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 September 30, 2003
Commission File Number:
I-D: 0-15831 I-E: 0-15832 I-F: 0-15833
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-D 73-1265223
I-E 73-1270110
Oklahoma I-F 73-1292669
- ---------------------------- -------------------------------
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or Number)
organization)
Two West Second Street, Tulsa, Oklahoma 74103
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(918) 583-1791
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ------
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes No X
------ ------
-1-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-D
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
2003 2002
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $273,628 $171,131
Accounts receivable:
Oil and gas sales 152,466 110,658
-------- --------
Total current assets $426,094 $281,789
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 428,829 393,450
DEFERRED CHARGE 89,670 89,670
-------- --------
$944,593 $764,909
======== ========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 24,721 $ 28,784
Gas imbalance payable 27,206 27,206
-------- --------
Total current liabilities $ 51,927 $ 55,990
LONG-TERM LIABILITIES:
Accrued liability $ 39,024 $ 39,024
Asset retirement obligation
(Note 1) 29,101 -
-------- --------
Total long-term liabilities $ 68,125 $ 39,024
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 16,929) ($ 22,566)
Limited Partners, issued and
outstanding, 7,195 units 841,470 692,461
-------- --------
Total Partners' capital $824,541 $669,895
-------- --------
$944,593 $764,909
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-2-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-D
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited)
2003 2002
-------- --------
REVENUES:
Oil and gas sales $247,033 $177,343
Interest income 380 327
-------- --------
$247,413 $177,670
COSTS AND EXPENSES:
Lease operating $ 21,866 $ 26,940
Production tax 17,552 10,537
Depreciation, depletion, and
amortization of oil and gas
properties 10,362 10,735
General and administrative
(Note 2) 23,268 22,872
-------- --------
$ 73,048 $ 71,084
-------- --------
NET INCOME $174,365 $106,586
======== ========
GENERAL PARTNER - NET INCOME $ 27,548 $ 17,441
======== ========
LIMITED PARTNERS - NET INCOME $146,817 $ 89,145
======== ========
NET INCOME per unit $ 20.41 $ 12.39
======== ========
UNITS OUTSTANDING 7,195 7,195
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-3-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-D
COMBINED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited)
2003 2002
-------- --------
REVENUES:
Oil and gas sales $811,884 $531,814
Interest income 928 1,058
Gain on abandonment 20 -
-------- --------
$812,832 $532,872
COSTS AND EXPENSES:
Lease operating $ 95,854 $102,716
Production tax 55,502 31,693
Depreciation, depletion, and
amortization of oil and gas
properties 27,054 36,967
General and administrative
(Note 2) 84,344 82,384
-------- --------
$262,754 $253,760
-------- --------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $550,078 $279,112
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) 1,099 -
-------- --------
NET INCOME $551,177 $279,112
======== ========
GENERAL PARTNER - NET INCOME $ 86,168 $ 46,883
======== ========
LIMITED PARTNERS - NET INCOME $465,009 $232,229
======== ========
NET INCOME per unit $ 64.63 $ 32.28
======== ========
UNITS OUTSTANDING 7,195 7,195
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-4-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-D
COMBINED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited)
2003 2002
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $551,177 $279,112
Adjustments to reconcile net
income to net cash provided
by operating activities:
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) ( 1,099) -
Depreciation, depletion, and
amortization of oil and gas
properties 27,054 36,967
Gain on abandonment ( 20) -
Increase in accounts receivable -
oil and gas sales ( 41,808) ( 50,021)
Increase (decrease) in accounts
payable ( 4,063) 7,722
-------- --------
Net cash provided by operating
activities $531,241 $273,780
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 32,230) ($ 13,005)
Proceeds from sale of oil and
gas properties 17 50,376
-------- --------
Net cash provided (used) by investing
activities ($ 32,213) $ 37,371
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($396,531) ($305,701)
-------- --------
Net cash used by financing activities ($396,531) ($305,701)
-------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $102,497 $ 5,450
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 171,131 148,852
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $273,628 $154,302
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-5-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-E
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
2003 2002
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $1,582,894 $1,098,557
Accounts receivable:
Oil and gas sales 928,601 700,458
---------- ----------
Total current assets $2,511,495 $1,799,015
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 2,475,298 2,206,391
DEFERRED CHARGE 480,060 480,060
---------- ----------
$5,466,853 $4,485,466
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 187,399 $ 228,879
Accrued liability - other (Note 1) 88,892 88,892
Gas imbalance payable 105,422 105,422
---------- ----------
Total current liabilities $ 381,713 $ 423,193
LONG-TERM LIABILITIES:
Accrued liability $ 204,802 $ 204,802
Asset retirement obligation
(Note 1) 280,911 -
---------- ----------
Total long-term liabilities $ 485,713 $ 204,802
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 54,332) ($ 92,930)
Limited Partners, issued and
outstanding, 41,839 units 4,653,759 3,950,401
---------- ----------
Total Partners' capital $4,599,427 $3,857,471
---------- ----------
$5,466,853 $4,485,466
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-6-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-E
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited)
2003 2002
---------- ----------
REVENUES:
Oil and gas sales $1,459,272 $1,123,308
Interest income 2,536 2,056
---------- ----------
$1,461,808 $1,125,364
COSTS AND EXPENSES:
Lease operating $ 205,322 $ 227,389
Production tax 96,915 69,164
Depreciation, depletion, and
amortization of oil and gas
properties 76,106 46,597
General and administrative
(Note 2) 130,340 124,203
---------- ----------
$ 508,683 $ 467,353
---------- ----------
NET INCOME $ 953,125 $ 658,011
========== ==========
GENERAL PARTNER - NET INCOME $ 153,243 $ 104,917
========== ==========
LIMITED PARTNERS - NET INCOME $ 799,882 $ 553,094
========== ==========
NET INCOME per unit $ 19.12 $ 13.22
========== ==========
UNITS OUTSTANDING 41,839 41,839
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-7-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-E
COMBINED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited)
2003 2002
---------- ----------
REVENUES:
Oil and gas sales $5,008,646 $3,192,292
Interest income 6,439 6,118
---------- ----------
$5,015,085 $3,198,410
COSTS AND EXPENSES:
Lease operating $ 745,539 $ 768,346
Production tax 315,417 181,108
Depreciation, depletion, and
amortization of oil and gas
properties 184,650 238,448
General and administrative
(Note 2) 391,706 388,755
---------- ----------
$1,637,312 $1,576,657
---------- ----------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $3,377,773 $1,621,753
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) 4,178 -
