SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 2002
Commission File Number: P-7: 0-20265 P-8: 0-20264
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
---------------------------------------------------------------------
(Exact name of Registrant as specified in its Articles)
P-7 73-1367186
Oklahoma P-8 73-1378683
---------------------------- -------------------------------
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or Number)
organization)
Two West Second Street, Tulsa, Oklahoma 74103
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(918) 583-1791
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ------
-1-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2002 2001
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 508,487 $ 349,737
Accounts receivable:
Net Profits 211,132 128,950
---------- ----------
Total current assets $ 719,619 $ 478,687
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 2,538,841 2,633,845
---------- ----------
$3,258,460 $3,112,532
========== ==========
PARTNERS' CAPITAL (DEFICIT)
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 101,216) ($ 123,150)
Limited Partners, issued and
outstanding, 188,702 units 3,359,676 3,235,682
---------- ----------
Total Partners' capital $3,258,460 $3,112,532
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-2-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
(Unaudited)
2002 2001
-------- --------
REVENUES:
Net Profits $627,970 $727,938
Interest income 44 5,254
Loss on sale of Net Profits
Interests - ( 252)
-------- --------
$628,014 $732,940
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 87,260 $ 65,573
General and administrative
(Note 2) 54,345 51,777
-------- --------
$141,605 $117,350
-------- --------
NET INCOME $486,409 $615,590
======== ========
GENERAL PARTNER - NET INCOME $ 27,809 $ 33,140
======== ========
LIMITED PARTNERS - NET INCOME $458,600 $582,450
======== ========
NET INCOME per unit $ 2.43 $ 3.09
======== ========
UNITS OUTSTANDING 188,702 188,702
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
-3-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(Unaudited)
2002 2001
-------- -----------
REVENUES:
Net Profits $753,247 $1,463,742
Interest income 864 12,335
Loss on sale of Net Profits
Interests - ( 252)
-------- ----------
$754,111 $1,475,825
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $147,794 $ 121,896
General and administrative
(Note 2) 122,251 120,152
-------- ----------
$270,045 $ 242,048
-------- ----------
NET INCOME $484,066 $1,233,777
======== ==========
GENERAL PARTNER - NET INCOME $ 30,072 $ 65,948
======== ==========
LIMITED PARTNERS - NET INCOME $453,994 $1,167,829
======== ==========
NET INCOME per unit $ 2.41 $ 6.19
======== ==========
UNITS OUTSTANDING 188,702 188,702
======== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-4-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(Unaudited)
2002 2001
---------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $484,066 $1,233,777
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depletion of Net Profits
Interests 147,794 121,896
Loss on sale of Net Profits
Interests - 252
(Increase) decrease in accounts
receivable - Net Profits ( 82,182) 116,139
-------- ----------
Net cash provided by operating
activities $549,678 $1,472,064
-------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 52,790) ($ 208,372)
-------- ----------
Net cash used by investing activities ($ 52,790) ($ 208,372)
-------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($338,138) ($1,259,984)
-------- ----------
Net cash used by financing
activities ($338,138) ($1,259,984)
-------- ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $158,750 $ 3,708
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 349,737 633,461
-------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $508,487 $ 637,169
======== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-5-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2002 2001
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 341,883 $ 280,416
Accounts receivable:
Net Profits 159,117 95,199
---------- ----------
Total current assets $ 501,000 $ 375,615
NET PROFITS INTERESTS, net, utilizing
the successful efforts method 1,488,817 1,543,676
---------- ----------
$1,989,817 $1,919,291
========== ==========
PARTNERS' CAPITAL (DEFICIT)
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 41,875) ($ 56,816)
Limited Partners, issued and
outstanding, 116,168 units 2,031,692 1,976,107
---------- ----------
Total Partners' capital $1,989,817 $1,919,291
========== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-6-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
(Unaudited)
2002 2001
-------- --------
REVENUES:
Net Profits $417,718 $518,679
Interest income 132 4,443
Loss on sale of Net Profits
Interests - ( 121)
-------- --------
$417,850 $523,001
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 50,820 $ 40,170
General and administrative
(Note 2) 34,927 32,169
-------- --------
$ 85,747 $ 72,339
-------- --------
NET INCOME $332,103 $450,662
======== ========
GENERAL PARTNER - NET INCOME $ 18,631 $ 23,918
======== ========
LIMITED PARTNERS - NET INCOME $313,472 $426,744
======== ========
NET INCOME per unit $ 2.70 $ 3.67
======== ========
UNITS OUTSTANDING 116,168 116,168
======== ========
The accompanying condensed notes are an integral part of
these financial statements.
