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:
P-1: 0-17800 P-4: 0-18308 P-6: 0-18937
P-3: 0-18306 P-5: 0-18637
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-6
---------------------------------------------------------------------
(Exact Name of Registrant as specified in its Articles)
P-1 73-1330245
P-3 73-1336573
P-1: Texas P-4 73-1341929
P-3 through P-6: P-5 73-1353774
Oklahoma P-6 73-1357375
---------------------------- -------------------------------
(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 INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP
GEODYNE NPI PARTNERSHIP P-1
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2006 2005
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 657,597 $ 595,286
Accounts receivable:
Net Profits 171,799 320,323
---------- ----------
Total current assets $ 829,396 $ 915,609
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 674,946 690,032
---------- ----------
$1,504,342 $1,605,641
========== ==========
PARTNERS' CAPITAL (DEFICIT)
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 43,132) ($ 29,401)
Limited Partners, issued and
outstanding, 108,074 units 1,547,474 1,635,042
---------- ----------
Total Partners' capital $1,504,342 $1,605,641
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-3-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP
GEODYNE NPI PARTNERSHIP P-1
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
-------- --------
REVENUES:
Net Profits $537,029 $439,476
Interest income 4,562 1,867
-------- --------
$541,591 $441,343
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 18,594 $ 17,789
General and administrative
(Note 2) 30,705 30,826
-------- --------
$ 49,299 $ 48,615
-------- --------
NET INCOME $492,292 $392,728
======== ========
GENERAL PARTNER - NET INCOME $ 50,447 $ 40,687
======== ========
LIMITED PARTNERS - NET INCOME $441,845 $352,041
======== ========
NET INCOME per unit $ 4.09 $ 3.25
======== ========
UNITS OUTSTANDING 108,074 108,074
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-4-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP
GEODYNE NPI PARTNERSHIP P-1
COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
---------- --------
REVENUES:
Net Profits $1,051,251 $988,923
Interest income 8,993 3,432
---------- --------
$1,060,244 $992,355
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 42,888 $ 33,217
General and administrative
(Note 2) 84,697 82,638
---------- --------
$ 127,585 $115,855
---------- --------
NET INCOME $ 932,659 $876,500
========== ========
GENERAL PARTNER - NET INCOME $ 96,227 $ 90,296
========== ========
LIMITED PARTNERS - NET INCOME $ 836,432 $786,204
========== ========
NET INCOME per unit $ 7.74 $ 7.27
========== ========
UNITS OUTSTANDING 108,074 108,074
========== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-5-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP
GEODYNE NPI PARTNERSHIP P-1
COMBINED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
------------ ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 932,659 $876,500
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depletion of Net Profits
Interests 42,888 33,217
Settlement of asset retirement
obligation ( 228) -
Net change in accounts receivable/
accounts payable - Net Profits 142,355 ( 201,722)
---------- --------
Net cash provided by operating
activities $1,117,674 $707,995
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 21,405) ($ 14,027)
---------- --------
Net cash used by investing activities ($ 21,405) ($ 14,027)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($1,033,958) ($676,602)
---------- --------
Net cash used by financing
activities ($1,033,958) ($676,602)
---------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 62,311 $ 17,366
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 595,286 448,368
---------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 657,597 $465,734
========== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-6-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3
GEODYNE NPI PARTNERSHIP P-3
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2006 2005
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 931,651 $ 885,655
Accounts receivable:
Net Profits 236,916 460,877
---------- ----------
Total current assets $1,168,567 $1,346,532
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 1,035,244 1,058,322
---------- ----------
$2,203,811 $2,404,854
========== ==========
PARTNERS' CAPITAL (DEFICIT)
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 26,559) ($ 4,259)
Limited Partners, issued and
outstanding, 169,637 units 2,230,370 2,409,113
---------- ----------
Total Partners' capital $2,203,811 $2,404,854
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-7-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3
GEODYNE NPI PARTNERSHIP P-3
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
-------- --------
REVENUES:
Net Profits $754,885 $637,978
Interest income 6,878 2,859
-------- --------
$761,763 $640,837
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 26,195 $ 23,322
General and administrative
(Note 2) 47,527 47,643
-------- --------
$ 73,722 $ 70,965
-------- --------
NET INCOME $688,041 $569,872
======== ========
GENERAL PARTNER - NET INCOME $ 70,474 $ 58,800
======== ========
LIMITED PARTNERS - NET INCOME $617,567 $511,072
======== ========
NET INCOME per unit $ 3.64 $ 3.01
======== ========
UNITS OUTSTANDING 169,637 169,637
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-8-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3
GEODYNE NPI PARTNERSHIP P-3
COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
---------- ----------
REVENUES:
Net Profits $1,491,950 $1,425,534
Interest income 13,544 5,119
---------- ----------
$1,505,494 $1,430,653
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 58,841 $ 51,548
General and administrative
(Note 2) 118,655 116,458
---------- ----------
$ 177,496 $ 168,006
---------- ----------
NET INCOME $1,327,998 $1,262,647
========== ==========
GENERAL PARTNER - NET INCOME $ 136,741 $ 130,392
========== ==========
LIMITED PARTNERS - NET INCOME $1,191,257 $1,132,255
========== ==========
NET INCOME per unit $ 7.02 $ 6.67
========== ==========
UNITS OUTSTANDING 169,637 169,637
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-9-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3
GEODYNE NPI PARTNERSHIP P-3
COMBINED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,327,998 $1,262,647
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depletion of Net Profits
Interests 58,841 51,548
Settlement of asset retirement
obligation ( 285) -
Net change in accounts receivable/
accounts payable - Net Profits 216,510 ( 263,065)
---------- ----------
Net cash provided by operating
activities $1,603,064 $1,051,130
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 28,027) ($ 21,853)
---------- ----------
Net cash used by investing
activities ($ 28,027) ($ 21,853)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($1,529,041) ($ 958,613)
---------- ----------
Net cash used by financing
activities ($1,529,041) ($ 958,613)
---------- ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 45,996 $ 70,664
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 885,655 633,196
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 931,651 $ 703,860
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-10-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4
GEODYNE NPI PARTNERSHIP P-4
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2006 2005
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 487,559 $ 599,645
Accounts receivable:
Net Profits 172,466 304,105
---------- ----------
Total current assets $ 660,025 $ 903,750
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 364,460 401,259
---------- ----------
$1,024,485 $1,305,009
========== ==========
PARTNERS' CAPITAL (DEFICIT)
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 63,425) ($ 43,366)
Limited Partners, issued and
outstanding, 126,306 units 1,087,910 1,348,375
---------- ----------
Total Partners' capital $1,024,485 $1,305,009
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-11-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4
GEODYNE NPI PARTNERSHIP P-4
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
-------- --------
REVENUES:
Net Profits $405,997 $445,650
Interest income 4,304 2,001
-------- --------
$410,301 $447,651
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 26,672 $ 11,015
General and administrative
(Note 2) 35,653 35,807
-------- --------
$ 62,325 $ 46,822
-------- --------
NET INCOME $347,976 $400,829
======== ========
GENERAL PARTNER - NET INCOME $ 36,767 $ 40,874
======== ========
LIMITED PARTNERS - NET INCOME $311,209 $359,955
======== ========
NET INCOME per unit $ 2.47 $ 2.85
======== ========
UNITS OUTSTANDING 126,306 126,306
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-12-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4
GEODYNE NPI PARTNERSHIP P-4
COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
-------- --------
REVENUES:
Net Profits $842,839 $791,277
Interest income 8,789 3,860
-------- --------
$851,628 $795,137
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 39,962 $ 22,765
General and administrative
(Note 2) 94,719 92,653
-------- --------
$134,681 $115,418
-------- --------
NET INCOME $716,947 $679,719
======== ========
GENERAL PARTNER - NET INCOME $ 74,412 $ 69,635
======== ========
LIMITED PARTNERS - NET INCOME $642,535 $610,084
======== ========
