FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2007
Commission File Number:
III-A: 0-18302 III-B: 0-18636 III-C: 0-18634
III-D: 0-18936 III-E: 0-19010 III-F: 0-19102
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
---------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
III-A 73-1352993
III-B 73-1358666
III-C 73-1356542
III-D 73-1357374
III-E 73-1367188
Oklahoma III-F 73-1377737
- ---------------------------- -------------------------------
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or No.)
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
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
STATEMENT OF NET ASSETS OF PARTNERSHIP IN LIQUIDATION
(Unaudited)
MARCH 31,
2007
-----------
NET ASSETS OF PARTNERSHIP IN LIQUIDATION,
at fair value $11,157,938
===========
PARTNERS' CAPITAL:
General Partner $ 1,034,112
Limited Partners, issued and
outstanding, 263,976 units 10,123,826
-----------
Total Partners' capital $11,157,938
===========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-3-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
STATEMENT OF CHANGES IN NET ASSETS OF PARTNERSHIP
IN LIQUIDATION
(Unaudited)
PERIOD FROM
FEBRUARY 5,
TO MARCH 31,
2007
------------
Total Partners' capital at February 4, 2007 $ 2,496,044
Adjust assets to fair value, net of
estimated selling costs 9,413,276
Partners' distributions from February 5, 2007
to March 31, 2007 ( 1,193,998)
Revenues from February 5, 2007 to March 31, 2007 662,723
Operating expenses incurred from
February 5, 2007 to March 31, 2007 ( 220,107)
-----------
Net assets of partnership in liquidation
at March 31, 2007 $11,157,938
===========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-4-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
BALANCE SHEET
(GOING CONCERN BASIS)
(Unaudited)
ASSETS
DECEMBER 31,
2006
------------
CURRENT ASSETS:
Cash and cash equivalents $1,443,396
Accounts receivable:
Oil and gas sales 571,125
Assets held for sale (Note 3) 32,307
----------
Total current assets $2,046,828
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 588,645
DEFERRED CHARGE 184,941
----------
$2,820,414
==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 151,192
Gas imbalance payable 21,627
Asset retirement obligation -
current (Note 1) 10,086
Assets retirement obligation -
assets held for sale 3,870
Liabilities of assets held
for sale 4,257
----------
Total current liabilities $ 191,032
LONG-TERM LIABILITIES:
Accrued liability $ 31,040
Asset retirement obligation (Note 1) 271,011
----------
Total long-term liabilities $ 302,051
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 59,707)
Limited Partners, issued and
outstanding, 263,976 units 2,387,038
----------
Total Partners' capital $2,327,331
----------
$2,820,414
==========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-5-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
STATEMENTS OF OPERATIONS
(GOING CONCERN BASIS)
(Unaudited)
PERIOD FROM THREE MONTHS
JANUARY 1, TO ENDED
FEBRUARY 4, MARCH 31,
2007 2006
------------- -----------
REVENUES:
Oil and gas sales $275,668 $1,081,728
Interest income 2,757 9,146
-------- ----------
$278,425 $1,090,874
COSTS AND EXPENSES:
Lease operating $ 37,643 $ 158,677
Production tax 26,127 85,937
Depreciation, depletion, and
amortization of oil and gas
properties 5,096 26,677
General and administrative
(Note 2) 26,619 97,480
-------- ----------
$ 95,485 $ 368,771
-------- ----------
INCOME FROM CONTINUING OPERATIONS $182,940 $ 722,103
DISCONTINUED OPERATIONS:
Income from discontinued operations
(Note 3) 3,513 21,975
-------- ----------
NET INCOME $186,453 $ 744,078
======== ==========
GENERAL PARTNER:
Net income from continuing
operations $ 18,477 $ 73,697
Net income from discontinued
operations 352 2,271
-------- ----------
NET INCOME $ 18,829 $ 75,968
======== ==========
-6-
LIMITED PARTNERS:
Net income from continuing
operations $164,463 $648,406
Net income from discontinued
operations 3,161 19,704
-------- --------
NET INCOME $167,624 $668,110
======== ========
NET INCOME FROM CONTINUING
OPERATIONS PER UNIT $ 0.62 $ 2.46
NET INCOME FROM DISCONTINUED
OPERATIONS PER UNIT 0.01 0.07
-------- --------
NET INCOME PER UNIT $ 0.63 $ 2.53
======== ========
UNITS OUTSTANDING 263,976 263,976
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-7-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
STATEMENTS OF CASH FLOWS
(GOING CONCERN BASIS)
(Unaudited)
PERIOD FROM THREE MONTHS
JANUARY 1, TO ENDED
FEBRUARY 4, MARCH 31,
2007 2006
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 186,453 $ 744,078
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 5,108 27,490
Decrease in accounts receivable -
oil and gas sales 27,132 235,950
Increase (decrease) in accounts
payable ( 7,153) 8,712
---------- ----------
Net cash provided by operating
activities $ 211,540 $1,016,230
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures $ - ($ 8,162)
Proceeds from the sale of oil and
gas properties 60 -
---------- ----------
Net cash provided (used) by investing
activities $ 60 ($ 8,162)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($ 17,740) ($1,029,120)
---------- ----------
Net cash used by financing
activities ($ 17,740) ($1,029,120)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 193,860 ($ 21,052)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,443,396 1,209,317
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $1,637,256 $1,188,265
========== ==========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-8-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
STATEMENT OF NET ASSETS OF PARTNERSHIP IN LIQUIDATION
(Unaudited)
MARCH 31,
2007
-----------
NET ASSETS OF PARTNERSHIP IN LIQUIDATION,
at fair value $5,196,642
==========
PARTNERS' CAPITAL:
General Partner $ 716,138
Limited Partners, issued and
outstanding, 138,336 units 4,480,504
----------
Total Partners' capital $5,196,642
==========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-9-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
STATEMENT OF CHANGES IN NET ASSETS OF PARTNERSHIP
IN LIQUIDATION
(Unaudited)
PERIOD FROM
FEBRUARY 5,
TO MARCH 31,
2007
------------
Total Partners' capital at February 4, 2007 $1,252,448
Adjust assets to fair value, net of
estimated selling costs 4,268,332
Partners' distributions from February 5, 2007
to March 31, 2007 ( 563,765)
Revenues from February 5, 2007 to March 31, 2007 378,309
Operating expenses incurred from
February 5, 2007 to March 31, 2007 ( 138,682)
----------
Net assets of partnership in liquidation
at March 31, 2007 $5,196,642
==========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-10-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
BALANCE SHEET
(GOING CONCERN BASIS)
(Unaudited)
ASSETS
DECEMBER 31,
2006
------------
CURRENT ASSETS:
Cash and cash equivalents $ 700,511
Accounts receivable:
Oil and gas sales 296,055
Assets held for sale (Note 3) 7,506
----------
Total current assets $1,004,072
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 349,851
DEFERRED CHARGE 122,514
----------
$1,476,437
==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 96,722
Gas imbalance payable 12,356
Asset retirement obligation -
current (Note 1) 5,552
Liabilities of assets held
for sale 1,049
----------
Total current liabilities $ 115,679
LONG-TERM LIABILITIES:
Accrued liability $ 8,001
Asset retirement obligation (Note 1) 181,827
----------
Total long-term liabilities $ 189,828
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 41,841)
Limited Partners, issued and
outstanding, 138,336 units 1,212,771
----------
Total Partners' capital $1,170,930
----------
$1,476,437
==========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-11-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
STATEMENTS OF OPERATIONS
(GOING CONCERN BASIS)
(Unaudited)
PERIOD FROM THREE MONTHS
JANUARY 1, TO ENDED
FEBRUARY 4, MARCH 31,
2007 2006
------------- ------------
REVENUES:
Oil and gas sales $153,250 $583,724
Interest income 1,385 4,426
-------- --------
$154,635 $588,150
COSTS AND EXPENSES:
Lease operating $ 25,902 $103,287
Production tax 15,033 49,667
Depreciation, depletion, and
amortization of oil and gas
properties 2,847 15,279
General and administrative
(Note 2) 14,958 62,496
-------- --------
$ 58,740 $230,729
-------- --------
INCOME FROM CONTINUING OPERATIONS $ 95,895 $357,421
DISCONTINUED OPERATIONS:
Income from discontinued operations
(Note 3) 573 3,913
-------- --------
NET INCOME $ 96,468 $361,334
======== ========
GENERAL PARTNER:
Net income from continuing
operations $ 14,575 $ 55,088
Net income from discontinued
operations 86 635
-------- --------
NET INCOME $ 14,661 $ 55,723
======== ========
-12-
LIMITED PARTNERS:
Net income from continuing
operations $ 81,320 $302,333
Net income from discontinued
operations 487 3,278
-------- --------
NET INCOME $ 81,807 $305,611
======== ========
NET INCOME FROM CONTINUING
OPERATIONS PER UNIT $ 0.59 $ 2.19
NET INCOME FROM DISCONTINUED
OPERATIONS PER UNIT - 0.02
-------- --------
NET INCOME PER UNIT $ 0.59 $ 2.21
======== ========
UNITS OUTSTANDING 138,336 138,336
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-13-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
STATEMENTS OF CASH FLOWS
(GOING CONCERN BASIS)
(Unaudited)
PERIOD FROM THREE MONTHS
JANUARY 1, TO ENDED
FEBRUARY 4, MARCH 31,
