-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K3lWYK0fFWoKrZR2r+iFHY04OV2QH3mDAYnHSFJEqxvee808Kb/tTTV7TwS0+1rz +9M5e9vy9Ughw6lWOeQYbQ== 0000888239-02-000146.txt : 20020806 0000888239-02-000146.hdr.sgml : 20020806 20020805154738 ACCESSION NUMBER: 0000888239-02-000146 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DYCO OIL & GAS PROGRAM 1984-2 CENTRAL INDEX KEY: 0000725262 STANDARD INDUSTRIAL CLASSIFICATION: DRILLING OIL & GAS WELLS [1381] IRS NUMBER: 411479080 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13578 FILM NUMBER: 02719675 BUSINESS ADDRESS: STREET 1: SAMSON PLZ STREET 2: TWO W SECOND ST CITY: TULSA STATE: OK ZIP: 74103 BUSINESS PHONE: 9185831791 MAIL ADDRESS: STREET 1: SAMSON PLAZA STREET 2: TWO WEST SECOND ST CITY: TULSA STATE: OK ZIP: 74103 10-Q 1 d84-2.txt QUARTERLY REPORT 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 Commission File Number June 30, 2002 0-13578 DYCO OIL AND GAS PROGRAM 1984-2 (A LIMITED PARTNERSHIP) (Exact Name of Registrant as specified in its charter) Minnesota 41-1479080 (State or other jurisdiction (I.R.S. Employer Identification of incorporation or Number) organization) Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103 - ------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (918) 583-1791 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ -1- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP BALANCE SHEETS (Unaudited) ASSETS June 30, December 31, 2002 2001 ---------- ------------ CURRENT ASSETS: Cash and cash equivalents $114,524 $ 62,380 Accrued oil and gas sales 41,676 35,769 -------- -------- Total current assets $156,200 $ 98,149 NET OIL AND GAS PROPERTIES, utilizing the full cost method 228,713 243,578 DEFERRED CHARGE 17,324 17,324 -------- -------- $402,237 $359,051 ======== ======== LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES: Accounts payable $ 7,007 $ 4,971 -------- -------- Total current liabilities $ 7,007 $ 4,971 ACCRUED LIABILITY $ 8,930 $ 7,412 PARTNERS' CAPITAL: General Partner, 52 general partner units $ 3,862 $ 3,466 Limited Partners, issued and outstanding, 5,200 Units 382,438 343,202 -------- -------- Total Partners' capital $386,300 $346,668 -------- -------- $402,237 $359,051 ======== ======== The accompanying condensed notes are an integral part of these financial statements. -2- DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001 (Unaudited) 2002 2001 --------- --------- REVENUES: Oil and gas sales $64,227 $101,987 Interest 327 1,109 ------- -------- $64,554 $103,096 COSTS AND EXPENSES: Oil and gas production $15,333 $ 17,743 Depreciation, depletion, and amortization of oil and gas properties 8,183 20,834 General and administrative (Note 2) 11,650 11,974 ------- -------- $35,166 $ 50,551 ------- -------- NET INCOME $29,388 $ 52,545 ======= ======== GENERAL PARTNER (1%) - net income $ 294 $ 526 ======= ======== LIMITED PARTNERS (99%) - net income $29,094 $ 52,019 ======= ======== NET INCOME PER UNIT $ 5.60 $ 10.00 ======= ======== UNITS OUTSTANDING 5,252 5,252 ======= ======== The accompanying condensed notes are an integral part of these financial statements. -3- DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (Unaudited) 2002 2001 --------- --------- REVENUES: Oil and gas sales $115,338 $315,394 Interest 600 2,804 -------- -------- $115,938 $318,198 COSTS AND EXPENSES: Oil and gas production $ 30,697 $ 47,376 Depreciation, depletion, and amortization of oil and gas properties 14,774 36,579 General and administrative (Note 2) 30,835 32,562 -------- -------- $ 76,306 $116,517 -------- -------- NET INCOME $ 39,632 $201,681 ======== ======== GENERAL PARTNER (1%) - net income $ 396 $ 2,017 ======== ======== LIMITED PARTNERS (99%) - net income $ 39,236 $199,664 ======== ======== NET INCOME PER UNIT $ 7.55 $ 38.40 ======== ======== UNITS OUTSTANDING 5,252 5,252 ======= ======== The accompanying condensed notes are an integral part of these financial statements. -4- DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (Unaudited) 2002 2001 ---------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 39,632 $201,681 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, and amortization of oil and gas properties 14,774 36,579 (Increase) decrease in accrued oil and gas sales ( 5,907) 21,157 Decrease in deferred charge - 2,434 Increase (decrease) in accounts payable 2,036 ( 576) Increase in accrued liability 1,518 - -------- -------- Net cash provided by operating activities $ 52,053 $261,275 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from the sale of oil and gas properties $ 91 $ 207 -------- -------- Net cash provided by investing activities $ 91 $ 207 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions $ - ($315,120) -------- -------- Net cash used by financing activities $ - ($315,120) -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 52,144 ($ 53,638) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 62,380 115,963 