Geodyne Resources, Inc.
Samson Plaza
Two W. 2nd Street
Tulsa, Oklahoma 74103-3103
(918) 583-1791
February 9, 2007
Ms. Jill S. Davis
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
RE: Geodyne Energy Income Limited Partnership - I-D, I-E, I-F II-A, II-B,
II-C, II-D, II-E, II-F, II-G, II-H
Form 10-K for Fiscal Year Ended December 31, 2005
Filed March 29, 2006
Form 10-Q for Fiscal Quarter Ended September 30, 2006
Filed November 20, 2006
Response Letter dated January 12, 2007
File Nos. 0-15831, 0-15832, 0-15833,
0-16388, 0-16405, 0-16981, 0-16980, 0-17320, 0-17799, 0-17802, 0-18305
Dear Ms. Davis:
This letter is in response to your letter dated February 1, 2006 addressed
to Craig Loseke, Chief Accounting Officer for the Geodyne Energy Income Limited
Partnerships I-D, I-E, I-F, II-A, II-B, II-C, II-D, II-E, II-F, II-G, II-H
(collectively, the "Partnerships"). For ease of review, Geodyne Resources Inc.
("Geodyne"), the General Partner of the Partnerships, is responding to your
comments in the order of your letter.
Geodyne Energy Income Limited Partnerships I-D - I-F
- ----------------------------------------------------
Form 10-K for the Fiscal Year Ended December 31, 2005
- -----------------------------------------------------
Executive Compensation, page 48
- -------------------------------
1. We have considered your response to prior comment number two, where you
indicate that "It would be an administrative burden to separate the charge
that Geodyne and its affiliates make to the Partnerships from all other
joint interest billings made to third parties in all of the 5,000 plus
wells operated by Geodyne and its affiliates." If you are able, please
tell us whether or not the related party expenses required to be disclosed
separately by Rule 4-08(k) of Regulation S-X are material to the periods
presented. In addition, please expand your future
-1-
footnote two disclosure indicating to the reader which line items contain
related party transactions that have not been separately identified and
the reasons why such break-out has not been provided.
RESPONSE:
- ---------
The related party expenses required to be disclosed separately by Rule
4-08(k) of Regulation S-X are not material for the year ended December 31,
2005. The chart below shows the related party operator overhead billings
as a percentage of net income for the Series I Partnerships for the year
ended December 31, 2005:
ID 0.93%
IE 1.06%
IF 1.61%
As a result of your comments and concerns the General Partner has secured
enhancements to its financial reporting system and will disclose the
actual dollar amount of related party operator overhead paid by the
Partnerships in future financial statements.
Form 10-Q for the Fiscal Quarter Ended September 30, 2006
- ---------------------------------------------------------
Accounting Policies, page 16
- ----------------------------
Oil and Gas Properties, page 18
- -------------------------------
2. We note from your response to prior comment number nine that you "felt that
the SEC reserves with spot pricing was an appropriate measure of the fair
value of these properties and is reflective of fair value as defined by
paragraph 22 of FAS 144." You further acknowledge "that under normal
conditions it would be appropriate to calculate cash flows utilizing
forward prices as opposed to current market prices;" but that you
considered future prices during your analysis of the impairment and
determined that the effect would have been immaterial. Please provide us
with the materiality analysis that supports your conclusion. In addition,
please confirm that in the future your impairment analysis will be
performed using forward prices to determine the fair value of the asset or
asset group.
RESPONSE:
- ---------
We believe we were correct in using the SEC reserves as the measure of
fair market value in this instance, based on the characteristics of the
properties involved, and the current commodity market. The properties sold
were short-lived and pricing had a minimal impact in the impairment
calculation for these properties. The difference in impairment using SEC
reserves and reserves using current strip pricing is immaterial, as
evidenced by the attached analysis. On
-2-
February 7, 2007, we filed Current Reports on Form 8-K that indicated that
the Partnerships will terminate at their current scheduled termination
date, December 31, 2007. Therefore, we will begin liquidation basis
accounting for all Partnerships and, as such, the impairment provisions of
FAS 144 will no longer be applicable to the properties of the
Partnerships.
