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: II-A: 0-16388 II-D: 0-16980 II-G: 0-17802 II-B: 0-16405 II-E: 0-17320 II-H: 0-18305 II-C: 0-16981 II-F: 0-17799 GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-A GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H --------------------------------------------------------- (Exact name of Registrant as specified in its Articles) II-A 73-1295505 II-B 73-1303341 II-C 73-1308986 II-D 73-1329761 II-E 73-1324751 II-F 73-1330632 Oklahoma II-G 73-1336572 II-H 73-1342476 ---------------------------- ---------------------------------- (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 II-A GEODYNE PRODUCTION PARTNERSHIP II-A COMBINED BALANCE SHEETS (Unaudited) ASSETS September 30, December 31, 2003 2002 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $1,322,728 $ 794,035 Accounts receivable: Oil and gas sales 808,381 658,499 ---------- ---------- Total current assets $2,131,109 $1,452,534 NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 2,276,936 2,056,359 DEFERRED CHARGE 656,289 656,289 ---------- ---------- $5,064,334 $4,165,182 ========== ========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 168,434 $ 256,595 Accrued liability - other (Note 1) 26,672 26,672 Gas imbalance payable 95,268 95,268 ---------- ---------- Total current liabilities $ 290,374 $ 378,535 LONG-TERM LIABILITIES: Accrued liability $ 217,322 $ 217,322 Asset retirement obligation (Note 1) 294,555 - ---------- ---------- Total long-term liabilities $ 511,877 $ 217,322 PARTNERS' CAPITAL (DEFICIT): General Partner ($ 214,754) ($ 241,784) Limited Partners, issued and outstanding, 484,283 units 4,476,837 3,811,109 ---------- ---------- Total Partners' capital $4,262,083 $3,569,325 ---------- ---------- $5,064,334 $4,165,182 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -2- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-A GEODYNE PRODUCTION PARTNERSHIP II-A COMBINED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 ---------- -------- REVENUES: Oil and gas sales $1,309,670 $932,585 Interest income 1,993 1,415 ---------- -------- $1,311,663 $934,000 COSTS AND EXPENSES: Lease operating $ 262,604 $264,322 Production tax 75,340 50,654 Depreciation, depletion, and amortization of oil and gas properties 59,426 21,670 General and administrative (Note 2) 143,626 136,398 ---------- -------- $ 540,996 $473,044 ---------- -------- NET INCOME $ 770,667 $460,956 ========== ======== GENERAL PARTNER - NET INCOME $ 82,216 $ 47,904 ========== ======== LIMITED PARTNERS - NET INCOME $ 688,451 $413,052 ========== ======== NET INCOME per unit $ 1.42 $ .85 ========== ======== UNITS OUTSTANDING 484,283 484,283 ========== ======== The accompanying condensed notes are an integral part of these combined financial statements. -3- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-A GEODYNE PRODUCTION PARTNERSHIP II-A COMBINED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 ---------- ---------- REVENUES: Oil and gas sales $4,355,746 $2,700,081 Interest income 5,244 3,765 Gain on sale of oil and gas properties - 193,272 ---------- ---------- $4,360,990 $2,897,118 COSTS AND EXPENSES: Lease operating $ 780,795 $ 972,953 Production tax 255,475 144,989 Depreciation, depletion, and amortization of oil and gas properties 166,456 183,165 General and administrative (Note 2) 428,937 425,800 ---------- ---------- $1,631,663 $1,726,907 ---------- ---------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $2,729,327 $1,170,211 Cumulative effect of change in accounting for asset retirement obligations (Note 1) 5,849 - ---------- ---------- NET INCOME $2,735,176 $1,170,211 ========== ========== GENERAL PARTNER - NET INCOME $ 287,448 $ 133,129 ========== ========== LIMITED PARTNERS - NET INCOME $2,447,728 $1,037,082 ========== ========== NET INCOME per unit $ 5.05 $ 2.14 ========== ========== UNITS OUTSTANDING 484,283 484,283 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -4- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-A GEODYNE PRODUCTION PARTNERSHIP II-A 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 $2,735,176 $1,170,211 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of change in accounting for asset retirement obligations (Note 1) ( 5,849) - Depreciation, depletion, and amortization of oil and gas properties 166,456 183,165 Gain on sale of oil and gas properties - ( 193,272) Increase in accounts receivable - oil and gas sales ( 149,882) ( 226,204) Decrease in deferred charge - 27,155 Decrease in accounts payable ( 88,161) ( 290) Decrease in accrued liability - other - ( 47,128) Increase in accrued liability - 14,104 ---------- ---------- Net cash provided by operating activities $2,657,740 $ 927,741 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 86,629) ($ 90,928) Proceeds from sale of oil and gas properties - 340,525 ---------- ---------- Net cash provided (used) by investing activities ($ 86,629) $ 249,597 ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($2,042,418) ($ 986,722) ---------- ---------- Net cash used by financing activities ($2,042,418) ($ 986,722) ---------- ---------- NET INCREASE IN CASH AND CASH EQUIVALENTS $ 528,693 $ 190,616 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 794,035 414,467 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,322,728 $ 605,083 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -5- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B GEODYNE PRODUCTION PARTNERSHIP II-B COMBINED BALANCE SHEETS (Unaudited) ASSETS September 30, December 31, 2003 2002 ------------- ------------ CURRENT ASSETS: Cash and cash equivalents $ 874,106 $ 478,067 Accounts receivable: Oil and gas sales 557,143 481,002 ---------- ---------- Total current assets $1,431,249 $ 959,069 NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 1,701,061 1,605,587 DEFERRED CHARGE 245,511 245,511 ---------- ---------- $3,377,821 $2,810,167 ========== ========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 123,745 $ 147,990 Gas imbalance payable 47,652 47,652 ---------- ---------- Total current liabilities $ 171,397 $ 195,642 LONG-TERM LIABILITIES: Accrued liability $ 52,682 $ 52,682 Asset retirement obligation (Note 1) 214,372 - ---------- ---------- Total long-term liabilities $ 267,054 $ 52,682 PARTNERS' CAPITAL (DEFICIT): General Partner ($ 249,465) ($ 264,786) Limited Partners, issued and outstanding, 361,719 units 3,188,835 2,826,629 ---------- ---------- Total Partners' capital $2,939,370 $2,561,843 ---------- ---------- $3,377,821 $2,810,167 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -6- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B GEODYNE PRODUCTION PARTNERSHIP II-B COMBINED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 -------- -------- REVENUES: Oil and gas sales $929,557 $652,635 Interest income 1,216 744 -------- -------- $930,773 $653,379 COSTS AND EXPENSES: Lease operating $194,275 $161,699 Production tax 53,481 33,729 Depreciation, depletion, and amortization of oil and gas properties 46,078 10,874 General and administrative (Note 2) 107,534 102,337 -------- -------- $401,368 $308,639 -------- -------- NET INCOME $529,405 $344,740 ======== ======== GENERAL PARTNER - NET INCOME $ 56,966 $ 35,378 ======== ======== LIMITED PARTNERS - NET INCOME $472,439 $309,362 ======== ======== NET INCOME per unit $ 1.31 $ .86 ======== ======== UNITS OUTSTANDING 361,719 361,719 ======== ======== The accompanying condensed notes are an integral part of these combined financial statements. -7- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B GEODYNE PRODUCTION PARTNERSHIP II-B COMBINED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 ---------- ---------- REVENUES: Oil and gas sales $2,967,617 $1,905,822 Interest income 3,272 1,736 Gain on sale of oil and gas properties - 20,525 ---------- ---------- $2,970,889 $1,928,083 COSTS AND EXPENSES: Lease operating $ 549,821 $ 680,492 Production tax 188,768 105,164 Depreciation, depletion, and amortization of oil and gas properties 134,837 135,691 General and administrative (Note 2) 325,562 322,772 ---------- ---------- $1,198,988 $1,244,119 ---------- ---------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $1,771,901 $ 683,964 Cumulative effect of change in accounting for asset retirement obligations (Note 1) 4,347 - ---------- ---------- NET INCOME $1,776,248 $ 683,964 ========== ========== GENERAL PARTNER - NET INCOME $ 189,042 $ 80,435 ========== ========== LIMITED PARTNERS - NET INCOME $1,587,206 $ 603,529 ========== ========== NET INCOME per unit $ 4.39 $ 1.67 ========== ========== UNITS OUTSTANDING 361,719 361,719 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -8- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B GEODYNE PRODUCTION PARTNERSHIP II-B 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 $1,776,248 $683,964 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of change in accounting for asset retirement obligations (Note 1) ( 4,347) - Depreciation, depletion, and amortization of oil and gas properties 134,837 135,691 Gain on sale of oil and gas properties - ( 20,525) Increase in accounts receivable - oil and gas sales ( 76,141) ( 124,979) Decrease in accounts payable ( 24,245) ( 9,634) ---------- -------- Net cash provided by operating activities $1,806,352 $664,517 ---------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 12,676) ($ 14,047) Proceeds from sale of oil and gas properties 1,084 30,000 ---------- -------- Net cash provided (used) by investing activities ($ 11,592) $ 15,953 ---------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($1,398,721) ($506,583) ---------- -------- Net cash used by financing activities ($1,398,721) ($506,583) ---------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS $ 396,039 $173,887 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 478,067 262,153 ---------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 874,106 $436,040 ========== ======== The accompanying condensed notes are an integral part of these combined financial statements. -9- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C GEODYNE PRODUCTION PARTNERSHIP II-C COMBINED BALANCE SHEETS (Unaudited) ASSETS September 30, December 31, 2003 2002 ------------- ------------ CURRENT ASSETS: Cash and cash equivalents $ 447,281 $ 250,767 Accounts receivable: Oil and gas sales 276,145 236,341 ---------- ---------- Total current assets $ 723,426 $ 487,108 NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 796,584 774,648 DEFERRED CHARGE 130,077 130,077 ---------- ---------- $1,650,087 $1,391,833 ========== ========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 62,802 $ 63,712 Gas imbalance payable 26,684 26,684 ---------- ---------- Total current liabilities $ 89,486 $ 90,396 LONG-TERM LIABILITIES: Accrued Liability $ 37,248 $ 29,815 Asset retirement obligation (Note 1) 70,310 - ---------- ---------- Total long-term liabilities $ 107,558 $ 29,815 PARTNERS' CAPITAL (DEFICIT): General Partner ($ 103,407) ($ 98,831) Limited Partners, issued and outstanding, 154,621 units 1,556,450 1,370,453 ---------- ---------- Total Partners' capital $1,453,043 $1,271,622 ---------- ---------- $1,650,087 $1,391,833 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -10- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C GEODYNE PRODUCTION PARTNERSHIP II-C COMBINED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 -------- -------- REVENUES: Oil and gas sales $433,234 $324,790 Interest income 622 444 -------- -------- $433,856 $325,234 COSTS AND EXPENSES: Lease operating $ 89,819 $ 67,563 Production tax 28,614 19,283 Depreciation, depletion, and amortization of oil and gas properties 20,844 5,556 General and administrative (Note 2) 46,570 44,794 -------- -------- $185,847 $137,196 -------- -------- NET INCOME $248,009 $188,038 ======== ======== GENERAL PARTNER - NET INCOME $ 26,615 $ 19,259 ======== ======== LIMITED PARTNERS - NET INCOME $221,394 $168,779 ======== ======== NET INCOME per unit $ 1.43 $ 1.09 ======== ======== UNITS OUTSTANDING 154,621 154,621 ======== ======== The accompanying condensed notes are an integral part of these combined financial statements. -11- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C GEODYNE PRODUCTION PARTNERSHIP II-C COMBINED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 ---------- -------- REVENUES: Oil and gas sales $1,468,547 $929,549 Interest income 1,688 950 Gain on sale of oil and gas properties - 1,014 Gain on abandonment 91 - ---------- -------- $1,470,326 $931,513 COSTS AND EXPENSES: Lease operating $ 259,204 $267,470 Production tax 101,523 56,821 Depreciation, depletion, and amortization of oil and gas properties 66,728 67,887 General and administrative (Note 2) 150,924 148,720 ---------- -------- $ 578,379 $540,898 ---------- -------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ 891,947 $390,615 Cumulative effect of change in accounting for asset retirement obligations (Note 1) 74 - ---------- -------- NET INCOME $ 892,021 $390,615 ========== ======== GENERAL PARTNER - NET INCOME $ 95,024 $ 45,076 ========== ======== LIMITED PARTNERS - NET INCOME $ 796,997 $345,539 ========== ======== NET INCOME per unit $ 5.15 $ 2.23 ========== ======== UNITS OUTSTANDING 154,621 154,621 ========== ======== The accompanying condensed notes are an integral part of these combined financial statements. -12- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C GEODYNE PRODUCTION PARTNERSHIP II-C 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 $892,021 $390,615 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of change in accounting for asset retirement obligations (Note 1) ( 74) - Depreciation, depletion, and amortization of oil and gas properties 66,728 67,887 Gain on sale of oil and gas properties - ( 1,014) Gain on abandonment ( 91) - Increase in accounts receivable - oil and gas sales ( 39,804) ( 68,012) Decrease in accounts payable ( 910) ( 5,394) Increase in accrued liability 7,433 - -------- -------- Net cash provided by operating activities $925,303 $384,082 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 18,654) ($ 3,832) Proceeds from sale of oil and gas properties 465 2,624 -------- -------- Net cash used by investing activities ($ 18,189) ($ 1,208) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($710,600) ($262,739) -------- -------- Net cash used by financing activities ($710,600) ($262,739) -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS $196,514 $120,135 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 250,767 115,201 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $447,281 $235,336 ======== ======== The accompanying condensed notes are an integral part of these combined financial statements. -13- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D GEODYNE PRODUCTION PARTNERSHIP II-D COMBINED BALANCE SHEETS (Unaudited) ASSETS September 30, December 31, 2003 2002 ------------- ------------ CURRENT ASSETS: Cash and cash equivalents $ 831,789 $ 561,177 Accounts receivable: Oil and gas sales 595,656 512,579 ---------- ---------- Total current assets $1,427,445 $1,073,756 NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 1,599,869 1,482,828 DEFERRED CHARGE 358,699 358,699 ---------- ---------- $3,386,013 $2,915,283 ========== ========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 199,424 $ 156,725 Gas imbalance payable 42,368 42,368 ---------- ---------- Total current liabilities $ 241,792 $ 199,093 LONG-TERM LIABILITIES: Accrued liability $ 96,494 $ 96,494 Asset retirement obligation (Note 1) 186,008 - ---------- ---------- Total long-term liabilities $ 282,502 $ 96,494 PARTNERS' CAPITAL (DEFICIT): General Partner ($ 183,901) ($ 76,044) Limited Partners, issued and outstanding, 314,878 units 3,045,620 2,695,740 ---------- ---------- Total Partners' capital $2,861,719 $2,619,696 ---------- ---------- $3,386,013 $2,915,283 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -14- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D GEODYNE PRODUCTION PARTNERSHIP II-D COMBINED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 -------- --------- REVENUES: Oil and gas sales $938,668 $786,875 Interest income 1,093 1,046 -------- -------- $939,761 $787,921 COSTS AND EXPENSES: Lease operating $208,376 $174,034 Production tax 61,078 49,371 Depreciation, depletion, and amortization of oil and gas properties 53,905 16,673 General and administrative (Note 2) 93,751 89,325 -------- -------- $417,110 $329,403 -------- -------- NET INCOME $522,651 $458,518 ======== ======== GENERAL PARTNER - NET INCOME $ 57,008 $ 47,248 ======== ======== LIMITED PARTNERS - NET INCOME $465,643 $411,270 ======== ======== NET INCOME per unit $ 1.48 $ 1.31 ======== ======== UNITS OUTSTANDING 314,878 314,878 ======== ======== The accompanying condensed notes are an integral part of these combined financial statements. -15- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D GEODYNE PRODUCTION PARTNERSHIP II-D COMBINED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 ------------ ---------- REVENUES: Oil and gas sales $2,982,439 $2,122,635 Interest income 3,003 2,149 Gain on sale of oil and gas properties - 11,014 Gain on abandonment 1,044 - ---------- ---------- $2,986,486 $2,135,798 COSTS AND EXPENSES: Lease operating $ 586,177 $ 592,116 Production tax 189,487 126,143 Depreciation, depletion, and amortization of oil and gas properties 205,540 150,385 General and administrative (Note 2) 286,054 283,396 ---------- ---------- $1,267,258 $1,152,040 ---------- ---------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $1,719,228 $ 983,758 Cumulative effect of change in accounting for asset retirement obligations (Note 1) ( 2,344) - ---------- ---------- NET INCOME $1,716,884 $ 983,758 ========== ========== GENERAL PARTNER - NET INCOME $ 190,004 $ 111,696 ========== ========== LIMITED PARTNERS - NET INCOME $1,526,880 $ 872,062 ========== ========== NET INCOME per unit $ 4.85 $ 2.77 ========== ========== UNITS OUTSTANDING 314,878 314,878 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -16- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D GEODYNE PRODUCTION PARTNERSHIP II-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 $1,716,884 $983,758 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of change in accounting for asset retirement obligations (Note 1) 2,344 - Depreciation, depletion, and amortization of oil and gas properties 205,540 150,385 Gain on sale of oil and gas properties - ( 11,014) Gain on abandonment ( 1,044) - Increase in accounts receivable - oil and gas sales ( 83,077) ( 155,032) Increase in accounts payable 42,699 23,264 Decrease in payable to General Partner - ( 65,905) ---------- -------- Net cash provided by operating activities $1,883,346 $925,456 ---------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 137,873) ($ 60,566) Proceeds from sale of oil and gas properties - 16,816 ---------- -------- Net cash used by investing activities ($ 137,873) ($ 43,750) ---------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($1,474,861) ($526,309) ---------- -------- Net cash used by financing activities ($1,474,861) ($526,309) ---------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS $ 270,612 $355,397 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 561,177 170,516 ---------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 831,789 $525,913 ========== ======== The accompanying condensed notes are an integral part of these combined financial statements. -17- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E GEODYNE PRODUCTION PARTNERSHIP II-E COMBINED BALANCE SHEETS (Unaudited) ASSETS September 30, December 31, 2003 2002 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ 653,390 $ 388,042 Accounts receivable: Oil and gas sales 419,455 362,987 ---------- ---------- Total current assets $1,072,845 $ 751,029 NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 1,442,877 1,425,028 DEFERRED CHARGE 209,297 209,297 ---------- ---------- $2,725,019 $2,385,354 ========== ========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 63,306 $ 85,744 Gas imbalance payable 43,443 43,443 ---------- ---------- Total current liabilities $ 106,749 $ 129,187 LONG-TERM LIABILITIES: Accrued liability $ 4,116 $ 7,264 Asset retirement obligation (Note 1) 98,139 - ---------- ---------- Total long-term liabilities $ 102,255 $ 7,264 PARTNERS' CAPITAL (DEFICIT): General Partner ($ 116,588) ($ 131,864) Limited Partners, issued and outstanding, 228,821 units 2,632,603 2,380,767 ---------- ---------- Total Partners' capital $2,516,015 $2,248,903 ---------- ---------- $2,725,019 $2,385,354 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -18- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E GEODYNE PRODUCTION PARTNERSHIP II-E COMBINED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 -------- -------- REVENUES: Oil and gas sales $657,561 $589,004 Interest income 924 510 -------- -------- $658,485 $589,514 COSTS AND EXPENSES: Lease operating $105,677 $ 82,803 Production tax 49,150 45,209 Depreciation, depletion, and amortization of oil and gas properties 43,663 23,120 General and administrative (Note 2) 68,413 66,510 -------- -------- $266,903 $217,642 -------- -------- NET INCOME $391,582 $371,872 ======== ======== GENERAL PARTNER - NET INCOME $ 42,995 $ 39,217 ======== ======== LIMITED PARTNERS - NET INCOME $348,587 $332,655 ======== ======== NET INCOME per unit $ 1.52 $ 1.45 ======== ======== UNITS OUTSTANDING 228,821 228,821 ======== ======== The accompanying condensed notes are an integral part of these combined financial statements. -19- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E GEODYNE PRODUCTION PARTNERSHIP II-E COMBINED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 ---------- ---------- REVENUES: Oil and gas sales $2,184,324 $1,461,055 Interest income 2,465 1,285 Gain on sale of oil and gas properties - 20,604 ---------- ---------- $2,186,789 $1,482,944 COSTS AND EXPENSES: Lease operating $ 334,855 $ 304,240 Production tax 150,292 111,721 Depreciation, depletion, and amortization of oil and gas properties 104,230 141,472 General and administrative (Note 2) 215,289 214,576 ---------- ---------- $ 804,666 $ 772,009 ---------- ---------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $1,382,123 $ 710,935 Cumulative effect of change in accounting for asset retirement obligations (Note 1) 3,090 - ---------- ---------- NET INCOME $1,385,213 $ 710,935 ========== ========== GENERAL PARTNER - NET INCOME $ 147,377 $ 83,697 ========== ========== LIMITED PARTNERS - NET INCOME $1,237,836 $ 627,238 ========== ========== NET INCOME per unit $ 5.41 $ 2.74 ========== ========== UNITS OUTSTANDING 228,821 228,821 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -20- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E GEODYNE PRODUCTION PARTNERSHIP II-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 $1,385,213 $710,935 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of change in accounting for asset retirement obligations (Note 1) ( 3,090) - Depreciation, depletion, and amortization of oil and gas properties 104,230 141,472 Gain on sale of oil and gas properties - ( 20,604) Increase in accounts receivable - oil and gas sales ( 56,468) ( 88,552) Increase (decrease) in accounts payable ( 22,438) 1,495 Decrease in payable to General Partner - ( 115,045) Decrease in accrued liability ( 3,148) ( 1,845) ---------- -------- Net cash provided by operating activities $1,404,299 $627,856 ---------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 20,850) ($187,402) Proceeds from the sale of oil and gas properties - 22,189 ---------- -------- Net cash used by investing activities ($ 20,850) ($165,213) ---------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($1,118,101) ($307,338) ---------- -------- Net cash used by financing activities ($1,118,101) ($307,338) ---------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS $ 265,348 $155,305 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 388,042 242,032 ---------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 653,390 $397,337 ========== ======== The accompanying condensed notes are an integral part of these combined financial statements. -21- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F GEODYNE PRODUCTION PARTNERSHIP II-F COMBINED BALANCE SHEETS (Unaudited) ASSETS September 30, December 31, 2003 2002 ------------- ------------ CURRENT ASSETS: Cash and cash equivalents $ 624,096 $ 453,233 Accounts receivable: Oil and gas sales 385,238 352,341 ---------- ---------- Total current assets $1,009,334 $ 805,574 NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 1,341,629 1,311,537 DEFERRED CHARGE 36,774 36,774 ---------- ---------- $2,387,737 $2,153,885 ========== ========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 49,624 $ 71,740 Gas imbalance payable 6,701 6,701 ---------- ---------- Total current liabilities $ 56,325 $ 78,441 LONG-TERM LIABILITIES: Accrued liability $ 15,443 $ 15,443 Asset retirement obligation (Note 1) 99,477 - ---------- ---------- Total long-term liabilities $ 114,920 $ 15,443 PARTNERS' CAPITAL (DEFICIT): General Partner ($ 85,436) ($ 95,526) Limited Partners, issued and outstanding, 171,400 units 2,301,928 2,155,527 ---------- ---------- Total Partners' capital $2,216,492 $2,060,001 ---------- ---------- $2,387,737 $2,153,885 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -22- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F GEODYNE PRODUCTION PARTNERSHIP II-F COMBINED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 -------- -------- REVENUES: Oil and gas sales $595,801 $527,359 Interest income 890 720 -------- -------- $596,691 $528,079 COSTS AND EXPENSES: Lease operating $ 65,077 $ 71,911 Production tax 36,964 32,944 Depreciation, depletion, and amortization of oil and gas properties 40,679 43,130 General and administrative (Note 2) 51,225 50,277 -------- -------- $193,945 $198,262 -------- -------- NET INCOME $402,746 $329,817 ======== ======== GENERAL PARTNER - NET INCOME $ 43,846 $ 36,791 ======== ======== LIMITED PARTNERS - NET INCOME $358,900 $293,026 ======== ======== NET INCOME per unit $ 2.09 $ 1.71 ======== ======== UNITS OUTSTANDING 171,400 171,400 ======== ======== The accompanying condensed notes are an integral part of these combined financial statements. -23- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F GEODYNE PRODUCTION PARTNERSHIP II-F COMBINED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 ---------- ---------- REVENUES: Oil and gas sales $2,066,022 $1,369,918 Interest income 2,471 1,827 Gain on sale of oil and gas properties - 50,440 ---------- ---------- $2,068,493 $1,422,185 COSTS AND EXPENSES: Lease operating $ 283,172 $ 253,958 Production tax 131,464 86,040 Depreciation, depletion, and amortization of oil and gas properties 111,162 141,931 General and administrative (Note 2) 165,729 165,185 ---------- ---------- $ 691,527 $ 647,114 ---------- ---------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $1,376,966 $ 775,071 Cumulative effect of change in accounting for asset retirement obligations (Note 1) 4,938 - ---------- ---------- NET INCOME $1,381,904 $ 775,071 ========== ========== GENERAL PARTNER - NET INCOME $ 147,503 $ 90,098 ========== ========== LIMITED PARTNERS - NET INCOME $1,234,401 $ 684,973 ========== ========== NET INCOME per unit $ 7.20 $ 4.00 ========== ========== UNITS OUTSTANDING 171,400 171,400 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -24- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F GEODYNE PRODUCTION PARTNERSHIP II-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 $1,381,904 $775,071 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of change in accounting for asset retirement obligations (Note 1) ( 4,938) - Depreciation, depletion, and amortization of oil and gas properties 111,162 141,931 Gain on sale of oil and gas properties - ( 50,440) Increase in accounts receivable - oil and gas sales ( 32,897) ( 89,331) Increase (decrease) in accounts payable ( 22,116) 7,436 ---------- -------- Net cash provided by operating activities $1,433,115 $784,667 ---------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 37,729) ($ 67,837) Proceeds from sale of oil and gas properties 890 54,883 ---------- -------- Net cash used by investing activities ($ 36,839) ($ 12,954) ---------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($1,225,413) ($672,380) ---------- -------- Net cash used by financing activities ($1,225,413) ($672,380) ---------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS $ 170,863 $ 99,333 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 453,233 278,738 ---------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 624,096 $378,071 ========== ======== The accompanying condensed notes are an integral part of these combined financial statements. -25- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G GEODYNE PRODUCTION PARTNERSHIP II-G COMBINED BALANCE SHEETS (Unaudited) ASSETS September 30, December 31, 2003 2002 ------------- ------------ CURRENT ASSETS: Cash and cash equivalents $1,322,979 $ 959,481 Accounts receivable: Oil and gas sales 817,728 745,529 ---------- ---------- Total current assets $2,140,707 $1,705,010 NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 2,890,776 2,821,960 DEFERRED CHARGE 79,136 79,136 ---------- ---------- $5,110,619 $4,606,106 ========== ========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 107,073 $ 153,893 Gas imbalance payable 16,907 16,907 ---------- ---------- Total current liabilities $ 123,980 $ 170,800 LONG-TERM LIABILITIES: Accrued liability $ 31,075 $ 31,075 Asset retirement obligation (Note 1) 214,476 - ---------- ---------- Total long-term liabilities $ 245,551 $ 31,075 PARTNERS' CAPITAL (DEFICIT): General Partner ($ 75,359) ($ 97,205) Limited Partners, issued and outstanding, 372,189 units 4,816,447 4,501,436 ---------- ---------- Total Partners' capital $4,741,088 $4,404,231 ---------- ---------- $5,110,619 $4,606,106 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -26- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G GEODYNE PRODUCTION PARTNERSHIP II-G COMBINED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 ---------- ---------- REVENUES: Oil and gas sales $1,262,790 $1,115,779 Interest income 1,925 1,575 Gain on sale of oil and gas properties - - ---------- ---------- $1,264,715 $1,117,354 COSTS AND EXPENSES: Lease operating $ 140,542 $ 154,903 Production tax 78,758 69,875 Depreciation, depletion, and amortization of oil and gas properties 88,464 91,939 General and administrative (Note 2) 110,340 106,071 ---------- ---------- $ 418,104 $ 422,788 ---------- ---------- NET INCOME $ 846,611 $ 694,566 ========== ========== GENERAL PARTNER - NET INCOME $ 92,431 $ 77,573 ========== ========== LIMITED PARTNERS - NET INCOME $ 754,180 $ 616,993 ========== ========== NET INCOME per unit $ 2.03 $ 1.66 ========== ========== UNITS OUTSTANDING 372,189 372,189 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -27- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G GEODYNE PRODUCTION PARTNERSHIP II-G COMBINED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 ---------- ---------- REVENUES: Oil and gas sales $4,388,272 $2,902,621 Interest income 5,340 4,214 Gain on sale of oil and gas properties - 105,409 ---------- ---------- $4,393,612 $3,012,244 COSTS AND EXPENSES: Lease operating $ 604,882 $ 542,854 Production tax 280,598 182,936 Depreciation, depletion, and amortization of oil and gas properties 238,823 304,730 General and administrative (Note 2) 335,057 333,945 ---------- ---------- $1,459,360 $1,364,465 ---------- ---------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $2,934,252 $1,647,779 Cumulative effect of change in accounting for asset retirement obligations (Note 1) 10,247 - ---------- ---------- NET INCOME $2,944,499 $1,647,779 ========== ========== GENERAL PARTNER - NET INCOME $ 314,488 $ 191,782 ========== ========== LIMITED PARTNERS - NET INCOME $2,630,011 $1,455,997 ========== ========== NET INCOME per unit $ 7.07 $ 3.91 ========== ========== UNITS OUTSTANDING 372,189 372,189 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -28- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G GEODYNE PRODUCTION PARTNERSHIP II-G 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 $2,944,499 $1,647,779 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of changes in accounting for asset retirement obligations (Note 1) ( 10,247) - Depreciation, depletion, and amortization of oil and gas properties 238,823 304,730 Gain on sale of oil and gas Properties - ( 105,409) Increase in accounts receivable - oil and gas sales ( 72,199) ( 189,569) Increase (decrease) in accounts payable ( 46,820) 16,624 ---------- ---------- Net cash provided by operating activities $3,054,056 $1,674,155 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 84,426) ($ 143,709) Proceeds from sale of oil and gas properties 1,510 114,809 ---------- ---------- Net cash used by investing activities ($ 82,916) ($ 28,900) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($2,607,642) ($1,470,970) ---------- ---------- Net cash used by financing activities ($2,607,642) ($1,470,970) ---------- ---------- NET INCREASE IN CASH AND CASH EQUIVALENTS $ 363,498 $ 174,285 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 959,481 625,720 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,322,979 $ 800,005 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -29- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H GEODYNE PRODUCTION PARTNERSHIP II-H COMBINED BALANCE SHEETS (Unaudited) ASSETS September 30, December 31, 2003 2002 ------------- ------------ CURRENT ASSETS: Cash and cash equivalents $ 313,317 $ 224,669 Accounts receivable: Oil and gas sales 195,070 176,539 ---------- ---------- Total current assets $ 508,387 $ 401,208 NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 684,496 664,355 DEFERRED CHARGE 20,637 20,637 ---------- ---------- $1,213,520 $1,086,200 ========== ========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 27,126 $ 37,271 Gas imbalance payable 3,596 3,596 ---------- ---------- Total current liabilities $ 30,722 $ 40,867 LONG-TERM LIABILITIES: Accrued liability $ 8,079 $ 8,079 Asset retirement obligation (Note 1) 52,515 - ---------- ---------- Total long-term liabilities $ 60,594 $ 8,079 PARTNERS' CAPITAL (DEFICIT): General Partner ($ 48,215) ($ 53,547) Limited Partners, issued and outstanding, 91,711 units 1,170,419 1,090,801 ---------- ---------- Total Partners' capital $1,122,204 $1,037,254 ---------- ---------- $1,213,520 $1,086,200 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -30- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H GEODYNE PRODUCTION PARTNERSHIP II-H COMBINED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 -------- -------- REVENUES: Oil and gas sales $299,711 $264,779 Interest income 430 364 Gain on sale of oil and gas properties - - -------- -------- $300,141 $265,143 COSTS AND EXPENSES: Lease operating $ 34,443 $ 37,756 Production tax 18,877 16,687 Depreciation, depletion, and amortization of oil and gas properties 21,385 22,005 General and administrative (Note 2) 27,750 28,128 -------- -------- $102,455 $104,576 -------- -------- NET INCOME $197,686 $160,567 ======== ======== GENERAL PARTNER - NET INCOME $ 21,651 $ 18,001 ======== ======== LIMITED PARTNERS - NET INCOME $176,035 $142,566 ======== ======== NET INCOME per unit $ 1.92 $ 1.55 ======== ======== UNITS OUTSTANDING 91,711 91,711 ======== ======== The accompanying condensed notes are an integral part of these combined financial statements. -31- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H GEODYNE PRODUCTION PARTNERSHIP II-H COMBINED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited) 2003 