---------- ----------
NET INCOME $3,381,951 $1,621,753
========== ==========
GENERAL PARTNER - NET INCOME $ 531,593 $ 275,728
========== ==========
LIMITED PARTNERS - NET INCOME $2,850,358 $1,346,025
========== ==========
NET INCOME per unit $ 68.13 $ 32.17
========== ==========
UNITS OUTSTANDING 41,839 41,839
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-8-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-E
COMBINED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited)
2003 2002
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $3,381,951 $1,621,753
Adjustments to reconcile net
income to net cash provided
by operating activities:
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) ( 4,178) -
Depreciation, depletion, and
amortization of oil and gas
properties 184,650 238,448
Increase in accounts receivable -
oil and gas sales ( 228,143) ( 244,162)
Increase (decrease) in accounts
payable ( 41,480) 33,023
Decrease in accrued liability -
other (Note 1) - ( 157,093)
---------- ----------
Net cash provided by operating
activities $3,292,800 $1,491,969
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 168,468) ($ 115,155)
Proceeds from the sale of oil and
gas properties - 160,371
---------- ----------
Net cash provided (used) by investing
activities ($ 168,468) $ 45,216
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($2,639,995) ($1,447,257)
---------- ----------
Net cash used by financing activities ($2,639,995) ($1,447,257)
---------- ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 484,337 $ 89,928
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,098,557 780,235
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $1,582,894 $ 870,163
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-9-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-F
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
2003 2002
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 482,956 $ 316,892
Accounts receivable:
Oil and gas sales 286,333 240,861
---------- ----------
Total current assets $ 769,289 $ 557,753
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 817,360 683,746
DEFERRED CHARGE 345,903 345,903
---------- ----------
$1,932,552 $1,587,402
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 88,245 $ 91,775
Accrued liability - other (Note 1) 62,225 62,225
Gas imbalance payable 34,038 34,038
---------- ----------
Total current liabilities $ 184,508 $ 188,038
LONG-TERM LIABILITIES:
Accrued liability $ 159,521 $ 159,521
Asset retirement obligation
(Note 1) 122,714 -
---------- ----------
Total long-term liabilities $ 282,235 $ 159,521
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 3,980) ($ 15,418)
Limited Partners, issued and
outstanding, 14,321 units 1,469,789 1,255,261
---------- ----------
Total Partners' capital $1,465,809 $1,239,843
---------- ----------
$1,932,552 $1,587,402
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-10-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-F
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited)
2003 2002
-------- --------
REVENUES:
Oil and gas sales $450,037 $357,548
Interest income 711 608
-------- --------
$450,748 $358,156
COSTS AND EXPENSES:
Lease operating $ 88,932 $ 99,503
Production tax 28,661 20,415
Depreciation, depletion, and
amortization of oil and gas
properties 29,657 3,809
General and administrative
(Note 2) 45,305 43,717
-------- --------
$192,555 $167,444
-------- --------
NET INCOME $258,193 $190,712
======== ========
GENERAL PARTNER - NET INCOME $ 42,774 $ 29,049
======== ========
LIMITED PARTNERS - NET INCOME $215,419 $161,663
======== ========
NET INCOME per unit $ 15.04 $ 11.29
======== ========
UNITS OUTSTANDING 14,321 14,321
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-11-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-F
COMBINED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited)
2003 2002
---------- --------
REVENUES:
Oil and gas sales $1,545,418 $976,513
Interest income 1,946 1,476
---------- --------
$1,547,364 $977,989
COSTS AND EXPENSES:
Lease operating $ 304,301 $291,173
Production tax 91,957 46,998
Depreciation, depletion, and
amortization of oil and gas
properties 65,095 51,905
General and administrative
(Note 2) 147,583 145,410
---------- --------
$ 608,936 $535,486
---------- --------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $ 938,428 $442,503
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) ( 318) -
---------- --------
NET INCOME $ 938,110 $442,503
========== ========
GENERAL PARTNER - NET INCOME $ 149,582 $ 73,421
========== ========
LIMITED PARTNERS - NET INCOME $ 788,528 $369,082
========== ========
NET INCOME per unit $ 55.06 $ 25.77
========== ========
UNITS OUTSTANDING 14,321 14,321
========== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-12-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F
GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-F
COMBINED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited)
2003 2002
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $938,110 $442,503
Adjustments to reconcile net
income to net cash provided
by operating activities:
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) 318 -
Depreciation, depletion, and
amortization of oil and gas
properties 65,095 51,905
Increase in accounts receivable -
oil and gas sales ( 45,472) ( 81,920)
Increase (decrease) in accounts
payable ( 3,530) 14,386
Decrease in accrued liability -
other (Note 1) - ( 109,965)
-------- --------
Net cash provided by operating
activities $954,521 $316,909
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 76,313) ($ 46,761)
Proceeds from the sale of oil and
gas properties - 55,983
-------- --------
Net cash provided (used) by investing
activities ($ 76,313) $ 9,222
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($712,144) ($162,832)
-------- --------
Net cash used by financing activities ($712,144) ($162,832)
-------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $166,064 $163,299
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 316,892 114,388
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $482,956 $277,687
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-13-
GEODYNE ENERGY INCOME PROGRAM I LIMITED PARTNERSHIPS
CONDENSED NOTES TO THE COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The combined balance sheets as of September 30, 2003, combined statements
of operations for the three and nine months ended September 30, 2003 and
2002, and combined statements of cash flows for the nine months ended
September 30, 2003 and 2002 have been prepared by Geodyne Resources, Inc.,
the General Partner of the limited partnerships, without audit. Each
limited partnership is a general partner in the related Geodyne Energy
Income Production Partnership in which Geodyne Resources, Inc. serves as
the managing partner. Unless the context indicates otherwise, all
references to a "Partnership" or the "Partnerships" are references to the
limited partnership and its related production partnership, collectively,
and all references to the "General Partner" are references to the general
partner of the limited partnerships and the managing partner of the
production partnerships, collectively. In the opinion of management the
financial statements referred to above include all necessary adjustments,
consisting of normal recurring adjustments, to present fairly the combined
financial position at September 30, 2003, the combined results of
operations for the three and nine months ended September 30, 2003 and
2002, and the combined cash flows for the nine months ended September 30,
2003 and 2002.
