Common use of Basis of Presentation Clause in Contracts

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 15% to $671,386 from $789,531 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease in production. For the six months ended June 30, 1999, 30,733 barrels of oil, 18,546 barrels of natural gas liquids ("NGLs") and 90,088 mcf of gas were sold, or 64,294 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 barrels of oil, 17,823 barrels of NGLs and 90,366 mcf of gas were sold, or 69,341 BOEs. The average price received per barrel of oil decreased 7% from $14.18 for the six months ended June 30, 1998 to $13.20 for the same period in 1999. The average price received per barrel of NGLs decreased slightly from $7.33 during the six months ended June 30, 1998 to $7.26 for the same period in 1999. The average price received per mcf of gas decreased 7% from $1.57 during the six months ended June 30, 1998 to $1.46 in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain on disposition of assets of $765 was received during the six months ended June 30, 1998 from the sale of equipment on one saltwater disposal well plugged and abandoned in a prior year. Costs and Expenses: Total costs and expenses decreased to $643,652 for the six months ended June 30, 1999 as compared to $825,617 for the same period ended June 30, 1998, a decrease of $181,965, or 22%. This decrease was due to declines in production costs, depletion and general and administrative expenses ("G&A"). Production costs were $455,004 for the six months ended June 30, 1999 and $596,233 for the same period in 1998 resulting in a decrease of $141,229, or 24%. The decrease was due to declines in well maintenance costs, workover costs, production taxes and ad valorem taxes. 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, 15% from $23,676 for the six months ended June 30, 1998 to $20,141 for the same period in 1999. Depletion was $168,507 for the six months ended June 30, 1999 compared to $205,708 for the same period in 1998. This represented a decrease in depletion of $37,201, or 18%. This decrease was primarily attributable to a reduction in oil production of 5,724 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase in proved reserves during the period ended June 30, 1999 due to higher commodity prices and a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998. Three months ended June 30, 1999 compared with three months ended June 30, 1998

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain reclassifications have been made to the June 30, 1998 financial statements to conform to the June 30, 1999 financial statement presentation. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 1521% to $671,386 194,872 from $789,531 246,176 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease declines in production. For the six months ended June 30, 1999, 30,733 10,144 barrels of oil, 18,546 5,069 barrels of natural gas liquids ("NGLs") and 90,088 22,550 mcf of gas were sold, or 64,294 18,971 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 12,102 barrels of oil, 17,823 5,715 barrels of NGLs and 90,366 25,765 mcf of gas were sold, or 69,341 22,111 BOEs. The average price received per barrel of oil decreased 7% $1.15, or 8%, from $14.18 14.08 for the six months ended June 30, 1998 to $13.20 12.93 for the same period in 1999. The average price received per barrel of NGLs decreased increased slightly from $7.33 6.70 during the six months ended June 30, 1998 to $7.26 6.84 for the same period in 1999. The average price received per mcf of gas decreased 711% from $1.57 1.45 during the six months ended June 30, 1998 to $1.46 1.29 in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain on disposition of assets of $765 was received during the six months ended June 30, 1998 from the sale of equipment on one saltwater disposal well plugged and abandoned in a prior year. Costs and Expenses: Total costs and expenses decreased to $643,652 177,985 for the six months ended June 30, 1999 as compared to $825,617 201,819 for the same period ended June 30, in 1998, a decrease of $181,96523,834, or 2212%. This decrease was due to declines the result of reductions in depletion, production costs, depletion costs and general and administrative expenses ("G&A"). Production costs were $455,004 122,130 for the six months ended June 30, 1999 and $596,233 130,525 for the same period in 1998 1998, resulting in a decrease of $141,2298,395, or 246%. The decrease was due , attributable to declines in well maintenance costs, workover costs, costs and production taxes and ad valorem taxes. 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, 1521% from $23,676 7,385 for the six months ended June 30, 1998 to $20,141 5,846 for the same period in 1999. Depletion was $168,507 50,009 for the six months ended June 30, 1999 compared to $205,708 63,909 for the same period in 1998. This represented , a decrease in depletion of $37,20113,900, or 1822%. This decrease was primarily attributable to a reduction in oil production of 5,724 1,958 barrels for the six months ended June 30, 1999 compared to the same period in 1998, 1998 and an increase in proved reserves during the period ended June 30, 1999 due to higher commodity prices and a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998prices. Three months ended June 30, 1999 compared with three months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 5% to $111,050 from $117,387 for the three months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from a decline in production, offset by higher average prices received. For the three months ended June 30, 1999, 4,974 barrels of oil, 2,728 barrels of NGLs and 11,075 mcf of gas were sold, or 9,548 BOEs. For the three months ended June 30, 1998, 5,743 barrels of oil, 3,134 barrels of NGLs and 13,299 mcf of gas were sold, or 11,094 BOEs.

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 1518% to $671,386 407,249 from $789,531 497,072 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease in production. For the six months ended June 30, 1999, 30,733 20,359 barrels of oil, 18,546 10,775 barrels of natural gas liquids ("NGLs") and 90,088 42,002 mcf of gas were sold, or 64,294 38,134 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 23,912 barrels of oil, 17,823 10,780 barrels of NGLs and 90,366 49,055 mcf of gas were sold, or 69,341 42,868 BOEs. The average price received per barrel of oil decreased 75% from $14.18 14.01 for the six months ended June 30, 1998 to $13.20 13.27 for the same period in 1999. The average price received per barrel of NGLs decreased slightly 11% from $7.33 7.68 during the six months ended June 30, 1998 to $7.26 6.87 for the same period in 1999. The average price received per mcf of gas decreased 7% from $1.57 during 1.62 for the six months ended June 30, 1998 to $1.46 1.50 for the same period in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain on disposition of assets of $765 5,435 was received during the six months ended June 30, 1998 from the sale of equipment on one saltwater disposal well plugged and abandoned in a prior yearduring 1998. Abandoned property costs of $20,389 were also incurred during the six months ended June 30, 1998 to plug and abandon this well. Costs and Expenses: Total costs and expenses decreased to $643,652 416,003 for the six months ended June 30, 1999 as compared to $825,617 522,831 for the same period ended June 30, in 1998, a decrease of $181,965106,828, or 2220%. This decrease was due to declines in production costs, depletion depletion, abandoned property costs and general and administrative expenses ("G&A"). Production costs were $455,004 293,691 for the six months ended June 30, 1999 and $596,233 339,770 for the same period in 1998 1998, resulting in a decrease of $141,22946,079 decrease, or 2414%. The decrease was due to declines in well maintenance costscosts and production taxes, workover costs, production taxes and offset by an increase in ad valorem taxes. 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, 15% 18%, from $23,676 14,912 for the six months ended June 30, 1998 to $20,141 12,217 for the same period in 1999. Depletion was $168,507 110,095 for the six months ended June 30, 1999 compared to $205,708 147,760 for the same period in 1998. This represented a decrease in depletion of $37,20137,665, or 1825%. This decrease was primarily attributable due to a reduction in oil production of 5,724 3,553 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase in proved reserves during the period ended June 30, 1999 due to higher commodity prices and a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998. 8 131 Three months ended June 30, 1999 compared with three months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 3% to $231,875 from $239,503 for the three months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from a decrease in production, offset by higher average prices received. For the three months ended June 30, 1999, 10,068 barrels of oil, 5,881 barrels of NGLs and 20,138 mcf of gas were sold, or 19,305 BOEs. For the three months ended June 30, 1998, 11,839 barrels of oil, 5,487 barrels of NGLs and 24,366 mcf of gas were sold, or 21,387 BOEs. The average price received per barrel of oil increased $1.51, or 11%, from $13.40 for the three months ended June 30, 1998 to $14.91 for the same period in 1999. The average price received per barrel of NGLs increased 7% from $7.64 during the three months ended June 30, 1998 to $8.17 for the same period in 1999. The average price received per mcf of gas increased 4% from $1.60 during the three months ended June 30, 1998 to $1.67 in 1999. A gain on disposition of assets of $4,779 was received during the three months ended June 30, 1998 from the sale of equipment on one well plugged and abandoned during 1998. Abandoned property costs of $10,743 were also incurred during the three months ended June 30, 1998 to plug and abandon this well. Costs and Expenses: Total costs and expenses decreased to $187,342 for the three months ended June 30, 1999 as compared to $269,651 for the same period in 1998, a decrease of $82,309, or 31%. This decrease was due to declines in production costs, abandoned property costs, G&A and depletion. Production costs were $144,074 for the three months ended June 30, 1999 and $172,207 for the same period in 1998 resulting in a $28,133 decrease, or 16%. The decrease was due to declines in well maintenance costs and production taxes, offset by an increase in ad valorem taxes. During this period, G&A decreased, in aggregate, 3%, from $7,185 for the three months ended June 30, 1998 to $6,956 for the same period in 1999. Depletion was $36,312 for the three months ended June 30, 1999 compared to $79,516 for the same period in 1998, a decrease of $43,204, or 54%. This decrease was primarily attributable to an increase in proved reserves during the period ended June 30, 1999 as a result of higher commodity prices, a reduction in oil production of 1,771 barrels for the three months ended June 30, 1999 compared to the same period in 1998 and a reduction in the Partnership's net depletable basis from charges taken in accordance with SFAS 121 during the fourth quarter of 1998.

