ITEM 1. BUSINESS
General
The Geodyne Energy Income Limited Partnership III-A (the "III-A Partnership"), Geodyne Energy Income Limited Partnership III-B (the "III-B Partnership"), Geodyne Energy Income Limited Partnership III-C (the "III-C Partnership"), Geodyne Energy Income Limited Partnership III-D (the "III-D Partnership"), Geodyne Energy Income Limited Partnership III-E (the "III-E Partnership"), and Geodyne Energy Income Limited Partnership III-F (the "III-F Partnership") (collectively, the "Partnerships") are limited partnerships formed under the Oklahoma Revised Uniform Limited Partnership Act. Each Partnership is composed of Geodyne Resources, Inc., a Delaware corporation, as general partner ("Geodyne" or the "General Partner"), Geodyne 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 the dates set forth below:
Date of Partnership Activation ----------- ------------------
III-A November 22, 1989 III-B January 24, 1990 III-C February 27, 1990 III-D September 5, 1990 III-E December 26, 1990 III-F March 7, 1991
The General Partner currently serves as general partner of 26 limited partnerships and 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, 2006, Samson owned interests in approximately 12,000 oil and gas wells located in 19 states of the United States, Alberta Canada, and the United Kingdom North Sea. At December 31, 2006, Samson operated approximately 4,000 oil and gas wells located in 15 states of the United States and Alberta Canada.
Until liquidation (see "Partnership Termination" below), the Partnerships are engaged in the business of owning interests in producing oil and gas properties located in the continental United States. The Partnerships may also engage to a limited extent in development drilling on producing oil and gas properties as required for the prudent management of the Partnerships.
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, 2007, Samson employed approximately 1,200 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, and Corporate Governance."
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].
Pursuant to the terms of the partnership agreements for the Partnerships (the "Partnership Agreements") the Partnerships were scheduled to terminate on the dates indicated in the "Initial Termination Date" column of the following chart. However, the Partnership Agreements provide that the General Partner may extend the term of each Partnership for up to five periods of two years each. The General Partner has extended the terms of the Partnerships for the fourth two-year extension period to the dates indicated in the "Current Termination Date" column on the following chart:
Initial Extensions Current Partnership Termination Date Exercised Termination Date - ----------- ------------------ --------- ------------------ III-A November 22, 1999 4 November 22, 2007 III-B January 24, 2000 4 December 31, 2007 III-C February 28, 2000 4 December 31, 2007 III-D September 5, 2000 4 December 31, 2007 III-E December 26, 2000 4 December 31, 2007 III-F March 7, 2001 4 December 31, 2007
On February 5, 2007, the General Partner mailed a notice to the limited partners indicating that the Partnerships will terminate at the end of their current term as listed above. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information regarding the termination and liquidation of the Partnerships.
Funding
Although the Partnership Agreements permit the Partnerships to incur borrowings, operations and expenses are currently funded out of each Partnership's revenues from oil and gas sales. The General Partner may, but is not required to, advance funds to a Partnership for the same purposes for which Partnership borrowings are authorized.
Principal Products Produced and Services Rendered
The Partnerships' sole business is the production of, and related incidental development of, oil and gas. 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 global price of steel as well as increases in the prices for oil and gas supplies and services will further increase the costs of any future workover, recompletion or drilling activities 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. During the past year, the sale of oil and gas properties has also generated significant revenues for the Partnerships. 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 and the impact of weather-related events; * The availability and proximity of pipelines for transportation; * Domestic and foreign government regulations and taxes; * Market expectations; and * The effect of worldwide energy conservation.
It is not possible to predict the future direction of oil or natural gas prices. Operating costs, including General and Administrative Expenses, may not decline over time, may increase, 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.
As discussed in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," the Partnerships will terminate on November 22, 2007 (for the III-A Partnership) and December 31, 2007 (for the III-B, III-C, III-D, III-E, and III-F Partnerships). The volumes, pricing, and expense factors discussed above may also impact the price the Partnerships receive for their oil and gas properties in connection with the liquidation of the Partnerships' assets.
Significant Customers
The following customers accounted for ten percent or more of the Partnerships' oil and gas sales during the year ended December 31, 2006:
Partnership Purchaser Percentage ----------- ------------------------ ---------- III-A ConocoPhillips Company ("ConocoPhillips") 34.6% Gulfterra Central Point Allocation ("Gulfterra") 19.7%
III-B ConocoPhillips 42.7% Gulfterra 17.2%
III-C Duke Energy Field Services, Inc.("Duke") 15.3% NGPL Allocation 11.0%
III-D NGPL Allocation 15.8% Eaglwing Trading Inc. ("Eaglwing") 12.6% Duke 12.2% Enbridge US Inc. - Texas 10.8% Eagle Rock Field Services LP 10.1%
III-E Duke 20.3% Sempra Energy Trading Corp. ("Sempra") 16.2% Red Desert Central Point Allocation ("Red Desert") 14.4% Hunt Crude Oil Supply Co. 13.8% Kinder Morgan, Inc. 10.1%
III-F Sempra 19.9% Eaglwing 18.8% Red Desert 17.7% Duke 15.4%
In the event of interruption of purchases by one or more of the Partnerships' significant customers or the cessation or material change in availability of open access transportation by the Partnerships' pipeline transporters, the Partnerships may encounter difficulty in marketing their 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 of the Partnerships. 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 by the Partnerships 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, including the Partnerships. Although virtually all of the Partnerships' gas production 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' operations and projections of future oil and gas production and revenues.
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 -- The Partnerships' operations are subject to numerous laws and regulations governing the discharge of materials into the environment or otherwise relating to the protection of environmental, biological, cultural, and aesthetic resources. Compliance with such laws and regulations, together with any penalties resulting from noncompliance, may increase the cost of the Partnerships' operations or may affect the Partnerships' ability to timely complete existing or future activities. Management anticipates that various local, state, and federal environmental control agencies will have an increasing impact on oil and gas operations.
Insurance Coverage
The Partnerships are subject to all of the risks inherent in the exploration for and production of oil and gas including blowouts, pollution, fires, and other casualties. The Partnerships maintain insurance coverage as is customary for entities of a similar size engaged in operations similar to that of the Partnerships, 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.
ITEM 1A.
ITEM 1A. RISK FACTORS
The following factors, among others, could have a material adverse effect upon the Partnerships' business, financial condition, and results of operations.
The following discussion of risk factors should be read in conjunction with the financial statements and related notes included herein. Because of these and other factors, past financial performance should not be considered an indication of future performance.
Termination of Partnerships in 2007 ------------------------------------
The Partnerships will terminate on November 22, 2007 (for the III-A Partnership) and December 31, 2007 (for the III-B, III-C, III-D, III-E and III-F Partnerships). Upon termination, we will sell the Partnerships' properties. There is no assurance that the market for the Partnerships' properties will be favorable at that time. The market for oil and gas properties is highly dependent on current and anticipated future prices for oil and gas. These prices fluctuate due to a number of uncontrollable factors as described in the following paragraph. A decrease in oil and gas prices and/or anticipated future oil and gas prices would probably depress the market for oil and gas properties and result in lowered sales proceeds to the Partnerships.
Oil And Natural Gas Prices Fluctuate Due To A Number Of ------------------------------------------------------- Uncontrollable Factors, And Any Decline Will Adversely Affect ------------------------------------------------------------- The Partnerships' Financial Condition. --------------------------------------
The Partnerships' results of operations depend upon the prices they receive for their oil and natural gas as well as the sales of oil and gas properties pursuant to the liquidation plan described in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations." We sell most of the Partnerships' oil and natural gas liquids at current market prices rather than through fixed-price contracts. Historically, the markets for oil and natural gas have been volatile and are likely to remain so. The prices we receive depend upon factors beyond our control, including:
* Worldwide and domestic supplies of oil and natural gas; * The ability of the members of 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 and the impact of weather-related events; * The availability and proximity of pipelines for transportation; * Domestic and foreign government regulations and taxes; * Market expectations; and * The effect of worldwide energy conservation.
Government regulations, such as regulation of natural gas transportation and price controls, can affect product prices.
These external factors and the volatile nature of the energy markets make it difficult to reliably estimate future prices of oil and natural gas.
Any decline in oil and natural gas prices adversely affects the Partnerships' financial condition. If the oil and gas industry experiences significant price declines, the Partnerships may not be able to maintain their current level of cash distributions. See "Item 1. Business-Competition and Marketing" and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations." Furthermore, significant price declines will negatively affect the ultimate cash received upon the sale of oil and gas properties in liquidation of the Partnerships.
Reserve Estimates Depend On Many Assumptions That May Turn ---------------------------------------------------------- Out To Be Inaccurate. Any Material Inaccuracies In The ------------------------------------------------------- Partnerships' Reserve Estimates Or Underlying Assumptions --------------------------------------------------------- Could Cause The Quantities And Net Present Value Of Their --------------------------------------------------------- Reserves To Be Overstated. --------------------------
Estimating quantities of proved oil and natural gas reserves is a complex process. It requires interpretations of available technical data and various assumptions, including assumptions relating to economic factors. Any significant inaccuracies in these interpretations or assumptions or changes of condition could cause the quantities and net present value of the Partnerships' reserves to be overstated.
To prepare estimates of economically recoverable oil and natural gas reserves and future net cash flows, we analyze many variable factors, such as historical production from the area compared with production rates from other producing areas. We also analyze available geological, geophysical, production and engineering data, and the extent, quality and reliability of this data can vary. The process also involves economic assumptions relating to commodity prices, production costs, severance and excise taxes, capital expenditures and workover and remedial costs. Actual results most likely will vary from our estimates. Any significant variance could reduce the estimated quantities and present value of reserves shown in this annual report.
You should not assume that the present value of future net cash flows from the Partnerships' proved reserves shown in this Annual Report is the current market value of their estimated oil and natural gas reserves. In accordance with Securities and Exchange Commission requirements, the Partnerships base the estimated discounted future net cash flows from their proved
reserves on prices and costs on the date of the estimate. Actual current and future prices and costs may differ materially from those used in the earlier net present value estimate, and as a result, net present value estimates using current prices and costs may be significantly less than the earlier estimate which is provided in this annual report. See "Item 2. Properties-Proved Reserves and Net Present Value."
We have included in Note 7 to the financial statements included in this Annual Report on Form 10-K ("Annual Report") unaudited balance sheets for the Partnerships which are prepared on a liquidation basis, rather than a going concern basis. While these balance sheets are prepared with the intent of showing fair value, they are also based on estimates regarding future net cash flows until the properties are sold as well as the prices which may be received for the properties through the liquidation process. Actual current and future prices and costs as well as the prices buyers are willing to pay at the time the properties are sold may differ materially from the estimates used in the preparation of the unaudited liquidation basis balance sheets.
Drilling Oil And Natural Gas Wells Is A High-Risk Activity ---------------------------------------------------------- And Subjects Us To A Variety Of Factors That We Cannot ------------------------------------------------------ Control. --------
Drilling oil and natural gas wells, including development wells, involves numerous risks, including the risk that the Partnerships may not encounter commercially productive oil and natural gas reservoirs. While the Partnerships do not expend a significant portion of their capital on drilling activities, to the extent they do drill wells this can be a significant risk factor to them. They may not recover all or any portion of their investment in new wells. The presence of unanticipated pressures or irregularities in formations, miscalculations or accidents may cause their drilling activities to be unsuccessful and result in a total loss of investment. Further, drilling operations may be curtailed, delayed or canceled as a result of a variety of factors, including:
* Unexpected drilling conditions; * Title problems; * Restricted access to land for drilling or laying pipeline; * Pressure or irregularities in formations; * Equipment failure or accidents; * Adverse weather conditions; and * Costs of, or shortages or delays in the availability of, drilling rigs, tubular materials and equipment.
The Marketability Of The Partnerships' Production Is ---------------------------------------------------- Dependent Upon Transportation And Processing Facilities Over ------------------------------------------------------------ Which We Have No Control. -------------------------
The marketability of the Partnerships' production depends in part upon the availability, proximity and capacity of pipelines, natural gas gathering systems and processing facilities. Any significant change in market factors affecting these infrastructure facilities could harm their business. The Partnerships deliver oil and natural gas through gathering systems and pipelines that they do not own. These facilities may be temporarily unavailable due to market conditions or mechanical reasons, or may not be available to us in the future.
Reliance On Third Party Operators ---------------------------------
A substantial portion of the Partnerships' properties are operated by third parties. The Partnerships have little, if any, control over the operational decisions and costs associated with these properties. In addition, the Partnerships are totally reliant on the third party operators' internal controls associated with the operators' accounting for revenues and expenses.
No Market For Units -------------------
The Partnerships' Units are not listed on any exchange or national market system, and there is no established public trading market for them. Secondary market activity for the Units has been limited and varies among the Partnerships. The General Partner's annual repurchase offer was terminated on March 9, 2007 in anticipation of the Partnerships' termination at November 22, 2007 (for the III-A Partnership) and December 31, 2007 (for the III-B, III-C, III-D, III-E and III-F Partnerships). Therefore, you may only sell your Units via (i) occasional "4.9% tender offers" which are made for the Units and (ii) transfers facilitated by secondary trading firms and matching services. To ensure that the proper parties receive their share of the Partnerships' liquidation proceeds, the General Partner will not accept, process, or recognize any transfers of Units (with the exception of certain transactions between related persons) for which completed transfer documentation is not mailed to the General Partner with a postmark on or before June 30, 2007. Accordingly, there will be no market for the Partnerships' Units after June 30, 2007. See "Item 5. Market for Units, Related Limited Partner Matters, and Issuer Purchases of Units."
The Partnerships Are Subject To Complex Federal, State And ---------------------------------------------------------- Local Laws And Regulations That Could Adversely Affect Their ------------------------------------------------------------ Business. ---------
Extensive federal, state and local regulation of the oil and gas industry significantly affects the Partnerships' operations. In particular, they are subject to stringent environmental regulations. These regulations increase the costs of planning, designing, drilling, installing, operating and abandoning oil and natural gas wells and other related facilities. These regulations may become more demanding in the future. Matters subject to regulation include:
* Discharge permits for drilling operations; * Drilling bonds; * Spacing of wells; * Unitization and pooling of properties; * Environmental protection; * Reports concerning operations; and * Taxation.
Under these laws and regulations, the Partnerships could be liable for:
* Personal injuries; * Property damage; * Oil spills; * Discharge of hazardous materials; * Reclamation costs; * Remediation and clean-up costs; and * Other environmental damages.
While the Partnerships maintain insurance coverage customary for companies similar to their size and operations, losses can occur from uninsurable risks or in amounts in excess of existing insurance coverage. See "Item 1. Business."
Conflicts Of Interest ---------------------
Direct and indirect conflicts of interests exist among the Partnerships and among a Partnership and the General Partner and its affiliates. The General Partner and its affiliates engage in many aspects of the oil and gas business, including acting as a general partner of a number of affiliated oil and gas limited partnerships. The General Partner and its affiliates may engage in transactions with a Partnership, and Partnerships will frequently engage in transactions with other oil and gas limited partnerships. These conflicts could relate to the sale of oil and gas properties in the normal course of business and well as in the
liquidation process. See "Item 13. Certain Relationships and Related Transactions and Director Independence."
Payments To The General Partner -------------------------------
The General Partner receives reimbursements for General and Administrative Expenses. The General Partner also receives a share of Partnership cash distributions. See "Item 11. Executive Compensation" and "Item 8. Financial Statements and Supplementary Data."
Financial Capability Of General Partner ---------------------------------------
The General Partner has limited financial resources. Contingencies may arise which will require funding beyond its financial resources. Even if such financial resources are available, the General Partner is not required to lend money or to fund any financial obligations of the Partnerships.
Liability And Indemnification Of General Partner And Related ------------------------------------------------------------ Parties -------
Although the General Partner generally will be liable for the obligations of the Partnerships, the Partnership Agreements provide that the claims of third parties will be initially satisfied from Partnership assets. The Partnership Agreements also provide, subject to certain conditions, that the Partnerships will reimburse (i.e. "indemnify") the General Partner and its affiliates for certain costs, claims and expenses.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
ITEM 2. PROPERTIES
Well Statistics
The following table sets forth the number of productive wells of the Partnerships as of December 31, 2006.
Well Statistics(1) As of December 31, 2006
Number of Gross Wells(2) Number of Net Wells(3) -------------------------- --------------------------- P/ship Total Oil Gas Total Oil Gas - -------- ----- --- --- ------ ----- ----- III-A 206 50 156 12.21 2.50 9.70 III-B 176 41 135 7.86 3.31 4.55 III-C 239 47 192 23.80 6.93 16.87 III-D 153 47 106 12.59 5.08 7.51 III-E 151 11 140 22.58 1.85 20.73 III-F 373 270 103 16.13 6.45 9.68 - ---------- (1) The designation of a well as an oil well or gas well is made by the General Partner based on the relative amount of oil and gas reserves for the well. Regardless of a well's oil or gas designation, it may produce oil, gas, or both oil and gas. (2) As used in this Annual Report, "gross well" refers to a well in which a working interest is owned; accordingly, the number of gross wells is the total number of wells in which a working interest is owned. (3) As used in this Annual Report, "net well" refers to the sum of the fractional working interests owned in gross wells. For example, a 15% working interest in a well represents one gross well, but 0.15 net well.
Drilling Activities
During the year ended December 31, 2006, the Partnerships directly or indirectly participated in the drilling activities described below.
III-A PARTNERSHIP - ----------------- WORKING REVENUE WELL NAME COUNTY ST. INTEREST INTEREST TYPE STATUS - --------- ------ --- -------- -------- ---- ------ Belt Properties #3-8 Pittsburg OK - 0.01101 Gas In Progress Clayton #11-9 Washita OK - 0.00330 Gas Producing Hachar #41 Webb TX - 0.00749 Gas Producing Hoyt #1C (DK) Rio Arriba NM - 0.00016 Gas In Progress Hoyt #1C (MV) Rio Arriba NM - 0.00050 Gas In Progress Jenny #1C Rio Arriba NM - 0.00158 Gas Producing Jicarilla B #1B Rio Arriba NM - 0.00021 Gas Producing Phillips #1-22 Caddo OK - 0.00215 Gas Producing Ringo #10-9 Washita OK - 0.00354 Gas Producing Tafoya #35-5 San Juan NM - 0.00300 Gas Producing
III-B PARTNERSHIP - ----------------- WORKING REVENUE WELL NAME COUNTY ST. INTEREST INTEREST TYPE STATUS - --------- ------ --- -------- -------- ---- ------ Clayton #11-9 Washita OK - 0.00218 Gas Producing Hachar #41 Webb TX - 0.00349 Gas Producing Hoyt #1C (DK) Rio Arriba NM - 0.00007 Gas In Progress Hoyt #1C (MV) Rio Arriba NM - 0.00022 Gas In Progress Jenny #1C Rio Arriba NM - 0.00066 Gas Producing Jicarilla B #1B Rio Arriba NM - 0.00009 Gas Producing Phillips #1-22 Caddo OK - 0.00142 Gas Producing Ringo #10-9 Washita OK - 0.00233 Gas Producing Tafoya #35-5 San Juan NM - 0.00126 Gas Producing
III-C PARTNERSHIP - ----------------- WORKING REVENUE WELL NAME COUNTY ST. INTEREST INTEREST TYPE STATUS - --------- ------ --- -------- -------- ---- ------ Aday #1-9 McClain OK - 0.00206 Gas Producing Bridges #2-18 LeFlore OK - 0.00029 Gas Producing Camel, Joe #3 Lea NM - 0.00140 Oil In Progress Cantrell #7-15H Haskell OK - 0.00112 Gas Producing Cheyenne 29 #5 Roger Mills OK - 0.00008 Gas Producing Cory #1-29 Kingfisher OK - 0.00372 Gas Producing Davis Garry #26 Kay OK - 0.00079 Oil Producing Delaware 28 #6 Roger Mills OK - 0.00008 Gas Producing Delaware 28 #7 Roger Mills OK - 0.00008 Gas In Progress Duncan #2-7H Seminole OK - 0.00018 Oil In Progress Gilbert A #1 Caddo OK - 0.00225 Gas Producing Grace #1-H Lincoln OK - 0.00290 Gas Producing Guinn #1-5 Coal OK - 0.00508 Gas Producing Hachar #41 Webb TX - 0.00145 Gas Producing Harris #5-26H Haskell OK - 0.00062 Gas Producing Hay #10-33 Roger Mills OK - 0.00015 Gas Producing Hefley #2-36 Wheeler TX - 0.01069 Gas Producing Hefley #3-37 Wheeler TX - 0.01070 Gas Producing Hefley #16-47 Wheeler TX - 0.01603 Gas Producing Hefley #20-47 Wheeler TX - 0.01603 Gas Producing Hefley #27-47 Wheeler TX - 0.01603 Gas In Progress Hefley #32-47 Wheeler TX - 0.01603 Gas Producing Helton #7-60 Wheeler TX - 0.00481 Gas Producing Helton #8-60 Wheeler TX - 0.00481 Gas Producing Helton #10A-60 Wheeler TX - 0.00481 Gas Producing Helton #11-60 Wheeler TX - 0.00481 Gas Producing Helton #14-60 Wheeler TX - 0.00481 Gas Producing Hinkle #4-28 Washita OK - 0.00440 Gas In Progress Hinkle Trust #5-33 Washita OK - 0.00094 Gas Producing Hoyt #1C (DK) Rio Arriba NM - 0.00003 Gas In Progress Hoyt #1C (MV) Rio Arriba NM - 0.00009 Gas In Progress Hubbard #2-13 Beckham OK - 0.00077 Gas Producing Jenny #1C Rio Arriba NM - 0.00028 Gas Producing
Jicarilla B #1B Rio Arriba NM - 0.00004 Gas Producing Litz #1R-2 Harper OK 0.00547 0.00547 Gas Producing McWilliams #2H-23 Pittsburg OK - 0.00034 Gas In Progress Melvin #1H-20 Hughes OK 0.00168 0.00168 Gas In Progress Mooney #1H-19 Hughes OK 0.00184 0.00184 Gas Producing Morris #1H-21 Hughes OK - 0.00500 Gas Producing Nutley #4-33 Washita OK - 0.00094 Gas Producing Oliver #1 McClain OK - 0.00492 Oil Producing Parker #1-6H Coal OK - 0.00217 Gas Producing Patterson #1H-31 Hughes OK - 0.00345 Gas Producing Patterson #2H-31 Hughes OK - 0.00345 Gas Producing Patton #3-24 Pittsburg OK - 0.01041 Gas In Progress Pee Wee #1-17 Stephens OK - 0.00433 Gas Producing Phipps #1-28 Pittsburg OK - 0.00384 Gas Producing Prater #5-10 Hemphill TX - 0.00268 Gas Producing Prater #6-10 Hemphill TX - 0.00268 Gas Producing Prater #7-10 Hemphill TX - 0.00268 Gas In Progress Prater #8-10 Hemphill TX - 0.00268 Gas Producing Prater #9-10 Hemphill TX - 0.00268 Gas In Progress Presson H W #1-5 Pittsburg OK - 0.00031 Gas Producing Reed #1-8 Beckham OK - 0.00010 Gas Producing Rice 1-25 LeFlore OK - 0.00020 Gas Producing Schueler #1-14H Hughes OK 0.00056 0.00056 Gas In Progress Sites Troy #1-9 Beckham OK 0.00052 0.00052 Gas Producing Smith #1H-28 Hughes OK - 0.00625 Gas In Progress Sophia #14-50 Wheeler TX - 0.00315 Gas In Progress Sophia #21-50 Wheeler TX - 0.00315 Gas Producing Spradlin Farms #8A-20 Washita OK - 0.00189 Gas Producing Sugg-Farmar 26 #1 Irion TX - 0.00128 Gas Producing Tafoya #35-5 San Juan NM - 0.00053 Gas Producing Trueblood #2-2 Noble OK 0.00476 0.00419 Gas Producing Trueblood #3-2 Noble OK 0.00476 0.00419 Gas Producing Trueblood #4-2 Noble OK 0.00478 0.00419 Oil Producing Trueblood #5-2 Noble OK 0.00476 0.00419 Oil In Progress Urchison #5-12H LeFlore OK 0.00148 0.00148 Gas Producing Vanilli #3-36 LeFlore OK - 0.00139 Gas Producing Verner #5-11 Pittsburg OK - 0.00370 Gas Producing Walter #5-24 Beckham OK - 0.00065 Gas Producing (Upr D.Moines GW)
III-D PARTNERSHIP - ----------------- WORKING REVENUE WELL NAME COUNTY ST. INTEREST INTEREST TYPE STATUS - --------- ------ --- -------- -------- ---- ------ Aday #1-9 McClain OK - 0.00029 Gas Producing Bridges #2-18 Le Flore OK - 0.00004 Gas Producing Camel, Joe #3 Lea NM - 0.00020 Oil In Progress Cantrell #7-15H Haskell OK - 0.00016 Gas Producing Cheyenne 29 #5 Roger Mills OK - 0.00001 Gas Producing Cory #1-29 Kingfisher OK - 0.00053 Gas Producing Davis Garry #26 Kay OK - 0.00011 Oil Producing Delaware 28 #6 Roger Mills OK - 0.00001 Gas Producing Delaware 28 #7 Roger Mills OK - 0.00001 Gas In Progress Duncan #2-7H Seminole OK - 0.00003 Oil In Progress Gilbert A #1 Caddo OK - 0.00032 Gas Producing Grace #1-H Lincoln OK - 0.00042 Gas Producing Guinn #1-5 Coal OK - 0.00073 Gas Producing Harris #5-26H Haskell OK - 0.00009 Gas Producing Hay #10-33 Roger Mills OK - 0.00002 Gas Producing Hefley #2-36 Wheeler TX - 0.00894 Gas Producing Hefley #3-37 Wheeler TX - 0.00895 Gas Producing Hefley #16-47 Wheeler TX - 0.01341 Gas Producing Hefley #20-47 Wheeler TX - 0.01341 Gas Producing Hefley #27-47 Wheeler TX - 0.01341 Gas In Progress Hefley #32-47 Wheeler TX - 0.01341 Gas Producing Helton #7-60 Wheeler TX - 0.00402 Gas Producing Helton #8-60 Wheeler TX - 0.00402 Gas Producing Helton #10A-60 Wheeler TX - 0.00402 Gas Producing Helton #11-60 Wheeler TX - 0.00402 Gas Producing Helton #14-60 Wheeler TX - 0.00402 Gas Producing Hinkle #4-28 Washita OK - 0.00063 Gas In Progress Hinkle Trust #5-33 Washita OK - 0.00013 Gas Producing Hubbard #2-13 Beckham OK - 0.00011 Gas Producing Litz #1R-2 Harper OK 0.00078 0.00078 Gas Producing McWilliams #2H-23 Pittsburg OK - 0.00005 Gas In Progress Melvin #1H-20 Hughes OK 0.00024 0.00024 Gas In Progress
Mooney #1H-19 Hughes OK 0.00026 0.00026 Gas Producing Morris #1H-21 Hughes OK - 0.00072 Gas Producing Nutley #4-33 Washita OK - 0.00013 Gas Producing Parker #1-6H Coal OK - 0.00031 Gas Producing Patterson #1H-31 Hughes OK - 0.00049 Gas Producing Patterson #2H-31 Hughes OK - 0.00049 Gas Producing Patton #3-24 Pittsburg OK - 0.00149 Gas In Progress Pee Wee #1-17 Stephens OK - 0.00062 Gas Producing Phipps #1-28 Pittsburg OK - 0.00055 Gas Producing Prater #5-10 Hemphill TX - 0.00224 Gas Producing Prater #6-10 Hemphill TX - 0.00224 Gas Producing Prater #7-10 Hemphill TX - 0.00224 Gas In Progress Prater #8-10 Hemphill TX - 0.00224 Gas Producing Prater #9-10 Hemphill TX - 0.00224 Gas In Progress Presson H W #1-5 Pittsburg OK - 0.00004 Gas Producing Reed #1-8 Beckham OK - 0.00001 Gas Producing Rice 1-25 Le Flore OK - 0.00003 Gas Producing Schueler #1-14H Hughes OK 0.00008 0.00008 Gas In Progress Sites Troy #1-9 Beckham OK 0.00007 0.00007 Gas Producing Smith #1H-28 Hughes OK - 0.00089 Gas In Progress Sophia #14-50 Wheeler TX - 0.00263 Gas In Progress Sophia #21-50 Wheeler TX - 0.00263 Gas Producing Spradlin Farms #8A-20 Washita OK - 0.00027 Gas Producing Sugg-Farmar 26 #1 Irion TX - 0.00107 Gas Producing Trueblood #2-2 Noble OK 0.00068 0.00060 Gas Producing Trueblood #3-2 Noble OK 0.00068 0.00060 Gas Producing Trueblood #4-2 Noble OK 0.00068 0.00060 Oil Producing Trueblood #5-2 Noble OK 0.00068 0.00060 Oil In Progress Urchison #5-12H Le Flore OK 0.00021 0.00021 Gas Producing Vanilli #3-36 Le Flore OK - 0.00020 Gas Producing Verner #5-11 Pittsburg OK - 0.00053 Gas Producing Walter #5-24 Beckham OK - 0.00009 Gas Producing (Upr D.Moines GW)
III-E PARTNERSHIP - ----------------- WORKING REVENUE WELL NAME COUNTY ST. INTEREST INTEREST TYPE STATUS - --------- ------ --- -------- -------- ---- ------ Coquat Et Al #1 Live Oak TX - 0.01187 Gas Dryhole Fed 5175-25-33CA Campbell WY - 0.00857 Gas Shut-in Federal 5175-24-21WA Campbell WY - 0.01237 Gas Shut-in Floyd Fed 5175-23-33WA Campbell WY - 0.01237 Gas Producing Floyd Fed 5175-24-11WA Campbell WY - 0.01237 Gas Shut-in Floyd Fed 5175-24-33WA Campbell WY - 0.01237 Gas Shut-in Hay Reservoir Unit #92 Sweetwater WY - 0.00261 Gas Producing Hay Reservoir Unit #95 Sweetwater WY - 0.00261 Gas Producing Hayden 5175-22-13CA Campbell WY - 0.00865 Gas Shut-in Hayden 5175-22-13WA Campbell WY - 0.00865 Gas Shut-in Hayden 5175-22-21CA Campbell WY - 0.00865 Gas Shut-in Hayden 5175-22-21WA Campbell WY - 0.00865 Gas Producing Hayden 5175-22-41CA Campbell WY - 0.00865 Gas Shut-in Hayden 5175-22-41WA Campbell WY - 0.00865 Gas Shut-in Hayden 5175-22-43CA Campbell WY - 0.00865 Gas Shut-in Hayden 5175-22-43WA Campbell WY - 0.00865 Gas Shut-in Hayden 5175-27-43WA Campbell WY - 0.00865 Gas Shut-in Hayden Federal Campbell WY - 0.00857 Gas Shut-in 5175-27-31WA Mooney Fed 5175-23-13WA Campbell WY - 0.03085 Gas Shut-in Trail #13C-15J Sweetwater WY - 0.00852 Gas In Progress Trail Unit Well #13C-15W Sweetwater WY - 0.01206 Gas In Progress Trail Unit Well #22 Sweetwater WY - 0.01206 Gas Producing Trail Unit Well #23 Sweetwater WY - 0.01206 Gas Producing Trail Unit Well #25 Sweetwater WY - 0.01206 Gas Producing Yonkee 5175-25-31WA Campbell WY - 0.00865 Gas Shut-in Yonkee Fed 5175-25-41WA Campbell WY - 0.00857 Gas Producing
III-F PARTNERSHIP - ----------------- WORKING REVENUE WELL NAME COUNTY ST. INTEREST INTEREST TYPE STATUS - --------- ------ --- -------- -------- ---- ------ Hay Reservoir Unit #92 Sweetwater WY - 0.00219 Gas Producing Hay Reservoir Unit #95 Sweetwater WY - 0.00219 Gas Producing Trail #13C-15J Sweetwater WY - 0.00716 Gas In Progress Trail Unit Well #13C-15W Sweetwater WY - 0.01013 Gas In Progress Trail Unit Well #22 Sweetwater WY - 0.01013 Gas Producing Trail Unit Well #23 Sweetwater WY - 0.01013 Gas Producing Trail Unit Well #25 Sweetwater WY - 0.01013 Gas Producing
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Oil and Gas Production, Revenue, and Price History
The following tables set forth certain historical information concerning the oil (including condensates) and gas production, net of all royalties, overriding royalties, and other third party interests, of the Partnerships, revenues attributable to such production, and certain price and cost information. As used in the following tables, direct operating expenses include lease operating expenses and production taxes. In addition, gas production is converted to oil equivalents at the rate of six Mcf per barrel, representing the estimated relative energy content of gas and oil, which rate is not necessarily indicative of the relationship of oil and gas prices. The respective prices of oil and gas are affected by market and other factors in addition to relative energy content.