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, 2002. The
results of operations for the period ended September 30, 2003 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
$1,000 initial capital contribution.
-14-
OIL AND GAS PROPERTIES
----------------------
The Partnerships follow the successful efforts method of accounting for
their oil and gas properties. Under the 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.
Depletion of the costs 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 unit-of-production
method. The Partnerships' depletion, depreciation, and amortization
includes estimated dismantlement and abandonment costs and estimated
salvage value of the equipment.
When complete units of depreciable property are retired or sold, the asset
cost and related accumulated depreciation are eliminated with any gain or
loss (including the elimination of the asset retirement obligation)
reflected in income. When less than complete units of depreciable property
are retired or sold, the proceeds are credited to oil and gas properties.
ACCRUED LIABILITY - OTHER
-------------------------
The Accrued Liability - Other at September 30, 2003 and December 31, 2002
for the I-E and I-F Partnerships represents a charge accrued for the
payment of a judgment related to plugging liabilities, which judgment is
currently under appeal.
-15-
NEW ACCOUNTING PRONOUNCEMENTS
- -----------------------------
In July 2001, the FASB issued FAS No. 143, "Accounting for Asset
Retirement Obligations", which is effective for fiscal years beginning
after June 15, 2002 (January 1, 2003 for the Partnerships). On January 1,
2003, the Partnerships adopted FAS No. 143 and recorded an increase in
capitalized cost of oil and gas properties, an increase(decrease) in net
income for the cumulative effect of the change in accounting principle,
and an asset retirement obligation in the following approximate amounts
for each Partnership:
Increase
(Decrease)
Increase in
in Net Income
Capitalized for the
Cost of Oil Change in Asset
and Gas Accounting Retirement
Partnerships Properties Principle Obligation
------------ ----------- ---------- ----------
I-D $ 30,000 $ 1,000 $ 29,000
I-E 278,000 4,000 274,000
I-F 119,000 ( 300) 119,000
These amounts differ significantly from the estimates disclosed in the
Annual Report on Form 10-K for the year ended December 31, 2002 due to a
revision of the methodology used in calculating the change in capitalized
cost of oil and gas properties.
The asset retirement obligation will be adjusted upwards each quarter in
order to recognize accretion of the time-related discount factor. For the
nine months ended September 30, 2003, the I-D, I-E, and I-F Partnerships
recognized approximately $1,000, $8,000, and $4,000, respectively, of an
increase in depreciation, depletion, and amortization expense, which was
comprised of accretion of the asset retirement obligation and depletion of
the increase in capitalized cost of oil and gas properties.
If this accounting policy had been in effect January 1, 2002, the proforma
impact for the I-D, I-E, and I-F Partnerships during the nine months ended
September 30, 2002 would have been an increase in depreciation, depletion,
and amortization expense of approximately $1,000, $8,000 and $4,000,
respectively.
-16-
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 September 30, 2003, the following payments were made to the General
Partner or its affiliates by the Partnerships:
Direct General Administrative
Partnership and Administrative Overhead
----------- ------------------- ---------------
I-D $ 3,282 $ 19,986
I-E 14,120 116,220
I-F 5,525 39,780
During the nine months ended September 30, 2003, the following payments
were made to the General Partner or its affiliates by the Partnerships:
Direct General Administrative
Partnership and Administrative Overhead
----------- ------------------- ---------------
I-D $24,386 $ 59,958
I-E 43,046 348,660
I-F 28,243 119,340
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.
-17-
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 are engaged in the business of acquiring and operating
producing oil and gas properties located in the continental United States.
In general, a Partnership acquired producing properties and did not engage
in development drilling or enhanced recovery projects, except as an
incidental part of the management of the producing properties acquired.
Therefore, the economic life of each Partnership, and its related
Production Partnership, is limited to the period of time required to fully
produce its acquired oil and gas reserves. The net proceeds from the oil
and gas operations are distributed to the Limited Partners and the General
Partner in accordance with the terms of the Partnerships' partnership
agreements.
-18-
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
----------- ------------------ ---------------
I-D March 4, 1986 $ 7,194,700
I-E September 10, 1986 41,839,400
I-F December 16, 1986 14,320,900
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 operations 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 September 30, 2003 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 a particular quarterly
cash distribution. During the nine months ended September 30, 2002,
capital expenditures for the I-F Partnership totaled $46,761. These
expenditures were primarily due to a successful recompletion in the
Jo-Mill Unit located in Borden County, Texas and drilling activities
in a large unitized property, the Willamar Community E Unit located in
Willacy County, Texas. These activities were successful leading to an
increase in oil and gas reserves on these properties. The I-F Partnership
owns working interests of approximately 0.3% and 3.5%, respectively,
in these wells. Any other capital expenditures incurred by the
Partnerships during the nine months ended September 30, 2003 and 2002
were not material to the Partnerships' cash flows.
The I-D, I-E, and I-F Partnerships' Statements of Cash Flows for the nine
months ended September 30, 2002 include proceeds from the sale of certain
oil and gas properties during December 2001. These proceeds were included
in the Partnerships' cash distributions paid in February 2002.
