-----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, TkjDT8neBemRIi1IfpOhGGDD6+jTaQ+ZmqH9yJqethx7X/luizUtBLW1pBvZjbX/ TOe80krN23M+gqswVCw4Og== 0000780200-98-000056.txt : 19980219 0000780200-98-000056.hdr.sgml : 19980219 ACCESSION NUMBER: 0000780200-98-000056 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980218 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEODYNE INSTITUTIONAL PENSION ENERGY INCOME P-1 LTD PTNSHIP CENTRAL INDEX KEY: 0000850427 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 731330245 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-17800 FILM NUMBER: 98544149 BUSINESS ADDRESS: STREET 1: TWO W SECOND ST CITY: TULSA STATE: OK ZIP: 74103 BUSINESS PHONE: 9185831791 MAIL ADDRESS: STREET 1: TWO W SECOND ST CITY: TULSA STATE: OK ZIP: 74103-3708 FORMER COMPANY: FORMER CONFORMED NAME: PAINEWEBBER GEODYNE INSTITUTIONAL PENSION ENERGY INC P-1 LP DATE OF NAME CHANGE: 19910401 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEODYNE INSTITUTIONAL PENSION ENERGY INCOME P-2 LTD PTNSHIP CENTRAL INDEX KEY: 0000850428 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 731330625 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-17801 FILM NUMBER: 98544150 BUSINESS ADDRESS: STREET 1: TWO W SECOND ST STREET 2: SAMSON PLAZA CITY: TULSA STATE: OK ZIP: 74103 BUSINESS PHONE: 9185831791 MAIL ADDRESS: STREET 1: TWO W SECOND STREET STREET 2: SAMSON PLAZA CITY: TULSA STATE: OK ZIP: 74103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEODYNE INSTITUTIONAL PENSION ENERGY INC LTD PARTNERSHIP P-3 CENTRAL INDEX KEY: 0000854066 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 731336573 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-18306 FILM NUMBER: 98544151 BUSINESS ADDRESS: STREET 1: TWO W SECOND ST STREET 2: SAMSON PLAZA CITY: TULSA STATE: OK ZIP: 74103 BUSINESS PHONE: 9185831791 MAIL ADDRESS: STREET 1: TWO W SECOND STREET STREET 2: SAMSON PLAZA CITY: TULSA STATE: OK ZIP: 74103 FORMER COMPANY: FORMER CONFORMED NAME: PAINEWEBBER GEODYNE INSTITUTIONAL PENSION ENERGY INC L P P-3 DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEODYNE INSTITUTIONAL PENSION ENERGY INCOME LTD PTNSHIP P-4 CENTRAL INDEX KEY: 0000860744 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 731341929 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-18308 FILM NUMBER: 98544152 BUSINESS ADDRESS: STREET 1: TWO W SECOND ST STREET 2: SAMSON PLAZA CITY: TULSA STATE: OK ZIP: 74103 BUSINESS PHONE: 9185831791 MAIL ADDRESS: STREET 1: TWO W SECOND STREET STREET 2: SAMSON PLAZA CITY: TULSA STATE: OK ZIP: 74103-3708 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEODYNE INSTITUTIONAL PENSION ENERGY INCOME LP P-5 CENTRAL INDEX KEY: 0000863832 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 731353774 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-18637 FILM NUMBER: 98544153 BUSINESS ADDRESS: STREET 1: TWO W SECOND ST STREET 2: SAMSON PLAZA CITY: TULSA STATE: OK ZIP: 74103 BUSINESS PHONE: 9185831791 MAIL ADDRESS: STREET 1: TWO W SECOND STREET STREET 2: SAMSON PLAZA CITY: TULSA STATE: OK ZIP: 74103 FORMER COMPANY: FORMER CONFORMED NAME: PAINEWEBBER GEODYNE INSTITUTIONAL PENSION ENERGY INC L P P-5 DATE OF NAME CHANGE: 19930328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEODYNE INSTITUTIONAL PENSION ENERGY INCOME LTD PART P-6 CENTRAL INDEX KEY: 0000869801 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 731357375 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-18937 FILM NUMBER: 98544154 BUSINESS ADDRESS: STREET 1: TWO W SECOND ST STREET 2: SAMSON PLAZA CITY: TULSA STATE: OK ZIP: 74103 BUSINESS PHONE: 9185831791 MAIL ADDRESS: STREET 1: TWO W SECOND STREET STREET 2: SAMSON PLAZA CITY: TULSA STATE: OK ZIP: 74103 10-K405 1 ANNUAL REPORT FOR PERIOD ENDING 12/31/97 FORM 10-K405 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1997 Commission File Number: P-1: 0-17800; P-2: 0-17801; P-3: 0-18306; P-4: 0-18308; P-5: 0-18637; P-6: 0-18937 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-2 LIMITED PARTNERSHIP GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-6 ------------------------------------------------------------------- (Exact name of Registrant as specified in its Articles) P-1: 73-1330245 P-2: 73-1330625 P-1 and P-2: P-3: 73-1336573 Texas P-4: 73-1341929 P-3 through P-6: P-5: 73-1353774 Oklahoma P-6: 73-1357375 - --------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Two West Second Street, Tulsa, Oklahoma 74103 --------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (918) 583-1791 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Depositary Units of Limited Partnership interest 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 the filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X Disclosure is not contained herein ----- Disclosure is contained herein ----- The Depositary Units are not publicly traded, therefore, Registrant cannot compute the aggregate market value of the voting units held by non-affiliates of the Registrant. DOCUMENTS INCORPORATED BY REFERENCE: None FORM 10-K405 TABLE OF CONTENTS PART I.......................................................................1 ITEM 1. BUSINESS...................................................1 ITEM 2. PROPERTIES.................................................7 ITEM 3. LEGAL PROCEEDINGS.........................................15 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS.......18 PART II.....................................................................18 ITEM 5. MARKET FOR UNITS AND RELATED LIMITED PARTNER MATTERS......18 ITEM 6. SELECTED FINANCIAL DATA...................................21 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.......................24 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...............42 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.......................42 PART III....................................................................42 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER...................................................42 ITEM 11. EXECUTIVE COMPENSATION....................................43 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................................................50 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............52 PART IV.....................................................................55 ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K...............................................55 SIGNATURES..............................................................61 PART I. ITEM 1. BUSINESS General The Geodyne Institutional/Pension Energy Income P-1 Limited Partnership (the "P-1 Partnership") and Geodyne Institutional/Pension Energy Income P-2 Limited Partnership (the "P-2 Partnership") are limited partnerships formed under the Texas Revised Limited Partnership Act and the Geodyne Institutional/Pension Energy Income Limited Partnership P-3 (the "P-3 Partnership"), Geodyne Institutional/Pension Energy Income Limited Partnership P-4 (the "P-4 Partnership"), Geodyne Institutional/Pension Energy Income Limited Partnership P-5 (the "P-5 Partnership"), and Geodyne Institutional/Pension Energy Income Limited Partnership P-6 (the "P-6 Partnership") are limited partnerships formed under the Oklahoma Revised Uniform Limited Partnership Act (collectively, the "Partnerships"). Each Partnership is composed of Geodyne Resources, Inc. ("Geodyne"), a Delaware corporation, as the general partner, Geodyne Institutional Depository Company, a Delaware corporation, as the sole initial limited partner, and public investors as substitute limited partners (the "Limited Partners"). The Partnerships commenced operations on the dates set forth below: Date of Partnership Activation ----------- ----------------- P-1 October 25, 1988 P-2 February 9, 1989 P-3 May 10, 1989 P-4 November 21, 1989 P-5 February 27, 1990 P-6 September 5, 1990 Immediately following activation, each Partnership invested as a general partner in a separate Oklahoma general partnership which actually conducts the Partnerships' operations. Geodyne serves as managing partner of such general partnerships. Unless the context indicates otherwise, all references to any single Partnership or all of the Partnerships in this Annual Report on Form 10-K405 ("Annual Report") are references to the Partnership and its related general partnership, collectively. In addition, unless the context indicates otherwise, all references to the "General Partner" in this Annual Report are references to Geodyne as the general partner of the Partnerships, and as the managing partner of the related general partnerships. 1 The General Partner currently serves as general partner of 29 limited partnerships, including the Partnerships. The General Partner is a wholly-owned subsidiary of Samson Investment Company. Samson Investment Company and its various corporate subsidiaries, including the General Partner (collectively, the "Samson Companies"), are primarily engaged in the production and development of and exploration for oil and gas reserves and the acquisition and operation of producing properties. At December 31, 1997, the Samson Companies owned interests in approximately 13,000 oil and gas wells located in 19 states of the United States and the countries of Canada, Venezuela, and Russia. At December 31, 1997, the Samson Companies operated approximately 2,500 oil and gas wells located in 15 states of the United States, as well as Canada, Venezuela, and Russia. The Partnerships are currently engaged in the business of owning net profits and royalty interests in oil and gas properties located in the continental United States. Most of the net profits interests acquired by the Partnerships have been carved out of working interests in producing properties ("Working Interests") which were acquired by affiliated oil and gas investment programs (the "Affiliated Programs"). Net profits interests entitle the Partnerships to a share of net revenues from producing properties measured by a specific percentage of the net profits realized by such Affiliated Programs. Except where otherwise noted, references to certain operational activities of the Partnerships are actually the activities of the Affiliated Programs. As the holder of a net profits interest, a Partnership is not liable to pay any amount by which oil and gas operating costs and expenses exceed revenues for any period, although any deficit, together with interest, is applied to reduce the amounts payable to the Partnership in subsequent periods. As used throughout this Annual Report, the Partnerships' net profits and royalty interests in oil and gas sales will be referred to as "Net Profits" and the Partnerships' net profits and royalty interests in oil and gas properties will be collectively referred to as "Net Profits Interests." In order to prudently manage the properties which are burdened by the Partnerships' Net Profits Interests, it may be appropriate for drilling operations to be conducted on such properties. Since the Partnerships' Net Profits are calculated after considering such costs, the Partnerships also indirectly engage in development drilling. As limited partnerships, the Partnerships have no officers, directors, or employees. They rely instead on the personnel of the General Partner and the other Samson Companies. As of February 1, 1998, the Samson Companies employed approximately 820 persons. No employees are covered by collective bargaining agreements, and management believes that the Samson Companies provide a sound employee relations environment. For information regarding the executive officers 2 of the General Partner, see "Item 10. Directors and Executive Officers of the General Partner." The General Partner's and the Partnerships' principal place of business is located at Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103, and their telephone number is (918) 583-1791 or (800) 283-1791. Funding Although the partnership agreement for each Partnership (the "Partnership Agreement") permits each Partnership to incur borrowings, operations and expenses are currently funded out of revenues from each Partnership's Net Profits Interests. The General Partner may, but is not required to, advance funds to a Partnership for the same purposes for which Partnership borrowings are authorized. Principal Products Produced and Services Rendered The Partnerships' sole business is the holding of certain Net Profits Interests. The Partnerships do not refine or otherwise process crude oil and condensate. The Partnerships do not hold any patents, trademarks, licenses, or concessions and are not a party to any government contracts. The Partnerships have no backlog of orders and do not participate in research and development activities. The Partnerships are not presently encountering shortages of oilfield tubular goods, compressors, production material, or other equipment. Competition and Marketing The domestic oil and gas industry is highly competitive, with a large number of companies and individuals engaged in the exploration and development of oil and gas properties. The ability of the Partnerships to produce and market oil and gas profitably depends on a number of factors that are beyond the control of the Partnerships. These factors include worldwide political instability (especially in oil-producing regions), United Nations export embargoes, the supply and price of foreign imports of oil and gas, the level of consumer product demand (which can be heavily influenced by weather patterns), government regulations and taxes, the price and availability of alternative fuels, the overall economic environment, and the availability and capacity of transportation and processing facilities. The effect of these factors on future oil and gas industry trends cannot be accurately predicted or anticipated. 3 The most important variable affecting the Partnerships' revenues is the prices received for the sale of oil and gas. Predicting future prices is very difficult. Concerning past trends, average yearly wellhead gas prices in the United States have been volatile for a number of years. For the past ten years, such average prices have generally been in the $1.40 to $2.40 per Mcf range, significantly below prices received in the early 1980s. Average gas prices in the latter part of 1996 and parts of 1997, however, were somewhat higher than those yearly averages. Gas prices are currently in the higher end of the 10-year average price range described above. Substantially all of the Partnerships' gas reserves are being sold on the "spot market." Prices on the spot market are subject to wide seasonal and regional pricing fluctuations due to the highly competitive nature of the spot market. In addition, such spot market sales are generally short-term in nature and are dependent upon the obtaining of transportation services provided by pipelines. Spot prices for the Partnerships' gas decreased from approximately $3.57 per Mcf at December 31, 1996 to approximately $2.32 per Mcf at December 31, 1997. Such prices were on an MMBTU basis and differ from the prices actually received by the Partnerships due to transportation and marketing costs, BTU adjustments, and regional price and quality differences. For the past ten years, average oil prices have generally been in the $16.00 to $24.00 per barrel range. Due to global consumption and supply trends over the last several months as well as expectations of at least a short-term slowdown in Asian energy demand, oil prices have recently been in the mid to lower portions of this pricing range, and in early 1998 dropped to as low as approximately $13.75 per barrel. It is not known whether this trend will continue. Prices for the Partnerships' oil decreased from approximately $23.75 per barrel at December 31, 1996 to approximately $16.25 per barrel at December 31, 1997. Future prices for both oil and gas will likely be different from (and may be lower than) the prices in effect on December 31, 1997. Primarily due to heating season demand, year-end prices in many past years have tended to be higher, and in some cases significantly higher, than the yearly average price actually received by the Partnerships for at least the following year. Management is unable to predict whether future oil and gas prices will (i) stabilize, (ii) increase, or (iii) decrease. Significant Customers The following customers accounted for ten percent or more of the oil and gas sales attributable to the Partnerships' Net Profits Interests during the year ended December 31, 1997: 4 Partnership Customer Percentage ----------- ------------------------ ---------- P-1 El Paso Energy Marketing Company ("El Paso") 25.19% Chevron U.S.A., Inc. 10.82% P-2 El Paso 24.39% Texaco Exploration and Production, Inc. ("Texaco") 11.11% P-3 El Paso 24.23% Texaco 11.18% P-4 El Paso 49.10% Valero Industrial Gas LP 13.56% Phibro Energy, Inc. 10.70% P-5 El Paso 64.98% P-6 El Paso 28.16% HPL Resources Company 19.85% Tejas Gas Marketing Company 14.13% In the event of interruption of purchases by one or more of these significant customers or the cessation or material change in availability of open access transportation by pipeline transporters, the Partnerships may encounter difficulty in marketing gas and in maintaining historic sales levels. Management does not expect any of its open access transporters to seek authorization to terminate their transportation services. Even if the services were terminated, management believes that alternatives would be available whereby the Partnerships would be able to continue to market their gas. The Partnerships' principal customers for crude oil production are refiners and other companies which have pipeline facilities near the producing properties in which the Partnerships own Net Profits Interests. In the event pipeline facilities are not conveniently available to production areas, crude oil is usually trucked by purchasers to storage facilities. Oil, Gas, and Environmental Control Regulations Regulation of Production Operations -- The production of oil and gas is subject to extensive federal and state laws and regulations governing a wide variety of matters, including the drilling and spacing of wells, allowable rates of production, prevention of waste and pollution, and protection of the environment. In addition to the direct costs borne in complying with such 5 regulations, operations and revenues may be impacted to the extent that certain regulations limit oil and gas production to below economic levels. Regulation of Sales and Transportation of Oil and Gas -- Sales of crude oil and condensate are made at market prices and are not subject to price controls. The sale of gas may be subject to both federal and state laws and regulations. The provisions of these laws and regulations are complex and affect all who produce, resell, transport, or purchase gas. Although virtually all of the natural gas production affecting the Partnerships is not subject to price regulation, other regulations affect the availability of gas transportation services and the ability of gas consumers to continue to purchase or use gas at current levels. Accordingly, such regulations may have a material effect on the Partnerships' Net Profits and projections of future Net Profits. Future Legislation -- Legislation affecting the oil and gas industry is under constant review for amendment or expansion. Because such laws and regulations are frequently amended or reinterpreted, management is unable to predict what additional energy legislation may be proposed or enacted or the future cost and impact of complying with existing or future regulations. Regulation of the Environment - Oil and gas operations are subject to numerous laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. Compliance with such laws and regulations, together with any penalties resulting from noncompliance, may decrease the Partnerships' Net Profits. Management anticipates that various local, state, and federal environmental control agencies will have an increasing impact on oil and gas operations. Insurance Coverage Exploration for and production of oil and gas are subject to many inherent risks, including blowouts, pollution, fires, and other casualties. The Partnerships maintain insurance coverage as is customary for entities of a similar size engaged in similar operations, but losses can occur from uninsurable risks or in amounts in excess of existing insurance coverage. The occurrence of an event which is not fully covered by insurance could have a material adverse effect on the Partnerships' financial position and results of operations in that it could negatively impact the cash flow received from the Net Profits Interests. 6 ITEM 2. PROPERTIES Well Statistics The following table sets forth the number of productive wells in which the Partnerships had a Net Profits Interest as of December 31, 1997. P/ship Number of Wells(1) ------ ------------------------------------ Total Oil Gas N/A(2) ----- ----- ----- ------ P-1 956 730 197 29 P-2 1,009 757 223 29 P-3 1,009 757 223 29 P-4 209 103 105 1 P-5 74 22 51 1 P-6 126 36 89 1 - --------------- (1) The designation of a well as an oil well or gas well is made by the General Partner based on the relative amount of oil and gas reserves for the well. Regardless of a well's oil or gas designation, it may produce oil, gas, or both oil and gas. (2) Wells which have not been designated as oil or gas. Drilling Activities The P-4 Partnership indirectly participated in the drilling of the Schwarz No. 8 well located in Webb County, Texas which was drilled as a development well in August 1997. The well was not capable of commercial production and has been plugged and abandoned. No other Partnerships were involved in drilling activities. Oil and Gas Production, Revenue, and Price History The following tables set forth certain historical information concerning the oil (including condensates) and gas production attributable to the Partnerships' Net Profits Interests, revenues attributable to such production, and certain price information. 7 Net Production Data P-1 Partnership --------------- Year Ended December 31, ---------------------------------------- 1997 1996 1995 ---------- ---------- ---------- Production: Oil (Bbls) 32,044 33,798 39,075 Gas (Mcf) 357,516 468,446 524,079 Oil and gas sales: Oil $ 598,856 $ 670,897 $ 629,419 Gas 813,010 911,723 704,485 --------- --------- --------- Total $1,411,866 $1,582,620 $1,333,904 ========= ========= ========= Average sales price: Per barrel of oil $18.69 $19.85 $16.11 Per Mcf of gas 2.27 1.95 1.34 Net Production Data P-2 Partnership --------------- Year Ended December 31, ---------------------------------------- 1997 1996 1995 ---------- ---------- ---------- Production: Oil (Bbls) $ 22,873 24,049 28,040 Gas (Mcf) 301,132 390,047 443,985 Oil and gas sales: Oil $ 428,036 $ 478,550 $ 453,329 Gas 697,928 764,204 604,448 -------- --------- --------- Total $1,125,964 $1,242,754 $1,057,777 ========= ========= ========= Average sales price: Per barrel of oil $18.71 $19.90 $16.17 Per Mcf of gas 2.32 1.96 1.36 8 Net Production Data P-3 Partnership --------------- Year Ended December 31, ---------------------------------------- 1997 1996 1995 ---------- ---------- ---------- Production: Oil (Bbls) 42,259 44,496 51,963 Gas (Mcf) 565,052 737,600 840,970 Oil and gas sales: Oil $ 791,047 $ 885,630 $ 840,314 Gas 1,312,229 1,441,296 1,143,030 --------- --------- --------- Total $2,103,276 $2,326,926 $1,983,344 ========= ========= ========= Average sales price: Per barrel of oil $18.72 $19.90 $16.17 Per Mcf of gas 2.32 1.95 1.36 Net Production Data P-4 Partnership --------------- Year Ended December 31, ---------------------------------------- 1997 1996 1995 ---------- ---------- ---------- Production: Oil (Bbls) 19,686 22,949 28,847 Gas (Mcf) 513,815 630,841 885,642 Oil and gas sales: Oil $ 387,375 $ 477,130 $ 505,129 Gas 1,267,510 1,332,412 1,299,908 --------- --------- --------- Total $1,654,885 $1,809,542 $1,805,037 ========= ========= ========= Average sales price: Per barrel of oil $19.68 $20.79 $17.51 Per Mcf of gas 2.47 2.11 1.47 9 Net Production Data P-5 Partnership --------------- Year Ended December 31, ---------------------------------------- 1997 1996 1995 ---------- ---------- ---------- Production: Oil (Bbls) 7,972 10,757 10,842 Gas (Mcf) 516,756 627,998 784,863 Oil and gas sales: Oil $ 158,471 $ 214,553 $ 185,791 Gas 1,148,588 1,229,170 1,061,514 --------- --------- --------- Total $1,307,059 $1,443,723 $1,247,305 ========= ========= ========= Average sales price: Per barrel of oil $19.88 $19.95 $17.14 Per Mcf of gas 2.22 1.96 1.35 Net Production Data P-6 Partnership --------------- Year Ended December 31, ---------------------------------------- 1997 1996 1995 ---------- ---------- ---------- Production: Oil (Bbls) 18,461 21,377 19,149 Gas (Mcf) 984,971 1,162,652 1,380,123 Oil and gas sales: Oil $ 354,536 $ 437,360 $ 318,880 Gas 2,231,611 2,359,218 1,819,370 --------- --------- --------- Total $2,586,147 $2,796,578 $2,138,250 ========= ========= ========= Average sales price: Per barrel of oil $19.20 $20.46 $16.65 Per Mcf of gas 2.27 2.03 1.32 10 Proved Reserves and Net Present Value The following table sets forth each Partnership's estimated proved oil and gas reserves and net present value therefrom as of December 31, 1997 which were attributable to the Partnerships' Net Profits Interests. (Throughout this Annual Report, such interests will be referred to as the Partnerships' "proved reserves.") The schedule of quantities of proved oil and gas reserves was prepared by the General Partner in accordance with the rules prescribed by the Securities and Exchange Commission (the "SEC"). Certain reserve information was reviewed by Ryder Scott Company Petroleum Engineers ("Ryder Scott"), an independent petroleum engineering firm. As used throughout this Annual Report, "proved reserves" refers to those estimated quantities of crude oil, gas, and gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known oil and gas reservoirs under existing economic and operating conditions. Net present value represents estimated future gross cash flow from the production and sale of proved reserves, net of estimated oil and gas production costs (including production taxes, ad valorem taxes, and operating expenses) and estimated future development costs, discounted at 10% per annum. Net present value of the proved reserves was calculated on the basis of current costs and prices at December 31, 1997. Such prices were not escalated except in certain circumstances where escalations were fixed and readily determinable in accordance with applicable contract provisions. The prices used in calculating the net present value of the proved reserves do not necessarily reflect market prices for oil and gas production subsequent to December 31, 1997. Year-end prices have generally been higher than prices during the rest of the year. There can be no assurance that the prices used in calculating the net present value at December 31, 1997 will actually be realized for such production. The process of estimating oil and gas reserves is complex, requiring significant subjective decisions in the evaluation of available geological, engineering, and economic data for each reservoir. The data for a given reservoir may change substantially over time as a result of, among other things, additional development activity, production history, and viability of production under varying economic conditions; consequently, it is reasonably possible that material revisions to existing reserve estimates may occur in the near future. Although every reasonable effort has been made to ensure that these reserve estimates represent the most accurate assessment possible, the significance of the subjective decisions required and variances in available data for various reservoirs make these estimates generally less precise than other estimates presented in connection with financial statement disclosures. 