-7-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(Unaudited)
2002 2001
-------- ----------
REVENUES:
Net Profits $531,837 $1,052,913
Interest income 895 10,155
Loss on sale of Net Profits
Interests - ( 121)
-------- ----------
$532,732 $1,062,947
COSTS AND EXPENSES:
Depletion of Net Profits
Interests $ 89,134 $ 74,710
General and administrative
(Note 2) 81,382 80,214
-------- ----------
$170,516 $ 154,924
-------- ----------
NET INCOME $362,216 $ 908,023
======== ==========
GENERAL PARTNER - NET INCOME $ 21,631 $ 47,882
======== ==========
LIMITED PARTNERS - NET INCOME $340,585 $ 860,141
======== ==========
NET INCOME per unit $ 2.93 $ 7.40
======== ==========
UNITS OUTSTANDING 116,168 116,168
======== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-8-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(Unaudited)
2002 2001
---------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $362,216 $ 908,023
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depletion of Net Profits
Interests 89,134 74,710
Loss on sale of Net Profits
Interests - 121
(Increase) decrease in accounts
receivable - Net Profits ( 63,918) 76,028
-------- ----------
Net cash provided by operating
activities $387,432 $1,058,882
-------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 34,275) ($ 124,481)
-------- ----------
Net cash used by investing activities ($ 34,275) ($ 124,481)
-------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($291,690) ($ 911,291)
-------- ----------
Net cash used by financing activities ($291,690) ($ 911,291)
-------- ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 61,467 $ 23,110
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 280,416 498,373
-------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $341,883 $ 521,483
======== ==========
The accompanying condensed notes are an integral part of
these financial statements.
-9-
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME PROGRAM II LIMITED PARTNERSHIPS
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The balance sheets as of June 30, 2002, statements of operations for the
three and six months ended June 30, 2002 and 2001, and statements of cash
flows for the six months ended June 30, 2002 and 2001 have been prepared
by Geodyne Resources, Inc., the General Partner (the "General Partner") of
the Geodyne Institutional/Pension Energy Income Program II Limited
Partnerships (individually, the "P-7 Partnership" or the "P-8
Partnership", as the case may be, or, collectively, the "Partnerships"),
without audit. In the opinion of management the financial statements
referred to above include all necessary adjustments, consisting of normal
recurring adjustments, to present fairly the financial position at June
30, 2002, the results of operations for the three and six months ended
June 30, 2002 and 2001, and the cash flows for the six months ended June
30, 2002 and 2001.
Information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The accompanying interim
financial statements should be read in conjunction with the Partnerships'
Annual Report on Form 10-K filed for the year ended December 31, 2001. The
results of operations for the period ended June 30, 2002 are not
necessarily indicative of the results to be expected for the full year.
As used in these financial statements, the Partnerships' net profits and
royalty interests in oil and gas sales are referred to as "Net Profits"
and the Partnerships' net profits and royalty interests in oil and gas
properties are referred to as "Net Profits Interests". The working
interests from which Partnerships' Net Profits Interests are carved are
referred to as "Working Interests".
The Limited Partners' net income or loss per unit is based upon each $100
initial capital contribution.
-10-
NET PROFITS INTERESTS
---------------------
The Partnerships follow the successful efforts method of accounting for
their Net Profits Interests. Under the successful efforts method, the
Partnerships capitalize all acquisition costs. Property acquisition costs
include costs incurred by the Partnerships or the General Partner to
acquire a net profits interest or other non-operating interest in
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 Net Profits Interests acquired by the General Partner
is adjusted to reflect the net cash results of operations, including
interest incurred to finance the acquisition, for the period of time the
properties are held by the General Partner prior to their transfer to the
Partnerships. Impairment of Net Profits Interests is recognized based upon
an individual property assessment.
