ITEM 1. BUSINESS
General
The Geodyne Institutional/Pension Energy Income Limited Partnership P-7 (the "P-7 Partnership") and Geodyne Institutional/Pension Energy Income Limited Partnership P-8 (the "P-8 Partnership") (collectively, the "Partnerships") are limited partnerships formed under the Oklahoma Revised Uniform Limited Partnership Act. Each Partnership is composed of Geodyne Resources, Inc. ("Geodyne" or the "General Partner"), a Delaware corporation, as the general partner, Geodyne Institutional Depositary 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 February 28, 1992.
The General Partner currently serves as general partner of 26 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 "Samson"), 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, 2004 Samson owned interests in approximately 16,000 oil and gas wells located in 18 states of the United States and the countries of Canada, Venezuela, and Australia. At December 31, 2004, Samson operated approximately 5,000 oil and gas wells located in 14 states of the United States, as well as Canada, Venezuela, and Australia.
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 oil and gas properties ("Working Interests") which were acquired by affiliated oil and gas investment programs or other affiliates (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 on those 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 throughout this Annual Report on Form 10-K ("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' capitalized cost of their Net Profits Interests 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 Samson. As of February 15, 2005, Samson employed approximately 1,100 persons. No employees are covered by collective bargaining agreements, and management believes that Samson provides a sound employee relations environment. For information regarding the executive officers 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 (888) 436-3963 [(888) GEODYNE].
The Partnerships were scheduled to terminate on February 28, 2002 in accordance with the partnership agreement for each Partnership (the "Partnership Agreement"). However, the General Partner may extend the term of each Partnership for up to five periods of two years each. The General Partner has extended the terms of the Partnerships for their second extension thereby extending their termination date through December 31, 2005. The General Partner has not determined whether it will further extend the term of either Partnership.
Funding
Although the Partnership Agreements permit each Partnership to incur a limited amount of 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 the Partnerships 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. However, substantial increases in the price of steel may increase the costs of any future workover, recompletion or drilling activities indirectly conducted by the Partnerships.
Competition and Marketing
The primary source of liquidity and Partnership cash distributions comes from the net revenues generated from the sale of oil and gas produced from the Partnerships' oil and gas properties. The level of net revenues is highly dependent upon the total volumes of oil and natural gas sold. Oil and gas reserves are depleting assets and will experience production declines over time, thereby likely resulting in reduced net revenues. The level of net revenues is also highly dependent upon the prices received for oil and gas sales, which prices have historically been very volatile and may continue to be so.
Additionally, lower oil and natural gas prices may reduce the amount of oil and gas that is economic to produce and reduce the Partnerships' revenues and cash flow. Various factors beyond the Partnerships' control will affect prices for oil and natural gas, such as:
* Worldwide and domestic supplies of oil and natural gas; * The ability of the members of the Organization of Petroleum Exporting Countries ("OPEC") to agree upon and maintain oil prices and production quotas; * Political instability or armed conflict in oil-producing regions or around major shipping areas; * The level of consumer demand and overall economic activity; * The competitiveness of alternative fuels; * Weather conditions; * The availability of pipelines for transportation; and * Domestic and foreign government regulations and taxes.
It is not possible to predict the future direction of oil or natural gas prices or whether the above discussed trends will remain. Operating costs, including General and Administrative Expenses, may not decline over time or may experience only a gradual decline, thus adversely affecting net revenues as either production or oil and natural gas prices decline. In any particular period, net revenues may also be affected by either the receipt of proceeds from property sales or the incursion of additional costs as a result of well workovers, recompletions, new well drilling, and other events.
Significant Customers
The following customers accounted for ten percent or more of the oil and gas revenues attributable to the Partnerships' Net Profits Interests during the year ended December 31, 2004:
Partnership Customer Percentage - ----------- ------------------------------------ ----------
P-7 Occidental Energy Marketing, Inc. ("Occidental") 24.0% Hunt Oil Company ("Hunt") 18.3% ExxonMobil Oil Corporation ("Exxon") 11.3%
P-8 Occidental 22.8% Hunt 16.2% Exxon 11.5%
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 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. In particular, many types of pollution and contamination can exist, undiscovered, for long periods of time and can result in substantial environmental liabilities which are not insured. The occurrence of an event which is not fully covered by insurance could have a material adverse effect on the Partnerships' financial condition and results of operations in that it could negatively impact the cash flow received from the Net Profits Interests.
ITEM 2.
ITEM 2. PROPERTIES
Well Statistics
The following table sets forth the number of productive wells as of December, 31, 2004 in which the Partnerships had a Net Profits Interest which was carved from a working interest.
Number of Wells(1) ----------------------- P/ship Total Oil Gas ------ ----- --- --- P-7 1,051 863 188 P-8 1,196 882 314
- ----------- (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.
Drilling Activities
During the year ended December 31, 2004, the Partnerships indirectly participated (through their Net Profits Interests) in the developmental drilling activities described below.
P-7 Partnership - --------------- Revenue Well Name County St. Interest Type Status - --------------- ------ --- -------- ---- --------- Red 6 #1 Texas OK .0019 N/A Dry Hole Headlee Unit Ector TX .0045 Gas Producing (1 new well) Robertson North Unit (37 new Gaines TX .0223 Oil Producing wells)
P-8 Partnership - --------------- Revenue Well Name County St. Interest Type Status - --------------- ------ --- -------- ---- --------- Red 6 #1 Texas OK .0009 N/A Dry Hole Headlee Unit Ector TX .0023 Gas Producing (1 new well) Robertson North Unit (37 new Gaines TX .0138 Oil Producing wells)
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.
Net Production Data P-7 Partnership ---------------
Year ended December 31, ------------------------------------------- 2004 2003 2002 ---------- ---------- ---------- Production: Oil (Bbls) 74,393 82,711 89,957 Gas (Mcf) 405,100 338,742 377,169
Oil and gas sales(1): Oil $2,849,057 $2,407,893 $2,144,085 Gas 1,870,375 1,453,901 1,044,230 --------- --------- --------- Total $4,719,432 $3,861,794 $3,188,315 ========= ========= ========= Average sales price: Per barrel of oil $38.30 $29.11 $23.83 Per Mcf of gas 4.62 4.29 2.77
- ------------------- (1) These amounts differ from the Net Profits included in the P-7 Partnership's financial statements because they do not reflect the offset of $1,645,946, $1,650,013, and $1,214,321, respectively, of production expenses incurred by the Affiliated Programs.
Net Production Data P-8 Partnership ---------------
Year ended December 31, -------------------------------------------- 2004 2003 2002 ---------- ---------- ---------- Production: Oil (Bbls) 45,339 49,766 54,657 Gas (Mcf) 270,536 257,786 300,937
Oil and gas sales(1): Oil $1,731,505 $1,448,496 $1,301,208 Gas 1,262,260 1,104,661 820,315 --------- --------- --------- Total $2,993,765 $2,553,157 $2,121,523 ========= ========= ========= Average sales price: Per barrel of oil $38.19 $29.11 $23.81 Per Mcf of gas 4.67 4.29 2.73
- ------------------- (1) These amounts differ from the Net Profits included in the P-8 Partnership's financial statements because they do not reflect the offset of $992,567, $1,004,748, $765,606, respectively, of production expenses incurred by the Affiliated Programs.
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, 2004 which were attributable to the Partnerships' Net Profits Interests. 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, L.P. ("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 attributable to the Partnerships' proved reserves
was calculated on the basis of current costs and prices at December 31, 2004. Such prices were not escalated except in certain circumstances where escalations were fixed and readily determinable in accordance with applicable contract provisions. Oil and gas prices at December 31, 2004 ($43.36 per barrel and $6.02 per Mcf, respectively) were higher than the prices in effect on December 31, 2003 ($29.25 per barrel and $5.77 per Mcf, respectively). This increase in oil and gas prices has caused the estimates of remaining economically recoverable reserves, as well as the values placed on said reserves, at December 31, 2004 to be higher than such estimates and values at December 31, 2003. The prices used in calculating the net present value attributable to the Partnerships' proved reserves do not necessarily reflect market prices for oil and gas production subsequent to December 31, 2004. There can be no assurance that the prices used in calculating the net present value of the Partnerships' proved reserves at December 31, 2004 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.