Engineering Comments
- --------------------
Properties, page 14
- -------------------
Proved Reserves and Net Present Value, page 19
- ----------------------------------------------
3. In your January 12, 2007 response seven, you propose to disclose "Ryder
Scott has stated to the general partner their opinion that (i) the
estimates of reserves for THE PROPERTIES WHICH THEY REVIEWED were prepared
in accordance with GENERALLY ACCEPTED PROCEDURES FOR THE ESTIMATION OF
RESERVES...". Please revise this to:
* Indicate that your consultant reviewed "the top 80% of each
Partnership's reserve base,"
* discuss the "generally accepted procedures for the estimation of
reserves" that YOU used in determining your disclosed proved reserves.
RESPONSE:
- ---------
In accordance with your instructions, the Partnerships future reports will
include the following disclosure:
"The following table sets forth each Partnership's estimated proved
oil and gas reserves and net present value therefrom as of .
----------
The schedule of quantities of proved oil and gas reserves was prepared
by the General Partner in accordance with the rules prescribed by the
Securities and Exchange Commission (the "SEC"). When preparing such
reserves the General Partner follows the SEC's definition regarding
oil and gas reserves, which were first published in 1978. The General
Partner books proved oil and gas reserves which geological and
engineering data show with reasonable certainty to be recovered in the
future from known reserves under existing economic and operating
conditions. Probable reserves are not booked.
The General Partner combines many methods of reserve estimation in
order to obtain the most accurate forecast, including both volumetric
and analogy methods. Many levels of review occur during this process.
First, the engineers review their respective wells, then the
operations manager and division vice presidents review the updated
forecasts, and finally the executive vice president of engineering
reviews approximately the top
-3-
85% (or more) wells by value. All engineers reviewing the data have
completed their engineering degrees and/or are licensed petroleum
engineers. In addition, reserve information for the top 80% of each
Partnership's reserve base has been reviewed by Ryder Scott Company,
L.P. ("Ryder Scott"), an independent petroleum engineering firm. Ryder
Scott has stated to the General Partner their opinion that (i) the
estimates of reserves for the properties which they reviewed were
prepared in accordance with generally accepted procedures for the
estimation of reserves, (ii) they found no bias in the utilization and
analysis of data, and (iii) the cash flow projections provided by
Samson of gross and net reserves and associated revenues and costs
based on constant pricing in general appear reasonable."
Geodyne Energy Income Limited Partnerships II-A - II-H
- ------------------------------------------------------
Form 10-K for the Fiscal Year Ended December 31, 2005
- -----------------------------------------------------
Executive Compensation, page 48
- -------------------------------
4. We have considered your response to prior comment number two, where you
indicate that "It would be an administrative burden to separate the charge
that Geodyne and its affiliates make to the Partnerships from all other
joint interest billings made to third parties in all of the 5,000 plus
wells operated by Geodyne and its affiliates." If you are able, please tell
us whether or not the related party expenses required to be disclosed
separately by Rule 4-08(k) of Regulation S-X are material to the periods
presented. In addition, please expand your future footnote two disclosure
indicating to the reader which line items contain related party
transactions that have not been separately identified and the reasons why
such break-out has not been provided.
RESPONSE:
- ---------
The related party expenses required to be disclosed separately by Rule
4-08(k) of Regulation S-X are not material for the year ended December 31,
2005. The chart below shows the related party operator overhead billings
as a percentage of net income for the Series II Partnerships for the year
ended December 31, 2005:
IIA 1.06%
IIB 1.41%
IIC 1.16%
IID 0.63%
IIE 1.28%
IIF 0.95%
IIG 0.98%
IIH 1.06%
-4-
As a result of your comments and concerns the General Partner has secured
enhancements to its financial reporting system and will disclose the
actual dollar amount of related party operator overhead paid by the
Partnerships in future financial statements.
