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, 2006
Commission File Number:
III-A: 0-18302 III-B: 0-18636 III-C: 0-18634
III-D: 0-18936 III-E: 0-19010 III-F: 0-19102
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
---------------------------------------------------------
(Exact name of Registrant as specified in its Articles)
III-A 73-1352993
III-B 73-1358666
III-C 73-1356542
III-D 73-1357374
III-E 73-1367188
Oklahoma III-F 73-1377737
- ---------------------------- -------------------------------
(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
------ ------
-1-
Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act (check
one):
Large accelerated filer
--------
Accelerated filer
--------
X Non-accelerated filer
--------
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes No X
------ ------
The Depositary Units are not publicly traded; therefore, Registrant cannot
compute the aggregate market value of the voting units held by non-affiliates of
the Registrant.
-2-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2006 2005
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 976,717 $1,209,317
Accounts receivable:
Oil and gas sales 572,070 831,772
---------- ----------
Total current assets $1,548,787 $2,041,089
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 699,653 775,391
DEFERRED CHARGE 186,254 190,240
---------- ----------
$2,434,694 $3,006,720
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 111,077 $ 126,411
Gas imbalance payable 21,315 17,660
Asset retirement obligation -
current (Note 1) 26,493 14,606
---------- ----------
Total current liabilities $ 158,885 $ 158,677
LONG-TERM LIABILITIES:
Accrued liability $ 26,965 $ 27,120
Asset retirement obligation
(Note 1) 265,618 270,650
---------- ----------
Total long-term liabilities $ 292,583 $ 297,770
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 99,629) ($ 59,217)
Limited Partners, issued and
outstanding, 263,976 units 2,082,855 2,609,490
---------- ----------
Total Partners' capital $1,983,226 $2,550,273
---------- ----------
$2,434,694 $3,006,720
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-3-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
---------- ----------
REVENUES:
Oil and gas sales $1,041,693 $1,136,402
Interest income 8,868 4,109
---------- ----------
$1,050,561 $1,140,511
COSTS AND EXPENSES:
Lease operating $ 137,181 $ 115,266
Production tax 90,877 98,708
Depreciation, depletion, and
amortization of oil and gas
properties 56,394 22,819
General and administrative
(Note 2) 73,395 73,423
---------- ----------
$ 357,847 $ 310,216
---------- ----------
NET INCOME $ 692,714 $ 830,295
========== ==========
GENERAL PARTNER - NET INCOME $ 73,460 $ 84,672
========== ==========
LIMITED PARTNERS - NET INCOME $ 619,254 $ 745,623
========== ==========
NET INCOME per unit $ 2.35 $ 2.82
========== ==========
UNITS OUTSTANDING 263,976 263,976
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-4-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
---------- ----------
REVENUES:
Oil and gas sales $2,155,013 $2,170,098
Interest income 18,014 7,990
---------- ----------
$2,173,027 $2,178,088
COSTS AND EXPENSES:
Lease operating $ 302,094 $ 378,494
Production tax 179,382 197,828
Depreciation, depletion, and
amortization of oil and gas
properties 83,884 46,808
General and administrative
(Note 2) 170,875 168,387
---------- ----------
$ 736,235 $ 791,517
---------- ----------
NET INCOME $1,436,792 $1,386,571
========== ==========
GENERAL PARTNER - NET INCOME $ 149,427 $ 142,071
========== ==========
LIMITED PARTNERS - NET INCOME $1,287,365 $1,244,500
========== ==========
NET INCOME per unit $ 4.88 $ 4.71
========== ==========
UNITS OUTSTANDING 263,976 263,976
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-5-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,436,792 $1,386,571
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 83,884 46,808
(Increase) decrease in accounts
receivable - oil and gas sales 259,702 ( 95,998)
(Increase) decrease in deferred
charge 3,986 ( 3,728)
Increase (decrease) in accounts
payable ( 3,215) 15,048
Increase (decrease) in gas
imbalance payable 3,655 ( 3,636)
Decrease in accrued liability ( 155) ( 3,934)
---------- ----------
Net cash provided by operating
activities $1,784,649 $1,341,131
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 13,410) ($ 15,581)
---------- ----------
Net cash used by investing
activities ($ 13,410) ($ 15,581)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($2,003,839) ($1,397,801)
---------- ----------
Net cash used by financing
activities ($2,003,839) ($1,397,801)
---------- ----------
NET DECREASE IN CASH AND CASH
EQUIVALENTS ($ 232,600) ($ 72,251)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,209,317 1,038,719
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 976,717 $ 966,468
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-6-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2006 2005
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 495,062 $ 604,086
Accounts receivable:
Oil and gas sales 319,220 433,785
---------- ----------
Total current assets $ 814,282 $1,037,871
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 374,307 414,293
DEFERRED CHARGE 123,122 125,644
---------- ----------
$1,311,711 $1,577,808
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 75,671 $ 76,295
Gas imbalance payable 13,133 9,707
Asset retirement obligation -
current (Note 1) 14,745 9,255
---------- ----------
Total current liabilities $ 103,549 $ 95,257
LONG-TERM LIABILITIES:
Accrued liability $ 8,001 $ 9,664
Asset retirement obligation
(Note 1) 174,231 175,358
---------- ----------
Total long-term liabilities $ 182,232 $ 185,022
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 63,692) ($ 35,041)
Limited Partners, issued and
outstanding, 138,336 units 1,089,622 1,332,570
---------- ----------
Total Partners' capital $1,025,930 $1,297,529
---------- ----------
$1,311,711 $1,577,808
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-7-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
-------- --------
REVENUES:
Oil and gas sales $563,165 $605,293
Interest income 4,186 1,942
-------- --------
$567,351 $607,235
COSTS AND EXPENSES:
Lease operating $ 87,560 $ 62,270
Production tax 52,005 55,744
Depreciation, depletion, and
amortization of oil and gas
properties 34,013 12,425
General and administrative
(Note 2) 38,978 39,123
-------- --------
$212,556 $169,562
-------- --------
NET INCOME $354,795 $437,673
======== ========
GENERAL PARTNER - NET INCOME $ 57,354 $ 67,099
======== ========
LIMITED PARTNERS - NET INCOME $297,441 $370,574
======== ========
NET INCOME per unit $ 2.15 $ 2.68
======== ========
UNITS OUTSTANDING 138,336 138,336
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
-8-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
---------- ----------
REVENUES:
Oil and gas sales $1,153,636 $1,130,446
Interest income 8,612 3,934
---------- ----------
$1,162,248 $1,134,380
COSTS AND EXPENSES:
Lease operating $ 192,721 $ 223,648
Production tax 102,288 111,606
Depreciation, depletion, and
amortization of oil and gas
properties 49,636 16,955
General and administrative
(Note 2) 101,474 99,373
---------- ----------
$ 446,119 $ 451,582
---------- ----------
NET INCOME $ 716,129 $ 682,798
========== ==========
GENERAL PARTNER - NET INCOME $ 113,077 $ 104,203
========== ==========
LIMITED PARTNERS - NET INCOME $ 603,052 $ 578,595
========== ==========
NET INCOME per unit $ 4.36 $ 4.18
========== ==========
UNITS OUTSTANDING 138,336 138,336
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-9-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $716,129 $682,798
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 49,636 16,955
(Increase) decrease in accounts
receivable - oil and gas sales 114,565 ( 55,163)
(Increase) decrease in deferred
charge 2,522 ( 2,938)
Increase in accounts payable 3,026 2,179
Increase (decrease) in gas imbalance
payable 3,426 ( 1,425)
Decrease in accrued liability ( 1,663) ( 2,526)
-------- --------
Net cash provided by operating
activities $887,641 $639,880
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 8,937) ($ 1,303)
-------- --------
Net cash used by investing
activities ($ 8,937) ($ 1,303)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($987,728) ($694,900)
-------- --------
Net cash used by financing
activities ($987,728) ($694,900)
-------- --------
NET DECREASE IN CASH AND CASH
EQUIVALENTS ($109,024) ($ 56,323)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 604,086 556,249
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $495,062 $499,926
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
-10-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2006 2005
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 890,908 $1,013,378
Accounts receivable:
Oil and gas sales 611,595 884,091
---------- ----------
Total current assets $1,502,503 $1,897,469
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 1,872,907 1,544,711
DEFERRED CHARGE 59,090 62,603
---------- ----------
$3,434,500 $3,504,783
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 221,433 $ 263,892
Gas imbalance payable 66,546 76,928
Asset retirement obligation -
current (Note 1) 19,328 19,679
---------- ----------
Total current liabilities $ 307,307 $ 360,499
LONG-TERM LIABILITIES:
Accrued liability $ 115,012 $ 124,681
Asset retirement obligation
(Note 1) 364,589 355,551
---------- ----------
Total long-term liabilities $ 479,601 $ 480,232
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 123,738) ($ 105,515)
Limited Partners, issued and
outstanding, 244,536 units 2,771,330 2,769,567
---------- ----------
Total Partners' capital $2,647,592 $2,664,052
---------- ----------
$3,434,500 $3,504,783
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-11-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
---------- --------
REVENUES:
Oil and gas sales $1,000,961 $982,319
Interest income 7,657 3,918
Other income - 800
---------- --------
$1,008,618 $987,037
COSTS AND EXPENSES:
Lease operating $ 184,264 $ 83,193
Production tax 73,081 69,352
Depreciation, depletion, and
amortization of oil and gas
properties 73,956 41,751
General and administrative
(Note 2) 68,065 68,113
---------- --------
$ 399,366 $262,409
---------- --------
NET INCOME $ 609,252 $724,628
========== ========
GENERAL PARTNER - NET INCOME $ 66,816 $ 75,756
========== ========
LIMITED PARTNERS - NET INCOME $ 542,436 $648,872
========== ========
NET INCOME per unit $ 2.22 $ 2.65
========== ========
UNITS OUTSTANDING 244,536 244,536
========== ========
The accompanying condensed notes are an integral part of
these financial statements.