2002 ---------- -------- REVENUES: Oil and gas sales $1,044,495 $687,798 Interest income 1,178 848 Gain on sale of oil and gas properties - 24,403 ---------- -------- $1,045,673 $713,049 COSTS AND EXPENSES: Lease operating $ 145,395 $130,833 Production tax 67,269 43,613 Depreciation, depletion, and amortization of oil and gas properties 56,629 71,489 General and administrative (Note 2) 98,506 98,189 ---------- -------- $ 367,799 $344,124 ---------- -------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ 677,874 $368,925 Cumulative effect of change in accounting for asset retirement obligations (Note 1) 2,536 - ---------- -------- NET INCOME $ 680,410 $368,925 ========== ======== GENERAL PARTNER - NET INCOME $ 72,792 $ 43,242 ========== ======== LIMITED PARTNERS - NET INCOME $ 607,618 $325,683 ========== ======== NET INCOME per unit $ 6.63 $ 3.55 ========== ======== UNITS OUTSTANDING 91,711 91,711 ========== ======== The accompanying condensed notes are an integral part of these combined financial statements. -32- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H GEODYNE PRODUCTION PARTNERSHIP II-H 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 $680,410 $368,925 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of change in accounting for asset retirement obligations (Note 1) ( 2,536 ) - Depreciation, depletion, and amortization of oil and gas properties 56,629 71,489 Gain on sale of oil and gas Properties - ( 24,403) Increase in accounts receivable - oil and gas sales ( 18,531) ( 45,122) Increase (decrease) in accounts payable ( 10,145) 4,214 -------- -------- Net cash provided by operating activities $705,827 $375,103 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 21,914) ($ 34,048) Proceeds from sale of oil and Gas properties 195 26,568 -------- -------- Net cash used by investing activities ($ 21,719) ($ 7,480) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($595,460) ($306,273) -------- -------- Net cash used by financing activities ($595,460) ($306,273) -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS $ 88,648 $ 61,350 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 224,669 136,988 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $313,317 $198,338 ======== ======== The accompanying condensed notes are an integral part of these combined financial statements. -33- GEODYNE ENERGY INCOME PROGRAM II 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 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 $100 initial capital contribution. -34- 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 II-A Partnership represents a charge accrued for the payment of a judgment related to plugging liabilities, which judgment is currently under appeal. -35- 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 ------------ ----------- ---------- ---------- II-A $292,000 $ 6,000 $286,000 II-B 212,000 4,000 208,000 II-C 68,000 100 68,000 II-D 181,000 ( 2,000) 183,000 II-E 98,000 3,000 95,000 II-F 101,000 5,000 96,000 II-G 218,000 10,000 208,000 II-H 54,000 3,000 51,000 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 II-A, II-B, II-C, II-D, II-E, II-F, II-G, and II-H Partnerships recognized approximately $9,000, $6,000, $3,000, $7,000, $3,000, $4,000, $8,000 and $2,000, 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 on January 1, 2002, the proforma impact for the II-A, II-B, II-C, II-D, II-E, II-F, II-G, and II-H Partnerships during the nine months ended September 30, 2002 would have been an increase in depreciation, depletion, and amortization expense of approximately $9,000, $6,000, $2,000, $7,000, $5,000, $4,000, $9,000, and $2,000, respectively. -36- 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 ----------- ------------------ -------------- II-A $16,183 $127,443 II-B 12,344 95,190 II-C 5,881 40,689 II-D 10,888 82,863 II-E 8,197 60,216 II-F 6,120 45,105 II-G 12,396 97,944 II-H 3,615 24,135 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 ----------- ------------------ -------------- II-A $46,608 $382,329 II-B 39,992 285,570 II-C 28,857 122,067 II-D 37,465 248,589 II-E 34,641 180,648 II-F 30,414 135,315 II-G 41,225 293,832 II-H 26,101 72,405 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. -37- 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. -38- 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 ----------- ------------------ --------------- II-A July 22, 1987 $48,428,300 II-B October 14, 1987 36,171,900 II-C January 14, 1988 15,462,100 II-D May 10, 1988 31,487,800 II-E September 27, 1988 22,882,100 II-F January 5, 1989 17,140,000 II-G April 10, 1989 37,218,900 II-H May 17, 1989 9,171,100 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 distribution. During the nine months ended September 30, 2002, capital expenditures for the II-A Partnership totaled $90,928. These expenditures were primarily due to drilling activities in a large unitized property, the Willamar Community E Unit, located in Willacy County, Texas, in which the II-A Partnership owns a working interest of approximately 11.5%. These activities were successful leading to an increase in both oil and gas reserves and production on this property. During the nine months ended September 30, 2002, capital expenditures for the II-D Partnership totaled $60,566. These expenditures were primarily due to the drilling of the Crusch A 1-3 well located in Roosevelt County, Montana, in which the II-D Partnership owns a working interest of approximately 11.5%. These activities were successful -39- leading to an increase in both oil and gas reserves and production on this property. During the nine months ended September 30, 2002, capital expenditures for the II-E Partnership totaled $187,402. These expenditures were primarily due to the drilling of the Ernest Frey #1 and Mordello Vincent #7 wells located in Acadia Parish, Louisiana, in each of which the II-E Partnership owns a working interest of approximately 5.8%. These activities were successful leading to an increase in oil reserves and production on these wells. In addition, during the nine months ended September 30, 2002, capital expenditures for the II-F, II-G, and II-H Partnerships totaled $67,837, $143,709, and $34,048, respectively. These expenditures were primarily due to a recompletion on the CH Weir B well located in Lea County, New Mexico. These activities were successful leading to an increase in both oil and gas reserves and production on this well. The II-F, II-G, and II-H Partnerships own working interests of approximately 4.0%, 8.3%, and 1.9%, respectively, in this well. 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 II-A Partnership's Statement of Cash Flows for the nine months ended September 30, 2002 includes proceeds from the sale of certain oil and gas properties during December 2001. These proceeds were included in the Partnership's cash distributions paid in February 2002. The Partnerships would have terminated on December 31, 2001 in accordance with the partnership agreements for the Partnerships. However, such partnership agreements provide that the General Partner may extend the term of each Partnership for up to five periods of two years each. The General Partner has extended the terms of the Partnerships for their first two-year extension thereby extending their termination date to December 31, 2003. The General Partner currently intends to extend the terms of each Partnership for their third extension period. Accordingly, the financial statements have not been presented on a liquidation basis because it is not probable that the Partnerships will be terminated within the next year. 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 -40- 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 than complete units of depreciable property are retired or sold, the proceeds are credited to oil and gas properties. The Partnerships evaluate the recoverability of the carrying costs of their proved oil and gas properties 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. 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 -41- 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: Increase (Decrease) Increase in in Net Income Capitalized for the Cost of Oil Change in Asset and Gas Accounting Retirement Partnerships Properties Principle Obligation ------------ ----------- ---------- ---------- II-A $292,000 $ 6,000 $286,000 II-B 212,000 4,000 208,000 II-C 68,000 100 68,000 II-D 181,000 ( 2,000) 183,000 II-E 98,000 3,000 95,000 II-F 101,000 5,000 96,000 II-G 218,000 10,000 208,000 II-H 54,000 3,000 51,000 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. -42- 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 II-A, II-B, II-C, II-D, II-E, II-F, II-G, and II-H Partnerships recognized approximately $9,000, $6,000, $3,000, $7,000, $3,000, $4,000, $8,000 and $2,000, 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. 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. -43- II-A Partnership ---------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, Dec. 31, 2002 517,852 5,817,550 Production ( 16,246) ( 182,843) Revisions of previous estimates 2,844 12,124 ------- --------- Proved reserves, March 31, 2003 504,450 5,646,831 Production ( 22,322) ( 192,809) Extensions and discoveries 18,202 23,004 Revisions of previous estimates 94,420 1,104,781 ------- --------- Proved reserves, June 30, 2003 594,750 6,581,807 Production ( 17,987) ( 180,852) Revisions of previous estimates ( 7,771) ( 71,904) ------- --------- Proved reserves, Sept. 30, 2003 568,992 6,329,051 ======= ========= -44- II-B Partnership ---------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, Dec. 31, 2002 359,624 4,443,545 Production ( 10,041) ( 137,522) Revisions of previous estimates ( 2,611) ( 1,847) ------- --------- Proved reserves, March 31, 2003 346,972 4,304,176 Production ( 9,804) ( 151,089) Revisions of previous estimates 92,624 852,286 ------- --------- Proved reserves, June 30, 2003 429,792 5,005,373 Production ( 11,170) ( 135,853) Revisions of previous estimates 564 ( 59,164) ------- --------- Proved reserves, Sept. 30, 2003 419,186 4,810,356 ======= ========= -45- II-C Partnership ---------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, Dec. 31, 2002 128,944 3,120,468 Production ( 3,777) ( 78,149) Revisions of previous estimates ( 210) ( 12,847) ------- --------- Proved reserves, March 31, 2003 124,957 3,029,472 Production ( 3,261) ( 93,177) Revisions of previous estimates 43,042 569,574 ------- --------- Proved reserves, June 30, 2003 164,738 3,505,869 Production ( 3,903) ( 74,009) Revisions of previous estimates 471 ( 50,300) ------- --------- Proved reserves, Sept. 30, 2003 161,306 3,381,560 ======= ========= -46- II-D Partnership ---------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, Dec. 31, 2002 186,724 7,948,973 Production ( 6,730) ( 164,162) Revisions of previous estimates 104 ( 6,291) ------- --------- Proved reserves, March 31, 2003 180,098 7,778,520 Production ( 3,172) ( 218,619) Revisions of previous estimates 18,742 1,463,484 ------- --------- Proved reserves, June 30, 2003 195,668 9,023,385 Production ( 4,672) ( 180,894) Revisions of previous estimates ( 2,171) ( 74,819) ------- --------- Proved reserves, Sept. 30, 2003 188,825 8,767,672 ======= ========= -47- II-E Partnership ---------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, Dec. 31, 2002 173,164 4,192,406 Production ( 5,319) ( 111,215) Revisions of previous estimates 722 10,746 ------- --------- Proved reserves, March 31, 2003 168,567 4,091,937 Production ( 4,892) ( 125,153) Revisions of previous estimates 24,112 1,085,980 ------- --------- Proved reserves, June 30, 2003 187,787 5,052,764 Production ( 4,824) ( 119,454) Extensions and discoveries 29 13,257 Revisions of previous estimates 1,148 ( 67,086) ------- --------- Proved reserves, Sept. 30, 2003 184,140 4,879,481 ======= ========= -48- II-F Partnership ---------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, Dec. 