ITEM 1. BUSINESS
General
The Dyco Oil and Gas Program 1979-1 Limited Partnership (the "1979-1 Program") and Dyco Oil and Gas Program 1979-2 Limited Partnership (the "1979-2 Program") (collectively, the "Programs") are Minnesota limited partnerships engaged in the production of oil and gas. The 1979-1 Program and 1979-2 Program commenced operations on April 2, 1979 and July 2, 1979, respectively, with the primary financial objective of investing their limited partners' subscriptions in the drilling of oil and gas prospects and then distributing to their limited partners all available cash flow from the Program's on-going production operations. Dyco Petroleum Corporation ("Dyco") serves as the General Partner of the Programs. See "Item 2.
ITEM 2. PROPERTIES
Well Statistics
The following table sets forth the numbers of gross and net productive wells of the Programs as of December 31, 1999.
Well Statistics(1) As of December 31, 1999
1979-1 1979-2 Program Program ------- ------- Gross productive wells(2): Oil 2 - Gas 25 18 -- -- Total 27 18
Net productive wells(3): Oil .08 - Gas 1.15 1.50 ---- ----
Total 1.23 1.50
- ---------------
(1) The designation of a well as an oil well or gas well is made by Dyco based on the relative amount of oil and gas reserves for the well. Regardless of a well's oil or gas designation, it may produce oil, gas, or both oil and gas. (2) As used throughout this Annual Report on Form 10-K ("Annual Report"), "Gross Well" refers to a well in which a working interest is owned. The number of gross wells is the total number of wells in which a working interest is owned. (3) As used throughout this Annual Report, "Net Well" refers to the sum of the fractional working interests owned in gross wells. For example, a 15% working interest in a well represents one Gross Well, but 0.15 Net Well.
Drilling Activities
The Programs did not participate in any drilling activities during the year ended December 31, 1999.
Oil and Gas Production, Revenue, and Price History
The following table sets forth certain historical information concerning the oil (including condensates) and gas production, net of all royalties, overriding royalties, and other third party interests, of the Programs, revenues attributable to such production, and certain price and cost information.
Net Production Data
Year Ended December 31, --------------------------------- 1999 1998 1997 -------- -------- -------- 1979-1 Program: - --------------
Production: Oil (Bbls)(1) 209 291 366 Gas (Mcf)(2) 136,760 185,215 205,089
Oil and gas sales: Oil $ 3,440 $ 4,242 $ 7,208 Gas 268,718 337,457 461,659 ------- ------- ------- Total $272,158 $341,699 $468,867 ======= ======= ======= Total direct operating expenses (3) $ 72,863 $ 72,099 $ 87,871 ======= ======= ======= Direct operating expenses as a percentage of oil and gas sales 26.8% 21.1% 18.7%
Average sales price: Per barrel of oil $16.46 $14.58 $19.69 Per Mcf of gas 1.96 1.82 2.25
Direct operating expenses per equivalent Mcf of gas(4) $ .53 $ .39 $ .42
Year Ended December 31, ---------------------------------- 1999 1998 1997 -------- -------- -------- 1979-2 Program: - --------------
Production: Oil (Bbls)(1) 1,161 1,067 1,325 Gas (Mcf)(2) 127,056 191,087 265,409
Oil and gas sales: Oil $ 20,297 $ 14,380 $ 26,891 Gas 305,550 422,747 669,037 ------- ------- ------- Total $325,847 $437,127 $695,928 ======= ======= ======= Total direct operating expenses(3) $ 70,598 $113,900 $127,516 ======= ======= ======= Direct operating expenses as a percentage of oil and gas sales 21.7% 26.1% 18.3%
Average sales price: Per barrel of oil $17.48 $13.48 $20.30 Per Mcf of gas 2.40 2.21 2.52
Direct operating expenses per equivalent Mcf of gas(4) $ .53 $ .58 $ .47
- ---------------
(1) As used throughout this Annual Report, "Bbls" refers to barrels of 42 U.S. gallons and represents the basic unit for measuring the production of crude oil and condensate oil. (2) As used throughout this Annual Report, "Mcf" refers to volume of 1,000 cubic feet under prescribed conditions of pressure and temperature and represents the basic unit for measuring the production of gas. (3) Includes lease operating expenses and production taxes. (4) Oil production is converted to gas equivalents at the rate of six Mcf per barrel, representing the estimated relative energy content of gas and oil, which rate is not necessarily indicative of the relationship of oil and gas prices. The respective prices of oil and gas are affected by market and other factors in addition to relative energy content.
Proved Reserves and Net Present Value
The following table sets forth the Programs' estimated proved oil and gas reserves and net present value therefrom as of
December 31, 1999. The schedule of quantities of proved oil and gas reserves was prepared by Dyco in accordance with the rules prescribed by the Securities and Exchange Commission (the "SEC"). Certain reserve information was reviewed by Ryder Scott Company, L.P. ("Ryder Scott"), an independent petroleum engineering firm. As used throughout this Annual Report, "proved reserves" refers to those estimated quantities of crude oil, gas, and gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known oil and gas reservoirs under existing economic and operating conditions.
Net present value represents estimated future gross cash flow from the production and sale of proved reserves, net of estimated oil and gas production costs (including production taxes, ad valorem taxes, and operating expenses), and estimated future development costs, discounted at 10% per annum. Net present value attributable to the Programs' proved reserves was calculated on the basis of current costs and prices at December 31, 1999. Such prices were not escalated except in certain circumstances where escalations were fixed and readily determinable in accordance with applicable contract provisions. The prices used by Dyco in calculating the net present value attributable to the Programs' proved reserves do not necessarily reflect market prices for oil and gas production subsequent to December 31, 1999. There can be no assurance that the prices used in calculating the net present value of the Programs' proved reserves at December 31, 1999 will actually be realized for such production.
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 near 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.
Proved Reserves and Net Present Value From Proved Reserves
As of December 31, 1999(1)
1979-1 Program: - --------------
Estimated proved reserves: Gas (Mcf) 1,037,725 Oil and liquids (Bbls) 2,487
Net present value (discounted at 10% per annum) $ 921,346
1979-2 Program: - --------------
Estimated proved reserves: Gas (Mcf) 1,051,164 Oil and liquids (Bbls) 12,671
Net present value (discounted at 10% per annum) $1,148,423
- ---------------
(1) Includes certain gas balancing adjustments which cause the gas volumes and net present value to differ from the reserve reports prepared by Dyco and reviewed by Ryder Scott.
No estimates of the proved reserves of the Programs comparable to those included herein have been included in reports to any federal agency other than the SEC. Additional information relating to the Programs' proved reserves is contained in Note 4 to the Programs' financial statements, included in Item 8 of this Annual Report.
Significant Properties
1979-1 Program --------------
As of December 31, 1999, the 1979-1 Program's properties consisted of 27 gross (1.23 net) productive wells. The 1979-1 Program also owned a non-working interest in an additional 9 wells. Affiliates of the 1979-1 Program operate 12 (33%) of its total wells. All of the 1979-1 Program's reserves are located in the Anadarko Basin of western Oklahoma and the Texas panhandle, which is an established oil and gas producing basin.
1979-2 Program --------------
As of December 31, 1999, the 1979-2 Program's properties consisted of 18 gross (1.50 net) productive wells. The 1979-2 Program also owned a non-working interest in an additional 2 wells. Affiliates of the 1979-2 Program operate 5 (25%) of its wells. All of the 1979-2 Program's properties are located onshore in the continental United States. Substantially all of the 1979-2 Program's reserves are located in the Anadarko Basin.
As of December 31, 1999, the 1979-2 Program's properties in the Anadarko Basin consisted of 13 gross (1.20 net) productive wells. The 1979-2 Program also owned a non-working interest in an additional 2 wells in the Anadarko Basin. Affiliates of the 1979-2 Program operate 4 (27%) of its Anadarko Basin wells. As of December 31, 1999, the 1979-2 Program had estimated total proved reserves in the Anadarko Basin of approximately 1,073,358 Mcf of gas and approximately 12,093 barrels of crude oil, with a present value (discounted at 10% per annum) of estimated future net cash flow of approximately $1,125,455.
Title to Oil and Gas Properties
Management believes that the Programs have satisfactory title to their oil and gas properties. Record title to substantially all of the Programs' properties is held by Dyco as nominee.