11 Proved Reserves and Net Present Values From Proved Reserves As of December 31, 1997(1) P-1 Partnership: - --------------- Estimated proved reserves: Gas (Mcf) 2,283,493 Oil and liquids (Bbls) 216,666 Net present value (discounted at 10% per annum) $4,222,872 P-2 Partnership: - --------------- Estimated proved reserves: Gas (Mcf) 2,042,600 Oil and liquids (Bbls) 160,322 Net present value (discounted at 10% per annum) $3,430,173 P-3 Partnership: - --------------- Estimated proved reserves: Gas (Mcf) 3,838,854 Oil and liquids (Bbls) 297,256 Net present value (discounted at 10% per annum) $6,404,345 P-4 Partnership: - --------------- Estimated proved reserves: Gas (Mcf) 2,659,848 Oil and liquids (Bbls) 55,834 Net present value (discounted at 10% per annum) $3,808,632 P-5 Partnership: - --------------- Estimated proved reserves: Gas (Mcf) 3,029,466 Oil and liquids (Bbls) 51,228 Net present value (discounted at 10% per annum) $3,375,677 12 P-6 Partnership: - --------------- Estimated proved reserves: Gas (Mcf) 4,963,503 Oil and liquids (Bbls) 123,737 Net present value (discounted at 10% per annum) $5,658,742 - --------- (1) Includes certain gas balancing adjustments which cause the gas volumes and net present values to differ from the reserve reports which were prepared by the General Partner and reviewed by Ryder Scott. No estimates of the proved reserves of the Partnerships comparable to those included herein have been included in reports to any federal agency other than the SEC. Additional information relating to the Partnership's proved reserves is contained in Note 4 to the Partnerships' financial statements, included in Item 8 of this Annual Report. Significant Properties The following table sets forth certain well and reserve information for the basins in which the Partnerships own a significant amount of Net Profits Interests. The table contains the following information for each significant basin: (i) the number of wells in which a Net Profits Interest is owned, (ii) the number and percentage of wells operated by the Partnership's affiliates, (iii) estimated proved oil reserves, (iv) estimated proved gas reserves, and (v) the present value (discounted at 10% per annum) of estimated future net cash flow. The Anadarko Basin is located in western Oklahoma and the Texas panhandle, while the Gulf Coast Basin is located in southern Louisiana and southeast Texas. The Southern Oklahoma Folded Belt Basin is located in southern Oklahoma, while the Permian Basin is located in west Texas and southeast New Mexico. Southern Arkansas and northern Louisiana contain the Arkla Basin. The San Juan Basin is located in northwest New Mexico and southwest Colorado. 13 Significant Properties ---------------------- Wells Operated by Affiliates Oil Gas Total ----------- Reserves Reserves Present Basin Wells Number % (Bbl) (Mcf) Value - ----------- ----- ------ --- -------- --------- --------- P-1 P/ship: Permian 3,353 4 -% 202,788 1,115,469 $2,894,958 Anadarko 90 17 19% 2,690 1,076,389 1,210,410 P-2 P/ship: Permian 3,353 4 -% 138,619 764,968 $1,992,747 Anadarko 90 17 19% 2,596 832,915 940,803 South. Ok. Folded Belt 29 23 79% 10,150 334,056 381,106 P-3 P/ship: Permian 3,353 4 -% 255,626 1,413,384 $3,679,254 Anadarko 90 17 19% 4,869 1,547,715 2,084,444 South. Ok. Folded Belt 29 23 79% 19,970 657,561 750,217 P-4 P/ship: Gulf Coast 75 14 19% 36,821 1,076,649 $1,799,708 Anadarko 65 9 14% 4,964 818,029 1,016,358 Arkla 40 - -% 5,620 408,926 718,252 P-5 P/ship: Anadarko 109 32 29% 7,750 1,903,947 $2,035,653 South. Ok. Folded Belt 72 - -% 29,078 464,107 638,267 Permian 58 28 48% 10,311 551,659 496,318 P-6 P/ship: Anadarko 109 32 29% 5,309 1,834,007 $1,916,976 Permian 61 30 49% 14,387 1,758,401 1,793,195 South. Ok. Folded Belt 88 14 16% 89,328 319,551 852,543 Gulf Coast 12 1 8% 5,703 630,817 727,101 14 Title to Oil and Gas Properties Management believes that the Partnerships have satisfactory title to their Net Profits Interests. Record title to all of the properties subject to the Partnerships' Net Profits Interests is held by either the Partnerships or Geodyne Nominee Corporation, an affiliate of the General Partner. Title to the Partnerships' Net Profits Interests is subject to customary royalty, overriding royalty, carried, working, and other similar interests and contractual arrangements customary in the oil and gas industry, to liens for current taxes not yet due, and to other encumbrances. Management believes that such burdens do not materially detract from the value of such properties or from the Partnerships' Net Profits Interests therein or materially interfere with their use in the operation of the Partnerships' business. ITEM 3. LEGAL PROCEEDINGS On December 6, 1994, the Partnerships, among other parties, were named as defendants in a lawsuit alleging causes of action based on fraud, negligent misrepresentation, breach of fiduciary duty, breach of implied covenant, and breach of contract in connection with the offer and sale of units in the Partnerships ("Units") (Marion Wolfe v. Geodyne Resources, Inc., et al. Case No. 94-059799, District Court of Harris County, Texas). The plaintiff's petition alleged that the lawsuit was being brought as a class action on behalf of the investors who purchased Units. The lawsuit has been consolidated with another lawsuit which is also pending in Harris County, Texas, Sidney Neidick, et al. v. Geodyne Resources, Inc., et al, Case No. 94-052860, District Court of Harris County, Texas. On June 7, 1995, Geodyne and the Partnerships were dismissed without prejudice as defendants in the matter. In addition, on June 7, 1995, the matter was certified as a class action. On November 23 and 25, 1994, Geodyne, PaineWebber Incorporated ("PaineWebber"), and certain other parties were named as defendants in two related lawsuits alleging misrepresentations made to induce investments in the Partnerships and asserting causes of action for common law fraud and deceit and unjust enrichment (Romine v. PaineWebber, Inc. et al, Case No. 94-CIV-8558, U.S. District Court, Southern District of New York and Romine v. PaineWebber, Inc., et al, Case No. 94-132844, Supreme Court of the State of New York, County of New York). The federal court case was later consolidated with other similar actions (to which Geodyne is not a party) under the title In Re: PaineWebber Limited Partnerships' Litigation (the "Federal Partnership Class Action") and was certified as a class action on May 30, 1995. The Federal Partnership Class Action also alleges violations of 18 U.S.C. Section 1962(c) and the Securities 15 Exchange Act of 1934. Compensatory and punitive damages, interest, and costs have been requested in both matters. The amended complaint in the Federal Partnership Class Action no longer asserts any claim directly against Geodyne. On January 18, 1996, PaineWebber issued a press release indicating that it had reached an agreement to settle the pending Federal Partnership Class Action along with the consolidated Neidick matter referred to above (collectively, the "PaineWebber Partnership Class Actions"), along with a settlement with the SEC and an agreement to settle with various state securities regulators. On that date, PaineWebber paid $125 million into an interest bearing account as part of a memorandum of understanding in connection with the proposed settlement (the "Settlement Fund"). The Settlement Fund applies to claims related to both the Partnerships and certain other investment programs sold by PaineWebber. In addition, PaineWebber agreed to a SEC administrative order creating a capped $40 million fund (the "SEC Claims Fund"), which is to be distributed to eligible Limited Partners by an independent administrator (the "Claims Administrator"); a civil penalty of $5 million leveled by the SEC; and payments aggregating $5 million to state securities administrators. Such settlement is not an obligation of either the Partnerships or Geodyne and, accordingly, would not affect the financial statements of the Partnerships. In connection with the PaineWebber Partnership Class Actions, on July 17, 1996 the federal court entered a preliminary order regarding the settlement proceedings referred to above. Pursuant to that order, plaintiffs' counsel mailed to class members the Class Settlement Notice (the "Notice") and Proof of Claim. Eligible class members are generally those who purchased their Units through PaineWebber on or before December 31, 1992 and who have not (i) previously opted out of the Class, (ii) previously released PaineWebber, or (iii) finally adjudicated their claims against PaineWebber. Plaintiffs' counsel will be responsible for allocating payments from the $125 million Settlement Fund previously funded by PaineWebber among eligible Limited Partners and investors in other unrelated PaineWebber partnerships in accordance with the settlement. The amount and date of any payment will vary depending upon many factors set forth in the Notice. It is currently expected that payments from the Settlement Fund will be made some time in 1998. In addition, eligible Limited Partners in the Partnerships who held their Units on June 3, 1996 may be entitled to certain additional payments from an escrow fund to which PaineWebber will make payments through May 30, 2001 if spot market oil and natural gas prices as reported by the New York Mercantile Exchange fall below certain thresholds set forth in the Notice (the "Pricing Guarantee"). The threshold prices used in the Pricing Guarantee are $18.00 per barrel of oil and $1.80 per Mcf of gas. Under the Notice, PaineWebber payments, 16 if any, made pursuant to the Pricing Guarantee will be paid to Limited Partners of record on June 30, 1996 irrespective of whether they subsequently sell/dispose of their Units to third parties. The Pricing Guarantee does NOT attach to the Units as an attribute of ownership in the Partnerships and is not an obligation of either Geodyne or the Partnerships. A look back provision is also included in the settlement which may provide additional funds as of January 1, 2001 for eligible Limited Partners. Class members who sold their Units prior to June 30, 1996 will not be eligible for payments, if any, under the Pricing Guarantee or the look back provision. Eligible Limited Partners were required to timely execute and return a proof of claim by January 17, 1997 in order to participate in the settlement. In connection with the SEC Claims Fund, on April 17, 1996, PaineWebber mailed a Notice and Claim Form to each Limited Partner who purchased Units in the Partnerships through PaineWebber from January 1, 1986 to December 31, 1992. Limited Partners are not eligible to participate in the claims process if they (i) previously reached a settlement with PaineWebber or (ii) had their direct investment claim resolved by a court or in arbitration. Participation in the claims process is optional, and does not prevent a Limited Partner from pursuing any other remedy against PaineWebber that may be available. Limited Partners had until October 22, 1996 to complete the claim form and return it to the Claims Administrator. The determination of whether a Limited Partner is entitled to a recovery under the SEC Claims Fund will be based on whether or not the Claims Administrator determines that the Limited Partner's investment in the Partnerships was suitable for him at the time of purchase. In addition, if the Limited Partner has opted out of the PaineWebber Partnership Class Action and has not already settled with PaineWebber or has had a claim resolved by a court or in arbitration, the Claims Administrator will also consider allegations that misrepresentations were made in connection with the sale of the Units. On March 20, 1997 the settlement described above was confirmed by the federal court. Certain limited partners in partnerships that were not sponsored by the General Partner appealed the confirmation; however, all such appeals were denied by the United States Second Circuit Court of Appeals and the settlement order is now final. The parties are currently awaiting a ruling by the federal district judge as to the amount of attorneys' fees to be awarded to the plaintiffs' attorneys from the Settlement Fund. The General Partner expects that the Settlement Fund will be distributed to eligible class members within a few months following the entry of a final order on the attorneys' fees. 17 To the knowledge of the General Partner, neither the General Partner nor the Partnerships or their properties are subject to any litigation, the results of which would have a material effect on the Partnerships' or the General Partner's financial condition or operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS There were no matters submitted to a vote of the Limited Partners of any Partnership during 1997. PART II. ITEM 5. MARKET FOR UNITS AND RELATED LIMITED PARTNER MATTERS As of January 31, 1998, the number of Units outstanding and the approximate number of Limited Partners of record in the Partnerships were as follows: Number of Limited Partnership Units Partners ----------- --------- -------- P-1 108,074 868 P-2 90,094 655 P-3 169,637 1,466 P-4 126,306 996 P-5 118,449 1,061 P-6 143,041 811 Units were initially sold for a price of $100. The Units are not traded on any exchange and there is no public trading market for them. The General Partner is aware of certain transfers of Units between unrelated parties, some of which are facilitated by secondary trading firms and matching services. In addition, as further described below, the General Partner is aware of certain "4.9% tender offers" which have been made for the Units. The General Partner believes that the transfers between unrelated parties have been limited and sporadic in number and volume. Other than trades facilitated by certain secondary trading firms and matching services, no organized trading market for Units exists and none is expected to develop. Due to the nature of these transactions, the General Partner has no verifiable information regarding prices at which Units have been transferred. Further, a transferee may not become a substitute Limited Partner without the consent of the General Partner. 18 Pursuant to the terms of the Partnership Agreements, the General Partner is obligated to annually issue a repurchase offer based on the estimated future net revenues from the Partnerships' reserves and is calculated pursuant to the terms of the Partnership Agreements. Such repurchase offer is recalculated monthly in order to reflect cash distributions to the Limited Partners and extraordinary events. The following table sets forth the General Partner's repurchase offer per Unit as of the periods indicated. For purposes of this Annual Report, a Unit represents an initial subscription of $100 to a Partnership. Repurchase Offer Prices ----------------------- 1996 1997 1998 ---------------------- ------------------------ ---- 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st P/ship Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. - ------ ---- ---- ---- ---- ---- ---- ---- ---- ---- P-1 $19 $17 $25 $22 $20 $26 $22 $20 $16 P-2 19 17 24 21 19 25 21 20 16 P-3 19 17 24 21 19 26 22 20 16 P-4 15 12 18 15 13 17 13 11 9 P-5 13 12 16 14 12 16 14 13 11 P-6 27 25 26 22 20 22 19 17 14 In addition to this repurchase offer, the Partnerships have been subject to "4.9% tender offers" from several third parties during 1997. The General Partner does not know the terms of these offers or the prices received by the Limited Partners who accepted these offers. Cash Distributions Cash distributions are primarily dependent upon a Partnership's cash receipts from its Net Profits Interests and cash requirements of the Partnership. Distributable cash is determined by the General Partner at the end of each calendar quarter and distributed to the Limited Partners within 45 days after the end of the quarter. Distributions are restricted to cash on hand less amounts required to be retained out of such cash as determined in the sole judgment of the General Partner to pay costs, expenses, or other Partnership obligations whether accrued or anticipated to accrue. In certain instances, the General Partner may not distribute the full amount of cash receipts which might otherwise be available for distribution in an effort to equalize or stabilize the amounts of quarterly distributions. Any available amounts not distributed are invested and the interest or income thereon is for the accounts of the Limited Partners. 19 The following is a summary of cash distributions paid to the Limited Partners during 1996 and 1997 and the first quarter of 1998: Cash Distributions ------------------ 1996 ------------------------------------------------ 1st 2nd 3rd 4th P/ship Quarter Quarter Quarter Quarter(1) ------ --------- ------- --------- ---------- P-1 $1.98 $2.00 $2.45 $2.98 P-2 1.64 1.70 2.31 2.77 P-3 1.69 1.70 2.06 2.76 P-4 2.09 2.41 2.19 2.93 P-5 1.40 1.61 1.85 2.01 P-6 1.61 2.20 2.22 4.04 1997 1998 -------------------------------------------------- ---------- 1st 2nd 3rd 4th 1st P/ship Quarter(1) Quarter Quarter(1) Quarter(1) Quarter(1) ------ ---------- ------- ---------- ----------- ---------- P-1 $2.61 $2.73 $3.90 $2.19 $4.52 P-2 2.36 2.66(1) 4.00 1.84 3.95 P-3 2.33 2.64(1) 4.02 1.82 3.90 P-4 2.54 3.42 4.04 1.84 1.75 P-5 2.00 2.90 2.16 1.39 1.74 P-6 2.09 4.63(1) 2.47 2.43 2.49 - ----------------------- (1) Amount of cash distribution includes proceeds from the sale of certain Net Profits Interests. 20 ITEM 6. SELECTED FINANCIAL DATA The following tables present selected financial data for the Partnerships. This data should be read in conjunction with the financial statements of the Partnerships, and the respective notes thereto, included elsewhere in this Annual Report. See "Item 8. Financial Statements and Supplementary Data."
Selected Financial Data P-1 Partnership --------------- 1997 1996 1995 1994 1993 ------------ ------------ ------------ ------------ ---------- Net Profits $1,064,105 $1,191,311 $ 935,026 $1,089,659 $1,216,344 Net Income (Loss): Limited Partners 106,676 773,173 6,098 ( 82,364) 84,309 General Partner 54,016 53,849 33,359 38,499 45,008 Total 160,692 827,022 39,457 ( 43,865) 129,317 Limited Partners' Net Income (Loss) per Unit .99 7.15 .06 ( .76) .78 Limited Partners' Cash Distributions per Unit 11.43 9.41 6.99 8.60 8.92 Total Assets 2,076,686 3,230,759 3,488,930 4,243,473 5,268,338 Partners' Capital (Deficit) Limited Partners 2,164,101 3,293,425 3,537,252 4,286,154 5,298,518 General Partner ( 87,415) ( 62,666) ( 48,322) ( 42,681) ( 30,180) Number of Units Outstanding 108,074 108,074 108,074 108,074 108,074
Selected Financial Data P-2 Partnership --------------- 1997 1996 1995 1994 1993 ------------ ------------ ------------ ------------ ---------- Net Profits $ 836,494 $ 911,429 $ 715,608 $ 786,768 $ 962,561 Net Income (Loss): Limited Partners 45,213 551,248 ( 182,851) ( 99,086) ( 54,217) General Partner 41,244 40,232 23,562 26,363 34,851 Total 86,457 591,480 ( 159,289) ( 72,723) ( 19,366) Limited Partners' Net Income (Loss) per Unit .50 6.12 ( 2.03) ( 1.10) ( .60) Limited Partners' Cash Distributions per Unit 10.86 8.42 6.04 8.66 8.45 Total Assets 1,686,752 2,635,549 2,854,539 3,586,328 4,483,051 Partners' Capital (Deficit) Limited Partners 1,759,190 2,692,977 2,900,729 3,628,580 4,507,666 General Partner ( 72,438) ( 57,428) ( 46,190) ( 42,252) ( 24,615) Number of Units Outstanding 90,094 90,094 90,094 90,094 90,094
21
Selected Financial Data P-3 Partnership --------------- 1997 1996 1995 1994 1993 ------------ ------------ ------------ ------------ ---------- Net Profits $1,559,975 $1,706,259 $1,327,052 $1,472,407 $1,798,809 Net Income (Loss): Limited Partners 30,632 1,024,694 ( 413,819) ( 183,184) ( 161,726) General Partner 76,414 75,192 42,468 49,058 64,658 Total 107,046 1,099,886 ( 371,351) ( 134,126) ( 97,068) Limited Partners' Net Income (Loss) per Unit .18 6.04 ( 2.44) ( 1.08) ( .95) Limited Partners' Cash Distributions per Unit 10.81 8.21 6.21 8.60 8.22 Total Assets 3,136,542 4,968,083 5,355,843 6,836,194 8,508,320 Partners' Capital (Deficit) Limited Partners 3,273,800 5,075,168 5,442,474 6,911,293 8,554,477 General Partner ( 137,258) ( 107,085) ( 86,631) ( 75,099) ( 46,157) Number of Units Outstanding 169,637 169,637 169,637 169,637 169,637
Selected Financial Data P-4 Partnership --------------- 1997 1996 1995 1994 1993 ------------ ------------ ------------ ------------ ---------- Net Profits $1,290,780 $1,373,635 $1,251,153 $1,779,306 $2,136,768 Net Income (Loss): Limited Partners 52,241 584,825 ( 496,777) ( 152,785) 339,911 General Partner 49,097 52,931 40,039 64,877 84,873 Total 101,338 637,756 ( 456,738) ( 87,908) 424,784 Limited Partners' Net Income (Loss) per Unit .41 4.63 ( 3.93) ( 1.21) 2.69 Limited Partners' Cash Distributions per Unit 11.84 9.62 8.36 15.11 10.87 Total Assets 1,827,292 3,283,477 3,940,479 5,506,217 7,607,125 Partners' Capital (Deficit) Limited Partners 1,922,091 3,364,850 3,995,025 5,546,802 7,609,587 General Partner ( 94,799) ( 81,373) ( 54,546) ( 40,585) ( 2,462) Number of Units Outstanding 126,306 126,306 126,306 126,306 126,306
Selected Financial Data P-5 Partnership --------------- 1997 1996 1995 1994 1993 ------------ ------------ ------------ ------------ ---------- Net Profits $1,000,125 $1,112,631 $ 938,957 $1,180,970 $1,228,404 Net Income (Loss): Limited Partners ( 355,086) 593,334 ( 201,341) ( 1,811,683) ( 755,849) General Partner 34,199 46,364 30,697 24,070 37,195 Total ( 320,887) 639,698 ( 170,644) ( 1,787,613) ( 718,654) Limited Partners' Net Income (Loss) per Unit ( 3.00) 5.01 ( 1.70) ( 15.30) ( 6.38) Limited Partners' Cash Distributions per Unit 8.45 6.87 5.79 8.99 4.80 Total Assets 1,621,507 2,993,188 3,225,517 4,115,661 7,050,262 Partners' Capital (Deficit) Limited Partners 1,696,190 3,053,276 3,273,942 4,160,283 7,036,966 General Partner ( 74,683) ( 60,088) ( 48,425) ( 44,622) ( 9,192) Number of Units Outstanding 118,449 118,449 118,449 118,449 118,449
22
Selected Financial Data P-6 Partnership --------------- 1997 1996 1995 1994 1993 ------------ ------------ ------------ ------------ ---------- Net Profits $1,793,685 $2,002,957 $1,284,185 $1,487,321 $1,638,647 Net Income (Loss): Limited Partners 97,934 996,385 ( 907,347) ( 346,636) ( 221,515) General Partner 67,889 84,925 36,393 50,124 58,274 Total 165,823 1,081,310 ( 870,954) ( 296,512) ( 163,241) Limited Partners' Net Income (Loss) per Unit .68 6.97 ( 6.34) ( 2.42) ( 1.54) Limited Partners' Cash Distributions per Unit 11.62 10.07 5.73 9.52 6.46 Total Assets 3,112,118 4,714,677 5,170,032 6,903,486 8,676,186 Partners' Capital (Deficit) Limited Partners 3,208,632 4,773,698 5,217,313 6,944,660 8,651,296 General Partner ( 96,514) ( 59,021) ( 47,281) ( 41,174) ( 21,298) Number of Units Outstanding 143,041 143,041 143,041 143,041 143,041
