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 June 30, 2004 Commission File Number: I-D: 0-15831 I-E: 0-15832 I-F: 0-15833 GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F -------------------------------------------------------- (Exact name of Registrant as specified in its Articles) I-D 73-1265223 I-E 73-1270110 Oklahoma I-F 73-1292669 - ---------------------------- ------------------------------- (State or other jurisdiction (I.R.S. Employer Identification of incorporation or Number) organization) Two West Second Street, Tulsa, Oklahoma 74103 ------------------------------------------------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code:(918) 583-1791 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes No X ------ ------ -1- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-D COMBINED BALANCE SHEETS (Unaudited) ASSETS June 30, December 31, 2004 2003 ---------- ------------ CURRENT ASSETS: Cash and cash equivalents $221,009 $257,054 Accounts receivable: Oil and gas sales 163,174 129,047 -------- -------- Total current assets $384,183 $386,101 NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 383,136 391,322 DEFERRED CHARGE 84,813 86,567 -------- -------- $852,132 $863,990 ======== ======== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 18,632 $ 24,251 Gas imbalance payable 28,871 28,358 Asset retirement obligation - current (Note 1) 1,186 252 -------- -------- Total current liabilities $ 48,689 $ 52,861 LONG-TERM LIABILITIES: Accrued liability $ 33,573 $ 35,408 Asset retirement obligation (Note 1) 29,244 29,596 -------- -------- Total long-term liabilities $ 62,817 $ 65,004 PARTNERS' CAPITAL (DEFICIT): General Partner ($ 18,231) ($ 23,613) Limited Partners, issued and outstanding, 7,195 units 758,857 769,738 -------- -------- Total Partners' capital $740,626 $746,125 -------- -------- $852,132 $863,990 ======== ======== The accompanying condensed notes are an integral part of these combined financial statements. -2- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-D COMBINED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003 (Unaudited) 2004 2003 -------- -------- REVENUES: Oil and gas sales $244,861 $296,147 Interest income 315 266 -------- -------- $245,176 $296,413 COSTS AND EXPENSES: Lease operating $ 21,496 $ 26,242 Production tax 16,975 19,457 Depreciation, depletion, and amortization of oil and gas properties 11,575 7,158 General and administrative (Note 2) 36,180 29,318 -------- -------- $ 86,226 $ 82,175 -------- -------- NET INCOME $158,950 $214,238 ======== ======== GENERAL PARTNER - NET INCOME $ 25,416 $ 33,168 ======== ======== LIMITED PARTNERS - NET INCOME $133,534 $181,070 ======== ======== NET INCOME per unit $ 18.56 $ 25.16 ======== ======== UNITS OUTSTANDING 7,195 7,195 ======== ======== The accompanying condensed notes are an integral part of these combined financial statements. -3- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-D COMBINED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (Unaudited) 2004 2003 -------- -------- REVENUES: Oil and gas sales $463,339 $564,851 Interest income 513 548 -------- -------- $463,852 $565,399 COSTS AND EXPENSES: Lease operating $ 56,618 $ 73,968 Production tax 32,225 37,950 Depreciation, depletion, and amortization of oil and gas properties 19,085 16,692 General and administrative (Note 2) 63,319 61,076 -------- -------- $171,247 $189,686 -------- -------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $292,605 $375,713 Cumulative effect of change in accounting for asset retirement obligations (Note 1) - 1,099 -------- -------- NET INCOME $292,605 $376,812 ======== ======== GENERAL PARTNER - NET INCOME $ 46,486 $ 58,620 ======== ======== LIMITED PARTNERS - NET INCOME $246,119 $318,192 ======== ======== NET INCOME per unit $ 34.21 $ 44.22 ======== ======== UNITS OUTSTANDING 7,195 7,195 ======== ======== The accompanying condensed notes are an integral part of these combined financial statements. -4- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-D COMBINED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (Unaudited) 2004 2003 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $292,605 $376,812 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of change in accounting for asset retirement obligations (Note 1) - ( 1,099) Depreciation, depletion, and amortization of oil and gas properties 19,085 16,692 Settlement of asset retirement obligation - ( 20) Increase in accounts receivable - oil and gas sales ( 34,127) ( 60,526) Decrease in deferred charge 1,754 - Decrease in accounts payable ( 7,276) ( 11,153) Increase in gas imbalance payable 513 - Decrease in accrued liability ( 1,835) - -------- -------- Net cash provided by operating activities $270,719 $320,706 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 8,752) ($ 21,184) Proceeds from sale of oil and gas properties 92 - -------- -------- Net cash used by investing activities ($ 8,660) ($ 21,184) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($298,104) ($197,823) -------- -------- Net cash used by financing activities ($298,104) ($197,823) -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ($ 36,045) $101,699 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 257,054 171,131 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $221,009 $272,830 ======== ======== The accompanying condensed notes are an integral part of these combined financial statements. -5- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-E COMBINED BALANCE SHEETS (Unaudited) ASSETS June 30, December 31, 2004 2003 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $1,434,874 $1,541,576 Accounts receivable: Oil and gas sales 1,025,179 806,189 ---------- ---------- Total current assets $2,460,053 $2,347,765 NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 2,136,426 2,200,076 DEFERRED CHARGE 444,614 455,095 ---------- ---------- $5,041,093 $5,002,936 ========== ========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 165,198 $ 240,583 Accrued liability - other (Note 1) 88,892 88,892 Gas imbalance payable 98,748 92,999 Asset retirement obligation - current (Note 1) 10,791 5,347 ---------- ---------- Total current liabilities $ 363,629 $ 427,821 LONG-TERM LIABILITIES: Accrued liability $ 171,087 $ 186,239 Asset retirement obligation (Note 1) 273,941 275,883 ---------- ---------- Total long-term liabilities $ 445,028 $ 462,122 PARTNERS' CAPITAL (DEFICIT): General Partner ($ 59,332) ($ 99,284) Limited Partners, issued and outstanding, 41,839 units 4,291,768 4,212,277 ---------- ---------- Total Partners' capital $4,232,436 $4,112,993 ---------- ---------- $5,041,093 $5,002,936 