Common use of Selected Financial Data Clause in Contracts

Selected Financial Data. The following table sets forth selected financial data for the years ended December 31: 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- OPERATING RESULTS: Oil and gas sales.............. $ 873,012 $1,273,373 $1,632,595 $1,416,748 $1,325,311 ========== ========== ========== ========== ========== Impairment of oil and gas properties.................. $ 295,542 $ 323,078 $ -- $ 104,290 $ -- ========== ========== ========== ========== ========== Net income (loss).............. $ (177,905) $ 222,730 $ 924,002 $ 483,679 $ 466,370 ========== ========== ========== ========== ========== Allocation of net income (loss): Managing general partner.... $ (1,779) $ 2,227 $ 9,240 $ 4,837 $ 4,664 ========== ========== ========== ========== ========== Limited partners............ $ (176,126) $ 220,503 $ 914,762 $ 478,842 $ 461,706 ========== ========== ========== ========== ========== Net income (loss) per limited partners' interest.......... $ (15.66) $ 19.60 $ 81.32 $ 42.57 $ 41.04 ========== ========== ========== ========== ========== Limited partners' cash distributions per limited partners' interest.......... $ 36.76 $ 75.32 $ 84.40 $ 70.24 $ 46.96 ========== ========== ========== ========== ========== AT YEAR END: Total assets................... $1,820,336 $2,424,808 $3,051,464 $3,131,023 $3,404,388 ========== ========== ========== ========== ========== ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1998 compared to 1997 The Partnership's 1998 oil and gas revenues decreased 31% to $873,012 from $1,273,373 in 1997. The decrease in revenues resulted from lower average prices received. In 1998, 49,100 barrels of oil, 17,427 barrels of natural gas liquids ("NGLs") and 68,244 mcf of gas were sold, or 77,901 barrel of oil equivalents ("BOEs"). In 1997, 49,485 barrels of oil, 7,536 barrels of NGLs and 90,255 mcf of gas were sold, or 72,064 BOEs. Due to the decline characteristics of the Partnership's oil and gas properties, management expects a certain amount of decline in production in the future until the Partnership's economically recoverable reserves are fully depleted. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. Effective September 30, 1997, as a result of the merger with Mesa, the managing general partner accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general partner's policy, the Partnership now accounts for processed natural gas production as processed natural 3 139 gas liquids and dry residue gas. Consequently, separate product volumes will not be comparable for periods prior to September 30, 1997. Also, prices for gas products will not be comparable as the price per mcf for natural gas for the year ended December 31, 1998 is the price received for dry residue gas and the price per mcf for natural gas produced prior to October 1997 was presented as a price for wet gas (i.e., natural gas liquids combined with dry residue gas).

Selected Financial Data. The following table sets forth selected financial data for the years ended December 31: 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- OPERATING RESULTS: Oil and gas sales.............. $ 873,012 $1,273,373 $1,632,595 $1,416,748 $1,325,311 430,499 $ 661,475 $ 837,849 $ 722,324 $ 804,039 ========== ========== ========== ========== ========== Impairment of oil and gas properties.................. $ 295,542 185,784 $ 323,078 79,288 $ -- $ 104,290 48,088 $ -- ========== ========== ========== ========== ========== Net income (loss).............. $ (177,905258,625) $ 222,730 105,740 $ 924,002 359,349 $ 483,679 163,626 $ 466,370 152,612 ========== ========== ========== ========== ========== Allocation of net income (loss): Managing general partner.... $ (1,7792,586) $ 2,227 1,057 $ 9,240 3,593 $ 4,837 1,668 $ 4,664 1,558 ========== ========== ========== ========== ========== Limited partners............ $ (176,126256,039) $ 220,503 104,683 $ 914,762 355,756 $ 478,842 161,958 $ 461,706 151,054 ========== ========== ========== ========== ========== Net Limited partners' net income (loss) per limited partners' partnership interest.......... ........ $ (15.6634.00) $ 19.60 13.90 $ 81.32 47.24 $ 42.57 21.51 $ 41.04 20.06 ========== ========== ========== ========== ========== Limited partners' cash distributions per limited partners' partnership interest.......... ........ $ 36.76 17.30 $ 75.32 47.53 $ 84.40 51.98 $ 70.24 45.34 $ 46.96 51.71 ========== ========== ========== ========== ========== AT YEAR END: Total assets................... $1,820,336 1,011,034 $2,424,808 1,411,804 $3,051,464 1,661,127 $3,131,023 1,728,891 $3,404,388 1,886,057 ========== ========== ========== ========== ========== ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1998 compared to 1997 The Partnership's 1998 oil and gas revenues decreased 3135% to $873,012 430,499 from $1,273,373 661,475 in 1997. The decrease in revenues resulted from lower average prices received. In 1998, 49,100 24,493 barrels of oil, 17,427 8,694 barrels of natural gas liquids ("NGLs") and 68,244 30,348 mcf of gas were sold, or 77,901 38,245 barrel of oil equivalents ("BOEs"). In 1997, 49,485 25,817 barrels of oil, 7,536 3,661 barrels of NGLs and 90,255 50,304 mcf of gas were sold, or 72,064 37,862 BOEs. Due to the decline characteristics of the Partnership's oil and gas properties, management expects a certain amount of decline in production in the future until the Partnership's economically recoverable reserves are fully depleted. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. Effective September 30, 1997, as a result of the merger with Mesa, the managing general partner accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general 3 139 partner's policy, the Partnership now accounts for processed natural gas production as processed natural 3 139 gas liquids and dry residue gas. Consequently, separate product volumes will not be comparable for periods prior to September 30, 1997. Also, prices for gas products will not be comparable as the price per mcf for natural gas for the year ended December 31, 1998 is the price received for dry residue gas and the price per mcf for natural gas produced prior to October 1997 was presented as a price for wet gas (i.e., natural gas liquids combined with dry residue gas).