23 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Use of Forward-Looking Statements and Estimates This Annual Report contains certain forward-looking statements. The words "anticipate," "believe," "expect," "plan," "intend," "estimate," "project," "could," "may," and similar expressions are intended to identify forward-looking statements. Such statements reflect management's current views with respect to future events and financial performance. This Annual Report also includes certain information which is, or is based upon, estimates and assumptions. Such estimates and assumptions are management's efforts to accurately reflect the condition and operation of the 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, or otherwise indicated. General Discussion The following general discussion should be read in conjunction with the analysis of results of operations provided below. As previously noted, the Partnerships own net profits and royalty interests in oil and gas properties. The Partnerships' net profits interests were carved out of Working Interests which were acquired by the Affiliated Programs. Net profits interests entitle the Partnerships to a share of net revenues from producing properties measured by a specific percentage of the net profits realized by such Affiliated Programs. Except where otherwise noted, references to certain operational activities of the Partnerships are actually the activities of the Affiliated Programs. As the holder of a net profits interest, a Partnership is not liable to pay any amount by which oil and gas operating costs and expenses exceed revenues for any period, although any deficit, together with interest, is 24 applied to reduce the amounts payable to the Partnership in subsequent periods. As used throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations, the Partnerships' net profits and royalty interests in oil and gas sales will be referred to as "Net Profits" and the Partnerships' net profits and royalty interests in oil and gas properties will be collectively referred to as "Net Profits Interests." The most important variable affecting the Partnerships' revenues is the prices received for the sale of oil and gas. Predicting future prices is very difficult. Concerning past trends, average yearly wellhead gas prices in the United States have been volatile for a number of years. For the past ten years, such average prices have generally been in the $1.40 to $2.40 per Mcf range, significantly below prices received in the early 1980s. Average gas prices in the latter part of 1996 and parts of 1997, however, were somewhat higher than those yearly averages. Gas prices are currently in the higher end of the 10-year average price range described above. Substantially all of the Partnerships' gas reserves are being sold on the "spot market." Prices on the spot market are subject to wide seasonal and regional pricing fluctuations due to the highly competitive nature of the spot market. In addition, such spot market sales are generally short-term in nature and are dependent upon the obtaining of transportation services provided by pipelines. Spot prices for the Partnerships' gas decreased from approximately $3.57 per Mcf at December 31, 1996 to approximately $2.32 per Mcf at December 31, 1997. Such prices were on an MMBTU basis and differ from the prices actually received by the Partnerships due to transportation and marketing costs, BTU adjustments, and regional price and quality differences. For the past ten years, average oil prices have generally been in the $16.00 to $24.00 per barrel range. Due to global consumption and supply trends over the last several months as well as expectations of at least a short-term slowdown in Asian energy demand, oil prices have recently been in the mid to lower portions of this pricing range and in early 1998 dropped to as low as approximately $13.75 per barrel. It is not known whether this trend will continue. Prices for the Partnerships' oil decreased from approximately $23.75 per barrel at December 31, 1996 to approximately $16.25 per barrel at December 31, 1997. Future prices for both oil and gas will likely be different from (and may be lower than) the prices in effect on December 31, 1997. Primarily due to heating season demand, year-end prices in many past years have tended to be higher, and in some cases significantly higher, than the yearly average price actually received by the Partnerships for at least the following year. Management is unable to predict whether future oil and gas prices will (i) stabilize, (ii) increase, or (iii) decrease. 25 As discussed in the "Results of Operations" section below, volumes of oil and gas sold also significantly affect the Partnerships' revenues. Oil and gas wells generally produce the most oil or gas in the earlier years of their lives and, as production continues, the rate of production naturally declines. At some point, production physically ceases or becomes no longer economic. The Partnerships are not acquiring additional Net Profits Interests, and the existing Net Profits Interests are not experiencing significant additional production through drilling or other capital projects. Therefore, volumes of oil and gas produced from the properties underlying the Partnerships' Net Profits Interests naturally decline from year to year. Over the past three years, this decline in production of oil and gas generally ranged form 12 to 19 percent per year. While it is difficult for management to predict future production from these properties, it is likely that this general trend of declining production will continue. Despite this general trend of declining production, several factors can cause the volumes of oil and gas sold to increase or decrease at an even greater rate over a given period. These factors include, but are not limited to, (i) geophysical conditions which cause an acceleration of the decline in production, (ii) the shutting in of wells (or the opening of previously shut-in wells) due to low oil and gas prices, mechanical difficulties, loss of a market or transportation, or performance of workovers, recompletions, or other operations in the well, (iii) prior period volume adjustments (either positive or negative) made by purchasers of the production, (iv) ownership adjustments in accordance with agreements governing the operation or ownership of the well (such as adjustments that occur at payout), and (v) completion of enhanced recovery projects which increase production for the well. Many of these factors are very significant as related to a single well or as related to many wells over a short period of time. However, due to the large number of Net Profits Interests owned by the Partnerships, these factors are generally not material as compared to the normal decline in production experienced on all remaining wells in which a Net Profits Interest is owned. Results of Operations An analysis of the change in net oil and gas operations (oil and gas sales, less lease operating expenses and production taxes), is presented in the tables following "Results of Operations" under the heading "Average Proceeds and Units of Production." Following is a discussion of each Partnerships results of operations for the year ended December 31, 1997 as compared to the year ended December 31, 1996 and for the year ended December 31, 1996 as compared to the year ended December 31, 1995. 26 P-1 Partnership --------------- Year Ended December 31, 1997 Compared to Year Ended December 31, 1996 -------------------------------------- Total Net Profits decreased $127,206 (10.7%) in 1997 as compared to 1996. Of this decrease, approximately $35,000 and $216,000, respectively, were related to decreases in volumes of oil and gas sold and approximately $37,000 was related to a decrease in the average price of oil sold, which decreases were partially offset by an increase of approximately $114,000 related to the increase in the average price of gas sold. In addition, the decrease in Net Profits was partially offset by an increase of approximately $44,000 related to decreases in production expenses incurred by the owners of the Working Interests. Volumes of oil and gas sold decreased 1,754 barrels and 110,930 Mcf, respectively, in 1997 as compared to 1996. The decrease in volumes of gas sold resulted primarily from (i) a negative prior period volume adjustment made by a purchaser on two significant wells in 1997, (ii) a positive prior period volume adjustment made by a purchaser on several wells in 1996, and (iii) the sale of several wells in early 1997. The decrease in production expenses resulted primarily from the decrease in volumes of oil and gas sold in 1997 which was partially offset by increases in operating expenses as a result of (i) workover expenses on two significant wells in 1997 and (ii) subsurface repairs on one significant well in 1997. Average oil prices decreased to $18.69 per barrel in 1997 from $19.85 per barrel in 1996. Average gas prices increased to $2.27 per Mcf in 1997 from $1.95 per Mcf in 1996. Depletion of Net Profits Interests decreased $60,815 (18.7%) in 1997 as compared to 1996. This decrease resulted primarily from decreases in volumes of oil and gas sold in 1997 and upward revisions in the estimates of remaining oil and gas reserves at December 31, 1997. As a percentage of Net Profits, this expense decreased to 24.8% in 1997 from 27.2% in 1996. This percentage decrease was primarily due to the increases in the average prices of gas sold in 1997 as compared to 1996. The P-1 Partnership recognized a non-cash charge against earnings of $902,042 in the first quarter of 1997. Of this amount, $113,945 was related to the decline in oil and gas prices used to determine future cash flows from the P-1 Partnership's Net Profits Interests in proved oil and gas reserves at March 31, 1997 and $788,097 was related to the writing-off of Net Profits Interests in unproved properties. The General Partner determined that it was unlikely that these unproved properties would be developed due to the low oil and gas prices received over the last several years and Partnership Agreement provisions which 27 limit the P-1 Partnership's level of permissible indirect drilling activity through its Affiliated Programs. No similar charges were necessary in 1996. General and administrative expenses remained relatively constant in 1997 as compared to 1996. As a percentage of Net Profits, these expenses increased to 12.1% in 1997 from 10.9% in 1996. This percentage increase was primarily due to the decrease in Net Profits discussed above. Cumulative cash distributions to the Limited Partners through December 31, 1997 were $10,013,558 or 92.65% of the Limited Partners' capital contributions. Year Ended December 31, 1996 Compared to Year Ended December 31, 1995 -------------------------------------- Total Net Profits increased $256,285 (27.4%) in 1996 as compared to 1995. Of this increase, approximately $126,000 and $286,000, respectively, were related to increases in the average prices of oil and gas sold, partially offset by decreases of approximately $85,000 and $75,000, respectively, related to decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased 5,277 barrels and 55,633 Mcf, respectively, in 1996 as compared to 1995. Average oil and gas prices increased to $19.85 per barrel and $1.95 per Mcf, respectively, for the year ended December 31, 1996 from $16.11 per barrel and $1.34 per Mcf, respectively, for the year ended December 31, 1995. Depletion of Net Profits Interests decreased $373,874 (53.5%) in 1996 as compared to 1995. This decrease was primarily due to (i) a decrease in capitalized costs due to an impairment provision recognized during the fourth quarter of 1995, (ii) upward revisions in the estimates of remaining oil and gas reserves at December 31, 1996, and (iii) the decrease in equivalent units of production sold during 1996. As a percentage of Net Profits, this expense decreased to 27.2% in 1996 from 74.7% in 1995. This decrease was primarily due to the dollar decrease in depletion of Net Profits Interests and the increases in the average prices of oil and gas sold in 1996. The P-1 Partnership recognized a non-cash charge against earnings of $86,264 in 1995. This impairment provision was necessary due to the unamortized costs of Net Profits Interests exceeding the undiscounted future net revenues from such Net Profits Interests. No similar charge was necessary during 1996. General and administrative expenses remained relatively constant in 1996 as compared to 1995. As a percentage of Net Profits, these expenses decreased to 10.9% in 1996 from 13.5% in 1995. This percentage decrease was primarily due to the increase in Net Profits discussed above. 28 P-2 Partnership --------------- Year Ended December 31, 1997 Compared to Year Ended December 31, 1996 -------------------------------------- Total Net Profits decreased $74,935 (8.2%) in 1997 as compared to 1996. Of this decrease, approximately $23,000 and $174,000, respectively, were related to decreases in oil and gas volumes sold, and approximately $27,000 was related to a decrease in the average price of oil sold, which decreases were partially offset by an increase of approximately $108,000 related to the increase in the average price of gas sold. In addition, the decrease in Net Profits was partially offset by an increase of approximately $42,000 related to decreases in production expenses incurred by the owners of the Working Interests. Volumes of oil and gas sold decreased 1,176 barrels and 88,915 Mcf, respectively, in 1997 as compared to 1996. The decrease in volumes of gas sold resulted primarily from (i) a negative prior period volume adjustment made by a purchaser on two significant wells in 1997, (ii) a positive prior period volume adjustment made by a purchaser on several wells in 1996, (iii) the sale of several wells in early 1997, and (iv) normal declines in production. The decrease in production expenses resulted primarily from the decrease in volumes of oil and gas sold in 1997. Average oil prices decreased to $18.71 per barrel in 1997 from $19.90 per barrel in 1996. Average gas prices increased to $2.32 per Mcf in 1997 from $1.96 per Mcf in 1996. Depletion of Net Profits Interests decreased $68,085 (24.7%) in 1997 as compared to 1996. This decrease resulted primarily from (i) the decreases in volumes of oil and gas sold in 1997 and (ii) upward revisions in the estimates of remaining oil and gas reserves at December 31, 1997. As a percentage of Net Profits, this expense decreased to 24.8% in 1997 from 30.2% in 1996. This percentage decrease was primarily due to the increase in the average price of gas sold in 1997. The P-2 Partnership recognized a non-cash charge against earnings of $727,893 in the first quarter of 1997. Of this amount, $113,005 was related to the decline in oil and gas prices used to determine future cash flows from the P-2 Partnership's Net Profits Interests in proved oil and gas reserves at March 31, 1997 and $614,888 was related to the writing-off of Net Profits Interests in unproved properties. The General Partner determined that it was unlikely that these unproved properties would be developed due to the low oil and gas prices received over the last several years and Partnership Agreement provisions which limit the P-2 Partnership's level of permissible indirect drilling activity through its Affiliated Programs. No similar charges were necessary in 1996. 29 General and administrative expenses decreased $1,205 (1.1%) in 1997 as compared to 1996. As a percentage of Net Profits, these expenses remained relatively constant at 12.9% in 1997 and 11.9% in 1996. Cumulative cash distributions to the Limited Partners through December 31, 1997 were $7,662,561 or 85.05% of the Limited Partners' capital contributions. Year Ended December 31, 1996 Compared to Year Ended December 31, 1995 ------------------------------------- Total Net Profits increased $195,821 (27.4%)in 1996 as compared to 1995. Of this increase, approximately $90,000 and $234,000, respectively, were related to increases in the average prices of oil and gas sold, partially offset by decreases of approximately $65,000 and $73,000, respectively, related to decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased 3,991 barrels and 53,938 Mcf, respectively, in 1996 as compared to 1995. Average oil and gas prices increased to $19.90 per barrel and $1.96 per Mcf, respectively, in 1996 from $16.17 per barrel and $1.36 per Mcf, respectively, in 1995. Depletion of Net Profits Interests decreased $329,737 (54.5%) in 1996 as compared to 1995. This decrease was primarily due to (i) a decrease in capitalized costs due to an impairment provision recognized during the fourth quarter of 1995, (ii) upward revisions in the estimates of remaining oil and gas reserves at December 31, 1996, and (iii) the decrease in equivalent units of production sold during 1996. As a percentage of Net Profits, this expense decreased to 30.2% in 1996 from 84.6% in 1995. This decrease was primarily due to the dollar decrease in depletion of Net Profits Interests and the increases in the average prices of oil and gas sold in 1996. The P-2 Partnership recognized a non-cash charge against earnings of $182,970 in 1995. This impairment provision was necessary due to the unamortized costs of Net Profits Interests exceeding the undiscounted future net revenues from such Net Profits Interests. No similar charge was necessary during 1996. General and administrative expenses remained relatively constant in 1996 as compared to 1995. As a percentage of Net Profits, these expenses decreased to 11.9% for the year ended December 31, 1996 from 14.7% for the year ended December 31, 1995. This percentage decrease was primarily due to the increase in Net Profits discussed above. 30 P-3 Partnership --------------- Year Ended December 31, 1997 Compared to Year Ended December 31, 1996 -------------------------------------- Total Net Profits decreased $146,284 (8.6%) in 1997 as compared to 1996. Of this decrease, approximately $45,000 and $336,000, respectively, were related to decreases in volumes of oil and gas sold and approximately $50,000 was related to the decrease in the average price of oil sold, which decreases were partially offset by an increase of approximately $209,000 related to an increase in the average price of gas sold. In addition, the decrease in Net Profits was partially offset by an increase of approximately $77,000 related to decreases in production expenses incurred by the owners of the Working Interests. Volumes of oil and gas sold decreased 2,237 barrels and 172,548 Mcf, respectively, in 1997 as compared to 1996. The decrease in volumes of gas sold resulted primarily from (i) a negative prior period volume adjustment made by a purchaser on two significant wells in 1997, (ii) a positive prior period volume adjustment made by a purchaser on several wells in 1996, (iii) the sale of several wells in early 1997, and (iv) normal declines in production. The decrease in production expenses resulted primarily from the decrease in volumes of oil and gas sold in 1997. Average oil prices decreased to $18.72 per barrel in 1997 from $19.90 per barrel in 1996. Average gas prices increased to $2.32 per Mcf in 1997 from $1.95 per Mcf in 1996. Depletion of Net Profits Interests decreased $135,229 (25.9%) in 1997 as compared to 1996. This decrease resulted primarily from (i) decreases in volumes of oil and gas sold in 1997 and (ii) upward revisions in the estimates of remaining oil and gas reserves at December 31, 1997. As a percentage of Net Profits, this expense decreased to 24.7% in 1997 from 30.5% in 1996. This percentage decrease was primarily due to (i) the increases in the average prices of gas sold in 1997 and (ii) the dollar decrease in depletion of Net Profits. The P-3 Partnership recognized a non-cash charge against earnings of $1,413,917 in the first quarter of 1997. Of this amount, $220,449 was related to the decline in oil and gas prices used to determine future cash flows from the P-3 Partnership's Net Profits Interests in proved oil and gas reserves at March 31, 1997 and $1,193,468 was related to the writing-off of Net Profits Interests in unproved properties. The General Partner determined that it was unlikely that these unproved properties would be developed due to the low oil and gas prices received over the last several years and Partnership Agreement provisions which limit the P-3 Partnership's level of permissible indirect drilling activity through its Affiliated Programs. No similar charges were necessary in 1996. 31 General and administrative expenses remained relatively constant in 1997 as compared to 1996. As a percentage of Net Profits, these expenses remained relatively constant at 13.0% in 1997 and 12.0% in 1996. Cumulative cash distributions to the Limited Partners through December 31, 1997 were $13,792,401 or 81.31% of the Limited Partners' capital contributions. Year Ended December 31, 1996 Compared to Year Ended December 31, 1995 ------------------------------------- Total Net Profits increased $379,207 (28.6%) in 1996 as compared to 1995. Of this increase, approximately $166,000 and $435,000, respectively, were related to increases in the average prices of oil and gas sold and approximately $36,000 was related to a decrease in production expenses incurred by the owners of the Working Interests, which amounts were partially offset by decreases of approximately $121,000 and $141,000, respectively, related to decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased 7,467 barrels and 103,370 Mcf, respectively, in 1996 as compared to 1995. The decrease in lease operating expenses resulted primarily from the decreases in volumes of oil and gas sold in 1996, partially offset by an increase in production taxes associated with the increase in Net Profits discussed above. Average oil and gas prices increased to $19.90 per barrel and $1.95 per Mcf, respectively, in 1996 from $16.17 per barrel and $1.36 per Mcf, respectively, in 1995. Depletion of Net Profits Interests decreased $626,740 (54.6%)in 1996 as compared to 1995. This decrease was primarily due to (i) a decrease in capitalized costs due to an impairment provision recognized during the fourth quarter of 1995, (ii) upward revisions in the estimates of remaining oil and gas reserves at December 31, 1996, and (iii) the decrease in equivalent units of production sold in 1996. As a percentage of Net Profits, this expense decreased to 30.5% in 1996 from 86.5% in 1995. This decrease was primarily due to the dollar decrease in depletion of Net Profits Interests discussed above and the increases in the average prices of oil and gas sold in 1996. The P-3 Partnership recognized a non-cash charge against earnings of $377,983 in 1995. This impairment provision was necessary due to the unamortized costs of Net Profits Interests exceeding the undiscounted future net revenues from such Net Profits Interests. No similar charge was necessary during 1996. General and administrative expenses remained relatively constant in 1996 as compared to 1995. As a percentage of Net Profits, these expenses decreased to 12.0% in 1996 from 15.0% in 1995. This percentage decrease was primarily due to the increase in Net Profits discussed above. 32 P-4 Partnership --------------- Year Ended December 31, 1997 Compared to Year Ended December 31, 1996 -------------------------------------- Total Net Profits decreased $82,855 (6.0%) in 1997 as compared to 1996. Of this decrease, approximately $68,000 and $247,000, respectively, were related to decreases in volumes of oil and gas sold and approximately $22,000 was related to the decrease in the average price of oil sold, which decreases were partially offset by an increase of approximately $185,000 related to the increase in the average price of gas sold. In addition, the decrease in Net Profits was partially offset by an increase of approximately $72,000 related to decreases in production expenses incurred by the owners of the Working Interests. Volumes of oil and gas sold decreased 3,263 barrels and 117,026 Mcf, respectively, in 1997 as compared to 1996. The decrease in volumes of oil and gas sold resulted primarily from normal declines in production. The decrease in production expenses resulted primarily from decreases in volumes of oil and gas sold in 1997. Average oil prices decreased to $19.68 per barrel in 1997 from $20.79 per barrel in 1996. Average gas prices increased to $2.47 per Mcf in 1997 from $2.11 per Mcf in 1996. Depletion of Net Profits Interests decreased $176,082 (32.6%) in 1997 as compared to 1996. This decrease resulted primarily from (i) decreases in volumes of oil and gas sold in 1997 and (ii) upward revisions in the estimates of remaining oil and gas reserves at December 31, 1997. As a percentage of Net Profits, this expense decreased to 28.3% in 1997 from 39.4% in 1996. This percentage decrease was primarily due to (i) the increase in the average price of gas sold in 1997 and (ii) the dollar decrease in depletion of Net Profits discussed above. The P-4 Partnership recognized a non-cash charge against earnings of $752,388 in the first quarter of 1997. Of this amount, $84,059 was related to the decline in oil and gas prices used to determine of future cash flows from the P-4 Partnership's Net Profits Interests in proved oil and gas reserves at March 31, 1997 and $668,329 was related to the writing-off of Net Profits Interests in unproved properties. The General Partner determined that it was unlikely that these unproved properties would be developed due to the low oil and gas prices received over the last several years and Partnership Agreement provisions which limit the P-4 Partnership's level of permissible indirect drilling activity through its Affiliated Programs. No similar charges were necessary in 1996. 33 General and administrative expenses decreased $5,846 (3.8%) in 1997 as compared to 1996. This decrease resulted primarily from a prior year charge which was refunded in 1997. As a percentage of Net Profits, these expenses remained relatively constant at 11.5% in 1997 and 11.2% in 1996. Cumulative cash distributions to the Limited Partners through December 31, 1997 were $11,405,945 or 90.3% of the Limited Partners' capital contributions. Year Ended December 31, 1996 Compared to Year Ended December 31, 1995 ------------------------------------- Total Net Profits increased $122,482 (9.8%) in 1996 as compared to 1995. Of this increase, approximately $75,000 and $404,000, respectively, were related to increases in the average prices of oil and gas sold and approximately $118,000 was related to a decrease in production expenses attributable to the Working Interests, partially offset by decreases of approximately $103,000 and $375,000, respectively, related to decreases in volumes of oil and gas sold. Volumes of oil and gas sold decreased 5,898 barrels and 254,801 Mcf, respectively, in 1996 as compared to 1995. The decrease in volumes of oil sold was primarily due to normal declines in production due to diminished oil reserves on several wells. The decrease in volumes of gas sold was primarily due to (i) the sale of several gas producing wells during 1996, (ii) the normal declines in production on several wells due to diminished gas reserves, and (iii) a positive prior period volume adjustment made by the purchaser on one well in 1995. The decrease in production expenses resulted primarily from the decreases in volumes of oil and gas sold in 1996. Average oil and gas prices increased to $20.79 per barrel and $2.11 per Mcf, respectively, for 1996 from $17.51 per barrel and $1.47 per Mcf, respectively, for 1995. Depletion of Net Profits Interests decreased $450,079 (45.4%) in 1996 as compared to 1995. This decrease was primarily due to (i) a decrease in capitalized costs due to an impairment provision recognized during the fourth quarter of 1995, (ii) upward revisions in the estimates of remaining oil and gas reserves at December 31, 1996, and (iii) the decrease in equivalent units of production sold in 1996. As a percentage of Net Profits, this expense decreased to 39.4% in 1996 from 79.2% in 1995. This decrease was primarily due to the dollar decrease in depletion of Net Profits Interests and the increases in the average prices of oil and gas sold in 1996. The P-4 Partnership recognized a non-cash charge against earnings of $581,036 in 1995. This impairment provision was necessary due to the unamortized costs of Net Profits Interests exceeding the undiscounted future net revenues from such Net Profits Interests. No similar charge was necessary during 1996. 