2007 2006
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 96,468 $361,334
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 2,847 15,623
Decrease in accounts receivable -
oil and gas sales 14,051 108,977
Increase (decrease) in accounts
payable ( 328) 10,115
-------- --------
Net cash provided by operating
activities $113,038 $496,049
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 5,232) ($ 5,476)
-------- --------
Net cash used by investing
activities ($ 5,232) ($ 5,476)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($ 14,950) ($518,920)
-------- --------
Net cash used by financing
activities ($ 14,950) ($518,920)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 92,856 ($ 28,347)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 700,511 604,086
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $793,367 $575,739
======== ========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-14-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
STATEMENT OF NET ASSETS OF PARTNERSHIP IN LIQUIDATION
(Unaudited)
MARCH 31,
2007
-----------
NET ASSETS OF PARTNERSHIP IN LIQUIDATION,
at fair value $15,566,991
===========
PARTNERS' CAPITAL:
General Partner $ 1,379,672
Limited Partners, issued and
outstanding, 244,536 units 14,187,319
-----------
Total Partners' capital $15,566,991
===========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-15-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
STATEMENT OF CHANGES IN NET ASSETS OF PARTNERSHIP
IN LIQUIDATION
(Unaudited)
PERIOD FROM
FEBRUARY 5,
TO MARCH 31,
2007
------------
Total Partners' capital at February 4, 2007 $ 3,255,784
Adjust assets to fair value, net of
estimated selling costs 12,626,037
Partners' distributions from February 5, 2007
to March 31, 2007 ( 869,410)
Revenues from February 5, 2007 to March 31, 2007 801,757
Operating expenses incurred from
February 5, 2007 to March 31, 2007 ( 247,177)
-----------
Net assets of partnership in liquidation
at March 31, 2007 $15,566,991
===========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-16-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
BALANCE SHEET
(GOING CONCERN BASIS)
(Unaudited)
ASSETS
DECEMBER 31,
2006
------------
CURRENT ASSETS:
Cash and cash equivalents $1,129,134
Accounts receivable:
Oil and gas sales 901,653
Related party 4,262
Assets held for sale (Note 3) 13,656
----------
Total current assets $2,048,705
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 1,634,985
DEFERRED CHARGE 56,549
----------
$3,740,239
==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 168,287
Gas imbalance payable 27,417
Asset retirement obligation -
current (Note 1) 24,559
Assets retirement obligation -
assets held for sale 291
Liabilities of assets held for sale 689
----------
Total current liabilities $ 221,243
LONG-TERM LIABILITIES:
Accrued liability $ 123,503
Asset retirement obligation (Note 1) 365,663
----------
Total long-term liabilities $ 489,166
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 90,026)
Limited Partners, issued and
outstanding, 244,536 units 3,119,856
----------
Total Partners' capital $3,029,830
----------
$3,740,239
==========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-17-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
STATEMENTS OF OPERATIONS
(GOING CONCERN BASIS)
(Unaudited)
PERIOD FROM THREE MONTHS
JANUARY 1, TO ENDED
FEBRUARY 4, MARCH 31,
2007 2006
------------- ------------
REVENUES:
Oil and gas sales $327,291 $1,218,588
Interest income 2,893 7,611
-------- ----------
$330,184 $1,226,199
COSTS AND EXPENSES:
Lease operating $ 32,344 $ 184,398
Production tax 6,623 89,437
Depreciation, depletion, and
amortization of oil and gas
properties 19,026 52,509
General and administrative
(Note 2) 24,815 91,992
-------- ----------
$ 82,808 $ 418,336
-------- ----------
INCOME FROM CONTINUING OPERATIONS $247,376 $ 807,863
DISCONTINUED OPERATIONS:
Income from discontinued operations
(Note 3) 2,121 10,431
-------- ----------
NET INCOME $249,497 $ 818,294
======== ==========
GENERAL PARTNER:
Net income from continuing
operations $ 26,161 $ 84,751
Net income from discontinued
operations 212 1,216
-------- ----------
NET INCOME $ 26,373 $ 85,967
======== ==========
-18-
LIMITED PARTNERS:
Net income from continuing
operations $221,215 $ 723,112
Net income from discontinued
operations 1,909 9,215
-------- ----------
NET INCOME $223,124 $ 732,327
======== ==========
NET INCOME FROM CONTINUING
OPERATIONS PER UNIT $ 0.90 $ 2.96
NET INCOME FROM DISCONTINUED
OPERATIONS PER UNIT 0.01 0.04
-------- ----------
NET INCOME PER UNIT $ 0.91 $ 3.00
======== ==========
UNITS OUTSTANDING 244,536 244,536
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-19-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
STATEMENTS OF CASH FLOWS
(GOING CONCERN BASIS)
(Unaudited)
PERIOD FROM THREE MONTHS
JANUARY 1, TO ENDED
FEBRUARY 4, MARCH 31,
2007 2006
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 249,497 $ 818,294
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 19,026 54,431
Settlement of asset retirement
obligation - ( 109)
Decrease in accounts receivable -
oil and gas sales 23,646 184,167
Increase in accounts receivable -
related party - ( 10,461)
Decrease in accounts payable ( 34,565) ( 58,628)
Decrease in gas imbalance
payable - ( 9,372)
---------- ----------
Net cash provided by operating
activities $ 257,604 $ 978,322
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 8,323) ($ 186,053)
---------- ----------
Net cash used by investing
activities ($ 8,323) ($ 186,053)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($ 23,543) ($ 747,805)
---------- ----------
Net cash used by financing
activities ($ 23,543) ($ 747,805)
---------- ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 225,738 $ 44,464
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,129,134 1,013,378
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $1,354,872 $1,057,842
========== ==========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-20-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
STATEMENT OF NET ASSETS OF PARTNERSHIP IN LIQUIDATION
(Unaudited)
MARCH 31,
2007
-----------
NET ASSETS OF PARTNERSHIP IN LIQUIDATION,
at fair value $9,165,043
==========
PARTNERS' CAPITAL:
General Partner $ 826,810
Limited Partners, issued and
outstanding, 131,008 units 8,338,233
----------
Total Partners' capital $9,165,043
==========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-21-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
STATEMENT OF CHANGES IN NET ASSETS OF PARTNERSHIP
IN LIQUIDATION
(Unaudited)
PERIOD FROM
FEBRUARY 5,
TO MARCH 31,
2007
------------
Total Partners' capital at February 4, 2007 $1,627,072
Adjust assets to fair value, net of
estimated selling costs 7,635,038
Partners' distributions from February 5, 2007
to March 31, 2007 ( 425,717)
Revenues from February 5, 2007 to March 31, 2007 485,087
Operating expenses incurred from
February 5, 2007 to March 31, 2007 ( 156,437)
----------
Net assets of partnership in liquidation
at March 31, 2007 $9,165,043
==========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-22-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
BALANCE SHEET
(GOING CONCERN BASIS)
(Unaudited)
ASSETS
DECEMBER 31,
2006
------------
CURRENT ASSETS:
Cash and cash equivalents $ 560,391
Accounts receivable:
Oil and gas sales 554,939
Related party 610
Other 26,776
Assets held for sale (Note 3) 2,524
----------
Total current assets $1,145,240
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 796,560
DEFERRED CHARGE 14,055
----------
$1,955,855
==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 114,417
Gas imbalance payable 5,724
Asset retirement obligation -
current (Note 1) 16,323
Assets retirement obligation -
assets held for sale 31
Liabilities of assets held
for sale 298
----------
Total current liabilities $ 136,793
LONG-TERM LIABILITIES:
Accrued liability $ 154,492
Asset retirement obligation (Note 1) 194,358
----------
Total long-term liabilities $ 348,850
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 17,347)
Limited Partners, issued and
outstanding, 131,008 units 1,487,559
----------
Total Partners' capital $1,470,212
----------
$1,955,855
==========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-23-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
STATEMENTS OF OPERATIONS
(GOING CONCERN BASIS)
(Unaudited)
PERIOD FROM THREE MONTHS
JANUARY 1, TO ENDED
FEBRUARY 4, MARCH 31,
2007 2006
------------- -----------
REVENUES:
Oil and gas sales $214,876 $711,608
Interest income 1,276 4,061
-------- --------
$216,152 $715,669
COSTS AND EXPENSES:
Lease operating $ 17,352 $116,917
Production tax 7,567 51,228
Depreciation, depletion, and
amortization of oil and gas
properties 11,560 32,891
General and administrative
(Note 2) 14,276 60,376
-------- --------
$ 50,755 $261,412
-------- --------
INCOME FROM CONTINUING OPERATIONS $165,397 $454,257
DISCONTINUED OPERATIONS:
Income from discontinued operations
(Note 3) 535 2,921
Gain on disposal of discontinued
operations (Note 3) 9,546 -
-------- --------
NET INCOME $175,478 $457,178
======== ========
GENERAL PARTNER:
Net income from continuing
operations $ 17,453 $ 47,980
Net income from discontinued
operations 1,008 315
-------- --------
NET INCOME $ 18,461 $ 48,295
======== ========
-24-
LIMITED PARTNERS:
Net income from continuing
operations $147,944 $406,277
Net income from discontinued
operations 9,073 2,606
-------- --------
NET INCOME $157,017 $408,883
======== ========
NET INCOME FROM CONTINUING
OPERATIONS PER UNIT $ 1.13 $ 3.10
NET INCOME FROM DISCONTINUED
OPERATIONS PER UNIT 0.07 0.02
-------- --------
NET INCOME PER UNIT $ 1.20 $ 3.12
======== ========
UNITS OUTSTANDING 131,008 131,008
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-25-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
STATEMENTS OF CASH FLOWS
(GOING CONCERN BASIS)
(Unaudited)
PERIOD FROM THREE MONTHS
JANUARY 1, TO ENDED
FEBRUARY 4, MARCH 31,
2007 2006
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $175,478 $457,178
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 11,560 33,147
Gain on disposal of discontinued
operations ( 9,546) -
Settlement of asset retirement
obligation - ( 1,152)
Decrease in accounts receivable -
oil and gas sales 17,397 90,935
Decrease in accounts payable ( 30,222) ( 22,901)
Increase in accounts payable -
related party - 4,547
Decrease in gas imbalance
payable - ( 1,336)
-------- --------
Net cash provided by operating
activities $164,667 $560,418
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 2,126) ($160,445)
-------- --------
Net cash used by investing
activities ($ 2,126) ($160,445)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($ 18,618) ($397,874)
-------- --------
Net cash used by financing
activities ($ 18,618) ($397,874)
-------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $143,923 $ 2,099
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 560,391 547,247
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $704,314 $549,346
======== ========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-26-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
STATEMENT OF NET ASSETS OF PARTNERSHIP IN LIQUIDATION
(Unaudited)
MARCH 31,
2007
-----------
NET ASSETS OF PARTNERSHIP IN LIQUIDATION,
at fair value $14,675,541
===========
PARTNERS' CAPITAL:
General Partner $ 1,317,080
Limited Partners, issued and
outstanding, 418,266 units 13,358,461
-----------
Total Partners' capital $14,675,541
===========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-27-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
STATEMENT OF CHANGES IN NET ASSETS OF PARTNERSHIP
IN LIQUIDATION
(Unaudited)
PERIOD FROM
FEBRUARY 5,
TO MARCH 31,
2007
------------
Total Partners' capital at February 4, 2007 $ 2,734,518
Adjust assets to fair value, net of
estimated selling costs 12,259,139
Partners' distributions from February 5, 2007
to March 31, 2007 ( 639,736)
Revenues from February 5, 2007 to March 31, 2007 705,753
Operating expenses incurred from
February 5, 2007 to March 31, 2007 ( 384,133)
-----------
Net assets of partnership in liquidation
at March 31, 2007 $14,675,541
===========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-28-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
BALANCE SHEET
(GOING CONCERN BASIS)
(Unaudited)
ASSETS
DECEMBER 31,
2006
------------
CURRENT ASSETS:
Cash and cash equivalents $ 981,324
Accounts receivable:
Oil and gas sales 743,001
Other 191,092
Assets held for sale (Note 3) 40,781
----------
Total current assets $1,956,198
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 1,592,366
DEFERRED CHARGE 29,450
----------
$3,578,014
==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 318,209
Accrued liability - other 105,000
Gas imbalance payable 21,870
Asset retirement obligation -
current (Note 1) 63,380
Assets retirement obligation -
assets held for sale 31,202
Liabilities of assets held
for sale 33,812
----------
Total current liabilities $ 573,473
LONG-TERM LIABILITIES:
Accrued liability $ 157,310
Asset retirement obligation (Note 1) 362,904
----------
Total long-term liabilities $ 520,214
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 263,673)
Limited Partners, issued and
outstanding, 418,266 units 2,748,000
----------
Total Partners' capital $2,484,327
----------
$3,578,014
==========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-29-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
STATEMENTS OF OPERATIONS
(GOING CONCERN BASIS)
(Unaudited)
PERIOD FROM THREE MONTHS
JANUARY 1, TO ENDED
FEBRUARY 4, MARCH 31,
2007 2006
------------- -----------
REVENUES:
Oil and gas sales $333,536 $1,239,076
Interest income 2,583 11,108
Other income - 10,740
-------- ----------
$336,119 $1,260,924
COSTS AND EXPENSES:
Lease operating $ 69,753 $ 210,521
Production tax 20,752 81,064
Depreciation, depletion, and
amortization of oil and gas
properties 15,707 66,084
General and administrative
(Note 2) 40,939 140,368
-------- ----------
$147,151 $ 498,037
-------- ----------
INCOME FROM CONTINUING OPERATIONS $188,968 $ 762,887
DISCONTINUED OPERATIONS:
Income from discontinued operations
(Note 3) 8,887 32,968
Gain on disposal of discontinued
operations (Note 3) 68,128 -
-------- ----------
NET INCOME $265,983 $ 795,855
======== ==========
GENERAL PARTNER:
Net income from continuing
operations $ 20,052 $ 81,125
Net income from discontinued
operations 7,713 3,807
-------- ----------
NET INCOME $ 27,765 $ 84,932
======== ==========
-30-
LIMITED PARTNERS:
Net income from continuing
operations $168,916 $ 681,762
Net income from discontinued
operations 69,302 29,161
-------- ----------
NET INCOME $238,218 $ 710,923
======== ==========
NET INCOME FROM CONTINUING
OPERATIONS PER UNIT $ 0.40 $ 1.63
NET INCOME FROM DISCONTINUED
OPERATIONS PER UNIT 0.17 0.07
-------- ----------
NET INCOME PER UNIT $ 0.57 $ 1.70
======== ==========
UNITS OUTSTANDING 418,266 418,266
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-31-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
STATEMENTS OF CASH FLOWS
(GOING CONCERN BASIS)
(Unaudited)
PERIOD FROM THREE MONTHS
JANUARY 1, TO ENDED
FEBRUARY 4, MARCH 31,
2007 2006
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 265,983 $ 795,855
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 15,833 71,757
Gain on disposal of discontinued
operations ( 68,128) -
Settlement of asset retirement
obligations ( 1,922) -
(Increase) decrease in accounts
receivable - oil and gas sales ( 20,522) 320,493
Decrease in accounts payable ( 830) ( 40,944)
Increase in accrued liability -
other - 11,865
---------- ----------
Net cash provided by operating
activities $ 190,414 $1,159,026
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 3,671) ($ 75,745)
---------- ----------
Net cash used by investing
activities ($ 3,671) ($ 75,745)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($ 15,792) ($1,051,551)
---------- ----------
Net cash used by financing
activities ($ 15,792) ($1,051,551)
---------- ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 170,951 $ 31,730
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 981,324 1,460,559
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $1,152,275 $1,492,289
========== ==========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-32-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
STATEMENT OF NET ASSETS OF PARTNERSHIP IN LIQUIDATION
(Unaudited)
MARCH 31,
2007
-----------
NET ASSETS OF PARTNERSHIP IN LIQUIDATION,
at fair value $13,168,145
===========
PARTNERS' CAPITAL:
General Partner $ 1,168,477
Limited Partners, issued and
outstanding, 221,484 units 11,999,668
-----------
Total Partners' capital $13,168,145
===========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-33-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
STATEMENT OF CHANGES IN NET ASSETS OF PARTNERSHIP
IN LIQUIDATION
(Unaudited)
PERIOD FROM
FEBRUARY 5,
TO MARCH 31,
2007
------------
Total Partners' capital at February 4, 2007 $ 2,243,782
Adjust assets to fair value, net of
estimated selling costs 11,122,620
Partners' distributions from February 5, 2007
to March 31, 2007 ( 468,028)
Revenues from February 5, 2007 to March 31, 2007 503,721
Operating expenses incurred from
February 5, 2007 to March 31, 2007 ( 233,950)
-----------
Net assets of partnership in liquidation
at March 31, 2007 $13,168,145
===========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-34-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
BALANCE SHEET
(GOING CONCERN BASIS)
(Unaudited)
ASSETS
DECEMBER 31,
2006
------------
CURRENT ASSETS:
Cash and cash equivalents $ 697,184
Accounts receivable:
Oil and gas sales 452,134
Assets held for sale (Note 3) 205,453
----------
Total current assets $1,354,771
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 1,381,325
DEFERRED CHARGE 13,909
----------
$2,750,005
==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 136,660
Accrued liability - other 90,000
Gas imbalance payable 18,329
Asset retirement obligation -
current (Note 1) 11,729
Assets retirement obligation -
assets held for sale 33,931
Liabilities of assets held
for sale 24,291
----------
Total current liabilities $ 314,940
LONG-TERM LIABILITIES:
Accrued liability $ 68,572
Asset retirement obligation (Note 1) 243,724
----------
Total long-term liabilities $ 312,296
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 126,790)
Limited Partners, issued and
outstanding, 221,484 units 2,249,559
----------
Total Partners' capital $2,122,769
----------
$2,750,005
==========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-35-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
