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, 2004
Commission File Number:
II-A: 0-16388 II-D: 0-16980 II-G: 0-17802
II-B: 0-16405 II-E: 0-17320 II-H: 0-18305
II-C: 0-16981 II-F: 0-17799
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-A
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H
---------------------------------------------------------
(Exact name of Registrant as specified in its Articles)
II-A 73-1295505
II-B 73-1303341
II-C 73-1308986
II-D 73-1329761
II-E 73-1324751
II-F 73-1330632
II-G 73-1336572
Oklahoma II-H 73-1342476
- ---------------------------- -------------------------------
(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
------ ------
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes No X
------ ------
-1-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-A
GEODYNE PRODUCTION PARTNERSHIP II-A
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2004 2003
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $1,443,022 $1,428,609
Accounts receivable:
Oil and gas sales 955,032 761,616
---------- ----------
Total current assets $2,398,054 $2,190,225
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 2,157,022 2,232,731
DEFERRED CHARGE 647,465 650,100
---------- ----------
$5,202,541 $5,073,056
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 216,775 $ 264,588
Accrued liability - other (Note 1) 26,672 26,672
Gas imbalance payable 74,981 91,463
Asset retirement obligation -
current (Note 1) 14,928 9,874
---------- ----------
Total current liabilities $ 333,356 $ 392,597
LONG-TERM LIABILITIES:
Accrued liability $ 211,277 $ 207,595
Asset retirement obligation
(Note 1) 267,784 268,040
---------- ----------
Total long-term liabilities $ 479,061 $ 475,635
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 204,514) ($ 232,071)
Limited Partners, issued and
outstanding, 484,283 units 4,594,638 4,436,895
---------- ----------
Total Partners' capital $4,390,124 $4,204,824
---------- ----------
$5,202,541 $5,073,056
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-2-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-A
GEODYNE PRODUCTION PARTNERSHIP II-A
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
---------- ----------
REVENUES:
Oil and gas sales $1,511,616 $1,571,019
Interest income 2,008 1,806
---------- ----------
$1,513,624 $1,572,825
COSTS AND EXPENSES:
Lease operating $ 294,280 $ 242,221
Production tax 80,035 82,600
Depreciation, depletion, and
amortization of oil and gas
properties 49,061 48,526
General and administrative
(Note 2) 150,003 140,093
---------- ----------
$ 573,379 $ 513,440
---------- ----------
NET INCOME $ 940,245 $1,059,385
========== ==========
GENERAL PARTNER - NET INCOME $ 98,239 $ 110,125
========== ==========
LIMITED PARTNERS - NET INCOME $ 842,006 $ 949,260
========== ==========
NET INCOME per unit $ 1.74 $ 1.96
========== ==========
UNITS OUTSTANDING 484,283 484,283
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-3-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-A
GEODYNE PRODUCTION PARTNERSHIP II-A
COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
---------- ----------
REVENUES:
Oil and gas sales $2,840,768 $3,046,076
Interest income 3,181 3,251
---------- ----------
$2,843,949 $3,049,327
COSTS AND EXPENSES:
Lease operating $ 570,624 $ 518,191
Production tax 159,636 180,135
Depreciation, depletion, and
amortization of oil and gas
properties 96,643 107,030
General and administrative
(Note 2) 292,465 285,311
---------- ----------
$1,119,368 $1,090,667
---------- ----------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $1,724,581 $1,958,660
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) - 5,849
---------- ----------
NET INCOME $1,724,581 $1,964,509
========== ==========
GENERAL PARTNER - NET INCOME $ 180,838 $ 205,232
========== ==========
LIMITED PARTNERS - NET INCOME $1,543,743 $1,759,277
========== ==========
NET INCOME per unit $ 3.19 $ 3.63
========== ==========
UNITS OUTSTANDING 484,283 484,283
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-4-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-A
GEODYNE PRODUCTION PARTNERSHIP II-A
COMBINED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,724,581 $1,964,509
Adjustments to reconcile net
income to net cash provided
by operating activities:
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) - ( 5,849)
Depreciation, depletion, and
amortization of oil and gas
properties 96,643 107,030
Increase in accounts receivable -
oil and gas sales ( 193,416) ( 222,531)
Decrease in deferred charge 2,635 -
Decrease in accounts payable ( 48,166) ( 73,442)
Decrease in gas imbalance payable ( 16,482) -
Increase in accrued liability 3,682 -
---------- ----------
Net cash provided by operating
activities $1,569,477 $1,769,717
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 15,821) ($ 62,145)
Proceeds from sale of oil and
gas properties 38 -
---------- ----------
Net cash used by investing activities ($ 15,783) ($ 62,145)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($1,539,281) ($1,047,348)
---------- ----------
Net cash used by financing activities ($1,539,281) ($1,047,348)
---------- ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 14,413 $ 660,224
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,428,609 794,035
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $1,443,022 $1,454,259
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-5-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B
GEODYNE PRODUCTION PARTNERSHIP II-B
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2004 2003
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $1,018,660 $ 933,790
Accounts receivable:
Oil and gas sales 676,570 546,637
---------- ----------
Total current assets $1,695,230 $1,480,427
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 1,617,028 1,683,184
DEFERRED CHARGE 247,727 238,135
---------- ----------
$3,559,985 $3,401,746
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 162,204 $ 154,705
Gas imbalance payable 17,724 47,276
Asset retirement obligation -
current (Note 1) 16,356 13,046
---------- ----------
Total current liabilities $ 196,284 $ 215,027
LONG-TERM LIABILITIES:
Accrued liability $ 64,613 $ 48,773
Asset retirement obligation
(Note 1) 189,256 189,095
---------- ----------
Total long-term liabilities $ 253,869 $ 237,868
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 236,577) ($ 254,807)
Limited Partners, issued and
outstanding, 361,719 units 3,346,409 3,203,658
---------- ----------
Total Partners' capital $3,109,832 $2,948,851
---------- ----------
$3,559,985 $3,401,746
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-6-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B
GEODYNE PRODUCTION PARTNERSHIP II-B
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
---------- ----------
REVENUES:
Oil and gas sales $1,110,599 $1,014,577
Interest income 1,417 1,130
---------- ----------
$1,112,016 $1,015,707
COSTS AND EXPENSES:
Lease operating $ 217,443 $ 186,785
Production tax 59,736 60,222
Depreciation, depletion, and
amortization of oil and gas
properties 38,794 49,047
General and administrative
(Note 2) 115,873 106,851
---------- ----------
$ 431,846 $ 402,905
---------- ----------
NET INCOME $ 680,170 $ 612,802
========== ==========
GENERAL PARTNER - NET INCOME $ 71,367 $ 65,582
========== ==========
LIMITED PARTNERS - NET INCOME $ 608,803 $ 547,220
========== ==========
NET INCOME per unit $ 1.68 $ 1.51
========== ==========
UNITS OUTSTANDING 361,719 361,719
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-7-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B
GEODYNE PRODUCTION PARTNERSHIP II-B
COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
---------- ----------
REVENUES:
Oil and gas sales $2,078,080 $2,038,060
Interest income 2,222 2,056
---------- ----------
$2,080,302 $2,040,116
COSTS AND EXPENSES:
Lease operating $ 414,994 $ 355,546
Production tax 127,085 135,287
Depreciation, depletion, and
amortization of oil and gas
properties 72,225 88,759
General and administrative
(Note 2) 223,743 218,028
---------- ----------
$ 838,047 $ 797,620
---------- ----------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $1,242,255 $1,242,496
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) - 4,347
---------- ----------
NET INCOME $1,242,255 $1,246,843
========== ==========
GENERAL PARTNER - NET INCOME $ 130,504 $ 132,076
========== ==========
LIMITED PARTNERS - NET INCOME $1,111,751 $1,114,767
========== ==========
NET INCOME per unit $ 3.07 $ 3.08
========== ==========
UNITS OUTSTANDING 361,719 361,719
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-8-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B
GEODYNE PRODUCTION PARTNERSHIP II-B
COMBINED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,242,255 $1,246,843
Adjustments to reconcile net
income to net cash provided
by operating activities:
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) - ( 4,347)
Depreciation, depletion, and
amortization of oil and gas
properties 72,225 88,759
Increase in accounts receivable -
oil and gas sales ( 129,933) ( 110,073)
Increase in deferred charge ( 9,592) -
Increase (decrease) in accounts
payable 6,365 ( 13,853)
Decrease in gas imbalance payable ( 29,552) -
Increase in accrued liability 15,840 -
---------- ----------
Net cash provided by operating
activities $1,167,608 $1,207,329
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 1,464) ($ 9,335)
---------- ----------
Net cash used by investing activities ($ 1,464) ($ 9,335)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($1,081,274) ($ 765,164)
---------- ----------
Net cash used by financing activities ($1,081,274) ($ 765,164)
---------- ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 84,870 $ 432,830
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 933,790 478,067
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $1,018,660 $ 910,897
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-9-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C
GEODYNE PRODUCTION PARTNERSHIP II-C
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2004 2003
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 477,733 $ 467,560
Accounts receivable:
Oil and gas sales 329,519 267,786
---------- ----------
Total current assets $ 807,252 $ 735,346
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 749,790 786,821
DEFERRED CHARGE 122,506 123,244
---------- ----------
$1,679,548 $1,645,411
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 67,056 $ 69,889
Gas imbalance payable 8,624 25,952
Asset retirement obligation -
current (Note 1) 10,399 8,575
---------- ----------
Total current liabilities $ 86,079 $ 104,416
LONG-TERM LIABILITIES:
Accrued Liability $ 42,239 $ 35,434
Asset retirement obligation
(Note 1) 62,207 62,598
---------- ----------
Total long-term liabilities $ 104,446 $ 98,032
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 98,434) ($ 106,418)
Limited Partners, issued and
outstanding, 154,621 units 1,587,457 1,549,381
---------- ----------
Total Partners' capital $1,489,023 $1,442,963
---------- ----------
$1,679,548 $1,645,411
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-10-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C
GEODYNE PRODUCTION PARTNERSHIP II-C
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
-------- --------
REVENUES:
Oil and gas sales $536,417 $512,079
Interest income 669 589
-------- --------
$537,086 $512,668
COSTS AND EXPENSES:
Lease operating $ 93,418 $ 92,751
Production tax 32,364 32,569
Depreciation, depletion, and
amortization of oil and gas
properties 19,632 21,957
General and administrative
(Note 2) 58,209 50,687
-------- --------
$203,623 $197,964
-------- --------
NET INCOME $333,463 $314,704
======== ========
GENERAL PARTNER - NET INCOME $ 35,046 $ 33,379
======== ========
LIMITED PARTNERS - NET INCOME $298,417 $281,325
======== ========
NET INCOME per unit $ 1.93 $ 1.82
======== ========
UNITS OUTSTANDING 154,621 154,621
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-11-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C
GEODYNE PRODUCTION PARTNERSHIP II-C
COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
---------- ----------
REVENUES:
Oil and gas sales $1,017,437 $1,035,313
Interest income 1,060 1,066
---------- ----------
$1,018,497 $1,036,379
COSTS AND EXPENSES:
Lease operating $ 187,344 $ 169,294
Production tax 68,361 72,909
Depreciation, depletion, and
amortization of oil and gas
properties 39,055 45,884
General and administrative
(Note 2) 107,643 104,354
---------- ----------
$ 402,403 $ 392,441
---------- ----------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $ 616,094 $ 643,938
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) - 74
---------- ----------
NET INCOME $ 616,094 $ 644,012
========== ==========
GENERAL PARTNER - NET INCOME $ 65,018 $ 68,409
========== ==========
LIMITED PARTNERS - NET INCOME $ 551,076 $ 575,603
========== ==========
NET INCOME per unit $ 3.56 $ 3.72
========== ==========
UNITS OUTSTANDING 154,621 154,621
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-12-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C
GEODYNE PRODUCTION PARTNERSHIP II-C
COMBINED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $616,094 $644,012
Adjustments to reconcile net
income to net cash provided
by operating activities:
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) - ( 74)
Depreciation, depletion, and
amortization of oil and gas
properties 39,055 45,884
Settlement of asset retirement
obligation - ( 91)
Increase in accounts receivable -
oil and gas sales ( 61,733) ( 72,540)
Decrease in deferred charge 738 -
Decrease in accounts payable ( 2,751) ( 4,512)
Decrease in gas imbalance payable ( 17,328) -
Increase in accrued liability 6,805 7,433
-------- --------
Net cash provided by operating
activities $580,880 $620,112
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 673) ($ 4,412)
-------- --------
Net cash used by investing activities ($ 673) ($ 4,412)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($570,034) ($399,648)
-------- --------
Net cash used by financing
activities ($570,034) ($399,648)
-------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 10,173 $216,052
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 467,560 250,767
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $477,733 $466,819
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-13-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D
GEODYNE PRODUCTION PARTNERSHIP II-D
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2004 2003
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 905,294 $ 908,655
Accounts receivable:
Oil and gas sales 695,584 559,179
---------- ----------
Total current assets $1,600,878 $1,467,834
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 1,422,132 1,539,915
DEFERRED CHARGE 348,814 352,392
---------- ----------
$3,371,824 $3,360,141
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 134,334 $ 167,028
Gas imbalance payable 46,190 43,698
Asset retirement obligation -
current (Note 1) 25,149 17,137
---------- ----------
Total current liabilities $ 205,673 $ 227,863
LONG-TERM LIABILITIES:
Accrued liability $ 97,710 $ 98,630
Asset retirement obligation
(Note 1) 164,617 168,853
---------- ----------
Total long-term liabilities $ 262,327 $ 267,483
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 182,424) ($ 190,287)
Limited Partners, issued and
outstanding, 314,878 units 3,086,248 3,055,082
---------- ----------
Total Partners' capital $2,903,824 $2,864,795
---------- ----------
$3,371,824 $3,360,141
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-14-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D
GEODYNE PRODUCTION PARTNERSHIP II-D
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
---------- ----------
REVENUES:
Oil and gas sales $1,037,272 $1,001,063
Interest income 1,350 1,058
---------- ----------
$1,038,622 $1,002,121
COSTS AND EXPENSES:
Lease operating $ 226,802 $ 215,062
Production tax 65,286 58,148
Depreciation, depletion, and
amortization of oil and gas
properties 59,476 70,253
General and administrative
(Note 2) 102,813 94,130
---------- ----------
$ 454,377 $ 437,593
---------- ----------
NET INCOME $ 584,245 $ 564,528
========== ==========
GENERAL PARTNER - NET INCOME $ 63,643 $ 62,575
========== ==========
LIMITED PARTNERS - NET INCOME $ 520,602 $ 501,953
========== ==========
NET INCOME per unit $ 1.65 $ 1.59
========== ==========
UNITS OUTSTANDING 314,878 314,878
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-15-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D
GEODYNE PRODUCTION PARTNERSHIP II-D
COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
---------- ----------
REVENUES:
Oil and gas sales $2,108,155 $2,043,771
Interest income 2,167 1,910
---------- ----------
$2,110,322 $2,045,681
COSTS AND EXPENSES:
Lease operating $ 422,387 $ 376,757
Production tax 136,039 128,409
Depreciation, depletion, and
amortization of oil and gas
properties 128,317 151,635
General and administrative
(Note 2) 197,470 192,303
---------- ----------
$ 884,213 $ 849,104
---------- ----------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $1,226,109 $1,196,577