34 General and administrative expenses remained relatively constant in 1996 as compared to 1995. As a percentage of Net Profits, these expenses remained relatively constant at 11.2% for 1996 as compared to 11.8% for 1995. P-5 Partnership --------------- Year Ended December 31, 1997 Compared to Year Ended December 31, 1996 -------------------------------------- Total Net Profits decreased $112,506 (10.1%) in 1997 as compared to 1996. Of this decrease, approximately $56,000 and $218,000, respectively, were related to decreases in volumes of oil and gas sold, which decreases were partially offset by an increase of approximately $134,000 related to the increase in the average price of gas sold. In addition, the decrease in Net Profits was partially offset by an increase of approximately $24,000 related to decreases in production expenses incurred by the owners of the Working Interests. Volumes of oil and gas sold decreased 2,785 barrels and 111,242 Mcf, respectively, in 1997 as compared to 1996. The decrease in volumes of oil sold resulted primarily from normal declines in production and positive prior period volume adjustments by purchasers on two significant wells in 1996. The decrease in volumes of gas sold resulted primarily from normal declines in production. Average oil prices remained relatively constant at $19.88 per barrel in 1997 and $19.95 per barrel in 1996. Average gas prices increased to $2.22 per Mcf in 1997 from $1.96 per Mcf in 1996. Depletion of Net Profits Interests decreased $119,919 (32.5%) in 1997 as compared to 1996. This decrease resulted primarily from (i) decreases in volumes of oil and gas sold in 1997 and (ii) upward revisions in the estimates of remaining oil and gas reserves at December 31, 1997. As a percentage of Net Profits, this expense decreased to 24.9% in 1997 from 33.2% in 1996. This percentage decrease was primarily due to the increases in the average prices of gas sold in 1997 and the dollar decrease in Depletion of Net Profits discussed above. The P-5 Partnership recognized a non-cash charge against earnings of $1,018,068 in the first quarter of 1997. Of this amount, $122,458 was related to the decline in oil and gas prices used to determine future cash flows from the P-5 Partnership's Net Profits Interest in proved oil and gas reserves at March 31, 1997 and $895,610 was related to the writing-off of Net Profits Interests in unproved properties. The General Partner determined that it was unlikely that these unproved properties would be developed due to the low oil and gas prices received over the last several years and Partnership Agreement provisions which limit the P-5 Partnership's level of permissible indirect drilling activity through its Affiliated Programs. No similar charges were necessary in 1996. 35 General and administrative expenses remained relatively constant in 1997 as compared to 1996. As a percentage of Net Profits, these expenses increased to 14.2% in 1997 from 12.8% in 1996. This increase resulted from the decrease in Net Profits discussed above. Cumulative cash distributions to the Limited Partners through December 31, 1997 were $6,355,759 of 53.66% or the Limited Partners' capital contributions. Year Ended December 31, 1996 Compared to Year Ended December 31, 1995 --------------------------------------- Total Net Profits increased $173,674 (18.5%) in 1996 as compared to 1995. Of this increase, approximately $30,000 and $383,000, respectively, were related to increases in the average prices of oil and gas sold, partially offset by decreases of approximately $212,000 and $19,000, respectively, related to a decrease in volumes of gas sold and an increase in production taxes paid by the owners of the Working Interests. Volumes of oil and gas sold decreased 85 barrels and 156,865 Mcf, respectively, in 1996 as compared to 1995. The decrease in the volumes of gas sold was primarily due to (i) normal declines in production on several wells due to diminished gas reserves and (ii) positive prior period volume adjustments made by the purchaser on two wells during 1995. Average oil and gas prices increased to $19.95 per barrel and $1.96 per Mcf, respectively, for 1996 from $17.14 per barrel and $1.35 per Mcf, respectively, for 1995. Depletion of Net Profits Interests decreased $416,821 (53.0%) in 1996 as compared to 1995. This decrease was primarily due to (i) a decrease in capitalized costs due to an impairment provision recognized during the fourth quarter of 1995, (ii) upward revisions in the estimates of remaining oil and gas reserves at December 31, 1996, and (iii) the decrease in equivalent units of production sold during 1996. As a percentage of Net Profits, this expense decreased to 33.2% for 1996 from 83.7% for 1995. This decrease was primarily due to the dollar decrease in depletion of Net Profits Interests and the increases in the average prices of oil and gas sold in 1996. The P-5 Partnership recognized a non-cash charge against earnings of $194,933 in 1995. This impairment provision was necessary due to the unamortized costs of Net Profits Interests exceeding the undiscounted future net revenues from such Net Profits Interests. No similar charge was necessary during 1996. General and administrative expenses remained relatively constant in 1996 as compared to 1995. As a percentage of Net Profits, these expenses decreased to 12.8% for 1996 from 14.8% for 1995. This percentage decrease was primarily due to the increase in Net Profits discussed above. 36 P-6 Partnership --------------- Year Ended December 31, 1997 Compared to Year Ended December 31, 1996 -------------------------------------- Total Net Profits decreased $209,272 (10.4%) in 1997 as compared to 1996. Of this decrease, approximately $60,000 and $361,000, respectively, were related to decreases in volumes of oil and gas sold and approximately $23,000 was related to the decrease in the average price of oil sold, which decreases were partially offset by an increase of approximately $236,000 related to the increase in the average price of gas sold. Volumes of oil and gas sold decreased 2,916 barrels and 177,681 Mcf, respectively, in 1997 as compared to 1996. The decrease in volumes of oil and gas sold resulted primarily from normal declines in production. Production expenses incurred by the owners of the Working Interests remained relatively constant. Any decrease in production expenses which resulted from decreases in volumes of oil and gas sold was substantially offset by increases in operating expenses as a result of (i) workovers on three wells in 1997 and (ii) an increase in ad valorem taxes on three wells in 1997. Average oil prices decreased to $19.20 per barrel in 1997 from $20.46 per barrel in 1996. Average gas prices increased to $2.27 per Mcf in 1997 from $2.03 per Mcf in 1996. Depletion of Net Profits Interests decreased $177,604 (22.5%) in 1997 as compared to 1996. This decrease resulted primarily from (i) decreases in volumes of oil and gas sold in 1997 and (ii) upward revisions in the estimates of remaining oil and gas reserves at December 31, 1997. As a percentage of Net Profits, this expense decreased to 34.0% in 1997 from 39.4% in 1996. This percentage decrease was primarily due to the increases in the average price of gas sold in 1997 and the dollar decrease in depletion of Net Profits discussed above. The P-6 Partnership recognized a non-cash charge against earnings of $898,584 in the first quarter of 1997. Of this amount, $444,990 was related to the decline in oil and gas prices used to determine future cash flows from the P-6 Partnership's Net Profit Interest in proved oil and gas reserves at March 31, 1997 and $453,594 was related to the writing-off of Net Profits Interests in unproved properties. The General Partner determined that it was unlikely that these unproved properties would be developed due to the low oil and gas prices received over the last several years and Partnership Agreement provisions which limit the P-6 Partnership's level of permissible indirect drilling activity through its Affiliated Programs. No similar charges were necessary in 1996. 37 General and administrative expenses remained relatively constant in 1997 as compared to 1996. As a percentage of Net Profits, these expenses remained relatively constant at 9.6% in 1997 and 8.6% in 1996. Cumulative cash distributions to the Limited Partners through December 31, 1997 were $8,448,248 or 59.06% of the Limited Partners' capital contributions. Year Ended December 31, 1996 Compared to Year Ended December 31, 1995 -------------------------------------- Total Net Profits increased $718,772 (56.0%) in 1996 as compared to 1995. Of this increase, approximately $81,000 and $825,000, respectively, were related to increases in the average prices of oil and gas sold and approximately $60,000 was related to a decrease in production expenses attributable to the Working Interests, partially offset by a decrease of approximately $287,000 related to a decrease in volumes of gas sold. Volumes of oil sold increased 2,228 barrels, while volumes of gas sold decreased 217,471 Mcf in 1996 as compared to 1995. The decrease in volumes of gas sold was primarily due to (i) the normal declines in production on several wells due to diminished gas reserves and (ii) positive prior period volume adjustments made by the purchaser on several wells during the year ended December 31, 1995. The decrease in production expenses resulted primarily from the decreases in volumes of oil and gas sold in 1996, partially offset by an increase in production taxes associated with the increase in Net Profits discussed above. Average oil and gas prices increased to $20.46 per barrel and $2.03 per Mcf, respectively, for 1996 from $16.65 per barrel and $1.32 per Mcf, respectively, for 1995. Depletion of Net Profits Interests decreased $732,087 (48.2%) in 1996 as compared to 1995. This decrease was primarily due to (i) a decrease in capitalized costs due to an impairment provision recognized during the fourth quarter of 1995, (ii) upward revisions in the estimates of remaining oil and gas reserves at December 31, 1996, and (iii) the decrease in volumes of gas sold in 1996. As a percentage of Net Profits, this expense decreased to 39.4% for 1996 from 118.4% for 1995. This decrease was primarily due to the dollar decrease in depletion of Net Profits Interests and the increases in the average prices of oil and gas sold in 1996. The P-6 Partnership recognized a non-cash charge against earnings of $478,168 in 1995. This impairment provision was necessary due to the unamortized costs of Net Profits Interests exceeding the undiscounted future net revenues from such Net Profits Interests. No similar charge was necessary during 1996. 38 General and administrative expenses remained relatively constant for 1996 as compared to 1995. As a percentage of Net Profits, these expenses decreased to 8.6% for 1996 from 13.5% for 1995. This percentage decrease was primarily due to the increase in Net Profits discussed above. Average Proceeds and Units of Production The following tables are comparisons of the annual equivalent units of production (one barrel of oil or six Mcf of gas) and the average proceeds received per equivalent unit of production for the oil and gas sales attributable to the Partnerships' Net Profits for the years ended December 31, 1997, 1996, and 1995. These factors comprise the change in oil and gas sales discussed in the "Results of Operations" section above. 1997 Compared to 1996 --------------------- Equivalent Units Average Proceeds of Production per Equivalent Unit ----------------------------- -------------------------- P/ship 1997 1996 % Change 1997 1996 % Change ------ ------- ------- -------- ----- ----- -------- P-1 91,630 111,872 (18%) $11.61 $10.65 10% P-2 73,062 89,057 (18%) 11.45 10.23 13% P-3 136,434 167,429 (19%) 11.43 10.19 13% P-4 105,322 128,089 (18%) 12.26 10.72 14% P-5 94,098 115,423 (18%) 10.63 9.64 10% P-6 182,623 215,152 (15%) 9.82 9.31 5% 1996 Compared to 1995 --------------------- Equivalent Units Average Proceeds of Production per Equivalent Unit ----------------------------- -------------------------- P/ship 1996 1995 % Change 1996 1995 % Change ------ ------- ------- -------- ----- ----- -------- P-1 111,872 126,422 (12%) $10.65 $7.40 44% P-2 89,057 102,038 (13%) 10.23 7.01 46% P-3 167,429 192,125 (13%) 10.19 6.91 47% P-4 128,089 176,454 (27%) 10.72 7.09 51% P-5 115,423 141,653 (19%) 9.64 6.63 45% P-6 215,152 249,170 (14%) 9.31 5.15 81% 39 Liquidity and Capital Resources Net proceeds from operations less necessary operating capital are distributed to the Limited Partners on a quarterly basis. See "Item 5. Market for Units and Related Limited Partner Matters." The net proceeds from the Net Profits Interests are not reinvested in productive assets. Assuming production levels for 1997, the Partnerships' proved reserve quantities at December 31, 1997 would have the following remaining lives: Partnership Gas-Years Oil-Years ----------- --------- --------- P-1 6.4 6.8 P-2 6.8 7.0 P-3 6.8 7.0 P-4 5.2 2.8 P-5 5.9 6.4 P-6 5.0 6.7 The Partnerships' available capital from the Limited Partners' subscriptions has been spent on Net Profits Interests and there should be no further material capital resource commitments in the future. The Partnerships have no debt commitments. The Partnerships sold certain Net Profits Interests during 1997. The sale of a Net Profits Interest was made by the General Partner after giving due consideration to the offer price and the General Partner's estimate of both the underlying property's remaining proved reserves and future operating costs. Net proceeds from the sale of any such Net Profits Interests were distributed to the Partnerships and included in the calculation of the Partnerships' cash distributions for the quarter immediately following the Partnerships' receipt of the proceeds. The amount of such proceeds from the sale of Net Profits Interest during 1997 were as follows: Partnership Amount ----------- ------ P-1 $507,599 P-2 402,870 P-3 759,639 P-4 266,265 P-5 91,840 P-6 43,605 The sale of these Net Profits Interests reduced the quantity of the Partnerships proved reserves. It is also possible that the Partnerships' repurchase values and future cash distributions could decline as a result of a reduction of the Partnerships' reserve base. The General Partner believes that 40 the sale of these Net Profits Interests will be beneficial to the Partnerships since the properties underlying the Net Profits Interests sold generally had a higher ratio of future operating expenses as compared to reserves than the properties not sold. There can be no assurance as to the amount of the Partnerships' future cash distributions. The Partnerships' ability to make cash distributions depends primarily upon the level of available cash flow generated by the Partnerships' Net Profits Interests, which will be affected (either positively or negatively) by many factors beyond the control of the Partnerships, including the price of and demand for oil and gas and other market and economic conditions. Even if prices and costs remain stable, the amount of cash available for distributions will decline over time (as the volume of production from producing properties declines) since the Partnerships are not replacing production through acquisitions of Net Profits Interests in other producing properties and drilling. The Partnerships' quantity of proved reserves has been reduced by the sale of Net Profits Interests as described above; therefore, it is possible that the Partnerships' future cash distributions could decline as a result of a reduction of the Partnerships' reserve base. Inflation and Changing Prices Prices obtained for oil and gas production depend upon numerous factors, including the extent of domestic and foreign production, foreign imports of oil, market demand, domestic and foreign economic conditions in general, and governmental regulations and tax laws. The general level of inflation in the economy did not have a material effect on the operations of the Partnerships in 1997. Oil and gas prices have fluctuated during recent years and generally have not followed the same pattern as inflation. See "Item 2. Properties - Oil and Gas Production, Revenue, and Price History." Year 2000 Computer Issues The General Partner has reviewed its computer systems and hardware to locate potential operational problems associated with the year 2000. Such review will continue until all potential problems are located and resolved. The General Partner believes that all year-2000 problems in its computer system have been or will be resolved in a timely manner and have not caused and will not cause disruption of the Partnerships' operations or a material affect on the Partnerships' financial condition or results of operations. However, it is possible that the Partnerships' cash flows could be disrupted by year-2000 problems experienced by operators of the Partnerships' wells, buyers of the Partnerships' oil and gas, financial institutions, or other persons. The General Partner is unable to quantify the effect, if any, on the Partnerships of year-2000 computer problems experienced by these third parties. 41 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and supplementary data are indexed in Item 14 hereof. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER The Partnerships have no directors or executive officers. The following individuals are directors and executive officers of the General Partner. The business address of such director and executive officers is Two West Second Street, Tulsa, Oklahoma 74103. Name Age Position with General Partner ---------------- --- -------------------------------- Dennis R. Neill 45 President and Director Judy K. Fox 46 Secretary The director will hold office until the next annual meeting of shareholders of Geodyne and until his successor has been duly elected and qualified. All executive officers serve at the discretion of the Board of Directors. Dennis R. Neill joined the Samson Companies in 1981, was named Senior Vice President and Director of Geodyne on March 3, 1993, and was named President of Geodyne and its subsidiaries on June 30, 1996. Prior to joining the Samson Companies, he was associated with a Tulsa law firm, Conner and Winters, where his principal practice was in the securities area. He received a Bachelor of Arts degree in political science from Oklahoma State University and a Juris Doctorate degree from the University of Texas. Mr. Neill also serves as Senior Vice President of Samson Investment Company and as President and Director of Samson Properties Incorporated, Samson Hydrocarbons Company, Dyco Petroleum Corporation, Berry Gas Company, Circle L Drilling Company, and Compression, Inc. Judy K. Fox joined the Samson Companies in 1990 and was named Secretary of Geodyne and its subsidiaries on June 30, 1996. Prior to joining the Samson Companies, she served as Gas Contract Manager for Ely Energy Company. Ms. Fox is 42 also Secretary of Berry Gas Company, Circle L Drilling Company, Compression, Inc., Dyco Petroleum Corporation, Samson Hydrocarbons Company, and Samson Properties Incorporated. Section 16(a) Beneficial Ownership Reporting Compliance To the best knowledge of the Partnerships and the General Partner, there were no officers, directors, or ten percent owners who were delinquent filers of reports required under Section 16 of the Securities Exchange Act of 1934 during 1997. ITEM 11. EXECUTIVE COMPENSATION The General Partner and its affiliates are reimbursed for actual general and administrative costs and operating costs incurred and attributable to the conduct of the business affairs and operations of the Partnerships, computed on a cost basis, determined in accordance with generally accepted accounting principles. Such reimbursed costs and expenses allocated to the Partnerships include office rent, secretarial, employee compensation and benefits, travel and communication costs, fees for professional services, and other items generally classified as general or administrative expense. The amount of general and administrative expense allocated to the General Partner and its affiliates and charged to each Partnership during 1997, 1996, and 1995 is set forth in the table below. Although the actual costs incurred by the General Partner and its affiliates have fluctuated during the three years presented, the amounts charged to the Partnerships have not fluctuated due to expense limitations imposed by the Partnership Agreements. Partnership 1997 1996 1995 ----------- -------- -------- -------- P-1 $113,760 $113,760 $113,760 P-2 94,836 94,836 94,836 P-3 178,560 178,560 178,560 P-4 132,960 132,960 132,960 P-5 124,680 124,680 124,680 P-6 150,564 150,564 150,564 None of the officers or directors of the General Partner receive compensation directly from the Partnerships. The Partnerships reimburse the General Partner or its affiliates for that portion of such officers' and directors' salaries and expenses attributable to time devoted by such individuals to the Partnerships' activities. The following tables indicate the approximate amount of general and administrative expense reimbursement attributable to the salaries of the directors, officers, and employees of the General Partner and its affiliates during 1997, 1996, and 1995: 43
Salary Reimbursements P-1 Partnership --------------- Long Term Compensation ----------------------------------- Annual Compensation Awards Payouts ------------------------- ----------------------- ------- Securi- Other ties All Name Annual Restricted Under- Other and Compen- Stock lying LTIP Compen- Principal Salary Bonus sation Award(s) Options/ Payouts sation Position Year ($) ($) ($) ($) SARs(#) ($) ($) - --------------- ---- ------- ------- ------- ---------- -------- ------- ------- C. Philip Tholen, President, Chief Executive Officer(1)(2) 1995 - - - - - - - 1996 - - - - - - - Dennis R. Neill, President(2)(3) 1996 - - - - - - - 1997 - - - - - - - All Executive Officers, Directors, and Employees as a group(4) 1995 $62,113 - - - - - - 1996 $66,550 - - - - - - 1997 $67,960 - - - - - - - ---------- (1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until July 1, 1996. (2) The general and administrative expenses paid by the P-1 Partnership and attributable to salary reimbursements do not include any salary or other compensation attributable to Mr. Tholen or Mr. Neill. (3) Mr. Neill became President of Geodyne on July 1, 1996. (4) No officer or director of Geodyne or its affiliates provides full-time services to the P-1 Partnership and no individual's salary or other compensation reimbursement from the P-1 Partnership equals or exceeds $100,000 per annum.
44
Salary Reimbursements P-2 Partnership --------------- Long Term Compensation ----------------------------------- Annual Compensation Awards Payouts ------------------------- ----------------------- ------- Securi- Other ties All Name Annual Restricted Under- Other and Compen- Stock lying LTIP Compen- Principal Salary Bonus sation Award(s) Options/ Payouts sation Position Year ($) ($) ($) ($) SARs(#) ($) ($) - --------------- ---- ------- ------- ------- ---------- -------- ------- ------- C. Philip Tholen, President, Chief Executive Officer(1)(2) 1995 - - - - - - - 1996 - - - - - - - Dennis R. Neill, President(2)(3) 1996 - - - - - - - 1997 - - - - - - - All Executive Officers, Directors, and Employees as a group(4) 1995 $51,780 - - - - - - 1996 $55,479 - - - - - - 1997 $56,655 - - - - - - - ---------- (1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until July 1, 1996. (2) The general and administrative expenses paid by the P-2 Partnership and attributable to salary reimbursements do not include any salary or other compensation attributable to Mr. Tholen or Mr. Neill. (3) Mr. Neill became President of Geodyne on July 1, 1996. (4) No officer or director of Geodyne or its affiliates provides full-time services to the P-2 Partnership and no individual's salary or other compensation reimbursement from the P-2 Partnership equals or exceeds $100,000 per annum.
45
Salary Reimbursements P-3 Partnership --------------- Long Term Compensation ----------------------------------- Annual Compensation Awards Payouts ------------------------- ----------------------- ------- Securi- Other ties All Name Annual Restricted Under- Other and Compen- Stock lying LTIP Compen- Principal Salary Bonus sation Award(s) Options/ Payouts sation Position Year ($) ($) ($) ($) SARs(#) ($) ($) - --------------- ---- ------- ------- ------- ---------- -------- ------- ------- C. Philip Tholen, President, Chief Executive Officer(1)(2) 1995 - - - - - - - 1996 - - - - - - - Dennis R. Neill, President(2)(3) 1996 - - - - - - - 1997 - - - - - - - All Executive Officers, Directors, and Employees as a group(4) 1995 $ 97,494 - - - - - - 1996 $104,458 - - - - - - 1997 $106,672 - - - - - - - ---------- (1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until July 1, 1996. (2) The general and administrative expenses paid by the P-3 Partnership and attributable to salary reimbursements do not include any salary or other compensation attributable to Mr. Tholen or Mr. Neill. (3) Mr. Neill became President of Geodyne on July 1, 1996. (4) No officer or director of Geodyne or its affiliates provides full-time services to the P-3 Partnership and no individual's salary or other compensation reimbursement from the P-3 Partnership equals or exceeds $100,000 per annum.
46
Salary Reimbursements P-4 Partnership --------------- Long Term Compensation ----------------------------------- Annual Compensation Awards Payouts ------------------------- ----------------------- ------- Securi- Other ties All Name Annual Restricted Under- Other and Compen- Stock lying LTIP Compen- Principal Salary Bonus sation Award(s) Options/ Payouts sation Position Year ($) ($) ($) ($) SARs(#) ($) ($) - --------------- ---- ------- ------- ------- ---------- -------- ------- ------- C. Philip Tholen, President, Chief Executive Officer(1)(2) 1995 - - - - - - - 1996 - - - - - - - Dennis R. Neill, President(2)(3) 1996 - - - - - - - 1997 - - - - - - - All Executive Officers, Directors, and Employees as a group(4) 1995 $72,596 - - - - - - 1996 $77,782 - - - - - - 1997 $79,430 - - - - - - - ---------- (1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until July 1, 1996. (2) The general and administrative expenses paid by the P-4 Partnership and attributable to salary reimbursements do not include any salary or other compensation attributable to Mr. Tholen or Mr. Neill. (3) Mr. Neill became President of Geodyne on July 1, 1996. (4) No officer or director of Geodyne or its affiliates provides full-time services to the P-4 Partnership and no individual's salary or other compensation reimbursement from the P-4 Partnership equals or exceeds $100,000 per annum.
47
Salary Reimbursements P-5 Partnership --------------- Long Term Compensation ----------------------------------- Annual Compensation Awards Payouts ------------------------- ----------------------- ------- Securi- Other ties All Name Annual Restricted Under- Other and Compen- Stock lying LTIP Compen- Principal Salary Bonus sation Award(s) Options/ Payouts sation Position Year ($) ($) ($) ($) SARs(#) ($) ($) - --------------- ---- ------- ------- ------- ---------- -------- ------- ------- C. Philip Tholen, President, Chief Executive Officer(1)(2) 1995 - - - - - - - 1996 - - - - - - - Dennis R. Neill, President(2)(3) 1996 - - - - - - - 1997 - - - - - - - All Executive Officers, Directors, and Employees as a group(4) 1995 $68,075 - - - - - - 1996 $72,938 - - - - - - 1997 $74,484 - - - - - - - ---------- (1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until July 1, 1996. (2) The general and administrative expenses paid by the P-5 Partnership and attributable to salary reimbursements do not include any salary or other compensation attributable to Mr. Tholen or Mr. Neill. (3) Mr. Neill became President of Geodyne on July 1, 1996. (4) No officer or director of Geodyne or its affiliates provides full-time services to the P-5 Partnership and no individual's salary or other compensation reimbursement from the P-5 Partnership equals or exceeds $100,000 per annum.