STATEMENTS OF OPERATIONS
(GOING CONCERN BASIS)
(Unaudited)
PERIOD FROM THREE MONTHS
JANUARY 1, TO ENDED
FEBRUARY 4, MARCH 31,
2007 2006
------------- -----------
REVENUES:
Oil and gas sales $182,805 $681,365
Interest income 1,664 8,023
Other income - 9,018
-------- --------
$184,469 $698,406
COSTS AND EXPENSES:
Lease operating $ 32,119 $146,256
Production tax 11,695 45,098
Depreciation, depletion, and
amortization of oil and gas
properties 12,468 41,055
General and administrative
(Note 2) 22,673 85,567
-------- --------
$ 78,955 $317,976
-------- --------
INCOME FROM CONTINUING OPERATIONS $105,514 $380,430
DISCONTINUED OPERATIONS:
Income from discontinued operations
(Note 3) 28,770 149,945
-------- --------
NET INCOME $134,284 $530,375
======== ========
GENERAL PARTNER:
Net income from continuing
operations $ 11,507 $ 40,936
Net income from discontinued
operations 2,891 15,239
-------- --------
NET INCOME $ 14,398 $ 56,175
======== ========
-36-
LIMITED PARTNERS:
Net income from continuing
operations $ 94,007 $339,494
Net income from discontinued
operations 25,879 134,706
-------- --------
NET INCOME $119,886 $474,200
======== ========
NET INCOME FROM CONTINUING
OPERATIONS PER UNIT $ 0.42 $ 1.53
NET INCOME FROM DISCONTINUED
OPERATIONS PER UNIT 0.12 0.61
-------- --------
NET INCOME PER UNIT $ 0.54 $ 2.14
======== ========
UNITS OUTSTANDING 221,484 221,484
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-37-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
STATEMENTS OF CASH FLOWS
(GOING CONCERN BASIS)
(Unaudited)
PERIOD FROM THREE MONTHS
JANUARY 1, TO ENDED
FEBRUARY 4, MARCH 31,
2007 2006
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $134,284 $ 530,375
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion, and
amortization of oil and gas
properties 12,619 43,775
Decrease in accounts receivable -
oil and gas sales 9,045 198,024
Decrease in accounts payable ( 18,226) ( 8,558)
-------- ----------
Net cash provided by operating
activities $137,722 $ 763,616
-------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 2,683) ($ 10,597)
-------- ----------
Net cash used by investing
activities ($ 2,683) ($ 10,597)
-------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($ 13,271) ($ 852,833)
-------- ----------
Net cash used by financing
activities ($ 13,271) ($ 852,833)
-------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $121,768 ($ 99,814)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 697,184 1,062,866
-------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $818,952 $ 963,052
======== ==========
The accompanying condensed notes are an integral part of these
unaudited financial statements.
-38-
GEODYNE ENERGY INCOME PROGRAM III LIMITED PARTNERSHIPS
CONDENSED NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 2007
(Unaudited)
1. BASIS OF PRESENTATION
---------------------
These unaudited financial statements are presented on a going concern
basis as of December 31, 2006 and for the period January 1, 2007 through
February 4, 2007 and the three months ended March 31, 2006. On February 5,
2007, Geodyne Resources, Inc., the General Partner of the Partnerships
(the "General Partner") mailed a notice to the limited partners announcing
that the Partnerships will terminate at the end of their current term,
December 31, 2007. Consequently, the Partnerships adopted the liquidation
basis of accounting effective February 5, 2007. The liquidation basis of
accounting reports the net assets of the Partnerships at their net
realizable value. Adjustments were made to reduce all balance sheet
categories into one line, net assets of Partnership in liquidation, which
is an estimate of the net fair value of all Partnership assets and
liabilities. Cash, accounts receivable, and accounts payable were valued
at their historical cost, which approximates fair value. Oil and gas
properties were valued at their estimated net sales price, which was
estimated utilizing discounted cash flows based on strip pricing as of
March 31, 2007 at a discount rate of 10% for proved developed producing
reserves, 18% for proved developed non-producing reserves and 20% for
proved undeveloped reserves. An adjustment was made to the discounted cash
flows for the effects of gas balancing and asset retirement obligations. A
provision was also made to account for expenses that will be incurred
directly related to the sale of the oil and gas properties. The allocation
of the net assets of Partnership in liquidation to the General Partner and
limited partners was calculated using the current allocation of income and
expenses, which may change.
The value of net assets in liquidation of the Partnerships is
substantially dependent on prices of crude oil, natural gas, and natural
gas liquids. Declines in commodity prices will adversely affect the amount
of cash that will be received from the sale of the Partnerships' oil and
gas properties in liquidation, and thus ultimately affect the amount of
cash that will be available for distribution to the partners.
-39-
The following table presents the estimated change in value of net assets
of Partnerships in liquidation presuming a decrease of 10% in forecasted
natural gas and crude oil prices. These estimated decreases in liquidation
values are in comparison to the estimated liquidation value calculated
using strip pricing for the Unaudited Statements of Changes in Net Assets
of Partnership in Liquidation at March 31, 2007.
General Limited
Partnership Partner Partners Total
----------- --------- ---------- ----------
III-A $138,000 $1,237,000 $1,375,000
III-B 97,000 552,000 649,000
III-C 202,000 1,823,000 2,025,000
III-D 118,000 1,065,000 1,183,000
III-E 219,000 1,968,000 2,187,000
III-F 181,000 1,630,000 1,811,000
ACCOUNTING POLICIES
-------------------
The Unaudited Statements of Net Assets of Partnership in Liquidation as of
March 31, 2007, Unaudited Statements of Changes in Net Assets of
Partnership in Liquidation as of March 31, 2007, Unaudited Statements of
Operations for the period from January 1, 2007 to February 4, 2007 and the
three months ended March 31, 2006, and Unaudited Statements of Cash Flows
for the period from January 1, 2007 to February 4, 2007 and the three
months ended March 31, 2006 were prepared by the General Partner. In the
opinion of management the financial statements referred to above include
all necessary adjustments, consisting of normal recurring adjustments, to
present fairly the fair value of net assets of Partnership in liquidation
at March 31, 2007, the results of operations for the period from January
1, 2007 to February 4, 2007 and the three months ended March 31, 2006,
results of changes in net assets of Partnership in liquidation from
February 5, 2007 to March 31, 2007, and the cash flows for the period from
January 1, 2007 to February 4, 2007 and the three months ended March 31,
2006.
Information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles were condensed or omitted. The accompanying unaudited interim
financial statements should be read in conjunction with the Partnerships'
Annual Report on Form 10-K filed for the year ended December 31, 2006. The
results of operations for the period ending February 4, 2007 and the
changes in fair value of net assets of Partnership in liquidation for the
period ending March 31, 2007 are not necessarily indicative of the results
to be expected for the full year.
-40-
The Limited Partners' net income or loss per unit is based upon each $100
initial capital contribution.
STATEMENTS OF CASH FLOWS
-----------------------
Cash flows from operating, investing and financing activities presented in
the Unaudited Statements of Cash Flows include cash flows attributable to
discontinued operations and assets held for sale for all periods
presented.
NEW ACCOUNTING PRONOUNCEMENTS
-----------------------------
In September 2006, the FASB issued FAS No. 157, "Fair Value
Measurements" (FAS No. 157). FAS No. 157 establishes a common
definition for fair value to be applied to US GAAP guidance requiring
use of fair value, establishes a framework for measuring fair value,
and expands the disclosure about such fair value measurements. FAS No.
157 is effective for fiscal years beginning after November 5, 2007.
The Partnerships are currently assessing the impact of FAS No. 157 on
its fair value of net assets of Partnership in liquidation and its
changes of net assets of Partnership in liquidation.
PARTNERSHIP TERMINATION
-----------------------
Pursuant to the terms of the partnership agreements for the Partnerships
(the "Partnership Agreements"), the Partnerships were scheduled to
terminate on the dates indicated in the "Initial Termination Date" column
of the following chart. However, the Partnership Agreements provide that
the General Partner may extend the term of each Partnership for up to five
periods of two years each. The General Partner has extended the terms of
the Partnerships for the fourth two-year extension period. On February 5,
2007, the General Partner mailed a notice to the limited partners
announcing that the Partnerships will terminate at the end of their
current term as indicated in the following chart. The reader should refer
to Note 4 - Partnership Termination to the unaudited financial statements
for additional information regarding this matter.