Depletion of the costs of Net Profits Interests is computed on the
unit-of-production method. The Partnerships' calculation of depletion of
its Net Profits Interests includes estimated dismantlement and abandonment
costs, net of estimated salvage value.
The Partnerships do not directly bear capital costs. However, the
Partnerships indirectly bear certain capital costs incurred by the owners
of the Working Interests to the extent such capital costs are charged
against the applicable oil and gas revenues in calculating the Net Profits
payable to the Partnerships. For financial reporting purposes only, such
capital costs are reported as capital expenditures in the Partnerships'
Statements of Cash Flows.
2. TRANSACTIONS WITH RELATED PARTIES
---------------------------------
The Partnerships' partnership agreements provide for reimbursement to the
General Partner for all direct general and administrative expenses and for
the general and administrative overhead applicable to the Partnerships
based on an allocation of actual costs incurred. During the three months
ended June 30, 2002, the following payments were made to the General
Partner or its affiliates by the Partnerships:
-11-
Direct General Administrative
Partnership and Administrative Overhead
----------- ------------------- ---------------
P-7 $4,686 $49,659
P-8 4,357 30,570
During the six months ended June 30, 2002, the following payments were
made to the General Partner or its affiliates by the Partnerships:
Direct General Administrative
Partnership and Administrative Overhead
----------- ------------------- ---------------
P-7 $22,933 $99,318
P-8 20,242 61,140
Affiliates of the Partnerships operate certain of the Partnerships'
properties and their policy is to bill the Partnerships for all customary
charges and cost reimbursements associated with their activities.
-12-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
USE OF FORWARD-LOOKING STATEMENTS AND ESTIMATES
- -----------------------------------------------
This Quarterly Report contains certain forward-looking statements. The
words "anticipate", "believe", "expect", "plan", "intend", "estimate",
"project", "could", "may" and similar expressions are intended to identify
forward-looking statements. Such statements reflect management's current
views with respect to future events and financial performance. This
Quarterly Report also includes certain information, which is, or is based
upon, estimates and assumptions. Such estimates and assumptions are
management's efforts to accurately reflect the condition and operation of
the Partnerships.
Use of forward-looking statements and estimates and assumptions involve
risks and uncertainties which include, but are not limited to, the
volatility of oil and gas prices, the uncertainty of reserve information,
the operating risk associated with oil and gas properties (including the
risk of personal injury, death, property damage, damage to the well or
producing reservoir, environmental contamination, and other operating
risks), the prospect of changing tax and regulatory laws, the availability
and capacity of processing and transportation facilities, the general
economic climate, the supply and price of foreign imports of oil and gas,
the level of consumer product demand, and the price and availability of
alternative fuels. Should one or more of these risks or uncertainties
occur or should estimates or underlying assumptions prove incorrect,
actual conditions or results may vary materially and adversely from those
stated, anticipated, believed, estimated, and otherwise indicated.
GENERAL
- -------
The Partnerships were formed for the purpose of acquiring Net Profits
Interests located in the continental United States. In general, each
Partnership acquired passive interests in producing properties and does
not directly engage in development drilling or enhanced recovery projects.
Therefore, the economic life of each Partnership is limited to the period
of time required to fully produce its acquired oil and gas reserves. A Net
Profits Interest entitles the Partnerships to a portion of the oil and gas
sales less operating and production expenses and development costs
generated by the owner of the underlying Working Interests. The net
proceeds from the oil and gas operations
-13-
are distributed to the Limited Partners and General Partner in accordance
with the terms of the Partnerships' Partnership Agreements.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnerships began operations and investors were assigned their rights
as Limited Partners, having made capital contributions in the amounts and
on the dates set forth below:
Limited
Date of Partner Capital
Partnership Activation Contributions
----------- ------------------ ---------------
P-7 February 28, 1992 $18,870,200
P-8 February 28, 1992 $11,616,800
In general, the amount of funds available for acquisition of producing
properties was equal to the capital contributions of the Limited Partners,
less 15% for sales commissions and organization and management fees. All
of the Partnerships have fully invested their capital contributions.