Proved Reserves and Net Present Values From Proved Reserves As of December 31, 2004(1)
P-7 Partnership: - ---------------
Estimated proved reserves: Gas (Mcf) 5,480,079 Oil and liquids (Bbls) 1,520,139
Net present value (discounted at 10% per annum) $22,479,398
P-8 Partnership: - ---------------
Estimated proved reserves: Gas (Mcf) 3,525,893 Oil and liquids (Bbls) 897,719
Net present value (discounted at 10% per annum) $14,013,719
- ---------- (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 Partnerships' proved reserves is contained in Note 4 to the Partnerships' financial statements, included in Item 8 of this Annual Report.
Significant Properties
As of December 31, 2004, affiliates of the Partnerships operated 24 (2%) and 27 (2%), respectively, of the P-7 and P-8 Partnerships' wells. 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 Permian Basin is located in west Texas and southeast New Mexico.
Significant Properties as of December 31, 2004 ----------------------------------------------
Wells Operated by Affiliates Oil Gas Total ------------ Reserves Reserves Present Basin Wells Number %(1) (Bbl) (Mcf) Value - ----------- ----- ------ --- --------- --------- -----------
P-7 P/ship: Permian 933 9 1% 1,463,841 3,739,764 $19,204,844 Anadarko 22 14 64% 29,261 1,673,167 2,902,428
P-8 P/ship: Permian 1,339 9 1% 867,169 2,393,888 $11,682,557 Anadarko 31 17 55% 15,439 1,099,784 2,083,991 - ------------------ (1) Percent of the Partnership's total wells in the basin which are operated by affiliates of the Partnerships.
Following is a description of those oil and gas properties whose revisions in the estimated proved reserves (based on equivalent barrels of oil) as of December 31, 2004 as compared to December 31, 2003, were significant to the Partnerships.
The P-7 and P-8 Partnerships' estimated proved reserves increased approximately 366,000 and 210,000 barrels of oil equivalent, respectively, in the Pecos Val (5400 Dev Ut) located in Pecos County, Texas from December 31, 2003 to December 31, 2004. This increase was primarily due to a revised forecast in reserves based on actual production experience.
The P-7 and P-8 Partnerships' estimated proved reserves increased approximately 228,000 and 140,000 barrels of oil equivalent, respectively, in the Robertson North Unit located in Gaines County, Texas from December 31, 2003 to December 31, 2004. This increase was primarily due to the completion of several new wells in 2004 and a revised forecast in reserves based on actual production experience.
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.
ITEM 3. LEGAL PROCEEDINGS
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS
There were no matters submitted to a vote of the Limited Partners of either Partnership during 2004.
PART II.
ITEM 5.
ITEM 5. MARKET FOR UNITS AND RELATED LIMITED PARTNER MATTERS
As of February 28, 2005, the number of Units outstanding and the approximate number of Limited Partners of record in the Partnerships were as follows:
Number of Number of Partnership Units Limited Partners ----------- --------- ----------------
P-7 188,702 970 P-8 116,168 850
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.
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 the Partnership.
Repurchase Offer Prices ----------------------- 2003 2004 2005 -------------------------- -------------------------- ---- 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st P/ship Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. - ------ ---- ---- ---- ---- ---- ---- ---- ---- ----
P-7 $27 $26 $34 $31 $29 $27 $37 $34 $32 P-8 28 27 38 32 29 27 38 34 32
In addition to this repurchase offer, the Partnerships have been subject to "4.9% tender offers" from several third parties. 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.
The following is a summary of cash distributions paid to the Limited Partners during 2003 and 2004 and the first quarter of 2005:
Cash Distributions ------------------
----------------------------------------- 1st 2nd 3rd 4th P/ship Qtr. Qtr. Qtr. Qtr. ------ ----- ----- ----- ----- P-7 $2.37 $ .82 $1.79 $3.66 P-8 2.77 1.19 2.35 6.24
2004 2005 ----------------------------------------- ----- 1st 2nd 3rd 4th 1st P/ship Qtr. Qtr. Qtr. Qtr. Qtr. ------ ----- ----- ----- ----- ----- P-7 $1.30 $2.32 $2.00 $2.87 $1.94 P-8 1.77 2.50 1.85 3.12 2.20
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The following table presents 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."
ITEM 7.
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. The primary source of liquidity and Partnership cash distributions comes from the net revenues generated from the sale of oil and gas produced from the Partnerships' oil and gas properties. The level of net revenues is highly dependent upon the prices received for oil and gas sales, which prices have historically been very volatile and may continue to be so. Additionally, lower oil and natural gas prices may reduce the amount of oil and gas that is economic to produce and reduce the Partnerships' revenues and cash flow. Various factors beyond the Partnerships' control will affect prices for oil and natural gas, such as:
* Worldwide and domestic supplies of oil and natural gas; * The ability of the members of the Organization of Petroleum Exporting Countries ("OPEC") to agree upon and maintain oil prices and production quotas; * Political instability or armed conflict in oil-producing region or around major shipping areas; * The level of consumer demand and overall economic activity; * The competitiveness of alternative fuels; * Weather conditions; * The availability of pipelines for transportation; and * Domestic and foreign government regulations and taxes.
It is not possible to predict the future direction of oil or natural gas prices or whether the above discussed trends will remain. Operating costs, including General and Administrative Expenses, may not decline over time or may experience only a gradual decline, thus adversely affecting net revenues as either production or oil and natural gas prices decline. In any particular period, net revenues may also be affected by either the receipt of proceeds from property sales or the incursion of additional costs as a result of well workovers, recompletions, new well drilling, and other events.
In addition to pricing, the level of net revenues is also highly dependent upon the total volumes of oil and natural gas sold. Oil and gas reserves are depleting assets and will experience production declines over time, thereby likely resulting in reduced net revenues. 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 (or high 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 wells owned by the Partnerships, these factors are generally not material as compared to the normal decline in production experienced on all remaining wells.
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 Partnership's results of operations for the year ended December 31, 2004 as compared to the year ended December 31, 2003 and for the year ended December 31, 2003 as compared to the year ended December 31, 2002.
P-7 Partnership ---------------
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003 -------------------------------------
Total Net Profits increased $861,705 (39.0%) in 2004 as compared to 2003. Of this increase, approximately (i) $683,000 and $132,000, respectively, were related to increases in the average prices of oil and gas sold, (ii) $285,000 was related to an increase in volumes of gas sold, and (iii) $4,000 was related to a decrease in production expenses. These increases were partially offset by a decrease of approximately $242,000 related to a decrease in volumes of oil sold. Volumes of oil sold decreased 8,318 barrels, while volumes of gas sold increased 66,358 Mcf in 2004 as compared to 2003. The decrease in volumes of oil sold was primarily due to (i) normal declines in production and (ii) the sale of several wells in late 2003. The increase in volumes of gas sold was primarily due to (i) an increase in production on several wells following the successful workovers of those wells during 2003 and 2004 and (ii) a positive prior period volume adjustment made by the operator on one significant well in 2004. These increases were partially offset by (i) normal declines in production, (ii) the sale of several wells in mid 2003, and (iii) a positive prior period volume adjustment on another significant well in 2003. The decrease in production expenses was primarily due to (i) workover expenses incurred on several wells during 2003 and (ii) the sale of several wells during late 2003. These decreases were substantially offset by (i) workover expenses incurred on several wells during 2004 and (ii) an increase in production taxes associated with the increase in oil and gas sales. Average oil and gas prices increased to $38.30 per barrel and $4.62 per Mcf, respectively, in 2004 from $29.11 per barrel and $4.29 per Mcf, respectively, in 2003.