Selected Financial Data. The following table sets forth selected financial data for the years ended December 31: 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- ----------- OPERATING RESULTS: Oil and gas sales.............. ..... $ 873,012 955,645 $1,273,373 1,411,247 $1,632,595 1,629,975 $1,416,748 $1,325,311 1,387,494 $ 1,568,783 ========== ========== ========== ========== =========== Impairment of oil and gas properties.................. ..... $ 295,542 306,043 $ 323,078 485,158 $ -- $1,008,771 $ 104,290 $ -- 1,055,409 ========== ========== ========== ========== =========== Net income (loss).............. ..... $ (177,905280,631) $ 222,730 (7,029) $ 924,002 654,054 $ 483,679 $ 466,370 (755,419) $(1,032,621) ========== ========== ========== ========== =========== Allocation of net income (loss): Managing general partner.... .......... $ (1,7792,806) $ 2,227 (70) $ 9,240 6,540 $ 4,837 (7,554) $ 4,664 (10,326) ========== ========== ========== ========== =========== Limited partners............ ... $ (176,126277,825) $ 220,503 (6,959) $ 914,762 647,514 $ 478,842 $ 461,706 (747,865) $(1,022,295) ========== ========== ========== ========== =========== Net income (loss) per limited partners' interest.......... ........... $ (15.6623.91) $ 19.60 (.60) $ 81.32 55.72 $ 42.57 (64.36) $ 41.04 (87.98) ========== ========== ========== ========== =========== Limited partners' cash distributions per limited partners' interest.......... ........... $ 36.76 36.77 $ 75.32 75.11 $ 84.40 70.97 $ 70.24 64.70 $ 46.96 77.81 ========== ========== ========== ========== =========== AT YEAR END: Total assets................... ...... $1,820,336 2,667,803 $2,424,808 3,402,546 $3,051,464 4,289,878 $3,131,023 $3,404,388 4,511,078 $ 5,976,067 ========== ========== ========== ========== =========== ITEM 7. MANAGEMENT7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1998 compared to 1997 The Partnership's 1998 oil and gas revenues decreased 3132% to $873,012 955,645 from $1,273,373 1,411,247 in 1997. The decrease in revenues resulted from lower average prices received. In 1998, 49,100 49,403 barrels of oil, 17,427 21,220 barrels of natural gas liquids ("NGLs") and 68,244 108,617 mcf of gas were sold, or 77,901 88,726 barrel of oil equivalents ("BOEs"). In 1997, 49,485 51,993 barrels of oil, 7,536 8,865 barrels of NGLs and 90,255 135,829 mcf of gas were sold, or 72,064 83,496 BOEs. Due to the decline characteristics of the Partnership's oil and gas properties, management expects a certain amount of decline in production in the future until the Partnership's economically recoverable reserves are fully depleted. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. Effective September 30, 1997, as a result of the merger with Mesa, the managing general partner accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general partner's policy, the Partnership now accounts for processed natural gas production as processed natural 3 139 gas liquids and dry residue gas. Consequently, separate product volumes will not be comparable for periods prior to September 30, 1997. Also, prices for gas products will not be comparable as the price per mcf for natural gas for the year ended December 31, 1998 is the price received for dry residue gas and the price per mcf for natural gas produced prior to October 1997 was presented as a price for wet gas (i.e., natural gas liquids combined with dry residue gas).

Selected Financial Data. The following table sets forth selected financial data for the years ended December 31: 1998 1997 1996 1995 1994 ---------- --------- ---------- ---------- ---------- ---------- OPERATING RESULTS: Oil and gas sales.............. ............. $ 873,012 $1,273,373 $1,632,595 $1,416,748 $1,325,311 392,883 $ 608,207 $ 710,173 $ 613,929 $ 636,470 ========= ========== ========== ========== ========== Litigation settlement, net.... $ -- $ -- $ 43,618 $ -- $ -- ========= ========== ========== ========== ========== Impairment of oil and gas properties.................. ................. $ 295,542 294,610 $ 323,078 165,201 $ 2,277 $ 20,719 $ -- $ 104,290 $ -- ========== ========== ========== ========== ========== Net income (loss).............. ............. $(563,993) $ (177,90560,847) $ 222,730 312,582 $ 924,002 34,081 $ 483,679 $ 466,370 =102,033 ========= ========== ========== ========== ========== Allocation of net income (loss): Managing general partner.... General partners........... $ (1,77949,472) $ 2,227 31,736 $ 9,240 92,811 $ 4,837 35,122 $ 4,664 =45,462 ========= ========== ========== ========== ========== Limited partners............ ........... $(514,521) $ (176,12692,583) $ 220,503 219,771 $ 914,762 (1,041) $ 478,842 $ 461,706 =56,571 ========= ========== ========== ========== ========== Net Limited partners' net income (loss) per limited partners' partnership interest.......... ....... $ (15.66105.20) $ 19.60 (18.93) $ 81.32 44.93 $ 42.57 (.21) $ 41.04 =11.57 ========= ========== ========== ========== ========== Limited partners' cash distributions per limited partners' partnership interest.......... ....... $ 36.76 19.57 $ 75.32 47.31 $ 84.40 51.40(a) $ 70.24 40.96 $ 46.96 =31.92 ========= ========== ========== ========== ========== AT YEAR END: Total assets................... .................. $ 474,528 $1,820,336 1,158,135 $2,424,808 1,526,765 $3,051,464 1,585,711 $3,131,023 $3,404,388 =1,786,274 ========= ========== ========== ========== ========== ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1998 compared to 1997 The Partnership's 1998 oil and gas revenues decreased 31% to --------------- (a) Including litigation settlement per limited partnership interest of $873,012 from $1,273,373 6.96 in 1997. The decrease in revenues resulted from lower average prices received. In 1998, 49,100 barrels of oil, 17,427 barrels of natural gas liquids ("NGLs") and 68,244 mcf of gas were sold, or 77,901 barrel of oil equivalents ("BOEs"). In 1997, 49,485 barrels of oil, 7,536 barrels of NGLs and 90,255 mcf of gas were sold, or 72,064 BOEs. Due to the decline characteristics of the Partnership's oil and gas properties, management expects a certain amount of decline in production in the future until the Partnership's economically recoverable reserves are fully depleted. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. Effective September 30, 1997, as a result of the merger with Mesa, the managing general partner accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general partner's policy, the Partnership now accounts for processed natural gas production as processed natural 3 139 gas liquids and dry residue gas. Consequently, separate product volumes will not be comparable for periods prior to September 30, 1997. Also, prices for gas products will not be comparable as the price per mcf for natural gas for the year ended December 31, 1998 is the price received for dry residue gas and the price per mcf for natural gas produced prior to October 1997 was presented as a price for wet gas (i.e., natural gas liquids combined with dry residue gas)1996.