Title to the Programs' properties is subject to customary royalty, overriding royalty, carried, working, and other similar interests and contractual arrangements customary in the oil and gas industry, to liens for current taxes not yet due, and to other encumbrances. Management believes that such burdens do not materially detract from the value of such properties or from the Programs' interest therein or materially interfere with their use in the operation of the Programs' business.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
On October 24, 1996, certain royalty owners filed a class action lawsuit against Dyco and certain other parties in which they alleged entitlement to a share of the proceeds from a gas contract involving one of the 1979-2 Program's wells, the Maxwell No. 1-23. (Thurman Horn, et al., v. Dyco, et al., Case No. 10,324, District Court of Wheeler County, Texas). The 1979-2 Program has a 22.5% working interest in the Maxwell No. 1-23. The plaintiffs are alleging causes of action based on breach of duty to market, breach of duty to pay royalties, and breach of duty of good faith and fair dealing and are seeking restitution and an accounting. The Plaintiffs have not quantified the amount of their damages. Dyco has filed its answer in the matter in
which it denied all of the plaintiffs' allegations, and discovery is proceeding in the matter. On November 24, 1998 Dyco filed a motion for summary judgment in the matter, which is awaiting a hearing by the district court. Discovery is proceeding in the matter. Dyco intends to vigorously defend the lawsuit. As of the date of this Annual Report, management cannot determine the amount of any alleged damages which would be allocable to the 1979-2 Program from this lawsuit. A Texas appellate court has previously ruled in a separate lawsuit that owners of royalty interests in Texas oil and gas properties do not have the right to share in the proceeds of take-or-pay settlements.
Except for the foregoing, to the knowledge of the management of Dyco and the Programs, neither Dyco, the Programs, nor the Programs' properties are subject to any litigation, the results of which would have a material effect on the Programs' or Dyco's financial condition or operations.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS
There were no matters submitted to a vote of the limited partners of either Program during 1999.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP UNITS AND RELATED LIMITED PARTNER MATTERS
The Programs do not have an established trading market for their units of limited partnership interest ("Units"). Pursuant to the terms of the Program Agreements, Dyco, as General Partner, is obligated to annually issue a repurchase offer which is based on the estimated future net revenues from the Programs' reserves and is calculated pursuant to the terms of the Program Agreements. Such repurchase offer is recalculated monthly in order to reflect cash distributions made to the limited partners and extraordinary events. The following table sets forth, for the periods indicated, Dyco's repurchase offer per Unit and the amount of the Programs' cash distributions per Unit for the same period. For purposes of this Annual Report, a Unit represents an initial subscription of $5,000 to a Program.
1979-1 Program --------------
Repurchase Cash Price Distributions ---------- -------------
1998: First Quarter $197 $35 Second Quarter 162 70(1) Third Quarter 203 40 Fourth Quarter 163 -
1999: First Quarter $163 $20 Second Quarter 143 - Third Quarter 260 20 Fourth Quarter 240 20
2000: First Quarter $220 $ -
- -------------- (1) Includes proceeds from the sale of oil and gas properties.
1979-2 Program --------------
Repurchase Cash Price Distributions ---------- -------------
1998: First Quarter $129 $35 Second Quarter 94 35 Third Quarter 358 60 Fourth Quarter 298 20
1999: First Quarter $278 $ - Second Quarter 278 20 Third Quarter 333 20 Fourth Quarter 313 20
2000: First Quarter $293 $25
As of March 1, 2000, the 1979-1 Program has 3,140 Units outstanding and approximately 950 Limited Partners of record. The 1979-2 Program has 2,860 Units outstanding and approximately 750 Limited Partners of record.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The following tables present selected financial data for the Programs. This data should be read in conjunction with the financial statements of the Programs, and the respective notes thereto, included elsewhere in this Annual Report. See "Item 8. Financial Statements and Supplementary Data."
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Use of Forward-Looking Statements and Estimates
This Annual 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 Annual 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 Programs.
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, or otherwise indicated.
General Discussion
The following general discussion should be read in conjunction with the analysis of results of operations provided below. The most important variable affecting the Programs' revenues is the prices received for the sale of oil and gas. Predicting future prices is not possible. Concerning past trends, average yearly wellhead gas prices in the United States have been volatile for many years. Over the past ten years such average prices have generally been in the $1.40 to $2.40 per Mcf range. Gas prices are currently in the upper end of this range.
Substantially all of the Programs' gas reserves are being sold on the "spot market." Prices on the spot market are subject to wide seasonal and regional pricing fluctuations due to the highly competitive nature of the spot market. In addition, such spot market sales are generally short-term in nature and are dependent upon the obtaining of transportation services provided by pipelines. Spot prices for the Programs' gas increased from
approximately $1.93 per Mcf at December 31, 1998 to approximately $2.24 per Mcf at December 31, 1999. Such prices were on an MMBTU basis and differ from the prices actually received by the Programs due to transportation and marketing costs, BTU adjustments, and regional price and quality differences.
For the past ten years, average oil prices have generally been in the $16.00 to $24.00 per barrel range, but have been extremely volatile over the past two years. Due to global consumption and supply trends as well as a slowdown in Asian energy demand, oil prices in late 1997 and early 1998 reached historically low levels, dropping to as low as approximately $9.00 per barrel. However, production curtailment agreements among major oil producing nations have caused recent oil prices to climb to over $30.00 per barrel in some markets. It is not known whether this trend will continue. Prices for the Programs' oil increased from approximately $9.50 per barrel at December 31, 1998 to approximately $22.75 per barrel at December 31, 1999.
Future prices for both oil and gas will likely be different from the prices in effect on December 31, 1999. Management is unable to predict whether future oil and gas prices will (i) stabilize, (ii) increase, or (iii) decrease.
Results of Operations
1979-1 Program --------------
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998 ----------------------------------------
Total oil and gas sales decreased $69,541 (20.4%) in 1999 as compared to 1998. Of this decrease, approximately $88,000 was related to a decrease in volumes of gas sold. This decrease was partially offset by an increase of approximately $20,000 related to an increase in the average price of gas sold. Volumes of oil and gas sold decreased 82 barrels and 48,455 Mcf, respectively, in 1999 as compared to 1998. The decrease in volumes of gas sold was primarily due to a positive prior period volume adjustment made during 1998 on one well. Average oil and gas prices increased to $16.46 per barrel and $1.96 per Mcf, respectively, in 1999 from $14.58 per barrel and $1.82 per Mcf, respectively, in 1998.
The 1979-1 Program sold several wells during the first quarter of 1998 for $162,007 representing approximately 9% of its total reserves. The proceeds from these sales would have reduced the net book value of the 1979-1 Program's oil and gas properties by 90%, significantly altering its capitalized cost/proved reserves relationship. Accordingly, capitalized costs were reduced by approximately 9% and a gain on sale of oil and gas
properties of $145,376 was recognized. No such sales occurred during 1999.
Oil and gas production expenses (including lease operating expenses and production taxes) increased $764 (1.1%) in 1999 as compared to 1998. This increase was primarily due to workover expenses incurred on one well during 1999 in order to improve the recovery of reserves. This increase was substantially offset by decreases in (i) lease operating expenses associated with the decreases in volumes of oil and gas sold and (ii) production taxes associated with the decrease in oil and gas sales. As a percentage of oil and gas sales, these expenses increased to 26.8% in 1999 from 21.1% in 1998. This percentage increase was primarily due to the dollar increase in oil and gas production expenses.
Depreciation, depletion, and amortization of oil and gas properties decreased $8,460 (34.9%) in 1999 as compared to 1998. This decrease was primarily due to the decreases in volumes of oil and gas sold and upward revisions in the estimates of remaining oil and gas reserves at December 31, 1999. As a percentage of oil and gas sales, this expense decreased to 5.8% in 1999 from 7.1% in 1998. This percentage decrease was primarily due to the dollar decrease in depreciation, depletion, and amortization and the increase in the average prices of oil and gas sold.
General and administrative expenses decreased $843 (1.6%) in 1999 as compared to 1998. As a percentage of oil and gas sales, these expenses increased to 19.0% in 1999 from 15.4% in 1998. This percentage increase was primarily due to the decrease in oil and gas sales.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997 ----------------------------------------
Total oil and gas sales decreased $127,168 (27.1%) in 1998 as compared to 1997. Of this decrease, approximately $45,000 was related to a decrease in volumes of gas sold and approximately $79,000 was related to a decrease in the average price of gas sold. Volumes of oil and gas sold decreased 75 barrels and 19,874 Mcf, respectively, in 1998 as compared to 1997. The decrease in volumes of gas sold resulted primarily from the sale of several wells in 1997 and 1998 and normal declines in production. These decreases were partially offset by a positive prior period volume adjustment made during 1998 on one well. Average oil and gas prices decreased to $14.58 per barrel and $1.82 per Mcf, respectively, in 1998 from $19.69 per barrel and $2.25 per Mcf, respectively, 1997.