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -6- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-E COMBINED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003 (Unaudited) 2004 2003 ---------- ---------- REVENUES: Oil and gas sales $1,550,019 $1,966,923 Interest income 2,007 2,025 ---------- ---------- $1,552,026 $1,968,948 COSTS AND EXPENSES: Lease operating $ 218,760 $ 210,589 Production tax 97,429 116,754 Depreciation, depletion, and amortization of oil and gas properties 51,545 39,761 General and administrative (Note 2) 137,412 128,332 ---------- ---------- $ 505,146 $ 495,436 ---------- ---------- NET INCOME $1,046,880 $1,473,512 ========== ========== GENERAL PARTNER - NET INCOME $ 163,947 $ 226,290 ========== ========== LIMITED PARTNERS - NET INCOME $ 882,933 $1,247,222 ========== ========== NET INCOME per unit $ 21.10 $ 29.81 ========== ========== UNITS OUTSTANDING 41,839 41,839 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -7- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-E COMBINED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (Unaudited) 2004 2003 ---------- ---------- REVENUES: Oil and gas sales $2,926,256 $3,549,374 Interest income 3,270 3,903 ---------- ---------- $2,929,526 $3,553,277 COSTS AND EXPENSES: Lease operating $ 529,992 $ 540,217 Production tax 185,719 218,502 Depreciation, depletion, and amortization of oil and gas properties 107,616 108,544 General and administrative (Note 2) 267,297 261,366 ---------- ---------- $1,090,624 $1,128,629 ---------- ---------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $1,838,902 $2,424,648 Cumulative effect of change in accounting for asset retirement obligations (Note 1) - 4,178 ---------- ---------- NET INCOME $1,838,902 $2,428,826 ========== ========== GENERAL PARTNER - NET INCOME $ 290,411 $ 378,350 ========== ========== LIMITED PARTNERS - NET INCOME $1,548,491 $2,050,476 ========== ========== NET INCOME per unit $ 37.01 $ 49.01 ========== ========== UNITS OUTSTANDING 41,839 41,839 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -8- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-E COMBINED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (Unaudited) 2004 2003 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,838,902 $2,428,826 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of change in accounting for asset retirement obligations (Note 1) - ( 4,178) Depreciation, depletion, and amortization of oil and gas properties 107,616 108,544 Increase in accounts receivable - oil and gas sales ( 218,990) ( 326,604) Decrease in deferred charge 10,481 - Decrease in accounts payable ( 78,755) ( 76,532) Increase in gas imbalance payable 5,749 - Decrease in accrued liability ( 15,152) - ---------- ---------- Net cash provided by operating activities $1,649,851 $2,130,056 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 37,198) ($ 85,012) Proceeds from the sale of oil and gas properties 104 - ---------- ---------- Net cash used by investing activities ($ 37,094) ($ 85,012) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($1,719,459) ($1,279,568) ---------- ---------- Net cash used by financing activities ($1,719,459) ($1,279,568) ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ($ 106,702) $ 765,476 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,541,576 1,098,557 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,434,874 $1,864,033 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -9- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-F COMBINED BALANCE SHEETS (Unaudited) ASSETS June 30, December 31, 2004 2003 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ 477,773 $ 513,327 Accounts receivable: Oil and gas sales 326,301 262,908 ---------- ---------- Total current assets $ 804,074 $ 776,235 NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 799,272 811,852 DEFERRED CHARGE 340,558 347,840 ---------- ---------- $1,943,904 $1,935,927 ========== ========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 78,770 $ 112,239 Accrued liability - other (Note 1) 62,225 62,225 Gas imbalance payable 31,448 30,890 Asset retirement obligation - current (Note 1) 5,893 3,481 ---------- ---------- Total current liabilities $ 178,336 $ 208,835 LONG-TERM LIABILITIES: Accrued liability $ 146,592 $ 151,391 Asset retirement obligation (Note 1) 118,092 118,854 ---------- ---------- Total long-term liabilities $ 264,684 $ 270,245 PARTNERS' CAPITAL (DEFICIT): General Partner ($ 1,337) ($ 13,564) Limited Partners, issued and outstanding, 14,321 units 1,502,221 1,470,411 ---------- ---------- Total Partners' capital $1,500,884 $1,456,847 ---------- ---------- $1,943,904 $1,935,927 ========== ========== The accompanying condensed notes are an integral part of these combined financial statements. -10- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-F COMBINED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003 (Unaudited) 2004 2003 -------- -------- REVENUES: Oil and gas sales $500,053 $555,719 Interest income 714 657 -------- -------- $500,767 $556,376 COSTS AND EXPENSES: Lease operating $111,505 $ 97,710 Production tax 29,490 30,210 Depreciation, depletion, and amortization of oil and gas properties 11,741 13,283 General and administrative (Note 2) 57,002 49,686 -------- -------- $209,738 $190,889 -------- -------- NET INCOME $291,029 $365,487 ======== ======== GENERAL PARTNER - NET INCOME $ 45,191 $ 56,584 ======== ======== LIMITED PARTNERS - NET INCOME $245,838 $308,903 ======== ======== NET INCOME per unit $ 17.17 $ 21.57 ======== ======== UNITS OUTSTANDING 14,321 14,321 ======== ======== The accompanying condensed notes are an integral part of these combined financial statements. -11- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-F COMBINED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (Unaudited) 2004 2003 -------- ------------ REVENUES: Oil and gas sales $960,226 $1,095,381 Interest income 1,114 1,235 -------- ---------- $961,340 $1,096,616 COSTS AND EXPENSES: Lease operating $226,284 $ 215,369 Production tax 56,934 63,296 Depreciation, depletion, and amortization of oil and gas properties 33,610 35,438 General and administrative (Note 2) 105,279 102,278 -------- ---------- $422,107 $ 416,381 -------- ---------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $539,233 $ 680,235 Cumulative effect of change in accounting for asset retirement obligations (Note 1) - ( 318) -------- ---------- NET INCOME $539,233 $ 679,917 ======== ========== GENERAL PARTNER - NET INCOME $ 85,423 $ 106,808 ======== ========== LIMITED PARTNERS - NET INCOME $453,810 $ 573,109 ======== ========== NET INCOME per unit $ 31.69 $ 40.02 ======== ========== UNITS OUTSTANDING 