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $114,524 $ 62,325 ======== ======== The accompanying condensed notes are an integral part of these financial statements. -5- DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP CONDENSED NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 (Unaudited) 1. ACCOUNTING POLICIES ------------------- The balance sheet as of June 30, 2002, statements of operations for the three and six months ended June 30, 2002 and 2001, and statements of cash flows for the six months ended June 30, 2002 and 2001 have been prepared by Dyco Petroleum Corporation ("Dyco"), the General Partner of the Dyco Oil and Gas Program 1984-2 Limited Partnership (the "Program"), without audit. In the opinion of management all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at June 30, 2002, results of operations for the three and six months ended June 30, 2002 and 2001, and changes in cash flows for the six months ended June 30, 2002 and 2001 have been made. Information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Program's Annual Report on Form 10-K for the year ended December 31, 2001. The results of operations for the period ended June 30, 2002 are not necessarily indicative of the results to be expected for the full year. OIL AND GAS PROPERTIES ---------------------- Oil and gas operations are accounted for using the full cost method of accounting. All productive and non-productive costs associated with the acquisition, exploration and development of oil and gas reserves are capitalized. The Program's calculation of depreciation, depletion, and amortization includes estimated future expenditures to be incurred in developing proved reserves and estimated dismantlement and abandonment costs, net of estimated salvage values. In the event the unamortized cost of oil and gas properties being amortized exceeds the full cost ceiling (as defined by the Securities and Exchange Commission), the excess is charged to expense in the period during which such excess occurs. Sales and abandonments of properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved oil and gas reserves. -6- The provision for depreciation, depletion, and amortization of oil and gas properties is calculated by dividing the oil and gas sales dollars during the period by the estimated future gross income from the oil and gas properties and applying the resulting rate to the net remaining costs of oil and gas properties that have been capitalized, plus estimated future development costs. 2. TRANSACTIONS WITH RELATED PARTIES --------------------------------- Under the terms of the Program's partnership agreement, Dyco is entitled to receive a reimbursement for all direct expenses and general and administrative, geological and engineering expenses it incurs on behalf of the Program. During the three months ended June 30, 2002 and 2001, the Program incurred such expenses totaling $11,650 and $11,974, respectively, of which $10,569 was paid each period to Dyco and its affiliates. During the six months ended June 30, 2002 and 2001, the Program incurred such expenses totaling $30,835 and $32,562, respectively, of which $21,138 was paid each period to Dyco and its affiliates. Affiliates of the Program operate certain of the Program's properties. Their policy is to bill the Program for all customary charges and cost reimbursements associated with these activities. 3. TERMINATION ----------- On July 31, 2002, Dyco mailed a notice letter (the "Notice") to the limited partners of its election to terminate the Program effective October 31, 2002 pursuant to the terms of the Partnership Agreement governing the Program (the "Agreement") and the Minnesota Revised Limited Partnership Act (the "Act"). As provided in the Agreement and under the Act, the Notice will cause dissolution of the Program ninety (90) days from July 31, 2002, PROVIDED, HOWEVER, that the limited partners of the Program may elect to reconstitute the Program with a new general partner as further described below. Due to this uncertainty these financial statements have been prepared on a going concern basis rather than a liquidation basis. It is expected that Dyco as general partner will file a certificate dissolving the partnership with the Minnesota Secretary of State on or about October 31, 2002 and, immediately thereafter, deregister the Program with the Securities & Exchange Commission ("SEC"). -7- Upon dissolution, Dyco and its affiliates may, pursuant to the Agreement, withdraw their limited partner interests in any or all of the Program's properties by taking their share of the Program's properties in-kind. Dyco and its affiliates intend to avail themselves of this provision upon dissolution. As part of the dissolution process, Dyco will actively negotiate for the sale of the producing properties attributable to the remaining limited partners' interests. These properties will be offered to all interested parties through normal oil and gas property auction processes