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) - ( 2,344)
---------- ----------
NET INCOME $1,226,109 $1,194,233
========== ==========
GENERAL PARTNER - NET INCOME $ 133,943 $ 132,996
========== ==========
LIMITED PARTNERS - NET INCOME $1,092,166 $1,061,237
========== ==========
NET INCOME per unit $ 3.47 $ 3.37
========== ==========
UNITS OUTSTANDING 314,878 314,878
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-16-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D
GEODYNE PRODUCTION PARTNERSHIP II-D
COMBINED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,226,109 $1,194,233
Adjustments to reconcile net
income to net cash provided
by operating activities:
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) - 2,344
Depreciation, depletion, and
amortization of oil and gas
properties 128,317 151,635
Settlement of asset retirement
obligation - ( 1,044)
Increase in accounts receivable -
oil and gas sales ( 136,405) ( 146,444)
Decrease in deferred charge 3,578 -
Decrease in accounts payable ( 32,904) ( 44,377)
Increase in gas imbalance payable 2,492 -
Decrease in accrued liability ( 920) -
---------- ----------
Net cash provided by operating
activities $1,190,267 $1,156,347
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 6,548) ($ 4,814)
---------- ----------
Net cash used by investing activities ($ 6,548) ($ 4,814)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($1,187,080) ($ 820,270)
---------- ----------
Net cash used by financing activities ($1,187,080) ($ 820,270)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 3,361) $ 331,263
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 908,655 561,177
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 905,294 $ 892,440
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-17-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E
GEODYNE PRODUCTION PARTNERSHIP II-E
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2004 2003
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 651,771 $ 638,668
Accounts receivable:
Oil and gas sales 476,489 363,426
---------- ----------
Total current assets $1,128,260 $1,002,094
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 1,236,794 1,412,445
DEFERRED CHARGE 207,414 207,890
---------- ----------
$2,572,468 $2,622,429
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 74,080 $ 82,154
Gas imbalance payable 43,424 43,424
Asset retirement obligation -
current (Note 1) 5,103 2,397
---------- ----------
Total current liabilities $ 122,607 $ 127,975
LONG-TERM LIABILITIES:
Accrued liability $ 9,863 $ 8,153
Asset retirement obligation
(Note 1) 95,254 95,923
---------- ----------
Total long-term liabilities $ 105,117 $ 104,076
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 119,820) ($ 129,173)
Limited Partners, issued and
outstanding, 228,821 units 2,464,564 2,519,551
---------- ----------
Total Partners' capital $2,344,744 $2,390,378
---------- ----------
$2,572,468 $2,622,429
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-18-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E
GEODYNE PRODUCTION PARTNERSHIP II-E
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
-------- --------
REVENUES:
Oil and gas sales $718,092 $774,082
Interest income 1,008 829
Gain sale of oil and gas
properties 8,253 -
-------- --------
$727,353 $774,911
COSTS AND EXPENSES:
Lease operating $109,137 $ 89,137
Production tax 41,052 52,940
Depreciation, depletion, and
amortization of oil and gas
properties 41,246 25,106
General and administrative
(Note 2) 78,870 72,603
-------- --------
$270,305 $239,786
-------- --------
NET INCOME $457,048 $535,125
======== ========
GENERAL PARTNER - NET INCOME $ 48,571 $ 55,689
======== ========
LIMITED PARTNERS - NET INCOME $408,477 $479,436
======== ========
NET INCOME per unit $ 1.79 $ 2.10
======== ========
UNITS OUTSTANDING 228,821 228,821
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-19-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E
GEODYNE PRODUCTION PARTNERSHIP II-E
COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
---------- ----------
REVENUES:
Oil and gas sales $1,419,422 $1,526,763
Interest income 1,563 1,541
Gain on sale of oil and gas
properties 8,253 -
---------- ----------
$1,429,238 $1,528,304
COSTS AND EXPENSES:
Lease operating $ 218,898 $ 229,178
Production tax 91,208 101,142
Depreciation, depletion, and
amortization of oil and gas
properties 188,838 60,567
General and administrative
(Note 2) 150,175 146,876
---------- ----------
$ 649,119 $ 537,763
---------- ----------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $ 780,119 $ 990,541
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) - 3,090
---------- ----------
NET INCOME $ 780,119 $ 993,631
========== ==========
GENERAL PARTNER - NET INCOME $ 94,106 $ 104,382
========== ==========
LIMITED PARTNERS - NET INCOME $ 686,013 $ 889,249
========== ==========
NET INCOME per unit $ 3.00 $ 3.89
========== ==========
UNITS OUTSTANDING 228,821 228,821
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-20-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E
GEODYNE PRODUCTION PARTNERSHIP II-E
COMBINED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $780,119 $993,631
Adjustments to reconcile net income
to net cash provided by operating
activities:
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) - ( 3,090)
Depreciation, depletion, and
amortization of oil and gas
properties 188,838 60,567
Gain on sale of oil and gas
properties ( 8,253) -
Increase in accounts receivable -
oil and gas sales ( 113,063) ( 114,239)
Decrease in deferred charge 476 -
Decrease in accounts payable ( 8,211) ( 15,372)
Increase (decrease) in accrued
liability 1,710 ( 3,148)
-------- --------
Net cash provided by operating
activities $841,616 $918,349
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 10,169) ($ 7,428)
Proceeds from the sale of oil and
gas properties 7,409 2,258
-------- --------
Net cash used by investing activities ($ 2,760) ($ 5,170)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($825,753) ($584,810)
-------- --------
Net cash used by financing activities ($825,753) ($584,810)
-------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 13,103 $328,369
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 638,668 388,042
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $651,771 $716,411
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-21-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F
GEODYNE PRODUCTION PARTNERSHIP II-F
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2004 2003
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 597,184 $ 604,369
Accounts receivable:
Oil and gas sales 453,724 354,719
---------- ----------
Total current assets $1,050,908 $ 959,088
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 1,287,035 1,318,881
DEFERRED CHARGE 33,553 32,899
---------- ----------
$2,371,496 $2,310,868
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 54,007 $ 66,133
Gas imbalance payable 3,390 3,555
Asset retirement obligation -
current (Note 1) 5,072 4,566
---------- ----------
Total current liabilities $ 62,469 $ 74,254
LONG-TERM LIABILITIES:
Accrued liability $ 16,884 $ 16,945
Asset retirement obligation
(Note 1) 95,206 93,600
---------- ----------
Total long-term liabilities $ 112,090 $ 110,545
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 84,055) ($ 91,417)
Limited Partners, issued and
outstanding, 171,400 Units 2,280,992 2,217,486
---------- ----------
Total Partners' capital $2,196,937 $2,126,069
---------- ----------
$2,371,496 $2,310,868
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-22-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F
GEODYNE PRODUCTION PARTNERSHIP II-F
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
-------- --------
REVENUES:
Oil and gas sales $686,089 $729,504
Interest income 990 812
Gain on sale of oil and gas
properties 20,173 -
-------- --------
$707,252 $730,316
COSTS AND EXPENSES:
Lease operating $ 58,952 $ 94,748
Production tax 44,700 47,886
Depreciation, depletion, and
amortization of oil and gas
properties 22,066 28,195
General and administrative
(Note 2) 62,830 55,953
-------- --------
$188,548 $226,782
-------- --------
NET INCOME $518,704 $503,534
======== ========
GENERAL PARTNER - NET INCOME $ 51,937 $ 52,810
======== ========
LIMITED PARTNERS - NET INCOME $466,767 $450,724
======== ========
NET INCOME per Unit $ 2.72 $ 2.63
======== ========
UNITS OUTSTANDING 171,400 171,400
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-23-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F
GEODYNE PRODUCTION PARTNERSHIP II-F
COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
---------- ----------
REVENUES:
Oil and gas sales $1,468,999 $1,470,221
Interest income 1,542 1,581
Gain on sale of oil and gas
properties 21,310 -
---------- ----------
$1,491,851 $1,471,802
COSTS AND EXPENSES:
Lease operating $ 146,170 $ 218,095
Production tax 95,735 94,500
Depreciation, depletion, and
amortization of oil and gas
properties 54,548 70,483
General and administrative
(Note 2) 117,130 114,504
---------- ----------
$ 413,583 $ 497,582
---------- ----------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $1,078,268 $ 974,220
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) - 4,938
---------- ----------
NET INCOME $1,078,268 $ 979,158
========== ==========
GENERAL PARTNER - NET INCOME $ 110,762 $ 103,657
========== ==========
LIMITED PARTNERS - NET INCOME $ 967,506 $ 875,501
========== ==========
NET INCOME per Unit $ 5.64 $ 5.11
========== ==========
UNITS OUTSTANDING 171,400 171,400
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-24-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F
GEODYNE PRODUCTION PARTNERSHIP II-F
COMBINED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
------------ ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,078,268 $979,158
Adjustments to reconcile net income
to net cash provided by operating
activities:
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) - ( 4,938)
Depreciation, depletion, and
amortization of oil and gas
properties 54,548 70,483
Gain on sale of oil and gas
properties ( 21,310) -
Increase in accounts receivable -
oil and gas sales ( 99,005) ( 100,909)
Increase in deferred charge ( 654) -
Decrease in accounts payable ( 13,560) ( 4,494)
Decrease in gas imbalance payable ( 165) -
Decrease in accrued liability ( 61) -
---------- --------
Net cash provided by operating
activities $ 998,061 $939,300
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 19,516) ($ 23,441)
Proceeds from sale of oil and
gas properties 21,670 -
---------- --------
Net cash provided (used) by
investing activities $ 2,154 ($ 23,441)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($1,007,400) ($674,312)
---------- --------
Net cash used by financing
activities ($1,007,400) ($674,312)
---------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 7,185) $241,547
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 604,369 453,233
---------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 597,184 $694,780
========== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-25-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G
GEODYNE PRODUCTION PARTNERSHIP II-G
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2004 2003
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $1,286,024 $1,284,869
Accounts receivable:
Oil and gas sales 966,636 752,979
---------- ----------
Total current assets $2,252,660 $2,037,848
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 2,774,424 2,841,346
DEFERRED CHARGE 72,471 71,238
---------- ----------
$5,099,555 $4,950,432
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 115,661 $ 139,590
Gas imbalance payable 13,503 10,091
Asset retirement obligation -
current (Note 1) 11,137 10,082
---------- ----------
Total current liabilities $ 140,301 $ 159,763
LONG-TERM LIABILITIES:
Accrued liability $ 32,047 $ 31,668
Asset retirement obligation
(Note 1) 203,108 199,686
---------- ----------
Total long-term liabilities $ 235,155 $ 231,354
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 72,040) ($ 87,509)
Limited Partners, issued and
outstanding, 372,189 Units 4,796,139 4,646,824
---------- ----------
Total Partners' capital $4,724,099 $4,559,315
---------- ----------
$5,099,555 $4,950,432
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-26-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G
GEODYNE PRODUCTION PARTNERSHIP II-G
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
---------- ----------
REVENUES:
Oil and gas sales $1,462,219 $1,556,629
Interest income 2,134 1,766
Gain on sale of oil and gas
properties 42,186 -
---------- ----------
$1,506,539 $1,558,395
COSTS AND EXPENSES:
Lease operating $ 128,669 $ 201,891
Production tax 96,087 102,799
Depreciation, depletion, and
amortization of oil and gas
properties 47,017 60,242
General and administrative
(Note 2) 118,736 110,404
---------- ----------
$ 390,509 $ 475,336
---------- ----------
NET INCOME $1,116,030 $1,083,059
========== ==========
GENERAL PARTNER - NET INCOME $ 111,816 $ 113,551
========== ==========
LIMITED PARTNERS - NET INCOME $1,004,214 $ 969,508
========== ==========
NET INCOME per Unit $ 2.70 $ 2.60
========== ==========
UNITS OUTSTANDING 372,189 372,189
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-27-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G
GEODYNE PRODUCTION PARTNERSHIP II-G
COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
---------- ----------
REVENUES:
Oil and gas sales $3,124,416 $3,125,482
Interest income 3,315 3,415
Gain on sale of oil and gas
properties 44,635 -
---------- ----------
$3,172,366 $3,128,897
COSTS AND EXPENSES:
Lease operating $ 315,161 $ 464,340
Production tax 204,892 201,840
Depreciation, depletion, and
amortization of oil and gas
properties 117,350 150,359
General and administrative
(Note 2) 229,697 224,717
---------- ----------
$ 867,100 $1,041,256
---------- ----------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $2,305,266 $2,087,641
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) - 10,247
---------- ----------
NET INCOME $2,305,266 $2,097,888
========== ==========
GENERAL PARTNER - NET INCOME $ 236,951 $ 222,057
========== ==========
LIMITED PARTNERS - NET INCOME $2,068,315 $1,875,831
========== ==========
NET INCOME per Unit $ 5.56 $ 5.04
========== ==========
UNITS OUTSTANDING 372,189 372,189
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-28-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G
GEODYNE PRODUCTION PARTNERSHIP II-G
COMBINED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,305,266 $2,097,888
Adjustments to reconcile net income
to net cash provided by operating
activities:
Cumulative effect of changes in
accounting for asset retirement
obligations (Note 1) - ( 10,247)
Depreciation, depletion, and
amortization of oil and gas
properties 117,350 150,359
Gain on sale of oil and gas
properties ( 44,635) -
Increase in accounts receivable -
oil and gas sales ( 213,657) ( 218,011)
Increase in deferred charge ( 1,233) -
Decrease in accounts payable ( 27,171) ( 11,521)
Increase in gas imbalance payable 3,412 -
Increase in accrued liability 379 -
---------- ----------
Net cash provided by operating
activities $2,139,711 $2,008,468
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 43,427) ($ 48,911)
Proceeds from sale of oil and
gas properties 45,353 -
---------- ----------
Net cash provided (used) by investing
activities $ 1,926 ($ 48,911)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($2,140,482) ($1,433,505)
---------- ----------
Net cash used by financing activities ($2,140,482) ($1,433,505)
---------- ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 1,155 $ 526,052
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,284,869 959,481
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $1,286,024 $1,485,533
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-29-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H
GEODYNE PRODUCTION PARTNERSHIP II-H
COMBINED BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2004 2003
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 296,029 $ 305,096
Accounts receivable:
Oil and gas sales 230,925 179,434
---------- ----------
Total current assets $ 526,954 $ 484,530
NET OIL AND GAS PROPERTIES, utilizing
the successful efforts method 658,066 673,170
DEFERRED CHARGE 18,230 18,580
---------- ----------
$1,203,250 $1,176,280
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 28,961 $ 34,033
Asset retirement obligation -
current (Note 1) 2,777 2,522
---------- ----------
Total current liabilities $ 31,738 $ 36,555
LONG-TERM LIABILITIES:
Accrued liability $ 9,609 $ 10,035
Asset retirement obligation
(Note 1) 49,734 48,857
---------- ----------
Total long-term liabilities $ 59,343 $ 58,892
PARTNERS' CAPITAL (DEFICIT):
General Partner ($ 47,228) ($ 51,046)
Limited Partners, issued and
outstanding, 91,711 Units 1,159,397 1,131,879
---------- ----------
Total Partners' capital $1,112,169 $1,080,833
---------- ----------
$1,203,250 $1,176,280
========== ==========
The accompanying condensed notes are an integral part of
these combined financial statements.