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 157% to $671,386 621,001 from $789,531 669,914 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and received, offset by a decrease slight increase in production. For the six months ended June 30, 1999, 30,733 27,730 barrels of oil, 18,546 17,155 barrels of natural gas liquids ("NGLs") and 90,088 79,292 mcf of gas were sold, or 64,294 58,100 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 31,285 barrels of oil, 17,823 14,787 barrels of NGLs and 90,366 71,913 mcf of gas were sold, or 69,341 58,058 BOEs. The average price received per barrel of oil decreased 76% from $14.18 14.25 for the six months ended June 30, 1998 to $13.20 13.33 for the same period in 1999. The average price received per barrel of NGLs decreased slightly increased 6% from $7.33 7.46 during the six months ended June 30, 1998 to $7.26 7.94 for the same period in 1999. The average price received per mcf of gas decreased 78% from $1.57 1.58 during the six months ended June 30, 1998 to $1.46 1.45 in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain on disposition of assets of $765 157 was received recognized during the six months ended June 30, 1998 from post closing adjustments received from the sale of equipment on two oil and gas wells and an overriding royalty interest in one saltwater disposal well plugged and abandoned in a prior yearduring 1997. Costs and Expenses: Total costs and expenses decreased to $643,652 558,526 for the six months ended June 30, 1999 as compared to $825,617 707,110 for the same period ended June 30, in 1998, a decrease of $181,965148,584, or 2221%. This decrease was due to resulted from declines in production costs, depletion and general and administrative expenses ("G&A"). Production costs were $455,004 416,974 for the six months ended June 30, 1999 and $596,233 529,323 for the same period in 1998 resulting in a decrease of $141,229112,349 decrease, or 2421%. The decrease was due to declines in well maintenance costs, workover costsproduction taxes, production ad valorem taxes and ad valorem taxesworkover expenses. 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, 15% decreased slightly from $23,676 21,809 for the six months ended June 30, 1998 to $20,141 21,326 for the same period in 1999. Depletion was $168,507 120,226 for the six months ended June 30, 1999 compared to $205,708 155,978 for the same period in 1998. This represented a decrease in depletion of $37,20135,752, or 1823%. This decrease was primarily attributable to an increase in proved reserves for the period ended June 30, 1999 due to higher commodity prices, a reduction in oil production of 5,724 3,555 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase in proved reserves during the period ended June 30, 1999 due to higher commodity prices 1998 and a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998. 8 131 Three months ended June 30, 1999 compared with three months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues increased 17% to $379,880 from $324,521 for the three months ended June 30, 1999 and 1998, respectively. The increase in revenues resulted from higher average prices received and an increase in production. For the three months ended June 30, 1999, 13,447 barrels of oil, 10,998 barrels of NGLs and 46,749 mcf of gas were sold, or 32,237 BOEs. For the three months ended June 30, 1998, 15,389 barrels of oil, 7,714 barrels of NGLs and 36,519 mcf of gas were sold, or 29,190 BOEs. The average price received per barrel of oil increased $1.45, or 11%, from $13.60 for the three months ended June 30, 1998 to $15.05 for the three months ended June 30, 1999. The average price received per barrel of NGLs increased $1.75, or 23%, from $7.59 during the three months ended June 30, 1998 to $9.34 for the same period in 1999. The average price received per mcf of gas increased 3% from $1.55 during the three months ended June 30, 1998 to $1.60 for the same period in 1999. A gain on disposition of assets of $157 was recognized during the three months ended June 30, 1998 from post closing adjustments received from the sale of two oil and gas wells and an overriding royalty interest in one well during 1997. Costs and Expenses: Total costs and expenses decreased to $261,584 for the three months ended June 30, 1999 as compared to $348,081 for the same period in 1998, a decrease of $86,497, or 25%. This decrease resulted from lower production costs and depletion, offset by an increase in G&A. Production costs were $210,785 for the three months ended June 30, 1999 and $262,138 for the same period in 1998 resulting in a $51,353 decrease, or 20%. The decrease was due to a decline in well maintenance costs. During this period, G&A increased, in aggregate, 11% from $10,964 for the three months ended June 30, 1998 to $12,187 for the same period in 1999. Depletion was $38,612 for the three months ended June 30, 1999 compared to $74,979 for the same period in 1998, a decrease of $36,367, or 49%. This decrease was primarily attributable to an increase in proved reserves during the period ended June 30, 1999 as a result of higher commodity prices, a reduction in oil production of 1,942 barrels for the three months ended June 30, 1999 compared to the same period in 1998 and a reduction in the Partnership's net depletable basis from charges taken in accordance with SFAS 121 during the fourth quarter of 1998.

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 154% to $671,386 573,345 from $789,531 594,203 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease received, offset by an increase in production. For the six months ended June 30, 1999, 30,733 25,057 barrels of oil, 18,546 18,393 barrels of natural gas liquids ("NGLs") and 90,088 80,888 mcf of gas were sold, or 64,294 56,931 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 28,194 barrels of oil, 17,823 15,777 barrels of NGLs and 90,366 67,759 mcf of gas were sold, or 69,341 55,264 BOEs. The average price received per barrel of oil decreased 75% from $14.18 14.22 for the six months ended June 30, 1998 to $13.20 13.44 for the same period in 1999. The average price received per barrel of NGLs decreased slightly increased 8% from $7.33 6.55 during the six months ended June 30, 1998 to $7.26 7.07 for the same period in 1999. The average price received per mcf of gas decreased 7% from $1.57 1.33 during the six months ended June 30, 1998 to $1.46 1.32 in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain on disposition of assets of $765 2,100 was received during the six months ended June 30, 1998 from the sale of equipment on one saltwater disposal well plugged and abandoned in a prior yearfully depleted well. Costs and Expenses: Total costs and expenses decreased to $643,652 531,921 for the six months ended June 30, 1999 as compared to $825,617 627,698 for the same period ended June 30, in 1998, a decrease of $181,96595,777, or 2215%. This decrease was due to declines in depletion and production costs, depletion and offset by an increase in general and administrative expenses ("G&A"). Production costs were $455,004 401,324 for the six months ended June 30, 1999 and $596,233 445,105 for the same period in 1998 resulting in a decrease of $141,22943,781 decrease, or 2410%. The decrease was due to declines in well maintenance costs, workover costs, production taxes and ad valorem taxes. 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, 15% increased slightly from $23,676 19,165 for the six months ended June 30, 1998 to $20,141 19,644 for the same period in 1999. Depletion was $168,507 110,953 for the six months ended June 30, 1999 compared to $205,708 163,428 for the same period in 1998. This represented , a decrease in depletion of $37,20152,475, or 1832%. This decrease was primarily attributable to an increase in proved reserves during the period ended June 30, 1999 as a result of higher commodity prices, a reduction in oil production of 5,724 3,137 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase in proved reserves during the period ended June 30, 1999 due to higher commodity prices 1998 and a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998. Three months ended June 30, 1999 compared with three months ended June 30, 1998