As discussed in "Liquidity and Capital Resources" below, the 1979-1 Program sold several wells during the first quarter of 1998 for $162,007 representing approximately 9% of its total reserves. The proceeds from these sales would have reduced the
net book value of the oil and gas properties by 90%, significantly altering the 1979-1 Program's capitalized cost/proved reserves relationship. Accordingly, capitalized costs were reduced by approximately 9% and a gain on sale of oil and gas properties of $145,376 was recognized. Similar sales during 1997 did not significantly alter the 1979-1 Program's capitalized cost/proved reserves relationship.
Oil and gas production expenses (including lease operating expenses and production taxes) decreased $15,772 (17.9%) in 1998 as compared to 1997. This decrease resulted primarily from decreases in (i) production taxes associated with the decrease in oil and gas sales and (ii) lease operating expenses associated with the decrease in volumes of oil and gas sold. As a percentage of oil and gas sales, these expenses increased to 21.1% in 1998 from 18.7% in 1997. This percentage increase was primarily due to the decreases in the average prices of oil and gas sold.
Depreciation, depletion, and amortization of oil and gas properties decreased $15,058 (38.3%) in 1998 as compared to 1997. This decrease resulted primarily from (i) the decrease in volumes of oil and gas sold, (ii) the sale of several wells in 1998 which decreased the amortizable capitalized costs of the oil and gas properties, and (iii) upward revisions in the estimates of remaining oil and gas reserves as of December 31, 1998. As a percentage of oil and gas sales, this expense decreased to 7.1% in 1998 from 8.4% in 1997. This percentage decrease was primarily due to the dollar decrease in depreciation, depletion, and amortization, which decrease was partially offset by the decreases in the average prices of oil and gas sold.
General and administrative expenses decreased $3,064 (5.5%) in 1998 as compared to 1997. As a percentage of oil and gas sales, these expenses increased to 15.4% in 1998 from 11.9% in 1997. This percentage increase was primarily due to the decrease in oil and gas sales.
1979-2 Program --------------
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998 ----------------------------------------
Total oil and gas sales decreased $111,280 (25.5%) in 1999 as compared to 1998. Of this decrease, approximately $142,000 was related to a decrease in volumes of gas sold. This decrease was partially offset by approximately $24,000 related to an increase in the average price of gas sold. Volumes of oil sold increased 94 barrels while volumes of gas sold decreased 64,031 Mcf in 1999 as compared to 1998. The decrease in volumes of gas sold was primarily due to (i) the curtailment of sales in 1999 on
one well due to the 1979-2 Program's overproduced gas balancing position in that well, (ii) a negative prior period volume adjustment made during 1999 by the purchaser on one well, and (iii) normal declines in production. Average oil and gas prices increased to $17.48 per barrel and $2.40 per Mcf, respectively, in 1999 from $13.48 per barrel and $2.21 per Mcf, respectively, in 1998.
Oil and gas production expenses (including lease operating expenses and production taxes) decreased $43,302 (38.0%) in 1999 as compared to 1998. This decrease was primarily due to (i) a decrease in lease operating expenses associated with the decrease in volumes of gas sold, (ii) legal expenses incurred during 1998 related to operations on one well, and (iii) a decrease in production taxes associated with the decrease in oil and gas sales. As a percentage of oil and gas sales, these expenses decreased to 21.7% in 1999 from 26.1% in 1998. This percentage decrease was primarily due to the increases in the average prices of oil and gas sold.
Depreciation, depletion, and amortization of oil and gas properties decreased $24,636 (50.2%) in 1999 as compared to 1998. This decrease was primarily due to the decrease in volumes of gas sold and upward revisions in the estimates of remaining oil and gas reserves at December 31, 1999. As a percentage of oil and gas sales, this expense decreased to 7.5% in 1999 from 11.2% in 1998. This percentage decrease was primarily due to the dollar decrease in depreciation, depletion, and amortization.
General and administrative expenses decreased $1,046 (2.7%) in 1999 as compared to 1998. As a percentage of oil and gas sales, these expenses increased to 11.6% in 1999 from 8.9% in 1998. This percentage increase was primarily due to the decrease in oil and gas sales.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997 ----------------------------------------
Total oil and gas sales decreased $258,801 (37.2%) in 1998 as compared to 1997. Of this decrease, approximately $187,000 was related to a decrease in volumes of gas sold and approximately $59,000 was related to a decrease in the average price of gas sold. Volumes of oil and gas sold decreased 258 barrels and 74,322 Mcf, respectively, in 1998 as compared to 1997. The decrease in volumes of gas sold resulted primarily from (i) the curtailment of sales in 1998 on one well due to the 1979-2 Program's overproduced position in that well and (ii) normal declines in production. Average oil and gas prices decreased to $13.48 per barrel and $2.21 per Mcf, respectively, in 1998 from $20.30 per barrel and $2.52 per Mcf, respectively, in 1997.
Oil and gas production expenses (including lease operating expenses and production taxes) decreased $13,616 (10.7%) in 1998 as compared to 1997. This decrease was primarily due to a decrease in production taxes associated with the decrease in oil and gas sales, which decrease was partially offset by an increase in lease operating expenses primarily due to the settlement of a lawsuit during 1998. As a percentage of oil and gas sales, these expenses increased to 26.1% in 1998 from 18.3% in 1997. This percentage increase was primarily due to the decreases in the average prices of oil and gas sold.
Depreciation, depletion, and amortization of oil and gas properties decreased $28,413 (36.7%) in 1998 as compared to 1997. This decrease resulted primarily from the decreases in volumes of oil and gas sold. As a percentage of oil and gas sales, this expense remained relatively constant at 11.2% in 1998 and 11.1% in 1997.
General and administrative expenses decreased $2,871 (6.9%) in 1998 as compared to 1997. As a percentage of oil and gas sales, these expenses increased to 8.9% in 1998 from 6.0% in 1997. This percentage increase was primarily due to the decrease in oil and gas sales.
Liquidity and Capital Resources
Net proceeds from operations less necessary operating capital are distributed to the limited partners on a quarterly basis. See "Item 5. Market for the Registrant's Limited Partnership Units and Related Limited Partner Matters." The net proceeds from production are not reinvested in productive assets, except to the extent that producing wells are improved, or where methods are employed to permit more efficient recovery of reserves, thereby resulting in a positive economic impact. Assuming 1999 production levels for future years, the 1979-1 Program's proved reserve quantities at December 31, 1999 would have remaining lives of approximately 7.6 years for gas reserves and 11.9 years for oil reserves and the 1979-2 Program's proved oil and gas reserve quantities at December 31, 1999 would have remaining lives of approximately 8.3 years for gas reserves and 10.9 years for oil reserves. However, since the Programs' reserve estimates are based on oil and gas prices at December 31, 1999, it is possible that a significant decrease in oil and gas prices from December 31, 1999 levels will reduce such reserves and their corresponding life-span.
The Programs' available capital from the limited partners' subscriptions has been spent on oil and gas drilling activities and there should be no further material capital resource commitments in the future. Occasional expenditures by the Programs for well completions or workovers, however, may reduce or eliminate cash available for a particular quarterly cash distribution. Cash for operational purposes has generally been
provided by current oil and gas production. Management believes that cash for ordinary operational purposes will be provided by current oil and gas production.
There can be no assurance as to the amount of the Programs' future cash distributions. The Programs' ability to make cash distributions depends primarily upon the level of available cash flow generated by the Programs' operating activities, which will be affected (either positively or negatively) by many factors beyond the control of the Programs, including the price of and demand for oil and gas and other market and economic conditions. Even if prices and costs remain stable, the amount of cash available for distributions will decline over time (as the volume of production from producing properties declines) since the Programs are not replacing production through acquisitions of producing properties and drilling.
