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
September 30, 2001 33-10346-07 (1979-1)
33-10346-08 (1979-2)
DYCO 1979 OIL AND GAS PROGRAM
(TWO LIMITED PARTNERSHIPS)
(Exact Name of Registrant as specified in its charter)
41-1358013 (1979-1)
Minnesota 41-1358015 (1979-2)
(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
------ ------
1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
2001 2000
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 19,128 $ 50,340
Accrued oil and gas sales 40,267 88,493
Accounts receivable - related
party (Note 2) - 13,487
-------- --------
Total current assets $ 59,395 $152,320
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 68,648 90,294
DEFERRED CHARGE 36,656 36,656
-------- --------
$164,699 $279,270
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 2,755 $ 2,474
-------- --------
Total current liabilities $ 2,755 $ 2,474
ACCRUED LIABILITY $ 33,877 $ 33,877
PARTNERS' CAPITAL:
General Partner, 32 general
partner units $ 1,281 $ 2,430
Limited Partners, issued and
outstanding, 3,140 Units 126,786 240,489
-------- --------
Total Partners' capital $128,067 $242,919
-------- --------
$164,699 $279,270
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
2
>
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(Unaudited)
2001 2000
-------- --------
REVENUES:
Oil and gas sales $64,299 $124,624
Interest 542 1,251
------- --------
$64,841 $125,875
COSTS AND EXPENSES:
Oil and gas production $12,334 $ 16,874
Depreciation, depletion, and
amortization of oil and gas
properties 9,870 3,144
General and administrative
(Note 2) 16,528 16,615
------- --------
$38,732 $ 36,633
------- --------
NET INCOME $26,109 $ 89,242
======= ========
GENERAL PARTNER (1%) - net income $ 261 $ 892
======= ========
LIMITED PARTNERS (99%) - net income $25,848 $ 88,350
======= ========
NET INCOME PER UNIT $ 8.23 $ 28.13
======= ========
UNITS OUTSTANDING 3,172 3,172
======= ========
The accompanying condensed notes are an integral part of
these financial statements.
3
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(Unaudited)
2001 2000
-------- --------
REVENUES:
Oil and gas sales $376,529 $281,014
Interest 2,701 2,073
-------- --------
$379,230 $283,087
COSTS AND EXPENSES:
Oil and gas production $ 52,196 $ 40,331
Depreciation, depletion, and
amortization of oil and gas
properties 21,090 7,618
General and administrative
(Note 2) 56,016 54,812
-------- --------
$129,302 $102,761
-------- --------
NET INCOME $249,928 $180,326
======== ========
GENERAL PARTNER (1%) - net income $ 2,499 $ 1,803
======== ========
LIMITED PARTNERS (99%) - net income $247,429 $178,523
======== ========
NET INCOME PER UNIT $ 78.79 $ 56.85
======== ========
UNITS OUTSTANDING 3,172 3,172
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
4
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(Unaudited)
2001 2000
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $249,928 $180,326
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 21,090 7,618
(Increase) decrease in accrued
oil and gas sales 48,226 ( 27,554)
Decrease in accounts receivable -
General Partner 13,487 -
Increase (decrease) in accounts
payable 281 ( 5,666)
------- --------
Net cash provided by operating
activities $333,012 $154,724
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties $ - ($ 2,021)
Proceeds from the sale of oil and
gas properties 556 164
-------- --------
Net cash provided (used) by
investing activities $ 556 ($ 1,857)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($364,780) ($111,020)
-------- --------
Net cash used by financing
activities ($364,780) ($111,020)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 31,212) $ 41,847
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 50,340 8,884
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 19,128 $ 50,731
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
5
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
2001 2000
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 83,242 $103,150
Accrued oil and gas sales 38,716 79,812
-------- --------
Total current assets $121,958 $182,962
NET OIL AND GAS PROPERTIES, utilizing
the full cost method 181,809 216,386
DEFERRED CHARGE 65,520 65,520
-------- --------
$369,287 $464,868
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 4,792 $ 7,027
Gas imbalance payable 60,849 60,849
-------- --------
Total current liabilities $ 65,641 $ 67,876
ACCRUED LIABILITY $ 19,076 $ 19,076
PARTNERS' CAPITAL:
General Partner, 29 general
partner units $ 2,847 $ 3,780
Limited Partners, issued and
outstanding, 2,860 Units 281,723 374,136
-------- --------
Total Partners' capital $284,570 $377,916
-------- --------
$369,287 $464,868
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
6
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(Unaudited)
2001 2000
-------- --------
REVENUES:
Oil and gas sales $56,812 $125,321
Interest 1,001 1,540
------- --------
$57,813 $126,861
COSTS AND EXPENSES:
Oil and gas production $19,515 $ 24,904
Depreciation, depletion, and
amortization of oil and gas
properties 16,229 4,049
General and administrative
(Note 2) 14,222 14,293
------- --------
$49,966 $ 43,246
------- --------
NET INCOME $ 7,847 $ 83,615
======= ========
GENERAL PARTNER (1%) - net income $ 79 $ 837
======= ========
LIMITED PARTNERS (99%) - net income $ 7,768 $ 82,778
======= ========
NET INCOME PER UNIT $ 2.72 $ 28.94
======= ========
UNITS OUTSTANDING 2,889 2,889
======= ========
The accompanying condensed notes are an integral part of
these financial statements.