-12-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
---------- ----------
REVENUES:
Oil and gas sales $2,233,942 $1,936,824
Interest income 15,268 6,341
Other income - 2,541
---------- ----------
$2,249,210 $1,945,706
COSTS AND EXPENSES:
Lease operating $ 369,576 $ 239,526
Production tax 163,644 134,171
Depreciation, depletion, and
amortization of oil and gas
properties 128,387 93,787
General and administrative
(Note 2) 160,057 157,631
---------- ----------
$ 821,664 $ 625,115
---------- ----------
NET INCOME $1,427,546 $1,320,591
========== ==========
GENERAL PARTNER - NET INCOME $ 152,783 $ 139,637
========== ==========
LIMITED PARTNERS - NET INCOME $1,274,763 $1,180,954
========== ==========
NET INCOME per unit $ 5.21 $ 4.83
========== ==========
UNITS OUTSTANDING 244,536 244,536
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-13-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,427,546 $1,320,591
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 128,387 93,787
Settlement of asset retirement
obligation ( 109) -
(Increase) decrease in accounts
receivable - oil and gas sales 272,496 ( 54,662)
(Increase) decrease in deferred
charge 3,513 ( 6,029)
Increase (decrease) in accounts
payable ( 95,269) 5,259
Decrease in gas imbalance
payable ( 10,382) ( 7,201)
Decrease in accrued liability ( 9,669) ( 43,918)
---------- ----------
Net cash provided by operating
activities $1,716,513 $1,307,827
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 394,977) ($ 92,281)
---------- ----------
Net cash used by investing
activities ($ 394,977) ($ 92,281)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($1,444,006) ($ 962,916)
---------- ----------
Net cash used by financing
activities ($1,444,006) ($ 962,916)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 122,470) $ 252,630
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,013,378 682,792
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 890,908 $ 935,422
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-14-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2006 2005
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 501,105 $ 547,247
Accounts receivable:
Oil and gas sales 362,943 527,187
---------- ----------
Total current assets $ 864,048 $1,074,434
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 942,499 651,461
DEFERRED CHARGE 14,691 15,342
---------- ----------
$1,821,238 $1,741,237
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 154,211 $ 155,178
Gas imbalance payable 41,622 42,943
Asset retirement obligation -
current (Note 1) 14,035 17,420
---------- ----------
Total current liabilities $ 209,868 $ 215,541
LONG-TERM LIABILITIES:
Accrued liability $ 140,185 $ 153,747
Asset retirement obligation
(Note 1) 192,030 186,678
---------- ----------
Total long-term liabilities $ 332,215 $ 340,425
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 38,987) ($ 29,279)
Limited Partners, issued and
outstanding, 131,008 units 1,318,142 1,214,550
---------- ----------
Total Partners' capital $1,279,155 $1,185,271
---------- ----------
$1,821,238 $1,741,237
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-15-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
-------- --------
REVENUES:
Oil and gas sales $585,954 $557,045
Interest income 3,809 2,189
Other income - 115
-------- --------
$589,763 $559,349
COSTS AND EXPENSES:
Lease operating $ 95,919 $ 50,814
Production tax 42,369 38,410
Depreciation, depletion, and
amortization of oil and gas
properties 37,498 22,846
General and administrative
(Note 2) 37,640 37,357
-------- --------
$213,426 $149,427
-------- --------
NET INCOME $376,337 $409,922
======== ========
GENERAL PARTNER - NET INCOME $ 40,628 $ 42,819
======== ========
LIMITED PARTNERS - NET INCOME $335,709 $367,103
======== ========
NET INCOME per unit $ 2.56 $ 2.81
======== ========
UNITS OUTSTANDING 131,008 131,008
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
-16-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
---------- ----------
REVENUES:
Oil and gas sales $1,300,940 $1,092,106
Interest income 7,870 3,586
Other income - 364
---------- ----------
$1,308,810 $1,096,056
COSTS AND EXPENSES:
Lease operating $ 212,876 $ 138,959
Production tax 93,758 74,988
Depreciation, depletion, and
amortization of oil and gas
properties 70,645 39,883
General and administrative
(Note 2) 98,016 95,503
---------- ----------
$ 475,295 $ 349,333
---------- ----------
NET INCOME $ 833,515 $ 746,723
========== ==========
GENERAL PARTNER - NET INCOME $ 88,923 $ 77,870
========== ==========
LIMITED PARTNERS - NET INCOME $ 744,592 $ 668,853
========== ==========
NET INCOME per unit $ 5.68 $ 5.11
========== ==========
UNITS OUTSTANDING 131,008 131,008
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-17-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
------------ ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 833,515 $746,723
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 70,645 39,883
Settlement of asset retirement
obligation ( 1,152) -
(Increase) decrease in accounts
receivable - oil and gas sales 164,244 ( 11,648)
(Increase) decrease in deferred
charge 651 ( 4,296)
Decrease in accounts payable ( 41,631) ( 66,729)
Decrease in gas imbalance
payable ( 1,321) -
Decrease in accrued liability ( 13,562) ( 29,445)
---------- --------
Net cash provided by operating
activities $1,011,389 $674,488
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 317,900) ($ 37,130)
---------- --------
Net cash used by investing
activities ($ 317,900) ($ 37,130)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($ 739,631) ($550,759)
---------- --------
Net cash used by financing
activities ($ 739,631) ($550,759)
---------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ($ 46,142) $ 86,599
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 547,247 432,834
---------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 501,105 $519,433
========== ========
The accompanying condensed notes are an integral part of
these financial statements.
-18-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2006 2005
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $1,069,285 $1,460,559
Accounts receivable:
Oil and gas sales 858,034 1,272,925
---------- ----------
Total current assets $1,927,319 $2,733,484
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 1,919,222 1,981,508
DEFERRED CHARGE 34,802 40,254
---------- ----------
$3,881,343 $4,755,246
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 202,740 $ 324,885
Accrued liability - other (Note 1) 11,865 -
Gas imbalance payable 17,735 16,538
Asset retirement obligation -
current (Note 1) 8,155 23,971
---------- ----------
Total current liabilities $ 240,495 $ 365,394
LONG-TERM LIABILITIES:
Accrued liability $ 172,765 $ 254,420
Asset retirement obligation
(Note 1) 439,735 413,791
---------- ----------
Total long-term liabilities $ 612,500 $ 668,211
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 248,531) ($ 197,010)
Limited Partners, issued and
outstanding, 418,266 units 3,276,879 3,918,651
---------- ----------
Total Partners' capital $3,028,348 $3,721,641
---------- ----------
$3,881,343 $4,755,246
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-19-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
---------- ----------
REVENUES:
Oil and gas sales $1,125,106 $1,353,943
Interest income 11,518 5,952
---------- ----------
$1,136,624 $1,359,895
COSTS AND EXPENSES:
Lease operating $ 172,335 $ 213,857
Production tax 78,205 94,091
Depreciation, depletion, and
amortization of oil and gas
properties 60,597 41,909
General and administrative
(Note 2) 118,145 117,026
---------- ----------
$ 429,282 $ 466,883
---------- ----------
NET INCOME $ 707,342 $ 893,012
========== ==========
GENERAL PARTNER - NET INCOME $ 75,036 $ 92,478
========== ==========
LIMITED PARTNERS - NET INCOME $ 632,306 $ 800,534
========== ==========
NET INCOME per unit $ 1.51 $ 1.91
========== ==========
UNITS OUTSTANDING 418,266 418,266
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-20-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
---------- ----------
REVENUES:
Oil and gas sales $2,424,884 $2,570,627
Interest income 22,626 10,501
Other income 10,740 -
---------- ----------
$2,458,250 $2,581,128
COSTS AND EXPENSES:
Lease operating $ 402,486 $ 488,730
Production tax 161,700 178,186
Depreciation, depletion, and
amortization of oil and gas
properties 132,354 85,695
General and administrative
(Note 2) 258,513 254,544
---------- ----------
$ 955,053 $1,007,155
---------- ----------
NET INCOME $1,503,197 $1,573,973
========== ==========
GENERAL PARTNER - NET INCOME $ 159,969 $ 164,060
========== ==========
LIMITED PARTNERS - NET INCOME $1,343,228 $1,409,913
========== ==========
NET INCOME per unit $ 3.21 $ 3.37
========== ==========
UNITS OUTSTANDING 418,266 418,266
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-21-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,503,197 $1,573,973
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 132,354 85,695
Settlement of asset retirement
obligation - ( 345)
(Increase) decrease in accounts
receivable - oil and gas sales 414,891 ( 1,651)
Decrease in deferred charge 5,452 9,335
Decrease in accounts payable ( 54,215) ( 570,440)
Increase in accrued liability -
other 11,865 -
Increase in gas imbalance
payable 1,197 486
Decrease in accrued liability ( 81,655) ( 22,401)
---------- ----------
Net cash provided by operating
activities $1,933,086 $1,074,652
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 127,870) ($ 18,306)
Proceeds from sale of oil and
gas properties - 3,099
---------- ----------
Net cash used by investing
activities ($ 127,870) ($ 15,207)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($2,196,490) ($1,301,424)
---------- ----------
Net cash used by financing
activities ($2,196,490) ($1,301,424)
---------- ----------
NET DECREASE IN CASH AND CASH
EQUIVALENTS ($ 391,274) ($ 241,979)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,460,559 1,413,497
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $1,069,285 $1,171,518
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-22-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2006 2005
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 662,040 $1,062,866
Accounts receivable:
Oil and gas sales 575,017 797,469
---------- ----------
Total current assets $1,237,057 $1,860,335
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 1,603,188 1,680,470
DEFERRED CHARGE 14,579 17,132
---------- ----------
$2,854,824 $3,557,937
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 130,849 $ 176,398
Gas imbalance payable 14,861 13,857
Asset retirement obligation -
current (Note 1) 2,265 1,948
---------- ----------
Total current liabilities $ 147,975 $ 192,203
LONG-TERM LIABILITIES:
Accrued liability $ 71,465 $ 84,584
Asset retirement obligation
(Note 1) 282,860 276,256
---------- ----------
Total long-term liabilities $ 354,325 $ 360,840
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 116,081) ($ 126,897)
Limited Partners, issued and
outstanding, 221,484 units 2,468,605 3,131,791
---------- ----------
Total Partners' capital $2,352,524 $3,004,894
---------- ----------
$2,854,824 $3,557,937