14,321 14,321 ======== ========== The accompanying condensed notes are an integral part of these combined financial statements. -12- GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F GEODYNE ENERGY INCOME PRODUCTION PARTNERSHIP I-F COMBINED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (Unaudited) 2004 2003 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $539,233 $679,917 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of change in accounting for asset retirement obligations (Note 1) - 318 Depreciation, depletion, and amortization of oil and gas properties 33,610 35,438 Increase in accounts receivable - oil and gas sales ( 63,393) ( 78,636) Decrease in deferred charge 7,282 - Decrease in accounts payable ( 35,481) ( 24,396) Increase in gas imbalance payable 558 - Decrease in accrued liability ( 4,799) - -------- -------- Net cash provided by operating activities $477,010 $612,641 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 17,368) ($ 33,921) -------- -------- Net cash used by investing activities ($ 17,368) ($ 33,921) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($495,196) ($375,172) -------- -------- Net cash used by financing activities ($495,196) ($375,172) -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ($ 35,554) $203,548 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 513,327 316,892 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $477,773 $520,440 ======== ======== The accompanying condensed notes are an integral part of these combined financial statements. -13- GEODYNE ENERGY INCOME PROGRAM I LIMITED PARTNERSHIPS CONDENSED NOTES TO THE COMBINED FINANCIAL STATEMENTS JUNE 30, 2004 (Unaudited) 1. ACCOUNTING POLICIES ------------------- The combined balance sheets as of June 30, 2004, combined statements of operations for the three and six months ended June 30, 2004 and 2003, and combined statements of cash flows for the six months ended June 30, 2004 and 2003 have been prepared by Geodyne Resources, Inc., the General Partner of the limited partnerships, without audit. Each limited partnership is a general partner in the related Geodyne Energy Income Production Partnership in which Geodyne Resources, Inc. serves as the managing partner. Unless the context indicates otherwise, all references to a "Partnership" or the "Partnerships" are references to the limited partnership and its related production partnership, collectively, and all references to the "General Partner" are references to the general partner of the limited partnerships and the managing partner of the production partnerships, collectively. In the opinion of management the financial statements referred to above include all necessary adjustments, consisting of normal recurring adjustments, to present fairly the combined financial position at June 30, 2004, the combined results of operations for the three and six months ended June 30, 2004 and 2003, and the combined cash flows for the six months ended June 30, 2004 and 2003. 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, 2003. The results of operations for the period ended June 30, 2004 are not necessarily indicative of the results to be expected for the full year. The Limited Partners' net income or loss per unit is based upon each $1,000 initial capital contribution. RECLASSIFICATION ---------------- Certain prior year balances have been reclassified to conform with current year presentation. -14- OIL AND GAS PROPERTIES ---------------------- The Partnerships follow the successful efforts method of accounting for their oil and gas properties. Under the successful efforts method, the Partnerships capitalize all property acquisition costs and development costs incurred in connection with the further development of oil and gas reserves. Property acquisition costs include costs incurred by the Partnerships or the General Partner to acquire producing properties, including related title insurance or examination costs, commissions, engineering, legal and accounting fees, and similar costs directly related to the acquisitions, plus an allocated portion, of the General Partner's property screening costs. The acquisition cost to the Partnerships of properties acquired by the General Partner is adjusted to reflect the net cash results of operations, including interest incurred to finance the acquisition, for the period of time the properties are held by the General Partner. Depletion of the costs of producing oil and gas properties, amortization of related intangible drilling and development costs, and depreciation of tangible lease and well equipment are computed on the unit-of-production method. The Partnerships' depletion, depreciation, and amortization includes estimated dismantlement and abandonment costs and estimated salvage value of the equipment. When complete units of depreciable property are retired or sold, the asset cost and related accumulated depreciation are eliminated with any gain or loss (including the elimination of the asset retirement obligation) reflected in income. When less than complete units of depreciable property are retired or sold, the proceeds are credited to oil and gas properties. ACCRUED LIABILITY - OTHER ------------------------- The Accrued Liability - Other at June 30, 2004 and December 31, 2003 for the I-E and I-F Partnerships represents a charge accrued for the payment of a judgment related to plugging liabilities, which judgment is currently under appeal. -15- ASSET RETIREMENT OBLIGATIONS ---------------------------- In July 2001, the FASB issued FAS No. 143, "Accounting for Asset Retirement Obligations", which is effective for fiscal years beginning after June 15, 2002 (January 1, 2003 for the Partnerships). On January 1, 2003, the Partnerships adopted FAS No. 143 and recorded an increase in capitalized cost of oil and gas properties, an increase(decrease) in net income for the cumulative effect of the change in accounting principle, and an asset retirement obligation in the following approximate amounts for each Partnership: Increase (Decrease) Increase in in Net Income Capitalized for the Cost of Oil Change in Asset and Gas Accounting Retirement Partnerships Properties Principle Obligation ------------ ----------- ---------- ---------- I-D $ 30,000 $ 1,000 $ 29,000 I-E 278,000 4,000 274,000 I-F 119,000 ( 300) 119,000 The asset retirement obligation will be adjusted upwards each quarter in order to recognize accretion of the time-related discount factor. For the six months ended June 30, 2004, the I-D, I-E, and I-F Partnerships recognized approximately $1,000, $5,000, 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. The components of the change in asset