7
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(Unaudited)
2001 2000
-------- --------
REVENUES:
Oil and gas sales $342,911 $342,304
Interest 4,133 4,435
-------- --------
$347,044 $346,739
COSTS AND EXPENSES:
Oil and gas production $ 68,023 $ 63,855
Depreciation, depletion, and
amortization of oil and gas
properties 34,595 12,231
General and administrative
(Note 2) 48,872 47,699
-------- --------
$151,490 $123,785
-------- --------
NET INCOME $195,554 $222,954
======== ========
GENERAL PARTNER (1%) - net income $ 1,956 $ 2,230
======== ========
LIMITED PARTNERS (99%) - net income $193,598 $220,724
======== ========
NET INCOME PER UNIT $ 67.69 $ 77.17
======== ========
UNITS OUTSTANDING 2,889 2,889
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
8
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(Unaudited)
2001 2000
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $195,554 $222,954
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 34,595 12,231
(Increase) decrease in accrued
oil and gas sales 41,096 ( 28,397)
Decrease in accounts payable ( 2,235) ( 436)
-------- --------
Net cash provided by operating
activities $269,010 $206,352
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties ($ 947) $ -
Proceeds from sale of oil and gas
properties 929 -
-------- --------
Net cash used by investing
activities ($ 18) $ -
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($288,900) ($202,230)
-------- --------
Net cash used by financing
activities ($288,900) ($202,230)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 19,908) $ 4,122
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 103,150 97,905
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 83,242 $102,027
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
9
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
CONDENSED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheets as of September 30, 2001, statements of operations for
the three and nine months ended September 30, 2001 and 2000, and
statements of cash flows for the nine months ended September 30, 2001 and
2000 have been prepared by Dyco Petroleum Corporation ("Dyco"), the
General Partner of the Dyco Oil and Gas Program 1979-1 and 1979-2 Limited
Partnerships (individually, the "1979-1 Program" or the "1979-2 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 September 30, 2001, results of operations for the three and nine months
ended September 30, 2001 and 2000, and changes in cash flows for the nine
months ended September 30, 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 September 30, 2001 are not necessarily indicative of the results to
be expected for the full year.
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 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
10
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
---------------------------------
The 1979-1 Program's related party receivable at December 31, 2000
represents $13,424 for well sale proceeds and $63 in related interest (at
prime plus 1%) due from an affiliate of the 1979-1 Program and associated
with the sale of three wells in late 2000. Such receivable was collected
in the first quarter of 2001.
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 September 30, 2001
and 2000, the 1979-1 Program incurred such expenses totaling $16,528 and
$16,615, respectively, of which $14,490 was paid each period to Dyco and
its affiliates. During the nine months ended September 30, 2001 and 2000,
the 1979-1 Program incurred such expenses totaling $56,016 and $54,812,
respectively, of which $43,470 was paid each period to Dyco and its
affiliates. During the three months ended September 30, 2001 and 2000, the
1979-2 Program incurred such expenses totaling $14,222 and $14,293,
respectively, of which $12,144 was paid each period to Dyco and its
affiliates. During the nine months ended September 30, 2001 and 2000, the
1979-2 Program incurred such expenses totaling $48,872 and $47,699,
respectively, of which $36,432 was paid each period to Dyco and its
affiliates.