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-23-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
-------- --------
REVENUES:
Oil and gas sales $733,032 $811,137
Interest income 7,309 3,426
-------- --------
$740,341 $814,563
COSTS AND EXPENSES:
Lease operating $148,229 $119,778
Production tax 49,528 43,293
Depreciation, depletion, and
amortization of oil and gas
properties 50,118 40,254
General and administrative
(Note 2) 62,029 62,124
-------- --------
$309,904 $265,449
-------- --------
NET INCOME $430,437 $549,114
======== ========
GENERAL PARTNER - NET INCOME $ 46,823 $ 28,895
======== ========
LIMITED PARTNERS - NET INCOME $383,614 $520,219
======== ========
NET INCOME per unit $ 1.73 $ 2.35
======== ========
UNITS OUTSTANDING 221,484 221,484
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
-24-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
---------- ----------
REVENUES:
Oil and gas sales $1,594,898 $1,631,089
Interest income 15,332 6,011
Other income 9,018 -
---------- ----------
$1,619,248 $1,637,100
COSTS AND EXPENSES:
Lease operating $ 319,300 $ 283,635
Production tax 97,647 87,286
Depreciation, depletion, and
amortization of oil and gas
properties 93,893 77,405
General and administrative
(Note 2) 147,596 145,267
---------- ----------
$ 658,436 $ 593,593
---------- ----------
NET INCOME $ 960,812 $1,043,507
========== ==========
GENERAL PARTNER - NET INCOME $ 102,998 $ 54,971
========== ==========
LIMITED PARTNERS - NET INCOME $ 857,814 $ 988,536
========== ==========
NET INCOME per unit $ 3.87 $ 4.46
========== ==========
UNITS OUTSTANDING 221,484 221,484
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-25-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 960,812 $1,043,507
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion, and
amortization of oil and gas
properties 93,893 77,405
(Increase) decrease in accounts
receivable - oil and gas sales 222,452 ( 21,203)
Decrease in deferred charge 2,553 4,610
Increase (decrease) in accounts
payable ( 39,643) 3,569
Increase in gas imbalance
payable 1,004 399
Decrease in accrued liability ( 13,119) ( 10,770)
---------- ----------
Net cash provided by operating
activities $1,227,952 $1,097,517
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 15,596) ($ 15,275)
Proceeds from sale of oil
and gas properties - 3,190
---------- ----------
Net cash used by investing
activities ($ 15,596) ($ 12,085)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($1,613,182) ($1,040,050)
---------- ----------
Net cash used by financing
activities ($1,613,182) ($1,040,050)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 400,826) $ 45,382
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,062,866 696,460
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 662,040 $ 741,842
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-26-
GEODYNE ENERGY INCOME PROGRAM III LIMITED PARTNERSHIPS
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheets as of June 30, 2006, statements of operations for the
three and six months ended June 30, 2006 and 2005, and statements of cash
flows for the six months ended June 30, 2006 and 2005 have been prepared
by Geodyne Resources, Inc., the General Partner of the Partnerships (the
"General Partner"), without audit. In the opinion of management the
financial statements referred to above include all necessary adjustments,
consisting of normal recurring adjustments, to present fairly the
financial position at June 30, 2006, the results of operations for the
three and six months ended June 30, 2006 and 2005, and the cash flows for
the six months ended June 30, 2006 and 2005.
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, 2005. The
results of operations for the period ended June 30, 2006 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.
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.
-27-
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.
ASSET RETIREMENT OBLIGATIONS
----------------------------
The Partnerships' wells must be properly plugged and abandoned after their
oil and gas reserves are exhausted. The Partnerships follow FAS No. 143,
"Accounting for Asset Retirement Obligations" in accounting for the future
expenditures that will be necessary to plug and abandon these wells. FAS
No. 143 requires the estimated plugging and abandonment obligations to be
(i) recognized in the period in which they are incurred (i.e. when the
well is drilled or acquired) if a reasonable estimate of fair value can be
made and (ii) capitalized as part of the carrying amount of the well.
Estimated abandonment dates will be revised based on changes to related
economic lives, which vary with product prices and production costs.
Estimated plugging costs may also be adjusted to reflect changing industry
experience. During the year ended December 31, 2005, the Partnerships'
asset retirement obligations were revised upward due to increases in both
labor and rig costs associated with plugging wells. Cash flows will not be
affected until wells are actually plugged and abandoned.
The asset retirement obligation is adjusted upwards each quarter in order
to recognize accretion of the time-related discount factor. For the six
months ended June 30, 2006, the III-A, III-B, III-C, III-D, III-E, and
III-F Partnerships recognized $20,000, $13,000, $21,000, $12,000, $26,000,
and $14,000, 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, 2006 and 2005 are as shown below.
-28-
III-A Partnership
-----------------
Three Months Three Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, April 1 $288,695 $116,105
Accretion expense 3,416 1,151
-------- --------
Total Asset Retirement
Obligation, End of Quarter $292,111 $117,256
======== ========
Six Months Six Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, January 1 $285,256 $114,955
Accretion expense 6,855 2,301
-------- --------
Total Asset Retirement
Obligation, End of Period $292,111 $117,256
======== ========
Asset Retirement Obligation -
Current $ 26,493 $ 3,614
Asset Retirement Obligation -
Long-Term 265,618 113,642
III-B Partnership
-----------------
Three Months Three Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, April 1 $186,795 $ 80,639
Accretion expense 2,181 808
-------- --------
Total Asset Retirement
Obligation, End of Quarter $188,976 $ 81,447
======== ========
-29-
Six Months Six Months
Ended Ended
6/30/2006 6/30/2005
----------- -----------
Total Asset Retirement
Obligation, January 1 $184,613 $ 79,865
Accretion expense 4,363 1,582
-------- --------
Total Asset Retirement
Obligation, End of Period $188,976 $ 81,447
======== ========
Asset Retirement Obligation -
Current $ 14,745 $ 24,802
Asset Retirement Obligation -
Long-Term 174,231 56,645
III-C Partnership
-----------------
Three Months Three Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, April 1 $379,515 $207,836
Additions and revisions - 14
Accretion expense 4,402 2,112
-------- --------
Total Asset Retirement
Obligation, End of Quarter $383,917 $209,962
======== ========
Six Months Six Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, January 1 $375,230 $204,672
Additions and revisions - 1,083
Settlements and disposals ( 109) -
Accretion expense 8,796 4,207
-------- --------
Total Asset Retirement
Obligation, End of Period $383,917 $209,962
======== ========
Asset Retirement Obligation -
Current $ 19,328 $ 26,845
Asset Retirement Obligation -
Long-Term 364,589 183,117
-30-
III-D Partnership
-----------------
Three Months Three Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, April 1 $203,728 $110,431
Accretion expense 2,337 1,106
-------- --------
Total Asset Retirement
Obligation, End of Quarter $206,065 $111,537
======== ========
Six Months Six Months
Ended Ended
6/30/2006 6/30/2005
----------- ------------
Total Asset Retirement
Obligation, January 1 $204,098 $109,182
Additions and revisions - 155
Settlements and disposals ( 2,732) -
Accretion expense 4,699 2,200
-------- --------
Total Asset Retirement
Obligation, End of Period $206,065 $111,537
======== ========
Asset Retirement Obligation -
Current $ 14,035 $ 3,510
Asset Retirement Obligation -
Long-Term 192,030 108,027
III-E Partnership
-----------------
Three Months Three Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, April 1 $442,837 $219,243
Settlements and disposals - ( 5,091)
Accretion expense 5,053 2,096
-------- --------
Total Asset Retirement
Obligation, End of Quarter $447,890 $216,248
======== ========
-31-
Six Months Six Months
Ended Ended
6/30/2006 6/30/2005
----------- -----------
Total Asset Retirement
Obligation, January 1 $437,762 $217,175
Settlements and disposals - ( 5,091)
Accretion expense 10,128 4,164
-------- --------
Total Asset Retirement
Obligation, End of Period $447,890 $216,248
======== ========
Asset Retirement Obligation -
Current $ 8,155 $ 7,014
Asset Retirement Obligation -
Long-Term 439,735 209,234
III-F Partnership
-----------------
Three Months Three Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, April 1 $281,674 $151,897
Accretion expense 3,451 1,713
-------- --------
Total Asset Retirement
Obligation, End of Quarter $285,125 $153,610
======== ========
Six Months Six Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, January 1 $278,204 $150,199
Accretion expense 6,921 3,411
-------- --------
Total Asset Retirement
Obligation, End of Period $285,125 $153,610
======== ========
Asset Retirement Obligation -
Current $ 2,265 $ 3,063
Asset Retirement Obligation -
Long-Term 282,860 150,547
-32-
2. TRANSACTIONS WITH RELATED PARTIES
---------------------------------
The Partnerships' partnership agreements (the "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, 2006, the following
payments were made to the General Partner or its affiliates by the
Partnerships:
Direct General Administrative
Partnership and Administrative Overhead
----------- ------------------- ---------------
III-A $ 3,927 $ 69,468
III-B 2,573 36,405
III-C 3,712 64,353
III-D 3,164 34,476
III-E 8,075 110,070
III-F 3,745 58,284
During the six months ended June 30, 2006, the following payments were
made to the General Partner or its affiliates by the Partnerships:
Direct General Administrative
Partnership and Administrative Overhead
----------- ------------------- ---------------
III-A $31,939 $138,936
III-B 28,664 72,810
III-C 31,351 128,706
III-D 29,064 68,952
III-E 38,373 220,140
III-F 31,028 116,568
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.
ACCRUED LIABILITY - OTHER
-------------------------
The Accrued Liability - Other at June 30, 2006 for the III-E Partnership
represents a charge accrued for the settlement of a lawsuit brought by a
royalty owner in the Karon Unit located in Live Oak County, Texas.
-33-
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 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.
-34-
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
----------- ------------------ ---------------
III-A November 22, 1989 $26,397,600
III-B January 24, 1990 13,833,600
III-C February 27, 1990 24,453,600
III-D September 5, 1990 13,100,800
III-E December 26, 1990 41,826,600
III-F March 7, 1991 22,148,400
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, 2006 and the net revenue
generated from future operations will provide sufficient working capital
to meet current and future obligations.
