnerships. As
a percentage of Net Profits, these expenses decreased to 9.0% for the
three months ended March 31, 2001 from 9.6% for the three months ended
March 31, 2000.
Cumulative cash distributions to the Limited Partners through March 31,
2001 were $9,084,583 or 78.20% of the Limited Partner's capital
contributions.
-16-
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
The Partnerships do not hold any market risk sensitive instruments.
-17-
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K.
Current Report on Form 8-K filed during the first quarter of 2001:
Date of Event January 26, 2001
Date filed with the SEC January 26, 2001
Items Included Item 5 - Other
Events
Item 7 - Exhibits
-18-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME LIMITED PARTNERSHIP P-7
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME LIMITED PARTNERSHIP P-8
(Registrant)
BY: GEODYNE RESOURCES, INC.
General Partner
Date: May 11, 2001 By: /s/Dennis R. Neill
--------------------------------
(Signature)
Dennis R. Neill
President
Date: May 11, 2001 By: /s/Patrick M. Hall
--------------------------------
(Signature)
Patrick M. Hall
Principal Accounting Officer
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