Net proceeds from the Partnerships' Net Profits Interests less necessary
operating capital are distributed to the Limited Partners on a quarterly
basis. Revenues and net proceeds of a Partnership are largely dependent
upon the volumes of oil and gas sold and the prices received for such oil
and gas. While the General Partner cannot predict future pricing trends,
it believes the working capital available as of June 30, 2002 and the net
revenue generated from future operations will provide sufficient working
capital to meet current and future obligations.
Occasional expenditures by the Affiliated Programs for new wells or well
recompletions or workovers, however, may reduce or eliminate cash
available for a particular quarterly cash distribution. During the six
months ended June 30, 2002, capital expenditures affecting the P-7 and P-8
Partnerships' Net Profits Interests totaled $52,790 and $34,275,
respectively. These costs were indirectly incurred as a result of drilling
and recompletion activities on one large unitized property, the Pecos
Valley Unit in Pecos County, Texas. In addition, during the six months
ended June 30, 2001, capital expenditures affecting the P-7 and P-8
Partnerships' Net Profits Interests totaled $208,372 and $124,481,
respectively. These costs were indirectly incurred as a result of drilling
and recompletion activities on two large unitized properties, the North
Riley Unit and the Robertson North Unit, both located in Gaines County,
Texas.
-14-
Pursuant to the terms of the Partnerships' partnership agreements (the
"Partnership Agreements"), the Partnerships were scheduled to terminate on
February 28, 2002. However, the Partnership Agreements provide that the
General Partner may extend the term of each Partnership for up to five
periods of two years each. The General Partner has extended the terms of
the Partnerships for their first two year extension period to February 28,
2004.
NEW ACCOUNTING PRONOUNCEMENTS
Below is a brief description of Financial Accounting Standards ("FAS")
recently issued by the Financial Accounting Standards Board ("FASB") which
may have an impact on the Partnerships' future results of operations and
financial position.
In July 2001, the FASB issued FAS No. 143, "Accounting for Asset
Retirement Obligations", which is effective for fiscal years beginning
after June 15, 2002 (January 1, 2003 for the Partnerships). FAS No. 143
will require the recording of the fair value of liabilities associated
with the retirement of long-lived assets (mainly plugging and abandonment
costs for the Partnerships' depleted wells), in the period in which the
liabilities are incurred (at the time the wells are drilled). Management
has not yet determined the effect of adopting this statement on the
Partnerships' financial condition or results of operations.
In August 2001, the FASB issued FAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", which is effective for
fiscal years beginning after December 15, 2001 (January 1, 2002 for the
Partnerships). This statement supersedes FAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of". The provisions of FAS No. 144, as they relate to the Partnerships,
are essentially the same as FAS No. 121 and thus are not expected to have
a significant effect on the Partnerships' financial condition or results
of operations.
RESULTS OF OPERATIONS
- ---------------------
GENERAL DISCUSSION
The following general discussion should be read in conjunction with the
analysis of results of operations provided below. The most important
variables affecting the Partnerships' revenues are the prices received for
the sale of oil and gas and the volumes of oil and gas produced. The
Partnerships' production is mainly natural gas, so such pricing and
volumes are the most significant factors.
-15-
Historically, oil and gas prices have been volatile and are likely to
continue to be volatile. As a result, forecasting future prices is subject
to great uncertainty and inaccuracy. Substantially all of the
Partnerships' gas reserves are being sold in 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. Such
spot market sales are generally short-term in nature and are dependent
upon the obtaining of transportation services provided by pipelines. It is
likewise difficult to predict production volumes. However, oil and gas are
depleting assets, so it can be expected that production levels will
decline over time. Gas prices in early 2001 were significantly higher than
the Partnerships' historical average. This was attributable to the higher
prices for crude oil, a substitute fuel in some markets, and reduced
production due to lower capital investments in 1998 and 1999. However,
prices for both oil and gas soon declined and were relatively lower in
late 2001 and early 2002 as a result of the declining economy and
relatively mild winter weather. Recently, prices of oil and gas have
improved, to some extent due to unrest in the Middle East. It is not
possible to accurately predict future trends.
P-7 PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2001.