48
Salary Reimbursements P-6 Partnership --------------- Long Term Compensation ----------------------------------- Annual Compensation Awards Payouts ------------------------- ----------------------- ------- Securi- Other ties All Name Annual Restricted Under- Other and Compen- Stock lying LTIP Compen- Principal Salary Bonus sation Award(s) Options/ Payouts sation Position Year ($) ($) ($) ($) SARs(#) ($) ($) - --------------- ---- ------- ------- ------- ---------- -------- ------- ------- C. Philip Tholen, President, Chief Executive Officer(1)(2) 1995 - - - - - - - 1996 - - - - - - - Dennis R. Neill, President(2)(3) 1996 - - - - - - - 1997 - - - - - - - All Executive Officers, Directors, and Employees as a group(4) 1995 $82,208 - - - - - - 1996 $88,080 - - - - - - 1997 $89,947 - - - - - - - ---------- (1) Mr. Tholen served as President and Chief Executive Officer of Geodyne until July 1, 1996. (2) The general and administrative expenses paid by the P-6 Partnership and attributable to salary reimbursements do not include any salary or other compensation attributable to Mr. Tholen or Mr. Neill. (3) Mr. Neill became President of Geodyne on July 1, 1996. (4) No officer or director of Geodyne or its affiliates provides full-time services to the P-6 Partnership and no individual's salary or other compensation reimbursement from the P-6 Partnership equals or exceeds $100,000 per annum.
49 During 1995 El Paso Energy Marketing Company, formerly known as Premier Gas Company ("El Paso"), an affiliate of the Partnerships until December 6, 1995, purchased a portion of the gas attributable to the Partnerships' Net Profits Interests at market prices and resold such gas directly to end-users and local distribution companies. Affiliates of the Partnerships serve as operator of some of the wells in which the Partnerships own a Net Profits Interest. The owners of the working interests in these wells contract with such affiliates for services as operator of the wells. As operator, such affiliates are compensated at rates provided in the operating agreements in effect and charged to all parties to such agreement. Such compensation may occur both prior and subsequent to the commencement of commercial marketing of production of oil or gas. The dollar amount of such compensation which burdens the Partnerships' Net Profits Interests is impossible to quantify as of the date of this Annual Report. In addition to the compensation/reimbursements noted above, during the three years ended December 31, 1997, the Samson Companies were in the business of supplying field and drilling equipment and services to affiliated and unaffiliated parties in the industry. These companies may have provided equipment and services for wells in which the Partnerships have a Net Profits Interest. These equipment and services were provided at prices or rates equal to or less than those normally charged in the same or comparable geographic area by unaffiliated persons or companies dealing at arm's length. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table provides information as to the beneficial ownership of the Units as of January 31, 1998, by (i) each beneficial owner of more than five percent of the issued and outstanding Units, (ii) the director and officers of the General Partner, and (iii) the General Partner and its affiliates. The address of the General Partner, its officers and director, and Samson Resources Company is Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103. 50 Number of Units Beneficially Owned (Percent Beneficial Owner of Outstanding) - -------------------------------------------- --------------- P-1 Partnership: - --------------- Samson Resources Company 13,134 (12.2%) All affiliates, directors, and officers of the General Partner as a group and the General Partner (4 persons) 13,134 (12.2%) P-2 Partnership: - --------------- Samson Resources Company 7,110 ( 7.9%) Masco Master Investment Account 21001 Van Born Road Taylor, MI 48180 10,600 (11.8%) Loma Linda University Medical Center P. O. Box 2000 Loma Linda, CA 92354 5,000 ( 5.5%) All affiliates, directors, and officers of the General Partner as a group and the General Partner (4 persons) 7,110 ( 7.9%) P-3 Partnership: - --------------- Samson Resources Company 39,924 (23.5%) Merced County Retirement Association Pension Trust 2222 M. Street Merced, CA 95340 10,000 ( 5.9%) All affiliates, directors, and officers of the General Partner as a group and the General Partner (4 persons) 39,924 (23.5%) 51 P-4 Partnership: - --------------- Samson Resources Company 9,738 ( 7.7%) Masco Master Investment Account 21001 Van Born Road Taylor, MI 48180 10,600 ( 8.4%) All affiliates, directors, and officers of the General Partner as a group and the General Partner (4 persons) 9,738 ( 7.7%) P-5 Partnership: - --------------- Samson Resources Company 14,777 (12.5%) All affiliates, directors, and officers of the General Partner as a group and the General Partner (4 persons) 14,777 (12.5%) P-6 Partnership: - --------------- Samson Resources Company 10,843 ( 7.6%) ATL, Inc. 1200 Harbor Boulevard, 5th Floor Weehawken, NJ 07087 54,887 (38.4%) All affiliates, directors, and officers of the General Partner as a group and the General Partner (4 persons) 10,843 ( 7.6%) ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The General Partner and certain of its affiliates engage in oil and gas activities independently of the Partnerships which result in conflicts of interest that cannot be totally eliminated. The allocation of acquisition opportunities and the nature of the compensation arrangements between the Partnerships and the General Partner also create potential conflicts of interest. An affiliate of the Partnerships owns some of the Partnerships' Units and therefore has an identity of interest with other Limited Partners with respect to the operations of the Partnerships. 52 In order to attempt to assure limited liability for the Limited Partners as well as an orderly conduct of business, management of the Partnerships is exercised solely by the General Partner. The Partnership Agreements grant the General Partner broad discretionary authority with respect to the Partnerships' expenditure and control of funds, including borrowings. These provisions are similar to those contained in prospectuses and partnership agreements for other public oil and gas partnerships. Broad discretion as to general management of the Partnerships involves circumstances where the General Partner has conflicts of interest and where it must allocate costs and expenses, or opportunities, among the Partnerships and other competing interests. The General Partner does not devote all of its time, efforts, and personnel exclusively to the Partnerships. Furthermore, the Partnerships do not have any employees, but instead rely on the personnel of the Samson Companies. The Partnerships thus compete with the Samson Companies (including other currently sponsored oil and gas partnerships) for the time and resources of such personnel. The Samson Companies devote such time and personnel to the management of the Partnerships as are indicated by the circumstances and as are consistent with the General Partner's fiduciary duties. Affiliates of the Partnerships operate certain wells in which the Partnerships have a net profits interest and are compensated for such services at rates comparable to charges of unaffiliated third parties for services in the same geographic area. These costs are charged to the owners of the working interest of such wells and are considered when calculating the Net Profits payable to the Partnerships. These costs are thus indirectly borne by the Partnership. As a result of Samson Investment Company's ("Samson") acquisition of the General Partner and its affiliates, Samson, PaineWebber (the dealer manager of the original offering of Units), and the General Partner entered into an advisory agreement which relates primarily to the Partnerships. The Advisory Agreement will expire on March 3, 1998. The Advisory Agreement provides, among other things, that: (i) Samson will review periodically with PaineWebber the general operations and performance of the Partnerships and the terms of any material transaction involving a Partnership; (ii) Samson will allow PaineWebber to advise Samson and to comment on any General Partner-initiated amendment to a Partnership Agreement which requires a vote of the Limited Partners and any proposal initiated by the General Partner that would involve a reorganization, merger, or consolidation of a Partnership, a sale of all or substantially all of the assets of a Partnership the liquidation or dissolution of a Partnership, or the exchange of cash, securities, or other assets for all or any outstanding Units; (iii) the General partner will maintain an "800" investor services telephone number; and (iv) if Samson proposes a 53 consolidation, merger, or exchange offer involving any limited partnership managed by Samson, it will propose to include all of the Partnerships in such transaction or provide a statement to PaineWebber as to the reasons why some or all of the Partnerships are not included in such transaction. Affiliates of the Partnerships are solely responsible for the negotiation, administration, and enforcement of oil and gas sales agreements covering the leasehold interests in which the Partnerships hold Net Profits Interests. Because affiliates of the Partnerships who provide services to the owners of the Working Interests have fiduciary or other duties to other members of the Samson Companies, contract amendments and negotiating positions taken by them in their effort to enforce contracts with purchasers may not necessarily represent the positions that the owners of such Working Interests would take if they were to administer their own contracts without involvement with other members of the Samson Companies. On the other hand, management believes that the negotiating strength and contractual positions of the owners of such Working Interests have been enhanced by virtue of their affiliation with the Samson Companies. For a description of certain of the relationships and related transactions see "Item 11. Executive Compensation." 54 PART IV. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) Financial Statements, Financial Statement Schedules, and Exhibits. (1) Financial Statements: The following financial statements for the Geodyne Institutional/Pension Energy Income P-1 Limited Partnership Geodyne Institutional/Pension Energy Income P-2 Limited Partnership Geodyne Institutional/Pension Energy Income Limited Partnership P-3 Geodyne Institutional/Pension Energy Income Limited Partnership P-4 Geodyne Institutional/Pension Energy Income Limited Partnership P-5 Geodyne Institutional/Pension Energy Income Limited Partnership P-6 as of December 31, 1997 and 1996 and for each of the three years in the period ended December 31, 1997 are filed as part of this report: Report of Independent Accountants Combined Balance Sheets Combined Statements of Operations Combined Statements of Changes in Partners' Capital (Deficit) Combined Statements of Cash Flows Notes to Combined Financial Statements (2) Financial Statement Schedules: None. (3) Exhibits: 4.1 The Certificate and Agreements of Limited Partnership for the following Partnerships have been previously filed with the SEC as Exhibit 2.1 to Form 8-A filed by each Partnership on the dates shown below and are hereby incorporated by reference. 55 Partnership Filing Date File No. ----------- ----------- -------- P-1 June 5, 1989 0-17800 P-2 June 5, 1989 0-17800 P-3 February 20, 1990 0-18306 P-4 February 20, 1990 0-18306 P-5 November 13, 1990 0-18637 P-6 November 30, 1990 0-18937 4.2 The Agreements of Partnership for the following NPI Partnerships have been previously filed with the SEC as Exhibit 2.2 to Form 8-A filed by the related Partnerships on the dates shown below and are hereby incorporated by reference. Form 8-A Partnership Filing Date ----------- ----------------- P-1 June 5, 1989 P-2 June 5, 1989 P-3 February 20, 1990 P-4 February 20, 1990 P-5 June 11, 1990 P-6 December 10, 1990 4.3 Advisory Agreement dated as of November 24, 1992 between Samson, PaineWebber, Geodyne Resources, Geodyne Properties, Inc., Geodyne Production Company, and Geodyne Energy Company filed as Exhibit 28.3 to Registrants' Current Report on Form 8-K filed with the SEC on December 24, 1992 and is hereby incorporated by reference. 4.4 Second Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income P-1 Limited Partnership, filed as Exhibit 4.1 to Registrants' Current Report on Form 8-K dated August 2, 1993 filed with the SEC on August 10, 1993 and is hereby incorporated by reference. 4.5 Second Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income P-2 Limited Partnership, filed as Exhibit 4.2 to Registrants' Current Report on Form 8-K dated August 2, 1993 filed with the SEC on August 10, 1993 and is hereby incorporated by reference. 56 4.6 Second Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-3, filed as Exhibit 4.3 to Registrants' Current Report on Form 8-K dated August 2, 1993 filed with the SEC on August 10, 1993 and is hereby incorporated by reference. 4.7 Second Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-4, filed as Exhibit 4.4 to Registrants' Current Report on Form 8-K dated August 2, 1993 filed with the SEC on August 10, 1993 and is hereby incorporated by reference. 4.8 Second Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-5, filed as Exhibit 4.5 to Registrants' Current Report on Form 8-K dated August 2, 1993 filed with the SEC on August 10, 1993 and is hereby incorporated by reference. 4.9 Second Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-6, filed as Exhibit 4.6 to Registrants' Current Report on Form 8-K dated August 2, 1993 filed with the SEC on August 10, 1993 and is hereby incorporated by reference. 4.10 Third Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income P-1 Limited Partnership, filed as Exhibit 4.10 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 filed with the SEC April 1, 1996 and is hereby incorporated by reference. 4.11 Third Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income P-2 Limited Partnership, filed as Exhibit 4.11 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 filed with the SEC on April 1, 1996 and is hereby incorporated by reference. 57 4.12 Third Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-3, filed as Exhibit 4.12 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 filed with the SEC on April 1, 1996 and is hereby incorporated by reference. 4.13 Third Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-4, filed as Exhibit 4.13 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 filed with the SEC on April 1, 1996 and is hereby incorporated by reference. 4.14 Third Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-5, filed as Exhibit 4.14 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 filed with the SEC on April 1, 1996 and is hereby incorporated by reference. 4.15 Third Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-6, filed as Exhibit 4.15 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 filed with the SEC on April 1, 1996 and is hereby incorporated by reference. *23.1 Consent of Ryder Scott Company, Petroleum Engineers for the Geodyne Institutional/ Pension Energy Income P-1 Limited Partnership. *23.2 Consent of Ryder Scott Company, Petroleum Engineers for the Geodyne Institutional/ Pension Energy Income P-2 Limited Partnership. *23.3 Consent of Ryder Scott Company, Petroleum Engineers for the Geodyne Institutional/ Pension Energy Income Limited Partnership P-3. *23.4 Consent of Ryder Scott Company, Petroleum Engineers for the Geodyne Institutional/ Pension Energy Income Limited Partnership P-4. 58 *23.5 Consent of Ryder Scott Company, Petroleum Engineers for the Geodyne Institutional/ Pension Energy Income Limited Partnership P-5. *23.6 Consent of Ryder Scott Company, Petroleum Engineers for the Geodyne Institutional/ Pension Energy Income Limited Partnership P-6. *27.1 Financial Data Schedule containing summary financial information extracted from the Geodyne Institutional/Pension Energy Income P-1 Limited Partnership's financial statements as of December 31, 1997 and for the year ended December 31, 1997. *27.2 Financial Data Schedule containing summary financial information extracted from the Geodyne Institutional/Pension Energy Income P-2 Limited Partnership's financial statements as of December 31, 1997 and for the year ended December 31, 1997. *27.3 Financial Data Schedule containing summary financial information extracted from the Geodyne Institutional/Pension Energy Income Limited Partnership P-3's financial statements as of December 31, 1997 and for the year ended December 31, 1997. *27.4 Financial Data Schedule containing summary financial information extracted from the Geodyne Institutional/Pension Energy Income Limited Partnership P-4's financial statements as of December 31, 1997 and for the year ended December 31, 1997. *27.5 Financial Data Schedule containing summary financial information extracted from the Geodyne Institutional/Pension Energy Income Limited Partnership P-5's financial statements as of December 31, 1997 and for the year ended December 31, 1997. *27.6 Financial Data Schedule containing summary financial information extracted from the Geodyne Institutional/Pension Energy Income Limited Partnership P-6's financial statements as of December 31, 1997 and for the year ended December 31, 1997. 59 All other Exhibits are omitted as inapplicable. ---------- *Filed herewith. b) Reports on Form 8-K filed during the fourth quarter of 1997 None. 60 SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly organized. GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP By: GEODYNE RESOURCES, INC. General Partner February 17, 1998 By: /s/Dennis R. Neill ------------------------------ Dennis R. Neill President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated. By: /s/Dennis R. Neill President and February 17, 1998 ------------------- Director (Principal Dennis R. Neill Executive Officer) /s/Patrick M. Hall (Principal February 17, 1998 ------------------- Financial and Patrick M. Hall Accounting Officer) /s/Judy K. Fox Secretary February 17, 1998 ------------------- Judy K. Fox 61 SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly organized. GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-2 LIMITED PARTNERSHIP By: GEODYNE RESOURCES, INC. General Partner February 17, 1998 By: /s/Dennis R. Neill ------------------------------ Dennis R. Neill President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated. By: /s/Dennis R. Neill President and February 17, 1998 ------------------- Director (Principal Dennis R. Neill Executive Officer) /s/Patrick M. Hall (Principal February 17, 1998 ------------------- Financial and Patrick M. Hall Accounting Officer) /s/Judy K. Fox Secretary February 17, 1998 ------------------- Judy K. Fox 62 SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly organized. GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3 By: GEODYNE RESOURCES, INC. General Partner February 17, 1998 By: /s/Dennis R. Neill ------------------------------ Dennis R. Neill President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated. By: /s/Dennis R. Neill President and February 17, 1998 ------------------- Director (Principal Dennis R. Neill Executive Officer) /s/Patrick M. Hall (Principal February 17, 1998 ------------------- Financial and Patrick M. Hall Accounting Officer) /s/Judy K. Fox Secretary February 17, 1998 ------------------- Judy K. Fox 63 SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly organized. GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4 By: GEODYNE RESOURCES, INC. General Partner February 17, 1998 By: /s/Dennis R. Neill ------------------------------ Dennis R. Neill President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated. By: /s/Dennis R. Neill President and February 17, 1998 ------------------- Director (Principal Dennis R. Neill Executive Officer) /s/Patrick M. Hall (Principal February 17, 1998 ------------------- Financial and Patrick M. Hall Accounting Officer) /s/Judy K. Fox Secretary February 17, 1998 ------------------- Judy K. Fox 64 SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly organized. GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5 By: GEODYNE RESOURCES, INC. General Partner February , 1998 By: /s/Dennis R. Neill ------------------------------ Dennis R. Neill President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated. By: /s/Dennis R. Neill President and February 17, 1998 ------------------- Director (Principal Dennis R. Neill Executive Officer) /s/Patrick M. Hall (Principal February 17, 1998 ------------------- Financial and Patrick M. Hall Accounting Officer) /s/Judy K. Fox Secretary February 17, 1998 ------------------- Judy K. Fox 65 SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly organized. GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-6 By: GEODYNE RESOURCES, INC. General Partner February 17, 1998 By: /s/Dennis R. Neill ------------------------------ Dennis R. Neill President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated. By: /s/Dennis R. Neill President and February 17, 1998 ------------------- Director (Principal Dennis R. Neill Executive Officer) /s/Patrick M. Hall (Principal February 17, 1998 ------------------- Financial and Patrick M. Hall Accounting Officer) /s/Judy K. Fox Secretary February 17, 1998 ------------------- Judy K. Fox 66 ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT ACCOUNTANTS TO THE PARTNERS GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP AND GEODYNE NPI PARTNERSHIP P-1 We have audited the combined balance sheets of the Geodyne Institutional/Pension Energy Income P-1 Limited Partnership, a Texas limited partnership, and Geodyne NPI Partnership P-1, an Oklahoma general partnership, as of December 31, 1997 and 1996 and the related combined statements of operations, changes in partners' capital (deficit), and cash flows for the years ended December 31, 1997, 1996, and 1995. These financial statements are the responsibility of the Partnerships' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of the Geodyne Institutional/Pension Energy Income P-1 Limited Partnership and Geodyne NPI Partnership P-1 at December 31, 1997 and 1996 and the combined results of their operations and cash flows for the years ended December 31, 1997, 1996, and 1995, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Tulsa, Oklahoma February 6, 1998 F-1 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP GEODYNE NPI PARTNERSHIP P-1 Combined Balance Sheets December 31, 1997 and 1996 ASSETS ------ 1997 1996 ------------ ----------- CURRENT ASSETS: Cash and cash equivalents $ 503,622 $ 293,296 Accounts receivable: Net Profits 164,644 257,458 --------- --------- Total current assets $ 668,266 $ 550,754 NET PROFITS INTERESTS, net, utilizing the successful efforts method 1,408,420 2,680,005 --------- --------- $2,076,686 $3,230,759 ========= ========= PARTNERS' CAPITAL (DEFICIT) --------------------------- PARTNERS' CAPITAL (DEFICIT): General Partner ($ 87,415) ($ 62,666) Limited Partners, issued and outstanding, 108,074 Units 2,164,101 3,293,425 --------- --------- Total Partners' capital $2,076,686 $3,230,759 ========= ========= The accompanying notes are an integral part of these combined financial statements. F-2 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP GEODYNE NPI PARTNERSHIP P-1 Combined Statements of Operations For the Years Ended December 31, 1997, 1996, and 1995 1997 1996 1995 ------------ ------------ ---------- REVENUES: Net Profits $1,064,105 $1,191,311 $935,026 Interest income 11,117 9,643 8,151 Gain on sale of Net Profits Interests 380,408 80,721 7,144 --------- --------- ------- $1,455,630 $1,281,675 $950,321 COSTS AND EXPENSES: Depletion of Net Profits Interests $ 263,691 $ 324,506 $698,380 Impairment Provision 902,042 - 86,264 General and administrative 129,205 130,147 126,220 --------- --------- ------- $1,294,938 $ 454,653 $910,864 --------- --------- ------- NET INCOME $ 160,692 $ 827,022 $ 39,457 ========= ========= ======= GENERAL PARTNER - NET INCOME $ 54,016 $ 53,849 $ 33,359 ========= ========= ======= LIMITED PARTNERS - NET INCOME $ 106,676 $ 773,173 $ 6,098 ========= ========= ======= NET INCOME per Unit $ .99 $ 7.15 $ .06 ========= ========= ======= UNITS OUTSTANDING 108,074 108,074 108,074 ========= ========= ======= The accompanying notes are an integral part of these combined financial statements. F-3 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP GEODYNE NPI PARTNERSHIP P-1 Combined Statements of Changes in Partners' Capital (Deficit) For the Years Ended December 31, 1997, 1996, and 1995 Limited General Partners Partner Combined ------------ --------- ------------ Balance, December 31, 1994 $4,286,154 ($42,681) $4,243,473 Net income 6,098 33,359 39,457 Cash distributions ( 755,000) ( 39,000) ( 794,000) --------- ------ --------- Balance, December 31, 1995 $3,537,252 ($48,322) $3,488,930 Net income 773,173 53,849 827,022 Cash distributions ( 1,017,000) ( 68,193) ( 1,085,193) --------- ------ --------- Balance, December 31, 1996 $3,293,425 ($62,666) $3,230,759 Net income 106,676 54,016 160,692 Cash distributions ( 1,236,000) ( 78,765) ( 1,314,765) --------- ------ --------- Balance, December 31, 1997 $2,164,101 ($87,415) $2,076,686 ========= ====== ========= The accompanying notes are an integral part of these combined financial statements. F-4 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-1 LIMITED PARTNERSHIP GEODYNE NPI PARTNERSHIP P-1 Combined Statements of Cash Flows For the Years Ended December 31, 1997, 1996, and 1995 1997 1996 1995 ------------ ------------ ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 160,692 $ 827,022 $ 39,457 Adjustments to reconcile net income to net cash provided by operating activities: Depletion of Net Profits Interests 263,691 324,506 698,380 Impairment Provision 902,042 - 86,264 Gain on sale of Net Profits Interests ( 380,408) ( 80,721) ( 7,144) (Increase)decrease in accounts receivable 92,814 ( 36,311) ( 34,097) --------- --------- ------- Net cash provided by operating activities $1,038,831 $1,034,496 $782,860 --------- --------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 21,339) ($ 12,540) ($ 4,566) Proceeds from sale of Net Profits Interests 507,599 115,009 30,046 --------- --------- ------- Net cash provided by investing activities $ 486,260 $ 102,469 $ 25,480 --------- --------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($1,314,765) ($1,085,193) ($794,000) --------- --------- ------- Net cash used by financing activities ($1,314,765) ($1,085,193) ($794,000) --------- --------- ------- NET INCREASE IN CASH AND CASH EQUIVALENTS $ 210,326 $ 51,772 $ 14,340 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 293,296 241,524 227,184 --------- --------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 503,622 $ 293,296 $241,524 ========= ========= ======= The accompanying notes are an integral part of these combined financial statements. F-5 REPORT OF INDEPENDENT ACCOUNTANTS TO THE PARTNERS GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-2 LIMITED PARTNERSHIP AND GEODYNE NPI PARTNERSHIP P-2 We have audited the combined balance sheets of the Geodyne Institutional/Pension Energy Income P-2 Limited Partnership, a Texas limited partnership, and Geodyne NPI Partnership P-2, an Oklahoma general partnership, as of December 31, 1997 and 1996 and the related combined statements of operations, changes in partners' capital (deficit), and cash flows for the years ended December 31, 1997, 1996, and 1995. These financial statements are the responsibility of the Partnerships' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of the Geodyne Institutional/Pension Energy Income P-2 Limited Partnership and Geodyne NPI Partnership P-2 at December 31, 1997 and 1996 and the combined results of their operations and cash flows for the years ended December 31, 1997, 1996, and 1995, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Tulsa, Oklahoma February 6, 1998 F-6 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-2 LIMITED PARTNERSHIP GEODYNE NPI PARTNERSHIP P-2 Combined Balance Sheets December 31, 1997 and 1996 ASSETS ------ 1997 1996 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ 369,191 $ 222,506 Accounts receivable: Net Profits 135,331 203,287 General Partner - 8,376 --------- --------- Total current assets $ 504,522 $ 434,169 NET PROFITS INTERESTS, net, utilizing the successful efforts method 1,182,230 2,201,380 --------- --------- $1,686,752 $2,635,549 ========= ========= PARTNERS' CAPITAL (DEFICIT) --------------------------- PARTNERS' CAPITAL (DEFICIT): General Partner ($ 72,438) ($ 57,428) Limited Partners, issued and outstanding, 90,094 Units 1,759,190 2,692,977 --------- --------- Total Partners' capital $1,686,752 $2,635,549 ========= ========= The accompanying notes are an integral part of these combined financial statements. F-7 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-2 LIMITED PARTNERSHIP GEODYNE NPI PARTNERSHIP P-2 Combined Statements of Operations For the Years Ended December 31, 1997, 1996, and 1995 1997 1996 1995 ---------- ---------- ---------- REVENUES: Net Profits $ 836,494 $911,429 $715,608 Interest income 8,532 7,216 5,184 Gain on sale of Net Profits Interests 284,247 57,048 13,376 --------- ------- ------- $1,129,273 $975,693 $734,168 COSTS AND EXPENSES: Depletion of Net Profits Interests $ 207,379 $275,464 $605,201 Impairment provision 727,893 - 182,970 General and administrative 107,544 108,749 105,286 --------- ------- ------- $1,042,816 $384,213 $893,457 --------- ------- ------- NET INCOME (LOSS) $ 86,457 $591,480 ($159,289) ========= ======= ======= GENERAL PARTNER - NET INCOME $ 41,244 $ 40,232 $ 23,562 ========= ======= ======= LIMITED PARTNERS - NET INCOME (LOSS) $ 45,213 $551,248 ($182,851) ========= ======= ======= NET INCOME (LOSS) per Unit $ .50 $ 6.12 ($ 2.03) ========= ======= ======= UNITS OUTSTANDING 90,094 90,094 90,094 ========= ======= ======= The accompanying notes are an integral part of these combined financial statements. F-8 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-2 LIMITED PARTNERSHIP GEODYNE NPI PARTNERSHIP P-2 Combined Statements of Changes in Partners' Capital (Deficit) For the Years Ended December 31, 1997, 1996, and 1995 Limited General Partners Partner Combined ------------ --------- ------------ Balance, December 31, 1994 $3,628,580 ($42,252) $3,586,328 Net income (loss) ( 182,851) 23,562 ( 159,289) Cash distributions ( 545,000) ( 27,500) ( 572,500) --------- ------ --------- Balance, December 31, 1995 $2,900,729 ($46,190) $2,854,539 Net income 551,248 40,232 591,480 Cash distributions ( 759,000) ( 51,470) ( 810,470) --------- ------ --------- Balance, December 31, 1996 $2,692,977 ($57,428) $2,635,549 Net income 45,213 41,244 86,457 Cash distributions ( 979,000) ( 56,254) ( 1,035,254) --------- ------ --------- Balance, December 31, 1997 $1,759,190 ($72,438) $1,686,752 ========= ====== ========= The accompanying notes are an integral part of these combined financial statements. F-9 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME P-2 LIMITED PARTNERSHIP GEODYNE NPI PARTNERSHIP P-2 Combined Statements of Cash Flows For the Years Ended December 31, 1997, 1996, and 1995 1997 1996 1995 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 86,457 $591,480 ($159,289) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depletion of Net Profits Interests 207,379 275,464 605,201 Impairment provision 727,893 - 182,970 Gain on sale of Net Profits Interests ( 284,247) ( 57,048) ( 13,376) (Increase) decrease in accounts receivable - Net Profits 67,956 ( 27,246) ( 39,805) (Increase) decrease in accounts receivable -General Partner 8,376 ( 8,376) - --------- ------- ------- Net cash provided by operating activities $ 813,814 $774,274 $575,701 --------- ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 34,745) ($ 6,613) ($ 9,877) Proceeds from sale of Net Profits Interests 402,870 97,524 36,381 --------- ------- ------- Net cash provided by investing activities $ 368,125 $ 90,911 $ 26,504 --------- ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($1,035,254) ($810,470) ($572,500) --------- ------- ------- Net cash used by financing activities ($1,035,254) ($810,470) ($572,500) --------- ------- ------- NET INCREASE IN CASH AND CASH EQUIVALENTS $ 146,685 $ 54,715 $ 29,705 F-10 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 222,506 167,791 138,086 --------- ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 369,191 $222,506 $167,791 ========= ======= ======= The accompanying notes are an integral part of these combined financial statements. F-11 REPORT OF INDEPENDENT ACCOUNTANTS TO THE PARTNERS GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3 AND GEODYNE NPI PARTNERSHIP P-3 We have audited the combined balance sheets of the Geodyne Institutional/Pension Energy Income Limited Partnership P-3, an Oklahoma limited partnership, and Geodyne NPI Partnership P-3, an Oklahoma general partnership, as of December 31, 1997 and 1996 and the related combined statements of operations, changes in partners' capital (deficit), and cash flows for the years ended December 31, 1997, 1996, and 1995. These financial statements are the responsibility of the Partnerships' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of the Geodyne Institutional/Pension Energy Income Limited Partnership P-3 and Geodyne NPI Partnership P-3 at December 31, 1997 and 1996 and the combined results of their operations and cash flows for the years ended December 31, 1997, 1996, and 1995, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Tulsa, Oklahoma February 6, 1998 F-12 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3 GEODYNE NPI PARTNERSHIP P-3 Combined Balance Sheets December 31, 1997 and 1996 ASSETS ------ 1997 1996 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ 685,628 $ 415,354 Accounts receivable: Net Profits 254,470 379,725 General Partner - 16,473 --------- --------- Total current assets $ 940,098 $ 811,552 NET PROFITS INTERESTS, net, utilizing the successful efforts method 2,196,444 4,156,531 --------- --------- $3,136,542 $4,968,083 ========= ========= PARTNERS' CAPITAL (DEFICIT) --------------------------- PARTNERS' CAPITAL (DEFICIT): General Partner ($ 137,258) ($ 107,085) Limited Partners, issued and outstanding, 169,637 Units 3,273,800 5,075,168 --------- --------- Total Partners' capital $3,136,542 $4,968,083 ========= ========= The accompanying notes are an integral part of these combined financial statements. F-13 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3 GEODYNE NPI PARTNERSHIP P-3 Combined Statements of Operations For the Years Ended December 31, 1997, 1996, and 1995 1997 1996 1995 ------------ ------------ ------------ REVENUES: Net Profits $1,559,975 $1,706,259 $1,327,052 Interest income 16,329 12,976 10,368 Gain on sale of Net Profits Interests 532,904 105,977 16,231 --------- --------- --------- $2,109,208 $1,825,212 $1,353,651 COSTS AND EXPENSES: Depletion of Net Profits Interests $ 385,937 $ 521,166 $1,147,906 Impairment provision 1,413,917 - 377,983 General and administrative 202,308 204,160 199,113 --------- --------- --------- $2,002,162 $ 725,326 $1,725,002 --------- --------- --------- NET INCOME (LOSS) $ 107,046 $1,099,886 ($ 371,351) ========= ========= ========= GENERAL PARTNER - NET INCOME $ 76,414 $ 75,192 $ 42,468 ========= ========= ========= LIMITED PARTNERS - NET INCOME (LOSS) $ 30,632 $1,024,694 ($ 413,819) ========= ========= ========= NET INCOME (LOSS) per Unit $ .18 $ 6.04 ($ 2.44) ========= ========= ========= UNITS OUTSTANDING 169,637 169,637 169,637 ========= ========= ========= The accompanying notes are an integral part of these combined financial statements. F-14 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3 GEODYNE NPI PARTNERSHIP P-3 Combined Statements of Changes in Partners' Capital (Deficit) For the Years Ended December 31, 1997, 1996, and 1995 Limited General Partners Partner Combined ------------- ---------- ------------ Balance, Dec. 31, 1994 $ 6,911,293 ($ 75,099) $6,836,194 Net income (loss) ( 413,819) 42,468 ( 371,351) Cash distributions ( 1,055,000) ( 54,000) ( 1,109,000) ---------- ------- --------- Balance, Dec. 31, 1995 $ 5,442,474 ($ 86,631) $5,355,843 Net income 1,024,694 75,192 1,099,886 Cash distributions ( 1,392,000) ( 95,646) ( 1,487,646) ---------- ------- --------- Balance, Dec. 31, 1996 $ 5,075,168 ($107,085) $4,968,083 Net income 30,632 76,414 107,046 Cash distributions ( 1,832,000) ( 106,587) ( 1,938,587) ---------- ------- --------- Balance, Dec. 31, 1997 $ 3,273,800 ($137,258) $3,136,542 ========== ======= ========= The accompanying notes are an integral part of these combined financial statements. F-15 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-3 GEODYNE NPI PARTNERSHIP P-3 Combined Statements of Cash Flows For the Years Ended December 31, 1997, 1996, and 1995 1997 1996 1995 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 107,046 $1,099,886 ($ 371,351) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depletion of Net Profits Interests 385,937 521,166 1,147,906 Impairment provision 1,413,917 - 377,983 Gain on sale of Net Profits Interests ( 532,904) ( 105,977) ( 16,231) (Increase) decrease in accounts receivable - Net Profits 125,255 ( 61,150) ( 67,313) (Increase) decrease in accounts receivable -General Partner 16,473 ( 16,473) - --------- --------- --------- Net cash provided by operating activities $1,515,724 $1,437,452 $1,070,994 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 66,502) ($ 12,220) ( 19,116) Proceeds from sale of Net Profits Interests 759,639 181,139 68,171 --------- --------- --------- Net cash provided by investing activities $ 693,137 $ 168,919 $ 49,055 --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($1,938,587) ($1,487,646) ($1,109,000) --------- --------- --------- Net cash used by financing activities ($1,938,587) ($1,487,646) ($1,109,000) --------- --------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS $ 270,274 $ 118,725 $ 11,049 F-16 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 415,354 296,629 285,580 --------- --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 685,628 $ 415,354 $ 296,629 ========= ========= ========= The accompanying notes are an integral part of these combined financial statements. F-17 REPORT OF INDEPENDENT ACCOUNTANTS TO THE PARTNERS GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4 AND GEODYNE NPI PARTNERSHIP P-4 We have audited the combined balance sheets of the Geodyne Institutional/Pension Energy Income Limited Partnership P-4, an Oklahoma limited partnership, and Geodyne NPI Partnership P-4, an Oklahoma general partnership, as of December 31, 1997 and 1996 and the related combined statements of operations, changes in partners' capital (deficit), and cash flows for the years ended December 31, 1997, 1996, and 1995. These financial statements are the responsibility of the Partnerships' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of the Geodyne Institutional/Pension Energy Income Limited Partnership P-4 and Geodyne NPI Partnership P-4 at December 31, 1997 and 1996 and the combined results of their operations and cash flows for the years ended December 31, 1997, 1996, and 1995, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Tulsa, Oklahoma February 6, 1998 F-18 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4 GEODYNE NPI PARTNERSHIP P-4 Combined Balance Sheets December 31, 1997 and 1996 ASSETS ------ 1997 1996 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ 243,903 $ 345,876 Accounts receivable: Net Profits 301,060 369,940 --------- --------- Total current assets $ 544,963 $ 715,816 NET PROFITS INTERESTS, net, utilizing the successful efforts method 1,282,329 2,567,661 --------- --------- $1,827,292 $3,283,477 ========= ========= PARTNERS' CAPITAL (DEFICIT) - --------------------------- PARTNERS' CAPITAL (DEFICIT): General Partner ($ 94,799) ($ 81,373) Limited Partners, issued and outstanding, 126,306 Units 1,922,091 3,364,850 --------- --------- Total Partners' capital $1,827,292 $3,283,477 ========= ========= The accompanying notes are an integral part of these combined financial statements. F-19 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4 GEODYNE NPI PARTNERSHIP P-4 Combined Statements of Operations For the Years Ended December 31, 1997, 1996, and 1995 1997 1996 1995 ------------ ------------ ------------ REVENUES: Net Profits $1,290,780 $1,373,635 $1,251,153 Interest income 13,072 11,768 12,458 Gain (Loss) on sale of Net Profits Interests 63,002 ( 52,591) ( 508) --------- --------- --------- $1,366,854 $1,332,812 $1,263,103 COSTS AND EXPENSES: Depletion of Net Profits Interests $ 364,709 $ 540,791 $ 990,870 Impairment provision 752,388 - 581,036 General and administrative 148,419 154,265 147,935 --------- --------- --------- $1,265,516 $ 695,056 $1,719,841 --------- --------- --------- NET INCOME (LOSS) $ 101,338 $ 637,756 ($ 456,738) ========= ========= ========= GENERAL PARTNER - NET INCOME $ 49,097 $ 52,931 $ 40,039 ========= ========= ========= LIMITED PARTNERS - NET INCOME (LOSS) $ 52,241 $ 584,825 ($ 496,777) ========= ========= ========= NET INCOME (LOSS) per Unit $ .41 $ 4.63 ($ 3.93) ========= ========= ========= UNITS OUTSTANDING 126,306 126,306 126,306 ========= ========= ========= The accompanying notes are an integral part of these combined financial statements. F-20 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4 GEODYNE NPI PARTNERSHIP P-4 Combined Statements of Changes in Partners' Capital (Deficit) For the Years Ended December 31, 1997, 1996, and 1995 Limited General Partners Partner Combined ------------ ---------- ------------ Balance, Dec. 31, 1994 $5,546,802 ($ 40,585) $5,506,217 Net income (loss) ( 496,777) 40,039 ( 456,738) Cash distributions ( 1,055,000) ( 54,000) ( 1,109,000) --------- ------- --------- Balance, Dec. 31, 1995 $3,995,025 ($ 54,546) $3,940,479 Net income 584,825 52,931 637,756 Cash distributions ( 1,215,000) ( 79,758) ( 1,294,758) --------- ------- --------- Balance, Dec. 31, 1996 $3,364,850 ($ 81,373) $3,283,477 Net income 52,241 49,097 101,338 Cash distributions ( 1,495,000) ( 62,523) ( 1,557,523) --------- ------- --------- Balance, Dec. 31, 1997 $1,922,091 ($ 94,799) $1,827,292 ========= ======= ========= The accompanying notes are an integral part of these combined financial statements. F-21 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-4 GEODYNE NPI PARTNERSHIP P-4 Combined Statements of Cash Flows For the Years Ended December 31, 1997, 1996, and 1995 1997 1996 1995 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 101,338 $ 637,756 ($ 456,738) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depletion of Net Profits Interests 364,709 540,791 990,870 Impairment provision 752,388 - 581,036 (Gain) loss on sale of Net Profits Interests ( 63,002) 52,591 508 (Increase) decrease in accounts receivable 68,880 ( 17,033) ( 139,959) --------- --------- -------- Net cash provided by operating activities $1,224,313 $1,214,105 $ 975,717 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 35,028) ($ 804) ( 19,172) Proceeds from sale of Net Profits Interests 266,265 139,216 9,907 --------- --------- --------- Net cash provided (used) by investing activities $ 231,237 $ 138,412 ($ 9,265) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($1,557,523) ($1,294,758) ($1,109,000) --------- --------- --------- Net cash used by financing activities ($1,557,523) ($1,294,758) ($1,109,000) --------- --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ($ 101,973) $ 57,759 ($ 142,548) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 345,876 288,117 430,665 --------- --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 243,903 $ 345,876 $ 288,117 ========= ========= ========= The accompanying notes are an integral part of these combined financial statements. F-22 REPORT OF INDEPENDENT ACCOUNTANTS TO THE PARTNERS GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5 AND GEODYNE NPI PARTNERSHIP P-5 We have audited the combined balance sheets of the Geodyne Institutional/Pension Energy Income Limited Partnership P-5, an Oklahoma limited partnership, and Geodyne NPI Partnership P-5, an Oklahoma general partnership, as of December 31, 1997 and 1996 and the related combined statements of operations, changes in partners' capital (deficit), and cash flows for the years ended December 31, 1997, 1996, and 1995. These financial statements are the responsibility of the Partnerships' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of the Geodyne Institutional/Pension Energy Income Limited Partnership P-5 and Geodyne NPI Partnership P-5 at December 31, 1997 and 1996 and the combined results of their operations and cash flows for the years ended December 31, 1997, 1996, and 1995, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Tulsa, Oklahoma February 6, 1998 F-23 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5 GEODYNE NPI PARTNERSHIP P-5 Combined Balance Sheets December 31, 1997 and 1996 ASSETS ------ 1997 1996 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ 228,750 $ 247,540 Accounts receivable: Net Profits 134,968 209,058 --------- --------- Total current assets $ 363,718 $ 456,598 NET PROFITS INTERESTS, net, utilizing the successful efforts method 1,257,789 2,536,590 --------- --------- $1,621,507 $2,993,188 ========= ========= PARTNERS' CAPITAL (DEFICIT) --------------------------- PARTNERS' CAPITAL (DEFICIT): General Partner ($ 74,683) ($ 60,088) Limited Partners, issued and outstanding, 118,449 Units 1,696,190 3,053,276 --------- --------- Total Partners' capital $1,621,507 $2,993,188 ========= ========= The accompanying notes are an integral part of these combined financial statements. F-24 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5 GEODYNE NPI PARTNERSHIP P-5 Combined Statements of Operations For the Years Ended December 31, 1997, 1996, and 1995 1997 1996 1995 ------------ ------------ ------------ REVENUES: Net Profits $1,000,125 $1,112,631 $ 938,957 Interest income 8,836 7,595 8,722 Gain on sale of Net Profits Interests 79,182 30,479 1,364 --------- --------- --------- $1,088,143 $1,150,705 $ 949,043 COSTS AND EXPENSES: Depletion of Net Profits Interests $ 249,055 $ 368,974 $ 785,795 Impairment provision 1,018,068 - 194,933 General and administrative 141,907 142,033 138,959 --------- --------- --------- $1,409,030 $ 511,007 $1,119,687 --------- --------- --------- NET INCOME (LOSS) ($ 320,887) $ 639,698 ($ 170,644) ========= ========= ========= GENERAL PARTNER - NET INCOME $ 34,199 $ 46,364 $ 30,697 ========= ========= ========= LIMITED PARTNERS - NET INCOME (LOSS) ($ 355,086) $ 593,334 ($ 201,341) ========= ========= ========= NET INCOME (LOSS) per Unit ($ 3.00) $ 5.01 ($ 1.70) ========= ========= ========= UNITS OUTSTANDING 118,449 118,449 118,449 ========= ========= ========= The accompanying notes are an integral part of these combined financial statements. F-25 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5 GEODYNE NPI PARTNERSHIP P-5 Combined Statements of Changes in Partners' Capital (Deficit) For the Years Ended December 31, 1997, 1996, and 1995 Limited General Partners Partner Combined ------------ ---------- ------------ Balance, Dec. 31, 1994 $4,160,283 ($44,622) $4,115,661 Net income (loss) ( 201,341) 30,697 ( 170,644) Cash distributions ( 685,000) ( 34,500) ( 719,500) --------- ------ --------- Balance, Dec. 31, 1995 $3,273,942 ($48,425) $3,225,517 Net income 593,334 46,364 639,698 Cash distributions ( 814,000) ( 58,027) ( 872,027) --------- ------ --------- Balance, Dec. 31, 1996 $3,053,276 ($60,088) $2,993,188 Net income (loss) ( 355,086) 34,199 ( 320,887) Cash distributions ( 1,002,000) ( 48,794) ( 1,050,794) --------- ------ --------- Balance, Dec. 31, 1997 $1,696,190 ($74,683) $1,621,507 ========= ====== ========= The accompanying notes are an integral part of these combined financial statements. F-26 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-5 GEODYNE NPI PARTNERSHIP P-5 Combined Statements of Cash Flows For the Years Ended December 31, 1997, 1996, and 1995 1997 1996 1995 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ($ 320,887) $639,698 ($170,644) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depletion of Net Profits Interests 249,055 368,974 785,795 Impairment provision 1,018,068 - 194,933 Gain on sale of Net Profits Interests ( 79,182) ( 30,479) ( 1,364) (Increase) decrease in accounts receivable 74,090 ( 58,851) ( 34,700) --------- ------- ------- Net cash provided by operating activities $ 941,144 $919,342 $774,020 --------- ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 980) ($ 2,807) ($ 29,603) Proceeds from sale of Net Profits Interests 91,840 35,956 1,557 --------- -------- ------- Net cash provided (used) by investing activities $ 90,860 $ 33,149 ($ 28,046) --------- ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($1,050,794) ($872,027) ($719,500) --------- ------- -------- Net cash used by financing activities ($1,050,794) ($872,027) ($719,500) --------- ------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ($ 18,790) $ 80,464 $ 26,474 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 247,540 167,076 140,602 --------- ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 228,750 $247,540 $167,076 ========= ======= ======= The