10-Q 1 pdc10q00d304.htm CONFORMED COPY

CONFORMED COPY

 

 

 

 

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

 

[X] Quarterly Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the period ended March 31, 2004

or

[ ] Transition Report Pursuant to Section 13 of 15(d) of

the Securities Exchange Act of 1934

For the transition period from to

 

 

 

Commission file number 333-41977-12

I.R.S. Employer Identification Number 55-0774071

PDC 2000-D LIMITED PARTNERSHIP

(A West Virginia Limited Partnership)

103 East Main Street

Bridgeport, WV 26330

Telephone: (304) 842-6256

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 XX No

Indicate by check mark whether the registrant is an accelerated filer (as definition in Rule 12b-2 of the Exchange Act.) Yes No XX

 

 

 

PDC 2000-D LIMITED PARTNERSHIP

(A West Virginia Limited Partnership)

 

INDEX

PART I - FINANCIAL INFORMATION

Page No.

       

Item 1.

Item Financial Statements

Balance Sheets - March 31, 2004 (unaudited) and December 31, 2003

1

       

Statements of Operations - Three Months Ended March 31, 2004

and 2003 (unaudited)

2

       

Statement of Partners' Equity - Three Months Ended March 31, 2004 (unaudited)

3

       

Statements of Cash Flows- Three Months Ended March 31, 2004 and 2003 (unaudited)

4

       
   

Notes to Financial Statements

5

       

Item 2.

Management's Discussion and Analysis of Financial

Condition and Results of Operations


5

       

Item 3.

Quantitative and Qualitative Disclosure About Market Rate Risk

7

Item 4.

Controls and Procedures

8

       

PART II OTHER INFORMATION

 
       

Item 1.

Legal Proceedings

9

       

Item 6.

Exhibits and Reports on Form 8-K

9

       
       

 

 

 

 

 

 

 

 

 

 

 

PDC 2000-D LIMITED PARTNERSHIP

(A West Virginia Limited Partnership)

Balance Sheets

March 31, 2004 and December 31, 2003

 

 

 

     

      Assets

   
 

2004

2003

 

(Unaudited)

 
     

Current assets:

   

 Cash

$     1,757

1,484

 Accounts receivable - oil and gas revenues

  572,318

   506,329

          Total current assets

574,075

507,813

     

Oil and gas properties, successful efforts method

14,601,009

14,601,009

     Less accumulated depreciation, depletion

   

and amortization

 4,996,101

 4,770,461

 

 9,604,908

 9,830,548

     
 

$ 10,178,983

 10,338,361

     

     Liabilities and Partners' Equity

   
     

Current liabilities:

   

 Accrued expenses

$  36,228

   26,667

          Total current liabilities

36,228

26,667

     

Asset retirement obligations

16,520

16,520

     

Partners' Equity

10,126,235

 10,295,174

     
     
 

$10,178,983

 10,338,361

See accompanying notes to financial statements.

 

 

 

 

 

 

 

 

 

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PDC 2000-D LIMITED PARTNERSHIP

(A West Virginia Limited Partnership)

Statements of Operations

Three Months ended March 31, 2004 and 2003

(Unaudited)

 

 

2004

2003

 

2002

Revenues:

       

Sales of oil and gas

$ 880,963

  976,228 

 

633,245 

Interest income

297

       496 

 

      593 

 

881,260

976,724 

 

633,838 

Expenses:

       

Lifting cost

203,004

235,485 

 

386,716 

Direct administration cost

24

304 

 

223 

Depreciation, depletion,

and amortization

225,640

 283,417 

  197,634 

 

428,668

 519,206 

  584,573 

Net income before cumulative effect of change

  in accounting principle

452,592


   457,518 

 


49,265  

         

Cumulative effect of change in accounting principle

-    

( 5,321)

    - 

         

Net income

$ 452,592

452,197 

 

 

 


49,265

Net income per limited partner unit before cumulative effect of change in accounting principle

$ 290

293 

 

   

Cumulative effect of change in accounting principle

-    

(4)

 

 

      52

Net income per limited partner unit

$ 290

289 

   
         

See accompanying notes to financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

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PDC 2000-D LIMITED PARTNERSHIP

(A West Virginia Limited Partnership)

Statement of Partners' Equity

Three months ended March 31, 2004

(Unaudited)

 

 

Limited Partners


Managing

General Partner

Accumulated

Other

Comprehensive

Income (loss)