Selected Financial Data. The following table sets forth selected financial data for the years ended December 31: 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- OPERATING RESULTSOperating results: Oil and gas sales.............. ................. $ 873,012 910,252 $1,273,373 1,402,306 $1,632,595 1,768,325 $1,416,748 1,433,517 $1,325,311 1,441,190 ========== ========== ========== ========== ========== Impairment of oil and gas properties.................. ..................... $ 295,542 $ 323,078 430,351 $1,194,023 $ -- $ 104,290 147,353 $ 491,050 ========== ========== ========== ========== ========== Litigation settlement, net........ $ -- $ -- $ 852,211 $ -- $ -- ========== ========== ========== ========== ========== Net income (loss).............. ................. $ (177,905784,583) $ 222,730 (811,642) $1,483,261 $ 924,002 (12,017) $ 483,679 $ 466,370 (474,032) ========== ========== ========== ========== ========== Allocation of net income (loss): Managing general partner.... General partners............... $ (1,77952,520) $ 2,227 (1,662) $ 9,240 389,185 $ 4,837 104,436 $ 4,664 34,602 ========== ========== ========== ========== ========== Limited partners............ ............... $ (176,126732,063) $ 220,503 (809,980) $1,094,076 $ 914,762 (116,453) $ 478,842 $ 461,706 (508,634) ========== ========== ========== ========== ========== Net Limited partners' net income (loss) per limited partners' partnership interest.......... ....................... $ (15.6637.53) $ 19.60 (41.53) $ 81.32 56.09 $ 42.57 (5.97) $ 41.04 (26.08) ========== ========== ========== ========== ========== Limited partners' cash distributions per limited partners' partnership interest.......... ........... $ 36.76 20.73 $ 75.32 24.50 $ 84.40 72.73(a) $ 70.24 21.54 $ 46.96 20.21 ========== ========== ========== ========== ========== AT YEAR ENDAt year end: Total assets................... ...................... $1,820,336 1,691,709 $2,424,808 3,015,116 $3,051,464 4,459,272 $3,131,023 4,865,672 $3,404,388 5,385,572 ========== ========== ========== ========== ========== ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1998 compared to 1997 The Partnership's 1998 oil and gas revenues decreased 31% to $873,012 from $1,273,373 in 1997. The decrease in revenues resulted from lower average prices received. In 1998, 49,100 barrels of oil, 17,427 barrels of natural gas liquids ("NGLs") and 68,244 mcf of gas were sold, or 77,901 barrel of oil equivalents ("BOEs"). In 1997, 49,485 barrels of oil, 7,536 barrels of NGLs and 90,255 mcf of gas were sold, or 72,064 BOEs. Due to the decline characteristics of the Partnership's oil and gas properties, management expects a certain amount of decline in production in the future until the Partnership's economically recoverable reserves are fully depleted. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. Effective September 30, 1997, as a result of the merger with Mesa, the managing general partner accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general partner's policy, the Partnership now accounts for processed natural gas production as processed natural 3 139 gas liquids and dry residue gas. Consequently, separate product volumes will not be comparable for periods prior to September 30, 1997. Also, prices for gas products will not be comparable as the price per mcf for natural gas for the year ended December 31, 1998 is the price received for dry residue gas and the price per mcf for natural gas produced prior to October 1997 was presented as a price for wet gas (i.e., natural gas liquids combined with dry residue gas).---------------

Selected Financial Data. The following table sets forth selected financial data for the years ended December 31: 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- OPERATING RESULTS: Oil and gas sales.............. $ 873,012 578,573 $ 810,500 $1,273,373 $1,632,595 $1,416,748 $1,325,311 1,052,408 $ 889,592 $ 946,401 ========== ========== ========== ========== ========== Impairment of oil and gas properties.................. $ 295,542 383,951 $ 323,078 547,793 $ -- $ 104,290 479,522 $ -- ========== ========== ========== ========== ========== Net income (loss).............. $ (177,905488,631) $ 222,730 (344,997) $ 924,002 397,674 $ 483,679 (391,752) $ 466,370 5,033 ========== ========== ========== ========== ========== Allocation of net income (loss): Managing general partner.... $ (1,7794,887) $ 2,227 (3,450) $ 9,240 3,977 $ 4,837 (3,918) $ 4,664 50 ========== ========== ========== ========== ========== Limited partners............ $ (176,126483,744) $ 220,503 (341,547) $ 914,762 393,697 $ 478,842 (387,834) $ 461,706 4,983 ========== ========== ========== ========== ========== Net Limited partners' net income (loss) per limited partners' partnership interest.......... ........ $ (15.6654.03) $ 19.60 (38.14) $ 81.32 43.97 $ 42.57 (43.31) $ 41.04 .56 ========== ========== ========== ========== ========== Limited partners' cash distributions per limited partners' partnership interest.......... ........ $ 36.76 24.02 $ 75.32 50.67 $ 84.40 54.14 $ 70.24 49.35 $ 46.96 52.50 ========== ========== ========== ========== ========== AT YEAR END: Total assets................... $1,820,336 1,334,302 $2,424,808 2,051,284 $3,051,464 2,848,468 $3,131,023 2,970,489 $3,404,388 3,781,914 ========== ========== ========== ========== ========== ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1998 compared to 1997 The Partnership's 1998 oil and gas revenues decreased 3129% to $873,012 578,573 from $1,273,373 810,500 in 1997. The decrease in revenues resulted from lower average prices received. In 1998, 49,100 31,155 barrels of oil, 17,427 12,210 barrels of natural gas liquids ("NGLs") and 68,244 52,254 mcf of gas were sold, or 77,901 52,074 barrel of oil equivalents ("BOEs"). In 1997, 49,485 31,020 barrels of oil, 7,536 barrels of 4,628 NGLs and 90,255 70,802 mcf of gas were sold, or 72,064 47,448 BOEs. Due to the decline characteristics of the Partnership's oil and gas properties, management expects a certain amount of decline in production in the future until the Partnership's economically recoverable reserves are fully depleted. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. Effective September 30, 1997, as a result of the merger with Mesa, the managing general partner accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general 3 139 partner's policy, the Partnership now accounts for processed natural gas production as processed natural 3 139 gas liquids and dry residue gas. Consequently, separate product volumes will not be comparable for periods prior to September 30, 1997. Also, prices for gas products will not be comparable as the price per mcf for natural gas for the year ended December 31, 1998 is the price received for dry residue gas and the price per mcf for natural gas produced prior to October 1997 was presented as a price for wet gas (i.e., natural gas liquids combined with dry residue gas).