-30-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H
GEODYNE PRODUCTION PARTNERSHIP II-H
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
-------- --------
REVENUES:
Oil and gas sales $351,848 $373,776
Interest income 474 381
Gain on sale of oil and gas
properties 9,758 -
-------- --------
$362,080 $374,157
COSTS AND EXPENSES:
Lease operating $ 31,944 $ 48,303
Production tax 23,371 24,850
Depreciation, depletion, and
amortization of oil and gas
properties 11,131 14,193
General and administrative
(Note 2) 40,636 34,340
-------- --------
$107,082 $121,686
-------- --------
NET INCOME $254,998 $252,471
======== ========
GENERAL PARTNER - NET INCOME $ 25,574 $ 26,486
======== ========
LIMITED PARTNERS - NET INCOME $229,424 $225,985
======== ========
NET INCOME per Unit $ 2.50 $ 2.47
======== ========
UNITS OUTSTANDING 91,711 91,711
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-31-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H
GEODYNE PRODUCTION PARTNERSHIP II-H
COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
-------- --------
REVENUES:
Oil and gas sales $748,081 $744,784
Interest income 786 748
Gain on sale of oil and gas
properties 10,370 -
-------- --------
$759,237 $745,532
COSTS AND EXPENSES:
Lease operating $ 76,863 $110,952
Production tax 49,502 48,392
Depreciation, depletion, and
amortization of oil and gas
properties 28,108 35,244
General and administrative
(Note 2) 72,443 70,756
-------- --------
$226,916 $265,344
-------- --------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $532,321 $480,188
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) - 2,536
-------- --------
NET INCOME $532,321 $482,724
======== ========
GENERAL PARTNER - NET INCOME $ 54,803 $ 51,141
======== ========
LIMITED PARTNERS - NET INCOME $477,518 $431,583
======== ========
NET INCOME per Unit $ 5.21 $ 4.71
======== ========
UNITS OUTSTANDING 91,711 91,711
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-32-
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H
GEODYNE PRODUCTION PARTNERSHIP II-H
COMBINED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
2004 2003
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $532,321 $482,724
Adjustments to reconcile net income
to net cash provided by operating
activities:
Cumulative effect of change in
accounting for asset retirement
obligations (Note 1) - ( 2,536)
Depreciation, depletion, and
amortization of oil and gas
properties 28,108 35,244
Gain on sale of oil and gas
properties ( 10,370) -
Increase in accounts receivable -
oil and gas sales ( 51,491) ( 53,453)
Decrease in deferred charge 350 -
Decrease in accounts payable ( 5,926) ( 2,594)
Decrease in accrued liability ( 426) -
-------- --------
Net cash provided by operating
activities $492,566 $459,385
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($ 11,168) ($ 11,266)
Proceeds from sale of oil and
Gas properties 10,520 -
-------- --------
Net cash used by investing activities ($ 648) ($ 11,266)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ($500,985) ($332,083)
-------- --------
Net cash used by financing activities ($500,985) ($332,083)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ($ 9,067) $116,036
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 305,096 224,669
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $296,029 $340,705
======== ========
The accompanying condensed notes are an integral part of
these combined financial statements.
-33-
GEODYNE ENERGY INCOME PROGRAM II LIMITED PARTNERSHIPS
CONDENSED NOTES TO THE COMBINED FINANCIAL STATEMENTS
JUNE 30, 2004
(Unaudited)
1. ACCOUNTING POLICIES
-------------------
The combined balance sheets as of June 30, 2004, combined statements of
operations for the three and six months ended June 30, 2004 and 2003, and
combined statements of cash flows for the six months ended June 30, 2004
and 2003 have been prepared by Geodyne Resources, Inc., the General
Partner of the limited partnerships, without audit. Each limited
partnership is a general partner in the related Geodyne Production
Partnership in which Geodyne Resources, Inc. serves as the managing
partner. Unless the context indicates otherwise, all references to a
"Partnership" or the "Partnerships" are references to the limited
partnership and its related production partnership, collectively, and all
references to the "General Partner" are references to the general partner
of the limited partnerships and the managing partner of the production
partnerships, collectively. In the opinion of management the financial
statements referred to above include all necessary adjustments, consisting
of normal recurring adjustments, to present fairly the combined financial
position at June 30, 2004, the combined results of operations for the
three and six months ended June 30, 2004 and 2003, and the combined cash
flows for the six months ended June 30, 2004 and 2003.
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, 2003. The
results of operations for the period ended June 30, 2004 are not
necessarily indicative of the results to be expected for the full year.
The Limited Partners' net income or loss per unit is based upon each $100
initial capital contribution.
RECLASSIFICATION
----------------
Certain prior year balances have been reclassified to conform with current
year presentation.
-34-
OIL AND GAS PROPERTIES
----------------------
The Partnerships follow the successful efforts method of accounting for
their oil and gas properties. Under the successful efforts method, the
Partnerships capitalize all property acquisition costs and development
costs incurred in connection with the further development of oil and gas
reserves. Property acquisition costs include costs incurred by the
Partnerships or the General Partner to acquire producing properties,
including related title insurance or examination costs, commissions,
engineering, legal and accounting fees, and similar costs directly related
to the acquisitions, plus an allocated portion, of the General Partner's
property screening costs. The acquisition cost to the Partnerships of
properties 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.
Depletion of the costs of producing oil and gas properties, amortization
of related intangible drilling and development costs, and depreciation of
tangible lease and well equipment are computed on the unit-of-production
method. The Partnerships' depletion, depreciation, and amortization
includes estimated dismantlement and abandonment costs and estimated
salvage value of the equipment.
When complete units of depreciable property are retired or sold, the asset
cost and related accumulated depreciation are eliminated with any gain or
loss (including the elimination of the asset retirement obligation)
reflected in income. When less than complete units of depreciable property
are retired or sold, the proceeds are credited to oil and gas properties.
ACCRUED LIABILITY - OTHER
-------------------------
The Accrued Liability - Other at June 30, 2004 and December 31, 2003 for
the II-A Partnership represents a charge accrued for the payment of a
judgment related to plugging liabilities, which judgment is currently
under appeal.
-35-
ASSET RETIREMENT OBLIGATIONS
----------------------------
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). On January 1,
2003, the Partnerships adopted FAS No. 143 and recorded an increase in
capitalized cost of oil and gas properties, an increase (decrease) in net
income for the cumulative effect of the change in accounting principle,
and an asset retirement obligation in the following approximate amounts
for each Partnership:
Increase
(Decrease)
Increase in
in Net Income
Capitalized for the
Cost of Oil Change in Asset
and Gas Accounting Retirement
Partnerships Properties Principle Obligation
------------ ----------- ---------- ----------
II-A $292,000 $ 6,000 $286,000
II-B 212,000 4,000 208,000
II-C 68,000 100 68,000
II-D 181,000 ( 2,000) 183,000
II-E 98,000 3,000 95,000
II-F 101,000 5,000 96,000
II-G 218,000 10,000 208,000
II-H 54,000 3,000 51,000
The asset retirement obligation will be adjusted upwards each quarter in
order to recognize accretion of the time-related discount factor. For the
six months ended June 30, 2004, the II-A, II-B, II-C, II-D, II-E, II-F,
II-G, and II-H Partnerships recognized approximately $5,000, $4,000,
$2,000, $5,000, $3,000, $2,000, $5,000 and $1,000, respectively, of an
increase in depreciation, depletion, and amortization expense, which was
comprised of accretion of the asset retirement obligation and depletion of
the increase in capitalized cost of oil and gas properties.
The components of the change in asset retirement obligations for the three
and six months ended June 30, 2004 and 2003 are as shown below.