-41-
Initial Extensions Current
Partnership Termination Date Exercised Termination Date
----------- ----------------- ---------- -----------------
III-A November 22, 1999 4 November 22, 2007
III-B January 24, 2000 4 December 31, 2007
III-C February 28, 2000 4 December 31, 2007
III-D September 5, 2000 4 December 31, 2007
III-E December 26, 2000 4 December 31, 2007
III-F March 7, 2001 4 December 31, 2007
RECLASSIFICATION
----------------
Certain prior year balances were reclassified to conform with current year
presentation.
OIL AND GAS PROPERTIES
----------------------
Before implementation of the liquidation basis of accounting, the
Partnerships followed the successful efforts method of accounting for
their oil and gas properties. Under the successful efforts method, the
Partnerships capitalized all property acquisition costs and development
costs incurred in connection with the further development of oil and gas
reserves. Property acquisition costs included costs incurred by the
Partnerships or the General Partner to acquire producing properties,
including related title insurance or examination costs, commissions,
engineering, legal and accounting fees, and similar costs directly related
to the acquisitions, plus an allocated portion of the General Partner's
property screening costs. The acquisition cost to the Partnerships of
properties acquired by the General Partner was adjusted to reflect the net
cash results of operations, including interest incurred to finance the
acquisition, for the period of time the properties were held by the
General Partner.
Depletion of the cost of producing oil and gas properties, amortization of
related intangible drilling and development costs, and depreciation of
tangible lease and well equipment was computed on the unit-of-production
method through February 4, 2007. The Partnerships' calculation of
depreciation, depletion, and amortization included estimated dismantlement
and abandonment costs and estimated salvage value of the equipment. When
complete units of depreciable property were retired or sold, the asset
cost and related accumulated depreciation were eliminated with any gain or
loss (including the elimination of the asset retirement obligation)
reflected in income. On February 5, 2007, the Partnerships adopted the
liquidation basis of accounting and no longer calculate depreciation,
depletion, and amortization.
-42-
The Partnerships evaluated the recoverability of the carrying costs of
their proved oil and gas properties for each well. If the unamortized
costs, net of salvage value, of oil and gas properties exceeded the
expected undiscounted future cash flows for such properties, the cost of
the properties was written down to fair value, which was determined by
using the estimated discounted future cash flows from the properties.
ASSET RETIREMENT OBLIGATIONS
----------------------------
The Partnerships' wells must be properly plugged and abandoned after their
oil and gas reserves are exhausted. The Partnerships follow FAS No. 143,
"Accounting for Asset Retirement Obligations" in accounting for the future
expenditures that will be necessary to plug and abandon these wells. FAS
No. 143 requires the estimated plugging and abandonment obligations to be
(i) recognized in the period in which they are incurred (i.e. when the
well is drilled or acquired) if a reasonable estimate of fair value can be
made and (ii) capitalized as part of the carrying amount of the well.
Estimated abandonment dates will be revised based on changes to related
economic lives, which vary with product prices and production costs.
Estimated plugging costs may also be adjusted to reflect changing industry
experience. 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.
2. TRANSACTIONS WITH RELATED PARTIES
---------------------------------
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. The general and administrative
expenses are included as a component of the net assets of Partnership in
liquidation. The reader should refer to Note 1 - Basis of Presentation to
the unaudited financial statements included in Part I, Item 1 of this
Quarterly Report on Form 10-Q for additional information regarding this
matter. During the three months ended March 31, 2007, the following
payments were made to the General Partner or its affiliates by the
Partnerships:
-43-
Direct General Administrative
Partnership and Administrative Overhead
----------- ------------------- ---------------
III-A $40,482 $ 69,468
III-B 36,481 36,405
III-C 35,285 64,353
III-D 31,569 34,476
III-E 40,841 110,070
III-F 34,535 58,284
Affiliates of the Partnerships serve as operator of some of the
Partnerships' wells. The General Partner contracts with such affiliates
for services as operator of the wells. As operator, such affiliates are
compensated at rates provided in the operating agreements in effect and
charged to all parties to such agreement. Such compensation may occur both
prior and subsequent to the commencement of commercial marketing of
production of oil or gas. During the three months ended March 31, 2007,
the following approximate dollar amounts of compensation were paid by the
Partnerships to the affiliates:
Partnership Compensation
----------- ------------
III-A $ 4,000
III-B 1,000
III-C 30,000
III-D 19,000
III-E 26,000
III-F 12,000
3. DISCONTINUED OPERATIONS
-----------------------
During August 2006, the General Partner approved a plan to sell an
increased amount of the Partnerships' properties as a result of the
generally favorable current environment for oil and gas properties. These
properties were classified as assets held for sale. On February 1, 2007
the III-D and III-E Partnerships sold their interests in a number of
producing properties at a large public oil and gas auction which resulted
in proceeds of approximately $10,000 and $68,000, respectively (net of
fees). The sale resulted in a gain on disposal of discontinued operations
of approximately $10,000 and $68,000, respectively, for the III-D and
III-E Partnerships. The properties sold in the February 2007 auction and
the remaining properties classified as assets held for sale represent
"disposal of a component" under Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" (FAS 144). Accordingly, current year results for the
period of January 1, 2007 through February 4, 2007 for these properties
were
-44-
classified as discontinued operations, and prior periods were restated.
Once properties are classified as assets held for sale, they no longer
incur any depreciation, depletion, and amortization expense. In
conjunction with the planned sales, the Partnerships will retain all
assets and liabilities through the effective date of the sale and
purchasers will assume the asset retirement obligations associated with
the sold interests. On February 5, 2007, the Partnerships adopted the
liquidation basis of accounting. The reader should refer to Note 1 - Basis
of Presentation to the unaudited financial statements for additional
information regarding this matter.
Net income from discontinued operations is as follows:
III-A Partnership
-----------------
Period from Three Months
January 1, to Ended
February 4, March 31,
2007 2006
------------ -------------
Oil and gas sales $ 5,491 $ 31,592
Lease operating ( 1,444) ( 6,236)
Production tax ( 522) ( 2,568)
Accretion and depreciation,
depletion, and amortization
of oil and gas properties ( 12) ( 813)
-------- --------
Income from discontinued
operations $ 3,513 $ 21,975
======== ========
III-B Partnership
-----------------
Period from Three Months
January 1, to Ended
February 4, March 31,
2007 2006
------------ -------------
Oil and gas sales $ 619 $ 6,747
Lease operating 39 ( 1,874)
Production tax ( 85) ( 616)
Accretion and depreciation,
depletion, and amortization
of oil and gas properties - ( 344)
------ -------
Income from discontinued
operations $ 573 $ 3,913
====== =======
-45-
III-C Partnership
-----------------
Period from Three Months
January 1, to Ended
February 4, March 31,
2007 2006
------------ -------------
Oil and gas sales $2,551 $14,393
Lease operating ( 211) ( 914)
Production tax ( 219) ( 1,126)
Accretion and depreciation,
depletion, and amortization
of oil and gas properties - ( 1,922)
------ -------
Income from discontinued
operations $2,121 $10,431
====== =======
III-D Partnership
-----------------
Period from Three Months
January 1, to Ended
February 4, March 31,
2007 2006
------------ -------------
Oil and gas sales $ 616 $ 3,378
Lease operating ( 33) ( 40)
Production tax ( 48) ( 161)
Accretion and depreciation,
depletion, and amortization
of oil and gas properties - ( 256)
------- -------
Income from discontinued
operations $ 535 $ 2,921
======= =======
-46-
III-E Partnership
-----------------
Period from Three Months
January 1, to Ended
February 4, March 31,
2007 2006
------------ -------------
Oil and gas sales $14,165 $60,702
Lease operating ( 4,272) ( 19,630)
Production tax ( 880) ( 2,431)
Accretion and depreciation,
depletion, and amortization
of oil and gas properties ( 126) ( 5,673)
------- -------
Income from discontinued
operations $ 8,887 $32,968
======= =======
III-F Partnership
-----------------
Period from Three Months
January 1, to Ended
February 4, March 31,
2007 2006
------------ -------------
Oil and gas sales $35,569 $180,501
Lease operating ( 6,365) ( 24,815)
Production tax ( 283) ( 3,021)
Accretion and depreciation,
depletion, and amortization
of oil and gas properties ( 151) ( 2,720)
------- --------
Income from discontinued
operations $28,770 $149,945
======= ========
Assets of the discontinued operations as of December 31, 2006 were as follows:
III-A
Partnership
-----------
Accounts receivable - oil and gas sales $27,392
Oil and gas properties 82,229
Accumulated depreciation, depletion,
and amortization of oil and gas
properties and valuation allowance ( 77,322)
Deferred charge 8
-------
Net assets held for sale $32,307
=======
-47-
III-B
Partnership
-----------
Accounts receivable - oil and gas sales $ 7,506
Oil and gas properties 750
Accumulated depreciation, depletion,
and amortization of oil and gas
properties and valuation allowance ( 750)
-------
Net assets held for sale $ 7,506
=======
III-C
Partnership
-----------
Accounts receivable - oil and gas sales $ 12,024
Oil and gas properties 57,240
Accumulated depreciation, depletion,
and amortization of oil and gas
properties and valuation allowance ( 55,618)
Deferred charge 10
----------
Net assets held for sale $ 13,656
==========
III-D
Partnership
-----------
Accounts receivable - oil and gas sales $ 2,296
Oil and gas properties 7,652
Accumulated depreciation, depletion,
and amortization of oil and gas
properties and valuation allowance ( 7,424)
----------
Net assets held for sale $ 2,524
==========
III-E
Partnership
-----------
Accounts receivable - oil and gas sales $ 38,260
Oil and gas properties 634,280
Accumulated depreciation, depletion,
and amortization of oil and gas
properties and valuation allowance ( 634,251)
Deferred charge 2,492
----------
Net assets held for sale $ 40,781
==========
-48-
III-F
Partnership
-----------
Accounts receivable - oil and gas sales $ 87,284
Oil and gas properties 1,219,907
Accumulated depreciation, depletion,
and amortization of oil and gas
properties and valuation allowance ( 1,101,738)
----------
Net assets held for sale $ 205,453
==========
Liabilities of the discontinued operations as of December 31, 2006 were as
follows:
III-A
Partnership
-----------
Accounts payable $ 4,257
----------
Net liabilities - held for sale $ 4,257
==========
III-B
Partnership
-----------
Accounts payable $ 1,049
----------
Net liabilities - held for sale $ 1,049
==========
III-C
Partnership
-----------
Accounts payable $ 684
Accrued liability 5
----------
Net liabilities - held for sale $ 689
==========
III-D
Partnership
-----------
Accounts payable $ 298
----------
Net liabilities - held for sale $ 298
==========
-49-
III-E
Partnership
-----------
Accounts payable $ 21,708
Accrued liability 12,104
----------
Net liabilities - held for sale $ 33,812
==========
III-F
Partnership
-----------
Accounts payable $ 24,291
----------
Net liabilities - held for sale $ 24,291
==========
4. PARTNERSHIP TERMINATION
-----------------------
The Partnerships would have terminated on the dates shown below in
accordance with the Partnership Agreements.