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 1510% to $671,386 458,623 from $789,531 511,361 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease in production. For the six months ended June 30, 1999, 30,733 23,002 barrels of oil, 18,546 11,929 barrels of natural gas liquids ("NGLs") and 90,088 51,130 mcf of gas were sold, or 64,294 43,453 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 25,046 barrels of oil, 17,823 10,876 barrels of NGLs and 90,366 51,388 mcf of gas were sold, or 69,341 44,487 BOEs. The average price received per barrel of oil decreased 7% $1.08, or 8%, from $14.18 14.09 for the six months ended June 30, 1998 to $13.20 13.01 for the same period in 1999. The average price received per barrel of NGLs decreased slightly from $7.33 7.46 during the six months ended June 30, 1998 to $7.26 7.29 for the same period in 1999. The average price received per mcf of gas decreased 76% from $1.57 1.51 during the six months ended June 30, 1998 to $1.46 1.42 in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain on disposition of assets of $765 13,728 was received during the six months ended June 30, 1998 from the sale of oil and gas equipment on one saltwater disposal well plugged and abandoned in a prior year. Abandoned property costs of $3,943 were also incurred during the six months ended June 30, 1998 related to this well. Costs and Expenses: Total costs and expenses decreased to $643,652 442,658 for the six months ended June 30, 1999 as compared to $825,617 494,200 for the same period ended June 30, in 1998, a decrease of $181,96551,542, or 2210%. This decrease was due to declines in depletion, production costs, depletion abandoned property costs and general and administrative expenses ("G&A"). Production costs were $455,004 302,253 for the six months ended June 30, 1999 and $596,233 315,652 for the same period in 1998 resulting in a decrease of $141,22913,399 decrease, or 244%. The This decrease was primarily due to declines a decline in well maintenance costs, workover costs, production taxes and ad valorem taxes. 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, 1510% from $23,676 15,341 for the six months ended June 30, 1998 to $20,141 13,759 for the same period in 1999. Depletion was $168,507 126,646 for the six months ended June 30, 1999 compared to $205,708 159,264 for the same period in 1998. This represented , a decrease in depletion of $37,20132,618, or 1820%. This decrease was primarily attributable to an increase in proved reserves during the period ended June 30, 1999 as a result of higher commodity prices, a reduction in oil production of 5,724 2,044 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase in proved reserves during the period ended June 30, 1999 due to higher commodity prices 1998 and a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998. 8 131 Three months ended June 30, 1999 compared with three months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues increased 13% to $267,074 from $235,929 for the three months ended June 30, 1999 and 1998, respectively. The increase in revenues resulted from higher average prices received and an increase in production. For the three months ended June 30, 1999, 11,616 barrels of oil, 6,585 barrels of NGLs and 25,440 mcf of gas were sold, or 22,441 BOEs. For the three months ended June 30, 1998, 12,145 barrels of oil, 5,147 barrels of NGLs and 22,520 mcf of gas were sold, or 21,045 BOEs. The average price received per barrel of oil increased $1.26, or 9%, from $13.40 during the three months ended June 30, 1998 to $14.66 for the same period in 1999. The average price received per barrel of NGLs increased $1.06, or 14%, from $7.70 during the three months ended June 30, 1998 to $8.76 for the same period in 1999. The average price received per mcf of gas increased 3% from $1.49 during the three months ended June 30, 1998 to $1.54 for the same period in 1999. A gain on disposition of assets of $235 was received during the three months ended June 30, 1998 from the sale of oil and gas equipment on one well abandoned in a prior year. Abandoned property costs of $95 were also incurred during the three months ended June 30, 1998 related to this well. Costs and Expenses: Total costs and expenses decreased to $215,431 for the three months ended June 30, 1999 as compared to $243,339 for the same period in 1998, a decrease of $27,908, or 11%. This decrease was due to declines in depletion and abandoned property costs, offset by increases in production costs and G&A. Production costs were $158,350 for the three months ended June 30, 1999 and $154,727 for the same period in 1998 resulting in a $3,623 increase. This increase was due to additional well maintenance costs incurred in an effort to stimulate well production, offset by a decline in ad valorem taxes. During this period, G&A increased, in aggregate, 13%, from $7,078 for the three months ended June 30, 1998 to $8,012 for the same period in 1999. Depletion was $49,069 for the three months ended June 30, 1999 compared to $81,439 for the same period in 1998, a decrease of $32,370, or 40%. This decrease was primarily attributable to an increase in proved reserves during the period ended June 30, 1999 as a result of higher commodity prices, a reduction in oil production of 529 barrels for the three months ended June 30, 1999 compared to the same period in 1998 and a reduction in the Partnership's net depletable basis from charges taken in accordance with SFAS 121 during the fourth quarter of 1998.

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, 1998 as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 1514% to $671,386 374,957 from $789,531 434,947 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease in production. For the six months ended June 30, 1999, 30,733 17,589 barrels of oil, 18,546 11,663 barrels of natural gas liquids ("NGLs") and 90,088 45,216 mcf of gas were sold, or 64,294 36,788 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 19,552 barrels of oil, 17,823 10,141 barrels of NGLs and 90,366 46,285 mcf of gas were sold, or 69,341 37,407 BOEs. The average price received per barrel of oil decreased 7% $1.65, or 11%, from $14.18 14.65 for the six months ended June 30, 1998 to $13.20 13.00 for the same period in 1999. The average price received per barrel of NGLs decreased slightly 7% from $7.33 7.39 during the six months ended June 30, 1998 to $7.26 6.86 for the same period in 1999. The average price received per mcf of gas decreased 78% from $1.57 1.59 during the six months ended June 30, 1998 to $1.46 1.47 in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain on disposition of assets of $765 was received during the six months ended June 30, 1998 from the sale of equipment on one saltwater disposal well plugged and abandoned in a prior year. Costs and Expenses: Total costs and expenses decreased to $643,652 343,476 for the six months ended June 30, 1999 as compared to $825,617 402,718 for the same period ended June 30, in 1998, a decrease of $181,96559,242, or 2215%. This decrease was due to declines in production costs, depletion and general and administrative expenses ("G&A"). Production costs were $455,004 223,897 for the six months ended June 30, 1999 and $596,233 272,903 for the same period in 1998 resulting in a decrease of $141,22949,006 decrease, or 2418%. The decrease was due to declines in well maintenance costs, workover costs, costs and production taxes and ad valorem taxes. 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, 1519% from $23,676 13,920 for the six months ended June 30, 1998 to $20,141 11,249 for the same period in 1999. Depletion was $168,507 108,330 for the six months ended June 30, 1999 compared to $205,708 115,895 for the same period in 1998. This represented , a decrease in depletion of $37,2017,565, or 187%. This decrease was primarily attributable due to a reduction in oil production of 5,724 1,963 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase in proved reserves during the period ended June 30, 1999 due to the higher commodity prices and a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998. Three months ended June 30, 1999 compared with three months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues increased 3% to $209,933 from $203,910 for the three months ended June 30, 1999 and 1998, respectively. The increase in revenues resulted from higher average prices received and an increase in production. For the three months ended June 30, 1999, 7,934 barrels of oil, 6,797 barrels of NGLs and 24,720 mcf of gas were sold, or 18,851 BOEs. For the three months ended June 30, 1998, 9,573 barrels of oil, 4,934 barrels of NGLs and 21,016 mcf of gas were sold, or 18,010 BOEs. 8 131 The average price received per barrel of oil increased 4% from $13.87 for the three months ended June 30, 1998 to $14.48 for the same period in 1999. The average price received per barrel of NGLs increased 8% from $7.62 during the three months ended June 30, 1998 to $8.21 for the same period in 1999. The average price received per mcf of gas decreased slightly from $1.60 during the three months ended June 30, 1998 to $1.59 in 1999. Costs and Expenses: Total costs and expenses decreased to $159,581 for the three months ended June 30, 1999 as compared to $200,434 for the same period in 1998, a decrease of $40,853, or 20%. This decrease was due to declines in depletion, production costs and G&A. Production costs were $122,011 for the three months ended June 30, 1999 and $133,653 for the same period in 1998 resulting in an $11,642 decrease, or 9%. The decrease was due to declines in well maintenance costs, ad valorem taxes and production taxes. During this period, G&A decreased, in aggregate, 10% from $6,989 for the three months ended June 30, 1998 to $6,298 for the same period in 1999. Depletion was $31,272 for the three months ended June 30, 1999 compared to $59,792 for the same period in 1998, a decrease of $28,520, or 48%. This decrease was primarily attributable to an increase in proved reserves during the period ended June 30, 1999 due to higher commodity prices, a reduction in oil production of 1,639 barrels for the three months ended June 30, 1999 compared to the same period in 1998 and a reduction in the Partnership's net depletable basis from charges taken in accordance with SFAS 121 during the fourth quarter of 1998.