NET INCOME per unit $ 5.09 $ 4.83
======== ========
UNITS OUTSTANDING 126,306 126,306
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-13-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4
GEODYNE NPI PARTNERSHIP P-4
COMBINED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $716,947 $679,719
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depletion of Net Profits
Interests 39,962 22,765
Net change in accounts receivable/
accounts payable - Net Profits 134,722 ( 28,365)
-------- --------
Net cash provided by operating
activities $891,631 $674,119
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 6,246) ($ 7,311)
-------- --------
Net cash used by investing
activities ($ 6,246) ($ 7,311)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($997,471) ($699,514)
-------- --------
Net cash used by financing
activities ($997,471) ($699,514)
-------- --------
NET DECREASE IN CASH AND CASH
EQUIVALENTS ($112,086) ($ 32,706)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 599,645 510,213
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $487,559 $477,507
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-14-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5
GEODYNE NPI PARTNERSHIP P-5
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2006 2005
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 429,376 $ 479,513
Accounts receivable:
Net Profits - 76,668
---------- ----------
Total current assets $ 429,376 $ 556,181
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 828,152 639,293
---------- ----------
$1,257,528 $1,195,474
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable:
Net Profits $ 6,829 $ -
---------- ----------
Total current liabilities $ 6,829 $ -
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 38,936) ($ 33,844)
Limited Partners, issued and
outstanding, 118,449 units 1,289,635 1,229,318
---------- ----------
Total Partners' capital $1,250,699 $1,195,474
---------- ----------
$1,257,528 $1,195,474
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-15-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5
GEODYNE NPI PARTNERSHIP P-5
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
-------- --------
REVENUES:
Net Profits $368,319 $414,044
Interest income 3,636 1,932
Other income - 672
-------- --------
$371,955 $416,648
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 28,451 $ 9,186
General and administrative
(Note 2) 33,499 33,660
-------- --------
$ 61,950 $ 42,846
-------- --------
NET INCOME $310,005 $373,802
======== ========
GENERAL PARTNER - NET INCOME $ 33,197 $ 37,953
======== ========
LIMITED PARTNERS - NET INCOME $276,808 $335,849
======== ========
NET INCOME per unit $ 2.33 $ 2.84
======== ========
UNITS OUTSTANDING 118,449 118,449
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-16-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5
GEODYNE NPI PARTNERSHIP P-5
COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
-------- --------
REVENUES:
Net Profits $869,808 $790,912
Interest income 7,149 3,322
Other income - 2,136
-------- --------
$876,957 $796,370
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 53,857 $ 39,187
General and administrative
(Note 2) 90,379 88,337
-------- --------
$144,236 $127,524
-------- --------
NET INCOME $732,721 $668,846
======== ========
GENERAL PARTNER - NET INCOME $ 77,404 $ 69,887
======== ========
LIMITED PARTNERS - NET INCOME $655,317 $598,959
======== ========
NET INCOME per unit $ 5.53 $ 5.06
======== ========
UNITS OUTSTANDING 118,449 118,449
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-17-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5
GEODYNE NPI PARTNERSHIP P-5
COMBINED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $732,721 $668,846
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depletion of Net Profits
Interests 53,857 39,187
Settlement of asset retirement
obligation ( 91) -
Net change in accounts receivable/
accounts payable - Net Profits 51,892 ( 67,691)
-------- --------
Net cash provided by operating
activities $838,379 $640,342
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($211,020) ($ 61,024)
-------- --------
Net cash used by investing
activities ($211,020) ($ 61,024)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($677,496) ($518,976)
-------- --------
Net cash used by financing
activities ($677,496) ($518,976)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 50,137) $ 60,342
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 479,513 393,840
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $429,376 $454,182
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-18-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-6
GEODYNE NPI PARTNERSHIP P-6
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2006 2005
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 700,607 $ 770,659
---------- ----------
Total current assets $ 700,607 $ 770,659
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 1,513,507 1,292,562
---------- ----------
$2,214,114 $2,063,221
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable:
Net Profits $ 148,192 $ 36,095
---------- ----------
Total current liabilities $ 148,192 $ 36,095
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 35,467) ($ 17,913)
Limited Partners, issued and
outstanding, 143,041 units 2,101,389 2,045,039
---------- ----------
Total Partners' capital $2,065,922 $2,027,126
---------- ----------
$2,214,114 $2,063,221
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-19-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-6
GEODYNE NPI PARTNERSHIP P-6
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
-------- --------
REVENUES:
Net Profits $702,835 $669,517
Interest income 5,436 2,841
Other income - 230
-------- --------
$708,271 $672,588
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 23,112 $ 51,652
General and administrative
(Note 2) 40,238 40,377
-------- --------
$ 63,350 $ 92,029
-------- --------
NET INCOME $644,921 $580,559
======== ========
GENERAL PARTNER - NET INCOME $ 66,029 $ 62,400
======== ========
LIMITED PARTNERS - NET INCOME $578,892 $518,159
======== ========
NET INCOME per unit $ 4.05 $ 3.62
======== ========
UNITS OUTSTANDING 143,041 143,041
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-20-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-6
GEODYNE NPI PARTNERSHIP P-6
COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
---------- ----------
REVENUES:
Net Profits $1,380,109 $1,259,050
Interest income 10,823 4,340
Other income - 733
---------- ----------
$1,390,932 $1,264,123
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 91,925 $ 80,605
General and administrative
(Note 2) 103,961 101,845
---------- ----------
$ 195,886 $ 182,450
---------- ----------
NET INCOME $1,195,046 $1,081,673
========== ==========
GENERAL PARTNER - NET INCOME $ 126,696 $ 114,922
========== ==========
LIMITED PARTNERS - NET INCOME $1,068,350 $ 966,751
========== ==========
NET INCOME per unit $ 7.47 $ 6.76
========== ==========
UNITS OUTSTANDING 143,041 143,041
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-21-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-6
GEODYNE NPI PARTNERSHIP P-6
COMBINED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
2006 2005
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,195,046 $1,081,673
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depletion of Net Profits
Interests 91,925 80,605
Settlement of asset retirement
obligation ( 2,312) ( 8)
Net change in accounts receivable/
accounts payable - Net Profits 138,421 ( 148,764)
---------- ----------
Net cash provided by operating
activities $1,423,080 $1,013,506
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 336,882) ($ 61,374)
---------- ----------
Net cash used by investing
activities ($ 336,882) ($ 61,374)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($1,156,250) ($ 819,195)
---------- ----------
Net cash used by financing
activities ($1,156,250) ($ 819,195)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 70,052) $ 132,937
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 770,659 469,272
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 700,607 $ 602,209
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-22-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIPS
CONDENSED NOTES TO THE COMBINED FINANCIAL STATEMENTS
JUNE 30, 2006
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The combined balance sheets as of June 30, 2006, combined statements of
operations for the three and six months ended June 30, 2006 and 2005, and
combined 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 Geodyne Institutional/Pension Energy Income Limited
Partnerships, without audit. Each limited partnership is a general partner
in the related Geodyne NPI Partnership (the "NPI Partnerships") in which
Geodyne Resources, Inc. serves as the managing partner. For the purposes
of these financial statements, the general partner and managing partner
are collectively referred to as the "General Partner" and the limited
partnerships and NPI Partnerships are collectively referred to as the
"Partnerships". In the opinion of management the financial statements
referred to above include all necessary adjustments, consisting of normal
recurring adjustments, to present fairly the combined financial position
at June 30, 2006, the combined results of operations for the three and six
months ended June 30, 2006 and 2005, and the combined 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.