accompanying notes are an integral part of these combined financial statements. F-27 REPORT OF INDEPENDENT ACCOUNTANTS TO THE PARTNERS GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-6 AND GEODYNE NPI PARTNERSHIP P-6 We have audited the combined balance sheets of the Geodyne Institutional/Pension Energy Income Limited Partnership P-6, an Oklahoma limited partnership, and Geodyne NPI Partnership P-6, an Oklahoma general partnership, as of December 31, 1997 and 1996 and the related combined statements of operations, changes in partners' capital (deficit), and cash flows for the years ended December 31, 1997, 1996, and 1995. These financial statements are the responsibility of the Partnerships' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of the Geodyne Institutional/Pension Energy Income Limited Partnership P-6 and Geodyne NPI Partnership P-6 at December 31, 1997 and 1996 and the combined results of their operations and cash flows for the years ended December 31, 1997, 1996, and 1995, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Tulsa, Oklahoma February 6, 1998 F-28 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-6 GEODYNE NPI PARTNERSHIP P-6 Combined Balance Sheets December 31, 1997 and 1996 ASSETS ------ 1997 1996 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ 362,957 $ 319,699 Accounts receivable: Net Profits 291,352 428,072 --------- --------- Total current assets $ 654,309 $ 747,771 NET PROFITS INTERESTS, net, utilizing the successful efforts method 2,457,809 3,966,906 --------- --------- $3,112,118 $4,714,677 ========= ========= PARTNERS' CAPITAL (DEFICIT) --------------------------- PARTNERS' CAPITAL (DEFICIT): General Partner ($ 96,514) ($ 59,021) Limited Partners, issued and outstanding, 143,041 Units 3,208,632 4,773,698 --------- --------- Total Partners' capital $3,112,118 $4,714,677 ========= ========= The accompanying notes are an integral part of these combined financial statements. F-29 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-6 GEODYNE NPI PARTNERSHIP P-6 Combined Statements of Operations For the Years Ended December 31, 1997, 1996, and 1995 1997 1996 1995 ---------- ------------ ---------- REVENUES: Net Profits $1,793,685 $2,002,957 $1,284,185 Interest income 15,425 13,419 10,768 Gain on sale of Net Profits Interests 37,698 24,815 6,045 --------- -------- --------- $1,846,808 $2,041,191 $1,300,998 COSTS AND EXPENSES: Depletion of Net Profits Interests $ 610,647 $ 788,251 $1,520,338 Impairment provision 898,584 - 478,168 General and administrative 171,754 171,630 173,446 --------- --------- --------- $1,680,985 $ 959,881 $2,171,952 --------- --------- --------- NET INCOME(LOSS) $ 165,823 $1,081,310 ($ 870,954) ========= ========= ========= GENERAL PARTNER - NET INCOME $ 67,889 $ 84,925 $ 36,393 ========= ========= ========= LIMITED PARTNERS - NET INCOME (LOSS) $ 97,934 $ 996,385 ($ 907,347) ========= ========= ========= NET INCOME (LOSS) per Unit $ .68 $ 6.97 ($ 6.34) ========= ========= ========= UNITS OUTSTANDING 143,041 143,041 143,041 ========= ========= ========= The accompanying notes are an integral part of these combined financial statements. F-30 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-6 GEODYNE NPI PARTNERSHIP P-6 Combined Statements of Changes in Partners' Capital (Deficit) For the Years Ended December 31, 1997, 1996 and 1995 Limited General Partners Partner Combined ------------ ---------- ----------- Balance, Dec. 31, 1994 $6,944,660 ($ 41,174) $6,903,486 Net income (loss) ( 907,347) 36,393 ( 870,954) Cash distributions ( 820,000) ( 42,500) ( 862,500) --------- ------- --------- Balance, Dec. 31, 1995 $5,217,313 ($ 47,281) $5,170,032 Net income 996,385 84,925 1,081,310 Cash distributions ( 1,440,000) ( 96,665) (1,536,665) ---------- ------ --------- Balance, Dec. 31, 1996 $4,773,698 ($ 59,021) $4,714,677 Net income 97,934 67,889 165,823 Cash distributions ( 1,663,000) ( 105,382) (1,768,382) --------- ------ --------- Balance, Dec. 31, 1997 $3,208,632 ($ 96,514) $3,112,118 ========= ======= ========= The accompanying notes are an integral part of these combined financial statements. F-31 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-6 GEODYNE NPI PARTNERSHIP P-6 Combined Statements of Cash Flows For the Years Ended December 31, 1997, 1996, and 1995 1997 1996 1995 ------------ ------------ ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 165,823 $1,081,310 ($ 870,954) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depletion of Net Profits Interests 610,647 788,251 1,520,338 Impairment provision 898,584 - 478,168 Gain on sale of Net Profits Interests ( 37,698) ( 24,815) (6,045) (Increase) decrease in accounts receivable 136,720 ( 196,497) (177,962) --------- ---------- --------- Net cash provided by operating activities $1,774,076 $1,648,249 $ 943,545 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 6,041) ($ 73,296) ($ 50,621) Proceeds from sale of Net Profits Interests 43,605 27,231 10,790 --------- --------- --------- Net cash provided (used) by investing activities $ 37,564 ($ 46,065) ($ 39,831) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($1,768,382) ($1,536,665) ($ 862,500) --------- --------- --------- Net cash used by financing activities ($1,768,382) ($1,536,665) ($ 862,500) --------- --------- --------- F-32 NET INCREASE IN CASH AND CASH EQUIVALENTS $ 43,258 $ 65,519 $ 41,214 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 319,699 254,180 212,966 --------- --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 362,957 $ 319,699 $ 254,180 ========= ========= ========= The accompanying notes are an integral part of these combined financial statements. F-33 GEODYNE INSTITUTIONAL/PENSION PROGRAM Notes to the Combined Financial Statements For the Periods Ended December 31, 1997, 1996, and 1995 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Operations The Geodyne Institutional/Pension Energy Income Limited Partnerships (the "Partnerships") were formed pursuant to a public offering of depositary units ("Units"). Upon formation, investors became limited partners (the "Limited Partners") and held Units issued by each Partnership. Geodyne Resources, Inc. ("Geodyne") is the general partner of each of the Partnerships. Each Partnership is a general partner in the related Geodyne NPI Partnership (the "NPI Partnerships") in which Geodyne serves as the managing partner. Limited Partners' capital contributions were contributed to the related NPI Partnerships for investment in net profits interests, royalty interests, and other nonoperating interests in producing oil and gas properties. Most of the net profits interests acquired by the Partnerships have been carved out of working interests in producing properties, located in the continental United States, which were acquired by affiliated oil and gas investment programs (the "Affiliated Programs"). Net profits interests entitle the Partnerships to a share of net revenues from producing properties measured by a specific percentage of the net profits realized by such Affiliated Programs as owners of the working interests in the producing properties. Except where otherwise noted, references to certain operational activities of the Partnerships are actually the activities of the Affiliated Programs. As the holder of a net profits interest, a Partnership is not liable to pay any amount by which oil and gas operating costs and expenses exceed revenues for any period, although any deficit, together with interest, is applied to reduce the amounts payable to the Partnership in subsequent periods. As used in these financial statements, the Partnerships' net profits and royalty interests in oil and gas sales are referred to as "Net Profits" and the Partnerships' net profits and royalty interests in oil and gas properties are referred to as "Net Profits Interests." The Partnerships do not directly bear capital costs. However, the Partnerships indirectly bear certain capital costs incurred by the Affiliated Programs to the extent such capital costs are charged against the applicable oil and gas revenues in calculating the net profits payable to the Partnerships. For financial reporting purposes only, such capital costs are reported as capital expenditures in the Partnerships' Statements of Cash Flows. F-34 The Partnerships were activated on the following dates with the following Limited Partner capital contributions: Limited Partner Date of Capital Partnership Activation Contributions ----------- ----------------- --------------- P-1 October 25, 1988 $10,807,400 P-2 February 9, 1989 9,009,400 P-3 May 10, 1989 16,963,700 P-4 November 21, 1989 12,630,600 P-5 February 27, 1990 11,844,900 P-6 September 5, 1990 14,304,100 For purposes of these financial statements, the Partnerships and NPI Partnerships are collectively referred to as the "Partnerships" and the general partner and managing partner are collectively referred to as the "General Partner". An affiliate of the General Partner owned the following Units at December 31, 1997: Percent of Number of Outstanding Partnership Units Owned Units ----------- ----------- ----------- P-1 13,134 12.2% P-2 7,110 7.9% P-3 39,924 23.5% P-4 9,738 7.7% P-5 14,777 12.5% P-6 10,843 7.6% The Partnerships' sole business is owning Net Profits Interests. Substantially all of the gas reserves attributable to the Partnerships' Net Profits Interests are being sold regionally on the "spot market." Due to the highly competitive nature of the spot market, prices on the spot market are subject to wide seasonal and regional pricing fluctuations. In addition, such spot market sales are generally short term in nature and are dependent upon the obtaining of transportation services provided by pipelines. Allocation of Costs and Revenues The combination of the allocation provisions in each Partnerships' limited partnership agreement and NPI Partnerships' partnership agreement (collectively, the "Partnership Agreement") results in allocations of costs and income between the Limited Partners and General Partner as follows: F-35 Before Payout(1) After Payout(1) -------------------- -------------------- General Limited General Limited Partner Partners Partner Partners ------- -------- ------- -------- Costs(2) - ------------------------- Sales commissions, payment for organization and offering costs and acquisition fee 1% 99% - - Property Acquisition Costs 1% 99% 1% 99% General and administrative costs and direct administrative costs(3) 5% 95% 15% 85% Income(2) - ------------------------- Temporary investments of Limited Partners' Subscriptions 1% 99% 1% 99% Income from oil and gas production(3) 5% 95% 15% 85% Gain on sale of Net Profits Interests(3) 5% 95% 15% 85% All other income(3) 5% 95% 15% 85% - ---------- (1) Payout occurs when total distributions to Limited Partners equal total original Limited Partner subscriptions. (2) The allocations in the table result generally from the combined effect of the allocation provisions in the Partnership Agreements. For example, direct administrative costs of the NPI Partnership are allocated 95.9596% to the Partnership and 4.0404% to the managing partner. The 95.9596% portion of these costs allocated to the limited partnership, when passed through the limited partnership, is further allocated 99% to the Limited Partners and 1% to the general partner. In this manner the Limited Partners are allocated 95% of such costs and the General Partner is allocated 5% of such costs. F-36 (3) If, at payout, the total distributions received by the Limited Partners from the commencement of the property investment period have averaged on an annualized basis an amount that is less than 12% of the Limited Partners' subscriptions, the percentage of income, and costs which are shared in the same proportions as income, allocated to the General Partner will increase to only 10% and the Limited Partners will be allocated 90% thereof until such time, if ever, that the distributions to the Limited Partners from the commencement of the property investment period reaches a yearly average equal to at least 12% of the Limited Partners' subscriptions. Thereafter, income, and costs shared in the same proportions as income, will be allocated 15% to the General Partner and 85% to the Limited Partners. Basis of Presentation These financial statements reflect the combined accounts of each Partnership after the elimination of all inter-partnership transactions and balances. Cash and Cash Equivalents The Partnerships consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents are not insured, which cause the Partnerships to be subject to risk. Credit Risk Accrued oil and gas sales, which are included in the Partnerships' Accounts Receivable - Net Profits, are due from a variety of oil and gas purchasers and, therefore, indirectly subject the Partnerships to a concentration of credit risk. Some of these purchasers are discussed in Note 4 - Major Customers. Receivable from General Partner The receivable from the General Partner at December 31, 1996 for the P-2 and P-3 Partnerships represents proceeds due to the Partnerships for the sale of Net Profits Interests. Such receivable was collected by the P-2 and P-3 Partnerships in the first quarter of 1997. F-37 Net Profits Interests The Partnerships follow the successful efforts method of accounting for their Net Profits Interests. Under the successful efforts method, the Partnerships capitalize all acquisition costs. Such acquisition costs include costs incurred by the Partnerships or the General Partner to acquire a Net Profits Interest, 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 net acquisition cost to the Partnerships of the Net Profits Interests in properties acquired by the General Partner consists of the cost of acquiring the underlying properties, adjusted for the net cash results of operations, including interest incurred to finance the net acquisition, for the period of time the properties are held by the General Partner. Impairment of Net Profits Interests in unproved oil and gas properties is recognized based upon an individual property assessment. Upon discovery of commercial reserves, Net Profits Interests in unproved properties are transferred to producing properties. Depletion of the cost of Net Profits Interests is computed on the units-of-production method. The Partnerships' calculation of depletion of its Net Profits Interests includes estimated dismantlement and abandonment costs, net of estimated salvage values. The depletion rate per equivalent barrel of oil produced during the years ended December 31, 1997, 1996, and 1995 were as follows: Partnership 1997 1996 1995 ----------- ---- ---- ---- P-1 2.88 2.90 5.52 P-2 2.84 3.09 5.93 P-3 2.83 3.11 5.97 P-4 3.46 4.22 5.62 P-5 2.65 3.20 5.55 P-6 3.34 3.66 6.10 The Partnerships follow the provisions of Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long Lived Assets and Assets Held for Disposal," which is intended to establish more consistent accounting standards for measuring the recoverability of long-lived assets. SFAS No. 121 requires successful efforts companies, like the Partnerships, to evaluate the recoverability of the carrying costs of their Net Profits Interests in proved oil and gas properties at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. With respect to the Partnerships' Net Profits Interests, this evaluation was performed for each field. SFAS No. 121 provides that if the unamortized costs of a Net Profits Interest exceeds the expected F-38 undiscounted future cash flows from such Net Profits Interest, the cost of the Net Profits Interest is written down to fair value, which is determined by using the discounted future cash flows from the Net Profits Interest. During 1995, 1996, and 1997, the Partnerships recorded the following non-cash charges against earnings (impairment provisions) pursuant to SFAS No. 121: Partnership 1997 1996 1995 ----------- ---- ---- ---- P-1 $ 113,945 $ - $ 86,264 P-2 113,005 - 182,970 P-3 220,449 - 377,983 P-4 84,059 - 581,036 P-5 122,458 - 194,933 P-6 444,990 - 478,168 In addition, during 1997 the General Partner determined that the Partnerships' Net Profits Interests in unproved properties would be uneconomic to develop and, therefore, of little or no value. This determination was based on an evaluation by the General Partner that it is unlikely that these unproved properties will be developed due to the low oil and gas prices received over the last several years and limitations on the level of permissible indirect drilling activity through its Affiliated Programs. As a result of this determination, the Partnerships recorded the following non-cash charges against earnings at March 31, 1997 in order to reflect the writing-off of the Partnerships' Net Profits Interests in unproved properties: Partnership Amount ----------- ----------- P-1 $ 788,097 P-2 614,888 P-3 1,193,468 P-4 668,329 P-5 895,610 P-6 453,594 Revenues from a Net Profits Interest consist of a share of the oil and gas sales of the property, less operating and production expenses. Accounts Receivable (Accounts Payable) - Net Profits The Partnerships accrue for oil and gas revenues less expenses from its Net Profits Interests. Sales of gas applicable to the Partnerships' Net Profits Interests in producing oil and gas leases are recorded as revenue when the gas is metered and title transferred pursuant to the gas sales contracts. During such times as sales of gas exceed a Partnership's pro rata Net Profits Interest F-39 in a well, such sales are recorded as revenue unless total sales from the well have exceeded the Partnership's share of estimated total gas reserves attributable to the underlying property, at which time such excess is recorded as a liability. The rates per Mcf used to calculate the liability are based on the average gas price received for the volumes at the time the overproduction occurred. This also reflects the price for which the Partnerships are currently settling this liability. This liability is recorded as a reduction of accounts receivable. At December 31, 1997 and 1996 total sales exceeded the Partnerships' Net Profits Interests in estimated total gas reserves as follows: 1997 1996 ---------------------- ---------------------- Partnership Mcf Amount Mcf Amount ----------- -------- ---------- -------- ---------- P-1 ( 9,119) ($13,679) (11,242) ($16,863) P-2 ( 8,717) ( 13,076) (10,944) ( 16,416) P-3 (16,342) ( 24,513) (20,540) ( 30,810) P-4 (15,352) ( 23,028) (26,973) ( 40,460) P-5 (15,537) ( 23,306) (12,159) ( 18,239) P-6 ( 3,938) ( 5,907) ( 3,483) ( 5,225) Also included in accounts receivable from (accounts payable to) Net Profits are amounts which represent costs deferred or accrued for Net Profits relating to lease operating expenses incurred in connection with the net underproduced or overproduced gas imbalance positions. The rate used in calculating the deferred charge or accrued liability is the average of the annual production costs per Mcf. At December 31, 1997 and 1996, cumulative total gas sales volumes were less than (more than) the Partnerships' Net Profits Interests in gas production by the following amounts: 1997 1996 ---------------------- ----------------------- Partnership Mcf Amount Mcf Amount ----------- --------- --------- --------- ----------- P-1 23,239 $13,632 41,624 $23,626 P-2 24,087 14,226 40,121 23,254 P-3 49,119 29,113 77,659 44,934 P-4 192,349 81,710 204,628 98,630 P-5 ( 66,455) ( 26,110) ( 71,197) ( 25,190) P-6 (124,204) ( 73,740) (107,990) ( 55,259) General and Administrative Overhead The General Partner and its affiliates are reimbursed for actual general and administrative costs incurred and attributable to the conduct of the business affairs and operations of the Partnerships. F-40 Use of Estimates in Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Further, accounts receivable (payable) - Net Profits includes accrued liabilities, accrued lease operating expenses, and deferred lease operating expenses related to gas balancing which involve estimates that could materially differ from the actual amounts ultimately realized or incurred in the near term. Oil and gas reserves (see Note 4) also involve significant estimates which could materially differ from the actual amounts ultimately realized. Income Taxes Income or loss for income tax purposes is includable in the income tax returns of the partners. Accordingly, no recognition has been given to income taxes in these financial statements. 2. TRANSACTIONS WITH RELATED PARTIES The Partnerships reimburse the General Partner for the general and administrative overhead applicable to the Partnerships, based on an allocation of actual costs incurred by the General Partner. When costs incurred benefit other Partnerships and affiliates, the allocation of costs is based on the relationship of the Partnerships' reserves to the total reserves in all Partnerships and affiliates. The General Partner believes this allocation method is reasonable. Although the actual costs incurred by the General Partner and its affiliates have fluctuated during the three years presented, the amounts charged to the Partnerships have not fluctuated due to expense limitations imposed by the Partnership Agreement. The following is a summary of payments made to the General Partner or its affiliates by the Partnerships for general and administrative overhead costs for the years ended December 31, 1997, 1996, and 1995: Partnership 1997 1996 1995 ----------- -------- -------- -------- P-1 $113,760 $113,760 $113,760 P-2 94,836 94,836 94,836 P-3 178,560 178,560 178,560 P-4 132,960 132,960 132,960 P-5 124,680 124,680 124,680 P-6 150,564 150,564 150,564 F-41 Affiliates of the Partnerships operate certain of the properties in which the Partnerships own a Net Profits Interest and their policy is to bill the owners of the working interests of such properties for all customary charges and cost reimbursements associated with these activities, together with any compressor rentals, consulting, or other services provided. Such charges are comparable to third party charges in the area where the wells are located and are the same as charged to other working interest owners in the wells. During 1995, gas production from some of the properties in which the Partnerships owned a Net Profits Interest was sold to El Paso Energy Marketing Company, formerly known as Premier Gas Company ("El Paso"). El Paso, like other similar gas marketing firms, then resold such gas to third parties at market prices. El Paso was an affiliate of the Partnerships until December 6, 1995. 3. MAJOR CUSTOMERS The following table sets forth purchasers who individually accounted for ten percent or more of combined oil and gas sales attributable to the Partnerships' Net Profits Interest during the years ended December 31, 1997, 1996, and 1995: Percentage ----------------------- Partnership Purchaser 1997 1996 1995 - ----------- ------------------------ ----- ----- ----- P-1 El Paso 25.19% 23.0% 18.4% Chevron U.S.A., Inc. 10.82% 10.1% - % Texaco Exploration and Production, Inc. ("Texaco") - 10.4% 13.0% P-2 El Paso 24.39% 22.4% 17.7% Texaco 11.11% 12.6% 13.7% P-3 El Paso 24.23% 22.3% 17.7% Texaco 11.18% 12.7% 13.6% P-4 El Paso 49.10% 60.2% 49.9% Valero Industrial Gas LP 13.56% - % - % Phibro Energy, Inc. 10.70% - % - % Mesa Pipeline Co. - 18.2% 18.6% P-5 El Paso 64.98% 62.0% 55.6% Apache Corporation - - % 12.4% P-6 El Paso 28.16% 27.0% 42.5% HPL Resources Company 19.85% 19.1% - % Tejas Gas Marketing Company 14.13% 13.7% - % F-42 In the event of interruption of purchases by one or more of these significant customers or the cessation or material change in availability of open access transportation by pipeline transporters, the Partnerships may encounter difficulty in marketing their gas and in maintaining historic sales levels. Alternative purchasers or transporters may not be readily available. 