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These However, these interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 1512% to $671,386 439,976 from $789,531 498,027 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease in production. For the six months ended June 30, 19991998, 30,733 21,076 barrels of oil, 18,546 12,312 barrels of natural gas liquids ("NGLs") and 90,088 52,185 mcf of gas were sold, or 64,294 42,086 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 24,420 barrels of oil, 17,823 9,853 barrels of NGLs and 90,366 48,253 mcf of gas were sold, or 69,341 42,315 BOEs. The average price received per barrel of oil decreased 7% $1.40, or 10%, from $14.18 14.31 for the six months ended June 30, 1998 to $13.20 12.91 for the same period in 1999. The average price received per barrel of NGLs decreased increased slightly from $7.33 7.13 during the six months ended June 30, 1998 to $7.26 7.21 for the same period in 1999. The average price received per mcf of gas decreased 76% from $1.57 1.62 during the six months ended June 30, 1998 to $1.46 1.52 in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain on disposition of assets of $765 3,702 was received recognized during the six months ended June 30, 1998 from post closing adjustments received from the sale of equipment on one saltwater disposal well plugged 16 oil and abandoned in a prior yeargas wells during 1997. Costs and Expenses: Total costs and expenses decreased to $643,652 479,364 for the six months ended June 30, 1999 as compared to $825,617 536,523 for the same period ended June 30, in 1998, a decrease of $181,96557,159, or 2211%. This decrease was due to declines in depletion, production costs, depletion costs and general and administrative expenses ("G&A"). Production costs were $455,004 369,495 for the six months ended June 30, 1999 and $596,233 380,882 for the same period in 1998 resulting in a decrease of an $141,22911,387 decrease, or 243%. The decrease was due to declines in well maintenance costs, workover costs, production taxes and ad valorem taxes. 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, 157% from $23,676 16,961 for the six months ended June 30, 1998 to $20,141 15,845 for the same period in 1999. Depletion was $168,507 94,024 for the six months ended June 30, 1999 compared to $205,708 138,680 for the same period in 1998. This represented 1999, a decrease in depletion of $37,20144,656, or 1832%. This decrease was primarily attributable to a reduction in oil production of 5,724 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase in proved reserves during the period ended June 30, 1999 due to higher commodity prices prices, a reduction in oil production of 3,344 barrels for the six months ended June 30, 1999 compared to the same period in 1998 and a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998. Three months ended June 30, 1999 compared with three months ended June 30, 1998

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These However, these interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 1517% to $671,386 179,090 from $789,531 215,630 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease decline in production. For the six months ended June 30, 1999, 30,733 8,806 barrels of oil, 18,546 4,288 barrels of natural gas liquids ("NGLs") and 90,088 20,236 mcf of gas were sold, or 64,294 16,467 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 10,417 barrels of oil, 17,823 4,340 barrels of NGLs and 90,366 22,148 mcf of gas were sold, or 69,341 18,448 BOEs. The average price received per barrel of oil decreased 75% from $14.18 13.87 for the six months ended June 30, 1998 to $13.20 13.16 for the same period in 1999. The average price received per barrel of NGLs decreased slightly 6% from $7.33 7.79 during the six months ended June 30, 1998 to $7.26 7.36 for the same period in 1999. The average price received per mcf of gas decreased 7% from $1.57 1.68 during the six months ended June 30, 1998 to $1.46 1.56 in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain on disposition of assets of $765 1,281 was received recognized during the six months ended June 30, 1998 from post closing adjustments received from the sale of equipment on six oil and wells and an overriding royalty interest in one saltwater disposal well plugged and abandoned in a prior yearduring 1997. Costs and Expenses: Total costs and expenses decreased to $643,652 179,771 for the six months ended June 30, 1999 as compared to $825,617 221,067 for the same period ended June 30, in 1998, a decrease of $181,96541,296, or 2219%. This decrease was due to declines in depletion, production costs, depletion costs and general and administrative expenses ("G&A"). Production costs were $455,004 137,257 for the six months ended June 30, 1999 and $596,233 139,621 for the same period in 1998 resulting in a decrease of $141,229, or 24%2,364 decrease. The decrease was due to declines in well maintenance costs, workover costs, production taxes and ad valorem taxes. 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, 15% from $23,676 for the six months ended June 30, 1998 to $20,141 for the same period in 1999. Depletion was $168,507 for the six months ended June 30, 1999 compared to $205,708 for the same period in 1998. This represented a decrease in depletion of $37,201, or 18%. This decrease was primarily attributable to a reduction in oil production of 5,724 barrels for the six months ended June 30, 1999 compared to the same period in 1998, offset by an increase in proved reserves during the period ended June 30, 1999 due well maintenance costs incurred in an effort to higher commodity prices and a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998. Three months ended June 30, 1999 compared with three months ended June 30, 1998stimulate well production.

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 1514% to $671,386 271,361 from $789,531 315,946 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease in production. For the six months ended June 30, 1999, 30,733 13,613 barrels of oil, 18,546 6,704 barrels of natural gas liquids ("NGLs") and 90,088 27,934 mcf of gas were sold, or 64,294 24,973 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 15,952 barrels of oil, 17,823 5,861 barrels of NGLs and 90,366 26,363 mcf of gas were sold, or 69,341 26,207 BOEs. The average price received per barrel of oil decreased 7% $1.17, or 8%, from $14.18 14.32 for the six months ended June 30, 1998 to $13.20 13.15 for the same period in 1999. The average price received per barrel of NGLs decreased slightly 3%, from $7.33 7.77 during the six months ended June 30, 1998 to $7.26 7.55 for the same period in 1999. The average price received per mcf of gas decreased 76% from $1.57 1.59 during the six months ended June 30, 1998 to $1.46 1.49 in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain on disposition of assets of $765 156 was received during the six months ended June 30, 1998 from the sale of equipment on one saltwater disposal well plugged and abandoned in a prior year. Costs and Expenses: Total costs and expenses decreased to $643,652 243,270 for the six months ended June 30, 1999 as compared to $825,617 305,366 for the same period ended June 30, in 1998, a decrease of $181,96562,096, or 2220%. This decrease was due to declines in production costs, depletion and general and administrative expenses ("G&A"). Production costs were $455,004 168,666 for the six months ended June 30, 1999 and $596,233 208,136 for the same period in 1998 resulting in a decrease of $141,22939,470 decrease, or 2419%. The This decrease was due to declines in well maintenance costs, workover costsexpenses, production taxes and ad valorem taxes. 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, 1513% from $23,676 9,332 for the six months ended June 30, 1998 to $20,141 8,141 for the same period in 1999. Depletion was $168,507 66,463 for the six months ended June 30, 1999 compared to $205,708 87,898 for the same period in 1998. This represented , a decrease in depletion of $37,20121,435, or 1824%. This decrease was primarily attributable due to a reduction in oil production of 5,724 2,339 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase in proved reserves during the period ended June 30, 1999 due to the higher commodity prices and a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998. Three months ended June 30, 1999 compared with three months ended June 30, 1998