As discussed in "Liquidity and Capital Resources" below, the P-7 Partnership sold certain oil and gas properties during 2003 and recognized a $440,609 gain on such sales. No such sales occurred during 2004.
Depletion of Net Profits Interests decreased $70,828 (23.2%) in 2004 as compared to 2003. This decrease was primarily due to (i) upward revisions in the estimates of remaining oil and gas reserves during 2004 and (ii) one significant well becoming substantially depleted in 2003 due to the lack of remaining reserves. As a percentage of Net Profits, this expense decreased to 7.6% in 2004 from 13.8% in 2003. This percentage decrease was primarily due to (i) the increases in the average prices of oil and gas sold and (ii) the dollar decrease in depletion of Net Profits Interests.
General and administrative expenses remained relatively constant in 2004 and 2003. As a percentage of Net Profits, these expenses decreased to 7.5% in 2004 from 10.4% in 2003. This percentage decrease was primarily due to the increase in Net Profits.
The P-7 Partnership achieved payout during the second quarter of 2004. After payout, operations and revenues for the P-7 Partnership have been and will be allocated using after payout percentages. After payout percentages allocate operating income and expenses 10% to the General Partner and 90% to the Limited Partners. Before payout, operating income and expenses were allocated 5% to the General Partner and 95% to the Limited Partners.
Cumulative cash distributions to the Limited Partners through December 31, 2004 were $19,800,916 or 104.93% of Limited Partners' capital contributions.
Year Ended December 31, 2003 Compared to Year Ended December 31, 2002 -------------------------------------
Total Net Profits increased $237,787 (12.0%) in 2003 as compared to 2002. Of this increase, approximately $437,000 and $516,000, respectively, were related to increases in the average prices of oil and gas sold. These increases were partially offset by decreases of approximately (i) $173,000 and $106,000, respectively, related to decreases in volumes of oil and gas sold and (ii) $436,000 related to an increase in production expenses. Volumes of oil and gas sold decreased 7,246 barrels and 38,427 Mcf, respectively, in 2003 as compared to 2002. The decrease in volumes of gas sold was primarily due to (i) normal declines in production and (ii) the sale of several wells in mid 2003. These decreases were partially offset by a positive prior period volume adjustment on one significant well in 2003. The increase in production expenses was primarily due to (i) workover expenses incurred on several wells during 2003, (ii) a negative prior period lease operating expense adjustment on one significant well in 2002, and (iii) an increase in production taxes associated with the increase in oil and gas sales. Average oil and gas
prices increased to $29.11 per barrel and $4.29 per Mcf, respectively, in 2003 from $23.83 per barrel and $2.77 per Mcf, respectively, in 2002.
As discussed in "Liquidity and Capital Resources" below, the P-7 Partnership sold certain oil and gas properties during 2003 and recognized a $440,609 gain on such sales. No such sales occurred during 2002.
Depletion of Net Profits Interests increased $42,642 (16.2%) in 2003 as compared to 2002. This increase was primarily due to (i) an increase in depletable Net Profits Interests primarily due to developmental drilling on one large unitized property in 2003 and (ii) one significant well being substantially depleted in 2003 due to the lack of remaining economically recoverable reserves. These increases were partially offset by the decreases in volumes of oil and gas sold. As a percentage of Net Profits, this expense increased to 13.8% in 2003 from 13.3% in 2002.
General and administrative expenses increased $2,660 (1.2%) in 2003 as compared to 2002. As a percentage of Net Profits, these expenses decreased to 10.4% in 2003 from 11.5% in 2002. This percentage decrease was primarily due to the increase in Net Profits.
P-8 Partnership ---------------
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003 -------------------------------------
Total Net Profits increased $452,789 (29.2%) in 2004 as compared to 2003. Of this increase, approximately (i) $412,000 and $103,000, respectively, were related to increases in the average prices of oil and gas sold, (ii) $55,000 was related to an increase in volumes of gas sold, and (iii) $12,000 was related to a decrease in production expenses. These increases were partially offset by a decrease of approximately $129,000 related to a decrease in volumes of oil sold. Volumes of oil sold decreased 4,427 barrels, while volumes of gas sold increased 12,750 Mcf in 2004 as compared to 2003. The decrease in volumes of oil sold was primarily due to (i) normal declines in production and (ii) the sale of several wells in late 2003. The increase in volumes of gas sold was primarily due to (i) an increase in production on several wells following successful workovers during 2003 and 2004 and (ii) a positive prior period volume adjustment made by the operator on one significant well in 2004. These increases were partially offset by (i) normal declines in production, (ii) the sale of several wells in mid 2003, and (iii) a positive prior period volume adjustment on another significant well in 2003. The decrease in production expenses was primarily due to (i) workover expenses incurred on
several wells during 2003 and (ii) the sale of several wells during late 2003. These decreases were partially offset by (i) workover expenses incurred on several wells during 2004 and (ii) an increase in production taxes associated with the increase in oil and gas sales. Average oil and gas prices increased to $38.19 per barrel and $4.67 per Mcf, respectively, in 2004 from $29.11 per barrel and $4.29 per Mcf, respectively, in 2003.
As discussed in "Liquidity and Capital Resources" below, the P-8 Partnership sold certain oil and gas properties during 2003 and recognized a $555,967 gain on such sales. No such sales occurred during 2004.
Depletion of Net Profits Interests decreased $50,433 (27.0%) in 2004 as compared to 2003. This decrease was primarily due to (i) upward revisions in the estimates of remaining oil and gas reserves during 2004 and (ii) one significant well becoming substantially depleted in 2003 due to the lack of remaining reserves. As a percentage of Net Profits, this expense decreased to 6.8% in 2004 from 12.1% in 2003. This percentage decrease was primarily due to (i) the dollar decrease in depletion of Net Profits Interests and (ii) the increases in the average prices of oil and gas sold.
General and administrative expenses remained relatively constant in 2004 and 2003. As a percentage of Net Profits, these expenses decreased to 7.5% in 2004 from 9.7% in 2003. This percentage decrease was primarily due to the increase in Net Profits.
Cumulative cash distributions to the Limited Partners through December 31, 2004 were $13,263,583 or 114.18% of Limited Partners' capital contributions.
Year Ended December 31, 2003 Compared to Year Ended December 31, 2002 -------------------------------------
Total Net Profits increased $192,492 (14.2%) in 2003 as compared to 2002. Of this increase, approximately $264,000 and $402,000, respectively, were related to increases in the average prices of oil and gas sold. These increases were partially offset by decreases of approximately (i) $117,000 and $118,000, respectively, related to decreases in volumes of oil and gas sold and (ii) $239,000 related to an increase in production expenses. Volumes of oil and gas sold decreased 4,891 barrels and 43,151 Mcf, respectively, in 2003 as compared to 2002. The decrease in volumes of gas sold was primarily due to (i) normal declines in production and (ii) the sale of several wells in mid 2003. These decreases were partially offset by a positive prior period volume adjustment on one significant well in 2003. The increase in production expenses was primarily due to (i) workover expenses incurred on several wells during 2003, (ii) an increase in
production taxes associated with the increase in oil and gas sales, and (iii) negative prior period lease operating expense adjustments on two significant wells in 2002. Average oil and gas prices increased to $29.11 per barrel and $4.29 per Mcf, respectively, in 2003 from $23.81 per barrel and $2.73 per Mcf, respectively, in 2002.
As discussed in "Liquidity and Capital Resources" below, the P-8 Partnership sold certain oil and gas properties during 2003 and recognized a $555,967 gain on such sales. No such sales occurred during 2002.
Depletion of Net Profits Interests increased $25,308 (15.7%) in 2003 as compared to 2002. This increase was primarily due to (i) an increase in depletable Net Profits Interests primarily due to developmental drilling on one large unitized property in 2003 and (ii) one significant well being substantially depleted in 2003 due to the lack of remaining economically recoverable reserves. These increases were partially offset by the decreases in volumes of oil and gas sold. As a percentage of Net Profits, this expense increased to 12.1% in 2003 from 11.9% in 2002.