31, 2002 230,274 2,962,281 Production ( 6,851) ( 111,565) Revisions of previous estimates 2,654 52,338 ------- --------- Proved reserves, March 31, 2003 226,077 2,903,054 Production ( 6,664) ( 111,604) Revisions of previous estimates 58,391 1,084,618 ------- --------- Proved reserves, June 30, 2003 277,804 3,876,068 Production ( 6,106) ( 108,194) Extensions and discoveries 2,881 1,207 Revisions of previous estimates 5,544 ( 65,918) ------- --------- Proved reserves, Sept. 30, 2003 280,123 3,703,163 ======= ========= -49- II-G Partnership ---------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, Dec. 31, 2002 483,873 6,369,980 Production ( 14,356) ( 237,017) Extensions and discoveries 207 108 Revisions of previous estimates 5,364 112,320 ------- --------- Proved reserves, March 31, 2003 475,088 6,245,391 Production ( 13,985) ( 238,346) Extensions and discoveries Revisions of previous estimates 122,287 2,319,224 ------- --------- Proved reserves, June 30, 2003 583,390 8,326,269 Production ( 12,803) ( 230,579) Extensions and discoveries 5,867 19,650 Revisions of previous estimates 11,712 ( 147,554) ------- --------- Proved reserves, Sept. 30, 2003 588,166 7,967,786 ======= ========= -50- II-H Partnership ---------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, Dec. 31, 2002 113,085 1,553,934 Production ( 3,330) ( 56,418) Revisions of previous estimates 1,317 27,210 ------- --------- Proved reserves, March 31, 2003 111,072 1,524,726 Production ( 3,254) ( 57,382) Revisions of previous estimates 28,117 557,281 ------- --------- Proved reserves, June 30, 2003 135,935 2,024,625 Production ( 2,973) ( 55,110) Extensions and discoveries 1,174 7,265 Revisions of previous estimates 3,017 ( 35,123) ------- --------- Proved reserves, Sept. 30, 2003 137,153 1,941,657 ======= ========= 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 -51- can be no assurance that the prices used in calculating the 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 ----------- ------- ------- ------- -------- II-A $15,600 $18,429 $17,432 $16,956 II-B 11,594 13,270 12,350 12,055 II-C 7,488 8,623 8,226 7,938 II-D 17,982 21,207 20,133 19,071 II-E 9,937 11,660 10,496 10,193 II-F 9,285 10,816 9,282 9,142 II-G 19,797 23,043 19,797 19,484 II-H 4,747 5,520 4,752 4,671 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: -52- * 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; * 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. -53- II-A 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 $1,309,670 $932,585 Oil and gas production expenses $ 337,944 $314,976 Barrels produced 17,987 13,602 Mcf produced 180,852 193,018 Average price/Bbl $ 26.32 $ 26.25 Average price/Mcf $ 4.62 $ 2.98 As shown in the table above, total oil and gas sales increased $377,085 (40.4%) for the three months ended September 30, 2003 as compared to the three months ended September 30, 2002. Of this increase, approximately (i) $297,000 was related to an increase in the average price of gas sold and (ii) $115,000 was related to an increase in volumes of oil sold. Volumes of oil sold increased 4,385 barrels, while volumes of gas sold decreased 12,166 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) an increase in production on another significant well due to the successful workover of that well during mid 2003, and (iii) the successful completion of a new well during mid 2002. Average oil and gas prices increased to $26.32 per barrel and $4.62 per Mcf, respectively, for the three months ended September 30, 2003 from $26.25 per barrel and $2.98 per Mcf, respectively, for the three months ended September 30, 2002. Oil and gas production expenses (including lease operating expenses and production taxes) increased $22,968 (7.3%) 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 25.8% for the three months ended September 30, 2003 from 33.8% for the three 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 $37,756 (174.2%) 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) downward revisions in the estimates of remaining oil and gas reserves for the three months ended September 30, 2003 and (ii) an increase in depletable oil and gas properties primarily due to recompletion activities on one significant well during the three months ended September 30, -54- 2003. As a percentage of oil and gas sales, these expenses increased to 4.5% for the three months ended September 30, 2003 from 2.3% 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 $7,228 (5.3%) 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 11.0% for the three months ended September 30, 2003 from 14.6% 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 $4,355,746 $2,700,081 Oil and gas production expenses $1,036,270 $1,117,942 Barrels produced 56,555 44,969 Mcf produced 556,504 618,085 Average price/Bbl $ 27.68 $ 22.55 Average price/Mcf $ 5.01 $ 2.73 As shown in the table above, total oil and gas sales increased $1,655,665 (61.3%) for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. Of this increase, approximately (i) $290,000 and $1,272,000, respectively, were related to increases in the average prices of oil and gas sold and (ii) $261,000 was related to an increase in volumes of oil sold. These increases were partially offset by a decrease of approximately $167,000 related to a decrease in volumes of gas sold. Volumes of oil sold increased 11,586 barrels, while volumes of gas sold decreased 61,581 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) a positive prior period gas balancing adjustment on one significant well during the nine months ended September 30, 2002, and (iii) positive prior period volume adjustments made by the operators on two significant wells during the nine months ended September 30, 2002. Average oil and gas prices increased to $27.68 per barrel and $5.01 per Mcf, -55- respectively, for the nine months ended September 30, 2003 from $22.55 per barrel and $2.73 per Mcf, respectively, for the nine months ended September 30, 2002. As discussed in Liquidity and Capital Resources above, the II-A Partnership sold certain oil and gas properties during the nine months ended September 30, 2002 and recognized a $193,272 gain on such sales. No such sales occurred during the nine months ended September 30, 2003. Oil and gas production expenses (including lease operating expenses and production taxes) decreased $81,672 (7.3%) for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. This decrease was primarily due to workover expenses incurred on several wells during the nine months ended September 30, 2002. This decrease was partially offset by (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 $22,000 (due to a partial post judgment settlement) of a charge previously accrued for this judgment. As a percentage of oil and gas sales, these expenses decreased to 23.8% for the nine months ended September 30, 2003 from 41.4% 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 $16,709 (9.1%) 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, this expense decreased to 3.8% for the nine months ended September 30, 2003 from 6.8% 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 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 9.8% for the nine months ended September 30, 2003 from 15.8% 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 $57,337,357 or 118.40% of Limited Partners' capital contributions. -56- II-B 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 $929,557 $652,635 Oil and gas production expenses $247,756 $195,428 Barrels produced 11,170 9,413 Mcf produced 135,853 139,524 Average price/Bbl $ 28.99 $ 26.18 Average price/Mcf $ 4.46 $ 2.91 As shown in the table above, total oil and gas sales increased $276,922 (42.4%) for the three months ended September 30, 2003 as compared to the three months ended September 30, 2002. Of this increase, approximately (i) $31,000 and $210,000, respectively, were related to increases in the average prices of oil and gas sold and (ii) $46,000 was related to an increase in volumes of oil sold. Volumes of oil sold increased 1,757 barrels, while volumes of gas sold decreased 3,671 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 an increase in production on one significant well due to the successful workover of that well during mid 2003. Average oil and gas prices increased to $28.99 per barrel and $4.46 per Mcf, respectively, for the three months ended September 30, 2003 from $26.18 per barrel and $2.91 per Mcf, respectively, for the three months ended September 30, 2002. Oil and gas production expenses (including lease operating expenses and production taxes) increased $52,328 (26.8%) 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) workover expenses incurred on one significant well during the three months ended September 30, 2003 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 26.7% for the three months ended September 30, 2003 from 29.9% for the three 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 $35,204 (323.7%) for the three months ended September 30, 2003 as compared to the three months ended September 30, 2002. This increase was primarily due to substantial downward revisions in the estimates of remaining oil and gas reserves on one significant well during the three months ended September 30, 2003 as compared -57- to the three months ended September 30, 2002. As a percentage of oil and gas sales, this expense increased to 5.0% for the three months ended September 30, 2003 from 1.7% 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 $5,197 (5.1%) 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 11.6% for the three months ended September 30, 2003 from 15.7% 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 $2,967,617 $1,905,822 Oil and gas production expenses $ 738,589 $ 785,656 Barrels produced 31,015 30,747 Mcf produced 424,464 462,665 Average price/Bbl $ 28.95 $ 22.93 Average price/Mcf $ 4.88 $ 2.60 As shown in the table above, total oil and gas sales increased $1,061,795 (55.7%) for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. Of this increase, approximately $187,000 and $968,000, respectively, were related to increases in the average prices of oil and gas sold. Volumes of oil sold increased 268 barrels, while volumes of gas sold decreased 38,201 Mcf for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. Average oil and gas prices increased to $28.95 per barrel and $4.88 per Mcf, respectively, for the nine months ended September 30, 2003 from $22.93 per barrel and $2.60 per Mcf, respectively, for the nine months ended September 30, 2002. Oil and gas production expenses (including lease operating expenses and production taxes) decreased $47,067 (6.0%) 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) workover expenses incurred on several wells during the nine months ended September 30, 2002 and (ii) a decrease in lease operating expenses associated with the decrease in volumes of gas sold. These decreases were partially offset by 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 -58- 24.9% for the nine months ended September 30, 2003 from 41.2% 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 remained relatively constant for the nine months ended September 30, 2003 and 2002. As a percentage of oil and gas sales, this expense decreased to 4.5% for the nine months ended September 30, 2003 from 7.1% 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 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 11.0% for the nine months ended September 30, 2003 from 16.9% 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 $41,281,916 or 114.13% of Limited Partners' capital contributions. II-C 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 $433,234 $324,790 Oil and gas production expenses $118,433 $ 86,846 Barrels produced 3,903 3,328 Mcf produced 74,009 86,084 Average price/Bbl $ 29.12 $ 26.40 Average price/Mcf $ 4.32 $ 2.75 As shown in the table above, total oil