III-A November 22, 1999
III-B January 24, 2000
III-C February 28, 2000
III-D September 5, 2000
III-E December 26, 2000
III-F March 7, 2001
However, the Partnership Agreements provided 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 fourth two-year extension, thereby extending their termination date
to November 22, 2007 (for the III-A Partnership) and to December 31, 2007
(for the III-B, III-C, III-D, III-E and III-F Partnerships). On February
5, 2007 the General Partner mailed a notice to the limited partners
announcing that (i) the Partnerships will terminate on November 22, 2007
(for the III-A Partnership) and on December 31, 2007 for the other
Partnerships and (ii) the General Partner will liquidate the Partnerships'
assets and satisfy their liabilities as part of the winding-up process.
-50-
Unrelated to the Partnerships termination, the General Partner has been
selling selected oil and gas properties due to the generally favorable
market for oil and gas properties. The last such sales are anticipated to
be The Oil and Gas Asset Clearinghouse auctions in May through July of
2007. While these property sales are not related to the Partnerships'
liquidation, all remaining property dispositions will be made as part of
the liquidation and winding-up process.
The General Partner intends to commence liquidating the Partnerships'
properties in the second half of 2007, and hopes to have all or
substantially all of the properties sold prior to March 31, 2008. As part
of the liquidation process, the General Partner will actively negotiate
for the sale of the properties. These properties will be offered to all
interested parties through normal oil and gas property auction processes
as well as appropriate negotiated transactions. It is possible that
affiliates of the General Partner may participate in any public auction of
these properties and may be the successful high bidder on some or all of
the properties.
The Partnerships will make routine cash distributions throughout the
remainder of 2007. Proceeds from the sale of Partnership properties may be
included in these normal cash distributions, or may be distributed to the
partners by way of special cash distributions. The General Partner will
analyze the level of cash held by the Partnerships throughout the
liquidation process and will retain sufficient cash to cover all final
expenses and liabilities of the Partnerships. After final settlement from
the sale of all properties, satisfaction of Partnership expenses and
liabilities, and calculation of any remaining assets and liabilities of
the Partnerships, any net cash will be paid as a final liquidating
distribution to all of the remaining partners in each Partnership. It is
expected that the final distribution will be made no later than December
31, 2008.
In order to ensure that the General Partner makes all liquidation
distributions to the correct parties based on the most accurate
information possible, the General Partner terminated the outstanding
repurchase offer as of March 9, 2007. In addition, the General Partner
will not process transfers among third parties which are not postmarked on
or before June 30, 2007 and received by the General Partner on or before
July 13, 2007. The General Partner will not impose these deadlines on
transfers between family members, their trusts, IRA accounts, or similar
related entities and transfers due to death or divorce.
-51-
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.
PARTNERSHIP TERMINATION
- -----------------------
Pursuant to the terms of the partnership agreements for the Partnerships
(the "Partnership Agreements"), the Partnerships were scheduled to
terminate on the dates indicated in the "Initial Termination Date" column
of the following chart. However, the Partnership Agreements provide that
the General Partner may extend the term of each Partnership for up to five
periods of two years each. The General Partner has extended the terms of
the Partnerships for the fourth two-year extension period. On February 5,
2007, the General Partner mailed a notice to the limited partners
announcing that the Partnerships will terminate at the end of their
current term as indicated in the following chart. The reader should refer
to Note 4 - Partnership Termination to the unaudited financial statements
for additional information regarding this matter.
-52-
Initial Extensions Current
Partnership Termination Date Exercised Termination Date
----------- ----------------- ---------- -----------------
III-A November 22, 1999 4 November 22, 2007
III-B January 24, 2000 4 December 31, 2007
III-C February 28, 2000 4 December 31, 2007
III-D September 5, 2000 4 December 31, 2007
III-E December 26, 2000 4 December 31, 2007
III-F March 7, 2001 4 December 31, 2007
GENERAL
- -------
The Partnerships are engaged in the business of owning interests in
producing oil and gas properties located in the continental United States.
The Partnerships may also engage to a limited extent in development
drilling on producing oil and gas properties as required for the prudent
management of the Partnerships.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnerships began operations and investors were assigned their rights
as Limited Partners, having made capital contributions in the amounts and
on the dates set forth below:
Limited
Date of Partner Capital
Partnership Activation Contributions
----------- ------------------ ---------------
III-A November 22, 1989 $26,397,600
III-B January 24, 1990 13,833,600
III-C February 27, 1990 24,453,600
III-D September 5, 1990 13,100,800
III-E December 26, 1990 41,826,600
III-F March 7, 1991 22,148,400
In general, the amount of funds available for acquisition of producing
properties was equal to the capital contributions of the Limited Partners,
less 15% for sales commissions and organization and management fees. All
of the Partnerships have fully invested their capital contributions.
-53-
On February 1, 2007, the III-D and III-E Partnerships sold their interests
in a number of producing properties at a large public oil and gas auction
which resulted in proceeds of approximately $10,000 and $68,000 (net of
fees), respectively. No such sales occurred during the three months ended
March 31, 2006 for the III-D and III-E Partnerships. No such sales
occurred during the three months ended March 31, 2007 and 2006 for the
III-A, III-B, III-C and III-F Partnerships.
Net proceeds from operations less necessary operating capital are
distributed to the Limited Partners on a quarterly basis. The
Partnerships' ability to make cash distributions depends primarily upon
the level of available cash flow generated by the Partnerships' operating
activities and sale of oil and gas properties, which will be affected
(either positively or negatively) by many factors beyond the control of
the Partnerships, including the price of and demand for oil and gas and
other market and economic conditions. While the General Partner cannot
predict future pricing trends, it believes the working capital available
as of March 31, 2007 and the net revenue generated from future operations
and property sales will provide sufficient working capital to meet current
and future obligations.
Occasional expenditures for new wells or well recompletions, or workovers
may reduce or eliminate cash available for a particular quarterly cash
distribution.
The reader should refer to the discussion above under the heading
"Partnership Termination" for information regarding termination of the
Partnerships as of December 31, 2007.
CRITICAL ACCOUNTING POLICIES
- ----------------------------
The unaudited financial statements included in this Quarterly Report on
Form 10-Q are presented on a going concern basis as of December 31, 2006
and for the period January 1, 2007 through February 4, 2007 and the three
months ended March 31, 2006. On February 5, 2007, the General Partner
mailed a notice to the limited partners announcing that the Partnerships
will terminate at the end of their current term, December 31, 2007.
Consequently, the Partnerships adopted the liquidation basis of accounting
effective February 5, 2007. The liquidation basis of accounting reports
the net assets of the Partnerships at their net realizable value.