as well as appropriate negotiated transactions. It is possible that Dyco or its affiliates may participate in any public auction of the remaining properties and may be the successful high bidder on some or all of the properties. Following the sale of the remaining properties and the calculation of other assets and liabilities of the Program, any net cash will be paid as a final liquidating distribution to all of the remaining partners in the Program. It is expected that any such distribution will be made no later than December 31, 2002. As provided by the Act and the Agreement, a majority in interest of the limited partners may vote to reconstitute the Program and continue its activities as a partnership with a newly appointed general partner. Such a proposal will be presented to the limited partners upon the written request of limited partners representing at least ten (10%) percent of the Program's total units. Consideration of such a proposal would require that a proxy statement be filed with the SEC. Dyco and its affiliates own approximately 44% of the Program's units. It is expected that they would vote "no" on any vote to reconstitute the Program. -8- 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 Program. 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. TERMINATION - ----------- On July 31, 2002 Dyco notified the limited partners of its election to terminate the Program effective October 31, 2002. See Item 5 - Other Information for more information regarding termination of the Program. However, as described in Item 5 there is a possibility that the Program will be reconstituted. Due to this uncertainty the financial statements and management's discussion and analysis contained in this Quarterly Report on Form 10-Q have been prepared on a going concern basis rather than a liquidation basis. In the event the Program is terminated as expected, then all statements in this Quarterly Report regarding future income, expenses, or other items will not be applicable. -9- LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Net proceeds from the Program's operations less necessary operating capital are distributed to investors on a quarterly basis. The net proceeds from production are not reinvested in productive assets, except to the extent that producing wells are improved or where methods are employed to permit more efficient recovery of the Program's reserves which would result in a positive economic impact. The Program's available capital from subscriptions has been spent on oil and gas drilling activities. There should not be any further material capital resource commitments in the future. The Program has no debt commitments. Management believes that cash for ordinary operational purposes will be provided by current oil and gas production. NEW ACCOUNTING PRONOUNCEMENTS Below is a brief description of a Financial Accounting Standard ("FAS") recently issued by the Financial Accounting Standards Board ("FASB") which may have an impact on the Program's 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 Program). FAS No. 143 will require the recording of the fair value of liabilities associated with the retirement of long-lived assets (mainly plugging and abandonment costs for the Program's depleted wells), in the period in which the liabilities are incurred (at the time the wells are drilled). Management has not yet determined the effect of adopting this statement on the Program's financial condition or results of operations. RESULTS OF OPERATIONS - --------------------- GENERAL DISCUSSION The following general discussion should be read in conjunction with the analysis of results of operations provided below. The most important variables affecting the Program's revenues are the prices received for the sale of oil and gas and the volumes of oil and gas produced. The Program's production is mainly natural gas, so such pricing and volumes are the most significant factors. -10- Historically, oil and gas prices have been volatile and are likely to continue to be volatile. As a result, forecasting future prices is subject to great uncertainty and inaccuracy. Substantially all of the Program's gas reserves are being sold on the "spot market". Prices on the spot market are subject to wide seasonal and regional pricing fluctuations due to the highly competitive nature of the spot market. Such spot market sales are generally short-term in nature and are dependent upon the obtaining of transportation services provided by pipelines. It is likewise difficult to predict production volumes. However, oil and gas are depleting assets, so it can be expected that production levels will decline over time. Gas prices in early 2001 were significantly higher than the Program's historical average. This was attributable to the higher prices for crude oil, a substitute fuel in some markets, and reduced production due to lower capital investments in 1998 and 1999. However, prices for both oil and