retirement obligations for the three and six months ended June 30, 2004 and 2003 are as shown below. -16- I-D Partnership --------------- Three Months Three Months Ended Ended 6/30/2004 6/30/2003 ------------ ------------ Total Asset Retirement Obligation, April 1 $ 30,135 $ 28,475 Additions and Revisions - 20 Accretion Expense 295 315 -------- -------- Total Asset Retirement Obligation, End of Quarter $ 30,430 $ 28,810 ======== ======== Six Months Six Months Ended Ended 6/30/2004 6/30/2003 ------------ ------------ Total Asset Retirement Obligation, January 1 $ 29,848 $ 29,376 Settlements and Disposals - ( 1,196) Accretion Expense 582 630 -------- -------- Total Asset Retirement Obligation, End of Period $ 30,430 $ 28,810 ======== ======== Asset Retirement Obligation - Current $ 1,186 $ - Asset Retirement Obligation - Long-Term 29,244 28,810 -17- I-E Partnership --------------- Three Months Three Months Ended Ended 6/30/2004 6/30/2003 ------------ ------------ Total Asset Retirement Obligation, April 1 $282,982 $276,038 Accretion Expense 1,750 2,456 -------- -------- Total Asset Retirement Obligation, End of Quarter $284,732 $278,494 ======== ======== Six Months Six Months Ended Ended 6/30/2004 6/30/2003 ------------ ------------ Total Asset Retirement Obligation, January 1 $281,230 $273,582 Accretion Expense 3,502 4,912 -------- -------- Total Asset Retirement Obligation, End of Period $284,732 $278,494 ======== ======== Asset Retirement Obligation - Current $ 10,791 $ - Asset Retirement Obligation - Long-Term 273,941 278,494 -18- I-F Partnership --------------- Three Months Three Months Ended Ended 6/30/2004 6/30/2003 ------------ ------------ Total Asset Retirement Obligation, April 1 $123,158 $120,543 Accretion Expense 827 1,115 -------- -------- Total Asset Retirement Obligation, End of Quarter $123,985 $121,658 ======== ======== Six Months Six Months Ended Ended 6/30/2004 6/30/2003 ------------ ------------ Total Asset Retirement Obligation, January 1 $122,335 $119,428 Accretion Expense 1,650 2,230 -------- -------- Total Asset Retirement Obligation, End of Period $123,985 $121,658 ======== ======== Asset Retirement Obligation - Current $ 5,893 $ - Asset Retirement Obligation - Long-Term 118,092 121,658 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 June 30, 2004, the following payments were made to the General Partner or its affiliates by the Partnerships: Direct General Administrative Partnership and Administrative Overhead ----------- ------------------- --------------- I-D $16,194 $ 19,986 I-E 21,192 116,220 I-F 17,222 39,780 -19- During the six months ended June 30, 2004, the following payments were made to the General Partner or its affiliates by the Partnerships: Direct General Administrative Partnership and Administrative Overhead ----------- ------------------- --------------- I-D $23,347 $ 39,972 I-E 34,857 232,440 I-F 25,719 79,560 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. -20- 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. -21- LIQUIDITY AND CAPITAL RESOURCES ------------------------------- The Partnerships began operations and investors were assigned their rights as Limited Partners, having made capital contributions in the amounts and on the dates set forth below: Limited Date of Partner Capital Partnership Activation Contributions ----------- ------------------ --------------- I-D March 4, 1986 $ 7,194,700 I-E September 10, 1986 41,839,400 I-F December 16, 1986 14,320,900 In general, the amount of funds available for acquisition of producing properties was equal to the capital contributions of the Limited Partners, less 15% for sales commissions and organization and management fees. All of the Partnerships have fully invested their capital contributions. Net proceeds from the operations less necessary operating capital are distributed to the Limited Partners on a quarterly basis. Revenues and net proceeds of a Partnership are largely dependent upon the volumes of oil and gas sold and the prices received for such oil and gas. While the General Partner cannot predict future pricing trends, it believes the working capital available as of June 30, 2004 and the net revenue generated from future operations will provide sufficient working capital to meet current and future obligations. Occasional expenditures for new wells or well recompletions or workovers, however, may reduce or eliminate cash available for a particular quarterly cash distribution. Pursuant to the terms of the Partnerships' partnership agreements (the "Partnership Agreements"), the Partnerships would have terminated on December 31, 1999. However, the Partnership Agreements provide that the General Partner may extend the term of each Partnership for up to five periods of two years each. The General Partner has extended the terms of the Partnerships for their third two year extension period to December 31, 2005. As of the date of this Quarterly Report, the General Partner has not determined whether to further extend the term of any Partnership. 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 -22- connection with the further development of oil and gas reserves. Property acquisition costs include costs incurred by the Partnerships or the General Partner to acquire producing properties, including related title insurance or examination costs, commissions, engineering, legal and accounting fees, and similar costs directly related to the acquisitions plus an allocated portion of the General Partner's property screening costs. The acquisition cost to the Partnerships of the properties acquired by the General Partner is adjusted to reflect the net cash results of operations, including interest incurred to finance the acquisition, for the period of time the properties are held by the General Partner. Depletion of the cost of producing oil and gas properties, amortization of related intangible drilling and development costs, and depreciation of tangible lease and well equipment are computed on the unit-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 -23- and gas leases are recorded as revenue when the gas is metered and title transferred pursuant to the gas sales contracts covering the Partnerships' interest in gas reserves. During such times as a Partnership's sales of gas exceed its pro rata ownership in a well, such sales are recorded as revenues unless total sales from the well have exceeded the Partnership's share of estimated total gas reserves underlying the property, at which time such excess is recorded as a liability. The rates per Mcf used to calculate this liability are based on the average gas prices received for the volumes at the time the overproduction