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 1517% to $671,386 435,655 from $789,531 525,141 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease in production. For the six months ended June 30, 1999, 30,733 21,588 barrels of oil, 18,546 10,021 barrels of natural gas liquids ("NGLs") and 90,088 49,899 mcf of gas were sold, or 64,294 39,926 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 26,017 barrels of oil, 17,823 10,006 barrels of NGLs and 90,366 56,185 mcf of gas were sold, or 69,341 45,387 BOEs. The average price received per barrel of oil decreased 73% from $14.18 13.90 for the six months ended June 30, 1998 to $13.20 13.55 for the same period in ended June 30, 1999. The average price received per barrel of NGLs decreased slightly 3% from $7.33 7.20 during the six months ended June 30, 1998 to $7.26 6.98 for the same period in 1999. The average price received per mcf of gas decreased 710% from $1.57 1.63 during the six months ended June 30, 1998 to $1.46 1.47 in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain on disposition of assets of $765 1,096 was received during the six months ended June 30, 1998 1999 from the sale disposal of oil and gas equipment on one saltwater disposal well plugged and abandoned in a prior yearfully depleted wells. Costs and Expenses: Total costs and expenses decreased to $643,652 408,427 for the six months ended June 30, 1999 as compared to $825,617 427,306 for the same period ended June 30, in 1998, a decrease of $181,96518,879, or 224%. This decrease was due to declines in production costscosts and depletion, depletion and offset by an increase in general and administrative expenses ("G&A"). Production costs were $455,004 245,642 for the six months ended June 30, 1999 and $596,233 270,636 for the same period in 1998 resulting in a decrease of $141,22924,994 decrease, or 249%. The This decrease was due to resulted from declines in well maintenance costs, workover costs, production taxes and ad valorem taxesworkover costs. G&A's components are independent accounting and engineering fees and managing general partner personnel and operating costs. During this period, G&A decreasedincreased, in aggregate, 1562% from $23,676 17,857 for the six months ended June 30, 1998 to $20,141 28,880 for the same period in 1999. Depletion was $168,507 133,905 for the six months ended June 30, 1999 compared to $205,708 138,813 for the same period in 1998. This represented , a decrease in depletion of $37,2014,908, or 184%. This decrease was primarily attributable due to a reduction in oil production of 5,724 4,429 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase in proved reserves during the period ended June 30, 1999 due to higher commodity prices 1998 and a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998. Three months ended June 30, 1999 compared with three months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased slightly to $252,835 from $257,804 for the three months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from a decrease in production, offset by higher average prices received. For the three months ended June 30, 1999, 8 131 10,689 barrels of oil, 5,598 barrels of NGLs and 25,314 mcf of gas were sold, or 20,506 BOEs. For the three months ended June 30, 1998, 13,255 barrels of oil, 5,319 barrels of NGLs and 29,304 mcf of gas were sold, or 23,458 BOEs. The average price received per barrel of oil increased $2.49, or 19%, from $12.98 during the three months ended June 30, 1998 to $15.47 in 1999. The average price received per barrel of NGLs increased $1.02, or 14%, from $7.17 during the three months ended June 30, 1998 to $8.19 for the same period in 1999. The average price received per mcf of gas increased slightly from $1.63 for the three months ended June 30, 1998 to $1.65 for the same period in 1999. A gain on disposition of assets of $1,096 was received during the three months ended June 30, 1999 from the disposal of oil and gas equipment on fully depleted wells. Costs and Expenses: Total costs and expenses decreased to $189,838 for the three months ended June 30, 1999 as compared to $222,966 for the same period in 1998, a decrease of $33,128, or 15%. This decline was due to a decrease in depletion and production costs, offset by an increase in G&A. Production costs were $123,097 for the three months ended June 30, 1999 and $141,346 for the same period in 1998 resulting in an $18,249 decrease, or 13%. This decrease was due to declines in well maintenance costs and workover costs. During this period, G&A increased from $8,794 for the three months ended June 30, 1998 to $21,337 for the same period in 1999. Depletion was $45,404 for the three months ended June 30, 1999 compared to $72,826 for the same period in 1998, a decrease of $27,422, or 38%. This decrease was primarily attributable to a reduction in oil production of 2,566 barrels for the three months ended June 30, 1999 compared to the same period in 1998, an increase in proved reserves during the period ended June 30, 1999 as a result of higher commodity prices and a reduction in the Partnership's net depletable basis from charges taken in accordance with SFAS 121 during the fourth quarter of 1998.

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain reclassifications have been made to the June 30, 1998 financial statements to conform to the June 30, 1999 financial statement presentation. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 1519% to $671,386 351,757 from $789,531 433,040 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease declines in production. For the six months ended June 30, 1999, 30,733 22,010 barrels of oil, 18,546 5,918 barrels of natural gas liquids ("NGLs") and 90,088 25,190 mcf of gas were sold, or 64,294 32,126 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 25,655 barrels of oil, 17,823 6,204 barrels of NGLs and 90,366 29,158 mcf of gas were sold, or 69,341 36,719 BOEs. The average price received per barrel of oil decreased 76% from $14.18 14.01 for the six months ended June 30, 1998 to $13.20 13.18 for the same period in 1999. The average price received per barrel of NGLs decreased slightly 7% from $7.33 6.00 during the six months ended June 30, 1998 to $7.26 5.61 for the same period in 1999. The average price received per mcf of gas decreased 710% from $1.57 during 1.25 for the six months ended June 30, 1998 to $1.46 1.13 for the same period in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain Gain on disposition of assets of $765 5,299 was received recognized during the six months ended June 30, 1998 1999. The gain consisted of $4,004 from the sale equipment credits of fully depleted wells and $1,295 from equipment credits on one saltwater disposal a well plugged and abandoned in a prior yearduring 1998. A loss on disposition of assets of $9,441, recognized during the six months ended June 30, 1998, was due to the abandonment of two wells. Expenses incurred during the six months ended June 30, 1999 and 1998 to plug and abandon these wells were $1,813 and $65,758, respectively. Costs and Expenses: Total costs and expenses decreased to $643,652 344,241 for the six months ended June 30, 1999 as compared to $825,617 547,323 for the same period ended June 30, in 1998, a decrease of $181,965203,082, or 2237%. This decrease was due to declines reductions in production costs, abandoned property costs, depletion and general and administrative expenses ("G&A"). Production costs were $455,004 271,521 for the six months ended June 30, 1999 and $596,233 360,313 for the same period in 1998 1998, resulting in a decrease of $141,22988,792 decrease, or 2425%. The decrease was due attributable to declines in well maintenance costs, workover costs, production taxes and ad valorem taxes. 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, 1552% from $23,676 21,764 for the six months ended June 30, 1998 to $20,141 10,553 for the same period in 1999. Depletion was $168,507 60,354 for the six months ended June 30, 1999 compared to $205,708 99,488 for the same period in 1998. This represented , a decrease in depletion of $37,20139,134, or 1839%. This decrease was primarily attributable due to a reduction in oil production of 5,724 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase in proved reserves during the period ended June 30, 1999 due to higher commodity prices prices, a reduction in oil production of 3,645 barrels for the six months ended June 30, 1999 compared to the same period in 1998 and a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998. 8 131 Three months ended June 30, 1999 compared with three months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 6% to $198,979 from $211,467 for the three months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from a decline in production, offset by higher average prices received. For the three months ended June 30, 1999, 10,807 barrels of oil, 3,090 barrels of NGLs and 12,770 mcf of gas were sold, or 16,025 BOEs. For the three months ended June 30, 1998, 13,131 barrels of oil, 2,945 barrels of NGLs and 14,644 mcf of gas were sold, or 18,517 BOEs. The average price received per barrel of oil increased $1.78, or 13%, from $13.37 for the three months ended June 30, 1998 to $15.15 for the same period in 1999. The average price received per barrel of NGLs increased 12% from $5.95 during the three months ended June 30, 1998 to $6.65 for the same period in 1999. The average price received per mcf of gas decreased 9% from $1.26 during the three months ended June 30, 1998 to $1.15 in 1999. A loss on disposition of assets of $44,930 was recognized for the three months ended June 30, 1998 on the abandonment of two oil and gas wells during 1998. Expenses incurred during the three months ended June 30, 1999 and 1998 to plug and abandon these wells totaled $189 and $18,767, respectively. Costs and Expenses: Total costs and expenses decreased to $163,726 for the three months ended June 30, 1999 as compared to $269,466 for the same period in 1998, a decrease of $105,740, or 39%. This decrease was due to declines in production costs, depletion, abandoned property costs and G&A. Production costs were $137,049 for the three months ended June 30, 1999 and $176,577 for the same period in 1998, resulting in a $39,528 decrease, or 22%. The decrease was attributable to lower well maintenance costs, production taxes and ad valorem taxes. During this period, G&A decreased, in aggregate, 61% from $15,117 for the three months ended June 30, 1998 to $5,970 for the same period in 1999. Depletion was $20,518 for the three months ended June 30, 1999 compared to $59,005 for the same period in 1998, a decrease of $38,487, or 65%. This decrease was primarily attributable to an increase in proved reserves during the period ended June 30, 1999 as a result of higher commodity prices, a reduction in oil production of 2,324 barrels for the three months ended June 30, 1999 as compared to the same period in 1998 and a reduction in the Partnership's net depletable basis from charges taken in accordance with SFAS 121 during the fourth quarter of 1998.