-36-
II-A Partnership
----------------
Three Months Three Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, April 1 $280,306 $289,040
Accretion Expense 2,406 2,802
-------- --------
Total Asset Retirement,
Obligation, End of Quarter $282,712 $291,842
======== ========
Six Months Six Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, January 1 $277,914 $286,238
Accretion Expense 4,798 5,604
-------- --------
Total Asset Retirement,
Obligation, End of Period $282,712 $291,842
======== ========
Asset Retirement Obligation -
Current $ 14,928 $ -
Asset Retirement Obligation -
Long-Term 267,784 291,842
-37-
II-B Partnership
----------------
Three Months Three Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, April 1 $203,873 $210,315
Accretion Expense 1,739 2,056
-------- --------
Total Asset Retirement,
Obligation, End of Quarter $205,612 $212,371
======== ========
Six Months Six Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, January 1 $202,141 $208,259
Accretion Expense 3,471 4,112
-------- --------
Total Asset Retirement,
Obligation, End of Period $205,612 $212,371
======== ========
Asset Retirement Obligation -
Current $ 16,356 $ -
Asset Retirement Obligation -
Long-Term 189,256 212,371
-38-
II-C Partnership
----------------
Three Months Three Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, April 1 $71,887 $69,077
Settlements and Disposals - ( 243)
Accretion Expense 719 759
------- -------
Total Asset Retirement,
Obligation, End of Quarter $72,606 $69,593
======= =======
Six Months Six Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, January 1 $71,173 $68,318
Settlements and Disposals - ( 243)
Accretion Expense 1,433 1,518
------- -------
Total Asset Retirement,
Obligation, End of Period $72,606 $69,593
======= =======
Asset Retirement Obligation -
Current $10,399 $ -
Asset Retirement Obligation -
Long-Term 62,207 69,593
-39-
II-D Partnership
----------------
Three Months Three Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, April 1 $187,879 $184,632
Settlements and Disposals - ( 2,546)
Accretion Expense 1,887 2,010
-------- --------
Total Asset Retirement,
Obligation, End of Quarter $189,766 $184,096
======== ========
Six Months Six Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, January 1 $185,990 $182,622
Settlements and Disposals - ( 2,546)
Accretion Expense 3,776 4,020
-------- --------
Total Asset Retirement,
Obligation, End of Period $189,766 $184,096
======== ========
Asset Retirement Obligation -
Current $ 25,149 $ -
Asset Retirement Obligation -
Long-Term 164,617 184,096
-40-
II-E Partnership
----------------
Three Months Three Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, April 1 $ 99,335 $96,086
Accretion Expense 1,022 1,036
-------- -------
Total Asset Retirement,
Obligation, End of Quarter $100,357 $97,122
======== =======
Six Months Six Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, January 1 $ 98,320 $95,050
Accretion Expense 2,037 2,072
-------- -------
Total Asset Retirement,
Obligation, End of Period $100,357 $97,122
======== =======
Asset Retirement Obligation -
Current $ 5,103 $ -
Asset Retirement Obligation -
Long-Term 95,254 97,122
-41-
II-F Partnership
----------------
Three Months Three Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, April 1 $ 99,229 $97,319
Accretion Expense 1,049 1,093
-------- -------
Total Asset Retirement,
Obligation, End of Quarter $100,278 $98,412
======== =======
Six Months Six Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, January 1 $ 98,166 $96,226
Accretion Expense 2,112 2,186
-------- -------
Total Asset Retirement,
Obligation, End of Period $100,278 $98,412
======== =======
Asset Retirement Obligation -
Current $ 5,072 $ -
Asset Retirement Obligation -
Long-Term 95,206 98,412
-42-
II-G Partnership
----------------
Three Months Three Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, April 1 $212,008 $209,842
Accretion Expense 2,237 2,337
-------- --------
Total Asset Retirement,
Obligation, End of Quarter $214,245 $212,179
======== ========
Six Months Six Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, January 1 $209,768 $207,505
Accretion Expense 4,477 4,674
-------- --------
Total Asset Retirement,
Obligation, End of Period $214,245 $212,179
======== ========
Asset Retirement Obligation -
Current $ 11,137 $ -
Asset Retirement Obligation -
Long-Term 203,108 212,179
-43-
II-H Partnership
----------------
Three Months Three Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, April 1 $ 51,929 $ 51,370
Accretion Expense 582 580
-------- --------
Total Asset Retirement,
Obligation, End of Quarter $ 52,511 $ 51,950
======== ========
Six Months Six Months
Ended Ended
6/30/2004 6/30/2003
------------ ------------
Total Asset Retirement
Obligation, January 1 $ 51,379 $ 50,790
Accretion Expense 1,132 1,160
-------- --------
Total Asset Retirement,
Obligation, End of Period $ 52,511 $ 51,950
======== ========
Asset Retirement Obligation -
Current $ 2,777 $ -
Asset Retirement Obligation -
Long-Term 49,734 51,950
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, 2004, the following payments were made to the General
Partner or its affiliates by the Partnerships:
-44-
Direct General Administrative
Partnership and Administrative Overhead
----------- ------------------ --------------
II-A $22,560 $127,443
II-B 20,683 95,190
II-C 17,520 40,689
II-D 19,950 82,863
II-E 18,654 60,216
II-F 17,725 45,105
II-G 20,792 97,944
II-H 16,501 24,135
During the six months ended June 30, 2004, the following payments were
made to the General Partner or its affiliates by the Partnerships:
Direct General Administrative
Partnership and Administrative Overhead
----------- ------------------ --------------
II-A $37,579 $254,886
II-B 33,363 190,380
II-C 26,265 81,378
II-D 31,744 165,726
II-E 29,743 120,432
II-F 26,920 90,210
II-G 33,809 195,888
II-H 24,173 48,270
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.
-45-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
USE OF FORWARD-LOOKING STATEMENTS AND ESTIMATES
- -----------------------------------------------
This Quarterly Report contains certain forward-looking statements. The
words "anticipate", "believe", "expect", "plan", "intend", "estimate",
"project", "could", "may" and similar expressions are intended to identify
forward-looking statements. Such statements reflect management's current
views with respect to future events and financial performance. This
Quarterly Report also includes certain information, which is, or is based
upon, estimates and assumptions. Such estimates and assumptions are
management's efforts to accurately reflect the condition and operation of
the Partnerships.
Use of forward-looking statements and estimates and assumptions involve
risks and uncertainties which include, but are not limited to, the
volatility of oil and gas prices, the uncertainty of reserve information,
the operating risk associated with oil and gas properties (including the
risk of personal injury, death, property damage, damage to the well or
producing reservoir, environmental contamination, and other operating
risks), the prospect of changing tax and regulatory laws, the availability
and capacity of processing and transportation facilities, the general
economic climate, the supply and price of foreign imports of oil and gas,
the level of consumer product demand, and the price and availability of
alternative fuels. Should one or more of these risks or uncertainties
occur or should estimates or underlying assumptions prove incorrect,
actual conditions or results may vary materially and adversely from those
stated, anticipated, believed, estimated, and otherwise indicated.
GENERAL
- -------
The Partnerships are engaged in the business of acquiring and operating
producing oil and gas properties located in the continental United States.
In general, a Partnership acquired producing properties and did not engage
in development drilling or enhanced recovery projects, except as an
incidental part of the management of the producing properties acquired.
Therefore, the economic life of each Partnership, and its related
Production Partnership, is limited to the period of time required to fully
produce its acquired oil and gas reserves. The net proceeds from the oil
and gas operations are distributed to the Limited Partners and the General
Partner in accordance with the terms of the Partnerships' partnership
agreements.
-46-
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
----------- ------------------ ---------------
II-A July 22, 1987 $48,428,300
II-B October 14, 1987 36,171,900
II-C January 14, 1988 15,462,100
II-D May 10, 1988 31,487,800
II-E September 27, 1988 22,882,100
II-F January 5, 1989 17,140,000
II-G April 10, 1989 37,218,900
II-H May 17, 1989 9,171,100
In general, the amount of funds available for acquisition of producing
properties was equal to the capital contributions of the Limited Partners,
less 15% for sales commissions and organization and management fees. All
of the Partnerships have fully invested their capital contributions.
Net proceeds from the operations 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, 2004 and the net revenue
generated from future operations will provide sufficient working capital
to meet current and future obligations.
Occasional expenditures for new wells or well recompletions or workovers,
however, may reduce or eliminate cash available for a particular quarterly
distribution.
The Partnerships would have terminated on December 31, 2001 in accordance
with the partnership agreements for the Partnerships. However, such
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
second two-year extension thereby extending their termination date to
December 31, 2005. As of the date of this Quarterly Report, the General
Partner has not yet determined whether to further extend the term of any
Partnership.
-47-
CRITICAL ACCOUNTING POLICIES
- ----------------------------
The Partnerships follow the successful efforts method of accounting for
their oil and gas properties. Under the successful efforts method, the
Partnerships capitalize all property acquisition costs and development
costs incurred in connection with the further development of oil and gas
reserves. Property acquisition costs include costs incurred by the
Partnerships or the General Partner to acquire producing properties,
including related title insurance or examination costs, commissions,
engineering, legal and accounting fees, and similar costs directly related
to the acquisitions plus an allocated portion of the General Partner's
property screening costs. The acquisition cost to the Partnerships of the
properties 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.
Depletion of the cost of producing oil and gas properties, amortization of
related intangible drilling and development costs, and depreciation of
tangible lease and well equipment are computed on the unit-of-production
method. The Partnerships' calculation of depreciation, depletion, and
amortization includes estimated dismantlement and abandonment costs and
estimated salvage value of the equipment. When complete units of
depreciable property are retired or sold, the asset cost and related
accumulated depreciation are eliminated with any gain or loss (including
the elimination of the asset retirement obligation) reflected in income.
When less than complete units of depreciable property are retired or sold,
the proceeds are credited to oil and gas properties.
The Partnerships evaluate the recoverability of the carrying costs of
their proved oil and gas properties for each oil and gas field (rather
than separately for each well). If the unamortized costs of oil and gas
properties within a field exceeds the expected undiscounted future cash
flows from such properties, the cost of the properties is written down to
fair value, which is determined by using the estimated discounted future
cash flows from the properties. The risk that the Partnerships will be
required to record impairment provisions in the future increases as oil
and gas prices decrease.
The Deferred Charge on the Balance Sheets represents costs deferred for
lease operating expenses incurred in connection with the Partnerships'
underproduced gas imbalance positions. Conversely, the Accrued Liability
represents charges accrued for lease operating expenses incurred in
connection with the Partnerships' overproduced gas imbalance positions.
The rate used in calculating the Deferred Charge
-48-
and Accrued Liability is the annual average production costs per Mcf.
The Partnerships' oil and condensate production is sold, title passed, and
revenue recognized at or near the Partnerships' wells under short-term
purchase contracts at prevailing prices in accordance with arrangements
which are customary in the oil and gas industry. Sales of gas applicable
to the Partnerships' interest in producing oil and gas leases are recorded
as revenue when the gas is metered and title transferred pursuant to the
gas sales contracts covering the Partnerships' interest in gas reserves.
During such times as a Partnership's sales of gas exceed its pro rata
ownership in a well, such sales are recorded as revenues unless total
sales from the well have exceeded the Partnership's share of estimated
total gas reserves underlying the property, at which time such excess is
recorded as a liability. The rates per Mcf used to calculate this
liability are based on the average gas prices received for the volumes at
the time the overproduction occurred. This also approximates the price for
which the Partnerships are currently settling this liability. These
amounts were recorded as gas imbalance payables in accordance with the
sales method. These gas imbalance payables will be settled by either gas
production by the underproduced party in excess of current estimates of
total gas reserves for the well or by negotiated or contractual payment to
the underproduced party.
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). On January 1,
2003, the Partnerships adopted FAS No. 143 and recorded an increase in
capitalized cost of oil and gas properties, an increase (decrease) in net
income for the cumulative effect of the change in accounting principle,
and an asset retirement obligation in the following approximate amounts
for each Partnership:
-49-
Increase
(Decrease)
Increase in
in Net Income
Capitalized for the
Cost of Oil Change in Asset
and Gas Accounting Retirement
Partnerships Properties Principle Obligation
------------ ----------- ---------- ----------
II-A $292,000 $ 6,000 $286,000
II-B 212,000 4,000 208,000
II-C 68,000 100 68,000
II-D 181,000 ( 2,000) 183,000
II-E 98,000 3,000 95,000
II-F 101,000 5,000 96,000
II-G 218,000 10,000 208,000
II-H 54,000 3,000 51,000
The asset retirement obligation will be adjusted upwards each quarter in
order to recognize accretion of the time-related discount factor. For the
six months ended June 30, 2004, the II-A, II-B, II-C, II-D, II-E, II-F,
II-G, and II-H Partnerships recognized approximately $5,000, $4,000,
$2,000, $5,000, $3,000, $2,000, $5,000, and $1,000, respectively, of an
increase in depreciation, depletion, and amortization expense, which was
comprised of accretion of the asset retirement obligation and depletion of
the increase in capitalized cost of oil and gas properties.
PROVED RESERVES AND NET PRESENT VALUE
- -------------------------------------
The process of estimating oil and gas reserves is complex, requiring
significant subjective decisions in the evaluation of available
geological, engineering, and economic data for each reservoir. The data
for a given reservoir may change substantially over time as a result of,
among other things, additional development activity, production history,
and viability of production under varying economic conditions;
consequently, it is reasonably possible that material revisions to
existing reserve estimates may occur in the future. Although every
reasonable effort has been made to ensure that these reserve estimates
represent the most accurate assessment possible, the significance of the
subjective decisions required and variances in available data for various
reservoirs make these estimates generally less precise than other
estimates presented in connection with financial statement disclosures.
The following tables summarize changes in net quantities of the
Partnerships' proved reserves, all of which are located in the United
States, for the periods indicated. The proved reserves were estimated by
petroleum engineers employed by affiliates of the Partnerships, and are
annually reviewed by
-50-
an independent engineering firm. "Proved reserves" refers to those
estimated quantities of crude oil, gas, and gas liquids which geological
and engineering data demonstrate with reasonable certainty to be
recoverable in future years from known oil and gas reservoirs under
existing economic and operating conditions. The following information
includes certain gas balancing adjustments which cause the gas volume to
differ from the reserve reports prepared by the General Partner.