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Net Production Data
III-A Partnership -----------------
Year Ended December 31, ------------------------------------- 2006 2005(1) 2004(1) ---------- ---------- ---------- Production: Oil (Bbls) 28,373 32,191 36,657 Gas (Mcf) 345,008 369,103 442,066
Oil and gas sales: Oil $1,834,132 $1,755,167 $1,463,426 Gas 2,247,244 2,818,549 2,555,799 --------- --------- --------- Total $4,081,376 $4,573,716 $4,019,225 ========= ========= ========= Total direct operating expenses $ 949,988 $1,078,166 $ 780,214 ========= ========= ========= Direct operating expenses as a percentage of oil and gas sales 23.3% 23.6% 19.4%
Average sales price: Per barrel of oil $64.64 $54.52 $39.92 Per Mcf of gas 6.51 7.64 5.78
Direct operating expenses per equivalent Bbl of oil $11.06 $11.51 $ 7.07
- ------------- (1) These amounts have been restated to reflect the sale of various oil and gas properties during 2006 and assets held for sale as of December 31, 2006 as discontinued operations. See Item 7 for more information about these discontinued operations.
Net Production Data
III-B Partnership -----------------
Year Ended December 31, ------------------------------------- 2006 2005(1) 2004(1) ---------- ---------- ---------- Production: Oil (Bbls) 19,700 22,521 25,353 Gas (Mcf) 145,330 159,150 184,751
Oil and gas sales: Oil $1,274,905 $1,229,664 $1,012,467 Gas 950,416 1,214,565 1,086,307 --------- --------- --------- Total $2,225,321 $2,444,229 $2,098,774 ========= ========= ========= Total direct operating expenses $ 582,134 $ 643,874 $ 468,512 ========= ========= ========= Direct operating expenses as a percentage of oil and gas sales 26.2% 26.3% 22.3%
Average sales price: Per barrel of oil $64.72 $54.60 $39.93 Per Mcf of gas 6.54 7.63 5.88
Direct operating expenses per equivalent Bbl of oil $13.25 $13.13 $ 8.34
- ------------ (1) These amounts have been restated to reflect the sale of various oil and gas properties during 2006 and assets held for sale as of December 31, 2006 as discontinued operations. See Item 7 for more information about these discontinued operations.
Net Production Data
III-C Partnership -----------------
Year Ended December 31, ------------------------------------- 2006 2005(1) 2004(1) ---------- ---------- ---------- Production: Oil (Bbls) 11,648 9,295 9,089 Gas (Mcf) 610,593 506,230 538,840
Oil and gas sales: Oil $ 742,594 $ 505,633 $ 359,643 Gas 3,925,885 3,662,756 2,916,066 --------- --------- --------- Total $4,668,479 $4,168,389 $3,275,709 ========= ========= ========= Total direct operating expenses $1,141,691 $ 956,321 $ 848,837 ========= ========= ========= Direct operating expenses as a percentage of oil and gas sales 24.5% 22.9% 25.9%
Average sales price: Per barrel of oil $63.75 $54.40 $39.57 Per Mcf of gas 6.43 7.24 5.41
Direct operating expenses per equivalent Bbl of oil $10.07 $10.21 $ 8.58
- ------------ (1) These amounts have been restated to reflect the sale of various oil and gas properties during 2006 and assets held for sale as of December 31, 2006 as discontinued operations. See Item 7 for more information about these discontinued operations.
Net Production Data
III-D Partnership -----------------
Year Ended December 31, ------------------------------------- 2006 2005(1) 2004(1) ---------- ---------- ---------- Production: Oil (Bbls) 9,928 8,546 8,347 Gas (Mcf) 367,694 284,998 291,166
Oil and gas sales: Oil $ 622,932 $ 452,501 $ 316,903 Gas 2,161,887 1,993,009 1,566,013 --------- --------- --------- Total $2,784,819 $2,445,510 $1,882,916 ========= ========= ========= Total direct operating expenses $ 731,952 $ 594,328 $ 493,312 ========= ========= ========= Direct operating expenses as a percentage of oil and gas sales 26.3% 24.3% 26.2%
Average sales price: Per barrel of oil $62.74 $52.95 $37.97 Per Mcf of gas 5.88 6.99 5.38
Direct operating expenses per equivalent Bbl of oil $10.28 $10.60 $ 8.67
- ------------ (1) These amounts have been restated to reflect the sale of the Jay Field during 2004, the sale of various oil and gas properties during 2006 and assets held for sale as of December 31, 2006 as discontinued operations. See Item 7 for more information about these discontinued operations.
Net Production Data
III-E Partnership -----------------
Year Ended December 31, --------------------------------------- 2006 2005(1) 2004(1) ---------- ---------- ---------- Production: Oil (Bbls) 16,782 23,178 22,473 Gas (Mcf) 535,598 634,703 678,604
Oil and gas sales: Oil $ 989,699 $1,171,095 $ 828,783 Gas 3,182,018 4,546,395 3,574,468 --------- --------- --------- Total $4,171,717 $5,717,490 $4,403,251 ========= ========= ========= Total direct operating expenses $1,396,094 $1,421,533 $1,272,794 ========= ========= ========= Direct operating expenses as a percentage of oil and gas sales 33.5% 24.9% 28.9%
Average sales price: Per barrel of oil $58.97 $50.53 $36.88 Per Mcf of gas 5.94 7.16 5.27
Direct operating expenses per equivalent Bbl of oil $13.16 $11.02 $ 9.39
- ---------- (1) These amounts have been restated to reflect the sale of the Jay Field during 2004, the sale of various oil and gas properties during 2006 and assets held for sale as of December 31, 2006 as discontinued operations. See Item 7 for more information about these discontinued operations.
Net Production Data
III-F Partnership -----------------
Year Ended December 31, ------------------------------------- 2006 2005(1) 2004(1) ---------- ---------- ---------- Production: Oil (Bbls) 9,822 10,893 10,696 Gas (Mcf) 300,359 370,786 393,218
Oil and gas sales: Oil $ 619,637 $ 590,719 $ 414,003 Gas 1,772,811 2,698,469 2,061,263 --------- --------- --------- Total $2,392,448 $3,289,188 $2,475,266 ========= ========= ========= Total direct operating expenses $ 823,804 $ 731,732 $ 646,563 ========= ========= ========= Direct operating expenses as a percentage of oil and gas sales 34.4% 22.2% 26.1%
Average sales price: Per barrel of oil $63.09 $54.23 $38.71 Per Mcf of gas 5.90 7.28 5.24
Direct operating expenses per equivalent Bbl of oil $13.76 $10.07 $ 8.48
- ------------ (1) These amounts have been restated to reflect the sale of various oil and gas properties during 2006 and assets held for sale as of December 31, 2006 as discontinued operations. See Item 7 for more information about these discontinued operations.
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, 2006. 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"). When preparing such reserves, the General Partner follows the SEC's definition regarding oil and gas reserves, which was first published in 1978. The General Partner books proved oil and gas reserves which geological and engineering data show with reasonable certainty to be recovered in the future from known reserves under existing economic and operating conditions. Probable reserves are not booked.
The General Partner combines many methods of reserve estimation in order to obtain the most accurate forecast, including both volumetric and analogy methods. Many levels of review occur during this process. First, the engineers review their respective wells, then the operations manager and division vice presidents review the updated forecasts, and finally the executive vice president of engineering reviews approximately the top 85% (or more) wells by value. All engineers reviewing the data have completed their engineering degrees and/or are licensed petroleum engineers. In addition, reserve information for the top 80% of each Partnership's reserve base (based on volumes) has been reviewed by Ryder Scott Company, L.P. ("Ryder Scott"), an independent petroleum engineering firm. Ryder Scott has stated to the General Partner their opinion that (i) the estimates of reserves for the properties which they reviewed were prepared in accordance with generally accepted procedures for the estimation of reserves, (ii) they found no bias in the utilization and analysis of data, and (iii) the cash flow projections provided by Samson of gross and net reserves and associated revenues and costs based on constant pricing in general appear reasonable.
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, 2006. Such prices were not escalated except in certain circumstances where escalations were fixed and readily determinable in accordance with applicable contract provisions. While oil prices remained relatively constant as of December 31, 2006 and 2005 ($60.85 and $61.06 per barrel, respectively), gas prices were substantially lower as of December 31, 2006 ($5.64 per Mcf) than December 31, 2005 ($10.08 per Mcf). This decrease in gas prices caused the estimates of remaining economically recoverable reserves, as well as the values placed on said reserves, at December 31, 2006 to be lower than such estimates and values at December 31, 2005. 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, 2006. In fact, subsequent to December 31, 2006 gas prices increased significantly and then declined. There can be no assurance that the prices used in calculating the net present value of the Partnerships' proved reserves at December 31, 2006 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.
The reserves table below reflects reserves as either discontinued operations or continuing operations. The discontinued operations reserves consist of all the properties classified as assets held for sale as of December 31, 2006. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information about these discontinued operations.
Proved Reserves and Net Present Values From Proved Reserves As of December 31, 2006(1)
Oil and Net Present Value Gas Liquids (discounted at (Mcf) (Bbls) 10% per annum) --------- --------- ----------------- III-A Partnership: - ----------------- Discontinued operations: 37,095 4,969 $ 228,403 Continuing operations: 2,862,147 85,327 9,404,365
III-B Partnership: - ----------------- Discontinued operations: 173 - $ 535 Continuing operations: 1,176,144 62,606 4,658,468
III-C Partnership: - ----------------- Discontinued operations: 17,697 1,497 $ 82,055 Continuing operations: 4,369,825 92,360 11,463,866
III-D Partnership: - ----------------- Discontinued operations: 4,639 220 $ 20,175 Continuing operations: 2,312,694 77,037 6,377,592
III-E Partnership: - ----------------- Discontinued operations: 106,932 579 $ 188,756 Continuing operations: 4,413,978 100,547 9,650,553
III-F Partnership: - ----------------- Discontinued operations: 27,492 137,785 $ 2,641,162 Continuing operations: 2,761,834 158,836 7,449,520
- ------------ (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
The following table sets forth the number and percent of each Partnership's total wells which are operated by affiliates of the Partnerships as of December 31, 2006:
Operated Wells ----------------------------------------- Partnership Number Percent ----------- ------ -------
III-A 21 7% III-B 3 1% III-C 140 21% III-D 135 27% III-E 44 13% III-F 26 6%
The following tables set forth certain well and reserve information as of December 31, 2006 for each oil and gas basin which holds a significant portion of the value of the Partnerships' properties. The tables contain the following information for each such basin: (i) the number of gross wells and net wells, (ii) the number of wells in which only a non-working interest is owned, (iii) the Partnership's total number of wells, (iv) the number of wells operated by the Partnership's affiliates, (v) estimated proved oil reserves, (vi) estimated proved gas reserves, and (vii) 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. The Gulf Coast Basin is located in southern Louisiana and southeast Texas. The Las Animas Arch Basin straddles east Colorado and northwest Kansas. The Southern Oklahoma Folded Belt Basin is located in southern Oklahoma, while the Green River Basin is located in southern Wyoming and northwest Colorado. The Permian Basin straddles west Texas and southeast New Mexico, while the East Texas Basin is located in east Texas and northern Louisiana.
Title to Oil and Gas Properties
Management believes that the Partnerships have satisfactory title to their oil and gas properties. Record title to all of the Partnerships' properties is held by either the Partnerships or Geodyne Nominee Corporation, an affiliate of the General Partner.
Title to the Partnerships' properties 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' interest therein or materially interfere with their use in the operation of the Partnerships' business.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
A lawsuit styled Robert W. Scott, individually and as Managing Member of R.W. Scott Investments, LLC v. Samson Resources Company, Case No. C-01-385, was filed in the District Court of Sweetwater County, Wyoming on June 29, 2001. The lawsuit seeks class action certification and alleges that Samson deducted from its payments to royalty and overriding royalty owners certain charges which were improper under the Wyoming royalty payment statutes. A number of these royalty and overriding royalty payments burden the interests of the III-A, III-B, III-E, and III-F Partnerships. In February 2003, Samson made a supplemental payment to the royalty and overriding royalty interest owners who were potential class members of amounts which were then thought to have been improperly deducted plus statutory interest thereon. The lawsuit also alleges that Samson's check stubs did not fully comply with the Wyoming Royalty Payment Act.
On May 13, 2005 the trial court certified this lawsuit as a class action and denied Samson's motion for summary judgment. On June 25, 2005 the Wyoming Supreme Court denied Samson's request for it to review these decisions. Samson and the plaintiffs have reached agreement to settle all of the plaintiffs' remaining claims in this lawsuit, and Samson expects a formal settlement agreement to be executed during April 2007. The settlement calls for an additional royalty payment of $1,000,000 and is subject to Court approval. Plaintiffs' counsel, subject to Court approval, is responsible for determining the allocation of the $1,000,000 among the various class members after deduction of litigation costs and attorneys' fees. Samson cannot determine the portion of this settlement amount attributable to each Partnership until the allocation is received from plaintiffs' counsel and approved by the Court.
On August 4, 1998 the U.S. Minerals Management Service ("MMS") issued an Order for Samson to recalculate and pay additional royalties to the MMS for various Federal and Indian leases in several states. A number of these Federal and Indian royalty interests burden the interests of the III-A, III-B, III-E, and III-F Partnerships. Samson appealed the Order and on October 22, 2004 the the Department of the Interior issued its decision which granted the appeal in part and denied the appeal in part. While the Department's decision did not approve the recalculation methodology originally ordered by the MMS, the decision still required Samson to recalculate and pay additional royalties but under a different recalculation methodology than sought by the MMS.
Samson paid additional royalties to the MMS on August 23, 2006 pursuant to the Department's decision. The MMS has since requested additional information and explanation regarding Samson's recalculation. The MMS has also informally indicated that it disagrees with certain aspects of the recalculation. As of the date of this Annual Report, Samson cannot determine the amount of additional royalties (and interest) which may be claimed by or ultimately owed to the MMS. While Samson maintains that no additional royalties are owed, Samson estimates that the maximum amount which may be claimed by the MMS attributable to the III-E and III-F Partnerships is as follows:
Partnership Amount ----------- -------- III-E $208,171 III-F 174,899
While the affiliate maintains that no additional royalties are owed, the General Partner has accrued $105,000 and $90,000, respectively, for the III-E and III-F Partnerships, as reasonable estimates of amounts which may become ultimately owed to the MMS. The amounts attributable to the III-A and III-B Partnerships are estimated to be immaterial.
Except as described above, 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 any Partnership during 2006.
PART II
ITEM 5.
ITEM 5. MARKET FOR UNITS, RELATED LIMITED PARTNER MATTERS, AND ISSUER PURCHASES OF UNITS
As of March 1, 2007, 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 ----------- --------- ----------------
III-A 263,976 1,074 III-B 138,336 652 III-C 244,536 1,002 III-D 131,008 549 III-E 418,266 1,664 III-F 221,484 846
Units were initially sold for a price of $100. 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 which is 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 purpose of this Annual Report,
a Unit represents an initial subscription of $100 to a Partnership.
Repurchase Offer Prices -----------------------
2005 2006 2007 ------------------------- ------------------------- ------- 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st P/ship Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.(1) - ------ ---- ---- ---- ---- ---- ---- ---- ---- ------- III-A $18 $15 $25 $23 $19 $16 $24 $22 $17 III-B 15 13 21 19 16 13 20 17 14 III-C 20 18 25 22 19 17 27 25 22 III-D 20 17 25 23 20 18 28 26 23 III-E 16 14 23 21 19 17 21 20 18 III-F 22 19 33 31 27 23 34 32 30 - ------------ (1) Repurchase offer terminated March 9, 2007.
In addition to this repurchase offer, some of 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.
As described in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," the Partnerships terminate on November 22, 2007 (for the III-A Partnership) and on December 31, 2007 (for the III-B, III-C, III-D, III-E and III-F Partnerships). Due to such termination and the necessary liquidation process, the General Partner terminated the repurchase offer and right of presentment described above as of March 9, 2007. In addition, the General Partner will not accept, process, or recognize any transfers of Units (with the exception of certain transactions between related persons) for which completed transfer documentation is not mailed to the General Partner with a postmark on or before June 30, 2007. Accordingly, there will be no market for the Partnerships' Units after June 30, 2007.
Cash Distributions
Cash distributions are primarily dependent upon a Partnership's cash receipts from the sale of oil and gas production, the sale of oil and gas properties 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. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information regarding the cash distribution process during liquidation of the Partnerships.
The following is a summary of cash distributions paid to the Limited Partners during 2005, 2006, and the first quarter of 2007:
Cash Distributions -----------------
----------------------------------------- 1st 2nd 3rd 4th P/ship Qtr. Qtr. Qtr. Qtr. ------ ----- ----- ----- -----
III-A $2.58 $2.20 $2.58 $2.59 III-B 2.49 1.83 2.47 2.36 III-C 1.36 2.03 2.47 2.50 III-D 1.39 2.27 2.51 2.67 III-E .82 2.06 1.78 1.71 III-F 1.91 2.55 2.37 2.56
2006 2007 ----------------------------------------- -------- 1st 2nd 3rd 4th 1st P/ship Qtr. Qtr. Qtr. Qtr. Qtr. ------ ----- ----- ----- ----- --------
III-A $3.49 $3.38 $2.54 $2.64 $4.19(1) III-B 3.17 2.94 2.28 2.54 3.64(1) III-C 2.65 2.56 1.86 1.68 3.30(1) III-D 2.60 2.29 1.79 1.62 3.00(2) III-E 2.19 2.55 1.49 1.45 1.44(2) III-F 3.65 3.21 1.87 1.90 1.95(1)
- ------------ (1) Includes proceeds from the sale of the Partnerships' interests in various oil and gas properties at The Oil and Gas Clearinghouse auction in Houston, Texas on December 13, 2006. (2) Includes proceeds from the sale of the Partnerships' interests in various oil and gas properties at The Oil and Gas Clearinghouse auction in Houston, Texas on December 13, 2006 and February 1, 2007.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The following tables present selected financial data for the Partnerships. This data should be read in conjunction with the financial statements of the Partnerships and the respective notes thereto, included elsewhere in this Annual Report. See "Item 8. Financial Statements and Supplementary Data."
The selected financial data tables reflect income from both continuing operations and discontinued operations for the Partnerships. The discontinued operations income is the income for various oil and gas properties sold during 2006 and all of the properties classified as assets held for sale as of December 31, 2006. See "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 accuracy of third party payments and billings, 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.
Discontinued Operations
The III-D and III-E Partnerships owned working interests in the Jay-Little Escambia Creek Field in Santa Rosa County, Florida (the "Jay Field"). In May 2004, the III-D and III-E Partnerships sold all of their interests in the Jay Field. For accounting purposes, the sale was treated as discontinued operations. The sales proceeds, consisting of approximately $89,000 and $632,000, respectively, were included in the III-D and III-E Partnerships' August 15, 2004 cash distributions.
The sale of the Jay Field interests impacted the operations of the III-D and III-E Partnerships. Routine audits of joint interest billings by an unaffiliated non-operator after the close date of the sale resulted in additional expenses of approximately $76,000 and $544,000, respectively, billed to the III-D and III-E Partnerships. The expenses represent costs incurred before the effective date of the sale. The reader should refer to Note 6 - Discontinued Operations to the financial statements included in
Item 8 of this Annual Report for additional information regarding this matter.
In December 2006, the Partnerships sold their interests in a number of producing properties. This disposal was treated as discontinued operations. The sales proceeds consisting of approximately $517,000, $218,000, $98,000, $1,000, $108,000 and $90,000, respectively, were included in the February 15, 2007 cash distributions paid by the III-A, III-B, III-C, III-D, III-E and III-F Partnerships. The sale of these producing properties will impact the continuing future operations of the Partnerships. It is anticipated that the Partnerships will have lower lease operating costs, lower oil and gas sales, and a reduction in their asset retirement obligations as a result of these sales. The reader should refer to the combined financial statements indexed in Item 15 hereof for additional information regarding this matter.
Partnership Terminations
The Partnerships would have terminated on the dates shown below in accordance with the Partnership Agreements.
III-A November 22, 1999 III-B January 24, 2000 III-C February 28, 2000 III-D September 5, 2000 III-E December 26, 2000 III-F March 7, 2001
However, the Partnership Agreements provide that the General Partner may extend the term of each Partnership for up to five periods of two years each. The General Partner has extended the terms of the Partnerships for their fourth two-year extension, thereby extending their termination date to November 22, 2007 (for the III-A Partnership) and to December 31, 2007 (for the III-B, III-C, III-D, III-E and III-F Partnerships). On February 5, 2007 the General Partner mailed a notice to the limited partners announcing that (i) the Partnerships will terminate on November 22, 2007 (for the III-A Partnership) and on December 31, 2007 for the other Partnerships and (ii) the General Partner will liquidate the Partnerships' assets and satisfy their liabilities as part of the winding-up process.
The General Partner has been selling selected oil and gas properties due to the generally favorable market for oil and gas properties. The last such sales are anticipated to be The Oil and Gas Asset Clearinghouse auctions in May through July 2007. While these property sales were not related to the Partnerships' liquidation, all remaining property dispositions will be made as part of the liquidation and winding-up process.
Liquidation and Winding-Up Process. The General Partner intends to commence liquidating the Partnerships' properties in the second half of 2007, and hopes to have all or substantially all of the properties sold prior to March 31, 2008. As part of the liquidation process, the General Partner will actively negotiate for the sale of the properties. These properties will be offered to all interested parties through normal oil and gas property auction processes as well as appropriate negotiated transactions. It is possible that the General Partner will package some properties which have value with other properties which have no or little value or are burdened with actual or potential liabilities. The General Partner intends to sell such remaining property packages and any associated or otherwise remaining Partnership assets and liabilities to the highest bidder at auction. It is possible that affiliates of the General Partner may participate in any public auction of these properties and may be the successful high bidder on some or all of the properties.
Cash Distributions. The Partnerships will make routine cash distributions throughout the remainder of 2007. Proceeds from the sale of Partnership properties may be included in these normal cash distributions, or may be distributed to the partners by way of special cash distributions. The General Partner will analyze the level of cash held by the Partnerships throughout the liquidation process and will retain sufficient cash to cover all final expenses and liabilities of the Partnerships. After final settlement from the sale of all properties, satisfaction of Partnership expenses and liabilities, and calculation of any remaining assets and liabilities of the Partnerships, any net cash will be paid as a final liquidating distribution to all of the remaining partners in each Partnership. It is expected that the final distribution will be made no later than December 31, 2008.
Repurchase Offer. In order to ensure that the General Partner makes all liquidation distributions to the correct parties based on the most accurate information possible, the General Partner terminated the outstanding repurchase offer as of March 9, 2007. In addition, the General Partner will not process transfers among third parties which are not postmarked on or before June 30, 2007 and received by the General Partner on or before July 13, 2007. The General Partner will not impose these deadlines on transfers between family members, their trusts, or similar related entities and transfers due to death or divorce.
Financial Statements. The financial statements described in "Item 8. Financial Statements and Supplementary Data" and indexed in Item 15 to this Annual Report are audited and presented on a going concern basis. However, the General Partner has included in Note 7 to such financial statements unaudited pro forma balance sheets which are presented on a liquidation basis.
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 and recently the sale of 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 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 and the impact of weather-related events; * The availability and proximity of pipelines for transportation; * Domestic and foreign government regulations and taxes; * Market expectations; and * The effect of worldwide energy conservation.
It is not possible to predict the future direction of oil or natural gas prices. Operating costs, including General and Administrative Expenses, may not decline over time, may increase, 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, remain relatively constant, or decrease at an even greater rate over a given period. These factors include, but are not limited to:
* Geophysical conditions which cause an acceleration of the decline in production;
* 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; * Prior period volume adjustments (either positive or negative) made by operators of the properties; * Adjustments in ownership or rights to production in accordance with agreements governing the operation or ownership of the well (such as adjustments that occur at payout or due to gas balancing); and * 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 Sales Prices, Production Volumes, and Average Production Costs." Following is a discussion of each Partnership's results of operations for the year ended December 31, 2006 as compared to the year ended December 31, 2005, and for the year ended December 31, 2005 as compared to the year ended December 31, 2004.
III-A Partnership -----------------
Year Ended December 31, 2006 Compared to Year Ended December 31, 2005 -------------------------------------
The following discussion contains amounts for the year 2005 which have been restated to reflect the Partnership's assets held for sale as discontinued operations. See Note 6 to the combined financial statements indexed in Item 15 hereof for more information about these discontinued operations.