As used in these financial statements, the Partnerships' net profits and
royalty interests in oil and gas sales are referred to as "Net Profits"
and the Partnerships' net profits and royalty interests in oil and gas
properties are referred to as "Net Profits Interests". The working
interests from which the Partnerships' Net Profits Interests are carved
are referred to as "Working Interests".
The Limited Partners' net income or loss per unit is based upon each $100
initial capital contribution.
-23-
NET PROFITS INTERESTS
---------------------
The Partnerships follow the successful efforts method of accounting for
their Net Profits Interests. Under the successful efforts method, the NPI
Partnerships capitalize all acquisition costs. 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 NPI Partnership of Net Profits Interests 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 prior to
their transfer to the Partnerships.
Depletion of the costs of Net Profits Interests is computed on the
unit-of-production method. The Partnerships' calculation of depletion of
its Net Profits Interests includes estimated dismantlement and abandonment
costs and estimated salvage value of the equipment.
The Partnerships do not directly bear capital costs. However, the
Partnerships indirectly bear certain capital costs incurred by the owners
of the Working Interests to the extent such capital costs are charged
against the applicable oil and gas revenues in calculating the Net Profits
payable to the Partnerships. For financial reporting purposes only, such
capital costs are reported as capital expenditures in the Partnerships'
Statements of Cash Flows.
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
-24-
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 P-1, P-3, P-4, P-5, and P-6 Partnerships
recognized $6,000, $9,000, $10,000, $7,000, and $22,000 of an increase in
depletion of Net Profits Interests, which was comprised of accretion of
the asset retirement obligation and depletion of the increase in Net
Profits Interests.
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.
P-1 Partnership
---------------
Three Months Three Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, April 1 $119,631 $ 59,672
Additions and revisions 207 212
Accretion expense 1,536 691
-------- --------
Total Asset Retirement
Obligation, End of Quarter $121,374 $ 60,575
======== ========
Six Months Six Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, January 1 $118,480 $ 58,753
Additions and revisions 207 441
Settlements and disposals ( 368) -
Accretion expense 3,055 1,381
-------- --------
Total Asset Retirement
Obligation, End of Period $121,374 $ 60,575
======== ========
-25-
P-3 Partnership
---------------
Three Months Three Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, April 1 $186,077 $101,158
Additions and revisions 262 267
Accretion expense 2,331 1,164
-------- --------
Total Asset Retirement
Obligation, End of Quarter $188,670 $102,589
======== ========
Six Months Six Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, January 1 $184,212 $ 99,718
Additions and revisions 262 562
Settlements and disposals ( 461) -
Accretion expense 4,657 2,309
-------- --------
Total Asset Retirement
Obligation, End of Period $188,670 $102,589
======== ========
P-4 Partnership
---------------
Three Months Three Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, April 1 $140,396 $ 57,494
Accretion expense 1,650 573
-------- --------
Total Asset Retirement
Obligation, End of Quarter $142,046 $ 58,067
======== ========
-26-
Six Months Six Months
Ended Ended
6/30/2006 6/30/2005
------------ -----------
Total Asset Retirement
Obligation, January 1 $138,714 $ 56,920
Accretion expense 3,332 1,147
-------- --------
Total Asset Retirement
Obligation, End of Period $142,046 $ 58,067
======== ========
P-5 Partnership
---------------
Three Months Three Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, April 1 $144,381 $ 78,380
Additions and revisions - 1
Accretion expense 1,679 771
-------- --------
Total Asset Retirement
Obligation, End of Quarter $146,060 $ 79,152
======== ========
Six Months Six Months
Ended Ended
6/30/2006 6/30/2005
------------ -----------
Total Asset Retirement
Obligation, January 1 $142,799 $ 76,681
Additions and revisions - 912
Settlements and obligations ( 91) -
Accretion expense 3,352 1,559
-------- --------
Total Asset Retirement
Obligation, End of Period $146,060 $ 79,152
======== ========
-27-
P-6 Partnership
---------------
Three Months Three Months
Ended Ended
6/30/2006 6/30/2005
------------ ------------
Total Asset Retirement
Obligation, April 1 $412,678 $210,328
Additions and revisions - 4
Settlements and disposals - ( 5,636)
Accretion expense 4,612 1,925
-------- --------
Total Asset Retirement
Obligation, End of Quarter $417,290 $206,621
======== ========
Six Months Six Months
Ended Ended
6/30/2006 6/30/2005
------------ -----------
Total Asset Retirement
Obligation, January 1 $413,445 $208,086
Additions and revisions - 322
Settlements and disposals ( 5,470) ( 5,636)
Accretion expense 9,315 3,849
-------- --------
Total Asset Retirement
Obligation, End of Period $417,290 $206,621
======== ========
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
----------- ------------------ --------------
P-1 $ 2,265 $28,440
P-3 2,887 44,640
P-4 2,413 33,240
P-5 2,329 31,170
P-6 2,597 37,641
-28-
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
----------- ------------------ --------------
P-1 $27,817 $56,880
P-3 29,375 89,280
P-4 28,239 66,480
P-5 28,039 62,340
P-6 28,679 75,282
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.
-29-
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 Net Profits
Interests in producing oil and gas properties located in the continental
United States. In general, a Partnership acquired passive interests in
producing properties and does not directly engage in development drilling
or enhanced recovery projects. Therefore, the economic life of each
limited partnership, and its related NPI Partnership, is limited to the
period of time required to fully produce its acquired oil and gas
reserves. A Net Profits Interest entitles the Partnerships to a portion of
the oil and gas sales less operating and production expenses and
development costs generated by the owner of the underlying Working
Interests. The net proceeds from the oil and gas operations are
distributed to the Limited Partners
-30-
and the General Partner in accordance with the terms of the Partnerships'
partnership agreements.