Adjustments were made to reduce all balance sheet categories into one
line, net assets of Partnership in liquidation, which is an estimate of
the net fair value of all Partnership assets and liabilities. Cash,
accounts receivable, and accounts payable were valued at their historical
cost, which approximates fair value. Oil and gas properties were valued at
their estimated net sales price, which was estimated utilizing discounted
cash flows
-54-
based on strip pricing as of March 31, 2007 at a discount rate of 10% for
proved developed producing reserves, 18% for proved developed
non-producing reserves and 20% for proved undeveloped reserves. An
adjustment was made to the discounted cash flows for the effects of gas
balancing and asset retirement obligations. A provision was also made to
account for expenses that will be incurred directly related to the sale of
the oil and gas properties. The allocation of the net assets of
Partnership in liquidation to the General Partner and limited partners was
calculated using the current allocation of income and expenses, which may
change.
Prior to the adoption of the liquidation basis of accounting, the
Partnerships followed the successful efforts method of accounting for
their oil and gas properties. Under the successful efforts method, the
Partnerships capitalized all property acquisition costs and development
costs incurred in connection with the further development of oil and gas
reserves. Property acquisition costs included costs incurred by the
Partnerships or the General Partner to acquire producing properties,
including related title insurance or examination costs, commissions,
engineering, legal and accounting fees, and similar costs directly related
to the acquisitions plus an allocated portion of the General Partner's
property screening costs. The acquisition cost to the Partnerships of the
properties acquired by the General Partner was adjusted to reflect the net
cash results of operations, including interest incurred to finance the
acquisition, for the period of time the properties were held by the
General Partner.
Depletion of the cost of producing oil and gas properties, amortization of
related intangible drilling and development costs, and depreciation of
tangible lease and well equipment was computed on the unit-of-production
method through February 4, 2007. The Partnerships' calculation of
depreciation, depletion, and amortization included estimated dismantlement
and abandonment costs and estimated salvage value of the equipment. When
complete units of depreciable property were retired or sold, the asset
cost and related accumulated depreciation are eliminated with any gain or
loss (including the elimination of the asset retirement obligation)
reflected in income. On February 5, 2007, the Partnerships adopted the
liquidation basis of accounting and no longer calculate depreciation,
depletion, and amortization.
The Deferred Charge on the Unaudited Balance Sheets represents costs
deferred for lease operating expenses incurred in connection with the
Partnerships' underproduced gas imbalance positions. Conversely, the
Accrued Liability represents charges accrued for lease operating expenses
incurred in connection with the Partnerships' overproduced gas imbalance
positions. The rate used in calculating the Deferred Charge and Accrued
Liability is the annual average production costs per Mcf. The Deferred
Charge and Accrued
-55-
Liability are included as a component of the net assets of Partnership in
liquidation. The reader should refer to Note 1 - Basis of Presentation to
the unaudited financial statements included in Part I, Item 1 of this
Quarterly Report on Form 10-Q for additional information regarding this
matter.
The Partnerships' oil and condensate production is sold, title passed, and
revenue recognized at or near the Partnerships' wells under short-term
purchase contracts at prevailing prices in accordance with arrangements
which are customary in the oil and gas industry. Sales of gas applicable
to the Partnerships' interest in producing oil and gas leases are recorded
as revenue when the gas is metered and title transferred pursuant to the
gas sales contracts covering the Partnerships' interest in gas reserves.
During such times as a Partnership's sales of gas exceed its pro rata
ownership in a well, such sales are recorded as revenues unless total
sales from the well have exceeded the Partnership's share of estimated
total gas reserves underlying the property, at which time such excess is
recorded as a liability. The rates per Mcf used to calculate this
liability are based on the average gas price for which the Partnerships
are currently settling this liability. These amounts were recorded as gas
imbalance payables in accordance with the sales method. These gas
imbalance payables will be settled by either gas production by the
underproduced party in excess of current estimates of total gas reserves
for the well or by negotiated or contractual payment to the underproduced
party. The gas imbalance payables are included as a component of the net
assets of Partnership in liquidation. The reader should refer to Note 1 -
Basis of Presentation to the unaudited financial statements included in
Part I, Item 1 of this Quarterly Report on Form 10-Q for additional
information regarding this matter.
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. The
asset retirement obligations are included as a component of the net assets
of Partnership in liquidation. The reader should refer to Note 1 - Basis
of Presentation to the unaudited financial statements included in Part I,
Item 1 of this Quarterly Report on Form 10-Q for additional information
regarding this matter.
-56-
NEW ACCOUNTING PRONOUNCEMENTS
- -----------------------------
In September 2006, the FASB issued FAS No. 157, "Fair Value
Measurements" (FAS No. 157). FAS No. 157 establishes a common
definition for fair value to be applied to US GAAP guidance requiring
use of fair value, establishes a framework for measuring fair value,
and expands the disclosure about such fair value measurements. FAS No.
157 is effective for fiscal years beginning after November 5, 2007.
The Partnerships are currently assessing the impact of FAS No. 157 on
its fair value of net assets of Partnership in liquidation and its
changes of net assets of Partnership in liquidation.
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 net present values of the Partnerships' reserves are included as a
component of the net assets of Partnership in liquidation. The reader
should refer to Note 1 - Basis of Presentation to the unaudited financial
statements included in Part I, Item 1 of this Quarterly Report on Form
10-Q for additional information regarding this matter.
The net present value of the Partnerships' reserves was estimated
utilizing discounted cash flows based on strip pricing as of March 31,
2007 at a discount rate of 10% for proved developed producing reserves,
18% for proved developed non-producing reserves and 20% for proved
undeveloped reserves. An adjustment has been made to the discounted cash
flows for the effects of gas balancing and asset retirement obligations. A
provision has also been made to account for expenses that will be incurred
directly related to the sale of the oil and gas properties.
-57-
RESULTS OF OPERATIONS
- ---------------------
GENERAL DISCUSSION
The following general discussion should be read in conjunction with the
analysis of results of operations provided below.
The primary source of liquidity and Partnership cash distributions comes
from the net revenues generated from the sale of oil and gas produced from
the Partnerships' oil and gas properties. Recently, the sale of oil and
gas properties is also a significant source of net revenues. The level of
net revenues is highly dependent upon the prices received for oil and gas
sales, which prices have historically been very volatile and may continue
to be so. Additionally, lower oil and natural gas prices may reduce the
amount of oil and gas that is economic to produce and reduce the
Partnerships' revenues and cash flow. Various factors beyond the
Partnerships' control will affect prices for oil and natural gas, such as:
* Worldwide and domestic supplies of oil and natural gas;
* The ability of the members of the Organization of Petroleum
Exporting Countries ("OPEC") to agree to and maintain oil
prices and production quotas;
* Political instability or armed conflict in oil-producing
regions or around major shipping areas;
* The level of consumer demand and overall economic activity;
* The competitiveness of alternative fuels;
* Weather conditions and the impact of weather- related
events;
* The availability of pipelines for transportation;
* Domestic and foreign government regulations and taxes;
* Market expectations; and
* The effect of worldwide energy conservation.
It is not possible to predict the future direction of oil or natural gas
prices. 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 as either the receipt of
proceeds from property sales or the incursion of additional costs as a
result of well workovers, recompletions, new well drilling, and other
events.
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
-58-
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 (either positive or negative)
made by the operators of the properties;
* Adjustments in ownership or rights to production in accordance
with agreements governing the operation or ownership of the
well (such as adjustments that occur at payout or due to gas
balancing); and
* Completion of enhanced recovery projects which increase
production for the well.
Many of these factors can be very significant for a single well or for
many wells over a short period of time. Due to the large number of wells
owned by the Partnerships, these factors are generally not material as
compared to the normal declines in production experienced on all remaining
wells.
III-A PARTNERSHIP
THE PERIOD FROM JANUARY 1, 2007 TO FEBRUARY 4, 2007
Period from
January 1, to
February 4,
2007
-------------
Oil and gas sales $275,668
Oil and gas production expenses $ 63,770
Barrels produced 2,487
Mcf produced 23,775
Average price/Bbl $ 54.96
Average price/Mcf $ 5.85
Income and expenses for the III-A Partnership for the period from January
1 to February 4, 2007 are not comparable to the three months ended March
31, 2006.
-59-
THE PERIOD FROM FEBRUARY 5, 2007 TO MARCH 31, 2007
Barrels produced 4,932
Mcf produced 49,963
Average price/Bbl $ 61.14
Average price/Mcf $ 7.05
Revenues from February 5, 2007 to March 31, 2007 were as follows:
Oil and gas sales $ 653,674
Interest income 9,049
----------
$ 662,723
==========
Operating expenses from February 5, 2007 to March 31, 2007 were as
follows:
Lease operating $ 73,973
Production tax 60,518
Accretion expense 2,285
General and administrative 83,331
----------
$ 220,107
==========
III-B PARTNERSHIP
THE PERIOD FROM JANUARY 1, 2007 TO FEBRUARY 4, 2007
Period from
January 1, to
February 4,
2007
-------------
Oil and gas sales $153,250
Oil and gas production expenses $ 40,935
Barrels produced 1,610
Mcf produced 11,112
Average price/Bbl $ 55.03
Average price/Mcf $ 5.82
Income and expenses for the III-B Partnership for the period from January
1 to February 4, 2007 are not comparable to the three months ended March
31, 2006.