Total oil and gas sales decreased $492,000 (10.8%) in 2006 as compared to 2005. Of this decrease (i) $208,000 and $184,000 were related to decreases in volumes of oil and gas sold and (ii) $387,000 was related to a decrease in the average price of gas
sold. These decreases were partially offset by an increase of $287,000 related to an increase in the average price of oil sold.
Volumes of oil and gas sold decreased 3,818 barrels and 24,095 Mcf in 2006 as compared to 2005. The decrease in volumes of oil sold was primarily due to (i) the shutting-in of one significant well during late 2005 through late 2006 in order to perform an unsuccessful workover and (ii) normal declines in production. As of the date of this Annual Report, the operator has not yet determined when, or if, the shut-in well will return to production and, if returned to production, at what rate. The decrease in volumes of gas sold was primarily due to (i) normal declines in production, (ii) the shutting-in of several wells during late 2005 through late 2006 in order to perform workovers, and (iii) positive prior period volume adjustments made by the operators on several other wells during 2005. As of the date of this Annual Report, the operator has not determined when, or if, the shut-in wells will return to production and, if returned to production, at what rate. These decreases were partially offset by a positive prior period volume adjustment made by the operator on another significant well during 2006.
Average oil prices increased to $64.64 per barrel in 2006 from $54.52 per barrel in 2005. Average gas prices decreased to $6.51 per Mcf in 2006 from $7.64 per Mcf in 2005.
Oil and gas production expenses (including lease operating expenses and production taxes) decreased $128,000 (11.9%) in 2006 as compared to 2005. This decrease was primarily due to (i) workover expenses incurred on several wells during 2005, (ii) a decrease in production taxes associated with the decrease in oil and gas sales, and (iii) a decrease in saltwater disposal expenses incurred on several other wells during 2006 as compared to 2005. As of the date of this Annual Report, management anticipates that these saltwater disposal expenses will remain at 2006 levels. These decreases were partially offset by workover expenses incurred on one significant well during 2006. As a percentage of oil and gas sales, these expenses decreased to 23.3% in 2006 from 23.6% in 2005.
Depreciation, depletion, and amortization ("DD&A") of oil and gas properties decreased $12,000 (7.1%) in 2006 as compared to 2005. This decrease was primarily due to (i) several wells being fully depleted during 2005 due to their lack of remaining reserves and (ii) the decreases in volumes of oil and gas sold. These decreases were partially offset by several other wells being fully depleted during 2006 due to their lack of remaining reserves. As a percentage of oil and gas sales, this expense increased to 3.8% in 2006 from 3.7% in 2005.
The Partnership recognized a non-cash charge against earnings of $6,000 during 2006. This charge was related to the decline in oil and gas prices used to determine recoverability of oil and gas reserves at September 30, 2006. No such charge was
incurred during 2005.
General and administrative expenses remained relatively constant in 2006 and 2005. As a percentage of oil and gas sales, these expenses increased to 7.8% in 2006 from 7.0% in 2005, primarily due to the decrease in oil and gas sales.
As further discussed in Notes 6 and 7 to the combined financial statements indexed in Item 15 hereof, the Partnership is in the process of selling an increased amount of the Partnership's properties as a result of the generally favorable current environment for oil and gas dispositions and will be selling all of the Partnership's properties in the liquidation process. The Partnership will have lower future oil and gas sales and lower future production expenses due to the sale of these properties.
The Limited Partners have received cash distributions through December 31, 2006 totaling $44,706,701 or 169.36% of Limited Partners' capital contributions.
Year Ended December 31, 2005 Compared to Year Ended December 31, 2004 -------------------------------------
The following discussion contains amounts for the years 2005 and 2004 which have been restated to reflect the Partnership's assets held for sale as discontinued operations. See Note 6 to the combined financial statements indexed in Item 15 hereof for more information about these discontinued operations.
Total oil and gas sales increased $554,000 (13.8%) in 2005 as compared to 2004. Of this increase $470,000 and $684,000 were related to increases in the average prices of oil and gas sold. These increases were partially offset by decreases of $178,000 and $422,000 related to decreases in volumes of oil and gas sold.
Volumes of oil and gas sold decreased 4,466 barrels and 72,963 Mcf in 2005 as compared to 2004. The decrease in volumes of oil sold was primarily due to (i) normal declines in production and (ii) the shutting-in of one significant well during late 2004 and early 2005 in order to perform a workover. The decrease in volumes of gas sold was primarily due to (i) normal declines in production, (ii) the shutting-in of two significant wells during early 2005 in order to perform workovers, and (iii) a positive prior period volume adjustment included in the receipt of first revenues on one significant well during 2004.
Average oil and gas prices increased to $54.52 per barrel and $7.64 per Mcf in 2005 from $39.92 per barrel and $5.78 per Mcf in 2004.
Oil and gas production expenses (including lease operating expenses and production taxes) increased $298,000 (38.2%) in 2005 as compared to 2004. This increase was primarily due to (i) workover expenses, (ii) an increase in production taxes associated with the increase in oil and gas sales, and (iii) a positive prior period production tax adjustment made by the operator on one significant well during 2005. These increases were partially offset by a negative prior period production tax adjustment made by the operator on another significant well during 2005. As a percentage of oil and gas sales, these expenses increased to 23.6% in 2005 from 19.4% in 2004, primarily due to the dollar increase in oil and gas production expenses.
DD&A of oil and gas properties increased $6,000 (3.7%) in 2005 as compared to 2004. Of this increase (i) $66,000 was due to the depletion of additional capitalized costs of oil and gas properties as a result of the upward revision in the estimate of the asset retirement obligations, of which $44,000 was related to previously fully depleted wells, and (ii) $8,000 was due to accretion of these additional asset retirement obligations. These increases were partially offset by (i) the abandonment of one significant well during 2004 following an unsuccessful recompletion attempt and (ii) the decreases in volumes of oil and gas sold. As a percentage of oil and gas sales, this expense decreased to 3.7% in 2005 from 4.1% in 2004.
General and administrative expenses increased $6,000 (2.0%) in 2005 as compared to 2004. As a percentage of oil and gas sales, these expenses decreased to 7.0% in 2005 from 7.8% in 2004, primarily due to the increase in oil and gas sales.
As further discussed in Notes 6 and 7 to the combined financial statements indexed in Item 15 hereof, the Partnership is in the process of selling an increased amount of the Partnership's properties as a result of the generally favorable current environment for oil and gas dispositions and will be selling all of the Partnership's properties in the liquidation process. The Partnership will have lower future oil and gas sales and lower future production expenses due to the sale of these properties.
III-B Partnership -----------------
Year Ended December 31, 2006 Compared to Year Ended December 31, 2005 -------------------------------------
The following discussion contains amounts for the year 2005 which have been restated to reflect the Partnership's assets held for sale as discontinued operations. See Note 6 to the combined financial statements indexed in Item 15 hereof for more
information about these discontinued operations.
Total oil and gas sales decreased $219,000 (9.0%) in 2006 as compared to 2005. Of this decrease (i) $154,000 and $105,000 were related to decreases in volumes of oil and gas sold and (ii) $159,000 was related to a decrease in the average price of gas sold. These decreases were partially offset by an increase of $199,000 related to an increase in the average price of oil sold.
Volumes of oil and gas sold decreased 2,821 barrels and 13,820 Mcf in 2006 as compared to 2005. The decrease in volumes of oil sold was primarily due to (i) the shutting-in of one significant well during late 2005 through late 2006 in order to perform an unsuccessful workover and (ii) normal declines in production. As of the date of this Annual Report, the operator has not yet determined when or if the shut-in well will return to production and, if returned to production, at what rate. The decrease in volumes of gas sold was primarily due to (i) normal declines in production, (ii) the shutting-in of several wells during late 2005 through late 2006 in order to perform workovers, and (iii) a positive prior period volume adjustment made by the operator on one significant well during 2005. As of the date of this Annual Report, the operator has not determined when, or if, the shut-in wells will return to production and, if returned to production, at what rate. These decreases were partially offset by a positive prior period volume adjustment made by the operator on another significant well during 2006.
Average oil prices increased to $64.72 per barrel in 2006 from $54.60 per barrel in 2005. Average gas prices decreased to $6.54 per Mcf in 2006 from $7.63 per Mcf in 2005.
Oil and gas production expenses (including lease operating expenses and production taxes) decreased $62,000 (9.6%) in 2006 as compared to 2005. This decrease was primarily due to (i) workover expenses incurred on several wells during 2005, (ii) a decrease in production taxes associated with the decrease in oil and gas sales, and (iii) a decrease in saltwater disposal expenses incurred on several wells during 2006 as compared to 2005. As of the date of this Annual Report, management anticipates that these saltwater disposal expenses will remain at 2006 levels. These decreases were partially offset by workover expenses incurred on one significant well during 2006. As a percentage of oil and gas sales, these expenses decreased to 26.2% in 2006 from 26.3% in 2005.
DD&A of oil and gas properties decreased $27,000 (28.8%) in 2006 as compared to 2005. This decrease was primarily due to (i) several wells being fully depleted during 2005 due to their lack of remaining reserves and (ii) the decreases in volumes of oil and gas sold. These decreases were partially offset by two significant wells being fully depleted during 2006 due to their lack of remaining reserves. As a percentage of oil and gas sales, this expense decreased to 3.0% in 2006 from 3.8% in 2005,
primarily due to the dollar decrease in DD&A.
The Partnership recognized a non-cash charge against earnings of $4,000 during 2006. This charge was related to the decline in oil and gas prices used to determine recoverability of oil and gas reserves at September 30, 2006. No such charge was incurred during 2005.
General and administrative expenses decreased $3,000 (1.4%) in 2006 as compared to 2005. As a percentage of oil and gas sales, these expenses increased to 8.1% in 2006 from 7.5% in 2005.
As further discussed in Notes 6 and 7 to the combined financial statements indexed in Item 15 hereof, the Partnership is in the process of selling an increased amount of the Partnership's properties as a result of the generally favorable current environment for oil and gas dispositions and will be selling all of the Partnership's properties in the liquidation process. The Partnership will have lower future oil and gas sales and lower future production expenses due to the sale of these properties.
The Limited Partners have received cash distributions through December 31, 2006 totaling $24,609,353 or 177.90% of Limited Partners' capital contributions.
Year Ended December 31, 2005 Compared to Year Ended December 31, 2004 -------------------------------------
The following discussion contains amounts for the years 2005 and 2004 which have been restated to reflect the Partnership's assets held for sale as discontinued operations. See Note 6 to the combined financial statements indexed in Item 15 hereof for more information about these discontinued operations.
Total oil and gas sales increased $345,000 (16.5%) in 2005 as compared to 2004. Of this increase $330,000 and $279,000 were related to increases in the average prices of oil and gas sold. These increases were partially offset by decreases of $113,000 and $151,000 related to decreases in volumes of oil and gas sold.
Volumes of oil and gas sold decreased 2,832 barrels and 25,601 Mcf in 2005 as compared to 2004. The decrease in volumes of oil sold was primarily due to (i) normal declines in production and (ii) the shutting-in of one significant well during late 2004 and early 2005 in order to perform a workover. The decrease in volumes of gas sold was primarily due to (i) normal declines in production and (ii) the shutting-in of two significant wells during early 2005 in order to perform workovers.
Average oil and gas prices increased to $54.60 per barrel and $7.63 per Mcf in 2005 from $39.93 per barrel and $5.88 per Mcf in 2004.
Oil and gas production expenses (including lease operating expenses and production taxes) increased $175,000 (37.4%) in 2005 as compared to 2004. This increase was primarily due to (i) workover expenses, (ii) an increase in production taxes associated with the increase in oil and gas sales, and (iii) a positive prior period production tax adjustment made by the operator on one significant well during 2005. These increases were partially offset by a negative prior period production tax adjustment made by the operator on another significant well during 2005. As a percentage of oil and gas sales, these expenses increased to 26.3% in 2005 from 22.3% in 2004, primarily due to the dollar increase in oil and gas production expenses.
DD&A of oil and gas properties decreased $3,000 (3.0%) in 2005 as compared to 2004. This decrease was primarily due to (i) the abandonment of one significant well during 2004 following an unsuccessful recompletion attempt and (ii) the decreases in volumes of oil and gas sold. These decreases were partially offset by increases of (i) $44,000 due to the depletion of additional capitalized costs of oil and gas properties as a result of the upward revision in the estimate of the asset retirement obligations, of which $27,000 was related to previously fully depleted wells, and (ii) $5,000 due to accretion of these additional asset retirement obligations. As a percentage of oil and gas sales, this expense decreased to 3.8% in 2005 from 4.6% in 2004, primarily due to the increase in the average prices of oil and gas sold.
General and administrative expenses increased $7,000 (3.9%) in 2005 as compared to 2004. As a percentage of oil and gas sales, these expenses decreased to 7.5% in 2005 from 8.4% in 2004, primarily due to the increase in oil and gas sales.
As further discussed in Notes 6 and 7 to the combined financial statements indexed in Item 15 hereof, the Partnership is in the process of selling an increased amount of the Partnership's properties as a result of the generally favorable current environment for oil and gas dispositions and will be selling all of the Partnership's properties in the liquidation process. The Partnership will have lower future oil and gas sales and lower future production expenses due to the sale of these properties.
III-C Partnership -----------------
Year Ended December 31, 2006 Compared to Year Ended December 31, 2005 -------------------------------------
The following discussion contains amounts for the year 2005 which have been restated to reflect the Partnership's assets held for sale as discontinued operations. See Note 6 to the combined financial statements indexed in Item 15 hereof for more information about these discontinued operations.
Total oil and gas sales increased $500,000 (12.0%) in 2006 as compared to 2005. Of this increase (i) $128,000 and $755,000 were related to increases in volumes of oil and gas sold and (ii) $109,000 was related to an increase in the average price of oil sold. These increases were partially offset by a decrease of $492,000 related to a decrease in the average price of gas sold.
Volumes of oil and gas sold increased 2,353 barrels and 104,363 Mcf in 2006 as compared to 2005. The increase in volumes of oil sold was primarily due to (i) an increase in production on two significant wells following their successful recompletion during early and mid 2006 and (ii) the successful completion of several new wells. These increases were partially offset by normal declines in production. The increase in volumes of gas sold was primarily due to (i) the successful completion of several wells, (ii) upward revisions in the estimates of remaining gas reserves on one significant well which reduced the Partnership's overproduced in excess of estimated ultimate reserves position, thereby decreasing its gas imbalance payable, and (iii) a negative prior period volume adjustment on another significant well during 2005. These increases were partially offset by normal declines in production.
Average oil prices increased to $63.75 per barrel in 2006 from $54.40 per barrel in 2005. Average gas prices decreased to $6.43 per Mcf in 2006 from $7.24 per Mcf in 2005.
Oil and gas production expenses (including lease operating expenses and production taxes) increased $185,000 (19.4%) in 2006 as compared to 2005. This increase was primarily due to (i) an increase in workover expenses, (ii) a $60,000 decrease in lease operating expenses during 2005 resulting from a decrease in the Partnership's gas balancing position on several wells, and (iii) an increase in production taxes associated with the increase in oil and gas sales. As of the date of this Annual Report, management anticipates workover costs remaining at or increasing above 2006 levels due to the increased cost to perform a workover and the age of the wellbores. As a percentage of oil and gas sales, these expenses increased to 24.5% in 2006 from 22.9% in 2005.
DD&A of oil and gas properties increased $294,000 (129.4%) in 2006 as compared to 2005. This increase was primarily due to (i) an increase in depletable oil and gas properties during 2006 primarily due to the recompletion of several wells and (ii) the increases in volumes of oil and gas sold. The increase in DD&A was partially offset by several wells being fully depleted during 2005 due to their lack of remaining reserves. As a percentage of oil and gas sales, this expense increased to 11.2% in 2006 from 5.5% in 2005, primarily due to the dollar increase in DD&A.
The Partnership recognized a non-cash charge against earnings of $77,000 during 2006. This charge was related to the decline in oil and gas prices used to determine recoverability of oil and gas reserves at September 30, 2006. No such charge was incurred during 2005.
General and administrative expenses decreased $3,000 (1.0%) in 2006 as compared to 2005. As a percentage of oil and gas sales, these expenses decreased to 6.3% in 2006 from 7.1% in 2005, primarily due to the increase in oil and gas sales.
As further discussed in Notes 6 and 7 to the combined financial statements indexed in Item 15 hereof, the Partnership is in the process of selling an increased amount of the Partnership's properties as a result of the generally favorable current environment for oil and gas dispositions and will be selling all of the Partnership's properties in the liquidation process. The Partnership will have lower future oil and gas sales and lower future production expenses due to the sale of these properties.
The Limited Partners have received cash distributions through December 31, 2006 totaling $33,575,795 or 137.30% of Limited Partners' capital contributions.
Year Ended December 31, 2005 Compared to Year Ended December 31, 2004 -------------------------------------
The following discussion contains amounts for the years 2005 and 2004 which have been restated to reflect the Partnership's assets held for sale as discontinued operations. See Note 6 to the combined financial statements indexed in Item 15 hereof for more information about these discontinued operations.
Total oil and gas sales increased $893,000 (27.3%) in 2005 as compared to 2004. Of this increase $138,000 and $923,000 were related to increases in the average prices of oil and gas sold. These increases were partially offset by a decrease of $176,000 related to a decrease in volumes of gas sold.
Volumes of oil sold increased 206 barrels, while volumes of
gas sold decreased 32,610 Mcf in 2005 as compared to 2004. The increase in volumes of oil sold was primarily due to (i) the successful completion of several new wells during early to mid 2005 and (ii) an increase in production on one significant well following its successful workover during late 2004. These increases were partially offset by normal declines in production. The decrease in volumes of gas sold was primarily due to (i) normal declines in production, (ii) substantial declines in production during 2005 on two significant wells following their unsuccessful workovers during mid to late 2004, and (iii) a negative prior period volume adjustment on one significant well during 2005. The wells with substantial declines in production are not expected to return to their previously high levels of production. These decreases were partially offset by (i) the successful completion of several new wells during late 2004 and early to mid 2005 and (ii) increases in production on several wells following their successful workovers during mid to late 2004 and early 2005.
Average oil and gas prices increased to $54.40 per barrel and $7.24 per Mcf in 2005 from $39.57 per barrel and $5.41 per Mcf in 2004.
Oil and gas production expenses (including lease operating expenses and production taxes) increased $107,000 (12.7%) in 2005 as compared to 2004. This increase was primarily due to (i) an increase in workover expenses and (ii) an increase in production taxes associated with the increase in oil and gas sales. As a percentage of oil and gas sales, these expenses decreased to 22.9% in 2005 from 25.9% in 2004, primarily due to the increase in oil and gas sales.
DD&A of oil and gas properties decreased $213,000 (48.4%) in 2005 as compared to 2004. This decrease was primarily due to (i) one significant well being fully depleted during 2004 due to its lack of remaining reserves and (ii) the decrease in volumes of gas sold. These decreases were partially offset by (i) $53,000 due to the depletion of additional capitalized costs of oil and gas properties as a result of the upward revision in the estimate of the asset retirement obligations, of which $34,000 was related to previously fully depleted wells, (ii) $8,000 due to accretion of these additional asset retirement obligations, and (iii) an increase in depletable oil and gas properties during 2005 primarily due to the drilling of two developmental wells. As a percentage of oil and gas sales, this expense decreased to 5.5% in 2005 from 13.5% in 2004, primarily due to the dollar decrease in DD&A.
General and administrative expenses increased $6,000 (2.1%) in 2005 as compared to 2004. As a percentage of oil and gas sales, these expenses decreased to 7.1% in 2005 from 8.9% in 2004, primarily due to the increase in oil and gas sales.
As further discussed in Notes 6 and 7 to the combined
financial statements indexed in Item 15 hereof, the Partnership is in the process of selling an increased amount of the Partnership's properties as a result of the generally favorable current environment for oil and gas dispositions and will be selling all of the Partnership's properties in the liquidation process. The Partnership will have lower future oil and gas sales and lower future production expenses due to the sale of these properties.
III-D Partnership -----------------
Year Ended December 31, 2006 Compared to Year Ended December 31, 2005 -------------------------------------
The following discussion contains amounts for the year 2005 which have been restated to reflect the Partnership's assets held for sale as discontinued operations. See Note 6 to the combined financial statements indexed in Item 15 hereof for more information about these discontinued operations.
Total oil and gas sales increased $339,000 (13.9%) in 2006 as compared to 2005. Of this increase (i) $73,000 and $578,000 were related to increases in volumes of oil and gas sold and (ii) $97,000 was related to an increase in the average price of oil sold. These increases were partially offset by a decrease of $409,000 related to a decrease in the average price of gas sold.
Volumes of oil and gas sold increased 1,382 barrels and 82,696 Mcf in 2006 as compared to 2005. The increase in volumes of oil sold was primarily due to (i) the successful completion of several new wells and (ii) an increase in production on two significant wells following their successful recompletion during early and mid 2006. These increases were partially offset by normal declines in production. The increase in volumes of gas sold was primarily due to (i) the successful completion of several new wells, (ii) upward revisions in the estimates of remaining gas reserves on one significant well which reduced the Partnership's overproduced in excess of estimated ultimate reserves position, thereby decreasing its gas imbalance payable, and (iii) increases in production on several other wells following their successful recompletions during early and mid 2006. These increases were partially offset by normal declines in production.
Average oil prices increased to $62.74 per barrel in 2006 from $52.95 per barrel in 2005. Average gas prices decreased to $5.88 per Mcf in 2006 from $6.99 per Mcf in 2005.
Oil and gas production expenses (including lease operating expenses and production taxes) increased $138,000 (23.2%) in 2006
as compared to 2005. This increase was primarily due to (i) an increase in workover expenses, (ii) a $45,000 decrease in lease operating expense during 2005 resulting from a decrease in the Partnership gas balancing position on several wells, and (iii) and an increase in production taxes associated with the increase in oil and gas sales. As of the date of this Annual Report, management anticipates workover costs remaining at or increasing above 2006 levels due to the increased cost to perform a workover and the age of the wellbores. As a percentage of oil and gas sales, these expenses increased to 26.3% in 2006 from 24.3% in 2005.
DD&A of oil and gas properties increased $256,000 (216.7%) in 2006 as compared to 2005. This increase was primarily due to an increase in depletable oil and gas properties during 2006 primarily due to the recompletion of several wells. The increase in DD&A was partially offset by several wells being fully depleted during 2005 due to their lack of remaining reserves. As a percentage of oil and gas sales, this expense increased to 13.5% in 2006 from 4.8% in 2005, primarily due to the dollar increase in DD&A.
The Partnership recognized a non-cash charge against earnings of $13,000 during 2006. This charge was related to the decline in gas prices used to determine recoverability of oil and gas reserves at September 30, 2006. No such charge was incurred during 2005.
General and administrative expenses decreased $2,000 (1.3%) in 2006 as compared to 2005. As a percentage of oil and gas sales, these expenses decreased to 6.2% in 2006 from 7.1% in 2005, primarily due to the increase in oil and gas sales.
As further discussed in Notes 6 and 7 to the combined financial statements indexed in Item 15 hereof, the Partnership is in the process of selling an increased amount of the Partnership's properties as a result of the generally favorable current environment for oil and gas dispositions and will be selling all of the Partnership's properties in the liquidation process. The Partnership will have lower future oil and gas sales and lower future production expenses due to the sale of these properties.
The Limited Partners have received cash distributions through December 31, 2006 totaling $18,671,669 or 142.52% of Limited Partners' capital contributions.
Year Ended December 31, 2005 Compared to Year Ended December 31, 2004 -------------------------------------
The following discussion contains amounts for the years 2005 and 2004 which have been restated to reflect the Partnership's
assets held for sale as discontinued operations. See Note 6 to the combined financial statements indexed in Item 15 hereof for more information about these discontinued operations.
Total oil and gas sales increased $563,000 (29.9%) in 2005 as compared to 2004. Of this increase $128,000 and $460,000 were related to increases in the average prices of oil and gas sold.
Volumes of oil sold increased 199 barrels, while volumes of gas sold decreased 6,168 Mcf in 2005 as compared to 2004. The increase in volumes of oil sold was primarily due to (i) the successful completion of several new wells during early to mid 2005 and (ii) an increase in production on one significant well following its successful workover during late 2004. These increases were partially offset by normal declines in production. The decrease in volumes of gas sold was primarily due to (i) normal declines in production and (ii) a substantial decline in production during 2005 on one significant well following its unsuccessful workover during mid 2004. The well with a substantial decline in production is not expected to return to its previously high levels of production. These decreases were partially offset by (i) the successful completion of several new wells during late 2004 and early to mid 2005 and (ii) increases in production on two significant wells following their successful workovers during mid to late 2004.
Average oil and gas prices increased to $52.95 per barrel and $6.99 per Mcf in 2005 from $37.97 per barrel and $5.38 per Mcf in 2004.
Oil and gas production expenses (including lease operating expenses and production taxes) increased $101,000 (20.5%) in 2005 as compared to 2004. This increase was primarily due to (i) an increase in workover expenses, (ii) an increase in production taxes associated with the increase in oil and gas sales, and (iii) repair and maintenance expenses incurred on several wells during 2005. As a percentage of oil and gas sales these expenses decreased to 24.3% in 2005 from 26.2% in 2004.
DD&A of oil and gas properties increased $22,000 (23.4%) in 2005 as compared to 2004. Of this increase (i) $34,000 was due to the depletion of additional capitalized costs of oil and gas properties as a result of the upward revision in the estimate of the asset retirement obligations, of which $24,000 was related to previously fully depleted wells, and (ii) $5,000 was due to accretion of these additional asset retirement obligations. This increase was also due to downward revisions in the estimates of remaining oil and gas reserves following an unsuccessful recompletion attempt on one significant well during 2005. These increases were partially offset by (i) one significant well being fully depleted during 2004 due to its lack of remaining reserves and (ii) upward revisions in the estimates of remaining oil and gas reserves since December 31, 2004. As a percentage of oil and gas sales, this expense decreased to 4.8% in 2005 from 5.1% in 2004.
General and administrative expenses increased $2,000 (1.4%) in 2005 as compared to 2004. As a percentage of oil and gas sales, these expenses decreased to 7.1% in 2005 from 9.1% in 2004, primarily due to the increase in oil and gas sales.
As further discussed in Notes 6 and 7 to the combined financial statements indexed in Item 15 hereof, the Partnership is in the process of selling an increased amount of the Partnership's properties as a result of the generally favorable current environment for oil and gas dispositions and will be selling all of the Partnership's properties in the liquidation process. The Partnership will have lower future oil and gas sales and lower future production expenses due to the sale of these properties.
III-E Partnership -----------------
Year Ended December 31, 2006 Compared to Year Ended December 31, 2005 -------------------------------------
The following discussion contains amounts for the year 2005 which have been restated to reflect the Partnership's assets held for sale as discontinued operations. See Note 6 to the combined financial statements indexed in Item 15 hereof for more information about these discontinued operations.
Total oil and gas sales decreased $1,546,000 (27.0%) in 2006 as compared to 2005. Of this decrease (i) $323,000 and $710,000 were related to decreases in volumes of oil and gas sold and (ii) $654,000 was related to a decrease in the average price of gas sold.
Volumes of oil and gas sold decreased 6,396 barrels and 99,105 Mcf in 2006 as compared to 2005. The decrease in volumes of oil sold was primarily due to (i) normal declines in production and (ii) a positive prior period volume adjustment made by the operator on one significant well during 2005. The decrease in volumes of gas sold was primarily due to (i) normal declines in production and (ii) a negative prior period volume adjustment during 2006.
Average oil prices increased to $58.97 per barrel in 2006 from $50.53 per barrel in 2005. Average gas prices decreased to $5.94 per MCF in 2006 from $7.16 per Mcf in 2005.
Oil and gas production expenses (including lease operating expenses and production taxes) decreased $25,000 (1.8%) in 2006 as compared to 2005. This decrease was primarily due to (i) a
decrease in production taxes associated with the decrease in oil and gas sales, (ii) a $78,000 decrease in lease operating expenses during 2006 resulting from a decrease in the Partnership's gas balancing position on several wells, and (iii) the receipt of a $46,000 lease operating expense credit resulting from the settlement of a class action lawsuit on one significant unit during 2006. These decreases were partially offset by an increase in workover expenses. As of the date of this Annual Report, management anticipates workover costs remaining at or increasing above 2006 levels due to the increased cost to perform a workover and the age of the wellbores. As a percentage of oil and gas sales, these expenses increased to 33.5% in 2006 from 24.9% in 2005, primarily due to the decrease in oil and gas sales.