Occasional expenditures for new wells, well recompletions, or workovers
may reduce or eliminate cash available for a particular quarterly
distribution. During the six months ended June 30, 2006, capital
expenditures for the III-C and III-D Partnerships totaled $448,000 and
$359,000, respectively. These expenditures were primarily due to
recompletions of the Sugg AA 3 #1 and Sugg AA 3067 #1 wells located in
Irion County, Texas. The III-C and III-D Partnerships own working
interests of approximately 29.9% and 25.0%, respectively, in the Sugg AA 3
#1 well and 34.2% and 28.6%, respectively, in the Sugg AA 3067 #1 well.
Other capital expenditures incurred by the Partnerships during the six
months ended June 30, 2006 and 2005 were not material to the Partnerships'
cash flows.
Pursuant to the terms of the Partnership Agreements, the Partnerships were
initially scheduled to terminate on the dates indicated in the "Initial
Termination Date" column of the following chart. However, the Partnership
Agreements provide that the General Partner may extend the term of each
-35-
Partnership for up to five periods of two years each. As of the date of
this Quarterly Report, the General Partner has extended the terms of the
Partnerships for their fourth extension period. Therefore, the
Partnerships are currently scheduled to terminate on the dates indicated
in the "Current Termination Date" column of the following chart.
Initial Extensions Current
Partnership Termination Date Exercised Termination Date
----------- ----------------- --------- -----------------
III-A November 22, 1999 4 November 22, 2007
III-B January 24, 2000 4 December 31, 2007
III-C February 28, 2000 4 December 31, 2007
III-D September 5, 2000 4 December 31, 2007
III-E December 26, 2000 4 December 31, 2007
III-F March 7, 2001 4 December 31, 2007
As of the date of this Quarterly Report, the General Partner has not yet
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 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.
-36-
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 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 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.
ASSET RETIREMENT OBLIGATIONS
- ----------------------------
The Partnerships' wells must be properly plugged and abandoned after
their oil and gas reserves are exhausted. The Partnerships follow FAS
No. 143, "Accounting for Asset Retirement Obligations" in accounting
for the future expenditures that will be necessary to plug and abandon
these wells. FAS No. 143 requires the estimated plugging
-37-
and abandonment obligations to be (i) recognized in the period in which
they are incurred (i.e. when the well is drilled or acquired) if a
reasonable estimate of fair value can be made and (ii) capitalized as part
of the carrying amount of the well.
NEW ACCOUNTING PRONOUNCEMENTS
- -----------------------------
The Partnerships are not aware of any recently issued accounting
pronouncements that will impact the Partnerships' future results of
operations and financial position.
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
volumes to differ from the reserve reports prepared by the General
Partner.
-38-
III-A Partnership
-----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2005 96,735 3,483,848
Production ( 6,820) ( 97,516)
Extensions and discoveries 2 3,176
Revisions of previous
estimates ( 215) ( 53,212)
------ ---------
Proved reserves, March 31, 2006 89,702 3,336,296
Production ( 6,894) ( 84,764)
Extensions and discoveries 11 1,953
Revisions of previous
estimates 6,071 96,052
------ ---------
Proved reserves, June 30, 2006 88,890 3,349,537
====== =========
III-B Partnership
-----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2005 60,591 1,408,960
Production ( 4,850) ( 42,417)
Extensions and discoveries 1 1,341
Revisions of previous
estimates 1,364 ( 18,779)
------ ---------
Proved reserves, March 31, 2006 57,106 1,349,105
Production ( 4,739) ( 34,124)
Extensions and discoveries 3 497
Revisions of previous
estimates ( 581) ( 95,999)
------ ---------
Proved reserves, June 30, 2006 51,789 1,219,479
====== =========
-39-
III-C Partnership
-----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2005 89,290 4,704,441
Production ( 2,712) ( 158,163)
Extensions and discoveries 1,473 119,936
Revisions of previous
estimates 2,456 ( 109,182)
------ ---------
Proved reserves, March 31, 2006 90,507 4,557,032
Production ( 2,778) ( 133,924)
Extensions and discoveries 10,600 122,051
Revisions of previous
estimates ( 988) ( 321,340)
------ ---------
Proved reserves, June 30, 2006 97,341 4,223,819
====== =========
III-D Partnership
-----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2005 83,877 2,407,268
Production ( 2,291) ( 84,478)
Extensions and discoveries 1,215 96,460
Revisions of previous
estimates 658 ( 70,812)
------- ---------
Proved reserves, March 31, 2006 83,459 2,348,438
Production ( 2,407) ( 75,153)
Extensions and discoveries 8,815 78,491
Revisions of previous
estimates 1,200 ( 173,003)
------- ---------
Proved reserves, June 30, 2006 91,067 2,178,773
======= =========
-40-
III-E Partnership
-----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- ------------
Proved reserves, Dec. 31, 2005 150,195 5,309,709
Production ( 4,192) ( 154,777)
Extensions and discoveries 11 143,125
Revisions of previous
estimates ( 3,993) ( 83,964)
------- ---------
Proved reserves, March 31, 2006 142,021 5,214,093
Production ( 4,871) ( 147,749)
Revisions of previous
estimates ( 8,624) ( 286,325)
------- ---------
Proved reserves, June 30, 2006 128,526 4,780,019
======= =========
III-F Partnership
-----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2005 337,230 3,504,393
Production ( 5,130) ( 79,364)
Extensions and discoveries 7 20
Revisions of previous
estimates 13,117 ( 102,547)
------- ---------
Proved reserves, March 31, 2006 345,224 3,322,502
Production ( 4,562) ( 78,746)
Extensions and discoveries - 187
Revisions of previous
estimates 3,434 ( 312,390)
------- ---------
Proved reserves, June 30, 2006 344,096 2,931,553
======= =========
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
-41-
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, 2006, March 31, 2006, and
December 31, 2005. 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 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, 2006. There can be no assurance that the prices used in
calculating the net present value of the Partnerships' proved reserves at
June 30, 2006 will actually be realized for such production.
Net Present Value of Reserves
-----------------------------------------------
Partnership 6/30/06 3/31/06 12/31/05
----------- ----------- ----------- -----------
III-A $11,752,525 $13,164,434 $18,172,686
III-B 5,368,024 6,084,467 8,094,147
III-C 12,911,289 13,478,529 19,743,674
III-D 7,741,492 7,505,439 10,571,683
III-E 16,003,653 18,021,403 25,351,236
III-F 14,966,678 15,791,540 20,515,797
Oil and Gas Prices
-----------------------------------------------
Pricing 6/30/06 3/31/06 12/31/05
----------- ----------- ----------- -----------
Oil (Bbl) $ 73.94 $ 66.25 $ 61.06
Gas (Mcf) 6.09 7.18 10.08
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. 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
-42-
of net revenues is also highly dependent upon the prices received for oil
and gas sales, which are very volatile.
Additionally, lower 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 and the impact of weather- related
events;
* The availability of pipelines for transportation;
* Domestic and foreign government regulations and taxes; and
* Market expectations.
It is not possible to predict the future direction of oil or natural gas
prices or whether the above discussed trends will continue. Operating
costs, including General and Administrative Expenses, may not decline over
time, may increase, or may experience only a gradual decline, thus
adversely affecting net revenues. Net revenues may also be affected by
proceeds from property sales or additional costs resulting from well
workovers, recompletions, new well drilling, and other events.
In addition to pricing, 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. Despite this general
trend of declining production, several factors can cause volumes sold to
increase, remain relatively constant, or decrease at an even greater rate
over a given period. These factors include, but are not limited to:
* Geophysical conditions which cause an acceleration of the
decline in production;
* The shutting-in of oil and gas wells due to low oil and gas
prices (or the opening of previously shut-in wells due to high
oil and gas prices), mechanical difficulties, loss of a
market/transportation, or performance of workovers,
recompletions, or other operations in the well;
-43-
* Prior period volume adjustments made by the operators of
the properties;
* Adjustments in ownership or rights to production (such as
adjustments that occur at payout or due to gas balancing);
and
* Completion of enhanced recovery projects which increase
production for the well.
Many of these factors can be very significant for a single well or for
many wells over a short period of time. Due to the large number of wells
owned by the Partnerships, these factors are generally not material as
compared to the normal declines in production experienced on all remaining
wells.
III-A PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2005.
Three Months Ended June 30,
---------------------------
2006 2005
---------- ----------
Oil and gas sales $1,041,693 $1,136,402
Oil and gas production expenses $ 228,058 $ 213,974
Barrels produced 6,894 8,162
Mcf produced 84,764 105,753
Average price/Bbl $ 68.37 $ 52.45
Average price/Mcf $ 6.73 $ 6.70
As shown in the table above, total oil and gas sales decreased $95,000
(8.3%) for the three months ended June 30, 2006 as compared to the three
months ended June 30, 2005. Of this decrease $67,000 and $141,000 were
related to decreases in volumes of oil and gas sold. These decreases were
partially offset by an increase of $110,000 related to an increase in the
average price of oil sold.
Volumes of oil and gas sold decreased 1,268 barrels and 20,989 Mcf for the
three months ended June 30, 2006 as compared to the three months ended
June 30, 2005. The decrease in volumes of oil sold was primarily due to
(i) the shutting-in of one significant well during late 2005 through mid
2006 in order to perform an unsuccessful workover and (ii) normal declines
in production. As of the date of this Quarterly Report, the operator has
not yet determined when or if the shut-in well will return to production
and, if returned to production, at what rate. The decrease in volumes of
gas 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 three months ended June 30, 2005, and (iii)
the shutting-in of two significant wells during late 2005 through mid 2006
in order to perform workovers. As of the date of this Quarterly Report,
the operator has not yet
-44-
determined when or if the shut-in wells will return to production and, if
returned to production, at what rate.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $14,000 (6.6%) for the three months ended June
30, 2006 as compared to the three months ended June 30, 2005. This
increase was primarily due to workover expenses incurred on one
significant well during the three months ended June 30, 2006. This
increase was partially offset by (i) workover expenses incurred on several
other wells during the three months ended June 30, 2005 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
21.9% for the three months ended June 30, 2006 from 18.8% for the three
months ended June 30, 2005, primarily due to the decrease in oil and gas
sales and the dollar increase in production expenses.