II-A Partnership
----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2003 578,339 6,602,791
Production ( 17,623) ( 162,681)
Extensions and discoveries 3,093 1,740
Revisions of previous
estimates 25,662 16,575
------- ---------
Proved reserves, March 31, 2004 589,471 6,458,425
Production ( 17,229) ( 179,580)
Extensions and discoveries - 34
Revisions of previous
estimates 35,658 77,563
------- ---------
Proved reserves, June 30, 2004 607,900 6,356,442
======= =========
-51-
II-B Partnership
----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2003 450,386 5,031,097
Production ( 11,835) ( 124,571)
Extensions and discoveries - 99
Revisions of previous
estimates 16,479 ( 787)
------- ---------
Proved reserves, March 31, 2004 455,030 4,905,838
Production ( 10,439) ( 154,801)
Revisions of previous
estimates 13,740 112,485
------- ---------
Proved reserves, June 30, 2004 458,331 4,863,522
======= =========
II-C Partnership
----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2003 166,878 3,471,332
Production ( 4,506) ( 72,221)
Revisions of previous
estimates 3,589 2,730
------- ---------
Proved reserves, March 31, 2004 165,961 3,401,841
Production ( 3,694) ( 86,749)
Revisions of previous
estimates 3,479 170,517
------- ---------
Proved reserves, June 30, 2004 165,746 3,485,609
======= =========
-52-
II-D Partnership
----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2003 205,493 8,820,151
Production ( 7,389) ( 173,189)
Revisions of previous
estimates 6,907 ( 94,156)
------- ---------
Proved reserves, March 31, 2004 205,011 8,552,806
Production ( 5,855) ( 163,105)
Revisions of previous
estimates 15,572 282,953
------- ---------
Proved reserves, June 30, 2004 214,728 8,672,654
======= =========
II-E Partnership
----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2003 185,726 4,993,342
Production ( 5,116) ( 113,320)
Revisions of previous
estimates 1,450 ( 101,967)
------- ---------
Proved reserves, March 31, 2004 182,060 4,778,055
Production ( 4,476) ( 103,692)
Revisions of previous
estimates 6,525 199,399
------- ---------
Proved reserves, June 30, 2004 184,109 4,873,762
======= =========
-53-
II-F Partnership
----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2003 294,371 3,805,394
Production ( 7,519) ( 123,018)
Sale of minerals in place ( 63) -
Revisions of previous
estimates ( 4,418) ( 7,353)
------- ---------
Proved reserves, March 31, 2004 282,371 3,675,023
Production ( 6,001) ( 91,744)
Revisions of previous
estimates 36,234 353,113
------- ---------
Proved reserves, June 30, 2004 312,604 3,936,392
======= =========
II-G Partnership
----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2003 618,052 8,180,541
Production ( 15,750) ( 262,468)
Sale of minerals in place ( 134) -
Revisions of previous
estimates ( 9,228) ( 14,416)
------- ---------
Proved reserves, March 31, 2004 592,940 7,903,657
Production ( 12,588) ( 194,394)
Extensions and discoveries 6,476 5,914
Revisions of previous
estimates 69,552 741,428
------- ---------
Proved reserves, June 30, 2004 656,380 8,456,605
======= =========
-54-
II-H Partnership
----------------
Crude Natural
Oil Gas
(Barrels) (Mcf)
--------- -----------
Proved reserves, Dec. 31, 2003 144,069 1,990,234
Production ( 3,652) ( 63,116)
Sale of minerals in place ( 35) -
Revisions of previous
estimates ( 2,142) ( 2,552)
------- ---------
Proved reserves, March 31, 2004 138,240 1,924,566
Production ( 2,924) ( 47,729)
Revisions of previous
estimates 17,620 177,037
------- ---------
Proved reserves, June 30, 2004 152,936 2,053,874
======= =========
The net present value of the Partnerships' reserves may change
dramatically as oil and gas prices change or as volumes change for the
reasons described above. Net present value represents estimated future
gross cash flow from the production and sale of proved reserves, net of
estimated oil and gas production costs (including production taxes, ad
valorem taxes, and operating expenses) and estimated future development
costs, discounted at 10% per annum.
The following table indicates the estimated net present value of the
Partnerships' proved reserves as of June 30, 2004, March 31, 2004 and
December 31, 2003. Net present value attributable to the Partnerships'
proved reserves was calculated on the basis of current costs and prices as
of the date of estimation. Such prices were not escalated except in
certain circumstances where escalations were fixed and readily
determinable in accordance with applicable contract provisions. The table
also indicates the gas prices in effect on the dates corresponding to the
reserve valuations. Changes in the oil and gas prices cause the estimates
of remaining economically recoverable reserves, as well as the values
placed on said reserves to fluctuate. The prices used in calculating the
net present value attributable to the Partnerships' proved reserves do not
necessarily reflect market prices for oil and gas production subsequent to
June 30, 2004. There can be no assurance that the prices used in
calculating the net present value of the Partnerships' proved reserves at
June 30, 2004 will actually be realized for such production.
-55-
Net Present Value of Reserves
-----------------------------------------
Partnership 6/30/04 3/31/04 12/31/03
----------- ----------- ----------- -----------
II-A $21,115,991 $20,313,454 $20,047,342
II-B 15,637,846 14,949,817 15,115,632
II-C 10,133,039 9,577,982 9,758,125
II-D 21,971,710 21,350,681 21,844,999
II-E 12,983,558 12,187,913 12,587,969
II-F 12,778,200 11,523,515 11,765,661
II-G 27,691,402 25,027,012 25,544,825
II-H 6,533,029 5,898,194 6,022,844
Oil and Gas Prices
----------------------------------------
Pricing 6/30/04 3/31/04 12/31/03
----------- ---------- ----------- -----------
Oil (Bbl) $ 33.75 $ 32.50 $ 29.25
Gas (Mcf) 6.04 5.63 5.77
RESULTS OF OPERATIONS
- ---------------------
GENERAL DISCUSSION
The following general discussion should be read in conjunction with the
analysis of results of operations provided below.
The primary source of liquidity and Partnership cash distributions comes
from the net revenues generated from the sale of oil and gas produced from
the Partnerships' oil and gas properties. The level of net revenues is
highly dependent upon the total volumes of oil and natural gas sold. Oil
and gas reserves are depleting assets and will experience production
declines over time, thereby likely resulting in reduced net revenues. The
level of net revenues is also highly dependent upon the prices received
for oil and gas sales, which prices have historically been very volatile
and may continue to be so.
Additionally, lower oil and natural gas prices may reduce the amount of
oil and gas that is economic to produce and reduce the Partnerships'
revenues and cash flow. Various factors beyond the Partnerships' control
will affect prices for oil and natural gas, such as:
* Worldwide and domestic supplies of oil and natural gas;
* The ability of the members of the Organization of Petroleum Exporting
Countries ("OPEC") to agree to and maintain oil prices and production
quotas;
* Political instability or armed conflict in oil-producing regions or
around major shipping areas;
* The level of consumer demand and overall economic activity;
-56-
* The competitiveness of alternative fuels;
* Weather conditions;
* The availability of pipelines for transportation; and
* Domestic and foreign government regulations and taxes.
It is not possible to predict the future direction of oil or natural gas
prices or whether the above discussed trends will remain. Operating costs,
including General and Administrative Expenses, may not decline over time
or may experience only a gradual decline, thus adversely affecting net
revenues as either production or oil and natural gas prices decline. In
any particular period, net revenues may also be affected by either the
receipt of proceeds from property sales or the incursion of additional
costs as a result of well workovers, recompletions, new well drilling, and
other events.
II-A PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2003.
Three Months Ended June 30,
---------------------------
2004 2003
---------- ----------
Oil and gas sales $1,511,616 $1,571,019
Oil and gas production expenses $ 374,315 $ 324,821
Barrels produced 17,229 22,322
Mcf produced 179,580 192,809
Average price/Bbl $ 35.19 $ 27.07
Average price/Mcf $ 5.04 $ 5.01
As shown in the table above, total oil and gas sales decreased $59,403
(3.8%) for the three months ended June 30, 2004 as compared to the three
months ended June 30, 2003. Of this decrease, approximately $138,000 and
$66,000, respectively, were related to decreases in volumes of oil and gas
sold. These decreases were partially offset by an increase of
approximately $140,000 related to an increase in the average price of oil
sold. Volumes of oil and gas sold decreased 5,093 barrels and 13,229 Mcf,
respectively, for the three months ended June 30, 2004 as compared to the
three months ended June 30, 2003. The decrease in volumes of oil sold was
primarily due to (i) positive prior period volume adjustments made by the
operators on several wells during the three months ended June 30, 2003 and
(ii) normal declines in production.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $49,494 (15.2%) for the three months ended
June 30, 2004 as compared to the three months ended June 30, 2003. This
increase was primarily due to (i) workover expenses incurred on several
wells during the three months ended June 30, 2004 and (ii) an increase in
salt water disposal expenses on one significant well for the three months
ended June 30, 2004 as
-57-
compared to the three months ended June 30, 2003. As of the date of this
Quarterly Report, management anticipates that saltwater disposal expenses
will remain at approximately their current levels. As a percentage of oil
and gas sales, these expenses increased to 24.8% for the three months
ended June 30, 2004 from 20.7% for the three months ended June 30, 2003.
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
increased $535 (1.1%) for the three months ended June 30, 2004 as compared
to the three months ended June 30, 2003. As a percentage of oil and gas
sales, this expense increased to 3.2% for the three months ended June 30,
2004 from 3.1% for the three months ended June 30, 2003.
General and administrative expenses increased $9,910 (7.1%) for the three
months ended June 30, 2004 as compared to the three months ended June 30,
2003. As a percentage of oil and gas sales, these expenses increased to
9.9% for the three months ended June 30, 2004 from 8.9% for the three
months ended June 30, 2003. This percentage increase was primarily due to
the dollar increase in general and administrative expenses.
SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2003.
Six Months Ended June 30,
---------------------------
2004 2003
---------- ----------
Oil and gas sales $2,840,768 $3,046,076
Oil and gas production expenses $ 730,260 $ 698,326
Barrels produced 34,852 38,568
Mcf produced 342,261 375,652
Average price/Bbl $ 33.18 $ 28.31
Average price/Mcf $ 4.92 $ 5.20
As shown in the table above, total oil and gas sales decreased $205,308
(6.7%) for the six months ended June 30, 2004 as compared to the six
months ended June 30, 2003. Of this decrease, approximately (i) $105,000
and $174,000, respectively, were related to decreases in volumes of oil
and gas sold and (ii) $96,000 was related to a decrease in the average
price of gas sold. These decreases were partially offset by an increase of
approximately $170,000 related to an increase in the average price of oil
sold. Volumes of oil and gas sold decreased 3,716 barrels and 33,391 Mcf,
respectively, for the six months ended June 30, 2004 as compared to the
six months ended June 30, 2003.
-58-
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $31,934 (4.6%) for the six months ended June
30, 2004 as compared to the six months ended June 30, 2003. This increase
was primarily due to (i) workover expenses incurred on several wells
during the six months ended June 30, 2004 and (ii) an increase in salt
water disposal expenses on one significant well for the six months ended
June 30, 2004 as compared to the six months ended June 30, 2003. As of the
date of this Quarterly Report, management anticipates that saltwater
disposal expenses will remain at approximately their current levels. As a
percentage of oil and gas sales, these expenses increased to 25.7% for the
six months ended June 30, 2004 from 22.9% for the six months ended June
30, 2003. This percentage increase was primarily due to (i) the dollar
increase in oil and gas production expenses and (ii) the decrease in the
average price of gas sold.
Depreciation, depletion, and amortization of oil and gas properties
decreased $10,387 (9.7%) for the six months ended June 30, 2004 as
compared to the six months ended June 30, 2003. As a percentage of oil and
gas sales, this expense decreased to 3.4% for the six months ended June
30, 2004 from 3.5% for the six months ended June 30, 2003.
General and administrative expenses increased $7,154 (2.5%) for the six
months ended June 30, 2004 as compared to the six months ended June 30,
2003. As a percentage of oil and gas sales, these expenses increased to
10.3% for the six months ended June 30, 2004 from 9.4% for the six months
ended June 30, 2003.
The Limited Partners have received cash distributions through June 30,
2004 totaling $59,378,357 or 122.61% of Limited Partners' capital
contributions.
II-B PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2003.
Three Months Ended June 30,
---------------------------
2004 2003
---------- ----------
Oil and gas sales $1,110,599 $1,014,577
Oil and gas production expenses $ 277,179 $ 247,007
Barrels produced 10,439 9,804
Mcf produced 154,801 151,089
Average price/Bbl $ 36.27 $ 27.55
Average price/Mcf $ 4.73 $ 4.93
As shown in the table above, total oil and gas sales increased $96,022
(9.5%) for the three months ended June 30, 2004 as compared to the three
months ended June 30, 2003. Of this increase, approximately (i) $91,000
was related to
-59-
an increase in the average price of oil sold and (ii) $17,000 and $18,000,
respectively, were related to increases in volumes of oil and gas sold.
These increases were partially offset by a decrease of approximately
$30,000 related to a decrease in the average price of gas sold. Volumes of
oil and gas sold increased 635 barrels and 3,712 Mcf, respectively, for
the three months ended June 30, 2004 as compared to the three months ended
June 30, 2003. The increase in volumes of oil sold was primarily due to an
increase in production on one significant well due to the successful
workover of that well during mid 2003. This increase was partially offset
by (i) normal declines in production and (ii) a positive prior period
volume adjustment made by the operator on one significant well during the
three months ended June 30, 2003. The increase in volumes of gas sold was
primarily due to (i) positive prior period volume adjustments made by the
operator on two significant wells during the three months ended June 30,
2004 and (ii) an increase in production on one significant well following
successful repairs during mid 2003. These increases were partially offset
by normal declines in production.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $30,172 (12.2%) for the three months ended
June 30, 2004 as compared to the three months ended June 30, 2003. This
increase was primarily due to (i) an increase in salt water disposal
expenses on two significant wells for the three months ended June 30, 2004
as compared to the three months ended June 30, 2003 and (ii) workover
expenses incurred on several wells during the three months ended June 30,
2004. These increases were partially offset by a decrease in production
taxes due to positive prior period adjustments made by the operator on
several wells during the three months ended June 30, 2003. As of the date
of this Quarterly Report, management anticipates that saltwater disposal
expenses will remain at approximately their current levels. As a
percentage of oil and gas sales, these expenses increased to 25.0% for the
three months ended June 30, 2004 from 24.3% for the three months ended
June 30, 2003.