General and administrative expenses increased $2,333 (1.6%) in 2003 as compared to 2002. As a percentage of Net Profits, these expenses decreased to 9.7% in 2003 from 10.9% in 2002. This percentage decrease was primarily due to the increase in Net Profits.
The P-8 Partnership achieved payout during the fourth quarter of 2003. After payout, operations and revenues for the P-8 Partnership have been and will be allocated using after payout percentages. After payout percentages allocate operating income and expenses 10% to the General Partner and 90% to the Limited Partners. Before payout, operating income and expenses were allocated 5% to the General Partner and 95% to the Limited Partners.
Average Proceeds and Units of Production
The following tables are comparisons of the annual barrels of oil equivalent (one barrel of oil or six Mcf of gas) and the average proceeds (oil and gas sales, less lease operating expenses and production taxes) received per barrel of oil equivalent attributable to the Partnerships' Net Profits Interest for the years ended December 31, 2004, 2003, and 2002.
2004 Compared to 2003 ---------------------
Barrel of Oil Average Proceeds per Equivalent Barrel of Oil Equivalent ----------------------------- -------------------------- P/ship 2004 2003 % Change 2004 2003 % Change - ------ ------- ------- -------- ------ ------ --------
P-7 141,910 139,168 2% $21.66 $15.89 36% P-8 90,428 92,730 (2%) 22.13 16.70 33%
2003 Compared to 2002 ---------------------
Barrel of Oil Average Proceeds per Equivalent Barrel of Oil Equivalent ----------------------------- -------------------------- P/ship 2003 2002 % Change 2003 2002 % Change - ------ ------- ------- -------- ------ ------ --------
P-7 139,168 152,819 (9%) $15.89 $12.92 23% P-8 92,730 104,813 (12%) 16.70 12.94 29%
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 generally not reinvested in productive assets. Assuming 2004 production levels for future years, the P-7 and P-8 Partnerships' proved reserve quantities at December 31, 2004 would have remaining lives of approximately 20.4 and 19.8 years, respectively, for oil reserves and 13.5 and 13.0 years, respectively, for gas reserves. These life of reserves estimates are based on the current estimates of remaining oil and gas reserves. See "Item 2. Properties" for a discussion of these reserve estimates. Any increase or decrease from the oil and gas prices at December 31, 2004 may cause an increase or decrease in the estimated life of said reserves. As discussed below, the Partnerships must terminate no later than December 31, 2011 (seven years from December 31, 2004).
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.
Expenditures by the Affiliated Programs for new wells or well recompletions or workovers, however, may reduce or eliminate cash available for a particular quarterly cash distribution. During 2004, 2003, and 2002, capital expenditures affecting the P-7 Partnership's Net Profits Interests totaled $686,894, $691,049, and $241,187, respectively. During 2004, 2003, and 2002, capital expenditures affecting the P-8 Partnership's Net Profits Interests totaled $420,275, $420,686, and $147,528, respectively. These costs were indirectly incurred as a result of drilling activities associated with several large unitized properties.
The Partnerships sold certain Net Profits Interests during 2003. No such sales occurred during 2004. These sales were made by the General Partner after giving due consideration to both the offer price and the General Partner's estimate of the underlying property's remaining proved reserves and future operating costs. Net proceeds from the sales 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. During 2003, such proceeds to the P-7 Partnership were $489,541, while such proceeds to the P-8 Partnership were $602,905.
Over the years, as part of the normal course of business, some of the Partnerships' interests in wells have been sold, generally at oil and gas auctions. Given the generally favorable current environment for oil and gas dispositions, it is possible that the number of and value of properties considered for sale may increase. In the event of sales, any net proceeds are distributed as soon as possible after the disposition. Future production, costs, and cash flow will be reduced as properties are 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 generally replacing production.
The General Partner expects general and administrative expenses to increase substantially during 2005 and 2006 due to costs required to comply with Section 404 of the Sarbanes-Oxley Act of 2002. Such anticipated increase will reduce cash available for distribution. The General Partner expects at least a portion of this anticipated increase in general and administrative expenses to continue in years beyond 2006.
The Partnerships were scheduled to terminate on February 28, 2002 in accordance with the Partnership Agreements. However, the General Partner may extend the term of each partnership for up to five periods of two years each. The General Partner has extended the terms of the Partnerships for their second extension thereby extending their termination date to December 31, 2005.
Off-Balance Sheet Arrangements
The Partnerships do not have any off-balance sheet arrangements.
Tabular Disclosure of Contractual Obligations
The partnerships do not have any contractual obligations of the type required to be disclosed under this heading.
Critical Accounting Policies
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 any interest incurred to finance the acquisition, for the period of time the properties are held by the General Partner.
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 related to the underlying properties in which the Partnership has a Net Profits Interest.
The Partnerships evaluate the recoverability of the carrying costs of their Net Profits Interests in proved oil and gas properties for each oil and gas field (rather than separately for each well). If the unamortized costs of a Net Profits Interest within a field exceeds the expected 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.
Accounts Receivable (Accounts Payable) - Net Profits
Revenues from a Net Profits Interest consist of a share of the oil and gas sales of the property, less operating and production expenses. The Partnerships accrue for oil and gas revenues less expenses from the Net Profits Interests. Sales of gas applicable to the Net Profits Interests 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 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 this liability are based on the average gas price for which the Partnerships are currently settling this liability. This liability is recorded as a reduction of accounts receivable.
Also included in accounts receivable(payable)-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 annual average production costs per Mcf.
In July 2001, the FASB issued FAS No. 143, "Accounting for Asset Retirement Obligations", which is effective for fiscal years beginning after June 15, 2002 (January 1, 2003 for the Partnerships). On January 1, 2003, the Partnerships adopted FAS No. 143 and recorded an increase in Net Profits Interests, an increase in net income for the cumulative effect of the change in accounting principle, and an asset retirement obligation, resulting in a decrease of accounts receivable - Net Profits, in the following approximate amounts for each Partnership:
Increase in Net Income for Increase in the Change in Asset Net Profits Accounting Retirement Partnership Interests Principle Obligation - ----------- ----------- -------------- ----------
P-7 $311,000 $ 400 $311,000 P-8 234,000 5,000 229,000
The asset retirement obligation is adjusted upwards each quarter in order to recognize accretion of the time-related discount factor. For the year ended December 31, 2004, the P-7 and P-8 Partnerships recognized approximately $16,000 and
$10,000, respectively, of an increase in depletion of Net Profits Interests, which was comprised of accretion of the asset retirement obligation and depletion of the increase in Net Profits Interests.
New Accounting Pronouncements
The Partnerships are not aware of any recently issued accounting pronouncements that would have an impact on the Partnerships' future results of operations and financial position.
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 2004. 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."
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Partnerships do not hold any market risk sensitive instruments.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data are indexed in Item 15 hereof.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, the principal executive officer and principal financial officer conducted an evaluation of the Partnerships' disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934). Based on this evaluation, such officers concluded that the Partnerships'
disclosure controls and procedures are effective to ensure that information required to be disclosed by the Partnerships in reports filed under the Exchange Act is recorded, processed, summarized, and reported accurately and within the time periods specified in the Securities and Exchange Commission rules and forms.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
The General Partner is not aware of any information required to be reported on Form 8-K during the fourth quarter of 2004 but which was not so reported.
PART III.
ITEM 10.
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 Geodyne ---------------- --- ----------------------- Dennis R. Neill 53 President and Director
Judy K. Fox 54 Secretary
The director will hold office until the next annual meeting of shareholders of Geodyne or 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 Samson 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 Samson, 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, Snyder Exploration Company, and Compression, Inc.