Depreciation, depletion, and amortization ("DD&A") of oil and gas
properties increased $34,000 (147.1%) for the three months ended June 30,
2006 as compared to the three months ended June 30, 2005. Of this increase
(i) $7,000 was due to the depletion of additional capitalized costs of oil
and gas properties as a result of the upward revision in the estimate of
the asset retirement obligations during late 2005 and (ii) $2,000 was due
to accretion of these additional asset retirement obligations. Other
contributing factors to the increase were two significant wells being
fully depleted during the three months ended June 30, 2006 due to their
lack of remaining reserves. The increases in DD&A were partially offset by
the decreases in volumes of oil and gas sold. As a percentage of oil and
gas sales, this expense increased to 5.4% for the three months ended June
30, 2006 from 2.0% for the three months ended June 30, 2005, primarily due
to the dollar increase in DD&A.
General and administrative expenses remained relatively constant for the
three months ended June 30, 2006 and 2005. As a percentage of oil and gas
sales, these expenses increased to 7.0% for the three months ended June
30, 2006 from 6.5% for the three months ended June 30, 2005.
-45-
SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2005.
Six Months Ended June 30,
---------------------------
2006 2005
---------- ----------
Oil and gas sales $2,155,013 $2,170,098
Oil and gas production expenses $ 481,476 $ 576,322
Barrels produced 13,714 16,196
Mcf produced 182,280 214,240
Average price/Bbl $ 65.50 $ 48.95
Average price/Mcf $ 6.89 $ 6.43
As shown in the table above, total oil and gas sales remained relatively
constant for the six months ended June 30, 2006 and 2005. Sales increases
of $227,000 and $85,000 related to increases in the average prices of oil
and gas sold were substantially offset by decreases of $122,000 and
$205,000 related to decreases in volumes of oil and gas sold.
Volumes of oil and gas sold decreased 2,482 barrels and 31,960 Mcf for the
six months ended June 30, 2006 as compared to the six months ended June
30, 2005. The decrease in volumes of oil sold was primarily due to (i) the
shutting-in of one significant well during late 2005 through mid 2006 in
order to perform an unsuccessful workover and (ii) normal declines in
production. As of the date of this Quarterly Report, the operator has not
yet determined when or if the shut-in well will return to production and,
if returned to production, at what rate. 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 several wells
during the six months ended June 30, 2005, and (iii) the shutting-in of
several wells during late 2005 through mid 2006 in order to perform
workovers. As of the date of this Quarterly Report, the operator has not
yet determined when or if the shut-in wells will return to production and,
if returned to production, at what rate.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $95,000 (16.5%) for the six months ended June
30, 2006 as compared to the six months ended June 30, 2005. This decrease
was primarily due to (i) workover expenses incurred on several wells
during the six months ended June 30, 2005, (ii) a positive prior period
production tax adjustment made by the operator on one significant well
during the six months ended June 30, 2005, and (iii) a decrease in
saltwater disposal expenses incurred on several wells during the six
months ended June 30, 2006 as compared to the same period in 2005. As of
the date of this Quarterly Report, management anticipates that these
saltwater disposal expenses will remain at 2006 levels. These decreases
were partially offset by workover expenses
-46-
incurred on one significant well during the six months ended June 30,
2006. As a percentage of oil and gas sales, these expenses decreased to
22.3% for the six months ended June 30, 2006 from 26.6% for the six months
ended June 30, 2005, primarily due to the dollar decrease in production
expenses.
Depreciation, depletion, and amortization ("DD&A") of oil and gas
properties increased $37,000 (79.2%) for the six months ended June 30,
2006 as compared to the six months ended June 30, 2005. Of this increase
(i) $13,000 was due to the depletion of additional capitalized costs of
oil and gas properties as a result of the upward revision in the estimate
of the asset retirement obligations during late 2005 and (ii) $4,000 was
due to accretion of these additional asset retirement obligations. Other
contributing factors to the increase were two significant wells being
fully depleted during the six months ended June 30, 2006 due to their lack
of remaining reserves. The increases in DD&A were partially offset by the
decreases in volumes of oil and gas sold. As a percentage of oil and gas
sales, this expense increased to 3.9% for the six months ended June 30,
2006 from 2.2% for the six months ended June 30, 2005, primarily due to
the dollar increase in DD&A.
General and administrative expenses increased $2,000 (1.5%) for the six
months ended June 30, 2006 as compared to the six months ended June 30,
2005. As a percentage of oil and gas sales, these expenses increased to
7.9% for the six months ended June 30, 2006 from 7.8% for the six months
ended June 30, 2005.
The Limited Partners have received cash distributions through June 30,
2006 totaling $43,338,701 or 164.18% of Limited Partners' capital
contributions.
III-B PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2005.
Three Months Ended June 30,
---------------------------
2006 2005
-------- --------
Oil and gas sales $563,165 $605,293
Oil and gas production expenses $139,565 $118,014
Barrels produced 4,739 5,712
Mcf produced 34,124 45,921
Average price/Bbl $ 68.53 $ 52.35
Average price/Mcf $ 6.99 $ 6.67
As shown in the table above, total oil and gas sales decreased $42,000
(7.0%) for the three months ended June 30, 2006 as compared to the three
months ended June 30, 2005. Of this decrease $51,000 and $79,000 were
related to decreases in volumes of oil and gas sold. These decreases were
partially offset by increases of $77,000 and $11,000 related to increases
in the average prices of oil and gas sold.
-47-
Volumes of oil and gas sold decreased 973 barrels and 11,797 Mcf for the
three months ended June 30, 2006 as compared to the three months ended
June 30, 2005. The decrease in volumes of oil sold was primarily due to
(i) the shutting-in of one significant well during late 2005 through mid
2006 in order to perform an unsuccessful workover and (ii) normal declines
in production. As of the date of this Quarterly Report, the operator has
not yet determined when or if the shut-in well will return to production
and, if returned to production, at what rate. The decrease in volumes of
gas 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 three months ended June 30, 2005, and (iii)
the shutting-in of two significant wells during late 2005 through mid 2006
in order to perform workovers. As of the date of this Quarterly Report,
the operator has not yet determined when or if the shut-in wells will
return to production and, if returned to production, at what rate.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $22,000 (18.3%) for the three months ended
June 30, 2006 as compared to the three months ended June 30, 2005. This
increase was primarily due to workover expenses incurred on one
significant well during the three months ended June 30, 2006. This
increase was partially offset by (i) workover expenses incurred on several
other wells during the three months ended June 30, 2005 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
24.8% for the three months ended June 30, 2006 from 19.5% for the three
months ended June 30, 2005, primarily due to the dollar increase in
production expenses.
Depreciation, depletion, and amortization ("DD&A") of oil and gas
properties increased $22,000 (173.7%) for the three months ended June 30,
2006 as compared to the three months ended June 30, 2005. Of this increase
(i) $5,000 was due to the depletion of additional capitalized costs of oil
and gas properties as a result of the upward revision in the estimate of
the asset retirement obligations during late 2005 and (ii) $2,000 was due
to accretion of these additional asset retirement obligations. Other
contributing factors to the increase were two significant wells being
fully depleted during the three months ended June 30, 2006 due to their
lack of remaining reserves. The increases in DD&A were partially offset by
the decreases in volumes of oil and gas sold. As a percentage of oil and
gas sales, this expense increased to 6.0% for the three months ended June
30, 2006 from 2.1% for the three months ended June 30, 2005, primarily due
to the dollar increase in DD&A.
General and administrative expenses remained relatively constant for the
three months ended June 30, 2006 and 2005. As a percentage of oil and gas
sales, these expenses
-48-
increased to 6.9% for the three months ended June 30, 2006 from 6.5% for
the three months ended June 30, 2005.
SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2005.
Six Months Ended June 30,
-------------------------
2006 2005
---------- ----------
Oil and gas sales $1,153,636 $1,130,446
Oil and gas production expenses $ 295,009 $ 335,254
Barrels produced 9,589 11,110
Mcf produced 76,541 90,715
Average price/Bbl $ 65.21 $ 49.06
Average price/Mcf $ 6.90 $ 6.45
As shown in the table above, total oil and gas sales increased $23,000
(2.1%) for the six months ended June 30, 2006 as compared to the six
months ended June 30, 2005. Of this increase $155,000 and $34,000 were
related to increases in the average prices of oil and gas sold. These
increases were partially offset by decreases of $75,000 and $91,000
related to decreases in volumes of oil and gas sold.
Volumes of oil and gas sold decreased 1,521 barrels and 14,174 Mcf for the
six months ended June 30, 2006 as compared to the six months ended June
30, 2005. The decrease in volumes of oil sold was primarily due to (i) the
shutting-in of one significant well during late 2005 through mid 2006 in
order to perform an unsuccessful workover and (ii) normal declines in
production. As of the date of this Quarterly Report, the operator has not
yet determined when or if the shut-in well will return to production and,
if returned to production, at what rate. The decrease in volumes of gas
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 six months ended June 30, 2005, and (iii) the
shutting-in of several other wells during late 2005 through mid 2006 in
order to perform workovers. As of the date of this Quarterly Report, the
operator has not yet determined when or if the shut-in wells will return
to production and, if returned to production, at what rate.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $40,000 (12.0%) for the six months ended June
30, 2006 as compared to the six months ended June 30, 2005. This decrease
was primarily due to (i) workover expenses incurred on several wells
during the six months ended June 30, 2005, (ii) a positive prior period
production tax adjustment made by the operator on one significant well
during the six months ended June 30, 2005, and (iii) a decrease in
saltwater disposal expenses incurred on several wells during the six
months ended June 30, 2006 as compared to the same period in 2005. As of
the date of this Quarterly Report, management anticipates that these
-49-
saltwater disposal expenses will remain at 2006 levels. These decreases
were partially offset by workover expenses incurred on one significant
well during the six months ended June 30, 2006. As a percentage of oil and
gas sales, these expenses decreased to 25.6% for the six months ended June
30, 2006 from 29.7% for the six months ended June 30, 2005, primarily due
to the dollar decrease in production expenses.