Inflation and Changing Prices
Prices obtained for oil and gas production depend upon numerous factors, including the extent of domestic and foreign production, foreign imports of oil, market demand, domestic and foreign economic conditions in general, and governmental regulations and tax laws. The general level of inflation in the economy did not have a material effect on the operations of the Program in 1999. Oil and gas prices have fluctuated during recent years and generally have not followed the same pattern as inflation. See "Item 2. Properties - Oil and Gas Production, Revenue, and Price History."
Year 2000 Computer Issues
The year 2000 issue refers to the inability of computer and other information technology systems to properly process date and time information, stemming from the earlier programming practice of using two digits rather than four to represent the year in a date. To the knowledge of the General Partner, the Programs have not experienced any material effects from the year 2000 issue. Costs incurred by the Programs in order to ensure year 2000 compatibility were not material to the Programs.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Programs do not hold any market risk sensitive instruments.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
In our opinion, the accompanying balance sheets and the related statements of operations, changes in partners' capital and cash flows present fairly, in all material respects, the financial position of the Dyco Oil and Gas Program 1979-1 Limited Partnership, a Minnesota limited partnership, at December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Program's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma March 20, 2000
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP Balance Sheets December 31, 1999 and 1998
ASSETS ------
1999 1998 -------- --------
CURRENT ASSETS: Cash and cash equivalents $ 8,884 $ 54,891 Accrued oil and gas sales 43,829 38,148 ------- ------- Total current assets $ 52,713 $ 93,039
NET OIL AND GAS PROPERTIES, utilizing the full cost method 107,520 123,292
DEFERRED CHARGE 49,064 31,576 ------- ------- $209,297 $247,907 ======= =======
LIABILITIES AND PARTNERS' CAPITAL ---------------------------------
CURRENT LIABILITIES: Accounts payable $ 8,231 $ 2,872 Gas imbalance payable 3,254 5,084 ------- ------- Total current liabilities $ 11,485 $ 7,956
ACCRUED LIABILITY $ 43,514 $ 29,241
PARTNERS' CAPITAL: General Partner, 32 general partner units $ 1,544 $ 2,108 Limited Partners, issued and outstanding, 3,140 Units 152,754 208,602 ------- ------- Total Partners' Capital $154,298 $210,710 ------- ------- $209,297 $247,907 ======= =======
The accompanying notes are an integral part of these financial statements.
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP Statements of Operations For the Years Ended December 31, 1999, 1998, and 1997
1999 1998 1997 -------- -------- --------
REVENUES: Oil and gas sales $272,158 $341,699 $468,867 Interest 2,179 4,420 3,073 Gain on sale of oil and gas properties - 145,376 - ------- ------- -------
$274,337 $491,495 $471,940
COSTS AND EXPENSES: Lease operating $ 53,513 $ 47,169 $ 55,138 Production taxes 19,350 24,930 32,733 Depreciation, depletion, and amortization of oil and gas properties 15,772 24,232 39,290 General and administrative 51,794 52,637 55,701 ------- ------- ------- $140,429 $148,968 $182,862 ------- ------- ------- NET INCOME $133,908 $342,527 $289,078 ======= ======= ======= GENERAL PARTNER (1%) - NET INCOME $ 1,339 $ 3,425 $ 2,891 ======= ======= ======= LIMITED PARTNERS (99%) - NET INCOME $132,569 $339,102 $286,187 ======= ======= ======= NET INCOME per Unit $ 42.22 $ 107.98 $ 91.13 ======= ======= ======= UNITS OUTSTANDING 3,172 3,172 3,172 ======= ======= =======
The accompanying notes are an integral part of these financial statements.
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP Statements of Changes in Partners' Capital For the Years Ended December 31, 1999, 1998, and 1997
General Limited Partner Partners Total -------- ---------- ----------
Balances at Dec. 31, 1996 $4,039 $399,786 $403,825 Cash distributions ( 3,648) ( 361,132) ( 364,780) Net income 2,891 286,187 289,078 ----- ------- -------
Balances at Dec. 31, 1997 $3,282 $324,841 $328,123 Cash distributions ( 4,599) ( 455,341) ( 459,940) Net income 3,425 339,102 342,527 ----- ------- -------
Balances at Dec. 31, 1998 $2,108 $208,602 $210,710 Cash distributions ( 1,903) ( 188,417) ( 190,320) Net income 1,339 132,569 133,908 ----- ------- -------
Balances at Dec. 31, 1999 $1,544 $152,754 $154,298 ===== ======= =======
The accompanying notes are an integral part of these financial statements.
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP Statements of Cash Flows For the Years Ended December 31, 1999, 1998, and 1997
1999 1998 1997 ---------- ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $133,908 $342,527 $289,078 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, and amortization of oil and gas properties 15,772 24,232 39,290 Gain on sale of oil and gas properties - ( 145,376) - (Increase) decrease in accrued oil and gas sales ( 5,681) 31,539 32,294 (Increase) decrease in deferred charge ( 17,488) 16,930 2,451 Increase (decrease) in accounts payable 5,359 94 ( 1,564) Increase (decrease) in gas imbalance payable ( 1,830) 4,979 ( 11,538) Increase (decrease) in accrued liability 14,273 ( 7,785) 3,194 ------- ------- ------- Net cash provided by operating activities $144,313 $267,140 $353,205 ------- ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from the sale of oil and gas properties $ - $177,387 $ 22,624 Additions to oil and gas properties - ( 194) - ------- ------- ------- Net cash provided by investing activities $ - $177,193 $ 22,624 ------- ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($190,320) ($459,940) ($364,780) ------- ------- ------- Net cash used by financing activities ($190,320) ($459,940) ($364,780) ------- ------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ($ 46,007) ($ 15,607) $ 11,049 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 54,891 70,498 59,449 ------- ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,884 $ 54,891 $ 70,498 ======= ======= ======= The accompanying notes are an integral part of these financial statements.
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP Notes to Financial Statements For the Years Ended December 31, 1999, 1998, and 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations
The Dyco Oil and Gas Program 1979-1 Limited Partnership (the "Program"), a Minnesota limited partnership, commenced operations on April 2, 1979. Dyco Petroleum Corporation ("Dyco") is the General Partner of the Program. Affiliates of Dyco owned 1,391 (44.3%) of the Program's Units at December 31, 1999.
The Program's sole business is the development and production of oil and gas with a concentration on gas. Substantially all of the Program's gas reserves are being sold regionally in the "spot market." Due to the highly competitive nature of the spot market, prices on the spot market are subject to wide seasonal and regional pricing fluctuations. In addition, such spot market sales are generally short-term in nature and are dependent upon the obtaining of transportation services provided by pipelines. The prices received for the Program's oil and gas are subject to influences such as global consumption and supply trends.
Cash and Cash Equivalents
The Program considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents are not insured, which cause the Program to be subject to risk.
Credit Risk
Accrued oil and gas sales which are due from a variety of oil and gas purchasers subject the Program to a concentration of credit risk. Some of these purchasers are discussed in Note 3 - Major Customers.
Oil and Gas Properties
Oil and gas operations are accounted for using the full cost method of accounting. All productive and non-productive costs associated with the acquisition, exploration, and development of oil and gas reserves are capitalized. Capitalized costs are depleted on the gross revenue method using estimates of proved reserves. The full
cost amortization rates per equivalent Mcf of gas produced during the years ended December 31, 1999, 1998, and 1997 were $0.11, $0.13, and $0.19, respectively. The Program's calculation of depreciation, depletion, and amortization includes estimated future expenditures to be incurred in developing proved reserves and estimated dismantlement and abandonment costs, net of estimated salvage values. In the event the unamortized cost of oil and gas properties being amortized exceeds the full cost ceiling (as defined by the Securities and Exchange Commission("SEC")) the excess is charged to expense in the year during which such excess occurs. Sales and abandonments of properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved oil and gas reserves. During the first quarter of 1998, the Program sold several wells for $162,007 representing approximately 9% of its total reserves. The proceeds from these sales would have reduced the net book value of the oil and gas properties by 90%, significantly altering the Program's capitalized cost/proved reserves relationship. Accordingly, capitalized costs were reduced by approximately 9% with the remainder recorded as a gain on sale of oil and gas properties.
Deferred Charge
The Deferred Charge at December 31, 1999 and 1998 represents costs deferred for lease operating expenses incurred in connection with the Program's underproduced gas imbalance positions. The rate used in calculating the deferred charge is the average of the annual production costs per Mcf. At December 31, 1999, cumulative total gas sales volumes for underproduced wells were less than the Program's pro-rata share of total gas production from these wells by 156,455 Mcf, resulting in prepaid lease operating expenses of $49,064. At December 31, 1998, cumulative total gas sales volumes for underproduced wells were less than the Program's pro-rata share of total gas production from these wells by 157,720 Mcf, resulting in prepaid lease operating expenses of $31,576.