Pursuant to the terms of the Partnerships' partnership agreements (the
"Partnership Agreements"), the Partnerships would have terminated 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
-19-
of two years each. The General Partner has extended the terms of the
Partnerships for their second two year extension period to December 31,
2003. The General Partner currently intends to exercise the third
extension option for each Partnership, thereby extending their terms to
December 31, 2005.
CRITICAL ACCOUNTING POLICIES
- ----------------------------
The Partnerships follow the successful efforts method of accounting for
their oil and gas properties. Under the 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 the
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.
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' calculation of depreciation, depletion, and
amortization includes estimated dismantlement and abandonment costs and
estimated salvage value of the equipment. When complete units of
depreciable property are retired or sold, the asset cost and related
accumulated depreciation are eliminated with any gain or loss (including
the elimination of the asset retirement obligation) reflected in income.
When less that 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 for each oil and gas field (rather
than separately for each well). If the unamortized costs of oil and gas
properties within a field exceeds 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 estimated discounted future
cash flows from the properties. The risk that the Partnerships will be
required to record impairment provisions in the future increases as oil
and gas prices decrease.
-20-
The Deferred Charge on the Balance Sheets represents costs deferred for
lease operating expenses incurred in connection with the Partnerships'
underproduced gas imbalance positions. Conversely, 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 Deferred Charge and Accrued Liability is
the annual average production costs per Mcf.
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 and gas 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 revenues 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. 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 negotiated or contractual payment to
the underproduced party.
NEW ACCOUNTING PRONOUNCEMENTS
- -----------------------------
Below is a brief description of Financial Accounting Standards ("FAS")
recently issued by the Financial Accounting Standards Board ("FASB") which
may have an impact on the Partnerships' future results of operations and
financial position.
In July 2001, the FASB issued FAS No. 143, "Accounting for Asset
Retirement Obligations", which is effective for fiscal years beginning
after June 15, 2002 (January 1, 2003 for the Partnerships). On January 1,
2003, the Partnerships adopted FAS No. 143 and recorded an increase in
capitalized cost of oil and gas properties, an increase (decrease) in net
income for the cumulative effect of the change in accounting principle,
and an asset retirement obligation in the following approximate amounts
for each Partnership:
-21-
Increase
(Decrease)
Increase in
in Net Income
Capitalized for the
Cost of Oil Change in Asset
and Gas Accounting Retirement
Partnerships Properties Principle Obligation
------------ ----------- ---------- ----------
I-D $ 30,000 $ 1,000 $ 29,000
I-E 278,000 4,000 274,000
I-F 119,000 ( 300) 119,000
These amounts differ significantly from the estimates disclosed in the
Annual Report on Form 10-K for the year ended December 31, 2002 due to a
revision of the methodology used in calculating the change in capitalized
cost of oil and gas properties.
The asset retirement obligation will be adjusted upwards each quarter in
order to recognize accretion of the time-related discount factor. For the
nine months ended September 30, 2003, the I-D, I-E, and I-F Partnerships
recognized approximately $1,000, $8,000, and $4,000, respectively, of an
increase in depreciation, depletion, and amortization expense, which was
comprised of accretion of the asset retirement obligation and depletion of
the increase in capitalized cost of oil and gas properties.
PROVED RESERVES AND NET PRESENT VALUE
- -------------------------------------
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 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.
-22-
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 were estimated by
petroleum engineers employed by affiliates of the Partnerships, and are
annually reviewed by an independent engineering firm. "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. The following
information includes certain gas balancing adjustments which cause the gas
volume to differ from the reserve reports prepared by the General Partner.
I-D Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2002 56,533 1,315,719
Production ( 882) ( 41,385)
Revisions of previous
estimates ( 91) ( 39,632)
------ ---------
Proved reserves, March 31, 2003 55,560 1,234,702
Production ( 941) ( 56,157)
Extensions and discoveries 13 1,019
Revisions of previous
estimates 1,825 333,974
------ ---------
Proved reserves, June 30, 2003 56,457 1,513,538
Production ( 1,097) ( 47,413)
Revisions of previous
estimates 118 ( 9,547)
------ ---------
Proved reserves, Sept. 30, 2003 55,478 1,456,578
====== =========
-23-
I-E Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2002 421,343 6,775,074
Production ( 11,706) ( 213,245)
Revisions of previous
estimates ( 13,711) ( 280,504)
------- ---------
Proved reserves, March 31, 2003 395,926 6,281,325
Production ( 17,762) ( 320,893)
Extensions and discoveries 15,839 20,924
Revisions of previous
estimates 49,424 2,004,537
------- ---------
Proved reserves, June 30, 2003 443,427 7,985,893
Production ( 12,433) ( 241,817)
Revisions of previous
estimates ( 7,913) ( 92,844)
------- ---------
Proved reserves, Sept. 30, 2003 423,081 7,651,232
======= =========
-24-
I-F Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2002 200,897 2,334,632
Production ( 5,585) ( 70,164)
Revisions of previous
estimates ( 6,180) ( 155,014)
------- ---------
Proved reserves, March 31, 2003 189,132 2,109,454
Production ( 7,648) ( 66,330)
Extensions and discoveries 14 1,124
Revisions of previous
estimates 23,267 606,847
------- ---------
Proved reserves, June 30, 2003 204,765 2,651,095
Production ( 5,424) ( 67,497)
Revisions of previous
estimates ( 3,634) ( 22,890)
------- ---------
Proved reserves, Sept. 30, 2003 195,707 2,560,708
======= =========
The net present value of the Partnerships' reserves may change
dramatically as oil and gas prices change or as volumes change for the
reasons described above. Net present value represents estimated future
gross cash flow from the production and sale of proved reserves, net of
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.
The following table indicates the estimated net present value of the
Partnerships' proved reserves as of September 30, 2003, June 30, 2003,
March 31, 2003, and December 31, 2002. Net present value attributable to
the Partnerships' proved reserves was calculated on the basis of current
costs and prices as of the date of estimation. Such prices were not
escalated except in certain circumstances where escalations were fixed and
readily determinable in accordance with applicable contract provisions.