Affiliates of the Programs operate certain of the Programs' properties.
Their policy is to bill the Programs for all customary charges and cost
reimbursements associated with these activities.
11
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.
12
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.
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. Gas prices in late 2000 and early 2001 were
significantly higher than the Program's historical average. This was
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. In the last several months, however, spot gas prices have
substantially declined. A weakening economy and recent terrorist
activities may result in additional downward pricing pressure. It is not
possible to accurately predict future pricing direction.
13
1979-1 PROGRAM
THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2000.
Three Months Ended September 30,
--------------------------------
2001 2000
-------- --------
Oil and gas sales $64,299 $124,624
Oil and gas production expenses $12,334 $ 16,874
Barrels produced 20 90
Mcf produced 23,223 32,695
Average price/Bbl $ 26.55 $ 25.20
Average price/Mcf $ 2.75 $ 3.74
As shown in the table above, total oil and gas sales decreased $60,325
(48.4%) for the three months ended September 30, 2001 as compared to the
three months ended September 30, 2000. Of this decrease, approximately
$35,000 was related to a decrease in volumes of gas sold and approximately
$23,000 was related to a decrease in the average price of gas sold.
Volumes of oil and gas sold decreased 70 barrels and 9,472 Mcf,
respectively, for the three months ended September 30, 2001 as compared to
the three months ended September 30, 2000. The decrease in volumes of gas
sold was primarily due to (i) a positive prior period volume adjustment
made by the operator on one well during the three months ended September
30, 2000, (ii) the 1979-1 Program's receipt of a reduced percentage of
sales on two wells during the three months ended September 30, 2001 due to
gas balancing, and (iii) a negative prior period volume adjustment made by
the purchaser on one well during the three months ended September 30,
2001. As of the date of this Quarterly Report, management expects the gas
balancing adjustment to continue for the foreseeable future, thereby
continuing to contribute to a decrease in volumes of gas produced for the
1979-1 Program. Average oil prices increased to $26.55 per barrel for the
three months ended September 30, 2001 from $25.20 per barrel for the three
months ended September 30, 2000. Average gas prices decreased to $2.75 per
Mcf for the three months ended September 30, 2001 from $3.74 per Mcf for
the three months ended September 30, 2000.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $4,540 (26.9%) for the three months ended
September 30, 2001 as compared to the three months ended September 30,
2000. This decrease was primarily due to 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 19.2% for the three months
ended September 30, 2001 from 13.5% for the three months ended September
30, 2000. This percentage
14
increase was primarily due to the decrease in the average price of gas
sold.
Depreciation, depletion, and amortization of oil and gas properties
increased $6,726 (213.9%) for the three months ended September 30, 2001 as
compared to the three months ended September 30, 2000. This increase was
primarily due to a decrease in the gas price used in the valuation of
reserves at September 30, 2001 as compared to September 30, 2000. As a
percentage of oil and gas sales, this expense increased to 15.4% for the
three months ended September 30, 2001 from 2.5% for the three months ended
September 30, 2000. This percentage increase was primarily due to the
dollar increase in depreciation, depletion, and amortization.
General and administrative expenses remained relatively constant for the
three months ended September 30, 2001 as compared to the three months
ended September 30, 2000. As a percentage of oil and gas sales, these
expenses increased to 25.7% for the three months ended September 30, 2001
from 13.3% for the three months ended September 30, 2000. This percentage
increase was primarily due to the decrease in oil and gas sales.
NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 2000.