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
----------- ----------------- ---------------
P-1 October 25, 1988 $10,807,400
P-3 May 10, 1989 16,963,700
P-4 November 21, 1989 12,630,600
P-5 February 27, 1990 11,844,900
P-6 September 5, 1990 14,304,100
In general, the amount of funds available for acquisition of producing
properties was equal to the capital contributions of the Limited Partners,
less 15% for sales commissions and organization and management fees. All
of the Partnerships have fully invested their capital contributions.
Net proceeds from the Partnerships' Net Profits Interests 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 by the owners of the Working Interests for new
wells, well recompletions, or workovers may reduce or eliminate cash
available for a particular quarterly cash distribution. During the six
months ended June 30, 2006, capital expenditures affecting the P-5
Partnership's Net Profits Interests totaled $240,000. These costs were
indirectly incurred primarily as a result of recompletion activities on
the Sugg AA 3067 #1 well and the Sugg AA 3 #1 well both located in Irion
County, Texas. During the six months ended June 30, 2006, capital
expenditures affecting the P-6 Partnership's Net Profits Interests totaled
$307,000. These costs were indirectly incurred primarily as a result of
recompletion activities on the same Sugg AA 3067 #1 and Sugg AA 3 #1 wells
and the Henderson Stovall GU #2 well located in Wharton County, Texas.
Other capital expenditures incurred by the
-31-
Partnerships during 2006 were not material to the Partnerships' cash
flows.
Pursuant to the terms of the Partnership Agreements, the Partnerships were
scheduled to terminate on December 31, 2005. However, the Partnership
Agreements provide that the General Partner may extend the term of each
Partnership for up to five periods of two years each. The General Partner
has extended the terms of the Partnerships for their first two year
extension period to December 31, 2007. As of the date of this Quarterly
Report, the General Partner has not yet determined whether it will further
extend the term of any Partnership.
CRITICAL ACCOUNTING POLICIES
- ----------------------------
The Partnerships follow the successful efforts method of accounting for
their Net Profits Interests. Under the successful efforts method, the
Partnerships capitalize all acquisition costs. Such acquisition costs
include costs incurred by the Partnerships or the General Partner to
acquire a Net Profits Interest, 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 net
acquisition cost to the Partnerships of the Net Profits Interests in
properties acquired by the General Partner consists of the cost of
acquiring the underlying properties adjusted for the net cash results of
operations, including any interest incurred to finance the acquisition,
for the period of time the properties are held by the General Partner.
Depletion of the cost of Net Profits Interests is computed on the
unit-of-production method. The Partnerships' calculation of depletion of
their Net Profits Interests includes estimated dismantlement and
abandonment costs and estimated salvage value of the equipment.
The Partnerships evaluate the recoverability of the carrying costs of
their Net Profits Interests in proved oil and gas properties for each oil
and gas field (rather than separately for each well). If the unamortized
costs of a Net Profits Interest within a field exceed the expected
undiscounted future cash flows from such Net Profits Interest, the cost of
the Net Profits Interest is written down to fair value, which is
determined by using the estimated discounted future cash flows from the
Net Profits Interest.
-32-
Accounts Receivable (Accounts Payable) - Net Profits
Revenues from a Net Profits Interest consist of a share of the oil and gas
sales of the property, less operating and production expenses. The
Partnerships accrue for oil and gas revenues less expenses from the Net
Profits Interests. Sales of gas applicable to the Net Profits Interests
are recorded as revenue when the gas is metered and title transferred
pursuant to the gas sales contracts. During such times as sales of gas
exceed a Partnership's pro rata share of estimated total gas reserves
attributable to the underlying property, such excess is recorded as a
liability. The rates per Mcf used to calculate this liability are based on
the average gas price for which the Partnerships are currently settling
this liability. This liability is recorded as a reduction of accounts
receivable.
Also included in accounts receivable (payable) - Net Profits are costs
deferred or accrued for Net Profits relating to lease operating expenses
incurred in connection with the net underproduced or overproduced gas
imbalance positions. The rate used in calculating the deferred charge or
accrued liability is the annual average production costs per Mcf. Also
included in accounts receivable (payable) - Net Profits is the asset
retirement obligation described below.
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.
-33-
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.
-34-
P-1 Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2005 240,494 2,192,218
Production ( 4,597) ( 57,726)
Extensions and discoveries 275 810
Revisions of previous
estimates 805 ( 32,892)
------- ---------
Proved reserves, March 31, 2006 236,977 2,102,410
Production ( 4,607) ( 57,643)
Extensions and discoveries 1,695 20,235
Revisions of previous
estimates 44,795 155,573
------- ---------
Proved reserves, June 30, 2006 278,860 2,220,575
======= =========
P-3 Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2005 316,480 3,450,217
Production ( 5,837) ( 88,356)
Extensions and discoveries 347 1,918
Revisions of previous
estimates 910 ( 55,543)
------- ---------
Proved reserves, March 31, 2006 311,900 3,308,236
Production ( 5,914) ( 89,587)
Extensions and discoveries 2,135 25,565
Revisions of previous
estimates 56,461 236,881
------- ---------
Proved reserves, June 30, 2006 364,582 3,481,095
======= =========
-35-
P-4 Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2005 47,507 1,825,768
Production ( 3,257) ( 50,280)
Extensions and discoveries 2 1,658
Revisions of previous
estimates ( 109) ( 26,595)
------ ---------
Proved reserves, March 31, 2006 44,143 1,750,551
Production ( 3,287) ( 45,360)
Extensions and discoveries 5 906
Revisions of previous
estimates 2,975 60,227
------ ---------
Proved reserves, June 30, 2006 43,836 1,766,324
====== =========
P-5 Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2005 40,130 2,201,499
Production ( 1,359) ( 84,457)
Extensions and discoveries 780 64,003
Revisions of previous
estimates 680 ( 41,128)
------ ---------
Proved reserves, March 31, 2006 40,231 2,139,917
Production ( 1,415) ( 65,469)
Extensions and discoveries 5,776 87,696
Revisions of previous
estimates 4,189 58,798
------ ---------
Proved reserves, June 30, 2006 48,781 2,220,942
====== =========
-36-
P-6 Partnership
---------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2005 126,115 3,330,307
Production ( 2,365) ( 114,614)
Extensions and discoveries 822 226,495
Revisions of previous
estimates ( 106) ( 25,518)
------- ---------
Proved reserves, March 31, 2006 124,466 3,416,670
Production ( 2,966) ( 118,934)
Extensions and discoveries 6,183 65,236
Revisions of previous
estimates 15,265 296,439
------- ---------
Proved reserves, June 30, 2006 142,948 3,659,411
======= =========
The net present value of the Partnerships' reserves may change
dramatically as oil and gas prices change or as volumes change for the
reasons described above. Net present value represents estimated future
gross cash flow from the production and sale of proved reserves, net of
estimated oil and gas production costs (including production taxes, ad
valorem taxes, and operating expenses) and estimated future development
costs, discounted at 10% per annum.