DD&A of oil and gas properties decreased $76,000 (23.7%) in 2006 as compared to 2005. This decrease was primarily due to (i) the decreases in volumes of oil and gas sold, (ii) several wells being fully depleted during 2005 due to their lack of remaining reserves, and (iii) one significant well being substantially depleted during 2005 due to its lack of remaining reserves. These decreases were partially offset by (i) downward revisions in the estimates of remaining oil and gas reserves since December 31, 2005 and (ii) two other wells being fully depleted during 2006 due to their lack of remaining reserves. As a percentage of oil and gas sales, this expense increased to 5.8% in 2006 from 5.6% in 2005.
The Partnership recognized a non-cash charge against earnings of $61,000 during 2006. This charge was related to the decline in oil and gas prices used to determine recoverability of oil and gas reserves at September 30, 2006. No such charge was incurred during 2005.
General and administrative expenses remained relatively constant in 2006 and 2005. As a percentage of oil and gas sales, these expenses increased to 11.7% in 2006 from 8.6% in 2005, primarily due to the decrease in oil and gas sales.
As further discussed in Notes 6 and 7 to the combined financial statements indexed in Item 15 hereof, the Partnership is in the process of selling an increased amount of the Partnership's properties as a result of the generally favorable current environment for oil and gas dispositions and will be selling all of the Partnership's properties in the liquidation process. The Partnership will have lower future oil and gas sales and lower future production expenses due to the sale of these properties.
The Limited Partners have received cash distributions through December 31, 2006 totaling $55,174,016, or 131.91% of Limited Partners' capital contributions.
Year Ended December 31, 2005 Compared to Year Ended December 31, 2004 -------------------------------------
The following discussion contains amounts for the years 2005 and 2004 which have been restated to reflect the Partnership's assets held for sale as discontinued operations. See Note 6 to the combined financial statements indexed in Item 15 hereof for more information about these discontinued operations.
Total oil and gas sales increased $1,314,000 (29.8%) in 2005 as compared to 2004. Of this increase $316,000 and $1,203,000 were related to increases in the average prices of oil and gas sold. These increases were partially offset by a decrease of $231,000 related to a decrease in volumes of gas sold.
The increase in volumes of oil sold was primarily due to a negative prior period volume adjustment on one significant well during 2004. This increase was partially offset by normal declines in production. The decrease in volumes of gas sold was primarily due to normal declines in production.
Average oil and gas prices increased to $50.53 per barrel and $7.16 per Mcf in 2005 from $36.88 per barrel and $5.27 per Mcf in 2004.
Oil and gas production expenses (including lease operating expenses and production taxes) increased $149,000 (11.7%) in 2005 as compared to 2004. This increase was primarily due to (i) an increase in production taxes associated with the increase in oil and gas sales and (ii) an increase in workover expenses. These increases were partially offset by a positive prior period production tax adjustment on one significant unit during 2004. As a percentage of oil and gas sales, these expenses decreased to 24.9% in 2005 from 28.9% in 2004, primarily due to the increase in oil and gas sales.
DD&A of oil and gas properties increased $128,000 (67.2%) in 2005 as compared to 2004. Of this increase (i) $72,000 was due to the depletion of additional capitalized costs of oil and gas properties as a result of the upward revision in the estimate of the asset retirement obligations, of which $51,000 was related to previously fully depleted wells, and (ii) $10,000 was due to accretion of these additional asset retirement obligations. This increase was also due to (i) downward revisions in the estimates of remaining gas reserves since December 31, 2004 and (ii) one significant well being substantially depleted during 2005 due to its lack of remaining reserves. These increases were partially offset by (i) one significant well being fully depleted during 2004 due to its lack of remaining reserves and (ii) the decrease in volumes of gas sold. As a percentage of oil and gas sales, this expense increased to 5.6% in 2005 from 4.3% in 2004, primarily due to the dollar increase in DD&A.
General and administrative expenses remained relatively constant in 2005 and 2004. As a percentage of oil and gas sales, these expenses decreased to 8.6% in 2005 from 11.1% in 2004, primarily due to the increase in oil and gas sales.
As further discussed in Notes 6 and 7 to the combined financial statements indexed in Item 15 hereof, the Partnership is in the process of selling an increased amount of the Partnership's properties as a result of the generally favorable current environment for oil and gas dispositions and will be selling all of the Partnership's properties in the liquidation process. The Partnership will have lower future oil and gas sales and lower future production expenses due to the sale of these properties.
III-F Partnership -----------------
Year Ended December 31, 2006 Compared to Year Ended December 31, 2005 -------------------------------------
The following discussion contains amounts for the year 2005 which have been restated to reflect the Partnership's assets held for sale as discontinued operations. See Note 6 to the combined financial statements indexed in Item 15 hereof for more information about these discontinued operations.
Total oil and gas sales decreased $897,000 (27.3%) in 2006 as compared to 2005. Of this decrease (i) $58,000 and $513,000 were related to decreases in volumes of oil and gas sold and (ii) $413,000 was related to a decrease in the average price of gas sold. These decreases were partially offset by an increase of $87,000 related to an increase in the average price of oil sold.
Volumes of oil and gas sold decreased 1,071 barrels and 70,427 Mcf in 2006 as compared to 2005. The decrease in volumes of oil sold was primarily due to normal declines in production. The decrease in volumes of gas sold was primarily due to normal declines in production and a negative prior period volume adjustment during 2006.
Average oil prices increased to $63.09 per barrel in 2006 from $54.23 per barrel in 2005. Average gas prices decreased to $5.90 per Mcf in 2006 from $7.28 per Mcf in 2005.
Oil and gas production expenses (including lease operating expenses and production taxes) increased $92,000 (12.6%) in 2006 as compared to 2005. This increase was primarily due to (i) an increase in workover expenses and (ii) repair and maintenance expenses incurred on one significant well during 2006. As of the date of this Annual Report, management anticipates workover costs
remaining at or increasing above 2006 levels due to the increased cost to perform a workover and the age of the wellbores. These increases were partially offset by a decrease in production taxes associated with the decrease in oil and gas sales. As a percentage of oil and gas sales, these expenses increased to 34.4% in 2006 from 22.2% in 2005, primarily due to the decrease in oil and gas sales.
DD&A of oil and gas properties decreased $10,000 (5.4%) in 2006 as compared to 2005. This decrease was primarily due to (i) the decreases in volumes of oil and gas sold and (ii) several wells being fully depleted during 2005 due to their lack of remaining reserves. The decreases in DD&A were partially offset by (i) downward revisions in the estimates of remaining oil and gas reserves since December 31, 2005, (ii) two other significant wells being fully depleted during 2006 due to their lack of remaining reserves, and (iii) an increase in depletable oil and gas properties during 2006 primarily due to the recompletion of one significant well. As a percentage of oil and gas sales, this expense increased to 7.6% in 2006 from 5.9% in 2005, primarily due to the decrease in the average price of gas sold.
The Partnership recognized a non-cash charge against earnings of $55,000 during 2006. This charge was related to the decline in oil and gas prices used to determine recoverability of oil and gas reserves at September 30, 2006. No such charge was incurred during 2005.
General and administrative expenses decreased $3,000 (1.0%) in 2006 as compared to 2005. As a percentage of oil and gas sales, these expenses increased to 11.3% in 2006 from 8.3% in 2005, primarily due to the decrease in oil and gas sales.
As further discussed in Notes 6 and 7 to the combined financial statements indexed in Item 15 hereof, the Partnership is in the process of selling an increased amount of the Partnership's properties as a result of the generally favorable current environment for oil and gas dispositions and will be selling all of the Partnership's properties in the liquidation process. The Partnership will have lower future oil and gas sales and lower future production expenses due to the sale of these properties.
The Partnership achieved payout during the first quarter of 2006. After payout, operations and revenues for the Partnership are 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.
The Limited Partners have received cash distributions through December 31, 2006 totaling $24,108,904 or 108.85% of Limited Partners' capital contributions.
Year Ended December 31, 2005 Compared to Year Ended December 31, 2004 -------------------------------------
The following discussion contains amounts for the years 2005 and 2004 which have been restated to reflect the Partnership's assets held for sale as discontinued operations. See Note 6 to the combined financial statements indexed in Item 15 hereof for more information about these discontinued operations.
Total oil and gas sales increased $814,000 (32.9%) in 2005 as compared to 2004. Of this increase $169,000 and $755,000 were related to increases in the average prices of oil and gas sold. These increases were partially offset by a decrease of $118,000 related to a decrease in volumes of gas sold.
Volumes of oil sold increased 197 barrels, while volumes of gas sold decreased 22,432 Mcf in 2005 as compared to 2004. The increase in volumes of oil sold was primarily due to (i) increases in production on several wells following their successful workovers during 2005 and (ii) an increase in production on another significant well following its successful recompletion during mid 2005. These increases were partially offset by normal declines in production. The decrease in volumes of gas sold was primarily due to normal declines in production.
Average oil and gas prices increased to $54.23 per barrel and $7.28 per Mcf in 2005 from $38.71 per barrel and $5.24 per Mcf in 2004.
Oil and gas production expenses (including lease operating expenses and production taxes) increased $85,000 (13.2%) in 2005 as compared to 2004. This increase was primarily due to (i) an increase in production taxes associated with the increase in oil and gas sales and (ii) workover expenses incurred on several wells during 2005. As a percentage of oil and gas sales, these expenses decreased to 22.2% in 2005 from 26.1% in 2004, primarily due to the increase in oil and gas sales.
DD&A of oil and gas properties increased $41,000 (27.3%) in 2005 as compared to 2004. Of this increase (i) $24,000 was due to the depletion of additional capitalized costs of oil and gas properties as a result of the upward revision in the estimate of the asset retirement obligations, of which $13,000 was related to previously fully depleted wells, and (ii) $6,000 was due to accretion of these additional asset retirement obligations. This increase was also due to downward revisions in the estimates of remaining oil and gas reserves on one significant well since December 31, 2004. These increases were partially offset by the decrease in volumes of gas sold. As a percentage of oil and gas sales, this expense decreased to 5.9% in 2005 from 6.1% in 2004.
General and administrative expenses increased $6,000 (2.3%) in 2005 as compared to 2004. As a percentage of oil and gas sales, these expenses decreased to 8.3% in 2005 from 10.8% in 2004, primarily due to the increase in oil and gas sales.
As further discussed in Notes 6 and 7 to the combined financial statements indexed in Item 15 hereof, the Partnership is in the process of selling an increased amount of the Partnership's properties as a result of the generally favorable current environment for oil and gas dispositions and will be selling all of the Partnership's properties in the liquidation process. The Partnership will have lower future oil and gas sales and lower future production expenses due to the sale of these properties.
Average Sale Prices, Production Volumes, and Average Production Costs
The following tables are comparisons of annual average oil and gas sales prices, production volumes, and average production costs (lease operating expenses and production taxes) per barrel of oil equivalent (one barrel or 6 Mcf of gas) for 2006, 2005, and 2004.
[Remainder of Page Intentionally Left Blank]
2006 Compared to 2005 ---------------------
Average Sales Prices - ----------------------------------------------------------------------------- P/ship 2006 2005(1) % Change - ------ ------------------ ----------------- -------------- Oil Gas Oil Gas ($/Bbl) ($/Mcf) ($/Bbl) ($/Mcf) Oil Gas ------- ------- ------- ------- --- ----- III-A $64.64 $6.51 $54.52 $7.64 19% (15%) III-B 64.72 6.54 54.60 7.63 19% (14%) III-C 63.75 6.43 54.40 7.24 17% (11%) III-D 62.74 5.88 52.95 6.99 18% (16%) III-E 58.97 5.94 50.53 7.16 17% (17%) III-F 63.09 5.90 54.23 7.28 16% (19%)
Production Volumes - ----------------------------------------------------------------------------- P/ship 2006 2005(1) % Change - ------ ------------------- ----------------- -------------- Oil Gas Oil Gas Oil Gas (Bbls) (Mcf) (Bbls) (Mcf) (Bbls) (Mcf) ------ ------- ------ ------- ------ ----- III-A 28,373 345,008 32,191 369,103 (12%) ( 7%) III-B 19,700 145,330 22,521 159,150 (13%) ( 9%) III-C 11,648 610,593 9,295 506,230 25% 21% III-D 9,928 367,694 8,546 284,998 16% 29% III-E 16,782 535,598 23,178 634,703 (28%) (16%) III-F 9,822 300,359 10,893 370,786 (10%) (19%)
Average Production Costs per Barrel of Oil Equivalent ---------------------------------------- P/ship 2006 2005(1) % Change ------ ------ ------- -------- III-A $11.06 $11.51 ( 4%) III-B 13.25 13.13 1% III-C 10.07 10.21 ( 1%) III-D 10.28 10.60 ( 3%) III-E 13.16 11.02 19% III-F 13.76 10.07 37% - ------------ (1) These amounts have been restated to reflect the sale of various oil and gas properties during 2006 and assets held for sale as of December 31, 2006 as discontinued operations. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information about these discontinued operations.
2005 Compared to 2004 ---------------------
Average Sales Prices - --------------------------------------------------------------------------- P/ship 2005(1) 2004(1) % Change - ------ ------------------- ----------------- ------------ Oil Gas Oil Gas ($/Bbl) ($/Mcf) ($/Bbl) ($/Mcf) Oil Gas ------- ------- ------- ------- --- --- III-A $54.52 $7.64 $39.92 $5.78 37% 32% III-B 54.60 7.63 39.93 5.88 37% 30% III-C 54.40 7.24 39.57 5.41 37% 34% III-D 52.95 6.99 37.97 5.38 39% 30% III-E 50.53 7.16 36.88 5.27 37% 36% III-F 54.23 7.28 38.71 5.24 40% 39%
Production Volumes - ----------------------------------------------------------------------------- P/ship 2005(1) 2004(1) % Change - ------ ------------------- ------------------ -------------- Oil Gas Oil Gas Oil Gas (Bbls) (Mcf) (Bbls) (Mcf) (Bbls) (Mcf) ------ ------- ------ ------- ------ ----- III-A 32,191 369,103 36,657 442,066 (12%) (17%) III-B 22,521 159,150 25,353 184,751 (11%) (14%) III-C 9,295 506,230 9,089 538,840 2% ( 6%) III-D 8,546 284,998 8,347 291,166 2% ( 2%) III-E 23,178 634,703 22,473 678,604 3% ( 6%) III-F 10,893 370,786 10,696 393,218 2% ( 6%)
Average Production Costs per Barrel of Oil Equivalent ----------------------------------------- P/ship 2005(1) 2004(1) % Change ------ -------- ------- --------- III-A $11.51 $7.07 63% III-B 13.13 8.34 57% III-C 10.21 8.58 19% III-D 10.60 8.67 22% III-E 11.02 9.39 17% III-F 10.07 8.48 19% - ------------ (1) These amounts have been restated to reflect the sale of various oil and gas properties during 2006 and assets held for sale as of December 31, 2006 as discontinued operations. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information about these discontinued operations.
Liquidity and Capital Resources
See discussion above under the heading "Partnership Termination" for information regarding termination of the Partnerships as of December 31, 2007.
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 production are not generally reinvested in productive assets, except to the extent that producing wells are improved, where methods are employed to permit more efficient recovery of reserves, or where identified developmental drilling or recompletion opportunities are pursued, thereby resulting in a positive economic impact. Assuming 2006 production levels for future years, the Partnerships' proved reserve quantities at December 31, 2006 would have the following remaining lives:
Discontinued Operations Continuing Operations ----------------------- --------------------- Partnership Gas-Years Oil-Years Gas-Years Oil-Years ----------- --------- --------- --------- ---------
III-A 2.2 13.5 8.3 3.0 III-B - - 8.1 3.2 III-C 2.1 14.1 7.2 7.9 III-D 2.6 11.0 6.3 7.8 III-E 2.7 5.3 8.2 6.0 III-F 3.0 15.0 9.2 16.2
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 in the oil and gas prices at December 31, 2006 may cause an increase or decrease in the estimated life of said reserves. As discussed above, the Partnerships will terminate on December 31, 2007 (November 22, 2007 for the III-A Partnership).
The Partnerships' available capital from the Limited Partners' subscriptions has been spent on oil and gas properties and there should be no further material capital resource commitments in the future. The Partnerships have no debt commitments. Cash for operational purposes will be provided by current oil and gas production. During 2006, 2005, and 2004, the Partnerships expended no capital on oil and gas acquisition or exploration activities. However, during those years the Partnerships expended the following amounts on oil and gas developmental activities, primarily well recompletions and developmental drilling:
Partnership 2006 2005 2004 ----------- -------- -------- -------- III-A $ - $ 16,822 $ 78,142 III-B 10,581 2,903 52,376 III-C 680,951 127,299 217,479 III-D 525,931 85,828 27,306 III-E 82,263 158,067 245,429 III-F 69,317 32,310 188,433
The 2006 capital expenditures for the III-C and III-D Partnerships were primarily due to recompletions of the Sugg AA 3 #1 and Sugg AA 3067 #1 wells located in Irion County, Texas and the Loving 1 State #1 and Loving 1 State #2 wells located in Eddy County, New Mexico. The III-C and III-D Partnerships own working interests in these wells as follows:
Property III-C III-D ----------------- ----- ----- Sugg AA 3 #1 29.9% 25.0% Sugg AA 2067 #1 34.2% 28.6% Loving 1 State #1 17.8% 14.9% Loving 1 State #2 20.5% 17.2%
While these expenditures may reduce or eliminate cash available for a particular quarterly cash distribution, the General Partner believes that these activities are necessary for the prudent operation of the properties and maximization of their value to the Partnerships.
The Partnerships sold certain oil and gas properties during 2006 and 2004. No such sales occurred during 2005. The sales of the Partnerships' properties were made by the General Partner after giving due consideration to both the offer price and the General Partner's estimate of the property's remaining proved reserves and future operating costs. Net proceeds from the sales of such properties were included in the calculation of the Partnerships' cash distributions for the quarter immediately following the Partnerships' receipt of the proceeds. The amount of such proceeds from the sales of oil and gas properties during 2006, 2005, and 2004, were as follows:
Partnership 2006 2005 2004 ----------- -------- -------- -------- III-A $517,423 $ - $ 375 III-B 218,220 - - III-C 98,364 - - III-D 1,072 - 88,277 III-E 107,714 - 629,332 III-F 90,451 - 1,654
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'
operating activities and sale of oil and gas properties, which will be affected (either positively or negatively) by many factors beyond the control of the Partnerships, including the price of and demand for oil and gas and other market and economic conditions. Even if prices and costs remain stable, the amount of cash available for distributions will decline over time (as the volume of production from producing properties declines) since the Partnerships are not replacing production through acquisitions of producing properties and extensive drilling. The Partnerships' quantity of proved reserves has been reduced by the sale of oil and gas properties as described above; therefore, it is possible that the Partnerships' future cash distributions will decline as a result of a reduction of the Partnerships' reserve base.
If the Partnerships were to continue past December 31, 2007(November 22, 2007 for the III-A Partnership), the General Partner would expect the Partnerships' general and administrative expenses to increase due to costs required to comply with Section 404 of the Sarbanes-Oxley Act of 2002. Such anticipated increase would reduce cash available for distributions. Due to the Partnerships' termination on December 31, 2007 (November 22, 2007 for the III-A Partnership), these expenses will not occur; however, the Partnerships will incur increased expenses as part of their liquidation (e.g. auction fees, legal and title expenses associated with property sales, etc.).
Off-Balance Sheet Arrangements
The Partnerships do not have any off-balance sheet arrangements.
Contractual Obligations
The Partnerships do not have any contractual obligations of the type which are required by the SEC to be disclosed in this Annual Report under this heading.
Critical Accounting Policies
The Partnerships follow the successful efforts method of accounting for their oil and gas properties. Under the successful efforts method, the Partnerships capitalize all property acquisition costs and development costs incurred in connection with the further development of oil and gas reserves. Property acquisition costs include costs incurred by the Partnerships or the General Partner to acquire producing properties, including related title insurance or examination costs, commissions, engineering, legal and accounting fees, and similar costs directly related to the acquisitions, plus an allocated portion of the General Partner's property screening
costs. The acquisition cost to the Partnership of properties acquired by the General Partner is adjusted to reflect the net cash results of operations, including interest incurred to finance the acquisition, for the period of time the properties are held by the General Partner.
Depletion of the cost of producing oil and gas properties, amortization of related intangible drilling and development costs, and depreciation of tangible lease and well equipment are computed on the units-of-production method. The Partnerships' calculation of depreciation, depletion, and amortization includes estimated dismantlement and abandonment costs, net of estimated salvage values. When complete units of depreciable property are retired or sold, the asset cost and related accumulated depreciation are eliminated with any gain or loss reflected in income.
The Partnerships evaluate the recoverability of the carrying costs of their proved oil and gas properties for each oil and gas well. If the unamortized costs, net of salvage value, of oil and gas properties exceed the expected undiscounted future cash flows from such properties, the cost of the properties is written down to fair value, which is determined by using the discounted future cash flows from the properties. In the third quarter of 2006, natural gas prices declined significantly. Consequently, the partnerships incurred impairments utilizing the natural gas spot prices that existed on September 30, 2006. The impairments related to continuing operations recognized in the third quarter totaled approximately $6,000, $4,000, $77,000, $13,000, $61,000, and $55,000 for the III-A, III-B, III-C, III-D, III-E, and III-F Partnerships, respectively. Once incurred, an impairment of oil and natural gas properties is not reversible.
The Deferred Charge on the Balance Sheets included in Item 8 of this Annual Report represents costs deferred for lease operating expenses incurred in connection with the Partnerships' underproduced gas imbalance positions. Conversely, the Accrued Liability represents charges accrued for lease operating expenses incurred in connection with the Partnerships' overproduced gas imbalance positions. The rates used in calculating the Deferred Charge and Accrued Liability are the annual average production cost per Mcf.
The Partnerships' oil and condensate production is sold, title passed, and revenue recognized at or near the Partnerships' wells under short-term purchase contracts at prevailing prices in accordance with arrangements which are customary in the oil and gas industry. Sales of gas applicable to the Partnerships' interest in producing oil and gas leases are recorded as revenue when the gas is metered and title transferred pursuant to the gas sales contracts covering the Partnerships' interest in gas reserves. During such times as a Partnership's sales of gas exceed its pro rata ownership in a well, such sales are recorded as revenues unless total sales from the well have exceeded the
Partnership's share of estimated total gas reserves underlying the property, at which time such excess is recorded as a liability. The rates per Mcf used to calculate this liability are based on the average gas prices received for the volumes at the time the overproduction occurred. These rates also approximate the prices for which the Partnerships are currently settling similar liabilities. These amounts were recorded as gas imbalance payables in accordance with the sales method. These gas imbalance payables will be settled by either gas production by the underproduced party in excess of current estimates of total gas reserves for the well or by a negotiated or contractual payment to the underproduced party.
The Partnerships' wells must be properly plugged and abandoned after their oil and gas reserves are exhausted. The Partnerships follow FAS No. 143, "Accounting for Asset Retirement Obligations" in accounting for the future expenditures that will be necessary to plug and abandon these wells. FAS No. 143 requires the estimated plugging and abandonment obligations to be recognized in the period in which they are incurred (i.e. when the well is drilled or acquired) if a reasonable estimate of fair value can be made and to be capitalized as part of the carrying amount of the well.
New Accounting Pronouncements
In September 2006, the FASB issued FAS No. 157, "Fair Value Measurements" (FAS No. 157). FAS No. 157 establishes a common definition for fair value to be applied to US GAAP guidance requiring use of fair value, establishes a framework for measuring fair value, and expands the disclosure about such fair value measurements. FAS No. 157 is effective for fiscal years beginning after November 5, 2007. The Partnerships are currently assessing the impact of FAS No. 157 on their results of operations, financial condition, and cash flows.
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. Inflationary pressure on drilling and operating costs have impacted the operating costs incurred by the Partnerships. This pressure is expected to continue if commodity prices remain at their current levels. 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 value of net assets in liquidation of the Partnerships is substantially dependent on prices of crude oil, natural gas, and natural gas liquids. Declines in commodity prices will adversely affect the amount of cash that will be received from the sale of oil and gas and from the sale of the Partnerships' oil and gas properties in liquidation, and thus ultimately affect the amount of cash that will be available for distribution to the Partners. The following table presents the estimated change in value presuming a decrease of 10% in forecasted natural gas and crude oil prices. These estimated decreases in liquidation values are in comparison to the estimated liquidation value calculated using strip pricing for the unaudited pro-forma balance sheets at December 31, 2006 presented in Note 7 to the financial statements indexed in Item 15 hereof.
General Limited Partnership Partner Partners Total ----------- --------- ---------- ----------
III-A $105,000 $ 947,000 $1,052,000 III-B 82,000 464,000 546,000 III-C 102,000 918,000 1,020,000 III-D 57,000 515,000 572,000 III-E 224,000 2,013,000 2,237,000 III-F 186,000 1,676,000 1,862,000
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data are indexed in Item 15 hereof. Such financial statements and supplementary data are audited and presented on a going concern basis. Since termination of the Partnerships is now imminent, the General Partner has prepared unaudited pro forma balance sheets which are presented on a liquidation basis. These unaudited liquidation basis balance sheets are included in Note 7 to the financial statements 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. This evaluation did not result in any changes in the Partnerships' internal control over financial reporting that materially affected, or were reasonably likely to materially affect, the Partnerships' internal control over financial reporting.
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 2006 but which was not so reported.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF THE GENERAL PARTNER, AND CORPORATE GOVERNANCE
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 55 President and Director
Judy K. Fox 56 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 2006 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.
Compensation Committee Interlocks and Insider Participation
As described above and in "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 which was charged to each Partnership during 2006, 2005, and 2004, 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 2006 2005 2004 ----------- -------- -------- --------
III-A $277,872 $277,872 $277,872 III-B 145,620 145,620 145,620 III-C 257,412 257,412 257,412 III-D 137,904 137,904 137,904 III-E 440,280 440,280 440,280 III-F 233,136 233,136 233,136
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 2006, 2005, and 2004:
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Affiliates of the Partnerships serve as operator of some of the Partnerships' wells. The General Partner contracts 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 paid by the Partnerships to the affiliates the year ended December 31, 2006 is approximately $14,000, $4,000, $116,000, $72,000, $104,000, and $49,000, respectively for the III-A, III-B, III-C, III-D, III-E and III-F Partnerships.
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 an 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. The operators of these wells billed the Partnerships for a portion of such costs based upon the Partnerships' interest in the well.
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 directors and officers of the General Partner, and (iii) the General Partner and its affiliates. The address of each of such persons is Samson Plaza, Two West Second Street, Tulsa, Oklahoma 74103.
Number of Units Beneficially Owned (Percent Beneficial Owner of Outstanding) - ------------------------------------ ------------------
III-A Partnership: - ----------------- Samson Resources Company 71,677 (27.2%)
All affiliates, directors, and officers of the General Partner as a group and the General Partner (4 persons) 71,677 (27.2%)
III-B Partnership: - ----------------- Samson Resources Company 35,082 (25.4%)
All affiliates, directors, and officers of the General Partner as a group and the General Partner (4 persons) 35,082 (25.4%)
III-C Partnership: - ----------------- Samson Resources Company 74,006 (30.3%)
All affiliates, directors, and officers of the General Partner as a group and the General Partner (4 persons) 74,006 (30.3%)
III-D Partnership: - ----------------- Samson Resources Company 40,848 (31.2%)
All affiliates, directors, and officers of the General Partner as a group and the General Partner (4 persons) 40,848 (31.2%)
III-E Partnership: - ----------------- Samson Resources Company 131,657 (31.5%)
All affiliates, directors, and officers of the General Partner as a group and the General Partner (4 persons) 131,657 (31.5%)
III-F Partnership: - ----------------- Samson Resources Company 72,549 (32.8%)
All affiliates, directors, and officers of the General Partner as a group and the General Partner (4 persons) 72,549 (32.8%)
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
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 and drilling 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 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' participation in drilling prospects and 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 are solely responsible for the negotiation, administration, and enforcement of oil and gas sales agreements covering the Partnerships' leasehold interests. Because affiliates of the Partnerships who provide services to the Partnerships 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 Partnerships 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 Partnerships' negotiating strength and contractual positions have been enhanced by virtue of their affiliation with Samson.