Nine Months Ended September 30,
-------------------------------
2001 2000
-------- --------
Oil and gas sales $376,529 $281,014
Oil and gas production expenses $ 52,196 $ 40,331
Barrels produced 46 187
Mcf produced 81,684 89,108
Average price/Bbl $ 27.24 $ 26.09
Average price/Mcf $ 4.59 $ 3.10
As shown in the table above, total oil and gas sales increased $95,515
(34.0%) for the nine months ended September 30, 2001 as compared to the
nine months ended September 30, 2000. Of this increase, approximately
$122,000 was related to an increase in the average price of gas sold,
which increase was partially offset by a decrease of approximately $23,000
related to a decrease in volumes of gas sold. Volumes of oil and gas sold
decreased 141 barrels and 7,424 Mcf, respectively, for the nine months
ended September 30, 2001 as compared to the nine months ended September
30, 2000. Average oil and gas prices increased to $27.24 per barrel and
$4.59 per Mcf, respectively, for the nine months ended September 30, 2001
from $26.09 per barrel and $3.10 per Mcf, respectively, for the nine
months ended September 30, 2000.
15
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $11,865 (29.4%) for the nine months ended
September 30, 2001 as compared to the nine months ended September 30,
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 13.9% for the nine months ended
September 30, 2001 from 14.4% for the nine months ended September 30,
2000.
Depreciation, depletion, and amortization of oil and gas properties
increased $13,472 (176.8%) for the nine months ended September 30, 2001 as
compared to the nine months ended September 30, 2000. This increase was
primarily due to (i) a decrease in the gas price used in the valuation of
reserves at September 30, 2001 as compared to September 30, 2000 and (ii)
the increase in the average price of gas sold. As a percentage of oil and
gas sales, this expense increased to 5.6% for the nine months ended
September 30, 2001 from 2.7% for the nine months ended September 30, 2000.
This percentage increase was primarily due to the dollar increase in
depreciation, depletion, and amortization.
General and administrative expenses increased $1,204 (2.2%) for the nine
months ended September 30, 2001 as compared to the nine months ended
September 30, 2000. As a percentage of oil and gas sales, these expenses
decreased to 14.9% for the nine months ended September 30, 2001 from 19.5%
for the nine months ended September 30, 2000. This percentage decrease was
primarily due to the increase in oil and gas sales.
1979-2 PROGRAM
THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2000.
Three Months Ended September 30,
--------------------------------
2001 2000
------- --------
Oil and gas sales $56,812 $125,321
Oil and gas production expenses $19,515 $ 24,904
Barrels produced 203 23
Mcf produced 17,812 29,953
Average price/Bbl $ 25.91 $ 21.78
Average price/Mcf $ 2.89 $ 4.17
As shown in the table above, total oil and gas sales decreased $68,509
(54.7%) for the three months ended September 30, 2001 as compared to the
three months ended September 30, 2000. Of this decrease, approximately
$51,000 was related to a decrease in volumes of gas sold and approximately
$23,000 was related to a decrease in the
16
average price of gas sold. Volumes of oil sold increased 180 barrels,
while volumes of gas sold decreased 12,141 Mcf for the three months ended
September 30, 2001 as compared to the three months ended September 30,
2000. The decrease in volumes of gas sold was primarily due to (i) the
1979-2 Program's receipt of an increased percentage of sales on one well
during the three months ended September 30, 2000 due to gas balancing,
(ii) the shutting-in of one well in order to perform repairs during the
three months ended September 30, 2001, and (iii) normal declines in
production. Average oil prices increased to $25.91 per barrel for the
three months ended September 30, 2001 from $21.78 per barrel for the three
months ended September 30, 2000. Average gas prices decreased to $2.89 per
Mcf for the three months ended September 30, 2001 from $4.17 per Mcf for
the three months ended September 30, 2000.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $5,389 (21.6%) for the three months ended
September 30, 2001 as compared to the three months ended September 30,
2000. This decrease was primarily due to 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 34.4% for the three months
ended September 30, 2001 from 19.9% for the three months ended September
30, 2000. This percentage increase was primarily due to the decrease in
the average price of gas sold.
Depreciation, depletion, and amortization of oil and gas properties
increased $12,180 (300.8%) for the three months ended September 30, 2001
as compared to the three months ended September 30, 2000. This increase
was primarily due to a decrease in the gas price used in the valuation of
reserves at September 30, 2001 as compared to September 30, 2000. As a
percentage of oil and gas sales, this expense increased to 28.6% for the
three months ended September 30, 2001 from 3.2% for the three months ended
September 30, 2000. This percentage increase was primarily due to the
dollar increase in depreciation, depletion, and amortization.