Form 10-Q for the Fiscal Quarter Ended September 30, 2006
- ---------------------------------------------------------
Accounting Policies, page 16
- ----------------------------
Oil and Gas Properties, page 18
- -------------------------------
5. We note from your response to prior comment number nine that you "felt that
the SEC reserves with spot pricing was an appropriate measure of the fair
value of these properties and is reflective of fair value as defined by
paragraph 22 of FAS 144." You further acknowledge "that under normal
conditions it would be appropriate to calculate cash flows utilizing
forward prices as opposed to current market prices;" but that you
considered future prices during your analysis of the impairment and
determined that the effect would have been immaterial. Please provide us
with the materiality analysis that supports your conclusion. In addition,
please confirm that in the future your impairment analysis will be
performed using forward prices to determine the fair value of the asset or
asset group.
RESPONSE:
- ---------
We believe we were correct in using the SEC reserves as the measure of
fair market value in this instance, based on the characteristics of the
properties involved, and the current commodity market. The properties sold
were short-lived and pricing had a minimal impact in the impairment
calculation for these properties. The difference in impairment using SEC
reserves and reserves using current strip pricing is immaterial, as
evidenced by the attached analysis. On February 7, 2007, we filed Current
Reports on Form 8-K that indicated that the Partnerships will terminate at
their current scheduled termination date, December 31, 2007. Therefore, we
will begin liquidation basis accounting for all Partnerships and, as such,
the impairment provisions of FAS 144 will no longer be applicable to the
properties of the Partnerships.
Form 8-K filed December 29, 2006 for Partnerships II-E and II-F
- ---------------------------------------------------------------
Form 8-K/A filed December 29, 2006 for Partnerships II-G and II-H
- -----------------------------------------------------------------
6. We note your statement that the "pro forma financial information that
would be required pursuant to Article 11 of Regulation S-X will be filed
by amendment to this Form 8-K as soon as possible." Please note that with
dispositions, pro forma information should be filed within 15 days after
the disposition. The 71-day
-5-
extension available for filing financial statements and pro forma
information for acquisitions is not available for dispositions. Please
tell us when you intend to file the required pro forma financial
statements.
RESPONSE:
- ---------
The required pro forma financial statements were filed on February 5,
2007.
Engineering Comments
- --------------------
Properties, page 15
- -------------------
Proved Reserves and Net Present Value, page 30
- ----------------------------------------------
7. In your January 12, 2007 response seventeen, you propose to disclose
"Ryder Scott has stated to the general partner their opinion that (i) the
estimates of reserves for THE PROPERTIES WHICH THEY REVIEWED were prepared
in accordance with GENERALLY ACCEPTED PROCEDURES FOR THE ESTIMATION OF
RESERVES...". Please revise this to:
* Clarify that your consultant reviewed "the top 80% of each
Partnership's reserve base,"
* Discuss the "generally accepted procedures for the estimation of
reserves" that YOU used in determining your disclosed proved reserves.
RESPONSE:
- ---------
In accordance with your instructions, the Partnerships future reports will
include the following disclosure:
"The following table sets forth each Partnership's estimated proved
oil and gas reserves and net present value therefrom as of .
----------
The schedule of quantities of proved oil and gas reserves was prepared
by the General Partner in accordance with the rules prescribed by the
Securities and Exchange Commission (the "SEC"). When preparing such
reserves the General Partner follows the SEC's definition regarding
oil and gas reserves, which were first published in 1978. The General
Partner books proved oil and gas reserves which geological and
engineering data show with reasonable certainty to be recovered in the
future from known reserves under existing economic and operating
conditions. Probable reserves are not booked.
The General Partner combines many methods of reserve estimation in
order to obtain the most accurate forecast, including both volumetric
and analogy methods. Many levels of review occur during this process.