occurred. This also approximates the price for which the Partnerships are currently settling this liability. These amounts were recorded as gas imbalance payables in accordance with the sales method. These gas imbalance payables will be settled by either gas production by the underproduced party in excess of current estimates of total gas reserves for the well or by negotiated or contractual payment to the underproduced party. NEW ACCOUNTING PRONOUNCEMENTS ----------------------------- Below is a brief description of Financial Accounting Standards ("FAS") recently issued by the Financial Accounting Standards Board ("FASB") which may have an impact on the Partnerships' future results of operations and financial position. In July 2001, the FASB issued FAS No. 143, "Accounting for Asset Retirement Obligations", which is effective for fiscal years beginning after June 15, 2002 (January 1, 2003 for the Partnerships). On January 1, 2003, the Partnerships adopted FAS No. 143 and recorded an increase in capitalized cost of oil and gas properties, an increase (decrease) in net income for the cumulative effect of the change in accounting principle, and an asset retirement obligation in the following approximate amounts for each Partnership: Increase (Decrease) Increase in in Net Income Capitalized for the Cost of Oil Change in Asset and Gas Accounting Retirement Partnerships Properties Principle Obligation ------------ ----------- ---------- ---------- I-D $ 30,000 $ 1,000 $ 29,000 I-E 278,000 4,000 274,000 I-F 119,000 ( 300) 119,000 The asset retirement obligation will be adjusted upwards each quarter in order to recognize accretion of the time-related discount factor. For the six months ended June 30, 2004, the I-D, I-E, and I-F Partnerships recognized -24- approximately $1,000, $5,000, 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. -25- I-D Partnership --------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, Dec. 31, 2003 60,374 1,618,197 Production ( 847) ( 39,051) Extensions and discoveries 1,748 983 Revisions of previous estimates 92 2,225 ------- --------- Proved reserves, March 31, 2004 61,367 1,582,354 Production ( 840) ( 39,049) Extensions and discoveries - 21 Revisions of previous estimates 866 ( 30,597) ------- --------- Proved reserves, June 30, 2004 61,393 1,512,729 ======= ========= I-E Partnership --------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, Dec. 31, 2003 421,996 8,460,984 Production ( 11,579) ( 215,701) Extensions and discoveries 7,547 4,246 Revisions of previous estimates 12,342 11,905 ------- --------- Proved reserves, March 31, 2004 430,306 8,261,434 Production ( 11,664) ( 210,241) Extensions and discoveries - 86 Revisions of previous estimates 19,262 ( 24,881) ------- --------- Proved reserves, June 30, 2004 437,904 8,026,398 ======= ========= -26- I-F Partnership --------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, Dec. 31, 2003 197,264 2,585,274 Production ( 5,237) ( 61,429) Extensions and discoveries 3,519 1,980 Revisions of previous estimates 5,842 10,243 ------- --------- Proved reserves, March 31, 2004 201,388 2,536,068 Production ( 5,084) ( 58,914) Extensions and discoveries - 38 Revisions of previous estimates 8,385 ( 34,252) ------- --------- Proved reserves, June 30, 2004 204,689 2,442,940 ======= ========= 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 June 30, 2004, March 31, 2004, and December 31, 2003. 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 June 30, 2004. There can be no assurance that the prices used in calculating the net present value of the Partnerships' proved reserves at June 30, 2004 will actually be realized for such production. -27- Net Present Value of Reserves ------------------------------------------ Partnership 6/30/04 3/31/04 12/31/03 ----------- ------------ ----------- ----------- I-D $ 4,511,217 $ 4,525,368 $ 4,506,015 I-E 25,057,286 24,589,562 24,355,021 I-F 7,806,952 7,807,309 7,501,060 Oil and Gas Prices ------------------------------------------ Pricing 6/30/04 3/31/04 12/31/03 ----------- ----------- ----------- ----------- Oil (Bbl) $ 33.75 $ 32.50 $ 29.25 Gas (Mcf) 6.04 5.63 5.77 RESULTS OF OPERATIONS --------------------- GENERAL DISCUSSION The following general discussion should be read in conjunction with the analysis of results of operations provided below. The primary source of liquidity and Partnership cash distributions comes from the net revenues generated from the sale of oil and gas produced from the Partnerships' oil and gas properties. The level of net revenues is highly dependent upon the total volumes of oil and natural gas sold. Oil and gas reserves are depleting assets and will experience production declines over time, thereby likely resulting in reduced net revenues. The level of net revenues is also highly dependent upon the prices received for oil and gas sales, which prices have historically been very volatile and may continue to be so. Additionally, lower oil and natural gas prices may reduce the amount of oil and gas that is economic to produce and reduce the Partnerships' revenues and cash flow. Various factors beyond the Partnerships' control will affect prices for oil and natural gas, such as: * Worldwide and domestic supplies of oil and natural gas; * The ability of the members of the Organization of Petroleum Exporting Countries ("OPEC") to agree to and maintain oil prices and production quotas; * 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. -28- It is not possible to predict the future direction of oil or natural gas prices or whether the above discussed trends will remain. Operating costs, including General and Administrative Expenses, may not decline over time or may experience only a gradual decline, thus adversely affecting net revenues as either production or oil and natural gas prices decline. In any particular period, net revenues may also be affected by either the receipt of proceeds from property sales or the incursion of additional costs as a result of well workovers, recompletions, new well drilling, and other events. I-D PARTNERSHIP THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2003. Three Months Ended June 30, --------------------------- 2004 2003 -------- -------- Oil and gas sales $244,861 $296,147 Oil and gas production expenses $ 38,471 $ 45,699 Barrels produced 840 941 Mcf produced 39,049 56,157 Average price/Bbl $ 37.44 $ 29.25 Average price/Mcf $ 5.47 $ 4.78 As shown in the table above, total oil and gas sales decreased $51,286 (17.3%) for the three months ended June 30, 2004 as compared to the three months ended June 30, 2003. Of this decrease, approximately $82,000 was related to a decrease in volumes of gas sold, which decrease was partially offset by increases of approximately $7,000 and $27,000, respectively, related to increases in the average prices of oil and gas sold. Volumes of oil and gas sold decreased 101 barrels and 17,108 Mcf, respectively, for the three months ended June 30, 2004 as compared to the three months ended June 30, 2003. 