Accrued Liability
The Accrued Liability at December 31, 1999 and 1998 represents charges accrued for lease operating expenses incurred in connection with the Program's overproduced gas imbalance positions. The rate used in calculating the accrued liability is the average of the annual production costs per Mcf. At December 31, 1999, cumulative total gas sales volumes for overproduced wells exceeded the Program's pro-rata share of total gas production from these wells by
138,757 Mcf, resulting in accrued lease operating expenses of $43,514. At December 31, 1998, cumulative total gas sales volumes for overproduced wells exceeded the Program's pro-rata share of total gas production from these wells by 146,057 Mcf, resulting in accrued lease operating expenses of $29,241.
Oil and Gas Sales and Gas Imbalance Payable
The Program's oil and condensate production is sold, title passed, and revenue recognized at or near the Program's wells under short-term purchase contracts at prevailing prices in accordance with arrangements which are customary in the oil industry. Sales of gas applicable to the Program's 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 Program's interest in gas reserves. During such times as the Program's sales of gas exceed its pro-rata ownership in a well, such sales are recorded as revenue unless total sales from the well have exceeded the Program's share of estimated total gas reserves underlying the property at which time such excess is recorded as a liability. The rates per Mcf used to calculate this liability are based on the average gas prices received for the volumes at the time the overproduction occurred. This also approximates the price for which the Program is currently settling this liability. At December 31, 1999, total sales exceeded the Program's share of estimated total gas reserves on one well by $3,254 (2,169 Mcf). At December 31, 1998, total sales exceeded the Program's share of estimated total gas reserves on two wells by $5,084 (3,389 Mcf).
Use of Estimates in Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Further, the deferred charge, the gas imbalance payable, and the accrued liability all involve estimates which could materially differ from the actual amounts ultimately realized in the near term. Oil and gas reserves (see Note 4) also involve significant estimates which could materially differ from the actual amounts ultimately realized.
Income Taxes
Income or loss for income tax purposes is includable in the income tax returns of the partners. Accordingly, no recognition has been given to income taxes in the accompanying financial statements.
2. TRANSACTIONS WITH RELATED PARTIES
Under the terms of the Program Agreement, Dyco is entitled to receive a reimbursement for all direct expenses and general and administrative, geological, and engineering expenses it incurs on behalf of the Program. During the years ended December 31, 1999, 1998, and 1997, such expenses totaled $51,794, $52,637, and $55,701, respectively, of which $44,520 was paid each year to Dyco and its affiliates.
Affiliates of the Program operate certain of the Program's properties. Their policy is to bill the Program for all customary charges and cost reimbursements associated with these activities, together with any compressor rentals, consulting, or other services provided. Such charges are comparable to third party charges in the area where the wells are located and are the same as charged to other working interest owners in the wells.
3. MAJOR CUSTOMERS
The following purchasers individually accounted for 10% or more of the combined oil and gas sales of the Program for the years ended December 31, 1999, 1998, and 1997:
Purchaser 1999 1998 1997 --------- ----- ----- -----
El Paso Energy Marketing Company 95.3% 79.1% 95.3% Enron Oil & Gas Company - % 18.6% - %
In the event of interruption of purchases by these significant customers or the cessation or material change in availability of open-access transportation by the Program's pipeline transporters, the Program may encounter difficulty in marketing its gas and in maintaining historic sales levels. Alternative purchasers or transporters may not be readily available.
4. SUPPLEMENTAL OIL AND GAS INFORMATION
The following supplemental information regarding the oil and gas activities of the Program is presented pursuant to the disclosure requirements promulgated by the SEC.
Capitalized Costs
The Program's capitalized costs and accumulated depreciation, depletion, amortization, and valuation allowance at December 31, 1999 and 1998 were as follows:
December 31, ------------------------- 1999 1998 ------------- ------------
Proved properties $20,381,071 $20,381,071
Less accumulated depreciation, depletion, amortization, and valuation allowance ( 20,273,551) ( 20,257,779) ---------- ---------- Net oil and gas properties $ 107,520 $ 123,292 ========== ==========
Costs Incurred
The Program incurred no oil and gas property acquisition or exploration costs during 1999, 1998, and 1997. Costs incurred by the Program in connection with its oil and gas property development activities during 1999, 1998, and 1997 were as follows:
December 31, --------------------- 1999 1998 1997 ---- ---- ----
Development costs $ - $194 $ - === === ===
Quantities of Proved Oil and Gas Reserves - Unaudited
Set forth below is a summary of the changes in the net quantities of the Program's proved crude oil and gas reserves for the years ended December 31, 1999, 1998, and 1997. Proved reserves were estimated by petroleum engineers employed by affiliates of Dyco. Certain reserve information was reviewed by Ryder Scott Company, L.P., an independent petroleum engineering firm. All of the Program's reserves
are located in the United States. The following information includes certain gas balancing adjustments which cause the gas volumes to differ from the reserve information prepared by Dyco and reviewed by Ryder Scott.
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 near future. Although every reasonable effort has been made to ensure that the reserve estimates reported herein 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 Program's reserves were determined at December 31, 1999 using oil and gas prices of $22.75 per barrel and $2.24 per Mcf, respectively.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
In our opinion, the accompanying balance sheets and the related statements of operations, changes in partners' capital and cash flows present fairly, in all material respects, the financial position of the Dyco Oil and Gas Program 1979-2 Limited Partnership, a Minnesota limited partnership, at December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Program's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma March 20, 2000
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP Balance Sheets December 31, 1999 and 1998
ASSETS ------ 1999 1998 -------- --------
CURRENT ASSETS: Cash and cash equivalents $ 97,905 $ 80,537 Accrued oil and gas sales 58,563 48,948 ------- ------- Total current assets $156,468 $129,485
NET OIL AND GAS PROPERTIES, utilizing the full cost method 209,357 233,381
DEFERRED CHARGE 63,096 51,206 ------- ------- $428,921 $414,072 ======= =======
LIABILITIES AND PARTNERS' CAPITAL ---------------------------------
CURRENT LIABILITIES: Accounts payable $ 4,845 $ 5,817 Payable to General Partner - 11,439 Gas imbalance payable 64,289 58,811 ------- ------- Total current liabilities $ 69,134 $ 76,067
ACCRUED LIABILITY $ 26,154 $ 28,873
PARTNERS' CAPITAL: General Partner, 29 general partner units $ 3,337 $ 3,092 Limited Partners, issued and outstanding, 2,860 Units 330,296 306,040 ------- ------- Total Partners' Capital $333,633 $309,132 ------- ------- $428,921 $414,072 ======= =======
The accompanying notes are an integral part of these financial statements.
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP Statements of Operations For the Years Ended December 31, 1999, 1998, and 1997
1999 1998 1997 -------- -------- --------
REVENUES: Oil and gas sales $325,847 $437,127 $695,928 Interest 4,734 7,903 9,287 ------- ------- -------
$330,581 $445,030 $705,215
COSTS AND EXPENSES: Lease operating $ 46,662 $ 83,351 $ 75,640 Production tax 23,936 30,549 51,876 Depreciation, depletion, and amortization of oil and gas properties 24,446 49,082 77,495 General and administrative 37,696 38,742 41,613 ------- ------- ------- $132,740 $201,724 $246,624 ------- ------- ------- NET INCOME $197,841 $243,306 $458,591 ======= ======= ======= GENERAL PARTNER (1%) - NET INCOME $ 1,978 $ 2,433 $ 4,586 ======= ======= ======= LIMITED PARTNERS (99%) - NET INCOME $195,863 $240,873 $454,005 ======= ======= ======= NET INCOME per Unit $ 68.48 $ 84.22 $ 158.74 ======= ======= ======= UNITS OUTSTANDING 2,889 2,889 2,889 ======= ======= =======
The accompanying notes are an integral part of these financial statements.