The following table indicates the estimated net present value of the
Partnerships' proved reserves as of June 30, 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 have caused 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.
-37-
Net Present Value of Reserves
-----------------------------------------------
Partnership 6/30/06 3/31/06 12/31/05
----------- ----------- ----------- -----------
P-1 $11,235,535 $10,403,645 $12,711,355
P-3 15,969,618 15,161,750 18,996,635
P-4 6,113,306 6,830,210 9,422,988
P-5 6,418,838 6,415,806 9,341,278
P-6 11,791,726 11,352,627 15,133,718
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
The P-1 and P-3 Partnerships' estimated proved reserves increased
approximately 33,000 and 42,000 barrels of oil equivalent ("BOE"),
respectively, in the Hutchings Stock Association well, located in Ward
County, Texas from March 31, 2006 to June 30, 2006. This increase was
primarily due to a revised forecast in reserves based on actual production
experience. The P-6 Partnership's estimated proved reserves increased
approximately 41,000 BOE in the Eva O'Byrne GU #2 well, located in Upshur
County, Texas from March 31, 2006 to June 30, 2006. This increase was also
primarily due to a revised forecast in reserves based on actual production
experience.
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 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:
-38-
* 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 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;
* 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.
-39-
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.
P-1 PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2005.
Three Months Ended June 30,
---------------------------
2006 2005
-------- --------
Net Profits $537,029 $439,476
Barrels produced 4,607 4,637
Mcf produced 57,643 57,869
Average price/Bbl $ 61.71 $ 48.22
Average price/Mcf $ 5.84 $ 5.26
As shown in the table above, total Net Profits increased $98,000 (22.2%)
for the three months ended June 30, 2006 as compared to the three months
ended June 30, 2005. Of this increase (i) $62,000 and $33,000 were related
to increases in the average prices of oil and gas sold and (ii) $5,000 was
related to a decrease in production expenses.
Volumes of oil and gas sold decreased 30 barrels and 226 Mcf for the three
months ended June 30, 2006 as compared to the three months ended June 30,
2005. The decreases in volumes of oil and gas sold were 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 a
negative prior period volume adjustment made by the operator on another
significant well during the three months ended June 30, 2005.
The decrease in production expenses was primarily due to (i) a negative
prior period lease operating expense adjustment made by the operator on
one significant well during the three months ended June 30, 2006, (ii)
workover expenses incurred on several wells during the three months ended
June 30, 2005, and (iii) a negative prior period production tax adjustment
made by the operator on one significant well during the three months ended
June 30, 2006. These decreases were partially offset by (i) workover
expenses incurred on several other wells during the three months ended
June 30, 2006 and (ii) an increase in production taxes associated with the
increase in oil and gas sales.
-40-
Depletion of Net Profits Interests increased $1,000 (4.5%) for the three
months ended June 30, 2006 as compared to the three months ended June 30,
2005. As a percentage of Net Profits, this expense decreased to 3.5% for
the three months ended June 30, 2006 from 4.0% for the three months ended
June 30, 2005. This percentage decrease was primarily due to the increases
in the average prices of oil and gas sold.
General and administrative expenses remained relatively constant for the
three months ended June 30, 2006 and 2005. As a percentage of Net Profits,
these expenses decreased to 5.7% for the three months ended June 30, 2006
from 7.0% for the three months ended June 30, 2005, primarily due to the
increase in Net Profits.
SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2005.
Six Months Ended June 30,
-------------------------
2006 2005
---------- --------
Net Profits $1,051,251 $988,923
Barrels produced 9,204 9,582
Mcf produced 115,369 124,012
Average price/Bbl $ 59.13 $ 46.55
Average price/Mcf $ 6.11 $ 5.69
As shown in the table above, total Net Profits increased $62,000 (6.3%)
for the six months ended June 30, 2006 as compared to the six months ended
June 30, 2005. Of this increase $116,000 and $48,000 were related to
increases in the average prices of oil and gas sold. These increases were
partially offset by decreases of (i) $18,000 and $49,000 related to
decreases in volumes of oil and gas sold and (ii) $35,000 related to an
increase in production expenses.
Volumes of oil and gas sold decreased 378 barrels and 8,643 Mcf for the
six months ended June 30, 2006 as compared to the six months ended June
30, 2005. The decreases in volumes of oil and gas sold were primarily due
to (i) positive prior period volume adjustments made by the operators on
several wells during the six months ended June 30, 2005 and (ii) normal
declines in production. These decreases were partially offset by a
negative prior period volume adjustment made by the operator on another
significant well during the six months ended June 30, 2005.
-41-
The increase in production expenses was primarily due to (i) workover
expenses incurred on several wells during the six months ended June 30,
2006 and (ii) the receipt of ad valorem tax credits on one significant
well during the six months ended June 30, 2005. These increases were
partially offset by (i) a negative prior period lease operating expense
adjustment made by the operator on one significant well during the six
months ended June 30, 2006, (ii) workover expenses incurred on several
wells during the six months ended June 30, 2005, and (iii) a negative
prior period production tax adjustment made by the operator on one
significant well during the six months ended June 30, 2006.
Depletion of Net Profits Interests increased $10,000 (29.1%) for the six
months ended June 30, 2006 as compared to the six months ended June 30,
2005. This increase was primarily due to the abandonment of one
significant well during the six months ended June 30, 2006 due to the lack
of remaining reserves. Other contributing factors to the increase were (i)
$3,000 due to the depletion of additional Net Profits Interests 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. These increases were partially
offset by upward revisions in the estimates of remaining oil and gas
reserves on one significant well since June 30, 2005. As a percentage of
Net Profits, this expense increased to 4.1% for the six months ended June
30, 2006 from 3.4% for the six months ended June 30, 2005, primarily due
to the dollar increase in depletion of Net Profits Interests.
General and administrative expenses increased $2,000 (2.5%) for the six
months ended June 30, 2006 as compared to the six months ended June 30,
2005. As a percentage of Net Profits, these expenses decreased to 8.1% for
the six months ended June 30, 2006 from 8.4% for the six months ended June
30, 2005.
Cumulative cash distributions to the Limited Partners through June 30,
2006 were $19,128,558 or 177.00% of Limited Partners' capital
contributions.
-42-
P-3 PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2005.
Three Months Ended June 30,
---------------------------
2006 2005
-------- --------
Net Profits $754,885 $637,978
Barrels produced 5,914 5,988
Mcf produced 89,587 89,676
Average price/Bbl $ 61.83 $ 47.89
Average price/Mcf $ 5.89 $ 5.55
As shown in the table above, total Net Profits increased $117,000 (18.3%)
for the three months ended June 30, 2006 as compared to the three months
ended June 30, 2005. Of this increase (i) $82,000 and $31,000 were related
to increases in the average prices of oil and gas sold, and (ii) $8,000
was related to a decrease in production expenses. These increases were
partially offset by decreases of $3,000 and $1,000 related to decreases in
volumes of oil and gas sold.