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) a positive prior period volume adjustment made by the operator on one significant well during the three months ended June 30, 2003, (ii) normal declines in production, and (iii) the temporary shutting-in of another significant well due to production difficulties during the three months ended June 30, 2004. -29- Oil and gas production expenses (including lease operating expenses and production taxes) decreased $7,228 (15.8%) for the three months ended June 30, 2004 as compared to the three months ended June 30, 2003. This decrease was primarily due to (i) expenses incurred on one significant well related to the abandonment of that well during the three months ended June 30, 2003 due to severe mechanical problems and (ii) a decrease in production taxes associated with the decrease in oil and gas sales. As a percentage of oil and gas sales, these expenses increased to 15.7% for the three months ended June 30, 2004 from 15.4% for the three months ended June 30, 2003. Depreciation, depletion, and amortization of oil and gas properties increased $4,417 (61.7%) for the three months ended June 30, 2004 as compared to the three months ended June 30, 2003. This increase was primarily due to several wells being fully depleted during the three months ended June 30, 2004 due to the lack of remaining reserves. As a percentage of oil and gas sales, this expense increased to 4.7% for the three months ended June 30, 2004 from 2.4% for the three months ended June 30, 2003. This percentage increase was primarily due to (i) the dollar increase in depreciation, depletion, and amortization of oil and gas properties and (ii) the decrease in oil and gas sales. General and administrative expenses increased $6,862 (23.4%) for the three months ended June 30, 2004 as compared to the three months ended June 30, 2003. As a percentage of oil and gas sales, these expenses increased to 14.8% for the three months ended June 30, 2004 from 9.9% for the three months ended June 30, 2003. This percentage increase was primarily due to the (i) dollar increase in general and administrative expenses and (ii) decrease in oil and gas sales. SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2003. Six Months Ended June 30, ------------------------- 2004 2003 -------- -------- Oil and gas sales $463,339 $564,851 Oil and gas production expenses $ 88,843 $111,918 Barrels produced 1,687 1,823 Mcf produced 78,100 97,542 Average price/Bbl $ 35.48 $ 30.51 Average price/Mcf $ 5.17 $ 5.22 As shown in the table above, total oil and gas sales decreased $101,512 (18.0%) for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003. Of this decrease, approximately $101,000 was related to a decrease in volumes of gas sold. Volumes of oil and gas sold decreased 136 barrels and 19,442 Mcf, respectively, for -30- the six months ended June 30, 2004 as compared to the six months ended June 30, 2003. The decrease in volumes of gas sold was primarily due to (i) normal declines in production and (ii) the temporary shutting-in of one significant well due to production difficulties during the six months ended June 30, 2004. Oil and gas production expenses (including lease operating expenses and production taxes) decreased $23,075 (20.6%) for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003. This decrease was primarily due to (i) a decrease in lease operating expenses associated with the decreases in volumes of oil and gas sold, (ii) expenses incurred on one significant well related to the abandonment of that well during the six months ended June 30, 2003 due to severe mechanical problems, and (iii) a decrease in production taxes associated with the decrease in oil and gas sales. As a percentage of oil and gas sales, these expenses decreased to 19.2% for the six months ended June 30, 2004 from 19.8% for the six months ended June 30, 2003. Depreciation, depletion, and amortization of oil and gas properties increased $2,393 (14.3%) for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003. This increase was primarily due to several wells being fully depleted during the six months ended June 30, 2004 due to the lack of remaining reserves. As a percentage of oil and gas sales, this expense increased to 4.1% for the six months ended June 30, 2004 from 3.0% for the six months ended June 30, 2003. This percentage increase was primarily due to (i) the decrease in oil and gas sales and (ii) the dollar increase in depreciation, depletion, and amortization of oil and gas properties. General and administrative expenses increased $2,243 (3.7%) for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003. As a percentage of oil and gas sales, these expenses increased to 13.7% for the six months ended June 30, 2004 from 10.8% for the six months ended June 30, 2003. This percentage increase was primarily due to the decrease in oil and gas sales. The Limited Partners have received cash distributions through June 30, 2004 totaling $16,996,175 or 236.23% of Limited Partners' capital contributions. -31- I-E PARTNERSHIP THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2003. Three Months Ended June 30, --------------------------- 2004 2003 ---------- ---------- Oil and gas sales $1,550,019 $1,966,923 Oil and gas production expenses $ 316,189 $ 327,343 Barrels produced 11,664 17,762 Mcf produced 210,241 320,893 Average price/Bbl $ 34.42 $ 26.58 Average price/Mcf $ 5.46 $ 4.66 As shown in the table above, total oil and gas sales decreased $416,904 (21.2%) for the three months ended June 30, 2004 as compared to the three months ended June 30, 2003. Of this decrease, approximately $162,000 and $515,000, respectively, were related to decreases in volumes of oil and gas sold. These decreases were partially offset by increases of approximately $91,000 and $169,000, respectively, related to increases in the average prices of oil and gas sold. Volumes of oil and gas sold decreased 6,098 barrels and 110,652 Mcf, respectively, for the three months ended June 30, 2004 as compared to the three months ended June 30, 2003. The decrease in volumes of oil sold was primarily due to (i) positive prior period volume adjustments made by the operators on two significant wells during the three months ended June 30, 2003 and (ii) normal declines in production. The decrease