Total

Balance December 31, 2003

$8,071,488 

2,225,928 

(2,242)

10,295,174 

         

Distributions to partners

(487,970)

(121,992)

-    

(609,962)

         

Comprehensive income:

       

Net income

 362,074 

90,518 

-    

452,592  

Change in fair value of

  outstanding hedging positions

   


(11,569)

 

Less reclassification adjustments   for settled contracts included in

  net income

   


       -    

 

Other comprehensive loss

   

(11,569)

    (11,569)

Comprehensive income

             

             

                

    441,023 

         

Balance March 31, 2004

$ 7,945,592 

 2,194,454 

   (13,811)

 10,126,235 

         

See accompanying notes to financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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PDC 2000-D LIMITED PARTNERSHIP

(A West Virginia Limited Partnership)

Statements of Cash Flows

Three Months ended March 31, 2004 and 2003

(Unaudited)

 

 

2004

2003

Cash flows from operating activities:

   

Net income

$452,592 

452,197 

Adjustments to reconcile net income to net cash

   

  provided from operating activities:

   

  Depreciation, depletion and amortization

225,640 

283,417  

  Cumulative effect of change in accounting principle

-     

5,321  

  Accretion of asset retirement obligations

-     

234  

  Changes in operating assets and liabilities:

   

  Increase in accounts receivable - oil and gas revenues

(65,989) 

(1,559)

  Decrease in accounts payable

   (2,008) 

    (8,832)

         Net cash provided from operating activities

   610,235 

  730,778 

     

Cash flows from financing activities:

   

  Distributions to partners

  (609,962)

  (730,351)

          Net cash used by financing activities

(609,962)

(730,351)

     

Net increase in cash

273 

427  

Cash at beginning of period

     1,484 

     3,729  

Cash at end of period

$     1,757 

     4,156  

     

See accompanying notes to financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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PDC 2000-D LIMITED PARTNERSHIP

(A West Virginia Limited Partnership)

Notes to Financial Statements

(Unaudited)

 

1. Accounting Policies

Reference is hereby made to the Partnership's Annual Report on Form 10-K for 2003, which contains a summary of significant accounting policies followed by the Partnership in the preparation of its financial statements. These policies were also followed in preparing the quarterly report included herein.

2. Basis of Presentation

The Management of the Partnership believes that all adjustments (consisting of only normal recurring accruals) necessary to a fair statement of the results of such periods have been made. The results of operations for the three months ended March 31, 2004 are not necessarily indicative of the results to be expected for the full year.

3. Oil and Gas Properties

The Partnership follows the successful efforts method of accounting for the cost of exploring for and developing oil and gas reserves. Under this method, costs of development wells, including equipment and intangible drilling costs related to both producing wells and developmental dry holes, and successful exploratory wells are capitalized and amortized on an annual basis to operations by the units-of-production method using estimated proved developed reserves which will be determined at year end by the Managing General Partner's petroleum engineer. If a determination is made that an exploratory well has not discovered economically producible reserves, then its costs are expensed as dry hole costs.

4. Revenue Recognition

Sales of oil and natural gas are recognized when the rights and responsibilities of ownership pass to the purchaser and are net of royalties.

5. Derivative Instruments and Hedging Activities

The Managing General Partner utilizes commodity based derivative instruments as hedges to manage a portion of the Partnership's exposure to price volatility stemming from natural gas production. These instruments consist of costless collars and option contracts traded on the CIG (Colorado Interstate Gas Index). The costless collars and option contracts hedge committed and anticipated natural gas sales generally forecasted to occur within a 24 month period. The Managing General Partner does not hold or issue derivatives for trading or speculative purposes.

6. Change in Accounting Principle

In June 2001, the Financial Accounting Standard Board issued SFAS No. 143, "Accounting for Asset Retirement Obligations" that requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. This statement is effective for fiscal years beginning after June 15, 2002. The Partnership adopted SFAS No. 143 on January 1, 2003 and recorded a net asset of $10,264 and a related liability of $15,585 (using a 6% discount rate) and a cumulative effect of change in accounting principle on prior years of $(5,321).