Depreciation, depletion, and amortization ("DD&A") of oil and gas
properties increased $33,000 (192.8%) for the six months ended June 30,
2006 as compared to the six months ended June 30, 2005. Of this increase
(i) $9,000 was due to the depletion of additional capitalized costs of oil
and gas properties as a result of the upward revision in the estimate of
the asset retirement obligations during late 2005 and (ii) $3,000 was due
to accretion of these additional asset retirement obligations. Other
contributing factors to the increase were two significant wells being
fully depleted during the six months ended June 30, 2006 due to their lack
of remaining reserves. The increases in DD&A were partially offset by the
decreases in volumes of oil and gas sold. As a percentage of oil and gas
sales, this expense increased to 4.3% for the six months ended June 30,
2006 from 1.5% for the six months ended June 30, 2005, primarily due to
the dollar increase in DD&A.
General and administrative expenses increased $2,000 (2.1%) for the six
months ended June 30, 2006 as compared to the six months ended June 30,
2005. As a percentage of oil and gas sales, these expenses remained
constant at 8.8% for the six months ended June 30, 2006 and 2005.
The Limited Partners have received cash distributions through June 30,
2006 totaling $23,942,353 or 173.07% of Limited Partners' capital
contributions.
-50-
III-C PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2005.
Three Months Ended June 30,
---------------------------
2006 2005
---------- --------
Oil and gas sales $1,000,961 $982,319
Oil and gas production expenses $ 257,345 $152,545
Barrels produced 2,778 2,286
Mcf produced 133,924 143,514
Average price/Bbl $ 67.41 $ 50.81
Average price/Mcf $ 6.08 $ 6.04
As shown in the table above, total oil and gas sales increased $19,000
(1.9%) for the three months ended June 30, 2006 as compared to the three
months ended June 30, 2005. Of this increase (i) $46,000 and $6,000 were
related to increases in the average prices of oil and gas sold and (ii)
$25,000 was related to an increase in volumes of oil sold. These increases
were partially offset by a decrease of $58,000 related to a decrease in
volumes of gas sold.
Volumes of oil sold increased 492 barrels, while volumes of gas sold
decreased 9,590 Mcf for the three months ended June 30, 2006 as compared
to the three months ended June 30, 2005. The increase in volumes of oil
sold was primarily due to (i) an increase in production on one significant
well following its successful recompletion during early 2006 and (ii) the
successful completion of several new wells during 2005 and early 2006.
These increases were partially offset by normal declines in production.
The decrease in volumes of gas sold was primarily due to (i) normal
declines in production and (ii) positive prior period volume adjustments
made by the operators on several wells during the three months ended June
30, 2005. These decreases were partially offset by (i) the successful
completion of several new wells during 2005 and early 2006 and (ii)
increases in production on two significant wells following their
successful recompletions during early 2006.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $105,000 (68.7%) for the three months ended
June 30, 2006 as compared to the three months ended June 30, 2005. This
increase was primarily due to (i) a $50,000 decrease in lease operating
expenses during the three months ended June 30, 2005 resulting from a
decrease in the III-C Partnership's gas balancing position on several
wells, (ii) workover expenses incurred on several wells during the three
months ended June 30, 2006, and (iii) repair and maintenance expenses
incurred on several other wells during the three months ended June 30,
2006. These increases were partially offset by workover expenses incurred
on several other wells during the three
-51-
months ended June 30, 2005. As a percentage of oil and gas sales, these
expenses increased to 25.7% for the three months ended June 30, 2006 from
15.5% for the three months ended June 30, 2005, primarily due to the
dollar increase in production expenses.
Depreciation, depletion, and amortization ("DD&A") of oil and gas
properties increased $32,000 (77.1%) for the three months ended June 30,
2006 as compared to the three months ended June 30, 2005. This increase
was primarily due to (i) one significant well being fully depleted during
the three months ended June 30, 2006 due to its lack of remaining reserves
and (ii) downward revisions in the estimates of remaining gas reserves
since June 30, 2005. Other contributing factors to the increase were
increases of (i) $7,000 due to the depletion of additional capitalized
costs of oil and gas properties as a result of the upward revision in the
estimate of the asset retirement obligations during late 2005 and (ii)
$2,000 due to accretion of these additional asset retirement obligations.
The increases in DD&A were partially offset by another significant well
being fully depleted during the three months ended June 30, 2005 due to
its lack of remaining reserves. As a percentage of oil and gas sales, this
expense increased to 7.4% for the three months ended June 30, 2006 from
4.3% for the three months ended June 30, 2005, primarily due to the dollar
increase in DD&A.
General and administrative expenses remained relatively constant for the
three months ended June 30, 2006 and 2005. As a percentage of oil and gas
sales, these expenses decreased to 6.8% for the three months ended June
30, 2006 from 6.9% for the three months ended June 30, 2005.
SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2005.
Six Months Ended June 30,
---------------------------
2006 2005
---------- ----------
Oil and gas sales $2,233,942 $1,936,824
Oil and gas production expenses $ 533,220 $ 373,697
Barrels produced 5,490 4,755
Mcf produced 292,087 277,720
Average price/Bbl $ 64.65 $ 48.74
Average price/Mcf $ 6.43 $ 6.14
As shown in the table above, total oil and gas sales increased $297,000
(15.3%) for the six months ended June 30, 2006 as compared to the six
months ended June 30, 2005. Of this increase (i) $87,000 and $86,000 were
related to increases in the average prices of oil and gas sold and (ii)
$36,000 and $88,000 were related to increases in volumes of oil and gas
sold.
-52-
Volumes of oil and gas sold increased 735 barrels and 14,367 Mcf for the
six months ended June 30, 2006 as compared to the six months ended June
30, 2005. The increase in volumes of oil sold was primarily due to (i) an
increase in production on one significant well following its successful
recompletion during early 2006 and (ii) the successful completion of
several new wells during 2005 and early 2006. These increases were
partially offset by normal declines in production. The increase in volumes
of gas sold was primarily due to (i) the successful completion of several
new wells during 2005 and early 2006 and (ii) increases in production on
several other wells following their successful recompletions during early
2006. These increases were partially offset by normal declines in
production.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $160,000 (42.7%) for the six months ended June
30, 2006 as compared to the six months ended June 30, 2005. This increase
was primarily due to (i) workover expenses incurred on several wells
during the six months ended June 30, 2006, (ii) a $50,000 decrease in
lease operating expenses during the six months ended June 30, 2005
resulting from a decrease in the III-C Partnership's gas balancing
position on several wells, and (iii) repair and maintenance expenses
incurred on several other wells during the six months ended June 30, 2006.
These increases were partially offset by workover expenses incurred on
several wells during the six months ended June 30, 2005. As a percentage
of oil and gas sales, these expenses increased to 23.9% for the six months
ended June 30, 2006 from 19.3% for the six months ended June 30, 2005,
primarily due to the dollar increase in production expenses.
Depreciation, depletion, and amortization ("DD&A") of oil and gas
properties increased $35,000 (36.9%) for the six months ended June 30,
2006 as compared to the six months ended June 30, 2005. Of this increase
(i) $11,000 was due to the depletion of additional capitalized costs of
oil and gas properties as a result of the upward revision in the estimate
of the asset retirement obligations during late 2005 and (ii) $4,000 was
due to accretion of these additional asset retirement obligations. Other
contributing factors to the increase were (i) one significant well being
fully depleted during the six months ended June 30, 2006 due to its lack
of remaining reserves and (ii) an increase in depletable oil and gas
properties during the six months ended June 30, 2006 primarily due to the
recompletion of another significant well. The increases in DD&A were
partially offset by one significant well being fully depleted during the
six months ended June 30, 2005 due to its lack of remaining reserves. As a
percentage of oil and gas sales, this expense increased to 5.7% for the
six months ended June 30, 2006 from 4.8% for the six months ended June 30,
2005, primarily due to the dollar increase in DD&A.
-53-
General and administrative expenses increased $2,000 (1.5%) for the six
months ended June 30, 2006 as compared to the six months ended June 30,
2005. As a percentage of oil and gas sales, these expenses decreased to
7.2% for the six months ended June 30, 2006 from 8.1% for the six months
ended June 30, 2005, primarily due to the increase in oil and gas sales.
The Limited Partners have received cash distributions through June 30,
2006 totaling $32,710,795 or 133.77% of Limited Partners' capital
contributions.
III-D PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2005.
Three Months Ended June 30,
---------------------------
2006 2005
-------- --------
Oil and gas sales $585,954 $557,045
Oil and gas production expenses $138,288 $ 89,224
Barrels produced 2,407 2,101
Mcf produced 75,153 75,890
Average price/Bbl $ 66.82 $ 49.88
Average price/Mcf $ 5.66 $ 5.96
As shown in the table above, total oil and gas sales increased $29,000
(5.2%) for the three months ended June 30, 2006 as compared to the three
months ended June 30, 2005. Of this increase (i) $41,000 was related to an
increase in the average price of oil sold and (ii) $15,000 was related to
an increase in volumes of oil sold. These increases were partially offset
by decreases of (i) $23,000 related to a decrease in the average price of
gas sold and (ii) $4,000 related to a decrease in volumes of gas sold.
Volumes of oil sold increased 306 barrels, while volumes of gas sold
decreased 737 Mcf for the three months ended June 30, 2006 as compared to
the three months ended June 30, 2005. The increase in volumes of oil sold
was primarily due to (i) an increase in production on one significant well
following its successful recompletion during early 2006 and (ii) the
successful completion of several new wells during 2005 and early 2006.
These increases were partially offset by normal declines in production.
The decrease in volumes of gas sold was primarily due to (i) positive
prior period volume adjustments made by the operators on several wells
during the three months ended June 30, 2005 and (ii) normal declines in
production. These decreases were partially offset by (i) the successful
completion of several new wells during 2005 and early 2006 and (ii)
increases in production on two significant wells following their
successful recompletions during early 2006.