Three Months Ended June 30,
---------------------------
2002 2001
-------- --------
Net Profits $627,970 $727,938
Barrels produced 30,723 22,417
Mcf produced 84,156 109,871
Average price/Bbl $ 22.31 $ 25.21
Average price/Mcf $ 2.93 $ 4.31
As shown in the table above, total Net Profits decreased $99,968 (13.7%)
for the three months ended June 30, 2002 as compared to the three months
ended June 30, 2001. Of this decrease, approximately (i) $89,000 and
$116,000, respectively, were related to decreases in the average prices of
oil and gas sold and (ii) $111,000 was related to a decrease in volumes of
gas sold. These decreases were partially offset by an increase of
approximately $209,000 related to an increase in volumes of oil sold.
Volumes of oil sold increased 8,306 barrels, while volumes of gas sold
decreased 25,715 Mcf for the three months ended June 30, 2002 as compared
to the three months ended June 30, 2001. The increase in volumes of oil
sold was primarily due to a positive prior period volume adjustment made
by the purchaser on one significant well during the three months
-16-
ended June 30, 2002. The decrease in volumes of gas sold was primarily due
to (i) a positive prior period volume adjustment made by the operator on
one significant well during the three months ended June 30, 2001, (ii) the
P-7 Partnership receiving a reduced percentage of sales on another
significant well during the three months ended June 30, 2002 due to gas
balancing, and (iii) normal declines in production. As of the date of this
Quarterly Report, management expects the reduced sales percentage due to
gas balancing to continue for the foreseeable future, thereby continuing
to contribute to a decrease in volumes of gas sold for the P-7
Partnership. Average oil and gas prices decreased to $22.31 per barrel and
$2.93 per Mcf, respectively, for the three months ended June 30, 2002 from
$25.21 per barrel and $4.31 per Mcf, respectively, for the three months
ended June 30, 2001.
Depletion of Net Profits Interests increased $21,687 (33.1%) for the three
months ended June 30, 2002 as compared to the three months ended June 30,
2001. This increase was primarily due to downward revisions in the
estimates of remaining oil and gas reserves. As a percentage of Net
Profits, this expense increased to 13.9% for the three months ended June
30, 2002 from 9.0% for the three months ended June 30, 2001. This
percentage increase was primarily due to the decreases in the average
prices of oil and gas sold.
General and administrative expenses increased $2,568 (5.0%) for the three
months ended June 30, 2002 as compared to the three months ended June 30,
2001. As a percentage of Net Profits, these expenses increased to 8.7% for
the three months ended June 30, 2002 from 7.1% for the three months ended
June 30, 2001. This percentage increase was primarily due to the decrease
in Net Profits.
SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2001.
Six Months Ended June 30,
--------------------------
2002 2001
-------- ----------
Net Profits $753,247 $1,463,742
Barrels produced 47,687 39,343
Mcf produced 168,632 218,215
Average price/Bbl $ 21.00 $ 26.26
Average price/Mcf $ 2.44 $ 4.82
As shown in the table above, total Net Profits decreased $710,495 (48.5%)
for the six months ended June 30, 2002 as compared to the six months ended
June 30, 2001. Of this decrease, approximately (i) $250,000 and $401,000,
respectively, were related to decreases in the average
-17-
prices of oil and gas sold, (ii) $239,000 was related to a decrease in
volumes of gas sold, and (iii) $39,000 was related to an increase in
production expenses. These decreases were partially offset by an increase
of approximately $219,000 related to an increase in volumes of oil sold.
Volumes of oil sold increased 8,344 barrels, while volumes of gas sold
decreased 49,583 Mcf for the six months ended June 30, 2002 as compared to
the six months ended June 30, 2001. The increase in volumes of oil sold
was primarily due to (i) a positive prior period volume adjustment made by
the purchaser on one significant well during the six months ended June 30,
2002 and (ii) an increase in production on another significant well due to
the successful recompletion of that well during mid 2001. The decrease in
volumes of gas sold was primarily due to (i) a positive prior period
volume adjustment made by the operator on one significant well during the
six months ended June 30, 2001, (ii) the P-7 Partnership receiving a
reduced percentage of sales on another significant well during the six
months ended June 30, 2002 due to gas balancing, and (iii) normal declines
in production. As of the date of this Quarterly Report, management expects
the reduced sales percentage due to gas balancing to continue for the
foreseeable future, thereby continuing to contribute to a decrease in
volumes of gas sold for the P-7 Partnership. The increase in production
expenses was primarily due to workover expenses incurred on one
significant well during the six months ended June 30, 2002, which increase
was partially offset by a decrease in production taxes associated with the
decrease in Net Profits. Average oil and gas prices decreased to $21.00
per barrel and $2.44 per Mcf, respectively, for the six months ended June
30, 2002 from $26.26 per barrel and $4.82 per Mcf, respectively, for the
six months ended June 30, 2001.