Volumes of oil and gas sold decreased 74 barrels and 89 Mcf for the three
months ended June 30, 2006 as compared to the three months ended June 30,
2005. The decreases in volumes of oil and gas sold were 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 a
negative prior period volume adjustment made by the operator on another
significant well during the three months ended June 30, 2005.
The decrease in production expenses was primarily due to (i) a negative
prior period lease operating expense adjustment made by the operator on
one significant well during the three months ended June 30, 2006, (ii)
workover expenses incurred on several wells during the three months ended
June 30, 2005, and (iii) a negative prior period production tax adjustment
made by the operator on one significant well during the three months ended
June 30, 2006. These decreases were partially offset by (i) workover
expenses incurred on several other wells during the three months ended
June 30, 2006 and (ii) an increase in production taxes associated with the
increase in oil and gas sales.
Depletion of Net Profits Interests increased $3,000 (12.3%) for the three
months ended June 30, 2006 as compared to the three months ended June 30,
2005. As a percentage of Net Profits, this expense decreased to 3.5% for
the three months ended June 30, 2006 from 3.7% for the three months ended
June 30, 2005.
-43-
General and administrative expenses remained relatively constant for the
three months ended June 30, 2006 and 2005. As a percentage of Net Profits,
these expenses decreased to 6.3% for the three months ended June 30, 2006
from 7.5% for the three months ended June 30, 2005, primarily due to the
increase in Net Profits.
SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2005.
Six Months Ended June 30,
-------------------------
2006 2005
---------- ----------
Net Profits $1,491,950 $1,425,534
Barrels produced 11,751 12,346
Mcf produced 177,943 190,528
Average price/Bbl $ 59.47 $ 46.66
Average price/Mcf $ 6.21 $ 5.79
As shown in the table above, total Net Profits increased $66,000 (4.7%)
for the six months ended June 30, 2006 as compared to the six months ended
June 30, 2005. Of this increase $151,000 and $75,000 were related to
increases in the average prices of oil and gas sold. These increases were
partially offset by decreases of (i) $28,000 and $73,000 related to
decreases in volumes of oil and gas sold, and (ii) $59,000 related to an
increase in production expenses.
Volumes of oil and gas sold decreased 595 barrels and 12,585 Mcf for the
six months ended June 30, 2006 as compared to the six months ended June
30, 2005. The decreases in volumes of oil and gas sold were primarily due
to (i) positive prior period volume adjustments made by the operators on
several wells during the six months ended June 30, 2005 and (ii) normal
declines in production. These decreases were partially offset by a
negative prior period volume adjustment made by the operator on another
significant well during the six months ended June 30, 2005.
The increase in production expenses was primarily due to (i) workover
expenses incurred on several wells during the six months ended June 30,
2006 and (ii) the receipt of ad valorem tax credits on one significant
well during the six months ended June 30, 2005. These increases were
partially offset by (i) a negative prior period lease operating expense
adjustment made by the operator on one significant well during the six
months ended June 30, 2006, (ii) workover expenses incurred on several
other wells during the six months ended June 30, 2005, and (iii) a
negative prior period production tax adjustment made by the operator on
one significant well during the six months ended June 30, 2006.
-44-
Depletion of Net Profits Interests increased $7,000 (14.1%) for the six
months ended June 30, 2006 as compared to the six months ended June 30,
2005. This increase was primarily due to the abandonment of one
significant well during the six months ended June 30, 2006 due to the lack
of remaining reserves. Other contributing factors to the increase were (i)
$4,000 due to the depletion of additional Net Profits Interests 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. These increases were partially
offset by upward revisions in the estimates of remaining oil and gas
reserves on one significant well since June 30, 2005. As a percentage of
Net Profits, this expense increased to 3.9% for the six months ended June
30, 2006 from 3.6% for the six months ended June 30, 2005.
General and administrative expenses increased $2,000 (1.9%) for the six
months ended June 30, 2006 as compared to the six months ended June 30,
2005. As a percentage of Net Profits, these expenses decreased to 8.0% for
the six months ended June 30, 2006 from 8.2% for the six months ended June
30, 2005.
Cumulative cash distributions to the Limited Partners through June 30,
2006 were $26,860,401 or 158.34% of Limited Partners' capital
contributions.
P-4 PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2005.
Three Months Ended June 30,
---------------------------
2006 2005
-------- --------
Net Profits $405,997 $445,650
Barrels produced 3,287 3,888
Mcf produced 45,360 55,427
Average price/Bbl $ 68.32 $ 52.42
Average price/Mcf $ 6.50 $ 6.55
As shown in the table above, total Net Profits decreased $40,000 (8.9%)
for the three months ended June 30, 2006 as compared to the three months
ended June 30, 2005. Of this decrease $32,000 and $66,000 were related to
decreases in volumes of oil and gas sold. These decreases were partially
offset by increases of (i) $52,000 related to an increase in the average
price of oil sold and (ii) $8,000 related to a decrease in production
expenses.
-45-
Volumes of oil and gas sold decreased 601 barrels and 10,067 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)
upward revisions in the estimate of remaining gas reserves and a decrease
in the P-4 Partnership's gas balancing position on several wells during
the three months ended June 30, 2005 resulting in a decrease in the P-4
Partnership's gas imbalance payable, and (iii) a positive prior period
volume adjustment made by the operator on one significant well during the
three months ended June 30, 2005.
The decrease in production expenses was primarily due to (i) a $13,000
increase in lease operating expenses during the three months ended June
30, 2005 resulting from an increase in the P-4 Partnership's gas balancing
position on several wells, (ii) workover expenses incurred on several
wells during the three 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 expense incurred on one
significant well during the three months ended June 30, 2006.
Depletion of Net Profits Interests increased $16,000 (142.1%) for the
three months ended June 30, 2006 as compared to the three months ended
June 30, 2005. This increase was primarily due to two significant wells
being fully depleted during the three months ended June 30, 2006 due to
the lack of remaining reserves. This increase was also due to an increase
of $3,000 due to the depletion of additional Net Profits Interests as a
result of the upward revision in the estimate of the asset retirement
obligations during late 2005. As a percentage of Net Profits, this expense
increased to 6.6% for the three months ended June 30, 2006 from 2.5% for
the three months ended June 30, 2005, primarily due to the dollar increase
in depletion of Net Profits Interests.
General and administrative expenses remained relatively constant for the
three months ended June 30, 2006 and 2005. As a percentage of Net Profits,
these expenses increased to 8.8% for the three months ended June 30, 2006
from 8.0% for the three months ended June 30, 2005. This percentage
increase was primarily due to the decrease in Net Profits.
-46-
SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2005.
Six Months Ended June 30,
-------------------------
2006 2005
-------- --------
Net Profits $842,839 $791,277
Barrels produced 6,544 7,745
Mcf produced 95,640 111,834
Average price/Bbl $ 65.45 $ 48.90
Average price/Mcf $ 6.81 $ 6.34
As shown in the table above, total Net Profits increased $52,000 (6.5%)
for the six months ended June 30, 2006 as compared to the six months ended
June 30, 2005. Of this increase (i) $108,000 and $45,000 were related to
increases in the average prices of oil and gas sold and (ii) $60,000 was
related to a decrease in production expenses. These increases were
partially offset by decreases of $59,000 and $102,000 related to decreases
in volumes of oil and gas sold.