 

 

 

 

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PDC 2000-D LIMITED PARTNERSHIP

(A West Virginia Limited Partnership)

Notes to Financial Statements

(Unaudited)

 

 

New Accounting Standards

A reporting issue has arisen regarding the application of certain provisions of SFAS No. 141 and SFAS No. 142 to companies in the extractive industries, including oil and gas companies. The issue is whether SFAS No. 142 requires registrants to classify the costs of mineral rights (leases) associated with extracting oil and gas intangible assets in the balance sheets, apart from other capitalized oil and gas property costs, and provide specific footnote disclosures. Historically, the Partnership has included the costs of mineral rights associated with extracting oil and gas as a component of oil and gas properties. If it is ultimately determined that SFAS No. 142 requires oil and gas companies to classify costs of mineral rights associated with extracting oil and gas as a separate intangible assets line item on the balance sheet, the Partnership would be required to reclassify the historical cost of approximately $784,456 of mineral rights associated with developed oil and gas properties as of March 31, 2004 and December 31, 2003 out of oil and gas properties and into a separate intangible mineral rights assets line item. The Partnership's total balance sheet, cash flows and results of operations would not be affected since such intangible assets would continue to be amortized and assessed for impairment.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources

The Partnership was funded with initial Limited and Additional General Partner contributions of $25,000,000 and the Managing General Partner's cash contribution of $5,437,500 in accordance with the Agreement. After payment of syndication costs of $2,625,000 and a one-time management fee to the Managing General Partner of $625,000 the Partnership had available cash of $27,187,500 for Partnership activities.

The Partnership began exploration and development activities subsequent to the funding of the Partnership and completed well drilling activities by December 31, 2001. Forty-three wells have been drilled, of which forty-one have been completed as producing wells. No additional wells will be drilled.

The Partnership had net working capital at March 31, 2004 of $537,847.

Operations are expected to be conducted with available funds and revenues generated from oil and gas activities. No bank borrowings are anticipated.

Results of Operations

Three months ended March 31, 2004 compared with March 31, 2003

Oil and gas sales for the three months ended March 31, 2004 were $880,963 compared to $976,228 for the three months ended March 31, 2003. For the three months ended March 31, 2004, the Partnership sold 162,139 Mcf of gas and 6,485 barrels of oil at average prices of $4.07 and $33.97, respectively. This compared with 197,277 Mcf of gas and 10,965 barrels of oil at average sales prices of $3.24 and $30.72, respectively for the three months ended March 31, 2003. Lifting cost per Mcfe in the first quarter of 2004 amounted to $1.01 as compared to $.90 for the first quarter of 2003. This increase is partially attributed to the increase in severance and property taxes. The fixed costs of operations and well maintenance are allocated to lower production volumes, therefore increasing the lifting cost per Mcfe. Depreciation, depletion and amortization decreased from $283,417 for the first quarter ended March 31, 2003 to $225,640 for the first quarter ended March 31, 2004, as a result of lower volumes of natural gas sold. Cash distributions to the partners amounted to $609,962 in the first quarter of 2004.

The Partnership's revenue from oil and gas will be affected by changes in prices. As a result of changes in federal regulations, gas prices are highly dependent on the balance between supply and demand. The Partnership's gas sales prices are subject to increase and decrease based on various market sensitive indices.

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PDC 2000-D LIMITED PARTNERSHIP

(A West Virginia Limited Partnership)

Notes to Financial Statements

(Unaudited)

 

 

Critical Accounting Policies

Certain accounting policies are very important to the portrayal of Partnership's financial condition and results of operations and require management's most subjective or complex judgments. The policies are as follows:

Revenue Recognition. Sales of natural gas are recognized when the rights and responsibilities of ownership pass to the purchasers and are net of royalties.

Impairment of Long-Lived Assets. The Partnership assesses impairment of capitalized costs of proved oil and gas properties by comparing net capitalized costs to undiscounted future cash flows on a field-by-field basis using expected prices. Prices utilized in each year's calculation for measurement purposes and expected costs are held constant throughout the life of the properties. If net capitalized costs exceed undiscounted future net cash flow, the measurement of impairment is based on estimated fair value which would consider future discounted cash flows.

The judgment used in applying the above policies is based on management's evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from those estimates. See additional discussions in this Management's Discussion and Analysis.