Judy K. Fox joined Samson in 1990 and was named Secretary of Geodyne and its subsidiaries on June 30, 1996. Prior to joining
Samson, she served as Gas Contract Manager for Ely Energy Company. Ms. Fox is also Secretary of Berry Gas Company, Circle L Drilling Company, Compression, Inc., Dyco Petroleum Corporation, Samson Hydrocarbons Company, Snyder Exploration 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 during 2004 of reports required under Section 16 of the Securities Exchange Act of 1934.
Audit Committee Financial Expert
The Partnerships are not required by SEC regulations or otherwise to maintain an audit committee. The board of directors of the General Partner consists of one person and therefore serves as its audit committee. There is not an audit committee financial expert, as defined in the SEC regulations, serving on the General Partner's board of directors.
Code of Ethics
The General Partner has adopted a Code of Ethics which applies to all of its executive officers, including those persons who perform the functions of principal executive officer, principal financial officer, and principal accounting officer. The Partnerships will provide, free of charge, a copy of this Code of Ethics to any person upon receipt of a written request mailed to Geodyne Resources, Inc., Samson Plaza, Two West 2nd Street, Tulsa, Oklahoma 74103. Such request must include the address to which the Code of Ethics should be mailed.
ITEM 11.
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. When actual costs incurred benefit other Partnerships and affiliates, the allocation of costs is based on the relationship of the Partnerships' reserves to the total reserves owned by all Partnerships and affiliates. The amount of general and administrative expense allocated to the
General Partner and its affiliates and charged to each Partnership during 2004, 2003, and 2002, 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 2004 2003 2002 ----------- -------- -------- --------
P-7 $198,636 $198,636 $198,636 P-8 122,280 122,280 122,280
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 based on the allocation method described above. 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 2004, 2003, and 2002:
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.
Samson maintains necessary inventories of new and used field equipment. Samson may have provided some of this equipment for wells in which the Partnerships have a Net Profits Interest. This equipment was 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.
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 the date of filing this Annual Report 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.
Number of Units Beneficially Owned (Percent Beneficial Owner of Outstanding) - ------------------------------------------ ----------------
P-7 Partnership: - ---------------
Samson Resources Company 40,496 (21.5%)
ATL, Inc. 54,896 (29.1%) 1200 Harbor Boulevard, 5th Floor Weehawken, NJ 07087
All affiliates, directors, and officers of 40,496 (21.5%) the General Partner as a group and the General Partner (4 persons)
P-8 Partnership: - ---------------
Samson Resources Company 34,535 (29.7%)
All affiliates, directors, and officers of 34,535 (29.7%) the General Partner as a group and the General Partner (4 persons)
ITEM 13.
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.
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 Samson. The Partnerships thus compete with Samson (including other oil and gas partnerships) for the time and resources of such personnel. Samson devotes 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 Interest payable to the Partnerships. These costs are thus indirectly borne by the Partnership.
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 or royalty 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 Samson, 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 Samson. 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 Samson.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
During 2004 and 2003, each Partnership paid the following audit fees:
2004 2003 ------- -------
Year-end audit per engagement letter $21,560 $19,250 1st quarter 10-Q review 825 750 2nd quarter 10-Q review 825 750 3rd quarter 10-Q review 825 750
Audit-Related Fees
During 2004 and 2003 the Partnerships did not pay any audit-related fees of the type required by the SEC to be disclosed in this Annual Report under this heading.
Tax Fees
During 2004 and 2003 the Partnerships did not pay any tax compliance, tax advice, or tax planning fees of the type required by the SEC to be disclosed in this Annual Report under this heading.
All Other Fees
During 2004 and 2003 the Partnerships did not pay any other fees of the type required by the SEC to be disclosed in this Annual Report under this heading.
Audit Approval
The Partnerships do not have audit committee pre-approval policies and procedures as described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X. The Partnerships did not receive any services of the type described in Items 9(e)(2) through 9(e)(4) of Schedule 14A.
Audit and Related Fees Paid by Affiliates
The Partnerships' accountants received compensation from other related partnerships managed by the General Partner and from other entities affiliated with the General Partner. This compensation is for audit services, tax related services, and other accounting-related services. The General Partner does not believe this arrangement creates a conflict of interest or impairs the auditors' independence.
PART IV.
ITEM 15.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements, Financial Statement Schedules, and Exhibits:
(1) Financial Statements: The following financial statements for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7 and the Geodyne Institutional/Pension Energy Income Limited Partnership P-8 as of December 31, 2004 and 2003 and for the three
years ended December 31, 2004 are filed as part of this report:
Report of Independent Registered Public Accounting Firm Balance Sheets Statements of Operations Statements of Changes in Partners' Capital (Deficit) Statements of Cash Flows Notes to Financial Statements
(2) Financial Statement Schedules:
None.
(3) Exhibits:
Exh. No. Exhibit - --- -------
4.1 Certificate of Limited Partnership dated February 28, 1992, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.1 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.2 Agreement of Limited Partnership dated February 28, 1992, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.2 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.3 First Amendment to Certificate of Limited Partnership and First Amendment to Agreement of Limited Partnership dated February 25, 1993, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.3 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.4 Second Amendment to Certificate of Limited Partnership dated August 4, 1993, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.4 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.5 Second Amendment to Agreement of Limited Partnership dated August 4, 1993, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.5 to Annual Report on Form 10K-405 for period
ended December 31, 2001 and is hereby incorporated by reference.
4.6 Third Amendment to Agreement of Limited Partnership dated August 31, 1995, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.6 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.7 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.7 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.8 Fifth Amendment to Agreement of Limited Partnership dated November 14, 2001, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.8 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.9 Sixth Amendment to Agreement of Limited Partnership dated January 22, 2004, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on March 26, 2004, as Exhibit 4.9 to Annual Report on Form 10-K for period ended December 31, 2003, and is hereby incorporated by reference.
4.10 Certificate of Limited Partnership dated February 28, 1992, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.9 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.11 Agreement of Limited Partnership dated February 28 , 1992, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.10 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.12 First Amendment to Certificate of Limited Partnership and First Amendment to Agreement of Limited Partnership dated February 25, 1993, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.11 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.13 Second Amendment to Certificate of Limited Partnership dated August 4, 1993, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.12 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.14 Second Amendment to Agreement of Limited Partnership dated August 4, 1993, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.13 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.15 Third Amendment to Agreement of Limited Partnership dated August 31, 1995, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.14 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.16 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.15 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.17 Fifth Amendment to Agreement of Limited Partnership dated November 14, 2001, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.16 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.18 Sixth Amendment to Agreement of Limited Partnership dated January 22, 2004, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8 filed with the Securities and Exchange Commission on March 26, 2004, as Exhibit 4.17 to Annual Report on Form 10-K for period ended December 31, 2003, and is hereby incorporated by reference.
*23.1 Consent of Ryder Scott Company, L.P. for the Geodyne Institutional/ Pension Energy Income Limited Partnership P-7.
*23.2 Consent of Ryder Scott Company, L.P. for the Geodyne Institutional/ Pension Energy Income Limited Partnership P-8.
*31.1 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7.
*31.2 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7.
*31.3 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8.
*31.4 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8.
*32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7.
*32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8.
All other Exhibits are omitted as inapplicable.
----------
*Filed herewith.