gas soon declined and were relatively lower in late 2001 and early 2002 as a result of the declining economy and relatively mild winter weather. Recently, prices of oil and gas have improved, to some extent due to unrest in the Middle East. It is not possible to accurately predict future trends. THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2001. Three Months Ended June 30, --------------------------- 2002 2001 ------- -------- Oil and gas sales $64,227 $101,987 Oil and gas production expenses $15,333 $ 17,743 Barrels produced 73 37 Mcf produced 18,960 23,267 Average price/Bbl $ 23.59 $ 25.84 Average price/Mcf $ 3.30 $ 4.34 As shown in the table above, total oil and gas sales decreased $37,760 (37.0%) for the three months ended June 30, 2002 as compared to the three months ended June 30, 2001. Of this decrease, approximately (i) $20,000 was related to a decrease in the average price of gas sold and (ii) $19,000 was related to a decrease in volumes of gas sold. Volumes of oil sold increased 36 barrels, while volumes of gas sold decreased 4,307 Mcf for the three months ended June 30, 2002 as compared to the three months ended June 30, 2001. The decrease in volumes of gas sold was primarily due to normal declines in production. Average oil and gas prices decreased to $23.59 per barrel and $3.30 per Mcf, respectively, for the three months ended June 30, 2002 from $25.84 per barrel and $4.34 per Mcf, respectively, for the three months ended June 30, 2001. -11- Oil and gas production expenses (including lease operating expenses and production taxes) decreased $2,410 (13.6%) for the three months ended June 30, 2002 as compared to the three months ended June 30, 2001. This decrease was primarily due to 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 23.9% for the three months ended June 30, 2002 from 17.4% for the three months ended June 30, 2001. This percentage increase was primarily due to the decreases in the average prices of oil and gas sold. Depreciation, depletion, and amortization of oil and gas properties decreased $12,651 (60.7%) for the three months ended June 30, 2002 as compared to the three months ended June 30, 2001. This decrease was primarily due to (i) the decreases in the average prices of oil and gas sold and (ii) the decrease in volumes of gas sold. As a percentage of oil and gas sales, this expense decreased to 12.7% for the three months ended June 30, 2002 from 20.4% for the three months ended June 30, 2001. This percentage decrease was primarily due to the dollar decrease in depreciation, depletion, and amortization. General and administrative expenses decreased $324 (2.7%) for the three months ended June 30, 2002 as compared to the three months ended June 30, 2001. As a percentage of oil and gas sales, these expenses increased to 18.1% for the three months ended June 30, 2002 from 11.7% for the three months ended June 30, 2001. This percentage increase was primarily due to the decrease in oil and gas sales. SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2001. Six Months Ended June 30, ------------------------- 2002 2001 -------- -------- Oil and gas sales $115,338 $315,394 Oil and gas production expenses $ 30,697 $ 47,376 Barrels produced 98 97 Mcf produced 40,620 52,338 Average price/Bbl $ 22.59 $ 27.26 Average price/Mcf $ 2.78 $ 5.98 As shown in the table above, total oil and gas sales decreased $200,056 (63.4%) for the six months ended June 30, 2002 as compared to the six months ended June 30, 2001. Of this decrease, approximately (i) $130,000 was related to a decrease in the average price of gas sold and (ii) $70,000 was related to a decrease in volumes of gas sold. Volumes of oil sold increased 1 barrel, while volumes of gas sold decreased 11,718 Mcf for the six months ended June 30, 2002 -12- as compared to the six months ended June 30, 2001. The decrease in volumes of gas sold was primarily due to normal declines in production. Average oil and gas prices decreased to $22.59 per barrel and $2.78 per Mcf, respectively, for the six months ended June 30, 2002 from $27.26 per barrel and $5.98 per Mcf, respectively, for the six months ended June 30, 2001. Oil and gas production expenses (including lease operating expenses and production taxes) decreased $16,679 (35.2%) for the six months ended June 30, 2002 as compared to the six months ended June 30, 2001. This decrease was primarily due to 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 26.6% for the six months ended June 30, 2002 from 15.0% for the six months ended June 30, 2001. This percentage increase was primarily due to the decreases in the average prices of oil and gas sold. Depreciation, depletion, and amortization of oil and gas properties decreased $21,805 (59.6%) for the six months ended June 30, 2002 as compared to the six months ended June 30, 2001. This decrease was primarily due to (i) the decreases in the average prices of oil and gas sold and (ii) the decrease in volumes of