and gas sales increased $108,444 (33.4%) for the three months ended September 30, 2003 as compared to the three months ended September 30, 2002. Of this increase, approximately (i) $116,000 was related to an increase in the average price of gas sold and (ii) $15,000 was related to an increase in volumes of oil sold. These increases were partially offset by a decrease of approximately $33,000 related to a decrease in volumes of gas sold. Volumes of oil sold increased 575 barrels, while volumes of gas sold decreased 12,075 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 an increase in production on one significant well due to the successful workover of that well during mid 2003. The decrease in -59- volumes of gas sold was primarily due to (i) normal declines in production and (ii) a positive prior period volume adjustment made by the purchaser on one significant well during the three months ended September 30, 2002. Average oil and gas prices increased to $29.12 per barrel and $4.32 per Mcf, respectively, for the three months ended September 30, 2003 from $26.40 per barrel and $2.75 per Mcf, respectively, for the three months ended September 30, 2002. Oil and gas production expenses (including lease operating expenses and production taxes) increased $31,587 (36.4%) 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) workover expenses incurred on two significant wells during the three months ended September 30, 2003, (ii) an increase in production taxes associated with the increase in oil and gas sales, and (iii) negative prior period lease operating expense adjustments made by the operators on two other significant wells during the three months ended September 30, 2002. As a percentage of oil and gas sales, these expenses increased to 27.3% for the three months ended September 30, 2003 from 26.7% for the three months ended September 30, 2002. Depreciation, depletion, and amortization of oil and gas properties increased $15,288 (275.2%) 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 gas reserves for the three months ended September 30, 2003. As a percentage of oil and gas sales, this expense increased to 4.8% for the three months ended September 30, 2003 from 1.7% 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 $1,776 (4.0%) 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 10.7% for the three months ended September 30, 2003 from 13.8% for the three months ended September 30, 2002. This percentage decrease was primarily due to the increase in oil and gas sales. -60- 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 $1,468,547 $929,549 Oil and gas production expenses $ 360,727 $324,291 Barrels produced 10,941 11,065 Mcf produced 245,335 263,604 Average price/Bbl $ 29.13 $ 23.25 Average price/Mcf $ 4.69 $ 2.55 As shown in the table above, total oil and gas sales increased $538,998 (58.0%) for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. Of this increase, approximately $64,000 and $524,000, respectively, were related to increases in the average prices of oil and gas sold. Volumes of oil and gas sold decreased 124 barrels and 18,269 Mcf, respectively, for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. Average oil and gas prices increased to $29.13 per barrel and $4.69 per Mcf, respectively, for the nine months ended September 30, 2003 from $23.25 per barrel and $2.55 per Mcf, respectively, for the nine months ended September 30, 2002. Oil and gas production expenses (including lease operating expenses and production taxes) increased $36,436 (11.2%) for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. This increase was primarily due to an increase in production taxes associated with the increase in oil and gas sales, which increase was partially offset by workover expenses incurred on two significant wells for the nine months ended September 30, 2002. As a percentage of oil and gas sales, these expenses decreased to 24.6% for the nine months ended September 30, 2003 from 34.9% 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 $1,159 (1.7%) 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, this expense decreased to 4.5% for the nine months ended September 30, 2003 from 7.3% 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 $2,204 (1.5%) for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. As a percentage of -61- oil and gas sales, these expenses decreased to 10.3% for the nine months ended September 30, 2003 from 16.0% 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 $19,288,686 or 124.75% of Limited Partners' capital contributions. II-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 $938,668 $786,875 Oil and gas production expenses $269,454 $223,405 Barrels produced 4,672 7,549 Mcf produced 180,894 212,305 Average price/Bbl $ 27.77 $ 26.59 Average price/Mcf $ 4.47 $ 2.76 As shown in the table above, total oil and gas sales increased $151,793 (19.3%) for the three months ended September 30, 2003 as compared to the three months ended September 30, 2002. Of this increase, approximately $309,000 was related to an increase in the average price of gas sold. This increase was partially offset by decreases of approximately $77,000 and $87,000, respectively, related to decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased 2,877 barrels and 31,411 Mcf, respectively, for the three months ended September 30, 2003 as compared to the three months ended September 30, 2002. The decrease in volumes of oil sold was primarily due to (i) a substantial decline in production during the three months ended September 30, 2003 on one significant well following the completion of that well during late 2001 and (ii) normal declines in production. The well with a substantial decline in production is not expected to return to previously high levels of production. The decrease in volumes of gas sold was primarily due to (i) the sale of several wells during late 2002, (ii) normal declines in production, and (iii) a positive prior period volume adjustment made by the purchaser on one significant well during the three months ended September 30, 2002. These decreases were partially offset by a positive prior period volume adjustment made by the purchaser on another significant well during the three months ended September 30, 2003. Average oil and gas prices increased to $27.77 per barrel and $4.47 per Mcf, respectively, for the three months ended September 30, 2003 from $26.59 per barrel and $2.76 per Mcf, respectively, for the three months ended September 30, 2002. -62- Oil and gas production expenses (including lease operating expenses and production taxes) increased $46,049 (20.6%) 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) a positive prior period lease operating expense adjustment made by the operator on one significant well during the three months ended September 30, 2003, (ii) workover expenses incurred on several wells during the three months ended September 30, 2003, and (iii) an increase in production taxes associated with the increase in oil and gas sales. These increases were partially offset by (i) a decrease in lease operating expenses associated with the decreases in volumes of oil and gas sold and (ii) workover expenses incurred on one significant well during the three months ended September 30, 2002. As a percentage of oil and gas sales, these expenses increased to 28.7% for the three months ended September 30, 2003 from 28.4% for the three months ended September 30, 2002. Depreciation, depletion, and amortization of oil and gas properties increased $37,232 (223.3%) for the three months ended September 30, 2003 as compared to the three months ended September 30, 2002. This increase was primarily due to (i) downward revisions in the estimates of remaining oil and gas reserves for the three months ended September 30, 2003 and (ii) 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 5.7% for the three months ended September 30, 2003 from 2.1% 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 $4,426 (5.0%) 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 10.0% for the three months ended September 30, 2003 from 11.4% for the three months ended September 30, 2002. This percentage decrease was primarily due to the increase in oil and gas sales. -63- 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 $2,982,439 $2,122,635 Oil and gas production expenses $ 775,664 $ 718,259 Barrels produced 14,574 25,931 Mcf produced 563,675 613,015 Average price/Bbl $ 29.05 $ 22.60 Average price/Mcf $ 4.54 $ 2.51 As shown in the table above, total oil and gas sales increased $859,804 (40.5%) for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. Of this increase, approximately $94,000 and $1,146,000, respectively, were related to increases in the average prices of oil and gas sold. These increases were partially offset by decreases of approximately $257,000 and $123,000, respectively, related to decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased 11,357 barrels and 49,340 Mcf, respectively, for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. The decrease in volumes of oil sold was primarily due to (i) a substantial decline in production during the nine months ended September 30, 2003 on one significant well following the completion of that well during late 2001 and (ii) normal declines in production. The well with a substantial decline in production is not expected to return to previously high levels of production. The decrease in volumes of gas sold was primarily due to (i) the sale of several wells during late 2002 and (ii) the shutting-in of one significant well during the nine months ended September 30, 2003 due to high well pressure. The shut-in well is expected to return to production in late 2003. These decreases were partially offset by positive prior period volume adjustments made by the operator on two significant wells during the nine months ended September 30, 2003. Average oil and gas prices increased to $29.05 per barrel and $4.54 per Mcf, respectively, for the nine months ended September 30, 2003 from $22.60 per barrel and $2.51 per Mcf, respectively, for the nine months ended September 30, 2002. Oil and gas production expenses (including lease operating expenses and production taxes) increased $57,405 (8.0%) 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, (ii) workover expenses incurred on several wells during the nine months ended September 30, 2003, and (iii) a positive prior period lease operating expense adjustment made by the operator on one significant well during the nine months ended -64- September 30, 2003. These increases were partially offset by (i) a decrease in lease operating expenses associated with the decreases in volumes of oil and gas sold and (ii) workover expenses incurred on several wells during the nine months ended September 30, 2002. As a percentage of oil and gas sales, these expenses decreased to 26.0% for the nine months ended September 30, 2003 from 33.8% 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 $55,155 (36.7%) 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 depletable oil and gas properties primarily due to recompletion activities on one significant well during the nine months ended September 30, 2003 and (ii) the abandonment of one significant well during the nine months ended September 30, 2003 due to severe mechanical problems. These increases were partially offset by (i) the decreases in volumes of oil and gas sold and (ii) upward revisions in the estimates of remaining oil and gas reserves for the nine months ended September 30, 2003. As a percentage of oil and gas sales, this expense decreased to 6.9% for the nine months ended September 30, 2003 from 7.1% for the nine months ended September 30, 2002. 