Depreciation, depletion, and amortization of oil and gas properties
decreased $10,253 (20.9%) for the three months ended June 30, 2004 as
compared to the three months ended June 30, 2003. This decrease was
primarily due to upward revisions in the estimates of remaining oil
reserves at June 30, 2004 as compared to June 30, 2003. As a percentage of
oil and gas sales, this expense decreased to 3.5% for the three months
ended June 30, 2004 from 4.8% for the three months ended June 30, 2003.
This percentage decrease was primarily due to the dollar decrease in
depreciation, depletion, and amortization of oil and gas properties.
-60-
General and administrative expenses increased $9,022 (8.4%) for the three
months ended June 30, 2004 as compared to the three months ended June 30,
2003. As a percentage of oil and gas sales, these expenses decreased to
10.4% for the three months ended June 30, 2004 from 10.5% for the three
months ended June 30, 2003.
SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2003.
Six Months Ended June 30,
---------------------------
2004 2003
---------- ----------
Oil and gas sales $2,078,080 $2,038,060
Oil and gas production expenses $ 542,079 $ 490,833
Barrels produced 22,274 19,845
Mcf produced 279,372 288,611
Average price/Bbl $ 34.27 $ 28.93
Average price/Mcf $ 4.71 $ 5.07
As shown in the table above, total oil and gas sales increased $40,020
(2.0%) for the six months ended June 30, 2004 as compared to the six
months ended June 30, 2003. Of this increase, approximately (i) $119,000
was related to an increase in the average price of oil sold and (ii)
$70,000 was related to an increase in volumes of oil sold. These increases
were partially offset by decreases of approximately (i) $102,000 related
to a decrease in the average price of gas sold and (ii) $47,000 related to
a decrease in volumes of gas sold. Volumes of oil sold increased 2,429
barrels, while volumes of gas sold decreased 9,239 Mcf for the six months
ended June 30, 2004 as compared to the six months ended June 30, 2003. The
increase in volumes of oil sold was primarily due to an increase in
production on one significant well due to the successful workover of that
well during mid 2003, which increase was partially offset by normal
declines in production. The decrease in volumes of gas sold was primarily
due to normal declines in production. This decrease was partially offset
by (i) positive prior period volume adjustments made by the operators on
several wells during the six months ended June 30, 2004 and (ii) an
increase in production on one significant well following successful
repairs during mid 2003.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $51,246 (10.4%) for the six months ended June
30, 2004 as compared to the six months ended June 30, 2003. This increase
was primarily due to (i) an increase in salt water disposal expenses on
two significant wells for the six months ended June 30, 2004 as compared
to the six months ended June 30, 2003 and (ii) workover expenses incurred
on several wells during the six months ended June 30, 2004. These
increases were partially offset by a decrease in production taxes due to
positive
-61-
prior period adjustments made by the operators on several other wells
during the six months ended June 30, 2003. As of the date of this
Quarterly Report, management anticipates that saltwater disposal expenses
will remain at approximately their current levels. As a percentage of oil
and gas sales, these expenses increased to 26.1% for the six months ended
June 30, 2004 from 24.1% for the six months ended June 30, 2003.
Depreciation, depletion, and amortization of oil and gas properties
decreased $16,534 (18.6%) for the six months ended June 30, 2004 as
compared to the six months ended June 30, 2003. This decrease was
primarily due to upward revisions in the estimates of remaining oil
reserves at June 30, 2004 as compared to June 30, 2003. As a percentage of
oil and gas sales, this expense decreased to 3.5% for the six months ended
June 30, 2004 from 4.4% for the six months ended June 30, 2003. This
percentage decrease was primarily due to the dollar decrease in
depreciation, depletion, and amortization of oil and gas properties.
General and administrative expenses increased $5,715 (2.6%) for the six
months ended June 30, 2004 as compared to the six months ended June 30,
2003. As a percentage of oil and gas sales, these expenses increased to
10.8% for the six months ended June 30, 2004 from 10.7% for the six months
ended June 30, 2003.
The Limited Partners have received cash distributions through June 30,
2004 totaling $42,697,916 or 118.04% of Limited Partners' capital
contributions.
II-C PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2003.
Three Months Ended June 30,
---------------------------
2004 2003
-------- --------
Oil and gas sales $536,417 $512,079
Oil and gas production expenses $125,782 $125,320
Barrels produced 3,694 3,261
Mcf produced 86,749 93,177
Average price/Bbl $ 36.38 $ 28.74
Average price/Mcf $ 4.63 $ 4.49
As shown in the table above, total oil and gas sales increased $24,338
(4.8%) for the three months ended June 30, 2004 as compared to the three
months ended June 30, 2003. Of this increase, approximately (i) $28,000
and $13,000, respectively, were related to increases in the average prices
of oil and gas sold and (ii) $12,000 was related to an increase in volumes
of oil sold. These increases were partially offset by a decrease of
approximately $29,000 related to a decrease in volumes of gas sold.
Volumes of
-62-
oil sold increased 433 barrels, while volumes of gas sold decreased 6,428
Mcf for the three months ended June 30, 2004 as compared to the three
months ended June 30, 2003. The increase in volumes of oil sold was
primarily due to (i) an increase in production on one significant well due
to the successful workover of that well during mid 2003 and (ii) a
negative prior period volume adjustment made by the operator on another
significant well during the three months ended June 30, 2003. These
increases were partially offset by normal declines in production.
Oil and gas production expenses (including lease operating expenses and
production taxes) remained relatively constant for the three months ended
June 30, 2004 and 2003. As a percentage of oil and gas sales, these
expenses decreased to 23.4% for the three months ended June 30, 2004 from
24.5% for the three months ended June 30, 2003.
Depreciation, depletion, and amortization of oil and gas properties
decreased $2,325 (10.6%) for the three months ended June 30, 2004 as
compared to the three months ended June 30, 2003. This decrease was
primarily due to the abandonment of one significant well during the three
months ended June 30, 2003 due to severe mechanical problems. As a
percentage of oil and gas sales, this expense decreased to 3.7% for the
three months ended June 30, 2004 from 4.3% for the three months ended June
30, 2003. This percentage decrease was primarily due to the dollar
decrease in deprecation, depletion, and amortization of oil and gas
properties.
General and administrative expenses increased $7,522 (14.8%) for the three
months ended June 30, 2004 as compared to the three months ended June 30,
2003. As a percentage of oil and gas sales, this expense increased to
10.9% for the three months ended June 30, 2004 from 9.9% for the three
months ended June 30, 2003. This percentage increase was primarily due to
the dollar increase in general and administrative expenses.
SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2003.
Six Months Ended June 30,
-------------------------
2004 2003
---------- ----------
Oil and gas sales $1,017,437 $1,035,313
Oil and gas production expenses $ 255,705 $ 242,203
Barrels produced 8,200 7,038
Mcf produced 158,970 171,326
Average price/Bbl $ 34.14 $ 29.13
Average price/Mcf $ 4.64 $ 4.85
As shown in the table above, total oil and gas sales decreased $17,876
(1.7%) for the six months ended June 30, 2004 as compared to the six
months ended June 30, 2003. Of
-63-
this decrease, approximately (i) $60,000 was related to a decrease in
volumes of gas sold and (ii) $33,000 was related to a decrease in the
average price of gas sold. These decreases were partially offset by
increases of approximately (i) $41,000 related to an increase in the
average price of oil sold and (ii) $34,000 related to an increase in
volumes of oil sold. Volumes of oil sold increased 1,162 barrels, while
volumes of gas sold decreased 12,356 Mcf for the six months ended June 30,
2004 as compared to the six months ended June 30, 2003. The increase in
volumes of oil sold was primarily due to an increase in production on one
significant well due to the successful workover of that well during mid
2003, which increase was partially offset by normal declines in
production.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $13,502 (5.6%) for the six months ended June
30, 2004 as compared to the six months ended June 30, 2003. This increase
was primarily due to (i) workover expenses incurred on two significant
wells during the six months ended June 30, 2004 and (ii) an increase in
salt water disposal expenses on one significant well during the six months
ended June 30, 2004 as compared to the six months ended June 30, 2003. As
of the date of this Quarterly Report, management anticipates that
saltwater disposal expenses will remain at approximately their current
levels. As a percentage of oil and gas sales, these expenses increased to
25.1% for the six months ended June 30, 2004 from 23.4% for the six months
ended June 30, 2003.
Depreciation, depletion, and amortization of oil and gas properties
decreased $6,829 (14.9%) for the six months ended June 30, 2004 as
compared to the six months ended June 30, 2003. This decrease was
primarily due to the abandonment of one significant well during the six
months ended June 30, 2003 due to severe mechanical problems. As a
percentage of oil and gas sales, this expense decreased to 3.8% for the
six months ended June 30, 2004 from 4.4% for the six months ended June 30,
2003. This percentage decrease was primarily due to the dollar decrease in
depreciation, depletion, and amortization of oil and gas properties.
General and administrative expenses increased $3,289 (3.2%) for the six
months ended June 30, 2004 as compared to the six months ended June 30,
2003. As a percentage of oil and gas sales, this expense increased to
10.6% for the six months ended June 30, 2004 from 10.1% for the six months
ended June 30, 2003.
The Limited Partners have received cash distributions through June 30,
2004 totaling $20,029,686 or 129.54% of Limited Partners' capital
contributions.
-64-
II-D PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2003.
Three Months Ended June 30,
---------------------------
2004 2003
---------- ----------
Oil and gas sales $1,037,272 $1,001,063
Oil and gas production expenses $ 292,088 $ 273,210
Barrels produced 5,855 3,172
Mcf produced 163,105 218,619
Average price/Bbl $ 37.09 $ 29.70
Average price/Mcf $ 5.03 $ 4.15
As shown in the table above, total oil and gas sales increased $36,209
(3.6%) for the three months ended June 30, 2004 as compared to the three
months ended June 30, 2003. Of this increase, approximately (i) $43,000
and $143,000, respectively, were related to increases in the average
prices of oil and gas sold and (ii) $80,000 was related to an increase in
volumes of oil sold. These increases were partially offset by a decrease
of approximately $230,000 related to a decrease in volumes of gas sold.
Volumes of oil sold increased 2,683 barrels, while volumes of gas sold
decreased 55,514 Mcf for the three months ended June 30, 2004 as compared
to the three months ended June 30, 2003. The increase in volumes of oil
sold was primarily due to (i) a negative prior period volume adjustment
made by the operator on one significant well during the three months ended
June 30, 2003 and (ii) an increase in production on another significant
well due to the successful workover of that well during late 2003. The
decrease in volumes of gas sold was primarily due to (i) positive prior
period volume adjustments made by the operator on two significant wells
during the three months ended June 30, 2003 and (ii) normal declines in
production.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $18,878 (6.9%) for the three months ended June
30, 2004 as compared to the three months ended June 30, 2003. This
increase was primarily due to workover expenses incurred on several wells
during the three months ended June 30, 2004. This increase was partially
offset by workover expenses incurred on several other wells during the
three months ended June 30, 2003. As a percentage of oil and gas sales,
these expenses increased to 28.2% for the three months ended June 30, 2004
from 27.3% for the three months ended June 30, 2003.
-65-
Depreciation, depletion, and amortization of oil and gas properties
decreased $10,777 (15.3%) for the three months ended June 30, 2004 as
compared to the three months ended June 30, 2003. This decrease was
primarily due to (i) the abandonment of one significant well during 2003
due to severe mechanical problems and (ii) the decrease in volumes of gas
sold. These decreases were partially offset by another significant well
being fully depleted during the three months ended June 30, 2004 due to
lack of remaining reserves. As a percentage of oil and gas sales, this
expense decreased to 5.7% for the three months ended June 30, 2004 from
7.0% for the three months ended June 30, 2003. This percentage decrease
was primarily due to the increases in the average prices of oil and gas
sold.
General and administrative expenses increased $8,683 (9.2%) for the three
months ended June 30, 2004 as compared to the three months ended June 30,
2003. As a percentage of oil and gas sales, these expenses increased to
9.9% for the three months ended June 30, 2004 from 9.4% for the three
months ended June 30, 2003.
SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2003.
Six Months Ended June 30,
---------------------------
2004 2003
---------- ----------
Oil and gas sales $2,108,155 $2,043,771
Oil and gas production expenses $ 558,426 $ 505,166
Barrels produced 13,244 9,902
Mcf produced 336,294 382,781
Average price/Bbl $ 34.15 $ 29.65
Average price/Mcf $ 4.92 $ 4.57
As shown in the table above, total oil and gas sales increased $64,384
(3.2%) for the six months ended June 30, 2004 as compared to the six
months ended June 30, 2003. Of this increase, approximately (i) $60,000
and $118,000, respectively, were related to increases in the average
prices of oil and gas sold and (ii) $99,000 was related to an increase in
volumes of oil sold. These increases were partially offset by a decrease
of approximately $213,000 related to a decrease in volumes of gas sold.
Volumes of oil sold increased 3,342 barrels, while volumes of gas sold
decreased 46,487 Mcf for the six months ended June 30, 2004 as compared to
the six months ended June 30, 2003. The increase in volumes of oil sold
was primarily due to (i) a negative prior period volume adjustment made by
the operator on one significant well during the six months ended June 30,
2003 and (ii) an increase in production on another significant well
following the successful workover of that well during late 2003. The
decrease in volumes of gas sold was primarily due to (i) positive prior
period volume adjustments made by the operator on two significant wells
-66-
during the six months ended June 30, 2003 and (ii) normal declines in
production.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $53,260 (10.5%) for the six months ended June
30, 2004 as compared to the six months ended June 30, 2003. This increase
was primarily due to workover expenses incurred on several wells during
the six months ended June 30, 2004. This increase was partially offset by
workover expenses incurred on several other wells during the six months
ended June 30, 2003. As a percentage of oil and gas sales, these expenses
increased to 26.5% for the six months ended June 30, 2004 from 24.7% for
the six months ended June 30, 2003.