First,
-6-
the engineers review their respective wells, then the operations
manager and division vice presidents review the updated forecasts,
and finally the executive vice president of engineering reviews
approximately the top 85% (or more) wells by value. All engineers
reviewing the data have completed their engineering degrees and/or
are licensed petroleum engineers. In addition, reserve information
for the top 80% of each Partnership's reserve base has been reviewed
by Ryder Scott Company, L.P. ("Ryder Scott"), an independent
petroleum engineering firm. Ryder Scott has stated to the General
Partner their opinion that (i) the estimates of reserves for the
properties which they reviewed were prepared in accordance with
generally accepted procedures for the estimation of reserves, (ii)
they found no bias in the utilization and analysis of data, and
(iii) the cash flow projections provided by Samson of gross and net
reserves and associated revenues and costs based on constant pricing
in general appear reasonable."
CLOSING:
If you have any questions or comments concerning our responses, please do
not hesitate to contact me at 918-591-1213 (phone), 918-591-1748 (fax) or
closeke@samson.com.
Very truly ours,
GEODYNE RESOURCES INC.
//s// Craig Loseke
Craig Loseke
Chief Accounting Officer
Attachments
cc: Jennifer Goeken-SEC
Ronald Winfrey-SEC
PricewaterhouseCoopers
Dennis Neill
-7-
Geodyne Partnerships
Impairment as a Percentage of Net Income
Nine Months Ended September 30, 2006
Impairment
Impairment Net Income Using Strip
Partnership Incurred Nine Months Pricing Difference % of Net Income
9/30/2006 9/30/2006 9/30/2006 9/30/2006
----------- ---------- ----------- ----------- ---------- ---------------
<s>
I-D 2,534.93 576,993.00 2,013.23 521.70 0.09%
I-E 42,553.91 3,744,172.00 34,903.87 7,650.04 0.20%
I-F 20,617.17 1,141,558.00 17,008.38 3,608.79 0.32%
II-A 12,869.41 3,671,658.00 7,927.70 4,941.71 0.13%
II-B 6,568.51 2,566,270.00 1,927.76 4,640.75 0.18%
II-C 5,336.14 1,306,613.00 344.13 4,992.01 0.38%
II-D 3,249.96 2,520,422.00 2,031.50 1,218.46 0.05%
II-E 20,277.80 1,741,038.00 5,271.86 15,005.94 0.86%
II-F 24,473.51 2,154,196.00 9,782.08 14,691.43 0.68%
II-G 54,129.39 4,584,359.00 20,454.32 33,675.07 0.73%
II-H 6,934.75 1,062,218.00 0.00 6,934.75 0.65%
Geodyne Partnerships
Impairment as a Percentage of Net Income
Three Months Ended September 30, 2006
Impairment
Impairment Net Income Using Strip
Partnership Incurred Three Months Pricing Difference % of Net Income
9/30/2006 9/30/2006 9/30/2006 9/30/2006
----------- ---------- ------------ ----------- ---------- ---------------
<s>
I-D 2,534.93 214,577.00 2,013.23 521.70 0.24%
I-E 42,553.91 1,427,264.00 34,903.87 7,650.04 0.54%
I-F 20,617.17 430,177.00 17,008.38 3,608.79 0.84%
II-A 12,869.41 1,389,378.00 7,927.70 4,941.71 0.36%
II-B 6,568.51 772,478.00 1,927.76 4,640.75 0.60%
II-C 5,336.14 400,680.00 344.13 4,992.01 1.25%
II-D 3,249.96 708,431.00 2,031.50 1,218.46 0.17%
II-E 20,277.80 527,376.00 5,271.86 15,005.94 2.85%
II-F 24,473.51 757,529.00 9,782.08 14,691.43 1.94%
II-G 54,129.39 1,603,885.00 20,454.32 33,675.07 2.10%
II-H 6,934.75 383,079.00 0.00 6,934.75 1.81%