The Partnerships will terminate as of December 31, 2007 (November 22, 2007 for the III-A Partnership). As part of the
liquidation and winding-up process the General Partner will liquidate the Partnerships' properties by offering them to all interested parties through normal oil and gas property auction processes as well as appropriate negotiated transactions. It is possible that the General Partner will package some properties which have value with other properties which have no or little value or are burdened with actual or potential liabilities. The General Partner intends to sell all such property packages and any associated or otherwise remaining Partnership assets and liabilities to the highest bidder at auction. It is possible that affiliates of the General Partner may participate in any public auction of these properties and may be the successful high bidder on some or all of the properties.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
During 2006 and 2005, each Partnership paid the following audit fees:
2006 2005 ------- ------- Year-end audit per engagement letter $26,418 $23,716 1st quarter 10-Q review 1,020 925 2nd quarter 10-Q review 1,020 917 3rd quarter 10-Q review 1,020 917
Audit-Related Fees
During 2006 and 2005 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 2006 and 2005 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 2006 and 2005 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' independent registered public 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 independent registered public accountants' independence.
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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 ENERGY INCOME LIMITED PARTNERSHIP III-A GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
as of December 31, 2006 and 2005 and for each of the three years in the period ended December 31, 2006 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 Agreement of Limited Partnership dated November 17, 1989 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.1 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.2 Certificate of Limited Partnership dated January 24, 1990 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.2 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 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 24, 1993 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.5 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.4 Second Amendment to Agreement of Limited Partnership dated August 4, 1993 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.8 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.5 Second Amendment to Certificate of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.5 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.6 Third Amendment to Agreement of Limited Partnership dated August 31, 1995 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.15 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.7 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.22 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.8 Fifth Amendment to Agreement of Limited Partnership dated November 15, 1999 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.25 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.9 Sixth Amendment to Agreement of Limited Partnership dated November 14, 2001, for the Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.9 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.10 Seventh Amendment to Agreement of Limited Partnership dated November 17, 2003, for the Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.10 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 2003, filed with the SEC on March 30, 2004 and is hereby incorporated by reference.
4.11 Eighth Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-A dated October 27, 2005, filed as Exhibit 4.11 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 29, 2006 and is hereby incorporated by reference.
4.12 Agreement of Limited Partnership dated January 24, 1990 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.2 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.13 Certificate of Limited Partnership dated January 24, 1990 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.11 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.14 First Amendment to Certificate of Limited Partnership and First Amendment to Agreement of Limited Partnership dated February 24, 1993 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.6 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.15 Second Amendment to Agreement of Limited Partnership dated August 4, 1993 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.9 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.16 Third Amendment to Agreement of Limited Partnership dated August 31, 1995 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.16 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.17 Second Amendment to Certificate of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.15 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.18 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.23 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.19 Fifth Amendment to Agreement of Limited Partnership dated December 30, 1999 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.26 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.20 Sixth Amendment to Agreement of Limited Partnership dated November 14, 2001, for the Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.18 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.21 Seventh Amendment to Agreement of Limited Partnership dated January 22, 2004, for the Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.20 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2003, filed with the SEC on March 30, 2004 and is hereby incorporated by reference.
4.22 Eighth Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-B dated October 27, 2005 filed as Exhibit 4.22 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 29, 2006 and is hereby incorporated by reference.
4.23 Agreement of Limited Partnership dated February 26, 1990 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.3 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.24 Certificate of Limited Partnership dated February 26, 1990 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.20 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.25 First Amendment to Certificate of Limited Partnership and First Amendment to Agreement of Limited Partnership dated February 24, 1993 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.7 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February
25, 2000, and is hereby incorporated by reference.
4.26 Second Amendment to Agreement of Limited Partnership dated August 4, 1993 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.19 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.27 Third Amendment to Agreement of Limited Partnership dated August 31, 1995 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.17 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.28 Second Amendment to Certificate of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.24 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.29 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.24 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.30 Fifth Amendment to Agreement of Limited Partnership dated December 30, 1999 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.27 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.31 Sixth Amendment to Agreement of Limited Partnership dated November 14, 2001, for the Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.27 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.32 Seventh Amendment to Agreement of Limited Partnership dated January 22, 2004, for the Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.30 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2003, filed with the SEC on March 30, 2004 and is hereby incorporated by reference.
4.33 Eighth Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-C dated October 27, 2005 filed as Exhibit 4.33 to
Registrant's Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 29, 2006 and is hereby incorporated by reference.
4.34 Agreement of Limited Partnership dated September 5, 1990 for Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.4 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.35 Certificate of Limited Partnership dated September 5, 1990 for Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.29 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.36 First Amendment to Certificate of Limited Partnership and First Amendment to Agreement of Limited Partnership dated February 24, 1993 for Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.11 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.37 Second Amendment to Agreement of Limited Partnership dated August 4, 1993 for Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.18 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.38 Third Amendment to Agreement of Limited Partnership dated August 31, 1995 for Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.25 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.39 Second Amendment to Certificate of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.33 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.40 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996 for the Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.32 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.41 Fifth Amendment to Agreement of Limited Partnership dated August 23, 2000 for the Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.39 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.42 Sixth Amendment to Agreement of Limited Partnership dated August 20, 2002 for the Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.36 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2002, filed with the SEC on March 28, 2003, and is hereby incorporated by reference.
4.43 Seventh Amendment to Agreement of Limited Partnership dated August 18, 2004 for the Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.40 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2004, filed with the SEC on March 30, 2004, and is hereby incorporated by reference.
4.44 Eighth Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-D dated October 27, 2005 filed as Exhibit 4.44 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 29, 2006 and is hereby incorporated by reference.
4.45 Agreement of Limited Partnership dated December 26, 1990 for Geodyne Energy Income Limited Partnership III-E filed as Exhibit 4.5 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.46 Certificate of Limited Partnership dated December 26, 1990 for Geodyne Energy Income Limited Partnership III-E filed as Exhibit 4.37 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.47 First Amendment to Certificate of Limited Partnership and First Amendment to Agreement of Limited Partnership dated February 24, 1993 for Geodyne Energy Income Limited Partnership III-E filed as Exhibit 4.12 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.48 Second Amendment to Agreement of Limited Partnership dated August 4, 1993 for Geodyne Energy Income Limited Partnership III-E filed as Exhibit 4.19 to Registrant's Annual Report on Form 10-K for the year ended December
31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.49 Third Amendment to Agreement of Limited Partnership dated August 31, 1995 for Geodyne Energy Income Limited Partnership III-E filed as Exhibit 4.26 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.50 Second Amendment to Certificate of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-E filed as Exhibit 4.41 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.51 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996 for the Geodyne Energy Income Limited Partnership III-E filed as Exhibit 4.33 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.52 Fifth Amendment to Agreement of Limited Partnership dated November 15, 2000 for the Geodyne Energy Income Limited Partnership III-E filed as Exhibit 4.40 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.53 Sixth Amendment to Agreement of Limited Partnership for Geodyne Energy Income Limited Partnership III-E dated November 6, 2002, filed as Exhibit 4.1 to Registrant's Quarterly Report on Form 10-Q with the SEC on November 14, 2002, and is hereby incorporated by reference.
4.54 Seventh Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-E dated August 18, 2004, filed as Exhibit 4.53 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2004, filed with the SEC on March 30, 2005, and is hereby incorporated by reference.
4.55 Eighth Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-E dated October 27, 2005 filed as Exhibit 4.55 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 29, 2006 and is hereby incorporated by reference.
4.56 Agreement of Limited Partnership dated March 7, 1991 for Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.6 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.57 Certificate of Limited Partnership dated March 7, 1991 for Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.45 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.58 First Amendment to Certificate of Limited Partnership and First Amendment to Agreement of Limited Partnership dated February 24, 1993 for Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.13 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.59 Second Amendment to Agreement of Limited Partnership dated August 4, 1993 for Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.20 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.60 Second Amendment to Certificate of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.48 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.61 Third Amendment to Agreement of Limited Partnership dated August 31, 1995 for Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.27 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.62 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996 for the Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.34 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.63 Fifth Amendment to Agreement of Limited Partnership dated February 5, 2001 for the Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.41 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.64 Sixth Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-F dated February 10, 2003, filed as Exhibit 4.53(a) to Registrant's Annual Report on Form 10-K for the year ended December 31, 2002, filed with the SEC on March 28, 2003, and is hereby incorporated by reference.
4.65 Seventh Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-F dated February 7, 2005, filed as Exhibit 4.60 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2004, filed with the SEC on March 30, 2004, and is hereby incorporated by reference.
4.66 Eighth Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-F dated October 27, 2005 filed as Exhibit 4.66 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 29, 2006 and is hereby incorporated by reference.
*23.1 Consent of Ryder Scott Company, L.P. for Geodyne Energy Income Limited Partnership III-A.
*23.2 Consent of Ryder Scott Company, L.P. for Geodyne Energy Income Limited Partnership III-B.
*23.3 Consent of Ryder Scott Company, L.P. for Geodyne Energy Income Limited Partnership III-C.
*23.4 Consent of Ryder Scott Company, L.P. for Geodyne Energy Income Limited Partnership III-D.
*23.5 Consent of Ryder Scott Company, L.P. for Geodyne Energy Income Limited Partnership III-E.
*23.6 Consent of Ryder Scott Company, L.P. for Geodyne Energy Income Limited Partnership III-F.
*31.1 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-A.
*31.2 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-A.
*31.3 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-B.
*31.4 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-B.
*31.5 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-C.
*31.6 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-C.
*31.7 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-D.
*31.8 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-D.
*31.9 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-E.
*31.10 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-E.
*31.11 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-F.
*31.12 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-F.
*32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy Income Limited Partnership III-A.
*32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy Income Limited Partnership III-B.
*32.3 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy Income Limited Partnership III-C.
*32.4 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy Income Limited Partnership III-D.
*32.5 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy Income Limited Partnership III-E.
*32.6 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy Income Limited Partnership III-F.
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 ENERGY INCOME LIMITED PARTNERSHIP III-A GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
By: GEODYNE RESOURCES, INC. General Partner
April 16, 2007
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 April 16, 2007 -------------------- Director (Principal Dennis R. Neill Executive Officer)
//s//Craig D. Loseke Chief Accounting April 16, 2007 -------------------- Officer (Principal Craig D. Loseke Accounting and Financial Officer)
//s//Judy K. Fox Secretary April 16, 2007 -------------------- Judy K. Fox
Item 8: Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A
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 Energy Income Limited Partnership III-A, an Oklahoma limited partnership, at December 31, 2006 and 2005, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, 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 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 7 to the financial statements, on February 5, 2007 the General Partner mailed a notice to the limited partners that the Partnership will terminate at the end of its current term, November 22, 2007, and that in connection with such termination the General Partner would liquidate all of the Partnership's assets.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma April 16, 2007
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A Balance Sheets December 31, 2006 and 2005
ASSETS ------ 2006 2005 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $1,443,396 $1,209,317 Accounts receivable: Oil and gas sales 571,125 831,772 Assets held for sale (Note 6) 32,307 - --------- --------- Total current assets $2,046,828 $2,041,089
NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 588,645 775,391
DEFERRED CHARGE 184,941 190,240 --------- --------- $2,820,414 $3,006,720 ========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) -------------------------------------------
CURRENT LIABILITIES: Accounts payable $ 151,192 $ 126,411 Gas imbalance payable 21,627 17,660 Asset retirement obligation - current (Note 1) 10,086 14,606 Asset retirement obligation - held for sale (Note 6) 3,870 - Liabilities - held for sale (Note 6) 4,257 - --------- --------- Total current liabilities $ 191,032 $ 158,677
LONG-TERM LIABILITIES: Accrued liability $ 31,040 $ 27,120 Asset retirement obligation (Note 1) 271,011 270,650 --------- --------- Total long-term liabilities $ 302,051 $ 297,770
PARTNERS' CAPITAL (DEFICIT): General Partner ($ 59,707) ($ 59,217) Limited Partners, issued and outstanding, 263,976 Units 2,387,038 2,609,490 --------- --------- Total Partners' capital $2,327,331 $2,550,273 --------- --------- $2,820,414 $3,006,720 ========= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A Statements of Operations For the Years Ended December 31, 2006, 2005, and 2004
2006 2005 2004 ---------- ---------- ---------- REVENUES: Oil and gas sales $4,081,376 $4,573,716 $4,019,225 Interest income 34,956 19,441 6,549 Gain on sale of oil and gas properties - - 1,399 --------- --------- --------- $4,116,332 $4,593,157 $4,027,173
COSTS AND EXPENSES: Lease operating $ 591,966 $ 676,015 $ 460,072 Production tax 358,022 402,151 320,142 Depreciation, depletion, and amortization of oil and gas properties 156,906 168,849 162,837 Impairment provision 5,577 - - General and administrative 316,885 319,762 313,621 --------- --------- --------- $1,429,356 $1,566,777 $1,256,672 --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS $2,686,976 $3,026,380 $2,770,501
DISCONTINUED OPERATIONS: Income from discontinued operations (Note 6) 113,515 129,491 61,486 Gain on disposal of discontinued operations (Note 6) 500,355 - - --------- --------- --------- NET INCOME $3,300,846 $3,155,871 $2,831,987 ========= ========= =========
GENERAL PARTNER: Net income from continuing operations $ 279,825 $ 315,890 $ 291,050 Net income from discontinued operations 61,473 13,371 6,387 --------- --------- --------- NET INCOME $ 341,298 $ 329,261 $ 297,437 ========= ========= =========
LIMITED PARTNERS: Net income from continuing operations $2,407,151 $2,710,490 $2,479,451 Net income from discontinued operations 552,397 116,120 55,099 --------- --------- --------- NET INCOME $2,959,548 $2,826,610 $2,534,550 ========= ========= =========
NET INCOME FROM CONTINUING OPERATIONS PER UNIT $ 9.12 $ 10.27 $ 9.39 NET INCOME FROM DISCONTINUED OPERATIONS PER UNIT 2.09 .44 .21 --------- --------- --------- NET INCOME PER UNIT $ 11.21 $ 10.71 $ 9.60 ========= ========= =========
UNITS OUTSTANDING 263,976 263,976 263,976 ========= ========= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A Statements of Partners' Capital (Deficit) For the Years Ended December 31, 2006, 2005, and 2004
Limited General Partners Partner Total ------------ ---------- ------------
Balance, Dec. 31, 2003 $2,213,330 ($104,097) $2,109,233 Net income 2,534,550 297,437 2,831,987 Cash distributions ( 2,337,000) ( 281,846) ( 2,618,846) --------- ------- ---------
Balance, Dec. 31, 2004 $2,410,880 ($ 88,506) $2,322,374 Net income 2,826,610 329,261 3,155,871 Cash distributions ( 2,628,000) ( 299,972) ( 2,927,972) --------- ------- ---------
Balance, Dec. 31, 2005 $2,609,490 ($ 59,217) $2,550,273 Net income 2,959,548 341,298 3,300,846 Cash distributions ( 3,182,000) ( 341,788) ( 3,523,788) --------- ------- ---------
Balance, Dec. 31, 2006 $2,387,038 ($ 59,707) $2,327,331 ========= ======= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A Statements of Cash Flows For the Years Ended December 31, 2006, 2005, and 2004
2006 2005 2004 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $3,300,846 $3,155,871 $2,831,987 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, and amortization of oil and gas properties 157,858 173,536 165,482 Impairment provision 5,577 - - Settlement of asset retirement obligation - - ( 165) Gain on sale of oil and gas properties - - ( 1,399) Gain on disposal of discounted operations (Note 6) ( 500,355) - - (Increase) decrease in accounts receivable - oil and gas sales 233,255 ( 242,943) ( 79,554) (Increase) decrease in deferred charge 5,291 ( 2,282) 7,691 Increase (decrease) in accounts payable 36,737 43,321 ( 2,055) Increase (decrease) in gas imbalance payable 3,967 ( 9,049) 4,420 Increase (decrease) in accrued liability 3,920 ( 1,598) ( 5,328) --------- --------- ---------
Net cash provided by operating activities $3,247,096 $3,116,856 $2,921,079 --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 6,652) ($ 18,286) ($ 68,482) Proceeds from sale of oil and gas properties - - 375 Proceeds from disposal of discontinued operations (Note 6) 517,423 - - --------- --------- ---------
Net cash provided (used) by investing activities $ 510,771 ($ 18,286) ($ 68,107) --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($3,523,788) ($2,927,972) ($2,618,846) --------- --------- ---------
Net cash used by financing activities ($3,523,788) ($2,927,972) ($2,618,846) --------- --------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 234,079 $ 170,598 $ 234,126
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,209,317 1,038,719 804,593 --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,443,396 $1,209,317 $1,038,719 ========= ========= =========
The accompanying notes are an integral part of these financial statements.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B
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 Energy Income Limited Partnership III-B, an Oklahoma limited partnership, at December 31, 2006 and 2005, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, 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 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 7 to the financial statements, on February 5, 2007 the General Partner mailed a notice to the limited partners that the Partnership will terminate at the end of its current term, December 31, 2007, and that in connection with such termination the General Partner would liquidate all of the Partnership's assets.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma April 16, 2007
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B Balance Sheets December 31, 2006 and 2005
ASSETS ------ 2006 2005 ---------- ---------- CURRENT ASSETS: Cash and cash equivalents $ 700,511 $ 604,086 Accounts receivable: Oil and gas sales 296,055 433,785 Assets held for sale (Note 6) 7,506 - --------- --------- Total current assets $1,004,072 $1,037,871
NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 349,851 414,293
DEFERRED CHARGE 122,514 125,644 --------- --------- $1,476,437 $1,577,808 ========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) -------------------------------------------
CURRENT LIABILITIES: Accounts payable $ 96,722 $ 76,295 Gas imbalance payable 12,356 9,707 Asset retirement obligation - current (Note 1) 5,552 9,255 Liabilities - held for sale (Note 6) 1,049 - --------- --------- Total current liabilities $ 115,679 $ 95,257
LONG-TERM LIABILITIES: Accrued liability $ 8,001 $ 9,664 Asset retirement obligation (Note 1) 181,827 175,358 --------- --------- Total long-term liabilities $ 189,828 $ 185,022
PARTNERS' CAPITAL (DEFICIT): General Partner ($ 41,841) ($ 35,041) Limited Partners, issued and outstanding, 138,336 Units 1,212,771 1,332,570 --------- --------- Total Partners' capital $1,170,930 $1,297,529 --------- --------- $1,476,437 $1,577,808 ========= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B Statements of Operations For the Years Ended December 31, 2006, 2005, and 2004
2006 2005 2004 ---------- ---------- ---------- REVENUES: Oil and gas sales $2,225,321 $2,444,229 $2,098,774 Interest income 17,044 9,610 3,114 --------- --------- --------- $2,242,365 $2,453,839 $2,101,888
COSTS AND EXPENSES: Lease operating $ 375,402 $ 415,564 $ 294,895 Production tax 206,732 228,310 173,617 Depreciation, depletion, and amortization of oil and gas properties 66,804 93,802 96,682 Impairment provision 3,798 - - General and administrative 179,681 182,306 175,518 --------- --------- --------- $ 832,417 $ 919,982 $ 740,712 --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS $1,409,948 $1,533,857 $1,361,176
DISCONTINUED OPERATIONS: Income from discontinued operations (Note 6) 26,472 31,841 12,547 Gain on disposal of discontinued operations (Note 6) 211,306 - - --------- --------- --------- NET INCOME $1,647,726 $1,565,698 $1,373,723 ========= ========= ========= GENERAL PARTNER: Net income from continuing operations $ 218,820 $ 241,770 $ 217,244 Net income from discontinued operations 35,705 5,017 2,044 --------- --------- --------- NET INCOME $ 254,525 $ 246,787 $ 219,288 ========= ========= ========= LIMITED PARTNERS: Net income from continuing operations $1,191,128 $1,292,087 $1,143,932 Net income from discontinued operations 202,073 26,824 10,503 --------- --------- --------- NET INCOME $1,393,201 $1,318,911 $1,154,435 ========= ========= =========
NET INCOME FROM CONTINUING OPERATIONS PER UNIT $ 8.61 $ 9.34 $ 8.27 NET INCOME FROM DISCONTINUED OPERATIONS PER UNIT 1.46 .19 .08 --------- --------- --------- NET INCOME PER UNIT $ 10.07 $ 9.53 $ 8.35 ========= ========= =========
UNITS OUTSTANDING 138,336 138,336 138,336 ========= ========= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B Statements of Partners' Capital (Deficit) For the Years Ended December 31, 2006, 2005, and 2004
Limited General Partners Partner Total ------------ ---------- ------------
Balance, Dec. 31, 2003 $1,178,224 ($ 68,928) $1,109,296 Net income 1,154,435 219,288 1,373,723 Cash distributions ( 1,055,000) ( 208,789) ( 1,263,789) --------- ------- ---------
Balance, Dec. 31, 2004 $1,277,659 ($ 58,429) $1,219,230 Net income 1,318,911 246,787 1,565,698 Cash distributions ( 1,264,000) ( 223,399) ( 1,487,399) --------- ------- ---------
Balance, Dec. 31, 2005 $1,332,570 ($ 35,041) $1,297,529 Net income 1,393,201 254,525 1,647,726 Cash distributions ( 1,513,000) ( 261,325) ( 1,774,325) --------- ------- ---------
Balance, Dec. 31, 2006 $1,212,771 ($ 41,841) $1,170,930 ========= ======= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B Statements of Cash Flows For the Years Ended December 31, 2006, 2005, and 2004
2006 2005 2004 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,647,726 $1,565,698 $1,373,723 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, and amortization of oil and gas properties 67,077 95,525 97,836 Impairment provision 3,798 - - Settlement of asset retirement obligation - - ( 701) Gain on disposal of discontinued operations (Note 6) ( 211,306) - - (Increase) decrease in accounts receivable - oil and gas sales 130,224 ( 133,231) ( 26,258) (Increase) decrease in deferred charge 3,130 ( 5,193) 7,966 Increase (decrease) in accounts payable 21,353 20,909 ( 2,383) Increase (decrease) in gas imbalance payable 2,649 ( 5,053) 3,049 Decrease in accrued liability ( 1,663) ( 164) ( 3,918) --------- --------- ---------
Net cash provided by operating activities $1,662,988 $1,538,491 $1,449,314 --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 10,458) ($ 3,255) ($ 46,547) Proceeds from disposal of discontinued operations (Note 6) 218,220 - - --------- --------- ---------
Net cash provided (used) by investing activities $ 207,762 ($ 3,255) ($ 46,547) --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($1,774,325) ($1,487,399) ($1,263,789) --------- --------- ---------
Net cash used by financing activities ($1,774,325) ($1,487,399) ($1,263,789) --------- --------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 96,425 $ 47,837 $ 138,978
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 604,086 556,249 417,271 --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 700,511 $ 604,086 $ 556,249 ========= ========= =========
The accompanying notes are an integral part of these financial statements.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
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 Energy Income Limited Partnership III-C, an Oklahoma limited partnership, at December 31, 2006 and 2005, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, 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 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 7 to the financial statements, on February 5, 2007 the General Partner mailed a notice to the limited partners that the Partnership will terminate at the end of its current term, December 31, 2007, and that in connection with such termination the General Partner would liquidate all of the Partnership's assets.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma April 16, 2007
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C Balance Sheets December 31, 2006 and 2005
ASSETS ------
2006 2005 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $1,129,134 $1,013,378 Accounts receivable: Oil and gas sales 901,653 884,091 Related party 4,262 - Assets held for sale (Note 6) 13,656 - --------- --------- Total current assets $2,048,705 $1,897,469
NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 1,634,985 1,544,711
DEFERRED CHARGE 56,549 62,603 --------- --------- $3,740,239 $3,504,783 ========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) -------------------------------------------
CURRENT LIABILITIES: Accounts payable $ 168,287 $ 263,892 Gas imbalance payable 27,417 76,928 Asset retirement obligation - current (Note 1) 24,559 19,679 Asset retirement obligation - held for sale 291 - Liabilities - held for sale (Note 6) 689 - --------- --------- Total current liabilities $ 221,243 $ 360,499
LONG-TERM LIABILITIES: Accrued liability $ 123,503 $ 124,681 Asset retirement obligation (Note 1) 365,663 355,551 --------- --------- Total long-term liabilities $ 489,166 $ 480,232
PARTNERS' CAPITAL (DEFICIT): General Partner ($ 90,026) ($ 105,515) Limited Partners, issued and outstanding, 244,536 Units 3,119,856 2,769,567 --------- --------- Total Partners' capital $3,029,830 $2,664,052 --------- --------- $3,740,239 $3,504,783 ========= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C Statements of Operations For the Years Ended December 31, 2006, 2005, and 2004
2006 2005 2004 ---------- ------------ ------------ REVENUES: Oil and gas sales $4,668,479 $4,168,389 $3,275,709 Interest income 29,261 17,355 5,295 Loss on sale of oil and gas properties - - ( 891) Other income 8,287 2,541 - --------- --------- --------- $4,706,027 $4,188,285 $3,280,113 COSTS AND EXPENSES: Lease operating $ 830,524 $ 675,992 $ 618,867 Production tax 311,167 280,329 229,970 Depreciation, depletion, and amortization of oil and gas properties 521,295 227,246 440,583 Impairment provision 77,435 - - General and administrative 294,899 297,767 291,575 --------- --------- --------- $2,035,320 $1,481,334 $1,580,995 --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS $2,670,707 $2,706,951 $1,699,118
DISCONTINUED OPERATIONS: Income from discontinued operations (Note 6) 55,455 56,474 46,184 Gain on disposal of discontinued operations (Note 6) 95,512 - - --------- --------- --------- NET INCOME $2,821,674 $2,763,425 $1,745,302 ========= ========= ========= GENERAL PARTNER: Net income from continuing operations $ 318,030 $ 289,411 $ 209,035 Net income from discontinued operations 15,355 5,812 4,762 --------- --------- --------- NET INCOME $ 333,385 $ 295,223 $ 213,797 ========= ========= =========