The table also indicates the gas prices in effect on the dates
corresponding to the reserve valuations. Changes in the oil and gas prices
cause the estimates of remaining economically recoverable reserves, as
well as the values placed on said reserves to fluctuate. 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 September 30, 2003. There can be no assurance
that the prices used in calculating the
-25-
net present value of the Partnerships' proved reserves at September 30,
2003 will actually be realized for such production.
Net Present Value of Reserves (In 000's)
---------------------------------------------------
Partnership 9/30/03 6/30/03 3/31/03 12/31/02
----------- ------- ------- ------- --------
I-D $ 3,467 $ 4,074 $ 3,634 $ 3,648
I-E 19,166 22,629 19,492 19,895
I-F 6,253 7,181 6,502 6,752
Oil and Gas Prices
---------------------------------------------------
Pricing 9/30/03 6/30/03 3/31/03 12/31/02
----------- ------- ------- ------- --------
Oil (Bbl) $ 26.00 $ 27.00 $ 27.75 $ 28.00
Gas (Mcf) 4.58 5.18 5.06 4.74
The Partnerships had downward revisions in the estimated net present value
of reserves at September 30, 2003 as compared to June 30, 2003 primarily
due to decreases in the oil and gas prices used to value the reserves.
RESULTS OF OPERATIONS
- ---------------------
GENERAL DISCUSSION
The following general discussion should be read in conjunction with the
analysis of results of operations provided below.
The primary source of liquidity and Partnership cash distributions comes
from the net revenues generated from the sale of oil and gas produced from
the Partnerships' oil and gas properties. The level of net revenues is
highly dependent upon the total volumes of oil and natural gas sold. Oil
and gas reserves are depleting assets and will experience production
declines over time, thereby likely resulting in reduced net revenues. The
level of net revenues is also highly dependent upon the prices received
for oil and gas sales, which prices have historically been very volatile
and may continue to be so.
Additionally, lower oil and natural gas prices may reduce the amount of
oil and gas that is economic to produce and reduce the Partnerships'
revenues and cash flow. Various factors beyond the Partnerships' control
will affect prices for oil and natural gas, such as:
* Worldwide and domestic supplies of oil and natural gas;
* The ability of the members of the Organization of Petroleum Exporting
Countries ("OPEC") to agree to and maintain oil prices and production
quotas;
-26-
* Political instability or armed conflict in oil-producing regions or
around major shipping areas;
* The level of consumer demand and overall economic activity;
* The competitiveness of alternative fuels;
* Weather conditions;
* The availability of pipelines for transportation; and
* Domestic and foreign government regulations and taxes.
Recently, while economic factors have been relatively unfavorable for oil
and natural gas demand, oil prices, to an extent, have benefited from the
political uncertainty associated with the increase in terrorist activities
in parts of the world. In the last few years, natural gas prices have
varied significantly, from very high prices in late 2000 and early 2001,
to low prices in late 2001 and early 2002, to rising prices in the later
part of 2002 and early 2003. The high natural gas prices were associated
with cold winter weather and decreased supply from reduced capital
investment for new drilling, while the low prices were associated with
warm winter weather and reduced economic activity. The more recent
increase in prices is the result of increased demand from weather
patterns, the pricing effect of relatively high oil prices and increased
concern about the ability of the industry to meet any longer-term demand
increases based upon current drilling activity.
It is not possible to predict the future direction of oil or natural gas
prices or whether the above discussed trends will remain. Operating costs,
including General and Administrative Expenses, may not decline over time
or may experience only a gradual decline, thus adversely affecting net
revenues as either production or oil and natural gas prices decline. In
any particular period, net revenues may also be affected by either the
receipt of proceeds from property sales or the incursion of additional
costs as a result of well workovers, recompletions, new well drilling, and
other events.
I-D PARTNERSHIP
THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2002.
Three Months Ended September 30,
--------------------------------
2003 2002
-------- --------
Oil and gas sales $247,033 $177,343
Oil and gas production expenses $ 39,418 $ 37,477
Barrels produced 1,097 904
Mcf produced 47,413 52,635
Average price/Bbl $ 26.07 $ 27.60
Average price/Mcf $ 4.61 $ 2.90
-27-
As shown in the table above, total oil and gas sales increased $69,690
(39.3%) for the three months ended September 30, 2003 as compared to the
three months ended September 30, 2002. Of this increase, approximately
$81,000 was related to an increase in the average price of gas sold, which
increase was partially offset by a decrease of approximately $15,000
related to a decrease in volumes of gas sold. Volumes of oil sold
increased 193 barrels, while volumes of gas sold decreased 5,222 Mcf for
the three months ended September 30, 2003 as compared to the three months
ended September 30, 2002. The increase in volumes of oil sold was
primarily due to a positive prior period volume adjustment made by the
operator on one significant well during the three months ended September
30, 2003. The decrease in volumes of gas sold was primarily due to (i)
normal declines in production and (ii) the shutting-in of one significant
well during the three months ended September 30, 2003 in order to perform
a workover on that well. The shut-in well is expected to return to
production in late 2003. Average oil prices decreased to $26.07 per barrel
for the three months ended September 30, 2003 from $27.60 per barrel for
the three months ended September 30, 2002. Average gas prices increased to
$4.61 per Mcf for the three months ended September 30, 2003 from $2.90 per
Mcf for the three months ended September 30, 2002.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $1,941 (5.2%) for the three months ended
September 30, 2003 as compared to the three months ended September 30,
2002. As a percentage of oil and gas sales, these expenses decreased to
16.0% for the three months ended September 30, 2003 from 21.1% for the
three months ended September 30, 2002. 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
decreased $373 (3.5%) for the three months ended September 30, 2003 as
compared to the three months ended September 30, 2002. As a percentage of
oil and gas sales, this expense decreased to 4.2% for the three months
ended September 30, 2003 from 6.1% for the three months ended September
30, 2002. This percentage decrease was primarily due to the increase in
the average price of gas sold.