in volumes of gas sold was primarily due to (i) a positive prior period volume adjustment made by the operator on one significant well during the three months ended June 30, 2003, (ii) normal declines in production, and (iii) the temporary shutting-in of another significant well due to production difficulties during the three months ended June 30, 2004. Oil and gas production expenses (including lease operating expenses and production taxes) decreased $11,154 (3.4%) for the three months ended June 30, 2004 as compared to the three months ended June 30, 2003. As a percentage of oil and gas sales, these expenses increased to 20.4% for the three months ended June 30, 2004 from 16.6% for the three months ended June 30, 2003. This percentage increase was primarily due to the decrease in oil and gas sales. -32- Depreciation, depletion, and amortization of oil and gas properties increased $11,784 (29.6%) for the three months ended June 30, 2004 as compared to the three months ended June 30, 2003. This increase was primarily due to several wells being fully depleted during the three months ended June 30, 2004 due to the lack of remaining reserves, which increase was partially offset by the decreases in volumes of oil and gas sold. As a percentage of oil and gas sales, this expense increased to 3.3% for the three months ended June 30, 2004 from 2.0% for the three months ended June 30, 2003. This percentage increase was primarily due to the (i) dollar increase in depreciation, depletion, and amortization of oil and gas properties and (ii) the decrease in oil and gas sales. General and administrative expenses increased $9,080 (7.1%) for the three months ended June 30, 2004 as compared to the three months ended June 30, 2003. As a percentage of oil and gas sales, these expenses increased to 8.9% for the three months ended June 30, 2004 from 6.5% for the three months ended June 30, 2003. This percentage increase was primarily due to the decrease in oil and gas sales. SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2003. Six Months Ended June 30, --------------------------- 2004 2003 ---------- ---------- Oil and gas sales $2,926,256 $3,549,374 Oil and gas production expenses $ 715,711 $ 758,719 Barrels produced 23,243 29,468 Mcf produced 425,942 534,138 Average price/Bbl $ 32.64 $ 27.93 Average price/Mcf $ 5.09 $ 5.10 As shown in the table above, total oil and gas sales decreased $623,118 (17.6%) for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003. Of this decrease, approximately $174,000 and $552,000, respectively, were related to decreases in volumes of oil and gas sold. These decreases were partially offset by an increase of approximately $110,000 related to an increase in the average price of oil sold. Volumes of oil and gas sold decreased 6,225 barrels and 108,196 Mcf, respectively, for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003. The decrease in volumes of oil sold was primarily due to (i) normal declines in production and (ii) positive prior period volume adjustments made by the operators on two significant wells during the six months ended June 30, 2003. The decrease in volumes of gas sold was primarily due to (i) normal declines in production and (ii) the temporary shutting-in of one significant well due to production difficulties during the six months ended June 30, 2004. -33- Oil and gas production expenses (including lease operating expenses and production taxes) decreased $43,008 (5.7%) for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003. As a percentage of oil and gas sales, these expenses increased to 24.5% for the six months ended June 30, 2004 from 21.4% for the six months ended June 30, 2003. This percentage increase was primarily due to the decrease in oil and gas sales. Depreciation, depletion, and amortization of oil and gas properties remained relatively constant for the six months ended June 30, 2004 and 2003. A decrease primarily due to the decreases in volumes of oil and gas sold was substantially offset by (i) an increase in depletable oil and gas properties primarily due to recompletion activities on one significant well in 2003 and (ii) several other wells being fully depleted during the six months ended June 30, 2004 due to the lack of remaining reserves. As a percentage of oil and gas sales, this expense increased to 3.7% for the six months ended June 30, 2004 from 3.1% for the six months ended June 30, 2003. This percentage increase was primarily due to the decrease in oil and gas sales. General and administrative expenses increased $5,931 (2.3%) for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003. As a percentage of oil and gas sales, these expenses increased to 9.1% for the six months ended June 30, 2004 from 7.4% for the six months ended June 30, 2003. This percentage increase was primarily due to the decrease in oil and gas sales. The Limited Partners have received cash distributions through June 30, 2004 totaling $69,520,552 or 166.16% of Limited Partners' capital contributions. I-F PARTNERSHIP THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2003. Three Months Ended June 30, --------------------------- 2004 2003 -------- -------- Oil and gas sales $500,053 $555,719 Oil and gas production expenses $140,995 $127,920 Barrels produced 5,084 7,648 Mcf produced 58,914 66,330 Average price/Bbl $ 34.77 $ 26.65 Average price/Mcf $ 5.49 $ 5.31 As shown in the table above, total oil and gas sales decreased $55,666 (10.0%) for the three months ended June 30, 2004 as compared to the three months ended June 30, 2003. Of this decrease, approximately $68,000 and $40,000, respectively, were related to decreases in volumes of oil and gas sold. These decreases were partially offset by -34- increases of approximately $41,000 and $11,000, respectively, related to increases in the average prices of oil and gas sold. Volumes of oil and gas sold decreased 2,564 barrels and 7,416 Mcf, respectively, for the three months ended June 30, 2004 as compared to the three months ended June 30, 2003. The decrease in volumes of oil sold was primarily due to (i) positive prior period volume adjustments made by the operators on two significant wells during the three months ended June 30, 2003 and (ii) normal declines in production. The decrease in volumes of gas sold was primarily due to (i) the temporary shutting-in of one significant well due to production difficulties during the three months ended June 30, 2004, (ii) a positive prior period gas balancing adjustment on another significant well during the three months ended June 30, 2003, and (iii) normal declines in production. Oil and gas production expenses (including lease operating