LIMITED PARTNERS: Net income from continuing operations $2,352,677 $2,417,540 $1,490,083 Net income from discontinued operations 135,612 50,662 41,422 --------- --------- --------- NET INCOME $2,488,289 $2,468,202 $1,531,505 ========= ========= =========
NET INCOME FROM CONTINUING OPERATIONS PER UNIT $ 9.62 $ 9.89 $ 6.09 NET INCOME FROM DISCONTINUED OPERATIONS PER UNIT .55 .21 .17 --------- --------- --------- NET INCOME PER UNIT $ 10.17 $ 10.10 $ 6.26 ========= ========= =========
UNITS OUTSTANDING 244,536 244,536 244,536 ========= ========= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C Statements of Partners' Capital (Deficit) For the Years Ended December 31, 2006, 2005, and 2004
Limited General Partners Partner Total ------------ ---------- ------------
Balance, Dec. 31, 2003 $2,542,860 ($153,480) $2,389,380 Net income 1,531,505 213,797 1,745,302 Cash distributions ( 1,729,000) ( 197,249) ( 1,926,249) --------- ------- ---------
Balance, Dec. 31, 2004 $2,345,365 ($136,932) $2,208,433 Net income 2,468,202 295,223 2,763,425 Cash distributions ( 2,044,000) ( 263,806) ( 2,307,806) --------- ------- ---------
Balance, Dec. 31, 2005 $2,769,567 ($105,515) $2,664,052 Net income 2,488,289 333,385 2,821,674 Cash distributions ( 2,138,000) ( 317,896) ( 2,455,896) --------- ------- ---------
Balance, Dec. 31, 2006 $3,119,856 ($ 90,026) $3,029,830 ========= ======= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C Statements of Cash Flows For the Years Ended December 31, 2006, 2005, and 2004
2006 2005 2004 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $2,821,674 $2,763,425 $1,745,302 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, and amortization of oil and gas properties 523,789 229,070 442,183 Impairment provision 77,806 - - Loss on sale of oil and gas properties - - 891 Gain on disposal of discontinued operations (Note 6) ( 95,512) - - Settlement of asset retirement obligation ( 109) - ( 131) Increase in accounts receivable - oil and gas sales ( 29,586) ( 301,082) ( 136,151) Increase in accounts receivable-related party ( 4,262) - - (Increase) decrease in deferred charge 6,044 ( 13,919) 4,533 Increase (decrease) in accounts payable ( 59,663) 118,382 15,711 Increase (decrease) in gas imbalance payable ( 49,511) ( 6,253) 44,994 Decrease in accrued liability ( 1,173) ( 45,851) ( 32,226) --------- --------- ---------
Net cash provided by operating activities $3,189,497 $2,743,772 $2,085,106 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 716,209) ($ 105,380) ($ 187,506) Proceeds from disposal of discontinued operations (Note 6) 98,364 - - --------- --------- ---------
Net cash used by investing activities ($ 617,845) ($ 105,380) ($ 187,506) --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($2,455,896) ($2,307,806) ($1,926,249) --------- --------- ---------
Net cash used by financing activities ($2,455,896) ($2,307,806) ($1,926,249) --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 115,756 $ 330,586 ($ 28,649)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,013,378 682,792 711,441 --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,129,134 $1,013,378 $ 682,792 ========= ========= =========
The accompanying notes are an integral part of these financial statements.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D
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 Energy Income Limited Partnership III-D, an Oklahoma limited partnership, at December 31, 2006 and 2005, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, 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 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 7 to the financial statements, on February 5, 2007 the General Partner mailed a notice to the limited partners that the Partnership will terminate at the end of its current term, December 31, 2007, and that in connection with such termination the General Partner would liquidate all of the Partnership's assets.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma April 16, 2007
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D Balance Sheets December 31, 2006 and 2005
ASSETS ------
2006 2005 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ 560,391 $ 547,247 Accounts receivable: Oil and gas sales 554,939 527,187 Related party 610 - Other 26,776 - Assets held for sale (Note 6) 2,524 - --------- --------- Total current assets $1,145,240 $1,074,434
NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 796,560 651,461
DEFERRED CHARGE 14,055 15,342 --------- --------- $1,955,855 $1,741,237 ========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) -------------------------------------------
CURRENT LIABILITIES: Accounts payable $ 114,417 $ 155,178 Gas imbalance payable 5,724 42,943 Asset retirement obligation - current (Note 1) 16,323 17,420 Asset retirement obligation - held for sale 31 - Liabilities - held for sale (Note 6) 298 - --------- --------- Total current liabilities $ 136,793 $ 215,541
LONG-TERM LIABILITIES: Accrued liability $ 154,492 $ 153,747 Asset retirement obligation (Note 1) 194,358 186,678 --------- --------- Total long-term liabilities $ 348,850 $ 340,425
PARTNERS' CAPITAL (DEFICIT): General Partner ($ 17,347) ($ 29,279) Limited Partners, issued and outstanding, 131,008 Units 1,487,559 1,214,550 --------- --------- Total Partners' capital $1,470,212 $1,185,271 --------- --------- $1,955,855 $1,741,237 ========= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D Statements of Operations For the Years Ended December 31, 2006, 2005, and 2004
2006 2005 2004 ---------- ---------- ------------ REVENUES: Oil and gas sales $2,784,819 $2,445,510 $1,882,916 Interest income 15,105 9,619 3,313 Loss on sale of oil and gas properties - - ( 128) Other income 1,187 364 - --------- --------- --------- $2,801,111 $2,455,493 $1,886,101 COSTS AND EXPENSES: Lease operating $ 546,210 $ 429,772 $ 361,371 Production tax 185,742 164,556 131,941 Depreciation, depletion, and amortization of oil and gas properties 374,569 118,272 95,808 Impairment provision 13,348 - - General and administrative 171,601 173,805 171,351 --------- --------- --------- $1,291,470 $ 886,405 $ 760,471 --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS $1,509,641 $1,569,088 $1,125,630
DISCONTINUED OPERATIONS: Income (loss) from discontinued operations (Note 6) 37,567 21,219 ( 85,767) Gain on disposal of discontinued operations (Note 6) 1,072 - 10,368 --------- --------- --------- NET INCOME $1,548,280 $1,590,307 $1,050,231 ========= ========= ========= GENERAL PARTNER: Net income from continuing operations $ 184,366 $ 166,592 $ 120,854 Net income (loss) from discontinued operations 3,905 2,137 ( 7,267) --------- --------- --------- NET INCOME $ 188,271 $ 168,729 $ 113,587 ========= ========= ========= LIMITED PARTNERS: Net income from continuing operations $1,325,275 $1,402,496 $1,004,776 Net income (loss) from discontinued operations 34,734 19,082 ( 68,132) --------- --------- --------- NET INCOME $1,360,009 $1,421,578 $ 936,644 ========= ========= =========
NET INCOME FROM CONTINUING OPERATIONS PER UNIT $ 10.12 $ 10.71 $ 7.67 NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS PER UNIT .27 .15 ( .52) --------- --------- --------- NET INCOME PER UNIT $ 10.39 $ 10.86 $ 7.15 ========= ========= =========
UNITS OUTSTANDING 131,008 131,008 131,008 ========= ========= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D Statements of Partners' Capital (Deficit) For the Years Ended December 31, 2006, 2005, and 2004
Limited General Partners Partner Total ------------ ---------- ------------
Balance, Dec. 31, 2003 $1,129,328 ($ 47,561) $1,081,767 Net income 936,644 113,587 1,050,231 Cash distributions ( 1,114,000) ( 121,184) ( 1,235,184) --------- ------- ---------
Balance, Dec. 31, 2004 $ 951,972 ($ 55,158) $ 896,814 Net income 1,421,578 168,729 1,590,307 Cash distributions ( 1,159,000) ( 142,850) ( 1,301,850) --------- ------- ---------
Balance, Dec. 31, 2005 $1,214,550 ($ 29,279) $1,185,271 Net income 1,360,009 188,271 1,548,280 Cash distributions ( 1,087,000) ( 176,339) ( 1,263,339) --------- ------- ---------
Balance, Dec. 31, 2006 $1,487,559 ($ 17,347) $1,470,212 ========= ======= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D Statements of Cash Flows For the Years Ended December 31, 2006, 2005, and 2004
2006 2005 2004 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,548,280 $1,590,307 $1,050,231 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, and amortization of oil and gas properties 374,933 118,445 98,838 Impairment provision 13,437 - - Loss on sale of oil and gas properties - - 128 Gain on disposal of discontinued operations (Note 6) ( 1,072) - ( 10,368) Settlement of asset retirement obligation ( 1,152) - ( 17) Increase in accounts receivable - oil and gas sales ( 30,048) ( 187,002) ( 719) Increase in accounts receivable-related party ( 610) - - Increase in accounts receivable-other ( 26,776) - - (Increase) decrease in deferred charge 1,287 ( 6,913) 1,523 Increase (decrease) in accounts payable ( 1,857) ( 16,403) 45,198 Increase (decrease) in gas imbalance payable ( 37,219) 1,336 36,418 Increase (decrease) in accrued liability 745 ( 37,938) ( 55,619) --------- --------- --------- Net cash provided by operating activities $1,839,948 $1,461,832 $1,165,613 --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 564,537) ($ 45,569) ($ 24,743) Proceeds from disposal of discontinued operations (Note 6) 1,072 - 88,586 --------- --------- ---------
Net cash provided (used) by investing activities ($ 563,465) ($ 45,569) $ 63,843 --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($1,263,339) ($1,301,850) ($1,235,184) --------- --------- ---------
Net cash used by financing activities ($1,263,339) ($1,301,850) ($1,235,184) --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 13,144 $ 114,413 ($ 5,728)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 547,247 432,834 438,562 --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 560,391 $ 547,247 $ 432,834 ========= ========= =========
The accompanying notes are an integral part of these financial statements.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E
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 Energy Income Limited Partnership III-E, an Oklahoma limited partnership, at December 31, 2006 and 2005, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, 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 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 7 to the financial statements, on February 5, 2007 the General Partner mailed a notice to the limited partners that the Partnership will terminate at the end of its current term, December 31, 2007, and that in connection with such termination the General Partner would liquidate all of the Partnership's assets.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma April 16, 2007
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E Balance Sheets December 31, 2006 and 2005
ASSETS ------
2006 2005 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ 981,324 $1,460,559 Accounts receivable: Oil and gas sales 743,001 1,272,925 Other 191,092 - Assets held for sale (Note 6) 40,781 - --------- --------- Total current assets $1,956,198 $2,733,484
NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 1,592,366 1,981,508
DEFERRED CHARGE 29,450 40,254 --------- --------- $3,578,014 $4,755,246 ========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) -------------------------------------------
CURRENT LIABILITIES: Accounts payable $ 318,209 $ 324,885 Accrued liability - other (Note 1) 105,000 - Gas imbalance payable 21,870 16,538 Asset retirement obligation - current (Note 1) 63,380 23,971 Asset retirement obligation - held for sale 31,202 - Liabilities - held for sale (Note 6) 33,812 - --------- --------- Total current liabilities $ 573,473 $ 365,394
LONG-TERM LIABILITIES: Accrued liability $ 157,310 $ 254,420 Asset retirement obligation (Note 1) 362,904 413,791 --------- --------- Total long-term liabilities $ 520,214 $ 668,211
PARTNERS' CAPITAL (DEFICIT): General Partner ($ 263,673) ($ 197,010) Limited Partners, issued and outstanding, 418,266 Units 2,748,000 3,918,651 --------- --------- Total Partners' capital $2,484,327 $3,721,641 --------- --------- $3,578,014 $4,755,246 ========= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E Statements of Operations For the Years Ended December 31, 2006, 2005, and 2004
2006 2005 2004 ---------- ---------- ------------ REVENUES: Oil and gas sales $4,171,717 $5,717,490 $4,403,251 Interest income 41,309 24,217 10,677 Other income 10,740 - - --------- --------- --------- $4,223,766 $5,741,707 $4,413,928
COSTS AND EXPENSES: Lease operating $1,101,862 $1,030,177 $ 920,005 Production tax 294,232 391,356 352,789 Depreciation, depletion, and amortization of oil and gas properties 243,785 319,317 190,924 Impairment provision 61,448 - - General and administrative 487,650 489,834 488,702 --------- --------- --------- $2,188,977 $2,230,684 $1,952,420 --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS $2,034,789 $3,511,023 $2,461,508
DISCONTINUED OPERATIONS: Income (loss) from discontinued operations (Note 6) 176,993 192,323 ( 549,606) Gain on disposal of discontinued operations (Note 6) 103,851 - 88,757 --------- --------- --------- NET INCOME $2,315,633 $3,703,346 $2,000,659 ========= ========= ========= GENERAL PARTNER: Net income from continuing operations $ 226,819 $ 377,419 $ 262,266 Net income (loss) from discontinued operations 44,465 21,053 ( 43,851) --------- --------- --------- NET INCOME $ 271,284 $ 398,472 $ 218,415 ========= ========= ========= LIMITED PARTNERS: Net income from continuing operations $1,807,970 $3,133,604 $2,199,242 Net income (loss) from discontinued operations 236,379 171,270 ( 416,998) --------- --------- --------- NET INCOME $2,044,349 $3,304,874 $1,782,244 ========= ========= =========
NET INCOME FROM CONTINUING OPERATIONS PER UNIT $ 4.32 $ 7.49 $ 5.26 NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS PER UNIT .57 .41 ( 1.00) --------- --------- --------- NET INCOME PER UNIT $ 4.89 $ 7.90 $ 4.26 ========= ========= =========
UNITS OUTSTANDING 418,266 418,266 418,266 ========= ========= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E Statements of Partners' Capital (Deficit) For the Years Ended December 31, 2006, 2005, and 2004
Limited General Partners Partner Total ------------ ---------- ------------
Balance, Dec. 31, 2003 $4,302,533 ($177,234) $4,125,299 Net income 1,782,244 218,415 2,000,659 Cash distributions ( 2,807,000) ( 357,239) ( 3,164,239) --------- ------- ---------
Balance, Dec. 31, 2004 $3,277,777 ($316,058) $2,961,719 Net income 3,304,874 398,472 3,703,346 Cash distributions ( 2,664,000) ( 279,424) ( 2,943,424) --------- ------- ---------
Balance, Dec. 31, 2005 $3,918,651 ($197,010) $3,721,641 Net income 2,044,349 271,284 2,315,633 Cash distributions ( 3,215,000) ( 337,947) ( 3,552,947) --------- ------- ---------
Balance, Dec. 31, 2006 $2,748,000 ($263,673) $2,484,327 ========= ======= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E Statements of Cash Flows For the Years Ended December 31, 2006, 2005, and 2004
2006 2005 2004 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $2,315,633 $3,703,346 $2,000,659 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, and amortization of oil and gas properties 263,444 339,544 215,745 Impairment provision 223,793 - - Gain on disposal of discontinued operations (Note 6) ( 103,851) - ( 88,757) Settlement of asset retirement obligation - ( 345) ( 319) (Increase) decrease in accounts receivable - oil and gas sales 491,664 ( 423,171) 237,935 Increase in accounts receivable - other ( 191,092) - - Decrease in deferred charge 8,312 8,724 718 Increase (decrease) in accounts payable 73,300 ( 500,913) 342,489 Increase in accrued liability - other (Note 1) 105,000 - - Increase in gas imbalance payable 5,332 10,895 2,907 Decrease in accrued liability ( 85,006) ( 47,174) ( 41,237) --------- --------- ---------
Net cash provided by operating activities $3,106,529 $3,090,906 $2,670,140 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 140,531) ($ 100,420) ($ 237,849) Proceeds from disposal of discontinued operations (Note 6) 107,714 - 632,221 --------- --------- ---------
Net cash provided (used) by investing activities ($ 32,817) ($ 100,420) $ 394,372 --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($3,552,947) ($2,943,424) ($3,164,239) --------- --------- ---------
Net cash used by financing activities ($3,552,947) ($2,943,424) ($3,164,239) --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ($ 479,235) $ 47,062 ($ 99,727)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,460,559 1,413,497 1,513,224 --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 981,324 $1,460,559 $1,413,497 ========= ========= =========
The accompanying notes are an integral part of these financial statements.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE PARTNERS
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F
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 Energy Income Limited Partnership III-F, an Oklahoma limited partnership, at December 31, 2006 and 2005, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, 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 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 7 to the financial statements, on February 5, 2007 the General Partner mailed a notice to the limited partners that the Partnership will terminate at the end of its current term, December 31, 2007, and that in connection with such termination the General Partner would liquidate all of the Partnership's assets.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma April 16, 2007
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F Balance Sheets December 31, 2006 and 2005
ASSETS ------ 2006 2005 ---------- ---------- CURRENT ASSETS: Cash and cash equivalents $ 697,184 $1,062,866 Accounts receivable: Oil and gas sales 452,134 797,469 Assets held for sale (Note 6) 205,453 - --------- --------- Total current assets $1,354,771 $1,860,335
NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 1,381,325 1,680,470
DEFERRED CHARGE 13,909 17,132 --------- --------- $2,750,005 $3,557,937 ========= =========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) -------------------------------------------
CURRENT LIABILITIES: Accounts payable $ 136,660 $ 176,398 Accrued liability - other (Note 1) 90,000 - Gas imbalance payable 18,329 13,857 Asset retirement obligation - current (Note 1) 11,729 1,948 Asset retirement obligation - held for sale 33,931 - Liabilities - held for sale (Note 6) 24,291 - --------- --------- Total current liabilities $ 314,940 $ 192,203
LONG-TERM LIABILITIES: Accrued liability $ 68,572 $ 84,584 Asset retirement obligation (Note 1) 243,724 276,256 --------- --------- Total long-term liabilities $ 312,296 $ 360,840
PARTNERS' CAPITAL (DEFICIT): General Partner ($ 126,790) ($ 126,897) Limited Partners, issued and outstanding, 221,484 Units 2,249,559 3,131,791 --------- --------- Total Partners' capital $2,122,769 $3,004,894 --------- --------- $2,750,005 $3,557,937 ========= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F Statements of Operations For the Years Ended December 31, 2006, 2005, and 2004
2006 2005 2004 ---------- ---------- ---------- REVENUES: Oil and gas sales $2,392,448 $3,289,188 $2,475,266 Interest income 27,194 15,044 3,841 Other income 9,018 - - --------- --------- --------- $2,428,660 $3,304,232 $2,479,107
COSTS AND EXPENSES: Lease operating $ 668,407 $ 532,795 $ 497,819 Production tax 155,397 198,937 148,744 Depreciation, depletion, and amortization of oil and gas properties 182,891 193,331 151,884 Impairment provision 55,288 - - General and administrative 270,274 273,110 266,912 --------- --------- --------- $1,332,257 $1,198,173 $1,065,359 --------- --------- --------- INCOME FROM CONTINUING OPERATIONS $1,096,403 $2,106,059 $1,413,748
DISCONTINUED OPERATIONS: Income from discontinued operations (Note 6) 477,135 458,357 376,474 Gain on disposal of discontinued operations (Note 6) 86,913 - - --------- --------- --------- NET INCOME $1,660,451 $2,564,416 $1,790,222 ========= ========= ========= GENERAL PARTNER: Net income from continuing operations $ 128,357 $ 112,284 $ 76,571 Net income from discontinued operations 58,326 23,496 19,218 --------- --------- --------- NET INCOME $ 186,683 $ 135,780 $ 95,789 ========= ========= ========= LIMITED PARTNERS: Net income from continuing operations $ 968,046 $1,993,775 $1,337,177 Net income from discontinued operations 505,722 434,861 357,256 --------- --------- --------- NET INCOME $1,473,768 $2,428,636 $1,694,433 ========= ========= =========
NET INCOME FROM CONTINUING OPERATIONS PER UNIT $ 4.37 $ 9.00 $ 6.04 NET INCOME FROM DISCONTINUED OPERATIONS PER UNIT 2.28 1.96 1.61 --------- --------- --------- NET INCOME PER UNIT $ 6.65 $ 10.96 $ 7.65 ========= ========= ========= UNITS OUTSTANDING 221,484 221,484 221,484 ========= ========= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F Statements of Partners' Capital (Deficit) For the Years Ended December 31, 2006, 2005, and 2004
Limited General Partners Partner Total ------------ ---------- ------------
Balance, Dec. 31, 2003 $2,374,722 ($156,356) $2,218,366 Net income 1,694,433 95,789 1,790,222 Cash distributions ( 1,286,000) ( 81,488) ( 1,367,488) --------- ------- ---------
Balance, Dec. 31, 2004 $2,783,155 ($142,055) $2,641,100 Net income 2,428,636 135,780 2,564,416 Cash distributions ( 2,080,000) ( 120,622) ( 2,200,622) --------- ------- ---------
Balance, Dec. 31, 2005 $3,131,791 ($126,897) $3,004,894 Net income 1,473,768 186,683 1,660,451 Cash distributions ( 2,356,000) ( 186,576) ( 2,542,576) --------- ------- ---------
Balance, Dec. 31, 2006 $2,249,559 ($126,790) $2,122,769 ========= ======= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F Statements of Cash Flows For the Years Ended December 31, 2006, 2005, and 2004
2006 2005 2004 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,660,451 $2,564,416 $1,790,222 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, and amortization of oil and gas properties 193,266 207,776 161,752 Impairment provision 66,259 - - Gain on disposal of discontinued operations (Note 6) ( 86,913) - - Settlement of asset retirement obligation ( 1,590) - - (Increase) decrease in accounts receivable - oil and gas sales 258,051 ( 249,464) ( 195,540) Decrease in deferred charge 3,223 4,815 290 Increase (decrease) in accounts payable ( 12,450) 84,991 ( 12,362) Increase in accrued liability - other (Note 1) 90,000 - - Increase in gas imbalance payable 4,472 9,136 2,426 Decrease in accrued liability ( 16,012) ( 21,293) ( 25,891) --------- --------- ---------
Net cash provided by operating activities $2,158,757 $2,600,377 $1,720,897 --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($ 72,314) ($ 33,349) ($ 180,521) Proceeds from sale of oil and gas properties - - 1,654 Proceeds from disposal of discontinued operations (Note 6) 90,451 - - --------- --------- ---------
Net cash provided (used) by investing activities $ 18,137 ($ 33,349) ($ 178,867) --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ($2,542,576) ($2,200,622) ($1,367,488) --------- --------- ---------
Net cash used by financing activities ($2,542,576) ($2,200,622) ($1,367,488) --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ($ 365,682) $ 366,406 $ 174,542
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,062,866 696,460 521,918 --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 697,184 $1,062,866 $ 696,460 ========= ========= =========
The accompanying notes are an integral part of these financial statements.
GEODYNE ENERGY INCOME PROGRAM III LIMITED PARTNERSHIPS Notes to Financial Statements For the Years Ended December 31, 2006, 2005, and 2004
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations
The Geodyne 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. (the "General Partner") is the general partner of each Partnership. Limited Partner capital contributions were invested in producing oil and gas properties. The Partnerships were activated on the following dates with the following Limited Partner capital contributions.
Limited Partner Date of Capital Partnership Activation Contributions ----------- ------------------ ---------------
III-A November 22, 1989 $26,397,600 III-B January 24, 1990 13,833,600 III-C February 27, 1990 24,453,600 III-D September 5, 1990 13,100,800 III-E December 26, 1990 41,826,600 III-F March 7, 1991 22,148,400
Pursuant to the terms of the partnership agreements for the Partnerships (the "Partnership Agreements") the Partnerships were scheduled to terminate on the dates indicated in the "Initial Termination Date" column of the following chart. However, the Partnership Agreements provide that the General Partner may extend the term of each Partnership for up to five periods of two years each. The General Partner has extended the term of the Partnerships for the fourth extension period. On February 5, 2007 the General Partner mailed a notice to the limited partners indicating that the Partnerships will terminate at the end of their current term as indicated in the following chart. See Note 7 for more information regarding the Partnership terminations. These audited financial statements are presented on a going concern basis.
Initial Extensions Current Partnership Termination Date Exercised Termination Date - ----------- ------------------ --------- ------------------ III-A November 22, 1999 4 November 22, 2007 III-B January 24, 2000 4 December 31, 2007 III-C February 28, 2000 4 December 31, 2007 III-D September 5, 2000 4 December 31, 2007 III-E December 26, 2000 4 December 31, 2007 III-F March 7, 2001 4 December 31, 2007
An affiliate of the General Partner owned the following Units at December 31, 2006:
Number of Percent of Partnership Units Owned Outstanding ----------- ----------- -----------
III-A 70,627 26.75% III-B 34,757 25.13% III-C 71,481 29.23% III-D 39,759 30.35% III-E 127,037 30.37% III-F 70,228 31.71%
The Partnerships' sole business is the development and production of oil and gas. Substantially all of the Partnerships' gas production is 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.
Basis of Presentation
These financial statements are presented on a going concern basis.
Allocation of Costs and Revenues
The terms of each Partnership's Limited Partnership Agreement (the "Partnership Agreement") allocate costs and income between the Limited Partners and the General Partner as follows:
Before Payout (1) After Payout(1) ------------------ ------------------ General Limited General Limited Partner Partners Partner Partners -------- -------- -------- -------- Costs(2) - ------------------------ Sales commissions, payment for organization and offering costs and management fee 1% 99% - - Property acquisition costs 1% 99% 1% 99% Identified development drilling 1% 99% 1% 99% Development drilling(2) 5% 95% 15% 85% General and administra- tive costs, direct administrative costs and operating costs(2) 5% 95% 15% 85%
Income(2) - ------------------------ 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 producing properties(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 Limited Partners have received distributions at an annual rate less than 12% of their subscriptions, the percentage of income and costs allocated to the General Partner will increase to only 10% and the Limited Partners will be allocated 90%. Thereafter, if the distribution to Limited Partners reaches an average annual rate of 12% the allocation will change to 15% to the General Partner and 85% to the Limited Partners.
The Partnerships' payout dates and current general partner/limited partner sharing ratio of costs and income are shown on the following chart:
Current Payout Costs and Income Partnership Occurred Sharing ----------- ------------- ---------------- III-A 2nd Qtr. 2000 10%/90% III-B 1st Qtr. 1998 15%/85% III-C 4th Qtr. 2001 10%/90% III-D 3rd Qtr. 2001 10%/90% III-E 3rd Qtr. 2001 10%/90% III-F 1st Qtr. 2006 10%/90%
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 Risks
Accrued oil and gas sales which are due from a variety of oil and gas purchasers subject the Partnerships to a concentration of credit risk. Some of these purchasers are discussed in Note 3 - Major Customers.
Oil and Gas Properties
The Partnerships follow the successful efforts method of accounting for their oil and gas properties. Under the successful efforts method, the Partnerships capitalize all property acquisition costs and development costs incurred in connection with the further development of oil and gas reserves. Property acquisition costs include costs incurred by the Partnerships or the General Partner to acquire producing properties, including related title insurance or examination costs, commissions, engineering, legal and accounting fees, and similar costs directly related to the acquisitions, plus an allocated portion of the General Partner's property screening costs. The acquisition cost to the Partnerships of properties acquired by the General Partner is adjusted to reflect the net cash results of operations, including interest incurred to finance the acquisition, for the period of time the properties are held by the General Partner.
Depletion of the costs of producing oil and gas properties, amortization of related intangible drilling and development costs, and depreciation of tangible lease and well equipment are computed on the units-of-production method. The Partnerships' calculation of depreciation, depletion, and amortization includes
estimated dismantlement and abandonment costs, net of estimated salvage values. The depreciation, depletion, and amortization rates, which include accretion of the asset retirement obligation, per equivalent barrel of oil produced during the years ended December 31, 2006, 2005, and 2004 were as follows:
Partnership 2006 2005(1) 2004(1) ----------- ----- ------- -------
III-A $1.83 $1.80 $1.48 III-B 1.52 1.91 1.72 III-C 4.60 2.43 4.46 III-D 5.26 2.11 1.68 III-E 2.30 2.48 1.41 III-F 3.05 2.66 1.99
(1) These amounts have been restated to reflect the sale of various oil and gas properties during 2006 and assets held for sale as of December 31, 2006 as discontinued operations. See Note 6 for more information about these discontinued operations.
When complete units of depreciable property are retired or sold, the asset cost, related accumulated depreciation, and remaining asset retirement obligation, are eliminated with any gain or loss reflected in income.
The Partnerships evaluate the recoverability of the carrying costs of their proved oil and gas properties for each oil and gas well. If the unamortized costs, net of salvage value, of oil and gas properties exceed the expected undiscounted future cash flows from such properties, the cost of the properties is written down to fair value, which is determined by using the discounted future cash flows from the properties. In the third quarter of 2006, natural gas prices declined significantly. Consequently, the partnerships incurred impairments utilizing the natural gas spot prices that existed on September 30, 2006. The impairments related to continuing operations recognized in the third quarter totaled approximately $6,000, $4,000, $77,000, $13,000, $61,000, and $55,000 for the III-A, III-B, III-C, III-D, III-E and III-F Partnerships, respectively. Once incurred, an impairment of oil and natural gas properties is not reversible.
Deferred Charge
Deferred Charge represents costs deferred for lease operating expenses incurred in connection with the Partnerships' underproduced gas imbalance positions. The rate used in calculating the deferred charge is the average of the annual production costs per Mcf. At December 31, 2006 and 2005, cumulative total gas sales volumes for underproduced wells were
less than the Partnerships' pro-rata share of total gas production from these wells by the following amounts:
2006 2005 ------------------ ------------------ Partnership Mcf Amount Mcf Amount ----------- ------- -------- ------- --------
III-A 211,417 $184,941 217,477 $190,240 III-B 108,144 122,514 110,907 125,644 III-C 83,559 56,549 92,496 62,603 III-D 11,416 14,055 12,461 15,342 III-E 14,941 29,450 20,422 40,254 III-F 12,590 13,909 15,507 17,132
Accrued Liability - Other
The Accrued Liability - Other at December 31, 2006 for the III-E and III-F Partnerships represents a charge accrued for a potential liability to the U.S. Minerals Management Service ("MMS"). On August 4, 1998 the MMS issued an Order for an affiliate of the General Partner to recalculate and pay additional royalties to the MMS for various Federal and Indian leases in several states. A number of these Federal and Indian royalty interests burden the interests of the Partnerships. The affiliate appealed the Order and on October 22, 2004 the Department of the Interior issued its decision which granted the appeal in part and denied the appeal in part. While the Department's decision did not approve the recalculation methodology originally ordered by the MMS, the decision still required the affiliate to recalculate and pay additional royalties but under a different recalculation methodology than sought by the MMS.
The affiliate paid additional royalties to the MMS on August 23, 2006 pursuant to the Department's decision. The MMS has informally indicated its disagreement with certain aspects of the recalculation. As of the date of these financial statements, the affiliate cannot determine the amount of additional royalties (and interest) which may be claimed by or ultimately owed to the MMS. While the affiliate maintains that no additional royalties are owed, the General Partner has accrued $105,000 and $90,000, respectively, for the III-E and III-F Partnerships, as reasonable estimates of amounts which may become ultimately owed to the MMS.