4. SUPPLEMENTAL OIL AND GAS INFORMATION The following supplemental information regarding the Net Profits Interest activities of the Partnerships is presented pursuant to the disclosure requirements promulgated by the SEC. Capitalized Costs Capitalized costs and accumulated depletion at December 31, 1997 and 1996 were as follows: P-1 Partnership --------------- 1997 1996 ------------ ------------ Net Profits Interests in proved oil and gas properties $7,407,587 $7,343,643 Net Profits Interests in unproved oil and gas properties not subject to depletion - 788,097 --------- --------- $7,407,587 $8,131,740 Less accumulated depletion and valuation allowance ( 5,999,167) ( 5,451,735) --------- --------- Net Profits Interests, net $1,408,420 $2,680,005 ========= ========= F-43 P-2 Partnership --------------- 1997 1996 --------- --------- Net Profits Interests in proved oil and gas properties $5,927,378 $6,049,274 Net Profits Interests in unproved oil and gas properties not subject to depletion - 614,888 --------- --------- 5,927,378 $6,664,162 Less accumulated depletion and valuation allowance ( 4,745,148) ( 4,462,782) --------- --------- Net Profits Interests, net $1,182,230 $2,201,380 ========= ========= P-3 Partnership --------------- 1997 1996 ------------- ------------- Net Profits Interests in proved oil and gas properties $11,134,440 $11,377,680 Net Profits Interests in unproved oil and gas properties not subject to depletion - 1,193,468 ---------- ---------- $11,134,440 $12,571,148 Less accumulated depletion and valuation allowance ( 8,937,996) ( 8,414,617) ---------- ---------- Net Profits Interests, net $2,196,444 $ 4,156,531 ========== ========== F-44 P-4 Partnership --------------- 1997 1996 ----------- ----------- Net Profits Interests in proved oil and gas properties $8,245,177 $ 8,753,695 Net Profits Interests in unproved oil and gas properties not subject to depletion - 735,371 --------- ---------- $8,245,177 $ 9,489,066 Less accumulated depletion and valuation allowance ( 6,962,848) ( 6,921,405) --------- ---------- Net Profits Interests, net $1,282,329 $ 2,567,661 ========= ========== P-5 Partnership --------------- 1997 1996 ---------- ----------- Net Profits Interests in proved oil and gas properties $10,112,131 $ 9,461,206 Net Profits Interests in unproved oil and gas properties not subject to depletion - 897,564 ---------- ---------- $10,112,131 $10,358,770 Less accumulated depletion and valuation allowance ( 8,854,342) ( 7,822,180) ---------- ---------- Net Profits Interest, net $ 1,257,789 $ 2,536,590 ========== ========== F-45 P-6 Partnership --------------- 1997 1996 ------------- ------------- Net Profits Interests in proved oil and gas properties $12,112,498 $12,204,492 Net Profits Interests in unproved oil and gas properties not subject to depletion - 454,263 ---------- ---------- $12,112,498 $12,658,755 Less accumulated depletion and valuation allowance ( 9,654,689) ( 8,691,849) ---------- ---------- Net Profits Interests, net $ 2,457,809 $ 3,966,906 ========== ========== Costs Incurred The following tables set forth the portion of the acquisition and/or development of acreage costs related to the working interests which are burdened by the Partnerships' Net Profits Interests during the years ended December 31, 1997, 1996, and 1995. Since these acquisition and development costs were charged against the Net Profits payable to the Partnerships, such costs were indirectly borne by the Partnerships. No exploration costs were incurred during the same periods. P-1 Partnership --------------- 1997 1996 1995 ------- ------- ------- Acquisition of Net Profits Interests $ - $ - $ - Development costs of Net Profits Interests 21,339 12,540 4,566 ------- ------- ------- $21,339 $12,540 $ 4,566 ======= ======= ======= F-46 P-2 Partnership --------------- 1997 1996 1995 ------- ------- ------- Acquisition of Net Profits Interests $ - $ - $ - Development costs of Net Profits Interests 34,745 6,613 9,877 ------- ------- ------- $34,745 $ 6,613 $ 9,877 ======= ======= ======= P-3 Partnership --------------- 1997 1996 1995 ------ ------- ------- Acquisition of Net Profits Interests $ - $ - $ - Development costs of Net Profits Interests 66,502 12,220 19,116 ------ ------- ------- $66,502 $12,220 $19,116 ====== ======= ======= P-4 Partnership --------------- 1997 1996 1995 ------- ------- ------- Acquisition of Net Profits Interests $16,495 $ - $ - Development costs of Net Profits Interests 18,533 804 19,172 ------- ------- ------- $35,028 $ 804 $19,172 ======= ======= ======= F-47 P-5 Partnership --------------- 1997 1996 1995 ------- ------- ------- Acquisition of Net Profits Interests $ - $ - $ - Development costs of Net Profits Interests 980 2,807 29,603 ------- ------- ------- $ 980 $ 2,807 $29,603 ======= ======= ======= P-6 Partnership --------------- 1997 1996 1995 ----- ------- ------- Acquisition of Net Profits Interests $ - $ - $ - Development costs of Net Profits Interests 6,041 73,296 50,621 ----- ------- ------- $ 6,041 $73,296 $50,621 ===== ======= ======= Quantities of Proved Oil and Gas Reserves - Unaudited The following tables summarize changes in net quantities of proved reserves attributable to the Partnerships' Net Profits Interests, 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. Certain reserve information was reviewed by Ryder Scott Company Petroleum Engineers, an independent petroleum engineering firm. The following information includes certain gas balancing adjustments which cause the gas volumes to differ from the reserve reports prepared by the General Partner and reviewed by Ryder Scott. F-48 P-1 Partnership --------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, December 31, 1994 248,024 2,656,373 Production ( 39,075) ( 524,079) Sales of minerals in place ( 3,823) ( 27,794) Extensions and discoveries - 79,261 Revisions of previous estimates 45,514 512,461 ------- --------- Proved reserves, December 31, 1995 250,640 2,696,222 Production ( 33,798) ( 468,446) Sales of minerals in place ( 5,578) ( 78,601) Extensions and discoveries 2,158 29,265 Revisions of previous estimates 37,840 522,920 ------- --------- Proved reserves, December 31, 1996 251,262 2,701,360 Production ( 32,044) ( 357,516) Sales of minerals in place ( 22,747) ( 234,580) Extensions and discoveries 2,126 55,362 Revisions of previous estimates 18,069 118,867 ------- --------- Proved reserves, December 31, 1997 216,666 2,283,493 ======= ========= PROVED DEVELOPED RESERVES: December 31, 1995 250,640 2,696,222 ======= ========= December 31, 1996 249,094 2,674,248 ======= ========= December 31, 1997 214,498 2,256,381 ======= ========= F-49 P-2 Partnership --------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, December 31, 1994 179,870 2,474,566 Production ( 28,040) ( 443,985) Sales of minerals in place ( 2,746) ( 26,060) Extensions and discoveries - 54,118 Revisions of previous estimates 31,208 431,237 ------- --------- Proved reserves, December 31, 1995 180,292 2,489,876 Production ( 24,049) ( 390,047) Sales of minerals in place ( 3,888) ( 79,207) Extensions and discoveries 1,469 19,983 Revisions of previous estimates 31,869 407,527 ------- --------- Proved reserves, December 31, 1996 185,693 2,448,132 Production ( 22,873) ( 301,132) Sales of minerals in place ( 16,062) ( 231,921) Extensions and discoveries 1,549 37,807 Revisions of previous estimates 12,015 89,714 ------- --------- Proved reserves, December 31, 1997 160,322 2,042,600 ======= ========= PROVED DEVELOPED RESERVES: December 31, 1995 180,292 2,489,876 ======= ========= December 31, 1996 183,318 2,418,444 ======= ========= December 31, 1997 157,947 2,012,912 ======= ========= F-50 P-3 Partnership --------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, December 31, 1994 333,255 4,702,187 Production ( 51,963) ( 840,970) Sales of minerals in place ( 5,045) ( 49,808) Extensions and discoveries - 99,853 Revisions of previous estimates 57,775 797,901 ------- --------- Proved reserves, December 31, 1995 334,022 4,709,163 Production ( 44,496) ( 737,600) Sales of minerals in place ( 7,247) ( 152,220) Extensions and discoveries 2,720 36,867 Revisions of previous estimates 59,454 765,991 ------- --------- Proved reserves, December 31, 1996 344,453 4,622,201 Production ( 42,259) ( 565,052) Sales of minerals in place ( 30,066) ( 457,133) Extensions and discoveries 2,854 69,751 Revisions of previous estimates 22,274 169,087 ------- ========= Proved reserves, December 31, 1997 297,256 3,838,854 ======= ========= PROVED DEVELOPED RESERVES: December 31, 1995 334,022 4,709,163 ======= ========= December 31, 1996 339,979 4,566,276 ======= ========= December 31, 1997 292,782 3,782,929 ======= ========= F-51 P-4 Partnership --------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, December 31, 1994 94,634 3,805,226 Production ( 28,847) ( 885,642) Sales of minerals in place ( 74) ( 23,687) Revisions of previous estimates 18,681 576,462 ------- --------- Proves reserves, December 31, 1995 84,394 3,472,359 Production ( 22,949) ( 630,841) Sales of minerals in place ( 661) ( 198,487) Revisions of previous estimates 15,013 480,088 ------- --------- Proved reserves, December 31, 1996 75,797 3,123,119 Production ( 19,686) ( 513,815) Sales of minerals in place ( 2,175) ( 315,220) Revisions of previous estimates 1,898 365,764 ------- --------- Proved reserves, December 31, 1997 55,834 2,659,848 ======= ========= PROVED DEVELOPED RESERVES: December 31, 1995 84,394 3,472,359 ======= ========= December 31, 1996 69,266 3,022,629 ======= ========= December 31, 1997 49,163 2,549,052 ======= ========= F-52 P-5 Partnership --------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ----------- Proved reserves, December 31, 1994 35,676 3,752,615 Production (10,842) ( 784,863) Sales of minerals in place ( 107) ( 601) Extensions and discoveries 12,096 143,318 Revisions of previous estimates ( 725) 120,437 ------ --------- Proved reserves, December 31, 1995 36,098 3,230,906 Production (10,757) ( 627,998) Sales of minerals in place ( 664) ( 23,621) Extensions and discoveries 8,865 45,915 Revisions of previous estimates 17,989 636,220 ------ --------- Proved reserves, December 31, 1996 51,531 3,261,422 Production ( 7,972) ( 516,756) Sales of minerals in place ( 3,066) ( 61,493) Revisions of previous estimates 10,735 346,293 ------ --------- Proved reserves, December 31, 1997 51,228 3,029,466 ====== ========= PROVED DEVELOPED RESERVES: December 31, 1995 36,017 3,180,500 ====== ========= December 31, 1996 51,388 3,232,004 ====== ========= December 31, 1997 51,175 3,024,146 ====== ========= F-53 P-6 Partnership --------------- Crude Natural Oil Gas (Barrels) (Mcf) --------- ------------ Proved reserves, December 31, 1994 157,152 7,474,320 Production ( 19,149) (1,380,123) Sales of minerals in place ( 336) ( 8,470) Extensions and discoveries 4,273 34,927 Revisions of previous estimates 7,331 ( 175,080) ------- --------- Proved reserves, December 31, 1995 149,271 5,945,574 Production ( 21,377) (1,162,652) Sales of minerals in place ( 20,978) ( 54,473) Extensions and discoveries 3,053 59,267 Revisions of previous estimates 30,411 695,404 ------- --------- Proved reserves, December 31, 1996 140,380 5,483,120 Production ( 18,461) ( 984,971) Sales of minerals in place ( 2,459) ( 75,335) Extensions and discoveries 189 235 Revisions of previous estimates 4,088 540,454 ------- --------- Proved reserves, December 31, 1997 123,737 4,963,503 ======= ========= PROVED DEVELOPED RESERVES: December 31, 1995 149,244 5,927,504 ======= ========= December 31, 1996 140,330 5,473,020 ======= ========= December 31, 1997 123,718 4,961,677 ======= ========= F-54 Standardized Measure of Discounted Future Net Cash Flows of Proved Oil and Gas Reserves - Unaudited The following tables set forth the estimated future net cash flows as of December 31, 1997 relating to the Partnerships' proved reserves attributable to the Partnerships' Net Profits Interests based on the standardized measure as prescribed in SFAS No. 69: Partnership ----------------------------------------------- P-1 P-2 P-3 ------------ ------------ ------------ Future cash inflows $8,972,099 $7,533,880 $14,097,270 Future production and development costs ( 1,968,812) ( 1,798,697) ( 3,385,457) --------- --------- ---------- Future net cash flows $7,003,287 $5,735,183 $10,711,813 10% discount to reflect timing of cash flows ( 2,780,415) ( 2,305,010) ( 4,307,468) --------- --------- ---------- Standardized measure of discounted future net cash flows $4,222,872 $3,430,173 $ 6,404,345 ========= ========= ========== Partnership ------------------------------------------------ P-4 P-5 P-6 ------------ ------------ ------------- Future cash inflows $7,472,138 $7,490,427 $13,327,295 Future production and development costs ( 1,943,911) ( 2,226,360) ( 4,846,552) --------- --------- ---------- Future net cash flows $5,528,227 $5,264,067 $ 8,480,743 10% discount to reflect timing of cash flows ( 1,719,595) ( 1,888,390) ( 2,822,001) --------- --------- ---------- Standardized measure of discounted future net cash flows $3,808,632 $3,375,677 $ 5,658,742 ========= ========= ========== The process of estimating oil and gas reserves is complex, requiring significant subjective decisions in the evaluation of available geological, engineering, and economic data for each reservoir. The data for a given reservoir may change substantially over time as a result of, among other things, additional development activity, production history, and viability of production under varying economic conditions; consequently, it is reasonably possible that material revisions to existing reserve estimates may occur in the near future. F-55 Although every reasonable effort has been made to ensure that the reserve estimates reported herein represent the most accurate assessment possible, the significance of the subjective decisions required and variances in available data for various reservoirs make these estimates generally less precise than other estimates presented in connection with financial statement disclosures. The Partnerships' reserves were determined at December 31, 1997 using oil and gas prices of approximately $16.25 per barrel and $2.32 per Mcf, respectively. F-56 INDEX TO EXHIBITS ----------------- Number Description - ------ ----------- 4.1 The Certificate and Agreements of Limited Partnership for the following Partnerships have been previously filed with the SEC as Exhibit 2.1 to Form 8-A filed by each Partnership on the dates shown below and are hereby incorporated by reference. Partnership Filing Date File No. ----------- ----------------- -------- P-1 June 5, 1989 0-17800 P-2 June 5, 1989 0-17800 P-3 February 20, 1990 0-18306 P-4 February 20, 1990 0-18306 P-5 November 13, 1990 0-18637 P-6 November 30, 1990 0-18937 4.2 The Agreements of Partnership for the following NPI Partnerships have been previously filed with the SEC as Exhibit 2.2 to Form 8A filed by the related Partnerships on the dates shown below and are hereby incorporated by reference. Form 8-A Partnership Filing Date ----------- ----------------- P-1 June 5, 1989 P-2 June 5, 1989 P-3 February 20, 1990 P-4 February 20, 1990 P-5 June 11, 1990 P-6 December 10, 1990 4.3 Advisory Agreement dated as of November 24, 1992 between Samson, PaineWebber, Geodyne Resources, Geodyne Properties, Inc., Geodyne Production Company, and Geodyne Energy Company filed as Exhibit 28.3 to Registrants' Current Report on Form 8-K filed with the SEC on December 24, 1992 and is hereby incorporated by reference. F-57 4.4 Second Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income P-1 Limited Partnership, filed as Exhibit 4.1 to Registrants' Current Report on Form 8-K dated August 2, 1993 filed with the SEC on August 10, 1993 and is hereby incorporated by reference. 4.5 Second Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income P-2 Limited Partnership, filed as Exhibit 4.2 to Registrants' Current Report on Form 8-K dated August 2, 1993 filed with the SEC on August 10, 1993 and is hereby incorporated by reference. 4.6 Second Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-3, filed as Exhibit 4.3 to Registrants' Current Report on Form 8-K dated August 2, 1993 filed with the SEC on August 10, 1993 and is hereby incorporated by reference. 4.7 Second Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-4, filed as Exhibit 4.4 to Registrants' Current Report on Form 8-K dated August 2, 1993 filed with the SEC on August 10, 1993 and is hereby incorporated by reference. 4.8 Second Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-5, filed as Exhibit 4.5 to Registrants' Current Report on Form 8-K dated August 2, 1993 filed with the SEC on August 10, 1993 and is hereby incorporated by reference. 4.9 Second Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-6, filed as Exhibit 4.6 to Registrants' Current Report on Form 8-K dated August 2, 1993 filed with the SEC on August 10, 1993 and is hereby incorporated by reference. 4.10 Third Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income P-1 Limited Partnership, filed as Exhibit 4.10 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 filed with the SEC on April 1, 1996 and is hereby incorporated by reference. F-58 4.11 Third Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income P-2 Limited Partnership, filed as Exhibit 4.11 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 filed with the SEC on April 1, 1996 and is hereby incorporated by reference. 4.12 Third Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-3, filed as Exhibit 4.12 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 filed with the SEC on April 1, 1996 and is hereby incorporated by reference. 4.13 Third Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-4, filed as Exhibit 4.13 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 filed with the SEC on April 1, 1996 and is hereby incorporated by reference. 4.14 Third Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-5, filed as Exhibit 4.14 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 filed with the SEC on April 1, 1996 and is hereby incorporated by reference. 4.15 Third Amendment to Agreement of Limited Partnership of Geodyne Institutional/Pension Energy Income Limited Partnership P-6, filed as Exhibit 4.15 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 filed with the SEC on April 1, 1996 and is hereby incorporated by reference. *23.1 Consent of Ryder Scott Company, Petroleum Engineers for the Geodyne Institutional/Pension Energy Income P-1 Limited Partnership. *23.2 Consent of Ryder Scott Company, Petroleum Engineers for the Geodyne Institutional/Pension Energy Income P-2 Limited Partnership. *23.3 Consent of Ryder Scott Company, Petroleum Engineers for the Geodyne Institutional/Pension Energy Income Limited Partnership P-3. *23.4 Consent of Ryder Scott Company, Petroleum Engineers for the Geodyne Institutional/Pension Energy Income Limited Partner-ship P-4. *23.5 Consent of Ryder Scott Company, Petroleum Engineers for the Geodyne Institutional/Pension Energy Income Limited Partnership P-5. F-59 *23.6 Consent of Ryder Scott Company, Petroleum Engineers for the Geodyne Institutional/Pension Energy Income Limited Partnership P-6. *27.1 Financial Data Schedule containing summary financial information extracted from the Geodyne Institutional/Pension Energy Income P-1 Limited Partnership's financial statements as of December 31, 1997 and for the year ended December 31, 1997. *27.2 Financial Data Schedule containing summary financial information extracted from the Geodyne Institutional/Pension Energy Income P-2 Limited Partnership's financial statements as of December 31, 1997 and for the year ended December 31, 1997. *27.3 Financial Data Schedule containing summary financial information extracted from the Geodyne Institutional/Pension Energy Income Limited Partnership P-3's financial statements as of December 31, 1997 and for the year ended December 31, 1997. *27.4 Financial Data Schedule containing summary financial information extracted from the Geodyne Institutional/Pension Energy Income Limited Partnership P-4's financial statements as of December 31, 1997 and for the year ended December 31, 1997. *27.5 Financial Data Schedule containing summary financial information extracted from the Geodyne Institutional/Pension Energy Income Limited Partnership P-5's financial statements as of December 31, 1997 and for the year ended December 31, 1997. *27.6 Financial Data Schedule containing summary financial information extracted from the Geodyne Institutional/Pension Energy Income Limited Partnership P-6's financial statements as of December 31, 1997 and for the year ended December 31, 1997. All other Exhibits are omitted as inapplicable. ---------- * Filed herewith. F-60 EX-23.1 2 RIDER SCOTT CONSENT FOR GEODYNE P-1 RYDER SCOTT COMPANY Fax (713) 651-0849 PETROLEUM ENGINEERS 1100 Louisiana Suite 3800 Houston, Texas 77002-5218 Telephone (713) 651-9191 CONSENT OF PETROLEUM ENGINEERING FIRM We consent to the reference to our name included in this Annual Report on Form 10-K for the year ended December 31, 1997 for Geodyne Institutional/Pension Energy Income P-1 Limited Partnership. //s// Ryder Scott Company Petroleum Engineers RYDER SCOTT COMPANY PETROLEUM ENGINEERS Houston, Texas January 13, 1998 EX-23.2 3 RIDER SCOTT CONSENT FOR GEODYNE P-2 RYDER SCOTT COMPANY Fax (713) 651-0849 PETROLEUM ENGINEERS 1100 Louisiana Suite 3800 Houston, Texas 77002-5218 Telephone (713) 651-9191 CONSENT OF PETROLEUM ENGINEERING FIRM We consent to the reference to our name included in this Annual Report on Form 10-K for the year ended December 31, 1997 for Geodyne Institutional/Pension Energy Income P-2 Limited Partnership. //s// Ryder Scott Company Petroleum Engineers RYDER SCOTT COMPANY PETROLEUM ENGINEERS Houston, Texas January 13, 1998 EX-23.3 4 RIDER SCOTT CONSENT FOR GEODYNE P-3 RYDER SCOTT COMPANY Fax (713) 651-0849 PETROLEUM ENGINEERS 1100 Louisiana Suite 3800 Houston, Texas 77002-5218 Telephone (713) 651-9191 CONSENT OF PETROLEUM ENGINEERING FIRM We consent to the reference to our name included in this Annual Report on Form 10-K for the year ended December 31, 1997 for Geodyne Institutional/Pension Energy Income Limited Partnership P-3. //s// Ryder Scott Company Petroleum Engineers RYDER SCOTT COMPANY PETROLEUM ENGINEERS Houston, Texas January 13, 1998 EX-23.4 5 RIDER SCOTT CONSENT FOR GEODYNE P-4 RYDER SCOTT COMPANY Fax (713) 651-0849 PETROLEUM ENGINEERS 1100 Louisiana Suite 3800 Houston, Texas 77002-5218 Telephone (713) 651-9191 CONSENT OF PETROLEUM ENGINEERING FIRM We consent to the reference to our name included in this Annual Report on Form 10-K for the year ended December 31, 1997 for Geodyne Institutional/Pension Energy Income Limited Partnership P-4. //s// Ryder Scott Company Petroleum Engineers RYDER SCOTT COMPANY PETROLEUM ENGINEERS Houston, Texas January 13, 1998 EX-23.5 6 RIDER SCOTT CONSENT FOR GEODYNE P-5 RYDER SCOTT COMPANY Fax (713) 651-0849 PETROLEUM ENGINEERS 1100 Louisiana Suite 3800 Houston, Texas 77002-5218 Telephone (713) 651-9191 CONSENT OF PETROLEUM ENGINEERING FIRM We consent to the reference to our name included in this Annual Report on Form 10-K for the year ended December 31, 1997 for Geodyne Institutional/Pension Energy Income Limited Partnership P-5. //s// Ryder Scott Company Petroleum Engineers RYDER SCOTT COMPANY PETROLEUM ENGINEERS Houston, Texas January 13, 1998 EX-23.6 7 RIDER SCOTT CONSENT FOR GEODYNE P-6 RYDER SCOTT COMPANY Fax (713) 651-0849 PETROLEUM ENGINEERS 1100 Louisiana Suite 3800 Houston, Texas 77002-5218 Telephone (713) 651-9191 CONSENT OF PETROLEUM ENGINEERING FIRM We consent to the reference to our name included in this Annual Report on Form 10-K for the year ended December 31, 1997 for Geodyne Institutional/Pension Energy Income Limited Partnership P-6. //s// Ryder Scott Company Petroleum Engineers RYDER SCOTT COMPANY PETROLEUM ENGINEERS Houston, Texas January 13, 1998 EX-27.1 8 FDS --
5 0000850427 GEODYNE INST/PENSION ENERGY INCOME P-1 LTD PSHP 12-MOS DEC-31-1997 JAN-01-1997 DEC-31-1997 503,622 0 164,644 0 0 668,266 7,407,587 5,999,167 2,076,686 0 0 0 0 0 2,076,686 2,076,686 1,064,105 1,455,630 0 1,294,938 0 0 0 160,692 0 160,692 0 0 0 160,692 0.99 0
EX-27.2 9 FDS --
5 0000850428 GEODYNE INST/PENSION ENERGY INCOME P-2 LTD PSHP 12-MOS DEC-31-1997 JAN-01-1997 DEC-31-1997 369,191 0 135,331 0 0 504,522 5,927,378 4,745,148 1,686,752 0 0 0 0 0 1,686,752 1,686,752 836,494 1,129,273 0 1,042,816 0 0 0 86,457 0 86,457 0 0 0 86,457 0.50 0
EX-27.3 10 FDS --
5 0000854066 GEODYNE INST/PENSION ENERGY INCOME LTD PSHP P-3 12-MOS DEC-31-1997 JAN-01-1997 DEC-31-1997 685,628 0 254,470 0 0 940,098 11,134,440 8,937,996 3,136,542 0 0 0 0 0 3,136,542 3,136,542 1,559,975 2,109,208 0 2,002,162 0 0 0 107,046 0 107,046 0 0 0 107,046 0.18 0
EX-27.4 11 FDS --
5 0000860744 GEODYNE INST/PENSION ENERGY INCOME LTD PSHP P-4 12-MOS DEC-31-1997 JAN-01-1997 DEC-31-1997 243,903 0 301,060 0 0 544,963 8,245,177 6,962,848 1,827,292 0 0 0 0 0 1,827,292 1,827,292 1,290,780 1,366,854 0 1,265,516 0 0 0 101,338 0 101,338 0 0 0 101,338 0.41 0
EX-27.5 12 FDS --
5 0000863832 GEODYNE INST/PENSION ENERGY INCOME LTD PSHP P-5 12-MOS DEC-31-1997 JAN-01-1997 DEC-31-1997 228,750 0 134,968 0 0 363,718 10,112,131 (8,854,342) 1,621,507 0 0 0 0 0 1,621,507 1,621,507 1,000,125 1,088,143 0 1,409,030 0 0 0 (320,887) 0 (320,887) 0 0 0 (320,887) (3.00) 0
EX-27.6 13 FDS --
5 0000869801 GEODYNE INST/PENSION ENERGY INCOME LTD PSHP P-6 12-MOS DEC-31-1997 JAN-01-1997 DEC-31-1997 362,957 0 291,352 0 0 654,309 12,112,498 (9,654,689) 3,112,118 0 0 0 0 0 3,112,118 3,112,118 1,793,685 1,846,808 0 1,680,985 0 0 0 165,823 0 165,823 0 0 0 165,823 0.68 0
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