gas sold. As a percentage of oil and gas sales, this expense increased to 12.8% for the six months ended June 30, 2002 from 11.6% for the six months ended June 30, 2001. This percentage increase was primarily due to the decreases in the average prices of oil and gas sold. General and administrative expenses decreased $1,727 (5.3%) for the six months ended June 30, 2002 as compared to the six months ended June 30, 2001. As a percentage of oil and gas sales, these expenses increased to 26.7% for the six months ended June 30, 2002 from 10.3% for the six months ended June 30, 2001. This percentage increase was primarily due to the decrease in oil and gas sales. -13- ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Program does not hold any market risk sensitive instruments. -14- PART II. OTHER INFORMATION ITEM 5. OTHER INFORMATION On July 31, 2002, Dyco mailed a notice letter (the "Notice") to the limited partners of its election to terminate the Program effective October 31, 2002 pursuant to the terms of the Partnership Agreement governing the Program (the "Agreement") and the Minnesota Revised Limited Partnership Act (the "Act"). A copy of the Notice is attached to this Quarterly Report on Form 10-Q as an Exhibit. As provided in the Agreement and under the Act, the Notice will cause dissolution of the Program ninety (90) days from July 31, 2002, PROVIDED, HOWEVER, that the limited partners of the Program may elect to reconstitute the Program with a new general partner as further described below. It is expected that Dyco as general partner will file a certificate dissolving the partnership with the Minnesota Secretary of State on or about October 31, 2002 and, immediately thereafter, deregister the Program with the Securities & Exchange Commission ("SEC"). Upon dissolution, Dyco and its affiliates may, pursuant to the Agreement, withdraw their limited partner interests in any or all of the Program's properties by taking their share of the Program's properties in-kind. Dyco and its affiliates intend to avail themselves of this provision upon dissolution. As part of the dissolution process, Dyco will actively negotiate for the sale of the producing properties attributable to the remaining limited partners' interests. These properties will be offered to all interested parties through normal oil and gas property auction processes as well as appropriate negotiated transactions. It is possible that Dyco or its affiliates may participate in any public auction of the remaining properties and may be the successful high bidder on some or all of the properties. Following the sale of the remaining properties and the calculation of other assets and liabilities of the Program, any net cash will be paid as a final liquidating distribution to all of the remaining partners in the Program. It is expected that any such distribution will be made no later than December 31, 2002. -15- As provided by the Act and the Agreement, a majority in interest of the limited partners may vote to reconstitute the Program and continue its activities as a partnership with a newly appointed general partner. Such a proposal will be presented to the limited partners upon the written request of limited partners representing at least ten (10%) percent of the Program's total units. Consideration of such a proposal would require that a proxy statement be filed with the SEC. As noted in the attached letter, Dyco and its affiliates own approximately 44% of the Program's units. It is expected that they would vote "no" on any vote to reconstitute the Program. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 20.1 Letter to the Program's limited partners dated July 31, 2002. 99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Program. (b) Reports on Form 8-K. None. -16- 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. DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP (Registrant) BY: DYCO PETROLEUM CORPORATION General Partner Date: August 5, 2002 By: /s/Dennis R. Neill ------------------------------- (Signature) Dennis R. Neill President Date: August 5, 2002 By: /s/Craig D. Loseke ------------------------------- (Signature) Craig D. Loseke Chief Financial Officer -17- EX-20.1 3 d842-let.txt LETTER TO INVESTORS RE: NOTICE OF TERMINATION OF THE DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP AND SUSPENSION OF REPURCHASE OFFER Dear Dyco 1984-2 Drilling Program Limited Partner: For the reasons explained herein, Dyco Petroleum Corporation ("Dyco" or the "General Partner"), general partner of the Dyco Oil and Gas Program 1984-2 Limited Partnership (the "Program"), hereby gives 90 days notice of Dyco's election to terminate the Program. This notice is being given pursuant to the Program's Partnership Agreement, as amended (the "Agreement"). FOLLOWING THE PROCESS DISCUSSED BELOW, LIMITED PARTNERS WILL RECEIVE THEIR PRO RATA SHARE OF THE PROGRAM'S DISSOLUTION PROCEEDS, IF ANY. NO FURTHER QUARTERLY CASH DISTRIBUTIONS WILL