Accrued Liability
Accrued liability represents charges accrued for lease operating expenses incurred in connection with the Partnerships' overproduced gas imbalance positions. The rate used in calculating the accrued liability is the average of the annual production costs per Mcf. At December 31, 2006 and 2005,
cumulative total gas sales volumes for overproduced wells exceeded the Partnerships' pro-rata share of total gas production from these wells by the following amounts:
2006 2005 ------------------ ------------------ Partnership Mcf Amount Mcf Amount ----------- ------- -------- ------- --------
III-A 33,537 $ 31,040 31,198 $ 27,120 III-B 7,234 8,001 8,738 9,664 III-C 202,862 123,503 204,788 124,681 III-D 151,177 154,492 150,673 153,747 III-E 79,808 157,310 129,075 254,420 III-F 62,068 68,572 76,561 84,584
Oil and Gas Sales and Gas Imbalance Payable
The Partnerships' oil and condensate production is sold, title passed, and revenue recognized at or near the Partnerships' wells under short-term purchase contracts at prevailing prices in accordance with arrangements which are customary in the oil and gas industry. Sales of gas applicable to the Partnerships' interest in producing oil and gas leases are recorded as revenue when the gas is metered and title transferred pursuant to the gas sales contracts covering the Partnerships' interest in gas reserves. During such times as a Partnership's sales of gas exceed its pro rata ownership in a well, such sales are recorded as revenue unless total sales from the well have exceeded the Partnership's share of estimated total gas reserves underlying the property, at which time such excess is recorded as a liability. The rates per Mcf used to calculate this liability are based on the average gas prices for which the Partnerships are currently settling this liability. At December 31, 2006 and 2005 total sales exceeded the Partnerships' share of estimated total gas reserves as follows:
2006 2005 ----------------- ----------------- Partnership Mcf Amount Mcf Amount ----------- ------ ------- ------ -------
III-A 14,418 $21,627 11,773 $17,660 III-B 8,237 12,356 6,471 9,707 III-C 18,278 27,417 52,079 76,928 III-D 3,816 5,724 28,742 42,943 III-E 14,580 21,870 11,025 16,538 III-F 12,219 18,329 9,238 13,857
These amounts were recorded as gas imbalance payables in accordance with the sales method. These gas imbalance payables will be settled by either gas production by the underproduced party in excess of the current estimates of total gas reserves
for the well or by a negotiated or contractual payment to the underproduced party.
The Partnerships have not entered into any hedging or derivative contracts in connection with their production and sale 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, the deferred charge, the gas imbalance payable, the asset retirement obligations, accrued liability-other, and the accrued liability all involve estimates which 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.
Legal Contingency
A class action lawsuit styled Robert W. Scott, individually and as Managing Member of R.W. Scott Investments, LLC v. Samson Resources Company, Case No. C-01-385, was filed in the District Court of Sweetwater County, Wyoming on June 29, 2001. Samson Resources Company ("Samson") is an affiliate of the General Partner and operates certain wells in which the Partnerships own interests. The lawsuit alleges that Samson deducted from its payments to royalty and overriding royalty owners certain charges which were improper under the Wyoming royalty payment statutes and also alleges that Samson's check stubs did not fully comply with the Wyoming Royalty Payment Act. A number of these royalty and overriding royalty payments burden the interests of the III-A, III-B, III-E, and III-F Partnerships. Samson and the plaintiffs have reached agreement to settle all of the plaintiffs' remaining claims in this lawsuit, and Samson expects a formal settlement agreement to be executed during April 2007. The settlement calls for an additional royalty payment of $1,000,000, and is subject to Court approval. The Plaintiffs' counsel, subject to Court approval, is responsible for determining the allocation of the $1,000,000 among the various class members after deduction of litigation costs and attorneys' fees.
The method of allocation selected by the Plantiffs' counsel and approved by the Court will determine the allocation of the settlement amount among Samson's Wyoming gas wells. This allocation is necessary in order to determine the portion of the settlement for which each Partnership is responsible. Consequently, until the allocation among the class members is received from the Plantiffs' counsel and approved by the Court, the General Partner cannot determine the portion of the settlement for which each Partnership will be responsible. Therefore, there have been no amounts accrued as of December 31, 2006.
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
The Partnerships' wells must be properly plugged and abandoned after their oil and gas reserves are exhausted. FAS No. 143 requires the estimated plugging and abandonment obligations to be recognized in the period in which they are incurred (i.e. when the well is drilled or acquired) if a reasonable estimate of fair value can be made and to be capitalized as part of the carrying amount of the well. Estimated abandonment dates will be revised in the future based on changes to related economic lives, which vary with product prices and production costs. Estimated plugging costs may also be adjusted to reflect changing industry experience. During the year ended December 31, 2005, the Partnerships asset retirement obligations were revised upward due to an increase in both the labor and rig costs associated with plugging wells. Cash flows would not be affected until wells are actually plugged and abandoned. The asset retirement obligation is adjusted upwards each quarter in order to recognize accretion of the time-related discount factor.
The components of the change in asset retirement obligations for the years ended December 31, 2006 and 2005 are as shown below.
III-A Partnership -----------------
2006 2005 ---------- -------- Total Asset Retirement Obligation, January 1 $285,256 $114,955 Additions 262 - Revisions - 157,334 Settlements and disposals ( 14,158) - Accretion expense 13,607 12,967 Discontinued operations ( 3,870) - ------- ------- Total Asset Retirement Obligation, December 31 $281,097 $285,256 ======= ======= Asset Retirement Obligation - Current $ 10,086 $ 14,606 Asset Retirement Obligation - Long-Term 271,011 270,650
III-B Partnership -----------------
2006 2005 ---------- -------- Total Asset Retirement Obligation, January 1 $184,613 $ 79,865 Additions 111 - Revisions - 96,512 Settlements and disposals ( 5,974) - Accretion expense 8,629 8,236 ------- ------- Total Asset Retirement Obligation, December 31 $187,379 $184,613 ======= ======= Asset Retirement Obligation - Current $ 5,552 $ 9,255 Asset Retirement Obligation - Long-Term 181,827 175,358
III-C Partnership -----------------
2006 2005 ---------- -------- Total Asset Retirement Obligation, January 1 $375,230 $204,672 Additions 455 1,809 Revisions - 152,220 Settlements and disposals ( 2,596) - Accretion expense 17,424 16,529 Discontinued operations ( 291) - ------- ------- Total Asset Retirement Obligation, December 31 $390,222 $375,230 ======= ======= Asset Retirement Obligation - Current $ 24,559 $ 19,679 Asset Retirement Obligation - Long-Term 365,663 355,551
III-D Partnership -----------------
2006 2005 ---------- ---------- Total Asset Retirement Obligation, January 1 $204,098 $109,182 Additions 60 592 Revisions - 85,391 Settlements and disposals ( 2,732) - Accretion expense 9,286 8,933 Discontinued operations ( 31) - ------- ------- Total Asset Retirement Obligation, December 31 $210,681 $204,098 ======= ======= Asset Retirement Obligation - Current $ 16,323 $ 17,420 Asset Retirement Obligation - Long-Term 194,358 186,678
III-E Partnership -----------------
2006 2005 ---------- ---------- Total Asset Retirement Obligation, January 1 $437,762 $217,175 Additions - 750 Revisions - 205,703 Settlements and disposals ( 416) ( 5,091) Accretion expense 20,140 19,225 Discontinued operations ( 31,202) - ------- ------- Total Asset Retirement Obligation, December 31 $426,284 $437,762 ======= ======= Asset Retirement Obligation - Current $ 63,380 $ 23,971 Asset Retirement Obligation - Long-Term 362,904 413,791
III-F Partnership -----------------
2006 2005 ---------- -------- Total Asset Retirement Obligation, January 1 $278,204 $150,199 Settlements and disposals ( 2,559) - Revisions - 114,910 Accretion expense 13,739 13,095 Discontinued operations ( 33,931) - ------- ------- Total Asset Retirement Obligation, December 31 $255,453 $278,204 ======= ======= Asset Retirement Obligation - Current $ 11,729 $ 1,948 Asset Retirement Obligation - Long-Term 243,724 276,256
New Accounting Pronouncement
In September 2006, the FASB issued FAS No. 157, "Fair Value Measurements" (FAS No. 157). FAS No. 157 establishes a common definition for fair value to be applied to US GAAP guidance requiring use of fair value, establishes a framework for measuring fair value, and expands the disclosure about such fair value measurements. FAS No 157 is effective for fiscal years
beginning after November 5, 2007. The Partnerships are currently assessing the impact of FAS No. 157 on their results of operations, financial condition and cash flows.
Discontinued Operations
As further discussed in Note 6, the Partnerships sold their interests in a number of producing properties to independent third parties at the Oil and Gas Clearinghouse auction in Houston, Texas on December 13, 2006. Additional properties will be sold at auction in 2007. The properties sold in the December auction, those scheduled to be sold in 2007 auctions, and the sale of the Jay Field represent a disposal of a component under Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (FAS 144). Accordingly, current year results of these properties have been classified as discontinued, and prior periods have been restated. Once properties are classified as assets held for sale, they no longer accrue any depreciation, depletion, or amortization expense.
Reclassification
Certain prior year balances have been reclassified to conform with current year presentation.
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 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 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 the expense limitations imposed by the Partnership Agreement. The following is a summary of payments made to the General Partner or its affiliates by the Partnerships for general and administrative overhead costs for the years ended December 31, 2006, 2005, and 2004:
Partnership 2006 2005 2004 ----------- -------- -------- --------
III-A $277,872 $277,872 $277,872 III-B 145,620 145,620 145,620 III-C 257,412 257,412 257,412 III-D 137,904 137,904 137,904 III-E 440,280 440,280 440,280 III-F 233,136 233,136 233,136
Affiliates of the Partnerships serve as operator of some of the Partnerships' wells. The General Partner contracts 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 paid by the Partnerships to the affiliates the year ended December 31, 2006 is approximately $14,000, $4,000, $116,000, $72,000, $104,000, and $49,000, respectively, for the III-A, III-B, III-C, III-D, III-E and III-F Partnerships.
3. MAJOR CUSTOMERS
The following table sets forth purchasers who individually accounted for ten percent or more of each Partnership's combined oil and gas sales during 2006, 2005, and 2004:
Partnership Purchaser Percentage ----------- ------------------------ ----------------------- 2006 2005 2004 ----- ----- -----
III-A ConocoPhillips Company ("ConocoPhillips") 34.6% 29.7% - Gulfterra Central Point Allocation ("Gulfterra") 19.7% 23.2% 12.2% Eaglwing Trading, Inc. ("Eaglwing") - - 26.9%
III-B ConocoPhillips 42.7% 37.6% - Gulfterra 17.2% 20.8% 11.0% Eaglwing - - 33.8%
III-C Duke Energy Field Services, Inc. ("Duke") 15.3% 16.9% 18.3% NGPL Allocation 11.0% - - ONEOK Texas Energy Resources ("ONEOK") - 19.1% 13.4% Cinergy Marketing Company ("Cinergy") - 10.4% 14.5% Enogex Services Corporation - 10.3% 11.5% ONEOK Field Services Company ("ONEOK FSC") - - 13.3%
III-D NGPL Allocation 15.8% - - Eaglwing 12.6% - 16.2% Duke 12.2% 13.8% 14.1% Enbridge US Inc.-Texas 10.8% - - Eagle Rock Field Services, LP 10.1% - - ONEOK - 28.3% 18.0% Cinergy - 14.9% 19.1% ONEOK FSC - - 10.8%
III-E Duke 20.3% 18.2% 15.1% Sempra Energy Trading Corp. ("Sempra") 16.2% 16.2% 11.6% Red Desert Central Point Allocation ("Red Desert") 14.4% 17.5% - Hunt Crude Oil Supply Company 13.8% 13.9% 10.4% Kinder Morgan, Inc. 10.1% - - Eaglwing - - 24.4% Mountain Gas Resources, Inc. ("Mountain") - - 13.5%
III-F Sempra 19.9% 20.4% 19.8% Eaglwing 18.8% 17.0% 18.4% Red Desert 17.7% 21.9% - Duke 15.4% 14.1% 14.7% Mountain - - 23.1%
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 the Partnerships' pipeline transporters, the Partnerships may encounter difficulty in marketing their gas and in maintaining historic sales levels. Alternative purchasers or transporters may not be readily available.
4. SUPPLEMENTAL OIL AND GAS INFORMATION
The following supplemental information regarding the oil and gas activities of the Partnerships is presented pursuant to the disclosure requirements promulgated by the SEC.
Capitalized Costs
Capitalized costs and accumulated depreciation, depletion, amortization, and valuation allowance at December 31, 2006 and 2005 were as follows:
III-A Partnership -----------------
2006 2005 ------------- -------------
Proved properties $15,158,202 $15,679,530
Less accumulated depreciation, depletion, amortization, and valuation allowance ( 14,569,557) ( 14,904,139) ---------- ---------- Net oil and gas properties $ 588,645 $ 775,391 ========== ==========
III-B Partnership -----------------
2006 2005 ------------- ------------- Proved properties $ 9,202,445 $ 9,378,899
Less accumulated depreciation, depletion, amortization, and valuation allowance ( 8,852,594) ( 8,964,606) ---------- ---------- Net oil and gas properties $ 349,851 $ 414,293 ========== ==========
III-C Partnership -----------------
2006 2005 ------------- ------------- Proved properties $18,429,188 $17,887,094
Less accumulated depreciation, depletion, amortization, and valuation allowance ( 16,794,203) ( 16,342,383) ---------- ----------
Net oil and gas properties $ 1,634,985 $ 1,544,711 ========== ==========
III-D Partnership -----------------
2006 2005 ------------- ------------- Proved properties $ 9,904,907 $ 9,388,350
Less accumulated depreciation, depletion, amortization, and valuation allowance ( 9,108,347) ( 8,736,889) ---------- ----------
Net oil and gas properties $ 796,560 $ 651,461 ========== ==========
III-E Partnership -----------------
2006 2005 ------------- ------------- Proved properties $20,617,856 $21,182,856
Less accumulated depreciation, depletion, amortization, and valuation allowance ( 19,025,490) ( 19,201,348) ---------- ----------
Net oil and gas properties $ 1,592,366 $ 1,981,508 ========== ==========
III-F Partnership -----------------
2006 2005 ------------- ------------- Proved properties $12,842,078 $14,020,664
Less accumulated depreciation, depletion, amortization, and valuation allowance ( 11,460,753) ( 12,340,194) ---------- ----------
Net oil and gas properties $ 1,381,325 $ 1,680,470 ========== ==========
Costs Incurred
The Partnerships incurred no costs in connection with oil and gas acquisition or exploration activities during the years ended December 31, 2006, 2005, and 2004. Costs incurred by the Partnerships in connection with oil and gas property development activities for the years ended December 31, 2006, 2005, and 2004 were as follows:
Partnership 2006 2005(1) 2004 ----------- -------- -------- --------
III-A $ - $ 16,822 $ 78,142 III-B 10,581 2,903 52,376 III-C 680,951 127,299 217,479 III-D 525,931 85,828 27,306 III-E 82,263 158,067 245,429 III-F 69,317 32,310 188,433
---------------- (1) Excludes the estimated asset retirement costs for the III-A, III-B, III-C, III-D, III-E, and III-F Partnerships of approximately $157,000, $97,000, $152,000, $85,000, $206,000, and $115,000, respectively, recorded as a revision in FAS No. 143 during 2005 due to an increase in both the labor and rig costs associated with plugging wells.
Quantities of Proved Oil and Gas Reserves - Unaudited
The following tables summarize changes in net quantities of the Partnerships' proved reserves, all of which are located in the United States of America, for the periods indicated. The proved reserves at December 31, 2006, 2005, and 2004 were estimated by petroleum engineers employed by affiliates of the Partnerships. In addition, reserve information for the top 80% of each Partnership's reserve base (based on volumes) has been reviewed by Ryder Scott Company, L.P. ("Ryder Scott"), an independent petroleum engineering firm. Ryder Scott has stated to the General Partner their opinion that (i) the estimates of reserves for the properties which they reviewed were prepared in accordance with generally accepted procedures for the estimation of reserves, (ii) they found no bias in the utilization and analysis of data, and (iii) the cash flow projections provided by Samson of gross and net reserves and associated revenues and costs based on constant pricing in general appear reasonable. 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.
In general, the Partnerships experienced downward revisions in gas reserves at December 31, 2006 as compared to December 31, 2005 due to the decrease in the gas prices used to estimate reserves. The III-A, III-C, and III-D Partnerships had an increase in gas reserves due to revised forecasts on several properties based on actual production experience. The III-F Partnership had an increase in gas reserves on one material property, which is discussed below.
Following is a description of those oil and gas properties for which revisions in the continuing operations estimated proved reserves as of December 31, 2006 as compared to December 31, 2005 were significant to the Partnerships:
The III-A and III-B Partnerships' estimated proved oil reserves increased approximately 26,000 barrels and 17,000 barrels, respectively, in the Amoco Fee #3 due to a revised forecast in reserves based on actual production experience.
In addition, the III-B Partnership's estimated proved oil reserves increased approximately 7,000 barrels in the F. H. Gray Unit D due to a revised forecast in reserves based on actual production experience.
The III-E Partnership's estimated proved oil reserves decreased approximately 19,000 barrels in the Womack Hill Field Unit due to a revised forecast in reserves based on actual production experience and an increase in monthly lease operating expenses.
The III-F Partnership's estimated proved gas reserves decreased approximately 110,000 Mcf and 49,000 Mcf on the Trail Unit and Gray #1-9, respectively, due to a steeper decline rate resulting in a shorter reserve life and an increase in monthly lease operating expenses.
Following is a description of those oil and gas properties for which revisions in the discontinued operations estimated proved reserves as of December 31, 2006 as compared to December 31, 2005 were significant to the Partnerships:
The III-E Partnership's estimated proved gas reserves decreased approximately 56,000 Mcf in the Jo Neal #1 due to a revised forecast in reserves based on actual production experience and an increase in monthly lease operating expenses.
The III-F Partnership's estimated proved gas reserves increased approximately 23,000 Mcf in the Stutes SU T (Breaux #2) due to a revised forecast in
reserves based on actual production experience and a lower decline rate resulting in a longer reserve life.
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5. QUARTERLY FINANCIAL DATA (Unaudited)
Summarized unaudited quarterly financial data for 2006 and 2005 are as follows:
III-A Partnership -----------------
------------------------------------------------------ First Second Third Fourth Quarter(2) Quarter(2) Quarter(2) Quarter ---------- ---------- ---------- ----------
Total Revenues $1,090,874 $1,011,994 $1,055,647 $ 957,817 Gross Profit(1) 819,583 737,509 768,464 678,305 Income from continuing operations 722,103 664,114 695,992 604,767 Income from discontinued operations 21,975 28,600 30,548 532,747 Net Income 744,078 692,714 726,540 1,137,514 Limited Partners' Net Income per Unit 2.53 2.35 2.46 3.87
------------------------------------------------------ First Second Third Fourth Quarter(2) Quarter(2) Quarter(2) Quarter(2) --------- ----------- ---------- ----------
Total Revenues $ 990,208 $1,104,544 $1,170,643 $1,327,762 Gross Profit(1) 615,275 875,355 823,718 1,031,794 Income from continuing operations 520,311 801,932 749,498 954,639 Income from discontinued operations 35,965 28,363 31,505 33,658 Net Income 556,276 830,295 781,003 988,297 Limited Partners' Net Income per Unit 1.89 2.83 2.64 3.35
- ------------ (1) Total revenues less oil and gas production expenses and depreciation, depletion and amortization expenses, and impairment provision. (2) Quarterly and prior year amounts have been restated to reflect the sale of various oil and gas properties during 2006 and assets held for sale as of December 31, 2006 as discontinued operations, as described in Note 6 to the financial statements of the Partnership.
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III-B Partnership -----------------
------------------------------------------------------ First Second Third Fourth Quarter(2) Quarter(2) Quarter(2) Quarter ---------- ---------- ---------- ---------- Total Revenues $588,150 $557,770 $581,937 $514,508 Gross Profit(1) 419,917 386,779 431,638 351,295 Income from continuing operations 357,421 347,801 393,149 311,577 Income from discontinued operations 3,913 6,994 7,619 219,252 Net Income 361,334 354,795 400,768 530,829 Limited Partners' Net Income per Unit 2.21 2.15 2.45 3.26
------------------------------------------------------ First Second Third Fourth Quarter(2) Quarter(2) Quarter(2) Quarter(2) ---------- ---------- ---------- ----------
Total Revenues $514,344 $598,059 $630,024 $711,412 Gross Profit(1) 296,108 469,843 398,892 551,320 Income from continuing operations 235,858 430,720 358,895 508,384 Income from discontinued operations 9,267 6,953 7,231 8,390 Net Income 245,125 437,673 366,126 516,774 Limited Partners' Net Income per Unit 1.51 2.67 2.20 3.15
- ------------ (1) Total revenues less oil and gas production expenses and depreciation, depletion and amortization expenses, and impairment provision. (2) Quarterly and prior year amounts have been restated to reflect the sale of various oil and gas properties during 2006 and assets held for sale as of December 31, 2006 as discontinued operations, as described in Note 6 to the financial statements of the Partnership.
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III-C Partnership -----------------
------------------------------------------------------ First Second Third Fourth Quarter(2) Quarter(2) Quarter(2) Quarter ---------- ---------- ---------- ----------
Total Revenues $1,226,199 $992,287 $1,199,818 $1,287,723 Gross Profit(1) 899,855 662,859 804,225 598,667 Income from continuing operations 807,863 594,794 737,011 531,039 Income from discontinued operations 10,431 14,458 13,556 112,522 Net Income 818,294 609,252 750,567 643,561 Limited Partners' Net Income per Unit 3.00 2.21 2.71 2.25
------------------------------------------------------ First Second Third Fourth Quarter(2) Quarter(2) Quarter(2) Quarter(2) ---------- ---------- ---------- ----------
Total Revenues $ 943,164 $974,640 $1,110,926 $1,159,555 Gross Profit(1) 672,877 781,920 767,357 782,564 Income from continuing operations 583,359 713,807 699,081 710,704 Income from discontinued operations 12,604 10,821 14,963 18,086 Net Income 595,963 724,628 714,044 728,790 Limited Partners' Net Income per Unit 2.18 2.65 2.59 2.68
- ------------ (1) Total revenues less oil and gas production expenses and depreciation, depletion and amortization expenses, and impairment provision. (2) Quarterly and prior year amounts have been restated to reflect the sale of various oil and gas properties during 2006 and assets held for sale as of December 31, 2006 as discontinued operations, as described in Note 6 to the financial statements of the Partnership.
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III-D Partnership -----------------
------------------------------------------------------ First Second Third Fourth Quarter(2) Quarter(2) Quarter(2) Quarter ---------- ---------- ---------- ----------
Total Revenues $715,669 $587,490 $607,936 $890,016 Gross Profit(1) 514,633 411,878 402,444 352,287 Income from continuing operations 454,257 374,238 365,940 315,206 Income from discontinued operations 2,921 2,099 3,992 29,627 Net Income 457,178 376,337 369,932 344,833 Limited Partners' Net Income per Unit 3.12 2.56 2.51 2.20
------------------------------------------------------ First Second Third Fourth Quarter(2) Quarter(2) Quarter(2) Quarter(2) ---------- ---------- ---------- ----------
Total Revenues $530,151 $553,012 $644,859 $727,471 Gross Profit(1) 389,060 441,363 466,078 446,392 Income from continuing operations 330,914 404,006 428,713 405,455 Income from discontinued operations 5,887 5,916 5,269 4,147 Net Income 336,801 409,922 433,982 409,602 Limited Partners' Net Income per Unit 2.30 2.80 2.97 2.79
- ------------ (1) Total revenues less oil and gas production expenses and depreciation, depletion and amortization expenses, and impairment provision. (2) Quarterly and prior year amounts have been restated to reflect the sale of various oil and gas properties during 2006 and assets held for sale as of December 31, 2006 as discontinued operations, as described in Note 6 to the financial statements of the Partnership.
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III-E Partnership -----------------
------------------------------------------------------ First Second Third Fourth Quarter(2) Quarter(2) Quarter(2) Quarter ---------- ---------- ------------ ----------
Total Revenues $1,260,924 $1,027,182 $1,018,660 $ 917,000 Gross Profit(1) 903,255 749,591 552,915 316,678 Income from continuing operations 762,887 631,446 438,712 201,744 Income (loss)from discontinued operations 32,968 75,896 ( 130,949) 302,929 Net Income 795,855 707,342 307,763 504,673 Limited Partners' Net Income per Unit 1.70 1.51 0.60 1.08
------------------------------------------------------ First Second Third Fourth Quarter(2) Quarter(2) Quarter(2) Quarter(2) ---------- ---------- ------------ ----------
Total Revenues $1,131,630 $1,287,386 $1,466,570 $1,856,121 Gross Profit(1) 753,051 955,691 1,010,430 1,281,685 Income from continuing operations 615,533 838,665 894,317 1,162,508 Income from discontinued operations 65,428 54,347 8,236 64,312 Net Income 680,961 893,012 902,553 1,226,820 Limited Partners' Net Income per Unit 1.46 1.91 1.91 2.62
- ------------ (1) Total revenues less oil and gas production expenses and depreciation, depletion and amortization expenses, and impairment provision. (2) Quarterly and prior year amounts have been restated to reflect the sale of various oil and gas properties during 2006 and assets held for sale as of December 31, 2006 as discontinued operations, as described in Note 6 to the financial statements of the Partnership.
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III-F Partnership -----------------
------------------------------------------------------ First Second Third Fourth Quarter(2) Quarter(2) Quarter(2) Quarter ---------- ---------- ---------- ---------
Total Revenues $698,406 $586,136 $617,650 $526,468 Gross Profit(1) 465,997 388,185 312,810 199,685 Income from continuing operations 380,430 326,156 251,836 137,981 Income from discontinued operations 149,945 104,281 123,085 186,737 Net Income 530,375 430,437 374,921 324,718 Limited Partners' Net Income per Unit 2.14 1.73 1.47 1.31
------------------------------------------------------ First Second Third Fourth Quarter(2) Quarter(2) Quarter(2) Quarter(2) ---------- ---------- ---------- ----------
Total Revenues $667,365 $697,199 $857,349 $1,082,319 Gross Profit(1) 447,452 524,142 624,204 783,371 Income from continuing Operations 364,309 462,018 561,938 717,794 Income from discontinued operations 130,084 87,096 137,128 104,049 Net Income 494,393 549,114 699,066 821,843 Limited Partners' Net Income per Unit 2.12 2.34 2.99 3.51
- ------------ (1) Total revenues less oil and gas production expenses and depreciation, depletion and amortization expenses, and impairment provision. (2) Quarterly and prior year amounts have been restated to reflect the sale of various oil and gas properties during 2006 and assets held for sale as of December 31, 2006 as discontinued operations, as described in Note 6 to the financial statements of the Partnership.
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6. DISCONTINUED OPERATIONS
On May 12, 2004 the III-D and III-E Partnerships sold all of their interests in the Jay-Little Escambia Creek Field located in Santa Rosa County, Florida (the "Jay Field") at a large public oil and gas auction for approximately $721,000, subject to standard transaction requirements and adjustments. These proceeds were allocated approximately $89,000 and $632,000, respectively, to the III-D and III-E Partnerships. This represents the sale of all oil and gas assets held by the III-D and III-E Partnerships in the Jay Field. The sale resulted in a gain on disposal of discontinued operations of approximately $10,000 and $89,000, respectively, for the III-D and III-E Partnerships.
During August 2006, the General Partner approved a plan to sell an increased amount of the Partnerships' properties as a result of the generally favorable current environment for oil and gas properties. On December 13, 2006, the Partnerships sold their interests in a number of producing properties at a large public oil and gas auction which resulted in proceeds of approximately $517,000, $218,000, $98,000, $1,000, $108,000, and $90,000 (net of fees), respectively, to the III-A, III-B, III-C, III-D, III-E, and III-F Partnerships. The sale resulted in a gain on disposal of discontinued operations of approximately $500,000, $211,000, $96,000, $1,000, $104,000, and $87,000, respectively, for the III-A, III-B, III-C, III-D, III-E, and III-F Partnerships. Additional properties will be sold at auctions in 2007. The properties sold in the December auction, those scheduled to be sold in 2007 auctions, and the sale of the Jay Field represent "disposal of a component" under Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (FAS 144). Accordingly, current year results of these properties have been classified as discontinued, and prior periods have been restated. Once properties are classified as assets held for sale, they no longer incur any depreciation, depletion, or amortization expense.