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 1519% to $671,386 195,089 from $789,531 240,589 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease in production. For the six months ended June 30, 1999, 30,733 9,267 barrels of oil, 18,546 5,512 barrels of natural gas liquids ("NGLs") and 90,088 21,392 mcf of gas were sold, or 64,294 18,344 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 11,127 barrels of oil, 17,823 5,392 barrels of NGLs and 90,366 24,197 mcf of gas were sold, or 69,341 20,552 BOEs. The average price received per barrel of oil decreased 76% from $14.18 14.16 for the six months ended June 30, 1998 to $13.20 13.27 for the same period in ended June 30, 1999. The average price received per barrel of NGLs decreased slightly 10% from $7.33 7.92 during the six months ended June 30, 1998 to $7.26 7.10 for the same period in 1999. The average price received per mcf of gas decreased 78% from $1.57 1.67 during the six months ended June 30, 1998 to $1.46 1.54 for the same period in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain on disposition of assets of $765 was received during the six months ended June 30, 1998 from the sale of equipment on one saltwater disposal well plugged and abandoned in a prior year. Costs and Expenses: Total costs and expenses decreased to $643,652 205,720 for the six months ended June 30, 1999 as compared to $825,617 227,750 for the same period ended June 30, in 1998, a decrease of $181,96522,030, or 2210%. This decrease was due to declines in production costs, depletion and general and administrative expenses ("G&A")) and depletion. Production costs were $455,004 132,744 for the six months ended June 30, 1999 and $596,233 148,593 for the same period in 1998 resulting in a decrease of $141,22915,849 decrease, or 2411%. The decrease was primarily due to less well maintenance costs and declines in well maintenance costs, workover costs, production taxes and ad valorem taxes. 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, 15% 37%, from $23,676 11,447 for the six months ended June 30, 1998 to $20,141 7,264 for the same period in 1999. Depletion was $168,507 65,712 for the six months ended June 30, 1999 compared to $205,708 67,710 for the same period in 1998. This represented , a decrease in depletion of $37,2011,998, or 183%. This decrease was primarily attributable to the result of a reduction in oil production of 5,724 1,860 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase in proved reserves during the period ended June 30, 1999 due to higher commodity prices and a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998. Three months ended June 30, 1999 compared with three months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased slightly to $111,127 from $113,383 for the three months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from decreases in production and lower average prices received from barrels of NGLs and mcf of gas, offset by a higher average price received per barrel of oil. For the three months ended June 30, 1999, 4,486 barrels of oil, 3,061 barrels of NGLs and 10,259 mcf of gas were sold, or 9,257 BOEs. For the three months ended June 30, 1998, 5,358 barrels of oil, 2,355 barrels of NGLs and 9,423 mcf of gas were sold, or 9,284 BOEs. 8 131 The average price received per barrel of oil increased $1.54, or 11%, from $13.45 for the three months ended June 30, 1998 to $14.99 for the same period in 1999. The average price received per barrel of NGLs decreased 10% from $9.60 during the three months ended June 30, 1998 to $8.62 for the same period in 1999. The average price received per mcf of gas decreased 14% from $1.98 during the three months ended June 30, 1998 to $1.71 for the same period in 1999. Costs and Expenses: Total costs and expenses decreased to $96,793 for the three months ended June 30, 1999 as compared to $117,506 for the same period in 1998, a decrease of $20,713, or 18%. This decrease was due to declines in depletion, production costs and G&A. Production costs were $71,921 for the three months ended June 30, 1999 and $75,490 for the same period in 1998 resulting in a $3,569 decrease, or 5%. The decrease was due to less well maintenance costs and declines in production taxes and ad valorem taxes. During this period, G&A decreased, in aggregate, 47%, from $7,201 for the three months ended June 30, 1998 to $3,806 for the same period in 1999. Depletion was $21,066 for the three months ended June 30, 1999 compared to $34,815 for the same period in 1998, a decrease of $13,749, or 39%. This decrease was primarily attributable to an increase in proved reserves during the period ended June 30, 1999 as a result of higher commodity prices, a decrease in oil production of 872 barrels for the three months ended June 30, 1999 as compared to the same period in 1998 and a reduction in the Partnership's net depletable basis from charges taken in accordance with SFAS 121 during the fourth quarter of 1998.

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results of operations are not necessarily indicative of results for a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 1518% to $671,386 435,922 from $789,531 532,019 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease in production. For the six months ended June 30, 1999, 30,733 19,850 barrels of oil, 18,546 13,581 barrels of natural gas liquids ("NGLs") and 90,088 56,238 mcf of gas were sold, or 64,294 42,804 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 23,063 barrels of oil, 17,823 14,918 barrels of NGLs and 90,366 65,777 mcf of gas were sold, or 69,341 48,944 BOEs. The average price received per barrel of oil decreased 7% from $14.18 14.17 for the six months ended June 30, 1998 to $13.20 13.24 for the same period in 1999. The average price received per barrel of NGLs decreased slightly from $7.33 7.05 during the six months ended June 30, 1998 to $7.26 6.93 for the same period in 1999. The average price received per mcf of gas decreased 78% from $1.57 1.52 during the six months ended June 30, 1998 to $1.46 1.40 in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain Gain on disposition of assets of $765 356 was received during the six months ended June 30, 1998 from the sale disposal of oil and gas equipment on one saltwater disposal well plugged and abandoned in a prior yearfully depleted wells. Costs and Expenses: Total costs and expenses decreased to $643,652 483,648 for the six months ended June 30, 1999 as compared to $825,617 528,511 for the same period ended June 30, in 1998, a decrease of $181,96544,863, or 228%. This decrease was due to declines in production costs, depletion and general and administrative expenses ("G&A"), depletion and abandoned property costs. Production costs were $455,004 344,743 for the six months ended June 30, 1999 and $596,233 383,272 for the same period in 1998 resulting in a decrease of $141,22938,529 decrease, or 2410%. The This decrease was due to declines in well maintenance costs, workover costs, costs and production taxes and ad valorem taxes. 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, 1518% from $23,676 15,961 for the six months ended June 30, 1998 to $20,141 13,078 for the same period in 1999. Depletion was $168,507 125,827 for the six months ended June 30, 1999 compared to $205,708 128,628 for the same period in 1998. This represented , a decrease in depletion decline of $37,201, or 18%2,801. This decrease was primarily attributable due to a reduction in oil production of 5,724 3,213 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase in proved reserves during the period ended June 30, 1999 due to the higher commodity prices and a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998. Abandoned property costs incurred during the six months ended June 30, 1998 totaled $650. These costs were in association with the plugging and abandonment of one uneconomical well. 8 131 Three months ended June 30, 1999 compared with three months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 7% to $244,884 from $262,816 for the three months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from declines in production, offset by higher average prices received. For the three months ended June 30, 1999, 9,402 barrels of oil, 7,313 barrels of NGLs and 27,119 mcf of gas were sold, or 21,235 BOEs. For the three months ended June 30, 1998, 11,711 barrels of oil, 7,790 barrels of NGLs and 32,461 mcf of gas were sold, or 24,911 BOEs. The average price received per barrel of oil increased $1.52, or 11%, from $13.47 for the three months ended June 30, 1998 to $14.99 for the same period in 1999. The average price received per barrel of NGLs increased $1.09, or 15%, from $7.24 during the three months ended June 30, 1998 to $8.33 for the same period in 1999. The average price received per mcf of gas increased 6% from $1.50 during the three months ended June 30, 1998 to $1.59 in 1999. Gain on disposition of assets of $285 was received during the three months ended June 30, 1998 from the disposal of oil and gas equipment on fully depleted wells. Costs and Expenses: Total costs and expenses decreased to $205,269 for the three months ended June 30, 1999 as compared to $269,700 for the same period in 1998, a decrease of $64,431, or 24%. This decrease was due to declines in production costs, depletion, G&A and abandoned property costs. Production costs were $162,895 for the three months ended June 30, 1999 and $195,142 for the same period in 1998 resulting in a $32,247 decrease, or 17%. This decrease was due to declines in well maintenance costs and production taxes, offset by an increase in ad valorem taxes. During this period, G&A decreased, in aggregate, 7% from $7,885 for the three months ended June 30, 1998 to $7,347 for the same period in 1999. Depletion was $35,027 for the three months ended June 30, 1999 compared to $66,558 for the same period in 1998. This represented a decrease in depletion of $31,531, or 47%. This decrease was primarily attributable to an increase in proved reserves during the period ended June 30, 1999 as a result of higher commodity prices, a reduction in oil production of 2,308 barrels for the three months ended June 30, 1999 compared to the same period in 1998 and a reduction in the Partnership's net depletable basis from charges taken in accordance with SFAS 121 during the fourth quarter of 1998. Abandoned property costs during the three months ended June 30, 1998 totaled $115. These costs were incurred in association with the plugging and abandonment of one uneconomical well. LIQUIDITY AND CAPITAL RESOURCES Net Cash Provided by Operating Activities