BE MADE. It is expected that the Program will be terminated with the Minnesota Secretary of State on or about October 31, 2002 and that the Program's assets and liabilities will be liquidated by December 31, 2002, with any cash proceeds distributed to the Limited Partners on or before December 31, 2002. REASON FOR TERMINATION The Program was formed on November 5, 1984. During the 18 years since its formation, it has produced most of the reserves associated with its original producing wells. The Program now has interests in 12 remaining wells. These properties have a declining ability to produce revenues. Please reference the attached "Summary of 2001 Financials and Operations," which was also included in the materials mailed to you on June 25, 2002, regarding 2001 performance and the 2002 repurchase offer. With a declining production base, Program revenues are expected to continue their downward trend. Dyco believes that it is no longer economic to operate and produce the wells within the partnership structure. Furthermore, the partners are burdened with (i) tax reporting costs, (ii) costs associated with the Program's continuing reporting obligations to the Securities and Exchange Commission ("SEC") and (iii) other necessary expenses associated with the partnership structure. For these reasons, the General Partner believes that it is now appropriate to proceed with winding up the business of the Program. DISSOLUTION PROCEDURE As provided in the Agreement and under Minnesota law (the law governing the Program), this notice will cause dissolution of the Program 90 days from the date hereof. Upon dissolution, the General Partner and its affiliates may, pursuant to the Agreement, withdraw their interest in any or all of the Program's properties by taking Dyco Oil and Gas Program 1984-2 Limited Partnership Notice of Termination Page 2 their share of the Program's properties in-kind. Dyco and its affiliates, including Samson Resources Company ("Samson"), intend to avail themselves of this provision. As part of the dissolution process, Dyco will actively negotiate for the sale of the producing properties attributable to the remaining Limited Partners' interests. These properties will be offered to all interested parties through normal oil and gas property auction processes as well as appropriate negotiated transactions. Over the last few years, Dyco and its affiliates have been marketing properties through these means. With the consolidation that is occurring in the oil and gas industry, we do not anticipate any significant problems in completing the sale of the properties. It is possible that Samson may participate in any public auction of the remaining properties and may be the successful high bidder on some or all of the properties. Following the sale of the remaining properties and the calculation of other assets and liabilities of the Program, any net cash will be paid as a final liquidating distribution to all of the remaining partners in the Program. It is expected that any such distribution will be made no later than December 31, 2002. Shortly after the final distribution, Dyco will send you the necessary tax information needed in order for you to finalize your tax reporting obligations associated with this Program. TAX CONSEQUENCES Upon the sale of the Program's producing oil and gas properties, the Program will recognize either a gain or loss. This gain or loss will be allocated to the partners based on their ownership percentage in the Program. The majority of any gain will be ordinary income to the partners due to the recapture of depreciation and depletion expenses. Any losses from the sale of the oil and gas properties will be a long-term capital loss. The actual distribution of the cash proceeds is not taxable to the partners. DISSOLUTION VALUE It is not possible to accurately project what oil and gas companies or other buyers may be willing to pay for the Program's properties. There will, however, be costs incurred in selling the properties and liquidating the Program. We will not know the actual results of the liquidation and the amount of any dissolution proceeds until completing the sale of all remaining properties. ALSO, IT IS NOT POSSIBLE TO PREDICT WHETHER ANY LIQUIDATION PROCEEDS PAYABLE TO LIMITED PARTNERS WILL BE LESS THAN, EQUAL TO, OR GREATER THAN THE CURRENT PROGRAM REPURCHASE OFFER WHICH WAS MAILED TO YOU ON JUNE 25, 2002. Dyco Oil and Gas Program 1984-2 Limited Partnership Notice of Termination Page 3 OUTSTANDING REPURCHASE OFFER AND SUSPENSION THEREOF As an alternative to receiving any liquidation distribution, a Limited Partner can presently require Dyco to buy out his or her interest pursuant to the outstanding 2002 Repurchase Offer. THE 2002 REPURCHASE OFFER WILL, HOWEVER, BE SUSPENDED AS OF AUGUST 31, 2002, SO ALL REPURCHASE OFFER FORMS MUST BE POSTMARKED BY THAT DATE. PARTNERS SHOULD NOTE THAT THE REPURCHASE OFFER MAY ULTIMATELY PROVE TO BE HIGHER OR LOWER THAN