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-7 GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
By: GEODYNE RESOURCES, INC. General Partner March 30, 2005
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 March 30, 2005 ------------------- Director (Principal Dennis R. Neill Executive Officer)
//s//Craig D. Loseke Chief Accounting March 30, 2005 ------------------- Officer (Principal Craig D. Loseke Accounting and Financial Officer)
//s//Judy K. Fox Secretary March 30, 2005 ------------------- Judy K. Fox
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE PARTNERS
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7
In our opinion, the accompanying balance sheets and the related statements of operations, changes in partners' capital (deficit) and cash flows present fairly, in all material respects, the financial position of the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, an Oklahoma limited partnership, at December 31, 2004 and 2003, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Pubic Company Accounting Oversight Board (United States). 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 1 of Notes to the Financial Statements under the heading "Asset Retirement Obligation," effective January 1, 2003 the Partnerships changed the manner in which they account for asset retirement obligations.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma March 30, 2005
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7 Balance Sheets December 31, 2004 and 2003
ASSETS ------
2004 2003 ------------ ------------
CURRENT ASSETS: Cash and cash equivalents $1,158,634 $ 973,753 --------- ---------
Total current assets $1,158,634 $ 973,753
NET PROFITS INTERESTS, net, utilizing the successful efforts method 3,727,027 3,266,042 --------- ---------
$4,885,661 $4,239,795 ========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) -------------------------------------------
CURRENT LIABILITIES: Accounts payable: Net Profits $ 37,237 $ 208,257 --------- ---------
Total current liabilities $ 37,237 $ 208,257
PARTNERS' CAPITAL (DEFICIT): General Partner ($ 44,682) ($ 103,881) Limited Partners, issued and outstanding 188,702 Units 4,893,106 4,135,419 --------- ---------
Total Partners' capital $4,848,424 $4,031,538 --------- ---------
$4,885,661 $4,239,795 ========= =========
The accompanying notes are an integral part of these financial statements
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7 Statements of Operations For the Years Ended December 31, 2004, 2003, and 2002
2004 2003 2002 ---------- ---------- ----------
REVENUES: Net Profits $3,073,486 $2,211,781 $1,973,994 Interest income 7,354 5,591 3,712 Gain on sale of Net Profits Interests - 440,609 - --------- --------- ---------
$3,080,840 $2,657,981 $1,977,706
COSTS AND EXPENSES: Depletion of Net Profits Interests $ 235,103 $ 305,931 $ 263,289 General and administrative 229,798 230,540 227,880 --------- --------- ---------
$ 464,901 $ 536,471 $ 491,169 --------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $2,615,939 $2,121,510 $1,486,537
Cumulative effect of change in accounting for asset retirement obligations (Note 1) - 400 - --------- --------- --------- NET INCOME $2,615,939 $2,121,910 $1,486,537 ========= ========= =========
GENERAL PARTNER - NET INCOME $ 257,252 $ 118,037 $ 84,673 ========= ========= =========
LIMITED PARTNERS - NET INCOME $2,358,687 $2,003,873 $1,401,864 ========= ========= =========
NET INCOME per Unit $ 12.50 $ 10.62 $ 7.43 ========= ========= =========
UNITS OUTSTANDING 188,702 188,702 188,702 ========= ========= =========
The accompanying notes are an integral part of these financial statements
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7 Statements of Changes in Partners' Capital (Deficit) For the Years Ended December 31, 2004, 2003, and 2002
Limited General Partners Partner Total ------------ ---------- ------------
Balance, Dec. 31, 2001 $3,235,682 ($123,150) $3,112,532 Net income 1,401,864 84,673 1,486,537 Cash distributions ( 877,000) ( 64,271) ( 941,271) --------- ------- ---------
Balance, Dec. 31, 2002 $3,760,546 ($102,748) $3,657,798 Net income 2,003,873 118,037 2,121,910 Cash distributions ( 1,629,000) ( 119,170) ( 1,748,170) --------- ------- ---------
Balance, Dec. 31, 2003 $4,135,419 ($103,881) $4,031,538 Net income 2,358,687 257,252 2,615,939 Cash distributions ( 1,601,000) ( 198,053) ( 1,799,053) --------- ------- ---------
Balance, Dec. 31, 2004 $4,893,106 ($ 44,682) $4,848,424 ========= ======= =========
The accompanying notes are an integral part of these financial statements
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-7 Statements of Cash Flows For the Years Ended December 31, 2004, 2003, and 2002
2004 2003 2002 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $2,615,939 $2,121,910 $1,486,537 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of change in accounting for asset retirement obligations (Note 1) - ( 400) - Depletion of Net Profits Interests 235,103 305,931 263,289 Gain on sale of Net Profits Interests - ( 440,609) - Net change in accounts receivable (accounts payable) - Net Profits ( 315,881) 79,513 ( 60,019) --------- --------- --------- Net cash provided by operating activities $2,535,161 $2,066,345 $1,689,807 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 551,227) ($ 691,049) ($ 241,187) Proceeds from sale of Net Profits Interests - 489,541 - --------- --------- --------- Net cash used by investing activities ($ 551,227) ($ 201,508) ($ 241,187) --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($1,799,053) ($1,748,170) ($ 941,271) --------- --------- --------- Net cash used by financing activities ($1,799,053) ($1,748,170) ($ 941,271) --------- --------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS $ 184,881 $ 116,667 $ 507,349
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 973,753 857,086 349,737 --------- --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,158,634 $ 973,753 $ 857,086 ========= ========= =========
The accompanying notes are an integral part of these financial statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE PARTNERS
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8
In our opinion, the accompanying balance sheets and the related statements of operations, changes in partners' capital (deficit) and cash flows present fairly, in all material respects, the financial position of the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, an Oklahoma limited partnership, at December 31, 2004 and 2003, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America. 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 of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 1 of Notes to the Financial Statements under the heading "Asset Retirement Obligation," effective January 1, 2003 the Partnerships changed the manner in which they account for asset retirement obligations.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma March 30, 2005
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8 Balance Sheets December 31, 2004 and 2003
ASSETS ------ 2004 2003 ------------ ------------
CURRENT ASSETS: Cash and cash equivalents $ 745,323 $ 675,203 --------- ---------
Total current assets $ 745,323 $ 675,203
NET PROFITS INTERESTS, net, utilizing the successful efforts method 2,245,692 1,956,230 --------- ---------
$2,991,015 $2,631,433 ========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) -------------------------------------------
CURRENT LIABILITIES: Accounts payable: Net Profits $ 9,813 $ 128,314 --------- ---------
Total current liabilities $ 9,813 $ 128,314
PARTNERS' CAPITAL (DEFICIT): General Partner ($ 13,891) ($ 29,971) Limited Partners, issued and outstanding 116,168 Units 2,995,093 2,533,090 --------- ---------
Total Partners' capital $2,981,202 $2,503,119 --------- --------- $2,991,015 $2,631,433 ========= =========
The accompanying notes are an integral part of these financial statements
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8 Statements of Operations For the Years Ended December 31, 2004, 2003, and 2002
2004 2003 2002 ---------- ---------- ----------
REVENUES: Net Profits $2,001,198 $1,548,409 $1,355,917 Interest income 4,735 4,316 3,037 Gain on sale of Net Profits Interests - 555,967 - --------- --------- ---------
$2,005,933 $2,108,692 $1,358,954
COSTS AND EXPENSES: Depletion of Net Profits Interests $ 136,275 $ 186,708 $ 161,400 General and administrative 149,887 149,591 147,258 --------- --------- ---------
$ 286,162 $ 336,299 $ 308,658 --------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $1,719,771 $1,772,393 $1,050,296
Cumulative effect of change in accounting for asset retirement obligations (Note 1) - 4,862 - --------- --------- ---------
NET INCOME $1,719,771 $1,777,255 $1,050,296 ========= ========= =========
GENERAL PARTNER - NET INCOME $ 183,768 $ 108,749 $ 58,819 ========= ========= =========
LIMITED PARTNERS - NET INCOME $1,536,003 $1,668,506 $ 991,477 ========= ========= =========
NET INCOME per Unit $ 13.22 $ 14.36 $ 8.53 ========= ========= =========
UNITS OUTSTANDING 116,168 116,168 116,168 ========= ========= =========
The accompanying notes are an integral part of these financial statements
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8 Statements of Changes in Partners' Capital (Deficit) For the Years Ended December 31, 2004, 2003, and 2002
Limited General Partners Partner Total ------------ ---------- ------------
Balance, Dec. 31, 2001 $1,976,107 ($ 56,816) $1,919,291 Net income 991,477 58,819 1,050,296 Cash distributions ( 645,000) ( 45,636) ( 690,636) --------- ------- ---------
Balance, Dec. 31, 2002 $2,322,584 ($ 43,633) $2,278,951 Net income 1,668,506 108,749 1,777,255 Cash distributions ( 1,458,000) ( 95,087) ( 1,553,087) --------- ------- ---------
Balance, Dec. 31, 2003 $2,533,090 ($ 29,971) $2,503,119 Net income 1,536,003 183,768 1,719,771 Cash distributions ( 1,074,000) ( 167,688) ( 1,241,688) --------- ------- ---------
Balance, Dec. 31, 2004 $2,995,093 ($ 13,891) $2,981,202 ========= ======= =========
The accompanying notes are an integral part of these financial statements
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME LIMITED PARTNERSHIP P-8 Statements of Cash Flows For the Years Ended December 31, 2004, 2003, and 2002
2004 2003 2002 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,719,771 $1,777,255 $1,050,296 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of change in accounting for asset retirement obligations (Note 1) - ( 4,862) - Depletion of Net Profits Interests 136,275 186,708 161,400 Gain on sale of Net Profits Interests - ( 555,967) - Net change in accounts receivable (accounts payable) - Net Profits ( 206,993) 31,639 ( 42,650) --------- --------- --------- Net cash provided by operating activities $1,649,053 $1,434,773 $1,169,046 --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 337,245) ($ 420,686) ($ 147,528) Proceeds from sale of Net Profits Interests - 602,905 - --------- --------- --------- Net cash provided (used) by investing activities ($ 337,245) $ 182,219 ($ 147,528) --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($1,241,688) ($1,553,087) ($ 690,636) --------- --------- --------- Net cash used by financing activities ($1,241,688) ($1,553,087) ($ 690,636) --------- --------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS $ 70,120 $ 63,905 $ 330,882
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 675,203 611,298 280,416 --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 745,323 $ 675,203 $ 611,298 ========= ========= =========
The accompanying notes are an integral part of these financial statements
GEODYNE INSTITUTIONAL/PENSION ENERGY INCOME PROGRAM II LIMITED PARTNERSHIPS Notes to the Financial Statements For the Years Ended December 31, 2004, 2003, and 2002
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. Limited Partners' capital contributions were invested 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 or other affiliates (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, such capital costs are reported as capital expenditures in the Partnerships' Statements of Cash Flows.