Depreciation, depletion, and amortization of oil and gas properties
decreased $23,318 (15.4%) for the six months ended June 30, 2004 as
compared to the six months ended June 30, 2003. This decrease was
primarily due to (i) the abandonment of one significant well during the
six months ended June 30, 2003 due to severe mechanical problems and (ii)
the decrease in volumes of gas sold. These decreases were partially offset
by one significant well being fully depleted during the six months ended
June 30, 2004 due to lack of remaining reserves. As a percentage of oil
and gas sales, this expense decreased to 6.1% for the six months ended
June 30, 2004 from 7.4% for the six months ended June 30, 2003. This
percentage decrease was primarily due to the dollar decrease in
depreciation, depletion, and amortization of oil and gas properties.
General and administrative expenses increased $5,167 (2.7%) for the six
months ended June 30, 2004 as compared to the six months ended June 30,
2003. As a percentage of oil and gas sales, these expenses remained
constant at 9.4% for the six months ended June 30, 2004 and 2003.
The Limited Partners have received cash distributions through June 30,
2004 totaling $41,974,903 or 133.31% of Limited Partners' capital
contributions.
-67-
II-E PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2003.
Three Months Ended June 30,
---------------------------
2004 2003
-------- --------
Oil and gas sales $718,092 $774,082
Oil and gas production expenses $150,189 $142,077
Barrels produced 4,476 4,892
Mcf produced 103,692 125,153
Average price/Bbl $ 36.51 $ 26.00
Average price/Mcf $ 5.35 $ 5.17
As shown in the table above, total oil and gas sales decreased $55,990
(7.2%) for the three months ended June 30, 2004 as compared to the three
months ended June 30, 2003. Of this decrease, approximately $11,000 and
$111,000, respectively, were related to decreases in volumes of oil and
gas sold. These decreases were partially offset by increases of
approximately $47,000 and $19,000, respectively, related to increases in
the average prices of oil and gas sold. Volumes of oil and gas sold
decreased 416 barrels and 21,461 Mcf for the three months ended June 30,
2004 as compared to the three months ended June 30, 2003. The decrease in
volumes of gas sold was primarily due to (i) positive prior period volume
adjustments made by the operators on several wells during the three months
ended June 30, 2003 and (ii) normal declines in production.
Oil and gas production expenses (including lease operating expenses and
production taxes) increased $8,112 (5.7%) for the three months ended June
30, 2004 as compared to the three months ended June 30, 2003. This
increase was primarily due to workover expenses incurred on one
significant well during the three months ended June 30, 2004, which
increase was partially offset by a decrease in production taxes associated
with the decrease in oil and gas sales. As a percentage of oil and gas
sales, these expenses increased to 20.9% for the three months ended June
30, 2004 from 18.4% for the three months ended June 30, 2003. 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
increased $16,140 (64.3%) for the three months ended June 30, 2004 as
compared to the three months ended June 30, 2003. This increase was
primarily due to downward revisions in the estimates of remaining oil and
gas reserves at June 30, 2004 as compared to June 30, 2003. As a
percentage of oil and gas sales, this expense increased to 5.7% for the
three months ended June 30, 2004 from 3.2% for the three months ended June
30, 2003. This percentage increase was primarily due to the dollar
increase in
-68-
depreciation, depletion, and amortization of oil and gas properties.
General and administrative expenses increased $6,267 (8.6%) for the three
months ended June 30, 2004 as compared to the three months ended June 30,
2003. As a percentage of oil and gas sales, these expenses increased to
11.0% for the three months ended June 30, 2004 from 9.4% for the three
months ended June 30, 2003. This percentage increase was primarily due to
the dollar increase in general and administrative expenses.
SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2003.
Six Months Ended June 30,
-------------------------
2004 2003
---------- ----------
Oil and gas sales $1,419,422 $1,526,763
Oil and gas production expenses $ 310,106 $ 330,320
Barrels produced 9,592 10,211
Mcf produced 217,012 236,368
Average price/Bbl $ 34.03 $ 28.60
Average price/Mcf $ 5.04 $ 5.22
As shown in the table above, total oil and gas sales decreased $107,341
(7.0%) for the six months ended June 30, 2004 as compared to the six
months ended June 30, 2003. Of this decrease, approximately (i) $18,000
and $101,000, respectively, were related to decreases in volumes of oil
and gas sold and (ii) $40,000 was related to a decrease in the average
price of gas sold. These decreases were partially offset by an increase of
approximately $52,000 related to an increase in the average price of oil
sold. Volumes of oil and gas sold decreased 619 barrels and 19,356 Mcf,
respectively, for the six months ended June 30, 2004 as compared to the
six months ended June 30, 2003.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $20,214 (6.1%) for the six months ended June
30, 2004 as compared to the six months ended June 30, 2003. This decrease
was primarily due to (i) a positive prior period lease operating expense
adjustment on one significant well during the six months ended June 30,
2003 and (ii) a decrease in production taxes associated with the decrease
in oil and gas sales. These decreases were partially offset by workover
expenses incurred on one significant well during the six months ended June
30, 2004. As a percentage of oil and gas sales, these expenses increased
to 21.8% for the six months ended June 30, 2004 from 21.6% for the six
months ended June 30, 2003.
-69-
Depreciation, depletion, and amortization of oil and gas properties
increased $128,271 (211.8%) for the six months ended June 30, 2004 as
compared to the six months ended June 30, 2003. This increase was
primarily due to one significant well being fully depleted during the six
months ended June 30, 2004 due to lack of remaining reserves. As a
percentage of oil and gas sales, this expense increased to 13.3% for the
six months ended June 30, 2004 from 4.0% for the six months ended June 30,
2003. This percentage increase was primarily due to the dollar increase in
depreciation, depletion, and amortization of oil and gas properties.
General and administrative expenses increased $3,299 (2.2%) for the six
months ended June 30, 2004 as compared to the six months ended June 30,
2003. As a percentage of oil and gas sales, these expenses increased to
10.6% for the six months ended June 30, 2004 from 9.6% for the six months
ended June 30, 2003. This percentage increase was primarily due to the
decrease in oil and gas sales.
The Limited Partners have received cash distributions through June 30,
2004 totaling $29,442,574 or 128.67% of Limited Partners' capital
contributions.
II-F PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2003.
Three Months Ended June 30,
---------------------------
2004 2003
-------- --------
Oil and gas sales $686,089 $729,504
Oil and gas production expenses $103,652 $142,634
Barrels produced 6,001 6,664
Mcf produced 91,744 111,604
Average price/Bbl $ 34.79 $ 26.56
Average price/Mcf $ 5.20 $ 4.95
As shown in the table above, total oil and gas sales decreased $43,415
(6.0%) for the three months ended June 30, 2004 as compared to the three
months ended June 30, 2003. Of this decrease, approximately $17,000 and
$98,000, respectively, were related to decreases in volumes of oil and gas
sold. These decreases were partially offset by increases of approximately
$49,000 and $23,000, respectively, related to increases in the average
prices of oil and gas sold. Volumes of oil and gas sold decreased 663
barrels and 19,860 Mcf, respectively, for the three months ended June 30,
2004 as compared to the three months ended June 30, 2003. The decrease in
volumes of oil sold was primarily due to a positive prior period volume
adjustment made by the operator on one significant well during the three
months ended June 30, 2003. The decrease in volumes
-70-
of gas sold was primarily due to (i) positive prior period volume
adjustments made by the operators on two significant wells during the
three months ended June 30, 2003 and (ii) normal declines in production.
These decreases were partially offset by an increase in volumes of gas
sold due to the payout of one non-consent well.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $38,982 (27.3%) for the three months ended
June 30, 2004 as compared to the three months ended June 30, 2003. This
decrease was primarily due to (i) workover expenses incurred on several
wells during the three months ended June 30, 2003 and (ii) a decrease in
lease operating expenses associated with the decreases in volumes of oil
and gas sold. These decreases were partially offset by workover expenses
incurred on one significant well during the three months ended June 30,
2004. As a percentage of oil and gas sales, these expenses decreased to
15.1% for the three months ended June 30, 2004 from 19.6% for the three
months ended June 30, 2003. This percentage decrease was primarily due to
the dollar decrease in oil and gas production expenses.
Depreciation, depletion, and amortization of oil and gas properties
decreased $6,129 (21.7%) for the three months ended June 30, 2004 as
compared to the three months ended June 30, 2003. This decrease was
primarily due to the decreases in volumes of oil and gas sold. As a
percentage of oil and gas sales, this expense decreased to 3.2% for the
three months ended June 30, 2004 from 3.9% for the three months ended June
30, 2003. This percentage decrease was primarily due to the dollar
decrease in depreciation, depletion, and amortization of oil and gas
properties.
General and administrative expenses increased $6,877 (12.3%) for the three
months ended June 30, 2004 as compared to the three months ended June 30,
2003. As a percentage of oil and gas sales, these expenses increased to
9.2% for the three months ended June 30, 2004 from 7.7% for the three
months ended June 30, 2003. This percentage increase was primarily due to
the dollar increase in general and administrative expenses.
-71-
SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2003.
Six Months Ended June 30,
---------------------------
2004 2003
---------- ----------
Oil and gas sales $1,468,999 $1,470,221
Oil and gas production expenses $ 241,905 $ 312,595
Barrels produced 13,520 13,515
Mcf produced 214,762 223,169
Average price/Bbl $ 32.50 $ 28.29
Average price/Mcf $ 4.79 $ 4.87
As shown in the table above, total oil and gas sales remained relatively
constant for the six months ended June 30, 2004 and 2003. Decreases of
approximately (i) $41,000 related to a decrease in volumes of gas sold and
(ii) $17,000 related to a decrease in the average price of gas sold were
substantially offset by an increase of approximately $57,000 related to an
increase in the average price of oil sold. Volumes of oil sold increased 5
barrels, while volumes of gas sold decreased 8,407 Mcf for the six months
ended June 30, 2004 as compared to the six months ended June 30, 2003. The
decrease in volumes of gas sold was primarily due to (i) positive prior
period volume adjustments made by the operators on two significant wells
during the six months ended June 30, 2003 and (ii) normal declines in
production. These decreases were partially offset by an increase in
volumes of gas sold due to the payout of one non-consent well.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $70,690 (22.6%) for the six months ended June
30, 2004 as compared to the six months ended June 30, 2003. This decrease
was primarily due to (i) workover expenses incurred on several wells
during the six months ended June 30, 2003 and (ii) a decrease in lease
operating expenses associated with the decreases in volumes of oil and gas
sold. These decreases were partially offset by workover expenses incurred
on one significant well during the six months ended June 30, 2004. As a
percentage of oil and gas sales, these expenses decreased to 16.5% for the
six months ended June 30, 2004 from 21.3% for the six months ended June
30, 2003. This percentage decrease was primarily due to the dollar
decrease in oil and gas production expenses.
Depreciation, depletion, and amortization of oil and gas properties
decreased $15,935 (22.6%) for the six months ended June 30, 2004 as
compared to the six months ended June 30, 2003. This decrease was
primarily due to (i) upward revisions in the estimates of remaining oil
and gas reserves at June 30, 2004 as compared to June 30, 2003 and (ii)
the decreases in volumes of oil and gas sold. As a percentage of oil and
gas sales, this expense decreased to 3.7% for the six months ended June
30, 2004 from 4.8% for the six months
-72-
ended June 30, 2003. This percentage decrease was primarily due to the
dollar decrease in depreciation, depletion, and amortization of oil and
gas properties.
General and administrative expenses increased $2,626 (2.3%) for the six
months ended June 30, 2004 as compared to the six months ended June 30,
2003. As a percentage of oil and gas sales, these expenses increased to
8.0% for the six months ended June 30, 2004 from 7.8% for the six months
ended June 30, 2003.
The Limited Partners have received cash distributions through June 30,
2004 totaling $24,227,051 or 141.35% of Limited Partners' capital
contributions.
II-G PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2003.
Three Months Ended June 30,
---------------------------
2004 2003
---------- ----------
Oil and gas sales $1,462,219 $1,556,629
Oil and gas production expenses $ 224,756 $ 304,690
Barrels produced 12,588 13,985
Mcf produced 194,394 238,346
Average price/Bbl $ 34.79 $ 26.57
Average price/Mcf $ 5.27 $ 4.97
As shown in the table above, total oil and gas sales decreased $94,410
(6.1%) for the three months ended June 30, 2004 as compared to the three
months ended June 30, 2003. Of this decrease, approximately $37,000 and
$219,000, respectively, were related to decreases in volumes of oil and
gas sold. These decreases were partially offset by increases of
approximately $104,000 and $58,000, respectively, related to increases in
the average prices of oil and gas sold. Volumes of oil and gas sold
decreased 1,397 barrels and 43,952 Mcf, respectively, for the three months
ended June 30, 2004 as compared to the three months ended June 30, 2003.