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP Statements of Changes in Partners' Capital For the Years Ended December 31, 1999, 1998, and 1997
General Limited Partner Partners Total --------- ---------- ----------
Balances at Dec. 31, 1996 $6,473 $640,802 $647,275 Cash distributions ( 6,067) ( 600,623) ( 606,690) Net income 4,586 454,005 458,591 ----- ------- -------
Balances at Dec. 31, 1997 $4,992 $494,184 $499,176 Cash distributions ( 4,333) ( 429,017) ( 433,350) Net income 2,433 240,873 243,306 ----- ------- -------
Balances at Dec. 31, 1998 $3,092 $306,040 $309,132 Cash distributions ( 1,733) ( 171,607) ( 173,340) Net income 1,978 195,863 197,841 ----- ------- -------
Balances at Dec. 31, 1999 $3,337 $330,296 $333,633 ===== ======= =======
The accompanying notes are an integral part of these financial statements.
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP Statements of Cash Flows For the Years Ended December 31, 1999, 1998, and 1997
1999 1998 1997 -------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 197,841 $243,306 $458,591 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, and amortization of oil and gas properties 24,446 49,082 77,495 (Increase) decrease in accrued oil and gas sales ( 9,615) 32,210 87,713 (Increase) decrease in deferred charge ( 11,890) ( 13,134) 12,485 Decrease in accounts payable ( 972) ( 373) ( 4,924) Increase (decrease) in payable to General Partner ( 11,439) 11,439 - Increase in gas imbalance payable 5,478 4,958 8,893 Increase (decrease) in accrued liability ( 2,719) 28,316 ( 5,756) ------- ------- ------- Net cash provided by operating activities $191,130 $355,804 $634,497 ------- ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from the sale of oil and gas properties $ - $ 544 $ 6,213 Additions to oil and gas properties ( 422) - ( 84) ------- ------- ------- Net cash provided (used) by investing activities ($ 422) $ 544 $ 6,129 ------- ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($173,340) ($433,350) ($606,690) ------- ------- ------- Net cash used by financing activities ($173,340) ($433,350) ($606,690) ------- ------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 17,368 ($ 77,002) $ 33,936
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 80,537 157,539 123,603 ------- ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 97,905 $ 80,537 $157,539 ======= ======= =======
The accompanying notes are an integral part of these financial statements.
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP Notes to Financial Statements For the Years Ended December 31, 1999, 1998, and 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations
The Dyco Oil and Gas Program 1979-2 Limited Partnership (the "Program"), a Minnesota limited partnership, commenced operations on July 2, 1979. Dyco Petroleum Corporation ("Dyco") is the General Partner of the Program. Affiliates of Dyco owned 1,294 (45.2%) of the Program's Units at December 31, 1999.
The Program's sole business is the development and production of oil and gas with a concentration on gas. Substantially all of the Program's gas reserves are being sold regionally in the "spot market." Due to the highly competitive nature of the spot market, prices on the spot market are subject to wide seasonal and regional pricing fluctuations. In addition, such spot market sales are generally short-term in nature and are dependent upon the obtaining of transportation services provided by pipelines.
Cash and Cash Equivalents
The Program considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents are not insured, which cause the Program to be subject to risk.
Credit Risk
Accrued oil and gas sales which are due from a variety of oil and gas purchasers subject the Program to a concentration of credit risk. Some of these purchasers are discussed in Note 3 - Major Customers.
Oil and Gas Properties
Oil and gas operations are accounted for using the full cost method of accounting. All productive and non-productive costs associated with the acquisition, exploration, and development of oil and gas reserves are capitalized. Capitalized costs are depleted on the gross revenue method using estimates of proved reserves. The full cost amortization rates per equivalent Mcf of gas produced during the years ended December 31, 1999, 1998, and 1997 were $0.18, $0.25, and $0.28, respectively. The Program's calculation of depreciation, depletion, and amortization
includes estimated future expenditures to be incurred in developing proved reserves and estimated dismantlement and abandonment costs, net of estimated salvage values. In the event the unamortized cost of oil and gas properties being amortized exceeds the full cost ceiling (as defined by the Securities and Exchange Commission ("SEC")) the excess is charged to expense in the year during which such excess occurs. Sales and abandonments of properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved oil and gas reserves.
Deferred Charge
The Deferred Charge at December 31, 1999 and 1998 represents costs deferred for lease operating expenses incurred in connection with the Program's underproduced gas imbalance positions. The rate used in calculating the deferred charge is the average of the annual production costs per Mcf. At December 31, 1999, cumulative total gas sales volumes for underproduced wells were less than the Program's pro-rata share of total gas production from these wells by 138,368 Mcf, resulting in prepaid lease operating expenses of $63,096. At December 31, 1998, cumulative total gas sales volumes for underproduced wells were less than the Program's pro-rata share of total gas production from these wells by 144,813 Mcf, resulting in prepaid lease operating expenses of $51,206.
Payable to General Partner
The payable to General Partner at December 31, 1998 represents an overpayment of gas sales in 1998. Such amount was repaid during 1999.
Accrued Liability
The Accrued Liability at December 31, 1999 and 1998 represents charges accrued for lease operating expenses incurred in connection with the Program's overproduced gas imbalance positions. The rate used in calculating the accrued liability is the average of the annual production costs per Mcf. At December 31, 1999, cumulative total gas sales volumes for overproduced wells exceeded the Program's pro-rata share of total gas production from these wells by 57,356 Mcf, resulting in accrued lease operating expenses of $26,154. At December 31, 1998, cumulative total gas sales volumes for overproduced wells exceeded the Program's pro-rata share of total gas production from these wells by
81,654 Mcf, resulting in accrued lease operating expenses of $28,873.
Oil and Gas Sales and Gas Imbalance Payable
The Program's oil and condensate production is sold, title passed, and revenue recognized at or near the Program's wells under short-term purchase contracts at prevailing prices in accordance with arrangements which are customary in the oil industry. Sales of gas applicable to the Program's 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 Program's interest in gas reserves. During such times as the Program's sales of gas exceed its pro-rata ownership in a well, such sales are recorded as revenue unless total sales from the well have exceeded the Program's share of estimated total gas reserves underlying the property at which time such excess is recorded as a liability. The rates per Mcf used to calculate this liability are based on the average gas prices received for the volumes at the time the overproduction occurred. At December 31, 1999, total sales exceeded the Program's share of estimated total gas reserves on one well by $64,289 (42,859 Mcf). At December 31, 1998, total sales exceeded the Program's share of estimated total gas reserves on one well by $58,811 (39,207 Mcf).
Use of Estimates in Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Further, the deferred charge, the gas imbalance payable, and the accrued liability all involve estimates which could materially differ from the actual amounts ultimately realized in the near term. Oil and gas reserves (see Note 4) also involve significant estimates which could materially differ from the actual amounts ultimately realized.
Income Taxes
Income or loss for income tax purposes is includable in the income tax returns of the partners. Accordingly, no recognition has been given to income taxes in the accompanying financial statements.
2. TRANSACTIONS WITH RELATED PARTIES
Under the terms of the Program Agreement, Dyco is entitled to receive a reimbursement for all direct expenses and general and administrative, geological, and engineering expenses it incurs on behalf of the Program. During the years ended December 31, 1999, 1998, and 1997, such expenses totaled $37,696, $38,742, and $41,613, respectively, of which $31,212 was paid each year to Dyco and its affiliates.
Affiliates of the Program operate certain of the Program's properties. Their policy is to bill the Program for all customary charges and cost reimbursements associated with these activities, together with any compressor rentals, consulting, or other services provided. Such charges are comparable to third party charges in the area where the wells are located and are the same as charged to other working interest owners in the wells.
3. MAJOR CUSTOMERS
The following purchasers individually accounted for 10% or more of the combined oil and gas sales for the years ended December 31, 1999, 1998, and 1997:
Purchaser 1999 1998 1997 --------- ----- ----- -----
El Paso Energy Marketing Company 70.8% 74.6% 60.0% Williams Energy Services Company - % - % 22.9% Warren Petroleum Company 12.6% - % - %
In the event of interruption of purchases by these significant customers or the cessation or material change in availability of open-access transportation by the Program's pipeline transporters, the Program may encounter difficulty in marketing its gas and in maintaining historic sales levels. Alternative purchasers or transporters may not be readily available.
4. SUPPLEMENTAL OIL AND GAS INFORMATION
The following supplemental information regarding the oil and gas activities of the Program is presented pursuant to the disclosure requirements promulgated by the SEC.