THE LIQUIDATION PROCEEDS, IF ANY, DISTRIBUTED TO THE PARTNERS. RECONSTITUTION OF PROGRAM As provided by Minnesota law and the Agreement, a majority in interest of the Limited Partners may vote to reconstitute the Program and continue its activities as a partnership with a newly appointed general partner. Such a proposal can be presented to the Limited Partners upon the written request of Limited Partners representing at least 10% of the total units. Consideration of such a proposal would require that a proxy statement be filed with the SEC. The proxy statement costs would be an expense of the Program. Dyco estimates that postage, printing, solicitation, accounting and legal expenses associated with any SEC proxy statement process would cost the Program at least $25,000 during 2002. Dyco and Samson own approximately 45% of the Program's units. It is expected that they would vote "no" on any vote to reconstitute the Program. OTHER INFORMATION The Program recently filed its 2001 annual report on Form 10-K and its first quarter 2002 report on Form 10-Q with the SEC. The second quarter 10-Q for the Program will be filed with the SEC within the next few days. If you wish to receive a copy of these reports, please call Dyco Investor Services. The Dyco 10-Ks and 10-Qs are also filed electronically with the SEC under the Edgar reporting system. Therefore, they are available over the Internet. You can access the SEC's home page on the World Wide Web at http://www.sec.gov/. If you have any questions about the Program's dissolution and liquidation, please contact Dyco Investor Services at 877-248-3926 or 918-583-1791. We will periodically update you on the progress of selling the Program's wells. Sincerely, Dennis R. Neill President Attachment PART III Summary of 2001 Financials And Operations (Limited Partners' Interest Only) Dyco 84-2 Drilling Program I. Financial Highlights (GAAP Basis )(1) 2001 2000 - ------------------------------------ ---- ---- Revenues $450,029 $ 384,668 Operating Expenses and Amortization of Oil and Gas Properties ( 156,619) ( 70,642) Overhead Expenses ( 57,195) ( 55,980) ------- --------- Net Income $236,215 $ 258,046 Per Unit Net Income $ 45 $ 49 Cash Flows From Operating Activities $365,631 $ 219,927 Cash Flows Per Unit $ 70 $ 42 Cash Distributions $420,160 $ 131,300 Cash Distributions Per Unit $ 80 $ 25 II. Operations - -------------- Gas Production (thousand cubic feet) 100,943 100,881 Oil Production (barrels) 177 284 Average Gas Price (thousand cubic feet) $ 4.38 $ 3.70 Average Oil Price (barrel) $ 24.93 $ 28.08 Gross (Net) Producing Wells at Year-End(2) 12(1.16) 12(1.28) III. Reserves - ------------- Oil Natural Gas A. Changes in Net Quantities of (Thousand Proved Reserves (2 year review): (Barrels) Cubic Feet) -------------------------------- --------- ------------ Balance, December 31, 1999 6,029 1,046,778 Production ( 284) ( 100,881) Revision of previous estimates ( 4,621) ( 125,605) -------- ---------- Balance, December 31, 2000 1,124 820,292 Production ( 177) ( 100,943) Revision of previous estimates 138 ( 1,188) -------- --------- Balance, December 31, 2001 1,085 718,161 ======== ========== Proved developed reserves included in December 31, 2001 amounts 1,085 718,161 ======== ========== B. Highest Value Properties Based on Reserve Estimates:(3) ----------------------------------------------------
Remaining Reserves at 12/31/01 % of Program's Working ------------------------ Remaining Well Name Interest County State Oil(Barrels) Gas(MCF) Reserves --------- -------- ------ ----- ------------ -------- -------------- Fulton #1-33 10.4% Caddo OK - 257,807 35.6% Davis #3-64 27.8% Wheeler TX - 162,059 22.4% Kephart 1-11 2.6% Washita OK 501 45,362 6.7% -------------------- (1) Complete Financial Statements are available on request by calling Dyco Investor Services. (2) "Gross wells" refers to wells in which a working interest is owned. "Net wells" refers to the sum of the fractional working interests owned in gross wells. For example, a 15% leasehold working interest in a well represents one gross well, but 0.15 net well. (3) Based on reserve studies used for the accompanying Repurchase Offer.
EX-99.1 4 d842cert.txt OFFICER CERTIFICATION CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned hereby certify, pursuant to 18 U.S.C. Section 906 of the Sarbanes-Oxley Act of 2002, that, to the undersigned's best knowledge and belief, the Quarterly Report on Form 10-Q for the Dyco Oil and Gas Program 1984-2 Limited Partnership ("Issuer") for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"): (a) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Dated this 5th day of August, 2002. DYCO OIL AND GAS PROGRAM 1984-2 LIMITED PARTNERSHIP ("Issuer") //s// Dennis R. Neill ------------------------------ Dennis R. Neill President (Chief Executive Officer) //s//Craig D. Loseke ------------------------------ Craig D. Loseke Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----