General and administrative expenses increased $396 (1.7%) for the three
months ended September 30, 2003 as compared to the three months ended
September 30, 2002. As a percentage of oil and gas sales, these expenses
decreased to 9.4% for the three months ended September 30, 2003 from 12.9%
for the three months ended September 30, 2002. This percentage decrease
was primarily due to the increase in oil and gas sales.
-28-
NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 2002.
Nine Months Ended September 30,
-------------------------------
2003 2002
-------- --------
Oil and gas sales $811,884 $531,814
Oil and gas production expenses $151,356 $134,409
Barrels produced 2,920 2,819
Mcf produced 144,955 169,104
Average price/Bbl $ 28.84 $ 24.18
Average price/Mcf $ 5.02 $ 2.74
As shown in the table above, total oil and gas sales increased $280,070
(52.7%) for the nine months ended September 30, 2003 as compared to the
nine months ended September 30, 2002. Of this increase, approximately
$330,000 was related to an increase in the average price of gas sold,
which increase was partially offset by a decrease of approximately $66,000
related to a decrease in volumes of gas sold. Volumes of oil sold
increased 101 barrels, while volumes of gas sold decreased 24,149 Mcf for
the nine months ended September 30, 2003 as compared to the nine months
ended September 30, 2002. The decrease in volumes of gas sold was
primarily due to (i) normal declines in production and (ii) a positive
prior period gas balancing adjustment on one significant well during the
nine months ended September 30, 2002. Average oil and gas prices increased
to $28.84 per barrel and $5.02 per Mcf, respectively, for the nine months
ended September 30, 2003 from $24.18 per barrel and $2.74 per Mcf,
respectively, for the nine months ended September 30, 2002.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $16,947 (12.6%) for the nine months ended
September 30, 2003 as compared to the nine months ended September 30,
2002. 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 18.6% for the nine months ended
September 30, 2003 from 25.3% for the nine months ended September 30,
2002. This percentage decrease was primarily due to the increases in the
average prices of oil and gas sold.
Depreciation, depletion, and amortization of oil and gas properties
decreased $9,913 (26.8%) for the nine months ended September 30, 2003 as
compared to the nine months ended September 30, 2002. This decrease was
primarily due to (i) upward revisions in the estimates of remaining oil
and gas reserves for the nine months ended September 30, 2003 and (ii) the
decrease in volumes of gas sold. As a percentage of oil and gas sales,
this expense decreased to 3.3% for the nine months ended September 30,
2003 from 7.0%
-29-
for the nine months ended September 30, 2002. This percentage decrease was
primarily due to (i) the increases in the average prices of oil and gas
sold and (ii) the dollar decrease in depreciation, depletion, and
amortization of oil and gas properties.
General and administrative expenses increased $1,960 (2.4%) for the nine
months ended September 30, 2003 as compared to the nine months ended
September 30, 2002. As a percentage of oil and gas sales, these expenses
decreased to 10.4% for the nine months ended September 30, 2003 from 15.5%
for the nine months ended September 30, 2002. This percentage decrease was
primarily due to the increase in oil and gas sales.
The Limited Partners have received cash distributions through September
30, 2003 totaling $16,592,175 or 230.62% of Limited Partners' capital
contributions.
I-E PARTNERSHIP
THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2002.
Three Months Ended September 30,
--------------------------------
2003 2002
---------- ----------
Oil and gas sales $1,459,272 $1,123,308
Oil and gas production expenses $ 302,237 $ 296,553
Barrels produced 12,433 10,304
Mcf produced 241,817 286,851
Average price/Bbl $ 26.60 $ 26.67
Average price/Mcf $ 4.67 $ 2.96
As shown in the table above, total oil and gas sales increased $335,964
(29.9%) for the three months ended September 30, 2003 as compared to the
three months ended September 30, 2002. Of this increase, approximately (i)
$413,000 was related to an increase in the average price of gas sold and
(ii) $57,000 was related to an increase in volumes of oil sold. These
increases were partially offset by a decrease of approximately $133,000
related to a decrease in volumes of gas sold. Volumes of oil sold
increased 2,129 barrels, while volumes of gas sold decreased 45,034 Mcf
for the three months ended September 30, 2003 as compared to the three
months ended September 30, 2002. The increase in volumes of oil sold was
primarily due to (i) an increase in production on one significant well due
to the successful recompletion of that well during mid 2002, (ii) a
positive prior period volume adjustment made by the operator on another
significant well during the three months ended September 30, 2003, and
(iii) the successful completion of a new well during mid 2002. The
decrease in volumes of gas sold was primarily due to (i) normal declines
in production and (ii) the shutting-in of two significant wells during the
three months ended September 30, 2003 in order to perform
-30-
workovers on those wells. The shut-in wells are expected to return to
production in late 2003. Average oil prices decreased to $26.60 per barrel
for the three months ended September 30, 2003 from $26.67 per barrel for
the three months ended September 30, 2002. Average gas prices increased to
$4.67 per Mcf for the three months ended September 30, 2003 from $2.96 per
Mcf for the three months ended September 30, 2002.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $5,684 (1.9%) for the three months ended
September 30, 2003 as compared to the three months ended September 30,
2002. As a percentage of oil and gas sales, these expenses decreased to
20.7% for the three months ended September 30, 2003 from 26.4% for the
three months ended September 30, 2002. 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 $29,509 (63.3%) for the three months ended September 30, 2003 as
compared to the three months ended September 30, 2002. This increase was
primarily due to an increase in depletable oil and gas properties
primarily due to recompletion activities on one significant well during
the three months ended September 30, 2003. As a percentage of oil and gas
sales, this expense increased to 5.2% for the three months ended September
30, 2003 from 4.1% for the three months ended September 30, 2002. This
percentage increase was primarily due to the dollar increase in
depreciation, depletion, and amortization of oil and gas properties.
General and administrative expenses increased $6,137 (4.9%) for the three
months ended September 30, 2003 as compared to the three months ended
September 30, 2002. As a percentage of oil and gas sales, these expenses
decreased to 8.9% for the three months ended September 30, 2003 from 11.1%
for the three months ended September 30, 2002. This percentage decrease
was primarily due to the increase in oil and gas sales.
NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 2002.
Nine Months Ended September 30,
-------------------------------
2003 2002
---------- ----------
Oil and gas sales $5,008,646 $3,192,292
Oil and gas production expenses $1,060,956 $ 949,454
Barrels produced 41,901 33,796
Mcf produced 775,955 903,208
Average price/Bbl $ 27.54 $ 22.03
Average price/Mcf $ 4.97 $ 2.71
-31-
As shown in the table above, total oil and gas sales increased $1,816,354
(56.9%) for the nine months ended September 30, 2003 as compared to the
nine months ended September 30, 2002. Of this increase, approximately
$231,000 and $1,752,000, respectively, were related to increases in the
average prices of oil and gas sold. These increases were partially offset
by a decrease of approximately $345,000 related to a decrease in volumes
of gas sold. Volumes of oil sold increased 8,105 barrels, while volumes of
gas sold decreased 127,253 Mcf for the nine months ended September 30,
2003 as compared to the nine months ended September 30, 2002. The increase
in volumes of oil sold was primarily due to (i) an increase in production
on one significant well due to the successful recompletion of that well
during mid 2002, (ii) the successful completion of a new well during mid
2002, and (iii) a positive prior period volume adjustment made by the
purchaser on another significant well during the nine months ended
September 30, 2003. The decrease in volumes of gas sold was primarily due
to (i) normal declines in production, (ii) positive prior period volume
adjustments made by the purchasers on several wells during the nine months
ended September 30, 2002, and (iii) a positive prior period gas balancing
adjustment on another significant well during the nine months ended
September 30, 2002. Average oil and gas prices increased to $27.54 per
barrel and $4.97 per Mcf, respectively, for the nine months ended
September 30, 2003 from $22.03 per barrel and $2.71 per Mcf, respectively,
for the nine months ended September 30, 2002.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $111,502 (11.7%) for the nine months ended
September 30, 2003 as compared to the nine months ended September 30,
2002. This increase was primarily due to (i) an increase in production
taxes associated with the increase in oil and gas sales and (ii) a partial
reversal during the nine months ended September 30, 2002 of approximately
$75,000 (due to a partial post-judgment settlement) of a charge previously
accrued for this judgment. 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
decreased to 21.2% for the nine months ended September 30, 2003 from 29.7%
for the nine months ended September 30, 2002. This percentage decrease was
primarily due to the increases in the average prices of oil and gas sold.
Depreciation, depletion, and amortization of oil and gas properties
decreased $53,798 (22.6%) for the nine months ended September 30, 2003 as
compared to the nine months ended September 30, 2002. This decrease was
primarily due to (i) upward revisions in the estimates of remaining oil
and gas reserves for the nine months ended September 30, 2003 and (ii) the
decrease in volumes of gas sold. These decreases were partially offset by
an increase in depletable oil and gas properties primarily due to
recompletion
-32-
activities on one significant well during the nine months ended September
30, 2003. As a percentage of oil and gas sales, this expense decreased to
3.7% for the nine months ended September 30, 2003 from 7.5% for the nine
months ended September 30, 2002. This percentage decrease was primarily
due to the increases in the average prices of oil and gas.
General and administrative expenses remained relatively constant for the
nine months ended September 30, 2003 and 2002. As a percentage of oil and
gas sales, these expenses decreased to 7.8% for the nine months ended
September 30, 2003 from 12.2% for the nine months ended September 30,
2002. This percentage decrease was primarily due to the increase in oil
and gas sales.
The Limited Partners have received cash distributions through September
30, 2003 totaling $67,210,552 or 160.64% of Limited Partners' capital
contributions.
I-F PARTNERSHIP
THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2002.
Three Months Ended September 30,
--------------------------------
2003 2002
-------- --------
Oil and gas sales $450,037 $357,548
Oil and gas production expenses $117,593 $119,918
Barrels produced 5,424 4,920
Mcf produced 67,497 72,848
Average price/Bbl $ 26.35 $ 26.58
Average price/Mcf $ 4.55 $ 3.11
As shown in the table above, total oil and gas sales increased $92,489
(25.9%) for the three months ended September 30, 2003 as compared to the
three months ended September 30, 2002. Of this increase, approximately (i)
$97,000 was related to an increase in the average price of gas sold and
(ii) $13,000 was related to an increase in volumes of oil sold. These
increases were partially offset by a decrease of approximately $17,000
related to a decrease in volumes of gas sold. Volumes of oil sold
increased 504 barrels, while volumes of gas sold decreased 5,351 Mcf for
the three months ended September 30, 2003 as compared to the three months
ended September 30, 2002. The increase in volumes of oil sold was
primarily due to (i) an increase in production on one significant well due
to the successful recompletion of that well during mid 2002, (ii) a
positive prior period volume adjustment made by the operator on another
significant well during the three months ended September 30, 2003, and
(iii) the successful completion of a new well during mid 2002. Average oil
prices decreased to $26.35 per barrel for the three months ended September
30, 2003 from $26.58 per barrel for the three months ended September 30,
2002. Average gas prices increased to $4.55
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per Mcf for the three months ended September 30, 2003 from $3.11 per Mcf
for the three months ended September 30, 2002.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $2,325 (1.9%) for the three months ended
September 30, 2003 as compared to the three months ended September 30,
2002. As a percentage of oil and gas sales, these expenses decreased to
26.1% for the three months ended September 30, 2003 from 33.5% for the
three months ended September 30, 2002. 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 $25,848 (678.6%) for the three months ended September 30, 2003
as compared to the three months ended September 30, 2002. This increase
was primarily due to (i) an increase in depletable oil and gas properties
primarily due to recompletion activities on one significant well during
the three months ended September 30, 2003 and (ii) downward revisions in
the estimates of remaining oil and gas reserves for the three months ended
September 30, 2003. As a percentage of oil and gas sales, this expense
increased to 6.6% for the three months ended September 30, 2003 from 1.1%
for the three months ended September 30, 2002. This percentage increase
was primarily due to the dollar increase in depreciation, depletion, and
amortization of oil and gas properties.