Capitalized Costs
The Program's capitalized costs and accumulated depreciation, depletion, amortization, and valuation allowance at December 31, 1999 and 1998 were as follows:
December 31, ---------------------------- 1999 1998 ------------- -------------
Proved properties $18,554,370 $18,553,948
Less accumulated depreciation, depletion, amortization, and valuation allowance ( 18,345,013) ( 18,320,567) ---------- ----------
Net oil and gas properties $ 209,357 $ 233,381 ========== ==========
Costs Incurred
The Program incurred no oil and gas property acquisition or exploration costs during 1999, 1998, and 1997. Costs incurred by the Program in connection with its oil and gas property development activities during 1999, 1998, and 1997 were as follows:
December 31, ------------------------ 1999 1998 1997 ------ ------ ------
Development costs $422 $ - $ 84 === === ===
Quantities of Proved Oil and Gas Reserves - Unaudited
Set forth below is a summary of the changes in the net quantities of the Program's proved crude oil and gas reserves for the years ended December 31, 1999, 1998, and 1997. Proved reserves were estimated by petroleum engineers employed by affiliates of the Program. Certain reserve information was reviewed by Ryder Scott Company, L.P., an independent petroleum engineering firm. All of the Program's reserves are located in the United States. The following information includes certain gas balancing adjustments which cause the gas volumes to differ from the reserve information prepared by Dyco and reviewed by Ryder Scott.
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 near future. Although every reasonable effort has been made to ensure that the reserve estimates reported herein 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 Program's reserves were determined at December 31, 1999 using oil and gas prices of $22.75 per barrel and $2.24 per Mcf, respectively.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Programs are limited partnerships and have no directors or executive officers. The following individuals are directors and executive officers of Dyco, the General Partner. The business address of such directors and executive officers is Two West Second Street, Tulsa, Oklahoma 74103.
NAME AGE POSITION WITH GENERAL PARTNERS ---------------- --- -------------------------------- Dennis R. Neill 48 President and Director
Patrick M. Hall 41 Chief Financial Officer
Judy K. Fox 49 Secretary
The director will hold office until the next annual meeting of shareholders of Dyco or until his successor has been duly elected and qualified. All executive officers serve at the discretion of the Board of Directors.
Dennis R. Neill joined Samson in 1981, was named Senior Vice President and Director of Dyco on June 18, 1991, and was named President of Dyco on June 30, 1996. Prior to joining Samson, he was associated with a Tulsa law firm, Conner and Winters, where
his principal practice was in the securities area. He received a Bachelor of Arts degree in political science from Oklahoma State University and a Juris Doctorate degree from the University of Texas. Mr. Neill also serves as Senior Vice President of Samson Investment Company and as President and Director of Samson Properties Incorporated, Samson Hydrocarbons Company, Berry Gas Company, Circle L Drilling Company, Compression, Inc., and Geodyne Resources, Inc. and its subsidiaries.
Patrick M. Hall joined Samson in 1983, was named a Vice President of Dyco on June 18, 1991, and was named Chief Financial Officer of Dyco on June 30, 1996. Prior to joining Samson he was a senior accountant with Peat Marwick Main & Co. in Tulsa. He holds a Bachelor of Science degree in accounting from Oklahoma State University and is a Certified Public Accountant. Mr. Hall also serves as Senior Vice President - Controller of Samson Investment Company.
Judy K. Fox joined Samson in 1990 and was named Secretary of Dyco on June 30, 1996. Prior to joining Samson, she served as Gas Contract Manager for Ely Energy Company. Ms. Fox is also Secretary of Berry Gas Company, Circle L Drilling Company, Compression, Inc., Samson Hydrocarbons Company, Samson Properties Incorporated, and Geodyne Resources, Inc. and its subsidiaries.
Section 16(a) Beneficial Ownership Reporting Compliance
To the best knowledge of the Programs and Dyco, there were no officers, directors, or ten percent owners who were delinquent filers during 1999 of reports required under Section 16(a) of the Securities and Exchange Act of 1934.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The Programs are limited partnerships and, therefore, have no officers or directors. The following table summarizes the amounts paid by the Programs as compensation and reimbursements to Dyco and its affiliates for the three years ended December 31, 1999:
Compensation/Reimbursement to Dyco and its affiliates Three Years Ended December 31, 1999
Type of Compensation/Reimbursement(1) Expense - ------------------------------------- -------------------------- 1999 1998 1997 ------- ------- -------
1979-1 Program - --------------
Compensation: Operations (2) (2) (2)
Reimbursements: General and Administrative, Geological, and Engineering Expenses and Direct Expenses(3) $44,520 $44,520 $44,520
1979-2 Program - --------------
Compensation: Operations (2) (2) (2)
Reimbursements: General and Administrative, Geological, and Engineering Expenses and Direct Expenses(3) $31,212 $31,212 $31,212
- ---------------
(1) The authority for all of such compensation and reimbursement is the Program Agreements. With respect to the Operations activities noted in the table, management believes that such compensation is equal to or less than that charged by unaffiliated persons in the same geographic areas and under the same conditions. (2) Affiliates of the Programs serve as operator of some of the Programs' wells. Dyco, as 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. The dollar amount of such compensation paid by the Programs to such affiliates is impossible to quantify as of the date of this Annual Report. (3) The Programs reimburse Dyco and its affiliates for reasonable and necessary general and administrative, geological, and engineering expenses and direct expenses incurred in connection with their management and operation of the Programs. The directors, officers, and employees of Dyco and its affiliates receive no direct remuneration from the Programs for their services to the Programs. See "Salary Reimbursement Table" below. The allocable general
and administrative, geological, and engineering expenses are apportioned on a reasonable basis between the Programs' business and all other oil and gas activities of Dyco and its affiliates, including Dyco's management and operation of affiliated oil and gas limited partnerships. The allocation to the Programs of these costs is made by Dyco as General Partner.
As noted in the Compensation/Reimbursement Table above, the directors, officers, and employees of Dyco and their affiliates receive no direct remuneration from the Programs for their services. However, to the extent such services represent direct involvement with the Programs, as opposed to general corporate functions, such persons' salaries are allocated to and reimbursed by the Programs. Such allocation to the Programs' general and administrative, geological, and engineering expenses of the salaries of directors, officers, and employees of Dyco and its affiliates is based on internal records maintained by Dyco and its affiliates, and represents investor relations, legal, accounting, data processing, management, gas marketing, and other functions directly attributable to the Programs' operations. When actual costs incurred benefit other partnerships and affiliates, the allocation of costs is based on the relationship of the Program's reserves to the total reserves owned by all partnerships and affiliates. The following table indicates the approximate amount of general and administrative expense reimbursement attributable to the salaries of the directors, officers, and employees of Dyco and its affiliates for the three years ended December 31, 1999:
Samson maintains necessary inventories of new and used field equipment. Samson may have provided some of this equipment for wells in which the Programs have an interest. This equipment was provided at prices or rates equal to or less than those normally charged in the same or comparable geographic area by unaffiliated persons or companies dealing at arm's length. The operators of these wells bill the Programs for a portion of such costs based upon the Programs' interest in the well.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information as to the beneficial ownership of the Programs' Units as of March 1, 2000 by each beneficial owner of more than 5% of the issued and outstanding Units and by the directors, officers, and affiliates of Dyco. The address of each of such persons is Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103.
Number of Units Beneficially Owned (Percent Beneficial Owner of Outstanding) - ---------------------------------------------- ---------------
1979-1 Program: - --------------
Samson Resources Company 1,394 (44.4%)
All directors, officers, and affiliates of Dyco as a group and Dyco (5 persons) 1,394 (44.4%)
1979-2 Program: - --------------
Samson Resources Company 1,296 (45.3%)
All directors, officers, and affiliates of Dyco as a group and Dyco (5 persons) 1,296 (45.3%)
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain affiliates of Dyco engage in oil and gas activities independently of the Programs which result in conflicts of interest that cannot be totally eliminated. The allocation of acquisition and drilling opportunities and the nature of the compensation arrangements between the Programs and such affiliates also create potential conflicts of interest. An affiliate of the Program owns a significant amount of the
Programs' Units and therefore has an identity of interest with other limited partners with respect to the operations of the Programs.
In order to attempt to assure limited liability for limited partners as well as an orderly conduct of business, management of the Programs is exercised solely by Dyco. The Program Agreements grant Dyco broad discretionary authority with respect to the Programs' participation in drilling prospects and expenditure and control of funds, including borrowings. These provisions are similar to those contained in prospectuses and partnership agreements for other public oil and gas partnerships. Broad discretion as to general management of the Programs involves circumstances where Dyco has conflicts of interest and where it must allocate costs and expenses, or opportunities, among the Programs and other competing interests.