The P-7 and P-8 Partnerships were activated February 28, 1992 with Limited Partner capital contributions of $18,870,200 and $11,616,800 respectively. The Partnerships were scheduled to terminate on February 28, 2002 in accordance with the partnership agreement for each Partnership (the "Partnership Agreement").
However, the General Partner may extend the term of each Partnership for up to five periods of two years each. The General Partner has extended the terms of the Partnerships for their second extension thereby extending their termination date to December 31, 2005. The General Partner has not determined whether it will further extend the term of either Partnership.
An affiliate of the General Partner owned 40,376 (21.4%) and 33,970 (29.2%) of the P-7 and P-8 Partnerships' Units, respectively, at December 31, 2004.
The Partnerships' sole business is owning Net Profits Interests in oil and gas properties. 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 obtaining transportation services provided by pipelines. The Partnerships' oil is sold at or near the Partnerships' wells under short-term purchase contracts at prevailing arrangements which are customary in the oil industry. The prices received for the Partnerships' oil and gas are subject to influences such as global consumption and supply trends.
Allocation of Costs and Revenues
Each Partnership Agreement allocates costs and income between the Limited Partners and General Partner as follows:
Before Payout(1) After Payout(1) ----------------- ----------------- General Limited General Limited Partner Partners Partner Partners ------- -------- ------- -------- Costs - -------------------------
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(2) 5% 95% 15% 85%
Income - -------------------------
Temporary investments of Limited Partners' Subscriptions 1% 99% 1% 99% Income from oil and gas production(2) 5% 95% 15% 85% Gain on sale of Net Profits Interests(2) 5% 95% 15% 85% All other income(2) 5% 95% 15% 85%
- ---------- (1) Payout occurs when total distributions to Limited Partners equal total original Limited Partner subscriptions. (2) 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.
The P-7 and P-8 Partnerships achieved payout during the second quarter of 2004 and the fourth quarter of 2003, respectively. After payout, operations and revenues for the Partnerships have been and will be allocated using the 10%/90% after payout percentages set forth in Footnote 2 to the table above.
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 (accounts payable) - 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 3 - Major Customers.
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 any interest incurred to finance the acquisition, for the period of time the properties are held by the General Partner.
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 related to the underlying properties in which the Partnership has a Net Profits Interest. The depletion rates, which include accretion of the asset retirement obligation, per equivalent barrel of oil produced during the years ended December 31, 2004, 2003, and 2002 were as follows:
Partnership 2004 2003 2002 ----------- ----- ----- -----
P-7 $1.66 $2.20 $1.72 P-8 1.51 2.01 1.54
The Partnerships evaluate the recoverability of the carrying costs of their Net Profits Interests in proved oil and gas properties at the field level. If the unamortized costs of a Net Profits Interest within a field exceeds the expected 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. No impairment provisions were recorded by the Partnerships during the three years ended December 31, 2004.
Accounts Receivable (Accounts Payable) - Net Profits
Revenues from a Net Profits Interest consist of a share of the oil and gas sales of the property, less operating and production expenses. The Partnerships accrue for oil and gas
revenues less expenses from the Net Profits Interests. Sales of gas applicable to the Net Profits Interests 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 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 this liability are based on the average gas price for which the Partnerships are currently settling this liability. This liability is recorded as a reduction of accounts receivable.
Also included in accounts receivable (accounts payable)- Net Profits are the estimated asset retirement obligations (see "Asset Retirement Obligation") and the 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 annual average production costs per Mcf.
The Partnerships have not entered into any hedging or derivative contracts in connection with their production of oil and gas.
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.
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 (accounts payable) - Net Profits includes accrued liabilities, accrued lease operating expenses, asset retirement obligations, 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.
Asset Retirement Obligation
In July 2001, the FASB issued FAS No. 143, "Accounting for Asset Retirement Obligations", which is effective for fiscal years beginning after June 15, 2002 (January 1, 2003 for the Partnerships). FAS No. 143 requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, and that the associated asset retirement costs be capitalized as part of the carrying amount of the long-lived asset. The Partnerships own interests in oil and gas properties which require expenditures to plug and abandon the wells when reserves in the wells are depleted. On January 1, 2003, the Partnerships adopted FAS No. 143 and recorded an increase in Net Profits Interests, an increase in net income for the cumulative effect of the change in accounting principle, and an asset retirement obligation (included in accounts receivable-Net Profits), resulting in a decrease of accounts receivable - Net Profits, in the following approximate amounts for each Partnership:
Increase in Net Income for Increase in the Change in Asset Net Profits Accounting Retirement Partnership Interests Principle Obligation - ----------- ------------ -------------- ----------
P-7 $311,000 $ 400 $311,000 P-8 234,000 5,000 229,000
The asset retirement obligation is adjusted upwards each quarter in order to recognize accretion of the time related discount factor. For the year ended December 31, 2004, the P-7 and P-8 Partnerships recognized approximately $16,000 and $10,000, respectively, of an increase in depletion of Net Profits Interests, which was comprised of accretion of the asset retirement obligation and depletion of the increase in Net Profits Interests.
The components of the change in asset retirement obligations for the years ended December 31, 2004 and 2003 are as shown below.