General and administrative expenses remained relatively constant for the
three months ended September 30, 2001 as compared to the three months
ended September 30, 2000. As a percentage of oil and gas sales, these
expenses increased to 25.0% for the three months ended September 30, 2001
from 11.4% for the three months ended September 30, 2000. This percentage
increase was primarily due to the decrease in oil and gas sales.
17
NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 2000.
Nine Months Ended September 30,
-------------------------------
2001 2000
-------- --------
Oil and gas sales $342,911 $342,304
Oil and gas production expenses $ 68,023 $ 63,855
Barrels produced 578 425
Mcf produced 65,472 95,375
Average price/Bbl $ 26.70 $ 26.80
Average price/Mcf $ 5.00 $ 3.47
As shown in the table above, total oil and gas sales remained relatively
constant for the nine months ended September 30, 2001 as compared to the
nine months ended September 30, 2000. Increases of approximately (i)
$100,000 related to an increase in the average price of gas sold and (ii)
$4,000 related to an increase in volumes of oil sold were substantially
offset by a decrease of approximately $104,000 related to a decrease in
volumes of gas sold. Volumes of oil sold increased 153 barrels, while
volumes of gas sold decreased 29,903 Mcf for the nine months ended
September 30, 2001 as compared to the nine months ended September 30,
2000. The decrease in volumes of gas sold was primarily due to (i) the
1979-2 Program's receipt of an increased percentage of sales on one well
during the nine months ended September 30, 2000 due to gas balancing, (ii)
the shutting-in of one well in order to perform repairs during the nine
months ended September 30, 2001, and (iii) normal declines in production.
Average oil prices decreased to $26.70 per barrel for the nine months
ended September 30, 2001 from $26.80 per barrel for the nine months ended
September 30, 2000. Average gas prices increased to $5.00 per Mcf for the
nine months ended September 30, 2001 from $3.47 per Mcf for the nine
months ended September 30, 2000.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $4,168 (6.5%) for the nine months ended
September 30, 2001 as compared to the nine months ended September 30,
2000. This increase was primarily due to (i) a positive prior period lease
operating expense adjustment made by the operator on one well during the
nine months ended September 30, 2001 and (ii) an increase in production
taxes associated with the increase in oil and gas sales. These increases
were partially offset by a decrease in lease operating expenses associated
with the decrease in volumes of gas sold. As a percentage of oil and gas
sales, these expenses increased to 19.8% for the nine months ended
September 30, 2001 from 18.7% for the nine months ended September 30,
2000.
18
Depreciation, depletion, and amortization of oil and gas properties
increased $22,364 (182.8%) for the nine months ended September 30, 2001 as
compared to the nine months ended September 30, 2000. This increase was
primarily due to (i) a decrease in the gas price used in the valuation of
reserves at September 30, 2001 as compared to September 30, 2000 and (ii)
the increase in the average price of gas sold. As a percentage of oil and
gas sales, this expense increased to 10.1% for the nine months ended
September 30, 2001 from 3.6% for the nine months ended September 30, 2000.
This percentage increase was primarily due to the dollar increase in
depreciation, depletion, and amortization.
General and administrative expenses increased $1,173 (2.5%) for the nine
months ended September 30, 2001 as compared to the nine months ended
September 30, 2000. As a percentage of oil and gas sales, these expenses
increased to 14.3% for the nine months ended September 30, 2001 from 13.9%
for the nine months ended September 30, 2000.
19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
The Programs do not hold any market risk sensitive instruments.
20
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On November 1, 2001 Craig D. Loseke was named Chief Financial Officer
of Dyco.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K.
None.
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED
PARTNERSHIP
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED
PARTNERSHIP
(Registrant)
BY: DYCO PETROLEUM CORPORATION
General Partner
Date: November 9, 2001 By: /s/Dennis R. Neill
-------------------------------
(Signature)
Dennis R. Neill
President
Date: November 9, 2001 By: /s/Craig D. Loseke
-------------------------------
(Signature)
Craig D. Loseke
Chief Financial Officer
22