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 9.6% for the nine months ended September 30, 2003 from 13.4% 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 $40,513,903 or 128.67% of Limited Partners' capital contributions. II-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 $657,561 $589,004 Oil and gas production expenses $154,827 $128,012 Barrels produced 4,824 5,795 Mcf produced 119,454 146,173 Average price/Bbl $ 31.43 $ 27.57 Average price/Mcf $ 4.24 $ 2.94 -65- As shown in the table above, total oil and gas sales increased $68,557 (11.6%) for the three months ended September 30, 2003 as compared to the three months ended September 30, 2002. Of this increase, approximately $19,000 and $155,000, respectively, were related to increases in the average prices of oil and gas sold. These increases were partially offset by decreases of approximately $27,000 and $78,000, respectively, related to decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased 971 barrels and 26,719 Mcf, respectively, for the three months ended September 30, 2003 as compared to the three months ended September 30, 2002. The decrease in volumes of oil sold was primarily due to (i) normal declines in production, (ii) production difficulties on one significant well during the three months ended September 30, 2003, and (iii) the shutting-in of another significant well due to high well pressure during the three months ended September 30, 2003. The shut-in well is expected to return to production in late 2003. The decrease in volumes of gas sold was primarily due to a positive prior period volume adjustment made by the purchaser on one significant well during the three months ended September 30, 2002. Average oil and gas prices increased to $31.43 per barrel and $4.24 per Mcf, respectively, for the three months ended September 30, 2003 from $27.57 per barrel and $2.94 per Mcf, respectively, for the three months ended September 30, 2002. Oil and gas production expenses (including lease operating expenses and production taxes) increased $26,815 (20.9%) 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) a positive prior period lease operating expense adjustment made by the operator on one significant well during the three months ended September 30, 2003 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 increased to 23.5% for the three months ended September 30, 2003 from 21.7% for the three months ended September 30, 2002. Depreciation, depletion, and amortization of oil and gas properties increased $20,543 (88.9%) 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) substantial downward revisions in the estimates of remaining oil and gas reserves on one significant well during the three months ended September 30, 2003 as compared to the three months ended September 30, 2002 and (ii) an increase in depletable oil and gas properties primarily due to drilling 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 6.6% for the three months ended September 30, 2003 from 3.9% 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. -66- General and administrative expenses increased $1,903 (2.9%) 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 10.4% for the three months ended September 30, 2003 from 11.3% for the three months ended September 30, 2002. 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 $2,184,324 $1,461,055 Oil and gas production expenses $ 485,147 $ 415,961 Barrels produced 15,035 18,651 Mcf produced 355,822 383,242 Average price/Bbl $ 29.51 $ 23.57 Average price/Mcf $ 4.89 $ 2.67 As shown in the table above, total oil and gas sales increased $723,269 (49.5%) for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. Of this increase, approximately $89,000 and $792,000, respectively, were related to increases in the average prices of oil and gas sold. These increases were partially offset by decreases of approximately $85,000 and $73,000, respectively, related to decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased 3,616 barrels and 27,420 Mcf, respectively, for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. The decrease in volumes of oil sold was primarily due to (i) normal declines in production, (ii) a positive prior period volume adjustment made by the operator on one significant well during the nine months ended September 30, 2002, and (iii) the shutting-in of one significant well due to high well pressure during the nine months ended September 30, 2003. The shut-in well is expected to return to production in late 2003. Average oil and gas prices increased to $29.51 per barrel and $4.89 per Mcf, respectively, for the nine months ended September 30, 2003 from $23.57 per barrel and $2.67 per Mcf, respectively, for the nine months ended September 30, 2002. Oil and gas production expenses (including lease operating expenses and production taxes) increased $69,186 (16.6%) for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. This increase was primarily due to (i) an increase in production taxes associated with the increase in oil and gas sales and (ii) positive prior period lease operating expense adjustments on two significant wells during the nine months ended September 30, 2003. These increases were partially offset by a decrease in lease operating expenses associated with the decreases in volumes of oil and gas sold. As a percentage of -67- oil and gas sales, these expenses decreased to 22.2% for the nine months ended September 30, 2003 from 28.5% 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 sold. Depreciation, depletion, and amortization of oil and gas properties decreased $37,242 (26.3%) 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 decreases in volumes of oil and gas sold. As a percentage of oil and gas sales, this expense decreased to 4.8% for the nine months ended September 30, 2003 from 9.7% 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. 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 9.9% for the nine months ended September 30, 2003 from 14.7% 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 $28,313,574 or 123.74% of Limited Partners' capital contributions. II-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 $595,801 $527,359 Oil and gas production expenses $102,041 $104,855 Barrels produced 6,106 6,838 Mcf produced 108,194 119,681 Average price/Bbl $ 29.19 $ 27.31 Average price/Mcf $ 3.86 $ 2.85 As shown in the table above, total oil and gas sales increased $68,442 (13.0%) for the three months ended September 30, 2003 as compared to the three months ended September 30, 2002. Of this increase, approximately $11,000 and $110,000, respectively, were related to increases in the average prices of oil and gas sold. These increases were partially offset by decreases of approximately $20,000 and $33,000, respectively, related to decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased 732 barrels and 11,487 Mcf, respectively, for the three months -68- ended September 30, 2003 as compared to the three months ended September 30, 2002. The decrease in volumes of oil sold was primarily due to normal declines in production. 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 operators on two significant wells during the three months ended September 30, 2002, and (iii) a negative prior period volume adjustment made by the purchaser on one significant well during the three months ended September 30, 2003. These decreases were partially offset by (i) positive prior period volume adjustments made by the purchasers on two significant wells during the three months ended September 30, 2003 and (ii) a positive prior period volume adjustment made by the operator on one significant well during the three months ended September 30, 2003. Average oil and gas prices increased to $29.19 per barrel and $3.86 per Mcf, respectively, for the three months ended September 30, 2003 from $27.31 per barrel and $2.85 per Mcf, respectively, for the three months ended September 30, 2002. Oil and gas production expenses (including lease operating expenses and production taxes) decreased $2,814 (2.7%) 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 17.1% for the three months ended September 30, 2003 from 19.9% for the three 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 $2,451 (5.7%) 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, this expense decreased to 6.8% for the three months ended September 30, 2003 from 8.2% for the three 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 $948 (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 8.6% for the three months ended September 30, 2003 from 9.5% for the three months ended September 30, 2002. -69- 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 $2,066,022 $1,369,918 Oil and gas production expenses $ 414,636 $ 339,998 Barrels produced 19,621 21,483 Mcf produced 331,363 338,964 Average price/Bbl $ 28.57 $ 23.06 Average price/Mcf $ 4.54 $ 2.58 As shown in the table above, total oil and gas sales increased $696,104 (50.8%) for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. Of this increase, approximately $108,000 and $651,000, respectively, were related to increases in the average prices of oil and gas sold. Volumes of oil and gas sold decreased 1,862 barrels and 7,601 Mcf, respectively, for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. Average oil and gas prices increased to $28.57 per barrel and $4.54 per Mcf, respectively, for the nine months ended September 30, 2003 from $23.06 per barrel and $2.58 per Mcf, respectively, for the nine months ended September 30, 2002. The II-F Partnership sold certain oil and gas properties during the nine months ended September 30, 2002 and recognized a $50,440 gain on such sales. No such sales occurred during the nine months ended September 30, 2003. Oil and gas production expenses (including lease operating expenses and production taxes) increased $74,638 (22.0%) 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) workover expenses incurred on several wells during the nine months ended September 30, 2003. These increases were partially offset by workover expenses incurred on several other wells during the nine months ended September 30, 2002. As a percentage of oil and gas sales, these expenses decreased to 20.1% for the nine months ended September 30, 2003 from 24.8% 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 $30,769 (21.7%) 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, -70- 2003 and (ii) the decreases in volumes of oil and gas sold. As a percentage of oil and gas sales, this expense decreased to 5.4% for the nine months ended September 30, 2003 from 10.4% 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 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 8.0% for the nine months ended September 30, 2003 from 12.1% 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 $22,879,051 or 133.48% of Limited Partners' capital contributions. II-G 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 $1,262,790 $1,115,779 Oil and gas production expenses $ 219,300 $ 224,778 Barrels produced 12,803 14,328 Mcf produced 230,579 254,078 Average price/Bbl $ 29.18 $ 27.32 Average price/Mcf $ 3.86 $ 2.85 As shown in the table above, total oil and gas sales increased $147,011 (13.2%) for the three months ended September 30, 2003 as compared to the three months ended September 30, 2002. Of this increase, approximately $24,000 and $232,000, respectively, were related to increases in the average prices of oil and gas sold. These increases were partially offset by decreases of approximately $42,000 and $67,000, respectively, related to decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased 1,525 barrels and 23,499 Mcf, respectively, for the three months ended September 30, 2003 as compared to the three months ended September 30, 2002. The decrease in volumes of oil sold was primarily due to normal declines in production. 