P-7 Partnership ---------------
2004 2003 ---------- ----------
Total Asset Retirement Obligation, January 1 $317,713 $311,238 Additions and revisions ( 5,538) - Settlements and disposals - ( 13,514) Accretion expense 14,732 19,989 ------- ------- Total Asset Retirement Obligation, December 31 $326,907 $317,713 ======= =======
P-8 Partnership ---------------
2004 2003 ---------- ----------
Total Asset Retirement Obligation, January 1 $234,524 $228,506 Additions and revisions ( 5,496) - Settlements and disposals - ( 10,203) Accretion expense 10,958 16,221 ------- ------- Total Asset Retirement Obligation, December 31 $239,986 $234,524 ======= =======
Had FAS No. 143 been adopted at January 1, 2002 the amount of the asset retirement obligation at that date and at December 31, 2002 would not have been materially different from the amount recorded at January 1, 2003. If this accounting policy had been in effect on January 1, 2002, the pro forma impact for the P-7 and P-8 Partnerships during the year ended December 31, 2002 would have been an increase in Depletion of Net Profits Interests of approximately $26,000 and $18,000, respectively.
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 owned by 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 Agreements. 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, 2004, 2003, and 2002:
Partnership 2004 2003 2002 ----------- -------- -------- --------
P-7 $198,636 $198,636 $198,636 P-8 122,280 122,280 122,280
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.
3. MAJOR CUSTOMERS
The following table sets forth purchasers who individually accounted for ten percent or more of the combined oil and gas sales attributable to each of the Partnership's Net Profits Interests during the years ended December 31, 2004, 2003, and 2002:
Partnership Purchaser Percentage ----------- ---------------------- --------------------- 2004 2003 2002 ----- ----- ----- P-7 Occidental Energy Marketing, Inc. ("Occidental") 24.0% - - Hunt Oil Company ("Hunt") 18.3% 15.9% 16.3% ExxonMobil Oil Corporation ("Exxon") 11.3% 33.1% 34.4% Duke Energy Field Services, Inc. ("Duke") - 10.2% - Scurlock Permian Corp. - 10.0% 12.4%
P-8 Occidental 22.8% - - Hunt 16.2% 13.8% 14.1% Exxon 11.5% 31.3% 32.6% Duke - 10.6% -
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. 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 and valuation allowance at December 31, 2004 and 2003 were as follows:
P-7 Partnership ---------------
2004 2003 ------------- -------------
Net Profits Interests in proved oil and gas properties $16,147,582 $15,460,653
Accumulated depletion and valuation allowance ( 12,420,555) ( 12,194,611) ---------- ---------- Net Profits Interests, net $ 3,727,027 $ 3,266,042 ========== ==========
P-8 Partnership ---------------
2004 2003 ------------- -------------
Net Profits Interests in proved oil and gas properties $ 9,616,334 $ 9,195,977
Accumulated depletion and valuation allowance ( 7,370,642) ( 7,239,747) ---------- ----------
Net Profits Interests, net $ 2,245,692 $ 1,956,230 ========== ==========
Costs Incurred
The following table sets forth the development costs related to the Working Interests which are burdened by the Partnerships' Net Profits Interests during the years ended December 31, 2004, 2003, and 2002. Since these development costs were charged against the Net Profits payable to the Partnerships, such development costs were indirectly borne by the Partnerships. No acquisition or exploration costs were incurred during the same periods.
Partnership 2004 2003(1) 2002 ------------ -------- -------- --------
P-7 $686,894 $691,049 $241,187 P-8 420,275 420,686 147,528
------------------
(1) Excludes the estimated asset retirement costs for the P-7 and P-8 Partnerships of approximately $246,000 and $174,000, respectively, recorded as part of the FAS No. 143 implementation.
Quantities of Proved Oil and Gas Reserves - Unaudited
The following table summarizes 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, L.P., 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.
5. QUARTERLY FINANCIAL DATA (Unaudited)
Summarized unaudited quarterly financial data for 2004 and 2003 are as follows:
P-7 Partnership ---------------
------------------------------------------------ First Second Third Fourth Quarter Quarter Quarter Quarter -------- -------- -------- --------
Total Revenues $554,506 $892,202 $951,443 $682,689 Gross Profit (1) 488,792 820,405 903,818 632,722 Net Income 430,539 752,757 851,318 581,325 Limited Partners' Net Income Per Unit 2.15 3.56 4.04 2.75
----------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter -------- -------- -------- --------
Total Revenues $777,219 $545,573 $960,108 $375,081 Gross Profit (1) 702,805 475,237 880,077 293,931 Net Income 640,872 415,359 823,757 241,922 Limited Partners' Net Income Per Unit 3.21 2.08 4.13 1.20
- ------------------------- (1) Total revenues less depletion of Net Profits Interests.
P-8 Partnership ---------------
------------------------------------------------ First Second Third Fourth Quarter Quarter Quarter Quarter -------- --------- -------- --------
Total Revenues $373,067 $572,467 $591,261 $469,138 Gross Profit (1) 334,378 530,776 563,946 440,558 Net Income 296,624 483,348 531,259 408,540 Limited Partners' Net Income Per Unit 2.27 3.71 4.10 3.14
------------------------------------------------ First Second Third Fourth Quarter Quarter Quarter Quarter -------- --------- -------- --------
Total Revenues $542,335 $387,427 $888,666 $290,264 Gross Profit (1) 498,633 345,101 840,528 237,722 Net Income 461,331 304,905 805,615 205,404 Limited Partners' Net Income Per Unit 3.76 2.48 6.57 1.55
- ---------------------- (1) Total revenues less depletion of Net Profits Interests.
INDEX TO EXHIBITS -----------------
No. Description - ---- -----------
4.1 Certificate of Limited Partnership dated February 28, 1992, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.1 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.2 Agreement of Limited Partnership dated February 28, 1992, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.2 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.3 First Amendment to Certificate of Limited Partnership and First Amendment to Agreement of Limited Partnership dated February 25, 1993, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.3 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.4 Second Amendment to Certificate of Limited Partnership dated August 4, 1993, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.4 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.5 Second Amendment to Agreement of Limited Partnership dated August 4, 1993, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.5 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.6 Third Amendment to Agreement of Limited Partnership dated August 31, 1995, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.6 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.7 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.7 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.8 Fifth Amendment to Agreement of Limited Partnership dated November 14, 2001, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.8 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.9 Sixth Amendment to Agreement of Limited Partnership dated January 22, 2004, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7 filed with the Securities and Exchange Commission on March 26, 2004, as Exhibit 4.9 to Annual Report on Form 10-K for period ended December 31, 2003, and is hereby incorporated by reference.
4.10 Certificate of Limited Partnership dated February 28, 1992, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.9 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.11 Agreement of Limited Partnership dated February 28 , 1992, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.10 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.12 First Amendment to Certificate of Limited Partnership and First Amendment to Agreement of Limited Partnership dated February 25, 1993, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.11 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.13 Second Amendment to Certificate of Limited Partnership dated August 4, 1993, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.12 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.14 Second Amendment to Agreement of Limited Partnership dated August 4, 1993, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.13 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.15 Third Amendment to Agreement of Limited Partnership dated August 31, 1995, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.14 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.16 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.15 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.17 Fifth Amendment to Agreement of Limited Partnership dated November 14, 2001, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8, filed with the Securities and Exchange Commission on February 26, 2002, as Exhibit 4.16 to Annual Report on Form 10K-405 for period ended December 31, 2001 and is hereby incorporated by reference.
4.18 Sixth Amendment to Agreement of Limited Partnership dated January 22, 2004, for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8 filed with the Securities and Exchange Commission on March 26, 2004, as Exhibit 4.17 to Annual Report on Form 10-K for period ended December 31, 2003, and is hereby incorporated by reference.
*23.1 Consent of Ryder Scott Company, L.P. for the Geodyne Institutional/ Pension Energy Income Limited Partnership P-7.
*23.2 Consent of Ryder Scott Company, L.P. for the Geodyne Institutional/ Pension Energy Income Limited Partnership P-8.
*31.1 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7.
*31.2 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7.
*31.3 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8.
*31.4 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8.
*32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Institutional/Pension Energy Income Limited Partnership P-7.
*32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Institutional/Pension Energy Income Limited Partnership P-8.
All other Exhibits are omitted as inapplicable.
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*Filed herewith.