expenses and production taxes) increased $13,075 (10.2%) for the three months ended June 30, 2004 as compared to the three months ended June 30, 2003. This increase was primarily due to (i) workover expenses incurred on two significant wells during the three months ended June 30, 2004 and (ii) repair and maintenance expenses incurred on another significant well during the three months ended June 30, 2004. As a percentage of oil and gas sales, these expenses increased to 28.2% for the three months ended June 30, 2004 from 23.0% for the three months ended June 30, 2003. This percentage increase was primarily due to (i) the decrease in oil and gas sales and (ii) the dollar increase in oil and gas production expenses. Depreciation, depletion, and amortization of oil and gas properties decreased $1,542 (11.6%) for the three months ended June 30, 2004 as compared to the three months ended June 30, 2003. This decrease was primarily due to the decreases in volumes of oil and gas sold. As a percentage of oil and gas sales, this expense decreased to 2.3% for the three months ended June 30, 2004 from 2.4% for the three months ended June 30, 2003. General and administrative expenses increased $7,316 (14.7%) for the three months ended June 30, 2004 as compared to the three months ended June 30, 2003. As a percentage of oil and gas sales, these expenses increased to 11.4% for the three months ended June 30, 2004 from 8.9% for the three months ended June 30, 2003. This percentage increase was primarily due to (i) the dollar increase in general and administrative expenses and (ii) the decrease in oil and gas sales. -35- SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2003. Six Months Ended June 30, ------------------------- 2004 2003 -------- ---------- Oil and gas sales $960,226 $1,095,381 Oil and gas production expenses $283,218 $ 278,665 Barrels produced 10,321 13,233 Mcf produced 120,343 136,494 Average price/Bbl $ 32.97 $ 28.07 Average price/Mcf $ 5.15 $ 5.30 As shown in the table above, total oil and gas sales decreased $135,155 (12.3%) for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003. Of this decrease, approximately (i) $82,000 and $86,000, respectively, were related to decreases in volumes of oil and gas sold and (ii) $18,000 was related to a decrease in the average price of gas sold. These decreases were partially offset by an increase of approximately $51,000 related to an increase in the average price of oil sold. Volumes of oil and gas sold decreased 2,912 barrels and 16,151 Mcf, respectively, for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003. The decrease in volumes of oil sold was primarily due to (i) normal declines in production and (ii) positive prior period volume adjustments made by the operators on two significant wells during the six months ended June 30, 2003. The decrease in volumes of gas sold was primarily due to (i) normal declines in production and (ii) the temporary shutting-in of one significant well due to production difficulties during the six months ended June 30, 2004. Oil and gas production expenses (including lease operating expenses and production taxes) increased $4,553 (1.6%) for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003. This increase was primarily due to (i) workover expenses incurred on two significant wells during the six months ended June 30, 2004 and (ii) repair and maintenance expenses incurred on another significant well during the six months ended June 30, 2004. These increases were partially offset by a decrease in production taxes associated with the decrease in oil and gas sales. As a percentage of oil and gas sales, these expenses increased to 29.5% for the six months ended June 30, 2004 from 25.4% for the six months ended June 30, 2003. This percentage increase was primarily due to the decrease in oil and gas sales. Depreciation, depletion, and amortization of oil and gas properties decreased $1,828 (5.2%) for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003. As a percentage of oil and gas sales, this expense -36- increased to 3.5% for the six months ended June 30, 2004 from 3.2% for the six months ended June 30, 2003. General and administrative expenses increased $3,001 (2.9%) for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003. As a percentage of oil and gas sales, these expenses increased to 11.0% for the six months ended June 30, 2004 from 9.3% for the six months ended June 30, 2003. This percentage increase was primarily due to the decrease in oil and gas sales. The Limited Partners have received cash distributions through June 30, 2004 totaling $21,898,664 or 152.91% of Limited Partners' capital contributions. -37- 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. -38- 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 I-D Partnership. 31.2 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the I-D Partnership. 31.3 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the I-E Partnership. 31.4 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the I-E Partnership. 31.5 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the I-F Partnership. 31.6 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the I-F Partnership. 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 I-D Partnership. 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 I-E Partnership. 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 I-F Partnership. (b) Reports on Form 8-K. None. -39- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-D GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-E GEODYNE ENERGY INCOME LIMITED PARTNERSHIP I-F (Registrant) BY: GEODYNE RESOURCES, INC. General Partner Date: August 11, 2004 By: /s/Dennis R. Neill -------------------------------- (Signature) Dennis R. Neill President Date: August 11, 2004 By: /s/Craig D. Loseke -------------------------------- (Signature) Craig D. Loseke Chief Accounting Officer -40- INDEX TO EXHIBITS ----------------- Exh. No. Exhibit - ---- ------- 31.1 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership I-D. 31.2 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership I-D. 31.3 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership I-E. 31.4 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership I-E. 31.5 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership I-F. 31.6 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership I-F. 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy Income Limited Partnership I-D. 32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy Income Limited Partnership I-E. 33.3 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy Income Limited Partnership I-F. -41-