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 operators on two significant wells during the three months ended September 30, 2002, and (iii) a negative prior period volume adjustment made by the purchaser on one significant well during the three months ended September 30, 2003. These decreases were partially offset by (i) positive prior period volume adjustments made by the purchasers on two significant wells during the three -71- months ended September 30, 2003 and (ii) a positive prior period volume adjustment made by the operator on one significant well during the three months ended September 30, 2003. Average oil and gas prices increased to $29.18 per barrel and $3.86 per Mcf, respectively, for the three months ended September 30, 2003 from $27.32 per barrel and $2.85 per Mcf, respectively, for the three months ended September 30, 2002. Oil and gas production expenses (including lease operating expenses and production taxes) decreased $5,478 (2.4%) 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 17.4% for the three months ended September 30, 2003 from 20.1% for the three 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 $3,475 (3.8%) 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 7.0% for the three months ended September 30, 2003 from 8.2% for the three 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 $4,269 (4.0%) 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 8.7% for the three months ended September 30, 2003 from 9.5% for the three months ended September 30, 2002. 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 $4,388,272 $2,902,621 Oil and gas production expenses $ 885,480 $ 725,790 Barrels produced 41,144 45,038 Mcf produced 705,942 721,221 Average price/Bbl $ 28.57 $ 23.06 Average price/Mcf $ 4.55 $ 2.58 As shown in the table above, total oil and gas sales increased $1,485,651 (51.2%) for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. Of this increase, approximately $227,000 and $1,388,000, respectively, were related to increases in the average prices of oil and gas sold. Volumes of oil and gas sold decreased 3,894 barrels and -72- 15,279 Mcf, respectively, for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. Average oil and gas prices increased to $28.57 per barrel and $4.55 per Mcf, respectively, for the nine months ended September 30, 2003 from $23.06 per barrel and $2.58 per Mcf, respectively, for the nine months ended September 30, 2002. The II-G Partnership sold certain oil and gas properties during the nine months ended September 30, 2002 and recognized a $105,409 gain on such sales. No such sales occurred during the nine months ended September 30, 2003. Oil and gas production expenses (including lease operating expenses and production taxes) increased $159,690 (22.0%) 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) workover expenses incurred on several wells during the nine months ended September 30, 2003. These increases were partially offset by workover expenses incurred on several other wells during the nine months ended September 30, 2002. As a percentage of oil and gas sales, these expenses decreased to 20.2% for the nine months ended September 30, 2003 from 25.0% 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 $65,907 (21.6%) 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 decreases in volumes of oil and gas sold. As a percentage of oil and gas sales, this expense decreased to 5.4% for the nine months ended September 30, 2003 from 10.5% 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 sold. 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 7.6% for the nine months ended September 30, 2003 from 11.5% 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 $47,734,371 or 128.25% of Limited Partners' capital contributions. -73- II-H 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 $299,711 $264,779 Oil and gas production expenses $ 53,320 $ 54,443 Barrels produced 2,973 3,323 Mcf produced 55,110 60,676 Average price/Bbl $ 29.16 $ 27.35 Average price/Mcf $ 3.87 $ 2.87 As shown in the table above, total oil and gas sales increased $34,932 (13.2%) for the three months ended September 30, 2003 as compared to the three months ended September 30, 2002. Of this increase, approximately $5,000 and $55,000, respectively, were related to increases in the average prices of oil and gas sold. These increases were partially offset by decreases of approximately $10,000 and $15,000, respectively, related to decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased 350 barrels and 5,566 Mcf, respectively, for the three months ended September 30, 2003 as compared to the three months ended September 30, 2002. The decrease in volumes of oil sold was primarily due to normal declines in production. 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 operators on two significant wells during the three months ended September 30, 2002, and (iii) a negative prior period adjustment made by the purchaser on one significant well during the three months ended September 30, 2003. These decreases were partially offset by (i) positive prior period volume adjustments made by the purchasers on two significant wells during the three months ended September 30, 2003 and (ii) a positive prior period volume adjustment made by the operator on one significant well during the three months ended September 30, 2003. Average oil and gas prices increased to $29.16 per barrel and $3.87 per Mcf, respectively, for the three months ended September 30, 2003 from $27.35 per barrel and $2.87 per Mcf, respectively, for the three months ended September 30, 2002. Oil and gas production expenses (including lease operating expenses and production taxes) decreased $1,123 (2.1%) 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 17.8% for the three months ended September 30, 2003 from 20.6% for the three months ended September 30, 2002. This percentage decrease was primarily due to the increases in the average prices of oil and gas sold. -74- Depreciation, depletion, and amortization of oil and gas properties decreased $620 (2.8%) 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 7.1% for the three months ended September 30, 2003 from 8.3% for the three 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 decreased $378 (1.3%) 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 9.3% for the three months ended September 30, 2003 from 10.6% 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 $1,044,495 $687,798 Oil and gas production expenses $ 212,664 $174,446 Barrels produced 9,557 10,464 Mcf produced 168,910 172,467 Average price/Bbl $ 28.57 $ 23.05 Average price/Mcf $ 4.57 $ 2.59 As shown in the table above, total oil and gas sales increased $356,697 (51.9%) for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. Of this increase, approximately $53,000 and $334,000, respectively, were related to increases in the average prices of oil and gas sold. Volumes of oil and gas sold decreased 907 barrels and 3,557 Mcf, respectively, for the nine months ended September 30, 2003 as compared to the nine months ended September 30, 2002. Average oil and gas prices increased to $28.57 per barrel and $4.57 per Mcf, respectively, for the nine months ended September 30, 2003 from $23.05 per barrel and $2.59 per Mcf, respectively, for the nine months ended September 30, 2002. The II-H Partnership sold certain oil and gas properties during the nine months ended September 30, 2002 and recognized a $24,403 gain on such sales. No such sales occurred during the nine months ended September 30, 2003. -75- Oil and gas production expenses (including lease operating expenses and production taxes) increased $38,218 (21.9%) 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) workover expenses incurred on several wells during the nine months ended September 30, 2003. These increases were partially offset by workover expenses incurred on several other wells during the nine months ended September 30, 2002. As a percentage of oil and gas sales, these expenses decreased to 20.4% for the nine months ended September 30, 2003 from 25.4% 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 $14,860 (20.8%) 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 decreases in volumes of oil and gas sold. As a percentage of oil and gas sales, this expense decreased to 5.4% for the nine months ended September 30, 2003 from 10.4% 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 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 9.4% for the nine months ended September 30, 2003 from 14.3% 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 $11,092,364 or 120.95% of Limited Partners' capital contributions. -76- 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. -77- 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 II-A. 31.2 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-A. 31.3 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-B. 31.4 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-B. 31.5 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-C. 31.6 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-C. 31.7 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-D. 31.8 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-D. 31.9 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-E. 31.10 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-E. 31.11 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-F. 31.12 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-F. -78- 31.13 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-G. 31.14 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-G. 31.15 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-H. 31.16 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-H. 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 II-A. 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 II-B. 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 II-C. 32.4 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 II-D. 32.5 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 II-E. 32.6 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 II-F. 32.7 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 II-G. 32.8 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 II-H. -79- (b) Reports on Form 8-K. None. -80- 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 II-A GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H (Registrant) BY: GEODYNE RESOURCES, INC. General Partner Date: November 14, 2003 By: /s/Dennis R. Neill -------------------------------- (Signature) Dennis R. Neill President Date: November 14, 2003 By: /s/Craig D. Loseke -------------------------------- (Signature) Craig D. Loseke Chief Accounting Officer -81- 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 II-A. 31.2 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-A. 31.3 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-B. 31.4 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-B. 31.5 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-C. 31.6 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-C. 31.7 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-D. 31.8 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-D. 31.9 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-E. 31.10 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-E. 31.11 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-F. 31.12 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-F. -82- 31.13 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-G. 31.14 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-G. 31.15 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-H. 31.16 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership II-H. 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 II-A. 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 II-B. 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 II-C. 32.4 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 II-D. 32.5 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 II-E. 32.6 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 II-F. 32.7 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 II-G. 32.8 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 II-H. -83-