Depletion of Net Profits Interests increased $25,898 (21.2%) for the six
months ended June 30, 2002 as compared to the six months ended June 30,
2001. This increase was primarily due to downward revisions in the
estimates of remaining oil and gas reserves. As a percentage of Net
Profits, this expense increased to 19.6% for the six months ended June 30,
2002 from 8.3% for the six months ended June 30, 2001. This percentage
increase was primarily due to the decreases in the average prices of oil
and gas sold.
General and administrative expenses increased $2,099 (1.7%) for the six
months ended June 30, 2002 as compared to the six months ended June 30,
2001. As a percentage of Net Profits, these expenses increased to 16.2%
for the six months ended June 30, 2002 from 8.2% for the six months ended
June 30, 2001. This percentage increase was primarily due to the decrease
in Net Profits.
-18-
Cumulative cash distributions to the Limited Partners through June 30,
2002 were $16,023,916 or 84.92% of the Limited Partners' capital
contributions.
P-8 PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2001.
Three Months Ended June 30,
---------------------------
2002 2001
-------- --------
Net Profits $417,718 $518,679
Barrels produced 18,655 13,554
Mcf produced 69,568 84,894
Average price/Bbl $ 22.32 $ 25.10
Average price/Mcf $ 2.91 $ 4.47
As shown in the table above, total Net Profits decreased $100,961 (19.5%)
for the three months ended June 30, 2002 as compared to the three months
ended June 30, 2001. Of this decrease, approximately (i) $52,000 and
$108,000, respectively, were related to decreases in the average prices of
oil and gas sold and (ii) $69,000 was related to a decrease in volumes of
gas sold. These decreases were partially offset by an increase of
approximately $128,000 related to an increase in volumes of oil sold.
Volumes of oil sold increased 5,101 barrels, while volumes of gas sold
decreased 15,326 Mcf for the three months ended June 30, 2002 as compared
to the three months ended June 30, 2001. The increase in volumes of oil
sold was primarily due to a positive prior period volume adjustment made
by the purchaser on one significant well during the three months ended
June 30, 2002. The decrease in volumes of gas sold was primarily due to
(i) a positive prior period volume adjustment made by the operator on one
significant well during the three months ended June 30, 2001, (ii) the P-8
Partnership receiving a reduced percentage of sales on another significant
well during the three months ended June 30, 2002 due to gas balancing, and
(iii) normal declines in production. As of the date of this Quarterly
Report, management expects the reduced sales percentage due to gas
balancing to continue for the foreseeable future, thereby continuing to
contribute to a decrease in volumes of gas sold for the P-8 Partnership.
Average oil and gas prices decreased to $22.32 per barrel and $2.91 per
Mcf, respectively, for the three months ended June 30, 2002 from $25.10
per barrel and $4.47 per Mcf, respectively, for the three months ended
June 30, 2001.
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Depletion of Net Profits Interests increased $10,650 (26.5%) for the three
months ended June 30, 2002 as compared to the three months ended June 30,
2001. This increase was primarily due to downward revisions in the
estimates of remaining oil reserves. As a percentage of Net Profits, this
expense increased to 12.2% for the three months ended June 30, 2002 from
7.7% for the three months ended June 30, 2001. This percentage increase
was primarily due to the decreases in the average prices of oil and gas
sold.
General and administrative expenses increased $2,758 (8.6%) for the three
months ended June 30, 2002 as compared to the three months ended June 30,
2001. As a percentage of Net Profits, these expenses increased to 8.4% for
the three months ended June 30, 2002 from 6.2% for the three months ended
June 30, 2001. This percentage increase was primarily due to the decrease
in Net Profits.
SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2001.
Six Months Ended June 30,
-------------------------
2002 2001
-------- ----------
Net Profits $531,837 $1,052,913
Barrels produced 29,246 24,044
Mcf produced 142,858 164,879
Average price/Bbl $ 21.03 $ 26.17
Average price/Mcf $ 2.46 $ 5.01
As shown in the table above, total Net Profits decreased $521,076 (49.5%)
for the six months ended June 30, 2002 as compared to the six months ended
June 30, 2001. Of this decrease, approximately (i) $150,000 and $365,000,
respectively, were related to decreases in the average prices of oil and
gas sold, (ii) $111,000 was related to a decrease in volumes of gas sold,
and (iii) $31,000 was related to an increase in production expenses. These
decreases were partially offset by an increase of approximately $136,000
related to an increase in volumes of oil sold. Volumes of oil sold
increased 5,202 barrels, while volumes of gas sold decreased 22,021 Mcf
for the six months ended June 30, 2002 as compared to the six months ended
June 30, 2001. The increase in volumes of oil sold was primarily due to
(i) a positive prior period volume adjustment made by the purchaser on one
significant well during the six months ended June 30, 2002 and (ii) an
increase in production on another significant well due to the successful
recompletion of that well during mid 2001. The decrease in volumes of gas
sold was primarily due to (i) a positive prior period volume adjustment
made by the operator on one significant well during the six months ended
June 30, 2001, (ii) the P-8 Partnership receiving a reduced
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percentage of sales on another significant well during the six months
ended June 30, 2002 due to gas balancing, and (iii) normal declines in
production. As of the date of this Quarterly Report, management expects
the reduced sales percentage due to gas balancing to continue for the
foreseeable future, thereby continuing to contribute to a decrease in
volumes of gas sold for the P-8 Partnership. The increase in production
expenses was primarily due to workover expenses incurred on one
significant well during the six months ended June 30, 2002, which increase
was partially offset by a decrease in production taxes associated with the
decrease in Net Profits. Average oil and gas prices decreased to $21.03
per barrel and $2.46 per Mcf, respectively, for the six months ended June
30, 2002 from $26.17 per barrel and $5.01 per Mcf, respectively, for the
six months ended June 30, 2001.
Depletion of Net Profits Interests increased $14,424 (19.3%) for the six
months ended June 30, 2002 as compared to the six months ended June 30,
2001. This increase was primarily due to downward revisions in the
estimates of remaining oil reserves. As a percentage of Net Profits, this
expense increased to 16.8% for the six months ended June 30, 2002 from
7.1% for the six months ended June 30, 2001. This percentage increase was
primarily due to the decreases in the average prices of oil and gas sold.
General and administrative expenses increased $1,168 (1.5%) for the six
months ended June 30, 2002 as compared to the six months ended June 30,
2001. As a percentage of Net Profits, these expenses increased to 15.3%
for the six months ended June 30, 2002 from 7.6% for the six months ended
June 30, 2001. This percentage increase was primarily due to the decrease
in Net Profits.
Cumulative cash distributions to the Limited Partners through June 30,
2002 were $10,371,583 or 89.28% of the Limited Partners' capital
contributions.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
The Partnerships do not hold any market risk sensitive instruments.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
99.1 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 for the P-7 Partnership.
99.2 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 for the P-8 Partnership.
(b) Reports on Form 8-K.
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME LIMITED PARTNERSHIP P-7
GEODYNE INSTITUTIONAL/PENSION ENERGY
INCOME LIMITED PARTNERSHIP P-8
(Registrant)
BY: GEODYNE RESOURCES, INC.
General Partner
Date: August 13, 2002 By: /s/Dennis R. Neill
--------------------------------
(Signature)
Dennis R. Neill
President
Date: August 13, 2002 By: /s/Craig D. Loseke
--------------------------------
(Signature)
Craig D. Loseke
Chief Accounting Officer
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INDEX TO EXHIBITS
-----------------
Exh.
No. Exhibit
- ---- -------
99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
Geodyne Institutional/Pension Energy Income Limited Partnership P-7.
99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
Geodyne Institutional/Pension Energy Income Limited Partnership P-8.
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