Selected Financial Data. The following table sets forth selected financial data for the years ended December 31: 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- OPERATING RESULTS: Oil and gas sales.............. $ 873,012 $1,273,373 $1,632,595 $1,416,748 $1,325,311 443,496 $ 753,775 $ 938,418 $ 754,343 $ 787,939 ========== ========== ========== ========== ========== Impairment of oil and gas properties.................. $ 295,542 -- $ 323,078 6,231 $ -- $ 104,290 369,426 $ -- ========== ========== ========== ========== ========== Net income (loss).............. $ (177,90513,621) $ 222,730 255,412 $ 924,002 424,569 $ 483,679 (225,390) $ 466,370 37,254 ========== ========== ========== ========== ========== Allocation of net income (loss): Managing general partner.... $ (1,779136) $ 2,227 2,554 $ 9,240 4,246 $ 4,837 (2,253) $ 4,664 373 ========== ========== ========== ========== ========== Limited partners............ $ (176,12613,485) $ 220,503 252,858 $ 914,762 420,323 $ 478,842 (223,137) $ 461,706 36,881 ========== ========== ========== ========== ========== Net Limited partners' net income (loss) per limited partners' partnership interest.......... ........ $ (15.661.20) $ 19.60 22.53 $ 81.32 37.46 $ 42.57 (19.88) $ 41.04 3.29 ========== ========== ========== ========== ========== Limited partners' cash distributions per limited partners' partnership interest.......... ........ $ 36.76 24.99 $ 75.32 50.52 $ 84.40 45.09 $ 70.24 39.64 $ 46.96 37.38 ========== ========== ========== ========== ========== AT YEAR END: Total assets................... $1,820,336 1,884,917 $2,424,808 2,212,937 $3,051,464 2,491,855 $3,131,023 2,578,655 $3,404,388 3,253,374 ========== ========== ========== ========== ========== ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1998 compared to 1997 The Partnership's 1998 oil and gas revenues decreased 3141% to $873,012 443,496 from $1,273,373 753,775 in 1997. The decrease in revenues resulted from lower average prices received. In 1998, 49,100 22,482 barrels of oil, 17,427 12,009 barrels of natural gas liquids ("NGLs") and 68,244 51,099 mcf of gas were sold, or 77,901 43,008 barrel of oil equivalents ("BOEs"). In 1997, 49,485 26,656 barrels of oil, 7,536 5,264 barrels of NGLs and 90,255 80,212 mcf of gas were sold, or 72,064 45,289 BOEs. Due to the decline characteristics of the Partnership's oil and gas properties, management expects a certain amount of decline in production in the future until the Partnership's economically recoverable reserves are fully depleted. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. Effective September 30, 1997, as a result of the merger with Mesa, the managing general partner accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general 3 139 partner's policy, the Partnership now accounts for processed natural gas production as processed natural 3 139 gas liquids and dry residue gas. Consequently, separate product volumes will not be comparable for periods prior to September 30, 1997. Also, prices for gas products will not be comparable as the price per mcf for natural gas for the year ended December 31, 1998 is the price received for dry residue gas and the price per mcf for natural gas produced prior to October 1997 was presented as a price for wet gas (i.e., natural gas liquids combined with dry residue gas).

Selected Financial Data. The following table sets forth selected financial data for the years ended December 31: 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- OPERATING RESULTS: Oil and gas sales.............. ................. $1,453,492 $2,232,898 $2,627,636 $2,338,478 $2,402,964 ========== ========== ========== ========== ========== Litigation settlement, net........ $ 873,012 $1,273,373 $1,632,595 $1,416,748 $1,325,311 -- $ -- $ 848,304 $ -- $ -- ========== ========== ========== ========== ========== Impairment of oil and gas properties.................. ..................... $ 295,542 477,501 $ 323,078 732,890 $ -- 348,546 $ 104,290 922,203 $ -- ========== ========== ========== ========== ========== Net income (loss).............. ................. $ (177,905736,103) $ 222,730 (49,528) $1,803,894 $ 924,002 (955,234) $ 483,679 $ 466,370 (10,326) ========== ========== ========== ========== ========== Allocation of net income (loss): Managing general partner.... ....... $ (1,7797,361) $ 2,227 (495) $ 9,240 18,039 $ 4,837 (9,553) $ 4,664 (103) ========== ========== ========== ========== ========== Limited partners............ ............... $ (176,126728,742) $ 220,503 (49,033) $1,785,855 $ 914,762 (945,681) $ 478,842 $ 461,706 (10,223) ========== ========== ========== ========== ========== Net Limited partners' net income (loss) per limited partners' partnership interest.......... ....................... $ (15.6625.29) $ 19.60 (1.70) $ 81.32 61.99 $ 42.57 (32.82) $ 41.04 (.35) ========== ========== ========== ========== ========== Limited partners' cash distributions per limited partners' partnership interest.......... ........... $ 36.76 19.54 $ 75.32 42.52 $ 84.40 89.89(a) $ 70.24 34.93 $ 46.96 34.70 ========== ========== ========== ========== ========== AT YEAR END: Total assets................... ...................... $1,820,336 3,466,459 $2,424,808 4,793,102 $3,051,464 6,171,831 $3,131,023 6,973,611 $3,404,388 8,966,767 ========== ========== ========== ========== ========== ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1998 compared to 1997 The Partnership's 1998 oil and gas revenues decreased 31% to --------------- (a) Including litigation settlement per limited partnership interest of $873,012 from $1,273,373 29.15 in 1997. The decrease in revenues resulted from lower average prices received. In 1998, 49,100 barrels of oil, 17,427 barrels of natural gas liquids ("NGLs") and 68,244 mcf of gas were sold, or 77,901 barrel of oil equivalents ("BOEs"). In 1997, 49,485 barrels of oil, 7,536 barrels of NGLs and 90,255 mcf of gas were sold, or 72,064 BOEs. Due to the decline characteristics of the Partnership's oil and gas properties, management expects a certain amount of decline in production in the future until the Partnership's economically recoverable reserves are fully depleted. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. Effective September 30, 1997, as a result of the merger with Mesa, the managing general partner accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general partner's policy, the Partnership now accounts for processed natural gas production as processed natural 3 139 gas liquids and dry residue gas. Consequently, separate product volumes will not be comparable for periods prior to September 30, 1997. Also, prices for gas products will not be comparable as the price per mcf for natural gas for the year ended December 31, 1998 is the price received for dry residue gas and the price per mcf for natural gas produced prior to October 1997 was presented as a price for wet gas (i.e., natural gas liquids combined with dry residue gas)1996.