-54-
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $49,000 (55.0%) for the three months ended
June 30, 2006 as compared to the three months ended June 30, 2005. This
increase was primarily due to (i) a $34,000 decrease in lease operating
expense during the three months ended June 30, 2005 resulting from a
decrease in the III-D Partnership's gas balancing position on several
wells, (ii) a positive prior period lease operating expense adjustment
made on one significant well during the three months ended June 30, 2006,
and (iii) workover expenses incurred on another significant well during
the three months ended June 30, 2006. These increases were partially
offset by workover expenses incurred on two significant wells during the
three months ended June 30, 2005. As a percentage of oil and gas sales,
these expenses increased to 23.6% for the three months ended June 30, 2006
from 16.0% for the three months ended June 30, 2005, primarily due to the
dollar increase in production expenses.
Depreciation, depletion, and amortization ("DD&A") of oil and gas
properties increased $15,000 (64.1%) for the three months ended June 30,
2006 as compared to the three months ended June 30, 2005. This increase
was primarily due to (i) one significant well being fully depleted during
the three months ended June 30, 2006 due to its lack of remaining reserves
and (ii) an increase in depletable oil and gas properties during the three
months ended June 30, 2006 primarily due to the recompletion of another
significant well. Other contributing factors to the increase were
increases of (i) $3,000 due to the depletion of additional capitalized
costs of oil and gas properties as a result of the upward revision in the
estimate of the asset retirement obligations during late 2005 and (ii)
$1,000 due to accretion of these additional asset retirement obligations.
The increases in DD&A were partially offset by an increase in depletable
oil and gas properties during 2005 primarily due to the recompletion of
one significant well. As a percentage of oil and gas sales, this expense
increased to 6.4% for the three months ended June 30, 2006 from 4.1% for
the three months ended June 30, 2005, primarily due to the dollar increase
in DD&A.
General and administrative expenses remained relatively constant for the
three months ended June 30, 2006 and 2005. As a percentage of oil and gas
sales, these expenses decreased to 6.4% for the three months ended June
30, 2006 from 6.7% for the three months ended June 30, 2005.
-55-
SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2005.
Six Months Ended June 30,
---------------------------
2006 2005
---------- ----------
Oil and gas sales $1,300,940 $1,092,106
Oil and gas production expenses $ 306,634 $ 213,947
Barrels produced 4,698 4,500
Mcf produced 159,631 152,605
Average price/Bbl $ 63.64 $ 47.61
Average price/Mcf $ 6.28 $ 5.75
As shown in the table above, total oil and gas sales increased $209,000
(19.1%) for the six months ended June 30, 2006 as compared to the six
months ended June 30, 2005. Of this increase (i) $75,000 and $84,000 were
related to increases in the average prices of oil and gas sold and (ii)
$10,000 and $40,000 were related to increases in volumes of oil and gas
sold.
Volumes of oil and gas sold increased 198 barrels and 7,026 Mcf for the
six months ended June 30, 2006 as compared to the six months ended June
30, 2005. The increase in volumes of oil sold was primarily due to (i) an
increase in production on one significant well following its successful
recompletion during early 2006 and (ii) the successful completion of
several new wells during 2005 and early 2006. These increases were
partially offset by normal declines in production. The increase in volumes
of gas sold was primarily due to (i) the successful completion of several
new wells during 2005 and early 2006 and (ii) increases in production on
several other wells following their successful recompletions during early
2006. These increases were partially offset by normal declines in
production.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $93,000 (43.3%) for the six months ended June
30, 2006 as compared to the six months ended June 30, 2005. This increase
was primarily due to (i) a $34,000 decrease in lease operating expenses
during the six months ended June 30, 2005 resulting from a decrease in the
III-D Partnership's gas balancing position on several wells, (ii) a
positive prior period lease operating expense adjustment made on one
significant well during the six months ended June 30, 2006, and (iii)
repair and maintenance expenses incurred on several other wells during the
six months ended June 30, 2006. These increases were partially offset by
workover expenses incurred on two significant wells during the six months
ended June 30, 2005. As a percentage of oil and gas sales, these expenses
increased to 23.6% for the six months ended June 30, 2006 from 19.6% for
the six months ended June 30, 2005, primarily due to the dollar increase
in production expenses.
-56-
Depreciation, depletion, and amortization ("DD&A") of oil and gas
properties increased $31,000 (77.1%) for the six months ended June 30,
2006 as compared to the six months ended June 30, 2005. This increase was
primarily due to (i) an increase in depletable oil and gas properties
during the six months ended June 30, 2006 primarily due to the
recompletion of two significant wells and (ii) one significant well being
fully depleted during the six months ended June 30, 2006 due to the lack
of remaining reserves. Other contributing factors to the increase were
increases of (i) $6,000 due to the depletion of additional capitalized
costs of oil and gas properties as a result of the upward revision in the
estimate of the asset retirement obligations during late 2005 and (ii)
$2,000 due to accretion of these additional asset retirement obligations.
The increases in DD&A were partially offset by an increase in depletable
oil and gas properties during 2005 primarily due to the recompletion of
one significant well. As a percentage of oil and gas sales, this expense
increased to 5.4% for the six months ended June 30, 2006 from 3.7% for the
six months ended June 30, 2005, primarily due to the dollar increase in
DD&A.
General and administrative expenses increased $3,000 (2.6%) for the six
months ended June 30, 2006 as compared to the six months ended June 30,
2005. As a percentage of oil and gas sales, these expenses decreased to
7.5% for the six months ended June 30, 2006 from 8.7% for the six months
ended June 30, 2005, primarily due to the increase in oil and gas sales.
The Limited Partners have received cash distributions through June 30,
2006 totaling $18,225,669 or 139.12% of Limited Partners' capital
contributions.
III-E PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2005.
Three Months Ended June 30,
---------------------------
2006 2005
---------- ----------
Oil and gas sales $1,125,106 $1,353,943
Oil and gas production expenses $ 250,540 $ 307,948
Barrels produced 4,871 6,195
Mcf produced 147,749 172,213
Average price/Bbl $ 60.61 $ 47.24
Average price/Mcf $ 5.62 $ 6.16
As shown in the table above, total oil and gas sales decreased $229,000
(16.9%) for the three months ended June 30, 2006 as compared to the three
months ended June 30, 2005. Of this decrease (i) $62,000 and $151,000 were
related to decreases in volumes of oil and gas sold and (ii) $81,000 was
related to a decrease in the average price of
-57-
gas sold. These decreases were partially offset by an increase of
$65,000 related to an increase in the average price of oil sold.
Volumes of oil and gas sold decreased 1,324 barrels and 24,464 Mcf for the
three months ended June 30, 2006 as compared to the three months ended
June 30, 2005. 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) the shutting-in
of two significant wells during early to mid 2006 in order to perform
workovers, and (iii) another significant well being temporarily shut-in
during the three months ended June 30, 2006 due to low well pressure. As
of the date of this Quarterly Report, two of the shut-in wells have
returned to production at a higher rate than previously experienced and
the third shut-in well is producing at a lower rate than previously
experienced. These decreases were partially offset by an increase in
production on one significant well following its successful recompletion
during early 2006.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $57,000 (18.6%) for the three months ended
June 30, 2006 as compared to the three months ended June 30, 2005. This
decrease was primarily due to (i) a $76,000 decrease in lease operating
expenses during the three months ended June 30, 2006 resulting from a
decrease in the III-E Partnership's gas balancing position on several
wells, (ii) a decrease in production taxes associated with the decrease in
oil and gas sales, and (iii) workover expenses incurred on one significant
well during the three months ended June 30, 2005. These decreases were
partially offset by workover expenses incurred on several other wells
during the three months ended June 30, 2006. As a percentage of oil and
gas sales, these expenses decreased to 22.3% for the three months ended
June 30, 2006 from 22.7% for the three months ended June 30, 2005.
Depreciation, depletion, and amortization ("DD&A") of oil and gas
properties increased $19,000 (44.6%) for the three months ended June 30,
2006 as compared to the three months ended June 30, 2005. This increase
was primarily due to (i) downward revisions in the estimates of remaining
oil and gas reserves since June 30, 2005 and (ii) an increase in
depletable oil and gas properties during the three months ended June 30,
2006 primarily due to the recompletion of one significant well. Other
contributing factors to the increase were increases of (i) $9,000 due to
the depletion of additional capitalized costs of oil and gas properties as
a result of the upward revision in the estimate of the asset retirement
obligations during late 2005 and (ii) $3,000 due to accretion of these
additional asset retirement obligations. The increases in DD&A were
partially offset by (i) an increase in depletable oil and gas properties
during 2005 primarily due to the recompletion of one significant
-58-
well and (ii) the decreases in volumes of oil and gas sold. As a
percentage of oil and gas sales, this expense increased to 5.4% for the
three months ended June 30, 2006 from 3.1% for the three months ended June
30, 2005, primarily due to the dollar increase in DD&A.
General and administrative expenses increased $1,000 (1.0%) for the three
months ended June 30, 2006 as compared to the three months ended June 30,
2005. As a percentage of oil and gas sales, these expenses increased to
10.5% for the three months ended June 30, 2006 from 8.6% for the three
months ended June 30, 2005, primarily due to the decrease in oil and gas
sales.
SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2005.
Six Months Ended June 30,
---------------------------
2006 2005
---------- ----------
Oil and gas sales $2,424,884 $2,570,627
Oil and gas production expenses $ 564,186 $ 666,916
Barrels produced 9,063 12,380
Mcf produced 302,526 344,436
Average price/Bbl $ 59.99 $ 45.37
Average price/Mcf $ 6.22 $ 5.83
As shown in the table above, total oil and gas sales decreased $146,000
(5.7%) for the six months ended June 30, 2006 as compared to the six
months ended June 30, 2005. Of this decrease $151,000 and $244,000 were
related to decreases in volumes of oil and gas sold. These decreases were
partially offset by increases of $132,000 and $117,000 related to
increases in the average prices of oil and gas sold.
Volumes of oil and gas sold decreased 3,317 barrels and 41,910 Mcf for the
six months ended June 30, 2006 as compared to the six months ended June
30, 2005. 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) the shutting-in of two
significant wells during early to mid 2006 in order to perform workovers,
and (iii) another significant well being temporarily shut-in during the
six months ended June 30, 2006 due to low well pressure. As of the date of
this Quarterly Report, two of the shut-in wells have returned to
production at a higher rate than previously experienced and the third
shut-in well is producing at a lower rate than previously experienced.