Net income from discontinued operations is as follows:
III-A Partnership -----------------
2006 2005 2004 ---------- ---------- ----------
Oil and gas sales $150,996 $172,252 $118,675 Lease operating ( 23,537) ( 23,555) ( 44,248) Production tax ( 12,992) ( 14,519) ( 10,296) Depreciation, depletion, and amortization of oil and gas properties ( 952) ( 4,687) ( 2,645) ------- ------- ------- Income from discontinued operations $113,515 $129,491 $ 61,486 ======= ======= =======
III-B Partnership -----------------
2006 2005 2004 ---------- ---------- ----------
Oil and gas sales $ 35,788 $ 43,968 $ 31,679 Lease operating ( 5,587) ( 6,340) ( 14,977) Production tax ( 3,456) ( 4,064) ( 3,001) Depreciation, depletion, and amortization of oil and gas properties ( 273) ( 1,723) ( 1,154) ------- ------- ------- Income from discontinued operations $ 26,472 $ 31,841 $ 12,547 ======= ======= =======
III-C Partnership -----------------
2006 2005 2004 ---------- --------- ----------
Oil and gas sales $ 65,630 $66,420 $ 58,809 Lease operating ( 2,877) ( 3,297) ( 6,731) Production tax ( 4,433) ( 4,825) ( 4,294) Depreciation, depletion, and amortization of oil and gas properties ( 2,494) ( 1,824) ( 1,600) Impairment provision ( 371) - - ------- ------ ------- Income from discontinued operations $ 55,455 $56,474 $ 46,184 ======= ====== =======
III-D Partnership -----------------
2006 2005 2004 ---------- --------- ----------
Oil and gas sales $ 11,974 $23,268 $161,977 Lease operating 26,426 ( 347) ( 10,575) Production tax ( 380) ( 1,529) ( 234,139) Depreciation, depletion, and amortization of oil and gas properties ( 364) ( 173) ( 3,030) Impairment provision ( 89) - - ------- ------ ------- Income (loss) from discontinued operations $ 37,567 $21,219 ($ 85,767) ======= ====== =======
III-E Partnership -----------------
2006 2005 2004 ---------- ---------- ------------
Oil and gas sales $255,286 $309,813 $1,301,085 Lease operating 116,640 ( 78,664) ( 1,742,518) Production tax ( 12,929) ( 18,599) ( 83,352) Depreciation, depletion, and amortization of oil and gas properties ( 19,659) ( 20,227) ( 24,821) Impairment provision ( 162,345) - - ------- ------- --------- Income (loss) from discontinued operations $176,993 $192,323 ($ 549,606) ======= ======= =========
III-F Partnership -----------------
2006 2005 2004 ---------- ---------- -----------
Oil and gas sales $621,629 $578,767 $ 466,466 Lease operating ( 98,931) ( 97,126) ( 71,591) Production tax ( 24,217) ( 8,839) ( 8,533) Depreciation, depletion, and amortization of oil and gas properties ( 10,375) ( 14,445) ( 9,868) Impairment provision ( 10,971) - - ------- ------- --------- Income from discontinued operations $477,135 $458,357 $ 376,474 ======= ======= =========
Assets of the discontinued operations as of December 31, 2006 were as follows:
III-A Partnership -----------
Accounts receivable - oil and gas sales $ 27,392 Oil and gas properties 82,229 Accumulated depreciation, depletion, amortization and valuation allowance ( 77,322) Deferred charge 8 --------- Net assets held for sale $ 32,307 =========
III-B Partnership -----------
Accounts receivable - oil and gas sales $ 7,506 Oil and gas properties 750 Accumulated depreciation, depletion, amortization and valuation allowance ( 750) --------- Net assets held for sale $ 7,506 =========
III-C Partnership -----------
Accounts receivable - oil and gas sales $ 12,024 Oil and gas properties 57,240 Accumulated depreciation, depletion, amortization and valuation allowance ( 55,618) Deferred charge 10 --------- Net assets held for sale $ 13,656 =========
III-D Partnership -----------
Accounts receivable - oil and gas sales $ 2,296 Oil and gas properties 7,652 Accumulated depreciation, depletion, amortization and valuation allowance ( 7,424) --------- Net assets held for sale $ 2,524 =========
III-E Partnership -----------
Accounts receivable - oil and gas sales $ 38,260 Oil and gas properties 634,280 Accumulated depreciation, depletion, amortization and valuation allowance ( 634,251) Deferred charge 2,492 --------- Net assets held for sale $ 40,781 =========
III-F Partnership -----------
Accounts receivable - oil and gas sales $ 87,284 Oil and gas properties 1,219,907 Accumulated depreciation, depletion, amortization and valuation allowance ( 1,101,738) --------- Net assets held for sale $ 205,453 =========
Liabilities of the discontinued operations as of December 31, 2006 were as follows: III-A Partnership -----------
Accounts payable $ 4,257 --------- Net liabilities - held for sale $ 4,257 =========
III-B Partnership -----------
Accounts payable $ 1,049 --------- Net liabilities - held for sale $ 1,049 =========
III-C Partnership -----------
Accounts payable $ 684 Accrued liability 5 --------- Net liabilities - held for sale $ 689 =========
III-D Partnership -----------
Accounts payable $ 298 --------- Net liabilities - held for sale $ 298 =========
III-E Partnership -----------
Accounts payable $ 21,708 Accrued liability 12,104 --------- Net liabilities - held for sale $ 33,812 =========
III-F Partnership -----------
Accounts payable $ 24,291 --------- Net liabilities - held for sale $ 24,291 =========
7. SUBSEQUENT EVENT
On February 5, 2007, the General Partner mailed a notice to the limited partners announcing that the III-A Partnership will terminate on November 22, 2007 and the other Partnerships will terminate on December 31, 2007.
The following unaudited pro forma balance sheets as of December 31, 2006 give effect to a change from the going concern basis of accounting to the liquidation basis of accounting. The unaudited pro forma balance sheets are presented as if the change had occurred on December 31, 2006. The unaudited pro forma balance sheets are based on assumptions and include adjustments as explained in the notes to the unaudited pro forma balance sheets. While these balance sheets are prepared with the intent of showing fair value, they are also based on estimates regarding (i) future net cash flows until the properties are sold and (ii) sales prices which will be received for the properties through the liquidation process. Actual current and future prices and costs, as well as the prices purchasers are willing to pay at the time the properties are sold, may differ materially from the estimates used in the preparation of the unaudited liquidation basis balance sheets.
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-A Unaudited Pro Forma Balance Sheet December 31, 2006
Pro Forma Adjustments To Liquidation Liquidation Basis Accounting Basis Historical (Note B) Pro Forma ----------- ---------------- -----------
CURRENT ASSETS: Cash and cash equivalents $1,443,396 ($ 1,443,396) $ - Accounts receivable: Oil and gas sales 571,125 ( 571,125) - Assets held for sale 32,307 ( 32,307) - --------- ---------- ---------- Total current assets $2,046,828 ($ 2,046,828) $ -
NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 588,645 ( 588,645) - DEFERRED CHARGE 184,941 ( 184,941) - NET ASSETS OF PARTNERSHIP IN LIQUIDATION, at fair value - 12,419,479 12,419,479 --------- ---------- ---------- $2,820,414 $ 9,599,065 $12,419,479 ========= ========== ==========
Pro Forma Adjustments To Liquidation Liquidation Basis Accounting Basis Historical (Note B) Pro Forma ----------- ---------------- -----------
CURRENT LIABILITIES: Accounts payable $ 151,192 ($ 151,192) $ - Gas imbalance payable 21,627 ( 21,627) - Asset retirement obligation - current 10,086 ( 10,086) - Asset retirement obligation - held for sale 3,870 ( 3,870) - Liabilities - held for sale 4,257 ( 4,257) - --------- ----------- ---------- Total current liabilities $ 191,032 ($ 191,032) $ -
LONG-TERM LIABILITIES: Accrued liability $ 31,040 ($ 31,040) $ - Asset retirement obligation 271,011 ( 271,011) - --------- ---------- ----------- Total long-term liabilities $ 302,051 ($ 302,051) $ -
PARTNER'S CAPITAL (DEFICIT): General Partner ($ 59,707) $ 1,104,337 $ 1,044,630 Limited Partners, issued and outstanding 263,976 units 2,387,038 8,987,811 11,374,849 --------- ---------- ---------- Total partners' capital $2,327,331 $10,092,148 $12,419,479 --------- ---------- ---------- $2,820,414 $ 9,599,065 $12,419,479 ========= ========== ==========
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-B Unaudited Pro Forma Balance Sheet December 31, 2006
Pro Forma Adjustments To Liquidation Liquidation Basis Accounting Basis Historical (Note B) Pro Forma ----------- ---------------- -----------
CURRENT ASSETS: Cash and cash equivalents $ 700,511 ($ 700,511) $ - Accounts receivable: Oil and gas sales 296,055 ( 296,055) - Assets held for sale 7,506 ( 7,506) - --------- ---------- --------- Total current assets $1,004,072 ($ 1,004,072) $ -
NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 349,851 ( 349,851) - DEFERRED CHARGE 122,514 ( 122,514) - NET ASSETS OF PARTNERSHIP IN LIQUIDATION, at fair value - 5,825,778 5,825,778 --------- ---------- --------- $1,476,437 $ 4,349,341 $5,825,778 ========= ========== =========
Pro Forma Adjustments To Liquidation Liquidation Basis Accounting Basis Historical (Note B) Pro Forma ----------- ---------------- -----------
CURRENT LIABILITIES: Accounts payable $ 96,722 ( $ 96,722) $ - Gas imbalance payable 12,356 ( 12,356) - Asset retirement obligation - current 5,552 ( 5,552) - Liabilities - held for sale 1,049 ( 1,049) - --------- ----------- --------- Total current liabilities $ 115,679 ($ 115,679) $ -
LONG-TERM LIABILITIES: Accrued liability $ 8,001 ($ 8,001) $ - Asset retirement obligation 181,827 ( 181,827) - --------- ---------- --------- Total long-term liabilities $ 189,828 ($ 189,828) $ -
PARTNER'S CAPITAL (DEFICIT): General Partner ($ 41,841) $ 761,652 $ 719,811 Limited Partners, issued and outstanding 138,336 units 1,212,771 3,893,196 5,105,967 --------- ---------- --------- Total partners' capital $1,170,930 $ 4,654,848 $5,825,778 --------- ---------- --------- $1,476,437 $ 4,349,341 $5,825,778 ========= ========== =========
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C Unaudited Pro Forma Balance Sheet December 31, 2006
Pro Forma Adjustments To Liquidation Liquidation Basis Accounting Basis Historical (Note B) Pro Forma ----------- ---------------- -----------
CURRENT ASSETS: Cash and cash equivalents $1,129,134 ($ 1,129,134) $ - Accounts receivable: Oil and gas sales 901,653 ( 901,653) - Related party 4,262 ( 4,262) - Assets held for sale 13,656 ( 13,656) - --------- ---------- ---------- Total current assets $2,048,705 ($ 2,048,705) $ -
NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 1,634,985 ( 1,634,985) - DEFERRED CHARGE 56,549 ( 56,549) - NET ASSETS OF PARTNERSHIP IN LIQUIDATION, at fair value - 13,966,177 13,966,177 --------- ---------- ---------- $3,740,239 $10,225,938 $13,966,177 ========= ========== ==========
Pro Forma Adjustments To Liquidation Liquidation Basis Accounting Basis Historical (Note B) Pro Forma ----------- ---------------- -----------
CURRENT LIABILITIES: Accounts payable $ 168,287 ($ 168,287) $ - Gas imbalance payable 27,417 ( 27,417) - Asset retirement obligation - current 24,559 ( 24,559) - Asset retirement obligation - held for sale 291 ( 291) - Liabilities - held for sale 689 ( 689) - --------- ----------- ---------- Total current liabilities $ 221,243 ($ 221,243) $ -
LONG-TERM LIABILITIES: Accrued liability $ 123,503 ($ 123,503) $ - Asset retirement obligation 365,663 ( 365,663) - --------- ---------- ---------- Total long-term liabilities $ 489,166 ($ 489,166) $ -
PARTNER'S CAPITAL (DEFICIT): General Partner ($ 90,026) $ 1,226,582 $ 1,136,556 Limited Partners, issued and outstanding 244,536 units 3,119,856 9,709,765 12,829,621 --------- ---------- ---------- Total partners' capital $3,029,830 $10,936,347 $13,966,177 --------- ---------- ---------- $3,740,239 $10,225,938 $13,966,177 ========= ========== ==========
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-D Unaudited Pro Forma Balance Sheet December 31, 2006
Pro Forma Adjustments To Liquidation Liquidation Basis Accounting Basis Historical (Note B) Pro Forma ----------- ---------------- -----------
CURRENT ASSETS: Cash and cash equivalents $ 560,391 ($ 560,391) $ - Accounts receivable: Oil and gas sales 554,939 ( 554,939) - Related party 610 ( 610) - Other 26,776 ( 26,776) - Assets held for sale 2,524 ( 2,524) - --------- ---------- --------- Total current assets $1,145,240 ($ 1,145,240) $ -
NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 796,560 ( 796,560) - DEFERRED CHARGE 14,055 ( 14,055) - NET ASSETS OF PARTNERSHIP IN LIQUIDATION, at fair value - 7,709,045 7,709,045 --------- ---------- --------- $1,955,855 $ 5,753,190 $7,709,045 ========= ========== =========
Pro Forma Adjustments To Liquidation Liquidation Basis Accounting Basis Historical (Note B) Pro Forma ----------- ---------------- -----------
CURRENT LIABILITIES: Accounts payable $ 114,417 ($ 114,417) $ - Gas imbalance payable 5,724 ( 5,724) - Asset retirement obligation - current 16,323 ( 16,323) - Asset retirement obligation - held for sale 31 ( 31) - Liabilities - held for sale 298 ( 298) - --------- ----------- --------- Total current liabilities $ 136,793 ($ 136,793) $ -
LONG-TERM LIABILITIES: Accrued liability $ 154,492 ( 154,492) $ - Asset retirement obligation 194,358 ( 194,358) - --------- ---------- --------- Total long-term liabilities $ 348,850 ($ 348,850) $ -
PARTNER'S CAPITAL (DEFICIT): General Partner ( 17,347) $ 660,522 643,175 Limited Partners, issued and outstanding 131,008 units 1,487,559 5,578,310 7,065,870 --------- ---------- --------- Total partners' capital $1,470,212 $ 6,238,832 $7,709,045 --------- ---------- --------- $1,955,855 $ 5,753,190 $7,709,045 ========= ========== =========
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-E Unaudited Pro Forma Balance Sheet December 31, 2006
Pro Forma Adjustments To Liquidation Liquidation Basis Accounting Basis Historical (Note B) Pro Forma ----------- ---------------- -----------
CURRENT ASSETS: Cash and cash equivalents $ 981,324 ($ 981,324) $ - Accounts receivable: Oil and gas sales 743,001 ( 743,001) - Other 191,092 ( 191,092) - Assets held for sale 40,781 ( 40,781) - --------- ---------- ---------- Total current assets $1,956,198 ($ 1,956,198) $ -
NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 1,592,366 ( 1,592,366) - DEFERRED CHARGE 29,450 ( 29,450) - NET ASSETS OF PARTNERSHIP IN LIQUIDATION, at fair value - 13,439,878 13,439,878 --------- ---------- ---------- $3,578,014 $ 9,861,864 $13,439,878 ========= ========== ==========
Pro Forma Adjustments To Liquidation Liquidation Basis Accounting Basis Historical (Note B) Pro Forma ----------- ---------------- ----------- CURRENT LIABILITIES: Accounts payable $ 318,209 ($ 318,209) $ - Accrued liability - other 105,000 ( 105,000) - Gas imbalance payable 21,870 ( 21,870) - Asset retirement obligation - current 63,380 ( 63,380) - Asset retirement obligation - held for sale 31,202 ( 31,202) - Liabilities - held for sale 33,812 ( 33,812) - --------- ----------- ---------- Total current liabilities $ 573,473 ($ 573,473) $ -
LONG-TERM LIABILITIES: Accrued liability $ 157,310 ($ 157,310) $ - Asset retirement obligation 362,904 ( 362,904) - --------- ---------- ---------- Total long-term liabilities $ 520,214 ($ 520,214) $ -
PARTNER'S CAPITAL (DEFICIT): General Partner ($ 263,673) $ 1,366,215 $ 1,102,542 Limited Partners, issued and outstanding 418,266 units 2,748,000 9,589,336 12,337,336 --------- ---------- ---------- Total partners' capital $2,484,327 $10,955,551 $13,439,878 --------- ---------- ---------- $3,578,014 $ 9,861,864 $13,439,878 ========= ========== ==========
GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-F Unaudited Pro Forma Balance Sheet December 31, 2006
Pro Forma Adjustments To Liquidation Liquidation Basis Accounting Basis Historical (Note B) Pro Forma ----------- ---------------- -----------
CURRENT ASSETS: Cash and cash equivalents $ 697,184 ($ 697,184) $ - Accounts receivable: Oil and gas sales 452,134 ( 452,134) - Assets held for sale 205,453 ( 205,453) - --------- ---------- ---------- Total current assets $1,354,771 ($ 1,354,771) $ -
NET OIL AND GAS PROPERTIES, utilizing the successful efforts method 1,381,325 ( 1,381,325) - DEFERRED CHARGE 13,909 ( 13,909) - NET ASSETS OF PARTNERSHIP IN LIQUIDATION, at fair value - 12,216,142 12,216,142 --------- ---------- ---------- $2,750,005 $ 9,466,137 $12,216,142 ========= ========== ==========
Pro Forma Adjustments To Liquidation Liquidation Basis Accounting Basis Historical (Note B) Pro Forma ----------- ---------------- ----------- CURRENT LIABILITIES: Accounts payable $ 136,660 ($ 136,660) $ - Accrued liability - other 90,000 ( 90,000) - Gas imbalance payable 18,329 ( 18,329) - Asset retirement obligation - current 11,729 ( 11,729) - Asset retirement obligation - held for sale 33,931 ( 33,931) - Liabilities - held for sale 24,291 ( 24,291) - --------- ----------- ---------- Total current liabilities $ 314,940 ($ 314,940) $ -
LONG-TERM LIABILITIES: Accrued liability $ 68,572 ($ 68,572) $ - Asset retirement obligation 243,724 ( 243,724) - --------- ---------- ---------- Total long-term liabilities $ 312,296 ($ 312,296) $ -
PARTNER'S CAPITAL (DEFICIT): General Partner ($ 126,790) $ 1,154,367 $ 1,027,577 Limited Partners, issued and outstanding 221,484 units 2,249,559 8,939,006 11,188,565 --------- ---------- ---------- Total partners' capital $2,122,769 $10,093,373 $12,216,142 --------- ---------- ---------- $2,750,005 $ 9,466,137 $12,216,142 ========= ========== ==========
NOTE A - Basis of presentation
The unaudited pro forma balance sheets as of December 31, 2006 are presented as if the change in the basis of accounting from the going concern basis to the liquidation basis occurred on December 31, 2006. The liquidation basis of accounting reports the net assets of the partnerships at their net realizable value.
NOTE B - Pro forma adjustments
Adjustments have been made to reduce all balance sheet categories into one line, net assets of partnership in liquidation, which is an estimate of the net fair value of all partnership assets and liabilities. Cash, accounts receivable, and accounts payable have all been valued at their historical cost, which approximates fair value. Oil and gas properties have been valued at their estimated net sales price, which have been estimated utilizing discounted cash flows based on strip pricing as of February 5, 2007 at a discount rate of 10% for proved developed producing reserves, 18% for proved developed not producing reserves, and 20% for proved undeveloped reserves. An adjustment has been made to the discounted cash flows for the effects of gas balancing and asset retirement obligations. A provision has also been made to account for expenses that will be incurred directly related to the sale of the oil and gas properties. The allocation of the net assets of Partnerships in liquidation to the General Partner and limited partners were calculated using the current allocation of income and expense, which may change.
INDEX TO EXHIBITS -----------------
Exh. No. Exhibit - ---- -------
4.1 Agreement of Limited Partnership dated November 17, 1989 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.1 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.2 Certificate of Limited Partnership dated January 24, 1990 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.2 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 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 24, 1993 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.5 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.4 Second Amendment to Agreement of Limited Partnership dated August 4, 1993 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.8 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.5 Second Amendment to Certificate of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.5 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.6 Third Amendment to Agreement of Limited Partnership dated August 31, 1995 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.15 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.7 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.22 to Registrant's Annual Report on Form 10-K for the year ended December
31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.8 Fifth Amendment to Agreement of Limited Partnership dated November 15, 1999 for Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.25 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.9 Sixth Amendment to Agreement of Limited Partnership dated November 14, 2001, for the Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.9 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.10 Seventh Amendment to Agreement of Limited Partnership dated November 17, 2003, for the Geodyne Energy Income Limited Partnership III-A filed as Exhibit 4.10 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2003, filed with the SEC on March 30, 2004 and is hereby incorporated by reference.
4.11 Eighth Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-A dated October 27, 2005, filed as Exhibit 4.11 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 29, 2006 and is hereby incorporated by reference.
4.12 Agreement of Limited Partnership dated January 24, 1990 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.2 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.13 Certificate of Limited Partnership dated January 24, 1990 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.11 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.14 First Amendment to Certificate of Limited Partnership and First Amendment to Agreement of Limited Partnership dated February 24, 1993 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.6 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.15 Second Amendment to Agreement of Limited Partnership dated August 4, 1993 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.9 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.16 Third Amendment to Agreement of Limited Partnership dated August 31, 1995 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.16 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.17 Second Amendment to Certificate of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.15 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.18 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.23 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.19 Fifth Amendment to Agreement of Limited Partnership dated December 30, 1999 for Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.26 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.20 Sixth Amendment to Agreement of Limited Partnership dated November 14, 2001, for the Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.18 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.21 Seventh Amendment to Agreement of Limited Partnership dated January 22, 2004, for the Geodyne Energy Income Limited Partnership III-B filed as Exhibit 4.20 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2003, filed with the SEC on March 30, 2004 and is hereby incorporated by reference.
4.22 Eighth Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-B dated October 27, 2005 filed as Exhibit 4.22 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 2005, filed with the SEC on March 29, 2006 and is hereby incorporated by reference.
4.23 Agreement of Limited Partnership dated February 26, 1990 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.3 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.24 Certificate of Limited Partnership dated February 26, 1990 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.20 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.25 First Amendment to Certificate of Limited Partnership and First Amendment to Agreement of Limited Partnership dated February 24, 1993 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.7 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.26 Second Amendment to Agreement of Limited Partnership dated August 4, 1993 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.19 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.27 Third Amendment to Agreement of Limited Partnership dated August 31, 1995 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.17 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.28 Second Amendment to Certificate of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.24 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.29 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.24 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.30 Fifth Amendment to Agreement of Limited Partnership dated December 30, 1999 for Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.27 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the SEC on February 25, 2000, and is hereby incorporated by reference.
4.31 Sixth Amendment to Agreement of Limited Partnership dated November 14, 2001, for the Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.27 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.32 Seventh Amendment to Agreement of Limited Partnership dated January 22, 2004, for the Geodyne Energy Income Limited Partnership III-C filed as Exhibit 4.30 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2003, filed with the SEC on March 30, 2004 and is hereby incorporated by reference.
4.33 Eighth Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-C dated October 27, 2005 filed as Exhibit 4.33 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 29, 2006 and is hereby incorporated by reference.
4.34 Agreement of Limited Partnership dated September 5, 1990 for Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.4 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.35 Certificate of Limited Partnership dated September 5, 1990 for Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.29 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.36 First Amendment to Certificate of Limited Partnership and First Amendment to Agreement of Limited Partnership dated February 24, 1993 for Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.11 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.37 Second Amendment to Agreement of Limited Partnership dated August 4, 1993 for Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.18 to Registrant's Annual Report on Form 10-K for the year ended December
31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.38 Third Amendment to Agreement of Limited Partnership dated August 31, 1995 for Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.25 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.39 Second Amendment to Certificate of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.33 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.40 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996 for the Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.32 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.41 Fifth Amendment to Agreement of Limited Partnership dated August 23, 2000 for the Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.39 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.42 Sixth Amendment to Agreement of Limited Partnership dated August 20, 2002 for the Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.36 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2002, filed with the SEC on March 28, 2003, and is hereby incorporated by reference.
4.43 Seventh Amendment to Agreement of Limited Partnership dated August 18, 2004 for the Geodyne Energy Income Limited Partnership III-D filed as Exhibit 4.40 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2004, filed with the SEC on March 30, 2004, and is hereby incorporated by reference.
4.44 Eighth Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-D dated October 27, 2005 filed as Exhibit 4.44 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 29, 2006 and is hereby incorporated by reference.
4.45 Agreement of Limited Partnership dated December 26, 1990 for Geodyne Energy Income Limited Partnership III-
E filed as Exhibit 4.5 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.46 Certificate of Limited Partnership dated December 26, 1990 for Geodyne Energy Income Limited Partnership III-E filed as Exhibit 4.37 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.47 First Amendment to Certificate of Limited Partnership and First Amendment to Agreement of Limited Partnership dated February 24, 1993 for Geodyne Energy Income Limited Partnership III-E filed as Exhibit 4.12 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.48 Second Amendment to Agreement of Limited Partnership dated August 4, 1993 for Geodyne Energy Income Limited Partnership III-E filed as Exhibit 4.19 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.49 Third Amendment to Agreement of Limited Partnership dated August 31, 1995 for Geodyne Energy Income Limited Partnership III-E filed as Exhibit 4.26 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.50 Second Amendment to Certificate of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-E filed as Exhibit 4.41 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.51 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996 for the Geodyne Energy Income Limited Partnership III-E filed as Exhibit 4.33 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.52 Fifth Amendment to Agreement of Limited Partnership dated November 15, 2000 for the Geodyne Energy Income Limited Partnership III-E filed as Exhibit 4.40 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.53 Sixth Amendment to Agreement of Limited Partnership for Geodyne Energy Income Limited Partnership III-E dated November 6, 2002, filed as Exhibit 4.1 to Registrant's Quarterly Report on Form 10-Q with the SEC on November 14, 2002, and is hereby incorporated by reference.
4.54 Seventh Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-E dated August 18, 2004, filed as Exhibit 4.53 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2004, filed with the SEC on March 30, 2005, and is hereby incorporated by reference.
4.55 Eighth Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-E dated October 27, 2005 filed as Exhibit 4.55 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 29, 2006 and is hereby incorporated by reference.
4.56 Agreement of Limited Partnership dated March 7, 1991 for Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.6 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.57 Certificate of Limited Partnership dated March 7, 1991 for Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.45 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.58 First Amendment to Certificate of Limited Partnership and First Amendment to Agreement of Limited Partnership dated February 24, 1993 for Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.13 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.59 Second Amendment to Agreement of Limited Partnership dated August 4, 1993 for Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.20 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.60 Second Amendment to Certificate of Limited Partnership dated July 1, 1996 for Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.48 to Registrant's Annual Report on Form 10-K for the year ended December
31, 2001, filed with the SEC on February 28, 2002 and is hereby incorporated by reference.
4.61 Third Amendment to Agreement of Limited Partnership dated August 31, 1995 for Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.27 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.62 Fourth Amendment to Agreement of Limited Partnership dated July 1, 1996 for the Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.34 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.63 Fifth Amendment to Agreement of Limited Partnership dated February 5, 2001 for the Geodyne Energy Income Limited Partnership III-F filed as Exhibit 4.41 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the SEC on March 5, 2001, and is hereby incorporated by reference.
4.64 Sixth Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-F dated February 10, 2003, filed as Exhibit 4.53(a) to Registrant's Annual Report on Form 10-K for the year ended December 31, 2002, filed with the SEC on March 28, 2003, and is hereby incorporated by reference.
4.65 Seventh Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-F dated February 7, 2005, filed as Exhibit 4.60 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2004, filed with the SEC on March 30, 2004, and is hereby incorporated by reference.
4.66 Eighth Amendment to Agreement of Limited Partnership for the Geodyne Energy Income Limited Partnership III-F dated October 27, 2005 filed as Exhibit 4.66 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 29, 2006 and is hereby incorporated by reference.
*23.1 Consent of Ryder Scott Company, L.P. for Geodyne Energy Income Limited Partnership III-A.
*23.2 Consent of Ryder Scott Company, L.P. for Geodyne Energy Income Limited Partnership III-B.
*23.3 Consent of Ryder Scott Company, L.P. for Geodyne Energy Income Limited Partnership III-C.
*23.4 Consent of Ryder Scott Company, L.P. for Geodyne Energy Income Limited Partnership III-D.
*23.5 Consent of Ryder Scott Company, L.P. for Geodyne Energy Income Limited Partnership III-E.
*23.6 Consent of Ryder Scott Company, L.P. for Geodyne Energy Income Limited Partnership III-F.
*31.1 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-A.
*31.2 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-A.
*31.3 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-B.
*31.4 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-B.
*31.5 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-C.
*31.6 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-C.
*31.7 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-D.
*31.8 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-D.
*31.9 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-E.
*31.10 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-E.
*31.11 Certification by Dennis R. Neill required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-F.
*31.12 Certification by Craig D. Loseke required by Rule 13a-14(a)/15d-14(a) for the Geodyne Energy Income Limited Partnership III-F.
*32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy Income Limited Partnership III-A.
*32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy Income Limited Partnership III-B.
*32.3 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy Income Limited Partnership III-C.
*32.4 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy Income Limited Partnership III-D.
*32.5 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy Income Limited Partnership III-E.
*32.6 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Geodyne Energy Income Limited Partnership III-F.
All other Exhibits are omitted as inapplicable.
---------- *Filed herewith.