Selected Financial Data. The following table sets forth selected financial data for the years ended December 31: 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- OPERATING RESULTS: Oil and gas sales.............. $ 873,012 583,396 $ 856,926 $1,273,373 $1,632,595 $1,416,748 $1,325,311 1,132,944 $ 932,815 $ 982,923 ========== ========== ========== ========== ========== Impairment of oil and gas properties.................. $ 295,542 306,826 $ 323,078 531,929 $ -- $ 104,290 692,515 $ -- ========== ========== ========== ========== ========== Net income (loss).............. $ (177,905444,718) $ 222,730 (269,363) $ 924,002 488,019 $ 483,679 (589,248) $ 466,370 119,039 ========== ========== ========== ========== ========== Allocation of net income (loss): Managing general partner.... $ (1,7794,447) $ 2,227 (2,693) $ 9,240 4,880 $ 4,837 (5,893) $ 4,664 1,304 ========== ========== ========== ========== ========== Limited partners............ $ (176,126440,271) $ 220,503 (266,670) $ 914,762 483,139 $ 478,842 (583,355) $ 461,706 117,735 ========== ========== ========== ========== ========== Net Limited partners' net income (loss) per limited partners' partnership interest.......... ........ $ (15.6652.94) $ 19.60 (32.06) $ 81.32 58.09 $ 42.57 (70.14) $ 41.04 14.16 ========== ========== ========== ========== ========== Limited partners' cash distributions per limited partners' partnership interest.......... ........ $ 36.76 28.57 $ 75.32 62.59 $ 84.40 68.92 $ 70.24 56.70 $ 46.96 63.80 ========== ========== ========== ========== ========== AT YEAR END: Total assets................... $1,820,336 1,392,439 $2,424,808 2,099,131 $3,051,464 2,890,740 $3,131,023 3,021,200 $3,404,388 4,042,199 ========== ========== ========== ========== ========== ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1998 compared to 1997 The Partnership's 1998 oil and gas revenues decreased 3132% to $873,012 583,396 from $1,273,373 856,926 in 1997. The decrease in revenues resulted from lower average prices received. In 1998, 49,100 29,084 barrels of oil, 17,427 12,847 barrels of natural gas liquids ("NGLs") and 68,244 62,751 mcf of gas were sold, or 77,901 52,390 barrel of oil equivalents ("BOEs"). In 1997, 49,485 30,029 barrels of oil, 7,536 6,032 barrels of NGLs and 90,255 92,294 mcf of gas were sold, or 72,064 51,443 BOEs. Due to the decline characteristics of the Partnership's oil and gas properties, management expects a certain amount of decline in production in the future until the Partnership's economically recoverable reserves are fully depleted. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. Effective September 30, 1997, as a result of the merger with Mesa, the managing general partner accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general 3 139 partner's policy, the Partnership now accounts for processed natural gas production as processed natural 3 139 gas liquids and dry residue gas. Consequently, separate product volumes will not be comparable for periods prior to September 30, 1997. Also, prices for gas products will not be comparable as the price per mcf for natural gas for the year ended December 31, 1998 is the price received for dry residue gas and the price per mcf for natural gas produced prior to October 1997 was presented as a price for wet gas (i.e., natural gas liquids combined with dry residue gas).

Selected Financial Data. The following table sets forth selected financial data for the years ended December 31: 1998 1997 1996 1995 1994 --------- ---------- ---------- ---------- ---------- ---------- OPERATING RESULTSOperating results: Oil and gas sales.............. ................. $ 873,012 $1,273,373 $1,632,595 $1,416,748 $1,325,311 =371,098 $ 548,786 $ 631,838 $ 570,205 $ 598,850 ========= ========== ========== ========== ========== Impairment of oil and gas properties.................. ..................... $ 295,542 22,031 $ 323,078 270,187 $ -- $ 104,290 -- $ 431,446 ========= ========== ========== ========== ========== Litigation settlement, net........ $ -- =$ -- $ 32,694 $ -- $ -- ========= ========== ========== ========== ========== Net income (loss).............. ................. $(274,769) $ (177,905158,804) $ 222,730 221,854 $ 924,002 60,241 $ 483,679 $ 466,370 =(435,081) ========= ========== ========== ========== ========== Allocation of net income (loss): Managing general partner.... ....... $ (1,7792,747) $ 2,227 (1,588) $ 9,240 2,219 $ 4,837 603 $ 4,664 =(4,351) ========= ========== ========== ========== ========== Limited partners............ ............... $(272,022) $ (176,126157,216) $ 220,503 219,635 $ 914,762 59,638 $ 478,842 $ 461,706 =(430,730) ========= ========== ========== ========== ========== Net Limited partners' net income (loss) per limited partners' partnership interest.......... ....................... $ (15.6628.30) $ 19.60 (16.35) $ 81.32 22.85 $ 42.57 6.20 $ 41.04 =(44.81) ========= ========== ========== ========== ========== Limited partners' cash distributions per limited partners' partnership interest.......... ........... $ 36.76 9.62 $ 75.32 25.26 $ 84.40 26.55(a) $ 70.24 19.89 $ 46.96 =18.57 ========= ========== ========== ========== ========== AT YEAR ENDAt year end: Total assets................... ...................... $ 684,133 $1,820,336 1,059,494 $2,424,808 1,460,408 $3,051,464 1,524,789 $3,131,023 $3,404,388 =1,658,967 ========= ========== ========== ========== ========== ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1998 compared to 1997 The Partnership's 1998 oil and gas revenues decreased 31% to $873,012 from $1,273,373 in 1997. The decrease in revenues resulted from lower average prices received. In 1998, 49,100 barrels of oil, 17,427 barrels of natural gas liquids ("NGLs") and 68,244 mcf of gas were sold, or 77,901 barrel of oil equivalents ("BOEs"). In 1997, 49,485 barrels of oil, 7,536 barrels of NGLs and 90,255 mcf of gas were sold, or 72,064 BOEs. Due to the decline characteristics of the Partnership's oil and gas properties, management expects a certain amount of decline in production in the future until the Partnership's economically recoverable reserves are fully depleted. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. Effective September 30, 1997, as a result of the merger with Mesa, the managing general partner accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general partner's policy, the Partnership now accounts for processed natural gas production as processed natural 3 139 gas liquids and dry residue gas. Consequently, separate product volumes will not be comparable for periods prior to September 30, 1997. Also, prices for gas products will not be comparable as the price per mcf for natural gas for the year ended December 31, 1998 is the price received for dry residue gas and the price per mcf for natural gas produced prior to October 1997 was presented as a price for wet gas (i.e., natural gas liquids combined with dry residue gas).---------------