General and administrative expenses increased $1,588 (3.6%) for the three
months ended September 30, 2003 as compared to the three months ended
September 30, 2002. As a percentage of oil and gas sales, these expenses
decreased to 10.1% for the three months ended September 30, 2003 from
12.2% for the three months ended September 30, 2002. This percentage
decrease was primarily due to the increase in oil and gas sales.
NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 2002.
Nine Months Ended September 30,
-------------------------------
2003 2002
---------- --------
Oil and gas sales $1,545,418 $976,513
Oil and gas production expenses $ 396,258 $338,171
Barrels produced 18,657 16,440
Mcf produced 203,991 225,709
Average price/Bbl $ 27.57 $ 21.54
Average price/Mcf $ 5.05 $ 2.76
As shown in the table above, total oil and gas sales increased $568,905
(58.3%) for the nine months ended September 30, 2003 as compared to the
nine months ended September 30, 2002. Of this increase, approximately
$112,000 and $469,000, respectively, were related to
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increases in the average prices of oil and gas sold. These increases were
partially offset by a decrease of approximately $60,000 related to a
decrease in volumes of gas sold. Volumes of oil sold increased 2,217
barrels, while volumes of gas sold decreased 21,718 Mcf for the nine
months ended September 30, 2003 as compared to the nine months ended
September 30, 2002. The increase in volumes of oil sold was primarily due
to (i) an increase in production on one significant well due to the
successful recompletion of that well during mid 2002, (ii) the successful
completion of a new well during mid 2002, and (iii) a positive prior
period volume adjustment made by the purchaser on another significant well
during the nine months ended September 30, 2003. Average oil and gas
prices increased to $27.57 per barrel and $5.05 per Mcf for the nine
months ended September 30, 2003 from $21.54 per barrel and $2.76 per Mcf
for the nine months ended September 30, 2002.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $58,087 (17.2%) for the nine months ended
September 30, 2003 as compared to the nine months ended September 30,
2002. This increase was primarily due to (i) a partial reversal during the
nine months ended September 30, 2002 of approximately $52,000 (due to a
partial post judgment settlement) of a charge previously accrued for this
judgment and (ii) 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 25.6% for the nine months ended September 30, 2003
from 34.6% for the nine months ended September 30, 2002. This percentage
decrease was primarily due to the increases in the average prices of oil
and gas sold.
Depreciation, depletion, and amortization of oil and gas properties
increased $13,190 (25.4%) for the nine months ended September 30, 2003 as
compared to the nine months ended September 30, 2002. This increase was
primarily due to an increase in depletable oil and gas properties
primarily due to recompletion activities on one significant well during
the nine months ended September 30, 2003. As a percentage of oil and gas
sales, this expense decreased to 4.2% for the nine months ended September
30, 2003 from 5.3% for the nine months ended September 30, 2002. This
percentage decrease was primarily due to the increases in the average
prices of oil and gas sold.
General and administrative expenses increased $2,173 (1.5%) for the nine
months ended September 30, 2003 as compared to the nine months ended
September 30, 2002. As a percentage of oil and gas sales, these expenses
decreased to 9.5% for the nine months ended September 30, 2003 from 14.9%
for the nine months ended September 30, 2002. This percentage decrease was
primarily due to the increase in oil and gas sales.
The Limited Partners have received cash distributions through September
30, 2003 totaling $21,279,664 or 148.59% of Limited Partners' capital
contributions.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
The Partnerships do not hold any market risk sensitive instruments.
ITEM 4. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of the end of this period covered by this report, the principal
executive officer and principal financial officer conducted an
evaluation of the Partnerships' disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
and Exchange Act of 1934). Based on this evaluation, such officers
concluded that the Partnerships' disclosure controls and procedures
are effective to ensure that information required to be disclosed by
the Partnerships in reports filed under the Exchange Act is
recorded, processed, summarized, and reported accurately and within
the time periods specified in the Securities and Exchange Commission
rules and forms.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
31.1 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d- 14(a)
for the Geodyne Energy Income Limited Partnership I-D.
31.2 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d- 14(a)
for the Geodyne Energy Income Limited Partnership I-D.
31.3 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d- 14(a)
for the Geodyne Energy Income Limited Partnership I-E.
31.4 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d- 14(a)
for the Geodyne Energy Income Limited Partnership I-E.
31.5 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d- 14(a)
for the Geodyne Energy Income Limited Partnership I-F.
31.6 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d- 14(a)
for the Geodyne Energy Income Limited Partnership I-F.
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne
Energy Income Limited Partnership I-D.
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne
Energy Income Limited Partnership I-E.
32.3 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne
Energy Income Limited Partnership I-F.
(b) Reports on Form 8-K.
None.
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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 ENERGY INCOME LIMITED PARTNERSHIP I-D
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F
(Registrant)
BY: GEODYNE RESOURCES, INC.
General Partner
Date: November 13, 2003 By: /s/Dennis R. Neill
--------------------------------
(Signature)
Dennis R. Neill
President
Date: November 13, 2003 By: /s/Craig D. Loseke
--------------------------------
(Signature)
Craig D. Loseke
Chief Accounting Officer
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INDEX TO EXHIBITS
-----------------
Exh.
No. Exhibit
- ---- -------
31.1 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a)
for the Geodyne Energy Income Limited Partnership I-D.
31.2 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a)
for the Geodyne Energy Income Limited Partnership I-D.
31.3 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a)
for the Geodyne Energy Income Limited Partnership I-E.
31.4 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a)
for the Geodyne Energy Income Limited Partnership I-E.
31.5 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a)
for the Geodyne Energy Income Limited Partnership I-F.
31.6 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a)
for the Geodyne Energy Income Limited Partnership I-F.
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
Geodyne Energy Income Limited Partnership I-D.
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
Geodyne Energy Income Limited Partnership I-E.
33.3 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
Geodyne Energy Income Limited Partnership I-F.
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