These decreases were partially offset by an increase in production on one
significant well following its successful recompletion during early 2006.
-59-
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $103,000 (15.4%) for the six months ended June
30, 2006 as compared to the six months ended June 30, 2005. This decrease
was primarily due to (i) a $76,000 decrease in lease operating expenses
during the six months ended June 30, 2006 resulting from a decrease in the
III-E Partnership's gas balancing position on several wells, (ii) workover
expenses incurred on one significant well during the six months ended June
30, 2005, and (iii) a decrease in production taxes associated with the
decrease in oil and gas sales. These decreases were partially offset by
workover expenses incurred on several other wells during the six months
ended June 30, 2006. As a percentage of oil and gas sales, these expenses
decreased to 23.3% for the six months ended June 30, 2006 from 25.9% for
the six months ended June 30, 2005, primarily due to the dollar decrease
in production expenses.
Depreciation, depletion, and amortization ("DD&A") of oil and gas
properties increased $47,000 (54.4%) for the six months ended June 30,
2006 as compared to the six months ended June 30, 2005. This increase was
primarily due to (i) downward revisions in the estimates of remaining oil
and gas reserves since June 30, 2005 and (ii) an increase in depletable
oil and gas properties during the six months ended June 30, 2006 primarily
due to the recompletion of one significant well. Other contributing
factors to the increase were increases of (i) $15,000 due to the depletion
of additional capitalized costs of oil and gas properties as a result of
the upward revision in the estimate of the asset retirement obligations
during late 2005 and (ii) $6,000 due to accretion of these additional
asset retirement obligations. The increases in DD&A were partially offset
by (i) the decreases in volumes of oil and gas sold and (ii) an increase
in depletable oil and gas properties during 2005 primarily due to the
recompletion of one significant well. As a percentage of oil and gas
sales, this expense increased to 5.5% for the six months ended June 30,
2006 from 3.3% for the six months ended June 30, 2005, primarily due to
the dollar increase in DD&A.
General and administrative expenses increased $4,000 (1.6%) for the six
months ended June 30, 2006 as compared to the six months ended June 30,
2005. As a percentage of oil and gas sales, these expenses increased to
10.7% for the six months ended June 30, 2006 from 9.9% for the six months
ended June 30, 2005.
The Limited Partners have received cash distributions through June 30,
2006 totaling $53,944,016 or 128.97% of Limited Partners' capital
contributions.
-60-
III-F PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2005.
Three Months Ended June 30,
---------------------------
2006 2005
-------- --------
Oil and gas sales $733,032 $811,137
Oil and gas production expenses $197,757 $163,071
Barrels produced 4,562 4,989
Mcf produced 78,746 89,254
Average price/Bbl $ 65.94 $ 52.40
Average price/Mcf $ 5.49 $ 6.16
As shown in the table above, total oil and gas sales decreased $78,000
(9.6%) for the three months ended June 30, 2006 as compared to the three
months ended June 30, 2005. Of this decrease (i) $22,000 and $65,000 were
related to decreases in volumes of oil and gas sold and (ii) $53,000 was
related to a decrease in the average price of gas sold. These decreases
were partially offset by an increase of $62,000 related to an increase in
the average price of oil sold.
Volumes of oil and gas sold decreased 427 barrels and 10,508 Mcf for the
three months ended June 30, 2006 as compared to the three months ended
June 30, 2005. 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) the shutting-in
of two significant wells during early to mid 2006 in order to perform
workovers, and (iii) another significant well being temporarily shut-in
during the three months ended June 30, 2006 due to low well pressure. As
of the date of this Quarterly Report, two of the shut-in wells have
returned to production at a higher rate than previously experienced and
the third shut-in well is producing at a lower rate than previously
experienced.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $35,000 (21.3%) for the three months ended
June 30, 2006 as compared to the three months ended June 30, 2005. This
increase was primarily due to (i) workover expenses incurred on several
wells during the three months ended June 30, 2006, (ii) positive prior
period production tax adjustments on two significant wells during the
three months ended June 30, 2006, and (iii) repair and maintenance
expenses incurred on another significant well during the three months
ended June 30, 2006. As a percentage of oil and gas sales, these expenses
increased to 27.0% for the three months ended June 30, 2006 from 20.1% for
the three months ended June 30, 2005, primarily due to the dollar increase
in production expenses.
-61-
Depreciation, depletion, and amortization ("DD&A") of oil and gas
properties increased $10,000 (24.5%) for the three months ended June 30,
2006 as compared to the three months ended June 30, 2005. This increase
was primarily due to downward revisions in the estimates of remaining gas
reserves since June 30, 2005. Other contributing factors to the increase
were increases of (i) $4,000 due to the depletion of additional
capitalized costs of oil and gas properties as a result of the upward
revision in the estimate of the asset retirement obligations during late
2005 and (ii) $1,000 due to accretion of these additional asset retirement
obligations. The increases in DD&A were partially offset by (i) an
increase in depletable oil and gas properties during 2005 primarily due to
the recompletion of one significant well and (ii) the decreases in volumes
of oil and gas sold. As a percentage of oil and gas sales, this expense
increased to 6.8% for the three months ended June 30, 2006 from 5.0% for
the three months ended June 30, 2005, primarily due to the dollar increase
in DD&A.
General and administrative expenses remained relatively constant for the
three months ended June 30, 2006 and 2005. As a percentage of oil and gas
sales, these expenses increased to 8.5% for the three months ended June
30, 2006 from 7.7% for the three months ended June 30, 2005, primarily due
to the decrease in oil and gas sales.
SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2005.
Six Months Ended June 30,
-------------------------
2006 2005
---------- ----------
Oil and gas sales $1,594,898 $1,631,089
Oil and gas production expenses $ 416,947 $ 370,921
Barrels produced 9,692 10,378
Mcf produced 158,110 189,504
Average price/Bbl $ 62.14 $ 49.42
Average price/Mcf $ 6.28 $ 5.90
As shown in the table above, total oil and gas sales decreased $36,000
(2.2%) for the six months ended June 30, 2006 as compared to the six
months ended June 30, 2005. Of this decrease $34,000 and $185,000 were
related to decreases in volumes of oil and gas sold. These decreases were
partially offset by increases of $123,000 and $60,000 related to increases
in the average prices of oil and gas sold.
-62-
Volumes of oil and gas sold decreased 686 barrels and 31,394 Mcf for the
six months ended June 30, 2006 as compared to the six months ended June
30, 2005. 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) the shutting-in of two
significant wells during early to mid 2006 in order to perform workovers,
and (iii) another significant well being temporarily shut-in during the
six months ended June 30, 2006 due to low well pressure. As of the date of
this Quarterly Report, two of the shut-in wells have returned to
production at a higher rate than previously experienced and the third
shut-in well is producing at a lower rate than previously experienced.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $46,000 (12.4%) for the six months ended June
30, 2006 as compared to the six months ended June 30, 2005. This increase
was primarily due to (i) workover expenses incurred on several wells
during the six months ended June 30, 2006, (ii) positive prior period
production tax adjustments on two significant wells during the six months
ended June 30, 2006, and (iii) repair and maintenance expenses incurred on
another significant well during the six months ended June 30, 2006. As a
percentage of oil and gas sales, these expenses increased to 26.1% for the
six months ended June 30, 2006 from 22.7% for the six months ended June
30, 2005, primarily due to the dollar increase in production expenses.
Depreciation, depletion, and amortization ("DD&A") of oil and gas
properties increased $16,000 (21.3%) for the six months ended June 30,
2006 as compared to the six months ended June 30, 2005. This increase was
primarily due to downward revisions in the estimates of remaining gas
reserves since June 30, 2005. Other contributing factors to the increase
were increases of (i) $7,000 due to the depletion of additional
capitalized costs of oil and gas properties as a result of the upward
revision in the estimate of the asset retirement obligations during late
2005 and (ii) $3,000 due to accretion of these additional asset retirement
obligations. The increases in DD&A were partially offset by (i) the
decreases in volumes of oil and gas sold and (ii) an increase in
depletable oil and gas properties during 2005 primarily due to the
recompletion of one significant well. As a percentage of oil and gas
sales, this expense increased to 5.9% for the six months ended June 30,
2006 from 4.7% for the six months ended June 30, 2005, primarily due to
the dollar increase in DD&A.
General and administrative expenses increased $2,000 (1.6%) for the six
months ended June 30, 2006 as compared to the six months ended June 30,
2005. As a percentage of oil and gas sales, these expenses increased to
9.3% for the six months ended June 30, 2006 from 8.9% for the six months
ended June 30, 2005.
-63-
The Limited Partners have received cash distributions through June 30,
2006 totaling $23,273,904 or 105.08% of Limited Partners' capital
contributions.
-64-
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnerships do not hold any market risk sensitive instruments.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the 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.
-65-
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS
31.1 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the III-A Partnership.
31.2 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the III-A Partnership.
31.3 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the III-B Partnership.
31.4 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the III-B Partnership.
31.5 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the III-C Partnership.
31.6 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the III-C Partnership.
31.7 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the III-D Partnership.
31.8 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the III-D Partnership.
31.9 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the III-E Partnership.
31.10 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the III-E Partnership.
31.11 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the III-F Partnership.
31.12 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the III-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 III-A Partnership.
-66-
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 III-B 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 III-C Partnership.
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 III-D Partnership.
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 III-E Partnership.
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 III-F Partnership.
-67-
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 III-A
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
(Registrant)
BY: GEODYNE RESOURCES, INC.
General Partner
Date: August 14, 2006 By: /s/Dennis R. Neill
--------------------------------
(Signature)
Dennis R. Neill
President
Date: August 14, 2006 By: /s/Craig D. Loseke
--------------------------------
(Signature)
Craig D. Loseke
Chief Accounting Officer
-68-
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 III-A.
31.2 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-A.
31.3 Certification Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-B.
31.4 Certification Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-B.
31.5 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-C.
31.6 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-C.
31.7 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-D.
31.8 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-D.
31.9 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-E.
31.10 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-E.
31.11 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-F.
31.12 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-F.
-69-
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 III-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 III-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 III-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 III-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 III-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 III-F.
-70-