Dyco does not devote all of its time, efforts, and personnel exclusively to the Programs. Furthermore, the Programs do not have any employees, but instead rely on the personnel of Samson. The Programs thus compete with Samson (including other oil and gas programs) for the time and resources of such personnel. Samson devotes such time and personnel to the management of the Programs as are indicated by the circumstances and as are consistent with Dyco's fiduciary duties.
Affiliates of the Programs are solely responsible for the negotiation, administration, and enforcement of oil and gas sales agreements covering the Programs' leasehold interests. Because affiliates of the Programs who provide services to the Programs have fiduciary or other duties to other members of Samson, contract amendments and negotiating positions taken by them in their effort to enforce contracts with purchasers may not necessarily represent the positions that a Program would take if it were to administer its own contracts without involvement with other members of Samson. On the other hand, management believes that the Programs' negotiating strength and contractual positions have been enhanced by virtue of its affiliation with Samson.
Samson Resources Company, an affiliate of Dyco, ("Resources") owns approximately 44% and 45% of the 1979-1 and 1979-2 Programs' outstanding Units as of March 1, 2000. The Program Agreements permit Resources to independently vote its Units. Resources' significant Unit ownership will therefore likely determine the outcome of any matter submitted for a vote of the Limited Partners.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements, Financial Statement Schedules, and Exhibits.
(1) Financial Statements: The following financial statements for the Programs as of December 31, 1999 and 1998 and for the years ended December 31, 1999, 1998, and 1997 are filed as part of this report:
Reports of Independent Accountants Balance Sheets Statements of Operations Statements of Changes in Partners' Capital Statements of Cash Flows Notes to Financial Statements
(2) Financial Statement Schedules:
None.
(3) Exhibits:
4.1 Drilling Agreement dated April 2, 1979 for Dyco Drilling Program 1979-1 by and between Dyco Oil and Gas Program 1979-1, Dyco Petroleum Corporation, and Jaye F. Dyer filed as Exhibit 4.1 to Annual Report on Form 10-K for the year ended December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
4.2 Form of Program Agreement for Dyco Oil and Gas Program 1979-1 by and between Dyco Petroleum Corporation and the Participants filed as Exhibit 4.2 to Annual Report on Form 10-K for the year ended December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
4.3 Amendment to Program Agreement for Dyco Oil and Gas Program 1979-1 dated February 9, 1989 filed as Exhibit 4.3 to Annual Report on Form 10-K for the year ended December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
4.4 Certificate of Limited Partnership (as amended) for Dyco Oil and Gas Program 1979-1 Limited Partnership filed as Exhibit 4.4 to Annual Report on Form 10-K for the year ended
December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
4.5 Drilling Agreement dated July 2, 1979 for Dyco Drilling Program 1979-2 by and between Dyco Oil and Gas Program 1979-2, Dyco Petroleum Corporation, and Jaye F. Dyer filed as Exhibit 4.5 to Annual Report on Form 10-K for the year ended December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
4.6 Form of Program Agreement for Dyco Oil and Gas Program 1979-2 by and between Dyco Petroleum Corporation and the Participants filed as Exhibit 4.6 to Annual Report on Form 10-K for the year ended December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
4.7 Amendment to Program Agreement for Dyco Oil and Gas Program 1979-2 dated February 9, 1989 filed as Exhibit 4.7 to Annual Report on Form 10-K for the year ended December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
4.8 Certificate of Limited Partnership (as amended) for Dyco Oil and Gas Program 1979-2 Limited Partnership filed as Exhibit 4.8 to Annual Report on Form 10-K for the year ended December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
*23.1 Consent of Ryder Scott Company, L.P. for Dyco Oil and Gas Program 1979-1 Limited Partnership.
*23.2 Consent of Ryder Scott Company, L.P. for Dyco Oil and Gas Program 1979-2 Limited Partnership.
*27.1 Financial Data Schedule containing summary financial information extracted from the Dyco Oil and Gas Program 1979-1 Limited Partnership's financial statements as of December 31, 1999 and for the year ended December 31, 1999.
*27.2 Financial Data Schedule containing summary financial information extracted from the Dyco Oil and Gas Program 1979-2 Limited Partnership's financial statements as of December 31, 1999 and for the year ended December 31, 1999.
All other Exhibits are omitted as inapplicable.
------------------ * Filed herewith.
(b) Reports on Form 8-K filed during the fourth quarter of 1999:
None.
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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 organized.
DYCO OIL AND GAS PROGRAM 1979-1 LIMITED PARTNERSHIP
By: DYCO PETROLEUM CORPORATION General Partner
March 24, 2000
By: //s// Dennis R. Neill ------------------------------ Dennis R. Neill President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated.
By: //s// Dennis R. Neill President and March 24, 2000 ------------------- Director (Principal Dennis R. Neill Executive Officer)
//s// Dennis R. Neill Chief Financial March 24, 2000 ------------------- Officer (Principal Patrick M. Hall Financial and Accounting Officer)
//s// Judy K. Fox Secretary March 24, 2000 ------------------- Judy K. Fox
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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 organized.
DYCO OIL AND GAS PROGRAM 1979-2 LIMITED PARTNERSHIP
By: DYCO PETROLEUM CORPORATION General Partner
March 24, 2000
By: //s// Dennis R. Neill ------------------------------ Dennis R. Neill President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated.
By: //s// Dennis R. Neill President and March 24, 2000 ------------------- Director (Principal Dennis R. Neill Executive Officer)
//s// Dennis R. Neill Chief Financial March 24, 2000 ------------------- Officer (Principal Patrick M. Hall Financial and Accounting Officer)
//s// Judy K. Fox Secretary March 24, 2000 ------------------- Judy K. Fox
INDEX TO EXHIBITS
Exhibit Number Description - ------- -----------
4.1 Drilling Agreement dated April 2, 1979 for Dyco Drilling Program 1979-1 by and between Dyco Oil and Gas Program 1979-1, Dyco Petroleum Corporation, and Jaye F. Dyer filed as Exhibit 4.1 to Annual Report on Form 10-K for the year ended December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
4.2 Form of Program Agreement for Dyco Oil and Gas Program 1979-1 by and between Dyco Petroleum Corporation and the Participants filed as Exhibit 4.2 to Annual Report on Form 10-K for the year ended December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
4.3 Amendment to Program Agreement for Dyco Oil and Gas Program 1979-1 dated February 9, 1989 filed as Exhibit 4.3 to Annual Report on Form 10-K for the year ended December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
4.4 Certificate of Limited Partnership (as amended) for Dyco Oil and Gas Program 1979-1 Limited Partnership filed as Exhibit 4.4 to Annual Report on Form 10-K for the year ended December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
4.5 Drilling Agreement dated July 2, 1979 for Dyco Drilling Program 1979-2 by and between Dyco Oil and Gas Program 1979-2, Dyco Petroleum Corporation, and Jaye F. Dyer filed as Exhibit 4.5 to Annual Report on Form 10-K for the year ended December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
4.6 Form of Program Agreement for Dyco Oil and Gas Program 1979-2 by and between Dyco Petroleum Corporation and the Participants filed as Exhibit 4.6 to Annual Report on Form 10-K for the year ended December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
4.7 Amendment to Program Agreement for Dyco Oil and Gas Program 1979-2 dated February 9, 1989 filed as Exhibit 4.7 to Annual Report on Form 10-K for the year ended December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
4.8 Certificate of Limited Partnership (as amended) for Dyco Oil and Gas Program 1979-2 Limited Partnership filed as Exhibit 4.8 to Annual Report on Form 10-K for
the year ended December 31, 1991 on April 10, 1992 and is hereby incorporated herein.
*23.1 Consent of Ryder Scott Company, L.P. for Dyco Oil and Gas Program 1979-1 Limited Partnership.
*23.2 Consent of Ryder Scott Company, L.P. for Dyco Oil and Gas Program 1979-2 Limited Partnership.
*27.1 Financial Data Schedule containing summary financial information extracted from the Dyco Oil and Gas Program 1979-1 Limited Partnership's financial statements as of December 31, 1999 and for the year ended December 31, 1999.
*27.2 Financial Data Schedule containing summary financial information extracted from the Dyco Oil and Gas Program 1979-2 Limited Partnership's financial statements as of December 31, 1999 and for the year ended December 31, 1999.
- ------------------ * Filed herewith.