Selected Financial Data. The following table sets forth selected financial data for the years ended December 31: 1998 1997 1996 1995 1994 ----------- ---------- ---------- ---------- ---------- ---------- ----------- OPERATING RESULTS: Oil and gas sales.............. .... $ 873,012 2,074,056 $1,273,373 3,033,675 $1,632,595 3,748,608 $1,416,748 $1,325,311 3,147,004 $ 3,434,740 =========== ========== ========== ========== =========== Impairment of oil and gas properties.................. .... $ 295,542 744,642 $ 323,078 891,257 $ 61,080 $ 312,969 $ -- $ 104,290 $ -- =========== ========== ========== ========== =========== Net income (loss).............. .... $(1,011,459) $ (177,905149,382) $1,479,052 $ 222,730 493,276 $ 924,002 $ 483,679 $ 466,370 619,939 =========== ========== ========== ========== =========== Allocation of net income (loss): Managing general partner.... ......... $ (1,77910,115) $ 2,227 (1,494) $ 9,240 14,790 $ 4,837 5,035 $ 4,664 6,335 =========== ========== ========== ========== =========== Limited partners............ ........ $(1,001,344) $ (176,126147,888) $1,464,262 $ 220,503 488,241 $ 914,762 $ 478,842 $ 461,706 613,604 =========== ========== ========== ========== =========== Net Limited partners' net income (loss) per limited partners' partnership interest.......... $ (15.6631.04) $ 19.60 (4.58) $ 81.32 45.38 $ 42.57 15.13 $ 41.04 19.02 =========== ========== ========== ========== =========== Limited partners' cash distributions per limited partners' partnership interest.......... $ 36.76 23.66 $ 75.32 52.38 $ 84.40 56.25 $ 70.24 48.87 $ 46.96 53.89 =========== ========== ========== ========== =========== AT YEAR END: Total assets................... ......... $ 5,585,045 $1,820,336 7,399,664 $2,424,808 9,230,704 $3,051,464 9,713,167 $3,131,023 $3,404,388 10,707,318 =========== ========== ========== ========== =========== ITEM 7. MANAGEMENT7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1998 compared to 1997 The Partnership's 1998 oil and gas revenues decreased 3132% to $873,012 2,074,056 from $1,273,373 3,033,675 in 1997. The decrease in revenues resulted from lower average prices received. In 1998, 49,100 111,585 barrels of oil, 17,427 47,190 barrels of natural gas liquids ("NGLs") and 68,244 199,215 mcf of gas were sold, or 77,901 191,978 barrel of oil equivalents ("BOEs"). In 1997, 49,485 114,621 barrels of oil, 7,536 18,786 barrels of NGLs and 90,255 271,374 mcf of gas were sold, or 72,064 178,636 BOEs. Due to the decline characteristics of the Partnership's oil and gas properties, management expects a certain amount of decline in production in the future until the Partnership's economically recoverable reserves are fully depleted. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. Effective September 30, 1997, as a result of the merger with Mesa, the managing general partner accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general partner's policy, the Partnership now accounts for processed natural gas production as processed natural 3 139 gas liquids and dry residue gas. Consequently, separate product volumes will not be comparable for periods prior to September 30, 1997. Also, prices for gas products will not be comparable as the price per mcf for natural gas for the year ended December 31, 1998 is the price received for dry residue gas and the price per mcf for natural gas produced prior to October 1997 was presented as a price for wet gas (i.e., natural gas liquids combined with dry residue gas).

Selected Financial Data. The following table sets forth selected financial data for the years ended December 31: 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- OPERATING RESULTSOperating results: Oil and gas sales.............. $ 873,012 $1,273,373 $1,632,595 $1,416,748 $1,325,311 441,480 $ 643,882 $ 777,677 $ 661,198 $ 733,354 ========== ========== ========== ========== ========== Impairment of oil and gas properties.................. $ 295,542 34,145 $ 323,078 321,019 $ -- $ 104,290 583,706 $ -- ========== ========== ========== ========== ========== Net income (loss).............. $ (177,90544,421) $ 222,730 (149,948) $ 924,002 261,210 $ 483,679 (696,986) $ 466,370 2,920 ========== ========== ========== ========== ========== Allocation of net income (loss): Managing general partner.... $ (1,779444) $ 2,227 (1,499) $ 9,240 2,612 $ 4,837 (6,960) $ 4,664 58 ========== ========== ========== ========== ========== Limited partners............ $ (176,12643,977) $ 220,503 (148,449) $ 914,762 258,598 $ 478,842 (690,026) $ 461,706 2,862 ========== ========== ========== ========== ========== Net Limited partners' net income (loss) per limited partners' partnership interest.......... ........ $ (15.666.46) $ 19.60 (21.80) $ 81.32 37.97 $ 42.57 (101.31) $ 41.04 .42 ========== ========== ========== ========== ========== Limited partners' cash distributions per limited partners' partnership interest.......... ........ $ 36.76 28.44 $ 75.32 53.06 $ 84.40 53.75 $ 70.24 48.45 $ 46.96 57.38 ========== ========== ========== ========== ========== AT YEAR ENDAt year end: Total assets................... $1,820,336 1,385,777 $2,424,808 1,634,061 $3,051,464 2,146,498 $3,131,023 2,277,937 $3,404,388 3,289,433 ========== ========== ========== ========== ========== ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1998 compared to 1997 The Partnership's 1998 oil and gas revenues decreased 31% to $873,012 441,480 from $1,273,373 643,882 in 1997. The decrease in revenues resulted from lower average prices received. In 1998, 49,100 21,587 barrels of oil, 17,427 11,328 barrels of natural gas liquids ("NGLs") and 68,244 47,086 mcf of gas were sold, or 77,901 40,763 barrel of oil equivalents ("BOEs"). In 1997, 49,485 21,972 barrels of oil, 7,536 4,763 barrels of NGLs and 90,255 68,973 mcf of gas were sold, or 72,064 38,231 BOEs. Due to the decline characteristics of the Partnership's oil and gas properties, management expects a certain amount of decline in production in the future until the Partnership's economically recoverable reserves are fully depleted. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. Effective September 30, 1997, as a result of the merger with Mesa, the managing general partner accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general partner's policy, the Partnership now accounts for processed natural gas production as processed natural 3 139 gas liquids and dry residue gas. Consequently, separate product volumes will not be comparable for periods prior to September 30, 1997. Also, prices for gas products will not be comparable as the price per mcf for natural gas for the year ended December 31, 1998 is the price received for dry residue gas and the price per mcf for natural gas produced prior to October 1997 was presented as a price for wet gas (i.e., natural gas liquids combined with dry residue gas).. The average price received per barrel of oil decreased $6.21, or 32% from $19.41 in 1997 to $13.20 in 1998. The average price received per barrel of NGLs decreased $4.14, or 37% from $11.16 in 1997 to $7.02 in 1998. The average price received per mcf of gas decreased 31% in 1998 to $1.64 compared to $2.38 in 1997. The market price for oil and gas has been extremely volatile in the past decade, and management expects a certain amount of volatility to continue in the foreseeable future. The Partnership may therefore sell its future oil and gas production at average prices lower or higher than that received in 1998. Total costs and expenses decreased in 1998 to $492,078 as compared to $801,240 in 1997, a decrease of $309,162, or 39%. This decrease was primarily due to declines in the impairment of oil and gas properties, production costs and general and administrative expenses ("G&A"), offset by a slight increase in depletion. Production costs were $282,430 in 1998 and $305,774 in 1997, resulting in a $23,344 decline, or 8%. The decline includes a reduction in production taxes due to the decline in oil and gas revenues and less well maintenance costs. G&A's components are independent accounting and engineering fees and managing general partner personnel and operating costs. During this period, G&A decreased, in aggregate, 41% from $23,842 in 1997 to $14,124 in 1998. The Partnership paid the managing general partner $11,560 in 1998 and $20,526 in 1997 for G&A incurred on behalf of the Partnership. G&A is allocated, in part, to the Partnership by the managing general partner. Such allocated expenses are determined by the managing general partner based upon its judgement of the level of activity of the Partnership relative to the managing general partner's activities and other entities it manages. The method of allocation has been consistent over the past several years with certain modifications incorporated to reflect changes in Pioneer USA's overall business activities. In accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("SFAS 121"), the managing general partner reviews the Partnership's oil and gas properties for impairment whenever events or circumstances indicate a decline in the recoverability of the carrying value of the Partnership's assets may have occurred. Declining commodity prices prompted impairment reviews in 1998 and 1997. As a result of the review and evaluation of its long-lived assets for impairment, the Partnership recognized non-cash charges of $34,145 and $321,019 related to its oil and gas properties during 1998 and 1997, respectively. Depletion was $161,379 in 1998 compared to $150,605 in 1997. This represented an increase of $10,774, or 7%. This increase was primarily the result of a decline in proved reserves during 1998 due to the lower commodity prices, offset by a reduction in the Partnership's net depletable basis from charges taken in accordance with SFAS 121 during the fourth quarter of 1997 and a reduction in oil production of 385 barrels for the period ended December 31, 1998 compared to the same period in 1997. 1997 compared to 1996 The Partnership's 1997 oil and gas revenues decreased 17% to $643,882 from $777,677 in 1996. The decrease in revenues resulted from declines in production and lower average prices received. In 1997, 21,972 barrels of oil, 4,763 barrels of NGLs and 68,973 mcf of gas were sold, or 38,231 BOEs. In 1996, 25,428 barrels of oil and 88,919 mcf of gas were sold, or 40,248 BOEs. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. As is described above in "Results of 4 140 Operations -- 1998 compared to 1997", the Partnership changed its method of accounting for processed natural gas to a dry gas basis in the fourth quarter of 1997. As a result of this change, the Partnership now accounts for processed natural gas production as processed natural gas liquids and dry residue gas. Consequently, 1997 and 1996 separate product volumes are not comparable. The declines in production volumes were primarily attributable to the decline characteristics of the Partnership's oil and gas properties. The average price received per barrel of oil decreased 10% from $21.62 in 1996 to $19.41 in 1997. The average price received per barrel of NGLs during 1997 was $11.16. The average price received per mcf of gas decreased 7% in 1997 to $2.38 compared to $2.56 in 1996. Total costs and expenses increased in 1997 to $801,240 as compared to $523,562 in 1996, an increase of $277,678, or 53%. This increase was primarily due to the impairment of oil and gas properties and an increase in production costs, offset by declines in loss on disposition of assets, depletion and G&A. Production costs were $305,774 in 1997 and $298,749 in 1996, resulting in a $7,025 increase. The increase was due to additional well maintenance costs, offset by a decrease in production taxes. During this period, G&A decreased, in aggregate, 9% from $26,252 in 1996 to $23,842 in 1997. The Partnership paid the managing general partner $20,526 in 1997 and $22,989 in 1996 for G&A incurred on behalf of the Partnership. The Partnership recognized a non-cash SFAS 121 impairment provision of $321,019 related to its oil and gas properties during the fourth quarter of 1997. Depletion was $150,605 in 1997 compared to $169,844 in 1996. This represented a decrease of $19,239, or 11%. This decrease was primarily attributable to a decline in oil production of 3,456 barrels from 1996. A loss on disposition of assets of $28,717 was recognized during 1996 resulting from the sale of one gas well and the write-off of remaining capitalized well costs of $35,532 less proceeds received of $6,815. IMPACT OF INFLATION AND CHANGING PRICES ON SALES AND NET INCOME