The decrease in volumes of oil sold was primarily due to a positive prior
period volume adjustment made by the operator on one significant well
during the three months ended June 30, 2003. The decrease in volumes of
gas sold was primarily due to (i) positive prior period volume adjustments
made by the operators on two significant wells during the three months
ended June 30, 2003 and (ii) normal declines in production. These
decreases were partially offset by an increase in volumes of gas sold due
to the payout of one non-consent well.
-73-
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $79,934 (26.2%) for the three months ended
June 30, 2004 as compared to the three months ended June 30, 2003. This
decrease was primarily due to (i) workover expenses incurred on several
wells during the three months ended June 30, 2003 and (ii) a decrease in
lease operating expenses associated with the decreases in volumes of oil
and gas sold. These decreases were partially offset by workover expenses
incurred on one significant well during the three months ended June 30,
2004. As a percentage of oil and gas sales, these expenses decreased to
15.4% for the three months ended June 30, 2004 from 19.6% for the three
months ended June 30, 2003. This percentage decrease was primarily due to
the dollar decrease in oil and gas production expenses.
Depreciation, depletion, and amortization of oil and gas properties
decreased $13,225 (22.0%) for the three months ended June 30, 2004 as
compared to the three months ended June 30, 2003. This decrease was
primarily due to the decreases in volumes of oil and gas sold. As a
percentage of oil and gas sales, this expense decreased to 3.2% for the
three months ended June 30, 2004 from 3.9% for the three months ended June
30, 2003. This percentage decrease was primarily due to the dollar
decrease in depreciation, depletion, and amortization of oil and gas
properties.
General and administrative expenses increased $8,332 (7.5%) for the three
months ended June 30, 2004 as compared to the three months ended June 30,
2003. As a percentage of oil and gas sales, these expenses increased to
8.1% for the three months ended June 30, 2004 from 7.1% for the three
months ended June 30, 2003. This percentage increase was primarily due to
the dollar increase in general and administrative expenses.
SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2003.
Six Months Ended June 30,
---------------------------
2004 2003
---------- ----------
Oil and gas sales $3,124,416 $3,125,482
Oil and gas production expenses $ 520,053 $ 666,180
Barrels produced 28,338 28,341
Mcf produced 456,862 475,363
Average price/Bbl $ 32.51 $ 28.29
Average price/Mcf $ 4.82 $ 4.89
As shown in the table above, total oil and gas sales remained relatively
constant for the six months ended June 30, 2004 and 2003. Decreases of
approximately (i) $90,000 related to a decrease in volumes of gas sold and
(ii) $30,000 related to a decrease in the average price of gas sold were
substantially offset by an increase of
-74-
approximately $120,000 related to an increase in the average price of oil
sold. Volumes of oil and gas sold decreased 3 barrels and 18,501 Mcf,
respectively, for the six months ended June 30, 2004 as compared to the
six months ended June 30, 2003. The decrease in volumes of gas sold was
primarily due to (i) positive prior period volume adjustments made by the
operators on two significant wells during the six months ended June 30,
2003 and (ii) normal declines in production. These decreases were
partially offset by an increase in volumes of gas sold due to the payout
of one non-consent well.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $146,127 (21.9%) for the six months ended June
30, 2004 as compared to the six months ended June 30, 2003. This decrease
was primarily due to (i) workover expenses incurred on several wells
during the six months ended June 30, 2003 and (ii) a decrease in lease
operating expenses associated with the decreases in volumes of oil and gas
sold. These decreases were partially offset by workover expenses incurred
on one significant well during the six months ended June 30, 2004. As a
percentage of oil and gas sales, these expenses decreased to 16.6% for the
six months ended June 30, 2004 from 21.3% for the six months ended June
30, 2003. This percentage decrease was primarily due to the dollar
decrease in oil and gas production expenses.
Depreciation, depletion, and amortization of oil and gas properties
decreased $33,009 (22.0%) for the six months ended June 30, 2004 as
compared to the six months ended June 30, 2003. This decrease was
primarily due to (i) upward revisions in the estimates of remaining oil
and gas reserves at June 30, 2004 as compared to June 30, 2003 and (ii)
the decreases in volumes of oil and gas sold. As a percentage of oil and
gas sales, this expense decreased to 3.8% for the six months ended June
30, 2004 from 4.8% for the six months ended June 30, 2003. This percentage
decrease was primarily due to the dollar decrease in depreciation,
depletion, and amortization of oil and gas properties.
General and administrative expenses increased $4,980 (2.2%) for the six
months ended June 30, 2004 as compared to the six months ended June 30,
2003. As a percentage of oil and gas sales, these expenses increased to
7.4% for the six months ended June 30, 2004 from 7.2% for the six months
ended June 30, 2003.
The Limited Partners have received cash distributions through June 30,
2004 totaling $50,586,371 or 135.92% of Limited Partners' capital
contributions.
-75-
II-H PARTNERSHIP
THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2003.
Three Months Ended June 30,
---------------------------
2004 2003
-------- --------
Oil and gas sales $351,848 $373,776
Oil and gas production expenses $ 55,315 $ 73,153
Barrels produced 2,924 3,254
Mcf produced 47,729 57,382
Average price/Bbl $ 34.81 $ 26.60
Average price/Mcf $ 5.24 $ 5.01
As shown in the table above, total oil and gas sales decreased $21,928
(5.9%) for the three months ended June 30, 2004 as compared to the three
months ended June 30, 2003. Of this decrease, approximately $9,000 and
$48,000, respectively, were related to decreases in volumes of oil and gas
sold. These decreases were partially offset by increases of approximately
$24,000 and $11,000, respectively, related to increases in the average
prices of oil and gas sold. Volumes of oil and gas sold decreased 330
barrels and 9,653 Mcf, respectively, for the three months ended June 30,
2004 as compared to the three months ended June 30, 2003. The decrease in
volumes of oil sold was primarily due to a positive prior period volume
adjustment made by the operator on one significant well during the three
months ended June 30, 2003. The decrease in volumes of gas sold was
primarily due to (i) positive prior period volume adjustments made by the
operators on two significant wells during the three months ended June 30,
2003 and (ii) normal declines in production. These decreases were
partially offset by an increase in volumes of gas sold due to the payout
of one non-consent well.
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $17,838 (24.4%) for the three months ended
June 30, 2004 as compared to the three months ended June 30, 2003. This
decrease was primarily due to (i) workover expenses incurred on several
wells during the three months ended June 30, 2003 and (ii) a decrease in
lease operating expenses associated with the decreases in volumes of oil
and gas sold. These decreases were partially offset by workover expenses
incurred on one significant well during the three months ended June 30,
2004. As a percentage of oil and gas sales, these expenses decreased to
15.7% for the three months ended June 30, 2004 from 19.6% for the three
months ended June 30, 2003. This percentage decrease was primarily due to
the dollar decrease in oil and gas production expenses.
-76-
Depreciation, depletion, and amortization of oil and gas properties
decreased $3,062 (21.6%) for the three months ended June 30, 2004 as
compared to the three months ended June 30, 2003. This decrease was
primarily due to the decreases in volumes of oil and gas sold. As a
percentage of oil and gas sales, this expense decreased to 3.2% for the
three months ended June 30, 2004 from 3.8% for the three months ended June
30, 2003. This percentage decrease was primarily due to the dollar
decrease in depreciation, depletion, and amortization of oil and gas
properties.
General and administrative expenses increased $6,296 (18.3%) for the three
months ended June 30, 2004 as compared to the three months ended June 30,
2003. As a percentage of oil and gas sales, these expenses increased to
11.5% for the three months ended June 30, 2004 from 9.2% for the three
months ended June 30, 2003. This percentage increase was primarily due to
the dollar increase in general and administrative expenses.
SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2003.
Six Months Ended June 30,
---------------------------
2004 2003
-------- --------
Oil and gas sales $748,081 $744,784
Oil and gas production expenses $126,365 $159,344
Barrels produced 6,576 6,584
Mcf produced 110,845 113,800
Average price/Bbl $ 32.53 $ 28.30
Average price/Mcf $ 4.82 $ 4.91
As shown in the table above, total oil and gas sales remained relatively
constant for the six months ended June 30, 2004 and 2003. Decreases of
approximately (i) $15,000 related to a decrease in volumes of gas sold and
(ii) $10,000 related to a decrease in the average price of gas sold were
substantially offset by an increase of approximately $28,000 related to an
increase in the average price of oil sold. Volumes of oil and gas sold
decreased 8 barrels and 2,955 Mcf, respectively, for the six months ended
June 30, 2004 as compared to the six months ended June 30, 2003. The
decrease in volumes of gas sold was primarily due to (i) positive prior
period volume adjustments made by the operators on two significant wells
during the six months ended June 30, 2003 and (ii) normal declines in
production. These decreases were partially offset by an increase in
volumes of gas sold due to the payout of one non-consent well.
-77-
Oil and gas production expenses (including lease operating expenses and
production taxes) decreased $32,979 (20.7%) for the six months ended June
30, 2004 as compared to the six months ended June 30, 2003. This decrease
was primarily due to (i) workover expenses incurred on several wells
during the six months ended June 30, 2003 and (ii) a decrease in lease
operating expenses associated with the decreases in volumes of oil and gas
sold. These decreases were partially offset by workover expenses incurred
on one significant well during the six months ended June 30, 2004. As a
percentage of oil and gas sales, these expenses decreased to 16.9% for the
six months ended June 30, 2004 from 21.4% for the six months ended June
30, 2003. This percentage decrease was primarily due to the dollar
decrease in oil and gas production expenses.
Depreciation, depletion, and amortization of oil and gas properties
decreased $7,136 (20.2%) for the six months ended June 30, 2004 as
compared to the six months ended June 30, 2003. This decrease was
primarily due to (i) upward revisions in the estimates of remaining oil
and gas reserves at June 30, 2004 as compared to June 30, 2003 and (ii)
the decreases in volumes of oil and gas sold. As a percentage of oil and
gas sales, this expense decreased to 3.8% for the six months ended June
30, 2004 from 4.7% for the six months ended June 30, 2003. This percentage
decrease was primarily due to the dollar decrease in depreciation,
depletion, and amortization of oil and gas properties.
General and administrative expenses increased $1,687 (2.4%) for the six
months ended June 30, 2004 as compared to the six months ended June 30,
2003. As a percentage of oil and gas sales, these expenses increased to
9.7% for the six months ended June 30, 2004 from 9.5% for the six months
ended June 30, 2003.
The Limited Partners have received cash distributions through June 30,
2004 totaling $11,759,364 or 128.22% of Limited Partners' capital
contributions.
-78-
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
The Partnerships do not hold any market risk sensitive instruments.
ITEM 4. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of the end of this period covered by this report, the principal
executive officer and principal financial officer conducted an
evaluation of the Partnerships' disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
and Exchange Act of 1934). Based on this evaluation, such officers
concluded that the Partnerships' disclosure controls and procedures
are effective to ensure that information required to be disclosed by
the Partnerships in reports filed under the Exchange Act is
recorded, processed, summarized, and reported accurately and within
the time periods specified in the Securities and Exchange Commission
rules and forms.
-79-
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
31.1 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the II-A Partnership.
31.2 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the II-A Partnership.
31.3 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the II-B Partnership.
31.4 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the II-B Partnership.
31.5 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the II-C Partnership.
31.6 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the II-C Partnership.
31.7 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the II-D Partnership.
31.8 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the II-D Partnership.
31.9 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the II-E Partnership.
31.10 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the II-E Partnership.
31.11 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the II-F Partnership.
31.12 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the II-F Partnership.
-80-
31.13 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the II-G Partnership.
31.14 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the II-G Partnership.
31.15 Certification by Dennis R. Neill required by Rule
13a-14(a)/15d-14(a) for the II-H Partnership.
31.16 Certification by Craig D. Loseke required by Rule
13a-14(a)/15d-14(a) for the II-H Partnership.
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
II-A Partnership.
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
II-B Partnership.
32.3 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
II-C Partnership.
32.4 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
II-D Partnership.
32.5 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
II-E Partnership.
32.6 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
II-F Partnership.
32.7 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
II-G Partnership.
32.8 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the
II-H Partnership.
-81-
(b) Reports on Form 8-K.
None.
-82-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-A
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-B
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-C
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-D
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-E
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-F
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-G
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP II-H
(Registrant)
BY: GEODYNE RESOURCES, INC.
General Partner
Date: August 13, 2004 By: /s/Dennis R. Neill
--------------------------------
(Signature)
Dennis R. Neill
President
Date: August 13, 2004 By: /s/Craig D. Loseke
--------------------------------
(Signature)
Craig D. Loseke
Chief Accounting Officer
-83-
INDEX TO EXHIBITS
-----------------
Exh.
No. Exhibit
- ---- -------
31.1 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-A.
31.2 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-A.
31.3 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-B.
31.4 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-B.
31.5 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-C.
31.6 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-C.
31.7 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-D.
31.8 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-D.
31.9 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-E.
31.10 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-E.
31.11 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-F.
31.12 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-F.
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31.13 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-G.
31.14 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-G.
31.15 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-H.
31.16 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for
the Geodyne Energy Income Limited Partnership II-H.
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy
Income Limited Partnership II-A.
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy
Income Limited Partnership II-B.
32.3 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy
Income Limited Partnership II-C.
32.4 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy
Income Limited Partnership II-D.
32.5 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy
Income Limited Partnership II-E.
32.6 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy
Income Limited Partnership II-F.
32.7 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy
Income Limited Partnership II-G.
32.8 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy
Income Limited Partnership II-H.
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