Volumes of oil and gas sold decreased 1,201 barrels and 16,194 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) upward revisions in the estimate of remaining gas reserves
and a decrease in the P-4 Partnership's gas balancing position on several
wells during the six months ended June 30, 2005 resulting in a decrease in
the P-4 Partnership's gas imbalance payable. These decreases were
partially offset by a positive prior period volume adjustment made by the
operator on another significant well during the six months ended June 30,
2006.
-47-
The decrease in production expenses was primarily due to (i) workover
expenses incurred on several wells during the six months ended June 30,
2005, (ii) a $13,000 increase in lease operating expenses during the six
months ended June 30, 2005 resulting from an increase in the P-4
Partnership's gas balancing position on several wells, 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 one significant well during the six months ended June 30, 2006.
Depletion of Net Profits Interests increased $17,000 (75.5%) for the six
months ended June 30, 2006 as compared to the six months ended June 30,
2005. This increase was primarily due to two significant wells being fully
depleted during the six months ended June 30, 2006 due to the lack of
remaining reserves. This increase was also due to increases of (i) $6,000
due to the depletion of additional net profits interests 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. These increases were partially offset by the
decreases in volumes of oil and gas sold. As a percentage of Net Profits,
this expense increased to 4.7% for the six months ended June 30, 2006 from
2.9% for the six months ended June 30, 2005, primarily due to the dollar
increase in depletion of Net Profits Interests.
General and administrative expenses increased $2,000 (2.2%) for the six
months ended June 30, 2006 as compared to the six months ended June 30,
2005. As a percentage of Net Profits, these expenses decreased to 11.2%
for the six months ended June 30, 2006 from 11.7% for the six months ended
June 30, 2005.
Cumulative cash distributions to the Limited Partners through June 30,
2006 were $21,117,945 or 167.20% of Limited Partners' capital
contributions.
P-5 PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2005.
Three Months Ended June 30,
---------------------------
2006 2005
-------- --------
Net Profits $368,319 $414,044
Barrels produced 1,415 978
Mcf produced 65,469 74,876
Average price/Bbl $ 67.05 $ 50.64
Average price/Mcf $ 5.82 $ 5.75
As shown in the table above, total Net Profits decreased $46,000 (11.0%)
for the three months ended June 30, 2006 as
-48-
compared to the three months ended June 30, 2005. Of this decrease (i)
$54,000 was related to a decrease in volumes of gas sold and (ii) $42,000
was related to an increase in production expenses. These decreases were
partially offset by increases of (i) $23,000 and $5,000 related to
increases in the average prices of oil and gas sold, and (ii) $22,000
related to an increase in volumes of oil sold.
Volumes of oil sold increased 437 barrels, while volumes of gas sold
decreased 9,407 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 the successful recompletion of that well 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 the
successful recompletion of those wells during early 2006.
The increase in production expenses was primarily due to (i) a $29,000
decrease in lease operating expenses during the three months ended June
30, 2005 resulting from a decrease in the P-5 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) a positive
prior period lease operating expense adjustment on one significant well
during the three months ended June 30, 2006. These increases were
partially offset by workover expense incurred on several other wells
during the three months ended June 30, 2005.
Depletion of Net Profits Interests increased $19,000 (209.7%) 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) one significant well
being fully depleted during the three months ended June 30, 2006 due to
the lack of remaining reserves and (ii) downward revisions in the
estimates of remaining gas reserves on one significant well since June 30,
2005. This increase was also due to an increase of $2,000 due to the
depletion of additional Net Profits Interests as a result of the upward
revision in the estimate of the asset retirement obligations during late
2005. As a percentage of Net Profits, this expense increased to 7.7% for
the three months ended June 30, 2006 from 2.2% for the three months ended
June 30, 2005, primarily due to the dollar increase in depletion of Net
Profits Interests.
-49-
General and administrative expenses remained relatively constant for the
three months ended June 30, 2006 and 2005. As a percentage of Net Profits,
these expenses increased to 9.1% for the three months ended June 30, 2006
from 8.1% for the three months ended June 30, 2005. This percentage
increase was primarily due to the decrease in Net Profits.
SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2005.
Six Months Ended June 30,
-------------------------
2006 2005
-------- --------
Net Profits $869,808 $790,912
Barrels produced 2,774 2,265
Mcf produced 149,926 138,653
Average price/Bbl $ 64.10 $ 47.93
Average price/Mcf $ 6.18 $ 6.06
As shown in the table above, total Net Profits increased $79,000 (10.0%)
for the six months ended June 30, 2006 as compared to the six months ended
June 30, 2005. Of this increase (i) $24,000 and $68,000 were related to
increases in volumes of oil and gas sold and (ii) $45,000 and $18,000 were
related to increases in the average prices of oil and gas sold. These
increases were partially offset by a decrease of $77,000 related to an
increase in production expenses.
Volumes of oil and gas sold increased 509 barrels and 11,273 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 the successful
recompletion of that well 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 the successful
recompletion of those wells during early 2006. These increases were
partially offset by normal declines in production.
The increase in production expenses was primarily due to (i) a $29,000
decrease in lease operating expenses during the six months ended June 30,
2005 resulting from a decrease in the P-5 Partnership's gas balancing
position on several wells, (ii) workover expenses incurred on several
wells during the six months ended June 30, 2006, and (iii) an increase in
production taxes associated with the increase in oil and gas sales. These
increases were partially offset by workover expenses incurred on several
other wells during the six months ended June 30, 2005.
-50-
Depletion of Net Profits Interests increased $15,000 (37.4%) 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) one significant well being
fully depleted during the six months ended June 30, 2006 due to the lack
of remaining reserves and (ii) an increase in depletable Net Profits
Interests during the six months ended June 30, 2006 primarily due to the
recompletion of another significant well. This increase was also due to
increases of (i) $3,000 due to the depletion of additional Net Profits
Interests 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. As a percentage of Net
Profits, this expense increased to 6.2% for the six months ended June 30,
2006 from 5.0% for the six months ended June 30, 2005, primarily due to
the dollar increase in depletion of Net Profits Interests.
General and administrative expenses increased $2,000 (2.3%) for the six
months ended June 30, 2006 as compared to the six months ended June 30,
2005. As a percentage of Net Profits, these expenses decreased to 10.4%
for the six months ended June 30, 2006 from 11.2% for the six months ended
June 30, 2005.
Cumulative cash distributions to the Limited Partners through June 30,
2006 were $14,852,759 or 125.39% of Limited Partners' capital
contributions.
P-6 PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2005.