Selected Financial Data. The following table sets forth selected financial data for the years ended December 31: 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- OPERATING RESULTS: Oil and gas sales.............. $ 873,012 692,090 $1,273,373 1,063,396 $1,632,595 1,346,937 $1,416,748 1,161,251 $1,325,311 1,292,563 ========== ========== ========== ========== ========== Impairment of oil and gas properties.................. $ 295,542 298,622 $ 323,078 127,213 $ -- $ 104,290 76,908 $ -- ========== ========== ========== ========== ========== Net income (loss).............. $ (177,905416,064) $ 222,730 168,261 $ 924,002 577,803 $ 483,679 263,533 $ 466,370 245,360 ========== ========== ========== ========== ========== Allocation of net income (loss): Managing general partner.... $ (1,7794,161) $ 2,227 1,683 $ 9,240 5,778 $ 4,837 2,686 $ 4,664 2,505 ========== ========== ========== ========== ========== Limited partners............ $ (176,126411,903) $ 220,503 166,578 $ 914,762 572,025 $ 478,842 260,847 $ 461,706 242,855 ========== ========== ========== ========== ========== Net Limited partners' net income (loss) per limited partners' partnership interest.......... ........ $ (15.6634.02) $ 19.60 13.76 $ 81.32 47.25 $ 42.57 21.55 $ 41.04 20.06 ========== ========== ========== ========== ========== Limited partners' cash distributions per limited partners' partnership interest.......... ........ $ 36.76 17.30 $ 75.32 47.53 $ 84.40 51.98 $ 70.24 45.35 $ 46.96 51.72 ========== ========== ========== ========== ========== AT YEAR END: Total assets................... $1,820,336 1,617,114 $2,424,808 2,261,689 $3,051,464 2,664,141 $3,131,023 2,771,529 $3,404,388 3,023,786 ========== ========== ========== ========== ========== ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1998 compared to 1997 The Partnership's 1998 oil and gas revenues decreased 3135% to $873,012 692,090 from $1,273,373 1,063,396 in 1997. The decrease in revenues resulted from lower average prices received. In 1998, 49,100 39,380 barrels of oil, 17,427 13,978 barrels of natural gas liquids ("NGLs") and 68,244 48,787 mcf of gas were sold, or 77,901 61,489 barrel of oil equivalents ("BOEs"). In 1997, 49,485 41,504 barrels of oil, 7,536 5,885 barrels of NGLs and 90,255 80,867 mcf of gas were sold, or 72,064 60,867 BOEs. Due to the decline characteristics of the Partnership's oil and gas properties, management expects a certain amount of decline in production in the future until the Partnership's economically recoverable reserves are fully depleted. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. Effective September 30, 1997, as a result of the merger with Mesa, the managing general partner accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general 3 139 partner's policy, the Partnership now accounts for processed natural gas production as processed natural 3 139 gas liquids and dry residue gas. Consequently, separate product volumes will not be comparable for periods prior to September 30, 1997. Also, prices for gas products will not be comparable as the price per mcf for natural gas for the year ended December 31, 1998 is the price received for dry residue gas and the price per mcf for natural gas produced prior to October 1997 was presented as a price for wet gas (i.e., natural gas liquids combined with dry residue gas).