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 1513% to $671,386 198,577 from $789,531 228,491 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease in production. For the six months ended June 30, 1999, 30,733 11,520 barrels of oil, 18,546 4,114 barrels of natural gas liquids ("NGLs") and 90,088 13,600 mcf of gas were sold, or 64,294 17,901 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 12,574 barrels of oil, 17,823 3,737 barrels of NGLs and 90,366 14,569 mcf of gas were sold, or 69,341 18,739 BOEs. The average price received per barrel of oil decreased $1.02, or 7% %, from $14.18 14.14 for the six months ended June 30, 1998 to $13.20 13.12 for the same period in 1999. The average price received per barrel of NGLs decreased slightly 12% from $7.33 7.51 during the six months ended June 30, 1998 to $7.26 6.63 for the same period in 1999. The average price received per mcf of gas decreased 75% from $1.57 1.56 during the six months ended June 30, 1998 to $1.46 1.48 in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain on disposition of assets of $765 was received during the six months ended June 30, 1998 from the sale of equipment on one saltwater disposal well plugged and abandoned in a prior year. Costs and Expenses: Total costs and expenses decreased to $643,652 218,134 for the six months ended June 30, 1999 as compared to $825,617 231,373 for the same period ended June 30, in 1998, a decrease of $181,96513,239, or 226%. This decrease was due to declines in production costs, depletion costs and general and administrative expenses expenses, ("G&A"), offset by an increase in depletion. Production costs were $455,004 154,559 for the six months ended June 30, 1999 and $596,233 168,981 for the same period in 1998 1998, resulting in a decrease of $141,22914,422 decrease, or 249%. The decrease was due to lower well maintenance costs and declines in well maintenance costs, workover costs, production taxes and ad valorem taxes. 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, 157% from $23,676 7,593 for the six months ended June 30, 1998 to $20,141 7,085 for the same period in 1999. Depletion was $168,507 56,490 for the six months ended June 30, 1999 compared to $205,708 54,799 for the same period in 1998. This represented a decrease in depletion of $37,201, or 18%. This decrease was primarily attributable to a reduction in oil production of 5,724 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase of $1,691, or 3%. This increase was the result of a combination of factors that included a decline in proved reserves during the period ended June 30March 31, 1999 due to higher reserve revisions and lower commodity prices and prices, offset by a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998 and a reduction in oil production of 1,054 barrels for the six months ended June 30, 1999 compared to the same period in 1998. Three months ended June 30, 1999 compared with three months ended June 30, 1998

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 159% to $671,386 186,502 from $789,531 205,570 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease received, offset by an increase in production. For the six months ended June 30, 1999, 30,733 9,297 barrels of oil, 18,546 3,592 barrels of natural gas liquids ("NGLs") and 90,088 24,947 mcf of gas were sold, or 64,294 17,047 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 9,753 barrels of oil, 17,823 2,988 barrels of NGLs and 90,366 23,991 mcf of gas were sold, or 69,341 16,740 BOEs. The average price received per barrel of oil decreased 7% $1.29, or 9%, from $14.18 14.20 for the six months ended June 30, 1998 to $13.20 12.91 for the same period in 1999. The average price received per barrel of NGLs decreased slightly $1.44, or 17%, from $7.33 during 8.43 for the six months ended June 30, 1998 to $7.26 6.99 for the same period in 1999. The average price received per mcf of gas decreased 75% from $1.57 1.74 during the six months ended June 30, 1998 to $1.46 1.66 in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain on disposition of assets of $765 199 was received during the six months ended June 30, 1998 from post closing adjustments received from the sale of equipment on one saltwater disposal well plugged eight oil and abandoned in a prior yeargas wells during 1997. Costs and Expenses: Total costs and expenses decreased increased to $643,652 238,811 for the six months ended June 30, 1999 as compared to $825,617 237,625 for the same period ended June 30, in 1998, a decrease an increase of $181,965, or 22%1,186. This decrease increase was due attributable to declines in production costs, higher depletion costs and general and administrative expenses ("G&A"), offset by a decline in production costs. Production costs were $455,004 150,511 for the six months ended June 30, 1999 and $596,233 175,267 for the same period in 1998 resulting in a decrease of $141,22924,756 decrease, or 2414%. The This decrease was due to declines in well maintenance costs, workover costs, costs and production taxes and ad valorem taxes. 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, 15% increased from $23,676 6,722 for the six months ended June 30, 1998 to $20,141 6,851 for the same period in 1999. Depletion was $168,507 81,449 for the six months ended June 30, 1999 compared to $205,708 55,636 for the same period in 1998. This represented a decrease an increase in depletion of $37,20125,813, or 1846%. This decrease increase was primarily attributable to the result of a reduction in oil production combination of 5,724 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase factors that included a decline in proved reserves during the period ended June 30March 31, 1999 due to higher reserve revisions and lower commodity prices and prices, offset by a reduction in the Partnership's net depletable basis from charges taken 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 OfOf " ("SFAS 121") during the fourth quarter of 1998 and a reduction in oil production of 456 barrels for the period ended June 30, 1999 compared to the same period in 1998. Three months ended June 30, 1999 compared with three months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues increased 17% to $101,099 from $86,663 for the three months ended June 30, 1999 and 1998, respectively. The increase in revenues resulted from increases in production 8 131 and higher average prices received. For the three months ended June 30, 1999, 4,285 barrels of oil, 1,840 barrels of NGLs and 12,774 mcf of gas were sold, or 8,254 BOEs. For the three months ended June 30, 1998, 4,429 barrels of oil, 957 barrels of NGLs and 8,265 mcf of gas were sold, or 6,764 BOEs. The average price received per barrel of oil increased 6%, from $13.39 for the three months ended June 30, 1998 to $14.21 for the same period in 1999. The average price received per barrel of NGLs increased 5% from $8.51 during the three months ended June 30, 1998 to $8.90 in 1999. The average price received per mcf of gas decreased 19% from $2.32 during the three months ended June 30, 1998 to $1.87 in 1999. A gain on disposition of assets of $199 was received during the three months ended June 30, 1998 from post closing adjustments received from the sale of eight oil and gas wells during 1997. Costs and Expenses: Total costs and expenses decreased to $87,366 for the three months ended June 30, 1999 as compared to $131,831 for the same period in 1998, a decrease of $44,465, or 34%. This decrease was due to declines in production costs and depletion, offset by an increase in G&A. Production costs were $75,833 for the three months ended June 30, 1999 and $100,496 for the same period in 1998 resulting in a $24,663 decrease, or 25%. This decrease was primarily due to a decline in well maintenance costs. During this period, G&A increased, in aggregate, 58% from $2,240 for the three months ended June 30, 1998 to $3,538 for the same period in 1999. Depletion was $7,995 for the three months ended June 30, 1999 compared to $29,095 for the same period in 1998, a decrease of $21,100, or 73%. This decrease was primarily attributable to an increase in proved reserves during the period ended June 30, 1999 as a result of higher commodity prices, a reduction in oil production of 144 barrels for the three months ended June 30, 1999 compared to the same period in 1998 and a reduction in the Partnership's net depletable basis from charges taken in accordance with SFAS 121 during the fourth quarter of 1998.