-60-
THE PERIOD FROM FEBRUARY 5, 2007 TO MARCH 31, 2007
Barrels produced 3,678
Mcf produced 21,361
Average price/Bbl $ 61.05
Average price/Mcf $ 7.00
Revenues from February 5, 2007 to March 31, 2007 were as follows:
Oil and gas sales $373,993
Interest income 4,316
--------
$378,309
========
Operating expenses from February 5, 2007 to March 31, 2007 were as
follows:
Lease operating $ 43,262
Production tax 36,014
Accretion expense 1,478
General and administrative 57,928
--------
$138,682
========
III-C PARTNERSHIP
THE PERIOD FROM JANUARY 1, 2007 TO FEBRUARY 4, 2007
Period from
January 1, to
February 4,
2007
-------------
Oil and gas sales $327,291
Oil and gas production expenses $ 38,967
Barrels produced 752
Mcf produced 50,426
Average price/Bbl $ 52.55
Average price/Mcf $ 5.71
Income and expenses for the III-C Partnership for the period from January
1 to February 4, 2007 are not comparable to the three months ended March
31, 2006.
-61-
THE PERIOD FROM FEBRUARY 5, 2007 TO MARCH 31, 2007
Barrels produced 1,990
Mcf produced 101,153
Average price/Bbl $ 57.54
Average price/Mcf $ 6.72
Revenues from February 5, 2007 to March 31, 2007 were as follows:
Oil and gas sales $794,587
Interest income 7,170
--------
$801,757
========
Operating expenses from February 5, 2007 to March 31, 2007 were as
follows:
Lease operating $132,116
Production tax 37,172
Accretion expense 3,066
General and administrative 74,823
--------
$247,177
========
III-D PARTNERSHIP
THE PERIOD FROM JANUARY 1, 2007 TO FEBRUARY 4, 2007
Period from
January 1, to
February 4,
2007
-------------
Oil and gas sales $214,876
Oil and gas production expenses $ 24,919
Barrels produced 805
Mcf produced 31,749
Average price/Bbl $ 51.14
Average price/Mcf $ 5.47
Income and expenses for the III-D Partnership for the period from January
1 to February 4, 2007 are not comparable to the three months ended March
31, 2006.
THE PERIOD FROM FEBRUARY 5, 2007 TO MARCH 31, 2007
Barrels produced 1,481
Mcf produced 60,431
Average price/Bbl $ 56.33
Average price/Mcf $ 6.59
-62-
Revenues from February 5, 2007 to March 31, 2007 were as follows:
Oil and gas sales $481,578
Interest income 3,509
--------
$485,087
========
Operating expenses from February 5, 2007 to March 31, 2007 were as
follows:
Lease operating $ 84,781
Production tax 18,272
Accretion expense 1,615
General and administrative 51,769
--------
$156,437
========
III-E PARTNERSHIP
THE PERIOD FROM JANUARY 1, 2007 TO FEBRUARY 4, 2007
Period from
January 1, to
February 4,
2007
-------------
Oil and gas sales $333,536
Oil and gas production expenses $ 90,505
Barrels produced 1,655
Mcf produced 47,269
Average price/Bbl $ 48.26
Average price/Mcf $ 5.37
Income and expenses for the III-E Partnership for the period from January
1 to February 4, 2007 are not comparable to the three months ended March
31, 2006.
THE PERIOD FROM FEBRUARY 5, 2007 TO MARCH 31, 2007
Barrels produced 2,398
Mcf produced 92,102
Average price/Bbl $ 52.06
Average price/Mcf $ 6.24
Revenues from February 5, 2007 to March 31, 2007 were as follows:
Oil and gas sales $699,692
Interest income 6,061
--------
$705,753
========
-63-
Operating expenses from February 5, 2007 to March 31, 2007 were as
follows:
Lease operating $222,580
Production tax 48,066
Accretion expense 3,515
General and administrative 109,972
--------
$384,133
========
III-F PARTNERSHIP
THE PERIOD FROM JANUARY 1, 2007 TO FEBRUARY 4, 2007
Period from
January 1, to
February 4,
2007
-------------
Oil and gas sales $182,805
Oil and gas production expenses $ 43,814
Barrels produced 558
Mcf produced 27,895
Average price/Bbl $ 52.36
Average price/Mcf $ 5.51
Income and expenses for the III-F Partnership for the period from January
1 to February 4, 2007 are not comparable to the three months ended March
31, 2006.
THE PERIOD FROM FEBRUARY 5, 2007 TO MARCH 31, 2007
Barrels produced 2,698
Mcf produced 53,424
Average price/Bbl $ 56.23
Average price/Mcf $ 6.51
Revenues from February 5, 2007 to March 31, 2007 were as follows:
Oil and gas sales $499,479
Interest income 4,242
--------
$503,721
========
-64-
Operating expenses from February 5, 2007 to March 31, 2007 were as
follows:
Lease operating $136,049
Production tax 25,348
Accretion expense 2,407
General and administrative 70,146
--------
$233,950
========
-65-
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnerships do not hold any market risk sensitive instruments.
ITEM 4T. 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.
During the period covered by this Form 10-Q, there were no changes
in our internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
A lawsuit styled Robert W. Scott, individually and as Managing Member of R.W.
Scott Investments, LLC v. Samson Resources Company, Case No. C-01-385, was filed
in the District Court of Sweetwater County, Wyoming on June 29, 2001. The
lawsuit seeks class action certification and alleges that Samson deducted from
its payments to royalty and overriding royalty owners certain charges which were
improper under the Wyoming royalty payment statutes. A number of these royalty
and overriding royalty payments burden the interests of the III-A, III-B, III-E,
and III-F Partnerships. In February 2003, Samson made a supplemental payment to
the royalty and overriding royalty interest owners who were potential class
members of amounts which were then thought to have been improperly deducted plus
statutory interest thereon. The lawsuit also alleges that Samson's check stubs
did not fully comply with the Wyoming Royalty Payment Act.
On May 13, 2005 the trial court certified this lawsuit as a class action and
denied Samson's motion for summary judgment. On June 25, 2005 the Wyoming
Supreme Court denied Samson's request for it to review these decisions. On April
20, 2007 Samson executed a formal settlement agreement with plaintiffs which
calls for an additional royalty payment of $1,000,000. The Settlement Agreement
is subject to Court approval, and a hearing for preliminary Court approval is
currently scheduled for May 29, 2007. Plaintiffs' counsel, subject to Court
approval, is responsible for determining the allocation of the $1,000,000 among
the various class members after deduction of litigation costs and attorneys'
fees. Samson cannot determine the portion of this settlement amount attributable
to each Partnership until the allocation is received from plaintiffs' counsel
and approved by the Court.
ITEM 6. EXHIBITS
31.1 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the III-A Partnership.
31.2 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the III-A Partnership.
31.3 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the III-B Partnership.
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31.4 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the III-B Partnership.
31.5 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the III-C Partnership.
31.6 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the III-C Partnership.
31.7 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the III-D Partnership.
31.8 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the III-D Partnership.
31.9 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the III-E Partnership.
31.10 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the III-E Partnership.
31.11 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the III-F Partnership.
31.12 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the III-F Partnership.
32.1 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 for the III-A Partnership.
32.2 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 for the III-B Partnership.
32.3 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 for the III-C Partnership.
32.4 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 for the III-D Partnership.
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32.5 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 for the III-E Partnership.
32.6 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 for the III-F Partnership.
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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 ENERGY INCOME LIMITED PARTNERSHIP III-A
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
(Registrant)
BY: GEODYNE RESOURCES, INC.
General Partner
Date: May 18, 2007 By: /s/Dennis R. Neill
--------------------------------
(Signature)
Dennis R. Neill
President
Date: May 18, 2007 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 Energy Income Limited
Partnership III-A.
31.2 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-A.
31.3 Certification Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-B.
31.4 Certification Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-B.
31.5 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-C.
31.6 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-C.
31.7 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-D.
31.8 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-D.
31.9 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-E.
31.10 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-E.
31.11 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-F.
31.12 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited
Partnership III-F.
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32.1 Certification pursuant to 18 U.S. C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
Geodyne Energy Income Limited Partnership III-A.
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
Geodyne Energy Income Limited Partnership III-B.
32.3 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
Geodyne Energy Income Limited Partnership III-C.
32.4 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
Geodyne Energy Income Limited Partnership III-D.
32.5 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
Geodyne Energy Income Limited Partnership III-E.
32.6 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
Geodyne Energy Income Limited Partnership III-F.
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