Item 3. Quantitative and Qualitative Disclosure About Market Rate Risk

Market-Sensitive Instruments and Risk Management

The Partnership's primary market risk exposure is commodity price risk. This exposure is discussed in detail below:

Commodity Price Risk

Natural gas and oil prices have been unusually volatile for the past few years, and the Partnership anticipates continued volatility in the future. Currently, the NYMEX futures reflect a market expectation of gas prices at Henry Hub close to or above record prices per million Btu's (mmbtu). The CIG price index has historically ranged from 80% to 90% of the NYMEX price. These prices look strong for 2004 although natural gas storage levels are near normal levels following a period when storage levels had been at a five-year low. The Partnership believes this situation creates the possibility of both periods of low prices and continued high prices.

Because of the uncertainty surrounding natural gas prices the Managing General Partner used hedging agreements to manage some of the impact of fluctuations in prices for the Managing General Partner and its various limited partnership's share of production. Through October of 2005 the Partnership has in place a series of costless collars and option contracts. Under the collar arrangements, if the applicable index rises above the ceiling price, the Partnership pays the counterparty, however if the index drops below the floor the counterparty pays the Partnership. For the period from April 2004 through October 2004, the Partnership has floors in place in a range from $3.20 to $4.17 on 5,057 Mmbtu of monthly production and ceilings in place at $4.70 on 2,528 Mmbtu of monthly production. Open option contracts maturing in the next twelve months are for the sales of 17,699 Mmbtu of natural gas with an average ceiling price of $4.70 and for the sale of 35,398 Mmbtu of natural gas with an average floor price of $3.69 and fair value of $(12,003). The maximum term over which the Partnership is hedging exposure to variability of cash flows for commodity risk price is 19 months. For the period April 2005 through October 2005, the Partnership has floors in place at $3.10 on 3,371 Mmbtu of monthly production and ceilings in place at $4.43 on 1,686 Mmbtu of monthly production. As of March 31, 2004 the Partnership had total option contracts for the sale of 29,498 Mmbtu of natural gas with an average ceiling price of $4.59 and for the sale of 58,996 Mmbtu of natural gas with an average floor price of $3.45. The fair value of all floors and ceilings on natural gas as of March 31, 2004 is $(9,454).

 

-7-

 

PDC 2000-D LIMITED PARTNERSHIP

(A West Virginia Limited Partnership)

Notes to Financial Statements

(Unaudited)

 

 

 

As of March 31, 2004, the Partnership had total open oil future contracts on 3,315 barrels of oil with a total contract amount of $104,839 and a fair value of $(4,357). All of the oil future contracts mature within the next twelve months.

Disclosure of Limitations

As the information above incorporates only those exposures that exist at March 31, 2004, it does not consider those exposures or positions which could arise after that date. As a result, the Partnership's ultimate realized gain or loss with respect to commodity price fluctuations will depend on the exposures that arise during the period, the Partnership's hedging strategies at the time and commodity prices at the time.

Item 4. Controls and Procedures

Under the supervision and with the participation of the Managing General Partner's management, including the Managing General Partner's Chief Executive Officer and Chief Financial Officer, the Managing General Partner has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Exchange Act Rule 13a-14(c)) as of the end of this fiscal quarter, and, based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective in all material respects, including those to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the Commission's rules and forms, and is accumulated and communicated to management, including the Managing General Partner's Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely disclosure. There have been no significant changes in our internal control or in other factors that have materially affected or are reasonably likely to materially affect these controls that occurred during the Partnership's last fiscal quarter and subsequent to the date of their evaluation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-8-

 

 

 

 

 

CONFORMED COPY

PART II - OTHER INFORMATION

 

Item 1.     Legal Proceedings

            None.

Item 6.    Exhibits and Reports on Form 8-K

           (a) Exhibits

Exhibit Name

Exhibit

Number

 
     

Rule 13a-14(a)/15d-14(a) Certifications by

 Chief Executive Officer

31

 

Rule 13a-14(a)/15d-14(a)Certification by

 Chief Financial Officer

31

 

Section 1350 Certifications by Chief Executive Officer

32

 
     

Section 1350 Certifications by Chief Financial Officer

32

 

 

           (b) No reports on Form 8-K have been filed during the quarter ended

                March 31, 2004.

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.

 

PDC 2000-D Limited Partnership

(Registrant)


By its Managing General Partner

Petroleum Development Corporation

   
   



Date: May 13, 2004

/s/ Steven R. Williams

Steven R. Williams

President

   
   



Date: May 13, 2004

/s/ Darwin L. Stump

Darwin L. Stump

Chief Financial Officer

 

 

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