Selected Financial Data. The following table sets forth selected financial data for the years ended December 31: 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- OPERATING RESULTS: Oil and gas sales.............. $ 873,012 774,533 $1,273,373 1,157,862 $1,632,595 1,411,568 $1,416,748 1,195,876 $1,325,311 1,183,360 ========== ========== ========== ========== ========== Impairment of oil and gas properties.................. $ 295,542 405,308 $ 323,078 699,976 $ -- $ 104,290 591,925 $ -- ========== ========== ========== ========== ========== Net income (loss).............. $ (177,905514,812) $ 222,730 (331,171) $ 924,002 600,634 $ 483,679 (334,438) $ 466,370 178,831 ========== ========== ========== ========== ========== Allocation of net income (loss): Managing general partner.... $ (1,7795,148) $ 2,227 (3,312) $ 9,240 6,006 $ 4,837 (3,344) $ 4,664 1,788 ========== ========== ========== ========== ========== Limited partners............ $ (176,126509,664) $ 220,503 (327,859) $ 914,762 594,628 $ 478,842 (331,094) $ 461,706 177,043 ========== ========== ========== ========== ========== Net Limited partners' net income (loss) per limited partners' partnership interest.......... ........ $ (15.6639.40) $ 19.60 (25.35) $ 81.32 45.97 $ 42.57 (25.60) $ 41.04 13.69 ========== ========== ========== ========== ========== Limited partners' cash distributions per limited partners' partnership interest.......... ........ $ 36.76 27.90 $ 75.32 50.68 $ 84.40 57.12 $ 70.24 44.53 $ 46.96 43.56 ========== ========== ========== ========== ========== AT YEAR END: Total assets................... $1,820,336 2,059,502 $2,424,808 2,953,618 $3,051,464 3,940,216 $3,131,023 4,121,722 $3,404,388 5,006,561 ========== ========== ========== ========== ========== ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1998 compared to 1997 The Partnership's 1998 oil and gas revenues decreased 3133% to $873,012 774,533 from $1,273,373 1,157,862 in 1997. The decrease in revenues resulted from lower average prices received. In 1998, 49,100 37,135 barrels of oil, 17,427 20,500 barrels of natural gas liquids ("NGLs") and 68,244 86,501 mcf of gas were sold, or 77,901 72,052 barrel of oil equivalents ("BOEs"). In 1997, 49,485 38,859 barrels of oil, 7,536 9,410 barrels of NGLs and 90,255 134,311 mcf of gas were sold, or 72,064 70,654 BOEs. Due to the decline characteristics of the Partnership's oil and gas properties, management expects a certain amount of decline in production in the future until the Partnership's economically recoverable reserves are fully depleted. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. Effective September 30, 1997, as a result of the merger with Mesa, the managing general partner accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general 3 139 partner's policy, the Partnership now accounts for processed natural gas production as processed natural 3 139 gas liquids and dry residue gas. Consequently, separate product volumes will not be comparable for periods prior to September 30, 1997. Also, prices for gas products will not be comparable as the price per mcf for natural gas for the year ended December 31, 1998 is the price received for dry residue gas and the price per mcf for natural gas produced prior to October 1997 was presented as a price for wet gas (i.e., natural gas liquids combined with dry residue gas).

Selected Financial Data. The following table sets forth selected financial data for the years ended December 31: 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- OPERATING RESULTS: Oil and gas sales.............. $ 873,012 764,787 $1,273,373 1,118,628 $1,632,595 1,382,265 $1,416,748 1,160,419 $1,325,311 1,266,515 ========== ========== ========== ========== ========== Impairment of oil and gas properties.................. $ 295,542 275,430 $ 323,078 328,594 $ -- 22,474 $ 104,290 115,434 $ -- ========== ========== ========== ========== ========== Net income (loss).............. $ (177,905373,956) $ 222,730 (55,191) $ 924,002 544,919 $ 483,679 181,451 $ 466,370 229,524 ========== ========== ========== ========== ========== Allocation of net income (loss): Managing general partner.... $ (1,7793,740) $ 2,227 (552) $ 9,240 5,449 $ 4,837 1,852 $ 4,664 2,345 ========== ========== ========== ========== ========== Limited partners............ $ (176,126370,216) $ 220,503 (54,639) $ 914,762 539,470 $ 478,842 179,599 $ 461,706 227,179 ========== ========== ========== ========== ========== Net Limited partners' net income (loss) per limited partners' partnership interest.......... ........ $ (15.6631.12) $ 19.60 (4.59) $ 81.32 45.35 $ 42.57 15.10 $ 41.04 19.10 ========== ========== ========== ========== ========== Limited partners' cash distributions per limited partners' partnership interest.......... ........ $ 36.76 23.66 $ 75.32 52.38 $ 84.40 56.21 $ 70.24 48.84 $ 46.96 53.88 ========== ========== ========== ========== ========== AT YEAR END: Total assets................... $1,820,336 2,057,408 $2,424,808 2,727,510 $3,051,464 3,402,932 $3,131,023 3,580,821 $3,404,388 3,947,513 ========== ========== ========== ========== ========== ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1998 compared to 1997 The Partnership's 1998 oil and gas revenues decreased 3132% to $873,012 764,787 from $1,273,373 1,118,628 in 1997. The decrease in revenues resulted from lower average prices received. In 1998, 49,100 41,140 barrels of oil, 17,427 17,403 barrels of natural gas liquids ("NGLs") and 68,244 73,460 mcf of gas were sold, or 77,901 70,786 barrel of oil equivalents ("BOEs"). In 1997, 49,485 42,270 barrels of oil, 7,536 6,929 barrels of NGLs and 90,255 100,068 mcf of gas were sold, or 72,064 65,877 BOEs. Due to the decline characteristics of the Partnership's oil and gas properties, management expects a certain amount of decline in production in the future until the Partnership's economically recoverable reserves are fully depleted. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. Effective September 30, 1997, as a result of the merger with Mesa, the managing general partner accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general 3 139 partner's policy, the Partnership now accounts for processed natural gas production as processed natural 3 139 gas liquids and dry residue gas. Consequently, separate product volumes will not be comparable for periods prior to September 30, 1997. Also, prices for gas products will not be comparable as the price per mcf for natural gas for the year ended December 31, 1998 is the price received for dry residue gas and the price per mcf for natural gas produced prior to October 1997 was presented as a price for wet gas (i.e., natural gas liquids combined with dry residue gas).