Three Months Ended June 30,
---------------------------
2006 2005
-------- --------
Net Profits $702,835 $669,517
Barrels produced 2,966 2,830
Mcf produced 118,934 112,473
Average price/Bbl $ 63.99 $ 51.17
Average price/Mcf $ 6.01 $ 6.10
As shown in the table above, total Net Profits increased $33,000 (5.0%)
for the three months ended June 30, 2006 as compared to the three months
ended June 30, 2005. Of this increase (i) $7,000 and $39,000 were related
to increases in volumes of oil and gas sold and (ii) $38,000 was related
to an increase in the average price of oil sold. These increases were
partially offset by decreases of (i) $40,000 related to an increase in
production expenses and (ii) $11,000 related to a decrease in the average
price of gas sold.
-51-
Volumes of oil and gas sold increased 136 barrels and 6,461 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 the
successful recompletion of that well 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) increases in
production on several wells following the successful recompletion of those
wells during early 2006, (ii) the successful completion of several new
wells during 2005 and early 2006, and (iii) an increase in production on
one significant well following the successful workover of that well during
early 2006. These increases were partially offset by normal declines in
production.
The increase in production expenses was primarily due to (i) a $42,000
decrease in lease operating expenses during the three months ended June
30, 2005 resulting from a decrease in the P-6 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) a positive
prior period lease operating expense adjustment on one significant well
during the three months ended June 30, 2006. These increases were
partially offset by workover expenses incurred on one significant well
during the three months ended June 30, 2005.
Depletion of Net Profits Interests decreased $29,000 (55.3%) for the three
months ended June 30, 2006 as compared to the three months ended June 30,
2005. This decrease was primarily due to an increase in depletable Net
Profits Interests during 2005 primarily due to the recompletion of one
significant well. This decrease was partially offset by (i) an increase of
$6,000 due to the depletion of additional Net Profits Interests as a
result of the upward revision in the estimate of the asset retirement
obligations during late 2005, (ii) an increase of $3,000 due to accretion
of these additional asset retirement obligations, and (iii) the increases
in volumes of oil and gas sold. As a percentage of Net Profits, this
expense decreased to 3.3% for the three months ended June 30, 2006 from
7.7% for the three months ended June 30, 2005, primarily due to the dollar
decrease in depletion of Net Profits Interests.
General and administrative expenses remained relatively constant for the
three months ended June 30, 2006 and 2005. As a percentage of Net Profits,
these expenses decreased to 5.7% for the three months ended June 30, 2006
from 6.0% for the three months ended June 30, 2005.
-52-
SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2005.
Six Months Ended June 30,
-------------------------
2006 2005
---------- ----------
Net Profits $1,380,109 $1,259,050
Barrels produced 5,331 5,854
Mcf produced 233,548 225,423
Average price/Bbl $ 62.17 $ 49.20
Average price/Mcf $ 6.26 $ 5.82
As shown in the table above, total Net Profits increased $121,000 (9.6%)
for the six months ended June 30, 2006 as compared to the six months ended
June 30, 2005. Of this increase (i) $69,000 and $104,000 were related to
increases in the average prices of oil and gas sold and (ii) $48,000 was
related to an increase in volumes of gas sold. These increases were
partially offset by decreases of (i) $74,000 related to an increase in
production expenses and (ii) $26,000 related to a decrease in volumes of
oil sold.
Volumes of oil sold decreased 523 barrels, while volumes of gas sold
increased 8,125 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. This decrease was
partially offset by (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. The
increase in volumes of gas sold was primarily due to (i) increases in
production on several wells following their successful recompletion during
2005 and early 2006, (ii) the successful completion of several new wells
during the same period, and (iii) an increase in production on one
significant well following its successful workover during early 2006.
These increases were partially offset by normal declines in production.
The increase in production expenses was primarily due to (i) a $42,000
decrease in lease operating expenses during the six months ended June 30,
2005 resulting from a decrease in the P-6 Partnership's gas balancing
position on several wells, (ii) workover expenses incurred on several
wells during the six months ended June 30, 2006, and (iii) an increase in
production taxes associated with the increase in oil and gas sales. These
increases were partially offset by workover expenses incurred on one
significant well during the six months ended June 30, 2005.
Depletion of Net Profits Interests increased $11,000 (14.0%) for the six
months ended June 30, 2006 as compared to the six months ended June 30,
2005. Of this increase (i) $12,000 was due to the depletion of additional
Net Profits Interests as a result of the upward revision in the estimate
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of the asset retirement obligations during late 2005 and (ii) $5,000 was
due to accretion of these additional asset retirement obligations. This
increase was also due to an increase in depletable Net Profits Interests
during the six months ended June 30, 2006 primarily due to the successful
recompletion of two significant wells. These increases were partially
offset by an increase in depletable Net Profits Interests during 2005
primarily due to the recompletion of one significant well. As a percentage
of Net Profits, this expense increased to 6.7% for the six months ended
June 30, 2006 from 6.4% for the six months ended June 30, 2005.
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 Net Profits, these expenses decreased to 7.5% for
the six months ended June 30, 2006 from 8.1% for the six months ended June
30, 2005.
Cumulative cash distributions to the Limited Partners through June 30,
2006 were $22,003,248 or 153.82% of Limited Partners' capital
contribution.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
The Partnerships do not hold any market risk sensitive instruments.
ITEM 4. 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.
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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 P-1 Partnership.
31.2 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a)
for the P-1 Partnership.
31.3 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a)
for the P-3 Partnership.
31.4 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a)
for the P-3 Partnership.
31.5 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a)
for the P-4 Partnership.
31.6 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a)
for the P-4 Partnership.
31.7 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a)
for the P-5 Partnership.
31.8 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a)
for the P-5 Partnership.
31.9 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a)
for the P-6 Partnership.
31.10 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a)
for the P-6 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 P-1
Partnership.
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 for the P-3
Partnership.
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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 P-4
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 P-5
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 P-6
Partnership.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME P-1 LIMITED PARTNERSHIP
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME LIMITED PARTNERSHIP P-3
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME LIMITED PARTNERSHIP P-4
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME LIMITED PARTNERSHIP P-5
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME LIMITED PARTNERSHIP P-6
(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
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INDEX TO EXHIBITS
-----------------
Exh.
No. Exhibit
- ---- -------
31.1 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Institutional/Pension Energy Income P-1 Limited Partnership.
31.2 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Institutional/Pension Energy Income P-1 Limited Partnership.
31.3 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Institutional/Pension Energy Income P-3 Limited Partnership.
31.4 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Institutional/Pension Energy Income P-3 Limited Partnership.
31.5 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Institutional/Pension Energy Income P-4 Limited Partnership.
31.6 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Institutional/Pension Energy Income P-4 Limited Partnership.
31.7 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Institutional/Pension Energy Income P-5 Limited Partnership.
31.8 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Institutional/Pension Energy Income P-5 Limited Partnership.
31.9 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Institutional/Pension Energy Income P-6 Limited Partnership.
31.10 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Institutional/Pension Energy Income P-6 Limited 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 Geodyne
Institutional/Pension Energy Income P-1 Limited Partnership.
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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
Institutional/Pension Energy Income Limited Partnership P-3.
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
Institutional/Pension Energy Income Limited Partnership P-4.
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
Institutional/Pension Energy Income Limited Partnership P-5.
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
Institutional/Pension Energy Income Limited Partnership P-6.
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