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 1513% to $671,386 319,242 from $789,531 367,337 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease in production. For the six months ended June 30, 1999, 30,733 18,522 barrels of oil, 18,546 6,611 barrels of natural gas liquids ("NGLs") and 90,088 21,869 mcf of gas were sold, or 64,294 28,778 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 20,218 barrels of oil, 17,823 6,010 barrels of NGLs and 90,366 23,433 mcf of gas were sold, or 69,341 30,134 BOEs. The average price received per barrel of oil decreased $1.01, or 7% %, from $14.18 14.13 for the six months ended June 30, 1998 to $13.20 13.12 for the same period in 1999. The average price received per barrel of NGLs decreased slightly 12% from $7.33 7.51 during the six months ended June 30, 1998 to $7.26 6.63 for the same period in 1999. The average price received per mcf of gas decreased 75% from $1.57 1.56 during the six months ended June 30, 1998 to $1.46 1.48 in 1999. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain on disposition of assets of $765 was received during the six months ended June 30, 1998 from the sale of equipment on one saltwater disposal well plugged and abandoned in a prior year. Costs and Expenses: Total costs and expenses decreased to $643,652 350,648 for the six months ended June 30, 1999 as compared to $825,617 371,899 for the same period ended June 30, in 1998, a decrease of $181,96521,251, or 226%. This decrease was due to declines in production costs, depletion costs and general and administrative expenses ("G&A"), offset by an increase in depletion. Production costs were $455,004 248,624 for the six months ended June 30, 1999 and $596,233 271,671 for the same period in 1998 1998, resulting in a decrease of $141,22923,047 decrease, or 248%. The This decrease was due to lower well maintenance costs and declines in well maintenance costs, workover costs, production taxes and ad valorem taxes. 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, 157% from $23,676 12,145 for the six months ended June 30, 1998 to $20,141 11,247 for the same period in 1999. Depletion was $168,507 90,777 for the six months ended June 30, 1999 compared to $205,708 88,083 for the same period in 1998. This represented a decrease in depletion of $37,201, or 18%. This decrease was primarily attributable to a reduction in oil production of 5,724 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase of $2,694, or 3%. This increase was the result of a combination of factors that included a decline in proved reserves during the period ended June 30March 31, 1999 due to higher reserve revisions and lower commodity prices and prices, offset by a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998 and a reduction in oil production of 1,696 barrels for the six months ended June 30, 1999 compared to the same period in 1998. Three months ended June 30, 1999 compared with three months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased to $172,712 from $174,479 for the three months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from a decrease in production, offset by higher average prices received. For the three months ended June 30, 1999, 8,848 barrels of oil, 3,546 barrels of NGLs and 10,109 mcf of gas were sold, or 14,079 BOEs. For the three 8 131 months ended June 30, 1998, 9,861 barrels of oil, 3,082 barrels of NGLs and 10,841 mcf of gas were sold, or 14,750 BOEs. The average price received per barrel of oil increased $1.06, or 8%, from $13.44 for the three months ended June 30, 1998 to $14.50 for the same period in 1999. The average price received per barrel of NGLs increased slightly from $7.95 during the three months ended June 30, 1998 to $7.99 for the same period in 1999. The average price received per mcf of gas decreased slightly from $1.61 during the three months ended June 30, 1998 to $1.59 in 1999. Costs and Expenses: Total costs and expenses decreased to $170,041 for the three months ended June 30, 1999 as compared to $190,452 for the same period in 1998, a decrease of $20,411, or 11%. This decrease was due to declines in depletion, production costs and G&A. Production costs were $137,477 for the three months ended June 30, 1999 and $141,492 for the same period in 1998, resulting in a $4,015 decrease, or 3%. The decrease was due to lower well maintenance costs, ad valorem taxes and production taxes. During this period, G&A decreased slightly from $5,738 for the three months ended June 30, 1998 to $5,701 for the same period in 1999. Depletion was $26,863 for the three months ended June 30, 1999 compared to $43,222 for the same period in 1998. This represented a decrease in depletion of $16,359, or 38%. This decrease was primarily attributable to an increase in proved reserves during the period ended June 30, 1999 as a result of higher commodity prices, a reduction in oil production of 1,013 barrels for the three months ended June 30, 1999 compared to the same period in 1998 and a reduction in the Partnership's net depletable basis from charges taken in accordance with SFAS 121 during the fourth quarter of 1998.

Basis of Presentation. In the opinion of management, the unaudited financial statements of the Partnership as of June 30, 1999 and for the three and six months ended June 30, 1999 and 1998 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain reclassifications have been made to the June 30, 1998 financial statements to conform to the June 30, 1999 financial statement presentations. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 1998, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square West, Irving, Texas 75039-3746. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(1) RESULTS OF OPERATIONS Six months ended June 30, 1999 compared with six months ended June 30, 1998 Revenues: The Partnership's oil and gas revenues decreased 15% to $671,386 243,058 from $789,531 286,777 for the six months ended June 30, 1999 and 1998, respectively. The decrease in revenues resulted from lower average prices received and a decrease declines in production. For the six months ended June 30, 1999, 30,733 12,583 barrels of oil, 18,546 5,365 barrels of natural gas liquids ("NGLs") and 90,088 24,988 mcf of gas were sold, or 64,294 22,113 barrel of oil equivalents ("BOEs"). For the six months ended June 30, 1998, 36,457 15,550 barrels of oil, 17,823 5,243 barrels of NGLs and 90,366 23,042 mcf of gas were sold, or 69,341 24,633 BOEs. The average price received per barrel of oil decreased 75% from $14.18 13.98 for the six months ended June 30, 1998 to $13.20 13.27 for the same period in 1999. The average price received per barrel of NGLs decreased slightly increased 13% from $7.33 6.83 during the six months ended June 30, 1998 to $7.26 7.72 for the same period in 1999. The average price received per mcf of gas decreased 75% from to $1.57 during 1.39 for the six months ended June 30, 1998 1999 compared to $1.46 for the same period in 19991998. 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 during the six months ended June 30, 1999. The volatility of commodity prices has had, and continues to have, a significant impact on the Partnership's revenues and operating cash flow and could result in additional decreases to the carrying value of the Partnership's oil and gas properties. A gain Gain on disposition of assets of $765 14,551 and $2,161 was received recognized during the six months ended June 30, 1999 and 1998, respectively. The gain recognized during the period in 1999 was due to equipment credits received on fully depleted wells. The gain recognized during the period in 1998 resulted from the sale of equipment credits on one saltwater disposal well wells plugged and abandoned in a the prior year. Costs and Expenses: Total costs and expenses decreased to $643,652 249,409 for the six months ended June 30, 1999 as compared to $825,617 270,038 for the same period ended June 30, in 1998, a decrease of $181,96520,629, or 228%. This decrease was due to declines reductions in production costs, depletion costs and general and administrative expenses ("G&A"), offset by increases in abandoned property costs and depletion. Production costs were $455,004 172,633 for the six months ended June 30, 1999 and $596,233 207,645 for the same period in 1998 1998, resulting in a decrease of $141,22935,012 decrease, or 2417%. The decrease was due primarily attributable to declines in well maintenance costs, workover costs, production taxes and ad valorem taxes. 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, 15% from $23,676 8,603 for the six months ended June 30, 1998 1998, to $20,141 7,292 for the same period in 1999. Depletion was $168,507 54,871 for the six months ended June 30, 1999 compared to $205,708 51,767 for the same period in 1998. This represented a decrease in depletion , an increase of $37,2013,104, or 186%. This decrease increase was primarily attributable due to reserve revisions on a significant well, offset by a reduction in oil production of 5,724 2,967 barrels for the six months ended June 30, 1999 compared to the same period in 1998, an increase in proved reserves . Abandoned property costs of $14,613 and $2,023 incurred during the period ended June 30, 1999 due to higher commodity prices and a reduction in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998. Three six months ended June 30, 1999 compared with three months ended June 30and 1998, respectively, were related to wells plugged and abandoned during 1998.